Rocket Lab flags weaker quarterly margins as lower-profit satellite sales increase

Aug 10 (Reuters) - Rocket Lab ‌forecast third-quarter gross ​margin ​below Wall Street expectations on Monday, as sales of lower-margin satellite platforms are set to make up a larger share ‌of its business.

The Long Beach, California-based company said the weaker outlook ⁠reflects the mix of products it expects to sell. Rocket Lab is booking more ‌revenue from building satellite platforms, ‌larger, more complex spacecraft that generate lower margins than some of its other space hardware and launch products.

That business is becoming increasingly important ​as the company expands beyond its Electron rocket launches and builds a broader satellite-manufacturing operation.

It expects gross margin of 29% to 31% in ⁠the third quarter, below analysts' average estimate of 37.6%, according to data compiled by LSEG. Its ​shares fell about 3% in extended trading.

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

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 first flight 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.

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

The company said it expects strong growth in both its 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 that would give it a recurring-services business.

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

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