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Rocket Companies, Inc. (RKT)·Q2 2025 Earnings Summary

Executive Summary

  • Adjusted revenue of $1.34B and adjusted diluted EPS of $0.04 were above the high end of guidance, with adjusted EBITDA of $172M and gain-on-sale margin of 2.80%; GAAP net income was $34M, but GAAP diluted EPS was $(0.01) due to interest and amortization on $4.0B senior notes issued in June .
  • Results beat Wall Street consensus: EPS $0.04 vs $0.026*, adjusted revenue $1.34B vs $1.28B*, and adjusted EBITDA $172M vs $106M*; narrative strength tied to refinance/home equity growth and AI-driven capacity gains .
  • Q3 2025 guidance introduced: adjusted revenue $1.60–$1.75B (includes a full quarter of Redfin), margins expected “relatively consistent” with Q2; consolidated expenses to rise ~$335M QoQ due to Redfin costs and non-recurring items, partly offset by reduced Rocket marketing .
  • Strategic catalysts: Redfin acquisition closed July 1 with early lead conversion traction and “Rocket Preferred Pricing”; $80M annualized savings from streamlining (Canada exit, credit card wind-down, G&A restructuring) provide operating leverage while Mr. Cooper integration remains on track for Q4 .

What Went Well and What Went Wrong

What Went Well

  • Adjusted revenue exceeded the high end of guidance, with adjusted EPS $0.04 and adjusted EBITDA $172M; CEO: “standout second quarter” and early Redfin integration benefits expanding the purchase funnel and raising conversion rates .
  • Volume growth: closed loan origination $29.1B (+18% YoY), net rate lock $28.4B (+13% YoY); home equity loans nearly doubled YoY, benefiting from AI-enabled digital refinance and client engagement .
  • AI-driven execution and capacity: banker follow-ups +20%, 80% of EMDs processed automatically (≈20,000 hours saved annually), fully digital refinance from application to rate lock in <30 minutes; “building a foundation for infinite capacity” .

What Went Wrong

  • Gain-on-sale margin compressed to 2.80% (-19 bps YoY), reflecting mix and competitive dynamics; partner network margin fell to 0.90% from 1.59% YoY .
  • GAAP diluted EPS was $(0.01), driven by interest and amortization linked to the $4.0B senior notes issued ahead of Mr. Cooper closing (not attributable to non-controlling interests) .
  • Total expenses rose 20% YoY to $1.336B as brand spend remained elevated and acquisition-related items and interest flowed through; Q3 guidance points to a further ~$335M sequential expense increase with $90M non-recurring items .

Financial Results

Results vs prior year and prior quarter

MetricQ2 2024Q1 2025Q2 2025
Total revenue, net ($USD Billions)$1.301 $1.037 $1.360
Adjusted revenue ($USD Billions)$1.228 $1.296 $1.340
GAAP net income ($USD Millions)$178 $(212) $34
Adjusted net income ($USD Millions)$121 $80 $75
Adjusted EBITDA ($USD Millions)$225 $169 $172
GAAP diluted EPS ($USD)$0.01 $(0.08) $(0.01)
Adjusted diluted EPS ($USD)$0.06 $0.04 $0.04
Gain on sale margin (%)2.99% 2.89% 2.80%

Segment breakdown

Segment MetricQ2 2024Q2 2025
Direct to Consumer: Sold loan volume ($USD Millions)$13,032 $14,118
Direct to Consumer: Sold loan gain on sale margin (%)4.14% 4.40%
Direct to Consumer: Total revenue, net ($USD Millions)$981 $1,030
Direct to Consumer: Adjusted revenue ($USD Millions)$909 $1,010
Direct to Consumer: Contribution margin ($USD Millions)$375 $367
Partner Network: Sold loan volume ($USD Millions)$11,296 $13,411
Partner Network: Sold loan gain on sale margin (%)1.59% 0.90%
Partner Network: Total revenue, net ($USD Millions)$188 $148
Partner Network: Adjusted revenue ($USD Millions)$188 $148
Partner Network: Contribution margin ($USD Millions)$126 $83

KPIs

KPIQ4 2024Q1 2025Q2 2025
Mortgage closed loan origination volume ($USD Millions)$27,789 $21,584 $29,056
Net rate lock volume ($USD Millions)$23,578 $26,117 $28,429
Gain on sale margin (%)2.98% 2.89% 2.80%
Total liquidity ($USD Billions)$8.2 $8.1 $9.1
Servicing portfolio UPB ($USD Billions)$593 —$609

Results vs Wall Street consensus (S&P Global)

Values retrieved from S&P Global.

MetricConsensus (Q2 2025)Actual (Q2 2025)Surprise
EPS (Primary) ($USD)0.02603*0.04 +0.014 (+53%); Beat
Revenue ($USD Billions)$1.280*$1.340 (adjusted rev) +$0.060 (+4.7%); Beat
EBITDA ($USD Millions)$106*$172 +$66 (+62%); Beat

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted revenueQ2 2025$1.175–$1.325B Actual $1.340B Beat high end
Adjusted revenueQ3 2025N/A$1.600–$1.750B Introduced; sequentially higher vs Q2
Gain-on-sale marginQ3 2025N/A“Relatively consistent with Q2” Maintained
Consolidated total expenses (QoQ)Q3 2025Baseline Q2+~$335M QoQ (includes ~$275M Redfin costs; ~$90M non-recurring) Raised sequentially
Non-recurring itemsQ3 2025~$30M in Q2 ~$120M in Q3 (incl. ~$60M interest on $4B bonds; ~$30M severance/transaction) Raised
Brand marketingQ3 2025Elevated in H1 ~$30M lower vs Q2 as brand restage transitions Lowered
Dividends2025Special $0.80 paid Apr 3 (Q1) None new disclosed in Q2 materialsMaintained (no new dividend)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesBrand refresh, Rocket.com platform launch; AI driving 54% banker productivity and >1M hours saved; Navigator usage scaling Fully digital refinance in <30 minutes; AI chat lifts conversion 3x purchase/2.5x refi; +20% banker follow-ups; 80% EMD auto-processed (~20k hours saved); MCP-based AgentIQ Accelerating adoption and measurable capacity gains
Purchase market and funnelPurchase share +8% YoY in 2024; affordability programs (RateBreak, RentRewards) Redfin integration expanding funnel; 200k pre-qual clicks; 65 closings in first weeks; Rocket Preferred Pricing Strong early attach and lead conversion
Macro/tariffs/affordabilityQ1 commentary on delayed season and affordability challenges Slow-forming season, momentum extending past Labor Day; prices moderating in 11 large metros; buyers gaining leverage Improving buyer leverage; extended seasonality
Regulatory/legal—Multiple investor alerts and class action notices noted externally in June/July press flow Background legal noise; no operational change disclosed
Broker/wholesale channelARIVE integration; API launches; improving broker self-serve Broker portal upgrades; ~20% reduction in outbound outreach; >1,000 partners adopt enhanced compensation splits Continued channel optimization
Capital/structureUp-C collapse and special dividend (Q1); strong liquidity Up-C collapse completed; $4B bonds for Mr. Cooper; liquidity $9.1B Strengthened funding, simplified structure
Servicing/MSRUPB $593B (Q4) with $1.5B servicing fees UPB $609B; MSR hedging strategy refined; plan to hedge combined post Mr. Cooper Larger servicing base; prudent hedging

Management Commentary

  • “Rocket delivered a standout second quarter, exceeding the high end of guidance with $1.34 billion in adjusted revenue and delivering adjusted diluted EPS of $0.04.” — Varun Krishna, CEO .
  • “We are building a foundation for infinite capacity… our growth is supercharged by AI and human capacity is no longer a limiting factor.” — Varun Krishna .
  • “Inclusive of Redfin, we expect adjusted revenue to be between $1.6 billion and $1.75 billion… margins will be relatively consistent with Q2.” — Brian Brown, CFO .
  • “We expect $200 million in total synergies [Redfin]: $140 million expense and $60 million revenue; early momentum is exciting and points to tremendous growth potential.” — Brian Brown .
  • “We initiated the wind down of Rocket Mortgage Canada and the credit card business… expected to yield approximately $80 million in annualized savings.” — Brian Brown .

Q&A Highlights

  • Cost outlook and guidance mechanics: Q3 adjusted revenue guide implies +6% YoY, +4% QoQ on Rocket standalone; expense bridge includes $275M Redfin and $90M non-recurring; brand marketing step-down of ~$30M .
  • MSR hedging strategy: Post Mr. Cooper close, plan to continue hedging combined portfolios (~70% coverage target); added hedges on Rocket to preserve float earnings assumptions .
  • Redfin synergy and attach: Early traction with pre-qualification buttons and “Rocket Powered by Redfin”; improved attach/recapture rates vs historical; 150 Bay Equity LOs added to retail force .
  • Mr. Cooper integration: On track for Q4 close (HSR approval, progressing with regulators); conviction in synergy assumptions (recapture flywheel) increasing .
  • MSR acquisition appetite: Market muted (transfers down ~30% YoY); remain opportunistic with high-return assets given multi-channel fulfillment options .

Estimates Context

  • EPS: $0.04 actual vs $0.026* consensus; consistent with company’s adjusted diluted EPS .
  • Revenue: adjusted revenue $1.34B actual vs $1.28B* consensus; beat driven by volume growth and mix (refi/home equity), and AI-enabled capacity .
  • EBITDA: $172M actual vs $106M* consensus; margin consistent with commentary (~13%) .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Beat-and-raise quarter: Broad beats vs consensus on EPS, revenue, and EBITDA; Q3 guide steps up with Redfin consolidation and margins expected to hold, a near-term positive for sentiment .
  • Purchase funnel conversion is improving: Early Redfin integration metrics (pre-qual clicks, early closings) plus Rocket Preferred Pricing support a structurally higher purchase attach over time; watch Q3/Q4 attach data .
  • Operating leverage building: $80M annualized savings and AI-driven capacity gains underpin margin resilience even as Redfin consolidates; reduces medium-term cost/investment overhang .
  • Balance sheet/liquidity strong: $9.1B liquidity; $4B bonds pre-positioned for Mr. Cooper debt actions at close; downside protected if deal doesn’t close (cash returned) .
  • Mix pressures persist: Gain-on-sale margin dipped YoY; Partner Network margin lower — monitor competitive dynamics and channel mix as Redfin scales .
  • Servicing scale expanding: UPB $609B and prudent hedging strategy; Mr. Cooper integration should bolster recapture economics and reduce CAC over the cycle .
  • Near-term trading: Stock may react to guide/beat and integration updates; watch expense phasing ($335M QoQ increase, $120M non-recurring) and evidence of sustained margin consistency .