Rocket Companies is back in the green after hitting a rough patch in the past two quarters. According to first-quarter results, the parent company of Detroit-based lender, Rocket Mortgage, profited $291 million in the quarter on $1.38 billion in revenue, up from its $233 million net loss the previous quarter on $694 million in revenue.
“Our rocket blasted off as we entered the new year," said Rocket Companies CEO Varun Krishna on Thursday’s earnings call.
Rocket Mortgage increased its origination volume 19% from last year, generating $20.2 billion in total closed loan origination volume. Both purchase and refinance market share expanded, showing double-digit percentage growth on a year-over-year basis. On the earnings call, Krishna said Rocket took market share away from “large industry players and big banks.”
Earnings also show home equity loan volume grew in the first quarter more than 3.5 times over the same period last year, setting a new record.
Total liquidity was approximately $8.9 billion, as of March 31, 2024, which includes $0.9 billion 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 $2.0 billion of undrawn MSR lines of credit.
Krishna and CFO Brian Brown reported a strong first quarter performance with an adjusted diluted EPS of $0.04 and adjusted revenue of $1.163 billion. Gain on sale margin was 3.11%, a 72 bps increase from last year.
"Rocket entered 2024 with strong momentum,” said Krishna. “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.”
Rocket Companies is optimistic about leveraging industry trends and AI-powered innovations to enhance client experiences and operational efficiency. In the first quarter, Rocket unveiled a plethora of new technology products, including Rocket Logic, Rocket Logic Synopsis, Rocket Homes Explore Spaces, and Rocket Mortgage’s recent launch of a voice generative AI feature that enables clients to make instant modifications to their verified approval letters. Some of the AI-powered tools like Rocket Logic Assistant, Docs, and Synopsis have reduced manual work hours and improved loan processing times.
Looking ahead to the second quarter, Rocket Companies expects to capitalize on industry consolidation “in this fragmented winner-takes-all market,” Krishna said. While banks reduce mortgage lending operations, it presents an opportunity for potential partnerships to access a wider customer base.
The company also anticipates higher volumes overall, and projects adjusted revenue to be between $1.075 billion and $1.225 billion. Moving forward, Krishna stated AI and algorithmic intelligence investments are significant, and Rocket Companies is committed to "playing to win" in this space.
