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 ¹. The company is publicly traded on the NASDAQ Global Select Market under the symbol "ASPS" ² and is organized under the laws of the Grand Duchy of Luxembourg ³. The real estate and mortgage markets are described as very large and are influenced by macroeconomic factors such as credit availability, interest rates, home prices, inflation, unemployment rates, consumer confidence, natural disasters, and pandemics ⁴. The markets for services provided to mortgage servicers and originators are highly competitive, consisting of national companies, in-house providers, and numerous regional and local providers, with competition based on product offerings, performance, quality, technology integration, price, financial strength, reputation, and customer service ⁵. For services provided to buyers and sellers of homes for investment, the market is also highly competitive, comprising national, regional, local, and start-up companies, competing on similar factors ⁶. Altisource believes it holds a modest share of the market for mortgage servicers and a relatively small market share for other segments ⁷.

The company's core business model revolves around generating revenue through fee-based services, categorized as "service revenue," while "reimbursable expenses" and "non-controlling interests" are pass-through items with no margin ⁸. Reimbursable expenses are amounts incurred on behalf of customers and passed directly on without markup ⁹. Non-controlling interests represent the earnings of Lenders One, a mortgage cooperative managed but not owned by Altisource, whose earnings are included in revenue and then reduced from net income to arrive at net income attributable to Altisource ¹⁰. Primary customer segments include 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 ¹¹.

Altisource operates through two reportable segments: Servicer and Real Estate, and Origination, with a third category, Corporate and Others, encompassing corporate functions and interest expense ¹². The Servicer and Real Estate segment provides solutions and technologies across the mortgage and real estate lifecycle to loan servicers and real estate investors ¹³. Its Solutions business includes property preservation and inspection, foreclosure trustee services, residential real estate renovation, residential and commercial construction inspection and risk mitigation, title insurance (as an agent) and settlement, and real estate valuation services ¹⁴. The Marketplace business within this segment features the Hubzu online real estate auction platform, real estate brokerage, and asset management services ¹⁵. Technology and SaaS Products for Servicer and Real Estate include Equator (SaaS for REO and investor homes, short sales, foreclosure, bankruptcy, and eviction management), Vendorly Invoice (vendor invoicing and payment), RentRange (rental data, analytics, and valuation), and REALSynergy (commercial loan servicing platform) ¹⁶. For the year ended December 31, 2025, the Servicer and Real Estate segment generated service revenue of $126.1 million ¹⁷, an increase of 5% compared to 2024 ¹⁸. Solutions revenue was $92.3 million ¹⁹, Marketplace revenue was $24.3 million ²⁰, and Technology and SaaS Products revenue was $9.4 million ²¹. Gross profit for this segment was $48.1 million ²², representing 38% of service revenue ²³.

The Origination segment offers solutions and technologies spanning the mortgage origination lifecycle to originators ²⁴. Its Lenders One business provides management services to the Lenders One cooperative and certain loan manufacturing and capital markets solutions to its members ²⁵. The Solutions business includes loan fulfillment, real estate valuation, title insurance (as an agent) and settlement, and insurance services ²⁶. Technology and SaaS Products for Origination comprise Vendorly Monitor (vendor management platform), Lenders One Loan Automation ("LOLA") (a marketplace for ordering services and automating loan manufacturing), and TrelixAI (technology for workflow management and automation of loan fulfillment and quality control) ²⁷. For the year ended December 31, 2025, the Origination segment generated service revenue of $35.2 million ²⁸, a 16% increase compared to 2024 ²⁹. Lenders One revenue was $28.2 million ³⁰, Solutions revenue was $6.3 million ³¹, and Technology and SaaS Products revenue was $0.7 million ³². Gross profit for this segment was $7.3 million ³³, representing 21% of service revenue ³⁴.

For the fiscal year ended December 31, 2025, Altisource reported total revenue of $170.975 million ³⁵, an increase of 7% from $160.134 million in 2024 ³⁶. Service revenue grew by $10.9 million, or 7%, to $161.3 million ³⁷. Gross profit was $48.910 million ³⁸, resulting in a gross margin of 30% of service revenue ³⁹, down from 33% in 2024 ⁴⁰. Operating income was $0.417 million ⁴¹, representing less than 1% of service revenue ⁴². Net income attributable to Altisource was $1.615 million ⁴³, a significant improvement from a net loss of $(35.636) million in 2024 ⁴⁴. Diluted earnings per share were $0.15 ⁴⁵, an improvement of $10.14 compared to $(9.99) in 2024 ⁴⁶. The company ended the year with $26.6 million of cash and cash equivalents ⁴⁷. Total long-term debt, net, was $191.086 million ⁴⁸ as of December 31, 2025, compared to $230.544 million in 2024 ⁴⁹.

Year-over-year, total service revenue increased by 7% to $161.3 million in 2025 ⁵⁰. This growth was driven by a 5% increase in the Servicer and Real Estate segment to $126.1 million ⁵¹ and a 16% increase in the Origination segment to $35.2 million ⁵². The Servicer and Real Estate segment saw 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 ⁵³. The Origination segment's growth was primarily from reseller products in the Lenders One business ⁵⁴. Gross profit as a percentage of service revenue decreased from 33% in 2024 to 30% in 2025 ⁵⁵, primarily due to a change in revenue mix with greater growth in lower-margin Property Renovation Services and Lenders One businesses compared to higher-margin Hubzu ⁵⁶. Selling, general and administrative (SG&A) expenses decreased by 10% to $41.0 million ⁵⁷, mainly due to lower professional services and other SG&A expenses, partially offset by higher compensation and benefits ⁵⁸.

During 2025, Altisource executed a Debt Exchange Transaction on February 19, 2025, with 100% of its senior secured term loan lenders ⁵⁹. This involved exchanging $232.8 million of outstanding senior secured term loans for a $160.0 million new first lien loan and approximately 7.3 million common shares of Altisource ⁶⁰. The new first lien loan consists of a $110.0 million term loan and a $50.0 million non-interest-bearing exit fee ⁶¹. On the same date, Altisource also closed a $12.5 million super senior credit facility to fund transaction costs and for general corporate purposes ⁶². On April 3, 2025, the company distributed 70.5 million warrants to purchase approximately 14.3 million shares of common stock at $9.5998 per share ⁶³. In the second quarter of 2025, management concluded that certain India tax positions were more likely than not to be sustained, leading to a net income tax benefit of $17.7 million, comprising a $9.6 million reversal of its uncertain tax positions reserve and a $9.0 million reversal of associated accrued interest, partially offset by $0.9 million in Mauritius Income tax expense ⁶⁴. On May 28, 2025, Altisource effected a 1-for-8 reverse stock split, reducing outstanding shares from 88,129,766 to 11,116,220 ⁶⁵. The company also recorded a $7.5 million litigation settlement loss for the year ended December 31, 2025, related to a settlement agreement with the National Fair Housing Alliance ⁶⁶.

Altisource is focused on becoming the premier provider of mortgage and real estate marketplaces and related technology-enabled solutions to a broad and diversified customer base of residential real estate and loan investors, servicers, and originators ⁶⁷. The company believes its scale and suite of offerings provide competitive advantages that could support growth in the very large real estate and mortgage markets ⁶⁸. Management anticipates an improvement in operating cash flow due to lower interest expense 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, converting sales prospects to wins, and a favorable revenue mix, combined with a reduced cost structure ⁶⁹.

A major growth area for the Servicer and Real Estate segment is gaining market share on existing solutions and launching new solutions with its existing customer base, as well as attracting new customers ⁷⁰. The company believes it is well-positioned to gain market share from existing and new customers if loan delinquency rates and foreclosure initiations and sales rise, or if customers consolidate to larger, full-service providers or outsource historically in-house services ⁷¹. Industrywide foreclosure initiations were 25% higher in 2025 compared to 2024, and foreclosure sales were 17% higher in 2025 compared to 2024, indicating a potential increase in demand for default-related services ⁷². The company estimates it typically takes an average of two years to convert foreclosure initiations to foreclosure sales and six months to market and sell REO properties ⁷³.

For the Origination segment, the growth strategy involves expanding business from the existing customer base, attracting new customers, and developing new offerings ⁷⁴. The company aims to grow relationships with its existing customer base, including Lenders One cooperative members, by increasing Lenders One membership, boosting member adoption of existing solutions, and developing and cross-selling new offerings ⁷⁵. Altisource believes it is well-positioned to gain market share as customers seek to improve profitability and competitiveness through Lenders One ⁷⁶. Industrywide mortgage origination unit volume increased by 19% in 2025 compared to 2024, with a 92% increase in refinance origination, suggesting a favorable market for origination-related services ⁷⁷.

Operationally, Altisource has focused on reducing its cost structure and maintaining the infrastructure to deliver default-related services to support anticipated increases in demand, should delinquency rates, foreclosure initiations, and/or foreclosure sales rise ⁷⁸. The company also launched a residential renovation business and a commercial real estate auction business on Hubzu in 2024, and is launching new solutions and increasing customer adoption of existing solutions to accelerate growth in the Origination segment ⁷⁹.

Regarding capital allocation, Altisource intends to deploy cash generated in a disciplined manner, primarily to develop and grow complementary services and businesses that are expected to generate attractive margins in line with its core capabilities and strategy, and to fund negative operating cash flow if necessary ⁸⁰. Cash is also used for repayments of long-term debt and capital investments ⁸¹. The company may also consider and evaluate business acquisitions, dispositions, closures, sales of equity securities, or other similar actions aligned with its strategy ⁸². The New Facility requires mandatory prepayments, including 95% of net proceeds from the exercise of Cash Exercise Stakeholder Warrants ⁸³. Additionally, beginning with the fiscal year ending December 31, 2025, the lesser of (a) 75% of the aggregate Consolidated Excess Cash Flow for the most recently ended fiscal year and (b) such amount that would result in the company having no less than $30 million of total cash on its balance sheet, shall be applied first to the prepayment of the Super Senior Facility and, second, to the prepayment of the New Facility ⁸⁴.

Altisource faces several material risks, including significant customer concentration, with Onity accounting for 42% of total revenue in 2025 ⁸⁵. The Rithm Brokerage Agreement expired on August 31, 2025, and Rithm notified Onity of its intent not to renew subservicing agreements effective January 31, 2026, which could lead to a material reduction in referrals, MSR volumes, or scope of services, or termination by either customer, adversely affecting revenue, liquidity, and financial condition ⁸⁶. Technology failures, intellectual property disputes, cyberattacks, ransomware, data breaches, or AI exploitation could disrupt operations, impair service delivery, increase costs, or expose the company to liability, penalties, or litigation ⁸⁷. The company may not successfully prevent or detect fraudulent activity, leading to financial loss, liability, and reputational harm ⁸⁸. Unauthorized access, disclosure, or processing of proprietary or personal information, or non-compliance with privacy, data protection, AI, or notification laws, could result in investigations, fines, litigation, and significant costs ⁸⁹. Business interruptions, pandemics, governmental shutdowns, or system failures may not be adequately addressed by continuity and recovery plans ⁹⁰. The formation of a stockholder "group" or change-of-control events could trigger termination or default rights under material agreements, limiting strategic flexibility ⁹¹. Adverse economic or housing market conditions, government shutdowns, or funding lapses could reduce demand for services, delay foreclosures and REO activity, and impair performance metrics ⁹². Failure to adapt to technological change, regulatory developments, or customer consolidation may reduce demand or competitiveness ⁹³. Restrictions on online foreclosure or REO auctions could negatively impact auction and brokerage revenues ⁹⁴. Changes reducing the frequency or requirement for default or origination services may decrease demand ⁹⁵. The company's remote work environment may reduce productivity, impair controls, and increase cybersecurity, tax, and regulatory risks ⁹⁶. Reliance on vendors exposes the company to service failures, pricing increases, compliance deficiencies, and potential liability for vendor misconduct ⁹⁷. Reclassification of contractors as employees could result in taxes, penalties, and increased compensation costs ⁹⁸. Loss of key personnel or difficulty attracting leadership in Luxembourg could adversely affect operations ⁹⁹. International operations expose the company to political, economic, corruption, sanctions, trade, and labor risks ¹⁰⁰. The company's relatively small market capitalization may increase stock volatility, limit liquidity, and restrict access to capital or analyst coverage ¹⁰¹. Issuance of additional shares, exercise of warrants, or vesting of equity awards could dilute stockholders ¹⁰². The company's indebtedness, variable interest rates, mandatory prepayments, and covenant restrictions limit financial flexibility and increase sensitivity to performance ¹⁰³. Failure to comply with loan covenants could result in default, acceleration, and enforcement against collateral ¹⁰⁴. The company may be unable to repay or refinance debt at maturity on favorable terms or at all ¹⁰⁵. Luxembourg net operating losses of approximately $2.1 billion ¹⁰⁶ may expire unused, and changes in tax laws, audits, or transfer pricing determinations could result in additional taxes, interest, penalties, and reduced realization of deferred tax assets ¹⁰⁷. Impairment of goodwill or intangible assets could require write-downs and reduce earnings ¹⁰⁸. Loss, misappropriation, or insolvency of financial institutions holding cash or escrow funds could result in unrecoverable losses ¹⁰⁹. Currency exchange rate fluctuations could increase costs and reduce profitability ¹¹⁰. As a Luxembourg company, stockholder rights differ from those of U.S. companies, enforcement of judgments may be difficult, and Luxembourg requirements may increase compliance burdens and limit operational flexibility ¹¹¹. Extensive and evolving regulation may require operational changes and expose the company to audits, penalties, or litigation ¹¹². Loss or suspension of required licenses could restrict the ability to provide services ¹¹³. Violations by customers in selecting or using services could expose the company to liability ¹¹⁴.

Management's overall tone emphasizes navigating current economic conditions, interest rate environments, housing supply, and other macroeconomic trends to position the businesses for long-term value creation for customers and shareholders ¹¹⁵. They highlight the significant improvement in full year 2025 net income attributable to Altisource of $1.6 million ¹¹⁶ and diluted earnings per share of $0.15 ¹¹⁷, representing a $37.3 million ¹¹⁸ and $10.14 ¹¹⁹ improvement, respectively, compared to 2024. Key strategic priorities include becoming the premier provider of mortgage and real estate marketplaces and related technology-enabled solutions to a broad and diversified customer base ¹²⁰. This involves gaining market share on existing solutions, launching new solutions with existing customers, and attracting new customers in the Servicer and Real Estate segment, particularly in anticipation of rising loan delinquency rates and foreclosure activity ¹²¹. In the Origination segment, priorities are growing business from the existing customer base, attracting new customers, and developing new offerings, leveraging the Lenders One cooperative to improve profitability and competitiveness for members ¹²². Management also focuses on disciplined cash deployment for developing and growing complementary services, funding operations, and debt repayments, while also considering business acquisitions, dispositions, or equity sales ¹²³.