CEO Elon Musk Just Gave SpaceX Investors Great News
Key PointsSpaceX reported strong earnings that topped analyst estimates on several key metrics.
SpaceX, a company co-founded by CEO Elon Musk, announced its third-quarter earnings on October 20, exceeding Wall Street's expectations. Analysts had predicted $12.8 billion in revenue, $2 billion in net income, and $6.8 billion in adjusted EBITDA. After-hours trading for SpaceX's shares saw a 5% increase.
CEO Musk addressed investors on a conference call, reporting that all three of SpaceX's business segments surpassed Wall Street's expectations. The Super Intelligence (SI) unit, which develops AI technologies, reported revenue exceeding $7.5 billion, a notable increase of over $1 billion compared to analysts' consensus estimates.
Starlink, SpaceX's low-Earth-orbit satellite internet service, experienced a surge in its subscriber base, reaching 13.6 million users by the end of the third quarter, up from 12 million in the second quarter. The average revenue per user (ARPU) rose by $3 to $69.
During the quarter, SpaceX allocated nearly $19.6 billion in total capital expenditures (capex), with $16.4 billion dedicated to the Super Intelligence unit. Musk highlighted the rapid growth of Grok, SpaceX's large language model, stating that it is growing faster than any product he has seen. Musk believes that Grok is likely to become the primary user of the Super Intelligence's compute resources.
Perhaps the most significant news Musk provided investors was his guidance on annual recurring revenue (ARR) and total compute capacity for 2027. As of the third quarter, SpaceX's existing data center footprint offered 1.7 gigawatts (GW) of AI compute capacity. By the end of the year, Musk expects the company to have between 2.5-3 GW of compute capacity. Musk is confident that the company will add another 10 GW of compute by the end of 2027, with a small chance of reaching 20 GW.
Musk also projected that SpaceX will achieve an annual recurring revenue (ARR) run rate between $500 billion and $1 trillion by the end of 2027. While the quarterly results and Musk's forward guidance are impressive, investors should approach this guidance cautiously. SpaceX's capital-intensive business could lead to increased capex, potentially impacting the balance sheet and shareholder dilution.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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