# How Rocket Lab makes money

CXProWealth Business Lens · Rocket Lab (RKLB) · Q2 FY2026

Read from the 10-Q for the period 2026-04-01 to 2026-06-30, filed 2026-08-10 with the SEC (accession 0001819994-26-000062): https://www.sec.gov/Archives/edgar/data/1819994/000181999426000062/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $234.1M (+91.0% on the year)
- Operating income: -$57.5M (operating margin -24.6%)
- Net income: -$49.3M (net margin -21.0%)
- Gross margin: 36.1%
- Free cash flow: -$110.1M (-47.0% of revenue)
- Cash conversion (operating cash flow / net income): 1.71x
- Capital expenditure: 11.1% of revenue

## Where the money goes (Q2 FY2026)

- Product revenues → Total revenues: $181.3M
- Service revenues → Total revenues: $52.7M
- Total revenues → Total cost of revenues: $149.5M
- Total revenues → Gross profit: $84.6M
- Gross profit → Total operating expenses: $84.6M
- Total operating expenses → Selling, general and administrative: $59.7M
- Total operating expenses → Research and development, net: $82.4M
- Net loss → Total operating expenses: $43.9M
- Total other income (expense), net → Total operating expenses: $13.6M
- Net loss → Provision for income taxes: $5.3M

## Where the revenue comes from

### Products and services (CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS)

| Member | Value | Share |
|---|---:|---:|
| Product revenues | $181.3M | 77.5% |
| Service revenues | $52.7M | 22.5% |

The members sum to total revenue.

### Segments (SEGMENTS - Schedule of Information by Reportable Segment (Details))

| Member | Value | Share |
|---|---:|---:|
| Space Systems | $189.5M | 81.0% |
| Launch Services | $44.6M | 19.0% |

The members sum to total revenue.

### TimingOfTransferOfGoodOrService (REVENUES - Schedule of Reconciliation of Disaggregation of Revenue (Details))

| Member | Value | Share |
|---|---:|---:|
| Over-time | $139.7M | 59.7% |
| Point-in-time | $94.3M | 40.3% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q2 FY2026 | Of revenue |
|---|---:|---:|
| Total revenues | $234.1M | 100% |
|   Product revenues | $181.3M | 77.5% |
|   Service revenues | $52.7M | 22.5% |
| Total cost of revenues | $149.5M | 63.9% |
|   Product revenues | $117.4M | 50.2% |
|   Service revenues | $32.1M | 13.7% |
| **Gross profit** | $84.6M | 36.1% |
| Research and development, net | $82.4M | 35.2% |
| Selling, general and administrative | $59.7M | 25.5% |
| **Total operating expenses** | $142.1M | 60.7% |
| **Operating loss** | -$57.5M | 24.6% |
| Interest expense | ($581.0K) | 0.2% |
| Interest income | $16.5M | 7.0% |
| Loss on foreign exchange | -$2.0M | 0.8% |
| Other expense, net | -$368.0K | 0.2% |
| **Total other income (expense), net** | $13.6M | 5.8% |
| **Loss before income taxes** | -$43.9M | 18.8% |
| Provision for income taxes | ($5.3M) | 2.3% |
| **Net loss** | -$49.3M | 21.0% |
| Foreign currency translation (loss) gain | -$5.4M | 2.3% |
| Unrealized (loss) gain on available-for-sale marketable securities | -$247.0K | 0.1% |
| **Comprehensive loss** | -$54.9M | 23.4% |
| Basic (in dollars per share) | -$0 | 0.0% |
| Diluted (in dollars per share) | -$0 | 0.0% |
| Basic (in shares) | 629,681,803 |  |
| Diluted (in shares) | 629,681,803 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2020 | $35.2M | -$55.0M | -$55.0M | -$27.8M | $25.1M | -$52.9M |
| FY2021 | $62.2M | -$102.1M | -$117.3M | -$71.8M | $25.7M | -$97.5M |
| FY2022 | $211.0M | -$135.2M | -$135.9M | -$106.5M | $42.4M | -$149.0M |
| FY2023 | $244.6M | -$177.9M | -$182.6M | -$98.9M | $54.7M | -$153.6M |
| FY2024 | $436.2M | -$189.8M | -$190.2M | -$48.9M | $67.1M | -$116.0M |
| FY2025 | $601.8M | -$228.8M | -$198.2M | -$165.5M | $156.3M | -$321.8M |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +38.0% (year before +78.3%): slowing
- Operating income: — (year before —): too short a history to read
- Net income: — (year before —): too short a history to read
- Free cash flow: — (year before —): too short a history to read

## Operating figures stated in the filing

- Electron launches to date: 87 launches (as of 2026-06-30). "We have successfully launched Electron 87 times delivering over 250 spacecraft to orbit, including suborbital launches, through June 30, 2026." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Electron launches, six months: 12 launches (as of 2026-06-30). "We launched 12 Electron vehicles during the six months ended June 30, 2026." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Electron launches, six months: 10 launches (as of 2025-06-30). "versus 10 launch missions completed in the six months ended June 30, 2025" (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Electron vehicles built, six months: 11 vehicles (as of 2026-06-30). "We built approximately 11 Electron launch vehicles during the six months ended June 30, 2026." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Revenue per launch, quarter: 9,100,000 usd (as of 2026-06-30). "For the three months ended June 30, 2026 and 2025, revenue per launch was $9.1 million and $7.9 million, respectively." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Revenue per launch, quarter: 7,900,000 usd (as of 2025-06-30). "For the three months ended June 30, 2026 and 2025, revenue per launch was $9.1 million and $7.9 million, respectively." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Cost per launch, quarter: 4,400,000 usd (as of 2026-06-30). "Meanwhile, cost per launch for the three months ended June 30, 2026 and 2025 was $4.4 million and $5.0 million, respectively." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Cost per launch, quarter: 5,000,000 usd (as of 2025-06-30). "Meanwhile, cost per launch for the three months ended June 30, 2026 and 2025 was $4.4 million and $5.0 million, respectively." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Backlog: 2,355,900,000 usd (as of 2026-06-30). "Backlog increased from $1,847.3 million as of December 31, 2025 to $2,355.9 million as of June 30, 2026, of which $1,415.8 million is related to space systems and $940.2 million is related to launch services." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Backlog: 1,847,300,000 usd (as of 2025-12-31). "Backlog increased from $1,847.3 million as of December 31, 2025 to $2,355.9 million as of June 30, 2026, of which $1,415.8 million is related to space systems and $940.2 million is related to launch services." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Backlog, space systems: 1,415,800,000 usd (as of 2026-06-30). "Backlog increased from $1,847.3 million as of December 31, 2025 to $2,355.9 million as of June 30, 2026, of which $1,415.8 million is related to space systems and $940.2 million is related to launch services." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Backlog, launch services: 940,200,000 usd (as of 2026-06-30). "Backlog increased from $1,847.3 million as of December 31, 2025 to $2,355.9 million as of June 30, 2026, of which $1,415.8 million is related to space systems and $940.2 million is related to launch services." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Backlog expected within 12 months: 45.0% (as of 2026-06-30). "Remaining backlog totaled $ 2,355,949 as of June 30, 2026, of which approximately 45 % is expected to be recognized within 12 months, with the remaining 55 % to be recognized beyond 12 months." (Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS)

## Key insights

### Gross profit now almost covers research spending

Research and development of $82.4M equaled 97.5% of gross profit, down from 142.6% a year earlier, as gross profit grew faster than spending.

Gross profit rose 82.3% to $84.6M from $46.4M, on revenue up 62.0% to $234.1M and a gross margin of 36.1% against 32.1%. Research and development rose 24.6% to $82.4M from $66.1M. The filing attributes that increase to Neutron development, research at recently acquired businesses, hiring, and prototype work on spacecraft components. _(from the filing)_
Measured against revenue, research and development fell to 35.2% from 45.8%, and selling, general and administrative to 25.5% from 27.6%. The operating loss barely moved, $57.5M against $59.6M, but the operating margin improved to -24.6% from -41.3%. The filing expects both expense lines to decline as a share of revenue over time. _(from the filing)_
Read together, the business now earns almost enough on what it sells to pay for what it is building next, before overhead. The lower ratio came from revenue growth rather than lower spending, since research still rose in dollars. Whether it keeps falling depends on Neutron moving from development into production, which the filing lists first among the factors affecting its performance. _(analysis)_

### Interest on cash, not operations, narrowed the net loss

The operating loss barely moved, $57.5M against $59.6M, but interest income of $16.5M now offsets 28.7% of it, against 8.4% a year earlier.

Net loss narrowed to $49.3M from $66.4M. Below the operating line, other income swung to $13.6M from an expense of $3.8M: interest income rose 228.5% to $16.5M on higher cash balances, and interest expense fell 92.1% to $581,000 from $7.4M after most convertible notes converted into shares and the Trinity equipment loan was repaid. _(from the filing)_
The net loss is now 85.6% of the operating loss. A year earlier it was 111.4%, because interest and other costs added to the loss rather than reducing it. The weighted share count rose 22.2% to 629.7 million from 515.1 million, and the loss per share narrowed to $0.08 from $0.13. _(from the filing)_
The filing states that operations have been funded largely through sales of the company's stock, and that interest income rose because of higher cash balances held in interest-bearing accounts. _(from the filing)_
Analysis: most of the improvement in per-share results came from the balance sheet. That cushion depends on the size of the cash balance and on interest rates, neither of which is an operating result, and the pending Iridium purchase would use cash and add debt. Operating progress is better read from the operating line, which was nearly flat. _(analysis)_

### Cash outflow ran at more than twice the loss

Free cash flow of -$110.1M was more than twice the $49.3M net loss, so growth consumes cash faster than the income statement shows.

Operating cash flow was -$84.1M, 1.7 times the net loss. Capital spending added $26.0M, 11.1% of revenue, for free cash flow of -$110.1M and a free cash flow margin of -47.0%. A year earlier free cash flow was -$55.3M on revenue of $144.5M, and it was -$69.4M and -$114.2M in the third and fourth quarters of the prior fiscal year. _(from the filing)_
For the half year, the filing attributes cash used in operations largely to working capital: inventories, accounts receivable, contract assets and other non-current assets all absorbed cash, partly offset by customer advances recorded as contract liabilities. _(from the filing)_
Analysis: spacecraft programs tie up cash in parts and work in process before milestones are billed, so a faster-growing hardware mix can widen the gap between the reported loss and the cash that leaves. Customer advances fund part of that build. The gap would narrow as deliveries turn inventory into billed revenue, a process the filing's own timing disclosures describe as uneven from quarter to quarter. _(analysis)_

### Competitive edge

- **An Electron launch now costs 48.4% of its price** Revenue per launch rose to $9.1M from $7.9M while cost fell to $4.4M from $5.0M, taking cost from 63.3% of price to 48.4%.
- **Launch is 19.0% of revenue but 39.9% of backlog** Of the $2,355.9M backlog, $940.2M is launch work, so the smaller segment holds a far larger share of contracted future revenue.
- **Buying scarce suppliers made spacecraft the main business** Space Systems earned $189.5M, 81.0% of revenue, built on acquired component makers whose parts go into its own spacecraft and other builders'.

### What to watch

- **Neutron delays would extend the spending, not just the schedule** Research and development, including Neutron, ran at 35.2% of revenue, and the filing says further delays may require more spending than planned.
- **Iridium's cash price is owed even if financing fails** The merger is not conditioned on financing, so Rocket Lab must pay the cash portion even if its bridge loan or replacement funding falls through.
- **Acquired units and fixed prices press on gross margin** Gross margin of 36.1% is below the prior fourth quarter's 38.0%, as newly acquired businesses enter the results adding revenue faster than profit.

## Investor view

**Spacecraft, not rockets, now bring in 81.0% of Rocket Lab's revenue**

### How it makes money

Rocket Lab sells two things. Space Systems designs and builds spacecraft and the components inside them: solar arrays, reaction wheels, star trackers, radios, laser communication terminals. It brought in $189.5M this quarter, 81.0% of the $234.1M total. Launch Services, mostly Electron missions to orbit and suborbital test flights, brought in $44.6M, the other 19.0%. _(from the filing)_
Revenue comes from long-term fixed-price contracts for launches and spacecraft builds, plus purchase-order sales of components. Over-time contracts, booked as costs are incurred against an estimated total, gave $139.7M, 59.7% of revenue. Point-in-time contracts, where milestone payments sit on the balance sheet until the final obligation is met, gave $94.3M, 40.3%. The filing warns that revenue and operating profit can 'fluctuate significantly' from period to period as a result. _(from the filing)_
Each Electron launch earned $9.1M on average this quarter against a cost of $4.4M, so cost was about 48% of the price. A year earlier the figures were $7.9M and $5.0M, about 63%. The filing ties the higher price to 'changes in customer mix and mission complexity', and the cost side to production rate: building more vehicles spreads direct labor and factory overhead across more units. _(from the filing)_
Gross profit was $84.6M, a 36.1% gross margin. Almost all of it went back into development: research and development cost $82.4M, much of it for the Neutron medium-lift rocket, and selling, general and administrative cost $59.7M. The result was an operating loss of $57.5M. Interest income of $16.5M on the company's cash, equal to 28.7% of that loss, narrowed the pre-tax loss to $43.9M. _(from the filing)_

### What shifted

The growth came from spacecraft. The filing attributes the year-on-year increase to space systems, 'primarily driven by satellite manufacturing and acquisitions', including Mynaric (laser communications, bought in April) and Motiv (mechanisms and robotics, bought in May). Launch revenue slipped slightly despite more missions, because some HASTE suborbital missions were recognized over time and partly booked in earlier quarters. _(from the filing)_
The mix moved toward hardware. Product revenue rose 95.6% to $181.3M and is now 77.5% of revenue, up 13.3 points on a year earlier. Service revenue grew 1.8% to $52.7M. Total revenue was $144.5M a year earlier, then $155.1M and $179.7M in the third and fourth quarters of the prior fiscal year, before this quarter's $234.1M. _(from the filing)_
Spending grew more slowly than revenue. Gross margin rose to 36.1% from 32.1%. Research and development fell to 35.2% of revenue from 45.8%, and selling, general and administrative to 25.5% from 27.6%, although both rose in dollars on Neutron work, acquired businesses, hiring and deal costs. The operating margin improved to -24.6% from -41.3%, with the operating loss nearly flat at $57.5M against $59.6M. _(from the filing)_
Below operating profit, the balance sheet changed the picture. Interest income rose 228.5% to $16.5M on higher cash balances, while interest expense fell 92.1% to $581,000 from $7.4M after most convertible notes converted into shares and the Trinity equipment loan was repaid. Net loss narrowed to $49.3M from $66.4M, and to $0.08 a share from $0.13, on 629.7 million weighted shares against 515.1 million. _(from the filing)_
Cash moved the other way. Operating cash flow was -$84.1M, 1.7 times the net loss, as the company built inventory and receivables. With capital spending of $26.0M, 11.1% of revenue, free cash flow was -$110.1M, a -47.0% margin. Gross margin also sits below the 38.0% of the fourth quarter of the prior fiscal year, even as launch costs per mission fell. _(from the filing)_

### Risks in the filing

The Iridium deal may not close. It needs a majority vote of Iridium's stockholders, expiry of the antitrust waiting period, consent from the Federal Communications Commission to transfer Iridium's licenses, telecom and foreign investment approvals in several countries, and possibly a foreign-ownership mitigation plan accepted by the Defense Counterintelligence and Security Agency. If it is not done by the end date, as extended, either side may walk away. _(from the filing)_
Rocket Lab must pay the cash portion of the Iridium price even if its financing falls through. It holds a commitment for a senior secured bridge loan and plans to replace it with permanent debt or equity on terms not yet set. The filing says the added debt could absorb cash needed for 'our development and growth programs (including Neutron)' and Iridium's constellation replacement, and could bring covenants that restrict the combined company. _(from the filing)_
Integration may cost more and deliver less than planned. The filing names different business models, 'our project-based launch and space-systems business and Iridium's subscription-based global satellite-services business', along with different cultures, systems and regulation. It also warns of substantial transaction costs whether or not the deal closes, possible shareholder lawsuits, change-of-control clauses in Iridium contracts, and pressure on the share price from the new shares issued. _(from the filing)_
Neutron carries development risk. The filing says developing a new launch vehicle is 'inherently time consuming', that even after a first flight the company could fail to build vehicles in quantity with reliable quality, and that further delays may require more research, development and capital spending than planned. Separately, a spacecraft bus contract with MDA is running late because of supply chain delays, and the customer may be entitled to liquidated damages. _(from the filing)_
Some of these risks already show in the numbers. Free cash flow stays deeply negative while research and development, mostly Neutron, absorbs nearly all gross profit, so any Neutron delay lengthens a period the company funds from its cash and from share sales. And the government spending the filing names as a growth driver sits beside a single government customer that accounts for a large part of revenue. _(analysis)_

## Founder view: mechanisms

### Buying the bottleneck parts

Rocket Lab buys the makers of spacecraft parts that are scarce or slow to source (solar cells, separation systems, star trackers, laser terminals, drive mechanisms) and then sells those parts both inside its own spacecraft and to other builders. Each acquisition removes a supplier delay from its own programs and adds a merchant product line, so the same factory earns twice: on components sold outside and on the margin of complete spacecraft. _(analysis)_

### Cadence spreads the factory's fixed cost

A rocket factory carries large fixed costs in skilled labor and overhead. Building more vehicles a year spreads those costs across more units, so unit cost falls without any change in design. Rocket Lab names raising the production rate as its main lever on cost, and it designed Electron from the start for a high launch rate rather than for the lowest cost on a single flight. _(analysis)_

### A launch record sells the spacecraft

Electron's flight history is the credential that lets Rocket Lab bid as a single partner for a whole mission: build the spacecraft, launch it and operate it. Customers, many of them government agencies, pay for lower risk and one point of accountability. The smaller, visible business earns trust; the larger, less visible business earns most of the revenue. _(analysis)_

### Long contracts trade smoothness for visibility

Most of Rocket Lab's revenue comes from long fixed-price contracts. That gives it a backlog it can see well ahead and customer payments tied to milestones, but revenue lands when obligations are met or costs are incurred, not evenly, and a cost overrun on a fixed price comes out of margin. The accounting method, over-time or point-in-time, shapes each quarter as much as the work done. _(analysis)_

## Member research

Signed-in members read, on the page: what Rocket Lab's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Rocket Lab 10-Q for the period to 2026-06-30: https://www.sec.gov/Archives/edgar/data/1819994/000181999426000062/ (2026-08-10)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02