Rocket Lab: Q4 Revenue Jumps 121%

Space launch provider Rocket Lab USA (NASDAQ:RKLB) reported mixed fourth-quarter earnings on Thursday, Feb. 27. Revenue in Q4 was notably higher at $132.4 million, topping analysts' consensus projections of $130 million and rising 121% year over year. Adjusted EPS in Q4 was in line with estimates, presenting a loss of $0.10 per share.

Overall, the quarter showed mixed results with strong revenue growth but enduring challenges in cost management.

Source: Rocket Lab. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.

Company Overview and Recent Focus

Rocket Lab USA, known for its Electron rocket, offers revolutionary launch services to government and commercial clients. It is a key player within the space industry, delivering flexible, reliable, and cost-effective launch solutions. Recently, it focused on expanding space system capabilities and enhancing electron launch frequency. The Space Systems segment now accounts for a significant portion of its growth strategy. Key focuses include satellite development and Neutron, a forthcoming medium-lift launch vehicle aimed at diversifying payload capacities.

The firm has been working toward vertical integration, reducing costs and improving efficiency by developing key technologies in-house. This approach enhances operational performance and streamlines production. The focus on integrated and comprehensive space solutions depicts its goal to be an end-to-end provider within the space sector, capturing diverse revenue streams.

Quarterly Financial and Operational Highlights

During Q4 2024, Rocket Lab USA surpassed revenue expectations, and more than doubled year over year. The primary driver of this growth was the frequency and efficiency of its launches, exemplified by a record-setting 16 Electron launches in 2024, marking a 60% increase from the previous year. Strategic multi-launch contracts bolstered this growth trajectory, marking a firm demand from commercial and governmental sectors.

However, Rocket Lab's earnings per share were lukewarm. This was in line with the same period last year. Operating income losses saw improvements, reducing to $29.5 million from $34.2 million. This was amid rising operational costs, where expenses hit $88.37 million, exceeding management's own guidance, highlighting areas needing attention in cost management.

Within segments, the company's ongoing efforts to bolster space system capacities took a pivotal role. The introduction of the Flatellite platform, targeting national security and commercial sectors, broadened its market reach toward a potential data constellation business model. Moreover, significant operational milestones were recorded with collaborations on U.S. Space Force contracts, showing robust federal trust and collaboration.

Non-recurring events such as the delay of the Mars transfer window, due to a third-party launch vehicle, slightly dampened segment performance and contributed to strategic bottlenecks in the mission timeline. The company’s strong customer backlog -- up by 80% to $1.05 billion -- highlights market confidence and demand consistency.

Looking Ahead

Moving into Q1 2025, Rocket Lab maintains forward-looking revenue guidance of $117 million to $123 million. It anticipates consistent gross margins of 30% to 32% while forecasting an operational expenditure of $77 million to $79 million. Despite the anticipated adjusted EBITDA loss of $33 million to $35 million, the company strives to balance growth with profitability.

Investors should monitor developments around the Neutron launch vehicle and expand space systems, continuing the trajectory toward an integrated space solutions provider. Notable changes in forward guidance offer insights into strategic capital deployment priorities such as innovation and ongoing project development, crucial for sustaining the growth and expanding market presence of Rocket Lab USA.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 904% — a market-crushing outperformance compared to 173% for the S&P 500.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

Learn more »

*Stock Advisor returns as of February 24, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Rocket Lab USA. The Motley Fool has a disclosure policy.