Virgin Galactic Announces Third Quarter 2021 Financial Results

Rhea-AI Summary

Virgin Galactic Holdings (NYSE: SPCE) reported third quarter 2021 results, highlighting strong demand for its commercial space travel service, with approximately 700 of the 1,000 targeted reservations sold at a price of $450,000 per seat. The company is on track to commence private astronaut services in Q4 2022 and has initiated a fleet enhancement program to boost vehicle reliability. Financially, Virgin Galactic maintains a robust cash position of $1 billion, though it recorded a net loss of $48 million, an improvement from a $92 million loss the previous year.

Positive

• Strong demand for space travel with 700 of 1,000 targeted reservations sold.
• Cash position remains strong at approximately $1 billion.
• Improvement in net loss from $92 million in Q3 2020 to $48 million in Q3 2021.

Negative

• Net loss of $48 million indicates ongoing financial challenges.
• GAAP selling, general, and administrative expenses increased to $50 million.

• Commercial Service on Track for Q4 2022
• Strong Ticket Sales at Updated Pricing of $450,000 per Seat
• Demonstrates Value of Differentiated Community Experience
• Commenced Fleet Enhancement Program to Increase Flight Rate and Extend Vehicle Service Life Ahead of Commercial Launch

LAS CRUCES, N.M.--(BUSINESS WIRE)-- Virgin Galactic Holdings, Inc. (NYSE: SPCE) (“Virgin Galactic” or the "Company”) today announced its financial results for the third quarter ended September 30, 2021.

“We are entering our fleet enhancement period with a clear roadmap for increasing the durability, reliability and predictability of our vehicles in preparation for commercial service next year,” said Michael Colglazier, Chief Executive Officer of Virgin Galactic. "Demand for space travel is strong, and we've been selling seats ahead of the pace we had planned. This demonstrates the incredible market for our product and appreciation for the value of the unique experience we offer. It's a pivotal time for the Company as we transition from a prototyping space innovator to the global, scaled, commercial operation we are becoming."

Business Highlights:

• Expected start of private astronaut commercial service on track for Q4 2022.
• On July 11, 2021, successfully completed first fully crewed spaceflight, Unity 22. The flight fulfilled several test objectives including evaluating the cabin and customer experience. The livestream was watched by tens of millions around the world and brought in tens of thousands of requests for information on future Virgin Galactic spaceflights.
• In August 2021, opened sales to our Spacefarer community, the group of early hand-raisers who had reserved the right to be first in line for tickets. The Company announced a target of 1,000 reservations prior to the launch of private astronaut commercial service. Approximately 700 of these 1,000 have been sold to date. Current pricing of $450,000 per seat has been well received.
• On October 14, 2021, announced the beginning of planned vehicle enhancement period. This program will increase vehicle service life and flight-rate capability in preparation for commercial service.
• In October 2021, the Company entered into a lease agreement for a new design and collaboration center where the next generation vehicles will be designed and engineered.

Third Quarter 2021 Financial Highlights:

• Cash position remains strong at approximately $1.0 billion, which includes cash and cash equivalents of $721 million and marketable securities of $286 million as of September 30, 2021.
• In July 2021, the Company completed an “at-the-market” equity offering program (the “ATM Offering”). In connection with the ATM Offering, the Company filed a prospectus supplement with the U.S. Securities and Exchange Commission to offer and sell up to $500 million of shares of the Company’s common stock from time to time. The Company ultimately generated $500 million in gross proceeds through the sale of approximately 13.7 million shares of common stock. The Company intends to use the net proceeds generated from the ATM Offering for general corporate purposes, with a priority on expansion of its spaceship fleet.
• GAAP selling, general, and administrative expenses of $50 million, compared to $31 million in the third quarter of 2020. Non-GAAP selling, general and administrative expenses of $40 million in the third quarter of 2021, compared to $24 million in the third quarter of 2020.
• GAAP research and development expenses of $36 million, compared to $46 million in the third quarter of 2020. Non-GAAP research and development expenses of $31 million in the third quarter of 2021, compared to $41 million in the third quarter of 2020.
• Adjusted EBITDA totaled $(68) million, compared to $(66) million in the third quarter of 2020.
• Net loss of $48 million, compared to a $92 million net loss in the third quarter of 2020.
• Cash paid for capital expenditures totaled $1 million, compared to $4 million in the third quarter of 2020.

Conference Call Information

Virgin Galactic will host a conference call to discuss the results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) today. To access the conference call, parties should dial (844) 200-6205 and enter the conference ID number 284644. The live audio webcast along with supplemental information will be accessible on the Company’s Investor Relations website at investors.virgingalactic.com. A recording of the webcast will also be available following the conference call.

About Virgin Galactic Holdings

Virgin Galactic Holdings, Inc. is a vertically integrated aerospace and space travel company, pioneering human spaceflight for private individuals and researchers with its advanced air and space vehicles. It is developing a spaceflight system designed to connect the world to the wonder and awe created by space travel and to offer customers a transformative experience. You can find more information at https://www.virgingalactic.com.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of federal securities laws with respect to Virgin Galactic Holdings, Inc. (the "Company"), including statements regarding the Company’s spaceflight systems, markets and expected flight schedule. These forward-looking statements generally are identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the factors, risks and uncertainties included in Amendment No. 2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as such factors may be updated from time to time in our other filings with the Securities and Exchange Commission (the "SEC"), accessible on the SEC’s website at www.sec.gov and the Investor Relations section of our website at www.virgingalactic.com. These filings identify and address other important risks and uncertainties that could cause the Company’s actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Third Quarter 2021 Financial Results   VIRGIN GALACTIC HOLDINGS, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited and in thousands except for per share data)
		Three Months Ended								Nine Months Ended
		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
						(As restated)								(As restated)
Revenue		$	2,580			$	—			$	3,151			$	238
Cost of revenue		207				—				270				173
Gross profit		2,373				—				2,881				65
Selling, general, and administrative expenses		49,859				30,936				133,276				83,738
Research and development expenses		35,593				46,075				107,859				117,276
Operating loss		(83,079		)		(77,011		)		(238,254		)		(200,949		)
Change in fair value of warrants		34,432				(15,280		)		(34,650		)		(341,772		)
Interest income, net		234				313				766				1,979
Other income (loss), net		70				(44		)		110				5
Loss before income taxes		(48,343		)		(92,022		)		(272,028		)		(540,737		)
Income tax expense		(25		)		(40		)		(74		)		(34		)
Net loss		(48,368		)		(92,062		)		(272,102		)		(540,771		)
Other comprehensive loss:
Foreign currency translation adjustment		3				48				11				(6		)
Unrealized loss on marketable securities		(437		)		—				(437		)		—
Total comprehensive loss		$	(48,802	)		$	(92,014	)		$	(272,528	)		$	(540,777	)
Net loss per share:
Basic		(0.19		)		(0.41		)		(1.11		)		(2.54		)
Diluted		(0.32		)		(0.41		)		(1.11		)		(2.54		)
Weighted-average shares outstanding:
Basic		254,749,195				225,253,536				244,157,923				213,193,386
Diluted		255,147,228				225,253,536				244,157,923				213,193,386

VIRGIN GALACTIC HOLDINGS, INC. Condensed Consolidated Balance Sheets (In thousands, except share data)
		September 30, 2021				December 31, 2020
		(Unaudited)				(As restated)
Assets
Current assets
Cash and cash equivalents		$	702,565			$	665,924
Restricted cash		18,078				13,031
Marketable securities, short-term		29,441				—
Inventories		29,306				30,483
Prepaid expenses and other current assets		8,963				18,489
Total current assets		788,353				727,927
Marketable securities, long-term		256,691				—
Property, plant, and equipment, net		48,130				53,148
Other non-current assets		24,449				22,915
Total assets		$	1,117,623			$	803,990
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$	7,997			$	5,998
Accrued expenses		23,298				22,982
Customer deposits		84,769				83,211
Other current liabilities		2,416				2,830
Total current liabilities		118,480				115,021
Non-current liabilities
Warrant liability		—				135,440
Other long-term liabilities		29,214				26,451
Total liabilities		$	147,694			$	276,912
Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding		$	—			$	—
Common stock, $0.0001 par value; 700,000,000 shares authorized; 257,397,850 and 236,123,659 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		25				23
Additional paid-in capital		2,013,171				1,297,794
Accumulated deficit		(1,042,846		)		(770,744		)
Accumulated other comprehensive income		(421		)		5
Total stockholders' equity		969,929				527,078
Total liabilities and stockholders' equity		$	1,117,623			$	803,990

VIRGIN GALACTIC HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited and in thousands)
		Nine Months Ended September 30,
		2021				2020
						(As restated)
Cash flows from operating activities
Net loss		$	(272,102	)		$	(540,771	)
Stock-based compensation		48,704				18,575
Depreciation and amortization		8,635				6,998
Change in fair value of warrant liability		34,650				341,772
Other operating activities, net		(42		)		75
Change in assets and liabilities
Inventories		1,178				1,195
Other current and non-current assets		6,342				6,152
Accounts payable and accrued expenses		1,824				719
Customer deposits		2,148				(172		)
Other current and non-current liabilities		3,026				2,394
Net cash used in operating activities		(165,637		)		(163,063		)
Cash flows from investing activity
Capital expenditures		(2,452		)		(13,661		)
Purchases of marketable securities		(286,132		)		—
Cash used in investing activity		(288,584		)		(13,661		)
Cash flows from financing activities
Payments of finance lease obligations		(105		)		(89		)
Proceeds from issuance of common stock pursuant to stock options exercised		18,856				—
Payment of notes payable		(310		)		—
Proceeds from issuance of common stock		500,000				460,200
Transaction costs		(6,753		)		(20,866		)
Withholding taxes paid on behalf of employees on net settled stock-based awards		(15,779		)		(399		)
Net cash provided by (used in) by financing activities		495,909				438,846
Net increase in cash and cash equivalents		41,688				262,122
Cash, cash equivalents and restricted cash at beginning of period		678,955				492,721
Cash, cash equivalents and restricted cash at end of period		$	720,643			$	754,843
Cash and cash equivalents		$	702,565			$	741,575
Restricted cash		18,078				13,268
Cash, cash equivalents and restricted cash		$	720,643			$	754,843

Use of Non-GAAP Financial Measures (Unaudited)

This press release references certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP selling, general, and administrative expense and non-GAAP research and development expense. The Company defines adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization, stock-based compensation, and certain other items the Company believes are not indicative of its core operating performance. It defines non-GAAP selling, general, and administrative expenses as selling, general, and administrative expenses other than stock-based compensation and non-capitalized transaction costs, and non-GAAP research and development expenses as research and development expenses other than stock-based compensation. None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles in the United States (GAAP) and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.

The Company believes that presenting these non-GAAP financial measures provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies.

A reconciliation of adjusted EBITDA to net loss for the three and nine months ended September 30, 2021 and September 30, 2020 , respectively, are set forth below:

Amounts in thousands ($)		Three Months Ended								Nine Months Ended
		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
Net Loss		$	(48,368	)		$	(92,062	)		$	(272,102	)		$	(540,771	)
Income tax expense		25				40				74				34
Interest expense		6				9				19				26
Depreciation & amortization		2,895				2,509				8,635				6,998
Non-capitalized transaction costs*		—				—				—				697
Stock-based compensation		12,169				8,625				48,704				18,575
Change in fair value of warrants		(34,432		)		15,280				34,650				341,772
Adjusted EBITDA		$	(67,705	)		$	(65,599	)		$	(180,020	)		$	(172,669	)

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three and nine months ended September 30, 2021 and September 30, 2020, respectively, are set forth below:

Amounts in thousands ($)		Three Months Ended								Nine Months Ended
		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
Selling, general, and administrative expenses		49,859				30,936				133,276				83,738
Stock-based compensation		8,540				5,056				37,004				11,472
Non-capitalized transaction costs*		—				—				—				697
Depreciation & amortization		1,592				1,448				4,774				3,809
Non-GAAP selling, general, and administration expenses		$	39,727			$	24,432			$	91,498			$	67,760

A reconciliation of research and development expenses to non-GAAP research and development expenses for the three and nine months ended September 30, 2021 and September 30, 2020, respectively, are set forth below:

Amounts in thousands ($)		Three Months Ended								Nine Months Ended
		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
Research and development expenses		35,593				46,075				107,859				117,276
Stock-based compensation		3,629				3,570				11,700				7,103
Depreciation & amortization		1,304				1,156				3,861				3,189
Non-GAAP Research and development expenses		$	30,660			$	41,349			$	92,298			$	106,984

_____________

∗ Non-capitalized transaction costs include non-recurring expenses related to preparation and filing of an S-1 registration statement in the first quarter of 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211108005984/en/

For investor relations inquiries:

Seth Zaslow – Vice President, Investor Relations

seth.zaslow@virgingalactic.com

For media inquiries:

Aleanna Crane – Vice President, Communications

aleanna.crane@virgingalactic.com

Source: Virgin Galactic Holdings, Inc.

FAQ

What are the financial results for Virgin Galactic in Q3 2021?

Virgin Galactic reported a net loss of $48 million in Q3 2021, an improvement from $92 million in Q3 2020.

When does Virgin Galactic expect to start commercial space services?

Virgin Galactic is on track to commence private astronaut commercial service in Q4 2022.

What is the current price for a seat on Virgin Galactic's spaceflights?

The current pricing for a seat is $450,000.

How many reservations has Virgin Galactic sold for its spaceflights?

Virgin Galactic has sold approximately 700 out of 1,000 targeted reservations.

What is Virgin Galactic's cash position as of September 30, 2021?

The company's cash position is approximately $1 billion, including cash and cash equivalents of $721 million.