Financial Data and Key Metrics Changes - In Q4 2024, the company generated revenue of $400,000 from future astronaut membership fees, with total operating expenses decreasing to $82 million from $117 million year-over-year, reflecting a shift from R&D to capital investments [47] - For the full fiscal year 2024, revenue reached $7 million, driven by two commercial spaceflights and membership fees, with average ticket prices increasing to $800,000 per seat from just over $300,000 in the prior year [48][49] - The GAAP net loss improved to $347 million, a 31% reduction from $502 million in the previous year, while adjusted EBITDA showed a favorable trend, improving to negative $289 million from negative $427 million [50][51] Business Line Data and Key Metrics Changes - The company is transitioning from an R&D-focused entity to one that builds real assets, with significant investments in manufacturing capabilities for new SpaceShips [11][20] - The new SpaceShips are designed for longer life, faster turnaround times, and lower costs per flight, with a target of flying twice a week and a lifespan of over 500 flights [12][10] Market Data and Key Metrics Changes - The company anticipates a significant increase in demand for its services, with plans to ramp up operations to meet the expected volume of commercial spaceflights starting in 2027 [66][67] - The commercial suborbital market is expected to grow, with opportunities for human-tended research and frequent payload flights [90][91] Company Strategy and Development Direction - The company aims to achieve EBITDA-positive operations by putting two new SpaceShips into service, with a focus on building a fully functioning spaceport in New Mexico before expanding to other locations [102][104] - Future plans include exploring partnerships for the mothership's capabilities, potentially expanding into government and research missions [108] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the production and launch timeline for new SpaceShips, with the first commercial research flight expected in summer 2026 and the first private astronaut flight in fall 2026 [10][31] - The company is focused on maintaining fiscal discipline and managing spending as it transitions to commercial operations, with expectations of cash inflows beginning in 2026 [120] Other Important Information - The company has made significant progress in building manufacturing assets, with a book value of property, plant, and equipment exceeding $200 million [52][116] - The company is exploring opportunities for a second spaceport in Italy, which could enhance its market presence and operational capacity [104][125] Q&A Session Summary Question: How quickly can the company ramp up from the initial flight schedule? - Management indicated that they will have confidence in the vehicles and maintenance strategies to enable a rapid ramp-up to the planned flight frequency by 2027 [66][67] Question: Will there be multiple research spaceflights before the first private astronaut flight? - Management confirmed that there will be a mix of research payloads and test flights, estimating around six to ten spaceflights in that timeframe [71][72] Question: What is the current thinking around reopening the order book? - Management suggested that the order book may reopen towards the end of 2025, with a cautious approach to ensure demand aligns with capacity [74] Question: Are there any changes to the propulsion system for Delta compared to Unity? - Management confirmed that there are no changes to the rocket motor itself, but improvements have been made to the oxidizer tank design for increased lifespan [80] Question: How does the company view the commercial research market evolving? - Management highlighted a surge in commercialization opportunities in spaceflight, emphasizing the potential for human-tended research and the unique capabilities of their platform [90][91] Question: What updates are there on the customer experience side, especially with the potential second spaceport? - Management noted progress in adapting the pilot simulator for geographical accuracy and expressed optimism about deeper market penetration with additional spaceports [122][125]

Virgin Galactic Holdings, Inc. (NYSE:SPCE) Q4 2024 Earnings Conference Call February 26, 2025 5:00 PM ET Company Participants Eric Cerny - Vice President, Investor Relations. Michael Colglazier - Chief Executive Officer Mike Moses - President, Spaceline Doug Ahrens - Chief Financial Officer Conference Call Participants Greg Konrad - Jefferies Michael Leshock - KeyBanc Capital Markets Myles Walton - Wolfe Research Tom Nass - TD Cowen Operator Good afternoon. My name is Louella, and I will be your conference ...

Spaceflight Operations - As of December 31, 2024, Virgin Galactic has approximately 700 future astronaut reservations, representing about $190 million in expected future spaceflight revenue[28]. - The company completed its sixth commercial spaceflight, 'Galactic 06,' in January 2024, achieving a record-breaking launch rate of one flight every month[26]. - 'Galactic 01' marked the start of commercial service in June 2023, conducting 13 experiments sponsored by the Italian government[25]. - The company has paused Unity spaceflights to focus resources on accelerating the Delta program following the 'Galactic 07' flight in June 2024[29]. - In 2023, the company commenced commercial operations with its spaceship, VSS Unity, and mothership, VMS Eve, aiming for hundreds of flights per year at Spaceport America[44]. - The company has flown 23 paying astronauts and has approximately 700 reservations, representing about $190 million in expected future spaceflight revenue[46]. - The mothership has completed approximately 350 flights, including over 50 dual tests with spaceships, and commenced commercial services in June 2023[56]. - The company plans to ramp up marketing and sales of new spaceflight reservations in line with the development of its Delta Class spaceship fleet[82]. - The company paused Unity spaceflights in mid-2024 and expects to commence test flights of Delta Class spaceships in advance of commercial service, anticipated to begin in 2026[123]. - The company has not yet tested flights at the full passenger capacity of six persons for the Delta Class spaceships, which could impact revenue generation[132]. Spacecraft Development - The next-generation Delta Class spaceships are expected to enter commercial service in 2026, featuring six passenger seats (50% more than VSS Unity) and a planned flight frequency of twice per week[29]. - The company has developed a hybrid rocket propulsion system for its spaceships, designed for safety, reliability, and economy[31]. - The company has developed a new fleet of Delta Class spaceships at a substantially lower cost, leveraging the design engineering from VSS Unity[89]. - The company is upgrading its rocket motor production plant to increase production rates and reduce unit production costs[64]. - The company plans to assemble its next-generation spaceships in Arizona at a new manufacturing facility of approximately 150,000 square feet[91]. Financial Performance - The company incurred net losses of $346.7 million and $502.3 million for the years ended December 31, 2024 and 2023, respectively[118]. - Operating expenses are expected to increase as the company scales spaceflight operations, develops next-generation vehicles, and hires more employees[119]. - The base price for consumer offerings was increased to $600,000 in 2023, up from $450,000 in 2021[82]. - The company is obligated to pay quarterly royalties to Virgin Enterprises Limited, which are based on a low single-digit percentage of gross sales and increase to a low-seven figure amount over a four-year ramp-up[99]. - The company operates under a Spacecraft Technology License Agreement, which requires payment of royalties based on a low-single-digit percentage of commercial spaceflight operating revenue[103]. Market and Competition - The commercial spaceflight market for private individuals is largely untapped, with historical prices for space travel exceeding $30 million for orbital missions[41]. - The commercial spaceflight industry is expected to be competitive, with potential threats from larger, well-funded competitors entering the suborbital spaceflight market[149]. - The commercial spaceflight market is still emerging, and the company's estimates for the total addressable market may prove to be incorrect[121]. Regulatory and Compliance Risks - The company is subject to FAA regulations and has a current Reusable Launch Vehicle Operator License for test and payload revenue flights from Mojave, California, and Spaceport America, New Mexico[106]. - The company must obtain various licenses and permits for spaceflight operations, which are subject to interagency reviews and could impact operational capabilities[179]. - New FAA licensing rules for commercial space launches must be complied with by 2026, affecting operational timelines and costs[181]. - Non-compliance with U.S. export and import control laws could lead to significant penalties and operational restrictions, especially as international expansion is planned[183]. - The company is subject to stringent GDPR requirements, with potential fines up to €20 million or 4% of worldwide annual turnover for non-compliance[187]. Operational Challenges - The company may face challenges in managing future growth, including hiring and training pilots and employees, which could strain resources[137]. - The company has limited experience in marketing and selling spaceflights, which may hinder its ability to effectively attract new astronauts[120]. - The company faces significant risks from adverse publicity related to incidents involving its spaceflight systems, which could materially affect customer demand and financial performance[139]. - The company may require substantial additional funding for operations, with potential challenges in accessing capital on acceptable terms due to unfavorable economic conditions[141]. - The company is highly dependent on its senior management team and skilled personnel, and any loss of key executives could materially affect its business strategy and financial results[195]. Cybersecurity and Data Privacy - Cybersecurity threats pose significant risks to the company, as it manages confidential information and relies on third-party services that may be vulnerable to attacks[173][175]. - The company may incur substantial costs and reputational harm if it fails to protect its confidential information or if it experiences a cybersecurity incident[174][176]. - The company faces potential litigation and regulatory investigations related to cybersecurity breaches, which could adversely affect its financial condition and operations[175][176]. - The company anticipates ongoing legal complexities regarding international data transfers, which may result in additional costs and operational changes[189]. Human Resources and Workforce - The company has 744 employees globally as of December 31, 2024, and focuses on attracting and retaining highly skilled personnel through competitive compensation and benefits[115]. - A workforce reduction of approximately 185 employees, constituting about 18% of the workforce, was announced to decrease costs and realign resources[136]. - The company may face challenges in attracting and retaining qualified personnel, leading to high turnover and increased wage costs, which could harm profitability[196]. Strategic Relationships and Expansion - An Agreement of Cooperation was established with Italy's civil aviation authority to explore spaceflight operations from Grottaglie Spaceport, indicating international market expansion[45]. - The company plans to expand its spaceflight operations internationally, which will expose it to various risks including compliance with local regulations and potential economic instability[169][171]. Intellectual Property and Brand Risks - The company relies on trade secrets and intellectual property laws to protect its proprietary technologies, but there is no guarantee these measures will be effective[156]. - The company does not own the Virgin brand and relies on a licensing agreement, which could be terminated under certain conditions, potentially requiring significant rebranding efforts[160][161]. - Negative publicity related to the Virgin brand, which is integral to the company's identity, could adversely affect its business and financial condition[155].

Revenue Performance - Revenue for Q4 2024 was $0.4 million, a decrease of 85.7% compared to $2.8 million in Q4 2023, due to the pause in commercial spaceflights[5] - Full year 2024 revenue was $7 million, compared to $6.8 million in 2023, primarily from commercial spaceflights and membership fees[5] Operating Expenses - GAAP total operating expenses for Q4 2024 were $82 million, down 29.6% from $117 million in Q4 2023[5] - Full year 2024 GAAP total operating expenses were $384 million, a decrease of 28.7% from $538 million in 2023[5] - Total operating expenses for Q4 2024 were $82,382 thousand, down from $117,074 thousand in Q4 2023, resulting in non-GAAP total operating expenses of $72,499 thousand compared to $100,370 thousand[20] Net Loss - Net loss for Q4 2024 was $76 million, an improvement from a net loss of $104 million in Q4 2023, primarily driven by lower operating expenses[5] - Net loss for the full year 2024 was $347 million, improved from a net loss of $502 million in 2023[5] - Net loss for Q4 2024 was $76,413 thousand, an improvement from a net loss of $103,984 thousand in Q4 2023[17] - Adjusted EBITDA for Q4 2024 was $(63,438) thousand, an improvement from $(83,818) thousand in Q4 2023[21] Cash Position - Cash position as of December 31, 2024, was strong with cash, cash equivalents, and marketable securities totaling $657 million[5] - Cash, cash equivalents, and restricted cash at the end of Q4 2024 totaled $210,885 thousand, down from $253,592 thousand at the end of Q4 2023[17] - The company reported a decrease in cash and cash equivalents from $216,799 thousand in Q4 2023 to $178,605 thousand in Q4 2024[17] Free Cash Flow - Free cash flow for Q1 2025 is expected to be in the range of $(115) million to $(125) million[6] - Free cash flow for Q4 2024 was $(116,744) thousand, slightly worse than $(113,677) thousand in Q4 2023[21] Capital Expenditures - Capital expenditures in Q4 2024 were $35,709 thousand, significantly higher than $18,368 thousand in Q4 2023[21] Cash Flow from Activities - Net cash used in operating activities for Q4 2024 was $(81,035) thousand, compared to $(95,309) thousand in Q4 2023[21] - The company experienced a net cash provided by investing activities of $59,212 thousand in Q4 2024, compared to $80,272 thousand in Q4 2023[17] Future Plans - The first spaceflight with the new Delta SpaceShip is planned for summer 2026, with private astronaut spaceflights expected to begin in fall 2026[4] - Assembly of the first Delta SpaceShip is set to begin in March 2025[4] Stock Issuance - Proceeds from the issuance of common stock in Q4 2024 amounted to $29,098 thousand, compared to no proceeds in Q4 2023[17]

Core Viewpoint - Virgin Galactic is exploring new revenue opportunities by potentially shifting focus from space tourism to carrying research payloads, leveraging its upcoming Delta-class spaceplane to enhance profitability [1][12]. Group 1: Delta-Class Spaceplane Improvements - The Delta-class spaceplane is expected to enter service in 2026, featuring significant enhancements over the Unity spaceplane, including the ability to fly twice a week instead of once a month [2]. - The Delta-class will increase passenger capacity from four to six, representing a 50% improvement, combined with a ninefold increase in launch frequency, which could lead to a potential 1,250% increase in revenues [3]. Group 2: Revenue Potential from Research Payloads - Virgin Galactic's Delta-class spaceplanes can accommodate up to 20 research payload lockers, allowing for a mix of tourists and research missions, potentially increasing revenue by substituting passengers with research projects [5][6]. - Research missions in suborbital space typically cost less than $5 million, suggesting that carrying four research projects could generate $20 million, significantly more than the revenue from a single tourist seat [8][9]. Group 3: Competitive Landscape - Virgin Galactic faces stiff competition in the space tourism sector, with Blue Origin having completed nine flights carrying 47 tourists, compared to Virgin's seven successful flights [10][11]. - The competitive pressure may necessitate a reevaluation of Virgin Galactic's business model, potentially leading to a reduced focus on tourism in favor of more lucrative research missions [12].

Earnings and Financial Performance - Virgin Galactic reported a significant loss of $72.7 million, or $2.66 per share, in Q3 despite a 49% increase in share count [6] - Revenue for the quarter was minimal at $402,000 due to no commercial flights [5] - Operating costs totaled $82.1 million, down 29% from previous periods [5] - Cash burn rate accelerated to $118 million in the quarter, with $744 million in cash and equivalents remaining [7] Future Plans and Challenges - Virgin Galactic is in the "build phase" of its new Delta-class spaceplanes and shifting to design work on a new mothership [2] - Commercial flights are expected to begin in 2026, but delays could push this timeline to 2027 or later [8] - The company plans to issue and sell $300 million worth of stock to fund additional motherships and Delta-class spaceplanes [10] - This stock issuance could dilute existing shareholders by 150% [10] Stock and Investment Outlook - Virgin Galactic stock closed down for the week despite positive developments in its spaceplane fleet [2] - The company's cash reserves are expected to last until 2026, but cash burn is predicted to rise to $115-$125 million in Q4 [7] - The stock issuance ensures solvency through 2026 but significantly dilutes shareholder value [13] - The company's long-term profitability is uncertain, even in a best-case scenario [14]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $402,000, driven by future astronaut membership fees, with total operating expenses at $82 million, down from $116 million in the prior year period, primarily due to lower R&D and SG&A expenses [21] - Capital expenditures for the quarter increased to $39 million from $13 million in the prior year, reflecting ramped-up investment in property, plant, and equipment related to the Delta Class fleet [22] - Free cash flow was negative $118 million in Q3 2024, compared to negative $105 million in the same period last year [22] Business Line Data and Key Metrics Changes - The company is in the build phase of its spaceship program, focusing on building tools, fabricating parts, and assembling spaceships, with assembly expected to commence in Q1 2025 [6][12] - The first two Delta spaceships are projected to generate positive operating cash flow, which can be used for organic fleet expansion [24] Market Data and Key Metrics Changes - The company anticipates that the addition of a second mothership and two additional spaceships will significantly enhance its capacity and profitability, with expectations to double revenue and quadruple EBITDA [25][46] Company Strategy and Development Direction - The company is focused on expanding its fleet beyond the first two spaceships to capture economies of scale and enhance profitability [7][18] - The strategy includes targeted use of growth capital to accelerate fleet expansion, with a goal to achieve a fully utilized spaceport by 2028 [27][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the customer experience and business model, planning to accelerate economic expansion through growth capital [9][10] - The company remains on track for commercial operations to begin in 2026, with a strong cash position providing flexibility for growth capital acquisition [10][23] Other Important Information - The company is ramping up hiring in the Phoenix Mesa area in preparation for spaceship assembly, focusing on key personnel to support the build phase [16] - The company has refined its schedules to manage tool deliveries, parts fabrication, and assembly sequences effectively [17] Q&A Session Summary Question: What is the latest thinking on reopening ticket sales? - Management indicated that ticket sales will likely open towards the back half of 2025, as they want to ensure they are supply constrained relative to demand [31][32] Question: Any additional equity issuance for the mothership program? - Management clarified that while they have enough cash to bring the first two Delta ships into service, they see an opportunity to bring in growth capital to accelerate expansion [34][35] Question: Thoughts on tariffs and sourcing risks? - Management believes they are reasonably insulated from tariffs as most efforts are based in the U.S., and partnerships with Bell and Qarbon are progressing well [38][39] Question: What is the timing for the second mothership? - Management confirmed that the second mothership and the third and fourth Delta ships are targeted for 2028, aligning with their growth strategy [58][59] Question: How is Delta Class progressing relative to the initial budget? - Management reported that Delta Class is tracking well against the initial budget, with active spending management contributing to lower cash burn expectations [66][67]

Group 1 - Virgin Galactic reported a quarterly loss of $2.66 per share, which was better than the Zacks Consensus Estimate of a loss of $4.10, and an improvement from a loss of $5.60 per share a year ago, resulting in an earnings surprise of 35.12% [1] - The company posted revenues of $0.4 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 13.55%, and down from $1.73 million in the same quarter last year [2] - Virgin Galactic shares have declined approximately 86% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3] Group 2 - The earnings outlook for Virgin Galactic is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The trend of estimate revisions for Virgin Galactic is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is -$4.28 on revenues of $0.27 million, and for the current fiscal year, it is -$18.11 on revenues of $7.29 million [7] Group 3 - The Aerospace - Defense industry, to which Virgin Galactic belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, suggesting that the industry's outlook can significantly impact stock performance [8]

GALACTIC THIRD QUARTER 11.6.2024 ARTIST RENDERING OF FUTURE FLEET AT SPACEPORT AMERICA FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as am ...

Revenue and Financial Performance - Revenue for the three months ended September 30, 2024, was $402,000, a decrease of 77% compared to $1.728 million for the same period in 2023[105] - Operating loss for the three months ended September 30, 2024, was $(81.728) million, compared to $(114.272) million for the same period in 2023[104] - Total operating expenses for the three months ended September 30, 2024, were $82.130 million, down from $116 million in the same period in 2023[104] - Net cash used in operating activities was $271.7 million for the nine months ended September 30, 2024, compared to $352.9 million for the same period in 2023[126][127] - Interest income increased from $28.6 million for the nine months ended September 30, 2023 to $33.8 million for the nine months ended September 30, 2024, primarily due to higher investment returns on marketable securities[121] Research and Development - Research and development expenses decreased by 47% to $23.937 million for the three months ended September 30, 2024, from $44.848 million in the same period in 2023[111] - Research and development expenses decreased from $241.3 million for the nine months ended September 30, 2023 to $124.4 million for the nine months ended September 30, 2024, primarily due to a $48.2 million decrease in materials and consulting costs[113] Cash and Investments - As of September 30, 2024, the company had cash, cash equivalents, and restricted cash of $204.7 million and marketable securities of $539.2 million[124] - Net cash provided by investing activities was $116.4 million for the nine months ended September 30, 2024, consisting primarily of $729.4 million in proceeds from maturities and calls of marketable securities[128] - Net cash provided by financing activities was $106.3 million for the nine months ended September 30, 2024, primarily from net cash proceeds from the sale and issuance of common stock[130] Future Plans and Expectations - As of September 30, 2024, the company has reservations for approximately 700 future astronauts, representing approximately $194 million in expected future spaceflight revenue[98] - The company expects to commence commercial service with its new Delta Class spaceships in 2026[92] - The company anticipates deploying a new mothership for commercial service in 2028, supported by additional engineering resources and growth capital[100] - The company expects expenditures to increase as it scales up manufacturing processes and capabilities to support the expansion of its fleet of spaceships[132] - The company anticipates that costs to manufacture additional vehicles will begin to decrease as it continues to scale up manufacturing processes[133] Operational Developments - The company completed its second spaceflight of 2024, 'Galactic 07,' in June, carrying one researcher and three private astronauts[92] - The company completed a new manufacturing facility in Mesa, Arizona, with final assembly of Delta Class spaceships scheduled to begin in 2025[95] Compliance and Risk Management - Following a 1-for-20 reverse stock split, the company regained compliance with NYSE listing requirements on July 1, 2024[93] - No significant changes to critical accounting policies and estimates during the fiscal quarter ended September 30, 2024[143] - No significant changes to market risks compared to previous disclosures during the fiscal quarter ended September 30, 2024[145] Cost Management - Selling, general and administrative expenses decreased from $144.0 million for the nine months ended September 30, 2023 to $95.8 million for the nine months ended September 30, 2024, driven by a $30.7 million decrease in cash compensation and other employee benefit costs[116] - The company expects to meet its short-term liquidity requirements primarily through its cash, cash equivalents, and marketable securities on hand[138]