Rocket Companies Announces Second Quarter 2025 Results
- Generated Q2'25 total revenue, net of
$1.36 billion and adjusted revenue of$1.34 billion . Adjusted revenue came in above the high end of our guidance range - Reported Q2'25 GAAP net income of
$34 million and adjusted net income of$75 million - Delivered Q2'25 adjusted EBITDA of
$172 million
"Rocket delivered a standout second quarter, exceeding the high end of guidance with
Second Quarter 2025 Financial Summary 1 |
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($ in millions, except per share amounts) |
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Q2 -25 |
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Q2 -24 |
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YTD 25 |
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YTD 24 |
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(Unaudited) |
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(Unaudited) |
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Total revenue, net |
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$ 1,360 |
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$ 1,301 |
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$ 2,398 |
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$ 2,684 |
Total expenses |
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$ 1,336 |
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$ 1,109 |
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$ 2,596 |
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$ 2,194 |
GAAP net income (loss) |
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$ 34 |
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$ 178 |
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$ (178) |
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$ 469 |
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Adjusted revenue |
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$ 1,340 |
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$ 1,228 |
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$ 2,637 |
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$ 2,391 |
Adjusted net income |
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$ 75 |
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$ 121 |
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$ 155 |
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$ 205 |
Adjusted EBITDA |
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$ 172 |
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$ 225 |
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$ 341 |
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$ 399 |
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GAAP diluted (loss) earnings per share (2) |
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$ (0.01) |
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$ 0.01 |
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$ (0.08) |
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$ 0.13 |
Adjusted diluted earnings per share |
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$ 0.04 |
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$ 0.06 |
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$ 0.08 |
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$ 0.10 |
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($ in millions) |
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Q2 -25 |
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Q2 -24 |
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YTD 25 |
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YTD 24 |
Select Metrics |
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(Unaudited) |
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(Unaudited) |
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Mortgage closed loan origination volume |
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$ 29,056 |
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$ 24,662 |
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$ 50,640 |
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$ 44,867 |
Gain on sale margin |
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2.80 % |
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2.99 % |
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2.84 % |
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3.05 % |
Net rate lock volume |
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$ 28,429 |
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$ 25,050 |
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$ 54,545 |
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$ 47,412 |
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1 "GAAP" stands for Generally Accepted Accounting Principles in the |
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2 GAAP net income was |
Second Quarter 2025 Financial Highlights
During the second quarter of 2025:
- Generated total revenue, net of
$1.36 billion and GAAP income of$34 million . Generated total adjusted revenue of$1.34 billion and adjusted net income of$75 million . - Rocket Mortgage generated
$28.4 billion in net rate lock volume, a 13% increase compared to the same period of the prior year. - Rocket Mortgage generated
$29.1 billion in closed loan origination volume, an 18% increase compared to the same period of the prior year. - Gain on sale margin was 2.80%, a decrease of 19 bps compared to the same period of the prior year.
- Total liquidity was
$9.1 billion , as ofJune 30, 2025 , which includes$5.1 billion of cash on the balance sheet,$0.9 billion of corporate cash used to self-fund loan originations,$1.1 billion of undrawn lines of credit, and$2.0 billion of undrawn MSR lines of credit. - Servicing portfolio unpaid principal balance, which includes acquired and subserviced loans, was
$609 billion or 2.8 million loans serviced as ofJune 30, 2025 . The portfolio generates approximately$1.6 billion of recurring servicing fee income on an annualized basis.
Company Highlights
- Rocket Mortgage clients can now complete their refinance journey fully digitally, seamlessly navigating every step—from pulling credit and selecting a product and rate to submitting the application, receiving automated approval updates, e-signing, and scheduling the closing. Clients are now able to complete a digital refinance from application to rate lock in under 30 minutes—entirely online and at any time of day, even outside of traditional business hours. We're continually enhancing this experience, with the goal of making refinancing as simple as pressing a "refi button" on any mortgage we service.
- In June, Rocket Mortgage launched a new feature in its AI-powered banker communication platform, which brings calls, texts, and soon, chats into one unified interface. AI-powered tools help bankers connect more efficiently, with new features surfacing client needs and enabling quicker follow-up. These enhancements have boosted daily refinance client follow-ups by 20%, allowing bankers to serve more clients.
- In Q2, Rocket Mortgage launched an agentic AI tool within the Rocket Logic loan origination system to handle reviewing earnest money deposits (EMD), the funds buyers provide to show commitment in a home purchase. Previously, tracking and validating EMDs involved significant manual work; now, agentic AI verifies documentation and traces funds automatically. This technology processes EMDs for 80% of purchase agreements, saving nearly 20,000 hours annually and allowing clients to progress through the home buying process faster.
- In Q2, Rocket Mortgage introduced several upgrades to support mortgage broker partners. Enhancements include an improved self-serve portal that gives brokers better pipeline visibility and expanded self-service options. These changes have resulted in significant time savings and nearly 20% reduction in outbound outreach. In addition, over 1,000 partners have adopted Rocket's enhanced broker compensation split program, which offers greater pricing flexibility and allows brokers to tailor compensation structures to fit the needs of their business.
- In June, Rocket Mortgage launched a bridge loan product, giving homebuyers the financial flexibility to purchase their next primary residence before selling their current one. By removing the hurdle of contingent offers, this product helps clients compete more effectively in today's market.
- In July, Rocket Mortgage was named #1 in client satisfaction for mortgage servicing by
J.D. Power for the 11th time, based on feedback from nearly 16,000 homeowners. Rocket Mortgage led in overall satisfaction, ease of doing business, client care, and digital experience, supported by AI tools that streamline service and improve results. This recognition highlights Rocket's continued leadership in client service and its commitment to creating a seamless homeownership experience. - In June,
Rocket Companies held its largest hackathon to date. Over a 24-hour period, 166 participants across the company worked on 38 projects to create transformative homeownership technology solutions. Projects in the event showcased cutting-edge technology, including AI models fromGoogle , OpenAI, andAnthropic , advanced vector databases and search technologies, cross-platform mobile and web development frameworks, Model Context Protocol (MCP), and secure cloud infrastructure. - On
July 1 , Rocket Mortgage introduced Rocket Preferred Pricing, a new program to make homeownership more affordable. Clients who finance their home with Rocket Mortgage and either purchase a home listed by a Redfin agent or work with a Redfin agent are eligible for a one percentage point reduction in their interest rate for the first year of their loan, or a lender credit at closing of up to$6,000 . - On
July 1 , the Company completed an all-stock acquisition of Redfin Corporation. Under the agreement, each Redfin share was exchanged for 0.7926 shares of Rocket Companies Class A common stock, increasing Rocket's Class A float to 12%. Founded in 2004, Redfin is one of the most recognized real estate brands in theU.S. , drawing 50 million monthly active visitors, featuring over 1 million for-sale and rental listings, and is supported by a tech-enabled brokerage of more than 2,200 lead agents. -
Rocket Companies took steps to streamline operations and narrow strategic focus. In the second quarter, the Company shut down Rocket Mortgage Canada operations. In July, the Company initiated the wind-down of the Rocket Visa Signature Card credit card program. - On
June 20 , the Company issued$2.0 billion of 6.125% senior notes due 2030 and$2.0 billion of 6.375% senior notes due 2033. Rocket intends to use the proceeds from the debt offering, on the closing date for the Mr. Cooper acquisition, to redeemNationstar Mortgage Holding Inc.'s ("NMH"), a subsidiary ofMr. Cooper , senior notes due 2026, 2027 and 2028, and pay fees and expenses related to the offering and redemption. At the Company's discretion, it may also redeem, purchase and/or amend NMH's senior notes due 2029, 2030, 2031 and 2032, and pay associated expenses, as well as repay secured debt of Rocket and its subsidiaries (including Redfin,Mr. Cooper and their subsidiaries). All actions related to NMH's senior notes are contingent on the closing of the Mr. Cooper transaction, which remains on track in the fourth quarter. - On
June 30 , the Company completed the simplification of its capital and organizational structure through the collapse of its "Up-C" structure, providing that each class of common stock will be entitled to one vote per share, and reducing its classes of common stock from four to two (the "Up-C Collapse"). The collapse simplifies Rocket's organizational structure, improves its ability to use its common stock as currency in acquisition transactions and creates a clearer corporate profile. - Rocket Mortgage held its seventh annual Rocket Classic event from
June 26 to 29, 2025 at theDetroit Golf Club . Since 2019, the Rocket Classic has raised over$10 million for local charitable organizations, including over$6 million for its Changing The Course initiative, which helpsDetroit residents access high-speed internet, digital devices and digital literacy training. - On
June 28 , theRocket Community Fund and theDetroit Housing Commission announced a new program to provide free high-speed home internet to 450 families inDetroit Housing Commission communities. Supported by an$850,000 investment fromRocket Community Fund and additional funding from Microsoft's Airband Initiative, the project will deliver free internet access for three years, along with community engagement and digital skills training to support residents long-term.
Third Quarter 2025 Outlook 3
In Q3 2025, we expect adjusted revenue between
This outlook incorporates a full quarter of consolidated financial results from Redfin Corporation.
3 Please see the section of this document titled "Non-GAAP Financial Measures" for more information. |
Direct to Consumer
In the Direct to Consumer segment, clients have the ability to interact with Rocket Mortgage digitally and/or with the Company's mortgage bankers. The Company markets to potential clients in this segment through various brand campaigns and performance marketing channels. The Direct to Consumer segment derives revenue from originating, closing, selling and servicing predominantly agency-conforming loans, which are pooled and sold to the secondary market. The segment also includes title and settlement services and appraisal management, complementing the Company's end-to-end mortgage origination experience. Servicing activities are fully allocated to the Direct to Consumer segment and are viewed as an extension of the client experience. Servicing enables Rocket Mortgage to establish and maintain long term relationships with our clients, through multiple touchpoints at regular engagement intervals.
DIRECT TO CONSUMER 4 ($ in millions) |
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Q2-25 |
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Q2-24 |
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YTD 25 |
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YTD 24 |
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(Unaudited) |
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(Unaudited) |
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Sold loan volume |
$ 14,118 |
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$ 13,032 |
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$ 25,420 |
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$ 22,081 |
Sold loan gain on sale margin |
4.40 % |
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4.14 % |
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4.51 % |
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4.19 % |
Total revenue, net |
$ 1,030 |
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$ 981 |
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$ 1,788 |
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$ 2,075 |
Adjusted revenue |
$ 1,010 |
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$ 909 |
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$ 2,027 |
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$ 1,782 |
Contribution margin |
$ 367 |
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$ 375 |
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$ 774 |
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$ 718 |
Partner Network
The Rocket Professional platform supports our Partner Network segment, where we leverage our superior client service and widely recognized brand to grow marketing and influencer relationships and our mortgage broker partnerships through
PARTNER NETWORK 4 ($ in millions) |
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Q2-25 |
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Q2-24 |
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YTD 25 |
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YTD 24 |
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(Unaudited) |
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(Unaudited) |
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Sold loan volume |
$ 13,411 |
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$ 11,296 |
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$ 22,615 |
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$ 19,064 |
Sold loan gain on sale margin |
0.90 % |
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1.59 % |
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1.10 % |
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1.57 % |
Total revenue, net |
$ 148 |
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$ 188 |
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$ 262 |
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$ 358 |
Adjusted revenue |
$ 148 |
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$ 188 |
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$ 262 |
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$ 358 |
Contribution margin |
$ 83 |
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$ 126 |
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$ 140 |
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$ 241 |
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4 We measure the performance of the Direct to Consumer and Partner Network 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. Directly attributable expenses include salaries, commissions and team member benefits, general and administrative expenses, marketing and advertising expenses and other expenses, such as mortgage servicing related expenses and expenses generated from |
Balance Sheet and Liquidity
Total available cash was
BALANCE SHEET HIGHLIGHTS ($ in millions) |
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(Unaudited) |
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Cash and cash equivalents |
$ 5,091 |
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$ 1,273 |
Mortgage servicing rights, at fair value |
$ 7,567 |
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$ 7,633 |
Funding facilities |
$ 9,482 |
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$ 6,708 |
Other financing facilities and debt |
$ 8,068 |
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$ 4,132 |
Total equity |
$ 7,449 |
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$ 9,043 |
Second Quarter Earnings Call
A replay of the webcast will be available on the Investor Relations site following the conclusion of the event.
Condensed Consolidated Statements of Income (Loss) ($ In Thousands, Except Per Share Amounts) |
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Three Months Ended |
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Six Months Ended |
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2025 |
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2024 |
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2025 |
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2024 |
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(Unaudited) |
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(Unaudited) |
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Revenue |
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Gain on sale of loans |
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Gain on sale of loans excluding fair value of |
$ 472,375 |
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$ 413,011 |
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$ 979,574 |
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$ 889,440 |
Fair value of originated MSRs |
343,525 |
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345,545 |
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607,952 |
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568,342 |
Gain on sale of loans, net |
815,900 |
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758,556 |
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1,587,526 |
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1,457,782 |
Loan servicing income |
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Servicing fee income |
401,276 |
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354,677 |
|
801,973 |
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700,423 |
Change in fair value of MSRs |
(198,885) |
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(112,941) |
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(648,070) |
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(56,433) |
Loan servicing income, net |
202,391 |
|
241,736 |
|
153,903 |
|
643,990 |
Interest income |
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Interest income |
123,502 |
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112,415 |
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215,592 |
|
201,395 |
Interest expense on funding facilities |
(90,879) |
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(81,293) |
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(154,918) |
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(132,736) |
Interest income, net |
32,623 |
|
31,122 |
|
60,674 |
|
68,659 |
Other income |
309,337 |
|
269,308 |
|
595,412 |
|
514,007 |
Total revenue, net |
1,360,251 |
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1,300,722 |
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2,397,515 |
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2,684,438 |
Expenses |
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Salaries, commissions and team member |
623,459 |
|
553,420 |
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1,233,067 |
|
1,094,516 |
General and administrative expenses |
287,421 |
|
232,952 |
|
548,236 |
|
469,617 |
Marketing and advertising expenses |
276,050 |
|
210,937 |
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551,673 |
|
417,233 |
Depreciation and amortization |
27,526 |
|
28,009 |
|
54,436 |
|
55,026 |
Interest and amortization expense on non- |
57,718 |
|
38,364 |
|
96,005 |
|
76,729 |
Other expenses |
63,815 |
|
44,998 |
|
112,939 |
|
80,905 |
Total expenses |
1,335,989 |
|
1,108,680 |
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2,596,356 |
|
2,194,026 |
Income (loss) before income taxes |
24,262 |
|
192,042 |
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(198,841) |
|
490,412 |
Benefit from (provision for) income taxes |
9,827 |
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(14,117) |
|
20,484 |
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(21,773) |
Net income (loss) |
34,089 |
|
177,925 |
|
(178,357) |
|
468,639 |
Net (income) loss attributable to non- |
(35,874) |
|
(176,630) |
|
166,189 |
|
(451,129) |
Net (loss) income attributable to |
$ (1,785) |
|
$ 1,295 |
|
$ (12,168) |
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$ 17,510 |
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(Loss) earnings per share of Participating Common Stock |
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Basic |
$ (0.01) |
|
$ 0.01 |
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$ (0.08) |
|
$ 0.13 |
Diluted |
$ (0.01) |
|
$ 0.01 |
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$ (0.08) |
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$ 0.13 |
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Weighted average shares outstanding |
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Basic |
171,438,105 |
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139,647,845 |
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159,643,228 |
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138,319,794 |
Diluted |
171,438,105 |
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139,647,845 |
|
159,643,228 |
|
138,319,794 |
Condensed Consolidated Balance Sheets ($ In Thousands) |
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Assets |
(Unaudited) |
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Cash and cash equivalents |
$ 5,090,631 |
|
$ 1,272,853 |
Restricted cash |
22,691 |
|
16,468 |
Mortgage loans held for sale, at fair value |
11,168,691 |
|
9,020,176 |
Derivative assets, at fair value |
391,770 |
|
192,433 |
Mortgage servicing rights ("MSRs"), at fair value |
7,566,632 |
|
7,633,371 |
Notes receivable and due from affiliates |
15,281 |
|
14,245 |
Property and equipment, net |
193,843 |
|
213,848 |
Deferred tax asset, net |
11,407 |
|
521,824 |
Lease right of use assets |
259,029 |
|
281,770 |
Loans subject to repurchase right from |
2,492,015 |
|
2,785,146 |
|
1,221,168 |
|
1,227,517 |
Other assets |
1,927,064 |
|
1,330,412 |
Total assets |
$ 30,360,222 |
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$ 24,510,063 |
Liabilities and equity |
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Liabilities: |
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Funding facilities |
$ 9,481,780 |
|
$ 6,708,186 |
Other financing facilities and debt: |
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Senior Notes, net |
8,000,225 |
|
4,038,926 |
Early buy out facility |
67,532 |
|
92,949 |
Accounts payable |
278,245 |
|
181,713 |
Lease liabilities |
293,671 |
|
319,296 |
Derivative liabilities, at fair value |
163,870 |
|
11,209 |
Investor reserves |
98,082 |
|
99,998 |
Notes payable and due to affiliates |
2,818 |
|
31,280 |
Tax receivable agreement liability |
588,510 |
|
581,183 |
Loans subject to repurchase right from |
2,492,015 |
|
2,785,146 |
Deferred tax liability |
714,673 |
|
17,445 |
Other liabilities |
729,873 |
|
599,352 |
Total liabilities |
$ 22,911,294 |
|
$ 15,466,683 |
Equity |
|
|
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Preferred stock |
$ — |
|
$ — |
Class A common stock |
1 |
|
1 |
Class B common stock |
— |
|
— |
Class C common stock |
— |
|
— |
Class D common stock |
— |
|
19 |
Class L common stock |
19 |
|
— |
Additional paid-in capital |
7,271,613 |
|
389,695 |
Retained earnings |
178,507 |
|
312,834 |
Accumulated other comprehensive loss |
(1,212) |
|
(48) |
Non-controlling interest |
— |
|
8,340,879 |
Total equity |
7,448,928 |
|
9,043,380 |
Total liabilities and equity |
$ 30,360,222 |
|
$ 24,510,063 |
Summary Segment Results for the Three and Six Months Ended ($ in millions) (Unaudited) |
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Three Months Ended |
Direct to Consumer |
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Partner Network |
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Segments Total |
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All Other |
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Total |
Total U.S. GAAP Revenue, net |
$ 1,030 |
|
$ 148 |
|
$ 1,178 |
|
$ 182 |
|
$ 1,360 |
Change in fair value of MSRs due to valuation |
(20) |
|
— |
|
(20) |
|
— |
|
(20) |
Adjusted revenue |
$ 1,010 |
|
$ 148 |
|
$ 1,158 |
|
$ 182 |
|
$ 1,340 |
Less: Directly attributable expenses |
643 |
|
65 |
|
708 |
|
114 |
|
821 |
Contribution margin (1) |
$ 367 |
|
$ 83 |
|
$ 451 |
|
$ 68 |
|
$ 519 |
Three Months Ended |
Direct to |
|
Partner Network |
|
Segments Total |
|
All Other |
|
Total |
Total U.S. GAAP Revenue, net |
$ 981 |
|
$ 188 |
|
$ 1,169 |
|
$ 132 |
|
$ 1,301 |
Change in fair value of MSRs due to valuation |
(73) |
|
— |
|
(73) |
|
— |
|
(73) |
Adjusted revenue |
$ 909 |
|
$ 188 |
|
$ 1,097 |
|
$ 132 |
|
$ 1,228 |
Less: Directly attributable expenses |
534 |
|
62 |
|
596 |
|
89 |
|
684 |
Contribution margin (1) |
$ 375 |
|
$ 126 |
|
$ 501 |
|
$ 43 |
|
$ 544 |
Six Months Ended |
Direct to |
|
Partner Network |
|
Segments Total |
|
All Other |
|
Total |
Total |
$ 1,788 |
|
$ 262 |
|
$ 2,050 |
|
$ 347 |
|
$ 2,398 |
Change in fair value of MSRs due to valuation |
239 |
|
— |
|
239 |
|
— |
|
239 |
Adjusted revenue |
$ 2,027 |
|
$ 262 |
|
$ 2,289 |
|
$ 347 |
|
$ 2,637 |
Less: Directly attributable expenses |
1,253 |
|
122 |
|
1,375 |
|
239 |
|
1,614 |
Contribution margin (1) |
$ 774 |
|
$ 140 |
|
$ 914 |
|
$ 108 |
|
$ 1,023 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
Direct to |
|
Partner Network |
|
Segments Total |
|
All Other |
|
Total |
Total |
$ 2,075 |
|
$ 358 |
|
$ 2,433 |
|
$ 251 |
|
$ 2,684 |
Change in fair value of MSRs due to valuation |
(293) |
|
— |
|
(293) |
|
— |
|
(293) |
Adjusted revenue |
$ 1,782 |
|
$ 358 |
|
$ 2,140 |
|
$ 251 |
|
$ 2,391 |
Less: Directly attributable expenses |
1,064 |
|
117 |
|
1,181 |
|
178 |
|
1,359 |
Contribution margin (1) |
$ 718 |
|
$ 241 |
|
$ 959 |
|
$ 73 |
|
$ 1,032 |
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(1) |
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 below. Directly attributable expenses include salaries, commissions and team member benefits, general and administrative expenses, marketing and advertising expenses and other expenses, such as mortgage servicing related expenses and expenses generated from |
GAAP to Non-GAAP Reconciliations |
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Adjusted Revenue Reconciliation ($ in millions) |
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Three Months Ended |
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Six Months Ended |
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|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
(Unaudited) |
|
(Unaudited) |
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Total revenue, net |
$ 1,360 |
|
$ 1,301 |
|
$ 2,398 |
|
$ 2,684 |
Change in fair value of MSRs due to valuation |
(20) |
|
(73) |
|
239 |
|
(293) |
Adjusted revenue |
$ 1,340 |
|
$ 1,228 |
|
$ 2,637 |
|
$ 2,391 |
|
|
(1) |
Reflects changes in market interest rates and assumptions, including discount rates and prepayment speeds, gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs. |
Adjusted Net Income Reconciliation ($ in millions) |
|||||||
|
|
|
|||||
|
Three Months Ended |
Six Months Ended |
|||||
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
(Unaudited) |
(Unaudited) |
|||||
Net (loss) income attributable to |
$ (2) |
|
$ 1 |
|
$ (12) |
|
$ 18 |
Net income (loss) impact from pro forma |
36 |
|
177 |
|
(166) |
|
452 |
Adjustment to the (provision for) benefit from |
(15) |
|
(33) |
|
29 |
|
(98) |
Tax-effected net income (loss) (2) |
19 |
|
145 |
|
(150) |
|
371 |
Share-based compensation expense |
52 |
|
39 |
|
92 |
|
70 |
Change in fair value of MSRs due to |
(20) |
|
(73) |
|
239 |
|
(293) |
Acquisition-related expenses (4) |
35 |
|
— |
|
63 |
|
— |
Change in Tax receivable agreement liability (5) |
8 |
|
— |
|
8 |
|
— |
Tax impact of adjustments (6) |
(20) |
|
8 |
|
(99) |
|
54 |
Other tax adjustments (7) |
1 |
|
1 |
|
2 |
|
2 |
Adjusted net income |
$ 75 |
|
$ 121 |
|
$ 155 |
|
$ 205 |
|
|
(1) |
Reflects net income (loss) to Class A common shares from pro forma exchange and conversion of corresponding shares of our Class D common shares held by non-controlling interest holders during the periods ended |
|
|
(2) |
|
|
|
(3) |
Reflects changes in market interest rates and assumptions, including discount rates and prepayment speeds, gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs. |
|
|
(4) |
Includes non-recurring expenses related to the pending acquisitions and the Up-C Collapse. |
|
|
(5) |
Reflects changes in estimates of tax rates and other variables of the Tax receivable agreement liability. |
|
|
(6) |
Tax impact of adjustments gives effect to the income tax related to share-based compensation expense, change in fair value of MSRs due to valuation assumptions (net of hedges), acquisition-related expenses and the change in Tax receivable agreement liability, at the effective tax rates for each period. |
|
|
(7) |
Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from the historical purchases of Holdings Units, net of payment obligations under Tax Receivable Agreement. |
Adjusted Diluted Weighted Average Shares Outstanding Reconciliation ($ in millions, except per share amounts) |
|||||||
|
|
|
|
||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
(Unaudited) |
|
(Unaudited) |
||||
Diluted weighted average Participating Common Stock |
171,438,105 |
|
139,647,845 |
|
159,643,228 |
|
138,319,794 |
Assumed pro forma conversion of Class D shares (1) |
1,828,562,126 |
|
1,848,879,483 |
|
1,838,664,679 |
|
1,848,879,483 |
Adjusted diluted weighted average shares outstanding |
2,000,000,231 |
|
1,988,527,328 |
|
1,998,307,907 |
|
1,987,199,277 |
|
|
|
|
|
|
|
|
Adjusted net income |
$ 75 |
|
$ 121 |
|
$ 155 |
|
$ 205 |
Adjusted diluted earnings per share |
$ 0.04 |
|
$ 0.06 |
|
$ 0.08 |
|
$ 0.10 |
|
|
(1) |
Reflects the pro forma exchange and conversion of anti-dilutive Class D common shares to Class A common shares. For the three and six months ended |
Adjusted EBITDA Reconciliation ($ in millions) |
|||||||
|
|
|
|
||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
(Unaudited) |
|
(Unaudited) |
||||
Net income (loss) |
$ 34 |
|
$ 178 |
|
$ (178) |
|
$ 469 |
Interest and amortization expense on non- |
45 |
|
38 |
|
84 |
|
77 |
(Benefit from) provision for income taxes |
(10) |
|
14 |
|
(20) |
|
22 |
Depreciation and amortization |
28 |
|
28 |
|
54 |
|
55 |
Share-based compensation expense |
52 |
|
39 |
|
92 |
|
70 |
Change in fair value of MSRs due to valuation |
(20) |
|
(73) |
|
239 |
|
(293) |
Acquisition-related expenses (1)(3) |
35 |
|
— |
|
63 |
|
— |
Change in Tax receivable agreement liability (4) |
8 |
|
— |
|
8 |
|
— |
Adjusted EBITDA |
$ 172 |
|
$ 225 |
|
$ 341 |
|
$ 399 |
|
|
(1) |
Debt financing fees related to the Bridge Facility are a non-recurring acquisition related expense impacting the 2025 periods, and therefore excluded from Interest and amortization expense on non-funding debt, and included as Acquisition-related expenses. |
|
|
(2) |
Reflects changes in market interest rates and assumptions, including discount rates and prepayment speeds, gains or losses on sales of MSRs during the period and the effects of contractual prepayment protection associated with sales or purchases of MSRs. |
|
|
(3) |
Includes non-recurring expenses related to the pending acquisitions and the Up-C Collapse. |
|
|
(4) |
Reflects changes in estimates of tax rates and other variables of the Tax receivable agreement liability. |
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted revenue, Adjusted net income, Adjusted diluted earnings per share and Adjusted EBITDA (collectively "our non-GAAP financial measures") as non-GAAP measures which management believes provide useful information to investors. We believe that the presentation of our non-GAAP financial measures provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Our non-GAAP financial measures are not calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income (loss), or any other operating performance measure calculated in accordance with GAAP. Other companies may define our non-GAAP financial measures differently, and as a result, our measures of our non-GAAP financial measures may not be directly comparable to those of other companies. Our non-GAAP financial measures provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures.
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" 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), acquisition-related expenses, the change in Tax receivable agreement liability and the tax effects of those adjustments as applicable. We define "Adjusted diluted earnings (loss) per share" as Adjusted net income divided by the adjusted diluted weighted average shares outstanding which includes diluted weighted average Participating 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), acquisition-related expenses and the change in Tax receivable agreement liability.
We exclude from each of our non-GAAP financial measures the change in fair value of MSRs due to valuation assumptions (net of hedges), as this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in market interest rates and assumptions, including discount rates and prepayment speeds, which are not indicative of our performance or results of operation. We also exclude gains or losses on sales of MSRs during the period and effects of contractual prepayment protection associated with sales of MSRs. Adjusted EBITDA includes Interest expense on funding facilities, which are recorded as a component of Interest income, net, as these expenses are a direct cost driven by loan origination volume. By contrast, interest and amortization expense on non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA.
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
Although we use our non-GAAP financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business. Our non-GAAP financial measures can represent the effect of long-term strategies as opposed to short-term results. Our presentation of our non-GAAP financial measures should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Our non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under
For financial outlook information, the Company is not providing a quantitative reconciliation of adjusted revenue to the most directly comparable GAAP measure because the GAAP measure cannot be reliably estimated and the reconciliation cannot be performed without unreasonable effort due to their dependence on future uncertainties and adjusting items that the Company cannot reasonably predict at this time but which may be material.
As of
Forward Looking Statements
Some of the statements contained in this document are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements in this document that are not historical or current facts, including statements regarding the the Mr. Cooper acquisition, are forward-looking statements. These forward-looking statements reflect our views with respect to future events as of the date of this document. All such forward-looking statements are subject to risks and uncertainties, including, but not limited to, the risk factors that are described under the section titled "Risk Factors" in our Annual Report on Form 10-K and other filings with the
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