Rocket Companies, parent of Rocket Mortgage, raked in a profit, or net income, of $178 million on $1.3 billion in revenue in the second quarter, according to its earnings results released on Thursday, August 1.
Though Rocket’s earnings dipped slightly from the first quarter of 2024, ($291 million in net income on $1.38 billion revenue), it’s still an improvement from the second quarter of last year ($139 million in net income on $1.2 billion revenue).
Varun Krishna, CEO and Director of Rocket Companies, said he is impressed by the company’s second quarter earnings, marked by year-over-year growth in purchase market share and its ability to expand profitability.
“We, again, grew our purchase market share year-over-year by making continuous improvements across our processes, teams, marketing, and technology," Krishna said. "We also delivered year-over-year top-line growth for the fourth straight quarter and expanded profitability for the fifth quarter in a row."
Rocket Mortgage generated $24.7 billion in closed loan origination volume, a 10.4% increase over the same period of the prior year. Meanwhile, gain on sale margin in the second quarter came in at 2.99%, down slightly from the previous quarter but up 32 basis points from the second quarter last year.
Year to date, Rocket is in the black with $469 million in net income, compared to a loss of $272 million for the first half of 2023.
Rocket's TPO channel outpaced its direct-to-consumer (DTC) channel in growth and profitability in the second quarter. The partner network, Rocket Pro TPO, grew its loan volume by about 18% year-over-year to $11.3 billion, compared to a 5% increase for DTC to $13 billion. Year-to-date, the partner network grew by 18%, while DTC grew by 4%. The partner network's gain on sale margin rose from 0.93% to 1.59%, and its contribution margin surged 125% to $126 million. In contrast, DTC's margin increased from 3.67% to 4.14%, with a 45% rise in contribution margin to $375 million.
“We consider ourselves the most optimistic company in America,” Krishna added. “Every day, Rocket makes 30-year bets on people who make 30-year bets on themselves. With our AI-fueled homeownership strategy, and by helping our clients overcome obstacles to achieve their dreams, we are making the homeownership experience easier and more accessible for all.”
Total liquidity for the second quarter was $8.6 billion, which includes $1.3 billion of cash on the balance sheet; $1.9 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.
Servicing portfolio unpaid principal balance, which includes subserviced loans, was $534.6 billion or 2.6 million loans serviced as of June 30, 2024. The portfolio generates approximately $1.4 billion of recurring servicing fee income on an annualized basis.
Rocket acquired mortgage servicing right (MSR) portfolios in the second quarter for a total consideration of $315 million. The MSR acquisitions added $20.8 billion of unpaid principal balance of loans with a blended weighted average coupon higher than its current portfolio, providing “a compelling refinance opportunity when rates decline,” the earnings report stated.
