Rocket Lab Announces First Quarter 2023 Financial Results,

Rocket Lab Announces First Quarter 2023 Financial Results, Issues Guidance For Continued Growth In Second Quarter 2023

Notes to Editor: All dollar amounts in this press release are expressed in U.S. dollars, unless otherwise stated.

+ USE OF NON-GAAP FINANCIAL MEASURES

We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (“GAAP”) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company's ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Reconciliation of the non-GAAP financial information to the corresponding GAAP measures for the historical periods disclosed are included at the end of the tables in this press release. We have not provided a reconciliation for forward-looking non-GAAP financial measures because, without unreasonable efforts, we are unable to predict with reasonable certainty the amount and timing of adjustments that are used to calculate these non-GAAP financial measures, particularly related to stock-based compensation and its related tax effects. The following definitions are provided:

+ ADJUSTED EDITDA

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from net income or loss to determine Adjusted EBITDA. Management believes this measure provides investors meaningful insight into results from ongoing operations.

+ OTHER NON-GAAP FINANCIAL MEASURES

Non-GAAP gross profit, research and development, net, selling, general and administrative, operating expenses, operating loss and total other income (expense), net, further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Such items are excluded from the applicable GAAP financial measure. Management believes these non-GAAP measures provide investors meaningful insight into results from ongoing operations.

ROCKET LAB U.S.A., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (unaudited; in thousands, except share and per share data)

	Three Months Ended March 31,
	2023			2022
Revenues	$	54,895		$	40,703
Cost of revenues		48,538			36,968
Gross profit		6,357			3,735
Operating expenses:
Research and development, net		23,905			13,477
Selling, general and administrative		28,469			23,078
Total operating expenses		52,374			36,555
Operating loss		(46,017	)		(32,820	)
Other income (expense):
Interest expense, net		(685	)		(2,989	)
Gain (loss) on foreign exchange		134			(20	)
Change in fair value of liability classified warrants		—			13,482
Other income, net		1,477			26
Total other income, net		926			10,499
Loss before income taxes		(45,091	)		(22,321	)
Provision for income taxes		(526	)		(4,388	)
Net loss	$	(45,617	)	$	(26,709	)
Net loss per share attributable to Rocket Lab USA, Inc.:
Basic and diluted	$	(0.10	)	$	(0.06	)
Weighted-average common shares outstanding:
Basic and diluted		476,199,710			456,495,288

ROCKET LAB U.S.A., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2023 AND DECEMBER 31, 2022 (unaudited; in thousands, except share and per share values)

	March 31, 2023
	(unaudited)			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	208,365		$	242,515
Marketable securities, current		190,357			229,276
Accounts receivable, net		50,690			36,572
Contract assets		12,558			9,451
Inventories		98,453			92,279
Prepaids and other current assets		63,203			52,201
Assets held for sale		11,630			—
Total current assets		635,256			662,294
Non-current assets:
Property, plant and equipment, net		95,981			101,514
Intangible assets, net		76,495			79,692
Goodwill		71,020			71,020
Right-of-use assets - operating leases		34,839			35,239
Right-of-use assets - finance leases		15,458			15,614
Marketable securities, non-current		47,920			9,193
Restricted cash		3,337			3,356
Deferred income tax assets, net		3,500			3,898
Other non-current assets		7,102			7,303
Total assets	$	990,908		$	989,123
Liabilities and Stockholders’ Equity
Current liabilities:
Trade payables	$	22,852		$	12,084
Accrued expenses		8,678			8,723
Employee benefits payable		12,333			8,634
Contract liabilities		125,635			108,344
Current installments of long-term borrowings		2,934			2,906
Other current liabilities		24,863			22,249
Total current liabilities		197,295			162,940
Non-current liabilities:
Long-term borrowings, excluding current installments		100,724			100,043
Non-current operating lease liabilities		33,870			34,266
Non-current finance lease liabilities		15,478			15,568
Deferred tax liabilities		170			95
Other non-current liabilities		3,353			3,005
Total liabilities		350,890			315,917
COMMITMENTS AND CONTINGENCIES
Stockholders’ equity:
Common stock, $0.0001 par value; authorized shares: 2,500,000,000; issued and outstanding shares: 478,153,075 and 475,356,517 at March 31, 2023 and December 31, 2022, respectively		48			48
Additional paid-in capital		1,125,976			1,112,977
Accumulated deficit		(486,572	)		(440,955	)
Accumulated other comprehensive income		566			1,136
Total stockholders’ equity		640,018			673,206
Total liabilities and stockholders’ equity	$	990,908		$	989,123

ROCKET LAB U.S.A., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (unaudited; in thousands)

	For the Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(45,617	)	$	(26,709	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		7,033			6,088
Stock-based compensation expense		14,036			11,958
Loss on disposal of assets		5			5
Amortization of debt issuance costs and discount		709			690
Noncash lease expense		988			731
Noncash income associated with liability-classified warrants		—			(13,482	)
Change in the fair value of contingent consideration		300			2,500
Accretion of marketable securities purchased at a discount		(1,147	)		—
Deferred income taxes		420			(1,558	)
Changes in operating assets and liabilities:
Accounts receivable, net		(14,116	)		(5,644	)
Contract assets		(3,109	)		(3,668	)
Inventories		(6,712	)		(9,132	)
Prepaids and other current assets		(10,035	)		(1,071	)
Other non-current assets		103			772
Trade payables		11,305			805
Accrued expenses		403			(3,245	)
Employee benefits payables		1,294			475
Contract liabilities		17,292			10,652
Other current liabilities		2,305			4,266
Non-current lease liabilities		(891	)		(783	)
Other non-current liabilities		49			11
Net cash used in operating activities		(25,385	)		(26,339	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and software		(12,674	)		(6,242	)
Cash paid for acquisitions, net of acquired cash and restricted cash		—			(65,588	)
Purchases of marketable securities		(76,394	)		—
Maturities of marketable securities		78,099			—
Net cash used in investing activities		(10,969	)		(71,830	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options and public warrants		771			1,379
Proceeds from Employee Stock Purchase Plan		1,202			1,025
Proceeds from sale of employees restricted stock units to cover taxes		3,078			20,841
Minimum tax withholding paid on behalf of employees for restricted stock units		(1,915	)		(8,756	)
Payment of contingent consideration		(1,000	)		—
Finance lease principal payments		(78	)		(45	)
Net cash provided by financing activities		2,058			14,444
Effect of exchange rate changes on cash and cash equivalents		127			(574	)
Net decrease in cash and cash equivalents and restricted cash		(34,169	)		(84,299	)
Cash and cash equivalents, and restricted cash, beginning of period		245,871			692,075
Cash and cash equivalents, and restricted cash, end of period	$	211,702		$	607,776

ROCKET LAB U.S.A., INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (unaudited; in thousands)

The tables provided below reconcile the non-GAAP financial measures Adjusted EBITDA, Non-GAAP gross profit, Non-GAAP research and development, net, Non-GAAP selling, general and administrative, Non-GAAP operating expenses, Non-GAAP operating loss and Non-GAAP total other income (expense), net with the most directly comparable GAAP financial measures. See above for additional information on the use of these non-GAAP financial measures.

	Three Months Ended March 31,
	2023			2022
NET LOSS	$	(45,617	)	$	(26,709	)
Depreciation		3,713			3,193
Amortization		3,320			2,895
Stock-based compensation expense		14,036			11,958
Transaction costs		165			375
Interest expense, net		685			2,989
Change in fair value of liability classified warrants		—			(13,482	)
Change in fair value of contingent consideration		300			2,500
Performance reserve escrow		1,838			1,895
Amortization of inventory step-up		—			2,002
Provision for income taxes		526			4,388
(Gain) loss on foreign exchange		(134	)		20
Accretion of marketable securities purchased at a discount		(1,165	)		—
Loss on disposal of assets		5			5
Employee retention credit		(3,841	)		—
ADJUSTED EBITDA	$	(26,169	)	$	(7,971	)

	Three Months Ended March 31,
	2023			2022
GAAP Gross profit	$	6,357		$	3,735
Stock-based compensation		3,813			3,335
Amortization of purchased intangibles		1,710			565
Amortization of inventory step-up		—			2,002
Performance reserve escrow		57			114
Employee retention credit		(2,130	)		—
Non-GAAP Gross profit	$	9,807		$	9,751
Non-GAAP Gross margin		17.9	%		24.0	%

GAAP Research and development, net	$	23,905		$	13,477
Stock-based compensation		(5,022	)		(5,026	)
Amortization of purchased intangibles		(9	)		(1,632	)
Employee retention credit		631			—
Non-GAAP Research and development, net	$	19,505		$	6,819

GAAP Selling, general and administrative	$	28,469		$	23,078
Stock-based compensation		(5,201	)		(3,597	)
Amortization of purchased intangibles		(1,434	)		(598	)
Transaction costs		(165	)		(375	)
Performance reserve escrow		(1,781	)		(1,781	)
Change in fair value of contingent consideration		(300	)		(2,500	)
Employee retention credit		1,080			—
Non-GAAP Selling, general and administrative	$	20,668		$	14,227

GAAP Operating expenses	$	52,374		$	36,555
Stock-based compensation		(10,223	)		(8,623	)
Amortization of purchased intangibles		(1,443	)		(2,230	)
Transaction costs		(165	)		(375	)
Performance reserve escrow		(1,781	)		(1,781	)
Change in fair value of contingent consideration		(300	)		(2,500	)
Employee retention credit		1,711			—
Non-GAAP Operating expenses	$	40,173		$	21,046

GAAP Operating loss	$	(46,017	)	$	(32,820	)
Total non-GAAP adjustments		15,651			21,525
Non-GAAP Operating loss	$	(30,366	)	$	(11,295	)

GAAP Total other income (expense), net	$	926		$	10,499
Change in fair value of liability classified warrants		—			(13,482	)
(Gain) loss on foreign exchange		(134	)		20
Non-GAAP Total other income (expense), net	$	792		$	(2,963	)

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