Rocket Lab doubles backlog to US$500m, sets up shop in Australia

Rocket Lab only managed two launches in the fourth quarter, as heavy losses continue. But says many more launches have been booked. Its backlog of orders for launches and space systems has doubled from a year-ago US$241 million to US$503m ($798m).

The Kiwi-American firm has been increasing its launch and production capacity in response. It installed a second launch pad at Mahia last year, and in January it staged its first launch from US soil at the newly opened Launch Complex 2 in the US state of Virginia.

And today, as it announced its fourth-quarter and full-year 2022 results, Rocket Lab said it planned US and NZ launches within two days of each other during March.

The Mahia launch will deploy satellites for Earth-observation outfit BlackSky, while the customer for the Virginia launch will be Capella Space - a firm that operates Earth-imaging satellites for clients including the US Air Force. (”We capture and track small-scale movements on the surface of the Earth whether it is at ports and along pipelines or in fields and on the high seas, anywhere change is occurring,” Capella says on its site).

The final quarter of Rocket Lab’s 2022 financial year (which coincides with the calendar year) saw just two Electron launches, generating US$12m in revenue as weather and sign-off delays saw the firm’s first US launch pushed into the New Year. Space systems generated US$38.8m.

Fourth quarter revenue fell 11 per cent from the third quarter, but more than doubled from the year-ago quarter to US$51.8m. For the full year, revenue was up 239 per cent over the Covid-stunted 2021 to US$211m.

Rocket Lab’s fourth-quarter ebitda loss widened 75 per cent over the year-ago quarter to US$14.5m.

The firm made a net loss of US$77.2m for its December quarter from a year-ago US$3.2m net profit, and its net loss for the full-year widened from US$117.3m to US$135.9m as it continued to invest in acquisitions, expansion and its Neutron rocket.

It still has most of the proceeds from its August 2021 Nasdaq listing in the bank. It finished the quarter with US$484.3m in cash and equivalents from the year-ago $691m.

More red ink is ahead

Rocket Lab forecast an adjusted ebitda loss of US$28m-S$30m for the first quarter of FY2023 on revenue that will be flat between US$51m and US$54m. Shares fell 1.96 per cent today to US$4.50 - continuing to languish at less than half their listing price - and slipped another 0.9 per cent in after-hours trading after the results were announced.

Despite its mixed fortunes, Sharesies co-CEO Leighton Roberts said the firm continued to attract Kiwi retail investors. “Rocket Lab is a top 20 investment by number of holders, clocking over 20,000 Sharesies investors and worth over $26 million,” he said.

“Rocket Lab’s year-on-year revenue increase looks impressive, but the market is valuing profitability above growth at present, and the company is very much still in the growth phase,” Stake analyst Megan Stals said.

Over the past week on Stake, more New Zealand investors have been buying rather than selling Rocket Lab shares, suggesting that investors are for the most part still positive about its prospects, Stals said.

“Rocket Lab has a growing pipeline of upcoming launches, but in this market, investors want tangible proof that these are successful. Investors are also monitoring potential cuts in US government spending, which could be a risk for Rocket Lab’s ability to sign new contracts.”

Lure of big-spending Aussie Govt

Rocket Lab also revealed today that it’s established a new wholly-owned subsidiary, Rocket Lab Australia, “to explore opportunities to support the expansion of Australia’s national space capabilities”.

The Royal Australian Air Force is already one of Rocket Lab’s repeat customers. The firm hopes to win more business across the Tasman,

The Australian Government has committed more than A$2 billion ($2.1b) to the civil space sector since 2018 for programmes spanning Earth observation, satellite infrastructure, high-tech manufacturing, and support for Nasa’s Moon-to-Mars Artemis Programme, Rocket Lab says. The Australian Government has also committed A$17b above and beyond this civil space investment for the development of military space capabilities as part of the Australian Defence Force’s 2020 Force Structure Plan, and to service global partnerships including Five Eyes.

It’s the second fully-owned subsidiary set up by Rocket Lab after the dedicated, US-based unit it formed in December to “to serve the defence and intelligence community”.

“Coupled with Australia’s renewed focus on industrial capability and advanced manufacturing, the industry is now poised for an era of rapid expansion driven by new technology, a growing demand for space-enabled data, private investment, and a significantly increased funding commitment from the Australian Government,” said Rocket Lab founder and CEO Peter Beck.

Rocket Lab also reiterated that it recently completed the construction of its first production building, in Virginia, for its much larger, crew-capable Neutron rocket, which is due for its first launch in 2024.

The firm reported that Cyclone Gabrielle did not damage Launch Complex 1. Rocket Lab deployed its twin-engined Sikorsky S-92 helicopter to fly in aid to Mahia.