Altisource Portfolio Solutions Q2 Earnings Call Highlights

Key Points

• Revenue growth accelerated in Q2 as Altisource reported service revenue of $48.7 million, up 19% year over year, driven by customer wins in both the origination and servicer/real estate segments. The company said this more than offset declines in business tied to Rithm.
• Customer diversification improved sharply, with revenue from customers other than Onity and Rithm rising to 65% of total service revenue, the highest level since the company’s IPO. Management also pointed to growing Hubzu inventory and a stronger sales pipeline as signs of continued progress.
• Margins and cash flow were pressured despite growth, as adjusted EBITDA declined due to prior-year one-time benefits, higher growth-related costs, and a $6.6 million use of operating cash tied mainly to receivables. Altisource said it repurchased $2 million of debt and is using AI initiatives to improve efficiency and support future margin expansion.

Altisource Portfolio Solutions NASDAQ: ASPS reported higher second-quarter 2026 service revenue as new customer wins helped offset a decline in business tied to Rithm, while management said the company is making progress toward diversifying its customer base and improving efficiency through artificial intelligence initiatives.

Chairman and Chief Executive Officer Bill Shepro said Altisource generated service revenue of $48.7 million in the quarter, up 19% from the second quarter of 2025 and 8% from the prior quarter. The increase reflected growth in both of the company’s operating segments, including a 62% year-over-year increase in the origination segment and an 8% increase in the servicer and real estate segment.

“Service revenue growth from customer wins has more than replaced the loss of a portion of the Rithm-related business, as demonstrated by our more diversified customer base and growing Hubzu inventory,” Shepro said.

Despite the revenue growth, Shepro said adjusted EBITDA and adjusted EBITDA margins declined from the prior-year period, primarily because the second quarter of 2025 included a non-recurring benefit related to a legacy matter in the servicer and real estate segment and because Altisource incurred higher costs to support revenue growth. Those factors were partially offset by a second-quarter 2026 gain from the repurchase of $2 million of the company’s term loan.

GAAP pre-tax earnings were nearly breakeven in the quarter, compared with $200,000 of pre-tax income in the second quarter of 2025. Net cash used in operating activities was $6.6 million, which Shepro said was driven almost entirely by higher receivables tied to revenue growth. The company ended the quarter with $23.2 million in unrestricted cash.

Servicer and Real Estate Segment Benefits From Customer Wins

Altisource’s countercyclical servicer and real estate segment generated $34.4 million in second-quarter service revenue, an 8% increase from the same period last year. Shepro attributed the growth primarily to customer wins in the Hubzu, title and trustee businesses, partially offset by fewer Rithm-related referrals.

Segment adjusted EBITDA was $11.7 million, down 2% year over year. Shepro said the decline reflected the prior-year non-recurring benefit in the marketplace business and 2026 EBITDA losses related to Rithm, which were largely offset by EBITDA growth from customer wins.

Altisource won an estimated $5.2 million in annualized stabilized service revenue in the servicer and real estate segment during the quarter. The company also generated $9.1 million of second-quarter revenue, or $36.5 million annualized, from sales wins since 2024. Its estimated weighted average sales pipeline for the segment ended the quarter at $8.2 million on a stabilized basis.

Shepro highlighted growth in Hubzu inventory as a key indicator for future revenue. Hubzu inventory increased 30% during the quarter to 22,300 assets from 17,200 assets at March 31, 2026.

In response to a question from B. Riley Securities analyst Timothy D’Agostino, Shepro said it typically takes nine to 12 months to sell an REO file after receipt, depending on factors such as redemption periods or eviction processes. For foreclosure referrals, he said Altisource typically receives the referral at the foreclosure start, and it takes around 12 months on average to reach foreclosure sale, though timelines vary by state.

Origination Segment Revenue Rises, But Investments Weigh on EBITDA

The company’s origination segment posted a 62% increase in second-quarter service revenue compared with the prior-year period, driven primarily by sales wins. Adjusted EBITDA declined as Altisource invested in leadership and staff and incurred higher outside fees and services to support growth.

During the quarter, the origination segment secured an estimated $7.1 million in wins, primarily in Lenders One. The segment ended the quarter with an estimated weighted average sales pipeline of $20 million.

Shepro said management expects service revenue and adjusted EBITDA in the origination segment to grow based on onboarding of recent sales wins, the existing pipeline and forecasted market conditions.

Customer Diversification Reaches Highest Level Since IPO

Altisource said it is reducing its dependence on Onity and Rithm. In the second quarter, revenue from customers other than Onity, Rithm and customers associated with their portfolios rose to 65% of total service revenue, up from 46% a year earlier.

Shepro said this represented the company’s highest percentage of service revenue from customers other than Onity and Rithm since Altisource went public in 2009.

Asked about the future contribution from Onity and Rithm, Shepro said it is difficult to forecast because it depends on Onity’s portfolio growth and delinquency trends. He said Altisource expects revenue from Rithm portfolios serviced or sub-serviced by Onity to decline over the next couple of months, but added that the company believes it is “closer to the end than the beginning” of that transition. Shepro said the decline may continue in the third quarter and should begin to stabilize in the fourth quarter.

Debt Repurchase and Liquidity Discussed

Altisource reduced outstanding debt during the quarter by repurchasing $2 million of its term loan. Shepro said the company has the ability under its debt agreements to buy back up to $3 million in purchase price of debt annually, subject to approval from the first-lien or super-senior term loan lenders.

“If we have the opportunity to opportunistically buy back debt, we think that’s a good use of cash, particularly when we’re buying back at a discount,” Shepro said.

He added that the company remains focused on building the business, growing revenue and improving margins, with the goal of generating more free cash flow and positioning Altisource to eventually refinance its debt.

Napier Park Global Managing Director Shachar Minkove asked about working capital, noting that receivables were a use of cash during the quarter. Chief Financial Officer Michelle Esterman said the increase was associated with revenue growth and some seasonality. Shepro said there was “nothing out of the ordinary” and that cash was already building back up early in the third quarter.

AI Initiatives and Market Backdrop

Shepro said Altisource has moved over the past year from evaluating AI to deploying it in practical ways across the company. He said the company is using AI to improve customer-facing capabilities, operating efficiency, revenue generation and software development.

Altisource has established a centralized AI enablement model and is applying AI-first software development to new applications and platform modernization. Shepro said the initiatives are already improving software development speed and productivity and could help reduce commercial off-the-shelf software costs while strengthening platforms including Equator, Hubzu and REALSynergy.

Management said Altisource continues to operate in a difficult market marked by low delinquency rates and origination volumes. Shepro cited a modest increase in 90-plus day mortgage delinquency rates to 1.55% in May 2026 from 1.45% in December 2025. Loans that were 90-plus days delinquent plus loans in foreclosure totaled 857,000 as of May 31, up 28% from May 2025 and 7% from December 2025.

Foreclosure starts for the first five months of 2026 were 14% higher than the same period in 2025, while foreclosure sales were 19% higher, though both remained well below pre-pandemic levels. In the origination market, second-quarter mortgage origination unit volume rose 9% year over year, driven by a 37% increase in refinance volume and a 4% decrease in purchase volume.

Shepro said the ramp of sales wins and efficiency initiatives should drive roughly flat third-quarter adjusted EBITDA and higher fourth-quarter adjusted EBITDA. He said the company remains focused on its Project 45 objective of reaching $45 million in run-rate adjusted EBITDA by the fourth quarter of 2028.

About Altisource Portfolio Solutions (NASDAQ:ASPS)

Altisource Portfolio Solutions SA NASDAQ: ASPS is a provider of proprietary technology and specialized services to the mortgage and real estate industries. Founded in 2009, the company helps financial institutions, investors and loan servicers streamline processes across the full loan lifecycle, from origination and valuation through default management, asset disposition and investor reporting.

Core offerings include loan servicing and asset management solutions, property preservation and inspection services, valuation and due diligence, title and settlement services, as well as vendor management platforms.

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