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DATE
Thursday, July 24, 2025 at 8:30 a.m. ET
CALL PARTICIPANTS
Chairman and Chief Executive Officer — Bill Shepro
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TAKEAWAYS
Total Service Revenue: $40.8 million in total company service revenue for Q2 2025, up 11% compared to the second quarter of 2024, with growth attributed to expansion in renovation, LendersOne, and foreclosure trustee businesses.
Adjusted EBITDA: $5.4 million in adjusted EBITDA for Q2 2025, primarily from growth in both business segments, partially offset by higher corporate losses.
Total Company Income Before Tax: Improved to $200,000 in the second quarter of 2025, compared to a $7.6 million loss in the same period of 2024, driven by higher adjusted EBITDA and lower interest expense related to new debt.
Net Income Attributable to Altisource: Net income attributable to Altisource (GAAP) was $16.6 million for Q2 2025, compared to an $8.3 million GAAP net loss in Q2 2024; This includes an income tax benefit from the reversal of India-related tax reserves.
Unrestricted Cash: $30 million at quarter-end.
Servicer and Real Estate Segment Revenue: $32 million in service revenue for Q2 2025, up 10% compared to Q2 2024, led by renovation and foreclosure trustee business growth.
Servicer and Real Estate Adjusted EBITDA: $12 million in adjusted EBITDA for Q2 2025, up 8% compared to the second quarter of 2024, with margin declining to 37.4% from 38.1% due to mix shift toward lower-margin renovation work.
Servicer and Real Estate Sales Pipeline: $25.3 million in annualized service revenue potential on a stabilized basis at quarter-end.
Origination Segment Revenue: $8.8 million in revenue for Q2 2025, up 13% compared to the second quarter of 2024, with growth primarily in LendersOne.
Origination Segment Adjusted EBITDA: up 81% or $400,000 compared to the same quarter last year, reflecting improved margins and service revenue.
Origination Segment Sales Pipeline: Origination segment sales pipeline was $14.7 million in estimated weighted average annualized revenue potential at quarter-end; $3.3 million in new annualized business wins during the quarter.
Corporate Segment Adjusted EBITDA Loss: $7.5 million corporate adjusted EBITDA loss in the second quarter of 2025, $300,000 higher than in the same period of 2024, largely owing to prior year benefits not repeating and increased unrealized foreign currency losses.
Industry Update — Delinquency Rates: Ninety-plus day mortgage delinquencies were 1.2% in May 2025, near historic lows.
Industry Update — Foreclosure Starts: Foreclosure starts increased by 15% in April and May 2025 compared to the same period in 2024, but still 29% below the same months of 2019.
Industry Update — Foreclosure Sales: Up 10% in April and May 2025 but 47% lower than April and May 2019 levels.
Industry Update — Origination Volumes: Industry-wide origination unit volume increased 27% compared to Q2 2024, with purchase origination volume up by 5% compared to the same quarter last year and refinance activity increasing by 89% compared to the same quarter last year
2025 Origination Forecast: The Mortgage Bankers Association projects 5.6 million loans in 2025 (full year), Loan originations in 2025 are projected to increase by 12% compared to the full year of 2024 but 3% below April's forecast.
Growth Initiatives: Management identifies renovation, granite construction risk management, LendersOne, Hubzu Marketplace, and foreclosure trustee as outsized growth areas that do not depend on market improvement.
SUMMARY
Reflecting momentum in business segments tied to renovation and LendersOne services. Management described its $40.8 million in service revenue and $5.4 million in adjusted EBITDA for Q2 2025 as the result of a focused effort on areas with macro tailwinds and cost discipline. $16.6 million in GAAP net income for Q2 2025 included substantial tax reserve benefits linked to India, without which the underlying profit improvement may be less pronounced. The company reported robust business pipelines in both its servicer/real estate and origination segments, indicating potential future revenue additions on a stabilized basis of $25.3 million and $14.7 million, respectively, as of quarter-end.
Chairman and CEO Shepro said, "we believe we are making solid progress against these initiatives and are optimistic that these initiatives represent a strong growth engine for the company."
The servicer and real estate segment's margin compression stemmed from revenue mix, as renovation services contributed more but at lower margins.
Interest expense declined following debt restructuring, aiding improvement in bottom-line metrics.
Origination market unit volume growth—industry-wide origination unit volume increased by 27% compared to Q2 2024—and a sizable new business sales pipeline may sustain or accelerate segment growth momentum if industry trends persist.
INDUSTRY GLOSSARY
LendersOne: Altisource's network platform providing mortgage origination solutions for lenders, referenced as a core area of segment growth.
Granite construction risk management: A service focused on monitoring and mitigating risks associated with construction loans and projects.
Hubzu Marketplace: Altisource’s online real estate auction platform, cited as a key growth initiative.
Foreclosure trustee business: Services managing legal and operational aspects of foreclosure proceedings, highlighted for segment revenue growth and future potential.
Full Conference Call Transcript
Bill Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to Bill.
Bill Shepro: Thanks, Michelle, and good morning. I'll begin on Slide four. We are pleased with our second quarter performance. In a close to historically low delinquency environment, we grew service revenue, adjusted EBITDA, pre and post-tax GAAP earnings, and GAAP earnings per share compared to the second quarter of last year. This is largely from our focus on growing our businesses that have tailwinds, cost discipline, lower interest expense, and the reversal of certain tax reserves related to our India operations. Turning to Slide five, compared to the second quarter of last year, we grew total company service revenue by 11% to $40.8 million and adjusted EBITDA by 23% to $5.4 million.
Service revenue growth primarily reflects the ramp of the renovation business and growth in the LendersOne and foreclosure trustee businesses. The improvement in total company adjusted EBITDA was largely from both business segments' service revenue and adjusted EBITDA growth and partially offset by a modest increase in the Corporate segment's adjusted EBITDA loss. The business segments generated $12.8 million of adjusted EBITDA representing an 11% or $1.3 million improvement compared to the second quarter of 2024. The corporate segment's adjusted EBITDA loss of $7.5 million was slightly higher than the second quarter of last year.
From a GAAP perspective, income before tax improved to $200,000 in the second quarter of 2025 compared to a loss of $7.6 million in the quarter of 2024. This was primarily driven by higher adjusted EBITDA and lower interest expense from the new debt. Net income attributable to Altisource improved to $16.6 million in the second quarter of 2025 compared to a net loss of $8.3 million in the same quarter of 2024. The improvement in net income reflects an income tax benefit from the reversal of certain tax reserves related to our India operations. We ended the quarter with $30 million in unrestricted cash.
Moving to slide six, in our largely countercyclical servicer and real estate segment, second quarter 2025 service revenue of $32 million was 10% higher than the second quarter of 2024, primarily from the ramp of the renovation business and growth in the foreclosure trustee business. Second quarter 2025 adjusted EBITDA of $12 million for the segment was $900,000 or 8% higher than the second quarter of 2024. Adjusted EBITDA margins declined to 37.4% from 38.1%. Adjusted EBITDA growth primarily reflects service revenue growth and lower SG&A. The slight decline in margins is from revenue mix with higher growth in the lower margin renovation business. Slide seven provides a summary of our servicer and real estate sales wins and pipeline.
For the second quarter, we won new business that we expect to add service revenue on a stabilized basis over the next couple of years. We ended the quarter with the servicer and real estate segment estimated total weighted average sales pipeline of $25.3 million of annual set service revenue on a stabilized basis. Moving to our origination segment in Slide eight, second quarter 2025 service revenue of $8.8 million was 13% higher than the second quarter of 2024. Adjusted EBITDA of $900,000 was $400,000 or 81% better than the same quarter last year. The increase in service revenue primarily reflects growth in the LendersOne business. Adjusted EBITDA growth primarily reflects stronger margins and service revenue growth.
Slide nine provides a summary of our origination segment sales wins and pipeline. Our focus on helping our LendersOne members save money and better compete continues to drive substantial interest in our solutions. On an annualized stabilized basis, we won an estimated $3.3 million in new business in the second quarter. Our estimated weighted average sales pipeline at the end of the quarter was $14.7 million. We are pleased with the progress we are making in developing our sales pipeline and are optimistic that our sales pipeline and recent sales wins will contribute to growth in our origination segment.
Before discussing our corporate segment, please turn to slide ten where we list the five businesses that we believe represent an outsized growth opportunity for Altisource over the next couple of years. These businesses include renovation, granite construction risk management, LendersOne, Hubzu Marketplace, and foreclosure trustee. On this slide, we provide a summary of the opportunities and the status of each. What's important is that the success of these initiatives does not depend on an increase in foreclosure starts or sales nor on a growing residential loan origination market. As you can see from the slide, we believe we are making solid progress against these initiatives and are optimistic that these initiatives represent a strong growth engine for the company.
Of course, should the US economy deteriorate, or origination volumes grow, we should be able to accelerate our growth even more. Turning to our corporate segment in Slide eleven, second quarter 2025 corporate adjusted EBITDA loss of $7.5 million was $300,000 higher than the second quarter of 2024 largely from a prior year tech and com benefit and higher unrealized foreign currency exchange losses. Moving to Slide twelve and the business environment in which we operate. Starting with the residential mortgage default market, 90-plus day mortgage delinquency rates remain near historic lows at 1.2% in May. Foreclosure starts increased by 15% in April and May of 2025 compared to the same period in 2024.
However, April and May 2025 foreclosure starts were 29% lower than the same period in 2019. Foreclosure sales for April and May of 2025 increased by 10% compared to last year, but were 47% lower than the same period in 2019. For the origination market, industry-wide origination unit volume increased by 27% in the second quarter compared to the same quarter of last year, with purchase origination volume up by 5% and refinance activity increasing by 89%. For the full year, MBA's July 2025 forecast projects there will be 5.6 million loans originated in 2025, a 12% increase compared to the full year of 2024 and 3% lower than the MBA's April 2025 forecast.
Turning to slide thirteen, in closing, we are pleased with our second quarter results. We have a strong sales pipeline, are winning new business, and ramping sales wins, while maintaining cost discipline and significantly reducing corporate interest expense. To support longer-term growth, we are focusing our efforts on accelerating the growth of those businesses that we believe have tailwinds in what remains a close to historically low delinquency environment. Should loan delinquencies, foreclosure starts, and foreclosure sales increase, we believe we are well-positioned to also benefit from stronger revenue and adjusted EBITDA growth in our largest and most profitable countercyclical businesses. I'll now open up the call for questions. Operator?
Operator: Thank you. At this time, we will begin our Q&A session. As a reminder, to ask a question during the call or during the session, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. Our first question comes from the line of Shikar Nikovi with Napier Park Global. Your line is now open.
Shikar Nikovi: Hey, guys. Good morning. Thanks for the call. Hope you're well. Wanted to just one piece that sort of jumped out at me on the cash flow statement, and it looks like there's a pretty meaningful working capital build. Just trying to understand what that is.
Bill Shepro: Hey, Shikar. It's Bill. Yeah. With respect to working capital, I think there's sort of normal working capital activities that are being managed. I wouldn't say there's anything that unusual in the quarter.
Shikar Nikovi: Okay. Yeah. I'll take a closer look.
Bill Shepro: Yep.
Shikar Nikovi: Circle back. Thanks.
Operator: Thank you so much for your question. As a reminder, everyone, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw a question, press star one again. One moment while we compile the Q&A roster. I am showing no further questions at this time. I will now like to turn the call back to Bill Shepro for closing remarks.
Bill Shepro: Thank you, operator. We're pleased with our second quarter performance and believe we are set up well. Thanks for joining us today. Have a good day.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.