10-QPeriod: Q1 FY2023

Rocket Companies, Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 10, 2023For Securities:RKT

Summary

Rocket Companies, Inc. reported a net loss of $18.5 million for the first quarter of 2023, a significant shift from the $53.7 million net income in the same period last year. This downturn is primarily attributed to a substantial decrease in total revenue, which fell to $666.1 million from $2.7 billion year-over-year. The decline in revenue stems largely from reduced gain on sale of loans, impacted by higher mortgage interest rates and decreased origination volume. Despite the challenging market conditions, the company managed to reduce its total expenses by 33% year-over-year through cost-saving measures, particularly in salaries, marketing, and administrative functions. The company maintains a strong liquidity position with $8.1 billion in total liquidity as of March 31, 2023, including $0.9 billion in cash and cash equivalents and significant undrawn credit facilities. Management remains focused on navigating the current economic environment and leveraging its technology platform to deliver client solutions.

Financial Highlights

34 data points
Beta

Net Income

-$18.52M

EPS (Diluted)

$-0.16

Total Assets

$21.20B

Cash & Equivalents

$893.38M

Free Cash Flow

-$1.35B

Financial Statements
Beta
Gross Profit$18.28M
Operating Expenses$1.08B
Net Income-$18.52M
EPS (Basic)$-0.15
EPS (Diluted)$-0.16
Shares Outstanding (Basic)124.73M
Shares Outstanding (Diluted)1.97B

Key Highlights

  • 1Net loss of $18.5 million for Q1 2023, compared to a net income of $53.7 million in Q1 2022.
  • 2Total revenue decreased by 75% to $666.1 million in Q1 2023 from $2.7 billion in Q1 2022.
  • 3Gain on sale of loans, net decreased significantly by 68% to $469.6 million.
  • 4Total expenses reduced by 33% to $1.1 billion in Q1 2023 from $1.6 billion in Q1 2022.
  • 5Cash and cash equivalents stood at $893.4 million, and total liquidity was $8.1 billion as of March 31, 2023.
  • 6Originated mortgage loan volume decreased by 69% year-over-year.
  • 7The company maintained compliance with all debt covenants as of March 31, 2023.

Frequently Asked Questions

The primary driver of the revenue decline was a substantial decrease in the 'Gain on sale of loans, net,' which fell by 68% year-over-year. This was largely due to a 69% decrease in originated mortgage loan volume, impacted by rising interest rates and reduced market demand for mortgage originations.

Rocket Companies implemented cost-saving measures, leading to a 33% reduction in total expenses year-over-year. Key areas of expense reduction included salaries, commissions, and team member benefits (down 29%), marketing and advertising expenses (down 45%), and general and administrative expenses (down 29%).

The company reported a strong liquidity position as of March 31, 2023, with total liquidity of $8.1 billion. This includes $0.9 billion in cash and cash equivalents, and substantial undrawn capacity from its financing facilities ($3.1 billion from credit facilities and $1.7 billion from MSR lines).

The 'Change in fair value of MSRs' resulted in a loss of $398.3 million for the first quarter of 2023, compared to a gain of $454.4 million in the prior year period. This significant swing negatively impacted the 'Loan servicing (loss) income, net' and contributed to the overall net loss.