Rocket Companies experienced a decline in adjusted revenue to $885 million in the fourth quarter of 2023, down from approximately $1 billion in the third quarter, while also reporting a net loss for the full year. It's adjusted revenue for all of 2023 was $3.8 billion.
The company, which encompasses various entities including mortgage lending giant Rocket Mortgage, Rocket Homes, Rocket Loans, and Rocket Money, disclosed its financial performance on Thursday. Fourth-quarter results for the Detroit-based firm were improved from the $493 million loss in net income it reported during the fourth quarter last year.
Despite the increase in adjusted revenue for the fourth quarter, the full-year adjusted revenue dropped from just over $4.6 billion in 2022 to $3.77 billion in 2023. Rocket posted a full-year profit of $700 million in 2022. Rocket Companies reported an adjusted net loss of $143 million, or $0.07 per diluted share, for 2023 - a nearly $850 million swing.
“I’m so confident about our future and the collective impact we will make as a team, and the best part is that our journey is just beginning,” Varun Krishna, CEO and director of Rocket Companies, said during the company’s earnings call Thursday. “And we delivered strong fourth-quarter and full-year results against the backdrop of extreme market challenges as the industry faced persistent constraints in affordability and inventory.”
In terms of mortgage origination volume, Rocket Mortgage closed $17 billion in loans during the fourth quarter, contributing to a total of $78.7 billion for the full year, accompanied by an annual gain on sale margin of 2.63%. In the third quarter it did $22.2 billion in total originations, down 15% from $25.6 billion in the third quarter of 2022.
"We delivered these achievements in what was one of the worst quarters for mortgage origination in recent history," Chief Financial Officer and Treasurer Brian Brown said in a conference call Thursday evening.
The company witnessed a notable increase in market share for both purchases and refinances, with a 14% jump in purchase market share and a 10% increase in refinance market share from 2022 to 2023.
Krishna acknowledged the challenges faced in mortgage originations throughout 2023, emphasizing the company's achievements in market share growth. He expressed optimism for the upcoming year, highlighting the company's commitment to advancing its goal of "AI-fueled homeownership."
“Now previously, these bankers juggled note taking, filling out applications, remembering regulatory requirements all the while talking to our clients,” he said. “What the AI assistant does is it seamlessly and accurately automatically transcribes, summarizes and populates hundreds of crucial application fields, hands-free in real time. So our bankers are more productive than they've ever been. And they can now focus on what they do best, with AI handling the rest.”
Automated income verification is one AI-driven process that Rocket has already implemented.
“In December, nearly two-thirds of income verifications were automated without an underwriter needing to intervene,” Krishna said. “This provided a five-fold improvement compared to just 50 months prior here at Rocket.”
The company said it cut expenses in 2023 by nearly 20% through what it calls "technology-led productivity gains, prioritization efforts and organizational right-sizing."
