Rocket Lab sees profitability pressure as sales of lower-margin satellite platforms rise

Aug 10 (Reuters) - Rocket Lab forecast ‌third-quarter margins ​below Wall ​Street expectations on Monday, as rapid expansion into satellite manufacturing boosts sales but weighs on profitability.

As sales of lower-margin satellite platforms ‌rise, they are expected to account for a larger share ⁠of the company's revenue as it expands its satellite-manufacturing business, a segment that is becoming increasingly ‌important as it diversifies beyond ‌rocket launches. Its shares fell more than 8% in extended trading.

The company expects gross margin of 29% to 31% in the third quarter, below ​analysts' average estimate of 37.6%, according to data compiled by LSEG.

Rocket Lab's space-systems division, which makes satellite components, spacecraft, separation systems, solar cells and ⁠other mission hardware, is its largest revenue contributor, accounting for 81% of revenue.

The unit helped drive a ​62% jump in second-quarter revenue to a record $234 million, topping the estimate of $231.4 million.

The company is also pushing ahead with ​Neutron, its reusable medium-lift rocket designed to compete ‌for commercial satellite-constellation missions, civil-space programs and U.S. national-security launches. Rocket Lab is targeting Neutron's arrival at the launch ⁠pad in the fourth quarter of 2026.

It has continued spending heavily to develop the rocket, build launch infrastructure and prepare for production, while integrating recent acquisitions, including laser-communications company ⁠Mynaric.

CEO Peter Beck said demand for Neutron was being driven by limited launch capacity, ​prompting customers to book missions years in advance.

Rocket Lab won a contract from Kepler Communications to launch several communications and in-orbit computing satellites on Neutron in 2028.

The company forecast third-quarter ‌revenue of $250 million to $265 million, above Wall Street estimate of $238.5 million.

It said it expects strong growth in both launch ‌and space-systems businesses, supported by a record $2.36 billion backlog at the end of June.

Rocket ⁠Lab, in June, also announced ‌plans to acquire satellite ​communications company Iridium in an $8 billion deal, which would give it a recurring-services business.

(Reporting by Akash Sriram in Bengaluru; Editing by ‌Shilpi Majumdar)

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