Rocket Lab Q1 2025: Launch Cadence Accelerates, Space Systems Drive Growth
Taking a Look at Rocket Lab's (RKLB) Earnings Results.
Rocket Lab (RKLB) started 2025 with a somewhat strong quarter that showed both reliability/strategy. The company posted $122.6M in revenue for Q1, a 32% YoY increase and near-record for RKLB. This growth was powered by five successful Electron launches in the quarter and continued expansion of its Space Systems business. Importantly, the backlog swelled to over $1.07B, providing visibility into future growth. Overall, this Q1 did point to their ability to scale its launch cadence, deliver for customers, & invest in new capabilities.
Launch Momentum: Five for Five Success
RKLB’s Electron rocket had a great quarter, launching five missions with 100% success in Q1 2025. This marks an accelerated cadence, at one point, the team pulled off three launches within a 13-day span, a rapid turnaround that underlines how far their launch operations have matured. These missions delivered satellites for multiple commercial constellations (supporting Earth imaging, monitoring, &even wildfire detection) and proved that when customers are ready to fly, they can meet the schedule. As a result of this activity, Electron remains the world’s most frequently flown small orbital launcher and the second most-launched U.S. rocket on an annual basis (only behind SpaceX’s heavy-lift rockets). In short, RKLB solidified its reputation for dependable, responsive access to orbit in the small launch market.
The company isn’t stopping at Electron. It’s also expanding the use of HASTE, a suborbital Electron variant for hypersonic test missions. Demand for hypersonic launch capabilities is growing, and RKLB is capitalizing on it. In Q1, the company booked additional HASTE launches, including a new contract for the U.S. Department of Defense’s MACH-TB program, and even saw its first international uptake for HASTE with the UK Ministry of Defence selecting it for a hypersonic test program. This expanding HASTE footprint in U.S. and allied defense projects is a noteworthy development, positioning them as a key player in the hypersonics testing arena. Together, the regular Electron missions and the specialized HASTE flights point to a healthy launch services segment with contiued momentum.
Space Systems Steals the Show
While launch gets the spotlight, Rocket Lab’s Space Systems division was the main revenue driver this quarter, contributing about 71% of Q1 revenues. In $ terms, Space Systems delivered roughly $87M of the $122.6M total, thanks to growing demand for the company’s satellite hardware and spacecraft services. This segment includes everything from components (like solar panels and reaction wheels) to complete satellite builds and mission operations. A great example of their capability here: the team turned around an in-space manufacturing mission for customer Varda in just 15 days, bringing a second spacecraft safely back to Earth and launching the third satellite in the series shortly after. This quick turnaround shows how their vertically-integrated approach (building/operating spacecraft in-house) is paying off, enabling rapid deployment for customers.
The backlog numbers compliment the strength in Space Systems. Of the $1.07B total backlog, about $645M is tied to Space Systems contracts (and $422M to launch). These include long-term projects like constellation builds and large government programs that RKLB is pursuing. Space Systems bookings can be uneven QoQ (given a few big deals can move the needle), but the pipeline remains healthy. In fact, RKLB is positioning to build entire constellations, not just individual satellites, which is an ambitious goal that could unlock significant value if even a couple of those “needle-moving” contracts land.
To further boost its Space Systems offerings, management announced plans in Q1 to acquire Mynaric, a German maker of laser optical communication terminals. Mynaric’s technology (space-based laser links for high-speed data between satellites) will expand the product lineup and give it a foothold in Europe. The idea is to scale up production of these laser comm terminals to meet growing demand from government and commercial satellite constellations, and eventually integrate them into RKLB’s own future spacecraft. This move again highlights their strategy of broadening its space hardware portfolio, from solar power systems and radios (the new “STARRAY” solar array line and Frontier radios introduced recently) to now laser communications, making them a one-stop shop for many satellite needs.
Neutron on the Horizon
Perhaps the most exciting developments are those laying the groundwork for the next-generation launch vehicle, Neutron. Neutron is a medium-class, reusable rocket in development, and Q1 brought two key updates: the program remains on schedule for a first flight in the 2H of 2025, and RKLB scored a major vote of confidence by being selected for the U.S. Space Force’s NSSL Phase 3 launch program. Management affirmed that no major issues have arisen and they’re still targeting Neutron’s debut launch by H2 2025, a crucial milestone that the entire company is laser-focused on (internally it’s “all hands on deck” to hit that date). If they succeed, it will mark RKLBs entry into a higher-end launch market, with Neutron able to loft 13+ tons and serve both commercial mega-constellations and government missions.
The NSSL Phase 3 win is particularly noteworthy. In Q1, Neutron was on-ramped into the National Security Space Launch program (Lane 1), a Space Force initiative worth up to $5.6B to secure launch providers for the nation’s most critical national security missions. RKLB is now one of just five providers (and the only publicly-traded company among them) deemed eligible for these missions. This doesn’t guarantee contracts yet, but it puts Neutron in the running for high-value launch orders once it’s flying. It’s a strong validation of their technical credibility that the U.S. government trusts a still-in-development rocket enough to include it in this elite program. In a related win, they also signed its first Neutron launch contract with the U.S. Air Force in Q1, a mission to test a rocket-based point-to-point reentry capability in 2026. All of these points signal that Neutron’s development is on track and drawing customer interest even before first flight. The next 18 months will be critical to execute on Neutron’s construction, testing, & launch site (LC-3 in Virginia) build-out, but Q1’s progress leaves management optimistic about hitting the timeline.
Financial Check-In: Investment and Runway
We have to remain grounded and understand that muck of RKLB’s growth does come with continued operating losses as the company reinvests in R&D and infrastructure (Neutron isn’t cheap!). Adjusted EBITDA for Q1 was about –$30M, reflecting ongoing development expenses and a slight dip in gross margin from a higher mix of lower-priced launches. The loss widened from a year ago, as RKLB scales up production capacity (including a bigger factory footprint and more headcount dedicated to Neutron and Photon spacecraft programs). However, this level of loss was expected and is being managed carefully, in my opinion.
On the positive side, their liquidity remains solid. The company ended the quarter with roughly $303M in cash on hand plus $125M in short-term marketable securities (about $428M total). This was primarily boosted in part by an at-the-market equity raise earlier in the quarter, and it provides a healthy runway for the company to continue funding its ambitious projects. At the current burn rate (which may stay elevated until Neutron’s debut), RKLB has several years of cash available. Management did note that FCF will be negative in the coming quarters (we already knew this) as they push to finish Neutron, so that cash can be put to work. The balance RKLB must strike is executing on growth initiatives without depleting its cash too quickly. So far, they appear to be navigating that balance well, keeping enough liquidity on hand to reach key milestones.
Valuation
From an investor’s perspective, the results support an intrinsic valuation of roughly $12.5 per share, in line with my prior estimates. Using a multi-stage discounted cash flow (DCF) model that factors in growth trajectory, we arrive at an equity value around $12.5 per share. This assumes RKLB continues converting its backlog into revenue growth, improves margins gradually, and successfully ramps Neutron and new Space Systems offerings over the next several years. Notably, the updated Q1 fundamentals (strong revenue, big backlog, but also higher spend) do not materially change this long-term valuation figure, essentially, their performance is tracking with the assumptions in my model. We aren’t including any comparative market prices here, but it’s worth saying that our $12.5 intrinsic value reflects a balanced view of the company’s potential and risks. It’s a base-case fair value that already considers Rocket Lab’s impressive progress to date, tempered by the work still ahead to reach profitability.
My Take
In my view, it was a solid and encouraging Q1 that reinforces my long-term conviction in the company. I’m particularly impressed by how effectively they are balancing its two halves, launch & space systems, to create a diversified yet synergistic business. That $1B+ backlog and the continued 30%+ revenue growth show that customers value what they have to offer, from putting payloads in orbit to supplying the satellites themselves. As an investor, it’s satisfying to see tangible progress like this that aligns with the thesis of RKLB being an end-to-end space solutions provider.
That said, I remain watchful on a couple of key items. First and foremost is Neutron’s execution (which I continue to pound the table on). Their future growth (and a lot of my valuation upside) hinges on getting Neutron off the ground successfully by next year. There’s no wiggle room for major delays or issues, competition in the medium-launch market is heating up, and RKLB has to prove it can deliver a bigger rocket just as reliably as Electron. Any slip in the Neutron timeline or performance would be a setback to my confidence. The other watchout is cash burn. $428M in liquidity gives a comfortable cushion for now, but Q1’s cash flow was deeply negative as the company invests heavily. I’ll be monitoring how quickly they burn through this cash over 2025. Ideally, we’ll see investments pay off and losses start to narrow as revenue scales, but if the burn stays high or increases, it could imply a need for additional capital down the road (dilution risk or debt). So far, management appears prudent with spending, and I’m okay with short-term losses in exchange for building long-term moat, but it’s something to keep an eye on each quarter.
This quarter affirmed that the company is executing well on its current business and laying the groundwork for its next leap (with Neutron and new space systems tech). The fundamentals: strong growth, big backlog, improving tech capabilities, continue to line up with my investment thesis. If they can hit its major milestones (Neutron’s debut, ramping production, winning large contracts) while managing costs, I believe the company is poised to become an even more dominant player in the space industry. I’m excited to watch how the rest of the year unfolds.