So the way we like to think of it is launch is about a $10 billion TAM and then you've got satellites, it's somewhere between 30 and 50 and then the applications is like 320 but that didn't include Starlink. It didn't include Russia or China. China is not an addressable market for us. Of course Starlink has proven to be extremely successful and other countries and other nations want their own sovereign capabilities of that particular solution.
Um well I mean that's a good question. Boots on Mars is still a very very challenging thing to do that we think we can do, but of course it hasn't been demonstrated yet.
It's no secret there's been defense applications and use cases for Rocket Lab. But I wonder what's changed in your mind to be, I guess, unapologetic about it.
There's plenty going on in the world that point to the importance of national security.
What potential does HASTE alone have?
The US in particular has fallen behind with respect to hypersonic and hypersonics research.
I do want to talk about all of the core engineering decisions that have gone into Neutron.
Always happy to put on my geek hat, but actually I'll put on my economics hat first.
How do you view ride share on heavy lift rockets potentially being a risk for a medium lift rocket like Neutron?
Yeah, I mean it's a good question.
It's been six months since my last episode with Rocket Lab at their launch site in the United States. We're inside Neutron's soon to be launch pad.
That's right. It's massive. Since then, they've made even bigger strides towards becoming an end-to-end space company, announcing new satellite hardware, software, and signing big defense contracts while still churning out and launching their Electron rocket. Liftoff. Their bigger 13-ton payload rocket, Neutron, is still under development and on track for its debut launch later this year. This gives you a sense of the scale of the Neutron rocket. This stainless steel piece right here is the nozzle that will go on the end of the single Archimedes engine in stage two. And I mean, she's not small. Peter Beck himself planted this here at the entrance of Rocket Lab in Auckland to remind the team of the mission. I want to hug it.
You're all good to come in.
Thank you so much. The day we entered the office in Auckland and handed over our phones for security reasons, the team were preparing to re-enter a third spacecraft for Varda Space Industries, a US company manufacturing pharmaceuticals on orbit. It was successful, by the way. Have they got a fireplace running in mission control? How cool is this? They've only got four years left. They're running out of space for all the milestones. They're going to need to expand this wall somehow. And soon that will be 2025 hopefully with a picture of Neutron. But we're here to talk to the CEO, Sir Peter Beck. How are you?
Thanks for having us. And we have a lot to discuss from earnings to acquisitions, defense contracts, and engineering decisions. I hope you enjoy this conversation. And yes, we had water. Peter, thanks so much for having us in as always.
Now, I've been meaning to say congratulations, aviation entrepreneur of the year.
Oh, yeah. Pretty cool. It was a pretty cool event up in Hollywood with all movie stars and stuff. That was quite fun.
Yeah, we are going to talk about that including a certain NASA representative who was there. So, I'm keen to ask you if you met them perhaps. We will get to that. But, let's just start with earnings. And this has kind of got to be a mashup of all the relevant items to tick off and get through. First of all, Rocket Lab Corporation. So you're restructuring the company from Rocket Lab USA doesn't mean too much for investors, but can you talk us through the thesis as to why a change in parent company structure was required especially for national security?
Yeah, I mean it sounds a bigger deal than it actually is. So for national security it's kind of important. But also equally as important as we expand into other countries and like Europe, it enables us to do the kind of New Zealand wholly owned subsidiary thing that we've done with Rocket Lab USA. And I think it just sets us up for much more global work and it sounds better. Like Rocket Lab Corporation sounds way better. So as you point out, nothing changes. The ticker doesn't change. Nothing. It's just a couple of words on top of a header. It's hardly like a giant restructure or anything like that. It's just a tweak.
Obviously, you have a vertically integrated supply chain. You make rockets right here behind us. The team is super busy. But I'm keen to understand your supply chain more broadly. My understanding is that you also make reaction wheels in Toronto. So, where could and would tariffs impact the supply chain for Rocket Lab?
Well, I think you've hit the nail on the head. We're very very vertically integrated. So in Canada we ship stuff but we quite often do some transformation of the product so when the product arrives in America we're still doing work to it so it's not like a tariff on the full price of the reaction wheel. And within New Zealand it really only affects us if we're sending stuff up through to the states so it really hasn't affected us very much at all. Our supply chain is predominantly US-based. Although we're sitting in a factory here and there's this rocket spitting out. I mean this is a small part of the entire business.
Now with these Electrons they're making behind us though, these are largely launched in New Zealand and not here. Some of them obviously go to LC-2 but Neutron, when it is in play, will be entirely launched from Virginia but it's made here. Would it make commercial sense to start building that and making that in America? Given, well, it's not made here. There's elements of Neutron, bits and pieces of Neutron are made here, but the vast majority of Neutron is assembled in the United States, isn't it?
No, there's parts of Neutron made in America like Archimedes and all the propulsion system, like 90% of the structures. So at our Middle River facility we have an automated tape layer machine which is a giant awesome machine and it's automatic tape laying down all of the domes, all of the first stage structures, all the second stage structures. So there's a bit of R&D happening down here in New Zealand but as for full production, the vast majority is up in the United States for obvious reasons. Like it's a big rocket, you're not shipping parts from New Zealand easily. So insulated from tariffs.
Yeah. Yeah. Fantastic. NASA, the Mars sample return is facing some challenges, some uncertainty, I guess you could say. I know that you have a real soft spot.
Has it been? I thought that they were just delaying it. Have they fully canceled it?
Well, I mean, I don't think anybody said they fully canceled it, but if you looked in the president's budget, he had said that we're not looking to do Mars sample return because they plan on sending humans to Mars instead. That's right.
Yeah. I know you have a real soft spot for multi-planetary missions and not to mention that video was just really epic as well.
Does that mean that going to Mars is off the table for Rocket Lab? At least for now by the sounds of it.
Well, not really. I mean, basically anything in... if space wins, we win. So, anything that goes to Mars, the chances are it will have a Rocket Lab logo on it. Now we'll see what happens with Mars sample return because I think that might get a little bit interesting from a political standpoint. Because China have made it very clear that they're going to go and get samples. So, it'll be interesting to see what happens and if it survives through the president's budget and then it goes through Congress and all the rest of it. So, we'll see what spits out the other end. But those samples are drilled and cut and sitting on the surface of the planet and a lot of people think they're just dirty rocks. But some of those samples have the keys to biological markers and all sorts of really really interesting stuff. So I don't see rocks on the surface. I see Nobel prizes sitting on the surface of that planet. And so I think they will eventually be got whether it's this administration or another one. It'll eventually get got.
Do you think they should be got before humans eventually get up there? Should that be something that we do as a world before sending humans up to Mars?
I don't think it necessarily needs to be sequential. I think those two things can happen in parallel. I don't think one thing has to happen before the other. But the reality is we absolutely have the capability to go and get those now. And their scientific value will be recognized and exploited now. Boots on Mars is still a very very challenging thing to do that we think we can do but of course it hasn't been demonstrated yet.
NASA, they are obviously facing some budget challenges but they have a new administrator who is an astronaut, has worked in space, incredible guy, Jared Isaacman. A, have you met him? And B, because he's there, is NASA back?
Well, I mean that's a good question. Yeah, I mean I obviously met Jared and great inspiration for NASA. And to your point, they are really having to face some budgetary challenges and figure out what they're really going to focus on. So, I think that's going to be interesting to see what gets prioritized and what doesn't. And it'll be interesting to see how much influence a new administrator can have on that because at the end of the day, Congress still has a pretty large say in what NASA does and the programs that it executes. But not saying that the administrator doesn't have a lot of control and power over that but it's still a big job and I don't think one person just instantly makes NASA back or if it was even missing.
So yeah, we've spoken before though about how the private space sector has started to win more contracts and we will talk about defense and exactly what Rocket Lab is winning especially with HASTE, but there's been this change from what used to be called the primes. Do you think that that would accelerate now that NASA is being run by someone who has worked in the private space industry?
I think so. I think so. I think it has a good possibility to do that. I mean someone who's experienced commercial and the power of commercial and someone who is a business leader, obviously those sort of things are going to be front and mind.
Yeah. Let's talk about Europe. The Minar acquisition still underway, but regardless of whether or not it's successful, fingers crossed it is for you guys. But what do you make of Europe's position in the space race? And with or even without the Minar acquisition, what impact could Rocket Lab have on its position? And also, what impact could that positioning in Europe have for Rocket Lab?
So a bunch of questions there. So firstly I guess Europe is kind of an interesting market and we've stood back and scratched our heads about how do we tap that market and be successful in it. And in order to be successful in it you have to be basically eligible for the European missions, the European government missions. And the way Europe is set up is they have this geo return policy so all of the countries put all the money in a big pot and then ESA divvies it back out to all the countries. So if you are a US firm for example and you don't have any European company there then it's essentially impossible to play in that European government market. But of course if you have an entity and you have a European subsidiary then you can actually play in that market.
Keep the acquisition strategic.
Well, I mean, firstly, from the acquisition standpoint, we look for technology and people first. We didn't go, well, we need to find something in Europe. What's in Europe? Let's see if we can find something in Europe. No, it's like people, technology. And then it just so happens that it's in Europe, and that gives us a nice footing to continue to grow and expand in Europe.
Yeah. Where would you put Europe's position in the space race? It seems to me like they haven't been rapid.
Well, I mean, if you talk about commercial, I think you're right, but excuse me. Jeepers, we have water. Yeah, I'll have some water. Hang on. I've been talking all day. So, if you think about Europe though, it's essentially the second largest addressable market in the world. So it might not be as big as the United States, but it's a really big market. So to not be in there would be a failure.
Did you see the ISAR Aerospace launch? What do you make of that launch site? I mean I think you have one of the most beautiful in the world but that one's pretty incredible.
Come on. It's a second. Yep. It's a second. Definitely the second most beautiful launch site in the world for sure.
Is that official? All right. We'll make that official now. Yeah. Let's talk about the satellite market and there are varying numbers out there on the TAM, the total addressable market. I know that in one of your releases a few months ago, you put out some Quilty Research on the satellite space outlook and it said that there were about 10,000 that research believed satellites to be placed in orbit by 2030, but that didn't include Starlink. It didn't include Russia or China. So, talk to me about the size of the market that you see for Rocket Lab in satellites aside from what the mega players already have.
Yeah. Well, I think that's an important distinction because, I mean, we're not going to China. China is not an addressable market for us, of course. Neither is Starlink and some of these others. So you need to kind of correctly divorce that out of the equation. But no doubt, and Europe is another great example of this. Starlink has proven to be extremely successful. And other countries and other nations want their own sovereign capabilities of that particular solution. And even within the same geographic region they want multiple solutions. And I think I've said this before, monopolies rarely survive the test of history. So, Kuiper is doing a great job now with getting their constellation up and providing. So, I think we're at the beginning of this kind of constellation growth, but I would say that there's clear data and points in time now where you can go, okay, this is a real thing and it's going to continue to scale.
Can you explicitly outline the long-term game plan for Rocket Lab's place in satellites for us? You've mentioned Kuiper and Starlink numerous times before. Those are telco use cases. Is that what you're heading for or are there use cases beyond that?
No, I mean we've been very clear. Nice try by the way. We've been very clear but we're not discussing what our constellation aspirations may be. Purely because it's way too early. I mean without a Neutron flying at a regular cadence then it's just too early. I mean the secret to these mega constellations is not the satellite. It's the high cadence, low cost access to space. It's the rocket that is the true needle mover. Lots of people can build satellites at high volume or few people can build satellites at high volume. But the real hard thing to do is get them into orbit in a high cadence. So Neutron is the most important thing and then once we finish Neutron then that might be the right time to start talking about the next step.
