Rocket Lab reported first-quarter results that exceeded expectations, but its muted guidance for the upcoming quarter weighed on investor sentiment. Shares fell 12% following the announcement.
The company reported a loss of $0.12 per share, or roughly $30 million, on revenue of $123 million—right at the upper end of its prior guidance, which had called for a net loss between $33 million and $35 million on revenue ranging from $117 million to $123 million.
While Rocket Lab remains a standout in the new wave of private space companies disrupting legacy aerospace players, the soft forward outlook served as a reminder that volatility remains a defining feature of this sector’s growth narrative.
Much like Palantir, Rocket Lab has been one of our highest-conviction ideas over the past few years. We accumulated shares early around its IPO and added significantly on dips below $10.
The trade proved successful. However, in light of recent market dynamics, we chose to exit the position a few weeks ago not because we lost faith in the company’s long-term vision, but due to near-term risks we couldn't ignore.
Tariff volatility, premium valuation, and uncertainty surrounding the timeline for Rocket Lab’s most important catalyst the Neutron rocket have made the stock more vulnerable to drawdowns. In this environment, we’ve opted to reallocate capital to undervalued names and shorter-term trading opportunities.
That said, our conviction in Rocket Lab’s strategic significance remains unchanged. It’s still one of the most important space infrastructure plays in the market. The company has carved out a valuable niche in the small satellite launch sector and is poised to take the next step with Neutron, its upcoming medium-lift vehicle.
The company entered 2025 with strong momentum, but shares have since cooled, now trading between $20 and $24. While investor enthusiasm is still strong, much hinges on execution. The timely debut of Neutron is critical. Any delays could raise the specter of additional capital raises and renewed volatility.
For now, we remain on the sidelines and maintain a Sell rating near current levels, though we’d strongly consider reentering the name below $15. For long-term-focused investors, the most important update this quarter is that Neutron’s maiden flight remains on track for the second half of this year, with the U.S. Air Force lined up as an early customer.
The potential is real—but so are the risks. This is, quite literally, rocket science.
Launch Segment Highlights
Rocket Lab continued to cement its leadership in the small launch market and made major strides toward securing a long-term position in U.S. national security infrastructure:
Neutron Rocket On-Ramped to NSSL Phase 3: Rocket Lab successfully secured a position in the Department of Defense’s $5.6 billion National Security Space Launch (NSSL) Phase 3 Lane 1 program. It is now one of only five eligible launch providers and the only publicly traded one authorized to support the nation’s most critical security missions.
As part of this on-ramp, Rocket Lab received a $5 million task order for a capabilities assessment to demonstrate its mission assurance framework.
U.S. Air Force Contract for Neutron: The company signed a launch contract with the U.S. Air Force for a point-to-point transportation system demonstration. The mission, which will test Neutron’s return-to-Earth capabilities, is slated for no earlier than 2026.
Electron Milestones: Rocket Lab successfully executed five Electron launches in Q1 2025 across three commercial satellite constellation customers.
Electron remains the most frequently launched small orbital rocket globally and the second-most launched rocket in the U.S. this year only behind SpaceX.
New HASTE Contract: Rocket Lab was awarded a launch contract for the Department of Defense’s MACH-TB 2.0 program via Kratos.
The HASTE mission is scheduled for no earlier than Q1 2026 and marks the program’s first full-scale flight test.
Eligibility for Hypersonic Programs: Rocket Lab’s HASTE vehicle was selected as an eligible provider for two key hypersonic test frameworks:
The U.S. Air Force’s EWAAC, a $46 billion initiative to accelerate next-gen defense capabilities.
The UK Ministry of Defence’s HTCDF, a £1 billion framework for advancing hypersonic technologies. This marks Rocket Lab’s first official pathway into UK-based government launch contracts.
Space Systems Expansion
Rocket Lab also advanced its strategy to become a vertically integrated space systems provider:
New Space Products Line: The company expanded its space systems catalog with several standardized, scalable products:
STARRAY Solar Arrays: Customizable, high-efficiency solar power solutions for small satellites.
Frontier Radios: A broader suite of satellite communications systems for Earth-orbit and deep-space missions.
Advanced Space Software: New offerings in satellite and constellation management software to support future government and commercial missions.
Rocket Lab completed five launches during the quarter, generating $36 million in revenue from its launch services segment. Its space systems division delivered $87 million in sales, and the company ended the quarter with a robust $645 million backlog of future business.
However, management signaled a slower second quarter ahead. Rocket Lab projects revenue between $130 million and $140 million — with the midpoint landing just below the $137 million consensus. Losses are expected to widen as well, with the company forecasting a net loss between $28 million and $30 million, exceeding the Street’s estimate of $21 million.
Despite near-term softness, Rocket Lab remains on a clear path to profitability as it scales launch cadence and prepares for the debut of Neutron — its mid-sized rocket. Management has indicated that just three Neutron launches could generate as much revenue as a full year of Electron missions at current cadence, suggesting a step change in revenue efficiency.
Adding to that momentum, Rocket Lab unveiled Flatellite — a low-cost, stackable, mass-producible satellite designed to maximize payload density per launch. This innovation enables Rocket Lab to operate its own constellations and vertically integrate space data services, capturing more value across the entire delivery chain.
Each launch now holds the potential to deploy a fleet of Flatellites, which can provide long-term data services once in orbit. This model not only boosts revenue per launch but significantly improves unit economics, positioning Rocket Lab for meaningful operating leverage in the quarters ahead.
While near-term financial results remain mixed, Rocket Lab’s longterm growth narrative continues to center around the Neutron launch vehicle and recent developments suggest meaningful progress. The company reaffirmed that Neutron’s maiden launch is on schedule for the second half of 2025.
More significantly, Neutron was recently selected for the Department of Defense’s $5.6 billion National Security Space Launch (NSSL) Phase 3, Lane 1 initiative — a major milestone. Rocket Lab is now one of just five companies chosen to participate in this strategically critical program, underscoring the government’s confidence in Neutron’s potential.
As part of the NSSL onboarding process, Rocket Lab secured a $5 million task order to demonstrate its mission assurance capabilities for future national security launches. In addition, the company signed a contract with the U.S. Air Force for a future Neutron mission, supporting an experimental point-to-point space transportation system targeted for no earlier than 2026.
Rocket Lab recently announced its intention to acquire Mynaric, a leading provider of laser-based optical communication terminals for air, space, and mobile platforms.
If completed, the transaction would mark Rocket Lab’s formal expansion into Europe and significantly enhance its capabilities in secure, high-speed space communications.
The strategic aim is twofold: to scale production of Mynaric’s optical terminals to meet growing demand from both government and commercial customers spanning individual satellites to large-scale constellations and to integrate the technology into Rocket Lab’s own future satellite constellation. This move positions Rocket Lab to further control the value chain and strengthen its foothold in the space data infrastructure market.
Rocket Lab delivered a strong first quarter, posting near-record revenue of $123 million at the top end of guidance and representing a 32% year-over-year increase.
The performance reflects strength across both launch services and space systems, setting the tone for what management expects to be another solid quarter, with Q2 revenue guidance in the $130–$140 million range.
For the period, Rocket Lab generated $80.8 million in product revenue (+49.2% YoY) and $41.8 million in services revenue (+8.1%), driving total sales of $122.6 million (+32.1%). Cost of revenue rose 27.3% to $87.3 million, resulting in a gross profit of $35.2 million — up 45.8% from the prior year — and pushing gross margin from 26.1% to 28.8%.
Total operating expenses climbed 40% to $94.4 million, leading to a GAAP operating loss of $59.2 million, versus a loss of $43.1 million in Q1 2024. After accounting for interest and other items, Rocket Lab reported a GAAP net loss of $0.12 per share, compared to $0.09 a year ago. On an adjusted basis — excluding stock-based compensation, depreciation, and transaction costs — EPS came in at -$0.07, down from -$0.06 last year.
Operating cash flow for the quarter stood at -$54.2 million, with capital expenditures of -$28.7 million, bringing free cash flow to -$82.9 million. As expected, Rocket Lab remains in investment mode and is not yet positioned to return capital to shareholders.
On the balance sheet, the company ended the quarter with $428.4 million in cash and $125.6 million in inventory, bringing total current assets to $724.9 million. Current liabilities totaled $348.1 million, including only $20.5 million in short-term debt highlighting a strong liquidity profile.
Rocket Lab’s total contracted backlog now stands at $1.07 billion, including $422 million in launch services and $645 million in space systems. Notably, the company completed five Electron launches during the quarter all successful further reinforcing its reliability in the increasingly crowded small satellite launch sector.
Second Quarter 2025 Guidance
For Q2 2025, Rocket Lab projects continued top-line growth with total revenue expected in the range of $130 million to $140 million.
Margin guidance reflects modest expansion:
GAAP gross margin is expected between 30% and 32%
Non-GAAP gross margin is expected between 34% and 36%
Operating cost projections are as follows:
GAAP operating expenses are forecasted between $96 million and $98 million
Non-GAAP operating expenses are projected between $82 million and $84 million
The company anticipates net interest expense of approximately $3.1 million, with adjusted EBITDA losses ranging from $28 million to $30 million.
Corporate Restructuring Update
Rocket Lab also announced plans to adopt a holding company structure. Under this reorganization, a new parent entity named Rocket Lab Corporation will replace Rocket Lab USA, Inc. as the publicly traded entity on the Nasdaq under the existing ticker symbol RKLB.
All outstanding shares of Rocket Lab USA will be automatically converted on a one-for-one basis into common shares of Rocket Lab Corporation.
The restructuring is expected to be completed by June 1, 2025.
Goldman Sachs Maintains Neutral on Rocket Lab USA, Raises Price Target to $16
Needham Initiates Coverage On Rocket Lab USA with Buy Rating, Announces Price Target of $28
Wells Fargo Maintains Equal-Weight on Rocket Lab USA, Lowers Price Target to $18
