Key Takeaways

  • Analysts estimate EPS of -$0.27 vs. -$0.30 in Q1 FY 2020.
  • Revenue is expected to rise YOY after three straight quarters of posting no revenue.
  • Virgin Galactic expects to launch customer flights into space in early 2022.

Virgin Galactic Holdings Inc. (SPCE) recently unveiled its newest spacecraft--the VSS Imagine--as it seeks to finalize testing of its first generation spacecraft, the VSS Unity. The aerospace and space tourism company founded by billionaire Richard Branson in 2004 plans to begin regular customer flights to space in early 2022 after years of setbacks and delays.

Investors will be looking for signs that Virgin Galactic is making progress toward generating steady revenue and becoming profitable when the company reports earnings on May 10, 2021 for Q1 FY 2021. Analysts expect the company to post another loss per share, albeit slightly smaller, than in recent quarters. The company also is forecast to generate its first revenue since the first quarter of FY 2020.

Virgin Galactic faces major financial challenges. It has reported a total of more than $484 million in net losses in the last eight quarters alone.

Shares of Virgin Galactic have had a volatile year compared to the rest of the market. The stock is currently underperforming after a massive run-up starting in early November that peaked around mid-February. The stock has since then given back all of those gains. Virgin Galactic's shares have provided a total return of 25.7% over the past year, below the S&P 500's total return of 43.6%.

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

Virgin Galactic Earnings History

The stock had been plunging prior to the company's Q4 FY 2020 results in late February, and continued to drop after they were released. Virgin Galactic posted a net loss per share of $0.31, continuing its streak of losses going back at least as far as Q1 FY 2019. The company failed to generate any revenue for the third straight quarter. Virgin Galactic noted that its cash position remained strong with cash and cash equivalents of $666 million.

In Q3 FY 2020, Virgin Galactic continued its loss streak with a loss of $0.34 per share. It was the company's biggest loss per share since the final quarter of FY 2019. The company reported no revenue for the second quarter in a row. Virgin Galactic said that it was experiencing ongoing delays to its operations due to COVID-19, hurting scheduling and cost efficiencies.

Analysts expect the losses to continue in Q1 FY 2021. However, they expect the company to begin generating revenue again, forecasting a rise of 11.9% compared to the year-ago quarter. For full-year FY 2021, analysts are expecting an annual loss per share of $1.00, which would be the smallest loss per share in at least the past three years. Revenue is expected to increase by a factor of more than twenty-fold to $4.1 million.

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. It had 600 reservations and more than $80.0 million in deposits booked as of Dec. 31, 2020.

Virgin Galactic Key Stats
  Estimate for Q1 2021 (FY) Q1 2020 (FY) Q1 2019 (FY)
Earnings Per Share ($)  -0.27 -0.30 -0.22
Revenue ($M) 0.3 0.2 1.8

Source: Visible Alpha

But Virgin Galactic will need to pass its flight tests before it starts flying customers into space. The company plans to fully reopen ticket sales after testing its VSS Unity spacecraft with Branson on board sometime this month. The test flight was originally scheduled for December of last year, but technical complications resulted in a postponement till February and further complications caused the date to be pushed back again, this time until May.

The urgency to complete testing and officially launch the service to customers is picking up as space tourism rival Blue Origin, founded by Amazon.com Inc.'s (AMZN) founder and former CEO Jeff Bezos, recently announced that it would soon commence ticket sales for rides on its rocket New Shepard. Blue Origin said that more details concerning the sales would be released on May 5.