Aerospace and defense company Rocket Lab (NASDAQ: RKLB) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 36% year on year to $144.5 million. The company expects next quarter’s revenue to be around $150 million, close to analysts’ estimates. Its GAAP loss of $0.13 per share was 17.9% below analysts’ consensus estimates.

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Company Overview

Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Rocket Lab grew its sales at an incredible 98.1% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade 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 47.5% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Rocket Lab reported wonderful year-on-year revenue growth of 36%, and its $144.5 million of revenue exceeded Wall Street’s estimates by 7%. Company management is currently guiding for a 43.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 40.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is commendable and suggests the market is forecasting success for its products and services.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Rocket Lab’s high expenses have contributed to an average operating margin of negative 60.6% 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 by 58.1 percentage points 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.

Rocket Lab’s operating margin was negative 41.3% this quarter.

Earnings Per Share

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 31% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

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 15.5% mark a reversal from its (seemingly) healthy five-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 Q2, Rocket Lab reported EPS at negative $0.13, down from negative $0.08 in 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 $0.46 will reach break even.

Key Takeaways from Rocket Lab’s Q2 Results

We were impressed by how significantly Rocket Lab blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS missed and its EBITDA guidance for next quarter fell short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock remained flat at $43.88 immediately following the results.

Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.