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What changed in Virgin Galactic Holdings, Inc's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Virgin Galactic Holdings, Inc's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+408 added−346 removedSource: 10-K (2026-03-30) vs 10-K (2025-02-26)

Top changes in Virgin Galactic Holdings, Inc's 2025 10-K

408 paragraphs added · 346 removed · 285 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

113 edited+34 added−17 removed111 unchanged
Biggest changePursuant to the terms of the Amended TMLA, we are obligated to pay VEL quarterly royalties equal to the greater of: (a) a low single-digit percentage of our gross sales; and, (b) (i) prior to the first spaceflight for paying future astronauts, a mid-five figure amount in dollars; and, (ii) from our first spaceflight for paying future astronauts, a low-six figure amount in dollars, which increases to a low-seven figure amount in dollars over a four-year ramp up and thereafter increases in correlation with the consumer price index.
Biggest changeUpon any termination or expiration of the Amended TMLA, unless otherwise agreed with VEL, we will have 90 days to exhaust, return or destroy any products or other materials bearing the licensed trademarks, and to change our corporate name to a name that does not include any of the licensed trademarks, including the Virgin name. 18 Table of Contents Pursuant to the terms of the Amended TMLA, we are obligated to pay VEL quarterly royalties equal to the greater of: (a) a low single-digit percentage of our gross sales; and, (b) (i) prior to the first spaceflight for paying future astronauts, a mid-five figure amount in dollars; and, (ii) from our first spaceflight for paying future astronauts, a low-six figure amount in dollars, which increases to a low-seven figure amount in dollars over a four-year ramp up and thereafter increases in correlation with the consumer price index.
The assembly of this fuel cartridge with the hybrid rocket motor is designed to be efficient and to support high rates of commercial spaceflight. In 2018, our rocket motor set a Guinness world record as the most powerful hybrid rocket to be used in crewed flight.
The assembly of this fuel cartridge with the hybrid rocket motor is designed to be efficient and to support high rates of commercial spaceflight. In 2018, our rocket motor set a Guinness world record as the most powerful hybrid rocket to be used in a crewed flight.
We have an aviation Safety Management System (SMS) that is aligned with industry and regulatory standards contained in FAA SMS Advisory Circular 120-92B and 14 Code of Federal Regulations Part 5, which advocates for a formal, top-down, and business-like approach to managing safety.
We have an aviation Safety Management System (SMS) that is aligned with industry and regulatory standards contained in FAA SMS Advisory Circular 120-92B and 14 Code of Federal Regulations Part 5, which advocates for a formal, top-down, business-like approach to managing safety.
Our astronauts will be able to exit their seats and experience weightlessness, floating about the cabin and positioning themselves at one of the twelve windows around the cabin sides and top. The vehicle’s two pilots will maneuver the spaceship to give the astronauts spectacular views of the Earth and an opportunity to look out into the blackness of space.
Our astronauts will be able to exit their seats and experience weightlessness, floating about the cabin and positioning themselves at one of the twelve windows around the cabin sides and top. The vehicle’s two pilots will maneuver the spaceship to give the astronauts spectacular views of Earth and an opportunity to look out into the blackness of space.
We believe our breadth of capabilities, experienced and cohesive team, and culture would be difficult to re-create and can be easily leveraged on the future design, build and test of transformational aerospace vehicles. The first vehicle we manufactured was VSS Unity, the second SpaceShipTwo.
We believe our breadth of capabilities, experienced and cohesive team and culture would be difficult to re-create and can be easily leveraged on the future design, build and test of transformational aerospace vehicles. The first vehicle we manufactured was VSS Unity, the second SpaceShipTwo vehicle.
Furthermore, VEL is generally responsible for the protection, maintenance, enforcement and protection of the licensed intellectual property, including the Virgin brand, subject to our step-in rights in certain circumstances.
Furthermore, VEL is generally responsible for the maintenance, enforcement and protection of the licensed intellectual property, including the Virgin brand, subject to our step-in rights in certain circumstances.
It is designed to deliver a high-touch but efficient and scalable user experience. Once the reservation transaction is completed, the customer receives immediate access to our astronaut community and opportunities to attend events and experiences, visits to Virgin Galactic’s facilities in New Mexico and California, as well as space readiness activities such as zero-gravity aircraft flights and high-g centrifuge training.
It is designed to deliver a high-touch but efficient and scalable user experience. Once the reservation transaction is completed, the customer receives immediate access to our astronaut community and opportunities to attend events and experiences, visits to Virgin Galactic’s facilities in New Mexico, Arizona and California, as well as space-readiness activities such as zero-gravity aircraft flights and high-g centrifuge training.
This flight also completed the data submission to the Federal Aviation Administration ("FAA"), resulting in the approval for the expansion of our commercial space transportation operator license to allow for the carriage of spaceflight participants. This marked the first time the FAA licensed a spaceline to fly customers and was further validation of the inherent safety of our system.
This flight also completed the data submission to the Federal Aviation Administration (“FAA”), resulting in the approval for the expansion of our commercial space transportation operator license to allow for the carriage of spaceflight participants. This marked the first time the FAA licensed a spaceline to fly customers and was further validation of the inherent safety of our system.
We have worked diligently for over a decade to plan every aspect of the journey to become an astronaut, drawing on a world-class team with extensive experience with human spaceflight, high-end customer experiences, and reliable transportation system operations and safety.
We have worked diligently for over a decade to plan every aspect of the journey to become an astronaut, drawing on a world-class team with extensive experience with human spaceflight, high-end customer experience and reliable transportation system operations and safety.
Research and Education Applications In addition to the potential market for human space travel, we believe our existing technology has potential application in additional markets, including scientific research and professional astronaut training.
Research and Education Applications In addition to the potential market for human space travel, we believe our existing technology has potential applications in additional markets, including scientific research and professional astronaut training.
On 'Galactic 07,' Purdue University and UC Berkeley, supported by NASA's Flight Opportunities Program, had autonomous payloads onboard designed to study propellant slosh in fuel tanks of maneuvering spacecraft and test a new type of 3D printing. 'Galactic 07,' also had an Axiom Space affiliated researcher astronaut who conducted human-tended research experiments.
On ‘ Galactic 07, ’ Purdue University and UC Berkeley, supported by NASA’s Flight Opportunities Program, had autonomous payloads onboard designed to study propellant slosh in fuel tanks of maneuvering spacecraft and test a new type of 3D printing. ‘ Galactic 07, ’ also had an Axiom Space affiliated researcher astronaut, who conducted human-tended research experiments.
Despite the importance of these missions and their cultural, scientific, economic and geopolitical influence, as of December 31, 2024, only approximately 700 humans have ever traveled above the Earth’s atmosphere into space. Overwhelmingly, these men and women have been government employees handpicked by government space agencies such as NASA, and trained over many years at significant expense.
Despite the importance of these missions and their cultural, scientific, economic and geopolitical influence, as of December 31, 2025, only approximately 700 humans have ever traveled above Earth’s atmosphere into space. Overwhelmingly, these men and women have been government employees handpicked by government space agencies such as NASA and trained over many years at significant expense.
Given that sales of spaceflights are consultative and generally require a one-on-one sales approach, we are focused on developing different sales journeys to engage and educate interested individuals and to drive sales conversion in a scalable way. In addition, we intend to utilize third-party partnerships to reach and cultivate our target audiences. This includes, for example, luxury travel agencies.
Given that sales of spaceflights are consultative and generally require a one-on-one sales approach, we are focused on developing different sales journeys to engage and educate interested individuals and to drive sales conversion in a scalable way. In addition, we intend to utilize third-party partnerships to reach and cultivate our target audience. This includes, for example, luxury travel agencies.
We believe our spaceflight systems addresses many of these issues by providing: • Researchers the ability to accompany and tend to their experiments in space; • The ability to fly payloads repeatedly, which can enable lower cost and iterative campaigns; • Prompt access to experiments following landing; • Access to a large payload capacity; and • In the case of sounding rockets, gentler G-loading.
We believe our spaceflight system addresses many of these issues by providing: • Researchers the ability to accompany and tend to their experiments in space; • The ability to fly payloads repeatedly, which can enable lower cost and iterative campaigns; • Prompt access to experiments following landing; • Access to a large payload capacity; and • In the case of sounding rockets, gentler G-loading.
Moreover, the horizontal launch method allows increased time for pilots and crew to respond to any potential problems that may arise with the spaceship or its propulsion system. As such, if the pilots observe a problem while the spaceship is still mated to the mothership, they can quickly and safely return to the ground without releasing our spaceship.
Moreover, the horizontal launch method allows increased time for pilots and crew to respond to any potential problems that may arise with the spaceship or its propulsion system. As such, if the pilots observe a problem while the spaceship is still mated to the launch vehicle, they can quickly and safely return to the ground without releasing our spaceship.
This rocket offers simple shut-off control at any point in the trajectory, unlike a traditional solid rocket motor. • Feathering system. Our unique wing feathering technology provides self-correcting capability that requires limited pilot input for our spaceship to align properly for re-entry. 12 Table of Contents • Astronaut preparation.
This rocket offers simple shut-off control at any point in the trajectory, unlike a traditional solid rocket motor. 13 Table of Contents • Feathering system. Our unique wing feathering technology provides self-correcting capability that requires limited pilot input for our spaceship to align properly for re-entry. • Astronaut preparation.
In 2001, Dennis Tito was the first private individual to purchase a ticket for space travel, paying an estimated $20 million for a ride to the International Space Station (the “ISS") on a Russian Soyuz rocket. Since then, only a limited number of individuals have purchased tickets and flown successful orbital and suborbital missions.
In 2001, Dennis Tito was the first private individual to purchase a ticket for space travel, paying an estimated $20 million for a ride to the International Space Station (the “ISS”) on a Russian Soyuz rocket. Since then, only a limited number of individuals have purchased tickets and flown successful orbital and suborbital missions.
The spaceship is a rocket-powered winged vehicle designed to achieve a maximum speed of over Mach 3 and has a flight duration, measured from passenger boarding to the disembarkation, of approximately 90 minutes. The spaceship begins each mission by being carried to an altitude of approximately 45,000 feet by the mothership before being released.
The spaceship is a rocket-powered winged vehicle designed to achieve a maximum speed of over Mach 3 and has a flight duration, measured from passenger boarding to the disembarkation, of approximately 90 minutes. The spaceship begins each mission by being carried to an altitude of approximately 45,000 feet by the launch vehicle before being released.
Our spaceflight system is intended to provide the scientific research community low cost, repeatable access to space and the microgravity environment.
Our spaceflight system is intended to provide the scientific research community with low cost, repeatable access to space and the microgravity environment.
The twin-boom configuration allows for a spacious central area between the two fuselages to accommodate a center wing launch pylon to which the spaceship can be attached. Both cabins of the mothership are constructed using the same tooling and are identical in shape and size to the spaceship cabin.
The twin-boom configuration allows for a spacious central area between the two fuselages to accommodate a center wing launch pylon to which the spaceship can be attached. Both cabins of the launch vehicle are constructed using the same tooling and are identical in shape and size to the spaceship cabin.
Important elements of our safety design include: • Horizontal takeoff and landing. We believe that launching our spaceship from the mothership offers several critical safety advantages. Among other advantages, horizontal launch generally requires less fuel, oxidizer and pressurant on board than would otherwise be required.
Important elements of our safety design include: • Horizontal takeoff and landing. We believe that launching our spaceship from the launch vehicle offers several critical safety advantages. Among other advantages, horizontal launch generally requires less fuel, oxidizer and pressurant on board than would otherwise be required.
We have worked with training experts, behavioral health experts, experienced flight technicians, and experienced government astronauts in order to customize training for our suborbital missions. This program includes training for emergency egress, flight communication systems, flight protocols, seat ingress and egress and meets all training requirements prescribed by applicable regulation.
We have worked with training experts, behavioral health experts, experienced flight technicians and experienced government astronauts in order to customize training for our suborbital missions. This program includes training for emergency egress, flight communication systems, flight protocols, seat ingress and egress and meets all training requirements prescribed by applicable regulations.
Once all astronauts are safely onboard and the pilots have coordinated with the appropriate regulatory and operational groups, the mothership will take-off and climb to an altitude of approximately 45,000 feet. Once at altitude, the pilots will perform all necessary vehicle and safety checks and then will release the spaceship from the mothership.
Once all astronauts are safely onboard and the pilots have coordinated with the appropriate regulatory and operational groups, the launch vehicle will take-off and climb to an altitude of approximately 45,000 feet. Once at altitude, the pilots will perform all necessary vehicle and safety checks and then will release the spaceship from the launch vehicle.
While these highly capable government astronauts have inspired millions, individuals in the private sector have had extremely limited opportunity to fly into space, regardless of their wealth or ambitions. Over the past decade, several trends have converged to invigorate the commercial space industry.
While these highly capable government astronauts have inspired millions, individuals in the private sector have had extremely limited opportunities to fly into space, regardless of their wealth or ambitions. Over the past decade, several trends have converged to invigorate the commercial space industry.
To accomplish this, we intend to: • Expand our spaceflight operations with more vehicles and significantly higher flight frequency per vehicle. In 2023, we commenced commercial operations with our spaceship, VSS Unity, and our mothership carrier aircraft, VMS Eve, which together comprise our initial spaceflight system.
To accomplish this, we intend to: • Expand our spaceflight operations with more vehicles and significantly higher flight frequency per vehicle. In 2023, we commenced commercial operations with our spaceship, VSS Unity, and our launch vehicle carrier aircraft, VMS Eve, which together comprise our initial spaceflight system.
In July 2021 we completed the Unity-22 mission, the first spaceflight with a full crew of four mission specialists in the cabin, including our Founder, Sir Richard Branson. In June 2023, 'Galactic 01,' marked the start of commercial service.
In July 2021 we completed the Unity-22 mission, the first spaceflight with a full crew of four mission specialists in the cabin, including our Founder, Sir Richard Branson. In June 2023, ‘ Galactic 01, ’ marked the start of commercial service.
The mothership’s differentiating design features include its twin-boom configuration, its single-piece composite main wing spars, its reusability as the first stage in our space launch system, and its versatility as a flight training vehicle for our pilots and spaceships.
The launch vehicle’s differentiating design features include its twin-boom configuration, its single-piece composite main wing spars, its reusability as the first stage in our space launch system, and its versatility as a flight training vehicle for our pilots and spaceships.
As a result, researchers have used parabolic aircrafts and drop towers to create moments of microgravity and conduct significant research activities. While these solutions help address cost concerns, they offer only seconds of continuous microgravity per flight.
As a result, researchers have used parabolic aircraft and drop towers to create moments of microgravity and conduct significant research activities. While these solutions help address cost concerns, they offer only seconds of continuous microgravity per flight.
Upon landing, astronauts will disembark and join family and friends to celebrate their achievements and receive their Virgin Galactic astronaut wings. 14 Table of Contents Sales and Marketing In August 2021, following Sir Richard Branson's successful test flight, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat.
Upon landing, astronauts will disembark and join family and friends to celebrate their achievements and receive their Virgin Galactic astronaut wings. Sales and Marketing In August 2021, following Sir Richard Branson’s successful test flight, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat.
We believe our unique approach that blends the speed of prototyping with the design stability required for production enables innovative ideas to be quickly designed, built, tested with process rigor, and transitioned into service. In addition, we have expertise in configuration 15 Table of Contents management and developing documentation needed to transition our technologies and systems to commercial applications.
We believe our unique approach that blends the speed of prototyping with the design stability required for production enables innovative ideas to be quickly designed, built, tested with process rigor and transitioned into service. In addition, we have expertise in configuration management and developing documentation needed to transition our technologies and systems to commercial applications.
Our commercial team is managed and supported by individuals with significant experience and success in building and growing a commercial spaceflight brand, selling spaceflight reservations and managing the astronaut community. 9 Table of Contents Our Assets We have developed an extensive portfolio of proprietary technologies that are embodied in the highly specialized vehicles that we have created to enable commercial spaceflight.
Our commercial team is managed and supported by individuals with significant experience and success in building and growing a commercial spaceflight brand, selling spaceflight reservations and managing the astronaut community. Our Assets We have developed an extensive portfolio of proprietary technologies that are embodied in the highly specialized vehicles that we have created to enable commercial spaceflight.
On 'Galactic 05,' two private researchers, one sponsored by the Southwest Research Institute (SwRI), and another sponsored by the International Institute for Astronautical Sciences (IIAS), conducted a total of five human-tended research experiments .
On ‘ Galactic 05, ’ two private researchers, one sponsored by the Southwest Research Institute (SwRI), and another sponsored by the International Institute for Astronautical Sciences (IIAS), conducted a total of five human-tended research experiments .
We have developed extensive aerospace development capabilities for developing, manufacturing and testing aircraft, spacecraft and related propulsion systems. These capabilities encompass preliminary systems and vehicle design and analysis, detail design, manufacturing, ground testing, flight testing and post-delivery support and maintenance.
We have developed extensive capabilities for developing, manufacturing and testing aircraft, spacecraft and related propulsion systems. These capabilities encompass preliminary systems and vehicle design and analysis, detail design, manufacturing, ground testing, flight testing and post-delivery support and maintenance.
International Traffic in Arms Regulations and Export Controls Our spaceflight business is subject to, and we must comply with, stringent U.S. import and export control laws, including the International Traffic in Arms Regulations ("ITAR") and the U.S. Export Administration Regulations (“EAR"). The ITAR generally restricts the export of hardware, software, technical data, and services that have defense or strategic applications.
Export Controls Our spaceflight business is subject to, and we must comply with, stringent U.S. import and export control laws, including the International Traffic in Arms Regulations (“ITAR”) and the U.S. Export Administration Regulations (“EAR”). The ITAR generally restricts the export of hardware, software, technical data and services that have defense or strategic applications.
The spaceship’s feathering system was originally developed and tested on SpaceShipTwo’s smaller predecessor, SpaceShipOne. 11 Table of Contents Our spaceship’s cabin has been designed to maximize customer safety and comfort.
The spaceship’s feathering system was originally developed and tested on SpaceShipTwo’s smaller predecessor, SpaceShipOne. 12 Table of Contents Our spaceship’s cabin has been designed to maximize customer safety and comfort.
This represented the first flight of our spaceflight system, which was built for commercial service to take humans into space routinely and safely, and designed with superior astronaut experience in mind. After relocating our operations to Spaceport America, we conducted the first flight to space from the state of New Mexico in May 2021.
This represented the first flight of our spaceflight system, which was built to take humans into space routinely and safely, and designed with superior astronaut experience in mind. After relocating our operations to Spaceport America, we conducted the first flight to space from the state of New Mexico in May 2021.
This reusable launch platform design provides a flight experience and economics similar to commercial airplanes and offers an economic advantage over other potential launch alternatives. Additionally, our carrier aircraft is designed to have a rapid turnaround time to enable it to provide frequent spaceflight launch services for multiple spaceships.
This reusable launch platform design provides a flight experience and economics similar to commercial airplanes and offers an economic advantage over other potential launch alternatives. Additionally, our launch vehicle is designed to have a rapid turnaround time to enable it to provide frequent spaceflight launch services for multiple spaceships.
We are focused on developing and implementing operational and manufacturing efficiencies in an effort to decrease the cost per spaceship, mothership and propulsion system, as well as our overall operating costs. We expect that our next-generation vehicles and scaled operating model will enable a dramatic reduction in operating cost per flight.
We are focused on developing and implementing operational and manufacturing efficiencies in an effort to decrease the cost per spaceship, propulsion system and launch vehicle, as well as our overall operating costs. We expect that our next-generation vehicles and scaled operating model will enable a dramatic reduction in operating cost per flight.
We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services, such as research, design, development, manufacturing and integration of advanced technology systems. Commercial Space Industry The commercial exploration of space represents one of the most exciting and important technological initiatives of our time.
We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services, such as research, design, development, manufacturing and integration of advanced technology systems. 6 Table of Contents Commercial Space Industry The commercial exploration of space represents one of the most exciting and important technological initiatives of our time.
Two pilots will fly in each mothership and each spaceship. Having a second pilot in the vehicles spreads the workload and provides critical redundancies. • Design of our rocket motors . Our rocket motor is a simple and robust, human-rated spaceflight rocket motor with no turbo-pumps or complicated machinery.
Two pilots will fly in each launch vehicle and each spaceship. Having a second pilot in the vehicles spreads the workload and provides critical redundancies. • Design of our rocket motors . Our rocket motor is a simple and robust, human-rated spaceflight rocket motor with no turbo-pumps or complicated machinery.
Our website and the information contained on or through that site are not incorporated into this Annual Report on Form 10-K. 19 Table of Contents
Our website and the information contained on or through that site are not incorporated into this Annual Report on Form 10-K. 21 Table of Contents
This law generally provides coverage to operators, manufacturers and suppliers, and requires operators to maintain at least $1.0 million in insurance for all spaceflight activities. 18 Table of Contents At this time, we are not aware that any claim regarding liability to third parties or informed consent provisions have been brought in New Mexico or in federal courts.
This law generally provides coverage to operators, manufacturers and suppliers and requires operators to maintain at least $1.0 million in insurance for all spaceflight activities. At this time, we are not aware that any claim regarding liability to third parties or informed consent provisions have been brought in New Mexico or in federal courts.
The astronauts will then meet up with their fellow astronauts and board our spaceship, which will already be mated to the mothership. The spaceship cabin has been designed, like the spaceport interior, to deliver an aesthetic consistent with our brand values and optimize the flight experience.
The astronauts will then meet up with their fellow astronauts and board our spaceship, which will already be mated to the launch vehicle. The spaceship cabin has been designed, like the spaceport interior, to deliver an aesthetic consistent with our brand values and optimize the flight experience.
We are exploring strategic relationships to develop new applications for our technologies and to develop new aerospace technologies for commercial and transportation applications that we believe will accelerate progress within relevant industries and enhance our growth. We plan to assemble our next-generation spaceships in Arizona at our new manufacturing and operating facility, which consists of approximately 150,000 square feet.
We are exploring strategic relationships to develop new applications for our technologies and to support new aerospace technologies for commercial and transportation applications that we believe will accelerate progress within relevant industries and enhance our growth. We are assembling our next-generation spaceships in Arizona at our new manufacturing and operating facility, which consists of approximately 150,000 square feet.
Furthermore, if potential concerns emerge after release from the mothership, spaceship can simply glide back to the runway. • The mothership's engine reliability. Highly reliable and rigorously tested jet engines made by Pratt and Whitney Canada power the first 45,000 feet of the journey to space. • Two pilots per vehicle.
Furthermore, if potential concerns emerge after release from the launch vehicle, spaceship can simply glide back to the runway. • The launch vehicle’s engine reliability. Highly reliable and rigorously tested jet engines made by Pratt and Whitney Canada power the first 45,000 feet of the journey to space. • Two pilots per vehicle.
Further, we believe we are at the center of these industry trends and well-positioned to capitalize on them by bringing human spaceflight to a broader global population that dreams of 6 Table of Contents traveling to space.
Further, we believe we are at the center of these industry trends and well-positioned to capitalize on them by bringing human spaceflight to a broader global population that dreams of traveling to space.
The mothership is a twin-fuselage, custom-built aircraft designed to carry our spaceships up to an altitude of approximately 45,000 feet, where the spaceship is released for its flight into space.
The launch vehicle is a twin-fuselage, custom-built aircraft designed to carry our spaceships up to an altitude of approximately 45,000 feet, where the spaceship is released for its flight into space.
Our first four spaceflights during the flight test program carried payloads into space for research purposes through NASA's Flight Opportunities Program. 'Galactic 01' – our first commercial spaceflight – was a government-funded flight that supported over a dozen research experiments and carried three mission specialists from the Italian Air Force and the National Research Council of Italy, who conducted human-tended research experiments.
Our first four spaceflights during the flight test program carried payloads into space for research purposes through NASA’s Flight Opportunities Program. ‘ Galactic 01 ’ – our first commercial spaceflight – was a government-funded flight that supported over a dozen research experiments and carried three mission specialists from the Italian Air Force and the National Research Council of Italy, who conducted human-tended research experiments.
These flights, along with the research experiments that were conducted on our previous test flights to space, demonstrated the capability of our spaceflight system to provide a ground-breaking platform to researchers.
These flights, along with the research experiments that were conducted on our previous test flights to space, demonstrated the capability of our spaceflight system to provide a groundbreaking research platform to researchers.
Spare parts and maintenance support are readily available for these engines, which have reliably been in service on the mothership since December 2008. The mothership’s 140 foot main wing houses large air brakes that allow the mothership to mimic the spaceship’s aerodynamic characteristics in the gliding portions of the spaceship’s flight.
Spare parts and maintenance support are readily available for these engines, which have reliably been in service on the launch vehicle since December 2008. The launch vehicle’s 140-foot main wing houses large air brakes that allow the launch vehicle to mimic the spaceship’s aerodynamic characteristics in the gliding portions of the spaceship’s flight.
The commonality of cabin construction provides cost savings in production, as well as operational, maintenance and crew training advantages. The mothership’s all-composite material construction substantially reduces weight as compared to an all-metal design. The mothership is powered by four Pratt and Whitney Canada commercial turbo-fan engines.
The commonality of cabin construction provides cost savings in production, as well as operational, maintenance and crew training advantages. The launch vehicle’s all-composite material construction substantially reduces weight as compared to an all-metal design. The launch vehicle is powered by four Pratt and Whitney Canada commercial turbo-fan engines.
Our spaceflight system and our hybrid rocket motor together enable the following key differentiators: ◦ Horizontal take-off and landing using winged vehicles and traditional airplane runway infrastructure that enable a familiar airplane-like experience; ◦ Use of our carrier aircraft for the first stage of flight and then to air launch our spaceship, which is intended to maximize the safety and efficiency of our spaceflight system; ◦ Pilot-designed and pilot-flown missions to aid safety and customer confidence; ◦ Carbon composite construction that is light, strong and durable; ◦ Robust, controllable spaceship hybrid rocket motor propulsion system that can be safely shut down at any time during the flight; ◦ Large cabin with multiple windows, allowing for an experience of weightlessness and easy access to views of Earth for all of our astronauts; ◦ Unique “wing-feathering” system, designed to enable a safe, aerodynamically controlled re-entry into the Earth’s atmosphere on a repeated basis; ◦ Versatile cabin provides the adaptability to operate research-focused flights with payload racks and researchers onboard as well as private astronaut flights with a full cabin of commercial passengers; and ◦ Highly re-useable spaceflight system, with the exception of the rocket motor, which must be replaced after each flight. • Significant backlog and pent-up customer demand.
Our spaceflight system and our hybrid rocket motor together enable the following key differentiators: ◦ Horizontal take-off and landing using winged vehicles and traditional airplane runway infrastructure that enable a familiar airplane-like experience; ◦ Use of our launch vehicle for the first stage of flight to air launch our spaceship, which is intended to maximize the safety and efficiency of our spaceflight system; 8 Table of Contents ◦ Pilot-designed and pilot-flown missions to aid safety and customer experience; ◦ Carbon composite structures that are light, strong and durable; ◦ High performing, controllable spaceship hybrid rocket motor propulsion system that can be safely shut down at any time during the flight; ◦ Large cabin with multiple windows, allowing for an experience of weightlessness and easy access to views of Earth for all of our astronauts; ◦ Unique “wing-feathering” system, designed to enable a safe, aerodynamically controlled re-entry into Earth’s atmosphere on a repeated basis; ◦ Versatile cabin provides the adaptability to operate research-focused flights with payload racks and researchers onboard as well as private astronaut flights with a full cabin of commercial passengers; and ◦ Highly re-useable spaceflight system across hundreds of missions, with the exception of the rocket motor, which must be replaced after each flight. • Significant backlog and pent-up customer demand.
Using the mothership’s air launch capacity, rather than a standard ground-launch, reduces the energy requirements of our spaceflight system as the spaceship does not have to ascend through the higher density atmosphere closest to the Earth’s surface. Our carrier aircraft is designed to launch hundreds of spaceship flights over its lifetime.
Using the launch vehicle’s air launch capacity, rather than a standard ground-launch, reduces the energy requirements of our spaceflight system as the spaceship does not have to ascend through the higher density atmosphere closest to Earth’s surface. Our launch vehicle is designed to launch hundreds of spaceship flights over its lifetime.
This demonstrates the broad implications and desirability of our offering. Design, Development and Manufacturing Our development and manufacturing team consists of talented and dedicated engineers, technicians and professionals with decades of combined design, engineering, manufacturing and flight test experience from a wide variety of the world’s leading research, commercial and military aerospace organizations.
We believe this demonstrates the broad implications and desirability of our offering. 16 Table of Contents Design, Development and Manufacturing Our development and manufacturing team consists of talented and dedicated engineers, technicians and professionals with decades of combined design, engineering, manufacturing and flight test experience from a wide variety of the world’s leading research, commercial and military aerospace organizations.
Upon release, the pilot ignites the hybrid rocket motor, which propels the spaceship on a near vertical trajectory into space. Once in space, astronauts enjoy amazing views and a weightlessness experience, and the pilots use the spaceship’s unique "wing-feathering" feature in order to prepare the vehicle for re-entry.
Upon release, the pilot ignites the hybrid rocket motor, which propels the spaceship on a near vertical trajectory into space. Once in space, astronauts enjoy amazing views and a weightless experience, and the pilots use the spaceship’s unique “wing-feathering” feature in order to prepare the vehicle for re-entry.
We possess highly specialized and extensive integrated capabilities that enable us to manage and control almost all elements of design and manufacturing of our current generation of spaceships and carrier aircraft.
We possess highly specialized and extensive integrated capabilities that enable us to manage and control almost all elements of design and manufacturing of our current generation of spaceships and launch vehicle.
This provides our pilots with a safe, cost-effective and repeatable way to train for the spaceship’s final approach and landing. 10 Table of Contents Our carrier aircraft is designed to launch hundreds of spaceship flights over its lifetime. As such, our spaceflight launch platform system offers a considerable economic advantage over other potential launch architectures.
This provides our pilots with a safe, cost-effective and repeatable way to train for the spaceship’s final approach and landing. Our launch vehicle is designed to launch many hundreds of spaceship flights over its lifetime. As such, our spaceflight launch platform system offers a considerable economic advantage over other potential launch architectures.
With the exception of the rocket motor, which must be replaced after each flight, the spaceship is designed as a wholly reusable vehicle. Our next-generation of spaceships – “Delta” – are in development and anticipated to enter commercial service in 2026.
With the exception of the rocket motor, which must be replaced after each flight, the spaceship is designed as a wholly reusable vehicle across hundreds of missions. Our next-generation of spaceships are in development and anticipated to enter commercial service in the fourth quarter of 2026.
Our hybrid rocket motor is core to the success of our spaceflight systems and we have established outstanding technology and infrastructure to maximize our opportunities to ensure our propulsion system is fully integrated into the Delta program while advancing our efforts to deliver cost-effective rocket motors at scale.
Our hybrid rocket motor is core to the success of our spaceflight system and we have established outstanding technology and infrastructure to maximize our opportunities to ensure our propulsion system is fully integrated into our next-generation spaceships while advancing our efforts to deliver cost-effective rocket motors at scale.
Our astronauts will interact with these technologies at Spaceport America, the first purpose-built commercial spaceport, and our terminal hangar building, officially designated the “Virgin Galactic Gateway to Space.” Our Carrier Aircraft—The Mothership The mothership is a twin-fuselage, custom-built aircraft designed to carry spaceships up to an altitude of approximately 45,000 feet, where the spaceship is released for its flight into space.
Our astronauts will interact with these technologies at Spaceport America, the first purpose-built commercial spaceport, and our terminal hangar building, officially designated the “Virgin Galactic Gateway to Space.” 10 Table of Contents Our Carrier Aircraft—The Launch Vehicle The launch vehicle is a twin-fuselage, custom-built aircraft designed to carry spaceships to an altitude of approximately 45,000 feet, where the spaceship is released for its rocket-powered flight into space.
Our astronauts will enjoy the journey back into the Earth’s atmosphere, at which time the vehicle’s wings will be returned to their normal configuration, and the spaceship will glide back to the original runway from which the combined mothership and spaceship pair had taken off less than two hours prior.
Our astronauts will enjoy the journey back into Earth’s atmosphere, at which time the vehicle’s wings will be returned to their normal configuration, and the spaceship will 15 Table of Contents glide back to the original runway from which the combined launch vehicle and spaceship pair had taken off less than two hours prior.
Further, even investigations of suspected or alleged violations can be expensive and disruptive. Thus, violations (or allegations of violations) of applicable export control laws and regulations could materially adversely affect our reputation, business, financial condition and results of operations. Human Capital As of December 31, 2024, we had 744 employees across the globe.
Further, even investigations of suspected or alleged violations can be expensive and disruptive. Thus, violations (or allegations of violations) of applicable export control laws and regulations could adversely affect our reputation, business, financial condition and results of operations. 20 Table of Contents Human Capital As of December 31, 2025, we had 694 employees across the globe.
This includes facilities to conduct full-scale “hot fire” tests – a comprehensive assessment of a rocket motor for performance qualification. Our Rocket Systems team will also work to identify new business opportunities that leverage and expand the intellectual property and commercial potential of technology developed at Virgin Galactic. • First purpose-built commercial spaceport.
This includes facilities to conduct full-scale “hot fire” tests – a comprehensive assessment of a rocket motor for performance qualification. Our Rocket Systems team will also work to identify new business opportunities that leverage and expand the intellectual property and commercial potential of technology developed at Virgin Galactic. • Avionics system and electronic engineering capabilities .
These technologies underpin our carrier aircraft, the mothership; our spaceships; our hybrid rocket motor; and our safety systems.
These technologies underpin our carrier aircraft, the launch vehicle; our spaceships; our hybrid rocket motor; and our safety systems.
Three of our commercial spaceflights were dedicated research missions: 'Galactic 01' was a government-funded flight that supported over a dozen research experiments and carried three mission specialists conducting human-tended research, 'Galactic 05' carried two privately-funded researchers who conducted human-tended research experiments, and 'Galactic 07' carried government-funded autonomous research payloads and one U.S. based commercial space company funded researcher who conducted human-tended research experiments .
Three of our commercial spaceflights were dedicated research missions: ‘ Galactic 01 ’ was a government-funded flight that supported over a dozen research experiments and carried three mission specialists conducting human-tended research, ‘ Galactic 05 ’ carried two privately-funded researchers who conducted human-tended research experiments, and ‘ Galactic 07 ’ carried government-funded autonomous research payloads and one U.S. based commercial space company funded researcher who conducted human-tended research experiments .
These obstacles have significantly limited the adoption of human space travel, until now. Our Strategy Using our proprietary and reusable flight system and supported by a distinctive, Virgin-branded customer experience, we seek to build a scaled and profitable business providing safe, reliable and regular transportation to space.
These obstacles have significantly limited the adoption of human space travel, until now. 7 Table of Contents Our Strategy Using our proprietary and reusable flight system and supported by a distinctive, Virgin-branded customer experience, we are on a path to building a scaled and profitable business providing safe, reliable and regular transportation to space.
Our operational headquarters is where we operate our spaceflights and astronaut training. Spaceport America is located in New Mexico on more than 25 square miles of desert landscape, with access to 6,000 square miles of restricted airspace running from the ground to space. The restricted airspace will facilitate flight scheduling by preventing general commercial air traffic from entering the area.
Spaceport America is located in New Mexico on more than 25 square miles of desert landscape, with access to 6,000 square miles of restricted airspace running from the ground to space. The restricted airspace will facilitate flight scheduling by preventing general commercial air traffic from entering the area.
Our Design and Engineering center is located in Tustin, California and encompasses approximately 100,000 square feet of office space and also functions as our corporate headquarters.
Our rocket motor ground test facility is located in Mojave, California. Our Design and Engineering center is located in Tustin, California and encompasses approximately 100,000 square feet of office space and also functions as our corporate headquarters.
Additionally, as of December 31, 2024, we have flown dozens of payloads for space research missions and intend to pursue similar arrangements for additional research missions. 8 Table of Contents • Iconic brand associated with unique customer experiences. The Virgin brand carries an exceptional reputation worldwide for innovation, customer experience, adventure and luxury.
Additionally, as of December 31, 2025, we have flown dozens of payloads for space research missions and intend to pursue similar arrangements for additional research missions, such as the Purdue University charter flight. • Iconic brand associated with unique customer experiences. The Virgin brand carries an exceptional reputation worldwide for innovation, customer experience, adventure and luxury.
Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties.
Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, autonomous research flight opportunities and human-tended research flights. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties.
Our Spaceships Virgin Galactic spaceships are reusable with the capacity to carry pilots and private astronauts, research experiments and researchers that travel with their experiments for human-tended research flights, into space and return them safely to Earth.
Our Spaceships Our spaceships are designed to be reusable across hundreds of missions with the capacity to carry pilots and private astronauts, research experiments and researchers that travel with their experiments for human-tended research flights, into space and return them safely to Earth.
This flight was a dedicated research mission sponsored by the Italian government, which tested 13 experiments and demonstrated our ability to use suborbital spaceflights to train astronauts for future orbital missions. 'Galactic 05' and 'Galactic 07' were also commercial research missions.
This flight was a dedicated research mission funded by the Italian government, which tested 13 experiments and demonstrated our ability to use suborbital spaceflights to train astronauts for future orbital missions. ‘ Galactic 05 ’ and ‘ Galactic 07 ’ were also commercial research missions.
In 2023, we increased the pricing of our consumer offerings to a base price of $600,000. As of December 31, 2024, we have reservations from approximately 700 future astronauts, which represent approximately $190 million in expected future spaceflight revenue upon completion of the spaceflights.
In 2023, we increased the pricing of our consumer offerings to a base price of $600,000 per seat. As of December 31, 2025, we have reservations for spaceflights for approximately 675 future astronauts, which represent approximately $188 million in expected future spaceflight revenue upon completion of the spaceflights.
As of December 31, 2024, we have flown 23 paying astronauts, and have reservations from approximately 700 future astronauts, which represent approximately $190 million in expected future spaceflight revenue upon completion of the spaceflights.
As of December 31, 2025, we have flown 23 paying astronauts and have reservations for spaceflights for approximately 675 future astronauts, which represent approximately $188 million in expected future spaceflight revenue upon completion of the spaceflights.
While our primary focus for the foreseeable future will be on developing the Delta Class spaceship fleet, we intend to explore the application of our proprietary technologies and our capabilities in areas such as design, engineering, composites manufacturing, high-speed propulsion and production for other commercial and government uses.
While our primary focus for the foreseeable future will be on completing the assembly and testing of our new spaceships and scaling commercial service, we intend to explore the application of our proprietary technologies and our capabilities in areas such as design, engineering, composites manufacturing, high-speed propulsion and production for other commercial and government uses.
Additionally, we expect that our staff will become more efficient in various aspects of operations and maintenance to reduce associated operating costs over time. 7 Table of Contents • Leverage our proprietary technology and deep manufacturing experience to augment our product and service offerings and expand into adjacent and international markets.
Additionally, we expect that our staff will become more efficient in various aspects of operations and maintenance to reduce associated operating costs over time. • Leverage our proprietary technology and deep manufacturing experience to augment our product and service offerings and expand into adjacent and international markets. We have developed an extensive set of integrated aerospace development capabilities and technologies.
Informed Consent and Waiver Our commercial human spaceflight operations and any third-party claims that arise from our operation of spaceflights are subject to federal and state laws governing informed consents and waivers of claims, including under the Commercial Space Launch Act (“CSLA”), the Commercial Space Launch Amendments Act of 2004 (“CSLAA”) and the New Mexico Space Flight Informed Consent Act (“SFICA”).
Informed Consent and Waiver Our commercial human spaceflight operations and any third-party claims that arise from our operation of spaceflights are subject to federal and state laws governing informed consents and waivers of claims, including under the Commercial Space Launch Act (“CSLA”), the Commercial Space Launch Amendments Act of 2004 (“CSLAA”) and the New Mexico Space Flight Informed Consent Act (“SFICA”). 19 Table of Contents Under U.S. federal law and the CSLAA, operators of spaceflights are required to obtain informed consent from both participants and members of the crew for any commercial human spaceflight.
Additionally, our carrier aircraft has a rapid turnaround time, enabling it to provide frequent spaceflight launch services for multiple spaceships. The mothership was designed with a view towards supporting our international expansion and has a range of up to 2,800 nautical miles. As a result, the mothership can transport our spaceships virtually anywhere in the world to establish launch capabilities.
Additionally, our launch vehicle has a rapid turnaround time, enabling it to provide frequent spaceflight launch services for multiple spaceships. The launch vehicle was designed with a view towards supporting our international expansion and has a range of up to 2,800 nautical miles.
We also expect to continue and expand our government and research payload business, in addition to developing additional commercial partnerships. Our Competitive Strengths We are a pioneer in commercial human spaceflight with a mission to transform access to space for the benefit of humankind; to reveal the wonder of space to more people than ever before.
Our Competitive Strengths We are a pioneer in commercial human spaceflight with a mission to transform access to space for the benefit of humankind; to reveal the wonder of space to more people than ever before.
Our in-house propulsion team is in the process of upgrading our rocket motor production plant to increase the production rate and to reduce the unit production cost to accommodate planned growth in the spaceship fleet and drive increasingly attractive per-flight economics. Safety Systems We have designed our spaceflight system with a fundamental focus on safety.
Our in-house propulsion team is in the process of developing our rocket motor production plant in our spaceship factory to increase the production rate and to reduce the unit production cost to accommodate planned growth in the spaceship fleet and drive increasingly attractive per-flight economics.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf delays like this arise or recur, in particular in connection with the development of our Delta Class spaceships and next-generation motherships, if our remediation measures and process changes do not continue to be successful or if we experience issues with planned manufacturing improvements or design and safety, we could experience issues in sustaining the ramp of our spaceflight system, delays in increasing production further or commencing commercial service on our expected timeframes or at all. 22 Table of Contents If we encounter difficulties in scaling our delivery or servicing capabilities, if we fail to develop and successfully commercialize spaceflight technologies, if we fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business, financial condition and results of operations could be materially and adversely impacted.
Biggest changeIf delays like this arise or recur, in particular in connection with the development of our next-generation spaceships and launch vehicles, if our remediation measures and process changes do not continue to be successful or if we experience issues with planned manufacturing improvements or design and safety, we could experience issues in sustaining the ramp of our spaceflight system, delays in increasing production further or commencing commercial service on our expected timeframes or at all.
The success of our business will be highly dependent on our ability to effectively market and sell spaceflights. We have generated only limited revenue from spaceflight, and we expect that our success will be highly dependent, especially in the foreseeable future, on our ability to effectively market and sell spaceflight experiences.
The success of our business will be highly dependent on our ability to effectively market and sell spaceflights. We have generated only limited revenue from spaceflight, and we expect that our business will be highly dependent, especially in the foreseeable future, on our ability to effectively market and sell spaceflight experiences.
The potential for differing policies globally about the altitude above the earth’s surface where “space” begins and defining the status of, and obligations toward, spaceflight participants could introduce an additional level of legal and commercial complexity.
The potential for differing policies globally about the altitude above Earth’s surface where “space” begins and defining the status of, and obligations toward, spaceflight participants could introduce an additional level of legal and commercial complexity.
As the enforcement landscape further develops, and supervisory authorities issue further guidance on international data transfers, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to stop using certain tools and vendors and make other operational changes; we have had to and will have to implement revised standard contractual clauses for existing intragroup, customer and vendor arrangements; and/or it could otherwise affect the manner in which we provide our services, the geographic location or segregation of our systems and operations, and could adversely affect our business, operations and financial condition.
As the enforcement landscape in relation to data transfers further develops, and supervisory authorities issue further guidance on international data transfers, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to stop using certain tools and vendors and make other operational changes; we have had to and will have to implement revised standard contractual clauses for existing intragroup, customer and vendor arrangements; and/or it could otherwise affect the manner in which we provide our services, the geographic location or segregation of our systems and operations, and could adversely affect our business, operations and financial condition.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; 38 Table of Contents • subject to the terms of the Stockholders’ Agreement, our board of directors has the exclusive right to expand the size of the board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on the board of directors; • the prohibition of cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; 41 Table of Contents • subject to the terms of the Stockholders’ Agreement, our board of directors has the exclusive right to expand the size of the board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on the board of directors; • the prohibition of cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Under Section 382 of the Internal Revenue Code of 1986, the Company’s ability to utilize net operating loss carryforwards or other tax attributes such as research tax credits, in any taxable year, may be limited if the Company experiences an “ownership change.” A Section 382 “ownership change" generally occurs if one or more stockholders or groups of stockholders, who own at least 5% of the Company’s stock, increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
Under Section 382 of the Internal Revenue Code of 1986, the Company’s ability to utilize net operating loss carryforwards or other tax attributes such as research tax credits, in any taxable year, may be limited if the Company experiences an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders, who own at least 5% of the Company’s stock, increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
Our certificate of incorporation provides that, to the fullest extent permitted by law, and other than corporate opportunities that are expressly presented to one of our directors in his or her capacity as such, VIL and its respective affiliates (but in each case, other than us and our officers and employees): • will not have any fiduciary duty to refrain from engaging in the same or similar business activities or lines of business as us, even if the opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so; • will have no duty to communicate or offer such business opportunity to us; and 39 Table of Contents • will not be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such exempted person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us.
Our certificate of incorporation provides that, to the fullest extent permitted by law, and other than corporate opportunities that are expressly presented to one of our directors in his or her capacity as such, VIL and its respective affiliates (but in each case, other than us and our officers and employees): • will not have any fiduciary duty to refrain from engaging in the same or similar business activities or lines of business as us, even if the opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so; • will have no duty to communicate or offer such business opportunity to us; and 42 Table of Contents • will not be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such exempted person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us.
Increasing stakeholder environmental, social and governance (“ESG”) expectations, physical and transition risks associated with climate change, and emerging ESG regulation and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives.
Stakeholder environmental, social and governance (“ESG”) expectations, physical and transition risks associated with climate change, and emerging ESG regulation and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives.
This creates an ongoing need for capital, and, to the extent we cannot fund capital expenditures from cash flows from operations, we will need to borrow or otherwise obtain funds. If we cannot access the capital we need, we may not be able to execute on our growth strategy, take advantage of future opportunities or respond to competitive pressures.
This creates an ongoing need for capital, and, to the extent we cannot fund capital expenditures from cash flows from operations, we will need to borrow or otherwise obtain funds. If we cannot access the capital we need, we may not be able to execute our growth strategy, take advantage of future opportunities or respond to competitive pressures.
In the event that we expand internationally, we expect that we would be subject to additional risks related to entering into international business relationships, including: • restructuring our operations to comply with local regulatory regimes; • identifying, hiring and training highly skilled personnel; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • the need for U.S. government approval to operate our spaceflight systems outside the United States; • the need for local government approval to operate our spaceflight systems; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue; 29 Table of Contents • government appropriation of assets; • workforce uncertainty in countries where labor unrest is more common than in the United States; and • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including anti-corruption laws and anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes.
In the event that we expand internationally, we expect that we would be subject to additional risks related to entering into international business relationships, including: • restructuring our operations to comply with local regulatory regimes; • identifying, hiring and training highly skilled personnel; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • the need for U.S. government approval to operate our spaceflight systems outside the United States; • the need for local government approval to operate our spaceflight systems; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue; • government appropriation of assets; • workforce uncertainty in countries where labor unrest is more common than in the United States; and • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including anti-corruption laws and anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes.
In addition, breaches of our or our third-party service providers’ security measures, the unapproved use or disclosure of proprietary information or sensitive or confidential information about us or our suppliers, customers or other third parties and any other adverse impact to the availability, integrity or confidentiality of our information systems and information could expose us or any such affected third party to a risk of loss or misuse of this information, result in litigation (including class actions), regulatory investigations, potential liability, damage our brand and reputation, cause significant incident response, system restoration or remediation and future compliance costs, or other harm to our business, even if we were not responsible for the breach.
In addition, breaches of our or our third-party service providers’ security measures, the unapproved use or disclosure of proprietary information or sensitive or confidential information about us or our suppliers, customers or other third parties (including information about individuals) and any other adverse impact to the availability, integrity or confidentiality of our information systems and information could expose us or any such affected third party to a risk of loss or misuse of this information, result in litigation (including class actions), regulatory investigations and enforcement actions, potential liability, damage our brand and reputation, cause significant incident response, system restoration or remediation and future compliance costs, or other harm to our business, even if we were not responsible for the breach.
Our growth could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring, training and managing an increasing number of pilots and employees, finding manufacturing capacity to produce our spaceflight systems and related equipment, and delays in production and spaceflights.
Our growth could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring, training and managing an increasing number of employees, finding manufacturing capacity to produce our spaceflight systems and related equipment, and delays in production and spaceflights.
We do not control these analysts, and the analysts who publish information about 43 Table of Contents our common stock may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
We do not control these analysts, and the analysts who publish information about our common stock may have had relatively little experience with us or our industry, which could affect their ability to 47 Table of Contents accurately forecast our results and could make it more likely that we fail to meet their estimates.
The successful development of our spaceflight systems and related technology involves many uncertainties, some of which are beyond our control, including: • timing in finalizing spaceflight systems design and specifications; • successful completion of flight test programs, including flight safety tests; • our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintaining current approvals, licenses or certifications; • performance of our manufacturing facilities despite risks that disrupt productions, such as natural disasters and hazardous materials; • performance of a limited number of suppliers for certain raw materials and supplied components; • performance of our third-party contractors that support our research and development activities; • performance of our third-party contractors to design and manufacture our next-generation carrier aircraft as well as manufacture key subassemblies for our next-generation spaceships; • our ability to maintain rights from third parties for intellectual properties critical to our research and development activities; • our ability to continue funding and maintain our current research and development activities; and • the impact of an outbreak of a highly infectious or contagious disease or other health concern, on us, our customers, suppliers and distributors, and the global economy.
The successful development of our spaceflight systems and related technology involves many uncertainties, some of which are beyond our control, including: • timing in finalizing spaceflight systems design and specifications; • successful completion of flight test programs, including flight safety tests; • our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintain current approvals, licenses or certifications; • performance of our manufacturing facilities despite risks that disrupt production, such as natural disasters and hazardous materials; • performance of a limited number of suppliers for certain raw materials and supplied components; • performance of our third-party contractors that support our research and development activities; • performance of our third-party contractors to design and manufacture our next-generation carrier aircraft as well as manufacture key subassemblies for our next-generation spaceships; • our ability to maintain rights from third parties for intellectual properties critical to our research and development activities; • our ability to continue funding and maintain our current research and development activities; and • the impact of an outbreak of a highly infectious or contagious disease or other health concerns, on us, our customers, suppliers and distributors, and the global economy.
These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow.
These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow or continuing our business operations.
We may also seek to expand the application of our existing proprietary technology in new and unproven offerings. Further, under the terms of an amended and restated trademark license agreement (the “Amended TMLA”), our ability to operationalize some of the technologies may be dependent upon the consent of Virgin Enterprises Limited ("VEL").
We may also seek to expand the application of our existing proprietary technology in new and unproven offerings. Further, under the terms of an amended and restated trademark license agreement (the “Amended TMLA”), our ability to operationalize some of the technologies may be dependent upon the consent of Virgin Enterprises Limited (“VEL”).
Any significant interruption due to any of the above hazards and operational to the manufacturing or operation of our spaceflight systems at one of our primary facilities, including from weather conditions, growth constraints, performance by 34 Table of Contents third-party providers (such as electric, utility or telecommunications providers), failure to properly handle and use hazardous materials, failure of computer systems, power supplies, fuel supplies, infrastructure damage, disagreements with the owners of the land on which our facilities are located, or damage sustained to our runway could result in manufacturing delays or the delay or cancellation of our spaceflights and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
Any significant interruption, due to any of the above hazards or operational risks, to the manufacturing or operation of our spaceflight systems at one of our primary facilities, including from weather conditions, growth constraints, performance by third-party providers (such as electric, utility or telecommunications providers), failure to properly handle and use hazardous materials, failure of computer systems, power supplies, fuel supplies, infrastructure damage, disagreements with the owners of the land on which our facilities are located, or damage sustained to our runway could result in manufacturing delays or the delay or cancellation of our spaceflights and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
If, following our written request, Virgin elects to not take an action to maintain, enforce or protect the Virgin brand, we may do so, at our expense, subject to various conditions including that so long as doing so would not have a material adverse effect on Virgin, any of Virgin’s other licensees or the Virgin brand and we reasonably believe failing to do so would materially adversely affect our business.
If, following our written request, Virgin elects to not take an action to maintain, enforce or protect the Virgin brand, we may do so, at our expense, subject to various conditions including that so long as doing so would not have a 30 Table of Contents material adverse effect on Virgin, any of Virgin’s other licensees or the Virgin brand and we reasonably believe failing to do so would materially adversely affect our business.
A number of factors impact the useful lives of the spaceflight systems, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components, the actual combined environment experienced compared to the assumed combined environment for which the spaceflight systems were designed and tested and the occurrence of any anomaly or series of anomalies or other risks affecting the spaceflight systems during launch, flight and reentry.
A number of factors impact the useful lives of the spaceflight systems, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components, the actual combined environment experienced compared to the assumed combined environment for which the spaceflight systems were designed and tested and the occurrence of any anomaly or series of anomalies or other risks affecting the spaceflight systems during launch, flight and re-entry.
The trading price of our common stock may fluctuate due to a variety of factors, including: • changes in the industries in which we operate; • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • delays in development of additional spaceships and motherships, including our Delta Class spaceships, or in the completion of our ground and flight testing programs; • delays in future commercial flights of our Delta Class spaceships; 41 Table of Contents • developments involving our competitors; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us, our competitors or our industry; • the public’s reaction to our press releases, public announcements and filings with the SEC; • additions and departures of key employees and personnel; • competition for talent and skill-sets required; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • investors mistaking developments involving other companies, including Virgin-branded companies, as involving us and our business; • the volume of shares of our common stock available for public sale; • sales of common stock by our directors, officers or significant stockholders, or the perception that such sales may occur; • short sales of our common stock; and • general economic and political conditions such as pandemics or epidemics, recessions, inflation, interest rates, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
The trading price of our common stock may fluctuate due to a variety of factors, including: • changes in the industries in which we operate; • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • delays in development of additional spaceships and launch vehicles, including our next-generation spaceships, or in the completion of our ground and flight testing programs; • delays in future commercial flights of our next-generation spaceships; • developments involving our competitors; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us, our competitors or our industry; • the public’s reaction to our press releases, public announcements and filings with the SEC; • additions and departures of key employees and personnel; • competition for talent and skill-sets required; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • investors mistaking developments involving other companies, including Virgin-branded companies, as involving us and our business; • the volume of shares of our common stock available for public sale; • sales of common stock by our directors, officers or significant stockholders, or the perception that such sales may occur; • short sales of our common stock; and • general economic and political conditions such as pandemics or epidemics, recessions, inflation, interest rates, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
Our spaceflight systems are highly sophisticated and depend on complex technology, and we require them to meet rigorous performance goals that may from time to time necessitate that we replace critical components or hardware. Our ability to operate in airspace may also be superseded by the U.S. Department of Defense priority missions.
Our spaceflight systems are highly sophisticated and depend on complex technology, and we require them to meet rigorous performance goals that may 23 Table of Contents from time to time necessitate that we replace critical components or hardware. Our ability to operate in airspace may also be superseded by the U.S. Department of Defense priority missions.
The occurrence of one or more natural disasters such as tornadoes, hurricanes, fires, floods and earthquakes, unusual weather conditions, epidemic or pandemic outbreaks (including COVID-19), terrorist attacks, military conflicts or disruptive political events in certain regions where our facilities are located, or where our third-party contractors’ and suppliers’ facilities are located, could adversely affect our business.
The occurrence of one or more natural disasters such as tornadoes, hurricanes, fires, floods and earthquakes, unusual weather conditions, epidemic or pandemic outbreaks, terrorist attacks, military conflicts or disruptive political events in certain regions where our facilities are located, or where our third-party contractors’ and suppliers’ facilities are located, could adversely affect our business.
In the event we need to replace any components or hardware of our spaceflight system, there are limited numbers of replacement parts available, some of which have significant lead time 21 Table of Contents associated with procurement or manufacture, so any failure of our systems or their components or hardware could result in reduced numbers of flights and significant delays to our planned growth.
In the event we need to replace any components or hardware of our spaceflight system, there are limited numbers of replacement parts available, some of which have significant lead time associated with procurement or manufacture, so any failure of our systems or their components or hardware could result in reduced numbers of flights and significant delays to our planned growth.
Threat actors also may be able to deploy viruses, worms, malware (including ransomware) and other malicious software programs that attack our systems or otherwise exploit any security vulnerabilities of our systems or products. We face additional cybersecurity risks from social engineering/phishing, malfeasance from insiders, human or technological error.
Threat actors also may be able to deploy viruses, worms, malware (including ransomware) and other malicious software programs that attack our systems or otherwise exploit any security vulnerabilities of our systems or products. We face additional cybersecurity 32 Table of Contents risks from social engineering/phishing, malfeasance from insiders, human or technological error.
Should we 25 Table of Contents experience complications with any of these components, which are critical to the operation of our spacecraft, we may need to delay or cancel scheduled spaceflights. We face the risk that any of our contractors and suppliers may not fulfill their contracts and deliver their products or services on a timely basis, or at all.
Should we experience complications with any of these components which are critical to the operation of our spacecraft, we may need to delay or cancel scheduled spaceflights. We face the risk that any of our contractors and suppliers may not fulfill their contracts and deliver their products or services on a timely basis, or at all.
In addition to fines, a breach of the GDPR or other applicable laws relating to the processing of personal information (including in the U.S.) may result in regulatory investigations, reputational damage, orders to cease/change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/or civil claims (including class actions).
In addition to fines, a breach of the GDPR or other applicable laws relating to the processing of personal information (including in the U.S.) may result in regulatory investigations, reputational damage, orders to cease/ 35 Table of Contents change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/or civil claims (including class actions).
We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any 33 Table of Contents subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide. We are subject to environmental regulation and may incur substantial costs.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide. We are subject to environmental regulations and may incur substantial costs.
The conditional conversion feature of the 2027 Notes, if triggered, may adversely affect our financial condition and any conversion of the 2027 Notes will dilute the ownership interest of existing stockholder, and may otherwise depress the price of our common stock.
The conditional conversion feature of the 2027 Notes, if triggered, may adversely affect our financial condition and any conversion of the 2027 Notes will dilute the ownership interest of existing stockholders, and may otherwise depress the price of our common stock.
We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations. 42 Table of Contents Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate.
We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations. Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate.
If an active market for our common stock is not maintained, or if we fail to satisfy the continued listing standards of the NYSE for any reason and our securities are delisted, it may be difficult for our security holders to sell their securities without depressing the market price for the securities or at all.
If an active market for our common stock is not maintained, or if we fail to satisfy the continued listing standards of the NYSE for any reason and our securities are delisted, it may be difficult for our securityholders to sell their securities without depressing the market price for the securities or at all.
A decision to close the facilities without adequate notice, or other unanticipated problems, could adversely impact our operations. Any of the aforementioned risks may be augmented if our or any third-party provider’s business continuity and disaster recovery plans prove to be inadequate.
A decision to close the facilities without adequate notice, or other 36 Table of Contents unanticipated problems, could adversely impact our operations. Any of the aforementioned risks may be augmented if our or any third-party provider’s business continuity and disaster recovery plans prove to be inadequate.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including: • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • the cost of raw materials or supplied components critical for the manufacture and operation of our spaceflight system; • any delays that we may experience in connection with the manufacture of our Delta Class spaceships and next-generation motherships; • the timing and cost of, and level of investment in, research and development relating to our technologies and our current or future facilities; • developments involving our competitors; • changes in governmental regulations or in the status of our regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • the impact of epidemics or pandemics; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including: 38 Table of Contents • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • the cost of raw materials or supplied components critical for the manufacture and operation of our spaceflight system; • any delays that we may experience in connection with the manufacture of our next-generation spaceships and launch vehicles; • the timing and cost of, and level of investment in, research and development relating to our technologies and our current or future facilities; • developments involving our competitors; • changes in governmental regulations or in the status of our regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • the impact of epidemics or pandemics; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
While Spaceport America was funded by the State of New Mexico and we intend to pursue similar arrangements in the future, we cannot assure that such arrangements will be available to us on terms similar to those we have with the State of New Mexico 24 Table of Contents or at all.
While Spaceport America was funded by the State of New Mexico and we intend to pursue similar arrangements in the future, we cannot assure that such arrangements will be available to us on terms similar to those we have with the State of New Mexico or at all.
For example, commercial space launches, reentry of our spacecraft and the operation of our spaceflight system in the United States require licenses and permits from certain agencies of the Department of Transportation, including the FAA, and review by other agencies of the U.S. Government, including the Department of Defense, Department of State, and Federal Communications Commission.
For example, commercial space launches and the overall operation of our spaceflight system in the United States require licenses and permits from certain agencies of the Department of Transportation, including the FAA, and review by other agencies of the U.S. Government, including the Department of Defense, Department of State, and Federal Communications Commission.
The adoption of a multi-layered regulatory approach to any one of the laws or regulations to which we are or may become subject, particularly where the layers are in conflict, could require alteration of our manufacturing processes or 31 Table of Contents operational parameters which may adversely impact our business.
The adoption of a multi-layered regulatory approach to any one of the laws or regulations to which we are or may become subject, particularly where the layers are in conflict, could require alteration of our manufacturing processes or operational parameters which may adversely impact our business.
We have generated limited revenue from our commercial spaceflight operations, which commenced in June 2023, and were subsequently paused in mid-2024, flying payloads into space, scientific research services, and access fees related to our astronaut community and related events. It is difficult for us to predict our future operating results as we develop our Delta Class spaceships.
We have generated limited revenue from our commercial spaceflight operations, which commenced in June 2023, and were subsequently paused in mid-2024, flying payloads into space, scientific research services, and access fees related to our astronaut community and related events. It is difficult for us to predict our future operating results as we develop our next-generation spaceships.
To the extent these events 35 Table of Contents also impact one or more of our suppliers or contractors or result in the closure of any of their facilities or our facilities, we may be unable to maintain spaceflight schedules, provide other support functions to our astronaut experience or fulfill our other contracts.
To the extent these events also impact one or more of our suppliers or contractors or result in the closure of any of their facilities or our facilities, we may be unable to maintain spaceflight schedules, provide other support functions to our astronaut experience or fulfill our other contracts.
Since the CCPA went into to effect, comprehensive privacy statutes that share similarities with the CCPA are now in effect and enforceable in over ten other states, will soon be enforceable in several other states and are being proposed in other U.S. states and at the federal level as well.
Since the CCPA went into to effect, comprehensive privacy statutes that share similarities with the CCPA are now in effect and enforceable in nineteen other states, will soon be enforceable in several other states and are being proposed in other U.S. states and at the federal level as well.
We do not believe, however, that pending environmental regulatory developments in this area will have a material effect on our capital expenditures or otherwise materially adversely affect our operations, operating costs, or competitive position. We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
We do not believe, however, that pending environmental regulatory developments in this area will have a material effect on our capital expenditures or otherwise materially adversely affect our operations, operating costs, or competitive position. 39 Table of Contents We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
The 2027 Note Hedge 40 Table of Contents transactions are expected generally to reduce the potential dilution upon any conversion of the 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, subject to a cap.
The 2027 Note Hedge transactions are expected generally to reduce the potential dilution upon any conversion of the 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, subject to a cap.
While we had a backlog of approximately 700 future astronauts as of December 31, 2024, we are making, and we expect that we will need to continue to make, significant investments in order to attract new astronauts. Our sales growth depends on our ability to implement strategic initiatives and these initiatives may not be effective in generating sales growth.
While we had a backlog of approximately 675 future astronauts as of December 31, 2025, we are making, and we expect that we will need to continue to make, significant investments in order to attract new astronauts. Our sales growth depends on our ability to implement strategic initiatives and these initiatives may not be effective in generating sales growth.
Pursuant to the terms of the stockholders' agreement (the "Stockholders' Agreement") entered in connection with the consummation of the Virgin Galactic business combination in October 2019 (the "Virgin Galactic Business Combination"), VIL has a contractual right to be able to influence the outcome of corporate actions so long as it owns a significant portion of our total outstanding shares of common stock.
Pursuant to the terms of the stockholders’ agreement (the “Stockholders’ Agreement”) entered in connection with the consummation of the Virgin Galactic business combination in October 2019 (the “Virgin Galactic Business Combination”), VIL has a contractual right to be able to influence the outcome of corporate actions so long as it owns a significant portion of our total outstanding shares of common stock.
If we are found to be in violation of these laws and regulations, it could result in civil and criminal liabilities, monetary and non-monetary penalties, the loss of export or import privileges, debarment and reputational harm.
If we are found to be in violation of these laws and regulations, it could result in civil and criminal liabilities, monetary and non- 34 Table of Contents monetary penalties, the loss of export or import privileges, debarment and reputational harm.
We expect our operating expenses to increase over the next several years as we scale our spaceflight operations, continue to attempt to streamline our manufacturing process, develop our next-generation spaceflight vehicles, which include our Delta Class spaceships and our next-generation motherships, ultimately increase our flight cadence, hire more employees and continue research and development efforts relating to new products and technologies.
We expect our operating expenses to increase over the next several years as we scale our spaceflight operations, continue to attempt to streamline our manufacturing process, develop our next-generation spaceflight vehicles, which include our next-generation spaceships and launch vehicles, ultimately increase our flight cadence, hire more employees and continue research and development efforts relating to new products and technologies.
For example, in July 2024, we announced the opening of a new spaceship manufacturing facility in Arizona and the related anticipated scaling of our team to produce Delta Class spaceships. However, in November 2023, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce, in order to decrease costs and strategically realign our resources.
For example, in July 2024, we announced the opening of a new spaceship manufacturing facility in Arizona and the related anticipated scaling of our team to produce our next-generation spaceships. However, in November 2023, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce, in order to decrease costs and strategically realign our resources.
While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct. The conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.
While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct. The conditions supporting our assumptions or estimates may 22 Table of Contents change at any time, thereby reducing the predictive accuracy of these underlying factors.
If we further delay spaceflights or if future astronauts reconsider their astronaut experience, those individuals may seek to cancel their planned spaceflight, and may obtain a full or partial refund. We have not yet tested flights at our anticipated full passenger capacity of our Delta Class spaceships.
If we further delay spaceflights or if future astronauts reconsider their astronaut experience, those individuals may seek to cancel their planned spaceflight and may obtain a full or partial refund. We have not yet tested flights at our anticipated full passenger capacity of our next-generation spaceships.
For example, unfavorable economic conditions, whether related to inflation, interest rates, the COVID-19 pandemic or otherwise have resulted in, and may continue to result in, significant disruption and volatility of global financial markets that could adversely impact our ability to access capital.
For example, unfavorable economic conditions, whether related to inflation, interest rates or otherwise have resulted in, and may continue to result in, significant disruption and volatility of global financial markets that could adversely impact our ability to access capital.
We may not be able to convert our orders in backlog or inbound inquiries about flight reservations into revenue. As of December 31, 2024, our backlog represents orders from approximately 700 future astronauts for which we have not yet recognized spaceflight revenue.
We may not be able to convert our orders in backlog or inbound inquiries about flight reservations into revenue. As of December 31, 2025, our backlog represents orders from approximately 675 future astronauts for which we have not yet recognized spaceflight revenue.
However, the steps we take to protect our intellectual property may be inadequate, and we may choose not to pursue or maintain protection for our intellectual property in the United States or foreign jurisdictions.
However, the steps we take to protect our intellectual property may be 29 Table of Contents inadequate, and we may choose not to pursue or maintain protection for our intellectual property in the United States or foreign jurisdictions.
Risks Related to Our Business We have incurred significant losses since inception, we expect to incur losses in the future and we may not be able to achieve or maintain profitability. We have incurred significant losses since inception. We incurred net losses of $346.7 million and $502.3 million for the years ended December 31, 2024 and 2023, respectively.
Risks Related to Our Business We have incurred significant losses since inception, we expect to incur losses in the future, and we may not be able to achieve or maintain profitability. We have incurred significant losses since inception. We incurred net losses of $278.9 million and $346.7 million for the years ended December 31, 2025 and 2024, respectively.
In addition, we have in the past and may in the future experience delays in manufacture or operation as we go through the requalification process with any replacement third-party supplier, as well as the limitations imposed by ITAR and other restrictions on transfer of sensitive technologies.
In addition, we have in the past and may in the future experience delays in manufacture or operation as we go through the requalification process with any replacement third-party supplier, as well as the limitations imposed by the International Traffic in Arms Regulations (“ITAR”) and other restrictions on transfer of sensitive technologies.
Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under the 2027 Notes or any additional indebtedness that we may incur.
Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under the 2028 Notes, 2027 Notes or any additional indebtedness that we may incur, and our cash needs may increase in the future.
We are currently developing our next-generation spaceflight vehicles, which include our Delta Class spaceships and our next-generation motherships, which we expect will allow us to increase our annual flight rate.
We are currently developing our next-generation spaceflight vehicles, which include our next-generation spaceships and launch vehicles, which we expect will allow us to increase our annual flight rate.
For example, certain U.S. states have adopted new or modified privacy and security laws and regulations that may apply to our business. The California Consumer Privacy Act ("CCPA") went into effect in 2020 and imposes a range of obligations on covered businesses that process personal information of California residents.
For example, certain U.S. states have adopted new or modified privacy and security laws and regulations that may apply to our business. The California Consumer Privacy Act (“CCPA”) imposes a range of obligations on covered businesses that process personal information of California residents.
In addition, any future indebtedness that we may incur may contain financial and other restrictive covenants that will limit our ability to operate our business, raise capital or make payments under our indebtedness.
In addition, the 2028 Notes and any future indebtedness that we may incur may contain financial and other restrictive covenants that could limit our ability to operate our business, raise capital or make payments under our indebtedness.
As a result, our estimates of the annual 20 Table of Contents total addressable market for our astronaut experience, as well as the expected growth rate for the total addressable market for that experience, may prove to be incorrect. Delays in the development of our Delta Class spaceships would adversely impact our business, financial condition and results of operations.
As a result, our estimates of the annual total addressable market for our astronaut experience, as well as the expected growth rate for the total addressable market for that experience, may prove to be incorrect. Delays in the development of our next-generation spaceships would adversely impact our business, financial condition and results of operations.
Terrorist attacks, actual or threatened acts of war or the escalation of current hostilities, such as the ongoing conflicts between Russia and Ukraine and Israel and Hamas, or any other military or trade disruptions impacting our domestic or foreign suppliers of components of our products, may impact our operations by, among other things, causing supply chain disruptions and increases in commodity prices, which could adversely affect our raw materials or transportation costs.
Terrorist attacks, actual or threatened acts of war or the escalation of current hostilities, or any other military or trade disruptions impacting our domestic or foreign suppliers of components of our products, may impact our operations by, among other things, causing supply chain disruptions and increases in commodity prices, which could adversely affect our raw materials or transportation costs.
We have previously experienced, and may experience in the future, delays or other complications in the design, manufacture, launch, production, delivery and servicing ramp of new spaceflight systems and related technology, including due to the COVID-19 pandemic, as well as other factors.
We have previously experienced, and may experience in the future, delays or other complications in the design, manufacture, launch, production, delivery and servicing ramp of new spaceflight systems and related technology, as well as other factors.
Moreover, we may not be able to maintain adequate insurance in the future at rates we consider reasonable and commercially justifiable, and insurance may not continue to be available on terms as favorable as our current arrangements.
In addition, passenger insurance may not be accepted or may be prohibitive to procure. Moreover, we may not be able to maintain adequate insurance in the future at rates we consider reasonable and commercially justifiable, and insurance may not continue to be available on terms as favorable as our current arrangements.
For example, governmental agencies often have an extended approval process for service contracts, which may result in delays or limit the timely operation of our Spaceport America facilities. Moreover, our insurance coverage may be inadequate to cover our liabilities related to such hazards or operational risks. In addition, passenger insurance may not be accepted or may be prohibitive to procure.
For example, governmental agencies often have an extended approval process for service contracts, which may result in delays or limit the timely operation of our Spaceport America facilities. 37 Table of Contents Moreover, our insurance coverage may be inadequate to cover our liabilities related to such hazards or operational risks.
Prior to November 1, 2026, noteholders will have the right to convert their notes only upon the occurrence of certain events. On and after November 1, 2026, noteholders will have the right to convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.
On and after November 1, 2026, such noteholders will have the right to convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.
We are required to import and export our products, software, technology and services, as well as run our operations in the United States, in full compliance with such laws and regulations, which include the EAR, the ITAR, and economic sanctions administered by the Treasury Department’s Office of Foreign Assets Control. Similar laws that impact our business exist in other jurisdictions.
We are required to import and export our products, software, technology and services, as well as run our operations in the United States, in full compliance with such laws and regulations, which include the Export Administration Regulations (“EAR”), the ITAR, and economic sanctions administered by the Treasury Department’s Office of Foreign Assets Control.
Prolonged disruptions in the supply of any of our key raw materials or components, difficulty qualifying new sources of supply, implementing use of replacement materials or new sources of supply or any volatility in prices could have a material adverse effect on our ability to operate in a cost-efficient, timely manner and could cause us to experience cancellations or delays of scheduled spaceflights, customer cancellations or reductions in our prices and margins, any of which could harm our business, financial condition and results of operations.
Prolonged disruptions in the supply of any of our key raw materials or components, difficulty qualifying new sources of supply, implementing use of replacement materials or new sources of supply or any volatility in prices could have a material adverse effect on our ability to operate in a cost-efficient, timely manner and could cause us to experience cancellations or delays of scheduled spaceflights, customer cancellations or reductions in our prices and margins, any of which could harm our business, financial condition and results of operations. 27 Table of Contents Our spaceflight systems and related equipment may have shorter useful lives than we anticipate.
These requirements include, for example: • specialized disclosure and accounting requirements unique to government contracts; • financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government; • public disclosures of certain contract and company information; and • mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.
These requirements include, for example: • specialized disclosure and accounting requirements unique to government contracts; • financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government; • public disclosures of certain contract and company information; and • mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements. 31 Table of Contents Government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, audits and investigations regarding our compliance with government contract requirements.
Any inability to operate our spaceflight systems at our anticipated flight rate could adversely impact our business, financial condition and results of operations. We have been dependent on a single spaceflight system consisting of a spaceship, VSS Unity, and mothership carrier aircraft, VMS Eve.
Any inability to operate our spaceflight systems at our anticipated flight rate could adversely impact our business, financial condition and results of operations. Historically, we were dependent on a single spaceflight system consisting of a spaceship, VSS Unity, and launch vehicle, VMS Eve.
These foreign trade controls prohibit, restrict, or regulate our ability to, directly or indirectly, export, deemed export, re-export, deemed re-export or transfer certain hardware, technical data, technology, software, or services to certain countries and territories, entities, and individuals, and for end uses.
Similar laws that impact our business exist in other jurisdictions. These foreign trade controls prohibit, restrict, or regulate our ability to, directly or indirectly, export, deemed export, re-export, deemed re-export or transfer certain hardware, technical data, technology, software, or services to certain countries and territories, entities, and individuals, and for end uses.
Any decrease from our assumptions in the number of passengers per flight could adversely impact our ability to generate revenue at the rate we anticipate. Any delays in the development and manufacture of additional spaceflight systems, including our Delta Class spaceships and next-generation motherships, may adversely impact our business, financial condition and results of operations.
Any decrease from our assumptions in the number of passengers per flight could adversely impact our ability to generate revenue at the rate we anticipate. 24 Table of Contents Any delays in the manufacture, production and commercialization of additional spaceflight systems, including our next-generation spaceships and launch vehicles, may adversely impact our business, financial condition and results of operations.
We are currently developing our next-generation spaceflight system, which include our Delta Class spaceships and our next-generation motherships, which we expect will allow us to increase our annual flight rate.
We are currently developing our next-generation spaceflight system, which includes our next-generation spaceships and launch vehicles, which we expect will allow us to increase our annual flight rate.
In addition, the existence of the 2027 Notes may encourage short selling by market participants because the conversion of the 2027 Notes could be used to satisfy short positions, and even anticipated conversion of the 2027 Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the 2027 Notes may encourage short selling by market participants because the conversion of the 2027 Notes could be used to satisfy short positions, and even anticipated conversion of the 2027 Notes into shares of our common stock could depress the price of our common stock. 44 Table of Contents Exercise of our outstanding common stock purchase warrants may dilute the ownership interest of our existing stockholders.
The convertible note hedge may affect the value of the 2027 Notes and our common stock. In connection with the sale of the 2027 Notes, we entered into convertible note hedge transactions in the form of capped call transactions ("the 2027 Note Hedge"), with certain financial institutions, or option counterparties.
In connection with the sale of the 2027 Notes, we entered into convertible note hedge transactions in the form of capped call transactions (“the 2027 Note Hedge”), with certain financial institutions, or option counterparties.
In addition, we could incur costs to comply with such current or future laws and regulations, the violation of which could lead to substantial fines and penalties. 36 Table of Contents We may have to pay governmental entities or third parties for property damage and for investigation and remediation costs that they incurred in connection with any contamination at our current and former properties without regard to whether we knew of or caused the presence of the contaminants.
We may have to pay governmental entities or third parties for property damage and for investigation and remediation costs that they incurred in connection with any contamination at our current and former properties without regard to whether we knew of or caused the presence of the contaminants.
If we do not complete the development of our next-generation spaceflight system in our anticipated timeframes or at all, our ability to grow our business will be adversely affected.
We currently expect private astronaut spaceflights to commence six to eight weeks after our first commercial spaceflight. If we do not complete the development of our next-generation spaceflight system in our anticipated timeframes or at all, our ability to grow our business will be adversely affected.
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in the Stockholders’ Agreement and future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant.
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in the Stockholders’ Agreement and future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant. 45 Table of Contents General Risk Factors The trading price of our common stock may be volatile, and you may be unable to sell your shares above your purchase price.
Our spaceflight systems and related equipment may have shorter useful lives than we anticipate. Our growth strategy depends in part on the successful and timely manufacture of our Delta Class spaceships. Each spaceflight system has a limited useful life, which is driven by the number of cycles that the system undertakes.
Our growth strategy depends in part on the successful and timely manufacture of our next-generation spaceships. Each spaceflight system has a limited useful life, which is driven by the number of cycles that the system undertakes.
Our indebtedness could have significant negative consequences for our security holders, business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • in the event interest accrues on the 2027 Notes or additional indebtedness, requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion of the 2027 Notes or additional indebtedness; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our indebtedness could have significant negative consequences for our securityholders, business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; and • diluting the interests of our existing securityholders if we issue shares of our common stock or debt securities to meet coupon obligations or upon conversion or repayment of the 2028 Notes, 2027 Notes or additional indebtedness.
If such business and economic conditions are experienced in future periods, this could reduce our sales and adversely affect our profitability, as demand for discretionary purchases may diminish during economic downturns, which could have a material adverse effect on our business, financial condition and results of operations. 23 Table of Contents Adverse publicity stemming from any incident involving us or our competitors, or an incident involving a commercial airline or other air travel provider, could have a material adverse effect on our business, financial condition and results of operations.
If such business and economic conditions are experienced in future periods, this could reduce our sales and adversely affect our profitability, as demand for discretionary purchases may diminish during economic downturns, which could have a material adverse effect on our business, financial condition and results of operations.
Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could divert the time and resources of our management team and harm our business, our operating results and our reputation. 28 Table of Contents We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.
Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could divert the time and resources of our management team and harm our business, our operating results and our reputation.
We believe our ability to compete successfully as a commercial provider of spaceflight does and will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, consumer confidence in the safety of our offerings, consumer satisfaction for the experiences we offer, and the frequency and availability of our offerings.
Any such foreign competitor, for example, could benefit from subsidies from, or other protective measures by, its home country. 28 Table of Contents We believe our ability to compete successfully as a commercial provider of spaceflight does and will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, consumer confidence in the safety of our offerings, consumer satisfaction for the experiences we offer, and the frequency and availability of our offerings.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis includes routine in-house and third-party testing, auditing, patch and vulnerability management, identity and access management, data loss prevention, threat intelligence and other information obtained from governmental, public, or private sources, and comprehensive alerting and reporting from operational tools and services.
Biggest changeThe Information Security Department is focused on assessing and managing our material risks from cybersecurity threats and takes steps to stay informed about and monitor efforts for the prevention, detection, and minimization of the effects of cybersecurity incidents through various means, which may include routine in-house and third-party testing, auditing, patch and vulnerability management, identity and access management, data loss prevention, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and comprehensive alerting and reporting from operational tools and services deployed in our information technology environment.
We extend our cybersecurity and data privacy standards to our third-party service providers, where appropriate, as part of our Information Security Governance Program. Where applicable, we seek vendor compliance with industry standards such as ISO 27001 and SOC 2.
We extend our cybersecurity and data privacy standards to our vendors and third-party service providers, where appropriate, as part of our Information Security Governance Program. Where applicable, we seek vendor compliance with industry standards such as ISO 27001 and SOC 2.
Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated oversight of enterprise risk management to the Audit Committee, including management’s implementation of our cybersecurity risk management program. The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity.
Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity risks to the Audit Committee, including management’s implementation of our cybersecurity risk management program. The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity.
Item 1C. Cybersecurity We utilize a risk-based approach to cybersecurity and data privacy that is intended to identify, assess, and manage information and cybersecurity risks applicable to our business, and protect the confidentiality, integrity, and availability of our critical systems and information.
Item 1C. Cybersecurity We utilize a risk-based approach to cybersecurity and data privacy to identify, assess, and manage information and cybersecurity risks applicable to our business, and protect the confidentiality, integrity, and availability of our systems and information.
The Audit Committee’s risk-based decisions related to cybersecurity are primarily reflective of the information presented.
The Audit Committee’s risk-based decisions related to cybersecurity are primarily reflective of the information presented. 48 Table of Contents
Our Information Security Department presents the status of the Information Security Program to the Audit Committee quarterly and includes security control performance, technical capability enhancements, threat intelligence, information about certain cybersecurity incidents (if any) and resource performance to demonstrate the risk posture and cyber risk management practices of the organization.
Our Information Security Department presents the status of the Information Security Program to the Audit Committee quarterly and includes technical capability enhancements, threat intelligence, information about certain cybersecurity incidents (if any) that it considers to be significant, where it deems appropriate, and resource performance to demonstrate the risk posture and cyber risk management practices of the organization.
Our defensive strategy is carefully managed to prevent threats that could materially impact our business operations, financial position or business strategy. We integrate several tools, policies, and services to support this strategy.
Our defensive strategy is carefully managed to prevent threats that could materially impact our business operations, financial position or business strategy. We integrate several tools, policies, and services to support this strategy. These are oriented around and informed by industry standard frameworks and publications, specifically the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and NIST SP 800-171.
Our Senior Director of Information Technology is principally responsible for executing our cybersecurity risk management program and has more than 15 years of global experience in managing technical and cybersecurity organizations. He is supported by our Information Security Department, which includes relevant expertise and leadership, and by external cybersecurity consultants as needed.
He is supported by our Information Security Department, which includes relevant expertise and leadership, and by external cybersecurity consultants as needed.
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These are oriented around and informed by industry standard control frameworks including the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), specifically NIST 800-171, as well as ISO 27001/27002.
Added
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF and NIST SP 800-171 as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Removed
The Information Security Department is focused on assessing and managing our material risks from cybersecurity threats and the prevention, detection, and minimization of the effects of cybersecurity incidents.
Added
Our Vice President of Enterprise Technology & Information Security is principally responsible for executing our cybersecurity risk management program and has more than 18 years of experience in cybersecurity, including over 8 years in a leadership role for domestic and international organizations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis campus includes four main operational buildings and several storage buildings under separate lease agreements that collectively house office, test and rocket motor production. These facilities are leased pursuant to separate agreements, which generally have renewal options. Several leases are either operating in renewal periods or on a month-to-month basis.
Biggest changeWe maintain more than 200,000 square feet of manufacturing and operations facilities at the Mojave Air and Space Port in Mojave, California. This campus includes four main operational buildings and several storage buildings under separate lease agreements that collectively house office, rocket motor design and test. These facilities are leased pursuant to separate agreements, which generally have renewal options.
In July 2024, we completed our final assembly facility in Arizona, which consists of two hangars with an aggregate of approximately 150,000 square feet. This facility, which is located in the Phoenix-Mesa area, will be used to assemble our next-generation Delta Class spaceships and motherships.
In July 2024, we completed our final assembly facility in Arizona, which consists of two hangars with an aggregate of approximately 150,000 square feet. This facility, which is located in the Phoenix-Mesa area, is used to assemble our next-generation spaceships and launch vehicles.
Item 2. Properties We currently operate primarily at our locations in California, New Mexico and Arizona. All of our current operating facilities are located on land that is leased from third parties.
Item 2. Properties We currently operate primarily at our locations in California, New Mexico and Arizona. All of our current operating facilities are located on land that is leased from third parties. We believe that such facilities meet our current and future anticipated needs.
We conduct our commercial operations at Spaceport America in Sierra County, New Mexico. Located on more than 25 square miles of desert landscape and with access to more than 6,000 square miles of protected airspace. Spaceport America is the world’s first purpose-built commercial spaceport and is home to the Virgin Galactic Gateway to Space terminal.
Located on more than 25 square miles of desert landscape and with access to more than 6,000 square miles of protected airspace, Spaceport America is the world’s first purpose-built commercial spaceport and is home to the Virgin Galactic Gateway to Space terminal.
Removed
We believe that such facilities meet our current and future anticipated needs. 44 Table of Contents We maintain more than 200,000 square feet of manufacturing and operations facilities at the Mojave Air and Space Port in Mojave, California.
Added
Several leases are either operating in renewal periods or on a month-to-month basis. We conduct our commercial operations at Spaceport America in Sierra County, New Mexico.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “SPCE.” Holders As of February 14, 2025, there were 63 holders of record of our shares of common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “SPCE.” Holders As of March 23, 2026, there were 84 holders of record of our shares of common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes"). 51 Table of Contents Historical Cash Flows Year Ended December 31, 2024 2023 (In thousands) Net cash provided by (used in): Operating activities $ (352,703) $ (448,193) Investing activities 175,656 (116,273) Financing activities 134,340 475,431 Net decrease in cash, cash equivalents and restricted cash $ (42,707) $ (89,035) Operating Activities Net cash used in operating activities was $352.7 million for the year ended December 31, 2024, and consisted primarily of $346.7 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $29.8 million and depreciation and amortization expense of $15.5 million, partially offset by $16.6 million of accretion of marketable securities purchased at a discount and $38.2 million of net changes in operating assets and liabilities, which were driven primarily by the reversal of $18.6 million of accrued costs in connection with the settlement of certain disputed vendor invoices.
Biggest changeHistorical Cash Flows Year Ended December 31, 2025 2024 (In thousands) Net cash provided by (used in): Operating activities $ (240,142) $ (352,703) Investing activities 90,843 175,656 Financing activities 114,129 134,340 Net decrease in cash, cash equivalents and restricted cash $ (35,170) $ (42,707) Operating Activities Net cash used in operating activities was $240.1 million for the year ended December 31, 2025, and consisted primarily of $278.9 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $18.7 million and depreciation and amortization expense of $16.5 million, as well as $7.4 million of net changes in operating assets and liabilities, partially offset by $6.1 million of accretion of marketable securities purchased at a discount. 54 Table of Contents Net cash used in operating activities was $352.7 million for the year ended December 31, 2024, and consisted primarily of $346.7 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $29.8 million, depreciation and amortization expense of $15.5 million, partially offset by $16.6 million of accretion of marketable securities purchased at a discount and $38.2 million of net changes in operating assets and liabilities, which were driven primarily by the reversal of $18.6 million of accrued costs in connection with the settlement of certain disputed vendor invoices.
Financing Activities Net cash provided by financing activities was $134.3 million for the year ended December 31, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $135.7 million, partially offset by tax withholdings paid for net settled stock-based awards of $1.2 million.
Net cash provided by financing activities was $134.3 million for the year ended December 31, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $135.7 million, partially offset by tax withholdings paid for net settled stock-based awards of $1.2 million.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context otherwise requires, all references in this section to the “Company,” "Virgin Galactic," “we,” “us,” or “our” refer to Virgin Galactic Holdings, Inc. and its subsidiaries.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context otherwise requires, all references in this section to the “Company,” “Virgin Galactic,” “we,” “us,” or “our” refer to Virgin Galactic Holdings, Inc. and its subsidiaries.
Our actual results may differ from these estimates under different assumptions and conditions. Please refer to Note 2 in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies.
Our actual results may differ from these estimates under different assumptions and conditions. Please refer to Note 3 in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies.
The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2024 and 2023. Overview We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies.
The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2025 and 2024. Overview We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies.
Our outstanding PSUs contain a service-based vesting condition, as well as a market-based vesting condition that is satisfied based on the Company's common stock performance following the end of the three-year performance measurement period based on the highest closing price over twenty consecutive trading days during the performance measurement period.
Our outstanding PSUs contain a service-based vesting condition, as well as a market-based vesting condition that is satisfied based on the Company’s common stock performance following the end of the performance measurement period based on the highest closing price over twenty consecutive trading days during the performance measurement period.
Safety Performance of Our Spaceflight Systems Our spaceflight systems are highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and servicing of our spaceflight systems meet rigorous quality standards.
Safety Performance of Our Spaceflight Systems Our spaceflight systems are highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and service of our spaceflight systems meet rigorous quality standards.
Research and development costs consist primarily of equipment, material, and labor costs (including from third-party contractors) for designing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles for our next-generation spaceships and motherships, as well as allocated facilities and other supporting overhead costs.
Research and development costs consist primarily of equipment, material, and labor costs (including from third-party contractors) for designing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles for our next-generation spaceships and launch vehicles, as well as allocated facilities and other supporting overhead costs.
The estimate of cash flows includes management's assumptions of cash inflows and outflows directly resulting from the use of those assets in operations. We assess impairment for asset groups, which represent a combination of assets that produce distinguishable cash flows.
The estimate of cash flows includes management’s assumptions of cash inflows and outflows directly resulting from the use of those assets in 57 Table of Contents operations. We assess impairment for asset groups, which represent a combination of assets that produce distinguishable cash flows.
We have estimated the fair value for each service-based stock option award as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of our stock price.
We have estimated the fair value for each service-based stock option award and stock purchases under the ESPP as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of our stock price.
Income taxes included in the consolidated financial statements are primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement. Stock-Based Compensation We have granted stock-based awards consisting of restricted stock units ("RSUs"), performance-based stock units ("PSUs"), performance-based stock options ("PSOs"), and service-based stock options.
Income taxes included in the consolidated financial statements are primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement. Stock-Based Compensation We have granted stock-based awards consisting of restricted stock units (“RSUs”), performance-based stock units (“PSUs”), performance-based stock options (“PSOs”), and service-based stock options.
Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties.
Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties. To expand capacity, we are currently developing our next-generation spaceflight vehicles.
Non-compensation components of selling, general and administrative expenses include accounting, legal and other professional fees, facilities expenses, and other corporate expenses. Selling, general and administrative expenses decreased from $174.9 million for the year ended December 31, 2023 to $125.5 million for the year ended December 31, 2024.
Non-compensation components of selling, general and administrative expenses include accounting, legal and other professional fees, facilities expenses, and other corporate expenses. Selling, general and administrative expenses decreased from $125.5 million for the year ended December 31, 2024 to $117.2 million for the year ended December 31, 2025.
As of December 31, 2024, we have reservations for spaceflights for approximately 700 future astronauts, which represent approximately $190 million in expected future spaceflight revenue upon completion of the spaceflights. Available Capacity and Annual Flight Rate In 2023, we commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system.
As of December 31, 2025, we have reservations for spaceflights for approximately 675 future astronauts, which represent approximately $188 million in expected future spaceflight revenue upon completion of the spaceflights. 51 Table of Contents Available Capacity and Annual Flight Rate In 2023, we commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system.
Investing Activities Net cash provided by investing activities was $175.7 million for the year ended December 31, 2024, and consisted primarily of $543.4 million in purchases of marketable securities and $121.9 million in capital expenditures, partially offset by $840.3 million in proceeds from maturities and calls of marketable securities.
The capital expenditures were primarily driven by costs associated with our next-generation spaceships. Net cash provided by investing activities was $175.7 million for the year ended December 31, 2024, and consisted primarily of $840.3 million in proceeds from maturities and calls of marketable securities, partially offset by $543.4 million in purchases of marketable securities and $121.9 million in capital expenditures.
LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $300 million of shares of our common stock from time to time through the Agents, acting as sales agents, or directly to one or more of the Agents, acting as principal(s), through an "at-the-market offering" program (the "2022 ATM Program").
LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $400 million of shares of our common stock from time to time through the Agents, acting as sales agents, or directly to one or more of the Agents, acting as principal(s), through an “at-the-market offering” program (the “2023 ATM Program”).
Selling, General and Administrative Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Selling, general and administrative $ 125,496 $ 174,864 $ (49,368) (28) % Selling, general and administrative expenses consist primarily of compensation and other employee benefit costs for employees involved in general corporate functions, including executive management and administration, accounting, finance, legal, information technology, sales and marketing, and human resources.
Selling, General and Administrative Year Ended December 31, $ Change % Change 2025 2024 (In thousands, except %) Selling, general and administrative $ 117,167 $ 125,496 $ (8,329) (7) % Selling, general and administrative expenses consist primarily of compensation and other employee benefit costs for employees involved in general corporate functions, including executive management and administration, accounting, finance, legal, information technology, sales and marketing, and human resources.
Spaceline Operations Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Spaceline operations $ 90,024 $ 50,538 $ 39,486 78 % 49 Table of Contents Spaceline operations expense includes costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles, such as rocket motors and spare parts; the consumption of rocket motors, fuel and other consumables; costs to maintain and support our astronaut community; and costs to provide payload cargo and engineering services.
Spaceline Operations Year Ended December 31, $ Change % Change 2025 2024 (In thousands, except %) Spaceline operations $ 72,769 $ 90,024 $ (17,255) (19) % Spaceline operations expense includes costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles, such as rocket motors and spare parts; the consumption of rocket motors, fuel and other consumables; costs to maintain and support our astronaut community; and costs to provide payload cargo and engineering services.
Research and Development Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Research and development $ 152,678 $ 295,140 $ (142,462) (48) % Research and development expenses represent costs incurred to support activities that advance our future fleet towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities.
Research and Development Year Ended December 31, $ Change % Change 2025 2024 (In thousands, except %) Research and development $ 80,466 $ 152,678 $ (72,212) (47) % Research and development expenses represent costs incurred to support activities that advance our future fleet towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities.
Research and development expenses decreased from $295.1 million for the year ended December 31, 2023 to $152.7 million for the year ended December 31, 2024.
Research and development expenses decreased from $152.7 million for the year ended December 31, 2024 to $80.5 million for the year ended December 31, 2025.
The capital expenditures were primarily driven by costs associated with our next-generation Delta spaceships and our new facility in Arizona, which will be used to assemble the spaceships.
The capital expenditures were primarily driven by costs associated with our next-generation spaceships and our new spaceship assembly facility in Arizona.
Net cash used in investing activities was $116.3 million for the year ended December 31, 2023, and consisted of $1.0 billion in purchases of marketable securities and $44.3 million in capital expenditures, partially offset by $937.9 million in proceeds from maturities and calls of marketable securities.
Investing Activities Net cash provided by investing activities was $90.8 million for the year ended December 31, 2025, and consisted primarily of $601.9 million in proceeds from maturities and calls of marketable securities, partially offset by $313.0 million in purchases of marketable securities and $198.0 million in capital expenditures.
Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance.
Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. We have recently reopened ticket sales for a tranche of spaceflight reservations at a higher base price per seat.
As we grow, we will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items. We adjust these reserves when facts and circumstances change, such as the closing of a tax audit or refinement of an estimate.
We adjust these reserves when facts and circumstances change, such as the closing of a tax audit or refinement of an estimate.
“ Risk Factors—Risks Related to Our Business .” Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
For more information regarding our risks and uncertainties, see the section of this Annual Report on Form 10-K titled “Risk Factors.” Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
In December 2024, we entered into an Agreement of Cooperation with Ente Nazionale per l'Aviazione Civile, the civil aviation authority of Italy, to jointly study the feasibility of conducting spaceflight operations from Grottaglie Spaceport in the Puglia region of Southern Italy. 47 Table of Contents Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titled “Risk Factors.” Customer Demand We have already received significant interest from potential astronauts.
Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titled “Risk Factors.” Customer Demand We have already received significant interest from potential astronauts.
We completed the 2022 ATM Program in June 2023, selling a total of 3.0 million shares of common stock and generating $300 million in gross proceeds, before deducting $3.0 million in underwriting discounts, commissions and other expenses.
In November 2024, we terminated the 2023 ATM Program, having sold a total of 12.8 million shares of common stock and generating $396.2 million in gross proceeds, before deducting $3.9 million in underwriting discounts, commissions and other expenses.
As of December 31, 2024, we sold a total of 4.1 million shares of common stock under the 2024 ATM Program, generating $29.1 million in gross proceeds since its inception, before deducting $0.9 million in underwriting discounts, commissions and other expenses.
As of December 31, 2025, we had sold a total of 37.6 million shares of common stock under the 2024 ATM Program, generating $150.7 million in gross proceeds since its inception, before deducting $4.4 million in underwriting discounts, commissions and other expenses. 55 Table of Contents Debt Obligations As of December 31, 2024, we had $425 million outstanding under the 2027 Notes that had a maturity date of February 1, 2027.
In June 2023, we entered into a distribution agency agreement with the Agents providing for the offer and sale of up to $400 million of shares of our common stock from time to time through the Agents, acting as sales agents, or directly to one or more of the Agents, acting as principal(s), through an "at-the-market offering" program (the "2023 ATM Program").
In November 2024, we entered into an open market sale agreement with Jefferies LLC (“Jefferies”) providing for the offer and sale of up to $300 million of shares of our common stock from time to time through Jefferies, acting as sales agent, or directly to Jefferies, acting as principal, through an “at-the-market offering” program (the “2024 ATM Program”).
These decreases were partially offset by a $7.8 million increase in sub-contractor and contract labor costs associated with the development of our next-generation spaceflight vehicles.
These decreases were partially offset by a $2.7 million increase in materials and sub-contractor and contract labor costs.
Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue. 48 Table of Contents Results of Operations The following tables set forth our results of operations for the periods presented. The period-to-period comparisons of financial results are not necessarily indicative of future results.
However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue. Results of Operations The following tables set forth our results of operations for the periods presented.
Interest Income Interest income increased from $42.2 million for the year ended December 31, 2023 to $42.4 million for the year ended December 31, 2024. Interest income was driven by investment returns on our marketable securities and deposits in interest-bearing accounts. Interest Expense Interest expense was $12.9 million for each of the years ended December 31, 2024 and 2023.
Interest Income Interest income decreased from $42.4 million for the year ended December 31, 2024 to $21.8 million for the year ended December 31, 2025. The decrease was primarily driven by decreased average balances of marketable securities and deposits in interest-bearing accounts.
We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations for the next twelve months. Beyond the next twelve months, our principal demand for funds will be to sustain our operations, operate our spaceline at Spaceport America in New Mexico, and expand our fleet of spaceships, motherships, and supporting facilities.
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, operate our spaceline at Spaceport America in New Mexico, expand our fleet of spaceships, launch vehicles and supporting facilities, and repay outstanding debt. We are currently in the pre-commercial service phase and accordingly have no spaceflight revenue.
We have estimated the fair value for each PSO and PSU award with market-based conditions as of the grant date using the Monte-Carlo simulation method. The Monte-Carlo simulation method considers, among other factors, the discount rate and future market conditions . Item 7A. Quantitative and Qualitative Disclosures about Market Risk Not applicable for smaller reporting companies.
We have estimated the fair value for each PSO and PSU award with market-based conditions as of the grant date using the Monte-Carlo simulation method. The Monte-Carlo simulation method considers, among other factors, the discount rate and future market conditions . Warrants Warrants are accounted for as either equity-classified or liability-classified instruments based on an assessment of their specific terms.
Interest expense primarily consisted of interest expense and amortization of debt issuance costs related to our convertible senior notes. Income Tax Expense Income tax expense was immaterial for the years ended December 31, 2024 and 2023. We have accumulated net operating losses at the U.S. federal and state levels.
Income Tax Expense Income tax expense was immaterial for the years ended December 31, 2025 and 2024. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets.
Accordingly, in assessing our future taxable income on a jurisdictional basis, we consider the effect of our transfer pricing policies on that income. 54 Table of Contents We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. As we grow, we will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items.
Year Ended December 31, 2024 2023 (In thousands) Revenue $ 7,036 $ 6,800 Operating expenses: Spaceline operations 90,024 50,538 Research and development 152,678 295,140 Selling, general and administrative 125,496 174,864 Depreciation and amortization 15,467 13,369 Special charges — 4,398 Total operating expenses 383,665 538,309 Operating loss (376,629) (531,509) Interest income 42,352 42,234 Interest expense (12,927) (12,872) Other income, net 538 263 Loss before income taxes (346,666) (501,884) Income tax expense 74 453 Net loss $ (346,740) $ (502,337) Comparison of Results of Operations for Year Ended December 31, 2024 to Year Ended December 31, 2023 Revenue Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Revenue $ 7,036 $ 6,800 $ 236 3 % Revenue for the years ended December 31, 2024 and 2023 were primarily attributable to revenue generated from our commercial spaceflights and access fees related to our astronaut community.
Year Ended December 31, 2025 2024 (In thousands) Revenue $ 1,544 $ 7,036 Operating expenses: Spaceline operations 72,769 90,024 Research and development 80,466 152,678 Selling, general and administrative 117,167 125,496 Depreciation and amortization 16,485 15,467 Total operating expenses 286,887 383,665 Operating loss (285,343) (376,629) Interest income 21,842 42,352 Interest expense (12,782) (12,927) Debt restructuring expense (2,798) — Other income, net 226 538 Loss before income taxes (278,855) (346,666) Income tax expense 52 74 Net loss $ (278,907) $ (346,740) Comparison of Results of Operations for Year Ended December 31, 2025 to Year Ended December 31, 2024 Revenue Year Ended December 31, $ Change % Change 2025 2024 (In thousands, except %) Revenue $ 1,544 $ 7,036 $ (5,492) (78) % 52 Table of Contents Revenue for the year ended December 31, 2025 was primarily attributable to access fees related to our astronaut community.
Our annual flight rate is constrained by the availability and capacity of this commercial spaceflight system. To expand capacity, we are currently developing our next-generation spaceflight vehicles. These next-generation spaceflight vehicles, which include our Delta Class spaceships and additional motherships, are expected to dramatically increase our annual flight rate.
Our annual flight rate was constrained by the availability and capacity of this commercial spaceflight system. To expand capacity, we developed and are assembling our next-generation spaceships. These spaceships are expected to dramatically increase our annual flight rate. With our first two next-generation spaceships, we expect to ramp to a targeted rate of 125 commercial space missions per year.
The decrease was primarily driven by a $33.7 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $8.9 million decrease in consulting 50 Table of Contents and other professional fees, a $4.2 million decrease in marketing and promotion expense, and a $1.7 million decrease in facility costs.
The decrease was primarily driven by a $6.7 million decrease in professional 53 Table of Contents fees and outside services and a $3.4 million decrease in cash compensation and other employee benefit costs, partially offset by a $2.3 million expense associated with the proposed settlement of a class action lawsuit.
In October 2024, we settled the lawsuit and all claims between us and The Boeing Company and Aurora Flight Sciences Corporation, a Boeing Company. See Note 15 in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
See Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Liquidity Outlook For at least the next twelve months, we expect our principal demand for funds will be for our ongoing activities described above. We expect to meet our short-term liquidity requirements primarily through our cash, cash equivalents and marketable securities on hand.
Liquidity Outlook For at least the next twelve months, we expect our principal demand for funds will be for our ongoing operating activities described below and the repayment of $30.4 million of contractual principal payments related to the 2028 Notes.
Depreciation and Amortization Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Depreciation and amortization $ 15,467 $ 13,369 $ 2,098 16 % Depreciation and amortization expense increased from $13.4 million for the year ended December 31, 2023 to $15.5 million for the year ended December 31, 2024.
Depreciation and Amortization Depreciation and amortization expense increased from $15.5 million for the year ended December 31, 2024 to $16.5 million for the year ended December 31, 2025. The increase was primarily due to the acquisition of property, plant and equipment.
Following the 'Galactic 07' flight, we paused Unity spaceflights and expect to commence flying with test flights of our new Delta Class spaceships in advance of restarting commercial service, which is expected to begin in 2026.
We currently expect our flight test program to commence in the third quarter of 2026 in advance of restarting commercial service, which is expected to begin in the fourth quarter of 2026 with a research flight. We currently expect private astronaut spaceflights to commence six to eight weeks after our first commercial spaceflight.
We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense was primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.
The income tax expense is primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement. Liquidity and Capital Resources As of December 31, 2025, we had total cash, cash equivalents and restricted cash of $175.7 million and total marketable securities of $162.3 million.
As of December 31, 2024, future minimum payments under non-cancellable operating leases were $120.6 million. For additional information regarding our lease obligations, see Note 15 in our consolidated financial statements included in Item 8 of this Annual Report in Form 10-K.
Debt Restructuring Expense Debt restructuring expense of $2.8 million for the year ended December 31, 2025 relates to costs incurred in connection with the 2027 Notes Repurchase Agreements. See Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Net cash provided by financing activities was $475.4 million for the year ended December 31, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $478.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $3.2 million. 52 Table of Contents Contractual Obligations We lease certain facilities and assets under non-cancellable operating lease arrangements that expire at various dates through 2065.
Financing Activities Net cash provided by financing activities was $114.1 million for the year ended December 31, 2025, and consisted primarily of proceeds from issuance of long-term debt of $212.5 million, net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $118.1 million, proceeds from the issuance of purchase warrants of $62.5 million, and proceeds from the issuance of common stock and pre-funded warrants of $45.6 million related to our registered direct offering, partially offset by the repurchase of our convertible debt of $320.6 million, transaction costs related to issuance of common stock and equity-classified warrants of $2.2 million and debt issuance costs of $1.8 million.
Removed
Recent Developments In January 2024, we completed our sixth commercial spaceflight, 'Galactic 06,' marking the first time all four seats aboard VSS Unity were occupied by private astronauts. In June 2024, we completed our second spaceflight of 2024 and seventh commercial spaceflight to date, 'Galactic 07,' carrying one researcher and three private astronauts.
Added
These spaceflight vehicles, which include our next-generation spaceships and launch vehicles, are expected to dramatically increase our annual flight rate. Following the completion of the non-recurring engineering work on our next-generation spaceships, we have redeployed engineering resources to the next phase of design for our next-generation launch vehicle.
Removed
On June 12, 2024, at the Company’s 2024 annual meeting of stockholders, our stockholders approved, and on June 14, 2024, we effected, a 1-for-20 reverse stock split (the “Reverse Stock Split”), and our common stock began trading on a split-adjusted basis on June 17, 2024.
Added
In addition, we are exploring the opportunity to use a derivative model of our launch vehicle as a High-Altitude, Long-Endurance (“HALE”) aircraft, which we believe could be utilized for several types of government and research purposes. Recent Developments We are continuing the production of our next-generation spaceships and are progressing through our build milestones.
Removed
Prior to the Reverse Stock Split, on May 29, 2024, we received a notice from the New York Stock Exchange (the “NYSE”) that we were no longer in compliance with Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”), which requires listed companies to maintain an average closing price per share of at least $1.00 over a 30 consecutive trading-day period.
Added
In December 2025, we entered into separate, privately negotiated repurchase agreements (the “2027 Notes Repurchase Agreements”) with a limited number of holders of our 2.50% convertible senior notes due 2027 (the “2027 Notes”), pursuant to which we repurchased $354.6 million in aggregate principal amount of the 2027 Notes.
Removed
Following the Reverse Stock Split, on July 1, 2024, we received a letter from the NYSE stating that we regained compliance with Section 802.01C.
Added
The period-to-period comparisons of financial results are not necessarily indicative of future results.
Removed
All shares of our common stock, per-share data and related information included in this Annual Report on Form 10-K have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.
Added
Revenue for the year ended December 31, 2024 was primarily attributable to revenue generated from our commercial spaceflights and access fees related to our astronaut community.
Removed
In July 2024, we completed our new manufacturing facility in Arizona, where final assembly of our next-generation Delta Class spaceships is scheduled to begin in 2025. After the initial development of our first Delta Class spaceship, we estimate the recurring cost to make each additional spaceship to be between $50 and $60 million.
Added
Spaceline operations expense decreased from $90.0 million for the year ended December 31, 2024 to $72.8 million for the year ended December 31, 2025. The decrease was primarily driven by an $18.9 million decrease in cash compensation and other employee benefit costs and a $1.6 million decrease in facility costs.
Removed
However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks.
Added
The decrease was primarily driven by a $63.1 million decrease in sub-contractor and contract labor costs associated with the development of our next-generation spaceflight vehicles and an $8.1 million decrease in cash compensation and other employee benefit costs.
Removed
Following the launch of commercial service and achievement of technological feasibility in July 2023, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying consolidated statements of operations and comprehensive loss.
Added
Interest Expense Interest expense decreased slightly from $12.9 million for the year ended December 31, 2024 to $12.8 million for the year ended December 31, 2025. Interest expense primarily consists of interest expense and amortization of debt issuance costs related to our convertible notes, as well as our new first lien notes that were issued in December 2025.
Removed
Prior to achievement of technological feasibility, spaceline operations expense included costs to support our astronaut community and costs related to payload cargo and engineering services.
Added
Our principal sources of liquidity have come from sales of our common stock and offering of the 2027 Notes.
Removed
Spaceline operations expense for the years ended December 31, 2024 and 2023, following achievement of technological feasibility in July 2023, were primarily attributable to costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles; and costs to maintain and support our astronaut community.
Added
Contractual Obligations For information regarding our cash requirements for contractual obligations, indebtedness and lease obligations, see Notes 6, 9 and 16 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Issuances of Common Stock In June 2023, we entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co.
Removed
The decrease was primarily driven by a $65.8 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the VSS Unity and VMS Eve modifications, a reduction in headcount and labor allocated to capitalizable Delta projects; a $49.3 million decrease in materials, consulting, and other costs primarily due to the completion of the VSS Unity and VMS Eve modifications; the settlement of certain disputed vendor invoices, resulting in a reversal of $18.6 million of accrued costs; an $8.3 million decrease in other operational costs primarily due to a technology license fee expensed in 2023; and a $5.2 million decrease in consulting and other professional fees.
Added
During the year ended December 31, 2025, we sold 33.5 million shares of common stock under the 2024 ATM Program and generated $121.6 million in gross proceeds, before deducting $3.5 million in underwriting discounts, commissions and other expenses.
Removed
The increase was primarily due to the acquisition of property, plant and equipment. Special Charges In November 2023, we commenced a restructuring plan designed to decrease costs and strategically realign our resources. In connection with this plan, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce.
Added
During 2025, we evaluated alternative financing arrangements to refinance the 2027 Notes. Our primary objective was to extend the maturity of our contractual debt obligations to better align with the planned growth in our spaceline commercial operations, which is expected to commence commercial service in the fourth quarter of 2026.
Removed
As a result, we recorded $4.4 million in severance and related benefit costs for the involuntarily terminated employees as special charges during the year ended December 31, 2023. In January 2024, we fully paid the $1.4 million liability balance associated with these costs that was accrued at December 31, 2023.
Added
As a result of the Capital Transactions (as defined below), we extended the maturity for a majority of our contractual debt obligations to December 31, 2028. In addition, the outstanding balance for our contractual debt obligations was reduced by $142.1 million.
Removed
Liquidity and Capital Resources As of December 31, 2024, we had total cash, cash equivalents and restricted cash of $210.9 million and total marketable securities of $445.9 million.
Added
A summary of the maturities and mandatory payments of the contractual debt outstanding is as follows: Year Ending December 31, 2025 2024 Change (In thousands) 2026 $ 30,392 $ — $ 30,392 2027 80,552 425,000 (344,448) 2028 171,973 — 171,973 $ 282,917 $ 425,000 $ (142,083) 2025 Capital Realignment Transactions In December 2025, we completed privately negotiated repurchase agreements (the “2027 Notes Repurchase Agreements”) with a limited number of holders of our 2027 Notes, pursuant to which we repurchased $354.6 million in aggregate principal amount of our 2027 Notes (the “Repurchases”) with cash proceeds received from the Registered Offering (as defined below) and the Private Placement (as defined below).
Removed
Net cash used in operating activities was $448.2 million for the year ended December 31, 2023, and consisted primarily of $502.3 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $44.3 million, depreciation and amortization expense of $13.4 million, and $7.9 million of net changes in operating assets and liabilities, partially offset by $15.1 million of accretion of marketable securities purchased at a discount.
Added
Concurrently with the Repurchases, we completed the issuance and sale for cash in a registered direct offering, pursuant to separate, privately negotiated subscription agreements with certain investors, of (i) 2.2 million shares of our common stock, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 8.4 million shares of our common stock (collectively, the “Registered Offering”).
Removed
Funding Requirements We expect our expenditures to fluctuate in connection with our ongoing activities, particularly as we continue to advance the development of our next-generation spaceflight system and leverage investments in capital expenditures. As our fleet of spaceships expands, we expect our expenditures to increase as we scale our commercial operations.
Added
In connection with the Registered Offering, we received cash proceeds of $45.6 million. The Pre-Funded Warrants are exercisable at any time on or after December 29, 2025 at an exercise price of $0.0001 per share.
Removed
Specifically, our long-term expenditures will increase as we: • scale up our manufacturing processes and capabilities to support expanding our fleet with additional spaceships, carrier aircraft and rocket motors in connection with commercialization; • hire additional personnel in manufacturing operations, testing programs, maintenance operations and guest services as we increase the volume of our spaceflights; and • scale up required operational facilities, such as hangars and warehouses; We expect our arrangements with third-party providers to manufacture key subassemblies for our next-generation spaceships and for the design and manufacture of our next-generation carrier aircraft will require significant capital expenditures.
Added
The Pre-Funded Warrants contain a cashless exercise feature that allows the holders to exercise the Pre-Funded Warrants without a cash payment to us upon the terms set forth therein. The number of shares of common stock for which the Pre-Funded Warrants are exercisable are subject to certain additional customary adjustments as set forth in the Pre-Funded Warrants.

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