Dude, the way that they push, oh, sorry.
Yeah. Yeah, you go ahead. You go ahead.
I never know when we're live and people complain that I started with, you know, this is Rocket Lab week and it was always cut in half. So, I usually wait. I think now we're on it.
So, 200 people on the...
I never know if that number is accurate, but so hello everyone. This is a super ball day for us Rocket Lab investors. Super exciting. This is the Rocket Lab Q2 earnings live investor commentary and call. We started a little bit earlier because usually Rocket Lab drops some gems before earnings, usually some videos and releases. So we're here. The minute anything is out, please let us know in the comments. We're also madly refreshing over here and we will just chitchat until that time. So, how are you guys feeling about earnings?
Excited. It's always a fun time. I'm really excited to see what the Q3 revenue guide is going to be. I just have it in my gut that we're going to hit a billion this year in revenue. And if we are, it's got to keep going up.
I'm like 275 to 300 is what something in me is telling me it's going to be around that range, but I don't know.
You're saying we're going to run to this this year.
I think the Q3 guide for revenue will be 275 to 300 million.
Okay. I right now just vibes. I mean, a little bit of like I think the Gaus maybe we'll start to see sales there and then Minarc sales will be in there for the full quarter.
Just to get it out of the way, I know we talked about aside real quick, but just so we don't have to bring it up again.
Yeah, I first of all really appreciate the community. I know that GoFundMe was controversial, but it really helped. It allowed me to not pull the last of my investment out and gives me time to make some other plans here the next few months. I just want to show some appreciation to anybody that has donated or reached out with support in the community. I'm doing much better emotionally, physically, mentally now than I was a few weeks ago. So, I really appreciate the love and support from everybody, but I don't want to go into all the details or get into a lot of it because it still hurts a little bit, but I just want to express that and then not leave it hanging there. So, that was it.
No problems, man. We appreciate you being here and providing value for the community and glad to see you doing well.
Thanks. Really you guys I felt the love. I'm not me getting emotional about it. Let's go on. All right. Rock.
So Jacob, I wanted to kind of not spread fear or whatever. Nothing like that. So it might sound like I'm trying to jinx earnings or whatnot. I'm not. Jake and I were talking last night in one of the Discord chats. One of the things that I'm really curious about this quarter is that revenue guide. What I mean by that is just to give the high level, Q2 revenue guide 225 to 240 million, six launches within the quarter. I did some kind of estimations, but it's not estimations. It's pretty accurate, but we're probably looking at like 50 million between the set of launches that we did see. And I'm quite convinced that that last IQPS one was intended to go off within the quarter. So, I'm curious to see not only that, to see if space systems did buffer that what would be a lag for launch and to take that a step further as well. Rocket Lab started doing that whole recognizing Haste revenue over time rather than at point in time. And that started in kind of heavy in Q2 2025. So I'm really curious to see what happens with that if launch revenue does end up falling a little bit short or if we do have to pull ahead some of that space systems revenue. Just to echo what you're saying in terms of the Q3 guide, I'm curious to see what Q2 ends up looking like in all things considering. But Jacob, you did bring up a good point where it's like, yeah, some of the Haste revenue wouldn't be within this quarter, but then we have what, like 25 new Haste launches in recent history. So maybe those milestones are going to be hit. So maybe we'll see actually a massive quarter for launch revenue just given that early recognition for such a large contract that 20 Haste.
Guys, just to give credit real quick. It was Space Fortune by the way that said that not me for the Haste partial presentation.
Can somebody share it? I don't... Oh, yeah. Yeah, I have it. Okay, let me.
I click on it. It said URL not found. It's probably crashing.
All right. So, 20 Q2 2026 investor update. Record quarter plus post-quarter wins. 234 million record revenue. Q2 revenue up 62% 89.66 million year-over-year versus Q2 2025 with 16.8% growth over Q1 2026. 581 million in space systems contracts across Q2 and post-quarter. 437 million plus in launch contracts across Q2 and post-quarter. 2.36 billion record Q2 backlog plus more than 800 million of new bookings post-quarter. Wow, that's crazy. Transformational acquisitions unlocking new tempos and capabilities. Iridium acquisition announced our boldest expansion yet that is expected to unlock our future revenue in space applications. Monarc and Motiv acquisitions closed, particularly integrating robotics and laser comms into our capabilities and expanding our reach into new programs.
Oh, I have a baby who woke up. Can somebody else take over reading the slides?
Sure. Do you want to link to my screen?
Hopefully loud when I'm reading it. So, here we go. This is my screen now. Okay, cool. Yeah. So, we finished this one. Yeah. On to the next. the 2.36 billion plus more than 800 million of new bookings post-quarter. That's yes, that's cool. So, space applications Rocket Lab, believe it or not, are acquiring Iridium. This combines Rocket Lab's launch capability and satellite manufacturing with Iridium's global satellite communications network in rare spectrum. Rocket Lab becomes a fully integrated self-launching tier 1 space provider, delivering critical communications capability to millions of users worldwide.
Just making sure it's larger. Good.
Rocket Lab becomes an integrated space powerhouse. So from launch complete, spacecraft complete and space applications. So global voice data and PNT services. That's new. Our future in space applications will be unlocked and accelerated. This is our entrance into recurring applications revenue from space. But it's not just the finish line. Rather than simply continuing Iridium's network, we'll build upon it to scale into untapped markets and pioneer new space-based services. Dimensions of PNT, IoT, defense and government, aviation and marine, which is I think that's one of the biggest fine print from this Iridium acquisition is the aviation related stuff. We can touch on that in a little bit. Direct to device is also mentioned as well and mission services. The ultimate combination for growth, expanding capabilities, build upon Iridium's existing network to scale into untapped markets, pioneer new space-based services, and deliver enhanced services across IoT, D2D, PNT, defense and national security, and aviation and marine safety. Streamlining deployment of a new infrastructure. Eliminate third-party costs and fast-track deployment of new on-orbit infrastructure to deliver new advanced capabilities. More efficient use of spectrum. Leverage new technology and capabilities to put Iridium's spectrum to effective use, extracting substantially greater capacity and throughput from the same finite spectrum allocation.
Space Systems $379 million contract to build and launch flats for Space Force SB-AMTI program. Space-based airborne moving target indicator. A large Space Force constellation to detect, track and monitor airborne threats from space. Includes multiple flatellite spacecraft plus options for more launched on Neutron. compelling recognition of Rocket Lab's strategic vertical integration model.
That that's going to be I think this is that's going to be a big program later on. I think it's this is like the first step of what the SDA is turned into. So I think I don't know. I don't think that's I mean not thing like maybe not in the next year, but I think later that's going to end up being another source of contracting revenue.
But by the way guys, why isn't this called a constellation contract? because they're like basically sending up satellites and operating them. And to me, it walks and talks like a constellation. I don't know why they didn't name it.
Because it's the US government that has it. I mean I mean it's SpaceX is doing the larger portion of it. We're basically doing what will turn into trench 2 or the second layer or something like that.
So we are part of an existing con. Okay.
Yeah. We're the second there. SpaceX got the lion share of the largest portion to put it up quickly and then we're the number two for the next iteration.
Yeah, it was really good though. I mean we that's up against Lockheed and you know all the other big names. So we beat them all out for a good contract. That's it's good to me.
New Market Unlocked selected to build GEO satellites for Space Force. selected to build multiple geostationary satellites to deliver space domain awareness for Space Systems Command across multiple contracts totaling more than 160 million. M&A synergy realized with integration of Heimdall payload from the GEOS acquisition. Rocket Lab's first entrance into satellite production for geostationary orbit unlocking a new market.
Either I've been under a rock or this is completely new. Is this new? This was the small contract Jacob and I were talking about.
The what's the PTS the PTSG contract that we got. Remember there was a VIAP that had gotten two when we were doing a bus probably for one and this was our first GEO contract we got. It's PTSG is the program.
Yeah. Well, we're also got our own two satellites we're building. We're most likely building the buses for VIAP as well.
Cool. Cool. There should be four sats total that we're doing. Two of them fully in to the buses.
Cool. I'm glad you're here, Jacob.
Got you. Victus Haze record-breaking responsive space mission. Launch record 16 hours 42 minutes. Launched on Electron with just 16 hours 42 minutes notice. Fastest response ever for TactRS mission. Rapid spacecraft ops 34 hours early. Spacecraft commissioning complete in just 38 hours. 34 hours faster than Space Force's set target. That's crazy. on orbit pursuit 25 hours early tracked and photographed a target adversary satellite in under 59 hours well before the 84-hour cutoff. Rocket Lab Germany delivering European sovereign space capabilities satellite manufacturing. Rocket Lab Germany I like the sound of that. Rocket Lab Germany is pursuing opportunities that could lead to the establishment of satellite bus, payload and spacecraft components manufacturing in Germany. Potential for establishment of regional hub for constellation class manufacturing of components as well as spacecraft assembly, integration and test would enable Rocket Lab to serve commercial, civil and defense space programs across Europe as a domestic provider. Assures access to space. Addresses Europe's launch deficit by bringing a domestic mission tested launch partner to the region to eliminate space access bottlenecks. Provides Europe with resilient and responsive launch capabilities tailored to the region's unique needs.
Really? Yeah. Strategic autonomy and space sovereignty. Europe faces glaring gaps across both launch and spacecraft manufacturing. Rocket Lab Germany addresses these directly, providing the region with new domestic strength to secure, defend, and discover in a rapidly evolving new space era.
Cool. Electron and Haste record demand and backlog. Q2 2026 plus post-quarter launch contracts across Electron, Haste and Neutron 437 million plus record new launch contracts 26 new launches booked and 90 plus launches and backlog highest in company history.
So that 90 plus that's like as of today's date, right? That's my inter.
No, for Oh, wow. Just because it does say plus post-quarter launch contracts.
Oh, yeah. Yeah. I'm gonna keep an eye out for that because that's crazy. Last quarter was 28, wasn't it, for Electron bookings.
31, wasn't it? Or something like that.
Yeah, it was. Yeah, right. It was 28 and then we had that additional three. Yeah.
There's a little fine print at the bottom. includes six optional launches under the US Space Force suborbital launch contract.
Okay, that's the Victus Haze ones from Alaska. It was 12, but then there's option for six more, right? Okay.
Also, just real quick on the last slide, the Germany Minor thing. If you guys remember, they were talking about having PCB printer assembly line stations up there extra at Minarc that was like underutilized. So when they're talking about doing more component manufacturing there that just made me bring it up that minor has facilities there for some of it that seem to be underutilized or they could optimize for some of that stuff but that was it.
In the chat I see a and Jane mentioning that LC4 will have two pads. I'm curious tell us more is do we know.
It's in the there's another there's two more announcements that came out but if you scroll down it will be in the peeking ahead are we?
Yep. I'm doing lots of peeking. I'm doing all the speaking.
Yeah. Yeah. New multi-launch contract signed. So it looks like three with NASA, three with IQPS, and two is it a French prime?
Money says that that's Rathon for SBI contract, but I'm not sure certain, but I bet you is that like like two additional to the one that was signed or is that.
Well, we didn't actually sign any with with Rathon. We signed three for Androl, but Rathon was just SBI partnership, but no official nothing announced for actual launch contracts. I'm just guessing that those two might be for it, but I.
Okay. Okay. Yeah, it is. It's one of those like off-record things, but I'm like 90% sure that they're Oh, well, we'll talk we'll talk offline. Largest launch contract yet, $266 million from US Space Force. Landmark agreement with Space Force's Space Systems Command solidifies Rocket Lab as a flight test leader for missile defense. Roughly 18 suborbital launches first launch within six months. Two new launch pads and a new location launch complex 4 coming to Kodiak, Alaska.
Awesome. Scroll to the next page. This is this is exciting.
Introducing Ghost Global Hypersonic. Oh Let's go. Global hypersonic and orbital spaceport technology. Launch anytime, anywhere. I We're not even through this yet. We're getting a tweet from Kemp within the hour. I'm calling it now. Launch anywhere, anytime. Rockets, launch infrastructure, ground support, and range control systems delivered in shipping containers ready to launch on rapid timelines.
Wow. Let's go. Back-to-back missions. Ghost supports Electron and Haste, bringing dual launch options to responsive launch, national security, and missile defense. Sovereign launch export. This sounds like Germany. Maybe Australia, too.
Bringing a one-stop shop for full end-to-end test regimes and orbital mission missions to America's partners and allies.
What about Japan? We have so many launches from I'm surprised we don't have something from Japan yet. Just between I keep.
They might be trying to protect their their domestic small launch industry because they do have more I mean they are a national they are a space power already but they're just as long as you have enough sovereign payloads you would consider it. Mhm.
Going back to the prior slide, that initial launchpad graphic that we saw when they first announced it, I thought initially is this like AI generated, but this looks like it's a thing, right? Like it's a real launchpad already.
Oh, no. I It's not up there yet. So, this is AI. This is very good AI.
Yeah. Yeah, that one's AI. Yeah, they haven't built it yet. No.
Okay. I mean, I haven't seen it. I when we looked through all the Alaska like their their the contracts for the spaceport there the because it's all public stuff. I there there was some stuff in there about doing the plumbing and stuff like that for the pad that they should be going. But but there's nothing indicating that they already would have built it yet, but this sounds like it's going to be a that's why the launch time's so fast. So they just have to roll them up there and lay them out. I guess I don't know. I'm not sure what the I guess we'll get more details in the call.
This is an excellent mockup though. Looks very detailed. Mhm. Yeah.
Damn. We're gonna have the two prettiest launch sites in the world now. I always like the Kodiak site.
So, flight hardware is coming together. Archimedes engines. We have 400 plus hot fires completed. For the thrust module, we have final fluids and avionics integration. Stage one assembly is underway. Stage two final integration. And hungry hippo fairing is in pre-flight testing.
Uh Jacob, you probably know this better than anyone here. Where are we at with the neutron being stacked?
Oh, I mean I this is the first I'm seeing some of this too. So maybe the let's let's go through the rest of it and then we can talk about it because I new information.
Okay. Stage one is in final assembly. Stage one, production making progress following transition from hand layup to automated fiber placement with barrel section and propellant tank domes moving into assembly and fit out. Production of the stage one tank currently aligns with target delivery of neutron to the launch pad in Q4 2026.
Okay, that wording that wording is no magusto.
Yeah. Um, interstage completed qualification load tests to validate design and performance. Now moving into flight assembly for first launch.
So that that broken interstage that they didn't get through their final qual that that cracked there along the lines. Not this not the stage one tank but where doing the hydro test but the other one that cracked. This is what they're saying they've it's done. It's passed and now it's moved. I mean you can see from looking at it that it's all stacked with stuff.
Nice. Um sorry. So, is it through qualifications?
Yes. Yes. I mean, they wouldn't have put all that stuff on it if they hadn't on the next page. You can see the picture of it. That's the That's the interstage right there, isn't it?
Yeah. Yeah. They wouldn't have put all that stuff on it if it wasn't Oh, they want stage two. Oh crap. Never mind. Keep going.
Because Because isn't it Isn't it the one that cracked where it says like production supports it to be delivered to the pad? Like, isn't that what they mean that it's not fully produced yet? Well, okay. It did say it did say completed qualification load test and validated design and performance. Now moving into flight assembly for personal. So it's yeah it's qualif. The stage one the one that we saw crack. That one looks there was two people. There was two things that cracked. The interstage did and also the stage one tanks. So this is the second thing that came out that had cracked.
Yeah. Target delivery to the launch pad. Mhm.
Um for stage two we have integration then shipping to LC3. So for stage two completing fluids and avionics integration and checkouts. Stage two being prepared to ship directly to launch complex 3 for final test campaign before first launch. Thrust module integration then shipping to LC3. Final avionics and fluid integration as well as engine fit checks completed ahead of testing on the launch pad. Engine testing heading into the final stretch. 400 plus hotfire tests completed across stage one and stage two engines, including beyond the power and mission duty cycle required. Control and durability validated across flight hardware for all major engine components. Full engines set for Neutron's first launch are in production. Once qualification program is completed, these will enter the acceptance test program before being shipped to LC3 for integration. So, it sounds like there's a lot that's still needing to be sent to LC3.
Yeah. Hungry Hippo in pre-flight testing. So, this is at LC3, right? Is that where we're seeing that or is that the like I mean, yeah, outside the facility, but yeah, it's not at the pad, it's at the right. No, it's where we park the cars. Yeah.
Hungry Hippo reusable fairing. Final checkouts underway before Hungry Hippo is ready for flight and attached to the rest of the first stage. New commercial and defense launch is signed. Constellation for Kepler Communications, the first time Kepler has booked a dedicated mission on a commercial launch vehicle launching no earlier than 2028. Um, okay, cool. dedicated launch with multiple Rocket Lab satellites for Space Force's SB-AMTI program to detect airborne threats from space.
That was part of the other bigger $400 million contract.
I can't It says Does it say multiple um multiple multiple? I bet it's only one. I bet you it's only one mage though because they could slot like 15 in there according to those graphics that we've seen of them. But I think there was even a quote I want to say it was like 20 to 25. I can't remember who it was from, but it I know that number because I Yeah, if you manually count I think it's 16 in the image, but it was in one interview somebody kind of threw up the number. Well, it was like it wasn't it wasn't like explicit, but it was one of those things. They're just kind of like, yeah, 20 to 25 satellites in a neutron. And so, it was one of those things kind of reading between the lines. I'm pretty sure they meant flat, but wasn't Yeah.
Yeah. So, some room for for error there. High demand for early Neutron launch slots. so commercial one launch for Kepler communications and seven confidential customer launches.
Rocket Lab. Wow. So that's the other closest eight. I don't know. That's that must be the first two that we ever got. They were confidential and the five from last quarter. So that's their seven confidentials. So this is good. This is another new one. This that means that's eight neutron backlog plus they if you know plus a point-to-point cargo study thing that is more than its own launch. Mhm. I wonder if that just gets baked into one of these eight. I guess.
I that's what I'm expecting. I don't think it's its own launch. Do you think that happens with Venus, too? Do you think Venus just gets kind of tacked onto one of these or is that going to have to be its own?
I mean, it I I don't know, honestly. I have no idea what the where the trajectory needs to go. If it's like a relight thing, I don't know. I was kind of hoping it would be on the first launch because it's been so long now, but we'll see. So for defense dedicated launch for space for space forces. So that just sounds like one dedicated launch for space forces SB-AMTI program national security space launch provider. Um that that we're I'm surprised we haven't seen any contracts from that yet. But I think that's coming.
We have to get a we have to get a flight done first be able to develop. Oh okay. Okay. Um launching US Air Force point-to-point delivery experiment. Um, Iridium neutron capacity will be reserved for launching Iridium's next-gen constellation under a self-launching space applications business model once the acquisition is complete.
It sounds more constraint overall.
Yeah. Oh yeah. Yeah. But but it also sounds like that they're planning to do something with Iridium because you guys remember that they said that the satellites of Iridium are quite new and they don't need to be replenished for quite some time in the future. So if they're saying that they're reserving Neutron, it can only be for a new thing because the Iridium satellites are not old enough yet to Mhm. plus just like looking at the customers that we do know already like we're already booked till like pretty much 2030. I think it's fair to say at this point.
Yeah 2029 2030 depending on the NSL stuff. There's probably some room in there for that. I wasn't thinking we were going to launch new Iridium like a new constellation until probably 2030 anyway.
Yeah, there's no point in, you know, I mean, it's generating cash now unless there's like a step change in what you could put up there that to, you know, it would have to be able to justify growing it really fast to be able to, you know, to pull in the capex turnover or whatever you want to call it.
Do you guys want to go into the financials or you want to watch the cool ghost video?
Oh, I didn't know there's a ghost video. Let's do that.
I didn't know that. Okay. Uh Vince, do you want to take the screen back for the video?
Sure. Let me just find it quickly. Was it on Twitter? It was posted uh YouTube. I don't know if it's on X also, but it's under YouTube. Let me check. Let me check.
I watched it on mute and I can just picture Kemp in the background like stomping his feet and throwing a tantrum. Okay, here we go. Uh, let me remove Scott. Add me. And let's see how bad is the sound.
Rocket Lab has mastered the art of building launch sites. Now we're making them deployable with Ghost. Turning our Electron and Haste rockets into a launch anywhere, launch anytime capability that meets the most demanding missions. Strengthening America's missile defense capability is incredibly important. Analysis only gets you so far. Eventually, you need to be producing hardware and testing it in the field. If you cannot test your missile defense system at a high cadence, frankly, you're just not going to keep pace with the threat because you're not evolving your own capability as quickly as you could. Missile defense testing is often more geographically relevant and so there needs to be missile defense tests in the Atlantic. They need to be in the Pacific. They need to be at partner nations. And so that's why developing the capability to perform those tests in those areas is so important. Pack it, ship it, launch it. Ghost can deploy rockets, infrastructure, ground support equipment, and range control systems from standard shipping containers to anywhere in the world. Speed on stations, speed to orbit, speed to test, speed has been the name of the game in recent national security applications. And so our ability to deploy this quickly, get into a launch campaign, pick it up and move it. Not only does it make it very affordable because you're not spending a lot of time waiting around, but it is exactly what the government has been looking for in terms of moving at the pace of the threat, accomplishing a lot of tests in a given year, and not having to spend a whole bunch of money to do so. Kodiak Alaska was the right solution for the first deployment of our mobile launch architecture really in support of our missile defense customers who needed Pacific access. But it's important to remember that Haste and Electron use the same launch infrastructure. And so not only is this a suborbital capability, but this is now an orbital launch capability that we can bring anywhere in the world. More orbital options, hypersonic flight tests on demand, accelerated timelines. Ghost is purpose-built for rapid activation within days and multiple missions at once, bringing launch to the location that serves the mission. Rocket Lab's approach to deployable launch infrastructure sets us apart from basically everybody else because it's electron and we've demonstrated a high rate reliable launch capability. That's really the discriminator. And so our approach is to bring that level of reliability into a mobile architecture that can be moved around. Now, once you complete a launch campaign, you're able to package that up and move it somewhere else. That somewhere else can be addressing a missile defense application, something suborbital or orbital. And if you can move a launch site somewhere near the equator, if you can move it to a partner nation, now you can address sovereign launch capability and you can address a variety of new orbits which open up new markets. Execution is key. We have the credibility to execute and now we're bringing that into a new application. It's a very exciting time to say that now we have the capability, we have the hardware and the infrastructure to move this around and go address new global markets.
That's that's very cool and a sign of things to come.
Yeah. Yeah. I I I mean I love that you're seeing I mean that's the shipping container in the video. It show it shows them. I mean, so that's probably them testing operations somewhere. But like there was one scene where they opened those doors and I saw snow in the background. Is it snowing in New Zealand or were they already up there? Did you guys see that?
It is actually winter in New Zealand. I don't know if it snows in Mahia, but it's definitely winter for them. That one or Oh, we get a different screen. um yeah. No, I think that's that I mean that's cool that they and they be able to pack it up. I mean that's always been Peter Beck's biggest thing is like I hate pad cost or I hate the overhead, you know, fixed cost of it having being there, but if they're saying like all right, you know, we go up there and do a bunch of these missions and let's say in four or five year like four years that there's not the demand there. Cool. Pack it up, save your save your infrastructure, and then go do it somewhere else or move it somewhere else. I think it's really cool.
It looks like wherever they're opening that container is very cool. They have like parkas on. So, what I'm wondering, maybe that photo wasn't AI, right? Like I but like I don't I don't think it's an actual like I'm willing to bet that's not like the like a properly installed anything like it's probably just like an empty, you know, you know, kind of in the way that Astro just shipped rocket 4 to Lord Null's wear. I don't think that's like an actual like rocket intended there.
Yeah, but that's no way that's a that's got to be AI. They don't have a They wouldn't have had a Electron on the pad with a logo on and everything else, right? Six months out for the first launch. I don't know. None of us none of us knowing about it.
That that's a that's a computer got to be computer-generated.
I think like none of us knowing about it like anything happens basically anywhere on the planet. like we get all the pictures and you know and and how would how how would someone have like an electron standing out in the open and it would just not be well Kodiak has no one there. It's there's no there's no like I mean there's a few people live there but it's a most of the island's like a wildlife protected area but I was going to say we don't have any boots in the ground over in Kodiak. Mhm.
I don't know. I know that that the work they were talking about for pad 4 A and B that they brought up in there where they showed the graphic that is the same thing that has the contracts out for some of the plumbing work on it. So for the connection pieces. So that job is being is is being advertised to like in the state of Alaska up there. So I can't think that it's done yet. So I don't know. We'll see. Guess we'll find out in the fall.
All right. Right. So, moving into financial highlights and outlook review of revenue and gross margins. So, $234 million in revenue in Q2 2026. um let me just bring up Whoops. Oh, hold on. I lost my screen. Give me one sec. Um, 62% year-on-year increase in revenue. Very impressive. um so 69 six sorry $89.66 million year-on-year driven by growth in space systems business primarily due to increased contribution from the SDA trench 2 and trench 3 contracts and our components businesses sequential revenue increase of 16.8% quarter-over-quarter or $33.7 million driven by growth in our satellite platforms business paired with growth in our components business particularly laser communications as we integrate the minor acquisition year-on-year um GAAP gross margin increase was driven by an increase in electron fixed cost absorption due to increased launch cadence and increased average selling price paired with a favorable product mix within our space systems business. Quarter-over-quarter Q2 gross margin decrease was driven by a shift in mix within our space systems business as our slightly lower gross margin satellite platforms business begins to take more share.
A review of backlog $2.36 billion as of Q2 end. um you can see the backlog by segments backlog by customer sequential backlog increase of 6.1% quarter-over-quarter or $136 million driven by significant bookings within both launch segment and space systems as well. We expect approximately 45% of the Q2 ending backlog to be recognized within 12 months and the remaining 54% to be recognized beyond the 12 months. Healthy pipeline, including multi-launch deals and large satellite manufacturing contracts, can create lumpiness in backlog growth given the size and complexities of these opportunities.
Worth keeping in mind while we're on this screen is that we've seen several large like meaningful contracts since the close of Q2.
The earlier in the presentation they said 800 million plus since or almost 800 million or something like that since the close of Q2. So this is gonna jump to probably over three billion next quarter. Nice review of operating expenses.
um GAAP and non-GAAP SG&A expense increased sequentially primarily due to the integration of the minor acquisition. GAAP and non-GAAP R&D expense also increased primarily due to the integration of the minor acquisition paired with continued investment within the Neutron program.
The loss is so tiny now the adjusted EBITDA um so 20 2.4 billion in cash and cash equivalents marketable securities and restricted cash enables continued investment in strategic growth opportunities.
GAAP EPS loss declined sequentially primarily due to the inclusion of minor results following the acquisition close during the quarter which we expect to meaningfully improve as we look to scale the business and realize synergies. Purchases of property equipment and capitalized software decreased $1 million sequentially to $26 million as we continue to invest in the return on investment barge as well as launch and test infrastructure. Negative GAAP operating cash flow decreased $33.7 million dollars sequentially as we continue to invest in scaling neutron beyond flight one and invest in inventory for future flights paired with fees related to the announced transaction of Iridium. Adjusted EBITDA loss improved $2.9 million sequentially due to a strong increase in revenue paired with strong gross margin.
Q3 2026 outlook Expect revenue to range between 250 million to 265 million. So, I guess that's our our billion right there. um expect year-over-year increases in both space systems and launch revenue. uh expect GAAP gross margin range between 29 and 31% driven by weaker mix within several of our product lines. And that would also be non-GAAP gross margin of 35 to 37%. expect GAAP operating expenses of 143 to 149 million and for non-GAAP 121 to 127 million uh for adjusted EBITDA um well a few things here expect interest income of $21 million adjusted EBITDA loss of 17 to 23 million and then weighted average shares outstanding of 641 million.
cool they mentioned the the ATM at all?
I was kind of wondering the same thing. I wanted to know that was done.
So, how are you guys feeling about the the 2023 outlook?
I think it they're gonna I don't know. I still feel like they're going to beat it, but see. Looks good. um I mean, if if that's if that's Q3, I just feel like I mean, the stuff that they're adding in as they've been adding in over this year is that's going to start like ramping. So, I don't know, maybe Q4 will be where we see a huge jump again in revenue guide, but that I mean, that's still really good. I mean, we're growing quarter over quarter. So,
how are you guys feeling about everything? There was one more PR, by the way, that came out. There was three or four three besides the um it was just an at last PR was the establishing Rocket Lab Germany.
Oh, the Germany one. Yeah, cool.
There's stuff in there. Is there is there like any um Okay, so Rocket Lab Corporation has formally announced the establishment of Rocket Lab Germany GmbH. The strategic the strategic expansion is a milestone in the company's international growth and supports potential future scaling of Rocket Lab satellite and component component manufacturing in Germany to provide sovereign space capabilities to Europe. Rocket Lab has already established a foothold in Europe with the strategic acquisition of Minarc AG, a premier provider of laser optical communications terminals based in Munich. As part of Rocket Lab, Minarc will continue to produce its industry-leading optical terminals and develop future optical communications technology. Rocket Lab will apply its proven manufacturing and supply chain expertise to increase Minarc's scale and efficiency to serve European and global demand. With the establishment of Rocket Lab Germany, the company is also pursuing opportunities that could lead to the establishment of satellite payload and components manufacturing in Germany, creating a regional hub for constellation class manufacturing to serve the evolving needs of European customers. Europe is increasingly focused on strengthening its strategic autonomy and sovereignty in space with the next decade poised for an unprecedented boom in European demand that will see thousands of satellites deployed to commercial defense and national security needs. Rocket Lab Germany is intended to not only enable scaled domestic production of satellites and their critical components, but also deliver services on Electron and Neutron, ensuring critical European programs have assured access to space.
I mean that it doesn't that way.
Yeah. But I don't think you can launch Neutron out of shipping containers. I think it's a bit too big.
Yeah. But it doesn't it Do you guys see the same thing as me that it it says that deliver launch services on Electron and Neutron for Europe?
I think so. Yeah. I mean, it's inevitable. It's it's going to happen. Yeah, they've been I mean there's Yeah, they've been talking about needing more launch constantly. So, I mean, yeah,
Their domestic launch market isn't — there's no one stepping ahead over there yet. So, and they can't wait another, you know, five years for somebody else to come in and finally maybe launch small launch. So.
Yeah, it's good for us. And Peter's mentioned in the past, like I'm heavily paraphrasing here, but he said something to the effect of like we're open to launching out of other countries, but they basically have to have like a sovereign payload ready to go. So if they want us to launch for them and provide the payload, we're ready when you are kind of a thing. So them establishing a footprint, especially like, you know, in Germany of all places, that's very very telling.
And it's smart because Germany in addition to having ESA money or the European Space Agency money, but then Germany's — I can't say their name — their military is spending faster than like any other individual country in Europe. So like, yeah, if we're going to do — if we're going to put it somewhere besides obviously having Minaric there, but that would be the country you want to be in.
Mhm. Cool. Do you guys have anything else to add about Germany?
I hope they will launch out of Sweden.
Mhm. Oh, go ahead. Go ahead.
I was just going to say, did you read that last quote from his — from that announcement?
Oh, no. I think you skipped over it. You should read that next quote.
So this is Peter Beck. Europe's space industry is undergoing a profound structural shift towards an era defined by speed, commercial agility, and absolute technical sovereignty, said Rocket Lab founder and CEO Sir Peter Beck. The demand for sovereign space capability has never been more urgent. Europe faces glaring gaps across both launch and spacecraft manufacturing. Rocket Lab Germany addresses these directly, combining opportunities for high-frequency access to space with high-volume satellite production to deploy resilient constellations on rapid timelines. With this strategic expansion, Rocket Lab is making a clear commitment to Europe that ensures the region has domestic strength to secure, defend, and discover in a rapidly evolving new space era.
Yeah, there's also a thing today that came out and said from somebody that they filled a position — Frasier found it — that was one of the head of Europe or Germany, something like that. Sorry, I'm trying to find it. But there was — they were basically saying like they were no longer accepting applications for the position and it was some head position over there. So.
It rings a bell. Yeah. Oh, was that just — oh, I think I just saw it for a glimpse and then disappeared. Ah, I know what you're talking about, though. Interesting.
Okay. So what do you guys think so far?
I think it's a lot of reiterating on the execution that they've been slowly giving us. Like we've seen, I think, the majority of these things. It's good to see the bottom line as usual. I think the Neutron — all the language sounds like probably not Q4. And I think the stock price is reacting a little bit to that. It's not terrible.
It was down last earnings calls too. It never peaked up after hours. I'm thinking it'll be — if whatever the move is going to be, it'll be tomorrow. But.
Yeah, I mean, financially speaking, everything looks great, right? But I think a lot of folks are looking forward to a Neutron update and this doesn't seem — and maybe they'll have more color during the call. So I'm looking forward to that. Excited about Ghost. I mean, that's pretty cool. And I really want to know whether that picture is real or not.
Mhm. Yeah. I mean, I also feel like it's everything you want to see in the earnings. There was just no like wow or big surprise this quarter. It was everything like kind of knew about except for the Ghost. But I have no clue on the Ghost if they have orders for it. What's the TAM? What like — yeah, I don't know. Like I kind of have seen — I think it was Astra and also Firefly that was trying with this that you can ship in containers and launch from anywhere. And none of them got contracts or delivered. It might have to do with the fact that they have zero cadence.
They need a rocket. They can — sorry, Firefly and Astra.
Didn't we see Astra somewhere in Europe recently? They had like a container out there with a rocket for some reason.
Like their whole — yeah. That was so random if you think about it because the tweet went out and then you would think that there's like a follow-up announcement, but now that months have passed and you're like, okay, you just shipped a rocket in a container to England. Okay, random. And even stranger is like in the replies to that he's like, yeah, we're launching at US first. We're like, then why did you send it across the world? Like, what are you doing?
I found that thing from Frasier earlier, by the way. It was their director of European government operations based out of Munich. And that position was — that's no longer accepting applications.
I'm excited for all this so far. It sounds really good. I mean, the Ghost thing's huge. I think them establishing Rocket Lab Europe is going to open up all kinds of — that's how we're getting our foot in the door over there. So I mean, and I don't think contracts are slowing down. We also got MTO, the Mars Telecommunication Orbiter. We should know before the end of September. So I don't know. I'm excited. Bullish. I like what I hear.
I'm also excited. I mean, it's everything you wanted to hear in this report, but I'm going to call it as I see it. I don't think Neutron is launching in 2026. It's — I don't like how they worded it. Even if I get flack for this, I'm like, okay, I don't think — I think after the tank failure, I'm like 2028, it's fine. And you surprise me when it's before 2028. No, I'm just kidding. I mean, I just really hope — like what would be really cool is if somehow Sir Peter Beck could be like, yeah, we found a way how we can maybe scale Neutron faster, like even if there's a delay. If he could say that, yeah, we have done so much testing on the components that the components that we're confident in, we're actually starting mass producing so we can scale faster and we think it can be like 148 or something like this on the scale, that would be really good.
Yeah. I mean, I don't think — and I think if they can, they will, but I still feel like he's not gonna — they're not going to know until that first flight's done. Like that first flight, it will determine the cadence ramp. If it goes perfectly or nearly perfectly, then I feel like we could go faster. But I don't know.
Yeah. It's so hard to tell ahead of time because you never test everything all the way together till the end.
Yeah. It's just, you know, for example, on the interstage, right? Like it cracked and then they understood like, okay, we made a mistake here. So I don't know if these things make them confident that okay, like we can maybe — I don't know. I want to see if we get more color on this.
Mhm. The only thing that I don't understand — I'm not a rocket engineer — that you have like qualifications testing and then it's like acceptance testing and then pre-flight testing and I'm like what the — are you guys testing all the time? Like why can't you just do like one big test campaign and that's it? But like sometimes I wonder, okay, but what do you guys — you hotfire the Archimedes engine like 400 times and then it has to be like acceptance tested at the pad. Like you think that the other guys were just faking or — I don't know. But this, I'm sure there's a good reason. It's just it feels like we go from test to test to test to test to test and yeah.
I mean, I for one am going to be really happy when we have like no major failure in the first 10 launches or so because of them. Something like this. Because imagine it's like flight five and we have a payload on there and then we find something horrible out. I don't know. I would be much happier. Please don't blow up the pad. Do not pull Blue Origin. And you know, like I guess I'm getting more zen about it because I know all this is happening and but.
I — but I mean I don't know, I agree. I feel like — I don't know, I guess I don't know either way. I just know that once they do get it like set straight now that they can — they'll build a ramp faster. What do you guys think, they're going to expand Electron's production line now after the introduction of Ghost? I mean, they're going to be getting closer to that like 50 a year cadence here within a couple years, right? If the rate is going the same direction.
Probably nothing yet. I'd imagine like that'd be a year or two off. Like I'd imagine they'd probably — it'd probably be like closer to the time that they're done scaling or like that Neutron's flying. I think that's when we start to see some serious upgrades. They're already like what, it's like one a week is kind of what they call for now, right?
Yeah, they said about 52 a year.
So that's 50 a year. Yeah. Do you guys think that the Ghost, for example, has to do something with the Iran war? Because there is this widespread rumor that the US is very low on ballistic interceptors and like the administration is really worried that there's no more ways to pressure Iran and now they're willing to walk away from the nuclear deal, maybe just open the strait. And I'm like, is it that suddenly this topic is very hot and everybody's looking for new ways to intercept missiles? Because I kind of wonder — like they said in Ghost that to do the test you need to be in the country. And I'm like, a test is a test, right? And I'm like why is it better that you ship it to somewhere else? And I'm like do they mean that they're going to ship them to Oman or something and try to see — I don't know, just completely speculating here.
No, I mean this stuff was all planned out before the Iran war started. So the hypersonics, like the plus-up they got — the Golden Dome thing went from 175 to 185 billion. That 10 extra billion they got in — like eight months ago, nine months ago or something — was part of it was to accelerate hypersonics testing. So this is a direct line from that. All of this stuff is based out of the Golden Dome stuff and then the military has been behind on hypersonics testing in general. Hence the reason why we have Haste. So I personally don't think this is just directly related to the Iran complex because I mean they're talking about running out of like smart munitions and stuff and we're not — we will help test those munitions but as far as I know we're not planning on producing missiles anytime soon. But.
Yeah, yeah, yeah. Is my connection bad? I saw a comment that it's like my connection is always bad. You guys hear?
Your face freezes a lot but your voice is always good to me.
Okay, okay, good. Voice is what matters.
So, just before the call starts, I put something very quick together. Because one thing that I'm worried about — for lack of a better way to put it — one thing that I'm worried about with Rocket Lab over the next, I guess, two — a year, next few quarters here, is a lot of folks are just going to be like, okay, what's Rocket Lab's earnings? and not factor in anything to do with Iridium at all. But if we were to factor in Iridium — actually, Jacob, can I just share my screen again?
Oh, wait. Hold on. I am sharing my screen, but I have the wrong screen open. Too many tabs. Hold on one sec. Just trying to track down the tab I have. There we go. Take that to full screen. Bring this in. So there we go. So, maybe that's too close. So quick overview. This is Iridium's financials at first and then Rocket Lab's are pulled in from the Rocket Lab tab. Then down below we have ProForma. So this is what the companies would look like as though they've been together this whole time. To make a long story short, Iridium stuff's already plugged in. Rocket Lab's just got plugged in. Only at the revenue level so far, but it's enough to get us to the point where we're able to kind of determine — right here, I'll bring that in — these are the growth rates that we're looking at for each of the — I'm sure it'll be chiseled down once Iridium's brought in, but there are what, six different — or five different revenue streams at the moment. And you can see it goes quarterly, annual, quarterly, annual, etc. On the left here you can see launch, space systems, services. Quick side note, launch and space systems — that would be Rocket Lab. Services, subscriber equipment, and engineering support — that would be coming from Iridium's side. And then total down below doesn't need an explanation. Quarterly revenue, what we're looking at pro forma is actually going to be 9.5% between the two. And we're still, you know, 27% otherwise. So between the two companies, still growing at a very healthy, very respectable, we'll call it mid-20s. And I mean, yeah, worth keeping in mind that it's not just Rocket Lab that we're looking at anymore. It's going to be Iridium over the next few quarters as well.
What's the combined total revenue per quarter?
That'd be 459 would be for Q2 for the total revenue for those.
Okay. So when they merge, it's like basically like a two billion run rate.
Yeah. Yeah. Like we can scroll ahead. Heavy grain of salt because nothing's been weighted or whatever. But yeah, we're north of two billion by the time this closes.
My thing with Iridium and in general is like the whole idea of this whole — I mean my thing is either you believe that there's an explosion in the TAM of everything in the space industry going forward and therefore, you know, maybe it won't come with exactly what Iridium has set up now, but they're moving on — they just — that's why they acquired Arion as well. So like if there's — either the growth rate of the whole TAM is going to explode and I think we'll find a lot of ways to kind of accelerate growth in the IoT market and PNT and stuff like that, or you think that ultimately the TAM of space is a lot smaller and anemic growth is what it's going to be. I'm for one, I'm a bull on space, so I think it's going to continue to grow. Granted, yeah, I know, I'm not saying like I don't know how they're going to do it, but I guarantee that they have thought through like the needing for growth there. And yeah, I'm excited to see what they all come up with because you get the whole — you get their entire engineering teams and all the talent pool plus all these other companies. I mean, I don't know. There's — I'm excited. I feel like they have some really good ingredients to do some really amazing things. So.
But necessarily will it — like you know the day that the deal closes, the growth might be a little bit slower at first for the combined company, maybe, depends on what Rocket Lab itself is growing at that point too. Mhm.
So, I'm listening to the music on the call. The minute it stops, we switch over because I see a lot of people asking. So we're keeping track. Right now, it's jazz music playing on the call. So we're not missing anything.
You know, I didn't see an update — was it returned? There was one passing mention, but nothing too in detail.
Good afternoon. This conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. I would now like to hand the conference over to your speaker today, Mario Baker.
Hello and welcome to today's conference call to discuss Rocket Lab's second quarter 2026 financial results, business highlights, and other updates. Before we begin the call, I'd like to remind you that our remarks may contain forward-looking statements that relate to the future performance of the company. And these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's press release and others are contained in our filings with the Securities and Exchange Commission. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments except as required by law. The company does not undertake any obligation to update these statements. Our remarks and press release today also contain non-GAAP financial measures within the meaning of Regulation G enacted by the SEC. And included in such release and our supplemental materials are reconciliations of these historical non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. This call is also being webcast with a supporting presentation and a replay and copy of the presentation will be available on our website. Our speakers today are Rocket Lab founder and chief executive officer Sir Peter Beck as well as chief financial officer Adam Spice. They will be discussing key business highlights including updates on our launch, space systems programs as well as our pending acquisition of Iridium Communications. We will discuss financial highlights and outlook before we finish by taking questions. So with that, let me turn the call over to Sir Peter.
It's been another exceptional quarter for Rocket Lab with some great wins after the close. We achieved a record $234 million in Q2 revenue, up almost $90 million or 62% versus the same quarter last year. That's a $34 million increase over last quarter's record revenue. For launch, demand is extreme. In Q2 and since the end of the quarter closed, we've signed more than $437 million in bookings for Electron, Haste, and Neutron. This includes a record $266 million contract for up to 18 suborbital missions for the Space Force, our largest launch contract ever. Also, we've seen a massive surge in space systems contracts with more than $581 million signed in Q2 and post-quarter. We ended the quarter with a $2.36 billion backlog. And across launch and space systems, we've signed more than a billion dollars in new contracts across Q2 and the period since the quarter close. It was also a milestone quarter for strategic acquisitions, having closed Manaric and Motive, and of course announcing our intentions to acquire Iridium, which will accelerate our future in space applications and evolve Rocket Lab into a fully integrated space powerhouse.
So with that, welcome to the beginning of our new space applications era. Our pending Iridium acquisition is a strategic move that will combine Rocket Lab's launch capability and satellite manufacturing with Iridium's global satellite communications network and rare spectrum. In short, Rocket Lab will become a self-launching tier one space power, delivering critical communications capability to millions of users worldwide. For years, we've talked about the space value chain in three key verticals. The first is access to space, and we have that with launch. The second is the hardware to do things in space once you're there. That's the satellites and their components. And we have this too. The third and final vertical is space applications. The entire reason for going to space in the first place. This is part of the space economy that provides data services to millions of people on Earth and delivers strong reoccurring revenue. With Iridium, Rocket Lab will have all three of these verticals. I've long since said that the most successful space companies will be the ones that have the keys to space, i.e. can build and launch their own satellites. Rocket Lab is one of only two companies capable of this. Now, by acquiring Iridium, we will accelerate our entrance into the space applications market. It will take a decade or more to build out a constellation from scratch. With Iridium, we are starting with a constellation of 66 satellites relied upon by more than 2.5 million subscribers and delivering more than $870 million in annual revenue this past year. That's an incredibly strong foundation on which we intend to build.
We won't simply continue Iridium's network. We will expand upon it and scale it into untapped markets and pioneer new space-based services. Since the transaction is not yet closed, we are still only in the integration and growth planning stages. There are however some obvious areas to focus on and these are aligned with the growth plans that Iridium has already shared. That includes expanding capabilities in IoT, direct to device and advanced PNT, defense and national security, as well as aviation and marine safety. We can also introduce efficiencies and streamline the deployment of new infrastructure by building and launching our own spacecraft, limiting the costs and risks associated with third parties. We will fast-track our ability to deliver new and advanced capabilities. It's through these growth areas that Rocket Lab will put Iridium spectrum to more effective use, extracting substantially greater capacity and throughput from the same finite spectrum allocation. We are immensely excited at what the future holds once Iridium is part of the Rocket Lab family. For now, we're steadily working through the customary closing conditions, including approval of Iridium stockholders and all the regulatory review processes. The transaction is expected to be completed in mid-2027. To the extent that we are able, we look forward to sharing updates throughout that process.
Okay, onto some space systems updates. Q2 and the weeks after saw us awarded significant contracts across space systems, including a $397 million contract to build and launch multiple Flatellite spacecraft for the Space Force space-based airborne moving target indicator program. This program is a high priority for the Department of Defense and it seeks to establish a satellite network to track aircraft, missiles, and airborne threats globally. And another example of our end-to-end space strategy bearing fruit, Neutron will be launching this mission. Flatellite is our high-performance low-profile spacecraft designed for rapid production and optimized for launch, enabling us to deploy large volumes from Neutron and from other launch vehicles. There has been significant interest in Flatellite from commercial and government customers since we first announced it last year. So, it's exciting for it to make its debut with such an important program. On to the next contract win. We signed two deals totaling more than $160 million to build three geostationary satellites, including a prime contract with the Space Systems Command to build two GEO satellites for space domain awareness. What's more, they will incorporate our Haberdar payload from our recently acquired company, Geost, once again highlighting the success of our vertical integration strategy. Rocket Lab is no stranger to building satellites for low Earth orbit and interplanetary missions, but these contracts are our first step into the government geostationary satellite market. It's an exciting expansion.
We don't just win contracts, we execute on them. There's no better mission that demonstrates that than our record-breaking results for the Victus Haze mission in Q2. The mission from Space Force was clear. Launch an Electron to orbit in just 24 hours. We did this in 16 hours and 42 minutes, a new record. We also designed and built the satellite that it launched. The Space Force gave us 72 hours to commission that spacecraft on orbit. We did it in 38. Then we had 84 hours to track, chase, and photograph a non-cooperative satellite. We did it in less than 59. Victus Haze was the first time that the Space Force had ever seen a single prime contractor deliver the rocket, the spacecraft, and the orbit operations for the same tactically responsive space mission. For Rocket Lab to deliver all three and with record-breaking results demonstrates the advanced capabilities that we're delivering to the Pentagon at a time when space is a key strategic priority.
And finally, Rocket Lab is very clearly a space leader in the US, but recently we deepened our roots in Europe with the acquisition of Manaric. Whenever Rocket Lab makes an acquisition, we don't just carry on running it. We streamline it, introduce efficiencies, scale production, and in many cases, introduce new capabilities. We're planning to do just that with the official establishment of Rocket Lab Germany. There's a real opportunity here for us to establish a regional hub for constellation class manufacturing as well as full-scale spacecraft assembly, integration, and test. This will enable Rocket Lab to serve commercial, civil, and defense space programs as a domestic European provider. A growing presence there also represents an opportunity to address Europe's launch deficit by bringing a domestic, mission-tested launch partner to the region to eliminate space access bottlenecks. Europe faces glaring gaps across both launch and spacecraft manufacturing. Rocket Lab Germany aims to address these directly, providing the region with new domestic strength in a rapidly evolving new space era.
That wraps up the space systems for the quarter. Let's move on to launch. There's been huge demand driving record numbers across new contracts and launch backlog. More than $437 million in Q2 and post-quarter and 26 new launches that grew our backlog to 90-plus launches after the quarter, our highest in history. Operationally, Electron and Haste continue to lead the industry on small launch. We're at 13 launches this year with 100% mission success and on track to beat last year's launch tally too. NASA has signed on for three Electron launches across two missions next year. Commercial constellation customer QPS has signed on for another three launches. This is the third time they've done a bulk buy in less than a year, taking their total number of launches with us to 18. And we've had a confidential defense prime sign up for a pair of Haste launches in 2027. Haste's rapid repeatable flight cadence was the clincher for that deal.
A suborbital launch capability anchors our largest launch contracts to date, a $266 million contract from the Space Force for up to 18 missile defense launches. We beat out legacy defense primes for this contract and it's our second multi-year, multi-launch Department of Defense deal for suborbital missions in five months. These launches will mostly fly out of our new launch location in Kodiak, Alaska, which opens up Pacific access for missile defense testing for our government partner. That's now six Rocket Lab launch pads across three launch sites, giving us unmatched geographical flexibility for all mission types.
Speaking of our new launch location, it's time to introduce Ghost. We've mastered the art of building launch sites. Now we're making them deployable worldwide. Our two new pads in Alaska will be deployed using our Ghost containerized deployable launch site technology. Electron and Haste revolutionize small orbital launch and hypersonic testing. Now we're making it easier to deploy them wherever they're needed most. Whether that's for missile defense testing or sovereign orbital launch capability. With Ghost, we'll deliver the rocket launch infrastructure, ground support, and range control systems in shipping containers, establishing launch capability in new locations on rapid timelines. It's easy to promise mobile or deployed launch systems. It's quite another to have the proven rockets, launch sites, and contracts to back them up. Once again, Rocket Lab is not just talking about it. We're delivering real capability for real missions.
Now, on to Neutron. It's been another really big quarter of testing and integration for Neutron. Every part of the vehicle has now seen significant testing. As with any complex development program, we've had to tweak a few things along the way, but we're moving now into final checkout and assembly of all of our flight hardware before integrating them at the pad. First up, stage one. We pulled the new barrels and domes off the AFP for the stage one tank and are moving those into assembly. For the interstage, new panels are also into the flight assembly after qualification load tests were completed recently. Production currently lines up with our target delivery of Neutron to the pad in Q4 2026. While the window for an end-year launch is narrowing, the work we're doing now is about risk trading. Balancing the timing of our first launch against how quickly and seamlessly we can scale to our 10th launch. Our focus is on the bigger picture and making sure that when Neutron flies, it enters service as a system ready for full-scale production and high cadence launch.
For stage two, the team is completing the install of flight avionics and fluid systems before it's out the door to Launch Complex 3. Once it arrives in Virginia, we'll be doing the integrated fluids testing and running the flight avionic suite to validate stage two's end-to-end performance before we add the Archimedes vacuum engine. That way, we derisk some of the elements early and avoid added time to the schedule. The next section of the rocket at LC3 will be Neutron's thrust module. The auxiliary tanks have been installed and the fluid systems and avionics integration is finishing up. Now, similar story here as well. After the install of the fluids and the avionics, we'll be taking the thrust module through the integrated systems test on the pad. Because the thrust module is the only physical interface between the launch vehicle and the launch mount, running these tests before we integrate the thrust module with stage one lets us derisk how the full vehicle will interact with the pad once everything else arrives.
Down at Stennis, we're heading off into the final stretch of Archimedes engine testing. We've completed more than 400 hot fires across both stage one engines and stage two vacuum engines. While early testing was all about the fundamentals like power level, mixture ratio control, and achieving duration, now it's about durability and the stuff that really matters for a reusable engine. We've been intentionally running engines for extended time to prove its margins beyond what they need for its successful flight, as well as repeated cycles to understand how durable the engines are after multiple restarts and uses. With confidence in the engine, we're already into production with the full engine set for Neutron's first launch. Once we formally complete qualification, those flight engines will go straight into an acceptance test program at Stennis before they're sent up to LC3 for integration with the thrust module. And now to Hungry Hippo. The team has been busy integrating control surfaces, avionics, and fluid systems and its thermal protection system. And soon we'll be getting into pre-flight testing with the most innovative part of Neutron. Once that's done, Hungry Hippo is essentially finished and ready for launch. The next step will be to mate it to the interstage when it arrives. And then that will bring us one step closer to having a full vehicle at the launch pad.
Out of development and into new contracts. As we race closer to first launch, we're seeing huge demand for Neutron's early flights. Like I've mentioned earlier, we've been newly awarded a dedicated Neutron launch contract for the Space Force for their space-based airborne moving targets program. This mission is a strong indicator of the trust that the government has in Neutron to support the most critical national security programs. And then on the commercial side, today we announced a dedicated launch for Kepler Communications to deliver their next set of satellites to low Earth orbit. That mission will expand the capacity of their network with on-orbit compute, optical comms, and hosted payloads. And it's the first time Kepler has booked an entire rocket for their constellation rather than rideshare. Again, another strong signal of the expectation for Neutron to become the industry's alternate ride to space for medium lift missions.
To understand the momentum behind Neutron, you have to look at the broader launch landscape today. Launch has never been so constrained. The Pentagon is accelerating procurement for its top priority programs like we've seen with the NSSL Lane One tripling its ceiling from 5.6 billion to 17 billion. Military spending in Europe has increased and sovereign launch remains a hot topic globally too. The truth is that if you want to book a launch now or especially after 2029, the options are extremely limited. Rocket Lab is uniquely positioned in this sense. We have a proven track record with Electron and Haste and customers know we develop and scale reliable launch vehicles which is why they're coming to us now and locking in Neutron slots early. Neutron is going to help unblock the industry's bottleneck, giving operators a reliable capacity that they need for years to come. That wraps up the operational highlights. Now over to Adam for the financial overview and outlook.
Thanks, Pete. Second quarter 2026 revenue was a record $234 million, which was within our prior guidance range and reflects significant year-over-year growth of 62% and 16.8% sequentially driven by strong contribution from both business segments. Our space system segment delivered $189.5 million in the quarter reflecting a sequential increase of 38.6%. This growth was primarily driven by increased contribution from our satellite manufacturing business along with initial contribution from our Manaric acquisition which closed within the quarter. Our space systems business continues to perform exceptionally well and provides comforting diversification alongside our robust but at times lumpy launch business. Meanwhile, our launch services segment generated revenue of $44.6 million this quarter, representing a 30% decrease compared to the previous quarter despite completing a similar number of launches. This decline is primarily attributable to a shift in the revenue mix between our point-in-time Electron business and our over-time Haste business. This quarter was somewhat atypical for our launch operations as we launched Haste missions for which a significant portion of revenue had already been recognized in prior periods under the over-time accounting method. In contrast, revenue from Electron missions is recognized at the point in time of launch.
Now turning to gross margin. GAAP gross margin for the second quarter was 36.1%, above our prior guidance range of 33 to 35%. Non-GAAP gross margin for the second quarter was 41.5%, which was also above our prior guidance range of 38 to 40%. Key drivers to gross margin this quarter include a shift in mix within our space systems business to our slightly lower gross margin satellite platforms business and initial contributions from our Manaric acquisition which similar to prior acquisitions will need some time to benefit from integration synergies and applying the Rocket Lab operating system and its related scale advantages. Additionally, we recorded a non-recurring benefit from tariff refunds, which was largely offset by an inventory reserve against our Neutron Flight 2 launch vehicle. Relatedly, we ended Q2 with production-related headcount of 1,688, up 240 from the prior quarter.
Turning to backlog, we ended Q2 2026 with approximately $2.36 billion in total backlog with launch backlog accounting for approximately 40% and space systems representing 60%. While bookings across space systems and launch can be inherently lumpy due to the timing of increasingly larger high-impact program opportunities, backlog continues to hold at healthy levels despite the step-up in revenue run rate recognition over the past few quarters. We continue to see a strong pipeline that includes multi-launch agreements and large satellite manufacturing contracts across government and commercial programs. Notably, subsequent to the quarter end, we signed a significant volume of contracts within space systems and launch across all vehicles, which will be reflected in our Q3 backlog and further strengthen our momentum across the business. Looking ahead, we expect approximately 45.5% of our current backlog to convert into revenue within the next 12 months. Additionally, we continue to benefit from relatively quick-turns business across launch and space systems components businesses that drive incremental top-line contribution beyond the current 12-month backlog conversion.
Turning to operating expenses, GAAP operating expenses for the second quarter of 2026 were $142.1 million, within our guidance range of $138 to $144 million. Non-GAAP operating expenses for the second quarter were $115.7 million, which was below our guidance range of $120 to $126 million. In R&D specifically, GAAP expenses increased $1.9 million quarter-over-quarter, while non-GAAP expenses rose $830,000. These increases were primarily due to incorporating Manaric expenses as that acquisition closed in the quarter. Q2 ending R&D headcount was 187, representing an increase of 138 for the prior quarter. In SG&A, GAAP expenses increased $7.7 million quarter-over-quarter, while non-GAAP expenses increased $9.8 million quarter-over-quarter. The increase in SG&A was primarily due to incorporating Manaric expenses again as that acquisition closed in the quarter. Q2 ending SG&A headcount was 442, representing an increase of 61 from the prior quarter. In summary, total headcount at the end of the second quarter was 3,217, up 439 heads from the prior quarter.
Turning to cash, purchases of property, equipment, and capitalized software licenses were $26 million in the second quarter of 2026, a decrease of $1 million from the $27.1 million in the first quarter. We continue to invest in Neutron, particularly for the return on investment recovery barge as well as launch and test infrastructure investments. As we progress towards Neutron's first flight, we expect capital expenditures to remain elevated as we invest in testing, production scaling, and infrastructure expansion.
GAAP EPS for the second quarter was a loss of 8 cents per share compared to a loss of 7 cents per share in the first quarter. The sequential decline in GAAP EPS primarily reflects the inclusion of Manaric's results after the acquisition close, including amortization of intangible assets acquired. GAAP operating cash flow was a use of $84.1 million in the second quarter of 2026 compared to a use of $50.3 million in the first quarter. Similar to the capital expenditure dynamics mentioned earlier, cash consumption will remain elevated due to Neutron development and Neutron tail production as we scale the business beyond the initial test flight and as we procure longer lead items for our SDA programs. Overall non-GAAP free cash flow defined as GAAP operating cash flow less purchase of property, equipment, and capitalized software in the second quarter of 2026 was a use of $110.1 million compared to a use of $77.4 million in the first quarter. The ending balance of cash, cash equivalents, restricted cash, and marketable securities was roughly $2.4 billion at the end of the second quarter. The sequential increase in liquidity was driven by proceeds from sales of our common stock under our at-the-market equity offering program which generated $1.08 billion during the quarter before it was subsequently terminated. These funds are intended to support acquisitions such as the recently announced Iridium acquisition as well as other targets in a robust M&A pipeline alongside general corporate expenditures and working capital. We exited Q2 in a strong position to execute on both organic and inorganic growth initiatives and to further vertically integrate our supply chain, expand strategic capabilities, and grow our addressable market. Consistent with what we have done successfully in the past. Adjusted EBITDA loss for the second quarter of 2026 was $8.8 million, which was well below our guidance range of $20 to $26 million loss. The sequential improvement of $2.9 million in adjusted EBITDA loss was largely driven by higher revenue and strong gross margin.
With that, let's turn to our guidance for the third quarter of 2026. We expect revenue in the second quarter to range between $250 and $265 million, representing 10% quarter-over-quarter revenue growth. At the midpoint, we anticipate GAAP gross margin to range between 29 to 31% and non-GAAP gross margin to range between 35 to 37%. These forecasted GAAP and non-GAAP gross margins are accounting for a shift in mix within our space systems business and we expect a beneficial remixing impact on gross margins as we look beyond Q3. We expect third quarter GAAP operating expenses to range between $143 and $149 million and non-GAAP operating expenses to range between $121 and $127 million. The quarter-over-quarter increases are primarily driven by ongoing Neutron development and spending related to flight 1, including staff costs, prototyping, and materials. However, we expect to see a shift in spending from R&D to flight 2 inventory, which is an encouraging sign of progress as we move closer to Neutron's first flight. We expect third quarter net interest income to be $21 million which is generally a function of higher cash balances. We expect third quarter adjusted EBITDA loss to range between $17 and $23 million and basic weighted average common shares outstanding to be approximately 641 million shares. Lastly, consistent with
Prior quarters, we expect negative non-GAAP free cash flow in the third quarter to remain at elevated levels driven by ongoing investments in Neutron development and scaling production. This excludes any potential offsetting effects from any financing activities in the quarter. In summary, Q2 was another quarter of strong execution. We continue to see exceptional revenue growth across the business, all while maintaining robust liquidity to fund future growth initiatives. We expect this momentum to continue guiding to strong revenue growth as our satellite platform's business scales exceptionally and Neutron progresses towards first flight. And last but not least, here are some of the upcoming investor events that we'll be attending in the next few months. And with that, we'll hand the call over to the operator for questions.
Thank you. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. One moment for questions. Our first question comes from Andre Shepard with Caneritz Herald. You may proceed.
Hey everyone. Good afternoon. Congratulations on the quarter and all the great progress, and thanks for taking our questions. Maybe one on Neutron and one on Iridium. So on Neutron, it's great to see all the recent progress. I guess I want to maybe move past the first launch and talk about scale. You know, in the past you've given us some cadence on Neutron first launches, but I guess my question there is how quickly do we think we could potentially get to 10 launches and additional scale? Is there a possibility to perhaps accelerate the ramp process? And then finally, with the space industry still significantly constrained on the launch side, how are you thinking about ASPs going forward? Is there an opportunity perhaps to increase ASPs both of Neutron and maybe Electron and Haste as well? Thank you.
Yeah, Andrew, good to chat to you. So thanks for the question. So with respect to Neutron, I guess one of the questions that I think people should be asking us is, obviously the first flight is extremely important, but what about flight 10? Because that's probably the, apart from first flight, the second most important thing, and how quickly we can scale into cadence is absolutely critical. So I think as we're kind of working forward with the vehicle right now, the way we're thinking about things is it's not just to get to the pad quickly for flight one. Of course, we all want that one, no one more than I, but it's really about how do we get to flight 10 in the shortest time possible. So for us that's really all about reusability, and we're constantly trading the timelines and the qualification criteria for the various systems and subsystems to get to the pad for flight one but also making sure that when it comes to flight 10 that we don't have to go back and re-qualify things. So there's a constant assessment along that way. And I think a ramp that we've sort of explained to everyone is a 1-3-5 ramp, and that's been kind of educated from what we did with Electron. But for Neutron, it really is all about reusability. And the more robust we can fall into reusability, then the faster we can scale it. And clearly you've seen the strain in the launch industry right now and the need not just for new vehicles but new vehicles at cadence. So I guess that's how we're sort of balancing all those things. And I'll let Adam comment on the ASP.
Yeah. No, look, I think on the ASPs it's really a function of what's going on in the broader launch market. We brought Neutron to market with a $50 to $55 million ASP with a commitment really not to do any significant discounting for early launches, and we've stuck to that. We feel very good though about where the market is from a supply versus demand perspective, and I think right now the view is that we see more upside to ASPs and certainly to anything that's down or sideways. So I think we feel good. I think it's left us room to move pricing as demand continues to firm up. And again, I think there's probably more upside in that mix than downside.
Excellent. Thank you both. Really appreciate all that color. And maybe just a quick one on Iridium. So, Peter, you touched on it a little bit in our prepared remarks, but just wondering if you can maybe elaborate a bit further on the overall combined strategy. What new opportunities does Iridium unlock both through vertical integration and with their 60-plus constellation? What new awards and opportunities can you now pursue? And maybe separately, how will you ultimately think about assigning Neutron launches to Iridium's new constellation and new customers? Thank you.
Yeah, thanks. So I mean obviously we're very excited about it. I think there's a lot of obvious synergies. I've always been very clear that the large space companies of the future are going to have the ability to launch their own satellites that they built themselves on their own rocket. I think that's very clearly demonstrated as being superior. So that's obviously really exciting. We've got a lot of areas that we think we can grow that business. And if you look at the cost of what it cost Iridium to put up the initial constellation, and we sit here on the back of an envelope with what we could do it for now, it's pretty stark. So we think there's lots of opportunities there. And then I think your point is right. We also, as we're thinking about Neutron's capacity, and in this environment where demand is extreme, we need to obviously serve the commercial market, we need to make sure that we have some launches left for our government customer as we've been onboarded onto the NSSL program, and we also need to make sure we have capacity for ourselves because ultimately our intention here will be to improve that constellation. So it's all a bit of a juggling act for sure.
Wonderful. Thank you so much. Congrats again on the quarter. Looking forward to Neutron. We'll pass it on.
Thank you. Our next question comes from Jeff Henry with Craig Allen Capital Group. You may proceed.
Great. Thanks. Thanks for taking that question. So Peter, on Iridium for a second, just, you know, obviously they come in, they bring some real nice profitability and a presence in the applications market which you want, they bring slower growth. And I know you've been pretty impressive with previous acquisitions particularly on margins, but here you're going to have to really try to reaccelerate or accelerate that top line. Like what are the lowest hanging fruits so to speak in terms of things that you can do over the shorter to intermediate term to accelerate their top line?
Yeah, it's a great question. So, firstly, it's a quintessential Rocket Lab deal in the fact that we're not buying a big hole in our P&L as you point out. So they bring some nice profitability and the constellation itself is good into 2035. And you also point out correctly that it's a relatively slow-growing business. But for us, as we think about some of the initiatives that they've already embarked on to grow, I think we can supercharge those, especially in the area of PNT, and with a relatively modest tweak to a constellation add a whole bunch more capability. But I also think it puts us in a totally different position from the perspective of some of our government customers because previously we can go along to our government customer and they give us full credit that we can design and build launch vehicles, and you jump on a Rocket Lab launch vehicle and you have no concern about getting to orbit. Also the same goes for building spacecraft. I think we've demonstrated we can build anything from a low-Earth orbit comms bird through to something that goes to Mars. But where it gets a little bit tricky for us is to put our hand in our heart and say, well, we can do a mission-critical, life-critical constellation and provide services and manage all that credibly. Before an Iridium acquisition we couldn't do that. So I think we turn up to a government customer and commercial customers in that sense with just a whole new set of toolkits and capabilities that really sets us apart from everybody else, really apart from one other provider in the market. So I think that in itself provides a lot of opportunity but our focus is rightly so with the acquisition from day one will be growth, growth, growth.
Yep. Makes sense. One last for me on Ghost. Very interesting. Talk a bit more about that. What infrastructure is needed at the site? It sounds like you bring a lot. There's clearly going to be some things that have to be there, but I'm particularly interested in kind of what business can or will this capture that you couldn't otherwise capture, and really what was the genesis of the idea?
Yeah, it was really a request from a customer. They have very important needs for the Haste program and to be able to service those needs we need to be able to be a little bit more mobile than we are. So it's not a, maybe we'll build it and someone will be interested in that capability. We're definitely directed to that capability and we don't need a lot. We've built three pads for Electron to date. And the one thing I'll say that with Neutron, what used to feel like big pieces of steel feels, on an Electron scale, feels like very small pieces of steel now. So to move launchpad infrastructure around on Electron scale is really quite arbitrary for us at this point.
Yep. Fair enough. I'll leave it there. Thanks so much.
Thank you. Our next question comes from Trevor Walsh with Citizens. You may proceed.
Great. Hey Peter and Adam, thanks for taking the questions. Maybe just a follow-up or feedback on the Ghost question. Is there a way we should think about the price per launch or the revenue per launch and then maybe the cost structure around those now Ghost-enabled launches as compared to an Electron launch or even a Haste launch? I know I think Haste you were able to charge more. So just curious if as we do more of these Ghost capability launches if that's going to kind of change the financial profile a little bit of those.
Yeah, look, I think obviously these are Haste missions. They're just happening out of the west coast. So I think you should look at pricing to be pretty consistent with what we've been showing on Haste. I think overall again as this type of mission becomes more strategic and important, particularly if certain elements of Golden Dome continue to proliferate the way many think that they will, there'll be more demand for these types of things. So it feels like we could be in the early phases of Haste demand. I think certainly we've seen great demand and great backlog build in the last few quarters. But as that continues, again we think we're in a very enviable spot with regard to unique capabilities to deliver these kind of missions for the government customer, and we also think there's international opportunities as well. So if Haste kind of behaves like other parts of the Electron portfolio where ASPs have gone up pretty significantly over the years, we could be looking at the same kind of opportunity for Haste across both our Virginia pad, the new pads in Alaska, and then of course even opportunities from New Zealand.
Great. Thanks. Perfect, Adam. And then maybe one quick follow-up semi-related for the new Kodiak site. Is there going to be a step-up in capex kind of associated with that that's maybe not already accounted for? How should we think about that in terms of like the comments you've made around capex kind of for the balance of the year? Thanks.
Yeah. No, there's some capex required for that. But again, as Pete was mentioning, in the context of what we've been dealing with Neutron, it's relatively in the noise, and the contracts that we engage with have some capex funding in them. So yes, they'll show up in a capex increase, but they're funded under that agreement to a large part.
Got it. Great. Thanks both. Appreciate the questions.
Thank you. Our next question comes from Addison Yu with Deutsche Bank. You may proceed.
Hi, good afternoon. Thanks for taking our questions. Wanted to come back on Iridium and I'm curious. I know you mentioned it technically it can run till mid-2030s but how are you thinking about the timing and sort of the potential synergies you might have with the next-gen constellation? And then obviously the landscape is going to change a lot by 2035. So is the idea to actually deploy the next-gen constellation sooner?
Yeah. Hey Addison. So you're right in the fact that the landscape for direct-to-mobile and services from internet from space is going to change a lot, but one of the really nice things that we liked about the Iridium business model is these are L-band, so rain and weather penetrating, indoors penetrating spectrum, because not all spectrum is the same as I'm sure you're aware, and just the safety-critical and stickiness of the current applications. So I guess I'm less concerned about, I'm happy to let the larger players fight over some of those internet-space type markets. Meanwhile, we think what Iridium has, particularly with the L-band spectrum, is very important today but actually going to be more important in the future. So I guess the landscape for me doesn't look vastly different. And I think it was also too early to pontificate about a new constellation. Now clearly the whole point of this is that we are a self-launching machine now. So there will be a constellation but I don't think we're ready to talk about exactly what that's going to be right at this early stage.
Understood. Understood. As a separate topic, you obviously won several pretty big satellite awards. You have Flatellite, you have the GEO award. Maybe it's for Adam. Any sense on the timing of the ramp of these contracts? Are these fairly linear or are these going to be a bit more lumpy? Thank you.
Yeah, no, I think our contracts again on the government side are pretty typical. I mean these programs are ones that last for, call it, four years and the kind of 10-40-10 kind of curve is still looking to be approximately right. Each program is a little bit different but I think that's a good way to model it going forward.
Thank you. Our next question comes from Jan Engle with Bear. You may proceed.
Good afternoon Peter, Adam. Congrats on another set of great results. I think I'll start with the spacecraft component supply chain as a whole. Just obviously you guys benefit internally just given your vertical integration, but as other companies and customers of yours start to try and ramp up their satellite constellations and you just look at some of these components - reaction wheels, laser terminals, solar panels, thrusters - where do you guys sort of see the biggest opportunity across those components and what's the capacity like looking at your factories today versus over the next couple years as launch cadence picks up and as more satellites go into orbit. Thank you.
You know, thanks for the question because I think people think of launch as a big moat, and launch, yes, launch is a really really big moat, but equally well spacecraft components is a big moat because if you just turn up in the industry and say I want a thousand reaction wheels then your chances of getting them are almost zero. Unless you come to perhaps us. So I think we've built a decent sense of scale within all of the components businesses but I very much look at it as a moat, and I think probably when some of the analysts that have been on with us here for a long time, when we first announced a solar company in Albuquerque you were thinking what on earth is Pete on, but you can see now that we've scaled that to being the largest space-grade solar manufacturer in the world, and every single satellite needs solar and tremendous amounts of it. So I think the components element continues to grow year after year and as more constellations and more spacecraft come into production that only continues to grow for us.
Yeah, and I would add to that that being a components provider on a merchant level is interesting. It's a growing business for us. Most of those products have very nice margins associated with them. It's more strategic than that for us because really what we do is, as you look at the strong backlog growth that we had on the program side of things, that's really enabled to a large part because we're able to eliminate margin stacking and just be that much more competitive in going after these large strategic programs. So the ability to basically take advantage of scale as a merchant provider and then further use that internally to be more competitive on these larger programs as you've seen us be successful in closing on, that's really kind of where the magic all comes together. It's more than just kind of playing in a healthy merchant component market. It's really about kind of feeding and enabling this much more strategic capability-building part of our platforms business.
Perfect. Thanks, Peter. Thanks, Adam. A quick follow-up if I may. Just returning to the Haste contract, the $266 million contract. Are you guys sort of going to break out the cost between sort of launch and actually building the pad? Because I think if you just look at the 18 launches then it implies sort of a $50 million ASP which I don't think is potentially correct. Maybe there's some launch infrastructure that's being funded as part of the contract, but maybe just on Haste as a whole on ASPs, and then just sort of what's the negotiations looking with commercial customers, because I think in May you guys booked your first contract with Andrew, but what's sort of the follow-on? What's that look like on Haste for commercial customers specifically? Thank you.
Yeah, so you're absolutely right. There is a bunch of stuff that's mixed into that overall $266 million contract value. I mentioned earlier I think when the question was asked there is some funding in there for infrastructure. So I mean obviously these launches will come through, when we recognize the revenue based on the standalone price for those launches. There'll be separate revenue with regards to continuing operations and so forth. And of course the infrastructure buildout will show up in incremental capex spend and then depreciation and amortization. So I would say overall nothing that you see in that contract will change the margin profile of that Haste business, which is actually coming along quite nicely if you look in the overall scheme of kind of Electron and Haste. So yeah, I don't see any difference there. And on the commercial side of Haste, maybe Pete you want to speak to that.
Yeah. Certainly seeing more interest, and as some of these large defense programs come to fruition, Haste has really proven itself as the go-to solution there. So yeah, plenty of interest and conversations and stuff going on there.
Perfect. Thank you. I appreciate it.
Thank you. Our next question comes from Eric Rasmusen with Stiefel. You may proceed.
Yeah, thanks. Maybe my first on Iridium. I know still early days. You outlined a few target markets. Initially they're looking to go after the narrowband IoT services. But at what point or would there be an opportunity maybe to look at the broadband layer? And if so, what would that entail if that's a road that you wanted to go down?
Yeah, Eric. I mean, it's the wrong kind of spectrum for a broadband. I mean, the L-band spectrum has very unique advantages compared to some of the more broadband spectrum. And I've learned to never say never, but I think the two most wealthiest people in the world are going after that, and that's quite a challenge to go and compete. But we see value in other places where you could have the most amount of S-band spectrum you want and the most amount of satellites you want but if you don't have an L-band spectrum there's going to be certain things that you just can't do.
Gotcha. Okay. And then maybe just, Adam, you talked about Minaric gross margins being pressured initially. Where are the margins today in that business and what's the target margin profile and when do you think you might get to that framework, that time frame to get to that target profile?
Yeah, look, I think the gross margins for Minaric coming out the gate, they're always going to be a little bit lower. I mean I think that as people know, that asset had some challenges, had some supply chain issues, went through an insolvency process, and so we're in the process of building that back up. I would say that, if you think about where, and I can't really comment because it's been less than really a quarter that we've owned the business. So I don't want to go into too many details on where gross margins are falling out. We're still doing some work there, but going forward, we think this business will really kind of look in line with the rest of our space systems merchant business. May take us a few quarters to get there. I think you may recall because you've been along on this journey for quite some time. When we acquired Cilero, the margins were quite challenged, call it high single digits, and we were able to get that in line with our overall target for the business. This won't take nearly that long. This is one where we've been able to take relatively decisive action on understanding what need to be done to get the margins up. We're also facing increased volumes in that business over the next several quarters. So we have a combination of revenue growth and some cost efficiencies that are really going to get the business into fighting shape relatively quickly.
Thank you. Our next question comes from Alex Potter with Piper Sandler. You may proceed.
Hi there. This is Ben Johnson online for Alex Potter. I guess first question is, can you guys just kind of walk through the big milestones that you view as the highest risk to getting Neutron to the pad in Q4?
Yeah. Hey Ben. Probably the stage testing is always the thing that gets your adrenaline running because you have fully fueled vehicles on the pad and you're igniting the engines for the first time. And I think you can also see for another space company that when that doesn't go well, it really doesn't go well. So I think that's always the last big milestone before flight, and then depending on how much granular detail you want to go into, then there's an ever-decreasing series of important milestones, but once you see some stuff rolling outside that looks completely finished and doing tests, I think those are good pointers.
Great. Thank you. And then my second question is on, so you previously talked about the benefits of establishing a footprint in Europe with the minority deal. What are some of the initial green shoots you've seen? Can you elaborate on the interest you've seen from customers in Europe? And is that primarily on the satellite or launch side?
Yeah, Europe is a really interesting market. It's typically been extremely sheltered. But with the recent geopolitical tensions, all of the European nations are looking for sovereignty, and a good example of more recently is Germany had put over $40 billion in place for a satellite missile warning system along with other things, and typically that would have been outsourced to other nations. So even in that alone, that's an area that Rocket Lab has tremendous experience in now and capabilities. So the challenge of course being that Europe generally hasn't got a lot of these capabilities. So they need a lot of help to get there. And then on launch itself, we'll see, but clearly Europe really only has a couple of launch vehicles that are launching relatively infrequently, and if you're trying to build whole constellations of systems then you might need some help with launches also.
Thank you. Our next question comes from Christine Leewag with Morgan Stanley. You may proceed.
Hey, good afternoon everyone. I just wanted to follow up on free cash flow. Can you provide more color on the higher expected cash burn in the quarter? How much of this was driven by higher than expected Neutron development cost versus acceleration of inventory to support future launches?
Yeah, well you pretty much hit the nail on the head, Christine. So a significant amount of the spend, or cash flow consumption in the quarter was driven by building out these subsequent tails for Neutron. So we're, as you can imagine, Pete talked earlier about the importance of getting to rate quickly. And so for the parts of the rocket that we think are at low risk to needing some kind of a change as a result of the first test launch later this year, hopefully, that really is kind of informing what we're building ahead on. And then I would say also the Minaric acquisition, I mentioned earlier it had some supply chain challenges and so forth, and so we basically had to replenish that supply chain and that was part of the step-up in the quarter as well, but we think we have that well in hand now. So that should be in a much more normal place. So it's really a combination of the Neutron tail buildout plus getting Minaric kind of tucked back into shape and firing on all cylinders.
Great. And just following up on Neutron then with the order that you're able to receive with the ASP that you are targeting, does this mean that we should expect more acceleration of Neutron orders especially as you get closer to the test flight? And I just wanted to follow up on my free cash flow question earlier. How should we think about the cadence of free cash flow through the rest of the year? And is Q2 the peak in free cash outflow?
Yeah, I'll let Pete talk about the Neutron question.
Yeah, hi Christine. I would say with Neutron, we are being very strategic and very thoughtful about our sales there. We have, as we've discussed, we have a 1-3-5 cadence. Hopefully we'll do a lot better than that. But we have commercial customers already signed. We have government customers, you saw NSSL nearly tripling their budget for NSSL launch. So we need to make sure that we've got capacity for that customer. And as I talked before, we've got our own aspirations and needs. So I've personally never seen launch so constrained in pretty much ever. Other launch providers are backing off and focusing on their own needs as well. So the amount of launch that's left in the industry is really really tight. So for us, it's being very thoughtful about which customers we sign up to at this point going forward.
And then coming back to the free cash flow question, it's still very much a function of the timing of the first successful test launch of Neutron. We've been pretty consistent in pointing towards that will be the real turning point where we go to adjusted positivity in the quarter after that event happens. But then we've also been pretty clear that it's going to probably be 18 to 24 months after that pivot that we get to cash flow positivity. Because we'll have to continue to invest in a fleet of tails to build up for Neutron. So I think that's really, I'd say those are kind of the two most driving factors. Now, of course, pending the closing of the Iridium acquisition, the table gets reset pretty significantly. So as we've talked about, that business generates pretty significant free cash flow. So I think we'll have a lot of things to update folks on once we get closer to the timing of closing that deal, but on a standalone Rocket Lab basis, it really is driven by the Neutron test timing.
Thank you. Our next question comes from Ryan Coun with Needham and Company. You may proceed.
