Virgin Galactic (SPCE) Q3 FY2021 Earnings Report Preview: What to Look For

Key Takeaways

  • Analysts estimate EPS of -$0.25 vs. -$0.34 in Q3 FY 2020.
  • Revenue is expected to rise YOY for the second straight quarter in a row.
  • Virgin Galactic expects to launch customer flights into space in late 2022.

Virgin Galactic Holdings Inc. (SPCE), owned by billionaire entrepreneur Sir Richard Branson, has been closely watched by investors as the company has prepared to formally launch its space flight service. It's one of a handful of companies pioneering commercial space travel and tourism. But shares of Virgin Galactic, which has posted major financial losses, plunged in after-hours trading on Oct. 14 when the company announced that it was delaying the start of its space flight service. The company said the reason was the start of an enhancement program to improve vehicle performance and other capabilities in its VMS Eve and VSS Unity space vehicles. Following completion of the program, Virgin Galactic said it will conduct its Unity 23 test flight and then begin its commercial space tourism service in the fourth quarter of 2022.

Investors will be focusing closely on Virgin Galactic's financial performance when the company reports earnings on Nov. 8, 2021 for Q3 FY 2021. Analysts expect the company to post another loss per share, albeit smaller than in recent quarters. The company also expects to generate its second straight quarter of revenue after four consecutive quarters of posting zero revenue.

Virgin Galactic faces significant financial challenges. It has recorded a cumulative net loss of $483.9 million in FY 2019 and FY 2020, and is expected to post another net loss of $361.2 million for all of FY 2021. The first major step towards profitability will be when the company finally begins its commercial space tourism service. The company said in August this year that flight tickets would start at $450,000 per seat.

Shares of Virgin Galactic have underperformed the broader market over the past year. The stock's movement has been extremely volatile during that period, rising sharply from early January to mid-February before quickly shedding all of its gains and bottoming out in the first half of May. It then shot up again, hitting another peak in late June. But it then declined sharply and is currently lagging the market. Virgin Galactic's shares have provided a total return of 1.9% over the past year, well below the S&P 500's total return of 33.8%.

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

Virgin Galactic Earnings History

Virgin Galactic reported Q2 FY 2021 earnings that missed analysts' estimates while revenue just matched expectations. The company posted a loss per share of $0.39, which was slightly larger than the loss of $0.34 per share reported in the year-ago quarter. Revenue came in at $0.6 million, ending a streak of four consecutive quarters of zero revenue. Virgin Galactic said that the Federal Aviation Administration (FAA) had updated the company's existing commercial space transportation license, allowing it to fly customers into space. The decision marked the first time the FAA has licensed a spaceline to fly customers.

In Q1 FY 2021, Virgin Galactic's earnings and revenue missed consensus estimates. The company reported a loss per share of $0.55, its largest loss since the first quarter of FY 2020. The company posted no revenue for the fourth consecutive quarter. Virgin Galactic highlighted in its earnings press release the unveiling of the VSS Imagine at the end of March, adding to the company's growing fleet of space vehicles.

Analysts expect Virgin Galactic's financial performance to improve in Q3 FY 2021. They forecast that the company will post its smallest loss per share since the second quarter of FY 2019. Revenue is expected to rise to $2.2 million, its highest level out of any quarter in at least the past two and a half years. For full-year FY 2021, analysts expect a loss of $1.45 per share, the largest loss per share in at least the past three years. They also expect annual revenue to rise 720.4% to $2.0 million for the year.

Virgin Galactic Key Stats
  Estimate for Q3 FY 2021 Q3 FY 2020 Q3 FY 2019
Earnings Per Share ($) -0.25 -0.34 -0.27
Revenue ($M) 2.2  0.0 0.8

Source: Visible Alpha

Virgin Galactic's most recent delay of its commercial flight service until the fourth quarter of 2022 came after the company identified a potential defect in a component from one of its parts suppliers. The extra time required to conduct inspections of its spacecraft meant pushing back the timing of the launch of commercial services. The company had been planning to begin offering flight services in the third quarter of 2022. Virgin Galactic is now working to enhance the flight capabilities of its space vehicles in order to launch commercial services by the fourth quarter of next year.

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  2. CNBC. "Virgin Galactic delays beginning of commercial spaceflights to fourth quarter 2022, stock falls 20%." Accessed Nov. 7, 2021.

  3. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC BEGINS PLANNED VEHICLE ENHANCEMENT AND MODIFICATION PERIOD; UNITY 23 TEST FLIGHT RESCHEDULED TO FOLLOW COMPLETION OF THIS PROGRAM." Accessed Nov. 7, 2021.

  4. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC ANNOUNCES DATE OF THIRD QUARTER 2021 FINANCIAL RESULTS AND CONFERENCE CALL." Accessed Nov. 6, 2021.

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  7. Virgin Galactic Holdings Inc. "VIRGIN GALACTIC ANNOUNCES FIRST QUARTER 2021 FINANCIAL RESULTS." Accessed Nov. 7, 2021.

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