First, it was
Rocket Cos. (RKT) is looking to turn into a one-stop outfit for the home-purchase and borrowing process, using its different sites to retain clients from initial search through appraisal. The company’s Rocket Homes subsidiary announced plans to build a
In the second quarter, Rocket Cos. — including Rocket Mortgage, Rocket Homes as well as its appraisal and auto-loan units — reported net income of $1 billion, down from $3.5 billion in the same period last year and $2.8 billion in
The Detroit-based company generated $2.7 billion in net revenue for the quarter, missing the consensus estimate of $2.9 billion. The quarterly figure also fell below reported revenue from one year ago of $5 billion, and the previous quarter’s $4.6 billion.
Second-quarter funded originations at Rocket Mortgage totaled $83.8 billion, an increase on a year-over-year basis but below first-quarter numbers. Originations amounted to $72.3 billion in the same quarter a year ago and $103.6 in the first quarter this year.
Gain-on-sale margins came in at 278 basis points, a 46.4% year-over-year drop from 519 basis points a year ago and 374 in the first quarter.
Although the bottom line came in lower, company officials expressed optimism with what they saw in their data.
“While industry forecasters expect a smaller market in 2021, we expect to grow volume from our 2020 record levels. We’re going to gain market share and achieve record origination volume this year,” said Rocket Cos. CEO Jay Farner, in an earnings call.
Investors also liked what they heard, pushing the company’s stock immediately higher. After closing at $17.47 on Thursday, Rocket blasted off in after-hours trading and opened on Friday up 4.2% at $18.20.
Turning itself into a multiproduct and multichannel company is turning into a key strategy for Rocket in its efforts at customer retention. Company officials repeatedly underscored that Rocket’s platforms could be utilized to create a bespoke process for customers and partners alike.
“Continuing to transform the home-buying experience is the single biggest opportunity for Rocket Companies today,” said Farner. “We spent years creating a complete end-to-end experience that puts the power of choice back into the hands of the consumer.”
Beyond home purchases, the experience is intended to now include solar energy. During the call, Farner said solar panels would be offered in its suite of products, with Rocket staff able to advise, finance and facilitate installation.
”Our goal is to have a solution for anyone in mortgage, in real estate and beyond. And so that's exactly what you'll see us do there, as we keep building out the Rocket Homes ecosystem,” Farner said.
Rocket Cos. issued future guidance, indicating it expected between $82 and $87 billion of mortgages in the third quarter, with full-year volume likely to exceed $320.2 billion and purchase originations breaking $60 billion. Company leaders said gain-on-sale margins would likely fall between 270-300 basis points in the third quarter.
