[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> May 15 2024 **Insider**: [[Adam Spice]] **Source**: B of A 31st Annual Transportation, Airlines and Industrials Conference **Date**: May 15 2024  🔗 Backup Link: https://www.youtube.com/watch?v=9gsEoqMAR6c ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. [1:23] **Moderator:** Thank you all for coming. We've got Rocket Lab here—Adam Spice, Chief Financial Officer, and Pete Camp, Financial Analyst. Thank you guys for coming. As far as I'm concerned, no offense to any other company, these guys do some of the coolest stuff that's going to happen and be spoken about at this conference. So anyway, without further ado, why don't we just—for the folks that aren't as familiar with Rocket Lab, Adam, if you could just kind of on a high level tell everybody what Rocket Lab is and does, that'd be great. **Adam Spice:** Sure. As you can tell by the name, Rocket Lab's got something to do with rockets, and that's how we started. Rocket Lab started off focused on a new class of vehicle called small dedicated launch vehicles. So we have a vehicle called Electron, and Electron has flown 47 times. We've got our 48th flight coming up in the next week or so, with a pretty busy manifest for 2024. We generate about 30% of our revenue from launch and about 70% of our revenue from the other part of the business that people aren't as familiar with, which is Space Systems. Think of Space Systems as anything to do with the actual satellite itself. So we've got the launch piece, we've got the satellite piece. Within the satellite part of the business, we've got a merchant component business where we sell key subsystems into the broader small satellite ecosystem—customers including companies like Lockheed and Northrop Grumman and other smaller satellite manufacturers. We also provide on-orbit services, so we operate satellites for customers on orbit. We actually design and manufacture full Satellite Systems. We have about 45 satellites in backlog right now. The two larger parts of that backlog are exactly 17 satellites for Global Star MDA, and then we have just recently been awarded a $515 million contract for 18 satellites as part of the Space Force's SDA platform—the low Earth orbit proliferated warfighter platform. Within our launch platform, we have commercial launches, government launches. Within the government launches, we actually have a new line of business where we're supporting hypersonics test platform work, launching out of Wallops, Virginia. We have launch pads in New Zealand and in Wallops, Virginia for Electron. Our biggest initiative right now is developing a medium-class launch vehicle called Neutron. Neutron is going to be reusable, 13-ton vehicle—13-ton payload capacity—flying at Wallops, Virginia as well. That's really to bring more capacity and capabilities to the medium launch category, which has really been winnowed down to really one primary provider right now, which is SpaceX. SpaceX has a very uncomfortable, I would say, position in that market where a lot of things have conspired to make it so that they're really the only active provider today of note. A lot of it's geopolitical—I think people were not necessarily anticipating the Russian-Ukrainian conflict and what that would do to the supply chain for rockets. If you think about engine dependency from Russia-Ukraine for Northrop Grumman's Antares rocket, for ULA's vehicles—it's really kind of upended the industry. We look to bring Neutron into that market to provide some much-needed diversity and incremental capacity. ### Neutron vs. Electron [4:51] **Moderator:** Maybe just as a place to kick off, if you could just maybe describe the difference between Neutron and Electron. Just bear in mind I was just out in their building, and one is huge, one's not so huge. But if you can give folks a just a sense on scale. **Adam Spice:** They're very, very different vehicles. Electron, which is the second most frequently flown US vehicle behind Falcon 9, is about a 70-foot tall vehicle. It's a three-stage vehicle, it's capable of putting a 300-kilogram payload into low orbit. It's also deployed payloads out of low Earth orbit—in fact, about two years ago for NASA we were the first part of the Artemis program, and we delivered a payload on a trajectory to the moon. It was called CAPSTONE, so we delivered a payload to the Moon, which was a very, very cool mission. So you think about a refrigerator-sized payload that we can deploy into low Earth orbit on Electron, or multiple smaller payloads. With Neutron, it's very different—it's a vehicle capable of delivering 13 tons, so almost 40 times the capacity of Electron. That's really designed to be a constellation deployment vehicle, very much like a Falcon 9. It could also do large individual single satellite dedicated launch missions as well. They're similar in some ways and different in some ways. The similarities are in the fact that both are carbon composite structured vehicles. We were the first to innovate around carbon composite structures for launch vehicles. The benefits of the carbon composite approach is that it's much lighter than stainless steel or aluminum, and it's very rigid. So if you get it right, it provides a lot of benefits to giving you more mass throw capability. We're also leveraging a lot of the avionics capabilities from Electron, because a lot of times the flight computers and other things don't really care whether it's a large launch vehicle or a small launch vehicle that it's controlling. So a lot of learnings from 47 flights are going into Neutron. Propulsion is probably the biggest change. Electron has a very novel propulsion system—it's an electronic fuel-injected rocket engine, essentially an electric turbo-pump design where we pressurize the fuel pumps using discharging about a megawatt of lithium-ion battery power. Versus Neutron, which is a different propulsion cycle—it's oxidizer-rich cycle, which is a much more complex piece of machinery. It looks more like a traditional rocket engine than the Electron rocket engine, which looks very different because it's very simplified. One of the other key things is we've now been bringing back the first stage of Electron for reusability, and we also recently, about six weeks ago or so, brought back a payload from orbit for a company called Varda Space where we built that satellite for them and then we re-entered the capsule with the pharmaceuticals that they manufactured on orbit. So a lot of R&D has gone into re-entry capabilities. That's one of the key things about Neutron—Neutron was designed from day one to be a reusable launch vehicle, and so all the economical benefits that go into being able to scale that business with a reusable vehicle is something that we're very much looking forward to. ### Neutron Development Status [8:04] **Moderator:** And then on Neutron, where is the company in the development of it, and when do you expect it to first fly, and so on and so forth? **Adam Spice:** These—I spent 25+ years in the semiconductor industry before coming to the wild and crazy business of rockets, but I always thought that there was nothing more complex than mixed-signal semiconductors, and I was really wrong, actually. Rockets are way harder, not only just from a technology perspective but also just from the geopolitics involved and things like ITAR controls and limitations that puts on your ability to share technology across borders and stuff. We are well on the way. We originally had, when we came public in August of 2021, we set a date for first launch of Neutron at the end of 2024. On our earnings last week, we announced that we were pushing that schedule out by two quarters, so now we're targeting the middle of 2025. Primary drivers for that push are the propulsion system, which is typically the longest pole in the tent. In this case, it's the most novel part of the new architecture. That has taken us longer, partially due to the fact that there's things you don't necessarily anticipate. There's also sometimes staffing challenges in scaling up as quick as you'd like to. You've got dependence on third-party providers for portions of the system and so forth. If you think about the key areas of a rocket development program, there's really four primary work streams: 1. Propulsion, which is always the longest and the riskiest 2. Structures, which are basically your tanks and your fairings and so forth (for that we feel really good about because we've done a lot of those for Electron) 3. Avionics, which is basically the guidance sets and all things that control the flight of the vehicle (again, we're leveraging that from Electron to Neutron) 4. Infrastructure, which means manufacturing factories and also the launch pad (you have to build a different pad for this new launch vehicle) All of those things are actually moving pretty well, but at some point the clipping of the milestones on propulsion were just delaying to the point where even though the engineering team didn't want to give up the end-of-year launch, Pete our CEO and the rest of the management team just had to make a judgment call and say, "Look, we no longer think we can reliably hit that date, so let's give ourselves what we think is a more appropriate delivery time frame," which is the middle of next year. One of the key milestones was really getting our new Archimedes engine for Neutron to the test stand in Stennis, Mississippi, and we accomplished that last week. Our goal and our belief is that we'll be able to see fire coming out of that engine before the end of this quarter. That's really—I mean, once you have an engine that's working or you know how it's working, you can have much higher confidence about the rest of the program coming together, because largely you want these things to kind of march in parallel. I think at this point, though, some of the infrastructure stuff and other parts of the vehicle are progressing a little bit beyond the propulsion side. So propulsion's got to catch up, and then that'll be the gating item. ### Neutron Recovery Strategy [11:08] **Moderator:** And I think it's cool, so I'm going to ask you this—how do you recover Neutron? **Adam Spice:** Neutron's got a couple different options. The initial approach for recovery is very much like the Falcon 9, where you'll see it land downrange on a barge, so call it like 400 km downrange in a downrange landing configuration. Again, the vehicle has about 13 tons of payload capacity. The other approach, which we'll phase in over the program, is return to launch pad. That's where the rocket takes off and then returns right back to where it took off from on the pad, which obviously helps a lot because you don't have the cost of deploying barges. It obviously provides an opportunity for much quicker reusability. So we're very excited about that. There are some steps that we still need to get through, including some of the environmental and regulatory stuff with NASA, to be able to do that at the Wallops range because, to my knowledge, nobody's ever done a return to pad at this point. So it's kind of a novel approach, but again could have huge benefits if and when we get that approved. ### Launch Industry Challenges [12:06] **Moderator:** If we just kind of rewind the clock to when we first started talking, we should have been swimming in launch providers today, and we're not. What is it about the launch industry that's made it that it's really kind of just—of the private launch providers, you guys, SpaceX—why don't we have all these other players around, and what makes launch so hard? **Adam Spice:** I think launch is inherently hard because it's such a complex piece of machinery. Electron, for example, the rocket that takes 300 kgs of payload to orbit, it's got like 66,000 parts, and there's no insignificant part. Every little thing can cause a potential anomaly. I think it's just there's so many elements of technology risk that you have to buy down over the development period, and I think it's a very capital-intensive business. For example, to your point, there were a lot of—we were supposed to be swimming in launch providers. Look at what's happened. You've had people like Astra, for example, who came public around the same time we did. They targeted, they said they were going to launch 300 times a year, which, you know, was kind of squinting at the time going, "300 times a year? I mean, you don't even have 300 days of clear weather to launch." So that was kind of to me a big head-scratcher, and ultimately that didn't materialize. You had folks like Virgin Orbit. Virgin Orbit came public again around the same time. They went bankrupt. We ended up benefiting from their bankruptcy in the fact that we were able to acquire a factory two blocks down the road that was fully equipped, that had about $100 million investment into it, and we were able to pick that up for $16 million, which really actually helped us drive our Neutron development because we basically walked into a turnkey factory that we could gain schedule and capital cost advantage on. The challenge with Virgin Orbit was they had a different architecture where it was a captive carry, so you put it under the wing of a 747, get up to 30-35,000 ft, drop it, and it goes. But they had launch failure after launch failure, and they ran out of capital. I think that was their challenge. The problem is, again, it's very capital intensive. If you make a mistake, it's very difficult to recover from. Once you kind of go down that wrong path from a development or architecture perspective, it's very difficult to recover. The capital markets, as we all know, aren't what they were back in 2021. So as people have kind of depleted their precious capital, they find themselves in a very awkward situation where they really can't raise anymore. I think the private markets are even worse. So I think we're now down to—if you kind of look at the launch landscape today, we're the clear dominant provider in small dedicated launch. We're the only one that's really operating at cadence at all. On the medium-class launch, you've got SpaceX. Northrop Grumman basically left the market for medium class with their Antares due to their Russia-Ukraine engine dependence. ULA's Vulcan is not there yet—they've had one test launch. And then you've got Blue Origin's New Glenn vehicle, which has not yet launched. So you've got a handful of current and potential providers. I think the one thing that the customer and the market really needs is they need another high-cadence, cost-effective medium launch provider beyond SpaceX. I think the market really looks—and we look to ourselves—to be that high-cadence, low-cost, really commercially oriented launch provider. ### Market Demand [15:52] **Moderator:** If Neutron goes the way you hope it will, and how big a market is it potentially? How much demand is there for Neutron-size launch and for Electron-size launch? If we were to walk out—just like thought experiment and not a future guide, be clear—but you walk out five years from now, 10 years from now, how much demand is there for this kind of launch? **Adam Spice:** If you look at third-party research out there—Northern Sky Research and Euroconsult that provide figures—they're pointing at tens of thousands of satellites per year need to be launched. I think we can look much more tangibly today and say, look, SpaceX launched, I think, roughly 95 times last year (might be 98), and around 80% of that volume was driven by Starlink launches. Starlink being one of the early, obviously, internet broadband from space providers. But you've got Amazon's Project Kuiper coming up behind that. You've got OneWeb Gen 2. You've got Telesat Lightspeed. You've got the government SDA tranches which are just starting. You've got NRO programs that are similarly looking at low Earth orbit proliferated constellation opportunities. So the demand is clear. Right now, there's a clear lack of capacity. Just to be—when you kind of think about it, there's a lot of people out there who are building business models that compete with Starlink, yet they're dependent upon SpaceX to launch their satellites. That's a very, very uncomfortable, tenuous situation to be in if you're running one of those constellation companies. So we look to be able to provide some incremental capacity there. Amazon Kuiper bid out, I think, 84 launches last year, and they awarded it to three providers: ULA Vulcan, Ariane 6, and Blue Origin New Glenn. Of those three providers, two of the rockets haven't been completed yet or haven't launched. Vulcan's had one launch. That's just one set of launch bids for a portion of their constellation. When we look at our opportunity for Neutron, we'll have one launch next year, and our cadence is kind of: one, scale to three, scale to five. That's really based on our experience with Electron. I think our biggest opportunity is how do we unleash the potential of this reusable vehicle more quickly, because there's no question—there's a lot of things that keep Pete and I up at night in running this space business, but demand for Neutron is absolutely not one of them. ### Space Systems Business [18:43] **Moderator:** Gotcha, gotcha, gotcha. And maybe changing gears a little bit, because we spoke so much about launch, the other side of the business—if you can talk about what you guys do in terms of subsystems, satellites, satellite parts, everything, you know. **Adam Spice:** Our goal really, if you step back, is to become an end-to-end space company. What we view as part of that is you've got the satellite subsystems that go into building the satellite. So we have a subsystem business that sells things like attitude direction and control components, which are things like reaction wheels and star trackers, torquer rods and so forth. These are things that help stabilize and orient the satellite on orbit so it can do its job, such as pointing it over Ukraine at 3:00 on a Wednesday afternoon to take images over a certain region. So it's the pointing and stability of the satellite. We sell subsystems that are oriented around that. We sell the software that does the command and control of those satellites on orbit. So if you've got a constellation, you need to wake up and task your satellite constellation—we own the software that does that, and we sell that into the merchant market. We sell solar solutions—germanium compound semiconductor solar cell solutions into that market, service a lot of national security missions. Then we also own a business that sells separation systems, which are basically the devices that sit on the rocket and are also connected to the satellite. They're basically what deploy the satellite—they're mechanical systems that eject the payloads from the rocket. So we sell all of those things to the merchant market today. It's call it a $140 million run rate business and growing quite nicely, call it a 20%-ish CAGR. Then we have a satellite manufacturing business where we actually design and manufacture whole satellite systems for customers. Those are the kinds of satellites that we do for customers like NASA. We've got two satellites that are going to launch later this year to Mars that are going to map the magnetic poles of Mars. Most people wouldn't think of Rocket Lab as building full satellite systems for customers like NASA—we do those. We build full satellite systems for a company called Varda Space, which does in-space pharmaceutical manufacturing. We just won that contract with the SDA to build 18 of their very sophisticated satellites, and we're the prime on that mission. If you look at our backlog, we've got about a billion dollars of backlog. About $800 million of that backlog is Space Systems. Of that $800 million of Space Systems, it's about call it $650 million roughly of the actual satellites themselves, and then $150 million of the components business. And then the rest, the other $200 million, is launch. ### SDA Constellation Contract [21:35] **Moderator:** And can you speak a little bit to the SDA constellation, because that—in total is what? A $515 million contract and you're prime? **Adam Spice:** That was the first prime mission that we've gotten, which does a lot of things. We had been a bus provider into the Global Star constellation, but being the prime is actually a much better position to be in because it obviously gives us more share of the platform from a dollar perspective. In this case, we're providing the bus, and as we talked about, we're so vertically integrated on the bus that we buy very little from third-party providers for the bus—it's largely all Rocket Lab content. But when it comes to the payload, that's an area that we don't have capabilities, so we basically partner and subcontract the payload elements out. But our goal over time is to own that as well. Our goal is to continue to expand our share of wallet on these platforms, and part of it is because, obviously, we want to provide growth to the business and we're expanding our addressable market when we move up the food chain. But at the same time, we also just derisk on-time delivery and performance and cost competitiveness. We don't necessarily look at the platform and say, "What are the sexiest pieces of technology that we think we want to own?" It's more of, "What are the biggest headaches on the platform, and how can we eliminate headaches by owning that, bringing it under our roof where we can manage it, bring our scale and our capabilities to it, and also allow a different level of overall architectural differentiation?" When you control all the various elements, you don't have to just take something that's going to give you a certain form factor, a certain mass, and a certain set of capabilities. You can say, "Well, if we had this element of the payload, if we had this element of the bus, we can make it smaller, we can make it lighter, or we can basically split certain amounts of the functionality from that subsystem to another subsystem to come together with a better, more holistic architecture." A lot of what you see in traditional aerospace primes is they don't build a lot of stuff—they just buy a lot of stuff from other people and they basically put it together. We take a very different view. We don't want to just buy stuff from other people and put it together—we want to design an optimized overall system. In order to do that, you need to have more control of all the various pieces that go into that. So that's really what drives how we think about what parts of the ecosystem we want to play in. Earlier this year in February, we went out and raised a $355 million convert, and a lot of people ask the question, "Well, what is that going to be used for? Is it really used for getting Neutron finished off?" It's really for pursuing more of those vertical integration opportunities on the satellite side of things. Ultimately long term, it's about how do we start to dip our toe in the application side of the market, because that's actually the biggest part of the overall space ecosystem—applications or monetizing the data that you get from the assets on orbit. If you look forward 3 to 5 years from now, I would fully expect that we own assets on orbit that we're monetizing on a recurring basis and getting that recurring revenue stream going at very high gross margins once you get that capex deployed. Since we own so much of the ability to put assets on orbit, we should be able to do that in a more cost-effective way than others. I think we've kind of seen that playbook play out with SpaceX and Starlink. It's very difficult for other people to do what SpaceX has done unless you have a vertically integrated model including a reusable launch vehicle. So we've seen what that playbook to success looks like, and I think very few organizations on the planet been able to put together a rocket, which is the hardest piece. So it comes back to your question—we're supposed to be drowning in launch providers, we're not. Well, we actually think if you don't have your rocket, you're going to be in a very uncomfortable place long term as a player in the space market. ### Launch Market Dynamics [25:42] **Moderator:** Yeah, yeah, interesting. Because nobody can just do launch, right? I mean, they'll end up doing other stuff, right? **Adam Spice:** It's so hard. I mean, launch is so hard because, again, you don't have to just develop really difficult technologies, but you have to have the capital to build that infrastructure. And then customers have to be motivated to take risk on a new platform. So your timing into the market is super important too. For example, the reason why Electron was given the opportunity it was given was because, until Electron came along, if you were going to launch a national security payload or any other where you needed a dedicated launch (so you can't put it next to a dozen other satellites on a rideshare mission but you need your own dedicated launch), you would pay at times $3 to $500 million to ULA to do that, or you'd spend $100 million with SpaceX to do that. We came into that market and said, "Well, we'll do it for less than 10 and actually build a business on it." So the customers go, "Well, you know, if it was 20% cheaper, probably not, but when you're one-tenth of the cost, that's what makes customers lean forward and take risk." So timing is super important. I think we've passed that point where competitors can come in and really disrupt the launch market, because on the small dedicated side, we sell a launch for, let's say, seven to 10 million. If a new launch provider comes in at five, it's like, why are you going to risk a 20 or 30 or $50 million satellite to save a few million dollars on the launch side? Because once you have a failure, it sets you back quite a ways. So I think on the launch side, we feel fairly protected given the timing and our position. On the larger side of the launch market, SpaceX has kind of done a similar thing, except for the fact that that portion of the market's so large it can't—and for lots of different reasons, including Congressional law, you need more than one provider. So I think that's what creates the opportunity for somebody to come in and be a competitor. I think if we end up being the dominant number two behind SpaceX, that's not a bad place to be. ### Competing with SpaceX [27:49] **Moderator:** So that was like kind of my next question—what's it like to compete with SpaceX, be it that it seems like they just have deep, deep, deep pockets? **Adam Spice:** Probably one of the scariest things about competing with SpaceX is, to that point, Elon seems to have an unlimited ability to raise capital. So he's playing with massive pools of capital. But we've kind of grown up with that context, so we've had to do things differently to be cost competitive. And so we're going to apply those same things to Neutron. We're not afraid of competing with them on a fair and level basis. I think often times, maybe he doesn't play on a fair level basis either. It's definitely one thing that does keep us up at night. Launch demand is not that, but how do you basically manage that dynamic with some of the unlimited capital and a very—got to give it to the organization—SpaceX has been a phenomenal executor in an industry that's not known for phenomenal execution. ### Talent Acquisition and Retention [29:02] **Moderator:** And then maybe just changing gears a bit, where do you get people from to work? I mean, how's attracting labor, retaining labor been? I mean, you look across the aerospace and defense sector in general, that's been tough for companies. How's it been for you guys? **Adam Spice:** It's not been that bad. When I joined the company—I'm coming up on my sixth year later this month—there were about 100 people when I joined. Now we're close to 2,000 people. We have the benefit of having about 800 people in New Zealand, so a large presence there. We're a pretty big fish in a relatively small pond there. We're a place that people want to work. We attract talent there. The interesting thing about New Zealand is you can actually hire people from around the world to work in New Zealand. But in the US, you're limited to US people for ITAR reasons. So it actually provides a really nice growth base to attract talent from. We have a lot of people in New Zealand that come from France and Germany and the UK and Canada and so forth. So we've had tremendous success hiring in New Zealand. It's actually a really good cost basis too—it's a much cheaper place to operate than in the US. In the US, we have over a thousand people, almost 1,200 people, and those are spread out between Long Beach, Denver, Albuquerque, Stennis Mississippi, Wallops Virginia, Middle River Maryland, Silver Springs Maryland, Toronto. So we've got a pretty good diversified footprint. At the end of the day, people just want to work for a platform that they think is going to be successful. So a lot of them believe in that end-to-end model that we talk about. We probably hire, I'd say, probably 20 to 25% of our people fresh out of school. So we've got pretty good feeder programs into multiple universities around the world. We do end up hiring quite a few people from traditional aerospace primes because I think they find that it's a much more dynamic work environment—they're given much more responsibility than in a more stuffy, more established location. We also offer pretty generous equity versus people that don't get to participate in these larger traditional primes. And then we build talent from within—we take relatively raw materials and develop those skills and capabilities internally. We have hired some people out of SpaceX because typically after about three years, they've kind of had enough of that. And then I would say we also get talent from the traditional aerospace companies—the Northrops, the L3 Harrises, the Lockheed Martins, and the Boeings. ### Revenue Growth Outlook [31:59] **Moderator:** How should investors think about top-line growth broadly going forward? **Adam Spice:** Top-line growth—we've got a nice year teed up for 2024, coming off a good growth year in 2023. It's really going to be driven by Electron cadence, so continue to grow that cadence. We have a pretty strong pipeline for that business relative to even where we were last year. Neutron's going to be a big enabler of growth. Right now when you sell Electron, you're selling roughly $7.5 million per launch. Neutron kicks that up to $50 to $60 million. And then really adding chunky Space Systems elements to the backlog around these satellite manufacturing contracts. We're continuing to chase opportunities that are similar in magnitude to the SDA contract. When you land those big contracts, it kind of derisks your revenue forecast for the next several years just given the nature of those programs. So we're chasing those hard. We've been able to double our backlog year on year on year. We've got over a billion dollars of backlog now, and it's when can we turn that into $2 billion of backlog and keep driving more secure growth. One thing that's really interesting about the dynamic that we find ourselves in is, in most high growth companies, your hockey stick elements of your revenue pipeline are usually driven by commercial opportunities that have their own financing risk. But right now, we're really kind of the best of both worlds where the US government is the hockey stick, and they're known programs. So we've got, I would say, financially lower risk, much higher programmatic certainty. Our growth isn't underpinned at all by these speculative commercial mega-constellations. I actually really like where we're at because you've got all the benefits of growth and all the certainty of government. ### Cash Flow and Neutron Investment [34:08] **Moderator:** Maybe we're running out of time, but just a point to wrap up on—how is the cash flow for the company proceeding, and maybe with and without the development of Neutron? **Adam Spice:** Neutron is consuming about $40 million a quarter between R&D, which is large. If you look at R&D spend for Neutron, it's half prototype and half direct labor. And then about $20 million, or half of the total cash flow related to the program, is capex spend. You're going to see that continue through the remainder of 2024. But as we get toward that first launch, that's going to start to taper off. We budgeted the program initially at $250 to $300 million, and right now, given that we pushed the program a couple quarters, now we're bumping up against that higher limit of $300 million across R&D and capex. But we exited Q1 with $565 million liquidity. The Electron and Space Systems parts of the business, if they were measured on a standalone basis, they're not cash consumers—they're cash generators. So as those elements of the business continue to grow, that'll help manage that continued investment in Neutron. We're all very much looking forward to that first Neutron launch where you pivot from heavy R&D investment to revenue cover, really moving a lot of those costs into COGS. We'll continue to invest in Neutron—it typically takes about three years to harden a rocket, so you'll do annual block upgrades to give you more functionality, buy down risk, improve the yield on certain subsystems. But the rate of spend should decline from an R&D perspective, and again, you've got the benefit of now you've got paying customers helping carry that water. **Moderator:** That's great. Well, thank you so much, Adam. **Adam Spice:** Thanks for having us. [36:09] **Moderator:** Thank you. [Applause]