ALTISOURCE PORTFOLIO SOLUTIONS S.A. [ASPS] Filings

10-Q 1 asps-20240930.htm 10-Q asps-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-34354

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

(Exact name of registrant as specified in its Charter)


Luxembourg			98-0554932
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

33, Boulevard Prince Henri

L-1724 Luxembourg

Grand Duchy of Luxembourg

(Address of principal executive offices)

(352) 2060 2055

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $1.00 par value

ASPS

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☑

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 18, 2024, there were 27,173,867 outstanding shares of the registrant’s common stock (excluding 2,788,881 shares held as treasury stock).

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

FORM 10-Q


			Page
PART I — Financial Information

	Item 1	Interim Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations and Comprehensive Loss	4
		Condensed Consolidated Statements of Equity (Deficit)	5
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8

	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

	Item 3	Quantitative and Qualitative Disclosures about Market Risk	48

	Item 4	Controls and Procedures	48

PART II — Other Information

	Item 1	Legal Proceedings	49

	Item 1A	Risk Factors	49

	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49

	Item 5	Other Information	49

	Item 6	Exhibits	50

SIGNATURES			51

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PART I — FINANCIAL INFORMATION

Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Condensed Consolidated Balance Sheets

(in thousands, except per share data)


	September 30, 2024		December 31, 2023

ASSETS
Current assets:
Cash and cash equivalents	$	28,339	$	32,522
Accounts receivable, net of allowance for credit losses of $3,486 and $3,123, respectively	14,241		11,682
Prepaid expenses and other current assets	8,244		11,336
Total current assets	50,824		55,540

Premises and equipment, net	901		1,709
Right-of-use assets under operating leases	2,544		3,379
Goodwill	55,960		55,960
Intangible assets, net	22,738		26,548
Deferred tax assets, net	4,968		4,992
Other assets	6,568		6,730

Total assets	$	144,503	$	154,858

LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	32,500	$	30,088

Current portion of long-term debt	226,708		—
Deferred revenue	3,769		3,195
Other current liabilities	2,402		2,477
Total current liabilities	265,379		35,760

Long-term debt	—		215,615
Deferred tax liabilities, net	9,104		9,028
Other non-current liabilities	18,706		19,510

Commitments, contingencies and regulatory matters (Note 21)

Deficit:
Common stock ($1.00 par value; 100,000 shares authorized, 29,963 issued and 27,171 outstanding as of September 30, 2024; 29,963 issued and 26,496 outstanding as of December 31, 2023)	29,963		29,963
Additional paid-in capital	180,776		177,278
Accumulated deficit	(247,545)		(180,162)
Treasury stock, at cost (2,792 shares as of September 30, 2024 and 3,467 shares as of December 31, 2023)	(112,580)		(152,749)
Altisource deficit	(149,386)		(125,670)

Non-controlling interests	700		615
Total deficit	(148,686)		(125,055)

Total liabilities and deficit	$	144,503	$	154,858

See accompanying notes to condensed consolidated financial statements.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share data)


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023

Revenue	$	40,531	$	36,213	$	119,121	$	110,909
Cost of revenue	28,461		29,024		82,030		89,684

Gross profit	12,070		7,189		37,091		21,225

Selling, general and administrative expenses	10,965		10,734		34,451		35,169

Income (loss) from operations	1,105		(3,545)		2,640		(13,944)
Other income (expense), net:
Interest expense	(9,960)		(9,890)		(29,277)		(26,554)
Change in fair value of warrant liability	—		2,225		—		1,145
Debt amendment costs	—		(59)		—		(3,402)
Other income (expense), net	362		407		2,143		2,357
Total other income (expense), net	(9,598)		(7,317)		(27,134)		(26,454)

Loss before income taxes and non-controlling interests	(8,493)		(10,862)		(24,494)		(40,398)
Income tax provision	(809)		(418)		(2,237)		(2,586)

Net loss	(9,302)		(11,280)		(26,731)		(42,984)
Net income attributable to non-controlling interests	(60)		(62)		(136)		(155)

Net loss attributable to Altisource	$	(9,362)	$	(11,342)	$	(26,867)	$	(43,139)

Loss per share:
Basic	$	(0.33)	$	(0.51)	$	(0.94)	$	(2.10)
Diluted	$	(0.33)	$	(0.51)	$	(0.94)	$	(2.10)

Weighted average shares outstanding:
Basic	28,672		22,181		28,469		20,538
Diluted	28,672		22,181		28,469		20,538

Comprehensive loss:
Comprehensive loss, net of tax	$	(9,302)	$	(11,280)	$	(26,731)	$	(42,984)
Comprehensive income attributable to non-controlling interests	(60)		(62)		(136)		(155)

Comprehensive loss attributable to Altisource	$	(9,362)	$	(11,342)	$	(26,867)	$	(43,139)

See accompanying notes to condensed consolidated financial statements.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Condensed Consolidated Statements of Equity (Deficit)

(in thousands)


	Altisource Equity (Deficit)
	Common stock			Additional paid-in capital		Retained earnings		Treasury stock, at cost		Non-controlling interests		Total
	Shares

Balance, December 31, 2022	25,413	$	25,413	$	149,348	$	118,948	$	(413,358)	$	775	$	(118,874)

Net loss	—	—		—		(12,947)		—		80		(12,867)
Distributions to non-controlling interest holders	—	—		—		—		—		(102)		(102)
Share-based compensation expense	—	—		1,445		—		—		—		1,445
Issuance of restricted share units and restricted shares	—	—		—		(6,058)		6,058		—		—
Issuance of common stock, net of issuance costs	4,550	4,550		15,911		—		—		—		20,461
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances	—	—		—		(3,700)		3,240		—		(460)

Balance, March 31, 2023	29,963	$	29,963	$	166,704	$	96,243	$	(404,060)	$	753	$	(110,397)

Net loss	—	—		—		(18,850)		—		13		(18,837)
Distributions to non-controlling interest holders	—	—		—		—		—		(100)		(100)
Share-based compensation expense	—	—		1,242		—		—		—		1,242
Issuance of restricted share units and restricted shares	—	—		—		(2,259)		2,259		—		—
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances	—	—		—		(30)		27		—		(3)

Balance, June 30, 2023	29,963	$	29,963	$	167,946	$	75,104	$	(401,774)	$	666	$	(128,095)

Net loss	—	—		—		(11,342)		—		62		(11,280)
Distribution to non-controlling interest holders	—	—		—		—		—		(67)		(67)
Reclassification of warrant liability to equity	—	—		6,951		—		—		—		6,951
Share-based compensation expense	—	—		1,231		—		—		—		1,231
Sale of treasury stock, net of transaction costs	—	—		—		(228,269)		246,643		—		18,374
Issuance of restricted share units and restricted shares	—	—		—		(1,153)		1,153		—		—
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances	—	—		—		(465)		417		—		(48)

Balance, September 30, 2023	29,963	$	29,963	$	176,128	$	(166,125)	$	(153,561)	$	661	$	(112,934)

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Condensed Consolidated Statements of Equity (Deficit)

(in thousands)


	Altisource Equity (Deficit)
	Common stock			Additional paid-in capital		Retained earnings		Treasury stock, at cost		Non-controlling interests		Total
	Shares

Balance, December 31, 2023	29,963	$	29,963	$	177,278	$	(180,162)	$	(152,749)	$	615	$	(125,055)

Net loss	—	—		—		(9,198)		—		41		(9,157)
Distributions to non-controlling interest holders	—	—		—		—		—		(19)		(19)
Share-based compensation expense	—	—		2,213		—		—		—		2,213
Exercise of warrants, net of costs	—	—		(398)		(3,722)		4,030		—		(90)
Issuance of restricted share units and restricted shares	—	—		—		(15,860)		15,860		—		—
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances	—	—		—		(9,575)		8,985		—		(590)

Balance, March 31, 2024	29,963	$	29,963	$	179,093	$	(218,517)	$	(123,874)	$	637	$	(132,698)

Net loss	—	—		—		(8,307)		—		35		(8,272)
Distributions to non-controlling interest holders	—	—		—		—		—		(32)		(32)
Share-based compensation expense	—	—		844		—		—		—		844

Issuance of restricted share units and restricted shares	—	—		—		(6,427)		6,427		—		—
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances	—	—		—		(1,100)		1,058		—		(42)

Balance, June 30, 2024	29,963	$	29,963	$	179,937	$	(234,351)	$	(116,389)	$	640	$	(140,200)

Net loss	—	—		—		(9,362)		—		60		(9,302)


Share-based compensation expense	—	—		859		—		—		—		859
Exercise of warrants, net of costs	—	—		(20)		(171)		191		—		—
Issuance of restricted share units and restricted shares	—	—		—		(2,290)		2,290		—		—
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances	—	—		—		(1,371)		1,328		—		(43)

Balance, September 30, 2024	29,963	$	29,963	$	180,776	$	(247,545)	$	(112,580)	$	700	$	(148,686)

See accompanying notes to condensed consolidated financial statements.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Nine months ended September 30,
	2024		2023

Cash flows from operating activities:
Net loss	$	(26,731)	$	(42,984)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	794		1,933
Amortization of right-of-use assets under operating leases	1,190		1,351
Amortization of intangible assets	3,810		3,912
PIK accrual	6,505		4,777
Share-based compensation expense	3,916		3,918
Bad debt expense	776		319
Amortization of debt discount	2,791		2,846
Amortization of debt issuance costs	1,797		1,846
Deferred income taxes	76		(224)
Loss on disposal of fixed assets	14		121

Change in fair value of warrant liability	—		(1,145)
Changes in operating assets and liabilities:
Accounts receivable	(3,335)		(311)

Prepaid expenses and other current assets	3,092		12,350
Other assets	179		(1,891)
Accounts payable and accrued expenses	2,412		(2,475)
Current and non-current operating lease liabilities	(1,233)		(1,351)
Other current and non-current liabilities	323		(587)
Net cash used in operating activities	(3,624)		(17,595)







Cash flows from financing activities:
Proceeds from revolving loan agreement	250		—
Proceeds from issuance of common stock, net of issuance costs	—		20,461
Proceeds from issuance of treasury stock, net of issuance costs	—		18,374
Exercise of Warrants, net of costs	(90)		—
Debt issuance and amendment costs	—		(4,886)
Repayments of long-term debt	—		(30,000)
Distributions to non-controlling interests	(51)		(269)
Payments of tax withholding on issuance of restricted share units and restricted shares	(675)		(511)
Net cash (used in) provided by financing activities	(566)		3,169

Net decrease in cash, cash equivalents and restricted cash	(4,190)		(14,426)
Cash, cash equivalents and restricted cash at the beginning of the period	35,416		54,273

Cash, cash equivalents and restricted cash at the end of the period	$	31,226	$	39,847

Supplemental cash flow information:
Interest paid	$	18,092	$	16,989
Income taxes paid (refunded), net	1,393		(4,034)

Acquisition of right-of-use assets with operating lease liabilities	442		329
Reduction of right-of-use assets from operating lease modifications or reassessments	(87)		(671)

Non-cash investing and financing activities:

Warrants issued in connection with Amended Credit Agreement	—		8,096

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets and the unaudited condensed consolidated statements of cash flows:
	September 30, 2024		September 30, 2023

Cash and cash equivalents	$	28,339	$	36,640
Restricted cash	2,887		3,207
Total cash, cash equivalents and restricted cash reported in the statements of cash flows	$	31,226	$	39,847

See accompanying notes to condensed consolidated financial statements.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Description of Business

Altisource Portfolio Solutions S.A., together with its subsidiaries (which may be referred to as “Altisource,” the “Company,” “we,” “us” or “our”), is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve.

We are publicly traded on the NASDAQ Global Select Market under the symbol “ASPS.” We are organized under the laws of the Grand Duchy of Luxembourg.

We conduct our operations through two reportable segments: Servicer and Real Estate and Origination. In addition, we report Corporate and Others separately (see Note 22 for a description of our business segments).

Basis of Accounting and Presentation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the interim data includes all normal recurring adjustments considered necessary to fairly state the results for the interim periods presented. The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our interim condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Intercompany transactions and accounts have been eliminated in consolidation. Certain prior year balance sheet amounts have been reclassified for consistency with the current year presentation.

Altisource consolidates Best Partners Mortgage Cooperative, Inc., which is managed by The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource. Best Partners Mortgage Cooperative, Inc. is a mortgage cooperative doing business as Lenders One® (“Lenders One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025 (with renewals for three successive five-year periods at MPA’s option).

The management agreement between MPA and Lenders One, pursuant to which MPA is the management company, represents a variable interest in a variable interest entity. MPA is the primary beneficiary of Lenders One as it has the power to direct the activities that most significantly impact the cooperative’s economic performance and the right to receive benefits from the cooperative. As a result, Lenders One is presented in the accompanying condensed consolidated financial statements on a consolidated basis and the interests of the members are reflected as non-controlling interests. As of September 30, 2024, Lenders One had total assets of $0.4 million and total liabilities of $0.4 million. As of December 31, 2023, Lenders One had total assets of $0.4 million and total liabilities of $0.6 million.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 7, 2024.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

Level 1 — Quoted prices in active markets for identical assets and liabilities

Level 2 — Observable inputs other than quoted prices included in Level 1

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities

Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Future Adoption of New Accounting Pronouncement

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are part of an entity’s segment measure of profit or loss and regularly provided to the chief operating decision maker. In addition, it adds or makes clarifications to other segment-related disclosures, such as clarifying that the disclosure requirements in ASC 280 are required for entities with a single reportable segment and that an entity may disclose multiple measures of segment profit and loss. This standard will be effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard amends the Codification to enhance the transparency and decision usefulness of income tax disclosures, to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This standard will be effective for annual periods beginning after December 15, 2024. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements.

NOTE 2 — CUSTOMER CONCENTRATION

Onity

Onity Group Inc. (together with its subsidiaries, “Onity”) (formerly Ocwen Financial Corporation, or “Ocwen”) is a residential mortgage loan servicer of mortgage servicing rights (“MSRs”) it owns, including those MSRs in which others have an economic interest, and a subservicer of loans owned by others.

During the three and nine months ended September 30, 2024, Onity was our largest customer, accounting for 43% and 44%, respectively, of our total revenue. Onity purchases certain mortgage services from us under the terms of services agreements and amendments thereto (collectively, the “Onity Services Agreements”) with terms extending through August 2030. Certain of the Onity Services Agreements contain a “most favored nation” provision and also grant the parties the right to renegotiate pricing, among other things.

Revenue from Onity primarily consists of revenue earned from the loan portfolios serviced and subserviced by Onity when Onity engages us as the service provider, and revenue earned directly from Onity, pursuant to the Onity Services Agreements. For the nine months ended September 30, 2024 and 2023, we recognized revenue from Onity of $52.6 million and $47.3 million, respectively ($17.6 million and $15.7 million for the third quarter of 2024 and 2023, respectively). Revenue from Onity as a percentage of segment and consolidated revenue was as follows:

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023

Servicer and Real Estate	54	%	55	%	55	%	54	%
Origination	—	%	—	%	—	%	—	%
Corporate and Others	—	%	—	%	—	%	—	%
Consolidated revenue	43	%	43	%	44	%	43	%

We earn additional revenue related to the portfolios serviced and subserviced by Onity when a party other than Onity or the MSR owner selects Altisource as the service provider. For the nine months ended September 30, 2024 and 2023, we recognized $7.5 million and $7.3 million, respectively ($2.3 million and $2.3 million for the third quarter of 2024 and 2023, respectively), of such revenue. These amounts are not included in deriving revenue from Onity and revenue from Onity as a percentage of revenue discussed above.

As of September 30, 2024, accounts receivable from Onity totaled $3.9 million, $2.8 million of which was billed and $1.1 million of which was unbilled. As of December 31, 2023, accounts receivable from Onity totaled $3.4 million, $2.2 million of which was billed and $1.2 million of which was unbilled.

Rithm

Rithm Capital Corp. (individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “Rithm”) is an asset manager focused on the real estate and financial services industries.

Onity has disclosed that Rithm is one of its largest servicing clients. As of June 30, 2024, Onity reported that approximately 14% of loans serviced and subserviced by Onity (measured in unpaid principal balance (“UPB”)) and approximately 64% of all delinquent loans that Onity services were related to Rithm MSRs or rights to MSRs (the “Subject MSRs”).

Rithm purchases brokerage services for real estate owned (“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.

For the nine months ended September 30, 2024 and 2023, we recognized revenue from Rithm of $1.8 million and $2.3 million, respectively ($0.5 million and $0.7 million for the third quarter of 2024 and 2023, respectively), under the Brokerage Agreement. For the nine months ended September 30, 2024 and 2023, we recognized additional revenue of $8.6 million and $10.1 million, respectively ($2.5 million and $3.2 million for the third quarter of 2024 and 2023, respectively), relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider.

NOTE 3 — ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consists of the following:


(in thousands)	September 30, 2024		December 31, 2023

Billed	$	10,548	$	9,826
Unbilled	7,179		4,979
	17,727		14,805
Less: Allowance for credit losses	(3,486)		(3,123)

Total	$	14,241	$	11,682

Unbilled accounts receivable consist primarily of certain real estate asset management services, REO and foreclosure sales, title and closing services, for which we generally recognize revenue when the service is provided but collect upon closing of the sale, as well as foreclosure trustee services and the recently launched property renovation services, for which we generally recognize revenues over the service delivery period but bill following completion of the service. We also include amounts in unbilled accounts receivable that are earned during a month and billed in the following month.

We are exposed to credit losses through our sales of products and services to our customers which are recorded as accounts receivable, net on the Company’s condensed consolidated financial statements. We monitor and estimate the allowance for credit losses based on our historical write-offs, historical collections, our analysis of past due accounts based on the contractual

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

terms of the receivables, relevant market and industry reports and our assessment of the economic status of our customers, if known. Estimated credit losses are written off in the period in which the financial asset is determined to be no longer collectible. There can be no assurance that actual results will not differ from estimates or that consideration of these factors in the future will not result in an increase or decrease to our allowance for credit losses.

Changes in the allowance for expected credit losses consist of the following:


			Additions
(in thousands)	Balance at Beginning of Period		Charged to Expenses		Deductions Note(1)		Balance at End of Period

Allowance for expected credit losses:

Three months ended September 30, 2024	$	3,421	$	226	$	(161)	$	3,486
Three months ended September 30, 2023	4,314		(203)		(732)		3,379

Nine months ended September 30, 2024	$	3,123	$	776	$	(413)	$	3,486
Nine months ended September 30, 2023	4,363		319		(1,303)		3,379

______________________________________

(1) Amounts written off as uncollectible or transferred to other accounts or utilized.

NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:


(in thousands)	September 30, 2024		December 31, 2023

Indemnity escrow receivable from Pointillist sale	$	3,160	$	3,201
Prepaid expenses	2,207		3,722
Maintenance agreements, current portion	1,311		1,327
Income taxes receivable	965		325
Restricted cash	23		23

Other current assets	578		2,738

Total	$	8,244	$	11,336

NOTE 5 — PREMISES AND EQUIPMENT, NET

Premises and equipment, net consists of the following:


(in thousands)	September 30, 2024		December 31, 2023

Computer hardware and software	$	46,078	$	46,519
Leasehold improvements	709		1,011
Furniture and fixtures	72		102
Office equipment and other	17		17
	46,876		47,649
Less: Accumulated depreciation and amortization	(45,975)		(45,940)

Total	$	901	$	1,709

Depreciation and amortization expense amounted to $0.8 million and $1.9 million for the nine months ended September 30, 2024 and 2023, respectively ($0.2 million and $0.6 million for the third quarter of 2024 and 2023, respectively), and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying condensed consolidated statements of operations and comprehensive loss.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Premises and equipment, net consist of the following by country:


(in thousands)	September 30, 2024		December 31, 2023

Luxembourg	$	671	$	1,131
India	199		492
United States	31		64
Uruguay	—		22

Total	$	901	$	1,709

NOTE 6 — RIGHT-OF-USE ASSETS UNDER OPERATING LEASES, NET

Right-of-use assets under operating leases, net consists of the following:


(in thousands)	September 30, 2024		December 31, 2023

Right-of-use assets under operating leases	$	6,132	$	7,242
Less: Accumulated amortization	(3,588)		(3,863)

Total	$	2,544	$	3,379

Amortization of operating leases was $1.2 million and $1.4 million for the nine months ended September 30, 2024 and 2023, respectively ($0.4 million and $0.4 million for the third quarter of 2024 and 2023, respectively), and is included in cost of revenue for operating assets and in selling, general and administrative expenses for non-operating assets in the accompanying condensed consolidated statements of operations and comprehensive loss.

NOTE 7 — GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following is a summary of goodwill by segment:


(in thousands)	Servicer and Real Estate		Origination		Corporate and Others		Total







Balance as of September 30, 2024 and December 31, 2023	$	30,681	$	25,279	$	—	$	55,960

Intangible Assets, net

Intangible assets, net consist of the following:


	Weighted average estimated useful life (in years)	Gross carrying amount				Accumulated amortization				Net book value
(in thousands)		September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023

Definite lived intangible assets:
Customer related intangible assets	9	$	213,912	$	214,307	$	(202,481)	$	(200,656)	$	11,431	$	13,651
Operating agreement	20	35,000		35,000		(25,666)		(24,354)		9,334		10,646
Trademarks and trade names	16	9,709		9,709		(7,736)		(7,458)		1,973		2,251



Total		$	258,621	$	259,016	$	(235,883)	$	(232,468)	$	22,738	$	26,548

Amortization expense for definite lived intangible assets was $3.8 million and $3.9 million for the nine months ended September 30, 2024 and 2023, respectively ($1.3 million and $1.4 million for the third quarter of 2024 and 2023, respectively). Forecasted annual definite lived intangible asset amortization expense for 2024 through 2028 is $5.1 million, $5.1 million, $4.9 million, $4.7 million and $4.4 million, respectively.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 8 — OTHER ASSETS

Other assets consist of the following:


(in thousands)	September 30, 2024		December 31, 2023

Restricted cash	$	2,864	$	2,871
Surety bond collateral	2,000		2,000
Security deposits	339		397
Other	1,365		1,462

Total	$	6,568	$	6,730

NOTE 9 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:


(in thousands)	September 30, 2024		December 31, 2023

Accounts payable	$	15,616	$	15,275
Accrued expenses - general	9,263		8,637
Accrued salaries and benefits	5,127		5,048
Income taxes payable	2,494		1,128

Total	$	32,500	$	30,088

Other current liabilities consist of the following:


(in thousands)	September 30, 2024		December 31, 2023

Operating lease liabilities	$	1,502	$	1,570
Revolving loan agreement	250		—
Other	650		907

Total	$	2,402	$	2,477

Revolving Loan Agreement

In connection with the Company’s residential real estate renovation services business, on June 3, 2024 Altisource Solutions, Inc., an indirect subsidiary of Altisource Portfolio Solutions S.A, entered into a revolving loan agreement with a related party, Altisource Asset Management Corporation (“AAMC”) (the “Revolving Loan Agreement”).

Under the terms of the Revolving Loan Agreement, AAMC will make loans to Altisource from time to time, as may be requested by Altisource. The Revolving Loan Agreement provides Altisource the ability to borrow an initial aggregate amount of up to $1.0 million, with the potential for this to be increased up to $3.0 million at the option of AAMC. Amounts that are repaid may be re-borrowed in accordance with the limitations set forth below.

The maturity date of the Revolving Loan Agreement is June 3, 2025 and may be automatically extended for one year on each anniversary of the maturity date. During any extension period, AAMC may terminate the Revolving Loan Agreement upon 150 days prior written notice and the loan will mature upon such termination.

Borrowings under the Revolving Loan Agreement bear interest of 12.00% per annum in cash and are payable monthly in arrears on the first business day of each calendar month. Altisource will pay AAMC a monthly unused commitment fee in an amount equal to 0.25% per annum of the average amount of the unused available credit under the Revolving Loan Agreement.

Altisource’s obligation under the Revolving Loan Agreement is secured by certain receivables related to the Company’s residential real estate renovation services business. The outstanding balance on the Revolving Loan Agreement is due and payable on the maturity date.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

As of September 30, 2024, there was $250 thousand outstanding debt under the Revolving Loan Agreement which is included in other current liabilities in the accompanying consolidated balance sheet.

NOTE 10 — LONG-TERM DEBT

Long-term debt consists of the following:


(in thousands)	September 30, 2024		December 31, 2023

Senior secured term loans	$	230,590	$	224,085
Less: Debt issuance and amendment costs, net	(1,521)		(3,318)


Less: Unamortized discount, net	(2,361)		(5,152)
Net long-term debt	226,708		215,615
Less: Current portion of long-term debt	(226,708)		—








Total long-term debt, less current portion	$	—	$	215,615

Senior Secured Term Loans

In April 2018, Altisource Portfolio Solutions S.A. and its wholly-owned subsidiary, Altisource S.à r.l., entered into a credit agreement with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and certain lenders (the “Credit Agreement”). Under the Credit Agreement, Altisource borrowed $412 million in the form of senior secured term loans (“SSTL”). Effective February 14, 2023, Altisource Portfolio Solutions S.A. and Altisource S.à r.l. entered into Amendment No. 2 to the Credit Agreement (as amended by Amendment No. 2, the “Amended Credit Agreement”). Altisource Portfolio Solutions S.A. and its subsidiaries, subject to the applicable exclusions in the Amended Credit Agreement, are guarantors on the SSTL (collectively, the “Guarantors”). Effective June 1, 2023, the administrative agent and collateral agent of the Amended Credit Agreement changed to Wilmington Trust, N.A.

The maturity date of the SSTL under the Amended Credit Agreement is April 30, 2025. Since the aggregate amount of par paydowns on the SSTL made prior to February 14, 2024 using proceeds from issuances of equity interests or from junior indebtedness (“Aggregate Paydowns”) was equal to or greater than $30 million, the maturity date of the SSTL may be extended at the Company’s option to April 30, 2026. Such extension is conditioned upon the Company’s payment of a 2% payment-in-kind extension fee on or before April 30, 2025 and 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.

All amounts outstanding under the SSTL will 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. There are no mandatory repayments of the SSTL, except as set forth herein, until the April 30, 2025 maturity when the balance is due. 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.

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.

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.

Through March 29, 2023, the SSTL’s interest rate was the Adjusted Eurodollar Rate plus 4.00%. Beginning March 30, 2023, the SSTL bears interest at rates based upon, at our option, the Secured Overnight Financing Rate (“SOFR”) or the Base Rate, as defined in the Amended Credit Agreement. SOFR-based term loans bear interest at a rate per annum equal to SOFR plus 5.00% payable in cash plus a payable in kind (“PIK”) component. Base Rate-based term loans bear interest at a rate per annum equal to the Base Rate plus 4.00% payable in cash plus a PIK component. The PIK component of the interest rate was subject to adjustment based on the amount of Aggregate Paydowns. Since Aggregate Paydowns were $20 million in the first quarter of 2023 and an additional $10 million in the third quarter of 2023, the PIK component was 4.50% for the period March 30, 2023

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

through June 30, 2023 and 3.75% for periods thereafter. The interest rate as of September 30, 2024, including the PIK component, was 14.18%.

If, as of the end of any calendar quarter, (i) the amount of unencumbered cash and cash equivalents of Altisource S.à r.l. and its direct and indirect subsidiaries on a consolidated basis plus (ii) the undrawn commitment amount under the Revolver 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 the Company’s election.

The payment of all amounts owing by Altisource under the Amended Credit Agreement is guaranteed by the Guarantors and is secured by a pledge of all equity interests of certain subsidiaries of Altisource, as well as a lien on substantially all of the assets of Altisource S.à r.l. and the Guarantors, subject to certain exceptions.

The Amended Credit Agreement includes covenants that restrict or limit, among other things, our ability, subject to certain exceptions and baskets, to incur indebtedness; incur liens on our assets; sell, transfer or dispose of assets; make Restricted Junior Payments including share repurchases, dividends and repayment of junior indebtedness; make investments; dispose of equity interests of any Material Subsidiaries; engage in a line of business substantially different than existing businesses and businesses reasonably related, complimentary or ancillary thereto; amend material debt agreements or other material contracts; engage in certain transactions with affiliates; enter into sale/leaseback transactions; grant negative pledges or agree to such other restrictions relating to subsidiary dividends and distributions; make changes to our fiscal year; and engage in mergers and consolidations.

The Amended Credit Agreement contains certain events of default including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the Amended Credit Agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of certain other covenants, subject to cure periods described in the Amended Credit Agreement, (iv) failure to pay principal or interest on any other debt that equals or exceeds $5 million when due, (v) default on any other debt that equals or exceeds $5 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an aggregate amount in excess of $10 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events, (x) the failure of certain Loan Documents to be in full force and effect and (xi) failure to comply in any material respects with the terms of the Warrants or the Warrant Purchase Agreement. If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

The lenders under the Amended Credit Agreement received Warrants to purchase shares of Altisource common stock. The number of Warrant Shares is subject to reduction based on the amount of Aggregate Paydowns (see Note 11 for additional information). The fair value of the Warrants on February 14, 2023 was $8.1 million and was recorded as an increase in debt discount.

In connection with Amendment No. 2, the Company paid $4.9 million to the lenders and to third parties on behalf of the lenders. The $4.9 million payment was recorded as an increase in debt issuance and amendment costs. In connection with Amendment No. 2, the Company paid $3.4 million to advisors and recorded these payments as other expense in the condensed consolidated statements of operations and comprehensive loss.

Deer Park Road Management Company, LP (“Deer Park”), a related party, owns approximately 16% and 15% of Altisource’s common stock as of September 30, 2024 and 2023, respectively, and $41.7 million and $40.2 million of Altisource debt under the Amended Credit Agreement as of September 30, 2024 and 2023, respectively. An employee of Deer Park is a member of Altisource’s Board of Directors. In connection with the Amended Credit Agreement, Deer Park received 292 thousand Warrants. During the nine months ended September 30, 2024 and 2023, Deer Park received interest of $1.1 million and $2.0 million, respectively from the Altisource SSTL.

As of September 30, 2024, debt issuance and amendment costs were $1.5 million, net of $7.9 million of accumulated amortization. As of December 31, 2023, debt issuance and amendment costs were $3.3 million, net of $6.1 million of accumulated amortization.

Revolver

On June 22, 2021 Altisource S.à r.l, a subsidiary of Altisource Portfolio Solutions S.A., entered into a revolving credit facility with STS Master Fund, Ltd. (“STS”) (the “Revolver”). STS is an investment fund managed by Deer Park.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

The Revolver was amended effective February 14, 2023 (the “Amended Revolver”). Under the terms of the Amended Revolver, STS will make loans to Altisource from time to time, in amounts requested by Altisource and Altisource may voluntarily prepay all or any portion of the outstanding loans at any time. The Amended Revolver provides Altisource the ability to borrow a maximum amount of $15.0 million. 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.

Borrowings under the Amended Revolver bear interest of 10.00% per annum in cash and 3.00% per annum PIK and are payable quarterly on the last business day of each March, June, September and December. In connection with the Amended Revolver, Altisource is required to pay a usage fee equal to $0.75 million at the initial extension of credit pursuant to the Amended Revolver.

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.

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.

The Amended Revolver contains certain events of default including (i) failure to pay principal when due or interest or any other amount owing on any other obligation under the Amended Revolver within three business days of becoming due, (ii) failure to perform or observe any material provisions of the Amended Revolver Documents to be performed or complied with and such failure continues for a period of 30 days after written notice is given by the Lender to the Borrower, (iii) material incorrectness of representations and warranties when made, (iv) default on any other debt that equals or exceeds $40.0 million that causes, or gives the holder or holders of such debt the ability to cause, an acceleration of such debt, (v) entry by a court of one or more judgments against us in an aggregate amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events. If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Revolver or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated.

As of September 30, 2024 and December 31, 2023, there was no outstanding debt under the Amended Revolver and Revolver, respectively. As of September 30, 2024 debt issuance costs were $0.1 million, net of $0.5 million of accumulated amortization. As of December 31, 2023 debt issuance costs were $0.2 million, net of $0.4 million of accumulated amortization. Debt issuance costs for the Amended Revolver and Revolver are included in other assets in the accompanying consolidated balance sheet.

NOTE 11 — WARRANTS

On February 14, 2023, the lenders under the Amended Credit Agreement (see Note 10 for additional information) received warrants (the “Warrants”) to purchase 3,223,851 shares of Altisource common stock (the “Warrant Shares”). The number of Warrant Shares was subject to reduction based on the amount of Aggregate Paydowns. During 2023, the Company made $30 million of Aggregate Paydowns. Since Aggregate Paydowns were equal to or greater than $30 million, the number of Warrant Shares was reduced to 1,612,705.

The following table summarizes the activity related to our Warrant Shares:


			Warrant Shares
Outstanding as of December 31, 2023			1,612,705
Exercised			(96,808)
Outstanding as of September 30, 2024			1,515,897

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 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. The Warrants were subject to a lock-up agreement, subject to customary exceptions, which expired on February 16, 2024.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

The Warrants are free standing financial instruments that are legally detachable and separately exercisable from the term loans under the Amended Credit Agreement. At inception, the Warrants were not considered to be indexed to the Company’s stock because the number of Warrant Shares varied based on Aggregate Paydowns. Pursuant to ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity, the outstanding Warrants were recognized as a warrant liability on the balance sheet based on their inception date fair value and subsequently re-measured at each reporting period with changes recorded as a component of other income (expense) in the statement of operations. On September 18, 2023, the Company reached the $30 million in Aggregate Paydowns threshold and the number of Warrant Shares was no longer variable. As a result, the Warrants were considered to be indexed to the Company’s stock and the Warrant Liability was reclassified to equity.

The fair value of the warrant liability was based on the number of Warrant Shares that were expected to be exercisable on and after February 14, 2024 and the Altisource share price less $0.01 at the measurement date.

The fair value of the warrant liability at each of the respective valuation dates is summarized below:


Warrant Liability	Warrant Shares based on Aggregate Paydowns	Expected Warrant Shares that will be exercisable on February 14, 2024	Fair Value per Warrant Share	Fair Value (in thousands)

Fair value at initial measurement date of February 14, 2023	3,223,851	1,612,705	$5.02	$	8,096
Gain on change in fair value of warrant liability				(694)
Fair value at March 31, 2023	2,578,743	1,612,705	$4.59	7,402
Loss on change in fair value of warrant liability				1,774
Fair value at June 30, 2023	2,578,743	1,612,705	$5.69	9,176
Gain on change in fair value of warrant liability				(2,225)
Fair value at September 18, 2023	1,612,705	1,612,705	$4.31	$	6,951

During the nine months ended September 30, 2023, the Company recorded a gain on changes in fair value of warrant liability of $1.1 million ($2.2 million for the third quarter of 2023) (no comparative amount for the three and nine months ended September 30, 2024).

NOTE 12 — OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consist of the following:


(in thousands)	September 30, 2024		December 31, 2023

Income tax liabilities	$	17,450	$	17,506
Operating lease liabilities	1,140		1,950
Deferred revenue	—		9
Other non-current liabilities	116		45

Total	$	18,706	$	19,510

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 13 — FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The following table presents the carrying amount and estimated fair value of financial instruments and certain liabilities measured at fair value as of September 30, 2024 and December 31, 2023. The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP:


	September 30, 2024								December 31, 2023
(in thousands)	Carrying amount		Fair value						Carrying amount		Fair value
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	28,339	$	28,339	$	—	$	—	$	32,522	$	32,522	$	—	$	—
Restricted cash	2,887		2,887		—		—		2,894		2,894		—		—
Short-term receivable	3,160		—		—		3,160		3,201		—		—		3,201


Liabilities:
Revolving loan agreement	250		—		—		250		—		—		—		—
Senior secured term loan	230,590		—		123,366		—		224,085		—		177,027		—

Fair Value Measurements on a Recurring Basis

Cash and cash equivalents and restricted cash are carried at amounts that approximate their fair values due to the highly liquid nature of these instruments and are measured using Level 1 inputs.

The fair value of our SSTL is based on quoted market prices. Based on the frequency of trading, we do not believe that there is an active market for our debt. Therefore, the quoted prices are considered Level 2 inputs.

Our Revolving Loan Agreement was measured using Level 3 inputs based on the present value of the future payments. As quoted market price is not available and there is no trading, we believe that the contractual interest rate represents the market rate at the measurement date and therefore the fair value equals the Revolving Loan Agreement book value.

In connection with the sale of Pointillist on December 1, 2021, $3.5 million was deposited into an escrow account to satisfy certain indemnification claims that may arise on or prior to the first anniversary of the sale closing. The deposit was recorded as a short-term receivable. We measure short-term receivables without a stated interest rate based on the present value of the future payments.

There were no transfers between different levels during the periods presented.

Concentrations of Credit Risk

Financial instruments that subject us to concentrations of credit risk primarily consist of cash and cash equivalents and accounts receivable. Our policy is to deposit our cash and cash equivalents with larger, highly rated financial institutions. The Company derived 43% and 44% of its revenue from Onity for the three and nine months ended September 30, 2024, respectively (see Note 2 for additional information on Onity revenues and accounts receivable balance). The Company strives to mitigate its concentrations of credit risk with respect to accounts receivable by actively monitoring past due accounts and the economic status of larger customers, if known.

NOTE 14 — SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

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. 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. As of September 30, 2024, 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 nine months ended September 30, 2024 and 2023. Luxembourg law limits share repurchases to the balance of Altisource Portfolio Solutions S.A. (unconsolidated parent company) retained earnings, less the value of shares repurchased. As of September 30, 2024, we can repurchase up to approximately $114 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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.

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.

Share-Based Compensation

We issue share-based awards in the form of stock options, restricted shares and restricted share units for certain employees, officers and directors. We recognized share-based compensation expense of $3.9 million and $3.9 million for the nine months ended September 30, 2024 and 2023, respectively ($0.9 million and $1.2 million for the third quarter of 2024 and 2023, respectively). As of September 30, 2024, estimated unrecognized compensation costs related to share-based awards amounted to $1.9 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 1.02 years.

Stock Options

Stock option grants are composed of a combination of service-based, market-based and performance-based options.

Service-Based Options. These options generally vest over three or four years with equal annual vesting and generally expire on the earlier of ten years after the date of grant or following termination of service. A total of 174 thousand service-based options were outstanding as of September 30, 2024.

Market-Based Options. These option grants generally have two components, each of which vests only upon the achievement of certain criteria. The first component, which we refer to as “ordinary performance” grants, generally consists of two-thirds of the market-based grant and begins to vest if the stock price is at least double the exercise price, as long as the stock price realizes a compounded annual gain of at least 20% over the exercise price. The remaining third of the market-based options, which we refer to as “extraordinary performance” grants, generally begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25% over the exercise price. Market-based options generally vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in equal annual installments. Market-based options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service or in the final three years of the option term, in which case vesting will generally continue in accordance with the provisions of the award agreement. A total of 77 thousand market-based options were outstanding as of September 30, 2024.

Performance-Based Options. These option grants generally will vest if certain specific financial measures are achieved; typically with one-fourth vesting on each anniversary of the grant date. The award of performance-based options is adjusted based on the level of achievement specified in the award agreements. If the performance criteria achieved is above threshold performance levels, participants generally have the opportunity to vest in 50% to 200% of the option grants, depending upon performance achieved. If the performance criteria achieved is below a certain threshold, the options are canceled. The options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service in which case vesting will generally continue in accordance with the provisions of the award agreement. There were 461 thousand performance-based options outstanding as of September 30, 2024.

There were no stock option grants during the nine months ended September 30, 2024 and 2023.

The fair values of the performance-based options are determined using the Black-Scholes option pricing model.

We determined the expected option life of all service-based stock option grants using the simplified method, determined based on the graded vesting term plus the contractual term of the options, divided by two. We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table summarizes the grant date fair value of stock options that vested during the periods presented:


	Nine months ended September 30,
(in thousands, except per share data)	2024		2023

Weighted average grant date fair value of stock options granted per share	$	—	$	—
Intrinsic value of options exercised	—		—
Grant date fair value of stock options that vested	83		83

The following table summarizes the activity related to our stock options:


	Number of options	Weighted average exercise price		Weighted average contractual term (in years)	Aggregate intrinsic value (in thousands)

Outstanding as of December 31, 2023	739,189	$	27.04	4.83	$	—
Granted	—	—

Forfeited	(27,500)	81.44

Outstanding as of September 30, 2024	711,689	24.94		3.21	—

Exercisable as of September 30, 2024	543,200	24.34		2.61	—

Other Share-Based Awards

The Company’s other share-based and similar types of awards are comprised of restricted shares and restricted share units. The restricted shares and restricted share units are comprised of a combination of service-based awards, performance-based awards, market-based awards and performance and market-based awards.

Service-Based Awards. These awards generally vest over one-to-four-year periods. A total of