Prompt:
Human: We appreciate you joining our call today.
We're very pleased with our performance this quarter as we achieved earnings of $624 million, resulting in earnings per share of $0.65.
Adjusted pre-tax pre-provision income increased 4% sequentially.
And we generated year-to-date positive operating leverage.
Our ability to keep the momentum going and deliver solid third quarter results comes from three primary factors.
First, we continue to benefit from our growing footprint.
Unemployment levels are improving.
And most of our markets are well below the national level.
People and businesses are continuing to move into our 15 state footprint and that bodes well for our growth prospects for the remainder of the year and into 2022.
We'll continue to make strategic investments in core and growth markets where we can grow new customers and deepen existing relationships.
On that note, we're also pleased to share that year-to-date net account growth has exceeded account growth for the preceding three years combined.
Second, credit quality has demonstrated incredible resiliency and continues to exceed our expectations.
Businesses across all industries have found ways to adapt and prosper despite ongoing supply chain and labor issues.
And consumers continue to cautiously manage their finances.
Overall, we feel very good about the health of our business and consumer customers.
Third, we continue to take advantage of opportunities to invest in talent, technology and capabilities to support growth.
For instance, earlier this month, we closed on our acquisition of EnerBank, a leading home improvement point-of-sale lender, a key part of our strategy to serve as a premier lender to homeowners.
We also entered into an agreement to acquire Sabal Capital Partners.
Sabal has a strong reputation and proprietary technology platform that will expand our real estate capital markets' capabilities.
Once the transition is complete, we expect to be a Top 5 bank agency producer.
The EnerBank and Sabal acquisitions complemented our existing portfolio of products and capabilities in the consumer and corporate bank.
We will continue to evaluate prudent, non-bank M&A opportunities that will allow us to expand our products and services and enhance our relevancy with our customers.
Also, we recently launched our Bank On-certified Now Checking' Account.
This new product has all the benefits of a traditional checking account without the concern of overdraft fees.
And finally, our investments in digital and data are positioning us for growth.
Through a technology-enabled seamless experience in branches and across all platforms, customers are responding to the personalized service, advice and guidance they receive from Regions.
Today, more than two-thirds of our customer transactions are digital.
Further, over the last two years, active mobile banking users are up 23% and notably, Zelle transactions have more than tripled.
We feel really good about our progress and momentum.
We operate in some of the best markets in the country, have a solid strategic plan, an outstanding team, and the experience to compete effectively.
We focus everyday on delivering products and services that are valued by our customers, while continuing to support our communities and provide an appropriate return to our shareholders.
Now, David will provide you with some details regarding the quarter.
Let's start with the balance sheet.
Adjusted average and ending loans increased approximately 1% during the quarter.
Although business loans continue to be impacted by low utilization rates and excess liquidity, pipelines have surpassed pre-pandemic levels.
In addition, production remained strong with a line of credit commitments increasing $2 billion year-to-date.
Consumer loans reflected another strong quarter of mortgage production, accompanied by modest growth in credit card.
However, consumer loans remain negatively impacted by exit portfolios and further paydowns in home equity.
Overall, we continue to expect full-year 2021 adjusted average loan balances to be down by low-single-digits compared to 2020, although we expect adjusted ending loans to grow by low-single-digits.
With respect to loan guidance, we are not including any impacts from our EnerBank acquisition, which closed on October 1 and resulted in the addition of $3.1 billion in loan balances that will benefit the fourth quarter and beyond.
So let's turn to deposits.
Although the pace of deposit growth has slowed, balances continue to increase this quarter to new record levels.
The increase is primarily due to higher account balances.
However, as John mentioned, we are also producing strong new account growth.
We are continuing to analyze probable future deposit behavior.
And based on analysis of pandemic-related deposit inflow characteristics, we currently believe approximately 30% or $10 billion to $12 billion of deposit increases can be used to support longer-term growth through the rate cycle.
Additional portions of the deposit increases could persist on the balance sheet, but are likely to be more rate sensitive.
Let's shift to net interest income and margin.
Pandemic-related items continue to impact net interest income and margin.
Net interest income from PPP loans decreased $12 million from the prior quarter, but is expected to pick up in the fourth quarter.
Cash averaged $25 billion during the quarter and when combined with PPP, reduced third quarter reported margin by 54 basis points.
Excluding excess cash and PPP, net interest income grew almost 1.5% linked quarter, and our adjusted margin was essentially stable at 3.30%.
This reflects strengthening loan growth as well as active balance sheet management efforts despite a near zero short-term rate environment.
Similar to prior quarters, the impact on NII from historically low long-term interest rates was completely offset by balance sheet management strategies, lower deposit costs and higher hedging income.
During the third quarter, we repositioned an additional $5 billion of receive-fixed swaps.
We shortened the maturities from 2026 to late 2022.
The repositioning locked in the associated gains that will be amortized over the remaining life of the interest rate swaps and will allow for more NII expansion when rates are projected to increase.
Further, with the inclusion of EnerBank's fixed-rate loan portfolio, less hedges will be needed to protect NII and the net interest margin profile from falling rates.
The cumulative value created from our hedging program is approximately $1.6 billion.
Roughly 75% of that amount has either been recognized or is locked into future earnings from hedge terminations reflecting the dynamic management of our hedging strategy.
Excluding EnerBank and PPP, adjusted net interest income should be relatively stable in the fourth quarter, after excluding the non-recurring interest recovery in the third quarter.
Including PPP and the EnerBank acquisition, linked quarter net interest income is expected to grow between 5% and 6% in the fourth quarter.
As illustrated on the slide, over a longer horizon, a strengthening economy, the ability to benefit from higher rates, and organic and strategic balance sheet growth are expected to ultimately drive net interest income growth.
Now, let's take a look at fee revenue and expense.
Adjusted non-interest income increased 8% from the prior quarter, primarily attributable to strong capital markets' activity, including record loan syndication revenue and solid M&A advisory fees.
We expect capital markets to remain strong in the fourth quarter, generating revenue in the $60 million to $70 million range, excluding the impact of CVA and DVA.
We will provide more specificity regarding 2022 expectations in January.
Other non-interest income also increased during the quarter, due to an increase in the value of certain equity investments as well as increased gains associated with the sale of certain small dollar equipment loans and leases.
Mortgage income decreased quarter-over-quarter, primarily due to mortgage servicing rights, valuation adjustments, partially offset by improved secondary market gains.
Service charges remained relatively stable, compared to the prior quarter.
And we continue to expect they will remain 10% to 15% below pre-pandemic levels.
We attribute the decline to changes in customer behavior as well as customer benefits from enhancements to our overdraft practices, including transaction posting order.
Card and ATM fees remained stable compared to the second quarter.
Debit and credit card spend remain above pre-pandemic levels as we continue to benefit from elevated account growth and increased economic activity in our footprint.
Given the timing of interest rate declines in 2020 and excluding the fourth quarter benefit from our EnerBank acquisition, we expect 2021 adjusted total revenue to be up modestly compared to the prior year, but this will ultimately be dependent on the timing and amount of PPP loan forgiveness.
Let's move onto non-interest expense.
Adjusted non-interest expenses increased 3% in the quarter, as higher salary and benefits and professional and legal fees were offset by decline in marketing expenses.
Salaries and benefits increased 4%, primarily due to higher variable-based compensation associated with elevated fee income as well as one additional day in the third quarter.
Associate headcount also increased by 149 positions during the quarter with the vast majority of those within revenue producing businesses.
Further, exceptional performance, particularly in credit, is also contributing to higher incentive compensation.
We will continue to prudently manage expenses, while investing in technology, products and people to grow our business.
Excluding approximately $35 million of core run rate expenses associated with our fourth quarter EnerBank acquisition, we expect adjusted non-interest expenses to be up modestly compared to 2020, and we remain committed to generating positive operating leverage over time.
From an asset quality standpoint, we delivered an exceptionally strong quarter as overall credit continues to perform better than expected, reflecting continued broad-based improvement across virtually all portfolios and continued recoveries associated with strong collateral asset values.
Annualized net charge-offs decreased 9 basis points during the quarter to 14 basis points, representing the company's lowest level on record post our 2006 merger of equals.
In addition to lower charge-offs, non-performing loans and business services criticized loans also improved, while total delinquencies remain unchanged during the quarter.
Our allowance for credit losses declined 20 basis points to 1.8% of total loans and 283% of total non-accrual loans.
Excluding PPP loans, our allowance for credit losses was 1.83%.
The decline in the allowance reflects better-than-expected credit trends and the continued constructive outlook on the economy.
The allowance reduction resulted in a $155 million benefit to the provision.
Future levels of the allowance will depend on the timing of charge-offs, greater certainty with respect to the resolution of remaining risk to credit losses as well as the integration of EnerBank.
Year-to-date net charge-offs are 25 basis points, and we expect full-year 2021 net charge-offs to approximate at same level, which includes the impact of EnerBank and excludes the benefit of any future recoveries that may occur.
With respect to capital, our common equity Tier 1 ratio increased approximately 40 basis points to an estimated 10.8% this quarter.
As previously noted, we continue to prioritize the utilization of our capital for organic growth and non-bank acquisitions like the EnerBank and Sabal that propel future growth.
Beyond that, we use share repurchases to manage our capital levels.
Share repurchases were temporarily paused ahead of the EnerBank closing, which absorbed approximately $1 billion of capital in the fourth quarter.
We anticipate being back in the repurchase market this quarter and expect to manage common equity Tier 1 to the midpoint of our 9.25% to 9.75% operating range by year-end.
So wrapping up on the next slide, our 2021 expectations, which we've already addressed.
In summary, we are very pleased with our third quarter results and are poised for growth as the economic recovery continues.
Pre-tax, pre-provision income remain strong; expenses are well controlled; credit quality is outperforming expectations; capital and liquidity are solid; and we are optimistic about the pace of the economic recovery in our markets.
 Assistant:

Chosen response:
compname reports q3 earnings per share of $0.65.
q3 earnings per share $0.65.
qtrly average loans and leases decreased 1 percent compared to prior quarter.


Prompt:
Human: Then Tom Dineen, our Chief Financial Officer, will give an overview of the second quarter 2021 financial results, and then I will discuss our operations and the state of the market.
Copies of these documents may be obtained by contacting the company or the SEC or on the company website at ruger.com/corporate or the SEC website at sec.gov.
We do reference non-GAAP EBITDA.
Please note that the reconciliation of GAAP net income to non-GAAP EBITDA can be found in our Form 10-K for the year ended December 31, 2020, and our Form 10-Q for the second quarter of 2021, both of which are posted on our website in the Investor Relations section.
Now Tom will discuss the company's second quarter 2021 results.
For the second quarter of 2021, net sales were $200.1 million and diluted earnings were $2.50 per share.
For the comparable prior year period, net sales were $130.3 million and diluted earnings were $1.05 per share.
For the first six months of 2021, net sales were $384.4 million and diluted earnings were $4.66 per share.
For the corresponding period in 2020, net sales were $253.9 million and diluted earnings were $1.91 per share.
The substantial increase in profitability for the second quarter was attributable to the increase in sales and production, resulting in favorable leveraging of fixed costs including depreciation, engineering and other indirect labor expenses, a significant reduction in sales promotional activities and improved labor efficiencies.
Not surprisingly, our strong financial results yielded robust cash generation.
During the first half of 2021, we generated $76.2 million of cash from operations.
We reinvested $11.5 million of that back into the company in the form of capital expenditures.
We estimate that 2021 capital expenditures will be approximately $20 million predominantly related to new product development.
Our ability to shift manufacturing equipment between cells and between facilities improves overall utilization and allows for reduced capital investment.
Our balance sheet at July 3, 2021, remains rock solid.
Our cash and short-term investments, which are invested in UST bills, totaled $173.6 million.
Our current ratio was 3.7:1, and we had no debt.
Our stockholders' equity was $319.1 million, which equates to a book value of $18.14 per share, of which $9.86 per share was cash and short-term investments.
Our shareholders continue to share in our success in a direct and timely manner.
In the first month -- in the first six months of 2021, we returned $27.6 million to our shareholders through the payment of dividends.
Our Board of Directors declared a $1 per share quarterly dividend for shareholders of record as of August 16, 2021, payable on August 27, 2021.
Upon receiving the $1 quarterly dividend, shareholders will have received over $2.50 of dividends per share thus far in 2021.
As a reminder, our quarterly dividend is approximately 40% of net income and, therefore, varies quarter-to-quarter.
That's the financial update for the second quarter.
The second quarter of 2021 marked the seventh consecutive quarter of meaningful growth in sales, profitability and virtually every financial and operating metric despite the challenges posed by the COVID-19 pandemic.
Demand for our products has remained strong.
The estimated unit sell-through of the company's products from the independent distributors to retailers increased 13% in the first half of '21 compared to the prior year period.
For the same period, the National Instant Criminal Background Check System background checks, as adjusted by the National Shooting Sports Foundation, commonly referred to as NICS checks, decreased 5%.
The increase in the sell-through of the company's products compared favorably to the decrease in adjusted NICS background checks and may be attributable to the following: strong consumer demand for Ruger products, increases in production for each of the past seven quarters and the introduction of new products that have been met with strong consumer demand.
New product development remains among our highest priorities.
On the heels of the successful MAX-9 pistol launch earlier this year, we introduced the Ruger LCP MAX, a 380 Auto pistol in June.
This is the latest offering from the Ruger LCP family, which has set the standard for personal protection pistols for over a decade.
The LCP MAX joins an impressive roster of products that were introduced in the past two years.
These include the extremely popular Ruger-57 Pistol, which is awarded the 2020 Caliber Award for best overall new product by the Professional Outdoor Media Association in conjunction with the NASGW.
The LCP II in.
22 Long rifle, which is based on the venerable LCP platforms and utilizes our Lite Rack system for easier slide manipulation and reduced recoil.
The Wrangler revolver, our latest take on the classic single-action revolver, which shows no signs of slowing down and the MAX-9 pistol, a versatile 9-millimeter pistol that has been met with tremendous excitement.
In the first half of 2021, new product sales represented $78 million or 22% of firearm sales compared to $48 million or 21% of firearm sales in the first half of 2020.
As a reminder, derivatives and product line extensions of mature product families are not included in our product sales -- new product sales calculation.
Nonetheless, they are valuable additions to the Ruger catalog of products and are greatly appreciated by distributors, retailers and our loyal Ruger consumers.
We look forward to the return of Marlin lever action rifles, which we plan to begin shipping in the fourth quarter.
If you're interested in following our progress with the Marlin product line, check out Marlin firearms on Facebook or Instagram.
We have been delighted with the overwhelming interest and support that we have received from Marlin fans.
Since March of 2020, our workforce has been strengthened by approximately 400 folks, an increase of 25%, and our quarterly unit production has increased by over 200,000 units or 58%.
This outsized growth in production is indicative of our labor efficiency gains.
And despite the growth in our output at the end of the second quarter of 2021, our finished goods inventory and distributor inventories of Ruger products were 160,000 units lower than they were at the end of the first quarter of 2020.
The last time these inventories were at what we would consider normal or expected pre-COVID-19 levels.
Since the onset of COVID-19 in March of 2020, we remain proactive in maintaining the health and safety of our employees and mitigating its impact on our business, by providing all hourly employees with an additional two weeks of paid time off in 2020 and an additional week in 2021, providing cash and other incentives for employees to become fully vaccinated, holding multiple on-site COVID-19 vaccination clinics at our manufacturing facilities, reducing hiring in early 2020 to help maintain the health and safety of employees and the cleanliness of our facilities, encouraging employees to continue to work remotely wherever possible and maintaining social distancing throughout each manufacturing facility, including in every manufacturing cell, confidentially communicating with and assisting employees with potential health issues through our dedicated facility nurses, restricting visitor access to minimize the introduction of new people to the factory environment, implementing additional cleaning, sanitizing and improved ventilation and other health and safety processes to maintain a clean and safe workplace, providing all employees with multiple face mask coverings and other personal protective equipment and currently mandating their use by unvaccinated and at-risk individuals at all times in our facilities and issuing periodic guidance and reminders to all associates to encourage them to engage in safe and responsible behaviors.
With the United States once again seeing a rise in COVID-19 cases and positivity rates, we remain vigilant and are proactively adjusting our plan accordingly to keep our associates healthy and safe and to minimize any disruption to our business.
We estimate that COVID-related costs will total approximately $1.5 million in 2021.
Included in this estimate is a $200 bonus for every employee who becomes fully vaccinated.
Our financial strength, evidenced by our debt-free balance sheet provides financial security and flexibility as we manage through challenges like COVID-19 and remain focused on the long-term goals and creation of shareholder value.
Those were the highlights of the second quarter of 2021.
Operator, may we have the first question?
 Assistant:

Chosen response:
compname reports q2 diluted earnings of $2.50 per share.
compname reports second quarter diluted earnings of $2.50 per share and declares quarterly dividend of $1.00 per share.
q2 earnings per share $2.50.
q2 sales $200.1 million.


Prompt:
Human: Before I turn things over to Jay, let me quickly go over our disclaimer.
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.
A recording of the call will be available later today.
Our commentary today will also include non-GAAP financial measures.
And with that, I'll turn things over to Jay Farner to get us started.
Our platform continues to execute at scale and grow across our businesses.
Rocket Mortgage is the largest mortgage lender in America with industry-leading profitability.
Our title and settlement services business, Amrock, is also the largest of its kind in the country.
Our emerging businesses also set new records in the quarter.
Rocket Homes reached $2.3 billion in real estate transaction value, and its current annualized run rate placed the company among the top 20 brokerages in the country.
Rocket Auto also reached a record $530 million in gross merchandise value in the quarter.
The number of vehicle sales facilitated by Rocket Auto in the last 12 months would put the company in the top 10 of all used car dealers nationwide.
I'm also excited to touch on the new Mortgage-as-a-Service opportunity we're launching in partnership with Salesforce.
Last quarter, we had excellent results.
with closed loan volume and gain on sale margin exceeding the top end of our guidance range.
Rocket Mortgage delivered $88 billion in closed loan volume, and Rocket Companies generated $3.2 billion in adjusted revenue and $1.6 billion in adjusted EBITDA.
On an adjusted EBITDA basis, we doubled the size of our business compared to 2019, again, demonstrating the sheer power and scalability of the Rocket platform.
We hit new records in both purchase and cash out refi volume in Q3.
We've also just recently announced a major partnership with Salesforce.
Up to this point in time, we have used Rocket technology to process our own mortgage volume through both our direct-to-consumer and partner network channels.
The Salesforce partnership will now open our mortgage technology and process to third-party financial institutions through the Salesforce Financial Services Cloud.
This new Mortgage-as-a-Service model is a game changer for the industry and for Rocket.
More than simply leveraging our technologies, these banks and credit unions will have Rocket integrated into their centralized workflow, making the process seamless and simple.
The opportunity is massive.
In 2020, the approximately 10,000 banks and credit unions originated over $1 trillion in mortgages.
That represents nearly a third of the total market in the US We believe Mortgage-as-a-Service represents a new model for financial institutions to partner with Rocket, paving the way for an even larger opportunity to provide consumer lending as a service, including mortgages, auto loans and personal loans.
Expect to hear more about this partnership in the first half of 2022.
With multiple channels all operating at scale over a broad range of products, we have many levers to drive growth while optimizing gain on sale margins even in shifting markets.
Our ability to pivot and scale is Rocket's key differentiator.
In fact, in the third quarter, we saw strong growth in our direct-to-consumer channel, where our purchase initiatives continue to gain traction.
We will be allocating additional resources to further support this growth.
More broadly, we've seen strength in products that aren't as interest rate-sensitive.
In the third quarter, both purchase and cashout refinancing hit new company records, rising approximately 70% year over year.
This growth is a direct result of Rocket's commitment to providing speed, certainty and choice to our clients, all of which are crucial in the ongoing inventory constrained, highly competitive housing market.
Not only did we set a record for purchase volume in the third quarter with both our direct-to-consumer and partner channels achieving all-time highs, but by the end of September, we had already originated more purchase volume than any full year prior.
This rapid growth in the purchase segment puts us well on our way to reaching our goal of becoming the No.
1 retail purchase lender by 2023.
Helping drive our continued growth in the purchase category is our seamless end-to-end homebuying ecosystem in partnership with Rocket Homes.
Through our integrated platform, clients can find their next house on Rocket Homes' 50 state home listing search platform, secure an agent from the company's agent network, get financing through Rocket Mortgage, have Amrock conduct the title work and appraisal for them and then after closing, have their mortgage serviced by Rocket Mortgage, all from one centralized platform.
Other key drivers helping us win in today's purchase market are industry-leading products like our Overnight Underwrite and a broad range of homebuying and selling services.
For instance, Rocket Homes offers the choice to sell your home through its on-staff agents, its 50-state network of real estate professionals or through its ForSaleByOwner platform.
Additionally, we recently rolled out our Breaking Barriers program for our Rocket Pro TPO partners.
These technology enhancements, paired with programming to better connect real estate professionals and mortgage brokers are designed to give our partners the tools that they need to win today and well into the future.
As we look ahead to the next year, we expect our Rocket Mortgage business to achieve continued market share growth, exceeding 10% share in a purchase-heavy market.
This is consistent with our track record of being opportunistic to grow share.
For instance, in 2019, our company's mortgage originations accounted for roughly 6.5% of the market.
In 2020, that grew to nearly 8.5%.
With the fourth quarter guidance released earlier today, which Julie will walk through in more detail, we are well on pace to break 2020's strong origination record of $320 billion and end the year with 9.5% market share.
As we look toward 2022, we will continue to invest in the rapid growth of our platform.
delivering a unified client experience across mortgage, real estate, auto, personal loans and solar.
In our emerging businesses, we expect continued growth from Rocket Auto and Rocket Homes in 2022, on top of the records reached in 2021.
We will also formally launch our solar program and continue to target new product categories to add to the Rocket platform, either organically or through acquisition.
Our platform has been built to capitalize on the vast data, proprietary technology, trusted brand and Cloud Force here at Rocket Companies.
Refined over decades, these pillars of our platform are the foundation of our growth ahead.
With that, I'll turn things over to Julie to go deeper into the numbers.
I'm pleased to report another quarter of strong financial results for Rocket Companies as we continue to leverage our flexible platform, grow our business at scale and drive substantial profitability.
Now, we'll get into the numbers.
During the third quarter of 2021, Rocket Companies generated $3.2 billion of adjusted revenue, which is a 76% increase from Q3 2019.
We had $1.6 billion of adjusted EBITDA in the quarter, more than doubling the results of Q3 2019, representing a 48% adjusted EBITDA margin.
We delivered net income of $1.4 billion, up 181% from Q3 2019 and adjusted net income of $1.1 billion, exceeding Q3 of 2019 by more than two times.
Over that same period, our adjusted net income margin was 36% and adjusted earnings per share was $0.57 for the quarter.
Rocket Mortgage generated $88 billion of closed loan origination volume during the quarter, up nearly 120% from $40 billion in Q3 2019.
Focusing on home purchase, our momentum has continued with Q3 purchase volume up more than 70% year over year, marking a new company record set in just the first nine months of the year.
In fact, both our direct-to-consumer and partner network segment generated all-time highs for purchase volume during the quarter with our higher-margin, direct-to-consumer business having the strongest gain.
For the quarter, our rate lock-in on sale margin was 305 basis points, which was above the high end of our guidance range and substantially higher than multichannel mortgage originators.
Gain on sale margins improved quarter over quarter in both our direct-to-consumer and partner network segment.
Our emerging businesses continued to reach new record.
At Rocket Homes, we generated record real estate transaction value of $2.3 billion during the quarter, closing more than 9,000 transactions.
Our rockethomes.com website continues to increase high-intent traffic and was up nearly five times year over year with 2.4 million monthly average users during Q3.
On a year-to-date basis, Rocket Auto's gross merchandise value, or GMV, and has grown nearly two and a half times year over year as momentum for this business continues to grow as we expand inventory partners and with the launch of rocketauto.com.
We are leveraging our platform and strong base of 2.5 million servicing clients as of the end of October to grow and ramp these emerging businesses.
The Rocket Companies flywheel is based on leveraging our profitability advantages to constantly reinvest in our business, driving continued growth and strengthening our competitive position.
We see tremendous potential to drive sustainable and profitable market share gains in our core mortgage business.
We are also investing to grow beyond mortgage and leverage our platform to scale our newer real estate, auto, personal loans and solar businesses.
This growth will come from continued investment in the pillars of our platform, particularly technology.
Fueled by our vast data lake aggregated through millions of client interactions, our technology drives speed and certainty to improve client experience, higher efficiency for our businesses and opens the door to new market opportunities.
For example, Amrock completed its 1 millionth digital closing in September, cementing its leadership position in the eClosing market.
Amrock digital experience makes the closing process easier, faster and more accessible translating to a better client experience overall.
Cumulatively, our technology investments are driving meaningful change in our business.
We expanded the rollout of Rocket Logic, which can now be used by substantially all of our Rocket Cloud Force.
On a year-over-year basis, our turn times improved by more than 33% this quarter, extending the gap between us and others in the industry.
This was achieved while generating a similar level of business with a substantially higher mix of purchase transactions, which historically take longer to close.
We're also leveraging our technology platform beyond our own four walls.
As Jay mentioned, our recently announced Mortgage-as-a-Service offering with Salesforce opens up a new opportunity for Rocket Mortgage to partner with medium and large-sized financial institutions that make up approximately a third of the mortgage market.
Mortgage as a Service represents a large incremental opportunity for Rocket Mortgage to continue growing market share in the years ahead.
Increasing the lifetime value of our clients is another core component to our growth strategy.
Our business is profitable on the first transaction with the client.
We then maintain ongoing loan servicing relationships with 2.5 million clients representing over $530 billion in outstanding loan principal as of the end of October.
Mortgage servicing drives a recurring cash free for Rocket Companies of $1.3 billion on an annual basis, which covers nearly a quarter of our annualized expenses.
More importantly, with service unpaid principal balance of 30% in the past 12 months and net retention above 90%, we are positioned to continue to drive additional clients to our platform across both our direct-to-consumer and partner network channels.
In addition to generating our clients organically, we acquired MSRs with an aggregate unpaid principal balance of $3.6 billion during the third quarter.
This is in accordance with our growth strategy as we have found that our industry-leading retention rate positions us to generate attractive returns through select MSR portfolio acquisitions.
We remain aggressive in pursuing this strategy, and we'll continue to look for opportunities to deploy capital through these types of acquisitions.
Looking ahead to Q4, the housing market remains active.
Homeowners are sitting on the highest levels of home equity in history, and the investments we have been making are gaining traction across the platform, especially with the progress we're making in purchase.
For the fourth quarter, we currently expect closed loan volume in the range of $75 billion to $80 billion, and rate lock volume between $71 billion and $78 billion.
At the midpoint of our fourth quarter guided range, our full year 2021 closed loan origination volume would exceed $350 billion, exceeding the previous record of $320 billion achieved in 2020 by more than 10%.
Rocket Mortgage has a long-term track record of consistent market share gains.
We have grown market share from 1% in 2009 to nearly 8.5% in 2020, 9.5% in 2021 and expect to reach more than 10% in 2022.
We expect fourth quarter gain on sale margin to be in the range of 265 to 295 basis points.
Regarding our expenses, we believe the run rate of operating expenses for the third quarter of 2021 is a good reference for the fourth quarter.
Turning to our balance sheet, liquidity and capital allocation.
We exited the third quarter with $2.2 billion of cash on the balance sheet and an additional $2.9 billion of corporate cash used to self-fund loan originations for total available cash of $5.1 billion.
Total liquidity stood at $8.6 billion as of September 30, including available cash plus undrawn lines of credit and undrawn MSR line.
Keep in mind, even with the record level of originations we generated in 2021, we need less than $1 billion of cash on hand to properly operate our business.
Our business is capital-light and our balance sheet is extremely strong.
As we've said before, our capital priorities always start with proper capitalization and reinvesting in the business.
With $5.1 billion of available cash, we have the opportunity to consider acquisitions, repurchase shares and return capital to shareholders via dividends as we've done in the past.
For acquisitions, we look for bolt-on targets that would be additive to our platform by bringing new clients into our ecosystem, enhancing operational efficiencies or enhancing our product offering.
During the third quarter, we increased the level at which we have bought back shares.
Through the end of October, we have deployed $94 million to repurchase approximately 5.7 million shares.
This is in addition to the special dividend of $1.11 per Class A common share, funded by an equity distribution of $2.2 billion that was paid in March.
In total, we have returned $2.3 billion to all classes of shareholders during the year.
We will deploy our capital in a strategic and disciplined manner to generate long-term shareholder value.
Also, one small housekeeping item.
Previously, we used the terms funded loan volume and funded loan gain on sale margin.
Since loans are considered sold when they are purchased by investors on the secondary market, we felt the terms sold loan volume and sold loan gain on sale margin align more closely with the definition and are the terms that we will use going forward.
There's no change to the metrics we are reporting, only a change in the terminology.
 Assistant:

Chosen response: qtrly adjusted diluted earnings per share $0.57.


Prompt:
Human: Sorry for that, we were having a few audio issues.
So we've redialed back in.
Joining me on the call today to discuss our quarterly results are CEO, Mick Farrell and CFO, Brett Sandercock.
Other members of management will be available during the Q&A portion of the call.
During our call, we will discuss several non-GAAP measures.
We believe these statements are based on reasonable assumptions.
However, our actual results may differ.
I'll then review top level financial results, some business highlights from the quarter, and a few key milestones.
Then I'll hand the call over to Brett, who will walk you through our financials in further detail.
Our team achieved another quarter of strong revenue growth across the portfolio driven by superb performance in the mask category particularly in the U.S. market with good performance across the 140 countries where we provide our solutions.
We continue to take market share with our software solutions that enable increased therapy adherence with resupply programs providing support to those who need it and with our innovative new products.
Customers are voting with their wallets and they are voting for ResMed.
As the world's leading software-driven medical device company, we are using digital health technology to transform the industry.
We have sold nearly 11 million 100% cloud connectable medical devices into the market and Air Solutions, our cloud-based ecosystem manages more than 12 million patients.
In the last 12 months, we have changed over 15 million lives by providing a person with a ResMed device or complete ResMed mask system to help them breathe better and live better lives.
In addition, our Brightree and MatrixCare software systems are helping to manage 19 [Phonetic] million more people outside the hospital.
Digital health technology is an integrator across everything that ResMed does.
AirView, myAir, Propeller and a portfolio of other digital health solutions allow us to better engage with our customers and partners, including patients, physicians, providers, payers and complete healthcare systems.
We are investing in advanced analytics and expanding our capabilities in machine learning and machine intelligence so that we can grow this digital health ecosystem at double digits on a volume basis.
We now have over 5.5 billion nights of respiratory medical data in the cloud and we are analyzing these data to derive actionable insights for the benefit of patients, physicians, providers and healthcare systems.
Our relentless focus on product and software innovation continues to set us apart from our competition.
We have massive opportunities ahead in sleep apnea, in COPD as well as in outside the hospital software to help patients live better quality lives, to help patients and healthcare systems save money and to help achieve better management of chronic disease.
We believe that the future of healthcare is outside the hospital.
That's where ResMed's competes today and that's where we are winning today.
We have the right elements in place to achieve our strategy and to drive financial success as we provide market leading value to customers.
Let's now briefly review our top level financial results.
We achieved another quarter of double digit revenue growth.
We were up 14% in constant currency across our portfolio.
This growth continues to be well balanced across our domestic U.S. as well as our global product sales as well as from our software as a service businesses.
We continue to deliver operating leverage with non-GAAP operating profit growth of 21% year-over-year and non-GAAP diluted earnings per share of $1.21.
I'd like to focus now on our core sleep apnea and respiratory care businesses.
In the devices category, we delivered a good quarter with year-over-year constant currency device growth of 8% globally supported by strong 9% device growth in the United States, Canada and Latin America geographies, as well as by improving, Europe, Asia and rest of world growth, which was at 6% constant currency in the device category.
We continue to face headwinds for device growth in France as a result of the 2018 and 2019 digital health-related fleet upgrades.
We expect that the headwinds will begin to abate in the upcoming European summer and we will start to return to market growth for devices in France during fiscal year 2021.
Underlying patient growth remains healthy around the globe and we continue to benefit from strong market dynamics with over 900 million people worldwide suffering from undiagnosed and untreated sleep apnea.
Growth in the masks and accessories category of our business was incredibly strong during the quarter.
We were up 16% constant currency globally in this category, well ahead of market growth rates, indicating that we gained significant market share with our latest patient interface innovations.
Removing the impact of some software within this category, we are still growing our global mask franchise in the mid teens.
Our flagship masks, the AirFit F20 and the AirFit N20 continue their growth across global markets.
The success of these masks was augmented by continued good uptake of our more recent masks launches.
We have launched a steady rhythm of mask innovation over the past 15 months.
We have just lapsed the successful launch of the F30 in the December quarter and we will lap the launch of the N30 the N30i and the P30i during the coming 12 months.
The F30i was launched just over a week ago combining the needs for patients in the freedom and the minimalist mask segments.
With our portfolio of solutions, we are ensuring that we have the right mask for every patient, every time.
We are innovating and expanding our mask portfolio to offer comprehensive options for physicians and home care providers and for the specific needs of the ultimate customer and that's the person who suffocates every night with sleep apnea.
We remain focused on driving innovation to meet underserved customer needs.
We are creating future products that are smaller, quieter, more comfortable, and more customized to each persons needs.
Through digital health technologies such as the myAir app, we are driving patient engagement with our therapy so that people can enjoy the benefits of better breathing and better sleep.
We have well over 2 million patients using myAir and leveraging its insights and personalized feedback through coaching algorithms.
In parallel, we are also ensuring that the cost of sleep apnea as a chronic disease can be better managed by physicians, providers, payers, and healthcare systems.
Our digital end-to-end solutions combined with available 100% cloud connectivity as well as information provided to patients on their own smartphones are all leading to significant improvements in cost, improvements in healthcare outcomes, and improvements in quality of life.
We believe cloud-based software combined with world-leading medical devices can add value and improve both clinical outcomes as well as the patient experience.
On the partnership front, our joint venture with Verily is creating software solutions to help identify and engage and enroll people with sleep apnea on a journey to better sleep and better breathing.
We have commenced pilots in a handful of U.S. cities to improve awareness, identification, and engagement with the importance of good sleep and breathing to overall health.
Our philosophy is this, the more a person knows about how much they suffocate every night and the consequences of that suffocation on their overall health outcomes, the more likely they will seek solutions.
At its simplest level, this partnership will drive incremental growth in our core sleep apnea business.
Over the longer-term and on a deeper level, this partnership will also allow ResMed to participate in a broad chronic disease management platform covering sleep apnea, cardiovascular disease, diabetes, mental health and beyond.
I'd like to now focus on our business in respiratory care.
There are nearly 400 million people suffering from chronic obstructive pulmonary disease or COPD worldwide.
We don't believe these people are well served by global healthcare systems today and many COPD patients are frequent visitors to hospital emergency rooms with admissions and frequent readmissions.
We have a vision to better manage COPD patients through the use of technology with digital end-to-end solutions, technology such as our Propeller platform helps how patients are communicated to, it helps how they are encouraged in their medical care and it helps how folks are looked after as an individual person.
We believe that technology combined with world-leading medical equipment can add substantial value to improve both clinical outcomes and the patient experience.
We plan to offer a portfolio of solutions through all stages of COPD progression.
We will be there with stage 1 and stage 2 COPD patients as they commence inhaled pharmaceutical therapy managed by the Propeller platform.
We will be there with stage 2 and stage 3 COPD patients as they add portable oxygen therapy to their care.
We will also be there with stage 3 and stage 4 COPD patients as they commence non-invasive ventilation therapy and ultimately life support ventilation therapy.
We will manage the person on one end-to-end digital health COPD platform, helping the patients, helping their caregivers and loved ones as well as helping their physicians and providers so that they have the right information at the right time, lowering costs and improving outcomes.
Our team at Propeller continues to progress their business as we move along the path from pilot trials to commercial partnerships with both pharmaceutical partners and healthcare systems.
The digital health opportunity with inhaled respiratory medicine adherence will take time to build and we are making good progress.
In December, Propeller was included as the only chronic respiratory disease solution in Express Scripts' first formulary for digital health solutions.
In November, access for Propeller users was expanded to pharmacy services from CVS, from Walmart, from Kroger, and from Rite Aid.
This was accessed directly from the Propeller app via the My Pharmacy feature within that smartphone application.
We will update you on the milestones for Propeller with partners in both pharma as well as healthcare systems as we move forward throughout 2020.
Finally, I'd like to focus on our software as a service business.
We continue to integrate and optimize the out of hospital SaaS portfolio for long-term growth.
We are focused on leveraging our competitive advantage as the only strategic player competing with leading software solutions focused on home medical equipment providers, skilled nursing facilities as well as home health and hospice providers.
Our SaaS portfolio revenue grew 37% year-on-year this last quarter, benefiting from the MatrixCare acquisition that we lapped during November.
We estimate that the weighted average market growth rate of these sectors we compete in is in the high-single digits.
Excluding the timing benefit of the MatrixCare acquisition and on a pro forma basis, our SaaS portfolio grew in line with market in Q2.
Our plan is to beat that market growth rate over the medium to long-term.
As we reached the fourth anniversary of our Brightree acquisition here in 2020, we are achieving strong [Technical Issues] in our home medical equipment or HME sector with our Brightree team in Atlanta.
We just passed the one-year anniversary with our MatrixCare acquisition in the quarter and we are increasing our investments in our MatrixCare team up there in Minneapolis.
This investment is focused on new module introduction for our MatrixCare platform so that we can ensure that we are able to grow and share in our skilled nursing facility as well as home health and hospice sectors as we move forward.
We are doing the hard work to make MatrixCare as successful as Brightree is in the ResMed portfolio and we have all the elements in place to do that.
It took around 24 months to see strong sustainable returns from our investments in R&D and our management team at Brightree.
We think we can meet or beat that timeline for strong and sustainable returns from our MatrixCare investments that we are currently making.
Last quarter, we announced a collaboration with Cerner as their new preferred partner for home health and hospice software for Cerner's customers.
It is early days in that partnership and things are going very well.
We've started to migrate existing home health and hospice customers to our MatrixCare solution.
Our sales team is actively engaged with Cerner's sales team with customers learning of the benefits of our MatrixCare home health and hospice software.
We are excited to drive growth from this partnership.
The rich interoperability between our two solutions will provide value for both Cerner and ResMed customers as well as their patients and residents.
I would like to take a moment to announce an exciting technology tuck-in acquisition that we are just in process of completing.
Just this week, Brightree signed an agreement to acquire a company called SnapWorx.
SnapWorx is a privately held software company that provides patient contact management and workflow optimization for sleep apnea resupply.
The combination of Brightree's technology and live call services with this new SnapWorx technology creates the largest resupply base in the industry with end-to-end workflow automation.
For our HME customers, the combination of these two technologies Brightree and SnapWorx will increase patient adherence and increase operational efficiency.
We expect the transaction to close very shortly.
The acquisition of SnapWorx is expected to be neutral to our non-GAAP ResMed earnings per share initially.
However, we expect this acquisition will be accretive to non-GAAP earnings per share during fiscal year 2021.
In summary, we have the vision to transform and significantly improve software solutions across outside the hospital healthcare sectors.
We see a future [Technical Issues] of hospital care.
The continued success of our mask and device portfolio along with a solid pipeline of new products and new digital health solutions covering sleep apnea, COPD, and out of hospital software gives us confidence in continued growth as we move through the year.
We have positioned ResMed for the long-term as the global leader in digital health driving top line and bottom line growth as we execute toward our 2025 strategy.
We are focused on our triple aim.
First, to slow chronic disease progression; second, to reduce overall healthcare system costs; and third, to improve quality of life for the ultimate customer, the patient.
With that, I'll hand the call over to Brett in Sydney for his remarks and then we'll go to Q&A.
In my remarks today, I'll provide an overview of our results for the second quarter of fiscal year 2020.
As Mick noted, we had a strong quarter.
Group revenue for the December quarter was $736 million, an increase of 13% over the prior year quarter.
In constant currency terms, revenue increased by 14%.
Excluding revenue from acquisitions, group revenue increased by 11% on a constant currency basis.
Taking a closer look at our geographic distribution and excluding revenue from our software as a service business, our sales in U.S., Canada and Latin America countries were $408 million, an increase of 14% over the prior year quarter.
Sales in Europe, Asia and other markets totaled $242 million, an increase of 5% over the prior year quarter.
However, in constant currency terms, sales in combined Europe, Asia and other markets increased by 8% over the prior year quarter.
Breaking out revenue between product segments, U.S., Canada and Latin America, device sales were $204 million, an increase of 9% over the prior year quarter.
Masks and other sales were $204 million, an increase of 19% over the prior year quarter.
Revenue in Europe, Asia and other markets device sales were $162 million, an increase of 4% over the prior year quarter or in constant currency terms, an increase of 6%.
Masks and other sales in Europe, Asia and other markets were $79 million, an increase of 8% over the prior year quarter or in constant currency terms, an increase of 11%.
Globally, in constant currency terms, device sales increased by 8% while masks and other sales increased by 16% over the prior year quarter.
Software as a service revenue for the second quarter was $87 million, an increase of 37% over the prior year quarter.
During the rest of my commentary today, I'll be referring to non-GAAP numbers.
The non-GAAP measures adjust for the impact of amortization of acquired intangibles, purchase accounting fair value adjustment to MatrixCare deferred revenue, litigation settlement expenses, and acquisition-related expenses.
Note that this quarter for GAAP reporting purposes, we are now reflecting the portion of amortization of acquired intangibles attributable to develop technology in our cost of sales rather than being allocated to operating expenses.
We've made this change to align with SEC disclosure guidance.
This will mean we'll disclose both GAAP and non-GAAP gross profit measures going forward.
Going forward, I will reference this non-GAAP metric as I believe it is the best measure of our underlying gross margin.
Our non-GAAP gross margin improved to 59.7% in the December quarter compared to 59.1% in the same quarter of last year.
Compared to the prior year, our non-GAAP gross margin increased by 60 basis points.
This was predominantly attributable to favorable product mix and manufacturing efficiencies, partially offset by typical declines in average selling prices.
Moving on to operating expenses, our SG&A expenses for the second quarter were $171 million, an increase of 6% over the prior year quarter.
In constant currency terms.
SG&A expenses increased by 8%.
Excluding acquisitions, SG&A expenses increased by 2% on a constant currency basis.
SG&A expenses as a percentage of revenue improved to 23.3% compared to 24.8% that we reported in the prior year quarter.
Looking forward, subject to currency movements and taking into account recent acquisitions, we expect SG&A as a percentage of revenue to be in the range of 23% to 25% for the remaining two quarters of fiscal year 2020.
R&D expenses for the quarter were $50 million, an increase of 16% over the prior year quarter or on a constant currency basis, an increase of 18%.
Excluding acquisitions, R&D expenses increased by 4% on a constant currency basis.
R&D expenses as a percentage of revenue was 6.8% compared to 6.6% in the prior year.
Looking forward, subject to currency movements, we expect R&D expenses as a percentage of revenue to be in the range of 7% to 8% for the balance of fiscal year 2020.
Total amortization of acquired intangibles was $20.6 million for the quarter, an increase of 30% over the prior year quarter reflecting the impact from our recent acquisitions.
Stock-based compensation expense for the quarter was $14.1 million.
Our non-GAAP operating profit for the quarter was $218.5 million, an increase of 21% over the prior year quarter while non-GAAP net income for the quarter was $176.3 million, an increase of 22% over the prior year quarter.
On a GAAP basis, our effective tax rate for the December quarter was 10.2% while on a non-GAAP basis, our effective tax rate for the quarter was 11.6%.
Our tax rate was favorably impacted by a tax benefit of $20.3 million associated with the vesting of employee share-based compensation, in particular, the tax deduction associated with the vesting of executive performance stock units in November.
Excluding the impact from this benefit, our GAAP effective tax rate would have been 21.6% and our non-GAAP effective tax rate would have been 21.8% [Phonetic].
Looking forward, we estimate our effective tax rate for the second half of fiscal year 2020 will be in the range of 19% to 21%.
Non-GAAP diluted earnings per share for the quarter were $1.21, an increase of 21% over the prior year quarter while GAAP diluted earnings per share for the quarter were $1.10.
Now diluted earnings per share were also favorably impacted by the tax benefit that I've just discussed.
Excluding the impact of this gain, our non-GAAP earnings per share would have been $1.07.
Cash flow from operations for the second quarter was $69.9 million reflecting robust underlying earnings, partially offset by the timing of tax payments with $111 million in tax paid in our second quarter.
Additionally, we made the payment for our settlement to the U.S. Department of Justice of $40.6 million this quarter.
Capital expenditure for the quarter was $25.1 million.
Depreciation and amortization for the December quarter totaled $45.5 million.
During the quarter, we paid dividends of $56.1 million.
We recorded equity losses of $6.9 million in our income statement in the December quarter associated with the Verily joint venture.
We expect to record approximately $6 million of equity losses each quarter for the balance of fiscal year 2020 associated with the joint venture operations.
Our Board of Directors today declared a quarterly dividend of $0.39 per share.
At December 31, we have $1.3 billion in gross debt and $1.1 billion in net debt.
Our total assets were $4.4 billion and our balance sheet remains strong with modest debt levels.
Finally, to recap, our top line revenue was strong this quarter with growth across all major categories.
Gross margin expanded and our operating costs remained well controlled.
As a result, we are continuing to drive operating leverage with Q2 non-GAAP operating profit up 21% year-on-year.
We are focused on driving operating results integrating our SaaS acquisitions and ensuring we continue to invest in our strategic long-term opportunities.
And with that, I'll hand the call back to Amy.
We will now turn to the Q&A portion of the call.
I would like to remind everyone to limit yourself to one question and if you have additional questions, please feel free to return to the call queue.
Christine, we are now ready for the Q&A portion of the call.
 Assistant:

Chosen response:
compname reports q2 non-gaap earnings per share $1.21.
q2 non-gaap earnings per share $1.21.
q2 gaap earnings per share $1.10.
agreed in january to acquire snapworx.


Prompt:
Human: Joining me on the call today to discuss our quarterly results are CEO Mick Farrell and CFO Brett Sandercock.
Other members of management will be available during the Q&A portion of the call during today's call, we will discuss some non-GAAP measures.
We believe these statements are based on reasonable assumptions.
However, our actual results may differ.
During this global pandemic, caused by a novel coronavirus and COVID-19, the disease state it leads to, I hope that you, your family and your friends remain safe and healthy during these times.
Way back in early January, a ResMed employee, a ResMedian in Hubei province, China, put on a hazmat suit and helped set up ventilators to provide the gift of breath to many thousands of people that turned out in that city, while their immune systems fought against the first global cases of COVID-19 that ResMed saw in Wuhan.
Since that time, seven months ago, our global team has provided vital support globally to combat this coronavirus, not just across China, but across Asia, then across Europe, across North America.
And now we are just starting to -- preparing to -- actually, we're in the midst of continuing that battle in Latin America in, sub-Sahara and Africa and parts of the Middle East and Asia that still have that, what we call, the peak impact ahead of them in terms of hospitalizations and ventilator needs.
So I noted in our call 90 days ago, our Q3 call, that we would do more to support the global community and local healthcare systems with ventilators and ventilation mask systems across the 140 countries that we serve.
During Q4, during this June quarter, we produced around 100,000 invasive and noninvasive ventilators, including bilevel positive pressure ventilators.
That brings our cumulative total to over 150,000 ventilators that we produced since the beginning of calendar year 2020.
So we've delivered on our promise to triple our production.
And in fact, if you take the period from January 1 to June 30, for 2020, that is a 3.5 times increase over the period for 2019, so 3.5 times.
For our flagship ventilator, which is the Astral life support ventilator, we reached a peak of over five times our weekly production rate during the period.
And we're still running at full capacity for the Astral to ensure that ResMed is there for, what we call, preservation of life as the coronavirus continues to move around the globe.
I'm particularly proud of the role that our supply chain, our manufacturing, our distribution and our tech services teams have played during this coronavirus crisis, making sure that ResMed device and a complete ventilation system was there at the bedside when someone needed help breathing as their immune system fights against COVID-19.
So, looking forward, we have built a sophisticated set of analytic capabilities, including an epidemiology patient model that has helped us model the impacts of both the headwinds and the tailwinds that are part of this COVID-19 crisis, and we have detailed scenarios of the impacts by city, by region, by country and by ResMed business line.
Through all that analysis, I'm happy to say that we're confident in our ResMed ability to execute across the full range of potential scenarios for all of our customers and for all of our global businesses.
The tailwinds for ventilation in the March quarter and the June quarter from both the ventilator devices and the ventilation mask systems are starting to recede.
And while we are still working on current and future contracts with hospitals, as well as city and national health authorities for these ventilators, the volumes will be significantly lower in the September quarter for these ventilators.
At the same time, the headwinds we experienced, especially in the June quarter, for our sleep apnea and COPD patient flow and patient diagnosis are also receding.
So, people are starting to return for their primary care physician visits.
They're starting to return for their specialist physician visits.
And we see the system today growing from its nadir during the last period as we now see city by city and country by country, the markets are coming back online.
So over the portfolio of 140 countries that we serve, we expect a gradual, sequential, quarter to quarter, U-shaped recovery of patient flow to primary care physicians, sleep physicians, as well as pulmonary physicians that are treating COPD and asthma throughout fiscal year 2021.
We expect the expansion of home sleep apnea testing to continue.
As it did during the crisis, we think it will continue post the crisis.
And we also expect a steady sort of sequential increase in sleep lab activity and visits to the pulmonary specialists both in person and through telehealth, which has been expanding rapidly under COVID.
Additionally, some very early research into the post-COVID clinical world shows that select patients who have recovered from COVID-19 may have lung damage, and some of them may require long-term ventilator support.
This is an additional area for focus for us, but I have to say, it's very early days in that area.
I'll also recap our long-term strategy, our ResMed 2025 strategy and some execution highlights against some of our key operating priorities as part of that strategy.
Finally, I'll discuss how we are advancing and learning in a post-COVID peak world, including how this pandemic has accelerated three important trends: One, the importance of respiratory medicine.
Two, the importance of digital health.
And three, the importance of outside-hospital healthcare.
These are three key elements of our ResMed 2025 strategy that were in play well before the global pandemic.
But these are theee trends that have accelerated during this pandemic, and we think the momentum will continue in a post-COVID world.
So, to our business performance.
We delivered strong revenue and earnings growth for the fourth quarter and for the full fiscal-year 2020.
We had year on year annual 15% top line revenue growth to $3 billion in annual revenue for ResMed.
Our results reflect strong growth and positive momentum across our innovative medtech portfolio and our market-leading digital health software solutions.
We have grown our global market footprint, finding new patients in the midst of a global pandemic, and we have driven growth with recurring revenue from our installed base of sleep apnea patients.
While our financial results in March and June have benefited from high demand for ventilation devices and lower operating costs, our underlying core business of sleep apnea, COPD and asthma remains strong and well positioned for long-term growth.
During fiscal year 2020, we generated $802 million of cash that allowed us to return $225 million of cash dividends to you, our shareholders, while also investing in our future with a double-digit increase in R&D, including clinical research, both digital and in person, as well as design and digital innovation across our sleep apnea, COPD, asthma and our software as a service businesses.
We have a full pipeline of innovative solutions that will generate both medium- and long-term growth opportunities, with an industry-leading intellectual property portfolio of over 6,000 patents and designs.
Importantly, we have also seen significant growth in our digital health ecosystem.
We now have over 6.5 billion nights of sleep and respiratory medical data in the air solutions platform.
We have grown connectivity to our digital health ecosystem by over 26% this fiscal year, and we now have over 12 million 100% cloud-connectable medical devices in the market.
And we have around 14 million patients enrolled in the AirView software solution.
Our digital health ecosystem is a competitive advantage for ResMed that offers innovative solutions, as well as integrated care to drive superior outcomes, better patient experiences and lower healthcare system costs.
Our acquisition and continued investment and development of the propeller platform has been a digital health accelerant for ResMed.
Our recently announced commercial partnership with Novartis, which I will describe in more detail later during the call, is a great example of this progress with propeller.
During the last 12 months, we have improved 16 million lives by providing a person with a device or complete mask system to help them breathe.
Importantly, the ability to help these patients on their individual journey to better sleep and better breathing is powered by the over 6.5 billion nights of medical data in our ecosystem.
These data form a significant competitive advantage as they enable us to perform sophisticated analytics and drive actionable insights to benefit all of our customer groups, including the patients most importantly, but also improving workflows for physicians, for providers, for payers and for full healthcare systems.
Fundamentally, we believe the future of healthcare delivery is outside the hospital.
That's where ResMed competes today, and that's where we win today.
Globally, there are 936 million people with sleep apnea.
There are over 380 million people who suffer from COPD, and there are over 340 million people living with asthma.
They all need our help, and they all want that help at home, definitely not in a hospital.
Our SaaS business is 100% focused on out-of-hospital care, leveraging the global trend for seniors to age in place.
We think this trend will accelerate in a post COVID world.
ResMed can provide seamless care for our portfolio of out-of-hospital care settings, including home medical equipment, skilled nursing facilities, senior living, life plan communities, home health, hospice, as well as home care services.
COVID-19 has accelerated the rapid adoption of digital health technologies, the recognition of the value of remote monitoring, virtual diagnosis and the evolution of global reimbursement models in the field of digital health.
This acceleration of digital health adoption represents a significant medium to long-term tailwind for our business.
These three trends, the increased importance of respiratory medicine, the increased importance of digital health and the increased importance of out-of-hospital healthcare will help ResMed achieve our goal to improve 250 million lives by 2025.
So on to our operating priorities.
We have three operating priorities that guide our daily focus here at ResMed.
1 is to grow and differentiate our core sleep apnea, COPD and asthma businesses across global markets.
With over 1.6 billion people across these three chronic disease states, we know that delivering our innovative solutions to these underpenetrated markets is our clear No.
2 priority is to design, develop and deliver world-leading medical devices, as well as digital health technology solutions to better engage physicians, providers and payers, as well as patients so that we can improve clinical outcomes so we can reduce costs, and we can enhance the patient experience.
3 priority is to innovate and grow the world's best seamless software solutions for care that is delivered outside the hospital.
We think ResMed is uniquely positioned to deliver on these three priorities.
So, I'll quickly walk through some examples of innovation in each of these priorities, and then we'll hand over to Brett and go to Q&A.
In our core market of sleep apnea, we launched, what we call, the ResMed MaskSelector into our US geography.
The ResMed MaskSelector is a digital health technology to make remote patient mask selection and sizing both easier and more effective, helping the patient themselves receive the care they need from home.
We think that this is the digital solution to help our home medical equipment or HME customers in their challenge to find the right mask for each patient when they can't physically touch them due to physical distancing during COVID-19.
We are providing this solution at no charge during the coronavirus public health emergency.
However, we think this technology's efficiency and benefits for both providers and patients will last well beyond the pandemic.
Digital tools like this, as well as capabilities, including video support for doctors and their patients, as well as remote mask patient fittings, have seen good application during COVID-19.
Combined with our mask resupply solutions, including SnapWorx, AeroCare and Brightree resupply, we have delivered solid mask growth.
In terms of new patient flow, the COVID lockdowns have had a significant impact on our business.
We saw double-digit declines in new sleep apnea patient flow across all markets that experienced lockdowns.
Individual cities, regions and countries had unique approaches to any lockdown and reopening processes.
For instance, today, in Germany, we stand at more than 85% of pre-COVID sleep lab capacity already up and running.
Whereas in China, at the other end of the spectrum, we stand at 50% of pre-COVID diagnostic capacity in that geography.
Most of the other 140 countries that we sell into around the world fall somewhere between those two extremes.
In big countries like the US, it's a story of 50 states with unique models, again, as a spectrum between these boundary conditions.
The average in the United States is probably somewhere in that 70% of diagnostic capability but some states will be closer to the 60% range, and some will be closer to the 75% range.
As I stated earlier, we expect a steady, sequential, quarter-by-quarter, sort of U-shaped recovery of the sleep apnea, COPD and asthma patient flow throughout fiscal 2021.
Clearly, a highly effective vaccine or a highly efficacious treatment for COVID-19 could, of course, turn that U-shape into a dramatic V-shaped recovery.
However, we are not counting on that.
And an event like that remains upside from what we call our expected or likely case scenario.
In terms of execution in our second key disease state of COPD and our ventilation solutions for COPD and other lung conditions, we launched our cloud-based remote monitoring software called AirView for our ventilator solutions in Europe, including the Astral product, the Stellar ventilator and the Lumis ventilator.
Through AirView, clinicians and care providers can now remotely monitor their patient's respiratory rate, as well as their blood oxygen saturation.
These are two critical indicators for a respiratory patient's condition.
We accelerated the delivery of this technology for clear and urgent needs during the pandemic.
However, this enhanced AirView capability, providing insights across European ventilation patient populations will provide differentiation for ResMed through the clinical value for physicians and better outcome for patients in perpetuity.
In terms of execution in our third key disease state of asthma, ResMed has partnered with Novartis to co-package the propeller solution and digital platform with the new triple-action asthma medication in a brand called Enerzair Breezhaler.
This novel combination has been cleared by the European Commission for launch.
The propeller sensor attaches to the new inhaler from Novartis and its new medication where it can collect medication usage data.
The app works both as an adherence measure that gives the patient reminders to take their medication, but also as a means of collecting information about the patient's medical condition to help their physician provide even better care to the patient.
This is a breakthrough innovation as it is the first time a respiratory medicine has been co-packaged with a digital health platform and co-prescribed.
The benefits of this combination are tremendous for the patient.
It's a simple and convenient way to have a fully integrated experience to allow them to better live with their chronic disease, to better live with asthma with no incremental cost to the patient.
This brand-new approval is a new-to-the-world technology that will accelerate the adoption of digital health in the respiratory medicine space and will help us identify other innovative opportunities to combine our propeller tech with medicine delivery.
This new Novartis partnership follows our announcement in May that the propeller sensor and an app gained 510(k) US 510(k) clearance for use with the SYMBICORT inhaler for both asthma and COPD patients from AstraZeneca.
This sensor is built to fit various inhalers and their generic equivalents.
Propeller's cloud-based system tracks medication usage of the SYMBICORT from these inhalers through a smartphone app, which patients can use to paint a clearer picture of their disease control for their clinicians.
These new partnerships with both Novartis and AstraZeneca and previously announced collaborations with Orion, as well as Boehringer Ingelheim expand the potential reach of propeller's technology to around 90% of inhaled medicines for both asthma and COPD in the United States.
We believe that this represents a significant upside opportunity for the expansion of the propeller platform in the US market, but also around the world as the benefits of digital health grow and move around the world.
So before I transition to details of our software-as-a-service business, I'd like to recap briefly why the SaaS business is integral to ResMed's long-term strategy to provide seamless transitions between hospital care and post-acute care or as we call it here at ResMed, out-of-hospital care because we don't think you have to go to hospital to get good care outside the hospital.
Our vision is to enable a system where a patient's health data moves with them as they transition care settings, giving providers the information they need to deliver personalized care and saving the person and the caregiver, both time and money.
We are focused on leveraging our competitive advantage as the only long-term strategic player with solutions that span across these seven important out-of-hospital healthcare verticals, home medical equipment, skilled nursing facilities, senior living, life plan communities, home health, hospice, as well as home care services.
During the quarter, our software-as-a-service business grew 7% compared to the year ago period.
We are integrating and optimizing the out-of-hospital SaaS portfolio to support long-term growth.
We continue to believe that the long-term weighted average growth of these SaaS verticals that we're in is in the high-single digits.
The COVID-19 market impact has particularly affected the skilled nursing facility census levels in that vertical that we serve.
We believe this impact will continue over the next several quarters, moving the weighted average market growth of these verticals to the mid-single-digit range for our SaaS businesses for that period with a return to high single digits as we start to see other analogous things, such as elective surgeries and hospital discharges return to their normal rates, at which time, we believe that market's weighted average market growth rate will return to the high single digits.
Our goal here at ResMed is always to not just meet but to beat that market growth through delivery of superior market-leading solutions.
Turning to more details of our SaaS business performance during the quarter.
We've been pleased with the early impact of SnapWorx technology, which we acquired in February.
As we discussed on our last earnings call, SnapWorx provides patient contact management and workflow optimization for sleep apnea resupply for our HME customers.
The timing of this acquisition couldn't have been better.
With COVID-19, our HME customers have been increasingly focused on resupply and better tech to interact with patients in a no-touch, noncontact world.
The combination of SnapWorx, as well as AeroCare and Brightree resupply, and all of these three technologies are under our Brightree brand, they provide the strongest suite of resupply solutions available in the market, period.
This technology is important to our customers, to their patients, as well as to our internal SaaS business and our core sleep apnea business, driving both patient engagement and better outcomes, as well as revenue growth.
In October 2019, we announced that ResMed entered into an agreement with Cerner Corporation to help clinicians make more informed treatment decisions, control costs and deliver seamless care across healthcare systems.
We have now integrated our Brightree-branded home health and hospice platform with the Cerner Electronic Health Record or EHR.
This partnership is performing above our expectations for both Cerner and for ResMed, and we anticipate opportunities to deepen and expand this collaboration as we continue to work together.
In summary, the SaaS portfolio is performing well and remains an important driver of our digital transformation of healthcare in settings outside the hospital.
The COVID headwinds in the near term will recede, and we will continue to invest now and in the future in research and development to make sure that ResMed has the best solutions for long-term growth and market leadership.
The future of healthcare delivery is outside the hospital.
COVID-19 has accelerated that, and we here at ResMed are well-positioned to capitalize on it.
Our diversified solution portfolio and capabilities are arrayed against a compelling and expanding market opportunity in sleep apnea, COPD, asthma and out-of-hospital SaaS.
Through the first seven months of this COVID-19 crisis and this calendar year, we have maintained strong growth through our effective execution, our breakthrough innovation, our recurring revenue businesses, as well as margin expansion driven by our global operating excellence programs.
While we look forward to moving COVID-19 into the rear view mirror, there are beneficial trends it has accelerated, which are not passing.
Moreover, they're actually persistent and, we believe, impactful.
The importance of respiratory medicine, the importance of digital health and the importance of healthcare delivered outside the hospital, those three trends just got accelerated, and they're here to stay.
While these macro trends of increased telehealth and increased remote patient monitoring represent short, medium- and long-term benefits for ResMed's business, more importantly, they represent tailwinds for significant improvement on the most critical patient metrics, improving clinical outcomes for the patient's chronic disease and enhancing levels of patient satisfaction for that ultimate customer, the person who just wants to sleep better, breathe better and live with a better quality of life.
So before I hand the call over to Brett for his remarks, I want to express my personal gratitude to the 7,500 ResMedians around the world.
In an unprecedented fiscal year, you have remained focused on creating value in our core markets and honoring commitments to patients through COVID-19.
You helped us pivot and produce 150,000 life-saving ventilators to help people breathe in 140 countries worldwide.
Without our team, our current and future success would not be possible.
With that, I'll hand the call over to Brett in Sydney, and then we'll open up for Q&A.
Brett, over to you.
In my remarks today, I will provide an overview of our results for the fourth-quarter fiscal year 2020 and some remarks on our Q1 FY '21 outlook.
As Mick noted, we had a strong quarter.
Group revenue for the June quarter was $770 million, an increase of 9% over the prior-year quarter.
In constant currency terms, revenue increased by 10% compared to the prior-year quarter.
Revenues for the fourth quarter were favorably impacted by significant sales of ventilator devices and accessories, partially offset by declines in our sleep business.
We estimate that the incremental net revenue benefit from COVID-19 related impacts was in the order of 20 million, reflecting estimated incremental ventilator and related accessory revenue of 125 million, partially offset by an estimated 105 million impact on our sleep revenue relative to our pre-COVID forecasts.
Taking a closer look at our geographic distribution and excluding revenue from our software-as-a-service business, our sales in US, Canada and Latin America countries were $401 million, an increase of 4% over the prior-year quarter.
Sales in Europe, Asia and other markets totaled 278 million, an increase of 19% over the prior-year quarter and an increase of 22% in constant currency terms.
By product segment, US, Canada and Latin America device sales were $206 million, an increase of 1% over the prior-year quarter.
Masks and other sales were 195 million, an increase of 7% over the prior-year quarter.
In Europe, Asia and other markets, device sales totaled $206 million, an increase of 32% over the prior-year quarter or in constant currency terms, a 35% increase.
Masks and other sales in Europe, Asia and other markets were 73 million, a decrease of 8% over the prior-year quarter, while in constant currency terms, a 6% decrease.
Globally, in constant currency terms, device sales increased by 16%, while masks and other sales increased by 3% over the prior-year quarter.
Software-as-a-service revenue for the fourth quarter was 91 million, an increase of 7% over the prior-year quarter.
On a non-GAAP basis, SaaS revenue increased by 6%.
During my commentary today, I will be referring to non-GAAP numbers.
The non-GAAP measures adjust for the impact of amortization of acquired intangibles, the purchase accounting fair value adjustment to MatrixCare deferred revenue, restructuring expenses and litigation settlement expenses.
Our non-GAAP gross margin improved by 60 basis points to 59.9% in the June quarter compared to 59.3% in the same quarter last year.
The increase is predominantly attributable to favorable product mix, partially offset by increased cost in logistics, component parts and manufacturing.
These cost increases largely reflect the impact of COVID-19 and our rapid ramp-up of ventilator production.
In particular, we incurred significantly higher inbound and outbound airfreight costs during the quarter reflecting both higher volumes and significantly higher rates.
We are rebalancing airfreight and sea freight volumes.
But in the near term, we expect to see elevated freight costs continuing into Q1 FY '21.
Moving on to operating expenses.
Our SG&A expenses for the fourth quarter were 165 million, a decrease of 4% over the prior-year quarter.
Or in constant currency terms, SG&A expenses were consistent with the prior year.
SG&A expenses as a percentage of revenue improved to 21.5% compared to 24.3% we reported in the prior-year quarter, benefiting from cost management and reduced travel as we work through the uncertain COVID-19 environment.
Looking forward, we expect SG&A expenses to increase in the low single digits relative to the year ago period.
R&D expenses for the quarter were $53 million, an increase of 3% over the prior-year quarter or on a constant currency basis, an increase of 4%.
R&D expenses as a percentage of revenue were 6.8% compared to 7.3% in the prior year.
We continue to prioritize investments in innovation because we believe our long-term commitment to technology and product development will deliver a sustained competitive advantage.
Looking forward, we expect R&D expenses to continue to grow in the high single digits to low double digits, reflecting our commitment to innovation through the economic cycles.
Total amortization of acquired intangibles was 20 million for the quarter, a decrease of 14% over the prior-year quarter, reflecting historical intangible assets becoming fully amortized during the quarter.
Stock-based compensation expense for the quarter was 16 million.
Non-GAAP operating profit for the quarter was 243 million, an increase of 24% over the prior year quarter, reflecting strong top line growth, expansion of gross margin and well-managed operating expenses.
On a GAAP basis, our effective tax rate for the June quarter was 16.2%, while on a non-GAAP basis, our effective tax rate for the quarter was 16.8%.
Looking forward, we estimate our effective tax rate for fiscal year 2021 will be in the range of 17 to 19%.
Non-GAAP net income for the quarter was $193 million, an increase of 40% over the prior year quarter.
Non-GAAP diluted earnings per share for the quarter were $1.33, an increase of 40% over the prior year quarter.
Our GAAP diluted earnings per share for the quarter were $1.22.
Cash flow from operations for the fourth quarter was 330 million, reflecting robust underlying earnings and working capital management.
Capital expenditure for the quarter was 18 million.
Depreciation and amortization for the June quarter totaled 39 million.
During the quarter, we also paid dividends of 56 million.
We recorded equity losses of 6 million in our income statement in the June quarter associated with the Verily joint venture.
We expect to record equity losses of approximately 15 million for the full fiscal year 2021 associated with the joint venture operation.
We ended the fourth quarter with a cash balance of 463 million, having generated 330 million in operating cash flow during the fourth quarter and 802 million during our fiscal year 2020.
At June 30, we had $1.2 billion in gross debt and 717 million in net debt.
Our debt levels remained modest.
And at June 30, we had just under 1.1 billion available for drawdown under our existing revolver facility.
In summary, our liquidity position remains strong.
However, I also want to highlight that in these times of uncertainty, we are maintaining a disciplined approach and we are tightly managing expenses, cash flow and liquidity.
Today, our board of directors declared a quarterly dividend of $0.39 per share, reflecting the Board's confidence in our strong liquidity position and operating performance.
Finally, to recap on Q4 results, our earnings this quarter were very strong, reflecting significant demand for ventilators underpinning revenue growth and expansion in our gross margin and lower operating expenses.
Turning now to our first-quarter FY '21 outlook.
At a high level, we expect to see continued demand for ventilators, but at a significantly lower level compared to Q4 FY '20.
Additionally, we expect to see a continued headwind for sleep device sales in Q1 in response to the temporary reduction in the diagnosis of new patients.
Mask and accessories have continued to demonstrate resilience over the past three months, which reflects the insulating value of the large patient installed base.
Consistent with these remarks, for the first month of Q1 FY '21, we recorded group revenue growth in the low single digits.
However, like many other companies, we are experiencing pervasive uncertainty in the current environment.
And as a result, our forecast and possible future revenue outcomes remain dynamic.
And with that, I will hand the call back to Amy.
We'll now turn to the Q&A portion of the call.
[Operator instructions] Sheryl, we'll now -- we are now ready to start the Q&A portion.
 Assistant:

Chosen response:
q4 non-gaap earnings per share $1.33.
q4 gaap earnings per share $1.22.
qtrly revenue increased 9% to $770.3 million; up 10% on a constant currency basis.