Q2 2024 Rocket Co Inc Earnings Call
Speaker Change: Thank you for staying by and welcome to the Rocket Companies 2nd Quarter 2020 4 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
Speaker Change: After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press the star 1. Thank you. I'd now like to turn the call over to Sharon Ng, Head of Investor Relations. You may begin.
Sharon Ng: Good afternoon, everyone, and thank you for joining us for Rocket Company's earnings call covering the second quarter of 2024.
Sharon Ng: With us this afternoon are Rocket Company CEO , Varun Krishna, and our CFO , Brian Brown.
Operator: Earlier today, we issued our second quarter earnings release, which is available on our website at RocketCompanies.com under Investor Info. On today's call, we will provide you with information regarding our second quarter performance, as well as our financial outlook. And with that, I'll turn things over to Varun Krishna to get us started.
Speaker Change: Earlier today, we issued our second quarter earnings release, which is available on our website at rocketcompanies.com under Investor Info.
Speaker Change: Also available on our website is an investor presentation.
Speaker Change: Before I turn things over to Varun, let me quickly go over our disclaimers.
Speaker Change: On today's call, we provide you with information regarding our second quarter performance, as well as our financial outlook.
Speaker Change: 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 mentioned today.
Speaker Change: We encourage you to consider the risk factors contained in our SEC filings for a detailed discussion of these risks and uncertainties.
Speaker Change: 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.
Speaker Change: Our commentary today will also include non-GAAP financial measures.
Varun Krishna: Reconciliations between GAAP and non-GAAP metrics for a reported result 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?
Varun Krishna: Thanks, Sharon. Good afternoon, everyone, and welcome to the Rocket Company's Q2 2024 earnings call.
Varun Krishna: As I reflect, it is hard to believe that it's been almost a year since I joined Rocket, and what an exhilarating journey it has been. It's not just the business school. It's our higher calling. We consider ourselves the most optimistic company in America because every day we make 30-year bets on people who make 30-year bets on themselves. The need for hope and optimism has never been greater in our country. We're navigating through challenging times, and predictability is the new normal.
Varun Krishna: As I reflect, it is hard to believe that it's been almost a year since I joined Rocket and what an exhilarating journey it has been. This Rocket is fueled by the passion of our team members who are the driving force behind everything that we do.
Varun Krishna: They are led and inspired by an unrivaled leadership team.
Varun Krishna: each bringing decades of experience and knowledge ranging from fintech and mortgage, capital markets and AI, to marketing, product, operations, sales, and so much more.
Varun Krishna: Together, we're blazing new trails, pioneering experiences that will redefine how consumers experience the homeownership journey now and into the future.
Varun Krishna: Our mission is to help everyone home.
Varun Krishna: That means we're obsessed with making homeownership easier and more accessible for everyone.
Varun Krishna: It's not just a business goal, it's our higher calling. We consider ourselves the most optimistic company in America because every day we make 30-year bets on people who make 30-year bets on themselves.
Varun Krishna: The need for hope and optimism has never been greater in our country. We're navigating through challenging times and unpredictability is the new normal.
Varun Krishna: Despite some signs of gradual recovery in home listings and sales, affordability remains at historic lows due to persistently high mortgage rates and rising home prices. Macro uncertainty and affordability issues are keeping potential buyers on the sidelines while consolidation continues with smaller players being acquired or exiting the market.
Speaker Change: Despite some signs of gradual recovery in home listings and sales, affordability remains at historic lows due to persistently high mortgage rates and rising home prices.
Speaker Change: This past spring, the industry experienced weak home buying activity, with purchase applications dropping to their lowest levels in over three decades.
Speaker Change: Macro uncertainty and affordability issues are keeping potential buyers on the sidelines while consolidation continues with smaller players being acquired or exiting the market.
Speaker Change: Mortgage employment has decreased by 36% from its peak.
Speaker Change: Yet, in the face of these challenges, optimism remains our mantra and higher calling. While others are faltering or retreating, we're mobilizing our immense resources, capabilities, and talent to innovate and serve our clients like never before.
Varun Krishna: While others are faltering or retreating, we're mobilizing our immense resources, capabilities, and talent to innovate and serve our clients like never before. This is our moment to show our unshakable resilience, grow from strength, and redefine our leadership role in the homeownership category as the most optimistic company in America. On that backdrop, let's go a little deeper on the second quarter when we demonstrated growth despite industry challenges. Most importantly, we achieved profitable market share growth, our North Star metric, and expanded purchase share year over year through numerous optimizations in our processes, teams, marketing, and technology capabilities.
Speaker Change: It is our moment to show our unshakable resilience, grow from strength, and redefine our leadership role in the homeownership category as the most optimistic company in America.
Speaker Change: On that backdrop, let's go a little deeper on the second quarter when we demonstrated growth despite industry challenges.
Speaker Change: Most importantly, we achieved profitable market share growth, our North Star metric, and expanded purchase share year-over-year through numerous optimizations in our processes, teams, marketing, and technology capabilities.
Speaker Change: This quarter, we delivered strong financial results, generating $1,228,000,000 in adjusted revenue above the high end of our guidance range, and grew year-over-year for the fourth straight quarter.
Varun Krishna: We expanded adjusted EBITDA margins quarter over quarter and year over year through both top line growth and our continued focus on operational efficiency. Chat is the asynchronous communication mode of choice in today's fast-paced world, favored by both older and younger generations.
Speaker Change: We expanded adjusted EBITDA margins quarter-over-quarter and year-over-year through both top-line growth and our continued focus on operational efficiency.
Speaker Change: We reported six cents of adjusted earnings per diluted share for the quarter.
Speaker Change: Solid execution is the lifeblood of our business.
Speaker Change: and our AI-powered initiatives stand at the forefront. I'd like to spend just a few minutes highlighting four key achievements this quarter. Our AI-powered live chat for clients, RocketLogic Assistant for banking, growth in home equity loans, and automation in servicing.
Speaker Change: I'll start with our AI-powered live chat experience. We've expanded this interface throughout the client journey, from early inquiries using tools like the Mortgage Calculator, to live help with applications and servicing questions on escrow and payments.
Speaker Change: Chat is an absolute game-changer for us. Our live chat interface is so much more than just a communication tool.
Speaker Change: It's a strategic advantage that enhances engagement with deep personalization, drives efficiency, and ultimately improves outcomes for our clients and business at scale.
Speaker Change: Chat is the asynchronous communication mode of choice in today's SaaS-based world, favored by both older and newer generations.
Varun Krishna: 80% of our clients prefer chat. They love the instant responses and 24-hour availability that allow them to manage their mortgage based on their individual preferences and needs. We can quickly gauge client intent and direct them to the best solutions, whether they need immediate answers or deeper discussions with the right expert team members. And by leveraging generative AI, we can deliver great client experiences at scale by handling more interactions and keeping more clients engaged with better automation.
Speaker Change: Eighty percent of our clients prefer CHOT. They love the instant responses and 24-7 availability that allow them to manage their mortgage based on their individual preferences and needs.
Speaker Change: The beauty of chat lies in its scalability and versatility. It seamlessly complements our traditional phone interactions. We're not just responding faster with chat, we're providing an experience that is more personalized and tailored.
Speaker Change: We can quickly gauge client intent and direct them to the best solutions, whether they need immediate answers or deeper discussions with the right expert team member.
Speaker Change: And by leveraging generative AI, we can deliver great client experiences at scale by handling more interactions and keeping more clients engaged with better automation.
Speaker Change: The result of AI-powered chat is a resounding win-win-win. Happier clients, satisfied team members, and clear business value.
Speaker Change: Recent data shows that clients using CHAT have conversion rates three times higher compared to those who didn't leverage CHAT.
Speaker Change: Building on these successes, we are expanding chat across more client and journey touchpoints, including Purchase, which we launched two weeks ago.
Varun Krishna: The next example is the rollout of RocketLogic Assistant to our entire banking force, helping our clients navigate the home buying journey. This AI-powered personal assistant transcribes client calls and automatically completes mortgage applications in real time, supercharging our bankers' productivity. Gone are the days of manual note-taking with hands on the keyboard or pen and paper, which would fatigue our bankers and leave gaps in client conversation.
Speaker Change: The next example is the rollout of RocketLogic Assistant to our entire banking force, helping our clients navigate the home buying journey.
Speaker Change: This AI-powered personal assistant transcribes client calls and automatically completes mortgage applications in real-time, supercharging our bankers' productivity.
Speaker Change: Gone are the days of manual note-taking with hands on keyboard or pen and paper, which would fatigue our bankers and leave gaps in client conversations.
Varun Krishna: Now the RocketLogic Assistant seamlessly generates over 300,000 detailed transcripts every week from outbound calls. It also supports over 100 data points on mortgage applications, saving our bankers from inputting tens of millions of data fields each week. Next, our home equity loan origination volume reached an all-time high in Q2, more than doubling from a year ago.
Speaker Change: Now, the RocketLogic Assistant seamlessly generates over 300,000 detailed transcripts every week from outbound calls.
Speaker Change: It supports over 100 data points on mortgage applications, saving our bankers from inputting tens of millions of data fields each week.
Speaker Change: This enhances efficiency, allows us to closely monitor calls, and extracts valuable client insights, while also creating recursive models and feedback loops to continuously improve our bankers' performance and more effectively train each new generation of the best bankers in the country.
Speaker Change: Next, our home equity loan origination volume reached an all-time high in Q2, more than doubling from a year ago.
Speaker Change: Home equity loans continue to resonate with our clients as we help them unlock record levels of home equity while still being able to keep their favorable rates on their first lien mortgages.
Varun Krishna: Additionally, we enhance the speed and efficiency of our home equity loan process through the launch of an automated valuation model, or AVM. This innovation allows us to deliver cash from home equity loans in as little as seven days, meeting our clients' needs with unprecedented speed and accuracy. We're retaining clients for the next transaction at rates three times higher than the industry average, positioning ourselves as their lender for life, and generating recurring cash flow without additional acquisition costs.
Speaker Change: Additionally, we enhance the speed and efficiency of our home equity loan process through the launch of an automated valuation model, or AVM.
Speaker Change: AVM represents a major upgrade, providing a cost-efficient digital alternative to traditional in-person appraisals.
Speaker Change: This innovation allows us to deliver cash from home equity loans in as little as seven days, meeting our clients' needs with unprecedented speed and accuracy.
Speaker Change: Finally, we've made significant strides in expanding our servicing portfolio.
Speaker Change: a strategic asset that complements our origination business.
Speaker Change: We're retaining clients for the next transaction at rates three times higher than the industry average, positioning ourselves as their lender for life, and generating recurring cash flow without additional acquisition costs.
Varun Krishna: Our advantage lies in providing technology-powered, class-leading service to 2.6 million clients and leveraging rich data profiles to continuously understand their needs for life. In the second quarter, we acquired five MSR portfolios, adding 67,000 new clients and approximately $21 billion in unpaid principal balance.
Speaker Change: Our advantage lies in providing technology-powered, class-leading service to 2.6 million clients and leveraging rich data profiles to continuously understand their needs for life.
Speaker Change: In the second quarter, we acquired five MSR portfolios, adding 67,000 new clients and approximately $21 billion in unpaid principal balance.
Speaker Change: The loans in these acquired MSRs have a blended weighted average coupon higher than our current portfolio, opening up a range of products and services for these new clients.
Speaker Change: From refinance options that capitalize on declining rates, to home equity loans for those looking to leverage their home equity, and new purchase loans for clients ready for their next home, we offer a comprehensive suite of solutions to meet diverse client needs across the spectrum.
Speaker Change: We've also become more operationally efficient in this space. Traditionally, MSR trailing document audits required manually sifting through extensive documents to verify data for each loan, which could take months for a single portfolio.
Varun Krishna: With our upgraded workflow automation, our capital markets team can now complete MSR audits in half the time. This enhancement allows us to onboard MSR portfolios more quickly, efficiently, and accurately, which is essential as we expand our portfolio. We've built a powerhouse technology suite for servicing that enables us to scale and deliver outstanding client service. Additionally, Rocket Synopsys, a tool leveraging generative AI, listens to, transcribes, and searches client calls, analyzing sentiment, and recording client patterns, in part.
Speaker Change: With our upgraded workflow automation, our Capital Markets team can now complete MSR audits in half the time.
Speaker Change: This enhancement allows us to onboard MSR portfolios more quickly, efficiently, and accurately, which is essential as we expand our portfolio.
Speaker Change: We've built a powerhouse technology suite for servicing that enables us to scale and deliver outstanding client service. The recent launch of MSR Audit Automation streamlines the first step of the loan onboarding process.
Speaker Change: Our AI-powered, self-serve phone and chat tools drive efficiency and provide exceptional service to millions of clients.
Speaker Change: Additionally, Rocket Synopsys, a tool leveraging generative AI, listens to, transcribes, and searches client calls, analyzing sentiment and recording client patterns and preferences.
Varun Krishna: Furthermore, features like live chat, real-time transcription, and tagging are enhancing the value of our data lake and AI-powered solutions. This infrastructure also supports recursive feedback loops that continuously refine and train our models. And from this repository, our models extract deep insights and analytics, enabling us to deliver exceptional client experiences and maximize team effectiveness. As a former software engineer, I'm going to keep geeking out for the next minute and talk about some of the deeper technology that powers our rocket ship. Leveraging our data and modeling tools, such as TensorFlow, Faster Region Convolutional Neural Network models, and EfficientNet V2L Keras models, our technology fully automates high-volume tasks such as document processing, appraisal reviews, and income verification.
Speaker Change: Furthermore, features like live chat, real-time transcription, and tagging are enhancing the value of our data lake and AI-powered solutions.
Speaker Change: This infrastructure supports recursive feedback loops that continuously refine and train our models.
Speaker Change: Our structured data lake aggregates and organizes information, making it readily accessible to our data scientists and technology teams.
Speaker Change: And from this repository, our models extract deep insights and analytics, enabling us to deliver exceptional client experiences and maximize team effectiveness.
Speaker Change: As we roll out new solutions and increase the usage of existing ones, we gather more data, creating an AI flywheel that accelerates velocity, enhances accuracy, personalizes interactions, and optimizes operational efficiency across our business.
Speaker Change: As a former software engineer, I'm going to keep geeking out for the next minute and talk about some of the deeper technology that powers our rocket ship, leveraging our data and modeling tools like TensorFlow,
Speaker Change: Faster Region Convolutional Neural Network Models
Speaker Change: and EfficientNet V2L Keras models, our technology fully automates high-volume tasks such as document processing, appraisal reviews, and income verification.
Speaker Change: With groundbreaking methods like this, we've already been able to bypass human intervention on nearly 10% of all appraisals in April 2024, saving 1,701 hours for collateral underwriting alone.
Speaker Change: Hopefully you're still with me. Let's talk about another AI concept called Retrieval Augmented Generation or RAG.
Varun Krishna: RAG is a way to supercharge the utility of Gen AI by adding your own data into the conversation. We're using this technique in our RocketLogic platform, allowing team members to dive deep into all facets of a loan and provide in-the-moment insights and assistance. Lastly, we are thrilled to invite you to Detroit on September 10th for Rocket's first ever Investor Day. This is your opportunity to go behind the scenes, meet our leadership, experience our company culture and innovation firsthand, and discover what makes Rocket rock. We're also excited to showcase our beautiful city of Detroit.
Speaker Change: RAG is a way to supercharge the utility of Gen AI by adding your own data into the conversation.
Speaker Change: We're using this technique in our RocketLogic platform, allowing team members to dive deep into all facets of a loan and provide in-the-moment insights and assistance.
Speaker Change: We're also able to leverage our own data and best practice documentation to assist our engineering teams and to provide an easily accessible natural language interface over our data analytics platform.
Speaker Change: This provides all of our teams with the context and data they need to make the best decisions for our clients where and when they need it.
Speaker Change: We work closely with amazing partners like AWS, Anthropocene, OpenAI, and others to stay on a cutting edge of research and techniques to make the most out of GenAI, and this will only increase going into the future.
Speaker Change: As I conclude, I want to give a huge shout out to our amazing servicing team for winning our 10th J.D. Power Award for servicing just last week.
Speaker Change: This achievement further cements Rocket Mortgage as the most awarded company for mortgage servicing and the most awarded mortgage company overall. Something we will continue to work hard to earn day after day and year after year.
Speaker Change: In closing, I am so proud of our strong execution in the second quarter, but this is just the beginning.
Speaker Change: The four examples we've discussed all share a common theme. They illustrate how AI both enhances client experiences and boosts team productivity through improved velocity, accuracy, personalization, and operational efficiency.
Speaker Change: While many companies aspire to be AI-centric, you have the right blend of talent, assets, and mindset to succeed. I believe that Rocket is exceptionally well-positioned to execute on our AI-fueled homeownership strategy, and I look forward to sharing our continued progress with you each quarter.
Speaker Change: Lastly, we are thrilled to invite you to Detroit on September 10th for Rocket's first ever Investor Day. This is your opportunity to go behind the scenes, meet our leadership, experience our company culture and innovation firsthand, and discover what makes Rocket rock.
Varun Krishna: And I look forward to seeing all of you there. And with that, I will turn it over to Brian. You heard Varun share the passion behind executing our AI-powered home ownership strategy, all in service of our mission to help everyone get a home. Our mission is so important because we bring people the pride and joy that only home ownership can offer. In pursuit of this mission, we're breaking new ground. We're transforming the homeownership experience from one traditionally filled with stress and complexity into a radically easier and simpler process for everyone. Adjusted revenue came in at $1,228,000,000, above the high end of our guidance.
Speaker Change: We're also excited to showcase our beautiful city of Detroit, and I look forward to seeing all of you there. And with that, I will turn it over to Brian .
Brian Brown: Thank you, Varun, and good afternoon, everyone. Today I'll cover our financial performance and provide an update on our investments and growth, particularly in technology and servicing. I'll close with our outlook and guidance for the third quarter.
Speaker Change: You heard Varun share the passion behind executing our AI-powered homeownership strategy, all in service of our mission to help everyone home. Our mission is so important because we bring people the pride and joy that only homeownership can offer.
Brian Brown: In pursuit of this mission, we're breaking new ground. We're transforming the home ownership experience from one traditionally filled with stress and complexity into a radically easier and simpler process for everyone.
Brian Brown: Rocket has the unique opportunity to transform the fragmented $5 trillion home ownership market.
Speaker Change: We have all the ingredients for success, an unrivaled combination of talent, assets, capabilities, and culture. We're just getting started, and I couldn't be more excited for the opportunity ahead of us. We are not just imagining the future of homeownership, we are building it.
Brian Brown: Now, on to the second quarter results.
Speaker Change: We delivered a strong second quarter, growing purchase market share, revenue, and profitability year over year.
Speaker Change: Our growth was particularly impressive against the backdrop of a contracting market, as industry purchase applications declined to their lowest second quarter in 30 years.
Speaker Change: Adjusted revenue came in at $1,228,000,000, above the high end of our guidance range.
Speaker Change: This represents a 23% increase from the second quarter of 2023 and our fourth consecutive quarter of year-over-year revenue growth.
Brian: Reflecting on our performance this past quarter, several wins come to mind, a double digit lift in purchase conversions due to marketing optimization, record volume for our home equity product, and a 30% increase in our agent network attachment, who generated $25.1 billion in net rate lock volume, a 13% increase year over year. Being on sale margin was $299 basis, for an increase of 32 basis points compared to the same period last year. Our continued focus on driving top line growth and improvements in operational efficiency combined to make the second quarter our most profitable quarter in two years. Adjusted EBITDA increased year-over-year for the fifth straight quarter to $225 million, for a margin of 18%.
Speaker Change: Reflecting on our performance this past quarter, several wins come to mind. A double-digit lift in purchase conversions due to marketing optimization, record volume for our home equity product, and a 30% increase in our agent network attachment rate.
Speaker Change: Driven by Demand for Buy Plus.
Speaker Change: We generated $25.1 billion in net rate lock volume, a 13% increase year-over-year. Gain on sale margin was 299 basis points.
Speaker Change: for an increase of 32 basis points compared to the same period last year.
Speaker Change: Our continued focus on driving top-line growth and improvements in operational efficiency combined to make the second quarter our most profitable quarter in two years.
Speaker Change: Adjusted EBITDA increased year-over-year for the fifth straight quarter to 225 million dollars for a margin of 18 percent.
Speaker Change: We also reported adjusted net income of $121 million and adjusted diluted EPS of $0.06.
Brian: In the first half of 2024, we generated nearly half a billion dollars more in adjusted EBITDA than the same period in 2023. While we are pleased with the progress we have made over the past year, we believe our true long-term earnings potential is much greater. We see significant room for more top-line growth and higher operating leverage, as our AI investments gain even more traction. Varun took us through some examples of how AI drives velocity, accuracy, personalization, and operational efficiency for our business.
Speaker Change: In the first half of 2024, we generated nearly half a billion dollars more in adjusted EBITDA than the same period in 2023. While we are pleased with the progress we have made over the past year, we believe our true long-term earnings potential is much greater.
Speaker Change: We see significant room for more top-line growth and higher operating leverage as our AI investments gain even more traction.
Speaker Change: Varun took us through some examples of how AI drives velocity, accuracy, personalization, and operational efficiency for our business. One of the breakthroughs that I'm particularly excited about is our AI-powered live chat, which will pave the way for further scale and operational efficiency.
Brian: One of the breakthroughs that I'm particularly excited about is our AI-powered live chat, which will pave the way for further scale and operational efficiency. AI-powered live chat is a prime example of delivering personalized and fast client experiences while supercharging our team members at scale. Chat is the clear choice for our clients, a quick way to get personalized support that empowers our team members to support multiple clients at the same time, freeing up their capacity.
Speaker Change: AI-powered live chat is a prime example of delivering personalized and fast client experiences while supercharging our team members at scale.
Speaker Change: Chat is the clear choice for our clients, a quick way to get personalized answers.
Speaker Change: SCAD empowers our team members to support multiple clients at the same time, freeing up their capacity.
Brian: Through chat, we identify client intent upfront and guide our clients to the right resource, which can include connecting them with one of our expert mortgage bankers. With client intent and call purpose matched to the right banker, these live conversations are more personalized and engaging. We're seeing these benefits pay off in our business. Chat helps us scale up to a better client experience, leading to higher conversion and operational efficiency. In fact, we're seeing clients who use chat convert three times better than those who don't. There is much more potential to unleash. AI enables us to do significantly more without adding more resources, which unlocks capacity.
Speaker Change: Through chat, we identify client intent up front and guide our clients to the right resource, which can include connecting them with one of our expert mortgage bankers.
Speaker Change: With client intent and call purpose matched to the right banker, these live conversations are more personalized and engaging.
Speaker Change: We're seeing these benefits pay off in our business. CHAT helps us scale up to a better client experience, leading to higher conversion and operational efficiency.
Speaker Change: In fact, we're seeing clients who use chat convert three times better than those who don't.
Speaker Change: There is much more potential to unleash. AI enables us to do significantly more without adding more resources, which unlocks capacity.
Speaker Change: When the market inflects, we believe AI will help us drive growth at scale while keeping fixed costs flat.
Brian: Now turning to our servicing portfolio, a strategic asset that's worth much more than the $7 billion on our balance sheet. Our servicing asset plays an important role in growing our mortgage origination business. Let me unpack this a little more.
Speaker Change: Now turning to our servicing portfolio, a strategic asset that's worth much more than the $7 billion on our balance sheet. Our servicing asset plays an important role in growing our mortgage origination business.
Speaker Change: Let me unpack this a little more.
Speaker Change: Clients choose Rocket for the convenience and J.D. Power award-winning service, experiencing how easy it is to get a mortgage with us.
Speaker Change: Once they get their mortgage, they move to our servicing platform, where they continue to enjoy J.D. Power award-winning service.
Brian: So it's no surprise that when they're ready to buy their next home, lower their mortgage rate, or tap into their home's equity, they come back to rocket at a rate three times higher than the industry average, organically creating new MSRs and keeping them for their next mortgage. This cycle creates lifelong clients and multiplies future origination and profitability. As we've discussed before, we're actively investing to reinforce this growth cycle. In the second quarter, we acquired $21 billion of unpaid principal balance and 67,000 new service clients for $315 million. Traditionally, getting a mortgage was a painful process for clients that could take up to 90 days before they'd start to see monthly savings.
Speaker Change: So, it's no surprise that when they're ready to buy their next home, lower their mortgage rate, or tap into their home's equity, they come back to Rocket at a rate three times higher than the industry average.
Speaker Change: Our servicing and origination businesses work together, creating a powerful cycle of attracting new clients, organically creating new MSRs, and keeping them for their next mortgage. This cycle creates lifelong clients and multiplies future origination and profitability growth.
Speaker Change: As we've discussed before, we're actively investing to reinforce this growth cycle. In the second quarter, we acquired $21 billion of unpaid principal balance and 67,000 new service clients for $315 million.
Speaker Change: These clients are immediate candidates for a new purchase mortgage, a home equity loan, or even a rate and term refinance.
Speaker Change: Looking at the broader market, around 6 million purchase mortgages have been originated since 2022 at current rates or higher.
Speaker Change: We expect many of these buyers will be highly motivated to pursue a refinance, even with a small drop in rate.
Speaker Change: In the past, consumers may have looked for a 60 to 75 basis point rate reduction to make the benefit worthwhile. Traditionally, getting a mortgage was a painful process for clients that could take up to 90 days before they'd start to see monthly savings.
Brian: Today at Rocket Mortgage, we're seeing clients refinance for less than a 50 basis point rate benefit thanks to our fast and easy process, with the majority of clients closing in two weeks or less. From a capital perspective, Rocket's strong balance sheet and substantial liquidity continue to serve as a major competitive advantage and provide us with tremendous flexibility to invest for growth. Having access to a range of diverse funding sources offers us great flexibility to allocate capital and be opportunistic about investing for growth, whether through the acquisition of MSRs or other strategic.
Rocket Mortgage: Today at Rocket Mortgage we're seeing clients refinance for less than a 50 basis point rate benefit. Thanks for a fast and easy process with the majority of clients closing in two weeks or less.
Speaker Change: Consider a borrower with a $400,000 mortgage.
Speaker Change: A 40 basis point rate reduction translates to a monthly savings of nearly $150.
Speaker Change: This difference is significant.
Speaker Change: especially as households feel the pinch of inflation. That money is a week's worth of groceries for the average household.
Speaker Change: From a capital perspective, Rocket's strong balance sheet and substantial liquidity continue to serve as a major competitive advantage and provide us with tremendous flexibility to invest for growth.
Speaker Change: We ended the second quarter with $3.2 billion of available cash and $7.2 billion of mortgage servicing rights. Together, these assets represent a total of approximately $10.4 billion of value on our balance sheet.
Speaker Change: Our $3.2 billion of available cash consists of $1.3 billion of cash on the balance sheet and an additional $1.9 billion of corporate cash used to self-fund loan originations.
Speaker Change: As of June 30, total liquidity stood at approximately $8.6 billion, including available cash plus undrawn lines of credit.
Speaker Change: Subsequent to June 30th, we renewed our three-year $1,150,000,000 Revolving Credit Facility, with more than 10 major banking partners participating.
Speaker Change: This fully committed facility, which is typically reserved for investment-grade institutions and is unmatched by any of our peers, further underscores our creditworthiness and strong financial standing.
Speaker Change: Having access to a range of diverse funding sources offers us great optionality to allocate capital and be opportunistic about investing for growth, whether through the acquisition of MSRs or other strategic options.
Brian: For the third quarter of 2024, our guidance reflects trends observed to date with one month of actual performance. We expect adjusted revenue to be in the range of $1,150,000,000 to $1,300,000,000. Regarding operating expenses, we expect Q3 to be flat compared to Q2.
Speaker Change: For the third quarter of 2024, our guidance reflects trends observed to date with one month of actual performance.
Speaker Change: Although housing inventory is gradually recovering, high home prices and challenging affordability persist.
Speaker Change: An uncertain macroeconomic environment and a subdued spring home buying season have kept potential buyers on the sidelines.
Speaker Change: We anticipate the mortgage market in Q3 will mirror the conditions of Q2.
Speaker Change: We expect adjusted revenue to be in the range of $1,150,000,000 to $1,300,000,000.
Speaker Change: Regarding operating expenses, we expect Q3 to be flat compared to Q2.
Operator: As always, our forward-looking guidance is based on our current outlook for visibility. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: As always, our forward-looking guidance is based on our current outlook in visibility.
Speaker Change: We are fired up in executing with momentum to achieve our mission to help everyone home. Our assets and financial strength provide us with a competitive advantage to transform the home ownership market.
Speaker Change: I'm so excited to host everyone at our first Investor Day in Detroit on September 10th. We have some fantastic immersive experiences in store that will showcase what we've launched to make home ownership easier and simpler. With that, we're ready to turn it back over to the operator for questions.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from the line of Mark DeVries from Deutsche Bank. Your line is open.
Operator: Your first question comes from the line of Mark DeVries from Deutsche Bank. Your line is open. Mark, thank you for the question. I appreciate it.
Mark Devries: Yeah, thank you and thanks for the comments on your 3Q outlook. I was hoping you could give us a little bit of additional context for kind of your overall market view and outlook in the Q3 guidance and how might that change if we start to get Fed easing and the long end of the curve moves down some?
Varun Krishna: And I'll start by just sharing a couple thoughts and ask Brian to jump in. Job in the Quarters, buyers that you're originating, whether it's first time buyers moving up, and kind of whether driven by a certain cohort or type of body. Purchase Side. Your next question comes from a line from Derek Sommers from Jeffreys. Your line is open. Is that a ratio that's going to hold up over time or any other color there?
Speaker Change: Mark, thank you for the question. I appreciate it. And I'll start by just sharing a couple thoughts and ask Brian to jump in.
Speaker Change: You know, I think the first thing is just, you know, I think the operative question is really not if the market will rebound, it's really when and how.
Brian Brown: And while we might not know exactly when, we do know that 24 is better than 23, and we believe that 25 is going to be better than 24.
Speaker Change: And if you look at the data, whether it's Fannie or the NBA, et cetera, you know, we roughly believe that the mortgage market is going to be around $1.7 trillion. Now the good news is...
Speaker Change: That's up 8% versus 23, so it's still well below the average, but we're starting to see some signs of gradual improvement.
Speaker Change: But that said, we're not seeing exactly the same upswing that you would typically associate with a spring buying season.
Speaker Change: But with that said...
Speaker Change: And when you look at home ownership overall, it's still a huge market. It's still a $5 trillion overall category.
Speaker Change: It's an industry that's existed with basically no modernization.
Speaker Change: Regardless, our philosophical view is that we're determined to take share, and we have a track record of taking share in essentially any market.
Speaker Change: And I do just want to share, you know, three things that give me confidence that Rocket will be accelerated uniquely, you know, within our outlook and what gives us optimism.
Speaker Change: And I think the first one is just quite simply our focus and our track record. I mean, there's a reason why we're the number two player in purchase, excluding correspondent. If you look at the results of our execution and hard work this quarter and consistency quarter over quarter, year over year, I think those are important proof points.
Speaker Change: The second is just there are industry tailwinds that are just realities in which we operate that are going to be headwinds for others and tailwinds for us.
Speaker Change: You know, whether it's the capacity that's coming out of the industry by gallons.
Speaker Change: whether it's the increased regulation of things like Basel III, whether it's just kind of a dynamic of fragmentation and consolidation.
Speaker Change: and this AI paradigm shift that we're all going through, you know, these are important dynamics that will determine winners and losers in the space, and we feel confident that they will benefit us disproportionately.
Speaker Change: And then the last thing I would just say before I turn it over to Brian to talk a little more about the guide and some of the external macro is that
Brian Brown: We have very unique assets. We have assets that will disrupt every aspect of the home ownership journey.
Brian Brown: It's not just our core businesses like Home Search, Purchase, Servicing, Refinance, Title.
Brian Brown: Personal Finance. It's the fact that these business lines are underpinned by significant data.
Speaker Change: Talent.
Brian Brown: culture, scale, and an iconic brand. And so when you put all of that together, you know, it reflects a company that's looking to grow share in a large market. And so when we talk about optimism in our market outlook, you know, this is for me what reinforces that.
Speaker Change: Yeah, Mark, I'll touch on the guidance piece. You know, as usual, we include all the information, all the data leading right up to the call, thinking about where to set the guide, but we're still only a month in, so you got two-thirds to go.
Speaker Change: But I think there's a couple points just worth noting. One is you may have seen the MBA purchase application data in the month of July . The MBA said it was down 10% when you compare it to June .
Speaker Change: I mean I'll say that that's a bit unexpected to Varun's point around what the traditional home buying season looks like. July is usually a pretty robust month.
Speaker Change: And then secondly, it's just worth noting that September is traditionally the lowest month in the quarter as kids get back to school, you know, usually want to have the home or be in the home by that period of time. So September is, you know, when you start to see it trailing off.
Brian Brown: So I think when you put all that together, there's a view you could get to where Q3 is probably going to be flat to Q2 or perhaps even a little bit down.
Brian Brown: Now, of course, we saw some rave relief come through today, which is always good, but nonetheless, I still think there's a little bit of uncertainty.
Speaker Change: I'll just touch on the gain-on-sale margin piece. We've said a lot that we expected gain-on-sale margin expansion from 2022 levels, and the 299 basis points in Q2 was really healthy.
Speaker Change: A month into the third quarter, I feel good about those levels being relatively consistent.
Speaker Change: So I think if I had to summarize it, you look at the guide and it's of course a bit tempered because of some of the uncertainty with how the home buying season will shake out. But to be clear, it definitely includes the confidence in our belief to take share through the quarter and beyond.
Speaker Change: Okay, that's very helpful, thank you.
Speaker Change: Your next question comes from a line of Ryan McKeveny from Zellman & Associates. Your line is open.
Ryan McEvaney: Hey Varun and Brian . Nice job in the quarter. Thanks for taking the questions. Wanted to dig in a little bit on
Ryan McEvaney: the share gains you're seeing on the purchase side of things. I guess I'm curious if you're seeing any mixed changes in the types of buyers that you're originating, whether it's first-time buyers, move-ups.
Speaker Change: and kind of whether the share gains you're seeing are being driven by a certain cohort or type of buyer. And secondarily, I guess a two-part question,
Speaker Change: On the purchase side, are the share gains apparent in both DTC and partner or any differences in the purchase trends between those segments? Thank you.
Speaker Change: And I would just highlight a couple of control points that we've really focused on in a durable way to achieve this metric.
Speaker Change: The first thing I would just highlight is innovation.
Speaker Change: You know, across the board, we're innovating faster than ever, we're building deeper, better experiences, and we've increased the velocity of high-impact innovation by releasing at a higher cadence. In fact, we're doing product and digital and experience releases almost weekly now.
Speaker Change: The second thing I would just say is we have increased our focus. We have restructured the way that we execute and we have operationalized against a new, what we call a mission-based autonomous structure. That means that we have autonomous teams that are goal-driven, that are working hard to execute against clearly defined metrics.
Speaker Change: And then the third thing I would highlight is that we've taken what we call a full funnel approach to every aspect of the business, which means that we consider every single element of the funnel.
Speaker Change: whether it's how we deliberately engage with our massive servicing portfolio.
Speaker Change: Improvements to performance marketing, whether that's better targeting, better creative.
Speaker Change: you know, better channel mix optimization, tuning our front doors.
Speaker Change: Pacific to Purchase.
Speaker Change: You know, one of the things that we just highlight is that we're really doubling down on our focus on purchase as a top-line strategic imperative.
Speaker Change: You're going to start to see us innovate further and faster here, whether it's existing product innovation like Byplus or the new AI-based verified approval letter adjustments that we're starting to see major traction because we're meeting our clients where they are.
Speaker Change: you know, better segmentation of our clients, understanding our clients, whether they are, you know, first-time homebuyers, female head of household, Latino, and, you know, understanding demographics, segmentation.
Speaker Change: and then leveraging that data to connect deeper with home search, optimizing the type of funnel for purchase.
Brian Brown: And then I'll ask Brian to maybe comment a little bit further. Sure. Yeah, Ryan, good to hear from you. Just two things for me. One, on your channel question, where the share gains are coming from, the answer is it's definitely both. It's definitely the direct-to-consumer and TPO. And then
Speaker Change: Just lastly, you know, on sort of the demographic attributes in terms of where these share gains are coming to, it's, you know, one of the things we've talked a lot about in this market is the first-time homebuyers, while they're not immune to some of the affordability challenges and down payments can be tough,
Speaker Change: They're also not trading, you know, a 3% or lower no rate for a higher rate. So, we've talked a lot about this, but we skew very high in terms of share, in terms of first-time homebuyers, given our digital experience and, you know, the way we interact with clients through chat. So, we think that's a big piece of share gains as well.
Speaker Change: Thank you.
Speaker Change: Yeah, thanks, Jeff. I can comment on that. Yeah, we've been really happy with the progress and gain on sale margins. You know, if you were to chart it over the past two years, you've seen some pretty decent growth. We've always said, and I believe it, that
Speaker Change: a best-in-class capital markets team. And when you operate in all 50 states and 3,000 counties, you can create very diversified pools of loans. And bondholders are willing to pay a premium for that diversification and that scale. So that always helps as well.
Speaker Change: late 2021, early 22, your contribution margins are holding up nicely in the different segments. Just curious if you think that can continue to expand from here or if you're a little bit more reliant on the volumes continuing to increase for that to happen. Thanks.
Speaker Change: how well you execute, how efficient you are.
Speaker Change: and then the big swings that you choose to intentionally take.
Speaker Change: And so in service to that, at the end of the day, market share, top line growth is our number one priority. Now, of course, we're going to run an efficient business.
Speaker Change: And, you know, that's a strategic imperative as well, and there's always room to go. And we definitely think we can scale up significantly while keeping our fixed costs roughly the same. And philosophically, the reason we, you know, believe in that is because that's how you build a durable growth business for the long run.
Speaker Change: And we believe we can grow that further.
Speaker Change: And we're leaning seriously into AI because we believe that will increase our operating leverage significantly. And so that capacity will come from AI investments and allow us to be more productive. And so, in summary, you know, investing in operational efficiency
Speaker Change: driving major innovation that's in AI, making our organization orders of magnitude more productive, is how we believe we will accelerate our normalized profitability.
Speaker Change: Your next question comes from the line of Derek Sommers from Jeffreys. Your line is open.
Derek Summers: Hey, good evening, everyone. Now that we've had volume bounce-off trough levels from seasonality and the 30-year mortgage rate seems to be cooperating a bit, can you talk a little bit about Rocket's incremental capacity for originations? Will recent investments in AI and Rocket logic alleviate any of the typical operational bottlenecks?
Brian Brown: and Brian Brown.
Speaker Change: Sure, you know, let me comment on AI, and then I'll ask Brian to just jump into some of what we're seeing in terms of capacity. And I'll just start by saying that from a resource perspective, AI is our most strategic imperative, and we are resourcing this to win.
Brian Brown: And there are real reasons that we're so vested in this, because we see tangible, concrete, metric-driven benefits of efficiency, velocity, and, you know, most importantly, a better experience.
Brian Brown: And so RocketLogic continues to advance. It's now built into every part of our experience, whether it's the digital workflow through to document management, to the tools that are actually powering our team members end to end in terms of how they drive the client experience.
Derek Summers: You know, as we shared earlier, you know, we're now generating 300,000 transcripts every week. That is a massive data set, and that data is actually automating 113 fields on a mortgage application that would have to be entered manually.
Derek Summers: from the earliest days of a generative AI-powered chat experience, and we're just starting to lean in much more heavily there.
Derek Summers: And then we're using all this data to actually refine and train our models and our workflows further. So more volume results in a better AI system.
Derek Summers: And then the other thing I would add before I pass it over to Brian is...
Brian Brown: versus how do we partner with the best in the industry, whether that's OpenAI, AWS.
Brian Brown: Thanks, and good to hear from you Derek. You know, the question we get asked a lot is like, how do you think about the fixed cost structure and we've talked a lot about really keeping it flat and I think there's two things that are worth noting there. One is like,
Derek Summers: To your point on capacity, I mean, that's everything right now. We're happy with the fixed cost structure.
Brian Brown: you know 18% EBITDA margins in a quarter where I think we're going to look back and still say yeah there things may be getting better but this is still going to be a very low quarter in terms of the history of mortgages.
Brian Brown: produced. So everything we're focused on right now is adding capacity to the system and doing it through efficient means and keeping the cost structure relatively similar.
Brian: Yeah, I mean, we kind of look at it in two buckets, the fixed and variable side. And, you know, the beauty about this business is once you clear those fixed costs, a really healthy chunk of that top line revenue drops to the bottom line, and you have a nice compounding effect. And if you think about 18%, even margins in this quarter, that means we at some point didn't clear that fixed cost hurdle. So, you know, the cost to produce, as we've talked about, as, Great, thank you. Your next question comes from the line of Brad Capuzzi from Piper Sandler. Your line is open.
Speaker Change: Yeah, I mean, like, you know, we kind of look at it in two buckets, the fixed and variable side, and, you know, the beauty about this business is once you clear those fixed costs,
Speaker Change: a really healthy chunk of that top line revenue drops to the bottom line and you have a nice
Speaker Change: compounding effect. And if you think about 18% EBITDA margins in this quarter, that means we at some point didn't clear that fixed cost hurdle. So, you know, the cost to produce, as we've talked about, has some
Speaker Change: Great, thank you.
Speaker Change: Your next question comes from the line of Brad Capuzzi from Piper Sandler. Your line is open.
Brad Capuzzi: Hi Harun and Brian, thank you for all the detailed commentary.
Brad Capuzzi: You've been active acquirers of higher coupon servicing portfolios, which strategically does make sense for Rocket. Can you just give us color on these transactions and conversations? I know you mentioned a lot of demand and a little bit of supply last quarter. Have these dynamics changed?
Speaker Change: recent months, and then what are the retention rates you assume on your MSR purchases, and how does this affect the prices paid on those purchases? Thank you.
Speaker Change: Yeah, great. Thank you so much for the question. You know, I wanted to start by talking a little bit about our strategy when it comes to servicing.
Brian: And I'd start by saying that, you know, our servicing portfolio is an incredibly strategic asset because it allows us to play both offense and defense at the same time. So our approach to servicing and origination is very unique to Rocket, in the sense that servicing is actually a source of future origination. And so the two things actually work as a flywheel, where you create a cycle where you can attract a new client, you can organically create a new MSR, and then you can actually support and build a relationship with that client as their lender.
Speaker Change: I'd start by saying that our servicing portfolio is an incredibly strategic asset because it allows us to play both offense and defense at the same time.
Speaker Change: So our approach to servicing and origination is very unique to Rocket in the sense that servicing is actually a source of future origination. And so the two things actually work as a flywheel where you create a cycle where you can attract a new client.
Speaker Change: You can organically create a new MSR and then you can actually support and build a relationship with that client as their lender for life.
Brian: So, you know, computationally, the raw MSR includes not just the servicing cash flow, but it also includes the future gain on sale from additional services and products that we can deliver to that client in an awesome way.
Speaker Change: So, computationally, the raw MSR includes not just the service and cash flow, but it also includes the future gain on sale from additional services and products that we can deliver to that client in an awesome way.
Speaker Change: And so when you add to that, you know, we have very strong in market recapture capability, that's three X higher than the industry. And so for that reason, you know, we are investing strategically. We're going to keep growing our servicing portfolio.
Speaker Change: Second, lean loans for those who are looking to utilize equity.
Speaker Change: and then, of course, originating new purchase loans as well.
Speaker Change: And underlying that, obviously, is our technology infrastructure and our client experience that allows us to do all of this with speed.
Brian: And so when you add to that, you know, we have a very strong in-market recapture capability that's 3x higher than the industry. And so for that reason, you know, we are investing strategically, we're going to keep growing our servicing portfolio, we're going to try our tranches strategically, and we can provide new experiences to our clients. And it's just very exciting to me that, you know, as of June 30th, we have around $535 billion of unpaid balance in servicing. And I have to just give a shout out again to our servicing team, who are the best in the business, who recently won, just last week, their 10th J.D. Power recognition for servicing.
Speaker Change: with the right and ultimately value for our clients, which is what we care about at the end of the day.
Speaker Change: And it's just very exciting to me that, you know, as of June 30th, we have around $535 billion of unpaid balance in servicing.
Speaker Change: and I have to just give a shout out again to our servicing team who is the best in the business who recently won just last week their 10th J.D. Power recognition for servicing. Let me ask Brian to comment a little bit more on your question.
Brian Brown: Yeah, Brad, I think the key part of your question, which is fair, is the, you know, the recapture. And we talked a lot about, to Brun's point, the three times industry recapture rate, but I think
Brian Brown: Honestly, the more exciting piece is that we're starting to learn through these acquisitions that we have a really nice recapture on the acquired books.
Brian: And if you think about what that does for us in terms of the market opportunity, it allows us to pay a premium in the sense of acquiring these because we're going to realize value that others in the space likely aren't going to realize.
Brian Brown: it opens up a really exciting acquisition channel because you have your regular direct-to-consumer business, you have your TPO business, and then now you have this acquisition channel via servicing, you know, from an inorganic perspective. So
Brian: Let me ask Brian to comment a little bit more on your question. But when you're acquiring clients and you start to become their servicer, they haven't gone through your origination business, and they haven't gotten to know you the same way. So there was a hypothesis that we would outperform the market there. And for a while, that's exactly what it was.
Speaker Change: and you start to become their servicer, they haven't gone through your origination business and they haven't gotten to know you the same way. So there was a hypothesis that we would outperform the market there, and for a while, that's exactly what it was. But now that we've been acquiring and we have some actual historical data, it's only building our confidence in them.
Speaker Change: Thank you. And then just on expenses, can you just give us an update on your expense management, both near-term and long-term in the 2025? I know you mentioned relatively flat quarter over quarter in 3Q, but kind of how are you prioritizing investing for growth and driving operational efficiencies, both near and long-term? Thanks.
Brian: Yeah, I think, you know, probably the only thing more I can say on that is it's, you know, operational efficiency and expense management is really part of our DNA and it's just, you know, part of running an efficient and diligent business and we'll continue to do it. We've been really tough on the stuff that isn't key.
Speaker Change: In prior calls, I talked a lot about our relentless prioritization. So, if things don't have the ROI that we expect and demand, we won't do them. We'll leave room for experimentation and the things that are working, we're going to put more capital to them as anyone would expect us to do.
Speaker Change: On one hand, we're being really tough and looking for all the operational efficiencies we can. And then as we're freeing up some space, we're putting capital towards things like tech and AI and data, all the things that we believe will change the game here.
Brian: Thanks for that for me. I appreciate all the comments.
Brian: Thank you.
Speaker Change: Your next question comes from a line of Doug Harder from UBS. Your line is open.
Brian: Thanks. I was hoping you could talk about the how you're seeing the durability of demand for home equity and you know kind of what you see as the limiting factors for for continuing to grow that whether that be consumer demand.
Brian: or Investor Appetite to purchase the loans.
Speaker Change: and they're able to do that without affecting their favorable rates. And that's because they have $32 trillion of equity to tap into. And I'm incredibly proud that Rocket is now amongst the top players in the entire market. We've essentially created a market here.
Brian: And by adding in the second lien, we're able to increase the weighted average coupon, which then leads to, you know, potential refinance as well.
Brian: But now that we've been acquiring, and we have some actual historical data, it's only building our confidence. Thanks for taking my questions this morning or this afternoon. It's been a long day. The commentary on technology is fascinating, and one of the things that's always been the big opportunity for Rocket is the push into purchase. Got it. It makes sense. Look, I think you guys will benefit from a generational shift. I just think about how my kids interact with financial institutions versus how I do. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Brian: Thanks for taking my questions this morning or this afternoon. It's been a long day. The commentary on technology is fascinating and one of the things that's always been the big opportunity for Rocket is the push into purchase and
Speaker Change: The penetration or market share for first-time homebuyers who represent that emerging generation of buyers is actually higher than purchase penetration for existing homebuyers.
Brian: You know, thank you for the question, Rick. You know, I just start by saying that, you know, purchase is a strategically elevated priority for us, you know, compared to the past.
Speaker Change: and there's a lot that you have to do to really make sure that you understand how to build a profitable, successful, growing purchase funnel.
Speaker Change: The starting point of purchase is really understanding your client and meeting them where they are and for that reason
Speaker Change: We're investing significantly in segmenting our clients and really understanding that the dynamics of a first-time homebuyer are different from a second-time homebuyer.
Speaker Change: the way that we engage with our service base to understand how to help them.
Speaker Change: Find a New Purchase Loan is different.
Speaker Change: One of the things that I think is really important is how we think about servicing as a source of purchase origination.
Brian: Got it. It makes sense. Look, I think you guys will benefit from a generational shift. I just think about how my kids interact with financial institutions versus how I do and I think that will be transformative in terms of the purchase market.
Speaker Change: Do you agree?
Speaker Change: Thank you guys.
Brian: That concludes our question and answer session. I will now turn the call back over to Varun Krishna for some closing remarks.
Speaker Change: Well, thank you everyone for joining us today. We're really excited about Investor Day on September 10th. We hope to see all of you there and we look forward to connecting with you next quarter. Thank you again for listening to the call.
Brian: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: and many more.