Rocket Cos. acquires personal finance app Truebill in $1.275 billion all-cash deal
Rocket Cos. on Monday announced a $1.275 billion all-cash deal to acquire personal finance app Truebill.
Rocket executives consider the acquisition a way to accelerate the planned transformation of the Detroit-based parent company of Rocket Mortgage into a financial technology, or fintech, company that provides services across numerous sectors.
"Our mission is to be the best at helping people with these complex moments in life," Rocket CEO Jay Farner told The Detroit News in an interview. "Now with Truebill, this allows us to bring real value and keep the client engaged, have a reason to be on the front of their phone in an app that they look at every single day, as they get valuable information.
"That now empowers us to accelerate our marketing, to accelerate adding additional transaction engines to the bottom of our platform. This acquisition moves us forward months or years in terms of where we are."
Founded in 2015, Truebill is a mobile application that allows users to manage subscriptions, track their spending and build budgets, among other features. The company also renegotiates bills on customers' behalf. It claims to have some 2.5 million members and to have doubled its user base in the last year. The company analyzes $50 billion in monthly transaction volume and claims to have saved its customers more than $100 million overall.
Farner likened Truebill to the middle of a funnel: at the top, Rocket has some 10 million prospective clients looking at its services but not necessarily ready to complete a transaction. The opportunity to make money off those interactions is there, but the addition of something like Truebill's platform provides a way to keep prospective customers engaged with the platform and generating recurring revenue.
Though known primarily for its leading mortgage lending business, Rocket increasingly has sought to build out and highlight other parts of its portfolio, underpinned by its technology platform. It recently launched an automotive retail marketplace, for example, and earlier this year said it would offer financing for solar panels and installation.
Truebill says it is on track to generate $100 million in annual recurring revenue, and 2021 revenue more than doubled from 2020, according to a news release. Meanwhile, Rocket says it generates about $1.3 billion in mortgage servicing income on an annualized basis.
"We'll keep adding to this platform of reoccurring, consistent revenue," Faner said, "and I think that changes the face of our company completely and people really start understanding that we're a true fintech, with this awesome engine of mortgage attached."
In a statement, Haroon Mokhtarzada, co-founder and CEO of Truebill, said: "By joining forces with the Rocket FinTech powerhouse, we will be able to extend our reach and seamlessly connect consumers with even more services. The synergy between Truebill and the Rocket Companies platform could not be stronger, especially when you consider the importance of home ownership as the centerpiece of a healthy financial life."
Looking to 2022, Farner said Rocket has the cash and will be on the lookout for other strategic acquisition opportunities, should they arise, in addition to funding other initiatives such as stock buybacks and special dividends for shareholders.
Rocket shares were down more than 6% at market's close Monday, to $14.46 per share, amid a broader market slump prompted in part by concerns about the economic fallout of the Omicron variant of the coronavirus. Year-to-date, Rocket's stock is down roughly 25%.
“It’s very logical that investors would look at this company that’s growing substantially in mortgage and the incredible profits from mortgage and say, 'Wow, that’s what Rocket is about,'" Farner said of the market's valuation of Rocket since the company went public last year. "But now that we’ve started talking about our huge growth in auto, our huge growth in real estate, our rolling out of solar, and now this hub that we’ve acquired that will connect them all together with Truebill, people will start seeing the power of the lifetime value of the client on this fintech platform."
Rocket said the deal is expected to close before year's end. Truebill's approximately 150-employee team will remain primarily based in Maryland.