Rocket Companies, Inc.

My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Rocket Company's Inc. First Quarter 2023 Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one once again. To allow everyone an opportunity to ask a question, we ask that you please limit yourselves to one question and one follow-up. I will now turn the call over to Sharon Ng, Head 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 first quarter of 2023. With us this afternoon are Rocket Company CEO Jay Farner, our current Director and future Interim CEO Bill Emerson, our President and COO Bob Walters, and our Chief Financial Officer Brian Brown. Earlier today, we issued our first quarter earnings release, which is available on our website at rocketcompanies.com under investor info. Also available on our website is an investor presentation. Before I turn things over to Jay, let me quickly go over our disclaimers. On today's call, we provide you with information regarding our first quarter 2023 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 filings 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 investor relations website. The recording of the call will be posted 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?

Thanks, Sharon. Good afternoon and welcome to the Rocket Company's earnings call for the first quarter of 2023. I'm joined today by Bill Emerson, who will be stepping in as Rocket's interim CEO on June 1st. Bill's been diving into the business over the last few months, and he'll be sharing some of his thoughts in just a moment. I'd like to begin with some thoughts on the market. We're encouraged by the fact that consumer demand for homes is robust, and we're seeing a healthy purchase pipeline as we enter the spring home buying season. From March to April of this year, purchase approval letters are up 11%. and are also trending much higher from March to April this year compared to the same timeframe last year. We believe that the increases we're seeing in this very important metric is primarily attributable to the investments we've made in the client and real estate agent purchase experience and innovative consumer-focused solutions such as Buy Plus, which we'll talk more about in a few minutes. That said, we're still seeing challenges in home inventory levels and existing home sales have declined to levels not seen since 2008. We'll need home inventory levels to cooperate in order to have a successful home buying season. Over the past several quarters, we've seen a consistent upward trend in our net promoter score for both clients and real estate agents. In fact, in the first quarter of this year, our purchase MPS reached an all-time high of 75 for retail clients and 53 for real estate agents, meaning clients and agents highly recommend Rocket as a lender. An MPS score above 50 is generally considered excellent, so we're excited that the investments that we've made in technology and data, as well as our continuous process improvements, have led to these high marks and the positive trend that we're experiencing. With this backdrop, we reported a strong first quarter. Adjusted revenue came in at $882 million, above the high end of our guidance range. We reported an adjusted EBITDA loss of $79 million, and an adjusted loss of $0.06 per diluted share, both metrics showing an improvement over the prior quarter. We've recently unveiled several important initiatives that help our clients in this uncertain time and lower barriers to transact. In April, we introduced Buy Plus and Sell Plus, a collaboration between Rocket Homes, our home search platform, and real estate agent referral network business, and Rocket Mortgage. With Buy Plus, purchase clients can save thousands of dollars in upfront costs, if they work with Rocket Homes partner real estate agents and obtain financing with Rocket Mortgage. With Sell Plus, sellers listing their homes for sale with Rocket Homes verified partner agent will receive a rebate check for 1% of the sale price from Rocket Homes after closing. If a homeowner is buying and selling, they can use both Buy Plus and Sell Plus to increase their savings. We also recently unveiled the Rocket Visa Signature Credit Card. the first credit card that makes home buying more accessible and home ownership easier through everyday spending. With a Rocket Signature Card, our clients can earn 5% back, which can reduce closing costs by thousands of dollars, helping to address one of the most significant hurdles in purchasing a home. The Rocket Signature Card is designed to appeal to first-time homebuyers, as well as existing homeowners who are in the market to buy, and helps us reach them earlier on in the purchase lifecycle. Along with Rocket money, our credit card provides us with another way to reach our clients much earlier in the process and at a significantly lower client acquisition cost compared to traditional mortgage methods. What's even more meaningful is that the points earned through the Rocket signature card can be used in conjunction with our Rocket Rewards loyalty program. When we surveyed our clients, nearly 90% of them told us they would value a Rocket-affiliated rewards program in a way that would promote a long-term relationship with our brand. Now with our loyalty program credit card, our clients can further accelerate their path to home ownership. Clients with loans already serviced by Rocket Mortgage have even more flexibility and can choose to use their points to reduce their unpaid principal balance, helping drive even higher retention and client lifetime value. Rocket Rewards enrollment has continued to show impressive growth, and the early results on Rocket Rewards have been very encouraging. with our test group seeing more than two times the conversion rate from lead to close compared to those who are not enrolled in the rewards program. As of March 31st, we grew the number of Rocket accounts to 27.6 million, up more than 2 million from our prior quarter, driven largely by Rocket money. Rocket accounts is an important metric as it represents clients who have taken the action to create an account with us and with whom we may have visibility on credit worthiness, spending behavior, finances, home buying intent, and more. We believe that these clients are more open to transacting with Rocket. Through our full end-to-end home buying ecosystem, we can help our clients at every step of the home ownership journey. From the financial planning and educational process, well before they apply for a mortgage, to searching for and ultimately the financing of their new home. With our client engagement program, which includes Rocket money, Rocket rewards, Rocket signature card, and the home buying plan, we now have multiple ways to acquire and engage our clients. This provides us with valuable data insights earlier in the process, indicators of home buying intent that are particularly valuable given the high client acquisition cost and the lengthy, often complex nature of a purchase transaction, helping us personalize the right offering at the right time. We believe this engagement will help grow our market share in purchase, as well as lower our client acquisition cost. meaningfully lift conversion from lead to close, increase retention, and extend client lifetime value. All of these initiatives set Rocket up for a bright future. This being my last earnings call, I'd like to thank the amazing team members that I've worked with for the past 27 years for their passion and commitment. Having worked alongside Bill now for many years, I'm certain there is no one more qualified to take the interim CEO role while the company searches for a permanent successor. Bill and I will continue to work together over the next month, helping to ensure a smooth transition. With that, I'll turn it over to Bill.