Rocket Lab - Q4 2022
February 28, 2023
Transcript
Moderator (participant)
Good afternoon, thank you for attending today's Rocket Lab Fourth Quarter 2022 Financial Results Update and Conference Call. My name is Danielle, I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. It is now my pleasure to hand the conference over to our host, Colin Canfield, Head of Investor Relations. Colin, please proceed.
Colin Canfield (Head of Investor Relations)
Thanks, Danielle. Hello, everyone. We're glad to have you join us for today's conference call to discuss Rocket Lab's fourth quarter full year 2022 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 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 that are contained in our filings with the Securities and Exchange Commission. Such statements are based upon information available to the company as of the date hereof and are subject to change per future developments. Except as required by law, the company does not undertake any obligation to update these statements.
Our remarks and press release today may also contain non-GAAP financial measures within the meaning of Regulation G enacted by the SEC. Included in such release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. This call is also being webcast with a supporting presentation. A replay and copy of the presentation will be available on our website. Our presenters today are Rocket Lab Founder and Chief Executive Officer, Peter Beck, and Chief Financial Officer, Adam Spice. After our prepared comments, we will take questions. Now let me turn the call over to Mr. Beck.
Peter Beck (Founder and CEO)
Thanks very much, Colin. Welcome, everybody, and thank you for joining us today. Today's presentation, we'll go over our key business accomplishments for the year 2022, as well as specific highlights from the fourth quarter. We'll also discuss further achievements we've made since the end of the quarter. Adam will then talk you through our financial results for the fourth quarter and full year, and also cover the financial outlook for Q1 2023. After that, we'll take questions and finish today's call with the up-and-coming conferences we'll be attending. All right, on to what the company achieved in 2022. Starting with a quick recap of our launch activity for 2022, it was our busiest year of launches yet.
We retained our position as the leading small launch vehicle globally, and once again, Electron held the title of second most frequently launched U.S. rocket annually. Across 9 Electron launches, we deployed more than 40 satellites to precise orbits for our customers, including commercial constellation operators, NASA, and the NRO, and more. Across these launches, we had a 100% mission success rate for the year, providing our customers with a reliable path to orbit. 2022 was also the year we successfully delivered the CAPSTONE mission to the Moon for NASA with a launch plus spacecraft solution using Electron and Photon. We completed 2 successful ocean recoveries of Electron's first stage as part of our rocket reusability program. We conducted five successful missions for constellation operators.
We put all 3 Electron pads to use, including our first launch attempt out of LC-2 in Virginia in Q4, which was successfully launched in Q1 2023. We also caught Electron with a helicopter for the first time. More on each of these achievements later in the presentation. As mentioned, in 2022, we reached our highest annual launch cadence with 9 missions, ensuring that Electron remains the global market leader in small launch. With 100% mission success in 2022, Electron is the most reliable dedicated small launch vehicle globally. As of 31st of December 2022, we've completed 32 Electron missions and deployed 152 satellites. I'm pleased to say that both those numbers have already increased thanks to another successful mission in Q1 2023.
2022 was also the year that Electron sent a mission beyond the Earth orbit, for the first time, successfully deploying the CAPSTONE mission to the Moon for NASA. This mission was far from just a standard Electron launch. It was a highly complex mission that showcased our strength as an end-to-end space company, not just a launch provider. In addition to providing the launch on Electron, our team developed and built and operated the Lunar Photon, a highly capable interplanetary spacecraft that set CAPSTONE on a course to the Moon. The team developed a highly efficient lunar trajectory to enable such a small rocket to transport a payload into lunar orbit. Rocket Lab is the only small launch provider to have designed, built, launched, and operated its own satellites in orbit, further expanding our total addressable market.
The CAPSTONE mission was the first launch of NASA's Artemis program, to return humans to the moon, and we're immensely proud to have enabled this crucial first step. Just 15 days after launching CAPSTONE, our most complex mission to date, the team turned around, the next launch, which, was a dedicated national security mission, for the NRO. This rapid, launch turnaround not only set a Rocket Lab record, but is by far the fastest turnaround between successful launches for any other small launch provider. Overall, in 2022, we averaged a launch approximately every 40 days, compared with, a launch nearly every 60 days in 2021. From April to November last year, we successfully had, excuse me, a launch every month.
So far, I've touched on some of the key launch achievements for 2022, but it was also a significant year of growth for our Space Systems arm of the business. More than 200 spacecraft were launched in 2022 featuring Rocket Lab, Space Systems products, including reaction wheels, star trackers, radios, solar power, flight software, separation systems, and more. Rocket Lab technology was featured in one form or another on 30% of globally addressable launches in 2022, demonstrating the success of our strategy to extract value from the full space chain, not just from our own launches. We delivered space systems products to more than 60 customers globally, spanning commercial and government sectors.
In 2022, we built a new space system production lines, including one to support high volume reaction wheel production to serve mega constellation customers and a new satellite manufacturing facility at our Long Beach headquarters. 2022 was the year that really cemented Rocket Lab's position as a leading spacecraft manufacturer. We have more than 25 spacecraft in development for various customers, including NASA, a NASA mission to Mars, a communications constellation for like Globalstar, in-space manufacturing satellites and orbit fueling depots. To achieve this, we've scaled our space systems team, expanded our manufacturing and development facilities, and of course, integrated our 4 space system acquisitions into our spacecraft programs.
Finally, before we wrap up the full year highlights and dive into the fourth quarter in more detail, in 2022, we saw backlog more than double from $241 million at the end of 2021 to more than $500 million at the end of Q4 2022, with growth driven by a healthy mix of launch and space systems bookings. With that, let's move on to the key accomplishments of 2022's fourth quarter in more detail. The final quarter of 2022 saw us successfully launch two Electron missions, delivering satellites to orbit for the Swedish National Space Agency and General Atomics. We were also honored to be selected by NASA to launch two dedicated Electron missions to deliver the TROPICS mission to orbit to monitor hurricanes and tropical storms.
In Q4, we also received the required licenses and approvals for our first mission from Launch Complex Two in Virginia. It was a long road to bring LC2 into operation, but with those approvals in place at the end of the year, we're able to launch the first Electron mission from U.S. soil early 2023. To top that off, we also introduced Rocket Lab National Security, a new subsidiary to deliver reliable launch services and space systems capabilities to U.S. government and its allies. We signed our largest order of satellite separation systems in the company's history, totaling $14 million in hardware to serve the Space Development Agency's Tranche 1 Transport Layer.
It was also the quarter that CAPSTONE reached lunar orbit, signaling final mission success for the NASA mission, more than 5 months after the successful launch on Electron. We also got testing underway at the NASA Stennis Space Center for Archimedes engine hardware and completed construction of the new satellite production line and clean room at our Long Beach headquarters. Let's start off with the key achievements in Q4 for Electron. We rounded out 2022 with 2 successful Electron launches in Q4. Both missions were from Launch Complex One and saw our total launch tally for the year reach 9 successful missions. As mentioned, this is a significant increase in launch cadence from 6 missions in 2021. We look forward to continuing to increase that cadence in 2023.
Electron is already a trusted launch provider to NASA, having successfully delivered missions to low-Earth orbit and to the Moon for the agency previously. Once again, we were honored when NASA entrusted Electron to deploy the remaining spacecraft on the TROPICS constellation across two dedicated missions. This is a constellation close to our hearts because it aims to enable scientists to study hurricanes, tropical storms, and ultimately leading to improved modeling and prediction to help save lives and livelihoods in the path of storms. These missions are scheduled to launch no earlier than May this year, and we look forward to sharing more about them in the lead-up to launch. In November, during our final mission for 2022, we conducted another successful splashdown and ocean recovery of Electron's first stage as part of our rocket reusability program.
Not all the requirements were met to ensure a successful capture due to a brief telemetry loss with Electron's first stage during atmospheric re-entry. This turned out to be quite a happy turn of events as it gave us another chance to bring back a stage that had been for a swim. Never one to waste an opportunity, our team put the return stage and components through analysis and testing. We're starting to see a bit of a pattern here that we hadn't initially expected. Electron survives an ocean recovery in remarkably good condition. In a lot of cases, its components actually pass re-qualification for flight.
In one of our upcoming flights, we're going to attempt another ocean recovery, this time with a few additional waterproofing modifications to the stage to protect some of the key areas and the bits we want to keep dry. Pending this outcome of testing and analysis of the stage, the mission may move us towards sticking with marine recovery altogether and introduce significant savings to the whole operation. In 2022, we proved that it was possible to rendezvous with a returning stage midair and get it on the helicopter hook. If we can save ourselves the extra step by just plucking it out of the water, we will.
Without the helicopter, if we're able to determine that ocean recovery is the most viable and effective path for recovery, this opens up even more flexibility with our launch windows and takes us from around 50% of Electron missions being suitable for re-recovery to anywhere between 60 and 70. We look forward to sharing the developments of this following our next recovery mission in the coming months. Moving on to Neutron achievements for the fourth quarter of 2022. In Q4, we officially opened the Archimedes test complex at NASA Stennis Space Center in Mississippi.
The site will be home to engine testing for Neutron's Archimedes engine. The team made fire at the site for the first time before the end of the year with the commencement of pre-burn igniter testing. Q4 saw some major movements at NASA Wallops Flight Facility for Neutron, including the completion of their first Neutron development building, which will be home to some stage assembly and integration activity. The team also started moving dirt at the site of Neutron's launch pad, with construction moving into full swing now that we're in the new year. We also started to see some really exciting hardware developments in Q4 with carbon composite structures for Neutron's first stage and second stages in production.
As you can see here, we're working on a much bigger scale than Electron, but we've been able to take that deep composites experience we've developed with Electron and use that knowledge to rapidly streamline Neutron's development. We're designing Neutron to be the world's first carbon composite large launch vehicle with the lightest and highest performance upper stage in history. When I say light, I mean really light. The vehicle's full tank combined that you see in the image, two of those halves together, weighs about the same as a Harley-Davidson motorbike, some 380 kg. Incredibly high performance. Moving on to from launch into space systems. In the final quarter of 2022, we had some great milestones for space systems, including having Rocket Lab hardware on 30% of all globally addressable launches.
In the quarter alone, more than 90 spacecraft launched to orbit, featuring Rocket Lab's space systems technology. One of the most exciting of those was the Artemis I launch of NASA's SLS rocket in November. That mission featured Rocket Lab solar arrays, satellite dispensers, and software, helping support NASA's goal of returning humans to the Moon, to the surface of the Moon. In Q4, we were selected to develop the Satellite Operations Control Center or SOCC for Globalstar's growing low Earth orbit constellation. The SOCC contract builds on the existing relationship between MDA, Rocket Lab, and Globalstar established in February 2022 when Rocket Lab was awarded a $143 million contract to design and manufacture 17 spacecraft buses for Globalstar's new constellation of satellites.
These new satellites and SOCC will augment Globalstar's existing constellation, delivering reliable mobile satellite voice and data services from space. The SOCC will provide 24/7 monitoring and management of Globalstar's constellation, including continuous satellite control and monitoring using Rocket Lab's MELPS ground data system, satellite orbit determination, maneuver planning, collision avoidance, orbit maintenance, and propellant management. By designing and manufacturing Globalstar's spacecraft buses, delivering the flight and ground software solution, and developing and supporting the Spacecraft Operations Center, we're once again executing on our strategy of going beyond launch to deliver complete space mission solutions. Finally, in Q4, our solar team in Albuquerque, New Mexico, delivered the final solar panels for the NASA Gateway Power and Propulsion Element.
These solar panels will enable NASA's Gateway Lunar Space Station to be the most powerful electric propulsion spacecraft ever flown, and they're a critical part of returning humanity to the Moon. That wraps up Q4 2022, but we've been busy since then. Let's take a quick look at some of the company's key accomplishments so far in Q1 2023. Electron took to the Virginia skies for the very first time in January 2023, marking the beginning of Rocket Lab launches from the U.S. It was a successful mission that delivered three satellites for commercial constellation operator, HawkEye 360. This was a significant moment for us and for the small satellite industry as the new U.S. launch pad represents even more flexibility and responsive launch capabilities for small satellite operators.
All three Rocket Lab launch pads across two hemispheres are now operational. We look forward to many launches from them all. With that first LC-2 mission successfully launched, we're onto the next. In fact, right now, there are rockets at both Launch Complex 1 and Launch Complex 2 preparing for a launch within a mere few days of each other. From Launch Complex 1 in New Zealand, we're preparing to launch two satellites for BlackSky Global in what will be our sixth mission for the constellation company. At Launch Complex 2 in Virginia, the team is preparing to launch a mission for Capella Space, a cycle installation operator that we previously launched in 2020.
Both missions are currently scheduled to launch in March, with launch windows to be finalized in the coming days, based on final customer requirements and range status. While we have 1 rocket in the pad for Capella Space, we've just signed a multi-launch contract with them to launch another 4 dedicated Electron missions through 2023. These missions are on the top of our second launch for them coming up in March, so 5 launches to look forward to this year altogether. We're honored that they've entrusted us with 5 missions in 2023 to help build their growing cell constellation. The latest multi-launch deal with Capella Space further cements our leadership position as the trusted small launch provider of choice for constellation operators.
We've now launched and signed deals with some of the most prominent constellations and operators globally, demonstrating the value of that Electron provides to these customers by offering reliable and flexible launch to tailored orbits. Onto our space systems, we started the quarter strong by releasing two new space systems products, a new satellite radio and reaction wheel specifically designed for constellation-class spacecraft. These products bolster our existing heritage in space system components and provide an entry point to new programs and mission profiles. This quarter, we also formally established a new subsidiary, Rocket Lab Australia, to explore opportunities to support the expansion of Australia's national space capabilities. The Australian government has set a goal to triple the size of the Australian space sector from an estimated AUD 4 billion in 2016 to AUD 12 billion by 2030.
To help facilitate this growth, the Australian government has committed more than $2 billion to the civil space sector since 2018 for programs spanning Earth observation, satellite infrastructure, high-tech manufacturing, and support of NASA's Artemis program. The Australian government has also committed $17 billion above and beyond the civil space investment for the development of defense-based capabilities. Rocket Lab has already played a key role in supporting Australia's rapid growth in space through supplying launch and space system products to Australian organizations. By building on our deep expertise and proven heritage in the space sector, we're well-positioned to advance Australia's capabilities in space. We have people on the ground already, and we look forward to exploring opportunities where they make strategic sense for us as a business and where we can truly strengthen Australia's position as a global space sector.
On the Neutron front this quarter, we've made investments and progress into establishing manufacturing infrastructure that will support scale production of Neutron. This includes composite tank molds for stage 1 and 2, as well as the installation of large 3D printers and milling machines to enable rapid production of the Archimedes engine. Q1 2023 brought welcome news in the form of a new acquisition strategy for the National Security Space Launch. This is the Space Force program to launch the nation's most critical and valuable government assets. Under NSSL phase III RFP, which was released earlier this month, new entrant launch vehicles qualified to bid for launches. Neutron was designed with NSSL launches in mind, and we look forward to making Neutron available to meet the national security needs.
You know, this wasn't a chance of good luck for us. We actively engaged NSSL on this to introduce this change on the back of our strong relationship with them. The first vote of confidence in Neutron came back in September 2021, when we won a $24 million contract for the development contract for Neutron's upper stage through the Space Force's Systems Command of Launch Enterprise, which falls under the NSSL program. The contract recognized Neutron's design to maximize mass to orbit capability, orbital insertion accuracy, and responsive, dedicated launch for the U.S. government, all key requirements for the highest priority missions awarded through the NSSL. I'm pleased to see this further strengthening of our relationship with this new path opened up.
Finally, before I hand over to Adam, for the financial highlights, I'd like to share that David Cowan is wrapping up his time on Rocket Lab's board of directors. David is a partner at Bessemer Venture Partners, one of our earliest investors, and he joined Rocket Lab's board in 2014. Since then, we've been grateful for his leadership and guidance as we grew Rocket Lab from a small startup to a publicly listed company. The world's leading small launch provider and now global space systems firm. I'd like to personally thank David for his support and efforts at Rocket Lab over the past nine years and wish him the very best for his continued work in deep tech. With that, I'll hand over to Adam to discuss the financial highlights.
Adam Spice (CFO)
Great. Thanks, Pete. I will first review our fourth quarter 2022 results and then discuss our outlook for the first quarter of 2023. Fourth quarter, 2022 revenue was $51.8 million, which was within our initial guidance range of $51 million-$54 million and well above our revised guidance range of $46 million-$47 million, provided in December. Fourth quarter, 2022 revenue reflects growth of 88% over the year ago fourth quarter of 2021, and the result of two successful launches and continued strong contribution from our space systems business. The overage to our revised guidance range was a result of higher than anticipated revenue recognition from a SolAero contract to a major prime contractor program.
This closes out a very successful year with full year 2022 revenue of $211 million, up 239% from 2021, with launch and space systems finishing the year with revenue growth of 56% and 546% respectively. Turning to gross margin. GAAP gross margin for the fourth quarter was 3.5%, below the low end of our original guidance range of 5%-7%. Non-GAAP gross margin for the fourth quarter was 15%, which was also below our original guidance range of 16%-18%.
GAAP and non-GAAP gross margins results relative to both our revised guidance and to our Q3 2022 results reflects a combination of reduced launch cadence and a related lack of fixed cost absorption, below average revenue contribution from the Catch Me If You Can R&D recovery mission, and an unfavorable mix within our space systems components revenue. More specifically, launch cadence was impacted by the push out of the HawkEye 360 launch from the December quarter due to weather and other factors. The below-average revenue contribution from the successful Q4 2022 Catch Me If You Can recovery mission was a conscious decision to trade off acceleration of the Electron recovery margin improvement initiatives versus maximizing revenue from additional payloads that would've taken longer to secure and integrate.
Our current launch manifest and proven execution capabilities gives us confidence that we'll see a return to growth and gross margin expansion in the launch segment of our business as we progress through 2023. Lastly, the unfavorable mix within space systems was a result of the timing of revenue recognition under a legacy low-margin pre-acquisition SolAero contract with a major prime contractor. We anticipate significant top-line growth to resume for our space system segment in the second half of the year as we forecast to begin benefiting from more meaningful revenue contribution under the MDA Globalstar contract, which brings with it gross margin uplift. In addition to forecasting a beneficial mix and change in our space systems component revenues as our higher margin component solutions contribute at a greater rate versus the lower margin component solutions.
We ended Q4 with 818 production-related headcount, up 21 from the prior quarter, which positions us well to not only scale production, but also the resources to exploit margin-expanding production efficiencies. We're turning to operating expenses. GAAP operating expenses for the fourth quarter were $39.1 million at the low end of our guidance range of $39 million-$41 million. non-GAAP operating expenses for the fourth quarter were $27.3 million, which was below our guidance range of $28 million-$30 million. The decline in both GAAP and non-GAAP total operating expenses versus the third quarter was primarily driven by an R&D grant benefit and lower stock-based compensation, partially offset by increases in headcount and prototyping expenses supporting Neutron and space systems.
In R&D specifically, GAAP expenses decreased by $2.5 million or 14% in the fourth quarter, driven by, again, R&D grant benefits and lower stock-based compensation. Non-GAAP R&D expenses were down $1.6 million or 13% quarter-on-quarter. We anticipate a return to sequential growth in R&D as we ramp investment in our Neutron launch vehicle. Quarter-ending R&D headcount was 348, representing an increase of 18 heads from September 30, 2022. In SG&A, GAAP expenses increased $1.1 million quarter-on-quarter or 5%, driven primarily by outside services, primarily owing to the first year SOX compliance-related expenses. Non-GAAP SG&A expenses increased by $1.6 million or 10% quarter-on-quarter, mostly driven by outside services, as previously mentioned.
Quarter-ending SG&A headcount was 197, represent an increase of 1 head from September 30th, 2022. On a year-on-year basis, GAAP operating expenses for the fourth quarter of $39.1 million were up $8 million or 26% year-on-year, while non-GAAP operating expenses of $27.4 million were up $7 million or 34% year-on-year. The growth in both GAAP and non-GAAP operating expenses were primarily driven by the acquisitions of ASI, PSC, and SolAero, which occurred in Q4 2021 and Q1 of 2022, as well as increase in staffing costs related to Neutron vehicle development, the Electron booster recovery initiatives, and Photon development projects.
In R&D specifically, GAAP expenses decreased by $3.1 million or 25% in the fourth quarter, while non-GAAP expenses were up $2.6 million or 33% year-over-year. In SG&A, GAAP expenses increased $5 million or 26% year-over-year. Cash consumed from operations was $19 million in the fourth quarter compared to $23 million in the third quarter. The sequential improvement of $4 million was driven primarily aimed at new equipment facilities underpinning our Neutron development initiative and expansion of our Photon production capabilities. Overall, non-GAAP free cash flow consumption in the fourth quarter was $33.9 million compared to $31.3 million in the third quarter.
The ending balance of cash equivalents, restricted cash, and marketable securities was $484.3 million at the end of the fourth quarter. Let's turn to our guidance for the first quarter of 2023. We expect revenue in the first quarter to range between $51 million and $54 million, which reflects $32 million-$35 million of contribution from space systems and $19 million of contribution from launch services, which assumes 3 launches or 2 remaining launches in the quarter. 1 of the 3 launches forecasted in Q1 was a successful January HawkEye 360 mission out of LC two in Virginia, which was a partially filled rideshare mission, where similar to an R&D mission, we made a conscious choice to focus on expediting our first-ever LC two launch versus maximizing revenue by filling the rest of the mass capacity on the launch vehicle.
Based on our manifested launch backlog, we expect our average selling price to increase back to our standard pricing as we progress through the remainder of 2023. We expect first quarter GAAP gross margins to range between a negative 5% and negative 3% and non-GAAP gross margins to range between positive 7% and 9%. These forecasted GAAP and non-GAAP gross margins reflect greater contribution from our launch services segment, as well as lower margin product mix within our Space Systems segment. We expect first quarter GAAP operating expenses to range between $44 million and $46 million and non-GAAP operating expenses to range between $33 million and $35 million. This quarter-on-quarter increase is driven primarily by increased R&D staff costs and prototype expenses related to accelerated investments in the Neutron launch vehicle development and scaling of our Photon product family.
We expect first quarter GAAP and non-GAAP net interest expense to be $1 million. We expect first quarter adjusted EBITDA loss to range between 28 million and 30 million and basic shares outstanding to be approximately 476 million shares. With that, I'll turn it back to the operator for questions.
Moderator (participant)
Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. On behalf of the management team, we would ask that you limit yourself to one question and one follow-up. The first question comes from the line of Kristy Liwag of Morgan Stanley. Please proceed.
Kristy Liwag (Executive Director and Head of Aerospace)
Yes. You know, first question for me, on Globalstar. We've seen the difficulty in raising financing. It's great to see that they finally have a resolution with Apple now prepaying to help fund the satellite build. In this environment where capital is more expensive, how prevalent are financing challenges amongst your commercial customers? Is this a one-time thing, or are you seeing this continue into the supply chain?
Adam Spice (CFO)
Yeah, I can take a pass at that. Pete, you could also provide your thoughts, Christine. You know, I would say that, you know, certainly with the capital market conditions the way they are, it's difficult for, you know, a lot of people to continue to finance their businesses. We've been relatively immune from that, largely given the mix that we have of, you know, either direct government contracts or also with customers who have deep ties and rely on a great amount of their revenue to come from government programs. You know, I think we've probably been impacted a lot less than maybe some other folks you come across. You know, we're not completely immune to it.
We've certainly seen some of our smaller customers, you know, struggle from time to time and, you know, have required a little bit longer to pay, or in some cases, you know, having to take small, relatively small amounts of bad debt reserves, for amounts owed us. For the most part, you know, it really hasn't been a, a tremendous factor on us to date. Hopefully, you know, continues to be that way. You know, yeah, there's hard to determine how this is gonna roll out going forward given the environment that we're in. Pete, I don't know if you have any different thoughts on that.
Peter Beck (Founder and CEO)
Yeah. No, I think that's exactly right, Adam. One of the benefits, I guess, with a number of these programs is they're very long time horizon programs. When someone secures funding, it's not, you know, typically for a 1-year time horizon. You know, a lot of these, especially constellations, have very long time horizon. You know, depending on how long this financial environment takes, you know, lasts, that may influence that. As Adam said, at this point, we don't see particularly, you know, big issues.
Adam Spice (CFO)
Christine, I think the other thing I'd like to.
Kristy Liwag (Executive Director and Head of Aerospace)
Great. Thanks. If I could do... Go ahead, Adam.
Adam Spice (CFO)
Sorry, Christine. I was gonna say, I think one of the advantages that we have relative to some of our other new space peers is that we obviously have a very healthy balance sheet. And we're also, you know, really particular about who we take on as customers. When we look into our backlog, you know, we don't see a lot of kind of financing risk in there, again, because the mix of customers that we have. Again, I think that we've been able to be a little bit more creative and flexible in some cases in working with customers to kind of help support their business and also kinda make sure that, you know, we're in, we're in a good position from, you know, maintaining and growing market share in many cases.
Kristy Liwag (Executive Director and Head of Aerospace)
Thanks for the addition, Adam. Maybe Peter, as a follow-up on government contracts, you touched on the Space Force RFP for the National Security Space Launch phase III, and right, it looks like Lane 1 is geared more towards medium-sized launch vehicles where Neutron would play in. Can you talk about the timing, milestones to watch, and size the opportunity for Neutron?
Peter Beck (Founder and CEO)
Yeah, absolutely. You know, from a, from a milestone perspective, for our program, the things to kind of watch are, you know, tanks rolling out, obviously engine testing and integration. There's a lot of stuff going on in the background where it's less obvious. You know, we talked about moving dirt on a launchpad, well, actually, to get to the point of moving dirt on a launchpad, there's a tremendous amount of kind of work that needs to be done to, you know, to get to that point. Those are the things I'd be watching out for.
You know, we obviously, we're, we have a great relationship with the whole NSSL program. We're, you know, we're encouraging them to certainly think about how can the U.S. maximize its capabilities across a wide range of launch vehicles, and opportunities to leverage that. Yeah, we're very, very happy to see, you know, the second Lane come and that aligned exactly with what, you know, what we have been promoting.
Kristy Liwag (Executive Director and Head of Aerospace)
Great. Thanks, guys.
Moderator (participant)
Thank you. The next question comes from Erik Rasmussen of Stifel. Please proceed.
Erik Rasmussen (VP and Senior Equity Research Analyst)
Yeah. Thank you for taking the questions. First, maybe just on launch. You have, you have slotted for 3 in Q1, 2 additional coming up, and looks like your timing is sometime in March. Adam, you'd previously talked about maybe 14 for the year. We had 1 slip from Q3 to Q4, I'm assuming maybe that makes the number 15. Is that still a good number for us to be modeling and thinking about as we, you know, as we look at launch?
Adam Spice (CFO)
Yeah. No, Eric, I think so. I mean, we typically have seen... I mean, it's a relatively young business, so we don't have a great amount of track record as far as seasonality is concerned. It does seem like Q1 gets off to a slower start, probably a function of, you know, a little bit of a hangover from the vacations, launch ranges, you know, kind of being, kind of closed at the end of the year. It takes a while for programs to get re-spun up. You know, with a targeted three launches in the first quarter, I think we're in great shape to get to that 15 number of launches of the year. You know, demand actually is higher than...
would indicate a higher number of launches than 15 this year. We've also learned, you know, through the school of hard knocks that, you know, we can get burned when we rely really upon what just our customers are telling us what their demands are. You know, customer spacecraft all, you know, oftentimes seem to slip and push out to right, at the last moment just because of the nature of how these programs develop and when things come through their final qualification and testing. We think that we've got, we've kind of risk-adjusted the numbers, so we think 15 is the right number for the year given where we're at and given the likelihood that some programs could push to the right. Yeah, time will tell, but right now it feels like the right number.
Erik Rasmussen (VP and Senior Equity Research Analyst)
Okay. Maybe just adding to that, you've mentioned, and we've seen it with the Q1 outlook for launch at $19 million for three launches. You've mentioned that you probably would get back to more of a normalized ASP, you know, throughout the year. Is that fair to say, right?
Adam Spice (CFO)
Absolutely. Yeah. Again, we made a conscious choice to get that launch off earlier in the year versus kind of just take more time to backfill all the volume capacity on the vehicle. Given right now, I mean, we have very strong visibility and conviction in where the manifest is, and we know what the launch prices are for those. Yeah, we're confident where the ASP is migrating back to where it has been and more towards our kind of advertised sticker price.
Erik Rasmussen (VP and Senior Equity Research Analyst)
Okay. Maybe just my follow-up, you know, on the SDA contract, any milestones that maybe you can call out, you know, where are you in terms of building out the manufacturing line and sort of what sort of volumes can you achieve? Then maybe just on the opportunity for launch, any updates there? Thank you.
Adam Spice (CFO)
Yeah. I'll let Pete... You wanna take a first pass with that?
Peter Beck (Founder and CEO)
Yeah, sure. Yeah. No, absolutely. You know, hey, Eric, things are looking good. If you come and visit us, you can see a, you know, a fully stacked integration facility, so at headquarters. That was completed last year. You know, that facility is more than capable of processing the 17 that are on contract and any further that may be options. No, I think we're in good shape there. You know, we continue discussions, you know, for the launch of those particular spacecraft.
Adam Spice (CFO)
Eric, I think I'll just add on a little bit there.
Erik Rasmussen (VP and Senior Equity Research Analyst)
Thank you.
Adam Spice (CFO)
You know, we continue to kind of knock down the gates towards these, you know, these milestones on the program. We've cleared, quite a few of the scheduled milestones. We're on schedule. Everything looks to be in good shape. You know, we won't go into all the details of all the kind of milestones and sub-milestones, but, you know, we've. So far, we've been very fortunate to be hitting all of our milestone dates, getting through successful reviews. Yeah, all that looks very good. So far, we've also been pretty fortunate that we haven't been, burned by any supply chain issues at this point.
Yeah, the program is still relatively early, but, you know, given everything that we're seeing right now, everything looks to be on track, and so far, we've got happy customers.
Erik Rasmussen (VP and Senior Equity Research Analyst)
Sounds good. Thank you.
Moderator (participant)
Thank you. The next question comes from Scott Deuschle of Credit Suisse. Please proceed.
Scott Deuschle (VP of Aerospace and Defense Equity Research)
Hey, good afternoon. Adam, it looks like the Q1 EBITDA loss you're guiding to is about double the loss in Q4 and pretty close to what the street was expecting for the full year in 2023. Just given the market's focus on profitability, I was wondering if you could give some further context on what's driving that increase and then how we should think about the trend from Q1?
Adam Spice (CFO)
Sure. Yeah. You know, I think that there. You know, I don't think there's been a tremendous amount of resolution in some of the models that are out there. I think that when, you know, we've communicated to investors kind of the level of investment required for the Neutron program. You know, when we came out, we said it was gonna be roughly a $250 million program to get the first Neutron to the pad at the end of 2024, and we believe we're still on schedule with that. If you kinda just look at kind of what that. We provided a breakdown of how much of that was gonna be, you know, in CapEx versus, you know, prototyping and then, you know, OpEx through headcount and so forth.
I think the ability there is to model out what that should be, especially given where we are now as we are in Q1 of 2023 and then anticipated launch date in Q4 of next year. I, you know, I guess it shouldn't be too much of a surprise kind of where we are kind of on that adjusted EBITDA basis. I think that, you know, at least from an internal purposes, it feels like it's pretty consistent with where we thought we'd be given the kind of where we are in the life cycle of the program. You know, from a, from a modeling and trending going forward, you know, we're gonna see continued uptick in spending related to Neutron.
You know, I think we've crossed the hump or gotten over the hump for a lot of our Photon space systems or related pure R&D work. There's still more to come, but a lot of it's kind of behind us. I think that, you know, we'll crest the Neutron spending hump probably in sometime in the middle of next year, again, as we get closer and closer to the launch date in Q4. Again, I think the uptick in spending the current or the forecasted Q1 adjusted EBITDA, while we don't give, you know, guidance beyond kind of the next quarter, I think that's a number that's gonna be...
You know, I don't think, I don't think we're looking at the low water mark as far as adjusted EBITDA loss in a quarter, because again, spending has continued to ramp up. I also don't think that, you know, we're looking at it that it's gonna get dramatically higher than where it is. It feels like we're kind of in a new range of kind of spending on the program. We also see revenue increasing over the same time period. You know, hopefully, a lot of that is 'cause offsetting. Yes, spending will increase fairly significantly, but we believe that revenue is gonna be helpful in growing along with that growth in R&D spend so that we don't kind of balloon that adjusted EBITDA loss on any quarterly basis.
Scott Deuschle (VP of Aerospace and Defense Equity Research)
I mean, if Q1 is not the low water mark, I mean, could full year EBITDA losses be $120 million or more? Like, I'm just trying to put some sort of finer point on it because to your point, there's not a lot of resolution in the street models.
Adam Spice (CFO)
Yeah. Again, a lot of it depends on, you know. A lot of things are still in flux as far as, you know, the major prototyping items, when we're gonna get invoiced for those types of things. It's really hard to predict right now, like exactly what the curve is gonna look like or the slope of the line on R&D spending increase related to Neutron. You know, we also have some pretty significant revenue growth coming in the second half of the year related to some of our space systems programs. Again, which depending on if, you know, how hard they hit up and the related margins that accompany those, you know, hopefully moderates quite a bit of that spending increase.
Yeah, at this point I'm not able or kind of willing to go really beyond what the next quarter looks like. But, you know, as we spend more time together and we get a little more, you know, color, and visibility, we'll certainly share that with you and others.
Scott Deuschle (VP of Aerospace and Defense Equity Research)
Okay. I mean, that's super helpful. Just as a follow-up, does the $143 million contract with the MDA include any inflation protection mechanisms on it, just given that it's, you know, kind of a multi-year contract and you're in an inflationary environment? Just curious on inflation protection on that contract specifically. Thank you.
Adam Spice (CFO)
Yeah, Scott. No, it's a good question. No, that's a firm fixed price contract. We were able to secure some incremental scope under that agreement with the SOC to operate the satellites on orbit for the customer. We got some uplift to total revenue from that. We didn't disclose the exact amount. You know, I think we feel pretty good because when we were modeling out the, you know, the BOM and other factors building the satellites, we took into consideration a certain amount of inflation. Now, is inflation running hotter than we thought it was gonna be, you know, a year and a half ago when we were doing that modeling? Certainly. We also put in some cushioning factors to make sure that we'd come out on the right side of that.
We feel very good, and we don't see anything right now that would kind of impact the margin expectations for that program versus where we originally modeled it.
Scott Deuschle (VP of Aerospace and Defense Equity Research)
Thank you, Adam. Really appreciate it.
Moderator (participant)
Thank you. The next question comes from Suji Desilva of ROTH MKM. Please proceed.
Suji Desilva (Managing Director and Senior Research Analyst)
Hi, Pete. Hi, Peter. Hi, Adam. First question on the launches, the 14, 15 for the year. Sorry. What number are you roughly expecting from Virginia? Is, you know, what's the incremental launch opportunities that are available from the U.S. soil that, you know, maybe weren't unavailable to New Zealand? If you could talk about that'll be helpful.
Peter Beck (Founder and CEO)
Yeah. Hi, Sujit. Of the 14, 15, it kind of depends a little bit on readiness of customers, there could be anything up to sort of, you know, 6 launches out of that site this year. Like I say, depending on readiness of customers.
Suji Desilva (Managing Director and Senior Research Analyst)
Okay. The incremental opportunity, Peter? U.S. government or other-
Peter Beck (Founder and CEO)
Oh, sorry.
Suji Desilva (Managing Director and Senior Research Analyst)
... specific to Virginia.
Peter Beck (Founder and CEO)
Yeah, yeah. Sorry. Yeah, no. The incremental opportunity, you know, the one thing that we, you know, we built that pad for was kind of a rapid response for our U.S. government customers. You know, we are seeing that capability really being valued. You know, more on that shortly, I would say. It certainly opens up, I would say, much greater access to doing, you know, defense or national security work, which is frankly why we intended to build that pad.
Suji Desilva (Managing Director and Senior Research Analyst)
Okay.
Adam Spice (CFO)
Yeah. Sujit.
Suji Desilva (Managing Director and Senior Research Analyst)
For my follow-up.
Adam Spice (CFO)
Yeah. What we're saying. Real quick, Sujit. On the impact of having this Virginia launch site now operational, you know, there's some variable incremental costs that come along with launching from that range because, you know, we don't own the range like we do in New Zealand. At the same time, we are seeing, you know, a strong degree of acceptance or willingness for customers to pay a premium to launch out of that range, you know, for obvious reasons, right? We're, you know, it's three and a half hours outside of D.C. There's a lot of, you know, benefits that come from a logistics perspective with having that in the backyard of some of our largest customers.
I think it's for us it's hugely enabling and it's, you know, it's something that our customers are seem to be very, very grateful that it's come online now. Again, I think it's gonna be long-term be a very busy range for us. I think, you know, we're well set up to kind of, you know, leverage that into more and more U.S. government business.
Suji Desilva (Managing Director and Senior Research Analyst)
Okay. Great. Thanks for that, Adam. As my follow-up, with the backlog growing here, I think $500 million, should we expect additional direct sell related opportunities like Globalstar, MDA, or maybe was that a one-off? Just to kind of set the expectations for, you know, what could be coming now that you have successfully won that.
Peter Beck (Founder and CEO)
Yeah, I mean, this is kind of goes to the pace at which the backlog grows is, you know, we tend to be working on, fewer larger deals, than perhaps, you know. As Adam mentioned before, like the quality of our backlog is super important to us. We're always working on some pretty significant, deals. I would hope, I hope that we would, you know, continue to see, those kind of larger lumps drop in as we, as we close those out.
Adam Spice (CFO)
Yeah. I think, Sujit, I mean, maybe a little bit more on that as well. Like, obviously, you know, we're very happy with what we've been able to secure for this type of application. Certainly we, you know, we think that we're at the earlier stages of what this ultimate application could look like for us. We're also very selective in who we work with, and we're not looking to basically, you know, go work with every, you know, kind of random opportunity out there looking to take advantage of this direct to mobile type of opportunity. We're pretty focused on staying engaged with the absolute tier one of customers on this type of opportunity.
Yes, we see more opportunities, but, you know, it's probably going to be in a very concentrated, you know, customer area, if you will.
Suji Desilva (Managing Director and Senior Research Analyst)
Okay. That's helpful, Adam. Thanks, guys.
Moderator (participant)
Next question comes from Matthew Akers with Wells Fargo. Please proceed.
Eric Yan (Equity Research Associate)
Hi, this is Eric Yan on for Matt. Just quickly, wanted to ask about the margins at SolAero, if there is any progress being made so far for getting it to 30% by early 2024.
Adam Spice (CFO)
I'll take the first pass at this. 'Cause there's a bunch of different initiatives ongoing. You know, certainly, you know, we believe that that 30% gross margin is the right target for that business. I will say that, you know, we're still going through the process of, you know, burning through the legacy backlog that was there that came at pretty compromised gross margins. If you look at the business, the new business that we're booking, and we've been booking quite a bit of new business, you know, all of that is at or above our target margin. We feel very good about how kind of we're replenishing the backlog with new business as we burn off the old business.
But there are also some longer-term opportunities to, for that legacy backlog for that to become better gross margin, you know, over time, but that's kind of just the traditional blocking and tackling, getting the efficiencies out of the operation, you know, investing more in systems and processes and people and equipment. You know, I, I think that we've got the right things kind of in focus and we're actually on the right things to get the margin up. I would say that, you know, it's definitely a, it's definitely a longer, it's a longer initiative to get the margins to where we thought we were, and I think it's aggressive at this point to think that we're going to be at that 30-point target, you know, in the early part of 2024.
I think it's gonna take us a little bit longer. That's just a function of, you know, how quickly we kinda burn through that legacy backlog and get some other efficiencies in the business. Longer term, we absolutely feel like that's the right number to be had. We say longer term, we're not gonna, not talking like, you know, three, four, five years. It's a shorter time horizon than that, but it's probably not the next 12 months. Pete, do you have any further color on other margin enhancement opportunities for the SolAero business?
Peter Beck (Founder and CEO)
Yeah. I think that's a good point. I mean, one of a good set of points. One of the reasons why we're attracted to that acquisition was their new IMM-beta cell technology, which is the highest performing cell technology in the world. As we kind of, you know, take that from, you know, relatively small production volumes and almost R&D into, you know, volume production, that, you know, that really expands some of those margin opportunities as well. As Adam pointed out, I mean, we've just got to burn off some of this long legacy stuff, but everything that the team has been booking and is looking, you know, exactly where we need it to be.
It's just we're gonna hit this drag for a little bit.
Eric Yan (Equity Research Associate)
Okay. Thank you.
Moderator (participant)
Thank you. The next question comes from the line of Andre Madrid of Bank of America. Please proceed.
Andre Madrid (Equity Research Analyst)
Hey, guys. How are you? kinda wanted to touch base on the comment you made regarding ocean recovery versus midair recovery. I mean, is there a big difference in between how much you might be able to recover were it to be received in midair versus ocean? Is there like an amount of the Electron that you might not be able to recover in the event that it splashes down?
Peter Beck (Founder and CEO)
Yeah. Hey, Andre. No, not really at all. The reason why we didn't wanna get it wet is there is some remedial work that's required when you get it wet. You know, purging and slightly more intense kind of recertification activities rather than it being dry. As kind of we've splashed a whole bunch down now and retrieved them back, that's become really well understood for us. When you trade the extra kind of work that you need to do to kind of replenish them and recertify, you know, a vehicle for launch against the cost of, you know, operating the helicopter, it's pretty much neutral.
You know, at that point, you know, what the water landing does enable us to do is recover more vehicles ’cause we don't have the constraints of, you know, the operations of the helicopter. It's kind of a... financially it's kind of the same, but we get to actually reuse more vehicles. And as we splash more and more down, we kind of learn more and more. As I mentioned, you know, in the deck, we're making modifications to the vehicle that make it far more kind of seaworthy, if you will. It's only going to get better.
Andre Madrid (Equity Research Analyst)
All right. Understood. Is there any read-through to Neutron development then? I mean, if it seems like it's not that much of an issue if it splashes down, is it worth the incremental development cost to develop the you know, the landing system if you could also do recovery from the ocean for the Neutron platform? I mean, is that something you guys are considering as well?
Peter Beck (Founder and CEO)
Sure. I mean, they're just such different vehicles of scale. One of the advantages of, you know, Electron being so small is that those, these kind of sea recoveries and things make it simple and viable. A vehicle of that scale, you know, an ocean splashdown is not something you'd want to do. It's a very large thing floating in the ocean. You know, the big difference between Electron and Neutron is that, is, you know, Neutron is designed from day one to be landing and reusable, whereas Electron, you know, I thought it was impossible for the longest period, so it was never conceived.
The mass margins you have on a small launch vehicle versus a larger launch vehicle just make, you know, small launch vehicle recovery infinitely more difficult. When you've got a fresh piece of paper, and you can design it from scratch, then, you know, landing a Neutron, you know, dry is by far the most sensible thing.
Edison Yu (Director)
Understood. Thanks.
Moderator (participant)
Thank you. The next question comes from Edison Yu of Deutsche Bank. Please proceed.
Edison Yu (Director)
Hey, guys. Thanks for taking the question. First one, I'm sure you've seen there's been quite a few high-profile failures since the last earnings call by some of your peers. Have you seen any increased activity from maybe customers that weren't considering you before, that are coming to you now because of this?
Peter Beck (Founder and CEO)
I mean, I'm not aware of one particular customer that's kind of offloaded. I would say it's a kind of a general sentiment that, you know, as more of these kind of emerging providers and others have these failures, it's kind of a reminder that this is way more difficult than kind of people sometimes give it credit for. I think, you know, as you get more data points of how difficult it is and more data points of people failing to execute against it certainly changes the sentiment.
you know, I would say that, you know, customers that we've been in discussions with for longer periods of time, those failures solidified their decision to come with us pretty quickly.
Edison Yu (Director)
As you ramp up the spend on Neutron, how should we think about the next couple of big milestones? I sort of ask that in the context of, you know, maybe a couple in the second half. Also, when would you consider announcing when exactly that first launch is for Neutron? Is that like a 4 Q 2023 thing? Is that a 1 Q 2024? Just how to think about the sequencing of leading up to the first launch.
Peter Beck (Founder and CEO)
I'll deal with the announcement, then I'll hand it over to Adam to talk about the spend profile. But, you know, a launch vehicle, you think you're golden until, you know, you do a particular test. In fact, it's, you know, it's across the whole space industry. This is why so many satellites delays. You do like a final TVAC test and find that, you know, you've got a thermal issue. It's the same with launch vehicle development, is you think you're golden until you go and do a test and realize that something's not right. You have to operate in the mindset of kind of like a green light schedule until something proves otherwise.
I wouldn't expect us to make any kind of, you know, formal announcements of a launch date until it's pretty obvious that we're ready to launch it. You know, we've got stuff on a pad, and, you know, things are moving along. As you've seen from some of the other emerging players, some of them have had a rocket on the pad for a year, working through variously that launch vehicle or pad issues. It's pretty hard to just, you know, put a stake in the sand. We'll keep everybody updated on our progress, and if there's anything that crops up that we think is gonna, you know, have an impact to timing, we'll certainly let everyone know.
Adam Spice (CFO)
Yeah. Edison, I would say that, you know, our baseline plan of record that's built into our financial plan assumes, a launch in Q4 of 2024.
Edison Yu (Director)
All right. Appreciate the color. Thanks.
Moderator (participant)
Thank you. The next question comes from the line of Austin Moeller of Canaccord. Please proceed.
Austin Moeller (Director and Equity Research Analyst)
Hi. Good afternoon. Just my question about Peter's comment around the ocean recovery of the Electrons. If we go from recovering 50% of the Electrons to potentially recovering 60%-70% of Electrons by doing water recovery, what does that do to your projections for gross margins for the launch business relative to your prior expectations?
Adam Spice (CFO)
Austin, that's a good question. I mean, I think it really doesn't change it because, you know, this basically just buys down the risk of getting to that margin target, right? I would say the margin targets, you know, in a business like this are never slam dunks. There's a lot of hard work that goes into it. You know, recovery's part of it. There are other elements that we're driving, getting to our target margins, including a launch cadence of launching, you know, twice monthly. Also some kind of, you know, I would say more traditional savings from BOM elements and labor efficiencies and so forth. All of it kind of factors into our longer term target of getting into the low 50% gross margin range on a non-GAAP basis.
Again, I wouldn't build in any increase to that based on this. I think just maybe it de-risks our ability to get there or what timeframe we get there.
Peter Beck (Founder and CEO)
Yeah. I'd agree 100% with that. This, you know, recovery is one element of the program here.
Austin Moeller (Director and Equity Research Analyst)
Okay. Also just considering your captured seat position within the launch market right now, just given the shortage of available launch vehicles, you see Amazon and a moon lander company all scrambling to get onto a ULA launch, even though it's a first launch for that vehicle. Do you expect to increase pricing at all for the Electron just given the launch shortage and inflation pressures, or do you plan to keep prices where they're at?
Peter Beck (Founder and CEO)
I mean, Electron pricing has never gone down. It's only it ever gone up. Yeah, maybe you wanna take that, Adam.
Adam Spice (CFO)
Yeah. No, I think the, I think the over time, you know, we, again, we see prices increasing. I think the greatest factor overall that'll lead to increased pricing is that as we see, you know, more failures from aspirational launch companies. You know, a lot of these folks, you know, just won't have the capital, in my opinion, to execute. I think it's just a matter of time before kind of the natural selection process really leads us down to a point where launch for Electron becomes more expensive, not less expensive. I think that also might be a reason why we're starting to see more kind of bulk buys, from Constellation customers, 'cause I think they realize that.
I think, you know, as difficult as it is to commit, you know, to one platform in, with the potential of maybe cheaper and more plentiful opportunities coming on board, you know, for launch or coming out to the market. I think they're also realizing that, you know, again, the difficulty of doing this and having a reliable launch platform is super important 'cause time is money for a Constellation operator. I think that my prediction would be that prices firm up again as we see continued kind of challenges for some of these aspirational launch people. There's still enough noise out there from people who are trying to enter the market where, you know, we don't have, I would say, a tremendous amount of pricing kind of leverage.
I think that's starting to change. I think we are starting to see, again, people realizing how difficult it is, and there's not gonna be 100 successful launch companies. You know, maybe there's a handful or less than a handful of successful long-term players. I think with that, you would normally see kinda pricing firm up and, you know, that's what I would expect to see happen over the course of the next, you know, several years.
Austin Moeller (Director and Equity Research Analyst)
Okay. Thanks for framing that. I appreciate it.
Moderator (participant)
Thank you. There are currently no additional questions registered at this time, so I will pass the conference back over to the management team for closing remarks.
Peter Beck (Founder and CEO)
Thanks very much. That's a wrap for today's presentation. Thank you everyone for joining us on the call. Adam and I will be speaking at these up and coming conferences, and look forward to the opportunity to share more exciting news and updates with you. Thanks again, and we'll look forward to speaking with you again soon about the exciting progress being made here at Rocket Lab.
Moderator (participant)
With that, we will conclude today's conference call. Thank you for participating. You may now disconnect your line.