But what’s helpful about that business though, is even though it may not have the same gross margin profile as the higher gross margin component — merchant component businesses, they can have a lot of operating leverage to them because we’re able to basically reuse a lot of the IP that we’ve created on prior missions. And so we now have a pretty full some portfolio of IP, and we’ve invested in the manufacturing capabilities to the point now where incremental programs that may not have the greatest gross margin perspective can drop quite a bit to the bottom line because of what we’ve already put in place from an investment perspective. So that’s kind of how I look at kind of the overall kind of margin shaping over the course of the next year or so.
But I’ll — maybe, Pete, you can jump in.
Peter Beck: I think you said it well, Adam. The only thing I’d add there is that we are — Rocket Lab is known and our reputation is execution. So we’re always kind of, as Adam pointed out, balancing, our growth with our ability to execute because the last thing we want to do is fall behind on that. So when we look at programs and opportunities, we are selective and kind of, as Adam mentioned before is, the kind of programs we’re looking for and spending our time on are very large ones. So we have to be kind of always diligent to make sure we don’t take on programs that absorb a lot of resource but don’t have a lot of scale. So we’re continually juggling those opportunities against how we want to grow the business.
Adam Spice: Yeah. And Michael, I would further add that a little bit, saying like, Pete and I were talking the other day about the fact that it feels like, the demand signal is stronger now than any time I could really remember it in the business. You think that it maybe would start to moderate a bit because we’ve now got $1 billion plus backlog, and the business is kind of hitting a new scale with, with our Q2 guiding, guide above $100 million per quarter. But it feels like — to a great extent, it feels like we’re drinking from a fire hydrant here, and there’s a lot of opportunities that we’re having to kind of shift through. But there is a very strong demand signal out there as far as the kind of programs that we’re being asked to look at.
Michael Leshock: Yeah. Absolutely, I appreciate that. And then on the launch side, specifically for HASTE launches, just wondering if you see opportunities there for more pricing. I think if you look at the customers’ alternatives, they could be significantly higher costs versus Rocket Lab’s offering. So is there a strategy there to increase pricing, or keep it stable where it’s at today? Any update on the HASTE side would be great. Thank you.
Peter Beck: Yeah. I mean, we see HASTE as a really fantastic opportunity for Electron, not only just on price but also on scale. And I guess the biggest opportunity for us there from a revenue perspective is the additional services from the launch vehicle as well. So, yes, as you point out, Michael, the alternatives are significantly higher, but the reason why there are so few launches and so little advancement is because of that. So by coming into the market with a disruptively low price point, we’re seeing just such a growth and kind of revitalization of that market that, — I think ultimately, that’s the best approach for the creating the most amount of value out of it is to stimulate it rather than suffocate it.
Michael Leshock: Got it. Thank you guys.
Peter Beck: Thank you.
Operator: And the next question is from Suji Desilva ROTH MKM.
Suji Desilva: Hi, Peter. Hi, Adam. Just a little bit maybe following the last question. The VICTUS HAZE missions, and you talked about being end-to-end service. I’m trying to understand if there’s incremental products or services you’re offering there that can be productized and offered more broadly if there’s a financial uplift of those incremental elements you’re characterizing as part of the end-to-end service offering.
Peter Beck: Yeah, for sure. I guess the biggest one is rendezvous and proximity operations. I mean, that is a very rare capability and something you need to dock spacecraft with ISS, for example. So kind of aligned with our strategy of only taking on work that we think is strategic to us, that is — that’s certainly a good example of that. But as an end-to-end service with a spacecraft, we’re leveraging the foundation’s designs from one of our spacecraft already. It certainly does make it possible to be more productized. And we see this is the direction that not just the U.S. government but the world is heading towards, right, on-demand, rapid call-up. And whoever has the best solution there is in a good position because often responsive launches talked about, well, I mean, that’s useless unless you’ve got something to stick on top of it.
So this is really the first demonstration of responsive space where it’s all combined right down to the data handling and operations of the spacecraft.
Adam Spice: Yeah. And I think Suji, I think along that line, I think one of the — we talked about the financial benefits to the model. I think when you’re able to couple the launch with the spacecraft manufacturer, I mean, you just — you’re increasing your odds of your P win for these types of programs when you can go with a turnkey solution. Because I think right now, what we’re seeing is that what the customer probably fears the most, it’s not necessarily they fear higher pricing. They fear delay, right, because I think there’s just the supply chain within the space market, particularly new space has not yet gotten to the point where it could deliver scalable solutions on time. So I think that when we can go with the turnkey, say, look, we have the launch capacity, we have the ability to design a spacecraft and manufacture spacecraft in a predictable timeline because we’re so vertically integrated.
I mean, it just kind of pushes the narrative forward and ultimately allows you to have just a higher overall market share and market kind of share capture approach. So I think this is really kind of a — more of a sign of things to come. This is where we really wanted to take the business was being able to do these end-to-end solutions for the customers. And ultimately with that will come just better scaling and more predictable scaling of the business across both segments. So we think this is a huge kind of validation of that strategy being realized now. And of course, with an incredibly sophisticated customer as well.
Suji Desilva: Sure. Great. Okay. And then my second question is, you listed out the subcontractors on the FDA contract in the press release. Just trying to understand now, I know you’ve been targeting M&A to insource, but is there an equilibrium balancing point where as a prime contractor, you’ll leverage external subcontracting and components versus wanting to keep bringing things in-house? How do you balance that going forward as you grow?
Peter Beck: Yeah. It’s really two elements. I mean, we don’t vertically integrate because we think it’s some kind of religion. We do it for either one or two reasons. One, we think we can create more value for the company, or two, we need to control it because suppliers just can’t deliver it, either the scale or the timelines that we require. So as we kind of execute on a prime — as a prime, then the subcontractors that deliver on schedule, on budget, and this kind of, to your point, there’s no need to kind of religiously suck their capabilities in. It’s just — that seems to be a relatively rare thing in the space industry. So we end up more often than not having to own it than rely on those parties.
Suji Desilva: Appreciate the balanced answer. Thanks.
Operator: Next up, we’ll hear from Cai von Rumohr TD Cowen.
Cai von Rumohr: Yes. Thanks so much. So it looks like — feels like your schedule is definitely slipped and you talk of a manifest of 22, but you have a comment in there that you look for a record year in launches. I mean, you only did 10 last year. That would say 11 would get you home. Can you give us your best guess as to a realistic range of number of Electron launches we could see this year?
Peter Beck: Yes. Well, I think if we launched 11, that would be a — that would not be a record year. In our minds, that would be a massive disappointment. And look, it’s just — we can provide a number, but it’s just super hard to kind of predict given — as the customers move around. But I think it’s fairly fair to say that at this point, we’ll struggle to achieve 22, but we have line of sight for probably a couple of less than that.
