Good day, and thank you for standing by. Welcome to the Altisource third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising you that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Michelle Esterman, Chief Financial Officer. Go ahead, Michelle. Thank you, operator. We first want to remind you that the earnings release, Form 10-Q, and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ. In addition to the usual uncertainty associated with forward-looking statements, the continuing COVID-19 pandemic and current economic environment makes it extremely difficult to predict the future state of the economy and its potential impact on Altisource. Please review the forward-looking statements section in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2021 Form 10-K, which describes factors that may lead to different results. We undertake no obligation to update these statements, financial scenarios, and projections previously provided or provided therein as a result of change in circumstances, new information, or future events. During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I'll now turn the call over to Bill. Thanks, Michelle. Good morning, and thank you for joining today's call. We'll begin with slide four. I am encouraged by our third quarter results and performance. During the quarter, we focused on improving segment margins, growing sales wins, and reducing costs. Our servicer and real estate segment continues to benefit from the restart of the default business and operational efficiencies, with 45% year-over-year adjusted EBITDA growth on 14% service revenue growth. Our origination segment year-over-year revenue decline was modestly better than the market-wide decline in origination volume. Despite the difficult origination market and our revenue decline, we reduced our origination segment's adjusted EBITDA loss compared to the second quarter and had strong sales wins that we estimate represent $10 million of annualized revenue on a stabilized basis. In corporate, our costs declined by $5.9 million or 25% over the third quarter of 2021 from the sale of the Pointillist business, cost savings initiatives, and the assignment of our sales and marketing employees to the business segments. We ended the quarter with $63.8 million in cash. In the third quarter, our cash burn declined by $2.7 million or 28% compared to the second quarter. We believe our cash burn will further decline in the fourth quarter and continue to anticipate ending the year with between $60 million and $65 million of cash, with the estimate fluctuating up or down based on working capital and other factors. Our estimate includes the anticipated fourth quarter refund of approximately $5 million in U.S. taxes and receipt of $3.5 million in escrow funds from the Pointillist sale, assuming no indemnification claims. Turning to slide five and our servicer and real estate segment. Compared to the third quarter of 2021, we grew service revenue and adjusted EBITDA and improved our gross profit and adjusted EBITDA margins. Our revenue growth reflects the beginning of the recovery of the default market following the September 2021 restart of foreclosures on pre-pandemic delinquencies and the December 31st expiration of most of the remaining pandemic-related borrower relief measures. Adjusted EBITDA and margin improvements reflect our greater scale, product mix, and cost savings initiatives. While the performance of our default business is improving, we believe that we are only in the first phase of a multi-phase recovery for our default-related revenue. In addition to sales and marketing wins, which I will cover shortly, Altisource's default business revenue growth is primarily driven by three market factors. First, the number of foreclosure starts. Second, the timing from foreclosure starts to foreclosure auctions and REO sales. Third, the percentage of foreclosure starts that ultimately convert to foreclosure auctions. Beginning with foreclosure starts in slide six. For the first nine months of 2022, foreclosure starts were 386% higher than the same period in 2021. This is primarily driving the growth of our pre-foreclosure solutions, including title, valuation, trustee, and field services. Despite the 2022 increase in foreclosure starts, they are still 45% below the same period in 2019. We believe this is due to the timing for servicers to initiate foreclosures on delinquent loans, post-expiration of the moratoriums, and represents a significant opportunity for revenue growth as the market returns to pre-pandemic foreclosure start levels. The second market factor driving Altisource's default-related revenue growth is the timing from foreclosure start to foreclosure auction and REO sale. We estimate that in today's environment, it typically takes on average two years to convert foreclosure starts to foreclosure sales and another six months to market and sell the REO. Due to this timing, we anticipate that our later stage foreclosure auction and REO asset management services won't fully benefit from the early 2022 higher foreclosure starts until late 2023 or early 2024. Turning to slide seven and the third market factor, the conversion rate of foreclosure inventory to foreclosure sales. For the first nine months of 2022, foreclosure sales were 45% higher than the same period in 2021, but significantly lower than the 386% growth in foreclosure starts. We believe foreclosure sales haven't grown at the same rate as foreclosure starts for two reasons. First, following the 2022 restart of the default market, a greater percentage of loans in foreclosure are from 2022 foreclosure starts, and the weighted average age of foreclosures haven't had sufficient time to reach historical norms. Second, over the past couple of years, we believe distressed homeowners have been able to sell their home or modify or refinance their loan before the foreclosure sale due to strong home price appreciation from the historically low interest rate environment. Recently, interest rates have more than doubled to approximately 7%, reducing affordability to levels not seen since October 1985. Because affordability is directly correlated to home values, we share the view of many industry experts that home values are going to decline, leaving distressed homeowners with fewer options. As newer foreclosure season and rising interest rates become priced into home values, we believe foreclosure sale conversion rates should return to 2019 levels or higher. We anticipate this will drive further growth for our solutions that support foreclosure auctions and REO asset management, including valuation, title, field services, and our higher margin brokerage and auction business. In addition to the three market factors I just discussed, should delinquency rates rise above pre-pandemic levels, which is looking more likely in this economic environment, we would expect foreclosure starts and sales to exceed 2019 pre-pandemic levels and support further growth for our servicer and real estate segment. We estimate for every 1% increase in 30-day delinquency rates, the addressable market for our default services would increase by about $700 million. While it's difficult to predict the manner and timing of the recovery of the default market, slide illustrates what we believe Altisource's run rate revenue and adjusted EBITDA could be after the default market returns to the pre-pandemic environment. Slide 16 summarizes the assumptions we used in arriving at the run rate scenario. To isolate the impact from the default market returning to normal, we held revenue from the origination segment for the last 12 months constant and applied 2019 origination adjusted EBITDA margins to this revenue. Under this scenario, we estimate generating $42 million of adjusted EBITDA on $253 million of service revenue. Of course, if delinquency rates rise above pre-pandemic levels, we would anticipate our revenue and earnings would be higher. In addition to growth from the recovery of the default market, we are focused on growing our servicer and real estate segment sales pipeline and are making good progress. During the third quarter, we won and are in various stages of onboarding new business with an estimated $4 million of annualized revenue on a stabilized basis. In addition, the midpoint of our average weighted sales pipeline is currently $36 million on an annualized and stabilized basis. Turning to slide nine and our origination segment. The origination market continues to face challenges, with the latest MBA report estimating that third quarter origination volume declined by 29% compared to the second quarter, and full year origination volume is forecasted to decline by 49% compared to last year. Compared to the second quarter, our origination segment's revenue decline outperformed the market. This reflects significantly better than market performance from the Lenders One business as we gain traction with our solutions that are designed to help members save money. This was partially offset by performance that was largely in line with the market for most of our other origination businesses. With a decline in origination volume and margins, originators have turned their attention to reducing costs and are increasingly looking to purchase Lenders One solutions that help them do so. As you can see on the left-hand side of the slide, during the quarter, we won an estimated annualized $10 million in new business on a stabilized basis and ended the quarter with an annualized average weighted sales pipeline of $23 million at the midpoint. Importantly, we are making progress translating these sales wins to revenue. As you can see on the slide, we have won an estimated $20 million in new business on a stabilized basis in 2022 and have recognized $1.3 million of revenue related to these wins. As we onboard and scale these wins, we believe there's significant additional revenue to be realized. While focusing on sales growth, we are also addressing our cost structure to improve the financial results of the origination businesses most impacted by lower origination volumes. As a result, we reduced the origination segment's adjusted EBITDA loss by $600,000 or 25%. Compared to the second quarter, despite the decline in service revenue as we benefit from our cost reduction initiatives. We believe with revenue growth and cost discipline, earnings from our origination segment should continue to improve. Finally, we continue to maintain cost discipline in our corporate segment, with costs down by $5.9 million or 25% over the third quarter of 2021 from the sale of the Pointillist business, cost savings initiatives, and the assignment of sales and marketing employees to the business segments. We are encouraged with our third quarter results and believe we are well-positioned for continued adjusted EBITDA improvement. In our servicer and real estate business, we should benefit from the market tailwinds, strong sales pipeline, and efficiency initiatives. In our origination business, we believe we are building an exciting and innovative business that we anticipate will benefit from sales wins and cost savings initiatives. The improving performance of our segments, combined with cost discipline in corporate, should help us return to a growth company and create substantial value for our stakeholders. I'll now open up the call for questions. Operator? Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while I compile the Q&A section. One moment for our first question. Our first question comes from the line of Mike Grondahl with Northland Securities. Go ahead, your line is now open. Hey, guys. Good morning. Couple questions. First one, Bill, when you were talking about the foreclosure sales conversion rate, did you say what the level or rate was today and what it was during kind of pre-pandemic normal levels? Could you let us know those? Sure. Yeah. Michelle, can you refer Mike to the slide- Sure. Slide seven, Mike that shows. Maybe you can provide some commentary on where what it was and what it is. Sure. If you look at the graph on the left-hand side of slide seven, the green line reflects the percentage of foreclosure sales as a percentage of beginning foreclosure inventory by quarter. What you can see is back in, you know, 2018, 2019 periods, the percentage was about, you know, 14, 15% per quarter. You can see today, you know, you're at about 7%, 6%-7%. Got it. That's just the definition of that, foreclosure sales as a percentage of beginning inventory. Okay. Beginning inventory, you know, the number of homes that are in foreclosure at the beginning of the quarter versus the number of sales during the quarter. Got it. You're running at about half the levels of This is the total market. Yes. Got total market. Okay. Then Bill, you know, in the press release, it talks about servicer in real estate having wins of annual revenue of $30-$40 million in originations, sort of $21-$23 million. I think you mentioned you got $1.3 million of that on the origination side. How long does it take to get this annual revenue in both- Yeah of these categories? That's a great question, Mike, and something we're very focused on is converting the wins to revenue. On the servicer side, don't hold me to exact numbers. We had about $20 million worth of wins this year, but have only generated about $1.5 million of revenue from those wins this year. I can tell you know, we're very actively onboarding. A lot of these wins are in Lenders One. We're very actively onboarding these customers. I think we have seven or eight client onboardings in the month of October alone. As we onboard those customers and then ramp those products across those customers' loan officers, we would expect to over time go from the 1.5 million run rate, or you know, to the $20 million, or on the origination side. On the servicer side, you know, same thing. We've won some deals. I think the dollar amount of the wins is smaller than on the origination side, but it takes time from when you win a transaction to when you onboard the client. For example, a month or two ago, we just onboarded you know, a household name bank in our field services business. We'll take time before that client fully ramps to the revenue we expect. Fair. Next, there's been a press release or two about Lenders One, I think getting in a couple Walmarts. I don't know, can you just describe that opportunity and is, you know, how that affects Altisource? Sure. We've been having a dialogue with Walmart for probably a couple of years now, and discussing ways in which we can potentially provide education to Walmart's customers, help make the stores a little bit stickier in terms of customer retention and as an opportunity to provide our Lenders One members to drive more loans to the top of their funnel. Particularly in this environment, it's a very tough origination environment. We've created a relationship where we're leasing space from Walmart that we in turn essentially sublease to members of Lenders One. Over time, you know, we're in a pilot program now, but over time, we'll be making money for providing all the services related to the lease and putting in place the sublease between us and our members. We've opened three stores so far. We feel really good about it. Our members are very excited. They like the idea of being able to provide loans to that demographic and to grow that component of their business. We're cautiously optimistic that this could turn into a meaningful program for our members of Lenders One, and over time, generate attractive income for Altisource. Got it. Then just lastly, you know, in the beginning of your comments, you talked about two years foreclosure starts become sales and then maybe six-month marketing and actual sale. Did I hear you right, like, you're hoping that the inflection in service revenue is sorta second half 2023, first half 2024. Is that sort of current thinking? Yeah. For all those foreclosure starts that have increased, think about the first half of this year, at least compared to 2021, we're starting to generate the early pre-foreclosure services on those foreclosure starts. As those foreclosures work through the foreclosure process over roughly a couple years. Some states it may be as short as six or nine months. Other states, it could take a couple of years to complete the foreclosure process. For those loans that get all the way to the end and then convert to REO, it then takes another six months to sell the REO. Some of our highest margin businesses take place at the very end of that process. We won't benefit from the substantial increase in foreclosure starts in our highest margin businesses until, you know, late 2023. Fair. You know, we're seeing some benefit. That's what I thought. I just wanted to what I thought. I just wanted to make sure I understood it. Modest benefit now. Yeah. Okay. Hey, thanks guys. Thanks, Mike. Thank you. We have one more question. Before I take the last question, please remember, if you would like to ask a question, you need to press star one one on your telephone and wait for your name to be announced. Our next question comes from the line of Raj Sharma with B. Riley. Go ahead, your line is now open. Hi. Good morning. Thank you for taking my question. My first sort of inquiry is on the cost savings. I know that there have been plenty of cost savings at different levels. I just wanted to understand when we look at 2019 cost levels, and I know that there have been changes since, you know, since then. Apples to apples, how should we look at the cost structure and the amount of savings from the 2019 level to now? I think, Raj, let me just reframe the question a little bit. I think what you're seeing now is we're very focused on improving the margins at our business unit level. Right. You know, to be at the same or better than 2019. Not necessarily across every service we provide, but across most of them. Right. We're also focused on keeping the corporate costs, which are significantly lower than where they were in 2019. I don't wanna say flat, but relatively flat, which is, you know, in a high inflation environment, we think is a pretty good outcome. We've substantially reduced the corporate costs over the last couple of years. In the business unit we've done a lot of work around cost savings, but we still have some more work to do in the fourth quarter. I think you'll see in our servicer and real estate business, we're continuing to work to improve our business unit margins and our EBITDA, even if revenue were to be flat. Of course, a lot depends on revenue mix, but all things being equal. On the origination side, we made some significant changes in the third quarter, but it was late in the third quarter, so we didn't get the full benefit in the fourth quarter. While fourth quarter is normally a seasonally slower period for us, we think, you know, revenue will be roughly flat, maybe slightly down, but we think earnings will be, adjusted EBITDA will be better as we benefit from the full quarter of expense savings in our origination segment in the fourth quarter. As we make some changes in our servicer and real estate segment that we'll get partial benefit from in the fourth quarter. Got it. On slide eight, when you show 17% on your run rate scenario, adjusted EBITDA margin, that is would you say a significant improvement from 2019 levels or Yeah. Raj, if you look at slide 16, you can see a comparison to 2019. Right. Oh, okay. That's. Oh, that's helpful. That's very helpful. Thank you. Then, my other question was on the run rate scenario on the slide, on slide eight. So when do you expect to achieve the run rate scenario by in the service segment? Is that mid-2023? Is that what I heard? Yeah. I think what we said on the call is it's very difficult to predict. Sure. I think when you spend some time going through that slide with all the assumptions on it, slide 16, you'll get a sense as to how we're thinking about it, Raj. It's hard to predict, but certainly as you get to, you know, the tail end of 2023, we would think we're gonna start to be running at a more normal rate. You could take a look. We tried to be middle of the fairway in terms of how we approach this process in terms of revenue per delinquent loan, in terms of our margins based on some of those improvements I just talked about. You could see compared to 2019, we think our servicer and real estate margins will get better than where they were. We assume the origination business is flat to our trailing twelve months and operating at 2019 margins. So I think we really tried to isolate the performance of the default business. I think there's an opportunity. There's a little bit of sales baked in here getting back to sort of 2019 levels, but there's an opportunity for sales to drive more growth than we have included in here, both on the origination and the servicer side. Of course, if there were to be a recession, then these numbers would look different as well, stronger. Right. On this run rate scenario, you're not really including the late stage REO sales on Hubzu, the higher margin business that you said. No. would probably kick in, likely in 2024 at a- No, we are including what we would look like on a more normalized basis. We're making assumptions around, you know, Ocwen's portfolio coming down over a couple of years. We're assuming we're providing the work on a smaller portfolio, you know, to be conservative in how we approach the exercise. But we are. This is what we believe we would look like potentially on a run rate basis, sort of once we hit normal. Right. Okay. Thank you. Lastly, on the origination side, I see the run rate scenario has flat origination revenues. How does that? Your sales pipeline, did you say when you'd be able to sort of fulfill or to convert the entire sales pipeline into sales or part of it? What is the timeline that you mentioned? Sure. The normal default market run rate just assumes the origination is equal to the trailing twelve months. Obviously, we have much greater ambitions than that. If you look at the information we provided on this call with the $20 million of sales wins this year, so far only generating roughly $1.5 million of income. You know, we think there's a big opportunity for us to get from that 1.5, hopefully close to that $20 million. A lot depends on origination volumes and the market, et cetera. In any event, that we're finding is taking longer than we've originally anticipated, you know, if you go back to earlier in the year. We're learning a lot more about how long it takes to onboard new customers on our newer products. You know, I think as a sort of general, I'd like to believe, you know, within a year of winning the deal, we could certainly have the client onboarded and generating revenue. Of course, it will vary product by product, but it will then take some time after that before it stabilizes at the run rate, maybe another six months. Great. Thank you. Thank you for answering my questions. I'll take it offline. Thanks, Raj. Great. Thank you. That was the last question. Last opportunity. If anyone would like to ask a question, please press star one one on your telephone now. Okay, no more questions. I would like to turn the call over back to Bill Shepro for closing remarks. Great. Thank you, operator. And thanks to those attending the call. We believe we have a very exciting opportunity in front of us with tailwinds in the default side of our business and good progress on the growing sales on the origination side of our business on a more moderate cost base. We're looking forward to the market moving more in our favor as well. Thanks for your time. Thank you everyone for your participation in today's conference. This does conclude the program. You may now disconnect.