Cash Runway in Pre-Profit Space Names
Liquidity ÷ |OCF burn| for Rocket Lab (~6.6 yr) and Planet (~15 yr on OCF): why net loss misleads, capex is separate, and EchoStar needs a debt lens.
Educational analysis for professional use. This guide is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Runway Is OCF Burn, Not Net Loss
Pre-profit space names often trade before EBITDA turns. Until then, the survival screen is how many years filed liquidity covers operating cash flow (OCF) outflow. The formula is simple; the inputs are not.
Runway (years) = Liquidity ÷ |Annual OCF used|
Liquidity means cash plus marketable securities from the balance sheet. Operating cash flow comes from the cash-flow statement. Constellation capex sits below that line in investing activities and is treated separately: a company can show extended OCF runway and still need capital for fleet builds.
Do not substitute GAAP net loss for OCF. Non-cash items and timing differences can diverge materially, especially at data and launch names still scaling revenue.
Rocket Lab: ~6.6 Years on Filed OCF Burn
Rocket Lab is the launch-and-systems teaching case for a high-growth, pre-EBITDA name with substantial liquidity.
| Item | FY2025 filed | Source basis |
|---|---|---|
| Cash | $828.7M | Balance sheet |
| Marketable securities | $187.9M current + $82.2M non-current | Balance sheet |
| Total liquid | ~$1.10B | Sum |
| Operating cash flow | $(165.5)M used | Cash-flow statement |
| OCF runway | ~6.6 years | $1.10B ÷ $165.5M |
| Adjusted EBITDA | $(101.2)M loss | Non-GAAP bridge |
| Revenue growth | +38% YoY to $601.8M | Top-line momentum |
Backlog was $1.85B (+73% YoY), split $475.6M launch and $1,371.7M space systems. Runway on OCF does not fund that backlog conversion automatically; it measures operating burn at current scale. The Rocket Lab profile pairs runway with the $816M Space Development Agency (SDA) prime contract and the EV/sales screen worked through in the valuation guide.
Above 36 months lands in the extended band. Rocket Lab qualifies on OCF, but capex at ~26% of revenue and constellation optionality can still require capital markets access over a multi-year build.
Planet Labs: ~15 Years on OCF, With a GAAP Caveat
Planet shows why net loss and OCF must be read together.
| Item | FY2025 (year ended 31 Jan 2025) | Read |
|---|---|---|
| Liquidity | $222.1M | Cash $118.0M + short-term investments $104.0M |
| Operating cash flow | $(14.4)M used | Small OCF burn |
| OCF runway | ~15 years | Extended band on arithmetic alone |
| Adjusted EBITDA | $(10.6)M loss | Q4 adj. EBITDA +$2.4M (first positive quarter) |
| Revenue | $244.4M (+11%) | Subscription scale |
| Backlog | $503.7M | Visibility separate from runway |
The ratio looks comfortable on OCF alone. GAAP net loss is much larger once non-cash charges flow through the income statement, so OCF runway overstates near-term survival if you ignore net-loss magnitude and upcoming milestone spend. Management’s forward statement on cash-flow crossover within 24 months is not an audited fact and should not replace filed OCF.
Planet’s business model (976 customers, 97% recurring annual contract value, or ACV) sits in the data layer; see the business models guide. Government data contracts, including NGA Luno B with a $200M five-year ceiling, add backlog visibility. That is a different thing from liquidity duration.
Runway Bands (OCF Basis)
| Band | Months | Action |
|---|---|---|
| Immediate risk | <12 | Dilution or refinance likely without a catalyst |
| Monitor | 12-24 | Quarterly liquidity and burn tracking |
| Adequate | 24-36 | Room for disclosed milestones |
| Extended | >36 | RKLB ~6.6 yr and PL ~15 yr on OCF sit here |
Extended runway does not eliminate constellation capex needs. Globalstar ran capex at 201% of revenue in FY2025, funded through Apple prepayments rather than equity burn. That is a different funding path from Rocket Lab’s public-market liquidity pile.
Names Where Runway Arithmetic Fails
| Company | Why runway ≠ primary screen | FY2025 anchor |
|---|---|---|
| Iridium | GAAP profitable; operational EBITDA (OEBITDA) $495.3M | Net income $114.4M |
| Viasat | OCF +$908M despite GAAP loss $(575)M | EBITDA-positive operator |
| Globalstar | OCF-positive; Apple prepayments fund capex | Adj. EBITDA $136M |
| EchoStar | Going-concern flag on 2026 debt maturities | Cash $2,984M but maturity wall |
EchoStar is the counterexample. Filed cash looked comfortable, yet the 10-K flags substantial doubt about ability to continue as a going concern around 2026 debt maturities pending spectrum and strategic transactions. A simple liquidity ÷ burn ratio misses the cliff. The EchoStar profile is the distress case; pair it with the debt-adjusted EV/sales read in the valuation guide rather than with extended OCF runway.
Building the Runway Sheet
- Pull cash, marketable securities and disclosed undrawn facilities from the latest balance sheet.
- Take operating cash flow from the cash-flow statement; use the absolute value if negative.
- Compute years of coverage; map to the bands above.
- Read GAAP net loss alongside OCF and flag material divergence (Planet pattern).
- Add a separate line for capex intensity and debt maturities; runway on OCF does not replace either.
Rocket Lab and Planet both pass the extended OCF band today. What matters from here is whether growth and backlog convert before burn rises. That is a different question from whether the arithmetic clears 12 months.
Space & Satellites Sector Primer
Revenue ramp, margin and capex are the inputs. This primer takes both a pre-profit builder and a profitable operator to a discounted cash-flow value against an EV/sales screen.
The Excel model is the primer's two worked valuations live across 12 sheets: a ten-year free-cash-flow DCF for a profitable operator, and a pre-profit ramp builder that fades losses to a target margin, each with a cash-runway and capex bridge. Change the growth path, the exit multiple or the capex intensity and the value moves.
Frequently Asked Questions
- How do you calculate cash runway for a pre-profit space company?
- Divide filed liquidity (cash plus marketable securities, and undrawn facilities only where explicitly disclosed) by the absolute value of annual operating cash flow (OCF) outflow. Rocket Lab FY2025: ~$1.10B liquid ÷ $165.5M OCF used ≈ 6.6 years. Planet FY2025: $222.1M liquidity ÷ $14.4M OCF used ≈ 15 years on the same basis. Screen on OCF burn: GAAP net loss carries non-cash charges and timing noise that would distort the ratio, and constellation capex is a separate line from operating survival.
- Why is net loss a misleading runway input?
- Non-cash charges and working-capital timing can widen the gap between net loss and OCF. Planet's adjusted EBITDA loss was $(10.6)M FY2025 while OCF used was only $(14.4)M, yet GAAP net loss is materially larger once stock-based compensation, depreciation and other non-cash items flow through the income statement. A runway ratio built on net loss understates or overstates survival depending on direction; screening standardises on OCF.
- What runway bands does Selborne use for space names?
- On liquidity ÷ |OCF burn|: below 12 months = immediate dilution or refinance risk; 12-24 months = monitor quarterly; 24-36 months = adequate for disclosed milestones; above 36 months = extended, though constellation capex may still require capital. Rocket Lab (~6.6 yr) and Planet (~15 yr on OCF) both sit in the extended band on OCF alone.
- When is cash runway not the right distress screen?
- When debt maturities dominate liquidity. EchoStar's FY2025 10-K flags substantial doubt (going-concern) on 2026 debt maturities despite $2,984M cash; runway arithmetic on OCF misses the refinance cliff. Iridium, Viasat (OCF +$908M FY2025) and Globalstar (OCF-positive, Apple-funded capex) are not pre-profit OCF-burn cases. Runway applies to RKLB and PL in the six-name set. SATS needs a balance-sheet maturity schedule instead of a simple burn ratio.