Rocket Companies, Inc. 2026 Q2 Earnings Call

Please go ahead, ma'am. Good afternoon, everyone, and thank you for joining us for Rocket Companies earnings call covering the second quarter 2026.

With us this afternoon are Rocket Companies CEO, Varun Krishna, and our President and 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. On today's call, we provide you with information regarding our second quarter 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 mention 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 reported results can be found in our earnings release issued earlier today, as well as in our filings with the SEC. With that, I'll turn things over to Varun Krishna to get us started.

Varun. Good afternoon, everyone, and thank you for joining our second quarter 2026 earnings call.

Today, I'll cover the market, our second quarter results, and Rocket's performance. Let's go ahead and start with the market. The industry expected a normal spring home buying season. Instead, affordability deteriorated as mortgage rates moved higher through May and June. Purchase and refinance demand as a result weakened during what is typically the strongest quarter of the year. Industry forecasts moved lower as the quarter progressed. Simply said, it was one of the toughest spring housing markets in years. Now against that backdrop, Rocket delivered one of its strongest quarters in recent memory. We gained market share in both purchase and refinance. We delivered our most profitable quarter in four years. We expanded adjusted EBITDA margins. Integration of Redfin and Mr. Cooper are well ahead of plan.

Adjusted revenue was $2.8 billion, near the midpoint of our guidance. Adjusted EBITDA margin expanded to 28%, up from 26% in the first quarter. Adjusted diluted EPS increased to $0.16. Our North Star is profitable market share growth, and we reached a new record this quarter. Purchase share increased to 6.2%, up from 5.5% in Q4 of last year. Refinance share increased to 14.3%, up from 12.2%. This performance was not a coincidence. It was the result of years of deliberate investment, focused execution, and a business model that has fundamentally evolved. Today, more than 70% of our revenue comes from recurring or less rate-sensitive businesses. Servicing provides a durable recurring revenue foundation. Purchase mortgages, home equity, personal loans, and Redfin diversify us across broader parts of the housing market. Today, Rocket is the largest in both servicing and origination. Our recapture engine connects these two things.

Just as importantly, all of our businesses reinforce one another. Redfin brings clients into the Rocket ecosystem earlier. Mortgage helps them finance one of life's biggest decisions. Servicing keeps that relationship alive for years. Additional products allow us to continue serving these same clients as their needs evolve. Artificial intelligence strengthens every step of that journey. It improves productivity, personalization, and conversion across the entire platform. The important point isn't that we've added new businesses, it's that we've changed the economics of the business fundamentally. Our recurring revenue base is larger. Our client relationships last longer. Our acquisition costs improve as these businesses reinforce one another. Our operating leverage expands as AI increases productivity across this platform. This is the business we've been building, one with a stronger floor in difficult markets and significantly more upside when housing activity returns.

That's what gives us confidence that Rocket's long-term earnings power is fundamentally stronger than it was just a few years ago. Let me take a second and show you how that came to life during the second quarter. Homeownership begins long before a mortgage application. It begins with home search. That's what makes Redfin such an important part of Rocket's strategy. Historically, Rocket entered the relationship when a client decided to finance a home. Today, we're increasingly entering months earlier while they're still searching. That completely changes the economics of client acquisition. Redfin reaches roughly 50 million monthly active users with some of the highest engagement and retention in online real estate. Those users aren't casually browsing. They're actively preparing to buy or sell a home. We're turning that intent into action.

Product improvements and proprietary AI models have increased lead conversion by roughly 30% over the past year, helping more clients move from searching to touring, financing, and closing. When buyers are ready to finance, Rocket is already part of the experience. Eligible servicing clients who buy and sell through Redfin and finance with Rocket Mortgage can save up to $20,000. That's a meaningful affordability advantage in today's market. We're seeing it translate into results. In June, mortgage leads from Redfin more than doubled year-over-year. The mortgage attach rate with Redfin agents reached 47%, approaching our synergy target of 50%. Inventory is yet another differentiator. Through our Compass partnership, Redfin continues expanding unique inventory that isn't available on other major home search portals. In markets like Chicago, that advantage is already driving meaningful increases in both home buyer and mortgage leads.

Nationally, Redfin now offers approximately 25,000 exclusive listings. More inventory attracts more serious buyers. More serious buyers create more financing opportunities. That's why Redfin matters. It allows us to build relationships earlier, convert them more effectively, and increase the lifetime value of every client who enters the Rocket ecosystem. The advantages we're creating upstream continue through mortgage origination. Sales is still very much a human craft. It takes judgment, empathy, and timing. Technology doesn't replace that, it just makes our people better at it. Our loan officers provide judgment, advice, and trust, and they are the best in the business. Artificial intelligence only makes them better. By removing administrative work and helping our teams focus on the right opportunities at the right time, AI allows our loan officers to spend more time helping clients and less time managing processes. We are already seeing significant impact.

Compared with just one year ago, our loan officers are serving nearly 40% more clients while delivering double-digit improvements in conversion at the same time. Those gains really matter today, and they matter even more as the market recovers. As mortgage volumes increase, we believe we can expand profitability faster without growing our cost structure at the same pace. This is one of the biggest structural changes happening inside Rocket. AI isn't simply making people more productive. It's actually increasing the earnings power of the business through operating leverage. We're applying that same approach across the entire company. Servicing remains one of Rocket's greatest competitive advantages. It generates durable, recurring revenue while creating long-term relationships with millions of clients. Those relationships become more valuable every year they remain inside the Rocket ecosystem.

During the second quarter of this year, we completed one of the largest servicing migrations in our industry's history, bringing our servicing clients onto a single platform. That milestone is about so much more than technology. It creates one foundation for how we serve clients, deploy AI, and identify opportunities across the business. Earlier this year, we launched Voice AI for inbound servicing calls. It has now handled more than one million calls, with more than half resolved without requiring a servicing specialist. Clients receive faster service, and our servicing experts spend more time solving the complex situations where human judgment matters most. Every interaction improves our understanding of the client and helps us identify opportunities to refinance, access home equity, purchase another home, or use another Rocket product. That's what makes our servicing different. It isn't just a recurring revenue business.

It's the engine that continuously creates future origination opportunities. Today, Rocket is both the nation's largest mortgage servicer and the nation's largest mortgage lender. Very few companies have both. That combination allows us to deepen client relationships over time instead of rebuilding them with every new transaction. The economics are fundamentally different. Every year we keep a client, we improve the probability of serving them again while reducing the cost of doing so. Artificial intelligence simply accelerates that advantage by improving client experiences, strengthening recapture, and increasing productivity across the entire platform. The result is a business with a stronger recurring earnings base today and even greater operating leverage when housing activity recovers. The power of this business model is what it allows us to build on top of this platform.