U.S. Department of Defense

Investment Thesis

Rocket Lab is strategically positioned to capture significant value from its relationship with the U.S. Department of Defense (DoD), a key customer leveraging multiple facets of its end-to-end space capabilities. The DoD's demand spans launch services, with critical suborbital hypersonic testing via HASTE and orbital deployment of defense satellites using Electron ^[4]. Furthermore, the DoD is a major prime contractor client for Rocket Lab's spacecraft manufacturing, evidenced by substantial contracts with the Space Development Agency (SDA) for satellite constellations, including over $1.3 billion for Transport Layer and Tracking Layer satellites ^[5]^[8]^[9]. This multi-faceted engagement validates Rocket Lab's expansive market reach and technological prowess, positioning it as a vital national security partner ^[1]^[2]. The company's Neutron rocket is also on the NSSL Phase 3 Lane 1 vendor pool, underscoring its growing role in supporting vital government space architectures and defense programs ^[3]^[6]^[7].

Key Differentiators

• Prime defense contractor status through strategic acquisitions and demonstrated delivery, enabling the handling of complex, large-scale satellite constellation projects and hypersonic testing vehicles ^[1]^[2]^[5]^[8].
• End-to-end space solutions encompassing launch (Electron, Neutron), spacecraft manufacturing, and critical components (solar panels, reaction wheels, separation systems) provides a unique, integrated offering for government and commercial clients ^[1]^[10].
• Specialized hypersonic testing capabilities via the HASTE vehicle, directly addressing urgent defense needs for advanced weapons system development and validation, evidenced by multiple program awards ^[4].
• Proven software expertise, with MAX Flight Software licensed even to competitors, demonstrating a critical underlying technology layer that enhances Rocket Lab's own mission success and offers revenue streams beyond hardware ^[2].

Risk Factors

• Dependence on large government contracts, particularly from the SDA and Space Force, subjects Rocket Lab to budget fluctuations, shifting program priorities, and potential recompete risks ^[5]^[8]^[9].
• Intense competition within the national security space sector, where Rocket Lab competes with established players and emerging disruptors for launch services and satellite prime contracts ^[3]^[6]^[7].
• The technical complexity and novel nature of hypersonic testing and advanced satellite constellations introduce inherent program execution risks and potential delays ^[4]^[5].

Rocket Lab Relationship

The U.S. Department of Defense (DoD) represents a pivotal customer segment for Rocket Lab, driving significant revenue across multiple business lines and validating its market position. The DoD utilizes Rocket Lab's launch services for tactical and national security missions, including suborbital hypersonic testing via HASTE and orbital deployments like the STP-S30 mission ^[4]. This direct launch customer relationship generates immediate revenue and signals repeat business potential, particularly given the recurring need for such capabilities. More importantly, the DoD's selection of Rocket Lab as a prime contractor for building satellite constellations, such as the SDA's Transport Layer and Tracking Layer programs valued at over $1.3 billion ^[2]^[5]^[8]^[9], represents a massive expansion into spacecraft manufacturing and systems integration. This dual role as launch provider and prime contractor strongly validates Rocket Lab's claim of offering end-to-end space solutions and bolsters its presence in the lucrative national security market, with the Neutron rocket also being eligible for NSSL contracts ^[3]^[6]^[7].