Virgin Galactic(SPCE) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Cautionary Note Regarding Forward-Looking Statements This section outlines forward-looking statements concerning the company's goals, intentions, and expectations, warning investors not to place undue reliance due to various risks and uncertainties - The report contains forward-looking statements based on current management beliefs and assumptions, which are subject to significant risks and uncertainties[8] - Key factors that could cause actual results to differ materially from forward-looking statements include: delays in future commercial flights, safety of spaceflight systems, ability to market flights and achieve profitability, and the effect of geopolitical conflicts, economic conditions, and government regulations[9] Item 1. Financial Statements (Unaudited) The company presents its unaudited condensed consolidated financial statements for Q1 2025, showing decreased revenue, a narrowed net loss, and a 1-for-20 reverse stock split Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $903.9 million, total liabilities slightly decreased, and total stockholders' equity declined to $272.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $547,567 | $627,936 | | Total Assets | $903,933 | $961,225 | | Total Current Liabilities | $143,824 | $150,010 | | Total Liabilities | $631,762 | $638,945 | | Total Stockholders' Equity | $272,171 | $322,280 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2025, revenue decreased to $0.46 million, while the net loss narrowed to $84.5 million, primarily due to lower operating expenses Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $461 | $1,985 | | Total Operating Expenses | $88,909 | $113,143 | | Operating Loss | $(88,448) | $(111,158) | | Net Loss | $(84,487) | $(102,012) | | Net Loss Per Share (Basic & Diluted) | $(2.38) | $(5.10) | Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash used in operating activities improved to $75.9 million, with overall cash decreasing by $38.7 million, supported by financing activities Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(75,918) | $(113,229) | | Net cash provided by investing activities | $7,475 | $83,097 | | Net cash provided by financing activities | $29,712 | $6,891 | | Net decrease in cash, cash equivalents and restricted cash | $(38,731) | $(23,241) | Notes to Condensed Consolidated Financial Statements The notes detail a 1-for-20 reverse stock split, $30.7 million raised from ATM offerings in Q1 2025, and ongoing legal proceedings - On June 14, 2024, the company effected a 1-for-20 reverse stock split of its common stock, with all share and per-share data retroactively adjusted[27] - In Q1 2025, the company sold 6.9 million shares of common stock under its 2024 ATM Program, generating $30.7 million in gross proceeds[45] - The company is a party to various lawsuits, including the Lavin v. Virgin Galactic Holdings, Inc. class action and several derivative actions, which it intends to vigorously defend[62][63][71] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports Delta Class spaceship development is on track for 2026 commercial service, Q1 2025 revenue decreased, net loss narrowed due to reduced R&D, and liquidity is sufficient for the next twelve months - Development of the new Delta Class spaceships is progressing, with the first research flight anticipated in summer 2026 and the first private astronaut flight in fall 2026[84] - As of March 31, 2025, the company holds reservations for approximately 675 future astronauts, representing about $189 million in expected future revenue[85] - The company believes its current capital, including cash, cash equivalents, and marketable securities, is adequate to sustain operations for at least the next twelve months[109][114] Results of Operations Q1 2025 revenue was $0.5 million, down from Q1 2024, while total operating expenses decreased by 21% to $88.9 million, resulting in a smaller operating loss Operating Expense Changes (Q1 2025 vs Q1 2024, in thousands) | Expense Category | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Spaceline operations | $20,826 | $22,591 | $(1,765) | (8)% | | Research and development | $33,310 | $58,969 | $(25,659) | (44)% | | Selling, general and administrative | $30,550 | $27,884 | $2,666 | 10% | - The decrease in R&D expenses was primarily driven by a $17.6 million decrease in sub-contractor costs and an $8.6 million decrease in employee compensation related to next-generation spaceflight vehicle development[93] Liquidity and Capital Resources As of March 31, 2025, the company had $172.2 million in cash and $394.4 million in marketable securities, with liquidity sufficient for at least the next 12 months Liquidity Position as of March 31, 2025 (in millions) | Category | Amount | | :--- | :--- | | Cash, cash equivalents and restricted cash | $172.2 | | Marketable securities | $394.4 | - Net cash provided by financing activities was $29.7 million for Q1 2025, primarily from the at-the-market offering program[106] - Future expenditures are expected to increase as the company scales manufacturing for its expanding fleet, including additional spaceships, carrier aircraft, and rocket motors[107] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable as the company qualifies as a smaller reporting company - Not applicable for smaller reporting companies[121] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[123] - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[124] PART II - OTHER INFORMATION Legal Proceedings The company is involved in various lawsuits, but management does not believe any pending proceedings will have a material adverse effect on its financial condition - The company does not consider any currently pending claims, lawsuits, or proceedings to be material to its business or likely to result in a material adverse effect[125] Risk Factors No material changes to risk factors from the 2024 Annual Report, except for an update on potential negative effects of changes to U.S. tariff and import/export regulations - An updated risk factor highlights that changes to U.S. tariff and import/export regulations could have a material adverse effect on global economic conditions, supply chains, and financial markets[127] Other Information The Board ratified the issuance of 351,313 shares sold via the ATM Program to correct a defective corporate act, and no Rule 10b5-1 trading plans were adopted or terminated - The Board ratified the issuance of 351,313 shares sold via the ATM program to correct a "failure of authorization" after they were sold below a previously established floor price[131] - During Q1 2025, no officers or directors adopted or terminated a Rule 10b5-1 trading plan for the purchase or sale of company securities[132] Signatures Signatures The Quarterly Report on Form 10-Q was signed on May 15, 2025, by CEO Michael Colglazier and CFO Douglas Ahrens - The report was signed on May 15, 2025, by CEO Michael Colglazier and CFO Douglas Ahrens[139]