Good day, and welcome to the Rocket Companies Incorporated Fourth Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Sharon Ng. Please go ahead.

Good afternoon, everyone, and thank you for joining us for Rocket Companies' earnings call covering the fourth quarter and full year of 2021. With us this afternoon are Rocket Companies' CEO, Jay Farner; our CFO, Julie Booth; and our President and COO, Bob Walters. Before I turn things over to Jay, let me quickly go over our disclaimers. On today's call, we provide you with information regarding our fourth quarter and full year 2021 performance as well as our financial outlook. This conference call includes forward-looking statements. These statements are subject to risks and uncertainties that cause actual results to differ materially from the expectations and the assumptions we mentioned 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 further 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 available later today. Our commentary today will also include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found on our earnings release issued earlier today as well as in our filings with the SEC. And with that, I'll turn things over to Jay Farner to get us started. Jay?

Thank you, Sharon. Good afternoon, and welcome to the Rocket Companies' earnings call for the fourth quarter and full year of 2021. On today's call, I'll recap our achievements from the past year, including our success driving growth in purchased loans and cash out refinance, continuing to build on the strength of the Rocket Platform through the addition of Truebill, and I'll cover the best-in-class capital returns we have provided to our shareholders since our IPO in August of 2020. Last year was an incredibly successful year for Rocket Companies as we continue to break records. In 2021, Rocket Mortgage reached a company best of $351 billion of originations, which represented a nearly 10% increase from the previous record of $320 billion set in 2020. On a full year basis, Rocket generated $12.4 billion of adjusted revenue, $6.2 billion of adjusted EBITDA and $4.5 billion of adjusted net income. It's worth taking a step back to look at what we've accomplished over the last two years. Comparing closed loan volume and adjusted revenue in 2021, it was more than double our 2019 levels. Our adjusted EBITDA and adjusted net income more than tripled in that same period. Also, we have organically grown our service client base by more than 40% since 2019, which today generates recurring cash revenue at an annual run rate exceeding $1.4 billion. The company has grown and strengthened all while generating profitability at scale, returning substantial capital to our shareholders. In the last two years, we have earned a cumulative adjusted net income of more than $12 billion. With today's announcement of our second $2 billion special dividend and the more than $300 million of stock repurchases, we've now returned $4.5 billion of capital to shareholders since our IPO in August of 2020. That represents roughly…

Thank you, Jay, and good afternoon everyone. Rocket delivered outstanding results in 2021 as we continue to drive growth in our less rate-sensitive products, build out our platform through continued organic investment as well as through the recent acquisition of Truebill and return substantial levels of capital to our shareholders. As Jay mentioned, 2021 was a record year for us as we delivered $351 billion in closed loan volume, 10% above the prior record set in 2020. This growth in volume was driven by our best year ever in purchase, along with record levels of cash out refinance volume. We saw purchase growth across both the direct-to-consumer and partner network channels with particularly strong growth year-over-year from our partner network, which includes both TPO and premier enterprise partners. While industry estimates of the total market size are still preliminary, it is clear that Rocket Mortgage gained meaningful market share in 2021, continuing our long-term trend of share growth. Based on the MBA's most recent estimate, Rocket increased its place in the market by 100 basis points to now account for nearly 9% market share for the full year 2021. Our gains in 2021 are particularly impressive considering the mix of refinance transactions declined as a percent on the total market during 2021. We increased our share of both purchase and refi transactions, demonstrating the flexibility of our centralized platform. Turning to fourth quarter results. Rocket Companies generated $2.4 billion of adjusted revenue in Q4, a 33% increase from Q4 2019. We had $883 million of adjusted EBITDA in the quarter, up 19% from Q4 2019, representing a 36% adjusted EBITDA margin. We delivered adjusted net income of $637 million, exceeding Q4 of 2019 by 23%. For the fourth quarter, we generated closed loan volume of $75.9 billion, which was in…

Thank you. [Operator Instructions] Our first question comes from Doug Harter from Credit Suisse. Please go ahead.

Thanks. Jay, since we spoke last, that the markets have been quite volatile with rates and mortgage spreads moving quite a bit. Can you just talk about how – what your outlook is for the market for the overall market size in the coming year? And how you're positioning Rocket to compete in that environment?

Yes. Thanks for the question. As I mentioned, in my remarks, I think this is an important topic to discuss. It's hard to know market size. Of course, any event on any given day can determine, like we're noticing here today in Europe, can determine what might happen. So what we focus on are kind of our long-term playbook to ensure that we can continue to grow like we have here for the last 36 years. In particular and why I mentioned this in my remarks is that when you see a rapid increase in interest rates, like we've experienced in the last 60 days or so, there are a few levers you can pull. For us being a centralized business model, with the brand and technology, our lever is training. Our lever is skill. Our lever is investing in our team members. We had a bit of a challenge because at the same time that this increase occurred, the Omicron outbreak here, in particular, Michigan and Ohio, caused us to send everyone home, making it a bit more challenging for training. But we've got people back in the office now. And as I referenced before, here in the last week, we've seen, I think, about roughly 90% of all of our loan volume the less interest rate-sensitive products, cash out refinance, rate and terms, purchase. So I bring all that up because the leverage you notice that we aren't pulling is the margin lever, and Julie can talk more about this. This is important. The way that we have always thought on operating our business is that the units that we generate, the mortgage, we're talking about the mortgage business needs to be a high revenue, profitable unit as you structure your business in a way where you're driving…

I appreciate that. And just to follow-up, when you're talking about cash out, refi and purchase being less rate sensitive, can you just talk about how higher rates impact that? And is there kind of a breakpoint where the higher rates start to kind of slow down overall volumes and people's appetites?

This is an important topic because rate is relative to the other ways that you borrow money. And so we're fortunate that mortgage rates don't sit by themselves. They sit with other vehicles that someone might use a credit card, a personal loan, a home equity line of credit, those sorts of things. And so with the benefit of mortgages and how they're done in this country, with the benefit of tax deduction, even if we see a pickup in interest rates, it still, in most cases, is the best way for our clients to achieve their goals. And the other thing that I think is critically important here, when you're buying a home or when you're noticing that you can't find a home and say now you're going to invest in a new kitchen or putting on an addition or whatever it might be, then the client becomes less rate sensitive, whether they receive 4.5% on their 30-year or 4.625% to 4.25%, that's not really the driver. The driver is achieving that new thing that they want, that new home or the kid's college education or the new kitchen. And that's where scale, that's where brand, that's where confidence in our company comes through. And so that's why in a rising rate market like this, we have an advantage because our conversation shifts from a rate in finance where everyone is fixated on every age in rate to, hey, I want to get this done. So I have a bed in for the baby that's on the way in eight months. And so that's how we think about it. It's the real conversation is about the opportunity you're creating for the client. If we just take a step back, 4.5% or so on a 30-year fixed rate, it's still incredibly low interest rates incredibly advantageous for clients to take advantage of it.

Thank you.

The next question comes from James Faucette from Morgan Stanley. Please go ahead.

Thank you so much. I'm wondering, and it seems it's always a topic on your calls. So I apologize maybe in advance. But can you talk about a little bit how gain on sale margins are trending? What you're seeing? What your planning assumptions are for, how those evolve over coming quarters and periods, especially in quite a volatile environment?

Yes. I'll let Julie feel that. Obviously, you can see our guidance here. And so we're feeling confident about where our margins have been here in Q4 and where we head in Q1. But Julie can give you more color.

Yes. Let me just give you a little bit more insight. So sale margins during the fourth quarter did come in within our expectations at the midpoint of our guided range at 280 basis points. And just kind of as a reference point, our Q2 2021 gain on sale margin came in at 278 basis points. Q3, excluding the impact of the removal of the adverse market fee, in the third quarter was 295 basis points. So we're really seeing margin stability since the second quarter of 2021, and we're seeing that stability to continue into Q1 as our expectations are gain on sale margin to be increasing at the midpoint to between 280 and 310 basis points. So we're continuing to see strength, as Jay mentioned, especially the direct-to-consumer channel where we're seeing margins there. I've talked about historically kind of that 400 basis points range for those margins, and we're still seeing very strong margins, as Jay said. That has been a lot of others that you'll see out there as well. So we're really pleased with where we're seeing them go into Q1 here.

Got it. And Julie, maybe just to be clear, so the improvement that you're expecting, is that all mix-driven? And is that – or is there something happening in the market that's providing some additional support? And I guess as part of that, particularly the direct-to-consumer, can you talk a little bit about like how that – how you're doing in terms of hitting your objectives and growing share with consumers and especially as the market becomes more purchase-based?

Yes. I'll jump in and Julie has some comments, too. But going back to the first question in, there's an initial kind of competitive situation as many lenders scramble, many cut margin. And so everyone is fighting for that business. as times move on and if rates continue to kind of stay where they're at will continue to rise, and we talked about the people cutting margin, then as I described before, now they have to come out of the market. Now they reduce their marketing spend. And actually, what happens is we now have less competition. That lead that maybe two or three other people we're talking to now is just us or it's us and only one other lender. And so that actually creates an environment where we can be even more confident in standing behind our margins. So not mix as much as it's just kind of the cycle that you go through the initial kind of playing that people do try to win through price will subside and then all of a sudden, you're left with a new playing field with fewer competitors out there talking to the same clients that you're talking to. Julie, any other comments?

Got it. And just – yes. Sorry, Julie.

Yes. I guess I'll just add to that, too. Certainly, mix is a peak not a big piece of different here. We're also seeing strength in the partner network channel relative to where we had seen margins coming in. So I think that also is really contributing here to the strength we're seeing.

That’s awesome. Thanks for all the color guys.

The next question comes from Kevin Barker from Piper Sandler. Please go ahead. Hi Kevin, is your line on mute? The next question comes from Ryan McKeveny from Zelman and Associates. Please go ahead.

Hey, good afternoon. Thank you. Jay, as you said, you'd get more questions on the topic of volume and margin. But think especially that first answer you gave hit on a lot of the [indiscernible] was wondering. So I will shift a little. I wanted to focus on the expense side. Julie, correct me if I'm wrong, I think the commentary you gave was that out of the 4Q expense level was a good run rate for 1Q. So correct me if I'm wrong there, but I'm thinking more as we move through the year, any commentary you can provide about what we should expect from the expense side of things, given obviously the revenue side is fairly uncertain. And maybe just remind us in terms of the cost base, how much is fixed versus variable? Anything that can kind of help us bridge the gap between an uncertain revenue environment relative to your expense base and ultimately profitability. Thank you.

Yes. Thanks for the question, and I'll kind of reiterate some of the things that I said in my prepared remarks. I know I said a lot there. So first of all, let me start by saying that we are very thoughtful about our costs, and I do want to be clear about that. So I'll share a couple of things relative to the fourth quarter to Q1 and reiterate some of the things I said earlier. So our total Q4 expenses were $1.74 billion, and this included two onetime items: one of which was $87 million associated with the early extinguishment of a portion of our outstanding bonds, and the other one was $19 million of expense associated with the revaluation of our tax receivable agreement liability. So if you exclude those two onetime items from Q4, our total expenses would have been $1.63 billion. So that's down $60 million from our Q3 levels. Then as we look ahead into 2022, we do expect expenses in the first quarter to be relatively consistent with Q4, as I mentioned, excluding those onetime items. And there's a few moving parts impacting Q1 that are important to understand. We do expect production-related expenses to continue to come down by more than $80 million in Q1 compared to Q4. However, these costs are being partially offset in Q1 by some seasonal items, including payroll taxes and our 401(k) match cost, which both reset at the beginning of the year and also some additional marketing expense that's going to be – that it was incurred with the Super Bowl ad that we did. And then the other thing I'll mention on less to in Q1 is that, that quarter is going to now include a full quarter of Truebill expenses as we closed on that acquisition in late December. So Truebill will also typically see higher marketing spend in the first quarter as many consumers are looking to improve their financial health as part of their New Year's resolutions and this marketing spend, we see a little bit higher and it does drive seasonal lift in the user base and revenue growth. As we look a little bit further out than that at our current volume levels, we would expect expenses to decline modestly beyond Q1 as well. So that's the trend that we're seeing.

Okay. Thank you very helpful.

The next question comes from Kevin Barker from Piper Sandler. Please go ahead.

Hi, can you hear me now?

Yes.

Sorry about that earlier. So Julie, you mentioned earlier that you're seeing a lot of more opportunities to grow, particularly with the Truebill acquisition, and it seemed like it was exceeding your expectations. I don't want to put a word in mouth, but it sounded that way. Is there anything in particular that stands out to you where you're seeing significant more opportunities to grow outside of your core mortgage business through the acquisition and various other ancillary businesses?

Well, maybe I'll jump in there. I think the Truebill business is exciting for us. As Julie said, they kind of had their fifth quarter in January, they consider it because there's so many people thinking about their finances. But we've got this question a lot about Truebill and the thought process behind Truebill, and so I think it's important to walk through. There are really kind of three elements that we're heading forward on with Truebill. The first is having that single time on solution. And that may not sound like much, but without that, our Rocket clients, the millions of clients we have in our servicing portfolio, the millions of clients that we'll deal with all the way through 2022, would have to create yet another account to access Truebill. And so you're adding a single sign-on solution where they can use the same account or transfer or use their Rocket account is incredibly important. Especially as we continue to market, we're talking to clients who may be seven, eight, nine months out from purchasing a home. Today, we may have to buy that lead again. As we launch single sign-on, those clients can now engage with Truebill to do their budgeting, they can engage with Truebill to more kind of credit score. They can engage with Truebill to save some money. And we keep getting signaled as they engage. Act as a ability for us to send push notifications to them, that really we don’t have today. And so we keep those purchase clients engaged. Same on the refinance side. And probably equally more and more as we turn on things side, because we talked about it. We are talking to people today. [indiscernible] but they may or may not, makes sense at this moment. At the…

So to follow up on that, is there any way to quantify the decrease in lead generation costs associated with having Truebill within the Rocket Companies? Or is there a way to say that a certain percentage of existing Truebill customers or future Truebill customers are going to become Rocket Mortgage customers that we can say they’re going to generate x amount of revenue and then suddenly, they’re in the ecosystem and they become 91% attrition – retention rate. So is there any way to quantify that for us?

Yes. So those we’re thinking about CAC or cost to acquire and how that adjusts that over time or LTV, which is probably important to us. We’ve given some slides in the past about examples of what LTV could look like. Those are all the things that we are – here’s what I can say, those are things that our data team is on every minute of every day. Our finance team is studying goals and KPIs are being set, and we are driving towards those, but those aren’t numbers that we are disclosing at this point in time. But just know that the operation of this business focuses on all of those critical things and you’re drilling down exactly why we did this acquisition because we have a strong belief that this has not been done in the mortgage space before. And so this is something that can really continue to add to the reducing CAC and increasing the LTV of our client base.

Thank you, Jay.

The next question comes from Arren Cyganovich from Citi. Please go ahead.

I was hoping you could address the funding and capital usage that you have, recently issuing a decent amount of new unsecured debt, which is attractive pricing. But just curious, the thought process there ahead of doing another relatively large special dividend in share repurchases and balancing those items.

Yes. So if you’re asking about the issuance of the bond, and that was something that was really strategic for us to be able to lower our cost of funding. So that was fairly significant for us in terms of the overall cost funding. It was 60 basis points of lower cost there. So that was something that allowed us to issue some debt and as I mentioned [indiscernible] and pay off actually some of our debt. So that was an opportunistic time for us to be able to build capital at a time when we executed at pricing that was really unseen before for a company like us. So we were very proud of that execution.

And then just in terms of the choice of special dividends, and I don’t know, it just seems like you didn’t really need the cash, you raised cash and then you’re doing special dividends, just been trying to understand the thought process there.

Yes. It was at a time in the market when it really was advantageous for us to go to market to raise that additional capital, and we are always looking at the capital. The earnings that we’ve had since that time coming into the business as well gave us an opportunity. I’ll just kind of maybe reiterate how we think about capital. First of all, we think about capitalizing the business properly, investing in our platform. We have the acquisition of Truebill as well for $1.3 billion. So another thing that we invested in. We have been acquiring mortgage servicing rights as well. During 2021, we acquired about $200 million worth of mortgage servicing rights. So all of that factored in then as we look at returning capital to shareholders, we’re thinking about all the time. And we’ve now returned, as I said, $4.5 billion to our shareholders since going public. So...

And I think it’s – look, it was the right time to do it because it was very advantageous. We did extinguish some existing debt at a higher interest rate. But when we think about the dividend, we’re looking at the profitability of the company and funding at least funding that cash is – funding that with the profitability of the company.

Okay. Thank you.

The next question comes from Richard Shane from JPM. Please go ahead.

Hey guys. Thanks for taking my question this afternoon. In all of the chaos of getting ready for earnings and everything else is happening in the world today, FHFA announced that they are reconsidering eligibility requirements for single-family seller servicers. I’m kind of curious how you look at this as a large player in that space, the advantages and disadvantages for you? And what you think it might – how it might impact the competitive landscape?

You guys there?

Can you guys hear me?

Yes, I can hear you. Hold on. Speakers, is your line muted?

Yes. Sorry, guys. We were talking and we – apparently, you weren’t listening. Bob, so you can probably comment it on. But I think we just reviewed those. I think there are some capital requirements that they have increased. And based on the last question on the dividend, we’re in great shape in terms of having enough capital. But Bob, I don’t know if you’ve got additional comments?

No, I mean there’s is nobody is in a stronger position financially from a liquidity standpoint, all the things from a capitalization standpoint than we are. So we’re totally fine with that. In fact, I think over time, it becomes an advantage because you have some pretty thinly capitalize folks out there that it will become a considerable challenge for them. So we don’t look to the regulator for competitive advantage, but in this case, we will get it.

Yes. The only thing that I would say also that kind of typically goes with that is that as we think about the broader platform, we touched on this before, and we’ve acquired MSRs. We’re always strategically looking to acquire MSRs. And so if there’s fewer people out there thinking about making that acquisition, probably in the long haul, it makes it even – it could be easier for us to make those acquisitions with our LTV, we’re probably in a better position to do that than others.

I think we heard it from recent earnings calls, there are some folks that are selling, servicing now to gain liquidity. And so that creates a pretty significant opportunity for us as well.

Great. Thank you guys.

The next question comes from Brock Vandervliet from UBS. Please go ahead.

Good afternoon. Thanks for the questions. Jay, I appreciated your comments earlier about marketing. Just if we could go maybe one layer deeper on that. How do you think about the return on marketing spend as we transition from, call it, a $4 trillion to $2.5 trillion or so market, your return on investment around those marketing dollars, I would think, would decline simply because the markets that much smaller? How should we think about that?

Yes. It’s probably three important components here. And again, that’s why it’s important to let things play out over a few months. Although initially you might see people scrambling to market performance marketing in particular. Over time, as companies reduce their margin, they then typically reduce their marketing cost as well. So there could be an increased amount of competition for some period, but then actually opportunity to go in and own spaces as people back away. So what you have to do from a marketing budget perspective is you have to shift more of your dollars. So as we were running performance marketing and what we consider kind of performance brand marketing, you’ll see us shift increasing the performance side of the house, right? And so you’ll notice there’ll be more on digital. There will be more on DR. We’ll get more robust in tracking those DR responses, a little bit more surgical. So watching it by state or county or city or those type of things to understand how our dollar is working. And then, of course, flaring our attribution models on top to make sure that, that brand spend we’re doing is also supporting that. So there’s not a big change to how we think about the return on the marketing dollars. It’s just – this is like a reset that gives you an opportunity to maybe find areas that six months ago, a year ago, we’re being – a lot of people are trying to make – to buy in those areas. Now they’re backing away, you can come in, you can buy. And then that’s – the last thing I’ll say is that is why the Truebill conversation, the value of the MSR going up, all of that matters because you’re rethinking your models based on the data coming in, the lifetime value of the client, the increase in the value of the MSR that you’re acquiring, that matters. So we’re always resetting the reports that we do to ensure that we’re spending properly. But that’s it. It’s just a mathematical decisions behind the scenes and shifting more to performance.

Okay. And just as a follow-up, I think this was Julie’s comment that expenses should decline modestly beyond of Q1. What’s the geography of that decline? Is that – where is that coming from basically?

Yes. We’re just giving guidance really on Q1 at this point. So as we look ahead, we would that over time. If you think about our costs, there’s some variable costs that adjust immediately with production, and there’s some that do take a little bit more time to work into overtime. So as we think about those declining that’s why I say that because some of those are going to take a bit more time.

Yes. I’m going to jump in here, though, too. I think this is important. So we touched on this all the time. We’ve invested and we’ll continue to invest in marketing in our brand. We continue to invest in technology. We’ve got thousands of technologists here, writing software that make our systems better, make our mortgages more efficient, make our conversion rates better. We’ve got the most skilled operations people from the United States of America who know how to work and process, underwrite and close loans. We’ve got the best mortgage banking force in this country, nearly 6,000 or so of those folks. That’s the heartbeat of our organization, right? Everything we have is due to the success of those individuals. And so we’re not going to have a conference call where all of a sudden, we let a group of them now, they’re not going to be working here any longer. That’s just not how we do this. These – that profitability is important, but the investment in our team members is the most important thing that leads to the future growth of this organization.

Yes. So we’ve seen this time and time again as we go through these cycles. We have been through the opportunity that it creates holding a bit more of that excess capacity really does pay dividends in the end. So you may see us do that.

Got it. Understood. Thanks for the color guys.

Yes.

Our next question comes from Mark DeVries from Barclays. Please go ahead.

Yes, thank you. Sorry if I missed this, but could you just comment on how your efforts to gain share in the purchase market have been trending these last couple of months as refi really starts to fade?

Yes. So again, as we think about it, we really think less or noninterest rate-sensitive products because there’s $25 trillion of home equity out there. So whether someone – and with inventory levels the way they’re at, whether someone purchases a new home or invest in their existing home, both are huge opportunities for us. Now we’re very pleased to exceed. I think we’ve set a goal for purchase and talk about it, exceed our 2021 purchase goal, really proud of the team for achieving that. And so we’re – as we talked about in the prepared remarks, we had good momentum. We continue to have good momentum in purchase those verified approval letters I think the pipeline is the biggest it’s ever been as we walked into January of 2022. And then the training around cash out, the training around a term change that we implemented in the first quarter of this year, as I mentioned, I think we’re down near 90% of our production today is falling into that less interest rate-sensitive bucket. So all in all, going very well and touching on another question that we had, once you make that switch, then your mortgage banking force is talking to individuals where rate is not the most important thing. Achieving the goal is the most important thing. And that allows for marketing growth but also allows for conversion increase. And I didn’t even touch on, again, the 2.5 million, 2.6 million service clients that we’ve got, as that value of the MSRs increases, it doesn’t mean that we won’t see opportunity to assist those clients as well in the retention. So all of the levers that we – like I said earlier, different than others, but the levers that we choose to pull in a rising rate market are going very well.

Okay. Great. And then just a follow-up question on kind of the efforts to tap into borrower equity. Does a move in mortgage rates this meaningful kind of require you to switch a little bit more from trying to market a cash-out refi to doing more of like a home equity line of credit or just a second lien?

We haven’t experienced that. Again, as I said before, typically as rates rise, all rates rise. So it’s just about the comparison of another way to achieve the goal versus mortgage. And so certainly, your mortgage payment is going to be a bit higher if you’re getting 4.5% on a 30 year than 3.5%. But in the grand scheme of life, and most of our clients have seen this, that’s still an incredibly low interest rate, a fixed interest rate that they can count on over time. And so we’ve not – in terms of objections that you might hear people telling us that there’s a better source to achieve those goals, has not been one that’s been surfacing.

Okay. That’s interesting. All right. Thank you.

The next question comes from Bose George from KBW. Please go ahead.

Hey everyone. Good afternoon. I just wanted to follow up on the cash out. So you guys noted 90% of the originations are not rate sensitive. I was curious, how do you treat refis for a borrower extracts equity, but also has a rate incentive to refi, so sort of an opportunistic cash out refi? Are there many borrowers kind of in that category?

Well, I’m sure there are certain borrowers in that category. But again, when we think about the purpose and the borrower usually or the client, as we call them, we’ll usually tell us what it is. That may be an ancillary benefit, but the strong desire for the call or the lead or the outreach is because they’re trying to achieve some sort of cash out we get, whether it’s home improvement or covering the college education or unfortunately going through a divorce or whatever the case may be, that’s the driver behind it, not the additional possibility of a reduction in rate in most cases.

Okay. Great. Thanks. And then actually, just going back to the gain on sale discussion, you might have addressed this, but the guidance, does the channel mix play a role in the guidance at all? Or is that assuming kind of the similar channel mix to what you had this quarter?

The channel mix has the minimal impact on that. Really, what we’re seeing is improvement in the partner network margins as well. So while there is some impact to that, holding steady on that direct-to-consumer gain on sale margin, as I mentioned, in that 400 basis point range, as I said, historically, kind of where we’re at and then that improvement in partner network.

Okay. Great. Thanks.

This concludes our question-and-answer session. I’d like to turn the conference back over to Jay Farner for any closing remarks.

Yes. Thanks everybody for the questions today. We appreciate and most importantly, thank you for our team members as they have done an amazing job here the last few months of dealing with all of the kind of curve balls of COVID and returning to the office and the shifting and changing in the market and the acquisition of Truebill, I mean we just – we’ve got a lot of things going on, and to see the entire team rally together has been – it’s just incredible in the 26 years I’ve been here. So...

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.