Revenue for Rocket Lab comes from space systems

Rocket Lab, known best for its Electron tiny launch vehicle, made the majority of its first-quarter income from other space systems rather than from the launch. Rocket Lab reported $40.7 million in sales for the first quarter of 2022, a $26.7 million net loss, and an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $8 million in quarterly earnings disclosed on May 16.

The statistics highlighted a significant distinction between the company’s two primary business lines, launch as well as space systems. In the quarter, sales from the latter group, which comprises its Photon spaceship and components business, were $34.1 million. A single Electron launch generated only $6.6 million.

This division illustrates the company’s ambitious diversification plan, which increased after it became public in August 2021 via a SPAC (special-purpose acquisition corporation) merger. Rocket Lab has since purchased Advanced Solutions Inc., Planetary Systems Corporation, and SolAero Holdings, all of which are companies that make satellite separation systems. In the first quarter, the SolAero acquisition was completed.

The conclusion of the SolAero purchase contributed significantly to the company’s backlog increasing from $241 million at the close of the 4th quarter of the year 2021 to about $546 million at the close of the first quarter. The company also received a $143 million deal from Canadian corporation MDA in February to build 17 spaceships for Globalstar.

The revenue disparity is expected to persist in the 2nd quarter, though not to the same extent. In the second quarter, the company expects revenue of $51 million to $54 million, with $32 million to $35 million coming from space systems and $19 million from launch.

Three Electron launches are slated for the 2nd quarter, with two already completed. The third is NASA’s CAPSTONE lunar smallsat mission’s Electron launch, which is expected to take place at the end of May. On the company’s results call, Adam Spice, Rocket Lab’s chief financial officer (CFO), said that a 4th launch in the quarter, for an unnamed government client in late June, is possible. The revenue projection for the quarter excludes that launch.

Launch revenue is recognized in the quarter in which the launch occurs, which can cause considerable fluctuations from quarter to quarter based on when launches occur. The first deployment of the 2nd quarter, containing two BlackSky imaging satellites, occurred in early April after being postponed from late March due to weather, forcing revenue to be recognized in the second quarter rather than the first. On the call, Peter Beck, Rocket Lab’s CEO, stated that the launch cadence is “driven by customer readiness.  Every launch is bumpy.”

According to company leaders, there is also a difference in revenue for each launch. NASA granted a contract for the CAPSTONE launch in 2020, which is valued at around $10 million. Spice, on the other hand, claims that the company’s last May 2 launch, which included 34 smallsats, generated just “de minimis” revenue. “It was essentially a platform for research and development.” He stated, “It contributed a modest amount of revenue.” “This was not your typical launch.”

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