Despite a wider deficit during the first quarter, executives of Virgin Orbit think their air launch firm has the financial runway to grow this year. The company reported a $62.6 million net loss and a $49.6 million EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) loss in its first-quarter financial results disclosed on May 11. Revenue for the period was only $2.1 million.
Virgin Orbit had $5.5 million in revenue, a net loss of about $32.3 million, and an adjusted EBITDA loss of about $29 million in the same quarter of 2021. Virgin Orbit launched a single LauncherOne flight during the first quarter of 2021, similar to the first quarter of 2022.
The loss was attributed to “anticipated revenue realization of agreement losses given the initial low-rate production period,” as well as additional expenses linked with being a publicly-traded company. In late December, Virgin Orbit completed a merger with a SPAC (special purpose acquisition company).
Brita O’Rear, Virgin Orbit’s chief financial officer, explained the low revenue on an earnings call that the company’s “introductory price” on initial LauncherOne missions was to blame. The company averaged only $2.5 million in revenue each launch in its first 3 operational launches. She estimates that revenue from upcoming “near-term” launches will range from $6 million to $12 million.
“Our contracts now represent increasing client trust given our established technology and the shift into recurring operations,” she said. The top end of the pre-launch revenue range, according to Virgin Orbit CEO Dan Hart, would likely be tied to national security as well as other government missions, as well as those occurring outside the US. “Revenue from international flights will be higher. He described the skill as “special and distinct.” By comparison, because of competition with other spacecraft, a commercial launch to a typical orbit such as a sun-synchronous orbit would be going to be at the low end of the revenue range.
With $127 million in cash at the end of the quarter and a negative free cash flow of about $66.6 million, analysts on the call wondered if Virgin Orbit will need to raise more financing soon. According to O’Rear, the company’s cash outflow in the first quarter is expected to be the largest of the year.
“Currently, we see our cash flow improving throughout the year,” she added, adding that the company has “adequate liquidity” to go through the year without needing to raise further funds. In March, the firm established a three-year standby equity purchase arrangement with Yorkville Advisors, a hedge fund. She claims that Virgin Orbit has yet to make good on its promise.
The earnings report from Virgin Orbit did not include revenue or loss predictions for the 2nd quarter or the remainder of the year. The business, which had planned six releases for 2022 at the start of the year, will launch only its second of the year, and it’s first since January, on June 29. On a deployment procured by the US Space Force, that mission, dubbed “Straight Up,” will carry seven US government payloads.