Closing Bell - Manifest Space: Q3 Results Boost Rocket Lab’s Stock to Lift Off with Rocket Lab CEO Peter Beck 11/13/24

Episode Date: November 13, 2024

Rocket Lab has surged, beating estimates for a better-than-expected results for its third quarter. CEO Peter Beck tells Morgan Brennan that the company is seeing record momentum in all its businesses, from its space systems segment to small launch rocket demand. Looking beyond the quarter the rocket startup raised its Q4 revenue guidance and is readying its medium launch rocket Neutron for its first flight next year. Founder & CEO Peter Beck and Morgan Brennan discuss the quarter, what a second Trump administration could mean for space policy – especially with SpaceX’s Elon Musk in the mix—and what he’s most excited about for space exploration. 

Rocket Lab has lifted off. Shares of the commercial space startup surged as much as 50% on Wednesday after reporting better than expected third quarter results and raising revenue guidance. The stock has now more than tripled in three months and is up more than 380% in six. CEO and founder Peter Beck says Rocket Lab is seeing momentum across all of its businesses. We continue to execute well on the space systems business. And Electron is the small launch vehicle product that we have. We continue to do well with that. The ASP continues to rise and bookings are incredibly strong. And then, of course, Neutron is making great progress. So there's a lot of technical milestones met and also some commercial ones as well with the first signing of some contracts. So, no, no, it was a great quarter. Rocket Lab has launched its small Electron rocket a record 12 times this year, with more missions still planned.

The backlog stands at just over a billion dollars. The company also signed up its first customer for its new rocket, the medium-lift Neutron, which is on pace for its first flight next year. Neutron opens a lot up for us, especially in providing and ultimately providing services from space. But I think about some of the other programs. We've talked about the national security, but one that we've got our eye on is the Mars sample return. It's one of NASA's most important missions, and we think we're really well-placed to go after that. If you look at all the key elements,

whether it's launching off a little planet with little rockets, I mean, I'm not sure who does that better than us, and through to bringing samples back to Earth. So, yeah, there's a lot to be excited about, and we're certainly putting our oar in the water in a lot of those really large, you know, nationalistic programs. On this episode, Rocket Lab's Beck breaks down earnings, what a second Trump term could mean for space,

especially with Elon Musk in the mix, and what he's most excited about. I'm Morgan Brennan, and this is Manifest Space. Joining me now, Peter Beck, CEO and founder of Rocket Lab. Peter, it's great to speak with you today. You just put out quarterly earnings better than expectations. You also raised fourth quarter guidance. You continue to do more electron launches,

and space systems continues to grow strongly. Walk me through what you're seeing across your businesses right now and Space Systems continues to grow strongly. Walk me through what you're seeing across your businesses right now and what's propelling the momentum. Yeah, no, thanks very much, Morgan. Well, I mean, it is, as you say, so, you know, we continue to execute well on the Space Systems business. And Electron is the small launch vehicle product that we have is, you know, we continue to do well with that. You know, the ASP continues to rise, and bookings are incredibly strong. And then, of course, Neutron is making great progress. So, you know, there's a lot of technical milestones met, and also some commercial ones as well with

the first signing of some contracts. So, yeah, no, it was a great quarter. And, you know, we continue to see really, really strong momentum within all the business lines. I do want to get to Neutron, but first, just the fact that so much of the time we talk about Rocket Lab, we talk about the rockets, but that space systems business is the business that's growing so strongly right now and is moving you closer to this path of profitability. So if we could just talk a little bit about what you're seeing there and the growth you're seeing there. Yeah, no, you're exactly right. I mean, what we're trying to build here is an end-to-end space company.

And launch is super important. It's literally the keys to space. But, you know, our space systems group is what enables us to build, you know, the infrastructure in orbit. So, you know, we supply components to a tremendous number of projects around the industry. But if you look across the Space Systems Group right now, we have over 40 spacecraft in backlog, ranging from missions to Mars through to telecommunications

and national security missions. So, yeah, that part of the business continues to go from strength to strength. But I think it's always important to remind everybody that, you know, the end goal here is to build an end-to-end space company. Launch being a cornerstone, but as you point out, the ability to build whatever satellite you need to provide whatever services desired is super important. And so if we shift back to launch here, what are you seeing in terms of interest for Electron, especially as you do start to develop this new medium lift rocket, Neutron? Yeah, so, you know, Electron had another strong quarter with over $55 million of new bookings.

And then, of course, Neutron, you know, this is the largest project within the company. And Neutron is really designed to do a couple of things. One is to try and dislodge some of the medium-class launch monopoly that's in the industry today, and also provide an ability for us to launch our own payloads and build our own constellations and services in orbit. So having that reusable multi-ton capability is really, really important. Neutron's still on track for its first flight next year? Yeah, you bet.

No, we're hitting some great milestones. So the Archimedes engine is going really well, and we had a major milestone of a stage two tank in full flight configuration in a wet dress. So no, it's going well. I mean, I always caveat with it's a rocket program, so anything can happen at any time. But right now, I think the team's feeling really good, and we're reaching those milestones that we need to.

And you announced that you signed your first customer as well. You've also stated your intention to go for national security contracts. What do you see as the biggest marketplace for that new rocket? It's a bit of both, really. So, you know, obviously, you know, there's tremendous demand within the commercial sector, a lot of mega constellations, and, you know, you saw us, you know, sign our first commercial customer in that vein. But also, you know, on national security, if you look at

the national security front right now, especially NSSL Phase 3 Lane 1, the last award was to one provider. So there's a desperate need for some kind of diversity within national security around that kind of Lane 1 medium class launch. We've been very lucky over the years to work very closely with the Space Force and to bring a vehicle to market that is incredibly relevant to the mission. We look forward to on-ramping the vehicle and playing our role within

the national security of the nation. What do you think a second Trump administration is going to mean for space policy? Well, I think it's good. I mean, you know, the administration has a very strong focus on space and national defense. And when space does well, Rocket Lab does well. So we're very happy about that.

And of course, there's an even stronger focus on highly efficient contracting and highly efficient outcomes for taxpayers' dollars in the space domain so that's where Rocket Lab excels as well. I mean if you look at our historical kind of government missions they've always been at price points and timelines that I think this administration will find very attractive. SpaceX has dominated the launch market largely. You now have Elon Musk in the mix with the administration. What do you think that potentially means? I think it'll even sharper focus on those two things, a sharper focus on space and a sharper

focus on efficiency, which, yeah sharper focus on space and a sharper focus on efficiency, which, yeah, that's great for us. Okay. And in terms of Neutron, as you do start to see more other types of rockets come online, including SpaceX's Starship, I just wonder which you see this competitive landscape evolving to. Yeah, I mean, it's funny. I mean, look, I recall a conversation we probably had a few years ago about the small launch industry. And, you know, there was at one point something like 100 small launch vehicles and, you know, it basically shaped out to just one. And I think you'll see a similar kind of, you know, whittling down in the medium class as well. I think there's a number of medium class launch vehicles in development, but getting a vehicle to the pad and then scaling

it is extraordinarily hard as we've seen. So I think it's going to be a relatively condensed environment for launch, which is great for demand, but I think there's a number of new interesting launch vehicles and services coming on the market. So it'll be busy times for everybody. And whether it's from the launch standpoint

or whether it's from the space system standpoint, the fact that Rocket Lab has its hands in, and honestly, some of the most dynamic space exploration programs that we're seeing take shape right now. I wonder what you're most excited about. Well, yeah, to your point, there's a lot to be excited about. You know, obviously Neutron opens a lot up for us, especially in providing and ultimately providing services from space.

But I think about, you know, some of the other programs, you know, we've talked about the national security, but, you know, one that we've got our eye on is the Mars sample return. It's one of NASA's most important missions, and we think we're really well-placed to go after that if you look at all the key elements, whether it's launching off a little planet with little rockets. I mean, I'm not sure who does that better than us,

and through to bringing samples back to Earth. So, yeah, there's a lot to be excited about and we're certainly putting our oar in the water in a lot of those really large nationalistic programs. Do you still have plans to go to Venus? Absolutely, but as you know, it's a nights and weekends project, so there's not that many nights and weekends anymore. We're's not that many nights and weekends anymore. We're too busy doing all the stuff. But no, it's a philanthropic project that we have to search for life in Venus.

And, you know, currently I think we're aiming for about a 2026 launch. You know, it'll be very helpful to have Neutron up and running there to be able to loft that up. But yeah, no, it's certainly a project that we're very passionate about here. And then finally, given the fact that Rocket Lab stock is up double digits today, it's more than tripled over the past three months. It's up something like 380% over the past six months. I could just keep going here. But it does seem like a tide has turned in terms of investors starting

to understand the space business. I wonder if you think that's true. Yeah, I think so. I mean, look, SpaceX is the largest space company in the world. And I think people are starting to understand that Rocket Lab is looking like it's going to come in as the number two. And, you know, if you look at SpaceX's valuation, it's something like over $200 billion. RocketLab is 5% of that or under 5% of that. And as those two companies start to look more and more similar, it's not surprising that, you know,

the valuation gap starts to decrease over time. Peter Beck, founder and CEO of RocketLab. Always great to speak with you. Thank you so much. Thanks, Morgan. Great to catch up. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.