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| Statement |
|---|
| Overall, we expect gross margin trends will continue to improve over time, thanks to the same factors that help drive improvement this year |
| I should note that the GNC team was able to deliver that accuracy to within 1.05 seconds, so 15 times better than the speed that was required |
| With two launch sites now up and running, we're well-positioned to meaningfully increase our launch cadence this year |
| So we had a successful return to flight in Q4 |
| It's our largest single contract to date and establishes Rocket Lab's position as a leading satellite prime contractor, providing supply chain diversity to the Department of Defense |
| So from humble beginnings with one spacecraft just four years ago, to a full family of them designed to serve commercial and government partners is certainly an exciting time for our space systems business |
| And the HASTE missions are a great opportunity for us |
| Overall, a strong year for the Electron team with plenty of firsts and new records, and we look forward to building on that this year |
| So this is one where it's both good from a working capital perspective, but also it's going to build nicely from a revenue contribution as we progress through 2024 and into 2025 and beyond |
| In this case this year will be a very good year for growth in our reaction wheel business, particularly tied to that one mega constellation deal that we announced a couple of years ago |
| So, we've got a lot of great achievements and milestones to share across Q4 2023 and Q1 2024 |
| On a full-year basis, 2023 revenue was $244.6 million, with impressive growth of approximately 16% year-on-year, especially when taking into consideration the effect of September's Electron anomaly |
| Clearly, demand for Electron is strong and continues to grow |
| So we see again very encouraging growth across the satellite manufacturing, but also components |
| The roughly $300 million of proceeds, net of our capped call and deal fees, positions the company to exercise inorganic adoptions to further vertically integrate our supply chain with the critical capabilities that are consistent with what we have done successfully in the past, which has enabled larger and more strategic program wins like the recent $0.5 billion SDA program |
| We had a strong start to the quarter, so far with two successful Electron missions |
| In our launch services business, backlog was up over 213% on the back of multi-launch Electron deals with government and commercial partners along with strong HASTE bookings |
| GAAP and non-GAAP gross margin performance reflects improved mix in both our merchant component and satellite manufacturing businesses, partially offset by the effect of less overhead absorption in our launch business due to only one Electron launch in the quarter |
| I'm pleased to see that it's happening |
| I would say that from an infrastructure standpoint, we're in a good position to scale |
| Right, on to some of the key highlights for our space systems since the end of Q1 and just last week, we achieved a world first, successfully reentering a capsule from orbit that was used to manufacture pharmaceutical products in space |
| Generally, a program like this would cause a lengthy pause in production to allow for design freezes and production changes, but by taking small steps on each flight, we've been able to continue delivering the launch service to our customers and the one that they rely on |
| So as we progress through 2024, we expect obviously growth on the top line to continue, we expect gross margin expansion |
| Happily, this process has yielded successful results |
| Currently, our schedule closes for this by the end of 2024, and we do have a track record for delivering programs faster than typical industry standard timelines |
| Excitingly, the lessons we've learned on this program are helping inform future projects, including scientific sample returns, point-to-point cargo delivery, and of course, human spaceflight capability on Neutron in the future |
| And it's exciting and great to be entering that phase for Neutron now |
| Hardware in the loop, or huddle testing, as we call it, has really been a key part of Electron's success, enabling us to test like we fly on the ground |
| Obviously, that's going to be an opportunity to significantly build our backlog in a very, very meaningful way given the estimated average selling price of that vehicle versus Electron |
| So I think overall, I'm actually pretty pleased with kind of, again, the adherence to the timelines and the overall budgets, and nothing has really kind of stepped away from us at this point |
| Statement |
|---|
| Fourth quarter 2023 revenue was $60 million, in line with our revised guidance provided on January 31, 2023, but below the low end of our original Q4 guidance in November, due primarily to the pushout of one of our planned Q4 launches, which was due to the longer than anticipated September anomaly remediation's |
| Although modestly lower than what we previously expected for Q4 just a few months ago |
| Fourth quarter revenue represented a sequential decline of 11.3% due to the reduction of launches from three in Q3 to one in Q4, partially offset by continued growth in our space systems business |
| However, lengthy delays in regulatory approvals to bring the spacecraft home meant that we ended up on orbit for more than eight months, and in a testament to both our spacecraft builders and operators, it performed flawlessly for that extended duration |
| And bringing a new vehicle to life is very difficult |
| We've been a major sub on another program, and it's very difficult if you're just the metal bender in a program |
| Bringing it into production is even more difficult |
| Because without Neutron on the pad, then it makes it difficult to be hugely disruptive in the services market |
| So your gross margin you've indicated is going to be lower in the first quarter than the fourth |
| And that is a very difficult thing to do |
| Much more difficult |
| This sequential decrease was due to lumpiness in the timing of our large CapEx items across both of our launch and space systems businesses |
| Now, I don't think many people really realize just how wildly ambitious and challenging that mission was for our team |
| With two launches down |
| The material step up in negative non-GAAP free cash flow was, as noted in my prior GAAP operating cash flow commentary was result of the lumpy timing of payments and receipts associated with our space systems manufacturing operations and the impact of post anomaly launch services milestones invoice delays for which we expect the reversal of this negative working capital cycle through early 2024 |
| What I will say is, it turns out we're just not that good at naming things |
| And it's very, very difficult to compete with that unless you have your own ability to manufacture your satellites using your own components and your own ability to launch those you know said satellites |
| So you know, we see some of that defection off the transporter and onto Electron in that sense |
| But what I can say is that when we look to jump into that larger tam, we will have a very disruptive way of going in there and executing and providing that service, because we will be able to build whatever spacecraft we require using all of our own components, and it will fly in our own rocket |
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