Altisource Portfolio Solutions SA (ASPS) Q3 2024 Earnings Call Highlights: Strong Service ...

GuruFocus News
4 min read

In This Article:

  • Service Revenue: $38.2 million for the quarter, an 11.8% increase year-over-year and a 3.5% increase sequentially.

  • Adjusted EBITDA: $3.6 million for the quarter, a $2.8 million improvement year-over-year, but an $800,000 decline sequentially.

  • Cash and Cash Equivalents: $28.3 million at the end of the quarter.

  • Adjusted EBITDA Margin: Improved to 11.3% year-to-date compared to negative 1.1% in the same period last year.

  • Servicer and Real Estate Segment Revenue Growth: 4.7% sequentially and 13% year-over-year.

  • Renovation Business Referrals: Over 70 referrals since launch, with an average renovation cost of close to $100,000 per property.

  • Origination Segment Adjusted EBITDA Improvement: $1.4 million year-over-year and $400,000 sequentially.

  • Corporate Adjusted EBITDA Loss: $7.2 million for the quarter, a 17% improvement year-over-year.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Altisource Portfolio Solutions SA achieved a 11.8% year-over-year increase in service revenue, marking the strongest quarterly performance in 12 quarters.

  • The company reported a $2.8 million improvement in adjusted EBITDA compared to the third quarter of 2023, driven by higher service revenue and lower corporate costs.

  • The newly launched Renovation business has shown rapid growth, becoming one of the larger business lines within six months of launch.

  • Altisource Portfolio Solutions SA has successfully added new clients in both the Servicer and Real Estate segment and the Origination segment, contributing to a diversified revenue stream.

  • The company maintains strong cost discipline, with a 17% improvement in corporate adjusted EBITDA loss compared to the third quarter of 2023.

Negative Points

  • The company faced a decline in serious delinquency rates, foreclosure starts, and foreclosure sales, impacting its higher-margin businesses.

  • Higher SG&A costs, including legacy indemnity claims and bad debt expense, negatively affected adjusted EBITDA results.

  • The Renovation business launched later than anticipated, resulting in a slower ramp-up and impacting expected EBITDA.

  • Market conditions, including lower foreclosure starts and sales, have been less favorable than anticipated, affecting revenue from the Hubzu, trustee, and title businesses.

  • The company anticipates achieving close to the low end of its guidance due to market challenges and slower-than-expected business ramp-up.

Q & A Highlights

Q: Can you elaborate on the impact of the foreclosure market on your business and the performance of the Renovation business? A: The foreclosure market has not performed as expected, with starts and sales lower than anticipated, impacting our higher-margin businesses. However, we are adding new clients in early-stage processes and seeing growth in our Renovation business, which has received over 70 referrals since its launch, with each renovation costing around $100,000. We expect this business to ramp up further.

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