Rocket Lab Report Raises Optimism
The aerospace firm is facing a selloff but there could be positives ahead.
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On Monday evening, portfolio holding Rocket Lab (RKLB) released the firm’s fiscal third quarter financial results. For the period ended September 30, Rocket Lab posted a GAAP EPS of -$0.12 on revenue of $267.834 million. While these results exceeded expectations for the top line, the bottom-line print disappointed. Sales growth was good for annual growth of 72.7%.
On the bright side, in addition to generating record revenue for the period, the firm’s order backlog reached approximately $3.6 billion, also a record and up 52% from the end of the second quarter. The firm also signed approximately $1 billion in new launch contracts across the Electron, HASTE and Neutron programs, bringing Rocket Lab’s total launch backlog to 117 launches. This, too, is a new record.
Included in that is more than $515 million in Neutron launch contracts from constellation operators. With the first Neutron launch now targeted for no earlier than 2027, the delay has hurt the share price.
The CEO
Founder and CEO Sir Peter Beck commented in the press release:
“Q3 2026 was a defining quarter for Rocket Lab. We delivered a record $268 million in revenue ($34 million higher than Q2 2026) alongside a record backlog which has grown to $3.57 billion. Nearly $1 billion of that backlog comes from new launch contracts, signed in Q3 2026 alone, as well as $470 million signed for Space Systems. Our end-to-end space strategy is delivering exactly as designed: the world’s most critical and ambitious missions increasingly rely on Rocket Lab for launch, spacecraft, and components, sometimes all on a single mission, and every part of our business is growing as a result.”
Operations
As revenue ran 72.7% higher to $267.834 million, the cost of that revenue ramped 81.8% to $177.763 million. That left a gross profit of $90.071 million (+57.2%) as gross margin dropped from 36.9% to 33.6%. Operating expenses grew 45.6% to $169.26 million, leaving a GAAP operating income/loss of -$79.189 million (down from -$58.969 million).
After accounting for interest and other income and expenses, as well as taxes, net income/loss landed at -$79.677 million (down from -$18.257 million). That works out to a GAAP EPS of -$0.12, fully diluted, down from the year ago comparison of -$0.03.
Guidance
For the current quarter, Rocket Lab now sees revenue generation at $270 million to $290 million, taking the midpoint of the range above the $273 million that Wall Street had been looking for. GAAP Gross Margins between 34% and 36% while GAAP Operating Expenses between $162 million and $168 million. The firm currently sees an adjusted EBITDA loss of between $14 million and $20 million.
Fundamentals
For the first nine months of the fiscal year, Rocket Lab has generated operating cash flow of -$127.254 million. The firm has spent $84.185 million over nine months on capital expenditures, leaving “free” cash flow at -$211.439 million. Though only a nine-month statement of cash flows was released in the Form 10-Q, the firm did inform that it had achieved three-month operating cash flow of $7.2 million (positive operating cash flow).
Turning to the balance sheet, Rocket Lab ended the quarter with a cash position of $4.608 billion and inventories of $280.885 million. That left current assets at $5.253 billion. Current liabilities add up to $614.118 million, including no short-term debt. Rocket Lab’s current and quick ratios stand at a robust 8.56 and 8.09, respectively. Rocket Lab’s current fiscal situation is extremely sound.
Total assets amount to $6.569 billion, of which less than 10% is labeled as either goodwill or other intangibles. That’s no problem at all. Total liabilities less equity comes to $766.137 million. There is long-term debt on the books of $3.01 million, which is really immaterial. This balance sheet is in spectacular condition.
Opinion
There’s a lot to like here. Sales are growing and that growth is accelerating. Operating cash flow is improving as the fiscal year is progressing. Guidance is slightly better than expected. That said, the firm is still burning cash and does not seem to be closing in on GAAP profitability.
Now, I may be dreaming, but there is a possibility that Tuesday morning’s selloff in RKLB is helping to create the right shoulder of an inverse head-and-shoulders pattern of bullish reversal that would have a $60 pivot point. That would come first with the moving averages then either posing as resistance of providing additional pivots.
Relative strength had been rising. The daily MACD, below the chart, had been flashing some bullish signs, but we’ll see what the histogram of the nine-day EMA does now. We are moderately optimistic as a result of this release.
Upcoming Portfolio Earnings
Evolv Technologies (EVLV), Tuesday, November 10
Consensus: adjusted EPS of -$0.02 on revenue of $45.6 million
Ondas Inc (ONDS), Friday, November 13
Consensus: adjusted EPS of -$0.09 on revenue of $148.1 million
Monday’s Intention vs Actual Trade
Purchased 30 shares of OCUL at or close to the last sale of $6.07
Bought 30 shares of OCUL at $6.35
Tuesday’s Intentions
No trades intended
Current Positions
Long 80 shares of (ASPN) at $5.0263. Target price: $8. Last close: $6.11.
Long 50 shares of (EVLV) at $5.33.92. Target price: $7.50. Last close: $4.76.
Long 200 shares of (OCUL) at $7.7263. Target price: $10. Last close: $6.85.
Long 330 shares of (ONDS) at $7.5402. Target price: $12. Last close: $5.97.
Long 100 shares of (PTON) at $5.2708. Target price: $9. Last close: $5.95.
Long 20 shares of (RKLB) at $50.942. Target price $84. Last close: $58.86.
Long 150 shares of (SOFI) at $15.947. Target price: $24. Last close: $16.75.
Cash: $465.31.
Portfolio value: $8,816.91, -11.8% from inception on March 24.
At the time of publication, Guilfoyle was long ASPN, EVLV, OCUL, ONDS, PTON, RKLB and SOFI.
