Rocket Companies experience second consecutive quarterly loss
Detroit-based Rocket Companies experienced its second consecutive quarterly loss since going public.
The corporate parent of Rocket Mortgage reported Thursday a $411 million net loss in the first quarter on $666 million in total revenue. The first quarter of every year is typically a slow time in the housing and mortgage markets, and Rocket executives said during an earnings call that they are already seeing higher revenues this spring.
Mortgage lenders nationwide have experienced a decline in business since early last year when mortgage rates started climbing, leading to fewer home purchases and less refinancing activity.
"Rocket delivered solid results in the first quarter in the backdrop of an uncertain macro environment," Rocket CEO Jay Farner said in a statement.
Rocket did $17 billion in total mortgage origination volume in the quarter, down from $19 billion the previous quarter.
The company's closely watched per-loan profit margin, or gain-on-sale margin, was 2.39% in the first quarter, up from 2.17% in the fourth quarter.
In the fourth quarter last year, the company lost $493 million for its first loss since going public in August 2020.
Chief Financial Officer Brian Brown said during a Thursday earnings call that the improved margins in the first quarter reflect lessening price competition among mortgage lenders and less "capacity," a term that generally refers to employee headcount.
Rocket had cut its companywide headcount to about 18,500 people as of Dec. 31, down from 26,000 a year earlier.
"We remain diligent in managing our expenses ... with an eye towards profitability," Brown said.
Rocket executives on Thursday also touted the company's new BUY+ and SELL+ promotional programs and the newly unveiled Rocket Visa Signature Credit Card. The credit card lets customers earn 5% back on purchases to go toward lower closing costs and down payments.
For Rocket, the ultimate goal of the credit card isn't to compete in the credit card business against the big banks and credit card brands, but to help acquire and engage future Rocket Mortgage customers, the executives said.
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Rival lender Pontiac-based United Wholesale Mortgage is scheduled to release its first quarter earnings Wednesday. UWM late last year, for the first time, surpassed Rocket Mortgage as the nation's No. 1 mortgage lender by volume.
Rocket's earnings call Thursday was the last one for Farner, who is set to retire June 1. William "Bill" Emerson will then take over as CEO on an interim basis while the board of directors searches for a permanent replacement.
“As this is my last call, I want to make sure I thank Dan Gilbert, all of our team members, our clients, our shareholders," Farner said. "This has been an amazing experience for me the last 27 years, and it’s because of everybody’s passion, support, excitement for what we’re doing here at the company and the city of Detroit and other places across the country.
“As Dan (Gilbert) always says, and I firmly believe, the best here at Rocket is yet to come."
Rocket stock closed up 6 cents Thursday to $8.70.
Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl.
This article originally appeared on Detroit Free Press: Rocket Companies experience second consecutive quarterly loss
