Altisource nearly halves its loss with field services, Hubzu gains

Altisource Portfolio Solutions cut its previous-quarter net loss by 49% in its most recent fiscal period, when property maintenance revenue and new Hubzu real estate auction site inventory increased.

But while the company's second-quarter net loss of $5.8 million marked an improvement over the previous fiscal period, it looks less favorable when compared to the $1.6 million net income it generated in the second quarter of 2018.

Charges associated with ongoing efforts to cut ties with Ocwen Financial and restructuring to refocus on core business lines contributed to the loss. Charges related to these efforts offset year-over-year gains in Altisource's field services and Hubzu business lines during the second quarter.

Altisource's more than $190 million in second-quarter service revenue dropped 9% from a year ago primarily due to the reduction in its Ocwen and Front Yard Residential Corp. portfolios.

"I am very pleased with our progress in streamlining Altisource. We recently sold the majority of the buy-renovate-lease-sell properties and our financial services and mortgage charge-off collections business, and began selling our shares in Front Yard Residential Corp. As we believe our share price doesn't reflect the inherent value of Altisource, we continue to explore ways to maximize shareholder value, which may include, from time to time, exploring the potential sale of one or more of our businesses, third-party investments in certain of our businesses or other forms of strategic transactions," William Shepro, Altisource's chairman and CEO, said in a press release.

"We are also focusing on larger opportunities, including those in our marketplace and field services businesses, where we are making considerable progress. Our ongoing success at winning and on-boarding new business is demonstrated by our 131% growth in Hubzu inventory and 17% growth in field services revenue from customers other than Ocwen, New Residential Investment Corp. and RESI, compared to the second quarter of 2018. Given recent market expansion, program launches with new clients, and scheduled on-boardings, we anticipate these trends to continue."

Analysts had mixed reactions to the company's net loss of $0.36 per share, which adjusts to a net gain of an equal amount when nonrecurring charges are removed.

Altisource's adjusted EPS outperformed by $0.36 and service revenue outperformed by $20.6 million, according to Seeking Alpha. But the company's adjusted EPS missed Zacks' consensus estimate by $0.20 even though its revenue outperformed consensus by more than 15%.

The company's stock price alternately rose and fell in response to its results Thursday morning. It was trading at $20.44 shortly before noon Eastern, when it was down nearly 5% on the day.

Altisource is a spinoff of Ocwen founded by Ocwen's former chairman William Erbey.

Ocwen has faced conflict of interest allegations related to its ties with Altisource.

Altisource previously operated Ocwen's existing proprietary system of record, but Ocwen has since moved its portfolio to a different vendor's system.