Rocket Cos. Inc., a Detroit-based fintech platform company consisting of tech-driven real estate, mortgage, and financial services businesses, announced results for the second quarter (Q2) of 2022, which shows a net revenue drop from Q2 2021’s $2.7 billion to $1.4 billion, a loss that came with cost cuts.
Due to rising inflation in recent month, caused in part by overspending measures pushed by the Biden Administration, interest rates have risen steadily. In addition, many businesses are dealing with supply chain delays and a tight labor market.
“During this time of change in the industry, we are focused on operating our business with discipline. We reduced expenses by approximately $300 million during the second quarter and will continue to execute a prudent approach to cost management,” says Julie Booth, CFO and treasurer of Rocket Cos.
“We are also investing our capital into the Rocket engagement and services platforms to expand our client base, drive higher conversion, and lower our client acquisition cost, setting the foundation for our next stage of growth. We will continue to deploy our capital in a strategic and disciplined manner to generate long term shareholder value.”
The platforms net income dropped to $60 million from slightly more than $1 billion in Q2 2021. Adjusted revenue also took a significant hit, dropping to $25 million from $2.7 billion year-over-year. Both its adjusted net income and adjusted EBITDA fell into the negatives — losing $67 million compared to a $921 million gain and a $27 million loss compared to a $1.2 billion gain year-over-year, respectively.
Rocket Mortgage, the nation’s largest wholesale mortgage lender, saw closed loan originations fall from $83.7 billion to $34.5 billion, a drop of nearly $50 billion. Its gain on sale margin increased slightly from 2.78 percent to 2.92 percent.
During the quarter, Rocket Cos. unified more of its businesses under the Rocket brand. In August, Truebill will rebrand to Rocket Money, and Edison Financial — the Canadian digital mortgage broker — will rebrand to Rocket Mortgage in Canada.
Rocket Money, formerly known as Truebill, a showed strong growth. Paying premium members surpassed 2 million users in July, more than doubling year-over-year. Rocket Money launched its first credit card in beta in Q2 and has seen a very positive early response.
Rocket Mortgage’s net client retention rate was 93 percent in Q2 2022. There is a strong correlation between this metric and client lifetime value, and Rocket states its net client retention rate is “unmatched among mortgage companies and on par with some of the best performing subscription business models in the world.”
Rocket Homes grew overall real estate transactions by 25 percent from year-over-year, notching two record months in the quarter for closed units. Rocket Homes’ web traffic grew by nearly 60 percent, reaching nearly 3 million unique visitors per month.
Rocket Solar continued its national expansion in June and is now available in 42 metropolitan areas, including Arizona, Florida and South Carolina. Starting in August, Rocket Solar will be working with Rocket Loans to provide solar financing options for our clients.
In related news, Rocket Mortgage and Santander Bank, one of the country’s leading retail and commercial banks, today announced Rocket Mortgage as the exclusive preferred mortgage provider for Santander Bank customers.
Through this relationship, Santander’s clients will receive exclusive discounts and dedicated resources to help them achieve their dream of owning a home.
“At Santander, we place the customer at the center of our business, and I’m pleased to be working with Rocket to deliver a convenient and simplified digital mortgage experience for our customers,” says Patrick Smith, head of consumer and business banking at Santander Bank.
“Our relationship with Rocket Mortgage is another example of how Santander Bank is evolving our business and continuing to pursue opportunities for our customers to save, invest, and manage their money at Santander.”
In addition to dedicated resources provided for Santander clients, Rocket Mortgage will provide discounts on loan costs and closing costs with enhanced discounts for Santander private clients and employees who close loans within the program.
“This relationship between Rocket Mortgage and Santander is a perfect fit. Both companies are passionate about delivering exceptional client experiences,” says Bob Walters, CEO of Rocket Mortgage.
“Rocket has spent decades building industry-leading technology to make every step in the mortgage process easier. We’re excited to offer a world-class experience to Santander clients. This is just the beginning of what we believe will be a long relationship between our companies as we innovate together to develop more ways to delight our clients.”
Santander Bank has nearly 2 million clients, principally located in Massachusetts, New Hampshire, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, and Delaware.
Santander clients can visit santanderbank.com/mortgages to start the home loans process or learn more about this relationship.