Key points
- How Rocket Lab's quarter compared with forecasts
- What widened Rocket Lab's loss
- What Rocket Lab now charges for a Neutron launch
Rocket Lab (RKLB) reported record third-quarter revenue of $268 million on November 9, beating analyst estimates of $258 million. Its GAAP loss of 12 cents a share was wider than the 7-cent loss analysts expected, according to S&P consensus figures cited by StockStory. The quarterly release didn't provide an adjusted loss per share.
Shares fell 6.8% to $54.87 in after-hours trading as of 7:39 p.m. Eastern, according to Nasdaq. They had closed at $58.86, up 10.9%, before the report.
Rocket Lab expects fourth-quarter revenue of $270 million to $290 million. The midpoint of $280 million is above the $266.4 million analysts expected.
Backlog rose 52% from the prior quarter to $3.57 billion. That's the value of signed contracts not yet recognized as revenue; how much arrives, and when, depends on contract terms and Rocket Lab delivering. The backlog includes work for Neutron, the company's larger rocket, which hasn't flown yet.
What made the loss wider?
Rocket Lab lost $79.7 million in the third quarter, compared with $18.3 million a year earlier. The prior-year result included a $41.1 million tax benefit, which made that loss smaller.
Operating expenses rose to $169.3 million, above the company's forecast of $143 million to $149 million. Chief financial officer Adam Spice said on the earnings call that the overshoot came mainly from costs tied to Rocket Lab's pending purchase of Iridium Communications. Those included a $9.4 million expense related to Iridium's existing term loan. Rocket Lab reported $21.3 million in transaction costs for the quarter.
The deal also produced a $27.3 million loss below the operating line. Rocket Lab had arranged a $3.6 billion bridge loan to help fund the purchase, then ended the commitment after raising about $2.4 billion through stock sales during the quarter and amending Iridium's term loan, Spice said. The release records the loss as an extinguishment of debt.
Rocket Lab's loss per share widened from 8 cents in the second quarter. Spice attributed the change mainly to the deal costs and bridge-loan termination, along with higher spending on Neutron's engines and rebuilt first-stage tank.
Adjusted EBITDA, which excludes items including stock compensation and deal costs, was a loss of $18 million. That was within Rocket Lab's forecast range of a $17 million to $23 million loss.
Where did the revenue come from?
Space systems, which covers satellites and the parts that go into them, brought in $214.8 million, about 80% of the total. Launch services added $53.1 million, up 19% from the second quarter because Rocket Lab flew two more Electron missions that were booked as revenue at launch. Total revenue also beat Rocket Lab's own forecast of $250 million to $265 million.
Margins beat the company's forecast, too. Gross margin was 33.6%, against guidance of 29% to 31%. On an adjusted basis it was 38.4%, against guidance of 35% to 37% and below 41.9% a year earlier. Spice said margins fell from the second quarter mainly because of Mynaric, a laser communications company Rocket Lab bought, and because second-quarter results had included tariff refunds. Rocket Lab also set aside a reserve for a possible loss on Neutron's second flight, given how early the rocket is in its life.
Operating cash flow was positive at $7.2 million, after Rocket Lab used $84.1 million in the second quarter. Spice credited larger milestone payments on satellite programs and said those payments are lumpy. Free cash flow, by the company's definition, was still negative at $23.9 million, and Spice expects it to stay negative in the fourth quarter.
Why is the backlog growing so fast?
Rocket Lab signed 54 launches in the quarter. They included the two biggest bulk orders in its history: 18 HASTE launches for the Space Force's Space Systems Command and 20 Electron launches for Synspective, a Japanese satellite company. Space systems signed another $470 million of contracts.
Eight of the new launches were for Neutron, Rocket Lab's larger reusable rocket, worth about $515 million combined. Several were sold at a new base price of $70 million a launch. When an analyst asked about pricing, Spice said "the Neutron pricing isn't going to 70, it's at 70." Chief executive Peter Beck said Neutron's first 16 launches are booked and the next open slots are in the 2030s.
Not all of that backlog will turn into revenue soon, though. Spice said he expects about 32.9% of it to be recognized within the next 12 months.
An analyst asked Beck about AST SpaceMobile (ASTS), which said last week that it plans to build its own rocket. Beck said launch capacity is "incredibly constrained." He added, "in many respects, we are rooting for everybody because even when we bring Neutron to market, it is not going to satisfy the demand that is required."
When does Neutron fly?
Not before 2027.
Rocket Lab pushed the first launch out of 2026 in October after finding small gaps in the carbon-fiber dome at the top of the first-stage tank. Beck said the replacement dome has now been made and cured. Next, the full tank goes through pressure testing at the Neutron factory, then ships to the company's Virginia launch site for testing at extremely cold temperatures.
Electron, Rocket Lab's small rocket, is close to its 100th launch. Beck said he expects it within about a week and put Electron's success rate at 96% across 99 launches.
The Iridium deal is fully funded, and Iridium shareholders have approved it. We covered how Rocket Lab raised the money in September. The deal still needs regulatory approval, and the release doesn't give a closing date.
Rocket Lab shares have traded between $37.57 and $151 over the past year, according to Nasdaq. For the fourth quarter, Spice said he expects launch revenue to rise and space systems revenue to dip after a strong third quarter.
