Virgin Galactic(SPCE) - 2025 Q2 - Quarterly Report

PART I Item 1. Financial Statements (Unaudited) Virgin Galactic's H1 2025 revenue was $0.87 million with a $151.8 million net loss, and total assets stood at $898.8 million Condensed Consolidated Balance Sheets Total assets decreased to $898.8 million by June 30, 2025, driven by reduced cash and marketable securities, impacting equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $163,547 | $178,605 | | Marketable securities (short & long-term) | $314,025 | $445,901 | | Total current assets | $532,795 | $627,936 | | Total assets | $898,817 | $961,225 | | Liabilities & Equity | | | | Customer deposits | $80,871 | $84,493 | | Convertible senior notes, net | $421,263 | $420,120 | | Total liabilities | $635,444 | $638,945 | | Total stockholders' equity | $263,373 | $322,280 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q2 2025 revenue declined to $0.4 million, but net loss narrowed to $67.3 million due to significantly lower operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $406 | $4,220 | $867 | $6,205 | | Operating Loss | $(69,942) | $(101,790) | $(158,390) | $(212,948) | | Net Loss | $(67,280) | $(93,775) | $(151,767) | $(195,787) | | Net Loss Per Share (Basic & Diluted) | $(1.47) | $(4.36) | $(3.74) | $(9.43) | - Total operating expenses decreased significantly to $70.3 million in Q2 2025 from $106.0 million in Q2 2024, driven by reductions in Spaceline operations and Research and development costs[18] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved in H1 2025, with financing providing $83.6 million, decreasing total cash by $17.2 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(131,364) | $(192,361) | | Net cash provided by investing activities | $30,634 | $83,676 | | Net cash provided by financing activities | $83,572 | $69,921 | | Net decrease in cash, cash equivalents and restricted cash | $(17,158) | $(38,764) | - Capital expenditures increased significantly to $104.4 million in the first six months of 2025, compared to $47.5 million in the prior year period, reflecting investment in future fleet development[25] Notes to Condensed Consolidated Financial Statements Notes detail the company's aerospace business, accounting policies, and key financial events including a legal settlement and ATM stock offerings - The company is focused on developing, manufacturing, and operating spaceships for private individuals, researchers, and government agencies[27] - In July 2025, the company reached a settlement in the 'Lavin v. Virgin Galactic' class action lawsuit for $8.5 million, with an expected net cost of $2.9 million after insurance coverage, accrued in Q2 2025[78] - During the first six months of 2025, the company sold 22.7 million shares of common stock under its 2024 ATM Program, generating $86.3 million in gross proceeds[50] - The company has $425 million in principal of 2.50% convertible senior notes due in 2027, with a net carrying amount of $421.3 million as of June 30, 2025[43][44] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Delta Class spaceship development on track for 2026, reduced operating expenses, and sufficient capital to fund operations for the next twelve months - Development of the new Delta Class spaceships is progressing on schedule, with commercial service planned to begin in the fall of 2026[95] - As of June 30, 2025, the company holds reservations for approximately 675 future astronauts, which translates to about $190 million in expected future revenue[98] - The company believes its current capital, including cash, cash equivalents, and marketable securities totaling $507.7 million, is adequate to sustain operations for at least the next twelve months[116][125] Results of Operations Q2 2025 revenue decreased to $0.4 million, while operating expenses significantly reduced, including Spaceline operations down 48% and R&D down 52% Operating Expense Comparison (Q2 2025 vs Q2 2024, in millions) | Expense Category | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Spaceline operations | $14.2 | $27.3 | $(13.1) | (48)% | | Research and development | $20.1 | $41.5 | $(21.4) | (52)% | | Selling, general and administrative | $31.9 | $33.9 | $(2.0) | (6)% | - The decrease in R&D expenses was primarily driven by a $19.2 million reduction in sub-contractor and contract labor costs related to the development of next-generation spaceflight vehicles[107] - The decrease in Spaceline operations expense was mainly due to an $8.7 million decrease in compensation and benefits and a $4.1 million decrease in materials and other operational costs[104] Liquidity and Capital Resources As of June 30, 2025, total liquidity was $507.7 million, with $83.6 million from ATM offerings, supporting short-term needs Key Liquidity Figures (as of June 30, 2025, in millions) | Item | Amount | | :--- | :--- | | Cash, cash equivalents and restricted cash | $193.7 | | Total marketable securities | $314.0 | | Total Liquidity | $507.7 | - The company's 2024 ATM Program generated $86.3 million in gross proceeds during the first six months of 2025 from the sale of 22.7 million shares[130] - Net cash used in operating activities for the first six months of 2025 was $131.4 million, a decrease from $192.4 million in the same period of 2024[117][118][119] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is not applicable as Virgin Galactic Holdings, Inc. qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[137] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[139] - No changes occurred in the internal control over financial reporting during Q2 2025 that have materially affected, or are reasonably likely to materially affect, these controls[140] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is subject to various legal proceedings, none of which are considered material to its business or financial condition - The company states that no pending legal proceedings are expected to have a material adverse effect on its operating results, financial condition, or cash flows. For more details, it refers to Note 12 of the financial statements[141] Item 1A. Risk Factors No material changes occurred to the risk factors previously disclosed in the company's 2024 Annual Report and Q1 2025 Quarterly Report - The company reports no material changes to the risk factors disclosed in its 2024 Annual Report on Form 10-K and Q1 2025 Form 10-Q[142] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[143] Item 5. Other Information No officers or directors adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the second quarter of 2025[146] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents, incentive plans, and officer certifications - The report includes exhibits such as the Third Amended and Restated 2019 Incentive Award Plan, the 2025 Employee Stock Purchase Plan, and certifications by the Principal Executive Officer and Principal Financial Officer[147][148]