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3Q A Solid Booster For Rocket Companies

David Krechevsky
Nov 04, 2021
Rocket Companies Logo

Revenue and earnings top analyst expectations; announces partnership with Salesforce

KEY TAKEAWAYS
  • The results were attributed in part to closed loan volume and gain-on-sale margin that topped the high end of expectations.

Rocket Companies, a Detroit-based holding company consisting of personal finance and consumer technology brands, today reported strong third-quarter earnings that beat the expectations of analysts.

Rocket, parent of Rocket Mortgage and Rocket Home, posted adjusted net income of $1.14 billion, or 57 cents per adjusted diluted share, exceeding the 48 cents per share predicted by analysts. It reported adjusted revenue of $3.2 billion, topping consensus estimates of $2.96 billion.

The results were attributed in part to closed loan volume and gain-on-sale margin that topped the high end of expectations. The company reported $88 billion in closed loan originations and a 3.05% gain-on-sale margin.

"We had an excellent third quarter, as we executed on our mission to remove friction from life's complex moments,” Rocket Companies Vice Chairman and CEO Jay Farner said. “Our core mortgage business exceeded the high end of guidance for closed loan volume and gain-on-sale margin, while achieving record purchase volume."

Farner said purchase volume grew 70% year over year, “driven by our focus on a superior, technology-driven client experience, product innovation and our integrated, end-to-end home buying ecosystem.”

"We also announced our exciting partnership with Salesforce to provide 'Mortgage as a Service' to financial institutions, leveraging Rocket Mortgage's transformational platform powered by Rocket technology,” he said.

Salesforce is an cloud-based software company based in San Francisco that provides customer relationship management services. The partnership extends Rocket Mortgage's technology to financial institution partners to process and manufacture mortgages.

Here are some other highlights of today’s earnings report:

  • Total revenue of $3.1 billion and adjusted revenue of $3.2 billion represent 96% and 76% growth as compared to the third quarter of 2019, the last full year before the COVID-19 pandemic.
  • Grew servicing book unpaid principal balance to $521 billion as of Sept. 30, up 30% from a year earlier 60% from Sept. 30, 2019. As of October 31, its servicing portfolio includes 2.5 million clients and generates $1.3 billion of recurring servicing fee income on an annualized basis.
  • Net client retention rate was 91% over the 12 months ended Sept. 30, 2021.
  • It’s Amrock division completed its 1 millionth digital closing in September, making it the first settlement services company to achieve this milestone, the company said.
  • In Q3 2021, Rocket Homes' agent referral network drove a record $2.3 billion real estate transaction value, representing the value of homes purchased and sold through its real estate agent network on 9,100 real estate transactions.
  • Rocket Auto, its automotive retail marketplace, generated over $530 million in gross merchandise value in the third quarter, a run rate of more than $2 billion annually. Also launched RocketAuto.com during the quarter and currently has nearly 400 inventory partners on the marketplace.
  • Testing of its new solar program began with a select set of clients, with millions of dollars of solar financing in process. Rocket said it plans to expand the solar business with the launch of a full-scale, public-facing solution, including financing through Rocket Loans, in the first half of 2022.
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