Rocket Companies(RKT) - 2024 Q3 - Quarterly Results

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