ALTISOURCE PORTFOLIO SOLUTIONS SA

Previous wording

•our ability to retain Ocwen Financial Corporation (together with its subsidiaries, “Ocwen”) as a customer or our ability to receive the anticipated volume of referrals from Ocwen;

Current wording

•our ability to retain Onity Group Inc. (together with its subsidiaries, “Onity”) (formerly Ocwen Financial Corporation, or “Ocwen”) as a customer or our ability to receive the anticipated volume of referrals from Onity;

Previous wording

•our ability to retain Rithm Capital Corp. (individually, together with one or more of its subsidiaries, or one or more of its subsidiaries individually, “Rithm”) (formerly New Residential Investment Corp.) as a customer or our ability to receive the anticipated volume of referrals from Rithm;

Current wording

•our ability to retain Rithm Capital Corp. (individually, together with one or more of its subsidiaries, or one or more of its subsidiaries individually, “Rithm”) as a customer or our ability to receive the anticipated volume of referrals from Rithm;

Previous wording

Our Solutions business includes property preservation and inspection services, title insurance (as an agent) and settlement services, real estate valuation services, foreclosure trustee services, and residential and commercial construction inspection and risk mitigation services.

Current wording

Our Solutions business includes property preservation and inspection services, title insurance (as an agent) and settlement services, real estate valuation services, foreclosure trustee services, residential and commercial construction inspection and risk mitigation services, and residential real estate renovation services.

Previous wording

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. 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 government-sponsored enterprises (“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. Further, we believe we are well positioned to gain market share from existing and new customers if they consolidate to larger, full-service providers or outsource services that have historically been performed in-house.

Current wording

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. 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 government-sponsored enterprises (“GSEs”), asset managers, and several large bank and non-bank servicers including Onity and Rithm. We believe we are one of only a few providers with a broad suite of solutions, nationwide coverage and scalability. Further, we believe we are well positioned to gain market share from existing and new customers if they consolidate to larger, full-service providers or outsource services that have historically been performed in-house.

Previous wording

Actions taken by federal, state and local governments, GSEs and mortgage servicers in connection with the COVID-19 pandemic continue to have a profound impact on our business, our customers, and the industries in which we operate. Despite the expiration of certain such measures, we believe servicers are proceeding slowly with foreclosure initiations for borrowers in default and foreclosure initiations may not convert to foreclosure sales and REO at the same pace as prior to the pandemic due to improved home equity and borrower relief options. 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.

Current wording

Actions taken by federal, state and local governments, GSEs and mortgage servicers in connection with the COVID-19 pandemic continue to have a profound impact on our business, our customers, and the industries in which we operate. Despite the expiration of certain such measures, we believe servicers are proceeding slowly with foreclosure initiations for borrowers in default and foreclosure initiations may not convert to foreclosure sales and REO at the same rate or pace as prior to the pandemic due to improved home equity and borrower relief options. 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 continue to negatively impact virtually all of Altisource’s default related services revenue.

Previous wording

During 2023 and the three months ended March 31, 2024, to address lower revenue, we worked to (1) reduce our cost structure, (2) maintain the infrastructure to deliver default related services for our customer base and support the anticipated increase in demand following the expiration of the moratoriums and forbearance plans and CFPB’s rules on temporary loss mitigation measures, and (3) add new Lenders One members, launch new solutions and increase customer adoption of our solutions to accelerate the growth of our origination business.

Current wording

During 2023 and the six months ended June 30, 2024, to address lower revenue, we worked to (1) reduce our cost structure, (2) maintain the infrastructure to deliver default related services for our customer base and support the anticipated increase in demand following the expiration of the moratoriums and forbearance plans and CFPB’s rules on temporary loss mitigation measures, and (3) add new Lenders One members, launch new solutions and increase customer adoption of our solutions to accelerate the growth of our origination business.

Previous wording

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 March 31, 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 three months ended March 31, 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 March 31, 2024, we can repurchase up to approximately $115 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.

Current wording

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 June 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 six months ended June 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 June 30, 2024, we can repurchase up to approximately $115 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.

Previous wording

During the three months ended March 31, 2024, Ocwen was our largest customer, accounting for 45% of our total revenue. Additionally, 7% of our revenue for the three months ended March 31, 2024 was earned on the loan portfolios serviced by Ocwen, when a party other than Ocwen or the mortgage servicing rights (“MSRs”) owner selected Altisource as the service provider.

Current wording

During the three and six months ended June 30, 2024, Onity was our largest customer, accounting for 44% of our total revenue. Additionally, 7% of our revenue for the six months ended June 30, 2024 (6% of our revenue for the second quarter of 2024) was earned on the loan portfolios serviced by Onity, when a party other than Onity or the mortgage servicing rights (“MSRs”) owner selected Altisource as the service provider.

Previous wording

Ocwen has disclosed that it is subject to a number of ongoing regulatory examinations, 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. 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. In addition to the above, Ocwen may become subject to future adverse regulatory or other actions.

Current wording

Onity has disclosed that it is subject to a number of ongoing regulatory examinations, 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 Onity for substantial monetary damages. Previous regulatory actions against Onity have subjected Onity 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 Onity. In addition to the above, Onity may become subject to future adverse regulatory or other actions.

Previous wording

Ocwen has disclosed that Rithm is one of its largest servicing clients. 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.

Current wording

Onity has disclosed that Rithm is one of its largest servicing clients. As of March 31, 2024, Onity reported that approximately 15% of loans serviced and subserviced by Onity (measured in UPB) and approximately 66% of all delinquent loans that Onity services were related to Rithm MSRs or rights to MSRs.

Previous wording

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 example, Ocwen may be required to alter the way it conducts business, including the parties it contracts with for services, it may be required to seek changes to its existing pricing structure with us, it may lose its non-GSE servicing rights or subservicing arrangements or may lose one or more of its state servicing or origination licenses. Additional regulatory actions or adverse financial developments may impose additional restrictions on or require changes in Ocwen’s business that could require it to sell assets or change its business operations. 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.

Current wording

The existence or outcome of Onity regulatory matters or the termination of Onity’s sub-servicing agreements with Rithm or other significant Onity clients may have significant adverse effects on Onity’s business. For example, Onity may be required to alter the way it conducts business, including the parties it contracts with for services, it may be required to seek changes to its existing pricing structure with us, it may lose its non-GSE servicing rights or subservicing arrangements or may lose one or more of its state servicing or origination licenses. Additional regulatory actions or adverse financial developments may impose additional restrictions on or require changes in Onity’s business that could require it to sell assets or change its business operations. Any or all of these effects and others could result in our eventual loss of Onity as a customer or a reduction in the number and/or volume of services it purchases from us or the loss of other customers.

Previous wording

•Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services it purchases from us

Current wording

•Altisource loses Onity as a customer or there is a significant reduction in the volume of services it purchases from us

Previous wording

•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

Current wording

•Onity 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

Previous wording

•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

Current wording

•The contractual relationship between Onity and Rithm changes significantly, including Onity’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

Previous wording

•Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio

Current wording

•Onity loses state servicing licenses in states with a significant number of loans in Onity’s servicing portfolio

Previous wording

•Ocwen is subject to stays, moratoriums, suspensions or other restrictions that limit or delay default-related actions on the loans it services

Current wording

•Onity is subject to stays, moratoriums, suspensions or other restrictions that limit or delay default-related actions on the loans it services

Previous wording

•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

Current wording

•The contractual relationship between Onity and Altisource changes significantly or there are significant changes to our pricing to Onity for services from which we generate material revenue

Previous wording

•Industrywide foreclosure initiations were 5% lower for January and February of 2024 compared to the same period in 2023 (and 35% lower than the same pre-COVID-19 period in 2019)

Current wording

•Industrywide foreclosure initiations were 9% lower for the six months ended June 30, 2024 compared to the same period in 2023 (and 37% lower than the same pre-COVID-19 period in 2019)

Previous wording

•Industrywide foreclosure sales were 11% lower for January and February of 2024 compared to the same period in 2023 (and 52% lower than the same pre-COVID-19 period in 2019)

Current wording

•Industrywide foreclosure sales were 14% lower for the six months ended June 30, 2024 compared to the same period in 2023 (and 53% lower than the same pre-COVID-19 period in 2019)

Previous wording

•The interest rate on the Company’s senior secured term loans was 14.20% for the three months ended March 31, 2024 compared to 8.73% for the same period in 2023

Current wording

•The interest rate on the Company’s senior secured term loans was 14.18% for the six months ended June 30, 2024 compared to 11.61% for the same period in 2023

Previous wording

•On February 14, 2023, Altisource Portfolio Solutions S.A. and its wholly-owned subsidiary, Altisource S.à r.l., entered into Amendment No. 2 to the Credit Agreement. In connection with Amendment No. 2, the Company paid $3.4 million for the three months ended March 31, 2023, to advisors and recorded these payments as other expense in the condensed consolidated statements of operations and comprehensive loss (no comparative amount for the three months ended March 31, 2024)

Current wording

•On February 14, 2023, Altisource Portfolio Solutions S.A. and its wholly-owned subsidiary, Altisource S.à r.l., entered into Amendment No. 2 to the Credit Agreement. In connection with Amendment No. 2, the Company paid $3.3 million for the six months ended June 30, 2023, to advisors and recorded these payments as other expense in the condensed consolidated statements of operations and comprehensive loss (no comparative amount for the six months ended June 30, 2024)

Previous wording

•The Company recognized an income tax provision of $0.7 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. The income tax provision for the three months ended March 31, 2024 was driven primarily by income tax expense on transfer pricing income from India and the United States, no tax benefit on the pretax loss from our Luxembourg operating company and uncertain tax positions.

Current wording

•The Company recognized an income tax provision of $1.4 million and $2.2 million for the six months ended June 30, 2024 and 2023, respectively ($0.7 million and $0.6 million for the second quarter of 2024 and 2023, respectively). The income tax provision for the three and six months ended June 30, 2024 was driven primarily by income tax expense on transfer pricing income from India and the United States, no tax benefit on the pretax loss from our Luxembourg operating company, and uncertain tax positions.

Previous wording

We recognized service revenue of $29.1 million for the three months ended March 31, 2024, a 2% decrease compared to the three months ended March 31, 2023. We also recognized reimbursable expense revenue of $2.4 million for the three months ended March 31, 2024, a 11% increase compared to the three months ended March 31, 2023. The decrease in service revenue for the three months ended March 31, 2024 was driven by $0.8 million of first quarter 2023 non-recurring professional services revenue in the Equator business within the Technology and SaaS Products business and fewer home sales in the Marketplace business, partially offset by growth in our foreclosure trustee business in the Solutions business.

Current wording

We recognized service revenue of $73.8 million for the six months ended June 30, 2024, a 5% increase compared to the six months ended June 30, 2023 ($36.9 million for the second quarter of 2024, an 11% increase compared to the second quarter of 2023). The increase in service revenue for the three and six months ended June 30, 2024 is primarily driven by higher revenue in the Servicer and Real Estate segment from growth in our foreclosure trustee and field services businesses in the Solutions business, partially offset by $0.8 million of first quarter 2023 non-recurring professional services revenue in the Equator business within the Technology and SaaS Products business.

Previous wording

We recognized reimbursable expense revenue of $2.5 million for the three months ended March 31, 2024, a 10% increase compared to the three months ended March 31, 2023. The increase in reimbursable expenses was primarily driven by higher-value REO title related expenses in connection the default title business in the Solutions business within the Servicer and Real Estate segment partially offset by a decrease in property preservation services in the Solutions business within the Servicer and Real Estate segment.

Current wording

We recognized reimbursable expense revenue of $4.8 million for the six months ended June 30, 2024, a 9% increase compared to the six months ended June 30, 2023 ($2.2 million for the second quarter of 2024, an 8% increase compared to the second quarter of 2023). The increase in reimbursable expenses for the six months ended June 30, 2024 was primarily driven by higher-value REO title related expenses in connection the default title business in the Solutions business within the Servicer and Real Estate segment partially offset by a decrease in property preservation services in the Solutions business within the Servicer and Real Estate segment. The increase in reimbursable expenses for the three months ended June 30, 2024 was primarily driven by an increase in property preservation services in the Solutions business within the Servicer and Real Estate segment.

Previous wording

We recognized cost of revenue of $27.2 million for the three months ended March 31, 2024, a 12% decrease compared to the three months ended March 31, 2023. Compensation and benefits for the three months ended March 31, 2024 decreased primarily due to efficiency initiatives and cost savings measures taken in 2023. Outside fees and services for the three months ended March 31, 2024 decreased primarily from lower Field Services revenue in the Solutions business within the Servicer and Real Estate segment. Technology and telecommunications for the three months ended March 31, 2024 decreased primarily due to lower overall headcount. In addition, changes in reimbursable expenses for the three months ended March 31, 2024 are consistent with the changes in reimbursable expense revenue discussed in the revenue section above.

Current wording

We recognized cost of revenue of $53.6 million for the six months ended June 30, 2024, a 12% decrease compared to the six months ended June 30, 2023 ($26.4 million for the second quarter of 2024, an 11% decrease compared to the second quarter of 2023). Compensation and benefits for the three and six months ended June 30, 2024 decreased primarily due to efficiency initiatives and cost savings measures taken in 2023. Technology and telecommunications for the three and six months ended June 30, 2024 decreased primarily due to lower overall headcount. In addition, changes in reimbursable expenses for the six months ended June 30, 2024 are consistent with the changes in reimbursable expense revenue discussed in the revenue section above.

Previous wording

Gross profit increased to $12.3 million, representing 33% of service revenue, for the three months ended March 31, 2024 compared to $8.5 million, representing 23% of service revenue, for the three months ended March 31, 2023. Gross profit as a percentage of service revenue for the three months ended March 31, 2024 increased compared to the three months ended March 31, 2023 primarily due to margin expansion in both the Servicer and Real Estate segment and the Origination segment from efficiency initiatives and lower corporate costs as a percentage of revenue.

Current wording

Gross profit increased to $25.0 million, representing 34% of service revenue, for the six months ended June 30, 2024 compared to $14.0 million, representing 20% of service revenue, for the six months ended June 30, 2023 (increased to $12.7 million, representing 34% of service revenue, for the second quarter of 2024, compared to $5.5 million, representing 17% of service revenue, for the second quarter of 2023) . Gross profit as a percentage of service revenue for the three and six months ended ended June 30, 2024 increased compared to the three and six months ended ended June 30, 2023 primarily due to margin expansion in both the Servicer and Real Estate segment and the Origination segment from efficiency initiatives and lower corporate costs as a percentage of revenue.

Previous wording

SG&A expenses for the three months ended March 31, 2024 of $12.9 million increased by 6% compared to the three months ended March 31, 2023. The increase for the three months ended March 31, 2024 was primarily driven by higher professional services and other expenses partially offset by lower occupancy related costs. Professional services for the three months ended March 31, 2024 increased primarily due to accruals for potential settlements of certain legacy indemnity claims and estimated legal matters. Other expenses increased due to the reversal of bad debt expense from collection of aged receivables in the first quarter of 2023. Occupancy related costs and compensation and benefits decreased from efficiency and cost reductions measures.

Current wording

SG&A expenses for the six months ended June 30, 2024 of $23.5 million decreased by 4% compared to the six months ended June 30, 2023 ($10.6 million for the second quarter of 2024, a 14% decrease compared to the second quarter of 2023). The decrease for the six months ended June 30, 2024 was primarily driven by lower compensation and benefits and occupancy related costs, partially offset by higher professional services. Compensation and benefits and occupancy related costs for the three and six months ended months ended June 30, 2024 decreased from efficiency and cost reductions measures. Professional services for the six months ended June 30, 2024 increased primarily due to accruals for potential settlements of certain legacy indemnity claims and estimated legal matters.

Previous wording

Loss from operations for the three months ended March 31, 2024 was $(0.5) million, representing (1)% of service revenue, compared to $(3.6) million, representing (10)% of service revenue, for the three months ended March 31, 2023. Loss from operations as a percentage of service revenue improved for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily as a result of higher gross profit margins.

Current wording

Income (loss) from operations for the six months ended June 30, 2024 was $1.5 million, representing 2% of service revenue, compared to $(10.4) million, representing (15)% of service revenue, for the six months ended June 30, 2023 (increased to $2.1 million, representing 6% of service revenue, for the second quarter of 2024, compared to $(6.8) million representing (21)% of service revenue for the second quarter of 2023). Income (loss) from operations as a percentage of service revenue improved for the three and six months ended June 30, 2024 compared to the three and six months ended ended June 30, 2023, primarily as a result of higher gross profit margins and lower SG&A expenses.

Previous wording

Other income (expense), net was $(7.9) million for the three months ended March 31, 2024 compared to $(7.7) million for the three months ended March 31, 2023. The change for the three months ended March 31, 2024 was primarily driven by higher interest expense and a gain on the change in fair value of the warrant liability for the three months ended March 31, 2023 (no comparable amount for the three months ended March 31, 2024), largely offset by lower debt amendment costs. The higher interest expense was driven by higher interest rates on our amended SSTL and higher amortization of debt discount and debt issuance and amendment costs.

Current wording

Other income (expense), net was $(17.5) million for the six months ended June 30, 2024 compared to $(19.1) million for the six months ended June 30, 2023 ($(9.6) million for the second quarter of 2024 and $(11.4) million for the second quarter of 2023). The change for the three and six months ended June 30, 2024 was primarily driven by lower debt amendment costs and a loss on the change in fair value of the warrant liability for the three and six months ended June 30, 2023 (no comparable amount for the three and six months ended June 30, 2024). The lower costs for the six months ended June 30, 2024 was partially offset by higher interest expense driven by higher interest rates on our amended SSTL.

Previous wording

We recognized an income tax provision of $0.7 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. The income tax provision was driven primarily by income tax expense on transfer pricing income from India and the United States, no tax benefit on the pretax loss from our Luxembourg operating company and uncertain tax positions.

Current wording

We recognized an income tax provision of $1.4 million and $2.2 million for the six months ended June 30, 2024 and 2023, respectively ($0.7 million and $0.6 million for the second quarter of 2024 and 2023, respectively). The income tax provision for the three and six months ended June 30, 2024 was driven primarily by income tax expense on transfer pricing income from India and the United States, no tax benefit on the pretax loss from our Luxembourg operating company, and uncertain tax positions.

Previous wording

Cost of revenue for the three months ended March 31, 2024 of $19.1 million decreased by 3% compared to the three months ended March 31, 2023. The decrease in cost of revenue for the three months ended March 31, 2024 is primarily driven by lower outside fees and services primarily in Field Services in the Solutions business and lower compensation and benefits from efficiency initiatives.

Current wording

Cost of revenue for the six months ended June 30, 2024 of $37.8 million increased by less than 1% compared to the six months ended June 30, 2023 ($18.7 million for the second quarter of 2024, a 4% increased compared to the second quarter of 2023). The increase in cost of revenue for the three and six months ended June 30, 2024 is primarily driven by higher outside fees and services primarily in the foreclosure trustee business in the Solutions business and higher reimbursable expenses, partially offset by lower compensation and benefits from efficiency initiatives and cost savings measures.

Previous wording

Gross profit increased to $12.4 million, representing 43% of service revenue, for the three months ended March 31, 2024 compared to $12.2 million, representing 41% of service revenue, for the three months ended March 31, 2023. Gross profit as a percentage of service revenue for the three months ended March 31, 2024 increased primarily due to price increases for certain services and efficiency initiatives and cost savings measures. Our margins can vary substantially depending upon the service revenue mix.

Current wording

Gross profit increased to $24.8 million, representing 43% of service revenue, for the six months ended June 30, 2024 compared to $21.0 million, representing 38% of service revenue, for the six months ended June 30, 2023 (increased to $12.4 million, representing 43% of service revenue, for the second quarter of 2024, compared to $8.8 million, representing 35% of service revenue, for the second quarter of 2023). Gross profit as a percentage of service revenue for the three and six months ended June 30, 2024 increased primarily due to price increases for certain services and efficiency initiatives and cost savings measures. Our margins can vary substantially depending upon the service revenue mix.

Previous wording

SG&A for the three months ended March 31, 2024 of $3.1 million increased by 35% compared to the three months ended March 31, 2023. The increase in SG&A for the three months ended March 31, 2024 is primarily due to higher professional services and other expenses, partially offset by lower compensation and benefits. Professional services for the three months ended March 31, 2024 increased primarily due to accruals for potential settlements of certain legacy indemnity claims. Other expenses increased due to the reversal of bad debt expense from collection of aged receivables in the first quarter of 2023. Compensation and benefits decreased from efficiency and cost reduction measures.

Current wording

SG&A for the six months ended June 30, 2024 of $5.5 million increased by 11% compared to the six months ended June 30, 2023 ($2.4 million for the second quarter of 2024, a 9% decrease compared to the second quarter of 2023). The increase in SG&A for the six months ended June 30, 2024 is primarily due to higher professional services, partially offset by lower compensation and benefits. The decrease in SG&A for the three months ended June 30, 2024 is primarily due to lower compensation and benefits and other expenses, partially offset by higher professional services. Professional services for the three and six months ended June 30, 2024 increased primarily due to accruals for potential settlements of certain legacy indemnity claims. Compensation and benefits for the three and six months ended June 30, 2024 decreased from efficiency and cost reduction measures. Other expenses for the three months ended June 30, 2024 decreased from lower bad debt expense.

Previous wording

Income from operations decreased to $9.3 million, representing 32% of service revenue, for the three months ended March 31, 2024 compared to $9.9 million, representing 33% of service revenue, for the three months ended March 31, 2023. The decrease in operating income as a percentage of service revenue for the three months ended March 31, 2024 is primarily the result of higher SG&A expenses, partially offset by higher gross profit margins.

Current wording

Income from operations increased to $19.3 million, representing 33% of service revenue, for the six months ended June 30, 2024 compared to $16.1 million, representing 29% of service revenue, for the six months ended June 30, 2023 (increased to $10.0 million, representing 34% of service revenue, for the second quarter of 2024, compared to $6.2 million, representing 25% of service revenue for the second quarter of 2023). The increase in operating income as a percentage of service revenue for the six months ended June 30, 2024 is primarily the result of higher gross profit margins, as discussed above, partially offset by higher SG&A expenses. The increase in operating income as a percentage of service revenue for the three months ended June 30, 2024 is primarily the result of higher gross profit margins and lower SG&A expenses.

Previous wording

We recognized service revenue of $7.8 million for the three months ended March 31, 2024, a 7% increase compared to the three months ended March 31, 2023. We also recognized reimbursable expense revenue of $0.1 million for the three months ended

Current wording

We recognized service revenue of $15.6 million for the six months ended June 30, 2024, a 1% increase compared to the six months ended June 30, 2023 ($7.8 million for the second quarter of 2024, a 5% decrease compared to the second quarter of 2023). We also recognized reimbursable expense revenue of $0.2 million for the six months ended June 30, 2024, a 2% decrease compared to the six months ended June 30, 2023 ($0.1 million for the second quarter of 2024, a 4% increase compared to the second quarter of 2023). The increase in service revenue in the Origination segment for the six months ended June 30, 2024 is primarily driven by Lenders One growth with our new reseller products, partially offset by the 4% market decrease in mortgage origination volume and the decline in the Solutions business revenue driven by a lower volume of outsourced fulfillment services. The decrease in service revenue in the Origination segment for the three months ended June 30, 2024 is primarily driven by the 13% market decrease in mortgage origination volume, partially offset by sales wins from our newer reseller products.

Previous wording

Cost of revenue for the three months ended March 31, 2024 of $6.1 million decreased by 18% compared to the three months ended March 31, 2023. The decrease in cost of revenue in the Solutions business for the three months ended March 31, 2024 was primarily driven by the prior year alignment of compensation and benefits with lower origination volume.

Current wording

Cost of revenue for the six months ended June 30, 2024 of $12.5 million decreased by 19% compared to the six months ended June 30, 2023 ($6.4 million for the second quarter of 2024, a 21% decrease compared to the second quarter of 2023). The decrease in cost of revenue for the three and six months ended June 30, 2024 was primarily driven by the prior year alignment of compensation and benefits with lower origination volume and lower outside fees and services from lower revenue.

Previous wording

SG&A for the three months ended March 31, 2024 of $2.0 million increased by 13% compared to the three months ended March 31, 2023. The increase in SG&A for the three months ended March 31, 2024 is primarily due to higher other expenses from the first quarter 2023 reversal of bad debt expense from collection of aged receivables partially offset by lower compensation and benefits from efficiency and cost reduction measures.

Current wording

SG&A for the six months ended June 30, 2024 of $3.7 million decreased by 9% compared to the six months ended June 30, 2023 ($1.7 million for the second quarter of 2024, a 26% decrease compared to the second quarter of 2023). The decrease in SG&A for the three and six months ended June 30, 2024 is primarily due to lower professional services from lower legal-related costs and lower compensation and benefits from efficiency and cost reduction measures. The decrease in SG&A for the six months ended June 30, 2024 is partially offset by higher other expenses from the first quarter 2023 reversal of bad debt expense from collection of aged receivables.

Previous wording

Loss from operations decreased to $(0.1) million, representing (2)% of service revenue, for the three months ended March 31, 2024 compared to $(1.7) million, representing (23)% of service revenue, for the three months ended March 31, 2023. The improvement in operating loss as a percentage of service revenue for the three months ended March 31, 2024 is primarily from higher gross profit margins.

Current wording

Loss from operations decreased to $(0.2) million, representing (1)% of service revenue, for the six months ended June 30, 2024 compared to $(3.6) million, representing (23)% of service revenue, for the six months ended June 30, 2023 (decreased to $(0.1) million, representing (1)% of service revenue for the second quarter of 2024, compared to $(2.0) million, representing (24)% of service revenue for the second quarter of 2023). The improvement in operating loss as a percentage of service revenue for the three and six months ended June 30, 2024 is primarily from lower SG&A expenses and higher gross profit margins.

Previous wording

Cost of revenue for the three months ended March 31, 2024 of $1.9 million decreased by 50% compared to the three months ended March 31, 2023. The decrease in cost of revenue for the three months ended March 31, 2024 is primarily driven by lower compensation and benefits and technology and telecommunications due to efficiency initiatives and cost savings initiatives.

Current wording

Cost of revenue for the six months ended June 30, 2024 of $3.2 million decreased by 56% compared to the six months ended June 30, 2023 ($1.3 million for the second quarter of 2024, a 63% decrease compared to the second quarter of 2023). The decrease in cost of revenue for the three and six months ended June 30, 2024 is primarily driven by lower compensation and benefits and technology and telecommunications due to efficiency initiatives and cost savings initiatives.

Previous wording

SG&A for the three months ended March 31, 2024 of $7.8 million decreased by 3% compared to the three months ended March 31, 2023. The decrease for the three months ended March 31, 2024 is primarily driven by lower occupancy related costs partially offset by higher professional services. The decrease for the three months ended March 31, 2024 in occupancy related costs was driven by efficiency initiatives and cost savings measures. Professional services for the three months ended March 31, 2024 increased primarily due to accruals for estimated legal matters.

Current wording

SG&A for the six months ended June 30, 2024 of $14.3 million decreased by 7% compared to the six months ended June 30, 2023 ($6.5 million for the second quarter of 2024, a 12% decrease compared to the second quarter of 2023). The decrease for the three and six months ended June 30, 2024 is primarily driven by lower compensation and benefits and occupancy related costs driven by efficiency initiatives and cost savings measures. The decrease for the six months ended June 30, 2024 is partially offset by higher professional services primarily due to higher legal-related costs.