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Hubzu operator Altisource to issue more stock to pay down debt

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Hubzu operator Altisource Portfolio Solutions announced late Thursday that it plans to raise money for the second time this year by issuing more common stock, an announcement that sent shares in the company to a new all-time low in after-hours trading.

The Luxembourg-based real estate and mortgage services provider, which also manages but does not own the Lenders One Cooperative, had previously raised $20.5 million in a February offering of 4.55 million shares that it used to pay down debt.

Altisource provided no information on the size or terms of the latest offering, but said it intended to use the proceeds “for general corporate purposes, including repayment of certain indebtedness.”

Investors react to news after hours

More than 130,000 shares in Altisource Portfolio Solutions (ASPS) traded after hours Thursday. Source: Nasdaq.com.

Shares in Altisource, which have changed hands for as much as $17.67 and as little as $3.52 in the last year, dipped as low as $3.02 in after-hours trading, before rebounding to $3.50.

In a separate regulatory filing, Altisource revealed that it’s cut nearly 400 positions this year, and plans to trim $13.5 million from the company’s annual expenses, after racking up a $4.1 million net loss in July.

Bill Shepro

“Altisource continues to execute on its strategy to recover from the impact of the pandemic,” Chairman and CEO Bill Shepro said in a statement.

Altisource said it employed 1,100 full-time workers as of Aug. 31, down from 1,496 at the end of last year (including 1,142 based in India, 279 in the U.S., 66 in Uruguay, and nine in Luxembourg, according to the company’s most recent annual report).

“Based upon our progress in the third quarter, we estimate that we will generate $1.0 million per month of expense savings for the month of Sept. 2023,” Shepro said.

He said the company expects to at least break even during the third quarter by one measurement — adjusted earnings before interest, tax, depreciation and amortization (EBITDA) — and to have positive adjusted EBITDA for the fourth quarter and full year.

Altisource had previously reported an $18.9 million second-quarter net loss, with revenue down 12 percent from the same quarter a year ago to $33.2 million. That brought the company’s net loss for the first half of the year to $31.7 million, following a $53.4 million 2022 net loss.

As of June 30, Altisource reported $217.9 million in long-term debt, down 11 percent from the $245.2 million it owed at the end of last year. The company also reported $59.8 million in current assets, including $35 million in cash.

“Since last quarter, we’ve won business that we estimate will generate $18.6 million of annual revenue on a stabilized basis,” Shepro said in a July 27 earnings announcement. “This includes a July win of $12.8 million from a new asset management client that we estimate will generate $3 million to $5 million per year in adjusted EBITDA across Hubzu and most of our other default solutions. During the quarter, we continued to onboard and grow sales wins from 2022 and 2023, which combined are now at a $13 million annualized revenue run rate.”

Altisource provides solutions to mortgage loan servicers and real estate investors that include property preservation and inspection services, title and settlement services, real estate valuation services, foreclosure trustee services, and residential and commercial construction inspection and risk mitigation services.

Its marketplace business includes the Hubzu online real estate auction platform and real estate auction, real estate brokerage, and asset management services.

The company’s tech offerings for loan servicers and real estate investors include:

  • Equator, a platform for managing real estate owned (REO) properties, short sales, foreclosure, bankruptcy and eviction processes
  • REALHome Services and Solutions, a national real estate brokerage specializing in institutional sellers and buyers
  • RentRange, a single-family rental data, analytics and rent-based valuation solution
  • REALSynergy, a commercial loan-servicing platform
  • NestRange, an automated valuation model and analytics solution

On the mortgage origination side, Altisource manages the Lenders One Cooperative and provides title and settlement services, real estate valuation services, loan fulfillment, certification and certification insurance services.

Altisource’s tech offerings for mortgage originators include:

  • Vendorly, a vendor management platform
  • Lenders One Loan Automation (LOLA), a marketplace to order services and a tool to automate loan originations
  • TrelixAI, workflow automation for the loan fulfillment, pre- and post-close quality control and service transfer processes.

On Aug. 30, Altisource announced it had signed six new Equator customers: Dawson’s Realty & Mortgages Inc., FlippingUSA, Scottsdale REI LLC (which does business as Scottsdale Mortgage Investments) and three other unnamed companies.

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