OVERVIEW

Altisource is an integrated service provider and marketplace for the real estate and mortgage industries. The company operates through two reportable segments: Servicer and Real Estate, and Origination. It also reports Corporate and Others separately.

The Servicer and Real Estate segment provides solutions and technologies for loan servicers and real estate investors across the mortgage and real estate lifecycle. This includes property preservation and inspection services, foreclosure trustee services, residential real estate renovation services, title insurance and settlement services, and real estate valuation services. It also operates the Hubzu online real estate auction platform and provides real estate brokerage and asset management services.

The Origination segment provides solutions and technologies for mortgage originators across the origination lifecycle. This includes loan fulfillment services, real estate valuation services, title insurance and settlement services, and insurance services. It also manages the Lenders One mortgage cooperative and provides certain loan manufacturing and capital markets solutions to its members.

Altisource’s strategy is to become the premier provider of mortgage and real estate marketplaces and related technology-enabled solutions to a broad and diversified customer base. The company believes its scale and suite of offerings provide competitive advantages that could support its growth.

Financial Performance

For the nine months ended September 30, 2025, Altisource reported total service revenue of $121.3 million, an 8% increase compared to the same period in 2024. This was driven by growth in both the Servicer and Real Estate segment and the Origination segment.

In the Servicer and Real Estate segment, service revenue increased 8% to $96.0 million, primarily from growth in the Property Renovation Services, Foreclosure Trustee, and Field Services businesses, partially offset by fewer home sales in the Marketplace business and lower professional services revenue in the Equator business.

In the Origination segment, service revenue increased 8% to $25.4 million, driven by growth in reseller products in the Lenders One business and higher volumes in the loan fulfillment services business.

Gross profit increased to $37.7 million, representing 31% of service revenue, for the nine months ended September 30, 2025, compared to $37.1 million, or 33% of service revenue, in the prior year period. The decrease in gross profit margin was primarily due to a change in revenue mix, with greater growth in the lower margin Property Renovations Services and Lenders One businesses compared to the higher margin Foreclosure Trustee and Hubzu businesses.

Selling, general and administrative (SG&A) expenses decreased 11% to $30.7 million for the nine months ended September 30, 2025, primarily due to lower professional services and other SG&A expenses, partially offset by higher compensation and benefits.

Income from operations increased to $7.0 million, representing 6% of service revenue, for the nine months ended September 30, 2025, compared to $2.6 million, or 2% of service revenue, in the prior year period. The improvement was primarily due to the lower SG&A expenses, partially offset by the lower gross profit margins.

Other expense, net decreased to $13.0 million for the nine months ended September 30, 2025, compared to $27.1 million in the prior year period. This was driven by lower interest expense, partially offset by higher debt exchange transaction expenses.

Altisource recognized an income tax benefit of $15.1 million for the nine months ended September 30, 2025, compared to a provision of $2.2 million in the prior year period. The benefit was primarily due to the reversal of liabilities for uncertain tax positions.

Segment Analysis

Servicer and Real Estate Segment The Servicer and Real Estate segment reported a 3% increase in service revenue to $31.2 million for the third quarter of 2025, and an 8% increase to $96.0 million for the nine months ended September 30, 2025. This was driven by growth in the Property Renovation Services, Foreclosure Trustee, and Field Services businesses, partially offset by fewer home sales in the Marketplace business and lower professional services revenue in the Equator business.

Gross profit decreased to $11.3 million, representing 36% of service revenue, for the third quarter of 2025, compared to $12.0 million, or 40% of service revenue, in the prior year period. For the nine months ended September 30, 2025, gross profit increased to $36.9 million, representing 38% of service revenue, compared to $36.8 million, or 42% of service revenue, in the prior year period. The decrease in gross profit margin was primarily due to a change in revenue mix, with greater growth in the lower margin Property Renovations Services business compared to the higher margin Foreclosure Trustee and Hubzu businesses.

SG&A expenses decreased 27% to $2.3 million for the third quarter of 2025 and 34% to $5.7 million for the nine months ended September 30, 2025, primarily due to lower professional services expenses.

Income from operations increased to $8.9 million, representing 29% of service revenue, for the third quarter of 2025, and $31.2 million, representing 32% of service revenue, for the nine months ended September 30, 2025. This was relatively flat compared to the prior year periods as the lower SG&A expenses offset the lower gross profit margins.

Origination Segment The Origination segment reported a 9% increase in service revenue to $8.5 million for the third quarter of 2025, and an 8% increase to $25.4 million for the nine months ended September 30, 2025. This was driven by growth in reseller products in the Lenders One business and higher volumes in the loan fulfillment services business, partially offset by lower volumes in the loan fulfillment services business in the third quarter.

Gross profit remained relatively flat at $1.7 million, representing 20% of service revenue, for the third quarter of 2025, and increased to $5.6 million, representing 22% of service revenue, for the nine months ended September 30, 2025, compared to the prior year periods.

SG&A expenses increased 54% to $2.0 million for the third quarter of 2025 and 9% to $5.5 million for the nine months ended September 30, 2025, primarily due to higher professional services, compensation and benefits, and marketing costs, partially offset by lower bad debt expense.

Income (loss) from operations decreased to $(0.4) million, representing (4)% of service revenue, for the third quarter of 2025, compared to $0.3 million, or 4% of service revenue, in the prior year period. For the nine months ended September 30, 2025, income from operations was $0.1 million, representing less than 1% of service revenue, relatively flat compared to the prior year period.

Corporate and Others Corporate and Others includes interest expense and costs related to corporate functions. SG&A expenses decreased 6% to $19.5 million for the nine months ended September 30, 2025, primarily driven by lower professional services expenses.

Other expense, net was $13.0 million for the nine months ended September 30, 2025, compared to $27.1 million in the prior year period. The decrease was primarily driven by lower interest expense, partially offset by higher debt exchange transaction expenses.

Factors Affecting Comparability

Several factors impacted the comparability of Altisource’s results:

• Industrywide foreclosure initiations were 19% higher for the eight months ended August 31, 2025 compared to the same period in 2024, but 21% lower than the same pre-COVID-19 period in 2019.
• Industrywide foreclosure sales were 10% higher for the eight months ended August 31, 2025 compared to the same period in 2024, but 49% lower than the same pre-COVID-19 period in 2019.
• Industrywide mortgage origination volume increased by 17% for the nine months ended September 30, 2025 compared to the same period in 2024, driven by a 103% increase in refinancing origination.
• On February 19, 2025, Altisource entered into a debt exchange transaction, exchanging $232.8 million in senior secured term loans for a $160.0 million new facility and 7.3 million shares of common stock.
• The weighted average interest rate on Altisource’s long-term debt decreased from 14.18% for the nine months ended September 30, 2024 to 12.35% for the nine months ended September 30, 2025.
• Altisource recognized an income tax benefit of $15.1 million for the nine months ended September 30, 2025, compared to a provision of $2.2 million in the prior year period, primarily due to the reversal of liabilities for uncertain tax positions.

Onity Related Matters

Onity was Altisource’s largest customer, accounting for 43% of total revenue for the nine months ended September 30, 2025. An additional 5% of revenue was earned on loan portfolios serviced by Onity when another party selected Altisource as the service provider.

Onity has disclosed that it is subject to ongoing federal and state regulatory examinations, consent orders, inquiries, and legal proceedings, some of which include claims against Onity for substantial monetary damages. Existing or future adverse regulatory or other actions against Onity could have significant adverse effects, including Onity altering its business, losing servicing rights or licenses, or Onity terminating or changing its relationship with Altisource.

If Altisource loses Onity as a customer, there is a significant reduction in the volume of services Onity purchases, or Onity’s relationship with Rithm changes significantly, Altisource’s revenue could be significantly reduced and its results of operations could be materially adversely affected.

Liquidity and Capital Resources

Altisource’s primary source of liquidity has historically been cash flow from operations, cash proceeds from sales of businesses, and cash on hand. However, due to lower delinquency and foreclosure rates, and higher home equity, revenue has declined significantly compared to pre-pandemic levels, resulting in negative operating cash flow.

The company believes lower interest expense from the February 2025 debt exchange, revenue growth from the renovation business, anticipated improvement in the default market, and its reduced cost structure should help improve operating cash flow going forward.

As of September 30, 2025, Altisource had $32.5 million in cash, cash equivalents, and restricted cash. Significant future uses of cash include amortization and interest payments on the New Facility and Super Senior Facility, and operating lease payments, totaling $74.8 million over the next five years.

Altisource anticipates funding future liquidity requirements with a combination of existing cash balances and cash generated by operating activities.

Outlook

While Altisource cannot predict whether the default market will return to a pre-pandemic operating environment, the company believes the demand for its Default business is likely to grow. It 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, though these timelines can vary significantly.

To address the low delinquency rates, Altisource has worked to reduce its cost structure, maintain the infrastructure to deliver default-related services, launch new businesses like residential renovation and commercial real estate auctions, and grow its Origination segment.

Overall, Altisource’s diversified business model, with growth opportunities in both the Servicer and Real Estate and Origination segments, as well as its focus on cost management, position the company to navigate the current economic environment and provide long-term value to its customers and shareholders.