Rocket's 3Q originations are growing as revenue margins on gross sales lower

Rocket Cos. Earned nearly $ 3 billion in the third quarter, up from $ 495 million in third quarter 19 and less than $ 3.5 billion reported in preliminary and final results for second quarter 20.

The closed origination volume rose to a record high of $ 89 billion during the three-month fiscal year, a significant increase from more than $ 40 billion in the third quarter of 19. It was also an increase of $ 72.3 billion in the second quarter 20th

The third quarter profit margin was 4.52% higher than 3.29% in the same quarter last year, but was lower than the second quarter of this year at 5.19%.

Historically, margin profits tend to shrink much faster in such a market environment, said Julie Booth, chief financial officer and treasurer at Rocket. She gave the following breakdown of contributors to the change after analysts asked about it.

“The change in credit prices accounted for less than 10 basis points of that variance [from Q2 to Q3]. Channel and product mix were the biggest drivers of this variance – about 40 basis points of that – and that resulted from our strong partner network growth that we saw in the third quarter, ”she said during the company's earnings statement. "If we look into the fourth quarter, margins are still strong by historical standards and will continue to be strong."

Company executives noted several initiatives aimed at reducing reliance on the refinancing boom, including partnering with high profile referral partners such as, Charles Schwab, and Mint. Due to the high demand for ads during the election, they also pointed to relatively higher advertising and marketing costs for the company in the third quarter.

Company executives are considering repurchasing $ 1 billion in the company's stock or, alternatively, may distribute a special dividend to investors.

Rocket Cos shares. Traded at $ 21 per share on the east coast just before noon on Wednesday. After the IPO in August, Rocket's stock rose to its current price level and has remained largely unchanged since then. Just before earnings were released, the price traded a little higher, just under $ 22 per share.

The digital mortgage pioneer executives also noted plans to continue its efforts to penetrate the Canadian mortgage market.

Many traditional non-banking firms that focus primarily on mortgages tend to hold on to the rope, but Rocket, positioning itself more as a technology-driven innovator, also pursues auto and personal loans. Executives declined to provide guidance to these companies.

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