Launch contracts are "basically worthless" until a rocket is proven and flying, Rocket Lab CEO says

Rocket Lab is waiting until Neutron is more technically mature before signing launch contracts with customers, CEO Peter Beck told investors on Wednesday.

The statements provided an inside look on how the space company is thinking about bringing the Neutron next-gen launch vehicle to market – and the lessons learned from selling its first rocket, Electron.

“Until a vehicle is proven and flying, any launch contract that you can sign is basically worthless,” Beck said during a third quarter earnings call. “We can go and sign a launch contract tomorrow with a number of customers, but it will be like, some thousand dollars down and cancellable anytime. But that really doesn’t mean anything.”

Rocket Lab had to offer “really low introductory pricing” with its Electron vehicle when it was unproven, prior to its first commercial flight in 2018.

“We carried some of that introductory pricing on for years […] For years, we had some really bad missions,” Beck added. “I just don’t want to go down that road again. […] I would much rather arrive to the market with something that works, that commands a premium, then fill my manifest up with a whole bunch of low-value launches now.”

His statements were in response to a question posed by Citi’s equity research analyst Jason Gursky, who asked about the demand outlook for Neutron and when the company expects getting its first order.

Beck said they’ll have Neutron “on the pad” by the end of 2024 – a little more than a year away. In terms of demand, he did say that the potential customers Rocket Lab is in conversations with don’t want just one or two launches, but a larger batch to launch their constellations. The risk of signing too early with these customers is if their satellites are delayed, there’s a massive committed manifest that can’t fly.

“That’s not a happy situation either.”