EARNINGS PRESENTATION SECOND QUARTER 2025 08.06.2025 DISCLOSURES FORWARD-LOOKING STATEMENTS This presentation references certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (GAAP), including, Adjusted EBITDA and free cash flow. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation and certain other items the Company believes are not indicative ...

Space Tourism - Blue Origin's next space tourism flight will include billionaire Justin Sun and five others [1]

Core Viewpoint - Virgin Galactic has seen a significant decline in its stock value, down 98% over the last five years, highlighting the risks associated with investing in speculative, unprofitable companies [1] - Recent better-than-expected earnings and analyst upgrades have led to a notable 80% increase in shares on May 16, raising questions about the sustainability of this rally [2] Company Overview - Virgin Galactic is pioneering the space tourism industry, offering suborbital flights to wealthy individuals at approximately $600,000 per seat [3][4] - The company estimates a total addressable market of 300,000 potential customers for space tourism, with an expected annual growth rate of 8% [5] Financial Performance - In the first quarter, Virgin Galactic reported a 77% year-over-year revenue decline to $461,000, although a reduction in expenses helped narrow the operating loss from $113.1 million to $88.9 million [6][7] - The company has $140.8 million in cash and equivalents, raising concerns about its ability to sustain losses without seeking external capital, which could lead to equity dilution [8] Business Stage and Future Prospects - Virgin Galactic is currently in a pre-commercial stage, focusing on aircraft design and obtaining regulatory approvals to start commercial flights in 2026 [10] - The management's history of overpromising and underdelivering raises skepticism about the timeline for commercial operations, which were initially expected to begin in 2011 [12] Investment Potential - There is potential for Virgin Galactic to become a millionaire-maker stock if it successfully establishes commercial operations, but this outcome is uncertain [11] - The ongoing capital burn and potential for shareholder dilution present significant risks that may outweigh the potential rewards at this time [13]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive has bureaus and studios in key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] Group 2 - The company is committed to using technology to enhance workflows and improve content production [4] - Proactive employs automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Financial Performance - Revenue was $0.5 million, a decrease compared to $2.0 million in the prior year period, due to the pause in commercial spaceflights[34] - Total operating expenses were $89 million, down from $113 million in the prior year period, reflecting a shift from R&D to capital investments[34] - Net loss was $84 million, an improvement from $102 million in the prior year period, primarily driven by lower operating expenses[34] - Adjusted EBITDA was $(72) million, compared to $(87) million in the prior year period[34] - Free cash flow was $(122) million, compared to $(126) million in the prior year period[34] - The company raised $31 million in gross proceeds through an at-the-market equity offering program[34] - Cash, cash equivalents, and marketable securities totaled $567 million, including $31 million of restricted cash[39, 38] Future Outlook - Q2 2025 free cash flow is expected to be in the range of $(105) million to $(115) million[35] - Upcoming key milestones include first glide test flight in Spring 2026, first research spaceflight in Summer 2026, and first private astronaut flight in Fall 2026[40] Non-GAAP Reconciliations - Non-GAAP total operating expenses were $79.917 million, compared to $101.200 million in the prior year period[42]

Financial Data and Key Metrics Changes - Revenue for the first quarter was approximately $500 million from future astronaut access fees and event fees [26] - Total operating expenses decreased by 21% to $89 million compared to $113 million in the prior year period [26] - Adjusted EBITDA improved to negative $72 million in the first quarter compared to negative $87 million in the prior year period [27] - Free cash flow was negative $122 million in the first quarter, within the range of guidance [28] - Cash, cash equivalents, and marketable securities at the end of the first quarter totaled $567 million [28] Business Line Data and Key Metrics Changes - The company is focused on transitioning spending from research and development to capital investments in manufacturing assets [27] - Capital expenditures for the first quarter grew to $46 million compared to $13 million in the prior year period [27] - The production of the first two spaceships is underway, with significant capital investments being made [27] Market Data and Key Metrics Changes - The company expects to open the first wave of spaceflight reservations in Q1 of 2026, with pricing expected to increase from the last price of $600,000 [21] - The company anticipates a strong referral and repeat business from the approximately 675 customers already on the manifest [21] Company Strategy and Development Direction - The company is focused on bringing new spaceships into service in a safe, timely, and cost-efficient manner [20] - Plans for a second spaceport in Southern Italy are underway, with feasibility assessments ongoing [22] - The company is exploring additional revenue opportunities through its carrier ship platform, which could support government and research missions [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming sales process and the potential for repeat business from previous customers [39] - The company is confident in its ability to manage expenses and expects a declining spending trend through 2025 [44] - Management highlighted the importance of customer experience and referrals in driving future sales [62] Other Important Information - The company plans to publish an in-depth series showcasing spaceship construction starting in June [19] - The company has established a strong cash position to support ongoing operations and capital investments [28] Q&A Session Summary Question: Thoughts on total addressable market and free cash flow - Management believes the analysis of the total addressable market remains solid and anticipates strong sales activity [39] - Free cash flow is expected to decline below $100 million by Q4 2025, with a positive cash flow business model anticipated in 2026 [45] Question: Size of the first wave of sales and ideal backlog - Management considers a one to two-year backlog appropriate and expects to target 125 flights per year with new ships [51] Question: Feasibility study for the second spaceport - Key factors include establishing necessary airspace and government support, with economic considerations focused on facilities and hangars [55]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was approximately $0.5 million from future astronaut access fees and event fees [26] - Total operating expenses decreased by 21% to $89 million compared to $113 million in the prior year period [27] - Adjusted EBITDA improved to negative $72 million in Q1 2025 from negative $87 million in the prior year [28] - Free cash flow was negative $122 million in Q1 2025, within the guidance range [29] - Cash, cash equivalents, and marketable securities at the end of Q1 2025 totaled $567 million [30] Business Line Data and Key Metrics Changes - The company is focused on transitioning spending from research and development to capital investments in manufacturing assets [28] - Capital expenditures for Q1 2025 grew to $46 million compared to $13 million in the prior year [28] - The production of the first two spaceships is underway, with significant progress in various systems including propulsion, avionics, and mechanical systems [9][12][15] Market Data and Key Metrics Changes - The company plans to reopen sales for spaceflights in Q1 2026, with expectations of a bespoke education sales process for new customers [21] - The first wave of spaceflight reservations is anticipated to attract new customers, including scientists and private individuals, with pricing expected to increase from the previous $600,000 [21] Company Strategy and Development Direction - The company aims to bring new spaceships into commercial service by 2026, focusing on cost control and efficient manufacturing processes [7][20] - There is ongoing development work for a new spaceport in Southern Italy, with feasibility assessments underway [22] - The company is exploring additional revenue streams beyond suborbital spaceflight, particularly through its carrier ship platform [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming sales process and the potential for repeat business from previous customers [39] - The company is confident in its ability to manage expenses and expects a declining trend in cash spending through 2025 [30][31] - The long-term outlook includes a projected revenue level of $450 million annually with positive cash flow expected in 2026 [46] Other Important Information - The company plans to publish a series showcasing spaceship construction starting in June 2025 [19] - Management highlighted the importance of customer experience and referrals in driving future sales [64] Q&A Session Summary Question: Thoughts on total addressable market and free cash flow - Management believes the analysis of the $300,000 total addressable market remains solid and anticipates strong sales activity [39] - Free cash flow is expected to decline below $100 million by Q4 2025, with a positive cash flow business model anticipated in 2026 [46] Question: Size of the first wave of sales and ideal backlog - Management indicated that a backlog of one to two years is appropriate, targeting 125 flights per year with six people per flight [53] Question: Feasibility study for the second spaceport - Key factors include establishing necessary airspace and government support, with economic considerations focused on facilities and hangars [57]

Core Viewpoint - Virgin Galactic (SPCE) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook driven by rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, particularly influenced by institutional investors who adjust their valuations based on these estimates [4][6]. - For Virgin Galactic, the increase in earnings estimates suggests an improvement in the company's underlying business, likely leading to higher stock prices as investor sentiment shifts positively [5][8]. Zacks Rating System - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7][9]. - Virgin Galactic's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Virgin Galactic is projected to earn -$8.72 per share, reflecting a 37.2% change from the previous year, with a 12.9% increase in the Zacks Consensus Estimate over the past three months [8].