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| Statement |
|---|
| 2023 adjusted EBITDA loss of $35.1 million was $7.9 million or 18% better than 2022 |
| This is from sales momentum in our Lenders One business, the full year benefit of 2023 cost savings and efficiency initiatives, January 2024 price increases for certain of our services, and the launch of new solutions that help Lenders One members improve their profitability |
| Additionally, we've won meaningful new business that should continue to ramp in 2024 and have a strong sales pipeline to support growth in 2025 and beyond |
| Our 2023 total company adjusted EBITDA improvement is largely from product mix, higher margins in our businesses, and lower corporate operating costs |
| Even still, we improved adjusted EBITDA by more than $30 million over the last two years |
| When the default market returns to normal and interest rates decline, we should benefit from stronger revenue and adjusted EBITDA growth and lower corporate interest expense |
| We're pleased with our financial performance and sales wins in 2023 and believe this sets us up really well for this year |
| During 2023, we won new business, strengthen our sales pipeline, and took steps to improve our balance sheet |
| We believe our sales wins, enhanced margins, and lower corporate costs position us for strong revenue and adjusted EBITDA growth |
| And so we feel good about our position |
| This represents 13% to 32% service revenue growth and an $18.4 million to $23.4 million improvement in adjusted EBITDA over 2023 |
| And again, the whole strategy is launch it, gain adoption, that gives us a stronger buying power that ultimately helps reduce our costs and provide a stronger pricing to our members, which increases the adoption and increases the profitability of the members and our profitability |
| We anticipate that the 2024 adjusted EBITDA improvement will be driven by; one, revenue growth; two, higher business unit margins, primarily from the full year benefit of 2023 cost savings and efficiency initiatives, price increases, and scale; and three, lower corporate operating costs from the full year benefit of 2023 cost savings and efficiency initiatives |
| we've improved our EBITDA over the last couple of years by over $30 million and we're forecasting $21 million, $22 million improvement this year |
| As we look beyond 2024, we anticipate that our businesses will also benefit from the ramp of sales wins, continued recovery of the default market, and normalized origination volumes |
| So, we're pretty excited around the launch of these new programs and we're optimistic that these -- a couple of new programs we launch each year can contribute to future revenue and earnings growth |
| First, accelerate business development efforts on solutions where we believe Altisource is a strong performer, generates high margins, and where we forecast market tailwinds |
| They're very attractive wins and we believe the margins are strong in those -- in that -- associated with that revenue and we're going to continue to ramp it this year and next |
| Second, deliver strong operational efficiency and manage costs to drive higher gross profit and adjusted EBITDA margins |
| Several of our businesses generate strong margins and we believe are in high demand as servicers prepare for a rise in delinquencies and originators look to improve their profitability |
| Third, strengthen customer relationships and cross-sell other solutions to existing customers to gain wallet share |
| We believe that there is a significant opportunity to grow business with our existing customer base through strong performance and cross-selling other solutions |
| And what we can control around a lot of these sales wins and the earlier stage of foreclosure starts, we're making really, really good progress |
| We believe that there is a significant opportunity to improve Lenders One members profitability and grow our revenue and earnings by launching new solutions that leverage the Lenders One members collective buying power |
| We improved the Servicer and Real Estate segment's adjusted EBITDA and adjusted EBITDA margins |
| 2023 adjusted EBITDA of $37.1 million was $5.9 million or 18.8% higher than 2022, and adjusted EBITDA margins improved to 34.4% from 27.9% |
| Adjusted EBITDA growth and margin improvement reflect product mix and benefits from cost reduction and efficiency initiatives partially offset by modestly lower service revenue |
| For 2024, we anticipate our Origination segment service revenue to outperform the forecasted 17% increase in industry-wide origination volume, and adjusted EBITDA to improve considerably compared to 2023 |
| EBITDA will be better in the first quarter than last year, and we would expect our EBITDA and revenue to grow as the year progresses as we ramp these customers that we've already won and where we've gotten a verbal commitment |
| For 2023, the Origination segment's gross profit, gross profit margins, adjusted EBITDA, and adjusted EBITDA margins, all improved relative to 2022 |
| Statement |
|---|
| So, I think you're going to see that -- look, from a revenue perspective, I think in the first quarter, March, is a -- it was -- for a variety of reasons, is a tough comp for us |
| According to the Federal Reserve Bank of New York, credit card and auto loans, that are becoming delinquent, are rising above pre-pandemic levels, signaling increased financial stress |
| There are early signs of consumer financial stress, which could be precursors to a rise in 90-plus day mortgage delinquency rates |
| We're being more cautious on Hubzu because until we actually see that conversion rate from a foreclosure start all the way to the end, getting back to sort of the pre-pandemic levels, we want to be more modest in our projections |
| For 2023, service revenue declined by 4%, which reflects growth in certain higher-margin businesses that support the earlier stage of the default process, offset by modestly lower service revenue from the fourth quarter 2022 exit of a low-margin employee outsourced business and fewer referrals in our lower margin field services business |
| And even during this difficult time |
| In addition to the usual uncertainty associated with forward-looking statements, the continuing impacts of government and servicer responses to the COVID-19 pandemic, government of fiscal policies, and current economic conditions make it extremely difficult to predict the future state of the economy and the industry in which we operate as well as the potential impact on Altisource |
| The default market was virtually shut down in 2020 and is still not fully recovered |
| Of course, things can happen and customers could go out of business, they could increase market share, decrease market share |
| More recently, there has been a dramatic increase in interest rates, significantly reducing mortgage origination volumes and increasing our corporate interest expense |
| In the face of serious market headwinds for both business segments, service revenue in the Servicer and Real Estate segment was only 4% lower than 2022 and service revenue in the Origination segment outperformed the overall market with a decline of 11% compared to a 36% decline in industry-wide residential origination volume |
| Our Hubzu and later-stage REO offerings forecast assumes only a modest benefit from the post-COVID increase in foreclosure starts |
| We continue to bring down our operating costs |
| But because we're not seeing that increase or that conversion rate increase at the end yet, we're trying to be more conservative in terms of how we're approaching our guidance |
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