Altisource Portfolio Solutions S.A.(ASPS) - 2025 Q1 - Quarterly Results

Financial Highlights and CEO Commentary Altisource reported strong Q1 2025 results with an 11% year-over-year increase in Service revenue to $40.9 million and a 14% rise in Adjusted EBITDA to $5.3 million, driven by renovation business growth, increased foreclosure starts, and new sales wins Q1 2025 Key Performance Indicators (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Service Revenue | $40.9 million | $36.9 million | +10.8% | | Adjusted EBITDA | $5.3 million | $4.6 million | +13.6% | | Adjusted EBITDA Margin | 12.9% | 12.6% | +0.3 p.p. | - The company executed a Debt Exchange Transaction in February 2025, exchanging $232.8 million of senior secured term loans for a new $160.0 million first lien loan and approximately 58.2 million common shares, expected to reduce annual cash and PIK interest by approximately $18 million[5][7] - Management is focusing on accelerating growth in businesses with tailwinds, believing the company is well-positioned to benefit from potential increases in loan delinquencies, foreclosure starts, and foreclosure sales[4] Industry Trends (Q1 2025 vs. Q1 2024) | Industry Metric | YoY Change | | :--- | :--- | | Foreclosure Initiations | +25% | | Foreclosure Sales | -2% | | Mortgage Origination Volume | -1% | - The company generated new sales wins estimated to represent $9.4 million in potential annualized Service revenue and ended the quarter with a weighted average sales pipeline of $34 million to $42 million[7] Detailed Financial Results Summary The company's financial performance in Q1 2025 showed significant improvement over Q1 2024, with total revenue growing by 10% to $43.4 million and a shift from an operating loss to an operating income of $3.2 million Q1 2025 Financial Results vs. Q1 2024 (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Service revenue | $40,895 | $36,891 | 11% | | Income (loss) from operations | $3,245 | $(548) | N/M | | Adjusted operating income | $5,199 | $2,958 | 76% | | Net loss attributable to Altisource | $(5,344) | $(9,198) | 42% | | Adjusted net loss attributable to Altisource | $(144) | $(5,598) | 97% | | Diluted loss per share | $(0.09) | $(0.33) | 73% | - The Q1 2025 loss before income taxes includes $3.0 million of expenses related to the Debt Exchange Transaction, which did not have a comparable amount in Q1 2024[10] Consolidated Financial Statements This section presents Altisource's consolidated financial statements, including statements of operations, balance sheets, and cash flows, providing a comprehensive overview of the company's financial position and performance Consolidated Statements of Operations and Comprehensive Loss For Q1 2025, Altisource reported total revenues of $43.4 million, an increase from Q1 2024, and a significant turnaround to income from operations of $3.2 million, contributing to a narrowed net loss Q1 2025 Statement of Operations Highlights (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $43,439 | $39,469 | | Gross profit | $13,325 | $12,304 | | Income (loss) from operations | $3,245 | $(548) | | Interest expense | $(4,938) | $(9,529) | | Net loss attributable to Altisource | $(5,344) | $(9,198) | | Diluted loss per share | $(0.09) | $(0.33) | Consolidated Balance Sheets As of March 31, 2025, Altisource's balance sheet reflects total assets of $145.7 million and a significantly improved liquidity profile due to debt reclassification, reducing the total deficit to $119.0 million Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $30,817 | $29,811 | | Total assets | $145,659 | $143,606 | | Current portion of long-term debt | $1,225 | $230,544 | | Long-term debt | $193,732 | $0 | | Total deficit | $(119,029) | $(156,711) | Consolidated Statements of Cash Flows In Q1 2025, the company used $5.0 million in cash from operating activities, with financing activities providing a net cash inflow of $6.0 million, resulting in a $1.0 million increase in cash and cash equivalents Cash Flow Summary for Three Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,972) | $(2,237) | | Net cash used in investing activities | $(25) | $0 | | Net cash provided by (used in) financing activities | $5,990 | $(699) | | Net increase (decrease) in cash | $993 | $(2,936) | - A significant non-cash financing activity in Q1 2025 was the issuance of $45.37 million in equity in exchange for debt reduction as part of the Debt Exchange Transaction[20] Non-GAAP Financial Measures This section details the non-GAAP financial measures used by management, such as Adjusted EBITDA, Adjusted operating income, and Adjusted net loss, providing reconciliations to GAAP figures for a clearer view of ongoing operational performance - Management uses non-GAAP measures to evaluate operating profitability and cash flow on a continuing basis, excluding non-cash expenses and significant non-operational items to better assess underlying business trends[22] Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss attributable to Altisource | $(5,344) | $(9,198) | | Income tax provision | 742 | 722 | | Interest expense (net) | 4,745 | 9,306 | | Depreciation and amortization | 185 | 296 | | Intangible asset amortization expense | 1,270 | 1,270 | | Share-based compensation expense | 1,094 | 2,213 | | Debt exchange transaction expenses | 2,980 | — | | Cost of cost savings initiatives and other | (410) | 23 | | Adjusted EBITDA | $5,262 | $4,632 | Reconciliation of Net Loss to Adjusted Net Loss (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss attributable to Altisource | $(5,344) | $(9,198) | | Intangible asset amortization expense, net of tax | 1,270 | 1,270 | | Share-based compensation expense, net of tax | 953 | 1,962 | | Debt exchange transaction expenses, net of tax | 2,980 | — | | Other adjustments, net of tax | 393 | 368 | | Adjusted net loss attributable to Altisource | $(144) | $(5,598) | Net Debt Calculation as of March 31, 2025 (in thousands) | Component | Amount | | :--- | :--- | | Senior Secured Term Loans | $160,000 | | Super senior term loan | $12,500 | | Less: Cash and cash equivalents | $(30,817) | | Net debt | $141,683 |