Rocket Lab: One Step Closer to Unlocking “The Keys to Space”
$RKLB Q3 2024 ER Update
The content of this analysis is for entertainment and informational purposes only and should not be considered financial or investment advice. Please conduct your own thorough research and due diligence before making any investment decisions and consult with a professional if needed.
With a growing reputation, advanced production capabilities, and strategic partnerships, RKLB 0.00%↑ is solidifying its position as a leader in the evolving space industry, moving ever closer to unlocking “the keys to space.”
If you haven't read my original deep dive on Rocket Lab, I recommend doing so before reviewing this update. It's essential reading for a thorough understanding of the company.
With Phase 1 and 2, the rockets and the spacecraft now well established, we're well positioned to create our own constellations to provide in-demand services and capabilities in the space.
In Q3, we strengthened this position with a few key achievements, including the signing of a multi-launch deal for Neutron with a commercial constellation operator.
announced Sir Peter Beck, CEO of Rocket Lab, during the Q3 earnings call.
He elaborated further:
And of course, to deliver Space Systems at scale, you need to be able to pump out constellations of spacecraft quickly and cost effectively. I'm proud to share that our spacecraft production line in Long Beach is churning out spacecraft at a faster rate than ever, ... underway for a backlog of more than 40 spacecraft.
All of these achievements and capabilities feed into our final strategic pillar, being able to build and launch and operate our own constellations.
Rocket Lab recently secured a launch agreement with a constellation operator, which includes two initial launches on its Neutron rocket. Leveraging its success with the Electron rocket, Rocket Lab has built a reputation for reliable, high-performance launch vehicles, attracting a wide range of customers eager to secure Neutron’s early missions.
According to Beck, the company is in the enviable position of being able to carefully select its first customers which allowed for strategic decision-making about who will fly on Neutron’s debut missions.
This agreement is seen as a gateway to a broader partnership, with the potential for Neutron to deploy the operator's entire constellation. Rocket Lab is optimistic that these first two launches will pave the way for numerous future missions with this client.
Rocket Lab is addressing a critical bottleneck in the medium-lift launch market—a sector vital for national security. The Neutron rocket is positioned as a strong contender for the U.S. National Security Space Launch (NSSL) program. Government interest is growing, underscored by an $8 million U.S. Air Force contract that highlights Rocket Lab’s digital engineering capabilities, particularly through its Archimedes program (the new engine for Neutron), and strengthens ties to NSSL Phase 3 as a launch provider.
This contract is a bit of a win-win when it comes to defense industry partnerships
Beck emphasized,
It not only allows the U.S. Air Force to collaborate with industry leaders like the Archimedes team to help develop and modernize the U.S. Air Force's engineering processes and capabilities, but it also supports smoother integration of Neutron into the NSSL program to more efficiently and quickly provide for some of the nation's most critical missions.
Now, let’s dive into the numbers of the quarter.
Revenue for the quarter grew by 55% year-over-year, driven primarily by the space systems segment, highlighting positive momentum in the industrialization of spacecraft production.
Cash burn remained within the expected range of $30 million to $50 million per quarter, a trend anticipated to continue until Neutron begins generating revenue and development spending tapers off, likely between late 2025 and the first half of 2026.
The outlook for Q4 2024 projects revenue growth exceeding 100% year-over-year, strongly reinforcing the company’s growth trajectory.
Quarter after quarter, as revenue grows and gross margins improve (rising from 22.1% in Q3 2023 to 26.7% in Q3 2024), it becomes increasingly evident that Rocket Lab's greatest competitive advantage lies in its deeply embedded culture of innovation.
Under Sir Peter Beck's visionary leadership, the company demonstrates an exceptional ability to iterate rapidly on engineering designs and production processes. This relentless drive for improvement enables continuous refinement of its machines, leading to greater cost efficiency. This advantage reflects both process power and scale economies, which will ultimately strengthen Rocket Lab's competitive moat over time.
From now on, for the companies I have analyzed in depth & disclosed a personal position in, I will introduce a new metric to track their stock performance since my initial deep dive. I have named this index “Deep Dive To Date” (DDTD). This metric will serve as a tool for both myself and my followers to reflect on and learn from my successes and mistakes.
For RocketLab stock ($RKLB), the price on September 17th, when I published my analysis, was $7.19. As of this update, the price stands at $27.28, reflecting a
+279.4% or 3.79x DDTDNot a bad result in less than three months ;)
I believe investors are beginning to recognize the insight I shared in my original deep dive: “this investment seems like an obvious call option for exposure to the space economy.”
See you in the next update!