© Reuters. Virgin Galactic (SPCE) cuts 18% of workforce as focus shits to Delta Class spaceships
(Updated – November 9, 2023 7:35 AM EST)
Virgin Galactic Holdings (NYSE:) gained 11% in early trading Thursday after the company reported third-quarter earnings and announced it would be cutting 18% of its workforce. The company also provided an update on its Delta Class spaceships and expects to be cash flow positive from the service of the new spaceships in 2026.
The commercial spaceflight operator reported revenue in the quarter of $1.7 million, compared to $0.8 million in the same quarter last year. Meanwhile, net loss was $105 million in the quarter, compared to a $146 million net loss last year.
The company ended the quarter with cash and marketable securities position of approximately $1.1 billion, up slightly from last quarter. The company forecasts that this will be sufficient to bring the Delta class into service and achieve positive cash flow in 2026.
Virgin Galactic said it successfully completed six spaceflights in under six months and that the production schedule for the Delta Class spaceships remains on track for revenue service in 2026.
The company provided an update on the economics of its Delta Class spaceships and now expects the Delta ships will be able to fly eight times per month, up from four times per month. This also compares to Unity’s ability to only fly in monthly intervals.
In addition to the results, the company announced it would reduce its workforce by about 185 employees, or 18% of the workforce.
The cuts will save the company $25 million per year. Virgin Galactic will incur charges related to the workforce reduction of about $5 million.
KeyBanc analysts said the workforce reduction is a move to shift all focus to its Delta class operations.
“Despite the overall reduction, Delta-specific headcount likely increases, as we believe no Delta teams were impacted by the cuts (and labor shifts from Unity/Imagine to Delta),” the analysts commented. “SPCE believes its $1.1B of cash/equivalents is sufficient to bring two Delta ships into service and achieve + FCF in 2026. We believe opportunistic capital raises (including >$100M remaining on ATM offering) remain on the table, though are not a near-term priority.”
The analysts maintained a Sector Weight rating on the stock.
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