Virgin Galactic Holdings Inc ((SPCE)) has held its Q4 earnings call. Read on for the main highlights of the call.
Virgin Galactic’s latest earnings call revealed a company in transition, moving from its roots in research and development to building operational assets. The sentiment expressed during the call was cautiously optimistic, highlighting significant progress in SpaceShip design and financial management. However, challenges remain, particularly with limited revenue and ongoing cash burn until commercial operations commence in 2026.
Transition to Asset-Building Phase
2024 marked a pivotal year for Virgin Galactic as it shifted from a focus on research and development to the construction of tangible assets. The company has initiated the fabrication of tools and parts for new SpaceShips, with assembly set to begin next month at the SpaceShip Factory in Phoenix.
SpaceShip and Rocket System Advancements
Virgin Galactic’s new SpaceShips are engineered to fly twice a week, boasting a lifespan of over 500 spaceflights. These SpaceShips feature the world’s most powerful hybrid rocket system, known for its safety and quick refueling capabilities.
Operational and Financial Improvements
The company reported a reduction in total operating expenses for Q4 2024, down to $82 million from $117 million the previous year. This decrease reflects a shift from R&D to capital investments. Adjusted EBITDA also improved, moving from negative $84 million to negative $63 million year-over-year.
Strong Financial Position
Virgin Galactic concluded 2024 with $657 million in cash, cash equivalents, and marketable securities. The company raised $138 million in gross proceeds through an equity offering program, bolstering its financial standing.
Revenue Growth and Ticket Price Increase
Revenue for 2024 reached $7 million, primarily driven by two commercial spaceflights. Notably, the average ticket price for the last spaceflight increased to $800,000 per seat, up from just over $300,000 the previous year.
Limited Revenue Generation
Despite some revenue growth, Q4 2024 revenue was only $400,000, derived from future astronaut membership fees, highlighting limited revenue streams during this asset-building phase.
Continued Cash Burn
Free cash flow remained negative at $117 million in Q4 2024, reflecting ongoing capital expenditures and operational costs during the transition phase.
Delayed Positive Cash Flow
Virgin Galactic does not anticipate cash inflows until the start of commercial service in mid-2026, with continued cash consumption expected through 2025.
Forward-Looking Guidance
CEO Michael Colglazier provided guidance for 2025, indicating it will be a year of momentum as Virgin Galactic transitions to a manufacturing entity. The company is on track to build new SpaceShips, with the first commercial research spaceflight planned for summer 2026 and the first private astronaut spaceflight in fall 2026. Financially, the company aims to achieve EBITDA-positive operations by introducing two new SpaceShips, projecting annual revenues of approximately $450 million with an 80% contribution margin.
In summary, Virgin Galactic’s earnings call reflected a company in transition, making strides in SpaceShip design and financial management while facing challenges related to revenue and cash flow. The forward-looking guidance suggests a promising future as the company aims to achieve significant milestones in commercial space travel by 2026.