27th Annual Needham Growth Conference

[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> January 14 2025 **Insider**: [[Adam Spice]] **Source**: [27th Annual Needham Growth Conference](https://www.youtube.com/watch?v=VSBTfYEV8PM) **Date**: January 14 2025 ![](https://www.youtube.com/watch?v=VSBTfYEV8PM) 🔗 Backup Link: https://www.youtube.com/watch?v=VSBTfYEV8PM ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. **Ryan Coun (Needham):** [0:01] Great, welcome to the 27th annual Needham Growth Conference. I'm Ryan Coun. My team covers the space and communication sectors here at Needham. Really excited to have Rocket Lab here presenting to us today. Our CFO is Adam Spice. Welcome Adam, how are you? **Adam Spice (Rocket Lab):** [0:36] Thanks, yeah it's working. Thanks for having me. Feel like a little bit of a Willy Wonka making my way up here with the cane and stuff, but I apologize - had some Achilles surgery a few weeks ago, so still trying to bounce back from that. But excited to have a chance to speak with everybody today about Rocket Lab and what we're doing. We're a very unique story in the fact that we're trying to do quite a bit as a small company. You'll see, I think, some parallels with what maybe some other companies are aware of, but SpaceX is probably the most obvious compare that we obviously get looked at from time to time. ### Company Vision and Strategy [1:30] I'll skip through the disclaimer and forward-looking statements. I think the biggest thing to say about Rocket Lab when we talk about forward-looking is it's a rocket company, right? There's a lot of risks, a lot of things can happen in our business, and I just always make sure that people understand that - huge opportunity but also not a trivial amount of risk involved in what we do on a day-to-day basis. I think the most important thing to really understand about what we're doing at Rocket Lab is we're known for launch, right? So we are the leading player in the small dedicated launch portion of the market. We'll talk a little bit about what that really is in more detail. But the vision for the company is much broader than that - it's really all about creating an end-to-end space company that takes advantage of or builds a synergistic story where if you have all these building blocks, you create a much more moated business that's harder to disrupt and creates a bigger set of opportunities. I remember when I was interviewing for this role about seven years ago, I'd spent the prior 25 years in the semiconductor world and was looking to make a move into something a little bit different. I sat down with Peter Beck, the founder and CEO, and said, "What are you really trying to create here?" At the time we'd had one test launch of our Electron launch vehicle that we've now had almost 60 launches of - actually I think it's 58 launches. If Pete had said, "Look, I want to create the most dominant small dedicated launch business and that's really my vision," I probably would have passed on the opportunity. But when he said, "Look, I'm going to start with Electron, we're going to create a beachhead and a legacy in a very difficult market in the form of launch. After that, we're going to start building our ability to actually build spacecraft, our own spacecraft at scale, being very vertically integrated. Then ultimately we're going to build a bigger rocket" - which is now Neutron, which is a direct competitor to Falcon 9 that's going to have its first launch later this year. "And then what we're going to do is, once we have that capability, we're going to create our own infrastructure on orbit so that we can create recurring revenue streams and be an end-to-end space play." With that, I thought, "Well, that's bold enough, it's ambitious enough, and it creates a big enough TAM where I think it's an interesting opportunity to attract attention and justify the investment dollars it would take to execute that vision." ### Current Business State [3:45] So at this point, we have a rocket; we'll have two rockets a little bit later on this year. We've got spacecraft that we're building. We have customers that range from NASA - we built a couple spacecraft that are ultimately going to map the magnetic poles of Mars (they were supposed to launch last year but the launch vehicle in the form of New Glenn wasn't ready, so the planetary window shut for efficient transport of those spacecraft to Mars, so those are pending a launch date). We secured constellation builds with MDA Global Star for the direct-to-mobile opportunity they're enabling. And then most recently we won a $515 million contract with the DoD for the SDA proliferated LEO constellation with 18 spacecraft that we'll be delivering to the US government customer in 2027. Those are the first time we were actually awarded as a prime, so we've been subcontractors on many things, but this is the first time we actually became a prime contractor to the US government for this opportunity. ### Company Overview [4:49] We'll talk about the space data and services opportunity a little bit more as we work through this, but for those that aren't familiar, we've put over 200 satellites in orbit over 58 launches. We actually have a lot of technology on orbit, not only from Rocket Lab organic development but also through acquisitions. We've acquired four companies in our history to really build out our space systems portfolio of capabilities for subsystems, and we'll talk more about that later about what that represents in the grand scheme of the business. We've got over 2,000 employees. We've got three launch pads. We're bringing this new launch vehicle to market. So I think it's a much more diversified business - when people think of Rocket Lab, they think of rockets because that's the sexiest part of the business, but at the end of the day, we generate 70-80% of our revenue from non-launch related activities. So it's a much more diversified business than I think people normally appreciate. ### Global Operations [5:31] We are a globally diversified company as well. The company got its origins in New Zealand, but we've since branched out and now we have the majority of our employees in the United States. We're spread across California, Colorado, Albuquerque, Maryland, Virginia, Mississippi. So we do a lot of things in a lot of different places. We still have a very significant presence in New Zealand. New Zealand's a very interesting market for us, not only because that's where we started from, but it provides very unique orbital access from the southern hemisphere. Last quarter we actually showed the capability to launch from two different hemispheres within 24 hours. So I think the diversification across geographies is very important, also from a competitive workforce environment. The war for talent is real - space is certainly a very attractive area for engineering talent, and we compete with the likes of SpaceX and some of these new commercial space station companies, plus the traditional primes. But New Zealand actually represents a very interesting opportunity to acquire talent from around the world at a pretty advantaged price point relative to the US. ### Customer Base [6:42] If you look at our customer roster, it's going to look pretty familiar - all the logos you'd expect to see. We've launched for most of the US government organizations that you'd expect - NASA, NRO, DARPA, Space Force, and so forth. And then you also see some commercial customers in there. At the surface, you'll see that it's 50% commercial and then the remaining 50% split between government (civil and defense). But really, if you peel the onion back one more layer, you'll find that it's probably closer to 90% of our revenues that are really tied to the US government in one way, shape, or form. Because if you look at our commercial customers - pick whether that's a customer like Black Sky, Capella, HawkEye 360 - their customers are predominantly US government. So yes, they're commercial entities, but their end customers are really US government. I think that's a very comfortable foundation to build the business because there are a lot of hockey stick opportunities represented by commercial space, but really the foundational, reliable, and targetable money is being spent on the government side, both civil and defense. ### Launch Business [7:51] We'll spend a little bit more time talking about the launch business. We've got three different capabilities on the launch side: - **Electron** is the launch vehicle that's launched 58 times. - We have a variant of that rocket called **Haste**, which is targeted at the hypersonics test platform market. We had two of those launches for government customers in fourth quarter of 2024. - **Neutron** is the new vehicle that's coming to market. The way to think about Electron is it's the vehicle that delivers dedicated launch services for small satellites into LEO. The vehicle can take 300 kg to low Earth orbit. Haste is different - it doesn't actually deliver a payload to orbit; it delivers a different capability for the government to do hypersonics testing. And then Neutron is the new vehicle that I mentioned earlier that's coming to market. You go from 300 kg on Electron to 13,000 kg on Neutron in reusable configuration. This really is our answer to the Falcon 9, and the market desperately needs choice right now. The medium launch category is dominated by Falcon 9, and certainly the US government customer wants and needs choice. In the commercial market, they also need choice but for different reasons. With the commercial market, there are some customers that compete with Starlink, and it gets increasingly uncomfortable to have your launch dependency upon an application that competes directly with your business. So having some separation there is a healthy thing and something that the market is showing a strong demand for. ### Launch Market Position [9:25] This is just a pictorial of all the launches that we've gotten off. If you look at the pecking order of launch providers, SpaceX launched I think 134-135 missions last year. We were the second most frequently launched vehicle in the Western world with 16 launches. So there's still a fairly large gap between that, but when you look at the number of Falcon 9 launches, the vast majority of those were actually Starlink - internal consumption of their own service provision. We are continuing to narrow that gap, but we've got a very capable competitor that we're chasing in this market in SpaceX. When you look at the broader set of competitors, you obviously have SpaceX, ourselves (Rocket Lab), ULA, Blue Origin with New Glenn, and then Ariane 6 would probably be the one to round out that set of competitors on the western side of the launch market across medium and larger launch. ### Launch Infrastructure [10:17] We have a unique set of infrastructure capabilities. We have a privately-owned, controlled launch range in New Zealand. Some people think, "Why New Zealand?" Part of it's a function of the fact that the company was founded there and our founder/CEO is a Kiwi, but it also provides very unique access. You don't have the range congestion, and with a privately controlled range, you also don't have a lot of air traffic and sea traffic to clear when you want to launch in New Zealand. We have the ability to launch 128 times a year from our New Zealand facility - we've got two pads. That's really unparalleled launch access compared to what most people have to deal with when they're competing for slots on US government-controlled ranges. We also have a range at Wallops Island, Virginia. It's a NASA-controlled range, and that's primarily focused on our US government customers where, in an ideal situation, they prefer to have their payloads never leave US soil. It's also right in the backyard of the US government customer - you don't have to travel 16 hours across the Pacific to get there. So having that New Zealand and Virginia presence is actually a very strategic asset. You can think of scenarios in which the US government is very interested in having launch capability out of the South Pacific - very strategically located and a lot of capacity to grow into. ### Neutron Development [11:39] Neutron, as I mentioned, is the next vehicle that's coming into our quiver - very different in some ways but very similar in other ways. We're leveraging a lot of the technology that we brought to market with Electron on Neutron to buy down risk. There are a few areas that are very clear kind of de-risking capabilities: 1. Electron was the first carbon composite structured vehicle, so our tanks are made out of carbon composite materials - much lighter than stainless steel or aluminum tanks (about 40% lighter), which allows you to carry more payload capability. 2. Avionics is something that we're also carrying forward largely from Electron to Neutron. So we're buying down a couple of the real key risk areas. Probably the biggest difference between the vehicles, other than one being capable of carrying 300 kg versus 13,000 kg, is the propulsion side. Propulsion is typically the long pole in any rocket development program - the engine's got to work; it's the trickiest piece of technology. Last summer, we got through one of the major risk items with our Archimedes engine hot-fire results. I think that started to get a lot of attention from people who were following us - the fact that once you have an engine that seems to be working, then you've crossed a major point of risk, and you can start to have a lot more line of sight towards when the vehicle could ultimately hit the pad. That also tends to unlock customers' commitment to building your manifest. Until you have at least a working engine, it's very difficult to get customers to commit because in this business, the customer and the launch provider are doing this very codependent dance. If you're the launch provider, what you don't want to do is fill up a manifest with risky customers that might not deliver spacecraft on time, because the last thing you want to do is develop a vehicle - spend hundreds of millions of dollars and years to bring it to market - only to be waiting on the pad for the spacecraft to arrive. On the other side, if you're a satellite operator, you don't want to commit to a rocket, pay deposits, build your commercial model on getting your assets put into operation, only to wait for years for that rocket to be delivered. Unfortunately, the nature of our business is such that rocket delays are frequent. If you look at the New Glenn rocket that's sitting on the pad right now for Blue Origin, that was supposed to launch in 2020. We're in 2025, and it still hasn't launched. That gives you an indication that things can have long development tails and risk entailed to them. Fortunately, we've so far been pretty good on holding the schedule. We came public in 2021; we put an end of 2024 launch window; we've since had to push that to the middle of 2025. But 6 months is painful, but in the grand scheme of traditional rocket program delays, we're very much still in the sweet spot. And we're also doing it on a cost point that has never been done before - we're bringing this rocket to market for around $300-350 million. When you compare that to other vehicle programs that are in the billions of dollars and take a lot longer, I think we're doing some pretty amazing things. ### Vertical Integration Strategy [15:27] One thing that distinguishes us versus others is that we're very vertically integrated. We're not just a technology integrator; we're a technology developer. If you look at our Electron launch vehicle, carbon composite powders come into the factory, metal printing powders like Inconel come in, and then out the back end comes a rocket. We're probably 90% vertically integrated, which is very different from most other models that have a lot of dependency upon subsystem providers, which can often lead to schedule delays and cost overruns. We really own all of this - we build stuff ourselves, we have very little dependence on third parties, and I think that's one of the key factors that gives us confidence in our roadmap and our ability to deliver to our customers. ### Neutron Commercial Progress [16:18] As I mentioned, one of the key unblockers of schedule for Neutron and bringing that to market was really getting that Archimedes hot-fire engine test behind us in August of last year. That was a very big deal, and what that did was allow customers to start working with conviction towards launch dates. So recently, we did announce our first two launches for Neutron with a commercial customer. As we progress and knock down more of these development milestones, you'll see more customer commitments coming forward. Now the goal is just about selling out the manifest that we've published, where our schedule is: we'll have a test launch this year (which won't be carrying customer payload), then three commercial or paid launches in 2026, and then five in 2027. So it's just building into the rocket's cadence. The one thing that we've learned is that in our business, it's a very high fixed-cost oriented business, so cadence is very important to absorb all those fixed costs. That's really what's helped SpaceX build their dominant position in launch - the fact that when you're launching 135 times and you're reusing boosters up to 25 times, that really brings a lot of economic power to their model. I did see a report the other day that was pointing to an estimated (I can't tell a lot about SpaceX because they're private) 70 points of gross margin on their Falcon 9 launches at this point. So I think there's definitely a path to very healthy margins, and we'll talk about where we're at right now and our progression and where we think those are headed. ### Space Systems Business [17:49] Before we get into the financial details, I want to talk about the other segment of our business, which is space systems. This represents 70-80% of our total corporate revenue and comes from a few different elements. Today we have two of these three pieces in place, and we're working on the third: 1. We have a **subsystem business** where we sell picks and shovels to other satellite manufacturers. Customers like Lockheed, Northrop, Airbus, York - all these folks that buy things like solar cells, solar panels, reaction wheels, star trackers, radios, battery systems, and so forth. That's about half of that 70-80% of the revenue mix. 2. The other half comes from selling **platform solutions**. That's where we deliver either a complete satellite bus or we sell as a prime the complete satellite solution to the end customer. Examples would be acting as a prime for NASA for several missions building full spacecraft solutions, our DoD contract for the SDA Tranche 2 Beta award as a prime, or providing a bus to Global Star/MDA where we have a contract to deliver full bus solutions. 3. The third leg of the stool that we're working towards is similar to the progression from SpaceX. Once we have similar pieces in place with Neutron, we believe we'll have the capability to build a recurring revenue stream as the third leg to our space systems business. ### Spacecraft Portfolio [19:56] Across our space systems family, we have a variety of spacecraft - it's not just one-size-fits-all: - **Explorer** is the version of our platform that's interplanetary. We were actually the first part of the Artemis mission where we sent a comms relay into orbit around the moon to establish that there's a stable environment to put a lunar gateway. - **Pioneer** is an experimentation platform. This is what's being used by Varda Space to do in-space manufacturing of pharmaceuticals. Today, the second Varda spacecraft that we manufactured was being launched on a SpaceX Transporter 12 mission. We're responsible for not only building the spacecraft but actually operating it on-orbit and then re-entering the capsule with the produced materials. We returned the first capsule in the first half of last year successfully into the Utah desert, and we're looking to return this next capsule sometime in the next several months. - **Lightning** represents our comms platform. That's the variant that's being used for Global Star/MDA and also the SDA contract. - **Photon** is really more for the hosted payload small platforms where you can actually use the kick stage of our Electron rocket and turn that into a satellite very cost-effectively. ### Vertical Integration Advantage [21:32] I mentioned earlier, one of the key differentiators for us is our level of vertical integration. We believe this is the model for success going forward. We think that just being an integrator of other people's technology is not the winning solution, particularly as the government pivots increasingly towards commercial acquisition strategies. We're finding that we're positioned very well relative to legacy primes that really rely on other people to provide them the subsystems - they just literally pull everything together, bundle it, and package it. Oftentimes, we find ourselves competing for platform opportunities against those customers that have to come to us for subsystems for their bids. So it gives us a very unique perspective about how to position ourselves relative to the competition to win some of these opportunities. So not only are we very vertically integrated on building rockets, but we're very vertically integrated on building spacecraft as well. And again, we think that provides a huge advantage. It's not easy - it's required several acquisitions and a lot of organic internal development, but we really see it paying dividends now. I'd say five years ago, it would have been very unlikely that a company as young as Rocket Lab would be given a half-billion dollar DoD satellite build contract. The primary reason we believe that we won that was because of our level of vertical integration. So ironically, a newer, younger company represented less risk than the more established traditional primes as far as delivering to those programs. [23:02] Through our organic development plus the acquisitions, we've got over 1,700 missions in our history, going all the way to some of the most challenging missions like James Webb and the Mars rover programs. So we've picked up decades of legacy technology through acquisitions, and then over the course of the last five years, we've really developed a lot of our own capabilities organically. We also have a lot of missions that are in formulation right now. We've got over 40 satellites in backlog. If you look at the dollar value in our backlog, we've got over $700 million of contracted backlog for the satellites, and then of course we have the subsystems backlog and our launch backlog as well. ### Financial Performance [24:02] I'll briefly talk about some of our financial highlights and what our profile is, because a lot of people are not that familiar. These are the results that we posted for our Q3 quarter. We were able to crest the $100 million per quarter revenue threshold. We're increasing our gross margin profile as well, so we've been successful, as we gained leverage in the business, to deliver an expanding gross margin and help fund a lot of that heavy R&D lift that's going on right now through our Neutron development program. We're spending about $150 million a year on Neutron bringing that to market. Again, that sounds like a lot - it is a lot, I don't want to diminish that investment level - but it really is very modest in comparison to pretty much anything else anybody's ever tried to bring to market before. So we've got an expanding top line, we've got an expanding gross margin line, and as we get Neutron delivered to the pad, we will pass this big R&D bubble, which creates a big inflection point for our P&L. Because now you go from flowing a tremendous amount of R&D through the model to having revenue cover as this goes into production. And of course, once you get to minimum viable product on the rocket where you've got a pad that can support a launch and a vehicle that can go into production, R&D gets cut pretty dramatically. So I think we've got an upcoming inflection and milestone financially once we get Neutron to the pad later this year. ### Backlog and Pricing [25:37] A little bit on the backlog - we exited the quarter with over a billion dollars of backlog. The split of that backlog looks very similar to our current revenue split, where about 75% or more is tied to space systems and the rest to launch. I think we had a very good year in 2024 for building our launch backlog. We exited Q3 of 2024 with 39 launches in backlog with an expanding average selling price. So we've been able to grow our backlog in launch while actually expanding our ASP as well, which I think just speaks to our position in the market. A lot of people five or six years ago were saying launch was going to become a commodity. It's done the exact opposite. When I joined, we were marketing Electron at about a $4.9 million price, and now our backlog is priced around $8.4 million, and we see upside to that over time as well. ### R&D and Cash Position [26:35] We have been investing at a pretty aggressive rate. Almost all of this R&D intensity that you see in our model is really coming from Neutron. Fortunately, Electron is now a pretty mature product, having launched almost 60 times, so that's got very low R&D commitment to it. Space systems in general doesn't have the same level of R&D intensity as the Neutron development program. Most of the R&D associated with our space systems group business is customer-funded. So again, most of this R&D is going to get lightened once we get past that first test launch of Neutron. [27:13] Our cash flow and adjusted EBITDA track pretty closely. The biggest non-GAAP exclusion would be our stock-based compensation. We do run about $60 million a year of SBC. The war for talent is real - compensation is a key part of how we attract and retain our team. We're a very equity-centric company where if shareholders do well, employees do well as well. The guidance that we provided for Q4 was very strong growth off of Q3 - revenue between $125-135 million, continued expansion on the gross margin line on a non-GAAP basis. We'll continue to invest aggressively - we're not going to really get the benefit of lifting our foot off the R&D process for Neutron until we get to that first test launch off the pad middle of this year. Fortunately for us, we're in a very enviable cash position. We exited Q3 with over $500 million of liquidity, so we feel like we're financed to the point where we can continue to invest in all the right areas and not have to make some of those difficult choices that would maybe cannibalize some of the longer-term growth due to lack of capital. ### Q&A Session **Question:** [28:47] If you haven't mentioned Boeing as a competitor, where do they fit in the company? **Adam Spice:** We do compete with Boeing in a few areas. For example, we have the largest compound semiconductor solar operation in the western world in the form of a company we acquired called Solero, and they have a company division called Spectral Lab, so we do compete at the subsystem level in some areas. We obviously don't compete directly with them in other areas. They're really more focused on the larger, exquisite satellites versus the low Earth orbit small satellite side of the market. They do have Millennium, which is a product line focused on the smaller satellite side of the market, so I'd say that's probably where the most direct competition would be, and then maybe on the solar subsystem side of things. But I would say that it would be fair to say that we don't wake up and worry about Boeing on a daily basis. That's not our biggest competitive focus right now. I'd say what pretty much dominates our competitive view would be really SpaceX - we wake up every day trying to figure out how we compete with the likes of Elon, and it makes for some interesting moments. **Question:** [30:18] (About the gap between 300 kg and 13,000 kg in payload capacities) **Adam Spice:** So the question was, we currently play at 300 kg, Neutron is going to 13,000 kg - isn't there a sweet spot in between there somewhere? I would say, we've now had six-plus years of experience in the small launch side of the market with Electron at 300 kg, and we really don't think that we've missed a lot of opportunities by not being a little bit larger, let's say at one ton. There are some one-ton players - you've got Firefly that plays in that area, Astra was trying to be in that part of the market but exited it. We just don't think there's a lot of payloads that are larger than 300 kg that represent a meaningful opportunity. And at one ton, you are, we believe, too small to be a competitive rideshare vehicle versus a Falcon 9. You're too large and expensive to be an effective rideshare competitor versus Electron. So it's kind of an awkward tweener place in the market to be. Also, we designed Neutron at the 13,000 kg size because the market has really been coalescing - if you're a satellite operator, who would you be designing your satellite to fit best on? Probably Falcon 9, because it has such a dominant position in the market; it really has a monopoly in that medium-class launch. So if you're going to displace some of those payloads, you've got to be competitive with that vehicle, and that's what Neutron was designed to be - really a substitute or swap-in for the Falcon 9. **Question:** [31:52] You talked about the price of the launches actually going up. Is that just demand, or what? **Adam Spice:** The question was around why we see the average selling price going up for Electron. I would say it's a function of the fact that if you rewind the clock five or six years ago, there was a lot of wishful thinking in the launch business. There was a lot of "slideware" - coming out of the semiconductor market, I was used to that term - that influenced pricing pressure. At some point, people need to deliver, and there's been relatively little execution in the rocket side of the business. You can talk about low launch prices, and we had companies that were out there touting 300 launches per year, which we knew was absolute nonsense and completely non-credible, but customers would actually buy into that from time to time. There are still some people out there who are aspirational launch providers that are giving really unrealistic targets and costs and cadence. But the beautiful thing about this market is ultimately you've got to put stuff on orbit. If you have a record of delivering stuff to orbit consistently and reliably, there isn't much incentive to switch to an unproven platform because the risks of having an anomaly or not getting your spacecraft in orbit are much worse for you as an operator than trying to save a couple million dollars on launch. We think we've pretty much squeezed out all of that risk trade on the Electron side of the market. Now we've got some pricing control because there's really nobody that can come close to our reliability and cadence, so we've got ourselves in the sweet spot. That does beg the question of what creates the opportunity for Neutron, because Neutron is a new, unproven vehicle. You do have Falcon 9 in the market, which is incredibly predictable, very effective. But I think that comes down to the fact that the government customer really wants diversity of supply - they can't just have one supplier control that important part of the market. And I think in the commercial side of the market, you've got customers that are relying upon a competitor to put their stuff in orbit. If your constellation competes with Starlink, and you're basically having to rely on SpaceX Falcon 9 for launch, that's got to be a very awkward, uncomfortable place to be. So we really represent a new capability coming into market that is not as scary as that. Longer term, if we're successful in pursuing our own application aspirations, it will create a similar dynamic, but at the end of the day, the customer doesn't have a lot of alternatives. Unless they want to build their own launch vehicle, which very few organizations in the history of mankind have been able to build a reliable launch vehicle, they really don't have a choice. That's why we think people who've established launch capabilities are very difficult to displace. New entrants coming to the market are very difficult - the people you see coming in the market now, like Blue Origin, are self-funded by one of the richest people on the planet. You don't see a lot of new companies putting attractive vehicles forward because it just costs a lot, is tremendously risky, and there are already existing capabilities on the market that don't provide a really good risk trade. **Question:** [35:31] (About shareholder base evolution and SpaceX valuation) **Adam Spice:** The question is really around the evolving dynamics of our shareholder base and how that sets up relative to SpaceX's valuation and accessibility or actionability as an investor. I think since coming public, we've largely been a retail, headline-driven company. There's a lot of passion for space. When we have to get ready to mail out our proxies, I was shocked at how many shareholders we have - it's orders of magnitude higher than most companies with similar market caps. That's because we're spread across a lot of retail - probably 50% of our volume is retail. I'd say the majority of the remainder has historically been fast money, hedge fund types. But over the course of the last six months, particularly once we got past the hot-fire engine test milestone, we started getting a lot more attention from your more traditional long-onlies. Recently we've seen people establish positions that we were hoping to get into the name over the last few years. One of the things that also happened is the stock price has moved a lot in the last six months. We were trading for $4 for a long time, and then we've now popped up into the 20s. I think part of that was as we de-risked Neutron getting to the pad - again, the engine hot-fire being the biggest milestone towards that - people started to look at SpaceX with a private valuation of $350 billion. You've got people talking about potential IPOs at much higher valuations than that. So what should the ascending, aspirational number two player in this market - what should that valuation delta be? I think once we have Neutron, we're starting to play in very similar sized markets. Right now, the small dedicated launch market is much smaller than the larger launch market, but that gets equalized with Neutron. The application market has been a huge leg up for SpaceX in their valuation, but once we have Neutron, we now have the ability to do what they do, which is build spacecraft and deploy spacecraft to orbit at a cadence and a cost point that's going to make us very interesting from an applications perspective. When we were trading for a $2 billion market cap versus $350 billion, there was a huge gap. Now we've certainly crept up north of $10 billion, but there's still a huge valuation discrepancy between the two firms that are chasing very similar opportunities. Granted, SpaceX has a 10-year lead on us - they started in 2003, we started in 2013 - but our focus is on how do we close that capabilities gap, and as we do that, how does the valuation gap converge as well. I think that's started to resonate quite a bit with investors and get a lot more attention. **Question:** [38:26] What about the satellite replenishment cycle? **Adam Spice:** The question is around the satellite replenishment cycle. With this LEO proliferated architecture that's taking hold not only across commercial markets but also government with SDA for example - if you're in the business of building satellites and launching satellites, it's a very healthy dynamic because these satellites often are designed to stay on orbit for three to five years. So you've got this virtuous cycle where, rather than have a handful of exquisite assets that basically stay up in orbit for 20 or 30 years, you now have hundreds or thousands of satellites that have to be replaced every 3 to 5 years. It's a very different set of dynamics for satellite manufacturers and satellite launchers, and that's quite encouraging. If you look at, for example, the larger constellations coming to market like Amazon Kuiper - they need to deploy over 3,000 satellites over the next three years, and then they've got to replenish that constellation on a recurring basis, which provides a lot of demand into the market. As I mentioned before, there's not a lot of supply right now on the launch side, and I don't think there's going to be a whole lot of incremental supply just because of the challenges and complexity. A lot of people have tried, a lot of people have broken their pick on trying to get into this market. Once you figure it out, I think there's a huge upside opportunity for people that can execute and capitalize on that. **Ryan Coun:** [39:54] Great. Please join me in thanking Adam and Rocket Lab. [Applause]