Rocket Companies, the parent of Rocket Mortgage, was in the red again in 2023 as it reported a GAAP net loss of $390 million.
The company reduced its cost structure by nearly 20% in 2023 following a nearly 25% reduction in 2022, but lower origination volume failed to keep the company profitable as the industry is still going through a challenging period for mortgage lending.
The Detroit-headquartered lender reported a GAAP net loss of $233 million in Q4 2023, following a GAAP net gain of $115 million in Q3. Rocket posted an adjusted net loss of $6 million in the final quarter of last year, lower than its $7 million adjusted net gain in the previous quarter.
The adjusted net loss for full year 2023 was $143 million, even bigger than the $137 million loss posted in 2022, marking a second straight year of not being profitable.
But Varun Krishna, CEO and director of Rocket Companies, noted its growth in market share during a difficult year for mortgage lenders.
“We once again made strides in market share, as our purchase and refinance share grew by double-digits in 2023. … We enter 2024 with momentum and Rocket is well-positioned to fulfill its strategy of AI-fueled home ownership” Krishna said in a statement.
“AI is being deployed across the organization to deliver industry-best client experiences, with the aim to achieve scaled growth in market share, revenue, and profitability.”
Rocket originated $17 billion in mortgages in Q4 2023, down from $22.2 billion in in Q3 2023. The fourth-quarter production represents a decline of 9.3% compared to the $19 billion volume in Q4 2022. Gain-on-sale margins posted for Q4 2023 were 268 points, down from the previous quarter’s 276 points.
For the entire year of 2023, Rocket generated $78.7 billion in closed loan volume, down from $133.1 billion for all of 2022.
By channel, Rocket reported $10.3 billion in closed loans through its direct-to-consumer channel and $8.5 billion through its third-party originator (TPO) channel, its conduit to mortgage brokers that has historically been a stronger source of purchase business. The company doesn’t break out purchase business versus refinances in its earnings reports.
Rocket reported net revenue of $694 million in the fourth quarter, a sizable decline from a total of $1.2 billion in Q3 2023.
The company’s expenses in Q4 dropped to $937 million from the previous quarter’s $1.08 billion.
Rocket reported $9 billion in liquidity as of Dec. 31, 2023 — including $1.1 billion in cash — up from $8.7 billion in liquidity in the previous quarter.
The unpaid principal balance in its servicing book increased to $509 billion as of Dec. 31, compared to $506 billion at the end of Q3 2023.
Rocket has 2.5 million clients and generates $1.4 billion annually in recurring servicing fee income.
The company expects to post an adjusted revenue of $925 million to $1.08 billion in the first quarter of 2024.
