ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Altisource Portfolio Solutions S.A. operates as an integrated service provider and marketplace for the real estate and mortgage industries, leveraging operational excellence and innovative services and technologies to address market demands. The company is publicly traded on the NASDAQ Global Select Market under the symbol "ASPS" and is organized under the laws of the Grand Duchy of Luxembourg. Its customer base includes large financial institutions, government-sponsored enterprises (GSEs), banks, asset managers, servicers, real estate and mortgage investors, property management firms, real estate brokerages, insurance companies, mortgage bankers, originators, correspondent, and private money lenders. The company's revenue is categorized into service revenue, revenue from reimbursable expenses, and non-controlling interests, with a focus on service revenue as reimbursable expenses and non-controlling interests are pass-through items with no margin.

The company's core business model revolves around providing fee-based services and technology platforms across the mortgage and real estate lifecycles. It generates revenue through transactional services, subscription-based technology platforms (SaaS), and management services for a mortgage cooperative. Primary customer segments span both the servicer/real estate and origination sides of the mortgage industry. The company also leverages proprietary data, combining it with third-party sources, to enhance its services. A significant portion of its revenue is derived from two key customers, Onity Group Inc. and Rithm Capital Corp., which introduces customer concentration risk.

The Servicer and Real Estate segment offers solutions and technologies to loan servicers and real estate investors. Its Solutions business includes property preservation and inspection, foreclosure trustee services, residential real estate renovation, commercial construction inspection and risk mitigation, title insurance (as an agent) and settlement, and real estate valuation services. The Marketplace business features the Hubzu online real estate auction platform, real estate brokerage, and asset management services. Technology and SaaS Products within this segment include Equator (for REO and investor home management, short sales, foreclosure, bankruptcy, and eviction processes), Vendorly Invoice (vendor invoicing and payment), RentRange (rental data, analytics, and valuation), and REALSynergy (commercial loan servicing platform).

The Origination segment provides solutions and technologies to originators throughout the mortgage origination lifecycle. Its Lenders One business offers management services to the Best Partners Mortgage Cooperative, Inc., and provides loan manufacturing and capital markets solutions to its members. The Solutions business includes loan fulfillment, real estate valuation, title insurance (as an agent) and settlement, and insurance services. Technology and SaaS Products in this segment comprise Vendorly Monitor (vendor management platform), Lenders One Loan Automation ("LOLA") (a marketplace for ordering services and automating loan manufacturing), and TrelixAI (workflow management and automation for loan fulfillment and quality control).

For the fiscal year ended December 31, 2025, Altisource reported total service revenue of $161.3 million ¹, a 7% increase compared to 2024. Total revenue, including reimbursable expenses and non-controlling interests, was $170.975 million ². Gross profit for the year was $48.910 million ³, representing a gross margin of 30% of service revenue ⁴. Income from operations was $0.417 million ⁵, resulting in an operating margin of less than 1% of service revenue ⁶. The company reported net income attributable to Altisource of $1.615 million ⁷, a significant improvement of $37.3 million compared to the full year 2024 ⁸. Diluted earnings per share were $0.15 ⁹, an improvement of $10.14 compared to 2024 ¹⁰. As of December 31, 2025, cash and cash equivalents stood at $26.603 million ¹¹. Total long-term debt, net, was $191.086 million ¹², with a current portion of long-term debt of $1.225 million ¹³.

Comparing 2025 to 2024, service revenue grew by $10.9 million ¹⁴, or 7% ¹⁵. The Servicer and Real Estate segment's service revenue increased by 5% to $126.057 million ¹⁶, driven by growth in Property Renovation Services, Foreclosure Trustee, Granite, and Field Services businesses, partially offset by fewer home sales in Marketplace and lower professional services revenue in Equator. The Origination segment's service revenue increased by 16% to $35.200 million ¹⁷, primarily due to growth in reseller products in the Lenders One business. Gross profit as a percentage of service revenue decreased from 33% in 2024 ¹⁸ to 30% in 2025 ¹⁹, mainly due to a shift in revenue mix towards lower-margin Property Renovation Services and Lenders One businesses. Income from operations declined by 87% to $0.417 million ²⁰ from $3.224 million ²¹ in 2024, primarily due to a $7.5 million litigation settlement loss ²² and lower gross profit margins, partially offset by reduced SG&A expenses.

During 2025, Altisource executed a Debt Exchange Transaction on February 19, 2025, where lenders exchanged $232.8 million ²³ of senior secured term loans for a $160.0 million new first lien loan ²⁴ and approximately 7.3 million common shares ²⁵. This transaction is expected to reduce annual cash and payment-in-kind interest by approximately $18 million to $13 million ²⁶ and annual GAAP interest expense by $23 million to approximately $9.5 million ²⁷, while extending debt maturity dates. On the same date, a $12.5 million super senior credit facility ²⁸ was closed for transaction costs and general corporate purposes. The company also distributed 70.5 million warrants ²⁹ to purchase approximately 14.3 million shares of common stock ³⁰ on April 3, 2025. During the second quarter of 2025, a net income tax benefit of $17.7 million ³¹ was recognized, including a $9.6 million reversal of uncertain tax position reserves related to India operations ³². On May 28, 2025, a 1-for-8 reverse stock split (Share Consolidation) was effected, reducing outstanding shares from 88,129,766 to 11,116,220 ³³. The company also generated 2025 sales wins estimated to represent potential annualized service revenue of $20.6 million ³⁴ for the Servicer and Real Estate segment and $20.9 million ³⁵ for the Origination segment on a stabilized basis. Hubzu foreclosure auction and REO inventory significantly grew, reducing Rithm Capital Corp.'s percentage of total Hubzu assets to 7.7% ³⁶ as of February 15, 2026.

Management anticipates an improvement in operating cash flow, driven by lower interest expense resulting from the February 2025 Debt Exchange Transactions, recent revenue growth from the renovation business launched in 2024, the expected improvement in the default market, the onboarding of sales wins, conversion of sales prospects, and a favorable revenue mix, coupled with a reduced cost structure. The company aims to deploy generated cash in a disciplined manner, primarily for developing and growing complementary services and businesses that are expected to generate attractive margins aligned with its core capabilities and strategy, and to fund any negative operating cash flow if necessary. Cash will also be used for long-term debt repayments and capital investments, with potential consideration for business acquisitions, dispositions, closures, or equity security sales that align with the company's strategy.

The Servicer and Real Estate segment is focused on gaining market share for existing solutions and launching new solutions with its current customer base, as well as attracting new customers. The company believes it is well-positioned for growth if loan delinquency rates and foreclosure initiations and sales increase, or if customers consolidate to larger, full-service providers or outsource historically in-house services. The Origination segment's growth strategy centers on expanding business with its existing customer base, attracting new customers, and developing new offerings. The company believes its suite of services, technologies, and access to Lenders One cooperative members position it to grow relationships by increasing Lenders One membership, boosting member adoption of existing solutions, and developing and cross-selling new offerings.

The default-related mortgage market is expected to see increased demand for the company's default-related business, despite current serious delinquency rates, foreclosure initiations, and sales remaining low relative to historical levels but having increased in 2025 compared to 2024. Industrywide foreclosure initiations were 25% higher in 2025 compared to 2024 ³⁷, and foreclosure sales were 17% higher in 2025 compared to 2024 ³⁸. However, both measures are still below pre-pandemic levels. The company estimates that it typically takes an average of two years to convert foreclosure initiations to foreclosure sales and six months to market and sell REO properties. To address historically low delinquency rates, the company has focused on reducing its cost structure, maintaining infrastructure for default-related services to support anticipated demand increases, launching a residential renovation business and a commercial real estate auction business on Hubzu, and launching new solutions to accelerate growth in the Origination segment.

Regarding capital allocation, the company's significant future liquidity obligations include amortization of the New Facility, amortization and maturity of the Super Senior Facility, interest expense under both facilities, and operating lease payments. Total future payments due for the New Facility are $159.175 million ³⁹, with $1.100 million ⁴⁰ due in 2026, $2.200 million ⁴¹ in 2027-2028, and $155.875 million ⁴² in 2029-2030. The Super Senior Facility has total payments of $12.391 million ⁴³, with $0.125 million ⁴⁴ due in 2026, $0.250 million ⁴⁵ in 2027-2028, and $12.016 million ⁴⁶ in 2029-2030. Estimated future interest payments total $52.371 million ⁴⁷, with $12.653 million ⁴⁸ due in 2026, $23.802 million ⁴⁹ in 2027-2028, and $15.916 million ⁵⁰ in 2029-2030. Lease payments total $1.256 million ⁵¹, with $0.922 million ⁵² due in 2026, $0.282 million ⁵³ in 2027-2028, and $0.052 million ⁵⁴ in 2029-2030. The company expects to satisfy debt-related obligations through a combination of prepayments, including potential proceeds from Cash Exercise Stakeholder Warrants, and the issuance of new debt.

A significant structural headwind is the customer concentration with Onity and Rithm. The Rithm Brokerage Agreement expired on August 31, 2025, and was not renewed, although Altisource continues to receive discretionary referrals. More critically, Rithm notified Onity of its intent not to renew subservicing agreements effective January 31, 2026, which could significantly reduce Altisource's revenue from Onity and Rithm. Onity itself is subject to ongoing regulatory examinations, consent orders, and legal proceedings, which could lead to adverse regulatory actions, restrictions on its business, or loss of servicing rights or clients, all of which would negatively impact Altisource's revenue and results of operations.

The company faces material risks including significant customer concentration, with Onity Group Inc. accounting for 42% of total revenue ⁵⁵ in 2025, and Rithm Capital Corp. having notified Onity of its intent to terminate subservicing agreements effective January 31, 2026, which could substantially reduce Altisource's revenue. Technology failures, intellectual property disputes, cyberattacks, ransomware, data breaches, or AI exploitation could disrupt operations, lead to liability, penalties, or litigation, and harm financial condition and reputation, with insurance potentially being insufficient or unavailable. Fraudulent activity by employees or third parties could result in financial loss, liability, and reputational damage. Unauthorized access or processing of proprietary or personal information, or non-compliance with privacy and data protection laws, could lead to investigations, fines, and litigation. Business interruptions, pandemics, or governmental shutdowns could disrupt operations and compliance. The formation of a stockholder "group" or change-of-control events could trigger termination or default rights under material agreements, limiting strategic flexibility. Adverse economic or housing market conditions, such as depressed real estate sales, values, or mortgage origination volumes, could reduce demand for services. Government shutdowns or funding lapses could delay foreclosures and REO activity, reducing volumes. Failure to adapt to technological changes, regulatory developments, or customer consolidation may reduce demand or competitiveness. Restrictions on online foreclosure or REO auctions, or changes reducing the frequency of default or origination services, could negatively impact revenues. The company's remote work environment may reduce productivity, impair controls, and increase cybersecurity, tax, and regulatory risks. Reliance on vendors exposes the company to service failures, pricing increases, and compliance deficiencies. Reclassification of contractors as employees could result in taxes, penalties, and increased compensation costs. Loss of key personnel or difficulty attracting leadership in Luxembourg could adversely affect operations. International operations expose the company to political, economic, corruption, sanctions, trade, and labor risks. The company's relatively small market capitalization may increase stock volatility, limit liquidity, and restrict access to capital. Issuance of additional shares, exercise of warrants (approximately 14.3 million shares ⁵⁶ from Stakeholder Warrants), or vesting of equity awards could dilute stockholders. Insufficient cash flow, limited capital access, or reduced borrowing capacity could impair liquidity. The company's indebtedness, including a $160.0 million new first lien loan ⁵⁷ and a $12.5 million super senior credit facility ⁵⁸, variable interest rates, mandatory prepayments, and covenant restrictions limit financial flexibility. Failure to comply with loan covenants could result in default and acceleration of debt. The company has a significant net operating loss of approximately $2.1 billion ⁵⁹ recognized by its Luxembourg entities, creating a deferred tax asset of $498.9 million ⁶⁰, which may expire unused. Impairment of goodwill or intangible assets could require write-downs. Loss or misappropriation of cash or escrow funds held at financial institutions could result in unrecoverable losses. Currency exchange rate fluctuations could increase costs. As a Luxembourg company, stockholder rights differ from those in the U.S., and enforcement of judgments may be difficult. Changes in trade, tariff, or cross-border tax policies could increase costs. Extensive and evolving regulation may require operational changes and expose the company to audits and penalties. Loss or suspension of required licenses could restrict service provision. Violations by customers in selecting or using services could generate liability for the company.

Management's message to shareholders emphasizes a focus on becoming the premier provider of mortgage and real estate marketplaces and related technology-enabled solutions to a broad and diversified customer base. They highlight the significant improvement in net income attributable to Altisource, which was $1.6 million ⁶¹ in 2025, a $37.3 million ⁶² improvement over 2024, and diluted EPS of $0.15 ⁶³, an improvement of $10.14 ⁶⁴. Key strategic priorities include leveraging the company's scale and suite of offerings to gain market share in both the Servicer and Real Estate and Origination segments, particularly in anticipation of a potential rise in loan delinquency rates and foreclosure activity. Management is also focused on disciplined cash deployment for developing and growing complementary services, funding operations, and managing debt obligations, with an expectation that annual cash and payment-in-kind interest will be reduced by approximately $18 million to $13 million ⁶⁵ and annual GAAP interest expense by $23 million to approximately $9.5 million ⁶⁶ due to the Debt Exchange Transaction. They also stress the importance of maintaining infrastructure to deliver default-related services and launching new solutions to accelerate growth, while acknowledging the significant customer concentration risk with Onity and Rithm and the potential adverse effects of Rithm's non-renewal of subservicing agreements with Onity.