Rocket Lab: Space Systems Deep Dive

Overview

Rocket Lab's key expansion into satellites & components now supports 70% of the space company’s revenue through their Space Systems business line (versus launch). This also strengthens the company’s mission of covering the entire lifecycle of a space mission, from initial launch to spacecraft design, manufacturing, and operational support as an end-to-end space organization.

Aside from the Electron and Neutron rockets, Rocket Lab also designs and builds satellites for telecommunications, Earth observation, and scientific research, as well as manufactures satellite hardware, including reaction wheels, star trackers, and solar panels for critical components to support satellite operations.

What Is Their Space System’s Division?

Rocket Lab's Space Systems division is mostly known for their spacecraft fleet. The company’s first spacecraft, Photon, is capable of delivering a low Earth orbit (LEO) platform with a mass of up to 300 kilograms. It is mainly used for defense and civil missions aside from commercial purposes.

Also part of the sub-division is Pioneer, which supports Varda Space Industries' in-space manufacturing. It offers essential systems enabling pharmaceutical microgravity processing and Earth re-entry.

The company has also manufactured its newest spacecraft bus, Lightning, which is designed for more than 12 years in orbital lifespan LEO. It offers ~3 kW power, high radiation tolerance, and subsystem redundancy. The bus is designed to cater to telecom and sensing applications and can be launched on Neutron or other medium-heavy vehicles.

Finally, Explorer is the company’s high delta-V spacecraft designed for missions to Mars, Venus, the Moon, geosynchronous Earth orbit (GEO), Lagrange points, and near Earth objects  (NEOs). It can launch on Electron, Neutron, or other vehicles, with flight heritage from the CAPSTONE mission to the Moon for NASA. 

Apart from spacecraft, the division also consists of star trackers and reaction wheels, radios, space software, separation systems, solar solutions, and composite structures.  For the star trackers sub-division, the company has successfully launched more than 140 star trackers on orbit since 2013, where more than 90 of these are ST-16RT2, which is designed for small spacecraft. The ST-16HV, on the other hand, is an attitude determination sensor, which boasts of a 7 arcsecond cross-boresight (RMS) and 70 arcsecond around boresight (RMS) accuracy.

For reaction wheels, the company offers equipment for picosatellites, nanosatellites and microsats. As of today, there are more than 240 wheels on-orbit, such as the 1 Nms, which is the largest wheel that can accommodate 100 kilogram Earth-observation missions. The 12 Nms, which is currently in production, can be used for spacecraft with ​​up to 650 kilogram mass.

Radios are also another popular product line, with Frontier-S, which is designed with GEO/deep space radiation tolerance for a non-destructive latchup, and robust to single event upsets. The Frontier-X, on the other hand, is an X-band, software-defined telemetry, tracking, and control (TT&C) X-band radio. It can be used for near Earth and deep space missions.

The Space Software sub-division, on the other hand, was born out of the company’s $40 million acquisition of Advanced Solutions, which develops flight software, simulation systems and guidance, navigation and control (GNC) systems. The products include MAX GDS, a ground software solution for full spacecraft command and control for all spacecraft and constellations, MAX FSW that has a full FSW library for all spacecraft functions, and the spacecraft environment simulator, SOLIS.

Similar to Space Software, the Separation Systems sub-division, was further expanded when the company purchased Planetary Systems Corporation which has built a name in the separation systems market for more than two decades with a 100% success rate of the production operating in flight.

This includes products such as the Advanced Lightband, which the company claims to have completed all separations on orbit for any mission. The Mark II Motorized Lightband (MLB) is the company’s original motorized vehicle separation system. Its configuration can be customized to meet client demands.

In 2022, Rocket Lab purchased SolAero Technologies, which produced satellite solar power and precision aerospace structures, for $80 million. Rocket Lab claims that they are the only vertically integrated supplier of Solar Array Panels (SAP) and Solar Arrays in the world. Likewise they supply composite panel substrates where fully integrated PVA solar panels are made.

Another record that Rocket Lab has achieved is being the developers of the world’s first carbon composite orbital launch vehicle. Through the Composite Structures sub-division, the company offers satellite bus structural panels and assemblies, solar panel substrates, and primary structures, to name a few. Their production centers are located in the United States and New Zealand.

What Does This Mean For Rocket Lab

The growth of the Space Systems division offers more opportunities for the company to achieve a full end-to-end space company to support their Electron and Neutron rocket through spacecraft and satellite components, and on-orbit management. CEO Peter Beck is aggressive in competing against SpaceX with the goal of acquiring a larger piece of the market once the Neutron takes flight.

In an interview he emphasized the value of the company’s spacecraft sub-division:

“Nobody can compete with Elon putting internet into space unless you have your own rocket and you have the ability to build whatever spacecraft you want.”

SpaceX is currently worth far more than Rocket Lab’s $13.15 billion. Beck is fully aware of his goals, citing Virgin Orbit’s failure to sustain their operations despite their large capital. He remains unfazed by the funding that Elon Musk has for SpaceX, and said:

“Physics doesn't care how much money you've got at the end of the day."

Risks

Despite CEO Beck’s confidence, there’s still a risk of increasing competition, with established players and new entrants. Rocket Lab can stay ahead through consistent innovation to further secure their market share in this case.

Furthermore, if the market demand for satellites and space systems can be impacted by economic cycles and geopolitical tensions this can induce potential revenue fluctuations for the company.

However, this is where the Space Systems division can offer its value. As CFO Adam Spice said in an interview:

“I think diversification is a necessity…. When you’re trying to attract investor capital, you have to have a robust strategy that isn’t so single-risk focused and driven…one of the reasons why I don’t think you can have a launch-only company in the future is that I’m not sure investors will back that.”

Bottom Line

Rocket Lab's Space Systems division now generates 70% of their revenue. That’s what makes them an end-to-end space company. They design and build spacecraft, satellite components, and support launch and on-orbit operations, competing with industry giants like SpaceX. CEO Beck is eager to offer more innovation and diversification to mitigate risks and attract investors.

Diversification is the key to survival here. It’s why I am so optimistic on Rocket Lab despite any short term volatility.

Disclosure: At the time of this publication some members affiliated with Marksman Research own stock, options or other interest in RKLB.