- Generated Q1'23 net revenue of $666
million and adjusted revenue of $882
million. Adjusted revenue exceeded the high end of guidance
range
- Reached 27.6 million Rocket Accounts1 across our
ecosystem, as of March 31, 2023
- Launched BUY+ and SELL+ purchase initiative, a collaboration
between Rocket Homes and Rocket Mortgage, to help homebuyers and
homeowners transact with ease
- Unveiled Rocket Visa Signature Credit Card, the first credit
card designed to make home buying more accessible and homeownership
easier through everyday spending
- As previously announced on February 13,
2023, Bill Emerson, Board
Director of Rocket Companies and Vice Chairman of Rock Holdings,
has been appointed to serve as interim CEO effective June 1
DETROIT, May 4, 2023
/PRNewswire/ -- Rocket Companies, Inc. (NYSE: RKT) ("Rocket
Companies" or the "Company"), a Detroit-based fintech platform company
consisting of tech-driven mortgage, real estate and financial
services businesses – including Rocket Mortgage, Rocket Homes,
Rocket Loans and Rocket Money – today announced results for the
quarter ended March 31, 2023.
"Rocket delivered solid results in the first quarter in the
backdrop of an uncertain macro environment. Adjusted revenue
exceeded the top end of our guidance, driven by healthy client
demand and strong execution," said Jay
Farner, CEO of Rocket Companies, "Our purchase pipeline has
been growing in the second quarter, but constrained housing
inventory and affordability still present challenges. To help
our clients in this market, we recently launched BUY+ and SELL+, a
collaboration between Rocket Homes and Rocket Mortgage, and
unveiled our new Rocket Visa Signature Credit Card, a loyalty
program card. These initiatives, along with Rocket Rewards, provide
our clients with tangible value and an experience that can only be
realized through Rocket. We believe our ability to provide a
superior, differentiated client value proposition will drive growth
in our purchase market share, revenue and profitability."
First Quarter
2023 Financial Summary2
|
|
ROCKET
COMPANIES
($ amounts in millions,
except per share)
|
|
|
Q1-23
|
|
Q1-22
|
|
(Unaudited)
|
Total revenue,
net
|
$
666
|
|
$
2,671
|
Total
expenses
|
$
1,082
|
|
$
1,608
|
GAAP Net (Loss)
Income
|
$
(411)
|
|
$
1,037
|
|
|
|
|
Adjusted
Revenue
|
$
882
|
|
$
1,931
|
Adjusted Net (Loss)
Income
|
$
(111)
|
|
$
293
|
Adjusted
EBITDA
|
$
(79)
|
|
$
450
|
|
|
|
|
GAAP Diluted (Loss)
Earnings Per Share
|
$
(0.16)
|
|
$
0.40
|
Adjusted Diluted (Loss)
Earnings Per Share
|
$
(0.06)
|
|
$
0.15
|
|
|
(Units in '000s, $
amounts in millions)
|
|
|
|
Q1-23
|
|
Q1-22
|
Select
Metrics
|
|
(Unaudited)
|
Closed loan origination
volume
|
|
$
16,929
|
|
$
53,977
|
Gain on sale
margin
|
|
2.39 %
|
|
3.01 %
|
Net rate lock
volume
|
|
$
19,535
|
|
$
49,614
|
Amrock closings
(units)
|
|
35.9
|
|
168.3
|
First Quarter 2023 Financial Highlights
- Generated total revenue, net of $666
million and net loss of $411
million, or a loss of $0.16
cents per diluted share. Generated total adjusted revenue of
$882 million and adjusted net loss of
$111 million, or an adjusted loss of
$0.06 cents per diluted share.
- Rocket Mortgage generated $17
billion in mortgage origination closed loan volume. Gain on
sale margin was 2.39%.
- Total liquidity was approximately $8.1
billion, as of March 31, 2023,
which includes $0.9 billion of cash
on-hand, $2.4 billion of corporate
cash used to self-fund loan originations, $3.1 billion of undrawn lines of credit, and
$1.7 billion of undrawn MSR
lines.
- Servicing book unpaid principal balance was $524.8 billion at March
31, 2023. As of March 31,
2023, our servicing portfolio includes 2.5 million clients
and generates approximately $1.5
billion of recurring servicing fee income on an annualized
basis.
- Rocket Mortgage net client retention rate was 96% over the 12
months ended March 31, 2023. There is
a strong correlation between this metric and client lifetime value,
and we believe our net client retention rate is unmatched among
mortgage companies and on par with some of the best performing
subscription business models in the world.
Company Highlights
- In April, we introduced BUY+ and SELL+, a collaboration between
Rocket Mortgage and Rocket Homes, our proprietary home search
platform and real estate agent referral network business. With
BUY+, purchase clients can save thousands of dollars in upfront
costs if they work with a Rocket Homes Partner Real Estate Agent
and obtain financing with Rocket Mortgage. With SELL+, sellers
listing their home for sale with a Rocket Homes Verified Partner
Agent will receive a rebate check for 1% of the sale price from
Rocket Homes after closing. If a homeowner is buying and selling,
they can use both BUY+ and SELL+ to increase their savings.
- In April, we unveiled the Rocket Visa Signature Credit Card,
the first credit card that makes home buying more accessible and
homeownership easier through everyday spending. With the Rocket
Signature Card, our clients can earn 5% back to lower closing costs
and down payments by thousands of dollars, helping to address some
of the most significant hurdles to purchasing a home. The Rocket
Signature Card is linked to our Rocket Rewards loyalty program and
designed to appeal to first time home buyers and existing
homeowners who are in the market to buy, helping us reach them
earlier in the purchase life cycle.
- Rocket Mortgage purchase net promoter scores (NPS) reached
all-time highs of 75 for retail clients and 53 for real estate
agents in the first quarter, meaning clients and agents recommend
Rocket highly as a lender. This achievement is due to our ongoing
technology and data investments and process improvements. An NPS
above 50 is generally considered excellent.
- As of March 31, 2023, Rocket
Accounts reached 27.6 million total accounts. Rocket Accounts is an
important metric as it represents clients who have taken the action
to create an account with us and with whom we may have visibility
on credit worthiness, spending behavior, finances, home buying
intent and more. Through these deeper, data-driven insights, we are
able to deliver richer and more personalized experiences to Rocket
Account holders and build ongoing relationships with them.
- In March, Rocket Mortgage became the first national lender to
offer Freddie Mac's BorrowSmart AccessSM program. The
program offers a $3,000 credit for
first time homebuyers to use toward their down payment, helping to
lower a significant hurdle to homeownership, especially to
underserved communities. First time homebuyers can use BorrowSmart
AccessSM if they are purchasing a home in several
counties across 10 metro areas – Atlanta; Chicago; Detroit; El
Paso; Houston; McAllen, Texas; Memphis; Miami; Philadelphia and St.
Louis.
- As previously announced on February 13,
2023, Bill Emerson, Board
Director of Rocket Companies and Vice Chairman of Rock Holdings,
has been appointed to serve as interim CEO effective June 1. The Board of Directors has commenced a
search for a permanent Chief Executive Officer and has retained a
leading firm to support its evaluation of internal and external
candidates.
Rocket Environmental, Social, Governance:
For-More-Than-Profit
- In March, we announced that the fourth annual Rocket Mortgage
Classic, Rocket Mortgage's flagship PGA tournament held in
Detroit, raised $1.6 million in 2022 to support local
Detroit nonprofits. Since 2019,
the Rocket Mortgage Classic has raised nearly $7 million for local charitable organizations,
including nearly $4 million for the
"Changing the Course" Detroit
digital inclusion effort. The fifth annual Rocket Mortgage Classic
event will be held at the Detroit Golf Club from June 27 to July 2, 2023.
- In February, the Rocket Community Fund, the philanthropic
partner of Rocket Companies, announced a collaboration with
Partnership for Southern Equity and Atlanta BeltLine Partnership to
launch the Neighbor to Neighbor program in Atlanta. Neighbor to Neighbor is a
door-to-door outreach program that aims to help over 20,000
families achieve housing stability.
- The Rocket Community Fund, the Rocket Mortgage Classic, and
partner Connect 313 reached a key milestone in their efforts to
bridge the digital divide in Detroit. The Affordable Connectivity Program
enrolled over 100,000 households to provide subsidized internet
access for income-qualified families. This marks the highest rate
of enrollment for cities with more than 150,000 households.
Second Quarter 2023 Outlook
In Q2 2023, we expect
adjusted revenue of between $850
million to $1 billion.
Direct to Consumer
In the Direct to Consumer segment, clients have the ability to
interact with Rocket Mortgage online and/or with the Company's
mortgage bankers. The Company markets to potential clients in this
segment through various brand campaigns and performance marketing
channels. The Direct to Consumer segment derives revenue from
originating, closing, selling and servicing predominantly
agency-conforming loans, which are pooled and sold to the secondary
market. The segment also includes title insurance, appraisals and
settlement services complementing the Company's end-to-end mortgage
origination experience. Servicing activities are fully allocated to
the Direct to Consumer segment and are viewed as an extension of
the client experience. Servicing enables Rocket Mortgage to
establish and maintain long term relationships with our clients,
through multiple touchpoints at regular engagement intervals.
DIRECT TO
CONSUMER3
($ amounts in
millions)
|
|
|
Q1-23
|
|
Q1-22
|
|
(Unaudited)
|
Sold loan
volume
|
$
8,811
|
|
$
36,165
|
Sold loan gain on sale
margin
|
3.71 %
|
|
4.00 %
|
Revenue, net
|
$
495
|
|
$
2,235
|
Adjusted
Revenue
|
$
711
|
|
$
1,496
|
Contribution
margin
|
$
206
|
|
$
626
|
Partner Network
The Rocket Professional platform supports our Partner Network
segment, where we leverage our superior client service and widely
recognized brand to grow marketing and influencer relationships,
and our mortgage broker partnerships through Rocket Pro TPO ("third
party origination"). Our marketing partnerships consist of
well-known consumer-focused companies that find value in our
award-winning client experience and want to offer their clients
mortgage solutions with our trusted, widely recognized brand. These
organizations connect their clients directly to us through
marketing channels and a referral process. Our influencer
partnerships are typically with companies that employ licensed
mortgage professionals that find value in our client experience,
technology and efficient mortgage process, where mortgages may not
be their primary offering. We also enable clients to start the
mortgage process through the Rocket platform in the way that works
best for them, including through a local mortgage broker.
PARTNER
NETWORK3
($ amounts in
millions)
|
|
|
Q1-23
|
|
Q1-22
|
|
(Unaudited)
|
Sold loan
volume
|
$
6,584
|
|
$
26,033
|
Sold loan gain on sale
margin
|
0.83 %
|
|
0.91 %
|
Revenue, net
|
$
91
|
|
$
292
|
Adjusted
Revenue
|
$
91
|
|
$
292
|
Contribution
margin
|
$
26
|
|
$
172
|
Balance Sheet and Liquidity
We remain in a strong liquidity position, with total liquidity
of $8.1 billion, which includes
$0.9 billion of cash on-hand,
$2.4 billion of corporate cash used
to self-fund loan originations, a portion of which could be
transferred to funding facilities (warehouse lines) at our
discretion, $3.1 billion of
undrawn lines of credit from financing facilities, and $1.7 billion of undrawn MSR lines. As of
March 31, 2023 our available cash
position was $3.3 billion, which
includes cash on-hand and corporate cash used to self-fund loan
originations, combined with the $6.7
billion of mortgage servicing rights, representing a total
of $9.9 billion of asset value
on our balance sheet. As of March 31,
2023, our total equity was $8.1
billion.
BALANCE SHEET
HIGHLIGHTS
($ amounts in
millions)
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
(Unaudited)
|
|
|
Cash and cash
equivalents
|
$
893
|
|
$
722
|
Mortgage servicing
rights ("MSRs"), at fair value
|
$
6,670
|
|
$
6,947
|
Funding
facilities
|
$
5,236
|
|
$
3,549
|
Other financing
facilities and debt
|
$
4,453
|
|
$
4,701
|
Total equity
|
$
8,109
|
|
$
8,476
|
First Quarter Earnings Call
Rocket Companies will host a live conference call at
4:30 p.m. ET on May 4, 2023 to discuss its results for the
quarter ended March 31, 2023. A live
webcast of the event will be available online by clicking on the
"Investor Info" section of our website. The webcast will also be
available via rocketcompanies.com.
A replay of the webcast will be available on the Investor
Relations site following the conclusion of the event.
_______________
1 A Rocket Account holder is defined as a consumer who
opens an account with any of our Rocket services, including Rocket
Money. Each Rocket Account holder has unique account credentials
across collective Rocket services through our single sign-on
solution. A Rocket Account holder continues to be counted as one
unless they delete or request that we remove their account
information.
2 "GAAP" stands for Generally Accepted Accounting
Principles in the U.S. Please see the sections of this document
titled "Non-GAAP Financial Measures" and "GAAP to non-GAAP
Reconciliations" for more information on the Company's non-GAAP
measures and its share count. Certain figures in the tables
throughout this document may not foot due to rounding.
3 We measure the performance of the Direct to
Consumer and Partner Network segments primarily on a contribution
margin basis. Contribution margin is intended to measure the direct
profitability of each segment and is calculated as Adjusted Revenue
less directly attributable expenses. Directly attributable expenses
include salaries, commissions and team member benefits, general and
administrative expenses, and other expenses, such as direct
servicing costs and origination costs. A loan is considered "sold"
when it is sold to investors on the secondary market. See "Summary
Segment Results" section later in this document and the footnote on
"Segments" in the "Notes to Consolidated Financial Statements" in
the Company's forthcoming filing on Form 10-Q for more
information.
Condensed
Consolidated Statements of Income (Loss)
($ In Thousands,
Except Shares and Per Share Amounts)
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
(Unaudited)
|
Revenue
|
|
|
|
Gain on sale of
loans
|
|
|
|
Gain on sale of loans
excluding fair value of MSRs, net
|
$
265,003
|
|
$
687,170
|
Fair value of
originated MSRs
|
204,560
|
|
796,616
|
Gain on sale of loans,
net
|
469,563
|
|
1,483,786
|
Loan servicing
(loss) income
|
|
|
|
Servicing fee
income
|
366,385
|
|
366,214
|
Change in fair value
of MSRs
|
(398,279)
|
|
454,380
|
Loan servicing (loss)
income, net
|
(31,894)
|
|
820,594
|
Interest
income
|
|
|
|
Interest
income
|
66,744
|
|
90,540
|
Interest expense on
funding facilities
|
(29,060)
|
|
(41,696)
|
Interest income,
net
|
37,684
|
|
48,844
|
Other
income
|
190,715
|
|
317,372
|
Total revenue,
net
|
666,068
|
|
2,670,596
|
Expenses
|
|
|
|
Salaries, commissions
and team member benefits
|
603,775
|
|
853,915
|
General and
administrative expenses
|
195,390
|
|
275,857
|
Marketing and
advertising expenses
|
181,604
|
|
328,058
|
Depreciation and
amortization
|
30,685
|
|
21,042
|
Interest and
amortization expense on non-funding debt
|
38,333
|
|
38,664
|
Other
expenses
|
32,268
|
|
90,603
|
Total
expenses
|
1,082,055
|
|
1,608,139
|
(Loss) income before
income taxes
|
(415,987)
|
|
1,062,457
|
Benefit from
(provision for) income taxes
|
4,504
|
|
(25,849)
|
Net (loss)
income
|
(411,483)
|
|
1,036,608
|
Net loss (income)
attributable to non-controlling interest
|
392,960
|
|
(982,896)
|
Net (loss) income
attributable to Rocket Companies
|
$
(18,523)
|
|
$
53,712
|
|
|
|
|
(Loss) earnings per
share of Class A common stock
|
|
|
|
Basic
|
$
(0.15)
|
|
$
0.44
|
Diluted
|
$
(0.16)
|
|
$
0.40
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
Basic
|
124,732,722
|
|
122,691,728
|
Diluted
|
1,974,629,808
|
|
1,975,379,132
|
Condensed
Consolidated Balance Sheets
($ In
Thousands)
|
|
|
March 31,
2023
|
|
December 31,
2022
|
Assets
|
(Unaudited)
|
|
|
Cash and cash
equivalents
|
$
893,383
|
|
$
722,293
|
Restricted
cash
|
64,307
|
|
66,806
|
Mortgage loans held
for sale, at fair value
|
8,438,714
|
|
7,343,475
|
Interest rate lock
commitments ("IRLCs"), at fair value
|
182,112
|
|
90,635
|
Mortgage servicing
rights ("MSRs"), at fair value
|
6,669,939
|
|
6,946,940
|
Notes receivable and
due from affiliates
|
8,073
|
|
10,796
|
Property and
equipment, net
|
267,320
|
|
274,192
|
Deferred tax asset,
net
|
541,248
|
|
537,963
|
Lease right of use
assets
|
391,897
|
|
366,189
|
Forward commitments,
at fair value
|
5,101
|
|
22,444
|
Loans subject to
repurchase right from Ginnie Mae
|
1,626,587
|
|
1,642,392
|
Goodwill and
intangible assets, net
|
1,253,309
|
|
1,258,928
|
Other
assets
|
860,289
|
|
799,159
|
Total
assets
|
$
21,202,279
|
|
$
20,082,212
|
Liabilities and
equity
|
|
|
|
Liabilities:
|
|
|
|
Funding
facilities
|
$
5,236,034
|
|
$
3,548,699
|
Other financing
facilities and debt:
|
|
|
|
Senior Notes,
net
|
4,029,339
|
|
4,027,970
|
Early buy out
facility
|
423,831
|
|
672,882
|
Accounts
payable
|
135,039
|
|
116,331
|
Lease
liabilities
|
448,331
|
|
422,769
|
Forward commitments,
at fair value
|
87,918
|
|
25,117
|
Investor
reserves
|
107,134
|
|
110,147
|
Notes payable and due
to affiliates
|
30,451
|
|
33,463
|
Tax receivable
agreement liability
|
577,996
|
|
613,693
|
Loans subject to
repurchase right from Ginnie Mae
|
1,626,587
|
|
1,642,392
|
Other
liabilities
|
390,274
|
|
393,200
|
Total
liabilities
|
$
13,092,934
|
|
$
11,606,663
|
Equity
|
|
|
|
Class A common
stock
|
$
1
|
|
$
1
|
Class B common
stock
|
—
|
|
—
|
Class C common
stock
|
—
|
|
—
|
Class D common
stock
|
19
|
|
19
|
Additional paid-in
capital
|
294,718
|
|
276,221
|
Retained
earnings
|
280,997
|
|
300,394
|
Accumulated other
comprehensive (loss) income
|
(32)
|
|
69
|
Non-controlling
interest
|
7,533,642
|
|
7,898,845
|
Total
equity
|
8,109,345
|
|
8,475,549
|
Total liabilities and
equity
|
$
21,202,279
|
|
$
20,082,212
|
Summary
Segment Results for the Three Months Ended March 31,
2023 and 2022,
($ amounts in
millions)
(Unaudited)
|
|
Three Months Ended
March 31, 2023
|
Direct
to
Consumer
|
|
Partner
Network
|
|
Segments
Total
|
|
All
Other
|
|
Total
|
Total U.S. GAAP
Revenue, net
|
$
495
|
|
$
91
|
|
$
586
|
|
$
80
|
|
$
666
|
Change in fair value of
MSRs due to valuation assumptions, net of hedges
|
216
|
|
—
|
|
216
|
|
—
|
|
216
|
Adjusted
revenue
|
$
711
|
|
$
91
|
|
$
802
|
|
$
80
|
|
$
882
|
Less: Directly
attributable expenses
|
506
|
|
65
|
|
571
|
|
77
|
|
648
|
Contribution margin
(1)
|
$
206
|
|
$
26
|
|
$
231
|
|
$
3
|
|
$
234
|
|
|
Three Months Ended
March 31, 2022
|
Direct to
Consumer
|
|
Partner
Network
|
|
Segments
Total
|
|
All
Other
|
|
Total
|
Total U.S. GAAP
Revenue, net
|
$
2,235
|
|
$
292
|
|
$
2,527
|
|
$
144
|
|
$
2,671
|
Change in fair value of
MSRs due to valuation assumptions, net of hedges
|
(739)
|
|
—
|
|
(739)
|
|
—
|
|
(739)
|
Adjusted
revenue
|
$
1,496
|
|
$
292
|
|
$
1,787
|
|
$
144
|
|
$
1,931
|
Less: Directly
attributable expenses
|
869
|
|
120
|
|
989
|
|
119
|
|
1,108
|
Contribution margin
(1)
|
$
626
|
|
$
172
|
|
$
798
|
|
$
25
|
|
$
823
|
|
(1) We measure the
performance of the segments primarily on a contribution margin
basis. Contribution margin is intended to measure the direct
profitability of each segment and is calculated as Adjusted Revenue
less Directly attributable expenses. Adjusted Revenue is a non-GAAP
financial measure described below. Directly attributable expenses
include salaries, commissions and team member benefits, general and
administrative expenses, marketing and advertising expenses and
other expenses, such as direct servicing costs and origination
costs.
|
GAAP to non-GAAP
Reconciliations
|
|
Adjusted
Revenue Reconciliation
($ amounts in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
(Unaudited)
|
Total revenue,
net
|
$
666
|
|
$
2,671
|
Change in fair value of
MSRs due to valuation assumptions (net of hedges) (1)
|
216
|
|
(739)
|
Adjusted
Revenue
|
$
882
|
|
$
1,931
|
|
(1) Reflects changes in
assumptions including discount rates and prepayment speed
assumptions, mostly due to changes in market interest rates,
and the effects of contractual prepayment
protection associated with sales of MSRs.
|
Adjusted Net Income
(Loss) Reconciliation
($ amounts in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
(Unaudited)
|
Net (loss) income
attributable to Rocket Companies
|
$
(19)
|
|
$
54
|
Net (loss) income
impact from pro forma conversion of Class D common shares to Class
A common shares (1)
|
(392)
|
|
984
|
Adjustment to the
benefit from (provision for) income tax (2)
|
96
|
|
(242)
|
Tax-effected net
(loss) income (2)
|
(314)
|
|
795
|
Share-based
compensation expense
|
52
|
|
67
|
Change in fair value
of MSRs due to valuation assumptions (net of hedges)
(3)
|
216
|
|
(739)
|
Tax impact of
adjustments (4)
|
(65)
|
|
169
|
Other tax adjustments
(5)
|
1
|
|
1
|
Adjusted Net (Loss)
Income
|
$
(111)
|
|
$
293
|
|
(1) Reflects net (loss)
income to Class A common stock from pro forma exchange and
conversion of corresponding shares of our Class D common shares
held by non-controlling
interest holders as of March 31, 2023 and
2022.
|
|
(2) Rocket Companies is
subject to U.S. Federal income taxes, in addition to state, local
and Canadian taxes with respect to its allocable share of any net
taxable (loss) income of
Holdings. The Adjustment to the benefit from
(provision for) income tax reflects the difference between (a) the
income tax computed using the effective tax rates below applied
to the (loss) income before income taxes
assuming Rocket Companies, Inc. owns 100% of the non-voting common
interest units of Holdings and (b) the (benefit from) provision
for income taxes. The effective income tax
rate for Adjusted Net (Loss) Income was 24.29% and 25.21% for three
months ended March 31, 2023 and 2022, respectively
|
|
(3) Reflects changes in
assumptions including discount rates and prepayment speed
assumptions, mostly due to changes in market interest rates, and
the effects of contractual
prepayment protection associated with sales of
MSRs.
|
|
(4) Tax impact of
adjustments gives effect to the income tax related to share-based
compensation expense and change in fair value of MSRs due to
valuation assumptions at the
effective tax rates for each
quarter.
|
|
(5) Represents tax
benefits due to the amortization of intangible assets and other tax
attributes resulting from the purchase of Holdings units, net of
payment obligations under Tax
Receivable Agreement.
|
Adjusted Diluted
Weighted Average Shares Outstanding Reconciliation
($ in millions,
except shares and per share)
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
(Unaudited)
|
Diluted weighted
average Class A Common shares outstanding
|
1,974,629,808
|
|
1,975,379,132
|
Assumed pro forma
conversion of Class D shares (1)
|
—
|
|
—
|
Adjusted diluted
weighted average shares outstanding
|
1,974,629,808
|
|
1,975,379,132
|
|
|
|
|
Adjusted Net (Loss)
Income
|
$
(111)
|
|
$
293
|
Adjusted Diluted (Loss)
Earnings Per Share
|
$
(0.06)
|
|
$
0.15
|
|
(1) Reflects the
proforma exchange and conversion of non-dilutive Class D common
stock to Class A common stock. For the three months ended
March 31, 2023 and 2022, Class D common shares
were dilutive and are included in the diluted weighted average
Class A common shares
outstanding in the table above.
|
Adjusted EBITDA
Reconciliation
($ amounts in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
(Unaudited)
|
Net (loss)
income
|
$
(411)
|
|
$
1,037
|
Interest and
amortization expense on non-funding debt
|
38
|
|
39
|
Income tax (benefit)
provision
|
(5)
|
|
26
|
Depreciation and
amortization
|
31
|
|
21
|
Share-based
compensation expense
|
52
|
|
67
|
Change in fair value
of MSRs due to valuation assumptions (net of hedges) (1)
|
216
|
|
(739)
|
Adjusted
EBITDA
|
$
(79)
|
|
$
450
|
|
(1) Reflects
changes in assumptions including discount rates and prepayment
speed assumptions, mostly due to changes in market interest
rates,
and the effects of contractual prepayment
protection associated with sales of MSRs.
|
Non-GAAP Financial Measures
To provide investors with information in addition to our results
as determined by GAAP, we disclose Adjusted Revenue, Adjusted Net
Income (Loss), Adjusted Diluted Earnings (Loss) Per Share and
Adjusted EBITDA (collectively "our non-GAAP financial measures") as
non-GAAP measures which management believes provide useful
information to investors. We believe that the presentation of our
non-GAAP financial measures provides useful information to
investors regarding our results of operations because each measure
assists both investors and management in analyzing and benchmarking
the performance and value of our business. Our non-GAAP financial
measures are not calculated in accordance with GAAP and should not
be considered as a substitute for revenue, net income (loss), or
any other operating performance measure calculated in accordance
with GAAP. Other companies may define our non-GAAP financial
measures differently, and as a result, our measures of our non-GAAP
financial measures may not be directly comparable to those of other
companies. Our non-GAAP financial measures provide indicators of
performance that are not affected by fluctuations in certain costs
or other items. Accordingly, management believes that these
measurements are useful for comparing general operating performance
from period to period, and management relies on these measures for
planning and forecasting of future periods. Additionally, these
measures allow management to compare our results with those of
other companies that have different financing and capital
structures.
We define "Adjusted Revenue" as total revenues net of the change
in fair value of mortgage servicing rights ("MSRs") due to
valuation assumptions (net of hedges). We define "Adjusted Net
Income (Loss)" as tax-effected earnings (losses) before share-based
compensation expense, the change in fair value of MSRs due to
valuation assumptions (net of hedges), and the tax effects of those
adjustments as applicable. We define "Adjusted Diluted Earnings
(Loss) Per Share" as Adjusted Net Income (Loss) divided by the
diluted weighted average number of Class A common stock outstanding
for the applicable period, which assumes the pro forma exchange and
conversion of all outstanding Class D common stock for Class A
common stock. We define "Adjusted EBITDA" as earnings (losses)
before interest and amortization expense on non-funding debt,
income tax, depreciation and amortization, share-based compensation
expense, change in fair value of MSRs due to valuation assumptions
(net of hedges).
We exclude from each of our non-GAAP financial measures the
change in fair value of MSRs due to valuation assumptions (net of
hedges) as this represents a non-cash non-realized adjustment to
our total revenues, reflecting changes in assumptions including
discount rates and prepayment speed assumptions, mostly due to
changes in market interest rates, which is not indicative of our
performance or results of operation. We also exclude effects of
contractual prepayment protection associated with sales of MSRs.
Adjusted EBITDA includes Interest expense on funding facilities,
which are recorded as a component of Interest income, net, as these
expenses are a direct cost driven by loan origination volume. By
contrast, interest and amortization expense on non-funding debt is
a function of our capital structure and is therefore excluded from
Adjusted EBITDA.
Our definitions of each of our non-GAAP financial measures allow
us to add back certain cash and non-cash charges, and deduct
certain gains that are included in calculating Total revenues, net,
Net income (loss) attributable to Rocket Companies or Net income
(loss). However, these expenses and gains vary greatly, and are
difficult to predict. From time to time in the future, we may
include or exclude other items if we believe that doing so is
consistent with the goal of providing useful information to
investors.
Although we use our non-GAAP financial measures to assess the
performance of our business, such use is limited because they do
not include certain material costs necessary to operate our
business. Our non-GAAP financial measures can represent the effect
of long-term strategies as opposed to short-term results. Our
presentation of our non-GAAP financial measures should not be
construed as an indication that our future results will be
unaffected by unusual or nonrecurring items. Our non-GAAP financial
measures have limitations as analytical tools, and you should not
consider them in isolation or as a substitute for analysis of our
results as reported under U.S. GAAP. Because of these limitations,
our non-GAAP financial measures should not be considered as
measures of discretionary cash available to us to invest in the
growth of our business or as measures of cash that will be
available to us to meet our obligations.
Forward Looking Statements
Some of the statements contained in this document are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements are generally identified by the use of words such as
"anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "plan," "potential," "predict," "project," "should,"
"target," "will," "would" and, in each case, their negative or
other various or comparable terminology. These forward-looking
statements reflect our views with respect to future events as of
the date of this document and are based on our management's current
expectations, estimates, forecasts, projections, assumptions,
beliefs and information. Although management believes that the
expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that these expectations will
prove to have been correct. All such forward-looking statements are
subject to risks and uncertainties, many of which are outside of
our control, and could cause future events or results to be
materially different from those stated or implied in this document.
It is not possible to predict or identify all such risks. These
risks include, but are not limited to, the risk factors that are
described under the section titled "Risk Factors" in our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and other filings with the Securities and
Exchange Commission. These factors should not be construed as
exhaustive and should be read in conjunction with the other
cautionary statements that are included in this document and in our
SEC filings. We expressly disclaim any obligation to publicly
update or review any forward-looking statements, whether as a
result of new information, future developments or otherwise, except
as required by applicable law.
About Rocket Companies
Founded in 1985, Rocket Companies is a Detroit-based fintech platform company
consisting of personal finance and consumer technology brands
including Rocket Mortgage, Rocket Homes, Amrock, Rocket Money,
Rocket Loans, Rocket Mortgage Canada, Lendesk, Core Digital Media,
Rocket Central and Rock Connections.
Rocket Companies' mission is to be the best at creating
certainty in life's most complex moments so that its clients can
live their dreams. The Company helps clients achieve the dream of
home ownership and financial freedom through industry-leading
client experiences powered by its simple, fast and trusted digital
solutions. Rocket Companies ranked #11 on Fortune's list of the
"100 Best Companies to Work For" in 2023 and has placed in the top
third of the list for 20 consecutive years. For more information,
please visit our Corporate Website or Investor Relations
Website.
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SOURCE Rocket Companies, Inc.