10-QPeriod: Q1 FY2021

Rocket Companies, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 14, 2021For Securities:RKT

Summary

Rocket Companies, Inc. (RKT) reported a significant increase in revenue and net income for the first quarter of 2021 compared to the same period in 2020. This surge was primarily driven by a substantial rise in mortgage loan origination volume and a strong gain on sale of loans. The company's Direct to Consumer segment showed robust growth, significantly increasing its revenue and contribution margin, supported by higher origination volumes and an expanded gain on sale margin. Similarly, the Partner Network segment experienced substantial revenue growth and a wider gain on sale margin. Despite increased operational expenses related to higher production levels and team member growth, Rocket Companies maintained strong profitability. The company's liquidity remains solid, with substantial cash and cash equivalents and ample capacity under its various financing facilities. The company also declared a special dividend, demonstrating its commitment to returning value to shareholders.

Financial Highlights

34 data points
Beta

Net Income

$123.70M

EPS (Diluted)

$1.07

Total Assets

$34.73B

Cash & Equivalents

$2.86B

Free Cash Flow

$6.24B

Financial Statements
Beta
Gross Profit$3.32B
Operating Expenses$1.70B
Net Income$123.70M
EPS (Basic)$1.07
EPS (Diluted)$1.07
Shares Outstanding (Basic)115.67M
Shares Outstanding (Diluted)122.01M

Key Highlights

  • 1Net income attributable to Rocket Companies surged to $123.7 million in Q1 2021 from effectively $0 in Q1 2020, a dramatic improvement driven by increased origination volume and favorable market conditions.
  • 2Total revenue, net, more than tripled year-over-year, reaching $4.6 billion in Q1 2021, up from $1.4 billion in Q1 2020, primarily due to a 95% increase in gain on sale of loans.
  • 3Mortgage loan origination volume more than doubled to $103.5 billion in Q1 2021, up from $51.7 billion in Q1 2020, reflecting strong market demand.
  • 4The company's Direct to Consumer segment saw its revenue increase by 78.0% to $3.2 billion and its contribution margin grow by 114.9% to $2.2 billion, driven by strong origination growth and improved gain on sale margins.
  • 5The Partner Network segment also experienced significant growth, with Adjusted Revenue increasing by 207.5% to $722.4 million and Contribution Margin rising by 279.6% to $542.7 million.
  • 6Despite increased operating expenses, including salaries and general administrative costs, the company reported a strong Adjusted EBITDA of $2.4 billion for Q1 2021.
  • 7Rocket Companies declared a special cash dividend of $1.11 per share, paid in March 2021, funded by substantial cash distributions from its subsidiary.

Frequently Asked Questions

The primary driver of Rocket Companies' revenue growth in Q1 2021 was the significant increase in mortgage loan origination volume and the resulting higher gain on sale of loans. Total revenue, net, more than tripled year-over-year, primarily due to a 95% increase in gain on sale of loans.

Both segments showed strong performance. The Direct to Consumer segment's Adjusted Revenue grew by 78.0% and its Contribution Margin increased by 114.9%. The Partner Network segment saw even more substantial growth, with Adjusted Revenue up 207.5% and Contribution Margin up 279.6%. This growth was fueled by increased origination volumes and improved gain on sale margins in both segments.

Rocket Companies maintains a strong liquidity position with $2.9 billion in cash and cash equivalents and restricted cash as of March 31, 2021. The company utilizes various financing facilities, including master repurchase agreements and other secured and unsecured lines of credit, to fund loan originations. As of March 31, 2021, the aggregate available amount under its facilities was $31.5 billion, with $16.0 billion in unutilized capacity, indicating ample financial resources.

Yes, Rocket Companies declared and paid a special cash dividend of $1.11 per share in March 2021. This dividend was funded by cash distributions of approximately $2.2 billion from its subsidiary, RKT Holdings, LLC.