Rocket Companies, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Rocket Company's second quarter 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you would like to ask a question at this time, simply press star, then the number one on your telephone keypad. If you require any further assistance, please press star zero. I would now like to turn the call over to your speaker today, Jason McGruder, Vice President of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us for Rocket Company's earnings call covering the second quarter of 2020. It's first as a public company. My name is Jason Magruder, and I'm the new vice president of investor relations for the company. I had the opportunity to email a number of participants on this call earlier this week, and I look forward to working closely with all of you in my new role. We are excited to share the results of a terrific quarter with you. But before I turn things over to Jay Farner to get us underway, I will read the policy regarding forward looking statements. Today's call is to provide you with information regarding our second quarter 2020 performance in addition to our financial outlook. This conference call includes forward looking statements. For more information about factors that may cause actual results to differ materially from forward looking statements, Please refer to the earnings release that we issued today, as well as risk described in filings with the SEC, particularly in the section of these documents titled Risk Factors. Our commentary today will also include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings release issued today. Please refer to our filings with the SEC for more information. With that, I'll turn things over to Jay Farner to get us started. Jay?

Thank you and good afternoon, everyone. Welcome to Rocket Company's second quarter earnings call, our first as a public company. Before we get started, I'd like to thank our 20,000 team members for the dedication and unwavering commitment to our clients. Because of their efforts, I'm proud to share that Rocket Company's achieved record-breaking results in the second quarter. Culture is the foundation of everything we do here at Rocket Companies. Our founder, Dan Gilbert, created 19 principles known as isms and they are the heart and soul of our culture and drive every decision we make. They are who we are, our DNA. Our culture has been the secret to our success over the last 35 years and the second quarter was no exception. One of those isms is do the right thing, a charge that we take very seriously. Earlier this year, when we saw the impacts of COVID-19 overseas, we quickly invested in the tools and technology that was needed to ensure that all our team members could effectively work from home, weeks faster than many other large businesses. This allowed us to keep our team members and communities safe while also meeting the needs of our clients as mortgage rates began to fall. We're extremely proud of protecting our team members and achieving record results in the second quarter, but that performance has been years in the making. Thousands of our technology team members have continuously built and refined a platform that has truly risen to the occasion, allowing us to scale to meet unprecedented demand, all while 98% of our team is working from home. It's a pleasure to be here today to talk about our second quarter results, the way we think about our business and why we believe Rocket Companies is well positioned to capitalize on the substantial opportunities ahead. In the second quarter, Rocket Mortgage closed $72.3 billion in loan volume, more than any quarter in our 35-year history. Record low interest rates are driving demand for home loans, and as we've highlighted, the power of our platform is proving a key differentiator for Rocket Mortgage. In fact, we've been able to achieve record volumes while maintaining impressive loan turn times. Industry-wide capacity constraints have led to significant gain-on-sale margins during the second quarter. with overall margins increasing to 5.19%, up from 3.25% in the first quarter. Our ability to scale volume at these elevated margins led to substantial incremental profitability in the quarter. While second quarter gain on sale margins were certainly elevated by historical standards, this is exactly the kind of market environment we built our platform to perform in. Quite simply, we were able to meet the needs of our growing client base and provide award-winning client experience. Our mortgage servicing business was a key driver of overall performance in the quarter, which Julie will talk about in a moment. I'm also proud to share that we recently earned an unprecedented seventh consecutive J.D. Power Award for customer satisfaction in mortgage servicing, an award we've won every year we've been eligible. This award is based entirely on feedback from our clients, and it's an honor our team members take tremendous pride in. Turning to our broader ecosystem of businesses, we believe we have substantial opportunities to apply the same focus on client experience, technology, and operations across multiple industries. When we look at our companies holistically, Rocket Companies generated 300% year-over-year growth in adjusted revenue and $2.8 billion of adjusted net income in the second quarter. We are delivering profitable growth at substantial scale. As you continue to get to know Rocket Companies, you will also learn we are passionate about the communities where our team members work, live, and play. We are keenly aware of the role our company plays in building the American dream and how communities are the foundation of progress, education, and pride. We recently announced the very important Changing the Course initiative here in Detroit. Unfortunately, Detroit ranks last in digital connectivity among all major cities. We saw the effects of this digital divide truly manifest with the onset of COVID-19, when many of our community members found themselves without access to the technology needed to participate in telemedicine, schooling, or find a job. We knew we needed to step in and make a change. Through the Rocket Mortgage Classic, our PGA Tour event in Detroit, we have risen to the task to ensure that by 2025, every Detroiter will have access to technology within a 10-minute walk from their home. As a technology company and the largest employer in the city of Detroit, this is a program that is near and dear to all our hearts and one we look forward to bringing to life. Finally, many of you have asked us how things will change now that we're a public company. The short answer is they won't. We have many more investors today than we did as a private company, including all of our team members who, once vested, will become shareholders. But that doesn't affect who we are. We are committed to providing you with the same plain-spoken transparency that has been a hallmark of our company. Thank you for joining us. Thank you for joining us.