Altisource Portfolio Solutions (ASPS) Q3 2024 earnings summary

Executive summary

• Service revenue increased 12% year-over-year to $40.5 million in Q3 2024, marking the strongest quarterly performance in three years, with growth in both Servicer and Real Estate and Origination segments.

• Adjusted EBITDA rose to $3.6 million, up $2.8 million from the prior year, with margin expansion and cost savings, though down $800,000 sequentially due to higher SG&A.

• Gross profit increased 68% to $12.1 million, with gross margin improving to 32% from 21% year-over-year.

• Net loss narrowed to $9.4 million from $11.3 million year-over-year, with adjusted diluted loss per share improving to $(0.23) from $(0.44).

• The company diversified revenue streams with the launch and ramp of its Renovation business, contributing $1.5 million in Q3 revenue.

Financial highlights

• Q3 2024 revenue: $40.5 million (up 12% year-over-year); gross profit: $12.1 million (32% margin); adjusted EBITDA: $3.6 million (9% margin).

• Net loss: $9.4 million; adjusted diluted loss per share: $(0.23), a 48% improvement year-over-year.

• Cash and cash equivalents at quarter-end: $28.3 million; net debt: $202.3 million.

• Net cash used in operating activities for the nine months ended September 30, 2024, was $3.6 million, a significant improvement from $17.6 million in the prior year.

• Interest expense for nine months: $29.3 million, reflecting higher rates on senior secured term loans.

Outlook and guidance

• Management expects further growth from diversification and new business lines, with the Renovation business and recent sales wins expected to drive future revenue.

• Sales pipeline at quarter-end estimated at $32 million–$40 million in annualized revenue, with strong sales wins positioning for future growth.

• Anticipates significant revenue growth opportunities if default and foreclosure markets return to pre-pandemic levels, but expects to achieve near the low end of guidance due to lower-than-expected foreclosure activity and higher legacy indemnity claims.

• Liquidity is expected to be sufficient to meet working capital, capital expenditures, and debt service needs.