The space sector has shown strong performance recently! What’s the outlook moving forward?
Rocket Lab 2026Q1業績直播
Key Takeaways (AI-Generated)
Financial Performance
- Record Q1 2026 revenue of $200.3 million, up 63.5% year-over-year and 11.8% sequentially
- GAAP gross margin of 38.2%, above guidance range of 34-36%
- Non-GAAP gross margin of 43%, above guidance range of 39-41%
- Record backlog of approximately $2.2 billion, up 20% quarterly and 108% year-over-year
Business Highlights
- Booked record 31 Electron and Haste launches plus 5 Neutron contracts in Q1
- Secured largest contract in company history: 5 Neutron flights plus 3 Electron launches through 2029
- Received $190 million, 20-launch Haste order from Department of Defense
- Selected for Space Based Interceptor Program under Golden Dome with Raytheon
Financial Guidance
- Q2 2026 revenue guidance: $225-240 million (16% quarter-over-quarter growth at midpoint)
- Q2 GAAP gross margin: 33-35%; non-GAAP gross margin: 38-40%
- Q2 Adjusted EBITDA loss: $20-26 million
- Approximately 36% of current backlog expected to convert to revenue within next 12 months
Opportunities
- European market opportunity estimated at $109 billion by 2030 across EU, Germany, and UK
- Neutron first launch scheduled for late 2026 with reusability capability from Flight 2
- Strategic partnerships with Anduril and Raytheon for defense programs
- Vertical integration strategy reducing costs and improving delivery timelines
Full Transcript (AI-Generated)
Operator
Good day. And thank you for standing by. Welcome to the Rocket Lab Corporation Q1 earnings call. At this time all participants are in a listen only mode. After the speakers presentation there will be a question and answer session. To ask a question during this session you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11. Again, please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Muriel Baker. Please go ahead.
Muriel Baker
Thank you. Hello and welcome to today's conference call to discuss Rocket Labs first quarter 2026 financial results, business highlights and other updates. Before we begin the call, I'd like to remind you that our remarks may contain forward-looking statements that relate to the future performance of the company. And these statements are intended to qualify for the safe harbour protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's press release and others are contained in our filings with the Security and Exchange Commission.
Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements. Our remarks in press release today also contain non GAAP financial measures within the meaning of Regulation G enacted by the SEC including in such release and our supplemental materials are reconciliations of these historical non GAP financial measures to the comparable financial measures calculated in accordance with GAP.
This call is also being webcast with a supporting presentation and a replay and a copy of the presentation will be available on our website. Our speakers today are Rocket Lab Founder and Chief Executive Officer, Sir Peter Beck, as well as Chief Financial Officer, Adam Spice. They will be discussing key business highlights including updates on our launch and space systems programs and we will discuss financial highlights and outlook before we finish by taking questions. So with that, let me turn the call over to Sir Peter.
Sir Peter Beck
Thanks Muriel. Before we dig into the quarter, I want to walk you through what sets Rocket Lab apart as one of the only true end to end space companies on the planet. Ultimately it's our technologies, our capabilities and our proven execution for the world's most demanding customers. First, our technology for launch. We have Electron, the world's leading small launcher alongside Haste which is delivering critical hypersonic test launch capability to the Department of War and Neutron and medium lift rocket tailored to the constellation deployment and national security missions.
But launch was just the start. In 2020 we launched Photon, our first in house developed spacecraft. That moment marked the beginning of our evolution from a Pureplay launch provider to an end to end space company. In just six short years, we expanded our technology stack to include a full family of highly capable spacecraft available at constellation scale. And critically, we also manufacture the subsystems and payloads that go into these spacecraft. This vertical integration means we control quality, schedule and cost in ways that our competitors simply can't.
These technologies have given us a huge suite of capabilities. We provide tactically responsive space launch and dedicated small satellite launch with unmatched flight heritage, suborbital, hypersonic and missile defense testing from our defense customers, and national security launch on both Neutron and Electron. Our rockets also deploy and replenish constellations, launch lunar and planetary missions, and more on space systems as satellite and subsystems, enable communication and content connectivity, infrastructure, missile warning and tracking, space reconnaissance and surveillance, space protection and space control, astrophysics and Earth science missions in space, manufacturing, and more.
Execution is what matters most. Anyone can promise capabilities, but Rocket Lab is actually delivering right now for demanding and complex programs. We're enabling SDA's proliferated war fighter space infrastructure, delivering complete satellites with payloads on aggressive timelines. We're supporting the DOW's Mark TB hypersonic program and the Golden Dome space based interceptor program. We're on boarded as a national security space launch provider and we're executing missions for the NRO, Space Force, Missile Defence Agency, DIU and DARPA.
We are a trusted partner for the US and International Space agencies including NASA, JAXA and ESA. Rocket Lab hardware is flying on Artibus missions. Our technology is on Mars Rovers and orbiters. We support ISS resupply and other flagship NASA missions. Commercially, we're supporting director device constellations, Earth observation constellations, lunar Landers, orbiters, and True missions. This is execution. Real missions on orbit now or in production and generating revenue. When the world's most sophisticated space organisations need mission success, they choose Rocket Lab.
We built this technology and capability to serve our customers, but we're also built something more the ability to deploy and operate our own space based applications and services. We're one of the only companies on the planet with this capability. This is the next significant opportunity that lays ahead for us. So with everyone up to speed, let's take a closer look how we executed against this strategy in Q1.
This quarter has been phenomenal, the strongest Q1 in Rocket Lab's history. We've blown through the ceilings across all of the most important metrics, record revenue, record gap, gross margins, record backlog, record cash position and record launch contracts across Electron, Haste and Neutron. With revenue, we topped 200 million in the quarter for the first time, up more than 63% versus this time last year and our forecast has revenue coming in even higher for Q2.
Our gross margins are excellent, sitting strong at 38.2% gap and 43% non GAAP. Our backlog jumped to more than 2 billion in contracted revenue across our national security, civil space and commercial programs, 20% over the quarter and 108% year on year, again, the highest it's ever been. That's partly thanks to the record number of contracts we signed in Q1. In fact, with the 31 Electron and haste launches and five Neutron contracts combined, we've booked more launches in the first three months of 2026 than we did for all of last year.
Overall, we exited the quarter with 1.48 billion in cash and cash equivalents and currently have secured access to more than 2 billion in total liquidity giving U.S. financial flexibility and positioning for growth and further M&A. There are more highlights across launch and space systems then we could fit into one slide, so let's go over them in more detail.
Starting off a small launch across Electron and Haste. What a truly exceptional quarter it's been for Electron and Haste. We booked 31 missions which is the most we've ever signed in 1/4. Demand for Electron has always been strong, but we're seeing an infliction now across both orbital and sub orbital launch. The customers know when their book on Electron and haste. They're buying certainty and responsiveness. They need to launch where and when they need to go.
We've got more than 70 launches in backlog now, which is a new record with eight missions off the pad already this year. We're on track to beat last year's launch record too as well, as we'll hit our hundredth launch later this year, the fastest anyone in the industry will have ever done that. It's another record on the books for Haste, with 190,000,020 launch order through Kratos in the Department of War and Mark TB. This is the largest single order we've seen with within the program and a very clear vote of confidence from the Pentagon in Haste ability to deliver the hypersonic test and missile defence capabilities that the nation needs.
Haste now makes up almost 1/3 of all of our launch backlog today. What's particularly significant about Haste is that along with being the category leader for Hypersonic's test missions, Haste strength has helped us to position us in the centre of America's defence architecture for the next big wave of spending. We're already ingrained with spacecraft components and full satellite builds, and when you add Haste, hypersonic rockets to test missile tracking and defence, that's almost the entire spectrum of capabilities covered by Golden Dome.
The new era of space primes has begun injecting pace and innovation into national security and defence. Two companies at the forefront of this are Rocket Lab and Andrew, and we're excited to confirm that we're teaming up. Andrew has booked 3 dedicated haste launches to support missions that combine their rapid prototyping with their industry, leading flight cadence to accelerate tech development for the Dow within months, not years. The first of these launches are scheduled as no earlier than November this year. That's commercial speed and tactical responsiveness in action.
While we can't talk program or mission specifics, the main take away from this partnership is that it brings together two of them, the defense industry's most innovative prime contractors to advanced defense capabilities for the nation. So like I said, it's been a fantastic quarter for launch, but there's plenty to talk about for space systems as well.
I'm thrilled to confirm that Rocket Lab has been selected to enable one of the nation's nation's top national security priorities, the Space Based Interceptor Program. Under Golden Dome. Rocket Lab and Raytheon have been selected to demonstrate advanced capabilities for the Space Based Interceptor Program. This program is an important step in strengthening national missile defence capabilities and we're proud to be contributing proven expertise to advance the development of solutions for this urgent security need.
But now everyone knows we always have a strategic acquisition opportunity up our sleeve and I'm excited to share the next one. We've entered into a definitive agreement to acquire Mode of Space Systems, a Californian based leader in space robotics, motion control systems and spacecraft mechanisms. Their technology is featured on the Cadre Lunar Rover and NASAS Mars Perseverance Rover that includes the road. His entire robotic arm, which was the most capable ever deployed on Mars in terms of load capacity, precision, and sensing, might have also built the zoom and focus and filter wheels for the primary imager for the mission.
Most pictures you'll see from Mars come through that camera and mode of zoom mechanism were the first ever deployed in a planetary surface mission. This acquisition positions us to play a critical role in future lunar and planetary exploration missions such as future commercial mass sample return missions, as well as expand into significant national security programs. It will also bring the design and manufacturing of critical spacecraft mechanisms like solar array, Dr. assemblies, antenna and propulsion gimbals, filter wheels, focus mechanisms and precision to drive electronics in house, completing a key element of our satellite manufacturing at scale strategy.
We unveiled our new electric propulsion thruster for satellites called Gauss at Space Symposium last month. With a 200 unit production line already established and units delivered to ourselves for some of our own constellation programs. We've been inundated with inquiries from programs in need of hundreds of units each and we're already to break the bottleneck on electric propulsion. Rocket Lab is recognized as a world leader in propulsion, so an organic electric propulsion solution is a natural progression for us and we're excited to bring manufacturing scale, reliability and performance to electric propulsion for the first time in the industry.
The pace of which we rolled out new products this year has been relentless, whether it's been organic or inorganic. What unifies our acquisitions and our internal innovations is a powerful vision, complete vertical integration across the entire satellite value chain. Everything you see on this page, optics, solar, laser terminals, electric propulsion and other components is already being built to our own platforms or being supplied to others. So that's a good chunk of upcoming missions across civil, commercial and national security. Have a Rocket Lab logo on them somewhere with supplier of choice across the industry and other prime contractors turn to us for mission critical technology.
This quarter we also closed our acquisition of Monarch. But the real story here is more than just adding optical COM terminals to our national security capabilities. With Monarch we have established rocks, established Rocket Labs, first European footprint to support the German and European Space industry on a much larger scale. The expansion couldn't have come at a bit of time. The European Space and defence market has been accelerating its investments in sovereign space capabilities up to 109 billion by 2030 by some estimates across the European Union, Germany and the United Kingdom.
Rocket Lab Europe gives us boots on the ground to capture that demand, whether it's optical comms, spacecraft build, international constellations, responsive launch, or you know, providing A sought after subsystems and high volumes. The door is now open to programs, partnerships and revenue streams that were inaccessible before. And Rocket Lab Europe is about positioning the company for what's the next phase of growth in the one of the world's most strategic markets.
Moving on to Neutron, I'm excited to now to announce a new multi launch contract for Neutron that makes up the largest contract in Rocket Labs history. 5 dedicated Neutron flights plus 3 electrons now between now and 2029 for a confidential customer. It was only a few weeks ago that we announced our $190 million twenty launch deal for haste, which was the record at that time. Now we're it. We have exceeded that deal with an even larger one. It speaks volumes to the strong and growing demand for all of our launch capabilities.
And this booking means neutrons manifest as filling up fast right through the end of the decade. This market needs medium launch. The demand signal is clear. Equally clear from these continued bookings is that customers trust Rocket Lab and Neutron to deliver this medium launch capability. We've introduced and scaled new vehicles to reliable high cadence before. We're one of only two companies in history that has successfully done this with meaningful reliability and we're doing the same with Neutron.
I hope that by now you know that my stance is not discounting flights just to fill up a manifest. So I can confirm that pricing for these Neutron and Electron launches are very much in family with their commercial rates. Now on to development updates across the program. The team has made tremendous strides on the Stage 1 tank design refinements and have improved both the tank strength, margins and manufacturability and give us confidence in the structural performance.
It's only been two months since our last Neutron update and already we have AFP made components sitting on the production floor. That's the beauty of automated production with AFP, not just for Flight 1 but also for the fleet of vehicles that come thereafter. This will feed directly into the next round of testing and qualification for Stage 1's tank as we drive towards Neutrons debut. As it stands, current progress is keeping our aggressive schedule towards the first launch later this year.
Stage separation tests are also underway using Stage 2. It's under stage and fixed varying test articles to test the condition as close to flight for how Neutrons first and 2nd stages will separate during launch Stage 2 deployment. Is arguably Neutron's most novel capability. Unlike other rockets with stack stages that separate, Neutron's second stage is hung inside the fairing before it's deployed along its interior rails and out the mouth of the hungry hippo fairing.
This reusable architecture is 1 of Neutron's clever competitive advantages. It allows us to reuse fairings without having to deploy separate marine assets to capture them downrange or deal with refurbishment from splashing down them in the ocean. Cleared separation events at full flight loads on the second stage article and interstage deployment system, which is great news. We're now testing the the resilience of the off nominal separation events. So if you see something broken on the test stand from here on, know that that's completely intentional for the interstage that's happening at Middle River right now.
As the team works on the structures qualification, it's up to the test stand and being subjected to its loads that we should expect during launch, reentry and landing. Then it will head back inside the building to be fitted out, whether it's full suite of a flight, avionics and fluid systems. After that it will be shipped off to Wallops to join the Hungry Hippo fearing for further assembly.
Another part of Neutrons program that we don't talk about enough, but which is a critical part of its development is the landing barge called Return on Investment. Now the photos do not do it justice because this thing is massive. It's particularly practically a launch site of its own. We're talking a huge amounts of power generation, 10 megawatts across its four station keeping thrusters enough to power thousands of homes. By the time it's completed, it'll be more than 11,000,000 lbs or 5000 metric tons.
So fitting out this landing platform is coming along nicely. Housings for the platform thrusters have been installed as well as the main cabin and the at the edge of the barge. It's pad generation systems and thrusters have arrived to the shipyard in Louisiana and are ready to go in next. And we're on track for sea trials to start later this year. It's one thing to say that you're going to be reusable, It's another to actually make the investments into the landing platforms that enable it. We're doing this now well ahead of time so that we can move swiftly into reusability with Neutron as early as Flight 2.
And finally, to round out Neutron's development, here's a look at the other significant progress across the program from the bottom of the vehicle to the top. We've got the Archimedes engines continuing to undergo extensive testing at Stennis in their flight configurations. This is for both Stage 1 version of the engines and for the vacuum optimized Archimedes that willpower Stage 2. It's nonstop hot fires across both test ends as the team really stretches the performance of these engines while running them in the full range of gimbal angles for the thrust structure.
Since completing qualification, the team has gotten stuck into fitting it out with all the flight set of avionics and fluid systems that's taking place at our Middle River facility before it's sent out to the launch Complex 3 for integrated systems testing on the pad. Stage 2 continues to progress with the integration of fluid systems and avionics. We also qualified its payload support structure, a separate interface on the top of the stage that physically attaches a satellite to Neutron.
This payload support structure is another carbon composite structure that's designed to be as lightweight as possible. Since every kilogram reduces payload capacity, and having cleared qualifications smoothly, it's just days away from shipping out to Launch Complex 3 as well. Then, right at the top of the Hungry Hippo, a qualified reusable fairing system has been covered in TPS, or Thermal Prediction System. Once arriving in Virginia, integration of the avionics and fluid systems on this part of the vehicle continues as well.
So as you can see, there's been lots of neutron activity lately. I'll remind you that that these these comprehensive test campaigns are all being run in parallel all time to converge for the first launch at the end of this year. That means a lot more exciting updates to look forward to in the coming weeks and months before the vehicle comes together and goes onto the pad. That wraps up the operational highlights. Now over to Adam for the financial overview and outlook.
Adam Spice
Thanks, Pete. The first quarter 2026 revenue was a record $200.3 million, coming in just above the high end of our prior guidance range and representing an impressive year over year growth of 63.5% and quarterly sequential growth of almost 12%. The strong performance was driven by significant contribution both of our business segments and underscores the continued momentum across the business.
Our Space System segment delivered $136.7 million in revenue in the quarter, reflecting a year on year increase of 57.2% and a sequential increase of 31.7%. This growth was primarily driven by increased contribution from our satellite platforms business, which continues to perform exceptionally well and provides comforting diversification alongside our robust, but at times lumpy launch business. Meanwhile, our Launch Services segment generated $63.7 million in revenue, up an impressive 78.9% year over year, though down 16.1% sequentially due to fewer launches in the period.
Now turning to gross. Margin gap gross margin for the first quarter was 38.2%, up slightly sequentially and above our prior guidance range of 34 to 36% without performance driven primarily by solar products and launch owing to better than expected absorption and lower spend respectively. Non gap gross margin for the first quarter was 43% while down slightly sequentially was also above our prior guidance range of 39 to 41%. The sequential decline in non GAAP gross margin which was better than expected was primarily driven by a mixed shift towards space Systems and a modest decline in launch margin based on mix and lower revenue.
Relatedly, we added Q1 with production related headcount of 1448 up 250 from the prior quarter, largely driven by a transition of dedicated R&D headcount from the first Neutron test flight to our production teams related to future revenue generating missions as well as headcount ramps related to our recent GEOS and PCL acquisitions.
Turn to backlog, We ended Q12026 with approximately $2.2 billion in total backlog with launch backlog accounting for approximately 41.5% and Space Systems representing 58.5%. During the quarter, launch backlog continue to gain share supported by strong underlying trends as we convert a robust pipeline of opportunities across Electron haste and Neutron. This includes the 20 haste block by emissions signed within the quarter that Pete mentioned earlier as well as 5 Neutron bookings with a confidential customer.
We are actively cultivating a strong pipeline that includes multi launch agreements, large satellite platform contracts in an increasingly diverse set of satellite component and subsystem merchant opportunities across government and commercial programs. As noted earlier, these larger needle moving opportunities can introduce lumpiness in backlog growth, but they are critical drivers of long term value and scale for the business. Looking ahead, we expect approximately 36% of our current backlog to convert into revenue within the next 12 months.
Additionally, we continue to benefit from relatively quick turns business, particularly in our space systems components and subsystems businesses that Dr. incremental top line contribution beyond the current 12 month backlog conversion. In addition, as we closed and integrate our new acquisitions such as Geos Optical Systems Inc, Monarch and Motive, they will be accretive to our served addressable market opportunity backlog and forward revenue growth, growth rates and margins.
Turning to operating expenses, Gap operating expenses for the first quarter of 2026 were $132.5 million above our guidance range of 120 to $126 million driven by the stock based compensation charge related to Peter Beck's RSU forfeiture. Non gap operating expenses for the first quarter were $105 million which was below our guidance range of 106 to $112 million.
In Rd. specifically, gap expenses increased $1.7 million quarter over quarter, while non GAAP expenses rose $1.9 million. These increases were driven by continued investment within our Neutron program paired with seasonal step up in payroll taxes. Q1 ending R&D headcount was 949, representing a decrease of 70 from the prior quarter. The decrease in dedicated R&D headcount is due to the transition of our production teams from R&D cost centers to production cost centers as we begin the transition from the first Neutron R&D test flight to future revenue generating missions
in SG And A gap expenses increased $11.4 million quarter over quarter, while non gap expenses declined $1.3 million quarter over quarter. The increase in gap SGNA was primarily due to the previously mentioned Peter Beck RSU cancellation resulting in a large one time stock based compensation expense. Meanwhile, the decline in non GAAP SGNA was primarily due to a one time adjustment of accruals related to our 2025 annual bonus plan which were ultimately lower than previously anticipated due to certain executive officers forgoing bonus awards for 2025. Q1 ending SGNA headcount was 381 representing a decrease of four from the prior quarter.
In summary, total headcount at the end of the first quarter was 2778, up 176 heads from the prior quarter. Turning to cash, purchases of property, equipment and capitalized software licenses were $27.1 million in the first quarter of 2026, a decrease of $22.6 million from the $49.7 million in the fourth quarter. This decrease reflects less capital investment in Neutron development during the quarter, particularly for the return on invest. Recovery barge as well as the pad at LC3 at Waltz Virginia.
As we progress towards neutrons first flight, we expect capital expenditures to remain elevated as we invest in testing, production scaling and infrastructure expansion. GAAP EPS for the first quarter was a loss of $0.07 per share compared to a loss of $0.09 per share in the fourth quarter. The sequential improvement to GAP EPS is primarily due to increased revenue contribution paired with increased gross profit.
Gap operating operating cash flow was a use of $50.3 million in the first quarter of 2026 compared to a use of $64.5 million in the fourth quarter. Similar to the capital expenditure dynamics mentioned earlier, cash consumption will remain elevated due to Neutron development, longer lead procurement for SDA programs and investments in subsequent Neutron tail inventory as we scale the business beyond its initial test flight.
Overall non GAAP free cash flow defined as gap operating cash flow less purchases of property, equipment and capitalized software in the first quarter of 2026 was a use of $77.4 million compared with to a use of $114.2 million in the fourth quarter. The ending balance of Cash, Cash equivalents, restricted cash and marketable securities was roughly $1.48 billion at the end of the first quarter.
The sequential increase in liquidity was driven by proceeds from sales from our common stock under our at the market equity offering program, which generated $450.4 million during the quarter. In addition, in April, we completed the ATM offering by raising another $24 million in cash as well as entering into a collared forward transaction with a floor price of $474 million. We also have access to capped call transaction proceeds related to our 2024 convertible notes offering with a maximum aggregated payment of $201.9 million by final maturity in 2029.
Putting this together with our cash on hand, we now have access to more than $2 billion in liquidity resulting from a successful series of capital raises over the last several years conducted at increasingly higher equity prices. In February of 2024, we raised a $355,000,000 convertible bond offering with an effective post capped call price of $8.04 a share and followed that with a series of three ATM facilities executed at average prices of $26.19, forty, $7.85 and $70.47 respectively.
Additionally, under the most recent ATM, we entered into colored forward transactions with a floor price of $63.61 and a ceiling price of $86.11. These funds are intended to support acquisitions in a robust M and A pipeline alongside general corporate expenditures and working capital. We execute one in a strong position to execute on both organic and inorganic growth initiatives and to further vertically integrate our supply chain, expand strategic capabilities and grow our addressable market consistent with what we've done and successfully in the past.
Adjusted EBITDA loss for the first quarter of 2026 was $11.8 million, which was well below our guidance range of a 21 million to $27 million loss. The sequential improvement of $5.6 million in Adjusted EBITDA loss was driven by higher revenue and strong gross margin. With that, let's turn to our guidance for the second quarter of 2026.
We expect revenue in the second quarter to range between 225 million and $240 million, representing 16% quarter over quarter revenue growth. At the midpoint, we anticipate gap gross margin to range between 33% to 35% and non gap gross margin to range between 38% to 40%. These forecasted gap and non gap gross margins are accounting for a shift mix within our Space Systems business.
We expect second quarter gap operating expenses to range between 138 million and $144,000,000 and non gap operating expenses to range between 120 million and $126 million. The quarter over quarter increases are primarily driven by the Monarch acquisition and ongoing neutron development and spending related to Flight 1 including staff costs, prototyping and materials. However, we expect to see a shift in spending from R&D to Flight 2 and beyond inventory which is an encouraging sign of progress as we move closer to Neutrons first flight.
Please note that the nascent see of the closing of the Monarch acquisition and the newly announced and yet to be closed mode of transaction, the gap guidance figures exclude any to be determined impact of purchase price allocation and stock based compensation related to these. Deals. We expect second quarter gap and non gap net interest income to be $12.5 million, which is a function of higher cash balances as well as a significant reduction in our outstanding convertible notes.
We expect second quarter Adjusted EBITDA loss to range between 20 million and $26 million and basic weighted average common shares outstanding to be approximately 629,000,000 shares, which includes convertible preferred shares of approximately 46 million. Lastly, consistent with prior quarters, we expect negative non GAAP free cash flow in the fourth quarter to remain at elevated levels driven by ongoing investments in Neutron development and scaling production. This excludes any potential offsetting effects from any financing activities.
In summary, Q1 was another quarter of strong execution. We exceeded guidance and expectations for revenue, gross margins and EBITDA, all well, maintaining robust liquidity to fund future growth initiatives. We expect this momentum to continue guiding to strong revenue growth as our satellite platforms business continues to scale and Neutron progresses towards first flight. And last but not least, to hear some of the upcoming investor events that we'll be attending in the next few months. And with that, we'll hand the call over the operator for questions.
Operator
Thank you. If you wish to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11. Again, we will take our first question. Your first question comes from the line of Andres Shepherd from Cantor Fitzgerald. Please go ahead. Your line is open.
Andres Shepherd
Hey, everyone, good afternoon. Thank you so much for taking our questions and congratulations on all the quarter and all the great progress. Maybe one on Neutron and one on space systems. So on Neutron, Pete, I know you talked a lot about this during the prepared remarks, but just maybe to simplify it for us, you know what are the key items that are pending that, you know investors and ourselves should be tracking as we get closer to the first launch? And also curious if you can maybe give us some of the customer feedback that you've been getting on Neutron, you know, since you're contracting Neutron missions ahead of that first launch. So just curious on that customer feedback and reception that that you're getting. Thank you.
Sir Peter Beck
Hey, Andrew, so nice to chat to you. So I guess that the key things to be to be watching out for, you know, the continued, you know, placing of items on test stands because really, you know, that's, that's the, you know, the large pieces of work yet to to come that have risk associated with them. So as we put these large, you know, pieces of, of the vehicle on, on the test stand and, and take them to their limits and sometimes beyond, then, you know, the completion of those pieces of work is probably the easiest and most visual thing to track. Of course, there's, you know, tremendous amount going on in the background. That's, that's kind of less visible. But, you know, for investors, I think that's, you know, it's probably the easiest thing to focus on.
And then with respect to, to customer feedback, you know, I think you can see from, you know, our strategy of, of just, you know, not dropping our pants and, and, and, you know, deploying neutrons at, at really low prices. We've we've held. The ground there and you know, the customers that that ultimately, you know, buy those, those vehicles, you know, they, they, they know us well and we, you know, we're very well trusted and you know, they have complete confidence in, in both the, you know, Rocket Lab and their ability to to deliver Neutron. So Needless to say, there's also a lot of customers waiting to see it fly. So, but you know, the more aggressive customers are making sure that, you know, they don't miss out their opportunities to fly early.
Andres Shepherd
Wonderful. I know that that's great to hear. And maybe just as a quick follow up maybe for you Adam on the space systems and on the space based interceptor program, just curious if you can maybe quantify that a bit further for us or, or any granularity in terms of, you know, the structure or or expectations there alongside Raytheon? Thank you.
Adam Spice
Yeah, you know, I'll, I'll, I'll provide what color I can and I'll pass back over to Pete. As regards to relationship of the partnership with Raytheon, it really is, we view it as a partnership. You know, I think everybody's been, you know, had a lot of visibility to what's going on with various elements of Golden Dome. SBI is one of the more visible ones. You know, there's a limited amount that we can really talk about for that program specifically. But, you know, we envisioned a very large opportunity, but there are gates that we got to get through.
And as you're aware, you know, this is kind of an interesting procurement process for the government where, you know, companies like ourselves and Raytheon and others that are that are in the mix have to put some of some of their own skin in the game. To unlock a potentially very large opportunity in the back end. So I'd say the most important thing right now is, you know, are we able to like we have in the past bring really quick cost advantage solutions to the market because of our vertical vertical integration capabilities. You know, we'll be able to do things at at in time frames and cost points that we think few if any people will really be able to compete with. So we think we're in a good spot. And then I'll Pete, you want to bring him a commentary.
Sir Peter Beck
I think you've covered up beautifully out of me. I can't really add more to that.
Andres Shepherd
All right, excellent. Well, thank you so much. Congrats again on all the great progress. Looking forward to that Neutron first launch. We'll pass it on. Thank you.
Operator
We will take our next question. Your next question comes from the line of Christine Liwack from Morgan Stanley. Please go ahead, Your line is open.
Christine Liwack
Hey, good afternoon everyone. You know Pete, Adam, there were a lot of moving pieces that occurred in 1/4 as you continue to broaden out your capabilities and increase vertical integration. So I guess first, you know when you look at your capabilities today, are there any areas you are interested in filling in more? And also second, as you continue to broaden out your capabilities, how do you think about the expansion of your Tam and how should we think about opportunities as you're able to provide more solutions as space, as a service? Thanks.
Sir Peter Beck
Hey Christine, great to great to talk to you. Well, I think, I think you've just seen, you know, a, just a methodical approach here from us. As you know, we, we continue to expand our teams and but I what I would say is they're, they're all, you know, expanding for a, for a, you know, a common reason and a common direction. And that's, you know, as we've talked about to ultimately be able to provide services of our own in orbit. So, so I mean, yeah, I, I think at this point there's, there's a lot of capability that we've, that we've managed to, to accumulate both organic and inorganic. And I think we're really at the point where I think if anybody comes to us and asks us to build any spacecraft or satellite, we, we just sort of shrug our shoulders and get to work. So I think we've, we've bought in house, you know, tremendous amount of capability and you know, it all. It all kind of drives towards those end goals.
Adam Spice
Yeah. And I I would add maybe one more point to that. I think it's important for shareholders, like a lot of other companies when they're going to expand into new, you know, into new Tams or expanding into ones they're already in, you know, they just default to acquiring their way in. And I think, you know, this quarter is a great example of us being able to really execute on both sides of the organic and inorganic side. You know, we announced a few weeks ago, Pete talked in his prepared remarks about Gauss, our EP solution that we're bringing to market. That's one where we could have spent, you know, a few $100 million acquiring, you know, startup and kind of went through all the scaling challenges there and then probably ultimately came out with a solution that we thought would be inferior.
Instead, we dedicated, you know, a portion of our engineering team a probably a, an order of magnitude less capital to get it done. And we ended up with what we think is the best solution for the for the market. So I think when we look at how we expanded new markets, we're not just so, you know, kind of focused on just spending shareholder capital to go get it, you know, from acquisition. We'll actually be very efficient and go after it organically as well, which we think yields great benefits for our shareholders.
Christine Liwack
Great, thank you. And if I could follow up on on Neutron, you know, you guys talked about the pricing for the recent deal aligns with your average selling price for for the launches, you know with a smaller backlog for Neutron key level set us on how we should think about the pricing for that. And then also, you know with with the maturity or or the upcoming launch in the fourth quarter, what's been the customer reception for for this? You've got a very strong order this quarter. You noted you know higher than what you had last year. So just understand the demand environment for that launch as we get closer to 4 Q for the first one.
Sir Peter Beck
Yeah, Thanks, Christine. I mean, look, we've always been consistent about, you know, our our pricing structure with Neutron and, and, and that remains the same. I think, you know, I was burned pretty heavily with, you know, discounting electrons and flushing them out of the manifest. It took years. So we're not, we're just not going to go down that road again. And then, you know, of all of the things that that I sit awake at night worrying about like Neutron demand isn't, is just not one of them. And you know, with with the backlog we have currently with Neutron, you know, the backlog is is super healthy for a number of years. And you know, at this point we also need to make sure we have capacity for for other customers as well.
Adam Spice
Yeah, I think, Christine, we can also kind of look back historically and, and, and look at what happened with Electron pricing. And when we brought that vehicle to market, pricing was call it 5 to $6 million. And we now see how backlog is priced with average backlog priced in around 8 and a half million dollars, you know, for commercial missions and you know some are hypersonics being higher than that. So I suspect that, you know, we'll can, you can, we'll see that same kind of trend present itself as we bring Neutron to market where we tend to be very conservative upfront. You know, we understand the value proposition that. Which one brings relative to what is arguably very scarce competition in the market, primarily Falcon 9 and we think that we'll compare very favorably there and hopefully experience an upward bias to ASP as we continue to kind of, you know, gain cadence and credibility with the platform.
Christine Liwack
Great, thank you very much.
Operator
Thank you. We will take our next question. Your next question comes from the line of Eric Rasmussen from Stifel. Please go ahead. Your line is open.
Eric Rasmussen
Yeah, thanks for taking the questions. Congratulations on the, the Neutron bulk order. Just trying to understand, you know, I, I, I hear your, your your comments around trying to be, you know, pretty pragmatic and balanced and keeping, you know, keeping an eye on your AAS. PS for that, make sure that you're not sort of underselling that rocket ahead of schedule. But you know, are we are you at a point now where you will will, we could see an acceleration of the signings of Neutron and those Neutron launch contracts given obviously the strong demand that we're seeing there?
Sir Peter Beck
Yeah, I mean potentially Eric, I think, I think that that will certainly occur after successful flights for sure. And for a number of reasons, you know, not just, you know, customer confidence, but also insurance rates will go down and all of those kind of things that, that get factored into, into launch costs. So, you know, and, and look, we're also always very careful with what we commit, you know, given that is a, it is a development program and we don't want to let anybody down. So, you know, having customers that that have, you know, some flexibility in the beginning is is super helpful.
Eric Rasmussen
Great. And maybe just my follow up, you spent a little bit of time on the AFP machine, but what are your, and seems like you made a lot of progress there, but what are your expectations from moving from maybe a single development machine to maybe more of a high cadence production on that?
Sir Peter Beck
Yeah, well, the the AFP, the the single machine we have, you know, fits our production for for far into the future. So, you know, at the end of the day, stage ones will be a fleet model no different to a a fleet of aeroplanes. The only the only, you know, part that we reproduce our this other stage twos, which you know, we can we can bang out on the AFP super quickly. So you know, at at full cadence rate, you know, we don't seem, we don't, we don't see the need to, to really invest into too much more of the infrastructure. It's it's, it's well scaled, you know, right out of the chute.
Eric Rasmussen
Great, thank you.
Operator
Thank you. We will take our next question. Your next question comes from the line of Trevor Walsh from Citizens. Please go ahead. Your line is open.
Trevor Walsh
Great agent. Thanks for taking the questions. Peter, maybe for you on the Motive acquisition, the prepared remarks focus a lot on the kind of planetary exploration, Mars missions, Moon missions, etcetera. But then there was a little call out in the slide deck around on orbit docking and spacecraft servicing. That seems like that could be a really large opportunity. How much is Motive leaning into that right now or, you know, what can just maybe unpack what that specific piece kind of looks like and if that's something we should kind of be paying attention to it all for that acquisition.
Sir Peter Beck
Yeah, you know, thanks Trevor. So, so motive actually brings a really interesting and unique capability. So yes, I mean, we we highlighted the Mars stuff because that's extremely unique and frankly very cool. But but also basically any any actuation and high precision actuation. These guys are are literally the world experts at. So that that ranges, you know, from like Mars booms and cameras, of course, through the, as you pointed out, like if you want to do some on on orbit rendezvous, you know, we have a very own, you know, Rocket Lab Canada, if you will, for that, for that kind of stuff.
But but also just precision to, you know, drive and drive electronics for things like, you know, solar panel rotators and, and, and array drives, which is something that typically we've bought that we're able to, to now bring that in house as well. So so yeah, it's, it's a unique acquisition in the fact that it, it exposes us to new opportunities and gives us new capabilities. It also closes, you know, one of the one of the last few, you know, subsystems that we, you know, currently buy externally and you know, with respect to solar array drives. So yeah, it it, it, it does a number of things for us.
Trevor Walsh
Great, appreciate that. Adam, maybe just a quick follow up for you with respect to the step down in non GAAP gross margin both in this quarter. And then I think what's implied based on what you're guiding to for Q2, you said that was basically space systems mix entering in. Is that specifically the SDA tranches coming in? I think that was called out for Q1 as the kind of main driver there. But is that also flowing into what's happening in Q2? Is there some other dynamic that we should be thinking about?
Adam Spice
No, you've got that right, Trevor. It's essentially as the SDA tranche 2 and tranche three programs become more and more of the mix. They come in at at lower gross margin, but they bring a lot of scale with them. So if you look at what that does to kind of overall operating margins and you know, be accretive to that. But I I think that the other thing to think about too is, you know, we have normal quarterly mix changes. You know, this quarter, there's less higher margin launch business in, in, in Q2 than we had in, in QQ 1 and Q4.
And the launch business, as we've talked about in the past, it's a little bit difficult to predict because now we have a mix of point in time revenue recognition and overtime revenue recognition. And I said I think it's just, it's, it's much harder to have a lot of predictability to what that margins is going to be. But overall, you know, we see margins expanding in launch as we progress through the year, as we increase our cadence on Electron. And then as we also have periods where we mix in more subsystems and components business, those typically come at higher gross margins than these large SDA contracts.
So you know, we feel very good about where we're at margin wise. We think we have a lot of opportunities to to continue to drive gross margin increases. So really, but you got to look when you start kind of getting a little bit too kind of digging a little too deep in what 1/4 versus the next, there's a lot of things that are moving around under under the surface. But again, the macro trend is supportive of of of of solid gross margins going forward.
Trevor Walsh
Understood. Appreciate the color. Thanks.
Operator
Thank you. We will take our next question and the question comes from the line of Michael Lashock from KeyBank Capital Markets. Please go ahead. Your line is open.
Michael Lashock
Hey, good afternoon. I wanted to follow up on the Motive acquisition and you mentioned how it brings in house a lot of the costly and and supply constrained components. You called out solar array Dr. Assembly specifically for things like that. Did you previously buy them from Motive or did you have multiple other other suppliers for components like that?
Sir Peter Beck
Yeah, Michael, yeah, no, we we bought them from multiple suppliers previously.
Michael Lashock
OK, great. Thanks. And then maybe moving to Electron and and just assuming that the demand is there for more launches and the impressive manifest that you have clearly implies that it is how many electrons could you physically launch annually? Is there anything that could potentially lead to another step change in the Electron launch cadence or, you know, any potential bottle that might be preventing even more of an increase in those launches? Thank you.
Sir Peter Beck
Yeah. So we, when we set up the electron factory, we designed it for 52 electrons a year. So, so we we have a capacity to to reach there and there'll be some modest capital investments to reach that, but that's basically it. And you know, we have two pads already done at LC-1. So, so that's not a constraint. And of course, we had the second, sorry, the third pad and and wallops. So no, I think, I think we're, we're really set up for that, that, that increase in cadence. And yeah, it would, it would be very, very modest investments to to realize that. And and then of course, if we win over 52 launch of the year, we'll have to, you know, we have to take a little bit more real estate and expand the factory. But you know, it's all pretty trivial stuff.
Michael Lashock
Great. Thanks so much.
Operator
Thank you. We will take our next question. Your next question comes from the line of Ron Epstein from Bank of America. Please go ahead. Your line is open.
Alex Preston
Hey, good afternoon. This is Alex Preston on for Ron. I wanted to ask on space systems, are you seeing or thinking about or how are you thinking about opportunities in proliferated Geo and maybe other higher orbits? Right. I know it's been, the trend has definitely been towards Leo proliferation, but I think in recent weeks we've seen some momentum on contracting activity, particularly it seems on the Space Force side there. This is a space you're looking at and to what extent could you maybe enter that market as a prime as well given your current capability set?
Sir Peter Beck
Yeah. Hey, Alex. You know, certainly, certainly we're interested in that. And a lot of the spacecraft that we, we, we build already go to higher low Earth orbits and they, you know, that necessitates an incredibly, you know, hard radiation tolerance. So those environments are not dissimilar to Geo. So a lot of the challenges around red hard and, and those kind of operating environments we, we're already very familiar with. So you know, going to Geo for us is not scary at all. I mean, we're happy to go to Mars and operate in those really deep space environments. So a lot of our tech stack is, is kind of, you know, red heart or red tolerant already. So yeah, we're watching the Geo stuff as as well as you are. And I I think that that that is there's an area we could easily, easily move to.
Alex Preston
Great, thanks. And then if I could follow up, I think Christine asked this question similarly, but I wanted to ask more on the national security side if there are, right. So you've got the capabilities on launch haste providing satellites themselves to SDA. Now adding to that with SBI, are there areas that you could look to expand your capabilities specifically looking at national security that may be areas you can't address currently that you'd like to in the near term?
Sir Peter Beck
Yeah, I think one, one of the really, you know, interesting opportunities that the GEOS application bought us is, is, is you know, these, these very bespoke unique national security payloads. So with that acquisition, I think we were introduced and got exposed to a lot more programs and, and folks then we then we would have you know, otherwise. So I think it's it's a core, a core drive and a core capability within the company. And you know, I think we are in one way or the other, whether it's a component supplier or you know a prime, we have pretty deep exposure into that national security environment now as you point out, both through launch and and through spacecraft.
Alex Preston
Great, thank you very much. Appreciate the color.
Operator
Thank you. We will take our next question. Your next question comes from the line of Jan Anglebrecht from Baird. Please go ahead. Your line is open.
Jan Anglebrecht
Good afternoon, Peter and Adam. Thanks for for taking our questions. I'll start with the the space systems business, you know announced a lot of updates recently, I think 7 different sort of capabilities in the last four months. And then there was the in house development of key components. We think of, you know, the Star Trekker in Toronto, electric propulsion thruster in New Zealand and then the Maneric deal and sort of each of these updates points towards the strategy of expanding Rocket Labs manufacturing footprint beyond the US So more of sort of a distributed manufacturing model. Just curious the the salt there should be expect more of that in the future. Did sort of the disruption of tariffs factor into that or was it mostly just a logical business decision of being able to serve customers globally in a much easier way?
Sir Peter Beck
Yeah. Hey, so so a bit of both, a bit of all of those things you said actually. So, so yes, it's it's strategic in the fact that, for example, you know, Monarch really gave us a foothold in Europe and you know, Europe, you know, outside the United States is, is like the second largest, you know, market and opportunity for us. So, and also it just sort of depends where the technology is. Like, you know, the the Monarch laser terminals are widely regarded as the best in the business. So if it means we have to go to Europe to get them, that's where we'll go. So so you know, that was just convenient that it was also very strategic for us.
But but yeah, I mean, we, we, we, we operate kind of, you know, areas of excellence and you know, some places it makes sense to do stuff in New Zealand, some, you know, times it makes sense to do it and in various facilities in the States. So, you know, we really look at that quite holistically in that sense.
Jan Anglebrecht
Thanks, Peter. And then if I just could have a quick follow up as we think about the trans three tracking layer, I think. In late December was about $800 million and then in the release it said. There's the potential for subcontracting opportunities to take it up to a billion dollars. I was curious, I mean, any of the updates, any of the new components that you've announced sort of developed in house and then you've brought mine, Eric in there. Is there anything I know you can't maybe don't want to talk about exact dollar values, but if we think about future tranches of the tracking layer, is there a ballpark of of sort of content that these latest developments could have had has increased your ability to to to serve the other prime customers?
Sir Peter Beck
Yeah. So I mean, you know, a number if we just talk about, you know, you know, some of the transport layer stuff in in what some of the track and SDA work in particular like it, you know, they are all optically linked together. So, so you know, obviously there's an opportunity there and they all have, you know, high-powered solar requirements and there's opportunities there. They all need electric propulsion. So there's opportunities there. So you can see that, that, you know, we can be widely just distributed across things. And you know, I like to think of it as like, even when we lose, we kind of win because if we lose a project, then, you know, the next day there's a bunch of purchase orders, you know, turning up for solar panels and reaction wheels and all that kind of stuff. So even when we, we lose, we win.
But even when we win, we also win twice because, you know, the same thing happens as we, we can win the program. And if there's multiple awards, typically there'll be, you know, come Monday, there'll be a bunch of purchase orders for, for components for other people's systems as well. So that's kind of what you saw with T3 is we kind of won twice.
Jan Anglebrecht
Great, Thank you, very helpful. Appreciate the time.
Operator
Thank you. We will take our next question. Your next question comes from Edison Yu from Deutsche Bank. Please go ahead. Your line is open.
Edison Yu
Hey, thank you for for your questions. Once actually asked something I brought up a couple of calls ago and it's in the context of you obviously laid out today you have the complete satellite, you know, component portfolio whole line of of different types of satellites. And then you know, you probably saw recently Amazon acquired global Star and so there's. Spectrum and you know these kind of potential services markets in the future have. Your views kind of changed over the last maybe 6 to 9 months. Are there certain services that look more attractive, less attractive the spectrum your viewing spectrum changing on just curious reviews on that.
Sir Peter Beck
Yeah, Hey, listen, great to talk to you. Look, I think we've always been super consistent that, you know, in goal here is to provide, you know, services from, from, from space. And I think that's the largest Pam and that's where if you're on your own rocket and have your own satellites, you can be most disruptive. And that thesis hasn't changed. But I also think it's a little bit academic to be talking about, you know, us doing services when we, when we still have Neutron and development and things like that. So, you know, it's at at the right time. I think we're we'll, we're happy to talk a little bit more about, you know, our, our thoughts there. But you know, for right now, the focus is really on, you know, completing and making sure that we, we have all the components and everything we need at scale to be able to be able to ultimately deploy, you know, applications in orbit.
Edison Yu
I understand. I thought I'd try and then I guess something, probably more something maybe more, perhaps it'll be more near term or, or more kind of next couple years. I think you said it your, your, your haste. The manifest was like a 1/3 already or 1/3 of the, the manifest. You, you kind of envision, you know, a future where your launch mix is actually becomes, you know, probably like 1/3 haste, whether, you know, let's say, you know, forever, let's say you get 30 launches, you know, 10 of them every year actually, you know, hypersonic testing is that is that like a realistic scenario?
Sir Peter Beck
Yeah, look, it, it could be. And a part of this will depend on the pace and scale of Golden Dome because you know, one really key critical element of golden Dome is, is, you know, how do you how do you how do you test it? And, and, you know, simulate the, the threats and all those kinds of things. And this is where we're seeing, you know, a lot of interest in, in the haste portfolio, of course, because you can do things with that, that, that it, that it's very difficult to simulate. So I would say that, you know, the scale of haste will will somewhat depend or that, you know, that the massive scale of haste will somewhat depend on, you know, the scale of Golden Dawn and, and the pace in which that takes place.
Adam Spice
Yeah, Addison, I'd also maybe add to that too, that, you know, one of the things that we're seeing is, you know, the international opportunities becoming much more clear and present. I think that also applies to hypersonics, right? I think that the, the environment that we find ourselves in these days geopolitically just is driving, you know, more and more sovereigns to need capabilities that they used to rely upon, you know, the US for primarily. So, you know, again, when you think about the long term demand for for haste type of solutions, I don't think you have to think of just the US as the customer base for that. I think it's going to it's going to expand beyond that.
Now, of course, you know, everything we do, you know, requires, you know, US State Department approval and cooperation. And you know, we of course work with with only the most friendly partners in the United States. But I think there is a bigger opportunity out there than just, you know, like mock TV, for example, and and U.S. government opportunities.
Edison Yu
Understood. Thank you.
Operator
Thank you. We will take our next question. The question comes from the line of Gautam Khanna from TD Cohen. Please go ahead. Your line is open.
Gautam Khanna
Good afternoon, Anton. On for Dawson. Can you just share some more details on Neutron timing? So based on the way things are trending now, is this more of an early Q4 story or late Q4 story? And then just depending on the timing of the first Neutron launch, is it possible we could see maybe 3 payload carrying launches in 2027? Thanks.
Sir Peter Beck
Could you repeat the first question? We had a bit of a followed on the audio on our side.
Gautam Khanna
Sorry about that. Can you just share some more details on Neutron timing? Is this kind of more of an early Q4 story or late Q4 story? And then the second part was just, you know, depending on the timing of that first launch, could we maybe see 3 payload carrying launches in 2027?
Sir Peter Beck
Yeah, I mean, I, I don't, I don't think we, we have enough visibility to, to nail it down to, you know, a couple of weeks and 1/4 at at this point in time. You know, as we, as we approach first launch, it'll be, you know, those, those timelines have become much, much tighter. And then, you know, we've always said their plan is, is sort of 135. And you know, that's what that's what we've demonstrated with the Electron and, and we think that's the right kind of cadence. So you know that that that, that you know thought store remains consistent.
Gautam Khanna
Got it. Thanks.
Operator
Thank you. We will take our next question. Your next question comes from David Strauss from Wells Fargo. Please go ahead. Your line is open.
Ben Tomic
Good afternoon. This is Ben Tomic on for David. I was just curious following up on that last question, when do you plan to incorporate the reusability for Neutron and then how will that kind of impact cadence going from there?
Sir Peter Beck
Yeah, no, great question. So on Flight 1, you know, we'll be attempting to reenter into a soft splashdown for Neutron. So that will test all of the the reentry engine relights and downrange burns. This is the area that's kind of the most unknown and the hardest to test for other than actual flight testing. Hence the reasons for the, you know, the intentional soft splashdown where we just splashed down in the ocean. Provided that is that all goes well and we're happy with, with, with what we need to do there, then we'll slip the return on investment barge under it and attempt attempt a landing on flight.
So now, of course, if we don't get the, the result that we want on the reentry for flight 1, then then we'll, you know, we'll, we'll reevaluate and and you know, basically I just don't want to put the barge under the vehicle until we till we know that we're not going to punch a hole through it.
Ben Tomic
Got it, Great, thanks. And then maybe going back to EWSA, can you just provide an update on your contracts there? And then how you're thinking about that program at a high level? Have you guys received all the funding for trans to transport and how are you thinking about the transport layer going forward with that shift to the space data network?
Adam Spice
Yeah, well, I can speak to the where we are with the contracts. So everything's on track. We've been, we've been hitting our milestones. We've been getting, you know, on time payments from our government customers. In fact, you know, pretty sizable one earlier this week. So no, I, I think everything seems to be on track there. So I don't think funding is an issue for the programs that we're executing against. As far as the long term, you know, direction for transport layer. You know, I, I think there's been plenty of kind of press and discussions and a lot of speculation of course, but I think, you know, for us right now, our focus is on executing, you know, our, our, our Trunch 2 of transport. And then of course on, on the the missile track, missile warning for for Trunch 3 if Pete, you want to get anything that.
Sir Peter Beck
Yeah, thanks Adam. I think you've covered it well. I mean, you know, transport is, is, is kind of one layer, but I mean the the layer that is that is doing the workers track. So hence the reasons why we focused in a very, very intently on that for the T3 stuff.
Ben Tomic
Got it. Thank you.
Operator
Thank you. We will take our next question. The next question comes from Surid De Silva from Roth Capital. Please go ahead, your line is open.
Surid De Silva
Hi Pete, Hi Adam, Congrats on the progress here. Adam, I know you talked about the the space systems business coming in with the PwC program, but maybe can you talk about what the mix of launch and space systems made, how it may trend? There are a lot of moving parts that I know may be hard, but and then, you know, gross margin implications of that as you look out the next, you know, several quarters, I guess one or two years maybe.
Adam Spice
Yeah. So look, I, I think that, you know, we're clearly going to have more mix in 2026 as we've progressed through the year coming from space systems, even though we're going to have pretty significant growth coming from the electron side of the business as well. Electron and haste, you know, I, I would say that it won't be dramatic. You know, we as the mix as I mentioned earlier as the mix skews more towards Electron, that's very helpful to the overall corporate margin because that product is really coming into its own, you know getting very closer if not at the, the target margins that we set for that business several years ago.
When you look at our Space systems business, we mentioned earlier that you have these SDA contracts are, are large and they bring a lot of absolute dollar scale with them a little bit lower gross margin profile. But the other thing to take note of too is if, you know, we just closed the Monarch acquisition, that will contribute, if you want to think about roughly $15 million, you know, in this, in this quarter on a run rate basis. And that comes at lower than those space systems overall gross margin because, you know, it's a brand new business.
I think Pete mentioned on the last call that there's a bunch of work that we need to do there to get that that business into fighting shape, you know, in, in the way that we view a kind of Rocket Lab, you know, product lines. You know, we're very excited and very confident we're going to get there. But there's some work to be done. And until we get a few more quarters under our belt and really kind of Rocket Lab eyes, if you will, that system, it's, you know, it's going to be a bit of a drag on margins, but I wouldn't say anything too too significant.
And we do think longer term that there's no reason why that business can't be at or greater than our our target margins for for our space systems division. So you know, I think the other thing is going to influence this. Obviously once we start to get Neutron in the mix, which is really more of a obviously revenue generating, you know 2027 story onward, you know that's going to do we think very much what Electron did through its match. Which is start off with challenge gross margins, but then because of reusability and because of our experience in in kind of ramping a rocket business, we think that that's got, you know, as much if not better long term gross margin potential as Electron is exhibiting.
So I think overall, you know, we're not going to see a dramatic shift I think either quarter to quarter or even over the next several years. It's going to be more of kind of the progression that we've seen. And I think we've been pretty clear in, in kind of what our long term model for the businesses, which is, you know, with a strong top line growth with gross margins, a corporate level, again longer term targets of you know around 50% or or or greater and then delivering, you know, mid to upper 20s operating margins for the business.
And I think that, you know, when we look at what's going on underneath, you know, the various pieces coming together, really the, the key to unlocking that is neutron, right? We got to get neutrons first flight off. We got to pivot that in production. And when we do, there's a lot of very positive things that happened to to the PNL. And then, you know, lagging that by perhaps 18 to 24 months is, you know, the strong cash flow generation that will come after we've had the opportunity to build out the fleet of of neutrons, as Pete talked about earlier, where it looks much like, you know, a fleet of aircraft.
So we we think we've got all the right kind of levers in place. It's just a matter of executing. And again, I don't think you should be expecting any sharp kind of changes to our margin profile. I think it should be relatively straightforward to model is no, I don't think there any big, big surprises that are lurking anywhere.
Surid De Silva
Thanks, Anna. That was very helpful color there. And then maybe this one's bigger picture for Pete and it could be a bit of a reach because you're not the first company people think about when they think about lunar missions. But Peter, are there any opportunities that rocket live intercepts with everything? Jared, I you can talk about NASA impact that we're not maybe realizing, but should or is that something that maybe is other companies more so than you guys?
Sir Peter Beck
Yeah, it's, it's, it's probably other companies in US in some, in some areas. You know, we are obviously a a provider of a lot of critical hardware for many of those companies. So for the lunar stuff, I think we we kind of prefer to, you know, to be the, you know, the picks and shovels behind those missions rather than those, you know, headline those missions. It's it's kind of a bit of a tricky one because, you know, typically those programs have been a little bit wobbly in the fact that, you know, we're going to the moon. No, we're not going to the moon. Now we're going to Mars. Now we're going back to the moon. Now we're going back to.
So I just don't want to get whipped sword and, you know, and have those those big, those big contracts in in the mix, getting whipsawed backwards and forwards. You know, for example, where Gateway got cancelled and, and and then the the commercial space stations got completely changed. And, and I don't know, it's just those, those those are cool programs, but you know, it's very easily a whipsawed around. So we we much prefer to to play a quieter role.
Now, in saying that, there's, there's certainly some projects with, you know, with respect to Mars that that we're, we're very vocal about Mars telecommunication orbital. There is, I think is, is, is, is one that more recently that we've talked about a lot in the mass sample return missions. So you know, where, where we see those missions that, you know, have strong, strong proven funding and, and that are, you know, relatively uncontentious from changes of administration and all those kind of things. And we'll go after them. But you know, I'm not less keen to to you know chase the shiny things that that can be a little bit, you know a little bit, you know less certain.
Surid De Silva
Appreciate the update. Thanks, Pete.
Operator
Thank you. We will take our next question and the question comes from the line of Ryan Koontz from Needham and Co. Please go ahead, your line is open.
Ryan Koontz
Great. Just a quick question here, you know, thinking about your recent additions to the portfolio with my NARC and and the gas electric propulsion, you know one first part a is like how do you think that improves your competitive position in the broader landscape? And then secondly, you know your ability to compete financially in the big picture thinking kind of multi year, you know strategic level. Appreciate your thoughts there. Thank you.
Sir Peter Beck
Yeah, no, thanks, Ron. Well, I think, I think, you know, some of these acquisitions are just driven by pure pain. If we look back through some of their programs, the things that caused a lot of pain for us were things like electric propulsion that was, you know, constantly late, constantly expensive and just just not great solutions. And, you know, Monarch was slightly different, you know, great technology, just just always, you know, struggled with respect to delivery. So some some of these things are just, you know, driven, driven from pain.
Now, of course, owning those things means that you can you can resolve the pain and that puts you in a much stronger competitive. Position both from, you know, an on time delivery or faster timeline delivery. And then of course, when they're all vertically integrated, the cost structures, cost structure is, is much more effective as well. So, you know, being vertically integrated and owning these really critical unique key pieces of the space, space ecosystem, you know, naturally gives a a competitive advantage.
Adam Spice
Yeah, and I'd add one more thing to that. I mean, I think we have a very tangible example of of the benefits that it can yield. If you look at our Tranche 3 win that we had for the $816 million, I think one of the, the main reasons why we think we prevailed in, in getting award there is because of our level of vertical integration. And if you look at the margins that that we model for that, which are very much in line with our our, our spaces and platform business, I think they look quite different than people who won similar awards that aren't as vertically integrated.
So, you know, not only does it position us to win because the customer can have more confidence that we're going to deliver, you know, on schedule with performance that we commit to because we own the whole platform or more of the whole platform. It just also puts us in a much stronger position to win financially as well because we just we can we can turn what would otherwise be a pretty lackluster kind of financial profile or program into something that's actually quite strong. So I think it's really important on both levels, you know, first and foremost strategically enabling us to just execute on programs and then when we do it to give it, there were kind of returns that we and our shareholders expect.
Ryan Koontz
That's wonderful guys. Thank you.
Operator
Thank you. We will take our next question. Your next question comes from Andre Madrid from BTIG. Please go ahead. Your line is open.
Ned Morgan
Hey, this is Ned Morgan on for Andre this afternoon. Could you guys just size up how much of space systems revenue is being consumed internally versus third parties this year? And then moreover, how that could trend over time.
Adam Spice
So I guess I think this, I think if I understand your question correctly, you're saying what percentage of our, if you look at a spacecraft that we're delivering say for example to SDA, what percentage of that would be vertically integrated bomb versus third party procured? Is that what you're asking?
Ned Morgan
I mean, I guess more so I was thinking about with the electric thrusters, you guys are, are using those on your, you know that business you line you're building up is going to support your SDA satellites. You know how much of your internal. Production Space Systems is supporting your programs versus others.
Adam Spice
Oh, that's an interesting question. I would say, I mean, I, yeah, it depends. Like if you've got our solar business, for example, right, I would say that we don't yet consume a majority of our solar capacity for our internal programs. That's still very much a program sort of platform or, or or line of business where the majority of the revenue is coming from other satellite manufacturers that we sell to like Lockheed and Airbus and and and others. If you look at things like electric propulsion for Gauss, that's going to be disproportionately internally focused initially because we're going to prioritize that for our key strategic programs.
But you know, make no mistake about it, every line of business, every product that we develop is designed to not only need our internal needs, but also serve the merchant market. So I would say that, yeah, it really depends by by by platform and solar is low, Gauss will be high. When we think of things like reaction wheels, I would say the vast majority of our production actually goes to third, third parties versus internal supply. So yeah, it's, there's really no, I'd say holistic number that I can give you that that would be helpful. It's just, it's just kind of a case by case kind of product by product kind of look.
Ned Morgan
OK, thank you. And then one more just trailing back to, you know, how big haste and hypersonics in general could be. I guess what would make you decide to broaden your hypersonic offerings beyond just haste? I know there's some other programs like Mock Mock XL out there. Was just curious if if you have any interest in those.
Sir Peter Beck
Yeah. I mean, I think we have kind of interesting exposure across a wide, wide field of stuff. So, so you know, the haste is obviously a very, very specific requirement. And and you know, we, we obviously involved in SBI as well. So yeah, I mean, I, I think, I think we view it, view it where we can add the most amount of value and, and we're strategic for us. And you know, as, as various programs, you know, rise, we, we always take a good solid look and, and, and sort of make decisions based on, you know, on those factors.
Adam Spice
Yeah, I think that if, if, if I can kind of wave the magic wand and come up with ideal mix, I would. And I, we, I talked about this a few years ago when I was meeting with folks. It was like if we could get to the point where haste represented, let's say, the base business for the Electron platform, that got us to our target margins, which was, as we've talked before, about 24 launches a year, if we could have. You know, 24 launches a year be haste that covers really the nut for that business and gets us to absorbing, you know a lot of the overhead and everything else becomes gravy and really additive to margin. That would be the place where we'd want it to land.
Now could it get there? I think there's a possibility of that. I mean, this year if you look at the the mix of haste launches this year out of our total manifest, it's sitting at around, yeah, a little over between 20 and 25% of the mix is going to be haste. So there'd be a little bit of work yet to get to that to become a baseline of say 2 haste launches of a month. But I would say also because I mentioned earlier, it doesn't just have to come from US programs. You know, there's a good chance it's going to, it's going to be coming from, from lots of different places.
Ned Morgan
Thank you.
Operator
We will take our next question. Your next question comes from the line of Jeff Zanry from Craig Hallum Capital Group. Please go ahead, Your line is open.
Vijay
Hi guys, this is Vijay on for Jeff. Thanks for taking the question and I'll keep it to one on subsystems, how are you tracking the progress post acquisition? You know, is it, is it how much cost you're able to take out? Is it how much you can increase margins, how much you can scale production? Just kind of what do you look at there? Thanks.
Sir Peter Beck
Yeah, it depends, it depends a little bit on the the business DJ like some some require a lot more work than others. You know, generally, historically we've we've acquired very profitable little companies and you know, the the Rocket Rocket Lab ising as Adam called it is, is, you know, relatively limited to black wall snack machines and T-shirts versus, you know, complete, you know, financial restructure. But I would say that, you know, Narak is, is certainly one of those that that's going to take a, you know, take a lot more work, but you know, consistent dead and Adams, you know, comments around their financial model.
We have very clear gross margin targets and and you know, these business units are run almost as their own entities. You know, I treat them actually like startups. So they have to come pitch to me for the money. They're expected to grow a certain amount every year. And whether they do that through selling more products or creating new products, that's, that's, you know, their business. But you know, we very much run them fast and hard and, and like little startups and you know that that's worked out really well for us.
Vijay
All right. Thanks for taking the question.
Operator
Thank you. There are no further questions. I would like to hand back for closing remarks.
Sir Peter Beck
Great. Thanks very much, everybody and and thanks for joining us today. And we look forward to sharing more exciting updates in the months ahead. So thanks very much.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
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