【TMGM Financial Recap】First Post-IPO Profit for SpaceX as AI Revenue Tops Starlink for the First Time! Both Companies Have Formed Special Committees to Explore a Merger, Musk Confirms

SpaceX reported net profit of $4.4 billion. Its first profit coincided with a change in revenue composition: the renamed “Superintelligence” business delivered $7.56 billion, outstripping launches and communications together for the first time. Around $1.6 billion of net profit, however, originated outside core operations. Merger discussions were another development that day. On the earnings call, Musk confirmed that separate special committees at SpaceX and Tesla were considering a combination of the two companies, valued together at approximately $3.5 trillion.

$14.58 Billion Revenue Accompanies SpaceX’s First Post-Listing Profit

A 14% beat against analysts’ revenue forecasts put SpaceX’s third-quarter sales at $14.58 billion, a gain of 161% year on year. Net profit came in at $4.4 billion against the $1.88 billion expected, and earnings per share reached $0.35 against a $0.15 forecast. At $8.81 billion, adjusted EBITDA was 306% higher than a year earlier.

The quarter marked a return to profitability at the operating level and the first net profit since SpaceX listed on 12 June. Revenue of $7.81 billion in the second quarter had accompanied a $541 million net loss; the year-earlier third quarter had produced a $1.05 billion net loss. Reversing the second-quarter operating loss, operating profit totalled $2.79 billion, with a margin of approximately 19%. The revenue breakdown comprised $1.77 billion from launches, $5.25 billion from communications, including Starlink, and $7.56 billion from the business renamed “Superintelligence” earlier this year.

Half of Sales: Computing Capacity Rentals Reshape Revenue

Growth of 830% year on year and 195% quarter on quarter lifted “Superintelligence” revenue to $7.56 billion. Never before had it exceeded the total from launches and communications. The source is rented computing capacity, not model sales. Anthropic signed up in May to use SpaceX’s Colossus data centre, agreeing to pay nearly $45 billion over three years. Under a deal reached in June, Google will pay $920 million per month from October through June 2029.

A further revenue contribution of $608 million came from coding tool Cursor, whose results entered SpaceX’s consolidated financial statements on 14 August. Even after removing that contribution, infrastructure and solutions generated $6.414 billion, up 192% quarter on quarter. Acquisitions alone did not account for the increase.

Capacity expansion also supports the contracts. Operational computing capacity has reached 1.7 gigawatts, up from 0.6 gigawatts a year ago. Because the agreements span several years, they secure part of the revenue stream. They do not, by themselves, resolve the question of profitability.

$4.4 Billion Net Profit: Operating Earnings and Other Contributions

Communications supplied the largest share of operating profit among the three businesses. The division, which includes Starlink, earned $2.367 billion in operating profit as revenue rose 69% year on year to $5.248 billion. A quarter-on-quarter addition of 1.6 million subscribers brought the total to 13.6 million. Price cuts remained part of the subscriber-growth strategy, taking average monthly revenue per user to $69 from $83 a year earlier.

Approximately $1.2 billion in Cursor acquisition-related share-based compensation weighed on “Superintelligence”, leaving reported operating profit at just $431 million. Before that expense, operating profit amounted to approximately $1.6 billion. For launches, 35 missions during the third quarter resulted in a $7 million operating loss. Although its first revenue-generating flight saw Starship deploy 26 next-generation Starlink satellites into orbit, the launch division remains unprofitable at the operating level.

Net profit exceeded the divisions’ aggregate operating profit of $2.79 billion by $1.61 billion, reaching $4.4 billion. Other income, net interest and income tax benefits supplied the difference, equivalent to 37% of net profit. Of $1.03 billion in other income, $561 million involved related parties. Their identities were absent from the financial report.

Free cash flow was still negative after third-quarter capital expenditure reached $19.59 billion, almost three times the year-earlier amount. Spending on AI infrastructure alone was $16.44 billion. Profit of $4.4 billion sits against capital expenditure of $19.59 billion, leaving the financial structure in need of a way forward. Musk’s proposed answer is a merger.

$3.5 Trillion Combination Faces Tesla’s Voting Hurdle

To assess a merger, each company has appointed its own special committee of independent directors, Musk told the call. He is not involved in the talks because leading both SpaceX and Tesla creates a conflict of interest. Completion would produce the largest corporate merger on record, with the companies’ combined market capitalisation at approximately $3.5 trillion. Barclays envisages SpaceX acquiring Tesla entirely in shares. It expects a possible announcement ahead of Tesla’s annual shareholder meeting on 3 December.

Tesla’s approval threshold is the challenge: Musk said support must represent 50% of all Tesla shares, not just a majority of those represented at the meeting. In his words, that is “a fairly high bar.” His voting power at Tesla is only around 20%, versus 82% at SpaceX. There is no merger proposal in the proxy materials for the 3 December shareholder meeting. Commercial relationships are already in place. Hundreds of millions of dollars’ worth of Cybertrucks have gone to SpaceX; Tesla’s energy storage batteries have a major customer in xAI, merged into SpaceX in February. The two companies are jointly constructing the Terafab chip plant in Texas as well.

Electricity is the fundamental link, despite the synergies in superintelligence software, chip design and robotics that Musk outlined on the call. By his own account, power, cooling and infrastructure constrain superintelligence more than chips.

Three Dates: Share Unlocks, Tesla Earnings and Shareholder Votes

SpaceX’s largest lock-up expiry since its June IPO falls on 22 October: up to 1.3 billion shares will be released, or 28% of the main locked-up pool of approximately 4.7 billion shares. A separate 328 million shares will become available on 24 October. Before those releases, Tesla reports third-quarter earnings after the US market closes on 21 October. The merger is certain to be discussed on that earnings call. Tesla shareholders will then vote at the meeting on 3 December.

Next year’s ambitions have already been enlarged by management. CFO Johnson forecasts $33 billion to $37 billion in first-quarter revenue next year, against analysts’ $22.2 billion expectation, with a further increase in capital expenditure to come. Musk’s forecast extends to annual recurring revenue of $500 billion to $1 trillion for SpaceX by the end of 2027, alongside 10 gigawatts of computing capacity entering service in 2027. No institution has built that figure into its model. For Musk, it is the basis for insisting on housing both businesses in one company.