ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Altisource Portfolio Solutions S.A. is an integrated service provider and marketplace operating within the real estate and mortgage industries, publicly traded on the NASDAQ Global Select Market under the symbol "ASPS." The company aims to address the demands of evolving markets through operational excellence and innovative services and technologies. It is organized under the laws of the Grand Duchy of Luxembourg and prepares its financial statements in accordance with GAAP.

The company's core business model revolves around generating revenue through fee-based services across two reportable segments: Servicer and Real Estate, and Origination. Revenue is categorized into service revenue, revenue from reimbursable expenses, and non-controlling interests. Service revenue represents fee-based services, while reimbursable expenses and non-controlling interests are pass-through items with no margin. Non-controlling interests specifically represent the earnings of Lenders One, a mortgage cooperative managed but not owned by Altisource. The company's 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.

The Servicer and Real Estate segment provides solutions and technologies spanning the mortgage and real estate lifecycle to loan servicers and real estate investors. This segment includes a Solutions business offering property preservation and inspection, foreclosure trustee services, residential real estate renovation, commercial construction inspection and risk mitigation, title insurance (as an agent) and settlement services, and real estate valuation services. Its Marketplace business features the Hubzu online real estate auction platform, real estate brokerage, and asset management services. The Technology and SaaS Products business within this segment includes Equator (SaaS 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 offers solutions and technologies to originators across the mortgage origination lifecycle. Its Lenders One business provides management services to the Lenders One cooperative and certain loan manufacturing and capital markets solutions to its members. The Solutions business in this segment includes loan fulfillment, real estate valuation, title insurance (as an agent) and settlement services, and insurance services. 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).

For the fiscal year ended December 31, 2025, Altisource reported total revenue of $170.975 million ¹, an increase of 7% compared to $160.134 million ² in 2024. Service revenue grew by $10.9 million ³, or 7%, to $161.257 million ⁴ in 2025 from $150.354 million ⁵ in 2024. Gross profit for 2025 was $48.910 million ⁶, representing 30% ⁷ of service revenue, a decrease from $49.529 million ⁸ and 33% ⁹ of service revenue in 2024. Income from operations was $0.417 million ¹⁰ in 2025, representing less than 1% ¹¹ of service revenue, a significant decrease from $3.224 million ¹² and 2% ¹³ of service revenue in 2024. The company reported a net income attributable to Altisource of $1.615 million ¹⁴ in 2025, a substantial improvement from a net loss of $(35.636) million ¹⁵ in 2024. Diluted earnings per share for 2025 was $0.15 ¹⁶, an improvement of $10.14 ¹⁷ compared to $(9.99) ¹⁸ in 2024. As of December 31, 2025, cash and cash equivalents stood at $26.603 million ¹⁹. Total principal debt was $171.566 million ²⁰ as of December 31, 2025, compared to $232.800 million ²¹ in 2024.

Year-over-year comparisons show service revenue growth in both segments. The Servicer and Real Estate segment's service revenue increased by 5% ²² to $126.057 million ²³ in 2025 from $119.939 million ²⁴ in 2024, driven by 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% ²⁵ to $35.200 million ²⁶ in 2025 from $30.415 million ²⁷ in 2024, primarily due to growth in reseller products in the Lenders One business. Gross profit as a percentage of service revenue decreased from 33% ⁹ in 2024 to 30% ⁷ in 2025, mainly due to a shift in revenue mix towards lower-margin Property Renovation Services and Lenders One businesses. Selling, general and administrative expenses decreased by 10% ²⁸ to $40.976 million ²⁹ in 2025 from $45.620 million ³⁰ in 2024, primarily due to lower professional services and other SG&A expenses, partially offset by higher compensation and benefits.

Significant operational developments in 2025 included the execution and closing of a Debt Exchange Transaction on February 19, 2025, where senior secured term loans with an outstanding balance of $232.8 million ³¹ were exchanged for a $160.0 million ³² new first lien loan and approximately 7.3 million ³³ common shares. Concurrently, Altisource closed a $12.5 million ³⁴ super senior credit facility for transaction costs and general corporate purposes. On April 3, 2025, the company distributed 70.5 million ³⁵ warrants to purchase approximately 14.3 million ³⁶ shares of common stock at $9.5998 ³⁷ per share. A 1-for-8 ³⁸ reverse stock split was effected on May 28, 2025, reducing outstanding shares from 88,129,766 ³⁹ to 11,016,220 ⁴⁰. The company also recognized a net income tax benefit of $17.7 million ⁴¹ during the second quarter of 2025 due to developments in India tax positions. Sales wins in 2025 are estimated to represent potential annualized service revenue of $20.6 million ⁴² for the Servicer and Real Estate segment and $20.9 million ⁴³ for the Origination segment. Hubzu foreclosure auction and REO inventory significantly grew, reducing Rithm Capital Corp.'s percentage of total Hubzu assets to 7.7% ⁴⁴ as of February 15, 2026.

Management believes that lower interest expense resulting from the February 2025 Debt Exchange Transactions, recent revenue growth from the renovation business launched in 2024, the anticipated improvement in the default market, on-boarding sales wins, converting sales prospects to wins, and revenue mix, combined with a reduced cost structure, should contribute to improved operating cash flow. The company aims to deploy generated cash in a disciplined manner, primarily for developing and growing complementary services and businesses that are expected to yield attractive margins consistent with its core capabilities and strategy, and to fund negative operating cash flow if necessary. Cash will also be used for repayments of long-term debt and capital investments.

The company's growth strategy 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. In the Servicer and Real Estate segment, the focus is on gaining market share for existing solutions, launching new solutions with the current customer base, and attracting new customers. Management believes the company is well-positioned to gain market share if loan delinquency rates and foreclosure initiations and sales rise, or if customers consolidate to larger, full-service providers or outsource services. For the Origination segment, the strategy involves 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 its members.

The company ended 2025 with a weighted average sales pipeline estimated to generate between $30.4 million ⁴⁵ and $38.0 million ⁴⁶ of potential annual revenue on a stabilized basis, based on forecasted probability of closing. This pipeline is comprised of between $17.1 million ⁴⁷ and $21.4 million ⁴⁸ in the Servicer and Real Estate segment and between $13.2 million ⁴⁹ and $16.6 million ⁵⁰ in the Origination segment. Additionally, 2025 sales wins are estimated to represent potential annualized service revenue on a stabilized basis of $20.6 million ⁴² for the Servicer and Real Estate segment and $20.9 million ⁴³ for the Origination segment.

The operational outlook includes managing the impact of industry-wide foreclosure initiations, which were 25% ⁵¹ higher in 2025 compared to 2024, and foreclosure sales, which were 17% ⁵² higher in 2025 compared to 2024, although both remain below pre-pandemic levels. Industry-wide mortgage origination unit volume increased by 19% ⁵³ in 2025 compared to 2024, driven by a 92% ⁵⁴ increase in refinance origination, despite a 2% ⁵⁵ decline in purchase origination. The company has worked to reduce its cost structure, maintain infrastructure for default-related services, and launch new solutions to support anticipated increases in demand and accelerate growth in the Origination segment.

Planned capital allocation includes using cash for repayments of long-term debt and capital investments. The New Facility requires repayment of the outstanding balance by April 30, 2030 ⁵⁶, and the Super Senior Facility matures on February 19, 2029 ⁵⁷. Estimated future interest payments for the New Facility and Super Senior Facility total $52.371 million ⁵⁸, with $12.653 million ⁵⁹ due in 2026, $23.802 million ⁶⁰ in 2027-2028, and $15.916 million ⁶¹ in 2029-2030. Lease payments amount to $1.256 million ⁶² in total, with $0.922 million ⁶³ in 2026, $0.282 million ⁶⁴ in 2027-2028, and $0.052 million ⁶⁵ in 2029-2030. The company is authorized to purchase up to 0.4 million ⁶⁶ shares of its common stock under a share repurchase program until May 16, 2028 ⁶⁷, with approximately 0.4 million ⁶⁸ shares remaining available as of December 31, 2025. However, under the New Facility and Super Senior Facility, share repurchases are permitted only under limited circumstances.

A significant structural headwind is the customer concentration with Onity and Rithm. Onity was the largest customer in 2025, accounting for 42% ⁶⁹ of total revenue. Rithm notified Onity of its intent not to renew subservicing agreements effective January 31, 2026 ⁷⁰, which is expected to reduce Altisource's revenue from Onity and Rithm. The Rithm Brokerage Agreement expired on August 31, 2025 ⁷¹ and was not renewed, though Rithm has continued discretionary referrals. The company also faces risks from government shutdowns or funding lapses, which could delay foreclosures and REO activity, and from changes in economic and market conditions that depress residential real estate sales, values, or mortgage origination volumes.

Altisource faces several material risks, including significant customer concentration, with Onity accounting for 42% ⁶⁹ of total revenue in 2025, and the non-renewal of Rithm's subservicing agreements with Onity effective January 31, 2026 ⁷⁰, which is expected to reduce revenue. Technology failures, intellectual property disputes, and cybersecurity incidents, including ransomware and AI exploitation, pose operational and financial risks, with insurance potentially being unavailable or insufficient. Fraudulent activity, unauthorized data access, and non-compliance with evolving privacy and AI regulations could lead to financial loss, liability, and reputational harm. Business interruptions, pandemics, or government shutdowns could disrupt operations and compliance. Certain material agreements contain termination or default rights triggered by the formation of a stockholder "group" or change-of-control events, limiting strategic flexibility. Adverse economic or housing market conditions, such as depressed real estate sales or mortgage origination volumes, could reduce demand for services. Reduced foreclosures or REO supply, changes in brokerage commissions, or inability to meet contractual performance metrics could negatively impact default-related services. The company's reliance on vendors exposes it to service failures and compliance deficiencies. Reclassification of contractors as employees could result in additional costs and taxes. Loss of key personnel or difficulty attracting leadership in Luxembourg could adversely affect operations. International operations expose the company to political, economic, and regulatory risks. The company's smaller market capitalization may increase stock volatility and limit access to capital. The issuance of additional shares, exercise of warrants (approximately 14.3 million ³⁶ shares from Stakeholder Warrants), or vesting of equity awards could dilute stockholders. The company's indebtedness, including a $160.0 million ³² new first lien loan and a $12.5 million ³⁴ super senior credit facility, and variable interest rates make it sensitive to financial performance and interest rate increases, with mandatory prepayments and covenant restrictions limiting 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 ⁷² in Luxembourg entities, which may expire unused, and changes in tax laws or audits could result in additional taxes.

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 company's scale and suite of offerings as competitive advantages in the large real estate and mortgage markets. Strategic priorities include gaining market share on existing solutions and launching new solutions within the Servicer and Real Estate segment, as well as growing business from the existing customer base, attracting new customers, and developing new offerings in the Origination segment. Management explicitly states that the company believes lower interest expense from the February 2025 Debt Exchange Transactions, recent revenue growth from the renovation business launched in 2024, anticipated improvement in the default market, on-boarding sales wins, converting sales prospects to wins, and revenue mix, combined with a reduced cost structure, should help improve operating cash flow. They also note that the weighted average sales pipeline at the end of 2025 is estimated to generate between $30.4 million ⁴⁵ and $38.0 million ⁴⁶ of potential annual revenue on a stabilized basis.