Virgin Galactic (SPCE) may soon progress to a more advanced stage of flight testing as Q1 results showed more seat reservations. The space tourism company also said it's working with NASA on high-speed, point-to-point flights across the Earth. Virgin Galactic stock rose.
XVirgin Galactic Earnings Call
CEO George Whitesides said the company needs to fly at least one more glide flight and then get into power testing, and "see how that goes."
On Friday, Virgin Galactic's SpaceShipTwo completed its first glide test at the company's Spaceport America facility in New Mexico. Whitesides said late Tuesday that Friday's flight was a big deal to see the ability of the team to work under Covid-19 protocols.
Founder Richard Branson hoped to fly aboard the first commercial SpaceShipTwo flight for his 70th birthday in July. But that timeline is under pressure due to Covid-19.
Another key milestone for the spacecraft will be the unveiling of the commercial customer cabin in "the coming months," Whitesides added Tuesday.
Meanwhile, he said that Virgin Galactic has soon "no meaningful increase in refund requests" due to the pandemic, adding that its wealthy customers help limit the impact of economic downturns.
CFO Jon Campagna said the company expects minimal revenue for the rest of the year as it focuses on the test flight program and ensuring workforce safety amid the coronavius.
The save cash in the meantime, Virgin Galactic is reducing executive bonuses and temporarily reducing executive and director compensation, while deferring or eliminating non-essential hiring and contractors, he added.
Virgin Galactic Earnings Report
The space company reported a Q1 net loss of $60 million as revenue fell 87% to $238,000. Estimates for Q1 weren't available, though earnings aren't expected anytime soon as passenger flights have yet to begin. In Q4, Virgin Galactic reported a net loss of $73 million on revenue of $529,000.
Virgin said it had received 400 refundable deposit payments from prospective passengers in 44 countries as part of its "One Small Step" initiative. The tickets amount for over $100 million in future revenue once ticket sales reopen and passengers pay the full ticket price.
Interest in flight reservations rose by approximately 15% since the Q4 report was out in February to over 9,100 as of April. In February, Virgin Galactic said it had received 7,957 online reservation registrations in Q4 vs. the 3,557 expressions of interest in flight reservations by the end of Q3.
After its Q4 report, Whitesides said ticket prices could rise to $1 million from a prior range of $200,000-$250,000 each, adding that the company plans to explain its premium pricing model later this year. But premium pricing could take a hit as the economy slows amid the coronavirus pandemic.
At the time, the company had $80 million in deposits for trips to space, representing $120 million in potential revenue, the same amounts that Virgin Galactic announced in Q3 as ticket sales were still closed.
Virgin Galactic Teams With NASA
Virgin Galactic stock rose 6.5% to 17.70 in premarket trading on the stock market today, poised to retake its 50-day average, according to MarketSmith analysis.
Earlier Tuesday, Virgin Galactic said it's entered into a Space Act Agreement with NASA on developing a sustainable high-mach supersonic vehicle. The U.S. space agency has been working on high-mach flight with its Supersonic X-59 test plane built by Lockheed Martin (LMT).
While Virgin Galactic plans to take passengers to the edge of space for short trips, analysts have been bullish on its potential hypersonic point-to-point travel business.
In February, CEO Whiteside said he wants to integrate Virgin Galactic's "vehicle system" into the national airspace systems, allowing it to land at airports and link to local transport systems.
Last year, Boeing (BA) venture capital arm HorizonX took a $20 million minority stake in Virgin to help the space company develop a vehicle to travel Earth at hypersonic speeds.
Follow Gillian Rich on Twitter @IBD_GRich for space news and more.
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