Rocket returns to profitability in Q2, yields early benefits from Redfin deal

Rocket Companies, the parent of Rocket Mortgage, has returned to profitability despite a challenging second quarter for the mortgage industry, marked by economic uncertainties in the U.S. The company is now focusing on integrating the recently acquired real estate brokerage firm Redfin, which has already shown early benefits.

In the second quarter, Rocket reported a GAAP net income of $34 million, a decrease from its $178 million profit in the same period of 2024, but a significant improvement from the $212 million loss in the previous quarter. Adjusted net income was $75 million, according to filings with the Securities and Exchange Commission. 

“We mentioned a delayed spring homebuying season, and that’s exactly what played out,” Varun Krishna, CEO of Rocket Companies, told analysts on Thursday. “April was pretty abnormal; there was a lot of volatility. You had tariffs, rates dipping and climbing, consumer sentiment dropping. In general, affordability was a little bit challenged.” 

Rocket’s total revenue for the quarter was $1.36 billion, up from $1.3 billion in the same period last year, while expenses increased from $1.1 billion to $1.3 billion.

Mortgage production rose to $29 billion from April to June, compared to $24.6 billion in the same period last year and $21.5 billion in the first quarter of 2025. The direct-to-consumer channel accounted for $14.1 billion, surpassing the $13.4 billion Rocket produced in the broker channel.

Krishna said Rocket served 100,000 origination clients, with purchase volume increasing month over month from April to June, supported by “affordability programs.” The company also experienced “strong growth” in refinance volume, he said, while home equity loan originations nearly doubled year over year, setting new records for units and volume.

On the artificial intelligence front, there was a nearly 20% increase in daily follow-ups with refinance clients. More than 80% of clients opted to continue their applications via chat, with those starting their journey in AI chat converting at rates that were three times higher on the purchase side of business and 2.5 times higher for refi business compared to those not using chat.

Rocket has launched a fully digital refi that can be completed in under 30 minutes, with a goal to reduce it to 10 minutes.

Its gain-on-sale margin was 2.80% in Q2 2025, a decrease of 19 basis points compared to the same period last year and a decline of 9 bps from Q1. Executives anticipate margins will remain stable in Q3. Total liquidity in Q2 2025 was $9.1 billion as of June 30.

Redfin integration moving ‘at a rapid pace’

Redfin financials were not included in the Q2 results, but its integration has moved at a “rapid pace,” Krishna said.

Rocket has introduced prequalification buttons on every home listing and launched Rocket preferred pricing. Qualified clients who finance with Rocket and work with a Redfin agent have a one-point rate reduction in their first year, up to $6,000.

Rocket is adding nearly 150 loan officers from Bay Equity Home Loans, a Redfin subsidiary, enhancing its presence in local markets. The company is also merging the Rocket Homes agent network with the Redfin agent network to achieve greater scale.

Since July 1, Rocket has seen more than 65 Redfin clients close on homes. Also, 200,000 people have clicked on the prequalification button, with 23% of Redfin account users becoming contactable leads for Rocket. In addition, 12% of users entering the funnel proceed to start an application, and 7,000 agent referrals have been sent to Rocket.

“Clients referred from Rocket to Redfin are 30% more likely than those from other channels to upgrade to verified approval letters, which is the strongest sign that they’re moving toward closing these results,” Krishna said.

Regarding Rocket’s acquisition of Mr. Cooper, executives maintain the forecast of closing the deal in the fourth quarter of 2025. The deal will bolster Rocket’s strategy to recapture customers through an expanded servicing portfolio. Rocket’s unpaid principal balance for its servicing portfolio, which includes acquired and subserviced loans, reached $609 billion in the quarter. 

Brian Brown, Rocket’s chief financial officer, told analysts that servicing portfolio transfers were down 30% in the first half of the year compared to the same period in 2024 across the entire market. But in this “mute market,” he said, Rocket remains “active,” particularly for assets with “high recapture potential.”

Rocket streamlined operations by shutting down Rocket Mortgage Canada and winding down the Rocket Visa Signature card program, resulting in $80 million in annualized savings.

But total expenses are anticipated to rise by approximately $335 million in the third quarter compared to the second quarter, including $275 million in Redfin-related costs and $90 million in nonrecurring items ($30 million for severance and $60 million for interest expenses from issuing bonds to replace Mr. Cooper’s debt). This is expected to be partially offset by a reduction in standalone expenses.

Looking forward, the company expects adjusted revenues between $1.6 billion and $1.75 billion in Q3 2025, which considers a full quarter of consolidated financial results from Redfin.