Virgin Galactic Q4 2025 Earnings Report

Virgin Galactic EPS Results

• Actual EPS: -$0.98
• Consensus EPS: -$1.12
• Beat/Miss: Beat by +$0.14
• One Year Ago EPS: -$2.53

Virgin Galactic Revenue Results

• Actual Revenue: $0.31 million
• Expected Revenue: $0.41 million
• Beat/Miss: Missed by -$100.00 thousand
• YoY Revenue Growth: N/A

Virgin Galactic Announcement Details

• Quarter: Q4 2025
• Date: 3/30/2026
• Time: Before Market Opens
• Conference Call Date: Monday, March 30, 2026
• Conference Call Time: 5:00PM ET

Virgin Galactic (NYSE:SPCE) (NYSE: SPCE) is a commercial spaceflight company developing and operating spacecraft for private individuals and research customers. The firm’s primary business is suborbital human spaceflight, offering passengers a brief trip to the edge of space aboard its reusable spaceplane. In parallel, the company is building out infrastructure and support services for suborbital payload deployments and microgravity research missions.

The core flight system consists of a carrier aircraft, WhiteKnightTwo, which lifts the spaceplane SpaceShipTwo to high altitude before release. Once deployed, SpaceShipTwo ignites its hybrid rocket motor to carry passengers and experiments to altitudes above 50 miles, where they experience several minutes of weightlessness before gliding back to a conventional runway landing. Facilities include engineering and manufacturing sites in Mojave, California, and a dedicated launch complex and mission control center at Spaceport America in New Mexico.

Virgin Galactic was founded in 2004 by Sir Richard Branson as part of the Virgin Group and has since completed multiple test flights, achieving its first suborbital milestone in late 2018. The company went public in 2019 through a merger with a special purpose acquisition company and now trades under the symbol SPCE. Leadership is led by CEO Michael Colglazier and overseen by a board chaired by investor Chamath Palihapitiya. With a globally dispersed customer base, Virgin Galactic continues to pre-sell tickets for tourism flights and develop research partnerships to expand access to space.

Virgin Galactic Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Structural assembly completed and the company expects ground testing to begin in April, flight testing in Q3 2026, and the first commercial space flight on track for Q4 2026, accelerating the path to revenue generation.
• Positive Sentiment: Virgin Galactic has reopened sales with a limited tranche of 50 spaceflight expeditions at $750,000, launched a new public website, and hired a Chief Growth Officer to drive consumer demand and pricing progression.
• Positive Sentiment: Management executed a December capital realignment that extended debt maturities to December 2028, eliminated about $142M of contractual payments, issued warrants, and maintains $338M in cash plus $138M ATM capacity to support the near-term runway.
• Negative Sentiment: Despite improvements, free cash flow remains negative (Q1 2026 guidance -$90M to -$95M) and the company included a going concern disclosure in its 10-K because GAAP doesn’t allow expected future customer inflows to be counted in the 12‑month assessment.

Presentation

[Operator]

My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's fourth quarter and full-year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Eric Cerny, Vice President of Investor Relations. Please go ahead.

[Eric Cerny, VP of Investor Relations at Virgin Galactic]

Good afternoon, everyone. Welcome to Virgin Galactic's fourth quarter and full-year 2025 earnings conference call. On the call with me today are Michael Colglazier, Chief Executive Officer, and Doug Ahrens, Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Our press release and slide presentation that will accompany today's remarks are available on our Investor Relations website. Please see slide two of the presentation for our Safe Harbor disclaimer. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the risk factors in the company's SEC filings made from time to time.

[Eric Cerny, VP of Investor Relations at Virgin Galactic]

You are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call, whether as a result of new information, future events, or otherwise. Please also note that we will refer to certain non-GAAP financial information on today's call. Please refer to our earnings release for a reconciliation of these non-GAAP financial metrics. I would now like to turn the call over to our CEO, Michael Colglazier. Go ahead, Michael.

[Michael Colglazier, CEO at Virgin Galactic]

Hello, everyone. We've had a tremendously productive start to 2026, and the buildup to commercial spaceflight operations is in full swing. Three massive milestones to call out at the start. First, we've completed structural assembly of all three major components of our ship, the wing, the fuselage, and the feather. Second, the weight-on-wheels milestone for this first ship is expected in the next few weeks as the process of joining the wing, fuselage, and feather has been moving along even better than expected. This allows the ground test phase to begin in April, with commencement of the flight test phase on track for Q3 as planned. Third, with the launch of our first space flight on track for Q4, we have opened the sales window for Virgin Galactic space flight expeditions, and we are now adding people to our spacefarer community at new price points.

[Michael Colglazier, CEO at Virgin Galactic]

We are very excited to share the progress made since our last earnings call, and I'll start by calling your attention to the fantastic image on page three of our presentation. As you can see, we've wrapped up final assembly of all three of our major sub-assemblies, the wing, the fuselage, and the feather, and the process of joining these into our first complete spaceship has begun. With structural assembly set to finish over the next week or two, we expect to bring this ship into ground testing in April, which has it on track for our first space flight in Q4 2026. Amazing progress by our entire company. With our first ship moving full steam ahead, we have released a limited tranche of Virgin Galactic space flight expeditions, each priced at $750,000.

[Michael Colglazier, CEO at Virgin Galactic]

Our new website is now live and will support the information and application process for those interested in joining the Virgin Galactic spacefarer community. We've hired our new Chief Growth Officer, Megan Prichard, and she's joining at one of the most exciting times in our company's history. Looking at the agenda on page four, today I'll offer insight into our sales plans for the year ahead, share expectations for ramping the cadence of space flight during the first months of operation, hit highlights on progress with future spaceports, and provide a roadmap for expected milestones and catalysts as our first spaceship is ready for its maiden space flight.

[Michael Colglazier, CEO at Virgin Galactic]

Doug will discuss our plans for cash management, capital structure support, and revenue planning over the next 12 months as we place our ships into commercial service, drive meaningful revenue from space flight operations, protect our balance sheet, and target quarterly positive cash flows as early as 2027. He'll also review our fourth quarter and fiscal year 2025 results. Let's get started on page five with the outstanding progress the Virgin Galactic team has delivered with our first spaceship. We've included a series of images on pages five through seven of our new ship as structural assembly nears completion. We're incredibly excited at how well the ship is coming together. During our last call, we highlighted some specific challenges we were having with elements of our fuselage, and the fuselage remained on the critical path for us throughout the build phase for this first ship.

[Michael Colglazier, CEO at Virgin Galactic]

With that said, we finished the fuselage assembly last week and joined it to the wing assembly shortly thereafter. Our feather assembly from Bell Textron has made its way across the country to our factory, and we expect to connect the feather to the wing and fuselage over the next week or two, and then move this ship into its ground testing phase. I'd like to take a minute to call out why this enormous milestone is so important to Virgin Galactic's future. We invested years designing this next-generation ship, and the result is spectacular.

[Michael Colglazier, CEO at Virgin Galactic]

That heavy lift is behind us. We then spent significant time and capital developing tools, both to build the carbon parts and also to assemble those parts into the final structure of the ship. These tools were built to exacting standards, designed to last, and they will support the efficient production of many spaceships going forward.

[Michael Colglazier, CEO at Virgin Galactic]

Next, we spent time refining the process to produce a wide variety of carbon composite parts for our ships. As I mentioned with our fuselage, some components required a few iterations to get right, which is fairly typical of first yield parts. We've adapted our processes and techniques, and we can now repeatedly produce high-quality parts. All these efforts came together and are enabling us to assemble the ship's structure in the span of just a few weeks. This final assembly time shaved months off our historical process, and we expect this efficient assembly process to be replicated as we expand our fleet over time. In sum, we now have the infrastructure and capability to build and assemble spaceships efficiently, reliably, and at scale. This provides an enormous competitive advantage as we grow our business. Turning to exciting news on page eight, sales have begun.

[Michael Colglazier, CEO at Virgin Galactic]

With our first new spaceship preparing for its ground test phase, it's time to welcome more people into Virgin Galactic spacefarer community, which already contains over 650 founding astronauts. To support the process, we have reimagined and rebuilt our entire digital presence to focus on informing and engaging aspiring astronauts with a streamlined and purposeful approach to our new public website at virgingalactic.com. I hope everyone listening will take time to explore this new site as the life-changing aspects of our space flight experience really come through. We've opened a limited tranche of 50 space flight expeditions, each priced at $750,000. These space flights will be slotted in our manifest immediately after we fly the current members of our founding astronaut community, many of whom have been anticipating their space flight for several years.

[Michael Colglazier, CEO at Virgin Galactic]

As I've shared before, we expect our prices will rise in steps over the near to medium term, and once this initial tranche of space flight reservations is concluded, we plan to retire sales at the $750,000 level to focus on welcoming this new group into our spacefarer community in trademark Virgin Galactic fashion. We will then open our next tranche of availability, which we expect will be priced higher than $750,000. We will also be offering a very limited number of reservations to join our earliest space flights on our new spaceship. To date, slightly less than 800 people have flown to space throughout history, and we expect flights from government agencies will leave fewer than 200 remaining slots to be one of the first 1,000 humans in space.

[Michael Colglazier, CEO at Virgin Galactic]

We will be pricing these very limited opportunities substantially higher than our regular reservations. With sales beginning and commercial operations on the horizon, I am extremely pleased to welcome our first Chief Growth Officer, Megan Prichard, to Virgin Galactic. Megan joins us from Uber, where she most recently led the U.S. mobility portfolio, including the luxury segment Uber Elite. Megan's career has been spent building commercial success in groundbreaking industries from eVTOL to autonomous vehicles to expansive growth and category expansion in the rideshare industry. Her charter is to drive growth and scale across the company with an immediate focus on our initial sales efforts and a broad remit that includes scaling our business at Spaceport America, establishing additional revenue streams for our existing and emerging technology, building brand partnerships, and accelerating the development of new spaceports.

[Michael Colglazier, CEO at Virgin Galactic]

Moving to page nine, I'd like to share how we are planning to ramp our flight cadence during the early months of operation. We expect to begin commercial space flight operations with a cadence of approximately four space flights per month. We plan to have our space missions and maintenance teams trained and ready to turn the ships at a higher pace, but we want to take the time necessary to dial in our astronaut experience and incorporate any learnings and feedback we receive during our initial flights. Once we have the missions, maintenance, and astronaut experience dialed in, we plan to progress to an average of eight space flights per month. We will then ensure all parts of our operation are scaling appropriately before moving to 10 flights per month or more.

[Michael Colglazier, CEO at Virgin Galactic]

Actual flight cadence will be influenced by weather and other factors, of course, but our planning efforts are built with these flight rates in mind. Safety and operation and dedication to an unparalleled astronaut experience will drive the actual pace of this progression, and we will only proceed with a step up in flight cadence when everything is fully ready. At this early planning stage, our goal is to move into a cadence of 10+ flights per month sometime in the second quarter of 2027, subject to vehicle and operational readiness. On page 10, we've recently been flying our launch vehicle, Eve, as part of our pilot proficiency training.

[Michael Colglazier, CEO at Virgin Galactic]

This ship was given a very meaningful upgrade over the last year while we've been building our new spaceships, and the improvements have readied Eve to target a launch support capability of up to 12-15 space flights per month, which is higher than our expected average commercial cadence. This additional capacity from Eve should be extremely helpful in allowing us to respond to weather-related flight delays, so we can generally stay on track with our flight dates and customer commitments on a week-to-week basis. Our engineering and maintenance teams, along with our pilot corps, have done an incredible job with this launch vehicle. We expect the substantial upgrades we have made to Eve over the last few years will support a service life into 2032 or beyond. We also plan to expand our space flight capacity beyond what Eve can support.

[Michael Colglazier, CEO at Virgin Galactic]

That will require additional launch vehicles to support the next set of spaceships coming off the line. Our new launch vehicle development program, internally known as the LV-X program, has been advancing modestly as we have kept most of our engineers focused on the delivery of our new spaceships. We expect the majority of our engineers will pivot to the LV-X program as our spaceships move into flight test. We currently are targeting commercial deployment of new LV-X vehicles along with additional spaceships in 2030, which should coincide nicely with opportunities for a second spaceport in addition to expanding operations at Spaceport America. Speaking of future spaceports, on page 11, I'd like to touch on progress with plans for our next spaceport. We are nearing conclusion of our initial study for Virgin Galactic Spaceline operations in Italy.

[Michael Colglazier, CEO at Virgin Galactic]

We've had a very successful engagement with our partners in the Italian government, and we've jointly sorted important efforts necessary to fly from a location within the Puglia region in southern Italy. Key achievements include understanding how airspace will be deconflicted, identification of probable flight paths and space flight trajectories, definition of infrastructure requirements of the spaceport, robust assessment of weather patterns across the year, and positive investigations into both supply chain and hospitality availability within the local area. Next steps will include specifics around licensing, timetables, and business arrangements, and we are looking forward to continuing this effort with our Italian partners this year. In addition to the exciting opportunity in Italy, we also progressed discussions for a Virgin Galactic spaceport with additional governments during the last quarter.

[Michael Colglazier, CEO at Virgin Galactic]

I've been very encouraged by the interest and opportunity within each of these locations, and I look forward to sharing more around international expansion opportunities in addition to the substantial growth we expect from Spaceport America. Starting on page 12, I'd like to outline several upcoming milestones and expected catalyst opportunities as our first spaceship moves through ground testing, advances to flight testing, and prepares to launch into commercial operation. First up in April, our first spaceship will begin a series of ground testing efforts, specifically known as production acceptance testing, or PAT, and integrated vehicle ground testing, or IVGT. Production acceptance testing will be done on every spaceship we produce and is conducted to ensure that all systems, including electrical, pneumatic, and hydraulic, are properly installed and function correctly in an integrated configuration.

[Michael Colglazier, CEO at Virgin Galactic]

After that's done, we plan to begin the IVGT process, a deep systems-level integration test done on the first vehicle, which is conducted to validate and verify the overall system design and confirm that it meets all performance and safety requirements. This thorough ground testing period should wrap up in July when we expect to open the hangar doors in Phoenix, christen this first ship with its new livery installed, and transport it to Spaceport America in New Mexico, where it will begin flight testing shortly thereafter. Moving to page 13. Next up in May will be some excitement at our operating base in New Mexico. With flight testing on our horizon, it's time to expand our team of pilots and accelerate proficiency training. To do that, we've been interviewing some of the world's best test pilots to join our elite spaceship pilot corps.

[Michael Colglazier, CEO at Virgin Galactic]

Commencing in May, our pilots are scheduled to begin flying our original spaceship, Unity, on a series of glide flights above Spaceport America. Our new spaceships share the same outer mold line and energy management characteristics as our original ship, which makes Unity an outstanding training vehicle in advance of our first glide flight with our new spaceship. This series of glide flights with Unity also gives our mission control and maintenance teams excellent preparation ahead of the new spaceship test flights. It's going to be a majestic sight when Unity delivers these encore performances in the New Mexico skies. Advancing to page 14. The next milestone following ground testing and the Unity glide flight series will be the start of our flight test program, which we expect to commence in the third quarter. The flight test program will include a series of glide and rocket-powered test flights.

[Michael Colglazier, CEO at Virgin Galactic]

We plan to have a partial burn test flight where we will ignite the rocket motor but purposely stop short of a full-duration burn. This will be followed by a full-duration burn space flight. The full flight test program is expected to extend into the fourth quarter. The main objective of our glide flights is to incrementally expand the flight envelope and evaluate overall vehicle performance, including tuning and validating the tuning of the fly-by-wire flight control system. Rocket-powered flights focus on validating the performance of the ship during key stages of flight and validating predictive thermal models. Other test points will include the evaluation of the cabin experience, training and customer operations procedures, and maintenance and turnaround processes. The test program is ultimately designed to validate all systems, operating procedures, and the astronaut experience before entering commercial service.

[Michael Colglazier, CEO at Virgin Galactic]

Throughout this phase, our timeline is driven by disciplined data collection, analysis, and model refinement. We will be posting and publishing images from all these flights along the way, and it will be an exciting spring, summer, and fall as anticipation builds for the start of commercial operations. On page 15, a quick note on two additional milestones coming later this year. First, with production of spaceships well underway, we are gearing up to begin rocket motor assembly within our Phoenix factory, with production expected to begin in Q4 2026. We have a solid inventory of motors already on hand, but the new rocket motor assembly line is planned to keep pace with rocket motor production needs as we scale flight at Spaceport America, and the line is designed to support rocket production needs for a second spaceport as well.

[Michael Colglazier, CEO at Virgin Galactic]

Next, with our first spaceship entering the test phase, fabrication efforts are pivoting to support both static testing efforts and also production of our second spaceship, which we expect will enter service between late Q4 2026 and early Q1 2027 in line with our planned ramp in spaceflight cadence. Turning to page 16. We often receive questions from our retail shareholder base regarding production schedule, commercial service launch dates and cadence, and cash management, including how we consider the benefits of cash inflows from our ATM program relative to its dilutive effects.

[Michael Colglazier, CEO at Virgin Galactic]

I believe we touched on schedule and launch cadence already, but before I hand the call over to Doug, I'd like to spend a little time on our cash management and capital market strategy as we conclude our pre-revenue phase and prepare to drive meaningful cash inflows with the launch of commercial spaceflight operations. First and foremost, we will be using cash to complete our first two spaceships and place them into service as those two ships enable the start of high-margin revenue operations and begin to unlock the tremendous value of our business model. As we bring these ships into service, we expect to generate significant cash from the current backlog of customers as their final payments become due in advance of their spaceflight.

[Michael Colglazier, CEO at Virgin Galactic]

To enhance our cash flows as we start commercial operations, we will be offering a limited number of higher-priced space expeditions on our earliest flights for those who wish to be part of the first 1,000 people in space. We plan to manage our flight manifest in a fashion that will allow modestly positive quarterly cash flow within 2027, with positive cash flow forecasted to scale in 2028 and beyond as we fly astronauts and researchers who have reserved their spaceflight at higher price points. We entered into a series of capital realignment transactions last December and moved most of our debt maturity into 2028 in alignment with our planned ramp in price and profitability. Doug will share more about the many benefits of these capital realignment transactions, including flexibility in payment terms.

[Michael Colglazier, CEO at Virgin Galactic]

We expect to leverage opportunities with the $138 million remaining within our existing ATM program to support corporate objectives in the upcoming year. Utilizing an ATM program is dilutive. However, we expect the value created from the assets that are being put into service with support from this ATM use will substantially outstrip the potential dilutive impact. We are excited to move into cash-generating operations as we place our new spaceships into service, expand our book of business with the addition of new astronauts, and prepare for high growth in the years ahead. I'll now turn the call over to Doug for the full financial update, including detail on our plans to leverage these aforementioned strategies to transition the company from a pre-revenue state to a profit-creating enterprise.

[Doug Ahrens, CFO at Virgin Galactic]

Thanks, Michael. Good afternoon, everyone. I'll start with the highlights of the capital realignment transactions we completed in December, and I'll share how this forms the landscape for us to realize the economic potential of our business. I'll follow with a recap of our recent financial results before providing an outlook for 2026 as we transition to commercial service. Starting with our capital realignment transactions on page 17. In December, we successfully executed an exchange with several of the holders of our 2027 convertible bonds, addressing $355 million of the $425 million of convertible bonds originally due in February 2027. These transactions were done very intentionally and with capital preservation in mind. There were several key benefits to our business from executing these transactions.

[Doug Ahrens, CFO at Virgin Galactic]

First, we extended the final maturity date of the new notes to December 2028, which better aligns with our planned ramp in cash flow from commercial operations with the two new spaceships in service. Second, we eliminated $142 million of contractual debt payments, representing a very substantial reduction in future indebtedness. Third, we built flexibility into the new structure, giving us the option to settle portions of the debt obligations with either cash or equity, depending on future conditions. As part of the exchange, we also issued warrants, which are intended to align with shareholder interest given the warrant exercise price is more than double our recent stock price. Additionally, the warrants require cash payment to the company when exercised, further enhancing our balance sheet. These transactions were thoughtfully executed and are expected to support our ability to deliver shareholder value over the long term.

[Doug Ahrens, CFO at Virgin Galactic]

To recap, we have substantially extended the maturity of our debt, materially reduced the principal amount due, added flexibility for method of payment, and with the inclusion of warrants, we have further aligned all stakeholders' interests with meaningful share price appreciation. Through the successful completion of these capital realignment transactions, we believe we have built a financial runway to launch and grow commercial Spaceline operations. I think it's important for us to take a moment and reflect on Virgin Galactic's financial life cycle and call out the extraordinary place we have now reached. The first phase of our financial life cycle was the development phase, when we spent many years on research and development to optimize the performance of our unique space flight system. Not only did we create an amazing human space flight experience, but we also built significant barriers to entry with our technology.

[Doug Ahrens, CFO at Virgin Galactic]

The next phase was the investment phase, when we put the infrastructure in place that enables us to build incredible spaceships. We have the factory capacity and tooling needed to repeatedly produce spaceships that are designed for manufacturability and maintainability. With the first new spaceship nearing completion and the second ship in line, we are wrapping up the initial investment phase. We are set up for cost-efficient scaling of the fleet going forward. We have effectively converted cash into valuable assets on the balance sheet in the form of both factory capacity and new spaceships. As this initial investment phase concludes and we head into commercial service, we expect to see further improvement in free cash flow each quarter of this calendar year. This brings us to the next and particularly exciting phase, the commercial phase.

[Doug Ahrens, CFO at Virgin Galactic]

With our first spaceship nearing completion and preparing to head into ground testing, we are now gearing up for the start of commercial service in the fourth quarter of this calendar year. Further emphasizing this incredible moment, we are welcoming our new Chief Growth Officer and opening up sales to new customers. With the start of the commercial phase, we plan to accelerate our flight rate and open the doors for sustained profitable growth. We're thrilled to have reached this extraordinary place in our journey. Let's now shift to our recent financial results on page 18. Starting with the fourth quarter of 2025, we generated revenue of $300,000 from access fees related to future astronauts.

[Doug Ahrens, CFO at Virgin Galactic]

Total operating expenses for the fourth quarter were reduced by 26% to $61 million compared to $82 million in the prior year period as we reduced expenses and also continued to see the shift from R&D to capital investments in new spaceships. Similarly, net loss improved by 18% to $63 million in the fourth quarter compared to $76 million in the prior year period. Adjusted EBITDA improved by 23% to -$49 million in the fourth quarter compared to -$63 million in the prior year period. Free cash flow was -$95 million in the fourth quarter at the midpoint of our prior guidance and a 19% improvement compared to the prior year period. Turning to page 19, for the full fiscal year 2025, we generated revenue of $2 million from future astronaut access fees.

[Doug Ahrens, CFO at Virgin Galactic]

Total operating expenses were $287 million in 2025, reflecting a 25% reduction from $384 million in 2024. We reported a net loss of $279 million in 2025, representing a 20% improvement compared to a net loss of $347 million in the prior year. Adjusted EBITDA for the year was -$226 million, a 22% improvement compared to -$289 million in the prior year. Free cash flow was -$438 million in 2025. Moving to page 20, we ended the year with $338 million in cash equivalents, and marketable securities. In 2025, we generated $122 million in gross proceeds through an at-the-market, or ATM, equity offering program.

[Doug Ahrens, CFO at Virgin Galactic]

For 2025, capital expenditures were $198 million, up from $122 million in the prior year. That growth in CapEx is reflected in property, plant, and equipment, or PP&E, on the balance sheet. We reported $389 million in PP&E at the end of 2025, an increase of 86% from $209 million at the end of 2024. This represents our significant investment in assets such as manufacturing capacity and spaceships that we expect to yield tremendous future economic returns. Spending trends in 2025 played out as expected. Peak spending occurred back in the first quarter of 2025. We have reduced our cash spending each quarter since then. Looking ahead, we expect continued reductions in cash spending each quarter this year.

[Doug Ahrens, CFO at Virgin Galactic]

Although we plan to add resources in our space line operations and customer operations teams in anticipation of commercial service in 2026, these operating costs are expected to be more than offset by the reductions in manufacturing costs as we finalize the build of our initial spaceship fleet. Continuing with our projections, revenue for the first quarter of 2026 is expected to be approximately $200,000 for astronaut access fees. Forecasted free cash flow for the first quarter of 2026 is expected to be in the range of -$90 million to -$95 million. We expect free cash flow to show sequential improvement following Q1. By the fourth quarter of 2026, we expect to receive significant new cash inflows from customers as we initiate commercial service.

[Doug Ahrens, CFO at Virgin Galactic]

Commercial service is obviously the pathway to delivering the economic model that we first laid out for you in August 2024, and that model is shown again here on page 21. We continue to see the economics of the model holding true. We plan to communicate two key metrics that drive the economics, flights per month and revenue per flight. The first metric, flights per month, is a powerful indicator of the success of our space flight system and is a key differentiator for us relative to a traditional vertical launch approach. Michael talked about our expectation of attaining a targeted flight rate of 10 or more flights per month sometime in the second quarter of 2027. This translates to approximately the annual flight rate of 125 flights per year, as shown in the first column on this page.

[Doug Ahrens, CFO at Virgin Galactic]

The second metric, revenue per flight, is a function of ticket pricing. Michael also mentioned that our current price for a space flight expedition has increased to $750,000 per seat. Plus, we will offer a limited number of tickets at a higher price to fly on the earlier flights. Given we currently have approximately 650 future astronauts with tickets at various prices, revenue per flight will vary depending on how these tickets flow through the flight manifest. Currently, we expect to achieve modest quarterly positive cash flow within 2027 as we fly a large percentage of astronauts with tickets that were historically sold at lower prices. We forecast that we will achieve the Adjusted EBITDA shown in the first column of this business model on an annualized basis sometime during 2028.

[Doug Ahrens, CFO at Virgin Galactic]

We are pursuing a high growth trajectory, and we are very excited to be approaching the growth phase of our business with the anticipated start of commercial service in the fourth quarter of this calendar year. Let's take a moment to discuss how the accounting world reflects this stage of our company's financial life cycle. In our 10-K to be filed, we included a going concern disclosure and management's plans to resolve it. The assessment leading to this disclosure looks at cash equivalents, and marketable securities on the balance sheet as of the date of the filing of the 10-K and compares those amounts to our spending projections for the next 12 months. It also takes into account all contractual debt payments due within the next 12 months, which are assumed to be settled in cash.

[Doug Ahrens, CFO at Virgin Galactic]

According to generally accepted accounting principles, this assessment does not yet allow inclusion of our expected future cash inflows from space flights, such as those we've highlighted today. It also does not include the potential of any additional capital inflows, such as the $138 million remaining on the ATM. Given this methodology, the going concern disclosure is to be expected. We are at the stage in our financial life cycle where we are successfully converting cash into valuable assets in the form of manufacturing capacity and new spaceships that can drive our economic model. We forecast the start of commercial service in the fourth quarter of this year. We expect significant cash inflows in connection with that milestone. Throughout the year, we plan to maintain appropriate strength in our balance sheet, and we are thrilled to be on the cusp of ramping commercial spaceflight operations.

[Doug Ahrens, CFO at Virgin Galactic]

With that, I'll turn the call back over to Michael.

[Michael Colglazier, CEO at Virgin Galactic]

Thanks, Doug. I'll close on page 22, which again shows the image of our new spaceship finishing final assembly in our Phoenix factory. What an accomplishment. It's a shared success that was only possible with the enormous effort and dedication from our partners at Bell Textron and Qarbon Aerospace, as well as a lengthy list of key suppliers who stepped up to deliver a very lengthy bill of material that enabled fabrication of the ship. Most of all, this ship coming together so well is a testament to the talent, genius, grit, and tenacity of our teammates at Virgin Galactic. We are on a bold endeavor, and this team is delivering day in and day out.

[Michael Colglazier, CEO at Virgin Galactic]

I'm proud and inspired to see our team and our partners come together, and we can't wait to show this ship off to the world when it is formally christened in just a few months. We've reached pivotal milestones this quarter with the upcoming conclusion of our first spaceship's assembly phase, the launch of sales, and the impending start of ground testing of our spaceship program. We'll be opening our factory to visits from our founding astronaut community in the next month, and I think this group is going to be over the moon with excitement as they see their spaceship coming to life so beautifully. Let's open the call for questions.

[Operator]

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Oliver Chen with TD Cowen. Your line is open.

[Oliver Chen, Managing Director of Retail and Luxury and New Platforms Sector Head at TD Cowen]

Hi. Thanks a lot, Michael and Doug. Regarding the Chief Growth Officer and what you see ahead with the consumer, what are your thoughts on our hypothesis on the opportunities and the workflow with much happening there? Also, as we think about the model going forward, what should we know about CapEx more quarterly? And then more broadly, the new spaceport sounds like a big opportunity. What's on the roadmap for that investment cost and how that may manifest? I know there's a lot of economic benefits you'll bring to a region. And then lastly, more specifically, the commercial spaceflight and fourth quarter is very exciting. Any parameters on that? What's embedded in your guidance for the revenue that quarter? Thank you very much.

[Michael Colglazier, CEO at Virgin Galactic]

Hey, Oliver, it's Michael. Why don't I take, I think, the first and third and let Doug take the second and fourth. If you would do me a favor, Oliver, just a little more clarity on your first question.

[Oliver Chen, Managing Director of Retail and Luxury and New Platforms Sector Head at TD Cowen]

Yeah, as we look ahead, I guess, the announcement of Megan Prichard, what's on the roadmap for what you see as the growth framework and thinking about the luxury and consumer side of the strategy?

[Michael Colglazier, CEO at Virgin Galactic]

Got it. I'm incredibly excited to have Megan join us. She's an amazing executive. She starts Monday. As we kinda mentioned in the prepared remarks, there's, I'll call it tactical, and then there's strategic. Tactically, Megan will lead our team that is driving growth in sales during this year, that all that growth will be flowing through its Spaceport America. That's a focus on our suborbital space business with both private citizens and researchers. Megan's remit is much broader, and the team and processes she'll build will be much broader. That includes, I'll say expansions of our suborbital business model. I'll jump ahead a little bit, Oliver, to number four, you talked about new spaceports.

[Michael Colglazier, CEO at Virgin Galactic]

Megan will be heavily involved in the identification and kind of partnership development we do on new spaceports. You ask about economics. Each deal will be different, and each partnership will be different depending. But broadly, these are likely to be joint venture agreements, you know, in the countries at hand. Broadly, we will look to bring from Virgin Galactic our space flight system, our space vehicles, and all the technology around that. We would look for our partner countries to bring the physical infrastructure in those areas. The spaceport, runway, airspace, of course, is key from a government standpoint. We would look to the community around for, I'll call it the astronaut experiences outside of flight.

[Michael Colglazier, CEO at Virgin Galactic]

Hotels, food and dining, beverages, activities to do, both for the astronauts and for all the friends and family who come. That's kind of who's bringing what to the table and then a sharing of the economics through that. Hopefully that gives you a little bit of clarity there. Like I said, each country has different things to bring to the table, and so I imagine things will be unique depending upon each country's specific interest. In addition then to growing our initial book of business further and managing the price, we think it would be price growth in the near term for that on Megan's plate, and then looking to expand through additional spaceports and get that underway because those are, you know, a number of years in development.

[Michael Colglazier, CEO at Virgin Galactic]

We'll be looking to additional business models that we can leverage both with our existing and, you know, emerging technologies that we create. Nothing more to share about that one broadly, but I think we've been bringing someone in of Megan's caliber, like I said, with a wide remit to help us grow and accelerate the growth of our company. Doug, you wanna talk about the couple questions Oliver had, number two and four?

[Doug Ahrens, CFO at Virgin Galactic]

Yes. Regarding the CapEx, we guided the free cash flow to be between -$90 million and -$95 million for Q1. We said it would continue to improve each quarter sequentially through the year. That's what we're expecting. To put the CapEx in perspective, around half of the projections for the first quarter and into the second quarter are CapEx. As we finish up the work on primarily you know Delta One, and we've got Delta Two coming in, the static test article, all of that. You'll see CapEx be you know around half.

[Doug Ahrens, CFO at Virgin Galactic]

As the total spending comes down, the CapEx comes down even faster in the second half because now we're moving into more of an operating phase and our spending shifts to the commercial operations, you know, with the spaceport and all of that. That's really more front-end loaded, the first half of the year and then tapers off on the CapEx side in the second half.

[Doug Ahrens, CFO at Virgin Galactic]

Regarding the revenue, it's a little early to be giving revenue guidance, you know, four quarters out, but just to put it in perspective, we did say that we expect to start commercial service in that quarter, and we gave kind of a cadence to expect that in the beginning, we would be expecting about one flight a week, and so four flights a month, and then when we're ready, we'll ramp up to eight flights a month, and we give a timeline getting to ten or so flights per month by the second quarter of 2027. You know, again, it depends a little bit on how we or exactly when we start in the fourth quarter. Then the other variable, of course, is the manifest, the mix of ticket pricing. We've talked about quite a variety of prices, and those will weave their way into the early manifest.

[Doug Ahrens, CFO at Virgin Galactic]

As we discussed today, you've got the legacy customers, and you've got some new opportunities here for people who want to be in the first 1,000 astronauts ever to go to space. Again, it varies on a few things there, Oliver, but I hope that gives you a little more color.

[Oliver Chen, Managing Director of Retail and Luxury and New Platforms Sector Head at TD Cowen]

Okay, last and a follow-up. On the four times monthly flight to the eight to the 10 times, what are the variables in terms of reaching 10 sooner or reaching 10 later that we should consider in the sensitivities as we model that monthly flight cadence ramp?

[Michael Colglazier, CEO at Virgin Galactic]

Sure. It's Michael. If you think about it as almost balancing the line a little bit, we're super excited at the work that has happened with our launch vehicle Eve and talked about Eve we expect has a capacity to support 12-15 launches. Better than three to four a week, if you want to think of it that way. That's higher than what we expect we will average across the year. That's important. That will help us do some catch up if we have a string of bad weather and other things. Let's say Eve is running three a week for conservative assumptions here. We've built each of these spaceships with an expectation that they can fly twice a week. Having one spaceship would theoretically let us fly twice a week. Eve has the capacity to fly twice a week.

[Michael Colglazier, CEO at Virgin Galactic]

That would get you to the eight flights per month capability with one spaceship and one mothership, one launch vehicle Eve. Now we have a second spaceship coming and we expect that to arrive late Q4 of 2026 into early Q1 of 2027. That also we expect will be able to fly twice a week. At that point, Eve, depending upon how it does between 12-15 a month, Eve starts to become the bottleneck of our system, which is of course why we have our LV-X program to expand our capacity overall. To go from greater than eight, we will need both Eve obviously, but we will need our second ship to be able to move past eight per month and into 10+ per month. Hopefully that gives you a good sense of how to think about that math.

[Oliver Chen, Managing Director of Retail and Luxury and New Platforms Sector Head at TD Cowen]

Very helpful. Thanks, gentlemen. Best regards.

[Operator]

Our next question comes from the line of Greg Konrad with Jefferies. Your line is open.

[Greg Konrad, SVP of Equity Research in Aerospace and Defense at Jefferies]

Good evening.

[Michael Colglazier, CEO at Virgin Galactic]

Hi, Greg.

[Greg Konrad, SVP of Equity Research in Aerospace and Defense at Jefferies]

Maybe just to continue with the last question, just to verify, I think you talked about the next mothership. Did you say 2030? Then I think in the past you had talked about an expanded fleet scenario. Should we think about the third spaceship not coming online or kind of reaching that model to that 2030 timeframe? Or how do you think about what's next after the two spaceships?

[Michael Colglazier, CEO at Virgin Galactic]

Yes, I think 2030 is the right timing for a next launch vehicle. It's not a perfect match, but broadly we want two spaceships coming out for every launch vehicle that we bring out. That kind of brings a balanced set. If the launch vehicle, which is the longer lead item for us is what's coming 2030, as we mentioned on the call, we now have the infrastructure to build spaceships efficiently, quickly, and cost-effectively. If you haven't seen it, or if anybody on the call has not seen the Galactic 10 video that released shortly after market close, you'll see in there just kind of a quick time lapse of how we take a completed fuselage and a completed wing and bring the joining of those together.

[Michael Colglazier, CEO at Virgin Galactic]

We expect over the next week or two at most, you'll see us into combining that with the feather that's already there. We are able to build spaceships in a very effective and efficient fashion. We would want at least one of those spaceships, if not two, we'll call it ready to go by the time we bring the launch vehicle in 2030. That's a fairly straightforward process for us to do now.

[Greg Konrad, SVP of Equity Research in Aerospace and Defense at Jefferies]

Maybe just to follow up on the reopening of ticket sales. I mean, I think you're doing a limited first tranche and then talked about the other limited tranche and eventually a second tranche. Can you maybe just talk about timing, how you're thinking about the metrics and balancing backlog? I think also since last time we talked, there's been some changes to the competitive backdrop. I mean, how has that maybe materialized in terms of demand?

[Michael Colglazier, CEO at Virgin Galactic]

Go ahead. Let's see where to start with that. I guess we'll start with the competitive piece just to ask Greg. Blue Origin made an announcement that they are trying to focus on their lunar program, which is very exciting and important to the country. We wish them the best. I think their stated piece was that they were out for no less than two years. I think it's probably right for people who wish to take a space flight expedition and not go to the space station for $50 million, but do so at a more manageable price point. We believe we're well-positioned to be their company of choice in that regard, and I think that will help from a demand standpoint from us for sure. That's one.

[Michael Colglazier, CEO at Virgin Galactic]

Two, the kind of amount of availability we're putting out is more for price strategy, pricing strategy than it is for picking a specific number. We think it is important to be clear that we're going to step our pricing up as we go, at least in the short and medium terms. That's why you see us with a fairly limited number of 50 at a $750,000 price point. I think everybody knows this, but just for context, in case anyone's new, we currently have 650 or so, a little more, founding astronauts, and that's a meaningful group that will carry us from 2027 into early 2028. It's not that there's necessarily pressure on us to fill the backlog, but we do want to build our book of business at higher price points.

[Michael Colglazier, CEO at Virgin Galactic]

That's why we're going to start at 50 spaceflight expeditions at $750,000. We'll retire that price point. We'll take a beat and bring those 50 people into our community because we want to do that in a world-class way. We'll open up again. We'll pick the number. We do expect the price point will be above $750,000. We haven't picked that yet. I think we'll repeat that process a couple of times until we hit a steady state price point and build our book of business going forward. Now, I may have missed one other part of your question, Greg.

[Greg Konrad, SVP of Equity Research in Aerospace and Defense at Jefferies]

No, no. That was perfect. I really appreciate it. Thank you.

[Michael Colglazier, CEO at Virgin Galactic]

You're welcome.

[Operator]

Next question comes from the line of Myles Walton with Wolfe Research. Your line is open.

[Myles Walton, Managing Director at Wolfe Research]

Thanks. Good evening.

[Michael Colglazier, CEO at Virgin Galactic]

Hey, Myles.

[Myles Walton, Managing Director at Wolfe Research]

I was hoping you could touch on the post-glide flight of the new spaceship to commercial service. I think you mentioned, Michael, that there's a partial burn and then there's one full powered burn. Is that all there is prior to the first commercial operation being presumably the third powered burn?

[Michael Colglazier, CEO at Virgin Galactic]

That is correct, Myles. In fact, the second piece will be carrying research experiments on the second flight. It will technically be our first. We do have Mike Moses in town today. He's in from—he's been back and forth in New Mexico and our factory in Phoenix much, but he's here. Mike, of course, is our expert in everything to do with flight tests. Mike, if you don't mind expanding upon that.

[Mike Moses, President of Spaceline Missions and Safety at Virgin Galactic]

Yeah, sure. Myles, happy to. Maybe just to clarify so we don't talk past each other. One rocket-powered flight that's not full duration will not take us to space just to get us supersonic and see how things behave in the Mach 1.5 region. Then two space flights before we enter commercial service, the first with just pilots on board and research in the back. Through the NASA Flight Opportunities program, we've got a manifest of payloads to bring in revenue on that first test flight to space. Then another one with two pilots and six mission specialists in back. Those will be internal folks to validate the cabin experience and mostly our procedures and processes, like Michael said. Then we'll be ready for commercial service.

[Mike Moses, President of Spaceline Missions and Safety at Virgin Galactic]

The reason that we're able to only have a couple of rocket-powered flights, unlike the Unity flight test program, is we're not learning that envelope for the first time. Our control system is different. We have some systems that are different. We certainly need to verify and validate the performance of the vehicle. We're not learning exactly what stresses are put on the vehicle, exactly how hot it'll get or exactly what happens in zero gravity as the ship maneuvers. We know all of that from the Unity flights. We're able to very rapidly move through that program. Of course, we will always operate with safety in mind and prudence. We'll take our time to analyze the data, make sure that the ship's actually behaving the way we thought it did, and then we'll be ready to move.

[Mike Moses, President of Spaceline Missions and Safety at Virgin Galactic]

A combination of not needing to do as many flights as Unity and a Delta spaceship that's designed to fly faster, so the turnarounds between test flights should be able to go a little faster, means that'll be a fairly expeditious program as we move through test space flights. You'll see us focusing more on the glide flights. That's where the new handling flight control systems are different, and we want to spend the most time looking at that envelope.

[Myles Walton, Managing Director at Wolfe Research]

Got it. Makes a lot of sense. I'm just looking at the 10-K relative to the going concern, and there's a comment in there about the management's plan for addressing and mitigating the condition. One of those points is partnering with third parties to fund and accelerate the pace of future space vehicle development. Can you elaborate on that, Michael? What exactly is meant by the partnering with third party? Is this different than your current organization? Is this something you're already doing or is this something that is looked at as being incremental?

[Michael Colglazier, CEO at Virgin Galactic]

We have efforts that I'd say we're exploring, Myles, both with governments for spaceports as well as the opportunities perhaps with the U.S. government and opportunities we may have with our launch vehicle and things we can do with our launch vehicle in those regards. I think there's nothing to share at this point in either of those places. As it pertains to our plans, which the way this accounting is done is over the next 12 months, I think both of those categories become relevant and how we might partner with governments, be it the U.S. government or an international government around a new spaceport. The partnership model, one could conceive, would bring in economics to allow us to accelerate the development of the vehicles for those.

[Myles Walton, Managing Director at Wolfe Research]

Yeah. Okay. That makes sense. Doug, just one quick one just to clarify for me. The cash flow commentary about the quarterly positive cash flow in 2027, we're talking about free cash flow, right? Not operating cash flow.

[Doug Ahrens, CFO at Virgin Galactic]

I specifically was using just the generic term cash flow for a reason, but let me just explain why. We have all intents here to build our cash balance through 2027. We would be spending less than we bring in from all sources. The reason I chose the words cash flow instead of free cash flow is there's a scenario where if we brought in further investment, like we were just talking about with Michael, you know, say it came into the capital markets, then we plowed that back into R&D, you don't get credit for those financing cash flows.

[Doug Ahrens, CFO at Virgin Galactic]

Free cash flow in that scenario, you know, you could get a negative number even though, you know, we're building for the future and, you know, not spending more than what we bring in. When I just say cash flow, that accommodates that. Again, the intent there is to say that we will spend less than we generate, and we're targeting, you know, individual quarters to cross that threshold in 2027.

[Myles Walton, Managing Director at Wolfe Research]

Okay. All right. Thank you.

[Operator]

Again, if you would like to ask a question, press star then the number one on your telephone keypad. We do have our last question comes from the line of Michael Leshock with KeyBanc Capital Markets. Your line is open.

[Michael Leshock, VP and Senior Research Analyst at KeyBanc Capital Markets]

Hey, good afternoon. Just following up on the 2026 free cash flow guidance and your expectations for the burn rate to improve sequentially through the year, is there any one quarter where you'd expect the biggest step up? Is that kind of a 2Q event when you shift more from production into testing? But just curious if there's any milestones that you could talk about that might drive more of a step change in cash burn versus a more gradual improvement.

[Doug Ahrens, CFO at Virgin Galactic]

It's really a gradual improvement till the fourth quarter. We were expecting, you know, just quarter-over-quarter lower than the one before. By the fourth quarter we see a big change because that's when we get cash coming in from customers as they, you know, pay for the rest of their flight reservation. That's the main driver in that quarter. Think of it as a continuous reduction in spending each quarter until the fourth quarter when you get a big shift in the other direction.

[Michael Leshock, VP and Senior Research Analyst at KeyBanc Capital Markets]

Great. Is there any update you can provide on the potential use case of your technology for defense initiatives like Golden Dome? You've talked about that in the past, and you mentioned the need to potentially carry heavy payloads at high altitudes. Just curious if that's still a focus, if there's been any update on that front that you can share. Thanks.

[Michael Colglazier, CEO at Virgin Galactic]

Nothing specific to share, Mike. We are, I'd say accepted into the IDIQ for the Golden Dome initiative, so we are, you know, qualified as a supplier for that effort. You know, we are spending our time being clear on what are both immediate things, immediate term opportunities that we may be able to support with both our existing launch vehicle Eve and with our new spaceships as they come up, as well as things that are, I'll call more developmental in nature, which are usually a little bit further in lead times. Nothing specific to share in that regard.

[Michael Leshock, VP and Senior Research Analyst at KeyBanc Capital Markets]

Great. Thank you.

[Operator]

Ladies and gentlemen, that concludes the question and answer session. Thank you all for joining in. You may now disconnect.

Participants

Executives

• Doug Ahrens, CFO
• Eric Cerny, VP of Investor Relations
• Michael Colglazier, CEO
• Mike Moses, President of Spaceline Missions and Safety

Analysts

• Greg Konrad, SVP of Equity Research in Aerospace and Defense at Jefferies
• Michael Leshock, VP and Senior Research Analyst at KeyBanc Capital Markets
• Myles Walton, Managing Director at Wolfe Research
• Oliver Chen, Managing Director of Retail and Luxury and New Platforms Sector Head at TD Cowen