Good afternoon, everyone, and welcome to the Rocket Lab third quarter 2021 financial results call. My name is Emily, and I'll be coordinating the call today. There will be a Q&A session during today's presentation where you will have the opportunity to ask a question by pressing star followed by one on your telephone keypads. I will now turn the call over to our host, Gideon Massey, Financial Planning and Analysis Manager. Please go ahead.
Thank you, operator. Good afternoon, everyone, and thank you for joining us on today's conference call to discuss Rocket Lab's third quarter 2021 financial results. Today's call is being hosted by Peter Beck, founder and CEO, and Adam Spice, Chief Financial Officer. After our prepared comments, we will take questions. Our comments today include forward-looking statements within the meaning of applicable securities laws, including statements relating to our guidance for fourth quarter 2021 revenue growth expectations in our principal target markets, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, interest and other expense and adjusted EBITDA. In addition, we will make forward-looking statements relating to trends, opportunities and uncertainties in various products and geographic markets, including without limitation, statements concerning opportunities arising from our Launch Services and Space Systems markets and opportunities for improved revenues across our target markets.
These forward-looking statements involve substantial risk and uncertainties, including risks arising from competition, global trade, and export restrictions. The impact of the COVID-19 pandemic, our dependency on a limited number of customers, average selling price trends, and risks that our market and growth opportunities may not develop as we currently expect, and that our assumptions concerning these opportunities may prove incorrect. More information on these and other risks that may affect the forward-looking statements as outlined in the Risk Factors section of our third quarter 10-Q filing, which will be filed today and the documents incorporated therein. Any forward-looking statements are made as of today, and Rocket Lab has no obligations to update or revise any forward-looking statements. The third quarter 2021 earnings release is available in the investor relations section of our website at rocketlabusa.com.
To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including gross margin and operating expenses. These supplemental measures exclude the effects of stock-based compensation expense, amortization of purchased intangible assets, other non-recurring interest and other income expenses, net attributable to acquisitions and non-cash income tax benefits and expenses. We also supplement our unaudited historical statements and forward-looking guidance with the measure of adjusted EBITDA, where adjustments to EBITDA include share-based compensation, warrant expense related to customers and partners, third-party expenses related to mergers and acquisitions activity, foreign exchange gains or losses, other non-operating income and loss, excluding interest expense related to debt and other non-recurring gains or losses. We encourage investors to review the detailed reconciliation of our GAAP and non-GAAP presentations in our investor update presentation available on our website.
We do not provide a reconciliation of non-GAAP guidance for future periods because of the inherent uncertainty associated with our ability to project certain future charges, including stock-based compensation and its associated tax effect and the effects of warrant expense related to customers and partners. Non-GAAP financial measures discussed today are not in accordance with and do not serve as an alternative for the presentation of Rocket Lab's GAAP financial results. We're providing this information to enable investors to perform more meaningful comparisons of our operating results in a manner similar to management's analysis of our business. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures.
Lastly, this call is also being webcast with a supporting presentation, and a replay copy of the presentation will be available on our website for two weeks. Now let me turn the call over to Peter Beck, Founder and CEO.
Thank you very much, Gideon, and thank you all for joining us here today as we review Rocket Lab's business highlights and financial results for the third quarter of 2021. As Gideon mentioned, joining me today is our CFO, Adam Spice, who you'll hear a little bit from later. Today, I'll be talking you through our key business accomplishments for the third quarter of 2021, and Adam will be covering off our financial highlights and outlook, sharing our up and coming conference schedule. Of course, we'll have time for Q&A. Right. Since the end of the second quarter, we've seen significant growth in our backlog.
At June 30, backlog was $141 million, ending the September 30 quarter at $183 million. Today, our backlog stands at $237 million, representing nearly $100 million in backlog growth since the end of the second quarter. We've seen bookings strengthen across every major product in the company, including new Electron launch contracts, government study contracts, interplanetary Photon satellites, orbital debris removal programs, NASA demonstrations that include small satellites, Electron launch vehicle, Rocket Lab components and software, and numerous component sales spanning a global customer base that includes government, foreign government, universities and commercial customers. I've never been more excited or proud of all of the use cases we're finding for our technology and high value missions we're enabling with our suite of products and services.
Many of these programs will enable and provide transformative technological breakthroughs that will have a long-lasting impact on our planet, which we're very proud about. Proof of our many industry-leading technologies and strong mission heritage can be seen in our strong repeat customer bookings. Since the end of Q2 2021, we have seen over a dozen repeat customers book additional business with Rocket Lab, with nine of these customers listed on this slide. As we continue to broaden our portfolio of space-based products and services, our ability to cross-sell and integrate technologies will lead to even richer customer engagements and relationships. On September 27th, we announced an agreement with the U.S. Space Force under the National Security Space Launch program or NSSL worth $24 million to advance our development of the Neutron rocket's upper stage.
This development will support national security and defense launch capabilities for scientific and experimental satellites to the world's most critical national security payloads. We are really honored to be partnered with the U.S. Space Force and view this as a vote of great confidence from the U.S. government, as another proof point in our ability to deliver low cost, responsive, next generation launch that will transform space access, across constellation deployment. Now, this is a really big deal. If you look at the other players that also won contracts, you will see we're in very good company. In August, our previously announced ESCAPADE mission passed a NASA critical mission review, following the mission to its next phase with a target launch readiness date of 2024.
In September, we finalized the phase B of the contract and also completed a kickoff meeting in November. This mission in partnership with UC Berkeley's Space Sciences Laboratory will put two Photon spacecraft into the orbit of Mars to study its magnetosphere. Could obviously not be more excited with the progress the team is making on this really complex, high-value, you know, crucial missions to explore other planets in our solar system. That covers the key business highlights of our third quarter, but I'd also like to touch briefly on some of our key achievements since the third quarter. We achieved a key program milestone with the NASA demonstration mission with our partner Eta Space. This mission is very very unique in two different ways.
LOXSAT-1 is the first cryogenic oxygen fluid management demonstration mission for NASA in its history. This will prove out the usage of on-orbit fueling systems for satellites on orbit, and thus developing critical technology that can keep our precious satellites monitoring gas emissions or storm monitoring on orbit, extending their lives for a longer period. Secondly, this was the first mission where Rocket Lab won both the launch and the spacecraft design and build in a complete integrated solution, ensuring a faster, more cost-effective and seamless development program for this particular NASA demonstration. On October 12, we signed and completed acquisition of Advanced Solutions Inc. or ASI, an industry leader in mission-critical flight software and GNC for space vehicles.
The ASI team brings with them over 20 years of flight heritage, more than 30,000 hours of on-orbit operation, and a growing team of 57 members located in Littleton, Colorado. The acquisition of ASI further positions Rocket Lab as an end-to-end space company as we desire and able to provide complete mission solutions to our customers. We're already integrating the MAX Flight Software into our Photon Space System Solutions for our LEO and interplanetary space vehicle missions. With more than 137 cumulative years of mission operations and heritage and more than 45 missions with the MAX Flight Software solutions, we believe that this provides a clear differentiator in the marketplace.
Lastly, I'm excited to have a footprint in Colorado, the second-largest aerospace economy in the U.S., with a strong base of research institutes, universities, to bolster Rocket Lab's workforce. Today's a big day. I'm very excited to announce the signing of a definitive agreement to acquire Planetary Systems Corporation or PSC, an industry leader in spacecraft separation systems and, quite frankly, a company, you know, I've worked with and admired for many, many years. Walter Holemans and his team have built an extraordinary business, based on best-in-class products that are reliable and have had a 100% mission success on over 150 missions.
These are viewed as the premier supplier for the U.S. government on smallsat missions with their Motorized Lightbands, Advanced Lightbands, and Canisterized Satellite Dispensers and separation systems. Adding PSC to the Rocket Lab team continues the execution of our stage strategy of expanding our product portfolio with best-in-class product offerings. We're excited about the cross-selling opportunities in combination with these leading spacecraft separation systems with our existing Electron launch services and other spacecraft components, software and service offerings, and believe there are meaningful synergies that can be achieved post-acquisition in shortening lead time, scaling production, and driving costs to provide our customers with an even better service offering than they've had before.
Looking forward into the rest of Q4, as we've already announced, we're planning to launch two BlackSky dedicated launches in this quarter with the first launch scheduled for no sooner than November 17 UTC, so tomorrow. These missions are part of a five-launch agreement signed earlier this year with Spaceflight to deploy BlackSky's Gen-2 satellite constellation. We really appreciate BlackSky entrusting us with their satellites, and look forward to these up-and-coming launches. As part of the up-and-coming Flight 22 with BlackSky Global, we'll be introducing helicopters into the operations of our recovery program for the very first time. We intend to station a helicopter in the recovery zone and track and visually observe the descending stage.
While we won't be attempting to catch at midair on this particular mission, this is really the last step in our program. We'll test all the communications and tracking for future Electron launches and aerial capture. This is really a key milestone for the Electron recovery program and, as we work to make Electron the very first reusable small launch vehicle. With that, I'll turn it over to Adam Spice, as CFO. Over to you, Adam.
Thanks, Pete. I'll first review our Q3 2021 results and then further discuss our outlook for Q4 2021. Our Q3 2021 revenue of $5.3 million was slightly above the guided range of $4 million-$5 million. With COVID impacting our ability to launch in the latter parts of Q3, revenue was largely driven by Space Systems, which contributed 79% of Q3 revenue and has grown by 698% year-on-year for the nine months ended September 30, 2021. Our launch revenue was impacted by both COVID restrictions and a legacy over time revenue recognition policy for the successful Space Force launch that occurred on July 29. This was the last con-launch contract for which revenue was being recognized over time.
Going forward, all launch contracts are expected to be recognized as point in time at the time of launch. Revenue for the nine months ended September 30, 2021 is up 79% year-on-year, with growth being contributed across both launch and a broadening of our Space Systems products and services. Our GAAP and non-GAAP gross margins for the third quarter of 2021 were a negative 236% and a negative 84% of revenue respectively. This compares to GAAP and non-GAAP gross margins of negative 18% and negative 14% respectively in the third quarter of 2020. GAAP and non-GAAP gross margins were significantly impacted by non-recurring de-SPAC-related stock-based compensation charges and New Zealand COVID restrictions that impacted production and launch operations, overhead cost absorption, and launch cadence.
We view all of these as non-recurring events and as such are indicating a significant upswing in profitability in the Q4 guidance, which we'll get to shortly. GAAP operating expenses for the third quarter of 2021 were $39.9 million, up $28.9 million versus the third quarter of 2020, significantly impacted by non-recurring de-SPAC-related stock-based compensation charges hitting both R&D and SG&A. In addition, Q3 2021 saw a meaningful step-up in non-recurring acquisition-related deal expenses and from the impacts of public company costs when compared to the prior year results. Net of the stock-based compensation charges, the growth rate in R&D investment has nearly doubled the growth rate of SG&A, year-on-year, representing continued aggressive prioritized investments in the TAM expanding opportunities.
Q3 2021 adjusted EBITDA loss was $17.5 million at the low end of the guidance range of a $17 million-$20 million loss. Q3 saw several unique one-time charges related to the de-SPAC with Vector Acquisition Corporation, which included the mark-to-market warrant expense of $34.5 million related to the outstanding publicly and privately held warrants, stock-based compensation expense of $31.5 million, the first full quarter impact of our Hercules loan interest expense of $3 million, depreciation and amortization expense of $2.6 million, and acquisition costs of $700,000, offset slightly by an income tax provision benefit of $1.7 million.
GAAP R&D expense was $14.2 million for the third quarter, which included stock-based compensation of $6 million and amortization of purchased intangibles of approximately $400,000, yielding $7.9 million of non-GAAP R&D expense for the third quarter of 2021. As previously referenced, the growth rate in R&D investments year-on-year is outpacing the growth rate in SG&A spend by more than 2x, and is driven largely by increased staffing and prototype expenses related to our Space Systems products and services, Neutron development, and continued spend on our launch vehicle automated flight termination systems development efforts.
GAAP SG&A expense was $25.7 million for the third quarter, which included stock-based compensation of $17.6 million and acquisition costs of $700,000, yielding approximately $7.4 million of non-GAAP SG&A expense for the third quarter of 2021. The year-on-year step up of $1.9 million in SG&A was primarily due to increased headcount and related labor expenses, directors and office insurance, and other new public company costs.
Our cash flow consumed from operating activities was $13.3 million for the third quarter of 2021 versus an operating loss in the quarter of $88 million, which reflects an increase in cash consumed of $4 million versus the third quarter of 2020. This increase in cash consumption was driven by a $6.9 billion increase in inventory and a $4.7 million increase in prepaids and other current assets. These were offset somewhat by non-cash expense add backs of $56.4 million, largely driven by the aforementioned stock-based compensation, warrant expense and depreciation charges, as well as $9 million of cash generation from accounts receivable and $220 million of cash generation from deferred revenue.
Cash consumed from investing activities was $5.7 million in the third quarter of 2021, compared to cash consumed of $2.2 million in the third quarter of 2020. With this year-on-year period increase in cash consumed, driven by several large capital projects, including investments that are expanding our lab facilities at our Long Beach headquarters, investments in our second launch pad at Launch Complex 1 and our new consolidated propulsion test complex in New Zealand. The combination of cash consumed from operating activities and investing activities was more than offset by the $704.4 million net cash generated from the financing activities in the period, resulting in $793.8 million in cash and cash equivalents and restricted cash as of September 30, 2021.
This cash generation was driven by $730.5 million in proceeds from the de-SPAC with Vector Acquisition Corporation and the related PIPE financing. In addition to collecting $2 million in proceeds from the exercise of employee stock options and $2.3 million related to the deferred transaction costs, which were somewhat offset by $30.4 million repurchases of shares and options from management. We believe the liquidity resources of the company enable the execution of our strategic development roadmap, including the development of our Neutron launch vehicle and continued investments targeted at expanding our total addressable market for strategic space system solutions. With that, let's turn our guidance to Q4 2021.
We currently expect revenue in the fourth quarter of 2021 to range between $23 million and $25 million, which includes two dedicated launches and partial quarter contribution from ASI. This revenue guidance does not include any partial quarter contribution from PSC, which was announced earlier today and is expected to close during the month of November. We expect Q4 2021 GAAP and non-GAAP gross margins of 13% and 27% respectively. The 249% anticipated increase in GAAP gross margin is driven by a favorable mix of higher margin Space Systems revenue, increased absorption of manufacturing overhead with increased launch cadence, and a step down in stock-based compensation after the non-recurring Q3 catch-up related to the de-SPAC transaction and related accounting treatment of restricted stock units.
We expect Q4 2021 GAAP operating expenses to range between $24 million and $26 million, and non-GAAP operating expenses to range between $19 million and $20 million as we continue to fund strategic development programs targeted at delivering strong top-line growth in 2021 and beyond across Launch Services and Space Systems and our goal of delivering operating leverage within the business. Please note that this guidance does not include impacts from the purchase price accounting of ASI, any impact of stock-based compensation related to the employee stock purchase plan that we've rolled out for the first time later this month, and again, does not include any contributions or purchase price accounting impacts from the pending acquisition of PSC announced earlier today. We expect Q4 2021 GAAP and non-GAAP interest expense to be $2.8 million.
Given the requirement to fair value the publicly and privately held warrants assumed in the Vector Acquisition Corp merger, which is based on the end of quarter stock price, we cannot estimate these below-the-line GAAP other income and expenses items at this time, nor are we able to forecast foreign exchange gains or losses. We expect Q4 2021 adjusted EBITDA loss to range between $9 million and $11 million. With that, I'd like to open up the call for questions. Operator?
Thank you very much. Our first question today comes from Erik Rasmussen from Stifel. Erik, your line is open.
Yeah, thanks for taking the questions and congratulations on the progress in the quarter. Maybe just in relation to your your acquisition of ASI, what sort of revenue contribution comes from them? Maybe you could just comment on the strategic rationale and maybe just how we should think about the types of acquisitions. You just announced Planetary Systems, the types of acquisitions you are targeting, you know, as you look to expand the business.
Yeah, Eric, thanks for the question. On the revenue side, you know, it was, you know, the revenue run rate was approximately $10 million per year at the point of acquisition. I'll let Pete speak to the strategic nature of the deal and future deals.
Yeah, absolutely. The kind of acquisitions we're looking to make here are ones that are, you know, technologies that we've used and we trust and we know super well and that are best in class. That's kind of fundamental. As we think about how we're going to build our business out in the future and how we're going to deliver on, you know, ultimately building our own infrastructure and all, but what we're looking to do here is compile all of the pieces and bits and pieces that are best in class to really form, if you kind of think of it like a cabinet of capabilities that we can deploy, not just in our own systems, but on others as well.
This is really important for, you know, the ultimate longer term game of the business in providing, you know, end-to-end solutions in space.
Okay, thanks. In relation to the BlackSky and the two launches that are upcoming, you know, obviously we saw that got pushed from November and looks like that's on track for the 17th. But you know, any other sort of impacts that could potentially have as we think about the remaining part of the year? I think you'd mentioned there was an opportunity for further missions, you know, maybe even December, you know, for the final one in December. Could that still be possible?
The plan here is to launch those two BlackSky missions in this quarter, end of the year. You know, both those missions, the vehicles are at the launch site and so are the spacecraft. We moved the launch a couple of days ago for a couple of reasons. One, we saw a sensor reading on the ground that we just didn't like. We subsequently reviewed it and it was, as we expected, nothing. Also, it gave us more time to prepare for the helicopter intercept. At this point in time, those are the two missions that we're planning in this quarter. You know, we'll be unlikely to push a third mission in this quarter.
Maybe just on the outlook for Q4 $23 million-$25 million. It looks like year-over-year for the year, you increased by $5 million. How much is that from, you know, ASI and acquisitions versus just business outperformance?
Yeah, you know, Eric, it's really kind of a partial contribution in the quarter from ASI. We have not baked anything in for PSC into the guidance that we provided. If you think about maybe kind of low single-digit millions dollar contribution from ASI, and the rest really is coming from the core organic business, I'd say, you know, obviously, you know, launch is stepping up with the two launches in the quarter, obviously, versus Q3. It's majority launch, but Space Systems is quickly kinda closing that gap in no small part because of, you know, contributions from the Sinclair acquisition that we did last year that's really, you know, paying off big dividends, and their business is looking very strong.
Great. Thanks. I'll jump back into the queue.
Our next question comes from Colin Canfield from Barclays. Colin, your line is open.
Hey, Adam, Peter. Thanks for the question. When we think about your helicopter intercept, can you just talk a little bit about how that's impacting your cost recovery for Electron?
Yeah, sure. You know, the vast majority of the cost of an Electron launch vehicle resides in the first stage. You know, there's obviously nine engines on the stage one and you know, the bulk majority of the systems. We've successfully splashed down multiple first stages now, and we've got that to a point where we can reenter the stage through the Earth's atmosphere and receive it down in the ocean in good condition. The helicopter intercept, it really enables us to not splash that down in the water. Obviously, rocket engines and rockets really don't love seawater. It enables us to capture that and then return that back to land for refurbishment.
That obviously reduces, you know, quite a large amount of work. There is gonna be some rework, of course, but it reduces, you know, a large amount of work. It's fair to say that, you know, to date, we haven't been baking any of that bonus we get from reusable systems into any of our numbers. It's just pure cream on the top of the cake.
Got it. We think about Neutron reusability and kind of the material and fuel preferences that you're taking for your next stage of your vehicle. Can you just discuss kinda-.
Mm-hmm.
How you're thinking about that, if you have a preference in any way?
Yeah, sure. We're actually gonna make a Neutron announcement here in due course. You know, it's fair to say that the experiences that we've gained from reentering Electron and it has just been absolutely critical in informing us how to design and develop Neutron. You know, going into a reusable launch vehicle program without actually having successfully reentered a rocket would be difficult. All the aero data and aero thermal data and all of the procedures and you know, you can actually bring that rocket through the wall of the atmosphere in one piece is just been absolutely critical. Those lessons and knowledge have been transferred directly to the Neutron program. In fact, more than that, the...
Got it. The last question from me, but maybe if you could talk a little bit about pricing and capacity trends that you're seeing in the smallsat launch market, and to the extent that customers are fully utilizing a Rocket Lab vehicle or something along the lines where it's a partial capacity utilization for your vehicles.
Apologies, everyone. It appears we have lost connection to Peter Beck. Please bear with us while we regain connection to him.
Yeah, Colin, I'll take that question in the interim while Peter rejoins. You know, I think if you look at our missions, we really do have a pretty good mix of what we call just a dedicated mission where you'd expect, for example, for U.S. government customers, it's primarily a dedicated launch. For some of the commercial customers, we are seeing the opportunity to basically pull together what we call kind of a primary rideshare, where there's a primary micro sat that anchors the launch, and then we fill the remaining capacity with CubeSats or other small spacecraft.
I'd say right now, it's probably a little bit more than half of the business are pure kind of dedicated one satellite per launch or one single customer, if you will. For example, on the BlackSky missions, we put two BlackSky satellites per launch. If you think about single customer launches are still probably a little bit more than half of the mix, and then where we do the primary rideshare and mix it with other payloads is a little bit less than half of that. I don't know if that helps. I mean, as far as the pricing trends, I would say that, you know, we're seeing relative stability in the pricing out there in the market.
You know, one thing that's probably the most encouraging, you know, kind of trend in our business, and you've probably seen that coming through some of our announcements, is the fact that we are getting multi-launch deals. We are seeing kind of, you know, earlier in the company's life, we were seeing a lot of pathfinder kind of one-off missions. Now we're starting to see recurring missions. You know, Pete talked about it earlier in the conference call about how we're seeing recurring customers. Well, we're seeing those recurring customers also sign up for multi-launch agreements. I think that's an encouraging sign that the market is continuing to build overall and that, you know, we're continuing to kind of follow through with repeat business from those customers.
I think all of that is very supportive to this because of the pricing and kind of volume trends right now that we're seeing.
Got it. Appreciate the color.
Apologies. We are still trying to regain connection to Peter's line. Our next question comes from Edison Yu from Deutsche Bank.
Thanks for taking our questions. I'll start with the kind of financial one while we try to get you know, Peter back. Can you maybe go over the contribution on the Planetary deal just in terms of what you can provide there? Also on the ASI, are you able to say anything about the margin?
Yeah. You know, we're not providing any color right now on the margin for the various pieces within our Space Systems business. We kind of wanna keep that more at that macro segment level where we talk about revenue and gross margin at that higher level. The contributions from a revenue perspective on an annual run rate basis are about the same between ASI and PSC. Each business kind of roughly in that $10 million kind of run rate range. I would also say that the overall margins across the businesses are pretty consistent as well. They're about the same size. They have similar gross margin profiles.
You know, I would say that the growth rates are maybe a little bit different across the two businesses and the ultimate kind of, I would say margin contribution at the bottom line is a little bit different as well because one requires a little bit more investment than the other. Overall, I think they're somewhat similar. Again, if you think about the combination of the two on an annualized basis running around $20 million combined of revenue contribution. The margins, again, are very. We've talked about the margins in Space Systems. They're north of 60%, and these businesses are kind of consistent with that overall profile.
Okay. Just one minute [crosstalk].
My apologies to everybody on the call here.
Cool.
Welcome back, Peter.
Sorry. My apologies if you were on the call. My phone dropped, so, really sorry about that.
Sure.
No, no worries.
Go ahead.
The second question about the, I guess, the launch cadence. You know, obviously you had to push out some launches I think you would have liked to have done in the fourth quarter. Can you maybe talk about if that sort of means you can launch, you know, more or recover some of that in the first quarter or in the first half, kind of your ability to maybe launch more than you would have expected in the first half than before because of the COVID lockdowns kind of pushing everything out. Is there ability to do that?
Yes. I'll take it first pass, then if Pete can add on. I would say that it is a fair statement to say that we have a pretty healthy manifest, you know, going into the first half of 2022. I think the challenge for us is really gonna be not on the demand side. It's really just we, you know, we've got to continue to increase our production rates and support the manifest from that perspective. I would say there's certainly, you know, we certainly expect, you know, our business to be on the launch side cadence to increase as we progress into 2022.
Again, while we're not giving specific guidance for 2022, you know, all of the indications and bias right now are certainly to an increased launch cadence in 2022.
Yeah. No, I think that's exactly right. I mean, I'd add, you know, there's a lot of product on the floor right now that we need to move through and, you know, the New Zealand COVID lockdown certainly hampered our ability to deliver more in this quarter. The other thing to always remember, of course, is in the launch business, we sometimes or more often than not are subject to our customers' readiness. You know, it's one thing to have a launch vehicle in production, you know, meeting its targets. Of course, quite often, we find that our customers' schedules often move around too. It's always a little bit of a manifest dance to get everything aligned.
Certainly, there is a lot of product on the floor that we'll be pushing through.
I would say also that, you know, as the customer requests are to launch sooner. The bias right now is to pull in launch dates. I think that's another kind of indication of where we see the business going. Kind of to your point, could we see some of that pent-up demand kind of manifest itself in launches as we head into 2022? We certainly expect that would be the case.
Great. Could you maybe discuss the potential, or if you've had kind of discussions about, you know, what could that kind of look like, or what have you maybe discussed with customers? Any color there?
Yeah, I mean, there's a relative subset of customers when you're talking human space flight, obviously NASA being the biggest. We're always talking about missions and nothing different, including human flight. We have a vehicle that is human space flight rather than at this point in time focusing on those, you know, priority is getting the vehicle off the pad and making sure that it is ready to be certified and reliable.
Okay, great. Thanks.
Our next question comes from Cai von Rumohr from Cowen. Cai, please go ahead.
Yes, thank you so much, and good quarter. A number of the other, you know, larger space companies and aerospace companies have mentioned supplier delays and the impact of the vax mandate. While I know you launch from New Zealand, you know, I assume that could have some impact on your domestic customers. Give us some color on that, if you might.
Certainly, I mean, yeah, we're managing supply chain issues, but we do carry a lot of stock, and so we've been, you know, fairly successful in managing those. One of the challenges with New Zealand is the ability to get customers into the country through the managed isolation facility in New Zealand. Obviously, we've been very successful in securing spots for customers through working directly through. That is experiencing their fair share of supply chain issues. Perhaps you can comment about the vaccination mandate and that impact on the U.S.
Yeah. Sorry. You were breaking up a bit there, Pete, so I'll recap a little bit of what Pete was saying, Cai. So far we've been pretty fortunate that we haven't had any real, I would call them, like significant supply chain constraints or issues. You know, as Pete was indicating, you know, we also have carried a lot of inventory, a lot of raw materials inventory. You know, kind of we've been able to absorb any impact that otherwise would've been an impact. Yeah, probably the biggest issue has really been, as Pete was saying, is getting people into New Zealand, right, to support the launches. We were fortunate that the two BlackSky missions that are going off this quarter already had the spacecraft in country.
They were already integrated, so there's really no risk from a COVID-related, you know, if you will, kind of spacecraft readiness from that perspective. Now as we get through kind of we're out of that level 4 alert in New Zealand, you know, we're able to have you know, full production and launch cadence support there. I would say we've been very, very fortunate. We haven't had any of those issues. We're very much looking forward to making it much easier for our customers to come support their spacecraft in New Zealand with the COVID restrictions easing.
You know, as a backstop to that as well, of course, you know, we're very anxious to get operational out of our Wallops facility, where, you know, right now we've been waiting on certification of our automated flight termination hardware on NASA's software. It's been quite delayed. It was expected some time ago. The current expectation is that it could be done as early as the end of the year, which would allow us to commence flight operations out of LC-2 in Wallops in the first half of 2022, and that's what our current expectations are. So that will be kind of able to further mitigate, you know, the issues around, you know, kind of restrictions on travel and so forth.
Now, as far as the overall vaccine mandate, you know, again, we've seen, you know, some pushouts to those things from to various elements in our supply chain. We're not getting any indication right now from any of our supply chain partners that that's gonna present an issue to supporting our manifest.
Our next question comes from Austin Moeller from Canaccord. Austin, your line is open.
Good evening. Great quarter, guys. My first question is for Peter. Would you argue that pairing the Electron with Planetary Systems lightweight satellite dispenser products make the Electron even more competitive as a constellation launcher?
Yeah.
Yeah.
Yeah.
Good. Sorry, go ahead, Pete. I didn't mean to cut you off.
Yeah, no, sorry about that. In some respects, Austin, you know, the Electron launch vehicle is ideal for very small constellations, but it's even good for one-off or early development of constellations. Certainly having the portfolio of Planetary Systems products in our organization gives us the ability to do very interesting things with you know, cross-selling and you know, bundling of products and services as well. It also gives us exposure to satellites that aren't launched on Electron. You know, the PSC separation system is used on every launch vehicle across the industry, and we will continue to supply that across every launch vehicle across the industry.
Okay, good. How much additional capital do you envision having to invest in the three launch sites, the two in New Zealand and the one in Virginia, to sort of get those to a capacity where they could support the 132 launches that you've discussed in the past? Is it pretty much close to that now, or is there a lot of additional capital still to be invested?
On the LC-2 launch site, I mean, that site is activated. The LC-1B and 1A Launch Pad A is obviously complete and Launch Pad B is nearing completion. That will give us sufficient launch capacity, you know, for all of our launches in the next couple of years. Any additional capacity to bring it up to that really high number, there would be additional pads required. You know, those two pads really give us a tremendous amount of launch capacity, and that won't be constraining us here for a while.
Yeah, Austin, we're, you know.
Okay.
We're almost complete on all the investments for those launch pads. I'd say you're probably looking at capital to go of less than $2 million. It's really quite small in the grand scheme of things. That's really to finalize the operations of the LC-1B pad in Mahia. The Virginia pad is up and ready to go. It's been ready for over a year. Again, just awaiting the software certification with NASA. We've got all that launch infrastructure in place that we need to support that capacity.
Okay. That's very helpful. Like the Russians, like the Russian government in particular has had plans to try and catch falling rocket boosters with a helicopter in the past. Can you sort of talk about what makes your plan for booster recovery different from those prior plans for a helicopter booster recovery and how you plan to achieve a high success rate there, just given the challenges of catching a rocket in midair with a helicopter?
Yeah, absolutely. I think this is somewhat a misconception. Actually catching the rocket as it's descending, once you've acquired it is, you know, is. Well, the helicopter pilot will kill me for saying, but it's not that difficult. In fact, you know, we've done a lot of drop testing and, you know, the success rate on the drop testing has been nearly 100%. This is where we go out with two helicopters, drop a simulated vehicle, then the other helicopter chases it down and captures it. I know that sounds like the hardest part, but actually the hardest part is reentering it through the Earth's atmosphere, controlling its trajectory, and making sure it stays in one piece.
You know, this, the last part of the program here is to rendezvous. Provided we can rendezvous, which we believe you know should be no problem, then you know, we're not expecting a tremendously difficult run after that. I mean, we think the hardest part's actually behind us.
Okay, great. Thank you for all the color.
Next, we have a follow-up question from Colin Canfield from Barclays. Colin, your line is open.
Hey, Adam, Pete. Thanks for the follow-up question. From a high level, could you just talk a little bit about the cash flow walk, and the cash that you're gonna need for engine development with Neutron and your constellation plans? Kinda where do you expect the biggest contribution to come from, split between organic debt and potentially equity?
I'll let Pete talk to the technical kinda milestones and so forth that drive it. You know, we forecasted all of this when we were going through our de-SPAC process and the related PIPE raise and so forth. We believe we overcapitalized ourselves to execute on Neutron in every aspect, and really also raise enough capital as dry powder to go execute on things like ASI and PSC and other opportunities. As you can imagine, you know, propulsion is well within our wheelhouse. I mean, we've put you know 200 Electron Rutherford engines on orbit. Whenever you're dealing with rocket science, obviously nothing is ever trivial.
You know, we think we've well scoped the capital investment required. We don't believe that for Neutron or anything else we have in our roadmap that would require us to go back to the equity markets, debt markets or what have you. Again, we think we're fully funded to execute what we need to do. Then I'll let Pete kinda jump in and talk maybe a little bit more about timing.
Yeah. No, thanks, Adam. So the you know, the way we're approaching Neutron is being really smart where we innovate. Propulsion is an area that if you want a reusable launch vehicle, you don't want an engine that's completely you know, stressed to its limits. You want a propulsion system that's got lots of margin in it. As we've been thinking about you know, the propulsion system for Neutron, that's really been our focus. As a result you know, I think you know, when it comes to innovation within engine cycles and and stresses in the engine, that's not an area where we're carrying a lot of risk. You know, there's other areas where we're innovating that have a much bigger payoff.
As Adam says, you know, we feel like we're in a good position to, you know, execute the propulsion program, but also the, you know, the conventional program for this.
Got it. If you could just talk about the investments that you're making today for your future constellation plans, whether you guys are bidding on spectrum, kind of a bench of talent you've put in place or other intellectual property assets that you're going after.
Yeah, I mean, look, we want to build infrastructure in orbit, and we're methodically putting in place all of the elements required to be able to do that in a very competitive way. I would say at this point, we're not prepared to make a bet on the particular application that we may go after. We have not secured spectrum to go after any particular application. We're obviously watching with interest with what everybody else is doing. You know, like I say, for us, the most important thing right now is to methodically build all of those capabilities. We get to contribute into other people's large efforts in constellation by being a supplier.
You know, we'll continue to work on what we think is, you know, a disruptive opportunity in the future.
Got it. Thanks .
Finally, we have another follow-up question from Cai von Rumohr from Cowen. Cai, your line is open.
Yes, thanks so much. I might have missed it, but what did you pay for ASI? And also, as you know, RTX, in addition to buying Blue Canyon, bought this software company in Colorado. Did you look at that? And are they competition to you when you go out and look at acquisitions? I would guess not, but love your perspective on that.
I'll comment on the purchase price of ASI. ASI is a $45 million cash purchase. I can't speak to the other acquisition that you're referencing from Raytheon. Obviously, we're familiar with the Blue Canyon acquisition.
Mm-hmm.
I'm not familiar with the other software company. I would say that in general, the environment for deals we're finding to be pretty receptive to the Rocket Lab platform. I think that's really what it's coming down to, is, you know.
We find that we're a very attractive place where entrepreneurial engineers want to call home. I think there, you know, no knock on some of the larger potential acquirers out there, but it's a very different choice, right? To go to a large, well-established prime, or you wanna, you know, be part of something that's a little bit smaller and perhaps you could have a greater impact, you know, through your efforts. I think it's kind of an apples and oranges choice for sellers. You know, this is a seller's market, there's no question about it. There is competition for deals. I think that we're being very selective.
I think we do have a healthy pipeline of opportunities that we're always evaluating and in this case, you know, executing on the most recent acquisitions of ASI and PSC. Again, I think that, you know, we don't really see. It seems like we're both looking at different types of assets. I would say that we don't necessarily see head-on competition in a lot of the stuff that we're looking at, but there's certainly, more broadly speaking, competition for the assets that we're bringing into the family.
To add to that.
Thanks very much.
I think you can see, Cai, that of the acquisitions that we make, it's very much, you know, a try before you buy. We were using Sinclair's reaction wheels in our projects and products. We were using ASI software. We were using, we've been using PSC for separation systems. These are companies that we know well and are always, you know, the leaders in their areas. That is always a strong component to the acquisition piece.
Yeah. I think, you know, taking that a step further [crosstalk]. I think you can. Yeah. Cai, I think you can also start to see the acquisition strategy really start to play out in the fact that if you look at some of our upcoming missions, you'll see, you know, obviously we're providing launch services. In many cases, we're providing the satellite components in the form of reaction wheels and star trackers from Sinclair. In many cases, the satellites are using ASI software. In many cases, the satellites are being deployed on a PSC separation system. You'll start to see, again, that theme start to continue to play out, where we're starting to get more and more content. We really view this as a platform. It's not one-off, you know, launch services or one-off th...
This really is how do we bring all the pieces together and offer truly end-to-end solutions that bring down the cost, increase the, you know, shorten the time to market. Again, I think it, when you start to put all the pieces together, when you see from the missions that we're executing on, it's kind of undeniable kind of how this, how all the pieces are coming together and how that leads to just, you know, increased amount of revenue per mission that we service. I think we're all very, very excited about kind of what the culmination of these deals represents and how it is providing a lot of revenue diversity to our model and some margin uplift as well, and again, just the scaling of the business.
I think this is an exciting part of our roadmap right now.
Thanks so much.
As we currently have no further questions, I'll now hand back to Peter for any closing comments.
Brilliant. Thanks very much. Look, before I wrap up, I'd like to thank everyone who participated in today's call. We look forward to having the opportunity to provide further updates on our business, including through our participation in the UBS Aerospace Investor Conference on November 19, the Truist Securities Industrial Conference, and the Morgan Stanley Space Summit, of course, in New York, December 7, and the Canaccord NewSpace Investor Conference on December 9. Thanks again, and we look forward to speaking to you all again soon about the exciting progress we've had in our business to date. Thank you very much.
This now concludes today's conference call, and you may now disconnect your lines. Thank you, everyone, for joining us today.