Virgin Galactic Holdings, Inc Q2 FY2023 Earnings Call

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's Second Quarter 2023 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. I will now turn the conference over to Eric Cerny, Vice President of Investor Relations.

Thank you. Good afternoon, everyone. Welcome to Virgin Galactic's second quarter 2023 earnings conference call. On the call with me today are Michael Colglazier, Chief Executive Officer, and Doug Ahrens, Chief Financial Officer. Following prepared remarks from Michael and Doug, we'll open the call for questions. Our press release and slide presentation that accompany today's remarks are available on our Investor Relations website. Please see Slide 2 of the presentation for 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 forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the risk factors in the company's SEC filings made from time to time. You 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, whether as a result of new information, future events, or otherwise. Please also note that we will refer to certain non-GAAP financial information on today's call. Please refer to our earnings release for a reconciliation of these non-GAAP financial metrics. With that, I would like to now turn the call over to Michael.

Good afternoon, everyone. Thank you for joining us on our second quarter earnings call. We are thrilled to have launched commercial service and look forward to sharing more about that on today's call. Turning to our agenda on Slide 3. I'll start today's call by highlighting the activity around our spaceflights during the quarter and then discuss the progress we are making on our Delta Class ships before turning the call over to Doug to share insights into our financial performance. Following our prepared remarks, we will open the call for your questions. Turning to Slide 4. We returned to space in late May with a spectacular Unity 25 space mission. The Unity 25 crew spent four days in training and preparation at Spaceport America before boarding VSS Unity and rocketing to space at nearly three times the speed of sound. The mission was an incredible success. Not only did it validate the efficacy of our astronaut training program, it also affirmed the absolutely stunning experience Virgin Galactic provides. Moving to Slide 5. On June 29, we transformed VSS Unity into a suborbital space lab with the launch of our first commercial space mission, Galactic 01. The mission brought members of the National Research Council of Italy and the Italian Air Force to space, along with 13 research payloads. Galactic 01 was an outstanding achievement for our customers, as the Italian astronauts and ground-based crew successfully executed all 13 of their research experiments. Feedback from our Italian partners was extremely positive, and the Italian team members received congratulatory notes from across their country, including from Italian Prime Minister Meloni. As highlighted on Slide 6, our spaceflight system and flight profile provide researchers with a long list of benefits. Our spaceship cabin is modular and can be adjusted to various needs. Experiments can be structured as autonomous payloads, human-intended research racks, and even as research studies designed to be worn by the crew themselves. Our unique runway take-off and landing enables research payloads to be loaded immediately prior to flight, minimizing time that experiments spend outside of the lab, and providing researchers with expedited access to their data after landing. Our ability to provide unprecedented access to space for researchers, government agencies, and universities means more opportunities for microgravity research and more expansion of human knowledge. Historically, microgravity research required long lead times and extremely high costs of accessing the International Space Station or accepting the limited continuous microgravity duration offered by parabolic flights. We believe our suborbital space lab product hits a sweet spot, and we are pleased to offer researchers and scientists access to several minutes of continuous microgravity that will allow for deeper and more frequent study of microgravity's effects on the human body, fluid dynamics, plant growth, and much more. On to Slide 7. While Galactic 01 showcased our research product, Galactic 02 is going to set the stage for a new era of suborbital human spaceflight that will dramatically broaden access to space for private individuals. We are just over a week away from the planned launch of this historic flight. The Galactic 02 crew provides a glimpse into the breadth of access that Virgin Galactic will enable as we scale our fleet and expand our business. Their ages range from 18 to 80; they hail from two of the more than 60 countries already represented within our future astronaut community; they have widely diverse reasons for wanting to travel to space; and their journeys will have widely diverse and positive impacts within their respective communities. Along with our pilots and astronaut instructors, they showcase that commercial space is opening the door for opportunities that are within the aspirations of all humans. Similar to Galactic 01, we will be live streaming the Galactic 02 mission. The livestream footage, along with widespread media coverage from these flights, helps to showcase our product and build awareness of the safety of our systems as well as the unique and highly differentiated space experience delivered by Virgin Galactic. I encourage you all to join us on August 10 for the live stream of this historic mission at virgingalactic.com. As we go forward with flying our customers to space, the majority of our webcast will be for private viewing as we focus our efforts on customers and their guests. Turning to Slide 8. We are building consumer interest and confidence by operating our commercial space line safely and consistently on a planned monthly cadence. We are executing on that objective. The performance of our spaceflight system over the last two flights has been excellent, and we've been very pleased to see both spaceship Unity and our mothership Eve perform so predictably following their enhancement programs. The enhancement program was successful, and the improved ship performance now enables us to plan our flight dates with reasonable advanced notice to our customers. Regular flight cadence gives us a meaningful database of feedback around both the astronaut experience and overall spaceflight performance. Monthly flights also provide valuable maintenance data with which we can continuously improve our operation. Moving to Page 9. We continue to progress the development of our Delta Class spaceships, which will drive the revenue growth and profitability of the company as we scale the business. Our production roadmap for the Delta Class remains consistent with what we shared last quarter, with 2023 focused on completing designs for the Delta spaceships, building the required tooling, and beginning fabrication and structural components for the ships. As we move into 2024, we anticipate completing the assembly and equipment installation designs, completing parts fabrication, and initiating the assembly phase at our facility in Phoenix, Arizona, utilizing the sub-assemblies from our suppliers. We continue to operate on a timeline that supports testing in 2025 in advance of the first Delta ship entering commercial service in 2026. Delta ships have been designed to have a relatively low unit production cost and have significant improvement in flight cadence compared to our initial ship VSS Unity. The Delta development process has yielded excellent enhancements to the ship's architecture, particularly regarding manufacturability and maintainability, and we are tracking well against our primary ship performance criteria. Before I turn the call over to Doug, I want to convey how incredibly moved our astronauts have been following their flights. Across the board, whether it be research flights or private astronaut missions, Virgin Galactic is delivering an incomparable experience. It is exciting to be flying to space on a regular basis, and we also know that we have many more milestones ahead of us. We continue to make progress on our Delta Class ships as these vehicles will enable us to deliver the same incomparable experience to more customers at a faster rate. With that, Doug, let's turn the call over to you.

Thanks, Michael. Good afternoon, everyone. Turning to Slide 10 and our financial results for the second quarter. We generated revenue of approximately $2 million, driven by a commercial spaceflight during the quarter and future astronaut membership fees. Operating expenses were $141 million, compared to $110 million in the prior-year period. The increase is primarily attributable to a $24 million rise in R&D costs tied to engineering work for our future fleet. SG&A increased by $7 million. We reported a GAAP net loss of $134 million, compared to $111 million in the prior-year period, primarily driven by higher R&D costs. Adjusted EBITDA was negative $116 million in the second quarter, compared to negative $93 million in the prior-year period. Free cash flow was in line with our guidance at negative $135 million in the second quarter, compared to negative $91 million in the same period last year. Moving to Slide 11. At the end of the second quarter, cash, cash equivalents, and marketable securities on the balance sheet totaled $980 million, a sequential increase of $106 million from the first quarter of fiscal 2023. During the quarter, we raised $241 million in gross proceeds as part of our at-the-market equity offering programs. With the start of commercial service, you will see some changes in the presentation of operating expenses when we report third quarter results in November. Going forward, the customer experience category will be expanded and renamed Spaceline Operations, accounting for costs associated with operating a commercial space line. These items include components of space line technical operations and space line missions and safety, which were previously presented in R&D or SG&A. This re-categorization does not change aggregate operating expenses. Moving to Slide 12 and our financial outlook. With commercial service, we anticipate a monthly flight cadence beginning in August with two commercial spaceflights in the third quarter and three commercial spaceflights in the fourth quarter. Given the flight cadence and manifest details, we forecast revenue to be approximately $1 million in each of the third and fourth quarters. Our capital expenditures for the third quarter are expected to be between $10 million and $15 million. The growth in CapEx is driven by the construction of the spaceship assembly facility in Phoenix, as well as technology used in the design process for our Delta Class vehicles. We continue to expect our forecasted free cash flow for each of the third and the fourth quarters of 2023 to be in the range of negative $120 million to $130 million. With that, I'll hand the call back to Michael for some closing comments.

Thanks, Doug. In closing, the second quarter was an important one for us. We celebrated a critical milestone for the company, having safely and successfully launched commercial service with extremely satisfied customers. We are very excited to be just over a week away from our second commercial spaceflight with Galactic 02, flying the first of approximately 800 customers with reservations. We look forward to delivering this transformational experience on a recurring basis, and we remain on track to scale the business in the future with the delivery of our Delta Class fleet. Finally, before we end the call today, I want to take a moment to address the passing of our good friend and Chair of the Board Evan Lovell. Evan was a champion for our mission and for the Virgin brand. We continue to keep his family in our thoughts and will forever be grateful for his leadership and his time with us. Our entire Board has been incredibly helpful, and Ray Mabus, our Lead Independent Director, has seamlessly stepped in as our Interim Chair. Ray brings extensive public sector experience to our Board, having served as U.S. Secretary of the Navy and as the Governor of Mississippi. With that, we'll turn to questions. Operator, we're ready to begin the Q&A portion of the call.

Thank you. Your first question comes from the line of Greg Konrad with Jefferies. Please go ahead.

Good evening.

Hi, Greg.

Maybe just to square the revenue comments. I mean, you did over $2 million in Q2, you talked about $1 million in Q3 and Q4 on two and three flights. What's included in that? I would think they'd be a little bit higher just given the spaceflight activity.

Hi, Greg. This is Doug. So, in Q2, we had the Italian flight, which was a research flight, so a little higher revenue. Going forward, for Q3 and Q4, when we look at the manifest details, it depends if it's going to be astronauts or research flights. So, depending on what we do with that mix and the manifest, particularly in the fourth quarter, we may see higher revenue. So, if we look at the potential here, it's probably going to be closer to $1 million in Q3. And if we do research in the fourth quarter, it would probably be over $2 million.

And then just on the R&D, you talked about the restatement in Q3, but R&D stepped down about $25 million sequentially, CapEx up a little bit. Is that Q2 R&D kind of the right level ex the restatement going forward just given the rework and re-entry of Eve now being complete?

Yes. So you're going to see some changes on the income statement because the R&D will start to move over into space line operations. So, things that were historically there will now be in the operations category, which represents the cost of operating the space line. So, you'll see our technical operations group go over there, space line missions and safety, this is all the maintenance and ground support and safety and pilots and all of that. So, a lot of movement. But in general, what you're still seeing without that restatement is R&D is continuing at this level for a while because we're in the design phase of the Delta Class and that effort is continuing for the foreseeable future into 2024. So, without that reclass, you'd still see the R&D progressing at these similar levels.

Thank you.

Hi. It's Tom on for Oliver. Just a question on how ticket sales are trending, especially after the most recent flight? And then how you expect that to trend forward? And additionally, if you could just remind us on how long the lower-priced tickets are expected to last relative to the price increase?

We currently have about 800 people in the queue. With the monthly cadence from our initial flights, Eve and Unity, we anticipate a four-year backlog until we introduce the Delta ships in 2026, which is longer than we’d like. Ideally, we want a backlog of two to three years. We're going to use these early flights to enhance confidence in our system and the safety of human spaceflight for suborbital journeys. You'll likely hear a lot of enthusiasm from passengers after their experiences, and we see this as a crucial component to build trust in this new industry and to stir excitement. We’ll let this enthusiasm grow since our backlog is longer than we would prefer. As we approach the readiness of our Delta ships, we will gradually open up sales in phases, allowing us to control pricing when we release inventory. For a while, we will have limited supply, so this approach will also help us manage that. We are not planning sales outside of what we’ve previously mentioned, but we will continue to allow for research sales and a small number of sales through the Virtuoso travel network. Anyone interested will likely go through that channel soon. As we get closer to scaling up the Delta fleet, we will increase our sales offerings, maintaining our desired backlog. In terms of pricing, of the 800 tickets, around 600 were sold at prices between $200,000 to $250,000, from as far back as 2005 to when we went public. We then lowered the price point to $450,000, with about 200 seats available at that price. The research flights, which make up about 10% of our first thousand seat volume, are priced at an average of $600,000 per seat. For now, outside of the Virtuoso seats, we have closed sales at the $450,000 price point, and we haven’t announced pricing for when we reopen sales, but we don’t expect it to decrease.

Great. That's very helpful. And then a follow-up on the research flight demand. Could you just talk a little bit about the drivers of demand for research flights? And then what factors lead you to prioritize research flights relative to ticketed passengers for tourism? Thanks.

I'll address the last point first. Overall, our primary focus will be on allocating the majority of our inventory for private astronauts. This has been a foundational vision of our company, aimed at making space accessible to individuals who aspire to explore it. We recognize the importance of research; it contributes significantly to the growth of human knowledge and is a profitable endeavor in itself. Additionally, research enhances the appeal of commercial spaceflight. For these reasons, we have generally allocated 100 out of our first 1,000 flights, which is about 10%. I would like to maintain this proportion as we grow. There are two extremes currently available for those interested in microgravity research, which is critical as humanity increasingly spends time in space. One option is experiments conducted on the space station, which requires a lengthy queue due to limited capacity and is costly to access. It also puts immense pressure on these experiments, as they must be highly robust. The second option involves parabolic flights, which provide roughly 20 seconds of microgravity, though this experience can be less than ideal due to the plane's movement in the air. While there is some opportunity for repetition, the duration isn’t adequate, and alternatives like sounding rockets or drop towers offer very brief experiences. From discussions with our Italian partners and other researchers, we've identified a unique opportunity that suborbital space presents. Our spacecraft’s flexibility allows us to either retain or renew seats, add payload racks, and enable researchers to manage the experiments, or even conduct experiments with astronauts themselves. This setup, providing several minutes of clean microgravity, opens the door to a broader range of experiments that are feasible at a fraction of the cost compared to the space station. Researchers can now plan sequences of experiments or those with varying parameters as they gather more information. These experiments often lead to larger projects intended for the space station or even the moon, although some researchers may find that their needs can be fully met through our offerings. The primary purchasers of these opportunities are government entities and institutions with government funding. Our aim now is to leverage the success of our first flight to create a toolkit for these researchers and agencies, enabling them to advocate for funding in discussions with the U.S. government and others worldwide.

Hey, good afternoon. I'm on for Mike Ciarmoli this afternoon. Appreciate you taking the questions. So first, I just wanted to ask, I appreciate the color you've given on pricing, but just kind of following up on that. In this timeframe where you're operating just with Unity, is $500,000 per flight about what you're expecting on average for civilian flights through 2025? Or are there any considerations related to the number of passengers per flight on these first couple of flights that are different from what you'd expect on average as you kind of get into 2024, '25?

Sure. So, when we look at the capacity of Unity and the ticket prices that we're flying these days, you would expect to see for the near term, about $600,000 per flight, because there is one seat allocated for an astronaut trainer in the near term. As we move into 2024, we expect to open up that fourth seat. And so then you would see four times $200,000 or $800,000 in revenue per flight is what we're projecting. And if we get research seats mixed in there, you would see some uplift from that.

Very helpful. Thank you. And then as a follow-up, I just wanted to ask on your fleet development activities, have you experienced any challenges or surprises that you'd call out either in terms of cost, labor or design challenges that might be different from what you expected at the beginning of the year? Or has it mostly just been on track up to this point?

No, I haven't seen any unexpected developments. The aerospace sector is generally expanding, and there remains a healthy level of competition for engineering positions in specific fields. The defense industry is under additional pressure due to the ongoing situation with the war in Ukraine. However, we continue to perform well, thanks to our exceptional group of engineers who are effectively meeting the demands. This situation is fairly typical for the aerospace industry. We have maintained strong relationships with our Delta suppliers, some of whom are visiting us today from both Bell and Qarbon, which has been very positive. We are collaborating with them using advanced industry technology, often referred to as digital thread or digital twin, which enhances our design and software processes from the initial design stage through tooling, manufacturing, and eventually maintenance. We invest heavily in training our teams and partners to be proficient with this software, which is not surprising. We remain focused on this area. Whenever we discuss the Delta ships, we emphasize that this is crucial to our business model, impacting how we scale production and maintain low variable costs for those ships, which are essential to our operation. We will continue to prioritize our attention on this matter.

Great. Thanks a lot for taking the questions.

Thanks, Peter.

Hey, guys, good afternoon. Thanks for the question. I wanted to ask just your latest thoughts on Imagine. And I think you've described that as kind of option value that you could activate at some point. Now that you've got Unity flying, is that something you could look to exercise at this point?

Imagine remains an option for us and will continue to be. The image shown on Page 9 of the deck represents our Delta Class ships, which is actually an image of Imagine, as Delta is based on that design. We've gained a lot from the transition in our production model from Imagine. We have decided to prioritize our engineers who are working on the early design phase of the Delta ships since they will also be involved in testing Imagine. We need their focus on Delta to ensure we can effectively integrate it into our existing supply chain. Once those engineers have made significant progress on Delta, the construction of these ships will move quickly. We are actively learning through flight tests and are developing systems on the ground, such as iron birds or static test articles, to expedite our design process. This month, we are conducting wind tunnel tests on the Delta ship, which will allow for a shorter flight test program. Therefore, when we mention flight testing occurring in 2025 and the first Delta ships entering commercial service in 2026, they will likely progress faster than Imagine. We will retain Imagine and have it ready, but its role will likely support the Delta program rather than shift focus back to Imagine. This approach centralizes our technical operations, flight support, and mission control around one consistent vehicle—the Delta ship. With multiple Delta ships, we can standardize engineering, maintenance, and operations, resulting in improved efficiency.

Got it. Okay. Thanks for the color. I'll leave at that one.

Thanks, Matt.

Great. Hey, guys, good afternoon.

Hi, Kristine.

You mentioned the ability to flex cash burn by controlling the timing for next-gen motherships. Can you provide any color to your current thinking around the timeline?

Yes. So that strategy that we outlined in the last call is still consistent with what we're looking at today, again, because we're pleased with how Eve is performing after the enhancement period we did. So now we see Eve continuing through the Delta flight test program. So, we are benefiting from that. So because of that, we are still anticipating that we will be working on Delta first and getting through some remaining design elements and then moving on to the parts fabrication and rolling off of that over to the next-generation mothership program. So it's a lot of the same engineers, again. So it allows us to stagger the engineering resources and the focus on the company from one program to the next. That would be in the following year. So, 2024 is when you see the mothership program start to pick up more heavily as we roll off of the initial phases of the Delta program. So that's still consistent with what we were planning before.

And just to add on, Kristine, that allows us to bring these additional motherships in at this kind of sequence when we're building the volume of our Delta fleet. So that way, right when Eve will tap out from a capacity standpoint, we would be bringing on new motherships at that point to manage the scale of the fleet.

Great. Thanks. And then also after you guys changed your pricing structure to the $450,000 for the passenger flights and then you've got $125,000 in a fully refundable deposit, can you discuss any cancellation requests that you've received so far? And how sticky has been the orders that you guys have received to date?

We have a small number of cancellations each year, with the largest occurring in 2014. We haven't observed any unusual increase in cancellations. The main questions on this topic arose after the Titan situation, but we did not experience any drop in interest. Many of our future astronauts, especially those who have been with us for a long time, understand the safety measures in place and have discussed it among themselves. Therefore, we haven't seen any dropouts related to that incident. Some people may cancel occasionally, typically for economic or health reasons, which is why we maintain some available spots. We generally replace any cancellations one or two at a time, so I hope this provides some insight into the situation.

Yes, great. Thank you for the color. Thanks, guys.

Thanks, Kristine.

Hey, good afternoon. I wanted to start on the cash balance that you're at today. And just as we think about some of the optionality that you have with your common stock offerings, what level of cash in marketable securities are you comfortable with? And do you expect to maintain that position of around $1 billion for the foreseeable future?

We're very pleased with the balance sheet right now and the strength there and our ability to have access to the capital markets; it's been great. So yes, we are approximately $1 billion today, and we like where we are. This gives us the flexibility to invest in these programs that we see are going to generate really high returns and gives us a pretty good runway. So we like where we are. And we fully intend to keep our balance sheet strong throughout this phase as we move towards the ramp of the Delta Class. So, we don't have a specific minimum cash balance, but we do intend to keep it strong.

And then following up on the Delta Class progression, you had mentioned you're on track with the development process. But I wanted to ask a bit more specifically since you previously expected to complete design and tooling and then begin parts fab this year, is that still the near-term expectation? And what has been accomplished to date?

Yes, that expectation still stands. Tooling will be completed before parts production begins, and both of these steps must happen before we can create subassemblies and send them over to us. We are rolling this out sequentially, with tools finishing this year, some parts being built on those tools, and tooling expected to be finalized early next year. The tools needed later in the process will arrive soon, along with the parts required for later stages. All this is necessary because we plan to bring these components into Phoenix for final assembly in the second half of the year. Everything is on track and progressing as anticipated. In terms of our recent developments, I participated in an executive overview that focused on the design process and provided insights on major milestones for Delta and how we are integrating the Imagine baseline into the Delta Class spaceship. I am very encouraged by what we've accomplished. Our objective is to create a ship that maintains a similar appearance to the Imagine ship, which we expect will perform comparably. The new model is lighter, accommodates six people, and reaches higher altitudes. The validation of our work has been significant, particularly in ensuring we can turn this ship around on a weekly basis, with an aim to improve further. We've projected around 500 flights for its useful life, and we feel confident in those estimates. The ability to conduct weekly flights and the duration of those flights positively impacts costs per flight compared to other human spaceflight methods. The design details and our approach to implementation have strengthened my confidence in this project. I also shared that we are dedicating substantial effort to this initiative; these will not be singular ships. We are developing a prototype known as a copper bird at our engineering headquarters, which will allow us to test all avionics and electrical systems extensively. Additionally, we will create an iron bird to evaluate the mechanical systems continuously. This proactive approach means we won’t need to wait until flight testing to understand the margins and maintenance intervals of our components. We'll also produce a static test article for our ships, which will undergo ultimate limit load testing to verify our maintenance intervals. Overall, I find it very reassuring to see the diligence our engineering and program teams are applying to these developments.

Great. Thank you.

Your next question comes from the line of Myles Walton with Wolfe Research. Please go ahead.

Thanks. Good evening.

Hi, Myles.

Hey, Michael, I was hoping you could talk a bit about the engagement plan after Galactic 2.0. And in the frame of reference, I think you mentioned these would start to become more private experiences. And I'm just curious, how do you maintain the visibility that's going to be required to create and sell the experiential side of this while keeping it intimate and private, what basically the customer is paying for?

We certainly need to balance both aspects. We plan to establish a regular schedule for our flights that allows for in-depth showcasing, particularly during our research flights, where there will be new stories to share. Some flights will be presented publicly, and while many of our future astronauts are enthusiastic about sharing their journey, they may not want us to publicly broadcast their personal experiences. We will find the right balance. You can expect to hear about our flight schedules, with recaps and video content available. However, we may not need to provide detailed streaming of the cabin interiors for every group of private astronauts. We will provide the material to our astronauts, and while not everyone may choose to share, many will likely be proactive in promoting their experiences. Our primary focus is on our customers; we must deliver the experience they want without overly commercializing their personal journey. They invest significant energy and aspiration into this, so we must honor that. When we get that right, it serves as the best marketing since they will become advocates for us. We can effectively communicate what we do while also building confidence in our safety, the power of the experience, and the overall excitement surrounding our company. I want to emphasize that we might not showcase the interior of every flight, as it may not be suitable.

Yes. Maybe a different operational question on the Delta Class. At this point, do you have a viewpoint of how many would actually be in service in '27? Is it one or two, or is it the four to six you're thinking about it on an annual basis of capacity out of manufacturing, those four to six could be on the line in '26?

Yes. I think at the end of '27 is what you're asking; we'll probably be in between there. As you've heard us say, we're building our factory for four to six ships a year. It's logical to start that on the lower side, right, as you start to build up just muscle memory and kind of work any kinks that are in the system out. So, we will probably be less than the full cadence of that but more than the first couple; we're wanting to get a couple out right away. And because we will be using two ships, Myles, in the flight test program. And so those will roll right into service. We'll have probably a little bit of a break between those two, but not so far that we kind of mess up the line from a supply chain standpoint. And then we'll start moving again at a pace; probably let's get the first four out. I think the other question that will come with that is what's the turn rate of those ships? As I mentioned just on the question before, feeling very good about our ability to hit a weekly turn from all the analysis we've seen. And we're going to keep pushing on that metric. So nothing else to add today, but that's another one that I think has got some interesting leverage.

Okay. And last one on the financials. Is this a point where you can kind of confirm you're past peak cash burn quarterly cadence? I guess, it's implied for the second half. I just don't know if you're able to say that we're past this quarterly cadence we saw in the first half into next year as well.

We're only providing guidance for Q3 and Q4. In the following years, we plan to ensure that we can invest in the fleet due to the promising returns we anticipate. This includes the Delta Class and the motherships, as we expect significant financial benefits from these investments. We intend to pursue this strategy whenever feasible, but we can also adjust the pace if needed, reducing spending to maintain a controlled level. However, we believe the returns are very appealing, and we expect shareholders to support our efforts to expand the fleet quickly. We have the flexibility to adapt as necessary.

Okay. Thanks.

Thanks, Myles.

This concludes the question-and-answer session as well as today's call. Thank you for joining. You may now disconnect your lines.