Rocket Companies, Inc.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number: 001-39432

Rocket Companies, Inc.

(Exact name of registrant as specified in its charter)

Delaware

84-4946470

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1050 Woodward Avenue, Detroit, MI (Address of principal executive offices)

48226 (Zip Code)

(313) 373-7990 (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Class A common stock, par value $0.00001 per share

Trading Symbol(s) RKT

Name of each exchange on which registered New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (?232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of May 3, 2022, 118,539,560 shares of the registrant's Class A common stock, $0.00001 par value, and 1,848,879,483 shares of the registrant's Class D common stock, $0.00001 par value, were outstanding.

1

Rocket Companies, Inc. Form 10-Q

For the period ended March 31, 2022

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)................................................................................................................

Condensed Consolidated Balance Sheets .................................................................................................

3

Condensed Consolidated Statements of Income and Comprehensive Income.........................................

4

Condensed Consolidated Statements of Changes in Equity .....................................................................

5

Condensed Consolidated Statements of Cash Flows................................................................................

6

Notes to Condensed Consolidated Financial Statements ..........................................................................

7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .....................

33

Item 3. Quantitative and Qualitative Disclosures about Market Risk .....................................................................

52

Item 4. Controls and Procedures .............................................................................................................................

52

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.......................................................................................................................................

53

Item 1A. Risk Factors ................................................................................................................................................

53

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....................................................................

54

Item 6. Exhibits .......................................................................................................................................................

55

Signatures ....................................................................................................................................................................

56

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited) Rocket Companies, Inc.

Condensed Consolidated Balance Sheets (In Thousands, Except Shares and Per Share Amounts)

Assets Cash and cash equivalents................................................................................................................................................. $ Restricted cash .................................................................................................................................................................. Mortgage loans held for sale, at fair value........................................................................................................................ Interest rate lock commitments ("IRLCs"), at fair value .................................................................................................. Mortgage servicing rights ("MSRs"), at fair value ........................................................................................................... Notes receivable and due from affiliates........................................................................................................................... Property and equipment, net of accumulated depreciation and amortization of $581,618 and $567,406, respectively .. Deferred tax asset, net ....................................................................................................................................................... Lease right of use assets .................................................................................................................................................... Forward commitments, at fair value ................................................................................................................................. Loans subject to repurchase right from Ginnie Mae......................................................................................................... Other assets .......................................................................................................................................................................

Total assets .......................................................................................................................................................................... $ Liabilities and equity

Liabilities Funding facilities ........................................................................................................................................................... $ Other financing facilities and debt Lines of credit ............................................................................................................................................................. Senior Notes, net......................................................................................................................................................... Early buy out facility .................................................................................................................................................. Accounts payable ........................................................................................................................................................... Lease liabilities .............................................................................................................................................................. Forward commitments, at fair value .............................................................................................................................. Investor reserves ............................................................................................................................................................ Notes payable and due to affiliates ................................................................................................................................ Tax receivable agreement liability................................................................................................................................. Loans subject to repurchase right from Ginnie Mae...................................................................................................... Other liabilities...............................................................................................................................................................

Total liabilities ................................................................................................................................................................. $ Equity

Class A common stock, $0.00001 par value - 10,000,000,000 shares authorized, 119,627,004 and 126,437,703 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. ...................................... $ Class B common stock, $0.00001 par value - 6,000,000,000 shares authorized, none issued and outstanding as of March 31, 2022 and December 31, 2021. ...................................................................................................................... Class C common stock, $0.00001 par value - 6,000,000,000 shares authorized, none issued and outstanding as of March 31, 2022 and December 31, 2021. ...................................................................................................................... Class D common stock, $0.00001 par value - 6,000,000,000 shares authorized, 1,848,879,483 and 1,848,879,483 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively. ....................................... Additional paid-in capital .............................................................................................................................................. Retained earnings........................................................................................................................................................... Accumulated other comprehensive income ................................................................................................................... Non-controlling interest ................................................................................................................................................. Total equity ...................................................................................................................................................................... Total liabilities and equity ................................................................................................................................................. $

March 31, 2022

(Unaudited) 2,310,661 77,027 10,685,144 213,210 6,410,288 10,796 260,042 555,663 414,201 667,908 1,490,804 2,152,276 25,248,020

6,469,607

-- 4,023,861 1,698,167

288,860 468,693 34,126 80,759 29,656 647,852 1,490,804 1,314,339 16,546,724

1

--

--

19 241,458 305,794

22 8,154,002 8,701,296 25,248,020

December 31, 2021

$

2,131,174

80,423

19,323,568

538,861

5,385,613

9,753

254,376

572,049

427,895

17,337

1,918,032

2,115,814

$

32,774,895

$

12,751,592

75,000

4,022,491

1,896,784

271,544

482,184

19,911

78,888

33,650

688,573

1,918,032

776,714

$

23,015,363

$

1

--

--

19

287,558

378,005

81

9,093,868

9,759,532

$

32,774,895

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

3

Rocket Companies, Inc. Condensed Consolidated Statements of Income and Comprehensive Income

(In Thousands, Except Shares and Per Share Amounts) (Unaudited)

Three Months Ended March 31,

2022

2021

Revenue

Gain on sale of loans

Gain on sale of loans excluding fair value of MSRs, net ......................................................... $

687,170 $ 2,379,278

Fair value of originated MSRs..................................................................................................

796,616

1,173,164

Gain on sale of loans, net ...............................................................................................................

1,483,786

3,552,442

Loan servicing income

Servicing fee income ................................................................................................................

366,214

292,361

Change in fair value of MSRs ..................................................................................................

454,380

200,555

Loan servicing income ...................................................................................................................

820,594

492,916

Interest income

Interest income .........................................................................................................................

90,540

95,245

Interest expense on funding facilities .......................................................................................

(41,696)

(67,844)

Interest income, net ........................................................................................................................

48,844

27,401

Other income..................................................................................................................................

317,372

466,112

Total revenue, net...........................................................................................................................

2,670,596

4,538,871

Expenses

Salaries, commissions and team member benefits ......................................................................

853,915

842,199

General and administrative expenses ..........................................................................................

275,857

291,419

Marketing and advertising expenses ...........................................................................................

328,058

320,843

Depreciation and amortization ....................................................................................................

21,042

15,304

Interest and amortization expense on non-funding debt .............................................................

38,664

35,571

Other expenses ............................................................................................................................

90,603

190,365

Total expenses................................................................................................................................

1,608,139

1,695,701

Income before income taxes ..........................................................................................................

1,062,457

2,843,170

Provision for income taxes.............................................................................................................

(25,849)

(65,832)

Net income .....................................................................................................................................

1,036,608

2,777,338

Net income attributable to non-controlling interest .......................................................................

(982,896)

(2,653,636)

Net income attributable to Rocket Companies .............................................................................. $

53,712 $

123,702

Earnings per share of Class A common stock Basic............................................................................................................................................... $ Diluted............................................................................................................................................ $

0.44 $

1.07

0.40 $

1.07

Weighted average shares outstanding Basic ............................................................................................................................................... Diluted............................................................................................................................................

122,691,728 1,975,379,132

115,673,524 122,011,916

Comprehensive income Net income ..................................................................................................................................... $ Cumulative translation adjustment ................................................................................................ Unrealized loss on investment securities ....................................................................................... Comprehensive income.................................................................................................................. Comprehensive income attributable to non-controlling interest.................................................... Comprehensive income attributable to Rocket Companies ........................................................... $

1,036,608 $ 588

(1,495) 1,035,701 (982,049)

53,652 $

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2,777,338 307 (364)

2,777,281 (2,653,586)

123,695

4

Rocket Companies, Inc. Condensed Consolidated Statements of Changes in Equity

(In Thousands, Except Shares and Per Share Amounts) (Unaudited)

Class A Common Class A Common

Stock Shares

Stock Amount

Balance, December 31, 2020....................................................................................

115,372,565 $

1

Net income .........................................................................................................

--

--

Cumulative translation adjustment .....................................................................

--

--

Unrealized loss on investment securities............................................................

--

--

Share-based compensation, net ..........................................................................

2,300

--

Distributions for state taxes on behalf of unit holders (members), net ..............

--

--

Distributions to unit holders (members) from subsidiary investment ................

--

--

Special Dividend to Class A Shareholders .........................................................

--

--

Change in controlling interest of investment, net...............................................

20,200,000

--

Balance, March 31, 2021 .........................................................................................

135,574,865 $

1

Class D Common Class D Common

Stock Shares

Stock Amount

1,869,079,483 $

19

--

--

--

--

--

--

--

--

--

--

--

--

--

--

(20,200,000)

--

1,848,879,483 $

19

Additional Paid-in Capital

$

282,743

--

--

--

2,116

--

--

--

85,351

$

370,210

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total Non-controlling

Interest

$ 207,422 $

317 $ 7,391,654 $

123,702

--

2,653,636

--

14

293

--

(21)

(343)

--

--

37,033

(281)

--

(4,559)

--

--

(2,242,999)

(145,903)

--

--

(1)

55

(84,420)

$ 184,939 $

365 $ 7,750,295 $

Total Equity

7,882,156 2,777,338

307 (364) 39,149 (4,840) (2,242,999) (145,903) 985 8,305,829

Balance, December 31, 2021.................................................................................... Net income ......................................................................................................... Cumulative translation adjustment ..................................................................... Unrealized loss on investment securities............................................................ Share-based compensation, net .......................................................................... Distributions for state taxes on behalf of unit holders (members), net .............. Distributions to unit holders (members) from subsidiary investment, net ......... Special Dividend to Class A Shareholders ......................................................... Taxes withheld on employees' restricted share award vesting ........................... Issuance of Class A common Shares under stock compensation and benefit plans .................................................................................................................... Repurchase of Class A common Shares ............................................................. Change in controlling interest of investment, net...............................................

Balance, March 31, 2022 .........................................................................................

126,437,703 $ -- -- --

186,891 -- -- -- --

1,018,875 (8,016,465)

-- 119,627,004 $

1

1,848,879,483 $

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

1

1,848,879,483 $

19 $ -- -- -- -- -- -- -- --

-- -- -- 19 $

287,558 $ -- -- --

3,288 -- 725 -- (77)

378,005 $ 53,712

-- -- -- (2,171) -- (123,752) --

930 (100,162)

49,196 241,458 $

-- -- -- 305,794 $

81 $ -- 31 (92) -- -- -- -- --

9,093,868 $ 982,896 557 (1,403) 50,093 (33,536)

(1,856,575) (31,830) (1,220)

9,759,532 1,036,608

588 (1,495) 53,381 (35,707) (1,855,850) (155,582) (1,297)

-- -- 2 22 $

12,743 --

(61,591) 8,154,002 $

13,673 (100,162) (12,393) 8,701,296

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

5

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