Rocket Companies Q3 2023 Earnings Call Transcript

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November 2, 2023

There are 10 speakers on the call.

Operator

You for standing by. My name is Greg and I will be your conference operator today. At this time, I would like to welcome everyone to the Rocket Companies Incorporated Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer Q3.

Operator

I would now like to turn the call over to Sharon Ng, Head of Investor Relations. Sharon, please go ahead.

Speaker 1

Good afternoon, everyone, and thank you for joining us for Rocket Companies' earnings call covering the Q3 of 2023. With us this afternoon are Rocket Companies' CEO, Varun Krishna our President and COO, Bill Emerson and our Chief Financial Officer, Brian Brown. Earlier today, we issued our Q3 earnings release, which is available on our website at rocketcompanies.com under Investor Info. Conference Call. Also available on our website is an investor presentation.

Speaker 1

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 Q3 2023 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 mentioned today. We encourage you to consider the risk factors contained in our SEC filings for a detailed discussion of these risks and uncertainties.

Speaker 1

We undertake no obligation to update these statements as a result of new information or further events, except as required by law. Conference call. This call is being broadcast online and is accessible on our Investor Relations website. A recording of this call will be posted later today. Our commentary today will also include non GAAP financial measures.

Speaker 1

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. And with that, I'll turn things over to Varun Krishnan to get us started.

Speaker 2

Conference call. Thanks, Sharon. Good afternoon, and welcome, everybody, to the Rocket Companies earnings call for the Q3 of 2023. It is such an honor to be here with you today. I'd like to begin by sharing why I chose to join this great company.

Speaker 2

Rocket is a business I've admired from afar for a long time. In my view, it's among those on a short list of companies that are working on a truly worthy problem to solve. Conference Call. We're at the heart of helping Americans achieve the dream of homeownership and financial freedom. Now according to a Bankrate report, 74% of consumers surveyed ranked homeownership as the number one aspect of their American dream, surpassing aspirations such as retirement for a successful career.

Speaker 2

Homeownership represents stability and financial security and often serves as the single best way for people from all walks of life to create intergenerational wealth for their family. I was also drawn to the huge market potential. The more than $5,000,000,000,000 home buying total addressable market is massive. Maybe take just one part of it, the mortgage market, which itself is sizable at roughly $2,000,000,000,000 and yet independent of rates and inventory remains highly fragmented. According to Inside Mortgage Finance, through the 1st 9 months of this year, the top 10 mortgage lenders comprised just 38% of the total origination market share.

Speaker 2

Homebuying represents in some ways the last frontier. Across the industry, the average time to originate a mortgage is more than 40 days from application to close. For documentation alone, our proprietary platform, which is responsible for extraction, classification and application processed 39,000,000 documents over the last 12 months alone. Conference Call. Now the benefits of digitizing documents and automating discrete tasks at such enormous scale have profound benefits for our business from enhancing productivity, the faster turn times, the higher decisioning accuracy.

Speaker 2

If you take just underwriting as an example, An underwriting decision requires the gathering and verification of thousands of data fields, which are drawn from disparate sources and formats to populate key categories like income, assets, collateral and property and credit profile. Now we've already made significant headway to simplify and digitize the loan origination process. And with our early application of generative AI, we know that our progress will only accelerate based on what we have witnessed firsthand. Now just imagine what can be done when we apply this transformative technology across our business and throughout the entire home buying process. Conference Call.

Speaker 2

Since starting this role, I've completely immersed myself in the business. I spent countless hours going deep in conversation with our team members with the goal of better understanding our company's culture, our products and the components of our client experience and where our frontline team members really see the opportunity. Conference Call. On my first day, I invited our team members to share their perspectives and questions with me, and they responded enthusiastically. About the chance to read and respond to hundreds of pieces of feedback and the passion and dedication of our team members has absolutely blown me away.

Speaker 2

I've also had a chance to experience our culture of innovation and putting our clients first. We have a rich history of winning awards, but we never rest on our laurels. We believe excellence can always be improved upon and are obsessed with finding a better way. Every day, we live the mindset of every client, Every time, no exceptions and no excuses. This relentless client focus enables us to thrive through the inevitable ups and downs of mortgage cycles.

Speaker 2

Now another observation from my 1st couple of months is just how well positioned we are to lead the transformation of the industry through generative AI. I believe we are now approaching a critical inflection point in the world when artificial intelligence, knowledge engineering, machine learning, automation and personalization will change every aspect of our industry and our lives. I believe AI will be at the center of how clients buy, sell and finance homes. Conference Call. Now at Rocket, this effort is actually already well underway.

Speaker 2

Today, thousands of our bankers and underwriters utilize RocketLogic, which is our proprietary AI powered next generation loan origination system. Rocket Logic intelligently generates tasks to seamlessly complete the mortgage origination process from application all the way through underwrite. This along with other tools that Rocket has automate routine and complex tasks, enhance productivity and ultimately drive a superior client experience. In August of this year, we delivered 20% faster purchase turn times. We reduced manual touches by more than 20% compared to the same time last year.

Speaker 2

We have a strong foundation in place and a wealth of assets at our fingertips to leverage generative AI. We have data and scale that most FinTech companies would be envious of, and we believe no one in the mortgage industry even comes close. For example, we have 10 petabytes of data in our environment. We have thousands of attributes in our clients that give us an accurate profile of who they are today and how we might help them achieve their dreams of tomorrow. We generate over 50,000,000 call logs annually, which we use to develop technology and processes to continuously improve upon our client experience.

Speaker 2

Now, we've already begun expanding our AI capabilities. In a single year, we used AI to generate approximately 3,700,000,000 customer interactions and decisions. This is just the start. While Rocket is the established industry leader and a technology trailblazer, there's still so much opportunity to unlock across our business. From lead generation and allocation to underwriting, closing, servicing, we will harness the power of generative AI and revolutionize the home buying and financing process to help everyone experience home.

Speaker 2

My career has been shaped by world class mentors and disruptive technology companies. I've seen firsthand the power of innovation in AI to transform industries and capture massive opportunities with products that are used by millions of clients. As I look around Rocket, I see a company with the talent, the culture and the assets to drive meaningful disruption and transformation. I am beyond excited for the tremendous opportunities that lie ahead of us. Before turning it over to Brian, I'd like to say a few things on our 3rd quarter results.

Speaker 2

Q3. First, I'm extremely proud of our team members for the work they've done and the commitment they've shown in the midst of what is obviously a challenging market environment. We grew purchase market share and reported strong results for the quarter with adjusted revenue north of $1,000,000,000 which is above the top end of our guidance range, reflective of continued momentum over the past 4 quarters. This was the result of strong execution and continued expansion in gain on sale margin. In the Q3, we turned a corner and achieved positive adjusted net income.

Speaker 2

And for the Q2, we achieved positive adjusted EBITDA and GAAP net income. We feel good about these results, but we're even more excited about disrupting the industry as we work to write the next chapter of this great company's story. I look forward to updating you on our progress on our next call. And with that, I'll turn it over to Brian.

Speaker 3

Thank you, Varun, and good afternoon, everyone. Guidance through innovation and leveraging our robust data assets and the power of generative AI to deliver seamless personalized experiences. We posted strong results for the quarter and I'm proud of how well our team members executed to serve our clients in this tough market. Call. For many in this environment, homeownership might feel like it's becoming less and less achievable.

Speaker 3

Affordability, which hit the historic low in Q3, 3 is a major concern for those looking to buy a home and inventory levels are not cooperating, which is extending the time to buy. At Rocket, we want to give our clients the confidence they need to transact and help them achieve their dream of homeownership. Our innovative products such as Buy Plus and One Plus, which address home affordability and our home equity loan, which helps clients take advantage of equity in their home, continue to resonate. 5 plus, our Rocket exclusive collaboration between Rocket Mortgage and Rocket Homes helps clients save 1,000 of dollars in upfront costs when they work with a Rocket Homes partner real estate agent and obtain financing with Rocket Mortgage. This product is a great example of the power of the Rocket ecosystem.

Speaker 3

Since we launched Buy Plus, we've seen our attachment rate defined as clients who use scale through our integrated real estate and mortgage experience. 1 plus, our 1% down program, increases access to homeownership for low to moderate income Americans and further broadens our purchase portfolio. OnePlus has gained significant traction since its launch in May with closing volume more than tripling from June to September. In a challenging rate environment, our home equity loan product provides a solution for those who may want to tap into their home's equity without impacting the lower rate on their 1st lien mortgage. 2nd.

Speaker 3

In addition, we may have the opportunity to consolidate the client's 1st and second lien if rates were to move lower. This product has performed well for us and continues to resonate with homeowners. Home equity volume has more than doubled in Q3 compared to the beginning of this year. Conference call. As you heard from Varun, we reported strong 3rd quarter results and I'm pleased to share with you 3 important milestones.

Speaker 3

2nd quarter. First, we achieved year over year growth in adjusted revenue and exceeded the high end of our guidance range. Secondly, we delivered profitability across adjusted EBITDA, GAAP net income and adjusted net income. Finally, we continue to gain purchase market share both year over year and quarter over quarter. We've accomplished all of this against the backdrop of a challenging macroeconomic environment.

Speaker 3

Diving deeper into the numbers, we generated adjusted revenue north of $1,000,000,000 in the 3rd quarter above the high end of our guidance range. Outperformance in the quarter was driven by market share gains as well as increases in both direct to consumer and partner network gain on sale margins. Net rate lock volume for the quarter was $21,000,000,000 roughly consistent with the $22,000,000,000 in the 2nd quarter. Gain on sale margin for the 3rd quarter came in at 2.76 basis 2 points, which was a 9 basis point increase over the 2nd quarter. Turning to expenses.

Speaker 3

In the 3rd quarter, we continued to execute on our company wide focus on operational efficiencies. Q3 expenses were roughly $60,000,000 lower than the prior quarter, excluding the $51,000,000 one time charge. On our last earnings call, we committed to an additional cost savings on an annualized basis in the range of $150,000,000 to $200,000,000 I'm pleased to share that we expect to come in at the top end of that range with approximately $200,000,000 of annualized savings. This achievement is a result of a concerted effort that expand the winding down of underperforming businesses to a rigorous reprioritization of company initiatives to the implementation of a career transition program. These savings are expected to fully take effect in the 4th quarter.

Speaker 3

Call. In the Q3, we generated $73,000,000 of adjusted EBITDA, thanks in large part to the continued cost reductions we've implemented over the last 18 months, coupled with the outperformance in adjusted revenue. Q3. We reported adjusted net income of $7,000,000 positive adjusted diluted EPS and $0.04 of GAAP diluted EPS. Turning to our balance sheet, Rocket's financial position continues to be a strategic strength.

Speaker 3

We consider this to be a major competitive advantage in today's market as it provides us with flexibility and optionality that most of our competitors simply do not have. We ended the Q3 with $3,800,000,000 of total cash and $6,700,000,000 of mortgage servicing rights. Together, these assets represent a total of approximately $10,400,000,000 of value on our balance sheet. Our $3,800,000,000 of available cash consists of $957,000,000 of cash on the balance sheet and an additional $2,800,000,000 of corporate cash used to self fund loan originations. Total liquidity stood at approximately $8,700,000,000 as of September 30th, including available cash plus undrawn line to credit and our undrawn MSR lines.

Speaker 3

As of September 30th, our mortgage servicing portfolio included more than $2,400,000 loans serviced with approximately $506,000,000,000 in unpaid principal balance. In the Q3, we acquired $103,000,000 mortgage servicing rights, adding $6,200,000,000 of unpaid principal balance to our servicing portfolio. Quarter. Our net client retention rate in the 3rd quarter was 97%, which is multiples higher than the industry average. Retention rate serves as a key metric engaging client satisfaction and is one of the primary indicators of client lifetime value.

Speaker 3

We also drive considerable recurring revenue from mortgage servicing. During the Q3, we generated $344,000,000 of cash revenue from our servicing book, which represents approximately $1,400,000,000 on an annualized basis. Turning to our outlook for the Q4. We expect industry conditions to remain challenging through the balance of the year. Expectations marked by record low affordability and inventory levels, further magnifying the traditional low seasonality in the 4th quarter.

Speaker 3

The industry typically sees decreased purchase activity and volume in the Q4 due to the winter months and fewer working days due to the holiday season. The lower volume also puts pressure on gain on sale margins in the 4th quarter. Excluding the $51,000,000 one time charge in the 3rd quarter, we expect Q4 expenses to be roughly $50,000,000 to $100,000,000 lower than Q3 expenses. Call. As always, our forward looking guidance is based on our current outlook and visibility.

Speaker 3

Looking ahead, we believe our culture of client obsession, wealth of assets and use of generative AI will help us make significant strides in operational efficiency and innovation. As Varun highlighted, we see tremendous opportunity ahead to disrupt the industry and completely reimagine the home buying experience. I look forward to sharing more in the coming quarters. We're just getting started. With that, we're ready to turn it back over to the operator for questions.

Operator

Conference Call. And our first question comes from the line of Kevin Barker with Piper Sandler. Kevin, please go ahead.

Speaker 4

Good afternoon. Thanks for taking my questions. I just wanted to Maybe touch base here with Varun and maybe get his first impressions of the company given he's been there for I know you've been there for a few weeks and got to meet several of the folks in different departments. Maybe just give us a view of what you've seen and what the opportunities you see within Rocket today?

Speaker 2

Kevin, thank you for your question. Great to have you here. It's been an amazing 1st couple of weeks here. I've had the chance to really go deep into our business and immerse myself. I have read and responded to hundreds of team members And I've spent countless hours just going deep into the business, into the product, talking to our clients, and just understanding every aspect of call that is that we do.

Speaker 2

I can just tell you that I'm very impressed with our leadership, our team members, our culture, and it's early days. I think there are some opportunities as well, how we can increase our focus, our prioritization, how big we can bet big on technology as a key part of our future strategy. And we're in the midst of writing that next chapter with the leadership team. So I look forward to sharing more with you. But it's been super exciting and we're just getting started.

Speaker 4

And then maybe a follow-up regarding the servicing transaction made for Brian. Could you just give us a little more detail on what the gross yield was on the MSR portfolio you purchased? Maybe what the weighted average coupon was, I believe that you mentioned it was higher coupon than your existing portfolio now,

Speaker 3

Thanks, Kevin. Happy to take that question. I mean, first, just to take a step back, Servicing continues to be a strategic asset for us. It's a nice hedge of course to the origination business And we definitely like the returns on the cash flows right now. It's proving to have very valuable ROIs.

Speaker 3

But as you know and we've talked about where we really look at it through this LTV lens. And the LTV is really based on these industry leading recaptures. So If you think about what we're trying to accomplish, we're trying to acquire portfolios, we're trying to acquire clients that have a high LTV that we believe we have an opportunity to recapture. We've mentioned that we've sold some servicing that we believe the LTV is low on. This is an example of buying some servicing that has a higher LTV.

Speaker 3

To answer your question on the note rate, it was north of 6%, but We're creating servicing every single day through our organic originations and those are at prevailing rates, higher note rates. We're also looking to acquire servicing at higher note rates and slowly but surely you end up taking up that average note rate. And then if rates If and when rates do decrease, you have a really nice refinance opportunity.

Speaker 4

Just a quick follow-up on that. Just given Your 97% client retention rate and a market that it seems like It's a buyer's market out there for MSRs. Why not become much more aggressive in buying higher coupon 2nd quarter MSRs in order to increase the pool of available refis for you.

Speaker 3

Yes, that's exactly what we're trying to accomplish. We are as we've We're very active in the space. We get a lot of looks. This is a good example of a competitive process that we won. It's something it's an asset that we're looking to grow.

Speaker 3

There's no question about it because of what you said, the lifetime value on those is really good.

Speaker 4

2020. Thank you, Brian. Thank you, Veron.

Operator

Okay. Thank you. And it looks like our Next question will come from the line of Ryan Nash with Goldman Sachs. Ryan, go ahead.

Speaker 5

Hey, good evening, everyone. Varun, the term AI was thrown around about several times in the prepared remarks, both yourself Brian talking about it. Maybe just digging a little bit deeper in terms of what you see as the biggest opportunities for the company to use generative AI. And what do you think this can mean for the overall efficiency of the mortgage origination process and the company overall.

Speaker 2

Yes. Thank you for the question, Ryan. Great to have I would just start by saying that I think that FinTech in general and in particular the homeownership market It is very ripe for disruption with artificial intelligence. And there are a couple of things that make Rocket in particular unique. Whether it's the vast amount of data that we have for personalization, the 50,000,000 call logs, the thousands of attributes to perform every aspect of the home buying process, whether it's lead generation, allocation, underwriting, closing, servicing.

Speaker 2

And I think really Almost every aspect of the home buying experience can, should and will be transformed with AI. We've made some progress in this space and I'm really excited about the foundation, but I think we're just scratching the surface. We've made some investments here in capabilities like RocketLogic and our data platform. When you think about the role of knowledge engineering, machine learning, Natural Language Processing Automation Workflow. This is a perfect fit problem for artificial intelligence to solve.

Speaker 2

And so I'm really excited about the foundation, but we're just scratching the surface.

Speaker 5

Got it. That's helpful. And then, Brian, maybe a question for you. So we had 3 straight quarters of both top and adjusted EBITDA improvement. Seems like in the Q4, you're going to take a little bit of a step back at least on the top line, but some of that will comeback via the high the $50,000,000 to $100,000,000 of cost cuts.

Speaker 5

Can you maybe just give us a little bit more color on how much of the volume impact is seasonal declines, how much should we expect to see? And maybe just expand on the comments around increased margin pressure in the 4th quarter. Is that just because of greater competition for lower overall volumes or is there something else that you're seeing there? Thanks.

Speaker 3

Yes. Thanks, Ryan. So when I think about the Q4 guide, I don't think it should come as a surprise. To your point, the Q4 is typically a seasonally low quarter. As we think about the home buying season, it cools off.

Speaker 3

You have the additional holidays around Thanksgiving, Christmas and New Year's and consumers are we know to relatively inactive during those times. And because the volumes are challenged, you definitely get pressure on gain on sale margins. Firms will use price is a lever. And everything that I just described is just describing a normal Q4 ticket in this market is of course more challenged. So you have those same challenges coupled with the lowest inventory on record in September, at least according to NAR.

Speaker 3

You You have affordability challenges that we haven't seen since the early '90s. So all that goes into the guide. There's no question. But Just I think a couple of important takeaways. We believe even at this revenue guide level, we're taking share in the Q4 and it's still a guide up from the Q4 of last year.

Speaker 3

So it's still top line improvement year over year.

Speaker 5

Thanks for the color.

Operator

Q3. Thank you. And it looks like our next question comes from the line of Derek Summers with Jefferies. Derek, go ahead.

Speaker 6

Hi, good afternoon. Could you share details about your outlook for 2024 originations? The MBA has projected a market close to 2,000,000,000,000 which would be about 19% year on year growth, but current market run rate is about 1.7%. So any details on I was thinking about volumes and mortgage rates for 2024 would be helpful. And then also kind of at what mortgage rate we would start to see a meaningful uptick in refinance volume?

Speaker 2

Yes. Thank you for the question, Derek. Great to have you. I would just start by saying that from a Rocket perspective, I like our position. The market is going to be the market, meaning that rates will go up and down, inventory will go up and down, and There's sort of a cyclic nature to the business, but we believe our strategy is incredibly durable, meaning that there's a huge fragmented market And we are very underpenetrated.

Speaker 2

And what is a headwind for the industry, we believe is a tailwind for Rocket in particular. It is a dynamic where it may be tougher for small players to compete, but we are incredibly well capitalized. We have liquidity And we have a huge opportunity to accelerate growth and take share, especially when you think about the opportunity to create A more disruptive experience leveraging technology. So, I'll ask Brian if there's anything that he would add to that, but, we're very excited about our position, Given the size of the market, the level of under penetration sort of independent of rates and inventory.

Speaker 3

I think it's less than that. We've looked at more recent forecasts from banks and we're probably more like 1.3, 1.4. So then take your point about the MBA who was the most recent to reforecast 2024 at $2,000,000,000,000 That's north of a 50% increase. A $2,000,000,000,000 market coming off this market could actually be very healthy, and very productive. That said, that's not necessarily what we're planning for.

Speaker 3

We're hoping that's true, but we're planning for a market that is more challenged. And exactly back to Bruin's point with our balance sheet, Our liquidity and our capital profile, you could look at rates higher for longer scenario as a tailwind for Rocket as more capacity keeps coming out of the

Speaker 6

Trade. Got it. Helpful color there. And one more quick one. Is the quarter over quarter increase in other income primarily driven by escrow income or is there anything else to be aware of in that number?

Speaker 3

Yes, you nailed it. A lot of it's coming from just increased escrow earnings, as rates continue to increase.

Speaker 6

Got it. Thank you. That's all

Speaker 7

for me.

Operator

Thanks, Derek. And our next question comes from James Faucette with Morgan Stanley. James, go ahead.

Speaker 8

Yes. Hi. This is Jeff Adelson on for James. Good afternoon. I guess just last quarter, Brian, you talked about The pre approval rates increasing, I think, higher than seasonality at 20%, which was a good sign for this quarter.

Speaker 8

Is there anything you're seeing today on that front that Tom might help you inform you about the next quarter into next year.

Speaker 3

Yes. Thanks for the question. I mean, I think you what you're alluding to is The beat this quarter, we beat the top end of our guidance that largely came from share gains. It definitely came from share gains and then a little bit of help from gain on sale margins from good pre approval numbers. We're seeing that trend continue through the Q3, but of Of course, we are starting to see the seasonality of the 4th quarter take place.

Speaker 3

But again, I think it's important to just come back to something we said earlier. When we look at this 4th quarter guide, we We still believe this guide is taking share in the Q4. We know people are going to buy and sell homes. We're still seeing very high demand for homes and consumers interested in buying homes. We just need cooperation from inventory to get them in homes.

Speaker 8

Got it. That's helpful. And just given the difficult environment out there, the rate environment has turned more unfavorable in recent months. Would you anticipate doing more expense reductions next year, if things kind of stay where they are? 2nd quarter or do you feel comfortable with what you've done so far?

Speaker 8

And as part of that, if we do stay in this kind of higher per longer environment, I know you talked about some more excess capacity coming out of the system, but what do you think it would take for you to get to more consistent profitability or what are you looking to reach that if

Speaker 2

2019. Thank you for the question. I'll start and then maybe Brian you can add any perspectives. I just start by saying that our primary focus is on growth. You have a $5,000,000,000,000 home buying TAM, you have a fragmented market, the mortgage market is 1.5 $2,000,000,000,000 And we have this crazy opportunity to be very disruptive with AI.

Speaker 2

Now we're always looking for efficiency. We think we're in a good place. But as Brian shared earlier, I mean, we're well capitalized and our perspective is we're in a position to actually invest. And we're looking for ways to increase our focus, our prioritization, but we are being very opportunistic, given where we are in the market.

Speaker 3

Yes, that's right. And the only other thing I'd add, just going back to those prepared remarks, we're happy to report. We talked about expense reduction plan of $150,000,000 to $200,000,000 We're pleased to report we're at the high end of that. And we have this pursuit of operational efficiency that Varun has alluded to and that's not something you start and stop. That's something that's built into your DNA.

Speaker 8

Great. Thanks for taking my question.

Operator

Thanks, James. Gin. It is star 1 on your telephone keypad. And our next question comes from Arren Cyganovich with Citi. Arren, go ahead.

Speaker 7

Conference Call. Thanks. I was wondering if you could talk a little bit about your progress making pickup in market share on the purchase side and whether or not the Buy Plus program that you've put in place earlier this year is making a notable difference.

Speaker 2

Thank you for the question, Aaron. I'll start and then Brian can add any perspectives. I'd just start by saying that our purchase products just continue to be relevant and resonate with our clients. A few examples, we have our Buy Plus program And since launch, we've seen the attachment rate double our 1 plus program, which is a 1% down program. We've seen the units triple between June September.

Speaker 2

We also have our home equity loan program. We've seen loan units and net rate lock volume double just in the Q3 alone. And so I think the goal for us is to ensure that our the programs that we're putting out are innovative and more importantly that they're relevant and that they resonate with clients. And so we're excited to see that progress and we're also excited to continue to innovate. And Brian, anything that you would add?

Speaker 3

Yes, I think that's great. I think the only thing I'd add, we've talked about in terms of how we measure share, we of course use the industry forecast, but A really good indication is securitization data. When we look at that and that's of course available to everyone, it shows us taking purchase share quarter over to quarter year over year. We also look at a lot of internal data to get more real time results like Optimal Blue and CoreLogic. But the nice thing is no matter how you do that math, All three of them point in the same direction that we're continuing to take share and we're seeing capacity continue to come out of the system.

Speaker 3

So it's no surprise.

Speaker 7

2. Thanks. On that last point from a capacity standpoint, I guess, where do you think we are in that process? Do you think there's still a lot of capacity that continues to need to come out of the market.

Speaker 3

Look, I think, you know, we talked a bit about what 24 could look like at least from how the industry 12 casters are looking at it and if rates are higher for longer that bodes well for us from capacity continuing to come out. I think we'd all like it to come out faster. But if you think about all these mortgage companies that went public and raised capital At that time, it put them in a different position. Time will tell in terms of how that shakes out. But again, we think about us, we think about our balance sheet, our liquidity trial, be able to keep investing through these cycles.

Speaker 3

That's the stuff that gets us excited.

Speaker 7

Got it. Thank you.

Operator

2019. And our final question today will come from Don Fandetti with Wells Fargo. Don, go ahead.

Speaker 9

Conference Call. Yes. I was wondering if you could just talk a little bit about the acquisition strategy, if you see any FinTech opportunities to kind of feed the funnel and also just an update on Rocket Money and how you feel like that traction is moving?

Speaker 2

Yes, I'll take this one. Thank you, Don, for your question. I think the first thing I would just point to again as Brian alluded to is one of the great things about Rocket is we have a very robust capitalization structure. We have what we call a fortress balance sheet and high levels of liquidity. I think that gives us A lot of flexibility and it affords us the chance to be opportunistic, especially in this market where you see things like valuations being down.

Speaker 2

So what I would share is just we are actively in the process of writing the next chapter of our strategy with our leadership team And we're going to be pursuing ways to accelerate that strategy, whether it's organic or inorganic. And so I look forward to sharing more As we write that next chapter, and so more to come. We are going to have an Investor Day in the coming quarters. And so we'll have an opportunity to go very deep on our strategy with all of our folks in the investor community. And also just say with Rocket Money, we're pleased with the progress that we're making, and I look forward to sharing more with you in the quarters ahead.

Operator

Thank you, Don, and thanks to all who ask questions today. I will now turn the call back over to Varun Krishna for closing remarks. Varun, over to you.

Speaker 3

All right.

Speaker 2

Thank you everybody for joining us today. We appreciate you and we look forward to connecting again next quarter.

Operator

Call. Thanks, Varun. Ladies and gentlemen, that does conclude today's conference call. You may now disconnect. Have a great day,

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Rocket Companies Q3 2023
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