[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> November 29 2024 **Insider**: [[Peter Beck]], [[Adam Spice]] **Source**: [Dave G Investing](https://www.youtube.com/watch?v=jjoJn0qiyTc) **Date**: November 29 2024  🔗 Backup Link: https://www.youtube.com/watch?v=jjoJn0qiyTc ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. **Dave:** Hi everyone, this is Dave. Today I am extremely excited to bring you an interview I did with Rocket Lab's CEO Peter Beck and CFO Adam Spice, as well as three other YouTubers were participating. You probably know them: Vince, Matt Money, and Scott. So if you're not familiar with those three channels, I highly recommend that you check them out as well. This video is brought to you by our amazing channel members who you see at the start of every video. Thank you guys so much for continuing to support the channel. If you hadn't been here, I probably would have given up on YouTube a long time ago. Special thanks to our newest members - we have Joe Dio rejoining and Papa Chen joining. Thank you guys for becoming members. If you're interested in joining as a member, the link is down below. Also, if you enjoy this interview and you're not yet subscribed, please do consider doing that. It's a great way to help out the channel and will allow me to bring you more great interviews in the future. Alright, with that out of the way, let's dive into my discussion with Rocket Lab's Peter Beck and Adam Spice. ### Stock Performance and Investment Strategy **Dave:** Alright, well I guess I'll just go ahead and start here then. Everyone ready? Yeah, so I figured I'd just say congratulations on a great quarter and performance on the stock price, and perhaps more importantly, the progress on Neutron and the overall business. I am curious though, when it comes to the stock price, it seems like publicly traded space companies, they seem more often targets of these meme trades and short squeezes and volatility. Is that something you ever worry about or think about much with your own company? **Peter Beck:** Yeah, I mean I'll take an answer that, throw it over to Adam as well. But of course, you know what we're looking for is to build a good solid institutional base within the stock and not, you know - I don't think it's helpful to be a meme stock. And space seems to attract some of that. Some of those businesses don't have very strong fundamentals. But yeah, I think it's something we keep an eye on, but if you look at our shareholder makeup, it's improving over time. **Adam Spice:** I would say kind of a little bit of the theme of how we're helping democratize space - maybe we're also helping democratize share ownership too, or opportunity for returns that maybe were a little bit more sequestered in prior cycles. I think there's a lot of value in getting a diverse shareholder base. I think we have a very Diversified shareholder base, and but I think as Pete said, we're continuing to work on making sure that it's covering all the bases. We definitely want to have more exposure to those fundamental kind of long-only investors that help stabilize things in tough periods, that have that three to five year holding period. I think it's important to have everyone involved. **Dave:** And then maybe just staying on the stock price a little bit - given the rise, has that changed your calculus at all on how you think about acquisitions or maybe using some stock, going more aggressive, or is that completely irrelevant? **Peter Beck:** I mean, look, we always keep a healthy pipeline of acquisitions, and as you know, we did that convert to put a bit of gas in the tank for something interesting. But the fundamental driver for us to do these acquisitions - they have to be things that we really need or really believe in, or things that we think are going to significantly grow the business. So irrespective of what the stock price is doing, those fundamentals have to be there. Sure, with a more valuable stock, they're less dilutive to do, but I don't think it materially changes our calculus. We're not going to go out just because we got a high stock price and do a whole bunch of janky deals. The fundamentals always have to be there for us to want to do stuff. **Vince:** I can hop in with a fun question. So Sir Peter Beck, what's it like to become a billionaire? **Peter Beck:** I mean, if my sole driver in life was to become a billionaire, I'm absolutely confident there are easier ways to do it than this. You know, I think the thing that's most gratifying is seeing everybody else do well as well - shareholders that have been in for the long ride like you guys. So I think that brings me more joy than a number on a piece of paper, if I'm honest. **Vince:** Yeah, and I'd like to add to that - I definitely think it's the byproduct of everybody that you're working with. We congratulate you guys' continued success, and it's really fun watching you guys just for the past three years since I've been a shareholder. It'll be much more fun as we get Neutron and start to compete with SpaceX a little bit more directly. Just huge kudos to you guys, it's so much fun, and I'm sure you guys are having a blast as well. So it's just a byproduct of all the great work that you guys are doing. I know I asked the question in jest. **Peter Beck:** Yeah, no, thanks. As you point out, it's a huge effort from the team and a lot of trust and faith in us from the shareholders. ### Company Growth and Headcount **Matt Money:** It kind of ties to what we're talking about indirectly. It's kind of related to stock-based compensation. Five years out, when Rocket Lab is kind of at a more mature stage with Neutron going, what can we expect in terms of headcount compared to the 2000 that we have currently? **Peter Beck:** Well, I'll take a fundamental pass, then I can kind of give you my view as well. I mean, we're not a company that looks at a headcount metric as a real advantage or a real metric to be proud of. I mean, personally, I want the least amount of heads to execute what we want to execute on as possible. There's definitely a different team from developing a rocket to producing a rocket, but we haven't seen huge staff growth as we've moved Electron into development as well. So I mean, from my perspective, the less headcount possible - it's not a metric that we plant a flag on or strive to employ as many people as possible. But no doubt there'll be reasonable growth as we scale that product. **Adam Spice:** I'll just kind of add to that. I think that we still run the company on a very short leash, and I would say that there is really no place to hide here. So when we look at headcount, we look at adding every headcount as: is this a nice-to-have or a must-have? And then people are definitely held accountable to delivering. It's really hard to say what the number is going to be in three to five years. You look at revenue metrics per headcount and all kinds of stuff, but again, I think to Pete's point, that's not really all that appropriate. It's really: do we have controls in place to make sure that every headcount that is coming in and every headcount we currently have is constantly justified? Because if not, we've got to right ship. So I think we're constantly looking at that almost on a daily basis, but it's just a really continuous process. **Matt Money:** Cool, and to kind of tie that into the stock-based compensation, would we expect the stock-based compensation to increase in tandem with headcount, or is that something that's more closely tied with revenue or maybe something else entirely different? **Adam Spice:** It's really tied more to headcount than revenue. It's really a function of purely the absolute number of heads that you have, because if you look at stock-based compensation per role, it's really pretty predictable. We have third-party compensation consultants that provide us what those compensation numbers per head need to look like, or the ranges like the 25th, 50th, 65th, 90th percentile. So we can map that up pretty accurately - it's really just purely headcount driven and not really tied to any other metric. **Matt Money:** Cool, thank you. I'll pass it back to Vince then. ### Neutron Development and Hot Fire Testing **Vince:** Alright, I want to go over to Neutron and Archimedes. I have a question that is for non-rocket engineers, because as you know, a lot of people love your company and follow it and perhaps follow it a bit too closely. We are not rocket engineers, and I thought that when you do a hot fire test, it's like one month - you start it and then the month is over, and then there's no more testing because everything is validated. And then some geniuses see that you are still testing the Archimedes engine, and then they come up with answers that this must be because the engine blew up or you didn't do a full test. So could you explain so non-rocket people understand what goes on with the hot fire test, how long it is, and if you're still hot fire testing - what are you trying to get out of it now? **Peter Beck:** Yeah, great question, Vince. So hot fire campaign or an engine qualification campaign runs for years, and you're always improving the engine. Right now we have our Archimedes Block One. We already have our Archimedes Block Two on the design table, and naturally, as you learn and you learn as you run the engine more and more, you want to simplify the engine and continue to improve it - reduce cost, reduce time to build, increase reliability. An engine is just like this living, breathing, fluid thing, and you're continually tweaking on it. I mean, if I think back to Rutherford, I don't know how many revisions of Rutherford we went through - probably about three or four. Fundamentally, it doesn't look any different, but slight tweaks to injectors to improve ISP efficiencies, slight tweaks to pumps to lower the tank pressures - you're continually tweaking these things. But for Archimedes as it sits today, it's in an engine qualification program. So what that means is we're looking to explore what's called "run box," and we're looking to explore all of the idiosyncrasies of that engine, all of the operating conditions that it might see, plus margin. For example, when we do a landing burn, the tank pressures are slightly lower than when we're ascending. We have to condition the propellant because the propellant is slightly warmer than when we took off from the ground because it's had a chance to mix with the gas and warm up. So you have to bound all of these different operating conditions and then test the engine at all these different operating conditions and then add margin to them as well. And then you also go through a bit of a process of just finding limits. That's why nobody should be shocked or too worried if we blow an engine up. I mean, just to be clear, we haven't, but if we blow an engine up, that's also normal because there's margin that you want to find and prove. If you think you have 1.2 times safety factor on pump rotational speed, then you want to take it up to 1.2, but is it 1.21? Is it 1.25? So some tests, you deliberately might run it up to 1.4, and something might let go because you want to actually sample those margins and determine where they truly are versus where you predicted them to be. So an engine qualification program is a very long program. The first engines that go on the vehicle will be qualified for flight, but that doesn't mean that's the end of the development program. We continue to refine and iterate and refine and iterate and improve the engine over the coming years. And you'll probably visually see that as well. I think if anybody has been following the SpaceX Raptor engines, they started off looking very complicated and end up looking very, very simple. And that is just the iteration cycle. Some companies just stop and don't do that - that's not us. We'll continue to improve it. But an engine program is a multi-year thing - it's not a "put it on hot fire and call it done." Not to say though that you can't take the engine at any point of that program and go and fly it, but as engineers, we want to really refine that to be the most reliable, the lowest cost thing we can make. **Vince:** Wow, I definitely didn't know that, so thank you for that answer. ### Engine Production and Scaling **Vince:** Another question that ties into Archimedes - how many engines is there capacity for you guys to produce, and how is the scale-up of the engine production coming along? **Peter Beck:** So we're tremendously lucky to have acquired the Virgin Orbit facility, and in that facility, there was something like 42 CNC machines. I think they had like 2,000 hours on the spindles, so almost no time on the spindles, and a whole bunch of factory and equipment. So it really put us on a tear for bringing Archimedes into production. There's a really, really fast throughput of hardware-rich program where there's just stuff flying through the production line all the time. And it's - I've lost track of like serial numbers, because we'll take a serial number three engine's pump and marry it to the combustion chamber. Is that still serial number three or is that serial number four now? So it's just that mad kind of iteration cycle. But suffice to say, there's like four bays of complete engine assembly - like four engine work cells, and those work cells have parts of engines or engines in them at all times. We're just cycling through as we go. We made a lot of investment earlier in the program with long lead time items like big 3D printers and stuff like that. Some of those things are big capital expenditures, so we just bought one, then we proved that was going to work, and then we started to buy more and more. That scale-up process continues, but I would say that if I look back at where we were with Electron, for example, and where we are with Archimedes and Neutron, it's just night and day. We have so much more facility and factory than we ever had in the past. **Vince:** Wow, so supplying the scaling of one Neutron, three Neutron, five Neutron - it's impossible that it's a bottleneck on Archimedes then? **Peter Beck:** No, I don't think so. The scaling - the 1-3-5 kind of scaling is not really driven by the stuff we can make. There's parts from serial number three of Neutron's vehicle in manufacture. It's not necessarily the parts that we can make in the timeframe - it's just acknowledging the iteration cycle. Because we'll go and fly flight one, and then we'll learn a whole bunch of stuff. If you couple yourself just really, really closely to just full serial production from flight one, then you lose the ability to iterate on the vehicle and make it way better. My biggest fear is you'd end up stuck with a really compromised vehicle in full rate production that you just do battle with every day. So the 1-3-5 kind of scale is much about facilities as it is about making sure you can take the learnings and then roll them back into the next vehicle and iterate, such that when you reach high volume manufacturing, you don't have a dog on your hands. You've got something you can produce at a reliable, steady rate. **Adam Spice:** And to add to that too, I think the other thing to think about is the reusability. So the 1-3-5 is the absolute number of launches that we're targeting for 2025, 2026, and 2027. That's not to say that the same rocket won't fly in 2026 and then 2027. So the ability to get to that flight cadence is really driven significantly by when we can get that first - when we can stick the landing the first time and then have confidence that we can refly that booster. Because then you get into the fleet model, and that's when things get really interesting, not only from how quickly you can scale your missions, but also what that does to your margin profile. So that first landing of that booster is going to be a very momentous occasion for us because it unlocks a whole bunch of upside. **Dave:** That actually does tie into a question I was planning to ask. So I know we're kind of doing a hover landing in the ocean for the first Neutron. Have you thought about when you'll actually try to land on a barge, or is that maybe even the second one or further down? **Peter Beck:** It depends on the results of the first flight. If we come scorching into the Earth and pummel it into the ocean, then that's not going to give us a huge amount of confidence to put a big, expensive steel barge there. But if everything goes according to plan, then there would be no reason why we wouldn't slip a barge under the next one. So it really depends on that outcome. And that's kind of more of the reason for setting expectations correctly around a flight cadence. Those two different outcomes could affect a flight rate. If you said you're going to come out of the chute and do one and then five and then ten, well, if you pummel one into the ocean, then you're going to spend a bit of time sorting that out. So we like to be conservative on these sorts of things and give that kind of flight cadence because that allows for these kinds of things to happen and learn from. **Dave:** So is it safe to say that you're sacrificing short-term scaling up of the cadence to make sure that the vehicle is right to have a much higher cadence later on in the future? **Peter Beck:** I guess you could say it like that, Dave. I wouldn't say sacrificing - I would just say doing it properly. Actually doing it properly - proper long-term thinking. **Dave:** I like it very much. Maybe just a quick follow-up then - just curious, any plans to, you know, if the booster, if the first one's in one piece, go fishing for it, pull it out of the water, or no need? **Peter Beck:** Oh no, I mean, if it's sitting there floating, I'm picking it up, jeez. **Dave:** Okay, and I guess I had one other Neutron question here. So I think quite a while back, you talked about once a Neutron is assembled, it's going to stay upright. Is that kind of still the plan, or will you need a transporter erector to move things around? **Peter Beck:** No, I mean, that's absolutely the plan from day one. I hate lifting ops, and especially those tilting ops with the big vehicle - they're a pain and require a lot of infrastructure as you point out. The pad has no strongback, and it has no strongback because we want to land this thing vertically and should never need to break over. So that's definitely the plan. We'll see how that works out in practice and operations. It's no big deal to break it over if we have to, but it's just extra infrastructure and extra time and extra cost that we don't want to have to put in. **Scott:** So depending on that, and once we finalize the transport piece and the reusability pieces, is there progress on the USTRANSCOM point-to-point cargo delivery study that you guys have been doing, or has that really been put on pause until you get the "stick the landing," I guess? **Peter Beck:** No, no, we continue to work with those guys. We certainly continue to work with that customer. **Scott:** And follow-up to that - what timeframe, knowing that point-to-point piece would happen, what timeframe would a Rocket Lab launch (either HASTE, Electron, Neutron) happen potentially outside of LC-1, 2, or 3 that you guys have currently in place? **Peter Beck:** I'd have to get back to you on that to really understand where that project's at with the team. But we've got a couple of different interesting offerings there, as you point out. Obviously Electron - with HASTE, we've been able to demonstrate we can stick a capsule in the Utah desert, so there's a re-entry piece. And then of course Neutron provides some interesting things with a downrange landing. So there's actually quite a few interesting things going on there to be working on. **Vince:** I have one last Neutron question - I don't know if anybody else has. It's more like tempering expectations, because I suspect that soon you will have a Neutron on the pad. And again, just to go ahead of conspiracy theories, I think that the non-rocket engineer people would think you put it on the pad and then two days later it will fly. I'm guessing that there is going to be wet dress rehearsal, this test, that test - could you temper or give us a pointer on, you know, we will see a Neutron standing, and then it will take like three, four months probably before it can fly? And what goes on during this time? **Peter Beck:** Yeah, I mean, so you're kind of right. So each individual stage firstly - there's a second stage and second stage test facility actually at the launch site, so there's a whole bunch of work that we'll be doing on the second stage alone. And then yeah, just like Electron, you'll see a rocket go up and down and up and down and up and down. There's hold-downs to sequence and get right, there's a whole lot of propellant commissioning to get right. The rocket and the launch pad is a living beast, and it has its own idiosyncrasies. We have no strongback, so all of the internal piping to fill stage two is actually inside - runs up the side inside of the vehicle. And that's just to remove a whole bunch of complexity, but also to make it rapidly reusable. You literally just plug in a second stage and it just couples up with the quick connects and away you go. So there's a few new things in there that we'll spend a bit of time on. And sometimes they're not particularly sexy with respect to the rocket - like you're just running propellant conditioning tests and stuff like that to really understand all the thermal gradient and geysering and all this kind of stuff. So you're right. It's a long-winded answer to answer your question - you're right. Expect to see a rocket on the pad there for quite some time as we run through a barrage of tests and get to learn the system and get to learn the rocket. ### Mars Sample Return **Dave:** I find the Mars Sample Return studies absolutely fascinating, so I was wondering if you could tell us a little bit about - well, first of all, I was very curious why Rocket Lab's proposal was added a little bit later, if there's anything you can say about that or if it's more of a NASA question. And maybe just talk about what it would mean to the company if you did get that, beyond just obviously being a very big contract. **Peter Beck:** So yes, we originally submitted a proposal and weren't selected. And I think that was the wrong decision, and then we were selected. So we're able to put together a proposal that we think is really compelling. And I think if you look at all of the key elements of that mission, we've kind of demonstrated many of them, if not most of them, in some way. So for us, we look at that and we look at the $11 billion in 2040, and it's just like, man, this can be done way cheaper, way faster. And we have many of these elements. The hardest thing in that program, or one of the hardest things (everything's hard), but one of the hardest things in that program is launching from Mars. Nobody's launched from Mars before. But if you want to launch a little rocket off a little planet and you picked up the phone book as an alien, who would you go and call? And I think we've proven that we can do that quite well. So I think that part of the mission element and architecture, I think, is a particularly strong point for us. As you know, we built a couple of spacecraft before and we've been involved in many, many missions in the past one way or the other. So there's a whole lot of elements there that we feel pretty confident on, and we think we can provide a solution to the US government and ultimately the taxpayer that provides the science outcomes for a markedly reduced price. And yeah, personally, planetary stuff's cool, but we don't do anything unless it makes sense, and we believe that we can make good margins from it. **Dave:** So I did want to dive into that piece specifically because you did state the $11 billion - it leaves a lot of room for optimization hopefully. So is the intent to provide the service with profit from day one, or would it be something like how we have with Electron, where you have to kind of get a cadence up before you really start to see the gross margins really increase to a place where it makes sense for the company to be involved? **Adam Spice:** I'll take a shot at that one, Pete, if you want. I mean, it's a little more of an accounting look. I think that this - we're early days, super early days, but I think the way you would look at this is very likely the way that we look at our Space Systems satellite manufacturing programs. It's what's called an estimated cost to completion. The acronym is EAC, but it's estimated cost to completion. What you do is you estimate going in how much you think the total program is going to cost to deliver. So hypothetically, let's pick a number - let's say that you think that the program is going to cost you $7 billion actual cost to deliver, and you've got revenue of $11 billion if you pitch it at the same original price. Well, as you expend the percentage of that $7 billion of cost, you recognize the pro-rata amount of revenue and your forecasted program margin. And then if things change - for example, all of a sudden now you think, "Well, actually, we found even better ways to do it, it's not going to cost us $7 billion," but it's a fixed price contract, well then obviously your margin on the program goes up. And at that point, you've actually completed a greater percentage of total cost to complete than you originally thought, so therefore you actually have a revenue catch-up. So it's not like an Electron or a Neutron launch where you don't get to recognize revenue and margin until you hit the intentional ignition. This is when you'd start to get revenue and margin from the beginning as you start to deploy resources, and it would be at the overall forecasted program margin. So there's not like a different margin profile as you progress through the program. You kind of model the margin, and as long as there's no changes to the margin forecast, then you're recognizing consistently over the program. **Dave:** Wow, that's a really good answer, Adam. I think that answers like three birds with one stone, so thank you much. Appreciated. ### Space Systems & Financials **Scott:** It'd be a huge disservice to not touch on Space Systems. So maybe, Adam, this one's a little more geared towards you. In Q1 and Q2, the components side of the Space Systems backlog was roughly $150 million. Is this what - $150 million similar again as of Q3 end? As far as I can tell, it's increased. I'm just not sure the brevity to that increase. Is there any color you could provide for that? **Adam Spice:** I think we might be mixing apples and oranges a little bit. We don't break out the Space Systems backlog by components versus services versus the systems business. What we said was that of the - if you look at our components business on an annualized basis, it's currently about a $150 million business. And then the rest of it is on the Space Systems systems manufacturing side of the house. So the split within the backlog between those two line items, we don't break out. And right now, of course, we have a lot of backlog that's concentrated in the particularly in the SDA contract that we recently won. So that's more disproportionately represented now in backlog versus maybe other parts of that total business. **Scott:** And as these mega-constellation reaction wheels are starting to ship, are you guys still on track for that 2,000 this year? And similarly, is this a one-time event in 2024, or could we should we extrapolate this into 2025, maybe 2026? **Peter Beck:** I mean, we're on track for those reaction wheels. The team is going strongly, and this isn't a one-time thing. This is a constant supply over many years of those systems. **Scott:** Cool. And just a quick follow-up to that - with the magnitude of this order, like for the Electron by example, when there's a bulk order, sometimes we see a bit of a discount given. Is that similar given that you had to build an entire line for these folks, or is that kind of like what you see is what you get in terms of price? Is there anything you can mention for that? I know it's confidential, so I don't want to step on toes. **Peter Beck:** I mean, it's very typical for - not getting into specifics - but it's very typical for large constellation players to have price targets. They'll put out RFPs with price targets, and it's up to the supply base to look at those cost targets and determine whether or not they can meet them and they can make good margins against meeting those price targets. I would say that this is consistent with that. We took a look at the price target and thought, "Can we do it for that and still make good margin?" If we think it's just dirt margin business, then we're very selective on what we do and what we don't do. **Adam Spice:** I think if you think about what this has really enabled for us - it's actually pretty powerful. If we were selling a customer 12 reaction wheels a year with the same requirements or same specifications, they're certainly priced much, much higher, but it also costs a lot more to make those. So if you look at the absolute gross margin profile on the 12-order sale versus the much larger mega-constellation sale, they're actually not that disparate. The absolute dollars really are driven by the price times quantity. The margin dollars are relatively consistent as a percentage. But what this really enables is when you have another customer that comes along and wants to order 12 reaction wheels off the same production line as we're producing for the mega-constellation, the margins just go through the roof. Because we don't give that same pricing obviously to the 12-unit order as to the 2,000-unit order. So it's really, really helpful and it's brought us along to expand the margins on that particular product line. **Scott:** I just want to say, I don't remember if Muriel said how much time we have with you guys, and we don't want to hold you up. **Peter Beck:** Yeah, then we keep you guys here until somebody tells me I've got to leave - somebody knocks on the door. **Muriel:** [Gives thumbs up] **Scott:** I just want to go back to the Mars Sample Return Mission. Could you guys elaborate on - if you guys get the contract, hopefully you do - is it TimeWise? Because I think some people are thinking like you get it and then it's delivered next year. But I guess you need to do a lot of planning, and then is it like three years coming up with new spacecraft, or do you maybe already have all the components you just need to marry together? And what would be the timeline of that mission? **Peter Beck:** I think we should put this mission into context. I mean, this is kind of Apollo-esque level of difficulty. This is not a "slap some spacecraft together and go." I mean, you have to launch multiple spacecraft, transit them across our solar system to Mars. One stays in orbit, one comes down, lands, and then collects the samples, then ingests them into another rocket, then launches and goes into Mars orbit, then rendezvous with another spacecraft that's already in Mars orbit, then transits back to Earth - all the time the samples are being sterilized - then re-enters Earth's gravity well and back into Earth orbit, then de-orbits Earth and then lands in the desert. So there's multiple craft, multiple complexities here - it is really, really hard. Now, the good news is that we like really, really hard stuff and we're good at that. But yes, there is a number of years of R&D and development of the various systems. And then you've got to time your Mars windows - you can't just go willy-nilly. The Mars windows drive a lot of the timing. Then when you're back at Mars, you've got to time an Earth window. So no, there is a lot going on. But in saying that, $11 billion in 2040 is insane - that's just way too much and way too long. And I think getting them back with at least a 2030 number in there, whether it's 2035 or whatever, is totally doable. But to temper that program a bit - it hasn't been decided that NASA is going to go commercial. We've proposed a solution that's soup-to-nuts - Rocket Lab-only all the way. Now, NASA may choose to select elements of our proposal. They might go, "Well, SpaceX has a really great cruise stage," or "Rocket Lab has a really great ascent stage," and they'll stitch the program together. Of course, our view is that vertical integration is the way to go - stick it all under one roof. But I think there's a lot of water to flow under the bridge yet. **Scott:** Thank you for that. I have a quick one - this one might be for Adam. So you talked about complex systems. Obviously, we've been pretty simple as the company's kind of grown - well, simple in my view, but it's really just been Electron and Space Systems that have really dominated the revenue stream. So it's really easy to look at it from a split in the two segments. But as we progress to providing space systems like constellations and things the like, is there going to be more granularity, whether it's on the investor presentations or the 10-Ks, that has launch separated into the three segments (Neutron, HASTE, Electron), Space Systems separated (whole satellites, components, transport vehicles), and then Space Systems or SOC, and then constellation and landing operations? Or is it just going to kind of stay very high level like you have it now in the launch and Space Systems split? **Adam Spice:** Well, even as we are right now, it's probably more granular than most companies like to report. I mean, people like executives like to keep it as macro as possible, right? Because the simpler the better. Now, what we've done - doing the segment reporting at the level we have, we think is the appropriate place to be. We have launch and we have Space Systems. I really don't see us breaking it down further below that. But the good thing about our business is you know when we launch an Electron, you'll know when we launch a Neutron. I think within the Space Systems business, I think it probably will be to our advantage to continue - even if we may not in the segment reporting break it out with any more granularity - we'll certainly speak to it with a lot of granularity because each business kind of has its own commonalities but also has some individual merits. Like for example, ultimately on the constellation side, the big thing you shoot for there on a business model perspective is that recurring revenue. And once you get your capital to be deployed, then you go on the capex holiday, as they like to call it in the constellation world, and that's when you generate some really high EBITDA margins. So I think it would not be in our interest to not provide that clarity when those kind of developments start to occur in the business. And I think you've also seen from an overall transparency, if you look at our investor decks and so forth, I think we provide a lot. In fact, I've gotten some feedback that maybe we provide a little bit too much - like your calls are getting really long, which is great because that means people are really interested and they really appreciate all the color that Pete provides, particularly on the engineering side of what's going on in the business. But at some point we've got to think about curtailing that a little bit as much as people seem to enjoy it. We have now got the distinction, I think, of having one of the longest calls on our quarterly calls. **Scott:** Can we kick those guys out? I love listening to you guys. It's like a college course. I've actually - because Adam, when we first brought on the company, I was like, "Why are we buying these Space Systems? I thought this was a launch company." So your investor day presentations and everything - you really brought me along. **Adam Spice:** That's nature, right? I think Pete's excited, I'm excited about the business, and so when you're excited about something, you talk about it. So I think you can look forward to that. **Vince:** I also just want to say that yes, the conference calls are very long, but I think it's because there are a lot of analysts asking a lot of questions. I think Pete's presentation and your presentation of the finances is just the right amount. So make sure you don't take that away. **Adam Spice:** We appreciate that feedback. Well, you guys should see it before we have like the giant slide deck a couple of days before the call, because there's honestly so much that's going on. We have to be like, "Wow, we really like to talk about that, but we won't talk about that." So we could go much longer, I can guarantee you. **Scott:** Good problem to have, I'm sure - having to cull the slides. **Vince:** Yeah, for me what makes it long is like sometimes you have analysts who ask, "Are you going to launch Neutron from New Zealand?" and it's been covered like 15 times. I could answer that question, and then it adds time. ### Election Implications **Dave:** I figured I'd just ask a quick one. I know you've kind of talked about the recent election in the states a little bit before. Sounds like pretty much everything's on the table right now - there's rumors about SLS and all sorts of things. Is there anything in particular you'd kind of like to see the new administration focus on more, or any opinions on that? **Peter Beck:** I mean, I think we've talked about this in other places. I think this administration is good for space. I mean, clearly there is a much stronger focus on space, and there's a much stronger focus on doing it really efficiently. So if you're a traditional Cost Plus contractor, I think this world is going to be uncomfortable. But for us, take the Mars Sample Return as a classic example - those kind of programs are going to be promoted in this administration. So I'm pretty bullish on the next term here. I think some good progress can be made. And I think there's also been some narrative around reducing some of the regulatory complexity and so forth, and I think we'll benefit from that because we run fast. So anything that allows us to keep running faster is good for us. **Adam Spice:** And like you said, probably not good for other people - they maybe can't take as much advantage of that as we can, but we certainly will take all the advantage out of that possible. **Vince:** I have a question that ties into this a little bit. Adam, you mentioned on a lot of conferences that what's interesting with Rocket Lab is like people expect the hockey stick from the commercial side, and then you see the commercial developing really, really well. But Rocket Lab also has a hockey stick potential from government contracts. I'm curious - when you say that, do you mean the Neutron launches from the government, or do you mean there is a hockey stick in the Space Systems and government orders, or is it both? **Adam Spice:** It's really both. I mean, the reference to that really is the fact that you've got things like the SDA program, for example. I think that's a hockey stick that was really - it's a hockey stick for us, it's a hockey stick that's available to some of the players that weren't traditional primes, in the sense as Pete was talking about, these Cost Plus kind of players. So for us, you've got all this activity taking place in places like SDA, and of course for us, we now have the HASTE opportunities, which are growing very nicely for us. And then things that we do, for example, in building things like the SDA satellites for Tranche 2 - well, perhaps those and maybe other future tranches will also feed Neutron launch cadence as well, and some R&D opportunities for Electron. So I think overall, it's really kind of a broad-based hockey stick that's touching pretty much every part of our business. **Scott:** All right, thank you. Growing up in Canada, I love hockey sticks. I like this one even more. ### What Keeps You Up at Night **Scott:** So this is probably for both of you - if Neutron demand doesn't worry you guys, what does keep you up at night? Safety? Constellations? Or do you guys both sleep pretty good? **Peter Beck:** Oh, have you seen the look of me sometimes? I don't sleep well at all. **Scott:** We were talking about that before you got on - about all the flights you're taking. **Peter Beck:** No, look, I think to be successful in this business, you need a high degree of paranoia about everything. I think if you go to bed and just sleep soundly every night, you don't understand what's going on. So I wish - I mean, that would just sound like an absolute dream to be able to go home, turn off, and just put everything behind you. That sounds like something to really strive for. But no, I think for me personally, a high degree of paranoia about everything. I'm tossing and turning all night every night, and I think that's just what it takes to be successful in this industry. **Adam Spice:** I agree with Pete. I think what keeps me up at night - Pete's got a lot more technical things to keep him up at night. For me, I think there's a great importance on making sure that we maintain our culture as we grow. When I joined the company, I think I was employee number 100. We now have over 2,100 employees scattered across five US states, three countries. The first question coming in was talking about headcount - clearly that headcount will continue to grow. One of the things that attracted me to make the switch to come to Rocket Lab and join an entirely new, risky industry was the fact that when I made my first trip over to New Zealand and Pete walked me around the factory, and then we went out to Mahia to see the launch pad, I couldn't believe the capital efficiency. It was staggering to see how much had been done for such a small amount of money compared to what it usually takes in this industry. We have to continue to be able to do that, and in order to do that, it's all about the people. I think we've been super fortunate that we've got an incredibly talented, large-scale team now, but as that team continues to grow, how do we make sure that we keep that kind of DNA? How do we sort through all the people to make sure we're continuing to keep that type of culture? Because what we're trying to do here is so incredibly difficult, and it doesn't take much to infect a culture. I know that Pete and I, and particularly Pete, spend a tremendous amount of time inserting ourselves in various parts of the business to make sure that culture is still well intact. I think part of it is you create a certain amount of paranoia not just at our level, but at every level. We had an all-hands meeting last week where I reiterated the fact that the last dollar we raised was hopefully the last round. I never want to raise more money. Now, we might do it for very good reasons - to accelerate growth and do all kinds of stuff - but we have to treat every dollar that we have like it's the last. I think that's been the way Pete kind of started the company. It's still very much the ethos, but we can never lose that. We just got to keep people realizing that this is not a nine-to-five place. This is a place where people come to do amazingly difficult things, and you sleep well at night when you're comfortable you've accomplished great things. I think that's probably the thing that gives me the most pause, because it's just so hard to make sure you keep that in focus. **Peter Beck:** I agree with Adam, and even today, every employee that comes through this place, I induct and spend an hour with - in a big group of course - but I spend an hour with every new employee that comes within this company. And it's just super clear expectations laid down from day one about what it means to work here and what it means for us to be successful. So there's no fuzz on expectations. And I think that's what it takes - just spending time with every person and also making sure all the managers are clear on the vision and make sure that they are the proliferators of the Rocket Lab magic. **Matt Money:** Love to hear it for sure as an investor. ### Wrap-up **Matt Money:** Well, I think we've taken up a lot of your time, so I don't want to hold you any longer unless there's any final questions from you guys? **Vince:** I have a quick one if you don't mind - any plans for Electron reuse this year? **Peter Beck:** No, look, there's one sitting there on the production line, but right now, as we said, the team needs to be focused on Neutron. It would be a nice kind of thing to claim, but at the end of the day, the big impact for Electron is just cadence, and the biggest impact for the company is having every engineer work on Neutron. As I look back on that program, the most valuable thing that has given us by far has been the ability to test new materials and learn reentry trajectories and understand fully how to reenter a launch vehicle. The benefit from here on in is definitely something there, but when you weigh it against Neutron, it's just all hands to the pump on Neutron. **Matt Money:** All right, thank you guys very, very much. Congratulations on the fantastic quarter and everything moving well, and hopefully see you guys again next quarter. **Peter Beck:** Thank you guys. **Adam Spice:** Thanks guys, cheers. **Peter Beck:** Hey, and Vince, congratulations on the newborn. **Vince:** Thank you so much. **Peter Beck:** Did you see he had the Rocket Lab onesie on on Twitter? **Vince:** No, I have to have a look. **Peter Beck:** No problem. I'm already - he's already a Rocket Lab shareholder, very proud. **Vince:** Excellent, excellent. **Adam Spice:** Well, you've got to be careful. Don't take it too far, because I got an email last week from a shareholder with the only picture was basically his arm with an Electron tattooed on his arm, and he was saying, "Can I get some free swag?" **Peter Beck:** Adam, we should totally send him some free swag for that. Come on. **Adam Spice:** Absolutely, 100%. Load it up. Get one of these t-shirts. **Scott:** Don't know if you guys know, but we made a bet when Rocket Lab was like three or four dollars - I have to go back and watch on Rocket Lab weekly - that if the stock goes 100x from that point, then we will have a Peter Beck tattoo somewhere on our body. **Peter Beck:** I just... **Scott:** And we're moving dangerously close into that direction, which is weird, good. **Peter Beck:** I hope you get one with me in a better physical condition than now. **Scott:** Cool. Thank you guys so much for the time. **Multiple:** Thanks guys, cheers, bye bye. **Dave:** Thank you guys so much for watching. I hope you enjoyed that. I know I did. Turns out Peter, as well as being a brilliant engineer, is also quite a funny guy. Let me know which part you found most interesting and what you took away from this interview. We can continue the discussion down below. Again, if you're not already subscribed, I hope you'll consider doing that, and I hope you have a great weekend. I will see you guys in the next video. Bye for now.