Financial Data and Key Metrics Changes - The company reported adjusted revenue exceeding $1 billion in the third quarter, surpassing the high end of its guidance range, reflecting strong execution and expansion in gain on sale margin [2][6][122] - Adjusted EBITDA for the quarter was $73 million, with adjusted net income of $7 million, resulting in positive adjusted diluted EPS and $0.04 of GAAP diluted EPS [23][118] - Total liquidity stood at approximately $8.7 billion as of September 30, including available cash and undrawn lines of credit [24] Business Line Data and Key Metrics Changes - The home equity loan product saw loan units and net rate lock volume double in Q3 compared to earlier in the year [21][84] - The BUY+ program, aimed at enhancing home affordability, has seen significant traction, with closing volume more than tripling from June to September [5][69] - Gain on sale margin for the third quarter was 276 basis points, a 9 basis point increase over the second quarter [22] Market Data and Key Metrics Changes - The company anticipates adjusted revenue for the fourth quarter to be in the range of $650 million to $800 million, considering challenging market conditions [10] - The industry is facing record low affordability and inventory levels, which are expected to impact purchase activity and volume in the fourth quarter [19][126] Company Strategy and Development Direction - The company aims to leverage generative AI to transform the home buying experience and improve operational efficiency [11][113] - There is a focus on maintaining a strong balance sheet and liquidity to capitalize on market opportunities, especially in a fragmented market [43][74] - The company is committed to a cost savings plan of $150 million to $200 million annually, with expectations to achieve the high end of that range [7][123] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market environment but expressed confidence in the company's ability to gain market share and innovate [40][43] - The company views the current market dynamics as a potential tailwind, allowing it to accelerate growth and take share from smaller competitors [43][44] - Management highlighted the importance of client retention, with a net client retention rate of 97%, significantly higher than the industry average [125] Other Important Information - The company has made significant investments in technology and data analytics to enhance client experiences and operational efficiency [100][115] - The mortgage servicing portfolio included more than 2.4 million loans serviced, with approximately $506 billion in unpaid principal balance [24] Q&A Session Summary Question: Can you provide more detail on the servicing transaction and the gross yield on the MSR portfolio? - Management indicated that the gross yield on the purchased MSR portfolio was north of 6%, which is higher than the existing portfolio, making it opportunistic for refinances [31] Question: Given the high client retention rate, why not be more aggressive in buying higher coupon MSRs? - Management confirmed they are actively pursuing higher coupon MSRs to increase the pool of available refinances, emphasizing the lifetime value of these assets [32] Question: What are the biggest opportunities for the company to use generative AI? - Management highlighted that generative AI can transform every aspect of the home buying process, including lead generation, underwriting, and servicing [36][37] Question: What is the outlook for 2024 originations? - Management noted that while the MBA projects a $2 trillion market for 2024, they are planning conservatively due to current market challenges [44][60] Question: How does the company plan to achieve consistent profitability in a challenging environment? - Management expressed confidence in their strategy and balance sheet, indicating that they are well-capitalized to invest and grow despite market fluctuations [61][81]

PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited condensed consolidated financial statements for the period ended June 30, 2023, detail the company's financial position, performance, and cash flows, showing a slight increase in total assets to **$20.9 billion**, a shift to a net loss of **$272.3 million** for the first six months of 2023 from a net income of **$1.1 billion** in the prior year period, and a significant decrease in cash from operations [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) - Total assets increased to **$20.86 billion** as of June 30, 2023, from **$20.08 billion** at December 31, 2022, primarily driven by an increase in Mortgage loans held for sale[12](index=12&type=chunk) - Total liabilities also rose to **$12.49 billion** from **$11.61 billion**, mainly due to higher balances on funding facilities[12](index=12&type=chunk) Key Balance Sheet Items (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$20,855,677** | **$20,082,212** | | Cash and cash equivalents | $882,783 | $722,293 | | Mortgage loans held for sale, at fair value | $8,444,443 | $7,343,475 | | Mortgage servicing rights ("MSRs"), at fair value | $6,443,632 | $6,946,940 | | **Total Liabilities** | **$12,490,823** | **$11,606,663** | | Funding facilities | $4,889,236 | $3,548,699 | | Senior Notes, net | $4,030,709 | $4,027,970 | | **Total Equity** | **$8,364,854** | **$8,475,549** | [Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)) - For Q2 2023, the company reported net income of **$139.2 million**, a 133% increase from **$59.8 million** in Q2 2022, despite a decrease in total revenue[13](index=13&type=chunk) - For the six months ended June 30, 2023, the company recorded a net loss of **$272.3 million**, a significant downturn from a net income of **$1.1 billion** in the same period of 2022, primarily due to lower gain on sale of loans and unfavorable changes in the fair value of MSRs[13](index=13&type=chunk) Key Income Statement Data (in thousands, except per share amounts) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenue, net | $1,236,227 | $1,392,419 | $1,902,295 | $4,063,015 | | Total expenses | $1,097,857 | $1,313,902 | $2,179,912 | $2,922,041 | | Net income (loss) | $139,152 | $59,756 | $(272,331) | $1,096,364 | | Diluted EPS | $0.05 | $0.02 | $(0.11) | $0.43 | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) - Total equity decreased from **$8.48 billion** at the end of 2022 to **$8.36 billion** as of June 30, 2023, primarily driven by a net loss of **$411.5 million** in the first quarter, partially offset by net income of **$139.2 million** in the second quarter and share-based compensation[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) - For the first six months of 2023, net cash used in operating activities was **$1.61 billion**, a stark contrast to the **$6.59 billion** provided by operating activities in the same period of 2022, mainly due to lower net income and changes in mortgage loans held for sale[22](index=22&type=chunk) - Net cash from financing activities was **$1.1 billion**, a reversal from an **$8.22 billion** use of cash in H1 2022, driven by net borrowings on funding facilities[22](index=22&type=chunk) Net Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,611,938) | $6,585,334 | | Net cash provided by investing activities | $641,740 | $408,522 | | Net cash provided by (used in) financing activities | $1,099,037 | $(8,221,278) | | **Net increase (decrease) in cash** | **$128,688** | **$(1,227,513)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates as a fintech holding company with two reportable segments: Direct to Consumer and Partner Network, with a significant portion of its assets, including MSRs and IRLCs, measured at fair value and many classified as Level 3 due to reliance on unobservable inputs[26](index=26&type=chunk)[64](index=64&type=chunk)[163](index=163&type=chunk) - As of June 30, 2023, the fair value of Mortgage Servicing Rights (MSRs) was **$6.44 billion**, covering a portfolio with an unpaid principal balance (UPB) of **$462 billion**, and the company was in compliance with all debt covenants[89](index=89&type=chunk)[90](index=90&type=chunk)[97](index=97&type=chunk) - The company's organizational structure as a C Corporation holding an interest in a partnership (Holdings) significantly impacts its income tax expense, with a Tax Receivable Agreement obligating the company to pay original LLC members 90% of realized cash tax savings from certain tax basis step-ups[126](index=126&type=chunk)[130](index=130&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant decline in mortgage origination volume and gain on sale revenue in the first half of 2023 to the rising interest rate environment initiated by the U.S. Federal Reserve, despite which the company improved Q2 2023 net income over Q2 2022 through aggressive cost-saving measures, maintaining a strong liquidity position of **$8.6 billion** and announcing a voluntary career transition program expected to result in a **$50-$60 million** charge in Q3 2023 - The U.S. Federal Reserve's interest rate hikes have driven a significant decline in the mortgage origination market, particularly impacting refinance transactions, which has adversely affected the company's loan volume[198](index=198&type=chunk) - A voluntary career transition program was initiated on July 28, 2023, which is expected to incur a non-recurring charge of **$50 to $60 million** in Q3 2023[199](index=199&type=chunk) Key Performance Indicators | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Closed loan origination volume | $22.3B | $34.5B | $39.3B | $88.5B | | Gain on sale margin | 2.67% | 2.92% | 2.54% | 2.98% | | Net income (loss) | $139.2M | $59.8M | $(272.3)M | $1.1B | - Total expenses decreased by **16% in Q2 2023** and **25% in H1 2023** year-over-year, driven by cost-saving measures in salaries, general & administrative, and marketing expenses[263](index=263&type=chunk)[264](index=264&type=chunk) - The company maintained a strong liquidity position with **$8.6 billion** as of June 30, 2023, consisting of cash, self-funding capacity, and undrawn lines of credit[297](index=297&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports that there have been no material changes to its exposure to market risks from the information previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the Company's market risk exposure since the end of 2022[305](index=305&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2023, with no material changes to the company's internal control over financial reporting during the quarter - As of June 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures are effective at a reasonable assurance level[306](index=306&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[307](index=307&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business but does not expect any currently pending matters to have a material adverse effect on its financial condition or results of operations - Management believes that currently pending or threatened legal matters are not expected to have a material adverse effect on the company's business or financial condition[310](index=310&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) There have been no significant changes to the company's risk factors from those disclosed in its 2022 Form 10-K, and investors are advised to refer to that document for a detailed discussion of risks and uncertainties - The company's risk factors have not changed significantly from those disclosed in the 2022 Form 10-K[311](index=311&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's **$1.0 billion** share repurchase program, renewed in November 2022, had approximately **$590.7 million** remaining available as of June 30, 2023, with no shares repurchased during the three months ended June 30, 2023 - No share repurchases were made during the three months ended June 30, 2023[312](index=312&type=chunk) - As of June 30, 2023, approximately **$590.7 million** remained available under the company's **$1.0 billion** share repurchase program[312](index=312&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) On July 7, 2023, the company's subsidiary, Rocket Mortgage, LLC, entered into an agreement that increased the commitments under its Revolving Credit Agreement by **$150 million** with the addition of a new lender - Subsequent to the quarter end, on July 7, 2023, a subsidiary increased its Revolving Credit Agreement commitments by **$150 million** by adding Wells Fargo Bank as a new lender[315](index=315&type=chunk)[316](index=316&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and various agreements

Rocket Companies, Inc. (NYSE:RKT) Q2 2023 Earnings Conference Call August 3, 2023 4:30 PM ET Company Participants Sharon Ng - Vice President of Investor Relations Bill Emerson - Director & Interim Chief Executive Officer Brian Brown - Chief Financial Officer & Treasurer Conference Call Participants Kevin Barker - Piper Sandler Ryan Nash - Goldman Sachs Kyle Joseph - Jefferies Ryan McKeveny - Zelman & Associates Doug Harter - Credit Suisse James Faucette - Morgan Stanley Mihir Bhatia - Bank of America Donald ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number: 001-39432 Rocket Companies, Inc. (Exact name of registrant as specified in its charter) Delaware 84-4946470 (State or ot ...

Financial Data and Key Metrics Changes - Adjusted revenue for Q1 2023 was $882 million, exceeding the high end of guidance, with a significant quarter-over-quarter increase of nearly $200 million [71][66] - Adjusted EBITDA loss improved to $79 million from a loss of $204 million in Q4 2022, indicating better operational efficiency [66][71] - Gain on sale margin for the quarter was 239 basis points, which is 22 basis points higher than the previous quarter [115] Business Line Data and Key Metrics Changes - Rocket Loans achieved its largest month of origination in March, indicating strong growth in personal loans [23] - The mortgage servicing portfolio included over 2.5 million clients with approximately $525 billion in unpaid principal, generating $366 million in cash revenue during Q1 [89][115] - The introduction of the Rocket Signature Card is expected to enhance client acquisition and engagement, particularly among first-time homebuyers [51][87] Market Data and Key Metrics Changes - Existing home sales in March were at a seasonally adjusted annual rate of 4.4 million, significantly below the 20-year average of over 5.3 million [25] - There were only 2.6 months of housing inventory available in March, less than half of the expected levels based on historical averages [25] - Purchase approval letters increased by 11% from March to April, indicating a healthy purchase pipeline [77] Company Strategy and Development Direction - The company is focusing on enhancing its client engagement through programs like Rocket Money, Rocket Rewards, and the Rocket Signature Card, which aim to lower client acquisition costs and improve retention [21][73] - The BUY+ and SELL+ initiatives are designed to provide financial incentives to clients, thereby increasing engagement and conversion rates [108][114] - The company aims to leverage its integrated real estate and mortgage services to capture broader revenue across transactions, differentiating itself from competitors [125] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about consumer demand for homes and a healthy purchase pipeline, despite challenges posed by limited housing inventory [83][120] - The company is closely monitoring the macroeconomic environment and is prepared to adjust marketing investments based on performance [31][120] - Management believes that the investments made in client experience and innovative solutions will lead to sustainable growth in market share and profitability [138][139] Other Important Information - The company ended Q1 with $3.3 billion in available cash and $6.7 billion in mortgage servicing rights, totaling $9.9 billion in assets [30] - The net client retention rate remained over 90%, significantly above the industry average, indicating strong customer loyalty [89] Q&A Session Summary Question: Can you talk about market share and how you're thinking about it going forward? - Management indicated that while they do not specify exact market share figures, they are focused on growing market share in both purchase and refinance segments through targeted strategies [2][3] Question: What impacts have you seen from the recent banking turmoil? - Management reported no direct exposure to failed banks and noted that the banking crisis could present an opportunity for the company to gain market share as banks pull back from the mortgage space [9][10] Question: Can you elaborate on the investments planned for the rest of 2023? - Management highlighted ongoing investments in marketing and technology to enhance client acquisition and engagement, particularly through the Rocket Rewards program and the Signature Card [41][42] Question: How do you view the current capacity in the mortgage industry? - Management acknowledged that capacity is decreasing in the industry, particularly among banks and retail lenders, which could benefit the company as it positions itself as a strong purchase lender [48][49]

Financial Data and Key Metrics Changes - In 2022, the company reported a closed loan volume of $133 billion and adjusted revenue of $4.6 billion, with a GAAP net income of $700 million or $0.28 per share [12] - The adjusted net income showed a loss of $137 million or $0.07 per share, influenced by a $1.2 billion mark-to-market appreciation of mortgage servicing rights [12] - The company reduced total expenses by $3 billion or 40% on an annualized basis from Q4 2021 to Q4 2022, exceeding previous commitments [29] Business Line Data and Key Metrics Changes - Rocket Money experienced significant growth, achieving its largest month of premium member growth in January 2023, and ranked first in daily downloads in the iOS app store finance category [8] - The company generated $371 million in cash revenue from its servicing book during Q4, which annualizes to approximately $1.5 billion [16] - The gain on sale margin was reported at 217 basis points for Q4, impacted by the high demand for the Inflation Buster product [30] Market Data and Key Metrics Changes - The mortgage application index dropped nearly 70% in 2022, marking the largest inter-year decline since 1990, reflecting a challenging market environment [29] - The company noted that the 30-year fixed mortgage rate increased from about 3% in January to over 7% by October 2022, the steepest rise in four decades [6] Company Strategy and Development Direction - The company aims to enhance client engagement through integrated experiences, particularly targeting millennials and first-time homebuyers [15] - The introduction of the Inflation Buster and Rocket Rewards programs is part of the strategy to improve client retention and conversion rates [26][32] - The company is focused on capturing market share in the purchase market while maintaining a robust capital structure and investing in technology [28][127] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment in 2022 due to rising interest rates and declining consumer confidence, but expressed confidence in the company's ability to adapt and innovate [29] - The outlook for 2023 includes expectations for improved margins and production, with a focus on maintaining a strong cost structure [34][53] - Management emphasized the importance of being present with clients throughout their home buying journey to enhance engagement and conversion [91] Other Important Information - Total liquidity stood at approximately $8.1 billion as of December 31, 2022, including available cash and undrawn lines of credit [33] - The company has enrolled over 1 million clients in the Rocket Rewards program, with significant engagement and point redemptions [145] Q&A Session Summary Question: What strategies are in place to diversify revenue in the current market? - Management discussed the importance of reducing client acquisition costs and increasing conversion rates to drive revenue diversification [35][46] Question: How does the company plan to return to profitability? - Management highlighted a focus on long-term results and the importance of maintaining a strong cost structure while preparing for the home buying season [43][45] Question: What is the outlook for margins in 2023? - Management indicated that margins are expected to improve due to a shift in product mix and the performance of promotional products like Inflation Buster [52][53] Question: How is the company addressing the competitive landscape in the mortgage industry? - Management noted that many competitors are exiting the market, providing an opportunity for the company to capture market share [58][88]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number: 001-39432 Rocket Companies, Inc. (Exact name of registrant as specified in its charter) (State or other ...

Rocket Companies Investor Presentation November 2022 ROCKET Companies Disclaimer This presentation contains and related discussions may contain "forward-looking statements" within the meaning of U.S. federal securities laws. Forward-looking statements conceening possible or assumed future results of operations, Rocket Company") business plans and strategies, the Company's ability to cross-sell and up-self the Conpany's pooducts, and expansion into new markets. You can identify forward-looking statements by ...

Rocket Companies, Inc. (NYSE:RKT) Q3 2022 Results Earnings Conference Call November 3, 2022 4:30 PM ET Company Participants Sharon Ng - Vice President-Investor Relations Jay Farner - Vice Chairman and Chief Executive Officer Brian Brown - Chief Accounting Officer Conference Call Participants James Faucette - Morgan Stanley Kevin Barker - Piper Sandler Ryan Nash - Goldman Sachs Doug Harter - Credit Suisse Mark DeVries - Barclays Derek Sommers - Jefferies Kevin Kaczmarek - Zelman & Associates Arren Cyganovich ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements of Rocket Companies, Inc. for the period ended June 30, 2022, including the balance sheets, statements of income and comprehensive income, statements of changes in equity, and statements of cash flows, along with detailed notes explaining the company's business, accounting policies, fair value measurements, mortgage servicing rights, borrowings, related party transactions, income taxes, derivative instruments, commitments, and earnings per share [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2022, compared to December 31, 2021 Condensed Consolidated Balance Sheets (June 30, 2022 vs. December 31, 2021, in Millions) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $915.4 | $2,131.2 | | Mortgage loans held for sale, at fair value | $12,402.9 | $19,323.6 | | Mortgage servicing rights ("MSRs"), at fair value | $6,657.8 | $5,385.6 | | Total assets | $25,076.9 | $32,774.9 | | **Liabilities** | | | | Funding facilities | $7,647.2 | $12,751.6 | | Senior Notes, net | $4,025.2 | $4,022.5 | | Total liabilities | $16,304.7 | $23,015.4 | | **Equity** | | | | Total equity | $8,772.2 | $9,759.5 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This section provides a comparative overview of the company's revenues, expenses, and net income for the three and six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Income (Three Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | | Total revenue, net | $1,392.4 | $2,668.1 | | Total expenses | $1,313.9 | $1,607.4 | | Income before income taxes | $78.5 | $1,060.7 | | Net income | $59.8 | $1,036.7 | | Net income attributable to Rocket Companies | $3.4 | $61.1 | | Basic EPS | $0.03 | $0.45 | | Diluted EPS | $0.02 | $0.40 | Condensed Consolidated Statements of Income (Six Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Total revenue, net | $4,063.0 | $7,207.0 | | Total expenses | $2,922.0 | $3,303.1 | | Income before income taxes | $1,141.0 | $3,903.9 | | Net income | $1,096.4 | $3,814.0 | | Net income attributable to Rocket Companies | $57.1 | $184.8 | | Basic EPS | $0.47 | $1.47 | | Diluted EPS | $0.43 | $1.46 | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This section details the changes in the company's total equity, reflecting the impact of net income, dividends, and other equity transactions for the period Total Equity (June 30, 2022 vs. December 31, 2021, in Millions) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | Total Equity | $8,772.2 | $9,759.5 | - The company's total equity decreased by approximately **$987 million** from December 31, 2021, to June 30, 2022, primarily due to special dividends and distributions to unit holders, partially offset by net income and share-based compensation[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $6,585.3 | $2,557.7 | | Net cash provided by (used in) investing activities | $408.5 | $(4.9) | | Net cash used in financing activities | $(8,221.3) | $(2,555.2) | | Net decrease in cash and cash equivalents and restricted cash | $(1,227.5) | $(1.7) | | Cash and cash equivalents and restricted cash, end of period | $984.1 | $2,052.5 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Business, Basis of Presentation and Accounting Policies](index=10&type=section&id=1.%20Business%2C%20Basis%20of%20Presentation%20and%20Accounting%20Policies) This note describes Rocket Companies as a Detroit-based FinTech holding company with tech-driven real estate, mortgage, and financial services businesses, including Rocket Mortgage, Amrock, Rocket Homes, Rocket Auto, Rocket Loans, and Rocket Money (formerly Truebill). The company operates in two segments: Direct to Consumer and Partner Network. It also details the basis of presentation, consolidation of Holdings as a VIE, the Truebill acquisition, management estimates, subsequent events, and special dividends - Rocket Companies is a FinTech holding company with diverse businesses including Rocket Mortgage, Amrock, Rocket Homes, Rocket Auto, Rocket Loans, and Rocket Money (formerly Truebill)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company's operations are organized into two segments: Direct to Consumer and Partner Network[24](index=24&type=chunk) - On December 23, 2021, Rocket Companies completed the acquisition of Truebill, Inc. for approximately **$1.2 billion** in cash[33](index=33&type=chunk) Special Dividends Declared (in Billions) | Year | Dividend Per Share | Total Cash Distribution by Holdings | | :--- | :----------------- | :---------------------------------- | | 2022 | $1.01 | ~$2.0 | | 2021 | $1.11 | ~$2.2 | [Revenue Recognition](index=12&type=section&id=Revenue%20Recognition) This section details the company's revenue recognition policies across its various income streams, including gain on sale of loans (net of MSRs, origination fees, and hedging), loan servicing income (servicing fees and MSR fair value changes), net interest income, and other income from lead generation, professional services, real estate referrals, contact centers, closing fees, appraisal revenue, and Rocket Money subscriptions - Gain on sale of loans, net, includes premiums, origination fees, investor reserves, fair value changes of IRLCs and loans held for sale, hedging gains/losses, and fair value of originated MSRs[39](index=39&type=chunk) - Loan servicing income includes servicing, sub-servicing, and ancillary fees, and adjustments for changes in the fair value of MSRs[40](index=40&type=chunk) - Other income sources include lead generation, professional service fees, real estate network referral fees, contact center revenue, personal loans, closing fees, appraisal revenue, and Rocket Money (Truebill) subscription revenue[42](index=42&type=chunk) Selected Other Income Streams (Three Months Ended June 30, 2022 vs. 2021, in Millions) | Revenue Stream | 2022 | 2021 | | :------------- | :---------- | :---------- | | Amrock closing fees | $37.9 | $118.0 | | Rocket Money subscription revenue | $26.2 | N/A | | Amrock appraisal revenue, net | $15.3 | $23.1 | | Rocket Homes real estate network referral fees | $14.9 | $14.1 | | Rock Connections and Rocket Auto contact center revenue | $3.8 | $12.3 | [2. Fair Value Measurements](index=14&type=section&id=2.%20Fair%20Value%20Measurements) This note outlines the company's fair value measurement policies, classifying assets and liabilities into a three-level hierarchy based on the observability of inputs. It details the valuation techniques for mortgage loans held for sale, interest rate lock commitments (IRLCs), mortgage servicing rights (MSRs), and forward commitments, and provides a summary of these items measured at fair value - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable prices for similar assets/liabilities or derived from market data), and Level 3 (internal models using unobservable assumptions)[60](index=60&type=chunk)[61](index=61&type=chunk) - IRLCs and MSRs are classified as Level 3 due to the significant and unobservable nature of inputs like pull-through factors and prepayment speeds/discount rates[65](index=65&type=chunk)[66](index=66&type=chunk) Assets Measured at Fair Value (June 30, 2022, in Millions) | Asset Type | Level 1 | Level 2 | Level 3 | Total | | :--------- | :------ | :----------- | :----------- | :----------- | | Mortgage loans held for sale | $— | $10,845.1 | $1,557.8 | $12,402.9 | | IRLCs | $— | $— | $309.5 | $309.5 | | MSRs | $— | $— | $6,657.8 | $6,657.8 | | Forward commitments | $— | $76.8 | $— | $76.8 | | Total assets | $— | $10,921.9 | $8,525.0 | $19,447.0 | Unobservable Inputs for Level 3 Fair Value Instruments (June 30, 2022) | Instrument | Unobservable Input | Range | Weighted Average | | :--------- | :----------------- | :---------- | :--------------- | | Mortgage loans held for sale | Dealer pricing | 76% - 98% | 94% | | IRLCs | Loan funding probability | 0% - 100% | 69% | | MSRs | Discount rate | 9.0% - 12.0% | 9.4% | | MSRs | Conditional prepayment rate | 6.5% - 9.6% | 6.9% | [3. Mortgage Servicing Rights](index=19&type=section&id=3.%20Mortgage%20Servicing%20Rights) This note details the accounting for Mortgage Servicing Rights (MSRs), which are recognized at fair value using an internal valuation model. It summarizes changes in MSR assets, the total unpaid principal balance (UPB) of serviced loans, and key assumptions like discount rates and prepayment speeds used in valuation, highlighting their sensitivity to market interest rate changes - MSRs are recognized as assets at fair value, determined by an internal valuation model that estimates future net servicing fee income, considering prepayment speeds, discount rates, and servicing costs[80](index=80&type=chunk) Changes in MSR Assets (Six Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----- | :----------------------------- | :----------------------------- | | Fair value, beginning of period | $5,385.6 | $2,862.7 | | MSRs originated | $1,256.1 | $2,030.3 | | MSRs sales | $(474.0) | $(99.1) | | Total changes in fair value | $490.1 | $(149.7) | | Fair value, end of period | $6,657.8 | $4,644.2 | MSR Valuation Assumptions (June 30, 2022 vs. December 31, 2021) | Assumption | June 30, 2022 | December 31, 2021 | | :--------- | :------------ | :---------------- | | Discount rate | 9.4% | 9.5% | | Prepayment speeds | 6.9% | 8.7% | | Life (in years) | 8.08 | 7.25 | - As of June 30, 2022, the total UPB of mortgage loans serviced was **$485.4 billion**, with delinquent loans (60+ days past-due) at **1.12%** of the total portfolio (**0.74%** excluding COVID-19 forbearance plans)[82](index=82&type=chunk) [4. Mortgage Loans Held for Sale](index=21&type=section&id=4.%20Mortgage%20Loans%20Held%20for%20Sale) This note discusses mortgage loans held for sale, which the company primarily sells into the secondary market, often retaining servicing rights. It reconciles changes in these loans and addresses the associated credit risk, which is considered insignificant due to short holding periods and a liquid market - The company sells substantially all originated mortgage loans into the secondary market, often retaining servicing rights[87](index=87&type=chunk) Mortgage Loans Held for Sale Reconciliation (Six Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----- | :----------------------------- | :----------------------------- | | Balance at the beginning of period | $19,323.6 | $22,865.1 | | Disbursements of mortgage loans held for sale | $89,469.2 | $187,979.2 | | Proceeds from sales of mortgage loans held for sale | $(97,597.6) | $(192,043.8) | | Balance at the end of period | $12,402.9 | $23,194.8 | - Credit risk associated with mortgage loans held for sale is considered insignificant due to short holding periods (average **44 days**) and a highly liquid market[88](index=88&type=chunk) [5. Borrowings](index=21&type=section&id=5.%20Borrowings) This note details the company's various funding facilities and non-funding debt, including master repurchase agreements, early funding facilities, lines of credit, and unsecured Senior Notes. It outlines the collateral, maturities, interest rates, and compliance with financial covenants, noting the company's use of cash for self-funding loans - The company maintains various funding facilities (primarily master repurchase agreements) and other non-funding debt (Senior Notes, lines of credit) to support loan origination and operations[89](index=89&type=chunk)[95](index=95&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) - As of June 30, 2022, the company was in compliance with all debt covenants, including minimum tangible net worth and liquidity requirements[89](index=89&type=chunk) Funding Facilities Outstanding Balance (in Millions) | Facility Type | June 30, 2022 | December 31, 2021 | | :------------ | :------------ | :---------------- | | MRA funding | $4,244.3 | $9,486.7 | | Early Funding Facility | $3,402.9 | $3,264.9 | | Total Funding Facilities | $7,647.2 | $12,751.6 | Unsecured Senior Notes Outstanding Principal (in Millions) | Facility Type | Maturity | Interest Rate | June 30, 2022 | December 31, 2021 | | :------------ | :--------- | :------------ | :------------ | :---------------- | | Unsecured Senior Notes | 10/15/2026 | 2.875% | $1,150.0 | $1,150.0 | | Unsecured Senior Notes | 1/15/2028 | 5.250% | $62.0 | $62.0 | | Unsecured Senior Notes | 3/1/2029 | 3.625% | $750.0 | $750.0 | | Unsecured Senior Notes | 3/1/2031 | 3.875% | $1,250.0 | $1,250.0 | | Unsecured Senior Notes | 10/15/2033 | 4.000% | $850.0 | $850.0 | | Total Senior Notes | | 3.59% | $4,062.0 | $4,062.0 | - As of June 30, 2022, **$3.1 billion** of corporate cash was used for discretionary self-funding of loans, reducing reliance on external funding facilities[91](index=91&type=chunk) [6. Transactions with Related Parties](index=27&type=section&id=6.%20Transactions%20with%20Related%20Parties) This note details various financial and service-related transactions between Rocket Companies and its related parties, including RHI and Bedrock Management Services LLC. It covers financing arrangements, services provided and purchased, promotional sponsorships, and lease agreements - Rocket Mortgage has an unsecured line of credit with RHI for **$2.0 billion**, maturing July 27, 2025, with no outstanding principal as of June 30, 2022[108](index=108&type=chunk) - The company recognized **$3.2 million** in revenue from services provided to related parties for the three months ended June 30, 2022, and incurred **$27.9 million** in expenses for services/products purchased from related parties[113](index=113&type=chunk) - Marketing and advertising costs related to promotional sponsorships with related parties, including the Rocket Mortgage Field House Naming Rights Contract, amounted to **$2.1 million** for the three months ended June 30, 2022[115](index=115&type=chunk) - Lease expenses for offices with Bedrock Management Services LLC and other related parties were **$18.3 million** for the three months ended June 30, 2022[116](index=116&type=chunk) [7. Income Taxes](index=29&type=section&id=7.%20Income%20Taxes) This note explains the company's income tax expense, which is influenced by its organizational structure as a holding company with various LLCs and C Corporations. It details the Tax Receivable Agreement (TRA) that obligates the company to pay LLC Members 90% of certain tax savings from basis increases, and discusses tax distributions to Holdings' unit holders Income Tax Expense (in Millions) | Period | Income before income taxes | Provision for income taxes | | :----- | :------------------------- | :------------------------- | | Three Months Ended June 30, 2022 | $78.5 | $18.8 | | Three Months Ended June 30, 2021 | $1,060.7 | $24.0 | | Six Months Ended June 30, 2022 | $1,141.0 | $44.6 | | Six Months Ended June 30, 2021 | $3,903.9 | $89.9 | - The company's income tax expense varies due to its organizational structure, with some subsidiaries passing taxable income/loss to Holdings and others filing as C Corporations[119](index=119&type=chunk)[120](index=120&type=chunk) - Under the Tax Receivable Agreement, the company pays LLC Members **90%** of realized tax savings from increases in tax basis, retaining the remaining **10%**. A payment of **$40.7 million** was made under the TRA during the six months ended June 30, 2022[122](index=122&type=chunk)[125](index=125&type=chunk) - Holdings paid tax distributions totaling **$166.7 million** to non-Rocket Companies unit holders for the six months ended June 30, 2022, significantly lower than **$1.4 billion** in the prior year[128](index=128&type=chunk) [8. Derivative Financial Instruments](index=30&type=section&id=8.%20Derivative%20Financial%20Instruments) This note describes the company's use of derivative financial instruments, including interest rate lock commitments (IRLCs) and forward commitments, which are accounted for at fair value as economic hedges. It provides details on notional and fair values, offsetting arrangements, and counterparty credit risk management - The company uses IRLCs, forward commitments to sell mortgage loans, and forward commitments to purchase loans as derivative financial instruments, treated as economic hedges[129](index=129&type=chunk) Notional and Fair Value of Derivative Financial Instruments (June 30, 2022, in Millions) | Instrument | Notional Value | Derivative Asset | Derivative Liability | | :--------- | :------------- | :--------------- | :------------------- | | IRLCs, net of loan funding probability | $10,505.2 | $309.5 | $— | | Forward commitments | $19,469.1 | $76.8 | $23.9 | - The company manages counterparty credit risk by dealing with creditworthy counterparties, spreading risk, setting unsecured credit limits, and using netting agreements[140](index=140&type=chunk) [9. Commitments, Contingencies, and Guarantees](index=33&type=section&id=9.%20Commitments%2C%20Contingencies%20and%20Guarantees) This note outlines the company's various commitments, contingencies, and guarantees, including interest rate lock commitments (IRLCs), commitments to sell mortgage loans, and guarantees of related party debt. It also addresses property taxes, insurance, principal and interest payable held in escrow, and legal proceedings UPB of Interest Rate Lock Commitments (IRLCs) (in Millions) | Metric | June 30, 2022 | December 31, 2021 | | :----- | :------------ | :---------------- | | Fixed Rate IRLCs | $14,319.0 | $25,937.8 | | Variable Rate IRLCs | $904.4 | $1,239.8 | - Commitments to sell existing mortgage loans held for sale amounted to **$1.55 billion** at June 30, 2022, down from **$2.24 billion** at December 31, 2021[146](index=146&type=chunk) - The company guaranteed **$4.3 million** of related party debt as of June 30, 2022, but did not record a liability as payment was not probable[149](index=149&type=chunk) - Legal reserves for potential damages were **$15.0 million** as of June 30, 2022 and December 31, 2021, with management believing current matters will not have a material adverse effect[153](index=153&type=chunk) [10. Minimum Net Worth Requirements](index=35&type=section&id=10.%20Minimum%20Net%20Worth%20Requirements) This note confirms that Rocket Companies and its subsidiary, Rocket Mortgage, are subject to minimum net worth and capital requirements imposed by secondary market investors and state regulators. The company was in compliance with the most restrictive requirement of $1.35 billion adjusted net worth as of June 30, 2022 - Rocket Companies and Rocket Mortgage must maintain minimum net worth and capital requirements set by secondary market investors and state regulators[154](index=154&type=chunk)[155](index=155&type=chunk) Minimum Adjusted Net Worth Requirement (in Millions) | Date | Minimum Adjusted Net Worth | Company Compliance | | :--- | :------------------------- | :----------------- | | June 30, 2022 | $1,346.9 | In compliance | | December 31, 2021 | $1,794.8 | In compliance | [11. Segments](index=36&type=section&id=11.%20Segments) This note details the company's two reportable segments: Direct to Consumer and Partner Network, along with an 'All Other' category. It describes how each segment generates revenue, primarily from gain on sale of loans and servicing activities, and how performance is measured based on contribution margin. The note also provides a reconciliation of segment contribution margin to consolidated U.S. GAAP income before taxes - The company has two reportable segments: Direct to Consumer and Partner Network, and an 'All Other' category for other operations[159](index=159&type=chunk)[167](index=167&type=chunk) - Direct to Consumer revenue is primarily from originating, closing, selling, and servicing agency-conforming loans, including MSRs and hedging gains/losses[160](index=160&type=chunk)[161](index=161&type=chunk) - Partner Network revenue is generated from marketing and influencer relationships, and mortgage broker partnerships through Rocket Pro TPO, primarily from gain on sale of loans[162](index=162&type=chunk)[163](index=163&type=chunk) Contribution Margin by Segment (Three Months Ended June 30, 2022, in Millions) | Segment | Adjusted Revenue | Directly Attributable Expenses | Contribution Margin | | :------ | :--------------- | :----------------------------- | :------------------ | | Direct to Consumer | $838.9 | $609.4 | $229.5 | | Partner Network | $177.2 | $95.7 | $81.5 | | All Other | $109.4 | $104.4 | $5.0 | | Total | $1,125.5 | $809.5 | $316.0 | Contribution Margin by Segment (Six Months Ended June 30, 2022, in Millions) | Segment | Adjusted Revenue | Directly Attributable Expenses | Contribution Margin | | :------ | :--------------- | :----------------------------- | :------------------ | | Direct to Consumer | $2,334.6 | $1,478.6 | $855.9 | | Partner Network | $468.9 | $215.7 | $253.2 | | All Other | $253.3 | $223.2 | $30.1 | | Total | $3,056.8 | $1,917.6 | $1,139.2 | [12. Non-controlling Interests](index=39&type=section&id=12.%20Non-controlling%20Interests) This note clarifies that non-controlling interest represents the economic interest in Holdings held by the Chairman and RHI. It details the ownership percentages of Holdings Units and the exchange rights of non-controlling interest holders for Class A or Class B common stock or cash - Non-controlling interest represents the economic interest in Holdings held by the Chairman and RHI[173](index=173&type=chunk) Ownership of Holdings Units (June 30, 2022 vs. December 31, 2021) | Holder | June 30, 2022 Ownership Percentage | December 31, 2021 Ownership Percentage | | :----- | :--------------------------------- | :------------------------------------- | | Rocket Companies, Inc. | 5.92% | 6.40% | | Holdings Units held by our Chairman | 0.06% | 0.06% | | Holdings Units held by RHI | 94.02% | 93.54% | - Non-controlling interest holders can exchange Holdings Units (Paired Interests) for Class A or Class B common stock or cash[173](index=173&type=chunk) [13. Share-based Compensation](index=41&type=section&id=13.%20Share-based%20Compensation) This note outlines the company's share-based compensation plans, including the 2020 Omnibus Incentive Plan for restricted stock units and stock options, and the Team Member Stock Purchase Plan (TMSPP). It details the estimated future expense for granted awards and the total share-based compensation expense - The company grants restricted stock units and stock options under the 2020 Omnibus Incentive Plan, with an estimated future expense of **$286.6 million** for awards granted in the six months ended June 30, 2022[177](index=177&type=chunk)[178](index=178&type=chunk) - The Team Member Stock Purchase Plan (TMSPP) allows eligible team members to purchase common stock at **85%** of the closing market price[179](index=179&type=chunk) Total Share-based Compensation Expense (in Millions) | Period | 2022 | 2021 | | :----- | :---------- | :---------- | | Three Months Ended June 30 | $56.4 | $41.0 | | Six Months Ended June 30 | $123.6 | $83.0 | [14. Earnings Per Share](index=41&type=section&id=14.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share (EPS) using the two-class method. It explains that Class A and Class B common stock participate equally in earnings, while Class C and Class D common stock do not. The calculation includes adjustments for potentially dilutive securities like Class D shares and share-based compensation awards - The company uses the two-class method for EPS calculation, with Class A and Class B common stock participating equally in earnings[181](index=181&type=chunk) Earnings Per Share of Class A Common Stock | Period | Basic EPS (2022) | Basic EPS (2021) | Diluted EPS (2022) | Diluted EPS (2021) | | :----- | :--------------- | :--------------- | :----------------- | :----------------- | | Three Months Ended June 30 | $0.03 | $0.45 | $0.02 | $0.40 | | Six Months Ended June 30 | $0.47 | $1.47 | $0.43 | $1.46 | - For the six months ended June 30, 2021, Holdings Units and corresponding Class D common stock were anti-dilutive and excluded from diluted EPS calculation[187](index=187&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Rocket Companies' financial condition, cash flows, and results of operations, including an executive summary, recent business trends, non-GAAP financial measures, key performance indicators, and a detailed analysis of revenue and expenses by segment for the three and six months ended June 30, 2022 and 2021. It also covers liquidity, capital resources, and contractual obligations [Executive Summary](index=44&type=section&id=Executive%20Summary) This section provides an overview of Rocket Companies as a FinTech holding company, highlighting its tech-driven real estate, mortgage, and financial services businesses - Rocket Companies is a Detroit-based FinTech holding company focused on tech-driven real estate, mortgage, and financial services, including Rocket Mortgage, Rocket Home, Rocket Auto, and Rocket Money[193](index=193&type=chunk) - The company aims to deliver innovative client solutions leveraging its Rocket platform across complementary industries[193](index=193&type=chunk) [Recent Developments](index=45&type=section&id=Recent%20Developments) This section discusses key recent events impacting the company, including market interest rate changes, share repurchases, and a career transition program - Rising Federal Funds rates are expected to significantly decline the mortgage origination market in 2022, leading to decreased mortgage origination volume for the company[194](index=194&type=chunk) - As of July 27, 2022, Rocket Companies repurchased **29.8 million** shares for **$393.7 million** under its **$1 billion** Share Repurchase Program[195](index=195&type=chunk) - The company incurred **$61.0 million** in charges during Q2 2022 for a career transition program offered to eligible team members due to changing mortgage market conditions[196](index=196&type=chunk) Summary of Financial Performance (Three & Six Months Ended June 30, 2022) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :----------------------------- | | Residential mortgage loans originated | $34.5 billion (58.8% decrease YoY) | $88.5 billion (52.7% decrease YoY) | | Net income | $59.8 million | $1.1 billion | | Adjusted EBITDA | $(27.5) million (102.1% decrease YoY) | $422.6 million (88.7% decrease YoY) | [Non-GAAP Financial Measures](index=45&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles the company's non-GAAP financial measures: Adjusted Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA. These measures are used by management to assess performance by excluding non-cash, non-realized adjustments like changes in MSR fair value, share-based compensation, litigation accruals, and career transition program costs, providing a clearer view of core operating performance - Non-GAAP measures (Adjusted Revenue, Adjusted Net Income/Loss, Adjusted Diluted EPS, Adjusted EBITDA) are used to analyze and benchmark performance by excluding certain non-cash or non-recurring items[199](index=199&type=chunk)[200](index=200&type=chunk) - Adjusted EBITDA excludes interest and amortization expense on non-funding debt, income tax, depreciation and amortization, changes in MSR fair value (net of hedges), share-based compensation, litigation accrual, career transition program, and changes in Tax receivable agreement liability[200](index=200&type=chunk) Reconciliation of Adjusted Revenue to Total Revenue, net (in Millions) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :----------------------------- | | Total revenue, net | $1,392.4 | $4,063.0 | | Change in fair value of MSRs due to valuation assumptions (net of hedges) | $(267.0) | $(1,006.2) | | Adjusted Revenue | $1,125.5 | $3,056.8 | Reconciliation of Adjusted EBITDA to Net Income (in Millions) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :----------------------------- | | Net income | $59.8 | $1,096.4 | | Adjusted EBITDA | $(27.5) | $422.6 | [Key Performance Indicators](index=51&type=section&id=Key%20Performance%20Indicators) This section presents key performance indicators (KPIs) used to evaluate business operations, including loan production data (origination volume, gain on sale margin), servicing portfolio data (UPB, MSR fair value multiple, delinquency rates, client retention), and metrics for other Rocket Companies (closings, transactions, unique visitors, sales, revenue) Loan Production Data (in Millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :----- | :------------------------------- | :------------------------------- | | Closed loan origination volume | $34,543.9 | $83,764.2 | | Direct to Consumer origination volume | $20,298.5 | $45,231.3 | | Partner Network origination volume | $14,245.4 | $38,533.0 | | Gain on sale margin | 2.92% | 2.78% | Servicing Portfolio Data (June 30, 2022 vs. 2021, in Millions) | Metric | June 30, 2022 | June 30, 2021 | | :----- | :------------ | :------------ | | Total serviced UPB (includes subserviced) | $537,854.2 | $507,167.6 | | MSRs UPB of loans serviced | $485,422.0 | $466,444.9 | | MSR fair value multiple | 4.83 | 3.46 | | Total serviced MSR delinquency rate (60+) | 1.12% | 2.60% | | Net client retention rate (trailing twelve months) | 93% | 90% | Other Rocket Companies Key Metrics (Three Months Ended June 30, 2022 vs. 2021) | Metric | 2022 | 2021 | | :----- | :------ | :------ | | Amrock closings (units in thousands) | 82.6 | 260.3 | | Rocket Homes real estate transactions (in thousands) | 10.4 | 8.3 | | Rockethomes.com average unique monthly visitors (in thousands) | 2,884.8 | 1,818.6 | | Rocket Loans closed (units in thousands) | 7.2 | 4.6 | | Rocket Auto car sales (units in thousands) | 4.8 | 15.6 | | Total Other Rocket Companies net revenue (in Millions) | $162.0 | $384.2 | [Description of Certain Components of Financial Data](index=53&type=section&id=Description%20of%20Certain%20Components%20of%20Financial%20Data) This section provides detailed descriptions of the company's revenue components, including Gain on sale of loans, net, Loan servicing income (loss), Interest income, net, and Other income. It also outlines the operating expense categories: Salaries, commissions and team member benefits, General and administrative expenses, Marketing and advertising expenses, and Other expenses, along with explanations for income taxes, Tax Receivable Agreement, and non-controlling interest - Revenue sources include Gain on sale of loans, net (premiums, origination fees, MSRs, hedging), Loan servicing income (servicing fees, MSR fair value changes), Interest income, net (on loans held for sale less funding facility interest), and Other income (Amrock, Rocket Homes, Rocket Auto, Core Digital Media, Rock Connections, Rocket Money, professional service fees)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - Operating expenses comprise Salaries, commissions and team member benefits (payroll, benefits, share-based compensation), General and administrative expenses (occupancy, professional services, loan processing, commitment fees), Marketing and advertising expenses, and Other expenses (depreciation, amortization, mortgage servicing related expenses)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) [Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021](index=55&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2022, versus 2021, breaking down changes in revenue components (gain on sale, loan servicing, interest income, other income) and expenses. It also includes a segment-level analysis for Direct to Consumer and Partner Network, highlighting volume, margins, and contribution [Gain on sale of loans, net](index=55&type=section&id=Gain%20on%20sale%20of%20loans%2C%20net) This section analyzes the changes in gain on sale of loans, net, driven by fluctuations in mortgage origination volume and market conditions Gain on Sale of Loans, Net (in Millions) | Period | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Three Months Ended June 30 | $806.8 | $2,341.5 | -65.5% | | Six Months Ended June 30 | $2,290.6 | $5,893.9 | -61.1% | - The decrease in gain on sale of loans, net, was primarily driven by a decline in net (loss) gain on sales of loans and a decrease in the fair value of originated MSRs, reflecting a significant reduction in mortgage loan origination volume[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) Mortgage Loan Origination Volume by Type (Six Months Ended June 30, in Millions) | Loan Type | 2022 | 2021 | Change (YoY) | | :-------- | :------------ | :------------ | :----------- | | Conventional Conforming | $68,747.3 | $144,960.6 | -52.57% | | FHA/VA | $15,696.8 | $31,392.9 | -50.02% | | Non-Agency | $4,076.6 | $10,935.8 | -62.73% | | Total mortgage loan origination volume | $88,520.7 | $187,289.4 | -52.72% | [Loan servicing income (loss)](index=57&type=section&id=Loan%20servicing%20income%20(loss)) This section details the significant increase in loan servicing income, primarily influenced by changes in MSR valuation assumptions and portfolio growth Loan Servicing Income (Loss) (in Millions) | Period | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Three Months Ended June 30 | $345.1 | $(72.0) | +579.0% | | Six Months Ended June 30 | $1,165.7 | $420.9 | +177.0% | - The significant increase in loan servicing income was primarily due to a **$281.8 million** increase in changes in valuation model inputs or assumptions (vs. a **$141.7 million** decrease in 2021) driven by lower prepayment speed assumptions due to rising mortgage interest rates[241](index=241&type=chunk) - Servicing fee income also increased due to growth in the servicing portfolio, reaching **$357.6 million** for the three months ended June 30, 2022, up from **$343.3 million** in 2021[241](index=241&type=chunk) [Interest income, net](index=59&type=section&id=Interest%20income%2C%20net) This section examines the increase in net interest income, attributed to interest savings from self-funding and higher mortgage interest rates Interest Income, Net (in Millions) | Period | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Three Months Ended June 30 | $36.5 | $22.3 | +63.9% | | Six Months Ended June 30 | $85.3 | $49.7 | +71.8% | - The increase in net interest income was primarily due to interest savings on funding facilities from increased self-funding of loans and higher mortgage interest rates, partially offset by lower sold loan volume[245](index=245&type=chunk)[246](index=246&type=chunk) [Other income](index=59&type=section&id=Other%20income) This section reviews the decrease in other income, mainly due to reduced title-related revenues at Amrock resulting from lower mortgage origination volume Other Income (in Millions) | Period | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Three Months Ended June 30 | $204.0 | $376.4 | -45.8% | | Six Months Ended June 30 | $521.4 | $842.5 | -38.1% | - The decrease in other income was primarily due to a reduction in title-related revenues at Amrock, driven by lower mortgage origination volume[247](index=247&type=chunk)[248](index=248&type=chunk) [Expenses](index=60&type=section&id=Expenses) This section analyzes the overall decrease in total expenses, driven by cost-saving measures across various operational categories Total Expenses (in Millions) | Period | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Three Months Ended June 30 | $1,313.9 | $1,607.4 | -18.3% | | Six Months Ended June 30 | $2,922.0 | $3,303.1 | -11.5% | - The decrease in total expenses was driven by cost-saving measures, including reductions in salaries, commissions, team member benefits, marketing and advertising, and other expenses[250](index=250&type=chunk)[251](index=251&type=chunk) - Salaries, commissions, and team member benefits decreased by **$86.3 million** (**10.3%**) for the three months ended June 30, 2022, due to fewer team members in production roles and lower variable compensation[250](index=250&type=chunk) - Other expenses decreased by **$102.1 million** (**62.9%**) for the three months ended June 30, 2022, primarily due to reduced title-related expenses at Amrock[250](index=250&type=chunk) [Summary Results by Segment](index=60&type=section&id=Summary%20Results%20by%20Segment) [Direct to Consumer Results](index=61&type=section&id=Direct%20to%20Consumer%20Results) This section details the performance of the Direct to Consumer segment, highlighting declines in loan volume, adjusted revenue, and contribution margin Direct to Consumer Segment Performance (Three Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Sold Loan Volume | $19,538.1 | $48,902.1 | -60.0% | | Sold Loan Gain on Sale Margin | 4.17% | 4.66% | -0.49 pp | | Adjusted Revenue | $838.9 | $2,342.8 | -64.2% | | Directly Attributable Expenses | $609.4 | $907.3 | -32.8% | | Contribution Margin | $229.5 | $1,435.5 | -84.0% | - The decrease in Direct to Consumer Adjusted Revenue and Contribution Margin was primarily due to a decline in sold loan volume and compression in gain on sale margins, driven by increased price competition[254](index=254&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk)[259](index=259&type=chunk) [Partner Network Results](index=62&type=section&id=Partner%20Network%20Results) This section outlines the performance of the Partner Network segment, showing decreases in loan volume, adjusted revenue, and contribution margin Partner Network Segment Performance (Three Months Ended June 30, 2022 vs. 2021, in Millions) | Metric | 2022 | 2021 | Change (YoY) | | :----- | :---------- | :---------- | :----------- | | Sold Loan Volume | $13,579.6 | $30,120.0 | -54.9% | | Sold Loan Gain on Sale Margin | 1.29% | 1.16% | +0.13 pp | | Adjusted Revenue | $177.2 | $319.2 | -44.5% | | Directly Attributable Expenses | $95.7 | $176.1 | -45.6% | | Contribution Margin | $81.5 | $143.1 | -43.0% | - The decrease in Partner Network Adjusted Revenue and Contribution Margin was primarily due to lower sold loan volumes, despite a slight increase in sold loan gain on sale margin due to a favorable mix shift[261](index=261&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[266](index=266&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) This section describes the company's liquidity sources, capital position, and significant changes in cash and equity during the period - Primary sources of liquidity include borrowings (loan funding facilities, secured/unsecured financing), cash flow from operations (loan sales, MSR sales, origination fees, servicing income, interest income), and cash/marketable securities[267](index=267&type=chunk) - As of June 30, 2022, total liquidity was **$7.3 billion**, including **$0.9 billion** cash on hand, **$3.1 billion** corporate cash for self-funding, **$3.1 billion** undrawn non-funding lines, and **$0.2 billion** undrawn MSR lines[273](index=273&type=chunk) - The company's available cash position was **$4.0 billion**, combined with **$6.7 billion** in MSRs, totaling **$10.7 billion** in asset value[273](index=273&type=chunk) - Cash and cash equivalents and Restricted cash decreased by **$1.1 billion** (**52.1%**) to **$1.0 billion** at June 30, 2022, primarily due to distributions to shareholders and unit holders[275](index=275&type=chunk) - Equity increased by **$0.6 billion** (**7.2%**) to **$8.8 billion** at June 30, 2022, driven by net income and share-based compensation, offset by distributions[276](index=276&type=chunk) Total Distributions (Six Months Ended June 30, in Billions) | Year | Special Dividend | Tax Distributions | Total Distributions | | :--- | :--------------- | :---------------- | :------------------ | | 2022 | $2.0 | $0.17 | ~$2.2 | | 2021 | $2.2 | $1.4 | ~$3.6 | [Contractual Obligations, Commercial Commitments, and Other Contingencies](index=65&type=section&id=Contractual%20Obligations%2C%20Commercial%20Commitments%2C%20and%20Other%20Contingencies) This section confirms no material changes to the company's outstanding contractual obligations or commercial commitments - There were no material changes to outstanding contractual obligations outside the ordinary course of business as of June 30, 2022, compared to December 31, 2021[280](index=280&type=chunk) [New Accounting Pronouncements Not Yet Effective](index=65&type=section&id=New%20Accounting%20Pronouncements%20Not%20Yet%20Effective) This section refers to details on recently issued accounting pronouncements and their expected impact on the company's financial statements - Refer to Note 1 for details on recently issued accounting pronouncements and their expected impact[281](index=281&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes to the company's exposure to market risks since the disclosures in its December 31, 2021 Annual Report on Form 10-K - No material changes to the company's exposure to market risks since December 31, 2021[283](index=283&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022, concluding they are effective at a reasonable assurance level. It also states there were no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2022[284](index=284&type=chunk) - No material changes in internal control over financial reporting were identified during the period[285](index=285&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) This section states that while the company is routinely involved in various legal actions, management believes that currently pending or threatened matters are not expected to have a material adverse effect on its business, financial condition, and results of operations - Management believes current legal proceedings are not expected to have a material adverse effect on the company's financial condition or results of operations[288](index=288&type=chunk) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the detailed discussion of risk factors in the company's 2021 Form 10-K and Q1 2022 Form 10-Q, stating that these risks have not significantly changed and should be carefully reviewed - Risk factors have not significantly changed from those disclosed in the 2021 Form 10-K and Q1 2022 Form 10-Q[289](index=289&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's Share Repurchase Program, authorized in November 2020 for up to $1.0 billion of common stock. It provides activity for the three months ended June 30, 2022, and cumulative repurchases - A **$1.0 billion** Share Repurchase Program was authorized in November 2020 for Class A and Class D Common Stock[291](index=291&type=chunk) Share Repurchase Program Activity (Three Months Ended June 30, 2022, in Millions) | Period | Number of Shares Repurchased | Average Repurchase Price Per Share | Total Repurchase Amount | | :--------------------------- | :--------------------------- | :--------------------------------- | :---------------------- | | 4/1/2022 to 4/30/2022 | 2.5 | $9.44 | $23.2 | | 5/1/2022 to 5/31/2022 | 0.4 | $9.09 | $3.8 | | 6/1/2022 to 6/30/2022 | 2.6 | $7.05 | $18.3 | | Total for the three months ended June 30, 2022 | 5.5 | $8.28 | $45.3 | - As of July 27, 2022, Rocket Companies cumulatively repurchased **29.8 million** shares at a weighted average price of **$13.20**, totaling **$393.7 million**[293](index=293&type=chunk) - Approximately **$623.0 million** remained available under the Share Repurchase Program as of June 30, 2022[292](index=292&type=chunk) [Item 6. Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, amendments to repurchase agreements, a new MSR facility agreement, CEO/CFO certifications, and XBRL-related documents - Exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), amendments to Master Repurchase Agreements, a new Loan and Security Agreement (MSR Facility), CEO/CFO certifications, and Inline XBRL documents[295](index=295&type=chunk) [Signature](index=70&type=section&id=Signature) This section contains the signature of the registrant, Rocket Companies, Inc., by its Chief Financial Officer and Treasurer, Julie Booth, dated August 9, 2022, certifying the filing of the report - The report was signed by Julie Booth, Chief Financial Officer and Treasurer of Rocket Companies, Inc., on August 9, 2022[299](index=299&type=chunk)