Rocket Companies, Inc.

Good morning. My name is Joseph, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Rocket Company's second quarter 2022 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star one. If you'd like to withdraw your question, again, press star one. Thank you. Sharon Ng. Vice President of Investor Relations, you may begin your conference.

Good afternoon, everyone, and thank you for joining us for Rocket Company's earnings call covering the second quarter of 2022. With us this afternoon are Rocket Company CEO Jay Farner, our CFO Julie Booth, and our President and COO Bob Walters. Before I turn things over to Jay, let me quickly go over our disclaimers. On today's call, we will provide you with information regarding our second quarter 2022 performance as well as our financial outlook. This conference call includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and the assumptions we mentioned today. We encourage you to consider the risk factors contained in our SEC filing for a detailed discussion of these risks and uncertainties. We undertake no obligation to update these statements as a result of new information or further events, except as required by law. This call is being broadcast online and is accessible on our IR website. The recording of the call will be available later today. 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 earlier 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?

Thank you, Sharon. Good afternoon and welcome to the Rocket Company's earnings call for the second quarter of 2022. On today's call, I'll share how Rocket is leading during this time of rapid change in the mortgage market and how we're investing in Rocket's future. I'll discuss the transformation of our Rocket services and engagement platform and strengthening of our offerings in both purchase and cash out refinance mortgage products. The mortgage industry has shifted rapidly and is facing challenging times. Volatility and interest rates and declining consumer sentiment have contributed to overall uncertainty about the economy. In this time of flux, we have taken proactive steps to optimize our core mortgage operations by improving lead capture and allocation, launching new products, signing new partnerships, and aligning our resources internally. Our senior-most leaders, seasoned industry veterans who have navigated numerous cycles in their 26 years here at Rocket, are as close to the business as they've ever been. We are adapting our mortgage operations to the current market environment, and we remain focused on managing the business with discipline. Julie will walk through our cost management efforts in more detail a bit later. This is an energizing time for us. Our ability to constantly innovate to serve our clients better through our platform, particularly during these challenging times, will further differentiate us from our competition. and will allow us to capture market share over the long term. Once again, we are revolutionizing the Rocket platform, setting the foundation for our next stage of growth through the use of centralized data across all Rocket businesses, which creates additional touch points to drive revenue. We've always taken a long-term view of our businesses. Through every cycle in our 37-year history, we've adapted, invested, and emerged stronger. Our track record has proven that investment into our own business is always the best one that we can make. In fact, we have more than 2000 team members, including technology product strategy data and marketing functions. Working to expand our client engagement platform and consequently the rocket flywheel is poised to spend faster than ever, as we enter 2023 We recently unified the entire Rocket ecosystem by launching single sign on across each of our businesses. In July, we unified more of our businesses under the Rocket umbrella with Truebill, soon to be operated as Rocket Money, and Edison Financial, our Canadian digital mortgage brokerage, transitioning to Rocket Mortgage Canada. These two rebranding initiatives leverage our continued investments in the trusted Rocket brand and draw our businesses closer together. With the Rocket Money rebrand, Clients serviced by Rocket Mortgage will enjoy a free Rocket Money premium membership, providing access to unlimited budget management tools, our network dashboard, subscription cancellation concierge service, full credit reporting, and more. We've been very pleased with our acquisition of Truebill, now known as Rocket Money, and the business is quickly becoming the core of the Rocket engagement platform. Rocket Money has continued to grow rapidly, with paying premium members surpassing 2 million in July 2022, more than doubling year over year. To put this in perspective, it took Rocket Mortgage nearly 30 years to originate 2 million mortgages. It was only a few years ago that our servicing book surpassed 2 million clients, making the growth of Rocket Money even more impressive. Rocket Money has launched its credit card in beta, offering unique features like SmartPay that help members take control of their credit. The early response is very positive. As I mentioned, Rocket Money provides valuable insights and helps keep clients actively engaged in our ecosystem. For consumers managing their financial lives, especially during times of high inflation, the services Rocket Money provides become even more valuable to its members. The company's members link their financial and credit accounts, providing insight into our clients' lives, which our industry-leading marketing engine can then leverage to help craft bespoke experiences. delivering the right offer to the right client at the right time. Rocket Homes, our home search platform and real estate agent referral network, grew overall real estate transactions by 25% from Q2 of 2021 to Q2 of 2022, which is even more impressive considering the overall housing industry declined over that same period. Rocket Homes also notched two record months in the quarter for closed units. The web traffic grew by nearly 60%, over that same time period, reaching nearly 3 million unique visitors per month. Rocket Solar continues its national expansion in June and is now available in 42 metropolitan areas covering a meaningful portion of the U.S. population, including Arizona, Florida, and South Carolina. In addition, as of this week, we are proud to highlight another example of our flywheel in action, as Rocket Solar is now working directly with Rocket Loans to provide solar financing options to our clients. This partnership is made possible by the incredibly flexible AI-powered loan decisioning engine and product agnostic platform developed by Rocket Loans over the last few quarters. This is just one of the many examples of our investment in technology continuing to pay off for our company. We look forward to continually growing our solar footprint and expanding the use of the Rocket Loans lending engine through the remainder of 2022 and beyond. As we continue to focus on our future, we're also keeping our sights firmly set on maximizing the opportunities before us. Homeowners are sitting on a record $28 trillion of home equity. The cash out refinance opportunity remains very healthy. We see our clients using cash out refinance to consolidate debt or remodel their existing home. We've also launched a home equity loan product just a few days ago that will provide even more optionality to clients who may not want to refinance their first mortgage due to favorable terms. but they still want to tap into the equity currently available in their home. To illustrate an example of the power of our platform, we were able to develop and go to market with our new home equity product in just under 60 days by leveraging our flexible technology platform and internal resources. With client insights from Rocket Money, we can offer our home equity loan and other products to come to the right clients at the right times. This client pool represents tremendous future opportunity once they're part of our ecosystem. They may roll their first and second mortgage together when the market is once again ripe for refinancing or take advantage of other rocket offerings down the road. The purchase market was more muted than we expected in the second quarter with home buying activity impacted by affordability, inventory, and consumer competence. We are prepared and ready to help our clients during these uncertain times and when the macro environment improves. This is exactly why our engagement platform is so crucial. It allows us to keep our clients engaged and active with our brand until the moment they are ready to transact, eliminating the need to market broadly, thus reducing our cost to acquire clients. Over the past few weeks, our capital markets and marketing teams collaborated to launch new products to address our clients' immediate concerns over rate uncertainty. We have placed renewed emphasis on our RateShield program, which gives our purchase clients confidence in a rising rate environment by locking in rates for 90 days while they search for a new home. We also launched our rate drop advantage at the end of July, which provides home buyers with a one-time credit on typical closing costs to refinance their mortgage if rates drop within three years of their purchase, something made possible and profitable by our efficient origination process. We are also very happy to share that we find two significant premier enterprise relationships. We've entered into a new agreement with global financial leader Santander to originate mortgages for the bank. You may remember earlier this year Santander exited the U.S. mortgage market in light of challenging conditions. We also signed a new partnership with Q2, a banking platform leader who provides digital banking applications to over 500 financial institutions. We'll work with Q2 to embed the digital Rocket Mortgage experience directly into the online banking apps used by their clients. Through the Q2 banking platform partnership, Rocket Mortgage will enable the financial institutions to offer mortgages. without the need to manage their own mortgage operations. Consumers will enjoy a comprehensive, seamless experience through one app to apply for a mortgage, make mortgage payments, deposit checks, and build their savings. We're having initial conversations with banks and credit unions now and expect to make this technology available to them in the fall. These challenging markets have spurred financial institutions to scale down or exit the mortgage business, creating a compelling case to partner with the industry leader, Rocket. More and more financial institutions are seeking out Rocket to help offer mortgage products and in particular purchase mortgage products to their clients without having to make the investment to originate on their own and compete with our strong brand. This is a tailwind for our enterprise partnerships channel and presents an opportunity unique to Rocket to grow our client base and market share. As we look forward, we will invest through the cycle and further prove Rocket's track record of execution. Rocket is incredibly well-positioned to seize the opportunities in the financial services space, the mortgage market, and beyond by continuing to build our platform and comprehensive end-to-end home buying and financial services ecosystem. We're excited to continue to move forward in fulfilling our mission to be the best at creating certainty in life's most complex moments so that our clients can live their dreams. With that, I'll turn things over to Julie to go deeper into the numbers.