Virgin Galactic Q1 Earnings Call Highlights
Virgin Galactic (NYSE:SPCE) said it remains on schedule to begin flight testing its first new Delta-class spaceship in the third quarter of 2026 and conduct rocket-powered spaceflight in the fourth quarter, as the company works through the final stages of its pre-revenue development phase.
On the company’s first-quarter 2026 earnings call, Chief Executive Officer Michael Colglazier said Virgin Galactic delivered the first of its new spaceships from its assembly hangar to its test and launch hangar and has begun ground testing. He said the company continues to expect commercial spaceflight operations to ramp in 2027.
“We remain on track to commence flight testing in Q3 and space flight in Q4,” Colglazier said. He added that Virgin Galactic has accelerated preparations for commercial operations, including hiring pilots, providing flight-window expectations to existing customers and beginning construction of a rocket motor assembly line in Phoenix.
Delta-class spaceship testing advances
Colglazier said Virgin Galactic reached a “weight on wheels” milestone in April when it moved its first spaceship from the assembly hangar to the test and launch hangar at its Phoenix campus. Structural assembly is also continuing for a static test article and for the company’s second operational spaceship.
The static test article will be used extensively in the testing program but will not fly, Colglazier said. The second operational spaceship has begun fabrication and is expected to enter service between late fourth quarter 2026 and early first quarter 2027. He said that timing supports the company’s plan to “substantially increase the number of space flights per month” during the first two quarters of 2027.
Colglazier said Virgin Galactic has changed its ground-testing approach compared with its original spaceship, Unity, by investing in off-ship testing infrastructure. That includes the company’s Safety and Test Center in Irvine, California, and an “Iron Bird” test platform used for system-level testing.
He said the company completed dozens of component qualifications during the quarter, including for its central computer, which he described as “the heart of the digital flight control system.” Virgin Galactic also completed testing of its flight control surfaces under loaded flight conditions at the Southwest Research Institute in San Antonio, Texas, and is preparing to structurally test wing, fuselage and feather subassemblies.
Integrated vehicle ground testing in Phoenix is expected to begin in June. After ground testing is complete, the company plans to carry the new spaceship to Spaceport America using its launch vehicle, Eve. Glide testing is expected to begin in the third quarter, followed by rocket-powered flights in the fourth quarter.
Colglazier also said Unity is expected to return to the skies for several glide flights above Spaceport America later this month, providing pilots with a real-world proxy ahead of testing the new spaceship.
Commercial preparations and ticket demand
Virgin Galactic has about 650 “founding astronauts” booked for spaceflight expeditions, which Colglazier said represents roughly one year of advance bookings. The company has provided those customers with expected flight windows through a new astronaut portal. Most are expected to fly in 2027, with the remainder expected in the first half of 2028.
The company recently opened a limited number of new bookings priced at $750,000 each, with expected flight dates in mid-2028. Colglazier said the response has been “strong and global in nature,” with qualified inquiries from customers in more than 20 countries.
During the question-and-answer session, Colglazier said interest has come from individuals, families, groups of friends, research organizations, government agencies and potential corporate charter customers. He said the company has secured deposits for “a meaningful portion” of the available seats at the $750,000 price point and expects to close that limited tranche during the glide flight program in the third quarter.
Once that tranche is allocated, Virgin Galactic plans to pause new bookings and later open another tranche, likely at a higher price, Colglazier said.
First-quarter loss narrows as spending declines
Chief Financial Officer Doug Ahrens said Virgin Galactic generated $200,000 in first-quarter revenue from access fees related to future astronauts. Total operating expenses were $66 million, down 26% from $89 million in the prior-year period.
The company reported a first-quarter net loss of $65 million, an improvement from a loss of $84 million a year earlier. Adjusted EBITDA was negative $55 million, compared with negative $72 million in the prior-year period. Capital expenditures were $40 million, down from $46 million a year earlier, and free cash flow was negative $93 million, a 23% improvement from the prior-year period.
Virgin Galactic ended the quarter with $251 million in cash, cash equivalents and marketable securities, including $11 million in gross proceeds from its at-the-market equity offering program. Ahrens said that figure did not include $52 million in gross proceeds raised through the ATM program in April.
Ahrens also said the company announced the potential redemption of $10 million of 2028 first lien notes through an exchange for common stock. He said the redemption is being made ahead of schedule and reduces debt payments due in September.
Outlook points to lower cash burn and initial spaceflight revenue
For the second quarter of 2026, Virgin Galactic expects revenue of approximately $100,000 from future astronaut access fees. The company projected second-quarter free cash flow of negative $87 million to negative $92 million, with slightly less than half allocated to capital expenditures.
Ahrens said free cash flow is expected to improve modestly in the third quarter and continue improving in the fourth quarter, when the company expects to begin generating revenue from spaceflight operations.
By the fourth quarter, Virgin Galactic expects quarterly operating expense, including variable spaceflight costs, to be in the range of $70 million to $80 million. Ahrens said the company expects to fly four flights per month in January 2027 and reach eight flights per month by the second quarter of 2027, while fourth-quarter 2026 flight cadence will be intentionally constrained to allow learning between flights.
Ahrens said early flights will largely include customers who bought reservations years ago at lower prices, with many at $200,000 to $250,000 per astronaut. As higher-priced tickets enter the mix, the company expects average revenue per astronaut to rise. Ahrens said Virgin Galactic expects to achieve modest quarterly positive cash flow within 2027 and reach the adjusted EBITDA level shown in its business model on an annualized basis sometime during 2028 as average ticket prices improve.
Licensing, spaceports and growth opportunities
Colglazier said Virgin Galactic’s licensing process for its new spaceships is underway and that the company has submitted its spaceflight operator license application to the FAA, which has been accepted. He said the company expects to receive its license before its first powered flight in the fourth quarter.
Asked about potential obstacles to increasing flight cadence, Colglazier said he does not expect licensing to be a complication. He said the company’s previous flight cadence was constrained by its own inspection and maintenance process, not by the FAA.
Colglazier also said Virgin Galactic continues to work with Italian partners on a potential spaceport in Italy, including business model and public-private partnership considerations. He said the company is also in discussions about additional spaceport locations and continues to see potential for three to four permanent spaceports, along with possible partial-year spaceports.
The company has also begun construction of a new rocket motor assembly line at its Phoenix campus, which Colglazier said is expected to be operational in the fourth quarter. He said the timing aligns with completion of the second spaceship and would allow the Phoenix team to shift from spaceship assembly to rocket motor assembly.
About Virgin Galactic (NYSE:SPCE)
Virgin Galactic Holdings, Inc (NYSE: SPCE) is a commercial spaceflight company developing and operating spacecraft for private individuals and research customers. The firm's primary business is suborbital human spaceflight, offering passengers a brief trip to the edge of space aboard its reusable spaceplane. In parallel, the company is building out infrastructure and support services for suborbital payload deployments and microgravity research missions.
The core flight system consists of a carrier aircraft, WhiteKnightTwo, which lifts the spaceplane SpaceShipTwo to high altitude before release.
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