Rocket Companies, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Rocket Companies Incorporated third 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. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I will now turn the call over to the company who may begin your conference.

Good afternoon, everyone. I'm Jason Magruder, Vice President of Investor Relations. Thank you for joining us for Rocket Company's earnings call covering the third quarter of 2020. We are excited to share the results of another very strong quarter with you. Before I turn things over to Jay Farner, I will read our disclaimers. Today's call is to provide you with information regarding our third 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 risks 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 also be found in our earnings release issued today, as well as in our filings with the SEC. And with that, I'll turn things over to Jay Farner to get us started. Jay? Good afternoon and welcome to our third quarter earnings call.

I'm pleased to report Rocket Company's sixth consecutive quarter of record-breaking volume, highlighting the power of our platform and the strength of the Rocket brand. We are demonstrating true leadership at a critical time for our industry and our clients. I'm extremely proud of our 22,000-plus team members whose dedication and drive have helped deliver the results we will share with you today. First, I want to congratulate our team on being named the number one company for client satisfaction in mortgage origination by J.D. Power yesterday. This marks our 11th straight year being named to the top of the list And when you add in our seven consecutive number one rankings for mortgage servicing, we've taken home 18 J.D. Power Awards in the last 11 years. This one in particular is special to us, however. It's proof that our platform is so powerful that we can more than double loan originations year over year and still deliver on our commitment to servicing our clients at the highest levels. Again, team, congratulations. Our industry has reached an important moment. The COVID-19 pandemic has fundamentally changed the way Americans think of their homes. For decades, many have viewed their house as their most important investment. Today, home means so much more. It is now where we work, where we teach our children, and where we gather with friends, bringing new meaning and significance to the place where we live, our home. This enthusiasm around the value of home is clear in the numbers. For instance, the National Association of Realtors' existing home sales report showed that September sales of previously owned homes were more than 20% higher than the same month in 2019. Also, recent reports in the New York Times and San Francisco Chronicle tell of residents moving from the city centers to buy homes in the surrounding suburbs in search of more space. Home ownership is on the rise across the country, led by a new generation of first-time homebuyers. As a result of shifting demographics and the ongoing pandemic, we are seeing a rapid acceleration in the long-term shift from physical to digital transactions across the industries where we participate. Consumers today don't just prefer, they demand a completely digital experience. At the same time, the digital transformation of the lending process has become more important than ever. as an unprecedented number of consumers look to leverage today's favorable interest rates. We are seeing the strongest growth among our most digitally engaged clients. Application volume through our self-serve digital experience has grown significantly faster than overall volume year-to-date. This trend accelerated earlier this year and continued through the third quarter. The Rocket Mortgage platform is particularly powerful for first-time homebuyers who can receive loan approvals within minutes. In the third quarter, we delivered more purchase approval letters through our digital experience than in any quarter in our company's history. In addition to becoming the overwhelming choice for millennial homebuyers, Rocket Mortgage has continued to serve a large number of clients looking to take cash out of their homes reduce their loan terms or refinance due to changes in life situations such as divorce. These clients who are not rate sensitive remain an important population when you consider Rocket Company's incredible footprint, serving all 50 states and more than 3,100 counties in the United States and a growing presence in Canada. Our marketplace has reached a significant inflection point due to consumers demanding a simple digital experience. and I'm proud to say Rocket Mortgage is executing at enormous scale. In the third quarter, we delivered a record performance with $89 billion of closed loan volume, representing a 122% increase year over year. The growth we're achieving is unmatched. In Q3, we added nearly $50 billion of year over year closed loan volume. Consider this. Our incremental volume in the third quarter is so large, that it alone would have made us the second largest retail mortgage lender in the nation. To further illustrate the scale of this growth, Rocket Mortgage closed nearly $1 billion of origination volume each day in the third quarter. The scale and efficiency of our platform continues to drive substantial earnings power. We achieved a 69% adjusted EBITDA margin in the quarter and have generated $5.9 billion of adjusted net income in just the first nine months of 2020. The guidance that Julie will share with you today cements us among the most profitable fintech companies in the world. And we're not stopping there. Our mission is simple. We will continue to lead from the front as the most admired brand and technology platform in our industry. Recently, we hosted TechCon, our in-house technology conference for all rocket companies' technologists, drawing more than 4,000 of the brightest minds in the industry. One of the most important topics covered was ethical artificial intelligence. and its ever-increasing role in business. We crossed an important milestone in Q3 by generating more than $60 billion in application volume over the last two years using data science and AI. Our data science teams are now generating organic lead flow at higher conversion rates than paid marketing channels. We are also using automation to improve the efficiency of our operations and are now making more than 1 million decisions per day using machine learning. All of these processes get better with scale, strengthening our competitive lead and reinforcing the rocket company's flywheel. In addition to leveraging our rich data insights, we continue to expand the ways we are reaching consumers through innovations, partnerships, and marketing. In the last 30 days alone, we have announced enhancements to our RocketPro platform that grant real estate professionals never before available insights into their clients' mortgages. Now they can help guide homebuyers through the mortgage process from approval to closing using the RocketPro mobile app or website. Rather than calling one of our mortgage bankers or asking the client, real estate agents can now use RocketPro Insight to check in on a loan status. That leaves more time for mortgage bankers to help other homebuyers, and the agent can focus on showing and closing houses with their clients. The reaction from those in the real estate community has been overwhelming. In fact, in the first day, more than 1,100 agents joined RocketPro Insights, and the momentum has only increased. We anticipate nearly 15,000 real estate professionals will sign up to use the platform by the end of the year. providing a significant touchpoint with one of the largest influencers in the home purchase lifecycle. Another program to help both homebuyers and their agents was launched in early October. We kicked off a new relationship with Realtor.com that allows the tens of millions of homebuyers visiting their website to seamlessly apply for a Rocket Mortgage. The new venture was quickly followed by an announcement highlighting Rocket Mortgage's partnership with Intuit's Mint personal finance tool. Now Mint users can easily import their personal financial information into a Rocket Mortgage loan application with a tap of a finger, allowing them to lock in a mortgage rate in as little as eight minutes, all while staying in the Mint app. Quicken Loans Mortgage Services, which serves the needs of our mortgage broker partners, recently rebranded to Rocket Pro TPO. This transition allows our partners to continue to meet the needs of their clients while also providing them with the ability to leverage the best known brand in consumer lending with Rocket Mortgage. To celebrate, we provided 10,000 fresh purchase leads to our RocketPro TPO partners, something that's never been done before in the industry. As part of the rebranding, we've also announced new AI and machine learning innovations in partnership with Google Technology. additional tech-focused enhancements to our platform, and new ways to align with and support our brokers. Overall, the feedback we've received about the rebrand and technology rollouts has been extremely positive. In addition to all the fantastic partnerships we've already shared with you, we are proud to announce that as of last week, we have forged a relationship with one of the largest financial services companies in the world. This collaboration, similar to the program we created with Charles Schwab, will allow us to originate mortgages for a new base of clients. We anticipate that we'll share more information in the new year. Our exceptional brand marketing also continues to be a true differentiator in the industry. Our Rocket Can campaign has been incredibly successful, and we're proud to soon be rolling out a new slate of ads, including our first exclusively targeting the growing Latinx community. We continue to also leverage well-known talent like Jason Momoa, star of our Super Bowl ad, and future NFL Hall of Fame wide receiver Larry Fitzgerald in our marketing to appeal to a broad consumer base. The fact is, Rocket Companies is leveraging the scale and flexibility of our platform to deliver first-to-market innovations with the best partnerships in real estate, technology, and finance. all while reinforcing our brand with best-in-class marketing. Outside of mortgage, innovation is taking place throughout our entire ecosystem. In the last several months, Nexus, our title and closing technology company, announced it had partnered with insurance leaders, farmers, and Lemonade to simplify homeowners insurance verifications using its clear HOI platform. These companies join others, including Allstate and Liberty Mutual, in helping provide a digital solution to lenders looking to confirm the presence of an insurance policy in real time, eliminating the need to manually call to confirm, a process that is deceptively tedious. At Amrock, our title company, we closed more than 100,000 mortgage transactions in September, a record that proves the scalability of our platform. In addition, Amrock continues to be a trailblazer, digitizing the title industry, much like Rocket Mortgage did for Loan Originations. In the first three quarters of 2020, the company is responsible for 90% of all e-closings in the industry, providing safety and convenience to our clients amid the ongoing pandemic. Additionally, Amrock is implementing machine learning and ethical AI into its workflow, through its proprietary Title Decision Engine, or TDE. This tool, which is currently being used on more than 30% of Amrock's title work, automates the traditionally manual process of reviewing documents, maps, and records of sale, cutting down the time our team members work on files by nearly 70%. This frees us up to work on other, more specialized items, significantly increasing our productivity. Finally, I'd like to take a moment to talk about our approach to client retention. increasingly important driver of our business after we originated alone we maintain monthly touch points with our clients and generate recurring revenue by processing their payments and servicing their loan over its lifetime Julie will give more detail in a moment but we are sharing today that rocket mortgage consistently retains over 90% of our total servicing clients on an annual basis retention at these levels has never been seen in the mortgage business and and rivals any subscription-based model across industries, including cable, streaming, and wireless services. Before I turn things over to Julie, I wanted to announce an addition to our board of directors. Our board has voted unanimously to make Jonathan Mariner, the founder and president of TaxDay, an independent board member and new chair of our audit committee. Prior to tax day, Jonathan spent 23 years in professional sports, serving as the chief financial officer for Major League Baseball, the Florida Marlins, the Florida Panthers, and Dolphin Stadium. In addition to our board, he also serves as an independent board member for Tyson Foods, McGraw-Hill Education, Little League Baseball, and several others. We are very excited to have him join us. And with that, I'll ask Julie to share with you the details of our financial performance in this quarter. Julie?