Recent IPO Rocket Companies (NYSE:RKT), owner of the popular Rocket Mortgage and Quicken Loans businesses, disappointed investors with its first earnings report as a publicly traded enterprise. For the company's Q2 of fiscal 2020, reported after market close Wednesday, it booked just under $5.04 billion. This was a more than fivefold increase over the same quarter of last year.
That was on the back of loan originations that more than doubled over that stretch of time to hit a record $72 billion. Non-GAAP (adjusted) net income also ballooned, rising to $2.85 billion from the Q2 2019 result of $260 million.
While these figures were significantly higher on a year-over-year basis, they were expected. Rocket Companies estimated roughly the same in a report on preliminary results it published last month.
In its official earnings release, Rocket Companies cited "unprecedented demand" as a major driver of its growth for the period.
The company proffered guidance for its current Q3, although it didn't provide top- or bottom-line estimates. It did say it expected closed loan volume to range from $82 billion to $85 billion for the quarter, more than double the Q3 2019 results. It also forecast that its gain on sale margins would be 4.05% to 4.30%, versus the 3.29% of the year-ago period.
It wasn't clear why investors traded the stock down so heavily on Thursday (it fell by over 15%). Company executives did warn, in a conference call discussing the results, that its business would soften in Q4 due to the seasonality of the mortgage sector. However, this dynamic is common throughout the industry.