Rocket Cos., a Detroit-based fintech platform company including mortgage, real estate, and personal finance businesses, has announced total net revenue of $1.4 billion and adjusted revenue of $1.2 billion, exceeding year-over-year growth for the third quarter in a row.
“Rocket entered 2024 with strong momentum,” says Varun Krishna, CEO of Rocket Cos. “I’m incredibly proud of our team’s performance in Q1, as we accelerated top-line growth for the third straight quarter and achieved our highest profitability in two years. Once again, we expanded both our purchase and refinance market share, through a combination of innovation, technology, process enhancements and strong execution.”
The numbers were achieved despite rapidly changing market conditions. Rocket officials say it has a “tremendous opportunity ahead to serve our clients.” The homeownership space is big, fragmented, “and ripe for modernization. Rocket is uniquely poised to leverage AI and drive transformative experiences in service of our mission to help everyone home.”
Rocket reported generated total net revenue of $1.4 billion and GAAP net income of $291 million, or 11 cents per diluted share and generated total adjusted revenue of $1.2 billion and adjusted net income of $84 million, or adjusted earnings of 4 cents per diluted share.
Rocket Mortgage generated $20.2 billion in closed loan origination volume, a 19 percent increase over the same period the prior year. The gain on sale margin was 3.11 percent, a 72-bps increase over the same period the prior year.
Total liquidity was approximately $8.9 billion, as of March 31, which includes $900 million of cash on the balance sheet, and $2.6 billion of corporate cash used to self-fund loan originations, $3.4 billion of undrawn lines of credit, and $2 billion of undrawn MSR lines of credit.
Rocket reported it serviced portfolio unpaid principal balance, which includes subserviced loans, was $511 billion or 2.5 million loans serviced as of March 31. The portfolio generates approximately $1.4 billion of recurring servicing fee income on an annualized basis. Rocket acquired one Mortgage Servicing Rights (MSRs) portfolio in March and three MSR portfolios in April, for total consideration of $110 million. The MSR acquisitions added $8.2 billion of unpaid principal balance for loans with a blended weighted average coupon above that of our current portfolio, providing a compelling refinance opportunity when rates decline.
Rocket reported total available cash was $3.5 billion as of March 31. This includes $900 million of cash and cash equivalents, and $2.6 billion of corporate cash used to self-fund loan originations. The company also has access to $3.4 billion of undrawn lines of credit, and $2.0 billion of undrawn MSR lines of credit from financing facilities, for a total liquidity position of $8.9 billion as of March 31.
Rocket reported it again gained market share during the quarter. Both purchase and refinance market share expanded, showing double-digit percentage growth on a year-over-year basis.
According to Rocket, its home equity loan product continues to fill a need in the market and resonate strongly with clients, offering a solution for those who may want to tap into their home’s equity without affecting the lower rate on their first lien mortgage. In Q1, home equity loan volume grew more than 3.5 times over the same period last year, setting a record.
In April, Rocket Mortgage unveiled Rocket Logic, a patented AI-driven technology platform. Rocket Logic powers our front-facing client interactions and back-end processing, and currently includes capabilities such as Rocket Logic Docs, its intelligent document processing platform; Rocket Logic Assistant, the company’s virtual assistant supporting team members for client interactions; and Rocket Logic Synopsis, our centralized client repository.
Rocket anticipates Rocket Logic’s automation capabilities will yield savings of over 170,000 team member hours annually. Notably, we have observed a 25 percent decrease in turn times from August 2022 to February 2024, contributing significantly to our ability to process loans nearly 2.5 times faster than the industry.
Rocket Mortgage also announced Rocket Logic Synopsis, a tool used by our client-facing team members across mortgage banking, TPO, client operations and servicing. With AI doing the work behind the scenes, Rocket Logic Synopsis transcribes and tags client interactions, and logs client preferences for communication method, time to be contacted, call purpose, sentiment and more. Our teams engage in 65 million client calls annually, and Synopsis captures and organizes this invaluable data to construct unified client profiles in a centralized repository and to enhance client personalization.
The company also unveiled a pilot for a voice generative AI feature that enables clients to make instant modifications to their verified approval letters by simply using their voice, giving clients a meaningful edge in today’s fast-paced and competitive housing market. Traditionally, clients would contact their mortgage banker to request adjustments, resulting in nearly 300,000 manual requests handled by our bankers and underwriters annually. This new feature is an industry-first, empowering our clients to take control of the process and complete modifications within minutes.
