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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 June 30, 2023
OR
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)
Luxembourg98-0554932
(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 classTrading SymbolName of each exchange on which registered
Common Stock, $1.00 par value
ASPSNASDAQ 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 July 21, 2023, there were 20,865,944 outstanding shares of the registrant’s common stock (excluding 9,096,804 shares held as treasury stock).


Table of Contents
Table of Contents
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
FORM 10-Q
Page
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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)
June 30,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents$35,041 $51,025 
Accounts receivable, net of allowance for doubtful accounts of $4,314 and $4,363, respectively
13,681 12,989 
Prepaid expenses and other current assets11,063 23,544 
Total current assets59,785 87,558 
Premises and equipment, net 2,842 4,222 
Right-of-use assets under operating leases4,689 5,321 
Goodwill55,960 55,960 
Intangible assets, net29,170 31,730 
Deferred tax assets, net5,029 5,048 
Other assets7,081 5,166 
Total assets$164,556 $195,005 
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable and accrued expenses$32,320 $33,507 
Warrant liability9,176  
Deferred revenue3,075 3,711 
Other current liabilities 2,585 2,867 
Total current liabilities47,156 40,085 
Long-term debt217,881 245,230 
Deferred tax liabilities, net8,745 9,028 
Other non-current liabilities 18,869 19,536 
Commitments, contingencies and regulatory matters (Note 21)
Equity (deficit):
Common stock ($1.00 par value; 100,000 shares authorized, 29,963 issued and 20,866 outstanding as of June 30, 2023; 16,129 outstanding as of December 31, 2022)
29,963 25,413 
Additional paid-in capital167,946 149,348 
Retained earnings75,104 118,948 
Treasury stock, at cost (9,097 shares as of June 30, 2023 and 9,284 shares as of December 31, 2022)
(401,774)(413,358)
Altisource deficit(128,761)(119,649)
Non-controlling interests666 775 
Total deficit(128,095)(118,874)
Total liabilities and deficit$164,556 $195,005 
See accompanying notes to condensed consolidated financial statements.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Condensed Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
Three months ended
June 30,
Six months ended
June 30,
2023202220232022
Revenue$35,235 $40,421 $74,696 $79,937 
Cost of revenue29,703 36,355 60,660 70,224 
Gross profit5,532 4,066 14,036 9,713 
Selling, general and administrative expenses12,341 14,525 24,435 28,499 
Loss from operations(6,809)(10,459)(10,399)(18,786)
Other income (expense), net:
Interest expense(9,904)(3,534)(16,664)(7,090)
Change in fair value of warrant liability(1,774) (1,080) 
Debt amendment costs(101) (3,343) 
Other income (expense), net390 193 1,950 933 
Total other income (expense), net(11,389)(3,341)(19,137)(6,157)
Loss before income taxes and non-controlling interests(18,198)(13,800)(29,536)(24,943)
Income tax provision(639)(1,521)(2,168)(2,407)
Net loss(18,837)(15,321)(31,704)(27,350)
Net income attributable to non-controlling interests(13)(174)(93)(335)
Net loss attributable to Altisource$(18,850)$(15,495)$(31,797)$(27,685)
Loss per share:
Basic$(0.90)$(0.96)$(1.62)$(1.73)
Diluted$(0.90)$(0.96)$(1.62)$(1.73)
Weighted average shares outstanding:
Basic20,840 16,083 19,648 16,020 
Diluted20,840 16,083 19,648 16,020 
Comprehensive loss:
Comprehensive loss, net of tax$(18,837)$(15,321)$(31,704)$(27,350)
Comprehensive income attributable to non-controlling interests(13)(174)(93)(335)
Comprehensive loss attributable to Altisource$(18,850)$(15,495)$(31,797)$(27,685)
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 stockAdditional paid-in capitalRetained earningsTreasury stock, at costNon-controlling interestsTotal
 Shares
Balance, December 31, 202125,413 $25,413 $144,298 $186,592 $(426,445)$1,272 $(68,870)
Net loss— — — (12,190)— 161 (12,029)
Distributions to non-controlling interest holders
— — — — — (264)(264)
Share-based compensation expense
— — 1,290 — — — 1,290 
Issuance of restricted share units and restricted shares
— — — (6,560)6,560 —  
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances
— — — (4,046)3,032 — (1,014)
Balance, March 31, 202225,413 $25,413 $145,588 $163,796 $(416,853)$1,169 $(80,887)
Net loss— — — (15,495)— 174 (15,321)
Distributions to non-controlling interest holders
— — — — — (486)(486)
Share-based compensation expense
— — 1,289 — — — 1,289 
Issuance of restricted share units and restricted shares
— — — (2,384)2,384 —  
Treasury shares withheld for the payment of tax on restricted share unit and restricted share issuances
— — — (38)29 — (9)
Balance, June 30, 202225,413 $25,413 $146,877 $145,879 $(414,440)$857 $(95,414)
Balance, December 31, 202225,413 $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 costs4,550 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, 202329,963 $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, 202329,963 $29,963 $167,946 $75,104 $(401,774)$666 $(128,095)
See accompanying notes to condensed consolidated financial statements.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Six months ended
June 30,
20232022
Cash flows from operating activities:  
Net loss$(31,704)$(27,350)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization1,353 1,846 
Amortization of right-of-use assets under operating leases930 1,745 
Amortization of intangible assets2,560 2,568 
PIK accrual2,556  
Share-based compensation expense2,687 2,579 
Bad debt expense522 600 
Amortization of debt discount1,828 329 
Amortization of debt issuance costs1,249 492 
Deferred income taxes(203)75 
Loss on disposal of fixed assets27 1 
Change in fair value of warrant liability1,080  
Changes in operating assets and liabilities:  
Accounts receivable(1,214)828 
Prepaid expenses and other current assets12,504 (1,566)
Other assets(2,045)125 
Accounts payable and accrued expenses(1,187)(4,861)
Current and non-current operating lease liabilities(960)(1,935)
Other current and non-current liabilities(923)(1,260)
Net cash used in operating activities(10,940)(25,784)
Cash flows from investing activities:  
Additions to premises and equipment (634)
Proceeds from the sale of business 346 
Net cash used in investing activities (288)
Cash flows from financing activities:  
Proceeds from issuance of common stock, net of issuance costs20,461  
Debt issuance and amendment costs(4,886) 
Repayments of long-term debt(20,000) 
Distributions to non-controlling interests(202)(750)
Payments of tax withholding on issuance of restricted share units and restricted shares(463)(1,023)
Net cash used in financing activities(5,090)(1,773)
Net decrease in cash, cash equivalents and restricted cash(16,030)(27,845)
Cash, cash equivalents and restricted cash at the beginning of the period54,273 102,149 
Cash, cash equivalents and restricted cash at the end of the period$38,243 $74,304 
Supplemental cash flow information:  
Interest paid$11,022 $6,218 
Income taxes (refunded) paid, net(4,509)3,497 
Acquisition of right-of-use assets with operating lease liabilities298 710 
Reduction of right-of-use assets from operating lease modifications or reassessments (173)
Non-cash investing and financing activities:  
Net decrease in payables for purchases of premises and equipment$ $107 
Warrants issued in connection with Amended Credit Agreement8,096  
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:
June 30, 2023June 30, 2022
Cash and cash equivalents$35,041 $70,693 
Restricted cash3,202 3,611 
Total cash, cash equivalents and restricted cash reported in the statements of cash flows$38,243 $74,304 
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.
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 June 30, 2023, Lenders One had total assets of $0.9 million and total liabilities of $1.1 million. As of December 31, 2022, Lenders One had total assets of $1.2 million and total liabilities of $1.1 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, 2022, as filed with the SEC on March 30, 2023.
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 1Quoted prices in active markets for identical assets and liabilities
Level 2Observable inputs other than quoted prices included in Level 1
Level 3Unobservable 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.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
NOTE 2 — CUSTOMER CONCENTRATION
Ocwen
Ocwen Financial Corporation (together with its subsidiaries, “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 six months ended June 30, 2023, Ocwen was our largest customer, accounting for 42% of our total revenue for the six months ended June 30, 2023 (40% of our revenue for the second quarter of 2023). Ocwen purchases certain mortgage services from us under the terms of services agreements and amendments thereto (collectively, the “Ocwen Services Agreements”) with terms extending through August 2030. Certain of the Ocwen Services Agreements contain a “most favored nation” provision and also grant the parties the right to renegotiate pricing, among other things.
Revenue from Ocwen primarily consists of revenue earned from the loan portfolios serviced and subserviced by Ocwen when Ocwen engages us as the service provider, and revenue earned directly from Ocwen, pursuant to the Ocwen Services Agreements. For the six months ended June 30, 2023 and 2022, we recognized revenue from Ocwen of $31.6 million and $29.9 million, respectively ($14.0 million and $16.2 million for the second quarter of 2023 and 2022, respectively). Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows:
Three months ended June 30,Six months ended June 30,
2023202220232022
Servicer and Real Estate52 %51 %54 %49 %
Origination % % % %
Corporate and Others % % % %
Consolidated revenue40 %40 %42 %37 %
We earn additional revenue related to the portfolios serviced and subserviced by Ocwen when a party other than Ocwen or the MSRs owner selects Altisource as the service provider. For the six months ended June 30, 2023 and 2022, we recognized revenue of $5.0 million and $5.1 million, respectively ($2.1 million and $2.7 million for the second quarter of 2023 and 2022, respectively), of such revenue. These amounts are not included in deriving revenue from Ocwen and revenue from Ocwen as a percentage of revenue discussed above.
As of June 30, 2023, accounts receivable from Ocwen totaled $3.7 million, $3.0 million of which was billed and $0.7 million of which was unbilled. As of December 31, 2022, accounts receivable from Ocwen totaled $4.0 million, $3.2 million of which was billed and $0.8 million of which was unbilled.
Rithm
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., or “NRZ”) is a real estate investment trust that invests in and manages investments primarily related to residential real estate, including MSRs and excess MSRs.
Ocwen has disclosed that Rithm is a significant client of Ocwen’s. As of March 31, 2023, approximately 16% of loans serviced and subserviced by Ocwen (measured in unpaid principal balance (“UPB”)) and approximately 68% of all delinquent loans that Ocwen 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 six months ended June 30, 2023 and 2022, we recognized revenue from Rithm of $1.6 million and $1.8 million, respectively ($0.80 and $1.0 million for the second quarter of 2023 and 2022, respectively), under the Brokerage Agreement. For the six months ended June 30, 2023 and 2022, we recognized additional revenue of $6.8 million and $7.4 million, respectively ($3.5 million and $3.7 million for the second quarter of 2023 and 2022, respectively), relating to the Subject MSRs when a party other than Rithm selects Altisource as the service provider.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
NOTE 3 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consists of the following:
(in thousands)June 30,
2023
December 31,
2022
Billed$11,832 $11,993 
Unbilled6,163 5,359 
17,995 17,352 
Less: Allowance for credit losses(4,314)(4,363)
Total$13,681 $12,989 
Unbilled accounts receivable consist primarily of certain real estate asset management, REO sales, title and closing services for which we generally recognize revenue when the service is provided but collect upon closing of the sale, and foreclosure trustee 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 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 PeriodCharged to Expenses
Deductions Note(1)
Balance at End of Period
Allowance for expected credit losses:
Six months ended June 30, 2023
$4,363 $522 $571 $4,314 
Six months ended June 30, 2022
5,297 600 1,105 4,792 
______________________________________
(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)June 30,
2023
December 31,
2022
Prepaid expenses$3,527 $5,165 
Income taxes receivable291 7,031 
Maintenance agreements, current portion1,259 1,498 
Indemnity escrow receivable from Pointillist sale3,201 3,223 
Restricted cash23  
Surety bond collateral 4,000 
Other current assets2,762 2,627 
Total$11,063 $23,544 
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
NOTE 5 — PREMISES AND EQUIPMENT, NET
Premises and equipment, net consists of the following:
(in thousands)June 30,
2023
December 31,
2022
Computer hardware and software$46,581 $49,339 
Leasehold improvements2,390 5,794 
Furniture and fixtures102 3,832 
Office equipment and other261 346 
49,334 59,311 
Less: Accumulated depreciation and amortization(46,492)(55,089)
Total$2,842 $4,222 
Depreciation and amortization expense amounted to $1.4 million and $1.8 million for the six months ended June 30, 2023 and 2022, respectively ($0.7 million and $0.9 million for the second quarter of 2023 and 2022, 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.
Premises and equipment, net consist of the following, by country:
(in thousands)June 30,
2023
December 31,
2022
Luxembourg$1,788 $2,455 
India809 1,129 
United States213 586 
Uruguay32 52 
Total$2,842 $4,222 
NOTE 6 — RIGHT-OF-USE ASSETS UNDER OPERATING LEASES, NET
Right-of-use assets under operating leases, net consists of the following:
(in thousands)June 30,
2023
December 31,
2022
Right-of-use assets under operating leases$12,072 $11,808 
Less: Accumulated amortization(7,383)(6,487)
Total$4,689 $5,321 
Amortization of operating leases was $0.9 million and $1.7 million for the six months ended June 30, 2023 and 2022, respectively ($0.5 million and $0.6 million for the second quarter of 2023 and 2022, 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 EstateOriginationCorporate and OthersTotal
Balance as of June 30, 2023 and December 31, 2022
$30,681 $25,279 $ $55,960 
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
Intangible Assets, net
Intangible assets, net consist of the following:
 
Weighted average estimated useful life
(in years)
Gross carrying amountAccumulated amortizationNet book value
(in thousands)June 30,
2023
December 31,
2022
June 30,
2023
December 31,
2022
June 30,
2023
December 31,
2022
Definite lived intangible assets:
Customer related intangible assets9$214,307 $214,307 $(199,094)$(197,594)$15,213 $16,713 
Operating agreement2035,000 35,000 (23,479)(22,604)11,521 12,396 
Trademarks and trade names169,709 9,709 (7,273)(7,088)2,436 2,621 
Total$259,016 $259,016 $(229,846)$(227,286)$29,170 $31,730 
Amortization expense for definite lived intangible assets was $2.6 million and $2.6 million for the six months ended June 30, 2023 and 2022, respectively ($1.3 million and $1.3 million for the second quarter of 2023 and 2022, respectively). Forecasted annual definite lived intangible asset amortization expense for 2023 through 2027 is $5.1 million, $5.1 million, $5.1 million, $4.9 million and $4.7 million, respectively.
NOTE 8 — OTHER ASSETS
Other assets consist of the following:
(in thousands)June 30,
2023
December 31,
2022
Restricted cash$3,179 $3,248 
Security deposits600 596 
Other3,302 1,322 
Total$7,081 $5,166 
NOTE 9 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accounts payable and accrued expenses consist of the following:
(in thousands)June 30,
2023
December 31,
2022
Accounts payable$14,868 $14,981 
Accrued expenses - general10,449 11,858 
Accrued salaries and benefits5,808 5,501 
Income taxes payable1,195 1,167 
Total$32,320 $33,507 
Other current liabilities consist of the following:
(in thousands)June 30,
2023
December 31,
2022
Operating lease liabilities$2,113 $2,097 
Other472 770 
Total$2,585 $2,867 
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
NOTE 10 — WARRANT LIABILITY
On February 14, 2023, the lenders under the Amended Credit Agreement (see Note 11 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 is subject to reduction based on the amount of par paydowns on the senior secured term loans (“SSTL”) in the aggregate using proceeds from issuances of equity interests or from junior indebtedness made prior to February 14, 2024 (“Aggregate Paydowns”) as set forth in the table below.
Aggregate PaydownsWarrant Shares
Less than $20 million3,223,851
$20 million+ but less than below2,578,743
$30 million+1,612,705
During the six months ended June 30, 2023, the Company made payments toward the determination of Aggregate Paydowns of $20 million. As a result, the number of Warrant Shares as of June 30, 2023 is 2,578,743.
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 are subject to a lock-up agreement, subject to customary exceptions, ending two business days after the paydown measurement date.
The Company determined that the Warrants are free standing financial instruments that are legally detachable and separately exercisable from the term loans under the Amended Credit Agreement. The Company also determined that the Warrants are not considered to be indexed to the Company’s stock because the number of Warrant Shares varies based on Aggregate Paydowns and as such are required to be classified as a liability pursuant to ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity. The outstanding Warrants are recognized as a warrant liability on the balance sheet and are measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component of other income (expense) in the statement of operations.
The fair value of the warrant liability is based on the number of Warrant Shares that are 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 LiabilityWarrant Shares based on Aggregate PaydownsExpected Warrant Shares that will be exercisable on February 14, 2024Fair Value per Warrant ShareFair Value
(in thousands)
Fair value at initial measurement date of February 14, 20233,223,8511,612,705$5.02$8,096 
Gain on change in fair value of warrant liability(694)
Fair value at March 31, 20232,578,7431,612,705$4.597,402 
Loss on change in fair value of warrant liability1,774 
Fair value at June 30, 20232,578,7431,612,705$5.69$9,176 
During the six months ended June 30, 2023, the Company recorded a loss on changes in fair value of warrant liability of $1.1 million ($1.8 million for the second quarter of 2023). During the three and six months ended June 30, 2022, there were no warrant liabilities outstanding.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
NOTE 11 — LONG-TERM DEBT
Long-term debt consists of the following:
(in thousands)June 30,
2023
December 31,
2022
Senior Secured Term Loans$229,760 $247,204 
Less: Debt issuance and amendment costs, net(4,575)(878)
Less: Unamortized discount, net(7,101)(833)
Net Senior secured term loans218,084 245,493 
Revolver  
Less: Debt issuance costs, net(203)(263)
Net Revolver(203)(263)
Total Long-term debt$217,881 $245,230 
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 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 certain subsidiaries are guarantors of the SSTL (collectively, the “Guarantors”).
The maturity date of the SSTL under the Amended Credit Agreement is April 30, 2025. If Aggregate Paydowns are equal to or greater than $30 million, then (subject to the representations and warranties being true and correct as of such date and there being no default or event of default being in existence as of such date) the maturity date of the 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. In February 2023, the Company made payments of $20 million toward the determination of Aggregate Paydowns.
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.
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. If the Company selects SOFR, the term loans initially bear interest at a rate per annum equal to SOFR plus 5.00% payable in cash plus 5.00% payable in kind (“PIK”). If the Company selects Base Rate, the loans initially bear interest at a rate per annum equal to the Base Rate plus 4.00% payable in cash plus 5.00% PIK. Base Rate term loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Base Rate and (y) 2.00% plus (ii) 4.00%. The PIK component of the interest rate is subject to adjustment based on the amount of Aggregate Paydowns as set forth in the table below. Based on Aggregate Paydowns of $20 million through June 30, 2023, the PIK component of the interest rate was 4.50%. The interest rate as of June 30, 2023 was 14.49%.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
Aggregate PaydownsPIK Component of Interest Rate
Less than $20 million5.00%
$20 million+ but less than below4.50%
$30 million+ but less than below3.75%
$40 million+ but less than below3.50%
$45 million+ but less than below3.00%
$50 million+ but less than below2.50%
$55 million+ but less than below2.00%
$60 million+ but less than below1.00%
$65 million+ but less than below0.50%
$70 million+0.00%
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 $5.0 million when due, (v) default on any other debt that equals or exceeds $5.0 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 $10.0 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 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 3,223,851 shares of Altisource common stock. The number of Warrant Shares is subject to reduction based on the amount of Aggregate Paydowns (see Note 10 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 $4.8 million to the lenders and to third parties on behalf of the lenders. The $4.8 million payment was recorded as an increase in debt issuance and amendment costs. In connection with Amendment No. 2, the Company paid $3.3 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 20% of Altisource’s common stock and $41.6 million of Altisource debt under the Amended Credit Agreement as of June 30, 2023. Deer Park’s Chief Investment Officer and managing partner was a member of Altisource’s Board of Directors until his resignation on March 1, 2022. The replacement director appointed by the Board of Directors is a current employee of Deer Park. In connection with
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
the Amended Credit Agreement, Deer Park received 583 thousand Warrants. During the six months ended June 30, 2023, Deer Park received interest of $2.0 million from the Altisource SSTL.
As of June 30, 2023, debt issuance and amendment costs were $4.6 million, net of $4.8 million of accumulated amortization. As of December 31, 2022, debt issuance costs were $0.9 million, net of $3.6 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.
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 June 30, 2023 and December 31, 2022, there was no outstanding debt under the Amended Revolver and Revolver, respectively. As of June 30, 2023 and December 31, 2022, debt issuance costs were $0.2 million, net of $0.3 million of accumulated amortization, and $0.3 million, net of $0.3 million of accumulated amortization, respectively.
NOTE 12 — OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consist of the following:
(in thousands)June 30,
2023
December 31,
2022
Income tax liabilities$16,141 $16,079 
Operating lease liabilities2,693 3,371 
Deferred revenue30 82 
Other non-current liabilities5 4 
Total$18,869 $19,536 
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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 June 30, 2023 and December 31, 2022. The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP:
June 30, 2023December 31, 2022
(in thousands)Carrying amountFair valueCarrying amountFair value
Level 1Level 2Level 3Level 1Level 2Level 3
Assets:
Cash and cash equivalents$35,041 $35,041 $ $ $51,025 $51,025 $ $ 
Restricted cash3,202 3,202   3,248 3,248   
Short-term receivable3,201   3,201 3,223   3,223 
Liabilities:
Warrant liability9,176   9,176     
Senior secured term loans229,760  181,798  247,204  200,235  
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 were 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.
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.
Warrant liability is carried at fair value. The fair value of the warrant liability is based on the number of Warrant Shares that are expected to be exercisable and the Altisource share price less $0.01 at the measurement date. The Warrant liability is measured using Level 3 inputs as the determination of fair value includes various assumptions of future Aggregate Paydowns (see Note 10 for additional information).
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 40% and 42% of its revenue from Ocwen for the three and six months ended June 30, 2023 (see Note 2 for additional information on Ocwen 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 June 30, 2023, approximately 3.1 million shares of common stock remain available for repurchase under the program. There were no purchases of shares of common stock during the six months ended June 30, 2023 and 2022. 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, 2023, we can repurchase up to approximately $61 million of our common stock
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances.
Public offering 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.
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 $2.7 million and $2.6 million for the six months ended June 30, 2023 and 2022, respectively ($1.2 million and $1.3 million for the second quarter of 2023 and 2022, respectively). As of June 30, 2023, estimated unrecognized compensation costs related to share-based awards amounted to $4.5 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 1.28 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 186 thousand service-based options were outstanding as of June 30, 2023.
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 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 96 thousand market-based options were outstanding as of June 30, 2023.
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 June 30, 2023.
There were no stock option grants during the six months ended June 30, 2023. The Company granted 105 thousand stock options (at a weighted average exercise price of $11.86 per share) for the six months ended June 30, 2022.
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
The fair values of the performance-based options are determined using the Black-Scholes option pricing model. The following assumptions were used to determine the fair values as of the grant date:
Six months ended June 30, 2022
 Black-Scholes
Risk-free interest rate (%)1.62 
Expected stock price volatility (%)67.75 
Expected dividend yield 
Expected option life (in years)6
Fair value$7.27 
We determined the expected option life of all service-based stock option grants using the simplified method, determined based on the graded vesting term plus the contractual term of the options, divided by two. We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life.
The following table summarizes the grant date fair value of stock options that vested during the periods presented:
 Six months ended June 30,
(in thousands, except per share data)20232022
Weighted average grant date fair value of stock options granted per share$ $8.19 
Intrinsic value of options exercised  
Grant date fair value of stock options that vested83 1,031 
The following table summarizes the activity related to our stock options:
 Number of optionsWeighted average exercise price
Weighted average contractual term (in years)
Aggregate intrinsic value (in thousands)
Outstanding as of December 31, 2022745,277 $27.03 4.83$ 
Granted  
Forfeited(2,288)29.76   
Outstanding as of June 30, 2023742,989 27.02 4.34 
Exercisable as of June 30, 2023547,501 25.25 3.74 
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 948 thousand service-based awards were outstanding as of June 30, 2023.
Performance-Based Awards. These awards generally vest if certain specific financial measures are achieved; generally one-third vests on each anniversary of the grant date or cliff-vest on the third anniversary of the grant date. The number of performance-based restricted shares and restricted share units that may vest is based on the level of achievement as specified in the award agreements. If the performance criteria achieved is above certain financial performance levels and Altisource’s share performance is above certain established criteria, participants have the opportunity to vest in up to 150% of the restricted share unit award for certain awards. If the performance criteria achieved is below certain thresholds, the award is canceled. A total of 143 thousand performance-based awards were outstanding as of June 30, 2023.
Market-Based Awards. 50% of these awards generally vest if certain specific market conditions are achieved over a 30-day period and the remaining 50% of these awards generally vest on the one year anniversary of the initial vesting. The
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
Company estimates the grant date fair value of these awards using a lattice (binomial) model. A total of 112 thousand market-based awards were outstanding as of June 30, 2023.
Performance-Based and Market-Based Awards. These awards generally vest if certain specific financial measures are achieved and if certain specific market conditions are achieved. If the performance criteria achieved is above certain financial performance levels and Altisource’s share performance is above certain established criteria, participants have the opportunity to vest in up to 300% of the restricted share unit award for certain awards. If the performance criteria or the market criteria is below certain thresholds, the award is canceled. The Company estimates the grant date fair value of these awards using a Monte Carlo simulation model. A total of 127 thousand performance-based and market-based awards were outstanding as of June 30, 2023.
The Company granted 891 thousand restricted share units (at a weighted average grant date fair value of $4.82 per share) during the six months ended June 30, 2023. These grants include 57 thousand awards that include both a performance condition and a market condition and 57 thousand performance-based awards, for the six months ended June 30, 2023. The Company granted 46 thousand awards that include both a performance condition and a market condition and 46 thousand performance-based awards, for the six months ended June 30, 2022.
The following table summarizes the activity related to our restricted shares and restricted share units:
Number of restricted shares and restricted share units
Outstanding as of December 31, 2022755,006 
Granted890,810 
Issued(187,424)
Forfeited/canceled(128,596)
Outstanding as of June 30, 20231,329,796 
NOTE 15 — REVENUE
We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. Service revenue consists of amounts attributable to our fee-based services. Reimbursable expenses and non-controlling interests are pass-through items for which we earn no margin. Reimbursable expenses consist of amounts we incur on behalf of our customers in performing our fee-based services that we pass directly on to our customers without a markup. Non-controlling interests represent the earnings of Lenders One, a consolidated entity that is a mortgage cooperative managed, but not owned, by Altisource. The Lenders One members’ earnings are included in revenue and reduced from net income to arrive at net income attributable to Altisource (see Note 1). Our services are provided to customers located in the United States. The components of revenue were as follows:
Three months ended June 30,
Six months ended
June 30,
(in thousands)2023202220232022
Service revenue$33,173 $37,638 $70,244 $75,401 
Reimbursable expenses2,049 2,609 4,359 4,201 
Non-controlling interests13 174 93 335 
Total$35,235 $40,421 $74,696 $79,937 
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ALTISOURCE PORTFOLIO SOLUTIONS S.A.
Notes to Condensed Consolidated Financial Statements (Continued)
Disaggregation of Revenue
Disaggregation of total revenues by segment and major source was as follows:
Three months ended June 30, 2023
(in thousands)Revenue recognized when services are performed or assets are soldRevenue related to technology platforms and professional servicesReimbursable expenses revenueTotal revenue
Servicer and Real Estate$22,538 $2,380 $1,930 $26,848 
Origination8,262 6 119 8,387