Altisource Portfolio Solutions S.A.(ASPS) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Altisource reported strong Q2 2025 performance with growth in service revenue, Adjusted EBITDA, and GAAP earnings, alongside strategic business acceleration and key corporate actions CEO Commentary CEO William B. Shepro expressed satisfaction with Altisource's Q2 2025 performance, highlighting growth in Service revenue, Adjusted EBITDA, and GAAP earnings despite a historically low delinquency environment. The company's strategy focuses on businesses with tailwinds, cost discipline, and benefits from lower interest expense and tax reserve reversals - Altisource grew Service revenue, Adjusted EBITDA, pre- and post-tax GAAP earnings, and GAAP earnings per share compared to Q2 2024, attributed to focusing on businesses with tailwinds, cost discipline, lower interest expense, and reversal of certain India tax reserves[4] - Management is accelerating growth in businesses with tailwinds and is positioned to benefit from stronger revenue and Adjusted EBITDA growth in countercyclical businesses if loan delinquencies and foreclosures increase[4] Company, Corporate and Financial Highlights Altisource reported significant financial improvements in Q2 2025 compared to Q2 2024, including an 11% increase in Service revenue, a substantial rise in net income, and positive diluted EPS. The company also reversed $9.6 million in India tax reserves and completed a 1-for-8 reverse stock split Second Quarter 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :----- | :------ | :------ | :----- | | Service revenue | $40.8 million | $36.9 million | +11% | | Income (loss) before income taxes and non-controlling interests | $0.2 million | $(7.6) million | +$7.8 million | | Net income (loss) attributable to Altisource | $16.6 million | $(8.3) million | +$24.9 million | | Diluted earnings per share | $1.48 | $(2.33) | +$3.81 | | Adjusted EBITDA | $5.4 million | $4.4 million | +19% | | Adjusted EBITDA margin | 13.2% | 11.9% | +1.3 pp | - Recognized a $9.6 million reversal of its reserve for uncertain tax positions related to India operations and a $9.0 million reversal of associated accrued interest[5] - Effected a 1-for-8 reverse stock split on May 28, 2025, reducing total issued and outstanding shares from 88,129,766 to 11,016,220[5] Business and Industry Highlights Altisource's Business Segments improved Adjusted EBITDA to $12.9 million, representing 31.5% of Service revenue, driven by revenue growth. The company secured new sales wins totaling an estimated $4.4 million in potential annualized Service revenue and maintained a robust sales pipeline. Industry-wide, foreclosure initiations and sales increased year-over-year, while mortgage origination volume also rose, primarily due to refinancing Business Segments Adjusted EBITDA (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :----- | :------ | :------ | :----- | | Business Segments Adjusted EBITDA | $12.9 million | $11.6 million | +$1.3 million | | Business Segments Adjusted EBITDA as % of Service revenue | 31.5% | 31.3% | +0.2 pp | - Generated sales wins estimated to represent potential annualized Service revenue of $1.1 million for the Servicer and Real Estate segment and $3.3 million for the Origination segment[6] - Ended the quarter with a weighted average sales pipeline between $36 million and $44 million of estimated potential Service revenue[6] - Industrywide foreclosure initiations were 22% higher for the five months ended May 31, 2025, compared to the same period in 2024[6] - Industrywide mortgage origination volume increased by 14% for the six months ended June 30, 2025, compared to the same period in 2024, comprised of a 2% decline in purchase origination and a 58% increase in refinancing origination[6] Second Quarter 2025 Financial Results (GAAP) Altisource's Q2 2025 GAAP results show significant improvements in revenue, income, and EPS, driven by an income tax benefit and debt reclassification Overview of Financial Performance Altisource reported strong financial performance for Q2 2025 and year-to-date 2025 compared to the prior year, with significant increases in service revenue, income from operations, and net income attributable to Altisource, largely due to a substantial income tax benefit Second Quarter and Year-to-Date 2025 Financial Results (Unaudited, in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------------------------------------------ | :------ | :------ | :------------- | :------- | :------- | :------------- | | Service revenue | $40,787 | $36,863 | 11% | $81,682 | $73,754 | 11% | | Revenue | $43,288 | $39,121 | 11% | $86,727 | $78,590 | 10% | | Gross profit | $13,027 | $12,717 | 2% | $26,352 | $25,021 | 5% | | Income from operations | $3,231 | $2,083 | 55% | $6,476 | $1,535 | 322% | | Income (loss) before income taxes and non-controlling interests | $187 | $(7,566) | 102% | $(4,342) | $(16,001) | 73% | | Net income (loss) attributable to Altisource | $16,582 | $(8,307) | 300% | $11,238 | $(17,505) | 164% | | Diluted earnings (loss) per share | $1.48 | $(2.33) | 164% | $1.19 | $(4.94) | 124% | - Second quarter 2025 net income attributable to Altisource includes an $18.5 million income tax benefit related to the reversal of a portion of its reserves for uncertain India tax positions and related accrued interest[8] Consolidated Statements of Operations and Comprehensive Income (Loss) The consolidated statements show a significant turnaround in profitability for Q2 2025 and YTD 2025, primarily driven by a substantial income tax benefit and reduced interest expense. Service revenue grew by 11% in Q2 and YTD Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service revenue | $40,787 | $36,863 | $81,682 | $73,754 | | Total revenue | $43,288 | $39,121 | $86,727 | $78,590 | | Gross profit | $13,027 | $12,717 | $26,352 | $25,021 | | Income from operations | $3,231 | $2,083 | $6,476 | $1,535 | | Interest expense | $(2,615) | $(9,788) | $(7,553) | $(19,317) | | Income (loss) before income taxes and non-controlling interests | $187 | $(7,566) | $(4,342) | $(16,001) | | Income tax benefit (provision) | $16,471 | $(706) | $15,729 | $(1,428) | | Net income (loss) attributable to Altisource | $16,582 | $(8,307) | $11,238 | $(17,505) | | Diluted earnings (loss) per share | $1.48 | $(2.33) | $1.19 | $(4.94) | Consolidated Balance Sheets As of June 30, 2025, Altisource's balance sheet shows a slight decrease in total assets but a significant reduction in total current liabilities, primarily due to a reclassification of long-term debt. The company's deficit attributable to Altisource improved from $(157,376) thousand at December 31, 2024, to $(102,689) thousand Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |