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ALTISOURCE PORTFOLIO SOLUTIONS S.A. (ASPS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 service revenue was $38.4M (+19% YoY) and total revenue $41.0M; Adjusted EBITDA was $4.7M—the strongest quarter since Q3 2020—while diluted EPS was $(0.31). Management highlighted this as the highest quarterly service revenue since Q3 2021 .
  • Full-year 2024 service revenue reached $150.4M (+10% YoY) and Adjusted EBITDA $17.4M, reflecting improved segment margins and corporate cost reductions .
  • 2025 guidance introduced: service revenue $165–$185M and Adjusted EBITDA $18–$23M, with expectations for positive operating cash flow and reduced corporate interest expense following the February 2025 debt exchange .
  • Balance sheet de-risked: term loan exchange and super senior facility reduce annual cash + PIK interest by ~$18M and extend maturities; lenders received ~58.2M shares and pre‑transaction stakeholders will receive ~114.5M warrants at $1.20 .
  • Near-term catalysts: ramping renovation, trustee, Hubzu expansion (including commercial auctions), and Lenders One products; management indicated Q1 2025 is off to a strong start versus plan, supporting estimate upward bias .

What Went Well and What Went Wrong

What Went Well

  • Highest quarterly service revenue since Q3 2021 ($38.4M) and highest quarterly Adjusted EBITDA since Q3 2020 ($4.7M), driven by sales wins and efficiency initiatives .
  • Full-year Business Segments Adjusted EBITDA improved by $10.4M to $44.6M with margins up to 29.7% in 2024, reflecting scale benefits and cost cutting .
  • Strategic commentary: “We believe we are positioned to diversify our revenue base and ramp business we have won while maintaining cost discipline…guiding to 2025 Service revenue of $165 million to $185 million and Adjusted EBITDA of $18 million to $23 million” .

What Went Wrong

  • Default market remained weak: industry foreclosure initiations down 6% YoY and foreclosure sales down 14% YoY in 2024, pressuring higher-margin Hubzu, trustee and title businesses; net loss in Q4 was $(8.8)M and interest expense was $9.6M for the quarter .
  • Q3 mix shift: fewer homes sold on Hubzu (higher margin) with growth in lower-margin field services and renovation, weighing on margins (context for Q4 run-rate) .
  • Elevated corporate interest and negative equity pre-exchange; management noted higher interest expense will persist in Q1 2025 through Feb. 19 before falling materially thereafter .

Financial Results

Quarter-over-Quarter (Q3 2024 → Q4 2024)

MetricQ3 2024Q4 2024
Service Revenue ($USD Millions)$38.150 $38.450
Total Revenue ($USD Millions)$40.531 $41.013
Gross Profit ($USD Millions)$12.070 $12.438
Adjusted EBITDA ($USD Millions)$3.624 $4.747
Diluted EPS ($)$(0.33) $(0.31)
Gross Margin (% of Service Revenue)31.6% 32.4% (derived from )
Adjusted EBITDA Margin (% of Service Revenue)9.5% 12.4% (derived from )

Year-over-Year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024Change
Service Revenue ($USD Millions)$32.209 $38.450 +19%
Total Revenue ($USD Millions)$34.157 $41.013 +20%
Adjusted Operating Income ($USD Millions)$(0.269) $4.234 N/M
Adjusted EBITDA ($USD Millions)$0.237 $4.747 N/M
Diluted EPS ($)$(0.47) $(0.31) +34%
Net Loss ($USD Millions)$(13.151) $(8.769) +33%

Segment and Corporate Breakdown (Quarter and Full-Year Context)

MetricQ4 2023Q4 2024FY 2023FY 2024
Business Segments Adjusted EBITDA ($USD Millions)$8.241 $11.365 $34.212 $44.607
Corporate & Others Adjusted EBITDA ($USD Millions)$(8.004) $(6.618) $(35.121) $(27.220)
Servicer & Real Estate Service Revenue ($USD Millions)———$120
Origination Service Revenue ($USD Millions)———$30

KPIs and Balance Sheet

KPIQ4 2024 / FY 2024Prior Quarter
Weighted Avg Sales Pipeline (Stabilized Annual Rev)$38–$47M total; $26–$33M Servicer & Real Estate; $12–$15M Origination $32–$40M (Q3)
Sales Wins (Stabilized Annual Rev)$25.8M Servicer & Real Estate; $13.6M Origination $1.7M Servicer & Real Estate; $4.9M Origination (Q3)
Cash & Cash Equivalents ($USD Millions)$29.8 (year-end) $28.3 (Q3 end)
Net Debt ($USD Millions)$202.989 (12/31/24) $202.251 (9/30/24)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Service RevenueFY 2025Not previously provided for FY25 in Q3; FY24 guidance was +13%–32% vs 2023 $165M–$185M New FY25 guidance introduced
Adjusted EBITDAFY 2025Not previously provided for FY25 in Q3; FY24 guidance $17.5M–$22.5M $18M–$23M New FY25 guidance introduced
Operating Cash FlowFY 2025N/AForecast positive operating cash flow New positive OCF outlook
Corporate Interest ExpenseFY 2025N/AReduction expected post exchange; cash + PIK interest down ~$18M annually Lower interest expense

Earnings Call Themes & Trends

TopicQ2 2024 (Previous Mentions)Q3 2024 (Previous Mentions)Q4 2024 (Current Period)Trend
Debt exchange/liquidityNo exchange yet; discussed cost discipline Announced intent (Dec press followed later) Completed exchange; debt cut to $172.5M; interest ~10.8% (SOFR+650bp); ~$18M annual interest reduction Improving balance sheet
Default market dynamicsEarly signs of stress; inventory rising; potential price declines to spur defaults Serious delinquency 1.2% (Aug); starts/sales down; Hubzu volume impact 2024 starts −6%, sales −14%; VA moratorium ended; FHA mods showing repeat delinquencies Gradual normalization potential
Renovation business rampLaunched; 35 referrals; ~$100K per property ~70+ referrals; ~$1.5M Q3 revenue; capacity scaling Management expects doubling of monthly revenue; continued customer additions Strong growth tailwind
Hubzu platformCore foreclosure/REO auctions Lower unit sales; margin mix impact Expansion into commercial and non-distressed auctions (soft launch) Product expansion
Lenders One productsCredit and homeowners insurance rollout; agent commissions Added insurance customers; credit wins Credit and homeowners insurance growth; pipeline strong Expanding solutions
Guidance and cash flowFY24 guidance reiterated Close to low end FY24; strong Q4 ramp FY25 guidance introduced; positive OCF forecast Constructive outlook

Management Commentary

  • “We believe we are positioned to diversify our revenue base and ramp business we have won while maintaining cost discipline…guiding to 2025 Service revenue of $165 million to $185 million and Adjusted EBITDA(1) of $18 million to $23 million.” — Chairman & CEO William B. Shepro .
  • “As a result of these transactions, we reduced our debt by over $60 million…[and] ~$18 million per year reduction in cash and PIK interest compared to our prior facility.” — Chairman & CEO William B. Shepro .
  • “We’ve started the year very strong…January revenue in line with plan; EBITDA better than plan; February revenue on target.” — Chairman & CEO William B. Shepro (Q&A) .

Q&A Highlights

  • Pipeline and initiatives: Focused on construction renovation, trustee, Hubzu expansion, and Lenders One credit/insurance products; both credit and renovation products hit >$1M/month by February, with an opportunity to more than double monthly revenues by year-end .
  • Default cycle cues: VA foreclosure moratorium ended; FHA streamlined mods seeing repeat defaults; clients preparing for increased starts; unemployment and other credit delinquencies monitored as leading indicators .
  • Near-term performance: Management expects Q1 Adjusted EBITDA “in that range or better” versus Q4’s $4.7M; caveat that interest expense remains higher until Feb. 19, 2025 transition .
  • Interest expense trajectory: Annual cash interest expected ~$13.4M vs prior ~$32M; accounting finalization ongoing, but overall interest burden materially lower post-exchange .

Estimates Context

Altisource has limited analyst coverage; consensus estimates were available for Q2 and Q3 but were not available for Q4 in S&P Global’s dataset.

MetricQ2 2024 ConsensusQ2 2024 ActualQ3 2024 ConsensusQ3 2024 ActualQ4 2024 ConsensusQ4 2024 Actual
Revenue ($USD)$39,366,500*$39,121,000 $45,776,500*$40,531,000 N/A*$41,013,000
Primary EPS ($)$(2.28)*$(1.68) $(1.92)*$(1.84) N/A*$(0.31)
EBITDA ($USD)$3,473,500*$3,629,000 $5,051,000*$2,597,000 N/A*$2,742,000 [GetEstimates]

Values with asterisks retrieved from S&P Global; consensus may be based on very few estimates (Revenue # of Estimates: 2; EPS # of Estimates: 2 for Q2 and Q3). Q4 consensus was not available; Altisource’s reported results are shown [GetEstimates] .
Disclaimer: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 execution and full-year margin expansion signal operational momentum despite a weak default backdrop; continued sales wins and cost discipline support FY25 growth and positive operating cash flow .
  • Balance sheet de-risked: debt reduced, maturities extended, and ~$18M annual interest reduction creates meaningful earnings and cash flow leverage to revenue growth—an underappreciated catalyst for re-rating .
  • Renovation, trustee, and Hubzu commercial/non-distressed auctions present tangible growth vectors; management targets doubling monthly revenue in select initiatives by year-end .
  • Default cycle asymmetry: FHA repeat defaults and VA moratorium expiry may drive incremental activity even if overall delinquency rates remain roughly flat; monitor macro credit signals (unemployment, consumer delinquencies) .
  • Near-term trading: Indications of a strong Q1 start and reduced interest expense post-Feb 19 could catalyze sentiment; watch for confirmation in Q1 print and pipeline conversion .
  • Medium-term thesis: As default normalizes, ASPS’s largest and most profitable businesses should re-accelerate; in the interim, diversification via Origination/Lenders One and Renovation mitigates cyclicality .

Notes on Non-GAAP and Adjustments

Adjusted EBITDA and other non-GAAP measures are reconciled to GAAP in the press release; improvements driven by segment margin expansion and corporate cost reductions. Q4 adjustments included intangible amortization ($1.27M), share-based comp ($0.82M), loss on sale of business ($0.69M), and cost savings initiatives ($0.87M) . The company highlights effective tax rate near 0% in Luxembourg due to valuation allowance, affecting tax-related adjustments .