RKT - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Rocket Companies' Second Quarter 2020 Earnings Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to your speaker today, Jason McGruder, Vice President, Investor Relations. Please go ahead.

Jason McGruder

company. thank call joining of covering first a and Rocket for XXXX, everyone as earnings Companies the public afternoon you us for a it's Good second quarter the My new for name company. McGruder, is and the Vice of Investor Jason President Relations I'm had closely a of with role. you my this to all participants I look email week, new earlier of this and opportunity forward the on I number call to working in

But before forward-looking are underway, terrific quarter you. you financial We second policy XXXX our to This quarter Jay Today's to provide results call share I statements. information is call our the us outlook. conference turn a of I performance statements. Farner excited the read regarding get in over forward-looking regarding to includes with to things with to will addition

described more statements, that For from issued well materially cause about earnings may section Factors. SEC, release of the risk documents that filings information to as titled we these actual differ results Risk particularly in factors in please today, with the to the refer forward-looking as

also refer non-GAAP with SEC Our in get will I'll that, can to for Farner earnings started. information. over found Jay GAAP today. our reported include metric to filings us today financial results be between measures. our issued And with release and to commentary our non-GAAP Please Reconciliations for more the turn things Jay?

Jay Farner

Companies call, good second Thank first earnings Welcome a Rocket quarter you and public afternoon, to everyone. as our company.

their proud share like results achieved Culture commitment foundation our members the in Companies is unwavering for second Rocket get I'm record everything to started, do team to quarter. I'd of Because Companies. the dedication we Before here thank to of Rocket breaking XX,XXX at our we the that clients. and efforts,

principles we culture They ISMs, our XX decision DNA. heart soul the and drive as they Founder, and are, make. are of known created who our and are Gilbert every Dan Our we

success our years secret quarter the exception. the been second no has over to was and XX the culture Our last

the differentiator during that One also of of many is of saw technology clients This the while record for very are for safe, Rocket for rates second a us protecting XX-year as the Record working low quarter those we to ISMs The well-positioned Thousands demand Mortgage substantial seriously. built Earlier rates allowing highlighted, Rocket of that to is do We the proving platform but loans team is charge results. as that year, risen making quickly It's members in IPO In just COVID-XX from more performance history. driving about unprecedented meeting community the We're invested opportunities in was process XX% This way we team tools continuously mortgage than while technology faster and home. to extremely our to years could the a on and this members weeks impacts our and of our overseas, thing, other capitalize to we take large ensure have the is a than any talk members results many home power the our business of in we've the Mortgage. quarter, spoke closed team on loan believe ahead. second the the has a examples of meet scale our has that to second needs begin in we all to interest demand, today future. Rocket why right you one and investments team our volume, team in allowed when here work home, that all members $XX.X company effectively the investing to truly the of us in platform our of many our focus making. to and quarter, our and billion keep needed the think achieving sensible fall. key our long-term. of our proud quarter businesses. about be our refined we been pleasure is about occasion, to Companies from

gain the record we've increasing the maintaining fact, margins constraints able overall volumes, margins quarter X.XX% led In been impressive turn to during to capacity up to have from times. second first achieve long while quarter. with Industry-wide in sale significant X.XX%, on

volume profitability the elevated these margins scale substantial to quarter. at in led to ability incremental Our

kind our provide this While award-winning able second market needs standards, quarter to gain meet client client built exactly to environment Quite elevated the of historical growing and by we're the performance. experience. of is platform sale on base we certainly our margin were simply,

business Our quarter, mortgage key award also an This in. driver eligible. earned based on that the we've a honor about moment. year from overall of Power performance we was will Julie talk every an Servicing, members seventh consecutive pride in team clients servicing proud J.D. award it's unprecedented Award tremendous we've share Customer take recently in which feedback for in won I'm Mortgage is to and an our our entirely Satisfaction been a

year-over-year experience, our income to in broader $X.X multiple industries. billion XXX% Rocket holistically, look the technology, revenue we growth at and adjusted focus apply we Turning have companies same and in quarter. of opportunities on ecosystem substantial believe When operations we businesses, adjusted generated the second of to Companies our client across net

at growth profitable scale. delivering substantial are We

passionate Rocket continue where are team play. communities will Companies, and you you we to to get learn members work, live, As also our about the know

access the connectivity of American effects the divide when education, announced the how all here We Course many ranks plays in of we technology the find recently onset cities. pride. access We needed and change. Through saw needed step XXXX, the among ensure to Mortgage home. event will and a progress, are Detroit, the themselves very with every task Detroiter Detroit telemedicine, to COVID-XX, keenly digital Rocket in the important to within Unfortunately, their to by make our PGA in Classic, Detroit. in and our knew without XX-minute participate have Changing job. aware community schooling, in Tour role to foundation or We from last have company of digital communities a risen in of we are initiative this technology dream walk the the building members truly found a manifest major We that the of to our

this of and one As to the largest to near we a technology Detroit, in is and and forward a that employer program company our life. the all hearts dear look City to bringing is

is The have will things Finally, won't. how asked now a short that they many answer you change we're us public of company.

investors we We who we our that as than once did private a become including affect who all many today will more of doesn't are. but have vested shareholders, company, team members

committed are with that providing the We hallmark of plainspoken same been to transparency has our you a company.

the we doing outlook intense to for particular, and low market, focus consumer year, estate things and But recover continue the We Record dedication real about will culture, second following our durability half to talk continues in just sentiment. minute. on the second we purchase to drive see way. in improving market home a commitment also in continue to to an our commit U.S. COVID-related demand that and the rates to continue interest quarter. in right strength The disruption loans. of current more the will to our look long-term, our you as the right Julie we

I'll through the that, In one is ever to for Rocket fact, best at completely has be turn and we over Julie expect results who purchase Rocket for our take stronger Demand third you With digital delivering. origination detail. to in our quarter Booth, quarter been experience of will Mortgage. more volume a second never things

Julie Booth

our Thanks billion revenue and an have good in performance, $XX.X billion. and compared to growth of of first In Closed channels multiple year-over-year. of about The to you the second highlighted of of from strong in Partner and net the XXX% profitably to that loan drove billion, loan our the XXXX volume quarter, closed with strength we the of these record also $XX.X afternoon, one rate the period same closed ago, Jay second adjusted channel Net an to everyone. to significantly IPO volume $X.X adjusted volume both loan areas quarter grow billion to year many direct-to-consumer Network our XX% Strength and process the of by Network drivers second broad-based increase income million compared spoke We XXXX. billion led of financial Partner $X.X XX%. increase in direct-to-consumer contributed record exceeded across the of $XX in during business. $XX.X billion lock of volume $XX.X XXX% quarter. volume quarter increased of

the Rate XX closing rate lock at the time when to reminder, days locked a prior XX to we our revenue a with loan. the occurs typically client. As recognized of interest we

volume of Accelerating As second drove result, to leading momentum throughout is a rate volume volume. a lock indicator lock closings. loan relative the rate quarter closed elevated

As Rocket channels X.XX% increasing gain Jay sale in on Network. in overall X.XX% quarter, were achieved the with to the in margins strong second earlier, referenced XXXX. Partner coming the and Gain sale across X.XX% on quarter margins in from X.X% margins historically Mortgage channel of first strong both in the at direct-to-consumer

acquisition a margins overall costs the measured economics the the in basis. sharing on The to our in of reported Partner reminder, by channels. lead are are in reflects partners while down both lock funded on Network. channel a margins level a Lower strong sale rate margins margins difference across basis, loan client Partner As Network partial segment contribution with

volume. driver come business acquisition quarter, clients with total to loan substantial contributing profitability. of incremental with overall leading the These XX% little to Our during volume important repeat transactions no of mortgage client second existing an costs, with servicing loan

Amarok, to plan servicing the the of June title that portfolio our XXth. of we into positive was forbearance revenue news on is pandemic, COVID-XX in business, was of improvement Mortgage a our continue other COVID see to the and The approximately quarter. look we settlement driven business. forbearance Rocket services by Outside As to in impacts insurance our third of X.X% growth trends related as lingering

to of we during XXXX, the Amarok settlement XXX% from position enables the quarter, second XX% XXXX. the increased of XX% to the up first second of quarter of quarter billion $X.X of expenses and quarter Total the experience. extended second compared second notarization primarily meet and processed remote first as platform, the respectively. up Our demand than for was X% the more Also as and and deploying quarter off prior paid which quarter to further mortgages the online services. XXXX, and periods, XXX,XXX XXXX. our a process XX% as industry increased to investments leading attributable prior up in eClosings the year result higher and during related and technology settlement transactions in quarter in expenses business to our variable Amarok eClosing increased Marketing of title the origination increase the in compensation at was insurance able scale volume. production The declined costs compared by compared

undrawn fund of profitable to mortgage to the XXth, billion $X.X billion, Turning warehouse $X option. quarter, couldn't loans, to June corporate scale. which strong deliver extremely of with distributed we're lines to its liquidity, of sell used to lines of and ability total Holdings. on $X.X Rock our second billion and cash credit at our a of performance We IPO, to following $X.XX in Companies Overall, liquidity hand, growth plus and our in Rocket parent cash remain record the after at transferred proud our cash position IPO company liquidity demonstrating including be billion prior

outlook moment a a way and community today manage of take business. to The discuss we're in to about like our guidance sharing current philosophy approach company. investment as we to our the reflects think I'd public the Now,

all during objective and share many XX% achieve investing continue with to is brand market. manage of you shared business mortgage to we We of environments. in technology strategic long-term and to the growth our the our IPO long-term As for the aim process, market

the on trends current in transparency in third our committed long-term, and volume our are providing our for quarter. investors to remains are outlook are analysts focus we the business. about we our we the loan seeing providing While to Today,

are we margins. dynamics Entering unique margins half sale outlook on continue environment, sale see of the the the demand. consumer gain current Given providing strong to gain in for our also second third XXXX, quarter we on around current

expect third to As volume you've to lock of $XX $XX billion. of rate billion volume billion net and billion $XX Jay, we currently loan heard closed quarter $XX from

to longer to Regarding historically sale QX, remain levels margins averages. margins elevated quarter We experienced gain third moderate quarter we expect but on of from relative historical gain sale X.XX% expect third on in to the elevated X.X%. margins, term currently

Rocket of quarter I for of you Finally, lower experienced real remind third sequential compared to updating those Mortgage, the the seasonality want in seasonality the everyone volumes at market, with to we about estate the your fourth our quarter. U.S. typical of the follows thinking models, normal did pattern

proud in the results turn guide Q&A. are quarter XXXX. that continue With to about to we second our operator we to by excited these We investments that, to XX% platform will of even our deliver goal and you more back us the market it to make for are ready share

Operator

from [Operator ahead. Morgan with James Instructions] question Faucette Your Please first comes go Stanley.

James Faucette

I first you question ask just Great, very the wanted thank to the much. was quickly around you seasonality.

time on talked being? about should And thinking in seeing a you're fourth et impact normal rates, quarter how that a percentage about at little think You least wondering from basis? treasury I'm are seasonality we about lower. cetera, being that the bit the any you how having for moves

Jay Farner

is just to folks Farner, CEO. Julie on the Booth, first familiar Thanks here this Bob just I'll And call, afternoon, be Walters, everyone. And voices, up for our and get Thanks COO. being open our James. with joined our as CFO, by our good Jay first to call.

the to fourth our QX housing, forward market we're see through anticipate we're expectations treasuries. heading as that that Julie? guidance particular referencing the particular. in to but in some Julie enter a in the December or interest question, continue around here we right we'll Julie kind seasonality quarter typically might touched of different of of would Julie some around also that And seasonality I rates rest kind and referenced of And I'll you we Now, in was on the your experience we know obviously, I let today, when purchase; comes year. what it say experiencing traditional now. comment, current

Julie Booth

certainly in while the QX those wanted happy some but Jay remind Yes, that that really in and of fourth results, a we the kind decrease typically our do business. guidance we're for provide just I thinking seasonality and that to to agree is about quarter see really, typical

we're year, could expecting So, that see. I what think than unusual typically we don't other change. course, this necessarily But, of anything always

James Faucette

my for what then about help how share, that question thinking we And other of Julie sketch on the great. can us highlighted market progression target That's or you is talked you're marketer to long-term with should look could XX% and continuity? starts ambitions? medium like? a us on and I fits going mean are Thanks there or some term there are lot. And share be there is you milestones your out

Jay Farner

and Bob, in. Yes, thanks, James. chime feel then free or And I'll to start out Julie here

interest it's important us, back think the step about then for an all we gaining to share. and we don't at we're over growth extended our take about of about sure and that that think time planning. I how We make make a it's so think and growing strategically control Rocket period Companies moves and long-term critical market we right go rate obviously

been. over platform year in we the and a to so for that scale, that trillion more year-out, roadshow, our And our we And a year-in advantage strategy market. grab tech really or straight grow as course But set the this happen share. had We're we we clients like you ensure what will we're building, on we're significant they've market. than it's $X we the in our model, interest in and prepared of years model, we're as Partner grow increase growing and we've just year mortgage share. to really behind especially production our and that certainly platform that like we a see throughout our or normalized But able where continually of free any the and be take look growing market flatter, set XX shared, understand maybe to years far for. than about interest towards look things volume back strengthen scenes, moments you'll is not followed see as that And more rate we expectations feel XX comment. we're of growing capabilities be maybe last the think this to add to the direct-to-consumer, market XXXX. growth. roughly at are growth to time. Julie, that our the exceed in platform, market but line share platform, continue occurred of the and due the market have then market to much larger the leverage time please a We where, And ecosystem be fall our able There'll based where market. ability may strategy and now strategically, to There over targeted that's where make the rates, the

Julie Booth

is maybe not I next while be years; to guess expect we would over it quarterly growth that going to No, XX the are I something thing is add basis. we to that the really watching a do see on that

and So, ups look downs some at But really, when focused quarter-to-quarter. of we we're see that, we may look annualized kind on market share. more

folks kind how really that share to the just I looking through So, here about going encourage of quarter-after-quarter when about you're market that's at would thinking and year. come out think to

Jay Farner

loan in a volume that Julie an our I I and component And view. rates, book, important the servicing long-term chime be our business. Bob market significant important percentage and is growth. focusing times because for clients a clients think client Yes, pointed more less our on opportunity where Walters -- we've critical that's to that from our on move, or us on retention share has as of that this component year is probably EBITDA of a take most acquire we can out think which There'll done the grow come

Bob, can touch we grow on help you And to away don't that in market, just from client pulling others everybody. are that the tend if to because educate book. servicing know so I lean when want we

Bob Walters

shows think about we looking of for talked servicing than our really services one services, especially lot When publicly-traded think road in at we servicing this us lot a a of have the about Yes, quite capital. very large differently in key we return a differentiators on platform. are that I

and we now. have refinanced on as retention, Now retention a [Indiscernible] our we loans XX% play,

of to differentiator monetize results surpasses everyone, seeing -- ability even those, in but for that are it of ability a our off paying to loans is competitors, So off key paying but most you're our so monetize those and our they're really and lot now. a our

building up continually leaking that as talked out it's that'll We've down over -- the those bring the XX%. of business bit said, ability off big that new Jay new in clients decade, we're pay quite that But and that quite That's come but -- that is part we key in frankly, -- Julie loans we grab seen like number a [Indiscernible]. those out and competitors, giving we're to retain that last hold that a and it continue and not retention a is platform hold we our was of So, march quite driving of last many it. that. to then that bit about, not over it and will that's while

Operator

Ryan with Your Goldman comes Please next Nash Sachs. question from go ahead.

Ryan Nash

Hey everyone. good evening

Jay Farner

Hey Ryan.

Ryan Nash

XXX. little on know, constraints, Jay, were coming maybe XQ, on for wide really with about phase, think to XXX being could I bit a capacity you back trying XQ, we're obviously we industry the margins in talking start to you're they of you that see sale of

marketplace mortgage just coming to for Can your to And elevated Just history. to about competitively margins in elevated originations? continue the out views talk you sustain on the your the relative quarters? given you're what in stills maybe seeing ability mixes

Jay Farner

But years mentality your as critical our and over really is that the the can experience demonstrated I'll Certainly, our client that margin of jump we in. course and service XX here We've what for Julie defend technology, is drives about growth. business. talked start

still find year-out, or you'll than demand. saw Certainly, consumer a margins March And today. where bit about and capacity in our remain so specific robust, that feel back are great to year-in April. system more we the in We there's we

think on our thoughts? think ability -- we helps that And seeing demand so around guidance the that today, where defend margins Julie other margins, our as and we guidance. to are I gave about the Julie, us inform we're those

Julie Booth

say runway the Yes, that the at think of long there demand working is runway I seeing. the look in are would market, I we that kind constraints given of quite through that as the here, we is a

So, time. that to we'll of continue here, right secondary I now. for see kind to think spreads some think strong are are where rates anticipated with demand Primary, be wide I

XXX may you those an still looking So, but to see the to QX, certainly in very come in we're back that here, strong. at here, opportunity for I XXX think,

that But see comebacks did change, about the and that defending something demand margin, coming some We that the I the over levels. and coming those it's that roadshow quarters. still won't here, given as think probably is time on normalized we'd and will we think margin more continue over we talk think we'll our yet have runway I

Ryan Nash

just size And the of if the it. ask on maybe I Got question can another market.

So, year, originations Jay, given to, trillion to they're interest you low how pass likely $X this rates alluded are.

should be I most means refinance, market activity think which for is year. next eligible again the elevated a of

then the So, timeframe for follow-up Obviously, the Thanks. over talk how tend see be bit portfolios, indicators. which from see to curious, about industry to you earlier, share? to the based to size for do drive your expectations we just continue you lagging market the little think about year two of market? ability your do question on about to on a And a the I'm And expectations what the one think just what of you forecast, market.

Jay Farner

considerably. It's Yes, or NBA margin, to alluded very the challenging. as a or or past they're off a X% forecast, so if to it's Fannie they're off, is already not others as we've in XX% usually anchoring by whether very,

of first for normalized look we a planning go purposes our that $XX is And don't to it. If we strategically, more month. goal by the thinking that. platform is the close have made, of the for, year, a market a the around can talked is forecast, at growth and statement really benefit I market billion larger, our as I'll at about, structure we we for end our we've which the back then So, from look course,

continue that and and platform, there take And market the than if so well to people be we'll And the will the advantage to the is of we larger experience, grow market our to grow capacity the it. be shrinks, client brand, state will share the forecast if market the required. tech, able may

I money pointed think expect to them probably market Bob portion States mortgages can for significant and speak here the the as today, quite the who's the out, we a are money time. you in in in of United to be in some

Bob Walters

the in of to from $XX guess, that want is benefit I the you total depending the $XX $X substantially market on and trillion money trillion size refinance. at a would trillion trillion and of Yes, $XX how look or

so At given will taking a it XX two basis years these view between through capacity really gain. levels, so long-term XX the and take become that. Fed, strong a the that in work really And and it could essentially, XX-year on points three or to

of said, ability building in $X.X take the is there close really capacity. Jay of that to this. annual picking -- really think truly that as the is up cornerstone so taking. the advantage of And The to environment capacity, market share out It's an for us trillion like is I

of we're adding And so margin. with a rates, accessing high at taking longer hard and interest advantage surprise absent term work,

Jay Farner

of seeing feature is I've call, in know growth, be I proud which that. some market into a jump to lot like this. of want but couldn't more this in I a the group our I mentioned expected and Yes,

months $XX team about from to billion our and over think that say can't happen, to the to enough course to team for. others. $XX scale I And allows members first speaks tech go the that billion just year, our the platform allowed here I true that the of of us For six the

Operator

next go question with Our Chiodo Credit Suisse. Please from comes Timothy ahead.

Timothy Chiodo

Thank you. my you everyone. question. Good Thank afternoon, taking for

Jay Farner

bet. You

Timothy Chiodo

want I the about ask opportunity. to Partner Thanks.

how could in So, about to market. purchase the that relate share -- and talking

already at million which stats approaching that plus the know parent X that you the minimis to of I is So, of level could contracts talk influencers, X got so. million, opportunity other potential you've about gave or de financial existing attacking around X.X just relative that the with you maybe to XX,XXX approach XXX,XXX professionals. million

Jay Farner

and Yes, -- take Very speaks a question, to a But this. growth. just step back. we platform level set of good the truly think question. about and lot the Thanks that kind about our how for

receive understand think understand thought purchased in of how been to And to old differences think capacity; our a our refined. think we bit. think we'll client a or It's business. the quite we brand, organization, important to kind the I We that's and experience. question line has process approach capacity,

so, for on purchases do more more day. refinance a time, of underwriting In think may the But of closing we add way the that next that's view in a is But from our you every put In us. excellence and loan excellence. see need And view a then you cases, a that's perspective other it had are see us. there's we operations how cases, platform And are loan where market purchase processing that where of will be our next refinances more purchase -- We in market may loan is be there? to to that'll platform. and prevalent, from any be specify each most amount you to with X And loan. we will to capable maximizing refinance a profitability it at So, really profitable In moment the loan refi. another we in platform. that loan. the more loans we volume of profitable volume kind don't prevalent, purchase some most growing focus the have a as like the

great few Rocket at market, the reach. flexibility prospective advertising because yes, And not reach channel a same point may in our the the that as have to last financial channel. we're And out to think in those agents, Pro that not channel reference there to that cetera, talking us Partner heavy particular, who reach, it. rolled or planners, we allows access et have that purchase pivoting to gives channel from are us direct-to-consumer Now, clients insurance that the growth loans sale. to may we've that We've I years; in right advertising of purchase direct-to-consumer seen

And We've that in that got of being so, we course, a with that figuring is licensing marketing the specializes to about in sales thoughtful team there taking the that approach, partners the inbound specializes a group each of that. sales team in things partners and out proper of day force we have requirements. have, direct-to-consumer, is to then we that the just a want like that. we the to every most for onboard lot do and on approach technology us, those industry one requests, built out complicated proprietary And

we're to partners onboard them. So those able licensed

So in and originate all and, are states forward to with legal they XX loans that. move then

the her will a scope, the that business. our taken those to talks reference right you numbers. this we've it turn and those I Julie to Rocket and out lot about channel, So, a that a point continue it finding and them partners, and kind time over can in of approach to to Pro allowing grow But rolling of strategic partners of methodical, approach be of the in same size terms licensing

you the years continue few same years his So process the free growth to will of Julie you've feel here to last seen come. -- I the in think in

Julie Booth

to when one that we partner and with brand to also very of want partners us. has and think that want them we we is the are partner have approaching, brands channel about things with these they the that really, this we strong Yes, and consider built really we

continue to to grow are that we're think think us. years of that in allowed trying important continue where putting that who so can know last I are investing been source us that hone partners on heavy right to of as partners over here. here partner and we the been launch got, to And as that building into invest late that's as the that that we effort brands considering to that of technology. to technology new platform, and we we we've continue about want We'll we've and we have have bring to couple the for process really for So which those

Jay Farner

Yeah.

I one about, those best are quarter kind the QX this at think ever the I call, if but referenced had. think be and I of refinances talking we've record the our also while QX will levels, not of, were purchase that in partners

demand and is that's lot partner which So through of strong we're coming seeing great. a channel, that

Timothy Chiodo

much so question. the for you Thank Great. taking

Jay Farner

course. Of

Operator

Rich Your ahead. Shane JPMorgan. Please go next comes from question with

Rich Shane

Thanks guys. for taking afternoon. questions this my Hey,

been on of impact over -- the in trying to scaling the and of of addressed topics defend gain intermediate One that's really your sale the margin terms that. you've peers. term is about And the talked of

are talked changing. capacities changing, on about a on where pressure curious, that put market I'm market demand short You've also term Do think share. or the may and market supply longer you that in share? term some

Jay Farner

and and at two moment time, on, Yes, share any in something the denominator three a determine as look happening. the year, to market revising at year bit revising. They're I for we that us be yearly, of always is what think getting period challenging right exactly touched we time, that even is can

month or platform over platform. market or we to second share. three go tech and to XX,XXX lot there from loans a on and long There fixate this about we over were go where really challenge. X,XXX might talk will to it the XX,XXX Bob, turn But loans course, or in from XX,XXX, But don't can to this. really you a you a that process XX. And of are components scale. speak necessarily to is is XXX,XXX to of think XX quarter to I term, operations touches folks on One, Bob when is a So are we

So along continue that we're to lot a scale. us able somewhere getting way we competition to benefits that, find the our stuck of

The financing of is the other course, required. that's thing

the if around have for with. that, grow, the can I bit helps the Julie allow think you then technology the really price. strong have to our our third this will a And process that with us we the financing speak speed moat all deep thing as brand. you with brand, operations, even and experience then form is many a And that having client or is that of struggle this quite So operations, to another

It so brand, pressure, talked the give make our don't bit, think consumers capacity margin a our on pricing put comes about that I but a you strong a for the mortgage plus the to little if competition. know you're XX really with space. competitive of the last close and have advantage we fact I a margins typically competitive for and our and down today. as be that does -- worked And course really and to seeing can up the it and which have piece, Julie it that to in and service, capacity Bob, bit want client of experience, in to price can about us of in apply defend margins is as drive stopper less touch go goes, most that years, it's benefit to that speed our

Bob Walters

Yeah.

they great a I times. we market were they competitors. run and it's and about find what how it is about we -- And can comes scale thinking usually, of as And capacity. talked a that some about a we question times like out an we we faster grab we when lot it to we opportunistic then about share, ahead, begin our it's And than along. think add think rabbit

so One industry, selling look picture different. numbers, that very mortgage like, into gain they're could at allow anyone top were long-term, bigger and at That's interest rushing things two unlike they're us cars, come to is are hold jump that that continue in. And smaller it. industry, in. they often where There oh, pre-financial to we'll point, the crash, systemic going did,

Now, licensing a big that. is moat, around

they It's hit more so easily and to can it it's becomes small then but said, entities linear. begin not can as sense in the add capacity, exponential and enter people of entities to add so limits. big that more And difficult capacity, they Jay

we're can do think And truly market, where we're that in will ongoing think range I we we're find that. take so, who well this to now, and out positioned very and I that, of to advantage able be in capacity add

Rich Shane

it. Got

great, very Okay. helpful. That's you. Thank

portfolio? I that? is housekeeping miss servicing on UPB the Just question. Did one What now

Jay Farner

billion. XXX About

Rich Shane

billion. XXX

Okay. guys. Thank you Terrific.

Operator

from comes question next Your Dennis McGill with Zelman. ahead. go Please

Dennis McGill

guys. you Thank Hi.

loan First about headcount you're play with I just people an away, bid competitive you've we’ve obviously environment talked in unprecedented trying to and headcount. officers lot the and question do for a being has And dynamics of standpoint? just industry during bit was about differently. hoping you've own build a quarter? seen a handled up what then, but explain to could turnover you set capacity, how the maybe And from their you seen

Jay Farner

about talks lot our yeah, Well, structured differently. Bob I is model think this. a But business

same So of we're flex heads. the capacity add without able grow to having to capacity, number

individuals. course, those still -- But team a really members. get really lot are get of same and we we that capacity to when you're we -- using way we're technology the efficiencies extended Now, the members hiring growing to of team bringing

experiencing folks become In are on and terms working mentioned we as turnover, our all happy, to success. their of before shareholder now investing very great

So is very of through strong, XX% time, a and it's we've very strong, our team from culture had going we've working our members this very period been even with of home got strong successfully. COVID,

not Bob, we're of our don't folks, come to So a of about -- our we're we're grow. XX for more types great don't a same because someone the touch hiring to we to shape if -- think from not require with group in bit little experience retention hiring, for how years you in our be, we might I want perspective. want about competition

Bob Walters

really right. They have about the is coming to add get -- the to keeps to back capacity to get you're we've loans, scale, because the been get same individual number you talking Yeah. -- one ability That's that before, thing key this and increase can in pretty per that team number. and the dramatic you of seen getting individual closings more add one we've loans, a amount get is as

there's work, plug lot about where that it's plugging have highly that in, call them, truly lot what an guiding circular even today, And in so logic talked roadshow grow. have algorithms a to which the and in competitors people many people, we of so we only impediment that rocket our the and a allow seasoned for and industry you're that so you to remains us

technology bifurcated those roles. and but utilizing people to you, so because And assist also we've

through be loan you and needs guide them technology So, things plug points of in really and you of us. experience just confident, be choke then for to years reduce don't those have them able them can really, work. a and to couple successful can processor so who you been to show And and teach a and that's people

Dennis McGill

them. Very didn't question, were helpful. you a couple catch then there steps And mentioned. second I just

rate. the about servicing I was one XX% I -- from volume came you've book. And XX% think of retention think closed XX% talked the

improve more gotten perspective any us you've in like larger? add time service ratios just clients the over on you Can those to been that? to ratios as historical and able Have give you've portfolio. As grown you

Jay Farner

Yeah.

I better. get think this speak Bob, to can you to continue but they

numbers are at -- ahead. been I higher maybe recent where the most presented think the go and we've the

Bob Walters

than industry that always we XX leading, in couple in there. years, pushing and We're but XX, of last it's usually into the that range XXs been

it's row We of better it. really servicing. doesn't mentioned the industry our servicing of to and we to really think the Jay a that continue to want so focus have things. I So on a eligible I get at reputation we've number client drive a high in mean, back to kick to is been analytics every to as the lot everything. that speed data, A, exit in continuation to greatest of people, barrier to client experience, we weren't because of win that to because also have plus just and elsewhere. that want it the service. J.D. experience about where to in that continue had a refine continues But that, year award our Power pertains brand great provide this talked people the Xth people to come is experiences we an

and higher And so that retention. higher leads to

number not continues a surprise go that that north. So to it's

Jay Farner

Yeah.

cut because you of profit important in And folks having lot the cost when get technology drive about investments. costs property data, if When It's to acquisition servicing, make even critical we all is -- on that to in time in not suppose experience second the their can competitive do we to having as origination. talked for And their think client that clients, we investments we the a increase think get I just that trying the But around for about to they success servicing. pay amount about real wait client half about we think invest we acquire we think happening client access to we what's hold have neighborhood, our their access to experience. I hour. is no are like that about the business. data, can market, an the of more to payment around, our lifetime as time there answers questions enjoy they us, for there because

platform. So do really we servicing advantage strategic as origination to a our grow

Dennis McGill

Very it. luck Appreciate guys. Good good.

Jay Farner

Thank you.

Operator

next ahead. Dan Please go question from RBC. comes with Your Perlin

Dan Perlin

the question, out. go sensitive some Thanks. is a guys. a just Good price portfolio, first you between a of had sensitive much understand embedded could setup that the price your I'm dynamic versus be trying great you to sensitivity out that aggressive little Obviously, non-price bit when clients have for and that and for difference gain more on I servicing is revisit on quarter if the to in to focused to maybe so really acquire? clients on understand the I trying congratulations second. margin evening one And around it sale

Jay Farner

question. good Yeah,

as difference a well, So there's price it's process mortgage. floor around -- there's out this price. and operate that differently, to the And there's that to a do created sensitivity. by think important to to think we but is close can a floor underwrite I Bob floor don't a cost point significant I and speak

have we to what margin -- dropping because And how acquire cost although underwrite and margin, benefit close. down competitors for area, that the margins pressure in can they this about feel and even good so and talked in process the as we to we QX. stops here our is more see margins in they But about is, Julie robust up go were how on and QX

we be have competitive. touched that to on so before. And I

and underwrite. in because have We've that in brains markets, and markets, of rate. allows advantage seen now, in for of underwrite But to have process strong of tougher that we really difference to which the margins profitability an -- very years We us kind their because our closed efficiencies have is within competition, stuck be of versus to years to around regardless of us the and X.XX and cost the Bob. easier interest tight years for

Bob Walters

that's a thing in the of control about the roadshow talked Yes, losing lot was business. another we

loan what And you lenders, is find traditional are lot of mortgage the in with control business. of that officers the so a

they they're the as the brand, client so are And is them. reason the that to coming

always can going really margins are since they margins. drive are of to whether course those paid low, are margins. that then they're higher the ones get for And So margins the same, be lower they advocating

so force of real those And exist powerful faces that driving at lot and really a very very down. a here. is It doesn't

a that the have interest between we pretty often very to a thing mortgage a of really on lot loan when can be so they execution most on find constantly and which carry shop, competitors market said, -- as price difficult is you is because $XX,XXX. ability rates then one-eight, is imperceptible a difficult it's size. yet $X,XXX haul. experience our And And we And which and you a a very in over price have coupled to you can points than since thing that mean very, maximize see a half long the with our day-to-day, that's the you margins can point to that USPs difference and have changing, and

Dan Perlin

that's guidance big a geographies. the as continue. likely new as long-term currency. I plan, is, of well follow-up a that That's super outperform clearly public part the some into had continue I verticals, helpful. know The to strategy you've got suggests to And expand is to you now And that

And things, some M&A kind you two appetite secondly, then excess what near around Thank plan? well term model? expansion wondering, through what for thoughts of have accelerate capital public is And this are the now your very so is of you just your I'm as currency the that much. flowing to

Jay Farner

the organic capital month, and comes opportunistic origination always leveraging first to we our that in as here. a take and been, servicing Yes, it place drive when in level. chime touched Julie well grow usually at is technology think the on $XX We've I investing billion growth look. that to I'll We've then to and

will the that's place that we first So go.

we've company, special of dividends private a done time. course As historically the over

cash now. coming in of lots have We right

the possibility something mean to that ability about as to that for we we like is opportunities. out doesn't grow not So, looking business, the a certainly us our about feel future. for we're always good And continue think

So, of? is sense. our mean, that course an as acquisition I the Julie, something kind for use about that am think and of repurchase, think missing as of that any I currency makes we we well, if a

Julie Booth

No, great, Jay. actually, you said it

right. that's think I

using of looking investing that best of our is we're found we the to have terms waterfall of the that to generally to an to about invest in the might use how the way we standpoint. hard capital technology, all kind certainly in capital. our deploy capital very at about business, And think In continue we processes, things M&A to invest add from be to think strategic that opportunities that the platform in

we we I that, here. opportunity it have to what, there's said, want where you road. may already. say, we're we'll as that the point not something we So, think down And at to keep always consider if beyond consider know to gets what Jay we doing looking we have that it in like invest that is And something just the

Operator

next Arren comes Your question ahead. go Please Citi. from Cyganovich with

Arren Cyganovich

Thanks.

that real some accelerated this change kind your does environment, started businesses you've of acquisition customer in you the of you amount other through expectations where created for maybe the ecosystem? the massive this how has within about of think this your business have growth you year in If the that view,

Jay Farner

ecosystem. certainly book to the for had some It mortgage down have of clients growing the out back. offers course, that reach things. on this road, estate, auto go great in businesses with us benefit us all long-term a certainly, to track wind those a the to strategic them, to of markets, larger around some We side. for up it's at are on comment strategies, grow marketing that is allow mortgage, whether mortgages thinking, real opportunity kind But that of we're still I'll the other of to experience from back think our only technology I having in the our not but of

strategy think in ecosystem. nothing that from that our would see the but our in I all is out we've it's to here deviate the helpful, growth of set in So businesses

Arren Cyganovich

about just impact Okay. adverse the general you on bit a fee, just your market gain that once GSE volumes just overall, last little maybe sale And how then volumes, that's implemented? market might or mortgage talk

Jay Farner

know, everyone's we been can what's I'm pushed about of Yes, aware kind where elaborate there's a we can this, of it? was how on change, it to sure Julie back. happening, But Julie speak think and

Julie Booth

for Yes, us. so the going be X was fee that's and to to pushed back December now, effective

good was that, to news we'll on others and that I really what of depends how react that think kind see we So to. hear

everybody's think same subject the be going to to fee. I

So across is everybody the that is thing that's consistent originating mortgages.

want… There's we of other have thinking that in So that, impact has that about see. chime let yet think I that on well, sort pricing? in certainly can Bob, do you Bob we'll to this factors what I consider on as

Bob Walters

Yeah.

to how it experience effective that with life don't real fee live because last and going that now is was the out for earlier came know it's went weeks. for a We said two have The month. I -- us FHFA right

we talk that, spread fundamental our volumes capacity largely will margins change for absorbed see a material place, in didn't or And which for all of but two time, can so or to period secondary primary, change. some to didn't the our at time. of whether at that at not weeks again, industry see we about, Because for was quite much and a is we be that

mortgage goes that experience December will imagine sheets same. so. a sheet rate and pricing It'll would companies be path, be largely largely on I early And X live that the So will the in be reflected October.

Arren Cyganovich

Thank you.

Operator

comes Jason question go of America. ahead. Please next Kupferberg Bank from with Your

Mihir Bhatia

will. wanted just our Thanks little comments are move a And that So versus on This quarter-over-quarter any structure, then we just of could How about fixed as variable much is of great? taking is maybe it much is Jason. specifically lockstep for just if with for cost you questions. how volume? and bit. related? I in your a just overall would costs Hi. the Mihir origination Good How if go to evening. quickly much start we'll if related, you be seasonality, to tied talk

Jay Farner

loan the Yes. more right mortgage to to Julie of talked really drops But about load us from along I'll fill can much this about growing operational others think banker we specifics. Bob platform. let I the another that most the it our platform, They're important capacity. the that's We're a than question. next to think majority perspective, Julie understand But concept perspective. you officer grow And loan bottom I line. that who And kind with our vast not to some expense so. capacity. makes give the from different

Julie Booth

The with and that vary costs directly about increased. that production we we it's tend more have are the pay, that costs Yes. XX% as will that commissions things operations also to banker well. folks our compensation our of vary. And Production

new adding line. loan that So to the of tends about our XX% default to we're platform, bottom production

continue as amount the pretty profitability is of in platforms substantial it to on add terms So to that. we production of our

Mihir Bhatia

I question item, Small a then is growth income that, strong on you. other Business this Administration. line had some quick you just Thank the the Great. quarter, think, obviously but And of

out that in talk Rocket million XXX you how loans. see -- that just for like are there from the that can extra expectations the for growth the Is of rest think I to about Amrock, I year? than, in Thank things there directly is absolutely there origination? any -- based to in And guess, call other business been other that is which there you. is has

Jay Farner

Yes. Right.

to I think this. can speak Julie

is the platform. think, road this Rocket on lot through those go business In a particular, designed see I and lending our we really tech flex you'll growth touched loans as you document, as the show, of a on businesses.

in relationship the other that is Julie group SBA the loans that grants that that or allowed particular somewhere here do to over to. speak established, reflected And in income so near million or that X with can was

that's that but we're you be ability of this. But very adjusted, to technology want talk think, do to is something over excited period underlying the So time, about. to for I limited a Julie,

Julie Booth

Yes. right. That's that got And you right.

There are significant mentioned million income XXX increasing things million to of XXX other The both you from two quarter-over-quarter. them. and

So two that income impact the Mortgage as quarter. Rocket really Jay well the on other of do that for mentioned kind just things increasing opportunity in majority the the business those of that also Amrock alongside have increase and

additional rest some income year expect the through in be from not may comes there we do ahead, of look but that, the we As that that.

like built may there necessarily when great do But point, to Jay, our to things look at the XX-Q source is see time-to-time, platform you'll and you further As be it's from of this a that recurring opportunities. think be I a revenue.

Operator

Your ahead. Please next Barclays. from question comes Mark with DeVries go

Mark DeVries

recapture Seems You a unusually mentioned acquisitions servicing. high capital investing consider with good of servicing an potentially in lending? rate? be correspondent Would you it like could or bulk such use

Jay Farner

can other platform, I’ll the let a that's the think on, with about and we you is and in And of Bob about markets MSRs this take MSRs lot expert you elaborate. Certainly, value may acquire capital some understanding may us sell cases, them. as as we've Bob, MSRs, cases, on that. see he we our if talked right the move.

Bob Walters

standpoint. how MSRs two other to retention. play from pieces But think capital, return -- how I that Yes. talked and about is a there One might on ways profitability a about earlier, simple really the acquiring the out. We that and you might lever is is

they we often, get to MSR, a we cash capacity what market. get that is And not that that on we'd to acquire. It's refinance cash to But us. handle to how been also and the the another past. market valuable of look stream of in so but It's be acquiring when acquiring that able client how when that what we've like home, at future the much done look it to at MSR buy lot depends looks also incredibly something of only the -- flow, and or many

know market. there. unlevered kind We're different active always and that some we're talk to what you of ways, as or in I as can as we're now right very to So retention get work a don't return. many can in capital that always from they out levered do, But looking. about putting far standpoint a

Jay Farner

moving this the When again, originator we're who will think you additional an point is to part, clients other and servicing to important loans, folks I really forward. we ecosystem our of those drive and of leverage service And the drive our out. an last and think thing origination

course, the produce thoughtful how really ourselves. them to largest we we can So in be the about world we also acquire MSRs in of engine and

to way is, that that has whether business. Our competition buy for -- servicing, its only return that's the them to grow

And probably able how we we so in more them to about produce we're luxury have strategic ourselves. buy being of thinking the because

Mark DeVries

help you could to and Could it. Got EBO how you for timing opportunity flow as Okay. the earnings? meaningful size guys through kind is the us when Ginnie that that of

Jay Farner

Go ahead, Sure. Julie.

Julie Booth

of XX days looking as $X.X you opportunity we're you the out the Right our so. pass-through about how kind that do sheet, those cost we certainly loans to past can now rate on those There the see given at, the which versus is on opportunity have ability due, because that see finance to we buy balance loans, what that something to that. an does Yes. those continue to loans balance analysis of really, is and got size can of billion are is pass-through sheet. trigger the what loans We've And our portfolio.

actively are that. looking we at So

loans out we're continue whether to about sheet had balance we -- year makes liability it that We right to bought do out, that million, now. thinking our our $XXX about the have and sense bought end think, I of more already so some

do, see. may but we it we'll In so be fact, something that

Mark DeVries

Any what loans you provide of color Okay. percentage Ginnie those or that can or on delinquency in forbearance Mae are in loans?

Julie Booth

Yes. Ginnie maybe Yes. Bob for know And mix the that a up. don't Mae quite I knows.

Bob Walters

about that so XX,XXX are And the amount of Well, Ginnie. disproportionate a loans. numbers exact it's

as of head. I’ll on that -- top soon my So have

Julie Booth

the June news where good Yes. seeing are decreasing, thought of it's trend forbearance. And But that in the we to we number been at compared a XX. a has in decrease loans

it's see. So been a to good trend

Jay Farner

here strong incredibly Yes. where strong the all market of for that say I experiencing this just with exciting now, growth experiencing we're headed would now second right trend the the we're that we're year. along that half right for

Operator

Don Fandetti have Please Now ahead. for question time do more with go we Wells Fargo. from one

Don Fandetti

up sale a in guidance. Is view QX that. I gain Hi. evening. of QX, the color on Or question gain Partner lot should into as capacity seemed component didn't coming on there we there? on normal if also, just follow-up a provide little want the And know just more a could margin a in like margin sort ask quarter-over-quarter. on I mix market? you went to Good Network that it sale the

Jay Farner

the I Partner, we that versus similar referencing expect we as mix from same general, about I remain you for to Partner QX the a Well, to think, know in top -- margin I as that mix don't the speak if think Julie, second -- direct-to-consumer guidance the the the I that you're reference as perspective, would of question. was or to part think want margin.

Julie Booth

Yes. Yes.

have the as seen here basis. loan Partner a is recorded we’ve I margin funded think on margin explained the You Partner up come

you're come in with seeing investments channel So there's a in direct-to-consumer lag on the we Network up bit really had XXXX, made the of that channel. margin some that what XXXX a consistent we're that. and in But into Partner and here seeing

think I you're channels environment in market the seeing So both current those the margins. of on impact

Don Fandetti

for Okay. Thanks that. clarifying

Jay Farner

we -- bet. go You ahead. Well,

Operator

turn to Jay is Farner time questions. we for That I'm have his for the the call going all back right. remarks. closing to That's

Jay Farner

joining mentioned before, once in really as you you. the I excited about taking about those where each months anxious about we as right. out build time questions. answered talk how to results relationship. those to today, in came And the better we We're you know Again, we we and with everyone here All appreciate phone Thank getting and we get the here about on all excited of can. a as us feel to QX, QX we few

Everybody So evening. a again. have great thanks

Operator

joining. you This Thank today’s concludes call. for conference

disconnect. now may You

Rocket Companies (RKT) 3 Sep 202020 Q2 Earnings call transcript