Rocket Lab: Revenue Guidance Accelerates, but Neutron Launch Delayed Again. Is the SpaceX Rival Still a Buy?

$Rocket Lab (RKLB.US)$ unveiled its financial outcomes for the fourth quarter and full year 2025 following the market's close on Thursday. The company posts record quarterly revenue, and annual revenue of $602M, delivering annual growth of 38% and growing backlog 73% year-on-year to $1.85B. Concerns also exist, as the Neutron rocket's maiden flight is delayed due to manufacturing defects in the first-stage fuel tank, and the Space Systems division revenue decreased by 9.1% quarter-over-quarter.

Core Financial Indicators

Q4 revenue was $179.65 million, up 35.70% year over year, exceeding the expected $178.18M.

Net income was -$52.02M, down by 1.1% year over year, also slightly beating expectations.

EPS: Fourth quarter Non-GAAP loss per share was $0.09, with losses widening quarter-over-quarter, primarily due to a $41 million tax benefit recognized in the third quarter. Adjusted EBITDA loss was $17.4 million, below the guided loss range of $23-29 million.

Business Segment Breakdown

Rocket Lab has two major business segments.

Launch Services:

The Launch Services division reported fourth quarter revenue of $75.90 million, a sharp quarter-over-quarter increase of 85%.

Electron rocket launches: Electron continued to perform strongly, with 7 launches in Q4—all successful—bringing 2025 to 21 successful missions. The company booked 30 new dedicated launch contracts in 2025.

Neutron rocket launches: The Neutron, with a payload class of 13 tons, is the single biggest factor influencing Rocket Lab's stock price.

The Neutron's maiden flight has been postponed from its original plan to the fourth quarter of 2026. The company emphasized that it will prioritize rocket reliability and is not in a hurry to advance the timeline. Management revealed that the root cause of the fuel tank failure was confirmed to be a defect caused by the manual layup process. The understanding of the failure mechanism is highly certain, and related research has been completed.

Space Systems:

The Space Systems segment reported revenue of $103.8 million, a 9.1% decrease quarter-over-quarter. The decline in space systems revenue was mainly due to the recognition of revenue from non-linear projects and the impact of subcontractor progress.

In our Rocket Lab earnings preview, we mentioned that the company secured a contract from the SDA (Space Development Agency) in December 2025. The company has now reconfirmed the $816 million contract to design and manufacture 18 satellites for the Tracking Layer Tranche 3 program under the Proliferated Warfighter Space Architecture.

Key Highlights

Positive signals in the financial report

The company's two segments both achieved record high gross profits. The overall adjusted gross margin also reached a new high. The increase in gross margin was primarily due to optimized fixed cost amortization resulting from the increased number of launches of Electron rockets.

Additionally, the company's order backlog increased significantly due to SDA orders.

Earnings Guidance

The company guides to record Q1 revenue of $185m - $200m, representing year-on-year growth of 57% at the midpoint of the range. Rocket Lab also guides next quarter's GAAP margins 34%-36%, non-GAAP margins 39%-41%.

This gross margin guidance implies a significant decline next quarter.

Management stated that large projects such as SDA Tranche 2 and Tranche 3 have relatively low gross margins, but higher operating profit margins and contribution margins (requiring no additional significant R&D investment). The gross margin of the component business fluctuates significantly (non-GAAP gross margin ranges from 30% to 70%), making long-term forecasting of portfolio changes difficult. Overall, gross margins show a long-term upward trend, but may fluctuate between quarters due to differences in business mix. After Neutron enters the market, its gross margin will follow a similar expansion curve to Electron, initially potentially low or even negative, but with increased capacity and process optimization, it will quickly achieve profitability and approach the target gross margin level. The company plans to disclose detailed gross margin data for Electron and Neutron in the future to improve transparency.

Summary

Overall, the earnings report was mixed.

Aside from the Neutron rocket launch, the variables that need to be focused on subsequently include the revenue recognition time of the SDA contract. The stock price fell by more than 5% after the earnings release.

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