Virgin Galactic Delays Quarterly Earnings Report as Blue Origin Ticket Sales Announcement Looms
by Douglas Messier
Managing Editor
Suborbital flight provider Virgin Galactic announced on Friday that it is delaying release of its first quarter earnings report from Tuesday, May 4, to Monday, May 10. The release will now occur after and not before rival Blue Origin starts selling tickets on May 5 for trips to space aboard its suborbital New Shepard spacecraft.
Virgin Galactic said it needs more time to restate 2019 and 2020 earnings in response to an April 12 statement by the Securities and Exchange Commission (SEC) on the accounting treatment of company-issued warrants, which provide holders the right to purchase stock at a set price by a certain date.
The SEC’s April 12 statement came on the same day Virgin Galactic announced the May 4 date for its quarterly earnings report. The company’s accountants had three weeks to recalculate the numbers. Virgin Galactic said six more days are required to report what it claims will be minimal impacts on the massive losses it has piled up since going public in October 2019.
“The Company expects to file the restated financials prior to the new conference call date and estimates that it will recognize incremental non-operating, non-cash expense for each of the fiscal years ended December 31, 2020 and December 31, 2019. The Company does not anticipate that the restatement will impact its previously communicated non-GAAP financial metrics, including Adjusted EBITDA and free cash flow,” Virgin Galactic said in a press release.
Unmentioned in Virgin Galactic’s press release is the delay will allow the company to respond to Blue Origin’s long-awaited announcement about ticket sales. Jeff Bezos’ company began promoting the pending announcement on Thursday, April 29. Virgin Galactic announced the delay in its earnings report the following day.
Either this is all a giant coincidence, or Virgin Galactic is responding to Bezos’ flanking maneuver. One thing is clear: the battle of the billionaires between Bezos and the Richard Branson-founded and Chamath Palihapitiya-backed Virgin Galactic is about to heat up.
Whatever the actual reason for the delay, the prospect of delivering yet another dismal earnings report only hours before Blue Origin’s announcement could not have been an attractive one for Virgin Galactic CEO Michael Colglazier and new CFO Doug Ahrens. The quarterly earnings call is a major opportunity to influence Wall Street analysts who make recommendations on whether to buy or sell the company’s stock.
Virgin Galactic is expected to report a significant loss with minimal or no revenues as it struggles to complete the flight test program for its SpaceShipTwo suborbital vehicle, VSS Unity. Virgin Galactic’s net lost was $273 million for 2020, including a $74 million net loss for the fourth quarter.
Virgin Galactic’s stock has been taking a pounding lately. After opening at $10.75 on the first day of trading on Oct. 28, 2019, the stock soared to a high of $62.80. It is now trading at $22.15, having lost all of its gains for the year.
Shares are down due to ongoing delays in the start of commercial service. Branson’s decision to sell $650 million in stock over the last year and Palihapitiya’s liquidation of his entire personal stake worth $312 million has hurt investor confidence. Both men continue to be large shareholders in the company.
Virgin Galactic went public after shareholders in billionaire Palihapitiya’s Social Capital Hedosophia (SCH) approved an $808 million merger. SCH was a special purpose acquisition company (SPAC) that was already traded on the New York Stock Exchange (NYSE). SPACs are investment vehicles whose entire purpose is to find a company to take public under its own name.
SEC’s April 12 statement concerned warrants issued by SCH and other SPACs that allow holders to purchase stock at set prices by certain dates. The statement indicated that warrants should be treated as liabilities on company’s balance sheets, not as equity. The move is widely viewed as a move to reign in SPACs, which have become increasingly popular on Wall Street and in the commercial space industry.
In response, Virgin Galactic has decided to restate past earnings going back to when the company began trading. The company said not that many warrants remain to be redeemed.
“As of today, approximately 2.7 million warrants remain outstanding, which represents less than 10% of the warrants originally issued,” the press release said.
In documents filed with the SEC to support the merger, Virgin Galactic and SCH projected to start commercial space tourism flights in June 2020. Due to technical problems with VSS Unity, the date has been pushed back to early 2022. In other words, the schedule has slipped about 19 months in the 18 months since the company went public.
Amid all the gloomy news, Virgin Galactic did say it plans to conduct a suborbital test of VSS Unity later this month.
“As previously communicated, Virgin Galactic is targeting its next rocket-powered spaceflight from Spaceport America to take place in May,” the company said.
VSS Unity last suborbital flight came more than 26 months ago on Feb. 22, 2019. The spacecraft was grounded after it suffered severe in-flight damage to its horizontal stabilizer that nearly destroyed the vehicle and killed the three-member crew.
Extensive modifications were required to address the problem. More than 13 months passed before the spacecraft flew again in May 2020 in a successful glide test from Spaceport America in New Mexico. Another glide flight followed the following month.
VSS’s next suborbital flight, which carried NASA-sponsored experiments, suffered an in-flight abort in December 2020 due to a computer reboot just as its hybrid engine began to fire. Virgin Galactic said the reboot was caused by electromagnetic interference (EMI).
The company planned to repeat the flight test in February 2021. But, the test was rescheduled to May when the modifications made to VSS Unity to address the EMI issue resulted in other potential problems.
Virgin Galactic has said it plans three additional flight tests after the one later this month. The first will carry four test subjects in the passenger cabin to evaluate the experience. Branson will be aboard the flight after that one. Then three Italian Air Force pilots will fly as part of a training exercise to complete the flight test program.
VSS Unity and its WhiteKnightTwo carrier airplane will undergo about four months of upgrades before flying the first space tourism mission early next year.
Virgin Galactic hopes to have another SpaceShipTwo, VSS Imagine, start service early next year. The spacecraft will undergo testing this summer at Spaceport America.
Virgin Galactic’s press release about the delayed earnings call follows.
Virgin Galactic Reschedules First Quarter 2021 Financial Results and Conference Call in Response in Response to Recent Guidance Relating to Warrants Issued by SPACs
LAS CRUCES, N.M.–(BUSINESS WIRE)– Virgin Galactic Holdings, Inc. (NYSE: SPCE) (the “Company”), a vertically integrated aerospace and space travel company, announced today that it has rescheduled the reporting of its financial results for the first quarter 2021 to following the close of the U.S. markets on Monday, May 10, 2021. Virgin Galactic will now host a conference call to discuss the results and provide a business update that day at 2:00 p.m., Pacific Time (5:00 p.m., Eastern Time). The Company is rescheduling its reporting due to the recent statement issued by the Securities and Exchange Commission (the “SEC”) on April 12, 2021 relating to the accounting treatment of warrants issued by special purpose acquisition companies (the “SEC Statement”).
The Company today reported in a Current Report on Form 8-K that, following its review of the SEC Statement and consulting with its advisors, the Company will restate its consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The restatement is due solely to the accounting treatment for the warrants of Social Capital Hedosophia Holdings Corp. that were outstanding at the time of the Company’s business combination on October 25, 2019. The Company expects to file the restated financials prior to the new conference call date and estimates that it will recognize incremental non-operating, non-cash expense for each of the fiscal years ended December 31, 2020 and December 31, 2019. The Company does not anticipate that the restatement will impact its previously communicated non-GAAP financial metrics, including Adjusted EBITDA and free cash flow.
As of today, approximately 2.7 million warrants remain outstanding, which represents less than 10% of the warrants originally issued.
As previously communicated, Virgin Galactic is targeting its next rocket-powered spaceflight from Spaceport America to take place in May.
A live webcast and replay of the conference call will be available on the Company’s Investor Relations website at investors.virgingalactic.com.
About Virgin Galactic Holdings
Virgin Galactic Holdings, Inc. is a vertically integrated aerospace and space travel company, pioneering human spaceflight for private individuals and researchers, as well as a manufacturer of advanced air and space vehicles. It is developing a spaceflight system designed to offer customers a unique and transformative experience. You can find more information at https://www.virgingalactic.com/.
27 responses to “Virgin Galactic Delays Quarterly Earnings Report as Blue Origin Ticket Sales Announcement Looms”
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Sadly Virgin Galactic, like the vast majority of the Mojave entrepreneurs, are nothing but dead end enterprises based on the Mojave group think that rocket planes were the key to reliable space flight. History will look on the Mojave based rocket plane firms like Virgin Galactic, Virgin Orbit, XCOR, Stratolaunch, Kelly Aerospace, Eclipse, the Ansari X-Prize and others as nothing but entertaining side shows that diverted resources, investment and good engineers into dead end technology. It will make a good case study on how group think, as with the idea of rocket plane fighters and gas turbine locomotives, leads to innovation failure.
And parked right in the middle of them has been Masten Space Systems, focusing on vertical take-off and landing. Masten has a NASA contract to deposit a lander at the lunar south pole. So it isn’t like the whole town is mad. They also have Dave Masten and Doug Messier.
Yes, the exception to the rule because Dave Masten rejected the rocket plane approach. Similarly XCOR might have survived if they focused on their engines and not the Lynx in their business strategy.
Of all the issues and challenges XCOR faced, the engine seems to have been one of the biggest factors holding back investment: they never managed to demonstrate they’d ‘closed the cycle’ on a flight-weight unit.
I’m quite prepared to be corrected on this (paging Doug Jones :-), but think it worth mentioning because it’s more evidence that “space launch is hard”.
But don’t forget Pat Bahn’s TGV, which was the first VTOL suborbital venture of the NewSpace era. Pat was not based in Mojave and spent most of his investor’s money in engine development and testing in NASA facilities… though, sadly, TGV now also seems to be moribund 🙁
Don’t forget Steve Wozniak’s sea launched rocket, Gary Hudson’s Phoenix, along with Space Services Conestoga, but those had pathways to scaling up, something not possible with rocket planes which is why rocket planes are a dead end for space development. Also the last two were inspirations for the DC-X which led to Blue Origin.
Rockwell’s Star-Raker concept would suggests rocket planes can be scaled-up quite significantly…
http://spaceflighthistory.b…
…as can subsonic air-launch concepts.
I’ll also note that Starship uses aerodynamic surfaces (i.e. wings 🙂 to enable reentry and recovery, just like Shuttle… so you may need to be a bit more specific when you define the term ‘rocket plane’ 🙂
Yes, an era when it seemed anything was possible, which gave us the Space Shuttle. In theory the X-33 was scalable as well…
Apologies for harping on about this, but both Shuttle and X-33 are prime examples of concepts whose failure was driven primarily by political factors that resulted in over-complex technical solutions, rather than a fundamental inadequacy of technologies to deliver reusable space launch or the scalability, or lack thereof, of rocket planes.
For example, Shuttle was originally proposed as a much smaller fully reusable design but was driven to accommodate larger payload mass/volume (i.e. effectively doubled) and larger wings to meet USAF requirements, while the redesign for partial re-use was driven by the annual development spending cap (i.e. effectively halved) demanded by Congress.
Similarly for X-33, NASA chose to select the far more technically ‘challenging’ concept from Lockheed over the far more ‘conservative’ concept from Rockwell… which was also the only proposal supported by a substantive business case!
The shiny is the next canceled X-33….anybody not a brainwashed fanboy can see it is just a Shuttle that takes it’s external tank with it and then brings it back down- at tremendous sacrifice in payload. And no escape system is…absurd.
But the Musk groupies will tolerate no criticism. The emperors new clothes.
https://uploads.disquscdn.c…
NewSpace delenda est
Or the VTVL one by MDD that actually had a history of flight testing to support it. The problem with both the X-33 and Rockwell designs is they had no abort modes. Once the engines fired they either made it to orbit or made a smoking hole in the ground. The same was true for Star-Raker.
The X-33 proposal from McDonnell Douglas certainly evolved from DC-X but had significant size and design differences (e.g. asymmetric mold-line, empennage, SSME) along with a much larger operational envelope, so the relevance of its flight test experience is somewhat questionable. Having said that, it did prove the viability of a much reduced ground support crew, though this was applicable to all concepts. And remember that Rockwell’s concept was based upon Shuttle aerodynamics, which covered the full mission envelope and so was arguable far more relevant than DX-C.
I’m not sure why you think X-33 concepts had no abort modes because that was one of NASA’s key requirements, since the suborbital X-33 was a sub-scale prototype of an orbit capable vehicle intended to replace Shuttle!
Based on a briefing by the program manager to the NM spaceport group. he was asked what would happen if anything went wrong on takeoff.
He was quiet for a bit and then admitted the vehicle would be lost because 1) it was too heavy to land with a full load of fuel, 2) the Center of Gravity at launch made gliding nearly impossible, 3) even if gliding was possible it would be too heavy to effectively glide with most of the fuel onboard, 4) the fuel could not be vented without the Center of Gravity shifting risking it being too unstable to control effectively.
So once the vehicle left the launch pad it either made orbit, or left a smoking hole in the ground. One of the folks there, from AFRL noted that was why the USAF had rejected the design when Lockheed proposed it to them in the late 1980’s. The Lockheed official did state they had every confidence that the aerospike engines would never fail…
Incidentally, this was why the landing gears were too weak to support it with a full load of fuel, they never would need to do so.
I suspect from looking at both the Rockwell design and the Star-Raker they would have similar problems if they needed to abort during a launch. The shuttle could only do so because most of the fuel was in the ET that could be jettison.
The DC-X by contrast, and the upgraded DC-Y MDD proposed, could land if one or more engines failed or their were problems during launch. The same capability is likely built into the Starship, while we saw how rugged the New Shepard was during its abort test.
Any vertically launched rocket with insufficient engine-out capability will suffer the same fate, especially designs that rely on rocket engines to land, so I’m not sure what you’re saying here. I do agree that Lockheed made an absolute pig’s ear of their X-33 design – Dave Urie told me this directly – but I don’t think you can draw more general conclusions from this one example.
The difference is that it is possible to design engine out capability into a VTVL vehicle that allows abort modes. VTHL rocket planes on the other hand would have wing loading and center of gravity issues that would make it a moot point to do so.
Yes, ‘moot’ is the right word, since wing sizing may be driven by a wide range of design and mission related factors (e.g. re-entry, cross-range, terminal descent, glide, landing), but it doesn’t mean impossible.
Wing loading and CoG issues may also be controlled by dumping propellant, like an aircraft abort immediately after take-off, using the functioning engines – if only because these are the most effective pumps available to any rocket propelled vehicle. Moreover, as landing may be at a down-range abort site in order to avoid sharp turn-back maneuvers, it’s clear that there are a number of design and operational choices available to mitigate these issues… though this doesn’t mean the designers will apply or even consider them 🙁
The problem with rockets is the majority of the mass is the liquid Oxygen, which greatly increases the fire risk when it’s vented. Emptying the LOX tanks would also create Center of Gravity issues due their density compared to the propellant tanks. Easiest would be just to have both in an ET like the Shuttle to dump together. But then you are getting away from a fully reusable system.
…which is why I suggested using the functioning engines, because they would exhaust both propellants after combusting them: an option not really viable for aircraft because of their relatively low rate of fuel consumption.
The Starship aerosurfaces are flaps and do not have a cross-section capable of generating lift. Starship is also not designed to land horizontally. Starship is many things, but a spaceplane is not among them.
You’ll note my reference to wings was qualified by a ‘smiley’, so I’m quite prepared to be corrected on the technical definition (i.e. these structures are not true airfoils, designed to generate lift greater than the vehicle’s weight). Nevertheless, they’re more than just flaps or drag-brakes and I assume they’re swept back in order to delay shock waves, rather than for aesthetic reasons, which is why many refer to them loosely as ‘wings’…
https://www.teslarati.com/s…
…since they must generate some degree of upward force to maintain balance and, maybe, modulate the lift vector about the roll-axis during re-entry to control cross-range?
Not sure Mike Kelly’s venture was based in Mojave and neither was RocketPlane… and you forgot Rotary, which was a VTOL rocket concept. Also, you’re assuming vehicles like New Shepard are going to be commercially successful, whereas it could be argued that VO’s Launcher One already is.
I don’t think you can generalize about launcher architecture/technology based upon this type of data because there’s far more important reasons for these failures: not least of which was a failure to secure significant investment in a timely manner. As a result, your comments seem more like the ‘Texas sharp-shooter fallacy’ than a thoughtful business assessment.
Yes, Rotary Rocket was a VTVL but was only because it was based on the use of rotary wings, basically a rocket helicopter. True, RocketPlane was not in Mojave but founded in Colorado before taking the state of Oklahoma for a ride, but it was indeed part of the rocket plane group think of the era.
And to be fair the rocket plane group think in Mojave was stimulated by the very well funded X-15/Space Shuttle history associated with the Dryden (now Armstrong) NASA facility which also led to NASA’s failed X-33/X-34 programs. But even NASA has basically moved on from the rocket plane group think based on its experience with the Space Shuttle.
True, the original Rotary concept did use the rotor for ascent but the funded version only used the rotor for recovery after re-entry in a similar manner to the concept considered for the Apollo command module, though they added (and demonstrated on their ATV) tip thrusters for terminal approach and landing.
Nevertheless, my basic point is that we have insufficient evidence to condemn the rocket plane concept. Indeed, discussions about the merits and drawbacks of VTVL, VTHL, HTHL have been raging, off and on, for almost a century (e.g. von Braun’s V2 versus Saenger’s ‘silver bird’) and there’s enough engineering knowledge to know that both can be made to work. However, what really determines the feasibility of one over the other is the mission and operational requirements that, in turn, are driven by who is paying for them… which may explain why USAF concepts have, to date, almost always tended towards winged concepts 🙂
Have you ever seen this wild stuff about silane fuel? It makes me rethink the whole notion of rocketplanes…
https://www.jstage.jst.go.j…
SLS delenda est
Sounds interesting, though I note they use terms like ‘theoretical’, ‘suggestive’ and ‘if confirmed’ quite liberally… and that’s just the abstract 🙂
I’m quite prepared to believe there are better ways to orbit than those currently being pursued, for example…
https://www.space.com/deton…
…though I’m now rather agnostic about such things as what really counts is not just making them work but making their business case close.
“NewSpace”, from the beginning, was…a scam. It promised space station vacations and LEO as the new frontier with cheap and nasty very small rockets as the path to the stars. Depots would allow all these cheap and nasties to do anything the big rockets could, for almost nothing.
The age-old confidence game of promising much in return for…almost nothing. Like vitamins and chiropractors….it is all just a scam but almost guaranteed to pull in some easy money.
Real space can be understood with just a few examples. The F-1 rocket engine. The AJ-260 monolithic solid fuel booster. If you look at the Saturn I you can see how this inferior lift rocket is still lifting satellites a half a century later in guise of the falcon 9. The coder-who-made-good entrepreneur has made landing back a great P.R. device but whether it is really breaking even is not so clear. Looking at the Saturn V we see the smallest practical rocket for taking a few people to the Moon. And then there is the Nova.
Nova is what should have came after the Saturn V along with programs to constantly improve it with an idea to recovering the engines and only expending tankage (the best feature of the Shuttle).
Instead of a logical progression for our tax dollars we got a political football. And trying to go cheap with the Shuttle. And here we are. Nowhere.
Hopefully the SLS and Artemis will kick-start a new space age.
NewSpace delenda est
https://uploads.disquscdn.c…
The limitations of an unaffordable, expendable giant rocket (Saturn 5) would not have been ameliorated by doubling down on an even bigger and more expensive expendable giant rocket (Nova).
It’s going to be a mighty slow new Space Age if only two people per year can get to the Moon for a short stay. And SLS-Orion would still need a lander of some kind. And a way to get it there. That way can’t be SLS unless one is satisfied to make those two-person short visits biannual, rather than annual, affairs.
Abandon your retro-fantasy world in which everything we needed to settle space was invented before 1970.