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Paper losses on its mortgage service portfolio pushed Rocket Companies into the red in the final quarter of 2023, but the financial giant announced its third consecutive quarter of positive adjusted earnings amid a difficult market, leading to a decline in 2023. This had a positive impact on our results for the fourth quarter of 2023 and 2023. .
Rocket reported The company reported a fourth-quarter net loss of $233 million on Thursday, primarily due to writedowns on its $509 billion mortgage servicing rights portfolio. Fourth quarter sales increased 44% year-over-year to $694 million, while expenses decreased 5% to $937 million.
Rocket posted a full-year net loss of $493 million as revenue dried up faster than it could cut costs. Revenue for 2023 fell 35 percent to his $3.8 billion, but Rocket cut full-year expenses by 18 percent to his $4.2 billion.
As of year-end, Rocket had collected 2.5 million mortgage payments on behalf of investors, and its mortgage servicing rights portfolio generated approximately $1.4 billion in annual recurring servicing fee income. The company said there are.
As with many mortgage lenders that also service loans, Lockett executives say adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is a better measure of performance.
Due to lower interest rates at the end of 2023, Rocket reduced the fair value of its mortgage servicing rights portfolio by $358 million in the fourth quarter. This is partly because lower interest rates make it more likely that borrowers will refinance and ultimately refinance to another loan servicer.
Rocket delivered an adjusted EBITDA profit of $55 million in the fourth quarter and $67 million in 2023, allowing CEO Varun Krishna to positively impact performance. In a call with investment analysts, Krishna said Rocket reported three consecutive quarters of positive adjusted EBITDA “despite the most challenging industry conditions in 30 years.”
varun krishna
“Our consistent execution resulted in exceptional results for the quarter and year, especially given market conditions,” Krishna said. “We have taken the difficult steps necessary to significantly reduce our cost base and right-size our company over the past two years, allowing us to prioritize what we do best. I was able to rank and focus.”
rocket stockshas traded as low as $7.17 and as high as $15.19 over the past 12 months, up 7% from Thursday’s closing price of $10.98 in after-hours trading after the earnings release.
With $17 billion in mortgage originations in the fourth quarter and $78.7 billion for the year, Rocket will see a 14% increase in purchase mortgage origination share in 2023 and a 10% year-over-year increase in refinance market share. He said he did.
Rocket Mortgage is Rocket’s largest business, but the company also matches consumers with real estate agents through its brokerage subsidiary Rocket Homes and provides closing and settlement services through its Amrock subsidiary.
Lockett said the home equity loan and new ONE+ and BUY+ mortgage products “resonated with new and existing customers.”
ONE+ mortgages allow low- and moderate-income borrowers to purchase a home with as little as 1% down without paying extra for mortgage insurance. The BUY+ program also offers up to $10,000 in closing credits to homebuyers who work with Rocket Homes partner agents.
“The majority of customers who came to us through home equity loans, ONE+ or BUY+, were new customers who had not yet made a loan with us,” Lockett said in an earnings call.
Rocket also pursues a long-term goal of providing personal financial services to consumers through its subsidiary Rocket Money, which has 5 million users. According to the company, the Rocket Money app (formerly Truebill) was the most downloaded personal finance app on the Apple App Store in December.
Rocket, which started the year by hiring Airbnb veteran Jonathan Mildenhall as its first group chief marketing officer, said it reported first-quarter adjusted revenue of $925 million to $1.07 billion. He said he expected it.
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