SpaceX’s revenue nearly doubled in the second quarter as its Starlink satellite business and growing AI operations gained traction, but the company’s first earnings report since going public also highlighted the huge spending required to fund its ambitions.
The Elon Musk-led company reported revenue of $7.8 billion for the April to June quarter, up from $4.1 billion a year earlier and ahead of Wall Street expectations, according to LSEG data.
Starlink remained the company’s main financial engine, accounting for more than half of total revenue. Revenue from the satellite communications business rose 66% while SpaceX’s AI operations recorded a roughly 250% increase.
The company said it expects to reach a $100 billion annualised revenue run-rate by December. It also expects new investments in AI computing capacity to pay back in less than a year and plans to launch at least 1,000 next-generation V3 Starlink satellites within the next 12 months.
“We’re building AI compute capacity at scale faster than anyone else, we believe, and we’re significantly improving our AI models,” Musk said on a post-earnings call.
But the growth comes with a hefty price tag. SpaceX’s capital expenditure surged to more than $18 billion in the quarter from $2.83 billion a year earlier, with finance chief Bret Johnsen saying spending could remain at a similar level for the next couple of quarters.
AI accounted for much of the increase, with SpaceX spending $15.83 billion on the business in the second quarter, compared with just $749 million a year earlier.
The spending spree is central to SpaceX’s strategy following its initial public offering, which valued the company at around $1.75 trillion. The investment case rests partly on using profits from Starlink to fund its expansion into AI, data centres and next-generation rockets until those businesses become significant revenue generators themselves.
SpaceX’s total operating loss narrowed to $143 million from $970 million a year earlier. Operating losses in its AI business also narrowed while Starlink’s operating income jumped 79%.
“That’s a tremendous upside surprise today alone, the fact that AI is already monetizing itself. They’re not relying on Starlink to fund operations there. I think that’s a huge part of the story,” said Brian Mulberry, chief market strategist at Zacks Investment Management.
SpaceX shares initially rose 9.4% during Tuesday’s trading session before falling 7.5% in after-hours trading following the earnings release. The stock has already declined about 8% from its record IPO level in June.
Further pressure could emerge from the expiry of the company’s post-IPO lock-up period starting Thursday, which could allow insiders and early investors to sell shares.
Starlink Remains The Cash Engine
Starlink doubled its subscriber base to 12 million at the end of the quarter as SpaceX expanded its consumer, enterprise, aviation, maritime and government services.
However, average revenue per subscriber fell 22% from a year earlier as the company entered more international markets and introduced cheaper plans.
SpaceX President Gwynne Shotwell also said the company expects to take “quite a few” customers from T-Mobile, AT&T and Verizon through Starlink’s connectivity offering.
The company plans to expand ground-based infrastructure alongside its satellite network to create “a true mobile service”, a move that weighed on shares of the three telecom operators in after-hours trading.
AI Spending Takes Centre Stage
SpaceX’s AI operations, including xAI, Grok, social media platform X and its expanding data centre business, have become its largest area of investment.
The division is already generating revenue through computing contracts with Anthropic, Alphabet’s Google and Reflection AI, although some recurring revenue has yet to be recognised.
Musk said SpaceX expects to build more than two gigawatts of computing capacity this year and nearly 10 gigawatts by the end of next year.
The company plans to use Nvidia hardware exclusively for its data centres. Nvidia chief executive Jensen Huang has estimated that each gigawatt of computing capacity can generate around $40 billion to $50 billion in revenue.
Meanwhile, SpaceX’s space business, covering commercial launches, government missions and Starship development, recorded 29% year-on-year revenue growth.
The business remains a significant source of costs and uncertainty as SpaceX continues to prioritise launches for its own satellite network while absorbing the heavy development costs associated with Starship.
Reuters
