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SpaceX (SPCX) is sharply lower today after a making a strong move into its first public quarterly report last night. Q2 was operationally strong, with revenue surging 92% yr/yr to $7.81 bln, nicely above expectations, while net loss narrowed to $541 mln and adjusted EBITDA nearly tripled to $3.54 bln. Revenue growth also accelerated across all three segments. However, investors appear focused on the significant capital spending required as SPCX scales its AI, Starlink, and Starship ambitions.

• Connectivity: Revenue grew 32% sequentially and 66% yr/yr to $4.29 bln. Starlink subscribers doubled yr/yr to 12.0 mln after a record 1.7 mln net additions in Q2, while ARPU held steady sequentially at $66. Consumer revenue rose 16% sequentially and 44% yr/yr to $2.49 bln, while enterprise revenue climbed 63% and 108%, respectively, to $1.81 bln. Operating income increased 79% to $1.66 bln.
• Space: Revenue grew 55% sequentially and 29% yr/yr to $962 mln, driven by larger customer launches and a favorable customer mix. Operating loss narrowed sequentially to $(542) mln but widened from $(369) mln a year ago, as costs and expenses increased $389 mln amid accelerated Starship R&D.
• AI: Revenue surged 213% sequentially and 247% yr/yr to $2.56 bln, led by new cloud-services agreements that contributed $1.6 bln of incremental infrastructure revenue. Operating loss narrowed to $(1.26) bln even as costs and expenses increased $1.6 bln yr/yr, while adjusted EBITDA swung to positive $1.15 bln.
• Capex: Q2 capex reached $18.37 bln, more than 6x the year-ago level and up from $10.11 bln in Q1, including $15.83 bln for AI, $1.37 bln for Connectivity, and $1.17 bln for Space. Management expects capex in each of the next two quarters to be similar to Q2, although current economics for new compute deployments are generating payback periods of less than one year. Through 1H26, operating cash flow improved to $3.47 bln but remained well below $28.48 bln of capex.
• Outlook: In the first few weeks of Q3, SPCX contracted an additional $6.7 bln of cloud-services revenue that begins ramping in October. Including Cursor, management believes this puts SPCX on a trajectory to reach $100 bln of ARR by year-end. Its internal projection for reaching $1 trln in annual revenue moved forward to 2030 from 2031.

Briefing.com Analyst Insight

SPCX touted an aspirational long-term view, including $1 trln of annual revenue by 2030, compute capacity closer to 10 GW than 5 GW by the end of 2027, Starlink representing a significant portion of global internet traffic, and a massive increase in tonnage delivered to orbit through Starship. Q2 results provided some support for that vision, with Connectivity revenue and operating income growing sharply, AI adjusted EBITDA turning positive, and SPCX contracting another $6.7 bln of cloud-services revenue in the first few weeks of Q3. Near term, however, SPCX is spending heavily to scale, with capex expected to remain near Q2 levels in each of the next two quarters. First-half operating cash flow improved significantly but remained far below capex. With SPCX's lofty valuation still reflecting its longer-term ambitions more than its current earnings and cash-flow profile, investors appear unwilling to look past the capital intensity despite the Q2 beat. For now, the report reinforces the potential of SPCX's integrated launch, connectivity, and AI model, but also the substantial spending and execution it requires.