Rocket Lab Corporation
11/09/2026 | Press release | Distributed by Public on 11/09/2026 15:16
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read this discussion and analysis in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. For additional context with which to understand our financial condition and results of operations, see the audited consolidated financial statements and accompanying notes contained therein as of December 31, 2025 and 2024 and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on February 26, 2026 (our "Form 10-K"). Certain amounts may not foot due to rounding. Certain information in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described under the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and Part II, Item 1A. "Risk Factors" included in this Quarterly Report on Form 10-Q and under the heading "Risk Factors" in our Form 10-K and Quarterly Report on Form 10-Q for the period ended June 30, 2026 as filed with the SEC on August 10, 2026. We assume no obligation to update any of these forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.
Overview
Rocket Lab is an end-to-end space company with an established track record of mission success. We deliver reliable launch services, spacecraft design services, spacecraft components, spacecraft manufacturing and other spacecraft and on-orbit management solutions that make it faster, easier and more affordable to access space.
While our business has historically been centered on the manufacture of small-class launch vehicles and the related sale of launch services, we are currently innovating in the areas of medium-class launch vehicle and launch services, space systems design and manufacturing, on-orbit management solutions and space data applications. Each of these initiatives addresses a critical component of the end-to-end solution and our value proposition for the space economy:
•Launch Services is the design, manufacture, and launch of orbital rockets to deploy payloads to various Earth orbits and interplanetary destinations.
•Space Systems is the design and manufacture of components and spacecraft program management services, space data applications, mission operations, optical systems, laser optical communications and space robotics.
Electron is our orbital small launch vehicle that was designed from the ground up to accommodate a high launch rate business model to meet the growing and dynamic needs of our customers for small launch services. Since its maiden launch in 2017, Electron has become the leading small spacecraft launch vehicle delivering over 250 spacecraft to orbit for government and commercial customers across 93 successful missions through September 30, 2026. In 2025, Electron was the second most frequently launched orbital rocket. Our launch services program has seen us develop many industry-leading innovations, including 3D printed electric turbo-pump rocket engines, fully carbon composite first stage fuel tanks, a private orbital launch complex, a rocket stage that can be configured to convert into a highly capable spacecraft on orbit, and the potential ability to successfully recover a stage from space, providing a path to reusability.
In March 2021, we announced plans to develop our reusable-ready medium-capacity Neutron launch vehicle that will increase the payload capacity of our space launch vehicles to approximately 13,000 kg for reusable configuration launches to low Earth orbit and support lighter payloads for higher orbits. Neutron will be tailored for commercial and U.S. government constellation launches and ultimately configurable for and capable of human space flight, enabling us to provide crew and cargo resupply to space stations. Neutron will also provide a dedicated service to orbit for larger civil, defense and commercial payloads that need a high level of schedule control and high-flight cadence. We expect to be able to leverage Electron's flight heritage across various vehicle subsystems designs, launch complexes and ground station infrastructure.
Our space systems initiatives are supported by the design and manufacture of our spacecraft family along with a range of components, software and services for spacecraft, including reaction wheels, star trackers, radios, separation systems, solar solutions, command and control spacecraft software, high voltage space grade battery solutions, optical systems and additional products in development to serve a wide variety of sub-system functions. We entered this market in 2020 with our acquisition of leading spacecraft components manufacturer Sinclair Interplanetary, and have since expanded our market participation with the acquisitions of Planetary Systems Corporation, SolAero Technologies Corp., Advanced Solutions, Incorporated, GEOST LLC ("GEOST"), Mynaric AG ("Mynaric") and Motiv Space Systems, LLC ("Motiv"). Each of these strategic acquisitions brought incremental vertically-integrated capabilities for our own spacecraft family and also enabled Rocket Lab to deliver high-volume manufacturing of critical spacecraft components and software solutions at scale prices to the broader spacecraft merchant market. Our spacecraft family, which are configurable for a range of low Earth orbit, medium Earth orbit, geosynchronous orbit and interplanetary missions enable us to offer an end-to-end mission solution encompassing launch, full spacecraft manufacturing, ground services, mission operations and optical systems to provide customers with streamlined access to orbit with Rocket Lab as a single mission partner.
Recent Developments
Neutron Update
We continue to make significant progress in the development of the Neutron launch vehicle. During the third quarter, we continued advancement of first-flight hardware, Archimedes engine testing, and development of key vehicle systems and production infrastructure.
In October 2026, during manufacturing of first-stage composite structures, we identified a manufacturing process issue that resulted in voids within portions of a composite propellant tank dome. Following investigation and testing, we implemented process refinements and obtained encouraging results from subsequent testing and manufacturing activities. As a result of the time required to investigate, resolve, and validate the manufacturing process, as well as manufacture a replacement forward dome, we now expect Neutron's inaugural launch to occur in 2027.
We continue to balance the schedule of the first launch with entering Neutron into service as a system designed for full-scale production and high-cadence launch beyond flight one. Remaining first-stage activities include manufacture and inspection of a replacement forward dome, assembly of the first stage tank structure, and completion of hydrostatic and cryogenic test campaigns. We expect to provide a more specific launch timeline following completion of these activities.
Risk and uncertainty remain inherent in the complex development cycle of a new launch vehicle, including qualification, manufacturing, integration, and testing activities, which could further impact our estimates regarding the timing of first launch.
Pending Acquisition
On June 28, 2026, we entered into a definitive agreement to acquire Iridium Communications Inc. The transaction is subject to customary closing conditions, including regulatory approval, and, if approved, is currently expected to close in 2027. Additional information regarding the transaction is included in Note 1 - Description of the Business to the condensed consolidated financial statements.
Key Factors Affecting Our Performance
Ability to timely develop and successfully deploy Neutron launch vehicle
Our future results will depend on the success of the development and commercial acceptance of our Neutron medium-capacity launch vehicle. While we have made significant progress across Neutron's structures and infrastructure to date, including engine testing and initial production execution, Neutron's development has experienced manufacturing and testing challenges, including a recently identified manufacturing process issue affecting the first-stage composite structures that resulted in a revision to our expected inaugural launch timeline. The commercial development of a new launch vehicle is inherently time consuming and involves numerous risks throughout the engineering and manufacturing development cycle, hardware and systems testing, and infrastructure readiness, any of which could create further delays in reaching the initial launch and future launches of the completed vehicle. In addition, even if we succeed in developing Neutron to a successful initial launch, we could be unsuccessful in developing the ability to produce these launch vehicles in quantities and with the necessary quality manufacturing system that ensures each vehicle and its engines perform as required or meet our expectations for future launch cadence. Any delay in the production of the Neutron launch vehicle or in our ability to produce these launch vehicles at our expected rate of production and with a reliable quality management system could have a material impact on customer acceptance as well as our future revenue, financial condition and results of operations. Additional delays or setbacks in Neutron development may require more research, development and capital expenditures than we currently anticipate, which could adversely affect our liquidity and capital resources in future periods.
Ability to sell additional launch services, space systems services and spacecraft components to new and existing customers
Our results will be impacted by our ability to sell our launch services, space systems services, and spacecraft components to new and existing customers. We have successfully launched Electron 93 times delivering over 250 spacecraft to orbit, including suborbital launches, through September 30, 2026. We have flight hardware and spacecraft with an extensive flight heritage, including legacy missions enabled by Sinclair Interplanetary (acquired April 2020), Advanced Solutions, Incorporated (acquired October 2021), Planetary Systems Corporation (acquired November 2021), SolAero Technologies Corp. (acquired January 2022), GEOST (acquired August 2025), Mynaric (acquired April 2026) and Motiv (acquired May 2026). Our growth opportunity is dependent on our ability to expand our addressable launch services market with larger volumetric and higher mass payload capabilities of our in-development medium-capacity Neutron launch vehicle, which will address large commercial and government constellation launch opportunities. Our growth opportunity is also dependent on our ability to win spacecraft constellation missions and expand our portfolio of strategic spacecraft components. Our ability to sell additional products to existing customers is a key part of our success, as follow-on purchases indicate customer satisfaction and decrease the likelihood of competitive substitution. To sell additional products and services to new and existing customers, we will need to continue to invest significant resources in our products and services.
Ability to improve profit margins and scale our business
We intend to continue to invest in initiatives to improve our operating leverage and significantly ramp production. We believe continued reduction in costs and an increase in production volumes will enable the cost of launch vehicles to decline and improve our gross margins. Our ability to achieve our production-efficiency objectives could be negatively impacted by a variety of factors including, among other things, lower-than-expected facility utilization rates, manufacturing and production cost overruns, increased purchased material costs and unexpected supply-chain quality issues or interruptions.
Government expenditures and private enterprise investment into the space economy
Government expenditures and private enterprise investment have fueled the growth in our target markets. We expect the continued availability of government expenditures and private investment for our customers to help fund purchases of our products and services will remain. This is an important factor in our company's growth prospects.
Key Metrics and Select Financial Data
We monitor the following key financial and operational metrics that assist us in evaluating our business, measuring our performance, identifying trends and making strategic decisions.
Launch Vehicle Build-Rate and Launch Cadence
We built approximately 14 Electron launch vehicles in 2024 and approximately 24 Electron launch vehicles in 2025. We built approximately 17 Electron launch vehicles during the nine months ended September 30, 2026. We launched 16 Electron vehicles in 2024 and 21 Electron vehicles in 2025. We launched 18 Electron vehicles during the nine months ended September 30, 2026. Growth rates between launches and total launch service revenue are not perfectly correlated because our total revenue is affected by other variables, such as the revenue per launch, which can vary considerably based on factors such as unique orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion, method of revenue recognition and other factors.
Revenue Growth
Three Months Ended September 30, 2026 and 2025
We generated $267.8 million and $155.1 million in revenue for the three months ended September 30, 2026 and 2025, respectively, representing a year-on-year increase in revenue of approximately 73%. This year-on-year increase resulted from space systems revenue growth of $100.6 million, primarily driven by satellite manufacturing and acquisitions, and an increase in launch revenue of $12.2 million. Launch revenue growth was due to a higher launch cadence with six point-in-time Electron launch missions completed for the three months ended September 30, 2026 versus four Electron launch missions completed for the three months ended September 30, 2025. Two of the four Electron launch missions completed for the three months ended September 30, 2025 were Hypersonic Accelerator Suborbital Test Electron ("HASTE") launch missions, for which revenue was recognized over time, including a cumulative catch-up adjustment of $13.3 million recognized in that quarter. The 2026 increase was partially offset by decreased revenue recognized on over-time HASTE launch missions and other launch revenue of $5.5 million, which includes contract termination and study revenue.
Nine Months Ended September 30, 2026 and 2025
We generated $702.2 million and $422.1 million in revenue for the nine months ended September 30, 2026 and 2025, respectively, representing a year-on-year increase in revenue of approximately 66%. This year-on-year increase resulted from space systems revenue growth of $241.9 million, primarily driven by satellite manufacturing and acquisitions, and an increase in launch revenue of $38.2 million. Launch revenue growth was primarily due to a higher launch cadence with 18 Electron launch missions completed for the nine months ended September 30, 2026 versus 14 Electron launch missions completed for the nine months ended September 30, 2025 and a higher revenue per launch on point-in-time Electron launch missions, partially offset by revenue recognized on over-time HASTE launch missions.
Revenue and Cost Per Launch
Revenue per launch represents the average transaction price attributable to launch contract performance obligations during the period in which the launch occurs, regardless of whether the revenue is recognized using the point-in-time or over-time method of revenue recognition. This metric provides insight into general competitiveness and price sensitivity in the marketplace. Revenue per launch can vary considerably, based on factors such as unique orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion and other factors, and as such may not provide absolute clarity with regards to pricing and competitive dynamics in the marketplace. Cost per launch is calculated by taking actual costs of the launch vehicles that occur in the period, regardless of whether the costs were recognized using the point-in-time or over-time method and all period costs in the period of launch.
Three Months Ended September 30, 2026 and 2025
For the three months ended September 30, 2026 and 2025, revenue per launch was $7.8 million and $10.1 million, respectively. Meanwhile, cost per launch for the three months ended September 30, 2026 and 2025 was $5.0 million and $5.9 million, respectively. The decrease in revenue per launch reflects changes in customer mix and mission complexity during the period in which the launches occurred. The decrease in cost per launch was primarily driven by efficiencies of scale.
Nine Months Ended September 30, 2026 and 2025
For the nine months ended September 30, 2026 and 2025, revenue per launch was $8.7 million and $8.2 million, respectively. Meanwhile, cost per launch for the nine months ended September 30, 2026 and 2025 was $4.9 million and $5.5 million, respectively. The increase in revenue per launch reflects changes in customer mix and mission complexity during the period in which the launches occurred. The decrease in cost per launch was primarily driven by efficiencies of scale.
Backlog
Backlog represents future revenues that we would recognize in connection with the completion of all contracts and purchase orders that have been entered into by our customers but have not yet been fulfilled, excluding any customer options for future products or services that have not yet been exercised. Contracts for launch services and spacecraft builds typically include termination rights that may be exercised by customers upon advance notice and payment of a specified termination fee. Backlog increased from $1,847.3 million as of December 31, 2025 to $3,573.0 million as of September 30, 2026, of which $1,724.7 million is related to space systems and $1,848.3 million is related to launch services. The increase was primarily a result of continued bookings and backlog added through acquisitions, partially offset by revenue recognized on contracts during the period.
Components of Results of Operations
Revenue
Our revenues are derived from a combination of long-term fixed price contracts for launch services and spacecraft builds, and purchase order based spacecraft components sales. Revenues from long-term contracts are recognized using either the "point-in-time" or "over-time" method of revenue recognition. Point-in-time revenue recognition results in cash payments being initially accrued to the balance sheet as deferred revenue as contractual milestones are accomplished and then recognized as revenue once the final contractual obligation is completed. Over-time revenue recognition is generally based on an input measure of progress based on costs incurred compared to estimated total costs at completion. Each project has a contractual revenue value and an estimated cost. The over-time revenue is recognized based on the percentage of the total project cost that has been realized.
Estimating future revenues and associated costs and profit is a process requiring a high degree of management judgment, including management's assumptions regarding our future operational performance as well as general economic conditions. Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved or progress under a contract is otherwise impeded. Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when the point-in-time or over-time contractual obligations are achieved. In the event cost estimates indicate a loss on a contract, the total amount of such loss is recorded in the period in which the loss is first estimated.
Cost of Revenues
Cost of revenues consists primarily of direct material and labor costs, manufacturing overhead, freight expense, depreciation and amortization and other personnel-related expenses, which include salaries, bonuses, benefits and stock-based compensation expense, directly associated with generating revenues. We expect our cost of revenues to increase in absolute dollars in future periods as we sell more launch services and space systems. As we grow into our current capacity and execute on cost-reduction initiatives, we expect our cost of revenues as a percentage of revenue to decrease over time.
Because direct labor costs and manufacturing overhead comprise a significant portion of cost of revenues, increasing our production rate resulting in greater absorption of these costs is our most critical cost reduction initiative. Increasing our production rate is a cross-functional effort involving sales and business development, manufacturing, engineering, supply chain and finance.
Operating Expenses
Our operating expenses consist of research and development and selling, general and administrative expenses.
Research and Development, Net
Research and development expenses consist primarily of labor, prototype, professional services, materials, facilities and depreciation expense. We intend to continue to make significant investments in developing new products and enhancing existing products, including but not limited to our medium capacity Neutron launch vehicle and spacecraft features and capabilities, as well as expanding our portfolio of spacecraft components and subsystems. Research and development expenses will be variable relative to the number of products that are in development, validation or testing. However, we expect it to decline as a percentage of total revenue over time.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of personnel-related expenses for our sales, marketing, supply chain, finance, legal, human resources and administrative personnel, as well as the costs of customer service, information technology, risk management and related insurance, travel, allocated overhead, other marketing, communications, administrative and transaction expenses. We also expect to further invest in our corporate infrastructure and incur additional expenses associated with operating as a public company, including increased legal and accounting costs, investor relations and compliance costs. As a result, we expect that selling, general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time.
Interest Expense
Interest expense consists primarily of interest expense on our loan agreements, amortization of debt issuance costs and finance lease interest.
Interest Income
Interest income consists primarily of interest income on our cash and cash equivalents, marketable securities and customer financing.
Gain (Loss) on Foreign Exchange
Gain (loss) on foreign exchange relates to currency fluctuations that generate foreign exchange gains or losses on invoices denominated in currencies other than the U.S. Dollar.
Loss on Extinguishment of Debt
Loss on extinguishment of debt relates to the termination of the Bridge Loan commitment related to the Iridium Transaction.
Other Income (Expense), Net
Other income (expense) consists primarily of changes in the fair value of contingent consideration, loss on extinguishment of debt, gain or loss on disposal of assets and accretion of marketable securities purchased at a discount.
Results of Operations
Comparison of the Three Months Ended September 30, 2026 and 2025
The following table sets forth our consolidated statements of operations and comprehensive loss information and data as a percentage of revenue for the three months ended September 30, 2026 and 2025 (in thousands, except percentages):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Revenues | $ | 267,834 | 100.0 | % | $ | 155,080 | 100.0 | % | |||||||||||||||
| Cost of revenues | 177,763 | 66.4 | % | 97,766 | 63.0 | % | |||||||||||||||||
| Gross profit | 90,071 | 33.6 | % | 57,314 | 37.0 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development, net | 98,388 | 36.7 | % | 70,694 | 45.6 | % | |||||||||||||||||
| Selling, general and administrative | 70,872 | 26.5 | % | 45,589 | 29.4 | % | |||||||||||||||||
| Total operating expenses | 169,260 | 63.2 | % | 116,283 | 75.0 | % | |||||||||||||||||
| Operating loss | (79,189) | (29.6) | % | (58,969) | (38.0) | % | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | (323) | (0.1) | % | (7,285) | (4.7) | % | |||||||||||||||||
| Interest income | 28,627 | 10.7 | % | 6,695 | 4.3 | % | |||||||||||||||||
| Gain on foreign exchange | 473 | 0.2 | % | 388 | 0.3 | % | |||||||||||||||||
| Loss on extinguishment of debt | (27,259) | (10.2) | % | - | - | % | |||||||||||||||||
| Other income (expense), net | 1,497 | 0.6 | % | (177) | (0.1) | % | |||||||||||||||||
| Total other income (expense), net | 3,015 | 1.2 | % | (379) | (0.2) | % | |||||||||||||||||
| Loss before income taxes | (76,174) | (28.4) | % | (59,348) | (38.2) | % | |||||||||||||||||
| (Provision) benefit for income taxes | (3,503) | (1.3) | % | 41,091 | 26.5 | % | |||||||||||||||||
| Net loss | $ | (79,677) | (29.7) | % | $ | (18,257) | (11.7) | % | |||||||||||||||
Revenues
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Revenues | $ | 267,834 | $ | 155,080 | $ | 112,754 | 73 | % | ||||||||||||||||||
Revenue increased by $112.8 million, or 73%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Space systems revenue was $214.8 million for the three months ended September 30, 2026, an increase of $100.6 million, or 88%, primarily due to spacecraft manufacturing growth and acquisitions. Launch services revenue was $53.1 million for the three months ended September 30, 2026, an increase of $12.2 million, or 30%, primarily due to a higher launch cadence with six Electron launch missions completed in the three months ended September 30, 2026, versus four launch missions completed in the three months ended September 30, 2025. The increase was partially offset by decreased other launch revenue of $5.5 million, which includes contract termination and study revenue.
Cost of Revenues
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Cost of revenues | $ | 177,763 | $ | 97,766 | $ | 79,997 | 82 | % | ||||||||||||||||||
Cost of revenues increased by $80.0 million, or 82%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Space systems cost of revenue was $143.4 million for the three months ended September 30, 2026, an increase of $62.8 million, or 78%, primarily due to acquisitions and spacecraft manufacturing growth. Launch services cost of revenues was $34.3 million for the three months ended September 30, 2026, an increase of $17.2 million, or 100%, primarily due to an increase in point-in-time launches.
Research and Development, Net
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Research and development, net | $ | 98,388 | $ | 70,694 | $ | 27,694 | 39 | % | ||||||||||||||||||
Research and development expenses increased by $27.7 million, or 39%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to Neutron development progress, incremental research and development spend at recently acquired businesses, increased staff and staff-related expenses as a result of hiring and prototype spend focused on expanding our spacecraft and spacecraft components product portfolio.
Selling, General and Administrative
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Selling, general and administrative | $ | 70,872 | $ | 45,589 | $ | 25,283 | 55 | % | ||||||||||||||||||
Selling, general and administrative expenses increased by $25.3 million, or 55%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to incremental selling, general and administrative spend at recently acquired businesses, increased staff and staff-related expenses to support revenue growth and increased transaction expenses related to managing an active acquisition pipeline.
Interest Expense
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Interest expense | $ | (323) | $ | (7,285) | $ | 6,962 | (96) | % | ||||||||||||||||||
Interest expense decreased by $7.0 million, or 96%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to conversions of the Convertible Senior Notes and the extinguishment of the Trinity Loan Agreement.
Interest Income
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Interest income | $ | 28,627 | $ | 6,695 | $ | 21,932 | 328 | % | ||||||||||||||||||
Interest income increased by $21.9 million, or 328%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to higher cash and cash equivalents balances held in interest bearing accounts.
Gain on Foreign Exchange
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Gain on foreign exchange | $ | 473 | $ | 388 | $ | 85 | 22 | % | ||||||||||||||||||
Gain on foreign exchange increased by $0.1 million, or 22%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to fluctuations in the foreign exchange rates of the New Zealand Dollar, Euro and Canadian Dollar as compared to the U.S. Dollar.
Loss on Extinguishment of Debt
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Loss on extinguishment of debt | $ | (27,259) | - | $ | (27,259) | N/M | ||||||||||||||||||||
Loss on extinguishment of debt increased by $27.3 million for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, as a result of the termination of the Bridge Loan commitment related to the Iridium Transaction, which resulted in the write-off of debt issuance costs and termination fees.
Other Income (Expense), Net
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Other income (expense), net | $ | 1,497 | $ | (177) | $ | 1,674 | (946 | %) | ||||||||||||||||||
Other income increased by $1.7 million, or 946%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to income from a change in the fair value of contingent consideration for the three months ended September 30, 2026, partially offset by a loss on equity securities for the three months ended September 30, 2026.
(Provision) Benefit for Income Taxes
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| (Provision) benefit for income taxes | $ | (3,503) | $ | 41,091 | $ | (44,594) | (109) | % | ||||||||||||||||||
Provision for income taxes increased by $44.6 million for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The effective tax rate was (4.6)% for the three months ended September 30, 2026, compared to 69.2% for the three months ended September 30, 2025. The change was primarily driven by the release of the valuation allowance related to the deferred tax liability from the GEOST acquisition in the three months ended September 30, 2025. The effective tax rate differs from the federal statutory rate due primarily to a full valuation allowance against our U.S. deferred tax assets, as well as the impact of discrete items that may occur in any given year but which are not consistent from year-to-year.
Comparison of the Nine Months Ended September 30, 2026 and 2025
The following table sets forth our consolidated statements of operations and comprehensive loss information and data as a percentage of revenue for the nine months ended September 30, 2026 and 2025 (in thousands, except percentages):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Revenues | $ | 702,248 | 100.0 | % | $ | 422,147 | 100.0 | % | |||||||||||||||
| Cost of revenues | 451,108 | 64.2 | % | 283,198 | 67.1 | % | |||||||||||||||||
| Gross profit | 251,140 | 35.8 | % | 138,949 | 32.9 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development, net | 261,330 | 37.2 | % | 191,937 | 45.5 | % | |||||||||||||||||
| Selling, general and administrative | 182,482 | 26.0 | % | 124,808 | 29.6 | % | |||||||||||||||||
| Total operating expenses | 443,812 | 63.2 | % | 316,745 | 75.1 | % | |||||||||||||||||
| Operating loss | (192,672) | (27.4) | % | (177,796) | (42.2) | % | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | (2,178) | (0.3) | % | (21,470) | (5.1) | % | |||||||||||||||||
| Interest income | 55,262 | 7.9 | % | 15,923 | 3.8 | % | |||||||||||||||||
| Loss on foreign exchange | (1,325) | (0.2) | % | (235) | (0.1) | % | |||||||||||||||||
| Loss on extinguishment of debt | (27,259) | (3.9) | % | - | - | % | |||||||||||||||||
| Other income (expense), net | 1,253 | 0.2 | % | (675) | (0.2) | % | |||||||||||||||||
| Total other income (expense), net | 25,753 | 3.7 | % | (6,457) | (1.6) | % | |||||||||||||||||
| Loss before income taxes | (166,919) | (23.7) | % | (184,253) | (43.8) | % | |||||||||||||||||
| (Provision) benefit for income taxes | (7,038) | (1.0) | % | 38,966 | 9.2 | % | |||||||||||||||||
| Net loss | $ | (173,957) | (24.7) | % | $ | (145,287) | (34.6) | % | |||||||||||||||
Revenues
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Revenues | $ | 702,248 | $ | 422,147 | $ | 280,101 | 66 | % | ||||||||||||||||||
Revenue increased by $280.1 million, or 66%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. Space systems revenue was $540.9 million for the nine months ended September 30, 2026, an increase of $241.9 million, or 81%, primarily due to spacecraft manufacturing growth and acquisitions. Launch services revenue was $161.3 million for the nine months ended September 30, 2026, an increase of $38.2 million, or 31%, primarily due to a higher launch cadence with 18 Electron launch missions completed for the nine months ended September 30, 2026, versus 14 launch missions completed in the nine months ended September 30, 2025, and higher revenue per launch, partially offset by revenue recognized on over-time HASTE launch missions.
Cost of Revenues
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Cost of revenues | $ | 451,108 | $ | 283,198 | $ | 167,910 | 59 | % | ||||||||||||||||||
Cost of revenues increased by $167.9 million, or 59%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. Space systems cost of revenue was $355.9 million for the nine months ended September 30, 2026, an increase of $150.6 million, or 73%, primarily due to acquisitions and spacecraft manufacturing growth. Launch services cost of revenues was $95.2 million for the nine months ended September 30, 2026, an increase of $17.3 million, or 22%, primarily due to a higher launch cadence.
Research and Development, Net
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Research and development, net | $ | 261,330 | $ | 191,937 | $ | 69,393 | 36 | % | ||||||||||||||||||
Research and development expenses increased by $69.4 million, or 36%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to Neutron development progress, incremental research and development spend at recently acquired businesses, increased staff and staff-related expenses as a result of hiring and prototype spend focused on expanding our spacecraft and spacecraft components product portfolio.
Selling, General and Administrative
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Selling, general and administrative | $ | 182,482 | $ | 124,808 | $ | 57,674 | 46 | % | ||||||||||||||||||
Selling, general and administrative expenses increased by $57.7 million, or 46%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to incremental selling, general and administrative spend at recently acquired businesses, cancellations of RSUs resulting in a one-time stock-based compensation expense of $11.2 million, increased staff and staff-related expenses to support revenue growth and increased transaction expenses related to managing an active acquisition pipeline.
Interest Expense
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Interest expense | $ | (2,178) | $ | (21,470) | $ | 19,292 | (90) | % | ||||||||||||||||||
Interest expense decreased by $19.3 million, or 90%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to conversions of the Convertible Senior Notes and the extinguishment of the Trinity Loan Agreement.
Interest Income
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Interest income | $ | 55,262 | $ | 15,923 | $ | 39,339 | 247 | % | ||||||||||||||||||
Interest income increased by $39.3 million, or 247%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to higher cash and cash equivalents balances held in interest bearing accounts.
Loss on Foreign Exchange
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Loss on foreign exchange | $ | (1,325) | $ | (235) | $ | (1,090) | 464 | % | ||||||||||||||||||
Loss on foreign exchange increased by $1.1 million, or 464%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to fluctuations in the foreign exchange rates of the New Zealand Dollar, Euro and Canadian Dollar as compared to the U.S. Dollar.
Loss on Extinguishment of Debt
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Loss on extinguishment of debt | $ | (27,259) | - | $ | (27,259) | N/M | ||||||||||||||||||||
Loss on extinguishment of debt increased by $27.3 million for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, as a result of the termination of the Bridge Loan commitment related to the Iridium Transaction, which resulted in the write-off of debt issuance costs and termination fees.
Other Income (Expense), Net
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| Other income (expense), net | $ | 1,253 | $ | (675) | $ | 1,928 | (286 | %) | ||||||||||||||||||
Other income increased by $1.9 million, or 286%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to a decrease in loss on disposal of assets for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 and income from a change in the fair value of contingent consideration for the nine months ended September 30, 2026, partially offset by a loss on equity securities for the nine months ended September 30, 2026 and a decrease in accretion of marketable securities purchased at a discount for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
(Provision) Benefit for Income Taxes
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||
| (Provision) benefit for income taxes | $ | (7,038) | $ | 38,966 | $ | (46,004) | (118) | % | ||||||||||||||||||
Provision for income taxes increased by $46.0 million for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The effective tax rate was (4.2)% for the nine months ended September 30, 2026, compared to 21.1% for the nine months ended September 30, 2025. The change was primarily driven by the release of the valuation allowance related to the deferred tax liability from the GEOST acquisition in the nine months ended September 30, 2025. The effective tax rate differs from the federal statutory rate due primarily to a full valuation allowance against our U.S. deferred tax assets, as well as the impact of discrete items that may occur in any given year but which are not consistent from year-to-year.
Liquidity and Capital Resources
Since inception, we have funded our operations with proceeds from sales of our capital stock, convertible senior notes, term note debt, equipment financing, research and development grant proceeds, and cash flows from the sale of our products and services. As of September 30, 2026, we had $4.4 billion of cash and cash equivalents and $256.2 million of marketable securities. Our primary requirements for liquidity and capital are for investment in new products and technologies, the expansion of existing manufacturing facilities, working capital, debt service, acquisitions of complementary businesses, products or technologies and general corporate needs. Historically, these cash requirements have been met through the net proceeds we received through private sales of equity securities and convertible senior notes, borrowings under our credit and equipment financing facilities, net proceeds received in our business combination, net proceeds received from our ATM Equity Offerings and payments received from customers.
We believe that our existing cash and cash equivalents and marketable securities and payments from customers will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months, although we may choose to take advantage of opportunistic capital raising or refinancing transactions at any time primarily for the purposes noted above. We will continue to invest in increasing production and expanding our product offerings through acquisitions.
On June 28, 2026, we entered into a definitive agreement to acquire all outstanding shares of Iridium for $54 per share in a cash and stock transaction. This represents an enterprise value of approximately $8.0 billion. The Iridium Transaction is expected to require over $3.0 billion in cash related to share consideration payments, repayment of certain outstanding Iridium acquisition indebtedness and payment of transaction fees and expenses.
On September 15, 2026, Iridium and Iridium's lenders entered into an amendment to Iridium's existing credit agreement, which provides that the Iridium Transaction will not constitute a "change of control" under the amended credit agreement and permits the approximately $1.8 billion of term loans outstanding, which mature in September 2030, to remain outstanding after closing of the Iridium Transaction, eliminating the need to repay or refinance this indebtedness. Upon closing of the Iridium Transaction, Rocket Lab USA, Inc., our primary operating subsidiary, will provide a downstream guarantee of the obligations under Iridium's amended credit agreement. In connection with the amendment, we incurred transaction costs of $9.4 million, which are included in selling, general and administrative expenses for the three and nine months ended September 30, 2026. The transaction is expected to close in 2027, subject to customary closing conditions, including regulatory approval.
Material Cash Requirements
As of September 30, 2026, our total minimum lease payments were $176.2 million, of which $23.9 million is due in the following twelve months. For details regarding our indebtedness and lease obligations as of September 30, 2026, refer to Note 11 and Note 14, respectively, to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Our capital expenditures for the nine months ended September 30, 2026 were $84.2 million. Our future capital requirements will depend on many factors, including our launch cadence, traction in the market with our space systems offerings, the expansion of sales and marketing activities, the timing and extent of spending to support product development efforts, the introduction of new and enhanced products, the continuing market adoption of our products, the timing and extent of additional capital expenditures to invest in existing and new office spaces and the number of acquisitions of complementary businesses, including the acquisition of Iridium, products or technologies we pursue, if any. We may be required to seek additional equity or debt financing or we may choose to take advantage of opportunistic capital raising or financing transactions primarily for the purposes noted above. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.
Additionally, we expect our capital and operating expenditures will increase significantly in connection with ongoing activities as we:
•increase our investment in marketing, advertising, sales and distribution infrastructure for our existing and future products and services;
•develop additional new products and enhancements to existing products, integrate acquisitions and seek new growth opportunities, including additional acquisitions and investments;
•obtain, maintain and improve our operational, financial and management performance;
•hire additional personnel;
•obtain, maintain, expand and protect our and our customers' intellectual property.
Indebtedness
As of September 30, 2026, there was $1.3 million outstanding under our 4.250% Convertible Senior Notes due 2029 (the "Convertible Notes"). For details regarding our outstanding loan agreements, refer to Note 11 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
In connection with the pricing of the Convertible Notes, on February 1, 2024 and February 2, 2024, we entered into privately negotiated capped call transactions (the "Capped Call Transactions") with certain financial institutions. These transactions are designed to offset potential dilution from the Convertible Notes and provide a non-dilutive source of liquidity under certain conditions. The Capped Call Transactions have a strike price of $5.1255 per share with a cap price of $8.04 per share, covering approximately 69.3 million shares of common stock.
The Capped Call Transactions are scheduled to expire in tranches over a series of dates, beginning on December 1, 2028, and ending on January 30, 2029. If our stock price equals or exceeds the strike price on any given expiration date, we would be entitled to receive payments for the corresponding tranche without issuing additional shares, up to a maximum aggregate payment of approximately $201.9 million across all tranches on the settlement date. However, if the stock price is below the cap price (but is above the strike price) on any expiration date, the payment received for that tranche would be reduced, and the Company may receive less than the maximum potential payment.
If the Capped Call Transactions are unwound prior to the maturity dates, the settlement terms would depend on the prevailing market conditions, including our stock price at the time of the unwind, the time remaining until maturity on the date of the unwind, and the expiration schedule of the tranches.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | (127,254) | $ | (100,990) | |||||||
| Investing activities | (113,893) | (243,250) | |||||||||
| Financing activities | 3,863,886 | 881,734 | |||||||||
| Effect of exchange rate changes | (205) | (86) | |||||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 3,622,534 | $ | 537,408 | |||||||
Cash Flows from Operating Activities
For the nine months ended September 30, 2026, net cash used in operating activities of $127.3 million consisted of $174.0 million in net loss, $166.5 million in non-cash activities and $119.8 million in cash used in operating assets and liabilities. Included in the non-cash activities are $66.0 million in stock-based compensation expense, $57.7 million in depreciation and amortization, $27.3 million loss on extinguishment of debt related to the termination of the Bridge Loan commitment, $9.9 million of noncash lease expense and $7.5 million lower of cost or market inventory valuation adjustments. Included in the cash used in operating assets and liabilities are $83.7 million in inventories, $68.5 million in accounts receivable, $60.8 million in contract assets, $48.6 million in other non-current assets, $20.5 million in prepaids and other current assets and $10.8 million in non-current lease liabilities, partially offset by cash provided by operating assets and liabilities of $144.5 million in contract liabilities and $11.9 million in employee benefits payable.
Cash Flows from Investing Activities
For the nine months ended September 30, 2026, net cash used in investing activities of $113.9 million consisted of $84.2 million of capital equipment and infrastructure investments and $44.3 million of cash paid for business combinations, partially offset by net maturities of marketable securities of $13.8 million.
Cash Flows from Financing Activities
For the nine months ended September 30, 2026, net cash provided by financing activities of $3,863.9 million consisted of $3,875.2 million of net proceeds from the issuance of common stock under the ATM Equity Offerings and $13.6 million of proceeds from Employee Stock Purchase Plan, partially offset by $27.3 million of debt issuance and extinguishment costs related to the terminated Bridge Loan commitment.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates as disclosed in our audited financial statements included in our Form 10-K.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.
Guarantor Information
In connection with the Reorganization, on May 23, 2025, the Company, Rocket Lab USA and U.S. Bank Trust Company, National Association (the "Trustee") entered a first supplemental indenture (the "Supplemental Indenture") to the indenture, dated as of February 6, 2024, between Rocket Lab USA and the Trustee (the "Indenture"), governing the Convertible Notes in order to (i) provide for subsequent conversions of the Convertible Notes in the manner set forth in Section 5.09 of the Indenture, (ii) provide for subsequent adjustments to the Conversion Rate pursuant to Section 5.05(A) of the Indenture in a manner consistent with Section 5.09 of the Indenture, (iii) provide for the full and unconditional guarantee of the obligations of Rocket Lab USA under the Convertible Notes and the Indenture and (iv) make such other changes as are appropriate to preserve the economic interests of the holders and to give effect to the provisions of Section 5.09(A) of the Indenture.
As of September 30, 2026, there was $1.3 million aggregate principal amount of issued and outstanding convertible senior notes of Rocket Lab USA that are fully and unconditionally guaranteed by the Company. Accordingly, pursuant to Rule 3-10 of Regulation S-X, separate condensed consolidated financial statements of Rocket Lab USA have not been presented. As permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded summarized financial information for Rocket Lab USA because the assets, liabilities and results of operations of Rocket Lab USA are not materially different than the corresponding amounts in the Company's condensed consolidated financial statements.
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