Q2 2024 Rocket Lab USA Inc Earnings Call

and exceptionally strong second quarter this year and I'm looking forward to taking you through all of the highlights and achievements. But before we get there I wanted to spend some time talking about who we are today, where Rocket Lab is headed in the future and the very deliberate and strategic steps we're taking to get there.

Peter Beck: But before we get there, I wanted to spend some time talking about who we are today, where Rocket Lab is headed in the future, and the very deliberate and strategic steps we're taking to get there. One of the common misconceptions we've faced is that Rocket Lab is just a launch company. Yes, launch is something that we're an industry leader in, and of course, Rocket being in the name doesn't help, but it's just part of what we do. I'd like to look at this in three clear steps. First, the ride.

Peter Beck: Achievements. But before we get there, I wanted to spend some time talking about who we are today, where Rocket Lab is headed in the future, and the very deliberate and strategic steps we're taking to get there. One of the common misconceptions we've faced is that Rocket Lab is a launch company. Yes, launch is something that we're an industry leader in, and of course Rocket being in the name doesn't help, but it's just part of what we do.

One of the common misconceptions we've faced is that Rocket Lab is a launch company. Yes, launch is something that we're an industry leader in, and of course, Rocket being in the name doesn't help, but it's just part of what we do.

Peter Beck: To do important things in space, you first have to get there. We've solved this with Small Launch and Electron, and we're breaking the medium launch monopoly with Neutron. Next, the tools to do the things in space once you get there.

I'd like to look at this in three clear steps. First, the ride. To do important things in space, you first have to get there. We've solved this with small launch with Electron, and we're breaking the medium launch monopoly with Neutron.

Peter Beck: I'd like to look at this in three clear steps. First, the ride to do important things in space, you first have to get there. We've solved this with small launch with Electron, and we're breaking the medium launch monopoly with Neutron. Next, the tools to do the things in space once you get there. This is spacecraft, the critical components that make them function, the software, the ground systems, and all the other pieces that make missions possible in orbit.

Peter Beck: This is spacecraft, the critical components that make them function, the software, the ground systems, and all the other pieces that make missions possible in orbit. We're reliably delivering this for commercial government and customers today. With the first two comfortably under our belts, our future and the whole reason for going to space is, in the first place, the data and the services that spacecraft provide. It's the most valuable part of the supply chain, demand for it is growing worldwide, and it's what will deliver long-term recurring revenue and incremental value for shareholders.

Next the tools to do the things in space once you get there. This is spacecraft, the critical components that make them function, the software, the ground systems and all the other pieces that make missions possible in orbit. We're reliably delivering this for commercial government and customers today.

With the first two comfortably under our belt, our future, and the whole reason for going to space, is in the first place, the data and the services that spacecraft provide.

Peter Beck: We're reliably delivering this for commercial government and customers today. With the first two comfortably under our belt, our future in the whole reason for going to space is in the first place, the data and the services that the spacecraft provide. It's the most valuable part of the supply chain, demand for it is growing worldwide, and it's what will deliver long-term, recurring revenue and incremental value for shareholders. By owning launch and spacecraft, we're at a distinct advantage when it comes to establishing our own space capabilities or constellations.

It's the most valuable part of the supply chain. Demand for it is growing worldwide, and it's what will deliver long-term recurring revenue and incremental value for shareholders.

Peter Beck: By owning the launch and spacecraft, we're at a distinct advantage when it comes to establishing our own space capabilities or constellations. We can build and launch our own spacecraft at cost, and we don't have to wait in line for limited launch capacity. We completely avoid the pain point that most constellation operators face, being at the mercy of suppliers on cost and schedule, often causing deeply disruptive delays and bringing capability online at scale.

By owning launch and spacecraft we're at a distinct advantage when it comes to establishing your own space capabilities or constellations.

We can build and launch our own spacecraft at cost, and we don't have to wait in line for limited launch capacity. We completely avoid the pain point that most Constellation operators face, being at the mercy of suppliers on cost and schedule, often causing deeply disruptive delays and bringing capability online at scale.

Peter Beck: We can build and launch our own spacecraft at cost, and we don't have to wait in line for limited launch capacity. We completely avoid the pain point of that most constellation operators face, being at the mercy of suppliers on costume schedule, often causing deeply disruptive delays and bringing capability online at scale. But that constellation or capability is not quite ready yet for us to disclose, but this overall company vision is useful to bear in mind when reviewing rocket lab achievements in this quarter in the months and the years ahead.

Peter Beck: But that constellation or capability is not quite ready yet for us to disclose. But this overall company vision is useful to bear in mind when reviewing Rocket Lab's achievements in this quarter, in the months, and in the years ahead. So with that, let me move on to more specifics for the quarter.

Speaker Change: But that constellation or capability is not quite ready yet for us to disclose, but this overall company vision is useful to bear in mind when reviewing Rocket Lab's achievements in this quarter, in the months and the years ahead. So with that, let me move on to more specifics for the quarter.

Peter Beck: Q2 was a huge quarter for Rocket Lab in a lot of ways, but especially in terms of revenue. For the first time, Rocket Lab revenue ticked past $100 million in the quarter. Revenue ultimately came in at $106 million for Q2, which is a company record. We also achieved a 15% quarter-on-quarter increase and a whopping 71% year-on-year increase. This result demonstrates the continued strength of our end-to-end space company strategy in offering diversified products and services since the growth is driven by an increase in launches last year as well as significant growth in our space systems. As of Q2 close, our backlog sits at over a billion dollars.

Q2 was a huge quarter for Rocket Lab in a lot of ways, but especially in terms of revenue.

Peter Beck: So with that, let me move on to more specifics for the quarter. Q2 was a huge quarter for rocket lab in a lot of ways, but especially in terms of revenue. For the first time, rocket lab revenue ticked past 100 million in the quarter. Revenue ultimately came at 106 million for Q2, which is a company record. We also achieved a 15% quarter and quarter increase and a whopping 71% year on year increase.

Speaker Change: For the first time, Rocket Lab revenue ticked past $100 million in the quarter.

Speaker Change: Revenue ultimately came at 106 million for Q2, which is a company record. We also achieved a 15% quarter and quarter increase and a whopping 71% year on year increase.

Speaker Change: This result demonstrates the continued strength of our into-inspace company strategy and offering diversified products and services since the growth has driven by an increase in launches on last year as well as significant growth in our space systems business.

Peter Beck: This result demonstrates the continued strength of our end to end space company strategy in offering diversified products and services since the growth has driven by an increase in launches on last year, as well as significant growth in our space systems business. As of Q2 close, our backlog sits at over a billion dollars. Now on to some electron specific updates. Before I get into some more electron achievements in the quarter, it's worth spending a moment going back to basics on the electron business model.

Speaker Change: As of Q2 close, a backlog that's at over a billion dollars.

Peter Beck: Now on to Electron, some Electron-specific updates. Before I get into some more Electron achievements in the quarter, it's worth spending a moment going back to basics on the Electron business model. I raise this because the most common metric we get held to is the number of launches per quarter and the resulting point-in-time revenue record. Revenue recognition is guided by well-established GAAP principles, but can at times fail to reflect the underlying strengths in our business given the constructive cash flow nature of the launch business, where we collect cash well in advance of revenue recognition. Electron delivers what rideshares and other rockets can't; it's a dedicated launch service tailored to each customer's specific needs. What that means in practice is customers get to choose and change their launch date.

Speaker Change: Now on to Electron, some Electron specific updates.

Speaker Change: Before I get into some more Electron achievements in the quarter, it's worth spending a moment going back to basics on the Electron business model. I raise this because the most common metric we get held to is number of launches per quarter and the resulting point in time revenue recognition.

Peter Beck: I raised this because the most common metric we get held to is number of launches per quarter and the resulting point in time revenue recognition. Revenue recognition is guided by a well established gap principles but can at times fail to reflect the underlying strengths in our business given the constructive cash flow nature of the launch business where we collect cash well in advance of revenue recognition. Electron delivers what rides shares and other rockets can't.

Speaker Change: Revenue recognition is guided by well-established gap principles, but can at times fail to reflect the underlying streaks in our business, given the constructive cash flow nature of the launch business where we collect cash well in advance of Revenue Rehibition.

Peter Beck: They can choose their launch site and precisely where they want to be deployed in orbit, and they can launch on incredibly short notice. We've demonstrated getting someone from contract signing to orbit in less than 8 weeks. If you're booked on a large rideshare or a bunch of other spacecraft, you simply don't get that flexibility.

Speaker Change: Electron delivers what ride cheers and other rockets can't, it's a dedicated launch service tailored to each customer specific needs.

Speaker Change: What that means in practice is customers get to choose and change their launch date.

Peter Beck: It's a dedicated launch service tailored to each customer specific needs. What that means in practice is customers get to choose and change their launch date. They can choose their launch site and precisely where they want to be deployed in orbit and they can go and they can launch on incredibly short notice. We've demonstrated getting someone from contract signing to orbit in less than eight weeks. If you're booked on a large ride share or a bunch of other spacecraft, you simply don't get that flexibility.

Speaker Change: They can choose their launch site and precisely where they want to be deployed in orbit and they can go and they can launch on incredibly short notice. We've demonstrated getting someone from contract signing to orbit in less than eight weeks.

Speaker Change: If you're booked on a large rideshare or a bunch of other spacecraft, you simply don't get that flexibility. And you certainly can't expect to get a dedicated ride on a large rocket or a near-entrance vehicle in just a week's notice.

Peter Beck: And you certainly can't expect to get a dedicated ride on a large rocket or a near-entrance vehicle in just one day. This flexibility does make it challenging to predict with high certainty exactly how many launches we'll do each year and exactly where they'll land in each quarter. That's not unexpected; rather, it's baked into our model and what sets us apart. Now, fortunately, the surface-level volatility represented by Gap Launch Revenue Recognition is disconnected from the underlying cash flow generation, in so much as we collect the vast majority of cash from our launch customers before launch day. So if they shift out by a few days, weeks, or even months, it makes a negligible difference.

Peter Beck: And you certainly can't expect to get a dedicated ride on a large rocket or a new entrance vehicle in just weeks. Next Notice. This flexibility does make it challenging to predict with high certainty exactly how many launches will do each year and exactly where they'll land in each quarter. That's not unexpected, rather it's baked into our model and what sets us apart. Now, fortunately, the surface level volatility represented by gap launch revenue recognition is disconnected from the underlying cash flow generation.

Speaker Change: This flexibility does make it challenging to predict with high certainty exactly how many launchers will do each year and exactly where their land in each quarter. That's not unexpected, rather it's baked into our model and what sets us apart.

Speaker Change: Now fortunately, the surface-level volatility represented by Gap launch revenue recognition is disconnected from the underlying cash flow generation.

Speaker Change: and so much as we collect the vast majority of cash from our launch customers before launch day. So if they shift out by a few days, weeks or even months, it makes a negligible difference.

Peter Beck: And so much as we collect the vast majority of cash from our launch customers before launch day. So if they shift out by a few days, weeks or even months, it makes a negligible difference. On this side, you can see an example of our billing cycle for Electron. We typically do it one or two ways. Time-based billing or milestone based. Time-based is most used for our customers booked a year or more in advance of launch.

Peter Beck: On this side, you can see an example of our billing cycle for Electron. We typically do it one or two ways, time-based billing or milestone-based. Time-based pricing is most used for our customers booked a year or more in advance of launch. And, as you will see, we bill 10% on contract signing, then further installments until we get to the final 10%, which is payable on launch day as soon as we activate the contract. Milestone-based is more used for our customers who come to us with their hair on fire, say L-3 months.

Speaker Change: On this side you can see an example of a billing cycle for electron. We typically do it one or two ways, time-based billing or master milestone-based.

Speaker Change: Timebase is most used for our customers booked a year or more in advance of launch and as you will see we build 10% on contract signing, then further installments until we get to the final 10% which is payable on launch day as soon as we ignite engines

Peter Beck: And as you will see, we build 10% on contract signing, then further installments until we get to the final 10% which is payable on launch day as soon as we ignite the engine. Milestone based is more used for our customers who come to us with their hair on fire say, our minus three months. Once again, we'll take a 10% on signing and then we move swiftly through the key milestones like spacecraft fit checks and readiness reviews.

Speaker Change: Master Investors more use for our customers who come to us with the here on fire, say, our mine of three months.

Peter Beck: Once again, we'll take 10% on signing, and then we move swiftly through the key milestones like spacecraft fit checks and readiness reviews, and then we collect the remaining instalments until we charge the final 10% when we ignite. As you can see, if a customer requires a launch date that pushes into the next quarter, we've likely already collected up to 90% of the contract value. We just don't recognize revenue until launch day for our accounting practice.

Speaker Change: Once again, we'll take a 10% unsigning, and then we move swiftly through the key milestones like spacecraft fit checks and readiness reviews, and then we collect the remaining instalments until again we charge the final 10% when we ignite the engines.

Peter Beck: And then we collect the remaining installments until again, we charge the final 10% when we ignite the engines. Third, you can see if a customer requires launch date that pushes into the next quarter, we've likely already collected up to 90% of the contract value. We just don't recognize a revenue until launch day for accounting practices purposes.

Speaker Change: Third, you can see, if a customer requires launch, it requires a launch date that pushes into the next quarter, we've likely already collected up to 90% of the contract value. We just don't recognise a revenue until launch day for accounting practices purposes.

Peter Beck: OK, a quick overview of some Electron achievements. We've signed 17 new Electron launch contracts year-to-date, with a total contract value of $141 million. We also reached an exciting new place in the global launch rankings. Electron is now the third most frequently launched rocket globally, behind only Falcon 9 and the Chinese Longbang.

Speaker Change: Okay, a quick overview of some electronic achievements. We've signed 17 new electronic launch contracts year-to-date with a total contract value of 141 million.

Peter Beck: Okay, a quick overview of some Electron achievements. We've signed 17 new Electron Launch Contracts year-to-date with a total contract value of 141 million. We also reached an exciting new place in the global launch rankings. Electron is now the third most frequently launched rocket globally, behind only Falcon 9 and the Chinese Long March. For a rocket that has only been flying for seven years, this is a monumental achievement and really highlights Electron's significance as a proven sort after capability.

Speaker Change: We also reached an exciting new place in the global launch rankings, Electron has now the third most frequently launched rocket globally, don't only Falcon 9 and the Chinese Longbatch. For a rocket that has only been flying for seven years, this is a monumental achievement and really highlights Electron's significance as a proven sought after capability.

Peter Beck: For a rocket that has only been flying for seven years, this is a monumental achievement and really highlights Electron's significance as a proven, sought-after capability. We achieved a 100% increase in launch rate for the first half of this year as compared with the first half of 2023. Doubling rocket production and launch cadence this year is far from the norm and really sets our team apart. As of today, Electron counts for 64% of all non-SpaceX US launches in 2024 so far.

Speaker Change: We've achieved a 100% increase in launch rate for the first half of this year as compared with the first half of 2023. Doubling rocket production and launch cadence in this year is far from the norm and really sets our team apart.

Peter Beck: We've achieved 100% increase in launch rate for the first half of this year as compared with the first half of 2023, doubling rocket reduction and launch cadence in this year is far from the norm and really sets our team apart. As of today, Electron counts for 64% of all non-SpaceXUS launches in 2024 so far. This really shows what an impact Electron has had on the industry and highlights just how constrained customers are right now with respect to launch options.

Speaker Change: As of today, Electron counts for 64% of all non-space-exuice launches in 2024 so far. This really shows what an impact Electron has had on the industry and highlights just how constrained customers are right now with respect to more on-tropions.

Peter Beck: This really shows what an impact Electron has had on the industry and highlights just how constrained customers are right now with respect to launch. And, of course, in a year plagued by launch anomalies and delays worldwide, Electron has continued to deliver trusted and reliable access to space, with mission success throughout the year for all of our customers. Now, this approach has been a successful one for Electron, retaining its title of the most active small rocket globally and now, of course, the third most frequently launched and flown rocket this year.

Speaker Change: And of course, in a year plagued by launch anomalies and delays worldwide, Electron has continued to deliver trusted and reliable access to space, with mission success throughout the year for all of our customers.

Peter Beck: And of course, in a year plagued by launch anomalies and delays worldwide, Electron has continued to deliver trusted and reliable access to space with mission success throughout the year for all of our customers. Now, this approach has been a successful one for Electron, retaining its title of the most active small rocket globally and now, of course, the third most frequently launched in fly and rocket this year. I won't go into the specifics of all nine launches we've completed this year to date, but if there's something that I'd like you to take away from looking at all of these missions, it's just how complex and tailored and customer centric they are.

Speaker Change: Now this approach has been a successful one for Electron retaining its title of the most active small rocket globally and now of course third most frequently launched in flying rocket this year.

Peter Beck: I won't go into the specifics of all nine launches we've completed this year to date, but if there's something that I'd like you to take away from looking at all of these missions, it's just how complex and tailored and customer-centric they are. We're taking dedicated missions 11 days apart to place climate change monitoring constellations in precise locations to monitor the poles, a rideshare mission that deployed two different customer satellites to entirely different orbits and altitudes on the same launch, swapped a customer mission out with the next one in queue within two weeks when a customer required a later launch date. All of this is exactly why customers choose Electron. It delivers a flexible service that small sats have never had before. Now onto contract wins.

Speaker Change: I won't go into the specifics of all nine launches with completed this year to date, but if there's something that I'd like you to take away from looking at all of these missions

Speaker Change: is just how complex and tailored and customer centric they are.

Speaker Change: We've taken dedicated missions 11 days apart to place climate change monitoring constellations in precise locations to monitor the poles, a rideshare mission that deployed two different customer satellites to entirely different orbits and altitudes on the same launch.

Peter Beck: We're taking dedicated, you know, missions 11 days apart to place climate change monitoring constellation in precise locations to monitor the poles. A ride share mission that develops two different customer deployed, sorry, two different customer satellites to entirely different orbits and altitudes on the same launch. Swop the customer mission out with the next one in queue within two weeks when a customer required a later launch date. All of this is exactly why customers choose Electron.

Speaker Change: Swapped a customer mission out with the next one in queue within two weeks when a customer required a later launch date. All of this is exactly why customers choose Electron. It delivers a flexible service that small sats have never had before.

Peter Beck: It was a few big months for the commercial sales team with a ten-launch deal signed with Synspective, a Japanese Earth Observation Constellation operator. We've been the sole launch provider for Synspective to date, with five successful missions, which has been a huge honor. We have also signed a full launch deal with another commercial constellation operator who has asked to remain confidential at this time.

Peter Beck: It delivers flexible service that small sets have never had before. Now on to contract wins. There were a few big months with the commercial sales team with a 10 launch deal signed with Synspective, Japanese Earth Observation Constellation Operator. We've been the sole launch provider for Synspectives to date with five successful missions, which has been a huge honor. We have also signed a 4 launch deal with another commercial constellation operator who has asked to remain confidential at this time.

Speaker Change: Now onto contract wins. It was a few big months with the commercial sales team with a ten launch deal signed with Synspective, a Japanese Earth Observation Constellation operator. We've been the sole launch provider for Synspective to date, with five successful missions, which has been a huge honour.

Speaker Change: We have also signed a full launch deal with another commercial constellation operator who is asked to remain confidential at this time.

Peter Beck: Electron also continues to be a critical enabler to the Department of Defense. We recently signed three new launch deals that further strengthen our position as a trusted partner across launch and space. Those contracts include being selected by the Space Force Systems Command to demonstrate an end-to-end space mission.

Speaker Change: Electron also continues to be a critical enabler to the Department of Defence. We recently signed three new launch deals that further strengthen our position as a trusted partner across launch and space systems.

Peter Beck: Electron also continues to be a critical enabler to the Department of Defence. We recently signed three new launch deals that further strengthen our position as a trusted partner across launch and space systems. Both contracts include being selected by the Space Force Systems Command to demonstrate an end to end space mission. This means Rocket Lab will design, build a spacecraft and launch it and operate it on short notice. This is a clear validation of our model as an end to end space company.

Speaker Change: Both contracts include being selected by the Space Force Systems Command.

Peter Beck: This means Rocket Lab will design, build a spacecraft and launch it, and operate it on short notice. This is a clear validation of our model as an end-to-end spacecraft manufacturer. We were also awarded the STP-S30 launch contract, a $14.5 million mission for the Space Force. And last but not least, Haste continues to be a sought-after capability with another hypersonic suborbital mission solved. We're immensely proud to have taken a proven product in Electron and adapted it for a new use case, unlocking hypersonic test launch capability for the DoD, helping open up the bottleneck that has existed for so long thanks to the limited availability of wind tunnels.

Speaker Change: to demonstrate an end-to-end space mission. This means Rocket Lab will design, build a spacecraft and launch it and operate it on short notice. This is a clear validation of our model as an twin-spice company.

Speaker Change: We were also awarded the STP-S30 launch contract, a $14.5 million mission for the Space Force. And last but not least, HACE continues to be a sought-after capability with another hypersonic suborbital mission sold.

Peter Beck: We were also awarded the STP F30 launch contract, a $14.5 million mission for the Space Force. And last but not least, Hayes continues to be a sought after capability with another hypersonic suborbital mission sold. We're immensely proud to have taken a proven product and electron and adapted it into a new use case. Unlocking hypersonic test launch capability for the DOD, helping open up the bottleneck that exists. This has existed for so long thanks to the limit of availability of wind tunnels and test flight opportunities.

Speaker Change: We're immensely proud to have taken a proven product in Electron and adapted it into a new use case, unlocking hypersonic test launch capability for the DoD, helping open up the bottleneck that has existed for so long thanks to the limited availability of wind tunnels and test flight opportunities.

Peter Beck: In the second quarter, we reached a significant company milestone, but also set a record for the wider launch industry, when we launched our 50th Electron mission. We reached this milestone faster than any other commercially developed rocket in history, and we're on track to be the fastest to 100 or so. This really just demonstrates our team's ability to execute in record time. We also demonstrated a pretty unique ability on our 50th mission, which was deploying a customer's spacecraft within 8 meters of the target. Now, for context, the general accepted industry tolerance is 1500 meters, or 15 kilometers. So to deploy the spacecraft within single-digit meters, not kilometers, is a real differentiator. Here's why that matters.

Speaker Change: In the second quarter, we reached a significant company milestone, but also set a record for the wider launch industry when we launched our 50th Electron mission.

Peter Beck: In the second quarter, we reached a significant company milestone but also set a record for the wider launch industry when we launched our 50th electron mission. We reached this milestone faster than any other commercially developed rocket in history and were on track to be the fastest to 100 also. This really just demonstrates our team's ability to execute it in record time. We also demonstrated a pretty unique ability on our 50th mission which was deploying a customer spacecraft within 8 meters of the target.

Speaker Change: We reached this milestone faster than any other commercially developed rocket in history and we're on track to be the fastest to 100 or so. This really just demonstrates our team's ability to execute in record time.

Speaker Change: We also demonstrated a pretty unique ability on our 50th mission, which was deploying a customer spacecraft within 8 metres of the target. Now, for context, the general accepted industry tolerance is 1500 metres, or 15 kilometres.

Speaker Change: So, to deploy the spacecraft within single digit metres, not kilometres, is a real differentiator.

Peter Beck: Now, for context, the general accepted industry tolerance is 1,500 meters or 15 kilometers. So, to deploy the spacecraft within single digit meters, not kilometers, is a real differentiator. Here's why that matters. It makes a lecture on the clear launch vehicle of choice for some really complex missions and unique capabilities that are increasingly sought after, like rendezvous and proximity operations, constellation replenishment, and customized orbits. Right, moving on from small launch into updates on the neutron development.

Speaker Change: is why that matters. It makes a lecture on the clear launch vehicle of choice for some really complex missions and unique capabilities that are increasingly sought after, like rendezvous in proximity operations, constellation replenishment and customized orbits.

Speaker Change: Right, moving on from small launch into updates on the Neutron development.

Speaker Change: I'm often asked how Neutron plans to compete and why we need to invest in a medium launch vehicle. So I'm going to go back to a little bit of 101 here.

Peter Beck: It makes Electron the clear launch vehicle of choice for some really complex missions and unique capabilities that are increasingly sought after, like rendezvous and proximity operations, constellation replenishment, and bespoke. Right, moving on from small launch into updates on the Neutron development. I'm often asked how Neutron plans to compete and why we need to invest in a medium-launched vehicle. So I'm going to go back to a little bit of 101.

Peter Beck: There is a practical monopoly in medium launch right now, there's no doubt about that. Demand is strong and growing for launch capability, particularly in the Constellation, with more than 10,000 satellites needing launch by the end of the decade. And that's viewed by many as a pretty conservative projection.

Peter Beck: I'm often asked how neutron plans to compete and why we need to invest in a medium launch vehicle, so I'm going to go back to a little bit of 101 here. There is a practical monopoly in medium launch right now. There's no doubt about that. Demand is strong and growing for launch capability, particularly in the constellation space. With more than 10,000 satellites needing launch by the end of the decade. And that's viewed by many as a pre-conservative projection.

Speaker Change: There is a practical monopoly in medium launch right now, there's no doubt about that, demand of strong and growing for launch capability, particularly in the constellation space. With more than 10,000 satellites needing launch by the end of the decade, and that's viewed by many of the pre-conservative projections.

Peter Beck: Neutron is best placed to be the rocket that disrupts this monopoly. We have a proven track record of building and launching a reliable vehicle that has become a market leader. Through this experience, we've been able to work incredibly closely with customers to design a new rocket that meets their needs, resulting in a customer-led design, and we're on track to bring that to market at an incredibly rapid time. Across all of our launch and space systems businesses to date, we've astutely assessed demand and opportunities and accurately allocated investment and effort where it makes the most business sense. And that has produced undeniable successful results, and Neutron will be no different.

Speaker Change: Your term is best place to be the rocket that disrupts this monopoly. We have a proven track record of building and launching a reliable vehicle that became a market leader. Through this experience, we've been able to work incredibly closely with customers to design a new rocket that meets their needs.

Peter Beck: Neutron is best place to be the rocket that disrupts this monopoly. We have a proven track record of building and launching a reliable vehicle that became a market leader. Through this experience, we've been able to work incredibly closely with customers to design a new rocket that meets their needs. Resulting in a custom led design. And we're on track to bring that to market at an incredibly rapid timeline. Across all of our launch and space systems businesses to date, we've astutely assessed demand and opportunities, and accurately allocated investment and effort where it makes the most business, and the Sense.

Speaker Change: Resulting in a custom-a-led design, and we're on track to bring that to market at an incredibly rapid timeline.

Speaker Change: Across all of our launch and space systems businesses today, we've astutely assessed demand and opportunities and accurately allocated investment and effort where it makes the most business sense. And that has produced undeniable successful results, and neutron will be no different.

Peter Beck: Now on to overall Neutron development progress, and I'm pleased to confirm we've largely progressed past the design phase, and we've moved swiftly into production and qualification of flight hardware for 100% of the vehicle. With flight articles now coming together, we're on track to launch, and we're on track to first launch for Midnex. I've said this before, but it's a key point that I think a lot of people tend to miss if they're not familiar with the Launch Vehicle Development Program.

Speaker Change: Now, on to overall Neutron development progress, and I'm pleased to confirm we've largely progressed past the design phase and we've moved swiftly into production and qualification of flight hardware for 100% of the vehicle. With flight articles now coming together, we're on track to first launch for mid next year.

Peter Beck: And that has produced undeniable successful results, and Neutron will be no different. Now, onto overall Neutron development progress, and I'm pleased to confirm we've largely progressed past the design phase, and we've moved swiftly into production and qualification of flight hardware for 100% of the vehicle. With flight articles now coming together, we're on track to first launch for mid-next year. I've said this before, but it's a key point that I think a lot of people tend to miss if they're not familiar with the launch vehicle development programmes.

Speaker Change: I've said this before, but it's a key point that I think a lot of people tend to miss if they're not familiar with the launch vehicle development programs

Peter Beck: Developing a rocket is certainly a big piece of work, but it's only about one-third of what you actually need to do. The remainder is launch and production infrastructure. That's the pad, the test cells, the production lines, the factories, and all of the processes and procedures to support that.

Speaker Change: Developing a rocket is certainly a big piece of work, but it's only about one-third of what you actually need to do. The remainder is launch and production infrastructure. That's the path, the test cells, the production lines, the factories and all the processes and procedures to support them.

Peter Beck: Developing a rocket is certainly a big piece of work, but it's only about one third of what you actually need to do. The remainder is launch and production infrastructure. That's the pad, the test cells, the production lines, the factories, and all of the processes and procedures to support them. A lot of organisations will focus their attention on their first rocket, but we knew that that would be very important to build up all the infrastructure and support production tests and launch in the long term, so that's what we've done in parallel.

Peter Beck: A lot of organizations will focus their attention on their first rocket, but we knew that it would be very important to build up all the infrastructure to support production, test, and launch in the long term, so that's what we've done in parallel. I'm really proud of the speed and progress that the team has achieved with Neutron so far in an incredibly short time frame, especially in the update I'm about to share.

Speaker Change: A lot of organizations will focus their attention on their first rocket, but we knew that that would be very important to build up all the infrastructure to support production, test and launch in the long term, so that's what we've done in parallel.

Speaker Change: I'm really proud of the speed and progress that the team has achieved with Neutron so far in an incredibly short time frame.

Peter Beck: Okay, the update you've all been waiting for, the Archimedes engine test campaign. As we've said before, propulsion is always a long pole in the tent when it comes to developing a rocket, but thanks to having successfully designed, flown, and built more than 500 Rutherford engines, we have a pretty good chunk of experience on how to do this. We used this to fast-track Archimedes' development, and this has certainly paid

Speaker Change: especially in the update I'm about to share next.

Peter Beck: I'm really proud of the speed and progress that the team has achieved with Neutron so far in an incredibly short time frame, especially in the update on about to share next. Okay, the update you've all been waiting for, the Archimedes engine test campaign. As we've said before, propulsion is always a long pole and a tent when it comes to developing a rocket, but thanks to having successfully designed, flown, and built more than 500 rather than engines, we have a pretty good chunk of experience how to do this.

Speaker Change: Okay, the update you've all been waiting for, the Archimedes engine test campaign. As we've said before, propulsion is always a long pole in the tent when it comes to developing a rocket, but thanks to having successfully designed, flown and built more than 500 Rutherford engines, we have a pretty good chunk of experience how to do this.

Speaker Change: We used this to fast track Archimedes development and this has certainly paid off. We also made a very conscious and strategic decision right from the outset to design a flight engine and put something on the engine test stand that was designed to be flight ready.

Peter Beck: We also made a very conscious and strategic decision right from the outset to design a flight engine and put something on the engine test stand that was designed to be flight-ready. It's fairly common to see downscaled engines or early-stage prototypes used for a couple of years before companies actually move into putting something on the stand that could fly. But we didn't do that.

Peter Beck: We use this to fast track Archimedes development and this has certainly paid off. We also made a very conscious and strategic decision right from the outset to design a flight engine and put something on the engine test stand that was designed to be flight ready. It's fairly common to see down-scaled engines or early stage prototypes used for a couple of years before companies actually move into putting something on the stand that could fly.

Speaker Change: It's fairly common to see downscaled engines or early stage prototypes used for a couple of years before companies actually move into putting something on the stand that could fly.

Peter Beck: In the past couple of months, we put Archimedes through hundreds of tests to validate the design, including spin primes, ignition tests, as well as understanding all the start-up and shut-down transients. All of that work culminated recently in a successful Archimedes hot fire. We started off with a series of low-power hot fires with great results, then cranked it up to put the engine through its paces.

Speaker Change: But we didn't do that. In the past couple of months, we put our committees through hundreds of tests to validate the design, including spin primes, ignition tests, and understanding all the start-up and shutdown transients.

Peter Beck: But we didn't do that. In the past couple of months, we put Archimedes through hundreds of tests to validate the design, including spin-primes ignition tests and, well, as understanding all the start-up and shutdown transients. All of that work accumulated recently in a successful Archimedes hotfire. We started off with a series of low-power hotfires, with great results, then cranked it up to put the engine through its paces. We've now reached a main stage hotfire at 102 percent power.

Speaker Change: One of that work, coming lighted recently in a successful Archimedes haltfire.

Speaker Change: We started off with a series of low power hot fires with great results, then cranked it up to put the engine through its paces. We've now reached main stage hot fire at 102% power.

Peter Beck: We've now reached main-stage hot fire at 102% power. Now, taking a new-stage combustion liquid rocket engine from clean-sheet design to hot fire in a flight configuration in just a couple of years is really industry-leading stuff. From here, it's about dialing in the engine, building a bunch more of them, and getting them rolling off to production. Now, the team has been pushing hard to get the first flight articles through qualification, but like we've always said with Electron, bringing your first rocket is hard, building your first rocket is hard, but building the 10th or the 50th is even harder. That's why we know it's just as important to build the machine behind the rocket and set it up for scale from day one.

Speaker Change: Now taking a new stage to combustion liquid rocket engine from clean sheet design to hotfire in a flight configuration and just a couple of years is really into industry leading stuff. From here it's about dialing the engine and building a bunch more of them and getting them rolling off the production line.

Peter Beck: Now taking a new stage combustion liquid rocket engine from clean sheet design to hotfire in a flight configuration in just a couple of years is really industry-leading stuff. From here, it's about dialing the engine in, building a bunch more of them and getting them rolling off the production line. Now the team has been pushing hard to get the first flight articles through qualification, but like we've always said, with Electron, bringing your first rocket is hard, building your first rocket is hard, but building the 10th or the 50th is even harder.

Speaker Change: Now, the team has been pushing hard to get the first flight articles through qualification, but like we've always said with Electron, bringing your first rocket is hard, building your first rocket is hard, but building the 10th or the 50th is even harder. That's why we know it's just as important to build the machine behind the rocket and set it up for scale from day one.

Peter Beck: The next Archimedes engine is coming off the production line right now, and while the assembly line for many more is also established, in the meantime, we've scaled the avionics production line to support both electron and neutron and all things that make it easier to roll into a launch cadence after flight one. While the propulsion team has been kicking goals, the composite team has been moving at pace too. As you can see here, we have flight hardware in production, including the fairing panels for Neutron's fixed fairing.

Speaker Change: The next Archimedes engine is coming off the production line right now and while the assembly line for many more is also established.

Peter Beck: That's why we know it's just as important to build the machine behind the rocket and set it up the scale from day one. The next Archimedes engine is coming off the production line right now and while the assembly line for many are the more, many more is also established. Meanwhile, we've scaled avionics production line to support both Electron and Neutron and all things that make it easier to roll until launch cadence after flight one.

Speaker Change: Meanwhile, we're scaled avionics production line to support both the electron and neutron and all things that make it easier to roll until launch cadence after flight 1.

Speaker Change: While the propulsion team has been kicking goals, the composite team has been moving at pace too. As you can see here, we have flight hardware in production.

Peter Beck: While the propulsion team has been kicking goals, the composite team has been moving at pace two. As you can see here, we have flight hardware introduction, including the fearing panels for Neutron's fixed fearing. Remember, this fearing is pretty unique in that it remains attached to Neutron throughout the launch and landing, enabling us to reuse it across multiple emissions. Benoit, we have flight hardware and production for all other neutron composite structures including stage 1 and stage 2 tanks and the interstage.

Peter Beck: Remember, this fairing is pretty unique in that it remains attached to Neutron throughout the launch and landing, enabling us to reuse it across multiple missions. Meanwhile, we have flight hardware in production for all other Neutron composite structures, including Stage 1 and Stage 2 tanks in the industry. Since Pitch Paints a Thousand Words, here's a quick look at some of the composite production going on behind the scenes to bring Neutron to life.

Speaker Change: including the fairing panels for Neutron's fixed fairing. Remember, this fairing is pretty unique in that it remains attached to Neutron throughout the launch and landing, enabling us to reuse it across multiple missions.

Speaker Change: Meanwhile, we have flight hardware in production for all other Neutron composite structures including Stage 1 and Stage 2 tanks and the interstage.

Speaker Change: Since the picture paints a thousand world words, here's a quick look at some of the composite production going on, beyond the scenes to bring you drawn to life.

Peter Beck: The progress in composites production is just about to accelerate even faster with the installation of our automated fiber placement machine in Middle River, Baltimore. Establishing this capacity and capability in parallel to manual lay-up of neutron structures enables us to rapidly scale up production for the first flight and full operational cadence to follow. The custom-built 90-ton machine will automate the production of all large composite neutron structures, including the panels that make up the 91-foot interstage and fairing, as well as the first and second stages. This machine is one of the largest of its kind in the world and will allow us to save thousands of hours on stage one alone, compared with manual labor.

Peter Beck: Since the paints of thousands of worlds, words, here's a quick look at some of the composite production going on, beyond the scenes to bring neutron to life. The progress and composites production is just about to accelerate even faster with the installation of our automated fibre placement machine in middle river Baltimore. Establing this capacity and capability in parallel to manual layout of neutron structures enables us to rapidly scale up production to the first flight and full operational cadence to follow.

Speaker Change: The progress in composites production is just about to accelerate even faster with the installation of our automated fibre placement machine in Middle River, Baltimore.

Speaker Change: Establishing this capacity and capability in parallel to manual lay-up of neutron structures enables us to rapidly scale up production for the first flight and full operational cadence to follow.

Speaker Change: The custom-built 90-ton machine will automate the production of all large composite neutron structures, including the panels that make up the 91-foot interstage and fairing, as well as the first and second stages.

Peter Beck: The custom built 1990-ton machine will automate the production of all large composite neutron structures including the panels that make up the 91 foot interstage and fearing as well as the first and second stages. This machine is one of the largest of its kind in the world and will allow us to save thousands of hours on stage 1 alone compared with hand labour. Speaking of infrastructure, progress is coming along nicely at launch complex 3 Virginia with fluid systems installation underway and we've started receiving some of the critical long lead items like cryogenic systems and tanks.

Speaker Change: This machine is one of the largest of its kind in the world and allows us to save thousands of hours on stage one alone, compete with hand labour.

Peter Beck: Speaking of infrastructure, progress is coming along nicely at Launch Complex 3 in Virginia with fluid systems installation underway, and we've started receiving some of the critical long lead items like cryogenics. As you can see from the photo on the screen, we've poured tons of concrete into Neutron's pad and are ready to receive the launch mount. This is a huge piece of infrastructure and a big milestone to tick off as part of the first flight. Just 10 minutes down the road from the pad is the Neutron assembly and integration facility where Neutron will undergo the final assembly before transportation to the pad.

Speaker Change: Speaking of infrastructure, progress is coming along nicely at Launch Complex 3 Virginia with fluid systems installation underway and we've started receiving some of the critical long lead items like cryogenic systems and tanks.

Speaker Change: As you can see from the photo on the screen, we've poured tons of concrete into Neutron's pad and ready to receive the launch mount. This is a huge piece of infrastructure and a big milestone to tick off for the part of the first flight.

Peter Beck: As you can see from the photo on the screen, we've poured tons of concrete into neutron's pad and ready to receive the launch mount. This is a huge piece of infrastructure and a big milestone to take off for the part of the first flight. Just 10 minutes down the road from the pad is a neutron assembly and integration facility where neutron will undergo the final assembly before transportation to the pad. Construction of this is progressing well and on track to receive the first neutron early next year ahead of launch.

Speaker Change: Just 10 minutes down the road from the pad is the Neutron assembly and integration facility where Neutron will undergo the final assembly before transportation to the pad. Construction of this is progressing well and on track to receive the first Neutron early next year ahead of launch.

Peter Beck: Construction of this is progressing well and on track to receive the first Neutron early next year ahead of its launch. Okay, that wraps up launch. On to the other half of our business now, Space Systems. Before I dig into the achievements on specific space systems items, I thought it was worth a quick reminder of the scale of the programs we have underway. Right now, we have more than $720 million worth of spacecraft on contract and in development, including constellations for the Space Development Agency and Globalstar, as well as bespoke spacecraft for NASA, the DoD, and commercial customers.

Speaker Change: Okay, that wraps up launch. On to the other half of our business now, Space Systems.

Speaker Change: Before I dig into the achievements on specific space systems, items I thought we're at the quick reminder of the scale of the programs we have underway.

Peter Beck: That wraps up launch on to the other half of our business now space systems. Before I dig into the achievements on specific space systems items, I thought it worth a quick reminder of the scale of the programs we have underway. Right now we have more than $720 million worth of spacecraft on track and on contract and in development, including constellations to the space development agency, global star as well as the spoke spacecraft for NASA, the DOD and commerce.

Speaker Change: Right now we have more than $720 million worth of spacecraft on contract and in development, including constellations for the Space Development Agency, Globalstar, as well as bespoke spacecraft for NASA, the DoD, and commercial customers.

Peter Beck: On any given day, the team is working through design reviews, qualification campaigns, analysis, and production for these programs. In many cases, this work isn't very visible because the hardware build only comes at the very end, and in some cases, our customers request confidentiality, so we can't share images or too much detail on progress. What I will say is our team has earned a reputation for delivering high-quality spacecraft on rapid timelines, and these programs are tracking that. Okay, on to the more granular detail.

Speaker Change: On any given day the team is working through design reviews, qualification campaigns, analysis and production for these programs.

Peter Beck: On any given day, the team is working through design reviews, qualification campaigns and LLSS and production for these programs. In many cases, work isn't very visible because the hardware build only comes at the very end and in some cases, their customers request confidentiality so we can't share images or too much detail on progress. What I will say is their team is earned a reputation for delivering high quality spacecraft on rapid timelines and these programs are tracking no differently.

Speaker Change: In many cases this work isn't very visible because the hardware build only comes at the very end and in some cases our customers request confidentiality so we can't share images or too much detail on progress. What I will say is our team has earned a reputation for delivering high quality spacecraft on rapid timelines and these programs are tracking no difference.

Peter Beck: We had a huge milestone recently by completing the production and test of two identical spacecraft for the NASA Mars mission. It's not uncommon for an interplanetary mission to take a decade to go from design to flight-ready, so to design, build, and test not one but two Mars spacecraft in around three years is pretty impressive. Once again, this has been made possible in part by a vertical integration strategy, which removes heavy reliance on suppliers since we produce many components in-house, enabling us to control the schedule and costs.

Speaker Change: Okay, onto the more granular detail, we had a huge milestone recently by completing production and test of two identical spacecraft for the NASA Mars mission.

Peter Beck: On to the more granular detail, we had a huge milestone recently by completing production and tests of two identical spacecraft for NASA Mars mission. It's not uncommon for an interplanetary mission to take a decade to go from design to flight ready to design, build and test not one but two Mars spacecraft in around three years is pretty impressive. Once again, it has been made possible in part by a vertical integration strategy which removes heavy reliance on suppliers since we produce many components in-house enabling us to control schedule and cost.

Speaker Change: It's not uncommon for an interplanetary mission to take a decade to go from design to flight ready, so to design, build and test not one but two Mars spacecraft in around three years is pretty impressive.

Speaker Change: Once again, it has been made possible in part by a vertical integration strategy, which removes heavy reliance on suppliers, since we produce many components in-house, enabling us to control schedule and costs.

Peter Beck: And in the case of Escapade, the spacecraft featured Rocket Lab solar cells, reaction wheels, Star Trekker separation systems, radio, flight software, structurally and autonomously. The twin spacecraft are now packed up for shipping out to the Cape and ready for launch during the up-and-coming Mars transit window which extends through October. I'm off to Albuquerque now, where we've signed preliminary terms for $49.4 million in federal, state, and local funding, including a portion under the CHIPS Act.

Speaker Change: And in the case of Escapade, the spacecraft featured rocket labs, solar cells, reaction wheels, star trackers, separation systems, radio, flight software, structurally, on and on the go.

Peter Beck: And in the case of ESCAPAID, the spacecraft featured rocket labs, solar cells, reaction waves, star tracker, separation systems, radio, flights, software, structurally on and on the go. The twin spacecraft are now packed up for shipping out to the Cape and ready for launch during the up and coming Mars transit window which extends through October. Over to Albuquerque now, where we've signed preliminary terms for a $49.4 million in federal state and local funding, including a portion under the Chips Act, the funding will enable us to expand production of our solar cells, which are important components for national defense and security satellites.

Speaker Change: The twin spacecraft are now packed up for shipping out to the Cape and ready for launch during the up-and-coming Mars Transit window which extends through October.

Speaker Change: Over to Albuquerque now, where we've signed preliminary terms for $49.4 million in federal, state, and local funding, including a portion under the CHIPS Act.

Peter Beck: The funding will enable us to expand production of our solar cells, which are important components for national defense and security satellites. We expect to create around 100 new manufacturing jobs as a direct result of this funding and the expansion it enables. Another pair of spacecraft we have rolling down the production line are the next two sets of satellites for Vardar Space Industries. These pioneer class satellites host Vardar's in-space manufacturing capsules which enable the production of pharmaceuticals and other products that benefit from low gravity environments. We successfully operated one of these spacecraft for Vardar last year, successfully setting it on a course for re-entry and landing it in the Utah desert in February this year.

Speaker Change: The funding will enable us to expand production of our solar cells, which are important components for national defence and security satellites.

Speaker Change: We expect to create around 100 new manufacturing jobs as a direct result of this funding and expansion it enables.

Peter Beck: We expect to create around 100 new manufacturing jobs as a direct result of this funding and expansion it enables. Another pair of spacecraft we have rolling down the production line are the next two set of satellites for Vata space industries. These pioneer class satellites host Vata's in-space manufacturing capsules, which enable the production of pharmaceuticals and other products that benefit from low-gravity environments. We successfully operated one of these spacecraft for Vata last year, successfully setting it onto a course for reentry and landing it on the Utah desert in February this year.

Speaker Change: Another pair of spacecraft we have rolling down the production line, are the next two set of satellites for Vata Space Industries. These pioneer class satellites host Vata's in space manufacturing capsules which enable the production of pharmaceuticals and other products that benefit from low gravity environments.

Speaker Change: We successfully operated one of these spacecraft for Vardar last year, successfully setting it onto a course for re-entry and landing it in the Utah desert in February this year.

Peter Beck: The spacecraft is nearing completion and preparing for launch in the coming months, with a third following not far behind. No one to constellation spacecraft is in development at the moment. Recently, we completed a successful systems requirements review for our $500 million prime contract with the SDA to design and build 18 Tranche 2 transport layer beta satellites. From here, we'll move into preliminary design review before hardware starts to take shape and clean up. These spacecraft are scheduled to launch in 2027, so we're on track and kicking some of these critical design milestones off early in the program. Our 17th Spacecraft, the Thunder Constellation for MDA and Globalstar.

Speaker Change: The spacecraft is nearing completion and preparing for launch in the coming months with a third following not far behind

Peter Beck: The spacecraft is nearing completion and preparing for launch in the coming months, with a third following not far behind. Now onto constellation spacecraft and development at the moment. Recently, we completed successful systems requirements review for our $500 million prime contract for the SDA to design and build 18 tranche 2 transport layer Vata satellites. From here, we'll move into preliminary design review before hardware starts to take shape in clean rooms. These spacecraft are scheduled to launch in 2027, so we're on track and kicking some of these critical design milestones off early in the program.

Speaker Change: Now onto Constellation spacecraft in development at the moment.

Speaker Change: Recently, we completed successful systems requirements review for our $500 million prime contract for this DA to design and build 18-transport layer beta satellites. From here, we'll move into a preliminary design review before hardware starts to take shape and clean rooms.

Speaker Change: These spacecraft are scheduled to launch in 2027, so we're on track and kicking some of these critical design milestones off early in the program.

Speaker Change: A 17-spacecraft Thunder Constellation for MDA and Globalstar. We've completed integration readiness review and hardware is in production, including the first delivery of a full flat sat to the customer. This program is moving at pace, with spacecraft scheduled for completion and launch by the end of 2025.

Peter Beck: We've completed the integration readiness review, and hardware is in production, including the first delivery of a full flat sat to the customer. This program is moving at pace, with spacecraft scheduled for completion and launch by the end of 2020. Our spacecraft programs tend to get the most attention in space systems, but our Merchant Components business continues to hit goals too, including when it comes to innovating new products. At the SmallSat conference in Utah this week, the team introduced a new Advanced Satellite Dispenser, giving customers more choice for versatile and reliable spacecraft deployment. The ASD builds on the 11-year heritage of the containerized satellite dispenser, which has successfully deployed more than 60 satellites.

Peter Beck: Our 17 spacecraft thunder constellation for MDA and global star. We've completed integration readiness review and hardware is in production, including the first delivery of a full flat set to the customer. This program is moving at pace with spacecraft scheduled for completion and launch by the end of 2025. Our spacecraft programs tend to get the most of the attention in the space systems, but our merchant components business continues to kick goals too, including when it comes to innovating new products.

Speaker Change: Our spacecraft programs tend to get the most of the attention in the space systems, but our merchant components business continues to kick goals too, including when it comes to innovating new products.

Speaker Change: At the SmallSat conference in Utah this week, the team introduced a new advanced satellite dispenser, giving customers more choice for versatile and reliable spacecraft deployment.

Peter Beck: At the Smallsack conference in Utah this week, the team introduced a new advanced satellite dispenser, giving customers more choice for versatile and reliable spacecraft deployment. The ASD builds on the 11 year heritage of the containerized satellite dispenser, which has successfully deployed more than 60 satellites. If I leave it on about the achievements across our other components businesses, we'll be here all evening, so I'll try and keep it brief.

Speaker Change: The ASD builds on the 11-year heritage of the containerized satellite dispenser, which has successfully deployed more than 60 satellites.

Peter Beck: If I leave it on about the achievements across our other component businesses, we'll be here all evening, so I'll try and keep it brief. Now, to round out our business updates, I just want to provide a quick update on our M&A strategy. We've had the privilege of being a launch provider, spacecraft developer, and component supplier to scores of companies and organizations across the global space industry. Increasingly, they want complete mission solutions, and a mixed approach of organic and developed development and M&A aims to serve them.

Speaker Change: If I leave it on about the achievements across our other components businesses, we'll be here all evening, so I'll try and keep it brief.

Speaker Change: Now, to round out our business updates, I just want to provide a quick update on our M&A strategy. We've had the privilege of being a launch provider, spacecraft developer, and component supplier to scores of companies and organizations across the global space industry.

Peter Beck: Now, to round out our business updates, I just want to provide a quick update on our M&A strategy. We've had the privilege of being a launch provider, spacecraft developer, and component supplier to scores of companies and organisations across the global space industry. Increasingly, they want complete mission solutions and a mixed approach of organic and developed development and M&A aims to serve this. Right now, we're managing a robust pipeline of targets while being selective and strategic about what we want to bring into our suite of capabilities.

Speaker Change: Increasingly, they want complete mission solutions and a mixed approach of organic and developed development and M&A aims to serve this.

Peter Beck: Right now, we're managing a robust pipeline of targets while being selective and strategic about what we want to bring into our suite of capabilities. The focus is on targets that would fill gaps in our already extensive suite of solutions, while also enabling meaningful revenue scale and profit. Last but not least, before we move into the financial highlights, I wanted to share some news about a documentary that recently came out that covers Rocket Lab in a way that many people may not have seen before.

Speaker Change: Right now we're managing a robust pipeline of targets while being selective and strategic about what we want to bring into our suite of capabilities.

Peter Beck: The focus on targets, the focus is on targets that would fill gaps in our already extensive suite of solutions, while also enabling meaningful revenue scale and profit. We look forward to sharing more on this in due course.

Speaker Change: The focus is on targets that would fill gaps in our already extensive suite of solutions, while also enabling meaningful revenue scale and profit. We look forward to sharing more on this in due course.

Speaker Change: And last but not least, before we move into the financial highlights, I wanted to share some news about a documentary that recently came out which covers Rocket Lab in a way that many people may not have seen before.

Peter Beck: Wild Wild Space was released on HBO Max just a few weeks ago. It's a film version of the New York Times best-selling book When the Heavens Went on Sale by Ashley Vance, and it's directed by Academy Award-winning director Ross Coffey. If you're interested in the history of Rocket Lab and how we got to where we are today and some insight into what drives us, this is a great place to start. Highly recommended if you go and check it out on HBO. That wraps up the top line business achievements, so with that, I'll hand it over to Adam to discuss our financial highlights and outlook.

Peter Beck: And last but not least, before we move into the financial highlights, I wanted to share some news about a documentary that recently came out, which covers rocket lab, in a way that many people may not have seen before. Wild Wild Space was released on HBO Max just a few weeks ago. It's a film version of The New York Times' bestselling book, When the Heavens Went On Sale by Ashley Vance, and it's directed by Academy Award winning director Ross Kaufman.

Speaker Change: Wild Wild Space was released on HBO Max just a few weeks ago. It's a film version of the New York Times bestselling book when the event went on sale by Ashley Vance, and it's directed by Academy Award winning director Ross Kaufman.

Peter Beck: If you're interested in the history of rocket lab and how we got to where we are today and some insight into what drives us, this is a great place to start. Highly recommended if you go and check it out on HBO. That wraps up the top line business achievements.

Speaker Change: If you're interested in the history of Rocket Lab and how we got to where we are today and some insight into what drives us, this is a great place to start. Highly recommended if you go and check it out on HBO.

Speaker Change: That wraps up the top line business achievement, so with that I'll head over to Adam to hand it over to Adam to discuss our financial highlights and outlook.

Adam Spice: Great. Thanks, Pete.

Adam Spice: Second quarter 2024 revenue was $106 million, which was consistent with our prior guidance range to reflect significant year-on-year growth of 71% and sequential growth of 15% driven by strong contribution from both business segments led by Space Systems. Our launch service segment delivered revenue of $29.4 million, slightly above our guidance of $28 to $29 million. Our current backlog continues to support our current year target average revenue per launch of $7.5 million, with some quarterly variability tied to volume purchase discounts, launch location, and mission assurance requirements.

Adam Spice: So with that, I'll head over to Adam to hand it over to Adam to discuss our financial highlights and outlook. Great, thanks Pete. Second quarter, 2024 revenue was $106 million, which was consistent with our prior guidance range or reflect significant year and year growth of 71% and sequential growth of 15% driven by strong contribution from both business segments led by space systems. Our launch serves as a segment-delivered revenue of $29.4 million, slightly above our guidance of $28 to $29 million.

Adam: Great. Thanks, Pete.

Adam: 2nd quarter, 24 revenue was $106 million.

Adam: which was consistent with our prior guidance range and reflects significant year-on-year growth of 71% and sequential growth of 15%, driven by strong contribution from both business segments, led by Space Systems.

Adam: Our launch service segment delivered revenue of $29.4 million, slightly above our guidance of $28 to $29 million.

Speaker Change: Our current backlog continues to support our current year target average revenue per launch of $7.5 million, with some quarterly variability tied to volume purchase discounts, launch location, and mission assurance requirements.

Adam Spice: Our current backlog can use to support our current year target average revenue per launch of $7.5 million, with some quarterly variability tied to volume purchase discounts, launch location, and mission assurance requirements. Our space system segment delivered $77 million in the quarter, again in line with our prior guidance range of $77 to $81 million, reflecting sequential growth of over 28%, driven primarily by growth in our FDA and MDA contracts revenue.

Adam Spice: Our space system segment delivered $77 million in the quarter, again, in line with our prior guidance range of $77 to $81 million, reflecting sequential growth of over 28%, driven primarily by growth in our SDA and MDA contract revenue. Now turn to Gross Margin. Gap gross margin for the second quarter was 25.6%, in line with our prior guidance range of 24 to 26%. Non-GAAP gross margin for the second quarter was 30.7%, which was also in line with our prior guidance range of 30 to 32%.

Speaker Change: Our space system segment delivered $77 million in the quarter, again, in line with our prior guidance range of $77 to $81 million, reflecting sequential growth of over 28%, driven primarily by growth in our SDA and MDA contracts revenue.

Speaker Change: Now turn to Gross Margin.

Speaker Change: Gap gross margin for the second quarter was 25.6% in line with our prior guidance range of 24 to 26 percent.

Adam Spice: Now I'll turn to Gross Margin. Gap Gross Margin for the second quarter was 25.6% in line with our prior guidance range of 24 to 26%. Non-Gap Gross Margin for the second quarter was 30.7%, which was also in line with our prior guidance range of 30 to 32%. Relatedly, we ended Q2 with production-related headcount of 914, up 42 from the prior quarter. Turns backlog, we ended Q2 2024 with 1.07 billion of total backlog, with launch backlog of 294 million and space systems backlog of $772.6 million.

Speaker Change: Non-Gap throws margin for the second quarter was 30.7% which was also in line with our prior guidance range of 30 to 32%.

Adam Spice: Relatedly, we ended Q2 with a production-related headcount of 914, up 42 from the prior quarter. Turning Backwards, We ended Q2 2024 with $1.07 billion in total backlog, with launch backlog of $294 million and space systems backlog of $772.6 million. Relative to Q1 2024, total backlog was up 5% sequentially or $51 million, despite a $106 million revenue quarter, as strong bookings continued in our launch and space systems business. For launch, backlog was up 36% sequentially or $78.3 million, primarily due to the 10-launch agreement that's inspective that Pete mentioned earlier. We continue to cultivate a healthy pipeline, including multi-launch deals and large satellite manufacturing contracts that can create lumpiness in our backlog growth given the size and complexity of these opportunities.

Speaker Change: Relatedly, we ended Q2 with a production-related headcount of 914, up 42 from the prior quarter.

Speaker Change: Turns Backlog

Speaker Change: We ended Q2 2024 with 1.07 billion of total backlog.

Speaker Change: with launch backlog of $294 million and space systems backlog of $772.6 million.

Speaker Change: We're older than 21-24, total backlog was up 5% sequentially or $51 million, despite a $16 million revenue quarter, as strong-booking has continued in our launch and space systems businesses.

Adam Spice: Rolled into Q1 2024, total backlog was up 5% sequentially, or $51 million, despite $106 million revenue quarter, as strong bookings continued in our launch and space systems businesses. For launch, backlog was up 36% sequentially, or $78.3 million, primarily due to the 10 launch agreement that's inspected that Pete mentioned earlier.

Speaker Change: For launch, backlog was up 36% sequentially, or $78.3 million, primarily due to the 10-launch agreement that's inspective that Pete mentioned earlier.

Speaker Change: We continue to cultivate a healthy pipeline, including multiple launch deals and large satellite manufacturing contracts that can create lumpiness in our backlog growth, given the size and complexity of these opportunities.

Adam Spice: We continue to cultivate a healthy pipeline, including multi-launch deals and large satellite manufacturing contracts that can create lumpiness in our backlog growth, given the size and complexity of these opportunities. We expect approximately 44% of current backlog to be recognized as revenues within 12 months.

Adam Spice: We expect approximately 44% of our current backlog to be recognized as revenues within 12 months. Turning to operating expenses, Gap operating expenses for the second quarter of 2024 were $70.4 million, up $3.2 million sequentially, but below the low end of our guidance range of $74 to $76 million. Non-GAAP operating expenses for the second quarter were $58.5 million, up $2.2 million sequentially, which was also below the Little Edinburgh guidance range of $62 to $64 million.

Speaker Change: We expect approximately 44% of current backlog to be recognized as revenues within 12 months.

Adam Spice: The sequential increases in both GAAP and non-GAAP operating expenses were primarily driven by continued growth in headcount and prototype expenditures to support our Neutron development program, related infrastructure IT support for Neutron, and our 18-satellite SDA contract, and a step-up related to our annual merit cycle. In R&D specifically, GAAP expenses were up $1.4 million quarter-on-quarter due to neutron prototyping, materials, headcount Non-GAAP R&D expenses were up $400,000 quarter on quarter, driven similarly to GAAP expenses. Q2 ending R&D headcount was 673, representing an increase of 48 from the prior quarter.

Speaker Change: Turning to operating expenses.

Speaker Change: Gap operating expenses for the second quarter of 2024 were 70.4 million dollars, up 3.2 million dollars sequentially, but below the low end of our guidance range of 74 to 76 million dollars.

Adam Spice: Turning to operating expenses, gap operating expenses for the second quarter of 2024 were $70.4 million, up $3.2 million sequentially, but below the low end of our guidance range of $74 to $76 million. Non-gap operating expenses for the second quarter were $58.5 million, up $2.2 million sequentially, which was also below the low end of our guidance range of $62 to $64 million. The sequentially increases in both gap and non-gap operating expenses were primarily driven by continued growth in headcount and prototype expending to support our neutron development program, related infrastructure IT support for neutron and our 18 satellite SDA contract, and a step up related to our annual merit cycle.

Speaker Change: Non-gap operating expenses for the second quarter were fifty eight point five million dollars up to two million sequentially which is also below the Leleber guidance range of sixty two to sixty four million dollars.

Speaker Change: The sequential increases in both gap and non-gap operating expenses were primarily driven by continued growth and head count and prototype expanding to support our new Toronto Development Program, related infrastructure IT support for new drone and our 18 satellite SDA contract and a step up related to our annual merit cycle.

Speaker Change: In R&D specifically, GAP expenses were up 1.4 million dollars quarter-on-quarter due to Neutron prototyping, materials, headcount growth, and related merit increases.

Adam Spice: In R&D specifically, gap expenses were up $1.4 million quarter on quarter due to neutron prototyping, materials, headcount growth, and related meridians. [inaudible] driven similarly to Gap SG&A expenses. A Q2 ending SG&A head count was 273, representing an increase of 10 from the prior quarter.

Speaker Change: non-GAAP R&D expenses were up $400,000 quarter-on-quarter, driven similarly to the GAAP expenses.

Speaker Change: Q2 ending R&D headcount was 673, representing an increase of 48 from the prior quarter.

Adam Spice: In SG&A, GAAP expenses increased $1.8 million quarter on quarter, largely due to an increase in staff costs following our annual merit cycle. Non-GAAP SG&A expenses increased by $1.7 million, driven similarly to GAAP SG&A expenses. Q2 ending SG&A headcount was 273, representing an increase of 10 from the prior quarter. In summary, total second quarter headcount was 1,860, up 100 heads from the prior quarter. Turn it to cash.

Speaker Change: In SGA, gap expense is increased $1.8 million, largely due to an increase in staff costs, following our annual merit cycle.

Speaker Change: non-GAAP SG&A expenses increased by $1.7 million, driven similarly to GAAP SG&A expenses.

Speaker Change: A Q2 ending SG&A headcount was 273, representing an increase of 10 from the prior quarter.

Speaker Change: In summary, total second quarter headcount was 1,860, up 100 heads from the prior quarter.

Adam Spice: In summary, total second quarter head count was 1,860 up 100 heads from the prior quarter.

Adam Spice: Purchases of property, equipment, and capitalized software licenses were $15.3 million in the second quarter of 2024, a decrease of $3.8 million from $19.2 million in the first quarter of 2024. We continue our investment in neutron research, testing, and production infrastructure projects, along with the expansion of our satellite production and space solar solutions capacity. And we do expect our capital expenditures to increase in the second half of the year. Cash consumed from operations was $13 million in the second quarter of 2024 compared to $2.6 million in the first quarter of 2024.

Speaker Change: Turn to cash.

Speaker Change: Thank you very much.

Speaker Change: Purchases of property, equipment, and capitalized software licenses was $15.3 million in the second quarter of 2024, a decrease of $3.8 million from $19.2 million in the first quarter of 2024.

Adam Spice: Turning to cash, purchases of property, equipment, and capitalized software licenses was $15.3 million in the second quarter of 2024, a decrease of $3.8 million from $19.2 million in the first quarter of 2024. We continue our investment in neutron research, testing, and production infrastructure projects, along with the expansion of our satellite production and space solar solutions capacity, and we do expect our capital expenditures to increase in the second half of the year.

Speaker Change: We continue our investment in neutron research, testing and production infrastructure projects along with the expansion of our satellite production and space solar solutions capacity. And we do expect our capital expenditure to increase in the second half of the year.

Speaker Change: Cash consumed from operations was $13 million in the second quarter of 2024, compared to $2.6 million in the first quarter of 2024.

Adam Spice: The sequential increase of $10.4 million was driven primarily by changes in working capital related to accounts receivables owing to the space system's milestone payments and the deposit owed on our 10-launch agreement with Inspectiv signed late in Q2. Overall, non-GAAP free cash flow, defined as GAAP operating cash flow reduced by purchases of property, equipment, and capitalized software in the second quarter of 2024, was a use of $28.3 million, compared to $21.8 million in the first quarter of 2024.

Adam Spice: Cash consumed from operations was $13 million in the second quarter of 2024, compared to $2.6 million in the first quarter of 2024. The sequential increase of $10.4 million was driven primarily by changes in working capital related to the accounts receivables owing to the space systems milestone payments, and the deposit owed on our 10 launch agreements with inspectors signed late in Q2. Overall, non-Gap free cash flow defined as Gap operating cash flow reduced by purchases of property, equipment, and capitalized software in the second quarter of 2024, was a use of $28.3 million compared to $21.8 million in the first quarter of 2024.

Speaker Change: The sequential increase of $10.4 million was driven primarily by changes in working capital related to the accounts receivables owing to the space system's milestone payments, and a deposit owed on our 10-launch agreement with Inspective signed late in Q2.

Speaker Change: Overall, non-gap free cash flow defined as gap operating cash flow reduced by purchases of property equipment and capitalized software in the second quarter of 2024 was a use of 28.3 million dollars compared to 21.8 million dollars in the first quarter of 2024.

Adam Spice: Our milestone cash collections have been strong in the first half of 2024, and we are ahead of our targeted cash consumption run rate for the year. But we do expect a pickup in cash consumption in the second half, owing to an expected increase in neutron capex and lumpiness in large space systems milestone payment collection. The ending balance of cash, cash equivalents, restricted cash, and marketable securities was $546.8 million as of the end of the second quarter of 2020.

Speaker Change: Our milestone cash collections have been strong in the first half of 2024, and we are ahead of our targeted cash consumption run rate for the year. But we do expect to pick up and cash consumption in the second half, owing to expected increase in neutron capex and lumpiness and large space systems milestone payment collections.

Adam Spice: Our milestone cash collections have been strong in the first half of 2024, and we are ahead of our targeted cash consumption run rate for the year, but we do expect a pickup and cash consumption in the second half owing to expected increase in neutron CapEx, and lumpiness and large space systems milestone payment collections.

Speaker Change: The ending balance of cash, cash equivalents, restricted cash and marketless securities was 546.8 million dollars as of the end of the second quarter of 2024.

Adam Spice: We are in a strong position to execute on our organic expansion initiatives as well as inorganic options to further vertically integrate our supply chain with critical capabilities and expand our addressable market consistent with what we've done successfully in the past.

Adam Spice: The ending balance of cash, cash equivalence, restricted cash, and marked securities was $546.8 million as of the end of the second quarter of 2024. We execute to in a strong position to execute on our organic expansion initiatives, as well as inorganic options to further vertically integrate our supply chain with critical capabilities, and expand our addressable market, consistent with what we've done successfully in the past. Adjusted EBITDA loss of $21.2 million in Q2 improves slightly by $500,000 from a loss of $21.7 million in Q1, as the benefit of strong revenue growth was largely offset by increased spending primarily related to neutron development.

Speaker Change: We execute, too, in a strong position to execute on our organic expansion initiatives, as well as inorganic options to further vertically integrate our supply chain with critical capabilities and expand our addressable market, consistent with what we've done successfully in the past.

Adam Spice: Adjusted EBITDA loss of $21.2 million in Q2 improved slightly by $500,000 from a loss of $21.7 million in Q1, as the benefit of strong revenue growth was largely offset by increased spending primarily related to neutron development. With that, let's turn to our guidance for the third quarter of 2024. We expect revenue in the third quarter to range between $100 and $105 million. This range reflects $79 to $84 million of contribution from space systems and approximately $21 million from launch services.

Speaker Change: Adjusted EBITDA loss of $21.2 million in Q2 improved slightly by $500,000 from a loss of $21.7 million in Q1, as the benefit of strong revenue growth was largely offset by increased spending primarily related to neutron development.

Adam Spice: We expect third quarter gap gross margin to range between 25 to 27 percent and non-gap gross margin to range between 30 to 32 percent. These forecasted gap and non-gap gross margins reflect an improved mix within our space system segment in favor of components and subsystems, offset by the impact of lower fixed launch services cost absorption. We expect third-quarter GAAP operating expenses to range between $80 million and $82 million, and non-GAAP operating expenses to range between $69 million and $71 million.

Speaker Change: With that, let's turn to our guidance for the third quarter of 2024.

Speaker Change: We expect revenue in the third quarter to range between $100 and $105 million. This range reflects $79 to $84 million of contribution from space systems and approximately $21 million from launch services.

Adam Spice: With that, let's turn to our guidance for the third quarter of 2024. We expect revenue in the third quarter to range between $100 and $105 million. This range reflects $79 to $84 million of contribution from space systems, and approximately $21 million from launch services. We expect third quarter gap gross margin to range between 25 to 27%, and non-gap gross margin to range between 30 to 32%. Incident. These forecasted gap and non-gap gross margins reflect improved mix within our space system segment in favor of components and subsystems, offset by the impact of lower fixed launchers as cost absorption.

Speaker Change: We've specced third quarter gap for a margin deranged between 25 to 27% and non-gap for a margin deranged between 30 to 32%.

Speaker Change: These forecasts to gap and non-gap growth margins reflect improved mix within our space system segment in favor of components and subsystems.

Speaker Change: Offset by the impact of lower fixed launchers as cost and absorption.

Speaker Change: We expect third quarter gap operating expenses to range between $80 million and $82 million and non-gap operating expenses to range between $69 and $71 million.

Adam Spice: The quarter-and-quarter-to-quarter increases are driven primarily by continued neutron investment in staff costs, prototyping, and materials. We expect third-quarter GAAP and non-GAAP net interest expense to be $1 million. We expect the second quarter adjusted EBITDA loss to range between $31 million and $33 million, and basic shares outstanding to be approximately 498 million. Despite Q3's modest revenue step back, we expect a marked resumption of growth across both segments of our businesses as we exit the year. And with that, I'd like to hand the call over to the operator for questions.

Adam Spice: We expect third quarter gap operating expenses to range between 80 million and 82 million dollars, and non-gap operating expenses to range between 69 and 71 million dollars. The quarter and quarter increases are driven primarily by continued neutron investment in the staff cost, prototyping, and materials. We expect third quarter gap and non-gap net interest expense to be 1 million dollars. We expect second quarter adjusted EBITDA loss to range between 31 and 33 million dollars, and basic shares outstanding to be approximately 498 million shares. Despite Q3's modest revenue step back, we expect a market resumption and growth across both segments of our businesses as we exit the year.

Speaker Change: The quarter-on-quarter increases are driven primarily by continued Neutron investment in the staff costs, prototyping, and materials.

Speaker Change: We expect third quarter gap and non-gap net interest expense to be $1 million.

Speaker Change: We expect second quarter adjusted EBITDA loss to range between $31 and $33 million, and basic shares outstanding to be approximately 498 million shares.

Speaker Change: Despite Q3's modest revenue step-back, we expect a marked resumption in growth across both segments of our businesses as we exit the year.

Operator: At this time, I'd like to remind everyone that in order to ask a question, press star 1 on your telephone keypad. Our first question will come from the line of Edison Yu with Deutsche Bank. Please go ahead.

Speaker Change: and with that I'd like to hand the call over the operator for questions.

Speaker Change: At the time I'd like to remind everyone in order to ask a question press star one on your telephone keypad. Our first question will come from the line of Edison, you with Deutsche Bank, please go ahead.

Operator: And with that, I'd like to hand the call over to the operator for questions. At this time, I'd like to remind everyone in order to ask a question, press star one on your telephone keypad.

Edison Yu: Hey, good afternoon. Thank you for taking our questions and for all the progress. First one on Neutron, obviously, you've made a lot of progress. You've got the hot fire test. What should we look for as the next big milestones as we think about the first launch in the next year?

Suji DeSilva: Our first question will come from the line of Edith and you with Deutsche Bank. Please go ahead. Good afternoon. Thank you for taking our questions and other progress. First one on a neutron. Obviously, you've made a lot of progress. You've got the hot fire test.

Edison: Hey, good afternoon. Thank you for taking our questions and all the progress. First one on Neutron, obviously you've made a lot of progress. You've got the hot fire test. What should we look for as the next big milestones as we think about the first launch in the next year?

Peter Beck: What should we look for as the next big milestones as we think about the first launch in the next year? Yeah, yes. And so, you know, as we've always kind of pointed out, I mean, the things to watch are infrastructure builds. So the launch pad taking shape and becoming ready to receive a rocket. Keep a lookout for tanks and large structures. And, you know, we're at right now as we're in the qualification phase.

Peter Beck: Yeah, hey, Edison. So, you know, as we've always kind of pointed out, the things to watch are infrastructure builds, so the launch pad taking shape and becoming ready to receive a rocket. Keep a look out for tanks and large structures. And, you know, where we are right now is that we're in the qualification phase. So, you know, we're starting to prepare for the really big tests like full-scale stage separation tests, full-scale fairing openings, you know, landing lead deployments and all those kinds of things.

Speaker Change: Yeah, hey, Aspen. So, you know, as we've always kind of pointed out, I mean, the things to watch are infrastructure builds, so the launch pad taking shape and becoming ready to receive a rocket.

Speaker Change: Keep a look out for tanks and large structures, and where we're at right now is we're in the qualification phase, so we're starting to prepare for the really big tests like full-scale stage separation tests, full-scale fairing openings.

Peter Beck: So we'll provide a, you know, a pretty healthy update of all those achievements as they come along. But that's kind of the cycle we're in, like I said on the call: design is done, and, you know, every component in the rocket is either in production or some form of qualification.

Peter Beck: So, you know, we're starting to prepare for the really big tests like full-scale stage separation, test, full-scale fearing openings, you know, landing lead deployments and all those kinds of things. So we'll provide a pretty healthy, you know, update of all those achievements that they come along, but that's kind of the cycle we're in. It's kind of like I said on the callers, you know, design is done in every component in the rocket is either in production or some form of qualification test.

Speaker Change: You know, landing lead, deployments and all those kinds of things so

Speaker Change: We'll provide a pretty healthy update of all those achievements as they come along but that's kind of the cycle we're in, kind of like I said on the call, design is done and every component in the rocket is either in production or some form of qualification test.

Peter Beck: Gotcha. And then it's kind of more of a financial one on Neutron. So, you know, we're looking at the cost of several rocket programs, you may have seen this analysis, typically, they cost many times more than what you're allocating for Neutron. What do you think that you guys are doing differently relative to some of these other programs, whether it's legacy or startups, that that's enabling you to actually develop such a robust rocket at a much lower program cost?

Speaker Change: That's it.

Speaker Change: and then kind of more of a financial one on neutron. So, you know, we're looking at the cost of several rocket programs, you may have seen this, you know, analysis, typically they cost many times more that what you're allocating for neutron.

Peter Beck: Gotcha. And then kind of more of a financial one on neutron. So, you know, we're looking at the cost of several rocket programs. You may have seen this, you know, analysis typically that cost many times more that what you're allocating for neutron. What do you think that that you guys are doing differently relative to some of these other program, whether it's legacy or startups that that's enabling you to actually develop such a robust rocket at a much lower program cost?

Speaker Change: What do you think that you guys are doing differently relative to some of these other programs, whether it's legacy or startups, that's enabling you to actually develop such a robust rocket at a much lower program cost?

Peter Beck: Yeah, well, I think, firstly, you know, that it needs to be backed up by data, and, fortunately, that analysis did. If you look at the cost in time that it took us to develop Electron, you can see, as you point out, we can do these things at a very fast time and a very low cost. And I guess that comes down to our development approach.

Speaker Change: Yeah, well, I think, firstly, you know, it needs to be backed up by data, and you know, fortunately, that analysis did. If you look at the cost and time that it took us to develop Electron,

Peter Beck: Yeah, well, I think I think firstly, you know, that it needs to be backed up by data and, you know, fortunately that that analysis did. If you look at the cost in time that it took us to develop electron, you know, you can see, as you point out, we can do these things at a very fast time and a very low cost. And I guess that comes down to our development approach.

Speaker Change: You can see, as you point out, we can do this thing at a very fast time in a very low cost and I guess that comes down to our Arab development approach. And even if you just look at the example of the Archimedes engine, you know, as I mentioned in the call, what a lot of folks do is they'll put together, you know, various sub-scale tests or boilerplate engines that have.

Peter Beck: And even if you just look at the example of the Archimedes engine, you know, as I mentioned in the call, what a lot of folks do is they'll put together, you know, various subscale tests or boilerplate engines that have lots of, you know, industrial valves bolted to them and whatnot. But, you know, especially now that we've been around the block a few times, we're able to confidently build, you know, an entirely flight-ready engine, put it on the stand, and it works. So, you know, it comes down to just the experience of the team and also the development approach.

Peter Beck: And even if you just look at the example of the Archimedes engine, you know, as I mentioned in the call, what a lot of folks do is they'll put together, you know, various sub scout tests or boilerplate engines that have lots of, you know, industrial valves, bolted to them and whatnot. But, you know, especially now that we've been around the block a few times, you know, we're able to confidently build an entirely flight ready engine, put it on the standard works.

Speaker Change: Lots of, you know, industrial valves bolted to them and whatnot. But, you know, especially now that we've been around the block a few times, you know, we're able to confidently build, you know, an entirely flight-ready engine, put it on the stand and it works.

Speaker Change: So, you know, it comes down to just the experience of the team and also a development approach.

Peter Beck: You know, we like to fail fast, but not at the system level. We'll fail quickly at the component level, but by the time things get built up into complete systems, we kind of expect them to work. And, you know, it's just the way that we've always been. It's the Rocket Lab magic, if you will. And, you know, right throughout the history of the company, we've always managed to develop these systems at a speed and a cost that are pretty much of this kind.

Peter Beck: So, you know, it comes down to just the experience of the team and also a development approach. You know, we like to fail fast, but not at the system level. You know, we'll fail quickly at the component level, but by the time things get built up into complete systems, we kind of expect them to work. And, you know, it's just the way that we've always been. It's the rocket lab magic, if you will.

Speaker Change: You know, we like we like to fail fast, but not at the system level, you know We'll fail quickly at the component level, but by the time things get built up into complete systems We can kind of expect them to work

Speaker Change: And, you know, it's just the way that we've always been, it's the Rocket Lab magic, if you will, and, you know, we've, right throughout the history of the company, we've always managed to, you know, develop these systems at a speed and a cost that pretty much, you know, others can't.

Peter Beck: And, you know, we've, right throughout the history of the company, we've always managed to, you know, develop these systems at a speed in the cost. That's pretty much, you know, others can't. Oh, wait. And if I could just sneak in on my financial one, I think the implied 3Q guys is 3 launches. Do we have any updates on what we could do for the 4 year for Electron? Yeah, I mean, it's really, really difficult to predict.

Peter Beck: Oh, boy. And if I could just sneak in one more financial one, I think the implied 3Q guide is three launches. Do we have any updated thoughts on what we could do for the full year for Electron?

Speaker Change: And if I could just sneak in one more financial one, I think the implied 3Q guide is three launches. Do we have any updated thoughts on what we could do for the full year for Electron?

Peter Beck: Yeah, I mean, it's really, really difficult to predict, as you see, launches move around all the time. And as we tried to explain in the call, that's kind of the value proposition for the business. We, internally here, worry less about that, as we kind of pointed out, that the majority of the cash, you know, is collected through that, through that billing cycle, but, you know, launches move around tremendously, and I guess, you know, we're trying to kind of, you know, provide that color for folks so that they can see how the business really operates.

Speaker Change: Yeah, I mean, it's really, really difficult to predict as you see, you know, launches move around all the time. And as we tried to explain in the call, that's kind of the value proposition for the business.

Peter Beck: As you see, you know, launches move around all the time. And as we tried to explain in the call, that's kind of the value proposition for the business. We internally hear we less, we worry less about that as we kind of pointed out that the majority of the cash, you know, is collected through that, through that billing cycle. But, you know, launches, you know, move around tremendously.

Speaker Change: We, internally here, we worry less about that, as we kind of pointed out, that the majority of the cash, you know, is collected through that billing cycle, but, you know, launches you know, move around tremendously, and I guess, you know, we're trying to kind of

Speaker Change: You know, provide that colour for folks so that they can see how the business really operates.

Erik Rasmussen: And I guess, you know, we're trying to kind of, you know, provide that color for folks so they can see how the business really operates. Thank you.

Operator: Our next question will come from the line of Erik Rasmussen with Steeple. Please go ahead.

Speaker Change: Good. Thank you.

Speaker Change: Our next question will cover the line of aircraft that's in with staple. Please go ahead.

Erik Rasmussen: Yeah, thanks for taking the questions, and I appreciate all the detail. There's a lot there to unpack, but maybe just to piggyback off that question, I realize that launch has always been tough to sort of predict. I know the manifest seems like it's filling up each quarter, but it's always sort of customer readiness and other things that can push things out, but you know Adam mentioned in Q4 we'll see a resumption of growth in both segments.

Speaker Change: Back.

Speaker Change: Yeah, thanks for taking the questions and I appreciate all the detail. There's a lot there to unpack.

Erik Rasmussen: Our next question will cover the line of aircraft with steeple. Please go ahead. Yeah, thanks for taking the questions and appreciate all the details. There's a lot there to unpack. But maybe just to pick it back off that question, I realized that launches that always come to sort of predict, I know the manifest seems like it's filling up each quarter. But it's always sort of customer readiness and other things that can push things out.

Speaker Change: Maybe just to piggyback off that question, I realize that launch has been always tough to sort of predict. I know the manifest seems like it's filling up each quarter, but it's always sort of customer readiness and other things that can push things out. But, you know, Adam had mentioned in Q4 we'll see a resumption of growth in both segments.

Erik Rasmussen: If we're sort of assuming three launches and that's about an implied 7 million ASP, I'm just trying to sort of dissect it. Does that mean if we're back to sort of a seven and a half ASP for Q4 and three launches, that obviously gets us more revenue, but would we also, I guess, see the potential to see even more than three launches in Q4?

Speaker Change: If we're sort of assuming three launches, and that's about implied.

Erik Rasmussen: But, you know, Adam mentioned in Q4, we'll see a resumption of growth in both segments. If we're sort of assuming three launches, and that's about a implied 7 million ASP, I'm just trying to sort of dissect, does that mean if we're back in sort of a seven and a half ASP or Q4 and three launches that obviously gets us more higher revenue, but we also, I guess, see is it potential to see even more than three launches in Q4?

Speaker Change: 7 million ASP. I'm just trying to sort of dissect, does that mean if we're back to sort of a seven and a half ASP for Q4, at three launches, that obviously gets us more, a higher revenue, but would we also, I guess, see, is it potential to see even more than three launches?

Adam Spice: Yeah, Erik, it's Adam. So I think the way to look at that is, yeah, I mean, we are, as you pointed out in my remarks at the end of my prepared statement, we do see significant growth returning to the business as we exit the year. And it's not off of a small increase in ASP, you know, sequentially. So we expect to be able to launch significantly more in Q4 than we did in Q3.

Speaker Change: and thank you for us.

Adam: Yeah, Erik is Adam.

Speaker Change: I think the way to look at that is, yeah, I mean, we are, as you pointed to my remarks at the end of my prepared statement, we do see significant growth returning to the business as we exit the year.

Erik Rasmussen: Yeah, Eric is Adam. So I think the way to look at that is, yeah, I mean, we are, as you pointed to my remarks with the animation, my prepared statement is we do see significant growth for turning into the business as we exit the year. And it's not off of a small increase of ASP, you know, quarter sequentially. So we expect to be able to launch significantly more in Q4 than we are in Q3.

Speaker Change: And it's not off of a small increase of ASP, you know, sequentially. So we expect today to launch significantly more in Q4 than we are in Q3.

Speaker Change: You know, whether that means you go from three launches to four launches or from three launches to, say, seven launches, I think that's kind of the range that we're kind of operating within. And that's really kind of guided by...

Adam Spice: You know, whether that means you go from three launches to four launches or from three launches to, say, seven launches, I think that's kind of the range that we're kind of operating within. And that's really kind of guided by, again, kind of customer readiness. And, you know, we've done quite a bit of work looking into kind of where these slippages occur. And, you know, we can't, the slippages are always driven by customer readiness.

Erik Rasmussen: You know, whether that means you go from three launches to four launches or from three launches to say seven launches, I think that's kind of the range that we're kind of operating within. And that's really kind of guided by, again, kind of the customer readiness. You know, we've done quite a bit of work looking into kind of where these slippages occur and, you know, we can't, the slippages are always, you know, can driven by customer readiness, but, you know, in this case, we didn't have, when we look at the manifest that we had coming into 2024, there hasn't been a mission on that manifest that we couldn't support from a production perspective.

Adam: We've done quite a bit of work looking into where these slippages occur, and the slippages are always driven by customer readiness, but in this case, when we look at the manifest that we had coming into 2024.

Speaker Change: There hasn't been a mission on that manifest that we couldn't support from a production perspective.

Speaker Change: Any volatility we've seen versus kind of that manifest has all been kind of customer delay related.

Pete: But as Pete said, that's part of the business and why people pay a premium to be on a dedicated small launcher versus being on a rideshare.

Erik Rasmussen: Any volatility we've seen versus kind of that manifest has all been kind of customer delay related. But as Pete said, you know, that's part of the business and why people pay a significant premium to be, you know, on a dedicated small launch versus bang on a rideshare. So it's kind of uncomfortable in one respect, but also comforting in the other respect that people see value in that flexibility. [inaudible] and $20 billion.

Pete: So it's kind of uncomfortable in one respect, but also comforting in the other respect that people see value in that flexibility.

Speaker Change: Got you. Thanks. That's helpful.

Speaker Change: And then maybe just, we're seeing a step up in non-GAP OPEX, 69 to 71 million, which we were around 58 in Q2, is this sort of the right range as we should think about the back half of the year? I mean, we've gotten guidance for Q3, but you know, just thinking in terms of the look through the Q4.

Adam Spice: But, you know, in this case, we didn't have, when we look at the manifest that we had coming into 2024, there hasn't been a mission on that manifest that we couldn't support from a production perspective. Any volatility that we've seen versus kind of that manifest has all been kind of customer delay-related. But as Pete said, that's part of the business and why people pay a significant premium to be on a dedicated small launcher versus being on a ride share. So it's kind of uncomfortable in one respect, but also comforting in the other respect that people see value in that flexibility.

Erik Rasmussen: Gotcha. Thanks. That's helpful.

Speaker Change: [inaudible]

Speaker Change: You know, as we've said many times, you know, these rocket programs are challenging on, like, lots of levels, including being able to predict the timing of when certain expenses are going to hit up, because you can make your commitments

Speaker Change: at one point and then you can face delays or actually in some cases get things that pull into the left as well. So I'd say in general, I think that you should think about neutron spending continuing to grow sequentially from Q3 into Q4, so that don't kind of drive overall off X in that same direction.

Erik Rasmussen: And then maybe just, um, we're seeing a step up in non-GAP OPEX, uh, 69 to 71 million, uh, which, you know, we were around 58 in Q2. Is this sort of the right range as we should think about the back half of the year? I mean, we've gotten guidance for Q3, but, you know, just thinking in terms of the look through Q4.

Adam Spice: You know, as we've said many times, these rocket programs are challenging on lots of levels, including being able to predict the timing of when certain expenses are going to hit because you can make your commitments at one point, and then you can face delays, or actually, in some cases, get things that pull to the left as well. So I'd say, in general, I think that you should think about neutron spending continuing to grow sequentially from Q3 into Q4. So that will kind of drive overall OPEX in that same direction. But, you know, we're not looking at step function increases.

Erik Rasmussen: It's just more, you know, kind of on a relatively predictable slope of that curve. You know, we would expect that that spending would start to trail off, obviously, as we start to approach the first launch of the vehicle, which, you know, we're talking about the middle of next year. We probably still have, you know, I'd say at least one quarter of kind of increased spend velocity. And then perhaps it starts to kind of plateau and then trail off as we approach the first launch.

Speaker Change: But, you know, we're not looking at step function increases. It's more kind of just more, you know, kind of, I would say, on a relatively predictable slope of that curve.

Speaker Change: We would expect that spending would start to trail off, obviously, as we start to approach the first launch of the vehicle, which we're talking about the middle of next year. So I think we probably still have...

Speaker Change: You know, I'd say at least, you know, I'd say one quarter of kind of increased spend kind of velocity, and then perhaps it starts to kind of plateau and then trail off as we approach the first launch.

Erik Rasmussen: Great. Maybe I could just add one more?

Speaker Change: and maybe if I could just add one more, it looks like...

Speaker Change: You've been super successful.

Peter Beck: It looks like a super successful test of a hot fire for the Archimedes. I mean, would you say that now this coincides with your timeline to get neutrons to the pad by mid-2025? I think, Peter, you had mentioned that that's still on track, but does this now give you a lot more comfort in that no earlier than mid-2025?

Speaker Change: test of a hot fire for the Archimedes.

Speaker Change: I mean, would you say that now this coincides with your timeline to get Neutron to the pad by mid-2025? I think, Peter, you had mentioned that that's still on track, but does this now give you a lot more comfort in that no earlier than mid-2025?

Erik Rasmussen: Yeah, Erik, it's certainly on the right side of the equation, yep. So, you know, from here on in, there's more kind of testing to be done, but certainly, you know, our approach here was to put the flight engine on the stand and take it to full power. And, you know, that buys down just... you know, all the risk really. So, you know, there's still obviously qualification of the engine to go, but certainly that gives us a lot of confidence to move forward.

Peter: Yeah, Eric, it's certainly on the right side of the equation, yep. So, you know, from here on in, there's more kind of testing to be done. But certainly, you know, our approach here was to put the flight engine on the stand and take it to full power. And, you know, that buys down just...

Peter: You know, all the risk really. So, you know, there's still obviously, you know, qualification in the engine to go, but certainly that gives us a lot of confidence to move forward.

Kristine Liwag: Great, I'll sit back in the queue and congratulate you on the results and progress. Our next question will come from the line of Kristine Liwag with Morgan Stanley. Please go ahead. Hey, good afternoon, everyone. Um, Peter and Adam, you know, on the data and services initiative,

Speaker Change: Great, I'll sit back in the queue and congrats on the results and progress.

Peter Beck: Our next question will come from the line of Kristine Liwag with Morgan Stanley. Please go ahead. Hey, good afternoon, everyone.

Speaker Change: Our next question will cover the line of Kristine Liwag with Morgan Stanley . Please go ahead.

Kristine Liwag: Hey, good afternoon everyone. Peter and Adam, you know, on the data and services initiative,

Kristine Liwag: Can you provide more color and exactly what kind of capabilities and solutions you're providing?

Speaker Change: Areas, you're targeting, and maybe it's a little early, but any sort of indication of how you think about economics of what a mature data and services capability could provide for you.

Jason Gursky: Yeah, hey, Kristine. So, look, if you break up the, you know, the industry, the launch is about $10 billion, $10 billion for spacecraft or services. Spacecraft, you know, is about $20 billion, and then services from orbit are about $320 billion. So if you have the first two, then your ability to compete in the second one becomes incredibly strong. And I would say that, you know, we're not ready to talk about what particular applications we're pursuing.

Speaker Change: Yeah, hey, Kristine. So, look, if you break up the, you know, the industry, the launch is about a $10 billion TAM spacecraft or services, spacecraft, you know, is about a $20.

Speaker Change: and then Launch Services from Orbit is about a $320 billion team.

Speaker Change: So if you have the first two then your ability to compete in the second one becomes incredibly strong.

Erik Rasmussen: Team. So if you have the first two, then your ability to compete in the second one becomes incredibly strong. And I would say that, you know, we're not really to talk about what particular occasions that we're pursuing. Right now, we are focused on building capability to go after, you know, some applications that we find interesting. But, you know, clearly getting into a $320 billion dollar term, we think you can be pretty disruptive is the great place to be in, you know, where we've been anchoring for a long time. But like I said, it's too early to really provide too much color on where we're headed with that. Great. Thank you. I'll give it to one.

Speaker Change: And I would say that we're not ready to talk about what particular applications that we're pursuing. Right now we're focused on building capability to go after some applications that we find interesting.

Jason Gursky: Right now, we're focused on building capability to go after, you know, some applications that we find interesting. But, you know, clearly getting into a $320 billion TAM where you think you can be pretty disruptive is a great place to be in, you know, where we've been anchoring for a long time. But, like I say, it's too early to really provide too much color on where we're headed with that.

Speaker Change: But, you know, clearly getting into a $320 billion TAM where you think you can be pretty disruptive is a great place to be and, you know, where we've been anchoring for a long time. But, like I say, it's too early to really provide too much colour on where we're headed with that.

Peter Beck: Our next question will come from the line of Jason Gursky with Citi. Please go ahead. Jason, your line might be on mute.

Speaker Change: Great, thank you. I'll keep it to one.

Speaker Change: Our next question will cover the line of Jason Gursky with Citi. Please go ahead.

Speaker Change: you

Jason Gursky: Our next question will come in the line of Jason Gursky with City, please go ahead. Jason, your line might be on mute. Indeed it was. Sorry about that. Hello, everybody. I think people just quick follow up on that last one on the services side of it, the $320 billion term. Maybe you can just educate us on, you know, kind of, I'll use a baseball analogy if you'll humor me. Kind of what any year in on the development of that, what are their capabilities do you need? And when do you expect kind of a unveiling of what you're up to there from the timing perspective?

Speaker Change: Jason, your line might be on mute.

Jason Gursky: It was. Sorry about that.

Jason Gursky: Indeed it was. Sorry about that. Hello, everybody.

Peter Beck: Hello, everybody. Hey Peter, just a quick follow up on that last one on the services side of it, the $320 billion TAM. Maybe you can just educate us on, you know, kind of, I'll use a baseball analogy, if you'll humor me, what inning you're in on the development of that? What other capabilities do you need? And when do you expect kind of a unveiling of what you're up to there from a timing perspective?

Jason: Hey, Peter, just a quick follow-up on that last one on the services side of it, the $320 billion TAM, maybe you can just educate us on

Jason Gursky: I'll use a baseball analogy if you'll humor me, what inning you're in on the development of that? What other capabilities do you need? And when do you expect an unveiling of what you're up to there from a timing perspective?

Peter Beck: Well, I'm going to horrify you, Jason, because I'm from New Zealand and I only know rugby, so a baseball analogy is lost on me completely, but I would say that, you know... Yeah, you can, I think you can, you can look at the acquisitions, the kind of spacecraft we're building, and the scaling that we're doing to kind of, you know, bring some comfort in where we, you know, Like I say, it would be, you know, incorrect for me to really provide too much guidance, but I mean, it's clearly, you know, I've been very public in the fact that I think the large space companies of the future are the ones that are going to have the ability to build whatever spacecraft they need to build, the ability to launch them on demand and deploy constellations at cost.

Speaker Change: Well, I'm going to horrify you, Jason, because I'm from New Zealand and I only know rugby. So a baseball analogy is lost on me completely. But I would say that, you know...

Peter Beck: Well, I'm going to horrify you, Jason, because I'm from New Zealand, I only know rugby. So a baseball analogy is lost on me completely. But I would say that you can, I think you can, you can look at the acquisitions, the kind of spacecraft for building and the scaling that we're doing to kind of, you know, bring some comfort in and where we, you know, where we're trying to head with this.

Speaker Change: Yeah, I think you can look at the acquisitions, the kind of spacecraft we're building and the scaling that we're doing to kind of bring some comfort in where we're trying to head with this.

Speaker Change: Like I say it's it's it would be it would be you know

Speaker Change: It's incorrect for me to really provide too much steering, but it's clearly, I've been very public in the fact that I think the large space companies of the future are the ones that are going to have the ability to build whatever spacecraft they need to build.

Peter Beck: Like I say, it would be, you know, incorrect for me to really provide too much steering. But I mean, it's clearly, you know, I've been very public in the fact that I think the large, you know, space companies in the future are the ones that are going to have the ability to build whatever spacecraft they need to build, the ability to launch them on demand and deploy constellations at cost. And, you know, if you have those things, then your ability to provide a service from space is uniquely advantage compared to anybody else who doesn't have those things.

Speaker Change: The ability to launch them on demand and deploy constellations at cost. And, you know, if you have those things, then your ability to provide a service in space is uniquely advantaged compared to anybody else who doesn't have those things.

Peter Beck: And, you know, if you have those things, then your ability to provide a service in space is uniquely advantaged compared to anybody else who doesn't have those things. So, you know, right now, I would say that we're really focused on building that capability, and you'll see space systems continue to grow and scale. Neutron is a really, really key part of this puzzle. I mean, we need a multi-ton launch to deploy it. So, Neutron is probably, you know...

Speaker Change: So, you know, right now I would say that we're really focused on building that capability and you'll see space systems continue to grow and scale. Neutron is a really, really key part of this puzzle. I mean, we need multi-ton launch to deploy.

Peter Beck: So, you know, right now I would say that we're really focused on building that capability and you'll see space systems continue to grow and scale. Neutron is a really, really key part of this puzzle. I mean, we need multi-tun launch to deploy, you know, significant constellations. So neutron is is probably, you know, one of the most critical and key elements to, you know, to that future. Right. Okay. So, from a dynamic perspective, that's helpful.

Speaker Change: you know significant constellations so neutron is is probably you know one of the most critical and key elements to you know to that future

Jason Gursky: Right, okay, so from a technical perspective, that's helpful. And then on this point, though, government versus commercial customers, where do you think you're going to be spending your time on the services on?

Speaker Change: Okay, so from a time of respect to that helpful. And then on this point though, government versus commercial customers, where do you think you're going to be spending your time on the services fund?

Peter Beck: A bit of both. So, you know, we generally like sort of a 50-50% mix across the business, and you can see that pretty consistent across launch and space systems. But, you know, there are huge opportunities on both sides of the ledger there, especially as the US government moves away from kind of singular large assets into orbit into, you know, distributed networks and low-earth orbit. So, you know, there's opportunity on both sides of the scale.

Peter Beck: And then on this point though, government versus commercial customers, where do you think you're going to be spending your time on the services? A bit of both. So, you know, we generally like sort of a 50, 50% mix across the business. And you can see that pretty consistent across launch and space systems. But, you know, there's huge opportunities on both sides of the ledger there. You know, especially as the US government moves away from kind of singular, large assets into orbit, into, you know, distributed networks and lower the orbit.

Speaker Change: A bit of both. So, you know, we generally like sort of a 50-50% mix across the business and you can see that pretty consistent across launch and space systems.

Speaker Change: But, you know, there's huge opportunities on both sides of the ledger there.

Speaker Change: you know especially as the US government moves away from kind of singular large assets into orbit into you know distributed networks and low-earth orbit so so you know there's there's opportunity on both sides of the scale.

Jason Gursky: Okay, and then Peter, can you just give us a revised view maybe on when you would expect to start signing up customers for Neutron? Has your thinking changed at all on when we start booking some?

Speaker Change: Can you give us a revised view on when you would expect to start signing up customers for Neutron? Has your thinking changed at all on when we start booking some?

Peter Beck: So, you know, there's opportunity on both sides of the scale. Okay. And then Peter, can you just give us a revised view, maybe on when you would expect to start signing up customers for Neutron? Is your thinking changed at all on when we start booking some? Not really. I mean, you know, if you bring, if you bring a rocket that doesn't exist, and you start selling, selling contracts against it, they're always discounted contracts.

Peter Beck: Not really. I mean, you know, if you bring a rocket that doesn't exist and you start selling contracts against it, they're always discounted contracts. You know, and as I think I've said before, which is exactly what we did with Electron, and it took us years to flush them out. So, you know, of all the things I worry about at night, demand is just not one of them. And I'd much rather bring a vehicle to the market and prove that it works and provide a capability to kind of unblock the kind of demand and monopoly than kind of preemptively sign a whole bunch of contracts that, you know, I think we'd all regret later on.

Speaker Change: Not really. I mean, you know, if you bring a rocket that doesn't exist and you start selling contracts against it, they're always discounted contracts.

Peter Beck: So, you know, I've all the things I worry about at night, demand is just not one of them, and I'd much rather bring a vehicle to the market and prove that it works, and provide a capability to kind of unblock the kind of demand monopoly, then kind of preemptively sign a whole bunch of contract that, you know, I think we'll regret later on. Right. Okay.

Speaker Change: You know, and as I think I've said before, this is exactly what we did with Electron and it took us years to flush those out.

Speaker Change: So, you know, of all the things I worry about at night, demand is just not one of them. And I'd much rather bring a vehicle to the market and prove that it works and provide a capability to kind of unblock the...

Speaker Change: to kind of demand a monopoly, then kind of preemptively sign a whole bunch of contract that I think we'd all regret later on.

Jason Gursky: Right. Okay, I've got one clarification and then one just for Adam. On clarification, so the point you're trying to make here on Electron and the cadence of the schedule and the cash flow profile and the rev rec here is that you guys could have done all of these launches this year. From a manufacturing perspective, you're getting the cash. There have been, and this is the part that I really want to confirm, there haven't been any cancellations. And so it's really just a question of when these things go, not if. That's the point you're all trying to make here, just so we can all kind of understand. All the moving pieces on the financial statements are the point you were trying to clarify.

Speaker Change: Right. Okay, I've got one clarification and then one just for Adam. On the clarification, so the point you're trying to make here on Electron and the cadence of the schedule and the cash flow profile on the RevRec here is that

Jason Gursky: I've got one clarification and then one just for Adam on the clarification. So the point you're trying to make here on electron and the cadence of the schedule and the cash flow profile on the rev rack here is that you guys could have done all of these launches this year from a manufacturing perspective. You're getting the cash. There have been, and this is the part that I really want to confirm there haven't been any cancellations.

Speaker Change: You guys could have done all of these launches this year from a manufacturing perspective. You're getting the cash. There have been, and this is the part that I really want to confirm, there haven't been any cancellations.

Speaker Change: And so it's really just a question of when these things go, not if. Is that the point you're all trying to make here, just so that we all kind of understand all the moving pieces on the financial statements? Is that the point you were trying to clarify?

Jason Gursky: And so it's really just a question of when these things go not as that the point you're all trying to make here, just so that we all kind of understand all the moving pieces on the financial on the financial statements is the point you were trying to clarify. That's 100% correct Jason. Yep. No, we're collecting the cash on those as the rocket comes down the production line and it's mild, don't you met or time is met. It's just we don't get to recognize the revenue until we have intentional ignition. Yeah. Okay. Got it. That's good.

Peter Beck: That's 100% correct, Jason. Yep, no, we're collecting the cash on those, you know, as the rocket comes down the production line and its milestones are met or time is met, it's just we don't get to recognize the revenue until we have intentional ignition.

Speaker Change: That's 100% correct, Jason. Yep, no, we're collecting the cash on those, you know, as the rocket comes down the production line and its milestones are met or time is met. It's just we don't get to recognise the revenue until we have intentional ignition.

Jason Gursky: Yeah, okay. Got it. That's good. And then, Adam, one for you.

Speaker Change: Yeah, okay. Got it. That's good. And then, Adam, one for you. Any updated thoughts on when we get to a cash flow break, even on a sustainable basis?

Adam Spice: Any updated thoughts on when we get to a cash flow break, even on a sustainable basis?

Adam Spice: And then Adam, one for you, any updated thoughts on when we get to casual break even on a sustainable basis. Yeah. No, I think it still looks very much like it had before when all along really we can't get cash flow positivity on any sustained basis until we get the first neutron off the pad. And so I've kind of been kind of pointing people towards two quarters after the first neutron launches where I think we kind of turn that corner on a more permanent basis given where the rest of the business is growing kind of what the what the PNL starts to look like once you've got that first.

Adam: Yeah, no, I think it still looks very much like it had before when, all along, really, we can't get to cash flow positivity on a sustained basis until we get the first neutron off the pad.

Adam Spice: Yeah, no, I think it still looks very much like it had before when all along, really, we can't get to cash flow positivity on a sustained basis until we get the first neutron off the pad. And so I've kind of been kind of pointing people towards two quarters after the first neutron launches, where I think, you know, we kind of turn that corner on a more permanent basis, given where, you know, the rest of the business is growing, kind of what the what the P&L starts to look like once you've got that first, you know, R&D test launch off, and that you've got most of that infrastructure, you know, put in place to scale neutrons, which I think, you know, we will have by, I would say, the, you know, middle of next year.

Adam: And so I've kind of been...

Speaker Change: And kind of pointing people towards two quarters after the first neutron launch is where I think we kind of turn that corner on a more permanent basis, given where the rest of the business is growing, kind of what the P&L starts to look like once you've got that first

Speaker Change: R&D test launch off, and that you've got most of that infrastructure put in place to scale neutrons, which I think we will have by, I would say, the end of the year.

Adam Spice: R&D test launch off and that you've got most of that infrastructure put in place to scale neutrons, which I think we will have by I would say the middle of next year. Now, again, middle next year kind of represents kind of a minimum viable product, a minimum viable infrastructure in this case. So there will be continued investment, but at a very, very different level. So I think it's my kind of guide post or roughly two quarters after the first neutron launch. Okay, great. Thanks.

Adam Spice: Now, again, the middle of next year kind of represents kind of a minimum viable product and minimum viable infrastructure in this case. So there will be continued investment, but at a very, very different level. So I think my kind of guideposts are roughly two quarters after the first neutron launch.

Speaker Change: Middle of next year now again middle of next year kind of represents kind of a minimum viable product and minimum viable infrastructure in this case So there will be continued investment, but at a very very different level, so I think it's My kind of guideposts are roughly two quarters after the first neutron launch

Jason Gursky: Okay, great. Thanks. I'll pass the line.

Speaker Change: Okay, great. Thanks. I'll pass the line.

Operator: Our next question comes from the line of Kai Von Rumor with T.D. Cowan. Please go ahead.

Speaker Change: Our next question comes from the line of Kyvon Rumor with TD Cowan. Please go ahead.

Kai Von Rumor: Yes, thank you so much for taking the question. So, you know, if you do four to seven launches in the fourth quarter, you'll do 15 to 18 for the year, with an initial manifest of 22. So you're slipping 20 to 30%, and it looks like quite a big slip in the third quarter. Can you give us a common reason? I mean, these are all customer slips? And was it because the satellites weren't ready? Or, you know, is there any common thread you can describe?

Operator: I'll pass the line.

Kyvon Rumor: Yes. Thank you so much for taking the question. So, you know, if you do four to seven launches in the fourth quarter, you'll do 15 to 18 for the year.

Kyvan Rumohr: Our next question comes from the line of Kyvan rumour with TD gallon. Please go ahead. Yes. Thank you so much for taking the question. So, you know, if you do four to seven launches in the fourth quarter, you'll do 15 to 18 for the year, with an initial manifest of 22. So you're slipping 20 to 30 percent and it looks like quite a big slip in the third quarter.

Speaker Change: with an initial manifest of 22. So you're slipping 20 to 30 percent.

Speaker Change: and it looks like quite a big slip in the third quarter. Can you give us, is there any common reason? I mean, these are all customer slips and was it the satellites aren't ready or is there any common thread you can describe?

Peter Beck: Can you give it, is there any common reason, I mean these are all customer slips and was it the satellites aren't ready or, you know, is there any common thread you can describe? Yeah, hi, yep, no, it's 100% customer readiness and it's kind of the nature of the business, you know, you're a customer will request a launch date. Their spacecraft is generally not complete when they're requesting their launch date. It'll go through various tests and sometimes there's rework or, you know, the customers have have other things that they're trying to line up. So, yep, that's a hundred percent of the reason.

Peter Beck: Yeah, hey, Cai. Yeah, no, it's 100% customer readiness. And it's kind of the nature of the business. You know, a customer will request a launch date. Their spacecraft is generally not complete when they're requesting their launch date. It'll go through various tests, and sometimes there's rework, or, you know, customers have other things that they're trying to line up. So, yep, that's 100% of the time.

Speaker Change: Yeah, hey Kai, it's 100% customer readiness and it's kind of the nature of the business, you know, your customer will request a launch date.

Speaker Change: Their spacecraft is generally not complete when they're requesting their launch date. It'll go through various tests and sometimes there's rework or, you know, customers have other things that they're trying to line up, so, yep, that's 100% of the reason.

Kai Von Rumor: How do you think about your pricing? Because if you get 90% three months before, first of all, is that three months before the scheduled launch when you initially signed the contract? And then if you have to go three months, but they're slipping by two months, which looks like what's been happening, you're still collecting that last 10%. So any thoughts about, you know, they have the flexibility, but if they slip, you get a penalty for slipping, because obviously it has to cost you more money.

Speaker Change: How do you think about your pricing? Because if you get 90% three months before, first of all, is that three months before the scheduled launch when you initially signed the contract?

Peter Beck: How do you think about your pricing, because if you get 90 percent three months before, first of all, is that three months before the scheduled launch when you initially signed the contract. And then if you have to go three months, but they're slipping by two months, which looks like what's been happening, you're still collecting that last 10 percent. So any thoughts about, you know, they have the flexibility. But if they slip, you know, you get a penalty for slipping because obviously it has to cost you more money.

Speaker Change: And then if you have to go three months, but they're slipping by two months, which looks like what's been happening, you're still collecting that last 10%. So any thoughts about...

Speaker Change: You know, they have the flexibility, but if they slip, you know, you get a penalty for slipping because obviously it has to cost you more money.

Peter Beck: Yeah, I mean, I would say that that is one of the reasons, though, why we can charge a premium for the service because that's kind of baked into the premium for the service. And there are, we do have some penalties in the contracts where we're kind of, certainly if egregious things happen.

Speaker Change: Yeah, I mean, I would say that that is one of the reasons, though, why we can charge a premium for the service. That's kind of baked into the premium for the service.

Peter Beck: Yeah, I mean, I would say that that is, that is one of the reasons though, why we can charge a premium for the service. That's kind of baked into the, into the premium for the service. And there are, there are, we do have some penalties in the contracts, where we're kind of certainly if egregious things happen. But also, you know, we have customers that, you know, 72 percent reoccurring customers. So, you know, if a customer has an issue with a spacecraft, they're already upset. The last thing they want to do is be slapped with a penalty. And if there are, you know, you have a long standing relationship with the customer, that's certainly not ideally there.

Speaker Change: There are, we do have some penalties in the contracts.

Speaker Change: certainly if egregious things happen.

Speaker Change: But also, you know, we have customers that, you know, 72% reoccurring customers, so...

Peter Beck: But also, you know, we have customers that we have 72% reoccurring customers. So, you know, if a customer has an issue with a space or craft, they're already upset. The last thing they want to do is be slapped with a penalty.

Speaker Change: You know, if a customer has an issue with a spacecraft, they're already upset. The last thing they want to do is be slapped with a penalty. And if they're, you know, you have a long-standing relationship with the customer, that's...

Peter Beck: And if there are, you know, you have a long-standing relationship with the customer, that's, that's certainly not ideal either. And, and I guess that's what we're trying to try to, you know, provide a little bit of color today, is that this is the business model of a bespoke service like this. And while it's super frustrating for us, you know, this is the service that we provide.

Speaker Change: That's certainly not ideal either, and I guess that's what we're trying to, you know, provide a little bit of colour today, is that is kind of the business model of a bespoke service like this.

Peter Beck: And I guess that's what we're trying to, you know, provide a little bit of color today is that is, that is kind of the business model of a bespoke service like this. And while it's super frustrating for us, you know, this is the service that we provide. And, you know, the good news is that, you know, as the rocket is coming down the production line, we're collecting the cash and, you know, the rocket is essentially funded as it's coming through the, through the facility. But as to, you know, when the customer ultimately turns up and is, and is ready to fly, it's just simply out of our control.

Speaker Change: and while it's super frustrating for us...

Speaker Change: You know this is this is the service that we provide and

Peter Beck: And, you know, the good news is that, you know, as the rocket is coming down the production line, we're collecting the cash, and the rocket is essentially funded as it's coming through the facility. But as to when the customer ultimately turns up and is ready to fly, it's just simply out of our control.

Kyvan Rumohr: Terrific. Thank you very much. Thanks, Guy.

Speaker Change: You know, the good news is that, you know, as the rocket is coming down the production line, we're collecting the cash and, you know, the rocket is essentially funded as it's coming through through the facility, but as to, you know, when the customer ultimately turns up and is ready to fly, it's just simply out of our control.

Kai Von Rumor: Terrific. Thank you very much. Thanks, Kai. Our next question comes from the line of Andre Madrid with BTIG. Please go ahead. Adam, Peter, thank you for taking my call.

Speaker Change: Terrific, thank you very much.

Andre Madrid: Yeah, I can jump in and take that one, Pete. Yeah, the Solero business, actually. So yeah, you're correct, Andre, that we've been kind of hamstrung by a legacy contract that was in place prior to us acquiring the business. And we're still working our way through that. I mean, we're, you know, we, there's still a little, I would say not a little, there are, there's still a bit of the backlog that's representative of that, but it's becoming less and less in the mix.

Operator: Our next question comes from the line of Andre Madrid with BTIG. Please go ahead. Uh, Adam, Peter, thank you for taking my call.

Guy: Thanks, Guy.

Speaker Change: Our next question comes to the line of Andre Madrid with BTIG, please go ahead.

Andre Madrid: Our next question comes to the line of Andre Madrid with BTIG. Please go ahead. Adam Peter, thank you for the taking my question.

Speaker Change: Peter, thank you for the...

Andre Madrid: I'm taking my question. I just wanted to ask for a status update on Solero. I know it's been kind of what's...

Speaker Change: and dragging down the broader space systems portfolio and we're not yet at that 30% gross margin point. Just some color as to what's going on there when we might be able to see that.

Adam Spice: I just wanted to ask for a status update on Solero. I know it's been kind of what's been dragging down the broader space systems portfolio. And we're not yet at that 30% gross margin point. Okay, just some color. So what's going on there when we might be able to see that? Yeah, I can, I can jump and take that one piece. So the, yeah, the Solero business actually say, yeah, you're correct Andre that we've been kind of been a little bit hamstrung by a legacy contract that was in place prior to us acquiring the business.

Speaker Change: [inaudible]

Speaker Change: Yeah, I can jump and take that one, Pete.

Speaker Change: Yeah, the Celero business actually, so yeah, you're correct, Andre, that we've been kind of been a little bit hamstrung by a legacy contract that was in place prior to us acquiring the business.

Speaker Change: And we're still working our way through that. I mean, we're, you know, we, there's still a little, I would say not a little, there's still a,

Adam Spice: And we're still working our way through that. I mean, we're, you know, we, there's still a little, I would say not a little, there are, there's still a bit of the backlog that's representative of that. But it's becoming less and less than the mix. And so if you, what we look at is we step back and say, you know, what is, what's new business being signed up at? Is that being signed up at the target model or, or less or more?

Speaker Change: A bit of the backlog that's representative of that.

Andre Madrid: And so if we step back and say, you know, what is the new business being signed up for? Is that being signed up at the target model, or less or more?

Speaker Change: but it's becoming less and less than the mix and so if you, what we've got to look at is we step back and say you know what is, what's new business being signed up at, is that being signed up at the target model or less or more and you know we can say we've, on average now, been kind of getting to a point where the 30 point margin target is really coming to focus so the business that we're signing up now, that those, those margins are very, very pretty, I would say much more sure to be at that target than they ever were before.

Adam Spice: And you know, we can say we've, on average, now been kind of getting to a point where the 30 point margin target has really come into focus. So the business that we're signing up now, those margins are, I would say, much more assured to be at that target than they ever were before. I would say that the, you know, you've probably seen the chips and other state and local incentives that we've received to support that business.

Adam Spice: And you know, we could say we've, we've, on average now, been kind of getting to a point where the 30 point margin target is really coming to focus. So the business that we're signing up now that those, those margins are very, very pretty, I would say much more assured to be at that target than they ever were before. I would say that the, you know, you've probably seen the chips and other state local incentives that we've received to support that business.

Speaker Change: I would say that you've probably seen the chips and other state and local incentives that we've received to support that business and that's going to do nothing but help improve those margins, even probably beyond that target because of the fact that we're really replacing and aging reactor fleet of these.

Adam Spice: And that's going to do nothing but help improve those margins, even probably beyond that target because of the fact that, you know, we're really replacing an aging reactor fleet of these in our solar fab. So I think everything is pointing in the right direction. I think we've made a lot of progress. I think, you know, it's just taking a matter of time to get that old contract flushed out through the mix, and it's happening.

Adam Spice: And that's going to do nothing but help improve those margins, even probably beyond that target. Because the fact that, you know, we're, we're really replacing an aging reactor fleet of these in our solar fab. So I think everything is pointing in the right direction. I think we've made a lot of progress. I think, you know, it's just taking a matter of time to get that old contract flushed out through the, through the mix and it's happening.

Speaker Change: in our SolarFab.

Speaker Change: I think everything is pointing in the right direction. I think we've made a lot of progress.

Speaker Change: It's just taking a matter of time to get that old contract flushed out through the mix, and it's happening. And what we're finding with that business is kind of meeting all of the strategic objectives that we'd set up when we acquired it, which was...

Adam Spice: And what we're finding with that business is kind of meeting all of the strategic objectives that we'd set out when we acquired it, which was, you know, to provide that kind of much higher degree of control over kind of delivering programs at cost and performance because solar is such an important piece of the overall cost of a spacecraft that we really thought it was strategic to bring it in. And it's providing us with confidence not only that we can kind of deliver programs within a certain margin, but it also just confirms the fact that we can actually get the capacity that is sometimes very difficult to get unless you plan very, very far in advance. So all the different strategic kinds of angles are coming into focus.

Speaker Change: You know, to provide that kind of much more higher degree of control over kind of delivering programs at cost and performance, because solar is such an important piece of the overall cost of a spacecraft that we really thought it was strategic to bring it in. And it's providing us with confidence not only that we can kind of deliver programs at a certain margin. But it's providing us with confidence that we can kind of deliver programs at a certain

Adam Spice: And we're finding that business is kind of meeting all the strategic objectives that we'd set up when we acquired it, which was yet to provide that kind of much more higher degree of control over kind of delivering programs that cost of performance, because solar such an important piece of the overall cost of the spacecraft that we really thought of strategic to bring it in. And it's providing us with confidence, not only that we can kind of deliver programs at a certain margin.

Speaker Change: But it also just confirms the fact that we can actually get the capacity that is sometimes very difficult to get unless you plan very, very far in advance. So all the different strategic kind of angles are coming into focus, and I think the gross margin one is also, too. It's just going to take a little bit longer. We said our goal was to get there by within two years of closing the deal, which would have put that.

Adam Spice: And I think the gross margin one is also too, it's just going to take a little bit longer. We said our goal was to get there within two years of closing the deal, which would have put that, you know, back in Q1 of 2024, so earlier this year. So I'd say it's probably been delayed by a few quarters, but I would say not materially. And certainly, the longer-term kind of indicators all appear very positive for that. That's helpful. Thank you.

Adam Spice: But it also just confirms the fact that we can actually get the capacity that that is sometimes very difficult to get unless you plan very, very far in advance. So all the different strategic kind of angles are coming into focus. And I think the gross margin one is also to is just going to take a little bit longer. We said our goal was to get there by within two years of closing the deal, which would have put that back in Q1 of 2024. So earlier this year. So I'd say it's probably been delayed by a few quarters, but I would say not materially. And certainly the longer term kind of indicators all of you are very positive for that.

Adam Spice: That's helpful. Thank you.

Speaker Change: You know back in Q1 of 2024, so earlier this year, so I'd say it's probably been delayed by a few quarters But I would say not materially and certainly the longer term kind of indicators all appear very positive for that

Adam Spice: And then maybe just general color on PSC and Sinclair and ASI and some of the other businesses in the space group. Yeah, I would say that, again, Pete talked about it earlier in his prepared remarks about our M&A strategy, and I would say that, you know, our M&A strategy has worked out very, very well. I think, you know, when you look at the components and subsystems parts of the portfolio, that's growing almost exactly on our annual CAGR target that we'd set out and communicated to folks, you know, previously.

Speaker Change: oh

Speaker Change: That's helpful, thank you. And then maybe just general color on...

Speaker Change: PSC and Sinclair and ASI and some of the other businesses in the Space Recruits Group.

Adam Spice: And then maybe just general color on PSC and Sinclair and ASI and some of the other businesses in the space groups. Yeah, I would say that again, Pete talked about earlier and his prepared remarks about our M&A strategy, and I would say that our M&A strategies worked out very, very well. I think you know, when you look at the components and subsystems parts of the portfolio, that's growing almost exactly kind of on our annual Kagger target that we'd set out and communicated to folks, you know, previously.

Speaker Change: Yeah, I would say that's it, again

Speaker Change: Pete talked about it earlier in his prepared remarks about our M&A strategy, and I would say that, you know, our M&A strategy has worked out very, very well. I think, you know, when you look at the components and subsystems parts of the portfolio, that's growing almost exactly kind of on our annual CAGR target that we'd set out and communicated to folks, you know, previously. So you want to think about that components.

Adam Spice: So you want to think about that components and subsystems business delivering roughly a 20% kind of CAGR. That's always what we'd kind of targeted, hopefully we'd get to, and that's really what that business has been delivering and continues to do so.

Speaker Change: and Subsystems Business with delivering roughly a 20% kind of CAGR. That's always what we had kind of targeted, hopefully we'd get to, and that's really what that business has been delivering and continues to do so.

Adam Spice: So you want to think about that components and subsystems business with the, you know, delivering roughly a 20% kind of Kagger. That's always what we'd kind of targeted. Hopefully we'd get to and that's that's really what that business has been delivering and continues to do so. Thank you, Adam.

Operator: Our next question comes from the line of Suji DeSilva with Roth Capital. Please go ahead.

Surveld: Surveld, thank you, Adam.

Speaker Change: Our next question comes from the line of Suji DeSilva with Roth Capital. Please go ahead.

Suji DeSilva: Hi Peter, and congratulations on the progress here. On Neutron, you know; it's good to see the hot fire test success. I'm just wondering, as I look ahead to the first launch a year from now, I know it's not customer payload dependent, at least I don't believe it is, your first launch, and it's largely in Rocket Lab's hands, but I just want to know if there are any non-Rocket Lab dependencies, risks that might occur that would otherwise, you know, prevent you from having the launch when you're ready Just want to visualize those as we get closer to that launch.

Suji DeSilva: Hi Peter, and congratulations on the progress here. On Neutron, you know, good to see the hot fire test success. I'm just wondering as I look ahead to the

Suji DeSilva: Our next question comes from the line of Suji De Silva with Roth Capital. Please go ahead. Hi, Peter.

Peter Beck: Congratulations on the progress here. I'm on neutral. You know, good to see the hot fire test success. I'm just wondering if I look ahead to the first launch a year from now. I know it's not customer payload dependent. At least I believe it is. We were testing your first launch, and it's largely in rocket laps, and I'm just wondering if there's any non-rocket lab dependencies risks that might occur that would otherwise, you know, prevent you from having the launch when you're ready to go. Things like regulatory pad readers just want to envision those as we get closer to that launcher year from now.

Suji DeSilva: First launch a year from now. I know it's not customer payload dependent. I at least I don't believe it is your test your first launch and it's largely in Rocket Lab's hands, but I'm just wanting to know if there's any

Speaker Change: Non-Rocket Lab dependencies, risks that might occur that would otherwise, you know, prevent you from having the launch when you're ready to go, things like regulatory, pad readiness. Just want to envision those as we get closer to that launch a year from now.

Peter Beck: Yeah, hey Suji, great question. So, you know, we've definitely front-footed a lot of that. I mean, I think a lot of us saw Electron sit on the pad at Wallops for a long time waiting for AFTS certification and things like that. So, you know, we certainly have all those kinds of things well in control, and, you know, a lot of that groundwork was done, excuse me, a long time ago, especially with some of the licensing around the launch pad at Wallops and things like that.

Speaker Change: Yeah, I have such a great question.

Speaker Change: So, you know, we've definitely front-footed a lot of that, I mean, I think a lot of us saw Electron sit on the pad at Wallops for a long time waiting AFTS certification and things like that. So, you know, we certainly have all those kinds of things well in control.

Peter Beck: Yeah, hey Suji, great question. So, you know, we've definitely front-footed a lot of that. I mean, I think a lot of the saw electrons that on the pad are wallops for a long time waiting AFTS certification and things like that. So, you know, we certainly have all those kinds of things well in control. And, you know, a lot of that groundwork was done, excuse me, a long time ago, especially with some of the licensing around the launch pad at wallops and things like that.

Speaker Change: You know, a lot of that groundwork was done a long time ago.

Speaker Change: especially with some of the licensing around the launch pad at Wallops and things like that.

Peter Beck: So, no, we think we've got that in hand, and certainly, there's nothing that's kind of out of bed at the moment. Suffice to say, though, some of these regulatory timelines can drag on, but, you know, we remain. We have a lot of, you know, extended experience and relationships with the regulators. So, you know, it's not untrodden ground for us.

Speaker Change: No, we think we've got that in hand and certainly there's nothing that's kind of out of bed at the moment.

Peter Beck: So, no, we think we've got that in hand, and certainly there's nothing that's kind of out of bed at the moment. So, if I have to say though, some of these regulatory timelines can drag on, but, you know, we're, you know, we remain to, we have a lot of, you know, extended and experienced, and relationships with the regulators. So, you know, it's not untrodden ground for us. Yeah, I guess a second around you.

Speaker Change: Suffice to say though, some of these regulatory timelines can drag on, but we have a lot of extended experience and relationships with the regulators, so it's not untrodden ground for us.

Suji DeSilva: Yeah, I guess the second go around is easier. And then also, you mentioned ultra-high accuracy launch capability in the press release. I'm just wondering, is that what you consider a niche market opportunity or not? Is that a meaningful opportunity versus the traditional launches where you can get to that meter, I believe? Yeah.

Speaker Change: Okay, I guess a second go around these here. And then also the mentioned ultra high accuracy, launch capability and the press release, just wondering, is that, which can serve a niche market opportunity or, incommentally, is that a meaningful opportunity versus the traditional launches where you can get to that meter, I believe.

Peter Beck: And then also the mentioned ultra high accuracy launch capability and the press police are just wondering, is that which means a niche market opportunity or incredibly is that a meaningful opportunity versus the traditional launches where you can get to that meter, I believe. Yeah, so, so, yeah, initially we, we didn't think it would be, you know, given that the industry standards sort of 15 kilometers, it wouldn't be that important. Yeah, it wouldn't be that important to folks, but, you know, as we started to, you know, really accurately deploy, I guess it opened the aperture for missions that weren't possible before.

Peter Beck: Yeah, so initially, we didn't think it would be, you know, given that the industry standard is sort of 15 kilometers, it wouldn't be that important to folks. But, you know, as we started to really accurately deploy, I guess it opened the aperture for missions that weren't possible before. A good example of that was the mission we did just recently for a Japanese customer where they rendezvoused with a spent upper stage, and they were able to rendezvous directly off the rocket. So normally you would have required, you know, a big ball of Delta V to kind of come off the rocket and clean the orbit up.

Speaker Change: Yeah.

Speaker Change: Yeah, so initially we didn't think it would be, you know,

Speaker Change: Given that the industry standard is sort of 15 kilometers, it wouldn't be that important to folks. But as we started to really accurately deploy, I guess it opened the aperture for missions that weren't possible before. A good example of that was the mission we did just recently.

Speaker Change: for a Japanese customer where they rendezvoused with a spent upper stage and they're able to rendezvous directly off the rocket.

Peter Beck: A good one, a good example of that was the mission we did just just recently for a Japanese customer, where they're rendezvoused with a spin upper stage and they're able to rendezvous directly off the rocket. So, normally you would have required, you know, a big ball of Delta V to kind of come off the rocket and clean the orbit up. So, I guess we've created a capability there that has, has really opened the aperture for a lot of other, a lot of other folks to do much more interesting things, including the DOD.

Speaker Change: So normally you would have required a big ball of Delta V to kind of come off the rocket and clean the orbit up.

Suji DeSilva: So I guess we've created a capability there that has really opened the aperture for a lot of other folks to do much more interesting things, including the DoD. And you can see, you know, we even have a DoD rendezvous mission now. So, you know, it's definitely an emerging space. There's a lot more desire to do kind of these proximity operations and rendezvous operations. And, you know, once again, it's all just muscle building for the future on Neutron as well. If we ever need to dock with anything in the future, we have all of that capability now created.

Speaker Change: So I guess we've created a capability there that has really opened the aperture for a lot of other folks to do much more interesting things, including the DoD, and you can see, you know, we even...

Speaker Change: have a DoD rendezvous mission now. So, you know, it's definitely an emerging space. There's a lot more desire to do kind of these proximity operations and rendezvous operations.

Peter Beck: And you can see, you know, we even have a DOD rendezvous mission now. So, you know, it's definitely an emerging space. There's a lot more desire to do kind of these proximity operations and rendezvous operations. And, you know, once again, it's all just muscle building for future on neutron as well, if we ever need to, you know, dock within a thing in the future, we have all of that capability now created.

Suji DeSilva: and you know once again it's all just muscle building for future on Neutron as well if we ever need to you know dock with anything in the future we have all of that capability now created.

Suji DeSilva: Great. All right. Thanks, Peter.

Operator: Our next question will come from the line of Andres Sheppard with Cancer Fitzgerald. Please go ahead.

Suji DeSilva: Craig, all right, thanks Phil.

Speaker Change: Our next question will come from the line of Andres Sheppard with Cantor Fitzgerald, please go ahead.

Andres Sheppard: Hey guys, thanks for taking our questions and congrats on the quarter. A lot of our questions have been asked. So I was wondering if you could touch on something from the space systems. I wonder if you guys have any updates on that $515 million SDA award. I know you touched on it earlier, so I was wondering how you expect revenue to ramp up in the second half of 2017. Or if you could walk us through it again, like how the financial impact of this contract is.

Suji DeSilva: All right, thanks, Peter. Thanks.

Andre Steppard: Our next question will come from the line of Andre Steppard with Cantor Fitzgerald. Please go ahead. Hey guys, thanks for taking our questions and congrats on the quarter. A lot of questions have been asked, so I was wondering if you could touch on something from the space systems. I wonder if you guys have any updates on that $515 million SDA war. I know you touched on it earlier, so I was wondering how you expect revenue to ramp in the second half of 25, or if you could walk us through again, like how the financial impact of this contract is?

Andres Sheppard: Hey guys!

Andres Sheppard: Thanks for taking our questions and congrats on the quarter. A lot of our questions have been asked, so I was wondering if you could touch on something from the space systems. I wonder if you guys have any updates on that $515 million SDA award. I know you touched on it earlier, so I was wondering how you expect revenue to ramp in the second half of 2025, or if you could walk us through again how the financial impact of this contract is.

Adam Spice: Yeah, I can, I can take one to you, Adam. Yeah, I'll take that. So we're at the very, very, very beginning of that program execution. We've recognized that.

Speaker Change: Yeah, I can I can take one to you, Adam. Yeah, I'll take that. So we're at the very, very, very beginning of that that program execution. We've recognized.

Andre Steppard: Yeah, I can I can take what you Adam. Yeah, I'll take that. So we're at the very, very, very beginning of that that program execution, we've recognized. I think it's like maybe single digit millions, maybe to maybe as high as $10 million of revenue under that contract under the A.S. EAC methodology that gets applied under the accounting guidance. So I would say that look, that that's going to continue to ramp. We've got, you know, it'll.

Adam Spice: I think it's like maybe single-digit millions, maybe as high as $10 million of revenue under that contract under the EAC methodology that gets applied under the accounting guidance. So I would say that, look, that's going to continue to ramp. Each quarter going forward should be incrementally kind of constructive to driving revenue growth. And so I think you would expect that program to, I'd say, probably hit its maximum revenue contribution, probably not for another, I would say, probably six or, 6 or 8 quarters is probably the profile you want to think about how they grow, but then it starts to kind of flatten out and then decline, and of course it's all about kind of backfilling with the next contract or the other growth vector to kind of make sure you don't hit an air pocket.

Speaker Change: I think it's like maybe single-digit millions, maybe to...

Speaker Change: Maybe as high as ten million dollars of revenue under that contract under the EAC methodology that gets applied under The accounting guidance, so I would say that look that that's going to continue to ramp We've got you know it'll

Speaker Change: Each quarter going forward should be incrementally kind of constructive to driving revenue growth And so I think you would expect that program to I'd say probably hit its maximum revenue contribution probably not for another I would say probably six or

Andre Steppard: Each quarter going forward should be incrementally kind of constructed to driving revenue growth. And so I think you would expect that program to. I'd say probably hit its maximum revenue contribution, probably not for another. I would say probably six or six or eight quarters is probably the. The profile thing about how they grow per minute starts to kind of flatten out and then decline. And of course, it's all about kind of the back filling, you know, with the next contract or the other growth, growth vector to kind of make sure you don't hit near pocket.

Speaker Change: 6 or 8 quarters is probably the profile you want to think about how they grow. Then it starts to kind of flatten out and then decline. And of course, it's all about kind of, you know, backfilling, you know, with the next contract or the other growth vector to kind of make sure you don't hit an air pocket. But right now, we're in the very early, early stages. We still have significant revenue recognition off of the MDA Global Star contract.

Adam Spice: But right now, we're in the very early, early stages. We still have significant revenue recognition from the MDA Global Star contract, and then we're, again, just really just kind of not even scratched the surface of revenue contribution from the SDA program of $515 million.

Andres Sheppard: Gotcha, appreciate the color. And I guess I'm switching gears a little bit. I know this was asked earlier.

Andre Steppard: But right now we're in the very early, early stages, we still have significant revenue recognition off of the NBA global start contract. And then we're again, just really just kind of not even scratch the surface of revenue contribution from the SDA program of $515 million. Gotcha. Appreciate the color.

Speaker Change: and then we're again just really just kind of not even scratch the surface of revenue contribution from the SDA program of 515 million.

Speaker Change: Gotcha, appreciate the color. And I guess switching gears a little bit, I know this was asked earlier, so I was wondering maybe what's a reasonable

Andres Sheppard: So I was wondering maybe what's a reasonable number of potential launches that you could expect for this year? Maybe how confident are you at, you know, hitting 20? Potentially, as I know, you're aiming for 22 earlier. There are some shifts to the right, just wanted to see if you could point us in the right direction there. Thank you.

Adam Spice: And I guess switching gears a little bit. I know this was asked earlier. So I was wondering maybe what's the reasonable number of potential launches that you could expect for this year? Maybe how confident are you at, you know, hitting 20 potentially as I know you were aiming for 22 earlier. There's some shifts to the right. Just wanted to see if you could point us in the right direction there. Thank you.

Speaker Change: number of potential launches that you could expect for this year. Maybe how confident are you at, you know, hitting 20 potentially, as I know you're aiming for 22 earlier. There's some shifts to the right. Just wanted to see if you could point us in the right direction there. Thank you.

Adam Spice: Yeah, and again, we've tried to be a bit more kind of nuanced about this because, again, we always end up getting a bit surprised. We give people the best estimates that we have based on our knowledge of where they are in their program life and so forth, and it's very difficult to handicap, you know, where launches can actually occur.

Speaker Change: Yeah, again, we've tried to be a bit more nuanced about this because, again, we always end up getting a bit surprised. We give people the best estimates that we have based on our knowledge of where they are in their program life and so forth, and it's very difficult to handicap where launch is going to actually occur.

Adam Spice: Yeah, again, we've tried to be a bit more kind of nuanced about this because again, we, we always end up getting a bit surprised. We give people the best estimates that we have based on our knowledge of where they are in their program life and so forth. And it's very difficult to handicap, you know, where launch is going to actually occur. But right now it's looking like, you know, you know, if you look at the model for Q3, you know, we would, you know, we would have, we think another opportunity for perhaps many is four in Q4 to, you know, as many as seven.

Adam Spice: But right now, it's looking like, you know, if you look at the model for Q3, we would, you know, we would have, we think, another opportunity for perhaps as many as four in Q4 to, you know, as many as seven. So, that kind of gives you a range of somewhere between 15 and 18 launches for the year. There's really no upside beyond, you know, 18 is kind of, again, really, I wouldn't, I would advise nobody to kind of put that into their model at this point because that's a stretch. It's doable, but it's not a layup.

Speaker Change: But right now, it's looking like, you know, if you look at the model for Q3,

Speaker Change: You know, we would...

Speaker Change: You know, we would have

Speaker Change: We think another opportunity for a little perhaps

Speaker Change: Up many as four in Q4 to, you know, as many as seven. So that kind of gives you a range of somewhere between 15 and 18 launches for the year. There's really no upside beyond, you know, 18 is kind of, again, really, I wouldn't, I would advise nobody to kind of put that into their model at this point because that's a stretch. It's doable, but it's not a layup.

Adam Spice: So that kind of gives you a range of somewhere between 15 and 18 launches for the year. There's really no upside beyond, you know, 18 is kind of, again, really I wouldn't, I would advise nobody to put that into their model at this point because that's a stretch as doable. But it's not a layup. And so if you think about like the delta between kind of the 22 and the 18, there is no customer readiness to support a launch beyond 18 for this year. So that's really kind of where things cap out. And again, that's if everything goes really, you know, perfectly. And you know, things rarely, if ever do. Gotcha. Appreciate the color.

Andre Steppard: Thanks for taking our questions. I'll pass it on.

Andres Sheppard: And so, if you think about, like, the delta between kind of the 22 and the 18, there just isn't enough customer readiness to support a launch beyond 18 for this year. So, that's really kind of where things gap out. Again, that's if everything goes perfectly, and things rarely, if ever, do.

Speaker Change: And so if you think about like the delta between kind of the 22 and the 18, there is no customer readiness to support a launch beyond 18 for this year. So that's really kind of where things cap out.

Speaker Change: And again, that's if everything goes perfectly and things rarely, if ever, do.

Operator: Gotcha. Appreciate the caller. Thanks for taking our questions. I'll pass them on. Our final question will come from the line of Anthony Valentini with Goldman Sachs. Please go ahead.

Speaker Change: Gotcha. Appreciate the caller. Thanks for taking our questions. I'll pass it on.

Speaker Change: Our final question will come from the line of Anthony Valentini with Goldman Sachs. Please go ahead.

Anthony Valentini: Hey, guys. You got Anthony on for NOAA tonight. Thanks for taking my question. I'm curious if you guys anticipate that you'll have to go back to the capital markets in order to fund it.

Anthony Valentini: Hey guys, you got Anthony on for NOAA tonight. Thanks for taking my question. I'm curious if you guys anticipate that you'll have to go back to the capital markets in order to fund some of these grander aspirations that you have.

Anthony Valentini: Our final question will come from the line of Anthony Valentini with Goldman Sachs. Please go ahead. Hey guys, you got Anthony on for no, it's tonight. Thanks for taking my question. I'm curious if you guys anticipate that you'll have to go back to the capital markets in order to fund some of these grander aspirations that you have. Well, I think it really depends. I think, you know, what we have right now, we were in an individual position of the amount of cash and equity that we have to fund the business.

Anthony Valentini: I think that can, you know, again, fund some of our M.A, ambitions. I think that, you know, it really is going to depend on kind of the size, the opportunity comes into focus. I think we're all, I think that right now, we don't really say, hey, look, you know, let's not consider things that are outside of our current ability to finance because I think, you know, for the right opportunity, the capital markets, you know, are available.

Adam Spice: Well, I think it really depends. I think, you know, what we have right now. We're in an enviable position because of the amount of cash and liquidity that we have to fund the business. I think that can, you know, again fund some of our M&A ambitions. I think that, you know, it really is going to depend on the kind of size of the opportunity comes into focus. I think we're all, I think that right now, we don't really say, hey, look, you know, let's not consider things that are outside of our current ability to finance, because I think, you know, for the right opportunity, the capital markets are available. You know, again, it has to be for the right opportunity. But right now, we don't see anything that would cause us to go back to the capital market. Okay, um, that's...

Speaker Change: Well, I think it really depends. I think, you know, what we have right now, we're in an enviable position of the amount of cash and liquidity that we have.

Speaker Change: To fund the business, I think that can, you know, again, fund some of our M&A ambitions. I think that, you know, it really is going to depend on kind of the size, the opportunity comes into focus. I think we're all – I think that right now we don't really say, hey, look, you know, let's not consider things that are outside of our current ability to finance because I think, you know, for the right opportunity, the capital markets, you know, are available. You know, again, but it has to be for the right opportunity. But right now we don't see anything that would cause us to go back to capital markets.

Speaker Change: okay that's helpful and then in terms of the commentary it sounds like really Neutron is you know the enabler to you guys being able to do some of these things should we be thinking about that because of the fact that that'll be driving more cash flow that you can then you know redeploy elsewhere or more so like the actual rails to getting to space

Anthony Valentini: You know, it has to be for the right opportunity. But right now, we don't see anything that would cause us to go back to the capital markets. Okay, that's helpful. And then in terms of the commentary, it sounds like really neutron is, you know, the enabler to you guys being able to do some of these things. Should we be thinking about that because of the fact that that'll be driving more cash flow that you can then, you know, redeploy elsewhere or more so of like the actual rails to getting to space. I would say both Anthony, for sure. Okay, that's helpful. Thanks so much. Thank you.

Anthony Valentini: I would say both, Anthony, for sure. Okay, that's helpful. Thanks so much, guys.

Speaker Change: Thank you for watching, and I'll see you in the next video.

Speaker Change: I would say both, Anthony, for sure.

Peter Beck: That will conclude our question and answer session. I'll hand the call back to Peter Beck for any closing remarks.

Anthony: Okay, that's helpful. Thanks so much, guys.

Anthony: That will conclude our question and answer session. I'll hand the call back to Peter Beck for any closing remarks.

Peter Beck: That will conclude our question and answer session. I'll hand the call back to Peter back for any closing remarks. Great. Thanks very much. So before we close out today, I just wanted to draw your attention to some up and coming conferences. We'll be attending. We look forward to sharing more exciting news and updates with you there.

Peter Beck: Great, thanks very much. So before we close out today, I just wanted to draw your attention to some up-and-coming conferences we'll be attending. We look forward to sharing more exciting news and updates with you there. So that wraps up today's call. Once again, thank you very much, and we look forward to speaking with you again about the exciting progress that Rocket Lab has been making next quarter.

Peter Beck: Great, thanks very much. So before we close out today I just wanted to draw your attention to some up-and-coming conferences we'll be attending.

Peter Beck: We look forward to sharing more exciting news and updates with you there. So that wraps up today's call. Once again, thank you very much. And we look forward to speaking with you again about the exciting progress that Rocket Lab has been making next quarter. Thanks.

Peter Beck: So that wraps up today's call. Once again, thank you very much. And we look forward to speaking with you again about the exciting progress that rocket lab has been making next quarter. Thanks.

Operator: That will conclude today's call. Thank you all for joining. You may now disconnect.

Speaker Change: That will conclude today's call. Thank you all for joining. You may now disconnect.

Speaker Change: .

Operator: That will conclude today's call. Thank you all for joining. You may now disconnect.

Speaker Change: you you