RKLB 10-Q: Smart Summary

Business description: Rocket Lab Corporation is an end-to-end space company headquartered in Long Beach, California, with wholly owned operating subsidiaries in the United States, New Zealand, Canada, and Australia; it operates one of the only private orbital launch ranges in the world, located in Mahia, New Zealand. Its historical core is manufacture of small-class launch vehicles and related launch services, with current innovation areas spanning medium-class launch vehicles, space systems design and manufacturing, on-orbit management solutions, and space data applications.

Holding company reorganization: On May 8, 2025, Rocket Lab USA, Inc. announced plans for a holding company reorganization; on May 23, 2025, the reorganization was implemented via a merger in which Rocket Lab Merger Sub, Inc. merged with and into Rocket Lab USA, with Rocket Lab USA surviving as a wholly owned subsidiary of Rocket Lab Corporation, which became the successor issuer to Rocket Lab USA.

• Basis of presentation: The unaudited condensed consolidated financial statements are prepared under U.S. GAAP on the same basis as the annual statements; the Reorganization was accounted for as a reorganization of entities under common control and is reflected as if it occurred at the beginning of the earliest period presented. Certain prior-period amounts have been reclassified to conform to the current period presentation.
• Accounting policies unchanged: There have been no significant changes to the Company's significant accounting policies during the three months ended March 31, 2026.
• ASU 2024-03 (DISE): The FASB issued ASU No. 2024-03 in November 2024, requiring disaggregated disclosures of income statement expenses and selling expenses; effective for annual periods beginning after December 15, 2026 and interim periods after December 15, 2027, with prospective application (retrospective optional); the Company is assessing the potential impact.
• ASU 2025-06 and ASU 2025-10: ASU No. 2025-06 (issued September 2025) modernizes internal-use software accounting by removing development-stage references and is effective for annual periods beginning after December 15, 2027; ASU No. 2025-10 (issued December 2025) establishes recognition, measurement, and presentation guidance for government grants — a grant is recognized only when it is probable conditions will be satisfied and the grant will be received — and is effective for annual periods beginning after December 15, 2028; the Company is assessing the impact of both standards.

• Contract balances: Accounts receivable, net was $75M as of March 31, 2026 (vs. $39M at December 31, 2025); contract assets were $75M (vs. $61.6M); contract liabilities were $241.4M (vs. $195.4M), with the Q1 2026 increase driven by $131M in customer advances received or billed, net, partially offset by $85.2M of unearned revenue recognized.
• Backlog: Remaining backlog totaled $2.2B as of March 31, 2026; approximately 36% is expected to be recognized within 12 months and the remaining 64% beyond 12 months.
• Concentration risk: Kratos SRE, Inc. accounted for 21% of total accounts receivable, net as of March 31, 2026; a government customer accounted for 36% of total revenue for the three months ended March 31, 2026.
• Customer financing: As of March 31, 2026, the Company held $9M in current and $15.2M in non-current customer financing receivables under subordinated loan and security agreements bearing fixed rates of 9.5%, 10.8%, or 12.6%; interest income on these receivables was $562,000 for the three months ended March 31, 2026 vs. $380,000 for the three months ended March 31, 2025. The MDA Contract (entered February 2022 for 17 spacecraft buses) faces delivery delays due to supply chain issues, potentially exposing the Company to liquidated damages claims, though the net amount cannot be determined with certainty at this time.

• Rocket Lab USA acquired GEOST (closed August 2025): Rocket Lab USA closed the acquisition of GEOST LLC in August 2025 pursuant to a Stock Purchase Agreement with LightRidge Solutions Holdings LP and LightRidge Interco Solutions Holdings, Inc., purchasing all issued and outstanding shares of LightRidge Interco (owner of GEOST) for aggregate consideration of $275M consisting of approximately $125M in cash and 3,057,588 shares of common stock, subject to customary closing adjustments; actual purchase consideration at closing was $290.2M, comprising cash consideration of $134.3M, fair value of common stock issued of $137.7M (3,057,588 shares at closing price of $45.02 on August 11, 2025), and contingent consideration of $18.3M classified as a non-current liability.
• Earnout provision: The GEOST Purchase Agreement provides for up to $50M in potential additional post-closing cash earnout payments to LightRidge Solutions tied to revenue targets of the GEOST business for 2026 and 2027; the contingent consideration liability was fair-valued at acquisition using a Monte Carlo simulation with revenue volatility of 29%, discount rate of 10%, and projected financial information.
• Purchase price allocation — intangibles and goodwill: Identifiable intangible assets acquired totaled $183.3M, consisting of developed technology ($172.3M, 10-year life) and backlog ($11M, 5-year life); goodwill of $134.7M was recorded, allocated to the space systems operating segment, and the majority is not expected to be deductible for income tax purposes.
• Pro forma results: Unaudited pro forma total revenues assuming the acquisition occurred on January 1, 2025 were $130M and pro forma net loss was ($66.4M) for the three months ended March 31, 2025.

• Portfolio totals: Total cash and cash equivalents and marketable securities were $1.5B as of March 31, 2026, up from $1.1B as of December 31, 2025, with cash and cash equivalents of $1.2B, current marketable securities of $177.9M, and non-current marketable securities of $93.5M.
• Unrealized losses: All $346,000 of gross unrealized losses were in positions held for less than 12 months; the largest contributors were corporate debt securities ($170,000 loss on $63.2M fair value), U.S. Treasury securities ($121,000 loss on $28.6M fair value), and commercial paper ($27,000 loss on $24.8M fair value). As of March 31, 2026, no allowance for credit losses had been recognized on any marketable securities in an unrealized loss position.
• Credit quality and intent: Management states it has not observed significant deterioration in credit quality, declines are largely attributable to current global economic conditions, securities continue to make timely principal and interest payments, and the Company does not intend to sell — nor is it more likely than not to be required to sell — before recovery of amortized cost bases.
• Maturities: Of the $1.4B amortized cost base, $1.3B (fair value $1.3B) is due within one year and $93.7M (fair value $93.5M) is due within one to two years.

• Fair value hierarchy — assets: Total fair value of assets measured on a recurring basis was $1.4B as of March 31, 2026 (vs. $1B as of December 31, 2025), with Level 1 assets of $1.2B (primarily money market accounts of $1.1B) and Level 2 assets of $206M spanning certificates of deposit, commercial paper, corporate debt securities, Yankee bonds, U.S. Treasury securities, and asset-backed securities; no Level 3 assets existed at either date.
• Contingent consideration (Level 3): The Company carries a Level 3 contingent consideration liability related to potential earnout payments based on revenue targets under the GEOST Purchase Agreement; the liability increased from $7.6M at December 31, 2025 to $7.8M at March 31, 2026, reflecting a fair value adjustment of $187,000 during the quarter.
• Convertible senior notes (Level 2): As of March 31, 2026, the net carrying amount of the convertible senior notes was $36.9M (with unamortized discount and debt issuance costs of $728,000), while the total estimated fair value was $521.1M, determined based on the closing trading price as of the last day of trading for the period.
• Level transfers: There were no transfers between fair value measurement levels for the three months ended March 31, 2026.

• Net PP&E growth: Property, plant and equipment, net grew from $319.5M at December 31, 2025 to $344M at March 31, 2026, driven primarily by a $19.2M increase in construction in process (to $130.3M) and an $8.3M increase in machinery, equipment, vehicles and office furniture (to $182.8M).
• Accumulated depreciation: Accumulated depreciation and amortization increased from ($90.9M) to ($97.2M), reflecting $7.5M of depreciation expense in Q1 2026 versus $5.6M in Q1 2025, a 35% increase year over year.
• Depreciation by function: The $7.5M of Q1 2026 depreciation was split across cost of revenues ($3.2M), research and development, net ($3.1M), and selling, general and administrative ($1.2M); R&D depreciation nearly doubled year over year from $1.7M.

• Goodwill: The carrying amount of goodwill was $208.7M as of March 31, 2026, up from $205.8M as of December 31, 2025; substantially all goodwill is allocated to the Space Systems reportable segment, and management noted no events or changes in circumstances indicating that fair value of any reporting unit is more likely than not below carrying value.
• Intangible assets: Total net intangible assets decreased from $224.7M as of December 31, 2025 to $220.6M as of March 31, 2026, against a gross carrying amount of $290.6M and accumulated amortization of ($70M); developed technology is the largest component at a net carrying amount of $188.8M.
• Amortization expense: Total amortization expense was $7.5M for the three months ended March 31, 2026, up sharply from $2.7M in the prior-year period, with the cost of revenues line driving most of the increase ($6.1M vs. $1.8M).
• Future amortization: Estimated remaining 2026 amortization is $22.7M, with annual amounts of $29.2M (2027), $28.1M (2028), $25.9M (2029), $22.1M (2030), and $92.1M thereafter, totaling $220.1M.

• Convertible Senior Notes: In February 2024, the Company issued $355,000 aggregate principal amount of 4.250% Convertible Senior Notes due February 1, 2029, governed by an Indenture dated February 6, 2024 with U.S. Bank Trust Company, National Association as trustee; the Notes bear interest at 4.250% per annum payable semi-annually on February 1 and August 1, and as of March 31, 2026, $37,597 remained outstanding before unamortized discount and debt issuance costs of $728, with an effective interest rate of 5.0%.
• Conversion activity and classification: For the three months ended March 31, 2026, the Company received conversion notices for $118,057 aggregate principal amount of Notes, resulting in the issuance of 23,033,250 shares of common stock; as of March 31, 2026, holders have the right to convert between April 1, 2026 and June 30, 2026 because the Company's common stock price exceeded the applicable conversion price by 130% for the specified period during the quarter ended March 31, 2026, and the Notes are classified as non-current liabilities as the Company cannot be required to settle in cash and has the intent and ability to settle in common stock.
• Capped Call Transactions: In connection with the Notes pricing, the Company entered into Capped Call Transactions costing $43,168, with an initial cap price of $8.04 per share (representing a 100% premium over the last reported sale price on February 1, 2024); the premiums are included as a net reduction to additional paid-in capital within shareholders' equity.
• Trinity Loan Agreement: The Company entered into a Master Equipment Financing Agreement with Trinity Capital, Inc. on December 29, 2023, providing up to $120,000 in equipment financing; in March 2025, the Company drew $25,000 under a 60-month term at a rate factor of 0.022266, and in December 2025, the Company paid off all obligations and the Trinity Loan Agreement was terminated.

• Preferred Stock Exchange: On January 7, 2025, the Company completed the exchange of 50,951,250 shares of common stock held by The Equatorial Trust (a family trust of Sir Peter Beck, Founder, President, CEO and Chairman) into 50,951,250 shares of Series A Convertible Participating Preferred Stock, $0.0001 par value, pursuant to an exchange agreement dated December 3, 2024; the exchanged common shares were reacquired at no cost and held in treasury stock, and the fair value of the Preferred Stock issued was determined to equal the fair value of the common stock exchanged. On June 17, 2025, the Trust converted 5,000,000 shares of Preferred Stock to common stock on a one-for-one basis.
• Preferred Stock terms: Each share is convertible at the holder's option into common stock at the then-applicable Conversion Rate and automatically converts upon transfer to a non-Permitted Transferee, Sir Peter ceasing to serve as CEO (or Board-approved executive officer role), his death or permanent disability, or the outstanding Preferred Stock falling below 5% beneficial ownership by Sir Peter; the stock is not redeemable by the Company, carries a liquidation preference of $0.0001 per share (then participates pari passu with common stock on an as-converted basis), receives dividends only if and when paid on common stock (on an as-converted basis), and votes together with common stock with votes per share equal to the number of shares of common stock into which a share converts.
• ATM Equity Offerings — current facility: On March 17, 2026, the Company entered into an Equity Distribution Agreement with BofA Securities, Inc., BTIG, LLC, Cantor Fitzgerald & Co., Citizens JMP Securities, LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, KeyBanc Capital Markets Inc., Morgan Stanley & Co. LLC, Needham & Company, LLC, Roth Capital Partners, LLC and Stifel Nicolaus & Company, Incorporated for aggregate offering proceeds of up to $1,000,000, replacing the September ATM Equity Offering; the agreement also allows forward sale agreements with designated Forward Purchasers.
• ATM activity: For the three months ended March 31, 2026, the Company sold 6,358,097 shares generating $450.3M in gross proceeds before deducting $5.4M in underwriting discounts, commissions and other expenses under the Equity Distribution Agreement; for the three months ended March 31, 2025, the Company sold 4,858,839 shares generating $92.8M in gross proceeds before deducting $2.7M in underwriting discounts, commissions and other expenses under the terminated March ATM Equity Offering.

• Plan capacity: The 2021 Plan had 102,797,434 shares registered with the SEC as of March 31, 2026, with 91,953,343 shares available for grant; the 2021 ESPP had 19,580,628 shares remaining available for issuance as of the same date.
• CEO RSU cancellation: On March 30, 2026, Sir Peter Beck voluntarily forfeited and cancelled all unvested RSUs held by him — an aggregate of 392,155 shares — resulting in a one-time stock-based compensation expense of $11.2M recorded in selling, general and administrative for the three months ended March 31, 2026; no additional expense will be incurred on these cancelled awards in future periods.
• Unrecognized compensation: As of March 31, 2026, unrecognized expense related to unvested performance-based RSUs under the 2021 Plan was $129M (to be recognized upon vesting), and unrecognized expense related to the 2021 ESPP was $3.3M (to be recognized over the remaining offering period).
• ESPP activity: No shares were issued under the 2021 ESPP in either the three months ended March 31, 2026 or March 31, 2025; ESPP stock-based compensation expense was $2.3M and $1.6M for those respective periods.

Commitments

• Lease obligations: Company has commitments under lease obligations as described in Note 14; no separate dollar amount disclosed here.
• Provision for contract losses ($4,799 as of March 31, 2026): SolAero Holdings acquisition assumed fixed-price solar panel module contract where costs to complete are probable to exceed the firm fixed price; recorded in other current liabilities.

Legal Proceedings

• Litigation and claims (general): Management's opinion is no legal matters are likely to have a material adverse effect on financial position, results of operations, or cash flows.

• Tax benefit and rate: The benefit for income taxes was $1.8M for the three months ended March 31, 2026, up from $813,000 in the prior-year period, with the effective tax rate rising to 3.8% from 1.3%.
• Rate vs. statutory rate: The effective tax rate differs from the federal statutory rate primarily due to a full valuation allowance against U.S. deferred tax assets, as well as the impact of discrete items that vary year-to-year.
• Examination exposure: Due to net operating loss carryforwards, the Company remains subject to U.S. federal and state examination for all years beginning with the year ended March 31, 2016; foreign subsidiaries are generally subject to examination within four years of the end of the relevant tax year.

Anti-dilutive shares excluded: For the three months ended March 31, 2026, stock options and restricted stock units of 14,572,468 shares and shares underlying convertible senior notes of 7,335,284 shares were excluded from diluted EPS as anti-dilutive; comparable prior-year figures were 26,372,525 and 69,261,530, respectively.

Preferred Stock treatment: The Preferred Stock is treated as common stock for purposes of the EPS calculation.

Dilutive equivalents: Potentially dilutive shares are comprised of restricted stock units, stock options, and shares underlying convertible senior notes; for both periods presented, basic and diluted share counts are identical due to the Company's net loss position.

• Segment structure: The Company operates 2 reportable segments — Launch Services and Space Systems. Launch Services provides launch and launch related services on a dedicated mission or ride share basis; Space Systems is predominately comprised of spacecraft components and spacecraft manufacturing.
• Revenue allocation: For contracts containing both segment elements, revenues are generally allocated based upon the overall costs incurred for each reporting segment in comparison to total overall costs of the contract.
• Assets and opex not reviewed: Management does not regularly review either reporting segment's total assets or operating expenses, as long-lived assets, facilities, and equipment are generally shared by each reporting segment.
• Products vs. services split: Within Space Systems, product revenues were $127.5M (2026) vs. $80.8M (2025), while service revenues were $9.2M (2026) vs. $6.2M (2025). Launch Services revenues are entirely services in both periods.

• Preferred Stock Exchange: In January 2025, the Company completed the Preferred Stock Exchange, filing the Certificate of Designation with the Secretary of State of the State of Delaware (effective upon filing), and issued 50,951,250 shares of Preferred Stock to the Trust at closing.
• Preferred-to-common conversion: In June 2025, the Trust converted 5,000,000 shares of Preferred Stock to common stock on a one-for-one basis in accordance with the Certificate of Designation.
• Related party balances: As of March 31, 2026 and December 31, 2025, there are no amounts due to or from related parties.

• Collared forward transactions: Pursuant to the Equity Distribution Agreement, the Company sold an aggregate of 7,451,200 shares of common stock for minimum expected proceeds of approximately $474,000 and maximum expected proceeds of approximately $642,000, based on maturity dates scheduled to occur in April 2028; actual proceeds will depend on, among other things, whether the Company elects to settle prior to the scheduled maturity dates and the cap and floor prices set in each transaction.
• Mynaric acquisition (completed): On April 14, 2026, the Company completed the acquisition of 100% of the issued and outstanding ordinary shares of Mynaric AG, a German stock corporation, for aggregate consideration of $155,300 consisting of a nominal cash payment and 2,277,002 shares of the Company's Common Stock; consideration was primarily based on a base purchase price of $75,000 plus additional investments made by the sellers prior to closing, and sellers are no longer eligible for earnout payments; fair value allocation of assets acquired and liabilities assumed is not yet complete and is expected to be finalized within one year of the acquisition date.
• Motiv acquisition (pending): On May 6, 2026, the Company entered into an Equity Purchase Agreement to acquire all issued and outstanding equity interests of Motiv Space Systems, Inc. for aggregate consideration of $40,000 in cash (subject to closing adjustments) plus up to $20,000 in potential post-closing earnout payments in common stock.

• Business description: Rocket Lab describes itself as an end-to-end space company operating two segments: Launch Services (design, manufacture, and launch of orbital rockets) and Space Systems (design and manufacture of components, spacecraft program management, space data applications, mission operations, and optical systems).
• Electron track record: Electron, the company's small orbital launch vehicle, has completed 81 successful missions through March 31, 2026, delivering over 200 spacecraft to orbit; in 2025 it was the second most frequently launched orbital rocket.
• Neutron development: Neutron, announced in March 2021, is a reusable-ready medium-capacity launch vehicle targeting approximately 13,000 kg payload capacity to low Earth orbit in reusable configuration, intended for commercial and U.S. government constellation launches and ultimately configurable for human spaceflight.
• Space Systems scope: Space Systems capabilities were built through acquisitions of Sinclair Interplanetary, Planetary Systems Corporation, SolAero Technologies Corp., Advanced Solutions, Incorporated, and GEOST LLC, covering reaction wheels, star trackers, radios, separation systems, solar solutions, command and control software, high voltage space grade battery solutions, and optical systems.

• Development status: Neutron qualification testing of flight hardware from large structures through to component level systems is ongoing, with significant milestones achieved in Q1 including integration and readiness of first-flight hardware, continued progress on Archimedes engine qualification, and advancement of the second stage and reusable fairing systems.
• Timeline: Management characterizes Neutron as on track for its debut launch later this year, while noting that risk and uncertainty remains in the complex development cycle of a new launch vehicle which could impact the current best estimate of a targeted timeline for first launch.

• Development progress and risks: Rocket Lab has made progress on Neutron's structures, infrastructure, engine testing, and initial production execution, but notes that commercial development of a new launch vehicle is inherently time consuming and involves risks across engineering, manufacturing, hardware/systems testing, and infrastructure readiness that could delay the initial launch or future launches.
• Production and quality risk: Even following a successful initial launch, Rocket Lab may be unable to produce Neutron in sufficient quantities or with the quality management system needed to meet expected launch cadence, which could materially impact customer acceptance, future revenue, financial condition, and results of operations.
• Capital requirements: Additional delays or setbacks in Neutron development may require more research, development, and capital expenditures than currently anticipated, which could adversely affect liquidity and capital resources in future periods.

• Operating leverage: Management intends to continue investing in initiatives to improve operating leverage and significantly ramp production, with the expectation that continued cost reductions and higher production volumes will enable launch vehicle costs to decline and improve gross margins.
• Risk factors: The ability to achieve production-efficiency objectives could be negatively impacted by lower-than-expected facility utilization rates, manufacturing and production cost overruns, increased purchased material costs, and unexpected supply-chain quality issues or interruptions.

• Electron build rate: Rocket Lab built approximately 14 Electron launch vehicles in 2024, approximately 24 in 2025, and approximately five during the three months ended March 31, 2026.
• Electron launch cadence: 16 Electron vehicles were launched in 2024, 21 in 2025, and six during the three months ended March 31, 2026.
• Revenue-to-launch correlation: Management notes that growth rates between launches and total launch service revenue are not perfectly correlated, as revenue per launch varies based on orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion, method of revenue recognition, and other factors.

• Revenue growth: Revenue grew 63% to $200.3M for the three months ended March 31, 2026 from $122.6M for the three months ended March 31, 2025, driven by space systems revenue growth of $49.7M (primarily satellite manufacturing) and launch revenue growth of $28.1M.
• Launch cadence: Launch revenue growth reflected 6 Electron launch missions completed in Q1 2026 versus 5 in Q1 2025, along with revenue recognized on over-time HASTE missions, higher other launch revenue (including study revenue), and a higher revenue per launch on point-in-time Electron launch missions.

• Revenue per launch: Revenue per launch was $9.3M for the three months ended March 31, 2026, up from $7.1M in the prior-year period, reflecting changes in customer mix and mission complexity.
• Cost per launch: Cost per launch was $5.4M for the three months ended March 31, 2026, down from $5.7M in the prior-year period.

• Backlog definition: Backlog represents future revenues from contracts and purchase orders entered into by customers but not yet fulfilled, excluding unexercised customer options; contracts for launch services and spacecraft builds typically include termination rights exercisable by customers upon advanced notice and payment of a specified termination fee.
• Backlog growth: Backlog increased from $1.8B as of December 31, 2025 to $2.2B as of March 31, 2026, driven primarily by continued bookings during the period, partially offset by revenue recognized on contracts during the period.
• Backlog composition: Of the $2.2B backlog as of March 31, 2026, $1.3B is related to space systems and $921.4M is related to launch services.

• Revenue recognition methods: Revenues derive from long-term fixed-price contracts for launch services and spacecraft builds, and purchase-order-based spacecraft component sales, recognized either at a point-in-time (cash payments initially accrued as deferred revenue upon contractual milestones, then recognized upon final contractual obligation) or over-time (based on costs incurred as a % of estimated total costs at completion).
• Estimation risk: Because contract performance periods extend over long periods, recognized revenues and operating profit can fluctuate significantly period-to-period depending on when point-in-time or over-time contractual obligations are achieved, and estimated costs to complete are subject to revision for schedule delays, unmet performance milestones, or other impediments.
• Loss contracts: In the event cost estimates indicate a loss on a contract, the total amount of such loss is recorded in the period in which the loss is first estimated.

• Composition: Cost of revenues consists primarily of direct material and labor costs, manufacturing overhead, freight expense, depreciation and amortization, and other personnel-related expenses (salaries, bonuses, benefits, and stock-based compensation) directly associated with generating revenues.
• Outlook — absolute dollars: Management expects cost of revenues to increase in absolute dollars in future periods as the company sells more launch services and space systems.
• Outlook — as % of revenue: Management expects cost of revenues as a percentage of revenue to decrease over time as the company grows into its current capacity and executes on cost-reduction initiatives.
• Key cost driver: Direct labor costs and manufacturing overhead comprise a significant portion of cost of revenues; increasing production rate to improve absorption of these costs is described as the most critical cost-reduction initiative, requiring cross-functional effort across sales and business development, manufacturing, engineering, supply chain, and finance.

• Expense composition: Research and development expenses consist primarily of labor, prototype, professional services, materials, facilities, and depreciation expense.
• Investment focus: The company intends to continue making significant investments in developing new products and enhancing existing products, including the medium capacity Neutron launch vehicle and spacecraft features and capabilities, as well as expanding its portfolio of spacecraft components and subsystems.
• Cost variability: Research and development expenses will be variable relative to the number of products in development, validation, or testing, but management expects them to decline as a percentage of total revenue over time.

• Cost composition: Selling, general and administrative expenses consist primarily of personnel-related expenses for sales, marketing, supply chain, finance, legal, human resources and administrative personnel, as well as costs of customer service, information technology, risk management and related insurance, travel, allocated overhead, other marketing, communications, administrative and transaction expenses.
• Public company costs: Management expects to further invest in corporate infrastructure and incur additional expenses associated with operating as a public company, including increased legal and accounting costs, investor relations and compliance costs.
• Outlook: Management expects SG&A to increase in absolute dollars in future periods but decline as a percentage of total revenue over time.

Interest income composition: Interest income consists primarily of interest income on cash and cash equivalents, marketable securities, and customer financing.

Category composition: Other income (expense) consists primarily of changes in the fair value of contingent consideration, loss on extinguishment of debt, gain or loss on disposal of assets, and accretion of marketable securities purchased at a discount.

• Revenue growth: Revenues grew 63.5% year-over-year to $200.3M for the three months ended March 31, 2026, up from $122.6M in the prior-year period, with revenue as 100.0% of revenues by definition.
• Gross margin expansion: Gross profit improved to $76.5M (38.2% of revenues) from $35.2M (28.8% of revenues), reflecting a meaningful reduction in cost of revenues as a percentage of revenues from 71.2% to 61.8%.
• Operating loss improvement: Operating loss narrowed to ($56M) (27.9% of revenues) from ($59.2M) (48.3% of revenues), despite total operating expenses rising to $132.5M from $94.4M, as revenue growth outpaced expense growth; R&D, net was $80.5M (40.2% of revenues) vs. $55.1M (45.0%), and SG&A was $51.9M (25.9% of revenues) vs. $39.3M (32.1%).
• Net loss and other income: Net loss improved to ($45M) (22.3% of revenues) from ($60.6M) (49.4% of revenues); total other income, net swung to $9.2M from a loss of ($2.2M), driven primarily by interest income of $10.1M (vs. $4.2M) and a reduction in interest expense to ($1.3M) from ($6.8M).

• Overall revenue: Revenue increased $77.8M, or 63%, to $200.3M for the three months ended March 31, 2026 from $122.6M for the three months ended March 31, 2025.
• Space systems: Space systems revenue was $136.7M for the three months ended March 31, 2026, an increase of $49.7M, or 57%, primarily due to spacecraft manufacturing growth and acquisitions.
• Launch services: Launch services revenue was $63.7M for the three months ended March 31, 2026, an increase of $28.1M, or 79%, driven by a higher launch cadence (six Electron launch missions completed versus five in the prior-year period), higher revenue per launch, revenue recognized on over-time HASTE launch missions, and an increase in other launch revenue including study revenue.

• Overall cost of revenues: Cost of revenues increased $36.5M, or 42%, to $123.9M for the three months ended March 31, 2026, from $87.3M for the three months ended March 31, 2025.
• Space systems: Space systems cost of revenue was $88.4M for the three months ended March 31, 2026, an increase of $29.5M, or 50%, primarily due to spacecraft manufacturing growth and acquisitions.
• Launch services: Launch services cost of revenues was $35.4M for the three months ended March 31, 2026, an increase of $7.1M, or 25%, primarily due to a higher launch cadence.

• R&D expense increase: Research and development, net rose $25.4M (46%) to $80.5M for the three months ended March 31, 2026 from $55.1M for the three months ended March 31, 2025, driven primarily by Neutron development progress, increased staff and staff-related expenses from hiring, and prototype spend focused on expanding the spacecraft and spacecraft components product portfolio.

• SG&A increase: Selling, general and administrative expenses rose $12.6M (32%) to $51.9M for the three months ended March 31, 2026 from $39.3M in the prior-year period.
• Primary drivers: The increase was primarily due to RSU cancellations triggering a one-time stock-based compensation expense of $11.2M, increased staff and staff-related expenses to support revenue growth, and increased transaction expenses related to managing an active acquisition pipeline.

Interest expense decline: Interest expense decreased by $5.5M, or 81%, to $1.3M for the three months ended March 31, 2026 from $6.8M for the three months ended March 31, 2025, primarily due to conversions of the Convertible Senior Notes and the extinguishment of the Trinity Loan Agreement.

Interest income: Interest income increased by $5.9M, or 141%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, rising from $4.2M to $10.1M, primarily due to higher cash and cash equivalents balances held in interest-bearing accounts.

Foreign exchange swing: Gain (loss) on foreign exchange improved by $290,000 (216%) to a gain of $156,000 for the three months ended March 31, 2026, from a loss of $134,000 in the three months ended March 31, 2025, primarily due to fluctuations in the New Zealand Dollar and Canadian Dollar relative to the U.S. Dollar.

• Other income, net: Declined $355,000 (74%) to $124,000 for the three months ended March 31, 2026 from $479,000 in the prior-year period, primarily due to an increase in changes to fair value of contingent consideration.

• Benefit for income taxes: Increased by $979,000 (120%) to $1.8M for the three months ended March 31, 2026, from $813,000 in the prior-year period.
• Effective tax rate: Rose to 3.8% for the three months ended March 31, 2026 from 1.3% for the three months ended March 31, 2025; the rate differs from the federal statutory rate primarily due to a full valuation allowance against U.S. deferred tax assets and the impact of discrete items that vary year-to-year.

• Liquidity position: As of March 31, 2026, the company held $1.2B of cash and cash equivalents and $271.3M of marketable securities.
• Funding history: Operations have been funded through capital stock sales, convertible senior notes, term note debt, equipment financing, research and development grant proceeds, ATM Equity Offerings, proceeds from a business combination, and customer payments.
• Primary cash requirements: Liquidity needs include investment in new products and technologies, expansion of existing manufacturing facilities, working capital, debt service, acquisitions of complementary businesses/products/technologies, and general corporate needs.
• Adequacy outlook: Management believes existing cash, cash equivalents, marketable securities, and customer payments will be sufficient to meet working capital and capital expenditure needs for at least the next twelve months, while noting the company may pursue opportunistic capital raising or refinancing transactions and will continue investing in production capacity and product acquisitions.

• Lease obligations: Total minimum lease payments were $152.3M as of March 31, 2026, with $18.7M due in the following twelve months.
• Capital expenditures: Capital expenditures for the three months ended March 31, 2026 were $27.1M; future requirements will depend on launch cadence, market traction with space systems offerings, product development spending, new product introductions, office space investments, and any acquisitions of complementary businesses, products, or technologies.
• Financing risk: Management states it may need to seek additional equity or debt financing and warns that if it cannot raise additional capital or generate sufficient cash flows, the company may not be able to compete successfully, which would harm its business, operations, and financial condition.
• Expected spending increases: Management expects capital and operating expenditures to increase significantly in connection with expanding marketing and distribution infrastructure, developing new products, hiring additional personnel, protecting intellectual property, and continuing public-company operations.

• Convertible Notes outstanding: As of March 31, 2026, $37.6M was outstanding under the 4.250% Convertible Senior Notes due 2029, before unamortized discount and debt issuance costs of $700,000.
• Capped Call Transactions: Entered into on February 1, 2024 and February 2, 2024 in connection with the pricing of the Convertible Notes; designed to offset potential dilution and provide a non-dilutive source of liquidity under certain conditions, with a strike price of $5.1255 per share, a cap price of $8.04 per share, and covering approximately 69.3 million shares of common stock.
• Maximum settlement: If the stock price equals or exceeds the strike price on any given expiration date, the company would be entitled to receive payments for the corresponding tranche without issuing additional shares, up to a maximum aggregate payment of approximately $201.9M across all tranches; tranches expire in a series of dates beginning December 1, 2028 and ending January 30, 2029.
• Early unwind terms: If the Capped Call Transactions are unwound prior to maturity, settlement terms would depend on prevailing market conditions including stock price at time of unwind, time remaining until maturity, and the expiration schedule of the tranches.

• Operating cash use: Net cash used in operating activities was $50.3M for the three months ended March 31, 2026, driven by a $45M net loss, $46.5M in non-cash activities, and $51.8M in cash used in operating assets and liabilities.
• Non-cash items: Non-cash activities included $28.1M in stock-based compensation expense and $15M in depreciation and amortization.
• Working capital headwinds: Cash used in operating assets and liabilities was driven by $35.7M in accounts receivable, $26.1M in other non-current assets, $24.6M in inventories, $13.4M in contract assets, and $8.2M in trade payables, partially offset by $45.8M in contract liabilities, $10.8M in accrued expenses, and $4.1M in prepaids and other current assets.

• Investing outflows: Net cash used in investing activities totaled $35.7M for the three months ended March 31, 2026, composed of $27.1M in capital equipment and infrastructure investments, $8M of cash paid for business combinations, and net purchases and maturities of marketable securities of $1.3M.

• ATM Equity Offerings: Net cash provided by financing activities was $463.3M for the three months ended March 31, 2026, driven primarily by $445.6M of net proceeds from the issuance of common stock under the ATM Equity Offerings.
• RSU tax withholding: The remaining $12.5M consisted of net restricted stock units tax withholding.

• Supplemental Indenture: On May 23, 2025, the Company, Rocket Lab USA, and U.S. Bank Trust Company, National Association entered a first supplemental indenture to the indenture dated February 6, 2024, governing the Convertible Notes, to provide for subsequent conversions and Conversion Rate adjustments, establish a full and unconditional guarantee of Rocket Lab USA's obligations under the Convertible Notes, and make other changes to preserve holders' economic interests.
• Outstanding guaranteed notes: As of March 31, 2026, $37.6M aggregate principal amount of Rocket Lab USA convertible senior notes were issued and outstanding and fully and unconditionally guaranteed by the Company.
• Separate financial statements omitted: Pursuant to Rule 3-10 of Regulation S-X, separate condensed consolidated financial statements of Rocket Lab USA have not been presented; summarized financial information has also been excluded under Rule 13-01(a)(4)(vi) because Rocket Lab USA's assets, liabilities, and results of operations are not materially different than the corresponding amounts in the Company's condensed consolidated financial statements.