Rocket shifts the focus to integration after Q1 growth

Fighting by headwind

“Let’s start with the housing market, which started on a positive note to start the year,” said Varun Krishna, CEO and director of Rocket Companies, during a phone call with analysts.

The inventory of the house improved, up to four months delivery and the 30-year fixed mortgage interest rate fell from 7% in January to 6.6% in March. That improved affordability briefly and led to any refinancing activity, he added.

Krishna mentioned Redfin data that showed that one in four Americans cancels plans for large purchases, including houses. Purchase requests – which usually increases between March and April – fell sharply in April, a trend that the industry has not seen since the major recession of 2009.

In this context, Rocket was created $ 21.5 billion in mortgages in the first quarter, an increase of $ 20.2 billion in the same period last year, but fell from $ 27.8 billion in the fourth quarter of 2024. Net rate locking volume reached $ 26 billion, an increase of 17% year over year and 11%.

Chief Financial Officer Brian Brown said analysts that the increase was “driven by growth in refinancing and continuous momentum in the range of an equity loan, which placed a record quarter.”

Rocket’s direct-to-consumer channel remained the primary driver and generated $ 11.3 billion in volume during the period, compared to $ 9.2 billion of his external originator (TPO) channel. The company experienced a number of competitive price dynamics in the TPO channel in the first quarter.

As a result, the profit-on-sales margins for Q1 2025 were 289 basic points, against 311 BPS in the previous quarter. This decrease was powered by a margin of 465 BPS in the direct-to-consumer channel and 139 BPS in the TPO channel.

Rebound on the horizon?

In general, Rocket reported a GAAP -Netto loss of $ 212 million from January to March, compared to a profit of $ 291 million in the same period last year, per archives with the Securities and Exchange Commission (Sec). Custom income, which excludes non-continuous costs and one-off costs, amounted to a total of $ 80 million in Q1 2025, somewhat of $ 84 million in Q1 2024.

Brown said analysts that Rocket remained focused on stimulating growth and profitability and at the same time balancing deliberate investments with disciplined cost management – especially important in what is usually a seasonal low quarter.

In his prepared remarks, Krishna emphasized the $ 1.3 billion of the company on adjusted income. That was “on the high -end of our guidance” for the quarter, compared to $ 1.1 billion a year earlier. The costs rose to $ 1.2 billion in Q1 2025, an increase of $ 1 billion in the same period last year.

Looking ahead, Rocket expects an adjusted turnover of $ 1,175 billion to $ 1,325 billion in the second quarter, which reflects a difficult April in terms of margins and volume. But there is the potential for a rebound in May and June.

The company uses technology to navigate better with mortgage market cycles. Brown noted that Rocket can support $ 150 billion in origination volume without adding a single dollar in fixed costs.

In addition, Krishna said that in March 2025 the company served 21% more original customers compared to March 2024. It shortened the turning times by 14%, which he described as “AI in action”.

Redfin, Mr. Cooper Integrations

Krishna said that the company will now give priority to the integration of Redfin and Mr Cooper, despite the fact that $ 8.1 billion in liquidity, including $ 1.4 billion in cash, on the balance sheet.

“These acquisitions are fundamentally about three things: strengthening our business model, feeding our platform with data and ecosystem partners to switch on Rocket AI and to build up an increased customer experience,” said Krishna.

“Integration is currently a top priority for our leadership team. In recent weeks we have worked closely with leaders at Redfin and Mr. Cooper.”

Asked for Mr Cooper who loses possibly losing subjects because of the Rocket deal, the company said that it remains enthusiastic about the company, fully supports it and is planning to honor all contractual provisions.

Competitor United Wholesale Mortgage (UWM) has Mr. Cooper already dropped as part of the part.

Rocket stock On Thursday, about 1.2% had fallen in after-market hours and traded near $ 11.50.