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Cost-cutting at Rocket Companies Inc. including voluntary job cuts in July helped the mortgage lending giant rack up its second-consecutive profitable quarter this year, but the Detroit-based lender remained in the red for the year to date with mortgage originations down by nearly half from 2022.
Rocket reported third-quarter net income was up 20 percent from a year ago, to $115 million, with a 9 percent reduction in expenses helping offset a 7 percent drop in revenue, which totaled $1.203 billion.
At $22.19 billion, Q3 closed mortgage origination volume was down 13 percent from a year ago. During the first nine months of the year, Rocket originated $61.45 billion in mortgages, down 46 percent from the $114.1 billion in mortgage production at the same point a year ago.
“I am very proud of our team for delivering strong results against a challenging economic backdrop,” Rocket CEO Varun Krishna said in a statement Thursday. “In today’s climate, innovation is essential. With the incredible amount of data in our ecosystem, paired with the transformative power of AI, Rocket is uniquely positioned to disrupt the industry.”
Krishna — a veteran fintech executive who took over for interim CEO Bill Emerson on Sept. 5 — was referring to Rocket’s Pathfinder tool, an AI and machine learning-powered search engine used by mortgage bankers, brokers and underwriters.
Last week Rocket announced that Pathfinder is now using its own custom Google AI search, and that Rocket is testing a new AI chat interface in Pathfinder that has helped mortgage bankers and brokers answer their clients’ questions 69 percent faster.
In addition, Rocket subsidiary Lendesk launched an AI tool, Lender Spotlight AI Assistant, to help Canadian mortgage brokers sift through the finer points of more than 7,000 mortgage options to help identify the right product for their clients.
In reporting third-quarter earnings Thursday Rocket said its BUY+ program, which provides a closing credit of up to $10,000 to homebuyers working with Rocket Homes partner agents, has doubled its attachment rate since launching in April.
The company’s new 1 percent down mortgage, ONE+, which launched in May, had three times more closings in September than June, the company said.
On the cost-cutting front, Rocket said it conducted a “voluntary career transition program” in July, which along with other cost reduction efforts kicking in during Q4 are expected to cut annual expenses by $200 million.
Rocket racked up nearly $1 billion in losses during the last three months of 2022 and the first three months of 2023 before turning things around in Q2 2023 when the company generated $139 million in profits.
Rocket executives said they expect adjusted revenue of between $650 million to $800 million during the fourth quarter, down from $1.002 billion in Q3.
Shares in Rocket, which in the last year have traded for as much as $11.94 and as little as $6.11, were down 3 percent in after-hours trading Thursday.
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