Rocket Companies (RKT) Q3 2026 earnings review
Rocket cut costs, but it expects revenue to fall 10%
Rocket earned more from each loan and spent less, but a smaller mortgage market shrank its revenue from the spring. Revenue excluding one-offs fell 7% from the second quarter as customers locked in 14% fewer loans. Chief executive Varun Krishna said Rocket still gained share. By our math, the fourth-quarter plan puts revenue 10% below a year ago.
| Revenue, excluding servicing-rights valuation swings | $2,574M −7% from the second quarter; inside the $2.5–2.7B plan |
|---|---|
| Profit per share, excluding one-offs | $0.15 $0.16 last quarter; $0.07 a year ago |
| Loans customers locked in | $40.4B −14% from the second quarter |
| Fourth-quarter outlook | $2.1–2.3B middle of the range: −10% from a year ago |
⚖️ Verdict: 🔴 Bearish
The story got worse because the outlook now points down, against a period that already included Mr. Cooper. The good news: lower spending lifted the profit margin excluding one-offs to its highest in nearly five years, Krishna said. One caution: reported net income of $709 million rests mostly on a servicing-rights valuation gain that reverses if rates fall.
The question now is whether Rocket can cut costs as fast as revenue drops. One answer says the Mr. Cooper savings hold up profit on less revenue; the other says a 15% revenue drop outruns them. Fourth-quarter expenses against the $2.2 billion middle of the plan will tell.
🐂 Bull Case
Rocket Cut Costs Faster Than Revenue Fell
Rocket's profit margin rose this quarter even though it sold fewer loans, because spending fell faster than revenue. Adjusted EBITDA, its profit before bond interest, taxes and one-offs, was 29.1% of revenue excluding valuation swings, up from 27.7% in the second quarter.
Total expenses fell by $177 million from the second quarter, below what finance chief Brian Brown had planned for the period. The savings came from the lines Rocket controls, not from lower volume alone.
- Pay and commissions: 36.3% of that revenue, down 1.7 points from the second quarter
- Marketing: 9.8% of that revenue, down 0.7 points
- Spending before deal costs, stock pay and acquired-asset amortization: down $158 million by our math, against the roughly $100 million Brown had planned
The pay line moved most because Rocket is removing duplicate roles after the Mr. Cooper purchase, so the margin gain does not depend on how many loans customers take. But adjusted net income still slipped 5% from the second quarter, because revenue fell faster than the lender could cut.
What to watch: fourth-quarter total expenses against revenue of about $2.2 billion at the middle of the plan. Expenses near this quarter's level would exceed that revenue by our math, so the cuts must continue for the margin to hold.
Rocket Earned More on Each Retail Loan
Gain on sale margin is what Rocket earns selling a mortgage to investors, as a share of the loan. Excluding the correspondent channel, where Rocket buys closed loans from other lenders at thin margins, it rose to 3.33% from 3.11% in the second quarter.
The direct-to-consumer channel, loans Rocket makes itself, earned 4.31%, up from 4.13%. Volume outside the correspondent channel fell 18% from the second quarter, but the price held, so each remaining loan paid more.
That is why profit margins rose while revenue fell. A refinance for an existing servicing client costs less to win than a new customer, and the company said its portfolio "reached its highest recapture levels to date".
What to watch: the fourth-quarter direct-to-consumer margin. A figure above 4.3% with volume down again would show pricing power that does not depend on a busy market.
Redfin Sends Rocket More Buyers and Refinancers
Rocket bought Redfin, the home-listings site and brokerage, in July 2025 to reach buyers before they choose a lender. Rocket said visitors who clicked to start a purchase mortgage on Redfin listings rose 50% from a year ago, and "Redfin’s contribution to Rocket’s refinance leads more than doubled in Q3".
Compass, the brokerage partner since February, has listed nearly 40,000 homes with the Detroit lender's pricing offer, up from about 25,000 a quarter earlier. Leads are not loans, though: the company has not said what share of Redfin buyers take a Rocket mortgage, and retail lock volume fell anyway.
What to watch: the share of Redfin buyers who take a Rocket mortgage, last given as 47% for the second quarter. A rising figure would show the funnel adds loans rather than relabelling customers Rocket would have won anyway.
Positives This Quarter Did Not Test
Two parts of the standing case for Rocket got no reading that could move them this quarter. The release reports liquidity but says nothing about progress on cost savings from the Mr. Cooper deal, so both stand where the second quarter left them until the earnings call or the quarterly filing.
- Balance sheet: total liquidity of $11.4 billion, up from $11.2 billion in June; the filing's leverage figures will show whether lower borrowing holds as volume falls.
- Mr. Cooper cost savings: the $400 million year-end target got no update in the release; a confirmed figure on the call would close the programme on schedule.
🐻 Bear Case
Rocket Expects Revenue to Fall 10% Next Quarter
Rocket's business still rises and falls with mortgage rates. Chief executive Varun Krishna said the company took share "even as mortgage rates climbed to a three-year high", and summed up the quarter: "Rates went up. We took share. Profits grew. That’s not a coincidence."
Profit grew from a year ago because Rocket bought Mr. Cooper in October 2025. Against the second quarter, profit excluding one-offs fell 5% and revenue excluding valuation swings 7%. Volume is weaker still. Customers locked in 14% fewer loans than in the spring, and outside the correspondent channel the total was 15% below a year ago, even though this year's figure includes Mr. Cooper's own retail lending.
Rocket expects revenue excluding valuation swings of $2.1–2.3 billion in the fourth quarter, by our math 10% below a year ago at the middle. That comparison is the first with Mr. Cooper in both periods, so no acquisition flatters it. Last year's fourth quarter also had a refinance rush when rates dipped in September, so part of the drop is a hard comparison.
What to watch: fourth-quarter net rate lock volume against this quarter's $40.4 billion. A second double-digit decline would mean the plan assumes no help from rates and that recapture alone cannot hold volume.
Rocket Pro Still Earns 0.70% on Each Loan
Rocket Pro is the wholesale channel, where independent brokers bring Rocket their clients' loans. Its gain on sale margin, revenue per dollar of loans sold, was 0.70%, against 4.31% in direct lending.
The margin has sat there since Rocket began giving brokers pricing credits with Compass in February, and in October it extended the credit through year-end while launching Orbit, a rewards programme with "expanded pricing-credit flexibility".
The company said the credit produced more than $3 billion of locks since February, roughly 2% of all locks this year by our math. So the credit buys little volume but caps the margin, and Rocket Pro locks still fell 25% from the second quarter.
What to watch: Rocket Pro's fourth-quarter margin with the credit still running. A reading near 0.7% again would mean the channel earns almost nothing while Rocket pays to keep brokers.
Most of the Reported Profit Is a Rate Mark
Rocket's reported net income of $709 million owes most of itself to accounting. When rates rise, the value of its mortgage servicing rights, the contracts to collect payments on $2.0 trillion of loans, goes up because fewer borrowers refinance away. That gain, net of hedges, was $710 million, three-quarters of pre-tax income by our math.
Rocket strips the gain out of its own adjusted figures, along with $113 million of deal costs for a seventh straight quarter, and it kept selling the asset. Servicing rights on $23 billion of loans went for $379 million. That is less than half the spring sale. It kept subservicing and recapture on "nearly 70%" of them, against about 80% in the spring.
This matters because the gain reverses if rates fall, and Rocket has said it relies partly on recapture rather than hedges to offset that risk. Meanwhile servicing fee income, by our math, slipped 3% from the second quarter as sold loans left the book.
What to watch: contractually specified servicing fees in the quarterly filing, against $903 million in the second quarter. A clear drop would show the sales are now eating the recurring income management describes as a floor.
Risks This Quarter Did Not Answer
Three standing concerns got no new information in the release. Each needs either the earnings call or the quarterly filing, and none of them moved on this quarter's numbers, so they stay open.
- HouseCanary lawsuit: a jury awarded $175 million against Rocket Close in March, with $103 million reserved and no accrual this quarter; the filing's legal note will show whether a judgment was entered.
- Servicing concentration: a regulator-imposed cap on the servicing portfolio and the retention of subservicing clients after the merger; the filing's portfolio table will show whether subserviced balances held.
- Market share: Krishna said share rose in purchase and refinance but gave no figures, last stated at 6.2% and 14.3% for the second quarter; the call should give the numbers.
👓 Other Themes
Rocket Money Launches an AI Money Agent
In August Rocket Money, the personal finance app, launched Rowan, "an AI financial agent developed with Anthropic that proactively manages client finances through text messaging" by renegotiating bills and cancelling unused subscriptions. In September Rocket Mortgage adopted VantageScore 4.0, a credit score that the company said "meaningfully expands borrower qualification rates". Neither has a revenue figure yet, so they sit outside the case for now.
💲 Other KPIs
Fell by $2.5 billion from June and by $3.7 billion since December. Secured financing is the short-term borrowing that funds loans before Rocket sells them, so it falls with loan volume, and the loans held for sale at quarter-end were also lower than in December. Unsecured bonds stayed near $10.7 billion.
Up 35% from a year ago because Rocket paid for Mr. Cooper in stock in October 2025. The count was almost unchanged from the second quarter, and no buyback is in place. Adjusted earnings per share were $0.15 against $0.07 a year ago, a smaller gain than adjusted net income because of the extra shares.
Grew 4% from a year ago, the first comparison in which both quarters include Redfin, the listings site Rocket bought in July 2025. All Other holds Redfin's brokerage commissions, Rocket Money subscriptions and Rocket Loans interest. Contribution margin, profit after direct costs, was $189 million, or 39% of revenue, about the same share as a year ago.
🔮 Guidance
New. The plan has revenue excluding valuation swings falling to about $2.2 billion at the middle of the range, 15% below this quarter by our math. Against last year's fourth quarter the drop is about 10%, the first comparison with Mr. Cooper in both periods. Rocket landed below the middle of its range in each of the last two quarters, after four straight quarters above the top.
❓ Key Questions
Has Rocket hit its $400 million Mr. Cooper savings target?
Brown said the full annual saving would arrive by year-end, with another $100 million in the first half of 2027. The release is silent, and the fourth-quarter plan depends on costs falling as fast as revenue.
What are Rocket's purchase and refinance market shares now?
Krishna said share rose in both from the second quarter, when it stood at 6.2% and 14.3%. The figures decide whether the 8% and 20% targets for 2027 remain reachable in a shrinking market.
What share of Redfin buyers take a Rocket mortgage?
The attach rate was 47% in the second quarter. Lead counts rose this quarter, but without the conversion figure readers cannot tell whether Redfin adds loans or relabels demand Rocket already had.
How much will the HouseCanary verdict finally cost?
A jury awarded $175 million against Rocket Close in March and reserves stood at $103 million. No accrual appeared this quarter, so the gap between verdict and reserve is still unexplained.
What did the $23 billion servicing-rights sale earn or lose?
Adjusted revenue excludes gains and losses on MSR sales, so the economics never show in the headline. With $115.5 billion of loans sold this year by our math, the terms and the plan for further sales matter.