Rocket Lab released an earnings report that showed both higher revenue and a larger net loss for the first quarter on Tuesday compared with the same period last year.
Revenue rose to $54.9 million from $40.7 million in the first quarter of 2022. Rocket Lab’s gross profit increased from $3.7 million to $6.4 million when the cost of revenue is subtracted.
The company’s net loss increased from $26.7 million to $45.6 million year over year. Adjusted EBITDA loss increased to $26.2 million from the $8 million loss reported during the same period last year.
Rocket Lab had $398.7 million in cash, cash equivalents, and marketable securities as of March 31. This was a reduction from the $471.8 million the company had at the end of March 2022.
“Rocket Lab started the year strong with three successful Electron missions in the first quarter across our global launch facilities and to date, remains the only commercial U.S. small launch vehicle to successfully deliver satellites to orbit in 2023,” Rocket Lab CEO Peter Beck said in a company announcement accompanying the Rocket Lab earnings report. “At a time when we’re starting to see a contraction of available small rockets, we’re also seeing an increase in launch bookings for Electron launches in 2023 and beyond from new and returning customers across government and commercial sectors.”
Rocket Lab’s net research and development spending rose from $13.5 million to $23.9 million as the company continued work on its reusable Neutron launch vehicle.
“The development of our larger rocket Neutron is continuing at pace with launch and testing facilities expanded, engine hardware being printed at our headquarters in Long Beach, and vehicle hardware in production for upcoming structural tests throughout the year that we expect will keep the program on track,” Beck added. “Space Systems also continues its strong performance, with the majority of our products supporting customer missions across several launches in the quarter, and major program milestones reached on Photon spacecraft build programs for government and commercial customers.”
Rocket Lab also announced that the company had signed multiple launch contracts since the first quarter ended on March 30, including that an Electron rocket will launch NASA’s Starling mission. Starling’s four CubeSats will demonstrate autonomous satellite swarm technologies as well as automated space traffic management.
Rocket Lab did not disclose the identities of the other companies that have signed launch contracts since the end of the quarter.
Rocket Lab also announced it had shipped a Photon module to Varda Space Industries. Photon will provide power, communications, propulsion, and attitude control for Varda’s capsule, which will manufacture pharmaceutical products in orbit and return them to Earth.
Rocket Lab issued the following guidance for the second quarter of 2023:
- Revenue between $60 million and $63 million.
- Launch services revenue of approximately $23 million.
- Space systems revenue of between $37 million to $40 million.
- GAAP gross margins between 14 percent to 16 percent.
- Non-GAAP gross margins between 22 percent to 24 percent.
- GAAP operating expenses between $55 million to $57 million.
- Non-GAAP operating expenses between $41 million to $43 million.
- Expected interest expense (income), net $1 million.
- Adjusted EBITDA loss of $22 million to $24 million.
- Basic shares outstanding of 480 million.
Rocket Lab Earnings
Rocket Lab’s first-quarter financials, as well as excerpted disclaimers from the company’s press release, are below.
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(unaudited; in thousands, except share and per share data)
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| Revenues | $ | 54,895 | $ | 40,703 | ||
| Cost of revenues | 48,538 | 36,968 | ||||
| Gross profit | 6,357 | 3,735 | ||||
| Operating expenses: | ||||||
| Research and development, net | 23,905 | 13,477 | ||||
| Selling, general and administrative | 28,469 | 23,078 | ||||
| Total operating expenses | 52,374 | 36,555 | ||||
| Operating loss | (46,017) | (32,820) | ||||
| Other income (expense): | ||||||
| Interest expense, net | (685) | (2,989) | ||||
| Gain (loss) on foreign exchange | 134 | (20) | ||||
| Change in fair value of liability classified warrants | — | 13,482 | ||||
| Other income, net | 1,477 | 26 | ||||
| Total other income, net | 926 | 10,499 | ||||
| Loss before income taxes | (45,091) | (22,321) | ||||
| Provision for income taxes | (526) | (4,388) | ||||
| Net loss | $ | (45,617) | $ | (26,709) | ||
| Net loss per share attributable to Rocket Lab USA, Inc.: | ||||||
| Basic and diluted | $ | (0.10) | $ | (0.06) | ||
| Weighted-average common shares outstanding: | ||||||
| Basic and diluted | 476,199,710 | 456,495,288 |
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2023 AND DECEMBER 31, 2022
(unaudited; in thousands, except share and per share values)
| March 31, 2023 (unaudited) | December 31, 2022 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 208,365 | $ | 242,515 | ||
| Marketable securities, current | 190,357 | 229,276 | ||||
| Accounts receivable, net | 50,690 | 36,572 | ||||
| Contract assets | 12,558 | 9,451 | ||||
| Inventories | 98,453 | 92,279 | ||||
| Prepaids and other current assets | 63,203 | 52,201 | ||||
| Assets held for sale | 11,630 | — | ||||
| Total current assets | 635,256 | 662,294 | ||||
| Non-current assets: | ||||||
| Property, plant and equipment, net | 95,981 | 101,514 | ||||
| Intangible assets, net | 76,495 | 79,692 | ||||
| Goodwill | 71,020 | 71,020 | ||||
| Right-of-use assets – operating leases | 34,839 | 35,239 | ||||
| Right-of-use assets – finance leases | 15,458 | 15,614 | ||||
| Marketable securities, non-current | 47,920 | 9,193 | ||||
| Restricted cash | 3,337 | 3,356 | ||||
| Deferred income tax assets, net | 3,500 | 3,898 | ||||
| Other non-current assets | 7,102 | 7,303 | ||||
| Total assets | $ | 990,908 | $ | 989,123 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities: | ||||||
| Trade payables | $ | 22,852 | $ | 12,084 | ||
| Accrued expenses | 8,678 | 8,723 | ||||
| Employee benefits payable | 12,333 | 8,634 | ||||
| Contract liabilities | 125,635 | 108,344 | ||||
| Current installments of long-term borrowings | 2,934 | 2,906 | ||||
| Other current liabilities | 24,863 | 22,249 | ||||
| Total current liabilities | 197,295 | 162,940 | ||||
| Non-current liabilities: | ||||||
| Long-term borrowings, excluding current installments | 100,724 | 100,043 | ||||
| Non-current operating lease liabilities | 33,870 | 34,266 | ||||
| Non-current finance lease liabilities | 15,478 | 15,568 | ||||
| Deferred tax liabilities | 170 | 95 | ||||
| Other non-current liabilities | 3,353 | 3,005 | ||||
| Total liabilities | 350,890 | 315,917 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||
| Stockholders’ equity: | ||||||
| Common stock, $0.0001 par value; authorized shares: 2,500,000,000; issued and outstanding shares: 478,153,075 and 475,356,517 at March 31, 2023 and December 31, 2022, respectively | 48 | 48 | ||||
| Additional paid-in capital | 1,125,976 | 1,112,977 | ||||
| Accumulated deficit | (486,572) | (440,955) | ||||
| Accumulated other comprehensive income | 566 | 1,136 | ||||
| Total stockholders’ equity | 640,018 | 673,206 | ||||
| Total liabilities and stockholders’ equity | $ | 990,908 | $ | 989,123 |
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(unaudited; in thousands)
| For the Three Months Ended March 31, 2023 | For the Three Months Ended March 31, 2022 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net loss | $ | (45,617) | $ | (26,709) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation and amortization | 7,033 | 6,088 | ||||
| Stock-based compensation expense | 14,036 | 11,958 | ||||
| Loss on disposal of assets | 5 | 5 | ||||
| Amortization of debt issuance costs and discount | 709 | 690 | ||||
| Noncash lease expense | 988 | 731 | ||||
| Noncash income associated with liability-classified warrants | — | (13,482) | ||||
| Change in the fair value of contingent consideration | 300 | 2,500 | ||||
| Accretion of marketable securities purchased at a discount | (1,147) | — | ||||
| Deferred income taxes | 420 | (1,558) | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | (14,116) | (5,644) | ||||
| Contract assets | (3,109) | (3,668) | ||||
| Inventories | (6,712) | (9,132) | ||||
| Prepaids and other current assets | (10,035) | (1,071) | ||||
| Other non-current assets | 103 | 772 | ||||
| Trade payables | 11,305 | 805 | ||||
| Accrued expenses | 403 | (3,245) | ||||
| Employee benefits payables | 1,294 | 475 | ||||
| Contract liabilities | 17,292 | 10,652 | ||||
| Other current liabilities | 2,305 | 4,266 | ||||
| Non-current lease liabilities | (891) | (783) | ||||
| Other non-current liabilities | 49 | 11 | ||||
| Net cash used in operating activities | (25,385) | (26,339) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property, equipment and software | (12,674) | (6,242) | ||||
| Cash paid for acquisitions, net of acquired cash and restricted cash | — | (65,588) | ||||
| Purchases of marketable securities | (76,394) | — | ||||
| Maturities of marketable securities | 78,099) | — | ||||
| Net cash used in investing activities | (10,969) | (71,830) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from the exercise of stock options and public warrants | 771 | 1,379 | ||||
| Proceeds from Employee Stock Purchase Plan | 1,202 | 1,025 | ||||
| Proceeds from sale of employees restricted stock units to cover taxes | 3,078 | 20,841 | ||||
| Minimum tax withholding paid on behalf of employees for restricted stock units | (1,915) | (8,756) | ||||
| Payment of contingent consideration | (1,000) | — | ||||
| Finance lease principal payments | (78) | (45) | ||||
| Net cash provided by financing activities | 2,058 | 14,444 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 127 | (574) | ||||
| Net decrease in cash and cash equivalents and restricted cash | (34,169) | (84,299) | ||||
| Cash and cash equivalents, and restricted cash, beginning of period | 245,871 | 692,075 | ||||
| Cash and cash equivalents, and restricted cash, end of period | $ | 211,702 | $ | 607,776 |
ROCKET LAB U.S.A., INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(unaudited; in thousands)
The tables provided below reconcile the non-GAAP financial measures Adjusted EBITDA, Non-GAAP gross profit, Non-GAAP research and development, net, Non-GAAP selling, general and administrative, Non-GAAP operating expenses, Non-GAAP operating loss and Non-GAAP total other income (expense), net with the most directly comparable GAAP financial measures. See above for additional information on the use of these non-GAAP financial measures.
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| NET LOSS | $ | (45,617) | $ | (26,709) | ||
| Depreciation | 3,713 | 3,193 | ||||
| Amortization | 3,320 | 2,895 | ||||
| Stock-based compensation expense | 14,036 | 11,958 | ||||
| Transaction costs | 165 | 375 | ||||
| Interest expense, net | 685 | 2,989 | ||||
| Change in fair value of liability classified warrants | — | (13,482) | ||||
| Change in fair value of contingent consideration | 300 | 2,500 | ||||
| Performance reserve escrow | 1,838 | 1,895 | ||||
| Amortization of inventory step-up | — | 2,002 | ||||
| Provision for income taxes | 526 | 4,388 | ||||
| (Gain) loss on foreign exchange | (134) | 20 | ||||
| Accretion of marketable securities purchased at a discount | (1,165) | — | ||||
| Loss on disposal of assets | 5 | 5 | ||||
| Employee retention credit | (3,841) | — | ||||
| ADJUSTED EBITDA | $ | (26,169) | $ | (7,971) |
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||
| GAAP Gross profit | $ | 6,357 | $ | 3,735 | ||
| Stock-based compensation | 3,813 | 3,335 | ||||
| Amortization of purchased intangibles | 1,710 | 565 | ||||
| Amortization of inventory step-up | — | 2,002 | ||||
| Performance reserve escrow | 57 | 114 | ||||
| Employee retention credit | (2,130) | — | ||||
| Non-GAAP Gross profit | $ | 9,807 | $ | 9,751 | ||
| Non-GAAP Gross margin | 17.9% | 24.0% | ||||
| GAAP Research and development, net | $ | 23,905 | $ | 13,477 | ||
| Stock-based compensation | (5,022) | (5,026) | ||||
| Amortization of purchased intangibles | (9) | (1,632) | ||||
| Employee retention credit | 631 | — | ||||
| Non-GAAP Research and development, net | $ | 19,505 | $ | 6,819 | ||
| GAAP Selling, general and administrative | $ | 28,469 | $ | 23,078 | ||
| Stock-based compensation | (5,201) | (3,597) | ||||
| Amortization of purchased intangibles | (1,434) | (598) | ||||
| Transaction costs | (165) | (375) | ||||
| Performance reserve escrow | (1,781) | (1,781) | ||||
| Change in fair value of contingent consideration | (300) | (2,500) | ||||
| Employee retention credit | 1,080 | — | ||||
| Non-GAAP Selling, general and administrative | $ | 20,668 | $ | 14,227 | ||
| GAAP Operating expenses | $ | 52,374 | $ | 36,555 | ||
| Stock-based compensation | (10,223) | (8,623) | ||||
| Amortization of purchased intangibles | (1,443) | (2,230) | ||||
| Transaction costs | (165) | (375) | ||||
| Performance reserve escrow | (1,781) | (1,781) | ||||
| Change in fair value of contingent consideration | (300) | (2,500) | ||||
| Employee retention credit | 1,711 | — | ||||
| Non-GAAP Operating expenses | $ | 40,173 | $ | 21,046 | ||
| GAAP Operating loss | $ | (46,017) | $ | (32,820) | ||
| Total non-GAAP adjustments | 15,651 | 21,525 | ||||
| Non-GAAP Operating loss | $ | (30,366) | $ | (11,295) | ||
| GAAP Total other income (expense), net | $ | 926 | $ | 10,499 | ||
| Change in fair value of liability classified warrants | — | (13,482) | ||||
| (Gain) loss on foreign exchange | (134) | 20 | ||||
| Non-GAAP Total other income (expense), net | $ | 792 | $ | (2,963) |
