Virgin Galactic Q2 2021 Earnings Report Preview: What to Look For

SPCE plans to offer customer flights to space in 2022

Key Takeaways

  • Analysts estimate EPS of -$0.34 vs. -$0.30 in Q2 FY 2020.
  • The company is expected to post revenue for the first time since Q1 FY 2020.
  • Virgin Galactic aims to launch customer flights into space in 2022.

Virgin Galactic Holdings Inc. (SPCE) drew attention around the world in July when its billionaire CEO Richard Branson became the first person to ride to space on a rocket he helped to fund. The flight marks the beginning of both the burgeoning space tourism field and the so-called "billionaire space race," which has seen Branson and Inc. (AMZN) founder Jeff Bezos compete to be the first private rocket developer to reach space. Bezos flew to the edge of space several days after Branson but reached a higher altitude in a rocket developed by his company Blue Origin.

Investors will watch to see how this competition may have impacted Virgin Galactic's financials when the company reports earnings on Aug. 5 after market close for Q2 fiscal year (FY) 2021. Analysts expect mixed results. The company is forecasted to see losses per share widen slightly on a year-over-year (YOY) basis. However, Virgin Galactic is also predicted to post revenue for the first time since Q1 FY 2020.

Virgin Galactic stock has been highly volatile in the past year. The company's shares rocketed upwards early in 2021 before giving up all of those gains and falling below the broader market in the spring. After falling to a low point in May, Virgin Galactic stock rallied once again, peaking in late June before once again collapsing. The shares are currently trading just below the overall market, with a one-year total return of 26.4% compared with 33.0% for the S&P 500.

One Year Total Return for S&P 500 and Virgin Galactic
Source: TradingView.

Virgin Galactic Earnings History

Virgin Galactic has failed to post positive earnings per share (EPS) in any quarter since at least Q1 FY 2018. Losses widened gradually throughout FY 2019 and then precipitously in Q1 FY 2020 before recovering somewhat through the end of that year. Q1 FY 2021 saw losses widen on a sequential basis. Now, analysts predict that Q2 FY 2021 losses will also widen, though on a YOY basis and not a sequential one.

Since Virgin Galactic has not yet begun customer flights, its main sources of revenue have been transporting scientific commercial research and development payloads on its spaceflight systems as well as providing engineering services to the U.S. government. The company expects to eventually derive the majority of its revenue from selling tickets for flights into space.

Virgin Galactic's quarterly revenue was relatively paltry through Q1 FY 2020. Then, beginning in Q2 of that year, the company posted no revenue for four consecutive quarters. Now, analysts expect Virgin Galactic to once again report revenue in Q2 FY 2021. This revenue estimate is predicted to match the figure from Q2 FY 2019.

For full-year FY 2021, analysts are expecting an annual loss per share of $1.41, which would be the biggest loss per share in at least the past three years. Revenue, meanwhile, is expected to increase from $0.2 million to $3.0 million.

Virgin Galactic Key Stats
  Estimate for Q2 FY 2021 Q2 FY 2020 Q2 FY 2019
Earnings Per Share ($) -0.34 -0.30 -0.23
Revenue ($M) 0.6 N/A 0.6

Source: Visible Alpha

As Virgin Galactic, Blue Origin, and a small number of other space companies vie for dominance in the emerging space tourism industry, there may be room for optimism for investors. As of July 12, 600 people had already reserved tickets for space flights at between $200,000 and $250,000 each. An extra 400 people have also reportedly expressed an interest in tickets once they become available, with fares expected to eventually rise to between $300,000 and $400,000.

Because of the high cost of space travel, it can be difficult to assess the addressable market of Virgin Galactic's space tourism arm, but one recent estimate places this figure at $600 billion. Risks associated with space tourism may also be high. Virgin Galactic expects to begin commercial service in 2022.

Article Sources
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  1. Virgin Galactic Holdings Inc. "Virgin Galactic Announces First Fully Crewed Space Flight."

  2. CNN. "Virgin Galactic Founder Richard Branson Successfully Rockets to Outer Space."

  3. NBC News. "Amazon's Jeff Bezos Makes History With All-Civilian Suborbital Flight."

  4. Virgin Galactic Holdings Inc. "Virgin Galactic Announces Date of Second Quarter 2021 Financial Results and Conference Call."

  5. Visible Alpha. "Financial Data."

  6. Virgin Galactic Holdings Inc. "Form 10-K for the Fiscal Year Ended December 31, 2020," Page 50.

  7. Wall Street Journal. "Is Virgin Galactic Truly a Space Company?"

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