Workflow
Rocket Companies(RKT) - 2024 Q3 - Quarterly Results
RKTRocket Companies(RKT)2024-11-12 21:30

Financial Performance - Q3 2024 total revenue was 647million,withadjustedrevenueof647 million, with adjusted revenue of 1.323 billion, exceeding guidance[1] - GAAP net loss for Q3 2024 was 481million,or481 million, or 0.19 per diluted share, while adjusted net income was 166million,or166 million, or 0.08 per diluted share[1][6] - Adjusted EBITDA reached 286million,thehighestintwoyears,reflectingastrongoperationalperformance[1][2]−TotalrevenueforQ3−24reached286 million, the highest in two years, reflecting a strong operational performance[1][2] - Total revenue for Q3-24 reached 177 million, a 50% increase compared to 118millioninQ3−23[29]−ContributionmarginforQ3−24was118 million in Q3-23[29] - Contribution margin for Q3-24 was 112 million, significantly higher than 58millioninQ3−23,reflectingimprovedprofitability[29]−TotalU.S.GAAPRevenueforQ32024was58 million in Q3-23, reflecting improved profitability[29] - Total U.S. GAAP Revenue for Q3 2024 was 647 million, a decrease of 46% from 1,203millioninQ32023[36]−AdjustedrevenueforQ32024was1,203 million in Q3 2023[36] - Adjusted revenue for Q3 2024 was 1,323 million, up 32% from 1,002millioninQ32023[37]−ContributionmarginforQ32024was1,002 million in Q3 2023[37] - Contribution margin for Q3 2024 was 622 million, compared to 367millioninQ32023,reflectinganincreaseof69367 million in Q3 2023, reflecting an increase of 69%[36] - Total U.S. GAAP Revenue for the nine months ended September 30, 2024, was 3,331 million, a decrease of 8% from 3,105millioninthesameperiodof2023[36]−AdjustedrevenuefortheninemonthsendedSeptember30,2024,was3,105 million in the same period of 2023[36] - Adjusted revenue for the nine months ended September 30, 2024, was 3,714 million, an increase of 29% from 2,886millioninthesameperiodof2023[37]−AdjustednetincomeforQ32024was2,886 million in the same period of 2023[37] - Adjusted net income for Q3 2024 was 166 million, compared to 7millioninQ32023[38]−AdjusteddilutedearningspershareforQ32024was7 million in Q3 2023[38] - Adjusted diluted earnings per share for Q3 2024 was 0.08, compared to 0.00inQ32023[43]LoanOriginationandServicing−Closedloanoriginationvolumewas0.00 in Q3 2023[43] Loan Origination and Servicing - Closed loan origination volume was 28.5 billion, a 28% increase year-over-year, and net rate lock volume was 29.8billion,a4329.8 billion, a 43% increase[6][7] - The servicing portfolio's unpaid principal balance was 546.1 billion, generating approximately 1.5billioninannualrecurringservicingfeeincome[8]−ThecompanyacquiredMSRportfoliostotaling1.5 billion in annual recurring servicing fee income[8] - The company acquired MSR portfolios totaling 311 million, adding 22.4billioninunpaidprincipalbalance,representinga1522.4 billion in unpaid principal balance, representing a 15% increase from the 2023 year-end balance[9] - Sold loan volume for Q3-24 was 12,405 million, up 20.7% from 10,278millioninQ3−23[29]LiquidityandAssets−TotalliquidityasofSeptember30,2024,was10,278 million in Q3-23[29] Liquidity and Assets - Total liquidity as of September 30, 2024, was 8.3 billion, including 1.2billionincash[7]−TotalavailablecashasofSeptember30,2024,was1.2 billion in cash[7] - Total available cash as of September 30, 2024, was 3.0 billion, with total liquidity position at 8.3billion[30]−Fundingfacilitiesincreasedto8.3 billion[30] - Funding facilities increased to 8,499 million as of September 30, 2024, compared to 3,367millionattheendof2023[35]−TotalassetsasofSeptember30,2024,were3,367 million at the end of 2023[35] - Total assets as of September 30, 2024, were 25,118 million, up from 19,231millionattheendof2023[35]MarketPositionandRatings−FitchRatingsupgradedRocketMortgageto′BBB−′,markingitasthefirstnon−bankmortgagecompanytoachieveaninvestment−graderatingfromamajorcreditratingagencyinnearlytwodecades[12]−RocketCompanieshasbeenranked1inclientsatisfactionforprimarymortgageoriginationandmortgageservicingbyJ.D.Poweratotalof22times[56]FutureOutlook−InQ42024,thecompanyexpectsadjustedrevenuebetween19,231 million at the end of 2023[35] Market Position and Ratings - Fitch Ratings upgraded Rocket Mortgage to 'BBB-', marking it as the first non-bank mortgage company to achieve an investment-grade rating from a major credit rating agency in nearly two decades[12] - Rocket Companies has been ranked 1 in client satisfaction for primary mortgage origination and mortgage servicing by J.D. Power a total of 22 times[56] Future Outlook - In Q4 2024, the company expects adjusted revenue between 1.05 billion to 1.2billion[25]−Forward−lookingstatementsreflectmanagement′sexpectationsbutaresubjecttorisksanduncertaintiesthatcouldmateriallyaffectfutureresults[54]Non−GAAPFinancialMeasures−Adjustedrevenueisdefinedastotalrevenuesnetofthechangeinfairvalueofmortgageservicingrights(MSRs)duetovaluationassumptions,netofhedges[48]−Adjustednetincome(loss)excludesshare−basedcompensationexpenseandthechangeinfairvalueofMSRs,resultinginaclearerviewofoperationalperformance[48]−AdjustedEBITDAincludesinterestexpenseonfundingfacilities,reflectingdirectcostsdrivenbyloanoriginationvolume[49]−ThecompanydoesnotprovideaquantitativereconciliationofadjustedrevenuetoGAAPmeasuresduetotheunpredictabilityoffutureuncertainties[53]−Thedefinitionsofnon−GAAPfinancialmeasuresallowfortheadditionofcertaincashandnon−cashcharges,butthesemeasureshavelimitationsandshouldnotbeviewedinisolation[51]−Thecompanyemphasizesthatitsnon−GAAPfinancialmeasuresdonotrepresentdiscretionarycashavailableforbusinessgrowthorobligations[52]OperationalPerformance−ThechangeinfairvalueofMSRsduetovaluationassumptionsforQ32024was1.2 billion[25] - Forward-looking statements reflect management's expectations but are subject to risks and uncertainties that could materially affect future results[54] Non-GAAP Financial Measures - Adjusted revenue is defined as total revenues net of the change in fair value of mortgage servicing rights (MSRs) due to valuation assumptions, net of hedges[48] - Adjusted net income (loss) excludes share-based compensation expense and the change in fair value of MSRs, resulting in a clearer view of operational performance[48] - Adjusted EBITDA includes interest expense on funding facilities, reflecting direct costs driven by loan origination volume[49] - The company does not provide a quantitative reconciliation of adjusted revenue to GAAP measures due to the unpredictability of future uncertainties[53] - The definitions of non-GAAP financial measures allow for the addition of certain cash and non-cash charges, but these measures have limitations and should not be viewed in isolation[51] - The company emphasizes that its non-GAAP financial measures do not represent discretionary cash available for business growth or obligations[52] Operational Performance - The change in fair value of MSRs due to valuation assumptions for Q3 2024 was 676 million, compared to a loss of $201 million in Q3 2023[38] - The effective income tax rate for the three and nine months ended September 30, 2024, was 24.40%[39] - Rocket Companies operates various brands including Rocket Mortgage, Rocket Homes, and Rocket Loans, enhancing its fintech platform presence[55] - The company processes over 65 million call logs annually and manages 10 petabytes of data, positioning itself as a leader in AI-fueled homeownership[56]