【TMGM Financial Recap】SpaceX Posts First Profit Since IPO as AI Revenue Surpasses Starlink for the First Time! Musk Also Confirms Both Companies Have Formed Special Committees to Explore a Merger

Beyond posting its first profit, SpaceX also saw a shift in its revenue mix: its renamed “Superintelligence” business generated $7.56 billion in revenue, exceeding the combined revenue of its launch and communications businesses for the first time. On the same day, Musk confirmed during the earnings call that SpaceX and Tesla had each formed special committees to explore a merger, with the two companies valued at approximately $3.5 trillion combined. Notably, around $1.6 billion of that $4.4 billion net profit came from sources outside its core operations.

The First Profitable Quarter Since Listing

SpaceX’s third-quarter revenue reached $14.58 billion, up 161% year on year and 14% above analysts’ expectations; net profit was $4.4 billion, versus an expected $1.88 billion; earnings per share were $0.35, versus an expected $0.15; and adjusted EBITDA rose 306% year on year to $8.81 billion.

This was its first profitable quarter since listing on June 12. In the second quarter, revenue was $7.81 billion, with a net loss of $541 million; in the same quarter last year, its net loss was $1.05 billion. Operating profit reached $2.79 billion, representing an operating margin of approximately 19%, compared with an operating loss in the second quarter. Revenue came from three businesses: launches generated $1.77 billion, communications—which includes Starlink—generated $5.25 billion, and the remaining $7.56 billion came from a segment renamed earlier this year: “Superintelligence.”

Half of Revenue Comes from Renting Out Computing Capacity

The “Superintelligence” business generated $7.56 billion in revenue, up 830% year on year and 195% quarter on quarter, exceeding the combined revenue of launches and communications for the first time. This money comes from renting out computing capacity, rather than selling models: Anthropic signed an agreement in May to pay nearly $45 billion over three years to use SpaceX’s Colossus data center; Google followed in June, agreeing to pay $920 million per month starting in October under a contract running through June 2029.

Cursor, the coding tool consolidated into SpaceX’s financial statements on August 14, contributed another $608 million. Excluding the contribution from consolidation, infrastructure and solutions revenue still reached $6.414 billion, up 192% quarter on quarter, showing that the growth was not entirely acquisition-driven.

The installed capacity supporting these contracts is also rising: operational computing capacity stands at 1.7 gigawatts, compared with 0.6 gigawatts a year ago. With contracts running for several years, part of the revenue is locked in; profitability is a separate matter.

What Makes Up the $4.4 Billion Net Profit

The communications business, which includes Starlink, generated $5.248 billion in revenue, up 69% year on year, and $2.367 billion in operating profit, accounting for the bulk of operating profit across the three businesses. Subscribers reached 13.6 million, an increase of 1.6 million quarter on quarter; average monthly revenue per user fell from $83 a year ago to $69, as the strategy of lowering prices to drive subscriber growth continued.

“Superintelligence” posted operating profit of just $431 million, a figure that includes approximately $1.2 billion in share-based compensation related to the Cursor acquisition. Excluding that expense, operating profit was approximately $1.6 billion. The launch business recorded an operating loss of $7 million and conducted 35 launches during the third quarter. Starship did complete its first revenue-generating flight, placing 26 next-generation Starlink satellites into orbit, but the launch business has yet to turn an operating profit.

Together, the three segments generated $2.79 billion in operating profit, yet net profit reached $4.4 billion. The $1.61 billion difference came from other income, net interest and income tax benefits, accounting for 37% of net profit. Other income totaled $1.03 billion, including $561 million involving related parties whose identities were not disclosed in the financial report.

Third-quarter capital expenditure reached $19.59 billion, nearly three times the level a year earlier, with $16.44 billion invested in AI infrastructure, leaving free cash flow negative. With $4.4 billion in profit alongside $19.59 billion in capital expenditure, this financial structure needs a way forward. A merger is the one Musk has put forward.

A $3.5 Trillion Merger Hinges on a Voting Threshold

Musk confirmed during the call that SpaceX and Tesla had each established special committees composed of independent directors to study a merger. As the head of both companies, he has a conflict of interest and is not participating in the discussions. The two companies have a combined market capitalization of approximately $3.5 trillion, and a completed deal would be the largest corporate merger in history. Barclays expects an all-stock transaction in which SpaceX acquires Tesla, potentially announced before Tesla’s annual shareholder meeting on December 3.

The hurdle lies on Tesla’s side. Musk said the proposal would require affirmative votes representing 50% of all Tesla shares, rather than a majority of shares represented at the meeting, calling it “a fairly high bar.” He controls only around 20% of Tesla’s voting power, compared with 82% at SpaceX. The proxy materials for the December 3 shareholder meeting contain no merger proposal. Business dealings between the two companies are already established: SpaceX has purchased hundreds of millions of dollars’ worth of Cybertrucks; xAI, which was merged into SpaceX in February, is a major customer for Tesla’s energy storage batteries; and the two companies are jointly building the Terafab chip plant in Texas.

The synergies Musk listed during the call included superintelligence software, chip design and robotics. The real connection lies in electricity: as he himself said, superintelligence is constrained more by power, cooling and infrastructure than by chips.

Three Dates to Watch

On October 22, up to 1.3 billion SpaceX shares will be released from lock-up, representing 28% of the main pool of approximately 4.7 billion locked-up shares and the largest release since the June IPO; another 328 million shares will be released on October 24; after the U.S. market closes on October 21, Tesla will report its third-quarter results, with the merger certain to be a topic on the earnings call; and on December 3, voting will take place at Tesla’s shareholder meeting.

Management has already raised the scale of its ambitions for next year. CFO Johnson expects first-quarter revenue next year of $33 billion to $37 billion, far above analysts’ expectations of $22.2 billion, while capital expenditure is set to rise further. Musk has offered his own forecast: by the end of 2027, SpaceX’s annual recurring revenue will reach $500 billion to $1 trillion, with 10 gigawatts of computing capacity coming online in 2027. That figure has not been incorporated into any institution’s model. It is Musk’s rationale for insisting that the two businesses belong under one company.