Altisource Portfolio Solutions ((ASPS)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call of Altisource Portfolio Solutions painted a picture of robust financial performance in 2024. The company reported significant revenue and EBITDA growth, alongside a successful debt restructuring. While the outlook for 2025 remains positive, challenges persist in the default and origination markets due to declines in foreclosure activity and mortgage origination volumes.
Strong Financial Performance in 2024
Altisource Portfolio Solutions showcased a strong financial performance in 2024, with full-year service revenue growing by 10% to $150 million. Adjusted EBITDA saw an impressive improvement of $18.3 million compared to 2023. Notably, the fourth quarter service revenue reached $38.4 million, marking the highest level since Q3 2021 and a 19% increase from the same period in 2023.
Successful Debt Restructuring
The company successfully completed an exchange and maturity extension transaction, reducing its debt by over $60 million, from $233 million to $172.5 million. This move significantly cut annual cash interest costs by approximately $18 million, reflecting a strategic financial maneuver to enhance the company’s fiscal health.
Growth in Countercyclical Servicer and Real Estate Segment
Despite market-wide declines in foreclosure starts and sales, Altisource’s countercyclical servicer and real estate segment experienced growth. Service revenue in this segment increased by 11% to $120 million, with adjusted EBITDA rising by 14% over 2023, demonstrating resilience in challenging market conditions.
Expansion of Origination Segment
The origination segment also saw expansion, with service revenue increasing by 6% to $30.4 million. Adjusted EBITDA improved by $5.4 million to $2.5 million, driven by customer wins and market share gains, indicating successful strategic positioning in the market.
Challenges in Default and Origination Markets
Despite the positive financial results, Altisource faced challenges in the default and origination markets. Foreclosure starts and sales in 2024 were significantly lower than 2019 levels, with foreclosure starts 35% lower and sales 53% lower. Mortgage origination volume also dropped by 35% compared to 2019, largely due to higher interest rates.
Decrease in Foreclosure Activity
The decrease in foreclosure activity continued to impact Altisource, with foreclosure starts 6% lower and foreclosure sales 14% lower in 2024 compared to 2023. This decline affected the Servicer and Real Estate segment, highlighting ongoing challenges in the market.
Positive 2025 Outlook
Looking ahead, Altisource provided an optimistic guidance for 2025. The company forecasts a 16% growth in annual service revenue and an 18% increase in adjusted EBITDA. Revenue is projected to be between $165 million to $185 million, with adjusted EBITDA ranging from $18 million to $23 million. The company expects to achieve positive operating cash flow for the first time since 2019, driven by improved margins and a more efficient corporate cost structure.
In summary, Altisource Portfolio Solutions’ earnings call highlighted a strong financial performance in 2024, with significant revenue and EBITDA growth and successful debt restructuring. While challenges remain in the default and origination markets, the company remains optimistic about 2025, forecasting growth in service revenue and adjusted EBITDA. Investors and market watchers will be keen to see how Altisource leverages its recent successes to navigate the challenges ahead.