Rocket Companies, Inc.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rocket Companies, Inc. second quarter 2025 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 would like to ask a question during that time, simply press star and the number 1 on your telephone keypad. I would now like to turn the call over to Sharon Ng, Head 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 2025. With us this afternoon are Rocket Company's CEO, Varun Krishna, and our CFO, Brian Brown. Earlier today, we issued our second 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 Varun, let me quickly go over our disclaimers. This conference call includes forward-looking statements about, among other matters, expected operating and financial results, strategic initiatives, the recent up-sea collapse, and acquisition of Redfin and the anticipated acquisition of Mr. Cooper. 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. A 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 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 Varun Krishna to get us started. Varun?

Good afternoon, everybody, and thank you for joining our second quarter 2025 earnings call. There is a lot happening at Rocket these days, and today I'm going to share our progress in a few key areas. First, I will recap our outstanding second quarter performance and the current market landscape. Next, I'll share a couple of execution wins from the quarter. And finally, I'll update you on the Redfin acquisition post-close and what lies ahead. Let's start with the numbers. This was a very strong quarter for us. We demonstrated rock solid execution on the business as we closed the Redfin transaction and made progress on the integration of both Redfin and Mr. Cooper. Adjusted revenue reached $1,340,000,000 above the high end of our guidance. Net rate lock volume increased by 13% year over year. We served over 100,000 origination clients representing a 19% year-over-year increase with the growth of home equity loans being a key driver. Adjusted EBITDA was $172 million, representing a solid 13% margin and adjusted diluted EPS of 4 cents. Given the Redfin transaction closed on July 1st, Redfin's financials are not included in these second quarter results. I'm especially proud that we delivered these results in a tough housing market, Last quarter, we mentioned a delayed spring home buying season, and that's exactly what played out. April was particularly challenging for the industry and set the tone for a slow forming season. June existing home sales came in 2.7% lower than May at an annualized pace of 3.9 million, more than 20% below pre-pandemic levels. This is a new normal. And while affordability remains a key challenge, we see signs of optimism. Consumer sentiment has recovered from the low point in April. Home price growth is beginning to slow. We're seeing prices soften in some areas. All signals that the market is slowly shifting in favor of buyers. With this backdrop, our second quarter performance was driven by the strength of our team's execution. Purchase volume increased month over month from April to June, supported by our affordability programs, including OnePlus, Rocket Rent Rewards, and a host of seasonal promotions. We saw particularly strong growth in refinance volume quarter over quarter and year over year. During this time, we helped clients take full advantage when the 30-year mortgage rate dipped briefly to 6.6%. Most notably, home equity loan volume nearly doubled year over year, once again hitting a new record for units and volume. Home equity loans, which help homeowners tap record levels of home equity without impacting their first lien, continues to attract new customers to Rocket, making up nearly half of all home equity loan clients. In summary, one word to describe the quarter's results, execution. We focused on acquiring clients efficiently, delighting them, recapturing them for their next loan, and earning the right to be their lender for life in line with our core strategy. Next, let's turn to our execution wins. Since I became CEO, I have consistently communicated how AI is transforming our business. This quarter, I'd like to share a few more examples of how our momentum in this space is accelerating. Let's start with our bankers. The greatest value our bankers bring is their empathy, helping clients achieve home ownership and building strong relationships with real estate agents. To enable our bankers to provide 10-star service to even more clients and agents, we've built an AI-powered communication platform that handles dialing, texting, follow-ups, and chat, which are fully automating administrative tasks. Recent enhancements we've made now dynamically prioritize the client follow-up pipeline for our refinance bankers and offer AI-recommended next steps and text messages to streamline communication. As a result, daily refinance client follow-ups have increased by nearly 20%. On the operations side, Agentic AI is transforming underwriting beyond traditional automation. Agentic AI breaks down complex manual processes into actionable steps that AI agents can handle autonomously. We are now launching new solutions in days instead of months. The Rocket Agentic AI is powered by a technology called Model Context Protocol, or MCP. MCP turns our tech stack into a dynamic, interconnected system. Unlike siloed AI tools, MCP enables intelligent agents to access company-wide data instantly through deep integration with legacy systems in our years of technology investment. An example of a Gentic AI at work is the reviewing of earnest money deposits, or EMD. Managing EMDs used to require tedious manual work for tracking, validation, and reconciliation. Today, Agentic AI verifies EMD documentation and traces funds automatically, bringing only exceptions to underwriters. This technology now processes EMD for over 80% of purchase agreements and is estimated to save our operations team nearly 20,000 hours annually. The key result is that clients move through the process faster with fewer delays. Let's turn to our clients. AI-powered chat and fully digital refinance options are redefining what it means to have a seamless and fully digital experience. Our agentic chat capabilities continue to be up-leveled. The power of chat lies in its ability to meet clients where they are, providing an experience they love enabling us to scale efficiently and operating around the clock. This approach is reshaping client engagement. More than 80% of clients now choose to continue their application through chat with over 10% of leads arriving outside traditional business hours. What's more, clients who begin their journey in AI Chat convert at three times higher rates for purchase applications and 2.5 times higher for refinance applications compared to those who don't use chat. We've expanded agentic chats capabilities to collect essential income, property, asset, and credit information upfront. This accelerates client qualification and enables seamless handoffs to our bankers with AI supplying complete context and handling the administrative work behind the scenes. We've taken a big step forward by launching a fully digital refinance experience. Clients are now able to complete a digital refinance from application to rate lock in under 30 minutes, entirely online at any time of day, even outside of traditional business hours. From pulling credit and selecting a product and rate to completing the application, receiving automated approval updates, uploading documents, e-signing, and even scheduling the closing. Now all happen seamlessly online. And if clients need support, a banker is just one click away. Looking ahead, we're focused on making the process even faster and more frictionless. aiming for completion in under 10 minutes and making refinancing as simple as pressing a refi button on any mortgage we service. All of these examples show how AI has led to higher team member productivity and expanded capacity while elevating client experiences. We put our AI-powered capacity to the test when we run seasonal promotions that spike daily volume two to three times. We manage the surge without adding a single team member demonstrating our ability to flex and scale operations in response to market activities such as rate drops while maintaining efficiency and client satisfaction. I believe we are building a foundation for infinite capacity at Rocket, where our growth is supercharged by AI and human capacity is no longer a limiting factor. Okay, now let's turn to Redfin. Rocket and Redfin together represent a redefinition of the category. Redfin gives Rocket a new foothold in purchase and takes our presence in local markets to another level. Relationships with 50 million consumers every month reflect a deep connection with demand right at the top of the funnel and creates new purchase opportunities from both directions, from Redfin to Rocket and Rocket to Redfin. Despite the early days, integration has moved at a rapid pace. Within our first month, we executed a comprehensive brand update designed to bring a unified look to our digital presence. Today, Redfin's digital pages carry the unified Redfin Powered by Rocket co-brand. We also made home buying easier by introducing prequalification buttons on every home listing, allowing clients to take action seamlessly. In addition, we introduced Rocket Preferred Pricing, giving qualified clients who finance with Rocket Mortgage and work with a Redfin agent a one-point rate reduction in their first year or up to $6,000 in closing credits. This delivers meaningful dollars to buyers and helps make home ownership more attainable. On the product side, we expanded our lending portfolio to address more specialized needs. Super Jumbo loans and non-qualified mortgage products are now available, supporting clients with unique financial profiles. These solutions extend not just to Redfin clients, but to our retail bankers and our mortgage broker partners as well, empowering more professionals to serve a much wider array of buyers. Additionally, we added nearly 150 Bay Equity loan officers to our retail banking force this quarter, further expanding our presence in local markets. Our momentum is strong, and our team remains focused on execution. We're already seeing some exciting early results. Our very first Redfin client closed on a home in Colorado in just 10 days. And since July 1st, we've seen over 65 Redfin clients close on their dream home with Rocket Mortgage. Plus, in the first three weeks, there's been a nice jump at the top of the funnel. Nearly 200,000 people have clicked on the Get Prequalified button within Redfin, indicating interest in home financing. Of those users with a Redfin account, 23% became a contactable lead at Rocket and 12% of all users who enter the funnel go on to start an application, taking a significant step toward home ownership. Now I have spent most of my career working on consumer FinTech conversion funnels and seeing such a positive response for a V1 that's not optimized is very promising. In addition, 7,000 agent referrals have been sent to Rocket Mortgage. What's even better is that clients referred from Rocket to Redfin are 30% more likely than those from other channels to upgrade to verified approval letters, which is the strongest sign that they're moving toward closing. These results, while early, highlight the art of the possible when the Redfin and Rocket platforms are fully connected. Together, we're meeting our clients at their moment of intent and providing a seamless experience from home search to financing to fundamentally changing the way homes are bought, sold, and financed. In summary, we had a very productive quarter, balancing short and long-term execution, and I also want to thank our teams for their speed, discipline, and heart. A huge shout out also to our servicing team for winning our 11th J.D. Power Award for servicing earlier this month. This recognition is a testament to our enduring commitment to loving, protecting, and amazing our clients. It is this dedication that underpins our industry-leading recapture rate and will be force-multiplied with Mr. Cooper. Looking ahead, our teams are fully engaged in the integration work needed to realize the full potential of our integrated home ownership platform. We are delivering on our milestones and remain on track to close the Mr. Cooper transaction in Q4. At Rocket, we live by an ism. You'll see it when you believe it. As we bring Rocket, Redfin, and soon Mr. Cooper together under one roof, we are building a homeownership experience that is simpler, faster, and more affordable. And we're building a stronger company with an all-weather business model that thrives in any market and interest rate environment. We are positioning Rocket to be in a category of its own, a business with a significantly larger lead funnel, a massive data lake, and AI-powered capacity. with a client acquisition cost to lifetime value model unseen in this industry, all designed to eliminate waste from the system, lower costs for consumers, and create a more frictionless experience. The pieces are coming together, and we are working relentlessly to make this vision a reality. We believe. Thank you, and with that, I'll turn it over to Brian.