Good afternoon. My name is Nadia, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Virgin Galactic second quarter 2021 earnings conference call. After the speaker's remarks, there will be a question and answer session. Hosting today's conference call will be Seth Zaslow, Vice President of Investor Relations. As a reminder, today's call is being recorded. I would now like to turn the conference over to Mr. Zaslow to begin. Please go ahead. Thank you. Good afternoon, everyone. Welcome to Virgin Galactic's second quarter 2021 earnings conference call. On the call with me today are Michael Colglazier, Chief Executive Officer, and Doug Ahrens, Chief Financial Officer. Following prepared remarks, we will open the call for questions. Our press release was issued about an hour ago and is available on our investor relations website, as is the slide presentation that will accompany today's remarks. Let me refer you to slide two of the presentation, which contains our safe harbor disclaimer. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the Risk Factors section of the company's Form 10-K filed with the Securities and Exchange Commission and other documents filed by Virgin Galactic from time to time. Readers are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call. Please also note that we will refer to certain non-GAAP financial information on today's call. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release. With that, I would now like to turn the call over to Michael. Thanks, Seth. Good afternoon, everyone. It has been an extraordinarily active and successful three months for our company. Since our last earnings call, we've achieved significant milestones on our path towards technical and operational readiness for commercial launch. We've also gathered tangible evidence of the deep consumer interest in our service, which reaffirms confidence in our approach. Our Unity 22 flight in July was a landmark achievement. After 17 years of research, engineering, and innovation, we executed a successful space flight with a full crew in the cabin. Unity 22 demonstrated further proof of our technical readiness, and we were able to share this event with the world, as over 19 million viewers around the globe enjoyed the excitement and wonder of the space flight experience through our live stream and live television broadcast. Watching VSS Unity streak once again above the atmosphere, arc back towards Earth into a perfect viewing position, and feather gracefully for return to Spaceport America validated the inherent safety and design of our system. The feedback we got from Sirisha Bandla, Colin Bennett, Beth Moses, and Richard Branson gave us incredible validation of the customer experience we've created, and the extraordinary global response to the flight makes us even more confident in the significant untapped market of space enthusiasts and the power of our global human-centered brand to attract them. With the successful results from the Unity 21 test flight in May and Unity 22 in July, we step closer to completing our test flight program and launching commercial passenger service in 2022. As we advance towards that goal, we are excited to announce today that we will immediately open ticket sales to our significant list of early hand raisers, prioritizing our Space farer community who, as promised, will be given first opportunity to reserve their place to space. We have a purposeful range of product offerings in order to satisfy the different ways people will want to share this experience. For the private astronaut flights, our products will include a single seat, a multi-seat couples, families, and friends package, and a full flight buy-up. Prices for this next phase of private astronaut sales will begin at $450,000 per seat. Our microgravity research and professional astronaut training flights remain priced at $600,000 on a per seat equivalent basis. I'll have more to say about our commercial plans later in my remarks. Turning to slide four and the agenda for today's call. I'm going to start with a recap of our flight test program and the momentum that it's created for our company and our commercial plans. I'll follow with an update on our fleet readiness, including efforts to reach moderate rate commercial cadence as we parallel path the design of our production model spaceships and motherships. I'll share an overview of our approach to the Virgin Galactic customer journey and how it will differentiate our product in the marketplace. I'll turn the call over to Doug, who will provide a financial update and discuss our strategy to expand our production capabilities to meet the high levels of anticipated demand. Turning to slide five, let's start with our flight test program and the enormous impact of our recent flight, Unity 22. Unity 22 flight was an important milestone for the company, it did not stand alone. It was part of a methodical test flight program with each achievement building on the one before it. With our Unity 21 test flight in May, we successfully completed our third space flight, the first one from Spaceport America, New Mexico. Now the focus of this flight was to validate our technical approach and flight profile, it did exactly that. The flight tested and affirmed the spaceship's upgraded flight controls and horizontal stabilizers, it also collected the data needed for our final two verification reports for the FAA. After the Unity 21 flight, we submitted that data to the FAA, following a detailed review, the FAA announced in late June that it had approved 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 space line to fly customers, and was further validation of the inherent safety of our system. With those technical pieces in place, in July, we turned our focus to testing the cabin experience for our private astronauts and researchers. This was the 22nd flight for VSS Unity, the fourth test flight to reach space, and the first test flight with a full crew in the cabin. The crew of Unity 22 successfully fulfilled a host of test objectives related to the cabin and customer experience. My favorite part happened when each of them stepped off the ship and they came into Spaceport America before they headed out to the stage to celebrate. As each came up to me and gave me a hug, seriously, the first thing that popped out of their mouths was, "I just want to go do that again." They stammered, and it was kind of stammering. They were very joyous in an attempt to find the words to describe the view that they had seen. I'm sure that all of our astronauts are still absorbing this moment and what it will mean for them personally. I think those initial sentiments confirm the most important test points for us of all. Turning to slide six. The Unity 22 flight was an inflection point for our global brand. We created a cultural moment. We saw incredible global engagement, with viewership coming from over 65 countries. Millions of space enthusiasts around the planet shared a glimpse into the journey that Virgin Galactic's future astronauts can expect, and they loved it. The interest in Unity 22 was expressed in several ways: through total viewership, which we estimate was in excess of 19 million between our live stream and linear viewership, through extensive media coverage, which we estimated generated billions of impressions, and through the incredible influx of traffic to our website, where potential space travelers and fans have been signing up to receive information on our products and to learn how to reserve a flight. We also announced an initiative with Omaze that raises funds for Space for Humanity, a nonprofit organization where individuals from any walk of life can apply for an opportunity to go to space. To date, over 125,000 people from 190 countries around the world have donated to this cause, and we're still in the early phase of the campaign, which is fantastic. Moving to slide seven. Our commercial focus now is to capitalize on this interest and enthusiasm. The data we gain from this consumer response will continue to feed us with meaningful insights that will be used for our next phase of sales, as well as to broaden our future sales efforts and deepen our well of engaged brand fans and followers. We will build on this large base of potential customers and brand fans through curated content and engagement, including sharing exclusive content from our upcoming test flights. In combination with targeted performance marketing, sales, and partnership efforts, we see this new customer database as an important strategic asset for us to convert future business as we ramp up the size of our fleet. As I noted, we will initially focus our sales efforts on an established group of early hand-raisers, prioritizing the approximately 1,000 spacefarers who've already expressed an interest in our product through our One Small Step program. For the private astronaut market, we will have three different consumer offerings: a full flight package, where the buyer can purchase all the seats and all the availability on a flight, a multi-seat package for couples, friends, and family, and a single seat for individual astronauts. We expect many consumers will want to fly with friends or family, and we will customize the experience to meet their individual preferences. Leveraging the substantial demand we have seen to our website, I am pleased to announce that we will soon open a priority list for future space travelers who wish to be next in line. We will reach out first to this list with any available inventory following the conclusion of our spacefarer conversion process. Registration for this list will soon be made available on our website. Going forward, we expect to maintain priority lists to ensure a continuous demand overhang as we grow our supply. Moving to slide eight. Following our Unity 22 flight, we conducted thorough inspections of both Eve and Unity. Both ships returned in excellent condition, and we were pleased with the performance of our new horizontal stabilizers and our new flight control systems. We received amazing remarks on the flight experience and the views from our mission specialist. They also gave us several notes as to how we can optimize the interior for our commercial customers. These notes included the request for additional handholds for when people are floating weightless in space for all the astronauts, and for researchers, who are often busy with both hands, the request was for some footholds to be added to the cabin design. While all safety and flight-related elements of the ships performed as expected, the live video feed from the cabin to the ground experienced intermittent connection, and we are reworking the video transmission system for our next flight. This is not a flight issue and it's not a safety issue, but it is relevant to our consumer experience, and we want to have it resolved for our next flight, Unity 23. Since Unity 22 was incredibly successful in giving us the required feedback on the private astronaut experience. We are optimizing our schedule and will now have Unity 23 focused on the microgravity research and professional astronaut training experience. We're working schedules right now with the Italian Air Force, but we expect Unity 23 to take place in late September. Unity 23 will be our first full revenue flight. Following Unity 23, we will begin our planned enhancement period for our Mothership Eve, which I'll discuss in a moment. After completion of our modifications and enhancements to Eve, we'll conduct the first flight test of SpaceShip III Imagine, a glide flight, as well as the Unity 24 mission, which will be a fully crewed flight to space that will validate the enhancements to Eve, as well as serving as the final confirmation of the Unity commercial cabin. Unity 25 will then mark the start of commercial service with our private astronauts. As we reopen sales and expand our book of future business, we remain focused on building a fleet of production spaceships, which we call our Delta class vehicles. Our objective for the Delta class is to build ships that are capable of turning on a one-week interval. We are also developing our next-generation mothership that is planned to frequently, reliably, and cost-effectively carry our spaceships to launch altitude. Our team of engineers is completing the design trade studies for both the next mothership platform as well as the Delta ships later this month. We look forward to sharing more about our progress on these important platforms in future updates. While the Delta class and the next mothership platform will constitute the bulk of our flight capacity over time, our near-term capacity is determined by flight rates of Eve, Unity, and Imagine. Currently, Eve and Unity have been flying on low-rate intervals, and this cadence is throttled by the amount and frequency of maintenance and inspection work that is performed after each flight. Finding a path to enable moderate flight rate intervals from our existing ships has been a key priority of our aerospace team. In late July, our team brought forth a recommendation to enhance Eve and Unity that could meaningfully improve flight rates. I want to take a moment to summarize the benefits of these enhancements with respect to each of our vehicles, as the improvements will expand both the scope and the duration of our upcoming enhancement period. For VSS Unity, the ship has been performing very well during these last space flights, requiring little work outside the normal inspections that we perform between test flights. With these additional enhancements, subject to testing and verification, we will be targeting a reduced turnaround flight between Unity flights of four to five weeks, and that's down from what has at our best been seven to eight weeks. For VMS Eve, the recommended enhancements will allow us to increase durability. After testing and confirmation, these enhancements could potentially allow Eve to fly 100 flights between major maintenance inspections. This is up from the current interval of 10 flights between major inspections today. This will be an incredibly important success factor during the early commercial service period while we are in process of manufacturing additional motherships. Although the designs for these improvements are still in progress, we estimate these enhancements will extend our planned vehicle enhancement period by approximately four months. The benefits of this extended work, however, are clear and advantageous to the business, and the results will enable greater commercial flight frequency and improved dispatch reliability that will favorably impact the business for years. The work on Eve drives the duration of the enhancement period, to achieve the improvements in flight frequency as soon as possible, we will start the planned enhancement period immediately following our Unity 23 flight in late September. VSS Imagine will complete its flight testing in parallel with Unity's commercial service operations, we expect the early rocket-powered flight test for Imagine to be revenue producing as we will provide access for microgravity research customers. Once in service, we expect Imagine's turnaround time between flights to be meaningfully shorter than the four to five weeks we have targeted for Unity. For those who are tracking, let me recap the integrated schedule that comes with our expanded enhancement efforts. We expect Unity 23 to fly to space in late September with the Italian Air Force. This will be followed by an enhancement period for Eve that will enable substantially increased flight rates that will accrue benefits for years to come. We expect Eve to complete its enhancement program around mid-year 2022. In early Q3, Imagine is planned to begin flight testing, and Unity 24 will fly a full crew of mission specialists to confirm the cabin interior adjustments are functioning as planned. Unity 25, our first commercial private astronaut flight, is planned for late Q3. For clarity, the Delta class and the next-generation mothership programs are not impacted by the extended enhancement period, and they continue on independent paths. Turning to slide nine, I'd like to provide some insight into our customer experience journey. Virgin Galactic is creating a consumer business with incomparable experiential offerings built around the heart of a world-class aerospace firm. Our commercial success will depend upon the quality of the experience we offer to our future astronauts, the word-of-mouth recommendations of that experience, and the impact of our consumer brand and marketing strategy. Our consumer offering is, at its most fundamental essence, a lifelong memory, and so our focus is on curating the customer experience across the entire journey from the moment someone reserves their place to space, to the time they reach apogee and graduate into the Virgin Galactic astronaut community and beyond. This will create a memory so powerful and so deep that it will catalyze lifelong reflection, recommendation, and sharing. Based on the reactions that we are seeing from our early astronauts, we believe this experience is so unique and compelling that it will drive multiple repeat experiences with friends and family across multiple space ports around the world. We are developing and bringing to life a one-of-a-kind consumer journey for our future astronauts and their guests. This will include building an immersive multi-day experience around the spaceflight. We plan to create a distinct and notable destination for our customers as a meaningful extension of the astronaut experience. This will include luxury accommodations, services, training facilities, and experiences. It will be a campus shared by future astronauts and guests, which will serve to enhance, enrich, and heighten the astronaut experience. This is the place that will get you ready for space, and this is the place where you'll come back to celebrate and commemorate having played a part in the next chapter of human progress. Our true product, though, goes far beyond the week of the spaceflight. It's about entrance into a community of people who are united by a singular aspirational experience. We've already built a thriving community of approximately 600 future astronauts with whom we regularly engage. We intend to take that much further, creating a membership community that will engage and prepare future astronauts before, during, and after the trip to space. This adds significant value that starts immediately with a commitment to reserve one's place in line. We will have more to share on our consumer experience as we move forward. We have some of the best minds in the business working on this, and we're incredibly excited about what we're building. I will now turn the call over to Doug for financial update. Thanks, Michael. Good afternoon, everyone. Before I review the financial results for the quarter, I'd like to begin with a few comments on our broader financial strategy. Turning to slide 10, as you heard from Michael, the incredible response to the Unity 22 flight reinforced the enormous interest and demand there is for our offering globally. To begin to address that demand, our long-term objective is to operate a near-daily cadence of spaceflights, not just from New Mexico, but from multiple locations around the world. As we've said previously, this is going to require a significant increase in manufacturing capacity, with each spaceport needing high single-digit to low double-digit numbers of spaceships, along with multiple motherships to carry the spacecraft to launch altitude. Of course, how many ships we need will depend on how quickly we can turn them around, which is why we are laser-focused on refining our ships to make turnaround and maintenance even more streamlined. As we are building the design of our next generation of spacecraft, we are incorporating learnings as we go. Our current production facilities have been sufficient for the needs of the business so far as they provide capabilities for developing, manufacturing, and testing spacecraft and related systems. These facilities will continue to play a valuable role in our future plans. As we've said before, in order to scale our fleet to the level we require, we must significantly enhance our production capabilities over the next few years. We're evaluating how to build our fleet most effectively and efficiently. In addition to planning improvements to our design and manufacturing capabilities, we're evaluating our supply chain and potential opportunities for strategic outsourcing to improve yield, quality, and speed. We expect to share more details on these plans in a future call. Turning to slide 11. Last month, we announced our intent to raise $500 million of capital through the sale of our common stock via an at-the-market or ATM equity offering. In connection with this offering, we issued approximately 13.7 million shares at an average price of $36.39. Going forward, we will continue to evaluate opportunities to raise capital as we grow and scale our business. We plan to use a combination of cash on hand, revenue from commercial spaceflights, as well as future inflows of capital to fund our strategic objectives. Our balance sheet remains an area of strength for us, and the step we took last month provides for our growth and further strengthens our position. We remain well-capitalized with cash and cash equivalents of over $1 billion, which represents the balance as of the end of the second quarter, adjusted for the proceeds from the July offering. I also wanted to take a moment to discuss another topic that some investors have expressed an interest in, capitalization of our spaceflight system. To date, our policy has been to expense the development costs associated with our human spaceflight system as they are incurred. We will continue to expense these costs until the completion of the enhancement period for the Mothership Eve and Spaceship Unity expected in mid-2022. As mentioned earlier, we anticipate that the planned improvements will significantly reduce the turn time between flights, which will enhance our economic model. Let's review our results for the second quarter. Free cash flow was the use of $66 million compared to prior guidance of approximately $60 million, primarily due to the acceleration of marketing expenses for the Unity 22 flight, as well as working capital changes. Looking ahead, we anticipate third quarter free cash flow of approximately - $65 million, plus or minus a few million dollars. Turning to slide 12 and the income statement. We generated revenue of $571,000 in the quarter related to payloads, which were flown on Unity 21 in May, as well as revenue earned from the completion of certain technical milestones related to payload services. Total GAAP operating expenses for the quarter were $74 million compared to $63 million in the prior year period. The increase in expenses was primarily attributable to higher non-cash stock-based compensation expense. Total non-GAAP operating expenses were $57 million compared to $55 million in the prior year period. GAAP net loss for the second quarter was $94 million compared to a loss of $72 million in the second quarter of 2020. The increase in net loss was attributable to the change in the fair value of warrants, plus increases in stock-based compensation and other operating expenses. Adjusted EBITDA was - $56 million compared to - $54 million in the prior year period. I'd like to now hand the call back to Michael. Thanks, Doug. Turning to slide 13. Before moving to Q&A, I want to take a moment to reinforce the outstanding success of the last three months. We've demonstrated the safety and success of our technology. We showcased to the world the emotional power of our consumer experience, and now we're intensely focused on scaling our operations, expanding our brand footprint, and adding new customers to our future astronaut community. As we move ahead, we'll continue to stay focused on three key areas, completing our flight test and enhancement programs, expanding our fleet through scaled production facilities and operations, and capturing and expanding consumer demand as we build out and deliver an incomparable customer experience. We are opening the door to greater access to space and bringing the awe and wonder of space travel to humanity at large. In this quarter, we made enormous progress towards that goal. This is an exciting time for the company, and it's also an incredible moment for human exploration. There's an unprecedented level of innovation and momentum in this sector and a tremendous global consumer response. We are not just watching history being made. We have our sleeves rolled up, and we're making it happen. The milestones we've achieved recently are clear progress towards an exciting future, and I am thrilled to be a part of it. Operator, we are now ready to begin the question and answer portion of the call. Of course. Our first question today comes from Robert Spingarn from Credit Suisse. Robert, please go ahead. Your line is open. Well, good afternoon. Hi, Rob. Michael and Doug, congratulations to everybody at Galactic for the progress to date and especially earlier this in July. Just a couple of questions. You talked about the experience in building out the campus. What's the capital expense for that? We're in the design phase of that right now. As you know, we've brought in a team of really world-class experts for that. We haven't landed on the full scope of that program, so nothing to disclose today on that. I think it will be in line with the volume of people that we take up into space for every spaceport. The campus we're talking about is one that we'll use at our first spaceport, but that model, I think, will play forward into future spaceports around the world as well. The real reason, Rob, for the campus is as we start moving at higher rate frequency and we fill up basically Spaceport America with departures. Spaceport America will in the short run be used for the training program itself. When we get to higher rate, we need to move training kind of off the spaceport and into its own place, and that's why we want to build a campus that combines that with the housing and the lodging. As we mentioned, much more broadly have a place that prepares people for this journey. As I mentioned, our real product is the memory that people come away with for life, and this is not just about going up and down. We want to make sure we're so thoughtful about preparing people for that. That thought will go into the design of the campus that we're talking about, and we look forward to sharing more about it as it comes together. Just a couple of things on timing. When should we expect the Delta class ships to be ready for commercial service? If I think about the 600 deposits that you have today, which I guess could be accommodated on roughly 100 flights if all those flights were full. Based on the plan that you laid out a little while ago, by when might these 600 tickets be fulfilled? Well, you are clearly hitting on kind of the key to our ramp-up, which is really leaning heavily into the Delta class, as well as getting motherships that will carry all the spaceships. In the short run, we will be flying on Unity and Imagine using our Mothership Eve. That's why you heard us today talking, sharing the really big lift that we're going to have for Eve and the frequency of flight around that. The initial phase of those 600 future astronauts will be flying on Unity and Imagine and carried by Eve. That's why we're taking the time out to go into this enhancement period with an extended scope. That was a big win that came from our engineering team in late July with a path forward for us to improve the rates there. Getting those rates up will let us move through the first 600 as quickly as possible, but we expect the Delta class will also be coming in for some of those people as well. That's where you see us on the capital side of the house, raising funds to get us ready for the manufacturing and production facilities that we're going to need to move those more quickly. It sounds like you can't really put any more specifics around that timeframe beyond that. Yeah. I think we tried to share today some good specifics on what we expect for turn rates on our existing ships, and we also have. laid out what we want the program for the Delta class to be. Today won't be the day that we kind of share the specific production strategy that we'll use for the Delta class. We do look forward to bringing that to you all, but we won't be sharing that one today. What I can say is that Delta class and the new mothership programs clearly are the important new programs for us as a company, and we'll be aligning our energies toward them. Okay. Thanks very much. Thank you, Robert. Our next question comes from Doug Harned of Bernstein. Doug, please go ahead. Very good. Thank you. Doug, when you talked about the need for the $500 million capital raise, you mentioned then part of this is about thinking of future space ports and the expansion. My guess is you've been thinking about that some. White Sands is the natural place to do this for a number of reasons. When you look forward, what's the timeframe when you're thinking about that next space port opening up, and what factors would go into a location decision? Hey, Doug, do you mind if I kick in on that one? Go ahead, Michael. So- Please Yeah. Hi, Doug. We're clearly going to focus the initial ships and the first ships coming out of our Delta class production facility towards building out Spaceport America. We're going to be building a production facility that will move multiple ships per year through, right in a kind of a quick sequence following each other. As we first then fill out Spaceport America, the year behind that, we will be able to put a heavy down payment against ships for the next spaceport. Year after that, we should be able to kind of finish that one out and kind of so on as we go forward. We will be in the market looking for where our next spaceport will go, not in this year, but I would expect we'll be spending some time doing early research for that in 2022. These are reasonably long lead items. What I think is really important is that we demonstrate value to New Mexico, both through a flight rate cadence that will bring lots of business directly, but also to the indirect benefits that will accrue to the community as we move to a high flight rate period. I think that will bring additional jobs, that will bring additional ancillary businesses. With that kind of fully functioning spaceport product, we can move to other communities around the world that I think will have high interest for that. We know kind of how we want to go about that from a research and negotiating standpoint. You ask what would be places that are interesting. I think having a varied look of different places around the world, right? We bring people up to look back upon the Earth from space, and I think seeing different parts of the Earth will be very different and unique. I would also call out that when we create a campus at each of our space ports in the future, they will be very different from each other. Let's take Southern Europe. What we would do from Southern Europe would be a very different feel than what we might do from Asia or what we might do from the Middle East. We could even see potential where if we are going someplace interesting that has great weather part of the year but not great weather the other part of the year, one of the great assets of our system is we can fly the motherships and the spaceships south for the winter, so to speak, and be able to allow us to get best utilization out of multiple places. I think we've got a really wide path open to us of interesting locales, but I would emphasize that while the spaceship will function the same way at each of those spaceports, the experience we put around them will be incredibly different, and each will be unique. When you talk about the microgravity experiments, it seems to me on the surface three to four minutes of weightlessness, not a long time. What are the types of experiments that fit with this experience? When you look at the interest you're seeing, how does the number of tickets, in a sense, for microgravity experiments, what sort of fraction do you see that being of the total? Let's talk a little bit about just I think the market for microgravity research, which goes in what has traditionally been two places: sounding rockets that can go up that are both very high from a G-force impact to the research experiment, so not every research experiment can do that. You get more limited in, like, zero G airplane flights are very limited in duration. Now, on the far side of that, you can go up to the space station and have lots of time in microgravity, and that's multiple orders of magnitude higher in cost. What you're seeing with the suborbital space flight system that we have is the ability to open up a new market that's significantly longer than what you'd see in a zero G piece, significantly calmer on the experiments themselves, and a system that has the ability for the first time outside of the space station to be human tended, and that's a big breakthrough. How do you then use the seat capacity when there's a human tended research flight? Sirisha Bandla actually tested that for us on Unity 22. Kellie Gerardi is one of the researchers that will be flying in a human tended space flight coming forward. These folks will basically take a seat within the cabin, and oftentimes their experiments will be handheld. There are other microgravity experiments that fit in what's in the industry often known as a payload rack, which we can put, for the most part, I'll call it four payload racks of a standard size for every seat that we have. You can subdivide that a little bit. That's where you see, is when we talk about a $600,000 per seat equivalent for microgravity research experiments, that's kind of running on those types of sub-pricing. How many of our seats, I think, will vary a bit. We definitely want to do some priority for each of our markets. There's a lot of people that have been waiting to fly to space in our future astronaut community, so we'll give, clearly, the most priority into that market. It's really important to do scientific research on our platform. I think it will benefit the science community, it'll benefit the research community, and it also brings a brand halo to what we're doing that I think is appropriate for the private astronaut market as well. We'll keep it balanced. Very good. Thank you. Thanks, Doug. Thank you, Doug. Our next question comes from Myles Walton of UBS. Myles, please go ahead. Your line is open. Hi, Myles. Thanks. Good evening. Hey there. Hey, Michael, thanks for the color on the pace of operations and the sort of lead time or separation time between flights. VSS Inspire, if you can give an update there, but also, I guess implied in the whole walk for schedule, you're talking maybe a maximum of 10 revenue flights in the back of 2022, then you're sort of limited 24 to 36 flights a year, I guess, until the Delta class shows up. Is that the takeaway I should have? Well, I'm happy to go through the numbers again. You probably got them down there. What we think will be the flight rate schedules as we come out of this enhancement period for Unity and for Imagine as that goes. Eve, the big win, because as you know, we have a single mothership at the moment, allowing Eve to go through this modification period and come out being able to fly effectively 10x more flights is what we'll be targeting, before these longer maintenance and inspection durations than what we have today, is a pretty material step for us, a forward-looking step. We're pleased with the benefits we're going to get out of that program. Flight rate will be tied to Unity and Imagine at the beginning. It's why you hear us putting such energy towards the Delta class of ships, and the need to shift off, as we've mentioned, this kind of prototype historical manufacturing platform to one where we actually engineer for and design for manufacturability. The confidence we've built in the total addressable market following Unity 22 really demands we move to a production fleet as quickly as possible. You mentioned Inspire. We will pull forward Inspire when ready. Right now, Inspire has been paused as we take the resources we have, still impacted by COVID. We've prioritized those against Unity, Eve, and Imagine. I would clearly point yours and everyone's attention towards the Delta class is where we're going to be putting our energy and our capital. Okay. One question on pricing. You said $450,000 is the starting price. How dynamic do you anticipate the pricing being, both as it relates to the space fares and then I guess beyond that, how curated will the pricing be? We will be, I'll call it reasonably specific on pricing for kind of each tranche of tickets that we put out. Where I said $450,000 is the beginning price, as an example, if someone wants to purchase a full flight, right, kind of buy out all the seats on the flight, there'll be a modest premium that goes against that. For the most part, that will be our starting point for the private astronaut experience. We'll carry that through a consistent tranche of vehicles. I think that allows people to understand our product. As I've said before, while this is an expensive proposition, I don't think about price. I think the question is always about value. That's why we're really thrilled to be able to share Unity 22 with the world, and get a glimpse of what that emotion and the value of that looks like for the space flight itself. As we mentioned into the broader view, Virgin Galactic will be taking into the customer experience. It really does start the moment someone signs up with us. For the spacefarers who will convert, for the people that come behind them on the priority list that we will bring into our future astronaut membership, their journey starts right there. Because this is relatively fleeting moments of your life that will be up looking about the Earth. Our full effort is to make sure that the emotions of that are so strong and the memory of that so powerful that that lasts you for life and you'll continue to share it there. Our energy will be against that, and I think the value that will come from an approach like this is incomparable. Having the price-value relationship where we want is really what factor we'll be looking for there. We feel very confident at this price point in that regard. All right. Thank you. Thanks, Myles. Thank you. Our next question comes from Oliver Chen of Cowen. Oliver, please go ahead. Your line is open. Hi, Oliver. Thanks very much, Michael. Hey there. Congratulations as well. The pricing, our surveys indicated a lot of pricing leverage given that there's so much demand and it's supply constraint. What was your framework in thinking about the right pricing, and also, given that you're very supply constrained, what are you thinking about in terms of the number of tickets you may sell? Also, as we think more broadly about customers and community and customer lifetime value, as well as experiential, and beyond the first experience, what should we focus on? What's on your mind in terms of driving that long-term relationship and how that may tie into potential revenues as well? Thank you. Thanks, Oliver. Let's see. As to the price itself, we want to have a price that obviously creates appropriate value for the company and drives value for our shareholders, and that's very important. We want a price that is understandable and delivers such great value that the people who experience this journey with us can't help but recommend it, want to do it again, want to bring their friends and family and do it again, and drive a repeat and referral dynamic that becomes kind of a self-perpetuating demand-making machine for us. We're putting a price point out that we think achieves all those goals. It's thoughtful and purposeful, and it will be for a tranche of tickets. That set of tickets starts being offered to the 1,000 or so Spacefarer communities. They're, we'll call it early hand-raisers that have also been involved in wanting to be a part of this for a while. As we move through, to the degree there's room in this next tranche beyond that group, we are building, and we'll open this up shortly, a new priority list that will allow us to take advantage of the just really incredible response that came from Unity 22. The volume that we've seen coming in asking for information about flights blew us away, and we're very pleased by that. We're going to create a priority list to capture that, and you'll see us use the concept of a priority list ongoing. Obviously, we want to keep more demand, I'll call it on our books, in excess of the supply we have. Clearly we're focused on ramping up our supply, and we'll always keep demand ramped up ahead of that. Oliver, you mentioned lifetime value. I think that's a really good place to be aware of. This is a lifetime moment for people. I don't think it's a once in a lifetime moment. I think it's a lifetime moment that will be wanting to be shared. I think you can think about lifetime value in several ways. One of them is as people move through being a future astronaut and graduate into the astronaut community, I think they're going to come back, and they will be, by far, the most outspoken and successful sales agents for us, right. I won't call it sales. I think it will just be very natural in how people will share the experience, and I think them sharing the experience will not only let people say how wonderful it was, it will bring normalcy to the concept of human spaceflight. This group of people, as we bring them in, the lifetime value is all around demand and continuing to increase the total addressable market as they go out there and share what they've done. With that said, I think there are also derivatives that will come off of this as we extend people through the community after the spaceflight in addition to future spaceflights and future spaceports. We haven't talked about that yet. Today's probably not the day for that. This is a really interesting community of people. You heard us talk about the database that we're building, we brought in world-class kind of marketing customer relationship management tools, we will be very purposeful about curating the experience for this community going forward so that it is not just aspirational to be a part of, but inspirational to be a part of. Again, I think the more we bring value to the community, the more that community will bring value to us as a company. Thank you. Our last question is, the enhancement period sounds very important for scaling and efficiency. There are a lot of variables that may be out of your control. What are risk factors and what will be the tougher aspects of the enhancement period, as we're all living in a very dynamic environment right now? Thank you. Sure. Functionally, this is kind of a life extension program on Eve, and so that's, I think, very well known in the aerospace industry of how to go about that. I'll leave it at that. As you mentioned, we're keeping an eye on the pandemic. We're keeping an eye on what that will do to allow us to bring our teams in and work efficiently together. That I'd say is one that I, like everyone, is hoping is not a risk to the system, but it's one that we're clearly keeping our eyes on. That's probably our biggest thing that I'm focusing on from a risk profile. We're still finishing the designs. This is an idea that was brought forth and proposed at the end of July. We definitely want to close the design process and be fully confident in the scope. We wanted to share our best look at that today was adding an additional four months going forward. Thank you very much. Best regards. Thanks, Oliver. Thank you. Our next question comes from Kristine Liwag of Morgan Stanley. Kristine, please go ahead. Your line is open. Hi, Kristine. Great. Hi, Mike. Hi, Doug. On Eve, I want to clarify, while it's going through enhancements and modifications, are you still able to fly it, or it'll be grounded completely? These are reasonably robust modifications to Eve, it will be coming back to our primary facility in Mojave to do this. We'll be bringing back Eve for this extended period. It will be going through efforts that make it not able to fly during that period of time. When Eve comes back out, which we estimate in mid 2022, we'll use Unity and Imagine both as we kind of start moving Imagine through its flight test and Unity. We'll basically do one Unity 24, one more fully crewed flight to just ensure we've got all the modifications to our cabin done the way we want to, and they're all functioning right. That will allow us to bring Unity 25 in, where we really start to open up the private astronaut experience. This will be then, we're expecting end of September following Unity 23 with the Italian Air Force. We'll bring Eve in right after that and come back in mid 2022 is our expectation. I see. With the mothership being a limiting factor in terms of your ability to keep flying, how do you prioritize building more motherships versus investing in the ability to enhance the spaceships and also build Delta? Can you give us an idea of what your priority is in terms of these projects? Sure. As you would guess, they're all linked factors in the equation. The reason we are taking the additional scope and the additional time for this enhancement period of Eve is because the flight rate that we will derive from Eve following this enhancement period is, we plan to build that to a factor that's almost 10x greater between major inspections than what we've been doing now. That will give us an ability to fly Eve much more frequently, and that's really important to our initial group of future astronauts, as well as the people that we're going to be signing up starting today. They want to see movement, and we also want to be bringing as many people back as we can to be advocates and missionaries for us as they go out. That's really critical, this Eve modification period. We're very excited by what we'll get from that. Really the big priority of scaling the business comes around from the matched pairing of the Delta class of vehicles, a production ship that we're targeting to be able to fly on a one-week interval, and pairing those with motherships that, like Eve, will function similarly, but can fly at an even more robust level. Those are the major programs of the company. You will see us using the funds that we have raised to develop new manufacturing production capabilities and facilities so that we can build those on as quick a rate as possible. Those are the big priorities. That's really helpful. Thank you very much. Thanks, Kristine. Thank you. Our next question comes from Noah Poponak of Goldman Sachs. Noah, please go ahead. Your line is open. Hi, Noah. Hi. How's it going? Could you give us a little more detail on specifically what you're physically doing with Eve, just because a 10x increase in pace is really massive. It would just help to better understand how you're achieving that. Sure. Just for clarity, what we're getting is 10x. We're going to build up to this to make sure that the enhancements that we do, we'll test them along the way up to that factor. What we're looking to do is enable Eve to build up to flying 100 flights before we do a major maintenance and inspection process. Currently, we do this inspection process after every 10 flights. The reason for that, if you go back, Eve was built, as was Unity, in a fashion that's used in prototype facilities. In building prototype facilities, they're meant to fly with specific windows, and they've been built in a way that has a fixed amount of durability. That's why ships that are built in that fashion have very frequent inspection processes. What we're really doing here is adding durability into the ship. This will allow it to tolerate longer periods of time with the forces that put upon it. Specifically, we'll be enhancing structural components, strengthening structural components along the ship itself. That's what will give us the ability to then, as we come out of this enhancement period, we will fly it many times, do an inspection, confirm that everything is working the way we want, and that will then the next time let us do a longer period of flights before doing an inspection. That will go sequentially up to what we expect will be a place of 100 flights between major inspection periods. That's really powerful for us and lets Eve support more spaceships than we had originally thought it might. Okay. That's very helpful. That helps clarify it. Then Michael, you spoke about wanting to sort of maintain demand that's just above supply as you ramp supply. Can you talk about how you're thinking through how you want to manage that gap? I imagine you have the algorithm of trying to triangulate demand versus supply versus price versus timing of getting folks in. Maybe, I know it changes as time goes by, but if you could speak to, at least in the near to medium term, how you intend to handle that, and how big you want that gap to be, that would be helpful. Sure. I think one thing that's probably not well-known outside of the existing future astronaut is one of the secret weapons of Virgin Galactic is our astronaut office. This is a group of people who have brought together these 600 people into a true community. As I've met many of our future astronauts, the shockingly consistent feedback that comes from them, is effectively being a part of this journey, and on this journey is far more valuable than. They're envisioning the flight, I think they're going to find that incredibly valuable too. They say it's far more valuable than what they even expect of the flight, because this is a life transitional journey. I bring that up here because it's the community and bringing these new customers that we'll bring in, into this community right from the moment they sign up with us, that is going to be where the value starts to derive. That's not well understood outside the existing 600 people. When you talk to those existing 600 people, it's top of mind and very powerful. What then will kind of gate our growth above our supply is how we want to absorb people into the community, and how we want to carry that forward. We think we've got quite a bit of headroom there. We have an enormous amount of confidence in the total addressable market that's been kind of shown from the response to Unity 22. We won't be absorbing all of it. We do think we can make a major step forward here. Once that's absorbed appropriate in the community, then we can grow from there. We'll also then keep a proportionate demand, kind of excess demand against our supply. Right now our supply is very low, and we have 600 people. We'll be adding more to that. As we start adding the Delta class ships in, as we bring Inspire on, as we bring Imagine on, and Eve comes out of its modification period, that will give us even more opportunity to bring more people into the community there. We'll always stay proportionally ahead of it. Finally, we'll get to a steady state point for Spaceport America, New Mexico, and then you'll see us moving to the next big part. That's really helpful. Is it correct to expect this current reopening of the sales window to be fairly short-lived given where demand sits and where supply sit at the moment? We haven't shared how long we think this will go. What I can tell you is the response has been really, really strong. What we want to do, the reason is we want to go do what we promised, which is move to the Spacefarer community. These are 1,000 people who signed up. They put deposits down saying they wanted to be first in line, and we're going to give them that chance. The number we will do beyond that Spacefarer community, we'll get to once we're kind of through the Spacefarer community itself, but I think it will be a meaningful number. Okay. We have, I think, plenty of time to get it done. We'll be reporting out on how we go along the way with that. I think it will be a good sales process and there'll be a lot of energy around it. Thanks so much. I appreciate it. Thank you. Thank you. Our next question comes from Michael Ciarmoli of Truist Securities. Michael, please go ahead. Your line is open. Evening, Michael. Hey, good evening. How are you? Thanks for taking the questions. Just on the pricing, the $450,000, can you talk maybe what that does to your overall financial model and specifically the contribution margin? I know you guys had laid out a 66% contribution margin based on the $250,000. Should we be thinking that all of this price is going to drop right to the bottom line? How should we be thinking about other costs being layered into the model that might possibly be an offset there? I think perhaps in some of the early documents before the company went public is maybe what you're referring to. I don't believe we've given guidance on specific margins. Obviously, raising price at these levels has quite a bit of flow through potential. We do expect to see quite a bit of flow through. We will be investing to add value to the experience, for certain. That we will not be just taking all that money through. We will be investing as part of what the campus will be about. The cost on a kind of per passenger, per astronaut basis, relatively are small in the relative sense from what will come from that campus versus the prices for the flight. The real cost of the business, as you would imagine, is the ramp-up of the fleet. That's why we're so focused on getting the Delta class with the next generation of mothership, that platform going. That's where we really get efficiency. That's where we get scale. That's where you'll really see the flow-through come, because we'll have a fixed cost basis that is easy for us to communicate and easy for us to continue to create more efficiency down the road. I don't think I'm giving you a specific answer. Got it. to your question on this one, other than to say, we do expect a heavy amount of flow-through, but it will be only after we've delivered the value to the customer. Got it. Just another one. The planned enhancements, maybe this is counterintuitive on my part, but did you guys have a discussion about just keeping the momentum going with current flights and current equipment and burn through that 600 passenger list and keep supply constrained and demand pent up while you maybe even create more demand and focus on Delta and maybe a new Mothership Eve building. Was that kind of talked about? Yeah. This proposal came up in late July, and the opportunity to have Eve fly at a much more frequent basis is very powerful. It's clearly the right thing to do on the business. The question was now versus later. In that discussion, if you look where we are in our evolution of our company, right now, we're flying with one ship, Unity. We'll be flying with two ships with Imagine. Over time, we're going to be flying with more ships. The time to take a period of an extended enhancement is when we have the newest ships available. That's the kind of least impact over time. That was probably the biggest factor is now's the time to get this done at the start. We don't want to take Eve down later, once we've really started to ramp up our private astronaut business, because I just think that's harder for people. They're like, "Okay, I'm started up, and I know the first X number of us got out," and then to kind of come back and do an extended period of time didn't make as much sense. What we are able to do now, though, during this down period, is also get focused on the Delta class and also get focused on the next generation of motherships so that we are keeping those things moving in parallel and not waiting in sequence. Got it. Perfect. Nadia- Thanks a lot, guys. Nadia- We have time for one last question, please. Okay. Our final question today comes from Pete Skibitski of Alembic Global. Pete, please go ahead. Your line is open. Evening, Pete. Thanks guys for squeezing me in. Good afternoon. Just wanted a little bit of a follow-on to Michael's line of questioning with regard to the income statement. I don't know if we could talk too much about this yet, I'm starting to get more curious now about if it takes kind of through the end of 2023, let's say, or so to get through the first tranche of 600 customers, is it reasonable then to assume that we'll take a pretty pronounced step-up in gross margin as we hit the Spacefarer tranche in, I guess that will be roughly 2024, just directionally. I'm wondering if you guys have an internal view of what annual rate of flights you need to hit to get to free cash flow positive. Maybe, Doug, I'll do a little bit and feel free to kick in here. I would say the last flight that we had with our first 600 future astronauts, the last section of those were priced at around $250,000 per person, and some of those in the early phases were less for the very early customers, who are very happy, I think, with their investment, even though it's taken a little bit of time now. As we fly those and recognize that revenue, the revenue we recognize on the earlier flights will come through with those prior sales prices. Then as we fly people who will be our new customers coming in, those will obviously come through at our new pricing, which will have a greater degree of revenue flow through. I think you're probably recognizing there will be an inflection point as we start to fly the next tranche of future astronauts. That is accurate. Doug, anything you'd like to add to that? Yeah. We gave information about the flight rates on Unity and Imagine, which you can therefore estimate the number of flights in 2022 and 2023. You can see our rate of flying the future astronauts we have on board now. That points to the next stage in our growth, which is with the Delta class, and how we then, with the expansion of the fleet and the faster turn times, we're able to really expand our rate of flight to the number of passengers we're taking with that expanded fleet. That's what we're really working towards and why that's so important. Just to follow up one last time on that, is it reasonable to think that as the more recent tranche starts flying in 2024, that could be the year, maybe in the back half, do you become free cash flow positive? Is that kind of a ballpark timeframe? Yeah about the CapEx level, I think. Yes. Level. The CapEx, we talked about the need to expand our fleet manufacturing capacity, so you'll see that kick in the interim period. It's going to, again, depend on the point in time where these things cross. Where we've got Delta class kicking in and the readiness of the fleet and where that crosses over with the 600 customers we have at the original price, and then the new ones kicking in. Again, it's the timing of when that comes online, and that's what we're working towards, but it's a little early to say exactly when that point in time is. We'll have more to say in the future on that. Great. Thanks, guys. Well, at this point, we want to thank everyone for joining the call and for your interest in Virgin Galactic. Nadia, you can conclude our call now. Thank you. Thank you, ladies and gentlemen. This concludes today's call. Thank you all for joining. You may now disconnect your lines.