Jeff Van Reed

Jeff Van Reed inquired about the drivers behind the expected sequential gross margin improvement in Q4, specifically asking which business segment is contributing most. He also sought insights into potential revisions to target gross margins for both launch and space systems segments and the distribution of deal sizes in the space systems pipeline.

Answer

Adam Spice, CFO, Rocket Lab, attributed Q4's gross margin improvement primarily to the Electron business, driven by increased launch cadence, higher ASPs, and better overhead absorption. He reiterated Electron's potential for 45%-50% non-GAAP gross margins and Neutron's similar potential. For Space Systems, he noted Solero solar business nearing 30% gross margin, other components exceeding 60-70%, and satellite manufacturing in the 25-35% range due to vertical integration. Peter Beck, Founder and CEO, Rocket Lab, described the space systems pipeline as well-distributed across commercial and defense, including significant opportunities with the intelligence community and DoD, alongside healthy growth from individual business units developing new products.