Rocket Cos., the Detroit-based fintech platform company that includes mortgage, real estate, and personal finance businesses, has announced full year 2023 net revenue and adjusted revenue of $3.8 billion.
For the full year of 2023, Rocket generated total revenue, net of $3.8 billion, and GAAP net loss of $390 million, or a loss of 15 cents per diluted share. The company also reported generated total adjusted revenue of $3.8 billion and adjusted net loss of $143 million, or an adjusted loss of 7 cents per diluted share.
Rocket Mortgage produced $78.7 billion in mortgage origination closed loan volume and gain on sale margin of 2.63 percent. Purchase market share grew by 14 percent, and refinance market share grew by 10 percent from 2022 to 2023.
Rocket achieved a disciplined and prudent approach to cost management, says Varun Krishna, CEO and director of Rocket Cos. After cutting nearly 25 percent of its cost base in 2022, Rocket further reduced expenses in 2023 by nearly 20 percent through technology-led productivity gains, prioritization efforts, and organizational rightsizing.
Rocket also reported fourth quarter 2023 net revenue of $694 million and adjusted revenue of $885 million.
“I’m proud of our team members for consistent execution amid one of the most challenging years for mortgage originations in three decades,” says Krishna. “We demonstrated accelerating year-over-year revenue growth in the (fourth) quarter, and positive adjusted EBITDA for the third quarter in a row. We once again made strides in market share, as our purchase and refinance share grew by double-digits in 2023.”
Rocket entered 2024 with momentum, and states it is well-positioned to fulfill its strategy of AI-fueled home ownership, says Krishna. AI is being deployed across the organization to deliver industry-best client experiences, with the aim to achieve scaled growth in market share, revenue, and profitability.
During the fourth quarter of 2023 Rocket generated total revenue, net of $694 million and GAAP net loss of $233 million, or a loss of 9 cents per diluted share. Generated total adjusted revenue of $885 million and adjusted net loss of $6 million, or an adjusted loss of 0 cents per diluted share.
Rocket Mortgage generated $17 billion in mortgage origination closed loan volume. The gain on sale margin was 2.68 percent, a 51-basis-point (bps) increase over the same period the prior year.
Total liquidity was approximately $9 as of Dec. 31, which includes $1.1 billion of cash on the balance sheet, and $2.5 billion of corporate cash used to self-fund loan originations, $3.4 billion of undrawn lines of credit, and $2.0 billion of undrawn MSR lines of credit.
The servicing portfolio unpaid principal balance, which includes subserviced loans, was $509 billion as of Dec. 31, which includes nearly 2.5 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 percent for the 12 months ended Dec. 31. There is a strong correlation between this metric and client lifetime value, says Krishna. He believes Rocket’s net client retention rate “is unmatched among mortgage companies and on par with some of the best performing subscription business models in the world.”
Automation and AI are helping to deliver higher accuracy and operational efficiency at scale in mortgage underwriting. In December, nearly two-thirds of income verifications were automated without an underwriter needing to intervene, a 5-fold improvement compared to 15 months prior. The technology has been extended to the company’s broker partners to further complement the offerings to help them grow their business with Rocket.
In 2023, Rocket facilitated 3.1 million servicing client interactions. Its servicing calls and chats are increasingly powered by AI, providing clients with conversational, self-service experiences 24/7.
Approximately 70 percent of Rocket’s servicing calls and chats are self-serve without the need of team member assistance, with escalation to team members reserved for instances requiring the human touch.
Rocket has seen a continuing trend of lower call volume in servicing, as its AI-powered digital experiences become the preferred choice for its clients.
Home equity loans and ONE+ and BUY+ were new products that Rocket introduced in 2023. They “resonated strongly” with new and existing clients, says Krishna. Notably, most clients who came to Rocket through ONE+ or BUY+ were new clients who did not already have a loan with Rocket.
On Jan. 4, Rocket named Jonathan Mildenhall as its first chief marketing officer (CMO) of Rocket Cos. Mildenhall was previously CMO at Airbnb. Prior to that, he spent eight years at Coca-Cola Co., and has 35 years of experience building consumer brands.
In his new role, Mildenhall will be responsible for reimagining the Rocket brand and creating a unified voice for businesses under the Rocket Cos. umbrella.
In the first quarter of 2024, Rocket expects adjusted revenue of between $925 million to $1,07 billion. Total available cash was $3.6 billion as of Dec. 31, which includes $1.1 billion of cash and cash equivalents, and $2.5 billion of corporate cash used to self-fund loan originations.
Additionally, Rocket has access to $3.4 billion of undrawn lines of credit, and $2 billion of undrawn MSR lines of credit from financing facilities, for a total liquidity position of $9 billion as of Dec. 31.
