In its first quarterly report since its historic IPO in June, SpaceX said revenue nearly doubled and losses narrowed, but investors focused on an unexpectedly large quarterly capital expenditure. The company’s results reflect three divergent trends: high-margin profitability from the Starlink connectivity business, explosive growth in AI-related revenues driven by cloud contracts, and increasing losses in the rocket business as Starship development costs mount.
Key figures
- Revenue rose 91.9% from $4.1 billion to $7.8 billion, beating market consensus of roughly $6.9 billion and marking a 66.5% increase versus the prior quarter.
- Adjusted EBITDA jumped 191% from $1.2 billion to $3.5 billion, a 45.3% adjusted EBITDA margin.
- Operating loss narrowed from $970 million to $143 million (operating margin improved from -23.8% to -1.8%).
- Net loss fell from $1.01 billion to $541 million; loss per share was $0.09 versus analysts’ expectation of a $0.26 loss.
- Capital expenditures rose from $2.8 billion to $18.4 billion. This capex figure was 82% higher than the first-quarter $10.1 billion and about 31% above the Reuters-cited expectation of $14.05 billion.
The after-hours share price fell by more than 7% following the capex disclosure.
Starlink is carrying the company
The connectivity segment (Starlink plus enterprise and government satellite services) generated $4.3 billion in revenue, up 65.8% and representing 54.9% of group revenue. Operating income in the segment rose 79.4% to $1.7 billion, and operating margin improved from 35.7% to 38.6%.
Starlink subscribers doubled year-over-year to 12 million by the end of June. Average revenue per user (ARPU) fell from $85 to $66 per month (a 22% decline) due to international expansion and lower-priced packages, but subscriber growth offset lower pricing: consumer revenue rose 44% to $2.5 billion. Enterprise and government revenue grew 108% to $1.8 billion. SpaceX signed deals with several airlines and secured more than $6 billion in multi-year U.S. government contract backlog for its Starshield secure satellite network.
The mix of enterprise, aviation, maritime and defense customers—services that are less dependent on consumer monthly fees—matters as much for Starlink’s profitability as total subscriber count.
AI segment becomes bigger than launch business
The AI segment produced the quarter’s most dramatic expansion: revenue grew 247.5% year-over-year from $737 million to $2.6 billion, and more than tripled from the first quarter’s $818 million. AI now accounts for 32.8% of total revenue and is more than two and a half times larger than the space segment, which generated $962 million.
Growth was driven largely by AI infrastructure. Advertising revenue fell from $426 million to $367 million, while revenue from AI solutions and infrastructure rose from $311 million to $2.2 billion. SpaceX signed cloud service contracts totaling $14.1 billion in value, which already contributed $1.6 billion of incremental revenue in the second quarter. Reuters identified customers including Anthropic, Google and Reflection AI. Nominal compute capacity available increased from 0.4 gigawatts to 1.4 gigawatts year-over-year.
GAAP operating loss in the AI segment narrowed from $1.5 billion to $1.3 billion, and compared with the first quarter’s $2.5 billion loss it was nearly halved. Adjusted EBITDA swung from a negative $276 million to a positive $1.2 billion; however, that figure excludes $1.9 billion of depreciation and $516 million of stock-based compensation. Given the capital-intensive nature of data center operations, depreciation represents a meaningful economic cost, so positive adjusted EBITDA does not equal mature profitability.
AI capex jumped from $749 million to $15.8 billion—more than twentyfold—and absorbed 86% of total corporate capex. Quarterly AI capex was more than six times the segment’s revenue. Customer concentration is a risk: the two largest customers together accounted for 37.8% of group revenue, with one tied directly to the AI segment.
SpaceX also plans to acquire Anysphere (developer of Cursor) for $60 billion, and expects the transaction to close in the third quarter.
Rockets still consume cash
Space segment revenue rose 29% to $962 million. The company conducted ten commercial launches in the quarter (versus nine a year earlier), but total launches fell from 46 to 38 and mass to orbit declined from 652 tonnes to 485 tonnes because Starlink launches decreased from 37 to 28.
Starship development is a major drag: space R&D rose 55% to $1.1 billion, and operating loss widened from $369 million to $542 million (a -56.3% operating margin). Progress continued on Starship V3 testing during the quarter, and in July SpaceX launched twenty production V3 Starlink satellites. While Starship could materially cut launch costs and multiply Starlink capacity over time, it is currently increasing losses in the space segment.
Liquidity and financing
Half-year cash flow shows both operational improvement and the scale of investment: operating cash flow rose from $351 million to $3.5 billion, while investments increased from $7 billion to $28.5 billion. Approximate free cash flow was negative $25.0 billion for the first half. Investment cash flow totaled negative $34.5 billion and financing cash flow was positive $100.3 billion.
The company’s financing position is strong for now. The June equity offering generated $85.7 billion in net proceeds, and the company issued an additional $25 billion of bonds. At the end of June, SpaceX held $93.5 billion in cash and $6.5 billion in securities—about $100 billion of liquid assets—against $38.4 billion of gross debt. Contract backlog stood at $47.5 billion, of which 56% is expected to be recognized as revenue within one year.
The CFO indicated capex could remain at similar levels for the next several quarters; if the second-quarter pace continues, annual capex could approach $65 billion.
What matters next
The report confirmed Starlink’s ability to generate high-margin profits and demonstrated real paying demand for AI capacity. The market’s focus now shifts to whether the large investments will pay off: can AI contract revenue sustain current growth, will results continue to improve, and can Starship development deliver meaningful commercial advantages?
Management guides to an annualized revenue run-rate of $100 billion by December, and Elon Musk has spoken of a potential $1 trillion annual revenue target by 2029 (optimistic) or 2030. Second-quarter revenue annualized equals about $31.3 billion, so these targets imply very steep growth. At the after-hours price of roughly $115, SpaceX’s implied market value was about $1.5 trillion—around 48 times annualized second-quarter revenue—leaving little margin for execution errors.
The after-hours market reaction—about a 7.5% drop—suggests investors acknowledge rapid growth but are less patient with large near-term spending without clearer signs of quick, high-return monetization.
This article does not constitute investment advice or a recommendation.
