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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 1-34354
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
(Exact name of registrant as specified in its Charter)
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Luxembourg |
98-0554932 |
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(State or other jurisdiction of incorporation or
organization) |
(I.R.S. Employer Identification No.) |
33, Boulevard Prince Henri
L-1724 Luxembourg
Grand Duchy of Luxembourg
(Address of principal executive offices)
(352) 27 61 49 00
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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Common Stock, $1.00 par value
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ASPS |
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NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
☑ No
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Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such
files).
Yes
☑ No
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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer |
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Non-accelerated filer
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
o
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No
☑
As of October 28, 2022, there were 16,123,433 outstanding shares of
the registrant’s common stock (excluding 9,289,315 shares held as
treasury stock).
Table of Contents
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
FORM 10-Q
PART I — FINANCIAL INFORMATION
Item 1. Interim Condensed Consolidated Financial Statements
(Unaudited)
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
ASSETS |
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
63,812 |
|
|
$ |
98,132 |
|
|
|
|
|
|
Accounts receivable, net |
14,335 |
|
|
18,008 |
|
|
Prepaid expenses and other current assets |
21,704 |
|
|
21,864 |
|
|
Total current assets |
99,851 |
|
|
138,004 |
|
|
|
|
|
|
|
Premises and equipment, net |
4,970 |
|
|
6,873 |
|
|
Right-of-use assets under operating leases |
5,965 |
|
|
7,594 |
|
|
Goodwill |
55,960 |
|
|
55,960 |
|
|
Intangible assets, net |
33,010 |
|
|
36,859 |
|
|
Deferred tax assets, net |
6,023 |
|
|
6,386 |
|
|
Other assets |
5,503 |
|
|
6,132 |
|
|
|
|
|
|
|
Total assets |
$ |
211,282 |
|
|
$ |
257,808 |
|
|
|
|
|
|
|
LIABILITIES AND DEFICIT |
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
$ |
41,456 |
|
|
$ |
46,535 |
|
|
|
|
|
|
Deferred revenue |
4,050 |
|
|
4,342 |
|
|
Other current liabilities |
3,095 |
|
|
3,870 |
|
|
Total current liabilities |
48,601 |
|
|
54,747 |
|
|
|
|
|
|
|
Long-term debt |
244,844 |
|
|
243,637 |
|
|
Deferred tax liabilities, net |
8,849 |
|
|
9,028 |
|
|
|
|
|
|
Other non-current liabilities |
17,508 |
|
|
19,266 |
|
|
|
|
|
|
|
Commitments, contingencies and regulatory matters (Note
21)
|
|
|
|
|
|
|
|
|
|
Equity (deficit): |
|
|
|
|
Common stock ($1.00 par value; 100,000 shares authorized, 25,413
issued and 16,117 outstanding as of September 30, 2022; 15,911
outstanding as of December 31, 2021)
|
25,413 |
|
|
25,413 |
|
|
Additional paid-in capital |
148,197 |
|
|
144,298 |
|
|
Retained earnings |
131,124 |
|
|
186,592 |
|
|
Treasury stock, at cost (9,296 shares as of September 30, 2022
and 9,502 shares as of December 31, 2021)
|
(414,102) |
|
|
(426,445) |
|
|
Altisource deficit |
(109,368) |
|
|
(70,142) |
|
|
|
|
|
|
|
Non-controlling interests |
848 |
|
|
1,272 |
|
|
Total deficit |
(108,520) |
|
|
(68,870) |
|
|
|
|
|
|
|
Total liabilities and deficit |
$ |
211,282 |
|
|
$ |
257,808 |
|
See accompanying notes to condensed consolidated financial
statements.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
38,380 |
|
|
$ |
43,243 |
|
|
$ |
118,317 |
|
|
$ |
139,749 |
|
|
Cost of revenue |
|
34,387 |
|
|
40,667 |
|
|
104,611 |
|
|
134,862 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
3,993 |
|
|
2,576 |
|
|
13,706 |
|
|
4,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
14,556 |
|
|
16,604 |
|
|
43,055 |
|
|
52,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(10,563) |
|
|
(14,028) |
|
|
(29,349) |
|
|
(47,159) |
|
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(4,349) |
|
|
(3,755) |
|
|
(11,439) |
|
|
(10,672) |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
459 |
|
|
(115) |
|
|
1,392 |
|
|
791 |
|
|
Total other income (expense), net |
|
(3,890) |
|
|
(3,870) |
|
|
(10,047) |
|
|
(9,881) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and non-controlling interests |
|
(14,453) |
|
|
(17,898) |
|
|
(39,396) |
|
|
(57,040) |
|
|
Income tax benefit (provision) |
|
197 |
|
|
(430) |
|
|
(2,210) |
|
|
(1,857) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
(14,256) |
|
|
(18,328) |
|
|
(41,606) |
|
|
(58,897) |
|
|
Net (income) loss attributable to non-controlling
interests |
|
(133) |
|
|
59 |
|
|
(468) |
|
|
151 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Altisource |
|
$ |
(14,389) |
|
|
$ |
(18,269) |
|
|
$ |
(42,074) |
|
|
$ |
(58,746) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.89) |
|
|
$ |
(1.15) |
|
|
$ |
(2.62) |
|
|
$ |
(3.71) |
|
|
Diluted |
|
$ |
(0.89) |
|
|
$ |
(1.15) |
|
|
$ |
(2.62) |
|
|
$ |
(3.71) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
16,087 |
|
|
15,831 |
|
|
16,051 |
|
|
15,816 |
|
|
Diluted |
|
16,087 |
|
|
15,831 |
|
|
16,051 |
|
|
15,816 |
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss, net of tax |
|
$ |
(14,256) |
|
|
$ |
(18,328) |
|
|
$ |
(41,606) |
|
|
$ |
(58,897) |
|
|
Comprehensive (income) loss attributable to non-controlling
interests |
|
(133) |
|
|
59 |
|
|
(468) |
|
|
151 |
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to Altisource |
|
$ |
(14,389) |
|
|
$ |
(18,269) |
|
|
$ |
(42,074) |
|
|
$ |
(58,746) |
|
See accompanying notes to condensed consolidated financial
statements.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Altisource Equity (Deficit) |
|
|
|
|
|
Common stock |
|
Additional paid-in capital |
|
Retained earnings |
|
|
|
Treasury stock, at cost |
|
Non-controlling interests |
|
Total |
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
141,473 |
|
|
$ |
190,383 |
|
|
|
|
$ |
(441,034) |
|
|
$ |
1,209 |
|
|
$ |
(82,556) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(22,002) |
|
|
|
|
— |
|
|
87 |
|
|
(21,915) |
|
|
Distributions to non-controlling interest holders
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(1,395) |
|
|
(1,395) |
|
|
Share-based compensation expense
|
— |
|
|
— |
|
|
1,438 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
1,438 |
|
|
Issuance of restricted share units and restricted
shares |
— |
|
|
— |
|
|
— |
|
|
(5,905) |
|
|
|
|
5,905 |
|
|
— |
|
|
— |
|
|
Treasury shares withheld for the payment of tax on restricted share
unit and restricted share issuances
|
— |
|
|
— |
|
|
— |
|
|
(3,586) |
|
|
|
|
2,756 |
|
|
— |
|
|
(830) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2021 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
142,911 |
|
|
$ |
158,890 |
|
|
|
|
$ |
(432,373) |
|
|
$ |
(99) |
|
|
$ |
(105,258) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(18,475) |
|
|
|
|
— |
|
|
(179) |
|
|
(18,654) |
|
|
Distributions to non-controlling interest holders
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(356) |
|
|
(356) |
|
|
Share-based compensation expense
|
— |
|
|
— |
|
|
641 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted share units and restricted
shares |
— |
|
|
— |
|
|
— |
|
|
(4,574) |
|
|
|
|
4,574 |
|
|
— |
|
|
— |
|
|
Treasury shares withheld for the payment of tax on restricted share
unit and restricted share issuances
|
— |
|
|
— |
|
|
— |
|
|
(571) |
|
|
|
|
474 |
|
|
— |
|
|
(97) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
143,552 |
|
|
$ |
135,270 |
|
|
|
|
$ |
(427,325) |
|
|
$ |
(634) |
|
|
$ |
(123,724) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(18,269) |
|
|
|
|
— |
|
|
(59) |
|
|
(18,328) |
|
|
Distributions to non-controlling interest holders
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(53) |
|
|
(53) |
|
|
Share-based compensation expense
|
— |
|
|
— |
|
|
431 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
431 |
|
|
Issuance of restricted share units and restricted
shares |
— |
|
|
— |
|
|
— |
|
|
(84) |
|
|
|
|
84 |
|
|
— |
|
|
— |
|
|
Treasury shares withheld for the payment of tax on restricted share
unit and restricted share issuances |
— |
|
|
— |
|
|
— |
|
|
(36) |
|
|
|
|
27 |
|
|
— |
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
143,983 |
|
|
$ |
116,881 |
|
|
|
|
$ |
(427,214) |
|
|
$ |
(746) |
|
|
$ |
(141,683) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Altisource Equity (Deficit) |
|
|
|
|
|
Common stock |
|
Additional paid-in capital |
|
Retained earnings |
|
|
|
Treasury stock, at cost |
|
Non-controlling interests |
|
Total |
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
144,298 |
|
|
$ |
186,592 |
|
|
|
|
$ |
(426,445) |
|
|
$ |
1,272 |
|
|
$ |
(68,870) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(12,190) |
|
|
|
|
— |
|
|
161 |
|
|
(12,029) |
|
|
Distributions to non-controlling interest holders |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(264) |
|
|
(264) |
|
|
Share-based compensation expense |
— |
|
|
— |
|
|
1,290 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
1,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted share units and restricted
shares |
— |
|
|
— |
|
|
— |
|
|
(6,560) |
|
|
|
|
6,560 |
|
|
— |
|
|
— |
|
|
Treasury shares withheld for the payment of tax on restricted share
unit and restricted share issuances
|
— |
|
|
— |
|
|
— |
|
|
(4,046) |
|
|
|
|
3,032 |
|
|
— |
|
|
(1,014) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
145,588 |
|
|
$ |
163,796 |
|
|
|
|
$ |
(416,853) |
|
|
$ |
1,169 |
|
|
$ |
(80,887) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(15,495) |
|
|
|
|
— |
|
|
174 |
|
|
(15,321) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to non-controlling interest holders |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(486) |
|
|
(486) |
|
|
Share-based compensation expense |
— |
|
|
— |
|
|
1,289 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
1,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted share units and restricted
shares
|
— |
|
|
— |
|
|
— |
|
|
(2,384) |
|
|
|
|
2,384 |
|
|
— |
|
|
— |
|
|
Treasury shares withheld for the payment of tax on restricted share
unit and restricted share issuances
|
— |
|
|
— |
|
|
— |
|
|
(38) |
|
|
|
|
29 |
|
|
— |
|
|
(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2022 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
146,877 |
|
|
$ |
145,879 |
|
|
|
|
$ |
(414,440) |
|
|
$ |
857 |
|
|
$ |
(95,414) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(14,389) |
|
|
|
|
— |
|
|
133 |
|
|
(14,256) |
|
|
Distributions to non-controlling interest holders |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(142) |
|
|
(142) |
|
|
Share-based compensation expense |
— |
|
|
— |
|
|
1,320 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
1,320 |
|
|
Issuance of restricted share units and restricted
shares |
— |
|
|
— |
|
|
— |
|
|
(260) |
|
|
|
|
260 |
|
|
— |
|
|
— |
|
|
Treasury shares withheld for the payment of tax on restricted share
unit and restricted share issuances |
— |
|
|
— |
|
|
— |
|
|
(106) |
|
|
|
|
78 |
|
|
— |
|
|
(28) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2022 |
25,413 |
|
|
$ |
25,413 |
|
|
$ |
148,197 |
|
|
$ |
131,124 |
|
|
|
|
$ |
(414,102) |
|
|
$ |
848 |
|
|
$ |
(108,520) |
|
See accompanying notes to condensed consolidated financial
statements.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
2022 |
|
2021 |
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
Net loss |
$ |
(41,606) |
|
|
$ |
(58,897) |
|
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization |
2,700 |
|
|
3,479 |
|
|
Amortization of right-of-use assets under operating
leases |
2,254 |
|
|
6,340 |
|
|
Amortization of intangible assets |
3,849 |
|
|
8,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
3,899 |
|
|
2,510 |
|
|
Bad debt expense |
578 |
|
|
1,268 |
|
|
|
|
|
|
Amortization of debt discount |
495 |
|
|
499 |
|
|
Amortization of debt issuance costs |
712 |
|
|
623 |
|
|
Deferred income taxes |
(329) |
|
|
8 |
|
|
Loss on disposal of fixed assets |
1 |
|
|
117 |
|
|
Other non-cash items |
— |
|
|
137 |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
3,095 |
|
|
1,846 |
|
|
|
|
|
|
Prepaid expenses and other current assets |
160 |
|
|
598 |
|
|
Other assets |
363 |
|
|
1,439 |
|
|
Accounts payable and accrued expenses |
(5,014) |
|
|
(2,738) |
|
|
Current and non-current operating lease liabilities |
(2,444) |
|
|
(6,958) |
|
|
Other current and non-current liabilities |
(1,006) |
|
|
413 |
|
|
Net cash used in operating activities |
(32,293) |
|
|
(41,133) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Additions to premises and equipment |
(863) |
|
|
(1,125) |
|
|
Proceeds from the sale of business |
346 |
|
|
3,000 |
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
(517) |
|
|
1,875 |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from revolving credit facility |
— |
|
|
20,000 |
|
|
Debt issuance costs |
— |
|
|
(531) |
|
|
Proceeds from convertible debt payable to related parties (Note
1)
|
— |
|
|
1,200 |
|
|
Distributions to non-controlling interests |
(892) |
|
|
(1,804) |
|
|
Payments of tax withholding on issuance of restricted share units
and restricted shares |
(1,051) |
|
|
(936) |
|
|
Net cash (used in) provided by financing activities |
(1,943) |
|
|
17,929 |
|
|
|
|
|
|
|
Net decrease in cash, cash equivalents and restricted
cash |
(34,753) |
|
|
(21,329) |
|
|
Cash, cash equivalents and restricted cash at the beginning of the
period |
102,149 |
|
|
62,096 |
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at the end of the
period |
$ |
67,396 |
|
|
$ |
40,767 |
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
Interest paid |
$ |
10,167 |
|
|
$ |
9,373 |
|
|
Income taxes paid, net |
2,556 |
|
|
2,736 |
|
|
Acquisition of right-of-use assets with operating lease
liabilities |
797 |
|
|
6,976 |
|
|
Reduction of right-of-use assets from operating lease modifications
or reassessments |
(172) |
|
|
(5,665) |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
Net decrease in payables for purchases of premises and
equipment |
$ |
(65) |
|
|
$ |
(47) |
|
|
|
|
|
|
|
The following table provides a reconciliation of cash, cash
equivalents and restricted cash reported within the unaudited
consolidated balance sheets and the unaudited consolidated
statements of cash flows: |
|
September 30, 2022 |
|
September 30, 2021 |
|
|
|
|
|
Cash and cash equivalents |
$ |
63,812 |
|
|
$ |
36,492 |
|
|
Restricted cash |
3,584 |
|
|
4,275 |
|
|
Total cash, cash equivalents and restricted cash reported in the
statements of cash flows |
$ |
67,396 |
|
|
$ |
40,767 |
|
See accompanying notes to condensed consolidated financial
statements.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION
Description of Business
Altisource Portfolio Solutions S.A., together with its subsidiaries
(which may be referred to as “Altisource,” the “Company,” “we,”
“us” or “our”), is an integrated service provider and marketplace
for the real estate and mortgage industries. Combining operational
excellence with a suite of innovative services and technologies,
Altisource helps solve the demands of the ever-changing markets we
serve.
We are publicly traded on the NASDAQ Global Select Market under the
symbol “ASPS.” We are organized under the laws of the Grand Duchy
of Luxembourg.
Basis of Accounting and Presentation
The unaudited interim condensed consolidated financial statements
have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for
interim financial information and with the instructions to Form
10-Q and Article 10 of Securities and Exchange Commission (“SEC”)
Regulation S-X. Accordingly, these financial statements do not
include all of the information and footnotes required by GAAP for
complete consolidated financial statements. In the opinion of
management, the interim data includes all normal recurring
adjustments considered necessary to fairly state the results for
the interim periods presented. The preparation of interim condensed
consolidated financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of our interim
condensed consolidated financial statements, as well as the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
Intercompany transactions and accounts have been eliminated in
consolidation.
Effective January 1, 2022, our reportable segments changed as a
result of a change in the way our Chief Executive Officer (our
chief operating decision maker) manages our businesses, allocates
resources and evaluates performance, and the related changes in our
internal organization. We now report our operations through two
reportable segments:
Servicer and Real Estate
and
Origination.
In addition, we report
Corporate and Others
separately. Prior to the January 1, 2022 change in reportable
segments, the Company operated with one reportable segment (total
Company). Prior year comparable period segment disclosures have
been restated to conform to the current year presentation. See Note
22 for a description of our business segments.
Altisource consolidates Best Partners Mortgage Cooperative, Inc.,
which is managed by The Mortgage Partnership of America, L.L.C.
(“MPA”), a wholly-owned subsidiary of Altisource. Best Partners
Mortgage Cooperative, Inc. is a mortgage cooperative doing business
as Lenders One®
(“Lenders One”). MPA provides services to Lenders One under a
management agreement that ends on December 31, 2025 (with
renewals for three successive five-year periods at MPA’s
option).
The management agreement between MPA and Lenders One, pursuant to
which MPA is the management company, represents a variable interest
in a variable interest entity. MPA is the primary beneficiary of
Lenders One as it has the power to direct the activities that most
significantly impact the cooperative’s economic performance and the
right to receive benefits from the cooperative. As a result,
Lenders One is presented in the accompanying condensed consolidated
financial statements on a consolidated basis and the interests of
the members are reflected as non-controlling interests. As of
September 30, 2022, Lenders One had total assets of $1.1
million and total liabilities of $0.8 million. As of
December 31, 2021, Lenders One had total assets of $2.2
million and total liabilities of $1.4 million.
In 2019, Altisource created Pointillist, Inc. (“Pointillist”) and
contributed the Pointillist®
customer journey analytics business and $8.5 million to it. On May
27, 2021, Pointillist issued $1.3 million in principal of
convertible notes to related parties with a maturity date of
January 1, 2023. The notes bore interest at a rate of 7% per
annum. The principal and unpaid accrued interest then outstanding
under the notes (1) would automatically convert to Pointillist
equity at the earlier of the time Pointillist receives proceeds of
$5.0 million or more from the sale of its equity or January 1,
2023, or (2) are repaid in cash or converted into Pointillist
common stock equity based on a $13.1 million Pointillist valuation
(at the Lenders’ option) in the event of a corporate transaction or
initial public offering of Pointillist. On December 1, 2021, the
notes were converted to Pointillist equity and Altisource and other
shareholders of Pointillist sold all of the equity interests in
Pointillist (See Note 3 for additional information). Prior to the
sale, Pointillist was owned by Altisource and management of
Pointillist, with management of Pointillist owning a
non-controlling interest representing 12.1% of the outstanding
equity of Pointillist. Through December 1, 2021, Pointillist is
presented in the accompanying condensed consolidated financial
statements on a consolidated basis and the portion of Pointillist
owned by Pointillist management is reported as non-controlling
interests.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
These interim condensed consolidated financial statements should be
read in conjunction with the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021, as filed with the SEC on
March 3, 2022.
Fair Value Measurements
Fair value is defined as an exit price, representing the amount
that would be received for an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. The three-tier hierarchy for inputs used in
measuring fair value, which prioritizes the inputs used in the
methodologies of measuring fair value for assets and liabilities,
is as follows:
Level 1
—
Quoted prices in active markets for identical assets and
liabilities
Level 2
—
Observable inputs other than quoted prices included in Level
1
Level 3
—
Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of assets or
liabilities
Financial assets and financial liabilities are classified based on
the lowest level of input that is significant to the fair value
measurements. Our assessment of the significance of a particular
input to the fair value measurements requires judgment and may
affect the valuation of the assets and liabilities being measured
and their placement within the fair value hierarchy.
Future Adoption of New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) No. 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting
and in January 2021, the FASB issued ASU No. 2021-01,
Reference Rate Reform (Topic 848): Scope.
This standard applies only to contracts, hedging relationships, and
other transactions that reference the London Interbank Offered Rate
(“LIBOR”) or another reference rate expected to be discontinued
because of reference rate reform. This standard provides optional
guidance for a limited period of time to ease the potential burden
in accounting for (or recognizing the effects of) reference rate
reform on financial reporting, in response to concerns about
structural risks of interbank offered rates, and, particularly, the
risk of cessation of LIBOR. This standard is effective from the
period from March 12, 2020 through December 31, 2022. An entity may
elect to apply the amendments for contract modifications as of any
date from the beginning of an interim period that includes or is
subsequent to March 12, 2020, or prospectively from a date within
an interim period that includes or is subsequent to March 12, 2020,
up to the date that the financial statements are available to be
issued. Once elected for a topic or an industry subtopic, the
standard must be applied prospectively for all eligible contract
modifications for that topic or industry subtopic. The Company is
currently evaluating the impact this guidance may have on its
condensed consolidated financial statements.
NOTE 2 — CUSTOMER CONCENTRATION
Ocwen
Ocwen Financial Corporation (together with its subsidiaries,
“Ocwen”) is a residential mortgage loan servicer of mortgage
servicing rights (“MSRs”) it owns, including those MSRs in which
others have an economic interest, and a subservicer of MSRs owned
by others.
During the three and nine months ended September 30, 2022,
Ocwen was our largest customer, accounting for 40% of our total
revenue for the nine months ended September 30, 2022 (45% of
our revenue for the third quarter of 2022). Ocwen purchases certain
mortgage services from us under the terms of services agreements
and amendments thereto (collectively, the “Ocwen Services
Agreements”) with terms extending through August 2030. Certain of
the Ocwen Services Agreements contain a “most favored nation”
provision and also grant the parties the right to renegotiate
pricing, among other things.
Revenue from Ocwen primarily consists of revenue earned from the
loan portfolios serviced and subserviced by Ocwen when Ocwen
engages us as the service provider, and revenue earned directly
from Ocwen, pursuant to the Ocwen Services Agreements. For the nine
months ended September 30, 2022 and 2021, we recognized
revenue from Ocwen of $47.2 million and $44.7 million, respectively
($17.2 million and $13.6 million for the third quarter of 2022 and
2021, respectively). Revenue from Ocwen as a percentage of segment
and consolidated revenue was as follows:
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended
September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
Servicer and Real Estate |
|
56 |
% |
|
51 |
% |
|
52 |
% |
|
50 |
% |
|
Origination |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
|
Corporate and Others |
|
— |
% |
|
— |
% |
|
— |
% |
|
1 |
% |
|
Consolidated revenue |
|
45 |
% |
|
31 |
% |
|
40 |
% |
|
32 |
% |
We earn additional revenue related to the portfolios serviced and
subserviced by Ocwen when a party other than Ocwen or the MSR owner
selects Altisource as the service provider. For the nine months
ended September 30, 2022 and 2021, we recognized revenue of
$7.3 million and $7.4 million, respectively ($2.2 million and $1.9
million for the third quarter of 2022 and 2021, respectively), of
such revenue. These amounts are not included in deriving revenue
from Ocwen and revenue from Ocwen as a percentage of revenue
discussed above.
As of September 30, 2022, accounts receivable from Ocwen
totaled $4.9 million, $4.3 million of which was billed and $0.6
million of which was unbilled. As of December 31, 2021,
accounts receivable from Ocwen totaled $3.0 million, $2.8 million
of which was billed and $0.2 million of which was
unbilled.
RITM
Rithm Capital Corp. (individually, together with one or more of its
subsidiaries or one or more of its subsidiaries individually,
“RITM”) (formerly New Residential Investment Corp., or “NRZ”) is a
real estate investment trust that invests in and manages
investments primarily related to residential real estate, including
MSRs and excess MSRs.
Ocwen has disclosed that RITM is its largest client. As of June 30,
2022, approximately 18% of loans serviced and subserviced by Ocwen
(measured in unpaid principal balance (“UPB”)) were related to RITM
MSRs or rights to MSRs (the “Subject MSRs”).
RITM purchases brokerage services for real estate owned (“REO”)
exclusively from us, irrespective of the subservicer, subject to
certain limitations, for certain MSRs set forth in and pursuant to
the terms of a Cooperative Brokerage Agreement, as amended, and
related letter agreement (collectively, the “Brokerage Agreement”)
with terms extending through August 2025.
For the nine months ended September 30, 2022 and 2021, we
recognized revenue from RITM of $2.6 million and $2.4 million,
respectively ($0.8 million and $0.7 million for the third quarter
of 2022 and 2021, respectively), under the Brokerage Agreement. For
the nine months ended September 30, 2022 and 2021, we
recognized additional revenue of $10.4 million and $10.9 million,
respectively ($3.0 million and $3.4 million for the third quarter
of 2022 and 2021, respectively), relating to the Subject MSRs when
a party other than RITM selects Altisource as the service
provider.
NOTE 3 — SALE OF BUSINESSES
Pointillist Business
On October 6, 2021, Altisource and other shareholders of
Pointillist entered into a definitive Stock Purchase Agreement (as
amended, the “SPA”) to sell all of the equity interests in
Pointillist to Genesys Cloud Services, Inc. (“Genesys”) for
$150.0 million (the “Purchase Price”) (the “Transaction”). The
Purchase Price consisted of (1) an up-front payment of
$144.5 million, subject to certain adjustments, (2)
$0.5 million deposited into an escrow account to be used to
satisfy potential deficits between estimated closing date working
capital and actual closing date working capital (the “Working
Capital Escrow”), with excess amounts remaining after satisfying
such deficits (if any) being paid to the sellers, and (3)
$5.0 million deposited into an escrow account to satisfy
certain Genesys indemnification claims that may arise on or prior
to the first anniversary of the sale closing and, at Genesys’
election, any working capital deficits that exceed the Working
Capital Escrow (the “Indemnification Escrow”), with the balance to
be paid to the sellers thereafter. The Transaction closed on
December 1, 2021. On a fully diluted basis, Altisource owned
approximately 69% of the equity of Pointillist. After working
capital and other applicable adjustments, Altisource received
approximately $106.0 million from the sale of its Pointillist
equity and the collection of outstanding receivables, with
$102.2 million received at closing, approximately
$0.3 million deposited into the Working Capital Escrow and
approximately $3.5 million deposited into the Indemnification
Escrow. The Working Capital Escrow was received in May 2022. The
present value of the amounts in escrow is included in other current
assets in the accompanying condensed consolidated balance sheets at
a discounted value of $3.4 million and $3.6 million as of
September 30, 2022 and December 31, 2021,
respectively.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
Rental Property Management Business
In August 2018, Altisource entered into an amendment to its
agreements with Front Yard Residential Corporation (“RESI”) to sell
Altisource’s rental property management business to RESI and permit
RESI to internalize certain services that had been provided by
Altisource. The proceeds from the transaction totaled $18.0
million, payable in two installments. The first installment of
$15.0 million was received in August 2018 and the second
installment of $3.0 million was received in
January 2021.
NOTE 4 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Billed |
|
$ |
13,384 |
|
|
$ |
17,907 |
|
|
Unbilled |
|
5,432 |
|
|
5,398 |
|
|
|
|
18,816 |
|
|
23,305 |
|
|
Less: Allowance for credit losses |
|
(4,481) |
|
|
(5,297) |
|
|
|
|
|
|
|
|
Total |
|
$ |
14,335 |
|
|
$ |
18,008 |
|
Unbilled accounts receivable consist primarily of certain real
estate asset management, REO sales, title and closing services for
which we generally recognize revenue when the service is provided
but collect upon closing of the sale, and foreclosure trustee
services, for which we generally recognize revenues over the
service delivery period but bill following completion of the
service. We also include amounts in unbilled accounts receivable
that are earned during a month and billed in the following
month.
We are exposed to credit losses through our sales of products and
services to our customers which are recorded as accounts
receivable, net on the Company’s condensed consolidated financial
statements. We monitor and estimate the allowance for credit losses
based on our historical write-offs, historical collections, our
analysis of past due accounts based on the contractual terms of the
receivables, relevant market and industry reports and our
assessment of the economic status of our customers, if known.
Estimated credit losses are written off in the period in which the
financial asset is determined to be no longer collectible. There
can be no assurance that actual results will not differ from
estimates or that consideration of these factors in the future will
not result in an increase or decrease to our allowance for credit
losses.
Changes in the allowance for expected credit losses consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
|
(in thousands) |
|
Balance at Beginning of Period |
|
Charged to Expenses |
|
Deductions Note
(1)
|
|
Balance at End of Period |
|
|
|
|
|
|
|
|
|
|
|
Allowance for expected credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2022
|
|
$ |
5,297 |
|
|
$ |
578 |
|
|
$ |
1,394 |
|
|
$ |
4,481 |
|
|
Twelve months ended December 31, 2021
|
|
5,581 |
|
|
1,354 |
|
|
1,638 |
|
|
5,297 |
|
|
|
|
|
|
|
|
|
|
______________________________________
(1) Amounts
written off as uncollectible or transferred to other accounts or
utilized.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Income taxes receivable |
|
$ |
6,214 |
|
|
$ |
8,403 |
|
|
Maintenance agreements, current portion |
|
1,794 |
|
|
1,717 |
|
|
Prepaid expenses |
|
3,614 |
|
|
2,865 |
|
|
Surety bond collateral |
|
4,000 |
|
|
2,000 |
|
|
Other current assets |
|
6,082 |
|
|
6,879 |
|
|
|
|
|
|
|
|
Total |
|
$ |
21,704 |
|
|
$ |
21,864 |
|
NOTE 6 — PREMISES AND EQUIPMENT, NET
Premises and equipment, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Computer hardware and software |
|
$ |
49,339 |
|
|
$ |
50,452 |
|
|
Leasehold improvements |
|
5,848 |
|
|
5,927 |
|
|
Furniture and fixtures |
|
3,840 |
|
|
4,441 |
|
|
Office equipment and other |
|
440 |
|
|
811 |
|
|
|
|
|
|
|
|
|
59,467 |
|
|
61,631 |
|
|
Less: Accumulated depreciation and amortization |
|
(54,497) |
|
|
(54,758) |
|
|
|
|
|
|
|
|
Total |
|
$ |
4,970 |
|
|
$ |
6,873 |
|
Depreciation and amortization expense amounted to $2.7 million and
$3.5 million for the nine months ended September 30, 2022 and
2021, respectively ($0.9 million and $1.1 million for the third
quarter of 2022 and 2021, respectively), and is included in cost of
revenue for operating assets and in selling, general and
administrative expenses for non-operating assets in the
accompanying condensed consolidated statements of operations and
comprehensive loss.
NOTE 7 — RIGHT-OF-USE ASSETS UNDER OPERATING LEASES,
NET
Right-of-use assets under operating leases, net consists of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Right-of-use assets under operating leases |
|
$ |
12,529 |
|
|
$ |
19,595 |
|
|
Less: Accumulated amortization |
|
(6,564) |
|
|
(12,001) |
|
|
|
|
|
|
|
|
Total |
|
$ |
5,965 |
|
|
$ |
7,594 |
|
Amortization of operating leases was $2.3 million and $6.3 million
for the nine months ended September 30, 2022 and 2021,
respectively ($0.5 million and $1.8 million for the third quarter
of 2022 and 2021, respectively), and is included in cost of revenue
for operating assets and in selling, general and administrative
expenses for non-operating assets in the accompanying condensed
consolidated statements of operations and comprehensive
loss.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
NOTE 8 — GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The following is a summary of goodwill by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Servicer and Real Estate |
|
Origination |
|
Corporate and Others |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2022 and December 31,
2021
|
|
$ |
30,681 |
|
|
$ |
25,279 |
|
|
$ |
— |
|
|
$ |
55,960 |
|
We determined that each reportable segment represents a reporting
unit. Goodwill was allocated to each reporting unit based on the
relative fair value of each of our reporting units.
Intangible Assets, net
Intangible assets, net consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average estimated useful life
(in years)
|
|
Gross carrying amount |
|
Accumulated amortization |
|
Net book value |
|
(in thousands) |
|
|
September 30,
2022 |
|
December 31,
2021 |
|
September 30,
2022 |
|
December 31,
2021 |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Definite lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer related intangible assets |
|
9 |
|
$ |
214,307 |
|
|
$ |
214,307 |
|
|
$ |
(196,844) |
|
|
$ |
(194,594) |
|
|
$ |
17,463 |
|
|
$ |
19,713 |
|
|
Operating agreement |
|
20 |
|
35,000 |
|
|
35,000 |
|
|
(22,166) |
|
|
(20,854) |
|
|
12,834 |
|
|
14,146 |
|
|
Trademarks and trade names |
|
16 |
|
9,709 |
|
|
9,709 |
|
|
(6,996) |
|
|
(6,709) |
|
|
2,713 |
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
259,016 |
|
|
$ |
259,016 |
|
|
$ |
(226,006) |
|
|
$ |
(222,157) |
|
|
$ |
33,010 |
|
|
$ |
36,859 |
|
Amortization expense for definite lived intangible assets was $3.8
million and $8.2 million for the nine months ended
September 30, 2022 and 2021, respectively ($1.3 million and
$2.7 million for the third quarter of 2022 and 2021, respectively).
Forecasted annual definite lived intangible asset amortization
expense for 2022 through 2026 is $5.1 million, $5.1 million, $5.1
million, $5.1 million and $4.9 million, respectively.
NOTE 9 — OTHER ASSETS
Other assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Restricted cash |
|
$ |
3,584 |
|
|
$ |
4,017 |
|
|
Security deposits |
|
825 |
|
|
1,043 |
|
|
|
|
|
|
|
Other |
|
1,094 |
|
|
1,072 |
|
|
|
|
|
|
|
|
Total |
|
$ |
5,503 |
|
|
$ |
6,132 |
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
NOTE 10 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES
Accounts payable and accrued expenses consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
13,937 |
|
|
$ |
15,978 |
|
|
Accrued expenses - general |
|
14,920 |
|
|
13,653 |
|
|
Accrued salaries and benefits |
|
10,711 |
|
|
12,254 |
|
|
Income taxes payable |
|
1,888 |
|
|
4,650 |
|
|
|
|
|
|
|
|
Total |
|
$ |
41,456 |
|
|
$ |
46,535 |
|
Other current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Operating lease liabilities |
|
$ |
2,303 |
|
|
$ |
2,893 |
|
|
Other |
|
792 |
|
|
977 |
|
|
|
|
|
|
|
|
Total |
|
$ |
3,095 |
|
|
$ |
3,870 |
|
NOTE 11 — LONG-TERM DEBT
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Senior secured term loans |
|
$ |
247,204 |
|
|
$ |
247,204 |
|
|
Less: Debt issuance costs, net |
|
(1,053) |
|
|
(1,632) |
|
|
Less: Unamortized discount, net |
|
(999) |
|
|
(1,494) |
|
|
|
|
|
|
|
|
|
|
|
|
Total Senior secured term loans |
|
245,152 |
|
|
244,078 |
|
|
|
|
|
|
|
|
Credit Facility |
|
— |
|
|
— |
|
|
Less: Debt issuance costs, net |
|
(308) |
|
|
(441) |
|
|
Net Credit Facility |
|
(308) |
|
|
(441) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-term debt |
|
$ |
244,844 |
|
|
$ |
243,637 |
|
Credit Agreement
Altisource Portfolio Solutions S.A. and its wholly-owned
subsidiary, Altisource S.à r.l. entered into a credit
agreement (the “Credit Agreement”) in April 2018 with Morgan
Stanley Senior Funding, Inc., as administrative agent and
collateral agent, and certain lenders. Under the Credit Agreement,
Altisource borrowed $412.0 million in the form of Term B Loans and
obtained a $15.0 million revolving credit facility. The Term B
Loans mature in April 2024. Altisource terminated the revolving
credit facility on December 1, 2021. Altisource Portfolio Solutions
S.A. and certain subsidiaries are guarantors of the Term B Loans
(collectively, the “Guarantors”).
There are no mandatory repayments of the Term B Loans except as set
forth below until the April 2024 maturity when the balance is due.
All amounts outstanding under the Term B Loans will become due on
the earlier of (i) April 3, 2024, and (ii) the date on which
the loans are declared to be due and owing by the administrative
agent at the request (or with the consent) of the Required Lenders
(as defined in the Credit Agreement; other capitalized terms,
unless defined herein, are defined in the Credit Agreement) or as
otherwise provided in the Credit Agreement upon the occurrence of
any event of default.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
In addition to the scheduled principal payments, subject to certain
exceptions, the Term B Loans are subject to mandatory prepayment
upon issuances of debt, certain casualty and condemnation events
and sales of assets, as well as from a percentage of Consolidated
Excess Cash Flow if our leverage ratio as of each year-end
computation date is greater than 3.00 to 1.00, as calculated in
accordance with the provisions of the Credit Agreement (the
percentage increases if our leverage ratio exceeds 3.50 to
1.00).
Altisource may incur incremental indebtedness under the Credit
Agreement from one or more incremental lenders, which may include
existing lenders, in an aggregate incremental principal amount not
to exceed $125.0 million, subject to certain conditions set forth
in the Credit Agreement, including a sublimit of $80.0 million with
respect to incremental revolving credit commitments and, after
giving effect to the incremental borrowing, the Company’s leverage
ratio does not exceed 3.00 to 1.00. The lenders have no obligation
to provide any incremental indebtedness.
The Term B Loans bear interest at rates based upon, at our option,
the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar
Rate term loans bear interest at a rate per annum equal to the sum
of (i) the greater of (x) the Adjusted Eurodollar Rate for a three
month interest period and (y) 1.00% plus (ii) 4.00%. Base Rate term
loans bear interest at a rate per annum equal to the sum of (i) the
greater of (x) the Base Rate and (y) 2.00% plus (ii) 3.00%. The
interest rate as of September 30, 2022 was 6.25%.
The payment of all amounts owing by Altisource under the Credit
Agreement is guaranteed by the Guarantors and is secured by a
pledge of all equity interests of certain subsidiaries of
Altisource, as well as a lien on substantially all of the assets of
Altisource S.à r.l. and the Guarantors, subject to certain
exceptions.
The Credit Agreement includes covenants that restrict or limit,
among other things, our ability, subject to certain exceptions and
baskets, to incur indebtedness; incur liens on our assets; sell,
transfer or dispose of assets; make Restricted Junior Payments
including share repurchases, dividends and repayment of junior
indebtedness; make investments; dispose of equity interests of any
Material Subsidiaries; engage in a line of business substantially
different than existing businesses and businesses reasonably
related, complimentary or ancillary thereto; amend material debt
agreements or other material contracts; engage in certain
transactions with affiliates; enter into sale/leaseback
transactions; grant negative pledges or agree to such other
restrictions relating to subsidiary dividends and distributions;
make changes to our fiscal year; and engage in mergers and
consolidations.
The Credit Agreement contains certain events of default including
(i) failure to pay principal when due or interest or any other
amount owing on any other obligation under the Credit Agreement
within five days of becoming due, (ii) material incorrectness of
representations and warranties when made, (iii) breach of certain
other covenants, subject to cure periods described in the Credit
Agreement, (iv) failure to pay principal or interest on any other
debt that equals or exceeds $40.0 million when due, (v) default on
any other debt that equals or exceeds $40.0 million that causes, or
gives the holder or holders of such debt the ability to cause, an
acceleration of such debt, (vi) occurrence of a Change of Control,
(vii) bankruptcy and insolvency events, (viii) entry by a court of
one or more judgments against us in an amount in excess of $40.0
million that remain unbonded, undischarged or unstayed for a
certain number of days after the entry thereof, (ix) the occurrence
of certain ERISA events and (x) the failure of certain Loan
Documents to be in full force and effect. If any event of default
occurs and is not cured within applicable grace periods set forth
in the Credit Agreement or waived, all loans and other obligations
could become due and immediately payable and the facility could be
terminated.
As of September 30, 2022, debt issuance costs were $1.1
million, net of $3.5 million of accumulated amortization. As of
December 31, 2021, debt issuance costs were $1.6 million, net
of $2.9 million of accumulated amortization.
Credit Facility
On June 22, 2021 Altisource S.à r.l, a subsidiary of
Altisource Portfolio Solutions S.A., entered into a revolving
credit facility with a related party, STS Master Fund, Ltd. (“STS”)
(the “Credit Facility”). STS is an investment fund managed by Deer
Park Road Management Company, LP. Deer Park Road Management
Company, LP owns approximately 24% of Altisource’s common stock as
of September 30, 2022. Deer Park’s Chief Investment Officer
and managing partner was a member of Altisource’s Board of
Directors until his resignation on March 1, 2022. The replacement
director appointed by the Board of Directors is a current employee
of Deer Park. Under the terms of the Credit Facility, STS will make
loans to Altisource from time to time, in amounts requested by
Altisource and Altisource may voluntarily prepay all or any portion
of the outstanding loans at any time. The Credit Facility provides
Altisource the ability to borrow a maximum amount of $20.0 million
through June 22, 2022, $15.0 million through June 22,
2023, and $10.0 million until the end of the term. Amounts that are
repaid may be re-borrowed in accordance with the limitations set
forth below.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
Outstanding amounts borrowed pursuant to the Credit Facility will
amortize over the three-year term as follows: on June 22,
2022, the difference between the then outstanding balance above
$15.0 million and $15.0 million, on June 22, 2023, the
difference between the then outstanding balance above $10.0 million
and $10.0 million, and on June 22, 2024, the then outstanding
balance of the loan will be due and payable by
Altisource.
Borrowings under the Credit Facility bear interest at 9.00% per
annum and are payable quarterly on the last business day of each
March, June, September and December. In connection with the Credit
Facility, Altisource is required to pay customary fees, including
an upfront fee equal to $0.5 million at the initial extension
of credit pursuant to the facility, an unused line fee of 0.5% and,
an early termination fee in the event of a refinancing
transaction.
Altisource’s obligations under the Credit Facility are secured by a
lien on all equity in Altisource’s subsidiary incorporated in
India, Altisource Business Solutions Private Limited, pursuant to a
pledge agreement entered into by Altisource Asia Holdings Ltd I, a
wholly owned Altisource subsidiary.
The Credit Facility contains additional representations,
warranties, covenants, terms and conditions customary for
transactions of this type, that restrict or limit, among other
things, our ability to use the proceeds of credit only for general
corporate purposes.
The Credit Facility contains certain events of default including
(i) failure to pay principal when due or interest or any other
amount owing on any other obligation under the Credit Facility
within
three business days of becoming due, (ii) failure to perform
or observe any material provisions of the Credit Documents to be
performed or complied with, (iii) material incorrectness of
representations and warranties when made, (iv) default on any other
debt that equals or exceeds $40.0 million that causes, or
gives the holder or holders of such debt the ability to cause, an
acceleration of such debt, (v) entry by a court of one or more
judgments against us in an amount in excess of $40.0 million
that remain unbonded, undischarged or unstayed for a certain number
of days after the entry thereof, (vi) occurrence of a Change of
Control, (vii) bankruptcy and insolvency events. If any event of
default occurs and is not cured within applicable grace periods set
forth in the Credit Facility or waived, all loans and other
obligations could become due and immediately payable and the
facility could be terminated.
As of September 30, 2022 and December 31, 2021, there was
no outstanding debt under the Credit Facility. As of
September 30, 2022 and December 31, 2021, debt issuance
costs were $0.3 million, net of $0.2 million of accumulated
amortization, and $0.4 million, net of $0.1 million of
accumulated amortization, respectively.
NOTE 12 — OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Operating lease liabilities |
|
$ |
3,800 |
|
|
$ |
5,029 |
|
|
Income tax liabilities |
|
13,588 |
|
|
14,156 |
|
|
Deferred revenue |
|
36 |
|
|
— |
|
|
Other non-current liabilities |
|
84 |
|
|
81 |
|
|
|
|
|
|
|
|
Total |
|
$ |
17,508 |
|
|
$ |
19,266 |
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
NOTE 13 — FAIR VALUE MEASUREMENTS AND FINANCIAL
INSTRUMENTS
The following table presents the carrying amount and estimated fair
value of financial instruments and certain liabilities measured at
fair value as of September 30, 2022 and December 31,
2021. The following fair values are estimated using market
information and what the Company believes to be appropriate
valuation methodologies under GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
|
(in thousands) |
|
Carrying amount |
|
Fair value |
|
Carrying amount |
|
Fair value |
|
|
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
63,812 |
|
|
$ |
63,812 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
98,132 |
|
|
$ |
98,132 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Restricted cash |
|
3,584 |
|
|
3,584 |
|
|
— |
|
|
— |
|
|
4,017 |
|
|
4,017 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term receivable |
|
3,433 |
|
|
— |
|
|
— |
|
|
3,433 |
|
|
3,643 |
|
|
— |
|
|
— |
|
|
3,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior secured term loan |
|
247,204 |
|
|
— |
|
|
200,235 |
|
|
— |
|
|
247,204 |
|
|
— |
|
|
224,956 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements on a Recurring Basis
Cash and cash equivalents and restricted cash are carried at
amounts that approximate their fair values due to the highly liquid
nature of these instruments and were measured using Level 1
inputs.
The fair value of our senior secured term loan is based on quoted
market prices. Based on the frequency of trading, we do not believe
that there is an active market for our debt. Therefore, the quoted
prices are considered Level 2 inputs.
In connection with the sale of Pointillist on December 1, 2021,
Altisource is scheduled to receive, assuming no indemnification
claims, $3.5 million on the first anniversary of the sale
closing and received $0.3 million from the Working Capital
Escrow in May 2022 (See Note 3 for additional information). We
measure short-term receivables without a stated interest rate based
on the present value of the future payments.
There were no transfers between different levels during the periods
presented.
Concentrations of Credit Risk
Financial instruments that subject us to concentrations of credit
risk primarily consist of cash and cash equivalents and accounts
receivable. Our policy is to deposit our cash and cash equivalents
with larger, highly rated financial institutions. The Company
derived 45% and 40% of its revenue from Ocwen for the three and
nine months ended September 30, 2022, respectively (see Note 2
for additional information on Ocwen revenues and accounts
receivable balance). The Company strives to mitigate its
concentrations of credit risk with respect to accounts receivable
by actively monitoring past due accounts and the economic status of
larger customers, if known.
NOTE 14 — SHAREHOLDERS’ EQUITY AND SHARE-BASED
COMPENSATION
Share Repurchase Program
On May 15, 2018, our shareholders approved the renewal and
replacement of the share repurchase program previously approved by
the shareholders on May 17, 2017. Under the program, we are
authorized to purchase up to 4.3 million shares of our common
stock, based on a limit of 25% of the outstanding shares of common
stock on the date of approval, at a minimum price of $1.00 per
share and a maximum price of $500.00 per share, for a period of
five years from the date of approval. As of September 30,
2022, approximately 2.4 million shares of common stock remain
available for repurchase under the program. There were no purchases
of shares of common stock during the nine months ended
September 30, 2022 and 2021. Luxembourg law limits share
repurchases to the balance of Altisource Portfolio Solutions S.A.
(unconsolidated parent company) retained earnings, less the value
of shares repurchased. As of September 30, 2022, we can
repurchase up to approximately $71 million of our common stock
under Luxembourg law. Our Credit Agreement also limits the amount
we can spend on share repurchases, which limit was approximately
$421 million as of September 30, 2022, and may prevent
repurchases in certain circumstances, including if our leverage
ratio exceeds 3.50 to 1.00.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
Share-Based Compensation
We issue share-based awards in the form of stock options,
restricted shares and restricted share units for certain employees,
officers and directors. We recognized share-based compensation
expense of $3.9 million and $2.5 million for the nine months ended
September 30, 2022 and 2021, respectively ($1.3 million and
$0.4 million for the third quarter of 2022 and 2021, respectively).
As of September 30, 2022, estimated unrecognized compensation
costs related to share-based awards amounted to $4.0 million, which
we expect to recognize over a weighted average remaining requisite
service period of approximately 1.43 years.
Stock Options
Stock option grants are composed of a combination of service-based,
market-based and performance-based options.
Service-Based Options.
These options generally vest over
three or four years with equal annual vesting and generally
expire on the earlier of ten years after the date of grant or
following termination of service. A total of 185 thousand
service-based options were outstanding as of September 30,
2022.
Market-Based Options.
These option grants generally have two components, each of which
vests only upon the achievement of certain criteria. The first
component, which we refer to as “ordinary performance” grants,
generally consists of two-thirds of the market-based grant and
begins to vest if the stock price is at least double the exercise
price, as long as the stock price realizes a compounded annual gain
of at least 20% over the exercise price. The remaining third of the
market-based options, which we refer to as “extraordinary
performance” grants, generally begins to vest if the stock price is
at least triple the exercise price, as long as the stock price
realizes a compounded annual gain of at least 25% over the exercise
price. Market-based options vest in
three or four year installments with the first installment
vesting upon the achievement of the criteria and the remaining
installments vesting thereafter in equal annual installments.
Market-based options generally expire on the earlier of ten years
after the date of grant or following termination of service, unless
the performance criteria is met prior to termination of service or
in the final three years of the option term, in which case vesting
will generally continue in accordance with the provisions of the
award agreement. A total of 96 thousand market-based options were
outstanding as of September 30, 2022.
Performance-Based Options.
These option grants generally will vest if certain specific
financial measures are achieved; typically with one-fourth vesting
on each anniversary of the grant date. The award of
performance-based options is adjusted based on the level of
achievement specified in the award agreements. If the performance
criteria achieved is above threshold performance levels,
participants generally have the opportunity to vest in 50% to 200%
of the option grants, depending upon performance achieved. If the
performance criteria achieved is below a certain threshold, the
options are canceled. The options generally expire on the earlier
of ten years after the date of grant or following termination of
service, unless the performance criteria is met prior to
termination of service in which case vesting will generally
continue in accordance with the provisions of the award agreement.
There were 450 thousand performance-based options outstanding as of
September 30, 2022.
The Company granted 105 thousand stock options (at a weighted
average exercise price of $11.86 per share) for the nine months
ended September 30, 2022 (no comparative amount for the nine
months ended September 30, 2021).
The fair values of the performance-based options are determined
using the Black-Scholes option pricing model. The following
assumptions were used to determine the fair values as of the grant
date:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2022
|
|
|
|
|
Black-Scholes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate (%) |
1.62 |
|
|
|
|
|
|
|
|
Expected stock price volatility (%) |
67.75 |
|
|
|
|
|
|
|
|
Expected dividend yield |
— |
|
|
|
|
|
|
|
|
Expected option life (in years) |
6.00 |
|
|
|
|
|
|
|
Fair value |
$ |
7.27 |
|
|
|
|
|
|
|
We determined the expected option life of all service-based stock
option grants using the simplified method, determined based on the
graded vesting term plus the contractual term of the options,
divided by two. We use the simplified method because we believe
that our historical data does not provide a reasonable basis upon
which to estimate expected option life.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
The following table summarizes the grant date fair value of stock
options that vested during the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
(in thousands, except per share data) |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
Weighted average grant date fair value of stock options granted per
share |
|
$ |
8.19 |
|
|
$ |
— |
|
|
Intrinsic value of options exercised |
|
— |
|
|
— |
|
|
Grant date fair value of stock options that vested |
|
1,031 |
|
|
1,203 |
|
The following table summarizes the activity related to our stock
options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of options |
|
Weighted average exercise price |
|
Weighted average contractual term
(in years)
|
|
Aggregate intrinsic value
(in thousands)
|
|
|
|
|
|
|
|
|
|
Outstanding as of December 31, 2021 |
687,339 |
|
|
$ |
27.99 |
|
|
4.57 |
|
$ |
— |
|
|
Granted |
105,000 |
|
|
11.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
(61,800) |
|
|
59.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of September 30, 2022 |
730,539 |
|
|
27.34 |
|
|
4.98 |
|
131 |
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of September 30, 2022 |
542,290 |
|
|
25.44 |
|
|
4.42 |
|
— |
|
Other Share-Based Awards
The Company’s other share-based and similar types of awards are
comprised of restricted shares and restricted share units. The
restricted shares and restricted share units are comprised of a
combination of service-based awards, performance-based awards,
market-based awards and performance and market-based
awards.
Service-Based Awards.
These awards generally vest over
one to four year periods with vesting in equal annual
installments. A total of 402 thousand service-based awards were
outstanding as of September 30, 2022.
Performance-Based Awards.
These awards generally vest if certain specific financial measures
are achieved; generally one-third vests on each anniversary of the
grant date or cliff-vest on the third anniversary of the grant
date. The number of performance-based restricted shares and
restricted share units that may vest is based on the level of
achievement as specified in the award agreements. If the
performance criteria achieved is above certain financial
performance levels and Altisource’s share performance is above
certain established criteria, participants have the opportunity to
vest in up to 150% of the restricted share unit award for certain
awards. If the performance criteria achieved is below certain
thresholds, the award is canceled. A total of 154 thousand
performance-based awards were outstanding as of September 30,
2022.
Market-Based Awards.
50% of these awards generally vest if certain specific market
conditions are achieved over a 30-day period and the remaining 50%
of these awards generally vest on the one year anniversary of the
initial vesting. The Company estimates the grant date fair value of
these awards using a lattice (binomial) model. A total of 112
thousand market-based awards were outstanding as of
September 30, 2022.
Performance-Based and Market-Based Awards.
These awards generally vest if certain specific financial measures
are achieved and if certain specific market conditions are
achieved. If the performance criteria achieved is above certain
financial performance levels and Altisource’s share performance is
above certain established criteria, participants have the
opportunity to vest in up to 300% of the restricted share unit
award for certain awards. If the performance criteria or the market
criteria is below certain thresholds, the award is canceled. The
Company estimates the grant date fair value of these awards using a
Monte Carlo simulation model. A total of 98 thousand
performance-based and market-based awards were outstanding as of
September 30, 2022.
The Company granted 440 thousand restricted share units (at a
weighted average grant date fair value of $10.69 per share) during
the nine months ended September 30, 2022. These grants include
46 thousand performance-based awards that include both a
performance condition and a market condition and 46 thousand
performance-based awards, for the nine months ended
September 30, 2022. The Company granted 29 thousand
performance-based awards that include both a performance condition
and a market condition and 89 thousand performance-based awards,
for the nine months ended September 30, 2021.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
The following table summarizes the activity related to our
restricted shares and restricted share units:
|
|
|
|
|
|
|
Number of restricted shares and restricted share units |
|
|
|
Outstanding as of December 31, 2021 |
677,175 |
|
|
Granted |
440,072 |
|
|
Issued |
(205,905) |
|
|
Forfeited/canceled |
(145,377) |
|
|
|
|
|
Outstanding as of September 30, 2022 |
765,965 |
|
NOTE 15 — REVENUE
We classify revenue in three categories: service revenue, revenue
from reimbursable expenses and non-controlling interests. Service
revenue consists of amounts attributable to our fee-based services.
Reimbursable expenses and non-controlling interests are
pass-through items for which we earn no margin. Reimbursable
expenses consist of amounts we incur on behalf of our customers in
performing our fee-based services that we pass directly on to our
customers without a markup. Non-controlling interests represent the
earnings of Lenders One, a consolidated entity that is a mortgage
cooperative managed, but not owned, by Altisource. The Lenders One
members’ earnings are included in revenue and reduced from net
income to arrive at net income attributable to Altisource (see Note
1). Our services are provided to customers located in the United
States. The components of revenue were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in thousands) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
36,290 |
|
|
$ |
41,626 |
|
|
$ |
111,691 |
|
|
$ |
133,672 |
|
|
Reimbursable expenses |
|
1,957 |
|
|
1,416 |
|
|
6,158 |
|
|
5,365 |
|
|
Non-controlling interests |
|
133 |
|
|
201 |
|
|
468 |
|
|
712 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
38,380 |
|
|
$ |
43,243 |
|
|
$ |
118,317 |
|
|
$ |
139,749 |
|
Disaggregation of Revenue
Disaggregation of total revenues by segment and major source was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2022
|
|
(in thousands) |
|
Revenue recognized when services are performed or assets are
sold |
|
Revenue related to technology platforms and professional
services |
|
Reimbursable expenses revenue |
|
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
Servicer and Real Estate |
|
$ |
26,387 |
|
|
$ |
2,633 |
|
|
$ |
1,846 |
|
|
$ |
30,866 |
|
|
Origination |
|
7,392 |
|
|
11 |
|
|
111 |
|
|
7,514 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
33,779 |
|
|
$ |
2,644 |
|
|
$ |
1,957 |
|
|
$ |
38,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2021
|
|
(in thousands) |
|
Revenue recognized when services are performed or assets are
sold |
|
Revenue related to technology platforms and professional
services |
|
Reimbursable expenses revenue |
|
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
Servicer and Real Estate |
|
$ |
23,785 |
|
|
$ |
1,782 |
|
|
$ |
1,226 |
|
|
$ |
26,793 |
|
|
Origination |
|
14,362 |
|
|
11 |
|
|
190 |
|
|
14,563 |
|
|
Corporate and Others |
|
— |
|
|
1,887 |
|
|
— |
|
|
1,887 |
|
|
Total revenue |
|
$ |
38,147 |
|
|
$ |
3,680 |
|
|
$ |
1,416 |
|
|
$ |
43,243 |
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2022
|
|
(in thousands) |
|
Revenue recognized when services are performed or assets are
sold |
|
Revenue related to technology platforms and professional
services |
|
Reimbursable expenses revenue |
|
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
Servicer and Real Estate |
|
$ |
77,947 |
|
|
$ |
7,654 |
|
|
$ |
5,748 |
|
|
$ |
91,349 |
|
|
Origination |
|
26,533 |
|
|
25 |
|
|
410 |
|
|
26,968 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
104,480 |
|
|
$ |
7,679 |
|
|
$ |
6,158 |
|
|
$ |
118,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2021
|
|
(in thousands) |
|
Revenue recognized when services are performed or assets are
sold |
|
Revenue related to technology platforms and professional
services |
|
Reimbursable expenses revenue |
|
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
Servicer and Real Estate |
|
$ |
77,898 |
|
|
$ |
6,832 |
|
|
$ |
4,854 |
|
|
$ |
89,584 |
|
|
Origination |
|
46,213 |
|
|
32 |
|
|
511 |
|
|
46,756 |
|
|
Corporate and Others |
|
— |
|
|
3,409 |
|
|
— |
|
|
3,409 |
|
|
Total revenue |
|
$ |
124,111 |
|
|
$ |
10,273 |
|
|
$ |
5,365 |
|
|
$ |
139,749 |
|
Contract Balances
Our contract assets consist of unbilled accounts receivable (see
Note 4). Our contract liabilities consist of current deferred
revenue and other non-current liabilities as reported on the
accompanying condensed consolidated balance sheets. Revenue
recognized that was included in the contract liability at the
beginning of the period was $3.7 million and $4.7 million for the
nine months ended September 30, 2022 and 2021, respectively
($0.8 million and $0.9 million for the third quarter of 2022 and
2021, respectively).
NOTE 16 — COST OF REVENUE
Cost of revenue principally includes payroll and employee benefits
associated with personnel employed in customer service, operations
and technology roles, fees paid to external providers related to
the provision of services, reimbursable expenses, technology and
telecommunications costs as well as depreciation and amortization
of operating assets. The components of cost of revenue were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in thousands) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
$ |
11,885 |
|
|
$ |
15,171 |
|
|
$ |
39,231 |
|
|
$ |
55,655 |
|
|
Outside fees and services |
|
15,319 |
|
|
16,891 |
|
|
42,573 |
|
|
52,473 |
|
|
Technology and telecommunications |
|
4,656 |
|
|
6,391 |
|
|
14,844 |
|
|
18,972 |
|
|
Reimbursable expenses |
|
1,957 |
|
|
1,416 |
|
|
6,158 |
|
|
5,365 |
|
|
Depreciation and amortization |
|
570 |
|
|
798 |
|
|
1,805 |
|
|
2,397 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
34,387 |
|
|
$ |
40,667 |
|
|
$ |
104,611 |
|
|
$ |
134,862 |
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
NOTE 17 — SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses include payroll and
employee benefits associated with personnel employed in executive,
sales and marketing, finance, technology, law, compliance, human
resources, vendor management, facilities and risk management roles.
This category also includes professional services fees, occupancy
costs, marketing costs, depreciation and amortization of
non-operating assets and other expenses. The components of selling,
general and administrative expenses were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in thousands) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
$ |
7,388 |
|
|
$ |
6,859 |
|
|
$ |
19,093 |
|
|
$ |
21,007 |
|
|
Amortization of intangible assets |
|
1,281 |
|
|
2,673 |
|
|
3,849 |
|
|
8,183 |
|
|
Professional services |
|
2,584 |
|
|
2,318 |
|
|
8,432 |
|
|
7,896 |
|
|
Occupancy related costs |
|
1,008 |
|
|
2,182 |
|
|
4,049 |
|
|
7,652 |
|
|
Marketing costs |
|
774 |
|
|
327 |
|
|
2,446 |
|
|
1,500 |
|
|
Depreciation and amortization |
|
284 |
|
|
346 |
|
|
895 |
|
|
1,082 |
|
|
Other |
|
1,237 |
|
|
1,899 |
|
|
4,291 |
|
|
4,726 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
14,556 |
|
|
$ |
16,604 |
|
|
$ |
43,055 |
|
|
$ |
52,046 |
|
NOTE 18 — OTHER INCOME (EXPENSE), NET
Other income (expense), net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in thousands) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense) |
|
$ |
212 |
|
|
$ |
— |
|
|
$ |
318 |
|
|
$ |
(28) |
|
|
Other, net |
|
247 |
|
|
(115) |
|
|
1,074 |
|
|
819 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
459 |
|
|
$ |
(115) |
|
|
$ |
1,392 |
|
|
$ |
791 |
|
NOTE 19 — INCOME TAXES
We recognized an income tax (provision) benefit of $(2.2) million
and $(1.9) million for the nine months ended September 30,
2022 and 2021, respectively ($0.2 million and $(0.4) million for
the third quarter of 2022 and 2021, respectively). The income tax
(provision) benefit for the three and nine months ended
September 30, 2022 was driven by income tax expense on
transfer pricing income from India, income tax benefit from losses
in the United States, no tax benefit on the pretax loss from our
Luxembourg operating company and uncertain tax
positions.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
NOTE 20 — LOSS PER SHARE
Basic loss per share is computed by dividing loss available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted net loss per share excludes all
dilutive securities because their impact would be anti-dilutive, as
described below.
Basic and diluted loss per share are calculated as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in thousands, except per share data) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Altisource |
|
$ |
(14,389) |
|
|
$ |
(18,269) |
|
|
$ |
(42,074) |
|
|
$ |
(58,746) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic |
|
16,087 |
|
|
15,831 |
|
|
16,051 |
|
|
15,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, diluted |
|
16,087 |
|
|
15,831 |
|
|
16,051 |
|
|
15,816 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.89) |
|
|
$ |
(1.15) |
|
|
$ |
(2.62) |
|
|
$ |
(3.71) |
|
|
Diluted |
|
$ |
(0.89) |
|
|
$ |
(1.15) |
|
|
$ |
(2.62) |
|
|
$ |
(3.71) |
|
For the nine months ended September 30, 2022 and 2021, 1.3
million and 1.5 million, respectively (1.3 million and 1.3 million
for the third quarter of 2022 and 2021, respectively), stock
options, restricted shares and restricted share units, were
excluded from the computation of loss per share, as a result of the
following:
•For
both the nine months ended September 30, 2022 and 2021, 0.2
million (0.2 million for both the third quarter of 2022 and 2021),
stock options, restricted shares and restricted share units were
anti-dilutive and have been excluded from the computation of
diluted loss per share because the Company incurred a net
loss
•For
the nine months ended September 30, 2022 and 2021, 0.2 million
and 0.3 million, respectively (0.2 million and 0.3 million for the
third quarter of 2022 and 2021, respectively), stock options were
anti-dilutive and have been excluded from the computation of
diluted loss per share because their exercise price was greater
than the average market price of our common stock
•For
the nine months ended September 30, 2022 and 2021, 0.9 million
and 1.0 million, respectively (0.9 million and 0.8 million for the
third quarter of 2022 and 2021, respectively), stock options,
restricted shares and restricted share units, which begin to vest
upon the achievement of certain market criteria related to our
common stock price, performance criteria and a total shareholder
return compared to the market benchmark, that have not yet been met
in each period have been excluded from the computation of diluted
loss per share
NOTE 21 — COMMITMENTS, CONTINGENCIES AND REGULATORY
MATTERS
We record a liability for contingencies if an unfavorable outcome
is probable and the amount of loss can be reasonably estimated,
including expected insurance coverage. For proceedings where the
reasonable estimate of loss is a range, we record a best estimate
of loss within the range.
Litigation
We are currently involved in legal actions in the course of our
business, some of which seek monetary damages. We do not believe
that the outcome of these proceedings, both individually and in the
aggregate, will have a material impact on our financial condition,
results of operations or cash flows.
Regulatory Matters
Periodically, we are subject to audits, examinations and
investigations by federal, state and local governmental authorities
and receive subpoenas, civil investigative demands or other
requests for information from such governmental authorities in
connection with their regulatory or investigative authority. We are
currently responding to such inquiries from governmental
authorities relating to certain aspects of our business. We believe
it is premature to predict the potential outcome or to estimate any
potential financial impact in connection with these
inquiries.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
Ocwen Related Matters
As discussed in Note 2, during the nine months ended
September 30, 2022, Ocwen was our largest customer, accounting
for 40% of our total revenue (45% of our revenue for the third
quarter of 2022). Additionally, 6% of our revenue for the three and
nine months ended September 30, 2022 was earned on the loan
portfolios serviced by Ocwen, when a party other than Ocwen or the
MSRs owner selected Altisource as the service
provider.
Ocwen has disclosed that it is subject to a number of ongoing
federal and state regulatory examinations, consent orders,
inquiries, subpoenas, civil investigative demands, requests for
information and other actions and is subject to pending and
threatened legal proceedings, some of which include claims against
Ocwen for substantial monetary damages. Previous regulatory actions
against Ocwen have subjected Ocwen to independent oversight of its
operations and placed certain restrictions on its ability to
acquire servicing rights. Existing or future similar matters could
result in adverse regulatory or other actions against Ocwen. In
addition to the above, Ocwen may become subject to future adverse
regulatory or other actions.
Ocwen has disclosed that RITM is its largest client. As of June 30,
2022, approximately 18% of loans serviced and subserviced by Ocwen
(measured in UPB) were related to RITM MSRs or rights to
MSRs.
The existence or outcome of Ocwen regulatory matters or the
termination of the RITM sub-servicing agreement with Ocwen may have
significant adverse effects on Ocwen’s business and/or our
continuing relationship with Ocwen. For example, Ocwen may be
required to alter the way it conducts business, including the
parties it contracts with for services, it may be required to seek
changes to its existing pricing structure with us, it may lose its
non-government-sponsored enterprise (“GSE”) servicing rights or
subservicing arrangements or may lose one or more of its state
servicing or origination licenses. Additional regulatory actions or
adverse financial developments may impose additional restrictions
on or require changes in Ocwen’s business that could require it to
sell assets or change its business operations. Any or all of these
effects and others could result in our eventual loss of Ocwen as a
customer or a reduction in the number and/or volume of services
they purchase from us or the loss of other customers.
If any of the following events occurred, Altisource’s revenue could
be significantly reduced and our results of operations could be
materially adversely affected, including from the possible
impairment or write-off of goodwill, intangible assets, property
and equipment, other assets and accounts receivable:
•Altisource
loses Ocwen as a customer or there is a significant reduction in
the volume of services they purchase from us
•Ocwen
loses, sells or transfers a significant portion of its GSE or
Federal Housing Administration servicing rights or subservicing
arrangements or remaining other servicing rights or subservicing
arrangements and Altisource fails to be retained as a service
provider
•The
contractual relationship between Ocwen and RITM changes
significantly, including Ocwen’s sub-servicing arrangement with
RITM expiring without renewal, and this change results in a change
in our status as a provider of services related to the Subject
MSRs
•Ocwen
loses state servicing licenses in states with a significant number
of loans in Ocwen’s servicing portfolio
•The
contractual relationship between Ocwen and Altisource changes
significantly or there are significant changes to our pricing to
Ocwen for services from which we generate material
revenue
•Altisource
otherwise fails to be retained as a service provider
Management cannot predict whether any of these events will occur or
the amount of any impact they may have on Altisource.
Leases
We lease certain premises and equipment, primarily consisting of
office space and information technology equipment. Certain of our
leases include options to renew at our discretion or terminate
leases early, and these options are considered in our determination
of the expected lease term. Certain of our lease agreements include
rental payments adjusted periodically for inflation. Our lease
agreements generally do not contain any material residual value
guarantees or material restrictive covenants. We sublease certain
office space to third parties. Sublease income was $0.4 million and
$0.6 million for the nine months ended September 30, 2022 and
2021, respectively (less than $0.1 million and $0.2 million for the
third quarter of 2022 and 2021, respectively). The amortization
periods of right-of-use assets are generally limited by the
expected lease term. Our leases generally have expected lease terms
at adoption of
one to six years.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
Information about our lease terms and our discount rate assumption
was as follows for the nine months ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
|
|
|
|
|
Weighted average remaining lease term (in years) |
|
3.15 |
|
3.28 |
|
Weighted average discount rate |
|
5.66 |
% |
|
6.24 |
% |
Our lease activity during the period was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
(in thousands) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Operating lease costs: |
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
$ |
586 |
|
|
$ |
1,486 |
|
|
$ |
2,217 |
|
|
$ |
4,696 |
|
|
Cost of revenue |
|
— |
|
|
398 |
|
|
265 |
|
|
1,896 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in operating activities for amounts included in the
measurement of lease liabilities |
|
$ |
515 |
|
|
$ |
1,690 |
|
|
$ |
2,022 |
|
|
$ |
7,143 |
|
|
Short-term (twelve months or less) lease costs |
|
402 |
|
|
(343) |
|
|
827 |
|
|
(802) |
|
Maturities of our lease liabilities as of September 30, 2022
are as follows:
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Operating lease obligations |
|
|
|
|
|
2022 |
|
$ |
557 |
|
|
2023 |
|
2,233 |
|
|
2024 |
|
1,715 |
|
|
2025 |
|
1,233 |
|
|
2026 |
|
636 |
|
|
|
|
|
Total lease payments |
|
6,374 |
|
|
Less: interest |
|
(271) |
|
|
|
|
|
|
Present value of lease liabilities |
|
$ |
6,103 |
|
Escrow Balances
We hold customers’ assets in escrow accounts at various financial
institutions pending completion of certain real estate activities.
These amounts are held in escrow accounts for limited periods of
time and are not included in the accompanying condensed
consolidated balance sheets. Amounts held in escrow accounts were
$20.0 million and $27.5 million as of September 30, 2022 and
December 31, 2021, respectively.
NOTE 22 — SEGMENT REPORTING
Our business segments are based upon our organizational structure,
which focuses primarily on the services offered, and are consistent
with the internal reporting used by our Chief Executive Officer
(our chief operating decision maker) to evaluate operating
performance and to assess the allocation of our
resources.
Effective January 1, 2022, our reportable segments changed as a
result of a change in the way our Chief Executive Officer (our
chief operating decision maker) manages our businesses, allocates
resources and evaluates performance, and the related changes in our
internal organization. We now report our operations through two
reportable segments:
Servicer and Real Estate
and
Origination.
In addition, we report
Corporate and Others
separately. Prior to the January 1, 2022 change in reportable
segments, the Company operated with one reportable segment (total
Company). Prior year comparable period segment disclosures have
been restated to conform to the current year
presentation.
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
The
Servicer and Real Estate
segment provides loan servicers and real estate investors with
solutions and technologies that span the mortgage and real estate
lifecycle. The
Origination
segment provides originators with solutions and technologies that
span the mortgage origination lifecycle.
Corporate and Others
includes Pointillist (sold on December 1, 2021), interest expense
and costs related to corporate functions including executive,
infrastructure and certain technology groups, finance, law,
compliance, human resources, vendor management, facilities, risk
management, as well as eliminations between reportable
segments.
Financial information for our segments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2022
|
|
(in thousands) |
|
Servicer and Real Estate |
|
Origination |
|
Corporate and Others |
|
Consolidated Altisource |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
30,866 |
|
|
$ |
7,514 |
|
|
$ |
— |
|
|
$ |
38,380 |
|
|
Cost of revenue |
|
22,082 |
|
|
7,654 |
|
|
4,651 |
|
|
34,387 |
|
|
Gross profit (loss) |
|
8,784 |
|
|
(140) |
|
|
(4,651) |
|
|
3,993 |
|
|
Selling, general and administrative expenses |
|
2,931 |
|
|
2,399 |
|
|
9,226 |
|
|
14,556 |
|
|
Income (loss) from operations |
|
5,853 |
|
|
(2,539) |
|
|
(13,877) |
|
|
(10,563) |
|
|
Total other income (expense), net |
|
4 |
|
|
— |
|
|
(3,894) |
|
|
(3,890) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
non-controlling interests
|
|
$ |
5,857 |
|
|
$ |
(2,539) |
|
|
$ |
(17,771) |
|
|
$ |
(14,453) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2021
|
|
(in thousands) |
|
Servicer and Real Estate |
|
Origination |
|
Corporate and Others |
|
Consolidated Altisource |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
26,793 |
|
|
$ |
14,563 |
|
|
$ |
1,887 |
|
|
$ |
43,243 |
|
|
Cost of revenue |
|
21,088 |
|
|
11,555 |
|
|
8,024 |
|
|
40,667 |
|
|
Gross profit (loss) |
|
5,705 |
|
|
3,008 |
|
|
(6,137) |
|
|
2,576 |
|
|
Selling, general and administrative expenses |
|
3,289 |
|
|
1,586 |
|
|
11,729 |
|
|
16,604 |
|
|
Income (loss) from operations |
|
2,416 |
|
|
1,422 |
|
|
(17,866) |
|
|
(14,028) |
|
|
Total other income (expense), net |
|
2 |
|
|
— |
|
|
(3,872) |
|
|
(3,870) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
non-controlling interests
|
|
$ |
2,418 |
|
|
$ |
1,422 |
|
|
$ |
(21,738) |
|
|
$ |
(17,898) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2022
|
|
(in thousands) |
|
Servicer and Real Estate |
|
Origination |
|
Corporate and Others |
|
Consolidated Altisource |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
91,349 |
|
|
$ |
26,968 |
|
|
$ |
— |
|
|
$ |
118,317 |
|
|
Cost of revenue |
|
64,235 |
|
|
26,206 |
|
|
14,170 |
|
|
104,611 |
|
|
Gross profit (loss) |
|
27,114 |
|
|
762 |
|
|
(14,170) |
|
|
13,706 |
|
|
Selling, general and administrative expenses |
|
9,227 |
|
|
6,739 |
|
|
27,089 |
|
|
43,055 |
|
|
Income (loss) from operations |
|
17,887 |
|
|
(5,977) |
|
|
(41,259) |
|
|
(29,349) |
|
|
Total other income (expense), net |
|
4 |
|
|
— |
|
|
(10,051) |
|
|
(10,047) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
non-controlling interests
|
|
$ |
17,891 |
|
|
$ |
(5,977) |
|
|
$ |
(51,310) |
|
|
$ |
(39,396) |
|
|
|
|
|
|
|
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2021
|
|
(in thousands) |
|
Servicer and Real Estate |
|
Origination |
|
Corporate and Others |
|
Consolidated Altisource |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
89,584 |
|
|
$ |
46,756 |
|
|
$ |
3,409 |
|
|
$ |
139,749 |
|
|
Cost of revenue |
|
69,063 |
|
|
38,722 |
|
|
27,077 |
|
|
134,862 |
|
|
Gross profit (loss) |
|
20,521 |
|
|
8,034 |
|
|
(23,668) |
|
|
4,887 |
|
|
Selling, general and administrative expenses |
|
10,709 |
|
|
4,468 |
|
|
36,869 |
|
|
52,046 |
|
|
Income (loss) from operations |
|
9,812 |
|
|
3,566 |
|
|
(60,537) |
|
|
(47,159) |
|
|
Total other income (expense), net |
|
6 |
|
|
— |
|
|
(9,887) |
|
|
(9,881) |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
non-controlling interests
|
|
$ |
9,818 |
|
|
$ |
3,566 |
|
|
$ |
(70,424) |
|
|
$ |
(57,040) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Servicer and Real Estate |
|
Origination |
|
Corporate and Others |
|
Consolidated Altisource |
|
|
|
|
|
|
|
|
|
|
|
Total assets: |
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
$ |
64,885 |
|
|
$ |
54,501 |
|
|
$ |
91,896 |
|
|
$ |
211,282 |
|
|
December 31, 2021 |
|
61,832 |
|
|
59,741 |
|
|
136,235 |
|
|
257,808 |
|
Our services are provided to customers primarily located in the
United States. Premises and equipment, net consist of the
following, by country:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
September 30,
2022 |
|
December 31,
2021 |
|
|
|
|
|
|
|
Luxembourg |
|
$ |
2,812 |
|
|
$ |
3,883 |
|
|
United States |
|
779 |
|
|
1,932 |
|
|
India |
|
1,314 |
|
|
999 |
|
|
Uruguay |
|
65 |
|
|
59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,970 |
|
|
$ |
6,873 |
|
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Management’s discussion and analysis of financial condition and
results of operations (“MD&A”) is a supplement to the
accompanying interim condensed consolidated financial statements
and is intended to provide a reader of our financial statements
with a narrative from the perspective of management on our
businesses, current developments, financial condition, results of
operations and liquidity. Our MD&A should be read in
conjunction with our Form 10-K for the year ended December 31,
2021 filed with the Securities and Exchange Commission (“SEC”) on
March 3, 2022.