Rocket earnings rebound in first quarter

Rocket Companies posted first-quarter net income of $291 million on net revenue of $1.4 billion, an improvement over the $411 million net loss it recorded a year ago, the parent company of mortgage lending giant Rocket Mortgage reported Thursday.

Rocket's net revenue more than doubled from $666 million in the first quarter of 2023.

Rocket reported adjusted revenue of $1.1 billion, up from $882 million a year ago.

The Detroit-based company generated $20.2 billion in closed loan origination volume during the first three months of the year, up 18% from a year ago. Rocket's quarterly gain-on-sale margin improved year-over-year from 2.4% to 3.1% in Q1.

“Rocket entered 2024 with strong momentum," Varun Krishna, CEO and director of Rocket Companies, said in a statement Thursday. "I’m incredibly proud of our team's performance in Q1, as we accelerated top-line growth for the third straight quarter and achieved our highest profitability in two years. Once again, we expanded both our purchase and refinance market share, through a combination of innovation, technology, process enhancements and strong execution.

"In spite of rapidly changing market conditions, we see tremendous opportunity ahead to serve our clients. The homeownership space is vast, fragmented and ripe for modernization. Rocket is uniquely poised to leverage AI and drive transformative experiences in service of our mission to help everyone home.”

Rocket Companies has continued its focus on using artificial intelligence to provide service for its mortgage customers, Krishna said during an earnings call.

“AI eliminates the drudgery of burdensome, time-consuming manual tasks so that our team members can spend more time on making human connections and producing higher-value work,” he said. “Ultimately, with AI we are driving operational efficiency, speed, accuracy and personalization at massive scale … Rocket Logic continues to add new capabilities and expand full automation of mundane tasks, freeing up team member capacity to serve many more clients and drive growth.”

Krishna said the company is continuously building on and adding new capabilities to Rocket Logic, such as Rocket Logic Synopsis, which he says works behind the scenes on tasks include transcribing and tagging client interactions, and logging client preferences for communication method and times to be contacted.

“Rocket Logic has already reduced the number of times a team member interacts with the loan by nearly 25% year over year,” he said. “This in turn has shaved several days off the time it takes Rocket clients to close on a home purchase, reducing current times by 25% from August 2022 to February 2024. These efficiencies are key in helping Rocket close loans nearly two and a half times faster than the industry average.”

Brian Brown, chief financial officer, noted the company's $22.4 billion in net rate lock volume and $20.2 billion in closed volume during the first quarter.

“We have made significant strides in both refinance and purchase market share delivering meaningful growth on both fronts during the period,” he said. “Our differentiated solutions like our home equity loan products are attracting new refinance clients who want to access the equity in their home while preserving an already low rate on their existing mortgage. And then from a purchase perspective, Rocket integrated end-to-end ecosystem across real estate and mortgage makes for unbeatable offerings like our Buy Plus Program, which is directly geared towards addressing the historic affordability challenges that today's buyers face.”

Rocket Cos. is a portfolio of businesses that includes Rocket Mortgage as well as other ventures such as Rocket Homes, Rocket Loans and Rocket Money.

Pontiac-based rival United Wholesale Mortgage Holdings Corp. reports earnings Thursday, May 9.

cwilliams@detroitnews.com

@CWilliams_DN