Rocket Lab
RKLB · NasdaqGross 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.
Q2 FY2026, the quarter to Jun 30, 2026 · 10-Q filed Aug 10, 2026
- Operating margin
- -24.6%
- Net income
- -$49.3M
- Free cash flow, quarter
- -$110.1M
Largest source of revenue: Product revenues, 77.5% of the total.
Where Rocket Lab's money goes
- 01
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.
Why it matters
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.1
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.1
AnalysisRead 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.
- 02
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.
Why it matters
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.1
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 $0.13.1
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.1
AnalysisAnalysis: 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.
- 03
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.
Why it matters
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.1
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.1
AnalysisAnalysis: 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.
Sources
- 1.Rocket Lab 10-Q for the period to 2026-06-30 (the filing), Aug 10, 2026, read Nov 2, 2026
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Growth, profit and margin
Revenue went from $35.2M in FY2020 to $601.8M in FY2025, the operating margin from -156.3% to -38.0%, over 5 years.
- Revenue$601.8M
- Operating income-$228.8M
- Operating margin-38.0%
- Period
- Q2 FY2026
- Revenue
- $234.1M
- Operating income
- -$57.5M
- Operating margin
- -24.6%
- Net income
- -$49.3M
- Free cash flow
- -$110.1M
Does the profit turn into cash?
Q2 FY2026: free cash flow of -$110.1M against net income of -$49.3M in the quarter.
- Operating cash flow-$165.5M
- Capital expenditure$156.3M
- Free cash flow-$321.8M
- Net income-$198.2M
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Financial data and sources
How the revenue mix has shifted
Each breakdown the filing reports, as shares of revenue, for every period it restates.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS. The filing restates this breakdown for 1 period.
Click a member to isolate it across the years shown.
The figures
Margins, cash and growth for the period, each with what it was computed from.
Where revenue comes from
Every breakdown the filing reports for the period, with each item's share.
Revenue streams
| Product revenues | $181.3M | 77.5% |
| Service revenues | $52.7M | 22.5% |
Segments
| Space Systems | $189.5M | 81.0% |
| Launch Services | $44.6M | 19.0% |
TimingOfTransferOfGoodOrService
| Over-time | $139.7M | 59.7% |
| Point-in-time | $94.3M | 40.3% |
What it costs
The cost lines beneath operating income, each as a share of revenue, then the operating result.
Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.
| Cost line | Q2 FY2026 | Of revenue | Source |
|---|---|---|---|
| Total cost of revenues | $149.5M | 63.9% | Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-08-10 |
| Operating loss | -$57.5M | -24.6% | Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-08-10 |
Operating figures the company states
From the text of the filing rather than its statements, each with the sentence that states it.
View source
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.
View source
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.
View source
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.
View source
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.
View source
Meanwhile, cost per launch for the three months ended June 30, 2026 and 2025 was $4.4 million and $5.0 million, respectively.
View source
We have successfully launched Electron 87 times delivering over 250 spacecraft to orbit, including suborbital launches, through June 30, 2026.
View source
We launched 12 Electron vehicles during the six months ended June 30, 2026.
View source
We built approximately 11 Electron launch vehicles during the six months ended June 30, 2026.
View source
For the three months ended June 30, 2026 and 2025, revenue per launch was $9.1 million and $7.9 million, respectively.
The statements, as filed
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Income statement26 lines, as presented in the 10-Q
Cash flow statement1 lines, as presented in the 10-Q
Year to date, as a quarterly filing reports it.
| Line | Q2 FY2026 | A year earlier | Change | Source |
|---|---|---|---|---|
| Statement of Cash Flows | ||||
| Cash and cash equivalents, and restricted cash, end of period | $2.14B | $569.0M | +276% | Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-10 |
Balance sheet41 lines, as presented in the 10-Q
About this data
- Source
- Rocket Lab 10-Q, accession 0001819994-26-000062, filed Aug 10, 2026, read on Nov 2, 2026.
- History
- From the SEC's XBRL company facts, the value from the latest filing that stated each period.
- Reading
- Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
- Version
- methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
What holds Rocket Lab's model up, and what could bend it
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%.
The detail
The filing ties the higher price to 'changes in customer mix and mission complexity'. On cost, it calls 'increasing our production rate resulting in greater absorption of these costs' its 'most critical cost reduction initiative', because direct labor and manufacturing overhead make up a large part of cost of revenues.1
The company launched 12 Electrons in the six months, against 10 a year earlier, built about 11 vehicles in the half, and has flown 87 launches in total. The filing says Electron was the second most frequently launched orbital rocket in the last fiscal year.1
AnalysisAnalysis: cadence is the part that is hard to copy, since a rival needs both the factory and a flight record to reach the same unit cost. Both figures are averages over a handful of launches and vary with orbit, payload and contract type, as the filing notes, so one quarter's spread is not by itself a trend.
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.
The detail
Backlog grew 27.5% in six months, to $2,355.9M from $1,847.3M, of which $1,415.8M is space systems and $940.2M launch services. The filing attributes the increase to continued bookings and backlog added through acquisitions, offset by revenue recognized. About 45% of the total is expected to become revenue within a year.1
Launch Services brought in $44.6M this quarter, 19.0% of revenue, against $189.5M from Space Systems. Backlog excludes unexercised options, and launch and spacecraft contracts typically let customers terminate on notice with a fee.1
AnalysisAnalysis: the gap suggests launch customers commit further ahead of delivery than spacecraft customers do, which gives the launch business visibility beyond its current revenue. The filing does not split backlog timing by segment, so how much of the launch book rests on Electron and how much on vehicles still in development cannot be read from the figures.
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'.
The detail
The filing describes each acquisition as adding vertically integrated capability for its own spacecraft while selling components to the broader merchant market. It says Motiv brings 'in-house costly and supply-constrained satellite components', and that Mynaric addresses 'a critical supply chain constraint' with laser communications technology.1
Product revenue, the hardware line, rose 95.6% to $181.3M and is now 77.5% of revenue, up 13.3 points on a year earlier, while service revenue grew 1.8% to $52.7M. The filing attributes the year-on-year growth to space systems, 'primarily driven by satellite manufacturing and acquisitions'.1
AnalysisAnalysis: owning the slow parts removes supplier delays from its own programs and lets one factory earn on both components and complete spacecraft. The Electron record supports bids to build, launch and operate a whole mission as a single partner, which is how the smaller launch business helps sell the larger spacecraft business.
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.
The detail
The filing says developing a new launch vehicle is 'inherently time consuming', that even after a first flight the company could fail to produce vehicles in quantity with reliable quality, and that 'additional delays or setbacks in Neutron development may require more research, development and capital expenditures than we currently anticipate'.1
On timing, the filing says first stage tank production is aligned with delivery to the launch pad late this year, that 'the window for an end-of-year launch date is narrowing', and that exact timing depends on first stage qualification and other critical tests.1
AnalysisAnalysis: with research absorbing nearly all of gross profit, any delay is funded from the cash balance rather than from operations. Neutron is also tied to growth, since the filing links access to larger constellation launches to the new vehicle, so a delay would postpone revenue as well as add cost.
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.
The detail
The filing says completion 'is not conditioned on our obtaining any financing'. The company holds a commitment for a senior secured bridge loan, intends to replace it with permanent debt or equity on terms not yet set, and warns that the added debt could absorb cash needed for 'our development and growth programs (including Neutron)' and Iridium's constellation replacement.1
Closing needs a majority vote of Iridium stockholders, antitrust clearance, consent from the Federal Communications Commission, foreign telecom and investment approvals, and possibly a foreign-ownership mitigation plan for security clearances. The filing also names the different business models: 'our project-based launch and space-systems business and Iridium's subscription-based global satellite-services business'.1
AnalysisAnalysis: the deal would bring debt service back to a balance sheet that has just shed most of its borrowings, and add a recurring subscription business beside lumpy contracts. The filing warns that substantial transaction costs are being incurred whether or not the deal closes.
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.
The detail
The filing's acquisition note shows Mynaric contributing an operating loss for the quarter roughly equal to its revenue. Space systems cost of revenues rose primarily due to acquisitions and spacecraft manufacturing growth, according to the filing, and amortization of acquired intangibles is charged mainly to cost of revenues.1
Most revenue comes from long fixed-price contracts, and the filing warns that revenue and operating profit 'can fluctuate significantly'. A spacecraft bus contract with MDA is running late because of supply chain delays, the customer may be entitled to liquidated damages, and the filing says the net amount cannot yet be determined.1
AnalysisAnalysis: for the shift toward spacecraft to raise margins rather than dilute them, acquired units would need to reach the margins of the work that preceded them. A cost overrun on a fixed price comes straight out of margin, so execution on large programs matters as much as winning them.
Sources
- 1.Rocket Lab 10-Q for the period to 2026-06-30 (the filing), Aug 10, 2026, read Nov 2, 2026
Rocket Lab, further in
Member research, then your own questions on ChatGPT.
What could change the outlook
What Rocket Lab's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
- What the operating line depends on from here
Which costs scale with revenue and which do not, what Neutron's timing means for research spending, and how much of the narrowing loss rests on cash rather than on operations.
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Have a question about Rocket Lab?
Explore its profit drivers, competitive edge, risks, or your own investment and business questions with CXProWealth on ChatGPT.
- How much of Rocket Lab's narrower net loss came from interest on its cash rather than from its operations?
- What would a longer Neutron delay mean for Rocket Lab's research spending and cash use?
- Why does launch make up a much larger share of Rocket Lab's backlog than of its revenue?
Business Lens describes Rocket Lab from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.