Strategic Performance and Operational Context
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Achieved 19% year-over-year service revenue growth by successfully replacing lost Rithm-related business with new customer wins across both segments.
Reached a historical milestone with 65% of total service revenue now coming from non-Onity/Rithm customers, the highest diversification since the 2009 IPO.
Attributed the decline in adjusted EBITDA margins to the absence of a prior-year non-recurring benefit and increased investments in leadership and staff to support growth.
Deployed a centralized AI enablement model to accelerate software development and improve operating efficiency, specifically targeting the modernization of the Equator and Hubzu platforms.
Reported a 30% sequential increase in Hubzu inventory, which management views as a critical leading indicator for future revenue realization.
Noted that while foreclosure starts and sales are increasing, they remain significantly below pre-pandemic levels, suggesting further upside if market conditions normalize.
Outlook and Strategic Objectives
Anticipates roughly flat third quarter adjusted EBITDA with a projected increase in the fourth quarter as recent sales wins continue to ramp.
Maintains the ‘Project 45’ objective to reach a $45 million run rate adjusted EBITDA by the fourth quarter of 2028.
Expects the decline in Rithm-related revenue to stabilize by the fourth quarter of 2026 as the transition of assets to Rithm’s internal servicing nears completion.
Assumes a 9 to 12-month lag between receiving REO or foreclosure referrals and the ultimate realization of service revenue.
Focusing on margin improvement and pipeline building in the second half of 2026 to position the company for a future debt refinancing.
Financial and Risk Factors
Repurchased $2 million of the company’s term loan at a discount, resulting in a gain and contributing to debt reduction efforts.
Identified a $6.6 million net cash use in operating activities, almost entirely driven by increased receivables resulting from rapid revenue growth.
Highlighted that $6.9 billion of Onity’s portfolio remains subject to trustee approvals, which may determine if those assets stay with Altisource for the foreseeable future.
Q&A Session Highlights
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