Virgin Galactic Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
SPCE$2.77+16.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001706946-24-000105
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001706946-24-000176
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 78 previous paragraphs and 82 current paragraphs.
49 unchanged; 24 reworded; 6 added; 3 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
On June 12, 2024, at the Company’s 2024 annual meeting of stockholders, our stockholders approved, and on June 14, 2024, we effected, a 1-for-20 reverse stock split (the “Reverse Stock Split”), and our common stock began trading on a split-adjusted basis on June 17, 2024. Prior to the Reverse Stock Split, on May 29, 2024, we received a notice from the New York Stock Exchange (the “NYSE”) that we were no longer in compliance with Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”), which requires listed companies to maintain an average closing price per share of at least $1.00 over a 30 consecutive trading-day period. Following the Reverse Stock Split, on July 1, 2024, we received a letter from the NYSE stating that we regained compliance with Section 802.01C.
Current report
All shares of our common stock, per-share data and related information included in this Quarterly Report on Form 10-Q have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.
Current report
In July 2024, we completed our new manufacturing facility in Mesa, Arizona, where final assembly of our next-generation Delta Class spaceships is scheduled to begin in 2025. After the initial development of our first Delta Class spaceship, we estimate the recurring cost to make each additional spaceship to be between $50 and $60 million.
Current report
We expect to reach a significant milestone for the design phase of our Delta Class spaceships at the end of summer 2024, completing the majority of manufacturing designs. This will enable us to deploy some of our engineers from the Delta program to the design of our new motherships, which we project to be ready for service in 2028.
Current report
Selling, general and administrative expenses decreased from $101.8 million for the six months ended June 30, 2023 to $61.8 million for the six months ended June 30, 2024. The decrease was primarily driven by a $20.1 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $9.1 million decrease in consulting and other professional fees, and a $6.9 million decrease in stock-based compensation.
Current report
During the six months ended June 30, 2024, we sold 3.9 million shares of common stock under the 2023 ATM Program and generated $71.6 million in gross proceeds, before deducting $0.7 million in underwriting discounts, commissions and other expenses.
Removed paragraphs (3)
Previous report
In January 2024, we completed our sixth commercial spaceflight,'Galactic 06.'
Previous report
We expect the design phase for our Delta Class spaceships to conclude in summer 2024. This will enable us to redeploy some of our engineers from the Delta program to the design of our next-generation mothership, which we now expect to enter service in 2028. This sequencing of programs will assist us in managing our spending levels in the near term. Our Delta Class spaceships, which are expected to commence revenue service in 2026, will initially be supported by our existing mothership, VMS Eve. We have recently validated that VMS Eve will have the ability to fly up to three times per week, an improvement from the earlier projection of two times per week.
Previous report
During the three months ended March 31, 2024, we sold 5.1 million shares of common stock under the 2023 ATM Program, generating $7.3 million in gross proceeds, before deducting $0.1 million in underwriting discounts, commissions and other expenses.
Reworded paragraphs (24)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "Annual Report on Form 10-K"). This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” section of our Annual Report on Form 10-K and under the "Cautionary Note Regarding Forward-Looking Statements" section and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "Annual Report on Form 10-K"). This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” sections of our Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and under the "Cautionary Note Regarding Forward-Looking Statements" section and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.
Previous wording
In November 2023, we announced our plan to pause Unity spaceflights in mid-2024 and that we expect to re-commence flying with test flights for our Delta Class spaceships in 2025, in advance of revenue service expected to begin in 2026.
Current wording
In June 2024, we completed our second spaceflight of 2024 and seventh commercial spaceflight to date,'Galactic 07,'carrying one researcher and three private astronauts. Following the 'Galactic 07' flight, we paused Unity spaceflights and expect to re-commence flying with test flights of our new Delta Class spaceships in advance of restarting commercial service, which is expected to begin in 2026.
Previous wording
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part 1, Item 1A. of our Annual Report on Form 10-K titled“Risk Factors.”
Current wording
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below, as well as in Part 1, Item 1A. of our Annual Report on Form 10-K titled“Risk Factors”and in Part II, Item 1A. in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
Previous wording
We have already received significant interest from potential astronauts. Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. As of March 31, 2024, we have reservations for spaceflights for more than 700 future astronauts, which represent approximately $198 million in expected future spaceflight revenue upon completion of the spaceflights.
Current wording
We have already received significant interest from potential astronauts. Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. As of June 30, 2024, we have reservations for spaceflights for approximately 700 future astronauts, which represent approximately $193 million in expected future spaceflight revenue upon completion of the spaceflights.
Previous wording
We commenced our commercial operations with VSS Unity and VMS Eve, which together comprise our current spaceflight system. As a result, our annual flight rate will be constrained by the availability and capacity of this spaceflight system. To reduce the capacity constraint associated with having only one spaceflight system, we are currently developing our next generation spaceflight vehicles. These next generation spaceflight vehicles, which include our Delta Class spaceships and our next generation motherships, will allow us to increase our annual flight rate. We are dedicating significant engineering resources to the work that precedes production of the future fleet. In 2023, we demonstrated the flight consistency of Unity and Eve by safely bringing our customers to space. In 2024, we expect to pause flights starting mid-year to focus our resources on the development of the Delta Class spaceship fleet.
Current wording
We commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system. Our annual flight rate is constrained by the availability and capacity of this commercial spaceflight system. To expand capacity, we are currently developing our next-generation spaceflight vehicles. These next-generation spaceflight vehicles, which include our Delta Class spaceships and additional motherships, are expected to dramatically increase our annual flight rate.
Previous wording
For the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023
Current wording
For the Three and Six Months Ended June 30, 2024 Compared to the Three and Six Months Ended June 30, 2023
Previous wording
Revenue for the three months ended March 31, 2024 was primarily attributable to revenue generated from our commercial spaceflight and membership fees related to our Future Astronaut community.
Current wording
Revenue for the three and six months ended June 30, 2024 and 2023 were primarily attributable to revenue generated from our commercial spaceflights and membership fees related to our Future Astronaut community.
Previous wording
Spaceline operations expense for the three months ended March 31, 2024 was primarily attributable to costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles; and costs to maintain and support our Future Astronaut community.
Current wording
Spaceline operations expense for the three and six months ended June 30, 2024 was primarily attributable to costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles; and costs to maintain and support our Future Astronaut community. Spaceline operations expense for the three and six months ended June 30, 2023 was primarily attributable to incremental costs related to our commercial spaceflight and costs related to our Future Astronaut community.
Previous wording
Research and development expenses decreased from $109.9 million for the three months ended March 31, 2023 to $59.0 million for the three months ended March 31, 2024. The decrease was primarily driven by a $26.1 million decrease in materials, consulting, and other costs primarily due to the completion of modifications in 2023 of our spaceship (VSS Unity) and mothership carrier aircraft (VMS Eve), a $22.1 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the modifications in 2023 of VSS Unity and VMS Eve and a reduction in headcount, a $8.3 million decrease in other operational costs primarily due to a technology license fee expensed in 2023, and a $1.9 million decrease in stock-based compensation. These decreases were partially offset by a $9.8 million increase in sub-contractor and contract labor costs associated with the development of our next generation spaceflight vehicles.
Current wording
Research and development expenses decreased from $196.4 million for the six months ended June 30, 2023 to $100.5 million for the six months ended June 30, 2024. The decrease was primarily driven by a $48.9 million decrease in materials, consulting, and other costs primarily due to the completion of modifications in 2023 of VSS Unity and VMS Eve, a $42.4 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the modifications in 2023 of VSS Unity and VMS Eve and a reduction in headcount, an $8.3 million decrease in other operational costs primarily due to a technology license fee expensed in 2023, and a $3.8 million decrease in stock-based compensation. These decreases were partially offset by a $10.4 million increase in sub-contractor and contract labor costs associated with the development of our next-generation spaceflight vehicles.
Previous wording
Selling, general and administrative expenses decreased from $50.4 million for the three months ended March 31, 2023 to $27.9 million for the three months ended March 31, 2024. The decrease was primarily driven by a $11.1 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $4.8 million decrease in consulting and other professional fees, and a $4.0 million decrease in stock-based compensation.
Current wording
Selling, general and administrative expenses decreased from $51.4 million for the three months ended June 30, 2023 to $33.9 million for the three months ended June 30, 2024. The decrease was primarily driven by a $9.1 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $4.3 million decrease in consulting and other professional fees, and a $2.9 million decrease in stock-based compensation.
Previous wording
Depreciation and amortization expense increased from $3.2 million for the three months ended March 31, 2023 to $3.7 million for the three months ended March 31, 2024. This increase is primarily due to the acquisition of property, plant and equipment.
Current wording
Depreciation and amortization expense increased from $6.4 million for the six months ended June 30, 2023 to $7.0 million for the six months ended June 30, 2024. The increase was primarily due to the acquisition of property, plant and equipment.
Previous wording
Interest income increased from $7.3 million for the three months ended March 31, 2023 to $12.3 million for the three months ended March 31, 2024. This increase was primarily driven by higher investment returns on marketable securities and higher interest rates on deposits in interest-bearing accounts.
Current wording
Interest income increased from $8.4 million for the three months ended June 30, 2023 to $11.1 million for the three months ended June 30, 2024. This increase was primarily driven by higher investment returns on marketable securities and higher interest rates on deposits in interest-bearing accounts.
Previous wording
Interest expense was $3.2 million for each of the three months ended March 31, 2024 and 2023. Interest expense consists of interest expense and amortization of debt issuance costs related to our convertible senior notes.
Current wording
Interest expense was $3.2 million for each of the three months ended June 30, 2024 and 2023. Interest expense increased from $6.4 million for the six months ended June 30, 2023 to $6.5 million for the six months ended June 30, 2024. Interest expense primarily consists of interest expense and amortization of debt issuance costs related to our convertible senior notes.
Previous wording
Income tax expense was immaterial for the three months ended March 31, 2024 and 2023. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense is primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.
Current wording
Income tax expense was immaterial for the three and six months ended June 30, 2024 and 2023. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense is primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.
Previous wording
As of March 31, 2024, we had total cash, cash equivalents and restricted cash of $230.4 million and total marketable securities of $636.9 million. Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes").
Current wording
As of June 30, 2024, we had cash, cash equivalents and restricted cash of $214.8 million and marketable securities of $605.9 million. Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes").
Previous wording
Net cash used in operating activities was $113.2 million for the three months ended March 31, 2024, and consisted primarily of $102.0 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $8.2 million and depreciation and amortization expense of $3.7 million, partially offset by $5.3 million of other non-cash items and $18.4 million of cash used from changes in operating assets and liabilities.
Current wording
Net cash used in operating activities was $192.4 million for the six months ended June 30, 2024, and consisted primarily of $195.8 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $16.5 million and depreciation and amortization expense of $7.0 million, partially offset by $9.3 million of other non-cash items and $11.8 million of cash used from changes in operating assets and liabilities.
Previous wording
Net cash used in operating activities was $136.1 million for the three months ended March 31, 2023, and consisted primarily of $159.4 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $13.0 million and depreciation and amortization expense of $3.2 million, as well as $6.8 million of cash provided from changes in operating assets and liabilities.
Current wording
Net cash used in operating activities was $261.4 million for the six months ended June 30, 2023, and consisted primarily of $293.7 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $24.8 million and depreciation and amortization expense of $6.4 million.
Previous wording
Net cash provided by investing activities was $83.1 million for the three months ended March 31, 2024, and consisted primarily of $257.4 million in proceeds from maturities and calls of marketable securities, partially offset by $161.8 million in purchases of marketable securities and $13.1 million in capital expenditures.
Current wording
Net cash provided by investing activities was $83.7 million for the six months ended June 30, 2024, and consisted primarily of $479.4 million in proceeds from maturities and calls of marketable securities, partially offset by $348.8 million in purchases of marketable securities and $47.5 million in capital expenditures.
Previous wording
Net cash provided by investing activities was $219.7 million for the three months ended March 31, 2023, and consisted of $305.8 million in proceeds from maturities and calls of marketable securities, partially offset by $83.3 million in purchases of marketable securities and $2.8 million in capital expenditures.
Current wording
Net cash provided by investing activities was $48.8 million for the six months ended June 30, 2023, and consisted of $471.3 million in proceeds from maturities and calls of marketable securities, partially offset by $409.9 million in purchases of marketable securities and $12.6 million in capital expenditures.
Previous wording
Net cash provided by financing activities was $6.9 million for the three months ended March 31, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $7.2 million, partially offset by tax withholdings paid for net settled stock-based awards of $0.3 million.
Current wording
Net cash provided by financing activities was $69.9 million for the six months ended June 30, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $70.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $0.9 million.
Previous wording
Net cash provided by financing activities was $29.8 million for the three months ended March 31, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $31.7 million, partially offset by tax withholdings paid for net settled stock-based awards of $1.9 million.
Current wording
Net cash provided by financing activities was $268.0 million for the six months ended June 30, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $270.5 million, partially offset by tax withholdings paid for net settled stock-based awards of $2.3 million.
Previous wording
During the three months ended March 31, 2023, we sold 5.8 million shares of common stock under the 2022 ATM Program, generating $32.0 million in gross proceeds, before deducting $0.3 million in underwriting discounts, commissions and other expenses. We completed the 2022 ATM Program in June 2023.
Current wording
We completed the 2022 ATM Program in June 2023, selling a total of 3.0 million shares of common stock and generating $300 million in gross proceeds, before deducting $3.0 million in underwriting discounts, commissions and other expenses.
Previous wording
As of March 31, 2024, we sold a total of 84.8 million shares of common stock under the 2023 ATM Program, generating $294.7 million in gross proceeds, before deducting $2.9 million in underwriting discounts, commissions and other expenses.
Current wording
As of June 30, 2024, we sold a total of 7.9 million shares of common stock under the 2023 ATM Program, generating $359.1 million in gross proceeds, before deducting $3.6 million in underwriting discounts, commissions and other expenses.
Previous wording
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, including the construction of additional spaceships and motherships, expansion of our footprint at Spaceport America in New Mexico, construction of our astronaut campus and payment of the principal amount of our convertible senior notes as they become due. We expect to generate revenue from our spaceflight program, which commenced with our first commercial spaceflight,'Galactic 01,' in June 2023. To the extent this source of capital as well as the sources of capital described above are insufficient to meet our needs, we may need to seek additional debt or equity financing.
Current wording
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, operate our spaceline at Spaceport America in New Mexico, and expand our fleet of spaceships, motherships, and supporting facilities. We expect to generate revenue from our spaceflight program, which is expected to restart in 2026. To the extent this source of capital as well as sources of capital described above are insufficient to meet our needs, we may need to seek additional debt or equity financing.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Research and development expenses decreased from $86.6 million for the three months ended June 30, 2023 to $41.5 million for the three months ended June 30, 2024. The decrease was primarily driven by a $22.8 million decrease in materials, consulting, and other costs primarily due to the completion of modifications in 2023 of VSS Unity and VMS Eve, a $20.3 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the modifications in 2023 of VSS Unity and VMS Eve and a reduction in headcount, and a $1.9 million decrease in stock-based compensation.
Current report — wording carried from elsewhere
Depreciation and amortization expense increased from $3.2 million for the three months ended June 30, 2023 to $3.3 million for the three months ended June 30, 2024.
Current report — wording carried from elsewhere
Interest income increased from $15.7 million for the six months ended June 30, 2023 to $23.4 million for the six months ended June 30, 2024. This increase was primarily driven by higher investment returns on marketable securities and higher interest rates on deposits in interest-bearing accounts.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Revenue for the three months ended March 31, 2023 was primarily attributable to membership fees related to our Future Astronaut community.
Previous report — wording carried elsewhere
Spaceline operations expense for the three months ended March 31, 2023 was primarily attributable to costs related to our Future Astronaut community.