Altisource Portfolio Solutions (ASPS) 25 Jul 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions Second Quarter 2024 Earnings Call. [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. Please go ahead.

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 additional provide information may useful. These investors find

number unduly cause actual statements with to include which forward-looking expressly Our scenarios projections other relied should results and statements qualified remarks could involve forward-looking as differ. today forward-looking a upon. that uncertainties of and statements, be are Financial not risks as and

continuing sections well associated company's review fiscal scenarios state no In XXXX government difficult impacts that previously as or We different as economic addition herein and the usual industries events. forward-looking potential as the of governmental in provided new and the provided uncertainty on of servicer pandemic, quarterly XX-K, future with conditions results. of forward-looking and well the to the impact the may policies describing in slides, in to our responses future earnings the result extremely economy information statements, financial to contained predict in factors and to statements statements, we the which as Altisource. Please the current make COVID-XX it and update circumstances, a change some to or Form factors the a projections release lead obligation as risk undertake operate,

disclosures will GAAP included additional the non-GAAP In of slides. our measures. measures find is financial the earnings A we and quarterly appendix call, in GAAP this and slides, both to non-GAAP During you present will non-GAAP quarterly to release the reconciliation regarding measures.

call Officer. Chief our Shepro, Bill I'll is and call today's Bill. for now the turn to me Executive over Joining Chairman

quarter a we XX% EBITDA service million on We $XX.X had I'll of adjusted and to XXXX. XXXX and on between revenue guidance and Slide track to Michelle, strong good morning. over in growth and XX% our achieve begin XXXX million believe of Thanks, are X. $XX.X second

of million and cash modestly million adjusted generated increased in we $X.X quarter, service to $XX.X the $XX.X EBITDA, For revenue million. and

business began also X went and We trustee foreclosure live renovation to referrals customers. from customer and a receive

sales in results to Our revenue XX% be rates in a by segment same Service financial in increases, Real that low sales. wins, difficult Origination close origination and Estate XX% origination had foreclosure decline of X% and our our mortgage to what revenue grew and financial by growth and price performance. cost low the XXXX provides reflect market delinquency in our approximately our X% total referral fewer base continues declined environment to starts XX% market historically strong X compared company in the total to an fewer XXXX, in outperforming information lower same quarter mortgage compared in the incredibly quarter volume Servicer segment on foreclosure additional volume. Slide volume. Service

benefits Service are of can of the you $XXX,XXX margins positive. comprised the last the improvement than revenue, Estate the compared EBITDA see, better As benefits compared EBITDA approximately of increases and to Corporate XX.X% segment. second to of first and and million The trends higher, year. XX% business and costs $X.X and the first in was revenue to segment costs. Adjusted second second in of margin negative referrals, segment million services, quarter corporate compared EBITDA lower to default modestly by EBITDA certain wins, margins 'XX. for sales $XXX,XXX Real declined in EBITDA Servicer was and year driven Adjusted $X.X improved EBITDA the stronger price expansion quarter margins adjusted XXXX due quarter service the was in XX.X% of nonrecurring adjusted adjusted net in to adjusted last of quarter quarter

improved compared benefits, net margins quarter. and adjusted quarter first the EBITDA second adjusted Excluding EBITDA nonrecurring quarter first these to

quarters, provides anticipate in fourth information lower over our and base. Slide and we efficient more on segment. XXXX X sales ramp service and third wins cost EBITDA additional strong Real revenue as the adjusted our we growth For and Estate Servicer

Second of quarter. XX% than was XXXX this the higher to quarter second last quarter flat XXXX segment and in service revenue

and businesses the to XX% the experience compared nonrecurring in wins than in and in initiatives. reflects XX.X% continue earlier quarter. expenses XX.X% second $XX.X of of the quarter and margins quarter year business process. Adjusted a X were Adjusted second the XXXX of reflects quarter our Estate The to quarter efficiency of in and as efficiency pipeline. the I to as the of $XXX,XXX and 'XX compared the Real the improvement We growth XX.X% last last improvement quarter first initiatives first compared this discussed. Slide second the just provides X% second sales XXXX unit quarter default certain of million The that that revenue higher higher-margin support quarter of year Servicer of EBITDA summary was EBITDA year. of stage to higher the growth of than well this first

in are revenue business customers these We wins once that annual For referrals. trustee that This quarter, these of and million that the quarter. we over in second signed support agreements X the EBITDA trustee market we ramping customer business share and process new couple quarter, first provide anticipate in $XX.X the In ramped We a completed is the won estimate growth. foreclosure revenue expansion the the with to fully generate onboarding will to will next services. won trustee addition X we of of we years. service

U.S. primarily assets We per ramping have progresses. We generate from will anticipate the earnings of Since which as in property. sales most forecast impact a segment of beyond. in probability. renovation decline win We discussed of basis, received significant million I revenue quarter average the over went opportunities just the progress $XX.X volume, estimate of pipeline, the pipeline and we which XXXX program stage a April, one referral sales wins also will close made a of customer sales quarter the with in assigned referrals, compared we reflects ramp average XX last services ended of lower to addition revenue will on and we our revenue for late the renovation and this largest the annual stabilized $XXX,XXX year which earlier weighted to live the pipeline to the owners REO of The have

Turning to the X. macroeconomic environment on Slide

and have is past, early there continues debt credit As in a financial we are early-stage declined, consumer discussed record of delinquencies the to stress. savings rising. card signs has Consumer near high be

in This higher the appears existing year May National the Additionally, for homes May inventory inventory changing. home for sale home Association adjusted was XX.X% According is to believe seasonally the and homes to low. Despite largely remains be X existing last which in home interest last remain sales of correlated low. XXXX high of highly very than to because home were we the of affordability, lower. in increase prices, rates sale the years, Realtors, X.X% is significant prices of

As rates will that in certain loan foreclosure couple of options and years foreclosure increase over to normalize. low their longer conversion normal inventory markets more This to defaults. therefore dynamics stress homes fewer mortgages have have initiations down Should levels. may could have loans the happen, address grows, or drive that and payment no equity prices home in last the consumers as originated this may decline supply/demand were

Moving to our Origination X. segment on Slide

service over of by million improved EBITDA revenue. year on for service last the XX% EBITDA decline and in residential EBITDA Adjusted period. Adjusted industry-wide improved compared origination volume first same are quarter We last initiatives. the X% second that the flat similar savings $X.X to and to decline despite a from a cost revenue in adjusted was efficiency quarter year pleased

business on see Origination all relative segment of profit, annualized adjusted year. Slide million an the basis, On sales the can the in slide, second in margins, adjusted prior provides a XX won segment's gross EBITDA wins improved and our gross $X.X estimated we quarter. stabilized profit you As an EBITDA Origination and summary margins, pipeline. to new

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

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

we first renewed. believe annuity with During of loan believe homeowners insurance the process for closing XX signed our the We be and agreements majority their as improve issued, for second a customer that of pipeline member policies have and prospects. attractive members, homeowners and will our revenue borrowers quarter, which insurance an the are we the program can establish Altisource

Turning to Slide on our Corporate XX. segment

We cost strong discipline. are maintaining

of this the loss $X.X second Second million $X.X first quarter and the better corporate of of XX% XXXX million than or EBITDA year. quarter worse than $XXX,XXX adjusted quarter was

compared benefits. adjusted loss nonrecurring EBITDA XXXX Absent in XXXX benefits, initiatives. results to quarter loss an included modestly XXXX. first our and corporate EBITDA of to million quarter $X.X reflects the second lower estimated The net of improved cost year first efficiency savings last quarter adjusted these compared The

between pleased XX. guidance to I'm XXXX and million first Moving XXXX service EBITDA year achieve million of XXXX. to $XX.X In XX% Slide to of $XX.X and believe with on adjusted over we our are and revenue performance half second summary, the our quarter and in track growth XX%

are a We cost ramping a market. good historically on continue in progress making new difficult to wins business base lower much and win sales

year, adjusted over months X% achieve $X.X of higher the result, mortgage guidance, higher have in same service is first period a grown years. over last million is the the origination As than or we and adjusted X EBITDA adjusted sales EBITDA of the X the decline starts, foreclosure same period. If foreclosure revenue approximately by $XX we million $XX despite for volume this EBITDA million will our and midpoint year

million business, run at optimistic Operator? open plus up EBITDA will call for questions. new we cautiously a $XX we exit the the ramp we that year now adjusted are rate. I'll As

[Operator Sharma from question Instructions] first with Riley. Our comes B. Raj

And from new the revenue about with talk service and talk If could How of also, how is the sales? and much fewer is pre that fewer increases? foreclosure incrementally early starts you could you foreclosure about foreclosure XX% revenue process? price the if growing

Raj, Bill Shepro here.

the Real taking and of Michelle, So I place think could couple segment. in jump Servicer as Estate things well. a you are in

I California, some our valuation of in growth. contributing our have to the it price second remember in holds Two, increases you quarter is had field think Those one foreclosures. component customers in if been the released. year and some which of one on last business, of services is

the quarter. we comparability And issue a year that have so this from don't perspective, in second

we're we're trustee on -- the earlier referrals new we're that and business, foreclosure includes business new renovation X meaningful our then adding earlier business, but winning where the receiving the one the it's business, new is quarter. Third it's we've started stage exciting adding business we innings, from primarily to clients, and think we and processes, launched modest. And two of the still in could more an although which in be -- be will finally, second early stage

I think or ramping it only that's nicely. the in but to contributed so quarter, about revenue $XXX,XXX second very

XX a or of we as referrals. so, week think I had ago received

we're now to think referrals of I this up customer. north from XX

be ramping go we And as contributor is so we're that forward. that, nicely, very a business very meaningful optimistic that and can

then usual servicer business? can estimate Right. of and -- an And on a the sort process margins this on the earlier part you your the pre foreclosure give the of versus

on Yes. Look, business depends of lot because very unit. high-margin trustee is the product, business, Sure. operations, global but business of the inside a our a the

XX% what, probably, in more Michelle, the of business, XXs? the north think that's title I in

Yes.

place The earlier high-teens margin And then business to mid- in services EBITDA field The process. take also is that level. business. the typically can margin

be can inside as end attractive, as margins still very but of the the pretty so not the they're And at margins process, the of Hubzu strong. reasonably attractive necessarily

revenue is very pre right. the you wanted And are helpful. level then process your and until on it of confidence confident to sort understand and through All this -- I Or the a to this new how foreclosures the addition up? the year next? foreclosure Is earlier actual in pick structural on the to That's continue base?

Yes.

the the both timing still second Raj, low, quarter, a think was month. the XX-plus question that Early-stage if look just early-stage but Black up you last are tick if it's low, very Knight, to So -- unclear delinquencies and did what at rates comes that or reporting in day day of delinquencies. was I delinquency as from ICE the

up. tick a it's or not. But did low. speaking, if delinquency rates So very they trend generally remain see We'll

from almost the because quite processes they to during were want still on foreclosure bit pre-pandemic, we stage so down initiations, where they're pandemic. earlier they're And just while XX% from up the a focus

I with think, to And so we've services an area space. trustee we're customer. share. And added, existing reverse an continue to them, in started on business that's portfolio the also some and mortgage doing in the X We the work on work and focus grab we then trustee expanding with to we're want new foreclosure market states providing also

going what's represents we And compared may think XX% the Michelle But I in us. and some during think up has with fairly I of remarks, were mentioned a been prior we on inventory. year, all, muted. sale That prepared that delinquency think So sales all for growth in were May, down my home to for mean, homes couple the market -- change. I percent.

that's So pretty interesting.

also the if -- appears it cohorts equity, So prices for recent even there's and after to more coming up massive we've that's in us. delinquencies, already that think in continue not was for selling. first may set some that that happens, the prices precursor typically, could loans, of you're loan-to-value equity that risk down. due bid-ask a to more to think high sale. benefit That's markets come originations, where a those home job there's had like less -- very see seen like That with going starts of of be homes are the that they to those a bit homes spreads, higher or even And available perhaps some I home could more be I if run particularly are and Austin. And down

the about lastly, business the that's just QX next $XX.X all? correctly, -- that to big The services for... related you in that's of hear at win? estimate then talk Could getting that or the the about X. getting did $XXX,XXX it And -- on annual Right. is the renovation year you're I win And the annual of property for million,

Yes, roughly.

shy referrals we've just costs approved we're where think on that renovation submitted and have I of the in far $XXX,XXX customer. the them received we've bids by so

be we So total you will as price, complete that's as that revenue ticket renovation renovations. the will, sort of of cost if the booked the

wins, I to look, look think, I at like larger so in And Raj. our wins our aggregate,

this look opportunity quarter. very second quarter, fourth the first won in we you So in and if the large renovation

that appendix, see in roughly are I looking between it's we've you're again think think, X slide, quarter, that what's trustee you X now million, to sending in revenue included this -- clients, the look these second sales the the at you'll million X those I of all is at won $XX scenario Michelle, quarter, think we referrals. We aggregate, if and $XX recollection. wins, my were in

on... we what have is million $XX in the deck

Yes.

trustee side, estimating as we we're sales several revenue but would that new building wins into largest on So to wins. and states. others the about customer those those feel with from X the as of be origination from wins work existing well level good Raj, the expansion those of up an

us files to you're -- In at an we we're -- opportunity, XXX could fact, And of forecast. month. opportunity a including if there's in it. If there's slide the deck we're outperform revenue turn into for what think there's we've the look, renovation included for opportunity $XX I today's an the those of near to certainly us million an not were slide business to that deck. month, appendix levels But a a anywhere in optimistic achieve $XXX,XXX month looking

it. there Got with my and it. offline. end questions take Got it I'll

Our next with FNBO comes from question Northland. Mike Grondahl

of an the Bill, program. on you -- with agent, you Are I that? homeowners mentioned you relation risk think just Or could any in the policies? taking are explain insurance you kind that homeowners' to insurance if XX

Sure.

insurtech just partner Policygenius, -- as called we're program So acting we launched agents. with an insurance we're homeowners acting a where both

to homeowners And simplify as we're and and getting we're are that reduce program loan as -- insurance an provide agent the homeowners lead those to join members under friction referrals as with officers is licensed and country program customers, their insurance policy. borrowers, our trying across the in we're to meeting the insurance Policygenius. So essentially the getting

provide comes And And commission the are -- of insurance multiple what's future. the homeowner that second half so a our us, really roughly the to insurance just essentially through -- modestly consumer half in to then of changed renewals but numbers, I our partner, these in rough through That then can we're to and partner. think Policygenius, we homeowners earning commission. offers the commission, for

taking And so we're -- is not answer and... risk we're any the short not

Right.

You're not risk. taking that

Okay.

a earning sale. commission are You a on kind of

right. That's

you the lenders are is already just one commission signed homeowners data earn And it's same important to up the we're us closing have have the optimistic. policies we I XX XX-plus time, our renew, renewed. as those very now actually program. these referrals. We've at this is year the the renew, for percent now that are we or continue We process think a evaluating insurance members is got pipeline to and making as get what's right members. and an business earn policies frictionless about We the And first forward receiving to and some of commission attractive closing more not around we're like the look deals. What I industry

that at what you sure. $XXX,XXX there? naive, Yes, it. newer little work? seat are -- for the is Or doing doing earn Got the per what On renovation the that explain $XXX,XXX... this business, you're renovation you're just you can actual but I'm a table to leveraging

Sure. of Yes, course.

us us come what on contractor bid the and to condition, property, the go services. to the the their they by rules doing client the investors work. do clients. We of based the investors tools basically, that's some and and the the work submit got single-family client starts and work But business contractors. we've real this a that analysis evaluate we're back. the the And upon then pay based the hired we to the If we're basically the actually We make doing rules, this we way, The through done, we by says by sophisticated that difference for work our that tells business bid. market is basically, of basically we over with to what So rental renovation oversight, all and hope prices what paid particularly are yes, between is larger time, determine to network be estate customer to owners what expand we needs we what out to one we're this REO. as given managing pay pretty

Got it.

costs. internal some Less

at thoughts Sure, you early, assuming sort this any And of round, initial point? maybe how stays about the Just 'XX? but are too Great. then sure. 'XX it's on world thinking

Yes.

some we of -- So we as sales put think doesn't $XX our fully show to EBITDA. would revenue slide talked that this look the we're year we won. look, that cautiously of call earnings include included on that like and EBITDA -- we we I both can the or with what presentation, pipeline. think second we've this about back quarter include And in the couple incremental sales All scenarios ramp million and end optimistic we presentation. way, run already not by does be that a the the the And scenarios we've that those in year would also exit rate

there's try point. some guidance to our we're in the of But about this puts be to or business sales putting course, we're that's scenario now. so customer We've right where our churn how takes. -- And attrition not at some I approach. any But and included out reasonable in think thinking

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

beyond. for and Thanks with Great. financial today's quarter Thank we're this year our joining and happy believe second call. very We're positioned well you, performance for operator.

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

disconnect. You may now