Virgin Galactic Q1 2026 Earnings Call - On Track for Q3 Flight Tests and Q4 Commercial Launch

Operator: Thank you. I will now turn the call over to Eric Cerny, Vice President of Investor Relations.

Eric Cerny, Vice President of Investor Relations, Virgin Galactic: Thank you. Good afternoon, everyone. Welcome to Virgin Galactic’s 1st quarter 2026 earnings conference call. On the call with me today are Michael Colglazier, Chief Executive Officer, and Doug 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 see 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, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call, whether as 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 on page 3 of our presentation.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Eric. Good afternoon, everyone. It’s been a quick month and a half since our last earnings call. I’m happy to share we’ve been advancing the many efforts across the company in line with our plans and prior guidance. We delivered the first of our new spaceships from our assembly hangar to our test and launch hangar. Ground testing of that spaceship is underway. We remain on track to commence flight testing in Q3 and space flight in Q4. With commercial space flight operations continuing to draw closer on the horizon, we’ve accelerated efforts across the company to prepare for the ramp of activity. We’re hiring our next group of world-class spaceship pilots as we prepare for flight test and ongoing space flight operations.

We’ve provided our roughly 650 founding astronauts, who make up roughly a year’s worth of advanced bookings, with expected flight windows in 2027 and early 2028. We’ve received excellent reception and early booking response to the newly priced space flight expeditions we released to the market in April, and we’ve begun construction of a rocket motor assembly line in Phoenix, which is expected to be operational in Q4. In addition, we’ve also managed the financial strength of the company. Spending continues to decline quarter by quarter. Debt retirements are being made on or ahead of schedule, and cash balances are being maintained at appropriate levels as we work through the final quarters of our pre-revenue phase.

Our agenda today will be relatively light, reflecting both the short term since our Q4 earnings call and the consistency of progress against our prior statements and objectives. Turning to page 4. Since our last call, we finished the major structural task with our first spaceship, and we were all pleased to reach the weight on wheels milestone in April as we moved the ship from our assembly hangar to our test and launch hangar, which is co-located on the grounds of our Phoenix campus. Outstanding work by our entire team. Structural assembly continues to progress as planned for both our static test article and our second spaceship, and the images on page 5 showcase some of the larger parts of our static test article coming together. As you saw during the build of our first spaceship, the final assembly process moved quite rapidly.

This rapid assembly process continues with the static test article, which, as a reminder, is built for extensive use in our testing program, but which will not be flying. Our second operational spaceship will follow the static test article, and this ship has begun fabrication. We will again leverage the same rapid assembly process for the second spaceship, and we expect the second ship will enter service between late Q4 2026 and early Q1 2027. This timing keeps us on track with our plans to substantially increase the number of space flights per month during the first 2 quarters of 2027. Turning to page 6 to talk about our ground test efforts. At a technical level, our ground test approach is comprehensive and takes advantage of industry best practices with testing progressing in parallel across multiple locations.

We’ve made purposeful changes in our approach to ground testing versus the process that was used with our original spaceship, Unity, and the upfront investments we made in this area are now paying off. We purposely invested in off-ship testing infrastructure to significantly increase the number of systems test that can be accomplished prior to and during the final spaceship assembly. Our safety and test center in Irvine, California, has been running parts of our ground test campaign for many months. The image on this page showcases our Iron Bird test platform, one of the many off-ship infrastructure investments we’ve made. These investments have enabled us to complete large amounts of the ground test program in dedicated facilities with purpose-built test rigs and equipment.

This parallel off-ship testing activity reduces expected time spans for the on-ship ground test elements, with much of the on-ship testing focused on verification of systems installations rather than first-time checkouts of hardware. At a practical level, this means we can now advance our new spaceships from structural assembly through on-ship ground testing and end-of-flight test in much less time than what was required with our VSS Unity, while having a more robust ground test program overall. Moving to page 7. I hope you’ve all seen our recently released episode of We Build Spaceships, which provides a great overview of our ground testing efforts. The link to the video is on this page, and I’ll summarize by highlighting the various facilities where this important work is taking place. First, at our Safety and Test Center in Irvine, we continue to conduct key qualification tests of our hardware.

Qualification testing puts the hardware components through the paces of the conditions they see in flight, including temperature and vibration, as well as extreme conditions they can be subject to. This past quarter, we completed dozens of component qualifications, including our central computer. This computer is the heart of the digital flight control system, which translates pilot inputs into commands to move the flight control surfaces at the back of the spaceship. We are also testing systems on our Iron Bird, a test platform that allows full system-level testing of how hardware responds in flight. Second, at the Southwest Research Institute in San Antonio, Texas, we’ve completed testing of our flight control surfaces under loaded flight conditions, and we’re now preparing to structurally test our wing, fuselage, and feather subassemblies.

These tests are part of our overall structural testing effort, which is conducted to verify that our as-built configurations meet or exceed the design standards we have set out to achieve. These tests also allow detailed correlation of the various analytical models that we use to predict behaviors in flight test and commercial service. Third, our team continues to qualify various software and avionics systems at our engineering headquarters in Orange County, California, and at vendor facilities across the country. Software plays a vital role in our spaceship, especially in our new flight control architecture, and we are using industry best practices to ensure our code is ready and safe.

Fourth, in the Test and Launch Center in Phoenix, our team is now completing installation of many electrical and mechanical systems that are embedded inside the ship, while also conducting a range of on-ship production acceptance tests on systems that have been put in place, verifying the quality of each system as it’s installed. In June, the team will begin integrated vehicle ground testing, which is used to check out complete end-to-end performance of the spaceship. Turning to page 8, I’d like to talk briefly about our flight test program. When our ground tests in Phoenix are complete, we’ll carry the new spaceship to Spaceport America using our launch vehicle, Eve. Once we are in New Mexico, we will start the glide flight phase of testing. This will be akin to the glide testing we did with our Unity ship.

However, the duration will be substantially shorter given the faster turn times of our new Delta-class vehicles. We continue to expect the flight test phase to commence with glide test in Q3, progressing to rocket-powered flights in Q4. As I mentioned on our last call, one of the many ways we are preparing for the first flight test of our new spaceship is by bringing our prototype spaceship, Unity, back for an encore performance. Unity’s glide characteristics and energy management profile provide an outstanding real-world proxy, which, in addition to extensive simulator training, will prepare our pilots to put our new spaceships through the required flight test points. This image from earlier this week shows Unity in its pre-flight configuration with our launch vehicle, Eve. We are expecting Unity to be back in the skies later this month for the first of several glide flights above Spaceport America.

Moving to page 9. Our key schedule milestone dates remain consistent with the expectations we shared during our last earnings call, which is great news. As those who track the aerospace industry know, keeping forward momentum in line with expectations is notoriously challenging with these complex programs, and our ability to maintain consistent progress against our schedule is due to the massive effort, ingenuity, and nimble adaptations from our Virgin Galactic team. Great job to all of you at VG who are listening in. Page 10 highlights some of our preparations for commercial spaceflight operations. Talent is key to our business, most of our hiring needed for commercial spaceflight operations will come in the third and fourth quarters as we continue to manage our costs prudently. A few key roles will be needed earlier, including the expansion of our truly world-class pilot corps.

The licensing process for our new spaceships is well underway, and we are working closely with the FAA to ensure all elements are submitted according to plan and the licensing process moves ahead accordingly. We anticipate the various elements associated with the new Part 450 licensing regime will continue throughout the year, and we expect to receive our license prior to our first powered flight in Q4. We have approximately 650 founding astronauts booked for Virgin Galactic spaceflight expeditions. They are an amazing group of people, and collectively, they represent around a year of advanced bookings for the business, which is a tremendous asset as we begin operations.

With clarity on flight windows growing substantially as we near the start of commercial spaceflight operations, we have given each of our founding astronauts a rough expectation of their flight window via a newly introduced astronaut portal. We expect the majority of our founding astronauts will complete their spaceflight expedition during 2027, with the remainder flying to space in the first half of 2028. We recently opened a limited number of bookings for Virgin Galactic spaceflight expeditions, each priced at $750,000, with flight dates expected in mid-2028. The response has been strong and global in nature, and we’ve received qualified inquiries from customers across more than 20 countries. We’re now actively progressing through the booking process with individuals, research organizations, and government agencies.

As a reminder, booking a space flight expedition is a deliberate process that typically unfolds across several months as customers move from initial engagement to in-depth conversations, continuing through a detailed review of terms and conditions, and ultimately to the booking of their expedition. This process is consistent with other high consideration, high value experiences. Many of the conversations we are having are moving to the contracting phase more quickly than we would typically expect, and we are very encouraged by the pace we’re seeing. We’ve secured deposits for a meaningful portion of the available seats at this price point, and I expect we will close this limited tranche of space flight expeditions at the $750,000 price during our glide flight program in Q3.

As we shared previously, once this tranche is allocated, we will pause new bookings and begin onboarding this next cohort of astronauts. Following that, we plan to open a subsequent tranche, likely at a higher price point. Finally, before I hand the call over to Doug, I am happy to share that construction has begun on our new rocket motor assembly line located adjacent to our spaceship assembly hangars at our Phoenix campus. We have a substantial number of motors already in inventory that will carry us through flight test and into the start of commercial space flight operations, but we plan to ensure a steady, ongoing supply to support our growing space flight cadence. In this regard, we plan to have the new rocket motor assembly line operational in Q four.

This timing aligns with the completion of our second spaceship, allowing us to shift our talented team in Phoenix from spaceship assembly to rocket motor assembly without missing a beat. Doug, let me pass the call over to you for the financial update.

Doug Ahrens, Chief Financial Officer, Virgin Galactic: Thanks, Michael. I’ll start with our financial results for the quarter just ended and follow with a few details about our recent capital market activities. I’ll provide more color on our projected cash flows and the P&L as we move into commercial spaceflight operations and scale the business. With regard to our recent financial results and our projections, you’ll notice a trend of continuous improvement in free cash flow because the peak spending for spaceship development is behind us. We’ve been moving through spaceship assembly and into testing, which results in a progressively smaller cost footprint. Moving to page 11. In the first quarter of 2026, we generated revenue of $200,000 from access fees related to future astronauts. Total operating expenses for the first quarter were $66 million, a 26% reduction from $89 million in the prior year period.

This change reflects a continued shift from R&D to capital investments in production of our spaceships and lower overall spend as we move through the assembly phase of the first spaceships. Our first quarter net loss improved by 23% to $65 million compared to $84 million in the prior year period. Adjusted EBITDA improved by 24% to negative $55 million in the first quarter compared to negative $72 million in the prior year period. Capital expenditures were $40 million, down from $46 million in the prior year period. Free cash flow was negative $93 million in the first quarter, a 23% improvement compared to the prior year period. Moving to page 12.

We ended the first quarter with $251 million in cash equivalents, and marketable securities, which includes $11 million in gross proceeds raised through our At the Market or ATM equity offering program. Not included in that cash balance is $52 million in gross proceeds from the ATM during the month of April. On April 30, we announced the potential redemption of $10 million of 2028 first lien notes through an exchange for shares of common stock. This redemption is being made ahead of schedule and reduces the debt payments due in September of this year. This is a great example of the flexibility built into our capital realignment transactions that we completed last December, and which we discussed during our last earnings call. We recognize that there’s dilution caused by the ATM program and debt redemption I just described.

However, we expect the dilutive impact will be far outweighed by the value created from assets being built with this capital. These assets are recorded in our property plant and equipment on the balance sheet, which totals $427 million at the end of the first quarter. Moving to our projections. Revenue for the second quarter of 2026 is expected to be approximately $100,000 for future astronaut access fees. Free cash flow for the second quarter of 2026 is expected to be in the range of negative $87 million to $92 million, with slightly less than half being for CapEx as we continue to prepare our spaceships for commercial service. We anticipate that free cash flow will continue to improve modestly in the third quarter of 2026.

We will be growing various functions within spaceflight operations during flight test and in preparation for the start of commercial service, but we expect this to be more than offset by larger reductions in capital expenditures as spaceship development progresses. During the fourth quarter of 2026, we expect to see continued improvement in spending and also the beginning of revenue for spaceflight operations. We have been presenting the annualized business model shown on page 13 during several of our recent earnings calls. By the fourth quarter of this year, we expect operating expense, including variable spaceflight costs, to be in the quarterly range of $70 million-$80 million. Notably, this level of quarterly spending aligns with the annualized view of the model as shown in the first column on this page.

Our cost footprint is expected to be reduced to this level by the fourth quarter because we are progressing from spaceship manufacturing to the launch of commercial spaceflight operations. Next, I want to highlight the powerful unit economics, by which I mean the economics of a single flight, that are now possible given the dramatic reductions in the cost of human spaceflight driven by our highly reusable system. Most importantly, reusability drives the cost of each flight down dramatically. This, combined with the high value of our spaceflight experience, which supports our pricing model, results in a high contribution margin per flight. In other words, the revenue from each flight can far exceed the variable cost for that flight. Given the low unit cost structure, even at historical $200,000 price points, each flight is expected to generate a positive contribution margin.

For illustrative purposes in the economic model on page 13, at an average price of $600,000 per astronaut, we’re expecting a very healthy contribution margin of over 80%. As we scale operations and given the baseline cost structures shown on this model, we begin to see the tremendous flow through of profit to the bottom line. Now let’s circle back to expectations for early commercial operations. In January 2027, we expect to fly 4 flights per month and reach 8 flights per month by Q2. Ahead of this, our cadence of space flights in Q4 of this year will be intentionally constrained to allow time for learning between flights. As we get closer to the launch of commercial spaceflight operations, we’ll provide more information on the expected dates for the first flights.

Additionally, we are modeling the majority of our early flights with average revenue per astronaut at $200,000. In the fourth quarter, cash receipts are expected to exceed revenue as we begin to collect customer payments ahead of flights planned for early 2027. Given the strength in our balance sheet, our declining spending, and our unit economics, our liquidity supports our transition to commercial spaceflight operations. Moving beyond 2026, we expect to achieve modest quarterly positive cash flow within 2027 as we fly a large percentage of astronauts with the reservations that were historically sold at lower prices. We forecast that we will achieve the adjusted EBITDA shown in the first column of the business model on page 13 on an annualized basis sometime during 2028 as the average ticket price improves. With that, I’ll turn it back over to Michael.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Doug. Finishing up on page 14 with a picture of our 1st production spaceship in the test and launch hangar. Every time I view our spaceships, I marvel at both the engineering and artistry that underpin everything about Virgin Galactic’s spaceflight system. Like all spacecraft built to handle the rigors of leaving and returning to the Earth’s atmosphere, our spaceships are powerful, incredibly strong, durable, and robust. Distinctively, our spaceships are stunning achievements of industrial design with a grace, elegance, and flat-out cool factor that is unique to Virgin Galactic. Just wait until you see this ship with its new livery. We’re proud of our progress, and we’ve opened up tours of the spaceship factory for founding astronauts, prospective customers, and invited guests. We expect to christen this 1st ship and send it out to Spaceport America around the time of our next earnings call.

We’re moving with momentum, and it’s awesome to see. Let’s open the call for questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Oliver Chen with TD Cowen. Your line is open.

Oliver Chen, Analyst, TD Cowen: Hi, Michael and Doug. Nice to see all the progress. Regarding the early booking responses, Michael, that you spoke to and the encouragement there, what’s the nature of what you’ve seen and also the implication for decisions on pricing? The second ship is pretty exciting as well. What have you learned from the first ship that will bode well for the process and the second ship and then future ships perhaps? Doug, on the ATM program, which helps fund the ROIC accretive, you know, actions, what should we know about your use of that program going forward and/or the framework? Thank you.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Oliver. I’ll start it out. It’s Michael here. I think the nature of who we’re talking to is really interesting and encouraging. We have, you know, I’d say some of the people that are more prevalent in our founding astronauts, those early 650, people who have always thought about going to space, always had the dream of going to space and wanting to do it. We see some of those. We see people who want to fly with their family members, parents or children. We’re seeing people coming and saying, "I want to do with this with my friends. I wanna do this as a buddy trip. I wanna do this as a girls trip." We’re seeing people who are coming in and saying, "I have research that I’ve been wanting to do.

How do I connect with your research program?" We have governments that are, you know, not governments like the U.S. or China or Russia that are doing their own space programs, but governments who probably can’t do that, but have an interest in their own space program reaching out to us. We have people who are more like corporate charters and wanting to book for a variety of corporate reasons. The diversity, I think is fantastic, and I’m very heartened by that. The general shift, I’d say, in tone from, you know, six years ago when I started of, "Oh, why would you think about going to space?" We haven’t seen that.

You know, I’ve been off in London and New York for, I’ll call it a connecting with potential customer trips. The tone is, "This is amazing." I’m so excited by this. Then you see a range of people, right? Some people are like, "I wanna do this in a couple of years. I wanna do this on my ex milestone birthday." Some are like, "I just wanna go do this right now." We send them over to our sales team. Hopefully that gives you a little bit of sense of the nature of the people we’re talking to. Pricing, we will continue to just have the same purposeful pricing strategy. The value has to massively exceed the price in which we charge.

That’s our first premise, we believe it’s doing that and more so. We expect we’ll retire this first tranche at $750 and open up the next one higher. I don’t think we’re ready to kind of say where higher at this stage, I do expect that it will be higher. We’ll probably continue that for a couple more clicks and then steady out somewhere. Hopefully that gives you some sense on the pricing. I’ll talk a bit on, Doug, on the first ship to the second, hand it to you. There’s a sizable shift between the first ship. The second set of structural parts are going into our static test article, the second spaceship is, you know, kind of the third one through our production line.

One of the big things I’m noticing is the consistency in which the carbon parts that we’re manufacturing are coming out as we get to our second spaceship. We’ve kind of figured out the recipe as we used to describe it, right? We’ve licked the manufacturing problems there, and that means they kind of come out clean, and they’re easy for us to take in and move forward. That’s the primary piece. The first assembly we went through was super smooth because we had used a determinant assembly process all the way through everything we’d done. At the same time, the first time through, you find the little things.

You know, small things that kind of clash when you try to put 2 things together and you didn’t quite expect something that kind of is in the way and you had to kind of move it around. That’s all cleaned up now. The net of all that is going to the 2nd ship, we expect it to come in functionally more cheaply in its set of parts because we won’t have to redo a carbon part. They’re coming out more consistently. The process will be more swift in the assembly, the net of that means it’s quicker and less costly to build. We expect that will continue probably more so as we expand our fleet over time. Doug?

Doug Ahrens, Chief Financial Officer, Virgin Galactic: Thanks for the question, Oliver. Regarding the ATM and our plans going forward. We’ve used the majority of it, right? It was a $300 million program. We have $87 million left on it’s been a successful program. That’s built up our cash balance that really helps us, you know, get through this transition phase to the start of commercial service. Really going forward, what we’re looking for is, you know, it provides additional growth capital for us. Example was, you know, we just expanded our rocket motor or are expanding our rocket motor factory capacity so we can have a larger volume of motors running through for growth. It also provides capital for us to continue working on a launch vehicle program.

Those are good opportunities for additional growth capital. It’s there for us if we need it. You know, I just wanna point you back to these unit economics we were talking about earlier and what we’re headed for. You know, we’re getting into a phase now where we’ve become stabilized and self-sufficient with the operations of the company so that, you know, drives a less reliance on things like ATMs going forward. That’s positive as we get to commercial service.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Yeah.

Oliver Chen, Analyst, TD Cowen: Okay. Thank you. There’s been a lot of general enthusiasm with SpaceX and space as large. You have a lot of partnerships or institutional ideas around governments and space ports as well. What are your thoughts on the evolution of more recurring revenue and also the nature of how you’re different from SpaceX and what this may mean for your strategies or the industry at large with space being a big idea?

Michael Colglazier, Chief Executive Officer, Virgin Galactic: I’ll start at the end, Oliver. Space is a big idea, has been and is getting a lot of momentum. You’re seeing more of the ETFs coming out around space. I think that’s positive and well merited. Obviously a lot of energy around the SpaceX IPO as that seems to be coming forward. I think that will continue as you see a lot of articles to just generate more innovation within commercial space. A lot of good things coming as SpaceX continues to mature and goes forward. I think we will benefit from that. You talked about recurring revenue. I assume you’re talking like things for us and where are we different. Well, one thing is we are clearly focused in this first business model on human spaceflight.

That’s part of SpaceX’s offering. Theirs, you know, starts at $50 million up. Ours is starting at $750,000. You know, close to a couple orders of magnitude less in cost. You know, that’s obviously a focus and all of our focus on the experiential benefits are there. We’ll take that as we talk to multiple spaceports. We’ve built all the infrastructure, now those fixed costs are behind us, the non-recurring engineering’s behind us, now we’re looking to scale that out. We continue, we’ve talked publicly about Italy. We continue to be working with our Italian partners on how and when we want to bring that spaceport forward, we continue with additional countries, I’d say, very excited about the potential to bring spaceports in additional countries.

That all just leverages all the infrastructure we’ve put in, and you start to see the flow-through economics that Doug talked about with that. There’s also a lot of other interesting things as, you know, governments, U.S. government in particular, but other governments look at what can be done with space. I think people are starting to recognize the frequency with which we will be going through the atmosphere and the ways we do has a lot of potential. One of the things we’re going to be exploring are, what things we can do as almost, you know, ride-along efforts, going forward. That is intriguing to us.

I think we shared in the past that we are qualified under the Golden Dome IDIQ, and so we continue to look at ways in which we can be supportive of the government in that regard. I really think you’re going to see expansion in the types of people and markets that can use these space vehicles going forward. Hopefully that gives you a little bit of context to that on that.

Doug Ahrens, Chief Financial Officer, Virgin Galactic: Yeah, very helpful. Thanks. Best regards.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Albert.

Operator: Our next question comes from the line of Greg Konrad with Jefferies. Your line is open.

Greg Konrad, Analyst, Jefferies: Good evening.

Hey, Greg.

Maybe just start with one clarification question. I think you mentioned $200K. Was that per passenger, and how long do you expect that to be at that price level, given I think in the past you talked about potentially filtering in some shorter cycle customers at a higher price point?

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Greg. This is Doug. We do have a lot of early, you know, reservations that were priced at $200,000 to $250,000, and these were sold years ago. You know, we’re of course prioritizing that for these, you know, customers that have been with us for a long time. You’ll see those, you know, at the front end of this because that’s, you know, kind of on a FIFO basis. That’s how that lands. We do have opportunities to mix in other prices. We did specifically talk about an opportunity for some customers to come in earlier to be one of the first 1,000 astronauts to space. You know, that comes at a premium price.

Doug Ahrens, Chief Financial Officer, Virgin Galactic: That is a program as an example of how people can be mixed in at earlier price points or earlier flights. That’s something that would tend to filter in. Then you start to see other ticket prices come in. We had other tickets at $450, then $600, and now $750. You’ll start to see those blend in as the year goes on. It’s as those blend and the sequencing. That’s TBD about how that will happen. We just want to kind of set expectations at the very beginning.

You know, you’ll see the lower tickets and then some of those ones that are moving up in the line, you know, to be in the first 1,000, they’ve got to be in the first 2 quarters of the year is if you look at our flight rate. That kind of tells you about when you’d see those start mixing in, and that will start elevating our price points.

Greg Konrad, Analyst, Jefferies: I think, you know, in terms of like the new sales at $750K, I think you talked about maybe that coming in mid 2028 if I heard correctly. I mean, if we think about that target base model that you’ve laid out, you know, assuming $600K per ticket, you know, as you kind of get to that higher price point, I mean, does anything change on the cost side or, you know, should we think of that as largely incremental to that base margin that you laid out on the initial fleet?

Doug Ahrens, Chief Financial Officer, Virgin Galactic: Right. That’s all going to be incremental because the cost here would not change. As you pointed out, this model reflects average ticket price of $600,000. We put that in there a while ago. As prices go above that level, that’s all incremental and flows right through to the bottom line and adds to the EBITDA.

Greg Konrad, Analyst, Jefferies: I’ll leave it at 2. Thank you.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Greg Konrad.

Operator: Next question comes from the line of Myles Walton with Wolfe Research. Your line is open.

Myles Walton, Analyst, Wolfe Research: Thanks. Good evening.

Mike, I think-- Michael, I think you talked about the Part 450 licensing regime, and I know that just went effective. How different is the licensing regime going forward? How much more effort do you have to obtain that license? Then as you ramp flights, could you remind us of basically the ongoing, recurring licensing? Is there any reason to think that that will be, you know, an obstacle to getting up to pace?

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Myles. I think great news with the Part 450 work. You know, we’ve obviously been working with the FAA, you know, for quite a while with this. We have turned in our application for our space flight operator’s license, and that’s been accepted. The FAA’s received our application. We’ve got a letter back that’s been accepted. That has a fairly structured process and an understood timeline going forward. That process and timeline we all expect to conclude before we go to space. That’s I think we’re feeling very confident in our approach to getting our space flight operator’s license in that regard. We have a very focused team that’s been working closely with the FAA all along.

Of course, you know, Mike Moses is our point on all of that and is very well engaged. You are well aware, as we always talk, each of our ships are experimental in nature. They must have experimental airworthiness certificates. Eve, our launch vehicle, has that. Our first Delta ship, you know, has to be airworthy to get that certificate, and that happens after we finish the construction and testing. We expect our first Delta ship will get its experimental airworthiness certificate just ahead of us taking it over to Spaceport America before we kind of do a captive carry flight and the glide flights. Those experimental airworthiness certificates are on recurring renewals. We’ve been doing that with Unity and Eve all along.

We expect that will continue. Hopefully that answers your question on the licensing piece.

Myles Walton, Analyst, Wolfe Research: Yeah. No, that’s great.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Very good.

Myles Walton, Analyst, Wolfe Research: Oh, go ahead.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Yeah, no, please. If you could remind me on the ramp question.

Myles Walton, Analyst, Wolfe Research: I was just wondering from a regulatory perspective, as you ramp, is there any ongoing recurring approvals you’re going to need that, you know, that in any way are risk to the recurring nature of flight? Obviously 4 months in January is not as quick as you want to be, but it’s heck of a lot quicker than what you’ve ever done.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Yeah, I don’t see something in the licensing effort, of course. We expect to be, you know, completely close with the FAA, just like we did with all of our Unity flights throughout here. Nothing I would expect to see that would change in the basis. You know, our ability to turn the ships wasn’t constrained by the FAA or licensing. It was our own inspections and maintenance process, and that’s what’s so different with these new ships. I don’t think there’s a licensing complication that we’re expecting there. We will be partnering with them on every flight as we go.

Myles Walton, Analyst, Wolfe Research: Okay, great. Just one last one, if I could. Have you reached out to the administration from a perspective of investment? Obviously they have expressed an interest in lots of different areas. Your emerging area might be an interest of them as well, and just curious, more from the investment side if there’s any conversation. Thanks.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: We are definitely in connection with the administration, especially some of the DOD departments as you’d expect, both in space, Air Force, AFRL, things like that. I think there’s interest in lots of areas. Now you used the word investment. You know, sometimes investment can come from sponsoring things that can help us add capabilities or help us expand capacity versus say a direct investment in the company. But there’s also, you know, conversations, you know, with I’ll call it other groups that would also be interested in partnering with us that we could always look to both for commercial business but also investment to help us expand and grow, you know, more from a growth capital standpoint. Nothing to share or announce here.

But I do think as we are now getting very practical and real, the assets themselves are visible, tangible. You can see them. The dates are, you know, close in on the horizon. It gives us a wider opportunity to talk about what else might we be able to do with these assets, who might we be able to do them for, and I think exciting to find value. I think we shared last time, we have a new member of our executive team, Megan Prichard came in as our Chief Growth Officer. A part of Megan’s team obviously will be focused on the sales of spaceflight expeditions. But a part of it is broader growth profile that would include new business and government growth like you’re referring to.

Myles Walton, Analyst, Wolfe Research: Thanks, Michael.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Myles.

Operator: Again, if you would like to ask a question, press star then the number 1 on your telephone keypad. We do have our last question comes from the line of Kristine Liwag with Morgan Stanley. Your line is open.

Gabby, Analyst (on behalf of Kristine Liwag), Morgan Stanley: Hey, guys. This is Gabby on for Kristine. Good evening, and thanks for taking the question. Last quarter you shared encouraging progress on the Italy Spaceport opportunity, you know, including work around airspace, potential flight paths, and infrastructure requirements. Could you provide an update on where that study stands today and what the key next steps are?

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thanks, Gabby. I’ll talk about Italy and then a bit more broadly about second spaceports. The work continues. The main part of the effort we had done with ENAC, I’ll call it similarly the FAA version for Italy, that structurally has been completed. We understand how and where the flight paths, the way we deconflict airspace, the approach we would take and everything around that. That’s pretty solid. Our next steps are really going to be both on the business model to work with our Italian partners there and the timing in which we want to do that and what’s the public-private partnership is likely to look like. Those will be the next steps that are there with Italy.

We’re, you know, remain incredibly excited about that opportunity and spaceport, and I think the same is true for the Italians. At kind of in parallel, I’d say, we continue to talk about other locations for spaceports in other parts of the world. You’ve always heard us say we think there’s probably 3-4 permanent spaceports, and then potential for more partial year spaceports. Those conversations have been continuing, and I think in a very, very positive way.

Nothing to share or announce on this, other than I think the understanding of both the economic engine that is brought with a, you know, kind of fully functioning spaceport, the opportunity that a spaceport brings to a government for its own potential interest to get into commercial space and the ability to bring lots of people to those countries, all those elements are meaningful, and we’re looking forward to continuing those dialogues with the countries we’ve been talking to.

Gabby, Analyst (on behalf of Kristine Liwag), Morgan Stanley: Great. Super helpful. Thanks so much.

Michael Colglazier, Chief Executive Officer, Virgin Galactic: Thank you.

Operator: Ladies and gentlemen, that concludes the question and answer session. Thank you all for joining. You may now disconnect.