SPCE Q2 Earnings Call Flags Delay but Strong Ticket Demand

SPCE Pushes Commercial Service to February

President and CEO Michael Colglazier said that the schedule change reflects extensions across hundreds of avionics and mechanical installation tasks, not new scope or a single technical issue.

Ground testing is expected to begin in August, followed by shipment to New Mexico in October for flight testing. The second spaceship is expected to join the fleet in March 2027.

Colglazier said that the revised timing still supports the planned cadence. Management targets 10 or more spaceflights per month by the end of the second quarter of 2027.

Virgin Galactic Raises Ticket Pricing

Colglazier said that the spaceflight tranche, priced at $750,000, sold out ahead of schedule and was oversubscribed. The bookings added more than $50 million to expected future spaceflight revenues.

Virgin Galactic has more than 700 members in its astronaut community. About 60% of the newest cohort booked as part of groups, including research missions and corporate charters.

The company retired the $750,000 price point and plans to reopen bookings this fall at higher prices. Responding to a TD Cowen analyst, Colglazier said that successive tranches are expected to carry higher pricing.

SPCE Retains 2027 Cash Flow Target

Executive vice president, CFO and treasurer, Douglas Ahrens, said that the third-quarter 2026 free cash flow is expected between negative $95 million and negative $100 million, as added labor and installation time lift spending.

Management expects the outflow to improve to negative $80-$90 million in the fourth quarter as capital expenditure resumes its downward trend. Commercial spaceflight revenue recognition is expected to start in February 2027.

Virgin Galactic ended the second quarter with $286 million in cash, cash equivalents and marketable securities after raising $134 million through its at-the-market program. Ahrens said that customers will pay ticket balances ahead of future flights once commercial service begins.

Virgin Galactic Details Spaceship Economics

Ahrens said that each new spaceship is expected to cost $60 million to produce. Management assumes 500 lifetime flights per ship, six astronauts per flight, average pricing of $600,000 and contribution margins above 80%.

Under those assumptions, each spaceship could generate more than $1.4 billion in lifetime contribution margin. With the first two ships, management expects a quarter in 2028 representing $100 million of annualized adjusted EBITDA once average pricing reaches $600,000.

The model scales further with fleet expansion. Virgin Galactic projects more than $450 million in annual adjusted EBITDA with four spaceships and an additional launch vehicle at one fully utilized spaceport.

SPCE Faces Capital & Execution Questions

A KeyBanc analyst asked whether additional capital would be required before positive cash generation in 2027. Ahrens said that Virgin Galactic does not need additional capital now after strengthening liquidity and reducing debt obligations.

He added that future fundraising could be tied to accelerating fleet growth. Capital spending is expected to decline after the fourth quarter of 2026 and further in 2027 as the business shifts from manufacturing toward operations.

A Morgan Stanley analyst pressed management on balancing expansion with free cash flow. Ahrens said that the roughly $60 million spaceship costs apply to near-term vehicles, while Colglazier emphasized maintaining a solid balance sheet and demand backlog.

Virgin Galactic Prioritizes Fleet Readiness

Management's focus is completing the first two spaceships while preserving the targeted 2027 operating cadence. The near-term trade-off is higher spending and a later commercial-service start, followed by lower expected capital intensity as manufacturing winds down.

Colglazier tied higher future pricing and fleet expansion to customer demand, while Ahrens maintained the target for positive quarterly cash flow within 2027.

SPCE's Zacks Rank & Style Scores

SPCE presently carries a Zacks Rank #2 (Buy), indicating a favorable near-term earnings estimate revision profile. Its Style Scores are less supportive, with an F for Value, C for Growth, F for Momentum and F for VGM Score. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks framework favors combining a Zacks Rank #1 or #2 with Style Scores of A or B. SPCE's favorable Rank contrasts with weak Value, Momentum and VGM readings, and a middle-range Growth score. The Zacks Rank can change as analysts revise estimates after the just-reported results.

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