RKLB - Earnings call Q3 2025

Good day, and welcome to the Rocket Lab Corporation Third Quarter Earnings Conference Call.

[Operator Instructions]

Please note this event is being recorded. And I would now like to turn the conference over to Murielle Baker, Director of Corporate and Launch Communications. Please go ahead.

Thank you. Hello, and welcome to today's conference call to discuss Rocket Lab's Third Quarter 2025 financial results, business highlights and other updates.

Before we begin the call, I'd like to remind you that our remarks may contain forward-looking statements that relate to the future performance of the company, and these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's press release and others are contained in our filings with the Securities and Exchange Commission.

Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update these statements.

Our remarks and press release today also contain non-GAAP financial measures within the meaning of Regulation G enacted by the SEC. Included in such release and our supplemental materials, a reconciliations of these historical non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP.

This call is also being webcast with a supporting presentation end of replay and copy of the presentation will be available on our website.

Our speakers today are Rocket Lab Founder and Chief Executive Officer; Sir Peter Beck as well as Chief Financial Officer, Adam Spice. They will be discussing key business highlights, including updates on our Launch and Space Systems programs, and we will discuss financial highlights and outlook before we finish by taking questions.

So with that, let me turn the call over to Sir Peter.

Thanks, Murielle, and thanks, everybody, for joining us today. With another record-breaking quarter for Rocket Lab, we're up 48% year-on-year with $155 million of revenue and strong gross margins as well. This is the second time in a row we've delivered record-breaking growth quarter-by-quarter, once again demonstrating our relentless execution.

Electron demand is accelerating faster than ever before, and the momentum continues to build with our largest Launch contract backlog yet with 49 launches on contract. We've just launched our 16th mission this year, equaling last year's launch record, and we've got another launch scheduled in the coming days that will take us to 17 with more to come and a new precedent for electronic annual launch cadence, and we see this precedent continue in 2026 as well.

Amazing performance is also the theme across our Space Systems Groups. Twin Spacecraft for NASA Mars mission are integrated onto its launch vehicle and are really lift off in Cape Canaveral in the coming days. In Neutron, we've got a full update to share on our progress to the pad following the official opening of the launch complex in August, ticking off a critical milestone in the program. We'll share more detail about that in the upcoming slides.

So before we get into it, I want to zoom out and talk about our performance over the last 5 years.

Given this is sort of a little bit of a wrap up for the year in some respects. Execution and reliability are critical in this base industry, but even more so in the public markets. And their ability to consistently deliver results for our customers, expand our capabilities and grow our revenue and gross margins really sets us apart in the sector as we set new benchmarks for operational and financial success.

From $35 million in revenue just 5 years ago to implied full year guidance of roughly $600 million at the midpoint, an approximately 1,600% increase over that time period. And the gross margins are looking great to from negative 34% GAAP gross margin to the midpoint of our implied full year guidance of slightly over 34% positive in 2025 and looking great [indiscernible] at '25 with an even higher 37% to 39% in the fourth quarter.

Our position as a leading end-to-end space company has never been stronger. We're a trusted disruptor of the industry, and we're proving that we can move quickly to scale our products and our services across both Launch and Space Systems and that focus is translating into the double-digit growth results you're seeing on the page here.

Right, on to Electron.

So as the title says, it's been a record-breaking quarter for Launch contracts. 17 dedicated launches were signed in just 3 months, but -- all but 2 of them were signed with international customers from Japan, Korea and Europe. Those new missions, plus the ones already on the books for international space agencies like [indiscernible] and [indiscernible] prove Electron is not just a leading launch vehicle in the United States, but it's becoming the preferred small launch vehicle globally. Electron's business model is one of scheduled flexibility for our customers, and you can see from these new bookings, demand is stronger and growing for Electron. The HASTE, our hypersonic test vehicle, continues to redefine the way technology has been developed and tested in the United States.

In Q3, we launched back-to-back missions from Launch complex to in Virginia with 100% mission success, enabling technology to be tested in real life hypersonic environments, which is a critical capability for the next-generation defense programs like Golden Dome. By leveraging our commercial speed, our vertical integration and our execution history with Electron, HASTE delivers the proven agility and responsiveness that are these programs demand.

Speaking of momentum, we're on track to fly our 17th launch of the year in the next few days, which will officially surpass our previous annual launch record set in 2024. This pace is only possible because we are very intentional about designing Electron for scale. This extends beyond the vehicle itself to all the supporting infrastructure like manufacturing, processing and operating a high-volume launch range infrastructure as well.

It's an important approach that we're deploying for Neutron too, ensuring that we're thinking well beyond first flight.

As of right now, there are only 3 American commercial launch providers who have launched to orbit more than once this year Space X, ULA and of course, us, which really does highlight just how [ real ] Electron's capabilities are.

Now let's turn to Space Systems. Starting up with -- starting off with a little bit of an update for M&A for the quarter. We closed the geos deal to create a new [indiscernible] business unit, strengthening our offering as a prime contractor for national security programs like Golden Dome and for the Space Development Agency. With our history and expertise in buying and expanding smaller shops to meet industry demand, we're turning our attention now to scaling our new electro-optical and infrared sensors for lucrative future contracts. We're also closer to acquiring Laser communications company, Mynaric. They have completed their financial restructure under German law in August, which was a pivotal moment in the acquisition process and one that brings us nearer to closing out this deal.

Rocket Lab has been a force multiplier for the U.S.-based industry, and we're ready to bring that same energy to the European space sector with our first European foothold and expansion into Germany.

As for what's next, we've built up our dry powder for future M&A with more than $1 billion in liquidity following at the market offering program implemented in September. It was a very strategic move to lock in capital that will allow us to act quickly on some of the exciting opportunities in the pipeline. We're not ready to reveal the details of these strategic plays just yet, but I can assure you that the pipeline is active. We've always taken a disciplined approach to acquisitions and our successful track record speaks for itself.

We've got a bit of a neck for identifying, acquiring and then integrating businesses that enhance our end-to-end capabilities and make us a stronger competitor for large-scale programs. And that's made us the consolidator of choice for many companies in the space sector. We're often the ones being approached first by companies wanting to join Rocket Lab now because they see the value we create for growth and innovation.

On to outcoming Space Systems missions. We're a few days away from two of our spacecraft launching for the ESCAPADE mission. And the initial launch attempt was unfortunately scrubbed by the launch provider yesterday. But by this time, Wednesday, they're scheduled to be launched from Cape Canaveral, and they'll be on their way to Mars.

Now what makes this mission truly groundbreaking is that we're tackling these interplanetary challenges with spacecraft built for an order of magnitude less than the usual cost developed in about 1/3 of the time. We're proving an entirely new, more accessible model for seeding satellites to other planets. In short, this mission is a tough one, both in flight and in the design, but of course, we love a challenge.

Another program with Big Green Tech this quarter is our transport layer Constellation for the Space Development Agency which is cleared critical design review to be able to move it into spacecraft production now while existing and contract fully funded contracts like a $0.5 billion program can continue under the government shutdown, the situation does continue to have an impact on the timing of new awards for the SDA Tranche-3 constellation.

Neutron, all right.

Moving on from Space Systems.

Let me give you a bit of an update on Neutron the quarter.

Now I've spent a lot of my time in the recent weeks, [ Albo to Albo ] with the teams at the various sites participated for Neutron testing. I have to say, I'm extremely happy with the progress, but more than that are the thoroughness of the team during this critical qualification in the acceptance testing phase. We're into the big media bits in the [indiscernible] test where we have whole systems integrated together in large subassemblies. This is a time when you find out on the ground what you got right and what you got wrong and of course, rather than finding out that during first launch.

Now at Rocket Lab, we have a proven process for delivering and developing complex space flight hardware. And I think that process speaks for itself with respect to our hardware always looking beautiful, and more importantly, always working beautifully.

Now our process is meticulous, but it works. Take Electron, for example, it's the world's most frequently launched small launch vehicle, as we all know. And we scaled the production and launch of it faster than any other commercial launch vehicle history, which is great. But if we think about how many others have tried to develop a launch, the results have been extremely poor. Those who have failed to deliver a numerous basically, every new space company, except Rocket Lab and SpaceX has failed to build an orbital rocket that is scaled to any kind of launch cadence and is reliable.

Now this is the Rocket Lab process in action and I've been resolute about sticking to this approach.

Now with all the hardware in front of us now and significant testing programs underway across all parts of the vehicle, we can see we need a little bit more time to retire the risks and stick to the Rocket Lab process. Yes, it might mean things will take a little bit longer, but I want to give some context here. I mean, the labor cost for the program is about [ $15 million ] a quarter, which we make back 4x over a single launch anyway.

So it makes sense to change what we know and what has proven to work.

So we're aiming to get to a new trend of the pad in Q1 next year, if all goes well with the first launch thereafter. Once again, though, that's provided that myself and the team are confident we have completed Neutron's goal testing and acceptance testing program to the Rocket Lab's standard.

As always, this is a Rocket Program.

So has been completed at a pace and a cost that nobody has achieved before. And the financial and long-term impacts are insignificant to take a little bit more time to get it right.

Now we've set high expectations for new transfers flight.

Our aim is to make it to orbit on the first try.

You won't see us minimizing some qualifier about us just clearing the pad and claim and success and whatnot. And that means that we don't want to learn something during neutrons first flight that could be learned on the ground during the testing phase. At the end of the day, Neutron fly when we're very confident it's ready and we're not going to break the mold of the Rocket Lab magic.

Now over the next few slides, I want to take you through some of the testing campaigns we've been running to paint a bit of a picture of what it takes to deliver a reliable rocket to the launch pad.

As you've seen for some time, we're very hardware rich across the entire vehicle.

Now it's all in sort of assembly and qualification and acceptance testing before it's all brought together under the East Coast site.

Okay.

So these pitches are just a snapshot of many of those activities. We're deep diving into the qualification, test and acceptance of every major assembly, subassembly and system before we get into launch operations.

In fact, I'd say we're putting Neutron through an even more extensive barrage testing than we did Electron because it's not your kind of conventional rocket that we're developing.

We have a couple of novel things being the world first architecture like Hungry Hippo appearing, that has been a second stage and the vehicle itself is, let's not forget, is the world's largest flying carbon composite structure ever built.

So we're making tremendous progress in these structures, testing across all levels of the vehicle. Every one of Neutron's major structures are tested on the ground to the levels that exceed what the Rocket may see in flight. This includes testing of our primary structures like propellant tanks, thrust structures, the end of stage pushing them all to their limits to ensure they meet the demands of launch and reusability.

Before we can call this qualified, we go through a full run of load cases like axial lateral torsional transient and combined loads. The main and primary structures must withstand a lift off of 1.5 million pounds of thrust from the Archimedes engines. The worst cases of aerodynamic loading on the way up as the vehicle goes through Max-Q and all the separation loads.

And then for the structures that come back on stage 1, they have to survive all the thermal and neurodynamic reentry loads too.

Now we test secondary and auxiliary systems to the same level of scrutiny as well. This involves pulling and pushing across the same load cases even down to the smallest fixtures and the smallest bracket that holds every device to Neutron's primary structure. A tests across both Stage 1 and 2 structures have yielded wealth of valuable data and by anchoring and validating our engineering models through this test, we're able to uncover and retire technical risks on the ground well before we fly.

With new [indiscernible] reusable fixed faring design and our suspended second stage that passes through it, we're working with a unique architecture that's never been seen in our rocket before. And we've been taking through it as -- we've been taking it through its paces to read the entire system for its first flight. This has included testing the Hungry Hippos aerodynamic control surfaces as well as turning the electromechanical actuators and the control systems and all the entire mechanisms. The Hungry Hippo's open and closed systems have past performance testing and so as the staging systems such as [indiscernible] locks and pushes and guides and all the stuff that's inside of second stage that passes through the Hungry Hippo's mouth.

While it's been one thing to build these huge assemblies for Flight 1, the team has also set up the infrastructure for this testing that allows us to get as close as to a flight test as we possibly can on the ground.

And this is important because it also laser foundations, not just for the first launch, but flights to and beyond.

You can see some of the giant towers in these staging tests on the right-hand side of the slide there.

In fact, some people thought we were building a launch site was so big. In the Neutron flight software and GNC team, we've been flowing to orbits virtually almost now for 2 years, leveraging our proven approach from the Electron program with our own flight software and hardware in the loop testing that integrates physical components with simulated flight environments to validate our system-level functionability and performance. In preparation for Neutron's first flight, our operators and engineers have been running virtual test and launch operations week in, week out. We've been exercising our operations team on console going through static fire operations and launch day operations so that we can hit the ground running when the vehicle arrives at Launch Complex 3.

Our world-class simulation tools built in-house allow us to exercise our Avionics GNC and software tools well in advance of conducting these operations with a fully integrated vehicle. This not only allows us to reduce risk, but also serves as a training platform for operations team.

Combine that with a full suite of vehicle avionics in the loop, and we bring test like you fly to a whole new level. It's all part of the smart rigorous approach that we apply to every program and mission.

On to Archimedes. Since the last engine update, the propulsion team has continued to validate its performance across the entire runbox. The upstaging on the test them to, and we continue to work for all the qualification testing on these engines and test as up configurations as you well as you know. The [ testing ] is operating at a 20/7 rate, meaning 20 hours a day, 7 days a week. The only way you can get through years of qualification always expected for an engine program is to squeeze years of hours into months.

So as you can imagine, no weekends or evenings are left on the table at the [indiscernible] test facility.

Now on to our ocean recovery platform for Neutron.

While return on investment barge won't be used for the first flight, the recovery team is making great progress on having it ready for Flight-2. The 3 main propulsion generating sets for the 400-foot length barge recently passed factory acceptance testing and have been cleared to be sent to the shipyard in Louisiana. Each of return on investment 3 diesel electric [indiscernible], sets are capable of more than 3 megawatts of electrical power. Combined, that's more than 2.5x the total electricity capacity for all launch complex-3.

So these things are big.

All in all, return on investment is looking good into service next year for the second launch.

Okay.

Finally, to wrap up our progress. It was a great moment to be able to cut the ribbon at the launch site last quarter. Neutron will bring the largest lift capacity to the Mid-Atlantic Regional Spaceport has ever seen.

So opening it was an important milestone, not only for the past the first launch, but for the assured access to space that the nation needs a launch as launch congestion continues to build up across the country. The team is running through the final activation as they prepare to receive Neutron on the launch amount, but otherwise all ready to go. Most recent tests have included flow in cryogens through propellent systems and tests continue to run smoothly. We've designed the site to be able to turn missions within 24 hours. That was the design requirement.

Now that's important for response space and the launch cadence we expect for the vehicle. But equally so, we can get Neutron straight into back back-to-back testing during the launch and readiness campaigns as well.

So you can see there's been lots of Neutron activity this quarter. The team has made significant progress towards Neutron's first launch while continuing to prioritize our very rigorous testing and qualification processes over rushing to the pad. We're seeing what happens when others rush to the pad with an unproven product, and we just refused to do that. A methodical and deep approach to qualification is what's driven our reputation for success and reliability in the industry. It's been a cornerstone of our success with Electron and it's the same philosophy that we'll be applying to Neutron.

Okay.

Here's Adam with the financial highlights for the quarter and our outlook ahead for Q4.

Great. Thanks, Pete.

Third quarter 2025 revenue was a record $155 million, coming in at the high end of our prior guidance range and representing an impressive year-over-year growth of 48%. This strong performance was driven by significant contributions from both our business segments. Sequentially, revenue increased by 7.3%, underscoring the continued momentum across the business.

Our Space Systems segment delivered $114.2 million in revenue in the quarter, reflecting a sequential increase of 16.7%. This growth was primarily driven by increased contributions from our satellite manufacturing business, which continues to perform exceptionally well and provides comforting diversification alongside our robust, but at times lumpy launch business. Meanwhile, our loan services segment generated $40.9 million in revenue, representing a 12.3% quarter-over-quarter decline due to fewer launches during the period, driven primarily by customer spacecraft delivery delays.

We have a busy Q4 manifest and as a result, expect a strong return to sequential revenue growth in our launch business in the fourth quarter.

Now turning to gross margin. GAAP gross margin for the third quarter was 37% at the high end of our prior guidance range of 35% to 37%. Non-GAAP gross margin for the third quarter was 41.9%, which was above our prior guidance range of 39% to 41%. The sequential improvement in gross margins was primarily driven by a onetime benefit from the transition to over time revenue recognition for certain HASTE missions paired with revenue recognition of an Electron mission cancellation due to a customer's internal program cancellation, which was recognized at 100% margin. We ended Q3 with production-related head count of 1,198, up 48% in the prior quarter.

Turning to backlog. We ended Q3 2025 with approximately $1.1 billion in total backlog, with launch backlog accounting for approximately 47% and Space Systems representing 53%.

During the quarter, launch backlog contributed to gain share, supported by strong underlying trends as we can hear a robust pipeline of opportunities across electronic ends. This includes the 17 electronic bookings signed within the quarter that Pete mentioned earlier.

While Space Systems bookings remain inherently lumpy due to the timing of increasingly larger and high-impact program opportunities, Space Systems backlog continues to hold at healthy levels despite the step-up in revenue run rate recognized over the last few quarters. We're actively cultivating a strong pipeline that includes multi-launch agreements and large satellite manufacturing contracts across government and commercial programs.

As noted earlier, these larger needle-moving opportunities can induce lumpiness in backlog growth and are critical drivers of long-term value and scale of business.

Looking ahead, we expect approximately 57% of our current backlog to convert in revenue within the next 12 months.

Additionally, we continue to benefit from relatively quick turns business across Launch and Space Systems components businesses that drive incremental top line contribution beyond the current 12-month backlog conversion.

Turning to operating expenses. GAAP operating expenses for the third quarter of 2025 were $116.3 million, above our guidance range of $104 million to $109 million. Non-GAAP operating expenses for the third quarter were $98.1 million, which was also above our guidance range of $86 million to $91 million. The sequential increases in both GAAP and non-GAAP operating expenses were primarily driven by continued growth in prototype and headcount-related spending to support our Neutron development program.

Specifically, investments ramped up in propulsion as we continue to qualify our committees as well as in test and integration of mechanical composite structures at our facility in the middle of America.

In R&D specifically, GAAP expenses increased $4.6 million quarter-over-quarter while non-GAAP expenses rose $4.8 million. These increases were driven by the ramp-up of Archimedes production along with higher expenditures related to mechanical systems [indiscernible] Peter just mentioned. Q3 R&D headcount was 1,019, representing an increase of 84 from the prior quarter.

In SG&A, GAAP expenses increased $5.7 million quarter-over-quarter while non-GAAP expenses rose $6.4 million quarter-over-quarter. These increases were primarily due to the acquisition of GEOs during the quarter compared with higher legal expenditures insurance renewals and fees associated with our annual proxy statement and related filings. Q3 ending SG&A headcount was 385, representing an increase of 42 from the prior quarter, with the majority of those coming from the closing of the GEOs acquisition. In summary, total headcount at the end of the third quarter was 2,602, up 174 heads from the prior quarter.

Turning to cash. Purchases of property, equipment and capitalized software licenses were $45.9 million for the third quarter of 2025, an increase of $13.9 million from the $32 million in the second quarter. This increase reflects ongoing investments in new run development as we continue testing and integrating large structures at our facility in Middle River, expanding capabilities at the engine test and in [indiscernible], Mississippi and scaling additive manufacturing at our engine development center in Long Beach.

As we progress towards Neutron's first flight, we expect capital expenditures to remain elevated as we invest in testing, production scaling and infrastructure expansion. GAAP EPS for the third quarter was a loss of $0.03 per share compared to a loss of $0.13 per share in the second quarter. The sequential improvement to GAAP EPS is mostly attributable to the $41 million tax benefit we recorded during the third quarter, which is due to the partial release of the valuation allowance against our corporate deferred tax assets as a result of acquiring an equal amount of deferred tax liabilities, emanating from the GEOs acquisition's purchase price accounting.

GAAP operating cash flow was a use of $23.5 million in the third quarter of 2025 compared to $23.2 million in the second quarter. Similar to the capital expenditure dynamics mentioned earlier, cash consumption will remain elevated with a Neutron development, longer lease production for SDA, investments in subsequent Neutron tail production and infrastructure expansion to scale the business to be audited and testified. Overall, non-GAAP free cash flow, defined as GAAP operating cash flow, less purchases of property, equipment and capital software in the third quarter of 2025 was a use of $69.4 million compared to a use of $55.3 million in the second quarter. The ending balance of cash, cash equivalents, restricted cash from marketable securities was just over $1 billion at the end of the third quarter.

The sequential increase in liquidity was driven by proceeds from the sale of our common stock under our aftermarket equity of program which generated $468.8 million during the quarter. These funds are intended to support acquisitions such as the announced Mynaric acquisition as well as other targets in our robust M&A pipeline, alongside general corporate expenditures and working capital. We exit Q3 in a strong position to execute on both organic and inorganic growth initiatives and to further vertically integrate our supply chain, expand strategic capabilities and grow addressable market, consistent to what we have done successfully in the past.

Adjusted EBITDA loss for the third quarter of 2025 was $26.3 million, which was below our guidance range of $21 million to $23 million loss. The sequential increase of $1.3 million and adjusted EBITDA loss was driven by higher revenue and improved gross margin, which was more than offset by increased operating expenses related to Neutron [indiscernible].

With that, let's turn to our guidance for the fourth quarter of 2025.

We expect revenue in the fourth quarter to range between $170 million and $180 million, representing 12.8 quarter-on-quarter growth at the midpoint. We anticipate further improvement in both GAAP and non-GAAP gross margins in the fourth quarter, with GAAP gross margins to range between 37% to 39% and non-GAAP gross margin to range between 43% to 45%. These forecasted GAAP and non-GAAP gross margins are benefited by a higher mix of launch contribution in the quarter as well as underlying improvements in launch ASPs and greater launch overhead absorption due to higher forecasted launch cadence in the quarter.

We expect fourth quarter GAAP operating expenses to range between $122 million and $128 million and non-GAAP operating expenses to range between $107 million and $103 million. The quarter-over-quarter increases were primarily driven by ongoing Neutron development spending related to Flight-1, including staff costs, prototyping and materials.

However, we expect to see a shift in spending from R&D to flight to inventory, which is an encouraging sign of progress as we move closer to Neutron's first flight. I'm optimistic that with the impressive strides we've made towards this milestone, we're approaching peak Neutron R&D spending and are on the path towards meaningful operating leverage and positive cash flow in the future.

We expect fourth quarter GAAP and non-GAAP net interest income to be $3.5 million, which is a function of higher cash balances as well as the conversion of approximately $192 million of convertible notes since September 30.

We expect fourth quarter adjusted EBITDA loss to range between $23 million to $29 million and basic weighted average common shares outstanding to be approximately 571 million shares, which includes convertible preferred shares of approximately 46 million and reflects the conversion of approximately 37 million shares from convertible notes thus far in Q4.

Lastly, consistent with prior quarters, we expect negative non-GAAP free cash flow in the fourth quarter to remain at elevated levels, driven by ongoing investments in neutron development and scaling production. This excludes any potential offsetting effects from financing under our ATM facility.

And with that, we'll hand the call over to the operator for questions.

[Operator Instructions]

The first question today comes from Ryan Koontz with Needham & Co.

Really nice to see the strong bookings and backlog jump there for launch, really impressive.

Sounds like a lot of that was international. Any particular color you can share on the use cases, defense versus government? Anything you can share as far as what's really driving that pickup in backlog and how you feel about it going forward over the next few quarters?

Yes, Ryan, thanks very much. Yes, so it's a bit of both.

So strong commercial bookings, but also for the first time, we see space agencies who typically use -- go to -- the first stop is to go and use their own sovereign capabilities. But Electron is really the only vehicle of its kind in -- operating in the world right now.

So it was very, very promising to see space agencies now kind of standardizing on the electrons platform.

Sure. That's great. And how are you feeling about supply chain relative to meeting that kind of demand for Electron at this point?

Electron's like 90% plus built in-house.

So we don't see too many challenges there. The factory that we built here was ultimately designed to build 52 rockets a year.

And so I think we'll be fine.

That's great. Maybe one last one, just to wrap up, just to clarify what Adam said about launch gross margins. There was a couple of onetime events there. Any color you can share with us on that, Adam.

Yes.

As Electron continues to kind of mature as a business, we've got a deep pipeline and backlog. And you're going to have customers that have changing priorities when programs get canceled.

Fortunately, we have very strong contract terms, which allow us to make sure that we're protected in the event that people programs get canceled or change their priorities.

I think on the HASTE change, that was really kind of again a pivot on some of the HASTE missions where the contractual terms are such where it's really more [indiscernible] under ASC 606 to recognize revenue over time and use EAC accounting to measure the cost that you're incurring and you recognize revenue and margin importantly.

So we now have [indiscernible] in that business where you have point in time and over time, and it's really just a function of contract terms.

And HASTE is evolving into an important and meaningful part of our business. A lot of good things come from at the fact that you've got typically higher ASPs.

You've got, I would say, along with that now you've got a little bit more stability, I would say, our predictability to the revenue contribution from that, given the fact that and some are going to be a point in time, but some are going to be over time and that over time allows a little bit more of a, I would say, like a little bit more predictability. And I think it's a healthy [ place ] to be.

Next question comes from Andres Sheppard with Cantor Fitzgerald.

Okay, everyone. And Pete, it's really -- it's great to hear all the great progress over the last few years to see everything up until this point. Two quick questions for us. One on Space Systems and one on Launch business.

On the Space Systems, maybe for Adam, can you remind us the revenue recognition associated with the FDA Tranche-2 award.

I think in the past, you had targeted 40% revenue recognition in 2026.

Just wondering if that's on track or unchanged? And then also on the FDA Tranche-3 award now, obviously, the government shutdown has maybe delayed the decision there slightly. But do we still feel confident in that award. And in that decision, if awarded, that would be the largest contract, I think, awarded in company history.

So curious on your thoughts there.

Yes. I'll take the first piece on the rev rec. I'll give you my thoughts on Q3, and then I'll hand it back over to Pete. But on the rev rec, yes, we're still very much in that path to recognize the revenue over that pattern where it was -- kind of think about these these larger long-lived government programs is kind of 10% kind of in the first year after you achieve award and then it's 40, 40, 10.

So think about that as the shape of the curve. And FDA has got a Tranche-2 transport layer shaping up to be similar to that.

So yes, everything is consistent there.

And as you know, similar to the other overtime rev rec, you basically estimate your cost to complete the mission as you incur costs proportionately, you recognize revenue at program margin.

And so yes, it's been -- so far, that program has been in very well.

As Pete mentioned, that's part of the business is performing very, very well. on T3, yes, that would be the largest contract company would have won to date. And you're right, the timing has been a little bit delayed due to the government shutdown.

I think you've all seen recently that there are signs that perhaps we could be coming to an end of that shutdown, which I think would be great to get that momentum back in the awarding of those types of contracts, but I'll show repeat investor confidence in that win.

Yes.

I think you've said it well, Adam. I mean, I think we put ourselves in a really strong position as a prime contractor on those awards, especially with some of our acquisitions.

So we're feeling good, and we just need the government to come back and finish off that last little piece. But no, I think we're feeling good, Andre.

Wonderful. That's great to hear. And maybe just as a quick follow-up on Neutron.

With the first launch now targeted for early next year, should we still be assuming kind of 3 launches for next year, 5 the following year and 7? Or is there perhaps a change to that cadence as well?

Yes. The way we think about that cadence is it's -- the clock starts for the next one from the first one.

So depending on the first flight, you think of it as like a 12-month kind of rate from there. But maybe, Adam, if you any different views?

Yes. No, I think that's right.

I think I'd just remind folks that the first launch is a test launch. It's an R&D launch. We've been expensing that vehicle over its manufacturing period.

So the previously communicated cadence was 1 test launch which is still the case, and then we expect to be in revenue for the flights thereafter.

So I would say that depending how early we get the test launch off in 2026, we'll dictate whether or not we get -- as Pete said, we kind of complete the next 3 missions in a 12-month window that would fall within that.

Wonderful, very helpful, and congrats again.

The next question comes from Edison Yu from Deutsche Bank.

I wanted to ask about the future constellation. I know it's quite a long-term question, but there's been a lot of activity in some operators around spectrum. And I'm curious, what's your thinking about the value of spectrum in your kind of calculus for any type of future constellation?

Well, I mean, that would be making an assumption that -- I guess you were sitting on a comms application as well. But clearly, spectrum is an important element to any kind of scaled comms business, although we have been seeing some interesting approaches where that becomes less so. But I think you're just seeing some kind of natural consolidation in the industry right now around some of those spectrum assets and I suspect that will continue. But look, Rocket Lab is not going to go out and buy billions of dollars worth of spectrum speculatively. That's for sure.

This is Adam.

Sorry, I got dropped some, unfortunately, the conference call dropping.

So I don't know, did I answer your question fully, Andre, on the launch cadence?

It's actually Edison on now.

Yes, we did. It's nice to see that you got dropped down in this time and not me. It's not for sure, yes.

So totally separate topic. I wanted to ask about. I'm sure everyone has seen NASA, we got Isaacman seemingly back. Do you see increased opportunities in this type of changeover around, whether it's moon, Mars space? And where do you think those incremental opportunities could potentially come from?

Short answer is yes.

I think if you -- if Jared is cemented as the NASA administrator, I think -- if you look at Jared's approach to how he believes NASA should be run and the role that commercial entities like Rocket Lab will play, I think that bodes very well for the way that we -- the way that we operate and the value that we can bring the agency.

So I would view that as a very positive thing for Rocket Lab.

The next question comes from Gautam Khanna with TD Cowen.

Was wondering if you could elaborate on how soon after Neutron arrives at the complex realistically it can launch? Does it -- is there a minimum interval of time? And then what sort of explains that whatever that range might be?

It's a little bit difficult to answer because it really depends on what you find. If we put the vehicle on the pad and we go through all of that fueling and de-tanking, and all the operational tests and static hot fires and all of that sort of stuff, and it all flies through, then it's a fairly straightforward path. But if you -- if we go there and we find some stuff that we don't like, then we're going to fix it. And I think as I tried to explain during the call, there's the way that we develop these kinds of things is I'm suspicious if everything just flies through because that, in some cases, causes more time to be spent than less because generally, you expect to see something because the whole vehicle is built on a safety factor of 1.1 or 1.2.

So you expect to see some things and depending on the magnitude of those things, we won't just blindly walk past them. We'll go out and not only fix them, but really, really deeply understand how they occurred and then also go 1 step further and feed that back into all of our engineering models to make sure that next time around, we're doing a similar thing that the -- I guess, the the ability to predict and the fineness of that become better and better and better.

So look, we know a lot more than we have a vehicle on the pad. We know even more new hot fire after hot fire if that's a successful campaign. We're happy with what we see then the turnaround to launch after that point is pretty quick.

Okay. And I was curious also, maybe I missed it, but the cumulative catch-up adjustment or the onetime, how large was it in the quarter?

Sorry, Gautam. What you're talking about the -- are you referring to the HASTE. I'm not sure if you can maybe -- sorry, I got dropped again from the call from a provider, but [indiscernible].

Yes.

I think you mentioned in the remarks that there was a -- well, I know in the Q, it says there's a revenue adjustment of net $10 million favorable in the quarter. Wanted to know, I think you described the EBITDA margins were lifted by a contract closeout of some sort. I was just curious if you could quantify how large that was?

Yes.

So there was one contract close that was about -- I think it was a little under $5 million was the value that we received when that cancellation occurred. And then there were some other things moving around with regards to the -- well, there was a benefit to the gross margins as well because in Q3, we recognized revenue with higher gross margin associated because when we made the change in Q2, we end up actually taking a margin hit because we've recognized revenue without having associated basically at 0 margin because at that time, we didn't have the ability to estimate what the costs were going to be to complete the mission as we did this transition the path was essentially revenue in Q2 at no margin. Q3, we got, again, normal amount of revenue from that overtime contract, but that was at -- now at margin, right?

So I think those are really kind of the 2 prior things. But when you look forward into Q4, given our -- the guidance that we've provided, even with those things not recurring in Q4, you still see our gross margins improving.

So you can just see that yes, that was kind of the unique dynamics in the transition from Q2 to Q3. But for Q3 and Q4, without those unique events, we still show gross margin strength and growth sequentially.

The next question comes from Erik Rasmussen with Stifel.

Yes. I wanted to -- just on Neutron. I totally understand, Peter and the team, how you guys operate.

You're not looking at an iterative process and having things blow up.

So that's great, and that you've always operated that way. But I wanted to see, though, with this latest push out, what does that do from a timing perspective for things like the NSSL and some of the things that you might have been looking at, at Neutron obviously is geared towards.

Yes. Erik, great question.

So look, the NSSL team worked shoulder to shoulder with us. They're on every review in the program. And obviously, I can't speak for them, but I think they take at least the feedback we've had from is they very much appreciate our approach of both transparency but also the diligence the way we build vehicles.

So the awards for the NSSL contracts have not been made yet and there's some time away for them to be made. We need to have a flight under our belt -- a successful flight under our belt before they'll make those awards anyway.

So largely speaking, it's pretty irrelevant. And we've been very careful, and I think there's been a lot of conversation previously about booking Neutron and making sure that we can deliver for our customers.

So long story short, we're not letting anybody down here, Erik, we're in a good spot.

Great. And maybe just my Follow-up question here.

You closed the GEOs acquisition. Mynaric is soon to close, I would presume, but with GEOs, are you seeing traction in expanding the footprint in national security and defense, I mean, that was part of the reason, but what are you seeing now that you've closed the deal?

Yes. It's -- look, it's just -- it's night and day to before.

So obviously, we had a good relationship with SDA and through the intelligence community, obviously, for launch and things like that. But I would just say we're in a totally different league now and working with totally different folks. And there's a long, long relationships that have been built with the GEOs team and now that they have the support of Rocket Lab, we're really able to expand and surcharge those. And also, those relationships expose them to the larger offering of Rocket Lab, because it always surprises me.

Sometimes people just think we're just this little launch company and don't have all this other capabilities.

So no, it's been incredibly important -- and also just now being a payload provider is -- it brings you up to a whole another level because you're having really detailed mission discussions rather than just talking about how you can provide a bus or a component or something. We're really in mission formulation territory.

Great. Thanks, and good luck with the Neutron development.

The next question comes from Michael Leshock with KeyBanc Capital Markets.

I wanted to ask on Archimedes. I know you're constantly testing and iterating the engine, but how close are you to having a finalized design that meets all the performance requirements in ready for first flight?

And then secondly, given your production cadence, I think you previously said a new engine was coming off the line every 11 days or so. How quickly can you ramp production of the engine to have 9 Archimedes for the first stage of Neutrons debut launch?

Yes.

So thanks, Michael. The engine design is pretty stable at this point. And we've met all performance criterias. What we're doing is, obviously, with ascent, there's 1 set of environments and with descent, an entirely new set of environment and much more challenging environments because you're propellent woman and lower pressures and you've had alleging and all kinds of stuff.

So going through all of those things has been really important. And I think the team -- I got to check on the exact number, but I mean the vast, vast majority of all of the components for Flight 1 engines are either complete or in some kind of kind of form of build.

So we're iterating on the engine for sure, but the production machine has stood up and ready to support. But with our committees, we want to make sure we're -- as we are sending on first flight, but nobody is worried about an engine. And obviously, it's the most complicated part of the vehicle.

So there's just no substitute for putting hours and hours and hours on test articles and hence, the reasons why we have 2 cells running now at [indiscernible], not just the one, as we think we talked about their last earnings, and it's just switching between engine and engine.

And some of the more interesting tests, just extra long durations to try and promote some fatigue in the engine because obviously, we want to reuse this engine over and over again.

So just doing really extended burns to try and promote fatigue and items as some of those kind of things. They just take time, like there's just no substitute for just burning?

Okay. Great. And then sticking with Neutron, is that original budget for Neutron $250 million to $300 million that still intact given the updating timing of new transfers launch? And you'd said you're near peak Neutron spending.

Just any way to frame how much you've spent so far or what's left to go?

Yes, I can take a swag at that.

So yes, I mean, the program, as Pete mentioned, I mean, we've continued to make a lot of progress. The $250 million to $300 million kind of original estimate we kind of got a little bit, I would say, behind us with the kind of the push from launching middle of '25 at the end of '25.

And so now as we get into kind of a 2026 scenario. Right now, I'd say that we're estimating that we will have spent approximately exiting in cumulative across R&D and CapEx through the end of 2025.

So we're above that. And as Pete mentioned, it's about a $15 million impact on the human capital side of things per quarter, just by extending, obviously, prototyping, you're going spend, we're going to spend. It's really not impacted by the time frame. But when the program kind of delays, you end up obviously incurring extension of that -- the staffing-related expenses for the program.

So right now, again, we're looking at around $360 million exiting 2025.

So again, as I mentioned, I do think we're approaching peak if hopefully, Q4 is the peak and it all depends on kind of when the timing the first launch occurs -- and of course, the launch as well.

The next question comes from Suji Desilva with ROTH Capital.

Congrats on the strong backlog build here.

On the electron launches, you gave some sense of pricing, but any [indiscernible] the trend and the size of the number of launches, maybe if not now into '26, if you're trying to extend those? Or is that fairly stable?

I don't know, Adam, if you've got that one, but I struggle to hear you on that one.

Yes. Suji, you broke up.

Sorry, I'll repeat it.

Just any observations on the Electron launches, the deals in terms of number of launches, length of the launches? Are people trying to extend the visibility there in the next few quarters? Or is it pretty stable?

I think when we talk to customers, as you can see in the last quarter, it's generally not for just sort of 1 launch we see folks locking in their launch capacity and buying lots of launches in 1 hit. We're -- we never try and let a customer down or leave a customer on the pad.

So we met production with launch demand very well, but -- and that hasn't been a problem to date. But no, we just continue to see just growth in the demand for the product.

Yes. I would add to that, Suji.

So we've seen these larger bulk buys over long periods of time occur more on the commercial side. as we've talked about in the past, it's kind of hard to differentiate sometimes commercial versus government because a lot of our commercial customers actually end up fulfilling government demand.

So it's a quasi commercial government. But also, we've been growing our has business pretty significantly over the last couple of years. And those have come, I would say, more like Electron originally did were kind of the onesie-twosie kind of concise contracts. And I think that's hopefully the next kind of shoe to drop for us is the ability to start -- start signing larger case deals that cover a long period of time and a greater number of launches because that would give even more certainty to the revenue ramp in that part of the business.

So again, that's something that we're looking forward to.

So I think that would be a very helpful indicator to the longevity of that HASTE business and the ultimate scaling of it.

Okay. Helpful, Adam. And my other question is on the M&A environment and with targets. Is there a sense maybe among the targets that consolidation and being part of the larger companies increasingly important, maybe more willingness to come to the table? Are you seeing any of that trend now among the M&A discussions?

Yes.

I think you're seeing it in a few different places, both on the larger scale, but also I think we're seeing it also on some of the smaller-scale stuff as well as -- I think it's a difficult environment to scale in, and there hasn't really been too many great companies that other companies want to join. And as I think I mentioned on the call, we're sort of becoming the de facto go-to guys if you want to really scale your products and the opportunities that you have in front of you.

The next question comes from Andre Madrid with BTIG.

I think earlier today, it was announced that the FDA was moving some funding earmarked for some of their programs over to true payments. This was a more of a DOW level. But seeing that and then you called it out, decreased cash receipts in the slide deck 2 related to SDA [indiscernible] work. I mean if things don't get resolved this evening, which hopefully they do. I mean, when does the shutdown pose a significant risk to your internal '26 outlook and beyond.

I can -- yes, go ahead, Pete.

You go ahead, Adam.

No, I was going to say, I think that there's so far, the government shutdown, I wouldn't say, has really dramatically affected us. Yes, there have been slightly slower cash receipts. But for example, we got a very large cash payment on Friday from SDA.

So I would say that this ticket has not been shut off.

I think it's just kind of -- it's just been a little bit slower and flowing.

So that's very helpful. That even before the line of sight to the ending of the government shutdown, we were still getting -- and we received again a very large payment at the end of last week.

So right now, it -- I don't think there's going to be any -- obviously, we factored in everything we believe is to be the most likely case in our Q4 guide that we described earlier.

So it's hard, no one's got a crystal ball for kind of what happens with this -- when they bring the government back and kind of where they reprioritize their dollars. But I think we've been very fortunate so far that we've really not felt any significant impact from the shutdown today.

Got it. Got it. That's helpful. And go ahead.

Sorry, I didn't mean to cut you off.

The only thing I'd add is like the requirement for what the SDA is doing is not diminishing. It's expanding.

So it's an important program.

So as far as like the need for the program, that's not getting smaller.

The next question comes from Jeffrey Van Rhee with Craig-Hallum.

On the margins and the gross margins for Q4 in the guide, it looks like maybe a couple of hundred basis points of sequential improvement. Is that just kind of break it down maybe a little more? Which side of the business are you expecting that sequential increase? And then any sort of even in clean as to maybe revisions on what you think target gross margins might be for either of those 2 segments?

Yes.

So the gross margin trend and the improvement sequentially Q3 to Q4, again, is driven really by a mix where as we get more scale into our Electron business, and we've always talked about cadence, I think super important for the margin profile for that business because there's so much fixed cost related to it.

So as you scale cadence and Pete kind of mentioned earlier in his comments that we're expecting hitting a new record for launches in the year.

So obviously, that's all good for overhead absorption.

So think of it as there's a lot of good underlying dynamics going on within the launch business as far as size of the backlog, the ASP increasing within that backlog.

We're getting greater overhead absorption benefits.

So that's really kind of what's driving the strength in the launch business. And as it becomes a bigger piece of the mix in Q4, that's really the biggest factor. And I would say that within our Space Systems business, the trend of margins actually been quite solid in that as well. We've talked in prior calls about how we've made very, very significant improvements in our gross margins from our Solero solar business. We've kind of talked about a long-term target there of we get 30 points of gross margin, that was kind of an aspirational target.

I think we're very comfortable that we're very close to that.

I think we think about revisiting that 1 upward a bit, I think, but overall, we still believe that we -- that our launch business on Electron first, has the potential to be a 45- to 50-point non-GAAP gross margin business.

We think long-term Neutron has the ability to be at least as good as that, helped by the reasonability nature of that vehicle. And then on the Space Systems side, it's really -- 2 different elements that kind of have different margin characteristics.

On the Space Systems components or subsystems business, that has a wide range with solar kind of being at the lowest end of that and again, around 30 points. Hopefully, we can push that a little bit higher. And for some of our other components business, we have margins that are well north of 60, in some cases, 70 points of margin. And I think overall, that kind of brings the gross market profile for that subsystems business around, call it, low to mid-40s.

The satellite manufacturing business because of the nature of those programs, we're able to take what for many people is either high single-digit or low double-digit gross margins and have those more in, call it, the -- I'd say 25 to 35 points, depending on the programs because of the level of vertical operation that we bring because those same components that we sell into the merchant market at very high margins, we basically obviously designed into our platforms.

So I think longer term, I think we still see again a gross margin business from Launch that is in the -- call it, 50% range and for Space Systems, probably in the -- I'd say the 40%, maybe low 40s percent gross margin range, so it puts in a nice spot overall.

But I think it's also helpful to note that in Space Systems, it's not as R&D intensive as the launch businesses when you're getting a new vehicle established.

So the operating margins or contribution margins for the spaces businesses, even the ones that aren't kind of in those high gross margin ranges is still quite healthy. And then I think -- again, I think the margins for our Launch [indiscernible] themselves.

Got it. Got it. Very helpful. Last 1 then on Space Systems. The -- can you talk about the pipeline? Obviously, Tranche-2, Tranche-3 are big needle movers, but the next layer beneath that look like? Like how many 8-figure, 9-figure deals, just some semblance of what the distribution of deal sizes that are later stage in the pipeline would be helpful.

Yes.

So there's -- we're always chasing a variety of stuff.

So I think the intelligence community and the is obviously big opportunities for us. And things like GEOs really provide us new kind of access and visibility to some things that aren't very visible at all.

So on that side of the equation, I think there's really good opportunities for us there. But I would say also, like if we think about the bids that we've got in play, there's also some extremely meaty commercial bids as well.

So I would say it's fairly well distributed across -- the opportunity is fairly well distributed across both commercial and defense, but there's always the big [indiscernible] programs. But I mean, all of the business units, we kind of run the business units like little start-up companies as well. And they're expected to grow really healthily every year. And you see new products coming on all the time because as they reach the saturation with their customers. These business units have to develop new products to continue that growth.

So this year alone, I think it's been a really, really great year. There's -- we set goals for those units.

And then there's kind of the Pet stretch goal. And they've all met or exceeded the peak stretch goal this year.

So it's not just about -- I guess what I'm saying it's not just about these big projects. They're obviously an important needle moving, but just the underlying business and just continuing to drive that growth in all the business units in the underlying business is equally as important.

The next question comes from Anthony Valentini with Goldman Sachs.

Just a quick clarification question on the backlog and Neutron. Is there anything in the backlog today for Neutron or is it 0?

Yes, Anthony, we do have -- we have launches in backlog for Neutron. There are 2 fully priced missions in the backlog right now for Neutron. There's a third contracted mission, which is right now anticipated to be a rideshare, but we don't have that in backlog because we don't do that until we've actually added the payloads into the manifesting. Again, we've got a primary customer, but not -- on that third launch, we've not put in the backlog yet.

Okay. That's helpful. And is there a way to think through how backlog for Neutron specifically ramps up? Like does that happen once you guys do that first R&D launch? Or is it a certain number of successful launches? Just historically, and like what you guys know about the industry, like how does that start to flow through?

Yes, it's a good question, Anthony. And I think we sort of alluded to this in one of the previous questions. It's like -- we don't want to let anybody down. And people when they're looking to buy Neutrons aren't typically looking for one, they're looking for many.

So a number of customers are looking to see that the vehicle does work and it scales.

So -- and we work very closely with those customers as we go along and these are both commercial and government customers.

So I think the unlocking point is certainly a successful flight in a number of these contracts, but also that we want to make sure we don't let customers down. And the last thing we want to do, and we've talked about this previously, is customers will be happy to book a bunch of Neutron like half price, and we're just not going to do that.

Right.

Okay. That makes a ton of sense. And then last one for you, Peter.

As I'm thinking through the opportunity set on the Tranche-3 transport layer and just looking back at the previous tranches, there's competition from the defense primes these new space tech companies, including yourself, I'm curious how you think through the differentiators for Rocket Lab and when you guys are presenting to the customer, what you think really separates you from the rest of the group?

Yes.

So I think one of the big separators and one of the reasons why we won a prime spot on our first SDA contractors that we're so vertically integrated that if you look across all of these programs, they're typically plagued by delays. Not so much cost overruns because it's a firm fixed price, but certainly delays and when you control so much of your own supply chain, then if there's a delay in the component, you get to choose what resources you sell or push around to solve that problem.

So I think that's a big element is just schedule certainty. Obviously, Adam talked about some of the margin stacking.

So price is a big element as well. But at the end of the day, all the stuff has got to work and this is where your reputation in this industry is just so critical and why we just never deviate from putting ourselves in a position where that can get compromised. When people buy a piece of Rocket Lab hardware, firstly, it turns up and it looks great, and it works. And in an industry where that seems to be challenging.

I think that's an important element.

And also finally, there's a set of requirements and then there's how you go about solving those set of requirements like with the technologies that you can bring to bear. And we just have such a war chest of technologies that we can bring to bear to provide solutions to meet everybody's requirements and then some that I think it puts us in a really strong position.

The next question comes from Kristine Liwag with Morgan Stanley.

Peter, Adam, from your commentary from a previous question, I mean, it sounds like you're not going to go out there and go buy Spectrum.

So first question, is that a fair assessment of your statement earlier. And also second to that, with over $1 billion in liquidity and with the broader and deeper capability set in Space Systems, what's your priority for M&A?

Yes.

So we look at a number of things, Kristine.

So I would say that there's always opportunities for tuck-ins and you've seen that with things like Mynaric where that gives us a capability that we didn't have.

So we'll always do those. But I think the GEOs acquisition is a really good example about acquiring a company that just brings us into a totally different customer set and a totally different capability and also puts us at a totally different level.

If you think of the big traditional primes, the one thing that sets them apart from lots of little space companies is they own the payload.

So we'll continue to look for opportunities there where we can own the payload and really drive the missions. And look, we're always looking at big needle moving stuff as well. And we always look for things that we think have a step change in either scale or other elements of the company.

So that's the way we look about this the way we think about it.

Super helpful. And look, when you look out into the market, it's hard not to see what SpaceX is doing in terms of their path towards that end-to-end space solutions.

So when you look at your portfolio today, I mean it looks like you're kind of marching in a similar direction with your [indiscernible] product set to and now you've got these additional payloads. Where do you see your role in terms of that industry? Do you, at some point, want to own your own constellation and be able to sell more of that as a service. How do we think about where you are in this journey? And what does the end look like?

Yes. We're just sort of quietly and methodically going about making sure we amass all of the kind of the strategic elements we need to ultimately deploy things at scale.

So Neutron is really an important element of that.

If you look at others, access to space and low-cost rapid and reliable access to space is kind of the place you start and Neutron gives us that multi-tone capability. And then as you point out, you look at the Space Systems growth then really, at this stage, I don't think there's any satellite we can't go and build. I mean we've got 2 going to mass here shortly.

So if you want to talk about complexity of spacecraft.

So I think from an engineering perspective and a component perspective, all of those kind of bases are loaded. And we'll be very strategic about how we think about the next step, which would be building our own constellation and whether we're providing services or infrastructure, I think, is yet to be determined.

The next question comes from Peter Arment with Baird.

Nice results, Pete and Adam, just a quick one, I guess, on Electron, more of the demand environment.

I think you've previously talked about the demand for around 30 electronic flights a year. I was wondering if that still kind of holds just given the uplift that we've seen tied to kind of all the national security launches and kind of what's going to be expected with Golden Dome and additional testing if there's upward bias to that. And it certainly seems like it.

Yes, Peter. I mean, look, I think that's fair. If -- depending on how quickly and what scale Golden Dome grows to, I think we're in a very strong position to provide critical services there. And we see nothing but upward trajectory in both government taste and commercial launches for that product.

Appreciate that. And just a quick follow-up. Thanks for the comments on the Archimedes, the testing that you've been doing. Could you give us a little context? Is that much different in terms of the rate that you did originally with the [indiscernible] around Electron?

Yes, it is. It is at a much, much higher intensity in rate because for Rutherford, we only had to do half the job, meaning that we only had to go up -- for our committees, we have to go up and down.

So it's like twice the amount of environments, twice the amount of run box and twice the amount of qualification.

This concludes our question-and-answer session. I would like to turn the conference back over to Peter Beck for any closing remarks.

Great. Thanks very much and thanks for the thoughtful questions.

So before we close out today, I would like to share that Medco is finishing up his time on the Rocket Lab Board of Directors. Matt's tenure as a member of the Board will end November 30. Matt is a Co-Founder and Managing Partner at a deep tech venture capital firm, DCVC and was one of Rocket Lab's earliest investors serving as a member of the Board since August 2021. And as a member of the legacy Rocket Lab Board since January 2017, so since then, we've been incredibly grateful for his leadership and his guidance as we grew Rocket Lab together from a small startup to a publicly listed company, one of the world's leading global space firms. And look, I just personally also want to thank Matt for backing us from the beginning and wish him all the best, has continued work in deep tech as he transitions out of Rocket Lab.

Otherwise, here are some upcoming events and conferences that the team will be attending. We look forward to sharing more exciting news and updates with you there. And thanks for joining us. That wraps up today's call, and we look forward to speaking with you again soon and sharing some more progress at Rocket Lab.

The conference has now concluded. Thank you for attending today's presentation.

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