Commercial Space Has a Dirty Secret. It Is Hiding in Plain Sight.

Commercial space has a dirty secret hiding in plain sight.

Synspective, the Japanese radar satellite company whose ninth spacecraft Rocket Lab deposited in orbit this morning, lost 1.6 billion yen — roughly $10 million — last quarter selling SAR imagery to commercial customers. This year it expects to more than triple its revenue, to 16.1 billion yen, because one customer signed up: Japan's Ministry of Defense, according to SpaceNews.

That customer is paying 105.6 billion yen, about $681 million, over five years for priority access to Synspective's synthetic aperture radar data — a contract structure called a Private Finance Initiative in which private companies finance, build, and operate infrastructure while the government commits to buying the output. Synspective does not yet have meaningful commercial revenue. Its entire financial turnaround rests on a single government budget line in Tokyo.

Rocket Lab knows this. Forty-eight hours before today's launch, Rocket Lab filed a prospectus with the Securities and Exchange Commission to sell up to $3 billion in stock, the purpose being acquisitions and vertical integration, per the SEC filing. In the past year Rocket Lab has spent roughly $215 million buying companies that make the components its satellite customers depend on — robotics firm Motiv Space Systems for $40 million cash plus earnouts, optical terminal maker Mynaric for $155.3 million in stock. Peter Beck, Rocket Lab's chief executive, said on the earnings call that the company always has a strategic acquisition opportunity lined up. He did not elaborate, SpaceNews reported.

The official story is that Rocket Lab is a launch company with ambitions. The financial documents tell a more specific story: Rocket Lab is positioning itself as infrastructure for the defense space economy that Synspective's contract represents. The launches are real. The revenue from Synspective's commercial SAR business is not what is funding anyone in this supply chain right now.

This is not unique to Synspective. The pattern — a commercial SAR operator surviving on a single government's imagery contract — shows up across the industry. Governments worldwide are buying commercial radar imagery after watching Ukraine demonstrate what persistent, all-weather, day-night Earth observation actually looks like in a conflict. Germany awarded a $1.9 billion SAR satellite deal to a Rheinmetall-ICEYE venture last year. Japan's Ministry of Defense is executing a broader satellite constellation project with seven private companies under the same PFI model that Synspective entered, SpaceNews separately reported. The war in Ukraine did not create a commercial market for SAR data. It created a government procurement channel, and the companies that positioned themselves to serve it are the ones still standing.

Rocket Lab's acquisition strategy maps onto this. Mynaric makes optical communications terminals — the high-bandwidth links between satellites and ground that become more valuable as constellations grow denser and data volumes increase. Motiv makes robotics components relevant to satellite servicing and on-orbit manipulation — capabilities that matter if the use case is persistent military surveillance rather than occasional commercial imaging. These are not general-purpose industrial acquisitions. They are the components of a defense space infrastructure stack.

The counterargument is legitimate: vertical integration in launch has genuine economic logic independent of any single customer. Rocket Lab argues that owning its supply chain reduces cost and improves reliability for all customers, defense or commercial. Synspective has 18 more Electron launches booked and seven more spacecraft scheduled on SpaceX rideshares — commercial business that exists independent of the Japanese military contract. Beck has said the company is building capabilities, not just chasing defense dollars.

That argument is harder to sustain when you look at the numbers. Synspective's Q1 revenue was $4.7 million. Its operating loss was $10.7 million. The gap between what it earns selling to commercial customers and what it costs to run the business is not closing through market expansion. It is being closed by a government contract that runs through 2031. Rocket Lab is not building a commercial launch business that happens to also serve defense customers. It is building a position in a defense space economy where the commercial layer may be thin for years.

The 88th Electron launch placed a 100-kilogram StriX satellite into a 572-kilometer orbit at 44.8 degrees inclination — a routine mission for a vehicle that has now launched successfully 88 times, SpaceNews noted. The satellites Synspective is building are real. The Japanese military contract is real. The $3 billion Rocket Lab is raising to buy its way deeper into the supply chain is real. The commercial SAR market that new space promised is, so far, not the thing making any of this financially viable.

What is making it viable is the same thing that has always made expensive space infrastructure viable: a government with a budget and a strategic interest, signing a multiyear contract and letting the financing take the risk.

The launches will continue. The papers will continue to note the growing Electron mission count. The acquisition pipeline Beck mentioned will produce press releases. The commercial space narrative will write itself.

The actual story is in Tokyo, in the defense ministry's budget documents, where 105.6 billion yen quietly became the foundation for a satellite operator that cannot yet make money selling to anyone else.