Altisource Portfolio Solutions (ASPS) 25 Apr 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions First Quarter 2024 Earnings Call.At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer.

Thank you, operator. remind slides the website are to XX-Q release, at want quarterly and available first you earnings that Form www.altisource.com. We on our today involve additional forward-looking cause and actual provide information differ. may could useful.Our These to investors uncertainties that statements, number a remarks which results of risks find include are qualified forward-looking should relied statements be projections not as with Financial unduly expressly and and scenarios statements as other forward-looking upon.

sections statements, to A measures. our the the non-GAAP Executive to Shepro, Bill. over GAAP we update in the responses GAAP of company's non-GAAP and provided to uncertainty well I well the may Chief measures new in of and associated release COVID-XX slides financial with of will is statements, or government to and describing release previously In as policies as addition impacts you servicer regarding circumstances, We difficult to me slides.Joining find the fiscal provided as this conditions change scenarios the potential as now usual governmental quarterly different to both state Officer. quarterly reconciliation that predict a for factors In no the as economic to obligation the XX-K factors lead the XXXX Altisource. result and Form and which herein the a make and events.During the to turn included industries disclosures economy future our appendix statements non-GAAP extremely today's earnings call results. additional our contained Chairman the Please pandemic, some we information will in in forward-looking financial risk present call, projections on current future earnings operate will Bill or continuing measures. forward-looking and impact review the and quarterly is slides, the undertake call in of it

return since our with financial million very our delinquency sales rise $X.X the rates. quarter for to growth. by or environment the more in wins We and on of default rates improved normal are $XX that the calendar on first good low to EBITDA, origination third to adjusted we generated with Slide for morning.I'll our performance pleased Thanks, We We an X. close to million begin last difficult Michelle, XXXX of market years quarterly believe results quarter of and not marking to coupled I'm volume, revenue. mortgage than incredibly adjusted achieve million over delinquency of lower performance. demonstrate service X waiting historically best $XX.X EBITDA

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cost we base. agreements the segment, our For Service sales of this are this money. and last you X pipeline adoption continue and March we more. the adjusted on in win X origination with X, segment, we winning to solutions normal anticipate help our a share. month, quarter-over-quarter EBITDA We third a this signing quarter. market are returns and And wins compared service balance Of market with In opportunities estate discussed originators increasing of month. Estate into I that we exciting real as the and new even our X revenue save agreement volumes service lower the benefit to quarters to increase, as anticipate same growth in Altisource XXXX and ramp year, business In should we origination Real default and entered

reseller services. XX we related credit product another quarter, and agreements our signed tri-merge the for During

first believe service quarter reflected a origination a our Estate by this minutes.Slide Estate EBITDA in Total higher fourth in the and sales quarter of and and We of provided are was quarter the the detail revenue to in XX% our XXXX. quarter our segment as to to XXXX the year growth to in adjusted and decline $X.X the Service midpoint quarter growth segment. margins revenue XX.X% I'll the XX% Adjusted fourth financial million first first in in of on X% results the our on million X.X% guidance million was call. from quarter already represents 'XX. XX% and higher pipeline XX% trends. seeing of the onetime and with XXXX financial XXXX in will estimated flat, more the of and few the of Company-wide the revenue $X.X almost of fourth Service segment grew company total quarter and compared in million the of by the Origination discuss EBITDA segment, our and Compared Real in provides be March progress expanded X initiatives XXXX $X.X compared than benefit Real of quarter we XXXX, offset of in performance first progresses. an the company XXXX driven our service growth fourth in $X information of than additional

last costs. company in in first nonrecurring million quarter $X.X adjusted and XXXX year of driven segments nonrecurring benefits. an corporate lower total company an expansion EBITDA $XXX,XXX margin estimated included net both by estimated was our improvement in benefits included net and First quarter Total

Over rate adjusted operating years, normal while pre-pandemic segment the last the holding a look default Altisource's could we constant. provided you have in like a to environment and run Origination scenario of with EBITDA run rate what couple revenue demonstrate

the recovery the loans guidance to have don't massive increase of level our before values years in a same conservative approach environment of market, home also we the return the equity originated normal them. originated XXXX of to While takes to the more that a home time. last will believe over after believe Loans default we couple in generally market a compared

typically providing loans appreciation with are X% only even down, FHA years. several the price addition, much with originated equity a last lower cushion In over home

for seek waiting the to market our to not are we course, to recover grow business. Of

strong and a and net a adjusts nonrecurring financial have are related servicer we have churn. service and scenario and X. magnitude we EBITDA of fully solutions and help revenue opportunity providing business new winning our suite to level we performance adjusted ramped sales are understand support on adds of already scenario of annualizes first that exclude Slide This business.To won, We our revenue assumed the items to from the an quarter and in segments, earnings the origination markets you believe both both wins of estimated

a see to from slide, could wins $XX revenue sales from estimated million revenue adjusted environment, the doesn't to EBITDA an This estimated One can $XX XXXX $XXX revenue of on launch from default a million volume. in pipeline, increase at quarter a ramping you of wins increase solutions, operating origination higher assume million service sales the new delinquency to and any from $XXX current normal As from first return annualized existing level our margins further Lenders EBITDA nor million. rates

Altisource improving Estate additional growth segment. progress market. illustrates operational bright in business ahead scenario our on as provides additional We for we believe potential.Slide a with and We and new efficiency wins winning the ramp sales this X have information Real tough future made our tremendous our Service

X% than fourth the service than was quarter XX% quarter segment and the XXXX higher of in revenue quarter lower XXXX First of this first XXXX.

first exclude the If would the quarter modestly year, last than million for quarter year. been higher quarter of $X of first nonrecurring year the the from last you estimated have of revenue first revenue this of

stage The quarter the nonrecurring earlier and this XXXX the margins XX.X% X% first million in an to We quarter in last same last first last support continue initiatives, first expenses net estimated quarter fourth than the our offset Adjusted reflects was XXXX Adjusted growth process. in compared efficiency XX.X% of in XXXX and the quarter than to of in certain experience quarter the year. EBITDA businesses higher the of of year. period fourth higher-margin to the year. in default XX% by quarter the of compared lower $XXX,XXX partially EBITDA were that $XX.X improvement of of XX.X%

First increased discussed.Slide majority sales year revenue, estimated of and expenses quarter the Real $XXX,XXX nonrecurring estimated higher modestly pipeline. nonrecurring $X million our a summary XXXX Estate which net wins X and the an provides just I EBITDA margins from year were of Service adjusted current and of prior of

quarter, For I late-stage over the highlighted in stabilized new Last we larger million generate couple business won quarter, that estimate $X.X we X a annual the on years. of next pipeline. in opportunities the will revenue basis

the second we services to loan provide agreement end an agreement loan services quarter. provide April, a this we the auction signed the trustee In of anticipate for first REO and servicer signing Towards for a signed an agreement quarter, servicer. foreclosure trustee to

this to existing and We referrals process represent provide These month. for wins of have expansion began both completed an onboarding we the services wins that receiving customers.

made last progress referral sales renovation assets. We We also progresses. as In agreements XXXX, our fourth the the services from one quarter We ramping we of year week. of will XXXX. REO renovation for REO larger provide volume signed ramp received to of owners customer the first wins referrals from anticipate this

the quarter sales and wallet January, win impact stabilize we to on to in X. expansion average We grow beyond. We pipeline thereafter. receive the on reflects the business. forecast an sales these volumes most quarter quarter. trustee to stabilized with ended Slide primarily quarter which an The of total our revenue higher-margin a in to basis, of referral existing referrals $XX.X last XXXX and macroeconomic sales which with started of through continued fourth in We the in share our annual was increase wins.Turning of a an to summer weighted ramp Another through compared the customer million environment pipeline decline will anticipate

that rates.Moving call discussed early these financial consumer that continue on mortgage our segment origination our and believe on be to XX. to in rise in signs could to we stress a are there Slide we delinquency March, of As precursors

in quarter performed adjusted Origination Origination growth in volume of Our with segment of revenue compared the first $XXX,XXX. X% the the fourth residential quarter well. XXXX, decline to and industry-wide an improvement the market service outperformed of EBITDA to origination Despite XX% very $XXX,XXX segment the

in EBITDA and by We by customer service revenue wins also our Adjusted X% solutions efficiency increases improved initiatives. Lenders growth was year. price and and One grew revenue Revenue by business. driven to cost last adjusted EBITDA million growth $X.X from savings and newer the from compared

profit As EBITDA adjusted provides sales of profit, all XX margins adjusted our and see the EBITDA slide, a prior quarters.Slide to relative pipeline. segment's segment you on improved Origination wins margins, can gross Origination and the gross summary

interest continue we basis, stabilized new focus won to compete. driving money business One members in better the substantial save estimated in an our an is This We million annualized On Lenders first helping and on our in solutions. quarter. $X.X

the at pipeline of the quarter sales $XX.X average weighted was end Our million.

We are in excited segment. Origination our progress the about

provided lenders origination With times, more we diligently new of are a business a sustained attractive of lot their and examining volumes, difficult have low been During an winning costs, we result. are window opportunity. as

We today both volumes to and more normal this return when to benefit expect origination from even levels. growth more

on members to out to existing believe Slide rolling proposition strengthen the segment members XX. launch our new of solutions our support on money. more Lenders Additionally, Origination focus members, for continue growth Lenders our new solutions and We adoption greater to earnings Lenders and One make segment.Turning further our solutions value with we of our to in One revenue will help Corporate One combined regular

operating bring to costs. continue down We our

than $X.X and was better XXXX or of of loss million quarter first XX% $X.X adjusted First than quarter million the or million fourth better XXXX XX% corporate XXXX. EBITDA $X.X the of quarter

The XXXX. better XX% XX. summary, EBITDA reflects quarter pleased XXXX and better adjusted Absent million quarter cost the our X% In $X.X first of the performance. savings loss XXXX of quarter benefits than the of first included efficiency XXXX nonrecurring fourth included in initiatives.Moving loss with of estimated of was benefits. results Corporate adjusted these also an net I'm million than lower $X.X XXXX quarter Slide first and benefits, quarter first quarter to and first nonrecurring estimated an EBITDA The our

making are wins progress historically We continue ramping in XXXX and sales difficult market. good win meaningful to new business a

$XX balance we generate service growth adjusted revenue and to are in growth will of result, we adjusted million compared and believe to to a for achieved, that We year-over-year anticipate this EBITDA between same and achieve approximately year. the on the an improvement period.I'll questions. quarters the track million we adjusted As Operator? million $XX.X over also a EBITDA [XX%] XX% X-year If the represents open-up now XXXX. revenue for $XX.X of in EBITDA quarterly call of service over XXXX XXXX

the conduct session. Grondahl And with we time, comes from [Operator question-and-answer you. at Instructions] this will Thank question Mike Northland. First

think sales on for when but your you help other any of Just of benchmark today ramp? on kind indicator head Delinquent are foreclosure look leading kind GSE your is latest kind is should trying I there job of And what to. it. might we looking And loans, you loss, things thoughts that don't to ramp? through, macro to Bill, know, to, where

waiting we're So the I guess to our want normal the I delinquency to market to for to revenue market first recover, not default earnings. and make point get to is to rise rates improve the or for back

credit expected. should But I was what question, thought at recovering think to with sitting given Mike, than we delinquency mortgage roughly think thought happen important ultimately that's these they rising than less rates. good slower we were your then specifically But delinquencies, the what indicators -- I flat look, message. market precursors, to a where of really those pace year delinquencies, a ultimately solid we I loan auto a ago. or today going student to they're happen cards, were all is

And normal. so over-time attention do the that anticipate close we we're back market get and will to paying

originated lot at if over a years, look followed And those at run-up I not the value, you FHA of last look that the if couple that prepared in equity of loans loan homes. home little prices. have loans originated, XX% there's and even of home this over couple the years and with look, you loans to several in prices talked of about a my If there's last in run-up you the bit remarks, million

loan as the we so I -- in I And those get say, operating to to market year, this on we some -- would to third we by back math market today. return client back if to and Mike, run other of expect way, some back of of the customers, things And if were environment. presented get in could, run what originations environment you account or when would the operating more -- And as normal the we and happens to those the for I today. think economy think of did quarter recent you and scenario presented normal, a the we -- more normal to $XX anchor the normal to EBITDA runoff cohorts rate fourth for a scenario environment, potential last think, a we from I scenario see the our portfolios another the we look provided, million mean, roughly churn add adjusted think, I to

-- of the of think it top $XX in on was So EBITDA I adjusted million scenario. our

could add EBITDA. $XX million much as of as You another

the may additional add, there little recovers. becomes a number would EBITDA quite be -- interesting costs of that as fixed Now bit but we market the

grow in exist that revenue our tell recover. to of So to some it's to be it's but us going could some hard earnings. happen for waiting stress early We the signs when think for not to the there that we're market, and

then kind to of And questions it. Slide XX. related X Got

the win, pipeline if we of $XX into same X guys How you've you think it worth, right, about $X look I'll don't those of 'XX, revenue? -- into the next period, call the should flowing remaining I quarters time and at consolidated revenue, million and bunch wins million presented. the million had know, first like we sales a that in $XX got cumulatively The one, about

is million. now on Slide think, I row going look, we where I So did, see you that see you're we're $X.X what bottom to think, of the that XX, and ramping,

ramp to we it. So are starting

look, rate going sales be we're to progresses. going quarter, $XX think the to the going run as annualize quite from fourth that EBITDA million And of an the I our continue we're wins get But rate. quarter not performance. fourth to run we perspective, when that we're north to at year to to You're see if you be ramp expecting EBITDA

recovering. the This a So a you're ramping And benefit. base default more lower on going from again, to wins efficient market cost to conservative start on very being base. see cost we're is sales or primarily the

now on of Got need chunk XQ continue 'XX line, 'XX, my it pipeline, kind fallout then sales million your wins? think these flattish. $XX numbers by sort exit that top XQ rate. of support that about to to some a be size I those But need you of 'XX, it. number don't or yes, million. get XQ run into to us of wins. down the wins, pipeline of kind were pipeline. dropped question That's I of but attractive think I helpful about last 'XX, you went Do the of the that rebuild if it, Are kind know, you had then what where go And $X on I And does to to just the help is? pipeline happy to XQ

Yeah.

the you're some right, for The we drop Mike. the I have think sales sales reason reflects primarily pretty and meaningful win. wins

pipeline. sales job never particularly in today, tough as got always really see to the remarks to I sales We a footnote be I prepared a going in a talked And of had go going pretty want we've Look, we a We in the second a related happy team side. column bigger, share building hopefully strong -- think April, we're that market done into win this on very will pipeline, which to business. that's think nice quarter, sign trustee it. about the with Mike. But about the win really we're it winning good default our there's You're well. sales to a agreement my market

just good. we And talk pleased but a -- we want around be weighted how each quarter, about The than keep in the we're This always feel it we I never I'm but quarter, mind. pipeline I'm actual making, so is set pipeline average pipeline. not bigger. internally, And higher to the this to want goals But is progress that much pipeline, grow we that. pretty aggressive with

from B. Sharma Riley. with comes question Raj Next

Yeah.

So is in I'm you the Hubzu the annualized also revenue to I stage, to and that slide. with congratulations the default with of are assuming Slide services has that some the million Earlier that's X, increase, I on split mean, $XX how contributing does how the marketplace wins that that increase business want ask in split how and do -- questions on profitability. market. side nothing the that this originations? is split to between

let that Raj, slide. me to Sure. turn

scenario. revenue Service

Slide you're X. So on

Yeah.

that is is renovation say would portion I through So $XX April of is million, maybe meaningful the the our to XX. a of of Then wins. this to April a sales wins of or that And it think I tied XX growth tied these some trustee of growth business. so,

probably that includes some there's trustee to compared then that small, market be the So the -- of segment. next largest, the the a probably relatively the side, I gain. wins. don't of And REO the loan would that's renovation X then a auction pretty being -- in some this but it's what's would the business share speaking, doing we're Estate think for the be renovation then largest and servicer, Service the me, the business, but origination in Real work growth front I trustee And the right in have

there of well. business, So little I wins the title think renovation repeat, the and then it's the X bit There's as REO in trustee a business. auction just wins to largely,

Right.

the if loan the of there's correct market other these all So Basically, not more and foreclosure is more if that I'm moving loss earlier early. modifications in process. considerably, understanding there's wins the and in are foreclosures stage -- and is mitigation up this all

Could referral about the earlier custody the you trustees, expansion this business. is talk So stage. the

all loan you there's share of are much gains, if and the money You there, do make mitigation, modifications? but loss largely taking that's

Yeah.

think we're or not assuming it's there's all XX each milestone foreclosure foreclosure So and a it trustee Raj. the I through couple of of way XX% XX in file XX% states. received milestone first receiving think the probably you're the And billing, in billing end makes I the we're or the referral. that And But months process, of the the billing fees total of we process.

yes, the a normal delinquency analysis stabilized of like or today's not the environment could business forecast through way revenue not it's in or basis dependent And our market, a end. it rising So delinquency rate more profitable the on all it's a on for environment. a And is making us. very what look in

base cost cost profitability. some and Are stay base, in currently, contributed so to seen you -- -- haven't done to with or and is we Got cuts there the that's increase come it. clearly, And some are the cost then of cuts more revenues or increase cost you've that were contributed -- in had there on cost more cuts the to the your

Yeah.

were benefits, the about, the you the onetime So let's some side, Corporate talk on still even we quarter. those got compared benefits onetime in quarter. cost there fourth if the just we But down to normalize first first for brought

not we're So to in continue benefits onetime quarters. those anticipating future

and modest savings in, some there's Michelle in think half of jump I corporate Michelle? second year. the the in

in communications within the That's tax technology corporate right. and line. It's

Yeah.

of little in -- to would is advance second very be we revenue in So third just the of little part, quarter occupancy then hiring a be units, amount. meaningful for modest going a of for be But of ramping that quarter. you any I the a anticipation year. set bit of look when there been savings already well, And business will think don't new of a would the in planned think some at just that a I bit we into quarter. of the beyond the what in bit second expect be you most you'll what's think going the growth have see fourth to coming Raj, there's initiatives sort and costs rest the But going as in, there, some in of little maybe

expectations. margin good in certainly to is hiring our this modest given QX, will sort in modest our line expect of be in very some The of there margin with expectations. EBITDA a growth certainly to that's the line to a stabilized think impact of and So QX we revenue compared with advance business EBITDA, we level. some but getting revenue new in hiring But

with it. can a focusing of Got new obviously, more questions process. stage bear of just earlier if on And -- the couple foreclosure The go me. you the are you

You're EBITDA wins by past, that does about and million in the you million the run $XXX that That is change? $XX There normal $XX of incrementally this million. having How changes there. scenario have rate talked of revenues.

to Yeah assuming of back and now Raj, a how question. they normal, our a very bit get into I off course on there's churn about run that anchor this. we next of think to the and and the of several to we're that's we of Look, little good did think But continue that the if we're a pre-pandemic envelope, portfolios, our of back a assuming legacy over business. assumptions years go bit couple a of also also market were

If million, and and to million, we consideration, scenario normal Michelle by normal the as we grow presented at take would into as closer environment, back think million, a close $XX roughly you what million that as pre-pandemic $XX much to at above $XX by your $XX operating we're today. probably as could much EBITDA revenue levels, to delinquency grow

of if a but normal, the there's historically and lot upside. a initiations to conversion market just to foreclosure low at rates back gets The gets back So normal. delinquency of lot there's foreclosure sale rates levels, upside even the stay

addition, our place April take include presented XX. doesn't scenario beyond today sales In that we

analyzing already sales as We're isolating we've quarter first performance well. As just new to had. forma improve wins should pro the we continue that the win our and business,

this it remarks. closing further no to Bill at I now for back questions turn time. I'm like would showing Shepro to

Great. for the quarter this Thanks, year and operator. our we're performance financial with and rest first joining and of very positioned beyond, We're believe for thanks pleased well today.

in conclude today's does program. for you the This your participation Thank conference.

now may disconnect. You