Rocket Lab signals $145M–$155M Q3 revenue target while accelerating Neutron and Space Systems growth

Earnings Call Insights: Rocket Lab Corporation (RKLB) Q2 2025

Management View

• Peter Beck, CEO, highlighted “another record revenue of $144.5 million, above the high end of our prior guidance and up 36% compared to last year.” He emphasized that Electron remains the leader in small launch, with five launches in the quarter, and noted increasing demand from international agencies and new contracts including with the European Space Agency and NASA.
• Beck revealed progress on the Neutron program, stating, “Launch Complex 3 is ready for its grand opening, and we’ve got the first rocket parts on their way to Virginia.” He also spotlighted the imminent acquisition of Geost to expand prime contractor status, noting it positions Rocket Lab as a “one-stop shop for national security.”
• The CEO described the company’s readiness to participate in the DoD’s $175 billion Golden Dome program, underlining capability across the entire space ecosystem and sharing, “We’ve already won more than $0.5 billion contract with the SDA to build and operate a significant piece of their PSA network.”
• Adam C. Spice, CFO, stated, “Second quarter 2025 revenue was a record $144.5 million, which was above the high end of our prior guidance range and reflects significant year-over-year growth of 36%, driven by strong contribution from both business segments.” Spice added, “GAAP gross margin for the second quarter was 32.1%, above our prior guidance range of 30% to 32%.” He noted the launch backlog’s increasing share and a healthy pipeline in multi-launch deals and satellite contracts.

Outlook

• Rocket Lab expects Q3 2025 revenue between $145 million and $155 million. Spice stated, “We expect a further uptick in both GAAP and non-GAAP gross margins in the third quarter, with GAAP gross margin to range between 35% to 37% and non-GAAP gross margin to range between 39% to 41%.”
• Operating expenses are projected to range between $104 million and $109 million on a GAAP basis, largely due to Neutron development and a shift from R&D to inventory. Adjusted EBITDA loss is forecasted between $21 million and $23 million.
• Negative non-GAAP free cash flow is expected to remain elevated next quarter, with continued investment in Neutron and related infrastructure.

Financial Results

• Space Systems segment delivered $97.9 million in Q2 revenue, up 12.5% sequentially. Launch Services produced $6.6 million, increasing 31.1% quarter-on-quarter.
• Production-related headcount ended the quarter at 1,150, up 62% from the prior quarter. Total headcount reached 2,420.
• Q2 GAAP operating expenses were $106 million. R&D headcount increased by 12% and SG&A by 11% over the prior quarter.
• Purchases of property, equipment, and capitalized software licenses were $32 million. GAAP operating cash flow was negative $23.2 million, an improvement from the negative $54.2 million in Q1. Non-GAAP free cash flow was a use of $55.3 million.
• Cash, cash equivalents, restricted cash, and marketable securities totaled $754 million, with a sequential increase due to the at-the-market equity offering generating $303.8 million.

Q&A

• Michael David Leshock, KeyBanc: Asked about Archimedes engine performance and readiness. Beck responded, “from like a basic performance of the engine, we’re very happy where it is… it’s just a much more complicated qualification program to get through.”
• Leshock asked about prospects for a Rocket Lab-owned constellation. Beck indicated that while ambitions are clear, “until Neutron is finished and flying, that’s a key element… So I wouldn’t expect any huge announcements from us on constellations until the big piece of the puzzle… starts to absorb less of our focus.”
• Erik Rasmussen, Stifel: Queried about backlog and timing for SDA Tranche 3. Beck projected announcement timing “somewhere between September and October for the tranche 3.”
• Rasmussen asked about Electron and HASTE launch mix. Spice confirmed, “we’re expecting about… 3 of the remaining launches this year will be HASTE missions.”
• Andres Sheppard-Slinger, Cantor Fitzgerald: Inquired about SDA revenue recognition and Tranche 3. Spice said, “for contribution in 2025, it’s probably — if you want to think in the order of kind of $150 million to $200 million is the right range to be in.”
• Kristine T. Liwag, Morgan Stanley: Asked about Neutron backlog and customer commitments. Beck explained, “they want to see a rocket that works before they commit because a lot of people have been burnt signing on vehicles that are either delayed or even in some cases, never turned up.”
• Liwag queried cash consumption post-Neutron launch. Spice responded, “the business could consume — continue to get some money through 2026. So I would say, more realistically for, I would say, positive free cash flow, 2026.”

Sentiment Analysis

• Analysts were generally positive but pressed on Neutron’s commercial traction, backlog growth, and SDA contract timing, showing a slightly more optimistic yet probing tone than last quarter.
• Management maintained a confident and detailed tone in prepared remarks, openly discussing program status and growth, but was more measured and cautious in the Q&A, especially regarding Neutron launch cadence and free cash flow timing. Beck stated, “we’re not going to rush and take stupid risks to get a launch Neutron before it’s ready.”
• Compared to last quarter, management’s confidence has increased around execution but also reflects greater caution in timing and capital allocation.

Quarter-over-Quarter Comparison

• Revenue rose from $122.6 million in Q1 to $144.5 million in Q2, with gross margin expanding from 28.8% to 32.1%.
• Headcount and operating expenses increased, attributed to scaling Neutron and Space Systems development.
• Backlog composition shifted, with launch backlog taking a higher share, while Space Systems still dominated.
• Q2 saw a step up in international contracts and a focus on the Golden Dome opportunity, whereas Q1 centered more on NSSL onboarding and the Mynaric acquisition.
• Management’s tone remained optimistic but was more specific about capital deployment and milestone risks.
• Analysts in both quarters focused on Neutron, backlog, and margins, but Q2 questions showed heightened interest in near-term revenue recognition and capital requirements.

Risks and Concerns

• Management identified ongoing risks in Neutron propulsion and integration testing, with Beck noting, “there are still some risks to retire like propulsion and full integration of Stage 1 testing, which we’re taking our time on to make sure we’re successful.”
• Capital expenditures and cash burn remain elevated due to Neutron and Space Systems investment.
• Analysts flagged concerns about Neutron backlog build and customer commitments, and probed for more details on timing for profitability and cash flow.

Final Takeaway

Rocket Lab delivered record revenue and margin expansion in Q2 2025, supported by strong execution in both launch and space systems, while advancing strategic priorities like the Geost acquisition and readiness for national security opportunities such as Golden Dome. Management emphasized discipline in scaling Neutron and backlog growth, maintaining a robust cash balance to support continued investment and future milestones, including a targeted $145 million to $155 million revenue range for Q3 and further gross margin improvement. The company remains focused on execution, operational scale, and capturing emerging market opportunities, while closely managing capital and risk as it transitions to the next phase of growth.

Read the full Earnings Call Transcript