Virgin Galactic Holdings, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Virgin Galactic develops and operates spaceflight systems for private astronauts, researchers and government customers. The filing is unaudited.
Financial performance and position
- Revenue: $2.0 million, up $1.6 million (406%) from $0.4 million in Q1 2023. Revenue primarily came from commercial spaceflight and Future Astronaut membership fees; the prior-year quarter was primarily membership fees.
- Net loss: $102.0 million, versus $159.4 million a year earlier. Basic and diluted loss per share was $0.25, compared with $0.57; weighted-average shares rose to 400.4 million from 278.5 million.
- Expenses: Operating expenses were $113.1 million, down from $163.8 million. Research and development fell 46% to $59.0 million and selling, general and administrative expense fell 45% to $27.9 million, reflecting completed work on Unity and Eve, lower headcount and reduced professional fees. Spaceline operations expense increased to $22.6 million from $0.3 million, reflecting commercial operations and non-capitalizable vehicle-related costs. The filing does not present a gross margin.
- Cash flow: Operating cash use was $113.2 million, compared with $136.1 million. Capital expenditures were $13.1 million, versus $2.8 million. Cash, cash equivalents and restricted cash decreased by $23.2 million during the quarter.
- Liquidity: At quarter-end, cash and cash equivalents were $195.4 million, restricted cash $34.9 million, and marketable securities $636.9 million—approximately $867.2 million combined. Total current assets were $837.5 million and current liabilities $171.8 million.
- Debt: Convertible notes had $425 million principal outstanding, due February 2027, with a 2.50% coupon; net carrying value was $418.4 million. Interest expense was $3.2 million.
- Equity issuance: The company sold 5.1 million shares through its 2023 at-the-market program for $7.3 million gross proceeds. Shares outstanding were 405.3 million at March 31, up from 399.9 million at year-end.
Material changes, outlook and risks
- Virgin Galactic completed its sixth commercial flight, Galactic 06, in January 2024. It planned to pause Unity flights starting mid-2024 to focus resources on its next-generation fleet.
- Management expected Delta Class test flights in 2025 and revenue service in 2026. It expected the Delta design phase to conclude in summer 2024 and the next-generation mothership to enter service in 2028. VMS Eve was validated for up to three flights per week. These are forward-looking expectations, not guarantees.
- Reservations covered more than 700 future astronauts, representing approximately $198 million of expected future spaceflight revenue upon completion of flights. The company cited conversion of reservations, vehicle development, safety, flight capacity and commercial demand as key uncertainties.
- Management stated existing capital was adequate for at least the next 12 months and expected to fund near-term needs with cash and marketable securities. Longer-term fleet, facilities and other spending may require additional debt or equity financing. Spending could exceed expectations.
- On March 21, 2024, Boeing sued Virgin Galactic, alleging breach of contract and trade-secret misappropriation; Boeing seeks damages exceeding $25 million and other relief. Virgin Galactic filed a separate suit against Boeing in April and said it would vigorously defend the matter. Related investor and derivative litigation also remained pending. Management said other pending matters were not expected to be material, but outcomes are uncertain.
- The company proposed a 1-for-2 to 1-for-20 reverse stock split for stockholder consideration in June 2024, citing share-price and NYSE listing considerations. It warned that a split may not produce a lasting price increase; NYSE delisting remains a risk if listing standards are not met.
- Q1 2024 operating expense presentation changed after technological feasibility was achieved in July 2023: costs supporting commercial operations are presented as spaceline operations expense. This affects year-over-year category comparisons.
Important facts for investors to verify
- Whether Delta development and testing remain on schedule for the targeted 2025 test flights and 2026 revenue service, and whether costs or capital needs change.
- Future cash burn, the amount of unrestricted liquidity available for operations, and whether additional financing or ATM share sales are needed.
- Actual flight cadence, safety performance, reservation conversion and revenue generation during the planned Unity pause.
- Developments and potential financial effects of the Boeing dispute and other securities and derivative litigation.
- The outcome and terms of the proposed reverse split and the company’s continued compliance with NYSE listing standards.