Rocket Lab USA, Inc.

Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Rocket Lab Q3 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Colin Canfield, Head of Investor Relations. Please go ahead.

Thank you, Eric. Hello, everyone. We're glad to have you join us for today's conference call to discuss Rocket Lab's third quarter 2023 financial results. Before we begin the call, I'd like to remind you that our remarks may contain forward-looking statements that relate to the future performance of the company. And these statements are intended to qualify for the safe harbor protection from the liability established by private securities litigation reform act. Any such statements are not guarantees of future performance, and factors that could influence our results are highlighted in today's press release, and others are contained in our filings with the Security and Exchange Commission. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements. Our remarks and press release today also contain non-GAAP financial measures within the meaning of Regulation G enacted by the SEC. Included in such release in our supplemental materials are reconciliations of these historical non-GAAP financial measures to the company's comparable financial measures calculated in accordance with GAAP. This call is also being webcast with a supporting presentation, and a replay and copy of the presentation will be available on our website. Our presenters today are Rocket Lead Founder and Chief Executive Officer Peter Beck and Chief Financial Officer Adam Spice. After our prepared comments, we will take questions. And now, let me turn the call over to Mr. Beck.

Thanks, Colin, and welcome, everybody, for joining us. Today's presentation, we will go over our key business accomplishments for the third quarter of 2023, as well as further achievements we've made since the end of the quarter. Adam will then talk through our financial results for the third quarter before covering the financial outlook for Q4 2023. After that, we'll take questions and finish today's call with the near-term conferences we'll be attending. All right, on to what we achieved in the third quarter for the year. Starting with Electron. In July, we launched a mission with several satellites for NASA and others, which was the first of two back-to-back reusability-focused missions. After successfully deploying the first Mission 7 spacecraft, Electron's first stage was brought back to Earth and recovered from the ocean. Then we followed that up with our 40th Electron launch and even more recovery milestones, including a return first stage, and a first to launch a reflowing Rutherford engine previously flown on our 26th mission there and back again. The engine performed flawlessly like a new one, completely validating our pursuit of reusability for Electron and setting us up well to refly an entire engine set as our next major reusability goal. So next I'll provide a bit of an update for Electron. Following those two successful flights, as you know, we unfortunately experienced an anomaly on our 41st mission. It's important to remember that up until this launch, we have had 37 successful orbital missions to place 171 satellites in orbit, and the past two years have been flawless with a record of 20 successful missions one after the other. For flight 41, as soon as the issue occurred, our team jumped into action. In the weeks since, the team has been scouring through thousands of channels of flight data and manufacturing data to determine what was a probable root cause. I'll take you through their investigation in detail over the next couple of slides. Working in parallel with the FAA, the FAA has conducted its own review of the mission safety processes, plans, and procedures, which concluded that they all worked as they should to keep the public safe, and I am pleased to confirm that the FAA has since given us approval to resume launching from Launch Complex 1. With our investigation in its final stages and our launch license remaining active, we are fully anticipating to return to flight within the next few weeks. Following updates and changes to our testing and manufacturing processes, we'll be returning to the pad with an even more reliable vehicle to meet our busy launch manifest for the remainder of 23 and into 24. Now, let me take you through what happened and what we've learned. So here's a slide on the anomaly timeline. The anomaly that ended the mission happened incredibly quickly. From the first action in the chain of events when Electron cut off its data relay, the team only had 1.6 seconds of anomaly flight data to work with. This was always going to be a highly complex issue to figure out, but with deep diligence and analysis, here's what we've been able to determine. On our 41st mission, launched September 19th from LC1, it completed all the usual launch milestones through liftoff, max queue, stage separations. And at 151 seconds, the second stage engine tried to ignite, which is confirmed by flight telemetry that showed the igniter pressures building and the LOX and kerosene pump speed rising to pump propellants into the combustion chamber. The voltage levels from the battery packs that power the engine and the motor controllers are nominal at this point and nominal at that point of ignition. But within milliseconds, in fact, 151.7 seconds, we get our first indication of the anomaly. The system's high-level voltage levels take a sudden dip and rise of about 100 volts within 30 milliseconds, indicating an energy escape from the system that then led to a full loss of power to the second stage lower avionics, cutting off telemetry and communication with the second stage. And with that, it was all over. So we'll move on to the issues. So you have to bear with me on this. There's a little bit to talk about here. But with good visual evidence with the onboarded cameras and over 12,000 channels of data and this high-level timeline to draw from, the investigation narrowed in on the issue. More than 200 sub-investigations were launched to rule out hypothetical causes of the anomaly. After more than seven weeks of extensive analysis of the mission's manufacturing, test, and flight data, the findings of the Rocket Lab investigation team overwhelmingly indicate an unexpected electrical arc occurred within the power system. Shown in the image on the top right, the team did some tricky optical triangulation and image processing of a small shadow on the engine bell caused by the arc. From that, they were able to pinpoint and retriangulate the failure point's origin to an area where the two battery packs connect, known as the fixed pack, to supply the high voltage power. So now we're all going to take a little lesson in Partion Law and Partion Curves. So Partion Law describes how in partial pressure environments, the likelihood of an arc to occur changes in high voltage systems depending on the environmental composition. An approximate guide that can then be applied across different situations called the Partion Curve, which uses the relationship between voltage, pressure, multiplied by distance to indicate what the range of danger is for an arc to form through various gases like helium, argon, nitrogen, etc. So the graph on the bottom right is what's known as a highly simplified Partion Curve. So basically, the easiest way to think about this is if you have a positive and a negative terminal of a battery at 500 volts down here on Earth, you could place those two terminals of the battery about 0.03 millimeters, or one third of the thickness of a human hair beside each other, and they would not create an arc or jump a spark between them. Now take the same 500 volt battery and terminals and put them in the worst part of the just after stage separation and stage two ignition of electron. And the same 500 volt battery and terminals will now arc to each other when they are nearly one meter apart. So different gases, different pressures affect this distance. And there's also other things like AC ripple that can have a huge negative effects. But for now, let's just keep it simple. For electron with its high voltage 500 volt rail power supply, we have to ensure that every connection is essentially hermetically sealed. A tiny pinprick or insulation failure will result in arcs, given that they can travel over large distances when in the passion curve. All of this is in flux and very transient because as we ascend higher during the second stage burn and go into the hard vacuum of space, the arcing distance goes back the other way and it becomes hard to arc again. It's really just at stage separation where things are the worst and we bottom out the passion curve. As you can imagine, this is extremely difficult to test for down on earth. We actually currently put the whole rear engine assembly in a vacuum chamber, pull it down and inject gases like argon to try and aggravate the phenomenon. But even the smallest insulation compromise cannot always be detected, especially when you compile that with other factors like AC ripple and trace gases. Excuse me. So now that everybody understands partial curves, during the second stage ignition, we're at the worst part of the curve, and we had a small concentration of helium in the vicinity of the upper stage, which is normal, and a high voltage AC ripple that lowers the spark threshold even lower, and a tiny undetectable fault in the HV lumen insulation, all of which combined allowed for an arc to briefly occur. If any of these things were not present, then the failure would not have occurred. All four had to be there, and to be honest, with all the testing we do before flight, you would also have to be incredibly unlucky to have the installation failure point also line up with an electrical path to be able to arc the chassis. And look, I don't generally believe in luck as an engineer, but in this instance, I would say that so many things had to line up that most people would say that this failure the probability of this occurring would be largely improbable. So with that, now that we kind of understand and we've explained the failure, what are we going to do to get back to flight? So the failure is obviously a highly complex set of conditions that are extremely difficult to predict. Our team's top priority through the investigation has been to find a way to make sure that this never happens again And as a result, there's a couple of key corrective measures. The first is to increase the fidelity of the stage level vacuum testing. We now have a much more sensitive instruments implemented in the preflight test, both at the component level and the stage level that can sense partial discharge all the way down to a picocoulomb now. This gives us much more confidence in the testing. However, I was not happy to stop there, and so we've implemented a rather brute force solution. What we've done is seal up the battery frame that contains all the high voltage connections and equipment, and then pressurize it to about 0.5 of psi. I'll draw your attention to the graph on the top right. Surprise, surprise, it's another partial curve that shows that by pressurizing the high voltage area, we shift the partial curve to the left out of the red zone and into the green zone, Basically, we're back to what it's like on Earth where it's not really possible for big arctic distances to occur. Now, this has been a lot of work to implement by the team and is a fairly extreme solution. But really, I thought it was the only way we could put the passion law well back in its box. So the best way to solve a problem, in my opinion, is a way to eliminate the problem, and that's what we've done. Getting to the bottom of the issue and back to the pad for our customers has been the team's number one priority. It's been incredible to witness their perseverance, dedication, over these past few weeks, not only on the anomaly investigation, but in the work that they've completed in parallel to make sure that we're good to go as soon as we get back to the pad. The launch window for our return to flight mission will open on November 28th and extend into December. This dedicated mission will be for IQPS, a Japanese-based earth imaging company, with the rocket for that mission going through pre-launch testing on the pad at launch complex right now. So move on to Electron launch manifest. So in 2024, we have a really big year ahead of us. Even with our pause in operations, Electron remains the world's most frequently launched small orbital rocket. Dedicated missions for small satellites continue to experience strong demand, which we've seen in multiple bulk buys by returning customers and constellation operators. In fact, we've booked out Electron launches next year, completely booked. We see the market for the Electron product being very strong, and this manifest validates that. Frequent launch opportunities, flexibility over schedule, and control over orbit deployment are what our customers are looking for, and that's what Electron has been providing and will continue to provide in the new year. And all that, all we have to do really with our 2024 manifest is execute, as in with anything in the space industry. By ramping electron production and keeping on top of demand with recent acquisitions as well as continuous improvement in automation across our manufacturing processes, we look to continue improving on an already impressive performance in manufacturing. We also note that the scaling is coming with improved gross margins. In Q3 2023, we achieved a 27% gap launch gross margin. which should look to enable to progress our profitability targets for Electron as we drive scale and efficiency into the business. I now want to take you through and highlight some of their accomplishments so far in Q4. So, Neutron structures. We'll start with a Neutron update. Earlier this quarter, we reached a major milestone and had a frosty second stage tank up on the stand for structural and cryogenic testing. which is really a key marker for a neutron program development and program. The team's job was to push the tank to its absolute limits by loading it up with cryogenic fluids and test to destruction. Something like 96,000 liters of liquid nitrogen was used for this test campaign and an exploded tank in this instance is very much a good thing and what we wanted to achieve. The team took the tank past MEOP or maximum expected operation pressure at more than seven times atmospheric pressure they've learned in the campaign has been applied to the next stage two tank and currently under production really to bake in structural reliability early as we get closer to our date with the launch pad speaking of baking this is quite literally what our carbon composites team has been up to with our next full scale neutron structures and components the images on this slide here show you the scale of some of the and tank devices being produced more than seven feet in diameter for those circular propellant management devices and the stage two dome being laminated in the bottom section models for neutrons fixed bearing sections are coming together nicely and of course we have another second stage neutron tank being built for our next test stand to go on our next test stand in the first half of 24. And then over to Neutron's Archimedes engine. Another test we're celebrating was a critical combustion test that the team achieved with Neutron's Archimedes engine. There's plenty of benefits to pursuing methane LOX propellants, but it does come with some of its own challenges. The critical piece really in one of the challenges was in using methane and liquid oxygen for Archimedes is getting the pre-burner dialed in. Where generally you want a fuel mixture ratio in a chamber of something like three to one oxygen fuel, We're running an oxygen-rich pre-burner cycle on Archimedes that forces us to flow all of our oxygen through the combustion device. Therefore, our ideal mix is something between 60 to 100 to 1, which is a challenging thing to achieve without all the excess oxygen extinguishing combustion. Archimedes also has an extremely benign operating point, making it great for reliability and reusability, but it does mean that the pressures are low and, ironically, harder for the pre-burner. But I'm happy to say that we met all the operating points that we wanted to on those tests. That was a great accomplishment by the team. At the same time, the Archimedes team had been producing and testing full-scale hardware like valves, chambers, injectors, controllers and assemblies in preparation for development and propulsion tests, making for a really impressive site when all the pieces come together, like you see in the photo on the slide as well. Over to Neutron infrastructure. So supporting infrastructure for Neutron has also scaled quickly over the past few months. Groundworks have been completed in Virginia where a Neutron pad will be. Test facilities and support services will be based there as well. And we're ready for construction to begin at a launch site located close to our key government customers, which will enjoy the benefits of a less congested launch site than obviously the Cape. In Q4, we opened our new engine development center in Long Beach that will support the development and production of the Archimedes engine. And once the engines are completed at EDC, they'll go to go to testing at our stand at NASA Stennis Space Center, where the Neutron team has been busy with site improvements to accept the engine for hotfires. And then finally, Neutron timeline All of these achievements across Q3 and Q4 that I've mentioned, and several others are shown here, have been great to tick off along the neutron timeline. We've completed second stage tank testing, printed key Archimedes engine parts and components, had success with our combustion testing devices, completed qualification testing of our composite over-wrap pressure vessel, run through separation lock deployment testing and stage pusher system testing, completed our actuator motor controller testing, finished tests on our power management module, confirmed Neutron's engine and stage controller functions as it should, completed avionics controller testing, successfully tested the vehicle's thermal protection system, stood up the test rig for the incoming Neutron canard and canard system testing. The team is obviously working hard to keep our ambitious schedule for the rest of the year and into 2024 with some of the next year milestones to look out for, including first stage qualification tanks, test completed, Archimedes engine testing campaign, and the first simulated flight orbit with our hardware connected to our flight computers. Now, we will continue to provide updates on how Neutron is tracking outside our quarterly reviews. Beyond Electron and Neutron, our hypersonic test vehicle, HAST, has seen significant amounts of interest from new and returning government customers, looking to further develop the nation's hypersonic testing capabilities. We've actually booked seven launch contracts in the six months since our HACE program was introduced, including our latest mission announced today. A HACE launch from Virginia from the U.S. Department of Defense Innovation Unit. This mission will demonstrate HACE direct inject capability by deploying its payload during ascent while still within the Earth's atmosphere. A long sought after capability for the nation's strategic defense and civil needs at a fraction of the cost of the current full scale test. Onto space systems now, and we have a new spacecraft order on the books for a confidential Constellation customer that builds on a strong demand for our satellite products. This particular spacecraft will include a full suite of our own satellite components and subsystems, including star trackers, reaction wheels, solar panels, S-band radios, flight software, and so on and so forth. This contract in particular speaks to the popularity and configurability of our spacecraft bus, but the confidence also in our satellite components in the market and our ability to grow as an end-to-end mission partner for the space industry. Now, importantly, we'll also be managing the mission's operations and a further demonstration of our end-to-end business model of building and operating satellites that we build for our customers. Continuing space systems to our largest space system contract now, the $143 million contract we have with MDA GlobalStar, We're getting close to the delivery of our first of 17 spacecraft for the program by the end of Q1 next year. Having cleared significant milestones in the contract in the past few months, the spacecraft critical design review and delivery of a structural thermal model for the customer, we expect to recognize revenue from those invoice payments to MDA in the fourth quarter of 2023. This sets the stage for a more meaningful revenue contribution from this contract as we enter 2024. We continue to pursue increasingly complex and financially needle-moving space system opportunities and are encouraged by progress being made in this part of our business. And we believe that these pursuits position us to continue scaling as an end-to-end space solutions leader. Lastly, in space systems updates, we're proud to have directly supported the success of NASA's groundbreaking Psyche mission launched in October. with our solar panels pairing the spacecraft on its six-year journey into deep space. These solar panels we provided to the mission hold the record for being the largest solar panels ever installed on a NASA JPL satellite, which we're immensely proud of. And then finally into post-quarter achievements, I'm thrilled to welcome retired U.S. Space Force Lieutenant General Nina Amano to Rocket Lab's Board of Directors. Lieutenant General Amano, served more than 35 years in leadership positions across the U.S. Air Force and U.S. Space Force, including being the first lieutenant general officer appointed to and director of staff for the Space Force, where she established America's first new military branch in 72 years. She's had an accomplished and distinguished career in the military and will be an invaluable asset to the board. And now over to Adam for the third quarter financial highlights.

Thanks, Pete. Third quarter 2023 revenue was $67.7 million, which is near the high end of our prior revised guidance of $66 million to $68 million. Third quarter 2023 revenue reflects sequential growth of 9%, the result of three launches and continued growth in our space systems business. Our launch services segment delivered revenue of $21.3 million in the quarter from three launches and is in line with post-anomaly revised guidance of $22 million, with slight underage due to timing of revenue under a launch study contract. The resulting average revenue per launch came in at $7.1 million, below our target average selling price of $7.5 million for 2023, and the result of less favorable mix in the quarter. Our current backlog continues to reflect our target average revenue per launch with variability tied to LSA volume commitments, launch location, and unique mission assurance requirements. Our space system segment delivered $46.3 million in the quarter, which was up 17% sequentially and modestly above the high end of our prior revised guidance range of $44 million to $46 million, driven by a step up in our MBA contract revenue offset somewhat by a reduction in our components business, which is poised to rebound in the fourth quarter guide that we'll discuss later. Now, turning to gross margin, GAAP gross margin for the third quarter was 22.1%, above the high end of our prior revised guidance range of 18 to 20%. Non-GAAP gross margin for the third quarter was 29.5%, which was also above our prior revised guidance range of 26 to 28%. GAAP and non-GAAP gross margin improvements relative to our revised Q3 2023 guidance reflect continued efficiencies in both our launch and satellite manufacturing businesses. We ended Q3 with production-related headcount of 816, up 49 from the prior quarter. We also note that non-GAAP gross margins reflect a 430 basis point improvement versus Q2 2023 when adjusting for Q2's one-time $4.1 million release of a loss reserve related to a legacy launch contract. We're encouraged by the trend in gross margin improvement and expect this trend to continue into 2024 as we return to launch and resume growth in Electron's launch cadence against our strong and growing launch backlog. Turning to backlog, we ended Q3 2023 with $582.4 million of total backlog, with launch backlog of $250.7 million and space systems backlog of $331.7 million. Relative to Q2 2023, total backlog was up 9% sequentially, or $48.1 million, thanks to healthy bookings in our launch business, partially offset by declines in space systems. For launch specifically, backlog was up 55% sequentially, or $88.8 million, as Electron continues to benefit from return orders of both commercial and HACE customers. For space systems, backlog was down 11% sequentially, or $40.7 million, as we continue to work through our larger satellite manufacturing contracts, and the timing of additions to Space Systems' backlog are lumpy due to the increasing complexity and magnitude of these contract opportunities. We expect approximately 57% of current backlog to be recognized as revenues within 12 months, and expect continued meaningful growth in our backlog as we exit 2023 and progress through 2024, thanks to continued demand for our Electron platform, as well as anticipated orders for significant satellite manufacturing opportunities we've aggressively been pursuing over the last year or so. Turning to operating expenses, GAAP operating expenses for the third quarter of 2023 were $53.8 million, modestly above the high end of our original and unrevised guidance range of $51 to $53 million. Non-GAAP operating expenses for the third quarter were $39.8 million, which is at the high end of our original and unrevised guidance range of $38 to $40 million. The decreases in both GAAP and non-GAAP operating expenses versus the second quarter of 2023 were primarily driven by Contra R&D credits related to neutron upper stage development from our U.S. government partners, partially offset by higher neutron development spending, increases in headcount, and higher depreciation and amortization expenses. In SG&A, GAAP expenses decreased $1.5 million quarter-on-quarter due to a change in continued consideration related to our PSC acquisition due to a lower average stock price in the quarter. Non-GAAP SG&A expenses increased by $700,000, primarily due to increases in headcount, along with a step-up in depreciation and amortization primarily related to additions to corporate IT and security infrastructure to further enable efficient scaling of the business. Q3 ending SG&A headcount was 236, representing an increase of 8 from the prior quarter. In R&D specifically, GAAP expenses were down $4.4 million quarter-on-quarter to the increased contra-R&D credits related to the previously referenced Neutron upper stage development, partially offset by a step-up in Neutron development spending, and non-GAAP expenses were down $4.3 million quarter-on-quarter, driven similarly to GAAP expenses by Neutron-related contra-R&D credit and development spend. Q3 ending R&D headcount was 520, representing an increase of two from the prior quarter. In summary, total third quarter headcount was 1,572, up 59 heads from the prior quarter. Purchases of property, equipment, and capitalized software licenses was $21 million in the third quarter of 2023, an increase from $10.6 million in the second quarter of 2023. The sequential increase was due to our continued investment in neutron research, testing and production infrastructure projects, along with expansion of our satellite production and space solar solutions capacity. Cash consumed from operations was $25.2 million in the third quarter of 2023, compared to $6.1 million in the second quarter of 2023. The sequential increase of $19.1 million was driven primarily by timing of receipts and payments associated with our satellite production programs which for some of our larger programs have significant periods between milestone achievement, invoicing, and ultimately collections, which at the end of the day are purely timing related. More specifically, Q2 was a quarter that benefited from a working capital dynamic where we collected on material milestone invoices that were invoiced in the prior quarter, where payment terms are more lengthy than our target 30 to 45 days. Cash consumed by asset acquisition and business combinations was $800,000 in the third quarter of 2023. a decrease from $16.1 million in the second quarter of 2023. The sequential decrease of $15.3 million was driven by the majority of our Virgin Orbit select asset acquisitions being realized in the second quarter. Overall, non-GAAP free cash flow, defined as GAAP operating cash flow reduced by purchases of property equipment and capitalized software in the third quarter of 2023, was a use of $47 million, compared to $16.7 million in the second quarter of 2023. or a more apples-to-apples comparison of $32.8 million when including the impact of our acquisition of select Virgin Orbit assets, most of which were classified as PP&E. The material step-up in negative non-cash free, negative free cash flow was, as noted in my early GAAP operating cash flow commentary, was a result of lumpy timing of payments and receipts associated with our space systems manufacturing operations, and we expect a reversal of this negative working capital cycle in early 2024. The ending balance of cash, cash equivalents, restricted cash, and market securities was $374 million at the end of the third quarter of 2023. Reflecting on the past four quarters, we have made meaningful progress towards our long-term financial model. We have delivered consistent revenue growth, and when adjusting for the one-time release of a loss reserve in Q2, gross margin expansion, and shrinking adjusted EBITDA losses each quarter. With our strong launch manifest and greater contribution from Space Systems' contract execution in 2024, we expect this trend to continue. Overall, we expect gross margin trends will continue to improve over time, thanks to the same factors that have helped drive improvement we've seen this year. In terms of when we can get to adjusted EBITDA breakeven, neutron investment, especially R&D spend, continues to be the pacing item to achieving this critical milestone. although we view that Rocket Lab has demonstrated that its existing businesses are on a trajectory to offset the weight of this neutron investment spend. With that, let's turn to our guidance for the fourth quarter of 2023. We expect revenue in the fourth quarter to range between $65 and $69 million, which reflects $48.5 to $52.5 million of contribution from space systems and $16.5 million from launch services, which assumes two launches. As referenced earlier, based on our manifested launch backlog, we now expect 11 launches in 2023 and 22 launches in 2024, with an expectation that our average selling price that continues to trend towards our current target of $7.5 million through the remainder of 2023 and into 2024. We expect fourth quarter GAAP gross margin to range between 24% to 26% and non-GAAP gross margin to range between 30% to 32%. These forecasted GAAP and non-GAAP gross margin improvements reflect a favorable mix between launch and space systems, along with a favorable mix within space systems. We expect fourth quarter GAAP operating expenses to range between $61 and $63 million, and non-GAAP operating expenses to range between $50 and $52 million. The quarter-on-quarter increases are driven primarily by having recognized a substantial amount of Contra R&D credit related to our neutron upper stage development agreement with the US Space Force in the prior quarter, along with increases in staff costs, prototyping, and material spend as we continue ramping our neutron development program. We expect fourth quarter GAAP and non-GAAP net interest expense to be $2 million. We expect fourth quarter adjusted EBITDA loss to range between $23 and $27 million, and basic shares outstanding to be approximately 487 million shares. Additionally, the unique situation created by the anomaly and related pent-up impacts to the launch manifest as we prepare to return to flight and head into 2024, combined with better visibility on space systems program execution and revenue recognition as we prepare to ship the first spacecraft against the MDA Global Star program in the middle of the first half of 2024, provides us with the visibility and confidence to estimate Q1 2024 revenue to range between $95 million and $105 million. putting in sight our first $100 million revenue quarter. This forecast would be the result of four to five launches in the quarter, yielding between $30 and $37 million of launch revenue, and $65 to $68 million of contribution from space systems. This would represent a significant milestone for the company, and we believe a strong endorsement of the end-to-end space solutions business model we're delivering on. And with that, we'll hand the call over to the operator for questions.

Thank you. At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad. Your first question comes from the line of Edison Yu with Deutsche Bank. Please go ahead.

Thanks for taking our questions and I appreciate the level of detail provided on the investigation. First question on the manifest for next year. Can you give us a sense of your confidence level on the 22? Is that sort of your base case? Or in other words, the ranges are 20 to 24 and the midpoint would be 22? Or do you need kind of everything to go right to hit that 22 target?

Well, hey, Edison. As with any launch contract, right? we are always somewhat susceptible to, you know, factors that we can't control. Like, you know, customer readiness is always a big one. You know, the customers need to turn up with their satellites on time. You know, weather and of course, you know, as I mentioned in my commentary, we have to execute from a manufacturing standpoint. But I think the key takeaway there is, you know, we have a completely sold out manifest for next year at a number that is really solid. So I would say that we have to execute, and there's always some uncertainty from some things that we don't control, but that's certainly what we're targeting.

And then just a follow-up to that, can you give us a sense or maybe a bridge on the margin in launch? You had a very good quarter, actually, in 3Q. How does that margin trajectory look if you can get to that 22 launch cadence?

I'll take it past that, Pete. So, yeah, I mean, we've long stated that when we get to our target model for launch, non-GAAP gross margins of around 50%, that requires launching 24 times a year. So, you know, we're going to make significant progress towards that as we launch, as we kind of strike at that 22 number next year. So, you know, and if you look at any given quarter, if we have, again, six launches in the quarter, that should be, you know, at or very close to our long-term, you know, 50% non-GAAP gross margin target.

Got it. And if I could just speak one more on Neutron, correct the milestones. Do we feel comfortable with the timeline? Should we interpret that as you guys feeling comfortable with the timeline on next year?

Well, there's still a lot of work to go, and the year's not finished yet, so we're pushing hard. But at this stage, we're not making any adjustments to our predicted timeline. I'd just highlight there are still some really significant tests to be completed, but right now we're not making any major changes. Got it.

Thank you very much. Thank you. Your next question comes from the line of Matt Akers with Wells Fargo. Please go ahead.

Yeah. Hey, guys. Good afternoon. Thanks for the question. I wanted to ask on Neutron, after that first launch, what sort of rate do you envision doing Neutron launches and what rate are you kind of capacitized to support now? At what point would you need to sort of add capacity there?

Yeah, it's a good question. So, um, we're not trying to do anything Herculean on, on Neutron, you know, we've, we've lived through the pain of, of creating a launch vehicle and standing it up and bringing it in to production. So it follows a pretty, pretty similar, cadence profile to what we were able to achieve with Electron. So we do a test flight or a couple of test flights and then move into sort of three or four a year and then continue to bootstrap and grow that and really follow the same model that we followed with Electron where we launch a little bit, we generate some revenue and we make improvements to the vehicle and we make improvements to the infrastructure. And we found that to be by far the most cost-effective way rather than going out and building a giant factory to do huge volumes from day one and just consuming a tremendous amount of capital. We've kind of always bootstrapped our way along and increased flight rate and cadence along with that and facilities along with that.

Got it. Thanks. That's helpful. And then if I could ask on, I guess, pre-cash flow, How much sort of additional expense was there around kind of the investigation in Q3 and maybe into Q4? And sort of how are you thinking about free cash flow into 2024?

Yeah, you know, Matt, we didn't see a tremendous amount of, you know, I would say resource diversion. A lot of these kind of anomaly investigations take, you know, a select group of very capable people to dive in and do the analysis and investigation. There's not a lot of capital spend associated with it, and we continue to keep our foot on the gas when it came to production of Electron. So the anomaly investigation itself really won't have any kind of noticeable material effect on cash flow in the fourth quarter. I think the biggest thing for us for cash flow is really around timing for the big space systems contracts. I mean, if you look at our You know, our launch business, you know, people, you know, the typical model is, you know, you get people pay a 10% deposit at contract signing, and then there's milestone payments along the way. And typically, you know, there's only 10% left to collect at the time that we actually launch the mission. So that's always been a good cash flow model. It's just all about that getting that business to scale, which, again, we're making great strides at being able to do. you know, when it comes to state systems, they're large contracts. You know, I mentioned lumpy a few times in, in prepared commentary. And that's really, really true because, you know, you can have the achievement, you have some delays of achievement of critical design milestones. You've got to get through those gates before you can turn that over into, you know, the AIT phase of the program where you're doing the assembly integration and test side of it. And so you can have periods, depending on what your payment terms are with your customers. And, you know, on our largest space systems contracts, you know, we're dealing with pretty sophisticated organizations that, you know, had pretty tough terms. It was, you know, we were chasing our first, you know, large and meaningful space systems contract. So we weren't necessarily in the best position to negotiate those types of terms to our advantage. So it leads to some, you know, some, I would say some, you know, a little bit of interim to near-term pain on that side. And we've experienced that in 2023. We expect that dynamic from the operating parts of our business to turn around and be much stronger from a cash flow perspective in 2024. Now, we'll continue to see consumption when it comes to Neutron, particularly around prototyping and particularly around infrastructure, because we still have infrastructure investments that we need to continue to make to prepare for that first launch at the end of 2024.

That's great. Thanks for the call, Eric.

Thank you. Your next question comes from the line of Kai Von Rumor with TD Cowan. Please go ahead.

Yes. Thanks so much. So first quarter, it looks like you have a target price of $7.5 million. Is that the price likely to be for the entire year? Or given the vigor and demand, are you guys increasing prices as we move forward? And if so, by how much?

Yeah, it's a good question, Kai. So the manifest that we showed in the deck, I mean, that is confirmed backlog. Pricing is not in question, right? So that does drive to our long-term pricing model in 2024. And that's all contracts, of course, that we've been continuing to add to the backlog. As we move forward, we certainly are seeing an environment that allows us to drive for firmer pricing. You know, as being one of the few truly operational launch providers, you know, we do have – we do see pricing power coming in our direction, and so we expect that longer term, you know, we'll see upward movement to the ASP for Electron launches. But I would say, again, there's really no volatility of the ones that we showed on the manifest because they're all kind of, they're booked and they're firm price.

Great. But with, I guess, not to beat a horse, but with Virgin Orbit basically gone, how come you don't increase prices? And when you talk about the longer term, At what point, you know, what would cause you to raise the price? I mean, will you then raise it? They're all going to go from seven and a half to eight. Or how should I think about how that works? And how does it take into account inflation?

I'll let Pete weigh in on this one.

Yeah, I mean, we kind of have a standard, you know, escalation for that, you know, to deal with inflation year on year. And, you know, certain missions, not all missions are the same, kind of to Adam's point, is, you know, when we do, you know, some of the very complicated government and hypersonic missions, you know, they command a much higher price than a mission where, you know, we're flying, someone's bought six rockets from us and we're flying the same satellite again and again.

Right.

So there's kind of variability, and I would say that we test the market pretty fairly on that pricing range, but still try to provide the right price for the product and services that they're expecting from us.

Thank you. I just have one last one. So out of the 22 launches, how many are from Virginia?

I believe right now, I think there are at least two, maybe three launches currently manifested for Virginia.

Got it. Thank you.

Thank you. Your next question comes from the line of Suji Da Silva with Roth MKM. Please go ahead.

Hi, Peter. Hi, Adam. My questions are on the space systems, and thanks for the 1Q guidance there. The increase in 1Q versus 4Q, is that primarily the GSAT MDA program ramping up, or is that the second customer contributing any color there on the increase guided for 1Q would be helpful?

Yeah, there's a few things contributing to that. Obviously, the higher launch cadence, you know, as we kind of get back to the pad, as Pete said, on November 28th. So, it's really coming across the board. We've got strength in Electron that's coming through and contributing. On the space system side, there's a few things that are going on there, but the biggest element is really as the NDA Global Star vehicles, again, start coming off the production line. We have a much clearer line of sight to the revenue recognition as, you know, Bill materials are pulled to the production floor to assemble the spacecraft and do the testing and so forth. So it's a, you know, there was a bit of uncertainty as we progressed through 2023, because you have, you know, milestones for when you get and get through key program reviews like PDRs and CDRs, and you really can't progress until you get through those. Once you have that, then it's a much more, you know, nothing is easy in this business, but there's a much more kind of predictable formulaic, you know, you've got almost a day for day schedule. of how you can kind of start to assemble based on the labor that you have and the bond that you've received or ordered and when it's scheduled to arrive. So it's a much easier thing to predict once you get past those key design pieces and you move into AIT. So I would say that the majority of the step up in the biggest piece, I would say, maybe not the majority, but the biggest piece of the step up in Q1 is coming from that Global Start MBA contract, but there is contribution from our other satellite programs as well.

Okay, great. And then my other question is on the manufacturing part of space systems as well. With the MDA contract with the 17 satellites and then a second customer coming on, I'm wondering what framework you should think about the capacity per quarter of the number of satellites you can make, if that's the right way to think about how that business can grow over time.

Yeah, I mean, I wouldn't necessarily just think about capacity because You know, the kind of spacecraft projects we take on, you know, they're not just sort of cheap and cheerful, easy metal bending kind of jobs. You know, we go into Mars and we've got, you know, the MDA, Global Star is a great example. It's a very deeply complicated mission in a horrible radiation environment. So I wouldn't be necessarily tracking just the volume of spacecraft, but also the complexity of the missions, because ultimately that drives a lot of value. And even the latest mission that we announced here today, the latest spacecraft, that's not an easy build. So we tend to be very successful and do very well and create a lot of value in those missions. There's much higher fidelity, much, much trickier missions to do. So I wouldn't just use a volume kind of metric to kind of measure us.

Okay. Understood, Peter. Thanks, guys.

Cool.

Thanks, Suji.

Thank you. Your next question comes from the line of Jason Gursky with Citi. Please go ahead.

Yeah, hey there. Good afternoon there, buddy. Adam, really quickly on the balance sheet, What are the current thoughts or expectations around that $100 million that's gone current here? Are we looking to refi that, or are we going to be taking some cash off the balance sheet to address that? Just want to figure that out from a modeling perspective.

Yeah, no, we're actively in the process of looking to refinance that. We've got several options. We're pretty far down the path with a few different providers. And they range from doing, you know, equipment lines to kind of, you know, similar structures to term loans that the Herc Dewey's loan represented. But, yeah, no, we're looking to refinance that. I think, you know, we're hopeful that we'll get that done, you know, in hopefully the next few weeks and, you know, again, almost certainly before the end of the year.

Okay, great. And then I want to make sure that I fully understand the comments on Electron for next year. Are you, at this point, fully sold out? Or if you had a couple of customers that wanted a quick-turn mission, would you have the launch vehicles available to do that? Or are you just kind of telling customers, okay, we're sold out for 24, got to look to 25?

Well, look, we'll always look for, you know, opportunistic opportunities. I mean, it's fair to say that production will be at near a full capacity. next year as we deliver on those but also as you guys see and we experience some customers slip out and it's very easy for a customer to have an issue in a TVAC cycle and shift out six months which would create an open opportunity so we never say no to customers and although the manifest is essentially full It doesn't mean that there's not going to be an opportunity open through the year. So, yeah, we always keep that in our discretion.

Right. Okay. And then last one for me, just on Neutron. Can you just spend a few minutes talking about your current views on the demand outlook for that vehicle and, you know, when in its development cycle would you expect You know, maybe to get your first order or two is kind of proving out the concept of what you're doing here. And then, you know, demand is as good as you think it might be. I'm just trying to balance that against the comment that we're going to bootstrap capacity there. Why aren't we running out and trying to fulfill as much demand as possible? So, just kind of general view of the current demand environment for Neutron. when we might expect orders and what kind of levers can you pull to more quickly come in and pull in some of that demand if you think it's really strong? Thanks.

Yeah, that's a great question, Jason. So look, on the order side, until a vehicle is kind of proven and flying, any launch contract that you can sign is basically worthless. we can go and sign a launch contract tomorrow with a number of customers that will be like, you know, some thousand dollars down and cancelable any time. But that really doesn't mean anything. And, you know, the one thing that you will always get from us is like, you know, real backlogs and real numbers. So, you know, it's almost pointless trying to sign something like that now. And then even if you do, we saw this with Electron, right? An unproven vehicle, you just take a massive haircut. So you have to do really low introductory pricing. And with Electron, we carried some of that introductory pricing on for years. And we managed to flush it out this year. But for years, we had some really bad missions. So I just don't want to go down that road again. But rather, When you have a flight-proven product in a launch-constrained market, then it becomes very valuable. So I'd much rather arrive to the market with something that works, that commands a premium, than fill my manifest up with a whole bunch of low-value launches now. And frankly, the customers that we talk to aren't looking to buy one or two launches. They're looking to buy quite a bit of capacity. to fill their constellation or their other needs. So we also need to see them delivering and being on time at the pad because if you commit to, you know, one customer and commit a whole bunch of manifest and they're late, then that's not a happy situation either. So, you know, when we're kind of reached a point of, you know, of, critical maturity such that somebody is willing to pay real deposits and write real contracts then that's a good time and you'll see those kind of announcements from us but until then I just don't want to put us in a position where we've just got a whole bunch of rubbish and kind of solidified launch on a manifest that might look good in a slide but actually isn't that real And then on the kind of the bootstrapping, you know, why not go out and just prepare for a massive volume? Look, I think I'd love to do that. That'd be awesome. But the reality is that, you know, big launch vehicles, they're easier to build than a small launch vehicle, but the challenge is they just consume huge amounts of capital. And, you know, we have to be diligent in the fact to use the capital we have wisely to and kind of use it, you know, methodically to make sure that we actually put a vehicle on the pad and we're able to scale it in a, you know, really safe and methodical sense. If you had no constraints on capital, then, of course, you'd go out and build big factories and big pads and away you would go. But, you know, it's not really an option and nor is it really our style. So... We like to put one on the pad, then we'll work through the block upgrades and the improvements that inevitably will happen, and then slowly ramp production over the coming years to meet demand.

That's great. Thanks, Peter. Appreciate it.

All right. Thank you. Your next question comes from the line of Christine Lewag with Morgan Stanley. Please go ahead.

Good evening, guys. Peter, you know, following up on Jason's question there on the neutron order, so it sounds like you don't anticipate orders to occur until after neutron has its first flight. Is that fair?

Hey, Christy. No, they could occur earlier, but I guess what I'm saying is that... you know, the two things need to be true, that we need to have confidence that the spacecraft will be delivered and they need to have confidence in us. And, you know, at this stage of the development program, you know, as I mentioned before, there's still a number of critical milestones to go through. So, you know, I wouldn't expect anybody to put huge deposits down on a vehicle in this kind of stage of development. And I think, yeah, that's just the reality.

So I guess another way to think about it is it sounds like you guys are prioritizing better pricing in the long term at the expense of building a backlog now and providing significant discounts, which could take years to offset. So if you're confident in your product, just wait until after launch to get better pricing. Okay, great. That's a very helpful color. Sorry, go ahead.

Well, I live... I lived through that with Electron, right, and those contracts can just be really painful to flush out of the system. And there's no argument that there's going to be huge demand, and there is huge demand. There's zero argument about that. So, as I mentioned before, the smart thing to do is arrive with a flight-proven product and not have to do kind of, you know, crazy things with pricing and destroy the business model over it.

Great. That's helpful, Culler. And maybe moving to space systems, it sounds like your Global Star contract through MDA as a subcontractor has been progressing well. MDA recently won a $2 billion Telesat LEO contract. How much of an opportunity is there for you to be a subcontractor to that program or similar programs of that size is a pretty meaningful consolation size.

Yeah, look, I can't really comment on that program in particular, but what I will say is we actively are pursuing many of these large programs, both as subcontractors and also as primes. So yeah, there's a real opportunity for us There, obviously, the large volume, but also the constraint on some of those critical components like solar is a huge constraint within the space industry right now, and we obviously own one of three supplies of that particular technology in the world. So, yeah, we see a lot of opportunity there, and we're actively and aggressively pursuing these large constellations as like I say, as a supplier and as a prime.

Great. And if I could ask one last one, you know, you mentioned Solero. With Solero, where are margins trending in the quarter? And can you provide any update on your tracking towards the 30% gross margin target for that business?

Yeah, I can answer that.

Yeah, Christine. So, you know, we've made very good progress towards our gross margin goals for that business. And we said that two years post-acquisition, we wanted to be at 30 points of non-GAAP gross margin. I think we're going to trail that by, I think, by maybe a couple of quarters. But the progression has been pretty clear and pretty steady. And, you know, we can definitely... But we've made improvements to get better margin on the existing backlog that's in place when we acquired the company. But I would say in the course of the last year in particular, you know, we've got a pretty stringent process for approving new customer deals. And, you know, I don't believe that we've really seen, I can't recall the last time that we approved a deal that was below that 30% gross margin target. In fact, we're kind of toying with how to start pushing that target a little bit further north from that. Because long-term, that's not our goal to get 30 points. We view that as having a great opportunity for really healthy long-term margins. But great progress towards the 30 points. I think we're going to hit that at some point in 2024. And again, all of our kind of building backlog is 100% supportive of that.

Great. Thank you very much, guys. Thank you.

Thank you. Your next question comes from the line of Ronald Epstein with Bank of America. Please go ahead.

Hey, guys. Good afternoon. Good evening. A lot's been asked. I'm the last guy, so I'll be quick because I guess we're running over on time. But here's a question for you. I mean, a lot of the space startup companies have been having difficulty, and you guys were able to pick up some interesting assets from – Virgin Orbit. When you look at the space systems business, is there talent you can pick up in the satellite world in terms of engineers and other things? I mean, some of the small satellite companies, their stocks are trading below, their equity is trading below a dollar per share. I would imagine it must be a pretty good environment to recruit talent in. I don't know if you can speak to that, but as you try to grow that business, are you able to pick up some talent?

Yeah, Ron, absolutely. That is true. And, you know, great talent attracts great talent as well. And the team that we've built there is, well, it's simply awesome. So yeah, That's been true. What I will say, though, is I think we've mentioned before the bar to get into Rocket Lab is extraordinarily high. I mean, it's twice as hard. We did the metrics, and it's twice as hard to get into Rocket Lab than it is to get into Harvard. So we're very, very fussy about the folks that we bring on board. But certainly, there's opportunities there for new folks. you know, as some of those other businesses fail.

And then maybe just following up on Neutron, because this came up a couple times in some of the other questions, what are some of the milestones we should be looking for? You know, as we look out into next year as kind of outsiders, you know, not inside the company, you know, what boxes can we check and say, hey, yeah, it's trucking right along to feel good about where the program's going?

I presume you're talking about Neutron here, Ron? Yeah, excuse me, yeah, neutron. Yeah, yeah, yep, yep, yep. Yeah, so we've kind of laid out a few. I mean, obviously, engines are always a long pole in the tent. So, you know, look for hot fires and kind of, you know, completions of qual programs and things like that. You know, we achieved probably, you know, it's understated, but, you know, the second stage tank test was a huge milestone because although it just kind of looks like a, you know, a big black thing that we, We filled and made frosty and then blew it up. The reality is that that validated like so many material properties, so many manufacturing processes, so much of the kind of core underlying materials and technology and designs were all validated by that test and by that milestone. So sometimes it's kind of a little bit difficult. And then I tried this earnings to give some color about some of the other tests that are going on. And, you know, there's just heaps and heaps going on and so many tests and milestones met every day that it's kind of hard to, you know, to get them all on paper. But, I mean, the key ones is, you know, fire and then fire reliably, you know, out of Archimedes and, you know, continued neutron structures. Keep looking for things that get frosty because that's important milestones. And then I would say, you know, next year is start to look for stuff coming out of the ground. Start to watch us pour concrete and things like that because the vehicle drives the ground infrastructure enormously. So if the vehicle is mature, then the ground infrastructure can start to be built. So they sort of go hand in hand and one leads the other. So if we're starting to pour concrete, then I would feel good and stuff like that.

Great.

Cool.

Thank you very much.

Thanks, Ron.

Thank you. Your next question comes from the line of Andres Shepherd with Cantor Fitzgerald. Please go ahead.

Hey, good afternoon, everyone. Thanks for taking our question. I appreciate you guys getting us in, and congratulations on the quarter. Most of our questions have been asked, so maybe just one two-part question. First, with the roughly $400 million in cash and equivalents, would you mind just reminding us what is the expected run rate there? And then secondly, you provided the revenue guidance for Q1, as well as your updated backlog, with 57% of that backlog being recognized in the first 12 months. Can you give us any sort of ideas or directions on how we should be thinking about that backlog being recognized in terms of seasonality or second half, first half, any color that you might be able to give us. Thank you very much.

Sure. Yeah.

I'll take, I'll take the, the first one and I'll keep mine both kind of China in the second, but yeah, with the cash, you know, we talked about the fact that, you know, we're 2024 from our space systems business should be a much more cash positive story for us. You know, the nature of the biggest program, which was the MBA Global Star, had a bunch of, you know, unique and, you know, quite honestly, onerous terms when it came to timing of us getting paid. You know, we've now kind of crossed the river on that one, if you will, and we're on the better side of that as we now, again, move into the AIT phase. So, you know, we believe we've got sufficient liquidity to do exactly what we said we were going to do when we came public, which is that we want to broaden out our space systems business. We've acquired you know, three businesses coming public. We, you know, we've also, you know, committed to getting, you know, having enough capital to get the Neutron product to the pad. That's also well within the scope of what we've called out. But what I would say is, you know, that we still have a significant amount of capital to consume in getting Neutron to the pad, you know, by the end of next year. Now, again, we're well funded to do that. The timing of that is a little bit difficult to predict because Pete's kind of gone through some of the milestones and his programs. They can move around a bit. There's different ways to kind of get there. There's some make versus buy decisions that take place that can affect how much cash goes out the door. So I would say that It's difficult to predict and also going to be dependent upon other business that we close as we progress through the remainder of 2023 and 2024 and what those cash characteristics look like. So right now, I would say that our Q3 cash consumption number was kind of a high point that we've seen thus far. That could hover around in that range for a quarter or so, but then we start to see that significantly trend down as we get past these key milestones and Neutron gets closer and closer and closer to the pad. The biggest factor right now in 2024 is really going to be progress towards those neutron milestones from a development perspective and also from an infrastructure perspective, as Pete mentioned. But again, we don't have any concerns right now that we don't have the runway to get to where we need to go. As far as the backlog and how that's going to be realized and seasonality and so forth, we don't really have a lot of view on seasonality. We haven't seen kind of true seasonality in our business. We've seen a lot of volatility. which has really been more a function for what we can tell, you know, from some of our smaller customers, it's the access to funding either through, you know, their government partner programs, whether it's through VC cycles and kind of, you know, the success in raising funds and so forth. So we really see more effect on revenue as our customers kind of go through their kind of cash, kind of rich and cash poor cycles. But again, I think that what you'll see is if we've gone through an elevated quarter, We'll probably have another couple of elevated quarters before it starts to get much better, and we start to, again, I'd say not consume as much cash as we have, again, function of programs where we are in their life cycles and just neutron developments.

Got it. Thank you. That's super helpful and super insightful. Thanks again, and congratulations on the quarter. I'll pass it on.

Thanks, Andre. Thanks, Andre. Thank you. Your next question comes from the line of Eric Rasmussen with Stifel. Please go ahead.

Yeah, thanks for taking the questions. Maybe just on the HAST rocket, you said you secured seven missions in the past six months. Does this change the number of missions that you had previously thought you would do? I mean, you've seen things accelerating?

Yeah, I mean, we always knew that there was demand for this product, but I would say that we're pleasantly surprised to see the demand grow the way it's growing. That first flight was an important one to demonstrate the capability. There's a bit of, I would say, hysteresis in the way government customers move to new kind of products like this, and that was all kind of dissolved with a very successful flight. we're kind of reaping the benefits of that. And the vehicle is just able to do a bunch of stuff that has been inaccessible before, being a liquid, throttleable vehicle. So it really opens the aperture for what can be done and development of systems that really, in some respects, can't be developed anywhere else in the world. So we're pleasantly surprised to see the pickup on the program.

great maybe just um you made an announcement you opened up the an engine development center um in the former virgin orbit assets facility um what sort of production capacity uh can you expect to achieve once operational and what is the timeline to maybe hit that is you know maybe you call it an annual run rate yeah look whether the virgin orbit facility was was a bit of a boon really because um

there is more equipment and capacity there than we can see in the future. For an engine facility, it's gold plated. So yeah, I mean, there's no numbers that we're working with at the moment that would see that EDC facility reach capacity.

OK, great. Thank you.

Thank you. Ladies and gentlemen, there are no further questions at this time. I will now turn the call back over to Peter Beck for closing remarks. Please go ahead.

Okay, that wraps up today's presentation. Thank you everyone for joining us for the call. Rocket Lab will be participating in some up-and-coming conferences displayed on the sheet there and look forward to the opportunity to share more exciting news and updates with you then.

Thanks Ian and we look forward to speaking to you soon. Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect your lines.