Aerospace and defense company Rocket Lab (NASDAQ:RKLB) announced better-than-expected revenue in Q4 CY2024, with sales up 121% year on year to $132.4 million. On the other hand, next quarter’s revenue guidance of $120 million was less impressive, coming in 13.4% below analysts’ estimates. Its GAAP loss of $0.10 per share was in line with analysts’ consensus estimates.
Rocket Lab founder and CEO, Sir Peter Beck, said: “2024 was a record-setting year for Rocket Lab, with our highest annual revenue ever posted of $436.2 million and a record Q4 2024 revenue of $132.4 million – a 382% increase compared to Q4 2021, our first full quarter following our debut on the Nasdaq as a publicly-traded company. Top achievements across launch and space systems include a record number of 16 launches for Electron in 2024 (a 60% increase in launch cadence compared to 2023) and more than $450 million in newly-secured launch and space systems contracts. We rounded out the year with significant advancement across the Neutron program ahead of a planned debut launch in the second half of 2025. The Company’s strong performance across launch and space systems is foundational to Rocket Lab’s momentum toward delivering its own satellite service as a truly end-to-end space company. This has been bolstered in Q1 2025 with the introduction of our new constellation-class satellite platform designed for mass manufacture, named Flatellite. Applicable to national security, defense, and commercial services, the new satellite also signals a bold, strategic step toward potential paths for operating our own future constellation.”
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ:RKLB) offers rockets designed for launching small satellites.
Aerospace companies often possess technical expertise and have made significant capital investments to produce complex products. It is an industry where innovation is important, and lately, emissions and automation are in focus, so companies that boast advances in these areas can take market share. On the other hand, demand for aerospace products can ebb and flow with economic cycles and geopolitical tensions, which can be particularly painful for companies with high fixed costs.
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Rocket Lab’s 87.7% annualized revenue growth over the last four years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
Rocket Lab Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Rocket Lab’s annualized revenue growth of 43.8% over the last two years is below its four-year trend, but we still think the results were good and suggest demand was strong.
Rocket Lab Year-On-Year Revenue Growth
This quarter, Rocket Lab reported magnificent year-on-year revenue growth of 121%, and its $132.4 million of revenue beat Wall Street’s estimates by 1.4%. Company management is currently guiding for a 29.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 38.9% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and indicates the market sees success for its products and services.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.
Rocket Lab’s high expenses have contributed to an average operating margin of negative 66.7% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.
On the plus side, Rocket Lab’s operating margin rose over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.
In Q4, Rocket Lab generated a negative 38.9% operating margin. The company’s consistent lack of profits raise a flag.
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Although Rocket Lab’s full-year earnings are still negative, it reduced its losses and improved its EPS by 34.1% annually over the last four years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.
Rocket Lab Trailing 12-Month EPS (GAAP)
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Rocket Lab, its two-year annual EPS declines of 14.1% mark a reversal from its (seemingly) healthy four-year trend. These shorter-term results weren’t ideal, but given it was successful in other measures of financial health, we’re hopeful Rocket Lab can return to earnings growth in the future.
In Q4, Rocket Lab reported EPS at negative $0.10, in line with the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Rocket Lab’s full-year EPS of negative $0.38 will reach break even.
We were impressed by how significantly Rocket Lab blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its revenue and EBITDA guidance for next quarter fell short of Wall Street’s estimates, making this a weaker quarter. The stock traded down 9.7% to $17.90 immediately after reporting.
So should you invest in Rocket Lab right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
