Good afternoon. My name is Jason and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic Fourth Quarter and Full-Year 2019 Earnings 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 session. Hosting today's conference call will be Michelle Kley, Executive Vice President, General Counsel and Secretary at Virgin Galactic. As a reminder, today's call is being recorded.

Thank you, and good afternoon, everyone. Welcome to Virgin Galactic's fourth quarter and full-year 2019 earnings conference call. With me today are George Whitesides, Chief Executive Officer; and Jon Campagna, Chief Financial Officer, who will provide prepared remarks. Also with me is Enrico Palermo, Chief Operating Officer who will be available along with George and Jon to answer questions during the Q&A portion of the call. Earlier today, we issued a press release and made a slide presentation available on our Investor Relations website, which provides an overview of our business and financial highlights for the fourth quarter and full-year 2019. During today’s call, we will make certain forward-looking statements within the meaning of 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 earnings press release we issued today as well as the Risk Factors section of the Annual Report on Form 10-K that we will file with the Securities and Exchange Commission in addition to the Company's subsequent filings 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. With that, I'd like to turn the call over to George Whitesides.

Thank you, Michelle. Good afternoon, everyone. I am delighted to be hosting our first earnings call as a public company, now that we have completed our transaction with Social Capital Hedosophia and are listed on the New York Stock Exchange. Both of these events are major steps forward and our mission to open space for everyone and we continue to make great progress towards reaching that goal. I would like to start by providing an overview of our business, what we have achieved so far and our strategy to drive growth going forward. I will then turn to our fourth quarter activity and also provide detail on our current areas of focus. Jon will then take you through the financial highlights.

Thanks, George. Turning to Slide 30. On October 25, 2019, we completed our merger with Social Capital Hedosophia, creating the world's first and only publicly traded company focused on commercial spaceflight. This transaction provided us with $452 million of cash on our balance sheet and put us in a strong cash position as we continue to progress towards commercial launch. As a result of the transaction, we incurred one-time cost of $48 million, including underwriting, legal, accounting, and other fees. Following the close of the transaction, our ownership structure consisted of 59% ownership by rollover equity holders, 27% public ownership, 13% ownership by the SPAC sponsors, and 1% Boeing ownership via the $20 million investment. We recently filed our amended S-1 registration statement for the purpose of registering the shares issuable upon exercise of approximately 31 million outstanding warrants. We are working closely with the SEC to make that registration statement effective as quickly as possible. While we have not yet met requirements to mandatorily redeem the outstanding public warrants and have not made any decisions as to whether we would redeem the warrants if we meet such requirements, our current intention is to wait until the S-1 is effective before making such decision. Turning to Slide 31. We are pleased with our fourth quarter results, which reflect our ongoing progress towards commercial launch and our transition during the quarter to become a public company. As George said earlier, we have received 7,957 registrations of interest in flight reservations as of February 23, 2020, up 124% from 3,557 as of September 30, 2019. We ended the quarter with cash and cash equivalence of $480 million on our balance sheet as of December 31, 2019. Revenue for the quarter was $529,000, which we generated by providing engineering services. Net loss for…

Thanks, Jon. Turning to Slide 33. As you may have seen from the press release issued earlier today, we have announced a new initiative called One Small Step as we reactivate our sales engine and prepare to release our next tranche of seats for sale to the general public. This is the latest planned step in a commercial strategy, which was initiated in December 2018 by a formal close to new sales, immediately following our historic first spaceflight. Our objective in the meantime has been to create optimal conditions and a strong sales pipeline in preparation for reopening the doors to new business at higher price points. During 2019, we rolled out a regular cadence of milestone updates including our second spaceflight and the reveals of the spaceport interior and customer spacesuits emphasizing the significant progress we have been making towards commercial service. This program was supported by successful campaigns in traditional and social media. The ambition behind this program was to create a pool of prospects for spaceflight sales and as we went through 2019, we use the news flow to encourage those potentially interested in flying with us to register online. We have been delighted with the response and are extremely pleased that flight reservation registrants now number approximately 8,000. Our direct sales funnel is now strong in each of the leads, prospects, and future astronaut stages. With the One Small Step initiative, we are now building additional structure that will establish a pool of qualified prospects, and in doing so, augment the direct channel sales funnel structure in readiness for a return to sales and in support of future growth. Turning to Slide 34. Today's announcement of our One Small Step initiative marks a significant milestone as we prepare to reopen ticket sales. Online registrants will pay…

At this time, we will begin our Q&A. Your first question comes from the line of Adam Jonas from Morgan Stanley. Your line is open.

Thanks everybody. And George, question for you. Just kind of upfront, what do you think of the share price here?

Hi, Adam, and hi, everybody. Nice to be with you. And I think we're just going to keep executing and that's really what we're focused on, run our team full of space engineers, and what we're best at is just keeping our heads down and focused on the engineering. So that's basically what I think.

Okay. I appreciate that. I asked because you clearly established you got a lot of cash on the balance sheet and there's some items that could kind of continue that moving up, whether it's the One Small Step program and then potentially the items related to the S-1. But as I saying that sometimes the best time to raise capital is when you don't need it, you don't need it. But given the enormity of the opportunity that you've established in this really excellent presentation, some investors might wonder, given volatile market conditions and an opportunity to really exercise that first-mover advantage, what is the logic for not raising more capital here? And I'm referring specifically beyond the warrants related to potential transaction. Can you tell us why you don't need – don't want to use a potential opportunity to raise even more?

Adam, I mean I think the thing that is exciting about Galactic is that we have in front of us an initial market opportunity that we believe is strong and highly profitable. But what's even more exciting in some ways is that the technology that we are developing as part of that first phase can lead into a future phase that can really transform the global transportation market. And that's something that we have a team thinking about right now. That is some of the smartest folks that I've ever met. And they're working really hard on this subject back in Mojave, California and in other places. And so I think we're going to take a staged approach to this. We're really going to be thinking carefully about how we roll it out. I look forward to sharing more information with the market as we go forward in our thinking process and our design process. But I've been gratified by the excitement that I think people have felt about this opportunity to like, really transform how we move around the planet. And I think that we're gratified by the share price, and as always, we'll look at the entire situation and keep monitoring. But right now, we're really focused on the engineering.

Your next question comes from the line of from Credit Suisse. Your line is open.

Hi, good afternoon. It's Rob Spingarn.

Hey, Rob.

Hey, George, and Jon. I got a couple of questions for both of you.

Yes.

I wanted to start George with the One Small Step and I ask you how large that next tranche of seats that you're planning to release would be and what kind of pricing you're thinking about?

Yes. So that's a very important question. And I mean, I think, we will be sharing more information on both our premium pricing strategy and the number of seats that we will be releasing over the course of the year. Right now, we're very focused on the rollout of the Small Step program. And what I like to say is, really think of our approach to the market as a sort of a funnel, right? So if you have it up at the top, you have around 2 million, a little bit less than 2 million folks who have over $10 million of net worth. And then we've had this 8,000 – roughly 8,000 folks who've now expressed a desire to buy a ticket with us, which by the way, I mean I think, frankly that to me was the great surprise that we've been looking forward to sharing with folks today, because it was sort of ticking up by a few hundred and then recently it's just a – it started going up by leaps and bounds. And that's just a really exciting validation of what we're trying to do and what we're trying to build. So if you sort of think, okay, well first level is this large group of people that can afford it, the next group is the number of people who sort of said that they want to buy it. And then if you go down to the bottom of the funnel, you have these 600 folks who've already put down either a full or substantial deposit representing $80 million of deposits and about $120 million, $130 million of future business. What that Small Step allows us to do, which is what we're announcing today and we'll open tomorrow, is a chance for us to…

Okay. And if I'm still in the queue here, I wanted to ask you if we could go back to…

Fairly, you are.

Okay, good. I have a couple more.

Okay.

If we go back to the Slide 17, you talked about the three areas.

Yes.

And when you’re updating the test program, so the flight test and customer experience and readying the vehicles, what are the key gating items among those three that you need to get through to get to this first commercial flight? And are you still on schedule for mid-summer, it sounded before like the schedules influx a little bit as you get everything as perfect as you need it.

Yes. Well, as you know, our number one priority is to fly safely, and not just Sir Richard, but anybody we fly, whether it's the pilots that we fly or employees that we might fly in the late test flight program. That's our number one priority. What we're affirming today, as you know, that were our number one priority is to fly Richard Branson into space on a commercial flight in 2020. That's what our entire organization is really – they know that's the top priority. I don't mind breaking out a little bit more detail in terms of these three areas. I did talk about it a little bit during those remarks. In terms of the finishing the test flight program, you're going to be needing to do some glide flights and some rocket-powered flights obviously in terms of the end-to-end customer experience. It's not just the in-flight experience, it's also the on the ground experience. It's even the – before you get to spaceport experience, we really are working really hard on all of those phases. But obviously a lot of – there's going to be a lot of focus on the cabin experience and the seats and the suits and the between all of those things. And then the third thing is readying the vehicles for long-term high rate service. I talked a little bit about that in my comments. So we really want to make that a big focus because we know ultimately the amount of revenue that we generate in 2020 is really not a thing that's going to make this company a great success. What's going to make it a great success is having a vehicle that we can turn around relatively rapidly and do that on a consistent basis, and then build a…

Your next question comes from the line of Darryl Genovesi from Vertical Research. Your line is open.

Hi guys. Thanks for the time.

Hey, Darryl.

Hey, Darryl.

Hey. George or if Steven is in the room, when I look at your chart where you show the progression of the addressable market from the $10 million plus to the 1% to 5%, I guess, I can't help, but think of how you plan to sort of test elasticity around sort of initial price points and how you ultimately make the decision as to whether or not you want to proceed down that path? Do you have any thoughts around how to get – you said you're going to give us some more comments on pricing as we progress through the year, but just wondering how you're sort of thinking about the forward progression specifically?

Yes. I mean you're probably aware that there's a variety of ways both private and public that then you can use to test market pricing and elasticity. Obviously, we're very focused on it. We have some of the best advisers in the world on this stuff. And so we're using a few different methods. I think what is clear is that there's a huge desire to get in on early flights, however you define that. There is a desire to fly with a special people. The number of people who love to fly with Richard is large, but there are other people who will be flying with us. And then there's – we even see a fair amount of folks who want to fly by themselves. They're like a couples or charter flights, things like that. And so there's going to be a variety of ways that we layer in different types of experiences. This won't be like sort of a single experience thing, where we maybe able to add premium pricing packages that I think will be really great for the customers, but also good for the company as well. The other thing that is exciting is obviously, the pricing that we're seeing in the research market is great. Even if pricing that is very good for us, it's still hugely cheaper than trying to send something up to an orbital facility. And so I think we're going to be able to make good progress on that as well. And of course, NASA is talking about human tended – funding human-tended flights on – they are considering that. They put out some kind of document on that. So I think there's a lot of interesting opportunities for premium pricing.

At this time, we would like to thank everyone for joining Virgin Galactic's fourth quarter and full-year 2019 earnings conference call. This concludes today's conference call. You may now disconnect.