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What changed in ALTISOURCE PORTFOLIO SOLUTIONS S.A.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ALTISOURCE PORTFOLIO SOLUTIONS S.A.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+329 added−346 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-30)

Top changes in ALTISOURCE PORTFOLIO SOLUTIONS S.A.'s 2023 10-K

329 paragraphs added · 346 removed · 265 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

34 edited+8 added−5 removed33 unchanged
Biggest changeThe Lenders One members’ earnings are included in revenue and reduced from net income to arrive at net income attributable to Altisource. 2022 Highlights Corporate and Financial • Focused on growing the sales pipeline, improving operational efficiencies, reducing costs, and strengthening liquidity as the Company continued to seek to mitigate the impacts of the COVID-19 pandemic, governmental moratoriums and loss mitigation measures that affect the timing of the recovery of the market for default-related services • Reduced 2022 Corporate and Others costs by $31.0 million, representing a 32% reduction, compared to 2021 • Ended 2022 with $51.0 million of cash and cash equivalents • Ended 2022 with $196.2 million of net debt • On February 14, 2023, the Company executed amendments to its senior secured term loans and revolving credit facility (together, “Credit Agreements”) that, among other things, extended the maturity dates to April 2025, with an option to extend to April 2026, subject to certain terms and conditions • On February 14, 2023, Altisource generated approximately $21 million in net proceeds from the sale of its common stock (after deducting the underwriting discounts and commissions and other offering expenses) • On February 22, 2023, the Company used $20 million of the proceeds of the offering to repay its term loans Business and Industry • The Servicer and Real Estate segment continues to benefit from the restart of the default business and efficiency initiatives with 47% gross profit growth on 4% service revenue growth compared to 2021 • Industrywide foreclosure initiations were 368% higher in 2022, compared to 2021 (although still 45% lower than the pre-COVID-19 period in 2019), as the foreclosure market is beginning to recover following expiration of the Federal government’s foreclosure moratorium on July 31, 2021 and the Consumer Financial Protection Bureau’s (“CFPB’s”) temporary loss mitigation measures on December 31, 2021 4 Table of Contents • Industrywide foreclosure sales were 39% higher in 2022, compared to 2021 (although still 67% lower than the same pre-COVID-19 period in 2019) • The Servicer and Real Estate segment and Origination segment had strong sales wins that we estimate represent $9.4 million and $21.6 million, respectively, of annualized revenue on a stabilized basis • The weighted sales pipeline in the Servicer and Real Estate segment represents $41 million to $51 million in estimated annual revenue on a stabilized basis based upon our forecasted probability of closing • The weighted sales pipeline in the Origination segment represents $20 million to $25 million in estimated annual revenue on a stabilized basis based upon our forecasted probability of closing Customers Overview Our customers include large financial institutions, government-sponsored enterprises (“GSEs”), banks, asset managers, servicers, investors, property management firms, real estate brokerages, insurance companies, mortgage bankers, originators, correspondent and private money lenders.
Biggest changeThe Lenders One members’ earnings are included in revenue and reduced from net income to arrive at net income attributable to Altisource. 2023 Highlights Company, Corporate and Financial : • Improved total Company loss from operations by $16.4 million in 2023 compared to 2022 by (1) improving operating income as a percentage of service revenue in the Servicer and Real Estate and Origination segments (together, “Business Segments”) to 19.1% in 2023 from 13.2% in 2022, and (2) reducing Corporate and Others operating loss as a percentage of total Company service revenue to (31.4)% in 2023 from (36.1)% in 2022, primarily through efficiency initiatives and cost savings measures • Amended the senior secured term loans (“SSTL”) and revolving credit facility to, among other things, extend the maturity dates to April 2025, with options to extend both to April 2026, subject to certain terms and conditions • Generated $38.8 million in net proceeds from the sale of common stock and used $30 million to partially repay the SSTL • Ended the year with $32.5 million of cash and cash equivalents, $15.0 million available under a revolving credit facility and $191.6 million of net debt Business Segments : • In the face of serious market headwinds for both Business Segments, service revenue in the Servicer and Real Estate segment was only down 4% and service revenue in the Origination segment outperformed the overall market with a decline of 11% compared to a 36% decline in industrywide residential origination volume • Improved income from operations in the Business Segments by $7.0 million to $26.1 million, representing 19.1% of service revenue, in 2023 compared to $19.0 million, representing 13.2% of service revenue, in 2022, primarily through efficiency and cost cutting initiatives • Ended 2023 with a weighted average sales pipeline between $43 million and $53 million of potential estimated revenue on a stabilized basis based upon forecasted probability of closing (comprised of between $27 million and $33 million in the Servicer and Real Estate segment and between $16 million and $20 million in the Origination segment) 4 Table of Contents • Generated 2023 sales wins which we estimate represent potential annualized revenue on a stabilized basis of $58.4 million for the Servicer and Real Estate segment and $10.3 million for the Origination segment Industry : • Industrywide foreclosure initiations were 4% lower in 2023 compared to 2022 (and 31% lower than the same pre-COVID-19 period in 2019) • Industrywide foreclosure sales were 8% higher in 2023 compared to 2022 (and 46% lower than the same pre-COVID-19 period in 2019) • Industrywide early-stage mortgage delinquencies (30-days late) increased by 15% and borrowers who have missed two payments (60-days past due) increased by 16% in December 2023 compared to December 2022 • Industrywide mortgage origination volume decreased by 36% in 2023 compared to 2022 • Industrywide seriously delinquent mortgage rate (90+ day past due and loans in foreclosure) decreased to 1.3% in December 2023 compared to 1.6% in December 2022 Customers Overview Our customers include large financial institutions, government-sponsored enterprises (“GSEs”), banks, asset managers, servicers, investors, property management firms, real estate brokerages, insurance companies, mortgage bankers, originators, correspondent and private money lenders.
We believe there are meaningful growth opportunities to sell our suite of services to new customers. Given the highly regulated nature of the industries that we serve, and the comprehensive purchasing process that our institutional customers and prospects follow, the time and effort we spend in expanding relationships or winning new relationships is significant.
We believe there are meaningful growth opportunities to sell our suite of services to new customers. Given the highly regulated nature of the industries we serve, and the comprehensive purchasing process that our institutional customers and prospects follow, the time and effort we spend in expanding relationships or winning new relationships is significant.
Sales and Marketing Our sales and marketing team has extensive relationship management and industry experience. These individuals cultivate and maintain relationships throughout the industry sectors we serve. We sell our suite of services to mortgage servicers, mortgage originators, GSEs, buyers and sellers of homes for investment use and financial services firms.
Sales and Marketing We believe our sales and marketing team has extensive relationship management and industry experience. These individuals cultivate and maintain relationships throughout the industry sectors we serve. We sell our suite of services to mortgage servicers, mortgage originators, GSEs, buyers and sellers of homes for investment use and financial services firms.
Technology and software-as-a-service (“SaaS”) Products Our Technology and SaaS Products business includes Equator ® (a SaaS-based technology to manage real estate owned (“REO”), short sales, foreclosure, bankruptcy and eviction processes), Vendorly Invoice (a vendor invoicing and payment system), RentRange ® (a single family rental data, analytics and rent-based valuation solution), REALSynergy ® (a commercial loan servicing platform), and NestRange TM (an automated valuation model and analytics solution). 3 Table of Contents Origination segment provides originators with solutions and technologies that span the mortgage origination lifecycle.
Technology and software-as-a-service (“SaaS”) Products Our Technology and SaaS Products business includes Equator ® (a SaaS-based technology to manage real estate owned (“REO”), short sales, foreclosure, bankruptcy and eviction processes), Vendorly Invoice (a vendor invoicing and payment system), RentRange ® (a single and multi-family rental data, analytics and rent-based valuation solution), REALSynergy ® (a commercial loan servicing platform), and NestRange TM (an automated residential valuation model and analytics solution). 3 Table of Contents Origination segment provides originators with solutions and technologies that span the mortgage origination lifecycle.
Technology and SaaS Products Our Technology and SaaS Products business includes Vendorly Monitor (a vendor management platform), Lenders One Loan Automation TM (“LOLA”) (a marketplace to order services and a tool to automate components of the loan manufacturing process), TrelixAI TM (technology to manage the workflow and automate components of the loan fulfillment, pre and post-close quality control and service transfer processes), ADMS (a document management and data analytics delivery platform), and automated valuation technology.
Technology and SaaS Products Our Technology and SaaS Products business includes Vendorly Monitor (a vendor management platform), Lenders One Loan Automation (“LOLA”) (a marketplace to order services and a tool to automate components of the loan manufacturing process), TrelixAI TM (technology to manage the workflow and automate components of the loan fulfillment, pre and post-close quality control and service transfer processes), and ADMS (a document management and data analytics delivery platform).
Revolver Amendment On February 9, 2023, we entered into Amendment No. 1 (the “First Revolver Amendment”) to our revolving credit facility effective February 14, 2023.
Revolver Amendment On February 9, 2023, we entered into Amendment No. 1 (the “First Revolver Amendment”) to our revolving credit facility (the “Revolver”) effective February 14, 2023.
For the years ended December 31, 2022 and 2021, we recognized additional revenue of $13.0 million and $13.6 million, respectively, relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider. Other Our services are provided to customers predominantly located in the United States.
For the years ended December 31, 2023 and 2022, we recognized additional revenue of $12.6 million and $13.0 million, respectively, relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider. Other Our services are provided to customers predominantly located in the United States.
We gather this data from a variety of third party sources, including from governmental entities and, subject to licensed usage rights, we use this data in connection with the delivery of certain of our services, including combining it with proprietary data we generate to further enhance data and metrics in connection with our services.
We gather this data from a variety of third party sources, including from governmental entities and, subject to licensed usage rights, we use this data in connection with the delivery of 6 Table of Contents certain of our services, including combining it with proprietary data we generate to further enhance data and metrics in connection with our services.
The PIK component of the interest rate will be subject to adjustment based on the amount of Par Paydown prior to the Paydown Measurement Date as set forth in the table below: Par Paydown PIK Component of Interest Rate Less than $20 million 5.00% $20 million+ but less than below 4.50% $30 million+ but less than below 3.75% $40 million+ but less than below 3.50% $45 million+ but less than below 3.00% $50 million+ but less than below 2.50% $55 million+ but less than below 2.00% $60 million+ but less than below 1.00% $65 million+ but less than below 0.50% $70 million+ 0.00% • If, as of the end of any calendar quarter, (i) our amount of unencumbered cash and cash equivalents on a consolidated basis plus (ii) the undrawn commitment amount under our revolving credit facility is, or is forecast as of the end of the 7 Table of Contents immediately subsequent calendar quarter to be, less than $35 million, then up to 2.00% in interest otherwise payable in cash in the following quarter may be paid in kind at our election • The lenders under the Amended Credit Agreement received warrants (the “Warrants”) to purchase 3,223,851 shares of Altisource common stock (the “Warrant Shares”).
The PIK component of the interest rate is subject to adjustment based on the amount of Aggregate Paydowns as set forth in the table below: 7 Table of Contents Aggregate Paydowns PIK Component of Interest Rate Less than $20 million 5.00% $20 million+ but less than below 4.50% $30 million+ but less than below 3.75% $40 million+ but less than below 3.50% $45 million+ but less than below 3.00% $50 million+ but less than below 2.50% $55 million+ but less than below 2.00% $60 million+ but less than below 1.00% $65 million+ but less than below 0.50% $70 million+ 0.00% • If, as of the end of any calendar quarter, (i) our amount of unencumbered cash and cash equivalents on a consolidated basis plus (ii) the undrawn commitment amount under our revolving credit facility is, or is forecast as of the end of the immediately subsequent calendar quarter to be, less than $35 million, then up to 2.00% in interest otherwise payable in cash in the following quarter may be paid in kind at our election • The lenders under the Amended Credit Agreement received warrants (the “Warrants”) to purchase 3,223,851 shares of Altisource common stock (the “Warrant Shares”).
The Dodd-Frank Act is extensive and includes reform of the regulation and supervision of financial institutions, as well as the regulation of derivatives, capital market activities and consumer financial services. The Dodd-Frank Act, among other things, created the CFPB, a federal entity responsible for regulating consumer financial services and products.
The Dodd-Frank Act is extensive and includes reform of the regulation and supervision of financial institutions, as well as the regulation of derivatives, capital market activities and consumer financial services. The Dodd-Frank Act, among other things, created the CFPB, a 9 Table of Contents federal entity responsible for regulating consumer financial services and products.
During the year ended December 31, 2022, Ocwen was our largest customer, accounting for 41% of our total revenue. 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.
During the year ended December 31, 2023, Ocwen was our largest customer, accounting for 44% of our total revenue. 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.
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 years ended December 31, 2022 and 2021, we recognized revenue from Ocwen of $63.5 million and $55.6 million, respectively.
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 years ended December 31, 2023 and 2022, we recognized revenue from Ocwen of $63.2 million and $63.5 million, respectively.
Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: 2022 2021 Servicer and Real Estate 53 % 49 % Origination — % — % Corporate and Others — % — % Consolidated revenue 41 % 31 % We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSRs owner selects Altisource as the service provider.
Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: 2023 2022 Servicer and Real Estate 55 % 53 % Origination — % — % Corporate and Others — % — % Consolidated revenue 44 % 41 % We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSRs owner selects Altisource as the service provider.
For both the years ended December 31, 2022 and 2021, we recognized $9.5 million of such revenue. These amounts are not included in deriving revenue from Ocwen and revenue from Ocwen as a percentage of revenue discussed above.
For the years ended December 31, 2023 and 2022, we recognized $9.2 million and $9.5 million, 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.
For the years ended December 31, 2022 and 2021, we recognized revenue from Rithm of $3.2 million and $3.1 million, respectively, under the Brokerage Agreement.
For the years ended December 31, 2023 and 2022, we recognized revenue from Rithm of $2.8 million and $3.2 million, respectively, under the Brokerage Agreement.
We typically compete based upon product and service awareness and offerings, product performance and service delivery, quality and control environment, technology integration and support, price and financial strength.
We typically compete based upon product and service awareness and offerings, product performance and service delivery, quality and control environment, technology integration and support, national coverage, price, financial strength, reputation and customer service.
A usage fee of $750,000 will be payable upon the initial drawing under our revolving credit facility following the effectiveness of the First Revolver Amendment.
A usage fee of $0.75 million will be payable upon the initial drawing under our revolving credit facility following the effectiveness of the First Revolver Amendment.
However, as a result of the pandemic and related measures, the seasonal impact to revenue may not follow historical patterns. 8 Table of Contents Government Regulation Our business and the business of our customers are or may be subject to extensive scrutiny and regulation by federal, state and local governmental authorities including the Federal Trade Commission (“FTC”), the CFPB, the Securities and Exchange Commission (“SEC”), the Department of Housing and Urban Development (“HUD”), the Treasury Department, various federal and state banking, financial and consumer regulators and the state and local agencies that license or oversee certain of our auction, real estate brokerage, title insurance agency, appraisal management, valuation, property preservation and inspection, mortgage and debt collection, trustee, mortgage origination underwriter and broker, property and asset management, insurance and credit report reselling services.
Government Regulation Our business and the business of our customers are or may be subject to extensive scrutiny and regulation by federal, state and local governmental authorities including the Federal Trade Commission (“FTC”), the CFPB, the Securities and Exchange Commission (“SEC”), the Department of Housing and Urban Development (“HUD”), the Treasury Department, various federal and state banking, financial and consumer regulators and the state and local agencies that license or oversee certain of our auction, real estate brokerage, title insurance agency, appraisal management, valuation, property preservation and inspection, mortgage and debt collection, trustee, mortgage origination underwriter and broker, property and asset management, insurance and credit report reselling services.
As of December 31, 2022, accounts receivable from Ocwen totaled $4.0 million, $3.2 million of which was billed and $0.8 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. Rithm Rithm Capital Corp.
As of December 31, 2023, accounts receivable from Ocwen totaled $3.4 million, $2.2 million of which was billed and $1.2 million of which was unbilled. As of December 31, 2022, accounts receivable from Ocwen totaled $4.0 million, $3.2 million of which was billed and $0.8 million of which was unbilled. 5 Table of Contents Rithm Rithm Capital Corp.
Our failure or the failure of our customers or vendors to comply with applicable laws or regulations or changing interpretation of such laws or regulations could subject the Company to criminal or civil liability, significant penalties, fines, settlements, costs and consent orders affecting us or our customers that may curtail or restrict the business as it is currently conducted and could have a material adverse effect on our financial condition or results of operations. 9 Table of Contents Furthermore, certain of our services are provided at the direction of, and pursuant to, the identified requirements of our customers.
Our failure or the failure of our customers or vendors to comply with applicable laws or regulations or changing interpretation of such laws or regulations could subject the Company to criminal or civil liability, significant penalties, fines, settlements, costs and consent orders affecting us or our customers that may curtail or restrict the business as it is currently conducted and could have a material adverse effect on our financial condition or results of operations.
Corporate and Others includes Pointillist, Inc. (“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 and eliminations between reportable segments. We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests.
Corporate and Others includes 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 and eliminations between reportable segments. We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. In evaluating our performance, we focus on service revenue.
The Warrants are exercisable on a cashless basis and will be subject to customary anti-dilution provisions. The Warrants, if not previously exercised or terminated, will be automatically exercised on May 22, 2027.
The Warrants may be exercised at any time on and after February 14, 2024 and prior to their expiration date. The Warrants are exercisable on a cashless basis and are subject to customary anti-dilution provisions. The Warrants, if not previously exercised or terminated, will be automatically exercised on May 22, 2027.
As of December 31, 2022 approximately 17% of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)) were related to Rithm MSRs or rights to MSRs (the “Subject MSRs”). 5 Table of Contents Rithm purchases brokerage services for 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.
Rithm purchases brokerage services for 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.
In evaluating our performance, we focus on service revenue. 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.
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.
The following is a summary of certain key terms of the Second Amendment and the Amended Credit Agreement. • The maturity date of the term loans under the Amended Credit Agreement is April 30, 2025 • If the amount of par paydown that we make on the term loans (excluding amortization and other required payments) in the aggregate using proceeds of junior capital raises (the “Par Paydown”) prior to February 14, 2024 (the “Paydown Measurement Date”) is equal to or greater than $30 million, then (subject to the representations and warranties being true and correct as of such date and there being no default or event of default being in existence as of such date) the maturity date of the term loans will be extended to April 30, 2026.
The following is a summary of certain key terms of the Second Amendment and the Amended Credit Agreement. • The maturity date of the term loans under the Amended Credit Agreement is April 30, 2025 • If the amount of par paydown that we make on the term loans (excluding amortization and other required payments) in the aggregate using proceeds from issuances of equity interest or from junior indebtedness prior to February 14, 2024 ("Aggregate Paydowns”) is equal to or greater than $30 million, then (subject to the representations and warranties being true and correct as of such date and there being no default or event of default being in existence as of such date) the maturity date of the term loans may be extended to April 30, 2026, at our option subject to Company's payment of a 2% payment-in-kind extension fee. • The principal amortization of the term loans under the Amended Credit Agreement is 1.00% per year through April 30, 2025 and, if the maturity date is extended, 1% per month during the 12 month extension period. • The interest rate on the term loans will initially be Secured Overnight Financing Rate (“SOFR”) plus 5.00% per annum payable in cash plus 5.00% per annum payable in kind (“PIK”).
The Warrants are subject to a lock-up agreement, subject to customary exceptions, ending two business days after the Paydown Measurement Date • The lenders under the Amended Credit Agreement were paid an amendment fee equal to 1.0%, substantially all of which was paid in cash at closing • Various of the affirmative and negative covenants, mandatory prepayments, events of default and other terms to which we are subject under the Amended Credit Agreement have been modified including in many cases to be more restrictive or to reduce certain permissions previously available to us. • Based on the February 2023 $20 million repayment of the term loans under the Amended Credit Agreement, the PIK component of the interest rate decreased to 4.50% and the number of Warrant Shares decreased to 2,578,743.
The Warrants are subject to a lock-up agreement, subject to customary exceptions, ending on February 16, 2024 • The lenders under the Amended Credit Agreement were paid an amendment fee equal to 1.0%, substantially all of which was paid in cash at closing • Various of the affirmative and negative covenants, mandatory prepayments, events of default and other terms to which we are subject under the Amended Credit Agreement have been modified including in many cases to be more restrictive or to reduce certain permissions previously available to us • Based on the $30 million of Aggregate Paydowns made by Company during the year ended December 31, 2023, the maturity date may be extended to April 30, 2026 at the Company's option (subject to conditions described above), the PIK component of the interest rate decreased to 3.75%, the number of Warrant Shares decreased to 1,612,705 and there is no contractual amortization due until the April 30, 2025 maturity date.
Our competitors may have greater financial resources, brand recognition, alternative or disruptive products and technology and other competitive advantages. We cannot determine our market share with certainty, but believe for mortgage servicers we have a modest share of the market, and for the others we have a relatively small market share.
We cannot determine our market share with certainty, but believe for mortgage servicers we have a modest share of the market, and for the others we have a relatively small market share.
The markets to provide services for buyers and sellers of homes for investment are highly competitive and generally consist of several national companies, a large number of regional and local providers and start-up companies. We typically compete based upon product and service awareness and offerings, product performance and service delivery, ease of transacting, price and personal service.
The markets for services provided to buyers and sellers of home for investment are highly competitive and generally consist of several national companies, a large number of regional and local providers and start-up companies.
Par Paydown Warrant Shares Less than $20 million 3,223,851 $20 million+ but less than below 2,578,743 $30 million+ 1,612,705 • The exercise price per share of common stock under each Warrant is equal to $0.01. The Warrants may be exercised at any time on and after the Paydown Measurement Date and prior to their expiration date.
The number of Warrant Shares is subject to reduction based on the amount of Aggregate Paydowns as set forth in the table below. Aggregate Paydowns Warrant Shares Less than $20 million 3,223,851 $20 million+ but less than below 2,578,743 $30 million+ 1,612,705 • The exercise price per share of common stock under each Warrant is equal to $0.01.
As of December 31, 2022, we have been awarded one patent that expires in 2023, one patent that expires in 2024, seven patents that expire in 2025, two patents that expire in 2026, one patent that expires in 2027, two patents that expire in 2029, one patent that expires in 2030 and one patent that expires in 2036.
These intellectual property rights are important factors in the success of our businesses. As of December 31, 2023, we have been awarded five patents that expire in 2025, one patent that expires in 2026, one patent that expires in 2027, one patent that expires in 2029, one patent that expires in 2030.
(individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “Rithm”) (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 Rithm is its largest client.
(individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “Rithm”) (formerly New Residential Investment Corp.) is an asset manager focused on the real estate and financial services industries. Ocwen has disclosed that Rithm is a significant client of Ocwen’s.
Employees As of December 31, 2022, we had the following number of employees: United States India Uruguay Luxembourg Consolidated Altisource Total employees 279 1,142 66 9 1,496 Seasonality Certain of our revenues can be impacted by seasonality.
As of December 31, 2023, there are no outstanding amounts under the First Revolver Amendment and the First Amendment Revolver has never been drawn. 8 Table of Contents Employees As of December 31, 2023, we had the following number of employees: United States India Uruguay Luxembourg Consolidated Altisource Total employees 187 810 66 8 1,071 Seasonality Certain of our revenues can be impacted by seasonality.
The mortgage and real estate markets are very large and are influenced by macroeconomic factors such as credit availability, interest rates, home prices, inflation, unemployment rates, consumer confidence and the COVID-19 pandemic. 6 Table of Contents The markets to provide services for mortgage servicers and mortgage originators are highly competitive and generally consist of national companies, in-house providers and a large number of regional and local providers.
The markets for services provided to mortgage servicers and mortgage originators are highly competitive and generally consist of national companies, in-house providers and a large number of regional and local providers.
Common Stock Offering On February 14, 2023, we closed an underwritten public offering of 4,550,000 shares of common stock (inclusive of 550,000 shares that were sold pursuant to the underwriters’ full exercise of their option to purchase additional shares of common stock), at a price to the public of $5.00 per share.
Public offerings of Common Stock On February 14, 2023, Altisource closed on an underwritten public offering to sell 4,550,000 shares of its common stock, at a price of $5.00 per share, generating net proceeds of $20.5 million, after deducting the underwriting discounts and commissions and other offering expenses.
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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. Lenders One is a mortgage cooperative managed, but not owned, by Altisource.
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Lenders One is a mortgage cooperative managed, but not owned, by Altisource.
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These intellectual property rights are important factors in the success of our businesses.
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As of December 31, 2023, Ocwen reported that approximately 16% of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)) and approximately 67% of all delinquent loans that Ocwen services were related to Rithm MSRs or rights to MSRs (the “Subject MSRs”).
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We received net proceeds from the offering of approximately $21 million, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by us. On February 22, 2023, we used $20 million of the net proceeds of the offering to repay our term loans.
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The mortgage and real estate markets are very large and are influenced by macroeconomic factors such as credit availability, interest rates, home prices, inflation, unemployment rates, consumer confidence, natural disasters and pandemics, and responses to such factors.
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Such extension is conditioned upon our payment of a 2% payment-in-kind extension fee • The principal amortization of the term loans under the Amended Credit Agreement is 1.00% per year through April 30, 2025 and, if applicable, 12% per year for the year ended April 30, 2026 • The interest rate on the term loans will initially be Secured Overnight Financing Rate (“SOFR”) plus 5.00% per annum payable in cash plus 5.00% per annum payable in kind (“PIK”).
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We typically compete based upon product and service awareness and offerings, product performance and service delivery, national coverage, ease of transacting, price, quality and control environment, technology integration and support, customer service and personal service. Our competitors may have greater financial resources, brand recognition, alternative or disruptive products and technology and other competitive advantages.
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The number of Warrant Shares is subject to reduction based on the amount of Par Paydown by the Paydown Measurement Date as set forth in the table below.
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On September 7, 2023, Altisource closed on an underwritten public offering to sell 5,590,277 shares of its common stock, at a price of $3.60 per share, generating net proceeds of $18.4 million, after deducting the underwriting discounts and commissions and other offering expenses.
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If the maturity date is extended to April 30, 2026, the Company is required to make mandatory repayments of $5.2 million in the first quarter of 2026 with the remaining balance due at the April 2026 maturity • As of December 31, 2023 the outstanding amount of our SSTL was $224.1 million.
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However, as a result of the COVID-19 pandemic and related measures and the rapid rise in mortgage interest rates, the seasonal impact to revenue may not follow historical patterns.
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Furthermore, certain of our services are provided at the direction of, and pursuant to, the identified requirements of our customers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

85 edited+22 added−19 removed189 unchanged
Biggest changeIf we are required to reclassify contractors as employees, we may incur fines and penalties and additional costs and taxes. • There can be no guarantee that we will be able to continue to implement appropriate measures to manage potential conflicts of interest. • Our success depends on the relevant industry experience and relationships of certain members of our Board of Directors, executive officers and other key personnel. • We may face difficulties to attract, motivate and retain skilled employees. • The presence of our operations in multiple countries subjects us to risks endemic to those countries. • We may be unable to realize sales represented by our awarded business or sales pipeline. • We may fail to adapt our services to changes in technology or in the marketplace related to mortgage servicing or origination, changing requirements of governmental authorities, GSEs and customers. • Acquisitions to accelerate growth initiatives involve potential risks. • Changes in economic and market conditions that reduce residential real estate sales or values or mortgage origination volumes could negatively impact demand for our services. • A reduction in residential mortgage delinquencies, defaults or foreclosures in the United States can negatively affect demand for certain of our services. • Developments that impact residential foreclosures or the supply, sale price or sale of REO could negatively impact us. • We may never pay dividends on our common stock so any returns would be limited to the potential appreciation of our stock. • We may take advantage of specified reduced disclosure requirements applicable to a “smaller reporting company” under Regulation S-K, and the information that we provide to stockholders may be different than they might receive from other public companies. • The market price and trading volume of our stock may be volatile. • If we are unable to generate sufficient cash flow or access the capital markets or our borrowing capacity is reduced, our liquidity and competitive position may be negatively affected. • Our primary source of liquidity is cash flows from operations and unrestricted cash.
Biggest changeIf we are required to reclassify contractors as employees, we may incur fines and penalties and additional costs and taxes. • There can be no guarantee that we will be able to continue to implement appropriate measures to manage potential conflicts of interest. • Our success depends on the relevant industry experience and relationships of certain members of our Board of Directors, executive officers and other key personnel. • We may face difficulties to attract, motivate and retain skilled employees. • The presence of our operations in multiple countries subjects us to risks endemic to those countries. • We may be unable to realize sales represented by our awarded business or sales pipeline. • We may fail to adapt our services to changes in technology or in the marketplace related to mortgage servicing or origination, changing requirements of governmental authorities, GSEs and customers. • Business expansion involves potential risks. • Acquisitions to accelerate growth initiatives involve potential risks. • Changes in economic and market conditions that reduce residential real estate sales or values or mortgage origination volumes could negatively impact demand for our services. • A reduction in residential mortgage delinquencies, defaults or foreclosures in the United States can negatively affect demand for certain of our services. 11 Table of Contents • Developments that impact residential foreclosures or the supply, sale price or sale of REO could negatively impact us. • Changes to real estate brokerage commission structures or rates paid for residential property transactions could negatively impact us. • We may never pay dividends on our common stock so any returns would be limited to the potential appreciation of our stock. • We may take advantage of specified reduced disclosure requirements applicable to a “smaller reporting company” under Regulation S-K, and the information that we provide to stockholders may be different than they might receive from other public companies. • The market price and trading volume of our stock may be volatile. • If we are unable to generate sufficient cash flow or access the capital markets or our borrowing capacity is reduced, our liquidity and competitive position may be negatively affected. • Our level of debt and the variable interest rate on our term loan makes us sensitive to the effects of our current financial performance and interest rate increases; our level of debt and provisions in our senior secured term loan and revolving credit facility could limit our ability to react to changes in the economy or our industry. • Our failure to comply with the covenants or terms contained in our senior secured term loan agreements or our credit facility, including as a result of events beyond our control, could result in an event of default. • We may be unable to exercise the option to extend the maturity of our loan agreements (Amended Credit Agreement and Revolver) from April 2025 to April 2026.
We also must comply with a number of federal, state and local consumer protection laws. We are also subject to various foreign laws and regulations based on our operations or the location of our affiliates as well, including those pertaining to data protection, such as the GDPR.
We also must comply with a number of federal, state and local consumer protection laws. We are subject to various foreign laws and regulations based on our operations or the location of our affiliates as well, including those pertaining to data protection, such as the GDPR.
Our services and their enhancements may also not adequately meet the demands of the marketplace or governmental authorities and achieve market acceptance. Customers of our default-related services and origination services may seek to reduce the number of service providers employed through vendor consolidation, insourcing (providing the services itself) or by other means.
Our technology and services and their enhancements may also not adequately meet the demands of the marketplace or governmental authorities and achieve market acceptance. Customers of our default-related services and origination services may seek to reduce the number of service providers employed through vendor consolidation, insourcing (providing the services itself) or by other means.
Department of Treasury Financial Crimes Enforcement Network, we could be subject to fines and penalties. We operate as a title insurance agent through one or more subsidiaries. As a title insurance agent, we are contractually required by insurance underwriters to make Financial Crimes Enforcement Network Currency Transaction Report filings with the U.S.
Department of Treasury Financial Crimes Enforcement Network, we could be subject to fines and penalties. We operate as a title insurance agent through one or more subsidiaries. As a title insurance agent, we are contractually required by certain insurance underwriters to make Financial Crimes Enforcement Network Currency Transaction Report filings with the U.S.
We and our vendors rely on processes that are intended to provide necessary notices regarding the collection, storage, processing and destruction of PI, and to permit subjects to exercise their legal rights concerning their PI in our possession.
We and our vendors rely on processes that are intended to provide necessary notices, processes and controls regarding the collection, storage, processing and destruction of PI, and to permit subjects to exercise their legal rights concerning their PI in our possession.
We have recently implemented internet protocol (“IP”) address blocking and screening mechanisms to promote compliance with US sanctions rules and regulations, although the blocking and screening mechanisms may not be able to completely block all unwanted IP access.
We have implemented internet protocol (“IP”) address blocking and screening mechanisms to promote compliance with US sanctions rules and regulations, although the blocking and screening mechanisms may not be able to completely block all unwanted IP access.
Further, our efforts to delete or destroy PI may not be consistent with our disclosed policies or may not be successful, resulting in the theft or unintentional disclosure of PI, including when disposing of media on which PI may be stored.
Further, our efforts to process, delete or destroy PI may not be consistent with our disclosed policies or may not be successful, resulting in the theft or unintentional disclosure of PI, including when disposing of media on which PI may be stored.
We rely on our proprietary technology in our Hubzu real estate marketing, Equator, Equator.com, NestRange, LOLA, REALSynergy, RentRange, Trelix TM Connect, Vendorly ® and other platforms. Certain of our proprietary technology includes licensed open source and third-party code or may be created or maintained by using low-code or other coding techniques that contain inherent risks.
We rely on our proprietary technology in our Hubzu real estate marketing, Equator, Equator.com, NestRange, LOLA, REALSynergy, RentRange, Trelix TM Connect, Vendorly ® and other platforms. Certain of our proprietary technology includes licensed open source and third-party code or may be created or maintained by using artificial intelligence, low-code or other coding techniques that contain inherent risks.
Our business and the business of our customers are subject to extensive scrutiny and regulation by federal, state and local governmental authorities including the FTC, the CFPB, the SEC, HUD and state and local agencies, including those which license or oversee certain of our auction, real estate brokerage, mortgage services, trustee services, residential mortgage origination services and insurance services, as well as collection and use of personal information.
Our business and the business of our customers are subject to extensive scrutiny and regulation by federal, state and local governmental authorities including the FTC, the CFPB, the SEC, HUD and state and local agencies, including those which license or oversee certain of our auction, real estate brokerage, mortgage services, trustee services, residential mortgage origination services, title insurance and other insurance services, as well as collection and use of personal information.
A determination that we have failed to comply with US sanctions, 25 Table of Contents whether knowingly or inadvertently, could result in the imposition of substantial penalties, including enforcement actions, fines, and civil and/or criminal penalties, and may adversely affect our business. If we fail to timely make required disclosure filings with the U.S.
A determination that we have failed to comply with US sanctions, 26 Table of Contents whether knowingly or inadvertently, could result in the imposition of substantial penalties, including enforcement actions, fines, and civil and/or criminal penalties, and may adversely affect our business. If we fail to timely make required disclosure filings with the U.S.
Such interests and relationships could create, or appear to create, potential conflicts of interest with respect to matters potentially or actually involving or affecting us and Ocwen, Rithm, Deer Park, William C. Erbey or their affiliates. There can be no assurance that we will implement measures that will enable us to manage such potential conflicts.
Such interests and relationships could create, or appear to create, potential conflicts of interest with respect to matters involving or affecting us and Ocwen, Rithm, Deer Park, William C. Erbey or their affiliates. There can be no assurance that we will implement measures that will enable us to manage such potential conflicts.
We are subject to the Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions, and the failure to comply with these laws could result in substantial penalties. Furthermore, the practice of utilizing labor based in foreign countries has come under increased scrutiny in the United States.
We are subject to the Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions, and the failure to comply with these laws could result in substantial penalties. Furthermore, the practice of utilizing labor based in foreign countries has at times come under increased scrutiny in the United States.
Our volume of sales may not materialize to the extent our customers or prospect customers elect to use providers of services other than us, or if economic or industry conditions exist such that our customers or prospect customers do not require the assumed quantity of services or reduce the fees paid for the services.
Our volume of sales may not materialize to the extent our customers or prospect customers elect to use providers of services other than us, or if economic, industry or company specific conditions exist such that our customers or prospect customers do not require the assumed quantity of services or reduce the fees paid for the services.
The EC is requiring these EU member states to recover from certain companies the prior year tax benefits they received. 24 Table of Contents Risks Relating to Regulation Our business and the business of our customers are subject to extensive scrutiny and legal requirements.
The EC is requiring these EU member states to recover from certain companies the prior year tax benefits they received. 25 Table of Contents Risks Relating to Regulation Our business and the business of our customers are subject to extensive scrutiny and legal requirements.
Disruptions, failures, defects or inadequacies in our technology or third-party technology or related services we utilize, delays or errors in developing or maintaining our technology, or acts of vandalism, misuse or malicious use of our solutions, system attacks or the introduction of malicious code in technology we utilize, or the use of outdated or unsupported open source or third-party code may interrupt or delay our ability to provide products or services to our customers, impact our ability to satisfy performance requirements, or cause the loss, corruption or disclosure of data.
Disruptions, failures, defects or inadequacies in our technology or third-party technology or related services we utilize, delays or errors in developing or maintaining our technology, or acts of vandalism, misuse or malicious use of our solutions, system attacks or the introduction of malicious code in technology we utilize, the use of outdated or unsupported open source or third-party code, or the use of defective, compromised or insecure code may interrupt or delay our ability to provide products or services to our customers, impact our ability to satisfy performance requirements, or cause the loss, corruption or disclosure of data.
These provisions include, among other things, scaled disclosure requirements, including simplified executive compensation disclosures in our filings, exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an independent registered accounting firm provide an attestation report on the effectiveness of internal control over financial reporting and certain other decreased disclosure obligations in our SEC filings.
These provisions include, among other things, scaled disclosure requirements, including simplified executive compensation disclosures in our filings, exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an 21 Table of Contents independent registered accounting firm provide an attestation report on the effectiveness of internal control over financial reporting and certain other decreased disclosure obligations in our SEC filings.
In connection with a merger of two of the Company’s wholly owned subsidiaries in December 2017, which was recognized at fair value, a net operating loss of $1.3 billion with a 17-year life was generated, creating a deferred tax asset of $342.6 million. 23 Table of Contents During 2019, the Company recognized a full valuation allowance with respect to this deferred tax asset.
In connection with a merger of two of the Company’s wholly owned subsidiaries in December 2017, which was recognized at fair value, a net operating loss of $1.3 billion with a 17-year life was generated, creating a deferred tax asset of $342.6 million. During 2019, the Company recognized a full valuation allowance with respect to this deferred tax asset.
Those jurisdictions are subject to changing tax environments, which may result in higher operating expenses or taxes and which may introduce uncertainty as to 26 Table of Contents the application of tax laws and regulations to our operations.
Those jurisdictions are subject to changing tax environments, which may result in higher operating expenses or taxes and which may introduce uncertainty as to 27 Table of Contents the application of tax laws and regulations to our operations.
The Brokerage Agreement with Rithm’s licensed brokerage subsidiary contains a similar provision, and we may enter into material agreements in the future that 15 Table of Contents contain similar provisions. The formation of a “group” could occur without the involvement of or input by us, and we are not in a position to prevent such an event from occurring.
The Brokerage Agreement with Rithm’s licensed brokerage subsidiary contains a similar provision, and we may enter into material agreements in the future that contain similar provisions. The formation of a “group” could occur without the involvement of or input by us, and we are not in a position to prevent such an event from occurring.
If Altisource S.à r.l. is unable to generate sufficient pretax income by 2034, the Company may not be able to fully utilize this deferred tax asset. In addition, changes in our structure or operations could prevent us from fully realizing some or all of the benefit of such deferred tax asset.
If Altisource S.à r.l. is unable to generate sufficient pretax income by 2034, the Company may not be able to fully utilize this deferred tax asset. In 24 Table of Contents addition, changes in our structure or operations could prevent us from fully realizing some or all of the benefit of such deferred tax asset.
Such litigation, if instituted, could result in substantial costs and diversion of management’s attention and resources, which could significantly impact our profitability and reputation. Owners of our securities could be diluted. We may issue new shares of common stock or other forms of securities which could dilute the economic and voting interests of current shareholders.
Such litigation, if instituted, could result in substantial costs and diversion of management’s attention and resources, which could significantly impact our profitability and reputation. 22 Table of Contents Owners of our securities could be diluted. We may issue new shares of common stock or other forms of securities which could dilute the economic and voting interests of current shareholders.
If we are required to reclassify contractors as employees, we may incur fines and penalties and additional costs and taxes. 16 Table of Contents A significant number of contractors provide services in our operations for which we do not pay or withhold any federal, state or local employment tax or provide employee benefits.
If we are required to reclassify contractors as employees, we may incur fines and penalties and additional costs and taxes. A significant number of contractors provide services in our operations for which we do not pay or withhold any federal, state or local employment tax or provide employee benefits.
Under this agreement and related amendments, Altisource is the 13 Table of Contents exclusive provider (with certain exceptions) of brokerage services for REO associated with the certain MSR through August 2025, irrespective of the subservicer, as long as Rithm owns such MSRs. The Brokerage Agreement may be terminated by Rithm upon the occurrence of certain specified events.
Under this agreement and related amendments, Altisource is the exclusive provider (with certain exceptions) of brokerage services for REO associated with the certain MSR through August 2025, irrespective of the subservicer, as long as Rithm owns such MSRs. The Brokerage Agreement may be terminated by Rithm upon the occurrence of certain specified events.
Erbey or their affiliates and, even if we do, that the resolution will be no less favorable to us than if we were dealing with another third-party that has none of the connections we have with Ocwen, Rithm, William C. Erbey or Deer Park.
Erbey or their affiliates and, 17 Table of Contents even if we do, that the resolution will be no less favorable to us than if we were dealing with another third-party that has none of the connections we have with Ocwen, Rithm, Deer Park or William C. Erbey.
There can be no assurance that we will continue with our current efforts and be successful in developing, enhancing, marketing, selling and implementing new and improved services. In addition, we may experience difficulties that could delay or prevent the successful development, enhancement, introduction and marketing of these services.
There can be no assurance that we will continue with our current efforts and be successful in developing, enhancing, marketing, selling and implementing new and improved technology or services. In addition, we may experience difficulties that could delay or prevent the successful development, enhancement, introduction and marketing of technologies or services.
We may face difficulties sourcing required vendors or supplies or managing our relationships with vendors. We rely on vendors to provide goods and services in relation to many aspects of our operations, including field services providers and certain providers of web-based services or software as services.
We may face difficulties sourcing required vendors or supplies or managing our relationships with vendors. 16 Table of Contents We rely on vendors to provide goods and services in relation to many aspects of our operations, including field services providers and certain providers of web-based services or software as services.
We may not be able to refinance our existing indebtedness when it becomes due or obtain alternative financing on terms that are acceptable to us, or at all. Without any such financing, 22 Table of Contents we could be forced to sell assets or reduce costs under unfavorable circumstances to make up for any shortfall in our payment obligations.
We may not be able to refinance our existing indebtedness when it becomes due or obtain alternative financing on terms that are acceptable to us, or at all. Without any such financing, we could be forced to sell assets or reduce costs under unfavorable circumstances to make up for any shortfall in our payment obligations.
We may face difficulties to attract, motivate and retain skilled employees. 17 Table of Contents Our business is labor intensive and places significant importance on our ability to recruit, engage, train and retain skilled employees. Additionally, demand for qualified professionals with experience in certain businesses or technologies may exceed available supply.
We may face difficulties to attract, motivate and retain skilled employees. Our business is labor intensive and places significant importance on our ability to recruit, engage, train and retain skilled employees. Additionally, demand for qualified professionals with experience in certain businesses or technologies may exceed available supply.
If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a provider. We entered into a brokerage agreement with Rithm’s licensed brokerage subsidiary.
If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a provider. 13 Table of Contents We entered into a brokerage agreement with Rithm’s licensed brokerage subsidiary.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate we will declare or pay any cash dividends for the foreseeable future. In addition, the terms of any future debt 20 Table of Contents agreements may preclude us from paying dividends.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate we will declare or pay any cash dividends for the foreseeable future. In addition, the terms of applicable debt agreements may preclude us from paying dividends.
Our failure to comply with applicable information management requirements or best practices or the legal rights of individuals about whom we collect or process personal information, or an unauthorized disclosure of information, could subject us to adverse publicity, investigations, fines, costly government enforcement actions or private litigation and expenses. • Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic. • The insurance underwriting loss limitation methods we use could fail. • Under certain material agreements to which we are currently a party or into which we may enter in the future, the formation by shareholders of Altisource of a “group” with ownership of Altisource capital stock exceeding a defined percentage may give rise to a termination event or an event of default. • The majority of our employees and contractors work from locations other than our facilities, which could negatively impact our control environment or productivity and create additional risks. • We rely on vendors for many aspects of our business.
Our failure to comply with applicable information management requirements or best practices or the legal rights of individuals about whom we collect or process personal information, or an unauthorized disclosure or processing of information, or our failure to comply with required disclosures or notifications related to unauthorized disclosure or processing of information, could subject us to adverse publicity, investigations, fines, costly government enforcement actions or private litigation and expenses. • Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic. • The insurance underwriting loss limitation methods we use may not be effective or sufficient. • Under certain material agreements to which we are currently a party or into which we may enter in the future, the formation by shareholders of Altisource of a “group” with beneficial ownership of a defined percentage of the combined voting power or economic interest of Altisource capital stock exceeding a defined percentage may give rise to a termination event or an event of default. • The majority of our employees and contractors work from locations other than our facilities, which could negatively impact our control environment or productivity and create additional risks. • We rely on vendors for many aspects of our business.
We may issue warrants and holders of outstanding warrants may exercise their warrant rights to acquire 21 Table of Contents Company securities, which actions would dilute the economic and voting interests of current shareholders.
We may issue warrants and holders of outstanding warrants may exercise their warrant rights to acquire Company securities, which actions would dilute the economic and voting interests of current shareholders.
Our term loans under the Amended Credit Agreement make us more vulnerable to changes in our results of operations because a portion of our cash flows from operations is dedicated to servicing our debt and is not available for other purposes.
Our term loans under the Amended Credit Agreement make us more vulnerable to changes in our results of operations because a portion of our cash flows from operations and current cash on the balance sheet is dedicated to servicing our debt and is not available for other purposes.
If our controls and those of our customers or vendors are not effective, are outdated or do not exist, or if we fail to detect or respond to attacks or intrusions, unauthorized parties may gain access to our networks or databases or information, or those of our customers or vendors with which we interconnect or share information, and they may be able to steal, publish, delete, or modify PI.
If such facilities, networks, databases, systems, processes and controls, or those of our customers or vendors, are not effective, are outdated or compromised, or do not exist, or if we, our customers or vendors fail to detect or respond to attacks or intrusions, unauthorized parties may gain access to our networks or databases or information, or those of our customers or vendors with which we interconnect or share information, and they may be able to steal, publish, delete, or modify PI.
We also may be unable to maintain our ability to offer such services in the future. The expiration dates of certain requirements that impact demand for our services may be indefinite or extended in the future making it difficult to predict when such requirements may end.
We also may be unable to maintain our ability to offer such services in the future. The expiration dates of certain requirements, loss mitigation or relief measures that impact demand for our services may be indefinite or extended in the future making it difficult to predict when such requirements or measures may end.
Our failure to comply with applicable information management requirements or best practices or the legal rights of individuals about whom we collect or process personal information, or an unauthorized disclosure of information, could subject us to adverse publicity, investigations, fines, costly government enforcement actions or private litigation and expenses.
Our failure to comply with applicable information management requirements or best practices or the legal rights of individuals about whom we collect or process personal information, or an unauthorized disclosure or processing of information, or our failure to comply with required disclosures or notifications related to unauthorized disclosure or processing of information, could subject us to adverse publicity, investigations, fines, costly government enforcement actions or private litigation and expenses.
Our future success will be significantly affected by our ability to complete our current efforts and in the future enhance, our services and technologies, and to develop and introduce new services that address the increasingly sophisticated needs of our customers and their customers, as well as our ability to reduce costs by relying on cloud architecture and other infrastructure advancements.
Our future success will be significantly affected by our ability to complete our current efforts and in the future enhance, our services and technologies, and to develop and introduce new services that address changes in technology or applicable marketplaces or the increasingly sophisticated needs of our customers and their customers, as well as our ability to reduce costs by relying on cloud architecture and other infrastructure advancements.
Reduction in residential foreclosures or the supply or sales of REO in the United States could reduce the demand for and volume of certain of our services, including foreclosure trustee, foreclosure auction, REO asset management, REO property inspection and preservation, real estate brokerage, real estate auction and marketing services, as well as sales of REO, especially in cases where more desirable properties are sold at foreclosure auctions and do not convert to REO.
Reduction in residential foreclosures or the supply or sales of REO in the United States could reduce the demand for and volume of certain of our services, including foreclosure trustee, foreclosure auction, REO asset management, REO property inspection and preservation, real estate brokerage, real estate auction and marketing services, as well as sales of REO, especially in cases where more loans are resolved prior to foreclosure or sold at foreclosure auctions and therefore do not convert to REO.
If faced with an extended period of decline in demand for and revenue from certain of our services as a result of economic conditions or due to government, GSE, servicer or investor restrictions related to loan delinquencies and foreclosures, including moratoriums on foreclosures and mortgage payment forbearance plans, we may be unable to sufficiently adjust our cost structure, in our operations that provide such impacted services or at the corporate level, to avoid negative impacts to net revenue or profits.
If faced with an extended period of decline in demand for and revenue from certain of our services as a result of economic conditions, borrower loss mitigation or relief measures, or due to government, GSE, servicer or investor restrictions related to loan delinquencies and foreclosures, including moratoriums on foreclosures and mortgage payment forbearance plans, we may 20 Table of Contents be unable to sufficiently adjust our cost structure, in our operations that provide such impacted services or at the corporate level, to avoid negative impacts to net revenue or profits.
In addition, these third parties could cease providing or reduce the availability, type, details or other 14 Table of Contents aspects of the Inputs, and change the pricing, performance or functionality of the Inputs.
In addition, these third parties could cease providing or reduce the availability, type, details or other aspects of the Inputs, and change the pricing, performance or functionality of the Inputs.
These efforts may include implementing new real estate auction and marketing capabilities, as well as technological and other modifications to increase efficiency and flexibility in supplying our 18 Table of Contents default-related and origination services. These initiatives carry the risks associated with any new service development effort, including cost overruns, delays in delivery and performance effectiveness.
These efforts may include implementing new real estate auction and marketing capabilities, as well as technological and other modifications to increase efficiency and flexibility in supplying our default-related and origination services. These initiatives carry the risks associated with any new technology or service development effort, including cost overruns, delays in delivery and performance effectiveness.
For example, we could experience a reduction in scope or volume of business as a direct or indirect result of the existence or outcome of regulatory matters impacting one or more of these clients, a change in the servicing relationship between these clients, a reduction in the MSRs for which Ocwen acts as a servicer or subservicer, or a change in the contractual relationship between Altisource and Ocwen or Rithm.
For example, we could experience a reduction in scope or volume of business as a direct or indirect result of the existence or outcome of regulatory matters impacting one or more of these clients, a change in the servicing relationship between these clients, a reduction in the MSRs for which Ocwen or Rithm acts as a servicer or subservicer or controls the rights to designate service providers, or a change in the contractual relationship between Altisource and Ocwen or Rithm.
Our term loans under the Amended Credit Agreement, and the revolving credit facility (amended with an effective date of February 14, 2023 (the “Revolver”)), are secured by virtually all of our assets and from time to time may trade at a substantial discount to face value.
Our term loans under the Amended Credit Agreement, and the Revolver (amended with an effective date of February 14, 2023) are secured by virtually all of our assets. From time to time, our debt under the Amended Credit Agreement may trade at a substantial discount to face value.
Under certain material agreements to which we are currently a party or into which we may enter in the future, the formation by shareholders of Altisource of a “group” with ownership of Altisource capital stock exceeding a defined percentage may give rise to a termination event or an event of default.
Under certain material agreements to which we are currently a party or into which we may enter in the future, the formation by shareholders of Altisource of a “group” with beneficial ownership of a defined percentage of the combined voting power or economic interest of Altisource capital stock exceeding a defined percentage may give rise to a termination event or an event of default.
In addition, employees may intentionally or inadvertently cause data or security breaches that result in unauthorized release of such PI.
In addition, employees may intentionally or inadvertently process PI in an unauthorized manner or cause data or security breaches that result in unauthorized release of such PI.
In such circumstances, our business could be harmed and we could be liable to our customers, employees or vendors, or to regulators, consumers or other parties, as well as be subject to notification requirements or regulatory or other actions for breaching applicable laws or failing to adequately protect such information.
In such circumstances, our business could be harmed and we could be liable to our customers, employees or vendors, or to regulators, consumers or other parties, as well as be subject to disclosure or notification requirements, and regulatory or other actions for breaching applicable laws, failing to make or provide required disclosures or notifications, or failing to adequately protect such information.
Our ability to pursue additional acquisitions in the future depends on our access to sufficient capital (equity and/or debt) to fund the acquisition and subsequent integration.
Our ability to pursue additional acquisitions in the future depends on our access to sufficient capital (equity 19 Table of Contents and/or debt) to fund the acquisition and subsequent integration.
We are subject to this limitation until such time as our public float exceeds $75 million. If we are required to file a new registration statement on another form, we may incur additional costs and be subject to delays due to review by the SEC. The market price and trading volume of our stock may be volatile.
We are subject to this limitation until such time as our public float exceeds $75 million. If we are required to file a new registration statement on another form, we may incur additional costs and be subject to delays due to review by the SEC.
The insurance underwriting loss limitation methods we use could fail. Altisource, through its subsidiary Association of Certified Mortgage Originators Risk Retention Group, Inc., provides certified loan insurance to its customers. Altisource reduces a portion of its risk of insurance loss through third-party reinsurance. The incidence and severity of claims against insurance policies are inherently unpredictable.
The insurance underwriting loss limitation methods we use may not be effective or sufficient. Altisource, through its subsidiary Association of Certified Mortgage Originators Risk Retention Group, Inc., provides certified loan insurance to its customers. Altisource reduces a portion of its risk of insurance loss through third-party reinsurance. The incidence and severity of claims against insurance policies are inherently unpredictable.
For example, economic conditions and restrictions instituted by governmental authorities, GSEs, servicers or investors may negatively impact the quantity or timing of customer demand for our services despite the existence of an agreement.
For example, economic conditions and restrictions instituted by governmental authorities, GSEs, servicers or investors, or the sale, consolidation or failure of current or potential customers, may negatively impact the quantity or timing of customer demand for our services despite the existence of an agreement.
As a result of the foreclosure and eviction moratoriums related to the COVID-19 pandemic, and declining origination volumes in the recent rising interest rate environment, our cash flows were and remain severely impacted. There can be no assurance that we will be able to achieve pre-COVID-19 levels of revenues and cash flows (adjusted for businesses sold or discontinued).
As a result of the low default, foreclosure and REO levels and declining origination volumes in the recent rising interest rate environment, our cash flows were and remain severely impacted. There can be no assurance that we will be able to achieve historical levels of revenues and cash flows (adjusted for businesses sold or discontinued).
The market price of our common stock could be subject to significant fluctuations. Stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies or our sector. These broad market fluctuations, in addition to our operating performance, may also adversely affect the trading price of our common stock.
The market price and trading volume of our stock may be volatile. The market price of our common stock could be subject to significant fluctuations. Stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies or our sector.
We rely on certain third parties to provide services, products and solutions including certain data, infrastructure, technology, systems and functionality including a third-party hosted and managed data center and operating environment (collectively, “Inputs”) critical to our services, including our Hubzu real estate marketing, Equator, Field Services, NestRange, RentRange, Trelix Connect, Vendorly, and other solutions.
We depend on our ability to use services, products, data and infrastructure provided by third parties to maintain and grow our businesses. 14 Table of Contents We rely on certain third parties to provide services, products and solutions including certain data, infrastructure, technology, systems and functionality including a third-party hosted and managed data center and operating environment (collectively, “Inputs”) critical to our services, including our Hubzu real estate marketing, Equator, Field Services, NestRange, RentRange, Trelix Connect, Vendorly, and other solutions.
A reduction in our ability to borrow funds to support our operations or a reduction in cash flow would also reduce our ability to pursue our business strategy to diversify and grow our customer base. Our primary source of liquidity is cash flows from operations and unrestricted cash.
A reduction in our ability to borrow funds to support our operations or a reduction in cash flow would also reduce our ability to pursue our business strategy to diversify and grow our customer base.
Failure to meet our debt service requirements could result in an event of default under our loans agreement which, if not cured or waived, would result in the holders of the defaulted debt causing all outstanding amounts with respect to that debt to be immediately due and payable and potentially permitting lenders to execute applicable security interests, negatively impacting our future operations or ability to engage in other favorable business activities.
Even if necessary, we may not be able to sell assets or reduce costs quickly enough or for sufficient amounts to enable us to meet our obligations. 23 Table of Contents Failure to meet our debt service requirements could result in an event of default under our loans agreement which, if not cured or waived, would result in the holders of the defaulted debt causing all outstanding amounts with respect to that debt to be immediately due and payable and potentially permitting lenders to execute applicable security interests, negatively impacting our future operations or ability to engage in other favorable business activities.
Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic, or may not be implemented on a timely or error free basis in response to business interruptions or a pandemic, resulting in negative operational impacts and errors.
The inadequacy, disruption or failure of our business continuity or disaster recovery plans and procedures in response to significant business or system disruption could adversely affect our business. 15 Table of Contents Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic, or may not be implemented on a timely or error free basis in response to business interruptions or a pandemic, resulting in negative operational impacts and errors.
Based on the expirations of the Federal government’s foreclosure and eviction moratoriums and the CFPB’s rules on temporary loss mitigation measures, we believe the demand for our Default business will grow, but our estimate may not be correct and is subject to macro and micro economic factors that could negatively impact us.
Based on the expirations of certain Relief Measures, we believe the demand for our Default business will grow, but our estimate may not be correct and is subject to macro and micro economic factors that could negatively impact us.
If our vendor oversight activities are ineffective, we may fail to meet customer or regulatory requirements. • We make extensive use of contractors in certain of our lines of business.
If our vendor oversight activities are ineffective, we may fail to meet customer or regulatory requirements. We may face difficulties sourcing required vendors or supplies or managing our relationships with vendors. • We make extensive use of contractors in certain of our lines of business.
Certain members of our management and independent members of our Board of Directors (or entities affiliated with such Board of Directors members) have direct or beneficial equity interests in Ocwen or in Rithm, including in one instance, equity interests in Ocwen (estimated to be approximately 11%) and Altisource (approximately 24%) as well as debt of both of these parties, equity interests in Rithm (less than 1%) and equity interest in Deer Park.
Certain members of our management and independent members of our Board of Directors (or entities affiliated with such members of the Board of Directors) have direct or beneficial equity interests in one or more of Altisource, Ocwen and Rithm, including in one instance, equity interests in both Ocwen (estimated to be approximately 8%) and Altisource (approximately 16%) as well as debt of both of these companies.
We also have a revolving credit facility with a fund managed by Deer Park Road Management Company L.P (“Deer Park”), and Deer Park owns Altisource debt as a lender pursuant to our senior secured term loan agreement, as amended and restated with an effective date of February 14, 2023 (the “Amended Credit Agreement”). Deer Park and William C.
(together with its affiliates and managed funds, “Deer Park”), and Deer Park owns Altisource debt as a lender pursuant to our senior secured term loan agreement, as amended and restated with an effective date of February 14, 2023 (the “Amended Credit Agreement”). Deer Park and William C.
Summary • We may experience a significant and extended reduction in the demand for our default-related services due to the continued low number of residential mortgage foreclosures and reduced supply of Real Estates Owned inventory resulting from COVID-19 foreclosure and eviction moratoriums. • We may be subject to legal claims from customers, employees, vendors and other third parties as a result of the response to COVID-19. • We earn a significant portion of our revenue in connection with providing services to two customers. • Changes that reduce or limit the use of online default real estate auctions or otherwise reduce the volume or rate of success of such auctions can negatively impact us. • If our agreement with Rithm is terminated, expires, is breached, or suffers a significant reduction in volume we could be adversely affected. 10 Table of Contents • Technology disruptions, failures, defects or inadequacies, delays or difficulties in implementing software or hardware changes, acts of vandalism or the introduction of harmful code could negatively impact us. • We depend on our ability to use services, products, data and infrastructure provided by third parties to maintain and grow our businesses. • The Company’s databases contain our proprietary information, the proprietary information of third parties and personal information of our customers, consumers, vendors and employees.
In this ITEM 1A, unless the context otherwise clearly indicates, references to our “services” include any services, products or solutions provided, or made available, by us. 10 Table of Contents Summary • We may experience a significant and extended reduction in the demand for our default-related services due to the continued low number of residential mortgage foreclosures, extended time periods from foreclosure starts to sales, the reduction in rates of foreclosures starts converting to foreclosure sales and reduced supply of Real Estates Owned inventory resulting from loss mitigation and borrower relief measures, fiscal policies, and other relevant economic conditions. • We earn a significant portion of our revenue in connection with providing services to two customers. • Changes that reduce or limit the use of online default real estate auctions or otherwise reduce the volume or rate of success of such auctions can negatively impact us. • If our agreement with Rithm is terminated, expires, is breached, or suffers a significant reduction in volume we could be adversely affected. • Technology disruptions, failures, defects or inadequacies, delays or difficulties in implementing software or hardware changes, acts of vandalism or the introduction of harmful code could negatively impact us. • We depend on our ability to use services, products, data and infrastructure provided by third parties to maintain and grow our businesses. • We may not successfully detect fraudulent activity, which could impact our services, our clients or third parties and could adversely affect our reputation and our results of operations. • The Company’s databases contain our proprietary information, the proprietary information of third parties and personal information of our customers, consumers, vendors and employees.
A reduction in residential mortgage delinquencies, defaults or foreclosures in the United States can negatively affect demand for certain of our services. 19 Table of Contents We provide certain services to residential mortgage servicers and subservicers, as well as government sponsored entities, federal agencies and others, to protect, preserve, manage and potentially dispose of properties securing residential mortgage loans, when such loans become delinquent, default, undergo foreclosure or become a REO asset.
We provide certain services to residential mortgage servicers and subservicers, as well as government sponsored entities, federal agencies and others, to protect, preserve, manage and potentially dispose of properties securing residential mortgage loans, when such loans become delinquent, default, undergo foreclosure or become a REO asset.
The COVID-19 pandemic continues to have a profound impact on our business, our customers, and the industries in which we operate. In response to the COVID-19 pandemic, beginning in March 2020, various governmental entities and servicers implemented unprecedented foreclosure and eviction moratoriums, forbearance programs and loss mitigation measures to help mitigate the impact to borrowers and renters.
In response to the COVID-19 pandemic, beginning in March 2020, various governmental entities and servicers implemented unprecedented foreclosure and eviction moratoriums, forbearance programs and loss mitigation measures to help mitigate the impact to borrowers and renters (collectively, “Relief Measures”).
If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a service provider.
If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a service provider. Changes to real estate brokerage commission structures or rates paid for residential property transactions could negatively impact us.
If any reduction in productivity or data privacy or cybersecurity failures or breaches or issues with our controls occurs, we may incur additional costs to address such issues and our financial condition and results may be adversely impacted. In addition, our Remote Work Environment may result in difficulties creating and maintaining accurate records of where our employees are working from.
If any reduction in productivity or data privacy or cybersecurity failures or breaches or issues with our controls occurs, we may incur additional costs to address such issues and our financial condition and results may be adversely impacted.
Risks Related to the COVID-19 Pandemic We may experience a significant and extended reduction in the demand for our default-related services due to the continued reduction in residential mortgage foreclosures and reduced supply of REO inventory resulting from COVID-19 foreclosure and eviction moratoriums.
Risks Related to the COVID-19 Pandemic We may experience a significant and extended reduction in the demand for our default-related services due to the continued reduction in residential mortgage foreclosures, extended time periods from foreclosure starts to sales, the reduction in rates of foreclosure starts converting to foreclosure sales and reduced supply of REO inventory resulting from loss mitigation and borrower relief measures, fiscal policies, and other relevant economic conditions.
In addition, certain members of our Board of Directors, executive officers or other key employees have relationships with certain customers or vendors that facilitate our business and operations.
We are dependent on the services of members of our Board of Directors and key executives at our corporate headquarters and personnel at each of our lines of business and support groups. In addition, certain members of our Board of Directors, executive officers or other key employees have relationships with certain customers or vendors that facilitate our business and operations.
The COVID-19 pandemic and its ramifications could further aggravate, accelerate, or precipitate any of the risk factors discussed below. Risks Related to Our Business and Operations We earn a significant portion of our revenue in connection with providing services to two customers. A significant portion of our revenue is earned from providing services to Ocwen and Rithm.
Risks Related to Our Business and Operations We earn a significant portion of our revenue in connection with providing services to two customers. A significant portion of our revenue is earned from providing services to Ocwen and Rithm.
We have significant business relationships with and provide services to Ocwen and to Rithm, and have business relationships with certain companies in which William C. Erbey has invested.
We have significant business relationships with and provide services to Ocwen and to Rithm, and we have business relationships with certain companies in which William C. Erbey has invested. We also have a revolving credit facility with a fund managed by Deer Park Road Management Company L.P.
In addition, some of our customers may require us to use labor based in the United States for other reasons. To the extent that we are required to use labor based in the United States, we may not be able to pass on the increased costs of higher-priced United States-based labor to our customers.
In addition, some of our customers may require us to use labor based in the United States for other reasons.
We may be unable to extend the maturity of our Amended Credit Agreement and Revolver from April 2025 to April 2026 if we are unable to raise sufficient funds from the proceeds of issuances of equity interests or from junior indebtedness.
We may be unable to exercise the option to extend the maturity of our Amended Credit Agreement and Revolver from April 2025 to April 2026.
If those processes are not sufficient or experience an error or other disruption, we or our vendors may fail to comply with applicable requirements concerning PI. In addition, we rely on the security of our facilities, networks, databases, systems and processes and, in certain circumstances, third parties, such as vendors, to protect PI.
In addition, we rely on the security of our facilities, networks, databases, systems, processes and controls, and, in certain circumstances, third parties, such as vendors, to protect PI.
Risks Related to Our Growth Strategy We may be unable to realize sales represented by our awarded business or sales pipeline. As part of our business and financial planning, we make assumptions about the quantity and timing of services that our customers and prospect customers will order from us.
As part of our business and financial planning, we make assumptions about the quantity and timing of services that our customers and prospective customers will order from us.
If we issue common stock, warrants or other securities, the trading price of our common stock or other Company securities could experience significant volatility or be negatively impacted. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies.
In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies.
As of February 14, 2023, Deer Park owned approximately 18% of Altisource’s debt under the Amended Credit Agreement.
As of December 31, 2023, Deer Park owned approximately 18% of Altisource’s debt under the Amended Credit Agreement and held 292 thousand warrants received in connection with the February 2023 debt amendment.
We estimate that in today’s environment it typically takes on average two years to convert foreclosure initiations to foreclosure sales and six months to market and sell the REO.
We estimate that in today’s environment it typically takes on average two years to convert foreclosure initiations to foreclosure sales and six months to market and sell the REO, but multiple factors could impact this estimate. The extent and duration of the impact of the Relief Measures and societal responses will depend on future developments which remain highly uncertain.
As a result, it is difficult to predict the impact on our business and the timing for the recovery of the default market, if it recovers at all. 12 Table of Contents Volatile or uncertain economic conditions caused by the COVID-19 pandemic, or its consequences, have and may continue to affect our customers and the markets we serve, causing customers to reduce, defer or eliminate spending on our services.
Volatile or uncertain economic conditions caused by the COVID-19 pandemic and its consequences, as well as governmental fiscal policies and other relevant economic conditions, have and may continue to affect our customers and the markets we serve, causing customers to reduce, defer or eliminate spending on our services.
Such changes could reduce the demand for our services or control over the prices we are able to charge for our services. Acquisitions to accelerate growth initiatives involve potential risks. Historically, our strategy has included the acquisition of complementary businesses from time to time.
Such changes could reduce the demand for our services or control over the prices we are able to charge for our services. Business expansion involves potential risks.
We made a paydown in the amount of $20 million in February 2023, leaving an additional paydown of $10 million required on or before February 13, 2024 to be able to extend the maturity date of our debt to April 2026.
We satisfied the $30 million paydown requirement through a par paydown in the amount of $20 million in February 2023 and an additional par paydown of $10 million in September 2023 each from the proceeds of equity issuances, providing us with the option to be able to extend the maturity date of our debt to April 2026.
Such uncertainty in employee location may subject us to risks related to certain state taxes or maintaining certain state licenses. We rely on vendors for many aspects of our business. If our vendor oversight activities are ineffective, we may fail to meet customer or regulatory requirements.
In addition, our Remote Work Environment may result in difficulties creating and maintaining current and accurate records of where our employees are working. Such uncertainty in employee location may subject us to risks related to taxing jurisdictions or maintaining certain licenses. We rely on vendors for many aspects of our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe consider these facilities to be suitable and currently adequate for the management and operations of our businesses.
Biggest changeWe consider these facilities to be suitable and currently adequate for the management and operations of our businesses. 29 Table of Contents
ITEM 2. PROPERTIES Our principal executive offices are located in leased office space in Luxembourg, Grand Duchy of Luxembourg. Our principal leased offices in other countries as of December 31, 2022 include three offices in the United States and one office each in India and Uruguay. We do not own any office facilities.
ITEM 2. PROPERTIES Our principal executive offices are located in leased office space in Luxembourg, Grand Duchy of Luxembourg. Our principal leased offices in other countries as of December 31, 2023 include two offices in the United States and one office each in India and Uruguay. We do not own any office facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS 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.
Biggest changeLitigation We are currently involved in legal actions in the course of our business, most of which seek monetary damages. Although the outcome of these proceedings cannot be predicted with certainty, we currently believe that their outcome, both individually and in the aggregate, will not 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.
Regulatory Matters Periodically, we are subject to audits, examinations and investigations by 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.
For further information, see Item 1A of Part I, “ Risk Factors ” above and Note 22 to the consolidated financial statements. 27 Table of Contents ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28 Table of Contents PART II
For further information, see Item 1A of Part I, “ Risk Factors ” above and Note 22 to the consolidated financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 Table of Contents PART II
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ITEM 3. LEGAL PROCEEDINGS We may become, from time to time, involved in various disputes, litigation, regulatory inquiry, audit, examinations and investigation matters that arise in the course of business. Given the inherent unpredictability of these proceedings, it is possible that future adverse outcomes could have a material adverse effect on our financial condition or results of operations.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 28 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 29 ITEM 6 [RESERVED] 29 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 30 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 52 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 30 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 31 ITEM 6 [RESERVED] 31 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 32 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 51 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities 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.
Biggest changeIssuer Purchases of Equity Securities On May 16, 2023, our shareholders approved the renewal and amendment of the share repurchase program previously approved by the shareholders on May 15, 2018.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated herein by reference to our definitive proxy statement in connection with our 2023 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Exchange Act.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated herein by reference to our definitive proxy statement in connection with our 2024 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Exchange Act.
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.
Under the program, we are authorized to purchase up to 3.1 million shares of our common stock, based on a limit of 15% 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 $25.00 per share, for a period of five years from the date of approval.
(unconsolidated parent company) retained earnings, less the value of shares repurchased. As of December 31, 2022, we can repurchase up to approximately $69 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
(unconsolidated parent company) retained earnings, less the value of shares repurchased. As of December 31, 2023, we can repurchase up to approximately $116 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
As of December 31, 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 years ended December 31, 2022 and 2021. Luxembourg law limits share repurchases to the balance of Altisource Portfolio Solutions S.A.
As of December 31, 2023, approximately 3.1 million shares of common stock remain available for repurchase under the program. There were no purchases of shares of common stock during the years ended December 31, 2023 and 2022. Luxembourg law limits share repurchases to the balance of Altisource Portfolio Solutions S.A.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the NASDAQ Global Select Market under the symbol “ASPS.” The number of holders of record of our common stock as of March 24, 2023 was 300.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the NASDAQ Global Select Market under the symbol “ASPS.” The number of holders of record of our common stock as of March 1, 2024 was 304.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth information on our consolidated results of operations for the years ended December 31: (in thousands, except per share data) 2022 % Increase (decrease) 2021 Service revenue Servicer and Real Estate $ 112,132 4 $ 107,790 Originations 32,364 (44) 58,002 Corporate and Others — (100) 4,821 Service revenue 144,496 (15) 170,613 Reimbursable expenses 8,039 23 6,555 Non-controlling interests 585 (54) 1,285 Total revenue 153,120 (14) 178,453 Cost of revenue 131,305 (23) 171,366 Gross profit 21,815 208 7,087 Operating expense (income): Selling, general and administrative expenses 54,755 (18) 67,049 Loss (gain) on sale of business 242 100 (88,930) (Loss) income from operations (33,182) (215) 28,968 Other income (expense), net: Interest expense (16,639) 14 (14,547) Other income, net 2,254 161 864 Total other income (expense), net (14,385) (5) (13,683) (Loss) income before income taxes and non-controlling interests (47,567) (411) 15,285 Income tax provision (5,266) 63 (3,232) Net (loss) income (52,833) N/M 12,053 Net income attributable to non-controlling interests (585) 143 (241) Net (loss) income attributable to Altisource $ (53,418) N/M $ 11,812 Margins: Gross profit/service revenue 15 % 4 % Income (loss) from operations/service revenue (23) % 17 % (Loss) earnings per share: Basic $ (3.32) N/M $ 0.75 Diluted $ (3.32) N/M $ 0.74 Weighted average shares outstanding: Basic 16,070 1 15,839 Diluted 16,070 — 16,063 _____________________________________ N/M — not meaningful. 35 Table of Contents Revenue We recognized service revenue of $144.5 million for the year ended December 31, 2022, a 15% decrease compared to the year ended December 31, 2021.
Biggest changeThe following table sets forth information on our consolidated results of operations for the years ended December 31: (in thousands, except per share data) 2023 % Increase (decrease) 2022 Service revenue Servicer and Real Estate $ 107,779 (4) $ 112,132 Origination 28,786 (11) 32,364 Total service revenue 136,565 (5) 144,496 Reimbursable expenses 8,273 3 8,039 Non-controlling interests 228 (61) 585 Total revenue 145,066 (5) 153,120 Cost of revenue 115,414 (12) 131,305 Gross profit 29,652 36 21,815 Operating expense (income): Selling, general and administrative expenses 46,420 (15) 54,755 Loss on sale of business — (100) 242 Loss from operations (16,768) 49 (33,182) Other income (expense), net: Interest expense (36,103) 117 (16,639) Change in fair value of warrant liability 1,145 N/M — Debt amendment costs (3,410) N/M — Other income (expense), net 2,788 24 2,254 Total other income (expense), net (35,580) (147) (14,385) Loss before income taxes and non-controlling interests (52,348) (10) (47,567) Income tax provision (3,714) (29) (5,266) Net loss (56,062) (6) (52,833) Net income attributable to non-controlling interests (228) (61) (585) Net loss attributable to Altisource $ (56,290) (5) $ (53,418) Margins: Gross profit / service revenue 22 % 15 % Loss from operations / service revenue (12) % (23) % Loss per share: Basic $ (2.51) 24 $ (3.32) Diluted $ (2.51) 24 $ (3.32) Weighted average shares outstanding: Basic 22,418 40 16,070 Diluted 22,418 40 16,070 _____________________________________ N/M — not meaningful. 37 Table of Contents Revenue We recognized service revenue of $136.6 million for the year ended December 31, 2023, a 5% decrease compared to the year ended December 31, 2022.
The Credit Agreement includes covenants that restrict or limit, among other things, our ability, subject to certain exceptions and baskets, to incur additional debt, pay dividends and repurchase shares of our common stock. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
The Amended Credit Agreement includes covenants that restrict or limit, among other things, our ability, subject to certain exceptions and baskets, to incur additional debt, pay dividends and repurchase shares of our common stock. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
We are focused on growing referrals from our existing customer base and attracting new customers to our offerings. We have a customer base that includes GSEs, asset managers, and several large bank and non-bank servicers including Ocwen and Rithm. We believe we are one of only a few providers with a broad suite of servicer solutions, nationwide coverage and scalability.
We are focused on growing referrals from our existing customer base and attracting new customers to our offerings. We have a customer base that includes GSEs, asset managers, and several large bank and non-bank servicers including Ocwen and Rithm. We believe we are one of only a few providers with a broad suite of solutions, nationwide coverage and scalability.
Finally, we believe our anticipated revenue growth from the return of the default market, on-boarding sales wins, and revenue mix together with our reduced cost structure, should help reduce negative operating cash flow. We seek to deploy cash generated in a disciplined manner.
We believe our anticipated revenue growth from the return of the default market, on-boarding sales wins, and revenue mix together with our reduced cost structure, should help reduce negative operating cash flow. We seek to deploy cash generated in a disciplined manner.
Altisource may incur incremental indebtedness under the Amended Credit Agreement from one or more incremental lenders, which may include existing lenders, in an aggregate incremental principal amount not to exceed $50.0 million, subject to certain conditions set forth in the Amended Credit Agreement. The lenders have no obligation to provide any incremental indebtedness.
Altisource may incur incremental indebtedness under the Amended Credit Agreement from one or more incremental lenders, which may include existing lenders, in an aggregate incremental principal amount not to exceed $50 million, subject to certain conditions set forth in the Amended Credit Agreement. The lenders have no obligation to provide any incremental indebtedness.
Management cannot predict whether any of these events will occur or the amount of any impact they may have on Altisource. We are seeking to diversify and grow our revenue and customer base and we have a sales and marketing strategy to support these efforts.
Management cannot predict whether any of these events or other events will occur or the amount of any impact they may have on Altisource. We are seeking to diversify and grow our revenue and customer base and we have a sales and marketing strategy to support these efforts.
We also discuss restrictions on cash movements, future commitments and capital resources. Critical Accounting Policies, Estimates and Recent Accounting Pronouncements. This section, beginning on page 49 , identifies those accounting principles we believe are most important to our financial results and that require significant judgment and estimates on the part of management in application.
We also discuss restrictions on cash movements, future commitments and capital resources. Critical Accounting Policies, Estimates and Recent Accounting Pronouncements. This section, beginning on page 48 , identifies those accounting principles we believe are most important to our financial results and that require significant judgment and estimates on the part of management in application.
We provide all of our significant accounting policies in Note 2 to the accompanying consolidated financial statements. Other Matters. This section, beginning on page 51 , provides a discussion of customer concentration. OVERVIEW Our Business We are an integrated service provider and marketplace for the real estate and mortgage industries.
We provide all of our significant accounting policies in Note 2 to the accompanying consolidated financial statements. Other Matters. This section, beginning on page 50 , provides a discussion of customer concentration. OVERVIEW Our Business We are an integrated service provider and marketplace for the real estate and mortgage industries.
Technology and SaaS Products Our Technology and SaaS Products business includes Vendorly Monitor (a vendor management platform), LOLA (a marketplace to order services and a tool to automate components of the loan manufacturing process), TrelixAI (technology to manage the workflow and automate components of the loan fulfillment, pre and post-close quality control and service transfer processes), ADMS (a document management and data analytics delivery platform), and automated valuation technology.
Technology and SaaS Products Our Technology and SaaS Products business includes Vendorly Monitor (a vendor management platform), LOLA (a marketplace to order services and a tool to automate components of the loan manufacturing process), TrelixAI (technology to manage the workflow and automate components of the loan fulfillment, pre and post-close quality control and service transfer processes), and ADMS (a document management and data analytics delivery platform).
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.
Ocwen has disclosed that it is subject to a number of ongoing 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.
Actual results may differ significantly from these estimates under different assumptions, judgments or conditions. Revenue Recognition We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer in an amount that reflects the consideration that we expect to receive.
Actual results may differ significantly from these estimates under different assumptions, judgments or conditions. 48 Table of Contents Revenue Recognition We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer in an amount that reflects the consideration that we expect to receive.
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.
Under the program, we are authorized to purchase up to 3.1 million shares of our common stock, based on a limit of 15% 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 $25.00 per share, for a period of five years from the date of approval.
The most significant temporary differences relate to accrued compensation, amortization, loss 50 Table of Contents carryforwards and valuation allowances. We measure deferred income tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we anticipate recovery or settlement of those temporary differences.
The most significant temporary differences relate to accrued compensation, amortization, loss carryforwards and valuation allowances. We measure deferred income tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we anticipate recovery or settlement of those temporary differences.
It also provides a brief description of significant transactions and events that affect the comparability of financial results and a discussion of the progress being made on our strategic initiatives. Consolidated Results of Operations. This section, beginning on page 35 , provides an analysis of our consolidated results of operations for the two years ended December 31, 2022 and 2021.
It also provides a brief description of significant transactions and events that affect the comparability of financial results and a discussion of the progress being made on our strategic initiatives. Consolidated Results of Operations. This section, beginning on page 37 , provides an analysis of our consolidated results of operations for the two years ended December 31, 2023 and 2022.
We are focused on growing business from our existing customer base, attracting new customers to our offerings and developing new offerings. We have a customer base that includes the Lenders One cooperative members, which includes independent mortgage bankers, credit unions, and banks, as well as bank and non-bank loan originators.
We are focused on growing business from our existing customer base, attracting new customers to our offerings and developing new 33 Table of Contents offerings. We have a customer base that includes the Lenders One cooperative members, which includes independent mortgage bankers, credit unions, and banks, as well as bank and non-bank loan originators.
Ocwen Related Matters During the year ended December 31, 2022, Ocwen was our largest customer, accounting for 41% of our total revenue. Additionally, 6% of our revenue for the year ended December 31, 2022 was earned on the loan portfolios serviced by Ocwen, when a party other than Ocwen or the MSR owner selected Altisource as the service provider.
Ocwen Related Matters During the year ended December 31, 2023, Ocwen was our largest customer, accounting for 44% of our total revenue. Additionally, 6% of our revenue for the year ended December 31, 2023 was earned on the loan portfolios serviced by Ocwen, when a party other than Ocwen or the MSR owner selected Altisource as the service provider.
(unconsolidated parent company) retained earnings, less the value of shares repurchased. As of December 31, 2022, we can repurchase up to approximately $69 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
(unconsolidated parent company) retained earnings, less the value of shares repurchased. As of December 31, 2023, we can repurchase up to approximately $116 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
However, due to governmental and market responses to the COVID-19 pandemic, revenue has declined significantly. The lower revenue, partially offset by cost savings initiatives, resulted in negative operating cash flow from operations for the years ended December 31, 2022 and 2021.
However, due to governmental and market responses to the COVID-19 pandemic, revenue has declined significantly. The lower revenue, partially offset by efficiency initiatives and cost savings measures, resulted in negative operating cash flow from operations for the years ended December 31, 2023 and 2022.
Amounts that are repaid may be re-borrowed in accordance with the limitations set forth below. The maturity date of the Amended Revolver coincides with the maturity date of the Term B Loans under the Amended Credit Agreement, as it may be extended. The outstanding balance on the Amended Revolver is due and payable on such maturity date.
Amounts that are repaid may be re-borrowed in accordance with the limitations set forth below. The maturity date of the Amended Revolver coincides with the maturity date of the SSTL under the Amended Credit Agreement, as it may be extended. The outstanding balance on the Amended Revolver is due and payable on such maturity date.
We use judgment to determine the period over which we recognize revenue for certain of these services. • For the real estate auction platform, real estate auction and real estate brokerage services, we recognize revenue on a net basis (i.e., the commission on the sale) as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. 49 Table of Contents • For SaaS based technology to manage REO, we recognize revenue over the estimated average number of months the REO are on the platform or ratably over the contract period.
We use judgment to determine the period over which we recognize revenue for certain of these services • For the real estate auction platform, real estate auction and real estate brokerage services, we recognize revenue on a net basis (i.e., commission and/or auction fee, as applicable, on the sale) at the closing of the sale of the REO as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount • For SaaS based technology to manage REO, we recognize revenue over the estimated average number of months the REO are on the platform or ratably over the contract period.
All amounts outstanding under the Term B Loans will become due on the earlier of (i) the maturity date described above, 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.
All amounts outstanding under the SSTL become due on the earlier of (i) the maturity date, 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 Amended Credit Agreement; other capitalized terms, unless defined herein, are defined in the Amended Credit Agreement) or as otherwise provided in the Amended Credit Agreement upon the occurrence of any event of default.
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.
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 it purchases from us or the loss of other customers.
As of December 31, 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 years ended December 31, 2022 and 2021. Luxembourg law limits share repurchases to the balance of Altisource Portfolio Solutions S.A.
As of December 31, 2023, approximately 3.1 million shares of common stock remain available for repurchase under the program. There were no purchases of shares of common stock during the years ended December 31, 2023 and 2022. Luxembourg law limits share repurchases to the balance of Altisource Portfolio Solutions S.A.
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 50% of Consolidated Excess Cash Flow, as calculated in accordance with the provisions of the Amended Credit Agreement.
In addition to the scheduled principal payments, subject to certain exceptions, the SSTL is subject to mandatory prepayment upon issuances of debt, certain casualty and condemnation events and sales of assets, as well as 50% of Consolidated Excess Cash Flow, as calculated in accordance with the provisions of the Amended Credit Agreement.
We anticipate to fund future liquidity requirements with a combination of existing cash balances, cash anticipated to be generated by operating activities and, if needed, proceeds from the Amended Revolver. For further information, see Note 12, Note 22 and Note 24 to the consolidated financial statements. Off-Balance Sheet Arrangements Our off-balance sheet arrangements consist of escrow arrangements.
We anticipate funding future liquidity requirements with a combination of existing cash balances, cash anticipated to be generated by operating activities and, as needed, proceeds from the Amended Revolver. For further information, see Note 11 and Note 22 to the consolidated financial statements. Off-Balance Sheet Arrangements Our off-balance sheet arrangements consist of escrow arrangements.
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 consolidated balance sheets. Amounts held in escrow accounts were $13.2 million and $27.5 million as of December 31, 2022 and 2021, respectively.
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 consolidated balance sheets. Amounts held in escrow accounts were $21.6 million and $13.2 million as of December 31, 2023 and 2022, respectively.
For both the years ended December 31, 2022 and 2021, we recognized $9.5 million, of such revenue. These amounts are not included in deriving revenue from Ocwen and revenue from Ocwen as a percentage of revenue discussed above.
For the years ended December 31, 2023 and 2022, we recognized $9.2 million and $9.5 million, 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.
In addition, from time to time we consider and evaluate business acquisitions, dispositions, closures or other similar actions that are aligned with our strategy.
In addition, from time to time we consider and evaluate business acquisitions, dispositions, closures, sales of equity securities or other similar actions that are aligned with our strategy.
Altisource’s obligations under the Amended Revolver are secured by first-priority lien on substantially all of the assets of the Company, which lien will be pari passu with liens securing the Term B Loans under the Amended Credit Agreement.
Altisource’s obligations under the Amended Revolver are secured by a first-priority lien on substantially all of the assets of the Company, which lien will be pari passu with liens securing the SSTL under the Amended Credit Agreement.
For the years ended December 31, 2022 and 2021, we recognized additional revenue of $13.0 million and $13.6 million, respectively, relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider. 51 Table of Contents
For the years ended December 31, 2023 and 2022, we recognized additional revenue of $12.6 million and $13.0 million, respectively, relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider.
The existence or outcome of Ocwen regulatory matters or the termination of the Rithm sub-servicing agreement with Ocwen may have significant adverse effects on Ocwen’s business.
The existence or outcome of Ocwen regulatory matters or the termination of Ocwen’s sub-servicing agreements with Rithm or other significant Ocwen clients may have significant adverse effects on Ocwen’s business.
For the years ended December 31, 2022 and 2021, we recognized revenue from Rithm of $3.2 million and $3.1 million, respectively, under the Brokerage Agreement.
For the years ended December 31, 2023 and 2022, we recognized revenue from Rithm of $2.8 million and $3.2 million, respectively, under the Brokerage Agreement.
More specifically, revenues from property sales, loan originations and certain property preservation services in Field Services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months.
Certain of our revenues can be impacted by seasonality. More specifically, revenues from property sales, loan originations and certain property preservation services in Field Services typically tend to be at their lowest level during the fall and winter months and at their highest level during the spring and summer months.
Segment Results of Operations. This section, beginning on page 39 , provides analysis of our business segments’ results of operations for the years ended December 31, 2022 and 2021. Liquidity and Capital Resources . This section, beginning on page 46 , provides an analysis of our cash flows for the two years ended December 31, 2022 and 2021.
Segment Results of Operations. This section, beginning on page 40 , provides analysis of our business segments’ results of operations for the years ended December 31, 2023 and 2022. Liquidity and Capital Resources . This section, beginning on page 45 , provides an analysis of our cash flows for the two years ended December 31, 2023 and 2022.
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 and risk management. We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. In evaluating our performance, we focus on service revenue.
Corporate and Others includes 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 and eliminations between reportable segments. We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. In evaluating our performance, we focus on service revenue.
Income Tax Provision We recognized an income tax provision of $5.3 million and $3.2 million for the years ended December 31, 2022 and 2021, respectively.
Income Tax Provision We recognized an income tax provision of $3.7 million and $5.3 million for the years ended December 31, 2023 and 2022, respectively.
Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: 2022 2021 Servicer and Real Estate 53 % 49 % Origination — % — % Corporate and Others — % — % Consolidated revenue 41 % 31 % We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSRs owner selects Altisource as the service provider.
Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: 2023 2022 Servicer and Real Estate 55 % 53 % Origination — % — % Corporate and Others — % — % Consolidated revenue 44 % 41 % 50 Table of Contents We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSRs owner selects Altisource as the service provider.
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 Rithm changes significantly, including Ocwen’s sub-servicing arrangement with Rithm 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 33 Table of Contents • 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.
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 it purchases 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 Rithm changes significantly, including Ocwen’s sub-servicing arrangement with Rithm 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 • Ocwen is subject to stays, moratoriums, suspensions or other restrictions that limit or delay default-related actions on the loans it services • 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 and/or there is a reduction in referral volumes The foregoing list is not intended to be exhaustive.
We also recognized reimbursable expense revenue of $7.5 million for the year ended December 31, 2022, a 29% increase compared to the year ended December 31, 2021.
We also recognized reimbursable expense revenue of $7.7 million for the year ended December 31, 2023, a 2% increase compared to the year ended December 31, 2022.
The decline in foreclosure initiations and foreclosure sales throughout the pandemic, partially offset by the restart of the default market, significantly decreased default related referrals to Altisource and continues to negatively impact virtually all of Altisource’s default related services revenue. We cannot predict the duration of the pandemic and future governmental and industry measures.
The decline in foreclosure initiations and foreclosure sales throughout the pandemic, partially offset by the restart of the default market, significantly decreased default related referrals to Altisource and continues to negatively impact virtually all of Altisource’s default related services revenue.
For the years ended December 31, 2022 and 2021, we recognized revenue from Ocwen of $63.5 million and $55.6 million, respectively.
For the years ended December 31, 2023 and 2022, we recognized revenue from Ocwen of $63.2 million and $63.5 million, respectively.
For the year ended December 31, 2022, net cash used in operating activities was $(44.9) million, compared to net cash used in operating activities of $(60.4) million for the year ended December 31, 2021.
For the year ended December 31, 2023, net cash used in operating activities was $(21.8) million compared to net cash used in operating activities of $(44.9) million for the year ended December 31, 2022.
The Amended Revolver 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. As of December 31, 2022, there was no outstanding debt under the Revolver.
The Amended Revolver 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. 46 Table of Contents As of December 31, 2023, there was no outstanding debt under the Amended Revolver and since obtaining the Amended Revolver, the Company has not borrowed any amount under the Amended Revolver.
We recognized revenue associated with implementation services and maintenance services ratably over the contract term. Goodwill and Identifiable Intangible Assets Goodwill We evaluate goodwill for impairment annually during the fourth quarter or more frequently when an event occurs or circumstances change in a manner that indicates the carrying value may not be recoverable.
Goodwill and Identifiable Intangible Assets Goodwill We evaluate goodwill for impairment annually during the fourth quarter or more frequently when an event occurs or circumstances change in a manner that indicates the carrying value may not be recoverable.
Technology and SaaS Products Our Technology and SaaS Products business includes Equator (a SaaS-based technology to manage REO, short sales, foreclosure, bankruptcy and eviction processes), Vendorly Invoice (a vendor invoicing and payment system), 30 Table of Contents RentRange (a single family rental data, analytics and rent-based valuation solution), REALSynergy (a commercial loan servicing platform), and NestRange (an automated valuation model and analytics solution).
Technology and SaaS Products Our Technology and SaaS Products business includes Equator (a SaaS-based technology to manage REO, short sales, foreclosure, bankruptcy and eviction processes), Vendorly Invoice (a vendor invoicing and payment system), RentRange (a single and multi-family rental data, analytics and rent-based valuation solution), REALSynergy (a commercial loan servicing platform), and NestRange (an automated valuation model and analytics solution). 32 Table of Contents The Origination segment provides originators with solutions and technologies that span the mortgage origination lifecycle.
The Origination segment provides originators with solutions and technologies that span the mortgage origination lifecycle. Within the Origination segment we provide: Solutions Our Solutions business includes title insurance (as an agent) and settlement services, real estate valuation services, and loan fulfillment, certification and certification insurance services.
Within the Origination segment we provide: Solutions Our Solutions business includes title insurance (as an agent) and settlement services, real estate valuation services, and loan fulfillment, certification and certification insurance services.
The income tax provision for the year ended December 31, 2021 was driven by no income tax provision on the gain on sale of Pointillist, income tax on transfer pricing income from India, no tax benefit on the pretax loss from our Luxembourg operating company and Pointillist, uncertain tax position and tax on unrepatriated earnings in India. 38 Table of Contents SEGMENT RESULTS OF OPERATIONS The following section provides a discussion of pretax results of operations of our business segments.
The income tax provision for the year ended December 31, 2022 was driven by income tax expense on transfer pricing income from India, no tax benefit on the pretax loss from our Luxembourg operating company, uncertain tax positions and anticipated withholdings tax on current year earnings in India. 39 Table of Contents SEGMENT RESULTS OF OPERATIONS The following section provides a discussion of pretax results of operations of our business segments.
Income from Operations Income from operations increased to $26.5 million, representing 24% of service revenue, for the year ended December 31, 2022 compared to $13.7 million, representing 13% of service revenue, for the year ended December 31, 2021.
Income from operations Income from operations increased to $32.1 million, representing 30% of service revenue, for the year ended December 31, 2023 compared to $26.5 million, representing 24% of service revenue, for the year ended December 31, 2022.
The income tax provision for the year ended December 31, 2021 was driven by no income tax provision on the gain on sale of Pointillist, income tax on transfer pricing income from India, no tax benefit on the pretax loss from our Luxembourg operating company and Pointillist, uncertain tax position and tax on unrepatriated earnings in India. 34 Table of Contents CONSOLIDATED RESULTS OF OPERATIONS The following is a discussion of our consolidated results of operations for the years ended December 31, 2022 and 2021.
The income tax provision for the year ended December 31, 2022 was driven by income tax expense on transfer pricing income from India, no tax benefit on the pretax loss from our Luxembourg operating company, uncertain tax positions and anticipated withholding tax on current year earnings in India 36 Table of Contents CONSOLIDATED RESULTS OF OPERATIONS The following is a discussion of our consolidated results of operations for the years ended December 31, 2023 and 2022.
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.
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 or proceed with default-related actions on the loans it services. Existing or future similar matters could result in adverse regulatory or other actions against Ocwen.
(Loss) income from Operations Loss from operations was $(7.4) million, representing (23)% of service revenue, for the year ended December 31, 2022 compared to income from operations of $5.3 million, representing 9% of service revenue, for the year ended December 31, 2021.
Income from Operations Loss from operations was $(6.0) million, representing (21)% of service revenue, for the year ended December 31, 2023 compared to loss from operations of $(7.4) million, representing (23)% of service revenue, for the year ended December 31, 2022.
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.
Share Repurchase Program On May 16, 2023, our shareholders approved the renewal and amendment of the share repurchase program previously approved by the shareholders on May 15, 2018.
Other Income (Expense), net Other income (expense), net principally includes interest expense and other non-operating gains and losses. 37 Table of Contents Other income (expense), net was $(14.4) million for the year ended December 31, 2022 compared to $(13.7) million for the year ended December 31, 2021.
Other income (expense), net Other income (expense), net, principally includes interest expense and other non-operating gains and losses. Other income (expense), net was $(35.6) million for the year ended December 31, 2023 compared to $(14.4) million for the year ended December 31, 2022.
We generally recognized revenue from professional services over the contract period. • Reimbursable expenses revenue related to property preservation and inspection services, real estate sales, title services and foreclosure trustee services is included in revenue with an equal amount recognized in cost of revenue.
We use judgment to determine the period over which we recognize revenue for certain of these services • Reimbursable expenses revenue related to property preservation and inspection services, real estate sales, title services and foreclosure trustee services is included in revenue with an equal amount recognized in cost of revenue.
(3) Estimated future interest payments based on the SOFR interest rate as of February 14, 2023, the effective date of the Amended Credit Agreement, and the April 30, 2025 maturity date. Based on the April 30, 2025 maturity date, no interest expense has been included beyond April 30, 2025.
(2) Estimated future interest payments based on the SOFR interest rate as of December 31, 2023 and the April 30, 2025 maturity date. Based on the April 30, 2025 maturity date, no interest expense has been included beyond April 30, 2025.
However, as a result of the pandemic and related measures, the seasonal impact to revenue may not follow historical patterns.
However, as a result of the COVID-19 pandemic and related measures and the rapid rise in mortgage interest rates, the seasonal impact to revenue may not follow historical patterns.
Descriptions of our principal revenue generating activities are as follows: Servicer and Real Estate • For property preservation and inspection services and payment management technologies, we recognize transactional revenue when the service is provided. • For vendor management transactions, we recognize revenue over the period during which we perform the services. • For loan disbursement review services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements. • For foreclosure trustee services, we recognize revenue over the period during which we perform the related services, with full recognition upon completion and/or recording the related foreclosure deed.
Descriptions of our principal revenue generating activities are as follows: Servicer and Real Estate • For property preservation and inspection services and payment management technologies, we recognize transactional revenue when the service is provided • For vendor management transactions, we recognize revenue over the period during which we perform the services.
The decrease in cost of revenue for the year ended December 31, 2022 is primarily driven by lower compensation and benefits primarily due to cash cost savings initiatives and lower incentive payments as well as the payment of incentive payments in stock as opposed to cash and lower technology and telecommunications.
The decrease in cost of revenue for the year ended December 31, 2023 is primarily driven by lower technology and telecommunications and compensation and benefits due to efficiency initiatives and cost savings initiatives.
Net cash used in financing activities were $(2.2) million and $(2.3) million for the years ended December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, we made payments of $(1.1) million and $(1.0) million, respectively, to satisfy employee tax withholding obligations on the issuance of restricted share units and restricted shares.
During the years ended December 31, 2023 and 2022, we made payments of $0.5 million and $1.1 million, respectively, to satisfy employee tax withholding obligations on the issuance of restricted share units and restricted shares.
Financial information for our segments was as follows: For the year ended December 31, 2022 (in thousands) Servicer and Real Estate Origination Corporate and Others Consolidated Altisource Revenue Service revenue $ 112,132 $ 32,364 $ — $ 144,496 Reimbursable expenses 7,529 510 — 8,039 Non-controlling interest — 585 — 585 119,661 33,459 — 153,120 Cost of revenue 81,148 32,052 18,105 131,305 Gross profit (loss) 38,513 1,407 (18,105) 21,815 Selling, general and administrative expenses 12,057 8,825 33,873 54,755 Loss on sale of businesses — — 242 242 Income (loss) from operations 26,456 (7,418) (52,220) (33,182) Total other income (expense), net 4 — (14,389) (14,385) Income (loss) before income taxes and non-controlling interests $ 26,460 $ (7,418) $ (66,609) $ (47,567) Margins: Gross profit (loss) /service revenue 34 % 4 % N/M 15 % Income (loss) from operations/service revenue 24 % (23) % N/M (23) % _____________________________________ N/M — not meaningful.
For the year ended December 31, 2022 (in thousands) Servicer and Real Estate Origination Corporate and Others Consolidated Altisource Revenue Service revenue $ 112,132 $ 32,364 $ — $ 144,496 Reimbursable expenses 7,529 510 — 8,039 Non-controlling interests — 585 — 585 119,661 33,459 — 153,120 Cost of revenue 81,148 32,052 18,105 131,305 Gross profit (loss) 38,513 1,407 (18,105) 21,815 Selling, general and administrative expenses 12,057 8,825 33,873 54,755 Gain on sale of business — — 242 242 Income (loss) from operations 26,456 (7,418) (52,220) (33,182) Total other income (expense), net 4 — (14,389) (14,385) Income (loss) before income taxes and non-controlling interests $ 26,460 $ (7,418) $ (66,609) $ (47,567) Margins: Gross profit (loss) / service revenue 34 % 4 % N/M 15 % Income (loss) from operations / service revenue 24 % (23) % N/M (23) % _____________________________________ N/M — not meaningful. 40 Table of Contents Servicer and Real Estate Revenue Revenue by line of business was as follows for the years ended December 31: (in thousands) 2023 2022 % Increase (decrease) Service revenue: Solutions $ 67,946 $ 71,686 (5) Marketplace 27,878 29,020 (4) Technology and SaaS Products 11,955 11,426 5 Total service revenue 107,779 112,132 (4) Reimbursable expenses: Solutions 3,551 3,203 11 Marketplace 4,137 4,326 (4) Total reimbursable expenses 7,688 7,529 2 Total revenue $ 115,467 $ 119,661 (4) We recognized service revenue of $107.8 million for the year ended December 31, 2023, a 4% decrease compared to the year ended December 31, 2022.
We believe these business segments address very large markets and directly leverage our core competencies and distinct competitive advantages. Our business segments and strategic initiatives follow: Servicer and Real Estate: Through our offerings that support residential real estate and loan investors and servicers, we provide a suite of solutions and technologies intended to meet their growing and evolving needs.
Our business segments and strategic initiatives follow: Servicer and Real Estate: Through our offerings that support residential real estate and loan investors and forward and reverse servicers, we provide a suite of solutions and technologies intended to meet their growing and evolving needs.
As of December 31, 2022, approximately 17% of loans serviced and subserviced by Ocwen (measured in UPB) were related to Rithm MSRs or rights to MSRs.
As of December 31, 2023, Ocwen reported that approximately 16% of loans serviced and subserviced by Ocwen (measured in UPB) and approximately 67% of all delinquent loans that Ocwen services were related to Rithm MSRs or rights to MSRs.
Cash Flows from Financing Activities Cash flows from financing activities primarily included payments of tax withholdings on issuance of restricted share units and restricted shares, distributions to non-controlling interests, debt repayments and, for the year ended December 31, 2021, included proceeds from issuance of debt and debt issuance costs and the repayment of debt.
Cash Flows from Financing Activities Cash flows from financing activities primarily included payments of tax withholding on issuance of restricted share units and restricted shares, distributions to non-controlling interests, proceeds from the sale of equity securities, debt repayments and debt amendment costs.
Cash Flows The following table presents our cash flows for the years ended December 31: (in thousands) 2022 % Increase (decrease) 2021 Net Cash used in operating activities $ (44,888) 26 $ (60,405) Net Cash (used in) provided by investing activities (767) (101) 102,762 Net Cash used in financing activities (2,221) 4 (2,304) Net (decrease) increase in cash, cash equivalents and restricted cash (47,876) (220) 40,053 Cash, cash equivalents and restricted cash at the beginning of the period 102,149 65 62,096 Cash, cash equivalents and restricted cash at the end of the period $ 54,273 (47) $ 102,149 Cash Flows from Operating Activities Cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net (loss) income.
Cash Flows The following table presents our cash flows for the years ended December 31: (in thousands) 2023 % Increase (decrease) 2022 Net cash used in operating activities $ (21,833) (51) $ (44,888) Net cash used in investing activities — (100) (767) Net cash provided by (used in) financing activities 2,976 234 (2,221) Net decrease in cash, cash equivalents and restricted cash (18,857) (61) (47,876) Cash, cash equivalents and restricted cash at the beginning of the period 54,273 (47) 102,149 Cash, cash equivalents and restricted cash at the end of the period $ 35,416 (35) $ 54,273 Cash Flows from Operating Activities Cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net loss.
The income tax provision for the year ended December 31, 2022 was driven by income tax expense on transfer pricing income from India, no tax benefit on the pretax loss from our Luxembourg operating company, uncertain tax positions and anticipated withholdings tax on current year earnings in India.
The income tax provision for the year ended December 31, 2023 was driven primarily by income tax expense on transfer pricing income from India and the United States, reduction in deferred tax assets related to intangible assets, no tax benefit on the pretax loss from our Luxembourg operating company and uncertain tax positions.
We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any arrangements, the history of the asset, our long-term strategy for use of the asset and other economic factors.
Factors we consider when determining useful lives include the contractual term of any arrangements, the history of the asset, our long-term strategy for use of the asset and other economic factors.
Operating cash flows can be negatively impacted because of the nature of some of our services and the mix of services provided. Certain services are performed immediately following or shortly after the referral, but the collection of the receivable does not occur until a specific event occurs (e.g., the foreclosure is complete, the REO asset is sold, etc.).
Certain services are performed immediately following or shortly after the referral, but the collection of the receivable does not occur until a specific event occurs (e.g., the foreclosure is complete, the REO asset is sold, etc.). Furthermore, lower margin services generate lower income and cash flows from operations.
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 and eliminations between reportable segments. We developed the Pointillist business through our consumer analytics capabilities.
Corporate and Others includes 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 and eliminations between reportable segments.
The decrease in cost of revenue for the year ended December 31, 2022 was primarily driven by lower compensation and benefits and outside fees and services driven by the decrease in service revenue discussed above.
The decrease in cost of revenue for the year ended December 31, 2023 was primarily driven by the alignment of compensation and benefits and technology and telecommunications with lower service revenue discussed above, partially offset by the increase in outside fees and services from Lenders One revenue growth.
As of December 31, 2022, accounts receivable from Ocwen totaled $4.0 million, $3.2 million of which was billed and $0.8 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. Rithm Ocwen has disclosed that Rithm is its largest client.
As of December 31, 2023, accounts receivable from Ocwen totaled $3.4 million, $2.2 million of which was billed and $1.2 million of which was unbilled. As of December 31, 2022, accounts receivable from Ocwen totaled $4.0 million, $3.2 million of which was billed and $0.8 million of which was unbilled.
The estimated cash flows are discounted using a rate that represents our estimated weighted average cost of capital. The market comparisons include an analysis of revenue and earnings multiples of guideline public companies compared to the Company. Identifiable Intangible Assets Identified intangible assets consist primarily of customer related intangible assets, operating agreements, trademarks and trade names and other intangible assets.
The estimated cash flows are discounted using a rate that 49 Table of Contents represents our estimated weighted average cost of capital. The market comparisons include an analysis of revenue and earnings multiples of guideline public companies compared to the Company.
Ocwen has disclosed that Rithm is its largest client. As of December 31, 2022, approximately 17% of loans serviced and subserviced by Ocwen (measured in UPB) were related to Rithm MSRs or rights to MSRs.
Rithm Ocwen has disclosed that Rithm is a significant client of Ocwen’s. As of December 31, 2023, Ocwen reported that approximately 16% of loans serviced and subserviced by Ocwen (measured in UPB) and approximately 67% of all delinquent loans that Ocwen services were related to Rithm MSRs or rights to MSRs.
Cost of revenue consists of the following for the years ended December 31: (in thousands) 2022 % Increase (decrease) 2021 Compensation and benefits $ 48,064 (31) $ 69,990 Outside fees and services 55,979 (16) 66,386 Technology and telecommunications 16,937 (33) 25,273 Reimbursable expenses 8,039 23 6,555 Depreciation and amortization 2,286 (28) 3,162 Total $ 131,305 (23) $ 171,366 We recognized cost of revenue of $131.3 million for the year ended December 31, 2022, a 23% decrease compared to the year ended December 31, 2021.
Cost of revenue consists of the following for the years ended December 31: (in thousands) 2023 % Increase (decrease) 2022 Outside fees and services $ 55,858 — $ 55,979 Compensation and benefits 35,396 (26) 48,064 Technology and telecommunications 14,196 (16) 16,937 Reimbursable expenses 8,273 3 8,039 Depreciation and amortization 1,691 (26) 2,286 Total $ 115,414 (12) $ 131,305 We recognized cost of revenue of $115.4 million for the year ended December 31, 2023, a 12% decrease compared to the year ended December 31, 2022.
The decline in the Solutions business revenue was greater than the overall market decline as customers transitioned services in-house to retain their employees in some of our Solutions businesses and a greater percentage of revenue in some of these businesses was derived from refinance transactions which declined faster than the market.
The decline in the Solutions business revenue was greater than the overall market decline as a greater percentage of revenue in some of our Solutions businesses was derived from refinance transactions which declined at a greater rate than the overall market.
We generally recognize revenue for professional services as services are provided. • For loan servicing technologies, we recognize revenue based on the number of loans on the system.
We generally recognize revenue for professional services as services are provided. We use judgment to determine the period over which we recognize revenue for certain of these services • For loan servicing technologies, we generally recognize revenue based on the number of loans on the system. We generally recognized revenue from professional services as services are provided.
The income tax provision for the year ended December 31, 2022 was driven by income tax expense on transfer pricing income from India, no tax benefit on the pretax loss from our Luxembourg operating company, uncertain tax positions and anticipated withholdings tax on current year earnings in India. • The Company recognized an income tax provision of $3.2 million for the year ended December 31, 2021.
The income tax provision for the year ended December 31, 2023 was driven primarily by income tax expense on transfer pricing income from India and the United States, reduction in deferred tax assets related to intangible assets, no tax benefit on the pretax loss from our Luxembourg operating company and uncertain tax positions 35 Table of Contents • The Company recognized an income tax provision of $5.3 million for the year ended December 31, 2022.
The decrease in operating (loss) income as a percentage of service revenue for the year ended December 31, 2022 was primarily the result of lower gross profit margins and higher SG&A costs, as discussed above.
The increase in operating income as a percentage of service revenue for the year ended December 31, 2023 is primarily the result of higher gross profit margins and a percentage reduction in SG&A in excess of the percentage reduction in revenue.
Certain of our Servicer and Real Estate businesses are impacted by seasonality. Revenues from property sales and certain property preservation services are generally lowest during the fall and winter months and highest during the spring and summer months. However, as a result of the pandemic and related measures, the seasonal impact to revenue may not follow historical patterns.
Certain of our Servicer and Real Estate businesses are impacted by seasonality. Revenues from property sales and certain property preservation services are generally lowest during the fall and winter months and highest during the spring and summer months.
Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses includes payroll for 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.
Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses includes payroll for personnel employed in executive, sales and marketing, finance, technology, law, compliance, audit, human resources, vendor management, facilities and risk management roles.
SG&A expenses consisted of the following for the years ended December 31: (in thousands) 2022 2021 % Increase (decrease) Compensation and benefits $ 17,492 $ 27,785 (37) Occupancy related costs 3,526 8,201 (57) Professional services 8,069 6,756 19 Marketing costs 14 843 (98) Depreciation and amortization 1,142 1,416 (19) Other 3,630 3,789 (4) Selling, general and administrative expenses $ 33,873 $ 48,790 (31) SG&A for the year ended December 31, 2022 of $33.9 million decreased by 31% compared to the year ended December 31, 2021.
SG&A expenses consisted of the following for the years ended December 31: (in thousands) 2023 2022 % Increase (decrease) Compensation and benefits $ 16,374 $ 17,492 (6) Professional services 5,257 8,069 (35) Occupancy related costs 3,984 3,526 13 Depreciation and amortization 698 1,142 (39) Marketing costs (9) 14 (164) Other 2,801 3,630 (23) Selling, general and administrative expenses $ 29,105 $ 33,873 (14) SG&A for the year ended December 31, 2023 of $29.1 million decreased by 14% compared to the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on the principal amount outstanding and SOFR as of February 14, 2023, the effective date of the Amended Credit Agreement, a one percentage point increase in SOFR above the minimum floor would increase our annual interest expense by approximately $2.5 million.
Biggest changeBased on the principal amount outstanding and SOFR as of December 31, 2023, a one percentage point increase in SOFR above the minimum floor would increase our annual interest expense by approximately $2.2 million. There would be a $2.2 million decrease in our annual interest expense if there was a one percentage point decrease in SOFR.
Based on expenses incurred in Indian rupees for the year ended December 31, 2022, a one percentage point increase or decrease in value of the Indian rupee in relation to the United States dollar would increase or decrease our annual expenses by approximately $0.2 million. 52 Table of Contents
Based on expenses incurred in Indian rupees for the year ended December 31, 2023, a one percentage point increase or decrease in value of the Indian rupee in relation to the United States dollar would increase or decrease our annual expenses by approximately $0.1 million. 51 Table of Contents
Interest Rate Risk Under the terms of the Amended Credit Agreement, the interest rate charged on the Term B Loans is SOFR (as defined in the Amended Credit Agreement) with a minimum floor of 1.00% plus 5.00% paid in cash plus 5.00% PIK.
Interest Rate Risk Under the terms of the Amended Credit Agreement, the initial interest rate charged on the SSTL is SOFR (as defined in the Amended Credit Agreement), with a minimum floor of 1.00%, plus 5.00% paid in cash plus 5.00% PIK.
There would be $2.5 million decrease in our annual cash interest expense if there was a one percentage point decrease in SOFR. Currency Exchange Risk We are exposed to currency risk from potential changes in currency values of our non-United States dollar denominated expenses, assets, liabilities and cash flows. Our most significant currency exposure relates to the Indian rupee.
Currency Exchange Risk We are exposed to currency risk from potential changes in currency values of our non-United States dollar denominated expenses, assets, liabilities and cash flows. Our most significant currency exposure relates to the Indian rupee.
Based on the first quarter 2023 par paydown of $20 million, the PIK component was reduced to 4.50% and may be further reduced on a prospective basis based on the Aggregate Paydowns made prior to February 14, 2024.
Based on par paydowns of $30 million during the year ended December 31, 2023, the PIK component was reduced to 3.75% and may be further reduced on a prospective basis based on the Aggregate Paydowns made prior to February 14, 2024.

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