Rocket Lab USA, Inc. (RKLB)

Rocket Lab USA, Inc. Financial Analysis (10-Q Q1 2025)

Report Date: 2025-03-31
Period Covered: Q1 2025 (Three months ended March 31, 2025)

Executive Summary

• Total Revenue: $122.6 M (up 32.1% YoY)
• Net Loss: $60.6 M (vs. $44.3 M loss in Q1 2024)
• Total Debt: $440.6 M (up 3.1% sequentially)

Revenue & Profit Analysis

• Launch Service: $35.6 M (29.0% of total; up 8.2% YoY)
• Space Systems: $86.98 M (71.0% of total; up 44.9% YoY)
• Gross Profit: $35.25 M (28.8% margin; up from 26.1%)
• Operating Loss: $59.2 M (48.3% of revenue; worsened from 46.4%)

Drivers of Performance

• Revenue Growth: Strong spacecraft manufacturing orders (+$26.9 M) and higher launch cadence (5 vs. 4 missions).
• Cost & Expenses: R&D surged by $16.6 M on Neutron development and headcount; SG&A rose by $10.6 M supporting scale.
• Debt Servicing: Interest expense increased to $2.6 M due to senior notes.

Debt & Liquidity

• Convertible Senior Notes: $345.9 M outstanding; effective rate 4.25%.
• Equipment Financing: $80.4 M term loans; 5-year maturities.
• Cash & Securities: $512.3 M combined; runway to fund operations through 2026.

Pros and Cons

Pros:

• Diversified revenue streams (launch + spacecraft).
• Strong backlog (~$1.07 B) with >12 months visibility.
• High cash reserves support R&D and capex.

Cons:

• Widening net losses driven by heavy R&D investment.
• Dependence on successful Neutron development for medium-lift market.
• Sensitivity to trade policy (tariffs) and regulatory risks.

Prepared by Financial Analyst

Revenue Breakdown Q1 2025:

• Launch Service: $35.592 M (Cost: $28.375 M; GP: $7.217 M)
• Space Systems: $86.977 M (Cost: $58.947 M; GP: $28.030 M)

Product vs. Service:

• Product (spacecraft + components): $80.804 M (Gross Profit: $26.935 M)
• Service (launch + mission ops): $41.765 M (Gross Profit: $7.312 M)

Customer Concentration:

• Largest government customer accounts receivable: Northrop Grumman ($39.4 M)

Rocket Lab is on a growth trajectory fueled by its strong backlog and expansion into medium-capacity launches via Neutron. Liquidity is robust with $512 M in cash and securities, while debt levels remain manageable. Key challenges include successfully developing Neutron on schedule, managing R&D burn, and mitigating tariff impacts on its supply chain. Potential upside lies in scaling launch cadence, capturing larger constellation contracts, and cross-selling spacecraft components.

Opportunities:

• Entering medium-lift market with Neutron
• Expanding mission services and data analytics offerings

Risks:

• Development delays
• Regulatory or trade policy headwinds
• Rising interest rates impacting funding costs

Overall, Rocket Lab’s diversified business model and strong order book position it well, but execution on new product development and cost control will be critical to profitability and future valuation.