Altisource Portfolio Solutions S.A.(ASPS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 4% increase in total service revenue to $39.7 million compared to Q3 2024, driven by growth in various business segments [4][5] - GAAP earnings before income taxes improved by $6.8 million to a pre-tax loss of $1.7 million in Q3 2025, compared to a pre-tax loss of $8.5 million in the same quarter last year [5] - Operating cash flow improved by $2.3 million year-over-year, ending the quarter with $28.6 million in unrestricted cash [5] Business Line Data and Key Metrics Changes - The service earning real estate segment generated $31.2 million in revenue, a 3% increase from Q3 2024, with adjusted EBITDA of $10 million, reflecting a slight increase of $100,000 [6][8] - The origination segment saw service revenue rise by 9% to $8.5 million, while adjusted EBITDA remained flat at $900,000, with margins declining to 10.3% [9][10] - The corporate segment reported an adjusted EBITDA loss of $7.3 million, which was $100,000 higher than the previous year [11] Market Data and Key Metrics Changes - The residential mortgage default market showed 90-plus-day mortgage delinquency rates at 1.3%, with foreclosure starts increasing by 19% and foreclosure sales by 10% year-over-year [11][12] - The real estate market is perceived to be weakening, indicated by higher inventory and extended sales timelines [12] - Mortgage origination unit volume increased by 17% year-to-date, with refinance volume up by 103% [12] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and growing businesses with strong growth potential, such as renovation and Granite Construction Risk Management [5][6] - The strategy includes maintaining cost discipline while capitalizing on potential increases in loan delinquencies and foreclosure activities to drive revenue growth [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for continued growth, emphasizing the importance of new business wins and a strong sales pipeline [13] - The outlook suggests that if loan delinquencies and foreclosure activities increase, the company is well-positioned to benefit from stronger revenue and adjusted EBITDA growth [13] Other Important Information - The cooperative brokerage agreement with Rhythm expired on August 31, but the company continues to manage REO and receive referrals [9] - The company won four new customers for the Equator platform, with three already live, which is expected to generate additional revenue [15] Q&A Session Summary Question: Are the new customer wins for the Equator platform expected to translate to more inventory on Hubzu Marketplace? - Management confirmed that as new customers load assets onto the Equator platform, revenue generation is anticipated, and there is a history of successful cross-selling with Hubzu Marketplace [15]