Rocket Lab Corporation

Good day, and welcome to the Rocket Lab Corporation Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Muriel Baker, Director of Corporate and Launch Communications. Please go ahead.

Thank you. Hello and welcome to today's conference call to discuss Rocket Lab's third quarter 2025 financial results, business highlights, and other updates. 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 harbour protection from liability established by the 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 and our supplemental materials are reconciliations of these historical non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. This call is also being webcast with a supporting presentation and a replay, and a copy of the presentation will be available on our website. Our speakers today are Rocket Lab Founder and Chief Executive Officer Sir Peter Beck, as well as Chief Financial Officer Adam Spice. They will be discussing key business highlights, including updates on our launch and space systems programs. And we will discuss financial highlights and outlook before we finish by taking questions. So with that, let me turn the call over to Sir Peter.

Thanks Muriel and thanks everybody for joining us today. It was another record-breaking quarter for Rocket Lab. We're up 48% year-on-year with $155 million in revenue and strong gross margins as well. This is the second time in a row we've delivered record-breaking growth quarter by quarter, once again demonstrating our relentless execution. Electron demand is accelerating faster than ever before and the momentum continues to build with our largest launch contract backlog yet, with 49 launches on contract. We've just launched our 16th mission this year, equaling last year's launch record, and we've got another launch scheduled in the coming days that will take us to 17, with more to come and a new precedent sent for Electron annual launch cadence, and we see this precedent continue in 2026 as well. Amazing performance is also the theme across our space systems groups. Our twin spacecraft for NASA Mars mission are integrated onto its launch vehicle and are ready for liftoff in Cape Canaveral in the coming days. And for Neutron, we've got a full update to share on our progress to the pad following the official opening of the Launch Complex 3 in August, ticking off a critical milestone in the program. We'll share more detail about that in the upcoming slides. So before we get into it, I want to zoom out and talk about our performance over the last five years, given this is sort of a little bit of a wrap-up for the year in some respects. Execution and reliability are critical in the space industry, but even more so in the public markets. And our ability to consistently deliver results for our customers, expand our capabilities, and grow our revenue and gross margins really sets us apart in the sector as we set new benchmarks for operational and financial success. From $35 million in revenue just five years ago to an implied four-year guidance of roughly $600 million at the midpoint, an approximately 1,600% increase over that time period. And our gross margins are looking great too, from negative 34% gap gross margin in 2020 to the midpoint of our implied four-year guidance of slightly over 34% positive in 2025, and looking great to exit 25 with an even higher 37% to 39% in the fourth quarter. Our position as a leading end-to-end space company has never been stronger. We're a trusted disruptor of the industry, and we're proving that we can move quickly to scale our products and our services across both launch and space systems. And that focus is translating into the double-digit growth results you're seeing on the page here. Right, on to Electron. So as the title says, it's been a record-breaking quarter for launch contracts. 17 dedicated launches were signed in just three months, but all but two of them were assigned with international customers from Japan, Korea, and Europe. Those new missions, plus the ones already on the books for international space agencies like ESA and JAXA, prove Electron is not just a leading launch vehicle in the United States, but it's becoming the preferred small launch vehicle globally. Electron's business model is one of schedule flexibility for our customers, and you can see from these new bookings, demand is stronger and growing for Electron. For HAST, our hypersonic test vehicle continues to redefine the way technology is being developed and tested in the United States. In Q3, we launched back-to-back missions from Launch Complex 2 in Virginia with 100% mission success, enabling technology to be tested in real-life hypersonic environments, which is a critical capability for the next generation defense programs like Golden Dome. By leveraging our commercial speed, our vertical integration, and our execution history with Electron, HACE delivers the proven agility and responsiveness that these programs demand. Speaking of momentum, we're on track to fly our 17th launch of the year in the next few days, which will officially surpass our previous annual launch record set in 2024. This place is only possible because we are very intentional about designing Electron for scale. This extends beyond the vehicle itself to all the supporting infrastructure like manufacturing, processing, and operating high-volume launch range infrastructure as well. It's an important approach that we're deploying for Neutron 2, ensuring that we're thinking well beyond first flight. As of right now, there are only three American commercial launch providers who have launched to orbit more than once this year, SpaceX, ULA, and of course us, which really does highlight just how rare Electron's capabilities are. Now let's turn to space systems. Starting off with a little bit of an update for M&A for the quarter. We closed the GEOS deal to create a new payloads business unit, strengthening our offering as a prime contractor for national security programs like Golden Dome and for the Space Development Agency. With our history and expertise in buying and expanding smaller shops to meet industry demand, we're turning our attention now to scaling and new electro-optical and infrared sensors for lucrative future contracts. We're also closer to acquiring laser communications company Menarik. They've completed their financial restructure under German law in August, which was a pivotal moment in the acquisition process and one that brings us nearer to closing out this deal. Rocket Lab has been a force multiplier for the US space industry, and we're ready to bring that same energy to the European space sector with our first European foothold and expansion into Germany. As for what's next, we've built up our dry powder for future M&A with more than a billion in liquidity following at the market offering program implemented in September. It was a very strategic move to lock in capital that will allow us to act quickly on some of the exciting opportunities in the pipeline. We're not ready to reveal the details of these strategic plays just yet, but I can assure you that the pipeline is active. We've always taken a disciplined approach to acquisitions and our successful track record speaks for itself. We've got a bit of a knack for identifying, acquiring, and then integrating businesses that enhance our end-to-end capabilities and make us a stronger competitor for large-scale programs. And that's made us the consolidator of choice for many companies in the space sector. We're often the ones being approached first by companies wanting to join Rocket Lab now because they see the value we create for growth and innovation. Onto our coming space systems missions. We're a few days away from two of our spacecraft launching for the ESCAPADE mission. And the initial launch attempt was unfortunately scrubbed by the launch provider yesterday. But by this time Wednesday, they're scheduled to be launched from Cape Canaveral, and they'll be on their way to Mars. Now, what makes this mission truly groundbreaking is that we're tackling these interplanetary challenges with spacecraft built for an order of magnitude less than the usual cost developed in about one-third of the time. We're proving an entirely new, more accessible model for sending satellites to other planets. In short, this mission is a tough one, both in flight and in the design, but of course we love a challenge. Another program with a big green tick this quarter is our transport layer constellation for the Space Development Agency. which has cleared critical design review to be able to move into spacecraft production now. While existing and fully funded contracts like a half-billion-dollar program can continue under the government shutdown, the situation does continue to have an impact on the timing of new awards for the SDA Tranche 3 constellation. Neutron, all right. Moving on from space systems, let me give you a bit of an update on Neutron for the quarter. Now, I've spent a lot of my time in the recent weeks elbow to elbow with the teams at the various sites for tests for neutron testing. I have to say I'm extremely happy with the progress, but more than that, the thoroughness of the team during this critical qualification and acceptance testing phase. We're into the big meaty bits and the meaty tests where we have whole systems integrated together and large sub-assemblies. This is a time when you find out on the ground what you got right and what you got wrong and of course rather than finding out that during first launch. Now at Rocket Lab we have a proven process for delivering and developing complex space flight hardware. And I think that process speaks for itself with respect to our hardware always looking beautiful and more importantly, always working beautifully. Now our process is meticulous, but it works. Take Electron for example, it's the world's most frequently launched small launch vehicle as we all know, And, you know, we scaled the production and launch of it faster than any other commercial launch vehicle in history, which is great. But if we think about how many others have tried to develop a launcher, the results have been extremely poor. Those who have failed to deliver are numerous. Basically, every new space company except Rocket Lab and SpaceX has failed to build an orbital rocket that is scaled to any kind of launch cadence and is reliable. Now, this is the Rocket Lab process in action, and I've been resolute about sticking to this approach. Now, with all the hardware in front of us now and significant testing programs underway across all parts of the vehicle, we can see we need a little bit more time to retire the risks and stick to the Rocket Lab process. Yep, it might mean things will take a little bit longer, but I wanna give some context here. I mean, the labor cost for the program is about $15 a quarter. which we make back four times over a single launch anyway. So it makes zero sense to change what we know and what is proven to work. So we're aiming to get Neutron to the pad in Q1 next year, if all goes well, with the first launch thereafter. Once again, though, that's provided that myself and the team are confident we have completed Neutron's QUAL testing and acceptance testing program to the Rocket Lab standards. As always, this is a rocket program, so that's been completed at a pace and a cost that nobody has achieved before. And the financial and long-term impacts are insignificant to take a little bit more time to get it right. Now, we've set high expectations for Neutron's first flight. Our aim is to make it to orbit on the first try. You won't see us minimizing some qualifier about us just clearing the pad and claiming success and whatnot. And that means that we don't want to learn something during Neutron's first flight that could be learned on the ground during the testing phase. At the end of the day, Neutron will fly when we're very confident it's ready, and we're not going to break the mold of the rocket lab magic. Now, over the next few slides, I want to take you through some of the testing campaigns we've been running to paint a bit of a picture of what it takes to deliver a reliable rocket to the launch pad. As you've seen for some time, we're very hardware rich across the entire vehicle. Now it's all in sort of assembly and qualification and acceptance testing before it's all brought together under the East Coast sites. Okay, so these pictures are just a snapshot of many of those activities. We're deep diving into the qualification test and acceptance of every major assembly, sub-assembly and system before we get into launch operations. In fact, I'd say we're putting Neutron through an even more extensive barrage of testings than we did Electron because it's not your kind of conventional rocket that we're developing. We have a couple of novel things being, you know, the world first architecture like hungry hippo fairing, suspended second stage, and the vehicle itself is, let's not forget, is the world's largest flying carbon composite structure ever built. So we're making tremendous progress in these structures, testing across all levels of the vehicle. Every one of Neutron's major structures are tested on the ground to the levels that exceed what the rocket may see in flight. This includes testing of our primary structures like propellant tanks, thrust structures, the interstage, pushing them all to their limits to ensure they meet the demands of launch and reusability. Before we can call these qualified, we go through a full run of load cases like axial, lateral, torsional, transient, and combined loads. The main and primary structures must withstand a lift-off of 1.5 million pounds of thrust from the Archimedes engines, the worst cases of aerodynamic loading on the way up as the vehicle goes through Max-Q, and all the separation loads. And then for the structures that come back on stage one, they have to survive all the thermal and aerodynamic re-entry loads too. Now we test secondary and auxiliary systems to the same level of scrutiny as well. This involves pulling and pushing across the same load cases even down to the smallest fixtures and the smallest bracket that holds every device in Neutron's primary structure. A test across both stage one and two structures have yielded a wealth of valuable data, and by anchoring and validating our engineering models through these tests, we're able to uncover and retire technical risks on the ground well before we fly. With Neutron's reusable fixed fairing design and our suspended second stage that passes through it, We're working with a unique architecture that's never been seen on a rocket before, and we've been taking it through its paces to ready the entire system for its first flight. This has included testing the Hungry Hippo's aerodynamic control surfaces, as well as turning the electromechanical actuators and the control systems and all the entire mechanisms. The Hungry Hippo's open and closed systems have passed performance testing, And so is the staging system, systems pneumatic locks and pushes and guides and all the stuff that's inside of second stage that passes through the hungry hippo's mouth. Well, it's been one thing to build these huge assemblies for flight one. The team has also set up the infrastructure for this testing that allows us to get as close to a flight test as we possibly can on the ground. And this is important because it also lays the foundations, not just for the first launch, but flights to and beyond, You can see some of the giant towers in these staging tests on the right-hand side of the slide there. In fact, some people thought we were building a launch site. It was so big. In the neutron flight software and GNC team, we've been flying to orbit virtually almost now for two years, leveraging a proven approach from the Electron program with our own flight software and hardware-in-the-loop testing that integrates physical components with simulated flight environments to validate system-level functionality and performance. In preparation for Neutron's first flight, our operators and engineers have been running virtual test and launch operations week in, week out. We've been exercising our operations team on console, going through static fire operations and launch day operations, so that we can hit the ground running when the vehicle arrives at Launch Complex 3. Our world-class simulation tools, built in-house, allow us to exercise our avionics, GNC, and software tools well in advance of conducting these operations with a fully integrated vehicle. This not only allows us to reduce risk, but also serves as a training platform for our operations team. Combine that with a full suite of vehicle avionics in the loop, and we bring test like you fly to a whole new level. It's all part of the smart, rigorous approach that we apply to every program and mission. Onto Archimedes, since the last engine update, the propulsion team has continued to validate its performance across the entire run box. The upstaging is on the test stand too, and we continue to work for all the qualification testings on these engines and test as you fly configurations as you know. The test cell is operating at a 27 rate, meaning 20 hours a day, seven days a week. The only way you can get through years of qualification you know, always expected for an engine program, is to squeeze years of hours into months. So as you can imagine, no weekends or evenings are left on the table at the Stennis Test Facility. Now onto our ocean recovery platform for Neutron. While return on investment barge won't be used for the first flight, the recovery team is making great progress on having it ready for flight two. The three main propulsion generating sets for the 400 foot length barge recently passed factory acceptance testing and have been cleared to be sent to the shipyard in Louisiana. Each of Return On Investment 3 diesel electric gensets are capable of more than three megawatts of electrical power. Combined, that's more than 2.5 times the total electricity capacity for all of Launch Complex 3, so these things are big. All in all, Return On Investment is looking good to enter service next year for the second launch. Okay, finally, to wrap up our progress, it was a great moment to be able to cut the ribbon at the launch site last quarter. Neutron will bring the largest lift capacity to the mid-Atlantic regional spaceport has ever seen. So opening it was an important milestone, not only for the path to first launch, but for the assured access to space that the nation needs as launch congestion continues to build up across the country. The team is running through the final activation as they prepare to receive Neutron on the launch mount. But otherwise, all ready to go. Most recent tests have included flowing cryogens through propellant systems, and tests continue to run smoothly. We've designed the site to be able to turn missions within 24 hours. That was the design requirement. Now, that's important for responsive space and the launch cadence we expect for the vehicle. But equally so, we can get Neutron straight into back-to-back testing during the launch and readiness campaigns as well. So you can see there's been lots of Neutron activity this quarter. The team has made significant progress towards Neutron's first launch, while continuing to prioritize our very rigorous testing and qualification processes over rushing to the pad. We've seen what happens when others rush to the pad with an unproven product, and Roo just refused to do that. A methodical and deep approach to qualification is what's driven our reputation for success and reliability in the industry. It's been a cornerstone of our success with Electron, and it's the same philosophy that we'll be applying to Neutron. Okay, here's Adam with the financial highlights for the quarter and outlook ahead for Q4.