Sign in
RC

Rocket Companies, Inc. (RKT)·Q1 2025 Earnings Summary

Executive Summary

  • Adjusted revenue landed at $1.296B, at the high end of guidance, and adjusted diluted EPS was $0.04; GAAP revenue was $1.037B and GAAP diluted EPS was $(0.08) as servicing fair value losses weighed on reported results .
  • EPS modestly beat S&P Global consensus, while revenue missed; management guided Q2 adjusted revenue to $1.175B–$1.325B and flagged April margin/volume pressure with expected sequential improvement in May/June . EPS consensus mean: $0.039; revenue consensus mean: $1.251B*.
  • Strategic catalysts: announced all‑stock acquisitions of Redfin ($1.75B equity value) and Mr. Cooper ($9.4B equity value), and collapsed the Up‑C structure with a $0.80 special dividend; liquidity remained strong at $8.1B .
  • Operational tailwinds: record home equity quarter, net rate locks +17% YoY, broker channel integrations (ARIVE) driving 9,000 pricing calls and >300 first‑time broker engagements; AI initiatives improving productivity and cycle times .

What Went Well and What Went Wrong

What Went Well

  • Adjusted revenue came in at $1.296B, at the high end of guidance; adjusted net income was $80M and adjusted EBITDA was $169M. CEO: “We entered 2025 with strength… This demonstrates the power of the Rocket platform” .
  • Home equity loans posted another record quarter; DTC sold loan gain on sale margin improved YoY (4.65% vs 4.26%); net rate locks +17% YoY and closed originations +7% YoY .
  • Broker ecosystem momentum: ARIVE integration triggered >9,000 pricing calls and >300 new broker engagements within days; redesigned Rocket Pro dashboard increased Pathfinder usage 30% .
  • AI productivity: agentic AI reduced transfer tax remediation costs ~50% (>$1M projected savings in 2025); call analysis tools cut review time >80% and scaled coaching volume ~10x .

What Went Wrong

  • GAAP net loss of $212M driven by servicing fair value decline (change in fair value of MSRs −$449M) causing loan servicing net loss of $48M; GAAP revenue fell YoY ($1.037B vs $1.384B) .
  • Gain on sale margin declined 22 bps YoY to 2.89% (Q1 2024: 3.11%); Partner Network contribution margin fell YoY ($57M vs $114M) .
  • April volatility (tariff headlines, rate spike near ~7%) pressured margins and volumes; management expects Q2 margins to be below Q1 due to April dip despite improving volumes into May/June .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total revenue, net ($USD Billions)$0.647 $1.769 $1.037
Adjusted revenue ($USD Billions)$1.323 $1.187 $1.296
GAAP Net (Loss) Income ($USD Billions)$(0.481) $0.649 $(0.212)
Adjusted Net Income ($USD Millions)$166 $85 $80
GAAP diluted EPS ($USD)$(0.19) $0.23 $(0.08)
Adjusted diluted EPS ($USD)$0.08 $0.04 $0.04
Adjusted EBITDA ($USD Millions)$286 $177 $169
Gain on sale margin (%)2.78% 2.98% 2.89%

Segment breakdown

Segment Metric ($USD Millions unless noted)Q1 2024Q4 2024Q1 2025
DTC Total revenue, net$1,094 $1,486 $758
DTC Adjusted revenue$873 $904 $1,017
DTC Contribution margin$344 $376 $407
DTC Sold loan volume ($USD Billions)$9.049 $16.528 $11.303
DTC Sold loan gain on sale margin (%)4.26% 4.10% 4.65%
Partner Total revenue, net$170 $135 $114
Partner Adjusted revenue$170 $135 $114
Partner Contribution margin$114 $77 $57
Partner Sold loan volume ($USD Billions)$7.768 $13.624 $9.203
Partner Sold loan gain on sale margin (%)1.55% 1.33% 1.39%

KPIs

KPIQ1 2024Q4 2024Q1 2025
Net rate lock volume ($USD Billions)$22.362 $23.578 $26.117
Closed loan origination volume ($USD Billions)$20.205 $27.789 $21.584
Total liquidity ($USD Billions)—$8.2 $8.1
Cash & equivalents ($USD Billions)—$1.273 $1.409
MSRs at fair value ($USD Billions)—$7.633 $7.350

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Revenue ($USD Billions)Q2 2025—$1.175–$1.325 New guide
Gain on sale margin (%)Q2 2025—“Q2 margins to be lower than Q1 due to April dip” Lower
Total expenses (GAAP)Q2 2025—“Total expenses to remain consistent with Q1” Maintained QoQ
Marketing spend ($USD Millions)H2 2025—“Brand spend to return to historical levels; ~$100M lower vs H1” Lower in H2
DividendQ2 2025Special dividend $0.80 (paid Apr 3 to Mar 20 holders) —Completed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesNavigator launched; chat integrated; call synopsis at scale Brand refresh and digital momentum highlighted Agentic AI reduces remediation costs ~50%; call coaching tools cut review time >80% Increasing deployment and impact
Macro/rates/affordabilityGain on sale stable; liquidity strong Liquidity $8.2B; market share expansion April volatility (tariffs, rates near ~7%) slowed spring season; May/June expected improvement Near‑term headwinds easing
Broker channel (Rocket Pro)TPO margin improvement; Annaly subservicing deal —ARIVE integration; dashboard revamp; 9,000 pricing calls; +300 new brokers Strengthening distribution
Home equity productVolume +78% YoY —Another record quarter; long runway cited Structural growth
Brand restage/marketingSuper Bowl, “Own the Dream” —Leads +~10% YoY; verified approvals up high single digits; H2 spend normalization Paying off; normalization ahead
M&A/platform strategyInvestor Day goals; servicing acquisitions —Redfin acquisition ($1.75B); Mr. Cooper acquisition ($9.4B); integration workstreams >35 Platform build accelerating
Capital/liquidityLiquidity $8.3B; Fitch upgrade Liquidity $8.2B Liquidity $8.1B; revolver upsized to $2.25B contingent on COOP close Ample, expanded facilities

Management Commentary

  • CEO: “We entered 2025 with strength, delivering $1.3 billion in adjusted revenue, at the high end of our guidance range… By integrating home search, origination and servicing into one platform, Rocket is building the future of homeownership” .
  • CFO: “Adjusted revenue reached $1.3 billion… Gain on sale margin came in at 289 bps… On an adjusted EBITDA basis, we delivered $169 million or a 13% adjusted EBITDA margin” .
  • On April macro: “Early April brought heightened equity and bond market volatility following the announcement of new tariffs… the temporary spike in uncertainty caused many consumers to pause” .
  • On integration: “We’ve identified more than 35 integration work streams… move quickly and decisively to realize synergy value after closing” .

Q&A Highlights

  • 2025 outlook and operating leverage: Q2 guide seen as “strong yet achievable” despite April; margins lower than Q1; expect H2 marketing $100M lower and option to convert excess capacity to fixed cost savings if volumes disappoint .
  • Subservicing strategy post‑COOP: Rocket supports subservicing; will honor contractual provisions; models include nonsolicit/recapture support depending on client arrangements .
  • Broker/TPO outlook: Strategic focus on choice, technology platform, servicing enablement; ARIVE integration and dashboard enhancements to accelerate momentum .
  • Capacity and AI: Capacity “well north of $150B” in annual originations without added fixed cost, with AI enabling “infinite capacity” optionality to scale or save costs .
  • Home equity: Another record quarter; attractive across rate scenarios; long runway .

Estimates Context

MetricQ1 2025 ConsensusQ1 2025 ActualSurprise
Primary EPS Consensus Mean ($)0.03921*0.04 +0.00079*
Revenue Consensus Mean ($USD Billions)1.251*1.1013*−0.1497*

Values marked with an asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Near‑term: Expect choppy margin/volume dynamics after April’s volatility; Q2 margins to be below Q1, but sequential volumetric improvement underway into May/June .
  • Earnings quality: Non‑cash MSR fair value adjustments materially affect GAAP; adjusted revenue/earnings better reflect core origination/servicing economics this quarter .
  • Platform strategy: Redfin and Mr. Cooper build a balanced, all‑weather origination‑servicing‑search super funnel; integration workstreams positioned to unlock synergies starting post close .
  • Distribution: Broker channel investments are gaining traction (ARIVE, dashboard, Pathfinder), supporting purchase share ambitions amid affordability constraints .
  • Product mix: Home equity continues as a structural growth lever regardless of rate path; affordability promotions (1‑0 Rate Break) and RentRewards broaden reach to first‑time buyers .
  • Cost optionality: Capacity “well north of $150B” supports operating leverage; if market softness persists, management can harvest fixed cost savings in H2 while normalizing brand spend .
  • Liquidity/capital: $8.1B liquidity and expanded revolver provide flexibility for integration and macro swings; special dividend completed as part of Up‑C collapse .