What Altisource Portfolio Solutions (ASPS) Said on Its Q3 Earnings Call

Key Points

• Q3 results improved: Service revenue rose 26% year over year to $49.8 million, while adjusted EBITDA increased 17% to $4.3 million and adjusted EPS climbed 30% to $0.13.
• Customer wins drove segment growth: Servicer and real estate revenue reached $35.8 million, while origination revenue surged 65% to $14 million despite weaker mortgage-market volumes. Hubzu inventory more than quadrupled year over year to 26,000 assets.
• Customer concentration declined: Revenue from customers outside the Onity and Rithm-related portfolios nearly doubled, representing 72% of total service revenue versus 46% a year earlier. Management expects margins and adjusted EBITDA to improve as newer business matures and automation initiatives scale.

Altisource Portfolio Solutions NASDAQ: ASPS reported higher third-quarter service revenue and adjusted EBITDA as customer wins continued to ramp across its servicer and real estate and origination businesses, while the company continued to reduce its concentration with Onity and Rithm-related customers.

Chief Executive Officer Bill Shepro said the results showed the company’s growth strategy was “gaining traction,” despite default and mortgage-origination markets that remained below normalized levels. He said results were affected by the wind down of the Rithm Cooperative Brokerage Agreement and the transfer of Rithm’s Onity-serviced loans to Rithm.

Third-quarter service revenue totaled $49.8 million, up 26% from the prior-year period. Adjusted EBITDA increased 17% year over year to $4.3 million. Adjusted EBITDA margin was 8.5%, modestly below the year-earlier level, which management attributed to revenue mix, investments in customer implementations and future growth.

Altisource said adjusted pretax income rose 59% to $2.1 million, while adjusted earnings per share increased 30% to $0.13. The company generated $3.5 million of net cash from operating activities during the quarter and $1.3 million during the first nine months of 2026. It also purchased and retired $900,000 of its term loan and ended the quarter with $25.1 million in unrestricted cash.

Segment growth led by customer wins

In the servicer and real estate segment, third-quarter service revenue was $35.8 million. Shepro said growth was driven primarily by customer wins and strength in the Hubzu, Title and Trustee businesses, partly offset by lower Rithm revenue. Segment adjusted EBITDA increased 2% to $10.2 million.

The company added an estimated $2.7 million of annualized stabilized service-revenue wins in the segment during the quarter. Wins secured since 2024 generated $13 million of revenue in the third quarter, or $51.9 million on an annualized basis, according to management. Altisource ended the period with an estimated weighted-average pipeline of $12.8 million in stabilized annual revenue for the segment.

Hubzu inventory within Marketplace more than quadrupled from a year earlier to 26,000 assets as of Sept. 30, compared with 5,700 assets a year earlier. Inventory rose 16% from 22,300 assets at the end of the second quarter. Hubzu transacted 789 homes during the quarter, compared with 583 homes a year earlier and 710 homes in the preceding quarter.

“Because Hubzu inventory typically moves through the foreclosure process and REO sales stages before generating revenue, inventory growth should be a precursor to home sales and revenue growth,” Shepro said.

The origination segment reported service revenue of $14 million, up 65% from the prior-year quarter, while adjusted EBITDA increased 33% to $1.2 million. Management said the growth was primarily driven by customer wins and market-share gains rather than broader market conditions, as mortgage origination unit volume declined 6% year over year.

During the quarter, the origination business secured an estimated $6.3 million in annualized stabilized revenue wins, primarily within Lenders One, and had an estimated weighted-average pipeline of $18.5 million. Altisource said it expects fourth-quarter origination service revenue to remain strong compared with the prior year.

Customer concentration declines

Service revenue from customers other than Onity, Rithm and customers associated with their portfolios rose 96% from the prior-year quarter. Those customers accounted for 72% of company service revenue, compared with 46% a year earlier and 65% in the second quarter.

Shepro said the mix shift broadens the sources of growth and should make the revenue base more durable. The company is pursuing its “Project 45” objective of reaching $45 million in run-rate adjusted EBITDA by the fourth quarter of 2028, supported by customer ramps, operating leverage and cost management.

Margins and automation initiatives

During the question-and-answer session, Chief Financial Officer Michelle Esterman said gross-profit margin trends reflected, in part, faster growth in the lower-margin origination segment relative to the servicer and real estate segment.

Esterman said management expects adjusted EBITDA margins to improve in coming quarters as newer servicer and real estate business matures, origination revenue grows against investments in talent and capabilities, and corporate costs remain relatively stable. The business segments generated combined adjusted EBITDA margins of approximately 23% in the third quarter, she said.

Altisource reported a corporate adjusted EBITDA loss of $7.1 million, reflecting a $200,000 reduction in corporate costs from a year earlier and an $800,000 decrease from the second quarter.

The company also expanded AI-enabled workflows across Marketplace, field services, valuations, finance and corporate support functions. It said it used AI to shorten software-development cycles and continued developing software tools for construction risk management, commercial loan servicing and real estate asset management.

Management said these initiatives remain in early stages but could improve scalability, support revenue growth and contribute to operating leverage. Altisource expects higher adjusted EBITDA in the fourth quarter, according to Shepro.

About Altisource Portfolio Solutions (NASDAQ:ASPS)

Altisource Portfolio Solutions SA NASDAQ: ASPS is a technology and services company that supports the mortgage and real estate industries. It provides software, marketplaces and related services designed to help mortgage lenders, servicers, investors and other participants manage loans, properties and real estate transactions.

The company's offerings have included Hubzu, an online marketplace for buying and selling residential and commercial properties, along with platforms and services for asset management, property preservation, valuation, real estate brokerage and other mortgage-related processes.

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