Hey, good evening everybody. Excited to have the opportunity to talk to Sir Peter Beck and Adam Spice once again. Very fortunate. This is like the third or fourth time we've been able to share post-quarterly results, what's been going on at the organization, the future of the workflows that are going on within the organization, and of course, just macroeconomic thoughts with respect to what's going on in the space industry, and how well Rocket Lab is suited to continue to progress as we have, in my opinion, a global space race ongoing. And that doesn't necessarily mean bad things, but just in general, everybody's trying to get to space right now. And with that, everybody's trying to secure their slots, whether that is from a satellite perspective, a launch perspective.
So, very exciting to see the quarter of the results, excited to see the forecast for Q2. And of course, I think more importantly, when I have these calls, I don't really like to think about the numbers so much, but really about how they're steering the ship and how they're acting behind the scenes. The numbers are a byproduct of the great work that Sir Peter Beck and Adam Spice do on a day-to-day basis. And not only them, but the team, the over 2,000 people that now work very actively across multiple continents now. And yeah, it's just mind-boggling how this business has grown since I've invested in it starting in the 2020-2021 time frame and how much it's grown obviously since 2006 and what Pete has done over the last 19 years. So excited to share this with you guys. Big shout out to Scott, Dave, Vince, and Muriel as well at Rocket Lab Communications for setting this up. As always, very humbled to even be in the conversation and just the fact that we're able to give us both an hour is mind-boggling. We kind of crept over that 30-minute mark and I was just like I'm not going to say anything if somebody else doesn't, and then I think Dave was good enough to step in and say hey, what do you guys think, and Pete was luckily to say hey I have to the top of the hour, so he gave us an entire hour. So wow, it was just a great conversation and as always, I always learn so much from these guys every time I have some sort of uncertainty or I'm questioning why they're doing things. And in this particular case I was questioning the ATM piece. Why are they going to the ATM? And Adam's answer is just brilliant and it makes 100% sense and it just goes to show you that these guys have so much forethought into everything that they do and methodical execution. It's astonishing. So anyway, 3 minutes of me just rambling. You've probably clicked to somebody else's YouTube link of it now, but hopefully you're still watching on my channel and I hope to see you guys in the next quarter. Cheers.
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. 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, just not that dissimilar to what 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? 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. 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 operate, 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. So with the success in testing so far on the new trunk campaign, you know, the videos that you guys put out, 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 one.
Yeah. Well, you've just laid out the dream run, right? So, 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 very close to completion. Some of them are dependent on each other, a lot of them are independent of each other, and it's kind of really hard to show graphically. And also, 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. Every element, every piece of software is kind of in that, and we're in this kind of all-up, big testing phase. So it's very tempting to 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 an integrated 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've heard me say many times, everything's great until it's not. 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 went 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 you can measure how good we are when we actually get to that point.
Yeah, no, 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 the stand at Stennis, I was very surprised to see that number two and number three came out very quickly to join it. And now obviously you guys are doubling capacity. I'm curious, before I hand it over to somebody else, are you already in works to create another stage two, 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 serial number for Neutron?
No, I mean, we intend to try and fly three times next year. 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 like 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.
Yeah, 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 like barges and the pads 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 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. So, you know, it's... Yeah. No, I have to... Yeah, I think it's one, I think only one of those is the Haste.
Oh, that's what I was gonna say. Yeah, it's one. Okay. Okay. Good to know.
So, good news is we are seeing kind of a firming of ASP across all of the different variants, right, of Electron. Certainly as Pete mentioned, the Haste variant really kind of helps bring up the ASP, partially because 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 the 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. They're margin-accretive and their ASP-accretive as well.
Cool. And then, 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, 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 kind of regulatory, 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 kind of 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?
Yep. 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 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. Like 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. 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, 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 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 did a hot fire test on the engine. You see it run once. Why can't it be just strapped onto a rocket and then you fly? So for non-rocket engineers, like when you're doing the qualifications of stage one, stage two, what does that go? 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. Like 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 kind of 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 in the ullage, 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 conditioning 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. So, yeah.
I'm actually more fun to party with than Pete. Just for, you know, make a statement there. He's not a real party person, but that aside, go ahead, Pete.
Yeah, 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 especially a new launch.
So, 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, it's 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 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 we 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, you know, like being Neutron.
There's nothing stopping you putting a party together, Vince. 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 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. 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 is kind of the big growth driver for space systems and now that Flataille's in the picture, I'm just kind of curious as to how this all shapes up. Is Flataille 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, 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 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 kind of gram of the satellite matters because it equates to how many you can get into a launch vehicle. And that's where Flataille 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 Flataille 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 Flataille, if you don't mind, Dave, can I jump in?
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 Flatailles to them?
Yeah, look, we don't do stuff on dreams. We were obviously, customers approach us and a number of them have requirements for large constellations. So this is kind of a response to those inquiries.
Thank you very much. So I can jump in really quick with a follow-up on that particularly. So, I noticed that obviously Mynaric and the laser obviously has a big component on Flataille, and I was just kind of curious. I know there's pros and cons of using radio. There's pros and cons of using laser for communications. Will Flataille have both? And what do you see the pros and cons of really utilizing lasers for Flataille rather than potentially radio if radio isn't available on Flataille?
Yeah, I mean, you make a good point, mate. I mean, radio links have been done in the past. Laser links are actually pretty new. And look, it just comes down to bandwidth, right? Like you can just move so much more data at such less scale of antenna and boxes, right? So it basically just comes down to that. So, if you're not meshing your satellites up and you're not needing to hand off data between them, then you can have a pretty low-bandwidth radio link and that's super easy. But if you're looking to be providing a mesh network and handing off lots and lots of data, then you really, really need the laser links. And even government programs have gone to laser as we know with SDA. So it's kind of the next evolution for inter-satellite communication.
And then you have to worry about RF spectrum and all of that kind of stuff.
Kind of my thought is like it's easier to kind of—I don't want to say hack, but I'll use the word hack—but it's less secure in my opinion from what I've read. And then also it just seems like the interference with so many different people already utilizing it seems like it'd be a pretty big issue.
