Rocket Companies Inc

Previous wording

We originated $24.7 billion in residential mortgage loans, which was a $2.3 billion, or 10% increase compared to $22.3 billion for the same period in 2023. Our Net income for the period was $177.9 million, which was an increase of $38.8 million, or 28%, compared to Net income of $139.2 million for the same period in 2023. We generated Adjusted EBITDA of $224.8 million which was an increase of $206.6 million compared to Adjusted EBITDA of $18.2 million for the same period in 2023. For more information on Adjusted EBITDA, please see “Non-GAAP Financial Measures” below.

Current wording

We originated $28.5 billion in residential mortgage loans, an increase of $6.3 billion, or 28%, compared to $22.2 billion for the same period in 2023. Our Net loss for the period was $481.4 million, a decrease of $596.4 million, compared to Net income of $114.9 million for the same period in 2023. We generated Adjusted EBITDA of $285.9 million, an increase of $212.7 million, compared to Adjusted EBITDA of $73.2 million for the same period in 2023. For more information on Adjusted EBITDA, please see “Non-GAAP Financial Measures” below.

Previous wording

We originated $44.9 billion in residential mortgage loans, which was a $5.6 billion, or 14% increase compared to $39.3 billion for the same period in 2023. Our Net income for the period was $468.6 million, which was an increase of $741.0 million, compared to a Net loss of $272.3 million for the same period in 2023. We generated $399.1 million of Adjusted EBITDA, which was an increase of $459.9 million, compared to an Adjusted EBITDA loss of $60.8 million for the same period in 2023. For more information on Adjusted EBITDA, please see “Non-GAAP Financial Measures” below.

Current wording

We originated $73.4 billion in residential mortgage loans, an increase of $11.9 billion, or 19%, compared to $61.5 billion for the same period in 2023. Our Net loss for the period was $12.8 million, an increase of $144.6 million, compared to Net loss of $157.4 million for the same period in 2023. We generated $685.0 million of Adjusted EBITDA, an increase of $672.6 million, compared to Adjusted EBITDA of $12.5 million for the same period in 2023. For more information on Adjusted EBITDA, please see “Non-GAAP Financial Measures” below.

Previous wording

We define “Adjusted revenue” as total revenues net of the change in fair value of mortgage servicing rights (“MSRs”) due to valuation assumptions, net of hedges. We define “Adjusted net income (loss)” as tax-effected net income (loss) before share-based compensation expense, the change in fair value of MSRs due to valuation assumptions, net of hedges, and the tax effects of those adjustments as applicable. We define “Adjusted diluted earnings (loss) per share” as Adjusted net income (loss) divided by the adjusted diluted weighted average shares outstanding which includes diluted weighted average Class A common stock and the assumed pro forma exchange and conversion of Class D common stock outstanding for the applicable period presented. We define “Adjusted EBITDA” as net income (loss) before interest and amortization expense on non-funding debt, provision for (benefit from) income taxes, depreciation and amortization, share-based compensation expense, and change in fair value of MSRs due to valuation assumptions, net of hedges.

Current wording

We define “Adjusted revenue” as total revenues net of the change in fair value of mortgage servicing rights (“MSRs”) due to valuation assumptions, net of hedges. We define “Adjusted net income (loss)” as tax-effected net income (loss) before share-based compensation expense, the change in fair value of MSRs due to valuation assumptions, net of hedges, career transition program and the tax effects of those adjustments as applicable. We define “Adjusted diluted earnings (loss) per share” as Adjusted net income (loss) divided by the adjusted diluted weighted average shares outstanding which includes diluted weighted average Class A common stock and the assumed pro forma exchange and conversion of Class D common stock outstanding for the applicable period presented. We define “Adjusted EBITDA” as net income (loss) before interest and amortization expense on non-funding debt, (benefit from) provision for income taxes, depreciation and amortization, share-based compensation expense, change in fair value of MSRs due to valuation assumptions, net of hedges and career transition program.

Previous wording

Our definitions of each of our non-GAAP financial measures allow us to add back certain cash and non-cash charges, and deduct certain gains that are included in calculating Total revenue, net, Net income (loss) attributable to Rocket Companies or Net income (loss). However, these expenses and gains vary greatly, and are difficult to predict. From time to time in the future, we may include or exclude other items if we believe that doing so is consistent with the goal of providing useful information to investors.

Current wording

Our definitions of each of our non-GAAP financial measures allow us to add back certain cash and non-cash charges, and deduct certain gains that are included in calculating Total revenue, net, Net (loss) income attributable to Rocket Companies or Net (loss) income. However, these expenses and gains vary greatly, and are difficult to predict. From time to time in the future, we may include or exclude other items if we believe that doing so is consistent with the goal of providing useful information to investors.

Previous wording

(2) Rocket Companies is subject to U.S. Federal income taxes, in addition to state, local and Canadian taxes with respect to its allocable share of any net taxable income (loss) of Holdings. The adjustment to the (provision for) benefit from income tax reflects the difference between (a) the income tax computed using the effective tax rates below applied to the income (loss) before income taxes assuming Rocket Companies, Inc. owns 100% of the non-voting common interest units of Holdings and (b) the provision for (benefit from) income taxes.

Current wording

(2) Rocket Companies is subject to U.S. Federal income taxes, in addition to state, local and Canadian taxes with respect to its allocable share of any net taxable income or loss of Holdings. The adjustment to the benefit from (provision for) income tax reflects the difference between (a) the income tax computed using the effective tax rates below applied to the (loss) income before income taxes assuming Rocket Companies, Inc. owns 100% of the non-voting common interest units of Holdings and (b) the (benefit from) provision for income taxes.

Previous wording

(4) Tax impact of adjustments gives effect to the income tax related to share-based compensation expense, and the change in fair value of MSRs due to valuation assumptions, at the effective tax rates for each quarter.

Current wording

(6) Tax impact of adjustments gives effect to the income tax related to share-based compensation expense, the change in fair value of MSRs due to valuation assumptions and career transition program, at the effective tax rates for each quarter.

Previous wording

(1) Reflects the pro forma exchange and conversion of anti-dilutive Class D common stock to Class A common stock for the three and six months ended June 30, 2024. For the three and six months ended June 30, 2023, Class D common shares were dilutive and are included in the Diluted weighted average Class A common shares outstanding in the table above.

Current wording

(1) Reflects the pro forma exchange and conversion of anti-dilutive Class D common stock to Class A common stock for the nine months ended September 30, 2024. For the three months ended September 30, 2024 and three and nine months ended September 30, 2023, Class D common shares were dilutive and are included in the Diluted weighted average Class A common shares outstanding in the table above.

Previous wording

Our sources of revenue include Gain on sale of loans, net, Loan servicing income, net, Interest income, net, and Other income.

Current wording

Our sources of revenue include Gain on sale of loans, net, Loan servicing (loss) income, net, Interest income, netand Other income.

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

The change in the Investor reserves liability balance was relatively flat in the current and prior period. The $74.2 million reduction in provision expense was primarily due to a decrease in losses on repurchased loans in the current period, compared to the same period in 2023.

Current wording

The Investor reserves liability balance was relatively flat in the current and prior period. The $73.7 million reduction in provision expense was primarily due to a decrease in losses on repurchased loans in the current period, compared to the same period in 2023.

Previous wording

For the periods presented, Loan servicing income, net consisted of the following:

Current wording

For the periods presented, Loan servicing (loss) income, net consisted of the following:

Previous wording

(1) Includes the effect of contractual prepayment protection resulting from sales or purchases of MSRs prepayment protection

Current wording

(1) Includes the effect of contractual prepayment protection resulting from sales or purchases of MSRs.

Previous wording

Loan servicing income, net was $241.7 million, a decrease of $144.2 million, or 37%, compared to $386.0 million for the same period in 2023, primarily due to the $166.5 million decrease in Change in valuation model inputs or assumptions, partially offset by the $11.1 million increase in Servicing fee income. In 2024, the Change in valuation model inputs or assumptions was $74.2 million, down from $240.7 million in 2023. This change is attributable to a smaller increase in interest rates during the second quarter of 2024, compared to the same period in 2023. The Servicing fee income increase was driven by an increase in the average portfolio size during 2024.

Current wording

Loan servicing loss, net was $504.5 million, a decrease of $861.3 million, compared to $356.8 million loan servicing income, net for the same period in 2023, primarily due to the $893.7 million decline in valuation reflected in Change in valuation model inputs or assumptions. In 2024, the Change in valuation model inputs or assumptions was a $682.6 million decrease, compared to an increase of $211.0 million in 2023. This change was driven by a decrease in interest rates during the third quarter of 2024, compared to an increase in interest rates during the same period in 2023.

Previous wording

Loan servicing income, net was $644.0 million, an increase of $289.9 million, or 82%, which compares to $354.1 million for the same period in 2023, primarily due to the $278.8 million increase in Change in valuation model inputs or assumptions and the $24.9 million increase in Collection / realization of cash flows. In 2024, the Change in valuation model inputs or assumptions was $301.0 million, up from $22.2 million in 2023. This change was due to a larger increase in interest rates during the first half of 2024, compared to the same period in 2023.

Current wording

Loan servicing income, net was $139.5 million, a decrease of $571.4 million, or 80%, compared to $710.9 million for the same period in 2023, primarily due to the $614.9 million decline in valuation reflected in Change in valuation model inputs or assumptions. In 2024, the Change in valuation model inputs or assumptions was a $381.7 million decrease, compared to an increase of $233.3 million in 2023. This change was driven by a decrease in interest rates during the current period, compared to an increase in interest rates during the same period in 2023.

Previous wording

Other income was $269.3 million, an increase of $34.8 million, or 15%, compared to $234.5 million for the same period in 2023, primarily driven by a $25.6 million, or 54%, increase in Rocket Money revenue associated with an increase in paid subscriptions.

Current wording

Other income was $300.3 million, an increase of $52.9 million, or 21%, compared to $247.4 million for the same period in 2023, driven by a $27.0 million, or 53%, increase in Rocket Money revenue associated with growth in paid subscriptions and also an increase in Amrock revenue of $21.3 million, or 34%, driven by higher Amrock closing volume.

Previous wording

Other income was $514.0 million, an increase of $82.7 million, or 19%, compared to $431.3 million for same period in 2023, primarily driven by a $48.4 million, or 52%, increase in Rocket Money revenue associated with an increase in paid subscriptions.

Current wording

Other income was $814.3 million, an increase of $135.6 million, or 20%, compared to $678.7 million for same period in 2023, driven by a $75.4 million, or 52%, increase in Rocket Money revenue associated with growth in paid subscriptions and also an increase in Amrock revenue of $30.1 million, or 16%, driven by higher Amrock closing volume.

Previous wording

Summary Results by Segment for the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Summary Results by Segment for the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

We measure the performance of the segments primarily on a contribution margin basis. Contribution margin is intended to measure the direct profitability of each segment and is calculated as Adjusted revenue less directly attributable expenses. Adjusted revenue is a non-GAAP financial measure described above. Directly attributable expenses include Salaries, commissions and team member benefits, General and administrative expenses, Marketing and advertising expenses and Other expenses, such as direct servicing costs and origination costs. For segments, we measure gain on sale margin of sold loans and refer to this metric as ‘sold loan gain on sale margin.’ A loan is considered sold when it is sold to investors on the secondary market. Sold loan gain on sale margin reflects the gain on sale revenue of loans sold into the secondary market divided by the sold loan volume for the period. By contrast, ‘gain on sale margin’, which we reference outside of the segment discussion, measures the gain on sale revenue, net divided by net rate lock volume for the period. See below for our overview and discussion of segment results for the three and six months ended June 30, 2024 and 2023. For additional discussion, see Note 11, Segments of the notes to the unaudited condensed consolidated financial statements of this Form 10-Q.

Current wording

We measure the performance of the segments primarily on a contribution margin basis. Contribution margin is intended to measure the direct profitability of each segment and is calculated as Adjusted revenue less directly attributable expenses. Adjusted revenue is a non-GAAP financial measure described above. Directly attributable expenses include Salaries, commissions and team member benefits, General and administrative expenses, Marketing and advertising expenses and Other expenses, such as direct servicing costs and origination costs. For segments, we measure gain on sale margin of sold loans and refer to this metric as ‘sold loan gain on sale margin’. A loan is considered sold when it is sold to investors on the secondary market. Sold loan gain on sale margin reflects the gain on sale revenue of loans sold into the secondary market divided by the sold loan volume for the period. By contrast, ‘gain on sale margin’, which we reference outside of the segment discussion, measures the gain on sale revenue, net divided by net rate lock volume for the period. See below for our overview and discussion of segment results for the three and nine months ended September 30, 2024 and 2023. For additional discussion, see Note 11, Segments of the notes to the unaudited condensed consolidated financial statements of this Form 10-Q.

Previous wording

Direct to Consumer Adjusted revenue was $1.8 billion, an increase of $279.7 million, or 19%, compared to $1.5 billion for the same period in 2023, primarily driven by Gain on sale revenue. Gain on sale revenue increased $251.0 million, or 29%, due to higher gain on sale margin and net rate lock volume during the period.

Current wording

Direct to Consumer Adjusted revenue was $1.0 billion, an increase of $224.0 million, or 29%, compared to $783.2 million for the same period in 2023, primarily driven by Gain on sale of loans, net. Gain on sale of loans, net increased $205.3 million, or 45%, due to an increase in net rate lock volume during the current period.

Previous wording

Direct to Consumer Contribution margin was $374.7 million, an increase of $115.2 million, or 44%, compared to $259.5 million for the same period in 2023. The increase in Contribution margin was driven primarily by an increase in Gain on sale revenue, as described above.

Current wording

Direct to Consumer Contribution margin was $456.0 million, an increase of $152.1 million, or 50%, compared to $303.9 million for the same period in 2023. The increase in Contribution margin was primarily driven by an increase in Gain on sale of loans, net, partially offset by higher Directly attributable expenses, as described above.

Previous wording

Direct to Consumer directly attributable expenses was $1.1 billion, an increase of $29.0 million, or 3%, compared to $1.0 billion during the same period in 2023. The increase during the period was primarily driven by an increase in third-party costs related to borrower credit report fees.

Current wording

Direct to Consumer Directly attributable expenses was $1.6 billion, an increase of $101.0 million, or 7%, compared to $1.5 billion during the same period in 2023, driven by an increase in variable compensation and other variable costs associated with higher origination volume, as well as increased third-party credit report costs per unit.

Previous wording

Direct to Consumer contribution margin was $718.3 million, an increase of $250.7 million, or 54%, compared to $467.6 million during the same period in 2023. The increase in Contribution margin was driven primarily by an increase in Gain on sale revenue, as described above.

Current wording

Direct to Consumer Contribution margin was $1.2 billion, an increase of $402.8 million, or 52%, compared to $771.5 million during the same period in 2023. The increase in Contribution margin was primarily driven by an increase in Gain on sale of loans, net, partially offset by higher Directly attributable expenses, as described above.

Previous wording

Partner Network Contribution margin was $126.3 million, an increase of $70.3 million, or 125%, compared to $56.1 million for the same period in 2023. The increase in Contribution margin was driven primarily by an increase in Gain on sale revenue, as described above.

Current wording

Partner Network Contribution margin was $112.3 million, an increase of $53.9 million, or 92%, compared to $58.4 million for the same period in 2023. The increase in Contribution margin was primarily driven by an increase in Gain on sale of loans, net, as described above.

Previous wording

Partner Network Directly attributable expenses was $61.5 million, a decrease of $4.9 million, or 7%, compared to $66.4 million for the same period in 2023. The decline during the period was due to less team members and variable compensation expense, partially offset by an increase in third-party costs related to borrower credit reports fees.

Current wording

Partner Network Directly attributable expenses was $182.1 million, a decrease of $9.4 million, or 5%, compared to $191.5 million for the same period in 2023. The decline during the period was driven by less compensation expense due to fewer team members directly attributable to the segment, partially offset by increased third-party credit report costs per unit.

Previous wording

Partner Network Contribution margin was $240.7 million, an increase of $161.4 million, or 204%, compared to $79.2 million for the same period in 2023. The increase in Contribution margin was driven primarily by an increase in Gain on sale revenue, as described above.

Current wording

Partner Network Contribution margin was $353.0 million, an increase of $215.3 million, compared to $137.6 million for the same period in 2023. The increase in Contribution margin was primarily driven by an increase in Gain on sale of loans, net, as described above.

Previous wording

As discussed in Note 5, Borrowings, of the notes to the unaudited condensed consolidated financial statements, as of June 30, 2024, we had 17 different funding and financing facilities in different amounts and with various maturities together with the Senior Notes. At June 30, 2024, the aggregate available amount under our facilities was $22.6 billion, with combined outstanding balances of $7.2 billion and unutilized capacity of $15.4 billion.

Current wording

As discussed in Note 5, Borrowings, of the notes to the unaudited condensed consolidated financial statements, as of September 30, 2024, we had 16 different funding and financing facilities in different amounts and with various maturities together with the Senior Notes. At September 30, 2024, the aggregate available amount under our facilities was $21.5 billion, with combined outstanding balances of $8.6 billion and unutilized capacity of $12.9 billion.

Previous wording

We remain in a strong liquidity position, with total liquidity of $8.6 billion as of June 30, 2024, which includes $1.3 billion of Cash and cash equivalents, $1.9 billion of corporate cash used to self-fund loan originations, a portion of which could be transferred to funding facilities (warehouse lines) at our discretion, $3.4 billion of undrawn lines of credit from financing facilities, and $2.0 billion of undrawn MSR lines. Margin cash held on behalf of counterparties is recorded in Cash and cash equivalents, and the related liability is classified in Other liabilities in the Condensed Consolidated Balance Sheets. Margin cash pledged to counterparties is excluded from Cash and cash equivalents and instead recorded in Other assets, as a receivable, in the Condensed Consolidated Balance Sheets.

Current wording

We remain in a strong liquidity position, with total liquidity of $8.3 billion as of September 30, 2024, which includes $1.2 billion of Cash and cash equivalents, $1.8 billion of corporate cash used to self-fund loan originations, a portion of which could be transferred to funding facilities (warehouse lines) at our discretion, $3.3 billion of undrawn lines of credit from financing facilities, and $2.0 billion of undrawn MSR lines. Margin cash held on behalf of counterparties is recorded in Cash and cash equivalents, and the related liability is classified in Other liabilities in the Condensed Consolidated Balance Sheets. Margin cash pledged to counterparties is excluded from Cash and cash equivalents and instead recorded in Other assets, as a receivable, in the Condensed Consolidated Balance Sheets.

Previous wording

Our Cash and cash equivalents and Restricted cash were $1.3 billion at June 30, 2024, an increase of $419.5 million, or 46%, compared to $917.8 million at June 30, 2023. The increase was primarily driven by less corporate cash used to self-fund loan originations.

Current wording

Our Cash and cash equivalents and Restricted cash were $1.2 billion at September 30, 2024, an increase of $256.7 million, or 26%, compared to $991.9 million at September 30, 2023. The increase was primarily driven by less corporate cash used to self-fund loan originations, partially offset by the increase in MSR purchases during the period.

Previous wording

Equity was $8.8 billion as of June 30, 2024, an increase of $449.1 million, or 5%, compared to $8.4 billion as of June 30, 2023. The increase was primarily a result of net income of $350.9 million, as well as share-based compensation expense of $143.5 million.

Current wording

Equity was $8.4 billion as of September 30, 2024, a decrease of $154.0 million, or 2%, compared to $8.5 billion as of September 30, 2023. The decrease was primarily a result of net loss of $245.5 million, partially offset by share-based compensation expense of $141.2 million.

Previous wording

During the three and six months ended June 30, 2024 and 2023, the Company had no material dividend or tax distributions. Except for tax distributions, these distributions are at the discretion of our board of directors.

Current wording

During the three and nine months ended September 30, 2024 and 2023, the Company had no material dividend or tax distributions. Except for tax distributions, these distributions are at the discretion of our board of directors.

Previous wording

There were no material changes outside the ordinary course of business to our outstanding contractual obligations as of June 30, 2024 from information and amounts previously disclosed as of December 31, 2023 in our Annual Report on Form 10-K under the caption “Contractual Obligations, Commercial Commitments, and Other Contingencies”. Refer to Notes 5, Borrowings, and 9, Commitments, Contingencies, and Guarantees, of the notes to the condensed consolidated financial statements for further discussion of contractual obligations, commercial commitments, and other contingencies, including legal contingencies.

Current wording

There were no material changes outside the ordinary course of business to our outstanding contractual obligations as of September 30, 2024 from information and amounts previously disclosed as of December 31, 2023 in our Annual Report on Form 10-K under the caption “Contractual Obligations, Commercial Commitments and Other Contingencies”. Refer to Notes 5, Borrowingsand 9, Commitments, Contingencies and Guarantees, of the notes to the condensed consolidated financial statements for further discussion of contractual obligations, commercial commitments and other contingencies, including legal contingencies.