Rocket Lab eyes big defense opportunities with new acquisition

Rocket Lab is increasingly signaling its evolution beyond being solely a launch services provider, with its second-quarter financial results highlighting a significant push into space systems and strategic acquisitions aimed at bolstering its defense sector opportunities.

The company’s second-quarter earnings report, released Thursday, reveals that its space systems division is now the primary revenue driver, surpassing its launch business. This shift underscores Rocket Lab’s diversification strategy, particularly through the acquisition of a new optical payloads company, which is expected to enhance its competitiveness for lucrative government contracts.

Rocket Lab achieved a record total revenue of $144.5 million in the second quarter, marking a 36% increase year-over-year. The space systems segment alone contributed $97.9 million to this total. Despite the revenue growth, the company’s net loss widened to $66.4 million for the quarter.

Founder and CEO Peter Beck pointed to a “busy quarter of M&A activity” as a key factor in the company’s progress. Rocket Lab is nearing the completion of its $275 million acquisition of Geost, a firm specializing in optical payloads. This strategic move will establish a new business unit, Optical Systems, dedicated to scaling the manufacturing of electro-optical and infrared sensors.

These advanced sensors are critical components for applications such as missile warning, tracking, and enhancing space domain awareness. The acquisition is a cornerstone of Rocket Lab’s broader strategy, explicitly detailed in its earnings presentation, to actively bid on multi-billion dollar Department of Defense (DOD) initiatives, including programs like Golden Dome.

Rocket Lab has already secured significant defense contracts, including an $515 million deal to build 18 satellites for the Space Development Agency (SDA). These satellites are designed to support the SDA’s constellation for tracking missiles, and Rocket Lab has commenced production following confirmation that the satellites meet the DOD’s mission requirements.

On the launch front, Rocket Lab reports steady progress towards the inaugural flight of its larger Neutron rocket. The launch complex situated in Virginia is anticipated to be completed in the third quarter of this year. Hardware for the Neutron rocket is en route to the site, and the new Archimedes engine is undergoing rigorous daily testing.

The company anticipates an “all-out effort to get Neutron to the launch pad before the end of 2025.” Rocket Lab concluded the second quarter with $564 million in cash and cash equivalents. Looking ahead, the company forecasts revenues between $145 million and $155 million for the upcoming third quarter.