Rocket Lab Corp Earnings - Q2 2026 Analysis & Highlights
Rocket Lab reported record Q2 2026 revenue of $234 million, up 62% year-over-year, driven by strong performance across launch and space systems segments, with significant contract wins including a $266 million Space Force suborbital contract and announcement of the Iridium acquisition to establish a fully integrated space applications business.
Key Financial Results
Q2 2026 revenue reached $234 million, representing 62% year-over-year growth and a $34 million sequential increase from Q1.
GAAP gross margin was 36.1%, exceeding prior guidance of 33% to 35%, while non-GAAP gross margin was 41.5%, also above guidance of 38% to 40%.
GAAP EPS was a loss of $0.08 per share compared to a loss of $0.07 per share in Q1, with the sequential decline reflecting Mynaric acquisition results and intangible asset amortization.
GAAP operating cash flow was a use of $84.1 million in Q2 compared to a use of $50.3 million in Q1, driven by Neutron development and production scaling.
Non-GAAP free cash flow was a use of $110.1 million in Q2 compared to a use of $77.4 million in Q1.
Cash, cash equivalents, restricted cash and marketable securities totaled approximately $2.4 billion at quarter end, with sequential increase driven by $1.08 billion in proceeds from at-the-market equity offering before termination.
Adjusted EBITDA loss was $8.8 million, well below guidance of $20 million to $26 million loss, with sequential improvement of $2.9 million driven by higher revenue and strong gross margin.
Business Segment Results
Space systems segment delivered $189.5 million, reflecting a 38.6% sequential increase, driven by increased satellite manufacturing contribution and initial contribution from Mynaric acquisition which closed in the quarter.
Launch services segment generated $44.6 million, representing a 30% decrease from the previous quarter despite completing a similar number of launches, primarily due to shift in revenue mix between point-in-time Electron business and over-time HASTE business.
Space systems business continues to perform exceptionally well and provides diversification alongside the launch business.
Mynaric acquisition closed within the quarter, with initial contribution to space systems segment, though margins will need time to benefit from integration synergies and Rocket Lab operating system scale advantages.
Product Orders and Backlog
Total backlog reached $2.36 billion at quarter end, with launch backlog accounting for approximately 40% and space systems representing 60%.
More than $437 million in bookings signed for Electron, HASTE, and Neutron in Q2 and post-quarter, including a record $266 million Space Force contract for up to 18 suborbital missions, the company's largest launch contract ever.
More than $581 million in space systems contracts signed in Q2 and post-quarter.
More than $1 billion in new contracts signed across Q2 and the period since quarter close across launch and space systems.
26 new launches added to backlog, growing total to 90-plus launches after the quarter, the company's highest in history.
Approximately 45.5% of current backlog expected to convert into revenue within the next 12 months.
Capital Allocation
Purchases of property, equipment and capitalized software licenses were $26 million in Q2, a decrease of $1 million from $27.1 million in Q1.
Capital expenditures expected to remain elevated as the company progresses towards Neutron's first flight, with continued investment in testing, production scaling and infrastructure expansion.
Significant capital investment in Neutron, particularly for the return on investment recovery barge, as well as launch and test infrastructure investments.
Kodiak, Alaska site CapEx is relatively modest in context of Neutron development, with contracts containing some CapEx funding.
At-the-market equity offering generated $1.08 billion during the quarter before termination, with funds intended to support acquisitions including Iridium, other M&A targets, general corporate expenditures and working capital.
Industry Trends and Dynamics
Launch market is extremely constrained, with the Pentagon accelerating procurement for top priority programs, including NSSL Lane 1 tripling its ceiling from $5.6 billion to $17 billion.
Military spending in Europe has increased, and sovereign launch remains a hot topic globally.
Launch has never been so constrained, with options extremely limited if booking a launch now or especially after 2029.
Demand for Neutron is extreme, with customers locking in Neutron slots early due to constrained launch market and limited options.
Significant interest in Flatellite from commercial and government customers since first announcement last year.
Europe faces glaring gaps across both launch and spacecraft manufacturing, creating opportunities for Rocket Lab Germany to address these directly.
Geopolitical tensions driving European nations to seek sovereignty, with Germany allocating over $40 billion for satellite missile warning system and other capabilities.
Competitive Landscape
Rocket Lab is one of only two companies capable of building and launching their own satellites.
Rocket Lab uniquely positioned with proven track record with Electron and HASTE, and customers know the company develops and scales reliable launch vehicles.
Neutron will help unblock the industry's bottleneck, giving operators reliable capacity needed for years to come.
Other launch providers backing off and focusing on their own internal programs, with much of new capacity already spoken for for Internet, AI data centers and other internal needs.
Rocket Lab positioned to serve as alternate ride to space for medium-lift missions with Neutron.
Very few companies can demonstrate the level of capability and experience that Rocket Lab has for programs like Mars Telecommunications Orbiter.
Macroeconomic Environment
Tariff refunds provided non-recurring benefit in Q2, largely offset by inventory reserve against Neutron Flight 2 launch vehicle.
Mynaric acquisition had supply chain challenges requiring replenishment of supply chain in Q2.
Growth Opportunities and Strategies
Iridium acquisition announced, combining Rocket Lab's launch capability and satellite manufacturing with Iridium's global satellite communications network and rare spectrum, expected to close mid-2027.
Iridium brings constellation of 66 satellites relied upon by more than 2.5 million subscribers and delivering more than $870 million in annual revenue.
Rocket Lab will expand Iridium's capabilities in IoT, direct-to-device, advanced PNT, defense and national security, aviation and marine safety.
Rocket Lab can introduce efficiencies by building and launching own spacecraft, limiting costs and risks associated with third-parties.
Rocket Lab Germany established as regional hub for constellation class manufacturing and full-scale spacecraft assembly, integration and test to serve commercial, civil and defense space programs as domestic European provider.
GHOST containerized deployable launch site technology enables Rocket Lab to deliver rocket launch infrastructure, ground support, range control systems in shipping containers, establishing launch capability in new locations on rapid timelines.
Flatellite spacecraft designed for rapid production and optimized for launch, enabling deployment of large volumes from Neutron and other launch vehicles.
$397 million contract awarded to build and launch multiple Flatellite spacecraft for Space Force's Space-Based Airborne Moving Target Indicator program.
Two deals totaling more than $160 million signed to build three geostationary satellites, including prime contract with Space Systems Command for two geo satellites for space domain awareness.
Geostationary satellites will incorporate Heimdall payload from recently acquired GEOST company.
VICTUS HAZE mission demonstrated Rocket Lab's ability to deliver rocket, spacecraft and orbit operations for same technically responsive space mission, with record-breaking results.
Neutron demand already very high for vehicle not yet flown, with backlog showing strong endorsement from customers.
Neutron early flights already have dedicated contracts, including Space Force contract for Space-Based Airborne Moving Targets program and Kepler Communications dedicated launch.
Kepler Communications booked entire Neutron rocket for constellation rather than rideshare, first time doing so.
Orbital data center opportunities being pursued, with new solar cells specifically targeted to that application.
M&A pipeline remains robust, with Iridium viewed as starting point rather than endpoint for applications play.
Neutron Development and Launch
Neutron production lines up with target delivery to pad in Q4 2026, with window for end-of-year launch narrowing.
Stage 1 tank barrels and domes moved into assembly after being pulled from AFP.
Interstage new panels into flight assembly after qualification load tests completed.
Stage 2 completing install of flight avionics and fluid systems before moving to Launch Complex 3.
Integrated fluids testing and flight avionics validation planned for Stage 2 at LC-3.
Thrust Module auxiliary tanks installed with fluid systems and avionics integration finishing up.
More than 400 hot fires completed across Stage 1 engines and Stage 2 vacuum engines at Stennis.
Engine testing now focused on durability and repeated cycles to understand engine durability after multiple restarts and uses.
Full engine set for Neutron's first launch already in production with confidence in engine.
Hungry Hippo integrating control surfaces, avionics, fluid systems and thermal protection system, with preflight testing coming soon.
Neutron 1-3-5 cadence ramp educated from Electron experience, with focus on reusability to scale faster.
Reusability critical to scaling Neutron quickly, with constant assessment of timelines and qualification criteria.
Stage testing identified as highest risk milestone before first flight, with fully fueled vehicles on pad and engines ignited for first time.
Pricing and Average Selling Price (ASP)
Neutron brought to market with $50 million to $55 million ASP, with commitment not to do significant discounting for early launches.
Company sees more upside to ASPs than downside, with view that supply versus demand perspective supports pricing.
Room to move pricing as demand continues to firm up, with probably more upside in mix than downside.
HASTE pricing expected to be consistent with what company has been showing on HASTE.
HASTE ASPs could increase significantly similar to other parts of Electron portfolio where ASPs have gone up substantially over the years.
Financial Guidance and Outlook
Q3 2026 revenue expected to range between $250 million and $265 million, representing 10% quarter-over-quarter growth at midpoint.
Q3 GAAP gross margin expected to range between 29% to 31%, with non-GAAP gross margin expected to range between 35% to 37%.
Forecasted Q3 gross margins accounting for shift in mix within space systems business, with beneficial remixing impact expected beyond Q3.
Q3 GAAP operating expenses expected to range between $143 million and $149 million, with non-GAAP operating expenses expected to range between $121 million and $127 million.
Quarter-over-quarter operating expense increases driven by ongoing Neutron development and spending related to Flight 1, including staff costs, prototyping and materials.
Shift in spending expected from R&D to flight to inventory, an encouraging sign of progress toward Neutron's first flight.
Q3 net interest income expected to be $21 million, generally a function of higher cash balances.
Q3 adjusted EBITDA loss expected to range between $17 million and $23 million.
Basic weighted average common shares outstanding expected to be approximately 641 million shares.
Negative non-GAAP free cash flow expected to remain at elevated levels in Q3, driven by ongoing Neutron development and scaling production.
Adjusted EBITDA positivity expected in quarter after successful Neutron test flight, with cash flow positivity likely 18 to 24 months after that pivot.
Iridium acquisition expected to close mid-2027, with Iridium generating significant free cash flow.
Production and Headcount
Production-related head count reached 1,688 at end of Q2, up 240 from prior quarter.
Total head count at end of Q2 was 3,217, up 439 heads from prior quarter.
R&D head count was 1,087, representing increase of 138 from prior quarter, primarily due to Mynaric incorporation.
SG&A head count was 442, representing increase of 61 from prior quarter, primarily due to Mynaric incorporation.
Strategic Acquisitions
Mynaric and Motiv acquisitions closed in Q2, with Iridium acquisition announced.
Rocket Lab Germany officially established following Mynaric acquisition.
Mynaric acquisition had supply chain challenges requiring replenishment, with business expected to improve relatively quickly through revenue growth and cost efficiencies.
