Ladies and gentlemen, thank you for your patience and welcome to today's Rocket Lab's Third Quarter 2022 Financial Results Conference Call. My name is Amber, and I will be your moderator for today's call. I would now like to pass the conference over to our host, Murielle Baker, Communications Manager with Rocket Lab. Murielle, please proceed.

Thank you. Hello, everyone. We're glad to have you join us for today's conference call to discuss Rocket Lab's Third Quarter 2022 Financial Results. Our presenters are Rocket Lab's Founder and CEO, Peter Beck; and Chief Financial Officer, Adam Spice. After our prepared comments, we will take questions. 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 is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. Lastly, this call is also being webcast with a supporting presentation, and a replay and copy of the presentation will be available on our website. Now let me turn the call over to Peter Beck, Founder and CEO.

Thanks, Murielle, and welcome, everybody, to the review of Rocket Lab's business highlights and financial results for Q3 2022 presented by myself and our Chief Financial Officer, Adam Spice. Today's presentation will go over our business accomplishments for the third quarter and further achievements we've made since the end of the quarter. We'll also include commentary on our market position across launch and space systems and discuss some of the big contracts we have underway. Adam will then talk through our financial results for the third quarter and our financial outlook for Q4. After that, we'll take some questions from those listening and finish off today's call with upcoming conferences we'll be attending. All right, on to what the company has achieved this quarter. The quarter ended strongly for Rocket Lab on the launch side of the business as we equaled our record for the number of successful launches to orbit per year, quickly surpassing it within the first few days of the fourth quarter. We completed two flawless National Security launches one after the other for the U.S. Government's National Reconnaissance Office—NRO, our prime customer in the launch business with stringent mission requirements. And so, it's both an honor and a show of our strength as a launch leader as they continue to return to us to deliver their national security missions to orbit. Our third mission was the second of a bulk buy of dedicated launches for Japanese constellation builder, Synspective. Electron again performed perfectly to deliver the respective payload to the exact position required to support their constellation growth. Flying dedicated offers multiple benefits to small satellite constellation operators. These include control over their launch schedule and the ability to reach specific LTMs that aren't achievable if they fly a larger mission. These reasons, along with Electron’s reliability, are why customers are coming to us and booking multiple launches at once. Synspective’s bulk buy launches will continue into 2023 with another launch scheduled for them, along with group launches for French constellation operator, Kinéis; and another set for U.S. operator HawkEye 360 expected to launch in the first half of next year. Sticking with Electron, we successfully fired up an engine that had been returned from the ocean during one of this year's earlier recovery missions, marking a massive technical achievement on the path to rocket reusability. Electron, Photon, and Neutron are within the scope of the U.S. USTRANSCOM research contract awarded to Rocket Lab this past quarter to examine their potential use for cargo transport and point-to-point travel. Speaking of Neutron, the program achieved some key wins and engineering milestones this quarter, including the selection of the new site for Rocket Lab to develop Neutron’s Archimedes engines and the production of full-scale hardware, including Neutron tank structures and Archimedes engine prototypes. I will take you through those achievements in more detail later in this presentation. On the Space Systems side, some of our earlier investments to grow the production capability of each of these Space Systems have really started paying off. In particular, we've announced today that our Separation Systems division has secured the largest bulk order ever totaling over $14 million. Those 80-plus separation systems will support the Department of Defense Space Development Agency mission to build a constellation that will serve future national defense and space architecture. As missions like these continue to come into the fore, our shored-up production capacity across vertically integrated space system streams means that we really are now able to service these types of large contracts now and into the future. Alongside this separation systems win, we also completed the high-volume manufacturing line for our satellite reaction wheel that will serve an undisclosed mega-constellation customer. This production line is capable of manufacturing up to 2,000 units per year and produced its first engineering units this quarter, which keeps us on track to start producing flight-ready wheels early in 2023. Turning now to Q3 highlights for Space Systems. We also were awarded a contract to provide solar power technology for three Lockheed Martin-built satellites for the U.S. Space Force. Okay. So three launches. As I mentioned at the top of this call, we had a strong quarter of launches with three successful orbital missions for Electron. Two of these were for the NRO office and the third was for Japanese constellation operator Synspective, both repeat customers for dedicated Electron launches. Since April, we have maintained a launch cadence of once a month with 100% success and we're on track to maintain that tempo for the rest of the year, including our first launch from our launch site in Virginia, Wallops Island. With the Synspective mission, we equaled our previous annual record of seven launches a year and were anticipated in the first week of Q4 with the eighth successful orbital mission, and again, with our ninth mission just five days ago to deliver a total of 152 satellites to space. Even without these four quarter launches, our missions in Q3 solidified our position as the launch provider of choice for small satellite operators and further stretched our lead as the most frequently flown and reliable small launcher. And obviously, I would go over the Rocket Reusability Program later in the call. But first, I want to highlight a key technical milestone we achieved in the third quarter for that program. For the first time, we successfully fired an engine with reused parts from the previous Electron mission that was recovered from the ocean. This particular Rutherford engine was previously successfully launched to space and returned to Earth during our recovery mission, named There and Back Again, in May. The refurbished Rutherford engine passed all of the same rigorous acceptance tests we put every flight engine through, having fired at a cumulative 200 seconds, restarted multiple times to produce the same amount of thrust and performance as a newly built engine—so, good as new. This is very exciting because the fact that we achieved such a high level of performance from an engine that was dredged out of the sea makes me excited and optimistic about what we can do with other recovered dry engines and further validates that we're on exactly the right path to bring reusability to small launch vehicles. On to our Responsive Space Program. In Q3, we opened up our Responsive Space Program to on-ramp commercial and government satellite operators to a rapid call-up launch capability and streamlined satellite build and operations options. There's been a lot of talk in the industry and numerous line items in government budgets about responsive space. It's a capability that's been sought for decades to enable select operators to rapidly call up a launch service and get it to space in a short timeframe. But the reality is, responsive space—at least for us—already exists for small satellites and it exists with Electron. There's a lot of talk about it, but we've actually demonstrated that our fastest launch turnaround time this year was a total of just 15 days, which comes down to the maturity of our rocket, our infrastructure, and our team. We introduced this program to formalize what we already offered to the market, and we're seeing strong interest already from repeat and future customers. On to Neutron. So as I've described, a good quarter for Electron, but Q3 also saw strong progress for our large rocket Neutron, and I'll take you through some of those key achievements now. To start with, Neutron has a new home or, at least, Archimedes engines do at NASA’s historic Stennis Space Center in Mississippi. In late September, we selected Stennis as the location of the engine test facility for our reusable rocket engine, Archimedes, which will power the Neutron rocket. And just last week, we cut the ribbon on Stennis with the Mississippi Senators and other senior figures in attendance there to show strong local and Federal support that we have for Neutron. The Archimedes Test Complex will be located within the greater A Test Complex at Stennis Space Center across a 1 million square foot area. The site itself already comes with all manner of critical infrastructure like cryogenic systems, tanks, test systems, instrumentation base, building, and a lot more that we can quickly adapt to support our engine test operations. We can also leverage the wide-ranging Stennis Center’s infrastructure for power systems, transportation networks, and commodities and supply chain—all the little things that make our test site run and operate quickly. That allows us to set up quickly and begin testing faster than if we had to build an engine testing site from scratch. The State of Mississippi has really backed us to bring Neutron to the area, with the State putting forth some significant capital investment for us to develop the facilities for Archimedes and Neutron. By getting to Stennis, we can fast-track development for Neutron, and already the team on the ground is getting to work to modify some systems and get the site ready for the very first Archimedes engine hot fire. Speaking of Archimedes, this past quarter saw progress on the development of our new reusable rocket engine. We made a change in the cycle of the engine from a gas generator to an oxidizer-rich closed-cycle to really optimize engine performance—not to increase the level of ISP or performance as you might think, but to maintain the power balance right in the middle that brings the temperatures down and the pressure down for a really super reliable engine, because that's what you want in an engine for a reusable rocket—an engine that can be used over and over again and which has a scope for increased performance if we need to or to lap a program for any re-entry as preferred. So with that, all the major design elements of the engine are complete. This quarter, we moved into producing some early prototype parts—3D printed components, including pump parts like oxidizer volumes and others. With Stennis secured and engine development ready and accelerating, we're on the right track with Archimedes and well-positioned to maintain our targets to see a hot fire engine soon. Continuing on the Neutron theme. Neutron is a unique rocket, not only in its design but in the materials we use to construct it. It's expected to be the world's first carbon composite large launch vehicle made up of newly formulated carbon composite materials—lightweight and very, very strong—but also able to withstand the heat and forces of repeated re-entry and launch. Now, we use carbon composites for Electron. In fact, we were the first in the world to build an all-carbon composite orbital rocket. So we understand the materials and these technologies very well. Now, with a carbon composite rocket, one of the best ways to determine the program's progress is whether the structural molds for the rocket are complete or not. Because if molds are built, that means the rocket's design is mature enough to invest in the capital and tooling. And that's where we are today with Neutron. In Q3, we completed the molds for its tanks and have started to develop full-scale prototype hardware. The parts can be made quickly to speed up Neutron's timeline. This type of advancement in the program might not seem flashy, but it's highly important for Neutron’s early development. We're expecting the first Neutron tank to come to life by the end of this year, 2022. Now, to build Neutron's carbon composite tanks and structures quickly, the best way to do that is by automation. And this is another area where we've completed early investments into the tooling and machinery by using rocket building robots. The process is called automated tape laying. It's quite a mature process. Many of the carbon fibers are laid down every minute to build the structured material for Neutron’s structures. It’s an advanced composite manufacturing technique that's really optimized for performance, speed, and cost. Carbon composite on a strength-to-mass ratio is at least 4x lighter than metallics like steel, meaning that a quarter of the amount of the material actually needs to be used for the same specific strength. Using our rocket building robots, we can really maintain and minimize labor and still manufacture completed tanks in a very short timeframe—on the order of days. That's the East Coast. Now, to Virginia, we continue to make good progress on the Neutron factory there. The 28-acre area was virtually greenfield when we started and has now been graded. Concrete was poured in the first building, which was up within just seven months from groundbreaking in April this year. We're expecting our first Stage 1 Neutron tank to be completed on Site 2, which has been kicked off in this current quarter. The site here for our production complex for Neutron will support production, assembly, and integrated launches—it's where we build the rocket, but it’s also where we will do some tests and some infrastructure, as well. The advantage of the site and the environment we gain from its location is how close it is to the Neutron launch pad—in fact, just two miles down the road. This allows us to unlock all of the constraints that a typical rocket program otherwise faces. There's a reason why most modern rockets are a little bit over three meters in diameter, and that's because they have to go through some kind of tunnel or bridge somewhere on the way from their production site to the launch site. That's not going to be the case for Neutron. It’s a unique proposition that we have with the launch site and pad in the Neutron production complex with major functions being so closely located where we can build the rocket but also test it in very close succession to help accelerate Neutron’s development timeline. Once Neutron is up on Plant 2, it will mean slick and streamlined operations in places where we're not handling the rocket multiple times and transporting it to various parts of the country to get it to the port. Right on to Space Systems. Moving into the accomplishments in Space Systems for the quarter. The lift-off of our entire Space Systems line has been to enable easier and faster access to space on proven and affordable hardware that is available at scale. Our satellite separation system by PSC has been a key offering of our vertically-integrated Space Systems business, having come to the table with 100% mission success heritage across more than 100 missions launched across most major U.S. and international rockets. Being acquired by Rocket Lab meant PSC could continue the commercial hardware trade; but by tapping into Rocket Lab's resources and manufacturing capability, grow the business. It’s fantastic to share today that under a year since the acquisition, we recently brought in their highest value mission for separation systems to date. Two orders totaling $14 million, and I'll take you through that deal in more detail on the next slide. The $14 million win is made up of two contracts to supply more than 80 of our Lightbands to Lockheed Martin and another undisclosed customer who are both building satellites for what's called Tranche 1 Tracking Layer, which has been developed by the U.S. Department of Defense Space Development Agency. These 80-plus Lightbands represent the majority of the separation systems required to deploy the entire Tranche 1 Tracking Layer constellation and early warning global system to take missiles and protect U.S. national securities. This is a critical capability that relies on the satellite and the constellation being accurately deployed to the precise location. The fact that not one but two organizations have entrusted us to build these devices that place satellites in orbit speaks to just how highly regarded our separation systems are in the market. Further to the U.S. government side of the business. In our Solar Power division, we secured another win with an award to deliver the solar cell assembly for three Lockheed Martin-built satellites for the United States Space Force. These three large spacecraft are part of the latest evolution of the U.S. missile warning system and recently passed the critical design review to become certified for space and set to launch in 2025. Deep expertise in space solar power, reliability of the technology, and our extensive manufacturing capability are some of the reasons behind this latest award, which supports satellite production on a really aggressive schedule. On to Mandrake, over in our mission software department, our team and technology have been helping progress a major U.S. government program called Blackjack. This program is being managed by DARPA and the government's Space Development Agency to create a global low-latency, high-volume data communications constellation using optically interconnected satellites. An early test of that network was carried out in June with the success of the Mandrake 2 mission, which successfully demonstrated a functioning optical communications link between two satellites. We played a leading role in the success of the Mandrake mission with our software and mission simulation and testing solutions that have been a part of the mission from the very beginning of the program. We also run mission operations for Mandrake, where the team is responsible for daily spacecraft health and status monitoring, payload tasking, and trajectory control between the two spacecraft to support the optical cross-linked testing. While we're counting this mission as a win for our Space Systems business, it's also an example of our vertical integration strategy and Space Systems paying off across the board. We supplied the star trackers and reaction wheels to the Mandrake spacecraft, which enabled it with the high precision control it needs to achieve the optical communications link, and our separation systems are also used to deploy these satellites. Another showcase this quarter of the strength of our interlinked mission solutions was the award of a new research and development agreement with the United States Transportation Command or USTRANSCOM. USTRANSCOM is responsible for all global logistics for the U.S. Military. They're DoD's future thinkers and are looking to rocket cargo transport and point-to-point travel for its operations in the years to come and see an opportunity across both our space systems and launch offerings. In Photon, our research agreement will explore the use of our spacecraft to establish on-orbit cargo depots and deliver re-entry capabilities, while Neutron and Electron are being examined for their ability to transport cargo point-to-point around the world. And then coming on to our Q3 highlights. We have completed the construction of our high-volume space systems production line to produce reaction wheels at scale. Our first prototypes for one of our mega-constellation customers have rolled off the line and are completing their testing before we begin delivering the final products during next year. This production line is capable of producing up to 2,000 units a year, which is an enormous increase in the availability of these critical products to the market. Where components like reaction wheels have been individually built by specialized engineers over a long wait time, with this production, we've incorporated advanced machining centers optimized for unattended operation, automated production tools, and automated environmental testing and workstation. This production line coming online means we're meeting the bottleneck of demand for these products for satellite constellation builders, where we see significant growth opportunities in our Space Systems division. Post-quarter accomplishments. So as you saw there, another really good quarter of business accomplishments in Q3. Now I'd like to take you through a few more exciting developments for the company since the quarter end. So the busiest launch year—starting with Electron—we've had a busy launch year. Just a week into the fourth quarter, we successfully launched our eighth mission. Five days ago, we launched our ninth mission, and the year end certainly surpassing our record for the calendar year. We said we would open up access to space with Electron with an increased launch cadence, and we have with a successful orbital mission every month this year since April. In fact, Electron has launched successfully more times this year alone than every other commercial small launch vehicle combined across all of their launches to date, and we're still not finished. So Electron and the team have had a stellar year, picking up the pace while also delivering some of our most demanding missions ever. Arguably, our hardest mission was the CAPSTONE mission that sent a satellite to the moon on Electron and one of our Photon spacecraft. It was the heaviest mission we'd ever lifted, the most technically demanding in the Rocket. And being only 15 days later, our team turned around for a flawless launch of one of the highest-level national security customers, that being the National Reconnaissance Office. We've had this success because we've advanced the technology, built the infrastructure upfront, set up three launchpads and three operations centers, and developed a world-class team of engineers. Electron has really hit its stride this year and is well set to continue an increased cadence in 2023. Before that, though, we have another Electron mission to fly, our 10th for 2022, this time flying from Rocket Lab Launch Complex 2 in Wallops Island, Virginia. Launching from this pad is going to open up a new era in launch for small satellite customers. We've been providing reliable and responsive access to space for more than 4.5 years now and are excited to build on that strong heritage by unlocking a new path to orbit from Virginia's Eastern Shore. Across these two launch sites, we can support more than 130 launch opportunities every year to deliver unmatched flexibility in the market for government and commercial satellite operators. On the AFTS front with NASA, we've been encouraged by the recent progress and their expression of confidence that they will be ready to go by December. Electron arrived in Virginia last month and is deep into processing and already on the ground with the team. Launch rehearsals and integration of the HawkEye 360 payload to the rocket will be taking place in the next few weeks before rollout to the pad at LC-2 for a launch. I'm personally very much looking forward to seeing this Electron fly out of Virginia. Finally, I'm also excited to announce today that we have our second launch lined up from LC-2 for an undisclosed commercial constellation customer on our Electron in January, meaning that we'll have two back-to-back missions from Virginia in just a matter of weeks. Even in its early days of flying from LC-2, Electron is set to change the game and set the standard for responsive and reliable small launch from U.S. soil, with these two missions expected to be the fastest launch turnaround by any operational small launcher. Electron is already the most frequently launched small orbital rocket globally. With both these complexes combined, the pace is really expected to pick up. This launch in January from LC-2 will be Rocket Lab’s first Electron launch in 2023 as part of a busy launch manifest. Other launches already announced for 2023 include the first of five dedicated missions for Internet of Things connectivity provider Kinéis, the launch of a mission to demonstrate space debris removal technology by Astroscale in Japan, and the continuation of the multi-launch contracts with HawkEye 360 and Synspective. This is not an exclusive list of all of our amenities for 2023, but it's just some of the customers that we've already announced this year. Moving on to Space Systems now and our contract with MDA for Globalstar has been expanded to include us developing a new global Satellite Operations Control Center, what we call the SOCC, for the constellation. We will not be disclosing the terms of this contract, but I can tell you it does represent an extension to the $143 million contract already in place. The foundational mission software for the SOCC will be based off of our existing MAX system, the same one used to manage the DARPA Blackjack program that I spoke about earlier. The combination of our software and deep expertise in operating demanding and complex missions, alongside our existing partnership, are the driving forces behind MDA choosing to extend this opportunity to us. By designing and manufacturing Globalstar's spacecraft buses, delivering the flight and ground software solutions, and developing and supporting the spacecraft operation centers, we're once again demonstrating that our strategy of going beyond launch and delivering complete space solutions—complete space mission solutions—are basically end-to-end. A big part of our growth and acquisition strategy has been the vertical integration of supply chains to mitigate constraints. The strategically important components needed to build out a functioning satellite as part of the constellation. The companies we've acquired over the years are believed to be the best in the business in their own right. More importantly, combining them has provided us with inorganic and organically developed solutions that cover the complete mission end-to-end to deliver an operational platform that's going to be used globally. This MDA contract is a perfect example of that. We're building all 17 of the constellation's new spacecraft buses. The SOCC’s Globalstar mission will use our software. The satellites themselves will be powered by our solar panels. They will communicate using our Frontier-C satellite radios that will maintain their position in space using our reaction wheels. Each satellite will be operated by our software, and they will have power distribution systems internally built by Rocket Lab. The customer also has the option within this contract to launch these satellites with us. Initially, there's an option for us to support the ground operations for Globalstar as well. The strength of our competitive advantage in vertical integration really shines with this contract. It helps to reduce the cost of our own systems, but also allows us to monetize it. The diversity of the revenue that you're seeing from us is a combination of that. Speaking of revenue generation in Space Systems. Early in the fourth quarter, we signed a contract with NASA's Jet Propulsion Laboratory to provide solar panels for shoebox-sized mobile robots as part of the agency's CADRE program. The CADRE acronym stands for Cooperative Autonomous Distributed Robot Explorers—much easier to just say CADRE—which is the next generation of pop-up explorers that will work with a group to collect data from hard-to-reach places on the Moon, Mars, and elsewhere. They're going to be powered by IMM solar cells, a superior type of space-grade solar cell we provide for the most innovative and power-reaching customers' missions. The latest contract with JPL extends a long history through SolAero of powering NASA’s satellites and spacecraft, including NASA's Ingenuity Helicopter. We'll be using the same solar cells on CADRE as we did for the Ingenuity Helicopter, Mars helicopter, with the high efficiency and lower mass combination and those cells being deemed a critical factor for enabling the mission’s success. So with that, let me turn it over to Adam Spice, our Chief Financial Officer.

Thanks, Pete. I will first review our third-quarter 2022 results and then discuss our outlook for the fourth quarter. Third-quarter 2022 revenue was $63.1 million, exceeding the high end of our guidance range of $60 million to $63 million, representing 14% sequential growth over the prior quarter. Our record revenue performance in the quarter was a result of three successful launches as well as outperformance in our Space Systems segment, led by our Separation Systems product line. Launch Services contributed $23 million, delivering 20% quarter-on-quarter growth and representing 36% of the total revenue in the quarter. Space Systems contributed $40.1 million, delivering 10% quarter-on-quarter growth and representing 64% of total revenue. Now turning to gross margin. GAAP gross margin for the third quarter was 13%, which was within our guidance range of 12% to 15%. Non-GAAP gross margin for the third quarter was 24%, which was within our guidance range of 22% to 25%. Compared to the second quarter, where GAAP and non-GAAP gross margins were 9% and 22%, respectively, both GAAP and non-GAAP margins expanded in the quarter. In the Launch Services segment specifically, GAAP gross margin for the third quarter was negative 4% versus negative 12% in the second quarter. This expansion of gross margin was the result of higher average selling prices per launch vehicle and lower production-related stock-based compensation expenses. In the Space Systems segment, GAAP gross margin for the third quarter was 23% versus 20% in the second quarter. This expansion of gross margin was driven by a greater mix of higher-margin satellite component revenue, such as separation systems and reaction wheels delivered in the quarter. Total production headcount ended September 30, 2022, at 797, up 16 heads from June 30, 2022. In the face of increased production unit volumes, we continue to focus on constraining production headcount and identifying production efficiencies in pursuit of expanding gross margins across the business. Backlog declined $10.8 million during the third quarter to $520.6 million as the recognition of record revenue outpaced new bookings in the quarter. Significant portions of our business involve projects that are many months or years in formation. And as a result, converting opportunities into new bookings is lumpy. Our pipeline of opportunities remains robust, and we are confident in our ability to build our backlog over the coming months and quarters. When we compare the third-quarter 2022 revenue on a year-on-year basis, the continued strength, evolution, and diversity of our business is evident. Total revenue was up more than 1,000% or more than $57 million when compared to the third quarter of 2021. Acquisitions have contributed meaningfully to this year-on-year growth, reinforcing the strategic importance of our early investments into expanding our total addressable market. Specifically, revenue contributions from the acquired ASI, PSC, and SolAero businesses added approximately $31 million of revenue in the third quarter of 2022. The remaining Rocket Lab product lines have experienced significant growth, having grown more than $27 million over the same time period, representing 514% growth year-on-year and contributed nearly $32 million in the third quarter of 2022. Now turning to gross margin. GAAP gross margin for third quarter was 13% compared to negative 230% in the third quarter of 2021. Non-GAAP gross margin for the third quarter was 24% compared to negative 84% in the third quarter of 2021. While we mentioned the impact of lower stock-based compensation on GAAP cost of goods sold and on GAAP operating expenses in the year-on-year comparisons, which was a function of the timing of our leaseback and the related one-time catch-up of revenue recognition for stock-based compensation related to restricted stock units vesting and on performance conditions related to achieving a liquidity event. The current quarter stock-based compensation represents a more normalized run rate. In the Launch Services segment specifically, both GAAP and non-GAAP gross margin for the third quarter 2022 expanded significantly over the third quarter of 2021 as revenue growth led to greater absorption of production overhead as well as lower production-related stock-based compensation. In the Space Systems segment, both GAAP and non-GAAP gross margin for the third quarter of 2022 declined versus the third quarter of 2021. The decline was driven by the acquisitions of ASI, PSC, and SolAero, which add significant revenue contributions but at a lower gross margin profile compared to our much smaller Space Systems business in the third quarter of 2021. Turning to operating expenses. GAAP operating expenses for the third quarter were $40.5 million, which was approximately $500,000 lower than our guidance range of $41 million to $43 million. Non-GAAP operating expenses for the third quarter were $27.4 million, which was within our guidance range of $27 million to $29 million. The growth in both GAAP and non-GAAP operating expenses versus the second quarter was primarily driven by an increase in staffing, prototyping related to Neutron vehicle development, the Electron booster recovery initiatives, and Photon development projects, which were partially offset by the change in fair value of contingent consideration related to the PSC acquisition and deal-related amortization of intangibles. In R&D specifically, GAAP expenses decreased by $1.7 million or 9% in the third quarter, driven by lower stock-based compensation. Non-GAAP expenses were up $1.1 million or 10% quarter-on-quarter. We anticipate the trend of sequential growth in R&D to continue as we ramp up investments in our Neutron launch vehicle and in Photon development, in particular. Quarter-ending R&D headcount was 348, representing an increase of 40 heads from June 30, 2022. In SG&A, GAAP expenses increased quarter-on-quarter by $4 million or 21%, driven primarily by the earlier-mentioned change in fair value of contingent consideration related to the PSC acquisition and deal-related amortization of intangibles. Non-GAAP SG&A expenses increased by $1.1 million or 8% quarter-on-quarter, mostly driven by increased staff costs as well as higher travel and marketing costs. Quarter-ending SG&A headcount was 196, representing an increase of 14 heads from June 30, 2022. On a year-on-year perspective, both GAAP and non-GAAP operating expenses increased as the company continues to invest heavily in Neutron development, broadening our Space Systems portfolio of products and services, and Electron recovery initiatives. The company is executing and achieving milestones on numerous ambitious projects, and we look forward to these investments generating shareholder value for years to come. Year-on-year GAAP R&D increased by $3.3 million, and non-GAAP R&D increased by $4.3 million, driven by increased staffing and prototyping expenses for our Neutron and Photon development projects. Year-on-year, GAAP SG&A was down $2.7 million, driven by a decrease in stock-based compensation, partially offset by an increase in amortization expense related to the ASI, PSC, and SolAero acquisitions. Non-GAAP SG&A was up by $7.8 million, driven by higher public company costs including audit, legal and D&O insurance. Cash consumed from operating activities was $23 million in the third quarter compared to $38.3 million in the second quarter. The sequential decline of $15.3 million was driven primarily by an improvement in working capital as well as lower net loss in the quarter. Cash consumed from investing activities was $188.7 million in the third quarter compared to $12.3 million in the second quarter. The sequential increase in cash consumed from investment activities was driven by the purchase of $179.9 million of marketable securities. Cash generated from financing activities was $2.1 million in the third quarter compared to cash consumption of $15 million in the second quarter. The sequential increase of $17.1 million was driven by lower tax withholdings paid on behalf of employees for the vesting of restricted stock units during the third quarter as well as a one-time contingent consideration payment in the second quarter related to the ASI acquisition. Overall, cash consumed in the third quarter was $210.3 million compared to $61.1 million in the second quarter. The ending balance of cash, cash equivalents, restricted cash, and marketable securities was $515.5 million as of the end of the third quarter, representing a decrease of $31.2 million sequentially. And with that, let's turn to guidance for the fourth quarter of 2022. We expect revenue in the fourth quarter to range between $51 million and $54 million, which reflects $34 million to $37 million of contribution from Space Systems and $17 million of contribution from Launch Services. This assumes three launches or one remaining launch in the quarter with one of those three launches being the attempted booster recovery R&D mission last week that was only partially filled, resulting in lower absolute and per launch contribution in the quarter. We expect fourth-quarter GAAP gross margin to range between 5% and 7% and non-GAAP gross margin to range between 16% and 18%. These forecasted GAAP and non-GAAP gross margins reflect the anticipated lower absorption of overhead expense in the Launch Services segment as well as a higher mix of lower-margin products within our Space Systems segment. We expect fourth-quarter GAAP operating expenses to range between $39 million and $41 million and non-GAAP operating expenses to range between $28 million and $30 million. This quarter-on-quarter increase is driven primarily by increased R&D staff costs and prototype expenses related to continued growth in our investments in the Neutron launch vehicle and development and scaling of our Photon product family. We expect fourth-quarter GAAP and non-GAAP net interest expense to be $1 million, and we expect fourth-quarter adjusted EBITDA loss to range between $12 million and $16 million and basic shares outstanding to be approximately 474 million shares. And with that, I'd like to open up the call for questions.

Thank you, Adam. During the Q&A portion of today's call, Rocket Lab will address the selection of questions from retail shareholders posted to our Q&A platform with Say Technologies. We'll begin by answering a selection of shareholder questions among the top voted questions on the platform. We'll pass over any questions that are likely to have been answered already throughout today's presentation. And we may group together questions that touch on the same subjects. But with that, the first question is from Daniel D. who asked, 'We are beginning to see major multinational corporations partner with Space Systems providers like Apple with Globalstar and General Dynamics with Iridium to provide more integrated services. Will Rocket Lab see a partnership similar to these in the future?'

Okay. Thanks, Murielle. Well, I mean, I guess, the answer to this question is you can already see that we are a strong partner with Globalstar, building their constellation, which is ultimately supporting some of those names. So the answer to the question is actually, yes. We already are.

Our next question is from Michael H., who asks, 'When will the company reach profitability?'

Yes, I'll take that, Murielle. While most of the elements of our business have been ramping well, we're still in the early stages of our Neutron development and investments. So achieving and sustaining profitability can really only happen once we've got the majority of the R&D spending for Neutron in the rearview mirror. So I think that's the best way to look at it. It's really—we've got a couple of things converging. We have an increase and kind of sustained investment in Neutron, and of course, that will come to a crescendo as we approach the launch. But we still need the rest of the business to grow and perform to overcome that investment in Neutron in the short term.

Thank you, Adam. The next question is from Kevin R. who wants to know, 'Are there any more potential acquisitions Rocket Lab is considering in the near term?'

Yes, I can take that one as well, Murielle. So unfortunately, we can't speak to any specific acquisition opportunities, but we continue to see strategic inorganic growth opportunities in our markets, but there are no deals currently in advanced stages of discussion. We're very happy with the four strategic acquisitions we've done, and we do believe there are deals to be done, both large and small, that fit well within our end-to-end space solutions vision.

Our next question then is from Carter M., who asks, 'Does Rocket Lab foresee any large military contracts in the near or distant future?'

Yes, I can take that one, Murielle. I mean, there are some significant defense contracts we can't really discuss that we're actively working on. It's easy to imagine a lot of these defense contracts are very long lead time processes. Generally, though, I can say we are seeing really an increased engagement from strategic DoD program opportunities that we think we can bring a new level of stability and scale from our business to both launch and on Space Systems side.

Thanks, Peter. I'm going to summarize now some of the questions we've had for demand for Launch Services. So I'll put it forward in this question here: What are the impacts on Electron’s launch cadence? Is it customer readiness level of demand or any other factors that you might like to comment on?

Yes, I can take a swing at this. I mean I can compare a dedicated launch vehicle to like the difference between an Uber service and a bus. The analogy is stronger than you think in the fact that with an Uber service, when you call it, that's when you call it and it arrives on your timescale. And that's the same with dedicated small launches; the value that we offer our customers is they can call us when they need us, and we meet their timeframes. Now the challenge for us is always if they're not ready on time, we're kind of the Uber left outside the restaurant, waiting for someone to come outside. This year, I think we've done a really good job—certainly way better than previous years of managing that by processing multiple customers at once. So if one customer has an issue during either integration or processing or even as they get their satellite prepared, we can jump in front with another one. We joke here, it’s literal; we call it 'manifest whack-a-mole' where you continually fight to keep the launch cadence. So, the thing that affects our launch cadence the most is, in fact, customer readiness rather than demand. When a customer slips, it's not that they go away; they just slip into a different quarter or, in some cases, a different year. We've seen continued growth in demand, which is pleasing to see. If we look at '23 and '24, we can see that we have line of sight to our model closing, so that's all good. But customer readiness is the one thing that is always challenging to manage.

Thanks, Pete. Maybe another one for you. We've had several questions about Electron reusability from shareholders. The main points coming through have been, 'What is the progress towards Electron recoverability and to what extent will reusability drive down launch costs? And finally, how does this process inform and help guide the design of Neutron?'

Thanks, Murielle. I guess the question that most people will be asking is what happened on the last launch. What we can say is that during re-entry, we need a telemetry lock with the vehicle so we can determine where it is in space because it's not responsible to put a helicopter in a zone where there's potentially a re-entering rocket. It's normal for us to lose that telemetry link through the re-entry process because of the plasma and the heat and the barbecue roll that we put the stage in. In this occasion, we didn't regain the lock in a time that was sufficient for us to put the helicopter into an area to be able to successfully catch it. That was a safety call that we made, and we have very strict flight rules around that. We still pushed it out of the ocean and we continue to be confident that we're going to get there with this recoverability. It’s important to point out that our other friends down the road took many attempts to successfully nail this. So that's probably the question on most people's minds. More kind of directly to the answer to the question you had: the majority of the cost of the rocket is in the first stage. If you can get that first stage back in good condition and service it without having to rebuild it completely, then it is a strong performance driver from a margin and cost perspective. So that's all goodness. With respect to Neutron, I wouldn't want to develop a reusable rocket without having all of this knowledge and experience of re-entering launch vehicles and controlling them. It's technically a challenging thing to do. We're really in the best position possible, given all the experience we’re learning from Electron. It's directly applicable to Neutron and ensuring that Neutron is very successful from a reusability standpoint.

Thanks, Pete. We've also had several questions about Rocket Lab's performance overall, which I'll summarize by asking: How would you say Rocket Lab compares to other commercial space companies, particularly in small launch, but also across end-to-end space solutions?

Yes, I'll take the first pass of this, Murielle. We think we've distinguished ourselves in a few important ways. Clearly, launch heritage is the most obvious. As we noted earlier, we successfully launched more times this year so far than all other small launch players combined, and we did this while establishing our leadership in responsive space, launching twice within 15 days. These accomplishments speak for themselves and delineate how we view ourselves as distinct and unique with regards to the rest of the small launch group. Additionally, we think there's a window for paying customers to take a bet on a new small launch provider, but that window is really closed. It feels like we're now in a period where new launch providers need to self-fund establishing a launcher with sufficient flight heritage for customers to mitigate risk. That really goes to future competition and those who have already made it through the first round, if you will. However, there's a lot of work to do, and we have to consider customer incentives here, given the state of development of various players, including ourselves. Related to the end-to-end space play, we were aggressive in acquiring on over heritage with our four acquisitions, and we're certainly leveraging that heritage into more extensive end-to-end opportunities, entering programs like the MDA Globalstar program that we've talked a lot about. Again, I think there are clear and obvious ways that we differentiate ourselves from the crowd, and we're very comfortable with our strategy and the execution against that so far.

Thank you, Adam. With that, we'll be moving on now from shareholder questions. Thank you to everyone for your thoughtful engagement from our shareholders. We will open up the line now to questions from the analysts on the call. So over to you, operator.

We will now begin the live Q&A. Our first question comes from Matt Akers with Wells Fargo.

I wonder if you could touch in a little bit more detail on the Q4 guidance for launch revenue. I think you mentioned why it was a little bit lower than what you might expect for three launches, but can you go into some more detail there? And then how should we think about ASP? Does that still ramp up as we get into next year?

Yes, sure, Matt. I'll take that question, and Pete can chime in if he views it differently. But within the Q4 guide, I mean, probably the obvious impact is having one of our customers push their scheduled launch from Q4 into next year. It’s one of those things you don’t get a lot of notice from the customer sometimes on these issues. So that was a late-breaking change, a more soft guide for Q4 on the Launch Service side of things. The other thing is we had our recoverability launch last week, which was really an R&D platform. We look at it as almost like subsidized R&D. So we take a partially filled rocket so we aren't so schedule-driven to ensure that we get a certain number of attempted recoveries in place. Those are really the primary movers. So when you look at the revenue contribution from launch in Q4, you might see the average selling price dip into a lower number, which is not really indicative because that recovery ride-share was really more of an R&D mission. As we look forward into 2023 and beyond, we see a firm pricing environment for our product. We're not seeing any big discounts. Occasionally, we'll do some material discounts when customers sign up for large bulk buys, but right now we're feeling pretty good about where our pricing is. Over the last several years, we've actually seen price increases.

Got it. Okay. No, that answers my question. Sorry, go ahead.

No matter, I was just valiantly agreeing with Adam.

Got it. Okay. No, thanks. That's helpful. And then I guess if you could talk just about how you are thinking about next year? I don't know if you can provide any guidance on how we should think about growth at the two different segments off of the Q4 run rate, if there are any early thoughts on that?

Yes. I'll take the first pass of that as well. We're looking at what we think will be a pretty impressive growth year for the Electron launch cadence. This year, with the manifest we just closed out, we have one more launch to complete at 10 launches. We think there's significant growth. Right now, we're pegging estimated launches for next year at around 14, so about 40% growth year-on-year. With fairly firm pricing, we're still going to have a few R&D efforts around booster recovery. Overall, if you want to think about the pricing on average when that's all factored in, it’ll be somewhere around $7 million to $7.5 million per launch. Some will be higher, some lower, particularly on the R&D booster recovery side of things. But yes, we see good growth year-on-year for the launch business. And then, when we look at the Space Systems business, we really see solid growth in four out of the five areas.

Pete, one of your peers in the launch industry—they are building an oxygen-rich closed-cycle engine as well. It's fair to say it's been a bit of a challenge for them. I recognize you guys have a great track record for execution. But can you talk a bit about what makes you comfortable with the development timeline you've laid out for Archimedes? How would you give us some comfort about the risk of cost overruns or schedule slippage on that engine architecture?

Yes, hi, Scott, it's a great question. The fundamental difference is generally the reason you go to an oxy-rich more closed-cycle is for performance. You’re trying to extract the maximum ISP out of a particular engine. What that means is you end up with thrust or chamber pressures in many thousands of PSIs. That's a good way to determine how stressed an engine is. Our rationale for going to the oxy-rich cycle was not because we're trying to squeeze out huge amounts of ISP and really push chamber pressures. Our chamber pressures are actually down at gas generator chamber pressures, at sort of 1,500 to 2,000 PSI, which is low. Our rationale was from a reusability standpoint. Ultimately, that cycle provides the best probability of reusability. It’s a long winded way of saying we are not trying to push the cycle. Generally, you go to that cycle because you need the performance. We are not going to that cycle because we need the performance. We’re not trying to extract the performance. You essentially have an engine that runs cold and is not running up against the limits. This gives us a lot of confidence in the development timeline because, for example, a pre-burner pressure in some of our peers' engines run at 8,000 to 11,000 PSI. We’re just down in a few thousand PSI. This ultimately means the temperatures of the turbines, which are the things that cause you to incur problems, are very low. We don't need exotic materials, and ultimately the turbine stresses and strains are very low as well. So, it's taking an engine that normally someone chooses for performance and derating it right down to fair purposes, which equals ultimate reliability. Rocket engines are rocket engines, and there are always developmental challenges along the way. But when the team looks at what turbine speeds and pressures and temperatures we need to achieve in the cycle, they're really, really boring, which is what we said we wanted to do—create a very boring engine. I wouldn't confuse the complexity of the cycle with the challenges of development here.

Yes. You mentioned that some larger potential deals are taking longer to close, can you discuss that a bit more? Is that the slowing of the sales cycle? Is it more on the commercial side? Or from government customers? I would say, it's a little bit of both. It's also a function of the fact that we're not chasing 1Z, 2Z small deals anymore. We're chasing needle-moving opportunities that just by definition are more complex. It's taking a more holistic effort across the product lines in the company. This—again, it's about reinforcing the strategy of being an end-to-end player and having more to bring to the table to go after bigger games. I think we've got a line of sight into that game that I think we're going to catch, but it's just taking a little longer. I don't think it's—these things are taking many quarters longer but, in some cases, they're taking a bit longer. Our confidence level is high that we will close on some of these more significant material deals. So again it's the complexity and size that causes delays, but it's a good thing in this case.

I just wanted to real quick on the pricing. It seemed like there was a little pressure this quarter because of R&D, but you're still thinking you're in the $7 million to $7.5 million range for next year. But how is pricing beyond—if we exclude those R&D programs? Where is pricing today? Is it higher than what we're currently seeing or what we've seen throughout 2022?

So the average sticker price or kind of your basic mission is still running around $7.5 million. Again, we’re not seeing a lot of dramatic pressure on the pricing side. Really, customers realize the cost and value of small dedicated launches, and they don’t really compare us to things like rideshare on an apples-to-apples basis because it’s not a direct comparison. So, again, pricing is holding up fine.

And then on margins coming down next quarter, how do you think about that? Where is the pressure coming from? Is it still SolAero, or is it something else? How should we be thinking about margins for next year?

So, on overall margin directionality, on the launch side, whenever you have less revenue contribution from launch, you have less production overhead absorption. When we have three launches, but one is heavily subsidized R&D, it doesn’t give you much air cover for that. What we saw in our Q3 results is the positive trend of increasing gross margins when we have three full-price launches. One launch per month is good, but when you have less than that or have a subsidized kind of launch, that starts to eat into margins meaningfully. Overall, it gets us on our path towards all cost reduction activities for Electron and gives us confidence toward profitability. Regarding Space Systems margins, it’s a bit of a yin and yang. When I mentioned earlier about growth for 2022, SolAero is being impacted by delayed revenue recognition. You won’t necessarily see margin improvement fully visible. Still, we believe overall for Space Systems to see positive margins through those efforts.

Hi, Peter. Hi, Adam. Looking at the launch count guidance for '23, what is the realistic expectation for how many of those might be out of Virginia? Is it kind of one a quarter early on? I've heard you say one will come early in '23, but would it progress towards one a month over time?

That's a good question. I'll have to follow the manifest and see where the kind of space is throughout the year. Getting a couple early in the year is helpful. I would say that you’ll see them sporadically throughout the year. Because we haven't had the range operational for a while, we've been cautious in what we can book for that site. I would say you'll sort of start to see them increase near the end of the year, just from the natural life cycle of a launch contract.

Right now, if you look at our manifest, we would estimate somewhere between four and six launches of the 14 would come out of LC-2 in Wallops.

Looking at the selection of the Stennis Space Center, how do you see that having an impact on CapEx spend? What are you projecting in terms of CapEx moving forward? What kind of rate?

On kind of the reduction of CapEx spend that Stennis enables us, it’s pretty significant. If you look at the infrastructure that's there, it's massive. It really helps us accelerate the program from just building a bare-bones engine test to moving into something significant from Day 1, which helps accelerate us through early and mid-to-long-term programs. A significant piece of infrastructure we didn’t have to CapEx. I'll throw it over to Adam to talk about overall CapEx and rate.

Overall, CapEx has been in a certain range—let's call it like I think this quarter was a little under $10 million. I think you're going to see that CapEx continue to step up as we continue to put infrastructure in place for Neutron. Our Space Systems business is pretty much there regarding infrastructure required to execute our plan. As for Neutron, we're still in early phases of getting the infrastructure set up. I'd expect that roughly $10 million per quarter CapEx number to sequentially increase and peak at about mid-20s million per quarter. We initially thought this would fall between $200 million and $250 million, with CapEx anticipated to be in the $80 million range with the rest in personnel and prototyping. The mix may be trending a little more towards higher CapEx with potentially less on the prototyping side of things, so we'll be tracking that as we progress.

I know it's been a long call, so I'll keep it to one. You mentioned more launch recovery attempts in 2024. How many more and why the lower price? I mean, I can assume, I understand why the costs would be higher but why the lower price? And maybe if you can give us a range of where the price would be for one of those R&D launches?

I'll take the first pass at that and have Pete address the cost and pricing side of things. You can think of this as we—it’s much more important for us to get the catch in hand. So we set the R&D team and say, 'You’re going to be doing a recovery at this point in time, so get your plans around that.' Then we try to subsidize the cost of that recovery mission with whatever payloads will fit into that defined timeline. It's more important to get the mission off, even if we sell it half full. So we might sell it for $7.5 million, sell roughly half the capacity. We haven't done more because we've chosen to stick to a recovery schedule and maximize the revenue on that recovery flight. There’s nothing preventing us from filling it completely other than it results in a delay in our R&D process for establishing recoverability.

On these R&D launches, as Adam pointed out, we’re clearly optimizing them for our schedule. I believe we had to do that with some degree of certainty to provide data for our team to meet targets. The development of the recovery system has slowed down. Of course, some tweaks are needed, but we’re not making block changes like we were a year ago. We’re ready to start moving into business as a standard operation.

There are currently no further questions in queue. I will pass the conference back over to Peter for any additional or closing remarks.

Thank you, everybody, for your interest in Rocket Lab. Adam and I will be speaking at these upcoming conferences, and we look forward to the opportunity to share more exciting news and updates at the Stifel Midwest Growth Conference on November the 10th and the Deutsche Bank Global Space Summit on the same day and then ROTH’s 11th Annual Technology Event on November the 16th. Thanks again, and we look forward to speaking with you all again soon about the exciting progress we've made in the business.

Thank you. This concludes today's Rocket Lab Third Quarter 2022 Financial Results Conference Call. Thank you for your participation. You may now disconnect your lines.