Good afternoon. My name is David, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's Special Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer Thank you.
Hosting today's conference call will be George Whitesides, Chief Executive Officer. As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Whitesides. Please go ahead.
Okay. Thanks a lot, and good afternoon, everyone. We appreciate everyone joining us on short notice for this conference call to discuss the announcement we made this afternoon. On the call with me today are Michael Colglazier, who as we announced earlier, will soon join the company as Virgin Galactic's next Chief Executive Officer and Chamath Palahatia, the Chairman of our Board. Before I begin, I wanted to remind everyone that during today's call, we may make certain forward statements within the meaning of the federal securities laws.
Forward looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and as a result are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward looking statements in this communication. For more information about factors that may cause actual results to materially differ from forward looking statements, please refer to the press release we issued today and other documents filed by Virgin Galactic from time to time with the Securities and Exchange Commission. Forward looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward looking statements.
Okay. So earlier today, we issued a press release announcing Michael's appointment to succeed me as CEO and my transition to the position of Chief Space Officer. Both of our new roles will be effective as of July 20, which is, as many people know, a great space anniversary when we landed on the moon for the first time. I have to open by saying I'm thrilled to be making this announcement. Michael joins us at an exciting time for the company as we're progressing through the final phase of our test flight program and preparing for the commencement of commercial service.
He comes to Virgin Galactic following a long and very successful career at the Walt Disney Company, where he spent over 3 decades developing and growing consumer oriented multibillion dollar businesses strategically, commercially and operationally. Michael will share more about his experience and decision to transition to Virgin Galactic shortly. As for myself, I will be transitioning to the role of Chief Space Officer so that I can focus full time on developing our future business opportunities, including point to point hypersonic travel and orbital space travel. Those of you following our story know that these are both very important new initiatives as we enter our next phase as a company and I'm very excited to advance them both. This work will include, for example, building upon our recent Space Act agreement with NASA to advance HiMock Technologies as well as the Space Act agreement we signed last month with NASA for private orbital human spaceflight.
It will also include continuing to build out our high speed vehicle design, test and development program. We also plan to establish a Space Advisory Board, which I will chair filled with remarkable NASA astronauts and space visionaries. Just as important, over the next few months, I will be working side by side with Michael to bring him up to speed on all of our initiatives and operations and to ensure a smooth transition. This will ensure continuity in our business operations during this pivotal time for the company. And while I'm looking forward to the CSO role, I do want to take this opportunity to say that it's been an honor and a privilege to serve as the 1st CEO of Virgin Galactic and the spaceship company over the past 10 years.
I've seen this company grow leaps and bounds from 30 people to a workforce of over 900 today. I've shared in the many memorable triumphs and milestones that we've accomplished together during my time as CEO, including our historic flights that saw the first humans launched into space from U. S. Soil since the retirement of the Space Shuttle to our successful public listing that created the world's first publicly traded pure play human spaceflight venture. And as we are on the cusp of achieving our next goal of commercial operations, I think now is exactly the right time for me to transition out of my current role as CEO, hand the reins to someone of Michael's incredible caliber and with his experience building commercial businesses, leaving me to concentrate on future growth areas for the company.
This transition is something that Chamath and I have been discussing and planning for some time as I have long intended to focus on the technology behind space travel once company was at an appropriate stage for growth and operations. The next decade for VG will be commercially focused and it is the perfect moment for us to bring on a true visionary commercial leader to take the company forward. Michael brings enormous experience in building customer experiences for Disney all around the world and scaling businesses into multibillion dollar organizations. I'm really looking forward to supporting Michael as the company realizes Richard Branson's vision to share the experience of spaceflight with people around the world as I turn my focus to building the next generation of aerospace vehicles and experiences. And with that, I will turn it over to Michael.
Thanks, George, and good afternoon, everyone. This is a true honor and I have to say a career highlight to be joining the talented team at Virgil Galactic, especially at this inflection point in the company's journey. Like so many others, including the hundreds of future astronauts that have already signed up to fly, I've been inspired by this company. It's purpose driven, it has a world class brand, and this has an incredible opportunity as we open up space to change the world for good. George's vision and the outstanding leadership that he has been putting forth in this company have brought Virgin Galactic to reach this point.
I'm so excited to work with him and the rest of the team here. As George noted, I have over 3 decades of experience developing and growing consumer oriented businesses. I'm very proud of my 30 year career at Disney. It gave me the opportunity to work for one of the greatest brands across the company's iconic locations and deliver world class experiences. As you may have read, most recently, I was President and Managing Director of Disney Parks International.
And that means I was responsible for the consumer strategy and experiential developments of Disney's International Parks and Resorts. I continue to love Disney, all my colleagues there and the amazing work that they're doing. I have to say, opportunities like this one do not come along very often and this was a truly extraordinary opportunity and I couldn't pass it up. Taking on the role of CEO of Virgin Galactic at this point in the company's growth trajectory is perfectly suited to my background and experience. I made one observation early on in this process, that was that Disney and Virgin share a common commitment to world class service, incredible innovation and delivering unique unforgettable experiences.
I'm so looking forward to working with my new team on this opportunity. Now those at Disney who know me well understand I have a career long passion for working alongside Disney Imagineers and helping them bring their visions to reality. As you might imagine, I am even more thrilled to join the group of talented engineers at Virgin Galactic and the spaceship company to bring the dream of spaceflight to people around the world. I'm very grateful to the Virgin Galactic Board, to Moff and to Richard Branson for their support and trust in me as we take make history together with this amazing company. I'm very committed also to connecting to our stakeholders as soon as possible.
That's why I want to be on this call, even at this quick time, just to have the opportunity to speak with you all and share a little bit about myself and my background. I obviously am going to have much more to say about the business in the future, but at this point, I just want to close by saying that I could not be more excited to join this great company. I'm looking forward to getting to work. I also look forward to talking with many of you in the weeks and the months ahead as well. Like many, I have had the dream of becoming an astronaut since my early, early days, and I'm incredibly excited that I get to live out that dream of Virgin Galactic.
I am going to be flying too. And with that, I will turn the call over to Chamath for some final remarks.
Thanks, Michael, and good afternoon, everybody. So look, today marks another really momentous milestone for us at Virgin Galactic for our shareholders and frankly for all of our stakeholders. As George mentioned earlier, he and I have been discussing long term succession planning for some time now. And as most of you know, point to point hypersonic travel and orbital space travel are really the next future areas of growth for our company. And George has been focused on driving progress in these areas, while also successfully moving the company towards commercial operations, including our listing as a public business.
So by creating this new role of a Chief Space Officer, we're going to allow George the ability to dedicate his time and skill set to bring these really important areas forward. I'm really excited to see the incredible progress. And over the next few weeks, frankly, you're going to start to see some really important announcements from us solidifying that direction. I also look forward to continuing to work with George on those projects in a deep way and would really like to take a moment frankly to thank him on behalf of myself, on behalf of the Board and frankly everybody else for what he's been able to build thus far. It's really incredible and unprecedented.
He started at this business when there was 30 people. There's almost or frankly more than about 900 of them today. He saw us through a public listing. He led the development of some very vital relationships with NASA and Boeing and other key partners. So again, from everybody, including the Board, George, I just want to say thank you.
And I'm so thrilled to welcome Michael to the team. We've been talking now for several months in very deep earnest around doing this. His skill set is so complementary to what we're trying to do. It partners him with an incredible team that's already on the ground at Virgin. He'll be, frankly, an invaluable addition to our company as we are now within months frankly of commercial operations.
Michael has considerable commercial and managerial experience and a real proven track record of successfully managing and commercializing new innovative products all around the world, whether it's Disney France, the experiences in Hong Kong, in China, in Japan. He was the CEO of Disneyland. He's built $1,000,000,000 businesses several times over. And frankly, he's worked at the grooming at a grooming place that frankly has created incredible world class executives. I'm really confident he's going to create an amazing customer experience for our future astronauts.
I think that the starting point of the ticketing revenue is just the beginning. We've all talked about how we can create an incredible experience, not just for the astronauts, but everybody that comes to Spaceport America. I think Michael understands how to do that. And so I'm just thrilled. So this is a really important day for our business.
It's full steam ahead. We are completely aligned and unanimous on how to move forward. So I'm just really glad that we've been able to affect this change in a really clean way. So with that, I'll turn this over to the operator for any Q and A you guys may have for Michael or for George or
Your first question comes from the line of Robert Spingarn with Credit Suisse. Your line is open.
Well, good afternoon and congratulations to all of you. Michael, I guess this is a totally new kind of Space Mountain for you. And I wanted to ask if you have any early thoughts on your vision for the customer experience and how it may differ given your background versus what's been planned so far?
Well, Robert, I'm looking forward to meeting you. You may not have known Space Mountain is actually my favorite attraction, so it's a long note. But first up, just to be very clear, is for me to get in and learn. And this is a deep, complex company. It's grounded on engineering excellence and safety.
And so I'm diving in and I start full time on that on Monday with George right at my side. So that's the first thing. But as Chamath said, I think the customer experience, the astronaut experience that's going to happen here is a life changing opportunity. And I think people are also going to want to share that. So I look forward to bringing the experience I've had for Disney in that.
But to be very focused, I'm just going to get in and be listening and learning right away.
Okay. Thank you. And then George, just for you, I know it sounds like you're going to have more to tell us on your new endeavors in the not too distant future. But as far as orbital space and hypersonic point to point are concerned, what's the timeframe where these businesses could be financially accretive when they could start to deliver cash flow and profit?
Well, I think we'll probably not make news with a specific time frame today, Rob. But I think, obviously, there are some really interesting opportunities, I think, in the relatively near term on Orbital. And with this announcement today, I think I'll be able to really dedicate a lot of my energies to bringing in point to point, which I think as you and I have discussed over the years, I think that there are opportunities to begin generating revenue through that, that may be earlier than a pure commercial operation, whether in government related activities or otherwise. So I think, stay tuned. I think we'll have some really exciting stuff to talk about over the course of the coming period of time.
And I think it is going to be exciting to everyone and also exciting to our employees who are excited about those areas as future business areas for the company.
Well, thank you everyone. And Michael, I
look forward to meeting you as well. Thanks,
Robert.
Your next question comes from the line of Daryl Genovesi with Vertical Research. Your line is open.
Hi, everybody. Thanks for the time. And I'd echo Rob's congratulatory remarks. Shamash, I realized there were probably many factors that went into this decision. But if maybe I could just offer the question in multiple choice form.
If you were to if I were to ask you whether the transition is motivated more by your level of satisfaction with the progress on development program, A, or B, your level of, I'll say, dissatisfaction, if that's the word, or
your I guess
I'm sorry, I realize I'm having a hard time getting this out. On one hand, the commercial program has made I'm sorry, the development program has made very good progress. But I think there was some anticipation that commercial sales activity would have been restarted around the New Year. That hasn't taken place. So if I were to ask you if on one hand the transition is more related to your level of satisfaction with, the development program versus your level of dissatisfaction with the restart of commercial sales activity, which do you think is the bigger driving factor here?
Thank you.
Yes. Thanks for your question, Daryl. I want to be really clear. George has done an exceptional job. Where we are now is a point where my ambition, Richard's ambition, the Board's ambition, the employees' ambition is to institutionalize Virgin Galactic.
And what that means is we had an opportunity to look at the chips on the table. And again, we can't transparency going forward as these things become a little bit more mature and baked. But the once is the short story. And in order to do more things at once, that's a growing pie of managerial opportunity that George was the first one to say, guys, let's build this. And like I said, you're going to start to see a drumbeat of progress here going into August and beyond.
All of it is very constructive. But what it's going to demonstrate to you is that not only are we going to basically take this first order business, Phase 1 that we've described, and do what we said, which is make it into a multibillion dollar high margin, high profit business. But we're also going to try to pull forward a bunch of demand that exists on orbital travel, which we didn't know existed, and pull forward a bunch of demand on hypersonic. But in order to do that, we needed to complement George with other people. And the reality is, when we started to work with Spencer Stuart and asked the question alongside George, what we were saying was who could be a good partner for him and who would understand how to frankly live out a multibillion dollar business here.
And what I will tell you is, it was shocking to us the number of people that raised their hand who wanted to do this. And so I guess what I would tell you is it was not about satisfaction or dissatisfaction. This is frankly the raw unbridled ambition of the employees and the owners and the Board of this business to live out our potential.
Great. Thank you very much. And then I guess Michael, welcome aboard. What do you think are going to be the key challenges for you as you transition from Disney over to Virgin Galactic?
Well, I think one thing that's important, I've had a long career working in an industry that is all about safety and delivering customer experiences in a safe way. Obviously, aerospace is different than theme park technology, and so that's why I'll be diving deep and looking to the But one thing I'd say is not going to be different, is But one thing I'd say is not going to be different is this company is continuing on its path. It's what attracted me to the opportunity. I believe in it. And we'll be marching down and working to finish the path we're on, commercialize it and grow ahead.
Great. Thanks very much.
Your next question comes from the line of Pete Skibitski with Alembic Global Advisors. Your line is open.
Yes, congratulations guys. Good afternoon. I guess, Michael, I just want to get your perspective of what kind of was the tipping point that led you to say, you're at a good job, I'll categorize it as kind of an exciting job with Disney. But at some point, you had to get more excited about this opportunity. What kind of led you to that point?
Well, I'll say this, I have had a great job at Disney, one of the most amazing jobs on the planet actually. And was not aware of this until I got a call and the call came in to look, this is perhaps the most exciting quality of what's going on. Virgin Galactic is, it's really the quality of what's going on. Virgin Galactic has engineered a platform that is built for safety and built for reusability. I could understand the business model right away, but more importantly, see all the places to amplify that.
And that's what I hope to do. But as I mentioned upfront, job 1 is let's just get in and understand and learn and I'll be part of helping achieve the vision.
Okay, great. And I think I know the answer to this one, but to me it seems like a pretty big signal you guys are putting out here today that do you feel that the technical risk of the flight test program is largely retired? Is that a correct takeaway for me?
I think it's fair to say that we are now within spitting distance and we are in a multi month march to commercial ops. So things are going well. Okay.
Sounds great. Thanks guys.
Your final question comes from the line of Oliver Chen with Cowen. Your line is open.
Hi, George, Michael and Shumak, congratulations. Michael, we were curious about the Virgin Galactic brand and what were some of the facets that were most attractive to you in regards to the brand. We also wanted to ask you regarding your tremendous experience and customer centricity. What which of your past experiences do you envision as being most synergistic as you look forward? And I had a follow-up for George as well.
Sure. Thanks. Yes, Virgin is one of the premier brands in the world. And like Disney, it has a lot of things that are important to me. It's about quality.
It is about delivering amazing experiences that surprise and delight the consumers that come in. It is a surprising and somewhat purposely surprising brand that I just think is awesome. But also Virgin, like Disney, is a company and a brand with a purpose. And I've been at one company for the time I was in because I believed in that purpose. And I really believe in what we're doing here at Virgin Galactic.
So I think all those things just resonated so clearly with me. This is going to be an easy and outstanding fit. And then to your question on what I will pull from, there will be many, many things. But I have just spent my career since the 1st year I joined Disney, delighting in watching the Imagineers create and envision and engineer amazing things. And I've worked alongside of them to help them figure out how to refine those ideas into ways that we could actually build a great business and bring more opportunity back.
So taking that opportunity and doing that at Virgin Galactic and the engineers at the spaceship company, it was really, really something could be passed out.
Thank you. Very helpful. And George, congrats on your new role. Regarding the Space Advisory Board, what do you see as some of the main objectives there and what you may be looking for and how that may aid you in the commercial progress you've been making? Thank you.
Thanks, Oliver. Yes, so for many years we've had sort of an informal constellation of amazing past astronauts and space leaders. And what we're really doing with this Space Advisory Board is going to sort of more formalize that because we've got such big opportunities in front of us. Number 1, of course, with the start of commercial service, we really want to have them be able to help plug in on their great advice there. But also with orbital spaceflight and even aspects of high speed travel.
I think we're just going to be able to get a lot of great input from them. And then of course, many of them are great brand ambassadors. And what we've seen now with customers from over 60 countries now is that this really is a global brand. And what we want to do is we want to make sure that we have great brand ambassadors as we grow that. And that's why I'm so excited to work with Michael, who is just a master at this kind of stuff.
So hopefully that gives you a sense of it. And over the course of the coming months, we'll be able to say more about that.
That's helpful. And Chamath, as we look forward, as you think about talent and the organization, what is your view of how the organization stands now relative to what you want to achieve and the journey ahead talent wise?
Well, I mean, I think that's really up to Michael, to refine over the coming months quarters. But when he we did a mock Board meeting. And I got to tell you, he blew our socks off. And the way he started it was he kind of and I'm not going to steal Michael's thunder because he'll because he's going to actually do this process. But he talked about sort of a blue sky process that he's run multiple times inside of Disney and some of the Disney secret sauce about how they start with this customer centric point of view.
And in it, you don't just look at that one individual person, but all the people around it. And when he described the process of how he wants to sort of like imagine expanding the scope of how Virgin Galactic delivers our experience, not just to the astronauts, but to all the people that come with them. It was incredibly inspiring. And from it, what jumped off the page was how to think about commercial scale, how to think about sales and a much larger and progressive sales footprint and relationship footprint. So I think that I'm not going to steal Michael's thunder.
I think he has a sense of how the org will evolve there. But it was really impressive. And so I suspect that you're going to see him recruit a lot of really talented folks into the organization as we really put the foot on the gas on commercial ops. So there'll be a lot of, I think, people that join the organization
on the commercial side over the next months quarters and years.
Great. That's really helpful. That community engagement and thinking about that ambassador ship sounds like a really interesting opportunity.
And frankly, well, and also like to your point like this is like really all about ARPU. And I mean a lot of you guys have had that have been pushing us a lot like don't just think about the ticket. The ticket should eventually be 10%, 15% of the revenue, right? But in order to do that, you really have to think about the end to end customer journey and he put a very elegant point on that. And so I'm excited for him to lead this company through that journey.
And having done it before many times, it will be I'm very excited to kind of
learn from them about that.
And I would now like to turn the call back to George Whiteside for some closing remarks.
All right. Thanks, everybody. We appreciate everybody joining. As always, we appreciate your interest and your support, and we look forward to updating you on our progress at our upcoming earnings call in early August. Thank you.
This concludes today's conference call. You may now disconnect.