Amid housing market boom, Rocket posts $2.8 billion profit in first quarter

Jordyn Grzelewski
The Detroit News

Rocket Companies Inc. posted a nearly $2.8 billion profit on revenue of $4.6 billion in the first quarter of 2021, continuing the newly-public company's hot streak amid a booming house market and growth in the company's other businesses.

Net revenue was up 236% from the first quarter of 2020, when the Detroit-based holding company that includes No. 1 mortgage lender Rocket Mortgage generated revenue of about $1.4 billion. Net income, or profit, was 28 times higher in the first three months of 2021 than in the same period of 2020, when Rocket posted a profit of $99 million.

Meanwhile, the company — which went public in August — reported closed loan origination volume of $103.5 billion in the first quarter, up more than 100% year-over-year. It saw a gain on sale margin for the quarter of 3.74%, up from 3.25% in the first quarter of 2020. 

Rocket Companies' Dan Gilbert and Jay Farner rang the opening bell earlier this year on the New York Stock Exchange in celebration of its IPO.

Though the success of the company's flagship Rocket Mortgage (also known as Quicken Loans) brand and a hot housing market helped fuel the powerhouse results, Rocket Cos. vice chairman and CEO Jay Farner also pointed to growth of the holding company's other arms.

"This was the sixth consecutive quarter where our team was able to double the company's home loan volume year-over-year," Farner said in a statement. "While the mortgage business continues to perform — with March producing our highest-ever purchase application volume — we also had success in our other verticals."

Rocket Auto, the company's automotive retail marketplace, for example, saw a 65% year-over-year increase in the number of vehicles it sold. Rocket Auto facilitated the sale of some 13,600 vehicles, Rocket reported, and the company sees additional room for growth amid a hot car market.

The company on Wednesday announced a new strategic partnership with software provider AutoFi, Inc., a move that Farner said would help "enable the company to facilitate a full automotive point-of-sale solution, including financing and insurance."

Amrock LLC, Rocket's title company, generated nearly 350,000 closings, up 110% and the company's highest level ever. And Rocket Homes, the company's digital real-estate platform, saw average monthly visitors to its website grow by more than 300% in the first quarter.

In a call with Wall Street analysts, Farner said the company's goal is to become the No. 1 retail home purchase lender in the U.S. in the next two years. He said the company sees untapped opportunities to improve the overall home-buying experience.

"It is clear that home purchase transactions represent the single largest growth opportunity for Rocket Companies today," he said. "We're in the hottest real estate market in more than a decade and demand is accelerating."

To that end, in a housing market fueled by strong demand and low inventories that are pushing prices up, Rocket said it had its best-ever Q1 purchase closed loan volume, and its highest monthly purchase application volume ever in March (a record it broke again in April).

"The simple fact is, the home-buying process is extremely complicated," said Farner. The company sees room to grab additional market share, and believes it's well-positioned to do so by further integrating its various platforms and services, he said. "Core to this growth strategy is Rocket Homes, our home search experience and real-estate agent referral network."

Rocket executives said the company remains in a "strong" liquidity position, with total liquidity of $8.7 billion. Of that total, $2.9 billion is from cash on-hand.

Meanwhile, Rocket is projecting it will see closed loan volume of between $82.5 billion and $87.5 billion in the second quarter and gain on sale margins of between 2.65% and 2.95%.

Chief financial officer Julie Booth said the company sees "a strengthening economic environment" in the second quarter: "The strength of today's real estate environment provides multiple tailwinds for our business," she said. "We expect continued strength into the spring home buying season, and we are projecting record quarterly purchase volume in Q2."

Rocket's shares closed up 1.38%, to $22.80 per share, Wednesday. It was trading down about 13% in after-hours trading about 6:30 p.m.

Twitter: @JGrzelewski