Rocket Lab became the latest space company to experience earnings scrutiny from investors after it released its second quarter (2Q) earnings late Monday. All eyes were focused on the long term fiscal health of the New Zealand launch provider, which has quickly risen to become SpaceX’s top rival in the commercial launch sector. Despite posting a massive 62% year-over-year increase in 2Q revenue to $234 million, its earnings-per-share (EPS) fell 8 cents and the company’s GAAP gross-margin was 36.1%, above the company’s 33% to 35% guidance range. Its non-GAAP free cash flow was negative $110.1 million, compared to negative $77.4 million reported in the first quarter.

Rocket Lab’s stock dropped below $75 a share following the report, then recovered Tuesday morning.

Investors and analysts have been much more CapEx conscious since jumping on the SpaceX IPO roller coaster ride that started this past June. Fears of an AI bubble have also put more focus recently on long-term expenses. Financial disclosures for SpaceX’s IPO revealed that despite being the clear global leader in commercial launching, SpaceX’s revenue generation was largely a result of growth in its Starlink LEO satellite service, which was still nowhere near the billions it was spending on AI. Rocket Lab acquired its own LEO constellation to round out its business through its $8 billion acquisition of Iridium later that same month.

Adding Iridium to the portfolio gives Rocket Lab some long-term stability with an additional $870 million in recurring revenue from 2.5 million subscribers. On the company’s earnings call, however, analysts expressed concern through questions about how the acquisition could potentially impact margins and cash flow, and also increase dilution for shareholders.

“Iridium is our entry point into space applications market,” Rocket Lab CEO Peter Beck said on the company’s Monday earnings call. “Iridium’s L-band spectrum provides capabilities distinct from broadband-oriented spectrum. We see growth opportunities in internet of things, direct-to-device services, positioning, navigation and timing, defense, aviation and marine safety … We will focus on growing the Iridium business and expanding its capabilities and we are still early in planning for any future constellation.”

L-band’s ability to penetrate through weather and harsh conditions was a key factor in Iridium’s success at the mobile edge. “If you want to do big things in space, you need spectrum —  others have arrived at the same conclusion as us,” Beck said in June after the acquisition.

While taking questions from reporters on Rocket Lab’s 2Q earnings call, Beck may have unnerved analysts when he stated that the launch window for the company’s upcoming and long-awaited Neutron reusable rocket is “narrowing.” Some interpreted this comment as a possibility delay. Beck has previously emphasized Neutron’s importance in its transition to a full-stack space company, and still believes that the rocket will hold its debut launch by the end of the year.

Despite the increased scrutiny, Rocket Lab’s short term financials seem solid. The company’s backlog jumped 137% year-over-year with more than 90 scheduled launches totaling $2.36 billion in business. Expectations for Q3 revenue sit  between $250 million and $265 million.

“The demand for launch services is extreme,” Beck said on the call. “We signed more than $1 billion in new contracts for Electron, HASTE and Neutron through the second quarter and the period after quarter’s end. We signed more than $581 million in Space Systems contracts during the quarter, including more than $160 million to build  satellites for U.S. Space Systems Command supporting space-domain awareness. Those satellites will be equipped with Heimdall payloads from GEOST, which we previously acquired.”

Rocket Lab also announced a new Neutron launch deal with constellation operator Kepler Communications (Kepler) with launches slated to start in 2028.  While Kepler has previously relied on rideshare capacity to deploy its first 33 satellites, this Neutron launch contract is the first time Kepler has booked a dedicated mission on a commercial launch vehicle – providing Kepler with much greater control over launch schedule and orbital parameters to meet their constellation requirements.

“Selecting Rocket Lab for our first dedicated launch marks an important milestone for Kepler as we continue to scale our infrastructure. Our customer demand continues to grow, and dedicated launch provides the flexibility to expand and deliver more capacity and capability to the missions we support,” Mina Mitry, CEO and co-founder, Kepler, said in a statement.