| | | Rocket Companies outlines Q3 adjusted revenue guidance of $1.6B–$1.75B while integrating Redfin and Mr. Cooper
Jul. 31, 2025 8:41 PM ET
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Earnings Call Insights: Rocket Companies (RKT) Q2 2025
Management View- CEO Varun Krishna highlighted "outstanding second quarter performance," noting adjusted revenue of $1.34 billion, which was above the high end of guidance. Krishna reported a 13% year-over-year increase in net rate lock volume, serving over 100,000 origination clients, with home equity loan growth as a key driver. "Home equity loan volume nearly doubled year-over-year, once again hitting a new record for units and volume." Krishna detailed AI-driven execution wins, stating, "Recent enhancements we've made now dynamically prioritize the client follow-up pipeline for our refinance bankers and offer AI recommended next steps and text messages to streamline communication. As a result, daily refinance client follow-ups have increased by nearly 20%." He also stressed the strategic significance of the Redfin acquisition, saying, "Redfin gives Rocket a new foothold in purchase and takes our presence in local markets to another level."
- Krishna reported early integration results with Redfin, sharing that "within our first month, we executed a comprehensive brand update" and introduced prequalification buttons on every home listing. "Since July 1, we've seen over 65 Redfin clients close on their Dream Home with Rocket Mortgage. Nearly 200,000 people have clicked on the get prequalified button within Redfin." He added, "Clients referred from Rocket to Redfin are 30% more likely than those from other channels to upgrade to verified approval letters."
- CFO Brian Brown stated, "Adjusted revenue reached $1.34 billion, beating the high end of our guidance range and achieving 9% year-over-year growth." Brown noted, "Net rate lock volume exceeded $28 billion, an increase of 13% over the same period. Our gain on sale margin for Q2 was healthy at 280 basis points." Brown highlighted $200 million in expected total Redfin synergies and confirmed the Mr. Cooper transaction is on track for Q4 close. He also announced, "We recently took further actions to streamline our operations. In the second quarter, we completed the shutdown of Rocket Mortgage Canada. Also in July, we initiated the wind down of the Rocket Visa Signature Card program."
Outlook- Brown provided third quarter guidance: "For the third quarter, inclusive of Redfin we expect adjusted revenue to be between $1.600 billion and $1.750 billion. On a Rocket stand-alone basis, we expect adjusted revenue to be in the range of $1.325 billion to $1.475 billion." He described a projected $335 million increase in total expenses for Q3, reflecting $275 million in Redfin-related costs and $90 million in nonrecurring items, partially offset by a reduction in Rocket's stand-alone expenses. "The decline in Rocket's stand-alone expense reflects the planned step-down in brand marketing."
- Krishna stated, "We expect that demand to extend. We expect it to carry through the traditional Labor Day drop-off. And again, that gives us optimism. And you see that optimism and confidence reflected in our outlook and our guide, and our guide is up 6% year-over-year."
Financial Results- Brown reported, "Adjusted EBITDA was $172 million or a 13% adjusted EBITDA margin. We reported adjusted net income of $75 million and adjusted diluted EPS came in at $0.04."
- Liquidity as of June 30 included $6 billion in available cash and $7.6 billion in mortgage servicing rights, totaling $13.6 billion in balance sheet value, with total liquidity at $9.1 billion. Brown highlighted a successful $4 billion unsecured bond issuance to refinance Mr. Cooper's debt, describing nearly 3x oversubscription.
- The company expects approximately $80 million in annualized savings from discontinuing Rocket Mortgage Canada, winding down the credit card business, and restructuring G&A teams, with the full run rate savings recognized in Q4.
Q&A- Lucas Haimes, Goldman Sachs: Questioned Q3 cost run rate and revenue pacing. Krishna responded that "the home buying season is going to continue on," with Brown explaining "our belief that the home buying season is going to continue on...so that's all baked into the guidance." Brown reiterated operational discipline and highlighted the $80 million in annualized savings, clarifying that some of these benefits will be more fully realized in Q4.
- Bose George, KBW: Asked about MSR hedging strategy post-Cooper acquisition. Brown answered, "The plan is to continue hedging, the combined portfolios. Cooper does a really nice job of that. I think they target around 70% coverage."
- Mark DeVries, Deutsche Bank: Sought updates on Redfin integration and synergy targets. Krishna said, "We are very pleased with the integration...On day 1, we had co-branding, Redfin powered by Rocket...We're seeing some awesome early data." Brown added, "We feel really good about achieving and dare I say, even exceeding our expectations on both the revenue and expense side of the synergy house."
- Ryan McKeveny, Zelman: Asked about Redfin agent count and purchase market share conviction. Krishna stated, "Purchase obviously is a major strategic area of focus for us as a company...we are on track to hit our goals, and we're feeling great about the progress."
- Jeff Adelson, Morgan Stanley: Questioned Mr. Cooper synergy progress and recapture rates. Krishna said, "We are on track for a Q4 close...the teams from both organizations are collaborating very closely, and it is our #1 priority across the company." Brown affirmed, "conviction continues to increase, and we're very confident in the numbers."
- Doug Harter, UBS: Inquired about MSR acquisition appetite and AI impacts. Brown explained, "To the extent we see assets with high recapture potential, very interesting to us, and we'll continue to be active in that market." Krishna emphasized, "We are building a platform where scale is basically no longer constrained by people or cost."
Sentiment Analysis- Analysts expressed cautious optimism, with questions probing cost control, integration progress, and outlook. The sentiment was neutral to slightly positive, with a focus on execution and synergy realization.
- Management’s tone remained confident and forward-leaning during prepared remarks, emphasizing strong execution and AI-driven productivity. In Q&A, confidence persisted, supported by phrases like "we are very pleased" and "conviction continues to increase," although management was measured when addressing cost and integration risks.
- Compared to the previous quarter, both analysts and management showed increased confidence, with less focus on market headwinds and more discussion on growth opportunities through integration and AI.
Quarter-over-Quarter Comparison- Guidance for Q3 adjusted revenue increased to $1.600–$1.750 billion (inclusive of Redfin) from a Q2 guidance range of $1.175–$1.325 billion (pre-Redfin). Management's language shifted from caution about market volatility in Q1 to optimism about extending the home buying season into Q3.
- Strategic focus moved from anticipation of Redfin and Mr. Cooper acquisitions to active integration and early synergy realization, with tangible early results reported from Redfin.
- Analysts’ questions in the current quarter centered more on integration progress and synergy realization, compared to last quarter’s focus on expense management and capacity.
- Key metrics such as adjusted revenue, EBITDA, and client origination volume improved, while management reported concrete cost savings initiatives taking effect.
- Management’s confidence in integration, AI-driven capacity, and synergy targets increased, reflected in both prepared remarks and Q&A responses.
Risks and Concerns- Krishna noted ongoing market headwinds and affordability challenges, stating, "affordability remains a key challenge." Brown reported, "this quarter's execution was truly a team effort," but acknowledged a "slow-forming" spring home buying season.
- Management is monitoring the impact of integrating Redfin and Mr. Cooper, with Brown warning that expected synergies, particularly on the revenue side, are "early days" and will be updated in future quarters.
- Expense increases in Q3, including $90 million in nonrecurring items, create some near-term operational risk.
Final Takeaway
Rocket Companies delivered a strong second quarter, driven by disciplined execution, AI-powered operational improvements, and successful early integration of Redfin. Management expressed optimism about extending the home buying season and highlighted significant synergy opportunities from both the Redfin and pending Mr. Cooper acquisitions, with Q3 guidance reflecting these strategic advances. The company remains focused on cost discipline and operational efficiency, positioning itself as a leader in integrated, AI-driven homeownership services as it moves toward closing the Mr. Cooper transaction in the fourth quarter.
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