Altisource Q3 Service Revenue Rises 26% on Customer Wins

Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) reported a 26% increase in third-quarter 2026 service revenue as recent customer wins expanded and reduced its dependence on Onity and Rithm. Adjusted EBITDA also increased, although a shift toward the lower-margin Origination segment and continued spending on customer implementations weighed on profitability.

Service revenue reached $49.8 million, up from $39.7 million a year earlier and the highest quarterly level since the fourth quarter of 2020. Total revenue rose 24% to $51.9 million, while gross profit increased 7% to $12.1 million. Gross profit as a percentage of service revenue declined to 24% from 29%.

Adjusted EBITDA, a non-GAAP measure, rose 17% to $4.3 million from $3.6 million. The adjusted EBITDA margin narrowed to 8.5% from 9.1%, reflecting stronger growth in the lower-margin Origination business and investment in new customer implementations and future expansion. Those pressures were largely offset by relatively stable corporate costs as revenue grew.

On a GAAP basis, Altisource recorded a pretax loss of $1.0 million, compared with a $1.7 million loss in the prior-year quarter. The net loss attributable to Altisource narrowed to $1.4 million from $2.4 million, while diluted loss per share improved to $0.12 from $0.22. Adjusted pretax income attributable to Altisource increased 59% to $2.1 million, and adjusted diluted earnings per share rose to $0.13 from $0.10.

For the first nine months of 2026, service revenue increased 18% to $143.7 million, but adjusted EBITDA declined 8% to $13.1 million. Net cash provided by operating activities totaled $1.3 million for the nine-month period, including $3.5 million in the third quarter. Altisource ended September with $25.1 million of unrestricted cash after purchasing and retiring $0.9 million of its term loan during the quarter.

Customer wins reshape the revenue base

Revenue from customers other than Onity, Rithm and parties associated with their portfolios increased 96% from a year earlier. These customers accounted for 72% of company service revenue, up from 46% in the third quarter of 2025. Revenue associated with Onity and Rithm fell to $14.1 million from $21.4 million.

The change helped offset the winddown of Altisource’s cooperative brokerage agreement with Rithm and the transfer of Rithm’s Onity-serviced loans to Rithm. Management said the continued ramp-up of customer wins, greater operating leverage and cost discipline are central to Project 45, its objective of reaching $45 million in run-rate adjusted EBITDA by the fourth quarter of 2028.

The Servicer and Real Estate segment generated service revenue of $35.8 million, 15% above the prior-year period and 4% higher than the second quarter. Growth came primarily from customer wins and strength in the Hubzu, Title and Trustee businesses, partly offset by lower Rithm revenue. Segment adjusted EBITDA increased 2% to $10.2 million, but the margin declined to 28.4% from 32.1%.

Hubzu inventory reached 26,000 assets at September 30, more than four times the 5,700 assets recorded a year earlier and 16% above the second-quarter level. The platform transacted 789 homes during the quarter, compared with 583 a year earlier and 710 in the second quarter. Altisource said inventory generally must move through foreclosure and real-estate-owned sale stages before producing revenue, making the timing and conversion of those assets important to future results.

Origination service revenue increased 65% to $14.0 million, driven principally by new customers, even as industrywide mortgage origination unit volume declined 6%. Segment adjusted EBITDA rose 33% to $1.2 million, while its 8.3% margin remained below the Servicer and Real Estate segment’s margin. Altisource continued to invest in staff and capabilities intended to support future growth.

Corporate and Other recorded an adjusted EBITDA loss of $7.1 million, narrowing from $7.3 million a year earlier and $7.9 million in the second quarter. The company expects corporate costs to remain relatively stable as the business expands.

Management expects higher fourth-quarter adjusted EBITDA

Altisource anticipates higher adjusted EBITDA in the fourth quarter as customer implementations advance, recent wins mature and efficiency initiatives begin to contribute. Management also expects a greater share of incremental Servicer and Real Estate revenue to flow through to adjusted EBITDA as new business seasons.

The company has expanded AI-enabled workflows across Marketplace, Field Services, Valuations, Finance and other corporate functions. It is also using AI to shorten software-development cycles and is building software products for construction risk management, commercial loan servicing and real-estate asset management. Altisource described these programs as early-stage initiatives intended to improve scalability and support growth.

The outlook remains subject to significant uncertainty. Altisource identified customer concentration, the timing and volume of default-related referrals, customer retention, technology disruptions, third-party vendors, regulatory and data-compliance obligations, liquidity and debt-covenant requirements among its risks. Industry volumes also remain below normalized levels, while foreclosure starts and sales, despite increasing during the first eight months of 2026, remained below pre-pandemic levels. The company’s sales-pipeline, Hubzu inventory and revenue-conversion estimates may therefore differ materially from actual results.