Rocket Companies Inc., parent of Rocket Mortgage, saw its profits fall 94% in the second quarter as the housing market continues to contract due to rising mortgage rates and shrinking home affordability.
Rocket, the nation’s largest lender by volume, on Thursday reported net income in the second quarter of 2022 of $60 million, or 2 cents per diluted share, down 94% from both the first quarter and the second quarter of last year.
Net revenue in the quarter was $1.39 billion, down 48% from both the first quarter and the second quarter last year.
Mortgage origination volume fell dramatically, totaling $34.5 billion in the second quarter, down 59% year over year. Net rate lock volume fell just as significantly, dropping 65% to $29.4 billion in the quarter compared to $83.6 billion a year earlier.
"As the mortgage market continues to transition, we are actively investing in our business and transforming the Rocket services and engagement platforms to better serve our clients," said Jay Farner, vice chairman & CEO of Rocket Companies. "In the second quarter alone, Rocket Companies introduced new lending programs, forged new mortgage partnerships, officially launched our solar business, and expanded our brand deeper into Canada. These moves provide us immediate opportunities today, and a tremendous runway for growth and expansion well into the future."
Still, the company was forced to significantly reduce expenses, which included offering a buyout to employees in April in a bid to cut its workforce by 8%. Company officials have not said how many employees accepted the buyout.
During an earnings call with analysts on Thursday, Chief Financial Officer Julie Booth said the company had reduced expenses by approximately $300 million in the quarter, and expects to cut as much as $150 million in the third quarter.
"During this time of change in the industry, we are focused on operating our business with discipline,” Booth said, adding that Rocket “will continue to execute a prudent approach to cost management."
Rocket Companies Inc. is a Detroit-based FinTech platform company consisting of tech-driven real estate, mortgage, and financial services businesses -– including not just Rocket Mortgage but also Rocket Homes, Rocket Money (formerly known as Truebill), and Rocket Auto.
Farner said Rocket Money, formerly known as Truebill – a leading personal finance app the company acquired in December – again “showed impressive growth. Paying premium members surpassed 2 million users in July, more than doubling year-over-year.”
Rocket Money also launched its first credit card in beta in the second quarter, “and has seen a very positive early response,” he said.
In July, Rocket Mortgage signed an agreement to originate mortgages for global financial company Santander. Rocket said that, under the agreement, Santander will offer Rocket Mortgage to its nearly 2 million U.S. clients.
Also in July, Rocket Mortgage said, it signed a new partnership with Q2, a banking platform that provides digital-banking applications to over 500 financial institutions. “Through the Q2 banking platform partnership, Rocket Mortgage will enable regional banks and credit unions to offer mortgages -- without the need to manage their own mortgage operations,” the company said.
