Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Thursday, May 7, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Varun Krishna
  • President and Chief Financial Officer — Brian Brown

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Adjusted Revenue -- $2.822 billion, surpassing the high end of guidance, demonstrating expansion in both purchase and refinance market share.
  • Adjusted EBITDA -- $738 million, up from $592 million sequentially, with margin increasing to 26% from 23% in the prior quarter.
  • Adjusted Diluted EPS -- $0.15, rising from $0.11 in the previous quarter as profitability strengthened.
  • Net Rate Lock Volume -- $49 billion, showing 19% sequential growth driven by all origination channels.
  • Servicing Fees Income -- Over $1 billion generated from the $2.1 trillion unpaid principal balance servicing portfolio, providing stable recurring cash flow.
  • Closed Loan Volume from Servicing Portfolio -- Reached an all-time high with 54% of refinance closings originating from existing serviced clients.
  • Home Equity and Jumbo Loans -- Both products doubled year over year, contributing to expanded market share in those categories.
  • Gain-on-Sale Margin (Excluding Correspondent) -- 322 basis points, the highest since 2021.
  • Channel Growth -- Nearly 180 new Rocket Pro partners added in two months, collectively representing $5 billion in annual closed loan volume.
  • Expense Synergy Realization -- $75 million of annualized run-rate savings recognized by Q1 end, aiming for $400 million by 2026, a full year ahead of schedule.
  • Origination Capacity -- Capability now up to $300 billion, achieved two years ahead of 2027 plan, while employing several hundred fewer production staff than 2024.
  • AI Impact -- Loan officer prospecting time dropped from two hours per day to zero for qualified prospects, with double-digit conversion improvement and preapproval conversion up 33%.
  • AgenTik AI -- Now manages top-of-funnel prospecting across chat, voice, and text, automating client qualification and outreach.
  • Digital Preapproval Utilization -- 40% of digital preapprovals completed outside of traditional business hours, with AI-driven preapprovals accounting for 10% of all preapprovals.
  • Redfin and Compass Partnership Metrics -- Nearly 10,000 exclusive Redfin listings and just under 30,000 leads delivered into the Compass ecosystem since launch.
  • Recurring or Less Rate-Sensitive Revenue -- Comprised 70% of total revenue, indicating greater business model stability versus prior periods.
  • Loan Production Efficiency -- Loans closed per team member increased 75% over two years, signifying operational leverage from AI.
  • Q2 Adjusted Revenue Guidance -- Estimated between $2.7 billion and $2.9 billion, reflecting flat volume expectations despite higher rate environment.
  • Q2 Expense Guidance -- Anticipated $2.2 billion excluding amortization, stock-based compensation, and one-time acquisition costs—a reduction of approximately $60 million from Q1.

SUMMARY

Rocket Companies (RKT 3.41%) highlighted substantial operational transformation, emphasizing advances in AI integration, origination capacity, and recurring revenue diversification. Management confirmed the acceleration of expense synergies from the Mr. Cooper and Redfin integrations, with associated cost reductions supporting margin expansion ahead of targeted timelines. Strategic investments in home equity, jumbo, and correspondent channels contributed to market share gains, while newly formed partnerships and technology launches expanded lead generation and top-of-funnel reach. Expectations for the next quarter remain cautious regarding volume uplift, as real-time indicators show the housing market has softened, yet Rocket Companies' model provides resilience and upside leverage should conditions improve.

  • CEO Krishna stated, "Rocket Companies, Inc. is no longer the same company that it was three years ago," indicating a fundamental shift in organizational structure and strategic focus.
  • The launch of Jupiter, a broker-facing loan origination system, was described as a catalyst for partner growth and workflow efficiency in the wholesale channel.
  • Management reported that "AI prospecting has reduced loan officer prospecting time from up to two hours per day down to zero," illustrating immediate process improvement.
  • Quarterly home sales data referenced a 1% year-over-year decline in March and nearly 4% drop from February, signaling broader market headwinds affecting the industry.
  • Integration of servicing platforms was described as "the largest servicing transfer in industry history," unifying millions of clients and thousands of workflows into a single system.
  • Redfin attach rates are "hovering around 45% and continuing to increase," with management having "line of sight to 50% attach already."
  • On expense management, CFO Brown noted, "The Q2 guide, at the midpoint, has expenses down about $60 million versus Q1 after adjustments," reinforcing ongoing efficiency gains.
  • Origination capacity expansion was achieved with a workforce reduction, as "Loans closed per team member were up 75% compared to two years ago."

INDUSTRY GLOSSARY

  • Recapture: The percentage of existing servicing clients who refinance or purchase their next loan through the same lender, enhancing portfolio retention and margin.
  • Rate Lock Volume: The total dollar amount of loans for which borrowers have committed to a specified interest rate, serving as a leading indicator of near-term origination volume.
  • Gain-on-Sale Margin: The spread earned on mortgage loan sales to secondary market investors, excluding correspondent channel transactions, reflecting profitability of originations.
  • Attach Rate: The frequency with which a primary product or service (e.g., mortgage) is paired with a complementary offering (e.g., Redfin real estate transaction) by a client.
  • MSR (Mortgage Servicing Rights): The contractual right to service a mortgage, collect payments, and realize servicing-related revenue streams.

Full Conference Call Transcript

Varun Krishna, and our President and CFO, Brian Brown. Earlier today, we issued our first quarter earnings release, which is available on our website at rocketcompanies.com under investor info. Also available on our website is an investor presentation. Before I turn things over to Varun, let me quickly go over our disclaimers. On today's call, we will provide you with information regarding our first quarter 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 assumptions we mention today.

We encourage you to consider the risk factors contained in our SEC filings for a detailed discussion of these risks and uncertainties. We undertake no obligation to update these statements as a result of new information or future events, except as required by law. This call is being broadcast online and is accessible on our Investor Relations website. A recording of the call will be posted later today. Our commentary today will also include non-GAAP financial measures. 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 will turn things over to Varun Krishna to get us started.

Varun?

Varun Krishna: Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. There is a lot happening at Rocket Companies, Inc., so I am going to keep this simple. Three things matter this quarter. First, we delivered strong performance in a volatile market. Second, we are using AI, data, and distribution to create opportunity instead of waiting for the market to hand it to us. And third, Rocket Companies, Inc. is no longer the same company that it was three years ago. The shape of our business has not just changed; it has fundamentally evolved. Let us start with the quarter. Adjusted revenue came in at $2.8 billion, above the high end of our guidance range.

That is not an accident. It reflects the durability of our model, the strength of our execution, and the discipline and resilience of our team. We do what we say. We say what we do. And we have done that through some of the most volatile operating conditions this industry has ever seen. That consistency is not cosmetic. It defines Rocket Companies, Inc. Our $2.1 trillion unpaid principal balance stands out for both scale and quality. In Q1, we generated over $1 billion in income from servicing fees. The power of that portfolio is simple. It creates stable cash flow, it balances the company, and it gives us a built-in engine for future growth.

When you combine that with our origination business, you get a massive platform that expands the top of our funnel without traditional client acquisition costs. That is a rare combination: recurring cash flow, deep client relationships, and built-in upside when the market moves. Net rate lock volume was $49 billion, up 19% from last quarter. We gained market share in both purchase and refinance, quarter over quarter and year over year. Adjusted EBITDA reached $738 million with margin expanding to 26% from 23% in the prior quarter. Adjusted diluted EPS was $0.15 compared with $0.11 in the fourth quarter. Now when I look at the housing market, there are two forces at work.

The first is the market itself: rates, affordability, inventory, consumer confidence. Q1 was a wild ride. Rates moved down through the early part of the quarter. The 30-year fixed rate went from 6.15% in January to just under 6% by February. That helped spark both purchase and refinance activity. Then volatility returned. Rates moved back up to 6.5% in March. Affordability tightened. The spring season started unevenly. You can see it in the data. Existing home sales in March were down 1% year over year and nearly 4% from February. That is the market. It moves. It stalls. It surprises people. We do not build Rocket Companies, Inc. around being surprised. The second force is much bigger: AI.

AI is changing how every industry works, and housing is one of those industries. For decades, housing has been slow, manual, fragmented, and expensive. Consumers have carried too much of the burden. Agents, loan officers, and servicers have fought through too much friction—too many steps, too many handoffs, too much waiting. Artificial intelligence fundamentally changes that. Real-time data, predictive insights, and intelligent automation can make the homeownership experience faster, simpler, more personal, and more affordable. A lot of companies are talking about AI right now. Some are still trying to find a strategy. Others are bolting tools onto businesses that were never built to use them properly. That is not Rocket Companies, Inc.

We have been building toward this for years. Over the last six years, we have invested more than $500 million in AI, automation, and the infrastructure underneath it. So when people ask what AI changes for Rocket Companies, Inc., the answer is clear: it helps us scale what we already do well. That distinction matters. AI without proprietary data is not much of an advantage. AI without distribution is not much of an advantage. AI without workflow integration—not much of an advantage. The advantage really comes from putting it all together.

At Rocket Companies, Inc., we have the clients, data, servicing relationships, brand, technology, loan officers, agent network, marketing engine, and operating discipline to put AI to work where it actually matters—not in a demo, not in a lab, in the business at national scale. When AI is woven into the homeownership experience, we can do things others simply cannot match. A client can describe their dream home to Redfin and find listings that fit what they actually mean, not just what they typed. A servicing client can be notified when it is time to refinance, understand their options, and move through the process in minutes.

A home buyer can get preapproved when it is convenient for them, not when the industry feels like picking up the phone. That is where this gets extremely powerful. Let me give you two examples. First, AgenTik AI is now managing client prospecting and outreach at the top of the funnel. That includes helping clients find homes through conversational search, reaching servicing clients when they are in the money, and prequalifying purchase clients. This gives us the ability to contact, engage, and qualify our entire book along with new leads across chat, voice, and text. Prospecting used to be one of the most time-consuming and lowest-converting activities for our loan officers.

In some cases, a loan officer might dial 14 clients just to get one on the phone. Now AI works those leads with precision. It knows the client's preferred time and channel. It uses our proprietary data to personalize the experience. It helps us reach the right client with the right message at the right moment. When you service one in six mortgages in America, speed and scale matter. When the market moves, we need to move at a level most of the industry cannot touch. AI prospecting has reduced loan officer prospecting time from up to two hours per day down to zero.

That time is now being used with clients who are already engaged and prescreened, driving conversion higher by double digits. That is not theory. That is production. Here is the second example. In late February, we launched AI-powered purchase preapproval letters. The process is fast and simple, and it is available 24/7. No loan officer assistance is required. Clients can get preapproved when it works for them, and they are doing exactly that. Forty percent of our digital preapprovals are now completed outside of traditional business hours.

In just a few months, AgenTik preapprovals have grown to 10% of all preapprovals, are generating more preapproval letters overall with a lower percentage requiring loan officer involvement, while driving 33% higher conversion through AI. That is the model: automate the work that should be automated, let our people spend more time where judgment, expertise, and human connection matter most, create a better experience for the client, and better economics for the business. Last quarter, I talked about an incremental $1 billion in monthly volume driven by our AI innovations. With our latest launches, we have added another $1 billion in volume per month. Our launch velocity has also changed fundamentally.

We are now pushing out new features and experiences five times faster than we were just two years ago. That means faster scale, higher conversion, more capacity, and better unit economics. Turning now to integration. We are tracking very well against our major milestones. We now expect Mr. Cooper expense synergies to be fully realized by 2026, one year ahead of the original plan. That is a major proof point. Integration is not putting logos next to each other. It is making the company work better, faster, and with more force. That brings me to who Rocket Companies, Inc. is today.

Three years ago, we began reconstructing the company and made aggressive moves to restructure, refocus, and reorganize Rocket Companies, Inc. into something much larger than a mortgage lender. In 2025, we built the foundation. We expanded the ecosystem. We strengthened the platform. We widened the top of funnel. We improved distribution. In 2026, we are bringing it all together across search, origination, servicing, data, and, of course, artificial intelligence. That is how we create our own opportunity. We are not waiting for a perfect rate environment. We are not waiting for the market to normalize. We are building a company that can win in the market we have and take even more ground when the market improves.

So when you think of Rocket Companies, Inc. today, you should think of three things: platform, distribution engine, and ecosystem. These are not slogans. They are the machinery of the company. No one matches our top of funnel when you combine home search, marketing, and servicing recapture. No one matches the combination of our brand, scale, distribution, and data. We have hundreds of thousands of real estate agents in our network and more than 10 thousand loan officers and broker partners. We have a technology platform custom built for this industry. We have proprietary data that gets smarter with every client interaction. That is very hard to copy.

Others may copy pieces—a feature here, a workflow there, a marketing claim, a model, a partnership—but a piece is not the system, and the system is what matters. Scale matters. Servicing matters. Recapture matters. Distribution matters. Data, compliance, and execution all matter. Without those things, AI is just a tool. With those things, AI becomes leverage. And then there is culture. Culture is still one of Rocket Companies, Inc.’s sharpest advantages. Whether someone came from legacy Rocket, Redfin, or Mr. Cooper, they are here because they believe in the mission to help everyone home. That matters more than people think. We are ambitious. We are competitive. We want to win badly.

But we also care deeply about the client, and we care about each other. That combination is rare. Hard edge, real heart—that has always been Rocket Companies, Inc. For 40 years, our culture has helped us move through change before others were ready. It helped us lead through the Internet era. It helped us lead through mobile, and it is helping us lead again in artificial intelligence. We do not wait for change. We engineer it. That is who Rocket Companies, Inc. is today. This quarter shows the model is working. The AI work shows the model is getting stronger. And the company is built to take ground in whatever market shows up. With that, Brian, over to you.

Brian Brown: Thank you, Varun, and good afternoon, everyone. Today, I will discuss Rocket Companies, Inc.’s strong first quarter results, which reflect the power of the Rocket Companies, Inc. ecosystem and platform. I will also provide an update on how we continue to make progress on our fixed cost and walk through our outlook for the second quarter. Let me start with our financial performance. Over the past year, we have intentionally transformed Rocket Companies, Inc., and it is showing up in the numbers. In Q1, we beat guidance, expanded EBITDA margins, and grew market share in both refinance and purchase. Adjusted revenue grew to $2.822 billion, surpassing the high end of our guidance range.

Adjusted net income was $422 million, or $0.15 of adjusted EPS. Adjusted EBITDA rose to $738 million, up from $592 million last quarter, with margins expanding to 26%. This was our most profitable quarter in four years. This performance was a direct result of deliberate strategy and sustained investment. Rocket Companies, Inc. was built to perform through volatility across every rate environment in every market cycle. The industry experienced a favorable origination environment in January and February as rates cooperated, followed by a sharp reversal in March as energy prices surged with the outbreak of the conflict in the Middle East. Rocket Companies, Inc. navigated both environments with strength.

Net rate lock volume reached $49 billion, a 19% increase quarter over quarter, driven by growth across all origination channels. The serviced client recapture and Rocket Pro channels led the way. The combination of the Rocket Companies, Inc. brand, more personalized experiences, and AI-powered origination capabilities drove recapture on Mr. Cooper-originated clients to an all-time high. The gains we have seen in the first two quarters since closing have exceeded our internal expectations, and the numbers reflect it. Closed loan volume from our servicing portfolio hit an all-time high, with 54% of refinance closings coming from existing serviced clients. On the wholesale side, Rocket Pro built momentum throughout the quarter.

A big catalyst came from Rocket Ignite, our large-scale event bringing our mortgage broker partners across the country together. At Ignite, we launched Jupiter, a white-labeled loan origination system we are offering to our broker partners at no cost. Jupiter streamlines workflow, automates follow-ups, and manages the loan life cycle from registration to closing. We also announced an expansion of our partnership with Compass and launched a special pricing incentive for Rocket Pro partners working with Compass agents. The market response has been immediate. In just the last two months, we have already added nearly 180 new Rocket Pro partners, which collectively represent $5 billion in annual closed loan volume.

The pace at which we are adding partners continues to increase. Cutting across all channels was the growth of our home equity and jumbo loan products, with both doubling year over year. This growth translated directly into market share expansion quarter on quarter and year on year. These increases were accompanied by healthy margins. Gain-on-sale margin, excluding correspondent, was 322 basis points in the first quarter, our highest since 2021. But what makes these results particularly meaningful is not just their scale and magnitude; it is the foundation upon which they are built. With the acquisition of Mr. Cooper and Redfin, the composition of Rocket Companies, Inc.’s revenue is more diverse than ever.

In the first quarter, roughly 70% of Rocket Companies, Inc.’s revenue came from recurring or less rate-sensitive sources. We think about our business across three distinct revenue categories. First, recurring revenue, which includes the servicing business and the Rocket Money subscription business. This category represents our durable, fee-based foundation. Second, our less rate-sensitive revenue, which includes purchase mortgages, cash-out, closed-end seconds, and the Redfin business, is primarily driven by housing activity and client demand. While these products have some relationship to rates, they offer an addressable market that is large and relatively stable. The third category is rate-sensitive revenue, consisting of rate-and-term refinances and other items.

Our rate-sensitive revenue has the most direct exposure to rate movements, but it is also our greatest source of upside when rates decline. This is what a balanced business model looks like. More than two thirds of our revenue provides stability and predictability through the cycle. Rocket Companies, Inc. is no longer solely a rate-driven business. We are a business with durable, recurring revenue streams that also retains significant upside when rates fall. Now let me share an update on integration synergies. Integrating a business of this scale demands disciplined execution. Our teams have moved with speed and precision with a strict focus on protecting the Rocket Companies, Inc. client experience. The Mr.

Cooper integration is running well ahead of schedule. As we mentioned last quarter, we identified the full $400 million target for annualized expense synergies with full realization expected by 2026. That puts us an entire year ahead of our original plan. Here is how we expect these savings to phase in between now and the end of the year. Through the end of the first quarter, we have realized $75 million in annualized run-rate savings. By the end of the second quarter, we expect to capture another $100 million in annualized savings, and the remaining $225 million of annualized savings is planned to be captured in the second half of this year.

These synergies flow directly into our fixed cost structure, primarily through the elimination of overlapping vendor contracts and the rationalization of duplicative functions. On a related note, I would like to give an exciting update on our origination capacity. At our September 2024 Investor Day, we shared that at that time, Rocket Companies, Inc. had the capacity to originate up to $150 billion without adding fixed costs. We also shared that we expected to double that capacity to $300 billion by 2027. Since then, the pace of deployment has accelerated materially with the power of AI.

End-to-end digital refinancing, digital preapprovals for purchase mortgages, voice AI and SMS texting for prospecting clients, AI underwriting agents—these capabilities, backed by sustained investment, are live at scale today and driving real operating leverage. The result is that we now have up to $300 billion of origination capacity with several hundred fewer production team members than we had back in 2024, and we have done this two years ahead of schedule while actively reducing fixed costs through synergies. March is the clearest proof point. We ramped up volumes quickly from January and February’s levels, closing nearly $20 billion in volume without straining the platform. Loans closed per team member were up 75% compared to two years ago.

AI is sharpening our unit economics and widening our competitive moat. Now turning to our outlook for the second quarter. Before getting into the numbers, let me frame up the current market environment. Since the outbreak of conflict in the Middle East in late February, rising energy prices have weighed on consumer sentiment and raised concerns about the future of inflation. Mortgage rates are approximately 50 basis points higher than their February lows. Homes are taking longer to sell, averaging 51 days on market, the longest stretch since 2019. The spring home buying season is off to a slow start.

Our real-time market indicators suggest that the mortgage market will not see the same sort of uplift in Q2 that historical seasonality would typically suggest. Our guidance reflects this reality and reflects our ability to outperform within it. For the second quarter, we expect adjusted revenue to be between $2.7 billion and $2.9 billion. The midpoint of this range reflects our confidence in continued share gains. On the expense side, we anticipate approximately $2.43 billion at the midpoint of the revenue range. This includes $110 million in amortization of intangible assets, $100 million for stock-based compensation, and $20 million in estimated one-time acquisition costs.

Excluding these items, expenses are expected to be $2.2 billion, which is approximately $60 million lower than the first quarter due to the realization of synergies and ongoing benefits of our AI initiatives. As a reminder, this Q2 expense guidance reflects the reclassification of warehouse interest expense from a contra revenue account to an expense line item, which is consistent with the Q1 financials in the earnings release. The net result implies higher profitability in the second quarter, in what we expect to be a tougher market. 2026 is a pivotal year, and this platform is built for it. Our top-of-funnel reach, distribution network, massive servicing and technology platform form a durable, self-reinforcing competitive engine.

Today, these strengths drive profitable growth regardless of how the macro environment shifts. With that, operator, we are ready to take questions.

Operator: We will now open the call for questions. If you would like to ask a question, please press star followed by one on your telephone keypad. Kindly limit your participation to one question only. Your first question comes from the line of Mihir Bhatia of Bank of America. Your line is now open.

Mihir Bhatia: In terms of the guide, you are guiding a little bit below where Q1 ended up. Could you talk through some of the internals—what is driving that? Is it volume, margins? I know rates have backed up a bit, but its impact is [inaudible].

Varun Krishna: Mihir, thank you for the question. Let me start by talking a little bit about our market outlook, and then I will ask Brian to unpack more detail on the specifics of our actual guide, because I think that context is important. Q1 started extremely strong—rates were cooperating—and you really saw Rocket Companies, Inc.’s business model snapping into action exactly as designed. That is what is unique about our ecosystem and platform working. Obviously, what happened later in the quarter is that a major conflict in the Middle East exploded. With the war, oil prices went up, inflation pressure increased, and then rates moved up. That certainly changed some of the trajectory as we moved into Q2.

I think the industry forecasts are expecting a step-up in Q2; I would say we are just not seeing that. What we see in our real-time data is that Q2 is probably going to look a little bit more like Q1. Yes, the environment has shifted, but the underlying demand is still resilient, and that is the most important thing. Specifically for Rocket Companies, Inc., when you have an ecosystem and a platform that is built for this environment—when you can convert demand at scale—you have a self-perpetuating ecosystem with servicing that is built for this exact moment. All of that is reflected in our guide, which is strong, and, obviously, when the conflict resolves, we expect to benefit further.

With that backdrop, let me hand it over to Brian to unpack a little bit more about Q1 and our Q2 guide.

Brian Brown: I think January and February—and really even March—demonstrated our ability to capture the upside when rates cooperate. All of our channels outperformed. That includes recapture, our new client acquisition, and especially the Pro business. But to Varun’s point, today the rate environment is completely different. The ten-year is hovering somewhere around 440 basis points; you have to go all the way back to July to see rates that high. So we have seen an expected pullback from rate-and-term refinance—there is no doubt about that. The good news is as we move into Q2, our less rate-sensitive products like cash-out and closed-end seconds continue to perform at those Q1 levels.

Another thing worth mentioning is servicing amortization—it has slowed down—which really demonstrates this balanced business model in action. On the purchase side, it has been a slow-forming season, but it is important to note the pipeline of preapproved purchase clients is at our highest level of all time, proving that there are clients in market who want to buy homes; they just need a little bit of cooperation from rates. On Q2 guidance, we think the market is tougher than the industry forecasts would suggest.

From a volume perspective here at Rocket Companies, Inc., we expect volumes to be similar to Q1, which is really impressive when you think about rates being more than 50 basis points higher than those Q1 levels. On the gain-on-sale margin front, margins so far in Q2 are holding consistent with Q1 on an individual channel level. We are seeing a little bit of downward pressure from mix shift to more Pro during a heavier purchase season, but overall margins remain healthy at the channel level.

Operator: Your next question comes from the line of Jeffrey David Adelson of Morgan Stanley. Your line is now open.

Jeffrey David Adelson: Good afternoon, and thanks for taking my question. I wanted to focus on expenses. It looks like your expenses came down quite a bit this quarter—about 2%, or maybe $60 million below your guide. Can you talk about what drove that beat? Was this synergy execution or something else? Historically when you come in at the higher end of your revenue guide, your expenses tend to go above the midpoint of the guide you gave for the quarter. And then your incremental margin also stepped up a bit this quarter. How are you thinking about the business’s incremental margins over time?

I know you talk a lot about the 70% on the Rocket standalone side, but could you help us unpack the different incremental margins for the two big parts of the business you now have?

Brian Brown: Thanks, Jeff. Really proud of the work we have done on the expense side. Our goals are simple: take fixed costs out of the system while increasing efficiency and capacity—essentially growing operating leverage. Since we are talking about capacity, we have $300 billion of origination capacity right now, more than double in two years. It is kind of crazy to think about where our capacity could be two years from now at this velocity. On the margin piece, remember when we are doing recapture loans—a big part of our business—you have a cost of acquisition that is close to zero, and you are generating 50% to 70% incremental EBITDA margins after amortization when we fill up that capacity.

On the better-than-expected expenses in Q1—and note Q2 expense guidance is down as well—it is the synergies. It is taking fixed costs out of the system and being ahead of our plan. The Q2 guide, at the midpoint, has expenses down about $60 million versus Q1 after adjustments. That is almost two pennies of EPS. You can see operating leverage increasing and EBITDA margins expanding. We are a full year ahead of our original goal on expense-side synergies. We set $400 million by the end of 2027, and we will have that in the books by the end of 2026. We are decreasing fixed costs, increasing operating leverage, and getting more efficient along the way.

Operator: Your next question comes from the line of Chad Larkin of Oppenheimer. Your line is now open.

Chad Larkin: You gave a couple of really good examples of how AI is benefiting your business today. How should we think about future AI benefits to the business? I would think it should help you drive better long-term recapture rates over time, for one. And how should we think about AI benefits to margin over the medium and long term?

Varun Krishna: Thanks for the question, Chad. The simple answer is we expect the benefits of our technology and AI investments to compound in a nonlinear way. There is a lot of hype in the market around AI, and most of what you are seeing from other players are really narrow use cases—they work for one loan, one scenario, or a demo here or there—but those claims are not translating into real outcomes. What matters in AI is not the model; it is the system attached to the model that feeds it. That is where Rocket Companies, Inc. is very special. We have the intent with Redfin—50 million monthly active users at the top of the funnel.

We have the economics in financing with Rocket Mortgage at national scale. We have the ongoing servicing relationship with Mr. Cooper. This creates a proprietary dataset across the entirety of the homeownership life cycle. Operating that system at scale is key. Our chat pulls credit 4 thousand times per day. Our AI prospecting processes more than 32 thousand outbound leads every single day. That is real productivity. From March 2024 to March 2026, closings per team member are up 74%. There is no one else in this industry operating AI at that level. We are building the system that AI runs on, at scale from day one. As you assess other players, ask: what outcomes are being driven at scale?

How many clients benefit? How much cost comes out? What is the net conversion improvement? How many loans are actually closed? We expect benefits across every aspect of our company—from how we acquire and grow demand at the top of the funnel, to how we drive conversion, to how we reduce the cost to originate a loan, and ultimately how we force-multiply recapture—to increase and compound in a nonlinear way over the coming years.

Operator: Your next question comes from the line of Mark DeVries of Deutsche Bank. Your line is now open.

Mark Christian DeVries: It looks like you are tracking well on recapture on the Mr. Cooper servicing book. I thought I heard something about 54% recapture. Was that just for Mr. Cooper? And could you talk about your optimism of ultimately getting to the low-60% range that was assumed in the deal economics?

Varun Krishna: Great question, Mark. We are very bullish. We are in the midst of a pretty massive integration of two big public companies, and I could not be more proud of the progress. You have multiple companies, systems, and cultures coming together at scale, impacting thousands of team members. Three data points give me a lot of confidence. First, complexity: we have completed the largest servicing transfer in industry history, bringing our servicing platforms and client base into one unified experience—millions of clients, trillions of dollars of unpaid principal balance, and thousands of workflows now fully unified into a single system. Second, culture: integrations only work if the culture works, and we are seeing that.

A baseline survey across the integrated organization—including Redfin and Mr. Cooper—shows engagement at 82%, up two points. Third, execution: we are well ahead of plan. We originally guided to 2027 for Mr. Cooper expense synergies and now expect to achieve that in 2026. We are doing that while increasing capacity, continuing to invest, and running the business quarter over quarter meeting or beating our guidance. It is not just about taking out cost—it is about building a more scalable, efficient system and bringing the team along. Overall, we feel very good about progress and are very bullish on recapture ahead of schedule. Brian can unpack more detail.

Brian Brown: On recapture specifically, we are ahead of plan relative to what we set out to do. The 54% figure refers to the share of refinance closings coming from the serviced portfolio, inclusive of Rocket Companies, Inc. and Mr. Cooper, combined. Looking at recapture rates, the Mr. Cooper-originated portfolio is at the highest recapture in Cooper’s history—that is great to see. I am equally excited about the Cooper portfolio that was acquired or purchased—we are seeing really nice increases in recapture there as well. Both matter, because if we can continue to prove higher recapture on purchased portfolios, that opens many different ways of acquiring MSRs, putting them on the portfolio, and increasing LTV through great recapture.

So we are ahead of plan on Cooper recapture, which, as you know, is the lion’s share of revenue synergies. On the Redfin side, it is all about attach rates—we have line of sight to 50% attach already. We are hovering around 45% and continuing to increase, so we are seeing really nice revenue synergies there as well.

Operator: Your next question comes from the line of Ryan McKeveny of Zelman. Your line is now open.

Ryan McKeveny: I wanted to dig in on the Compass partnership. I know it has only been a couple of months, but can you talk about what you are seeing thus far—both on the Redfin side in terms of traffic to the website and lead generation, and also on the Rocket Companies, Inc. side being embedded as the digital mortgage provider within the Compass platform? Anything you can share on what you are seeing so far from the relationship?

Varun Krishna: Thank you for the question, Ryan. This partnership is very exciting to us. It is about skating to where the puck is going and impacting how this industry fundamentally works. Today the home buying process is extremely fractured—inventory and real estate, traffic, mortgage, and servicing are separate. That is not good for consumers; it creates friction, makes things more expensive, and is antiquated. We are bringing these closer together and connecting them so the buyer and seller benefit. The idea is simple: inventory drives traffic, traffic drives leads, leads drive mortgage, mortgage leads to servicing, and that creates recapture.

It is early days, but a couple of data points: we have already generated nearly 10 thousand exclusive listings on Redfin—inventory that drives traffic and discovery. We have delivered just shy of 30 thousand leads into the Compass ecosystem as an evolution of the Redfin business model. One in four of our purchase loans in our TPO broker channel are coming from Compass. These are promising early signals. With any large-scale enterprise partnership, there is more work to do, but this is an extension of the platform we are building—one system that benefits the client with better, faster experiences and lower rates and fees. The teams are working well together, and we will keep sharing progress.

Operator: Your next question comes from the line of Donald Fandetti of Wells Fargo. Your line is now open.

Donald Fandetti: Could you provide updated thoughts on the competitive landscape? It seems like some other originators and servicers are struggling to keep up with expense and AI investment. Related to that, how are you tracking toward your market share goals?

Varun Krishna: Thank you for the question, Don. We respect our competitors and learn from them, but our maniacal focus is on the client and executing our strategy—building a fully integrated platform across search, mortgage, and servicing. That is what you see with Rocket Companies, Inc., Redfin, and Mr. Cooper coming together, and you see it in the outcomes. Across the industry, the average time to close a loan is around 45 days. In March, Rocket Companies, Inc.’s days to close was less than half of that, and almost half of our loans closed in 15 days or less. That tells me many competitors’ technology investments are not translating into real operational performance—it is more marketing architecture.

Our technology is built for scale, to benefit millions of clients on day one. There are a lot of AI claims in the market, but many operate in extremely narrow use cases. Ask: at what scale does it operate, how many loans are closed, how much revenue is generated, how much cost is taken out? That is where the difference shows up. On market share, we feel very good about our progress and our ability to achieve our goals. Q1 is a good example—we gained share in both purchase and refinance, quarter over quarter and year over year. Growth will not be perfectly linear.

But the underlying drivers are working: Redfin attach rate and traffic converting into mortgage; servicing recapture as a strong lever; continued new client acquisition through brand marketing and AI-driven prospecting. We are principled in how we invest to drive growth. We will not sacrifice profitability to chase share. We are focused on growing share the right way for the long term.

Operator: Our last question comes from the line of Bose George of KBW. Your line is now open.

Bose Thomas George: Good afternoon. How do you feel about growing the correspondent channel as a way to increase market share?

Brian Brown: Thanks, Bose. We really like the correspondent channel. It was not a big focus for Rocket Companies, Inc. before, but it was one of the attractive points of Mr. Cooper. There are several ways to acquire MSRs. Our favorite is acquiring the client and doing the first loan organically. Rocket Companies, Inc. has traditionally participated in the bulk market and we will continue to look at that. The correspondent channel is a really efficient way to fill the servicing funnel. Going back to recapture, we know our recapture rate even on acquired MSRs is higher than the industry and it is rising every day, which allows us to be very thoughtful in the ROI equation.

It is a big part of our capital waterfall and a place we will continue to invest. Ultimately it comes down to best execution decisions we make almost every day among acquiring clients in market, bulk acquisitions, correspondent, and even the co-issue business, which is also a very attractive way to acquire MSRs.

Operator: I would now like to hand the call back to Varun Krishna for closing remarks.

Varun Krishna: Thanks, everybody, for listening, and we look forward to seeing you next quarter.

Operator: Thank you for attending today’s call. You may now disconnect. Goodbye.