Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We are live from Rocket Lab in Long Beach, and I.
Speaker 3: Want to be honest with you guys. We're here because
Speaker 3: we've been on the road in Socow. But this is
Speaker 3: where the industries happened. What's started with a single name
Speaker 3: has boomed into thousands of startups, many here in Southern
Speaker 3: California and in commercial space.
Speaker 4: This is how it started.
Speaker 3: SpaceX has become synonymous with commercial space. Elon Musk's company
Speaker 3: is a prolific launch provider, with around three hundred and
Speaker 3: eighty launches of the Falcon nine family of reusable rockets
Speaker 3: to date. The competition is starting to catch up, whether
Speaker 3: abroad or at home in Southern California.
Speaker 1: When you look at sort of the companies that are
Speaker 1: coming out of this defense tech movement, a lot of
Speaker 1: them have been trained at places like SpaceX, or they
Speaker 1: got their start there, and then they're building new startups
Speaker 1: and deciding to build where there's a concentration of talent,
Speaker 1: which is in southern California.
Speaker 5: Tam Mueller, one of the early founders at SpaceX, who
Speaker 5: actually brought rocket technology at Elion Musk because he likes
Speaker 5: to say you can't really throw a rock and also
Speaker 5: going to know I've hitting as SpaceX Alum working on
Speaker 5: another company.
Speaker 3: Others have a home in SoCal take rocket Lab. It's
Speaker 3: an end to end space company providing launch services which
Speaker 3: designs and manufactures small and medium class rockets. It's had
Speaker 3: eleven launch missions so far this year. Elsewhere, another launch
Speaker 3: competitor is United Launch Alliance, which is transitioning from its
Speaker 3: previous rockets to the next generation Vulcan family. The Pentagon
Speaker 3: has brought several Vulcan launches to fly before the end
Speaker 3: of this year, but delays have put pressure on the company.
Speaker 3: It has launched two Vulcan rockets so far, neither has
Speaker 3: cracked reusability. Bezos's Blue Origin also has new Glen, a
Speaker 3: heavy lift orbital rocket, but it has yet to launch
Speaker 3: to space. Meanwhile, in Europe, delays and malfunctions left the
Speaker 3: continent unable to get to orbit with its own rockets
Speaker 3: for quite some time. The Arian six rocket, operated by
Speaker 3: the European consortium Arian Space, which lifted off early in July,
Speaker 3: was Europe's first Arian rocket launch in a year. Arian
Speaker 3: Space launched the final mission of its smaller Vega rocket
Speaker 3: on September fourth. In the age of commercial space, SpaceX
Speaker 3: is still the most reliable way to hitch a ride
Speaker 3: to Earth's orbit.
Speaker 2: And talking of SpaceX, a California state commission voted against
Speaker 2: a request by the US military to approve more SpaceX
Speaker 2: launches now. Commissioners expressed a concern about why SpaceX was
Speaker 2: not applying for a permit itself, and some also voice
Speaker 2: concern over working conditions at SpaceX. Elon Musk's increasing role
Speaker 2: in US politics as well a.
Speaker 4: New story that came out early this morning.
Speaker 3: We're going to dig deep into SpaceX throughout the show,
Speaker 3: but right now we're going to talk about one of
Speaker 3: SpaceX's competitors, rocket Lab, which is a rocket company and
Speaker 3: much more. It's a launch provider and it's where we're at.
Speaker 3: We're in the Long Beach headquarters. Also a focus on
Speaker 3: a company that has a home in southern California and
Speaker 3: in New Zealand. The company's CFO, Adam Spice, is with us.
Speaker 3: Thank you very much for hosting us, Thanks for coming.
Speaker 3: Let's start with the basics for the audience that might
Speaker 3: just be tuning in for the first time, wondering where
Speaker 3: we are. Rocket Lab is an end to end space provider,
Speaker 3: space launch services systems provider. Bring us up to speed
Speaker 3: on what that means.
Speaker 6: Yeah, you know, we think that the space companies of
Speaker 6: the future are ones that aren't just a launch company
Speaker 6: or just a satellite company or just an operator of satellites.
Speaker 6: It's really all about providing an end d service. So
Speaker 6: what you're seeing here in Long Beach is really our headquarters.
Speaker 6: We make a lot of the rocket components here at
Speaker 6: rocket engines, the avionics.
Speaker 7: And so forth.
Speaker 6: So we have a pretty big footprint here in southern California,
Speaker 6: but we since expanded that and of course the company
Speaker 6: got started in New Zealand, but then expanded to the
Speaker 6: US and starting to expand further throughout the United States,
Speaker 6: including locations in places like Denver and Albuquerque and Stennis, Mississippi,
Speaker 6: and Silver Springs, Maryland, and of course a launch site
Speaker 6: in Wallaps Island, Virginia, and a facility in Toronto, Canada
Speaker 6: as well. So we've established ourselves a very broad footprint
Speaker 6: doing much more than just launch.
Speaker 3: An hqu here in Soco, which fits exactly what we're
Speaker 3: talking about.
Speaker 4: Two launch systems. What are they and what are the differences?
Speaker 7: Right?
Speaker 6: So the vehicle you see behind you is Electron, and
Speaker 6: Electron is the second most frequently launched vehicle in the
Speaker 6: United States.
Speaker 7: It's launched fifty three times.
Speaker 6: So we've got a very, let's say significant lead in
Speaker 6: the small dedicated launch market, and we're developing a second vehicle,
Speaker 6: which is called Neutron, which will address the larger medium
Speaker 6: class launch market.
Speaker 2: Go, we dig into the practicalities and how difficult space
Speaker 2: engineering is. Where are we with Neutron, and what are
Speaker 2: some of the issues in the steps of getting it
Speaker 2: up and running.
Speaker 6: Yeah, well, we're quite a ways along the path of Neutron,
Speaker 6: So we've been at it now for a little over
Speaker 6: three years. We announced the program when became public in
Speaker 6: August of twenty twenty one. You know, it's amazing to
Speaker 6: see a rocket program come together. You know, I hadn't
Speaker 6: come from a space background for joining the company about
Speaker 6: six and a half years ago. Just to see what
Speaker 6: it takes to pull together and pull off a rocket
Speaker 6: development program is absolutely staggering. The complexity, you know, not
Speaker 6: just from just the science, it is literally rocket science.
Speaker 6: I'm grateful every day that there's people who have dedicated
Speaker 6: their lives to developing these complex systems that are absolutely amazing.
Speaker 7: So it's it's a very you know, it's a very detailed,
Speaker 7: very arduous task to get there.
Speaker 6: And I think that's what's so exciting from a business
Speaker 6: perspective is the fact that if you can do it,
Speaker 6: you know, you're one of a few numbers of organizations
Speaker 6: in the history we've actually pulled it off. And so
Speaker 6: it creates a very defensible position because again space is very,
Speaker 6: very hard, and you know, we have the you know,
Speaker 6: the I would say, the challenge of wake it up
Speaker 6: every morning and doing battle with physics, but also doing
Speaker 6: battle with some of the most fierce competitors on the plan,
Speaker 6: including SpaceX. And so we look around our industry and
Speaker 6: we see we see bodies everywhere that we have to
Speaker 6: step over, and you know, it kind of makes you
Speaker 6: wake up every morning and kind of like, Okay, this
Speaker 6: is a serious business, Like we got to make sure
Speaker 6: that we make all the right decisions and be very
Speaker 6: efficient with our capital and very very focused on execution.
Speaker 2: I mean, you are the numbers guy. Let's just talk
Speaker 2: about capital efficiency. You have to spend in extraordinary amount
Speaker 2: of money. You took this company public, You're having to
Speaker 2: answer to a whole host of retail investors and more
Speaker 2: increasing the institution investors.
Speaker 4: What's it a.
Speaker 2: Revenue run rate and where is the money coming from?
Speaker 6: Yeah, we're very fortunate that we've been able to get
Speaker 6: now to a scale. So Q two we generated over
Speaker 6: one hundred million dollars in revenue, so we really kind
Speaker 6: of now cross that threshold of scalability.
Speaker 7: We've shown that a model can scale.
Speaker 6: I think it's very important that we've done it, not
Speaker 6: just on launch, because the launch represents about thirty percent
Speaker 6: of our revenues. Space systems actually represent seventy percent.
Speaker 3: And just on that when you say space systems is
Speaker 3: seventy percent of revenue, just in Layman's terms, what are
Speaker 3: you talking about.
Speaker 6: So we sell a variety of solutions, So we sell
Speaker 6: subsystems that into the merchant market. So we sell things
Speaker 6: like you know, solar solutions for spacecraft. We sell radios
Speaker 6: and battery systems and composits and so forth. So we
Speaker 6: really are a very serious in materials merchant subsystem market.
Speaker 6: But then we also build full spacecraft solutions. So for example,
Speaker 6: we built full spacecraft for NASA than the action. In fact,
Speaker 6: we built a couple of spacecraft that are gonna be
Speaker 6: orbiting Mars and then not two distant view.
Speaker 3: Yes, this is big news for you recently, very big
Speaker 3: because you originally you weren't on that list and now
Speaker 3: you are.
Speaker 6: Well, that's actually for the marge sample return, okay, so
Speaker 6: forwards sloper return. Yeah, that's and you're right, we were
Speaker 6: not included in the first but we were ultimately added
Speaker 6: to that program.
Speaker 7: So that's very exciting.
Speaker 6: But when you look at all the different programs that
Speaker 6: were across again not just subsystems, but we're actually making
Speaker 6: full satellites for including the Defense Department and their Space
Speaker 6: Development Agency. We want a contract to be the prime
Speaker 6: contractor for over five hundred million dollar contract. So it's
Speaker 6: actually the one thing that's most exciting for me is
Speaker 6: how quickly we've come from a very organic base to
Speaker 6: now building a very significant size revenue and getting again
Speaker 6: past that one hundred million dollars thresholder quarter.
Speaker 2: And you talk about the electron behind us fifty three
Speaker 2: already put into space. How many launches are we looking
Speaker 2: at in terms of the next year, What sort of
Speaker 2: cadence you're trying to live up to.
Speaker 6: Well, you know, we've indicated fifteen to eighteen launches this year.
Speaker 6: We've launched eleven times so far, so we've got a
Speaker 6: big Q four coming up. And then when you look
Speaker 6: at the kind of the rate going to next year,
Speaker 6: we see growth off of that and a lot of
Speaker 6: it's really not depending on how many rockets we can build.
Speaker 7: We can build a lot of rockets we could build.
Speaker 7: You know, we've sized ourselves three D printing a whole
Speaker 7: on We're three D printing a lot of stuff here.
Speaker 7: We could build.
Speaker 4: What is the limiting factor?
Speaker 6: It's really the market at this point. It's really the market.
Speaker 6: We can build as many rockets as the market demands.
Speaker 6: But it's a new market, it's a nascent market. I think,
Speaker 6: you know, it just takes time for these markets.
Speaker 3: I want to get into this the business of space
Speaker 3: and just bear with me.
Speaker 4: Carry elon, musk, I'm bear with you.
Speaker 3: A lot has a big gap right over you, a
Speaker 3: big sort of lead with SpaceX, and he talks about
Speaker 3: this idea that the business of sending payload to orbit
Speaker 3: tops out for them at three billion dollars. Now that's
Speaker 3: a scale that you're not near yet, but it makes
Speaker 3: it seem like there's a gap. There's a ceiling on
Speaker 3: how much money you can ever make in this business.
Speaker 4: What do you make of that?
Speaker 6: I think it depends on how you define this business, right,
Speaker 6: I think, yeah, even as we've seen the space X,
Speaker 6: I don't think they stopped it just launch. So launch
Speaker 6: is a very critical part of the ecosystem, but it's
Speaker 6: not the biggest piece of the ecosystem. So the applications
Speaker 6: and creating that ongoing revenue stream from applications and having
Speaker 6: a constallation orbit that is really what people are shooting for.
Speaker 6: Is is where the real scale for this industry comes from.
Speaker 6: And that's exactly what we're oriented around. We're all about
Speaker 6: being an end to end space company where we can
Speaker 6: design the spacecraft, we can build the spacecraft in a
Speaker 6: very vertically integrated way with our own subsystems, we can
Speaker 6: launch them on a variety of rockets, then we can
Speaker 6: operate those on orbit. So it's a very very important
Speaker 6: thing to think about yourself as an end end player
Speaker 6: because again, if you're a bespoke kind of one solution provider,
Speaker 6: it's probably not the path to survive ability for.
Speaker 2: Those institution investors sat watching and indeed retail investors who
Speaker 2: are excited about putting money into rocketing very excised. What
Speaker 2: tell us about how the market scales up? What is needed?
Speaker 2: You're saying you can get these, you can build these
Speaker 2: as quickly as the market wants. Well, what gets the
Speaker 2: market to the next iteration to the size that you
Speaker 2: want to be able to serve it?
Speaker 4: That?
Speaker 6: I think the most exciting thing about what's going on
Speaker 6: in this market right now is that you think about
Speaker 6: what typically drives the hockey stick growth of characteristic of
Speaker 6: an industry, and it's usually commercial. But I think we're
Speaker 6: in a really interesting period where we're actually seeing the
Speaker 6: hockey stick being derived building from commercial opportunities. So everyone
Speaker 6: seeing what SpaceX is doing with startlinks, that's kind of
Speaker 6: old news to a certain extent. But then you see
Speaker 6: Amazon Kuiper, you see tallesid light Speed, you see the
Speaker 6: SDA constollation. So you're actually seeing a combination of government
Speaker 6: and commercial all presenting hockey stick opportunities. And that's really
Speaker 6: You're not a one bet kind of situation right now.
Speaker 6: There's lots of different cliers you can put your fired.
Speaker 4: Too, Adam.
Speaker 3: There's so much more to come, as you know, in
Speaker 3: this hour. But before we let you go, a word
Speaker 3: for SpaceX. What they enabled your company to do, particularly
Speaker 3: here in California, Well.
Speaker 6: I think you have to give them, you know, amazing
Speaker 6: credit for what they've accomplished.
Speaker 7: They really kind of are a I would.
Speaker 6: Say, kind of a an inspiration and aspirational target as well.
Speaker 7: Like we've we've seen that it could be done right.
Speaker 6: I think that's the one thing is we don't We
Speaker 6: wake up every morning understanding the challenge that faces us,
Speaker 6: but we're not intimidated by it.
Speaker 7: Never.
Speaker 6: That's one thing that this company does not ever get
Speaker 6: is intimidated by competition, whether it's SpaceX or anybody else.
Speaker 7: So we're up for the challenge.
Speaker 6: It's exciting and there's a tremendous amount of opportunity, and
Speaker 6: I think we're in a great position to exploit it.
Speaker 2: You were up early for us. We give you great
Speaker 2: thanks for it, Adam. It's wonderful to have us here
Speaker 2: and you here with us. Adams by CFO of Rocket
Speaker 2: Lab