What happened

Virgin Galactic Holdings (SPCE 3.15%) accomplished a lot in the second quarter, but all that activity did not translate to the returns that Wall Street had expected. Shares of the space start-up fell about 5% after the company released its numbers and provided tepid guidance about the quarters to come.

So what

After years of delays, Virgin Galactic is finally airborne. The company celebrated its first commercial mission in June, and a second flight that will carry private astronaut customers is scheduled for August 10.

But the launch of service failed to meet Wall Street's initial financial expectations. Virgin Galactic lost $0.51 per share in the quarter on revenue of $2 million, falling short of the consensus estimate of a $0.46-per-share loss on sales of $2.69 million.

The company is expecting revenue of about $1 million apiece in the third and fourth quarters of the year, which would mean Wall Street's $3.71 million estimate for the third quarter will have to come down. Virgin Galactic expects free cash flow in the range of negative $120 million to negative $130 million in each of the remaining quarters of the year.

The company noted that while tickets are now $450,000 apiece, many of the early buyers paid between $200,000 and $250,000 apiece. Virgin Galactic for now is also not selling as many seats as anticipated per flight, choosing to include an astronaut trainer on each mission and only three paying customers, instead of using all four seats to generate income.

Now what

Virgin Galactic expects to add a fourth paying customer by early 2024 and will eventually see the average ticket price jump higher. But for investors, the quarter is both a reason for excitement and a reminder of the complexities of this business.

The company initially targeted the summer of 2020 for the launch of commercial service, hoping to be airborne in time for founder Richard Branson's 70th birthday. A combination of COVID and engineering issues slowed the timetable.

The launch of commercial service is a huge milestone, but this sort of business is not one that rockets higher overnight. Longtime holders who have shown patience with the company for this long will need to continue to temper expectations for the quarters to come.