After Rocket Lab Fires Off Solid Earnings, I’m Pulling the Trigger
Let’s dive into the most recent quarterly report and I’ll give my take on the stock now.
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Portfolio holding and long-time Sarge-fave Rocket Lab (RKLB) revealed on Monday night second-quarter financial results, showing an an adjusted loss per share of two cents and unadjusted lost per share of eight cents. Revenue landed at $234.066 million. These top- and adjusted-bottom-line results both beat Wall Street’s expectations quite decisively, while that unadjusted EPS line met expectations. That sales print reflected 62% annual growth. Even more impressively, Rocket Lab’s order backlog reached $2.36 billion during the quarter, good for a year-over-year increase of 137%.
“We achieved a record $234 million in Q2 revenue — up 62% year-over-year and $34 million higher than last quarter’s record — driven by surging demand across all areas of our business. Q2 2026 saw our backlog grow to $2.36 billion – another record – which, combined with new deals in the period since, equates to more than $1 billion1 in new contracts across launch and space systems already entered into in Q3,” CEO and founder Sir Peter Beck said in the release.
Beck added, “Alongside this execution, we closed the acquisitions of Mynaric and Motiv and announced our historic deal to acquire Iridium Communications Inc. Together, these moves position Rocket Lab to accelerate our future into space applications by becoming a self-launching, tier-1 space power that will deliver critical communications capability to millions of users worldwide.”
Operations
Total revenue grew 62%. Within that number of $234 million, product-driven sales grew 95.6% to $181.347 million and service-driven sales increased 1.8% to $52.719 million. The total cost of sales grew 52.4% to $149.49 million. That left a gross profit of $84.576 million (+82.3%) on a gross margin of 36.1%, up sharply from 32.1%.
Total unadjusted operating expenses printed at $142.09 million (+34%), leaving a unadjusted operating loss of $57.514 million, up from a loss of $59.639 million. After adjustments for stock-based compensation, the amortization of purchased intangibles and transaction costs, operating income improved from a loss of $33.568 million to a loss of $18.708 million.
After accounting for all other income and expenses as well as interest and taxes, unadjusted net loss printed at a loss $49.258 million, up from a loss of $66.414 million. That works out to a fully diluted -$0.08 per share, up from -$0.13.
Guidance
For the current quarter, Rocket Lab is projecting total revenue of $250 million to $265 million, bringing the low end of the range well above the $236 million that Wall Street had in mind. Adjusted gross margin is seen at 35% to 37%. Adjusted earnings before interest, taxes, depreciation, and amortization is seen at a loss of $23 million to a loss of $17 million.
Fundamentals
For the first six months of the fiscal year, Rocket Lab “generated” operating cash flow of negative $134.407 million. On top of that, it spent $53.112 million on capital expenditures. That works out to a “free” cash flow of -$187.519 million. The company obviously does not return capital to shareholders.
Turning to the balance sheet, Rocket Lab ended the quarter with a cash position of $2.302 billion and inventories of $266.931 million. That left current assets of $2.898 billion. Current liabilities add up to $528.196 million. That puts the current ratio at 5.49 and its quick ratio at 2.63, which is excellent.
Total assets amount to $4.187 billion, of which less than 15% is labeled as either goodwill or other intangibles. Total liabilities less equity comes to $695.221 million. This includes long-term debt of $14.845 million, which is easily covered by cash on hand. This balance sheet is very, very strong.
My Take
I think there’s a lot to like here. The business is growing rapidly. Cash flows remain negative, but the balance sheet is in excellent shape. The company said that its Neutron rocket (Neutron is the firm’s reusable medium-lift rocket tailored for deploying satellite constellations, delivering national security missions, and enabling planetary exploration) remains scheduled to reach the launchpad in the fourth quarter of 2026 but stopped short of maintaining its previous target for a first flight before year-end.
Readers will see that RKLB broke out of a “rising wedge” of bullish reversal that produced a breakout in late July/early August. Yes, I did suggest a couple of weeks ago that an inverse head & shoulders could develop. That idea died on the vine, but RKLB still produced a bullish setup. The stock is now trying to take and hold its 200-day simple moving average, which is the upside pivot.
Target Price: $101
Pivot: 200-day SMA (currently $78)
Add: On take and hold of pivot / test of 21-day EMA
Panic: Loss of Falling Wedge support
Upcoming Portfolio Earnings
- Evolv Technologies (EVLV) – After the closing bell today, Tuesday, Aug. 11. Expected: Adjusted EPS of -$0.02 on revenue of $41.81 million.
- Velo3D (VELO) – After the closing bell today. Expected: Adjusted EPS of -$0.27 on revenue of $13.5 million.
- Ondas Inc (ONDS) – Ahead of the opening bell on Thursday, Aug. 13. Expected: Adjusted EPS of -$0.07 on revenue of $68 million.
Monday’s Intentions vs. Actual Trades
- Purchase 25 shares of ALTO at or close to the last sale of $4.39.
- Bought 25 shares of ALTO at $4.26.
- Purchase 10 shares of SWBI at or close to the last sale of $14.27.
- Bought 10 shares of SWBI at $14.25.
Tuesday’s Intentions
- Purchase 2 shares of RKLB at or close to the last sale of $77.10
Current Positions
Long 300 shares of ALTO at $5.0782. Target Price: $8. Last sale: $4.18.
Long 80 shares of EVLV at $5.8959. Target Price: $8.50. Last sale: $5.99.
Long 115 shares of OCUL at $8.3545. Target Price: $11. Last sale: $9.47.
Short one OCUL $11 Sep 18th call at $1.65, Last sale: $0.60.
Long 250 shares of ONDS at $8.4266. Target Price: $14. Last sale: $9.34.
Long 50 shares of PL at $24.4758. Target Price $46. Last sale: $23.05.
Long 6 shares of RKLB at $69.24. Target Price $101. Last sale: $77.10.
Long 100 shares of SOFI at $15.7153. Target Price: $24. Last sale: $18.15.
Long 50 shares of SWBI at $15.2614. Target Price: $19. Last sale: $14.27.
Long 115 shares of VELO at $12.1201. Target Price: $18. Last sale: $13.34.
Cash: $209.54.
Portfolio Value: $10,993.80, +9.9% from inception on March 24.
At the time of publication, Guilfoyle was long ALTO, EVLV, OCUL, ONDS, PL, RKLB, SOFI, SWBI, VELO and short OCUL.
