SpaceX earned its first profit as a public company in the third quarter, and for the first time this year its artificial intelligence business outsold Starlink. Revenue rose 161 per cent from a year earlier, to US$14.6 billion, and net income reached $4.4 billion.
All figures are in U.S. dollars, SpaceX’s reporting currency.
Chief financial officer Bret Johnsen told analysts on the Oct. 20 earnings call that SpaceX will roughly double its capital spending this quarter, to $35 billion to $40 billion from $19.6 billion in the third.
SpaceX’s segments
SpaceX reports its results in three segments. Rockets and Starlink are the familiar two. The third builds data centres and rents their computing power to other companies, and SpaceX renamed it this quarter from AI to Super Intelligence, or SI. It also sells the Grok models and runs X.
SpaceX spent 84 per cent of its third-quarter capital budget on SI, close to the 86 per cent that SpaceQ reported for the second quarter.
August’s promises
Johnsen set a target in August of more than 2 gigawatts of nameplate compute by year end, a measure of the electrical capacity of SpaceX’s data centres. He now expects 2.5 to 3 gigawatts.
Elon Musk, the chief executive, raised his own target too. In August he put capacity at the end of 2027 closer to 10 gigawatts than 5. On Tuesday he said, “I would be surprised if we brought on less than 13 gigawatts of compute by the end of next year.”
Johnsen kept the goal of a $100-billion annualized revenue run rate by December, which is December’s revenue multiplied by 12.
Johnsen hit his spending forecast for one quarter. In August he said the third and fourth quarters would each look much like the second quarter’s $18.4 billion, and the third came in at $19.6 billion. He tied this quarter’s jump to extra data centre capacity coming online at the company’s sites in Memphis, Tenn., and Southaven, Miss.
Musk had also floated a catch of the Starship upper stage as early as Flight 14, then planned for late August. Flight 14 flew in the last week of September, reaching orbit for the first time and releasing 26 Starlink V3 satellites. SpaceX will try to catch both the booster and the ship on Flight 15, expected next month.
The AI business
SpaceX’s SI segment grew revenue 195 per cent from the second quarter, to $7.6 billion.
Johnsen credited most of the gain to cloud services agreements, contracts that rent SpaceX’s computing capacity to outside AI developers. Cursor, the AI coding company SpaceX bought on Aug. 14, added $608 million.
Johnsen said the rentals pay for themselves fast. “At current pricing, new compute deployments are generating a payback of less than a year.”
The segment earned an operating profit of $431 million, after $1.2 billion of stock compensation from the Cursor deal. SpaceX set aside $23.4 billion of Cursor’s $60-billion value as stock awards to keep its staff, and will expense them over about three years.
Starlink’s quarter
Starlink’s Connectivity segment grew revenue 69 per cent to $5.2 billion. Sales to businesses and governments rose fastest, by 91 per cent. Johnsen put that down to airlines and to Starshield, the secure version of Starlink built for government and military customers.
Gwynne Shotwell, SpaceX’s president, said Starlink is now contracted for about 12,000 aircraft, almost a quarter of those available. By the end of September more than 3,800 of them had the hardware installed. She said Starlink-equipped flights fill more seats, and that full connectivity is becoming “table stakes for passengers.”
SpaceX added 1.6 million consumer subscribers, fewer than the record 1.7 million of the second quarter, for a total of 13.6 million. Johnsen said the company sent kits to retail stores ahead of the holiday season and expects that to lift activations this quarter.
Customers paid an average of $69 a month, up from $66 in the second quarter, and Johnsen put the rise down to a better mix of customers. The figure is still below $83 a year earlier. In August he said expansion into new countries may pull it down over time.
Shotwell said Starlink Mobile, which connects ordinary phones directly to satellites, passed 22 million monthly users. On Oct. 8 SpaceX agreed to buy a nationwide portfolio of 800 MHz licences from Grain Management, pending regulatory approval. The low-band frequencies reach inside buildings, and she said they pave the way for Starlink Mobile to “become a major mobile carrier in the U.S.”
Evercore analyst Kutgun Maral asked how Starlink Mobile’s spectrum can compete with the incumbent U.S. carriers, and how much the satellites can really carry. Musk answered that SpaceX sees “a clear path to several hundred billion dollars a year in connectivity revenue.” He said the company should set out the plan in a longer presentation of its own.
Canadians already use both services. WestJet flies with Starlink, and Rogers sells Starlink’s phone service as Rogers Satellite. Bell chose AST SpaceMobile instead. Once it enters service, Telesat’s Lightspeed will reach airlines through Viasat, which is adding the constellation to its in-flight Wi-Fi service as it competes with Starlink for those contracts.
US$ millions Q3 2026 Q2 2026 Q3 2025 Revenue 14,575 7,814 5,576 Space 1,767 962 1,666 Connectivity 5,248 4,291 3,097 Super Intelligence (SI) 7,560 2,561 813 Gross margin* 62.4% 55.3% 51.5% Income (loss) from operations 2,791 (143) (273) Adjusted EBITDA 8,809 3,538 2,169 Adjusted EBITDA margin* 60.4% 45.3% 38.9% Net income (loss) 4,404 (541) (1,054) Diluted EPS (US$) 0.35 (0.09) (0.36) Capital spending 19,593 18,369 6,880 Starlink consumer subscribers (millions) 13.6 12.0 7.2 Starlink consumer ARPU (US$ a month) 69 66 83 Nameplate compute (gigawatts) 1.7 1.4 0.6
Behind the profit
SpaceX earned $2.8 billion of its $4.4-billion profit from operations — the remaining $1.6 billion came from outside the business. It reported $1 billion of other income and a $390-million tax benefit, and earned $198 million more in interest on its cash than it paid on its debt.
Johnsen said Connectivity’s gross margin of 55 per cent included about 3 percentage points from one-time benefits, mostly tariff refunds. He expects company-wide gross margin this quarter to look more like the second quarter’s.
SpaceX generated $13.1 billion from operations over nine months and spent $48.1 billion on property and equipment. Its cash and short-term investments fell 10 per cent from the end of June, to $89.9 billion at Sept. 30.
JPMorgan analyst Doug Anmuth asked how SpaceX will pay for the build. Johnsen pointed first to operating cash flow and the company’s investment-grade credit rating, and named suppliers and customers as possible partners. Because compute pays back so fast, he added, new capacity soon helps fund the next round.
What to watch
Musk put the odds of a double catch on Flight 15 at better than even. “Success is not guaranteed on these first flights, but I’d say it’s more likely than not that this succeeds next flight,” he said.
Johnsen forecast first-quarter 2027 revenue of $33 billion to $37 billion, more than double the quarter just reported. December comes first. To hit its $100-billion target, SpaceX needs about $8.3 billion in revenue that month.
Musk said SpaceX and Tesla have each formed special committees of independent directors to consider a merger, at shareholders’ request. “The special committees have not reached agreement on the terms of any transaction,” he said.
SpaceX shares jumped 7.8 per cent on Oct. 21, the day after the results, then gave it all back. They closed Friday at $147.49, just below where they stood before the report.