Virgin Orbit Quarterly: $30.9M in Revenues and $43.6M Net Loss; Virgin Group Makes $25M Investment as Cash Reserves Shrink

Boeing 747 Cosmic Girl (Credit: Virgin Orbit)

Launch provider Virgin Orbit received a $25 million investment from Richard Branson’s Virgin Group on Nov. 4, three days prior to reporting on Monday that its cash and cash equivalents had declined from $122 million to $71.2 million in the third quarter as it ramped up rocket production.

The air-launch company reported third quarter revenues of $30.9 million, which exceeded the zero revenues reported in Q3 2021. The company’s net loss was $43.6 million, which was higher than the $38.6 million loss in Q3 2021.

Officials said the company expects to complete three launches by the end of 2022; the company had hoped to conduct as many as six launches this year. The third launch is scheduled for later this year from Spaceport Cornwall in England. Virgin Orbit is currently awaiting a launch license from the government.

Virgin Orbit plans to more than double the number of launches in 2023, officials said. The company reported a backlog of binding agreements worth approximately $143.1 million. The backlog includes a multi-year launch contract recently signed with Spire Global.

“We have had a very productive quarter – reporting strong revenues as well as signing several key international partnerships and commercial deals. We continue to scale production in our Long Beach manufacturing facility as we prepare to meet higher launch rates,” said Virgin Orbit CEO Dan Hart. “Our recent ‘Straight Up’ mission built on our track record of 100% mission success in our first eighteen months of operations, bringing our total to thirty-three satellites precisely delivered into their target orbits.”

“Having deployed the LauncherOne system to Cornwall, we have demonstrated the mobility and flexibility of our launch platform. Our world class team continues to drive efficiency, and productivity gains while we scale the business,” Hart added.

Virgin Orbit’s press release and financial results are below.

Virgin Orbit Announces Third Quarter 2022 Financial Results

  • July 1, 2022 delivered seven satellites for the Department of Defense Space Test Program (STP) – fourth consecutive successful launch
  • Strong Q3 revenue – $30.9 million
  • Signed multi-year launch contract with Spire Global
  • Signed international spaceport agreements with Australia, Luxembourg, and South Korea
  • LauncherOne system on-site at Spaceport Cornwall for upcoming UK launch
  • $25 million investment from Virgin Investments, a part of the Virgin Group

LONG BEACH, Calif. (Virgin Orbit PR) — Virgin Orbit (Nasdaq: VORB) (“Virgin Orbit” or the “Company”), today announced its financial results for the third quarter ended September 30, 2022.

Virgin Orbit’s Chief Executive Officer, Dan Hart, commented, “We have had a very productive quarter – reporting strong revenues as well as signing several key international partnerships and commercial deals. We continue to scale production in our Long Beach manufacturing facility as we prepare to meet higher launch rates.

Our recent “Straight Up” mission built on our track record of 100% mission success in our first eighteen months of operations, bringing our total to thirty-three satellites precisely delivered into their target orbits.”

Mr. Hart continued, “Having deployed the LauncherOne system to Cornwall, we have demonstrated the mobility and flexibility of our launch platform. Our world class team continues to drive efficiency, and productivity gains while we scale the business.”

Third Quarter 2022 Financial Highlights:

  • Revenue of $30.9 million, compared to $0.0 million in third quarter 2021.
  • Net loss of $43.6 million, compared to a net loss of $38.6 million in third quarter 2021.
  • Adjusted EBITDA of ($42.9 million), compared to ($32.8 million) in the same prior year period.
  • Net cash used from operations of $45.7 million, compared to $34.5 million used in the same prior year period, as the Company continues to invest in the business.
  • Capital expenditures of $6.9 million, compared to $5.0 million in the same prior year period.
  • Free cash flow of ($52.5 million), compared to ($39.5 million) in the same prior year period.
  • Cash and cash equivalents of $71.2 million as of September 30, 2022.
  • Binding backlog agreements was approximately $143.1 million.

2023 Priorities:

  • More than double 2022 launch rate
  • Increase revenue per launch through our proven value proposition – offering premium mission unique solutions
  • Continue to ramp, scale and drive production efficiency gains
  • Expand backlog in launch, international spaceports, and key defense applications such as responsive launch, missile defense targets, and hypersonics

Conference Call Information:

The Company will conduct a conference call starting at 4:30 pm ET on Monday, November 7, 2022 to review the results for the third quarter ended September 30, 2022 and provide a business update.

A live webcast and replay will be available at https://investors.virginorbit.com/news-events/ir-calendar.

ABOUT VIRGIN ORBIT

Virgin Orbit operates one of the most flexible and responsive space launch systems ever built. Founded by Sir Richard Branson in 2017, the company began commercial service in 2021, and has already delivered commercial, civil, national security, and international satellites into orbit. Virgin Orbit’s LauncherOne rockets are designed and manufactured in Long Beach, California, and are air-launched from a modified 747- 400 carrier aircraft that allows Virgin Orbit to operate from locations all over the world in order to best serve each customer’s needs.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding the Company’s expectations for certain operational and financial results for the year ending December 31, 2022, expectations as to the rate and timing and success of future launches, expectations as to the anticipated benefits of the Company’s air launch capabilities, and anticipated growth. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the Company’s ability to access adequate sources of capital and continue as a going concern; its ability to grow market share in the developing space economy; its ability to convert backlog and potential revenue into revenue; its expected timing for and success of future missions; market acceptance of its current and planned products and services and ability to achieve sufficient production volumes and anticipated mission timing, as well as the factors, risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as in the Company’s subsequent filings with the SEC, including but not limited to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, accessible on the SEC’s website at www.sec.gov and the Investor Information section of the Company’s website at www.virginorbit.com. These filings identify and address other important risks and uncertainties that could cause the Company’s actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Virgin Orbit assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Virgin Orbit gives no assurance that it will achieve its expectations.

Third Quarter 2022 Financial Results

VIRGIN ORBIT HOLDINGS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except for per share data)
(Unaudited)

Three Months Ended September 30, 2022  Three Months Ended September 30, 2021  Nine Months Ended September 30, 2022   Nine Months Ended September 30, 2021
        
Revenue$30,907  $2 $33,023 $7,230
Cost of revenue 40,396   8,697  61,264  25,370
Gross loss (9,489)  (8,695)  (28,241)  (18,140)
Selling, general and administrative expenses 30,745   27,163  91,016  67,126
Research and development expenses 10,263   9,035  30,201  38,482
Operating loss (50,497)  (44,893)  (149,458)  (123,748)
Other income, net            
Change in fair value of equity investments (340)  4,852  (9,160)  4,852
Change in fair value of liability classified warrants 4,182     15,862  
Change in fair value of convertible notes 3,153     3,153  
Interest expense, net (508)  (6)  (588)  (19)
Other income 367   1,457  690  3,352
Total other income, net 6,854   6,303  9,957  8,185
Loss before income taxes (43,643)  (38,590)  (139,501)  (115,563)
Provision for income taxes      4  
Net loss (43,643)  (38,590)  (139,505)  (115,563)
              
Other comprehensive loss            
Foreign currency translation adjustment (31)  (82)  (120)  (102)
Total comprehensive loss$(43,674) $(38,672) $(139,625) $(115,665)
            
Net loss per share:            
Basic and diluted$(0.13) $(0.13) $(0.42) $(0.41)
            
Weighted average shares outstanding:            
Basic and diluted 335,416,139   294,124,548  335,101,146  283,496,703

VIRGIN ORBIT HOLDINGS, INC.
Condensed Consolidated Balance Sheets
As of September 30, 2022 and December 31, 2021
(In thousands, except per share data)

  As of As of
 September 30, 2022
(Unaudited)
December 31,
2021
     
Assets     
Current assets     
Cash and cash equivalents$71,194 $194,154
Restricted cash   828
Accounts receivable, net 1,977  2,080
Inventory 69,229  33,927
Prepaid expenses and other current assets 12,708  7,789
Total current assets 155,108  238,778
Property, plant and equipment, net 69,840  61,425
Right-of-use assets 13,312  14,685
Investments 4,338  13,498
Other noncurrent assets 380  3,354
Total assets$242,978 $331,740
      
Liabilities and Stockholders’ Equity     
Current liabilities     
Accounts payable$19,728 $10,334
Current portion of lease obligation 1,455  1,642
Current portion of provision for contract losses 8,054  
Accrued liabilities and other current liabilities 25,094  23,832
Deferred revenue 17,927  12,150
Total current liabilities 72,258  47,958
Lease obligation, net of current portion 12,800  14,078
Deferred revenue, net of current portion 9,165  28,991
Convertible note 44,147  
Public and private placement warrant liabilities 4,326  20,188
Provision for contract losses, net of current portion and other long-term liabilities 10,795  7,555
Total liabilities 153,491  118,770
Commitments and contingencies (Note 17)     
Stockholders’ equity     
Preferred stock, $0.0001 par value, 25,000,000 shares authorized; none issued and outstanding   
Common stock, $0.0001 par value, 2,000,000,000 shares authorized; 336,145,621 and 334,919,914 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively. 36  34
Additional paid-in capital 1,049,533  1,033,393
Accumulated deficit (959,959) (820,454)
Accumulated other comprehensive loss (123) (3)
Total stockholders’ equity 89,487  212,970
Total liabilities and stockholders’ equity$242,978 $331,740

VIRGIN ORBIT HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2022 and 2021
(In thousands)
(Unaudited)

  Nine Months Ended September 30, 2022  Nine Months Ended September 30, 2021
Cash flows from operating activities     
Net loss$(139,505) $(115,563)
Adjustments to reconcile net loss to net cash used in operating activities:     
Stock-based compensation 11,954  8,308
Depreciation and amortization 9,646  10,783
Inventory write-down 298  1,569
Gain on sale of fixed asset disposal (90)  
Write-off of right-of-use assets 70  
Non-cash investment in Sky and Space   (1,706)
Change in fair value of equity investments 9,160  (4,852)
Change in fair value of liability classified warrants (15,862)  
Change in fair value of convertible note (3,153)  
Changes in operating assets and liabilities:     
Accounts receivable 103  2,035
Inventory (24,305)  (24,345)
Prepaid expenses and other current assets (4,888)  (5,267)
Deferred transaction costs   (230)
Other noncurrent assets 2,977  78
Due to related party, net (74)  (83)
Accounts payable 9,391  5,127
Other long-term liabilities (966)  (727)
Accrued liabilities 1,335  1,608
Deferred revenue (14,049)  11,681
Other, net (33)  (110)
Net cash used in operating activities (157,991)  (111,694)
Cash flows from investing activities:     
Purchase of property and equipment (17,115)  (16,791)
Purchase of investment in Arqit   (5,000
Proceeds from sale of property and equipment 90  
Net cash used in investing activities (17,025)  (21,791)
Cash flows from financing activities:     
Payments of finance lease obligations (227)  (187)
Proceeds from the exercise of stock options 1,455  1,733
Advances to stock option holders   18
Parent Company contributions   137,141
Proceeds from convertible note 50,000  
Net cash provided by financing activities 51,228  138,705
Net (decrease) increase in cash and cash equivalents and restricted cash (123,788)  5,220
Cash and cash equivalents and restricted cash at the beginning of the period 194,982  26,786
Cash and cash equivalents and restricted cash at the end of the period$71,194 $32,006
      
Cash and cash equivalents$71,194 $31,178
Restricted cash   828
Cash and cash equivalents and restricted cash$71,194 $32,006

Virgin Orbit Holdings, Inc.
Use of Non-GAAP Financial Measures
(Unaudited)

Reconciliation of Adjusted (Non-GAAP) Results

This press release references Adjusted EBITDA and free cash flow, financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (GAAP). The Company defines Adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization, stock-based compensation expense, and certain other items the Company believes are not indicative of its core operating performance. The Company defines free cash flow as net cash used in operating activities less capital expenditures. Non-GAAP financial measures are not a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.

The Company believes that presenting Adjusted EBITDA and free cash flow provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. However, there are a number of limitations related to the use of Adjusted EBITDA, and free cash flow or any other non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies.

A reconciliation of the Company’s free cash flow guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting

and quantifying certain amounts that are necessary for such reconciliations.

Adjusted EBITDA Reconciliation

 Three Months Ended September 30, 2022Three Months Ended September 30, 2021Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
 (In thousands)       
Net Loss$(43,643) $(38,590) $(139,505) $(115,563)
            
Stock-based compensation$5,508 $5,560  11,954  8,308
Depreciation and amortization 3,079  3,547  9,646  10,783
Inventory write-down (1,283)  1,569  298  1,569
Write-off of ROU assets      70  
Gain on sale of fixed asset disposal (90)    (90  
Non-cash investment in Sky and Space       (1,706)
Change in fair value of equity investments 340  (4,852)  9,160  (4,852)
Change in fair value of liability classified warrants (4,182)    (15,862  
Change in fair value of convertible note (3,153)    (3,153)  
Interest expense, net 508  6  588  19
Provision for income taxes     4  
Adjusted EBITDA$(42,916) $(32,760) $(126,890) $(101,442)

Free Cash Flow Reconciliation

Three Months Ended September 30, 2022  Three Months Ended September 30, 2021  Nine Months Ended September 30, 2022  Nine Months Ended September 30, 2021
  (In thousands)       
 
Net cash used in operating activities$(45,676) $(34,451) $(157,991) $(111,694)
Capital expenditures (6,858)  (5,042)  (17,115)  (16,791)
Free cash flow$(52,534) $(39,493) $(175,106) $(128,485)