Hey everyone. Today I'm excited to bring you a brand new interview me and three other YouTubers had with Rocket Lab CEO, Sir Peter Beck, and CFO Adam Spice. We learned so much about the company every time we talked to them. And every time we talk to them, I am left just feeling so confident in the management of this company. If you do find this video useful, please thank the channel members who support and make it possible at the beginning of every video. And if you'd like to join them, there is a link down below in the description as well. And if you aren't already a subscriber, that would be very much appreciated as well, of course. Okay, with that out of the way, let's dive into the latest discussion with Rocket Lab CEO, Sir Peter Beck and Adam Spice. Today we have a new interview with Sir Peter Beck and Adam Spice of Rocket Lab. We're going to ask you guys some questions about the Q1 earnings and some questions that the retail investors might want to have answers for. We want to congratulate you on a fantastic quarter, which we felt it was, and yeah, let's shoot away with the questions. So the first question that I wanted to ask, it feels like on the Neutron you guys have sold the next three slots. Two was for a confidential customer and one is to the US Air Force. And do you know when you're going to be flying your own satellite on Neutron, and what goes into prioritizing customers versus your own constellation?
Yeah. No. Hey, Vince. So the priority is to flesh out Neutron as a commercial launcher first before we start flying our own stuff. Now, we'll be opportunistic. If we have spare capacity, you know, just not that dissimilar that we do with Electron. If we want to develop new hardware or get some flight heritage on some new hardware, we'll take that opportunity. But we're not really at the point yet where we are assigning tails to our own stuff. Like I say, we'll always take opportunities when they come, but we're not there yet.
Yeah, maybe I'll just hop in with a Neutron question then. I was going through the payload guide and I don't claim to understand the majority of it, but I did think it was pretty interesting how you had the two modules there, the upper module and the lower module, and how you could transport them separately. And just curious, I don't think I've seen that before. So, what was the decision-making on that? And what benefits does it give you?
Yeah, so there's kind of two ways to integrate Neutron. One is that kind of horizontal module approach and we developed that for that approach. What that does is it negates the necessity for a vertical stacking tower. And really that's just a capex decision. So in the ideal kind of full flow, high cadence rate, we always said that we never want to break over the rocket. So literally the rocket will come off the barge, get transported back to the launch site and then there's a kind of a gantry tower building that rolls over the rocket and can integrate the second stage satellites and stack the second stage and satellite stack all in one unit and drop it into the hungry hippo and close it and then go. So the rocket never ever ceases from being vertical. But obviously a big rollover tower integration building is a fairly expensive capital item and for the initial launches we just do that by breaking off the module and shipping the module. And this kind of follows a similar approach we did with Electron, right? So we didn't go out and build two launch pads and three clean rooms and a whole bunch of facilities. We started off with one hangar, one clean room, and then as the vehicle started flying and the cadence increases, then we make those investments. Well, and investments are largely paid for by the operation of the vehicle anyway. So, it's just more of a phased approach than anything else. There are some reasons why you might want to integrate in that horizontal module one configuration as well. So it just gives us also the extra flexibility to do that.
So I can chime in on that. With the success in testing so far on the Neutron campaign, you know, the videos that you guys put out, a stage one qualification and everything, I feel like we're getting very close. You're starting to see the milestones get closer and closer to launch and I feel like we're getting to a place where a lot of these milestones are clumping up at the end. We're going to move very quickly once we get there. So, how far do you feel like we are from seeing a fully integrated Neutron at Wallops? And then how quickly would we see a wet dress rehearsal after that? Would it be imminent? And then obviously what kind of timeline once we kind of get a wet dress rehearsal, if everything goes successfully, of course. How long would it be from a wet dress to launch? Fully recognizing that obviously not everything can be successful, but I'm very optimistic of a successful outcome.
Yeah. Yeah. Well, you've just laid out the dream run, right? So, you know, if you look at all the milestones that we put up and we kind of at pains to reiterate that they're all happening concurrently. Some of them, as you point out, are very close to completion. Some of them are dependent on each other, a lot of them are independent on each other. And it's kind of really hard to show graphically. And also, you know, in some areas we're right at the nitty-gritty, the end test where the big all-up test. Like take stage one module for example. You know, every element, every piece of software is kind of in that and we're in this kind of all-up, big testing phase. So, you know, it's very tempting to say, well, I'll call that done because it's like 98% done, but until it's 100% done, it's not 100% done in our world. And then, you're right. So, as those components get integrated, providing that we don't find any issues, then you move pretty quickly into a wet dress. And then if you do a wet dress and you find no issues, then you move very quickly into a launch. Now I think we should all be kind of realistic about that. I mean, you're building a complex machine for the first time. We all hope that there's going to be no issues, but there could easily be things that crop along the way. So, you know, we always, you've heard me say many times, everything's great until it's not. And but at the moment, we haven't had any kind of major project setbacks or things that have just gone super pear-shaped, and we continue to track. If you look at an Electron wet dress for example, we'll wet dress the day before and then go fly. But if you look at the very first Electron, we wet dressed and it was quite some time before we actually flew because we were trying to understand the rocket and all the new systems that you stand up. So I think we're certainly better than we were when we did the Electron, but I think you can measure how good we are when we actually get to that point.
Yeah, that's good feedback and I'm sure we'll see milestones quickly. You guys have been doing a phenomenal job. A follow-up to that, I know when you guys were building the Archimedes, that first one that got to Stennis, I was very surprised to see that number two and number three came out very quickly to join it and obviously now you guys are doubling capacity. I'm curious before I hand it over to somebody else, are you guys already in works to create another stage one with the Neutron? Are you waiting to get a kind of a fully integrated dynamic test before you kind of roll out the next serial number for Neutron?
No, I mean we intend to try and fly three times next year. You know, that's our ramp rate. So we're building multiple flights worth of hardware now. And that's part of the scaling efforts that we've talked about. We've kind of moved slightly past the minimum viable product to investing in the barge return on investment and in multiple serial numbers. So in the components and areas we have super confidence in, we're plowing straight forward.
And by the way, part of what's consuming cash right now is exactly what Pete is saying. You know, it's one thing to get to minimum viable product and infrastructure, but now we're actually investing in subsequent tails. We're investing in the barge and so forth. So, that's all about scaling the business, but it's starting to show up now in kind of the working capital needs of the business. So, it's all good stuff. It's just a matter of that's why we're so focused on making sure that we've done all the right things and put everything in place so that we can kind of just deliver on the expectations and flying a new rocket, you know, three times next year when the first launch is in the second half of this year, that's not an easy task, right? So, we got to make sure that we're doing all the preparatory stuff. And I think we've made a lot of investments in the team and other parts of the business to really enable that. That really wasn't in place seven years ago when Electron was just beginning to ramp up.
Perfect. Thank you. Since Electron was brought up, if you guys don't mind me pivoting, during Q1, we saw the eight new Electron signings, four of which were the second batch of IQPS. And then if we look at the other four that were signed during the quarter, it looks like the ASP lines up nicely with what could be assumed to be four Haste launches. Is a 50/50 split between Electron and Haste a fair assumption? And if so, is the Kratos mission that was announced in April, is that one of these presumed Haste signings?
Yeah, I'd have to go back and have a look at that information. I mean, it's true that the Haste ASPs are generally higher because the mission requirements are a lot more complex, ironically, than going to orbit.
Yeah, I think only one of those is the Haste.
Oh, that's what I was going to say. Yeah, it's one.
So, the good news is we're seeing kind of a firming of ASP across all of the different variants of Electron. Certainly as Pete mentioned, the Haste variant really kind of helps bring up the ASP. Partially it's a bit of a unique vehicle, but also there's the different mission assurance requirements that those Haste customers require versus a traditional commercial launch. You don't kind of get the same kind of rinse and repeat that benefits you get when you sign up a 10-launch commercial deal. But, all in all, I'd say that the Haste missions are helpful because they're growing quickly. Their margin is accretive and their ASP is accretive as well.
As a follow-up kind of on the topic of Haste as well, Rocket Lab was recently selected by the UK's Ministry of Defense to help develop hypersonic capabilities. What are the limitations of Haste at an international level given the defense nature? Like for example, if the UK were to require a Haste launch from you guys, could that go off on American soil or is that going to be kind of particular for each government?
It has to be from their own soil. Yeah. And it's a good question. So typically those launches are from US soil. In order to launch off foreign soil, you have to have technology safeguard agreements in place and a whole bunch of those regulatory or cross-government and cross-regulatory approvals. Not saying that that's not possible, but that is required and of course we have to establish a launch site whether it be mobile or fixed in that nation, which is no trivial thing. But typically they are kind of joint research programs as well.
All right. I'll pass it on to one of you gentlemen.
Maybe I'll just jump in on Haste. Pretty excited about the growth prospects there. Just kind of curious, can you give us an idea just how big that TAM is? Like could we ever see a day maybe long in the future where there's more suborbital launches than orbital launches for Electron?
Yeah. Yeah. Potentially. I mean, the head of the hypersonic suborbital program was publicly stated as he wants to fly every day. So, now I'm sure not a Haste mission every day, but kind of gives you a sense of where that program's going. And we maintain in a pretty unstable environment and the US really needs to get its stuff sorted with a whole bunch of these hypersonic systems. So, we certainly see strong growth in that area. And we provide a really important service. So we expect just Haste to be a pretty significant part of Electron going forward.
Great. Thanks. And I wanted to follow up a little bit on what Scott was talking about. So there was the AUKUS Pillar 2 announcement in November 2024 and how it pertains specifically to expansion of the United Kingdom, Australia. And I think part of what we saw with the UK deal was it was like one of five potential launch providers to be able to kind of win a contract. So as we've seen that UK contract kind of come through, how competitive do we think Rocket Lab is? Obviously, I know what your answer probably is for that one, but what can you say with respect to the rest of hypersonic expansion opportunities in the rest of the EU? And the reason why I ask is because I know the United Kingdom and several four or five other countries have kind of a consortium for hypersonic with like High Flight and things like that. Where do we see the potential for that UK to eventually maybe spill over? And I know you're going to say one country at a time, but just wanted to get your thoughts.
Yeah. No, I think and I think you teed it up nicely. It's like the Five Eye allies or the AUKUS pillars group of countries that are very deeply sharing in some of this defense technology and things like that. So that's where the core focus of this will lie, which one of which New Zealand is a partner in the Five Eyes group. So that enables us to engage very deeply there as well from a New Zealand side. So yeah, no, I think and with respect to your question of how competitive we think we're going to be. I mean, as far as I know there's not too many vehicles that can provide anything up to sort of Mach 25 with a high frequency and high cadence ability. So we think we're very uniquely placed and just the ability to produce vehicles at rate and fly them at rate and fly them out of different launch sites. I don't know anybody else in the world who has that capability right now.
All right. I just want to circle back to Neutron for two last questions. One of them I feel like you kind of answered it, but I still just want to ask it. So, I'm the guy who's like, 'Okay, you know, you did a hot fire test on the engine. You see it run once. Why can it be just strapped onto a rocket and then you fly?' So for non-rocket engineers, when you're doing the qualifications of stage one, stage two, what does that go through? Because in my mind it's like you flip on the switch, okay, the lights come on, okay, the canards are moving, okay, it's good to go. That's how I would do it and that's why I probably don't work at Rocket Lab. But what is it that goes into these qualifications?
Well, to be fair, Vince, that's how some others do it, and we all know where that ends, right? So, the way we roll here is we'll test and probe every operation, nominal and off-nominal. And we don't put anything on the pad or any spacecraft in orbit unless we've thoroughly, thoroughly tested. And I think that's part of the magic of Rocket Lab is we have very good simulation tools, very good hardware-in-the-loop tools, and then when we actually build the hardware, there is no shortcut taken.
So with respect to propulsion, we are exploring every part of the run box. And the challenge with the run box in the Archimedes engine is it's not just a simple ascent burn where you've got very well-conditioned propellants and 200 seconds later they're extinguished. You have the added complexity of coasting the first stage for a while, mixing the propellants with the ullage and all the gases, so the propellants get warm, and then when you go to relight for your landing burns and things like that, then you've got totally different conditioned propellants, totally different pressures and temperatures, which all really, really matter. And we've gone to pains to make sure the Archimedes is the simplest engine you can build, but at the end of the day it's still a staged combustion cycle engine. And it's still a really complex piece of machinery that when you change the inlet temperatures and pressures of propellants, things move around.
So, right now we've just been doing, I would say, pretty abusive things to the engine. And really trying to understand those startup and shutdown transients. And then all of the things that we need to do. And then of course on stage two we have a couple of relights depending on the mission. So once again it can be 45 minutes before you do the relight. So what is the condition of propellants after that period of time and how do you define what the run box looks like? So the crude thing to do would be, yep, just do a first stage profile, run a few tests, call it good, but that's just not the way we roll.
All right. Thank you. Thank you for that. And the last question I have on Neutron is the retail group for some reason quite understandably would really like to have a launch party with you present at Neutron and I understand that it's very challenging because you cannot set a launch date and you're a very busy person and we don't want to hold you up from the production. So I was thinking that maybe a middle way could be to have like when Neutron is ready enough to have like a retail meetup with maybe someone like Adam or you present and where the retail could get like a tour of the facilities or the rocket if this is possible. And obviously for us the important thing is we have a smooth launch and we know that you guys are very busy.
Yeah, I'm actually more fun to party with than Pete, just to make a statement there. He's not a real party.
That's a fact. I mean, to Adam's point, I can barely make my own birthday party, let alone a launch party. And the reality is that if it's launch day, any of us are not going to be interesting people to be around. It is all consuming. I'll most likely be spewing up in the corner with nervousness, that's not untypical of a, especially a new launch. And also just kind of the reality of the logistics, right? I mean, we'll put a vehicle on the pad. It's going to be a first vehicle. We'll be working issues. And we'll be working things that we haven't seen before because we'll be doing a lot of stuff for the first time. And look, if it's not right, we'll scrub. So, everything has to be lined up and perfect. And I think one interesting thing would be for one of you guys to come and watch an Electron launch and sit in mission control, because I think very few people understand the kind of ballet of stuff that needs to happen in order to be able to even launch anytime, whether it's all the weather and the space radiation concerns and then the vehicle and your payload readiness. It's amazing that anything ever launches if we're honest. And I know that us and others have got a good launch cadence and it looks easy, but every single launch is, you could literally write a book on every single launch about various dramas and bits and pieces and things that kind of got in your way. So it gives you kind of a sense of just what it takes to launch. But I think a Neutron launch, you don't want us partying. You want us deep in mission control and on the job.
Thank you and totally understand your answer and I really had to ask it because I get put into all kinds of groups on Twitter and the whole group is about Neutron.
Nothing's stopping you putting a party together, Vince. Why don't you put the big party together and it doesn't necessarily have to be around launch. It could be perhaps like when we get to within line of sight, vehicles on the pad, the right time, we can just kind of, because we're all about creating transparency and access, right? So, I think that that would be consistent with that.
Yeah. That'd be a much easier thing to do would be to, as you say, and we could do like an investor day or something like that and then there's a vehicle on the pad and you can wander around the pad and stuff. That would be pretty cool.
All right. Yeah. Thank you guys. I think we can go over to space systems if we are done with Electron. And sure, if we still have time maybe I'll circle back, but yeah let's go on. Kind of up to this point I had viewed like over the past year Lightning as kind of the big growth driver for space systems. And now that Flatalite's in the picture I'm just kind of curious as to how this all shapes up. Is Flatalite just kind of a superior form factor or is there kind of cases where Lightning would be a better option? And how do you see those two playing out in your spacecraft family?
Yeah, no, they're two totally different things. So, Lightning is actually a fantastic national security platform. So it has all of the kind of redundancies and equipment on board that national security missions really, really require. So that's kind of our go-to platform for a lot of those missions. If we're doing, for example, a high-volume large constellation, then every gram of the satellite matters because it equates to how many you can get into a launch vehicle. And that's where Flatalite really excels is its ability to dispense with the dispenser and of course maximize every gram on the satellite to add as many of those in a launch vehicle as you possibly can. So it's kind of different products for different things in that respect.
Great. So then we won't see a decrease in Lightning because of Flatalite coming online?
No, no. I mean, like I say, it's no dissimilar to like some of the Pioneers and those other platforms. They all do kind of different things.
Sure. I actually also have a question about Flatalite, if you don't mind. Dave, can I jump in?
So, on Flatalite, my question is, how did you come up with that idea and was it something that customers were organically asking for? Meaning are you in talks with customers about deploying Flatalites, and if not then what considerations went into the design?
Yeah, I mean if you kind of devolve the engineering down to I need to put the maximum number of spacecraft possible per rocket then you kind of naturally end up at that shape, right? And it's just like a bicycle, like if you derive the most efficient frame of a bicycle to carry the loads of a human you end up with what looks like a bicycle. So that's pretty much how we kind of arrived at that. And look, there's other examples in the industry where other people have arrived at the same conclusion. So, I'm not going to proclaim certainly any visionary moments here. It's just kind of pretty matter-of-fact and functional that that's what you optimize down to.
All right. And are you currently in talks with the customers on selling Flatalites to them?
