Detroit-based Rocket Companies (NYSE: RKT) recorded a $481 million loss in the third quarter on $647 million in total revenue.
The company’s dismal third quarter performance followed a mild $178 million profit in the second quarter, when the company’s total revenue was $1.3 billion. The third quarter loss was attributed primarily to a $878 million decline in the value of Rocket’s mortgage servicing rights.
Nonetheless, CEO Varun Krishna emphasized the positive in Rocket’s earnings call.
“Optimism is the ability to see the glass as half full,” Krishna said. “Over the past few months, the market has thrown our industry almost every curveball imaginable, with inflation easing, the Fed cut rates for the first time in four years, but in an interesting twist, while the Fed lowered rates, mortgage rates did not follow suit. Instead, both the 10-year treasury yield and the 30-year fixed mortgage rate actually increased. In my experience, it’s always important to take the long view and put things in perspective.”
Chief Financial Officer Brian Brown echoed Krishna, insisting the company was on solid ground.
“As a testament to our sustained financial strength, I’m proud to share that Fitch recently upgraded Rocket Mortgage to investment grade,” said Brown. “This makes Rocket Mortgage the first nonbank mortgage company to receive investment grade status from one of the three big rating agencies in almost two decades. This achievement highlights our strong balance sheet and financial profile and paves the way to access a wider range of funding sources at a much more favorable cost of funds. This added flexibility positions us to continue to allocate capital in service of our growth strategy.”
Brown added the company expected “the mortgage market in the fourth quarter to be smaller than the third quarter. We expect adjusted revenue to be in the range of $1.50 billion to $1.200 billion. The mid-point of this range represents 27% year-over-year growth and reflects continued market share gains.”
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