Virgin Galactic Holdings, Inc. 2026 Q2 Earnings Call

Thank you. I will now turn the call over to Ken Michaels, Vice President of Finance. Please go ahead. Thank you.

Good afternoon, everyone. Welcome to Virgin Galactic's second quarter 2026 earnings conference call. On the call with me today are Michael Colglazier, Chief Executive Officer, and Doug T. 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 refer to slide 2 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.

You are cautioned not to put undue reliance on forward-looking statements. The company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call, whether 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, who will begin our discussion on slide 3.

I am pleased to share our recent tranche of spaceflight expeditions as booked out ahead of schedule, demonstrating strong demand from a wide range of customer segments. The allotment we had held at the $750,000 price point was oversubscribed, and we have added over $50 million to our expected future spaceflight revenue. We have moved our first commercial space flight to this coming February to allow additional time to complete avionics and systems installations. No single issue is driving the schedule push. Rather, we have experienced modest time duration extensions across hundreds of relatively small but important installation tasks involved in the first build of our new spaceship. Our teams bring disciplined urgency to their efforts, and they have made outstanding progress on both our first ship and the ship sets that are following. This progress required more time than we expected ahead of our integrated vehicle ground testing.

But it was needed to complete the work with the thoroughness and precision we demand. This work is wrapping up in the next couple of weeks, and we expect to begin integrated vehicle ground testing later this month. We have incorporated the learnings from this first build into the schedule forecast for our second ship, which we now expect will join the fleet in New Mexico in March. That schedule continues to support the cadence of flight rate that we shared last quarter, and we maintain our projections to deliver positive quarterly cash flow within 2027. I will share some insight on the sales process and the additions we have made to our astronaut community, followed by some detail into the build process for our first spaceship, our static test ship, and our second spaceship.

I will then pass it over to Doug T. Ahrens for our financial discussion and further context into the unit profitability of our spaceships. Turning to page 4 in the slide deck. We now have over 700 members within the Virgin Galactic astronaut community, and we are very pleased to welcome our most recent arrivals. This new group, like those who have been in our community for a while, are passionate about space. As a cohort, they represent a diverse range of organizations and individuals who broaden our target market. One new trend we are seeing is an increase in multi-seat bookings. Approximately 60% of this new cohort is part of a group of some form or another, ranging from multi-generation expeditions of all sorts, to research missions, to corporate charters and nonprofit bookings.

Many are adventurers, but most are joining the community for the deep transformative experience that is enabled with our space flights. Many of our new arrivals see space as a platform for broader initiatives, including science-based and nonprofit endeavors. Consistent with our prior statements, we have now closed active bookings as we onboard our new astronauts and engage them in the community. We have retired the $750,000 price point, and we plan to open a new tranche of spaceflight expeditions this fall at higher price points. Moving to page 5 to discuss spaceship progress. I will start this section with one of the many fun facts around our spaceships. We have over 12 miles of wire running between the various computers, systems, and sensors throughout the entire ship.

Every one of those wires is designed, fabricated, bundled, and connected with detailed precision, and the image on this page gives you a glimpse into the complexity of installation within the unique configuration of our spaceship. The progress our team has been making is incredible, and they are doing their work with thoroughness, precision, and quality. As I mentioned at the outset, many of the hundreds of preparation and installation tasks have required more time to complete than we had estimated. We will always take the time that is needed, and that has caused us to move our first spaceflight expectation to February. We take the time needed for on-ship work and related engineering and quality assurance processes.

We also have added resources and improved process management to minimize the overall time impacts. We are operating with two shifts, seven days a week, and I am very proud of and grateful for the massive joint effort of our team and the extended workforce we have brought in from California, New Mexico, Bell Textron, and partner agencies to complete the effort. These added investments will show up as incremental spending in Q3 and to a lesser degree in Q4. But these added expenses bring high return by helping us maintain our expected flight cadence in 2027. On page 6, we are highlighting progress with our static test ship, which we use to verify our as-built structural configurations. The image on the upper left shows the wing assembly, and the images on the lower left show the fuselage structure in process of assembly.

These will be joined together and shipped to the Southwest Research Institute for structural testing. Our feather assembly, shown in the image on the right, is already at the Southwest Research Institute and is being wired for testing, which will start in early September. As soon as the static test wing and fuselage are joined and shipped, we will pivot our manufacturing team to begin assembly of the second spaceship. Let us turn to page 7. These images show major parts of our second spaceship as they move through the production and assembly process. The image on the left shows a wing skin, the image on the top right shows a cabin skin being fabricated, and the image on the bottom right shows our nearly completed feather assembly. It is exciting to see multiple spaceships being built at the same time.

With that, I will turn the call over to Doug, starting on slide 8.