Ladies and gentlemen, thank you for standing by and welcome to the Rocket Companies Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, John Shallcross. Thank you. Please go ahead.

Good afternoon everyone. Thank you for joining us for Rocket Companies earnings call covering the fourth quarter and full-year of 2020. We’re excited to share these strong results with you, but before I turn things over to Jay Farner, I will read our disclaimers. Today's call is to provide you with information regarding our fourth quarter and full-year 2020 performance in addition to our financial outlook. This conference call includes forward-looking statement. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued today, as well as risks described in filings with the SEC, particularly in the section of these documents titled Risk Factors. Our commentary today will also include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued today, as well as in our filings with the SEC. And with that, I'll turn things over to Jay Farner to get us started. Jay?

Good afternoon and welcome to the fourth quarter earnings call for Rocket Companies. Before we discuss another incredible quarter, I’d like to thank our 24,000 team members, many of whom are listening now. The excellent results that we are about to discuss and the innovations that drove them are a testament to your focus and dedication in what was an incredibly difficult year for the world. Your contributions to our clients and communities were a shining example of how successful our, for more than profit mindset can truly be. On today’s call, I’ll be speaking to a very important topic here at Rocket Companies, our platform. The platform continues to be the key to our long-term success in the verticals where we operate, as well as the record results that we've achieved in 2020. Over the next few minutes, you'll see how the technology that we've built and refined over decades will continue to drive success not only in the products that you're familiar with today, but also in product extensions and entirely new verticals in the future. If you were to ask us what our most important product is, we'd say it's the platform itself. In walking through our results, I'll provide updates on each of the key pillars of the Rocket platform, our technology, the strength of our brand, the Rocket Cloud Force, which I'll discuss later, and our data science foundation. I'll finish today's remarks by talking about how our platform allows us to continue to grow and become more efficient in our existing lines of business, while also launching and rapidly scaling new businesses. Our mission over the last several decades has been to take the most complicated and stressful transactions in life and simplify them with technology. Whether those transactions are mortgage, real estate, auto…

Thanks, Jay and good afternoon, everyone. I'm pleased to again report strong financial results for Rocket Companies. For the full-year 2020, Rocket Companies generated $16.9 billion of adjusted revenue and $11.1 billion of adjusted EBITDA as we wrapped up a record setting year. In discussing today's results, I'll walk through some of the key advantages of Rocket Companies business model. In particular, I'll highlight the power of our platform to unlock scale, drive efficiency, and serve as a launch pad for new businesses focused on simplifying complicated transactions. I will also provide some insights on our capital allocation priorities. Our 2020 results demonstrate true growth at scale. For the full-year 2020, we generated $320 billion of closed loan volume, representing an increase of 121% year-over-year. Our success in 2020 was broad based with consistent increases across both our direct-to-consumer and Partner Network channels. Our growth was also balanced between new and existing client relationships. 2020 was also a year of robust growth across Rocket Companies with particular strength at Amrock, our title company with revenues increasing 124% to $1.3 billion during the year. Rocket Auto, our automotive retail marketplace also generated robust results orchestrating more than $750 million in gross merchandise value of automotive e-commerce transactions. This equates to just over 32,000 auto units in 2020, up more than 60% as compared to 2019. We finished 2020 on a particularly strong note, with fourth quarter rate lock volume of $96 billion and closed loan volume of $107 billion, both significantly exceeding the high-end of our expectations. Multiple drivers contributed to the outperformance in Q4. In particular, we are seeing a consumer that is increasingly comfortable completing large complex transactions online. Continuing the trend we've seen throughout 2020, our automated self-serve digital experience was our fastest growing channel in Q4. We…

Great, thank you. [Operator Instructions] And your first question here comes from the line of Timothy Chiodo from Credit Suisse. Please go ahead. Your line is now open.

Great. Thank you so much for the question – for taking the question. So, you touched on it, I think very nicely during the prepared remarks around some of the other businesses, they may be sometimes get a little bit less attention, given they're a smaller percentage of revenue today, but represent a bigger opportunity, longer-term. I wanted to first touch on the auto business briefly, both in terms of the direct and some of the indirect benefits to the overall platform. And then if you don't mind a brief follow up on Rocket Homes.

Thanks, Tim. Jay Farner here Absolutely. When we think about Dan Gilbert's vision for the company, over 20 years ago, I think I referenced the email that Dan had sent out about our ability to transform these major life events that people have leveraging the internet. Well, here we are 20 years later. And we're talking about mortgage, we're talking about real estate, we're talking about auto sales. As you know, that's over a $5.5 trillion market that we're playing in. And these investments that I discussed in the prepared remarks around our technology platform, the brand that we have built, the Rocket Cloud Force that allows us to step-in and take action at the right moment with consumers. And then this massive data lake that allows us to market to consumers. Well, now we're leveraging that across multiple channels, this platform that you're asking about. So, one thing I'll draw your attention to. We did 750 million in gross merchandise value at Rocket Auto in 2020. We're looking to see that double as we go into 2021. So that's really kind of our direct impact, but you also asked about the indirect. If you think about the importance here with the retention rate that's, I think nearly 90% industry tops then these points for us to help our clients with other transactions and have a car delivered directly to their doorstep that keeps our engagement strong. And so the next time they need to purchase or refinance or roll in debt, or have a life event, we're right there, and they think about us as more than a mortgage lender. On our real estate side, even with COVID and some of the delays that we saw in the spring time with home buying, we did $6 billion in transaction value from Rocket Homes. We invested heavily in our MLS platform, and launched that new technology here in January. We're rapidly adding states. I think we'll be up to 45 states by the end of March. And so that gives us great reach into the client base out there that's thinking about buying a home. And now we're interacting with them at the top of the funnel, and we can bring them through for mortgage title. And if you're not ready to buy a home right now, well, that's okay, maybe a [indiscernible] is the right thing for them. So, you're starting to see the power of this platform that we're building.

All right, that's excellent. Thank you so much. You sort of touched on it there with the follow-up on homes, but maybe you can just dig into a little bit in terms of the listings, the quality of the listings, what might be unique about them, the extent of your coverage in terms of the MLS listings, any data points around that that could give us a better sense of just how broad that platform has become?

Yeah. I think not only how broad it can be, but it moves us up to the top of the funnel as we see our clients starting to think about or purchase a home. The other important component, though, is, is that we've got more than just MLS. ForSaleByOwner.com, which allows us to help clients who aren't ready to transact with the real estate agent, we've got a realtor network. So those who are ready, we can refer off to the best agents in the country. And of course, then we can supply with our full blown approvals to ensure that anybody that's interacting with our real estate agents, is an active buyer. And as you know, in a real estate market, that's red hot, with such low inventory, the need for that client to walk through the door with a Rocket Mortgage, full approval is absolutely critical. So, it's really tying all of those threads together that gives our clients the best shot at getting the house from start to finish and all along the way we’re able to collect data to determine someone’s interest and make sure that we’re putting our Rocket Cloud Force in the right point at the right time to help that client through the process.

Excellent. Thank you so much for taking both of those.

Of course.

Your next question comes from the line of James Faucette from Morgan Stanley. Please go ahead. Your line is now open.

Thank you very much. Jay. Julie, wondering if you can help shed some light on what we should expect in terms of new applications and growing – continuing to grow the business, particularly in the rising rate environment. You guys obviously have the benefit of a long history through lots of different interest rates cycle. So, how are you anticipating that borrowers and homebuyers will react to kind of the current move? And where should we be particularly sensitive to where rates could go, is kind of my first question?

Well, as we've been on this journey for 35 years as a company, 25 years for me here and Julie 17, Bob 24, you know, rates will that tick up and rates will tick down. Our real focus is making sure we're providing an experience that draws clients and consumers into our funnel, and allows us to grow market share in particular, when things get a bit more challenging, and others tend to step away from investments in marketing and technology and other things. We're seeing strong consumer demand, especially in the housing market, and it's a strongest that it's been here in the last decade, and current rates are still incredibly low. So that means it's very affordable to buy a home. And there are still millions of Americans out there that can save well over $100 a month on their monthly payment by refinancing their home. There are also many Americans out there that are looking to invest in their home, home improvements and those sorts of things. So, like I said, we're seeing strong consumer demand. I know Julie's given the guidance for the next quarter, which is kind of where we're willing to go at this point in time. I'll draw your attention to the fact that overall, we were able to grow volume twice as fast as the industry in 2020. And so when we think about our opportunity to invest in marketing, invest in technology, and continue to grow market share in 2021 we feel very strong about that. And we think that that investment won't – it will not only grow our market for mortgage and real estate, but it will start feeding these other businesses like I talked about auto for example on our platform.

That's really useful. And Julie, you didn't give very specific guidance for first quarter. So, appreciate that. How should we think about, particularly the evolution of gain on sale through the course of the year, at least directionally, and any color you can give us to help us think about like what the current environment is for selling of loans and how you're anticipating that roughly to evolve over the year?

Yeah, sure. First I’ll say, we're still in a very strong demand environment with the Fed buying 95% or so of all conforming mortgage production today, the demand environment is very strong. One thing to remember about us as well as the market leader, we also benefit from the scale of our business when we execute into the secondary market. So, we have advantages because of that. So, we've seen gain on sale margins of 4.52% in Q3 of this year and then we saw continued strength as we came into Q4 coming in at 4.41%. And then, you know, as we look ahead into Q1, our expectations, as I said, for gain on sale margins are between 3.6% and 3.9%. And this is up from 3.25%, in Q1 of last year. So, margins are still well ahead of where they were a year ago. And then I’ll also point at same time, we're still seeing strong close loan volume. Our close loan volume in Q4 of [$170 billion] and then looking ahead into Q1 between 98 billion and 103 billion, with those numbers, that would be the second biggest quarter in our company's history. So, to put this in perspective, just a little bit more than midpoint for our guidance is roughly 95% higher than our Q1 volumes. So, you know, the flexibility of our platform that we've talked about allows us to really run our business for long-term growth and for profitability in any environment and we're really feeling good about the momentum that we're seeing.

That's great. Thank you.

Your next question here comes from the line of Ryan Nash with Goldman Sachs. Please go ahead. Your line is now open.

Hi, good evening, everyone.

Good evening.

Maybe just talk about the mechanics of the special dividend? How is the 2.2 billion split? How is it funded across the different classes? I think you mentioned by an equity distribution, so I just wanted to clarify. And second, you know, last quarter, you know, with, you know, with the, you know, large profitability you did a billion dollar buyback, this quarter it’s a 2.2 billion special and I appreciate Julie outlining, you know, the capital priorities, but maybe can you just help us understand, you know how your framework came to the conclusion, one quarter buyback another quarter special dividend and how we should think about, you know, use of capital in a time where you're experiencing, you know, really record profits? Thanks.

Yeah. Sure. I'll start with the dividend and mechanics, and then maybe I'll let Jay comment on your other questions. So, the way to think about the dividends is that the $2.2 billion is being distributed to all shareholders based on their economic interest. So, our public Class A shareholders have roughly a 6% economic interest, and then RHI has a 94% economic interest. So, they are each receiving a dividend in proportion to that economic interest.

All right and then maybe going into the capital allocation, just to be clear, the board approved up to a billion dollar share repurchase, we have not repurchased shares up to this point in time. In looking at, and Julie walked through the waterfall nicely, I'll recap it again, we always first are focused on maintaining a very strong balance sheet, which we have today. Second, is just investing in our business, like we've been doing now for 35 years, whether it's the brand activity, you saw the Super Bowl spots, the technology platforms here, that we have been rolling out, strengthening, adding features to. Rocket Labs, which I talked about, which is an important investment for us to make sure we're incubating all of these ideas that we can grow and then add to the platform. And we're very active and looking for acquisitions that would allow us to grow. After going through that waterfall, we determined at this moment in time, the best use of those funds was to issue a dividend. And we'll follow that process moving forward here, as we've got a great track record of being profitable and throwing off a lot of cash, what's the best use in the long-term for our shareholders. And so that's the process we use. That's a process we'll continue to use. And we'll be opportunistic. If we feel like the share prices is at a place where the right thing to do is buy back those shares. We'll do that as well.

Got it. And maybe I can ask a follow up to an earlier question. Jay, can you maybe just talk about some of the competitive dynamics you're seeing given, you know, the changing rate backdrop, and I was hoping you can maybe talk about it in the context of the direct-to-consumer and the partner segments. I think, you know, there was a competitor in the partner segment talking about exiting parts of the market. So, I was hoping you can maybe talk about how that's evolving. And if we do continue to see, you know, rates going up, like where do you inevitably see margins getting to over time? Thanks.

Well, I'll start with the partner segment. I know we made an announcement today that Morgan Stanley and E*Trade will be joining the platform. They'll be joining Charles Schwab, State Farm, Intuit, [indiscernible] TurboTax, Realtor.com. So, you know, as the market becomes more challenging and others experience headwind, typically what we find is that, you know, large partners like this will look for the steady driving force in the market and that’s us. And so that usually bodes well for our opportunity to grow market share and grow partnerships. When it comes to our third party or what we call TPO space, it’s the same situation. Brokers out there who are in a more challenging market are going to look for somebody who will deliver the technology, a brand that they can lean into. And that's why we did the Super Bowl spot to give them that Rocket Brand that they could leverage to grow their business. And so, usually as we see these interest rates tick up a bit, what we're going to see is an opportunity for us to lean in to spend more money, and now to talk about the retail or direct-to-consumer space, same situation here. There are so many marketing opportunities out there for us. And as others tend to step away or back away from the space this is where we can lean in, we can grab market share. And not only are we thinking about the profitability that we achieve on the first transaction. We're thinking about the lifetime value of that client, and we're now thinking about the lifetime value not only over mortgage, but real estate, auto, and these additional businesses that we'll be adding. So, I guess you can tell we're pretty excited about it and don't see interest rates going up or down really having an impact on our business one way or the other.

Got it. Thanks for the color.

Your next question here comes from the line of Jason Kupferberg from Bank of America. Please go ahead. Your line is now open.

Hi. This is Mihir on for Jason. Actually wanted to ask just a little bit, maybe just following up a little bit on that. You know, as we think about rates increasing, maybe you can talk about what is the right level of profitability longer-term for the market business and just for how you're thinking about, you know you have pretty optimistic, if you will market share aspirations over the long-term? So how are you thinking about taking advantage of that opportunity as rates rise and as balancing that market share gains with those margin? Thank you.

Well, maybe I'll let Bob speak a moment about the margin because we've got a pretty long track record of protecting that over time, and then I can dive a little bit into the things that we'll do to continue to grow market share.

Yeah, Jay, I think it's a good question. It's important one. In a lot of ways, when interest rates have risen in the past those have been and we've made some [indiscernible] powerful share gains. We have a lot of advantages that our competitors don't have and as Jay and Julie touched on, because of the brand, because of our brand, there's only one National Mortgage brand, it really allows for the consistency of those margins. So, not only are we able to protect those, but also gain share in these sorts of environments. There's a lot of different areas that we are gaining those shares. We have multiple channels, a lot of our competitors don't have those multiple. We talked about the Pro channel, and we – certainly the direct-to-consumer channel. And there's also a pretty persistent market of less interest rate sensitive products whether it be mortgage insurance, whether it be equity extraction, so cash out, you know that homes have risen in an incredible amount. The amount of equity in the market is really substantial. That is something that really will drive the market in the years to come. And then there's also a very, very robust purchase market and that we're very active in. So, you know, you asked for that ideal, that ideal channel, or ideal, it's really – it is these sorts of markets that we have grown in the past and taken advantage of a lot of the attributes that we have that are competitive.

Yeah, maybe I'll jump in here. If you think about our operational efficiencies, and how much of every dollar we earn in revenue drops to the bottom line, and the scale that we have in our platform, and you can see the guidance that Julie provided in Q1. We've obviously seen market shifting and changing the last few months and our guidance is based on that. We have this very unique advantage to make the investment in marketing. And that can be marketing to drive more purchase leads to our 6,600 Cloud Force individuals that can be marketing with our partners like Realtor.com to drive purchase leads that can be marketing inside of E*Trade clients or Schwab clients. And so, as Bob touched on, those operational efficiencies give us the opportunity to increase our investment and grow that market share. And we're fortunate that so many different places to go spend those dollars. That's what you will see us do. And that's the plan that we will execute on to continue to grow through 2021.

Understood. And then just really quickly, Jay, you mentioned earlier, as you're thinking about capital, the priorities, you know the flowchart, if you will, on a waterfall of capital allocation, you mentioned acquisitions, and I was curious, what you thinking over there is like mortgage, non-mortgage both? Just if, you know, to the extent it is, just what do you think in terms of opportunities right now in that? Thank you.

Yeah, I'll give some many themes that we're looking at. I want to be cautious about going too far down the funnel there. But we're thinking about the tech stack that exists in auto. One of the key differentiators for us on the Rocket Auto piece is connecting the highly fragmented buyers across America with the highly fragmented distributors across America. And so there's a unique tech stack opportunity there that could accelerate our growth. We look at other add-ons that could bring efficiency or accelerate growth in mortgage out of mortgage. We look at other tech add-ons that could allow our Rocket Homes platform to grow efficiently. So, you'll find us exploring things that we can add-on to our platform that will accelerate your organic growth that we're already seeing.

Thanks guys.

Your next question here comes from the line of Dan Perlin from RBC. Please go ahead. Your line is now open.

Thanks, and good evening, everyone. Julie, I had a question about the investments, I might have missed it, but is there a way you can kind of dimensionalize the size of the investments to planning, maybe the cadence throughout the year that those were expected? And then really the second part of the question is, you know, your outlined three areas. And, Jay, you've talked about it as well, in your prepared remarks. I'm just wondering how do we think about, you know, how those investments break down as it pertains to really focus areas outside of mortgage, right, in order to continue to diversify the business over time?

You know – I'll start and I guess I'll say that continuing to invest is something that we will do, as Jay mentioned, in terms of, you know, looking at things from an ROI standpoint, and is that investment going to be one that is going to be a good use of our capital. So, we'll evaluate the opportunities based on that and think about the best use for our capital. So, that's one of the things that we certainly think about as we evaluate the amount of capital in the business. So…

Yeah. Maybe a clarifying question, when you mentioned investments, are we talking capital allocation or are you speaking specifically to the non-mortgage, the Rocket, the loan and the homes investments that – you know and platform added components to our platform today?

I was talking more broadly when you said brand and growth of the purchase market and product. So, I mean, it's a more of a holistic question. I'm not trying to pin down on one area in particular. And given the significant outperformance that you guys have had and just leveraging the platform that clearly shows through, I’m just trying to figure out, you know what that number, size of that number, cadence of that number might look like throughout the year?

Yeah, I would say that we feel very good about how we invested in 2020. And so, I think you'll see similar investments in 2021. You know, behind the scenes, a lot of the incredible work that was done to our tech platform supporting our brand that occurred in, you know very similar in 2020 to 2021. The one area you'll probably see us lean into even more is our performance marketing. And that's an area where we can invest, grow our brand, but also grow revenue and lifetime value. And it's very, very measurable. And so that'll be probably an area you'll see even increased investment in 2021.

Okay, thank you so much.

Yeah.

Your next question here comes from a line of Arren Cyganovich from Citi. Please go ahead. Your line is now open.

Thanks. I was wondering if you could touch about the purchase market, you highlighted that you had a record level of purchase volume and some of the steps that you're taking to ensure that you, you know, capture a sizable piece of that as [the refi], eventually burns off. One of the areas that I thought was interesting was the Rocket Pro insight. You had highlighted 25,000 real estate agents already signed up on that. How's that tracking versus your expectations? And what's the level of engagement you're seeing there?

Yeah. You touched on important component and there are quite a few. I always [stop], Bob Walters always reminds me that regardless of interest rate market refinance makes up a very large portion of mortgages done in this country each and every year. So, as we touched on before there, of course our cash out, people are investing in their home at record levels. We're seeing that in some of the non-revolving debt that's increasing across the country. Of course, there's always life events that cause people to move. And we're also seeing second home investment be very strong. So, we'll keep seeing, I think refinancing, regardless of interest rate, but to the to the purchase question that you're asking, we touched on our realtor.com relationship and partnership. So, we're thinking about how we bring more clients directly to our 6,600 Rocket Cloud Force team members. That's the investment in Rocket Homes, which will allow for the same and ForSaleByOwner.com. Large partnership like E*Trade gives us access to great clients who are saving money and thinking about investing in homes, as does the Schwab network, which I think is having a had a record year in 2020. So, all of these things give us reach into people at the very front-end of when they're thinking about purchasing. But then there's another important component as well, which is our broker network, and the thousands of brokers that we're working with, that we're supporting, and we continue to support more and more not only with great technology, and a great salesforce, but also great marketing. And that's why we mentioned the Super Bowl spot, because we are now turning the millions of people that come to our Rocket Mortgage website onto the fact that they can work with a broker, as well as our Rocket Cloud Force. And so that will help drive more purchase volume into our funnel. And then let's go to Insight because Insight and the thousands of agents that are joining there, they want certainty, and they want visibility into what's happening with the real estate transaction. And we believe we're uniquely positioned to provide this because we've also got thousands of agents that are already signed up on our Rocket Homes Platform. So, we're working with them each and every day. We're getting feedback from them. We're taking that, we're sending it into product strategy. We're adding features to that technology to give them that visibility and that certainty. And I think that's why we're seeing such growth. So to answer your question about the pace, the pace is exactly where we thought it would be for Insight, and as we get into the purchase at home buying market, we think that will continue to grow.

Thank you.

You bet.

Your next question here comes from the line of Ryan McKeveny from Zelman & Associates. Please go ahead. Your line is now open.

Yes, thank you and congratulations on the great results this year. So, we're all obviously very focused on the rise in the 10-year, the relationship there between spreads getting on sale margins and apologize because I realized this is a bit repetitive with other analysts questions, but around the concept of just protecting gain on sale, I'm hoping you can talk to how the competitive environment has historically influenced things, because I guess an environment of higher rates, capacity in the industry that has expanded, still probably not scaled. But, you know, I think there is a level of concern that we're approaching a period of just more competition amongst lenders, and I understand what you're saying on the market share side, the opportunity to take incremental share and tougher periods, but how does this competitive side of things, you know, play into that gain on sale margin? And I guess why or why not should we, you know, trend backwards “normal levels of getting on sale” or, you know, someday, obviously, they have to go below average? So, can you help me tease that out a little bit?

Sure. And maybe I'll start and Bob, you can give your thoughts as well, as you've been watching that for the quarter of a century now. So, if you'll kind of maybe take a step back, as the market – as we see rates tick down, what you'll typically see is a lot of folks join the industry and you referenced increasing capacity. But when they join the industry, it's not with hundreds of millions or billions of dollars in investment in technology. It's not with billions of dollars of investment in brand and that's why they don't see $0.85 or $0.80 or wherever we were, Julie can clarify, dropped to the bottom line the way that we do. So, then as the market compresses and these things happen pretty quickly, folks who decided to get into the market by hiring folks and adding bodies and spending money, they find that it gets very hard to be in the mortgage business very quickly. And so, the same slack that – the same capacity that went in comes out. And so, sure there can be ups and downs in margin and interest rate for a short period of time as that kind of works it through, but as we get to the other side of that, what you find is, usually fewer competitors. And so for those remaining, not only does the margin stabilize and give you the opportunity to see that increase, but it also gives you what you pointed out great opportunity to grow market share. And then again, I'll mention this because it's so critical to our business model. For us, as we think about the acquiring of clients onto our platform, we're sitting in a situation where not only will we recognize the profitability of that first transaction with our operational efficiency, but if people are coming in at a higher interest rate, and we're servicing now, nearly 2.2 million clients, well, then the minute that rates tick down, while the opportunity to help them with a lower interest rate, thus recognizing the profit, again, at a higher margin, with no marketing cost. And then of course, help them with the purchase of a new home to Rocket Homes; help them with a purchase of a car through Rocket Auto. So, it really is a very exciting opportunity for us as we see rates tick up a bit, because it creates this process I've just discussed, which leads to market share growth, and leads a lot of sight to really strong future profitability as well for us. Bob, anything to add?

Yeah, I think just a couple of things. So that, you know, we have the luxury of being a 35 year old company. If you look back decades, you will see a very consistent track record of gain on sale. And it's really one of the, I think one of the hallmarks of the company. And there's a number of reasons for that. Jay’s also talked a lot about lifetime value. You mentioned the service clients, over $400 billion of service clients. So, you know, in the rising rate environment that becomes incredibly valuable and let alone all the other things that we talked about, the other businesses and markets that we are in. So quarter-to-quarter, we don't spend a lot of time thinking about, it's just gaining share and gaining lifetime value.

That's very helpful. Thank you. And second question. So, on the topic of, you know, just the strength of the platform, obviously, you know, very robust dynamics in the mortgage space, you know, strong traction with the ancillary channels, auto homes, I guess, this concept of just launching into entirely new verticals, I'm curious, you know, what are the characteristics there that you think, are kind of most critical for us to think about? And when you talk about new verticals, you know, are you still thinking within the realm of, you know, real estate lending auto or can there be, you know, bigger opportunities above and beyond that, you know, don't even necessarily relate to those aspects of the business?

Yeah. We’ll have Dan join the call next time to discuss this. I'll go back to the comments that he made or in the letter. Our real mission is to take complicated transactions that humans tend to shy away from because of the complexity and the fact that they're not that frequent, and make them simple for people. And so that's where you're going to see us focus in on because that's the power of our platform between the data that we have, the incredible client experience, we can deliver with our rocket cloud force, the marketing brand that brings confidence and the technology that streamlines these complex things. That's where we can win. That's where we differentiate. So, of course, real estate is kind of centered to that. We think auto is right there as well. But other things of that nature are of interest to us. In addition, we're always looking for the things that come natural with the purchase of a home or the ownership of a home or a car. And so, you know, think about when you buy a house now, what are the other things that you have to invest in, the other things that you have to keep track of. As we've got a relationship with the client, as we have the data around that, from the appraisal data, to the credit data, how can we assist that client in streamlining all these ginormous fragmented markets that surround the home or the auto. And so those are the places, when we talk about Rocket Labs in investing and setting up these two [indiscernible] teams to quickly develop technology and put it into the wild, we can leverage our servicing book and other client bases to test it out. That's where you're going to see that – those groups focus.

Very helpful. Thanks, Jay.

Absolutely.

Your next question here comes from the line of Rich Shane from JPMorgan. Please go ahead. Your line is now open.

Thanks, everybody, and good afternoon and appreciate you taking my question. A couple of things, can we talk a little bit about the dividend policy and how we should think about the special dividend? Should we think about that in the context of fourth quarter earnings? Should we think about that in the context of earnings since going public or should we think about it in context of all of 2020?

Yeah. I would say that at any point in time, we're more looking at the capital that we have in the business. And certainly this year was a year when we generated a lot of capital. It gave us the opportunity to not only continue to invest in the business, but also to think about whether there's additional capital that it might be the right time to return some of that to our shareholders. So, after evaluating that here, just recently, we decided that the right thing to do was to do this dividend. And we're really excited to be able to share in the successes that we have had here in 2020 with our shareholders.

The only thing that I'll add is, and you've probably heard that through the entire call. So, our focus is long-term. And our focus is the – what we believe this company will be over the coming years and satisfying these challenging problems for consumers across multiple, you know, industries. And so, you know, growth is our focus and because of the platform that we've got, and Julie just touched on this – the scale and the efficiency, we can generate profits very quickly, large profits very quickly. And so, you know, we have to take into consideration all the opportunities that are in front of us to grow the business in the long-run. But we've also got to think about situations where we're – we made $11 billion last year. We're making a billion dollars a month. Even with all those opportunities out there, it still may be the best thing to do to issue a dividend to our shareholders. So, we're fortunate to have these choices, and we'll – but we're always thinking the long-term success and growth of this business first.

Look, no question I, you know, you think about the investments you made in 2018 and 2019, and you didn't necessarily expect that they would manifest in terms of the, at the time, the level of profitability you enjoyed in 2020. So, makes sense to continue to do that. One other question, you know, when we think about your guidance, historically, it's been conservative in terms of volume and gain on sale margin. When we look at the guidance on gain on sale for the first quarter, how should we think about that in context of primary, secondary spreads had come in pretty significantly, but also, and this is the – I think, the more interesting nuanced point, how are you thinking about your pipeline hedge and potentially [indiscernible] a decrease in fallout with the slicing rates?

Yeah. Great question. I can tell you that those type of things are what our capital markets folks are looking at every day and the data that we have, and I'm going to go back to the importance of the data from the top of the funnel, even pre-application to understand pull-through rates. And so those type of data points are priced in to the guidance that Julie has provided.

Got it. So, you’re changing that pipeline hedge constantly based upon a dynamic in pull-through rates or fallout rates?

That's right.

Okay, great. Thank you, guys.

Thank you. That is all the time that we have for questions. I will turn the call back over to you, Jay, for closing comments.

Thank you. Thank you. Yeah, I just want to thank everybody, and particularly our team members who are listening, couldn't be more proud of the year that we had. Of course, the record revenue and profitability, but I think even more importantly, all the impact that we're able to have on the communities that we live and work and play in supporting the city of Detroit, the massive investments that we've made here in COVID, not only of our money, but of the time, energy, and effort that so many team members did to support the community, just so proud. And so thanks to all of you, and thanks to our investors, and we'll keep plugging away here to do great things at Rocket Companies.

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you for participating. And you may now disconnect.