Rocket Companies Inc Earnings - Q3 2025 Analysis & Highlights
Rocket Companies Inc (RKT) Q3 2025 earnings call discussed key financial results including exceeding adjusted revenue guidance, growth in net rate lock and closed loan volume, and adjusted EBITDA margin expansion. The call also covered progress in AI, integration with Redfin and Mr. Cooper, and the company's strategic positioning for the future.
Key Financial Results:
Adjusted revenue was $1.783 million, exceeding the high end of guidance.
Net rate lock volume totaled $36 billion, up 26% quarter-over-quarter and 20% year-over-year.
Closed loan volume was $32 billion, up 11% over the second quarter.
Gain on sale margin remained stable sequentially at 280 basis points.
Adjusted EBITDA reached $349 million, expanding margins to 20% from 13% the prior quarter.
Adjusted diluted EPS came in at $0.07.
Business Segment Results:
Redfin revenue performed in line with expectations.
Home equity product continued its momentum, doubling year-over-year.
Redfin source purchase closings make up 13% of direct-to-consumer purchase closings.
Capital Allocation:
Refinanced $3 billion of Mr. Cooper's legacy, unsecured notes with proceeds from a June issuance.
Refinanced the remaining $2 billion through an exchange offer.
Upsized revolving credit facility from $1.150 billion to $2.300 billion.
Pro forma available cash was approximately $4 billion and total liquidity stood at approximately $11 billion as of October 1, inclusive of Mr. Cooper.
Industry Trends and Dynamics:
Affordability is slowly improving as rates ease.
In Q3, the 30-year fixed rate dropped by 40 basis points to 6.3%.
Home price growth continued to moderate, slowing to 3.1% year-over-year in Q3, down from 5.5% in January.
Existing home sales continue to hover around 4 million units, putting 2025 on track to be the slowest year for existing home sales since 1995.
Competitive Landscape:
Gained market share in both purchase and refinance.
Q3 was the strongest purchase and refinance quarter in the last three years.
Rocket's recapture rate is 3 times the industry average.
Macroeconomic Environment:
Operates in a complex housing environment.
Buyers are watching the market closely and waiting for clear signals and increased affordability.
Growth Opportunities and Strategies:
AI is helping to grow the top of the funnel, lift conversion rates, reduce production costs, and increase recapture.
Integrating Redfin's low-cost, high-intent lead pipeline to enhance the top of the funnel.
Mr. Cooper has an ongoing servicing revenue stream that expands the ability to drive recapture.
Combining the industry's largest servicer and a top originator to create a massive recapture engine.
Redfin users going directly to home financing through the Get Pre-qualified button more than doubled, surpassing 0.5 million by September.
Mortgage attach rates have climbed from 27% to 40%.
The integration connects Mr. Cooper's servicing portfolio directly into Rocket's recapture engine.
Financial Guidance and Outlook:
Expect adjusted revenue, inclusive of Mr. Cooper and Redfin, to range between $2.1 billion and $2.3 billion for Q4.
On a Rocket standalone basis, excluding Mr. Cooper and Redfin, expect adjusted revenue at the midpoint of the range to be up roughly 7% year-over-year.
Expect total expenses of approximately $2.3 billion, including $140 million of one-time transaction-related costs and $120 million of new amortization of intangible assets.
Underlying expenses are expected to be roughly $2 billion in the fourth quarter, excluding one-time items.
Expense guidance includes $215 million of interest expense related to unsecured debt and MSR facilities.
