Rocket Lab’s Record Revenue Tempered by Neutron Rocket Delay

Rocket Lab USA concluded its 2025 fiscal year with a performance marked by both significant achievement and a notable setback. The company posted record-breaking revenue, yet investor sentiment was moderated by a confirmed delay to the inaugural launch of its next-generation Neutron rocket.

The company achieved its most successful financial year to date, generating annual revenue approaching $600 million. This growth was primarily fueled by a substantial expansion of its backlog, which nearly doubled to approximately $1.9 billion. A pivotal $816 million contract with the Space Development Agency, signed on December 19, 2025, was the key driver behind this surge.

A strategic shift in revenue streams is now evident. The "Space Systems" segment now accounts for 74% of total revenue, a transformation accelerated by the strategic acquisitions of Geost and Mynaric in 2025. This diversification has altered the firm's risk profile, reducing its dependence on pure launch services and creating a more stable, less volatile income base. Company leadership anticipates that about 57% of the current backlog will convert to revenue within the coming 12 months.

Neutron Launch Timeline Pushed to Mid-2026

The primary disappointment for the market was the revised schedule for the Neutron medium-lift rocket. Its maiden flight has been postponed from late 2025 to the second quarter of 2026. CEO Sir Peter Beck cited an extended qualification phase for the Archimedes engine and complexities associated with the new "Hungry Hippo" payload fairing design as reasons for the shift.

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While critical infrastructure milestones were met—including completion of the production facility and successful engine test runs at NASA's Stennis Space Center—the company emphasized a "quality over speed" approach. This delay, however, may provide a near-term opportunity for competitors such as Northrop Grumman and Firefly Aerospace, which are targeting the same medium-payload market with vehicles like the Antares 330.

Operational Excellence and Analyst Outlook

Alongside its future ambitions, Rocket Lab's established operations demonstrated robust performance. The Electron launch vehicle completed 21 missions in 2025 with a 100% success rate. This operational reliability is translating to financial strength, with management forecasting an adjusted gross margin between 43% and 45% for the fourth quarter.

Market analysts have responded favorably to the underlying fundamentals. Following the major December contract award, both Needham and Stifel raised their price targets for Rocket Lab shares to $90 and $85, respectively. However, after a share price rally exceeding 180% since the start of the year, expectations for further scaling are already elevated.

Investor attention now turns to the first quarter of 2026. Key events include the anticipated arrival of the first Neutron rocket stage at the Wallops Island launch site and the scheduling of initial "Wet Dress Rehearsal" tests. Whether the ambitious second-quarter target for the first launch holds will be a focal point of the next quarterly report, expected on February 25, 2026.