Altisource Portfolio Solutions S.A.(ASPS) - 2024 Q2 - Quarterly Results

Q2 2024 Earnings Release Altisource's Q2 2024 earnings highlight strong financial and operational improvements, reaffirming guidance Financial and Operational Highlights Altisource reported strong Q2 2024 results with significant year-over-year growth in service revenue and Adjusted EBITDA - The company reaffirms its 2024 guidance for service revenue growth of 13% to 32% over 2023 and Adjusted EBITDA between $17.5 million and $22.5 million[3] Q2 2024 Key Financial Highlights (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Service Revenue | $36.9 million | $33.2 million | +11% | | Adjusted EBITDA | $4.4 million | $(3.5) million | +$7.9 million | | Adjusted EBITDA Margin | 11.9% | (10.5)% | +22.4 p.p. | | Gross Profit Margin | 34.0% | 16.7% | +17.3 p.p. | - The company ended Q2 with $29.7 million in cash, $15.0 million available under a revolving credit facility, and $198.7 million of net debt[4] - Generated new sales wins estimated to represent $16.8 million in potential annualized revenue on a stabilized basis across its segments[5] Financial Results Overview Q2 2024 financial performance significantly improved, driven by increased service revenue and positive Adjusted EBITDA Q2 2024 Financial Results Summary (in thousands) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Service revenue | $36,863 | $33,173 | 11% | | Gross profit | $12,717 | $5,532 | 130% | | Income (loss) from operations | $2,083 | $(6,809) | 131% | | Adjusted EBITDA | $4,384 | $(3,491) | 226% | | Net loss attributable to Altisource | $(8,307) | $(18,850) | 56% | | Diluted loss per share | $(0.29) | $(0.90) | 68% | - The mortgage industry continues to face headwinds: Foreclosure initiations were down 9% for the first six months of 2024 vs. 2023; Foreclosure sales were down 14% for the first six months of 2024 vs. 2023; Mortgage origination volume decreased by 13% in Q2 2024 vs. Q2 2023; The seriously delinquent mortgage rate declined to 1.1% in June 2024 from 1.3% in December 2023[8] Forward-Looking Statements & Other Information This section outlines risks and uncertainties affecting future performance, including customer concentration and macroeconomic conditions - Forward-looking statements are subject to risks including, but not limited to, customer concentration, timing of default related referrals, technology disruptions, and macroeconomic conditions[10] - Altisource will host a webcast at 08:30 a.m. EDT to discuss its second-quarter results[11] - Altisource is an integrated service provider and marketplace for the real estate and mortgage industries[12] Consolidated Financial Statements This section presents Altisource's consolidated financial statements, detailing operations, balance sheets, and cash flows Consolidated Statements of Operations and Comprehensive Loss Q2 2024 total revenue increased 11% to $39.1 million, with reduced net loss and improved diluted loss per share Consolidated Statements of Operations (in thousands, except per share data) | Description | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :--- | :--- | :--- | | Service revenue | $36,863 | $33,173 | | Total revenue | $39,121 | $35,235 | | Gross profit | $12,717 | $5,532 | | Income (loss) from operations | $2,083 | $(6,809) | | Net loss attributable to Altisource | $(8,307) | $(18,850) | | Diluted loss per share | $(0.29) | $(0.90) | Consolidated Balance Sheets As of June 30, 2024, total assets were $146.6 million, with $223.0 million long-term debt reclassified to current Consolidated Balance Sheet Highlights (in thousands) | Description | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $29,702 | $32,522 | | Total current assets | $51,201 | $55,540 | | Total assets | $146,557 | $154,858 | | Liabilities and Deficit | | | | Current portion of long-term debt | $223,009 | $— | | Total current liabilities | $258,932 | $35,760 | | Long-term debt | $— | $215,615 | | Total liabilities and deficit | $146,557 | $154,858 | Consolidated Statements of Cash Flows Net cash used in operating activities improved to $(2.1) million for H1 2024, with a total cash decrease of $2.8 million Consolidated Statements of Cash Flows Highlights (in thousands) | Description | Six months ended June 30, 2024 | Six months ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,057) | $(10,940) | | Net cash used in financing activities | $(773) | $(5,090) | | Net decrease in cash, cash equivalents and restricted cash | $(2,830) | $(16,030) | | Cash, cash equivalents and restricted cash at the end of the period | $32,586 | $38,243 | Non-GAAP Financial Measures This section defines and reconciles Altisource's non-GAAP financial measures for clearer operational performance insights Explanation of Non-GAAP Measures The company uses non-GAAP measures like Adjusted EBITDA and Net Debt to provide a clearer view of continuous operational performance - Management uses non-GAAP measures to evaluate operating profitability and cash flow on a continuing basis by excluding items like prior-period acquisition amortization, non-cash share-based compensation, and significant non-operational items[22] - Key non-GAAP measures are defined as follows: Adjusted operating income (loss) excludes intangible amortization, share-based compensation, cost savings initiatives, debt amendment costs, and unrealized warrant loss from operating income; Adjusted EBITDA is calculated by removing taxes, interest, D&A, and other specified non-cash or non-recurring items from net loss; Net debt is calculated as long-term debt (including current portion) minus cash and cash equivalents[23][24] Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP, showing Q2 2024 Adjusted EBITDA of $4.4 million and Net Debt of $198.7 million Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Description | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :--- | :--- | :--- | | Net loss attributable to Altisource | $(8,307) | $(18,850) | | Adjustments: | | | | Income tax provision | 706 | 639 | | Interest expense (net) | 9,582 | 9,589 | | Depreciation and amortization | 276 | 654 | | Intangible asset amortization expense | 1,270 | 1,280 | | Share-based compensation expense | 844 | 1,242 | | Other adjustments | 13 | 1,954 | | Adjusted EBITDA | $4,384 | $(3,491) | Reconciliation of GAAP to Non-GAAP Loss Per Share | Description | Three months ended June 30, 2024 | Three months ended June 30, 2023 | | :--- | :--- | :--- | | Diluted loss per share (GAAP) | $(0.29) | $(0.90) | | Adjustments (per share) | $0.08 | $0.22 | | Adjusted diluted loss per share (Non-GAAP) | $(0.21) | $(0.68) | Net Debt Calculation (in thousands) | Description | June 30, 2024 | | :--- | :--- | | Senior Secured Term Loans | $228,354 | | Less: Cash and cash equivalents | $(29,702) | | Net debt | $198,652 |