$RKLB Rocket Lab announced a strong balance sheet and Stifel clearly evaluated this as a “beat and raise”. Revenue came in above expectations with $234 million and grew 62% year-on-year. While Non-GAAP Gross Margin was strong at 41.5%, EPS was slightly below expectations at -0.08 dollars. The real strength was that Q3 Revenue guidance was announced at $250-265 million, significantly above the expectation of $239 million.
Backlog reached $2.36 billion, growing 137% on an annual basis and reaching a new record. The company signed 26 new Electron/HASTE missions in Q2, bringing the total launch backlog to over 90 missions. Moreover, approximately 800 million dollars of additional bookings came after the quarter. According to the management's statement, as we have just entered Q3, the new contracts signed by launch and space systems have exceeded 1 billion dollars. This seriously strengthens Revenue visibility in the coming period.
Growth also accelerated on the Space Systems side. While the ramp-up of SDA programs in particular provides a strong contribution to Revenue, the company is moving from being just a launch company to a more comprehensive space prime contractor by winning new defense contracts. The introduction of the new globally deployable launch system called GHOST and the increased exposure on the defense side also support this transformation.
However, the balance sheet is not entirely perfect. Adjusted EBITDA losses of $17-23 million are expected for Q3, worse than Wall Street's expectation of losses of around $11.8 million. So, while growth is accelerating, the company is still investing heavily and near-term cash burn remains high.
The main focus of the market is again Neutron. Management aims to deliver Neutron's first stage tank to the launch pad in Q4 2026, but acknowledged that the first flight could be delayed to 2027. CEO Peter Beck says it is more important to get the rocket ready for mass production and high launch cadence rather than rushing the first flight. Although this approach makes sense in the long term, the uncertainty in Neutron's first flight schedule is the most important risk that could put pressure on the stock in the short term.
Another development that strengthens the long-term story is the Iridium acquisition. By purchasing Iridium, Rocket Lab wants to become not only a rocket and satellite manufacturer, but also a Tier-1 space platform that has its own launch capacity and can provide communication infrastructure. Stifel maintained its Buy recommendation and $132 price target due to this expanding opportunity set, while Cantor Fitzgerald increased its price target from $96 to $122 and maintained its Overweight recommendation.
In summary, the balance sheet is operationally strong: Revenue beat, record backlog, strong Q3 guidance and acceleration on the Space Systems side are noteworthy. On the negative side, EPS is below expectations, Q3 EBITDA loss is higher than forecast, and Neutron's first flight may be delayed until 2027. So Rocket Lab's long-term growth story is strengthening, but in the short term, the Neutron schedule and high capital expenditures will continue to be the main source of volatility in the stock.
