10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-34354

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

(Exact name of Registrant as specified in its Charter)

Luxembourg	98-0554932
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

40, avenue Monterey

L-2163 Luxembourg

Grand Duchy of Luxembourg

(Address of principal executive offices) (Zip Code)

(352) 24 69 79 00

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act):

Large accelerated filer o	Accelerated filer þ
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o
	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided by Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  Noþ

As of April 20, 2018, there were 17,204,646 outstanding shares of the registrant’s shares of beneficial interest (excluding 8,208,102 shares held as treasury stock).

Table of Contents

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

FORM 10-Q

			Page
PART I — Financial Information
	Item 1	Interim Condensed Consolidated Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations and Comprehensive Income	4
		Condensed Consolidated Statements of Equity	5
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	45
	Item 4	Controls and Procedures	45
PART II — Other Information
	Item 1	Legal Proceedings	46
	Item 1A	Risk Factors	46
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	46
	Item 6	Exhibits	47
SIGNATURES			48

2

PART I — FINANCIAL INFORMATION

Item 1. Interim Condensed Consolidated Financial Statements (Unaudited)

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	March 31, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	84,850		$	105,006
Investment in equity securities	41,652			49,153
Accounts receivable, net	50,839			52,740
Prepaid expenses and other current assets	73,955			64,742
Total current assets	251,296			271,641
Premises and equipment, net	65,585			73,273
Goodwill	86,283			86,283
Intangible assets, net	112,918			120,065
Deferred tax assets, net	305,679			303,707
Other assets	10,012			10,195
Total assets	$	831,773		$	865,164
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	66,475		$	84,400
Current portion of long-term debt	5,945			5,945
Deferred revenue	15,489			9,802
Other current liabilities	6,651			9,414
Total current liabilities	94,560			109,561
Long-term debt, less current portion	401,716			403,336
Other non-current liabilities	15,415			12,282
Commitments, contingencies and regulatory matters (Note 19)
Equity:
Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 17,343 outstanding as of March 31, 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	114,676			112,475
Retained earnings	600,253			626,600
Accumulated other comprehensive income	—			733
Treasury stock, at cost (8,070 shares as of March 31, 2018 and 7,995 shares as of December 31, 2017)	(421,486		)	(426,609		)
Altisource equity	318,856			338,612
Non-controlling interests	1,226			1,373
Total equity	320,082			339,985
Total liabilities and equity	$	831,773		$	865,164

See accompanying notes to condensed consolidated financial statements.

3

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands, except per share data)

	Three months ended  March 31,
	2018			2017
Revenue	$	197,438		$	240,483
Cost of revenue	147,194			177,953
Gross profit	50,244			62,530
Selling, general and administrative expenses	43,124			47,701
Income from operations	7,120			14,829
Other income (expense), net:
Interest expense	(5,863		)	(5,798		)
Unrealized loss on investment in equity securities (Note 3)	(7,501		)	—
Other income (expense), net	1,272			715
Total other income (expense), net	(12,092		)	(5,083		)
(Loss) income before income taxes and non-controlling interests	(4,972		)	9,746
Income tax benefit (provision)	1,365			(2,586		)
Net (loss) income	(3,607		)	7,160
Net income attributable to non-controlling interests	(525		)	(615		)
Net (loss) income attributable to Altisource	$	(4,132	)	$	6,545
(Loss) earnings per share:
Basic	$	(0.24	)	$	0.35
Diluted	$	(0.24	)	$	0.34
Weighted average shares outstanding:
Basic	17,378			18,662
Diluted	17,378			19,304
Comprehensive (loss) income:
Net (loss) income	$	(3,607	)	$	7,160
Other comprehensive income, net of tax:
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 (Note 1)	(733		)	—
Unrealized gain on investment in equity securities, net of income tax provision of $4,725	—			12,723
Comprehensive (loss) income, net of tax	(4,340		)	19,883
Comprehensive income attributable to non-controlling interests	(525		)	(615		)
Comprehensive (loss) income attributable to Altisource	$	(4,865	)	$	19,268

See accompanying notes to condensed consolidated financial statements.

4

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

	Altisource Equity
	Common stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock, at cost			Non-controlling interests			Total
	Shares
Balance, December 31, 2016	25,413	$	25,413	$	107,288	$	333,786		$	(1,745	)	$	(403,953	)	$	1,405		$	62,194
Comprehensive income:
Net income	—	—		—		6,545			—			—			615			7,160
Other comprehensive income, net of tax	—	—		—		—			12,723			—			—			12,723
Distributions to non-controlling interest holders	—	—		—		—			—			—			(569		)	(569		)
Share-based compensation expense	—	—		695		—			—			—			—			695
Cumulative effect of an accounting change (Note 13)	—	—		932		(932		)	—			—			—			—
Exercise of stock options	—	—		—		(2,872		)	—			3,624			—			752
Repurchase of shares	—	—		—		—			—			(10,590		)	—			(10,590		)
Balance, March 31, 2017	25,413	$	25,413	$	108,915	$	336,527		$	10,978		$	(410,919	)	$	1,451		$	72,365
Balance, December 31, 2017	25,413	$	25,413	$	112,475	$	626,600		$	733		$	(426,609	)	$	1,373		$	339,985
Net (loss) income	—	—		—		(4,132		)	—			—			525			(3,607		)
Distributions to non-controlling interest holders	—	—		—		—			—			—			(672		)	(672		)
Share-based compensation expense	—	—		2,201		—			—			—			—			2,201
Cumulative effect of accounting changes (Note 1)	—	—		—		(9,715		)	(733		)	—			—			(10,448		)
Exercise of stock options and issuance of restricted shares	—	—		—		(12,500		)	—			15,117			—			2,617
Repurchase of shares	—	—		—		—			—			(9,994		)	—			(9,994		)
Balance, March 31, 2018	25,413	$	25,413	$	114,676	$	600,253		$	—		$	(421,486	)	$	1,226		$	320,082

See accompanying notes to condensed consolidated financial statements.

5

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three months ended  March 31,
	2018			2017
Cash flows from operating activities:
Net (loss) income	$	(3,607	)	$	7,160
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	8,721			10,008
Amortization of intangible assets	7,147			9,146
Change in the fair value of acquisition related contingent consideration	—			8
Unrealized loss on investment in equity securities	7,501			—
Share-based compensation expense	2,201			695
Bad debt expense	724			1,903
Amortization of debt discount	89			105
Amortization of debt issuance costs	273			291
Deferred income taxes	(1,972		)	—
Loss on disposal of fixed assets	489			1,480
Changes in operating assets and liabilities:
Accounts receivable	2,289			2,880
Prepaid expenses and other current assets	(9,213		)	(4,749		)
Other assets	481			(374		)
Accounts payable and accrued expenses	(18,189		)	(10,177		)
Other current and non-current liabilities	(5,503		)	(36,735		)
Net cash used in operating activities	(8,569		)	(18,359		)
Cash flows from investing activities:
Additions to premises and equipment	(1,258		)	(1,944		)
Net cash used in investing activities	(1,258		)	(1,944		)
Cash flows from financing activities:
Repayment of long-term debt	(1,486		)	(1,486		)
Debt issuance costs	(496		)	—
Proceeds from stock option exercises	2,617			752
Purchase of treasury shares	(9,994		)	(10,590		)
Distributions to non-controlling interests	(672		)	(569		)
Net cash used in financing activities	(10,031		)	(11,893		)
Net decrease in cash, cash equivalents and restricted cash	(19,858		)	(32,196		)
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	$	88,985		$	121,225
Supplemental cash flow information:
Interest paid	$	5,269		$	5,456
Income taxes paid, net	946			6,515
Non-cash investing and financing activities:
Increase in payables for purchases of premises and equipment	$	264		$	2,094

See accompanying notes to condensed consolidated financial statements.

6

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Description of Business

Altisource Portfolio Solutions S.A., together with its subsidiaries (which may be referred to as “Altisource,” the “Company,” “we,” “us” or “our”), is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve.

We are publicly traded on the NASDAQ Global Select Market under the symbol “ASPS.” We are organized under the laws of the Grand Duchy of Luxembourg.

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 March 31, 2018, Lenders One had total assets of $4.8 million and total liabilities of $3.2 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.

7

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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, andASU 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 months ended March 31, 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 revenues, 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.

• 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.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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. 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 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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported		Adjustments			Balances without adoption of Topic 606
Accounts receivable, net	$	50,839	$	(28	)	$	50,811
Total current assets	251,296		(28		)	251,268
Total assets	831,773		(28		)	831,745
Other current liabilities	6,651		348			6,999
Deferred revenue	15,489		(6,655		)	8,834
Total current liabilities	94,560		(6,307		)	88,253
Deferred revenue, non-current	5,529		(3,890		)	1,639
Retained earnings	600,253		10,169			610,422
Altisource equity	318,856		10,169			329,025
Total equity	320,082		10,169			330,251
Total liabilities and equity	831,773		(28		)	831,745

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported			Adjustments			Balances without adoption of Topic 606
Revenue	$	197,438		$	412		$	197,850
Cost of revenue	147,194			797			147,991
Gross profit	50,244			(385		)	49,859
Income from operations	7,120			(385		)	6,735
Loss before income taxes and non-controlling interests	(4,972		)	(385		)	(5,357		)
Income tax benefit	1,365			106			1,471
Net loss	(3,607		)	(279		)	(3,886		)
Net loss attributable to Altisource	(4,132		)	(279		)	(4,411		)

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 three months ended March 31, 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 condensed 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 $4.1 million, $3.8 million, $4.1 million and $4.1 million of restricted cash with cash and cash equivalents in its condensed consolidated statements of cash flows as of March 31, 2018, December 31, 2017, March 31, 2017 and December 31, 2016, respectively.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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, Compensation—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 March 31, 2018, would result in approximately $22.0 million right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheet as of March 31, 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.

11

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 2 — CUSTOMER CONCENTRATION

During the three months endedMarch 31, 2018, Ocwen was our largest customer, accounting for 52% of our total revenue. 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 three months endedMarch 31, 2018 and 2017, we generated revenue from Ocwen of $102.0 million and $141.4 million, respectively. Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows for the three months ended March 31:

	2018		2017
Mortgage Market	60	%	68	%
Real Estate Market	1	%	1	%
Other Businesses, Corporate and Eliminations	9	%	14	%
Consolidated revenue	52	%	59	%

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 three months endedMarch 31, 2018 and 2017, we recognized revenue of $15.2 million and $41.7 million, 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 March 31, 2018, accounts receivable from Ocwen totaled $18.4 million, $13.4 million of which was billed and $5.0 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 June 30, 2017, we estimate that New Residential Investment Corp. (individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “NRZ”) owned certain economic rights in, but not legal title to, approximately 78% of Ocwen’s non-government-sponsored enterprise (“non-GSE”) MSRs (the “Subject MSRs”). 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 will receive a cooperative brokerage commission on the sale of certain REO properties from these portfolios subject to certain exceptions.

For the three months endedMarch 31, 2018, we earned revenue from NRZ of $10.3 million following the transfer of certain of the Subject MSRs from Ocwen to NRZ (the “Transferred MSRs”) (no comparative amount in 2017). For the three months ended

12

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

March 31, 2018, we earned additional revenue of $16.1 million relating to the Transferred MSRs when a party other than NRZ selects Altisource as the service provider (no comparative amount 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 April 30, 2018 with a further automatic extension through May 15, 2018 provided that the parties continue to negotiate the Services Agreement in good faith.

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 three months endedMarch 31, 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.

NOTE 3 — 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 $41.7 million as of March 31, 2018 and $49.2 million as of December 31, 2017. During the three months ended March 31, 2018, we recognized an unrealized loss of $7.5 million on our investment in RESI as a result of a decline in the market value of RESI common shares in the condensed consolidated statements of operations and comprehensive income. During the three months ended March 31, 2017, an unrealized gain on our investment in RESI of $12.7 million, net of income tax expense, 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 three months ended March 31, 2018 and 2017, we earned dividends of $0.6 million in each period related to this investment.

NOTE 4 — ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Billed	$	42,509		$	40,787
Unbilled	19,231			22,532
	61,740			63,319
Less: Allowance for doubtful accounts	(10,901		)	(10,579		)
Total	$	50,839		$	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.

13

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Short-term investments in real estate	$	39,320	$	29,405
Maintenance agreements, current portion	6,362		8,014
Income taxes receivable	9,702		9,227
Prepaid expenses	7,748		7,898
Other current assets	10,823		10,198
Total	$	73,955	$	64,742

NOTE 6 — PREMISES AND EQUIPMENT, NET

Premises and equipment, net consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Computer hardware and software	$	180,488		$	179,567
Leasehold improvements	33,202			33,417
Furniture and fixtures	14,015			14,092
Office equipment and other	9,574			9,388
	237,279			236,464
Less: Accumulated depreciation and amortization	(171,694		)	(163,191		)
Total	$	65,585		$	73,273

Depreciation and amortization expense totaled $8.7 million and $10.0 million for the three months ended March 31, 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.

NOTE 7 — 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 March 31, 2018 and December 31, 2017	$	73,259	$	10,056	$	2,968	$	86,283

14

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Intangible Assets, net

Intangible assets, net consist of the following:

	Weighted average estimated useful life (in years)	Gross carrying amount				Accumulated amortization						Net book value
(in thousands)		March 31, 2018		December 31, 2017		March 31, 2018			December 31, 2017			March 31, 2018		December 31, 2017
Definite lived intangible assets:
Customer related intangible assets	10	$	277,828	$	277,828	$	(194,470	)	$	(188,258	)	$	83,358	$	89,570
Operating agreement	20	35,000		35,000		(14,307		)	(13,865		)	20,693		21,135
Trademarks and trade names	13	15,354		15,354		(9,080		)	(8,881		)	6,274		6,473
Non-compete agreements	4	1,560		1,560		(995		)	(897		)	565		663
Intellectual property	10	300		300		(123		)	(115		)	177		185
Other intangible assets	5	3,745		3,745		(1,894		)	(1,706		)	1,851		2,039
Total		$	333,787	$	333,787	$	(220,869	)	$	(213,722	)	$	112,918	$	120,065

Amortization expense for definite lived intangible assets was $7.1 million and $9.1 million for the three months ended March 31, 2018 and 2017, respectively. Anticipated annual definite lived intangible asset amortization for 2018 through 2022 is $26.4 million, $21.8 million, $18.2 million, $11.4 million and $7.3 million, respectively.

NOTE 8 — OTHER ASSETS

Other assets consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Security deposits	$	5,150	$	5,304
Restricted cash	4,135		3,837
Maintenance agreements, non-current portion	189		362
Other	538		692
Total	$	10,012	$	10,195

NOTE 9 — ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Accounts payable	$	11,324	$	15,682
Accrued expenses - general	30,628		27,268
Accrued salaries and benefits	24,523		41,363
Income taxes payable	—		87
Total	$	66,475	$	84,400

15

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Other current liabilities consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Unfunded cash account balances	$	3,597	$	5,900
Other	3,054		3,514
Total	$	6,651	$	9,414

NOTE 10 — LONG-TERM DEBT

Long-term debt consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Senior secured term loan	$	412,095		$	413,581
Less: Debt issuance costs, net	(3,381		)	(3,158		)
Less: Unamortized discount, net	(1,053		)	(1,142		)
Net long-term debt	407,661			409,281
Less: Current portion	(5,945		)	(5,945		)
Long-term debt, less current portion	$	401,716		$	403,336

On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of Altisource Portfolio Solutions S.A., entered into a senior secured term loan agreement with Bank of America, N.A., as administrative agent, and certain lenders. Altisource Portfolio Solutions S.A. and certain subsidiaries were guarantors of the senior secured term loan (collectively, the “Guarantors”). We subsequently entered into four amendments to the senior secured term loan agreement to, among other changes, increase the principal amount of the senior secured term loan, re-establish the $200.0 million incremental senior secured term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year, increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement) and certain other changes including to facilitate an internal restructuring of the Company’s subsidiaries. On April 3, 2018, Altisource Portfolio Solutions S.A. and Altisource S.à r.l. entered into a credit agreement with Morgan Stanley Senior Funding, Inc. as administrative agent and collateral agent and the other lender parties thereto, pursuant to which the lenders have agreed to extend credit to Altisource S.à r.l. in the form of (i) Term B Loans (as defined in the credit agreement) in an aggregate principal amount equal to $412.0 million and (ii) a $15.0 million revolving credit facility. The proceeds of the Term B Loans were used to refinance Altisource S.à r.l.’s senior secured term loan. See Note 21 for additional information on the April 3, 2018 Term B Loans and revolving credit facility.

The senior secured term loan was required to be repaid in equal consecutive quarterly principal installments of $1.5 million, with the balance due at maturity. All amounts outstanding under the senior secured term loan agreement would have been due on the earlier of (i) December 9, 2020 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 or as otherwise provided in the senior secured term loan agreement upon the occurrence of any event of default under the senior secured term loan agreement.

In addition to the scheduled principal payments, subject to certain exceptions, the senior secured term loan was 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 senior secured term loan agreement (the percentage increases if the leverage ratio exceeds 3.50 to 1.00). No mandatory prepayments were owed for the three months ended March 31, 2018.

The senior secured term loan bore interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar Rate loans bore interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bore 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) a 2.50% margin. The interest rate at March 31, 2018 was 5.38%.

16

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Senior secured term loan payments were guaranteed by the Guarantors and were secured by a pledge of all equity interests of certain subsidiaries 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 senior secured term loan agreement included covenants that restricted or limited, among other things, our ability to create liens and encumbrances; incur additional indebtedness; sell, transfer or dispose of assets; make Restricted Junior Payments including share repurchases, dividends and repayment of junior indebtedness; change lines of business; amend material debt agreements or other material contracts; engage in certain transactions with affiliates; enter into sale/leaseback transactions; grant negative pledges or agree to such other restrictions relating to subsidiary dividends and distributions; make changes to our fiscal year; and engage in mergers and consolidations.

The senior secured term loan agreement contained 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 senior secured term loan agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of covenants, (iv) failure to pay principal or interest on any other debt that equals or exceeds $40.0 million when due, (v) default on any other debt that equals or exceeds $40.0 million that caused, or gave the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents to be in full force and effect. If any event of default occurred and was not cured within applicable grace periods set forth in the senior secured term loan agreement or waived, all loans and other obligations could have become due and immediately payable and the facility could have been terminated.

At March 31, 2018, debt issuance costs were $3.4 million, net of $7.4 million of accumulated amortization. At December 31, 2017, debt issuance costs were $3.2 million, net of $7.1 million of accumulated amortization.

NOTE 11 — OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Income tax liabilities	$	5,825	$	5,955
Deferred revenue	5,529		2,101
Other non-current liabilities	4,061		4,226
Total	$	15,415	$	12,282

NOTE 12 — 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 March 31, 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:

	March 31, 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	$	84,850	$	84,850	$	—	$	—	$	105,006	$	105,006	$	—	$	—
Restricted cash	4,135		4,135		—		—		3,837		3,837		—		—
Investment in equity securities	41,652		41,652		—		—		49,153		49,153		—		—
Liabilities:
Long-term debt	412,095		—		412,095		—		413,581		—		407,377		—

17

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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 the largest portion 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.

NOTE 13 — SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Share Repurchase Program

On May 17, 2017, our shareholders approved the renewal of the share repurchase program previously approved by the shareholders on May 18, 2016, which replaced the previous share repurchase program. We are authorized to purchase up to 4.6 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 March 31, 2018, approximately 3.1 million shares of common stock remain available for repurchase under the program. We purchased 0.4 million shares of common stock at an average price of $27.67 per share during the three months ended March 31, 2018 and 0.4 million shares at an average price of $25.10 per share during the three months ended March 31, 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 March 31, 2018, we can repurchase up to approximately $141 million of our common stock under Luxembourg law. Our senior secured term loan limited the amount we could have spent on share repurchases, which was approximately $464 million as of March 31, 2018, and may have prevented repurchases in certain circumstances. The new credit agreement retains this amount available for share repurchases and other restricted payments. See Note 21 for additional information on the new credit agreement.

Share-Based Compensation

We issue share-based awards in the form of stock options, restricted shares and restricted share units for certain employees, officers and directors. We recognized share-based compensation expense of $2.2 million and $0.7 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, estimated unrecognized compensation costs related to share-based awards amounted to $16.9 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 2.28 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.

18

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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 611 thousand service-based awards were outstanding as of March 31, 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 707 thousand market-based awards were outstanding as of March 31, 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 306 thousand performance-based awards outstanding as of March 31, 2018.

The Company granted 261 thousand stock options (at a weighted average exercise price of $24.95 per share) during the three months ended March 31, 2018. There were no stock option grants during the three months ended March 31, 2017.

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:

	Three months ended  March 31, 2018
	Black-Scholes	Binomial
Risk-free interest rate (%)	2.66 – 2.70	1.65 – 2.77
Expected stock price volatility (%)	70.31 – 71.81	71.81
Expected dividend yield	—	—
Expected option life (in years)	6.00 – 6.25	2.56 – 4.32
Fair value	$16.17 – $17.15	$15.58 – $18.28

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 period presented:

	Three months ended March 31,
(in thousands, except per share amounts)	2018		2017
Weighted average grant date fair value of stock options granted per share	$	16.20	$	—
Intrinsic value of options exercised	4,320		868
Grant date fair value of stock options that vested	23		89

19

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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	260,697		24.95
Exercised	(286,252	)	9.14
Forfeited	(96,734	)	36.35
Outstanding at March 31, 2018	1,623,617		30.55		6.09	3,999
Exercisable at March 31, 2018	841,472		27.81		3.95	2,817

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 565 thousand service-based awards were outstanding as of March 31, 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 March 31, 2018.

The Company granted 255 thousand restricted shares and restricted share units (at a weighted average grant date fair value of $24.54 per share) during the three months ended March 31, 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	254,619
Forfeited/canceled	(43,697	)
Outstanding at March 31, 2018	567,431

20

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 14 — 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 for the three months ended March 31:

(in thousands)	2018		2017
Service revenue	$	188,766	$	229,839
Reimbursable expenses	8,147		10,029
Non-controlling interests	525		615
Total	$	197,438	$	240,483

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 for the three months ended March 31, 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	$	129,536	$	18,273	$	7,602	$	155,411
Origination Solutions	9,185		2,686		56		11,927
Total Mortgage Market	138,721		20,959		7,658		167,338
Real Estate Market
Consumer Real Estate Solutions	1,405		—		2		1,407
Real Estate Investor Solutions	13,398		—		475		13,873
Total Real Estate Market	14,803		—		477		15,280
Other Businesses, Corporate and Eliminations	13,432		1,376		12		14,820
Total revenue	$	166,956	$	22,335	$	8,147	$	197,438

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 $5.9 million for the three months ended March 31, 2018.

21

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

NOTE 15 — 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 for the three months ended March 31:

(in thousands)	2018		2017
Compensation and benefits	$	54,866	$	63,092
Outside fees and services	65,098		80,959
Cost of real estate sold	3,179		4,935
Technology and telecommunications	9,451		11,351
Reimbursable expenses	8,147		10,029
Depreciation and amortization	6,453		7,587
Total	$	147,194	$	177,953

NOTE 16 — 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 for the three months ended March 31:

(in thousands)	2018		2017
Compensation and benefits	$	13,569	$	12,506
Occupancy related costs	8,434		10,273
Amortization of intangible assets	7,147		9,146
Marketing costs	3,607		4,269
Professional services	3,226		3,730
Depreciation and amortization	2,268		2,421
Other	4,873		5,356
Total	$	43,124	$	47,701

NOTE 17 — OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following for the three months ended March 31:

(in thousands)	2018		2017
Interest income	$	131	$	98
Other, net	1,141		617
Total	$	1,272	$	715

NOTE 18 — 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.

22

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Basic and diluted EPS are calculated as follows for the three months ended March 31:

(in thousands, except per share data)	2018			2017
Net (loss) income attributable to Altisource	$	(4,132	)	$	6,545
Weighted average common shares outstanding, basic	17,378			18,662
Dilutive effect of stock options and restricted shares	—			642
Weighted average common shares outstanding, diluted	17,378			19,304
(Loss) earnings per share:
Basic	$	(0.24	)	$	0.35
Diluted	$	(0.24	)	$	0.34

For the three months ended March 31, 2018 and 2017, 0.3 million options and 0.4 million options, 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 three months ended March 31, 2018 and 2017 were 0.6 million options, restricted shares and restricted share units and 0.2 million options, 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 three months ended March 31, 2018, 0.5 million options, restricted shares and restricted share units were excluded from the computation of diluted EPS for the three months ended March 31, 2018, as their impact was anti-dilutive.

NOTE 19 — 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.

23

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Ocwen Related Matters

As discussed in Note 2, during the three months endedMarch 31, 2018, Ocwen was our largest customer, accounting for 52% of our total revenue. Additionally, 8% of our revenue for the three months endedMarch 31, 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

24

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

to a new servicing platform. Altisource is supporting Ocwen through this transition. We do not anticipate that a servicing technology transition would impact the other services we provide to Ocwen. For the three months endedMarch 31, 2018 and 2017, service revenue from REALServicing was $6.5 million and $7.0 million, respectively.

In addition to the above, as of June 30, 2017, we estimate that NRZ owned certain economic rights in, but not legal title to, approximately 78% of the Subject MSRs. 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 will receive 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 April 30, 2018 with a further automatic extension through May 15, 2018 provided that the parties continue to negotiate the Services Agreement in good faith.

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 three months endedMarch 31, 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 $24.6 million and $35.1 million at March 31, 2018 and December 31, 2017, respectively.

NOTE 20 — 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.

25

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

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 March 31, 2018
(in thousands)	Mortgage Market		Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue	$	167,338	$	15,280		$	14,820		$	197,438
Cost of revenue	111,073		18,554			17,567			147,194
Gross profit (loss)	56,265		(3,274		)	(2,747		)	50,244
Selling, general and administrative expenses	23,374		4,118			15,632			43,124
Income (loss) from operations	32,891		(7,392		)	(18,379		)	7,120
Total other income (expense), net	16		2			(12,110		)	(12,092		)
Income (loss) before income taxes and non-controlling interests	$	32,907	$	(7,390	)	$	(30,489	)	$	(4,972	)

	Three months ended March 31, 2017
(in thousands)	Mortgage Market		Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue	$	204,723	$	20,063		$	15,697		$	240,483
Cost of revenue	140,150		22,143			15,660			177,953
Gross profit (loss)	64,573		(2,080		)	37			62,530
Selling, general and administrative expenses	28,682		4,325			14,694			47,701
Income (loss) from operations	35,891		(6,405		)	(14,657		)	14,829
Total other income (expense), net	10		—			(5,093		)	(5,083		)
Income (loss) before income taxes and non-controlling interests	$	35,901	$	(6,405	)	$	(19,750	)	$	9,746

(in thousands)	Mortgage Market		Real Estate Market		Other Businesses, Corporate and Eliminations		Consolidated Altisource
Total assets:
March 31, 2018	$	285,989	$	82,574	$	463,210	$	831,773
December 31, 2017	304,346		64,624		496,194		865,164

26

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Our services are primarily provided to customers located in the United States. Premises and equipment, net consist of the following, by country:

(in thousands)	March 31, 2018		December 31, 2017
United States	$	40,068	$	46,268
Luxembourg	16,686		16,688
India	6,797		8,136
Philippines	1,916		2,038
Uruguay	118		143
Total	$	65,585	$	73,273

NOTE 21 — SUBSEQUENT EVENT

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 the other lender parties thereto, pursuant to which the lenders have agreed to extend credit to Altisource S.à r.l. in the form of (i) Term B Loans (as defined in the Credit Agreement) in an aggregate principal amount equal to $412.0 million and (ii) a $15.0 million revolving credit facility, with Altisource Portfolio Solutions S.A. and certain wholly-owned subsidiaries of Altisource S.à r.l. acting as guarantors.

The proceeds of the Term B Loans were used to refinance Altisource S.à r.l.’s prior term loans under the credit agreement dated as of November 27, 2012 (see Note 10). When drawn, the proceeds from the revolving credit facility may be used for general corporate purposes and other uses permitted under the Credit Agreement.

As further summarized below, the Credit Agreement contains several changes from the prior credit agreement and retains certain other provisions. These include the following:

• The Term B Loans mature in April 2024 while the term loans under the prior credit agreement would have matured in December 2020.

• The Credit Agreement includes a revolving credit facility with a maintenance covenant that will apply to Altisource S.à r.l. only if funds are drawn on the revolving credit facility as of the last day of a fiscal quarter.

• The new Term B Loans have no financial maintenance covenants and are similar to Altisource S.à r.l.’s term loans under the prior credit agreement.

• The net debt definition in the Credit Agreement permits Altisource S.à r.l. to reduce net debt by up to $75 million in marketable securities while the prior credit agreement did not reduce net debt by marketable securities.

• The Available Amount accumulated under the prior credit agreement is being carried over to the Credit Agreement. The Available Amount can be used to make certain restricted payments, investments and payments, subject to certain conditions set forth in the Credit Agreement.

• Altisource S.à r.l. 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 million (compared to $200 million in the prior credit agreement), subject to certain conditions set forth in the Credit Agreement, including a sublimit of $80 million with respect to incremental revolving credit commitments. The lenders have no obligation to provide any incremental indebtedness.

• The new Term B Loans amortize $41.2 million in year 1, $41.2 million in year 2 and $12.4 million per year in each of the subsequent years. Amortization under the prior credit agreement was equal to $5.9 million per year.

The new Term B Loans bear interest at rates based upon, at Altisource S.à r.l.’s option, the Adjusted Eurodollar Rate or the Base Rate. Eurodollar Rate Term Loans will 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%. Eurodollar Rate Loans under the revolving credit facility will bear interest at a rate per annum of the Adjusted Eurodollar Rate for a three month interest period plus 4.00%. Base Rate Term Loans will 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%. Base Rate loans under the revolving credit facility will bear interest at a rate per annum of the Base Rate plus 3.00%. Interest under the prior credit agreement was based upon, at Altisource S.à r.l.’s option, the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar Rate loans bore interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bore 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) 2.50%.

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Notes to Condensed Consolidated Financial Statements (Continued)

Mandatory repayments of the new Term B Loans from asset sales that exceed $25 million in a given calendar year and from proceeds from the sale RESI shares held on April 3, 2018 are applied against contractual amortization of the Term B Loans.

Similar to the prior credit agreement, the Credit Agreement contains representations, warranties, covenants, terms and conditions customary for transactions of this type. These include covenants limiting Altisource Portfolio Solutions S.A.’s, Altisource S.à r.l.’s and each Restricted Subsidiary’s ability, subject to certain exceptions and baskets, to (i) incur indebtedness, (ii) incur liens on its assets, (iii) agree to any additional negative pledges, (iv) pay dividends and make other Restricted Junior Payments, (v) limit the ability of its subsidiaries to pay dividends or distribute assets, (vi) make investments, (vii) enter into any transaction of merger or consolidation, liquidate, wind-up or dissolve, or convey any part of its business, assets or property, or acquire the business, property or assets of another person, subject to certain exceptions, (viii) dispose of the equity interests of any Material Subsidiaries, whether through a sale of the capital stock, dissolution, merger or sale of all or substantially all of the assets of such Material Subsidiary, (ix) enter into sale and leaseback transactions, (x) enter into certain transactions with affiliates, (xi) engage in a line of business substantially different than existing business and businesses reasonably related, complimentary or ancillary thereto, (xii) modify the terms of indebtedness junior to the loans contemplated by the Credit Agreement, (xiii) modify the terms of its organizational documents in any material respect, (xiv) change its fiscal year, (xv) permit Altisource Portfolio Solutions S.A. to hold material assets, have material liabilities, or engage in certain activities, in each case, except as contemplated by the Credit Agreement, (xvi) use the proceeds of the loans for certain purposes, and (xvii) 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 (such covenant, the “Springing Revolving Financial Covenant”). The Springing Revolving Financial Covenant is for the benefit of Lenders having Revolving Credit Loans only and is subject to a customary cure provision.

The Company filed a Current Report on Form 8-K on April 4, 2018 that describes certain of the provisions of the Credit Agreement and also contains the Credit Agreement as an exhibit, which is incorporated in this Form 10-Q by reference. This description of the Credit Agreement is not complete and is qualified in its entirety by reference to the entire Credit Agreement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is a supplement to the accompanying interim condensed consolidated financial statements and is intended to provide a reader of our financial statements with a narrative from the perspective of management on our businesses, current developments, financial condition, results of operations and liquidity. Our MD&A should be read in conjunction with our Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (“SEC”) on February 22, 2018.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q regarding anticipated financial outcomes, business and market conditions, outlook and other similar statements related to Altisource’s future financial and operational performance are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of terminology such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “believe,” “predict,” “potential” or “continue” or the negative of these terms and other comparable terminology. Forward-looking statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. The following are examples of such items and are not intended to be all inclusive:

• assumptions related to sources of liquidity and the adequacy of financial resources;

• assumptions about our ability to grow our business, including executing on our strategic initiatives;

• assumptions about our ability to improve margins;

• assumptions regarding the impact of seasonality;

• estimates regarding our effective tax rate; and

• estimates regarding our reserves and valuations.

Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2017 and include the following:

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

• our ability to reach agreement with New Residential Investment Corp. (individually, together with one or more of its subsidiaries, or one or more of its subsidiaries individually, “NRZ”) on a Services Agreement or the termination of the Cooperative Brokerage Agreement, as amended, and related letter agreement (collectively, the “Brokerage Agreement”);

• our ability to execute on our strategic businesses;

• our ability to retain our existing customers, expand relationships and attract new customers;

• the level of loan delinquencies and charge-offs;

• the level of origination volume;

• technology failures;

• the outsourcing trends;

• our ability to raise debt;

• our ability to retain our directors, executive officers and key personnel;

• our ability to integrate acquired businesses;

• our ability to comply with, and burdens imposed by, governmental regulations and policies and any changes in such regulations and policies; and

• significant changes in the Luxembourg tax regime or interpretations of the Luxembourg tax regime.

We caution the reader not to place undue reliance on these forward-looking statements as they reflect our view only as of the date of this report. We are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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OVERVIEW

Our Business

When we refer to “Altisource,” the “Company,” “we,” “us” or “our” we mean Altisource Portfolio Solutions S.A., a Luxembourg société anonyme, or public limited liability company, and its subsidiaries.

We are 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.

Our reportable segments are as follows:

Mortgage Market: Provides loan servicers and originators with marketplaces, services and technologies that span the mortgage lifecycle. Within the Mortgage Market segment, we provide:

Servicer Solutions - the solutions, services and technologies typically used or licensed primarily by residential loan servicers.

• Property preservation and inspection services • Real estate brokerage and auction services • Title insurance (agent and related services) and settlement services • Appraisal management services and broker and non-broker valuation services • Foreclosure trustee services • Residential and commercial loan servicing technologies • Vendor management, marketplace transaction management and payment management technologies • Document management platform • Default services (real estate owned (“REO”), foreclosure, bankruptcy, eviction) technologies • Mortgage charge-off collections • Residential and commercial loan disbursement processing, risk mitigation and construction inspection services

Origination Solutions - the solutions, services and technologies typically used or licensed by loan originators (or other similar mortgage market participants) in originating, buying and selling residential mortgages.

• Title insurance (agent and related services) and settlement services • Appraisal management services and broker and non-broker valuation services • Fulfillment services • Loan origination system • Document management platform • Certified loan insurance and certification • Vendor management oversight platform • Mortgage banker cooperative management • Mortgage trading platform

Real Estate Market: Provides real estate consumers and rental property investors with marketplaces and services that span the real estate lifecycle. Within the Real Estate Market segment, we provide:

Consumer Real Estate Solutions - the solutions, services and technologies typically used by home buyers and sellers to handle key aspects of buying and selling a residence.

• Real estate brokerage doing business as Owners.com^® • Title insurance (agent and related services) and settlement services • Mortgage brokerage • Homeowners insurance

Real Estate Investor Solutions - the solutions, services and technologies used by buyers and sellers of single-family investment homes.

• Property preservation and inspection services • Real estate brokerage and auction services • Data solutions • Title insurance (agent and related services) and settlement services • Buy-renovate-lease-sell • Renovation services • Property management services • Appraisal management services and broker and non-broker valuation services

Other Businesses, Corporate and Eliminations: Includes certain ancillary businesses, interest expense and unallocated costs related to corporate support functions. The businesses in this segment include post-charge-off consumer debt collection services, customer relationship management services and information technology (“IT”) infrastructure management services. Interest expense relates to the Company’s senior secured term loan and corporate support functions include executive, finance, law, compliance, human

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resources, vendor management, facilities, risk management and sales and marketing costs not allocated to the business units. This segment also includes eliminations of transactions between the reportable segments.

We classify revenue in three categories: service revenue, revenue from reimbursable expenses and non-controlling interests. In evaluating our performance, we focus on service revenue. 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 Best Partners Mortgage Cooperative, Inc., doing business as Lenders One^® (“Lenders One”). Lenders One 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.

Strategy and Growth Businesses

We are focused on becoming one of the premier providers of mortgage and real estate marketplaces and related services to a broad and diversified customer base. Within the mortgage and real estate market segments, we facilitate transactions and provide products, solutions and services related to home sales, home purchases, home rentals, home maintenance, mortgage originations and mortgage servicing.

Each of our strategic businesses provides Altisource the potential to grow and diversify our customer and revenue base. We believe these businesses operate in very large markets and directly leverage our core competencies and distinct competitive advantages. A further description of our four strategic businesses follows.

Servicer Solutions:

Through this business, we provide a suite of services and technologies to meet the evolving and growing needs of loan servicers. We are focused on growing referrals from our existing customer base, expanding the service and proprietary technology offerings to our customer base, and attracting new customers to our offerings. We have a customer base that includes Ocwen, a government-sponsored enterprise (“GSE”), NRZ, several large bank and non-bank servicers and asset managers. We believe we are one of only a few providers with a broad suite of servicer solutions, nationwide coverage and demonstrated scalability. Further, we believe we are well positioned to gain market share as existing customers and prospects consolidate to larger, full-service providers and outsource services that have historically been performed in-house.

Origination Solutions:

Through this business, we provide a suite of services and technologies to meet the evolving and growing needs of loan originators and correspondents. We are focused on growing referrals from our existing customer base, expanding the service and proprietary technology offerings to our customer base, and attracting new customers to our offerings. We have a customer base that includes the Lenders One cooperative mortgage bankers, the Mortgage Builder^® loan origination system customers and mid-size and larger bank and non-bank loan originators. We believe our suite of services and technologies positions us to grow our relationships with our existing customer base by providing additional products, services and solutions to these customers. Further, we believe we are well positioned to attract new customers as prospects consolidate to larger, full-service providers and outsource services that have historically been performed in-house.

Consumer Real Estate Solutions:

Through this business, we provide real estate buyers and sellers with a technology enabled real estate brokerage and integrated services to support them in buying and selling a home. Our offerings include local real estate agent services and loan brokerage as well as closing and title services. We are focused on continuing to develop this business by capitalizing on Altisource’s experience in online real estate marketing and loan origination services as well as on recently developed agile execution competencies.

Real Estate Investor Solutions:

Through this business, we provide a suite of services and technologies to support buyers and sellers of single-family investment homes, including our purchase, renovation, leasing and sale of short-term investments in real estate. We are focused on growing referrals from our existing customer base, expanding the service and proprietary technology offerings to our customer base, and attracting new customers to our offerings. We have a customer base that includes Front Yard Residential Corporation (“RESI”) and other institutional and smaller single-family rental investors. The single-family rental market is large, geographically distributed and has fragmented ownership. We believe our acquisition, renovation, property management, leasing and disposition platform provides a strong value proposition for institutional and retail investors and positions us well for growth.

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There can be no assurance that growth from some or all of our strategic businesses will be successful or our operations will be profitable.

Share Repurchase Program

On May 17, 2017, our shareholders approved the renewal of the share repurchase program previously approved by the shareholders on May 18, 2016, which replaced the previous share repurchase program. We are authorized to purchase up to 4.6 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 March 31, 2018, approximately 3.1 million shares of common stock remain available for repurchase under the program. We purchased 0.4 million shares of common stock at an average price of $27.67 per share during the three months ended March 31, 2018 and 0.4 million shares at an average price of $25.10 per share during the three months ended March 31, 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 March 31, 2018, we can repurchase up to approximately $141 million of our common stock under Luxembourg law. Our senior secured term loan limited the amount we could have spent on share repurchases, which was approximately $464 million as of March 31, 2018, and may have prevented repurchases in certain circumstances. The new credit agreement retains this amount available for share repurchases and other restricted payments. See Note 21 to the condensed consolidated financial statements for additional information on the new credit agreement.

Ocwen Related Matters

During the three months endedMarch 31, 2018, Ocwen was our largest customer, accounting for 52% of our total revenue. Additionally, 8% of our revenue for the three months ended March 31, 2018 was earned on the loan portfolios serviced by Ocwen, when a party other than Ocwen or the mortgage servicing rights (“MSRs”) owner selected Altisource as the service provider.

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 Consumer Financial Protection Bureau (“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

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• 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 impact the other services we provide to Ocwen. For the three months endedMarch 31, 2018 and 2017, service revenue from REALServicing was $6.5 million and $7.0 million, respectively.

In addition to the above, as of June 30, 2017, we estimate that NRZ owned certain economic rights in, but not legal title to, approximately 78% of Ocwen’s non-GSE MSRs (the “Subject MSRs”). 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 will receive 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 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 April 30, 2018 with a further automatic extension through May 15, 2018 provided that the parties continue to negotiate the Services Agreement in good faith.

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

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become our largest customer. Had all of the Subject MSRs been transferred to NRZ and the Brokerage Agreement and the Services Agreement with NRZ were in place as of January 1, 2018, we estimate that approximately 48% of our revenue for the three months endedMarch 31, 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.

Factors Affecting Comparability

The following items may impact the comparability of our results:

• The average number of loans serviced by Ocwen on REALServicing (including those MSRs owned by NRZ and subserviced by Ocwen) was approximately 1.2 million for the three months ended March 31, 2018 compared to 1.3 million for the three months ended March 31, 2017, a decrease of 13%. The average number of delinquent non-GSE loans serviced by Ocwen on REALServicing was approximately 171 thousand for the three months ended March 31, 2018 compared to 191 thousand for the three months ended March 31, 2017, a decrease of 10%.

• Effective January 1, 2018, the Company adopted Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which requires certain equity investments to be measured at fair value with changes in fair value recognized in net income. Previously, changes in the fair value of the Company’s available for sale securities were included in comprehensive income. During the three months ended March 31, 2018, net loss included an unrealized loss from our investment in RESI common shares of $5.6 million, net of a $1.9 million income tax benefit. During the three months ended March 31, 2017, comprehensive income included an unrealized gain from our investment in RESI common shares of $12.7 million, net of a $4.7 million income tax provision. See Note 1 to the condensed consolidated financial statements for additional information on the adoption of the new accounting standard on investments in equity securities.

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CONSOLIDATED RESULTS OF OPERATIONS

Summary Consolidated Results

The following is a discussion of our consolidated results of operations for the periods indicated. For a more detailed discussion of the factors that affected the results of our business segments in these periods, see “Segment Results of Operations” below.

The following table sets forth information regarding our results of operations for the three months ended March 31:

(in thousands, except per share data)	2018			2017			% Increase (decrease)
Service revenue
Mortgage Market	$	159,155		$	194,973		(18	)
Real Estate Market	14,803			19,189			(23	)
Other Businesses, Corporate and Eliminations	14,808			15,677			(6	)
Total service revenue	188,766			229,839			(18	)
Reimbursable expenses	8,147			10,029			(19	)
Non-controlling interests	525			615			(15	)
Total revenue	197,438			240,483			(18	)
Cost of revenue	147,194			177,953			(17	)
Gross profit	50,244			62,530			(20	)
Selling, general and administrative expenses	43,124			47,701			(10	)
Income from operations	7,120			14,829			(52	)
Other income (expense), net:
Interest expense	(5,863		)	(5,798		)	1
Unrealized loss on investments in equity securities	(7,501		)	—			N/M
Other income (expense), net	1,272			715			78
Total other income (expense), net	(12,092		)	(5,083		)	138
(Loss) income before income taxes and non-controlling interests	(4,972		)	9,746			(151	)
Income tax benefit (provision)	1,365			(2,586		)	(153	)
Net (loss) income	(3,607		)	7,160			(150	)
Net income attributable to non-controlling interests	(525		)	(615		)	(15	)
Net (loss) income attributable to Altisource	$	(4,132	)	$	6,545		(163	)
Margins:
Gross profit/service revenue	27		%	27		%
Income from operations/service revenue	4		%	6		%
(Loss) earnings per share:
Basic	$	(0.24	)	$	0.35		(169	)
Diluted	$	(0.24	)	$	0.34		(171	)

N/M — not meaningful.

Revenue

We recognized service revenue of $188.8 million for the three months ended March 31, 2018, an 18%decrease compared to the three months ended March 31, 2017. The decrease in service revenue in the Mortgage Market segment was primarily a result of the reduction in the size of Ocwen’s portfolio and number of delinquent loans in its portfolio resulting from loan repayments, loan modifications, short sales, REO sales and other forms of resolution. The decrease in service revenue in the Real Estate Market segment was primarily from RESI’s smaller portfolio of non-performing loans and REO, partially offset by service revenue growth in the non-Ocwen property preservation and inspection, Hubzu, renovation management and Consumer Real Estate Solutions businesses.

Certain of our revenues are impacted by seasonality. More specifically, revenues from property sales, loan originations and certain property preservation services typically tend to be at their lowest level during the fall and winter months and at their highest level

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during the spring and summer months. In addition, revenue in the asset recovery management business tends to be higher in the first quarter, as borrowers may utilize tax refunds and bonuses to pay debts, and generally declines throughout the rest of the year.

Cost of Revenue and Gross Profit

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, and depreciation and amortization of operating assets.

Cost of revenue consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	54,866	$	63,092	(13	)
Outside fees and services	65,098		80,959		(20	)
Cost of real estate sold	3,179		4,935		(36	)
Technology and telecommunications	9,451		11,351		(17	)
Reimbursable expenses	8,147		10,029		(19	)
Depreciation and amortization	6,453		7,587		(15	)
Cost of revenue	$	147,194	$	177,953	(17	)

Cost of revenue for the three months ended March 31, 2018 of $147.2 milliondecreased17% compared to the three months ended March 31, 2017. The decrease in cost of revenue was primarily driven by lower outside fees and services, consistent with the decrease in Mortgage Market and Real Estate Market service revenue discussed in the revenue section above. Compensation and benefits declined in certain of our businesses as we reduced headcount in anticipation of the revenue decline from the Ocwen and RESI portfolios and from the implementation of efficiency initiatives.

Gross profit decreased to $50.2 million, representing 27% of service revenue, for the three months ended March 31, 2018 compared to $62.5 million, representing 27% of service revenue, for the three months ended March 31, 2017. Gross profit as a percentage of service revenue for the three months ended March 31, 2018 was flat compared to the three months ended March 31, 2017, as the revenue declines were largely offset by lower cost of revenue, as discussed above.

Selling, General and Administrative Expenses

Selling, general and administration expenses (“SG&A”) include payroll for 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.

SG&A expenses consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	13,569	$	12,506	8
Occupancy related costs	8,434		10,273		(18	)
Amortization of intangible assets	7,147		9,146		(22	)
Marketing costs	3,607		4,269		(16	)
Professional services	3,226		3,730		(14	)
Depreciation and amortization	2,268		2,421		(6	)
Other	4,873		5,356		(9	)
Selling, general and administrative expenses	$	43,124	$	47,701	(10	)

SG&A for the three months ended March 31, 2018 of $43.1 milliondecreased10% compared to the three months ended March 31, 2017. The decrease in SG&A was primarily due to lower amortization of intangible assets, driven by lower revenue generated by the Homeward Residential, Inc. (“Homeward”) and Residential Capital, LLC (“ResCap”) portfolios (revenue-based amortization)

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in the Mortgage Market segment, consistent with the reduction in the size of Ocwen’s portfolio discussed in the revenue section above. In addition, lower occupancy costs were driven by the subleasing of certain office facilities in Other Businesses, Corporate and Eliminations.

Income from Operations

Income from operations decreased to $7.1 million, representing 4% of service revenue, for the three months ended March 31, 2018 compared to $14.8 million, representing 6% of service revenue, for the three months ended March 31, 2017. Operating income as a percentage of service revenue decreased because SG&A costs declined at a lower rate than service revenue based on the less variable nature of certain of these costs.

Other Income (Expense), net

Other income (expense), net principally includes interest expense and other non-operating gains and losses. Effective January 1, 2018, other income (expense), net includes unrealized losses on our investment in RESI (see Factors Affecting Comparability above). Other income (expense), net for the three months ended March 31, 2018 of $(12.1) millionincreased138% compared to the three months ended March 31, 2017, driven by an unrealized loss of $7.5 million on our investment in RESI.

Income Tax Benefit (Provision)

We recognized an income tax benefit of $1.4 million for the three months ended March 31, 2018 compared to an income tax provision of $2.6 million for the three months ended March 31, 2017. Our effective tax rate was 27.5% and 26.5% for the three months ended March 31, 2018 and 2017, respectively. Our effective tax rates differ from the Luxembourg statutory tax rate of 26.0% and 27.1% in 2018 and 2017, respectively, primarily due to the mix of income and losses with varying tax rates in multiple taxing jurisdictions and, for the three months ended March 31, 2017, the effect of certain deductions in Luxembourg. Our effective income tax rate can vary due to changes in the mix of taxable income across the jurisdictions in which we operate.

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SEGMENT RESULTS OF OPERATIONS

The following section provides a discussion of pretax results of operations of our business segments. Transactions between segments are accounted for as third party arrangements for purposes of presenting segment results of operations.

Financial information for our segments was as follows:

	Three months ended March 31, 2018
(in thousands)	Mortgage Market			Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue
Service revenue	$	159,155		$	14,803		$	14,808		$	188,766
Reimbursable expenses	7,658			477			12			8,147
Non-controlling interests	525			—			—			525
	167,338			15,280			14,820			197,438
Cost of revenue	111,073			18,554			17,567			147,194
Gross profit (loss)	56,265			(3,274		)	(2,747		)	50,244
Selling, general and administrative expenses	23,374			4,118			15,632			43,124
Income (loss) from operations	32,891			(7,392		)	(18,379		)	7,120
Total other income (expense), net	16			2			(12,110		)	(12,092		)
Income (loss) before income taxes and non-controlling interests	$	32,907		$	(7,390	)	$	(30,489	)	$	(4,972	)
Margins:
Gross profit (loss)/service revenue	35		%	(22		)%	(19		)%	27		%
Income (loss) from operations/service revenue	21		%	(50		)%	(124		)%	4		%

	Three months ended March 31, 2017
(in thousands)	Mortgage Market			Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue
Service revenue	$	194,973		$	19,189		$	15,677		$	229,839
Reimbursable expenses	9,135			874			20			10,029
Non-controlling interests	615			—			—			615
	204,723			20,063			15,697			240,483
Cost of revenue	140,150			22,143			15,660			177,953
Gross profit (loss)	64,573			(2,080		)	37			62,530
Selling, general and administrative expenses	28,682			4,325			14,694			47,701
Income (loss) from operations	35,891			(6,405		)	(14,657		)	14,829
Total other income (expense), net	10			—			(5,093		)	(5,083		)
Income (loss) before income taxes and non-controlling interests	$	35,901		$	(6,405	)	$	(19,750	)	$	9,746
Margins:
Gross profit (loss)/service revenue	33		%	(11		)%	—		%	27		%
Income (loss) from operations/service revenue	18		%	(33		)%	(93		)%	6		%

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Mortgage Market

Revenue

Revenue by business unit was as follows for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Service revenue:
Servicer Solutions	$	147,809	$	183,433	(19	)
Origination Solutions	11,346		11,540		(2	)
Total service revenue	159,155		194,973		(18	)
Reimbursable expenses:
Servicer Solutions	7,602		9,036		(16	)
Origination Solutions	56		99		(43	)
Total reimbursable expenses	7,658		9,135		(16	)
Non-controlling interests	525		615		(15	)
Total revenue	$	167,338	$	204,723	(18	)

We recognized service revenue of $159.2 million for the three months ended March 31, 2018, an 18% decrease compared to the three months ended March 31, 2017. We also recognized reimbursable expense revenue of $7.7 million for the three months ended March 31, 2018, a 16% decrease compared to the three months ended March 31, 2017. The decreases in service revenue and reimbursable expenses revenue were primarily a result of the reduction in the size of Ocwen’s portfolio and number of delinquent loans in its portfolio resulting from loan repayments, loan modifications, short sales, REO sales and other forms of resolution in the Servicer Solutions business. These decreases were partially offset by growth in the non-Ocwen property preservation and inspection and Hubzu^® businesses.

Certain of our Mortgage Market businesses are impacted by seasonality. Revenues from property sales, loan originations and certain property preservation services are generally lowest during the fall and winter months and highest during the spring and summer months.

Cost of Revenue and Gross Profit

Cost of revenue consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	34,966	$	42,755	(18	)
Outside fees and services	57,561		75,370		(24	)
Reimbursable expenses	7,658		9,135		(16	)
Technology and telecommunications	6,346		8,172		(22	)
Depreciation and amortization	4,542		4,718		(4	)
Cost of revenue	$	111,073	$	140,150	(21	)

Cost of revenue for the three months endedMarch 31, 2018 of $111.1 million decreased by 21% compared to the three months endedMarch 31, 2017. The decrease in cost of revenue was primarily driven by lower outside fees and services, consistent with the decrease in Servicer Solutions service revenue discussed in the revenue section above. Compensation and benefits declined in certain of the Servicer Solutions businesses as we reduced headcount in anticipation of the revenue decline from Ocwen’s portfolio discussed in the revenue section above, the implementation of efficiency initiatives and the redeployment of certain technology resources to our Other Businesses, Corporate and Eliminations for the development of enterprise-wide technology initiatives. The decrease in reimbursable expenses was consistent with the decrease in reimbursable expenses revenue discussed in the revenue section above.

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Gross profit decreased to $56.3 million, representing 35% of service revenue, for the three months endedMarch 31, 2018 compared to $64.6 million, representing 33% of service revenue, for the three months endedMarch 31, 2017. Gross profit as a percentage of service revenue increased primarily due to service revenue mix from fewer lower margin property preservation referrals. Our margins can vary substantially depending upon service revenue mix.

Selling, General and Administrative Expenses

SG&A expenses consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	4,857	$	5,154	(6	)
Occupancy related costs	5,254		5,216		1
Amortization of intangible assets	6,519		8,435		(23	)
Professional services	1,446		2,230		(35	)
Marketing costs	1,728		2,472		(30	)
Depreciation and amortization	896		863		4
Other	2,674		4,312		(38	)
Selling, general and administrative expenses	$	23,374	$	28,682	(19	)

SG&A for the three months ended March 31, 2018 of $23.4 million decreased by 19% compared to the three months ended March 31, 2017. The decrease in SG&A was primarily due to lower amortization of intangible assets, driven by lower revenue generated by the Homeward and ResCap portfolios (revenue-based amortization), consistent with the reduction in the size of Ocwen’s portfolio discussed in the revenue section above, and a decrease in other due to lower bad debt expense in the current year. In addition, legal costs in professional services decreased in connection with the resolution of, and reduction in activities related to, litigation and regulatory matters, and marketing costs decreased due to a reduction in Hubzu spending in the current year.

Income from Operations

Income from operations decreased to $32.9 million, representing 21% of service revenue, for the three months ended March 31, 2018 compared to $35.9 million, representing 18% of service revenue, for the three months ended March 31, 2017. The increase in operating income as a percentage of service revenue was primarily the result of higher gross profit margins, as discussed above.

Real Estate Market

Revenue

Revenue by business unit was as follows for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Service revenue:
Consumer Real Estate Solutions	$	1,405	$	709	98
Real Estate Investor Solutions	13,398		18,480		(28	)
Total service revenue	14,803		19,189		(23	)
Reimbursable expenses:
Consumer Real Estate Solutions	2		—		N/M
Real Estate Investor Solutions	475		874		(46	)
Total reimbursable expenses	477		874		(45	)
Total revenue	$	15,280	$	20,063	(24	)

N/M — not meaningful.

We recognized service revenue of $14.8 million for the three months ended March 31, 2018, a 23% decrease compared to the three months ended March 31, 2017. The decrease in service revenue was primarily driven by a decline in revenues in the Real Estate

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Investor Solutions business from RESI’s smaller portfolio of non-performing loans and REO, as RESI continues to sell its portfolio of non-performing loans and REO and focuses on directly acquiring, renovating and managing rental homes. This decrease in the Real Estate Investor Solutions business was also driven by a decrease in our buy-renovate-lease-sell program due to lower transaction volumes. These decreases were partially offset by an increase in the Consumer Real Estate Solutions business from higher transaction volumes for the three months ended March 31, 2018 and growth in the renovation management business in the Real Estate Investor Solutions business.

Certain of our Real Estate Market businesses are impacted by seasonality. Revenues from property sales and certain property preservation services are generally lowest during the fall and winter months and highest during the spring and summer months.

Cost of Revenue and Gross Loss

Cost of revenue consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	7,002	$	9,242	(24	)
Outside fees and services	6,869		4,716		46
Cost of real estate sold	3,179		4,935		(36	)
Reimbursable expenses	477		874		(45	)
Technology and telecommunications	843		1,722		(51	)
Depreciation and amortization	184		654		(72	)
Cost of revenue	$	18,554	$	22,143	(16	)

Cost of revenue for the three months ended March 31, 2018 of $18.6 million decreased by 16% compared to the three months ended March 31, 2017. The decrease in cost of revenue was primarily driven by lower compensation and benefits, which declined in certain of the Real Estate Investor Solutions businesses as we reduced headcount in anticipation of the revenue from RESI’s portfolio discussed in the revenue section above, and a decrease in the cost of real estate sold in connection with our buy-renovate-lease-sell program due to lower transaction volumes. These decreases were partially offset by higher outside fees and services, principally in the Real Estate Investor Solutions renovation management business and in the Consumer Real Estate Solutions business consistent with the increase in service revenue discussed in the revenue section above.

Gross loss increased to $(3.3) million, representing (22)% of service revenue, for the three months ended March 31, 2018, compared to $(2.1) million, representing (11)% of service revenue, for the three months ended March 31, 2017. Gross loss as a percent of service revenue increased primarily as a result of service revenue mix from fewer higher margin REO sales, partially offset by declines in the lower margin buy-renovate-lease-sell program. Our margins can vary substantially depending upon service revenue mix.

Selling, General and Administrative Expenses

SG&A expenses consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	709	$	599	18
Occupancy related costs	571		672		(15	)
Amortization of intangible assets	211		211		—
Professional services	158		323		(51	)
Marketing costs	1,794		1,724		4
Depreciation and amortization	127		156		(19	)
Other	548		640		(14	)
Selling, general and administrative expenses	$	4,118	$	4,325	(5	)

SG&A for the three months ended March 31, 2018 of $4.1 million decreased by 5% compared to the three months ended March 31, 2017. The decrease in SG&A was primarily driven by a decrease in legal costs in professional services.

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Loss from Operations

Loss from operations increased to $(7.4) million, representing (50)% of service revenue, for the three months ended March 31, 2018, compared to a loss from operations of $(6.4) million, representing (33)% of service revenue, for the three months ended March 31, 2017. The increase in loss from operations as a percentage of service revenue was primarily the result of lower gross profit margins, as discussed above.

Other Businesses, Corporate and Eliminations

Revenue

Revenue by business unit was as follows for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Service revenue:
Customer relationship management	$	6,393	$	7,357	(13	)
Asset recovery management	7,039		6,077		16
IT infrastructure services	1,376		2,243		(39	)
Total service revenue	14,808		15,677		(6	)
Reimbursable expenses:
Asset recovery management	12		20		(40	)
Total reimbursable expenses	12		20		(40	)
Total revenue	$	14,820	$	15,697	(6	)

We recognized service revenue of $14.8 million for the three months ended March 31, 2018, a 6% decrease compared to the three months ended March 31, 2017. The decrease in service revenue was primarily due to a decline in customer relationship management services from lower transaction volumes from a customer that expanded its vendor network. In addition, the decline in IT infrastructure services, which are typically billed on a cost plus basis, was driven by the transition of resources supporting Ocwen’s technology infrastructure from Altisource to Ocwen. This transition began in the fourth quarter of 2015 and continued through 2018. These decreases were partially offset by an increase in asset recovery management service revenue from growth in collection referral volumes.

Certain of our other businesses are impacted by seasonality. Revenue in the asset recovery management business tends to be higher in the first quarter, as borrowers may utilize tax refunds and bonuses to pay debts, and generally declines throughout the remainder of the year.

Cost of Revenue and Gross Profit (Loss)

Cost of revenue consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	12,898	$	11,095	16
Outside fees and services	668		873		(23	)
Reimbursable expenses	12		20		(40	)
Technology and telecommunications	2,262		1,457		55
Depreciation and amortization	1,727		2,215		(22	)
Cost of revenue	$	17,567	$	15,660	12

Cost of revenue for the three months ended March 31, 2018 of $17.6 million increased by 12% compared to the three months ended March 31, 2017. The increase in cost of revenue was primarily due to increases in compensation and benefits and technology and telecommunications costs, driven by the redeployment of certain technology resources from the Mortgage Market segment for the development of enterprise-wide technology initiatives.

Gross profit (loss) decreased to a gross loss of $(2.7) million, representing (19)% of service revenue, for the three months ended March 31, 2018 compared to gross profit of less than $0.1 million, representing less than 1% of service revenue, for the three months ended March 31, 2017. Gross profit as a percentage of service revenue decreased due to the increase in compensation and benefits and technology and telecommunications costs and the decrease in customer relationship management and IT infrastructure revenue, partially offset by increased asset recovery management revenue, as described above.

Selling, General and Administrative Expenses

SG&A in Other Businesses, Corporate and Eliminations include SG&A expenses of the customer relationship management, asset recovery management and IT infrastructure services businesses. It also includes costs related to corporate support functions not allocated to the Mortgage Market and Real Estate Market segments.

Other Businesses, Corporate and Eliminations also include eliminations of transactions between the reportable segments.

SG&A expenses consisted of the following for the three months ended March 31:

(in thousands)	2018		2017		% Increase (decrease)
Compensation and benefits	$	8,003	$	6,753	19
Occupancy related costs	2,609		4,385		(41	)
Amortization of intangible assets	417		500		(17	)
Professional services	1,622		1,177		38
Marketing costs	85		73		16
Depreciation and amortization	1,245		1,402		(11	)
Other	1,651		404		309
Selling, general and administrative expenses	$	15,632	$	14,694	6

SG&A for the three months ended March 31, 2018 of $15.6 million increased by 6% compared to the three months ended March 31, 2017. The increase in SG&A was primarily driven by an increase in compensation and benefits from higher share-based compensation and higher other SG&A due to facility closure costs, partially offset by lower occupancy costs due to the subleasing of certain office facilities.

Loss from Operations

Loss from operations increased to $(18.4) million for the three months ended March 31, 2018 compared to a loss of $(14.7) million for the three months ended March 31, 2017. The increase in operating loss was primarily driven by a decrease in gross profit, as discussed above.

Other Expenses, Net

Other expenses, net principally includes interest expense and other non-operating gains and losses. Effective January 1, 2018, other income (expense), net includes unrealized losses on our investment in RESI (see Factors Affecting Comparability above). For the three months ended March 31, 2018, other expenses, net of $(12.1) million increased by 138% compared to the three months ended March 31, 2017, driven by an unrealized loss of $7.5 million on our investment in RESI from a decline in the market value of RESI common shares.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary source of liquidity is cash flow from operations. We seek to deploy cash generated in a disciplined manner. Principally, we intend to use cash to develop and grow complementary services and businesses that we believe will generate attractive margins in line with our core capabilities and strategy. We use cash for scheduled repayments of our senior secured term loan and seek to use cash from time to time to repurchase shares of our common stock and repurchase portions of our senior secured term loan. In addition, we consider and evaluate business acquisitions that may arise from time to time that are aligned with our strategy.

For the three months ended March 31, 2018, we used $10.0 million to repurchase shares of our common stock.

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Senior Secured Term Loan and Credit Agreement

On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of Altisource Portfolio Solutions S.A., entered into a senior secured term loan agreement with Bank of America, N.A., as administrative agent, and certain lenders. Altisource Portfolio Solutions S.A. and certain subsidiaries were guarantors of the senior secured term loan. We subsequently entered into four amendments to the senior secured term loan agreement to, among other changes, increase the principal amount of the senior secured term loan, re-establish the $200.0 million incremental term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year, increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement) and certain other changes primarily to facilitate an internal restructuring of the Company’s subsidiaries. The lenders of the senior secured term loan, as amended, had no obligation to provide any such additional debt under the accordion provision. As of March 31, 2018, $412.1 million was outstanding under the senior secured term loan agreement, as amended, compared to $413.6 million as of December 31, 2017. No mandatory prepayments were required for the three months ended March 31, 2018. The interest rate for the senior secured term as of March 31, 2018 was 5.38%. On April 3, 2018, Altisource Portfolio Solutions S.A. and Altisource S.à r.l. entered into a credit agreement with Morgan Stanley Senior Funding, Inc. as administrative agent and collateral agent and the other lenders parties thereto, pursuant to which the lenders have agreed to extend credit to Altisource S.à r.l. in the form of (i) Term B Loans (as defined in the credit agreement) in an aggregate principal amount equal to $412.0 million and (ii) a $15.0 million revolving credit facility. The proceeds of the Term B Loans were used to refinance Altisource S.à r.l.’s senior secured term loan. See Note 21 to the condensed consolidated financial statements for additional information on the April 3, 2018 Term B Loans and revolving credit facility.

The debt covenants in the new credit agreement limit, among other things, our ability to incur additional debt, pay dividends and repurchase shares of our common stock. In the event we require additional liquidity, our ability to obtain it may be limited by the new credit agreement.

Cash Flows

The following table presents our cash flows for the three months ended March 31:

(in thousands)	2018			2017			% Increase (decrease)
Net (loss) income adjusted for non-cash items	$	21,566		$	30,796		(30	)
Changes in operating assets and liabilities	(30,135		)	(49,155		)	39
Cash flows used in operating activities	(8,569		)	(18,359		)	53
Cash flows used in investing activities	(1,258		)	(1,944		)	35
Cash flows used in financing activities	(10,031		)	(11,893		)	16
Net decrease in cash, cash equivalents and restricted cash	(19,858		)	(32,196		)	38
Cash, cash equivalents and restricted cash at the beginning of the period	108,843			153,421			(29	)
Cash, cash equivalents and restricted cash at the end of the period	$	88,985		$	121,225		(27	)

Cash Flows from Operating Activities

Cash flows from operating activities generally consist of the cash effects of transactions and events that enter into the determination of net income. For the three months ended March 31, 2018, we used cash flows in operating activities of $(8.6) million, or approximately $(0.05) for every dollar of service revenue, compared to cash flows used in operating activities of $(18.4) million, or approximately $(0.08) for every dollar of service revenue, for the three months ended March 31, 2017. The improvement in cash flows from operations for the three months ended March 31, 2018, compared to the three months ended March 31, 2017, was principally driven by the $28.0 million net payment in the prior year period of a previously accrued litigation settlement, partially offset by a $9.9 million increase in short-term investments in real estate for the three months ended March 31, 2018, compared to a $2.5 million increase in short-term investments in real estate for the three months ended March 31, 2017 in connection with our buy-renovate-lease-sell program. The improvement in cash flows from operations for the three months ended March 31, 2018 was also partially offset by lower net income, adjusted for non-cash items, by $9.2 million, a decrease of 30% compared to the three months ended March 31, 2017. Cash flows from operating activities excluding increases in short-term investments in real estate and the net litigation settlement payment for the three months ended March 31, 2017, would have been $1.3 million, or approximately $0.01 for every dollar of service revenue for the three months ended March 31, 2018 and cash flows from operating activities would have been $12.1 million, or approximately $0.05 for every dollar of service revenue for the three months ended March 31, 2017.

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Operating cash flows can be negatively impacted because of the nature of some of our services and the mix of services provided. Certain services are performed immediately following or shortly after the referral, but the collection of the receivable does not occur until a specific event occurs (e.g., the foreclosure is complete, the REO asset is sold, etc.). Furthermore, lower margin services generate lower income and cash flows from operations. In addition, annual incentive compensation bonuses are typically paid during the first quarter of each year. Consequently, our cash flows from operations may be negatively impacted when comparing one interim period to another.

Cash Flows from Investing Activities

Cash flows from investing activities for the three months ended March 31, 2018 and 2017 consisted of cash used for additions to premises and equipment of $1.3 million and $1.9 million, respectively, primarily related to investments in the development of certain software applications, IT infrastructure and facility improvements.

Cash Flows from Financing Activities

Cash flows from financing activities for the three months ended March 31, 2018 and 2017 primarily included activities associated with the purchase of treasury shares, debt repayments, stock option exercises and distributions to non-controlling interests. During the three months ended March 31, 2018 and 2017, we used $10.0 million and $10.6 million, respectively, to repurchase our common stock, received proceeds from stock option exercises of $2.6 million and $0.8 million, respectively, and distributed $0.7 million and $0.6 million, respectively, to non-controlling interests.

Liquidity Requirements after March 31, 2018

Our primary future liquidity obligations pertain to long-term debt repayments and interest expense under our new credit agreement (see Liquidity section above), distributions to Lenders One members and payments related to a prior acquisition.

During the next 12 months, we expect to make mandatory repayments of $41.2 million and pay $23.5 million of interest expense (assuming the current interest rate) under the new credit agreement (see Liquidity section above) and distribute approximately $2.7 million to the Lenders One members representing non-controlling interests.

On July 17, 2015, we acquired CastleLine Holdings, LLC and its subsidiaries. A portion of the purchase consideration totaling $10.5 million is payable to the sellers over approximately three and one-half years from the acquisition date, including $3.8 million to be paid to certain of the sellers that is contingent on future employment. As of March 31, 2018, we have paid $9.2 million of the up to $10.5 million that is payable over four years from the acquisition date, of which $2.5 million of the $3.8 million purchase consideration that is contingent on future employment. The remaining future payments of $1.3 million are payable during the next 12 months.

We believe that our existing cash and cash equivalents balances and our anticipated cash flows from operations will be sufficient to meet our liquidity needs, including to fund required debt and interest payments and additions to premises and equipment, for the next 12 months.

Contractual Obligations, Commitmentsand Contingencies

For the three months ended March 31, 2018, there were no significant changes to our contractual obligations from those identified in our Form 10-K for the fiscal year ended December 31, 2017, other than those that occur in the normal course of business. See Note 19 to the condensed consolidated financial statements.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENT

We prepare our interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. In applying many of these accounting principles, we need to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and judgments, however, are often subjective. Actual results may be negatively affected based on changing circumstances. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known.

See Note 1 to the condensed consolidated financial statements for the Company’s critical accounting policy for revenue recognition. Our other critical accounting policies are described in the MD&A section of our Form 10-K for the year ended December 31, 2017 filed with the SEC on February 22, 2018. With the exception of the changes to our revenue recognition policy referenced above, there have been no material changes to our critical accounting policies during the three months ended March 31, 2018.

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Recently Adopted and Future Adoption of New Accounting Pronouncements

See Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements, including pronouncements that were adopted in the current period.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Our financial market risk consists primarily of interest rate and foreign currency exchange rate risk.

Interest Rate Risk

As of March 31, 2018, the interest rate charged on the senior secured term loan was 5.38%. The interest rate was calculated based on the Adjusted Eurodollar Rate (as defined in the senior secured term loan agreement) with a minimum floor of 1.00% plus 3.50%.

Based on the principal amount outstanding at March 31, 2018, a one percentage point increase in the Eurodollar Rate would have increased our annual interest expense by approximately $4.1 million, based on the March 31, 2018 Adjusted Eurodollar Rate. There would have been a $3.6 million decrease in our annual interest expense if there was a one percentage point decrease in the Eurodollar Rate.

Currency Exchange Risk

We are exposed to currency risk from potential changes in currency values of our non-United States dollar denominated expenses, assets, liabilities and cash flows. Our most significant currency exposure relates to the Indian rupee. Based on expenses incurred in Indian rupees for the three months ended March 31, 2018, a one percentage point increase or decrease in value of the Indian rupee in relation to the United States dollar would increase or decrease our annual expenses by approximately $1.0 million.

Item 4. Controls and Procedures

a) Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of March 31, 2018, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on this evaluation, such officers have concluded that our disclosure controls and procedures were effective as of March 31, 2018.

b) Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

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 CFPB indicating that the CFPB was considering a potential enforcement action against Altisource relating to an alleged violation of federal law focused on REALServicing 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.

Item 1A. Risk Factors

As of the date of this filing, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our Form 10-K for the year ended December 31, 2017 filed with the SEC on February 22, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information related to our repurchases of our equity securities during the three months ended March 31, 2018:

Period	Total number of shares purchased	Weighted average price paid per share		Total number of shares purchased as part of publicly announced plans or programs(1)	Maximum number of shares that may yet be purchased under the plans or programs(1)
Common stock:
January 1 – 31, 2018	177,907	$	28.07	177,907	3,245,044
February 1 – 28, 2018	35,200	26.90		35,200	3,209,844
March 1 – 31, 2018	147,625	27.38		147,625	3,062,219
	360,732	$	27.67	360,732	3,062,219

⁽¹⁾  On May 17, 2017, our shareholders approved the renewal of the share repurchase program originally approved by the shareholders on May 18, 2016, which replaced the previous share repurchase program and authorizes us to purchase up to 4.6 million shares of our common stock in the open market, subject to certain parameters.

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Item 6. Exhibits

Exhibit Number	Exhibit Description
10.1 *	Third Amendment to the Cooperative Brokerage Agreement, dated as of March 23, 2018, between REALHome Services and Solutions, Inc., REALHome Services and Solutions - CT, Inc. and New Residential Sales Corp.
10.2 * †	Form of Non-Qualified Stock Option Award Agreement (2018 Performance-Based Stock Options)
10.3 * †	Form of Restricted Share Unit Award Agreement (2018 Time-Based Restricted Share Units)
10.4	Credit Agreement, dated April 3, 2018 among Altisource S.à r.l. and Altisource Portfolio Solutions S.A., Morgan Stanley Senior Funding, Inc., as Administrative Agent and Collateral Agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 4, 2018)
31.1*	Section 302 Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)
31.2*	Section 302 Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)
32.1*	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 *	Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 is formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets at March 31, 2018 and December 31, 2017; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2018 and 2017; (iii) Condensed Consolidated Statements of Equity for the three months ended March 31, 2018 and 2017; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017; and (v) Notes to Condensed Consolidated Financial Statements.
______________________________________
*	Filed herewith.
†	Denotes a management contract or compensatory arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ALTISOURCE PORTFOLIO SOLUTIONS S.A.
		(Registrant)
Date:	April 26, 2018	By:	/s/ William B. Shepro
			William B. Shepro
			Director and Chief Executive Officer
			(Principal Executive Officer)
Date:	April 26, 2018	By:	/s/ Michelle D. Esterman
			Michelle D. Esterman
			Executive Vice President, Finance
			(Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

THIRD AMENDMENT

TO

COOPERATIVE BROKERAGE AGREEMENT

This THIRD AMENDMENT TO COOPERATIVE BROKERAGE AGREEMENT (this “Third Amendment”) is made as effective as of March 23, 2018, and is by and among REALHome Services and Solutions, Inc., a Florida corporation (“RHSS, Inc.”), REALHome Services and Solutions - CT, Inc., a Connecticut corporation (“RHSS CT”), and New Residential Sales Corp., a Delaware Corporation (“NRZ Brokerage”).

Recitals

Whereas, on August 28, 2017, RHSS, Inc., RHSS CT, and NRZ Brokerage entered into that certain Cooperative Brokerage Agreement (as amended, the “CBA”);

Whereas, RHSS, Inc., RHSS CT, and NRZ Brokerage desire to amend the CBA, in the manner set forth herein; and

Whereas, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the CBA.

Agreement

Now, therefore, in consideration of the premises and mutual promises herein made, and in consideration of the representations, warranties, and the covenants herein contained, each of parties agree as follows:

1.Section 19(a)(xi) of the CBA is hereby deleted in its entirety, and inserted in lieu thereof is the following Section 19(a)(xi) of the CBA, as follows:

“(xi) Sufficient Cash. By NRZ Brokerage, if the Guarantor, together with its direct and indirect subsidiaries on a consolidated basis, fails to maintain twenty-five million dollars ($25,000,000) in unencumbered (except for that certain Credit Agreement dated November 27, 2012 under which Altisource is the borrower and any successive amendments, restatements, supplements, modifications, renewals, extensions, refundings, refinancings, restructurings or replacements thereof) cash and/or cash equivalents, regardless of the currency (the “Cash Threshold”); provided that each month, the principal financial officer or principal accounting officer shall certify that (a) at the end of such month, the Cash Threshold was satisfied in accordance with the United States generally accepted accounting principles (GAAP) definition of cash and cash equivalents; and (b) throughout such month, the Cash Threshold was satisfied at the end of each day in the month based on the total amount of cash held in bank accounts, which may or may not be GAAP compliant and may or not be reconciled.”

2.All remaining provisions of the CBA shall remain unchanged and effective and are incorporated herein by reference.

3.This Third Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed and delivered this Third Amendment to Cooperative Brokerage Agreement as of the date first written above.

RHSS Inc.:

REALHome Services and Solutions, Inc.

By: /s/ Michelle D. Esterman

Name:Michelle D. Esterman

Title: President and Chief Executive Officer

RHSS CT.:

REALHome Services and Solutions - CT, Inc.

By: /s/ Michelle D. Esterman

Name:Michelle D. Esterman

Title: President and Chief Executive Officer

NRZ Brokerage:

New Residential Sales Corp.

By: /s/ Nicola Santoro, Jr.

Name:Nicola Santoro, Jr.

Title:Chief Financial Officer

EX-10.2

Exhibit 10.2

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (the “Agreement”) is made as of February 12, 2018 (the “Grant Date”), between Altisource Portfolio Solutions S.A., a Luxembourg société anonyme (“Altisource” and, together with its subsidiaries and affiliates, the “Company”), and [ ],an employee of the Company (the “Employee”).

WHEREAS, the Company desires, by affording the Employee an opportunity to purchase shares of its common stock, par value $1.00 per share (“Shares”), to further the objectives of the Company’s 2009 Equity Incentive Plan (the “2009 Plan”).

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto have agreed, and do hereby agree, as follows:

1. OPTION GRANT

The Company hereby grants to the Employee, pursuant to and subject to the 2009 Plan, the right and option to purchase from the Company a number of Shares equal to the Target Amount (as defined in Exhibit A) for a purchase price of $24.82 per share (the “Strike Price”), on the terms and conditions set forth in this Agreement (the “Options”).

2. OPTION TERM

The term of the Options shall begin on the Grant Date and will continue for a period of ten (10) years from the Grant Date, unless earlier terminated pursuant to exercise, in accordance with Section 3 Subsection A(3) or as provided in Section 5 below.

3. VESTING OF OPTIONS

A. Vesting Schedule

Subject to the provisions of Sections 5 and 6 below, the Options shall vest and become exercisable in accordance with the following provisions:

(1) Following the conclusion of the 2018 calendar year and prior to the first anniversary of the Grant Date, the Compensation Committee of the Board of Directors of Altisource shall confirm the extent to which the performance measure described in Exhibit A (the “Performance Measure”) is satisfied. Based upon the achievement against the Performance Measure, a percentage of the Target Amount (between 0% and 200%) shall become vestable Options

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(the “Stock Option Vestable Portion”) and shall vest in accordance with the provisions of Section 3 Subsection A(2) below.

(2) One-fourth (1/4) of the Stock Option Vestable Portion (if any, as determined pursuant to the provisions of Exhibit A)shall vest on each of the first, second, third and fourth anniversaries of the Grant Date.

(3) All Options that do not constitute the Stock Option Vestable Portion shall be forfeited and cancelled immediately upon confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied (if at all).

B. General

The Employee shall have none of the rights of a shareholder with respect to any of the Shares subject to the Options until such Shares shall be issued in the Employee’s name or the name of the Employee’s designee following the exercise of the Options.

4. METHOD OF OPTION EXERCISE

A. Subject to the terms and conditions of this Agreement, vested Options may be exercised by written notice to the Company at its executive offices to the attention of the Corporate Secretary of the Company (the “Notice”). The Notice shall state the election to exercise vested Options, shall state the number of Shares in respect of which it is being exercised (the “Purchased Shares”) and shall be signed by the person or persons so exercising such Options. In no case may vested Options be exercised as to less than fifty (50) Shares at any one time (or the remaining Shares then purchasable under the vested Options, if less than fifty (50) Shares) or for a fractional Share. Except as provided in Section 5 below, vested Options may not be exercised unless the Employee shall, at the time of the exercise, be an employee of the Company and not under a notice of resignation. During the Employee’s lifetime, only the Employee or the Employee’s guardian or legal representative may exercise vested Options (in the case of the Employee’s guardian or legal representative, such guardian or legal representative, as applicable, will be considered to be the Employee for purposes of exercising the Employee’s rights in this Section 4, Subsections A and B).

B. A Notice shall be accompanied by (1) a personal check or wire transfer payable to the order of the Company for payment of the full purchase price of the Purchased Shares, (2) delivery to the Company of the number of Shares duly endorsed for transfer and owned by the Employee that have an aggregate Fair Market Value equal to the aggregate purchase price of the Purchased Shares or (3) payment therefor made in such other manner as may be acceptable to the Company on such terms as may be determined by the Board of Directors. “Fair Market Value” shall have the

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meaning given to that term in the 2009 Plan. In addition to and at the time of payment of the purchase price, the person exercising the vested Options shall pay to the Company the full amount of any federal and state withholding or other taxes applicable to the taxable income of such person resulting from such exercise in cash unless the Board of Directors in its sole discretion shall permit such taxes to be paid in Shares. Such payment may also be made in the form of payroll withholding, at the election of the Employee, provided that the required payroll withholding occurs within one pay period. The Company shall issue the Purchased Shares as soon as practicable after receipt of the notice and all required payments by the person or persons exercising the Options as provided in Section 4, Subsection A above. Unless the person or persons exercising the Options shall otherwise direct the Company in writing, such Purchased Shares shall be registered in the name of the Employee and shall be delivered as aforesaid to or upon the written order of the Employee.

C. To the extent Options shall be exercised, pursuant to Section 5 hereof, by any person or persons other than the Employee, such notice shall be accompanied by appropriate proof of the derivative right of such person or persons to exercise the Options.

D. The date of exercise of an Option shall be the date on which the Notice, the documents and all payments required under this Section 4 are received by or arranged with the Corporate Secretary of the Company. If such Notice is received after the market closes, the following trading day will be considered the date of exercise. All Purchased Shares shall be fully paid and non-assessable.

E. The Company may require the Employee to exercise the Options electronically through the Solium Shareworks system or any other online system pursuant to the procedures set forth therein as determined by the Company in its sole discretion.

F. The Company may amend the procedures set forth in this Section 4, Subsections A through E in its sole discretion.

5. TERMINATION OF OPTIONS

The Options may not be exercised to any extent after termination of the Options. Options will terminate as set forth below in this Section 5:

A. The Options shall terminate upon the exercise of such Options in the manner provided in this Agreement and the 2009 Plan, whether or not the Purchased Shares are ultimately delivered.

B. Except as may otherwise be provided in Section 3 Subsection A(3) and this Section 5, Subsections A and C for the earlier termination of the Options, the Options and all rights and obligations thereunder shall expire ten (10) years after the Grant Date.

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C. If, prior to exercise, expiration, forfeiture, surrender or cancellation of the Options, the Employee’s employment terminates, the Options shall terminate in accordance with the 2009 Plan except as follows:

(1) by reason of termination of employment by the Company for Cause, then all Options shall terminate on the date of termination of employment.

(2) by reason of termination of employment by the Employee (other than by reason of retirement), then all unvested Options shall terminate on the date Employee provides notice of his or her resignation and all vested Options shall terminate on the date that is six (6) months after the date of termination of employment.

(3) by reason of termination of employment by the Company without Cause then:

(a) if the date of such termination occurs after September 30, 2018 but before the Stock Option Vestable Portion has been determined, the Options shall remain outstanding and the Stock Option Vestable Portion (if any) shall be determined pursuant to the provisions of Exhibit A, after which the Stock Option Vestable Portion, if any, shall vest and shall become immediately exercisable in full on the date of such determination and shall be exercisable for a period of six (6) months following such vesting date; provided however that if Employee has been employed with the Company for less than two (2) years at the time of termination, then any unvested Options that are determined to be eligible to vest within twelve (12) months of such termination shall vest in accordance with the vesting schedule set forth in Section 3 Subsection A(2), and shall be exercisable within six (6) months of such vesting date, and the remainder of the Options shall be forfeited by the Employee as of the date the Stock Option Vestable Portion has been determined. For the avoidance of doubt, all Options other than the Stock Option Vestable Portion shall be forfeited and cancelled immediately on the date of confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied. For the further avoidance of doubt, no Options shall vest pursuant to this Section 5 Subsection C(3)(a) prior to the first anniversary of the Grant Date.

(b) if the date of such termination occurs after September 30, 2018 and after the determination of the Stock Option Vestable Portion, the Stock Option Vestable Portion, if any, shall vest and shall become immediately exercisable in full on the date of such termination and shall be exercisable for a period of six (6) months following such termination date; provided however that if Employee has been

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employed with the Company for less than two (2) years, then any unvested Options that are scheduled to vest within twelve (12) months of such termination of employment shall vest in accordance with the vesting schedule set forth in Section 3 Subsection A(2), and shall be exercisable within six (6) months of such vesting date, and the remainder of the Options shall be forfeited by the Employee as of the date the Stock Option Vestable Portion has been determined. Notwithstanding the foregoing, the Company will have the right in its sole discretion to require the Employee to exercise all or part of any Options retained pursuant to this paragraph at any time. For the avoidance of doubt, all Options other than the Stock Option Vestable Portion shall be forfeited and cancelled immediately on the date of confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied. For the further avoidance of doubt, no Options shall vest pursuant to this Section 5 Subsection C(3)(b) prior to the first anniversary of the Grant Date.

(c) if the date of such termination of employment occurs prior to September 30, 2018, then all Options shall terminate on the date of such termination without Cause as applicable.

(4) by reason of termination of employment by reason of retirement, Disability, or death of the employee then:

(a) if the date of such termination occurs after September 30, 2018 but before the Stock Option Vestable Portion has been determined, the Options shall remain outstanding and the Stock Option Vestable Portion (if any) shall be determined pursuant to the provisions of Exhibit A after which the Stock Option Vestable Portion, if any, shall vest in accordance with the vesting schedule set forth in Section 3 Subsection A(2) and any vested Options shall terminate as follows: (i) in the case of retirement or Disability, on the earlier of (x) five (5) years after the date of the Employee’s retirement or Disability, as applicable or (y) the end of the Option’s term and (ii) in the case of death, on the earlier of (x) three (3) years after the date of the Employee’s death or (y) the end of the Option’s term. Notwithstanding the foregoing, the Company will have the right in its sole discretion to require the Employee to exercise all or part of any Options retained pursuant to this paragraph at any time. For the avoidance of doubt, all Options other than the Stock Option Vestable Portion shall be forfeited and cancelled immediately on the date of confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied. For the further avoidance of doubt, no Options shall vest pursuant to this Section 5 Subsection C(4)(a) prior to the first anniversary of the Grant Date.

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(b) if the date of such termination occurs after September 30, 2018 and after the determination of the Stock Option Vestable Portion, the Stock Option Vestable Portion that has not yet vested shall vest and shall become immediately exercisable in full on the date of such termination and any vested Options shall terminate as follows: (i) in the case of retirement or Disability, on the earlier of (x) five (5) years after the date of the Employee’s retirement or Disability, as applicable or (y) the end of the Option’s term and (ii) in the case of death, on the earlier of (x) three (3) years after the date of the Employee’s death or (y) the end of the Option’s term. Notwithstanding the foregoing, the Company will have the right in its sole discretion to require the Employee to exercise all or part of any Options retained pursuant to this paragraph at any time. For the avoidance of doubt, all Options other than the Stock Option Vestable Portion shall be forfeited and cancelled immediately on the date of confirmation by the Board of Directors regarding the extent to which the Performance Measure is satisfied. For the further avoidance of doubt, no Options shall vest pursuant to this Section 5 Subsection C(4)(b) prior to the first anniversary of the Grant Date.

(c) if the date of such termination of employment occurs prior to September 30, 2018, then all Options shall terminate on the date of such retirement, Disability or death, as applicable.

(d) The Employee’s right to retain any Options or right to accelerated vesting following termination of employment under Section 5 Subsection C(4) is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least three (3) years in the case of retirement (and has reached the minimum age for retirement set forth in the 2009 Plan) or two (2) years in the case of Disability or death, unless otherwise determined by the Company in its sole discretion.

D. In no event shall this Section 5, Subsection C extend the life of the Options beyond the Option term as set forth in Section 2 of this Agreement.

6. CONDITIONS UPON TERMINATION OF EMPLOYMENT; CLAW-BACK POLICY

A. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not: (i) within the territory where the Employee is working or within which the Employee had responsibility at the time of termination, perform, either directly or indirectly, on behalf of a competitor the same or similar job duties

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that Employee performed on behalf of the Company in the two (2) years prior to departure, (ii) solicit, directly or indirectly, any employee of the Company to leave the employ of the Company for employment, hire, or engagement as an independent contractor elsewhere, (iii) solicit the sale of competitive goods or services from any customer, supplier, licensee, or business relation of the Company with which Employee had material contact (as that term is defined at O.C.G.A. § 13-8-51(10)) or solicit the aforementioned categories of entities to reduce their relationships with the Company, or (iv) share, reveal or utilize any Confidential Information of the Company except as otherwise expressly permitted in writing by Altisource.

B. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times for consultations at the request of the Company’s management with respect to phases of the business with which the Employee was actively connected during the Employee’s employment, but such consultations shall not be required to be performed during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.

C. The Employee acknowledges that the Company would not have awarded the Options granted to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.

D. In the event that the Employee fails to comply with any of the promises made in this Section 6, then in addition to and not in limitation of any and all other remedies available to the Company at law or in equity (a) the Options, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the market value (on the date of exercise) of any Shares acquired on exercise of the Options less the exercise price paid for such Shares (the “Share Value”) to the extent such Shares were acquired by the Employee upon exercise of the Options at any time from 180 days prior to the earlier of (i) the date of termination of employment or (ii) the date the Employee fails to comply with any promise made in this Section 6, to 180 days after the date when the Company learns that the Employee has not complied with any such promise. The Employee will deliver such Share Value amount (either in cash or in Shares) to the Company on such terms and conditions as may be required by the Company. The Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the Share Value amount and any other damage amount against any amount that might be owed to the Employee by the Company.

E. The Employee further acknowledges that in the event that the covenants made in this Section 6 are not fulfilled, the damage to the Company would be irreparable. The Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Section 6, Subsection D above, shall be entitled

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to injunctive relief against the Employee’s breach or threatened breach of said covenants.

F. The Options shall be subject to any claw-back policy implemented by the Board of Directors of the Company or any Successor Entity.

7. CORPORATE TRANSACTIONS; CHANGE OF CONTROL/RESTRUCTURING EVENT; OTHER EVENTS

A. Corporate Transactions

Except to the extent governed by Section 7, Subsections B and C below, if there shall be any change in the Shares subject to the Options granted hereunder, through merger, consolidation, reorganization, recapitalization, stock dividend, extraordinary dividend, stock split, spin off of one or more subsidiaries or other change in the corporate structure, appropriate adjustments shall be made by the Board of Directors in its discretion in the aggregate number and kind of Shares subject to the 2009 Plan and the number and kind of Shares and the price per Share subject to the Options. Further, the Board of Directors shall have the right to adjust the Performance Measure and defined levels of achievement as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such a corporate transaction or restructuring. Without limiting the generality of the foregoing, in the event of a restructuring or transaction resulting in some or all of the Company’s Shares being convertible into equity of a separate company, the Board of Directors shall have the authority to replace Options with any one or more of the following: (1) adjusted options of the Company; (2) adjusted options on the equity of the separate company; and (3) a combination of adjusted options on the shares of both the Company and the separate company, all as the Board of Directors sees as equitable. In the event of any such option adjustment and/or conversion, the Board of Directors shall attempt to reasonably approximate the aggregate value of the Employee’s Options under this Agreement. For the avoidance of doubt, in the event Employee remains employed with the separate company that results from a restructuring or transaction covered by this Section 7, for purposes of this Agreement, the Employee will be deemed to remain employed as if the Employee continued employment with the Company such that the employment termination provisions applicable to the Options shall not be invoked unless and until the Employee’s employment with such separate company shall terminate.

B. Change of Control/Restructuring Event

(1) If a Change of Control/Restructuring Event occurs, the Board of Directors shall have the right to make appropriate adjustments, including, without limiting the generality of the foregoing (i) allow the Options to continue in full force and effect in accordance with the terms hereof or (ii) issue an award of shares in theSuccessor Entity as the Board of Directors deems equitable.

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(2) If the Options are to remain in place following such Change of Control/Restructuring Event, appropriate adjustments (as the Board of Directors sees as equitable) shall be made by the Board of Directors in its discretion in the aggregate number and kind of Shares subject to the 2009 Plan and the number and kind of Shares and the price per Share subject to the Options. Further, the Board of Directors shall have the right to adjust the Performance Measure and defined levels of achievement as appropriate to avoid inequitable dilution or enlargement of award values or rights in connection with such Change of Control/Restructuring Event. Without limiting the generality of the foregoing, such discretions shall include the authority to replace Options with any one or more of the following: (a) adjusted options of the Company; (b) adjusted options on the equity of any Successor Entity surviving such Change of Control/Restructuring event; and (c) a combination of adjusted options on the shares of both the Company and the Successor Entity, all as the Board of Directors sees as equitable. In the event of any option adjustment and/or conversion referred to in this Section 7, Subsection B(2), the Board of Directors shall attempt to reasonably approximate the aggregate value of the Employee’s Options under this Agreement.

(3) Notwithstanding any provision of Section 7 Subsection B(1) and B(2) to the contrary, in the eventa Change of Control/Restructuring Event occurs, if the Options are not assumed or replaced by the acquiror/continuing entity on terms deemed by the Compensation Committee to be appropriate, then the Compensation Committeeshall have the right to (i)provide for accelerated vesting and settlement of the Options immediately prior to, and conditioned on consummation, of the Change of Control/Restructuring Event or (ii) to the extent theSuccessor Entityallows the Options to stay in place,to make appropriate adjustments to avoid an expansion or reduction in the value of the award.

C. Other Events

(1) The 2009 Plan and Agreement and the Options granted hereunder shall not affect the right of the Company to reclassify, recapitalize, issue equity or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, wind up or otherwise reorganize. The Board of Directors shall have the discretion to make adjustments to the Options made hereunder (including, without limitation, to the Performance Measure and defined levels of achievement) to reflect any changes that the Board of Directors deems appropriate as a result of any sale, an IPO, business combination, acquisition, recapitalization, reclassification, merger, consolidation, reorganization, stock dividend, stock split, spin off of one or more divisions or subsidiaries, a “going private” transaction (which shall mean any transaction that results in the occurrence of any of the following events: (a) Altisource’s common

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stock is no longer listed on any national securities exchange or quoted on the NASDAQ Global Select Market or other securities quotation system; (b) Altisource is no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; or (c) Altisource becomes subject to Rule 13e-3 under the Exchange Act) or similar transaction affecting the Options. Upon the occurrence of any such events, the Board of Directors may make appropriate adjustments to the Options made hereunder (including, without limitation to the Performance Measure and defined levels of achievement) to avoid inequitable dilution or enlargement of award values or rights in connection with any such event (as determined by the Board of Directors in its sole discretion based on any facts and circumstances it considers relevant). For the avoidance of doubt, the Options are subject to the dilutive impact of equity issuances (including an IPO) or other costs of capital made in connection with acquisitions or capital raises.

(2) The Board of Directors may also specify any inclusion(s) or exclusion(s) for charges related to any event(s) or occurrence(s) which the Board of Directors determines should be included or excluded, as appropriate, for purposes of measuring performance against the applicable Performance Measure and the calculation methodology for such Performance Measure, which may include, but is not limited to, acquisitions and dispositions, market changes, reserve adjustments for litigation or regulatory/enforcement matters, litigation or claim judgments or settlements. If the Board of Directors determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances, renders the previously established Performance Measure and defined levels of achievement unsuitable, the Board of Directors may also, in its discretion, modify such levels of achievement, in whole or in part, as the Board of Directors deems appropriate.

8. NON-TRANSFERABILITY OF OPTIONS

The Options shall not be transferable otherwise than by will or by the applicable laws of descent and distribution. More particularly (but without limiting the generality of the foregoing), the Options may not be assigned, transferred (except as aforesaid), pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Options contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Options, shall be null and void and without effect.

9. PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS

The Company shall at all times during the term of the Options reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement, shall pay all original issue and/or transfer taxes with respect to the issue and/or transfer of Shares pursuant hereto

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and all other fees and expenses necessarily incurred by the Company in connection therewith and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

The intent of the parties is that payments and benefits under this Agreement comply with or otherwise be exempt from Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder (the “Code”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted either to be exempt from or in compliance therewith. If any provision of this Agreement (or any award of compensation or benefits provided under this Agreement) would cause Employee to incur any additional tax or interest under Section 409A of the Code, the Company may reform such provision to comply with 409A.

10. DEFINITIONS

A. As used herein, the term “Board of Directors” shall mean the Board of Directors or Compensation Committee of Altisource or any Successor Entity, as applicable, and the term “Compensation Committee” shall mean the Compensation Committee of the Board of Directors of Altisource.

B. As used herein, “Cause” means, as reasonably determined by the Board of Directors (excluding the Employee, if he/she is then a member of the Board of Directors) either (i) any willful or grossly negligent conduct (including but not limited to fraud or embezzlement) committed by the Employee in connection with the Employee’s employment by the Company which conduct in the reasonable determination of the Board of Directors has had or will have a material detrimental effect on the Company’s business or (ii) the Employee’s conviction of, or entering into a plea of nolo contendere to, a felony involving fraud or embezzlement or such other crime which may bring disrepute upon the Company, whether or not committed in the course of the Employee’s employment with the Company. For the avoidance of doubt, termination of employment as a result of a business reorganization or reduction in force will be deemed termination without Cause.

C. As used herein, “Change of Control/Restructuring Date” means either the date (i) which includes the “closing” of the transaction which makes a Change of Control/Restructuring Event effective if the Change of Control/Restructuring Event is made effective through a transaction which has a “closing” or (ii) a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”

D. As used herein, a “Change of Control/Restructuring Event” means (i) the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such

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acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger, consolidation or similar transaction resulting in a reduction of the interest in the Company’s stock of the pre-transaction stockholders to less than fifty percent (50%) of the post-transaction ownership.

E. As used herein, “Confidential Information” means all information relating to Company, including any of its subsidiaries, customers, vendors, and affiliates, of any kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or not the subject of a patent), computer software and specifications therefore; leases; and any and all agreements entered into by Company or its affiliates and any information contained therein; database mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered to be of a confidential nature regardless of form. Confidential Information shall not include: (i) information that is or becomes generally available to the public other than as a result of a disclosure in breach of this Agreement, (ii) information that was available on a non-confidential basis prior to the date hereof or becomes available from a person other than the Company who was not otherwise bound by confidentiality obligations to the Company and was not otherwise prohibited from disclosing the information or (iii) Confidential Information that is required by law to be disclosed, in which case, the Employee will provide the Company with notice of such obligation immediately to allow the Company to seek such intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure.

F. As used herein, “Disability” means a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.

G. As used herein, the term “Successor Entity” means the person that is formed by, replaces or otherwise survives the Company as a result of a transaction, series of transaction or restructuring with the effect that the Company ceases to exist.

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H. Capitalized terms used but not defined in this Agreement or in Exhibit A shall have the meanings set forth in the 2009 Plan.

11. AMENDMENT

In the event that the Board of Directors shall amend the 2009 Plan under the provisions of Section 9 of the 2009 Plan and such amendment shall modify or otherwise affect the subject matter of this Agreement, this Agreement shall, to that extent, be deemed to be amended by such amendment to the 2009 Plan. The Company shall notify the Employee in writing of any such amendment to the 2009 Plan and this Agreement as soon as practicable after its approval. Notwithstanding any other provision of this Agreement or the 2009 Plan, the Employee’s Options under this Agreement may not be amended in a way that materially diminishes the value of the Options without the Employee’s consent to the amendment.

12. CONSTRUCTION

In the event of any conflict between the 2009 Plan and this Agreement, the provisions of the 2009 Plan shall control. This Agreement shall be governed in all respects by the laws of the State of Georgia. No provision of this Agreement shall limit in any way whatsoever any right that the Company may otherwise have to terminate the employment of the Employee at any time.

If any provision of this Agreement is held to be unenforceable, then this provision will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

Except as otherwise required by applicable law, rule or regulation, the Board of Directors shall have full discretion with respect to any actions to be taken or determinations to be made in connection with this Agreement (including, without limitation, any determination with regard to Section 3, Section 5, Subsections D and E, Section 6, Section 7 and Exhibit A, and its determinations shall be final, binding and conclusive.

13. ENTIRE AGREEMENT

This Agreement, together with the 2009 Plan, constitutes the entire agreement between the Company and the Employee and supersedes all other discussions, correspondence, representations, understandings and agreements between the parties, with respect to the subject matter hereof.

14. HEADINGS

The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed a part hereof.

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15. CONFIRMING INFORMATION

By accepting this Agreement, either through electronic means or by providing a signed copy, the Employee (i) acknowledges and confirms that the Employee has read and understood the 2009 Plan and the Agreement and (ii) acknowledges that acceptance through electronic means is equivalent to doing so by providing a signed copy.

[SIGNATURE PAGE FOLLOWS]

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I hereby agree to and accept the terms of this Agreement.

Employee

_______________________________

Altisource Portfolio Solutions S.A.

By: ___________________________

Name:

Title:

Attested by: ____________________

Name:

Title:

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EXHIBIT A

TO

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

(THE “AGREEMENT”)

Target Amount: [ ] Options

The Employee will have a vesting opportunity of up to two hundred percent (200%) of the Target Amount ([ ] Options) pursuant to the provisions of this Exhibit A and the terms of the Agreement.

The Performance Measure to be satisfied for purposes of Section 3 Subsection A of the Agreement is adjusted diluted earnings per share (a non-GAAP measure) (“Adjusted EPS”) achieved for 2018.Adjusted EPS will be calculated by dividing net income (loss) attributable to the Company before intangible asset amortization expense (net of tax), stock based compensation (net of tax) and any gain (loss) on investment in equity securities (net of tax) by the weighted average number of diluted shares. Adjusted EPS will also be subject to adjustment pursuant to Section 7 of the Agreement.

The percentage of the Target Amount that will be eligible to vest will be determined based on 2018Adjusted EPSin accordance with the below table. If 2018Adjusted EPSfalls between the pre-determined levels shown in the table, the percentage of the Target Amount that will form part of theStock Option Vestable Portionshall be determinedusing linear interpolation between such pre-determined levels. For the avoidance of doubt, in no event shall theStock OptionVestable Portion exceed 200% of the Target Amount.

The number of Options that form part of the Stock Option Vestable Portion (i.e., the number of Options eligible to vest) will then be determined by multiplying the applicable percentage by the Target Amount.

2018 Adjusted EPS (in $)	Stock Option Vestable Portion (% of Target Amount)
$1.97 or less	0%
$1.98 -$2.31	50% - 98.5%
$2.32	100%
$2.33 - $2.66	102.9% - 197.1%
$2.67 or greater	200%

Capitalized terms used but not defined in this Exhibit A shall have the meaning ascribed to them in the Agreement.

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EX-10.3

Exhibit 10.3

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) is made and entered into as of February 12, 2018 (the “Grant Date”), by and between Altisource Portfolio Solutions S.A., a Luxembourg société anonyme (“Altisource” and, together with its subsidiaries and affiliates, the “Company”), and [ ],an employee of the Company (the “Employee”).

WHEREAS, The Company desires, by awarding the Employee restricted units for shares of its common stock, par value $1.00 per share (“Shares”), to further the objectives of the Company’s 2009 Equity Incentive Plan (the “2009 Plan”).

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto have agreed, and do hereby agree, as follows:

1. RESTRICTED STOCK UNIT AWARD

The Company hereby grants to the Employee, pursuant to and subject to the 2009 Plan, [ ] Restricted Stock Units (the “Restricted Stock Units” or “RSUs”), on the terms and conditions set forth herein (the "RSU Award”). Each RSU represents a right for the Employee to receive one Share (or cash, if so determined pursuant to Section 5 Subsection B), as determined in the sole discretion of the Committee, subject to the terms and conditions of this Agreement and the Plan.

2. VESTING OF RSU AWARD

One-fourth (1/4) of the RSUs shall vest on each of the first, second, third and fourth anniversaries of the Grant Date. Except as provided in Section 4 and Section 8 below, RSUs will not vest unless the Employee is, at the time of vesting, an employee of the Company and not under a notice of resignation.

3. SHAREHOLDER RIGHTS; DIVIDEND EQUIVALENT RIGHTS

A. Shareholder Rights

RSUs are an unfunded promise to deliver Shares (or cash, if so determined pursuant to Section 5 Subsection B) in the future if the requirements of the RSU Award and the Plan are met. Prior to issuance of Shares, if any, to the Employee in settlement of the RSU Award pursuant to Section 5 below, the Employee has no ownership rights in Shares or shareholder rights.

B. Dividend Equivalents

Each RSU shall include dividend equivalent rights that entitle the Employee, simultaneously upon the settlement of the RSU pursuant to Section 5 below, to receive a cash payment equal to any dividends declared on a Share (“Dividend Equivalents”) from the Grant Date through the day immediately before the issuance date of the Share in settlement of the RSU. If for

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any reason, the Employee does not become entitled to receive a Share in settlement of an RSU, the Employee will forfeit the dividend equivalent rights associated with such RSU. Dividend Equivalents shall not accrue interest. For the avoidance of doubt, Employee shall have no right to receive the Dividend Equivalents unless and until the associated RSUs vest.

C. Non-Transferability of the RSU Award

This RSU Award is nontransferable and neither the RSU Award nor the RSUs may be assigned, transferred, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the RSU Award contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the RSU Award, shall be null and void and without effect.

D.    RSUs Are Unfunded and Unsecured

RSUs are an unfunded and unsecured promise to deliver Shares in the future (or cash, if so determined pursuant to Section 5 Subsection B), subject to the terms of this Agreement and the Plan. The Employee’s rights under this Agreement are no greater than an unsecured, general creditor of the Company.

4. TERMINATION OF RSU AWARD

If, prior to vesting of the entire RSU Award, the Employee's employment terminates, the RSU Award shall terminate in accordance with the 2009 Plan except as follows:

A. by the Company for Cause or termination of employment by the Employee (other than by reason of Retirement), then the RSU Award shall terminate and all unvested RSUs shall be forfeited by the Employee as of the date of termination of employment or, in the case of the Employee’s resignation, on the date the Employee provides notice of his or her resignation.

B. by the Company without Cause, then any unvested RSUs that are scheduled to vest within twelve (12) months of such termination of employment under Section 2 above shall vest thirty (30) days after the date of such termination of employment and the remainder of the unvested RSUs (if any) shall be forfeited by the Employee as of the date of termination of employment.

C. by reason of retirement, death or Disability of the Employee, then all unvested RSUs shall vest thirty (30) days after the date of such termination of employment.

D. The Employee’s right to accelerated vesting of RSUs following termination of employment under this Section 4 is subject in all cases to the requirement that the Employee has been employed with the Company for a period of at least two (2) years in the case of termination without Cause, Disability or death. In the case of retirement, the Employee's right to accelerated vesting of RSUs following termination of employment under this Section 4 is subject in all cases to the requirement that the Employee has attained the age of fifty-five (55) and has been employed for a period

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of at least three (3) years, unless otherwise determined by the Company in its sole discretion.

E. In no event shall the granting of the RSU Award or its acceptance by the Employee give or be deemed to give the Employee any right to continued employment by the Company.

5. SETTLEMENT OF RSUS.

A. Subject to Section 7.B, each vested RSU shall be settled in one Share (less applicable tax withholdings), as soon as practicable following and no later than the March 15th following the calendar year in which the RSU vests pursuant to Section 2 or 4 of this Agreement.

B. Notwithstanding the foregoing or any other provision of this Agreement, and subject in all cases to the terms of the 2009 Plan then in effect, the Company reserves the right to settle your RSUs by a lump sum cash payment equal to then fair market value (as determined pursuant to Section 7) of the settled Shares (less applicable tax withholdings).

6. CONDITIONS UPON TERMINATION OF EMPLOYMENT; CLAW-BACK POLICY

A. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall not: (i) within the territory where the Employee is working or within which the Employee had responsibility at the time of termination, perform, either directly or indirectly, on behalf of a competitor the same or similar job duties that Employee performed on behalf of the Company in the two (2) years prior to departure, (ii) solicit, directly or indirectly, any employee of the Company to leave the employ of the Company for employment, hire, or engagement as an independent contractor elsewhere, (iii) solicit the sale of competitive goods or services from any customer, supplier, licensee, or business relation of the Company with which Employee had material contact (as that term is defined at O.C.G.A. § 13-8-51(10)) or solicit the aforementioned categories of entities to reduce their relationships with the Company, or (iv) share, reveal or utilize any Confidential Information of the Company except as otherwise expressly permitted in writing by Altisource.

B. For a period of two (2) years following the Employee’s departure from the Company, the Employee shall be available at reasonable times to provide information to the Company at the request of the Company’s management with respect to phases of the business with which he/she was actively connected during his/her employment, but such availability shall not be required during usual vacation periods or periods of illness or other incapacity or without reasonable compensation and cost reimbursement.

C. In the event that the Employee fails to comply with any of the promises made in this Section 6, then in addition to and not in limitation of any and all other remedies

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available to the Company at law or in equity (a) RSUs, to the extent then unvested, will be immediately forfeited by the Employee and returned to the Company and (b) the Employee will be required to immediately deliver to the Company an amount (in cash or in Shares) equal to the amount of the market value of any Shares that have been issued to the Employee in settlement of a vested RSU (“Share Value”) at any time (or cash, if applicable) from one hundred eighty (180) days prior to the date of termination of employment to one hundred eighty (180) days after the date when the Company learns that the Employee has not complied with any such promise. The Employee will deliver such Share Value amount to the Company on such terms and conditions as may be required by the Company. The Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the Share Value amount and any other damage amount against any amount that might be owed to the Employee by the Company. The Employee acknowledges that in the event that the covenants made in this Section 6 are not fulfilled, the damage to the Company would be irreparable. The Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Section 6, Subsection C above, shall be entitled to injunctive relief against the Employee’s breach or threatened breach of said covenants. Employee specifically agrees that the subsidiaries and affiliates of Altisource are intended beneficiaries of the restrictions contained in this Paragraph 6 and that those subsidiaries and affiliates have the right to enforce the terms of this Paragraph 6.

D. The Employee acknowledges that the Company would not have awarded the RSUs to the Employee under this Agreement absent the Employee’s agreement to be bound by the covenants made in this Section 6.

E. The RSUs shall be subject to any claw-back policy implemented by the Board of Directors of the Company or any Successor Entity.

7. INCOME TAXES

A. Generally

Except as provided in the next sentence, the Company shall withhold and/or receive the return of a number of Shares having a fair market value equal to the taxes that the Company determines it is required to withhold under applicable tax laws with respect to the RSUs (with such withholding obligation determined based on any applicable minimum statutory withholding rates), in connection with the vesting of RSUs. In the event the Company cannot (under applicable legal, regulatory, listing or other requirements) satisfy such tax withholding obligation in such method or the parties otherwise agree in writing, then the Company may satisfy such withholding by any one or combination of the following methods: (i) by requiring the Employee to pay such amount by check or wire transfer; (ii) by deducting such amount out of any other compensation otherwise payable to the Employee; and/or (iii) by allowing the Employee to surrender shares of Common Stock of the Company which (a) in

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the case of shares initially acquired from the Company (upon exercise of a stock option or otherwise), have been owned by the Employee for such period (if any) as may be required to avoid a charge to the Company’s earnings, and (b) have a fair market value on the date of surrender equal to the amount required to be withheld. For these purposes, the fair market value of the Shares to be withheld or repurchased, as applicable, shall be determined using the opening price of the Shares on the date that the amount of tax to be withheld is to be determined or, if such date falls on a day on which the NASDAQ Global Select Market is not open for active trading, using theopening price of the Shares on the next active trading day.

B. Section 409A.

The intent of the parties is that payments and benefits under this Agreement comply with or otherwise be exempt from Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder (the “Code”),and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted either to be exempt from or in compliance therewith. If any provision of this Agreement (or any award of compensation or benefits provided under this Agreement) would cause the Employee to incur any additional tax or interest under Section 409A of the Code, the Company may reform such provision to comply with 409A. Notwithstanding the foregoing, Employee is solely responsible for any tax consequences Employee may incur under Code Section 409A and none of Altisource, its subsidiaries or any of their respective directors, officers, employees, agents or shareholders shall have any obligation to indemnify or hold Employee harmless from such taxes. If and to the extent any Shares that become vested and issuable under this RSU Award on account of the Employee’s retirement constitute deferred compensation subject to Code 409A, such issuance shall occur when the Employee has incurred a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (“Separation from Service”). Notwithstanding the foregoing, if at the time of the Employee’s Separation from Service, the Employee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i), such Shares shall be issued to the Employee on the first business day of the seventh month following the Employee’s Separation from Service.

8. CORPORATE TRANSACTIONS; CHANGE OF CONTROL/RESTRUCTURING EVENT

A. Corporate Transactions

If there shall be any change in the Shares, through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, spin off of one or more subsidiaries or other change in the corporate structure, appropriate adjustments shall be made by the Board of Directors in its discretion in the aggregate number and kind of Shares subject to the 2009 Plan and the number and kind of Shares subject to the RSU Award.

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B. Change of Control/Restructuring Event

(1) If a Change of Control/Restructuring Event occurs, the Board of Directors shall have the right to make appropriate adjustments, including, without limiting the generality of the foregoing, by (i) allowing the RSUs to continue in full force and effect in accordance with the terms hereof, (ii)issuing an equivalent award of shares in theSuccessor Entityas the Board of Directors deems equitable, (iii) cancelling the award for consideration (as the Board of Directors sees as equitable) which may equal the value of the consideration to be paid in the Change of Control/Restructuring Event to holders of Shares, or (iv) providing for vesting and settlement of the RSUs immediately prior to, and conditioned on consummation, of the Change of Control/Restructuring Event.

(2) To the extent the Successor Entityallows the RSUs to continue in full force and effect in accordance with the terms hereof, the vesting schedule set forth in Section 2 will continue to apply (subject to the accelerated vesting provisions of Section 4); provided that, in such case, the Board of Directors shall have the right in its discretion to make appropriate adjustments, including, with the consent of theSuccessor Entity, equitably converting the consideration to be received upon the vesting of the RSUs to common stock of theSuccessor Entity.

(3) Notwithstanding any provision of Section 8 Subsection B(1) and B(2) to the contrary, in the eventa Change of Control/Restructuring Event occurs, if the RSUs are not assumed or replaced by the acquiror/continuing entity on terms deemed by the Compensation Committee to be appropriate, then the Compensation Committeeshall have the right to (i)provide for vesting and settlement of the RSUs immediately prior to, and conditioned on consummation, of the Change of Control/Restructuring Event or (ii) to the extent theSuccessor Entityallows the RSUs to stay in place,to make appropriate adjustments to avoid an expansion or reduction in the value of the award.

(4) For the avoidance of doubt, in the event the Employee remains employed with the Successor Entity for purposes of this Agreement, he/she will be deemed to remain employed as if he/she continued employment with the Company such that the employment termination provisions applicable to the RSU Award shall not be invoked unless and until his/her employment with such Successor Entity shall terminate.

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9. PAYMENT OF EXPENSES AND COMPLIANCE WITH LAWS

The Company shall reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement, shall pay all original issue and/or transfer taxes with respect to the issue and/or transfer of Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

10. ADDITIONAL CONDITIONS

A. The Employee hereby represents and covenants that (a) any Share acquired upon the vesting of the RSU Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), unless such acquisition has been registered under the Securities Act and any applicable state securities law; (b) any subsequent sale of any such Shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Employee shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of acquisition of any Shares hereunder or (y) is true and correct as of the date of any sale of any such Shares, as applicable. As a further condition precedent to the delivery to the Employee of any Shares subject to the RSU Award, the Employee shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Shares and, in connection therewith, shall execute any documents which the Company shall in its sole discretion deem necessary or advisable.

B. The RSU Award is subject to the condition that if the listing, registration or qualification of the Shares subject to the RSU Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting or delivery of the Shares hereunder, the Shares subject to the RSU Award shall not vest or be delivered, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company shall use reasonable efforts to effect or obtain any such listing, registration, qualification, consent or approval.

11. DEFINITIONS

A. As used herein, the term “Board of Directors” shall mean the Board of Directors or Compensation Committee of Altisource or any Successor Entity, as applicable, and the term “Compensation Committee” shall mean the Compensation Committee of the Board of Directors of Altisource.

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B. As used herein, the term “Cause” shall mean, as reasonably determined by the Board of Directors (excluding the Employee, if he/she is then a member of the Board of Directors) either (i) any willful or grossly negligent conduct (including but not limited to fraud or embezzlement) committed by the Employee in connection with the Employee’s employment by the Company which conduct in the reasonable determination of the Board of Directors has had or will have a material detrimental effect on the Company’s business or (ii) the Employee’s conviction of, or entering into a plea of nolo contendere to, a felony involving fraud or embezzlement, whether or not committed in the course of the Employee’s employment with the Company. For avoidance of doubt, termination of employment as a result of a business reorganization or reduction in force will be deemed termination without Cause for purposes of the RSU Award.

C. As used herein, “Change of Control/Restructuring Date” shall mean either the date which includes the “closing” of the transaction which makes a Change of Control/Restructuring Event effective if the Change of Control/Restructuring Event is made effective through a transaction which has a “closing” or the date a Change of Control/Restructuring Event is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change of Control/Restructuring Event is made effective other than through a transaction which has a “closing.”

D. As used herein, a “Change of Control/Restructuring Event” shall mean (i)  the acquisition by any person or entity, or two or more persons and/or entities acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), of outstanding shares of voting stock of the Company at any time if after giving effect to such acquisition, and as a result of such acquisition, such person(s) or entity(ies) own more than fifty percent (50%) of such outstanding voting stock, (ii) the sale in one or more transactions of substantially all of the Company’s assets to any person or entity, or two or more persons and/or entities acting in concert, or (iii) the merger, consolidation or similar transaction resulting in a reduction of the interest in the Company’s stock of the pre-transaction stockholders to less than fifty percent (50%) of the post-transaction ownership. Notwithstanding anything herein to the contrary, the definition of Change of Control Event set forth herein shall not be broader than the definition of “change in control event” as set forth under Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance promulgated thereunder, and if a transaction or event does not otherwise fall within such definition of change in control event, it shall not be deemed a Change in Control for purposes of this Agreement.

E. As used herein, “Confidential Information” means all non-public, commercially valuable information relating to Company, including any of its customers, vendors, and affiliates, of any kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business results or prospects; financial books, data and plans; pricing; supplier information and agreements; investor or lender data and information; business processes (whether or not the subject of a patent), computer

Page 8 of 11

software and specifications therefore; leases; and any and all agreements entered into by Company or its affiliates and any information contained therein; database mining and marketing; customer relationship management programs; any technical, operating, design, economic, client, customer, consultant, consumer or collector related data and information, marketing strategies or initiatives and plans which at the time or times concerned is either capable of protection as a trade secret or is considered to be of a confidential nature regardless of form. Confidential Information shall not include: (i) information that is or becomes generally available to the public other than as a result of a disclosure in breach of this Agreement, (ii) information that was available on a non-confidential basis prior to the date hereof or becomes available from a person other than the Company who was not otherwise bound by confidentiality obligations to the Company and was not otherwise prohibited from disclosing the information or (iii) Confidential Information that is required by law to be disclosed, in which case, the Employee will provide the Company with notice of such obligation immediately to allow the Company to seek such intervention as it may deem appropriate to prevent such disclosure including and not limited to initiating legal or administrative proceedings prior to disclosure.

F. As used herein, the term “Disability” shall mean a physical or mental impairment which, as reasonably determined by the Board of Directors, renders the Employee unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than one hundred and eighty (180) days in any twelve (12) month period, unless a longer period is required by federal or state law, in which case that longer period would apply.

G. As used herein, the term “Successor Entity” means the person that is formed by, replaces or otherwise survives the Company as a result of a transaction, series of transaction or restructuring with the effect that the Company ceases to exist.

H. Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the 2009 Plan.

12. AMENDMENT

In the event that the Board of Directors amends the 2009 Plan under the provisions of Section 9 of the 2009 Plan and such amendment shall modify or otherwise affect the subject matter of this Agreement, this Agreement shall, to that extent, be deemed to be amended by such amendment to the 2009 Plan. The Company shall notify the Employee in writing of any such amendment to the 2009 Plan and this Agreement as soon as practicable after its approval. Notwithstanding any other provision of this Agreement or the 2009 Plan, the Employee’s rights under this Agreement may not be amended in a way that materially diminishes the value of the award without the Employee’s consent to the amendment.

Page 9 of 11

13. CONSTRUCTION

In the event of any conflict between the 2009 Plan and this Agreement, the provisions of the 2009 Plan shall control. This Agreement shall be governed in all respects by the laws of the State of Georgia. No provision of this Agreement shall limit in any way whatsoever any right that the Company may otherwise have to terminate the employment of the Employee at any time.

If any provision of this Agreement is held to be unenforceable, then this provision will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of this Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

Except as otherwise required by applicable law, rule or regulation, the Board of Directors shall have full discretion with respect to any actions to be taken or determinations to be made in connection with this Agreement (including, without limitation, any determination with regard to Section 3, Section 6 Subsection C and Section 8), and its determinations shall be final, binding and conclusive.

14. ENTIRE AGREEMENT

This Agreement, together with the 2009 Plan, constitutes the entire agreement between the Company and the Employee and supersedes all other discussions, correspondence, representations, understandings and agreements between the parties, with respect to the subject matter hereof.

15. HEADINGS

The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed a part hereof.

16. CONFIRMING INFORMATION

By accepting this Agreement, either through electronic means or by providing a signed copy, the Employee (i) acknowledges and confirms that he/she has read and understood the 2009 Plan and this Agreement and (ii) acknowledges that acceptance through electronic means is equivalent to doing so by providing a signed copy.

[SIGNATURE PAGE FOLLOWS]

Page 10 of 11

I hereby agree to and accept the terms of this Agreement.

Employee

_______________________________

Altisource Portfolio Solutions S.A.

By: ___________________________

Name:

Title:

Attested by: ____________________

Name:

Title:

Page 11 of 11

EX-31.1

Exhibit 31.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, William B. Shepro, hereby certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2018 of Altisource Portfolio Solutions S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 26, 2018	By:	/s/ William B. Shepro
			William B. Shepro
			Director and Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Indroneel Chatterjee, hereby certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2018 of Altisource Portfolio Solutions S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 26, 2018	By:	/s/ Indroneel Chatterjee
			Indroneel Chatterjee
			Chief Financial Officer
			(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(UNITED STATES CODE, TITLE 18, CHAPTER 63, SECTION 1350)

ACCOMPANYING QUARTERLY REPORT ON FORM 10-Q OF

ALTISOURCE PORTFOLIO SOLUTIONS S.A. FOR THE QUARTER ENDED

MARCH 31, 2018

In connection with the Quarterly Report on Form 10-Q of Altisource Portfolio Solutions S.A. (the “Company”) for the quarterly period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), William B. Shepro, as Chief Executive Officer of the Company, and Indroneel Chatterjee, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ William B. Shepro	By:	/s/ Indroneel Chatterjee
	William B. Shepro		Indroneel Chatterjee
	Director and Chief Executive Officer		Chief Financial Officer
	(Principal Executive Officer)		(Principal Financial Officer)
	April 26, 2018		April 26, 2018

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 20, 2018
Document and Entity Information
Entity Registrant Name	Altisource Portfolio Solutions S.A.
Entity Central Index Key	0001462418
Document Type	10-Q
Document Period End Date	Mar. 31, 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)		17,204,646
Entity Treasury Stock (in shares)		8,208,102
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 84,850	$ 105,006
Investment in equity securities	41,652	49,153
Accounts receivable, net	50,839	52,740
Prepaid expenses and other current assets	73,955	64,742
Total current assets	251,296	271,641
Premises and equipment, net	65,585	73,273
Goodwill	86,283	86,283
Intangible assets, net	112,918	120,065
Deferred tax assets, net	305,679	303,707
Other assets	10,012	10,195
Total assets	831,773	865,164
Current liabilities:
Accounts payable and accrued expenses	66,475	84,400
Current portion of long-term debt	5,945	5,945
Deferred revenue	15,489	9,802
Other current liabilities	6,651	9,414
Total current liabilities	94,560	109,561
Long-term debt, less current portion	401,716	403,336
Other non-current liabilities	15,415	12,282
Commitments, contingencies and regulatory matters
Equity:
Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 17,343 outstanding as of March 31, 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	114,676	112,475
Retained earnings	600,253	626,600
Accumulated other comprehensive income	0	733
Treasury stock, at cost (8,070 shares as of March 31, 2018 and 7,995 shares as of December 31, 2017)	(421,486)	(426,609)
Altisource equity	318,856	338,612
Non-controlling interests	1,226	1,373
Total equity	320,082	339,985
Total liabilities and equity	$ 831,773	$ 865,164

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 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)	17,343,000	17,418,000
Treasury stock, shares (in shares)	8,070,000	7,995,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenue	$ 197,438	$ 240,483
Cost of revenue	147,194	177,953
Gross profit	50,244	62,530
Selling, general and administrative expenses	43,124	47,701
Income from operations	7,120	14,829
Other income (expense), net:
Interest expense	(5,863)	(5,798)
Unrealized loss on investment in equity securities	(7,501)	0
Other income (expense), net	1,272	715
Total other income (expense), net	(12,092)	(5,083)
(Loss) income before income taxes and non-controlling interests	(4,972)	9,746
Income tax benefit (provision)	1,365	(2,586)
Net (loss) income	(3,607)	7,160
Net income attributable to non-controlling interests	(525)	(615)
Net (loss) income attributable to Altisource	$ (4,132)	$ 6,545
(Loss) earnings per share:
Basic (in usd per share)	$ (0.24)	$ 0.35
Diluted (in usd per share)	$ (0.24)	$ 0.34
Weighted average shares outstanding:
Basic (in shares)	17,378	18,662
Diluted (in shares)	17,378	19,304
Comprehensive (loss) income:
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	$ (733)	$ 0
Unrealized gain on investment in equity securities, net of income tax provision of $4,725	0	12,723
Comprehensive (loss) income, net of tax	(4,340)	19,883
Comprehensive income attributable to non-controlling interests	(525)	(615)
Comprehensive (loss) income attributable to Altisource	$ (4,865)	$ 19,268

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income tax provision on securities	$ 0	$ 4,725
Reclassification out of accumulated other comprehensive income
Income tax provision on securities	$ (200)	$ 0

XML

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 (loss) income	7,160			6,545			615
Other comprehensive income, net of tax	12,723				12,723
Distributions to non-controlling interest holders	(569)						(569)
Share-based compensation expense	695		695
Exercise of stock options and issuance of restricted shares	752			(2,872)		3,624
Repurchase of shares	(10,590)					(10,590)
Balance (in shares) at Mar. 31, 2017		25,413
Balance at Mar. 31, 2017	72,365	$ 25,413	108,915	336,527	10,978	(410,919)	1,451
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 (loss) income	(3,607)			(4,132)			525
Distributions to non-controlling interest holders	(672)						(672)
Share-based compensation expense	2,201		2,201
Exercise of stock options and issuance of restricted shares	2,617			(12,500)		15,117
Repurchase of shares	(9,994)					(9,994)
Balance (in shares) at Mar. 31, 2018		25,413
Balance at Mar. 31, 2018	$ 320,082	$ 25,413	$ 114,676	$ 600,253	$ 0	$ (421,486)	$ 1,226

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net (loss) income	$ (3,607)	$ 7,160
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	8,721	10,008
Amortization of intangible assets	7,147	9,146
Change in the fair value of acquisition related contingent consideration	0	8
Unrealized loss on investment in equity securities	7,501	0
Share-based compensation expense	2,201	695
Bad debt expense	724	1,903
Amortization of debt discount	89	105
Amortization of debt issuance costs	273	291
Deferred income taxes	(1,972)	0
Loss on disposal of fixed assets	489	1,480
Changes in operating assets and liabilities:
Accounts receivable	2,289	2,880
Prepaid expenses and other current assets	(9,213)	(4,749)
Other assets	481	(374)
Accounts payable and accrued expenses	(18,189)	(10,177)
Other current and non-current liabilities	(5,503)	(36,735)
Net cash used in operating activities	(8,569)	(18,359)
Cash flows from investing activities:
Additions to premises and equipment	(1,258)	(1,944)
Net cash used in investing activities	(1,258)	(1,944)
Cash flows from financing activities:
Repayment of long-term debt	(1,486)	(1,486)
Debt issuance costs	(496)	0
Proceeds from stock option exercises	2,617	752
Purchase of treasury shares	(9,994)	(10,590)
Distributions to non-controlling interests	(672)	(569)
Net cash used in financing activities	(10,031)	(11,893)
Net decrease in cash, cash equivalents and restricted cash	(19,858)	(32,196)
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	88,985	121,225
Supplemental cash flow information:
Interest paid	5,269	5,456
Income taxes paid, net	946	6,515
Non-cash investing and financing activities:
Increase in payables for purchases of premises and equipment	$ 264	$ 2,094

XML

ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 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 March 31, 2018, Lenders One had total assets of $4.8 million and total liabilities of $3.2 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, andASU 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 months ended March 31, 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 revenues, 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.

• 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. 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 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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported		Adjustments			Balances without adoption of Topic 606
Accounts receivable, net	$	50,839	$	(28	)	$	50,811
Total current assets	251,296		(28		)	251,268
Total assets	831,773		(28		)	831,745
Other current liabilities	6,651		348			6,999
Deferred revenue	15,489		(6,655		)	8,834
Total current liabilities	94,560		(6,307		)	88,253
Deferred revenue, non-current	5,529		(3,890		)	1,639
Retained earnings	600,253		10,169			610,422
Altisource equity	318,856		10,169			329,025
Total equity	320,082		10,169			330,251
Total liabilities and equity	831,773		(28		)	831,745

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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported			Adjustments			Balances without adoption of Topic 606
Revenue	$	197,438		$	412		$	197,850
Cost of revenue	147,194			797			147,991
Gross profit	50,244			(385		)	49,859
Income from operations	7,120			(385		)	6,735
Loss before income taxes and non-controlling interests	(4,972		)	(385		)	(5,357		)
Income tax benefit	1,365			106			1,471
Net loss	(3,607		)	(279		)	(3,886		)
Net loss attributable to Altisource	(4,132		)	(279		)	(4,411		)

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 three months ended March 31, 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 condensed 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 $4.1 million, $3.8 million, $4.1 million and $4.1 million of restricted cash with cash and cash equivalents in its condensed consolidated statements of cash flows as of March 31, 2018, December 31, 2017, March 31, 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, Compensation—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 March 31, 2018, would result in approximately $22.0 million right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheet as of March 31, 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.

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CUSTOMER CONCENTRATION

3 Months Ended

Mar. 31, 2018

Risks and Uncertainties [Abstract]

CUSTOMER CONCENTRATION

CUSTOMER CONCENTRATION

During the three months endedMarch 31, 2018, Ocwen was our largest customer, accounting for 52% of our total revenue. 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 three months endedMarch 31, 2018 and 2017, we generated revenue from Ocwen of $102.0 million and $141.4 million, respectively. Revenue from Ocwen as a percentage of segment and consolidated revenue was as follows for the three months ended March 31:

	2018		2017
Mortgage Market	60	%	68	%
Real Estate Market	1	%	1	%
Other Businesses, Corporate and Eliminations	9	%	14	%
Consolidated revenue	52	%	59	%

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 three months endedMarch 31, 2018 and 2017, we recognized revenue of $15.2 million and $41.7 million, 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 March 31, 2018, accounts receivable from Ocwen totaled $18.4 million, $13.4 million of which was billed and $5.0 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 June 30, 2017, we estimate that New Residential Investment Corp. (individually, together with one or more of its subsidiaries or one or more of its subsidiaries individually, “NRZ”) owned certain economic rights in, but not legal title to, approximately 78% of Ocwen’s non-government-sponsored enterprise (“non-GSE”) MSRs (the “Subject MSRs”). 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 will receive a cooperative brokerage commission on the sale of certain REO properties from these portfolios subject to certain exceptions.

For the three months endedMarch 31, 2018, we earned revenue from NRZ of $10.3 million following the transfer of certain of the Subject MSRs from Ocwen to NRZ (the “Transferred MSRs”) (no comparative amount in 2017). For the three months endedMarch 31, 2018, we earned additional revenue of $16.1 million relating to the Transferred MSRs when a party other than NRZ selects Altisource as the service provider (no comparative amount 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 April 30, 2018 with a further automatic extension through May 15, 2018 provided that the parties continue to negotiate the Services Agreement in good faith.

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 three months endedMarch 31, 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.

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INVESTMENT IN EQUITY SECURITIES

3 Months Ended

Mar. 31, 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 $41.7 million as of March 31, 2018 and $49.2 million as of December 31, 2017. During the three months ended March 31, 2018, we recognized an unrealized loss of $7.5 million on our investment in RESI as a result of a decline in the market value of RESI common shares in the condensed consolidated statements of operations and comprehensive income. During the three months ended March 31, 2017, an unrealized gain on our investment in RESI of $12.7 million, net of income tax expense, 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 three months ended March 31, 2018 and 2017, we earned dividends of $0.6 million in each period related to this investment.

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ACCOUNTS RECEIVABLE, NET

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

ACCOUNTS RECEIVABLE, NET

ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Billed	$	42,509		$	40,787
Unbilled	19,231			22,532
	61,740			63,319
Less: Allowance for doubtful accounts	(10,901		)	(10,579		)
Total	$	50,839		$	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.

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PREPAID EXPENSES AND OTHER CURRENT ASSETS

3 Months Ended

Mar. 31, 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)	March 31, 2018		December 31, 2017
Short-term investments in real estate	$	39,320	$	29,405
Maintenance agreements, current portion	6,362		8,014
Income taxes receivable	9,702		9,227
Prepaid expenses	7,748		7,898
Other current assets	10,823		10,198
Total	$	73,955	$	64,742

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PREMISES AND EQUIPMENT, NET

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT, NET

PREMISES AND EQUIPMENT, NET

Premises and equipment, net consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Computer hardware and software	$	180,488		$	179,567
Leasehold improvements	33,202			33,417
Furniture and fixtures	14,015			14,092
Office equipment and other	9,574			9,388
	237,279			236,464
Less: Accumulated depreciation and amortization	(171,694		)	(163,191		)
Total	$	65,585		$	73,273

Depreciation and amortization expense totaled $8.7 million and $10.0 million for the three months ended March 31, 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.

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GOODWILL AND INTANGIBLE ASSETS, NET

3 Months Ended

Mar. 31, 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 March 31, 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)		March 31, 2018		December 31, 2017		March 31, 2018			December 31, 2017			March 31, 2018		December 31, 2017
Definite lived intangible assets:
Customer related intangible assets	10	$	277,828	$	277,828	$	(194,470	)	$	(188,258	)	$	83,358	$	89,570
Operating agreement	20	35,000		35,000		(14,307		)	(13,865		)	20,693		21,135
Trademarks and trade names	13	15,354		15,354		(9,080		)	(8,881		)	6,274		6,473
Non-compete agreements	4	1,560		1,560		(995		)	(897		)	565		663
Intellectual property	10	300		300		(123		)	(115		)	177		185
Other intangible assets	5	3,745		3,745		(1,894		)	(1,706		)	1,851		2,039
Total		$	333,787	$	333,787	$	(220,869	)	$	(213,722	)	$	112,918	$	120,065

Amortization expense for definite lived intangible assets was $7.1 million and $9.1 million for the three months ended March 31, 2018 and 2017, respectively. Anticipated annual definite lived intangible asset amortization for 2018 through 2022 is $26.4 million, $21.8 million, $18.2 million, $11.4 million and $7.3 million, respectively.

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OTHER ASSETS

3 Months Ended

Mar. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER ASSETS

OTHER ASSETS

Other assets consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Security deposits	$	5,150	$	5,304
Restricted cash	4,135		3,837
Maintenance agreements, non-current portion	189		362
Other	538		692
Total	$	10,012	$	10,195

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ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

3 Months Ended

Mar. 31, 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)	March 31, 2018		December 31, 2017
Accounts payable	$	11,324	$	15,682
Accrued expenses - general	30,628		27,268
Accrued salaries and benefits	24,523		41,363
Income taxes payable	—		87
Total	$	66,475	$	84,400

Other current liabilities consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Unfunded cash account balances	$	3,597	$	5,900
Other	3,054		3,514
Total	$	6,651	$	9,414

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LONG-TERM DEBT

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Senior secured term loan	$	412,095		$	413,581
Less: Debt issuance costs, net	(3,381		)	(3,158		)
Less: Unamortized discount, net	(1,053		)	(1,142		)
Net long-term debt	407,661			409,281
Less: Current portion	(5,945		)	(5,945		)
Long-term debt, less current portion	$	401,716		$	403,336

On November 27, 2012, Altisource Solutions S.à r.l., a wholly-owned subsidiary of Altisource Portfolio Solutions S.A., entered into a senior secured term loan agreement with Bank of America, N.A., as administrative agent, and certain lenders. Altisource Portfolio Solutions S.A. and certain subsidiaries were guarantors of the senior secured term loan (collectively, the “Guarantors”). We subsequently entered into four amendments to the senior secured term loan agreement to, among other changes, increase the principal amount of the senior secured term loan, re-establish the $200.0 million incremental senior secured term loan facility accordion, lower the interest rate, extend the maturity date by approximately one year, increase the maximum amount of Restricted Junior Payments (as defined in the senior secured term loan agreement; other capitalized terms, unless defined herein, are defined in the senior secured term loan agreement) and certain other changes including to facilitate an internal restructuring of the Company’s subsidiaries. On April 3, 2018, Altisource Portfolio Solutions S.A. and Altisource S.à r.l. entered into a credit agreement with Morgan Stanley Senior Funding, Inc. as administrative agent and collateral agent and the other lender parties thereto, pursuant to which the lenders have agreed to extend credit to Altisource S.à r.l. in the form of (i) Term B Loans (as defined in the credit agreement) in an aggregate principal amount equal to $412.0 million and (ii) a $15.0 million revolving credit facility. The proceeds of the Term B Loans were used to refinance Altisource S.à r.l.’s senior secured term loan. See Note 21 for additional information on the April 3, 2018 Term B Loans and revolving credit facility.

The senior secured term loan was required to be repaid in equal consecutive quarterly principal installments of $1.5 million, with the balance due at maturity. All amounts outstanding under the senior secured term loan agreement would have been due on the earlier of (i) December 9, 2020 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 or as otherwise provided in the senior secured term loan agreement upon the occurrence of any event of default under the senior secured term loan agreement.

In addition to the scheduled principal payments, subject to certain exceptions, the senior secured term loan was 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 senior secured term loan agreement (the percentage increases if the leverage ratio exceeds 3.50 to 1.00). No mandatory prepayments were owed for the three months ended March 31, 2018.

The senior secured term loan bore interest at rates based upon, at our option, the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar Rate loans bore interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bore 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) a 2.50% margin. The interest rate at March 31, 2018 was 5.38%.

Senior secured term loan payments were guaranteed by the Guarantors and were secured by a pledge of all equity interests of certain subsidiaries 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 senior secured term loan agreement included covenants that restricted or limited, among other things, our ability to create liens and encumbrances; incur additional indebtedness; sell, transfer or dispose of assets; make Restricted Junior Payments including share repurchases, dividends and repayment of junior indebtedness; change lines of business; amend material debt agreements or other material contracts; engage in certain transactions with affiliates; enter into sale/leaseback transactions; grant negative pledges or agree to such other restrictions relating to subsidiary dividends and distributions; make changes to our fiscal year; and engage in mergers and consolidations.

The senior secured term loan agreement contained 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 senior secured term loan agreement within five days of becoming due, (ii) material incorrectness of representations and warranties when made, (iii) breach of covenants, (iv) failure to pay principal or interest on any other debt that equals or exceeds $40.0 million when due, (v) default on any other debt that equals or exceeds $40.0 million that caused, or gave the holder or holders of such debt the ability to cause, an acceleration of such debt, (vi) occurrence of a Change of Control, (vii) bankruptcy and insolvency events, (viii) entry by a court of one or more judgments against us in an amount in excess of $40.0 million that remain unbonded, undischarged or unstayed for a certain number of days after the entry thereof, (ix) the occurrence of certain ERISA events and (x) the failure of certain Loan Documents to be in full force and effect. If any event of default occurred and was not cured within applicable grace periods set forth in the senior secured term loan agreement or waived, all loans and other obligations could have become due and immediately payable and the facility could have been terminated.

At March 31, 2018, debt issuance costs were $3.4 million, net of $7.4 million of accumulated amortization. At December 31, 2017, debt issuance costs were $3.2 million, net of $7.1 million of accumulated amortization.

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OTHER NON-CURRENT LIABILITIES

3 Months Ended

Mar. 31, 2018

Other Liabilities Disclosure [Abstract]

OTHER NON-CURRENT LIABILITIES

OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Income tax liabilities	$	5,825	$	5,955
Deferred revenue	5,529		2,101
Other non-current liabilities	4,061		4,226
Total	$	15,415	$	12,282

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FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 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 March 31, 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:

	March 31, 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	$	84,850	$	84,850	$	—	$	—	$	105,006	$	105,006	$	—	$	—
Restricted cash	4,135		4,135		—		—		3,837		3,837		—		—
Investment in equity securities	41,652		41,652		—		—		49,153		49,153		—		—
Liabilities:
Long-term debt	412,095		—		412,095		—		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 the largest portion 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.

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 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 17, 2017, our shareholders approved the renewal of the share repurchase program previously approved by the shareholders on May 18, 2016, which replaced the previous share repurchase program. We are authorized to purchase up to 4.6 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 March 31, 2018, approximately 3.1 million shares of common stock remain available for repurchase under the program. We purchased 0.4 million shares of common stock at an average price of $27.67 per share during the three months ended March 31, 2018 and 0.4 million shares at an average price of $25.10 per share during the three months ended March 31, 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 March 31, 2018, we can repurchase up to approximately $141 million of our common stock under Luxembourg law. Our senior secured term loan limited the amount we could have spent on share repurchases, which was approximately $464 million as of March 31, 2018, and may have prevented repurchases in certain circumstances. The new credit agreement retains this amount available for share repurchases and other restricted payments. See Note 21 for additional information on the new credit agreement.

Share-Based Compensation

We issue share-based awards in the form of stock options, restricted shares and restricted share units for certain employees, officers and directors. We recognized share-based compensation expense of $2.2 million and $0.7 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, estimated unrecognized compensation costs related to share-based awards amounted to $16.9 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 2.28 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 611 thousand service-based awards were outstanding as of March 31, 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 707 thousand market-based awards were outstanding as of March 31, 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 306 thousand performance-based awards outstanding as of March 31, 2018.

The Company granted 261 thousand stock options (at a weighted average exercise price of $24.95 per share) during the three months ended March 31, 2018. There were no stock option grants during the three months ended March 31, 2017.

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:

	Three months ended  March 31, 2018
	Black-Scholes	Binomial
Risk-free interest rate (%)	2.66 – 2.70	1.65 – 2.77
Expected stock price volatility (%)	70.31 – 71.81	71.81
Expected dividend yield	—	—
Expected option life (in years)	6.00 – 6.25	2.56 – 4.32
Fair value	$16.17 – $17.15	$15.58 – $18.28

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 period presented:

	Three months ended March 31,
(in thousands, except per share amounts)	2018		2017
Weighted average grant date fair value of stock options granted per share	$	16.20	$	—
Intrinsic value of options exercised	4,320		868
Grant date fair value of stock options that vested	23		89

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	260,697		24.95
Exercised	(286,252	)	9.14
Forfeited	(96,734	)	36.35
Outstanding at March 31, 2018	1,623,617		30.55		6.09	3,999
Exercisable at March 31, 2018	841,472		27.81		3.95	2,817

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 565 thousand service-based awards were outstanding as of March 31, 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 March 31, 2018.

The Company granted 255 thousand restricted shares and restricted share units (at a weighted average grant date fair value of $24.54 per share) during the three months ended March 31, 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	254,619
Forfeited/canceled	(43,697	)
Outstanding at March 31, 2018	567,431

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REVENUE

3 Months Ended

Mar. 31, 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 for the three months ended March 31:

(in thousands)	2018		2017
Service revenue	$	188,766	$	229,839
Reimbursable expenses	8,147		10,029
Non-controlling interests	525		615
Total	$	197,438	$	240,483

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 for the three months ended March 31, 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	$	129,536	$	18,273	$	7,602	$	155,411
Origination Solutions	9,185		2,686		56		11,927
Total Mortgage Market	138,721		20,959		7,658		167,338
Real Estate Market
Consumer Real Estate Solutions	1,405		—		2		1,407
Real Estate Investor Solutions	13,398		—		475		13,873
Total Real Estate Market	14,803		—		477		15,280
Other Businesses, Corporate and Eliminations	13,432		1,376		12		14,820
Total revenue	$	166,956	$	22,335	$	8,147	$	197,438

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 $5.9 million for the three months ended March 31, 2018.

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COST OF REVENUE

3 Months Ended

Mar. 31, 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 for the three months ended March 31:

(in thousands)	2018		2017
Compensation and benefits	$	54,866	$	63,092
Outside fees and services	65,098		80,959
Cost of real estate sold	3,179		4,935
Technology and telecommunications	9,451		11,351
Reimbursable expenses	8,147		10,029
Depreciation and amortization	6,453		7,587
Total	$	147,194	$	177,953

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

3 Months Ended

Mar. 31, 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 for the three months ended March 31:

(in thousands)	2018		2017
Compensation and benefits	$	13,569	$	12,506
Occupancy related costs	8,434		10,273
Amortization of intangible assets	7,147		9,146
Marketing costs	3,607		4,269
Professional services	3,226		3,730
Depreciation and amortization	2,268		2,421
Other	4,873		5,356
Total	$	43,124	$	47,701

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OTHER INCOME (EXPENSE), NET

3 Months Ended

Mar. 31, 2018

Other Income and Expenses [Abstract]

OTHER INCOME (EXPENSE), NET

OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following for the three months ended March 31:

(in thousands)	2018		2017
Interest income	$	131	$	98
Other, net	1,141		617
Total	$	1,272	$	715

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 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 for the three months ended March 31:

(in thousands, except per share data)	2018			2017
Net (loss) income attributable to Altisource	$	(4,132	)	$	6,545
Weighted average common shares outstanding, basic	17,378			18,662
Dilutive effect of stock options and restricted shares	—			642
Weighted average common shares outstanding, diluted	17,378			19,304
(Loss) earnings per share:
Basic	$	(0.24	)	$	0.35
Diluted	$	(0.24	)	$	0.34

For the three months ended March 31, 2018 and 2017, 0.3 million options and 0.4 million options, 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 three months ended March 31, 2018 and 2017 were 0.6 million options, restricted shares and restricted share units and 0.2 million options, 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 three months ended March 31, 2018, 0.5 million options, restricted shares and restricted share units were excluded from the computation of diluted EPS for the three months ended March 31, 2018, as their impact was anti-dilutive.

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COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS

3 Months Ended

Mar. 31, 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 months endedMarch 31, 2018, Ocwen was our largest customer, accounting for 52% of our total revenue. Additionally, 8% of our revenue for the three months endedMarch 31, 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 impact the other services we provide to Ocwen. For the three months endedMarch 31, 2018 and 2017, service revenue from REALServicing was $6.5 million and $7.0 million, respectively.

In addition to the above, as of June 30, 2017, we estimate that NRZ owned certain economic rights in, but not legal title to, approximately 78% of the Subject MSRs. 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 will receive 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 April 30, 2018 with a further automatic extension through May 15, 2018 provided that the parties continue to negotiate the Services Agreement in good faith.

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 three months endedMarch 31, 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 $24.6 million and $35.1 million at March 31, 2018 and December 31, 2017, respectively.

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 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 March 31, 2018
(in thousands)	Mortgage Market		Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue	$	167,338	$	15,280		$	14,820		$	197,438
Cost of revenue	111,073		18,554			17,567			147,194
Gross profit (loss)	56,265		(3,274		)	(2,747		)	50,244
Selling, general and administrative expenses	23,374		4,118			15,632			43,124
Income (loss) from operations	32,891		(7,392		)	(18,379		)	7,120
Total other income (expense), net	16		2			(12,110		)	(12,092		)
Income (loss) before income taxes and non-controlling interests	$	32,907	$	(7,390	)	$	(30,489	)	$	(4,972	)

	Three months ended March 31, 2017
(in thousands)	Mortgage Market		Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue	$	204,723	$	20,063		$	15,697		$	240,483
Cost of revenue	140,150		22,143			15,660			177,953
Gross profit (loss)	64,573		(2,080		)	37			62,530
Selling, general and administrative expenses	28,682		4,325			14,694			47,701
Income (loss) from operations	35,891		(6,405		)	(14,657		)	14,829
Total other income (expense), net	10		—			(5,093		)	(5,083		)
Income (loss) before income taxes and non-controlling interests	$	35,901	$	(6,405	)	$	(19,750	)	$	9,746

(in thousands)	Mortgage Market		Real Estate Market		Other Businesses, Corporate and Eliminations		Consolidated Altisource
Total assets:
March 31, 2018	$	285,989	$	82,574	$	463,210	$	831,773
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)	March 31, 2018		December 31, 2017
United States	$	40,068	$	46,268
Luxembourg	16,686		16,688
India	6,797		8,136
Philippines	1,916		2,038
Uruguay	118		143
Total	$	65,585	$	73,273

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SUBSEQUENT EVENT SUBSEQUENT EVENT

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENT

SUBSEQUENT EVENT

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 the other lender parties thereto, pursuant to which the lenders have agreed to extend credit to Altisource S.à r.l. in the form of (i) Term B Loans (as defined in the Credit Agreement) in an aggregate principal amount equal to $412.0 million and (ii) a $15.0 million revolving credit facility, with Altisource Portfolio Solutions S.A. and certain wholly-owned subsidiaries of Altisource S.à r.l. acting as guarantors.

The proceeds of the Term B Loans were used to refinance Altisource S.à r.l.’s prior term loans under the credit agreement dated as of November 27, 2012 (see Note 10). When drawn, the proceeds from the revolving credit facility may be used for general corporate purposes and other uses permitted under the Credit Agreement.

As further summarized below, the Credit Agreement contains several changes from the prior credit agreement and retains certain other provisions. These include the following:

• The Term B Loans mature in April 2024 while the term loans under the prior credit agreement would have matured in December 2020.

• The Credit Agreement includes a revolving credit facility with a maintenance covenant that will apply to Altisource S.à r.l. only if funds are drawn on the revolving credit facility as of the last day of a fiscal quarter.

• The new Term B Loans have no financial maintenance covenants and are similar to Altisource S.à r.l.’s term loans under the prior credit agreement.

• The net debt definition in the Credit Agreement permits Altisource S.à r.l. to reduce net debt by up to $75 million in marketable securities while the prior credit agreement did not reduce net debt by marketable securities.

• The Available Amount accumulated under the prior credit agreement is being carried over to the Credit Agreement. The Available Amount can be used to make certain restricted payments, investments and payments, subject to certain conditions set forth in the Credit Agreement.

• Altisource S.à r.l. 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 million (compared to $200 million in the prior credit agreement), subject to certain conditions set forth in the Credit Agreement, including a sublimit of $80 million with respect to incremental revolving credit commitments. The lenders have no obligation to provide any incremental indebtedness.

• The new Term B Loans amortize $41.2 million in year 1, $41.2 million in year 2 and $12.4 million per year in each of the subsequent years. Amortization under the prior credit agreement was equal to $5.9 million per year.

The new Term B Loans bear interest at rates based upon, at Altisource S.à r.l.’s option, the Adjusted Eurodollar Rate or the Base Rate. Eurodollar Rate Term Loans will 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%. Eurodollar Rate Loans under the revolving credit facility will bear interest at a rate per annum of the Adjusted Eurodollar Rate for a three month interest period plus 4.00%. Base Rate Term Loans will 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%. Base Rate loans under the revolving credit facility will bear interest at a rate per annum of the Base Rate plus 3.00%. Interest under the prior credit agreement was based upon, at Altisource S.à r.l.’s option, the Adjusted Eurodollar Rate or the Base Rate. Adjusted Eurodollar Rate loans bore interest at a rate per annum equal to the sum of (i) the greater of (x) the Adjusted Eurodollar Rate for the applicable interest period and (y) 1.00% plus (ii) a 3.50% margin. Base Rate loans bore 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) 2.50%.

Mandatory repayments of the new Term B Loans from asset sales that exceed $25 million in a given calendar year and from proceeds from the sale RESI shares held on April 3, 2018 are applied against contractual amortization of the Term B Loans.

Similar to the prior credit agreement, the Credit Agreement contains representations, warranties, covenants, terms and conditions customary for transactions of this type. These include covenants limiting Altisource Portfolio Solutions S.A.’s, Altisource S.à r.l.’s and each Restricted Subsidiary’s ability, subject to certain exceptions and baskets, to (i) incur indebtedness, (ii) incur liens on its assets, (iii) agree to any additional negative pledges, (iv) pay dividends and make other Restricted Junior Payments, (v) limit the ability of its subsidiaries to pay dividends or distribute assets, (vi) make investments, (vii) enter into any transaction of merger or consolidation, liquidate, wind-up or dissolve, or convey any part of its business, assets or property, or acquire the business, property or assets of another person, subject to certain exceptions, (viii) dispose of the equity interests of any Material Subsidiaries, whether through a sale of the capital stock, dissolution, merger or sale of all or substantially all of the assets of such Material Subsidiary, (ix) enter into sale and leaseback transactions, (x) enter into certain transactions with affiliates, (xi) engage in a line of business substantially different than existing business and businesses reasonably related, complimentary or ancillary thereto, (xii) modify the terms of indebtedness junior to the loans contemplated by the Credit Agreement, (xiii) modify the terms of its organizational documents in any material respect, (xiv) change its fiscal year, (xv) permit Altisource Portfolio Solutions S.A. to hold material assets, have material liabilities, or engage in certain activities, in each case, except as contemplated by the Credit Agreement, (xvi) use the proceeds of the loans for certain purposes, and (xvii) 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 (such covenant, the “Springing Revolving Financial Covenant”). The Springing Revolving Financial Covenant is for the benefit of Lenders having Revolving Credit Loans only and is subject to a customary cure provision.

The Company filed a Current Report on Form 8-K on April 4, 2018 that describes certain of the provisions of the Credit Agreement and also contains the Credit Agreement as an exhibit, which is incorporated in this Form 10-Q by reference. This description of the Credit Agreement is not complete and is qualified in its entirety by reference to the entire Credit Agreement.

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ORGANIZATION AND BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 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.

• 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. 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 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, andASU 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 months ended March 31, 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 revenues, 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.

• 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. 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 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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported		Adjustments			Balances without adoption of Topic 606
Accounts receivable, net	$	50,839	$	(28	)	$	50,811
Total current assets	251,296		(28		)	251,268
Total assets	831,773		(28		)	831,745
Other current liabilities	6,651		348			6,999
Deferred revenue	15,489		(6,655		)	8,834
Total current liabilities	94,560		(6,307		)	88,253
Deferred revenue, non-current	5,529		(3,890		)	1,639
Retained earnings	600,253		10,169			610,422
Altisource equity	318,856		10,169			329,025
Total equity	320,082		10,169			330,251
Total liabilities and equity	831,773		(28		)	831,745

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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported			Adjustments			Balances without adoption of Topic 606
Revenue	$	197,438		$	412		$	197,850
Cost of revenue	147,194			797			147,991
Gross profit	50,244			(385		)	49,859
Income from operations	7,120			(385		)	6,735
Loss before income taxes and non-controlling interests	(4,972		)	(385		)	(5,357		)
Income tax benefit	1,365			106			1,471
Net loss	(3,607		)	(279		)	(3,886		)
Net loss attributable to Altisource	(4,132		)	(279		)	(4,411		)

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 three months ended March 31, 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 condensed 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 $4.1 million, $3.8 million, $4.1 million and $4.1 million of restricted cash with cash and cash equivalents in its condensed consolidated statements of cash flows as of March 31, 2018, December 31, 2017, March 31, 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, Compensation—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 March 31, 2018, would result in approximately $22.0 million right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheet as of March 31, 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.

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ORGANIZATION AND BASIS OF PRESENTATION ORGANIZATION AND BASIS OF PRESENTATION (Tables)

3 Months Ended

Mar. 31, 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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported		Adjustments			Balances without adoption of Topic 606
Accounts receivable, net	$	50,839	$	(28	)	$	50,811
Total current assets	251,296		(28		)	251,268
Total assets	831,773		(28		)	831,745
Other current liabilities	6,651		348			6,999
Deferred revenue	15,489		(6,655		)	8,834
Total current liabilities	94,560		(6,307		)	88,253
Deferred revenue, non-current	5,529		(3,890		)	1,639
Retained earnings	600,253		10,169			610,422
Altisource equity	318,856		10,169			329,025
Total equity	320,082		10,169			330,251
Total liabilities and equity	831,773		(28		)	831,745

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 March 31, 2018:

	Impact of the adoption of Topic 606
(in thousands)	As reported			Adjustments			Balances without adoption of Topic 606
Revenue	$	197,438		$	412		$	197,850
Cost of revenue	147,194			797			147,991
Gross profit	50,244			(385		)	49,859
Income from operations	7,120			(385		)	6,735
Loss before income taxes and non-controlling interests	(4,972		)	(385		)	(5,357		)
Income tax benefit	1,365			106			1,471
Net loss	(3,607		)	(279		)	(3,886		)
Net loss attributable to Altisource	(4,132		)	(279		)	(4,411		)

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CUSTOMER CONCENTRATION (Tables)

3 Months Ended

Mar. 31, 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 for the three months ended March 31:

	2018		2017
Mortgage Market	60	%	68	%
Real Estate Market	1	%	1	%
Other Businesses, Corporate and Eliminations	9	%	14	%
Consolidated revenue	52	%	59	%

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ACCOUNTS RECEIVABLE, NET (Tables)

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Schedule of accounts receivable, net

Accounts receivable, net consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Billed	$	42,509		$	40,787
Unbilled	19,231			22,532
	61,740			63,319
Less: Allowance for doubtful accounts	(10,901		)	(10,579		)
Total	$	50,839		$	52,740

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)

3 Months Ended

Mar. 31, 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)	March 31, 2018		December 31, 2017
Short-term investments in real estate	$	39,320	$	29,405
Maintenance agreements, current portion	6,362		8,014
Income taxes receivable	9,702		9,227
Prepaid expenses	7,748		7,898
Other current assets	10,823		10,198
Total	$	73,955	$	64,742

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PREMISES AND EQUIPMENT, NET (Tables)

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Schedule of premises and equipment, net

Premises and equipment, net consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Computer hardware and software	$	180,488		$	179,567
Leasehold improvements	33,202			33,417
Furniture and fixtures	14,015			14,092
Office equipment and other	9,574			9,388
	237,279			236,464
Less: Accumulated depreciation and amortization	(171,694		)	(163,191		)
Total	$	65,585		$	73,273

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GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

3 Months Ended

Mar. 31, 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 March 31, 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)		March 31, 2018		December 31, 2017		March 31, 2018			December 31, 2017			March 31, 2018		December 31, 2017
Definite lived intangible assets:
Customer related intangible assets	10	$	277,828	$	277,828	$	(194,470	)	$	(188,258	)	$	83,358	$	89,570
Operating agreement	20	35,000		35,000		(14,307		)	(13,865		)	20,693		21,135
Trademarks and trade names	13	15,354		15,354		(9,080		)	(8,881		)	6,274		6,473
Non-compete agreements	4	1,560		1,560		(995		)	(897		)	565		663
Intellectual property	10	300		300		(123		)	(115		)	177		185
Other intangible assets	5	3,745		3,745		(1,894		)	(1,706		)	1,851		2,039
Total		$	333,787	$	333,787	$	(220,869	)	$	(213,722	)	$	112,918	$	120,065

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OTHER ASSETS (Tables)

3 Months Ended

Mar. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of other assets

Other assets consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Security deposits	$	5,150	$	5,304
Restricted cash	4,135		3,837
Maintenance agreements, non-current portion	189		362
Other	538		692
Total	$	10,012	$	10,195

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ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued expenses

Accounts payable and accrued expenses consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Accounts payable	$	11,324	$	15,682
Accrued expenses - general	30,628		27,268
Accrued salaries and benefits	24,523		41,363
Income taxes payable	—		87
Total	$	66,475	$	84,400

Schedule of other current liabilities

Other current liabilities consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Unfunded cash account balances	$	3,597	$	5,900
Other	3,054		3,514
Total	$	6,651	$	9,414

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LONG-TERM DEBT (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consists of the following:

(in thousands)	March 31, 2018			December 31, 2017
Senior secured term loan	$	412,095		$	413,581
Less: Debt issuance costs, net	(3,381		)	(3,158		)
Less: Unamortized discount, net	(1,053		)	(1,142		)
Net long-term debt	407,661			409,281
Less: Current portion	(5,945		)	(5,945		)
Long-term debt, less current portion	$	401,716		$	403,336

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OTHER NON-CURRENT LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2018

Other Liabilities Disclosure [Abstract]

Schedule of other non-current liabilities

Other non-current liabilities consist of the following:

(in thousands)	March 31, 2018		December 31, 2017
Income tax liabilities	$	5,825	$	5,955
Deferred revenue	5,529		2,101
Other non-current liabilities	4,061		4,226
Total	$	15,415	$	12,282

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FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 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:

	March 31, 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	$	84,850	$	84,850	$	—	$	—	$	105,006	$	105,006	$	—	$	—
Restricted cash	4,135		4,135		—		—		3,837		3,837		—		—
Investment in equity securities	41,652		41,652		—		—		49,153		49,153		—		—
Liabilities:
Long-term debt	412,095		—		412,095		—		413,581		—		407,377		—

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 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:

	Three months ended  March 31, 2018
	Black-Scholes	Binomial
Risk-free interest rate (%)	2.66 – 2.70	1.65 – 2.77
Expected stock price volatility (%)	70.31 – 71.81	71.81
Expected dividend yield	—	—
Expected option life (in years)	6.00 – 6.25	2.56 – 4.32
Fair value	$16.17 – $17.15	$15.58 – $18.28

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 period presented:

	Three months ended March 31,
(in thousands, except per share amounts)	2018		2017
Weighted average grant date fair value of stock options granted per share	$	16.20	$	—
Intrinsic value of options exercised	4,320		868
Grant date fair value of stock options that vested	23		89

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	260,697		24.95
Exercised	(286,252	)	9.14
Forfeited	(96,734	)	36.35
Outstanding at March 31, 2018	1,623,617		30.55		6.09	3,999
Exercisable at March 31, 2018	841,472		27.81		3.95	2,817

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	254,619
Forfeited/canceled	(43,697	)
Outstanding at March 31, 2018	567,431

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REVENUE (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Schedule of revenue

The components of revenue were as follows for the three months ended March 31:

(in thousands)	2018		2017
Service revenue	$	188,766	$	229,839
Reimbursable expenses	8,147		10,029
Non-controlling interests	525		615
Total	$	197,438	$	240,483

Disaggregation of revenue

Disaggregation of total revenues by segment and major source is as follows for the three months ended March 31, 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	$	129,536	$	18,273	$	7,602	$	155,411
Origination Solutions	9,185		2,686		56		11,927
Total Mortgage Market	138,721		20,959		7,658		167,338
Real Estate Market
Consumer Real Estate Solutions	1,405		—		2		1,407
Real Estate Investor Solutions	13,398		—		475		13,873
Total Real Estate Market	14,803		—		477		15,280
Other Businesses, Corporate and Eliminations	13,432		1,376		12		14,820
Total revenue	$	166,956	$	22,335	$	8,147	$	197,438

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COST OF REVENUE (Tables)

3 Months Ended

Mar. 31, 2018

Cost of Revenue [Abstract]

Schedule of components of cost of revenue

The components of cost of revenue were as follows for the three months ended March 31:

(in thousands)	2018		2017
Compensation and benefits	$	54,866	$	63,092
Outside fees and services	65,098		80,959
Cost of real estate sold	3,179		4,935
Technology and telecommunications	9,451		11,351
Reimbursable expenses	8,147		10,029
Depreciation and amortization	6,453		7,587
Total	$	147,194	$	177,953

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Tables)

3 Months Ended

Mar. 31, 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 for the three months ended March 31:

(in thousands)	2018		2017
Compensation and benefits	$	13,569	$	12,506
Occupancy related costs	8,434		10,273
Amortization of intangible assets	7,147		9,146
Marketing costs	3,607		4,269
Professional services	3,226		3,730
Depreciation and amortization	2,268		2,421
Other	4,873		5,356
Total	$	43,124	$	47,701

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OTHER INCOME (EXPENSE), NET (Tables)

3 Months Ended

Mar. 31, 2018

Other Income and Expenses [Abstract]

Schedule of other income (expense), net

Other income (expense), net consists of the following for the three months ended March 31:

(in thousands)	2018		2017
Interest income	$	131	$	98
Other, net	1,141		617
Total	$	1,272	$	715

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Schedule of basic and diluted EPS calculation

Basic and diluted EPS are calculated as follows for the three months ended March 31:

(in thousands, except per share data)	2018			2017
Net (loss) income attributable to Altisource	$	(4,132	)	$	6,545
Weighted average common shares outstanding, basic	17,378			18,662
Dilutive effect of stock options and restricted shares	—			642
Weighted average common shares outstanding, diluted	17,378			19,304
(Loss) earnings per share:
Basic	$	(0.24	)	$	0.35
Diluted	$	(0.24	)	$	0.34

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Schedule of financial information of segments

Financial information for our segments is as follows:

	Three months ended March 31, 2018
(in thousands)	Mortgage Market		Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue	$	167,338	$	15,280		$	14,820		$	197,438
Cost of revenue	111,073		18,554			17,567			147,194
Gross profit (loss)	56,265		(3,274		)	(2,747		)	50,244
Selling, general and administrative expenses	23,374		4,118			15,632			43,124
Income (loss) from operations	32,891		(7,392		)	(18,379		)	7,120
Total other income (expense), net	16		2			(12,110		)	(12,092		)
Income (loss) before income taxes and non-controlling interests	$	32,907	$	(7,390	)	$	(30,489	)	$	(4,972	)

	Three months ended March 31, 2017
(in thousands)	Mortgage Market		Real Estate Market			Other Businesses, Corporate and Eliminations			Consolidated Altisource
Revenue	$	204,723	$	20,063		$	15,697		$	240,483
Cost of revenue	140,150		22,143			15,660			177,953
Gross profit (loss)	64,573		(2,080		)	37			62,530
Selling, general and administrative expenses	28,682		4,325			14,694			47,701
Income (loss) from operations	35,891		(6,405		)	(14,657		)	14,829
Total other income (expense), net	10		—			(5,093		)	(5,083		)
Income (loss) before income taxes and non-controlling interests	$	35,901	$	(6,405	)	$	(19,750	)	$	9,746

(in thousands)	Mortgage Market		Real Estate Market		Other Businesses, Corporate and Eliminations		Consolidated Altisource
Total assets:
March 31, 2018	$	285,989	$	82,574	$	463,210	$	831,773
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)	March 31, 2018		December 31, 2017
United States	$	40,068	$	46,268
Luxembourg	16,686		16,688
India	6,797		8,136
Philippines	1,916		2,038
Uruguay	118		143
Total	$	65,585	$	73,273

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ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017	Mar. 31, 2017	Jan. 01, 2017	Dec. 31, 2016
Summary of significant accounting policies
Increase in deferred revenue	$ 15,489		$ 9,802
Other current liabilities	6,651		9,414
Decrease in retained earnings	(600,253)		(626,600)
Cumulative effect of accounting changes					$ 0
Restricted cash	4,135		3,837	$ 4,100		$ 4,100
Operating lease, right-of-use, estimated asset and liability (approximate)	22,000
Accounting Standards Update 2016-01 | Accumulated other comprehensive income (loss)
Summary of significant accounting policies
Cumulative effect of accounting changes		$ 733
Accounting Standards Update 2014-09
Summary of significant accounting policies
Cumulative effect of accounting changes		10,448
Accounting Standards Update 2014-09 | Adjustments
Summary of significant accounting policies
Increase in deferred revenue	(6,655)	11,200
Increase unbilled accounts receivable		1,100
Other current liabilities	348
Decrease in retained earnings	(10,169)	$ 10,400
Lenders One
Summary of significant accounting policies
Total assets	4,800		4,600
Total liabilities	$ 3,200		$ 3,100

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ORGANIZATION AND BASIS OF PRESENTATION - Impact of Topic 606 on Financial Statements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	$ 50,839			$ 52,740
Total current assets	251,296			271,641
Total assets	831,773			865,164
Other current liabilities	6,651			9,414
Deferred revenue	15,489			9,802
Total current liabilities	94,560			109,561
Deferred revenue, non-current	5,529			2,101
Retained earnings	600,253			626,600
Altisource equity	318,856			338,612
Total equity	320,082	$ 72,365		339,985	$ 62,194
Total liabilities and equity	831,773			$ 865,164
Revenue	197,438	240,483
Cost of revenue	147,194	177,953
Gross profit	50,244	62,530
Income from operations	7,120	14,829
Loss before income taxes and non-controlling interests	(4,972)	9,746
Income tax benefit	1,365	(2,586)
Net loss	(3,607)	7,160
Net loss attributable to Altisource	(4,132)	$ 6,545
Balances without adoption of Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	50,811
Total current assets	251,268
Total assets	831,745
Other current liabilities	6,999
Deferred revenue	8,834
Total current liabilities	88,253
Deferred revenue, non-current	1,639
Retained earnings	610,422
Altisource equity	329,025
Total equity	330,251
Total liabilities and equity	831,745
Revenue	197,850
Cost of revenue	147,991
Gross profit	49,859
Income from operations	6,735
Loss before income taxes and non-controlling interests	(5,357)
Income tax benefit	1,471
Net loss	(3,886)
Net loss attributable to Altisource	(4,411)
Accounting Standards Update 2014-09 | Adjustments
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	(28)
Total current assets	(28)
Total assets	(28)
Other current liabilities	348
Deferred revenue	(6,655)		$ 11,200
Total current liabilities	(6,307)
Deferred revenue, non-current	(3,890)
Retained earnings	10,169		$ (10,400)
Altisource equity	10,169
Total equity	10,169
Total liabilities and equity	(28)
Revenue	412
Cost of revenue	797
Gross profit	(385)
Income from operations	(385)
Loss before income taxes and non-controlling interests	(385)
Income tax benefit	106
Net loss	(279)
Net loss attributable to Altisource	$ (279)

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CUSTOMER CONCENTRATION (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jun. 30, 2017
Ocwen
Concentration Risk
Accounts receivable	$ 18.4		$ 18.9
Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	52.00%	59.00%
Revenue	$ 102.0	$ 141.4
Highly Correlated - Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	8.00%
Revenue	$ 15.2	41.7
NRZ | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Revenue	$ 10.3	0.0
Estimated percentage of revenue from largest customer	48.00%
Highly Correlated - NRZ | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Revenue	$ 16.1	$ 0.0
Billed | Ocwen
Concentration Risk
Accounts receivable	13.4		13.6
Unbilled | Ocwen
Concentration Risk
Accounts receivable	$ 5.0		$ 5.3
Mortgage Market | Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	60.00%	68.00%
Real Estate Market | Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	1.00%	1.00%
Other Businesses, Corporate and Eliminations | Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	9.00%	14.00%
NRZ | Ocwen
Concentration Risk
Non-government-sponsored enterprise servicing rights (approximate)				78.00%

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INVESTMENT IN EQUITY SECURITIES (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Sep. 30, 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	$ 41,652			$ 49,153	$ 49,200
Unrealized loss on investment in equity securities	(7,501)	$ 0
Unrealized gain on investment in equity securities, net of income tax provision		12,723
Investment income, dividend	$ 600	$ 600

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ACCOUNTS RECEIVABLE, NET (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accounts receivable, net
Accounts receivable, gross	$ 61,740	$ 63,319
Less: Allowance for doubtful accounts	(10,901)	(10,579)
Total	50,839	52,740
Billed
Accounts receivable, net
Accounts receivable, gross	42,509	40,787
Unbilled
Accounts receivable, net
Accounts receivable, gross	$ 19,231	$ 22,532

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Short-term investments in real estate	$ 39,320	$ 29,405
Maintenance agreements, current portion	6,362	8,014
Income taxes receivable	9,702	9,227
Prepaid expenses	7,748	7,898
Other current assets	10,823	10,198
Total	$ 73,955	$ 64,742

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PREMISES AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	$ 237,279		$ 236,464
Less: Accumulated depreciation and amortization	(171,694)		(163,191)
Total	65,585		73,273
Depreciation and amortization expense	8,721	$ 10,008
Computer hardware and software
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	180,488		179,567
Leasehold improvements
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	33,202		33,417
Furniture and fixtures
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	14,015		14,092
Office equipment and other
PREMISES AND EQUIPMENT, NET
Premises and equipment, gross	$ 9,574		$ 9,388

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GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands	Mar. 31, 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

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GOODWILL AND INTANGIBLE ASSETS, NET - Intangible assets, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Intangible Assets, Net
Gross carrying amount	$ 333,787		$ 333,787
Accumulated amortization	(220,869)		(213,722)
Net book value	112,918		120,065
Amortization expense for definite lived intangible assets	7,147	$ 9,146
2018	26,400
2019	21,800
2020	18,200
2021	11,400
2022	7,300
Customer related intangible assets
Intangible Assets, Net
Gross carrying amount	277,828		277,828
Accumulated amortization	(194,470)		(188,258)
Net book value	83,358		89,570
Operating agreement
Intangible Assets, Net
Gross carrying amount	35,000		35,000
Accumulated amortization	(14,307)		(13,865)
Net book value	20,693		21,135
Trademarks and trade names
Intangible Assets, Net
Gross carrying amount	15,354		15,354
Accumulated amortization	(9,080)		(8,881)
Net book value	6,274		6,473
Non-compete agreements
Intangible Assets, Net
Gross carrying amount	1,560		1,560
Accumulated amortization	(995)		(897)
Net book value	565		663
Intellectual property
Intangible Assets, Net
Gross carrying amount	300		300
Accumulated amortization	(123)		(115)
Net book value	177		185
Other intangible assets
Intangible Assets, Net
Gross carrying amount	3,745		3,745
Accumulated amortization	(1,894)		(1,706)
Net book value	$ 1,851		$ 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)	13 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

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OTHER ASSETS (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Security deposits	$ 5,150	$ 5,304
Restricted cash	4,135	3,837	$ 4,100	$ 4,100
Maintenance agreements, non-current portion	189	362
Other	538	692
Total	$ 10,012	$ 10,195

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Accounts payable	$ 11,324	$ 15,682
Accrued expenses - general	30,628	27,268
Accrued salaries and benefits	24,523	41,363
Income taxes payable	0	87
Total	$ 66,475	$ 84,400

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OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Other current liabilities
Unfunded cash account balances	$ 3,597	$ 5,900
Other	3,054	3,514
Total	$ 6,651	$ 9,414

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LONG-TERM DEBT (Details)			3 Months Ended
	Apr. 03, 2018 USD ($)	Aug. 01, 2014 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	May 07, 2013 USD ($)
Debt
Senior secured term loan			$ 412,095,000	$ 413,581,000
Less: Debt issuance costs, net			(3,381,000)	(3,158,000)
Less: Unamortized discount, net			(1,053,000)	(1,142,000)
Net long-term debt			407,661,000	409,281,000
Less: Current portion			(5,945,000)	(5,945,000)
Long-term debt, less current portion			401,716,000	403,336,000
Debt issuance costs, net			3,381,000	3,158,000
Senior secured term loan
Debt
Less: Debt issuance costs, net			(3,400,000)	(3,200,000)
Debt instrument accordion feature increase in additional borrowings					$ 200,000,000.0
Aggregate amount of each consecutive quarterly scheduled principal installment		$ 1,500,000
Mandatory prepayments owed			$ 0
Interest rate at the end of the period (as a percent)			5.38%
Debt issuance costs, net			$ 3,400,000	3,200,000
Accumulated amortization			$ 7,400,000	$ 7,100,000
Senior secured term loan | Maximum
Debt
Leverage ratio to be maintained under the credit facility covenants			3.0
Covenant threshold, leverage ratio			3.50
Number of days within which the entity fails to pay principal when due or interest or any other amount owing on any other obligation under the credit agreement, is considered as event of default			5 days
Amount of principal or interest if failed to pay considered as event of default			$ 40,000,000.000
Amount of debt which results in acceleration of debt if failed to pay considered as event of default			40,000,000.000
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			$ 40,000,000.000
Senior secured term loan | Minimum
Debt
Leverage ratio to be maintained under the credit facility covenants			1.00
Covenant threshold, leverage ratio			1.00
Senior secured term loan | Adjusted Eurodollar Rate
Debt
Reference rate			Adjusted Eurodollar Rate
Interest rate margin (as a percent)			3.50%
Senior secured term loan | Base Rate
Debt
Reference rate			Base Rate
Interest rate margin (as a percent)			2.50%
April 3, 2018 Credit Agreement | Subsequent Event
Debt
Debt instrument accordion feature increase in additional borrowings	$ 125,000,000
April 3, 2018 Credit Agreement | Subsequent Event | Term B loans
Debt
Debt instrument, face amount	$ 412,000,000
April 3, 2018 Credit Agreement | Subsequent Event | Term B loans | Maximum
Debt
Leverage ratio to be maintained under the credit facility covenants	3.50
April 3, 2018 Credit Agreement | Subsequent Event | Term B loans | Minimum
Debt
Leverage ratio to be maintained under the credit facility covenants	1.00
April 3, 2018 Credit Agreement | Subsequent Event | Term B loans | Adjusted Eurodollar Rate
Debt
Reference rate	Adjusted Eurodollar Rate
Interest rate margin (as a percent)	4.00%
April 3, 2018 Credit Agreement | Subsequent Event | Term B loans | Base Rate
Debt
Reference rate	Base Rate
Interest rate margin (as a percent)	3.00%
April 3, 2018 Credit Agreement | Subsequent Event | Revolving credit facility
Debt
Debt instrument accordion feature increase in additional borrowings	$ 80,000,000
Debt instrument, face amount	$ 15,000,000
April 3, 2018 Credit Agreement | Subsequent Event | Revolving credit facility | Adjusted Eurodollar Rate
Debt
Reference rate	Eurodollar Rate
Interest rate margin (as a percent)	4.00%
April 3, 2018 Credit Agreement | Subsequent Event | Revolving credit facility | Base Rate
Debt
Reference rate	Base Rate
Interest rate margin (as a percent)	3.00%

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OTHER NON-CURRENT LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Other Liabilities Disclosure [Abstract]
Income tax liabilities	$ 5,825	$ 5,955
Deferred revenue	5,529	2,101
Other non-current liabilities	4,061	4,226
Total	$ 15,415	$ 12,282

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FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Details) shares in Millions	Mar. 31, 2018 shares
RESI
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment in equity securities, number of shares	4.1

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FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Assets, Fair Value Disclosure
Cash and cash equivalents	$ 84,850	$ 105,006
Restricted cash	4,135	3,837		$ 4,100	$ 4,100
Investment in equity securities	41,652	49,153	$ 49,200
Liabilities, Fair Value Disclosure
Long-term debt, carrying amount	412,095	413,581
Level 1 | Fair Value, Measurements, Recurring
Assets, Fair Value Disclosure
Cash and cash equivalents	84,850	105,006
Restricted cash	4,135	3,837
Investment in equity securities	41,652	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	412,095	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

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Stock Repurchase Plan & Share-Based Compensation (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	May 18, 2016 $ / shares shares	Mar. 31, 2018 USD ($) component $ / shares shares	Mar. 31, 2017 USD ($) $ / shares shares	Jan. 01, 2018 USD ($)	Dec. 31, 2017 shares	Jan. 01, 2017 USD ($)
Stock Repurchase Plan
Capacity available to repurchase common stock under senior secured term loan (in dollars)		$ 464,000
Share-Based Compensation
Share-based compensation expense (in dollars)		2,200	$ 700
Estimated unrecognized compensation costs (in dollars)		$ 16,900
Weighted average remaining requisite service period for stock options over which unrecognized compensation costs would be recognized		2 years 3 months 11 days
Cumulative effect of accounting changes						$ 0
Outstanding (in shares) | shares		1,623,617			1,745,906
Stock options granted (in shares) | shares		260,697	0
Weighted average exercise price of stock options granted (in usd per share) | $ / shares		$ 24.95
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		$ 16.20	$ 0.00
Intrinsic value of options exercised		$ 4,320	$ 868
Grant date fair value of stock options that vested		$ 23	$ 89
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) | shares		611,000
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) | shares		707,000
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) | shares		306,000
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) | shares	4,600,000.0
Percentage of outstanding shares authorized to be repurchased	25.00%
Minimum purchase price authorized (in usd per share) | $ / shares	$ 1.00
Maximum purchase price authorized (in usd per share) | $ / shares	$ 500.00
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) | shares		3,100,000
Share Repurchase Programs
Stock Repurchase Plan
Number of shares of common stock purchased (in shares) | shares		400,000	400,000
Average purchase price per share (in usd per share) | $ / shares		$ 27.67	$ 25.10
Luxembourg Law Limitation
Stock Repurchase Plan
Capacity available to repurchase common stock under senior secured term loan (in dollars)		$ 141,000
Retained earnings
Share-Based Compensation
Cumulative effect of accounting changes				$ (9,715)
Retained earnings | Accounting Standards Update 2016-09
Share-Based Compensation
Cumulative effect of accounting changes						$ (932)

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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		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Number of options
Outstanding at the beginning of the period (in shares)	1,745,906
Granted (in shares)	260,697	0
Exercised (in shares)	(286,252)
Forfeited (in shares)	(96,734)
Outstanding at the end of the period (in shares)	1,623,617		1,745,906
Exercisable at the end of the period (in shares)	841,472
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)	24.95
Exercised (in usd per share)	9.14
Forfeited (in usd per share)	36.35
Outstanding at the end of the period (in usd per share)	30.55		$ 28.20
Exercisable at the end of the period (in usd per share)	$ 27.81
Weighted average contractual term
Weighted average contractual term	6 years 1 month 2 days		4 years 11 months 16 days
Exercisable at the end of the period	3 years 11 months 12 days
Aggregate intrinsic value
Aggregate intrinsic value, beginning balance (in dollars)	$ 10,202
Aggregate intrinsic value, ending balance (in dollars)	3,999		$ 10,202
Exercisable at the end of the period (in dollars)	$ 2,817
Black Scholes | Minimum
Aggregate intrinsic value
Risk-free interest rate (%)	2.66%
Expected stock price volatility (%)	70.31%
Expected dividend yield	0.00%
Expected option life (in years)	6 years
Fair value (in usd per share)	$ 16.17
Black Scholes | Maximum
Aggregate intrinsic value
Risk-free interest rate (%)	2.70%
Expected stock price volatility (%)	71.81%
Expected dividend yield	0.00%
Expected option life (in years)	6 years 3 months
Fair value (in usd per share)	$ 17.15
Binomial | Minimum
Aggregate intrinsic value
Risk-free interest rate (%)	1.65%
Expected stock price volatility (%)	71.81%
Expected dividend yield	0.00%
Expected option life (in years)	2 years 6 months 22 days
Fair value (in usd per share)	$ 15.58
Binomial | Maximum
Aggregate intrinsic value
Risk-free interest rate (%)	2.77%
Expected stock price volatility (%)	71.81%
Expected dividend yield	0.00%
Expected option life (in years)	4 years 3 months 26 days
Fair value (in usd per share)	$ 18.28

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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION RSU (Details)	3 Months Ended
	Mar. 31, 2018 $ / shares shares
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	$ 24.54
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)	254,619
Restricted shares and restricted share units forfeited/canceled (in shares)	(43,697)
Restricted shares and restricted share units outstanding, end of period (in shares)	567,431
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)	565,000
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%

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REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Schedule of revenue [Line Items]
Revenue	$ 197,438	$ 240,483
Revenue recognized that was included in contract liability at the beginning of the period	5,900
Service revenue
Schedule of revenue [Line Items]
Revenue	188,766	229,839
Reimbursable expenses
Schedule of revenue [Line Items]
Revenue	8,147	10,029
Non-controlling interests
Schedule of revenue [Line Items]
Revenue	$ 525	$ 615

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REVENUE REVENUE - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disaggregation of Revenue [Line Items]
Revenue	$ 197,438	$ 240,483
Revenue recognized when services are performed or assets are sold
Disaggregation of Revenue [Line Items]
Revenue	166,956
Revenue related to technology platforms and professional services
Disaggregation of Revenue [Line Items]
Revenue	22,335
Reimbursable expenses revenue
Disaggregation of Revenue [Line Items]
Revenue	8,147	10,029
Operating Segment | Mortgage Market
Disaggregation of Revenue [Line Items]
Revenue	167,338	204,723
Operating Segment | Mortgage Market | Servicer Solutions
Disaggregation of Revenue [Line Items]
Revenue	155,411
Operating Segment | Mortgage Market | Origination Solutions
Disaggregation of Revenue [Line Items]
Revenue	11,927
Operating Segment | Mortgage Market | Revenue recognized when services are performed or assets are sold
Disaggregation of Revenue [Line Items]
Revenue	138,721
Operating Segment | Mortgage Market | Revenue recognized when services are performed or assets are sold | Servicer Solutions
Disaggregation of Revenue [Line Items]
Revenue	129,536
Operating Segment | Mortgage Market | Revenue recognized when services are performed or assets are sold | Origination Solutions
Disaggregation of Revenue [Line Items]
Revenue	9,185
Operating Segment | Mortgage Market | Revenue related to technology platforms and professional services
Disaggregation of Revenue [Line Items]
Revenue	20,959
Operating Segment | Mortgage Market | Revenue related to technology platforms and professional services | Servicer Solutions
Disaggregation of Revenue [Line Items]
Revenue	18,273
Operating Segment | Mortgage Market | Revenue related to technology platforms and professional services | Origination Solutions
Disaggregation of Revenue [Line Items]
Revenue	2,686
Operating Segment | Mortgage Market | Reimbursable expenses revenue
Disaggregation of Revenue [Line Items]
Revenue	7,658
Operating Segment | Mortgage Market | Reimbursable expenses revenue | Servicer Solutions
Disaggregation of Revenue [Line Items]
Revenue	7,602
Operating Segment | Mortgage Market | Reimbursable expenses revenue | Origination Solutions
Disaggregation of Revenue [Line Items]
Revenue	56
Operating Segment | Real Estate Market
Disaggregation of Revenue [Line Items]
Revenue	15,280	20,063
Operating Segment | Real Estate Market | Consumer Real Estate Solutions
Disaggregation of Revenue [Line Items]
Revenue	1,407
Operating Segment | Real Estate Market | Real Estate Investor Solutions
Disaggregation of Revenue [Line Items]
Revenue	13,873
Operating Segment | Real Estate Market | Revenue recognized when services are performed or assets are sold
Disaggregation of Revenue [Line Items]
Revenue	14,803
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	1,405
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	13,398
Operating Segment | Real Estate Market | Revenue related to technology platforms and professional services
Disaggregation of Revenue [Line Items]
Revenue	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
Operating Segment | Real Estate Market | Revenue related to technology platforms and professional services | Real Estate Investor Solutions
Disaggregation of Revenue [Line Items]
Revenue	0
Operating Segment | Real Estate Market | Reimbursable expenses revenue
Disaggregation of Revenue [Line Items]
Revenue	477
Operating Segment | Real Estate Market | Reimbursable expenses revenue | Consumer Real Estate Solutions
Disaggregation of Revenue [Line Items]
Revenue	2
Operating Segment | Real Estate Market | Reimbursable expenses revenue | Real Estate Investor Solutions
Disaggregation of Revenue [Line Items]
Revenue	475
Other Businesses, Corporate and Eliminations
Disaggregation of Revenue [Line Items]
Revenue	14,820	$ 15,697
Other Businesses, Corporate and Eliminations | Revenue recognized when services are performed or assets are sold
Disaggregation of Revenue [Line Items]
Revenue	13,432
Other Businesses, Corporate and Eliminations | Revenue related to technology platforms and professional services
Disaggregation of Revenue [Line Items]
Revenue	1,376
Other Businesses, Corporate and Eliminations | Reimbursable expenses revenue
Disaggregation of Revenue [Line Items]
Revenue	$ 12

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COST OF REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cost of Revenue [Abstract]
Compensation and benefits	$ 54,866	$ 63,092
Outside fees and services	65,098	80,959
Cost of real estate sold	3,179	4,935
Technology and telecommunications	9,451	11,351
Reimbursable expenses	8,147	10,029
Depreciation and amortization	6,453	7,587
Cost of revenue	$ 147,194	$ 177,953

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Selling, General and Administrative Expense [Abstract]
Compensation and benefits	$ 13,569	$ 12,506
Occupancy related costs	8,434	10,273
Amortization of intangible assets	7,147	9,146
Marketing costs	3,607	4,269
Professional services	3,226	3,730
Depreciation and amortization	2,268	2,421
Other	4,873	5,356
Total	$ 43,124	$ 47,701

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OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Other Income and Expenses [Abstract]
Interest income	$ 131	$ 98
Other, net	1,141	617
Total	$ 1,272	$ 715

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share [Abstract]
Net (loss) income attributable to Altisource	$ (4,132)	$ 6,545
Weighted average common shares outstanding, basic (in shares)	17,378	18,662
Dilutive effect of stock options (in shares)	0	642
Weighted average common shares outstanding, diluted (in shares)	17,378	19,304
(Loss) earnings per share:
Basic (in usd per share)	$ (0.24)	$ 0.35
Diluted (in usd per share)	$ (0.24)	$ 0.34
Employee and non employee stock options
Anti-dilutive securities
Options excluded from the computation of diluted EPS (in shares)	300	400
Options, restricted shares and restricted share units issuable upon achievement of market and performance criteria
Anti-dilutive securities
Options excluded from the computation of diluted EPS (in shares)	600	200
Options, restricted shares and restricted share units excluded due to net loss [Member]
Anti-dilutive securities
Options excluded from the computation of diluted EPS (in shares)	500

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COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jun. 30, 2017
Concentration Risk
Revenue	$ 197,438	$ 240,483
Escrow and Trust Balances
Amounts held in escrow and trust accounts	$ 24,600		$ 35,100
Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	52.00%	59.00%
Highly Correlated - Ocwen | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Percentage of revenue from largest customer	8.00%
NRZ | Customer Concentration Risk | Revenue, Segment
Concentration Risk
Estimated percentage of revenue from largest customer	48.00%
Service revenue
Concentration Risk
Revenue	$ 188,766	$ 229,839
REALServicing | Service revenue | Ocwen
Concentration Risk
Revenue	$ 6,500	$ 7,000
NRZ | Ocwen
Concentration Risk
Non-government-sponsored enterprise servicing rights (approximate)				78.00%

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SEGMENT REPORTING (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) segment	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting [Abstract]
Number of reporting segments | segment	2
SEGMENT REPORTING
Revenue	$ 197,438	$ 240,483
Cost of revenue	147,194	177,953
Gross profit (loss)	50,244	62,530
Selling, general and administrative expenses	43,124	47,701
Income (loss) from operations	7,120	14,829
Total other income (expense), net	(12,092)	(5,083)
Income (loss) before income taxes and non-controlling interests	(4,972)	9,746
Total assets:
Total assets	831,773		$ 865,164
Operating Segment | Mortgage Market
SEGMENT REPORTING
Revenue	167,338	204,723
Cost of revenue	111,073	140,150
Gross profit (loss)	56,265	64,573
Selling, general and administrative expenses	23,374	28,682
Income (loss) from operations	32,891	35,891
Total other income (expense), net	16	10
Income (loss) before income taxes and non-controlling interests	32,907	35,901
Total assets:
Total assets	285,989		304,346
Operating Segment | Real Estate Market
SEGMENT REPORTING
Revenue	15,280	20,063
Cost of revenue	18,554	22,143
Gross profit (loss)	(3,274)	(2,080)
Selling, general and administrative expenses	4,118	4,325
Income (loss) from operations	(7,392)	(6,405)
Total other income (expense), net	2	0
Income (loss) before income taxes and non-controlling interests	(7,390)	(6,405)
Total assets:
Total assets	82,574		64,624
Other Businesses, Corporate and Eliminations
SEGMENT REPORTING
Revenue	14,820	15,697
Cost of revenue	17,567	15,660
Gross profit (loss)	(2,747)	37
Selling, general and administrative expenses	15,632	14,694
Income (loss) from operations	(18,379)	(14,657)
Total other income (expense), net	(12,110)	(5,093)
Income (loss) before income taxes and non-controlling interests	(30,489)	$ (19,750)
Total assets:
Total assets	$ 463,210		$ 496,194

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PREMISES AND EQUIPMENT, NET per country (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Premises & equipment, net
Premises and equipment, net	$ 65,585	$ 73,273
United States
Premises & equipment, net
Premises and equipment, net	40,068	46,268
Luxembourg
Premises & equipment, net
Premises and equipment, net	16,686	16,688
India
Premises & equipment, net
Premises and equipment, net	6,797	8,136
Philippines
Premises & equipment, net
Premises and equipment, net	1,916	2,038
Uruguay
Premises & equipment, net
Premises and equipment, net	$ 118	$ 143

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SUBSEQUENT EVENT SUBSEQUENT EVENT (Details)		3 Months Ended
	Apr. 03, 2018 USD ($)	Mar. 31, 2018	May 07, 2013 USD ($)
Senior secured term loan
Subsequent Event [Line Items]
Debt instrument, maturity date		December 2020
Debt instrument incremental increase in additional borrowings			$ 200,000,000.0
Adjusted Eurodollar Rate | Senior secured term loan
Subsequent Event [Line Items]
Reference rate		Adjusted Eurodollar Rate
Fixed interest rate base (as a percent)		1.00%
Interest rate margin (as a percent)		3.50%
Base Rate | Senior secured term loan
Subsequent Event [Line Items]
Reference rate		Base Rate
Fixed interest rate base (as a percent)		2.00%
Interest rate margin (as a percent)		2.50%
Maximum | Senior secured term loan
Subsequent Event [Line Items]
Leverage ratio to be maintained under the credit facility covenants		3.0
Minimum | Senior secured term loan
Subsequent Event [Line Items]
Leverage ratio to be maintained under the credit facility covenants		1.00
Subsequent Event | Senior secured term loan
Subsequent Event [Line Items]
Annual principal payment	$ 5,900,000
Subsequent Event | April 3, 2018 Credit Agreement
Subsequent Event [Line Items]
Net debt, reduction by marketable securities	75,000,000
Debt instrument incremental increase in additional borrowings	125,000,000
Subsequent Event | April 3, 2018 Credit Agreement | Revolving credit facility
Subsequent Event [Line Items]
Debt instrument, face amount	15,000,000
Debt instrument incremental increase in additional borrowings	80,000,000
Subsequent Event | April 3, 2018 Credit Agreement | Term B loans
Subsequent Event [Line Items]
Debt instrument, face amount	$ 412,000,000
Debt instrument, maturity date	April 2024
Term loan amortization, year one	$ 41,200,000
Term loan amortization, year two	41,200,000
Term loan amortization, subsequent to year two	12,400,000
Calendar year asset sales, mandatory repayments	$ 25,000,000
Subsequent Event | April 3, 2018 Credit Agreement | Adjusted Eurodollar Rate | Revolving credit facility
Subsequent Event [Line Items]
Reference rate	Eurodollar Rate
Interest rate margin (as a percent)	4.00%
Subsequent Event | April 3, 2018 Credit Agreement | Adjusted Eurodollar Rate | Term B loans
Subsequent Event [Line Items]
Reference rate	Adjusted Eurodollar Rate
Fixed interest rate base (as a percent)	1.00%
Interest rate margin (as a percent)	4.00%
Subsequent Event | April 3, 2018 Credit Agreement | Base Rate | Revolving credit facility
Subsequent Event [Line Items]
Reference rate	Base Rate
Interest rate margin (as a percent)	3.00%
Subsequent Event | April 3, 2018 Credit Agreement | Base Rate | Term B loans
Subsequent Event [Line Items]
Reference rate	Base Rate
Fixed interest rate base (as a percent)	2.00%
Interest rate margin (as a percent)	3.00%
Subsequent Event | April 3, 2018 Credit Agreement | Maximum | Term B loans
Subsequent Event [Line Items]
Leverage ratio to be maintained under the credit facility covenants	3.50
Subsequent Event | April 3, 2018 Credit Agreement | Minimum | Term B loans
Subsequent Event [Line Items]
Leverage ratio to be maintained under the credit facility covenants	1.00

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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