Earnings Call Insights: Rocket Lab Corporation (RKLB) Q4 2025
Management View
- CEO Peter Beck announced a record annual revenue of $602 million for 2025, reflecting 38% year-on-year growth, and Q4 revenue of $180 million, up 36% from Q4 2024. Beck highlighted, “At the end of Q4, our backlog sat at a record $1.85 billion, which is up 73% from the same time in 2024.” He emphasized the company’s execution, stating, “We launched and signed a record number of electron missions and led the way on hypersonics testing with haste and achieved some significant qualification and development milestones on Neutron.”
- Beck detailed strategic acquisitions, welcoming Geost, Optical Support, Inc., and Precision Components Limited. He identified the $816 million Space Development Agency (SDA) contract as “the largest single contract in Rocket Lab’s history” and noted that additional subsystem opportunities could total approximately $1 billion.
- On Neutron, Beck addressed the Stage 1 tank hydrostatic test failure, attributing it to a manufacturing defect from a handlaid process and confirmed, “Neutron’s first launch is now targeted for Q4 2026.”
- CFO Adam Spice reported, “Fourth quarter 2025 revenue was a record $180 million, coming in at the high end of our prior guidance range and representing an impressive year-over-year growth of 36%.” Spice noted a sequential revenue increase of 16%. He highlighted, “GAAP gross margin for the fourth quarter was 38%, at the center of our prior guidance range of 37% to 39% and an increase of 100 basis points quarter-over-quarter.”
Outlook
- Management guided Q1 2026 revenue between $185 million and $200 million, representing 7% quarter-on-quarter growth at the midpoint. GAAP gross margin is expected between 34% and 36%, with non-GAAP gross margin from 39% to 41%. Operating expenses are forecasted to range between $120 million and $126 million (GAAP). Adjusted EBITDA loss is projected between $21 million and $27 million. Spice stated, “We expect first quarter GAAP and non-GAAP net interest income to be $8 million.” The company expects negative non-GAAP free cash flow in Q1 to remain at elevated levels due to Neutron development and production scaling.
- Neutron’s first launch is now targeted for Q4 2026, with Q1 2026 expected to mark peak Neutron R&D spending.
Financial Results
- Q4 2025 revenue was $180 million. The Space Systems segment delivered $103.8 million, reflecting a sequential decrease of 9.1% due to programmatic revenue recognition, while Launch Services generated $75.9 million, an 85% increase quarter-over-quarter with 7 launches, including 1 HASTE mission.
- Full year 2025 revenue reached $602 million. GAAP gross margin for the year was 34.4%, up 780 basis points year-over-year. Non-GAAP gross margin for the year was 39.7%.
- Q4 operating expenses were $119.3 million (GAAP), below guidance. Non-GAAP operating expenses were $104.5 million. Research and development headcount was 1,012, a decrease of 7 from the prior quarter. SG&A expenses declined quarter-over-quarter.
- GAAP EPS loss for Q4 was ($0.09) per share, compared to a loss of ($0.03) per share in Q3. GAAP operating cash flow was a use of $64.5 million. Ending liquidity was $1.1 billion, driven by $280.6 million raised from common stock sales.
- Adjusted EBITDA loss for Q4 was $17.4 million, below guidance.
Q&A
- Andres Sheppard-Slinger, Cantor Fitzgerald: Asked about backlog composition, including SDA Tranche II/III and Neutron. Adam Spice responded that all SDA contracts were in backlog and Neutron flights are represented. Sheppard-Slinger also asked about Neutron cadence and CapEx after the tank issue. Beck explained that “none of the other hardware that’s qualified as being halted, obviously, it’s just that tank,” and Spice added, “the actual cost to produce that second tank is quite low.”
- Xin Yu, Deutsche Bank: Inquired about space data centers and customer interest. Beck said, “We’re early with data centers,” but Rocket Lab has developed silicon arrays for megawatt-scale power. On customer type, he said, “there’s certainly more nontraditional looking at this kind of solution than traditional players.”
- Alexander Preston, Bank of America: Asked about European opportunities. Beck described Europe as “a great opportunity for us and a real expansion beachhead.” Preston questioned attitudes towards U.S.-based providers, to which Beck replied, “I think it’s very constructive.”
- Erik Rasmussen, Stifel: Queried Neutron’s revenue flight timing and recovery. Beck stated, “The timing of Flight 2 will always depend on the results of Flight 1.” On Electron, Beck said, “we’re looking for more launch than last year.” Spice projected 20% growth in Electron/HASTE launches.
- Trevor Walsh, Citizens JMP: Asked about OSI acquisition. Beck said, “the most critical element of many of these optical systems are, in fact, the optics, bringing and owning that optics in-house really, really drives certainty for us around cost and schedule.”
- Andres Sheppard-Slinger, Cantor Fitzgerald: Asked about Space Systems segment performance. Spice noted consensus may not differentiate launch and Space Systems components/platforms and highlighted supply chain as a factor.
Sentiment Analysis
- Analyst tone was neutral to slightly positive, with a focus on growth opportunities, backlog composition, and technology development. Questions remained probing but constructive, particularly around Neutron delays and segment performance.
- Management maintained a confident and transparent tone in both prepared remarks and Q&A. Beck and Spice consistently referenced execution, vertical integration, and strategic progress. Beck used confident phrasing such as “we’re happy with the overall tank design” and “we are well positioned.”
- Compared to the previous quarter, management’s confidence was steady, with increased detail on resolving Neutron’s tank issue and expanding vertical integration. Analysts raised similar themes but with greater focus on backlog dynamics and CapEx impacts.
Quarter-over-Quarter Comparison
- Q4 set new records for revenue, gross margin, and backlog compared to Q3. Backlog increased to $1.85 billion from $1.1 billion, driven by the SDA contract.
- The launch cadence accelerated, with 7 launches in Q4 versus fewer in Q3, and Electron/HASTE bookings remained strong.
- Management shifted Neutron’s first launch target from early 2026 to Q4 2026 due to the Stage 1 tank setback, while reaffirming commitment to reliability and vertical integration.
- Analysts’ focus shifted from international customer growth and M&A in Q3 to Neutron’s timeline, CapEx, and contract conversion in Q4.
- Management sentiment remained confident, but provided more granular updates on risk and mitigation, especially regarding Neutron and supply chain.
Risks and Concerns
- The main challenge cited was the Neutron Stage 1 tank failure, attributed to a handlaid process. Management explained mitigation by moving to automated fiber placement and minor design improvements.
- Supply chain risk in Space Systems was noted, with vertical integration as the core mitigation strategy.
- Continued elevated CapEx and negative free cash flow due to Neutron development were acknowledged by Spice.
- Analysts raised concerns about the pace of revenue recognition from large contracts and potential step-down in gross margins due to segment mix.
Final Takeaway
Rocket Lab closed 2025 with record financial results, a historic $1.85 billion backlog, and significant contract wins in space and defense. The company addressed the Neutron tank setback by advancing production automation, targeting a Q4 2026 first launch while continuing to expand its vertically integrated supply chain. Management emphasized strong momentum across launch and space systems, disciplined cost control, and strategic acquisitions to support further growth and reliability as a disruptive leader in the sector.