Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 20, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Altisource Portfolio Solutions S.A. | |
Entity Central Index Key | 1,462,418 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 17,006,516 | |
Entity Treasury Stock (in shares) | 8,406,232 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 84,569 | $ 105,006 |
Investment in equity securities | 43,185 | 49,153 |
Accounts receivable, net | 45,426 | 52,740 |
Prepaid expenses and other current assets | 70,009 | 64,742 |
Total current assets | 243,189 | 271,641 |
Premises and equipment, net | 58,820 | 73,273 |
Goodwill | 86,283 | 86,283 |
Intangible assets, net | 105,374 | 120,065 |
Deferred tax assets, net | 305,056 | 303,707 |
Other assets | 11,174 | 10,195 |
Total assets | 809,896 | 865,164 |
Current liabilities: | ||
Accounts payable and accrued expenses | 67,646 | 84,400 |
Current portion of long-term debt | 41,200 | 5,945 |
Deferred revenue | 19,131 | 9,802 |
Other current liabilities | 5,889 | 9,414 |
Total current liabilities | 133,866 | 109,561 |
Long-term debt, less current portion | 354,332 | 403,336 |
Other non-current liabilities | 9,407 | 12,282 |
Commitments, contingencies and regulatory matters | ||
Equity: | ||
Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 17,027 outstanding as of June 30, 2018; 100,000 shares authorized, 25,413 shares issued and 17,418 outstanding as of December 31, 2017) | 25,413 | 25,413 |
Additional paid-in capital | 116,586 | 112,475 |
Retained earnings | 596,268 | 626,600 |
Accumulated other comprehensive income | 0 | 733 |
Treasury stock, at cost (8,386 shares as of June 30, 2018 and 7,995 shares as of December 31, 2017) | (427,380) | (426,609) |
Altisource equity | 310,887 | 338,612 |
Non-controlling interests | 1,404 | 1,373 |
Total equity | 312,291 | 339,985 |
Total liabilities and equity | $ 809,896 | $ 865,164 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 25,413,000 | 25,413,000 |
Common stock, shares outstanding (in shares) | 17,027,000 | 17,418,000 |
Treasury stock, shares (in shares) | 8,386,000 | 7,995,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 218,556 | $ 250,685 | $ 415,994 | $ 491,168 |
Cost of revenue | 163,206 | 185,393 | 310,400 | 363,346 |
Gross profit | 55,350 | 65,292 | 105,594 | 127,822 |
Selling, general and administrative expenses | 42,924 | 52,470 | 86,048 | 100,171 |
Income from operations | 12,426 | 12,822 | 19,546 | 27,651 |
Other income (expense), net: | ||||
Interest expense | (7,027) | (5,465) | (12,890) | (11,263) |
Unrealized gain (loss) on investment in equity securities | 1,533 | 0 | (5,968) | 0 |
Other income (expense), net | (3,861) | 4,803 | (2,589) | 5,518 |
Total other income (expense), net | (9,355) | (662) | (21,447) | (5,745) |
Income (loss) before income taxes and non-controlling interests | 3,071 | 12,160 | (1,901) | 21,906 |
Income tax (provision) benefit | (816) | (2,438) | 549 | (5,024) |
Net income (loss) | 2,255 | 9,722 | (1,352) | 16,882 |
Net income attributable to non-controlling interests | (687) | (687) | (1,212) | (1,302) |
Net income (loss) attributable to Altisource | $ 1,568 | $ 9,035 | $ (2,564) | $ 15,580 |
Earnings (loss) per share: | ||||
Basic (in usd per share) | $ 0.09 | $ 0.49 | $ (0.15) | $ 0.84 |
Diluted (in usd per share) | $ 0.09 | $ 0.48 | $ (0.15) | $ 0.82 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 17,142 | 18,335 | 17,260 | 18,497 |
Diluted (in shares) | 17,553 | 18,836 | 17,260 | 19,069 |
Comprehensive income (loss): | ||||
Reclassification of unrealized gain on investment in equity securities, net of income tax provision of $200, to retained earnings from the cumulative effect of an accounting change | $ 0 | $ 0 | $ (733) | $ 0 |
Unrealized (loss) gain on investment in equity securities, net of income tax benefit (provision) of $0, $2,593, $0, $(2,132) | 0 | (6,981) | 0 | 5,742 |
Comprehensive income (loss), net of tax | 2,255 | 2,741 | (2,085) | 22,624 |
Comprehensive income attributable to non-controlling interests | (687) | (687) | (1,212) | (1,302) |
Comprehensive income (loss) attributable to Altisource | $ 1,568 | $ 2,054 | $ (3,297) | $ 21,322 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income tax benefit (provision) on unrealized (loss) gain on investment in equity securities | $ 0 | $ 2,593 | $ 0 | $ (2,132) |
Reclassification out of accumulated other comprehensive income | ||||
Income tax provision on unrealized gain on investment in equity securities | $ 0 | $ 0 | $ 200 | $ 0 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock, at cost | Non-controlling interests |
Balance (in shares) at Dec. 31, 2016 | 25,413 | ||||||
Balance at Dec. 31, 2016 | $ 62,194 | $ 25,413 | $ 107,288 | $ 333,786 | $ (1,745) | $ (403,953) | $ 1,405 |
Increase (Decrease) in Equity | |||||||
Net income (loss) | 16,882 | 15,580 | 1,302 | ||||
Other comprehensive income, net of tax | 5,742 | 5,742 | |||||
Distributions to non-controlling interest holders | (1,056) | (1,056) | |||||
Share-based compensation expense | 1,858 | 1,858 | |||||
Exercise of stock options and issuance of restricted shares | 765 | (5,014) | 5,779 | ||||
Treasury shares withheld for the payment of tax on restricted share issuances and stock option exercises | (1,089) | (1,494) | 405 | ||||
Repurchase of shares | (18,573) | (18,573) | |||||
Balance (in shares) at Jun. 30, 2017 | 25,413 | ||||||
Balance at Jun. 30, 2017 | 66,723 | $ 25,413 | 110,078 | 341,926 | 3,997 | (416,342) | 1,651 |
Balance (in shares) at Dec. 31, 2017 | 25,413 | ||||||
Balance at Dec. 31, 2017 | 339,985 | $ 25,413 | 112,475 | 626,600 | 733 | (426,609) | 1,373 |
Increase (Decrease) in Equity | |||||||
Net income (loss) | (1,352) | (2,564) | 1,212 | ||||
Distributions to non-controlling interest holders | (1,181) | (1,181) | |||||
Share-based compensation expense | 4,111 | 4,111 | |||||
Exercise of stock options and issuance of restricted shares | 2,707 | (17,237) | 19,944 | ||||
Treasury shares withheld for the payment of tax on restricted share issuances and stock option exercises | (410) | (816) | 406 | ||||
Repurchase of shares | (21,121) | (21,121) | |||||
Balance (in shares) at Jun. 30, 2018 | 25,413 | ||||||
Balance at Jun. 30, 2018 | $ 312,291 | $ 25,413 | $ 116,586 | $ 596,268 | $ 0 | $ (427,380) | $ 1,404 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (1,352) | $ 16,882 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,049 | 18,895 |
Amortization of intangible assets | 14,691 | 18,539 |
Change in the fair value of acquisition related contingent consideration | 0 | 16 |
Unrealized loss on investment in equity securities | 5,968 | 0 |
Share-based compensation expense | 4,111 | 1,858 |
Bad debt expense | 1,503 | 2,890 |
Gain on early extinguishment of debt | 0 | (3,937) |
Amortization of debt discount | 298 | 156 |
Amortization of debt issuance costs | 502 | 433 |
Deferred income taxes | (1,349) | 0 |
Loss on disposal of fixed assets | 558 | 2,798 |
Loss on debt refinancing | 4,434 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 6,923 | 11,954 |
Prepaid expenses and other current assets | (5,267) | (6,811) |
Other assets | 967 | 523 |
Accounts payable and accrued expenses | (17,152) | (10,637) |
Other current and non-current liabilities | (8,631) | (41,042) |
Net cash provided by operating activities | 23,253 | 12,517 |
Cash flows from investing activities: | ||
Additions to premises and equipment | (2,756) | (5,658) |
Net cash used in investing activities | (2,756) | (5,658) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 407,880 | 0 |
Repayments and repurchases of long-term debt | (421,821) | (24,766) |
Debt issuance costs | (5,042) | 0 |
Proceeds from stock option exercises | 2,707 | 765 |
Purchase of treasury shares | (21,121) | (15,531) |
Distributions to non-controlling interests | (1,181) | (1,056) |
Payment of tax withholding on issuance of restricted shares and stock option exercises | (410) | (1,089) |
Net cash used in financing activities | (38,988) | (41,677) |
Net decrease in cash, cash equivalents and restricted cash | (18,491) | (34,818) |
Cash, cash equivalents and restricted cash at the beginning of the period | 108,843 | 153,421 |
Cash, cash equivalents and restricted cash at the end of the period | 90,352 | 118,603 |
Supplemental cash flow information: | ||
Interest paid | 11,540 | 10,787 |
Income taxes paid, net | 2,865 | 12,668 |
Non-cash investing and financing activities: | ||
Increase (decrease) in payables for purchases of premises and equipment | 398 | (378) |
Increase in payables for purchases of treasury shares | $ 0 | $ 3,042 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | 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. 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 period. Actual results could differ from those estimates. Intercompany transactions and accounts have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Altisource consolidates Best Partners Mortgage Cooperative, Inc., which is managed by The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource. Best Partners Mortgage Cooperative, Inc. is a mortgage cooperative doing business as Lenders One ® (“Lenders One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025 (with renewals for three successive five-year periods at MPA’s option). The management agreement between MPA and Lenders One, pursuant to which MPA is the management company, represents a variable interest in a variable interest entity. MPA is the primary beneficiary of Lenders One as it has the power to direct the activities that most significantly impact the cooperative’s economic performance and the right to receive benefits from the cooperative. As a result, Lenders One is presented in the accompanying condensed consolidated financial statements on a consolidated basis and the interests of the members are reflected as non-controlling interests. As of June 30, 2018 , Lenders One had total assets of $4.8 million and total liabilities of $3.1 million . As of December 31, 2017 , Lenders One had total assets of $4.6 million and total liabilities of $3.1 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, 2017 , as filed with the SEC on February 22, 2018 . Fair Value Measurements Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows: Level 1 — Quoted prices in active markets for identical assets and liabilities Level 2 — Observable inputs other than quoted prices included in Level 1 Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. Recently Adopted Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) and during 2016, the FASB issued additional guidance providing clarifications and corrections, including: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (collectively “Topic 606”) . Topic 606 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance. This new standard requires that an entity recognize revenue for the transfer of promised goods or services to a customer in an amount that reflects the consideration that the entity expects to receive and consistent with the delivery of the performance obligation described in the underlying contract with the customer. The Company adopted Topic 606 effective January 1, 2018 using the cumulative effect method. As a result of this adoption, the Company recognized an $11.2 million increase in deferred revenue, a $1.1 million increase in unbilled accounts receivable, a $0.3 million increase in other current liabilities and a $10.4 million decrease in retained earnings as of January 1, 2018. Because the Company adopted Topic 606 retrospectively with a cumulative effect as of January 1, 2018, the comparative results as of December 31, 2017 and for the three and six months ended June 30, 2017 have not been restated and continue to be reported under Accounting Standards Codification Topic 605, Revenue Recognition and SEC Staff Accounting Bulletin Topic 13, Revenue Recognition . The details of the significant changes and quantitative impact of the adoption of Topic 606 are described below. Also see Note 14 for additional information on revenue, including disaggregation of revenue and contract balances. As a result of the adoption of Topic 606, the Company’s accounting policy for revenue recognition is as follows: We recognize revenue from the services we provide in accordance with the 5-step process outlined in Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer in an amount that reflects the consideration that we expect to receive. This revenue can be recognized at a point in time or over time. We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized. When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred revenue or other current liabilities), as appropriate. A description of our principal revenue generating activities by reportable segment are as follows: Mortgage Market • For the majority of the services we provide, we recognize transactional revenue when the service is provided. • For loan servicing technologies, we recognize revenue based on the number of loans on the system, on a per-transaction basis or over the estimated average number of months the loans and real estate owned (“REO”) are on the platform, as applicable. We generally recognize revenue for professional services relating to loan servicing technologies over the contract period. For our loan origination system, we generally recognize revenue over the contract term, beginning on the commencement date of each contract. For foreclosure trustee services, we recognize revenue over the period during which we perform the related services, with full recognition upon completion and/or recording the related foreclosure deed. For loan disbursement processing services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements. We use judgment to determine the period over which we recognize revenue for certain of these services. For mortgage charge-off collections performed on behalf of our clients, we recognize revenue as a percentage of amounts collected following collection from the borrowers. • For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. • Reimbursable expenses revenue, primarily related to our property preservation and inspection services, real estate sales and our foreclosure trustee services businesses, is included in revenue with an equal amount recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers. Real Estate Market • For the majority of the services we provide, we recognize transactional revenue when the service is provided. • For our renovation services, revenue is recognized over the period of the construction activity, based on the estimated percentage of completion of the projects. We use judgment to determine the period over which we recognize revenue for certain of these services. For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. For the buy-renovate-lease-sell business, we recognize revenue associated with our sales of short-term investments in real estate on a gross basis as we assume the risks and rewards of ownership of the asset. • Reimbursable expenses revenue, primarily related to our real estate sales business, is included in revenue with an equal offsetting expense recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers. Other Businesses, Corporate and Eliminations • For the majority of the services we provide, we recognize transactional revenue when the service is provided. We generally earn fees for our post-charge-off consumer debt collection services as a percentage of the amount we collect on delinquent consumer receivables and recognize revenue following collection from the borrowers. We provide customer relationship management services for which we typically earn and recognize revenue on a per-person, per-call or per-minute basis as the related services are performed. • For the information technology (“IT”) infrastructure services we provide to Ocwen Financial Corporation (“Ocwen”), Front Yard Residential Corporation (“RESI”) and Altisource Asset Management Corporation (“AAMC”), we recognize revenue primarily based on the number of users of the applicable systems, fixed fees and the number and type of licensed platforms. We recognize revenue associated with implementation services upon completion and maintenance services ratably over the related service period. The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated balance sheet as of June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Accounts receivable, net $ 45,426 $ 642 $ 46,068 Total current assets 243,189 642 243,831 Total assets 809,896 642 810,538 Other current liabilities 5,889 (217 ) 5,672 Deferred revenue 19,131 (9,100 ) 10,031 Total current liabilities 133,866 (9,317 ) 124,549 Deferred revenue, non-current 41 1,160 1,201 Retained earnings 596,268 8,799 605,067 Altisource equity 310,887 8,799 319,686 Total equity 312,291 8,799 321,090 Total liabilities and equity 809,896 642 810,538 The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated statement of operations and comprehensive income for the three months ended June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Revenue $ 218,556 $ (1,203 ) $ 217,353 Cost of revenue 163,206 662 163,868 Gross profit 55,350 (1,865 ) 53,485 Income from operations 12,426 (1,865 ) 10,561 Income before income taxes and non-controlling interests 3,071 (1,865 ) 1,206 Income tax provision (816 ) 544 (272 ) Net income 2,255 (1,321 ) 934 Net income attributable to Altisource 1,568 (1,321 ) 247 The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated statement of operations and comprehensive income for the six months ended June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Revenue $ 415,994 $ (791 ) $ 415,203 Cost of revenue 310,400 1,459 311,859 Gross profit 105,594 (2,250 ) 103,344 Income from operations 19,546 (2,250 ) 17,296 Loss before income taxes and non-controlling interests (1,901 ) (2,250 ) (4,151 ) Income tax benefit 549 650 1,199 Net loss (1,352 ) (1,600 ) (2,952 ) Net loss attributable to Altisource (2,564 ) (1,600 ) (4,164 ) The adoption of Topic 606 did not have any impact on net cash flows used in operating, financing or investing activities on the Company’s condensed consolidated statement of cash flows for the six months ended June 30, 2018 . Financial Instruments In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . This standard requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. It also amends certain financial statement presentation and disclosure requirements associated with the fair value of financial instruments. This standard was effective for the Company on January 1, 2018. The adoption of this standard resulted in a cumulative effect adjustment to increase retained earnings and decrease accumulated other comprehensive income by $0.7 million on January 1, 2018. Changes in the fair value of the Company’s investment in RESI subsequent to January 1, 2018, as well as any equity investments acquired in the future, will be reflected as a component of net income in the Company’s consolidated statements of operations and comprehensive income. Other Recently Adopted Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s condensed consolidated statement of cash flows. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This standard requires that companies recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs. Previous guidance prohibited companies from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . This standard requires that companies include restricted cash and restricted cash equivalents in their cash and cash equivalent balances in the statement of cash flows. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This standard was effective for the Company on January 1, 2018, and was adopted using the retrospective transition method, as required by the standard. The adoption of this standard resulted in the classification of the Company’s restricted cash with cash and cash equivalents reported in the Company’s condensed consolidated statements of cash flows. As a result, the Company included $5.8 million , $3.8 million , $4.4 million and $4.1 million of restricted cash with cash and cash equivalents in its condensed consolidated statements of cash flows as of June 30, 2018, December 31, 2017, June 30, 2017 and December 31, 2016, respectively. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This standard clarifies the definition of a business and provides a screen to determine if a set of inputs, processes and outputs is a business. The screen requires that when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the assets acquired would not be a business. Under the new guidance, in order to be considered a business, an acquisition must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. In addition, the standard narrows the definition of the term “output” so that it is consistent with how it is described in Topic 606 . This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. In February 2017, the FASB issued ASU No. 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets . This standard was issued to clarify the scope of Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets , and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20 provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. In May 2017, the FASB issued ASU No. 2017-09, C ompensation—Stock Compensation (Topic 718): Scope of Modification Accounting . This standard provides guidance about which changes to the terms or conditions of a share-based payment award require the application of modification accounting. This standard requires companies to continue to apply modification accounting, unless the fair value, vesting conditions and classification of an award all do not change as a result of the modification. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. Future Adoption of New Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . This standard introduces a new lessee model that brings substantially all leases on the balance sheet. This standard will require companies to recognize lease assets and lease liabilities on their balance sheets and disclose key information about leasing arrangements in their financial statements. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact of this guidance on its results of operations and financial position. Based on the Company’s preliminary analysis of arrangements where the Company is a lessee, we estimate that the new standard, if implemented as of June 30, 2018 , would result in approximately $17.6 million right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheet as of June 30, 2018 . The Company will continue to analyze the impact of this guidance and refine the estimated impact on its results of operations and financial position. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard will simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Current guidance requires that companies compute the implied fair value of goodwill under Step 2 by performing procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. This standard will require companies to perform annual or interim goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This standard will be effective for annual periods beginning after December 15, 2019, including interim periods within that reporting period, and will be applied prospectively. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . The amendments in this standard better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedging results. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application is permitted. The Company currently does not expect the adoption of this guidance to have a material effect on its results of operations and financial position. |
CUSTOMER CONCENTRATION
CUSTOMER CONCENTRATION | 6 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
CUSTOMER CONCENTRATION | CUSTOMER CONCENTRATION During the three and six months ended June 30, 2018 , Ocwen was our largest customer, accounting for 51% of our total revenue for the six months ended June 30, 2018 ( 50% of our revenue for the second quarter of 2018 ). 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 MSRs owned by others. Ocwen purchases certain mortgage services and technology services from us under the terms of master services agreements and amendments thereto (collectively, the “Ocwen Services Agreements”) with terms extending through August 2025. Certain of the Ocwen Service Agreements contain a “most favored nation” provision and also grant the parties the right to renegotiate pricing, among other things. Certain of the Ocwen Service Agreements also prohibit Ocwen from establishing fee-based businesses that would directly or indirectly compete with Altisource’s services with respect to the Homeward Residential, Inc. and Residential Capital, LLC loan portfolios acquired by Ocwen in December 2012 and February 2013, respectively. Ocwen also purchases certain origination services from Altisource under an agreement that continues until January 2019, but which is subject to a 90 day termination right by Ocwen. Revenue from Ocwen primarily consists of revenue earned from the loan portfolios serviced by Ocwen when Ocwen designates us as the service provider and revenue earned directly from Ocwen. For the six months ended June 30, 2018 and 2017 , we generated revenue from Ocwen of $210.8 million and $285.6 million , respectively ( $108.8 million and $144.2 million for the second quarter of 2018 and 2017 , respectively). Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: Three months ended Six months ended 2018 2017 2018 2017 Mortgage Market 60 % 68 % 60 % 68 % Real Estate Market 1 % 1 % 1 % 1 % Other Businesses, Corporate and Eliminations 9 % 11 % 9 % 13 % Consolidated revenue 50 % 58 % 51 % 58 % We earn additional revenue related to the loan portfolios serviced by Ocwen when a party other than Ocwen or the MSR owner selects Altisource as the service provider. For the six months ended June 30, 2018 and 2017 , we recognized revenue of $26.2 million and $82.9 million , respectively ( $11.0 million and $41.2 million for the second quarter of 2018 and 2017 , respectively), related to the loan portfolios serviced by Ocwen when a party other than Ocwen or the MSR owner selected Altisource as the service provider. These amounts are not included in deriving revenue from Ocwen as a percentage of revenue in the table above. As of June 30, 2018 , accounts receivable from Ocwen totaled $16.5 million , $12.2 million of which was billed and $4.3 million of which was unbilled. As of December 31, 2017 , accounts receivable from Ocwen totaled $18.9 million , $13.6 million of which was billed and $5.3 million of which was unbilled. As of March 31, 2018, New Residential Investment Corp. (individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “NRZ”) owned Ocwen-serviced MSRs and rights to MSRs (the “Subject MSRs”) with underlying unpaid principal balances (“UPB”) of $98.3 billion . As of March 31, 2018, Ocwen serviced and subserviced MSRs with underlying UPB of $173.4 billion . As previously disclosed, in July 2017, Ocwen and NRZ entered into agreements to convert NRZ’s economic rights to the Subject MSRs into fully-owned MSRs in exchange for payments from NRZ to Ocwen when such Subject MSRs were transferred. The transfers are subject to certain third party consents. Ocwen disclosed that under these agreements, Ocwen would subservice the transferred Subject MSRs for an initial term of five years, and the agreements provided for the conversion of the existing arrangements into a more traditional subservicing arrangement. In January 2018, Ocwen disclosed that it and NRZ entered into new agreements to accelerate the implementation of certain parts of their July 2017 arrangement in order to achieve the intent of the July 2017 agreements sooner while Ocwen continues the process of obtaining the third party consents necessary to transfer the Subject MSRs to NRZ. On August 28, 2017, Altisource, through its licensed subsidiaries, entered into a Cooperative Brokerage Agreement, as amended, and related letter agreement (collectively, the “Brokerage Agreement”) with NRZ which extends through August 2025. Under this agreement and related amendments, Altisource remains the exclusive provider of brokerage services for REO associated with the Subject MSRs when Ocwen transfers such MSRs to NRZ or when NRZ acquires both an additional economic interest in such Subject MSRs and the right to designate the broker for REO properties in such portfolios. The Brokerage Agreement provides that Altisource is the exclusive provider of brokerage services for REO associated with the Subject MSRs, irrespective of the sub-servicer. NRZ’s brokerage subsidiary receives a cooperative brokerage commission on the sale of certain REO properties from these portfolios subject to certain exceptions. For the three and six months ended June 30, 2018 , we earned revenue from NRZ of $8.9 million and $19.2 million , respectively, following the transfer of certain of the Subject MSRs from Ocwen to NRZ (the “Transferred MSRs”) ( no comparative amounts in 2017). For the three and six months ended June 30, 2018 , we earned additional revenue of $26.7 million and $42.8 million relating to the Transferred MSRs when a party other than NRZ selects Altisource as the service provider ( no comparative amounts in 2017). On August 28, 2017, Altisource and NRZ also entered into a non-binding Letter of Intent, as amended, to enter into a Services Agreement (the “Services LOI”), setting forth the terms pursuant to which Altisource would remain the exclusive service provider of fee-based services for the Subject MSRs through August 2025. The Services LOI was amended to continue through August 31, 2018 . The Brokerage Agreement can be terminated by Altisource if the Services Agreement is not signed by Altisource and NRZ during the term of the Services LOI, as extended. The Brokerage Agreement may otherwise only be terminated upon the occurrence of certain specified events. Termination events include, but are not limited to, a breach of the terms of the Brokerage Agreement (including, without limitation, the failure to meet performance standards and non-compliance with law in a material respect), the failure to maintain licenses which failure materially prevents performance of the contract, regulatory allegations of non-compliance resulting in an adversarial proceeding against NRZ, voluntary or involuntary bankruptcy, appointment of a receiver, disclosure in a Form 10-K or Form 10-Q that there is significant uncertainty about Altisource’s ability to continue as a going concern, failure to maintain a specified level of cash and an unapproved change of control. We anticipate that revenue from NRZ will increase over time and revenue from Ocwen will decrease. As Subject MSRs continue to transfer from Ocwen to NRZ and following the anticipated execution of the Services Agreement, we expect that NRZ will become our largest customer. Had all of the Subject MSRs been transferred to NRZ and the Brokerage Agreement and the Services Agreement with NRZ been in place as of January 1, 2018, we estimate that approximately 48% of our revenue for the six months ended June 30, 2018 would have been related to NRZ. There can be no assurance that the parties will reach an agreement with respect to the terms of the Services Agreement or that a Services Agreement will be entered into on a timely basis or at all. |
INVESTMENT IN EQUITY SECURITIES
INVESTMENT IN EQUITY SECURITIES | 6 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENT IN EQUITY SECURITIES | INVESTMENT IN EQUITY SECURITIES During 2016 , we purchased 4.1 million shares of RESI common stock for $48.2 million . This investment is reflected in the condensed consolidated balance sheets at a fair value of $43.2 million as of June 30, 2018 and $49.2 million as of December 31, 2017 . During the three and six months ended June 30, 2018 , we recognized an unrealized gain (loss) of $1.5 million and $(6.0) million , respectively, on our investment in RESI in other income (expense), net in the condensed consolidated statements of operations and comprehensive income as a result of a change in the market value of RESI common shares. During the three and six months ended June 30, 2017 , an unrealized gain (loss) on our investment in RESI of $(7.0) million and $5.7 million , respectively, net of income tax expense (benefit), was reflected in other comprehensive income in the condensed consolidated statements of operations and comprehensive income (see Note 1 for additional information on the adoption of the new accounting standard on investments in equity securities). During the six months ended June 30, 2018 and 2017 , we earned dividends of $1.2 million in each period related to this investment ( $0.6 million in both the second quarter of 2018 and 2017 ). |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | ACCOUNTS RECEIVABLE, NET Accounts receivable, net consists of the following: (in thousands) June 30, December 31, Billed $ 39,313 $ 40,787 Unbilled 17,446 22,532 Subtotal 56,759 63,319 Less: Allowance for doubtful accounts (11,333 ) (10,579 ) Total $ 45,426 $ 52,740 Unbilled accounts receivable consist primarily of certain real estate asset management and sales 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. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: (in thousands) June 30, December 31, Short-term investments in real estate $ 35,289 $ 29,405 Maintenance agreements, current portion 4,961 8,014 Income taxes receivable 11,396 9,227 Prepaid expenses 7,501 7,898 Other current assets 10,862 10,198 Total $ 70,009 $ 64,742 |
PREMISES AND EQUIPMENT, NET
PREMISES AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
PREMISES AND EQUIPMENT, NET | PREMISES AND EQUIPMENT, NET Premises and equipment, net consists of the following: (in thousands) June 30, December 31, Computer hardware and software $ 182,606 $ 179,567 Leasehold improvements 32,658 33,417 Furniture and fixtures 13,695 14,092 Office equipment and other 8,887 9,388 237,846 236,464 Less: Accumulated depreciation and amortization (179,026 ) (163,191 ) Total $ 58,820 $ 73,273 Depreciation and amortization expense totaled $17.0 million and $18.9 million for the six months ended June 30, 2018 and 2017 , respectively ( $8.3 million and $8.9 million for the second quarter of 2018 and 2017 , 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 income. |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The following is a summary of goodwill by segment: (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Total Balance as of June 30, 2018 and December 31, 2017 $ 73,259 $ 10,056 $ 2,968 $ 86,283 Intangible Assets, net Intangible assets, net consist of the following: Weighted average estimated useful life (in years) Gross carrying amount Accumulated amortization Net book value (in thousands) June 30, December 31, June 30, December 31, June 30, December 31, Definite lived intangible assets: Customer related intangible assets 10 $ 273,172 $ 277,828 $ (196,315 ) $ (188,258 ) $ 76,857 $ 89,570 Operating agreement 20 35,000 35,000 (14,748 ) (13,865 ) 20,252 21,135 Trademarks and trade names 14 12,554 15,354 (6,480 ) (8,881 ) 6,074 6,473 Non-compete agreements 4 1,230 1,560 (872 ) (897 ) 358 663 Intellectual property 10 300 300 (130 ) (115 ) 170 185 Other intangible assets 5 3,745 3,745 (2,082 ) (1,706 ) 1,663 2,039 Total $ 326,001 $ 333,787 $ (220,627 ) $ (213,722 ) $ 105,374 $ 120,065 Amortization expense for definite lived intangible assets was $14.7 million and $18.5 million for the six months ended June 30, 2018 and 2017 , respectively ( $7.5 million and $9.4 million for the second quarter of 2018 and 2017 , respectively). Anticipated annual definite lived intangible asset amortization is $25.7 million in 2018 , $20.6 million in 2019 , $17.9 million in 2020 , $13.4 million in 2021 and $7.3 million in 2022 . |
OTHER ASSETS
OTHER ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS | OTHER ASSETS Other assets consist of the following: (in thousands) June 30, December 31, Security deposits $ 4,807 $ 5,304 Restricted cash 5,783 3,837 Other 584 1,054 Total $ 11,174 $ 10,195 |
ACCOUNTS PAYABLE, ACCRUED EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accounts payable and accrued expenses consist of the following: (in thousands) June 30, December 31, Accounts payable $ 13,781 $ 15,682 Accrued expenses - general 26,343 27,268 Accrued salaries and benefits 27,062 41,363 Income taxes payable 460 87 Total $ 67,646 $ 84,400 Other current liabilities consist of the following: (in thousands) June 30, December 31, Unfunded cash account balances $ 3,147 $ 5,900 Other 2,742 3,514 Total $ 5,889 $ 9,414 |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consists of the following: (in thousands) June 30, December 31, Term loans $ 403,760 $ 413,581 Less: Debt issuance costs, net (4,317 ) (3,158 ) Less: Unamortized discount, net (3,911 ) (1,142 ) Net long-term debt 395,532 409,281 Less: Current portion (41,200 ) (5,945 ) Long-term debt, less current portion $ 354,332 $ 403,336 On April 3, 2018 , Altisource Portfolio Solutions S.A. and its wholly-owned subsidiary, Altisource S.à r.l. entered into a credit agreement (the “Credit Agreement”) with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and certain lenders. Under the Credit Agreement, Altisource borrowed $412.0 million in the form of Term B Loans and obtained a $15.0 million revolving credit facility. The Term B Loans mature in April 2024 and the revolving credit facility matures in April 2023. Altisource Portfolio Solutions S.A. and certain subsidiaries are guarantors of the term loan and the revolving credit facility (collectively, the “Guarantors”). Proceeds from the Term B Loans were used to repay the Company’s prior senior secured term loan, which had an outstanding balance of $412.1 million as of April 3, 2018 . In connection with the refinancing, we recognized a loss of $4.4 million from the write-off of unamortized debt issuance costs and debt discount in the second quarter of 2018. This loss was included in other income (expense), net in the condensed consolidated statements of operations and comprehensive income. The Term B Loans must be repaid in consecutive quarterly principal installments with $24.7 million due in 2018, $41.2 million due in 2019, $25.7 million due in 2020 and $12.4 million due annually thereafter, with the balance due at maturity. During the three months ended June 30, 2018, the Company repaid $8.2 million of the Term B Loans. All amounts outstanding under the Term B Loans will become due on the earlier of (i) April 3, 2024, 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 Credit Agreement; other capitalized terms, unless defined herein, are defined in the Credit Agreement) or as otherwise provided in the Credit Agreement upon the occurrence of any event of default. In addition to the scheduled principal payments, subject to certain exceptions, the Term B Loans are subject to mandatory prepayment upon issuances of debt, casualty and condemnation events and sales of assets, as well as from a percentage of Consolidated Excess Cash Flow if the leverage ratio is greater than 3.00 to 1.00 , as calculated in accordance with the provisions of the Credit Agreement (the percentage increases if the leverage ratio exceeds 3.50 to 1.00 ). Certain mandatory prepayments reduce future contractual amortization payments by an amount equal to the mandatory prepayment. No mandatory prepayments were owed for the three months ended June 30, 2018 . Altisource may incur incremental indebtedness under the Credit Agreement from one or more incremental lenders, which may include existing lenders, in an aggregate incremental principal amount not to exceed $125.0 million , subject to certain conditions set forth in the Credit Agreement, including a sublimit of $80.0 million with respect to incremental revolving credit commitments. The lenders have no obligation to provide any incremental indebtedness. The Term B Loans bear interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate . Adjusted Eurodollar Rate term loans bear interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for a three month interest period and (y) 1.00% plus (ii) 4.00% . 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) 3.00% . The interest rate at June 30, 2018 was 6.33% . Loans under the revolving credit facility bear interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate . Adjusted Eurodollar Rate revolving loans bear interest at a rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate for a three month interest period plus (ii) 4.00% . Base Rate revolving loans bear interest at a rate per annum equal to the sum of (i) the Base Rate plus (ii) 3.00% . The unused commitment fee is 0.50% . There were no borrowings outstanding under the revolving credit facility as of June 30, 2018 . The payment of all amounts owing by Altisource under the 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 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; and to the extent any Revolving Credit Loans are outstanding on the last day of a fiscal quarter, permit the Total Leverage Ratio to be greater than 3.50 : 1.00 as of the last day of such fiscal quarter, subject to a customary cure provision (the “Revolving Financial Covenant”). The 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 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 Credit Agreement, (iv) a breach of the Revolving Financial Covenant, subject to a customary cure provision and not an Event of Default with respect to the Term Loans unless and until the Required Revolving Lenders accelerate the Revolving Credit Loans, (v) failure to pay principal or interest on any other debt that equals or exceeds $40.0 million when due, (vi) 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, (vii) occurrence of a Change of Control, (viii) bankruptcy and insolvency events, (ix) entry by a court of one or more judgments against us in an amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (x) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents to be in full force and effect. 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. At June 30, 2018 , debt issuance costs were $4.3 million , net of $0.2 million of accumulated amortization. At December 31, 2017, debt issuance costs related to the prior term loans were $3.2 million , net of $7.1 million of accumulated amortization. In the second quarter of 2017, we repurchased portions of our prior senior secured term loan with an aggregate par value of $26.0 million at a weighted average discount of 16.5% , recognizing a net gain of $3.9 million on the early extinguishment of debt ( no comparative amounts in 2018 ). The net gain was included in other income (expense), net in the condensed consolidated statements of operations and comprehensive income. |
OTHER NON-CURRENT LIABILITIES
OTHER NON-CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
OTHER NON-CURRENT LIABILITIES | OTHER NON-CURRENT LIABILITIES Other non-current liabilities consist of the following: (in thousands) June 30, December 31, Income tax liabilities $ 5,605 $ 5,955 Deferred revenue 41 2,101 Other non-current liabilities 3,761 4,226 Total $ 9,407 $ 12,282 |
FAIR VALUE MEASUREMENTS AND FIN
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS | 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, 2018 and December 31, 2017 . The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP: June 30, 2018 December 31, 2017 (in thousands) Carrying amount Fair value Carrying amount Fair value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 84,569 $ 84,569 $ — $ — $ 105,006 $ 105,006 $ — $ — Restricted cash 5,783 5,783 — — 3,837 3,837 — — Investment in equity securities 43,185 43,185 — — 49,153 49,153 — — Liabilities: Long-term debt 403,760 — 401,067 — 413,581 — 407,377 — 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. Investment in equity securities is carried at fair value and consists of 4.1 million shares of RESI common stock. The investment in equity securities is measured using Level 1 inputs as this security has a quoted price in an active market. The fair value of our long-term debt 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. 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 derives approximately 50% of its revenues from Ocwen (see Note 2 for additional information on Ocwen revenues and accounts receivable balance). The Company mitigates 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. |
SHAREHOLDERS_ EQUITY AND SHARE-
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION | SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Share Repurchase Program On May 15, 2018 , our shareholders approved the renewal of the share repurchase program previously approved by the shareholders on May 17, 2017 , which replaced the previous share repurchase program. We are authorized to purchase up to 4.3 million shares of our common stock, based on a limit of 25% 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 $500.00 per share, for a period of five years from the date of approval. As of June 30, 2018 , approximately 4.2 million shares of common stock remain available for repurchase under the program. We purchased 0.8 million shares of common stock at an average price of $27.39 per share during the six months ended June 30, 2018 and 0.8 million shares at an average price of $22.15 per share during the six months ended June 30, 2017 ( 0.4 million shares at an average price of $27.14 per share for the second quarter of 2018 and 0.4 million shares at an average price of $19.17 per share for the second quarter of 2017 ). 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, 2018 , we can repurchase up to approximately $142 million of our common stock under Luxembourg law. The Credit Agreement also limits the amount we can spend on share repurchases, which was approximately $456 million as of June 30, 2018 , and may prevent repurchases in certain circumstances. 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 $4.1 million and $1.9 million for the six months ended June 30, 2018 and 2017 , respectively ( $1.9 million and $1.2 million for the second quarter of 2018 and 2017 , respectively). As of June 30, 2018 , estimated unrecognized compensation costs related to share-based awards amounted to $14.5 million , which we expect to recognize over a weighted average remaining requisite service period of approximately 2.12 years . In connection with the January 1, 2017 adoption of ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , the Company made an accounting policy election to account for forfeitures in compensation expense as they occur, rather than continuing to apply the Company’s previous policy of estimating forfeitures. Prior to this accounting change, share-based compensation expense for stock options and restricted shares was recognized net of estimated forfeiture rates ranging from 0% to 40% . This policy election resulted in a cumulative effect adjustment of $0.9 million to retained earnings and additional paid-in capital as of January 1, 2017 using the modified retrospective transition method. 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 expire on the earlier of ten years after the date of grant or following termination of service. A total of 575 thousand service-based awards were outstanding as of June 30, 2018 . 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 awards 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 684 thousand market-based awards were outstanding as of June 30, 2018 . Performance-Based Options. These option grants generally begin to vest upon the achievement of certain specific financial measures. Generally, the awards begin vesting if the performance criteria are achieved; one-fourth vest on each anniversary of the grant date. For certain other financial measures, awards cliff-vest upon the achievement of the specific performance during the period from 2018 through 2021 . 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 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 award is canceled. The options expire on the earlier of ten years after the date of grant or following termination of service. There were 282 thousand performance-based awards outstanding as of June 30, 2018 . The Company granted 272 thousand stock options (at a weighted average exercise price of $25.06 per share) and 129 thousand stock options (at a weighted average exercise price of $39.13 per share) during the six months ended June 30, 2018 and 2017 , respectively. The fair values of the service-based options and performance-based options were determined using the Black-Scholes option pricing model and the fair values of the market-based options were determined using a lattice (binomial) model. The following assumptions were used to determine the fair values as of the grant date: Six months ended Six months ended Black-Scholes Binomial Black-Scholes Binomial Risk-free interest rate (%) 2.66 – 2.98 1.64 – 2.83 2.06 – 2.29 0.77 – 2.38 Expected stock price volatility (%) 70.31 – 71.86 71.81 – 71.86 61.49 – 66.68 66.68 Expected dividend yield — — — — Expected option life (in years) 6.00 – 6.25 2.56 – 4.32 6.00 – 7.50 3.53 – 3.85 Fair value $16.17 – $19.06 $14.67 – $18.28 $23.91 – $24.80 $23.54 – $24.30 We determined the expected option life of all service-based stock option grants using the simplified method. 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 weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the periods presented: Six months ended June 30, (in thousands, except per share amounts) 2018 2017 Weighted average grant date fair value of stock options granted per share $ 16.27 $ 24.23 Intrinsic value of options exercised 4,393 875 Grant date fair value of stock options that vested 1,334 1,693 The following table summarizes the activity related to our stock options: Number of options Weighted average exercise price Weighted average contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2017 1,745,906 $ 28.20 4.96 $ 10,202 Granted 271,876 25.06 Exercised (295,752 ) 9.48 Forfeited (180,578 ) 33.91 Outstanding at June 30, 2018 1,541,452 30.56 5.76 5,235 Exercisable at June 30, 2018 921,627 27.03 3.96 5,132 During the second quarter of 2018, the Company modified the performance thresholds that are required to be met in order for vesting to occur for 263 thousand stock options granted to 16 employees in the first quarter of 2018. The award modification did not change the inputs into the valuation model or the Company’s assessment of the probability of vesting as of the effective date of the modifications. Consequently, no incremental compensation expense was required as a result of this modification. Other Share-Based Awards The Company’s other share-based and similar types of awards are composed of restricted shares and, beginning in 2018, restricted share units. The restricted shares and restricted share units are composed of a combination of service-based awards and performance-based awards. Service-Based Awards. These awards generally vest over one to four years with vesting in equal annual installments, vesting of all of the restricted shares at the end of the vesting period or vesting beginning after two years of service. A total of 475 thousand service-based awards were outstanding as of June 30, 2018 . Performance-Based Awards. These awards generally begin to vest upon the achievement of certain specific financial measures. Generally, the awards begin vesting if the performance criteria are achieved; one-third vest on each anniversary of the grant date. The number of performance-based restricted shares that may vest will be based on the level of achievement, as specified in the award agreements. If the performance criteria achieved is above threshold performance levels, participants have the opportunity to vest in 80% to 150% of the restricted share award, depending on performance level achieved. If the performance criteria achieved is below a certain threshold, the award is canceled. A total of two thousand performance-based awards were outstanding as of June 30, 2018 . The Company granted 305 thousand restricted shares and restricted share units (at a weighted average grant date fair value of $25.23 per share) during the six months ended June 30, 2018 . The following table summarizes the activity related to our restricted shares and restricted share units: Number of restricted shares Outstanding at December 31, 2017 356,509 Granted 305,282 Issued (88,043 ) Forfeited/canceled (96,853 ) Outstanding at June 30, 2018 476,895 |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Revenue includes service revenue, reimbursable expenses and non-controlling interests. Service revenue consists of amounts attributable to our fee-based services and sales of short-term investments in real estate. 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. Lenders One is included in revenue and reduced from net income to arrive at net income attributable to Altisource (see Note 1 ). The components of revenue were as follows: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Service revenue $ 208,861 $ 238,107 $ 397,627 $ 467,946 Reimbursable expenses 9,008 11,891 17,155 21,920 Non-controlling interests 687 687 1,212 1,302 Total $ 218,556 $ 250,685 $ 415,994 $ 491,168 As discussed in Note 1 , the Company adopted Topic 606 effective January 1, 2018 using the cumulative effect method. Disaggregation of Revenue Disaggregation of total revenues by segment and major source is as follows: Three months ended June 30, 2018 (in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue Mortgage Market: Servicer Solutions $ 139,084 $ 18,525 $ 8,460 $ 166,069 Origination Solutions 10,243 2,292 58 12,593 Total Mortgage Market 149,327 20,817 8,518 178,662 Real Estate Market: Consumer Real Estate Solutions 2,312 — — 2,312 Real Estate Investor Solutions 21,352 — 481 21,833 Total Real Estate Market 23,664 — 481 24,145 Other Businesses, Corporate and Eliminations 14,215 1,525 9 15,749 Total revenue $ 187,206 $ 22,342 $ 9,008 $ 218,556 Six months ended June 30, 2018 (in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue Mortgage Market: Servicer Solutions $ 268,620 $ 36,798 $ 16,062 $ 321,480 Origination Solutions 19,428 4,978 114 24,520 Total Mortgage Market 288,048 41,776 16,176 346,000 Real Estate Market: Consumer Real Estate Solutions 3,717 — 2 3,719 Real Estate Investor Solutions 34,750 — 956 35,706 Total Real Estate Market 38,467 — 958 39,425 Other Businesses, Corporate and Eliminations 27,647 2,901 21 30,569 Total revenue $ 354,162 $ 44,677 $ 17,155 $ 415,994 Contract Balances Our contract assets consist of unbilled accounts receivable (see Note 4 ). Our contract liabilities consist of current deferred revenue as reported on the condensed consolidated balance sheets and non-current deferred revenue (see Note 11 ). Revenue recognized that was included in the contract liability at the beginning of the period, including amounts added to the contract liability as part of the cumulative effect of the adopting Topic 606, was $5.4 million and $11.3 million for the three and six months ended June 30, 2018 , respectively. |
COST OF REVENUE
COST OF REVENUE | 6 Months Ended |
Jun. 30, 2018 | |
Cost of Revenue [Abstract] | |
COST OF REVENUE | COST OF REVENUE Cost of revenue principally includes payroll and employee benefits associated with personnel employed in customer service and operations roles, fees paid to external providers related to the provision of services, cost of real estate sold, reimbursable expenses, technology and telecommunications costs as well as depreciation and amortization of operating assets. The components of cost of revenue were as follows: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Compensation and benefits $ 54,769 $ 62,666 $ 109,635 $ 125,758 Outside fees and services 68,879 86,255 133,977 167,214 Cost of real estate sold 13,320 7,114 16,499 12,049 Technology and telecommunications 10,852 10,941 20,303 22,292 Reimbursable expenses 9,008 11,891 17,155 21,920 Depreciation and amortization 6,378 6,526 12,831 14,113 Total $ 163,206 $ 185,393 $ 310,400 $ 363,346 |
SELLING, GENERAL AND ADMINISTRA
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6 Months Ended |
Jun. 30, 2018 | |
Selling, General and Administrative Expense [Abstract] | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses include payroll and employee benefits associated with personnel employed in executive, finance, law, compliance, human resources, vendor management, facilities, risk management, sales and marketing roles. This category also includes professional fees, occupancy costs, marketing costs, depreciation and amortization of non-operating assets and other expenses. The components of selling, general and administrative expenses were as follows: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Compensation and benefits $ 12,197 $ 15,541 $ 25,766 $ 28,047 Occupancy related costs 7,189 9,538 15,623 19,811 Amortization of intangible assets 7,544 9,393 14,691 18,539 Marketing costs 3,978 3,697 7,585 7,966 Professional services 4,328 4,367 7,554 8,097 Depreciation and amortization 1,950 2,361 4,218 4,782 Other 5,738 7,573 10,611 12,929 Total $ 42,924 $ 52,470 $ 86,048 $ 100,171 |
OTHER INCOME (EXPENSE), NET
OTHER INCOME (EXPENSE), NET | 6 Months Ended |
Jun. 30, 2018 | |
Other Income and Expenses [Abstract] | |
OTHER INCOME (EXPENSE), NET | OTHER INCOME (EXPENSE), NET Other income (expense), net consists of the following: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Loss on debt refinancing $ (4,434 ) $ — $ (4,434 ) $ — Gain on early extinguishment of debt — 3,937 — 3,937 Interest income 100 44 231 142 Other, net 473 822 1,614 1,439 Total $ (3,861 ) $ 4,803 $ (2,589 ) $ 5,518 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities using the treasury stock method. Basic and diluted EPS are calculated as follows: Three months ended Six months ended (in thousands, except per share data) 2018 2017 2018 2017 Net income (loss) attributable to Altisource $ 1,568 $ 9,035 $ (2,564 ) $ 15,580 Weighted average common shares outstanding, basic 17,142 18,335 17,260 18,497 Dilutive effect of stock options, restricted shares and 411 501 — 572 Weighted average common shares outstanding, diluted 17,553 18,836 17,260 19,069 Earnings (loss) per share: Basic $ 0.09 $ 0.49 $ (0.15 ) $ 0.84 Diluted $ 0.09 $ 0.48 $ (0.15 ) $ 0.82 For the six months ended June 30, 2018 and 2017 , 0.3 million options and 0.4 million options, respectively ( 0.3 million options and 0.4 million options for the second quarter of 2018 and 2017 , respectively), were excluded from the computation of diluted EPS because they were anti-dilutive since their exercise price was greater than the average market price of our common stock. Also excluded from the computation of diluted EPS for the six months ended June 30, 2018 and 2017 were 0.5 million options, restricted shares and restricted share units and 0.3 million options and restricted shares, respectively ( 0.5 million options, restricted shares and restricted share units and 0.3 million options and restricted shares for the second quarter of 2018 and 2017 , respectively), which begin to vest upon the achievement of certain market criteria related to our common stock price, performance criteria and an annualized rate of return to shareholders that have not yet been met. Furthermore, as a result of the net loss attributable to Altisource for the six months ended June 30, 2018 , 0.5 million options, restricted shares and restricted share units were excluded from the computation of diluted EPS for the six months ended June 30, 2018 , as their impact was anti-dilutive. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS | COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS We record a liability for contingencies if an unfavorable outcome is probable and the amount of loss can be reasonably estimated, including expected insurance coverage. For proceedings where the reasonable estimate of loss is a range, we record a best estimate of loss within the range. Litigation We are currently involved in legal actions in the course of our business, some of which seek monetary damages. We do not believe that the outcome of these proceedings, both individually and in the aggregate, will have a material impact on our financial condition, results of operations or cash flows. Regulatory Matters Periodically, we are subject to audits, examinations and investigations by federal, state and local governmental authorities and receive subpoenas, civil investigative demands or other requests for information from such governmental authorities in connection with their regulatory or investigative authority. We are currently responding to such inquiries from governmental authorities relating to certain aspects of our business. We believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with these inquiries. As previously disclosed, the Company received a Notice and Opportunity to Respond and Advise (“NORA”) letter on November 10, 2016 from the Consumer Financial Protection Bureau (“CFPB”) indicating that the CFPB was considering a potential enforcement action against Altisource relating to an alleged violation of federal law focused on the REALServicing ® platform and certain other technology services provided to Ocwen, including claims related to the features, functioning and support of such technology. The NORA process provides the recipient an opportunity to present its positions to the CFPB before an enforcement action is recommended or commenced. On December 5, 2016, we provided a written response to the NORA letter setting forth the legal, policy and factual reasons why we believe an enforcement action is not warranted. By letter dated April 3, 2018, the CFPB informed the Company that the investigation of the Company has been completed and the staff of the CFPB’s Office of Enforcement currently does not intend to recommend that the CFPB take enforcement action, and further that the Company is relieved of the document-retention obligations pursuant to the civil investigative process. Ocwen Related Matters As discussed in Note 2 , during the three and six months ended June 30, 2018 , Ocwen was our largest customer, accounting for 51% of our total revenue for the six months ended June 30, 2018 ( 50% of our revenue for the second quarter of 2018 ). Additionally, 6% of our revenue for the six months ended June 30, 2018 ( 5% of our revenue for the second quarter of 2018 ) was earned on the loan portfolios serviced by Ocwen, when a party other than Ocwen or the MSR owner selected Altisource as the service provider. Ocwen has disclosed that it is subject to a number of ongoing federal and state regulatory examinations, cease and desist orders, consent orders, inquiries, subpoenas, civil investigative demand, requests for information and other actions and is subject to pending legal proceedings, some of which include claims against Ocwen for substantial monetary damages. For example, on May 15, 2017, Ocwen disclosed that on April 20, 2017, the CFPB and the State of Florida filed separate complaints in the United States District Court for the Southern District of Florida against Ocwen alleging violations of Federal consumer financial law and, in the case of Florida, Florida statutes. As another example, on May 15, 2017, Ocwen also disclosed that on April 28, 2017, the Commonwealth of Massachusetts filed a lawsuit against Ocwen in the Superior Court for the Commonwealth of Massachusetts alleging violations of state consumer financial laws relating to Ocwen’s servicing business, including lender-placed insurance and property preservation fees. Ocwen disclosed that the complaints seek to obtain permanent injunctive relief, consumer redress, refunds, restitution, disgorgement, damages, civil penalties, costs and fees and other relief. The forgoing or other matters could result in, and in some cases, have resulted in, adverse regulatory or other actions against Ocwen. Previous regulatory actions against Ocwen resulted in subjecting Ocwen to independent oversight of its operations and placing certain restrictions on its ability to acquire servicing rights. In addition to the above, Ocwen may become subject to future federal and state regulatory investigations, cease and desist orders, consent orders, inquiries, subpoenas, civil investigative demands, requests for information, other matters or legal proceedings, any of which could also result in adverse regulatory or other actions against Ocwen. The foregoing may have significant adverse effects on Ocwen’s business and/or our continuing relationship with Ocwen. For example, Ocwen may be required to alter the way it conducts business, including the parties it contracts with for services (including IT and software 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 could result in our eventual loss of Ocwen as a customer or a reduction in the number and/or volume of services they purchase from us or the loss of other customers. If any of the following events occurred, Altisource’s revenue could be significantly lower and our results of operations could be materially adversely affected, including from the possible impairment or write-off of goodwill, intangible assets, property and equipment, other assets and accounts receivable: • Altisource loses Ocwen as a customer or there is a significant reduction in the volume of services they purchase from us • Ocwen loses, sells or transfers a significant portion or all of its remaining non-GSE servicing rights or subservicing arrangements and Altisource fails to be retained as a service provider • Ocwen loses state servicing licenses in states with a significant number of loans in Ocwen’s servicing portfolio • 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 • Altisource otherwise fails to be retained as a service provider Management cannot predict the outcome of these matters or the amount of any impact they may have on Altisource. However, in the event these matters materially negatively impact Altisource, we believe the variable nature of our cost structure would allow us to realign our cost structure in line with remaining revenue. Furthermore, in the event of a significant reduction in the volume of services purchased or loan portfolios serviced by Ocwen (such as a transfer of Ocwen’s remaining servicing rights to a successor servicer), we believe the impact to Altisource could occur over an extended period of time. During this period, we believe that we will continue to generate revenue from all or a portion of Ocwen’s loan portfolios. Our Servicer Solutions, Origination Solutions, Consumer Real Estate Solutions and Real Estate Investor Solutions businesses are focused on diversifying and growing our revenue and customer base and we have a sales and marketing strategy to support these businesses. Management believes our plans, together with current liquidity and cash flows from operations, would be sufficient to meet our working capital, capital expenditures, debt service and other cash needs. However, there can be no assurance that our plans will be successful or our operations will be profitable. Additionally, Ocwen has notified us, disclosed in its filings and stated in connection with resolving several state administrative actions discussed above, that it plans to transition from REALServicing to another mortgage servicing software platform. Furthermore, Ocwen disclosed in its filings that its pending acquisition of PHH Corporation is expected to accelerate its transition to a new servicing platform. Altisource is supporting Ocwen through this transition. We do not anticipate that a servicing technology transition would materially impact the other services we provide to Ocwen. For the six months ended June 30, 2018 and 2017 , service revenue from REALServicing was $11.9 million and $13.4 million , respectively ( $5.4 million and $6.3 million for the second quarter of 2018 and 2017 , respectively). In addition to the above, as of March 31, 2018, NRZ owned the Subject MSRs with underlying UPB of $98.3 billion . As of March 31, 2018, Ocwen serviced and subserviced MSRs with underlying UPB of $173.4 billion . As previously disclosed, in July 2017, Ocwen and NRZ entered into agreements to convert NRZ’s economic rights to the Subject MSRs into fully-owned MSRs in exchange for payments from NRZ to Ocwen when such Subject MSRs were transferred. The transfers are subject to certain third party consents. Ocwen disclosed that under these agreements, Ocwen would subservice the transferred Subject MSRs for an initial term of five years, and the agreements provided for the conversion of the existing arrangements into a more traditional subservicing arrangement. In January 2018, Ocwen disclosed that it and NRZ entered into new agreements to accelerate the implementation of certain parts of their July 2017 arrangement in order to achieve the intent of the July 2017 agreements sooner while Ocwen continues the process of obtaining the third party consents necessary to transfer the Subject MSRs to NRZ. On August 28, 2017, Altisource, through its licensed subsidiaries, entered into the Brokerage Agreement with NRZ which extends through August 2025. Under this agreement and related amendments, Altisource remains the exclusive provider of brokerage services for REO associated with the Subject MSRs when Ocwen transfers such MSRs to NRZ or when NRZ acquires both an additional economic interest in such Subject MSRs and the right to designate the broker for REO properties in such portfolios. The Brokerage Agreement provides that Altisource is the exclusive provider of brokerage services for REO associated with the Subject MSRs, irrespective of the sub-servicer. NRZ’s brokerage subsidiary receives a cooperative brokerage commission on the sale of certain REO properties from these portfolios subject to certain exceptions. On August 28, 2017, Altisource and NRZ also entered into the Services LOI, setting forth the terms pursuant to which Altisource would remain the exclusive service provider of fee-based services for the Subject MSRs through August 2025. The Services LOI was amended to continue through August 31, 2018 . The Brokerage Agreement can be terminated by Altisource if the Services Agreement is not signed by Altisource and NRZ during the term of the Services LOI, as extended. The Brokerage Agreement may otherwise only be terminated upon the occurrence of certain specified events. Termination events include, but are not limited to, a breach of the terms of the Brokerage Agreement (including, without limitation, the failure to meet performance standards and non-compliance with law in a material respect), the failure to maintain licenses which failure materially prevents performance of the contract, regulatory allegations of non-compliance resulting in an adversarial proceeding against NRZ, voluntary or involuntary bankruptcy, appointment of a receiver, disclosure in a Form 10-K or Form 10-Q that there is significant uncertainty about Altisource’s ability to continue as a going concern, failure to maintain a specified level of cash and an unapproved change of control. We anticipate that revenue from NRZ will increase over time and revenue from Ocwen will decrease. As Subject MSRs continue to transfer from Ocwen to NRZ and following the anticipated execution of the Services Agreement, we expect that NRZ will become our largest customer. Had all of the Subject MSRs been transferred to NRZ and the Brokerage Agreement and the Services Agreement with NRZ been in place as of January 1, 2018, we estimate that approximately 48% of our revenue for the six months ended June 30, 2018 would have been related to NRZ. There can be no assurance that the parties will reach an agreement with respect to the terms of the Services Agreement or that a Services Agreement will be entered into on a timely basis or at all. Escrow and Trust Balances We hold customers’ assets in escrow and trust accounts at various financial institutions pending completion of certain real estate activities. We also hold cash in trust accounts at various financial institutions where contractual obligations mandate maintaining dedicated bank accounts for our asset recovery management business’s collections. These amounts are held in escrow and trust accounts for limited periods of time and are not included in the condensed consolidated balance sheets. Amounts held in escrow and trust accounts were $20.8 million and $35.1 million at June 30, 2018 and December 31, 2017 , respectively. |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING Our business segments are based upon our organizational structure, which focuses primarily on the services offered, and are consistent with the internal reporting used by our Chief Executive Officer (our chief operating decision maker) to evaluate operating performance and to assess the allocation of our resources. We report our operations through two reportable segments: Mortgage Market and Real Estate Market . In addition, we report Other Businesses, Corporate and Eliminations separately. The Mortgage Market segment provides loan servicers and originators with marketplaces, services and technologies that span the mortgage lifecycle. The Real Estate Market segment provides real estate consumers and rental property investors with marketplaces and services that span the real estate lifecycle. In addition, the Other Businesses, Corporate and Eliminations segment includes businesses that provide post-charge-off consumer debt collection services primarily to debt originators (e.g., credit card, auto lending and retail credit), customer relationship management services primarily to the utility, insurance and hotel industries and IT infrastructure management services. Other Businesses, Corporate and Eliminations also includes interest expense and costs related to corporate support functions including executive, finance, law, compliance, human resources, vendor management, facilities, risk management, and sales and marketing costs not allocated to the business units as well as eliminations between the reportable segments. Financial information for our segments is as follows: Three months ended June 30, 2018 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 178,662 $ 24,145 $ 15,749 $ 218,556 Cost of revenue 115,329 28,191 19,686 163,206 Gross profit (loss) 63,333 (4,046 ) (3,937 ) 55,350 Selling, general and administrative expenses 20,604 5,180 17,140 42,924 Income (loss) from operations 42,729 (9,226 ) (21,077 ) 12,426 Total other income (expense), net (4 ) 12 (9,363 ) (9,355 ) Income (loss) before income taxes and $ 42,725 $ (9,214 ) $ (30,440 ) $ 3,071 Three months ended June 30, 2017 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 210,195 $ 25,130 $ 15,360 $ 250,685 Cost of revenue 144,326 26,844 14,223 185,393 Gross profit (loss) 65,869 (1,714 ) 1,137 65,292 Selling, general and administrative expenses 29,805 5,551 17,114 52,470 Income (loss) from operations 36,064 (7,265 ) (15,977 ) 12,822 Total other income (expense), net 102 — (764 ) (662 ) Income (loss) before income taxes and $ 36,166 $ (7,265 ) $ (16,741 ) $ 12,160 Six months ended June 30, 2018 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 346,000 $ 39,425 $ 30,569 $ 415,994 Cost of revenue 226,402 46,745 37,253 310,400 Gross profit (loss) 119,598 (7,320 ) (6,684 ) 105,594 Selling, general and administrative expenses 43,978 9,298 32,772 86,048 Income (loss) from operations 75,620 (16,618 ) (39,456 ) 19,546 Total other income (expense), net 12 14 (21,473 ) (21,447 ) Income (loss) before income taxes and $ 75,632 $ (16,604 ) $ (60,929 ) $ (1,901 ) Six months ended June 30, 2017 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 414,918 $ 45,193 $ 31,057 $ 491,168 Cost of revenue 284,476 48,987 29,883 363,346 Gross profit (loss) 130,442 (3,794 ) 1,174 127,822 Selling, general and administrative expenses 58,487 9,876 31,808 100,171 Income (loss) from operations 71,955 (13,670 ) (30,634 ) 27,651 Total other income (expense), net 112 — (5,857 ) (5,745 ) Income (loss) before income taxes and $ 72,067 $ (13,670 ) $ (36,491 ) $ 21,906 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Total assets: June 30, 2018 $ 265,463 $ 85,080 $ 459,353 $ 809,896 December 31, 2017 304,346 64,624 496,194 865,164 Our services are primarily provided to customers located in the United States. Premises and equipment, net consist of the following, by country: (in thousands) June 30, December 31, United States $ 34,597 $ 46,268 Luxembourg 16,708 16,688 India 5,575 8,136 Philippines 1,848 2,038 Uruguay 92 143 Total $ 58,820 $ 73,273 |
ORGANIZATION AND BASIS OF PRE28
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting and Presentation | 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 period. Actual results could differ from those estimates. Intercompany transactions and accounts have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Altisource consolidates Best Partners Mortgage Cooperative, Inc., which is managed by The Mortgage Partnership of America, L.L.C. (“MPA”), a wholly-owned subsidiary of Altisource. Best Partners Mortgage Cooperative, Inc. is a mortgage cooperative doing business as Lenders One ® (“Lenders One”). MPA provides services to Lenders One under a management agreement that ends on December 31, 2025 (with renewals for three successive five-year periods at MPA’s option). The management agreement between MPA and Lenders One, pursuant to which MPA is the management company, represents a variable interest in a variable interest entity. MPA is the primary beneficiary of Lenders One as it has the power to direct the activities that most significantly impact the cooperative’s economic performance and the right to receive benefits from the cooperative. As a result, Lenders One is presented in the accompanying condensed consolidated financial statements on a consolidated basis and the interests of the members are reflected as non-controlling interests. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as an exit price, representing the amount that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows: Level 1 — Quoted prices in active markets for identical assets and liabilities Level 2 — Observable inputs other than quoted prices included in Level 1 Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities Financial assets and financial liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. |
Revenue Recognition | As a result of the adoption of Topic 606, the Company’s accounting policy for revenue recognition is as follows: We recognize revenue from the services we provide in accordance with the 5-step process outlined in Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer in an amount that reflects the consideration that we expect to receive. This revenue can be recognized at a point in time or over time. We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized. When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred revenue or other current liabilities), as appropriate. A description of our principal revenue generating activities by reportable segment are as follows: Mortgage Market • For the majority of the services we provide, we recognize transactional revenue when the service is provided. • For loan servicing technologies, we recognize revenue based on the number of loans on the system, on a per-transaction basis or over the estimated average number of months the loans and real estate owned (“REO”) are on the platform, as applicable. We generally recognize revenue for professional services relating to loan servicing technologies over the contract period. For our loan origination system, we generally recognize revenue over the contract term, beginning on the commencement date of each contract. For foreclosure trustee services, we recognize revenue over the period during which we perform the related services, with full recognition upon completion and/or recording the related foreclosure deed. For loan disbursement processing services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements. We use judgment to determine the period over which we recognize revenue for certain of these services. For mortgage charge-off collections performed on behalf of our clients, we recognize revenue as a percentage of amounts collected following collection from the borrowers. • For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. • Reimbursable expenses revenue, primarily related to our property preservation and inspection services, real estate sales and our foreclosure trustee services businesses, is included in revenue with an equal amount recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers. Real Estate Market • For the majority of the services we provide, we recognize transactional revenue when the service is provided. • For our renovation services, revenue is recognized over the period of the construction activity, based on the estimated percentage of completion of the projects. We use judgment to determine the period over which we recognize revenue for certain of these services. For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. For the buy-renovate-lease-sell business, we recognize revenue associated with our sales of short-term investments in real estate on a gross basis as we assume the risks and rewards of ownership of the asset. • Reimbursable expenses revenue, primarily related to our real estate sales business, is included in revenue with an equal offsetting expense recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers. Other Businesses, Corporate and Eliminations • For the majority of the services we provide, we recognize transactional revenue when the service is provided. We generally earn fees for our post-charge-off consumer debt collection services as a percentage of the amount we collect on delinquent consumer receivables and recognize revenue following collection from the borrowers. We provide customer relationship management services for which we typically earn and recognize revenue on a per-person, per-call or per-minute basis as the related services are performed. • For the information technology (“IT”) infrastructure services we provide to Ocwen Financial Corporation (“Ocwen”), Front Yard Residential Corporation (“RESI”) and Altisource Asset Management Corporation (“AAMC”), we recognize revenue primarily based on the number of users of the applicable systems, fixed fees and the number and type of licensed platforms. We recognize revenue associated with implementation services upon completion and maintenance services ratably over the related service period. |
Adoption/Future Adoption of New Accounting Pronouncements | Recently Adopted Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) and during 2016, the FASB issued additional guidance providing clarifications and corrections, including: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (collectively “Topic 606”) . Topic 606 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance. This new standard requires that an entity recognize revenue for the transfer of promised goods or services to a customer in an amount that reflects the consideration that the entity expects to receive and consistent with the delivery of the performance obligation described in the underlying contract with the customer. The Company adopted Topic 606 effective January 1, 2018 using the cumulative effect method. As a result of this adoption, the Company recognized an $11.2 million increase in deferred revenue, a $1.1 million increase in unbilled accounts receivable, a $0.3 million increase in other current liabilities and a $10.4 million decrease in retained earnings as of January 1, 2018. Because the Company adopted Topic 606 retrospectively with a cumulative effect as of January 1, 2018, the comparative results as of December 31, 2017 and for the three and six months ended June 30, 2017 have not been restated and continue to be reported under Accounting Standards Codification Topic 605, Revenue Recognition and SEC Staff Accounting Bulletin Topic 13, Revenue Recognition . The details of the significant changes and quantitative impact of the adoption of Topic 606 are described below. Also see Note 14 for additional information on revenue, including disaggregation of revenue and contract balances. As a result of the adoption of Topic 606, the Company’s accounting policy for revenue recognition is as follows: We recognize revenue from the services we provide in accordance with the 5-step process outlined in Topic 606. We recognize revenue when we satisfy a performance obligation by transferring control of a product or service to a customer in an amount that reflects the consideration that we expect to receive. This revenue can be recognized at a point in time or over time. We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized. When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred revenue or other current liabilities), as appropriate. A description of our principal revenue generating activities by reportable segment are as follows: Mortgage Market • For the majority of the services we provide, we recognize transactional revenue when the service is provided. • For loan servicing technologies, we recognize revenue based on the number of loans on the system, on a per-transaction basis or over the estimated average number of months the loans and real estate owned (“REO”) are on the platform, as applicable. We generally recognize revenue for professional services relating to loan servicing technologies over the contract period. For our loan origination system, we generally recognize revenue over the contract term, beginning on the commencement date of each contract. For foreclosure trustee services, we recognize revenue over the period during which we perform the related services, with full recognition upon completion and/or recording the related foreclosure deed. For loan disbursement processing services, we recognize revenue over the period during which we perform the processing services with full recognition upon completion of the disbursements. We use judgment to determine the period over which we recognize revenue for certain of these services. For mortgage charge-off collections performed on behalf of our clients, we recognize revenue as a percentage of amounts collected following collection from the borrowers. • For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. • Reimbursable expenses revenue, primarily related to our property preservation and inspection services, real estate sales and our foreclosure trustee services businesses, is included in revenue with an equal amount recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers. Real Estate Market • For the majority of the services we provide, we recognize transactional revenue when the service is provided. • For our renovation services, revenue is recognized over the period of the construction activity, based on the estimated percentage of completion of the projects. We use judgment to determine the period over which we recognize revenue for certain of these services. For real estate brokerage and auction services, we recognize revenue on a net basis as we perform services as an agent without assuming the risks and rewards of ownership of the asset and the commission earned on the sale is a fixed percentage or amount. For the buy-renovate-lease-sell business, we recognize revenue associated with our sales of short-term investments in real estate on a gross basis as we assume the risks and rewards of ownership of the asset. • Reimbursable expenses revenue, primarily related to our real estate sales business, is included in revenue with an equal offsetting expense recognized in cost of revenue. These amounts are recognized on a gross basis, principally because generally we have control over selection of vendors and the vendor relationship is with us, rather than with our customers. Other Businesses, Corporate and Eliminations • For the majority of the services we provide, we recognize transactional revenue when the service is provided. We generally earn fees for our post-charge-off consumer debt collection services as a percentage of the amount we collect on delinquent consumer receivables and recognize revenue following collection from the borrowers. We provide customer relationship management services for which we typically earn and recognize revenue on a per-person, per-call or per-minute basis as the related services are performed. • For the information technology (“IT”) infrastructure services we provide to Ocwen Financial Corporation (“Ocwen”), Front Yard Residential Corporation (“RESI”) and Altisource Asset Management Corporation (“AAMC”), we recognize revenue primarily based on the number of users of the applicable systems, fixed fees and the number and type of licensed platforms. We recognize revenue associated with implementation services upon completion and maintenance services ratably over the related service period. The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated balance sheet as of June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Accounts receivable, net $ 45,426 $ 642 $ 46,068 Total current assets 243,189 642 243,831 Total assets 809,896 642 810,538 Other current liabilities 5,889 (217 ) 5,672 Deferred revenue 19,131 (9,100 ) 10,031 Total current liabilities 133,866 (9,317 ) 124,549 Deferred revenue, non-current 41 1,160 1,201 Retained earnings 596,268 8,799 605,067 Altisource equity 310,887 8,799 319,686 Total equity 312,291 8,799 321,090 Total liabilities and equity 809,896 642 810,538 The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated statement of operations and comprehensive income for the three months ended June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Revenue $ 218,556 $ (1,203 ) $ 217,353 Cost of revenue 163,206 662 163,868 Gross profit 55,350 (1,865 ) 53,485 Income from operations 12,426 (1,865 ) 10,561 Income before income taxes and non-controlling interests 3,071 (1,865 ) 1,206 Income tax provision (816 ) 544 (272 ) Net income 2,255 (1,321 ) 934 Net income attributable to Altisource 1,568 (1,321 ) 247 The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated statement of operations and comprehensive income for the six months ended June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Revenue $ 415,994 $ (791 ) $ 415,203 Cost of revenue 310,400 1,459 311,859 Gross profit 105,594 (2,250 ) 103,344 Income from operations 19,546 (2,250 ) 17,296 Loss before income taxes and non-controlling interests (1,901 ) (2,250 ) (4,151 ) Income tax benefit 549 650 1,199 Net loss (1,352 ) (1,600 ) (2,952 ) Net loss attributable to Altisource (2,564 ) (1,600 ) (4,164 ) The adoption of Topic 606 did not have any impact on net cash flows used in operating, financing or investing activities on the Company’s condensed consolidated statement of cash flows for the six months ended June 30, 2018 . Financial Instruments In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . This standard requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The standard also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. It also amends certain financial statement presentation and disclosure requirements associated with the fair value of financial instruments. This standard was effective for the Company on January 1, 2018. The adoption of this standard resulted in a cumulative effect adjustment to increase retained earnings and decrease accumulated other comprehensive income by $0.7 million on January 1, 2018. Changes in the fair value of the Company’s investment in RESI subsequent to January 1, 2018, as well as any equity investments acquired in the future, will be reflected as a component of net income in the Company’s consolidated statements of operations and comprehensive income. Other Recently Adopted Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s condensed consolidated statement of cash flows. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This standard requires that companies recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs. Previous guidance prohibited companies from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . This standard requires that companies include restricted cash and restricted cash equivalents in their cash and cash equivalent balances in the statement of cash flows. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This standard was effective for the Company on January 1, 2018, and was adopted using the retrospective transition method, as required by the standard. The adoption of this standard resulted in the classification of the Company’s restricted cash with cash and cash equivalents reported in the Company’s condensed consolidated statements of cash flows. As a result, the Company included $5.8 million , $3.8 million , $4.4 million and $4.1 million of restricted cash with cash and cash equivalents in its condensed consolidated statements of cash flows as of June 30, 2018, December 31, 2017, June 30, 2017 and December 31, 2016, respectively. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This standard clarifies the definition of a business and provides a screen to determine if a set of inputs, processes and outputs is a business. The screen requires that when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the assets acquired would not be a business. Under the new guidance, in order to be considered a business, an acquisition must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. In addition, the standard narrows the definition of the term “output” so that it is consistent with how it is described in Topic 606 . This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. In February 2017, the FASB issued ASU No. 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets . This standard was issued to clarify the scope of Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets , and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20 provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. In May 2017, the FASB issued ASU No. 2017-09, C ompensation—Stock Compensation (Topic 718): Scope of Modification Accounting . This standard provides guidance about which changes to the terms or conditions of a share-based payment award require the application of modification accounting. This standard requires companies to continue to apply modification accounting, unless the fair value, vesting conditions and classification of an award all do not change as a result of the modification. This standard was effective for the Company on January 1, 2018, and the adoption of this guidance did not have any effect on the Company’s results of operations and financial position. Future Adoption of New Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . This standard introduces a new lessee model that brings substantially all leases on the balance sheet. This standard will require companies to recognize lease assets and lease liabilities on their balance sheets and disclose key information about leasing arrangements in their financial statements. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application of this standard is permitted. The Company is currently evaluating the impact of this guidance on its results of operations and financial position. Based on the Company’s preliminary analysis of arrangements where the Company is a lessee, we estimate that the new standard, if implemented as of June 30, 2018 , would result in approximately $17.6 million right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheet as of June 30, 2018 . The Company will continue to analyze the impact of this guidance and refine the estimated impact on its results of operations and financial position. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard will simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Current guidance requires that companies compute the implied fair value of goodwill under Step 2 by performing procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. This standard will require companies to perform annual or interim goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This standard will be effective for annual periods beginning after December 15, 2019, including interim periods within that reporting period, and will be applied prospectively. Early adoption of this standard is permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . The amendments in this standard better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedging results. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period. Early application is permitted. The Company currently does not expect the adoption of this guidance to have a material effect on its results of operations and financial position. |
ORGANIZATION AND BASIS OF PRE29
ORGANIZATION AND BASIS OF PRESENTATION ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Impact of Topic 606 on Financial Statements | The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated balance sheet as of June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Accounts receivable, net $ 45,426 $ 642 $ 46,068 Total current assets 243,189 642 243,831 Total assets 809,896 642 810,538 Other current liabilities 5,889 (217 ) 5,672 Deferred revenue 19,131 (9,100 ) 10,031 Total current liabilities 133,866 (9,317 ) 124,549 Deferred revenue, non-current 41 1,160 1,201 Retained earnings 596,268 8,799 605,067 Altisource equity 310,887 8,799 319,686 Total equity 312,291 8,799 321,090 Total liabilities and equity 809,896 642 810,538 The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated statement of operations and comprehensive income for the three months ended June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Revenue $ 218,556 $ (1,203 ) $ 217,353 Cost of revenue 163,206 662 163,868 Gross profit 55,350 (1,865 ) 53,485 Income from operations 12,426 (1,865 ) 10,561 Income before income taxes and non-controlling interests 3,071 (1,865 ) 1,206 Income tax provision (816 ) 544 (272 ) Net income 2,255 (1,321 ) 934 Net income attributable to Altisource 1,568 (1,321 ) 247 The following table summarizes the impact of adopting Topic 606 on the Company’s condensed consolidated statement of operations and comprehensive income for the six months ended June 30, 2018 : Impact of the adoption of Topic 606 (in thousands) As reported Adjustments Balances without adoption of Topic 606 Revenue $ 415,994 $ (791 ) $ 415,203 Cost of revenue 310,400 1,459 311,859 Gross profit 105,594 (2,250 ) 103,344 Income from operations 19,546 (2,250 ) 17,296 Loss before income taxes and non-controlling interests (1,901 ) (2,250 ) (4,151 ) Income tax benefit 549 650 1,199 Net loss (1,352 ) (1,600 ) (2,952 ) Net loss attributable to Altisource (2,564 ) (1,600 ) (4,164 ) |
CUSTOMER CONCENTRATION (Tables)
CUSTOMER CONCENTRATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Ocwen | |
Concentration Risk | |
Schedule of concentration of risk, revenue as a percentage of segment and consolidated revenue | Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows: Three months ended Six months ended 2018 2017 2018 2017 Mortgage Market 60 % 68 % 60 % 68 % Real Estate Market 1 % 1 % 1 % 1 % Other Businesses, Corporate and Eliminations 9 % 11 % 9 % 13 % Consolidated revenue 50 % 58 % 51 % 58 % |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable, net | Accounts receivable, net consists of the following: (in thousands) June 30, December 31, Billed $ 39,313 $ 40,787 Unbilled 17,446 22,532 Subtotal 56,759 63,319 Less: Allowance for doubtful accounts (11,333 ) (10,579 ) Total $ 45,426 $ 52,740 |
PREPAID EXPENSES AND OTHER CU32
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following: (in thousands) June 30, December 31, Short-term investments in real estate $ 35,289 $ 29,405 Maintenance agreements, current portion 4,961 8,014 Income taxes receivable 11,396 9,227 Prepaid expenses 7,501 7,898 Other current assets 10,862 10,198 Total $ 70,009 $ 64,742 |
PREMISES AND EQUIPMENT, NET (Ta
PREMISES AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of premises and equipment, net | Premises and equipment, net consists of the following: (in thousands) June 30, December 31, Computer hardware and software $ 182,606 $ 179,567 Leasehold improvements 32,658 33,417 Furniture and fixtures 13,695 14,092 Office equipment and other 8,887 9,388 237,846 236,464 Less: Accumulated depreciation and amortization (179,026 ) (163,191 ) Total $ 58,820 $ 73,273 |
GOODWILL AND INTANGIBLE ASSET34
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of changes in goodwill | The following is a summary of goodwill by segment: (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Total Balance as of June 30, 2018 and December 31, 2017 $ 73,259 $ 10,056 $ 2,968 $ 86,283 |
Schedule of intangible assets, net | Intangible assets, net consist of the following: Weighted average estimated useful life (in years) Gross carrying amount Accumulated amortization Net book value (in thousands) June 30, December 31, June 30, December 31, June 30, December 31, Definite lived intangible assets: Customer related intangible assets 10 $ 273,172 $ 277,828 $ (196,315 ) $ (188,258 ) $ 76,857 $ 89,570 Operating agreement 20 35,000 35,000 (14,748 ) (13,865 ) 20,252 21,135 Trademarks and trade names 14 12,554 15,354 (6,480 ) (8,881 ) 6,074 6,473 Non-compete agreements 4 1,230 1,560 (872 ) (897 ) 358 663 Intellectual property 10 300 300 (130 ) (115 ) 170 185 Other intangible assets 5 3,745 3,745 (2,082 ) (1,706 ) 1,663 2,039 Total $ 326,001 $ 333,787 $ (220,627 ) $ (213,722 ) $ 105,374 $ 120,065 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of other assets | Other assets consist of the following: (in thousands) June 30, December 31, Security deposits $ 4,807 $ 5,304 Restricted cash 5,783 3,837 Other 584 1,054 Total $ 11,174 $ 10,195 |
ACCOUNTS PAYABLE, ACCRUED EXP36
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consist of the following: (in thousands) June 30, December 31, Accounts payable $ 13,781 $ 15,682 Accrued expenses - general 26,343 27,268 Accrued salaries and benefits 27,062 41,363 Income taxes payable 460 87 Total $ 67,646 $ 84,400 |
Schedule of other current liabilities | Other current liabilities consist of the following: (in thousands) June 30, December 31, Unfunded cash account balances $ 3,147 $ 5,900 Other 2,742 3,514 Total $ 5,889 $ 9,414 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consists of the following: (in thousands) June 30, December 31, Term loans $ 403,760 $ 413,581 Less: Debt issuance costs, net (4,317 ) (3,158 ) Less: Unamortized discount, net (3,911 ) (1,142 ) Net long-term debt 395,532 409,281 Less: Current portion (41,200 ) (5,945 ) Long-term debt, less current portion $ 354,332 $ 403,336 |
OTHER NON-CURRENT LIABILITIES (
OTHER NON-CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of other non-current liabilities | Other non-current liabilities consist of the following: (in thousands) June 30, December 31, Income tax liabilities $ 5,605 $ 5,955 Deferred revenue 41 2,101 Other non-current liabilities 3,761 4,226 Total $ 9,407 $ 12,282 |
FAIR VALUE MEASUREMENTS AND F39
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following fair values are estimated using market information and what the Company believes to be appropriate valuation methodologies under GAAP: June 30, 2018 December 31, 2017 (in thousands) Carrying amount Fair value Carrying amount Fair value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 84,569 $ 84,569 $ — $ — $ 105,006 $ 105,006 $ — $ — Restricted cash 5,783 5,783 — — 3,837 3,837 — — Investment in equity securities 43,185 43,185 — — 49,153 49,153 — — Liabilities: Long-term debt 403,760 — 401,067 — 413,581 — 407,377 — |
SHAREHOLDERS_ EQUITY AND SHAR40
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of assumptions used to determine the fair value of options as of the grant date | The following assumptions were used to determine the fair values as of the grant date: Six months ended Six months ended Black-Scholes Binomial Black-Scholes Binomial Risk-free interest rate (%) 2.66 – 2.98 1.64 – 2.83 2.06 – 2.29 0.77 – 2.38 Expected stock price volatility (%) 70.31 – 71.86 71.81 – 71.86 61.49 – 66.68 66.68 Expected dividend yield — — — — Expected option life (in years) 6.00 – 6.25 2.56 – 4.32 6.00 – 7.50 3.53 – 3.85 Fair value $16.17 – $19.06 $14.67 – $18.28 $23.91 – $24.80 $23.54 – $24.30 |
Summary of the weighted average fair value of stock options granted, the total intrinsic value of stock options exercised and the fair value of options vested | The following table summarizes the weighted average grant date fair value of stock options granted per share, the total intrinsic value of stock options exercised and the grant date fair value of stock options that vested during the periods presented: Six months ended June 30, (in thousands, except per share amounts) 2018 2017 Weighted average grant date fair value of stock options granted per share $ 16.27 $ 24.23 Intrinsic value of options exercised 4,393 875 Grant date fair value of stock options that vested 1,334 1,693 |
Summary of the activity of the entity's stock options | The following table summarizes the activity related to our stock options: Number of options Weighted average exercise price Weighted average contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2017 1,745,906 $ 28.20 4.96 $ 10,202 Granted 271,876 25.06 Exercised (295,752 ) 9.48 Forfeited (180,578 ) 33.91 Outstanding at June 30, 2018 1,541,452 30.56 5.76 5,235 Exercisable at June 30, 2018 921,627 27.03 3.96 5,132 |
Restricted stock and restricted stock units activity | The following table summarizes the activity related to our restricted shares and restricted share units: Number of restricted shares Outstanding at December 31, 2017 356,509 Granted 305,282 Issued (88,043 ) Forfeited/canceled (96,853 ) Outstanding at June 30, 2018 476,895 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue | The components of revenue were as follows: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Service revenue $ 208,861 $ 238,107 $ 397,627 $ 467,946 Reimbursable expenses 9,008 11,891 17,155 21,920 Non-controlling interests 687 687 1,212 1,302 Total $ 218,556 $ 250,685 $ 415,994 $ 491,168 |
Disaggregation of revenue | Disaggregation of total revenues by segment and major source is as follows: Three months ended June 30, 2018 (in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue Mortgage Market: Servicer Solutions $ 139,084 $ 18,525 $ 8,460 $ 166,069 Origination Solutions 10,243 2,292 58 12,593 Total Mortgage Market 149,327 20,817 8,518 178,662 Real Estate Market: Consumer Real Estate Solutions 2,312 — — 2,312 Real Estate Investor Solutions 21,352 — 481 21,833 Total Real Estate Market 23,664 — 481 24,145 Other Businesses, Corporate and Eliminations 14,215 1,525 9 15,749 Total revenue $ 187,206 $ 22,342 $ 9,008 $ 218,556 Six months ended June 30, 2018 (in thousands) Revenue recognized when services are performed or assets are sold Revenue related to technology platforms and professional services Reimbursable expenses revenue Total revenue Mortgage Market: Servicer Solutions $ 268,620 $ 36,798 $ 16,062 $ 321,480 Origination Solutions 19,428 4,978 114 24,520 Total Mortgage Market 288,048 41,776 16,176 346,000 Real Estate Market: Consumer Real Estate Solutions 3,717 — 2 3,719 Real Estate Investor Solutions 34,750 — 956 35,706 Total Real Estate Market 38,467 — 958 39,425 Other Businesses, Corporate and Eliminations 27,647 2,901 21 30,569 Total revenue $ 354,162 $ 44,677 $ 17,155 $ 415,994 |
COST OF REVENUE (Tables)
COST OF REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cost of Revenue [Abstract] | |
Schedule of components of cost of revenue | The components of cost of revenue were as follows: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Compensation and benefits $ 54,769 $ 62,666 $ 109,635 $ 125,758 Outside fees and services 68,879 86,255 133,977 167,214 Cost of real estate sold 13,320 7,114 16,499 12,049 Technology and telecommunications 10,852 10,941 20,303 22,292 Reimbursable expenses 9,008 11,891 17,155 21,920 Depreciation and amortization 6,378 6,526 12,831 14,113 Total $ 163,206 $ 185,393 $ 310,400 $ 363,346 |
SELLING, GENERAL AND ADMINIST43
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Selling, General and Administrative Expense [Abstract] | |
Schedule of the components of selling, general and administrative expenses | The components of selling, general and administrative expenses were as follows: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Compensation and benefits $ 12,197 $ 15,541 $ 25,766 $ 28,047 Occupancy related costs 7,189 9,538 15,623 19,811 Amortization of intangible assets 7,544 9,393 14,691 18,539 Marketing costs 3,978 3,697 7,585 7,966 Professional services 4,328 4,367 7,554 8,097 Depreciation and amortization 1,950 2,361 4,218 4,782 Other 5,738 7,573 10,611 12,929 Total $ 42,924 $ 52,470 $ 86,048 $ 100,171 |
OTHER INCOME (EXPENSE), NET (Ta
OTHER INCOME (EXPENSE), NET (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Income and Expenses [Abstract] | |
Schedule of other income (expense), net | Other income (expense), net consists of the following: Three months ended Six months ended (in thousands) 2018 2017 2018 2017 Loss on debt refinancing $ (4,434 ) $ — $ (4,434 ) $ — Gain on early extinguishment of debt — 3,937 — 3,937 Interest income 100 44 231 142 Other, net 473 822 1,614 1,439 Total $ (3,861 ) $ 4,803 $ (2,589 ) $ 5,518 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted EPS calculation | Basic and diluted EPS are calculated as follows: Three months ended Six months ended (in thousands, except per share data) 2018 2017 2018 2017 Net income (loss) attributable to Altisource $ 1,568 $ 9,035 $ (2,564 ) $ 15,580 Weighted average common shares outstanding, basic 17,142 18,335 17,260 18,497 Dilutive effect of stock options, restricted shares and 411 501 — 572 Weighted average common shares outstanding, diluted 17,553 18,836 17,260 19,069 Earnings (loss) per share: Basic $ 0.09 $ 0.49 $ (0.15 ) $ 0.84 Diluted $ 0.09 $ 0.48 $ (0.15 ) $ 0.82 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of financial information of segments | Financial information for our segments is as follows: Three months ended June 30, 2018 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 178,662 $ 24,145 $ 15,749 $ 218,556 Cost of revenue 115,329 28,191 19,686 163,206 Gross profit (loss) 63,333 (4,046 ) (3,937 ) 55,350 Selling, general and administrative expenses 20,604 5,180 17,140 42,924 Income (loss) from operations 42,729 (9,226 ) (21,077 ) 12,426 Total other income (expense), net (4 ) 12 (9,363 ) (9,355 ) Income (loss) before income taxes and $ 42,725 $ (9,214 ) $ (30,440 ) $ 3,071 Three months ended June 30, 2017 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 210,195 $ 25,130 $ 15,360 $ 250,685 Cost of revenue 144,326 26,844 14,223 185,393 Gross profit (loss) 65,869 (1,714 ) 1,137 65,292 Selling, general and administrative expenses 29,805 5,551 17,114 52,470 Income (loss) from operations 36,064 (7,265 ) (15,977 ) 12,822 Total other income (expense), net 102 — (764 ) (662 ) Income (loss) before income taxes and $ 36,166 $ (7,265 ) $ (16,741 ) $ 12,160 Six months ended June 30, 2018 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 346,000 $ 39,425 $ 30,569 $ 415,994 Cost of revenue 226,402 46,745 37,253 310,400 Gross profit (loss) 119,598 (7,320 ) (6,684 ) 105,594 Selling, general and administrative expenses 43,978 9,298 32,772 86,048 Income (loss) from operations 75,620 (16,618 ) (39,456 ) 19,546 Total other income (expense), net 12 14 (21,473 ) (21,447 ) Income (loss) before income taxes and $ 75,632 $ (16,604 ) $ (60,929 ) $ (1,901 ) Six months ended June 30, 2017 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Revenue $ 414,918 $ 45,193 $ 31,057 $ 491,168 Cost of revenue 284,476 48,987 29,883 363,346 Gross profit (loss) 130,442 (3,794 ) 1,174 127,822 Selling, general and administrative expenses 58,487 9,876 31,808 100,171 Income (loss) from operations 71,955 (13,670 ) (30,634 ) 27,651 Total other income (expense), net 112 — (5,857 ) (5,745 ) Income (loss) before income taxes and $ 72,067 $ (13,670 ) $ (36,491 ) $ 21,906 (in thousands) Mortgage Market Real Estate Market Other Businesses, Corporate and Eliminations Consolidated Altisource Total assets: June 30, 2018 $ 265,463 $ 85,080 $ 459,353 $ 809,896 December 31, 2017 304,346 64,624 496,194 865,164 |
Schedule of premises and equipment, net by country | Premises and equipment, net consist of the following, by country: (in thousands) June 30, December 31, United States $ 34,597 $ 46,268 Luxembourg 16,708 16,688 India 5,575 8,136 Philippines 1,848 2,038 Uruguay 92 143 Total $ 58,820 $ 73,273 |
ORGANIZATION AND BASIS OF PRE47
ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Jan. 01, 2017 | Dec. 31, 2016 |
Summary of significant accounting policies | ||||||
Increase in deferred revenue | $ 19,131 | $ 9,802 | ||||
Increase in other current liabilities | 5,889 | 9,414 | ||||
Decrease in retained earnings | (596,268) | (626,600) | ||||
Cumulative effect of accounting changes | $ 10,448 | $ 0 | ||||
Restricted cash | 5,783 | 3,837 | $ 4,398 | $ 4,100 | ||
Operating lease, right-of-use, estimated asset and liability (approximate) | 17,600 | |||||
Accounting Standards Update 2014-09 | Adjustments | ||||||
Summary of significant accounting policies | ||||||
Increase in deferred revenue | (9,100) | 11,200 | ||||
Increase unbilled accounts receivable | 1,100 | |||||
Increase in other current liabilities | (217) | 300 | ||||
Decrease in retained earnings | (8,799) | 10,400 | ||||
Accounting Standards Update 2016-01 | Accumulated other comprehensive income (loss) | ||||||
Summary of significant accounting policies | ||||||
Cumulative effect of accounting changes | $ 733 | |||||
Lenders One | ||||||
Summary of significant accounting policies | ||||||
Total assets | 4,800 | 4,600 | ||||
Total liabilities | $ 3,100 | $ 3,100 |
ORGANIZATION AND BASIS OF PRE48
ORGANIZATION AND BASIS OF PRESENTATION - Impact of Topic 606 on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||
Accounts receivable, net | $ 45,426 | $ 45,426 | $ 52,740 | ||||
Total current assets | 243,189 | 243,189 | 271,641 | ||||
Total assets | 809,896 | 809,896 | 865,164 | ||||
Other current liabilities | 5,889 | 5,889 | 9,414 | ||||
Deferred revenue | 19,131 | 19,131 | 9,802 | ||||
Total current liabilities | 133,866 | 133,866 | 109,561 | ||||
Deferred revenue, non-current | 41 | 41 | 2,101 | ||||
Retained earnings | 596,268 | 596,268 | 626,600 | ||||
Altisource equity | 310,887 | 310,887 | 338,612 | ||||
Total equity | 312,291 | $ 66,723 | 312,291 | $ 66,723 | 339,985 | $ 62,194 | |
Total liabilities and equity | 809,896 | 809,896 | $ 865,164 | ||||
Revenue | 218,556 | 250,685 | 415,994 | 491,168 | |||
Cost of revenue | 163,206 | 185,393 | 310,400 | 363,346 | |||
Gross profit | 55,350 | 65,292 | 105,594 | 127,822 | |||
Income from operations | 12,426 | 12,822 | 19,546 | 27,651 | |||
Income (loss) before income taxes and non-controlling interests | 3,071 | 12,160 | (1,901) | 21,906 | |||
Income tax (provision) benefit | (816) | (2,438) | 549 | (5,024) | |||
Net income (loss) | 2,255 | 9,722 | (1,352) | 16,882 | |||
Net income (loss) attributable to Altisource | 1,568 | $ 9,035 | (2,564) | $ 15,580 | |||
Balances without adoption of Topic 606 | |||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||
Accounts receivable, net | 46,068 | 46,068 | |||||
Total current assets | 243,831 | 243,831 | |||||
Total assets | 810,538 | 810,538 | |||||
Other current liabilities | 5,672 | 5,672 | |||||
Deferred revenue | 10,031 | 10,031 | |||||
Total current liabilities | 124,549 | 124,549 | |||||
Deferred revenue, non-current | 1,201 | 1,201 | |||||
Retained earnings | 605,067 | 605,067 | |||||
Altisource equity | 319,686 | 319,686 | |||||
Total equity | 321,090 | 321,090 | |||||
Total liabilities and equity | 810,538 | 810,538 | |||||
Revenue | 217,353 | 415,203 | |||||
Cost of revenue | 163,868 | 311,859 | |||||
Gross profit | 53,485 | 103,344 | |||||
Income from operations | 10,561 | 17,296 | |||||
Income (loss) before income taxes and non-controlling interests | 1,206 | (4,151) | |||||
Income tax (provision) benefit | (272) | 1,199 | |||||
Net income (loss) | 934 | (2,952) | |||||
Net income (loss) attributable to Altisource | 247 | (4,164) | |||||
Accounting Standards Update 2014-09 | Adjustments | |||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||
Accounts receivable, net | 642 | 642 | |||||
Total current assets | 642 | 642 | |||||
Total assets | 642 | 642 | |||||
Other current liabilities | (217) | (217) | $ 300 | ||||
Deferred revenue | (9,100) | (9,100) | 11,200 | ||||
Total current liabilities | (9,317) | (9,317) | |||||
Deferred revenue, non-current | 1,160 | 1,160 | |||||
Retained earnings | 8,799 | 8,799 | $ (10,400) | ||||
Altisource equity | 8,799 | 8,799 | |||||
Total equity | 8,799 | 8,799 | |||||
Total liabilities and equity | 642 | 642 | |||||
Revenue | (1,203) | (791) | |||||
Cost of revenue | 662 | 1,459 | |||||
Gross profit | (1,865) | (2,250) | |||||
Income from operations | (1,865) | (2,250) | |||||
Income (loss) before income taxes and non-controlling interests | (1,865) | (2,250) | |||||
Income tax (provision) benefit | 544 | 650 | |||||
Net income (loss) | (1,321) | (1,600) | |||||
Net income (loss) attributable to Altisource | $ (1,321) | $ (1,600) |
CUSTOMER CONCENTRATION (Details
CUSTOMER CONCENTRATION (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Ocwen | ||||||
Concentration Risk | ||||||
Accounts receivable | $ 16.5 | $ 16.5 | $ 18.9 | |||
Unpaid principal balances of mortgage servicing rights | $ 173,400 | |||||
Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 50.00% | 58.00% | 51.00% | 58.00% | ||
Revenue | $ 108.8 | $ 144.2 | $ 210.8 | $ 285.6 | ||
Highly Correlated - Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 5.00% | 6.00% | ||||
Revenue | $ 11 | 41.2 | $ 26.2 | 82.9 | ||
NRZ | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Revenue | 8.9 | 0 | $ 19.2 | 0 | ||
Estimated percentage of revenue from largest customer | 48.00% | |||||
Highly Correlated - NRZ | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Revenue | 26.7 | $ 0 | $ 42.8 | $ 0 | ||
Billed | Ocwen | ||||||
Concentration Risk | ||||||
Accounts receivable | 12.2 | 12.2 | 13.6 | |||
Unbilled | Ocwen | ||||||
Concentration Risk | ||||||
Accounts receivable | $ 4.3 | $ 4.3 | $ 5.3 | |||
Mortgage Market | Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 60.00% | 68.00% | 60.00% | 68.00% | ||
Real Estate Market | Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 1.00% | 1.00% | 1.00% | 1.00% | ||
Other Businesses, Corporate and Eliminations | Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 9.00% | 11.00% | 9.00% | 13.00% | ||
NRZ | Ocwen | ||||||
Concentration Risk | ||||||
Unpaid principal balances of mortgage servicing rights | $ 98,300 |
INVESTMENT IN EQUITY SECURITI50
INVESTMENT IN EQUITY SECURITIES (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||||
Number of investment shares acquired (in shares) | 4.1 | |||||
Purchase of investment securities | $ 48,200 | |||||
Investment in equity securities | $ 43,185 | $ 43,185 | $ 49,153 | |||
Unrealized gain (loss) on investment in equity securities | 1,533 | $ 0 | (5,968) | $ 0 | ||
Unrealized gain (loss) on investment in equity securities, net of income taxes (OCI) | 0 | (6,981) | 0 | 5,742 | ||
Investment income, dividend | $ 600 | $ 600 | $ 1,200 | $ 1,200 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accounts receivable, net | ||
Subtotal | $ 56,759 | $ 63,319 |
Less: Allowance for doubtful accounts | (11,333) | (10,579) |
Total | 45,426 | 52,740 |
Billed | ||
Accounts receivable, net | ||
Subtotal | 39,313 | 40,787 |
Unbilled | ||
Accounts receivable, net | ||
Subtotal | $ 17,446 | $ 22,532 |
PREPAID EXPENSES AND OTHER CU52
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Short-term investments in real estate | $ 35,289 | $ 29,405 |
Maintenance agreements, current portion | 4,961 | 8,014 |
Income taxes receivable | 11,396 | 9,227 |
Prepaid expenses | 7,501 | 7,898 |
Other current assets | 10,862 | 10,198 |
Total | $ 70,009 | $ 64,742 |
PREMISES AND EQUIPMENT, NET (De
PREMISES AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
PREMISES AND EQUIPMENT, NET | |||||
Premises and equipment, gross | $ 237,846 | $ 237,846 | $ 236,464 | ||
Less: Accumulated depreciation and amortization | (179,026) | (179,026) | (163,191) | ||
Total | 58,820 | 58,820 | 73,273 | ||
Depreciation and amortization expense | 8,300 | $ 8,900 | 17,049 | $ 18,895 | |
Computer hardware and software | |||||
PREMISES AND EQUIPMENT, NET | |||||
Premises and equipment, gross | 182,606 | 182,606 | 179,567 | ||
Leasehold improvements | |||||
PREMISES AND EQUIPMENT, NET | |||||
Premises and equipment, gross | 32,658 | 32,658 | 33,417 | ||
Furniture and fixtures | |||||
PREMISES AND EQUIPMENT, NET | |||||
Premises and equipment, gross | 13,695 | 13,695 | 14,092 | ||
Office equipment and other | |||||
PREMISES AND EQUIPMENT, NET | |||||
Premises and equipment, gross | $ 8,887 | $ 8,887 | $ 9,388 |
GOODWILL AND INTANGIBLE ASSET54
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Goodwill [Roll Forward] | ||
Goodwill | $ 86,283 | $ 86,283 |
Mortgage Market | ||
Goodwill [Roll Forward] | ||
Goodwill | 73,259 | 73,259 |
Real Estate Market | ||
Goodwill [Roll Forward] | ||
Goodwill | 10,056 | 10,056 |
Other Businesses, Corporate and Eliminations | ||
Goodwill [Roll Forward] | ||
Goodwill | $ 2,968 | $ 2,968 |
GOODWILL AND INTANGIBLE ASSET55
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible assets, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Intangible Assets, Net | |||||
Gross carrying amount | $ 326,001 | $ 326,001 | $ 333,787 | ||
Accumulated amortization | (220,627) | (220,627) | (213,722) | ||
Net book value | 105,374 | 105,374 | 120,065 | ||
Amortization expense for definite lived intangible assets | 7,544 | $ 9,393 | 14,691 | $ 18,539 | |
2,018 | 25,700 | 25,700 | |||
2,019 | 20,600 | 20,600 | |||
2,020 | 17,900 | 17,900 | |||
2,021 | 13,400 | 13,400 | |||
2,022 | 7,300 | 7,300 | |||
Customer related intangible assets | |||||
Intangible Assets, Net | |||||
Gross carrying amount | 273,172 | 273,172 | 277,828 | ||
Accumulated amortization | (196,315) | (196,315) | (188,258) | ||
Net book value | 76,857 | 76,857 | 89,570 | ||
Operating agreement | |||||
Intangible Assets, Net | |||||
Gross carrying amount | 35,000 | 35,000 | 35,000 | ||
Accumulated amortization | (14,748) | (14,748) | (13,865) | ||
Net book value | 20,252 | 20,252 | 21,135 | ||
Trademarks and trade names | |||||
Intangible Assets, Net | |||||
Gross carrying amount | 12,554 | 12,554 | 15,354 | ||
Accumulated amortization | (6,480) | (6,480) | (8,881) | ||
Net book value | 6,074 | 6,074 | 6,473 | ||
Non-compete agreements | |||||
Intangible Assets, Net | |||||
Gross carrying amount | 1,230 | 1,230 | 1,560 | ||
Accumulated amortization | (872) | (872) | (897) | ||
Net book value | 358 | 358 | 663 | ||
Intellectual property | |||||
Intangible Assets, Net | |||||
Gross carrying amount | 300 | 300 | 300 | ||
Accumulated amortization | (130) | (130) | (115) | ||
Net book value | 170 | 170 | 185 | ||
Other intangible assets | |||||
Intangible Assets, Net | |||||
Gross carrying amount | 3,745 | 3,745 | 3,745 | ||
Accumulated amortization | (2,082) | (2,082) | (1,706) | ||
Net book value | $ 1,663 | $ 1,663 | $ 2,039 | ||
Weighted Average | Customer related intangible assets | |||||
Intangible Assets, Net | |||||
Weighted average estimated useful life (in years) | 10 years | ||||
Weighted Average | Operating agreement | |||||
Intangible Assets, Net | |||||
Weighted average estimated useful life (in years) | 20 years | ||||
Weighted Average | Trademarks and trade names | |||||
Intangible Assets, Net | |||||
Weighted average estimated useful life (in years) | 14 years | ||||
Weighted Average | Non-compete agreements | |||||
Intangible Assets, Net | |||||
Weighted average estimated useful life (in years) | 4 years | ||||
Weighted Average | Intellectual property | |||||
Intangible Assets, Net | |||||
Weighted average estimated useful life (in years) | 10 years | ||||
Weighted Average | Other intangible assets | |||||
Intangible Assets, Net | |||||
Weighted average estimated useful life (in years) | 5 years |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Security deposits | $ 4,807 | $ 5,304 | ||
Restricted cash | 5,783 | 3,837 | $ 4,398 | $ 4,100 |
Other | 584 | 1,054 | ||
Total | $ 11,174 | $ 10,195 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 13,781 | $ 15,682 |
Accrued expenses - general | 26,343 | 27,268 |
Accrued salaries and benefits | 27,062 | 41,363 |
Income taxes payable | 460 | 87 |
Total | $ 67,646 | $ 84,400 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Other current liabilities | ||
Unfunded cash account balances | $ 3,147 | $ 5,900 |
Other | 2,742 | 3,514 |
Total | $ 5,889 | $ 9,414 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Apr. 03, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Debt | ||||||
Term loans | $ 403,760,000 | $ 403,760,000 | $ 413,581,000 | |||
Less: Debt issuance costs, net | (4,317,000) | (4,317,000) | (3,158,000) | |||
Less: Unamortized discount, net | (3,911,000) | (3,911,000) | (1,142,000) | |||
Net long-term debt | 395,532,000 | 395,532,000 | 409,281,000 | |||
Less: Current portion | (41,200,000) | (41,200,000) | (5,945,000) | |||
Long-term debt, less current portion | 354,332,000 | 354,332,000 | 403,336,000 | |||
Write-off of unamortized debt issuance costs and debt discount | 4,434,000 | $ 0 | 4,434,000 | $ 0 | ||
Repayment of long-term debt | 421,821,000 | 24,766,000 | ||||
Debt issuance costs, net | 4,317,000 | 4,317,000 | 3,158,000 | |||
Gain on early extinguishment of debt | 0 | 3,937,000 | 0 | 3,937,000 | ||
Term B loans | ||||||
Debt | ||||||
Less: Debt issuance costs, net | (4,300,000) | (4,300,000) | ||||
Long-term debt, maturities, 2018 | 24,700,000 | 24,700,000 | ||||
Long-term debt, maturities, 2019 | 41,200,000 | 41,200,000 | ||||
Long-term debt, maturities, 2020 | 25,700,000 | 25,700,000 | ||||
Long-term debt, maturities, due annually thereafter | 12,400,000 | $ 12,400,000 | ||||
Repayment of long-term debt | 8,200,000 | |||||
Leverage ratio to avoid mandatory prepayments under the Credit Agreement (maximum) | 3 | |||||
Leverage ratio at which mandatory prepayments increase under the Credit Agreement (exceeds) | 3.50 | |||||
Mandatory prepayments owed | $ 0 | |||||
Interest rate at the end of the period (as a percent) | 6.33% | 6.33% | ||||
Debt issuance costs, net | $ 4,300,000 | $ 4,300,000 | ||||
Accumulated amortization | 200,000 | 200,000 | ||||
Extinguishment of debt, amount | $ 0 | $ 0 | ||||
Weighted average discount of par received on early extinguishment of debt | 0.00% | 0.00% | ||||
Term B loans | Maximum | ||||||
Debt | ||||||
Amount of principal or interest if failed to pay considered as event of default | $ 40,000,000 | |||||
Amount of debt which results in acceleration of debt if failed to pay considered as event of default | 40,000,000 | |||||
Amount of unbonded, undischarged or unstayed debt under entry by court of one or more judgments for certain period to determine as event of default | $ 40,000,000 | |||||
Line of Credit | Domestic Line of Credit | ||||||
Debt | ||||||
Leverage ratio at which mandatory prepayments increase under the Credit Agreement (exceeds) | 3.5 | |||||
Line of Credit | Revolving Credit Facility | Domestic Line of Credit | ||||||
Debt | ||||||
Term loans | $ 0 | $ 0 | ||||
Unused commitment fee (as a percent) | 0.50% | |||||
Senior secured term loan | ||||||
Debt | ||||||
Term loans | $ 412,100,000 | |||||
Less: Debt issuance costs, net | (3,200,000) | |||||
Write-off of unamortized debt issuance costs and debt discount | $ 4,400,000 | |||||
Debt issuance costs, net | 3,200,000 | |||||
Accumulated amortization | $ 7,100,000 | |||||
Extinguishment of debt, amount | $ 26,000,000 | $ 0 | ||||
Weighted average discount of par received on early extinguishment of debt | 16.50% | 0.00% | ||||
Gain on early extinguishment of debt | $ 3,900,000 | |||||
April 3, 2018 Credit Agreement | ||||||
Debt | ||||||
Debt instrument accordion feature, potential increase in additional borrowings | $ 125,000,000 | |||||
April 3, 2018 Credit Agreement | Domestic Line of Credit | Adjusted Eurodollar Rate | ||||||
Debt | ||||||
Reference rate | Adjusted Eurodollar Rate | |||||
April 3, 2018 Credit Agreement | Domestic Line of Credit | Base Rate | ||||||
Debt | ||||||
Reference rate | Base Rate | |||||
April 3, 2018 Credit Agreement | Term B loans | ||||||
Debt | ||||||
Debt instrument, face amount | $ 412,000,000 | |||||
April 3, 2018 Credit Agreement | Term B loans | Adjusted Eurodollar Rate | ||||||
Debt | ||||||
Reference rate | Adjusted Eurodollar Rate | |||||
Debt instrument fixed base rate | 1.00% | |||||
Interest rate margin (as a percent) | 4.00% | |||||
April 3, 2018 Credit Agreement | Term B loans | Base Rate | ||||||
Debt | ||||||
Reference rate | Base Rate | |||||
Debt instrument fixed base rate | 2.00% | |||||
Interest rate margin (as a percent) | 3.00% | |||||
April 3, 2018 Credit Agreement | Line of Credit | Revolving Credit Facility | Domestic Line of Credit | ||||||
Debt | ||||||
Debt instrument, face amount | $ 15,000,000 | |||||
Debt instrument accordion feature, potential increase in additional borrowings | $ 80,000,000 | |||||
April 3, 2018 Credit Agreement | Line of Credit | Revolving Credit Facility | Domestic Line of Credit | Adjusted Eurodollar Rate | ||||||
Debt | ||||||
Interest rate margin (as a percent) | 4.00% | |||||
April 3, 2018 Credit Agreement | Line of Credit | Revolving Credit Facility | Domestic Line of Credit | Base Rate | ||||||
Debt | ||||||
Interest rate margin (as a percent) | 3.00% |
OTHER NON-CURRENT LIABILITIES60
OTHER NON-CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Income tax liabilities | $ 5,605 | $ 5,955 |
Deferred revenue | 41 | 2,101 |
Other non-current liabilities | 3,761 | 4,226 |
Total | $ 9,407 | $ 12,282 |
FAIR VALUE MEASUREMENTS AND F61
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Details) shares in Millions | Jun. 30, 2018shares |
RESI | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Investment in equity securities, number of shares | 4.1 |
FAIR VALUE MEASUREMENTS AND F62
FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets, Fair Value Disclosure | ||||
Cash and cash equivalents | $ 84,569 | $ 105,006 | ||
Restricted cash | 5,783 | 3,837 | $ 4,398 | $ 4,100 |
Investment in equity securities | 43,185 | 49,153 | ||
Liabilities, Fair Value Disclosure | ||||
Long-term debt, carrying amount | 403,760 | 413,581 | ||
Level 1 | Fair Value, Measurements, Recurring | ||||
Assets, Fair Value Disclosure | ||||
Cash and cash equivalents | 84,569 | 105,006 | ||
Restricted cash | 5,783 | 3,837 | ||
Investment in equity securities | 43,185 | 49,153 | ||
Liabilities, Fair Value Disclosure | ||||
Long-term debt, fair value | 0 | 0 | ||
Level 2 | Fair Value, Measurements, Recurring | ||||
Assets, Fair Value Disclosure | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Investment in equity securities | 0 | 0 | ||
Liabilities, Fair Value Disclosure | ||||
Long-term debt, fair value | 401,067 | 407,377 | ||
Level 3 | Fair Value, Measurements, Recurring | ||||
Assets, Fair Value Disclosure | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Investment in equity securities | 0 | 0 | ||
Liabilities, Fair Value Disclosure | ||||
Long-term debt, fair value | $ 0 | $ 0 |
SHAREHOLDERS_ EQUITY AND SHAR63
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Stock Repurchase Plan & Share-Based Compensation (Details) $ / shares in Units, $ in Thousands | May 17, 2017$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2018USD ($)component$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jan. 01, 2018USD ($) | Dec. 31, 2017shares | Jan. 01, 2017USD ($) | Dec. 31, 2016 |
Stock Repurchase Plan | |||||||||
Capacity available to repurchase common stock under senior secured term loan (in dollars) | $ | $ 456,000 | $ 456,000 | |||||||
Share-Based Compensation | |||||||||
Share-based compensation expense (in dollars) | $ | 1,900 | $ 1,200 | 4,100 | $ 1,900 | |||||
Estimated unrecognized compensation costs (in dollars) | $ | $ 14,500 | $ 14,500 | |||||||
Weighted average remaining requisite service period for stock options over which unrecognized compensation costs would be recognized | 2 years 1 month 13 days | ||||||||
Cumulative effect of accounting changes | $ | $ (10,448) | $ 0 | |||||||
Outstanding (in shares) | 1,541,452 | 1,541,452 | 1,745,906 | ||||||
Stock options granted (in shares) | 271,876 | 129,000 | |||||||
Weighted average exercise price of stock options granted (in usd per share) | $ / shares | $ 25.06 | $ 39.13 | |||||||
Plan modification, number of stock options affected | 263,000 | ||||||||
Plan modification, number of employees affected | 16 | ||||||||
Weighted average fair value of stock options granted and total intrinsic value of stock options exercised | |||||||||
Weighted average grant date fair value of stock options granted per share (in usd per share) | $ / shares | $ 16.27 | $ 24.23 | |||||||
Intrinsic value of options exercised | $ | $ 4,393 | $ 875 | |||||||
Grant date fair value of stock options that vested | $ | $ 1,334 | $ 1,693 | |||||||
Minimum | |||||||||
Share-Based Compensation | |||||||||
Share based compensation arrangement, estimated forfeiture rate | 0.00% | ||||||||
Maximum | |||||||||
Share-Based Compensation | |||||||||
Share based compensation arrangement, estimated forfeiture rate | 40.00% | ||||||||
Employee and non-employee stock options | Service-Based | |||||||||
Share-Based Compensation | |||||||||
Outstanding (in shares) | 575,000 | 575,000 | |||||||
Employee and non-employee stock options | Service-Based | Minimum | |||||||||
Share-Based Compensation | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years | ||||||||
Employee and non-employee stock options | Service-Based | Maximum | |||||||||
Share-Based Compensation | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 4 years | ||||||||
Expiration term | 10 years | ||||||||
Employee and non-employee stock options | Market-Based | |||||||||
Share-Based Compensation | |||||||||
Outstanding (in shares) | 684,000 | 684,000 | |||||||
Allowable performance period before expiration date | 3 years | ||||||||
Number of components of an award | component | 2 | ||||||||
Employee and non-employee stock options | Market-Based | Minimum | |||||||||
Share-Based Compensation | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years | ||||||||
Expiration term | 10 years | ||||||||
Employee and non-employee stock options | Market-Based | Maximum | |||||||||
Share-Based Compensation | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 4 years | ||||||||
Employee and non-employee stock options | Market-Based, ordinary performance | Minimum | |||||||||
Share-Based Compensation | |||||||||
Percentage of compounded annual gain of stock price over exercise price required for the award to vest | 20.00% | ||||||||
Employee and non-employee stock options | Market-Based, extraordinary performance | Minimum | |||||||||
Share-Based Compensation | |||||||||
Percentage of compounded annual gain of stock price over exercise price required for the award to vest | 25.00% | ||||||||
Employee and non-employee stock options | Performance-Based | |||||||||
Share-Based Compensation | |||||||||
Outstanding (in shares) | 282,000 | 282,000 | |||||||
Employee and non-employee stock options | Performance-Based | Minimum | |||||||||
Share-Based Compensation | |||||||||
Allowable performance period before expiration date | 10 years | ||||||||
Attainment above threshold performance levels, vesting percentage | 50.00% | ||||||||
Employee and non-employee stock options | Performance-Based | Maximum | |||||||||
Share-Based Compensation | |||||||||
Attainment above threshold performance levels, vesting percentage | 200.00% | ||||||||
Employee and non-employee stock options | Performance-Based, Vesting Period One | |||||||||
Share-Based Compensation | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% | ||||||||
Employee and non-employee stock options | Performance-Based, Vesting Period Two | |||||||||
Share-Based Compensation | |||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% | ||||||||
Share Repurchase Program, Current | |||||||||
Stock Repurchase Plan | |||||||||
Number of shares of common stock authorized to be purchased (in shares) | 4,300,000 | ||||||||
Percentage of outstanding shares authorized to be repurchased | 25.00% | ||||||||
Minimum purchase price authorized (in usd per share) | $ / shares | $ 1 | ||||||||
Maximum purchase price authorized (in usd per share) | $ / shares | $ 500 | ||||||||
Period that shares may be repurchased, from the date of approval | 5 years | ||||||||
Remaining number of shares available for repurchase under the plan (in shares) | 4,200,000 | 4,200,000 | |||||||
Share Repurchase Programs | |||||||||
Stock Repurchase Plan | |||||||||
Number of shares of common stock purchased (in shares) | 400,000 | 400,000 | 800,000 | 800,000 | |||||
Average purchase price per share (in usd per share) | $ / shares | $ 27.14 | $ 19.17 | $ 27.39 | $ 22.15 | |||||
Luxembourg Law Limitation | |||||||||
Stock Repurchase Plan | |||||||||
Capacity available to repurchase common stock under senior secured term loan (in dollars) | $ | $ 142,000 | $ 142,000 | |||||||
Retained earnings | Accounting Standards Update 2016-09 | |||||||||
Share-Based Compensation | |||||||||
Cumulative effect of accounting changes | $ | $ (932) |
SHAREHOLDERS_ EQUITY AND SHAR64
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Black-Scholes and Binomial model Assumptions and Summary of Activity related to our stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Number of options | |||||
Outstanding at the beginning of the period (in shares) | 1,745,906 | ||||
Granted (in shares) | 271,876 | 129,000 | |||
Exercised (in shares) | (295,752) | ||||
Forfeited (in shares) | (180,578) | ||||
Outstanding at the end of the period (in shares) | 1,541,452 | 1,541,452 | 1,745,906 | ||
Exercisable at the end of the period (in shares) | 921,627 | 921,627 | |||
Weighted average exercise price | |||||
Outstanding at the beginning of the period (in usd per share) | $ 28.20 | ||||
Weighted average exercise price of stock options granted (in usd per share) | 25.06 | $ 39.13 | |||
Exercised (in usd per share) | 9.48 | ||||
Forfeited (in usd per share) | 33.91 | ||||
Outstanding at the end of the period (in usd per share) | $ 30.56 | 30.56 | $ 28.20 | ||
Exercisable at the end of the period (in usd per share) | $ 27.03 | $ 27.03 | |||
Weighted average contractual term | |||||
Weighted average contractual term | 5 years 9 months 4 days | 4 years 11 months 16 days | |||
Exercisable at the end of the period | 3 years 11 months 16 days | ||||
Aggregate intrinsic value | |||||
Aggregate intrinsic value, beginning balance (in dollars) | $ 10,202 | ||||
Aggregate intrinsic value, ending balance (in dollars) | $ 5,235 | 5,235 | $ 10,202 | ||
Exercisable at the end of the period (in dollars) | $ 5,132 | $ 5,132 | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% | ||
Black Scholes | Minimum | |||||
Aggregate intrinsic value | |||||
Risk-free interest rate (%) | 2.66% | 2.06% | |||
Expected stock price volatility (%) | 70.31% | 61.49% | |||
Expected dividend yield | 0.00% | 0.00% | |||
Expected option life (in years) | 6 years | 6 years | |||
Fair value (in usd per share) | $ 16.17 | $ 23.91 | $ 16.17 | $ 23.91 | |
Black Scholes | Maximum | |||||
Aggregate intrinsic value | |||||
Risk-free interest rate (%) | 2.98% | 2.29% | |||
Expected stock price volatility (%) | 71.86% | 66.68% | |||
Expected dividend yield | 0.00% | 0.00% | |||
Expected option life (in years) | 6 years 3 months | 7 years 6 months | |||
Fair value (in usd per share) | 19.06 | 24.80 | $ 19.06 | $ 24.80 | |
Binomial | Minimum | |||||
Aggregate intrinsic value | |||||
Risk-free interest rate (%) | 1.64% | 0.77% | |||
Expected stock price volatility (%) | 71.81% | 66.68% | |||
Expected dividend yield | 0.00% | 0.00% | |||
Expected option life (in years) | 2 years 6 months 22 days | 3 years 6 months 11 days | |||
Fair value (in usd per share) | 14.67 | 23.54 | $ 14.67 | $ 23.54 | |
Binomial | Maximum | |||||
Aggregate intrinsic value | |||||
Risk-free interest rate (%) | 2.83% | 2.38% | |||
Expected stock price volatility (%) | 71.86% | 66.68% | |||
Expected dividend yield | 0.00% | 0.00% | |||
Expected option life (in years) | 4 years 3 months 26 days | 3 years 10 months 6 days | |||
Fair value (in usd per share) | $ 18.28 | $ 24.30 | $ 18.28 | $ 24.30 |
SHAREHOLDERS_ EQUITY AND SHAR65
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION RSU (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, equity instruments other than options, grants in period, weighted average grant date fair value | $ / shares | $ 25.23 |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Restricted shares and restricted share units outstanding, beginning of period (in shares) | 356,509 |
Restricted shares and restricted share units granted (in shares) | 305,282 |
Restricted shares and restricted share units issued (in shares) | (88,043) |
Restricted shares and restricted share units forfeited/canceled (in shares) | (96,853) |
Restricted shares and restricted share units outstanding, end of period (in shares) | 476,895 |
Service-Based | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, alternate award vesting period | 2 years |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Restricted shares and restricted share units outstanding, end of period (in shares) | 475,000 |
Service-Based | Minimum | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting period | 3 years |
Service-Based | Minimum | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year |
Service-Based | Maximum | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting period | 4 years |
Service-Based | Maximum | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting period | 4 years |
Performance-Based | Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Restricted shares and restricted share units outstanding, end of period (in shares) | 2,000 |
Performance-Based | Minimum | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Attainment above threshold performance levels, vesting percentage | 50.00% |
Performance-Based | Minimum | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Attainment above threshold performance levels, vesting percentage | 80.00% |
Performance-Based | Maximum | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Attainment above threshold performance levels, vesting percentage | 200.00% |
Performance-Based | Maximum | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Attainment above threshold performance levels, vesting percentage | 150.00% |
Performance-Based, Vesting Period One | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% |
Performance-Based, Vesting Period One | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.00% |
Performance-Based, Vesting Period Two | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% |
Performance-Based, Vesting Period Two | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.00% |
Performance-Based, Vesting Period Three | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% |
Performance-Based, Vesting Period Three | Restricted Stock | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.00% |
Performance-Based, Vesting Period Four | Employee and non-employee stock options | |
Schedule of Share-based compensation, Restricted Stock and Restricted Stock units activity [Line Items] | |
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Schedule of revenue [Line Items] | ||||
Revenue | $ 218,556 | $ 250,685 | $ 415,994 | $ 491,168 |
Revenue recognized that was included in contract liability at the beginning of the period | 5,400 | 11,300 | ||
Service revenue | ||||
Schedule of revenue [Line Items] | ||||
Revenue | 208,861 | 238,107 | 397,627 | 467,946 |
Reimbursable expenses | ||||
Schedule of revenue [Line Items] | ||||
Revenue | 9,008 | 11,891 | 17,155 | 21,920 |
Non-controlling interests | ||||
Schedule of revenue [Line Items] | ||||
Revenue | $ 687 | $ 687 | $ 1,212 | $ 1,302 |
REVENUE REVENUE - Disaggregatio
REVENUE REVENUE - Disaggregation of revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 218,556 | $ 250,685 | $ 415,994 | $ 491,168 |
Revenue recognized when services are performed or assets are sold | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 187,206 | 354,162 | ||
Revenue related to technology platforms and professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 22,342 | 44,677 | ||
Reimbursable expenses revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 9,008 | 11,891 | 17,155 | 21,920 |
Operating Segment | Mortgage Market | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 178,662 | 210,195 | 346,000 | 414,918 |
Operating Segment | Mortgage Market | Servicer Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 166,069 | 321,480 | ||
Operating Segment | Mortgage Market | Origination Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 12,593 | 24,520 | ||
Operating Segment | Mortgage Market | Revenue recognized when services are performed or assets are sold | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 149,327 | 288,048 | ||
Operating Segment | Mortgage Market | Revenue recognized when services are performed or assets are sold | Servicer Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 139,084 | 268,620 | ||
Operating Segment | Mortgage Market | Revenue recognized when services are performed or assets are sold | Origination Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,243 | 19,428 | ||
Operating Segment | Mortgage Market | Revenue related to technology platforms and professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 20,817 | 41,776 | ||
Operating Segment | Mortgage Market | Revenue related to technology platforms and professional services | Servicer Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 18,525 | 36,798 | ||
Operating Segment | Mortgage Market | Revenue related to technology platforms and professional services | Origination Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,292 | 4,978 | ||
Operating Segment | Mortgage Market | Reimbursable expenses revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 8,518 | 16,176 | ||
Operating Segment | Mortgage Market | Reimbursable expenses revenue | Servicer Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 8,460 | 16,062 | ||
Operating Segment | Mortgage Market | Reimbursable expenses revenue | Origination Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 58 | 114 | ||
Operating Segment | Real Estate Market | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,145 | 25,130 | 39,425 | 45,193 |
Operating Segment | Real Estate Market | Consumer Real Estate Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,312 | 3,719 | ||
Operating Segment | Real Estate Market | Real Estate Investor Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 21,833 | 35,706 | ||
Operating Segment | Real Estate Market | Revenue recognized when services are performed or assets are sold | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 23,664 | 38,467 | ||
Operating Segment | Real Estate Market | Revenue recognized when services are performed or assets are sold | Consumer Real Estate Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,312 | 3,717 | ||
Operating Segment | Real Estate Market | Revenue recognized when services are performed or assets are sold | Real Estate Investor Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 21,352 | 34,750 | ||
Operating Segment | Real Estate Market | Revenue related to technology platforms and professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | ||
Operating Segment | Real Estate Market | Revenue related to technology platforms and professional services | Consumer Real Estate Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | ||
Operating Segment | Real Estate Market | Revenue related to technology platforms and professional services | Real Estate Investor Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | ||
Operating Segment | Real Estate Market | Reimbursable expenses revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 481 | 958 | ||
Operating Segment | Real Estate Market | Reimbursable expenses revenue | Consumer Real Estate Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 2 | ||
Operating Segment | Real Estate Market | Reimbursable expenses revenue | Real Estate Investor Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 481 | 956 | ||
Other Businesses, Corporate and Eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 15,749 | $ 15,360 | 30,569 | $ 31,057 |
Other Businesses, Corporate and Eliminations | Revenue recognized when services are performed or assets are sold | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 14,215 | 27,647 | ||
Other Businesses, Corporate and Eliminations | Revenue related to technology platforms and professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,525 | 2,901 | ||
Other Businesses, Corporate and Eliminations | Reimbursable expenses revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 9 | $ 21 |
COST OF REVENUE (Details)
COST OF REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cost of Revenue [Abstract] | ||||
Compensation and benefits | $ 54,769 | $ 62,666 | $ 109,635 | $ 125,758 |
Outside fees and services | 68,879 | 86,255 | 133,977 | 167,214 |
Cost of real estate sold | 13,320 | 7,114 | 16,499 | 12,049 |
Technology and telecommunications | 10,852 | 10,941 | 20,303 | 22,292 |
Reimbursable expenses | 9,008 | 11,891 | 17,155 | 21,920 |
Depreciation and amortization | 6,378 | 6,526 | 12,831 | 14,113 |
Cost of revenue | $ 163,206 | $ 185,393 | $ 310,400 | $ 363,346 |
SELLING, GENERAL AND ADMINIST69
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Selling, General and Administrative Expense [Abstract] | ||||
Compensation and benefits | $ 12,197 | $ 15,541 | $ 25,766 | $ 28,047 |
Occupancy related costs | 7,189 | 9,538 | 15,623 | 19,811 |
Amortization of intangible assets | 7,544 | 9,393 | 14,691 | 18,539 |
Marketing costs | 3,978 | 3,697 | 7,585 | 7,966 |
Professional services | 4,328 | 4,367 | 7,554 | 8,097 |
Depreciation and amortization | 1,950 | 2,361 | 4,218 | 4,782 |
Other | 5,738 | 7,573 | 10,611 | 12,929 |
Total | $ 42,924 | $ 52,470 | $ 86,048 | $ 100,171 |
OTHER INCOME (EXPENSE), NET (De
OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Other Income and Expenses [Abstract] | ||||
Loss on debt refinancing | $ (4,434) | $ 0 | $ (4,434) | $ 0 |
Gain on early extinguishment of debt | 0 | 3,937 | 0 | 3,937 |
Interest income | 100 | 44 | 231 | 142 |
Other, net | 473 | 822 | 1,614 | 1,439 |
Total | $ (3,861) | $ 4,803 | $ (2,589) | $ 5,518 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Altisource | $ 1,568 | $ 9,035 | $ (2,564) | $ 15,580 |
Weighted average common shares outstanding, basic (in shares) | 17,142 | 18,335 | 17,260 | 18,497 |
Dilutive effect of stock options, restricted shares and restricted share units (in shares) | 411 | 501 | 0 | 572 |
Weighted average common shares outstanding, diluted (in shares) | 17,553 | 18,836 | 17,260 | 19,069 |
Earnings (loss) per share: | ||||
Basic (in usd per share) | $ 0.09 | $ 0.49 | $ (0.15) | $ 0.84 |
Diluted (in usd per share) | $ 0.09 | $ 0.48 | $ (0.15) | $ 0.82 |
Employee and non-employee stock options | ||||
Anti-dilutive securities | ||||
Options, restricted shares and restricted share units excluded from the computation of diluted EPS (in shares) | 300 | 400 | 300 | 400 |
Options, restricted shares and restricted share units issuable upon achievement of market and performance criteria | ||||
Anti-dilutive securities | ||||
Options, restricted shares and restricted share units excluded from the computation of diluted EPS (in shares) | 500 | 300 | 500 | 300 |
Options, restricted shares and restricted share units excluded due to net loss | ||||
Anti-dilutive securities | ||||
Options, restricted shares and restricted share units excluded from the computation of diluted EPS (in shares) | 500 |
COMMITMENTS, CONTINGENCIES AN72
COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Concentration Risk | ||||||
Revenue | $ 218,556 | $ 250,685 | $ 415,994 | $ 491,168 | ||
Escrow and Trust Balances | ||||||
Amounts held in escrow and trust accounts | $ 20,800 | $ 20,800 | $ 35,100 | |||
Ocwen | ||||||
Concentration Risk | ||||||
Unpaid principal balances of mortgage servicing rights | $ 173,400,000 | |||||
Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 50.00% | 58.00% | 51.00% | 58.00% | ||
Highly Correlated - Ocwen | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Percentage of revenue from largest customer | 5.00% | 6.00% | ||||
NRZ | Customer Concentration Risk | Revenue | ||||||
Concentration Risk | ||||||
Estimated percentage of revenue from largest customer | 48.00% | |||||
Service revenue | ||||||
Concentration Risk | ||||||
Revenue | $ 208,861 | $ 238,107 | $ 397,627 | $ 467,946 | ||
REALServicing | Service revenue | Ocwen | ||||||
Concentration Risk | ||||||
Revenue | $ 5,400 | $ 6,300 | $ 11,900 | $ 13,400 | ||
NRZ | Ocwen | ||||||
Concentration Risk | ||||||
Unpaid principal balances of mortgage servicing rights | $ 98,300,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)segment | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reporting segments | segment | 2 | ||||
SEGMENT REPORTING | |||||
Revenue | $ 218,556 | $ 250,685 | $ 415,994 | $ 491,168 | |
Cost of revenue | 163,206 | 185,393 | 310,400 | 363,346 | |
Gross profit (loss) | 55,350 | 65,292 | 105,594 | 127,822 | |
Selling, general and administrative expenses | 42,924 | 52,470 | 86,048 | 100,171 | |
Income (loss) from operations | 12,426 | 12,822 | 19,546 | 27,651 | |
Total other income (expense), net | (9,355) | (662) | (21,447) | (5,745) | |
Income (loss) before income taxes and non-controlling interests | 3,071 | 12,160 | (1,901) | 21,906 | |
Total assets: | |||||
Total assets | 809,896 | 809,896 | $ 865,164 | ||
Operating Segment | Mortgage Market | |||||
SEGMENT REPORTING | |||||
Revenue | 178,662 | 210,195 | 346,000 | 414,918 | |
Cost of revenue | 115,329 | 144,326 | 226,402 | 284,476 | |
Gross profit (loss) | 63,333 | 65,869 | 119,598 | 130,442 | |
Selling, general and administrative expenses | 20,604 | 29,805 | 43,978 | 58,487 | |
Income (loss) from operations | 42,729 | 36,064 | 75,620 | 71,955 | |
Total other income (expense), net | (4) | 102 | 12 | 112 | |
Income (loss) before income taxes and non-controlling interests | 42,725 | 36,166 | 75,632 | 72,067 | |
Total assets: | |||||
Total assets | 265,463 | 265,463 | 304,346 | ||
Operating Segment | Real Estate Market | |||||
SEGMENT REPORTING | |||||
Revenue | 24,145 | 25,130 | 39,425 | 45,193 | |
Cost of revenue | 28,191 | 26,844 | 46,745 | 48,987 | |
Gross profit (loss) | (4,046) | (1,714) | (7,320) | (3,794) | |
Selling, general and administrative expenses | 5,180 | 5,551 | 9,298 | 9,876 | |
Income (loss) from operations | (9,226) | (7,265) | (16,618) | (13,670) | |
Total other income (expense), net | 12 | 0 | 14 | 0 | |
Income (loss) before income taxes and non-controlling interests | (9,214) | (7,265) | (16,604) | (13,670) | |
Total assets: | |||||
Total assets | 85,080 | 85,080 | 64,624 | ||
Other Businesses, Corporate and Eliminations | |||||
SEGMENT REPORTING | |||||
Revenue | 15,749 | 15,360 | 30,569 | 31,057 | |
Cost of revenue | 19,686 | 14,223 | 37,253 | 29,883 | |
Gross profit (loss) | (3,937) | 1,137 | (6,684) | 1,174 | |
Selling, general and administrative expenses | 17,140 | 17,114 | 32,772 | 31,808 | |
Income (loss) from operations | (21,077) | (15,977) | (39,456) | (30,634) | |
Total other income (expense), net | (9,363) | (764) | (21,473) | (5,857) | |
Income (loss) before income taxes and non-controlling interests | (30,440) | $ (16,741) | (60,929) | $ (36,491) | |
Total assets: | |||||
Total assets | $ 459,353 | $ 459,353 | $ 496,194 |
PREMISES AND EQUIPMENT, NET per
PREMISES AND EQUIPMENT, NET per country (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Premises & equipment, net | ||
Premises and equipment, net | $ 58,820 | $ 73,273 |
United States | ||
Premises & equipment, net | ||
Premises and equipment, net | 34,597 | 46,268 |
Luxembourg | ||
Premises & equipment, net | ||
Premises and equipment, net | 16,708 | 16,688 |
India | ||
Premises & equipment, net | ||
Premises and equipment, net | 5,575 | 8,136 |
Philippines | ||
Premises & equipment, net | ||
Premises and equipment, net | 1,848 | 2,038 |
Uruguay | ||
Premises & equipment, net | ||
Premises and equipment, net | $ 92 | $ 143 |
Uncategorized Items - asps-2018
Label | Element | Value |
Accounting Standards Update 2016-09 [Member] | Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 932,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (9,715,000) |