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Table of Contents

Virgin Galactic (SPCE) Q1 FY2022 Earnings Report Preview: What to Look For

Key Takeaways

  • Analysts estimate EPS of -$0.34 vs. -$0.55 in Q1 FY 2021.
  • The company is expected to generate a small amount of revenue compared to zero revenue in the same quarter a year ago.
  • Virgin Galactic has started selling tickets to the general public for flights into space and plans to launch its commercial space tourism services in Q4 2022.

Virgin Galactic Holdings Inc. (SPCE), owned by billionaire entrepreneur Sir Richard Branson, is one of a handful of companies pioneering commercial space travel and tourism. But it has yet to generate substantial revenue while financial losses have been piling up. Investors are hoping that the company's growth will, finally, take off soon. After years of test flights, Virgin Galactic recently started selling tickets to the general public for the first time. And the company plans to launch its commercial spaceflight service in the final quarter of this year.

Investors are likely to focus closely on Virgin Galactic's financial performance, and especially its outlook, when the company reports earnings and holds a conference call on May 5, 2022 for Q1 FY 2022. Analysts expect the company to post another loss per share, part of a long string of losses. But they also expect it to post its fourth straight quarter of revenue, albeit a small amount, after four consecutive quarters of zero revenue.

Virgin Galactic faces significant financial challenges. It has recorded a cumulative net loss of approximately $1.2 billion in FY 2019, FY 2020, and FY 2021. The question is whether Virgin Galactic can raise enough revenue from ticket sales over the next few years to turn a profit. Ticket sales to reserve a spot on one of the company's spaceflight missions opened to the general public in mid-February. Each ticket costs $450,000, a third of which must be paid upfront as a deposit with final payment to be made prior to the flight. The company had opened ticket sales in August last year to private customers who expressed initial interest.

Shares of Virgin Galactic have underperformed the broader market over the past year. The stock outperformed from mid-May 2021 to around mid-October 2021 before it began to underperform. Its underperformance gap especially widened between early November 2021 and late January 2022. Virgin Galactic's shares have provided a total return of -60.6%, well below the S&P 500's total return of -0.9%.

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

Virgin Galactic Earnings History

Virgin Galactic reported a loss per share that was narrower than analysts expected in Q4 FY 2021. The loss of $0.31 per share was also narrower than the $0.44 loss per share reported in the year-ago quarter. The company reported $0.1 million compared to zero revenue in the year-ago quarter. Despite the ongoing losses, the company noted that its cash position remains strong with cash, cash equivalents, and marketable securities of approximately $931 million as of the end of the year.

In Q3 FY 2021, Virgin Galactic's financial results beat consensus estimates. The company reported a loss per share of $0.19, about half the loss per share reported in the year-ago quarter. Virgin Galactic generated revenue of $2.6 million. The company noted that it had opened ticket sales in August to a group of early hand-raisers who had reserved the right to be first in line for tickets. It priced those tickets at $450,000 and said it had sold 700 as of the date of the earnings report in early November.

Analysts are not expecting much improvement in Virgin Galactic's financial performance in Q1 FY 2022. The company is expected to report another adjusted loss per share. While revenue is expected to be better than the zero revenue reported in the year-ago quarter, it is estimated to be about level with revenue generated in the previous quarter.

Virgin Galactic Key Stats
  Estimate for Q1 FY 2022 Q1 FY 2021 Q1 FY 2022
Earnings Per Share ($) -0.34 -0.55 -1.86
Revenue ($M)  0.1  0.0 0.2

Source: Visible Alpha

Virgin Galactic received approval from the Federal Aviation Administration (FAA) for a full commercial launch license in June 2021. It was the first time the FAA provided a license to a company to fly customers into space. Virgin Galactic then completed its first fully-crewed spaceflight, Unity 22, in July 2021. That flight, which carried billionaire Branson as one of its passengers, met its test objectives, which included evaluations of the cabin and customer experience.

The FAA temporarily grounded Virgin Galactic's operations earlier in September 2021 after the agency learned that the company’s spacecraft had deviated from its restricted airspace during its July flight. Later in September, the FAA cleared Virgin Galactic to return to flight after finishing its investigation and after Virgin Galactic agreed to make required changes in its flight communications and calculations.

The company is now preparing for its full commercial launch in the fourth quarter of 2022. As part of those preparations, the company appointed veteran combat pilot Kelly Latimer as director of flight test at the end of March. Latimer first joined the company in 2015 from Boeing, where her posts included deputy director for airlift operations and chief pilot for Boeing’s C-17 program. She was also in charge of global operations and managing test pilots at Boeing. She flew 90 combat missions during her twenty years of service with the U.S. Air Force.

Article Sources

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  1. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC OPENS LIMITED OPPORTUNITY TO PURCHASE FUTURE SPACEFLIGHT RESERVATION."

  2. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC ANNOUNCES FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL RESULTS."

  3. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC ANNOUNCES DATE OF FIRST QUARTER FISCAL YEAR 2022 FINANCIAL RESULTS AND CONFERENCE CALL."

  4. Visible Alpha. "Financial Data."

  5. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC ANNOUNCES SECOND QUARTER 2021 FINANCIAL RESULTS."

  6. Yahoo! Finance. "Virgin Galactic Holdings, Inc. (SPCE)."

  7. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC ANNOUNCES THIRD QUARTER 2021 FINANCIAL RESULTS."

  8. CNBC. "FAA clears Virgin Galactic after completing investigation of Branson’s spaceflight, stock jumps 10%."

  9. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC APPOINTS PILOT KELLY LATIMER TO DIRECTOR OF FLIGHT TEST."

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