Thank you for standing by. And welcome to the Rocket Companies First Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Sharon Ng, Head of Investor Relations. You may begin.

Good afternoon, everyone and thank you for joining us for Rocket Companies earnings call covering the first quarter of 2025. With us this afternoon are Rocket Companies CEO, Varun Krishna; and our CFO, Brian Brown. Earlier today, we issued our first quarter earnings release which is available on our website at rocketcompanies.com under Investor Info. Also available on our website is an investor presentation. Before I turn things over to Varun, let me quickly go over our disclaimers. This conference call includes forward-looking statements about, among other matters, expected operating and financial results, strategic initiatives and the anticipated Up-C collapse and acquisitions of Redfin and Mr. Cooper. These statements are subject to risks and uncertainties which could cause actual results to differ materially from the expectations and assumptions we mentioned today. We encourage you to consider the risk factors contained in our SEC filings for a detailed discussion of these risks and uncertainties. We undertake no obligation to update these statements as a result of new information or further events except as required by law. This call is being broadcast online and is accessible on our Investor Relations website. A recording of the call will be posted later today. Our commentary today will also include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings release issued earlier today, as well as in our filings with the SEC. And with that, I’ll turn things over to Varun Krishna to get us started. Varun?

Good afternoon, everyone and thank you for joining us on Rocket’s first quarter 2025 earnings call. In today’s call, I’m going to focus in on 3 areas. First, I’d like to talk about what we’re seeing in the current market landscape. With that backdrop, I’m going to spend a few minutes recapping our strong Q1 performance. And lastly share some examples of what we’re delivering for team members, broker partners and clients, including our plans for the future with Redfin and Mr. Cooper. Let’s start with the housing market which kicked off on a positive note to start the year. Housing inventory was 25%, moving from 3.2 to just over 4 months of supply year-over-year, offering relief to buyers facing tight options. 30-year fixed mortgage rates also declined from 7% in January to around 6.6% in March, briefly improving affordability and sparking refinance activity. Now shifting into spring, April was a little unusual. It actually marked a sharp reversal in earlier momentum and that’s for a few reasons. Following global tariff announcements, the stock and bond markets reacted with volatility and the 10-year treasury yield fluctuated sharply. Mortgage rates climbed back to nearly 7% during the month and at the same time, consumer sentiment which was already softening, continued to decline. According to Redfin, nearly 1 in 4 Americans are now delaying major purchases including buying a home. Now spring typically brings increased activity, and you usually see purchase applications in the industry rising between March and April. And what’s unusual is that the impact of all of these dynamics compounded when we saw weekly purchase applications actually declined by double digits throughout April, which the industry hasn’t experienced since 2009 during the great financial crisis. While these short-term headwinds are shaping consumer behavior certainly, it also reinforces our conviction…

Thank you, Varun and good afternoon, everyone. Today, I’ll walk through our first quarter performance, second quarter outlook and I’ll provide an update on the integration planning for Redfin and Mr. Cooper. We delivered strong results in the first quarter and they are a direct testament to our team’s continued focus and execution. Adjusted revenue reached $1.3 billion near the high end of our guidance range. We generated $26 billion in net rate lock volume, a 17% increase year-over-year, and an 11% quarter-over-quarter increase driven by growth in refinance and continued momentum in our home equity loan offering which posted yet another record quarter. Gain on sale margin came in at 289 basis points in the first quarter compared to 311 basis points in the same period last year, and 298 basis points in the prior quarter. Our Q1 gain on sale margin was consistent with our weighted average gain on sale margin over the last 12-months. On an adjusted EBITDA basis, we delivered $169 million or a 13% adjusted EBITDA margin. We also reported adjusted net income of $80 million and adjusted diluted EPS came in at $0.04 These results reflect our continued focus on driving growth and profitability while balancing deliberate investments with disciplined expense management. From January through March which is typically a seasonally low quarter, we saw momentum build month-over-month. The 30-year fixed mortgage rate declined from nearly 7% at the start of the year to around 6.6% at the end of the quarter. Our team quickly capitalized on that opportunity through disciplined execution and the strength of our scalable technology platform, and we helped even more homebuyers and homeowners move forward with confidence. March was highly productive in our second highest production month in 3 years, coming in just shy of last September when rates…

[Operator Instructions] Your first question comes from the line of Ryan Nash from Goldman Sachs. Your line is open.

So maybe kick it off, I’ll ask both my questions upfront. First, I wanted to dig in on your outlook for 2025. 1Q, we saw solid top line growth. Varun, you talked about some of the softness that we saw in April. Expenses were a little bit higher. But Brian, you talked about elevated brand investment that will come down. So lots of moving pieces in here. So and while I assume results are going to be messy given the potential of the closing of the transactions but can you maybe just talk about how all of this factors into your 2025 outlook from both a revenue and an operating leverage perspective? And then just my second question, I’ll throw it out there now. It’s easy to see the strategic benefits of these deals. And when you think about the market share goals that you laid out, do you think these recent acquisitions increase those goals? Or do they accelerate the progress towards? Thank you.

Yes. Thank you for the question, Ryan. Why don’t I start with just some comments on the outlook. Brian can touch on our guide and maybe a little bit on expenses as well. And then we’ll talk about goals. And so, know, I think the first thing I would just start with is that I think the pretty big change that I would highlight is just the market dynamics from Q1 to Q2 of this year. In Q1, started with some pretty clear momentum. Inventory was up 25%. Rates had dropped from 7% to 6.5%. So you had this kind of reactivation of refi interest and you had more room to transact in affordability. I think as we went into April, you know, just the start of Q2, there was just a pretty much a, you know, a sharp and somewhat unusual reversal. And I think it kind of started on Liberation Day with the announcement of the tariffs. There’s a lot of volatility that followed that on April 2. You know, you had the NASDAQ, the S&P that fell almost 13% in the days that followed. They rebounded 10% on the April 9 [ph]. And then, you know, obviously, now there’s more recovery. But the ten year treasury dropped from 4.2% to 3.9%, you know, only to spike back up to 4.58% on the April 5 [ph]. And so you just have this compounding effect that just leads to consumer confidence dipping and that’s really the story of April. And the net of that is that consumers are obviously going to think about putting off things that are big important long-term decisions. And so buying a home, selling a home, refinancing is the largest transaction that consumers ever going to do. And so with that dynamic, you know, what we saw is that and it makes sense that consumers are going to wait on the sidelines a little bit more than usual. And we do think it’s a little more of a wait and see. You know, Brian will talk about this but looking at May and June, we’ve already started to see that coming back and that’s why we feel that our guide is also realistic but also confident. So speaking of the guide, Brian, maybe you can touch on the guide, our expenses and then we can close on just the goals.

Sure. Yes. Thanks, Ryan. I mean just real quick to double down on what Bruin said around Q1, it really was a strong quarter for us, really proud of the team. We were up 11% on adjusted revenue on a year-over-year basis, 9% on a quarter-over-quarter basis. And then also just to reiterate but April was a tough month to Varun’s point. And it was tough from both the margin and the volume perspective. And if you need evidence of that, just look at the MBA application data which week over week in April was trending in the wrong direction. So if I think about the guide, we’re sitting here early May and I’m looking at 3 months in the quarter, April is baked into that. But to Varun’s point, the good news is as we sit here in the first week in May, we’ve seen some rebound, particularly on the volume side. Margins have been a little bit slower. So in May and June, I’m assuming that those months get sequentially better than April. And at this point in time, it’s our view that the home buying season has been a little slow to form but we still think there’s potential to end it really strong. But before I let you go on this one, Reinhold, just on the margin piece, I do expect Q2 margins to be lower than Q1 because of that April dip. As I said, they started to perform a little bit better. Volumes come back nicely but I do expect margins to be a little slower. So at the end of the day, to Varun’s point, we think it’s a really strong guide. We think it’s taking share into the second quarter and it’s achievable. Let me touch a little bit on expenses on…

Your next question comes from the line of Mark DeVries from Deutsche Bank. Your line is open.

Ryan asked my question on expenses. So instead, I’d like to ask about just your post-merger with Mr. Cooper Group, your subservicing strategy going forward. Obviously, it’s kind of a big part of their business. And we’ve seen at least one notable client defection since the deal was announced. Obviously, having subservicing with a company like Rocket, it’s much more effective at recapturing maybe a greater threat. So I’m just how are you thinking about retention of subservicing agreements going forward and the ability to kind of grow that?

Mark, let me touch on the first part of your question and then, Varun may have a comment or two. I can’t comment on the Cooper business. We do need to run as 2 independent companies right now. But I think there’s two things I’d point you to. One is, from the Rocket perspective, we fully support the subservicing business. There’s no question about that. What Cooper’s built and particularly being able to scale through subservicing is part of the aspect that’s been very impressive to us. And if you go back to Cooper’s earnings call and look at some of the comments they make, they talk a lot about the fact that they have actually been increasing the pipeline on the subservicing business and haven’t seen any material changes. So if I leave my comments to just post-closing, we’re very excited about that business. We fully support it. And we plan, as we said publicly, to completely honor the contractual provisions with those sub servicers.

Your next question comes from the line of Doug Harter from UBS. Your line is open.

Hoping you could talk about Rocket Pro. It seems like you kind of made some investments into technology and staff in that. Just what you’re thinking on kind of near term outlook there and ability to kind of narrow the gap in that channel?

Thank you for the question, Doug. I’ll start by just saying that we are extremely optimistic about our prospects in this space and I think we have a huge opportunity to grow. And I think what you’ve seen from us over the past 18 to 20 months or so is just a strategy and execution So we’ve been on a journey to kind of retool how we think about the broker landscape. I think we obviously started with leadership hiring. Those leaders have been in place now for a few months and are driving faster execution. They’re focusing on technology, scale, more strategic relevance. And our strategy is basically threefold. I think the first pillar is just the power of choice. You know, we know that brokers are essential to the mortgage ecosystem but we need to make sure that they’re empowered with choice, that they’re able to shop the entire market. And so choice is kind of our first pillar. The second is that we just we think today this is a space that is not super powered by technology, we think that there’s a huge benefit that can be created there for the broker community. And so the tech the technology that we’re building internally, we’re building that as a platform and so we’re extending that capability to our brokers. That’s why we provide things like best in class notifications, best in class models, insights, relevant offerings like rent rewards which we just talked about. That’s already exceeding expectations in early days. And that’s why we’re refreshing things like our broker dashboard. We’re providing loan level editing just to give them more flexibility at their fingertips. And so a lot of the technology we built in house, we think about our brokers as natural inheritance of that capability. And then, the last thing is we want to enable our brokers to just thrive for the long-term. And that’s not just with technology but it’s with, like, new innovative business models, like servicing, for example. And so we want to basically create a world where a broker can compete, you know and have the same value chain that we have on the retail side and we just kind of continue that continuum and where they can service the loan, they can drive retention with the client. And so investments that we’ve made, you know, being on the Arrive platform that we talked about earlier, are just all in service to that. And so we want to empower brokers with choice. We want to create the best technology and capabilities. We want to grow help them grow their business for life. We’ve made progress and we do expect our momentum to accelerate in the coming months.

Your next question comes from the line of Bose George from KBW. Your line is open.

Just a follow-up on the earlier question on market share. Do you think you might explore other acquisitions, especially to grow purchase market share? And is the acquisition of distributed retail capacity something you could consider?

Yes. Thank you, Bose. I think what I would say right now is with the criticality of the integration that we have, we’re absolutely focused on these two. I think we’re super excited about these deals. They’re directly in service to our long-term strategy. And we think that it’s very relevant to our purchase strategy goals. Just to kind of recap that, we want to establish a top of funnel, build relationships with clients that are searching for homes, as well as with real estate agents and experts. And this is directly in service to that with Redfin. We want to build a broker strategy as I obviously just talked about with the earlier question. And then we want to drive the recapture flywheel which is really powered by servicing. And you know, we are knee deep in integration preparation and we’re really excited and happy with how it’s going. But, you know, this will be the primary focus for us just to make sure that, you know, we build these key pillars of our integration platform.

Your next question comes from the line of Jeff Adelson from Morgan Stanley. Your line is open.

Brian, you mentioned that your capacity is well north of $150 million now. Just wondering if you could provide a little bit more color on how you kind of continue to grow that and where you think that might go overtime? Anything you can provide us on numbers in terms of back half of the year on expense savings if mortgage volumes don’t come through like you mentioned?

Yes. Thanks for the question, Jeff. I think you know, I’ll start by just talking a little bit about the relevance of AI here and then maybe Brian you can touch on capacity as it pertains to, expenses and cost. The reality is, I mean, is such a clear strategic bet for us. And essentially, everything we’re doing, our recent 2 deal announcements in organic and our build strategy is all in service to that. And the reason for that is because we feel that this is the tool to create infinite capacity. And I use the term infinite capacity on purpose because we do think the capacity is limitless and it can be expanded, with, you know, significant growth potential. And so we imagine a world where, you know, people are developing sort of superpowers in this space, especially in mortgage and homeownership and they can do the work of an order of magnitude larger. And the examples of that just keep piling up, you know and I saw an example the other day that we call the banker report card. It use it utilizes our navigator AI, utilizes our synopsis platform and it was something that our bankers built for themselves that analyses calls, it flags conversion opportunities, it delivers coaching and just makes them better. And so what’s beautiful about this example to me is that it’s self-created and self-perpetuating. It’s people using technology to make themselves better and that technology is becoming democratized. And so what excites me is that this is now happening without writing code. And there’s sort of this shift from what was, you know, a previous definition of AI of being sort of rule based automation to something that’s more agentic. It’s something that can reason; it can act, it can adapt. And that just gives us a lot of optionality to be able to scale up without scaling costs or pull back without compromising throughput and keep our fixed costs, you know, operationally efficient and sort of avoid that yo-yo [ph] effect that happens in the industry because it’s a big market and we have significant aspirations for growth and we need our team.

Yes, that’s right. And the only thing I’d add Jeff is two things. One is the to Varun’s point, the velocity of increasing is only increasing as well. So that number that we announced at September of last year has been growing daily, frankly speaking, because of some of the examples that Varun gave. And that just presents option value to us. Plan A is clearly to fill that with a little cooperation from the market and taking share but that option value on Plan B does allow us to release some of that and take down the cost structure. So if I take you back to my prepared remarks, what we were foreshadowing is that we’re going to watch the market over this next couple of quarters. April was challenging. We’ve seen some green shoots in the May. There’s no doubt about that. We still are very bullish on the home buying season though it might be postponed or delayed off the gates. And we’ll continue to monitor and we’ll take action as needed. But being disciplined and being operationally effective is in our DNA.

Okay, great. Thanks. And just my follow-up on home equity product. Can you just maybe contextualize how quickly that’s been growing for you this past quarter and where that fits into your market share goals by 2027? Thanks.

Yes. I mean, I think you broke up a little bit there, Jeff. But I think if the question was how is the home equity loan product performing, it was another record quarter for it. We consistently have quarter-over-quarter growth. If you think about the market share opportunity there, regardless if rates are at 7 or if rates are at 6 [ph], that product is still very attractive. So we think there’s a really long runway there.

Your next question comes from the line of Mihir Bhatia from Bank of America. Your line is open.

I wanted to start by just talking a little bit about the channels. And I heard your comments about overall margins probably down a little bit in the second quarter. I don’t know if you want to give us commentary at the channel level on that but maybe at least talk a little bit about the competitive intensity you’re seeing. And certainly in 1Q, looks like funded loan margins were lower in the partner channel. Anything specific to call out there?

Mihir, I’ll take a stab at it. Thanks, for the question. I mean, I think there’s let me start with the TPO space. If you think about pricing in the broker space, there’s really been two periods this year where we’ve seen a more competitive landscape and pricing pressure. And I don’t think either of them are surprising. One was just to start the year in January. We know that sometimes the wholesale space gets off to a little slower start coming out of the holidays and there’s still capacity built into the system and then you do see some price pressure and that was what we saw in January and then we saw that sort of come out of the system through February, March. And then the other period was what we’ve discussed, which was around April, where the other place you see some of that price pressure come is when you see volatility in the market. Consumers do take a step back, particularly in the home buying space. Even in when it comes to refinance and cash out, if rates are bouncing around, that does present some uncertainty. You still have capacity of the system. So you generally see price competitiveness increase. So that’s what we saw. And like I said, as I but as I get, here into the first week of May, I’ve seen some of that come out of the system. On the retail side, on the direct to consumer, things have sort of followed that same trend but relatively holding strong with Q1.

Got it. And then maybe just switching back for a second to subservicing and protection. And also may be related to subservicing, you know, just protection, the brokers when you are servicing loans in the broker channel. There’s been a lot of talk just about that and about the potential for Rocket, you know, being a competitor but also going to be doing subservicing. Others may want to switch, etcetera. Can we just take a couple of minutes to just talk about that? What kind of protection do MSR owners have in these typical subservicing arrangements and similarly for the brokers that work with Rocket? Thank you.

Yes. I mean, I think it’s pretty simple. It’s either you have a non-solicitor or I guess they put it in three buckets, Mihir. If you’re if you’re speaking about, doing subservicing and we announced the [indiscernible] deal earlier, there’s a way that Rocket can help them actually do the recapture. If you’re if you’re asset manager and you come to Rocket to do subservicing, you own the MSR, we’re going to do the subservice. There’s a really awesome opportunity because we can do the recapture which protects that asset, extends the cash flows. And it’s a win for the and it’s a win for the owned servicer and it’s a win for Rocket. And then when you talk when you take it one step further into subservicing, similarly, you can either help the client do recapture or not and we’re open to both. But if you don’t help the client recapture, then you’re not going to solicit those clients or you’re not going to be a subservicer for long. And our comments are that we support all three of those models. Obviously, Cooper does all 3, Rocket does two of them today. We’ll do 3 upon the close of the transaction. But we’re very supportive of it and that’s one of the exciting things about this acquisition.

And that concludes our question-and-answer session. I will now turn the call back over to Varun Krishna for closing remarks.

All right. Well, thank you everyone on the Rocket team for an awesome quarter, and thanks everyone for listening. We’ll see you next quarter.

This concludes today’s conference call. Thank you for your participation. You may now disconnect.