Altisource Portfolio Solutions SA
10/23/2025 | Press release | Distributed by Public on 10/23/2025 05:05
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's discussion and analysis of financial condition and results of operations ("MD&A") is a supplement to the accompanying interim condensed consolidated financial statements and is intended to provide a reader of our financial statements with a narrative from the perspective of management on our businesses, current developments, financial condition, results of operations and liquidity. Our MD&A should be read in conjunction with our Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission ("SEC") on March 31, 2025.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may relate to, among other things, future events or our future performance or financial condition. Words such as "anticipate," "intend," "expect," "may," "could," "should," "would," "plan," "estimate," "believe," "predict," "potential" or "continue" or the negative of these terms and comparable terminology are intended to identify such forward-looking statements. Such statements are based on expectations as to the future and are not statements of historical fact. Furthermore, forward-looking statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. The following are examples of such items and are not intended to be all inclusive:
•assumptions related to sources of liquidity and the adequacy of financial resources;
•assumptions about our ability to grow our business, execute our strategic initiatives and improve margins;
•assumptions about the variable nature of our cost structure that would allow us to realign our cost structure in line with revenue;
•assumptions regarding the impact of seasonality;
•estimates regarding our effective tax rate; and
•estimates regarding our reserves and valuations.
Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the risks discussed in the Risk Factors section of our Form 10-K for the year ended December 31, 2024, as supplemented or amended by the Risk Factors set forth in our subsequent Form 10-Q filings, including this Form 10-Q, such as:
•a reduction in the level of residential mortgage delinquencies, foreclosure initiations and foreclosure sales could negatively affect demand for some of our services;
•our ability to retain Onity Group Inc. (together with its subsidiaries, "Onity") (formerly Ocwen Financial Corporation, or "Ocwen") as a customer or our ability to receive the anticipated volume of referrals from Onity;
•the impact of the expiration of the Rithm Brokerage Agreement in August 2025 and our ability to mitigate its impact;
•our ability to comply with material agreements if a change of control is deemed to have occurred including, among other things, through the formation of a shareholder group, which may cause a termination event or event of default under certain of our agreements;
•our ability to execute on our strategic plan;
•our ability to retain our existing customers, expand relationships and attract new customers;
•our ability to comply with governmental regulations and policies and any changes in such regulations and policies;
•our ability to develop, launch and gain market acceptance of new solutions or recoup our investments in developing such new solutions;
•a reduction in the level of origination volume;
•technology incidents, data breaches and cybersecurity risks; and
•significant changes in tax regulations and interpretations in the countries, states and local jurisdictions in which we operate.
We caution you not to place undue reliance on these forward-looking statements which reflect our view only as of the date of this report. We are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any such statement is based.
OVERVIEW
Our Business
When we refer to "Altisource," the "Company," "we," "us" or "our" we mean Altisource Portfolio Solutions S.A., a Luxembourg société anonyme, or public limited liability company, and its subsidiaries.
We are an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve.
We conduct our operations through two reportable segments: Servicer and Real Estate andOrigination. In addition, we reportCorporate and Othersseparately.
The Servicer and Real Estate segment provides loan servicers and real estate investors with solutions and technologies that span the mortgage and real estate lifecycle. Within the Servicer and Real Estate segment we provide:
Solutions
Our Solutions business includes property preservation and inspection services, foreclosure trustee services, residential real estate renovation services, residential and commercial construction inspection and risk mitigation services, title insurance (as an agent) and settlement services, and real estate valuation services.
Marketplace
Our Marketplace business includes the Hubzu®online real estate auction platform, real estate brokerage and asset management services.
Technology and software-as-a-service ("SaaS") Products
Our Technology and SaaS Products business includes Equator®(a SaaS-based technology to manage real estate owned ("REO") and investor homes, short sales, foreclosure, bankruptcy and eviction processes), Vendorly Invoice (a vendor invoicing and payment system), RentRange®(a single and multi-family rental data, analytics and rent-based valuation solution), REALSynergy®(a commercial loan servicing platform), and NestRangeTM(a single-family automated valuation model and analytics solution).
The Origination segment provides originators with solutions and technologies that span the mortgage origination lifecycle. Within the Origination segment we provide:
Lenders One
Our Lenders One business includes management services provided to the Best Partners Mortgage Cooperative, Inc., doing business as Lenders One®("Lenders One"), and certain loan manufacturing and capital markets solutions provided to the members of the Lenders One cooperative.
Solutions
Our Solutions business includes loan fulfillment services, real estate valuation services, title insurance (as an agent) and settlement services, and insurance services.
Technology and SaaS Products
Our Technology and SaaS Products business includes Vendorly Monitor (a vendor management platform), Lenders One Loan Automation ("LOLA") (a marketplace to order services and a tool to automate components of the loan manufacturing process), TrelixAITM(technology to manage the workflow and automate components of the loan fulfillment and pre and post-close quality control), and ADMS (a document management and data analytics delivery platform).
Corporate and Othersincludes interest expense and costs related to corporate functions including executive, infrastructure and certain technology groups, finance, law, compliance, human resources, vendor management, facilities, risk management and eliminations between reportable segments.
We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. In evaluating our performance, we focus on service revenue. Service revenue consists of amounts attributable to our fee-based services. Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin. Reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services that we pass directly on to our customers without a markup. Non-controlling interests represent the earnings of Lenders One. Lenders One is a mortgage cooperative managed, but not owned, by Altisource. Lenders One's earnings are included in revenue and reduced from net (loss) income to arrive at net (loss) income attributable to Altisource.
Strategy and Core Businesses
We are focused on becoming the premier provider of mortgage and real estate marketplaces and related technology enabled solutions to a broad and diversified customer base of residential real estate and loan investors, servicers, and originators. The real estate and mortgage marketplaces represent very large markets, and we believe our scale and suite of offerings provide us with competitive advantages that could support our growth. As we navigate the current state of the economy, interest rate environment, housing supply, and other macro-economic trends, we continue to evaluate our strategy and core businesses and seek to position our businesses to provide long term value to our customers and shareholders.
Each of our business segments provides Altisource the potential to grow and diversify our customer and revenue base. We believe these business segments address very large markets and directly leverage our core competencies and distinct competitive advantages. Our business segments and strategic initiatives follow:
Servicer and Real Estate:
Through our offerings that support residential real estate and loan investors and forward and reverse servicers, we provide a suite of loan default and real estate investor solutions and technologies intended to meet their growing and evolving needs. We are focused on gaining market share on existing solutions and launching new solutions with our existing customer base and attracting new customers to our offerings. We have a customer base that includes government-sponsored enterprises ("GSEs"), asset managers, and several large bank and non-bank servicers including Onity and Rithm. We believe we are one of only a few providers with a broad suite of solutions, nationwide coverage and scalability. Further, we believe we are well positioned to gain market share from existing and new customers if loan delinquency rates and foreclosure initiations and sales rise, or if they consolidate to larger, full-service providers or outsource services that have historically been performed in-house.
Origination:
Through our offerings that support mortgage loan originators (or other similar mortgage market participants), we provide a suite of solutions and technologies to meet the evolving and growing needs of lenders, mortgage purchasers and securitizers. We are focused on growing business from our existing customer base, attracting new customers to our offerings and developing new offerings. We have a customer base that includes the Lenders One cooperative members (Lenders One is a residential mortgage cooperative managed by Altisource), which includes independent mortgage bankers, credit unions, and banks, as well as bank and non-bank loan originators. We believe our suite of services, technologies and unique access to the members of the Lenders One mortgage cooperative position us to grow our relationships with our existing customer base by growing membership of Lenders One, increasing member adoption of existing solutions and developing and cross-selling new offerings. Further, we believe we are well positioned to gain market share from existing and new customers as customers and prospects look to Lenders One to help them improve their profitability and better compete.
Corporate and Othersincludes interest expense and costs related to corporate functions including executive, infrastructure and certain technology groups, finance, law, compliance, human resources, vendor management, facilities, risk management and eliminations between reportable segments.
Default Related Mortgage Market
Serious delinquency rates, foreclosure initiations and foreclosure sales are low relative to historical levels but have been increasing for the nine months ended September 30, 2025 relative to the same period in 2024. Additionally, foreclosure initiations and sales as a percentage of seriously delinquent loans for 2020 through 2025 are significantly lower than prior years. During 2020 and 2021, these percentages were significantly impacted by COVID-19 borrower relief measures, including foreclosure moratoriums and forbearance programs. These measures largely expired at the end of 2021. Beginning in 2022, we believe these percentages were impacted by servicer practices, home price appreciation, the interest rate environment, housing supply, the general state of the economy, and other factors. In 2021 and 2022, a low interest environment drove a high volume of refinance transactions and home prices appreciated significantly. Although interest rates began to increase in 2022, home prices remained high. With greater home equity from home price appreciation, we believe troubled borrowers have more
options to avoid foreclosure. Foreclosure initiations and sales increased during the nine months ended September 30, 2025 compared to the same period in 2024. However, both measures remain below pre-pandemic levels.
While we cannot predict whether the default market will return to a pre-pandemic operating environment, we believe the demand for our Default business is likely to grow. We estimate that in today's environment it typically takes on average two years to convert foreclosure initiations to foreclosure sales and six months to market and sell the REO. The foreclosure timelines could vary significantly based upon, for example, the state where the property is located, whether the foreclosure is contested, amount of borrower equity in the home and available borrower relief programs. The REO sale timelines could also vary significantly based upon, for example, mortgage interest rates, the local real estate market, whether the home is located in a redemption state and whether the home is occupied post foreclosure.
During 2024 and the nine months ended September 30, 2025, to address the close to historically low delinquency rates, we worked to (1) reduce our cost structure, (2) maintain the infrastructure to deliver default related services for our customer base and support the anticipated increase in demand should delinquency rates, foreclosure initiations and/or foreclosure sales rise, (3) launch a residential renovation business to renovate single family homes and launch a commercial real estate auction business on Hubzu, our online auction platform, and (4) launch new solutions and increase customer adoption of our existing solutions to accelerate the growth of our Origination segment.
Share Repurchase Program
On May 16, 2023, our shareholders approved the renewal and amendment of the share repurchase program previously approved by our shareholders on May 15, 2018. Under the program, we are authorized to purchase up to 0.4 million shares of our common stock, based on a limit of 15% of the outstanding shares of common stock on the date of approval, at a minimum price of $8.00 per share and a maximum price of $200.00 per share, until May 16, 2028. As of September 30, 2025, approximately 0.4 million shares of common stock remain available for repurchase under the program. In connection with the Share Consolidation, the Company purchased 204 shares of common stock during the nine months ended September 30, 2025. There were no other purchases of shares of common stock during the nine months ended September 30, 2025 and 2024. Under the new first lien loan facility (the "New Facility") and the super senior credit facility (the "Super Senior Facility"), we are not permitted to repurchase shares except for limited circumstances.
Onity Related Matters
During the three and nine months ended September 30, 2025, Onity was our largest customer, accounting for 42% and 43% of our total revenue, respectively. Additionally, 5% of our revenue for the nine months ended September 30, 2025 (4% of our revenue for the third quarter of 2025) was earned on the loan portfolios serviced by Onity, when a party other than Onity or the mortgage servicing rights ("MSRs") owner selected Altisource as the service provider.
Onity has disclosed that it is subject to a number of ongoing federal and state regulatory examinations, consent orders, inquiries, subpoenas, civil investigative demands, requests for information and other actions and is subject to pending and threatened legal proceedings, some of which include claims against Onity for substantial monetary damages. Previous regulatory actions against Onity have subjected Onity to independent oversight of its operations and placed certain restrictions on its ability to acquire servicing rights or proceed with default-related actions on the loans it services. Existing or future similar matters could result in adverse regulatory or other actions against Onity. In addition to the above, Onity may become subject to future adverse regulatory or other actions.
Onity has disclosed that Rithm is one of its largest servicing clients. As of June 30, 2025, Onity reported that approximately 11% of loans serviced and subserviced by Onity (measured in UPB) and approximately 59% of all delinquent loans that Onity services were related to Rithm MSRs or rights to MSRs.
The existence or outcome of Onity regulatory matters or the termination of Onity's sub-servicing agreements with Rithm or other significant Onity clients may have significant adverse effects on Onity's business. For example, Onity may be required to alter the way it conducts business, including the parties it contracts with for services, it may be required to seek changes to its existing pricing structure with us, it may lose its non-GSE servicing rights or subservicing arrangements or may lose one or more of its state servicing or origination licenses. Additional regulatory actions or adverse financial developments may impose additional restrictions on or require changes in Onity's business that could require it to sell assets or change its business operations. Any or all of these effects and others could result in our eventual loss of Onity as a customer or a reduction in the number and/or volume of services it purchases from us or the loss of other customers.
If any of the following events occurred, Altisource's revenue could be significantly reduced and our results of operations could be materially adversely affected, including from the possible impairment or write-off of goodwill, intangible assets, property and equipment, other assets and accounts receivable:
•Altisource loses Onity as a customer or there is a significant reduction in the volume of services it purchases from us
•Onity loses, sells or transfers a significant portion of its GSE or Federal Housing Administration servicing rights or subservicing arrangements or remaining other servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider
•The contractual relationship between Onity and Rithm changes significantly, including Onity's sub-servicing arrangement with Rithm expiring without renewal, and this change results in a change in our status as a provider of services related to the Subject MSRs
•Onity loses state servicing licenses in states with a significant number of loans in Onity's servicing portfolio
•Onity is subject to stays, moratoriums, suspensions or other restrictions that limit or delay default-related actions on the loans it services
•The contractual relationship between Onity and Altisource changes significantly or there are significant changes to our pricing to Onity for services from which we generate material revenue
•Altisource otherwise fails to be retained as a service provider and/or there is a reduction in referral volumes.
The foregoing list is not intended to be exhaustive. Management cannot predict whether any of these events or other events will occur or the amount of any impact they may have on Altisource.
Factors Affecting Comparability
The following items impact the comparability of our results:
•Industrywide foreclosure initiations were 19% higher for the eight months ended August 31, 2025 compared to the same period in 2024 (and 21% lower than the same pre-COVID-19 period in 2019)
•Industrywide foreclosure sales were 10% higher for the eight months ended August 31, 2025 compared to the same period in 2024 (and 49% lower than the same pre-COVID-19 period in 2019)
•Industrywide mortgage origination volume increased by 17% for the nine months ended September 30, 2025 compared to the same period in 2024, comprised of a 4% decline in purchase origination and a 103% increase in refinancing origination
•On February 19, 2025, Altisource Portfolio Solutions S.A. and Altisource S.à r.l. (the "Borrower") entered into agreements with 100% of the lenders under the SSTL (the "Lenders"). Under these agreements, the Lenders exchanged the senior secured term loans ("SSTL") with an outstanding balance of $232.8 million for a $160.0 million New Facility and 7.3 million shares of common stock (the "Debt Exchange Shares") (collectively, the "Debt Exchange Transaction"). The New Facility is comprised of a $110.0 million interest-bearing loan (the "New Debt") and a $50.0 million non-interest-bearing exit fee. In connection with the Debt Exchange Transaction, the Company expensed $3.6 million relating to fees paid to advisors and others
•The weighted average interest rate on the Company's long-term debt was 12.35% for the nine months ended September 30, 2025 compared to 14.18% for the same period in 2024
•The Company recognized an income tax benefit (provision) of $15.1 million and $(2.2) million for the nine months ended September 30, 2025 and 2024, respectively ($(0.7) million and $(0.8) million for the third quarter of 2025 and 2024, respectively). The income tax benefit for the nine months ended September 30, 2025 was driven primarily by the reversal of liabilities for uncertain tax positions. The income tax (provision) benefit for the three and nine months ended September 30, 2025 was also driven by income tax expense on transfer pricing income from India and the United States and no tax benefit on the pretax loss from our Luxembourg operating company. For further information, see Note 19.
CONSOLIDATED RESULTS OF OPERATIONS
Summary Results
The following is a discussion of our consolidated results of operations for the periods indicated. For a more detailed discussion of the factors that affected the results of our business segments in these periods, see "Segment Results of Operations" below.
The following table sets forth information on our consolidated results of operations:
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Three months ended September 30,
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Nine months ended September 30,
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| (in thousands, except per share data) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Service revenue: | ||||||||||||||||||||||||||||||||||||||
| Servicer and Real Estate | $ | 31,175 | $ | 30,389 | 3 | $ | 95,992 | $ | 88,495 | 8 | ||||||||||||||||||||||||||||
| Origination | 8,491 | 7,761 | 9 | 25,356 | 23,409 | 8 | ||||||||||||||||||||||||||||||||
| Total service revenue | 39,666 | 38,150 | 4 | 121,348 | 111,904 | 8 | ||||||||||||||||||||||||||||||||
| Reimbursable expenses | 2,171 | 2,321 | (6) | 7,067 | 7,081 | - | ||||||||||||||||||||||||||||||||
| Non-controlling interests | 71 | 60 | 18 | 220 | 136 | 62 | ||||||||||||||||||||||||||||||||
| Total revenue | 41,908 | 40,531 | 3 | 128,635 | 119,121 | 8 | ||||||||||||||||||||||||||||||||
| Cost of revenue | 30,561 | 28,461 | 7 | 90,936 | 82,030 | 11 | ||||||||||||||||||||||||||||||||
| Gross profit | 11,347 | 12,070 | (6) | 37,699 | 37,091 | 2 | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 10,826 | 10,965 | (1) | 30,702 | 34,451 | (11) | ||||||||||||||||||||||||||||||||
| Income from operations | 521 | 1,105 | (53) | 6,997 | 2,640 | 165 | ||||||||||||||||||||||||||||||||
| Other income (expense), net: | ||||||||||||||||||||||||||||||||||||||
| Interest expense | (2,368) | (9,960) | (76) | (9,921) | (29,277) | (66) | ||||||||||||||||||||||||||||||||
| Debt exchange transaction expenses | (194) | - | N/M | (3,646) | - | N/M | ||||||||||||||||||||||||||||||||
| Other income (expense), net | 376 | 362 | 4 | 563 | 2,143 | (74) | ||||||||||||||||||||||||||||||||
| Total other income (expense), net | (2,186) | (9,598) | (77) | (13,004) | (27,134) | (52) | ||||||||||||||||||||||||||||||||
| Loss before income taxes and non-controlling interests | (1,665) | (8,493) | 80 | (6,007) | (24,494) | 75 | ||||||||||||||||||||||||||||||||
| Income tax (provision) benefit | (660) | (809) | 18 | 15,069 | (2,237) | N/M | ||||||||||||||||||||||||||||||||
| Net (loss) income | (2,325) | (9,302) | 75 | 9,062 | (26,731) | 134 | ||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | (71) | (60) | (18) | (220) | (136) | (62) | ||||||||||||||||||||||||||||||||
| Net (loss) income attributable to Altisource | $ | (2,396) | $ | (9,362) | 74 | $ | 8,842 | $ | (26,867) | 133 | ||||||||||||||||||||||||||||
| Margins: | ||||||||||||||||||||||||||||||||||||||
| Gross profit / service revenue | 29 | % | 32 | % | 31 | % | 33 | % | ||||||||||||||||||||||||||||||
| Income from operations / service revenue | 1 | % | 3 | % | 6 | % | 2 | % | ||||||||||||||||||||||||||||||
| (Loss) earnings per share: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.22) | $ | (2.61) | 92 | $ | 0.91 | $ | (7.55) | 112 | ||||||||||||||||||||||||||||
| Diluted | $ | (0.22) | $ | (2.61) | 92 | $ | 0.81 | $ | (7.55) | 111 | ||||||||||||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||||||||
| Basic | 10,988 | 3,584 | 207 | 9,755 | 3,559 | 174 | ||||||||||||||||||||||||||||||||
| Diluted | 10,988 | 3,584 | 207 | 10,890 | 3,559 | 206 | ||||||||||||||||||||||||||||||||
_____________________________________
N/M - not meaningful.
Revenue
We recognized service revenue of $121.3 million for the nine months ended September 30, 2025, an 8% increase compared to the nine months ended September 30, 2024 ($39.7 million for the third quarter of 2025, a 4% increase compared to the third quarter of 2024). The increase in service revenue for the three and nine months ended September 30, 2025 was primarily driven by higher revenue in both segments. Revenue was higher in the Servicer and Real Estate segment from growth in our Property Renovation Services, Foreclosure Trustee, Granite and Field Services businesses in the Solutions business, partially offset by fewer home sales in the Marketplace business and lower professional services revenue in the Equator business within the Technology and SaaS products. Revenue was higher in the Origination segment from growth in reseller products in the Lenders One business and, for the nine months ended September 30, 2025, higher volumes in the loan fulfillment services business within the Solutions business.
We recognized reimbursable expenses revenue of $7.1 million for the nine months ended September 30, 2025, a less than 1% decrease compared to the nine months ended September 30, 2024 ($2.2 million for the third quarter of 2025, a 6% decrease compared to the third quarter of 2024). The decrease in reimbursable expenses for the three and nine months ended September 30, 2025 was primarily driven by fewer asset resolution and asset management activities in the Marketplace business and a decrease in property preservation services in our Field Services business in the Servicer and Real Estate Solutions business partially offset by growth in the Foreclosure Trustee business in the Solutions business within the Servicer and Real Estate segment. For the nine months ended September 30, 2025, the decrease in reimbursable expenses was also from lower REO title related expenses in our Title business in the Solutions business.
Certain of our revenues can be impacted by seasonality. More specifically, revenues from property sales, loan originations and certain property preservation services in field services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months. However, as a result of the current default market, home price appreciation and higher mortgage interest rates, the seasonal impact to revenue may not follow historical patterns.
Cost of Revenue and Gross Profit
Cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service, operations and technology roles, fees paid to external providers related to the provision of services, reimbursable expenses, technology and telecommunications costs as well as depreciation and amortization of operating assets.
Cost of revenue consists of the following:
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Three months ended September 30,
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Nine months ended September 30,
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| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Outside fees and services | $ | 17,261 | $ | 15,534 | 11 | $ | 51,757 | $ | 44,301 | 17 | ||||||||||||||||||||||||||||
| Compensation and benefits | 8,112 | 7,457 | 9 | 22,971 | 21,913 | 5 | ||||||||||||||||||||||||||||||||
| Technology and telecommunications | 2,945 | 3,026 | (3) | 8,830 | 8,256 | 7 | ||||||||||||||||||||||||||||||||
| Reimbursable expenses | 2,171 | 2,321 | (6) | 7,067 | 7,081 | - | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 72 | 123 | (41) | 311 | 479 | (35) | ||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 30,561 | $ | 28,461 | 7 | $ | 90,936 | $ | 82,030 | 11 | ||||||||||||||||||||||||||||
We recognized cost of revenue of $90.9 million for the nine months ended September 30, 2025, an 11% increase compared to the nine months ended September 30, 2024 ($30.6 million for the third quarter of 2025, a 7% increase compared to the third quarter of 2024). Outside fees and services for the three and nine months ended September 30, 2025 increased primarily from service revenue growth in the Property Renovations Services, Foreclosure Trustee and Field Services businesses within the Servicer and Real Estate segment and service revenue growth in the Lenders One business in the Origination segment. Compensation and benefits for the three and nine months ended September 30, 2025 increased primarily due to growth in the Property Renovation Services business and higher annual incentive compensation accruals. Technology and telecommunications for the nine months ended September 30, 2025 increased primarily from a benefit recognized in 2024. Depreciation and amortization was lower for the three and nine months ended September 30, 2025 from the completion of the depreciation periods of certain premises and equipment with only modest additions. In addition, changes in reimbursable expenses for the three and nine months ended September 30, 2024 are consistent with the changes in reimbursable expenses revenue discussed in the revenue section above.
Gross profit increased to $37.7 million, representing 31% of service revenue, for the nine months ended September 30, 2025 compared to $37.1 million, representing 33% of service revenue, for the nine months ended September 30, 2024 (decreased to $11.3 million, representing 29% of service revenue, for the third quarter of 2025, compared to $12.1 million, representing 32% of service revenue, for the third quarter of 2024). Gross profit as a percentage of service revenue for the nine months ended September 30, 2025 decreased compared to the three and nine months ended September 30, 2024 primarily due to a change in revenue mix from greater growth in the lower margin Property Renovations Services business and Lenders One businesses than in the higher margin Foreclosure Trustee business and Hubzu business. Our margins can vary substantially depending upon the service revenue mix.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses include payroll for personnel employed in executive, sales and marketing, finance, technology, law, compliance, audit, human resources, vendor management, facilities and risk management roles. This category also includes professional services fees, occupancy costs, marketing costs, depreciation and amortization of non-operating assets and other expenses.
SG&A expenses consist of the following:
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Three months ended September 30,
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Nine months ended September 30,
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| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Compensation and benefits | $ | 5,206 | $ | 4,413 | 18 | $ | 15,111 | $ | 14,765 | 2 | ||||||||||||||||||||||||||||
| Professional services | 1,581 | 2,547 | (38) | 4,009 | 7,160 | (44) | ||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 1,270 | 1,270 | - | 3,810 | 3,810 | - | ||||||||||||||||||||||||||||||||
| Occupancy related costs | 875 | 801 | 9 | 2,541 | 2,776 | (8) | ||||||||||||||||||||||||||||||||
| Marketing costs | 593 | 489 | 21 | 1,719 | 1,536 | 12 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 8 | 99 | (92) | 132 | 315 | (58) | ||||||||||||||||||||||||||||||||
| Other | 1,293 | 1,346 | (4) | 3,380 | 4,089 | (17) | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 10,826 | $ | 10,965 | (1) | $ | 30,702 | $ | 34,451 | (11) | ||||||||||||||||||||||||||||
SG&A expenses for the nine months ended September 30, 2025 of $30.7 million decreased by 11% compared to the nine months ended September 30, 2024 ($10.8 million for the third quarter of 2025, a 1% decrease compared to the third quarter of 2024). The decrease in SG&A for the three and nine months ended September 30, 2025 was primarily driven by lower professional services and other SG&A expenses, partially offset by higher compensation and benefits. Professional services for the three and nine months ended September 30, 2025 decreased primarily due to lower costs related to legacy indemnification accruals. Other SG&A expenses for the three and nine months ended September 30, 2025 decreased primarily due to lower bad debt expense. Compensation and benefits for the nine months ended September 30, 2025 increased primarily from higher annual incentive compensation accruals, partially offset by lower share based compensation. Compensation and benefits for the three months ended September 30, 2025 increased from higher annual incentive compensation accruals and higher share based compensation.
Income from operations
Income from operations for the nine months ended September 30, 2025 was $7.0 million, representing 6% of service revenue, compared to $2.6 million, representing 2% of service revenue, for the nine months ended September 30, 2024 (decreased to $0.5 million, representing 1% of service revenue, for the third quarter of 2025, compared to $1.1 million representing 3% of service revenue for the third quarter of 2024). Income from operations as a percentage of service revenue improved for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily as a result of lower SG&A expenses as a percentage of service revenue, partially offset by lower gross profit margins. Income from operations as a percentage of service revenue decreased for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily from lower gross profit margins.
Other Income (Expense), net
Other income (expense), net principally includes interest expense and other non-operating gains and losses.
Other income (expense), net was $(13.0) million for the nine months ended September 30, 2025 compared to $(27.1) million for the nine months ended September 30, 2024 ($(2.2) million for the third quarter of 2025 and $(9.6) million for the third
quarter of 2024). The change for the three and nine months ended September 30, 2025 was primarily driven by lower interest expense, partially offset by higher debt exchange transaction expenses. The lower interest expense was driven by the decrease in outstanding debt and a lower interest rate from the February 19, 2025 Debt Exchange Transaction.
Income Tax Provision
We recognized an income tax benefit (provision) of $15.1 million and $(2.2) million for the nine months ended September 30, 2025 and 2024, respectively ($(0.7) million and $(0.8) million for the third quarter of 2025 and 2024, respectively). The income tax (provision) benefit for the nine months ended September 30, 2025 was driven primarily by the reversal of liabilities for uncertain tax positions. The income tax (provision) benefit for the three and nine months ended September 30, 2025 was also driven by income tax expense on transfer pricing income from India and the United States and no tax benefit on the pretax loss from our Luxembourg operating company. For further information, see Note 19.
SEGMENT RESULTS OF OPERATIONS
The following section provides a discussion of pretax results of operations of our business segments. Transactions between segments are accounted for as third party arrangements for purposes of presenting segment results of operations.
Financial information for our segments was as follows:
| Three months ended September 30, 2025 | ||||||||||||||||||||||||||
| (in thousands) | Servicer and Real Estate | Origination | Corporate and Others | Consolidated Altisource | ||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Service revenue | $ | 31,175 | $ | 8,491 | $ | - | $ | 39,666 | ||||||||||||||||||
| Reimbursable expenses | 2,067 | 104 | - | 2,171 | ||||||||||||||||||||||
| Non-controlling interests | - | 71 | - | 71 | ||||||||||||||||||||||
| 33,242 | 8,666 | - | 41,908 | |||||||||||||||||||||||
| Cost of revenue | 21,977 | 6,984 | 1,600 | 30,561 | ||||||||||||||||||||||
| Gross profit (loss) | 11,265 | 1,682 | (1,600) | 11,347 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 2,344 | 2,040 | 6,442 | 10,826 | ||||||||||||||||||||||
| Income (loss) from operations | 8,921 | (358) | (8,042) | 521 | ||||||||||||||||||||||
| Total other income (expense), net | 53 | - | (2,239) | (2,186) | ||||||||||||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 8,974 | $ | (358) | $ | (10,281) | $ | (1,665) | ||||||||||||||||||
| Margins: | ||||||||||||||||||||||||||
| Gross profit (loss) / service revenue | 36 | % | 20 | % | N/M | 29 | % | |||||||||||||||||||
| Income (loss) from operations / service revenue | 29 | % | (4) | % | N/M | 1 | % | |||||||||||||||||||
N/M - not meaningful.
| Three months ended September 30, 2024 | ||||||||||||||||||||||||||
| (in thousands) | Servicer and Real Estate | Origination | Corporate and Others | Consolidated Altisource | ||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Service revenue | $ | 30,389 | $ | 7,761 | $ | - | $ | 38,150 | ||||||||||||||||||
| Reimbursable expenses | 2,160 | 161 | - | 2,321 | ||||||||||||||||||||||
| Non-controlling interests | - | 60 | - | 60 | ||||||||||||||||||||||
| 32,549 | 7,982 | - | 40,531 | |||||||||||||||||||||||
| Cost of revenue | 20,509 | 6,312 | 1,640 | 28,461 | ||||||||||||||||||||||
| Gross profit (loss) | 12,040 | 1,670 | (1,640) | 12,070 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 3,194 | 1,325 | 6,446 | 10,965 | ||||||||||||||||||||||
| Income (loss) from operations | 8,846 | 345 | (8,086) | 1,105 | ||||||||||||||||||||||
| Total other income (expense), net | 62 | - | (9,660) | (9,598) | ||||||||||||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 8,908 | $ | 345 | $ | (17,746) | $ | (8,493) | ||||||||||||||||||
| Margins: | ||||||||||||||||||||||||||
| Gross profit (loss) / service revenue | 40 | % | 22 | % | N/M | 32 | % | |||||||||||||||||||
| Income (loss) from operations / service revenue | 29 | % | 4 | % | N/M | 3 | % | |||||||||||||||||||
N/M - not meaningful.
|
Nine months ended September 30, 2025
|
||||||||||||||||||||||||||
| (in thousands) | Servicer and Real Estate | Origination | Corporate and Others | Consolidated Altisource | ||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Service revenue | $ | 95,992 | $ | 25,356 | $ | - | $ | 121,348 | ||||||||||||||||||
| Reimbursable expenses | 6,605 | 462 | - | 7,067 | ||||||||||||||||||||||
| Non-controlling interests | - | 220 | - | 220 | ||||||||||||||||||||||
| 102,597 | 26,038 | - | 128,635 | |||||||||||||||||||||||
| Cost of revenue | 65,724 | 20,453 | 4,759 | 90,936 | ||||||||||||||||||||||
| Gross profit (loss) | 36,873 | 5,585 | (4,759) | 37,699 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 5,707 | 5,463 | 19,532 | 30,702 | ||||||||||||||||||||||
| Income (loss) from operations | 31,166 | 122 | (24,291) | 6,997 | ||||||||||||||||||||||
| Total other income (expense), net | 8 | - | (13,012) | (13,004) | ||||||||||||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 31,174 | $ | 122 | $ | (37,303) | $ | (6,007) | ||||||||||||||||||
| Margins: | ||||||||||||||||||||||||||
| Gross profit (loss) / service revenue | 38 | % | 22 | % | N/M | 31 | % | |||||||||||||||||||
| Income (loss) from operations / service revenue | 32 | % | - | % | N/M | 6 | % | |||||||||||||||||||
_____________________________________
N/M - not meaningful.
|
Nine months ended September 30, 2024
|
||||||||||||||||||||||||||
| (in thousands) | Servicer and Real Estate | Origination | Corporate and Others | Consolidated Altisource | ||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Service revenue | $ | 88,495 | $ | 23,409 | $ | - | $ | 111,904 | ||||||||||||||||||
| Reimbursable expenses | 6,680 | 401 | - | 7,081 | ||||||||||||||||||||||
| Non-controlling interests | - | 136 | - | 136 | ||||||||||||||||||||||
| 95,175 | 23,946 | - | 119,121 | |||||||||||||||||||||||
| Cost of revenue | 58,357 | 18,801 | 4,872 | 82,030 | ||||||||||||||||||||||
| Gross profit (loss) | 36,818 | 5,145 | (4,872) | 37,091 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 8,687 | 5,030 | 20,734 | 34,451 | ||||||||||||||||||||||
| Income (loss) from operations | 28,131 | 115 | (25,606) | 2,640 | ||||||||||||||||||||||
| Total other income (expense), net | 61 | - | (27,195) | (27,134) | ||||||||||||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 28,192 | $ | 115 | $ | (52,801) | $ | (24,494) | ||||||||||||||||||
| Margins: | ||||||||||||||||||||||||||
| Gross profit (loss) / service revenue | 42 | % | 22 | % | N/M | 33 | % | |||||||||||||||||||
| Income (loss) from operations / service revenue | 32 | % | - | % | N/M | 2 | % | |||||||||||||||||||
_____________________________________
N/M - not meaningful.
Servicer and Real Estate
Revenue
Revenue by line of business was as follows:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Service revenue: | ||||||||||||||||||||||||||||||||||||||
| Solutions | $ | 23,186 | $ | 21,090 | 10 | $ | 70,300 | $ | 59,546 | 18 | ||||||||||||||||||||||||||||
| Marketplace | 5,691 | 6,406 | (11) | 18,708 | 20,915 | (11) | ||||||||||||||||||||||||||||||||
| Technology and SaaS Products | 2,298 | 2,893 | (21) | 6,984 | 8,034 | (13) | ||||||||||||||||||||||||||||||||
| Total service revenue | 31,175 | 30,389 | 3 | 95,992 | 88,495 | 8 | ||||||||||||||||||||||||||||||||
| Reimbursable expenses: | ||||||||||||||||||||||||||||||||||||||
| Solutions | 1,159 | 1,085 | 7 | 3,454 | 3,308 | 4 | ||||||||||||||||||||||||||||||||
| Marketplace | 908 | 1,075 | (16) | 3,151 | 3,372 | (7) | ||||||||||||||||||||||||||||||||
| Total reimbursable expenses | 2,067 | 2,160 | (4) | 6,605 | 6,680 | (1) | ||||||||||||||||||||||||||||||||
| Total revenue | $ | 33,242 | $ | 32,549 | 2 | $ | 102,597 | $ | 95,175 | 8 | ||||||||||||||||||||||||||||
We recognized service revenue of $96.0 million for the nine months ended September 30, 2025, an 8% increase compared to the nine months ended September 30, 2024 ($31.2 million for the third quarter of 2025, a 3% increase compared to the third quarter of 2024). We also recognized reimbursable expenses revenue of $6.6 million for the nine months ended September 30, 2025, a 1% decrease compared to the nine months ended September 30, 2024 ($2.1 million for the third quarter of 2025, a 4% decrease compared to the third quarter of 2024). The increase in service revenue for the three and nine months ended September 30, 2025 was driven by growth in our Property Renovation Services, Foreclosure Trustee businesses, Granite and Field Services businesses in the Solutions business, partially offset by fewer home sales in the Marketplace business and lower professional services revenue in the Equator business within the Technology and SaaS products business. The decrease in reimbursable expenses for the three and nine months ended September 30, 2025 was primarily driven by fewer asset resolution and asset management activities in the Marketplace business and a decrease in property preservation services in our Field Services business partially offset by growth in the Foreclosure Trustee business in the Solutions business. For the nine months ended September 30, 2025, the decrease in reimbursable expenses was also from lower REO title related expenses in our Title business in the Solutions business.
Certain of our Servicer and Real Estate businesses are impacted by seasonality. Revenues from property sales and certain property preservation services are generally lowest during the fall and winter months and highest during the spring and summer months. However, as a result of the current default market, home price appreciation and higher mortgage interest rates, the seasonal impact to revenue may not follow historical patterns.
Cost of Revenue and Gross Profit
Cost of revenue consisted of the following:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Outside fees and services | $ | 11,686 | $ | 10,778 | 8 | $ | 35,575 | $ | 29,662 | 20 | ||||||||||||||||||||||||||||
| Compensation and benefits | 6,276 | 5,590 | 12 | 17,623 | 16,569 | 6 | ||||||||||||||||||||||||||||||||
| Reimbursable expenses | 2,067 | 2,159 | (4) | 6,605 | 6,679 | (1) | ||||||||||||||||||||||||||||||||
| Technology and telecommunications | 1,898 | 1,905 | - | 5,724 | 5,200 | 10 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 50 | 77 | (35) | 197 | 247 | (20) | ||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 21,977 | $ | 20,509 | 7 | $ | 65,724 | $ | 58,357 | 13 | ||||||||||||||||||||||||||||
Cost of revenue for the nine months ended September 30, 2025 of $65.7 million increased by 13% compared to the nine months ended September 30, 2024 ($22.0 million for the third quarter of 2025, a 7% increase compared to the third quarter of 2024). The increase in cost of revenue for the three and nine months ended September 30, 2025 was primarily driven by higher outside fees and services and compensation and benefits. The increase in cost of revenue for the nine months ended September 30, 2025 was also from higher technology and telecommunications. Outside fees and services for the three and nine months ended September 30, 2025 increased from service revenue growth in the Property Renovation Services, Foreclosure Trustee and Field Services businesses in the Solutions business. Compensation and benefits for the three and nine months ended September 30, 2025 increased primarily due to growth in the Property Renovation Services business and higher annual incentive compensation accruals. Technology and telecommunications for the nine months ended September 30, 2025 increased from higher cloud services costs from higher volumes and from a benefit recognized in the first quarter of 2024.
Gross profit increased to $36.9 million, representing 38% of service revenue, for the nine months ended September 30, 2025 compared to $36.8 million, representing 42% of service revenue, for the nine months ended September 30, 2024 (decreased to $11.3 million, representing 36% of service revenue, for the third quarter of 2025, compared to $12.0 million, representing 40% of service revenue, for the third quarter of 2024). Gross profit as a percentage of service revenue for the three and nine months ended September 30, 2025 decreased primarily due to a change in revenue mix from greater growth in the lower margin Property Renovations Services business than in the higher margin Foreclosure Trustee business in the Solutions business and fewer homes sales in the Marketplace business. Our margins can vary substantially depending upon the service revenue mix.
Selling, General and Administrative Expenses
SG&A expenses consisted of the following:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Professional services | $ | 421 | $ | 1,082 | (61) | $ | 180 | $ | 2,734 | (93) | ||||||||||||||||||||||||||||
| Amortization of intangible assets | 740 | 740 | - | 2,220 | 2,220 | - | ||||||||||||||||||||||||||||||||
| Compensation and benefits | 491 | 473 | 4 | 1,445 | 1,497 | (3) | ||||||||||||||||||||||||||||||||
| Marketing costs | 278 | 296 | (6) | 960 | 969 | (1) | ||||||||||||||||||||||||||||||||
| Occupancy related costs | 108 | 122 | (11) | 323 | 434 | (26) | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | - | - | - | 1 | 1 | - | ||||||||||||||||||||||||||||||||
| Other | 306 | 481 | (36) | 578 | 832 | (31) | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 2,344 | $ | 3,194 | (27) | $ | 5,707 | $ | 8,687 | (34) | ||||||||||||||||||||||||||||
N/M - not meaningful.
SG&A for the nine months ended September 30, 2025 of $5.7 million decreased by 34% compared to the nine months ended September 30, 2024 ($2.3 million for the third quarter of 2025, a 27% decrease compared to the third quarter of 2024). The decrease in SG&A for the three and nine months ended September 30, 2025 was primarily due to lower professional services. Professional services for the nine months ended September 30, 2025 decreased primarily due to a settlement received related to a legacy matter and lower costs related to legacy indemnification accruals. Professional services for the three months ended September 30, 2025 decreased primarily due to lower costs related to legacy indemnification accruals.
Income from operations
Income from operations increased to $31.2 million, representing 32% of service revenue, for the nine months ended September 30, 2025 compared to $28.1 million, representing 32% of service revenue, for the nine months ended September 30, 2024 (increased to $8.9 million, representing 29% of service revenue, for the third quarter of 2025, compared to $8.8 million, representing 29% of service revenue for the third quarter of 2024). Operating income as a percentage of service revenue for the three and nine months ended September 30, 2025 remained flat compared to September 30, 2024 as a result of lower SG&A expenses, offset by lower gross profit margins.
Origination
Revenue
Revenue by business unit was as follows:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Service revenue: | ||||||||||||||||||||||||||||||||||||||
| Lenders One | $ | 6,781 | $ | 5,937 | 14 | $ | 20,008 | $ | 18,680 | 7 | ||||||||||||||||||||||||||||
| Solutions | 1,547 | 1,657 | (7) | 4,808 | 4,248 | 13 | ||||||||||||||||||||||||||||||||
| Technology and SaaS Products | 163 | 167 | (2) | 540 | 481 | 12 | ||||||||||||||||||||||||||||||||
| Total service revenue | 8,491 | 7,761 | 9 | 25,356 | 23,409 | 8 | ||||||||||||||||||||||||||||||||
| Reimbursable expenses: | ||||||||||||||||||||||||||||||||||||||
| Solutions | 104 | 161 | (35) | 462 | 401 | 15 | ||||||||||||||||||||||||||||||||
| Total reimbursable expenses | 104 | 161 | (35) | 462 | 401 | 15 | ||||||||||||||||||||||||||||||||
| Non-controlling interests | 71 | 60 | 18 | 220 | 136 | 62 | ||||||||||||||||||||||||||||||||
| Total revenue | $ | 8,666 | $ | 7,982 | 9 | $ | 26,038 | $ | 23,946 | 9 | ||||||||||||||||||||||||||||
We recognized service revenue of $25.4 million for the nine months ended September 30, 2025, an 8% increase compared to the nine months ended September 30, 2024 ($8.5 million for the third quarter of 2025, a 9% increase compared to the third quarter of 2024). We also recognized reimbursable expenses revenue of $0.5 million for the nine months ended September 30, 2025, a 15% increase compared to the nine months ended September 30, 2024 ($0.1 million for the third quarter of 2025, a 35% decrease compared to the third quarter of 2024). The increase in service revenue in the Origination segment for the nine months ended September 30, 2025 was primarily driven by growth in reseller products in the Lenders One business and higher volumes in the loan fulfillment services business within the Solutions business. The increase in service revenue for the three months ended September 30, 2025 was primarily driven by growth in reseller products in the Lenders One business partially offset by lower volumes in the loan fulfillment services business within the Solutions business. The increase in reimbursable expenses for the nine months ended September 30, 2025 was primarily driven by certain Title orders partially offset by lower volumes in the loan fulfillment services business within the Solutions business. The decrease in reimbursable expenses for the three months ended September 30, 2025 was primarily driven by lower volumes in the loan fulfillment services business within the Solutions business.
Cost of Revenue and Gross Profit
Cost of revenue consisted of the following:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Outside fees and services | $ | 5,575 | $ | 4,756 | 17 | $ | 16,182 | $ | 14,639 | 11 | ||||||||||||||||||||||||||||
| Compensation and benefits | 1,107 | 1,170 | (5) | 3,218 | 3,238 | (1) | ||||||||||||||||||||||||||||||||
| Technology and telecommunications | 196 | 220 | (11) | 583 | 505 | 15 | ||||||||||||||||||||||||||||||||
| Reimbursable expenses | 104 | 162 | (36) | 462 | 402 | 15 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 2 | 4 | (50) | 8 | 17 | (53) | ||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 6,984 | $ | 6,312 | 11 | $ | 20,453 | $ | 18,801 | 9 | ||||||||||||||||||||||||||||
Cost of revenue for the nine months ended September 30, 2025 of $20.5 million increased by 9% compared to the nine months ended September 30, 2024 ($7.0 million for the third quarter of 2025, an 11% increase compared to the third quarter of 2024). The increase in cost of revenue for the three and nine months ended September 30, 2025 was primarily driven by higher outside fees and services from growth in the reseller products in the Lenders One business.
Gross profit increased to $5.6 million, representing 22% of service revenue, for the nine months ended September 30, 2025 compared to $5.1 million, representing 22% of service revenue, for the nine months ended September 30, 2024 (remained relatively flat at $1.7 million, representing 20% of service revenue, for the third quarter of 2025, compared to $1.7 million, representing 22% of service revenue for the third quarter of 2024). Gross profit as a percentage of service revenue for the nine months ended September 30, 2025 was relatively flat compared to the nine months ended September 30, 2024. Gross profit as a percentage of service revenue for the three months ended September 30, 2025 decreased compared to the three months ended September 30, 2024 from revenue mix.
Selling, General and Administrative Expenses
SG&A expenses consisted of the following:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Amortization of intangible assets | $ | 530 | $ | 530 | - | $ | 1,590 | $ | 1,590 | - | ||||||||||||||||||||||||||||
| Compensation and benefits | 574 | 440 | 30 | 1,569 | 1,405 | 12 | ||||||||||||||||||||||||||||||||
| Professional services | 399 | 69 | N/M | 943 | 350 | 169 | ||||||||||||||||||||||||||||||||
| Marketing costs | 315 | 193 | 63 | 759 | 562 | 35 | ||||||||||||||||||||||||||||||||
| Occupancy related costs | 46 | 68 | (32) | 148 | 311 | (52) | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 1 | - | N/M | 1 | 1 | - | ||||||||||||||||||||||||||||||||
| Other | 175 | 25 | N/M | 453 | 811 | (44) | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 2,040 | $ | 1,325 | 54 | $ | 5,463 | $ | 5,030 | 9 | ||||||||||||||||||||||||||||
SG&A for the nine months ended September 30, 2025 of $5.5 million increased by 9% compared to the nine months ended September 30, 2024 ($2.0 million for the third quarter of 2025, a 54% increase compared to the third quarter of 2024). The increase in SG&A for the three and nine months ended September 30, 2025 was primarily due to higher professional services, compensation and benefits and marketing costs, partially offset by lower occupancy related costs. The increase in SG&A for the nine months ended September 30, 2025, 2025 was also partially offset by lower bad debt expense. Professional services for the three and nine months increased primarily from a legacy litigation matter. Compensation and benefits for the three and nine months increased primarily from revenue growth in the Lenders One business. Marketing costs for the three and nine months increased primarily from revenue growth in the Lenders One business.
Income (loss) from operations
Income (loss) from operations was $0.1 million, representing less than 1% of service revenue, for the nine months ended September 30, 2025 compared to $0.1 million, representing less than 1% of service revenue, for the nine months ended September 30, 2024 (decreased to $(0.4) million, representing (4)% of service revenue for the third quarter of 2025, compared to $0.3 million, representing 4% of service revenue for the third quarter of 2024). Income from operations for the nine months ended September 30, 2025 was relatively flat compared to the nine months ended September 30, 2024. The decline in operating (loss) income as a percentage of service revenue for the three months ended September 30, 2025 was primarily from higher SG&A expenses and lower gross profit margins.
Corporate and Others
Cost of Revenue
Cost of revenue consisted of the following:
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Technology and telecommunications | $ | 851 | $ | 901 | (6) | $ | 2,523 | $ | 2,551 | (1) | ||||||||||||||||||||||||||||
| Compensation and benefits | 729 | 697 | 5 | 2,130 | 2,106 | 1 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 20 | 42 | (52) | 106 | 215 | (51) | ||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 1,600 | $ | 1,640 | (2) | $ | 4,759 | $ | 4,872 | (2) | ||||||||||||||||||||||||||||
Cost of revenue for the nine months ended September 30, 2025 of $4.8 million decreased by 2% compared to the nine months ended September 30, 2024 ($1.6 million for the third quarter of 2025, a 2% decrease compared to the third quarter of 2024). The decrease in cost of revenue for the three and nine months ended September 30, 2025 was primarily driven by lower depreciation and amortization from the completion of the depreciation periods for certain premises and equipment.
Selling, General and Administrative Expenses
SG&A in Corporate and Others includes costs related to the corporate functions including executive, finance, technology, law, compliance, human resources, vendor management, facilities, risk management and eliminations between reportable segments.
SG&A expenses consisted of the following:
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Three months ended September 30,
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Nine months ended September 30,
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| (in thousands) | 2025 | 2024 | % Increase (decrease) | 2025 | 2024 | % Increase (decrease) | ||||||||||||||||||||||||||||||||
| Compensation and benefits | $ | 4,141 | $ | 3,500 | 18 | $ | 12,097 | $ | 11,863 | 2 | ||||||||||||||||||||||||||||
| Professional services | 761 | 1,396 | (45) | 2,886 | 4,076 | (29) | ||||||||||||||||||||||||||||||||
| Occupancy related costs | 721 | 611 | 18 | 2,070 | 2,031 | 2 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 7 | 99 | (93) | 130 | 313 | (58) | ||||||||||||||||||||||||||||||||
| Marketing costs | - | - | - | - | 5 | (100) | ||||||||||||||||||||||||||||||||
| Other | 812 | 840 | (3) | 2,349 | 2,446 | (4) | ||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 6,442 | $ | 6,446 | - | $ | 19,532 | $ | 20,734 | (6) | ||||||||||||||||||||||||||||
SG&A for the nine months ended September 30, 2025 of $19.5 million decreased by 6% compared to the nine months ended September 30, 2024 ($6.4 million for the third quarter of 2025, a less than 1% decrease compared to the third quarter of 2024). The decrease in SG&A for the nine months ended September 30, 2025 was primarily driven by lower professional services from lower accruals for estimated legal matters. The decrease in professional services for the three months ended September 30, 2025 was primarily driven by lower accruals for estimated legal matters. The increase in compensation and benefits for the three months ended September 30, 2025 was primarily from higher share based compensation.
Other Income (Expense), net
Other income (expense), net principally includes interest expense and other non-operating gains and losses.
Other income (expense), net was $(13.0) million for the nine months ended September 30, 2025 compared to $(27.1) million for the nine months ended September 30, 2024 ($(2.2) million for the third quarter of 2025 and $(9.6) million for the third quarter of 2024). The change for the three and nine months ended September 30, 2025 was primarily driven by lower interest expense, partially offset by higher debt exchange transaction expenses. The lower interest expense was driven by the decrease in outstanding debt and a lower interest rate from the February 19, 2025 Debt Exchange Transaction.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our primary source of liquidity has historically been cash flow from operations, cash proceeds from sales of businesses, cash proceeds from the sale of equity securities and cash on hand. However, primarily due to lower delinquency and foreclosure rates, and higher home equity, revenue has declined significantly compared to pre-pandemic levels (although revenue grew in 2024 compared to 2023 and for the first nine months of 2025 compared to the first nine months of 2024). The lower revenue, partially offset by efficiency initiatives and cost savings initiatives, has resulted in negative operating cash flow from operations. We believe lower interest expense as a result of the February 2025 Debt Exchange Transaction, more recent revenue growth from the renovation business launched in 2024, the anticipated improvement in the default market, on-boarding sales wins, and revenue mix together with our reduced cost structure, should help improve operating cash flow.
We seek to deploy cash generated in a disciplined manner. Principally, we intend to use cash to develop and grow complementary services and businesses that we believe will generate attractive margins in line with our core capabilities and strategy and fund negative operating cash flow, if necessary. We also use cash for repayments of our long-term debt and capital investments. In addition, from time to time we may consider and evaluate business acquisitions, dispositions, closures, sales of equity securities or other similar actions that are aligned with our strategy.
Revolving Loan Agreement
In connection with the Company's Renovation business, on June 3, 2024 Altisource Solutions, Inc., an indirect subsidiary of Altisource Portfolio Solutions S.A, entered into a revolving loan agreement with a then related-party, Altisource Asset Management Corporation ("AAMC") (the "Revolving Loan Agreement").
Under the terms of the Revolving Loan Agreement, AAMC will make loans to Altisource from time to time, as may be requested by Altisource. The Revolving Loan Agreement provides Altisource the ability to borrow an initial aggregate amount of up to $1.0 million, with the potential for this to be increased up to $3.0 million at the option of AAMC. Amounts that are repaid may be re-borrowed in accordance with the limitations set forth below.
The maturity date of the Revolving Loan Agreement was June 3, 2025 and can be automatically extended for one year on each anniversary of the maturity date. During any extension period, AAMC may terminate the Revolving Loan Agreement upon 150 days prior written notice and the loan will mature upon such termination. During the second quarter of 2025 the Revolving Loan Agreement was renewed, extending the maturity date to June 3, 2026. The outstanding balance on the Revolving Loan Agreement is due and payable on such maturity date.
Borrowings under the Revolving Loan Agreement bear interest of 12.00% per annum in cash and are payable monthly in arrears on the first business day of each calendar month. Altisource will pay AAMC a monthly unused commitment fee in an amount equal to 0.25% per annum of the average amount of the unused available credit under the Revolving Loan Agreement.
Altisource's obligation under the Revolving Loan Agreement is secured by certain receivables related to the Company's residential real estate renovation services business.
As of September 30, 2025, there was $1.0 million outstanding debt under the Revolving Loan Agreement.
Cash Flows
The following table presents our cash flows for the nine months ended September 30:
| (in thousands) | 2025 | 2024 | % Increase (decrease) | |||||||||||||||||
| Net cash used in operating activities | $ | (4,560) | $ | (3,624) | (26) | |||||||||||||||
| Net cash used in investing activities | (299) | - | N/M | |||||||||||||||||
| Net cash provided by (used in) financing activities | 4,637 | (566) | N/M | |||||||||||||||||
| Net decrease in cash, cash equivalents and restricted cash | (222) | (4,190) | (95) | |||||||||||||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 32,700 | 35,416 | (8) | |||||||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | $ | 32,478 | $ | 31,226 | 4 | |||||||||||||||
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N/M - not meaningful.
Cash Flows from Operating Activities
Cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net (loss) income. For the nine months ended September 30, 2025, net cash used in operating activities was $(4.6) million compared to net cash used in operating activities of $(3.6) million for the nine months ended September 30, 2024. The increase in cash used in operating activities was driven by a $5.4 million higher use of cash for working capital (accounts receivable, prepaid expenses and other current assets, other assets, and accounts payable and accrued expenses), $12.7 million lower non-cash interest expense and $0.9 million lower non-cash share based compensation, partially offset by an $18.5 million improvement in income (loss) before income taxes and non-controlling interests. Operating cash flows can be negatively impacted because of the nature of some of our services and the mix of services provided. Certain services are performed immediately following or shortly after the referral, but the collection of the receivable does not occur until a specific event occurs (e.g., the foreclosure is complete, the REO asset is sold, etc.). Furthermore, lower margin services generate lower income and cash flows from operations. Consequently, our cash flows from operations may be negatively impacted when comparing one period to another.
Cash Flows from Financing Activities
Net cash provided by (used in) financing activities was $4.6 million and $(0.6) million for the nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025, we received $11.3 million in proceeds from the Super Senior Credit Facility, net of the original issuance discount. We used $(1.7) million for debt issuance costs and $(3.8) million related to the issuance of equity, in connection to the Debt Exchange Transaction. During the nine months ended September 30, 2025, we used $0.6 million to make scheduled repayments of our senior secured term loan (no comparative amount for the nine months ended September 30, 2024). During the nine months ended September 30, 2024, we received proceeds from the issuance of short-term debt of $0.3 million in connection with borrowings under the Revolving Loan Agreement (no comparative amount for the nine months ended September 30, 2025). During the nine months ended September 30, 2025 and 2024, we made payments of $0.3 million and $0.7 million, respectively, to satisfy employee tax withholding obligations on the issuance of restricted share units ("RSUs") and restricted shares. These payments were made to tax authorities, at the employees' direction, to satisfy the employees' tax obligations rather than issuing a portion of vested restricted share units and restricted shares to employees. In addition, during the nine months ended September 30, 2025 and 2024, we distributed $0.1 million and less than $0.1 million, respectively, to non-controlling interests.
Future Uses of Cash
Our significant future liquidity obligations primarily pertain to amortization of the New Facility, amortization and maturity of the Super Senior Facility, interest expense under the New Facility and the Super Senior Facility, and operating lease payments on certain of our premises and equipment.
Significant future uses of cash include the following:
| Payments Due by Period | ||||||||||||||||||||||||||
| (in thousands) | Total | 2025 | 2026-2027 | 2028-2029 | ||||||||||||||||||||||
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New Facility (1)
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$ | 6,018 | $ | 275 | $ | 2,200 | $ | 3,543 | ||||||||||||||||||
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Super Senior Facility (2)
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12,437 | 31 | 250 | 12,156 | ||||||||||||||||||||||
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Revolving Loan Agreement (3)
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1,000 | - | 1,000 | - | ||||||||||||||||||||||
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Interest payments (4)
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53,894 | 3,337 | 26,077 | 24,480 | ||||||||||||||||||||||
| Lease payments | 1,462 | 392 | 914 | 156 | ||||||||||||||||||||||
| Total | $ | 74,811 | $ | 4,035 | $ | 30,441 | $ | 40,335 | ||||||||||||||||||
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(1)$158.1 million of the New Facility matures on April 30, 2030 and $1.4 million of the New Facility matures on January 15, 2029.
(2)The Super Senior Facility matures on February 19, 2029.
(3)The outstanding balance of our Revolving Loan Agreement as of September 30, 2025 is $1.0 million and is currently due on June 3, 2026, and can be automatically extended for one year on each anniversary of the maturity date.
(4)Estimated future interest payments for the New Facility and the Super Senior Facility based on the three-month Secured Overnight Financing Rate ("SOFR") interest rate as of September 30, 2025.
We anticipate funding future liquidity requirements with a combination of existing cash balances and cash anticipated to be generated by operating activities. For further information, see Note 10 and Note 21 to the condensed consolidated financial statements.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements consist of escrow and certain other account arrangements.
We hold customers' assets in escrow and other accounts at various financial institutions pending completion of certain real estate and construction review activities. These amounts are held in escrow and other accounts for limited periods of time and are not included in the accompanying condensed consolidated balance sheets. Amounts held in escrow and other accounts were $52.5 million and $27.1 million as of September 30, 2025 and December 31, 2024, respectively.
Contractual Obligations, Commitments and Contingencies
For the nine months ended September 30, 2025, there were no significant changes to our contractual obligations from those identified in our Form 10-K for the fiscal year ended December 31, 2024 and this Form 10-Q, other than those that occur in the normal course of business. See Note 21 to the condensed consolidated financial statements.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENTS
We prepare our interim condensed consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and judgments, however, are often subjective. Actual results may be negatively affected based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known.
Our critical accounting policies are described in the MD&A section of our Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025. There have been no material changes to our critical accounting policies during the nine months ended September 30, 2025.
Recently Adopted and Future Adoption of New Accounting Pronouncements
See Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements, including pronouncements that were adopted in the current period.
Altisource Portfolio Solutions SA published this content on October 23, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 23, 2025 at 11:05 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]