Rocket Lab Announces Preliminary Fourth Quarter 2023 Financial Results After Successful Launch for Spire and NorthStar
- Rocket Lab shared preliminary financial results for Q4 2023, following a successful deployment of Spire and NorthStar’s Space Situational Awareness Mission.
- The Space Systems business showed strength, offsetting the impact of a postponed Electron launch on revenue.
- Estimated preliminary unaudited results for Q4 2023 include revenue of $59-61 million, with a net loss of $49-52.5 million.
- The GAAP gross margin is estimated to be 24.8-26.8%, and the non-GAAP gross margin is estimated to be 31.4-33.2%.
- Operating expenses are estimated to be $62.5-64.5 million, with an adjusted EBITDA loss of $28-30 million.
- None.
Insights
The preliminary financial results from Rocket Lab for Q4 2023 indicate several key factors that stakeholders should consider. Firstly, the postponement of an Electron launch, which could have been a negative factor, was partially mitigated by the strength in the Space Systems business, demonstrating revenue diversification. The reported increase in Space Systems revenue from $39.7 million to a range of $50.5 to $52.5 million year-over-year shows the company's growing capability in this segment, which could be a sign of resilience against single-segment volatility.
Another point of interest is the improvement in GAAP and non-GAAP gross margins, suggesting enhanced operational efficiency or a higher-margin product mix. However, the increase in GAAP operating expenses from $39.1 million to between $62.5 and $64.5 million and the anticipated net loss widening from $37.2 million to between $49.0 and $52.5 million, highlight escalating costs likely associated with the development of the Neutron rocket and other growth initiatives. This could indicate a phase of heavy investment that investors typically scrutinize for future returns.
While the report mentions a record backlog, the actual impact on financials will depend on the company's ability to convert this backlog into revenue efficiently. Furthermore, the mention of more launches scheduled in 2024 suggests a potentially upward trajectory in operational cadence, which could be promising for future revenue streams.
From a market perspective, Rocket Lab's preliminary results and CEO statements provide insight into the company's strategic positioning within the space industry. The reference to the largest contract award to date with the $515 million Space Development Agency’s Tranche 2 Beta award underlines the company's competitive strength and could signal future market share growth. Additionally, the emphasis on the Neutron rocket's progress and upcoming medium lift launch capabilities suggests an expansion into new market segments, potentially increasing the addressable market for Rocket Lab.
The company's expectation of introducing 'much needed incremental capacity to the market' indicates an awareness of current market demands and a potential undersupply in launch capabilities, which could offer a strategic advantage if Rocket Lab can fulfill this market gap effectively. The increased merchant component business contributing to Space Systems growth also suggests a healthy demand for space-related components, possibly driven by broader industry growth trends.
However, it is crucial to monitor how the company manages the balance between its growth investments and operational efficiency, as the space industry is known for its high capital expenditure and long lead times to profitability. The forthcoming audited financial statements will provide a clearer picture of the company's financial health and its ability to sustain growth while managing costs.
Analyzing Rocket Lab's preliminary financial results within the context of the aerospace industry reveals several points of interest. The successful deployment of Spire and NorthStar’s Space Situational Awareness Mission signifies the company's operational reliability, a critical factor in the aerospace sector. Additionally, the growth in Space Systems revenue reflects a broader industry trend where companies are not just service providers but also technology enablers, offering comprehensive space solutions.
The development milestones of the Neutron rocket position Rocket Lab as a potential key player in the medium lift launch market, which is currently dominated by a few companies. This could reshape the competitive landscape and drive innovation within the sector. Moreover, the backlog record indicates strong market demand and could serve as an indicator of future revenue stability if managed effectively.
However, it's essential to note the substantial investment in operating expenses, which could reflect the high costs associated with research and development in aerospace. This investment strategy must be weighed against the potential for market capture and long-term returns. Stakeholders will also be interested in the company's ability to maintain its launch schedule in 2024, as any delays could affect revenue projections and market confidence.
Rocket Lab's Electron launch vehicle lifts off the pad at Launch Complex 1 in
Rocket Lab founder and CEO, Peter Beck, said: “Our fourth quarter included Electron’s successful return to service and our largest contract award to date with the
Certain Estimated Preliminary Results for the Three Months Ended December 31, 2023 (unaudited)
Our audited consolidated financial statements for the year ended December 31, 2023 are not yet available; however, certain of our estimated preliminary unaudited financial results for the three months ended December 31, 2023 are set forth below. With respect to certain presented results, we have provided ranges, rather than specific amounts, because these results are preliminary and subject to change. These results are based on the information available to us as of the date of this release. Our actual results may vary from the estimated preliminary results presented below, including due to the completion of our financial closing and other operational procedures, final adjustments, and other developments that may arise between now and the time the Company releases its financial results for the fourth quarter and full year 2023, which is currently scheduled for February 27, 2024. Our fourth quarter revenue was impacted by the postponement of an Electron launch previously scheduled to occur before the end of 2023, which was partially offset by strength in our Space Systems business. The postponement is not expected to impact our future results.
These estimates should not be viewed as a substitute for our full interim or annual financial statements prepared in accordance with US generally accepted accounting principles (“GAAP”). Accordingly, undue reliance should not be placed on this preliminary data.
The estimated preliminary financial results for the three months ended December 31, 2023 have been prepared by, and are the responsibility of, management. Our independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures with respect to the estimated preliminary financial results. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect thereto. Certain monetary amounts, percentages, and other figures included below have been subject to rounding adjustments. Percentage amounts included below have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts below may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements. Certain other amounts that appear below may not sum due to rounding.
|
|
(figures in millions) |
||||||||||
|
|
Three Months Ended December 31, |
||||||||||
|
|
2022 |
|
2023 Estimated |
||||||||
Preliminary Unaudited Results |
|
Actual |
|
Low |
|
High |
||||||
Revenue |
|
$ |
51.8 |
|
|
$ |
59.0 |
|
|
$ |
61.0 |
|
Space Systems revenue |
|
$ |
39.7 |
|
|
$ |
50.5 |
|
|
$ |
52.5 |
|
Launch Services revenue |
|
$ |
12.0 |
|
|
$ |
8.5 |
|
|
$ |
8.5 |
|
|
|
|
|
|
|
|
||||||
GAAP Gross margin |
|
|
3.5 |
% |
|
|
24.8 |
% |
|
|
26.8 |
% |
Non-GAAP Gross margin |
|
|
14.5 |
% |
|
|
31.4 |
% |
|
|
33.2 |
% |
|
|
|
|
|
|
|
||||||
GAAP Operating expenses |
|
$ |
39.1 |
|
|
$ |
62.5 |
|
|
$ |
64.5 |
|
Non-GAAP Operating expenses |
|
$ |
27.3 |
|
|
$ |
52.5 |
|
|
$ |
54.5 |
|
Interest expense, net |
|
$ |
0.9 |
|
|
$ |
1.4 |
|
|
$ |
1.4 |
|
|
|
|
|
|
|
|
||||||
Net loss |
|
$ |
(37.2 |
) |
|
$ |
(52.5 |
) |
|
$ |
(49.0 |
) |
Adjusted EBITDA loss |
|
$ |
(14.5 |
) |
|
$ |
(30.0 |
) |
|
$ |
(28.0 |
) |
|
|
|
|
|
|
|
||||||
Basic shares outstanding |
|
|
474 |
|
|
|
487 |
|
|
|
487 |
|
Non-GAAP Financial Measures
We have included information about certain non-GAAP financial measures in this release. We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into our ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for, or superior to, the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
The following tables present a reconciliation of our estimated preliminary Adjusted EBITDA loss, non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating expenses for the three months ended December 31, 2023 to the most directly comparable financial measure presented in accordance with GAAP. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from net income or loss to determine Adjusted EBITDA. Management believes this measure provides investors meaningful insight into results from ongoing operations. Non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating expenses further exclude items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from the applicable GAAP financial measure. Management believes these non-GAAP measures provide investors meaningful insight into results from ongoing operations.
|
|
(figures in millions) |
||||||||||
|
|
Three Months Ended December 31, |
||||||||||
|
|
2022 |
|
2023 Estimated |
||||||||
Preliminary Unaudited Results |
|
Actual |
|
Low |
|
High |
||||||
Net loss |
|
$ |
(37.2 |
) |
|
$ |
(52.5 |
) |
|
$ |
(49.0 |
) |
Depreciation |
|
|
4.8 |
|
|
|
4.6 |
|
|
|
4.6 |
|
Amortization |
|
|
3.5 |
|
|
|
3.6 |
|
|
|
3.6 |
|
Stock-based compensation expense |
|
|
12.3 |
|
|
|
10.2 |
|
|
|
10.2 |
|
Transaction costs |
|
|
0.1 |
|
|
|
0.0 |
|
|
|
0.0 |
|
Interest expense, net |
|
|
0.9 |
|
|
|
1.4 |
|
|
|
1.4 |
|
Change in fair value of contingent consideration |
|
|
(0.2 |
) |
|
|
0.2 |
|
|
|
0.2 |
|
Performance reserve escrow |
|
|
1.9 |
|
|
|
0.0 |
|
|
|
0.0 |
|
(Benefit) provision for income taxes |
|
|
(1.0 |
) |
|
|
2.0 |
|
|
|
0.5 |
|
Loss on foreign exchange |
|
|
0.5 |
|
|
|
0.4 |
|
|
|
0.4 |
|
Accretion of marketable securities purchased at a discount |
|
|
(1.1 |
) |
|
|
(1.2 |
) |
|
|
(1.2 |
) |
Loss (gain) on disposal of assets |
|
|
0.9 |
|
|
|
(0.4 |
) |
|
|
(0.4 |
) |
Loss on debt extinguishment |
|
|
0.0 |
|
|
|
1.7 |
|
|
|
1.7 |
|
Adjusted EBITDA loss |
|
$ |
(14.5 |
) |
|
$ |
(30.0 |
) |
|
$ |
(28.0 |
) |
|
|
|
|
|
|
|||||||
GAAP Gross profit |
|
$ |
1.8 |
|
|
$ |
14.6 |
|
|
$ |
16.3 |
|
Stock-based compensation |
|
|
3.9 |
|
|
|
2.2 |
|
|
|
2.2 |
|
Amortization of purchased intangibles |
|
|
1.7 |
|
|
|
1.7 |
|
|
|
1.7 |
|
Performance reserve escrow |
|
|
0.1 |
|
|
|
0.0 |
|
|
|
0.0 |
|
Non-GAAP Gross profit |
|
$ |
7.5 |
|
|
$ |
18.5 |
|
|
$ |
20.2 |
|
Non-GAAP Gross margin |
|
|
14.5 |
% |
|
|
31.4 |
% |
|
|
33.2 |
% |
|
|
|
|
|
|
|||||||
GAAP Operating expenses |
|
$ |
39.1 |
|
|
$ |
62.5 |
|
|
$ |
64.5 |
|
Stock-based compensation |
|
|
(8.5 |
) |
|
|
(8.0 |
) |
|
|
(8.0 |
) |
Amortization of purchased intangibles |
|
|
(1.5 |
) |
|
|
(1.8 |
) |
|
|
(1.8 |
) |
Transaction costs |
|
|
(0.1 |
) |
|
|
0.0 |
|
|
|
0.0 |
|
Performance reserve escrow |
|
|
(1.8 |
) |
|
|
0.0 |
|
|
|
0.0 |
|
Change in fair value of contingent consideration |
|
|
0.2 |
|
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Non-GAAP Operating expenses |
|
$ |
27.3 |
|
|
$ |
52.5 |
|
|
$ |
54.5 |
|
About Rocket Lab
Founded in 2006, Rocket Lab is an end-to-end space company with an established track record of mission success. We deliver reliable launch services, satellite manufacture, spacecraft components, and on-orbit management solutions that make it faster, easier and more affordable to access space. Headquartered in
+ FORWARD LOOKING STATEMENTS
This press release may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, contained in this press release, including statements regarding our expectations of financial results for the fourth quarter of 2023, strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. Words such as, but not limited to, “anticipate,” “aim,” “believe,” “contemplate,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “suggest,” “strategy,” “target,” “will,” “would,” and similar expressions or phrases, or the negative of those expressions or phrases, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are based on Rocket Lab’s current expectations and beliefs concerning future developments and their potential effects. These forward-looking statements involve a number of risks, uncertainties (many of which are beyond Rocket Lab’s control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including adjustments or changes that may be required after the date hereof in connection with the preparation of our full year and fiscal quarter ended December 31, 2023 financial statements, risks related to delays and disruptions in expansion efforts; delays in the development of our Neutron rocket; our dependence on a limited number of customers; the harsh and unpredictable environment of space in which our products operate which could adversely affect our launch vehicle and spacecraft; increased competition in our industry due in part to rapid technological development; technological change in our industry which we may not be able to keep up with or which may render our services uncompetitive; average selling price trends; general economic uncertainty and turbulence which could impact our customers’ ability to pay what we are owed; failure of our launch vehicles, spacecraft and components to operate as intended either due to our error in design in production or through no fault of our own; launch schedule disruptions; supply chain disruptions, product delays or failures; design and engineering flaws; launch failures; natural disasters and epidemics or pandemics; any inability to effectively integrate recently acquired assets; a US government shutdown or delays in government funding; changes in governmental regulations including with respect to trade and export restrictions, or in the status of our regulatory approvals or applications; or other events that force us to cancel or reschedule launches, including customer contractual rescheduling and termination rights; risks that acquisitions may not be completed on the anticipated time frame or at all or do not achieve the anticipated benefits and results; and the other risks detailed from time to time in Rocket Lab’s filings with the Securities and Exchange Commission (the “SEC”), including under the heading “Risk Factors” in Rocket Lab’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 7, 2023, and elsewhere. There can be no assurance that the future developments affecting Rocket Lab will be those that we have anticipated. Except as required by law, Rocket Lab is not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Notes to Editor: All dollar amounts in this press release are expressed in
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+ Rocket Lab Investor Relations Contact
Colin Canfield
investors@rocketlabusa.com
+ Rocket Lab Media Contact
Morgan Bailey
media@rocketlabusa.com
Source: Rocket Lab USA, Inc.
FAQ
What are the estimated preliminary unaudited results for Rocket Lab's Q4 2023 revenue?
What is the net loss estimated for Rocket Lab's Q4 2023?
What is the estimated GAAP gross margin for Rocket Lab's Q4 2023?
What are the estimated preliminary unaudited results for Rocket Lab's Q4 2023 operating expenses?
What is the adjusted EBITDA loss estimated for Rocket Lab's Q4 2023?
