Rocket Companies Announces Second Quarter 2023 Results

• Rocket Companies appoints Varun Krishna as Chief Executive Officer of Rocket Companies and Rocket Mortgage
• Generated Q2'23 net revenue of $1.236 billion and adjusted revenue of $1.002 billion. Adjusted revenue exceeded the high end of guidance range
• Reported net income of $139 million, or $0.05 per diluted share
• Anticipated annualized cost savings of $150 million to $200 million through prioritization and cost reduction measures, as part of ongoing company-wide focus on efficiency

DETROIT, Aug. 3, 2023 /PRNewswire/ -- Rocket Companies, Inc. (NYSE: RKT) ("Rocket Companies" or the "Company"), a Detroit-based fintech platform company consisting of tech-driven mortgage, real estate and financial services businesses – including Rocket Mortgage, Rocket Homes, Rocket Loans and Rocket Money – today announced results for the quarter ended June 30, 2023.

"Rocket's performance in the second quarter demonstrates the strength of our business and our commitment to delivering superior client service through innovation. In the second quarter, against the backdrop of housing affordability and inventory challenges, we reported adjusted revenue that exceeded the high end of our guidance range, and profitability on a net income and Adjusted EBITDA basis. These results are reflective of our continued focus on operating a growing and efficient business," said Bill Emerson, Interim CEO of Rocket Companies. "On behalf of the board, I am pleased to announce the appointment of Varun Krishna as Rocket Companies' next Chief Executive Officer. Varun brings a wealth of fintech leadership experience, most recently as Executive Vice President & General Manager of Intuit's Consumer Group, that will be instrumental in driving Rocket's future success."

Second Quarter 2023 Financial Highlights

• Generated total revenue, net of $1.236 billion and net income of $139 million, or $0.05 cents per diluted share. Generated total adjusted revenue of $1.002 billion and adjusted net loss of $33 million, or an adjusted loss of $0.02 cents per diluted share.
• Rocket Mortgage generated $22 billion in mortgage origination closed loan volume. Gain on sale margin was 2.67%. Rocket gained purchase market share in the quarter, both year-over-year and quarter-over-quarter.
• Total liquidity was approximately $8.6 billion, as of June 30, 2023, which includes $0.9 billion of cash on-hand, $2.9 billion of corporate cash used to self-fund loan originations, $3.1 billion of undrawn lines of credit, and $1.7 billion of undrawn MSR lines.
• Servicing book unpaid principal balance, which includes subserviced loans, was $504 billion at June 30, 2023. As of June 30, 2023, our servicing portfolio includes 2.4 million loans serviced. The portfolio generates approximately $1.4 billion of recurring servicing fee income on an annualized basis.
• Rocket Mortgage net client retention rate was 97% over the 12 months ended June 30, 2023. There is a strong correlation between this metric and client lifetime value. We believe our net client retention rate is unmatched among mortgage companies and on par with some of the best performing subscription business models in the world.

Company Highlights

• Rocket Mortgage was named #1 in the nation in J.D. Power's 2023 study for client satisfaction in mortgage servicing, the 9th year Rocket Mortgage has earned the accolade. The award is based on client feedback collected by the independent research firm. Rocket Mortgage has been awarded 21 J.D. Power awards in the last 13 years.
• In May, we introduced ONE+, a new 1% down home loan program that aims to increase access to homeownership for millions of low-to-moderate-income earning Americans. ONE+ is available to homebuyers purchasing single-family homes – including manufactured homes – whose income is equal to or less than 80 percent of their area median income.
• The number of Rocket Accounts grew to 29.3 million, as of June 30, 2023 – an increase of nearly 2 million compared to March 31, 2023. Rocket Accounts gives us valuable signals of home buying readiness and intent and we believe Rocket Account holders are more open to transacting with Rocket now or in the future.

Rocket Environmental, Social, Governance: For-More-Than-Profit

• In June, we published our 2022 ESG report, which highlights Rocket's commitment to being a For-More-Than-Profit organization and the positive impact we have had on our communities and environment. The report can be found on the Social Impact tab of our Investor Relations website.
• Rocket Mortgage held its fifth annual Rocket Mortgage Classic event from June 27 to July 2, 2023 at the Detroit Golf Club. Since 2019, the Rocket Mortgage Classic has raised nearly $7 million for local charitable organizations, including nearly $4 million for the "Changing the Course" Detroit digital inclusion effort.
• The Rock Family of Companies, which includes Rocket Companies, Bedrock and other related companies, announced that the organization's team members have now spent more than 1 million hours volunteering with more than 4,800 community organizations and nonprofits nationwide. Team members have participated in more than 150,000 volunteer events coordinated by the Rocket Community Fund, our partner company.

Recent Developments

• On July 31, Rocket Companies' Board of Directors announced the appointment of accomplished fintech executive Varun Krishna as the company's Chief Executive Officer, effective September 5, 2023. Krishna will succeed Bill Emerson, who has served as interim Chief Executive Officer since June 1, 2023. Emerson will continue in his interim role until Krishna joins the Company, and will remain on the Rocket Companies Board while also working with Krishna to ensure a smooth transition of leadership. Krishna has more than 20 years of experience building consumer platform strategies for leading global fintech companies. Most recently, Krishna served as Executive Vice President and General Manager, Consumer Group of Intuit, Inc., where he oversaw the organization's end-to-end suite of consumer and tax products and services, including TurboTax and TurboTax Live. During his tenure, TurboTax Live became the fastest growing product in Intuit's history. Prior to Intuit, Krishna served as Senior Director of Product at PayPal, where he managed the company's global consumer product team.
• On July 31, the Company announced that Bob Walters informed the Board of Directors of his intention to retire on September 5, when he will step down from his roles as CEO of Rocket Mortgage and as President and Chief Operating Officer of Rocket Companies. Varun Krishna will succeed Walters at that time as Rocket Mortgage CEO and Emerson will assume the roles of President and Chief Operating Officer for Rocket Companies.
• As part of ongoing company-wide focus on efficiency, Rocket Companies streamlined operations through prioritization efforts, cost reduction across expense categories, including a voluntary career transition program conducted in July, and reduction in other third-party costs. As a result of these actions, the Company expects cost savings in the range of $150 to $200 million on an annualized basis. The Company expects to incur a one-time charge of approximately $50 to $60 million related to the voluntary career transition program primarily in the third quarter.

Third Quarter 2023 Outlook
In Q3 2023, we expect adjusted revenue of between $850 million to $1.0 billion.

Direct to Consumer

In the Direct to Consumer segment, clients have the ability to interact with Rocket Mortgage online and/or with the Company's mortgage bankers. The Company markets to potential clients in this segment through various brand campaigns and performance marketing channels. The Direct to Consumer segment derives revenue from originating, closing, selling and servicing predominantly agency-conforming loans, which are pooled and sold to the secondary market. The segment also includes title insurance, appraisals and settlement services complementing the Company's end-to-end mortgage origination experience. Servicing activities are fully allocated to the Direct to Consumer segment and are viewed as an extension of the client experience. Servicing enables Rocket Mortgage to establish and maintain long term relationships with our clients, through multiple touchpoints at regular engagement intervals.

Partner Network

The Rocket Professional platform supports our Partner Network segment, where we leverage our superior client service and widely recognized brand to grow marketing and influencer relationships, and our mortgage broker partnerships through Rocket Pro TPO ("third party origination"). Our marketing partnerships consist of well-known consumer-focused companies that find value in our award-winning client experience and want to offer their clients mortgage solutions with our trusted, widely recognized brand. These organizations connect their clients directly to us through marketing channels and a referral process. Our influencer partnerships are typically with companies that employ licensed mortgage professionals that find value in our client experience, technology and efficient mortgage process, where mortgages may not be their primary offering. We also enable clients to start the mortgage process through the Rocket platform in the way that works best for them, including through a local mortgage broker.

Balance Sheet and Liquidity

We remain in a strong liquidity position, with total liquidity of $8.6 billion, which includes $0.9 billion of cash on-hand, $2.9 billion of corporate cash used to self-fund loan originations, a portion of which could be transferred to funding facilities (warehouse lines) at our discretion, $3.1 billion of undrawn lines of credit from financing facilities, and $1.7 billion of undrawn MSR lines. As of June 30, 2023 our available cash position was $3.8 billion, which includes cash on-hand and corporate cash used to self-fund loan originations, combined with the $6.4 billion of mortgage servicing rights, representing a total of $10.2 billion of asset value on our balance sheet. As of June 30, 2023, our total equity was $8.4 billion.

Second Quarter Earnings Call

Rocket Companies will host a live conference call at 4:30 p.m. ET on August 3, 2023 to discuss its results for the quarter ended June 30, 2023. A live webcast of the event will be available online by clicking on the "Investor Info" section of our website. The webcast will also be available via rocketcompanies.com.

A replay of the webcast will be available on the Investor Relations site following the conclusion of the event.