Earnings Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per ShareThe Company applies the two-class method for calculating and presenting earnings per share by separately presenting earnings per share for Class A common stock and Class B common stock. In applying the two-class method, the Company allocates undistributed earnings equally on a per share basis between Class A and Class B common stock. According to the Company’s certificate of incorporation, the holders of the Class A and Class B common stock are entitled to participate in earnings equally on a per-share basis, as if all shares of common stock were of a single class, and in dividends as may be declared by the board of directors. Holders of the Class A and Class B common stock also have equal priority in liquidation. Shares of Class C and Class D common stock do not participate in earnings of Rocket Companies, Inc. As a result, the shares of Class C and Class D common stock are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of earnings per share. Restricted stock units awarded as part of the Company’s compensation program are included in the weighted-average Class A shares outstanding in the calculation of basic earnings per share ("EPS") once the units are fully vested.

Basic earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing Net income attributable to Rocket Companies by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. There was no Class B common stock outstanding as of March 31, 2022 or 2021, respectively. See Note 13, Non-controlling Interests for a description of Paired Interests and their potential impact on Class A and Class B share ownership.

The following table sets forth the calculation of the basic and diluted earnings per share for the period:


	Three Months Ended March 31,
	2022		2021
Net income	$	1,036,608	$	2,777,338
Net income attributable to non-controlling interest	(982,896)		(2,653,636)
Net income attributable to Rocket Companies	53,712		123,702
Add: Reallocation of Net income attributable to vested, undelivered stock awards	32		80
Net income attributable to common shareholders	$	53,744	$	123,782

Numerator:
Net income attributable to Class A common shareholders - basic	$	53,744	$	123,782
Add: Reallocation of net income attributable to dilutive impact of pro-forma conversion of Class D shares to Class A shares (1)	744,379		—
Add: Reallocation of net income attributable to dilutive impact of share-based compensation awards (2)	1,418		6,349
Net income attributable to Class A common shareholders - diluted	$	799,541	$	130,131
Denominator:
Weighted average shares of Class A common stock outstanding - basic	122,691,728		115,673,524
Add: Dilutive impact of conversion of Class D shares to Class A shares	1,848,879,483		—
Add: Dilutive impact of share-based compensation awards (3)	3,807,921		6,338,392
Weighted average shares of Class A common stock outstanding - diluted	1,975,379,132		122,011,916

Earnings per share of Class A common stock outstanding - basic	$	0.44	$	1.07
Earnings per share of Class A common stock outstanding - diluted	$	0.40	$	1.07

(1) Net income calculated using the estimated annual effective tax rate of Rocket Companies, Inc.

(2) Reallocation of net income attributable to dilutive impact of share-based compensation awards for the three months ended March 31, 2022 and 2021 comprised of $1,356 and $5,889 related to restricted stock units, zero and $422 related to stock options and $62 and $38 related to TMSPP.

(3) Dilutive impact of share-based compensation awards for the three months ended March 31, 2022 and 2021 comprised of 3,640,391 and 5,879,491 related to restricted stock units, zero and 421,267 related to stock options and 167,530 and 37,634 related to TMSPP.

For the period from January 1, 2022 to March 31, 2022, 23,941,259 stock options, each weighted for the portion of the period for which they were outstanding, were excluded from the computation of diluted earnings per share as the effect was determined to be anti-dilutive.

For the period from January 1, 2021 to March 31, 2021, 1,868,855,039 Holdings Units, each weighted for the portion of the period for which they were outstanding, together with a corresponding number of shares of our Class D common stock, were exchangeable, at our option, for shares of our Class A common stock. After evaluating the potential dilutive effect under the if-converted method, the outstanding Holdings Units for the assumed exchange of non-controlling interests were determined to be anti-dilutive and thus were excluded from the computation of diluted earnings per share.