Rocket reports steep decline in profit in 2Q

Abstract

Rocket set out a goal of $200 million in expense reductions in the current period. "We took additional cost savings measures beyond the crew transition plan including but not limited to marketing, production and other vendor related costs, which resulted in a reduction in cost of $300 million."In the current quarter, Rocket is looking to save another $100 million and that includes looking at vendor contracts as they mature, Booth said. With all of the work that Rocket is doing to drive market share on what Vice Chairman and CEO Jay Farner described as its "Engagement platform" across the company's various brands, involuntary headcount reductions are not part of the plan, even though right now it has a little bit of excess capacity. Rocket management's guidance for the rest of the year came in weaker than what Keefe, Bruyette & Woods expected. Still, a positive takeaway was "Rocket has done a good job reducing costs, and has guided to further reductions in the second half of 2022, suggesting that the company will not chase volume at lower margins," George continued. The Santander partnershipAs another competitive advantage, Rocket is spending the "Millions and millions of dollars" on its various businesses or in creating partnerships like the one with Santander, where other mortgage companies are not, Farner said. "We are expecting Rocket to build on this with future acquisitions of both other mortgage-related assets and new product sets."Rocket's partner network, which besides working with other institutions includes its wholesale channel, did $13.6 billion in production during the quarter, well down from the $26 billion originated in the first quarter and $30.1 billion in the previous year.