Opto Sessions – Invest in the Next Big Idea

Rocket Lab CEO On Record Growth & National Security Contracts

• Haydn Brain & Ed Gotham

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Sir Peter Beck, CEO and Founder of Rocket Lab, returns to OPTO Sessions a year after our first conversation to delve deeper into the company’s evolution as an end-to-end space provider, its growing role in national security, record financial performance following Q1 earnings, and the transformative impact of AI on the future of space exploration. 

0:00 Introduction to Rocket Lab 
02:16 Government & National Security Contracts 
05:58 Rocket Lab's structural change 
06:49 Recent Product Launches: Flatellite & Starray 
10:48 Electron: Operational Success 
11:58 Advantages of Vertical Integration
13:33 Financial Performance & Growth 
17:34 Tariff's Impact 
18:32 Future Outlook 
20:01 AI in Space

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Welcome back to the show, Peter. So how are things? Very good, thank you. Great. So as we discussed offline, we have spoken before, but for any new listeners, I thought it might be worth reminding them about Rocket Lab, what you do and what makes you different from other competitors in this space. Yeah, so thanks very much. Well, I think what makes us a little bit unique is we're one of the few, if not the only, truly end-to-end space companies. And when I say end-to-end, what I mean by that is that someone can come to us with a problem or a requirement on orbit where they need to provide a service. And we can then go and design a spacecraft. We can build it mainly using all of our own components from reaction wheels and solar panels and you name it. Then we can go and put it on orbit using our own rocket and once it's on orbit we can operate it for a customer as well. So you know that kind of explains that we build satellite components, satellites, rockets and then operate them all which is a little bit unique. And then from a rocket standpoint I mean often the rocket steals the show because it's a big hot stick roaring in the sky. But we're the second most frequently launched US rocket right now, third most frequently in the world. So we have a very high profile small launch business and then soon to be medium class launch business as well. Yeah, absolutely. Great. Well, we'll get into most of those points in due course. Just to set further context, I think in our previous conversation, you mentioned there's considerable aspiration in the industry. I I guess that goes with the territory, but perhaps there's less actual delivery, so to speak. And with SpaceX and Rocket Lab, for sure, standing notably apart on that point potentially. Does that assessment still hold true? Now we're talking, I think, nearly a year later. yeah, no it does. It's held true for as long as I've been in this industry. And look, I mean, it's incredibly hard. You have to be very, very optimistic in this industry, otherwise you'd just cry. So, you know, it's good that there is a lot of aspiration. But no, I you know, it is a, like I say, very, very difficult industry and there's zero room for error. So, you know, plenty of aspiration and... less execution still. Yeah, yeah, it made sense. OK, well, I want to start by getting into a customer sector that you've enjoyed significant recent success in, and that's kind of the national security and government contract space. Rocket Lab, I read, was selected by the US Space Force to compete for the Department of Defense's highest priority national security missions for the National Security Space Launch Program. So firstly, perhaps you can just describe the significance of that milestone for Rocket Yeah, so the NSSL series of launches, as you point out, are the nation's highest profile, most important missions. So it's not uncommon to have a billion dollar spacecraft on the top of your rocket at all times. So to be selected into that elite group, they don't just let any riff-raff in there. You have to have a... a very solid background and reputation. And all of these national security customers we've worked with in the past and flown the monoelectron, so we have a strong relationship and a demonstrated history there. But yeah, mean, it is the Pentagon's preeminent launch contract, so to be onboarded onto that is a real testament and vote of confidence, not only in the vehicle, but in the company. Yeah, absolutely. You mentioned there's other established players in that mix as well. How do you see Rocket Lab's position within that evolving national defense ecosystem and how will you differentiate against those peers? Yeah, so there's two lanes to the program. One lane being under the kind of the old rules and laws, if you will, where you have to have a series of vehicles or a vehicle that can meet all of the requirements for the US National Security from both the Cape Canaveral launch site and the Vandenberg launch site. So as you can imagine, that's a huge... a large vehicle and a huge kind of infrastructure that you have to maintain. And as a result there's like sustainment contracts and various things to you know to make it commercially viable. And there's really only two players in there being SpaceX and ULA. Then the Space Force relatively recently, a couple of years now, created another lane that doesn't require all those things. But really that lane was created to leverage all of the commercial opportunities that are coming to market, things like Neutron. And it doesn't require those big asset investments, but nevertheless it enables people like us to compete for these missions on a standalone basis. Yeah, absolutely. And just to kind of underline that point, I read that you've also been selected to participate in the US Air Force's $46 billion EWAAC program and the UK's $1.3 billion hypersonic technologies framework. just underline for us what this means in practice and how are you approaching this opportunity to secure further orders? Yeah, so I mean we're no stranger to national security work. mean we have a number of spacecraft, have Prime on a national security spacecraft constellation. national security has always been an important part of the company. But these missions obviously are very high value and very high profile and extremely important missions. So it is important for the business and it is important to have... that capability to be able to execute and perform under these national security levels. recently we kind of did a slight change with the structure of the company and changed from Rocket Lab Inc. to Rocket Lab Corporation. That further enables us to, just with a slight tweak to the structure of the company, address some of these national security opportunities. Yeah, I had a question on that further along in the interview, but given you're touching on that now, what does that change in framework mean? that, I mean, you've given an example of the outcome of that decision, but does that mean anything different for the future strategy of the business moving forward? Not really, I mean it just enables us to do things like expand into other nations. You know obviously we have a New Zealand entity, we have a Canadian entity and hopefully if our acquisition of the Nauruq goes well we'll have a German entity and it just enables us to have those kind of Holyoan subsidiaries under a corporate structure in a much tidier way. So that's basically what it enables and that also helps with the national security work as well to be able to... completely marginalise those various structures and organisations. Yeah, yeah, absolutely. Okay, well, having covered off that sector, I want to just briefly, I suppose, to speak to the wider kind of products there and your offerings outside of that key sector. So let's discuss some recent product launches to give listeners a sense of that offering scope. You recently introduced Flatellite, a new satellite platform designed for mass manufacturing and constellation scale deployment. I think listeners will be keen to understand whether that signal is a move towards Rocket Lab launching and operating its own constellation. Yeah, mean, Flatellite was a response to customer requirements and inquiries. So, you know, there really isn't a solution out there right now for, you know, high volume spacecraft for mega constellations. And in that sense, it's particularly designed for neutron. you know, a satellite and a launch vehicle have to do this dance on the way to orbit where, you know, you have to... Make sure you don't exceed the kind of loads and requirements of the spacecraft So you make compromises on the satellite side you make compromises on the rocket side what Flatellite enables us to do is really remove all those compromises and Why customers care about that is that ultimately that means we get more spacecraft per rocket Which in turn drives the cost of putting their constellation down on orbit So so Flatellite is you know is optimized for a neutron ride Of course it's also optimized as a spacecraft for minimum mass and the right levels of power and control and communications for a number of constellation applications. yeah, just, if you look at any of the high density constellations, they kind of devolve down to this flat format. And as of date, nobody's really offered that flat format to the commercial market. Yeah, fantastic. Sounds pretty innovative. I want to move on then to another kind of recent product, I guess not wholly related to Flatellite but it's called Starray. I read it's your customizable solar array product. I read it's also, again, having spoken about innovative products, the world's only vertically integrated solution of its kind. So what market need is that product solving? Yeah, so solar is a real pain point. That's why that was one of the first acquisitions we made of Solero. And if you're new to spacecraft, then the most common way is you buy kicks or the individual solar cells. Then you learn to put them down on a panel yourself. And then those panels get turned into arrays. And then sometime, an expense later, you have a solution, a solar solution. And you know when we acquired the Solero business that was pretty much the standard way. Solero made panels, they never made arrays, so they made panels but not to the full kind of end point of arrays. So what we've done with StarArray is that we've made that kind of this generic kind of singular array that can be multiplied many times to achieve different powers and different requirements. And it's very easily modifiable. So it just cuts all the faff out basically. you know, a customer can come and say I've got this power requirement and instead of, you know, a bespoke design solar array then, you know, there's this solution that's available off the shelf and all the hinges and locks and everything are qualified and everything's ready to go. So there's no real development and yeah, it just on ramps new customers, especially all the customers in a hurry. for power solutions just in a way, way faster way. And are those customers coming from particular industry or is it quite a broad mix? are all over, mean, whether it's just a commercial customer or a government customer wanting to just move quickly. Yeah, OK, got it. And now having covered, I suppose, different products and recent launches, I want to talk about technology and launch progress. Firstly, let's cover Electron. think you've had, well, you had 16 Electron launches in 2024. I believe that was a 60 % increase over the prior year. So before we move on to the launches expected this year and beyond, what operational changes made that earlier? success last year possible and how are you preparing for the future launches moving forward? Well for us, mean our cadence is driven by customers turning up on time. That's it. So we don't have to do anything. We just integrate the spacecraft on the rocket and go on flight. And then the same again with this year. I we built a factory that's capable of building over 50 rockets in a year. So we just scale that up and down as customers require. But I mean, this year is shaping up to be a much bigger year than that. We have demand for over 20 launches. Of course, the true proof in the pudding will be if the customers all turn up on time. But we've had a good first quarter, so hopefully we're on track. Yeah, great. saw that. And I saw the target was 20 and beyond. So really interesting to see the progress there. And for those that I just wanted to come back on that vertical integration piece, because obviously beyond launch, the product offering and the kind of value proposition of the entire business is far larger than that, as you touched on in your intro. So particularly for those that missed our previous interview, how does Rocket Lab deliver everything from those individual components right through to kind of complete spacecraft. What advantages does this vertical integration provide? Well, so think the best way to describe the space industry is a collection of extremely unique capabilities in shops, all at subscale. So whenever we've gone to order anything at scale, it's always been a real challenge. And the one thing that the Rocket Lab has the ability to do, and we do very well, is produce things that are very, very technically difficult and very bespoke at scale. So the vertical integration strategy for us is not a religion. And you can argue it's not even a strategy. It's just a necessity. We can't wait tremendous amounts of time for stuff because we move very quickly. And there's just not that many things that are developed and offered at scale at the right price that meet our requirements. we didn't wake up one morning and say, right, everything must be vertically integrated. was just a... requirement that if we wanted to move at the speed we wanted to move, if we wanted to offer the value that we could, then that was kind of the only way. Yeah, absolutely. Okay, great. So let's look at, suppose, how all of that translates into financial performance. Rocket Lab achieved record revenue of 436.2 million in 2024. And Q1 2025 maintained that momentum with 123 million up 32 % year on year. I believe that was hitting the top end of your guidance as well. what's... driving this growth, if that's not too kind of broader question, and which business segments specifically are scaling fastest. Look, everything is growing. So every component business has grown significantly year over year. Every electron continues to grow year over year. All of the space systems and satellite divisions continue to grow year over year. So if there's not one part of the business, it's growing everywhere, which is what we want. And we expect that to continue with new products coming online. Neutron obviously will be a big enabler, you know, in everywhere and every part of the business is expected to grow. So, you know, there's no, we run our little acquisitions as pseudo separate companies, but within those acquisitions, I make it very, very clear that they are treated exactly like a startup. So, you know, there's no resting on your laurels, we expect. growth, significant growth year over year and that means new products. So that's why you see new reaction wheels coming out, new solar systems coming out, new software coming out because each one of those companies is expected to grow. yeah, no, there's no part of the business that is not growing. Yeah, fantastic to hear. And you've touched on Nutri on a couple of times there. Just give us a sense of, obviously it's early days, but give us a sense of the potential. Yeah, mean, of all the things that I worry about at night, demand for Neutron is not one of them. And you can look at the ASP for a Neutron is in the order of 50 to 55 million. So if you have any kind of resemblance of a cadence there, then that's a fairly big revenue line into the company. So in Neutron, we're expecting sort of This year we'll get one away, next year we'll do three, the following year we'll do five. So that scales fairly quickly into a pretty significant revenue line for us. Fantastic. And just to touch on again, to close off the financial performance sort of section, I believe you secured over $450 million in new contracts last year. So are you seeing a kind of shift towards more multi-year or multi-launch deals? And if that's the case, how does that impact your approach to capacity planning and cashflow? Well, it's funny how the business grows because we used to press release a $50 million contract or those kinds of things. These days it just gets washed into the mix. It's not a company stopping event. All of the elements, especially the... the component parts of the business are all growing significantly as we talked about. But by the very nature of the programs that we're going after, they're not a $50 million program here and there, especially on the space system side. We're chasing very large billion or multi-billion dollar opportunities. So that does make the backlog growth a little bit lumpy. Mm-hmm. because these opportunities, they can take a year or two to come to fruition, right? So, you know, we spend a lot of resource and a lot of time on these really large moving opportunities, you know, because obviously they're good for us, but also we've grown to kind of a scale and a competency and capability that, you know, we can absorb one or two of these very large opportunities. So I would say that, you know, that it leads from... from my perspective or my time gets that that's what I spend the most amount of time on is both commercial and government. It's pretty significant opportunities to feed the machine. Yeah, yeah, absolutely. And I want to finish, suppose, by looking ahead and thinking about, I guess, the current environment in which the company is operating in. How are current tariffs and global trade dynamics affecting your manufacturing, your supply chains, and how do you see that evolving through 2025? Yeah, I we're, I would say we're largely unaffected. You know, we are, we're, you know, by far majority US centric manufacturing. So that's not really, you know, an issue for us, obviously, because we're so vertically integrated, you know, the supply chain aspects that really, really remain for us pretty unaffected. I would say the thing that, that we watch the most is, as I'm sure everybody else does, is the market is pretty unstable and as it swings up and down, I think that's hard to not miss. But as far as day-to-day kind of business operations, no, think we're fairly well insulated from those events. Yeah, interesting that the business model and kind of the strategy from the top level actually gives you a bit of defensive, defendability, sorry, against those external pressures. One of my final questions then, I suppose, is to ask you, know, the podcast tagline is invest in the next big idea. So interested to get your kind of longer term thinking here. So perhaps if we look ahead 10 years, what role do you hope Rocket Lab is playing within the global space industry at large. Well, firstly, 10 years is a long time. Rocket Lab years are like dog years, right? So it's like three or four per one. So it's a long time. Look, if I've done my job right, my firm belief is that the large space companies of the future are going to look exactly like Rocket Lab. They're going to have the ability to deploy infrastructure in orbit by building their own spacecraft. And they're going to be able to launch it using their own rockets. And I think space companies will become a little bit blurry about, you know, is this a space company or is this a particular applications company? And, you know, I just think that the power of vertical integration, both of being able to launch your own stuff, build your own stuff, is just so powerful that that will be the kind of default, you know, successful business model for the really, really large space companies. So obviously that's where we're aiming to be and in 10 years time I would expect that we were there otherwise, know, if I'm in now. Yeah, okay, we'll watch this space then. Final question then. I usually finish by speaking to business leaders, particularly in the more innovative sectors and asking them sort of for maybe a product that we haven't spoken about, a technology within a product that we haven't spoken about that you think could be transformative, but at the moment is living a little bit under the radar and hasn't got enough attention. Mmm. Gosh, that's a good question. I mean, my default answer as you were saying the question was, was just going to say AI, but that's not living under the radar. That's in big bright lights. But I honestly think that even within our business, we have dedicated AI resources and we're pushing that throughout the company. some of the gains in efficiency are just phenomenal. But that's hardly under the radar. But I suppose the applications of AI within the space sector is, well, it's certainly something that I'm not particularly familiar with. So if there is anything kind of material that you could point to, that would be really interesting to hear about. Yeah, yeah, I mean so AI is in machine learning has been fairly well embedded into things like Earth observation within within the space industry for a while But I think you know from our perspective. It's it's just like you know I was down You know there was a hot fire of a new engine development that we were doing and And you know the entire you know user interface and GUI was was You know was all coded using AI like a day And everybody at Rocket Lab knows that I'm super hot on AI and I like to see it push throughout the business to create efficiencies. And the entire code base for this test setup was written in AI. And of course, everybody likes to tell me that because they know how much I want to see that used. But I mean, the reality is that would have taken probably a week or more. And it was just essentially auto-coded within less than a day. So it's just little stuff like that, which doesn't sound much, but you do that like five times and you've got five weeks of savings. It's crazy. Yeah, completely. And a really, I think, fascinating insight to end on and one that will resonate with a lot of business leaders and listens to the podcast. I think that just leaves me to say thank you very much for joining us on the podcast again, Peter. My absolute pleasure, thanks very much for having me.