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Home / Business / Markets

Rocket Lab recovers from launch failure, edges closer to profitability

By Ben Moore
NZME.·
9 Nov, 2023 02:48 AM3 mins to read

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Rocket Lab has a fully booked manifest of 22 Electron launches in 2024. Photo / Rocket Lab

Rocket Lab has a fully booked manifest of 22 Electron launches in 2024. Photo / Rocket Lab

Rocket Lab has posted another quarter of revenue growth and profit loss, although the company is edging closer to profitability, according to an earnings call on Thursday.

It also has a fully booked manifest of 22 Electron launches in 2024, nine of which will be reusable rockets, and said progress on the larger Neutron rocket continues, with successful testing of its first stage tank.

Further, the anomaly that caused a launch failure in September has been identified and a solution has been put in place that should make sure it doesn’t happen again.

Q3 earnings

Rocket Lab posted revenue of US$67.6 million (NZ$114.4m) for the three months ending September 30, which was at the upper end of the company’s revised guidance for the quarter.

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Net loss was US$40.6m, down US$6m from the second quarter of 2023, but up just over US$5m from the same period in the prior year.

Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) was a loss of US$16m.

Chief financial revenue officer Adam Spice said that the path to a breakeven Ebitda is clear.

“Overall, we expect gross margin trends will continue to improve over time, thanks to the same factors that have helped drive improvement we’ve seen this year.

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“In terms of when we can get to adjusted Ebitda breakeven, Neutron investment, especially R&D spend, continues to be the pacing item to achieving this critical milestone. Although we view that Rocket Lab has demonstrated the existing businesses are on a trajectory to offset the weight of this Neutron investment spend.”

Guidance for the fourth quarter is revenue of between US$65m and US$69m, with an adjusted Ebitda loss of US$23m to US$27m.

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The anomaly

The issue that caused the failure of the launch was “extremely difficult to replicate in testing”, according to founder and chief executive Peter Beck.

After an investigation, it was identified as being caused by an electrical arc in the engine’s motor controller’s power supply.

Beck described the issue in thorough technical detail in the earnings call, which boiled down to an unexpected quirk of physics called Paschen’s Law that allows electrical arcs to form more easily in a partial vacuum, such as that in Earth’s upper atmosphere.

The fix, Beck explained, was to enclose and pressurise the power supply system.

“This has been a lot of work to implement by the team, and it’s a fairly extreme solution, but really, I thought it was the only way we could put the Paschen Law well back in its box. The best way to solve a problem, in my opinion, is always to eliminate the problem, and that’s what we’ve done.”

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