Rocket Lab has bought Advanced Solutions, a Colorado-based maker of mission simulation systems, and navigation and control solutions, for US$40 million ($64m) – plus a potential US$5m on top if it reaches performance targets for this calendar year.

The acquisition is part of a Rocket Lab strategy to diversify its revenue – today dominated by launches – into space systems, including inhouse designed satellites and spacecraft for interplanetary missions.

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Advances Solutions was founded in 1995 and its off-she-shelf Max software MAX has been used by more than 45 spacecraft for a cumulative 135 years in space.

The Colorado companies customers include “leading aerospace contractors”, Nasa, the US Air Force and various US Department of Defense organisations.

Advanced Solutions is Rocket Lab’s second major acquisition in space services, following its purchase of Canadian satellite component maker Sinclair Interplanetary for an undisclosed sum in April last year to bolster its “Photon” platform for placing satellites into the right orbit around the Earth, or ferrying them between planets.

Later this year, a Rocket Lab Photo will take a Nasa satellite into lunar orbit. In 2024, a Nasa rocket will take two Rocket Lab designed and built Photons into orbit around Mars.

CEO Peter Beck hints that more acquisitions are likely.

“We’ll continue to assess opportunities for organic and inorganic growth across the business where it makes sense,” the founder told the Herald overnight.

Earlier, in the wake of his company’s Nasdaq debut Beck told the Herald that as well as development of his company’s much larger Neutron rocket, some of the US$750m raised through the listing would be used for acquisitions.

“We have a very strong thesis around mergers and acquisitions,” Beck said.

“So we’re looking to do more of that. So watch this space. Satellites and space systems is certainly an area that we’re keen to focus more on.”

The space transport industry, currently crowded by dozens of startups, was ripe for consolidation, Beck said.

A busy post-listing period has included the announcement that Rocket Lab has secured US$24.35m ($34m) from the US Air Force’s new Space Force division to develop the upper stage of its Neutron rocket – part of a Congressionally-approved process that also saw the Kiwi-American company enter the inner-circle of companies approved for top-level security and defence missions.

A string of new contracts has included Nasa selecting Rocket Lab to launch a demonstrator for its Advanced Composite Solar Sail System.

Rocket Lab’s aim is for space systems to generate 40 per cent of its revenue by 2027 – a year in which it has forecast operating earnings of US$505m on US$1.57b turnover.

It has projected a series of losses in the near term, which was the case last month as the company reported a net loss of US$32.5 million for the six months to June 30, 2021, versus its US$23.5m loss for the same period last year.

But investors like that revenue grew from US$8.8m in the first half of 2020 to US$29.5m.

And that the company said its pipeline of advance work had grown from a year-ago US$59.9m to US$127m.

Since it reverse-listed on the Nasdaq at US$10.00 share on August 26, Rocket Lab’s shares have been volatile, matching the big swings of its peers in the emerging space transportation sector.

Its stock has traded as high as US$20.72 but has recently been easing back and closed today at US$13.25 for a US5.93b market cap.

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