Good afternoon, everyone.
Thank you for joining us today for SpaceX's second quarter
2026 earnings conference call.
I'm Andrea Williams, head of Investor Relations.
Joining me today are Elon, Gwen, and Brett,
and we are speaking to you from our facility in Bastrop, Texas.
Our second quarter financial results were announced
just after 3 p.m. Central Time,
and all relevant materials have been published
to our Investor Relations website at ir.spacex.com.
For this webcast, our prepared remarks will be followed
by a question and answer session.
We will take live Q&A from equity analysts,
and then move to questions directly from our investors
that were polled on our dedicated earnings Q&A platform.
Thank you to everyone who submitted your questions in advance.
During this webcast, we will discuss our business outlook
and make forward-looking statements.
These statements are based on our predictions
and expectations as of today.
Actual events or results could differ materially
due to a number of risks and uncertainties,
including those mentioned in our most recent filings
with the SEC, including our final prospectus
and today's published Form 10Q.
Additionally, during this call,
we may discuss certain non-GAP measures.
In our press release in our filings with the SEC,
you can find additional disclosures,
including all reconciliations with comparable GAP measures.
For the second quarter of 2026,
we announced the following financial results
as compared to the prior year quarter.
Revenues of $7.8 billion, up 92%,
from $4.1 billion, a quarterly net loss of $541 million,
an improvement of $467 million,
an adjusted EBITDA of $3.5 billion,
up 191% from $1.2 billion.
Now I will hand the call over to Elon
for his opening remarks.
Thank you.
So it's been another milestone year for SpaceX so far.
We're making great progress developing
a fully and rapidly reusable reliable rocket with Starship.
We're connecting millions more people globally
across 170 markets with fast reliable styling internet.
We're building AI compute capacity at scale,
fast than anyone else would believe.
And we're significantly improving our AI models,
most notably with the release of Grog 4.5 last month.
And now I'll dive into each of those topics separately.
So with Starship, we completed two successful flights
of Starship B3 in the past 90 days.
Flight 13 demonstrated core capabilities necessary
to achieve an orbital mission
and return to Starbase for catch.
And on Flight 14 will be our first flight
to fly our version three styling satellites,
our communication satellites to operational orbit.
We will try to actually catch the first and the second stage
of the Starlink B3 this year.
And we could possibly catch the ship as soon as the next flight.
And it's difficult to actually explain to most people
just the incredible significance of Starship.
And I think perhaps describing it in terms of tonged orbit
is a good way to appreciate the magnitude
of the impact Starship will have on the future of civilization.
So right now we deliver roughly 2,500 tons a year
to orbit via Falcon.
And this is a big number by normal standards.
The rest of the world I think live is around 300 tons.
So we deliver 80 to 90% of total Earth
mass to orbit per year with Falcon.
Now with Starship, our aspirations,
and I think we will achieve these aspirations
are to deliver well over a million tons to orbit per year
and probably ultimately 10 million tons per year.
So this is not like if you had a chart
where you plotted things you would need a very,
very big table to put the chart on to even see
any of our competitors on that chart
and to make that sound next biggest competitor
was one pixel high on the bar chart.
You would still need a very big bar chart
to represent the SpaceX Starship vehicle.
And it's worth noting that we actually encourage
our competitors to copy us.
We do nothing to slow them down.
We actually launch, we launch competing satellite constellations
at the fair prices, the same price we charge everyone.
So we do encourage our competitors to copy us
but it's quite difficult to copy something like Starship.
But we don't use patents as a sort of a land,
mine exercise to stop people from copying us.
We actively encourage it.
So, anyways, but when you think about it on that,
so that if we go from 2,500 tons a year to
a million potentially 10 million tons per year,
it's really a ridiculously profound difference.
But that is our plan and I think we will achieve that plan.
Regarding Starlink, it's also worth just noting
that the Starlink V3 satellite is about an order of magnitude
more capable than the Starlink V2 satellite,
which was already a very capable satellite.
And we expect to launch about an order of magnitude
more Starlink V3 satellites.
So that would mean a roughly two order of magnitude
increase in the delivered bandwidth.
Even if our monetization per bit dropped by a factor of 10,
that would still mean a 10x increase in the revenue of Starlink.
So I think people are really underestimating Starlink here.
So this is a big deal.
It's kind of hard for people to wrap their minds around this,
but it's not out of the question that at some point
Starlink will deliver a majority of the world's internet,
at least in countries where we're allowed to operate,
which is the vast majority of countries.
So this is an important bear in mind,
and it's not in the infinity future,
it's less than 10 years.
And with the advent of AI and humanoid robotics
and vehicle robotics and just a massive number of robots,
the appetite for bandwidth will be much greater
than it has been in the past.
You think of a human consuming, perhaps,
or producing perhaps a few hundred bits per second of output,
and actually the average human is outputting less than one bit
per second over the course of a day, which is 86,400 seconds.
Now computers easily do billions of bits per second
continuously over a 24-hour period.
So this is why I would expect the appetite for bandwidth
to grow dramatically with the growth of AI and robotics.
And really, I think Starlink is the only thing
that can actually service that bandwidth.
Regarding AI,
we're making rapid progress on Grog,
because Grog 4.5 was a huge improvement,
and we have Grog 4.6 coming out probably next week,
and then Grog 4.7 is about three or four weeks from today,
and we expect the cadence of AI development
to improve dramatically, and then with Grog 5,
which should be out before the end of this year,
we will be incorporating the entire corpus of SpaceX data,
basically all the data that SpaceX has ever produced,
which is a tremendous amount of the course of a quarter century,
will be incorporated into Grog training.
And we think this will make Grog by far the best engineer.
So these are all like very, very big things.
In addition, of course, we are providing compute to others,
and we are building and deploying compute,
I think faster, our rate of growth certainly is faster
than anyone else.
And our efficiency of compute deployment I think is also the highest.
So we expect to end this year with over two gigawatts of compute,
and probably our cumulative compute online
by the end of next year will be several times higher.
So it may, let's say, be closer to 10 gigawatts of compute
than five gigawatts of compute.
There's a way to think about it.
And going forward, we've decided to build exclusively on Nvidia
because we think the Veraruban architecture
is the best architecture.
We think it's the best AI computer.
And we greatly value our close cooperation
and partnership on many levels with Nvidia.
So we're exclusive to Nvidia.
And this new capacity coming online will obviously further benefit
the development of GARC as well as our cursor acquisition,
which should close quite soon.
I think we're through almost all of the regulatory hurdles.
And then with respect to the star-mind AI satellite,
which will be essentially an optimized Veraruban
NVL 72 computer.
This is not some sort of far future distant thing we expect
to start launching these next year.
And we think the design of the NVL 72 VR computer is a much better
design than having a standard RAC-style design.
And so we expect to actually deploy this on the ground as well as in orbit
because we think it's going to be a radical simplification
of the normal NVL 72 RAC.
It will cost less, it will be more effective.
And so if we're going to put it in space,
we want to put it on the ground.
So I think that's going to be pretty cool.
In conclusion, the SpaceX team is solving some of the hardest
engineering problems in the history of humanity.
And I think the team is succeeding because we've got,
in a lot of ways, the smartest, most dedicated team of humans
that has ever existed.
I'm incredibly proud to work with such a team
and I'd like to thank the team for their incredible hard work.
And also thank you to investors who have supported us long way.
Thanks, Elon.
We had an exceptional second quarter,
and today I'll focus on the operational and commercial highlights
as well as the initiatives we are prioritized going forward.
Starting with our space business,
we remain the leading launch provider globally
with 78 total launches and 1,041 tons of mass to orbit delivered
in the first half of this year,
primarily allocated to our own internal Starlink missions,
but with great customer missions as well.
While our launch capabilities are key to supporting our connectivity business,
we continue to have a very robust commercial manifest
and a very robust and growing US government mission demand,
which drives revenue for the segment.
We're currently launching at our highest Falcon cadence
and are on the precipice of operationalizing Starship.
As Elon said, the first two flights of our V3 Starship vehicles
put us in an excellent position to achieve our near term goals
of reaching orbit, catching and reusing the ships and boosters
and deploying our V3 Starlink broadband satellites.
Speaking of which, Starlink had a standout quarter driven by continued growth
across our consumer enterprise and government businesses.
During the second quarter, we added net more than 1.7 million
Starlink subscribers globally, consumer.
This reflects our best quarter of new customers to date
and increase from the 1.4 million we added during the first quarter.
We achieved this by holding ARPU,
which is the average revenue per user,
stable at $66 per month compared to the first quarter.
We ended the second quarter with service availability in 167 markets
and have continued to activate new markets since then
with some very exciting announcements coming soon,
maybe even as early as today.
As of June 30th, our constellation of operational Starlink broadband
and mobile satellites in orbit grew to roughly 10,200,
with our 9,600 broadband satellites delivering roughly 800 terabits per second
of total downlink capacity.
Following a successful speed run test of the V3 Starlink satellites
on the most recent Starship launch,
during which we connected every satellite through every laser link,
we intended to deploy V3 satellites into the constellation
for operational use on the upcoming Starship missions.
The significant amount of capacity we're able to add
to the Starlink constellation from the V3 satellites
will enable us to continue providing even better service.
I think it's pretty great already,
but to do so while serving more and more customers over the world.
In fact, in the years ahead,
we expect Starlink will represent a significant portion of global internet traffic,
which Elon also talked about.
We also see significant growth opportunities for Starlink
on the enterprise and government side of the business.
We believe revenue from these markets have the potential
to reach a scale at least comparable but likely exceed our consumer business
as we continue to gain share.
In the second quarter, we signed a major agreement with American Airlines,
as well as activated our service with new partners, including Southwest,
Virgin Atlantic, Iberia, and Aerlingus.
We have become the provider of choice among major airlines
with outstanding customer feedback, but still have significant room for growth.
In fact, we heard from one of our airline customers,
shockingly customers are flying shorter hop flights instead of direct
so that they could ensure that they're on a Starlink activated flight.
They'd never seen this in the business before.
On the government side, we won more than $6 billion in U.S. contracts in Q2,
supporting major space force programs that offer our nation mission critical communications
and sensing capabilities, and we see even more room for growth in this sector
in this coming year.
In Q2, we also launched the new Starlink mobile partnerships
with international carriers, including SoftBank, NTT, Dokomo, and Spark New Zealand.
Our near-term priority is launching mobile V2 satellites on Starship
ahead of integrating the 65 megahertz of Echostar spectrum later next year.
This spectrum transfer was recently approved by the FCC
and represents a foundational competitive advantage for Starlink mobile.
In AI, the industry is hurtling towards ever more compute demands,
we're rapidly expanding our compute capacity to meet our own needs, as GRC expands,
as well as those for other leading companies such as Google and Anthropic.
In terms of our own GRC models, the enterprise feedback on rollout of GRC 4.5
has been very positive so far, token consumption tripled out of the gate
after the July release, and we continue to see strong signals on usage
and monetization for the model.
We're looking forward to welcoming the cursor team to SpaceX
to integrate our engineering and begin to benefit from a combined sales capability.
In review, our momentum as a business is extraordinary.
Our engineering teams are scaling Starship and our next-gen satellites,
while our sales teams expand Starlink, aviation, mobility, and global markets.
At the same time, we're bringing on additional compute capacity
and expanding and deepening our AI partnerships across a broader set of customers.
And though I've been in this business for 24 years,
I could not be more excited about the months ahead
with all the exciting and amazing things going on.
It really feels like we're just getting started all over again.
Now I'll turn the call over to Brett.
Thank you, Gwen.
We demonstrated strong results in Q2.
Revenue growth accelerated across every segment.
We narrowed our net losses by nearly half,
and on a year-over-year basis, on a year-over-year basis,
and we grew adjusted even meaningfully faster than revenue.
Importantly, we significantly strengthened the balance sheet
through our IPO and inaugural investment grade bond offering.
The combination of our global launch leadership,
recurring Starlink revenue and rapid growth in AI infrastructure
continues to drive improved operating leverage.
Now I'll walk through the financials for each segment.
For the space segment, revenue grew 55% sequentially
and 29% year-over-year to 962 million,
driven by a higher number of larger customer launches
and a favorable customer mix.
Segment costs and expenses rose 389 million year-over-year,
and we continued to accelerate R&D investments
in our Starship program.
Starship aims to quadruple payload capacity
and reduce launch costs by 10 times
compared to our Falcon 9 rocket,
unlocking significant capabilities across all of our business segments.
We continue to make progress building the infrastructure
required to support thousands of Starship launches per year,
including accelerating Raptor and launch vehicle production,
the build-out of our Gigabays,
and making significant progress towards activating multiple launch pads
at Starbase and in Cape Canaveral,
at Pad 39A and Pad 37.
Space-adjusted EBITDA was a loss of 205 million for the quarter,
primarily reflecting these higher R&D expenses.
Moving to the connectivity segment,
revenue was up in the connectivity segment by,
or was up to 4.3 billion, up 32% sequentially,
and 66% year-over-year.
Growth was driven by record net additions of Starlink subscribers
and a sharp increase in enterprise and government revenue.
Starlink subscriber ARPU was $66 unchanged compared to Q1.
As we continue our global expansion,
we're taking a localized go-to-market approach
that ensures our product and service offerings fit local needs.
While our geographic expansion may drive down blended ARPU over time,
we anticipate continued subscriber momentum to deliver strong revenue growth.
Enterprise and government revenue grew 108% year-over-year
and represents a durable source of revenue,
contributing to strong segment margins overall.
As Gwen mentioned, we see enormous opportunity for growth in this segment,
as we remain, for example,
less than 10% penetrated in one of the largest segments being aviation.
Total costs and expenses for the connectivity segment
increased 970 million, or approximately 58% year-over-year.
The increase was driven by higher spend to support our revenue growth,
including growth in our satellite constellation,
increased R&D investment for our next-gen version 3 satellites,
and incremental marketing spend.
As Elon mentioned, our version 3 satellites are expected to deliver 10 times
the amount of broadband capacity and data density from our current generations,
which I think we believe are already pretty amazing,
and which are essential to supporting continued subscriber growth
and higher value service tiers.
Income from operations from the connectivity segment increased 79% year-over-year
to $1.7 billion, outpacing revenue growth
and driving nearly three points of operating margin expansion.
Connectivity segment adjusted EBITDA rose 64% year-over-year to $2.6 billion.
AI segment revenue was $2.6 billion, up 213% sequentially,
and 247% year-over-year.
The increase was driven primarily by new cloud services agreements,
as well as growth in GROC and X subscription revenue.
Advertising revenue grew 7% sequentially, as we overhauled our advertising platform technology
to enable AI functionality and enhance self-service for all customer types.
In Q2, we entered into cloud services agreements
providing access to compute capacity at our Colossus and Colossus 2 sites.
The initial ramp from these agreements contributed $1.6 billion of incremental
AI infrastructure revenue in the quarter.
Total cost and expenses for the AI segment rose $1.6 billion year-over-year,
reflecting increased R&D primarily due to higher infrastructure spend
as we accelerated compute deployment.
We meaningfully narrowed our AI segment net operating loss to $1.3 billion
and turned adjusted EBITDA positive for the segment in the second quarter at $1.1 billion.
The incremental revenue from new hosting deals generated high incremental EBITDA margins
as we monetized available compute capacity.
We ended the second quarter with 1.4 gigawatts of nameplate compute up from 1 gigawatt in Q1
and 400 megawatts a year earlier.
We expect to end this year at over 2 gigawatts of compute capacity.
Total company capital expenditures in the second quarter were approximately $18.4 billion,
of which roughly $15.8 billion supported AI compute infrastructure.
The remainder funded ongoing Starship and launch infrastructure, satellite production,
and global ground station expansion.
Additionally, we paid out $856 million during the quarter
under our spectrum credit agreement related to our pending EcoStar transaction.
Our capital allocation priorities remain clear and disciplined.
We plan to continue to invest aggressively in the three areas we believe
generate the highest long-term returns.
Starship development and production scale, next generation,
star link, broadband and mobile constellations, and AI compute infrastructure.
Across all three of these investments, we remain focused on capital efficiency,
return on investment, and preservation of a strong investment grade balance sheet.
The second quarter was transformative from a capital markets perspective.
We completed our initial public offering, raising approximately $85.7 billion in net proceeds,
and followed that with a $25 billion inaugural investment grade senior notes offering
that was partially used to repay our $20 billion bridge loan.
The senior notes were issued across five tranches with a weighted average interest rate
of 5.855% and average maturity of 11.7 years.
We ended the quarter with $100 billion of cash, cash equivalents, and marketable securities,
and $47.5 billion in backlog.
Looking ahead, we continue to see robust demand in all three of our business segments,
but in particular in our cloud services arrangements.
We see increasingly favorable economics with each agreement we sign,
and as Elon mentioned, we expect the supply, demand, and balance in the compute market to continue.
The current economics have translated into a less than one year payback
on our new capital deployments for compute.
For example, in the first few weeks of the third quarter,
we've already contracted an additional $6.7 billion of cloud services revenue
over a six month period that begins ramping starting in October of this year.
We believe this puts us on a trajectory, including contribution from cursor,
to reach 100 billion of ARR or annualized revenue run rate by the end of this year,
based on our expected revenue in the month of December of this year.
With that, I'll turn the call back to Andrea.
Thank you, Elon, Gwen, and Brett.
This concludes our prepared remarks.
For today's Q&A session, we will take our first questions from the equity analysts.
Please press star one to join the question queue, and also please limit yourself to one question.
Operator, please proceed with the queue.
We will now begin the question and answer session.
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Please stand by while we compile the Q&A roster.
Your first question comes from the line of Eric Sheridan with Goldman Sachs.
Your line is open. Please go ahead.
Thanks so much for taking the question and thanks for all the details in the prepared remarks.
Maybe just one on the connectivity segment.
Can you discuss the backlog of enterprise and government contracts in that segment of the business
and how we think about that backlog converting it to revenue and what that might mean for the piece
of cadence of growth in the next couple of years?
Thanks so much.
Yeah, we are quite bullish on our enterprise activities.
I mentioned alone that we received from the government over $6 billion in contracts.
You can look at those as tranches and beginnings of additional capability that we will bring online.
Some of which we will have to compete, but fundamentally we have the contracts in place to fulfill many
phenomenologies, both the ones we recently announced as well as additional ones that we will be working on going forward.
Enterprise revenue is quite sticky.
We have never lost an enterprise customer.
They are quite happy with the Starlink capability that we have right now.
Brett mentioned we are only 10% penetrated in the aviation industry,
which definitely represents a lot of headroom for revenue going forward.
Maritime, I think, is Starlink opens up the TAM dramatically.
Starlink offers the capability that ships that don't really have much connectivity right now because they can't afford VSATs.
We can basically outfit those ships with Starlink maritime.
I am quite bullish on enterprise, very bullish on government and quite happy with the stickiness that we have seen in those markets.
I will just elaborate a little bit on that, which is that obviously in order to secure a large amount of enterprise revenue,
you have to demonstrate a very high reliability, very high uptime.
In the early days, Starlink did not have high uptime.
There are a lot of enterprise customers, most enterprise customers, I would say,
that still have that early Starlink experience where it was a little patchy.
We are building up a large enterprise sales team just to go out there, meet with enterprise corporate and government customers,
show them the incredible uptime and low latency of the Starlink system today,
so they realize that they can actually treat Starlink as a primary provider, not sort of as a backup provider.
This requires just going out there, talking to people, educating them about the currency of the Starlink system and where it's going,
and I would expect enterprise revenue to substantially exceed consumer revenue.
Next question, operator.
Your next question comes from the line of Adam Jonas with Morgan Stanley.
Your line is open. Please go ahead.
Thanks. Elon, first one for you.
Just confirming, you said you expect to be closer to 10 gigawatts of nameplate compute by end of 27, closer to 10 than 5.
Do you have line of sight?
How common is your line of sight on permitting chips and turbines for that?
And then I have a follow up for Gwen. Thanks.
So we're actually aiming to far exceed that gigawatt number in terms of power online, power cooling,
and electrical equipment.
So our tentative target is to actually have 20 gigawatts at the power and cooling level online by the end of next year.
Now, I don't think we're going to achieve 20 gigawatts per week.
We want to have a series of projects that cumulatively come to 20 gigawatts by the end of next year,
something close to 15 gigawatts.
So assuming that maybe a quarter of the projects take longer than expected.
So our goal is to have far more power, cooling, and electrical equipment than we have GPUs.
That's the logical thing to do, given the relative expense of GPUs versus balance of system.
SpaceX's company is incredibly good at hardware.
In fact, I'd say probably outside of China, SpaceX and Tesla are the two best companies on Earth at hardware.
Yeah, and I think perhaps even including China.
So we're taking a small amount of the expertise that we use for rockets and satellites and applying that to scaling terrestrial data centers.
And we're finding even a small amount of what we've learned building rockets, which are incredibly difficult, applied to data centers, yields tremendous amounts.
So yeah, we expect to have far an excess of the power and cooling that's needed.
And then our understanding within the video is that we will receive a very significant percentage of their GPUs next year.
Okay, thanks, Elon. Just Glenn, just a follow up.
You were recently asked what is one of the more under appreciated parts of the SpaceX investment story and you said robotics.
Can you elaborate on why you believe that?
How do robots fit into the SpaceX TAM? Thanks, Glenn.
Let me try to put something together for you.
I think what I might have said is under appreciating the amount of connectivity that we will need going forward.
And I think robotics, especially robotics tied to AI, like for autos and humanoid robots, will dramatically increase the demand for connectivity dramatically.
Elon talked about that in his remarks.
I mean, you can think about satellites as being robots.
I mean, they're autonomous and they do not need servicing.
So, and then, you know, in the sort of what may seem the far future, but we'll come faster than you think.
You know, using robots on the moon to scale up manufacturing on the moon, which it sounds like super sci-fi right now, but it's going to happen.
We'll enable us to, well, the mass accelerator on the moon.
And if you have a mass accelerator on the moon and you have solar and radiator production on the moon, you can, I know this sounds totally nuts, but you can probably scale to a thousand times the economy of Earth in terms of intelligence launched to space.
But probably, you know, maybe even a million times.
So, you know, we are going to land a lot of time on the moon.
We're going to build the factories on the moon.
The robots will be helpful with that.
And then it's like, well, how much intelligence would you like as we, you know, grow it towards being a Kardashev 2 scale civilization.
Did that get that for you, Adam?
Your next question comes from the line of John Godin with Citigroup.
Your line is open.
Please go ahead.
Hey, thanks for taking my question.
One of the hallmarks of SpaceX today to tell efficiently the organization has used Capitol so far in its journey, but it's also no secret that the Capitol needs their significant to support your vision from here.
Obviously, the company's moving fast.
So, I was hoping you could talk a bit more about the CAPEX outlook across the segment, touch upon any areas where buying birth building might accelerate growth.
The mobile strategy obviously comes to mind there.
And any related thoughts on Capitol needs for next steps in extreme vertical integration like Terrapab, anything that's needed to support future growth. Thanks.
Yeah, I appreciate the question.
I think we are very proud of how we have managed capital allocation over the years for sure.
And I think we are continuing down that path, right?
If you look at it, we have been very efficient to date and I think will continue to be.
If you look at the rest of this year to answer specifically on CAPEX, I think you should probably think that the next two quarters are very similar to the current quarter from a CAPEX level perspective.
But I do think as you look at longer term, I think CAPEX really, I think for our perspective is all CAPEX is not the same, right?
What we're seeing right now is a situation where we're able to deploy specifically on the AI compute side.
We're able to deploy capital in such a way that we're getting less than a one year payback.
It's almost like your capital is becoming almost an item that you would put otherwise in cogs because it's moving so quickly.
And as far as monetization and moving into revenue.
That's different than I would say historically in the SpaceX level where we're building assets that are going to benefit us from launch sites for the next couple of decades.
And so we certainly manage for optimizing ROI on our capital all the time from that perspective.
Yeah, I'll add a little bit to that.
As Brett mentioned, we are expecting to reach 100 billion plus ARR in December of this year.
It's probably also worth mentioning that our internal projections for reaching a trillion dollars in revenue, not ARR, but revenue have moved up from 2031 to 2030.
So prior to the IPO, you know, the financial projections we had were reaching a trillion dollars in revenue in 2031.
We now expect that to be in 2030.
And there's a nonzero chance of that being in 2029.
Your next question comes from the line of Ronald Epstein with Bank of America.
Your line is open. Please go ahead.
Yeah, hey, good evening, everybody.
Could you walk through what you learned on Starship launch 13?
You know, what was better than expected, you know, what was worse?
And then, you know, how do we think about this in the journey to kind of rapid reusability, you know, the heat shield, so on, so forth?
Sure.
So the, yeah, actually Flight 13, I wasn't worried about that Flight 13, you know, because, you know, think of Apollo 13, like things went wrong on that flight.
But this flight actually went incredibly well.
The heat shield appears to be very robust.
The ship is still floating in the ocean.
And we expect to recover the ship and bring it back for analysis.
So I'd say things look very good.
And that's why we, assuming we receive regulatory approval to do so,
we'll attempt to catch the ship with the tower on the next flight, which is tentatively scheduled for the end of this month.
We expect the cadence flights to be increasing rapidly.
And probably a year from now, we will be doing at least one flight a day, possibly more.
Your next question comes from a line of Doug Anmouth with JP Morgan.
Your line is open. Please go ahead.
Thanks so much for taking questions.
Elon, can you elaborate on the key unlocks from leveraging your rockets and satellite expertise just in accelerating the pace of compute build out, and then totally appreciate the $6.7 billion in incremental compute deals.
Can you talk more about just how you expect the supply demand environment to persist going forward and whether you'll be able to keep this kind of premium pricing for these deals and sustainability?
Thanks.
Sure.
Well, you know, as the saying goes, you know, long as they say like they would say like this ain't rocket science.
Well, actually rocket science is literally our daily business.
And, you know, rocket science is a idiomatic expression for extreme technological difficulty.
And there's a reason for it because the thing, let me tell you what rockets desperately want to do every flight.
They desperately want to blow themselves into tiny pieces.
And then the engineering struggle is to convince the rocket not to blow itself into tiny pieces and actually deliver payload orbit.
But you'll note that, you know, some of our competitors do, in fact, blow their rockets up.
This is not a reflection on their does not mean they're in cable.
In fact, I think our competitors are very smart people, but despite being very smart, the rockets will blow up.
So now if you apply a small amount of the engineering skill that goes into making gigantic rockets reach orbit on a regular basis reliably,
to threshold data centers, this is like, frankly, the Yankees, New York Yankees going in and playing a little league team.
And it's kind of ridiculous, frankly.
The threshold data centers are a trivial problem compared to making gigantic reusable rockets and which are launched frequently.
And the Starlink satellites also are like alien level technology.
There's still nothing that compares to our Starlink V2 satellites and our V3 satellites are really more than an order of magnitude better than our V2 satellites.
So you take a small percentage of that engineering applied to threshold data centers and you get an amazing outcome.
So that's what we're seeing.
Now, from a monetization standpoint, if you say like, what's my best guess for monetization per watt of, say, Rubens, my guess is
would be somewhere between $30 and $50.
This is just a guess. I'm just, you know, take a guess as a guess.
But what we're seeing with AI is that the intelligence per watt is increasing rapidly.
So that means the usefulness per watt is increasing rapidly.
And I think anyone who's a close poller of the AI arena, you're starting smaller and smaller models do more and more amazing things.
There's an argument that we may get to the point where even an H100 is able to deliver useful AI that's comparable to a human engineer.
Based on current trends, I think that's not an impossible outcome.
So then it's like how useful would that be?
I think the usefulness that would be is going to be extremely high.
I mean, if you think of like, where was AI 12 months ago?
I mean, this is 12 months ago.
It would have been before the advent of cloud 4.5, which I think is should be considered one of the milestones and the credit to entrophic.
You know, it was, I would say a shock to the system was how good cloud 4.5 was.
And that was, you know, 10 months ago, basically.
And if you say, well, what about an AI two years ago?
I think, well, an AI two years ago feels like something that should be in a museum.
Okay.
Well, you're like, you're not going to believe this, but two years ago, this was AI.
This relic.
So I think, you know, by the end of next year, it's not clear to me that there's anything that's happening.
Anything that digital at least that AI won't be able to do based on the current rate of improvement.
Then look at the rate at which logic and memory is being produced.
And one was always considered a limiting factor here.
A limiting factor currently is memory.
The memory output is increasing by around 20% per year.
Now, normally that would be fantastically fast and amazing for any large mature industry.
But ask yourself, is the demand increasing by 20% year?
No, the demand is increasing by 200% a year.
Maybe higher.
So if you've got demand increasing much faster than supply, then economics 101 would suggest that
the price increases.
It does not decrease.
Your next question comes from the line of Edison U with Deutsche Bank.
Your line is open.
Please go ahead.
Thank you for taking our question.
Wanted to come back on the comment about the 100 billion in AR.
Is there any way you can can unpack that a little bit and perhaps kind of what it takes to get there?
And then in relation to that, Elon, I know you mentioned you pulled the revenue target forward by year.
Can you maybe call out maybe a few things that gave you this extra confidence?
Thank you.
Well, on the unpacking, I think that the key there is it's really gross in all three of the business segments.
But the biggest piece is, and we already talked about, you know, additional business.
Since we've already closed in the first couple of weeks of July on the AI cloud services side.
But certainly, as you know, we've already announced some previous deals with Google and entropic that start to ramp either later this quarter or, you know, in October.
And so there's a lot of momentum from that side of the business as well as we're seeing, you know, strength in our own models and and cursor coming into the fold as well.
So it's really all three segments that are driving that.
But the cloud services piece being the largest contributor of that piece.
Yes, like to be clear, the 100 billion ARR in December is not a question mark.
That's what we'd achieve if we basically did nothing.
So like, you know, so I think it may be higher than that.
It probably will be higher than that.
The, you know, I think in terms of the relative percentage of, you know, breakdown of like what revenue generates what.
I think the breakdown is probably similar to what we shared pre IPO.
It's just happening a year sooner.
And, you know, I will go back to what I said and what Gwen and Brett mentioned earlier, which is that we do expect a very rapid increase in revenue from strong and communications from the V3 satellite.
Because like, like I said, it's more than 10 times the capability of the V2 satellite and we'll be launching 10 times as many and we have the direct to sell consolation going up as well.
So, you know, so some of you are looking at the sort of historical growth of Starlink based on V2, but we have a step change, a massive step change happening with the V3 satellite.
Your next question comes from the line of John Hodelick with UBS. Your line is open. Please go ahead.
Great. Thank you. Two things. First, you want to just follow up on that comment on Starlink mobile.
When do you expect to start launching the V2s? He talked about your appetite for additional spectrum after the upper star deal and then just how big do you think that the opportunity is in mobile and if you could compare that to the broadband business, that would be great.
And then secondly, just a quick follow up on the compute. Looks like you have a big ramp and compute coming in 2027.
How should we think of that capacity being leased versus used for, you know, to train Grog? I guess in other words, how much of that has to be withheld to train Grog versus that can be leased out to third parties? Thanks.
I'll go ahead and take the Starlink mobile questions, John. We're going to start flying the next generation Starlink mobile satellite, which is confusing.
It's actually the second version as opposed to the V3, which is the broadband, next generation broadband satellite. We're going to start flying those next year.
And just so you understand currently the system that we're operating uses about five megahertz of bandwidth.
And we operate that through local telco providers. We have 65 megahertz of bandwidth available to us through the EcoStar spectrum, which gives massive increase in capability.
Another way to look at it is we were also probably 10x the number of satellites. So we, simplifying, you could look at the Starlink mobile leveraging the next generation satellite and the EcoStar spectrum is being 100 times better,
10 times 10 better than what we've got right now. And it's a pretty decent service. You can do voice and video calls over signal and WhatsApp.
So we anticipate really strong uptake of that capability. As far as revenue, like I'm just going to take a very high level kind of top down.
The big three in the United States, AT&T, Verizon, and TMO roughly between them, $600 billion a year.
Better. We will eliminate dead zones leveraging the, basically, the satellites in orbit. It will be better during any sort of natural disaster because, surprisingly, even those space movies make space looks super dangerous is a pretty quiet environment.
And so I'm quite excited about Starlink mobile going forward. We will start to fly the satellites next year, and we will start providing service end of next year.
Yeah, I guess I should elaborate on, we obviously have more than one question being answered, but the, you know, obviously, if somebody's trying to create a financial model, some of these questions are, you have to plug in some number here.
So for Grock training, we do expect the percentage of compute that we use internally for rock training to decrease over time and to have far more of the compute used for inference.
Or to, you know, for, for ranting training inference compute to others.
So I would expect maybe, you know, to a 10% of our compute to be used for Grock training, something like that.
Your next question comes from the line of CATGUN moral with Evercore ISI. Your line is open. Please go ahead.
Good afternoon, and thanks for taking the question. I had a follow up on Starlink mobile and your ambitions in the US market in particular.
I think a lot of us are trying to better understand what a US direct-to-consumer service could look like to become a true fourth US carrier would imply well over 100 billion of mobile CAPX over time, much of it, auction spectrum, and green field infrastructure.
How are you weighing that potential bill plan against the MBO know or acquisition path? And what's your internal base case on how far you'll take this envision, or is this all a little bit too premature at this point? Thank you.
The spectrum that we purchase from Echo Star does have terrestrial components. So we definitely intend to build out terrestrial, the terrestrial component. So you will have not only the,
the capacity from the satellites themselves, but you will have a build out of the terrestrial, basically the hardware and systems necessary to make a true mobile service exactly what you want it to be.
I'm not going to talk about the CAPX for that. It's a little, well, I don't want to say it's immature. I'm just going to say I'm not going to talk about the CAPX for that right now.
But let's talk a little, let me give a little hint, and that is you could put a base station, a cellular base station on basically the gear that holds a Starlink broadband dish.
So you can have kind of these little femto cells around the country, and you deploy that as you need it. You don't have to necessarily spend, you know, many billions of dollars in low band spectrum
all up front before you deploy your system. So that's why I don't want to talk about the CAPX for building out the terrestrial because we have a lot of really kind of great and new ideas for how we're going to do that. And I think it will be quite CAPX efficient.
Yeah, that point is probably worth just a few more words, which is that because this is quite an important point. Instead of having to deploy these very expensive and difficult to locate large cellular base stations, we feel reasonably confident that we can deploy a large number of sort of small
small stations, essentially, that are really just Starlink dishes that also provide connectivity in the mobile spectrum bands and have them be all over the place.
And the Starlink antennas are located on the roofs of houses and businesses. So they're, you know, it's sort of a clear view for providing connectivity directly to the cell phones on the ground.
And, in fact, providing connectivity that is, I think, probably better and higher bandwidth than what is currently available from cellular providers.
This is an important point.
Thank you. With the remaining time, we would like to cover some of the questions from individual shareholders. I will read them aloud.
We got a lot of questions on the progress for Starship human landing system. Can we provide any updates?
For Starship, well, obviously we need to make Starship super reliable for satellites before we put any people on board, but we are expecting to have a very high launch rate unless achieve a level of safety needed for humans very quickly, probably by the end of next year.
As far as the milestones go, propellant transfer in orbit is critical to both our internal SpaceX as well as our HLS ambitions.
Artemis 3 mission is next year. That's where we will dock with the Orion spacecraft. We will follow that up with a direct to lunar cargo mission on crude.
And then we want to put boots on the ground, boots on the moon in 2028.
For the cursor acquisition, there were several questions asking about the combined product roadmap for the companies once it closes.
I think we will leave that to...
We will probably make some announcement or discussion of that outside of the owning school.
But we don't want to jump the gun on regulators for the closing acquisition.
So we are trying to get the acquisition close as quickly as possible. I think we are pretty close to that.
But we have to worry of sort of jumping the gun on regulatory closures.
Next question from the individual shareholders. Once you start launching broadband V3 satellites, how quickly will they translate into improved Starlink service?
So would we need some critical mass of V3 satellites, probably at least on the order of about 1,000?
But probably that's approximately second quarter next year. I think we would get to that point.
And our last question, is the heat shield the hardest remaining problem for Starship?
Look, I don't want to jinx it or anything, but I think I would consider the heat shield problem solved at this point.
We want to take a close look at the ship that is currently floating in the ocean.
But all indications from data and our visual inspection suggest that we have solved the heat shield problem,
which is arguably the single biggest problem. That doesn't mean we want to make improvements.
The heat shield, of course, will continue to make improvements to the heat shield.
But I would say that we do not see any technical obstacles at this point to achieving full unwrapped reasability.
Thank you. This concludes today's call. You can reach us at ir.spacex.com, and we will see you next quarter.
Cheers.
This concludes today's call. Thank you for attending. You may now disconnect.