Q4 2022 Rocket Lab USA Inc Earnings Call
This call is also being webcast with the supporting presentation, a replay and copy of the presentation will be available on our website.
Our presenters today are rocket led founder and Chief Executive Officer, Peter Beck, and Chief Financial Officer space. After our prepared comments, we will take questions and now let me turn the call over to Mr. Beck.
Thanks, very much so welcome everybody and thank you for joining us today.
Today's presentation will guide.
Key business accomplishments for the year of 2022.
As well as specific highlights from the fourth quarter also discuss further achievements. We've made since the end of the quarter and will then talk you through our financial results for the full quarter and full year and also cover the financial outlook for Q1 'twenty three.
We'll take questions and finish today's call with the upcoming conferences, we will be a Q&A.
Alright onto what the company achieved in 2023.
Starting with a quick recap of our launch activity to 'twenty to 'twenty two.
It was a busy year of launches yet we retained our position as the leading small launch vehicles globally and once again electron have retired with secret most frequently most U S rocket annually.
Across nine elektron inches, we deployed more than 40 satellites to precise tool box for our customers, including commercial constellation operators NASA and the Enron and more across these launches we had 100% mission success rate for the year are providing our customers with the reliable path a little bit.
2022 was also the year, we statistically deliver Kickstarted mission to the Moon, Vanessa launch plus base crop solution using electron and photon.
We completed two successful Washington recoveries of electrons per stage as part of rocket reduced therapy program. We conducted followed statistical missions constellation operators, we put all three electron pants to use including FERC entered teams out of <unk> in Virginia in Q4, which was <unk>.
Typically ownership launched in Q1 2023.
And we also had quarter electron with helicopter for the first time more on each of these achievements later in the presentation.
As mentioned in 2022, we reached our highest annual launch cadence with non mission, ensuring that elektron remains the global market leader in small launch with 100% mission success and 2022 electron as the most reliable dedicated small launch vehicle globally.
As of 30 <unk> December 2022, we've completed 32 electron missions and deployed 162 satellites and I'm pleased to say that both of those numbers have already increased things to another successful mission in Q1 2003.
2022 was also the year that electrons emissions beyond Earth orbit and for the first time successfully deploying the <unk> mission to the Moon Vanessa.
<unk> was far from just the standard electron launch was a highly complex mission that showcased our strength as an <unk> company.
Just to mention Nevada. In addition to providing the launch for electron on Elektron team developed and built and operated the lunar photon a highly capable interplanetary space craft that to capstone on a course to me and the team developed a highly efficient munis trajectory to enable such a small rocket to transport I've highlighted intellectual but.
<unk> is the only small loans provided to have designed built and operated it's arent satellites in orbit further expanding.
The addressable market.
It kept so I mentioned that the first interim message Adam is program to return humans to the Moon and we're immensely proud to have been able this crucial posted.
Just 15 days after launching capstone most complex mission to date the team turned around the next launch which was a dedicated national security mission.
<unk>.
This rapid launch turnaround not only fit rocket labor record.
The fastest turnaround between successful launches for any other small lunch remodel.
Overall in 2022, we averaged approximately 40 days compete with.
Nearly every 60 days in 2021 and from April to November last year, we successfully hit excuse me launch every month.
Yes.
Certainly ill touch.
Strong some of the key Lynch treatments for 2022, but we've also had a significant year of growth for us by systems onto the business.
More than 200 spacecraft launched in 2022, featuring rocket lab space systems products, including reaction will Star Trek is right now at.
<unk> talked with separation systems and more.
Broker led technology was featured in one form or another on 30% of globally addressable launches in 2022, demonstrating the success of our strategy to extract value.
Valley from the full space, China, not just from our own launches.
We do look at space systems products to more than 60 customers globally spanning commercial and government sectors. In 2022, we built a new space system production loans, including one to support high volume reaction real production to make a constellation customers and then you said a lot manufacturing facility at Antelope Ridge headquarters.
2022 was the year that that really cemented rock relates to position as a leading space Crouch manufacturer, we had more than 25 spacecraft in development for various customers, including NASA nest emission demands a community communications constellation for global scale global style and space manufacturing satellites enrollment.
But feeling good place to achieve this with scale at a specific team expanded their manufacturing and development facilities and of course integrated at <unk>.
<unk> spaces to make positions into a spacecraft program.
And finally before we wrap up the full year highlights and dive into the fourth quarter in more detail in 2022, we saw backlog more than double from $241 million at the end of 'twenty, one to more than $500 million at the end of Q4 2022 with growth driven by healthy mix of launch a spy systems bookings.
So with that let's move on to the key accomplishments of 2020 twos fourth quarter in more detail.
The final quarter of 2020 to source the consistency in which to electron mission delivering said locked all but for the sweetest Swedish National Space Agency and General Atomics.
We were also on them to be selected financial to launch to dedicate electron mission to deliver the tropics mission to orbit to monitor hurricanes and tropical storms. In Q4. We also received the required licenses and approvals Greg transmission for multiple <unk> in Virginia.
Long road to bring out the two into operation, but with those approvals in place and at the end of the year, we're able to launch the first littoral mission from U S or early 'twenty.
To top it off but also introduced rocket led national security, a new subsidiary to deliver reliable services and spy systems capabilities.
U S government.
And at the logs.
We signed our largest order of satellite suppression systems in the company's history totaling $14 million in hardware.
The space Development Agency tranche, one transport line.
It also had a quarter that kept stoneridge lunar orbit signaling.
Final mission success for the NASA mission more than five months after the successful launch on Elektron.
Also I've got testing underway at the <unk> engine hardware and completed construction construction of when you settle that production line in clean room at Atlanta headquarters.
Okay, let's start off with the key achievements.
And people for Elektron, we rounded out 2022 with two successful electron launches in Q4 both missions.
Sure.
Orange complex, one and saw a title launch tally for the year reached 92 submissions as mentioned this is a significant increase in which guidance from six missions in 'twenty, one and we'll look forward to continuing to increase that guidance in 'twenty three.
Elektron is already trusted news provided to nessa heading consistently delivered admissions to lag a little bit into the moon.
The agency previously so I wont for Daniel we nessa interested electron to deploy the remaining spacecraft in the tropics constellation across two dedicated mission.
This is a constellation close to my heart because it aims to enable scientists to study hurricane struck with storms and ultimate leading ultimately leading to improved modeling and production to help save lives and livelihoods and the path of storms. These machines are scheduled to launch in Ireland and in May This year, and we look forward to sharing more.
And laid up to launch.
In November during our founding mission for 2022, we conducted another statistical slash down in Ocean recovery of electrons per stage as part of our rocket Reusability program. We had initially planned.
Got to catch for this mission, but noting the requirements for me is to ensure a successful capture due to due to a brief furniture loss with electron stress stage during atmospheric reentry.
Just turned out to be quite a heavy turn of events as it gives us another chance to bring back a stage that had been for Sweden.
Never want to that's an opportunity to obtain the return stage in components and also some testing and we're starting to see a bit of a patent here that we had initially expected.
Let me turn survived the notion recovery in remarkably good condition and in a lot of cases, it's components actually past re qualification for Florida.
One of our upcoming cuts we're going to attempt to another ocean recovery at this time with a few additional waterproofing modification to the stage to take some of the key areas in the bits, we want to keep dry.
This outcome with testing and analysis at this stage the mission may move us towards sticking to sticking with marine recovery altogether and introduce significant savings to the whole operation.
In 2022, we proved that it was possible to run by very with the returning stage video and get it on helicopter hook, but if we can save ourselves the extra step of just plucking at an award we will without the helicopter.
If we are able to determine that I should recover as the most.
Viable and effective path to recovery this opens up even more flexibility with their launch windows and takes us from around 30% of the electro emissions being suitable there.
Recovery to anywhere between 60 and 70.
We look forward to sharing the development for this following a nice recovery in Michigan mission and the covenant coming.
Moving onto a neutral and achievements for the fourth quarter of 2022.
In <unk>, we officially opened the Archimedes too complex and this has been a student of spaces.
In Mississippi.
It will be home to engine testing for Neutrolin as a community of the engine and the team made the sites for the first time before the end of the year with the commencement of a pretty pretty granular giada testing.
Q4 saw some major movements at NIST.
Some of these the neutral including the completion of their first neutral and development building, which will be home to some stage assembly and integration activity. The team also started moving dirt.
Sort of mutual launch pad with construction moving into full swing now that we're in the new year.
We also have started to see some really exciting hardware developments in Q4 with cabin composite structures for neutrons per stage.
<unk> taken the stages in production as you can see here, we're working on a much bigger scale of an electron but we've been able to take that deep competence experience, we've developed with electron and use that knowledge to rapidly streamlined neutrons development.
It is on a neutral and to be the world's first carbon pumps that logical which vehicle with the latest in costs between the type of stage in history.
There's a lot I mean really launch the vehicles full tank combined that you see an image.
Those hubs to give that right is about the same as the Harley Davidson might've Buck from 390 cages.
<unk> high performance.
Moving on to from launched into space systems.
In the final quarter of 2022, we had some great milestones with Bae systems, including Kevin Rocket led hardware on 30% of all.
Globally addressable launches in the quarter alone more than 90 spacecraft launched orbit featuring rocket labs spy systems technology, one of the most exciting of buyers was the Adam It's one launch of Mesothelin rocket in November that mission featured rocket led summarize some of the speakers and software helping support message call.
Opportunity humans to the Moon.
Right.
In Q4, we were selected to develop the satellite operations control center or Socs for global stars Darren.
Local.
Constellation.
Contract builds on the existing relationship between India and.
Globalstar established in February 2022, when you look at Labor was awarded a $143 million contract to design and manufacture 17 spacecraft buses for globalstar, new constellation of satellites. These new satellites and thoughtful opening clubs that golden star's existing constellation delivering reliable mobile satellite voice and data.
Service has been stayed the same.
We'll provide pretty closely and monitoring and management of global staff constellation, including continuous satellite control and monitoring using rocket lands mix Grand out of system satellite orbit determination manoeuvre planning collision avoidance overt maintenance and talent management.
Designing and building.
Learning and manufacturing <unk> spacecraft buses delivering the flight and ground purpose solution and developing and supporting the <unk> Operation Center for once again executing on our strategy of gone beyond launch to deliver complete space missing emission solutions.
And finally in Q4, a solid team in Albuquerque, New Mexico delivered the final solar panels for the Mercer Gateway power and propulsion element. These solar panels will enable Mrs gateway lunar space station to be the most powerful electric propulsion vice craft even flown.
And they are a critical part of returning humanity to them.
That wraps up our Q4 2022, but we've been busy since then.
Take a quick look at some of the Companys key accomplishment.
Q1 2003.
Elektron took to the Virginia skies for the very first time in January 23, marking the beginning of broker that branches from the U S.
Successful mission that delivered three satellites for commercial installation operate.
360.
With a significant moment for us and for the small satellite industry is that new loan New U S. Japan represents even more flexibility and responsive Lynch capability for small set a lot of arthritis.
III recognize launch pads across two hemispheres are now operational and we look forward to many niches from BMO.
With that first LC tuition statistically launched we're onto the next in fact right now is there.
Rocco Ted <unk> inch complex, one and which completes to preparing for a launch within EMEA a few days of each other.
Instrument places one in New Zealand, we are preparing to launch two satellites.
<unk> global and what will be six submission for the constellation company.
While at launch complex tuned, Virginia, and the team is preparing to submission for Capella space software installation operator that we previously launched in 2020.
Both missions are currently scheduled to mention match with launch windows to be finalized in the coming days based on final customer requirements.
Scientists.
Yes.
Yeah.
Yes.
Well I only have one rocket in the pad, but capella space, We've just signed a multiyear contract with them to launch another full dedicated electron mission through 2023.
These machines are in the top of our six inch <unk> coming up in March sorry, five inches to look forward to this year altogether.
We're honored that they've entrusted us with Bob missions in 2023 to help build the growing south constellation.
The latest multilayer steel Carlos.
Further to meet their leadership position as the trusted small niche provider of choice for constellation arthritis.
We've now launched and fund deals with some of the most prominent constellations and operators globally, demonstrating the value of it.
That I think terms of our city's customers offering reliable and flexible launch to tie a little bit.
Andre I spy systems, and we started the quarter strong by releasing two new spy systems products and you said about radio and reaction real specifically designed for constellation classified stopped these products bolster our existing heritage and space system components and provide an entry point to new programs and mission protocol.
This quarter. We also formally established a new subsidiary rocket lab, Australia to explore opportunities to support the expansion of Australia as national space capabilities.
It's driving government has set a goal to triple the size of the Australia and spicy from an estimated $4 billion.
Australia in 2000 $16 billion to $12 billion by 2030 to help facilitate this growth the Australian government has committed more than $2 billion to the civil space take this in 2019 the program spending Earth observation satellite infrastructure project manufacturing in support of misses out on this program.
Is there anything government has also committed $17 billion above and beyond the civil space investment for the development of defense device capabilities.
Rocket lab has already played a key role in supporting Australia's rapid insights through supply and launch in spy system products to Australia and organization.
Voting on a deep expertise and proven heritage in the spaces that we are well positioned to advance our strategies capabilities in space.
We have people on the ground already and we look forward to exploring opportunities where they make strategic themes for us as a business and where we can truly strength in Australia its position epic levels, let's say to us.
On the H one front this quarter, we made investments in progress into establishing manufacturing infrastructure that will support scaling production of neutral on this include composite tank molds to stage, one and two as well as the.
The installation of large <unk> printed lung machines to enable rapid production of the <unk> engine.
Q1, 2023 Board welcome news in the form of a new acquisition strategy for the National Space Security launch.
This is the space forces program to launch the nation's most critical and valuable government SCS.
And the industry itself by three RFP, which was released earlier this month, new entrants launch vehicles qualify to bid for launches.
<unk> is designed with initially sell launches in mind, and we look forward to making neutrolin available to meet the national security needs.
This wasn't a chunk of good luck to us and we actively engaged in.
Industry sell almost to introduce this change on the back of a strong relationship with them, but first of all the confidence in neutral and came back in September 2021, when we won a $24 million contract for the development contract for the neutrals Alpha stage through the Spice forces.
<unk> command of launching the product, which goes under the CSL program.
The contract recognized mutual and designed to maximize missed or capability overland session accuracy and responsive dedicated launch to be with government. All key requirements for the highest party emissions awarded through the EDC cell.
And I'm pleased to see this further strengthening of our relationship with this new pathway for that.
And finally before I hand over to Adam for the financial highlights I'd like to hear David Cameron is wrapping up this time on <unk> board of directors.
David is a partner at least some adventure patent is one of the earliest investors and he joined rocket late reported 2014. Since then we've been grateful for his leadership and guidance as we grow <unk> grew rapidly from a small startup to a publicly listed company, who was leading smallish, Nevada and now global Si systems.
I'd like to personally thank David for his support and EBIT at rocket labor over the past nine years and wish him. The very best for this continued where it can be.
And with that I'll hand over to Adam to discuss the financial highlights.
Great. Thanks Pete.
I will first review our fourth quarter 2022 results and then discuss our outlook for the first quarter of 2023.
Fourth quarter 2022 revenue was $51 $8 million.
Which was within our initial guidance range of $51 million to $54 million and well above our revised guidance range of <unk> $46 million to $47 million provided in December .
Fourth quarter 2022 revenue reflects growth of eight 8% over the year ago fourth quarter of 2021, and the result of two successful launches and continued strong contribution from our space systems business.
The overage to our revised guidance range was a result of higher than anticipated revenue recognition from our <unk> contract to a major prime contractor program.
This closes out a very successful year with full year 2022 revenue of $211 million up 239% from 200 from 2021 with launch in space systems, finishing the year with revenue growth of 56 and 546% respectively.
Now turning to gross margins GAAP gross margin for the fourth quarter was three 5% below the low end of our original guidance range of 5% to 7%.
non-GAAP gross margin for the fourth quarter was 15%, which was also below our original guidance range of 16% to 18%.
GAAP and non-GAAP gross margins results relative to both our revised guidance and to our Q3 2022 results reflects a combination of reduced launch cadence and related lack of fixed cost absorption.
Hello average revenue contribution from the catch me if you can R&D recovery mission and unfavorable mix within our space systems components revenue.
More specifically launch cadence was impacted by the pushout of the Hawkeye 360 launch from the December quarter due to weather and other factors.
The below average revenue contribution from our successful Q4 2020 to catch me. If you can recovery mission was a conscious decision to trade off acceleration of the elektron recovery margin improvement initiatives versus maximizing revenue from additional payloads that we're taking longer to secure and integrate.
Our current launch manifest and proven execution capabilities gives us confidence that we'll see a return to growth and gross margin expansion and the launch segment of our business as we progress through 2023.
Lastly, the unfavorable mix within space systems was a result of the timing of revenue recognition under our legacy low margin pre acquisition <unk> contract with a major prime contractor.
We anticipate significant top line growth to resume for our space systems segment in the second half of the year as we forecast to begin benefiting from more meaningful revenue contribution under the MDA globalstar contract, which brings with it gross margin uplift. In addition to forecasting a beneficial mix and change in our space systems, because warrant revenues as our higher margin component solutions contribute at a greater.
Versus the lower margin component solutions.
We ended Q4 with 818 production related head count up 21 from the prior quarter, which positions us well to not only scale production, but also the resources to exploit margin expanding production efficiencies.
Turning to operating expenses GAAP operating expenses for the fourth quarter were $39 $1 million at the low end of our guidance range of $39 million to $41 million.
non-GAAP operating expenses for the fourth quarter were $27 $3 million, which was below our guidance range of $28 million to $30 million.
The decline in both GAAP and non-GAAP total operating expenses versus the third quarter was primarily driven by an R&D grant benefit and lower stock based compensation, partially offset by increases in head count and prototype expenses supporting neutron and space systems.
And R&D, specifically GAAP expenses decreased by $2 5 million or 14% in the fourth quarter, driven by again, R&D grant benefits and lower stock based compensation.
non-GAAP R&D expenses were down $1 6 million or 13% quarter on quarter.
We anticipate a return to sequential growth in R&D as we ramp investment in our neutral launch vehicle.
Quarter, ending R&D head count was 348, representing an increase of 18 heads from September 32022.
And SG&A GAAP expenses increased $1 $1 million quarter on quarter, or 5% driven primarily by outside services, primarily owing to the first year Sox compliance related expenses.
non-GAAP SG&A expenses increased by $1 6 million or 10% quarter on quarter, mostly driven by outside services as previously mentioned.
Quarter, ending SG&A head count was 197, representing an increase of one head from September 32022.
On a year on year basis, GAAP operating expenses for the fourth quarter of $39 $1 million were up $8 million or 26% year on year, while non-GAAP operating expenses of $27 $4 million were up $7 million or <unk>, 34% year on year.
The growth in both GAAP and non-GAAP operating expenses were primarily driven by the acquisitions of ASI PSC and <unk>, which occurred in Q4 2021 in Q1 of 2022 as.
As well as increase in staffing costs related to new Tron vehicle development, the elektron boost recovery initiatives and photo on development projects.
And R&D, specifically GAAP expenses decreased by $3 1 million or 25% in the fourth quarter, while non-GAAP expenses were up $2 6 million or 33% year on year.
And SG&A GAAP expenses increased $5 million or 26% year on year.
Cash consumed from operations was $19 million in the fourth quarter compared to $23 million in the third quarter.
The sequential improvement of $4 million was driven primarily by improved cash collections during Q4.
Purchases of property equipment, and capitalized software licenses increased from $8 million in Q3 to $15 million in Q4.
These investments are primarily aimed at new equipment facilities underpinning, our neutron development initiative and expansion of our photon production capabilities.
Overall, non-GAAP free cash flow consumption in the fourth quarter was $33 9 million compared to $31 3 million in the third quarter.
The ending balance of cash cash equivalents restricted cash and marketable securities was $484 3 million at the end of the fourth quarter.
With that let's turn to our guidance for the first quarter of 2023.
We expect revenue in the first quarter to range between 51% and $54 million.
Which reflects 32% to $35 million of contribution from space systems, and $19 million of contribution from launch services, which assumes three launches or two remaining launches in the quarter.
One of the three launches forecasted in Q1 wasn't successful January Hawkeye 360 emission out of LC two in Virginia.
Which was partially filled rideshare mission, where similar to an R&D mission, we made a conscious choice to focus on expediting, our first ever LTE to launch versus maximizing revenue by filling the rest of the mass capacity are the launch vehicle.
Based on our manifested launch backlog, we expect our average selling price to increase back to our standard pricing as we progress through the remainder of 2023.
We expect first quarter GAAP gross margins to range between negative, 5% and negative, 3% and non-GAAP gross margins to range between positive, 7% and 9%.
These forecasted GAAP and non-GAAP gross margins reflect greater contribution from our launch of services segment as well as lower margin product mix within our space systems segment.
We expect first quarter GAAP operating expenses to range between $44 million and $46 million and non-GAAP operating expenses to range between $33 million and $35 million.
This quarter on quarter increase was driven primarily by increased R&D staff costs and prototype expenses related to accelerated investments in the neutron launch vehicle development and scaling of our photon product family.
We expect first quarter, GAAP and non-GAAP net interest expense to be $1 million.
We expect first quarter adjusted EBITDA loss to range between $28 million and $30 million and basic shares outstanding to be approximately 476 million shares.
And with that I'll turn it back to the operator for questions.
Certainly if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question. Please press star one as a reminder, if you are using a speaker phone. Please remember so you pick up your handset.
Before asking your question also on behalf of the management team, we would ask that you limit yourself to one question and one follow up.
The first question comes from the line.
Christy.
<unk>.
Of Morgan Stanley . Please proceed.
Yes.
First question for me on Globalstar, we've seen their difficulty in raising financing it's great to see that they finally have a resolution with Apple now prepaying to help fund the satellite build.
In this environment, where capital is more expensive how prevalent are financing challenges amongst your commercial customers is this a onetime thing or are you seeing this.
Continue into the supply chain.
Yes, I can take a pass at that and Pete you could also provide your thoughts Chris.
So.
I would say that certainly with the capital markets conditions the way they are.
For a lot of people to continue to finance their businesses, we've been relatively immune from that largely given the mix that we have of either direct government contracts were also with customers who have deep ties and rely on the great amount of the revenue to come from government programs. So I think we've probably been impacted a lot less than maybe some other <unk>.
You come across.
But we're not completely immune to it we've certainly seen some of our smaller customers struggled from time to time and required a little bit longer to pay or in some cases, having to take small relatively small amount of bad debt reserves.
For amounts owed us, but for the most part it really hasn't been a tremendous factor on us today and hopefully it continues to be that way, but.
The other part of it.
On a term on how this is going to rollout going forward given the environment that we're in.
Pete do you have any different thoughts on that.
Yes.
Got it.
One of the benefits <unk> with a number of needs.
Programs is a very long time horizon program side with some unsecured funding thats not typically for one year time horizon.
A lot of these.
Specie pumps license, a very long time horizon.
Depending on how long the financial environment type loss.
At this point.
Please go ahead.
The big issues.
And Christine I think the other thing.
Try that circus that was going to say.
One of the advantage that we have relative to some of our other newspaper peers that we obviously have a very healthy balance sheet.
And we're also really particular about who we take on as customers. So when we look into our backlog, we don't see a lot of kind of financing risk and there again because of the mix of the customers that we have.
Again, I think that we've been able to be a little bit more creative and flexible in some cases working with customers to help support their business and also make sure that we.
We're in good position from maintaining and growing market share in many cases.
Thanks for the additional Adam.
Peter as a follow up on government contracts can you touch on the space Force RFP for the National Security space launch Phase III and right. It looks like LN, one is geared more towards the medium sized launch vehicles, where neutron with plan.
Can you talk about the timing milestones to watch and size the opportunity for Neutrolin.
Yes, certainly.
From a markdown perspective.
And the thing to kind of watch.
Tanks rolling out obviously engine testing and integration.
There's a lot of one of the top gun on in the background with at least there'll be we talked about maybe get on a launch pad to actually to get to the point of moving dirt in a large part of this is a tremendous amount of kind of work that needs to be done to get to that point.
So those are the things I'd be watching out for.
Honestly.
Sure.
Great relationship with.
With the whole program and <unk> program and where.
We're encouraging them to two state and we think about how can they maximize its capabilities across a wide range of launch vehicles.
And an opportunity.
Sorry, yes.
We were very very happy to see.
Keep in line came in and.
Let alone exactly with what.
What we have been promoting.
Great. Thanks, guys.
Thank you.
Next question comes from.
Eric.
RASM Houston Stifel. Please proceed.
Yes, thank you for taking the questions.
So first maybe just on launch.
You have.
<unk>.
Slit slotted to three in Q1, two additional coming up and it looks like.
Timing is sometime in March.
But Adam you'd previously talked about maybe 14 for the year, we had one slipped from Q3 to Q4 so.
Assuming maybe that makes the number 15 is that still a good number for us to be modeling and thinking about as we are.
As we as we look at launch.
Yes, Eric I think so.
We typically have seen.
It's a relatively young business. So we don't have a great.
Amount of track record as far as seasonality is concerned but it does seem like Q1 gets off to a slower start probably a function of a little bit of a hangover from the vacations launch ranges kind of being kind of closed at the end of the year. So it takes a while for programs gets respond up.
But with a targeted three launches in the first quarter I think we're in great shape to get to that 15 number of launches a year.
<unk> actually is higher than would indicate a higher number of launches in 15. This year, but we've also learned through with the school of hard knocks that we can get burned when we rely really upon what our customers are telling us what their demands are because.
Customers spacecraft.
Oftentimes seemed to slip and push out to the right at the last moment, just because the nature of how these programs develop and when things come through their their final qualification and testing. So we think that we've got.
We've kind of risk adjusted the numbers. So we think 15 is the right number for the year, given where we're at and given the likelihood that some programs get pushed to the right.
But time will tell but right now it feels it feels like the right number.
Okay, and maybe just.
Adding to that.
Mentioned, we've seen it with the Q1 outlook for launch at $19 million for three launches, but you had mentioned that you probably would get back to more of a normalized ASB.
Throughout the year is that fair to say right.
Absolutely, yes, and we made a conscious choice to get that launch off earlier in the year versus kind of just kind of take more time to backfill all the volume capacity on the vehicle.
And given right now.
Very very strong visibility and conviction and where the manifest as and we know what the launch prices are for those so yes, we're confident where the ASP is migrating back to where it has been in more towards our kind of advertised kind of sticker price.
Okay.
Okay, and then just my follow up.
The NBA contract any milestones that maybe you can call out.
Where are you in terms of building out the manufacturing line and sort of what sort of volumes can you achieve.
And then maybe just on the opportunity for launch any updates there. Thank you.
Yes, I'll, let Pete you want to take a first pass.
Yes sure.
Hey, Eric.
Looking good.
Can you come and visit US you can see.
I fully get.
Integration facility sorry.
And he couldnt.
That was completed last year and that facility is more than capable of processing.
<unk> that are on contract.
Anything to that.
Maybe options.
Alright.
We're in good shape there.
And we continue discussions.
Yes.
Sean.
Hi, Scott.
And Eric I think I'd, just add on a little bit there.
We continue to kind of knockdown the gates towards these these.
Milestones on the program. So we've cleared quite a few of those.
The scheduled milestones were on schedule everything looks to be in good shape. So.
We won't go into all the details of all of the kind of milestones and sub milestones, but we've so far we've been very fortunate to be hitting all of our milestone dates getting through successful reviews.
So yes, all that looks very very good. So far we've also been pretty fortunate that we haven't been burned by any supply chain issues at this point so.
The program is still relatively early but given everything we're seeing right now everything looks to be on track.
We've got happy customers.
Sounds good thank you.
Thank you. The next question comes from Scott.
Sure.
Credit Suisse. Please proceed.
Hey, good afternoon, Adam It looks like the Q1 EBITDA loss you are guiding to is about double the loss in Q4 and pretty close to what the street was expecting for the full year and 23.
Given the market's focus on profitability I was wondering if you could.
Give some further context on what's driving that increase and then how we should think about the trend from Q1.
Sure, Yes, I think that there.
I don't think theres been a tremendous amount of resolution and some of the models that are out there.
I think that when we've communicated to investors.
The level of investment required for the sorry for the neutron program, where we came out we said it was going to be roughly a $250 million program to get the first neutral to the pad at the end of 2024, and we believe were solid schedule that so if you kind of just look at kind of what that and we've got we've tried it a breakdown of how much of that was going to be.
Capex versus prototyping and then I'll.
Opex through head count and so forth.
The ability there is to model what that should be especially given where we are now is we are in Q1 of 2023 and an anticipated launch date in Q4 of next year. So I guess it shouldnt be too much of a surprise kind of where we are kind of on that adjusted EBITDA basis, and I think that at least from our internal purposes. It feels like it's pretty consistent.
With where we thought we'd be given kind of the where we are in the lifecycle of the program.
From a modeling and trending going forward, we're going to see continued uptick in spending related to neutron.
We've I think we've crossed the hump or gotten over the hump for a lot of our photon space systems related pure R&D work, there is still more to come but a lot of it is kind of behind us.
But I think that the.
Will crest, the neutron spending hump probably.
Sometime in the middle of next year again, as we get closer and closer to the launch date in Q4. So again I think the uptick in spending the the current or the forecasted Q1 adjusted EBITDA, while we don't give guidance beyond kind of the next quarter I think thats a number thats going to be I don't think I don't think were looking at the low watermark as far as.
Adjusted EBITDA loss in the quarter because it gets spending has continued to ramp up but I also don't think that we're looking at it it's going to get dramatically higher than where it is but it feels like we're kind of in a new range of of kind of spending on the program.
But we also see revenue increasing over the same time periods. So.
Hopefully a lot of that is because I say, so yes spending will increase fro significantly, but we believe that revenue is going to be helpful.
Growing along with that growth in R&D spend so that we don't kind of balloon that that adjusted EBITDA loss on any quarterly basis.
Okay. So I mean, if Q1 is not the low watermark.
Full year, EBITDA losses be 120 million or more I'm, just trying to put some sort of a finer point on it because to your point there is not a lot of resolution with street models.
Yes, again, a lot of it depends on a lot of things are still in flux.