loanDepot(US:LDI)2021-11-01 20:48Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $924 million, with diluted earnings per share of $0.40 and adjusted diluted earnings per share of $0.46, reflecting higher loan origination volumes and gain on sale margins as well as lower operating expenses [19][20] - Loan origination volume was $32 billion, a decrease of 7% from Q2 2021, meeting the guidance of $30 billion to $36 billion [20] - Rate lock volume was $43.7 billion, resulting in total revenue of $924 million, which represented an increase of 18% from Q2 2021 [22][23] - Gain on sale margin for Q3 was 2.84% of loan origination volume, meeting the guidance of 245 to 295 basis points [23] Business Line Data and Key Metrics Changes - Retail channel accounted for 78% of loan originations, while the partner channel accounted for 22%, indicating strong customer relationships and effective technology platform [21] - Purchase loan origination was $11 billion, while refinance loan originations were $21 billion during the period [20] Market Data and Key Metrics Changes - Market share increased by 46% from 2.4% to 3.5% compared to the same quarter last year, demonstrating the strength of the diversified channel strategy [8][10] - Unique website visitors for the first nine months of 2021 were up over 16% compared to the same period in 2020, despite lower market volume [13] Company Strategy and Development Direction - The company is focused on becoming a digital commerce company serving customers throughout the homeownership journey with a full suite of products and services [16] - The launch of the loanDepot Grand Slam package is expected to drive growth, with early success in purchase lead funding and real estate agent introductions [15] - The company aims to lead the consolidation of products and services for homeowners, leveraging its brand, technology, and scale [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenging market conditions and emphasized the importance of operational flexibility [10][17] - The company expects pull-through weighted rate lock volume for Q4 to be between $18 billion and $28 billion, reflecting recent increases in interest rates and seasonal slowdowns [31] - Management highlighted the potential for a refi boom due to increased loan limits, but noted that labor market adjustments are necessary for optimal performance [83] Other Important Information - The unpaid principal balance of the servicing portfolio grew to a record level of $145.3 billion as of September 30, 2021, compared to $138.8 billion in Q2 2021 [28] - The company is committed to ethical business practices and is currently involved in litigation related to shareholder suits and employment law claims, but does not expect material adverse impacts from these lawsuits [26][27] Q&A Session Summary Question: How does the company balance marketing investments with a smaller market size? - The company increased marketing spend by 14% and grew lead volume by 33%, which helped expand market share to 3.5% [39][40] Question: What is the outlook for gain on sale margins? - Gain on sale margins are expected to be lower in Q4 due to seasonality and rising rates, with guidance of 210 to 260 basis points [50] Question: What are the expectations for operating expenses in the coming quarters? - Operating expenses are expected to continue declining due to cost-saving initiatives, but there may be increases related to in-house servicing personnel [60][61] Question: What progress has been made with the Grand Slam initiative? - Digital mortgage purchase leads have increased significantly, and metrics related to real estate agent introductions and listings have shown strong growth [65] Question: What are the company's thoughts on stock buybacks? - The company is focused on growth and creating shareholder value, with stock buybacks being a less attractive option due to limited float in the market [105]