Virgin Galactic Holdings, Inc

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, 2024 (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, 2024 (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, 2025 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

We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, spaceflight operation, and post-flight maintenance of our spaceflight system. Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties. 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 launch vehicles, are expected to dramatically increase our annual flight rate. In addition, we are exploring the opportunity to use a derivative model of our launch vehicle as a High-Altitude, Long-Endurance ("HALE") aircraft, which we believe could be utilized for several types of government and research purposes.

Current wording

We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, spaceflight operation, and post-flight maintenance of our spaceflight system. Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties. 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 launch vehicles, are expected to dramatically increase our annual flight rate. Following the completion of the non-recurring engineering work on our Delta Class spaceships, we have redeployed engineering resources to the next phase of design for our next-generation launch vehicle. In addition, we are exploring the opportunity to use a derivative model of our launch vehicle as a High-Altitude, Long-Endurance ("HALE") aircraft, which we believe could be utilized for several types of government and research purposes.

Previous wording

The development of our new Delta Class spaceships is on track. We are progressing through our build milestones with key tools and materials continuing to arrive at our spaceship final assembly facility. With our new Delta Class spaceships, we expect to commence commercial service with our first research spaceflight anticipated in the summer of 2026 and the first private astronaut spaceflight anticipated in the fall of 2026.

Current wording

The development of our new Delta Class spaceships is on track. We are progressing through our build milestones with key tools and materials continuing to arrive at our spaceship final assembly facility. Commercial service remains planned for 2026, with both research and private astronaut flights expected in the fall of 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 and in Part 1, Item 1A. of our Annual Report on Form 10-K titled “Risk Factors” and in Part II, Item 1A. of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

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. Our sales remain paused, but we expect to open tranches of sales reservations in the first quarter of 2026 as we approach the start of commercial service. As of March 31, 2025, we have reservations for spaceflights for approximately 675 future astronauts, which represent approximately $189 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. Our sales remain paused, but we expect to open tranches of sales reservations in the first quarter of 2026 as we approach the start of commercial service. As of June 30, 2025, we have reservations for spaceflights for approximately 675 future astronauts, which represent approximately $190 million in expected future spaceflight revenue upon completion of the spaceflights.

Previous wording

The following table sets forth our results of operations for the periods presented. The period-to-period comparisons of financial results are not necessarily indicative of future results.

Current wording

The following tables set forth our results of operations for the periods presented. The period-to-period comparisons of financial results are not necessarily indicative of future results.

Previous wording

For the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Current wording

For the Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024

Previous wording

Revenue for the three months ended March 31, 2025 was primarily attributable to access fees related to our astronaut community. Revenue for the three months ended March 31, 2024 was primarily attributable to revenue generated from our commercial spaceflight and access fees related to our astronaut community. During the third quarter of 2024, we paused our Unity spaceflights and we expect to commence commercial service in the summer of 2026.

Current wording

Revenue for the three and six months ended June 30, 2025 was primarily attributable to access fees related to our astronaut community. Revenue for the three and six months ended June 30, 2024 was primarily attributable to revenue generated from our commercial spaceflights and access fees related to our astronaut community.

Previous wording

Spaceline operations expense decreased from $22.6 million for the three months ended March 31, 2024 to $20.8 million for the three months ended March 31, 2025. The decrease was primarily driven by a $2.5 million decrease in cash compensation and other employee benefit costs.

Current wording

Spaceline operations expense decreased from $27.3 million for the three months ended June 30, 2024 to $14.2 million for the three months ended June 30, 2025. The decrease was primarily driven by a $8.7 million decrease in cash compensation and other employee benefit costs and a $4.1 million decrease in materials, sub-contractor and contract labor costs, and other operational costs.

Previous wording

Research and development expenses decreased from $59.0 million for the three months ended March 31, 2024 to $33.3 million for the three months ended March 31, 2025. The decrease was primarily driven by a $17.6 million decrease in sub-contractor and contract labor costs associated with the development of our next generation spaceflight vehicles and an $8.6 million decrease in cash compensation and other employee benefit costs.

Current wording

Research and development expenses decreased from $41.5 million for the three months ended June 30, 2024 to $20.1 million for the three months ended June 30, 2025. The decrease was primarily driven by a $19.2 million decrease in sub-contractor and contract labor costs associated with the development of our next generation spaceflight vehicles and a $1.8 million decrease in cash compensation and other employee benefit costs.

Previous wording

Selling, general and administrative expenses increased from $27.9 million for the three months ended March 31, 2024 to $30.6 million for the three months ended March 31, 2025. The increase was primarily driven by a $1.1 million increase in legal costs and a $0.6 million increase in cash compensation and other employee benefit costs.

Current wording

Selling, general and administrative expenses increased from $61.8 million for the six months ended June 30, 2024 to $62.4 million for the six months ended June 30, 2025. The increase was primarily driven by a $2.9 million expense associated with the settlement of the Lavin Action and a $2.5 million increase in cash compensation and other employee benefit costs. These increases were partially offset by a $4.2 million decrease in stock-based compensation.

Previous wording

Depreciation and amortization expense increased from $3.7 million for the three months ended March 31, 2024 to $4.2 million for the three months ended March 31, 2025. The increase was primarily due to the acquisition of property, plant and equipment.

Current wording

Depreciation and amortization expense increased from $3.3 million for the three months ended June 30, 2024 to $4.2 million for the three months ended June 30, 2025. Depreciation and amortization expense increased from $7.0 million for the six months ended June 30, 2024 to $8.4 million for the six months ended June 30, 2025. The increases were primarily due to the acquisition of property, plant and equipment.

Previous wording

Interest income decreased from $12.3 million for the three months ended March 31, 2024 to $7.2 million for the three months ended March 31, 2025. The decrease was primarily driven by decreased average balances of marketable securities and deposits in interest-bearing accounts.

Current wording

Interest income decreased from $11.1 million for the three months ended June 30, 2024 to $5.8 million for the three months ended June 30, 2025. Interest income decreased from $23.4 million for the six months ended June 30, 2024 to $13.0 million for the six months ended June 30, 2025. These decreases were primarily driven by decreased average balances of marketable securities and deposits in interest-bearing accounts.

Previous wording

Interest expense was $3.2 million for each of the three months ended March 31, 2025 and 2024. Interest expense primarily consisted 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, 2025 and 2024. Interest expense was $6.5 million for each of the six months ended June 30, 2025 and 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, 2025 and 2024. 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 was 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 (benefit) was immaterial for the three and six months ended June 30, 2025 and 2024. 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 (benefit) 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, 2025, we had total cash, cash equivalents and restricted cash of $172.2 million and total marketable securities of $394.4 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, 2025, we had cash, cash equivalents and restricted cash of $193.7 million and total marketable securities of $314.0 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 accretion of marketable securities purchased at a discount and $18.4 million of net changes in operating assets and liabilities.

Current wording

Net cash used in operating activities was $131.4 million for the six months ended June 30, 2025, and consisted primarily of $151.8 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $9.6 million and depreciation and amortization expense of $8.4 million, partially offset by $4.0 million of accretion of marketable securities purchased at a discount and $5.3 million of net changes in operating assets and liabilities.

Previous wording

Net cash used in operating activities was $75.9 million for the three months ended March 31, 2025, and consisted primarily of $84.5 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $4.8 million and depreciation and amortization expense of $4.2 million, partially offset by $2.2 million of accretion of marketable securities purchased at a discount and $1.2 million of net 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$10.0 million of accretion of marketable securities purchased at a discount and$11.8 million of net changes in operating assets and liabilities.

Previous wording

Net cash provided by investing activities was $7.5 million for the three months ended March 31, 2025, and consisted primarily of $158.1 million in proceeds from maturities and calls of marketable securities, partially offset by $104.6 million in purchases of marketable securities and $46.0 million in capital expenditures.

Current wording

Net cash provided by investing activities was$30.6 million for the six months ended June 30, 2025, and consisted primarily of$356.0 million in proceeds from maturities and calls of marketable securities, partially offset by$220.9 million in purchases of marketable securities and $104.4 million in capital expenditures.

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 financing activities was $29.7 million for the three months ended March 31, 2025, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering program.

Current wording

Net cash provided by financing activities was$83.6 million for the six months ended June 30, 2025, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering program.

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 pursuant to our at-the-market offering program.

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 pursuant to our at-the-market offering program.

Previous wording

•scale up our manufacturing processes and capabilities to support expanding our fleet with additional spaceships, carrier aircraft and rocket motors in connection with commercialization;

Current wording

•scale up our manufacturing processes and capabilities to support expanding our fleet with additional spaceships, launch vehicles and rocket motors in connection with commercialization;

Previous wording

We expect our arrangements with third-party providers to manufacture key subassemblies for our next-generation spaceships and for the design and manufacture of our next-generation carrier aircraft will require significant capital expenditures. Certain estimated amounts in connection with third-party arrangements are subject to future negotiations and cannot be estimated with reasonable certainty.

Current wording

We expect our arrangements with third-party providers to manufacture key subassemblies for our next-generation spaceships and for the design and manufacture of our next-generation launch vehicles will require significant capital expenditures. Certain estimated amounts in connection with third-party arrangements are subject to future negotiations and cannot be estimated with reasonable certainty.

Previous wording

During the three months ended March 31, 2025, we sold 6.9 million shares of common stock under the 2024 ATM Program and generated $30.7 million in gross proceeds, before deducting $0.9 million in underwriting discounts, commissions and other expenses.

Current wording

During the six months ended June 30, 2025, we sold 22.7 million shares of common stock under the 2024 ATM Program and generated $86.3 million in gross proceeds, before deducting $2.6 million in underwriting discounts, commissions and other expenses.

Previous wording

As of March 31, 2025, we sold a total of 11.1 million shares of common stock under the 2024 ATM Program, generating $59.8 million in gross proceeds since its inception, before deducting $1.8 million in underwriting discounts, commissions and other expenses.

Current wording

As of June 30, 2025, we sold a total of 26.8 million shares of common stock under the 2024 ATM Program, generating $115.4 million in gross proceeds since its inception, before deducting $3.4 million in underwriting discounts, commissions and other expenses.