Altisource Portfolio Solutions S.A. Aktie

Ladies and gentlemen, thank you for standing by. Welcome to Altisource Portfolio Solutions Second Quarter 2026 Earnings Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to Michelle Esterman, Chief Financial Officer. Please go ahead.

Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Please review the forward-looking statements sections in the company's earnings release and quarterly slides as well as the risk factors contained in our 2025 Form 10-K and our 2026 Form 10-Q filings.

These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios and projections previously provided or provided herein as a result of change in circumstances, new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. Joining me for today is Bill Shepro, our Chairman and Chief Executive Officer. I'll now turn the call over to Bill.

Thanks, Michelle, and good morning. I'll begin on Slide 4. We are pleased with our second quarter performance with sequential and year-over-year service revenue growth in both segments. 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. In addition to strong service revenue, we reduced outstanding debt and continue to deploy AI and other efficiency initiatives, which we anticipate will improve product development speed and EBITDA margins.

We believe the continued ramp of sales wins and ongoing efficiency initiatives should drive roughly flat third quarter and higher fourth quarter adjusted EBITDA. Combined with continued sales wins, we believe this positions us well to achieve our Project 45 objective of $45 million in run rate adjusted EBITDA by the fourth quarter of 2028. Turning to Slide 5. For the second quarter, we generated service revenue of $48.7 million, a 19% increase over the second quarter of 2025 and an 8% increase over last quarter. The increase over the second quarter of last year was driven by 62% growth in the Origination segment and 8% growth in the Servicer and Real Estate segment. Despite the revenue growth, business segment and total company adjusted EBITDA and adjusted EBITDA margins declined quarter-over-quarter, primarily due to a non-recurring benefit realized in the second quarter 2025 related to a legacy matter in the Servicer and Real Estate segment and higher costs to support revenue growth.

This was partially offset by a second quarter 2026 gain from the repurchase of $2 million of our term loan. Moving to Slide 6. GAAP pretax earnings in the second quarter were nearly break-even compared to $200,000 of pretax income in the second quarter of 2025. Net cash used in operating activities was $6.6 million, almost all of which was driven by an increase in receivables from revenue growth. We ended the quarter with $23.2 million in unrestricted cash.

Turning to Slide 7 and our countercyclical Servicer and Real Estate segment. Second quarter 2026 service revenue of $34.4 million increased by 8% from the same quarter last year. The increase was primarily attributable to growth from customer wins in the Hubzu, title and trustee businesses, partially offset by a reduction of Rithm-related referrals. We anticipate service revenue from customer wins will continue to grow as it should take several more quarters for this new business to stabilize. Second quarter Servicer and Real Estate segment adjusted EBITDA of $11.7 million decreased by 2% compared to the same quarter last year. The modest decline is primarily from a non-recurring benefit realized in the second quarter of 2025 related to a legacy matter in the Marketplace business and 2026 Rithm-related EBITDA losses, which were largely offset by EBITDA growth from customer wins.

We anticipate adjusted EBITDA to grow as service revenue from these wins continue to ramp. We believe our performance demonstrates the strength of our platform and our resiliency in the face of Rithm-related losses. Slide 8 summarizes our Servicer and Real Estate segment wins and pipeline. For the quarter, we won an estimated $5.2 million in annualized stabilized service revenue wins. In addition to these sales wins, we are particularly pleased with how quickly we are growing revenue from earlier sales wins. As shown on the bottom of this slide, we generated $9.1 million in second quarter revenue or $36.5 million on an annualized basis from sales wins since 2024.

We anticipate revenue and earnings from sales wins to increase as the year progresses. We ended the quarter with the Servicer and Real Estate segment estimated total weighted average sales pipeline of $8.2 million on a stabilized basis. Turning to Slide 9 and our growing Hubzu inventory. Hubzu inventory grew 30% in the last quarter to 22,300 assets from 17,200 assets at March 31, 2026. The inventory level is an important service revenue barometer because growing inventory should generate future revenue growth. For REO inventory, we generate revenue on those REO that are ultimately sold, which has been typically most of the REO inventory. For foreclosure auction inventory, we generate revenue on those foreclosures that ultimately reach foreclosure sale and are sold to a third party, which has typically been anywhere from 5% to 10% of foreclosure auction inventory and at a higher level pre-COVID.

Moving to Slide 10. Our Originations segment continued to build momentum. Second quarter 2026 service revenue increased 62% over the second quarter last year, driven primarily by sales wins. Adjusted EBITDA declined as we invested in leadership and staff and incurred higher outside fees and services to support growth. Slide 11 outlines our Origination segment sales wins and pipeline. During the quarter, we secured an estimated $7.1 million in wins, primarily in Lenders One. We ended the quarter with a $20 million estimated weighted average sales pipeline. We continue to be pleased with the Origination segment pipeline and sales wins, which we believe demonstrate the value that we bring to our customers.

Based upon the onboarding of several sales wins, our sales pipeline and forecasted market conditions, we anticipate service revenue and adjusted EBITDA to grow in our Origination segment. Turning to Slide 12 and our growing revenue and customer diversification. We are executing well against our plan to grow revenue and reduce our dependence on Onity and Rithm. Second quarter 2026 total company service revenue grew by 19% over the second quarter in 2025. Over the same period, revenue from customers other than Onity Rithm and those associated with Onity and Rithm's portfolios increased to 65% of total service revenue from 46%. As the year progresses, we anticipate these trends to continue. This marks the company's highest percentage of service revenue from customers other than Onity and Rithm since Altisource went public in 2009.

Moving to Slide 13. I'd like to briefly discuss our AI and automation strategy. Over the last year, we have moved from evaluating AI to deploying it in practical, measurable ways across Altisource. Our priorities are clear: to enhance customer-facing capabilities, improve operating efficiency, support revenue generation and accelerate software development. We have established a centralized AI enablement model to identify and scale high-impact use cases across the organization while also applying AI-first software development across both new applications and major platform modernization efforts.

These initiatives are already improving software development speed and productivity. We believe they will also help us scale more efficiently, reduce commercial-off-the-shelf software costs, strengthen our software platforms such as Equator, Hubzu and REALSynergy and support the Project 45 growth initiatives. Turning to Slide 14 and our Corporate segment. Second quarter 2026 corporate adjusted EBITDA loss was $7.9 million, reflecting a $400,000 increase compared to the second quarter of 2025. The increase is largely due to the net impact of non-recurring items. Looking forward, we believe corporate costs should be more in line with the first quarter of 2026 and remain relatively stable as revenue grows.

Moving to Slide 15 and the business environment. We are performing well despite low delinquency rates and origination volumes. 90-plus-day mortgage delinquency rates slightly increased from 1.45% in December 2025 to 1.55% in May. As of May 31, 2026, 90-plus-day delinquent mortgages plus loans in foreclosure totaled 857,000, which represents a 28% increase from May 2025 and a 7% increase from December 2025. Foreclosure starts for the first 5 months of 2026 were 14% higher than the same period in 2025 and foreclosure sales were 19% higher, although both still remain significantly below pre-pandemic levels.

For the origination market, second quarter 2026 mortgage origination unit volume increased 9% compared to the second quarter 2025, driven by a 37% increase in refinance volume and a 4% decrease in purchase volume. The MBA projects 5.7 million loans will be originated in 2026, representing 4% growth over 2025. To conclude, in what continues to be a tough market, we are pleased with the second quarter's performance and the progress we are making against our strategic priorities. We grew service revenue, reduced outstanding debt and continue to ramp recent sales wins that should support future growth. We are reducing Onity and Rithm customer concentration and deploying AI with the objectives of improving efficiency and scalability and positioning the company to benefit if delinquency rates or origination volumes increase from today's relatively low levels.

We believe Altisource is becoming a stronger, more diversified and more scalable company. I am proud of what the team accomplished and the progress we are making on our strategic initiatives that should drive durable value for our stakeholders. I'll now open up the call for questions. Operator?

[Operator Instructions]

The first question comes from Timothy D'Agostino with B. Riley Securities.

Yes, a couple of quick questions on my end. I guess, first, it's great to see that Hubzu inventory continues to grow and the 30% increase quarter-over-quarter is great. I guess you talk about it as its future revenue growth. And I guess while we look at foreclosure auction and REO inventory, could you maybe just provide some color on kind of how long it may take for inventory to transfer into revenue, understanding different -- between foreclosure and REO, it might have different time lines, but just getting a general sense of when that might become future revenue.

So we are starting to benefit from the inventory, but obviously, it's in the early innings. Typically, when you receive an REO file, it could take anywhere from, let's say, 9 to 12 months to sell. A lot depends, of course, if it's in a redemption state, if you have to go through an eviction process, et cetera. But generally speaking, let's say, 9 to 12 months. And then with respect to foreclosure starts, we typically or foreclosure referrals, we typically receive the referral at the foreclosure start. And I think on average, it takes around 12 months before it gets to the foreclosure sale. Of course, there's very wide variability around those time lines. There are certain states that take much longer and there are certain states that are faster. But generally speaking, I think those are the averages.

Okay. Great. So it's fair to say that the inventory wins in 1Q '26 still have runway to be realized as well on top of the 2Q wins, correct?

Absolutely. Yes.

Okay. Great. That's great to hear. And then I guess on capital allocation, obviously, you paid down $2 million of the term loan. I guess, how do you think about capital allocation going forward? Do you continue to reduce debt? Just trying to get a better sense of how you plan to put cash to work.

Yes, sure. So I think under our debt agreements that we have in place today, we have the ability, I think, to buy back up to $3 million in purchase price a year of debt. And so we view if we can opportunistically buy back some of that debt. By the way, it's subject to the first lien approval or the super senior term loan approval. But 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. Otherwise, at this point, we want to continue to build the business, grow the revenue. We're very focused now. Now that revenue growth is growing and we've been able to mitigate the loss of revenue from Rithm and Onity.

We're very focused on improving our margins as we set up for the fourth quarter of this year. So there's some more work we're going to be doing in the third quarter. We hope to have some improved margins going into the fourth quarter, and we want to continue to build the pipeline with stronger EBITDA margins to hopefully generate more free cash flow and put us in a very strong position over the next couple of years to ultimately refi the debt.

Okay. Great. And I'm sorry, if I could just sneak a final question in. It's obviously great to see that the customer diversification continues to excel. I guess looking at the share of Onity and Rithm, is there, like -- and I don't know -- maybe this is looking more too far into the future, but thinking about, like, how much -- like what percentage of service revenue Onity and Rithm might be going forward? Like would that -- will that continue to decrease? And like how little will that become as a percentage of the total, do you think over time?

Yes. So obviously, it's difficult for us to forecast what happens with Onity's portfolio and how successful it is at growing its portfolio and how delinquent that portfolio is going forward. But if you look at Onity's portfolio today, Onity is still managing some of Rithm's assets. And as Onity has disclosed, those assets are being service-transferred to Rithm with the exception of -- there's about a $6.9 billion portfolio, which is subject to trustee and other approvals, which may or may not happen. And so there is a percentage of that portfolio, which may remain with Onity for the foreseeable future.

So we do anticipate that the Onity revenue that we're -- or the revenue we're generating from Onity's portfolios that are either being serviced or subserviced by -- sorry, the revenue we're generating from the Rithm portfolios that are being serviced or subserviced by Onity will decline over the next couple of months. But we do think we are getting closer to the end than the beginning of this, and we should hopefully normalize from there. So the bottom line is maybe some continued decline in the third quarter, and we think that should start to stabilize as we go into the fourth quarter. And then a lot just depends on Onity's growth after that.

And our next question will come from Shachar Minkove with Napier Park Global.

Working capital seems to have been a bit of a use this quarter. Just wondering if you can give me a sense of sort of what's driving that. Obviously, it looks like -- it looks like the receivables were a big use. Wondering if there's something -- there's a trend there? Or is this just sort of normal seasonality that we should be thinking about?

Yes. I think it's associated with revenue growth. There's probably a little seasonality, but we've had a fair amount of growth and receivables have grown along with that.

[indiscernible] ordinary from our perspective.

Yes. I mean it's just normal revenue increasing. So therefore, we're going to see some usage of growth in the receivables line.

And that combined with we spent about $1.5 million to buy back some debt.

Sure, sure. And so that doesn't seem like liquidity -- that will come back necessarily. It almost seems like as you grow, that will be a continued need. Is that the right way to think about it?

I mean I think working capital fluctuates as we continue to grow. I think our receivables may grow in line, but we'll generate cash from receivables, and it is seasonal as well. But as revenues grow, you would expect receivables to grow a little bit as well.

Okay. But not something we should be too alarmed by.

No.

No, I'm not alarmed at it.

With regard to liquidity, I mean.

Sorry to interrupt.

No, just with regard to liquidity, I just wanted to make sure there wasn't something that we should be sort of more concerned around?

No, not at all. And as we're still obviously early into the third quarter, but cash is already building back up this quarter.

[Operator Instructions]

At this time, I am showing no further questions in the queue. I will now turn the call back over to Bill for closing remarks.

Thanks, operator. We're pleased with our second quarter performance and believe we are set up well for continued growth. Thank you for joining us today.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions First Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that this conference is being recorded.

I would now like to introduce your speaker for today, Michelle Esterman, Chief Financial Officer. Please go ahead.

Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which include a number of risks and uncertainties that could cause actual results to differ. Please review the forward-looking statement sections in the company's earnings release and quarterly slides as well as the risk factors contained in our 2025 Form 10-K. These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios and projections previously provided or provided herein as a result of a change in circumstances, new information or future events.

During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to Bill.

Thanks, Michelle, and good morning. I'll begin on Slide 4. We are off to a strong start this year. For the quarter, we grew service revenue and pretax GAAP earnings compared to the first quarter of 2025 from sales wins and lower debt-related interest and transaction costs. More importantly, we are seeing strength in both business segments. The Origination segment's first quarter service revenue and EBITDA growth compared to last year accelerated from sales wins and a stronger origination market. The Servicer and Real Estate segment is positioned extremely well with Hubzu inventory at 17,200 homes as of the end of the first quarter and exciting first quarter sales wins in the title and foreclosure trustee businesses. We anticipate this momentum to continue as the year progresses.

For the first quarter, we generated service revenue of $45.1 million, a 10% increase over the first quarter of 2025. This was driven by 71% growth in service revenue in our Origination segment, primarily from sales wins in our Lenders One business. Origination segment revenue growth is partially offset by a 5% revenue decline in our Servicer and Real Estate segment, primarily from a onetime 2025 pricing adjustment benefit in our foreclosure trustee business.

Total company adjusted EBITDA declined by $800,000 due to revenue mix, including higher revenue in the lower-margin Origination segment, lower revenue in the Servicer and Real Estate segment and modestly higher corporate costs.

Moving to Slide 6. The company generated first quarter pretax GAAP income of $400,000 compared to a $4.5 million loss in the first quarter of 2025. This improvement was primarily attributable to lower interest expense and debt exchange transaction expenses incurred last year. Net cash provided by operating activities was $4.5 million, a $9.4 million improvement compared to the first quarter of 2025. We ended the quarter with $30.3 million in unrestricted cash.

Turning to Slide 7 and our countercyclical Servicer and Real Estate segment. First quarter 2026 service revenue of $31.4 million decreased 5% from the same quarter last year. The revenue decline was primarily attributable to a onetime 2025 pricing adjustment benefit in our foreclosure trustee business and lower volume in our renovation business. First quarter Servicer and Real Estate segment adjusted EBITDA of $10.8 million decreased by 10% compared to the same quarter last year, primarily from the lower revenue in the foreclosure trustee business that I just discussed.

Slide 8 summarizes our Servicer and Real Estate segment sales wins and pipeline. For the quarter, we won an estimated $12.4 million in annualized stabilized service revenue wins. Two of the larger first quarter wins were in our higher margin foreclosure trustee and title businesses. Toward the end of the first quarter, we began receiving referrals from this new business. We anticipate referral growth and earnings from these wins to accelerate as the year progresses. We ended the quarter with a Servicer and Real Estate segment total weighted average sales pipeline of $11.7 million on a stabilized basis.

Turning to Slide 9 and our growing Hubzu inventory. As mentioned in our March call, we recently onboarded two larger Hubzu wins. Driven by these and other recent customer wins, total Hubzu inventory has more than tripled since September 30 and stands at 17,200 assets as of March 31 and over 18,800 assets as of earlier this week. We anticipate revenue from these wins to grow during the year as REO and foreclosure referrals proceed for sale.

We are forecasting full year service revenue growth in our Servicer and Real Estate segment from the significant growth in Hubzu inventory and recent sales wins. Our forecast assumes that our revenue growth is partially offset by lower Onity and Rithm revenue based on our estimated timing for both the service transfer of Onity servicing to Rithm and the transition of the cooperative brokerage agreement REO assets from Altisource to Rithm.

Moving to Slide 10 and our Origination segment. We are continuing to demonstrate strong service revenue and adjusted EBITDA growth. First quarter 2026 service revenue of $13.7 million was 71% higher than the first quarter of 2025. Adjusted EBITDA more than doubled to $1.2 million in the first quarter of 2026 from $500,000 in the same period last year. The acceleration of the Originations segment's revenue and EBITDA growth in the first quarter of 2026, reflects sales wins and a stronger market.

Slide 11 outlines our Origination segment sales wins and pipeline. During the quarter, we secured an estimated $4.7 million in wins, primarily in Lenders One and ended the quarter with an estimated 17.2 million weighted average sales pipeline. Based on the sales wins, sales pipeline and forecasted market conditions, we are anticipating strong full year service revenue growth in our Origination segment.

Turning to Slide 12 and our Corporate segment. First quarter 2026 corporate adjusted EBITDA loss was $7.6 million, reflecting a modest increase compared to the first quarter of 2025. Looking forward, we believe corporate costs should remain relatively stable as revenue grows.

Moving to Slide 13 and the business environment. We continue to operate in an environment with both low delinquency rates and origination volume, though the market trends appear to be changing. 90-plus day mortgage delinquency rates increased from 1.45% in December 2025 to 1.6% in February. As of February 28, 2026, there were 612,000 late-stage delinquent mortgages, a 9% increase since December. This marks the highest level of late-stage delinquent mortgages since July 2022.

Foreclosure starts for January and February of 2026 were 5% higher than the same period in 2025 and foreclosure sales were 27% higher, although both remain significantly below pre-pandemic levels. For the origination market, first quarter 2026 mortgage origination unit volume increased 42% compared to the first quarter 2025, driven by a 91% increase in refinance volume and a 19% increase in purchase volume. The MBA projects 5.7 million loans will be originated in 2026, representing 4% growth over 2025.

To conclude, I'm pleased with the first quarter performance and how we are positioned for the year. In addition to 10% service revenue growth and exciting sales wins that should support future growth, we improved pretax GAAP earnings by $4.9 million and cash provided by operating activities by $9.4 million compared to the first quarter of 2025. As the year progresses, we believe Onity and Rithm will continue to become a smaller percentage of our revenue base and total company service revenue and EBITDA will be more balanced between our segments. I'm proud of what the team has accomplished this quarter and I'm excited about our future.

I'll now open up the call for questions. Operator?

[Operator Instructions] Our first question today will be coming from the line of Timothy D'Agostino of B. Riley Securities.

Congrats on the quarter. My first question is on the sales pipeline in the Servicer and Real Estate segment. I guess just understanding the quarter-over-quarter move a little bit more from $19.3 million to $11.7 million. It'd be great to just kind of understand why it decreased. And I know -- earlier in the call, you had mentioned it's at the stabilized level. So just understanding that language and what we should expect from the pipeline going forward throughout the year.

Tim, we appreciate you covering Altisource. So the difference in the pipeline reflects the $10 million or $11 million in sales wins I discussed in the call. So it's just simply partially offset by some increases in the sales pipeline. And so we'll be working very diligently to rebuild that pipeline, but the change reflects the fact that we had over $10 million. I think it was $11 million in sales wins in the first quarter.

Okay. Great. Understood on that. And then just as a second one, net cash provided by operating activities, as you highlighted earlier in the call, at $4.5 million is a significant increase year-over-year. I guess not really asking for guidance, but as we look to the second quarter, third quarter, fourth quarter, should we expect this to be positive? Or are there items late in the year that maybe could turn this back negative? Just trying to get an understanding if net cash is going to continue to be positive throughout the year as that's a pretty important and great milestone you all hit in the first quarter.

Michelle, do you want to take that?

Yes, I'm happy to. Yes, I think we guided earlier in the year to positive cash flow, operating cash flow for the year. you do see fluctuations from quarter-to-quarter depending on revenue growth, et cetera. But yes, we do anticipate positive cash flow for the year.

Okay. Great. And then on that positive cash flow, is that more supported by the Servicer and Real Estate segment or for Origination segment? I know Hubzu is one of the higher-margin businesses, but just getting a better understanding of maybe the driver of the net cash provided.

Sure. So you can see in our slides what our EBITDA is broken out between Servicer and Real Estate and Origination, they both have positive EBITDA. You do have larger EBITDA in Servicer and Real Estate. So more of the cash flow does come from that segment. But as Bill mentioned, we expect that to become more balanced as we move through time.

[Operator Instructions] There are no more questions in the queue. I would like to turn the call back over to Bill for closing remarks. Please go ahead.

Thanks, operator. We're very pleased with the first quarter performance. We're particularly pleased that our Hubzu inventory is standing at roughly 18,800 assets as of earlier this week, and we think we're set up very well for continued growth during the year. Thanks for joining us today.

This does conclude today's conference call. You may all disconnect. Bye.

Thank you for standing by. Welcome to the Altisource Portfolio Solutions Fourth Quarter 2025 Earnings Call. [Operator Instructions] After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Michelle Esterman, Chief Financial Officer. Please go ahead.

Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ.

Please review the forward-looking statements section in the company's earnings release and quarterly slides as well as the risk factors contained in our 2025 Form 10-K. These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios and projections previously provided or provided herein as a result of a change in circumstances, new information or future events.

During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I'll now turn the call over to Bill.

Thanks, Michelle, and good morning. I'll begin on Slide 4 with our 2025 highlights. We are pleased with our full year 2025 results. We grew service revenue, adjusted EBITDA and GAAP earnings compared to 2024. These improvements reflect disciplined execution, lower interest expense and strong sales wins across both business segments.

The strong sales wins, including fourth quarter wins estimated to generate $13.2 million in stabilized annual revenue should put us in a strong position to mitigate the impact of anticipated legacy revenue losses, materially diversify Altisource's revenue base and support our growth. We are particularly excited by the growth of our Hubzu inventory from recent sales wins. Hubzu's foreclosure auction and REO inventory grew by 137% since the end of the third quarter to 13,500 assets as of mid-February.

Turning to Slide 5. Service revenue for 2025 increased by 7% to $161.3 million with sales wins in both segments contributing to the growth. The business segment's adjusted EBITDA improved by $3 million or 7% to $47.6 million and total company adjusted EBITDA improved by $900,000 or 5% to $18.3 million, driven by higher revenue, partially offset by revenue mix and modestly higher corporate costs.

Moving to Slide 6. We improved total company 2025 GAAP loss before income taxes to $14.1 million from $32.9 million in 2024. This was primarily driven by lower interest expense from the new capital structure, partially offset by $3.6 million of debt exchange transaction expenses and a $7.5 million loss from a legacy litigation settlement. 2025 net cash used in operating activities would have been close to 0 if you exclude the debt exchange transaction expenses and $1.2 million of higher first quarter cash interest expense related to the prior debt agreement. Adjusting for these items, net cash used in operating activities improved by approximately $60 million over the last 5 years. We ended the year with $26.6 million in unrestricted cash.

Turning to Slide 7. Fourth quarter 2025 service revenue was $39.9 million, up 4% from the fourth quarter of last year, driven by growth in the Origination segment. Fourth quarter 2025 Business segment adjusted EBITDA of $11.4 million was flat to the fourth quarter 2024, while higher fourth quarter 2025 Corporate segment costs resulted in total company adjusted EBITDA of $4 million for the quarter.

The corporate segment's costs were $700,000 higher than the prior year, primarily from foreign currency fluctuations. Our fourth quarter GAAP loss before income taxes and noncontrolling interest improved to $8.1 million from $8.4 million in the fourth quarter 2024, primarily from lower interest expense, partially offset by a $7.5 million loss from a legacy litigation settlement.

Before turning to the segment updates, I want to address developments related to Rithm and Onity. As we discussed last quarter, the cooperative brokerage agreement between Altisource and Rithm, which I'll refer to as the CBA, expired on August 31, 2025. Despite the expiration of the CBA, at Rithm's discretion, we continue to manage CBA REO assets and receive new referrals with limited exceptions.

From a 2026 guidance perspective, which I'll review shortly, we assume that this business will roll off during the first half of this year. With respect to Onity, Rithm provided notice in the fourth quarter that it is terminating its servicing agreements with Onity. As the service transfers occur, we expect a reduction in our foreclosure trustee title and field service referrals from Onity tied to these portfolios.

Our 2026 guidance assumes that the Onity serviced to Rithm-owned MSRs transfer to Rithm during the first half of this year. Although we would prefer to retain this business, we believe that our sales wins, once stabilized, should more than offset the anticipated reduction in service revenue and EBITDA from the Rithm and Onity-related changes.

As a result, the midpoint of our 2026 guidance reflects service revenue growth and close to flat adjusted EBITDA with Rithm and Onity representing a significantly smaller share of our revenue base by the fourth quarter of 2026. Turning to Slide 8 and our countercyclical Servicer and Real Estate segment. 2025 service revenue of $126 million increased 5% from last year, reflecting a full year of the newer renovation business and growth across foreclosure trustee, Granite and field services, partially offset by fewer home sales in the Marketplace business. 2025 Servicer and Real Estate segment adjusted EBITDA increased by 6% to $44.6 million, with adjusted EBITDA margins higher due to revenue mix.

Slide 9 summarizes our Servicer and Real Estate segment wins and pipeline. In 2025, we won an estimated $20.6 million in annualized stabilized service revenue wins, including $11.5 million in fourth quarter wins. Two of the larger fourth quarter wins were in our higher-margin marketplace business unit, which we also refer to as Hubzu.

The first was an REO asset management and foreclosure auction agreement with a residential loan servicer and the second, a CWCOT first chance foreclosure auction agreement with an existing customer. We ended the year with the Servicer and Real Estate segment total weighted average sales pipeline of $19.3 million on a stabilized basis. The pipeline includes a couple of larger opportunities for our trustee and title businesses that we are optimistic should close in the second quarter, if not sooner.

Turning to Slide 10 and our growing Hubzu inventory. We onboarded the 2 new Hubzu wins I just discussed and are off to a strong start. As of February 15, total Hubzu inventory stands at 13,500 assets compared to 5,700 assets as of September 30 of last year. These 2 wins were significant contributors to this growth. We anticipate revenue from these customers to grow during the year as REO and foreclosure referrals proceed to sale.

Moving to Slide 11 and our Origination segment. 2025 service revenue grew 16% to $35.2 million. Adjusted EBITDA increased 19% to $2.9 million with margins improving modestly. Service revenue growth was driven by continued expansion in the Lenders One business, including onboarding the forecasted $11.2 million in third quarter wins.

Due to these wins, the Origination segment service revenue growth accelerated in the fourth quarter, increasing 40% year-over-year. For 2026, we anticipate strong year-over-year service revenue and adjusted EBITDA growth for the Originations segment as recently won business continues to grow and scale, and we convert our sales pipeline to wins.

Slide 12 outlines our Origination segment sales wins and pipeline. We secured an estimated $1.8 million in wins, primarily in Lenders One and ended the year with an estimated $14.9 million weighted average sales pipeline. We are actively engaging with several large prospects and anticipate additional wins in the first half of 2026.

Turning to Slide 13 and our Corporate segment. 2025 Corporate adjusted EBITDA loss was $29.3 million, reflecting a year-over-year increase in costs, primarily related to nonrecurring benefits in the first quarter of 2024 and higher foreign currency expenses in 2025. We believe Corporate costs should remain relatively stable as revenue grows.

Moving to Slide 14 and the business environment. We've been operating in a challenging environment with both low delinquency rates and origination volume, though recent indicators are improving. 90-plus day mortgage delinquency rates modestly increased to 1.45% in December 2025. As of December 31, 2025, there were 560,000 late-stage delinquent mortgages, the highest level since February 2023.

In 2025, foreclosure starts grew by 25% and foreclosure sales grew by 17% compared to 2024, although still significantly below pre-pandemic levels. We believe the increase over 2024 reflects the end of the voluntary VA foreclosure moratoriums, rising FHA delinquency rates and a softening real estate market.

We anticipate that borrowers may face additional pressure in 2026, given the fourth quarter implementation of the April 2025 FHA mortgage e-letter that extends the time between loan modifications from every 18 months to every 24 months. For the origination market, total 2025 mortgage origination unit volume increased 19%, driven by a 92% increase in refinance volume, partially offset by a 2% decline in purchase volume. For 2026, the MBA projects 5.8 million loans originated or 7% year-over-year growth. with a forecasted 8% increase in refinance volume and a 6% increase in purchase volume.

Turning to Slide 15 and our 2026 outlook. We are forecasting service revenue of $165 million to $185 million and adjusted EBITDA of $15 million to $20 million. At the midpoint, this represents 8.5% service revenue growth and close to flat adjusted EBITDA. Revenue growth assumptions include roughly flat industry-wide delinquency rates, the MBA's forecasted origination volume growth and our estimated timing for the onboarding and ramp of sales wins, conversion of pipeline opportunities and price increases for certain services, partially offset by the assumed loss of business related to the CBA and Rithm's termination of its servicing agreements with Onity.

The projected adjusted EBITDA reflects forecasted service revenue growth and scale efficiencies, partially offset by product mix and modest growth in Corporate segment costs. The forecast range for service revenue and adjusted EBITDA primarily reflects timing differences in the potential loss of business related to the CBA and Onity service transfer and the ramp in business from sales wins and pipeline conversion. At the midpoint of the guidance, we are forecasting to generate positive operating cash flow for the year.

Moving to Slide 16 and 17. Our 2026 outlook is supported by momentum in the businesses we believe offer the greatest long-term growth potential. Lenders One, Hubzu Marketplace, foreclosure trustee, Title, Granite, Renovation and Field Services. The anticipated growth of these businesses forms the foundation for Altisource's Project 45 strategic initiatives.

Our company-wide objective to achieve a run rate of $45 million in adjusted EBITDA by the fourth quarter of 2028. While individual businesses and support group contributions to this initiative may vary, we believe the businesses we identified best position Altisource for meaningful diversified growth.

Turning to Slide 18. We believe we are positioned to diversify our revenue base, ramp newly won business, maintain cost discipline and lower corporate interest expense in 2026. The Project 45 initiatives supported by our 2025 sales wins should help mitigate the impact from anticipated Rithm-related revenue losses and support a stronger, more resilient Altisource.

I'm proud of what the team has accomplished in 2025 and I'm excited about our prospects for 2026 and beyond. I'll now open up the call for questions. Operator?

[Operator Instructions] I'm showing no questions at this time. I'd like to turn the call back to Bill Shepro for closing remarks.

Thank you, operator. We're pleased with our 2025 performance and believe we're set up well for continued growth. Thanks for joining our call today.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer. Please go ahead.

Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful.

Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Please review the forward-looking statements sections in the company's earnings release and quarterly slides as well as the risk factors contained in our 2024 Form 10-K and our 2025 Form 10-Q filings. These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios and projections previously provided or provided herein as a result of the change in circumstances, new information or future events.

During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I'll now turn the call over to Bill.

Thanks, Michelle, and good morning. I'll begin on Slide 4. We delivered solid third quarter performance. We grew service revenue and improved pre- and post-tax GAAP earnings, GAAP earnings per share and cash flow from operations compared to the third quarter of last year. This is largely from our focus on growing our businesses that have tailwinds, cost discipline and lower interest expense.

Turning to Slide 5. Compared to the third quarter of last year, we grew total company service revenue by 4% to $39.7 million. Service revenue growth primarily reflects the ramp of the Renovation business and growth in the Lenders One, Foreclosure Trustee, Granite Construction Risk Management and Field Services businesses.

The business segments generated $10.9 million of adjusted EBITDA, representing modest growth compared to the third quarter of 2024. The Corporate segment's adjusted EBITDA loss of $7.3 million was slightly higher than the third quarter of last year. Adjusted EBITDA was flat at $3.6 million, primarily from service revenue growth, offset by lower business segment margins from revenue mix.

Moving to Slide 6. From a GAAP perspective, our loss before income taxes and noncontrolling interests improved by $6.8 million to a pre-tax loss of $1.7 million in the third quarter of 2025 compared to a pretax loss of $8.5 million in the same quarter of last year. This was primarily driven by lower interest expense from the new debt.

For the quarter, we improved operating cash flow by $2.3 million compared to last year. We ended the quarter with $28.6 million in unrestricted cash.

In addition to delivering solid financial performance, we are making progress diversifying our customer base and growing the businesses that we believe represent an outsized growth opportunity for Altisource. These businesses, which are set forth on Slides 7 and 8 include Renovation, Granite Construction Risk Management, Lenders One, Hubzu Marketplace, Foreclosure Trustee, Field Services and Title. On these slides, we provide a summary of the opportunities and the progress we are making with each.

The success of these initiatives does not depend on an increase in foreclosure starts or sales nor on a growing residential loan origination market. We believe these initiatives represent a strong growth engine for the company.

Moving to Slide 9 and our largely countercyclical Servicer and Real Estate segment. Third quarter 2025 service revenue of $31.2 million was 3% higher than the third quarter of '24, primarily from the ramp of the Renovation business and growth in the Foreclosure Trustee, Granite and Field Services businesses, partially offset by fewer home sales in the Marketplace business.

Third quarter 2025 adjusted EBITDA of $10 million for the segment was $100,000 or 1% higher than the third quarter of '24. Adjusted EBITDA margins declined to 32.1% from 32.5% from revenue mix with higher growth in the lower-margin Renovation business.

Slide 10 provides a summary of our Servicer and Real Estate sales wins and pipeline. For the third quarter, we won new business that we estimate will generate $3.2 million in annual service revenue on a stabilized basis over the next couple of years. We ended the quarter with a Servicer and Real Estate segment estimated total weighted average sales pipeline of $24.4 million of annual service revenue on a stabilized basis. The pipeline includes a few very significant foreclosure auction and REO asset management opportunities that we hope to close in the fourth quarter.

Before turning to our Origination segment, I'd like to discuss the status of the Cooperative Brokerage Agreement between Altisource and Rithm, which I'll refer to as the CBA. Under the terms of the CBA, the agreement expired on August 31. At Rithm's discretion, Altisource has continued to manage the REO and receive new referrals with limited exceptions despite the expiration of this agreement.

Moving to our Origination segment on Slide 11. Third quarter 2025 service revenue of $8.5 million was 9% higher than the third quarter of 2024. Adjusted EBITDA of $900,000 was flat compared to the same quarter last year, and adjusted EBITDA margins declined to 10.3% from 11.7%. The increase in service revenue primarily reflects growth in the Lenders One business, while the margin decline relates to product mix.

Slide 12 provides a summary of our Origination segment sales wins and pipeline. Our focus on helping Lenders One members save money and better compete continues to drive substantial interest in our solutions. On an annualized stabilized basis, we won an estimated $11.2 million in new sales in the third quarter, primarily in our Lenders One business. On a fully stabilized basis, this new business would increase the Origination segment's annualized third quarter service revenue by 33%. We have already onboarded most of these wins and anticipate beginning to benefit from them in the fourth quarter.

Our estimated weighted average sales pipeline at the end of the quarter was $13.4 million. We anticipate that our sales pipeline and recent sales wins will contribute to strong growth in our Origination segment.

Turning to our Corporate segment on Slide 13. Third quarter 2025 Corporate adjusted EBITDA loss of $7.3 million was $100,000 higher than the third quarter of 2024. We believe that we can maintain relatively stable Corporate segment costs as revenue grows.

Moving to Slide 14 and the business environment. Starting with the residential mortgage default market, 90-plus day mortgage delinquency rates remain near historic lows at 1.3% in August. Despite the low delinquency rates, foreclosure starts and sales are increasing.

Foreclosure starts increased by 19% and foreclosure sales increased by 10% for the 8 months ended August 2025 compared to the same period in 2024. We believe the increase reflects rising FHA delinquency rates and a weakening real estate market. Borrowers may soon face additional pressure as the April FHA Mortgagee Letter extends the time between loan modifications from every 18 months to every 24 months, beginning as early as October 1.

Turning to the real estate market. We believe the market is weakening as demonstrated by higher for-sale inventory, extended sales time lines and rising sale cancellation rates. As a result, we believe a lower percentage of homes are selling to third parties at the foreclosure auctions, driving higher REO inventory. This is supported by our own experience. Altisource's third quarter REO asset management referrals from Onity and Rithm were the highest since the second quarter of 2024.

For the origination market, mortgage origination unit volume increased by 17% for the 9 months ended September 30, 2025, compared to the same period in '24, with purchase origination volume declining by 4% and refinance volume increasing by 103%. For the full year, the MBA's October 2025 forecast projects that there will be 5.4 million loans originated in 2025, an 18% increase compared to '24. The MBA's full year projections reflect an 87% increase in refinance activity and a 2% decline in purchase activity.

Turning to Slide 15. We are pleased with our third quarter results. More importantly, we are winning new business and have a strong sales pipeline 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 Instructions] And I would now like to turn the call to Michelle for additional questions.

So we received an e-mail question. I'll read that. On August 18, the company announced some customer wins for the Equator platform. Are these customer wins expected to translate to more inventory on Hubzu in the future?

Yes. Thanks, Michelle. So in August, we announced we won four new customers for the Equator platform. Three of those customers are now live and loading properties and one is in the process of implementing the Equator system. As these customers load more assets, we should begin to generate revenue. And then historically, we've had good success in cross-selling Equator customers with the Hubzu platform and other services, which we would hope to continue to do with some of these newer customers.

Operator, is there any additional questions?

[Operator Instructions] And I am showing no further questions. I would now like to hand the call back to Bill for closing remarks.

Great. Thank you, operator. We're pleased with our third quarter performance and believe we are set up well for continued growth. Thanks for joining us today.

And this concludes today's conference call. Thank you for participating. You may now disconnect.