- Generated Q1'23 net revenue of $666 million and adjusted revenue of $882 million. Adjusted revenue exceeded the high end of guidance range
- Reached 27.6 million Rocket Accounts1 across our ecosystem, as of March 31, 2023
- Launched BUY+ and SELL+ purchase initiative, a collaboration between Rocket Homes and Rocket Mortgage, to help homebuyers and homeowners transact with ease
- Unveiled Rocket Visa Signature Credit Card, the first credit card designed to make home buying more accessible and homeownership easier through everyday spending
- As previously announced on February 13, 2023, Bill Emerson, Board Director of Rocket Companies and Vice Chairman of Rock Holdings, has been appointed to serve as interim CEO effective June 1
DETROIT, May 4, 2023 /PRNewswire/ -- Rocket Companies, Inc. (NYSE:RKT) ("Rocket Companies" or the "Company"), a Detroit-based fintech platform company consisting of tech-driven mortgage, real estate and financial services businesses – including Rocket Mortgage, Rocket Homes, Rocket Loans and Rocket Money – today announced results for the quarter ended March 31, 2023.
"Rocket delivered solid results in the first quarter in the backdrop of an uncertain macro environment. Adjusted revenue exceeded the top end of our guidance, driven by healthy client demand and strong execution," said Jay Farner, CEO of Rocket Companies, "Our purchase pipeline has been growing in the second quarter, but constrained housing inventory and affordability still present challenges. To help our clients in this market, we recently launched BUY+ and SELL+, a collaboration between Rocket Homes and Rocket Mortgage, and unveiled our new Rocket Visa Signature Credit Card, a loyalty program card. These initiatives, along with Rocket Rewards, provide our clients with tangible value and an experience that can only be realized through Rocket. We believe our ability to provide a superior, differentiated client value proposition will drive growth in our purchase market share, revenue and profitability."
First Quarter 2023 Financial Summary2 | |||
ROCKET COMPANIES ($ amounts in millions, except per share) | |||
Q1-23 | Q1-22 | ||
(Unaudited) | |||
Total revenue, net | $ 666 | $ 2,671 | |
Total expenses | $ 1,082 | $ 1,608 | |
GAAP Net (Loss) Income | $ (411) | $ 1,037 | |
Adjusted Revenue | $ 882 | $ 1,931 | |
Adjusted Net (Loss) Income | $ (111) | $ 293 | |
Adjusted EBITDA | $ (79) | $ 450 | |
GAAP Diluted (Loss) Earnings Per Share | $ (0.16) | $ 0.40 | |
Adjusted Diluted (Loss) Earnings Per Share | $ (0.06) | $ 0.15 |
(Units in '000s, $ amounts in millions) | ||||
Q1-23 | Q1-22 | |||
Select Metrics | (Unaudited) | |||
Closed loan origination volume | $ 16,929 | $ 53,977 | ||
Gain on sale margin | 2.39 % | 3.01 % | ||
Net rate lock volume | $ 19,535 | $ 49,614 | ||
Amrock closings (units) | 35.9 | 168.3 |
First Quarter 2023 Financial Highlights
- Generated total revenue, net of $666 million and net loss of $411 million, or a loss of $0.16 cents per diluted share. Generated total adjusted revenue of $882 million and adjusted net loss of $111 million, or an adjusted loss of $0.06 cents per diluted share.
- Rocket Mortgage generated $17 billion in mortgage origination closed loan volume. Gain on sale margin was 2.39%.
- Total liquidity was approximately $8.1 billion, as of March 31, 2023, which includes $0.9 billion of cash on-hand, $2.4 billion of corporate cash used to self-fund loan originations, $3.1 billion of undrawn lines of credit, and $1.7 billion of undrawn MSR lines.
- Servicing book unpaid principal balance was $524.8 billion at March 31, 2023. As of March 31, 2023, our servicing portfolio includes 2.5 million clients and generates approximately $1.5 billion of recurring servicing fee income on an annualized basis.
- Rocket Mortgage net client retention rate was 96% over the 12 months ended March 31, 2023. There is a strong correlation between this metric and client lifetime value, and we believe our net client retention rate is unmatched among mortgage companies and on par with some of the best performing subscription business models in the world.
Company Highlights
- In April, we introduced BUY+ and SELL+, a collaboration between Rocket Mortgage and Rocket Homes, our proprietary home search platform and real estate agent referral network business. With BUY+, purchase clients can save thousands of dollars in upfront costs if they work with a Rocket Homes Partner Real Estate Agent and obtain financing with Rocket Mortgage. With SELL+, sellers listing their home for sale with a Rocket Homes Verified Partner Agent will receive a rebate check for 1% of the sale price from Rocket Homes after closing. If a homeowner is buying and selling, they can use both BUY+ and SELL+ to increase their savings.
- In April, we unveiled the Rocket Visa Signature Credit Card, the first credit card that makes home buying more accessible and homeownership easier through everyday spending. With the Rocket Signature Card, our clients can earn 5% back to lower closing costs and down payments by thousands of dollars, helping to address some of the most significant hurdles to purchasing a home. The Rocket Signature Card is linked to our Rocket Rewards loyalty program and designed to appeal to first time home buyers and existing homeowners who are in the market to buy, helping us reach them earlier in the purchase life cycle.
- Rocket Mortgage purchase net promoter scores (NPS) reached all-time highs of 75 for retail clients and 53 for real estate agents in the first quarter, meaning clients and agents recommend Rocket highly as a lender. This achievement is due to our ongoing technology and data investments and process improvements. An NPS above 50 is generally considered excellent.
- As of March 31, 2023, Rocket Accounts reached 27.6 million total accounts. Rocket Accounts is an important metric as it represents clients who have taken the action to create an account with us and with whom we may have visibility on credit worthiness, spending behavior, finances, home buying intent and more. Through these deeper, data-driven insights, we are able to deliver richer and more personalized experiences to Rocket Account holders and build ongoing relationships with them.
- In March, Rocket Mortgage became the first national lender to offer Freddie Mac's BorrowSmart AccessSM program. The program offers a $3,000 credit for first time homebuyers to use toward their down payment, helping to lower a significant hurdle to homeownership, especially to underserved communities. First time homebuyers can use BorrowSmart AccessSM if they are purchasing a home in several counties across 10 metro areas – Atlanta; Chicago; Detroit; El Paso; Houston; McAllen, Texas; Memphis; Miami; Philadelphia and St. Louis.
- As previously announced on February 13, 2023, Bill Emerson, Board Director of Rocket Companies and Vice Chairman of Rock Holdings, has been appointed to serve as interim CEO effective June 1. The Board of Directors has commenced a search for a permanent Chief Executive Officer and has retained a leading firm to support its evaluation of internal and external candidates.
Rocket Environmental, Social, Governance: For-More-Than-Profit
- In March, we announced that the fourth annual Rocket Mortgage Classic, Rocket Mortgage's flagship PGA tournament held in Detroit, raised $1.6 million in 2022 to support local Detroit nonprofits. Since 2019, the Rocket Mortgage Classic has raised nearly $7 million for local charitable organizations, including nearly $4 million for the "Changing the Course" Detroit digital inclusion effort. The fifth annual Rocket Mortgage Classic event will be held at the Detroit Golf Club from June 27 to July 2, 2023.
- In February, the Rocket Community Fund, the philanthropic partner of Rocket Companies, announced a collaboration with Partnership for Southern Equity and Atlanta BeltLine Partnership to launch the Neighbor to Neighbor program in Atlanta. Neighbor to Neighbor is a door-to-door outreach program that aims to help over 20,000 families achieve housing stability.
- The Rocket Community Fund, the Rocket Mortgage Classic, and partner Connect 313 reached a key milestone in their efforts to bridge the digital divide in Detroit. The Affordable Connectivity Program enrolled over 100,000 households to provide subsidized internet access for income-qualified families. This marks the highest rate of enrollment for cities with more than 150,000 households.
Second Quarter 2023 Outlook
In Q2 2023, we expect adjusted revenue of between $850 million to $1 billion.
Direct to Consumer
In the Direct to Consumer segment, clients have the ability to interact with Rocket Mortgage online and/or with the Company's mortgage bankers. The Company markets to potential clients in this segment through various brand campaigns and performance marketing channels. The Direct to Consumer segment derives revenue from originating, closing, selling and servicing predominantly agency-conforming loans, which are pooled and sold to the secondary market. The segment also includes title insurance, appraisals and settlement services complementing the Company's end-to-end mortgage origination experience. Servicing activities are fully allocated to the Direct to Consumer segment and are viewed as an extension of the client experience. Servicing enables Rocket Mortgage to establish and maintain long term relationships with our clients, through multiple touchpoints at regular engagement intervals.
DIRECT TO CONSUMER3 ($ amounts in millions) | |||
Q1-23 | Q1-22 | ||
(Unaudited) | |||
Sold loan volume | $ 8,811 | $ 36,165 | |
Sold loan gain on sale margin | 3.71 % | 4.00 % | |
Revenue, net | $ 495 | $ 2,235 | |
Adjusted Revenue | $ 711 | $ 1,496 | |
Contribution margin | $ 206 | $ 626 |
Partner Network
The Rocket Professional platform supports our Partner Network segment, where we leverage our superior client service and widely recognized brand to grow marketing and influencer relationships, and our mortgage broker partnerships through Rocket Pro TPO ("third party origination"). Our marketing partnerships consist of well-known consumer-focused companies that find value in our award-winning client experience and want to offer their clients mortgage solutions with our trusted, widely recognized brand. These organizations connect their clients directly to us through marketing channels and a referral process. Our influencer partnerships are typically with companies that employ licensed mortgage professionals that find value in our client experience, technology and efficient mortgage process, where mortgages may not be their primary offering. We also enable clients to start the mortgage process through the Rocket platform in the way that works best for them, including through a local mortgage broker.
PARTNER NETWORK3 ($ amounts in millions) | |||
Q1-23 | Q1-22 | ||
(Unaudited) | |||
Sold loan volume | $ 6,584 | $ 26,033 | |
Sold loan gain on sale margin | 0.83 % | 0.91 % | |
Revenue, net | $ 91 | $ 292 | |
Adjusted Revenue | $ 91 | $ 292 | |
Contribution margin | $ 26 | $ 172 |
Balance Sheet and Liquidity
We remain in a strong liquidity position, with total liquidity of $8.1 billion, which includes $0.9 billion of cash on-hand, $2.4 billion of corporate cash used to self-fund loan originations, a portion of which could be transferred to funding facilities (warehouse lines) at our discretion, $3.1 billion of undrawn lines of credit from financing facilities, and $1.7 billion of undrawn MSR lines. As of March 31, 2023 our available cash position was $3.3 billion, which includes cash on-hand and corporate cash used to self-fund loan originations, combined with the $6.7 billion of mortgage servicing rights, representing a total of $9.9 billion of asset value on our balance sheet. As of March 31, 2023, our total equity was $8.1 billion.
BALANCE SHEET HIGHLIGHTS ($ amounts in millions) | |||
March 31, 2023 | December 31, 2022 | ||
(Unaudited) | |||
Cash and cash equivalents | $ 893 | $ 722 | |
Mortgage servicing rights ("MSRs"), at fair value | $ 6,670 | $ 6,947 | |
Funding facilities | $ 5,236 | $ 3,549 | |
Other financing facilities and debt | $ 4,453 | $ 4,701 | |
Total equity | $ 8,109 | $ 8,476 |
First Quarter Earnings Call
Rocket Companies will host a live conference call at 4:30 p.m. ET on May 4, 2023 to discuss its results for the quarter ended March 31, 2023. A live webcast of the event will be available online by clicking on the "Investor Info" section of our website. The webcast will also be available via rocketcompanies.com.
A replay of the webcast will be available on the Investor Relations site following the conclusion of the event.
_______________
1 A Rocket Account holder is defined as a consumer who opens an account with any of our Rocket services, including Rocket Money. Each Rocket Account holder has unique account credentials across collective Rocket services through our single sign-on solution. A Rocket Account holder continues to be counted as one unless they delete or request that we remove their account information.
2 "GAAP" stands for Generally Accepted Accounting Principles in the U.S. Please see the sections of this document titled "Non-GAAP Financial Measures" and "GAAP to non-GAAP Reconciliations" for more information on the Company's non-GAAP measures and its share count. Certain figures in the tables throughout this document may not foot due to rounding.
3 We measure the performance of the Direct to Consumer and Partner Network segments primarily on a contribution margin basis. Contribution margin is intended to measure the direct profitability of each segment and is calculated as Adjusted Revenue less directly attributable expenses. Directly attributable expenses include salaries, commissions and team member benefits, general and administrative expenses, and other expenses, such as direct servicing costs and origination costs. A loan is considered "sold" when it is sold to investors on the secondary market. See "Summary Segment Results" section later in this document and the footnote on "Segments" in the "Notes to Consolidated Financial Statements" in the Company's forthcoming filing on Form 10-Q for more information.
Condensed Consolidated Statements of Income (Loss) ($ In Thousands, Except Shares and Per Share Amounts) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Unaudited) | |||
Revenue | |||
Gain on sale of loans | |||
Gain on sale of loans excluding fair value of MSRs, net | $ 265,003 | $ 687,170 | |
Fair value of originated MSRs | 204,560 | 796,616 | |
Gain on sale of loans, net | 469,563 | 1,483,786 | |
Loan servicing (loss) income | |||
Servicing fee income | 366,385 | 366,214 | |
Change in fair value of MSRs | (398,279) | 454,380 | |
Loan servicing (loss) income, net | (31,894) | 820,594 | |
Interest income | |||
Interest income | 66,744 | 90,540 | |
Interest expense on funding facilities | (29,060) | (41,696) | |
Interest income, net | 37,684 | 48,844 | |
Other income | 190,715 | 317,372 | |
Total revenue, net | 666,068 | 2,670,596 | |
Expenses | |||
Salaries, commissions and team member benefits | 603,775 | 853,915 | |
General and administrative expenses | 195,390 | 275,857 | |
Marketing and advertising expenses | 181,604 | 328,058 | |
Depreciation and amortization | 30,685 | 21,042 | |
Interest and amortization expense on non-funding debt | 38,333 | 38,664 | |
Other expenses | 32,268 | 90,603 | |
Total expenses | 1,082,055 | 1,608,139 | |
(Loss) income before income taxes | (415,987) | 1,062,457 | |
Benefit from (provision for) income taxes | 4,504 | (25,849) | |
Net (loss) income | (411,483) | 1,036,608 | |
Net loss (income) attributable to non-controlling interest | 392,960 | (982,896) | |
Net (loss) income attributable to Rocket Companies | $ (18,523) | $ 53,712 | |
(Loss) earnings per share of Class A common stock | |||
Basic | $ (0.15) | $ 0.44 | |
Diluted | $ (0.16) | $ 0.40 | |
Weighted average shares outstanding | |||
Basic | 124,732,722 | 122,691,728 | |
Diluted | 1,974,629,808 | 1,975,379,132 |
Condensed Consolidated Balance Sheets ($ In Thousands) | |||
March 31, | December 31, | ||
Assets | (Unaudited) | ||
Cash and cash equivalents | $ 893,383 | $ 722,293 | |
Restricted cash | 64,307 | 66,806 | |
Mortgage loans held for sale, at fair value | 8,438,714 | 7,343,475 | |
Interest rate lock commitments ("IRLCs"), at fair value | 182,112 | 90,635 | |
Mortgage servicing rights ("MSRs"), at fair value | 6,669,939 | 6,946,940 | |
Notes receivable and due from affiliates | 8,073 | 10,796 | |
Property and equipment, net | 267,320 | 274,192 | |
Deferred tax asset, net | 541,248 | 537,963 | |
Lease right of use assets | 391,897 | 366,189 | |
Forward commitments, at fair value | 5,101 | 22,444 | |
Loans subject to repurchase right from Ginnie Mae | 1,626,587 | 1,642,392 | |
Goodwill and intangible assets, net | 1,253,309 | 1,258,928 | |
Other assets | 860,289 | 799,159 | |
Total assets | $ 21,202,279 | $ 20,082,212 | |
Liabilities and equity | |||
Liabilities: | |||
Funding facilities | $ 5,236,034 | $ 3,548,699 | |
Other financing facilities and debt: | |||
Senior Notes, net | 4,029,339 | 4,027,970 | |
Early buy out facility | 423,831 | 672,882 | |
Accounts payable | 135,039 | 116,331 | |
Lease liabilities | 448,331 | 422,769 | |
Forward commitments, at fair value | 87,918 | 25,117 | |
Investor reserves | 107,134 | 110,147 | |
Notes payable and due to affiliates | 30,451 | 33,463 | |
Tax receivable agreement liability | 577,996 | 613,693 | |
Loans subject to repurchase right from Ginnie Mae | 1,626,587 | 1,642,392 | |
Other liabilities | 390,274 | 393,200 | |
Total liabilities | $ 13,092,934 | $ 11,606,663 | |
Equity | |||
Class A common stock | $ 1 | $ 1 | |
Class B common stock | — | — | |
Class C common stock | — | — | |
Class D common stock | 19 | 19 | |
Additional paid-in capital | 294,718 | 276,221 | |
Retained earnings | 280,997 | 300,394 | |
Accumulated other comprehensive (loss) income | (32) | 69 | |
Non-controlling interest | 7,533,642 | 7,898,845 | |
Total equity | 8,109,345 | 8,475,549 | |
Total liabilities and equity | $ 21,202,279 | $ 20,082,212 |
Summary Segment Results for the Three Months Ended March 31, 2023 and 2022, ($ amounts in millions) (Unaudited) | |||||||||
Three Months Ended March 31, 2023 | Direct to Consumer | Partner Network | Segments Total | All Other | Total | ||||
Total U.S. GAAP Revenue, net | $ 495 | $ 91 | $ 586 | $ 80 | $ 666 | ||||
Change in fair value of MSRs due to valuation assumptions, net of hedges | 216 | — | 216 | — | 216 | ||||
Adjusted revenue | $ 711 | $ 91 | $ 802 | $ 80 | $ 882 | ||||
Less: Directly attributable expenses | 506 | 65 | 571 | 77 | 648 | ||||
Contribution margin (1) | $ 206 | $ 26 | $ 231 | $ 3 | $ 234 | ||||
Three Months Ended March 31, 2022 | Direct to | Partner | Segments Total | All Other | Total | ||||
Total U.S. GAAP Revenue, net | $ 2,235 | $ 292 | $ 2,527 | $ 144 | $ 2,671 | ||||
Change in fair value of MSRs due to valuation assumptions, net of hedges | (739) | — | (739) | — | (739) | ||||
Adjusted revenue | $ 1,496 | $ 292 | $ 1,787 | $ 144 | $ 1,931 | ||||
Less: Directly attributable expenses | 869 | 120 | 989 | 119 | 1,108 | ||||
Contribution margin (1) | $ 626 | $ 172 | $ 798 | $ 25 | $ 823 | ||||
(1) We measure the performance of the segments primarily on a contribution margin basis. Contribution margin is intended to measure the direct profitability of each segment and is calculated as Adjusted Revenue less Directly attributable expenses. Adjusted Revenue is a non-GAAP financial measure described below. Directly attributable expenses include salaries, commissions and team member benefits, general and administrative expenses, marketing and advertising expenses and other expenses, such as direct servicing costs and origination costs. |
GAAP to non-GAAP Reconciliations | |||
Adjusted Revenue Reconciliation ($ amounts in millions) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Unaudited) | |||
Total revenue, net | $ 666 | $ 2,671 | |
Change in fair value of MSRs due to valuation assumptions (net of hedges) (1) | 216 | (739) | |
Adjusted Revenue | $ 882 | $ 1,931 | |
(1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, |
Adjusted Net Income (Loss) Reconciliation ($ amounts in millions) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Unaudited) | |||
Net (loss) income attributable to Rocket Companies | $ (19) | $ 54 | |
Net (loss) income impact from pro forma conversion of Class D common shares to Class A common shares (1) | (392) | 984 | |
Adjustment to the benefit from (provision for) income tax (2) | 96 | (242) | |
Tax-effected net (loss) income (2) | (314) | 795 | |
Share-based compensation expense | 52 | 67 | |
Change in fair value of MSRs due to valuation assumptions (net of hedges) (3) | 216 | (739) | |
Tax impact of adjustments (4) | (65) | 169 | |
Other tax adjustments (5) | 1 | 1 | |
Adjusted Net (Loss) Income | $ (111) | $ 293 | |
(1) Reflects net (loss) income to Class A common stock from pro forma exchange and conversion of corresponding shares of our Class D common shares held by non-controlling | |||
(2) Rocket Companies is subject to U.S. Federal income taxes, in addition to state, local and Canadian taxes with respect to its allocable share of any net taxable (loss) income of | |||
(3) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, and the effects of contractual | |||
(4) Tax impact of adjustments gives effect to the income tax related to share-based compensation expense and change in fair value of MSRs due to valuation assumptions at the | |||
(5) Represents tax benefits due to the amortization of intangible assets and other tax attributes resulting from the purchase of Holdings units, net of payment obligations under Tax |
Adjusted Diluted Weighted Average Shares Outstanding Reconciliation ($ in millions, except shares and per share) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Unaudited) | |||
Diluted weighted average Class A Common shares outstanding | 1,974,629,808 | 1,975,379,132 | |
Assumed pro forma conversion of Class D shares (1) | — | — | |
Adjusted diluted weighted average shares outstanding | 1,974,629,808 | 1,975,379,132 | |
Adjusted Net (Loss) Income | $ (111) | $ 293 | |
Adjusted Diluted (Loss) Earnings Per Share | $ (0.06) | $ 0.15 | |
(1) Reflects the proforma exchange and conversion of non-dilutive Class D common stock to Class A common stock. For the three months ended |
Adjusted EBITDA Reconciliation ($ amounts in millions) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
(Unaudited) | |||
Net (loss) income | $ (411) | $ 1,037 | |
Interest and amortization expense on non-funding debt | 38 | 39 | |
Income tax (benefit) provision | (5) | 26 | |
Depreciation and amortization | 31 | 21 | |
Share-based compensation expense | 52 | 67 | |
Change in fair value of MSRs due to valuation assumptions (net of hedges) (1) | 216 | (739) | |
Adjusted EBITDA | $ (79) | $ 450 | |
(1) Reflects changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, |
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share and Adjusted EBITDA (collectively "our non-GAAP financial measures") as non-GAAP measures which management believes provide useful information to investors. We believe that the presentation of our non-GAAP financial measures provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Our non-GAAP financial measures are not calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income (loss), or any other operating performance measure calculated in accordance with GAAP. Other companies may define our non-GAAP financial measures differently, and as a result, our measures of our non-GAAP financial measures may not be directly comparable to those of other companies. Our non-GAAP financial measures provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures.
We define "Adjusted Revenue" as total revenues net of the change in fair value of mortgage servicing rights ("MSRs") due to valuation assumptions (net of hedges). We define "Adjusted Net Income (Loss)" as tax-effected earnings (losses) before share-based compensation expense, the change in fair value of MSRs due to valuation assumptions (net of hedges), and the tax effects of those adjustments as applicable. We define "Adjusted Diluted Earnings (Loss) Per Share" as Adjusted Net Income (Loss) divided by the diluted weighted average number of Class A common stock outstanding for the applicable period, which assumes the pro forma exchange and conversion of all outstanding Class D common stock for Class A common stock. We define "Adjusted EBITDA" as earnings (losses) before interest and amortization expense on non-funding debt, income tax, depreciation and amortization, share-based compensation expense, change in fair value of MSRs due to valuation assumptions (net of hedges).
We exclude from each of our non-GAAP financial measures the change in fair value of MSRs due to valuation assumptions (net of hedges) as this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, which is not indicative of our performance or results of operation. We also exclude effects of contractual prepayment protection associated with sales of MSRs. Adjusted EBITDA includes Interest expense on funding facilities, which are recorded as a component of Interest income, net, as these expenses are a direct cost driven by loan origination volume. By contrast, interest and amortization expense on non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA.
Our definitions of each of our non-GAAP financial measures allow us to add back certain cash and non-cash charges, and deduct certain gains that are included in calculating Total revenues, net, Net income (loss) attributable to Rocket Companies or Net income (loss). However, these expenses and gains vary greatly, and are difficult to predict. From time to time in the future, we may include or exclude other items if we believe that doing so is consistent with the goal of providing useful information to investors.
Although we use our non-GAAP financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business. Our non-GAAP financial measures can represent the effect of long-term strategies as opposed to short-term results. Our presentation of our non-GAAP financial measures should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Our non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Because of these limitations, our non-GAAP financial measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
Forward Looking Statements
Some of the statements contained in this document are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are generally identified by the use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. These forward-looking statements reflect our views with respect to future events as of the date of this document and are based on our management's current expectations, estimates, forecasts, projections, assumptions, beliefs and information. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. All such forward-looking statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this document. It is not possible to predict or identify all such risks. These risks include, but are not limited to, the risk factors that are described under the section titled "Risk Factors" in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document and in our SEC filings. We expressly disclaim any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
About Rocket Companies
Founded in 1985, Rocket Companies is a Detroit-based fintech platform company consisting of personal finance and consumer technology brands including Rocket Mortgage, Rocket Homes, Amrock, Rocket Money, Rocket Loans, Rocket Mortgage Canada, Lendesk, Core Digital Media, Rocket Central and Rock Connections.
Rocket Companies' mission is to be the best at creating certainty in life's most complex moments so that its clients can live their dreams. The Company helps clients achieve the dream of home ownership and financial freedom through industry-leading client experiences powered by its simple, fast and trusted digital solutions. Rocket Companies ranked #11 on Fortune's list of the "100 Best Companies to Work For" in 2023 and has placed in the top third of the list for 20 consecutive years. For more information, please visit our Corporate Website or Investor Relations Website.
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SOURCE Rocket Companies, Inc.