Space Exploration Technologies (SPCX) Q3 2026 earnings call transcript

In order to understand the nature of the universe and all these fundamental questions, we must expand the scope and scale of consciousness.

Hello, everyone. We are coming to you live from our Starlink factory and future StarMine production site here in Bastrop, Texas. I'm Andrea Williams, head of investor relations, and thank you for joining us for SpaceX's third quarter 2026 earnings presentation. Joining us are Elon, Gwen, and Brett, and we are live streaming on X. Our third quarter financial results were announced just after 3 p. m. Texas time, and all relevant materials have been published to our investor relations website at ir. spacex. com.

For today's presentation, 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, which the SpaceX team built with Grok. 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 earnings release and the most recent filings with the SEC, including our final prospectus. During the presentation, we may discuss certain non-GAAP financial measures. In today's earnings release and our filings with the SEC, you can find additional disclosures regarding these non-GAAP measures, including all the reconciliations with comparable GAAP measures.

For the third quarter of 2026, we announced the following financial results as compared to the prior year period. revenues of $14.6 billion, up 161% from $5.6 billion, net income of $4.4 billion, an improvement of $5.5 billion from a net loss of $1.1 billion, and adjusted EBITDA of $8.8 billion, up 306% from $2.2 billion.

With that, I'll hand the call over to Elon.

Thank you. So we are in an inflection moment for SpaceX across launch, connectivity, and superintelligence. Starting with Starship, Flight 14 was a critical milestone. Starship made it to orbit for the first time and deployed operational Starlink V3 satellites. I think we have a recap video we're going to play.

Thank you. Thank you. Thank you. Thank you. For Flight 15, which we expect to happen next month, we're going to attempt to catch both the booster and the ship.

This will be, if we succeed, will be the first time that an orbital launch vehicle has been fully recovered. This is a massive technology milestone. the only way that we can extend consciousness beyond Earth on a sustained basis is with a fully reusable orbital launch vehicle. So this is a profound technology milestone in the history of civilization consciousness.

So let's look at what a simulation of Flight 15 would look like if we succeed. If we don't succeed in Flight 15, we'll get there. So success is not guaranteed on these first flights, but I'd say it's more likely than not that this succeeds next flight.

And if not, we have a steady stream of Starship flight attempts through the end of this year and then accelerating next year. So with that, the Flight 15.

Simulation. Thank you. Thank you. We've also announced the development of the Louisiana spaceport. So that's going to be an incredible asset to the country and to the world that will, I think, at some point probably have on the order of 20 or more launch towers and enable the transport of millions of tons per year to orbit and beyond.

So that's really going to be a big deal. We expect Starship to fly weekly at some point in the first half next year, and then second half next year twice weekly, or maybe even more frequently than that by the end of next year. The rate at which we launch Starship will increase dramatically as we solve the rapid and complete reusability. So we'll have complete reusability.

Then at first there will be a little bit of refurbishment that's needed between each flight. And we'll iron out the need for any refurbishment such that you can immediately land the rocket and launch it again just like an airplane.

As I said, this is a profound technology milestone that most people in the world don't realize how important it is. But it will be obvious in hindsight.

Starlink is also just getting started. Flight 14 deployed 26 terabits per second of Starlink bandwidth. That's equivalent to 10 Falcon 9 launches. So a single Starship launch, which wasn't even fully loaded. It was about maybe half loaded. And it did the equivalent of 10 Falcon 9 launches. So what I expect over time is not in the distant future, probably within three years, is that we will have about 100 times the bandwidth of the current Starlink constellation. So because we will have launched satellites with an order of magnitude more bandwidth, and we will place into orbit an order of magnitude more Starlink satellites, So probably something on the order of 100,000 satellites, each of which have more than 10 times the bandwidth of the current Starlink system.

So I think revenue for Starlink will be at least somewhat proportionate to the total bandwidth delivered. And we will also have direct-to-cell, high-bandwidth direct-to-cell capability. And we will be building out our terrestrial networks. that there's broad-based connectivity anywhere that SpaceX and Starlink are allowed to operate, so anywhere in the world that we're allowed to operate.

And I think the demand for bandwidth is going to be dramatically higher than it is today. I think in three to five years, there's probably a demand for 1,000 times more bandwidth than there is currently because AI or SI agents will, on a per-agent basis, use far more bandwidth than a person, and there will be far more agents than there are people. So this ends up requiring a several-order-of-magnitude increase in communication bandwidth in order to satisfy that communication demand. So talking about SpaceX superintelligence, SpaceX SI, sexy, whatever.

So I think people are starting to realize the constraint on deployment of superintelligence is more in power and cooling and infrastructure than it is in chips So what we done at SpaceX is we taken a team that has been able to achieve a market share in mass-to-orbit that is almost 90% of all mass-to-orbit of Earth, where China is about, I think, roughly 6%, and the rest of the world combined, including the rest of the U. S. , is about 4%. So a team that has been able to achieve results that are an order of magnitude greater than the rest of all competitors in space combined, and applied that same team to the deployment of terrestrial compute.

So this is a bit like the New York Yankees playing in Little League. It's not fair. But the net result is being able to deploy power cooling infrastructure at a rate that is vastly faster than anyone else and may at some point be faster than everyone else combined.

So I just let that sink in for a minute. So I've been spending personally a lot of my time in Memphis, often four days a week, night and day, just getting the Memphis Supercompute Cluster or Clusis2 online. we're tracking to be able to bring roughly 200,000 GB300s online per month for every month for the remainder of this year and continuing that pace next year with next year being primarily a very Rubin compute.

At this point, I would say I'm fairly confident of being able to bring an incremental 10 gigawatts of compute online in 2027.

That would be in addition to the roughly 3 gigawatts, maybe 2.5 to 3 gigawatts that we'll have online by the end of this year. So I would be surprised if we brought on less than 13 gigawatts of compute by the end of next year.

And as I mentioned earlier, the power cooling, electrical equipment, infrastructure is somewhat of a limiting factor. So to make sure that that is not a constraint for our build-out, we're actually going to aim for an incremental 20 gigawatts of power cooling infrastructure next year. So that the amount of power and cooling that we have is far in excess of what is needed to turn the GPUs on.

So there's a non-zero possibility, maybe it's a small possibility at this point, but it's not zero, of SpaceX having over 20 gigawatts of superintelligence compute online next year. A small possibility, but it used to be zero. It's not zero anymore.

We're also planning to have the most powerful training cluster online by the end of Q2, which will be 440,000 Verorubin computers deployed for optimal training. This will, I think, be extremely helpful for getting Grok to be potentially the best model, but certainly to be extremely competitive.

So on the GrokBot side, we're seeing the fastest growth of a product that I've ever seen in my life for GrokBot. I've never seen anything grow this fast.

We're also seeing that the usage of GrokBot grows over time per user. It does not decline. So as we make GrokBot more useful, it's actually we're seeing users use it more per week, not use it less. and we'll be deploying Grokbot at scale for enterprise customers, which is a very big deal, so it can be used effectively in teams by companies as though it were a virtual human.

We already are in early deployment with some trusted customers and we expect to be in wide deployment within a few weeks for enterprise customers for Grokbot.

I think Rockpot may end up being what uses most of our superintelligence compute. So, I mean, in a nutshell, what this implies for SpaceX's annual recurring revenue by the end of 27 is somewhere between 500 billion and a trillion.

Brett? Are you going next? Sorry. It's okay, Brett. You can go instead. Sorry.

On that crazy note, I thought... On that crazy note. Yeah, I don't want to give Brett a heart attack anymore.

Thanks, Ilan. So we had an exceptional execution and quarter again, and today I'll focus both on the operational and the commercial highlights as well as talk about the priority initiatives for next quarter.

Showing a slide with the KPIs, and I'll go ahead and walk through it. Starting with our space business, we remain the leading launch provider for the world, flying the vast majority of payload mass to orbit. During the third quarter, our 35 launches included 21 flights of Starlink on Falcon 9, two flights of Starship, a Falcon Heavy, which I'll talk about in a second, and 12 high-profile customer missions, including the Falcon Heavy launch, which we flew NASA's Roman Space Telescope into deep space. We also flew six national security space launch missions.

We've also secured important new business, winning three additional human spaceflight missions on Dragon, which will take us through 2028. along with the Starlink communications contract on NASA's Artemis III mission. In addition, we signed 18 new national security space launch missions, a contract to deliver payload to the lunar surface with Starship, and three new Starfall missions on Starship. We just did a Starfall mission today, by the way, on Falcon 9.

Starfall is our space capsule, which provides routine access, routine relatively low-cost access to microgravity environments for scientific research, including improving our understanding of diseases like cancer and diabetes, and developing better protocols for patients here on Earth. During the final week of the quarter, we flew Starship Flight 14 to orbit, as Elon talked about, followed just after on October 1st by a triple header. We threw three Falcon missions across our three Falcon launch sites in just 13 hours.

Crew 13 we brought safely to the International Space Station, a Falcon Heavy NRO mission, and a rideshare mission flying 130 payloads. It's an incredible display of what we can deliver in a single day across crew, commercial, and national security missions. We're also incredibly excited for what's ahead for Starship, flying the largest payloads to help build the space economy in orbit and on other planets and the moon.

As Elon said, Starship's Flight 14 was a major technical milestone, and we remain on track with our goals to bring back both the first and second stages to the tower this year, refly the second stage by early next year, and ramp our launch cadence as we make progress towards rapid reusability. We'll attempt an on-orbit refueling early next year, and we'll begin flying mobile V2 and StarMine satellites in 2027.

We have had significant constructive engagement with the FAA, and we expect the license for our Flight 15 to include return-to-launch site and tower catch for both stages. I'm also extremely excited about expanding the Starship operations to Louisiana with the second Louisiana purchase. The geography of Louisiana, the community, and their work ethic is so aligned for an amazing Starship future.

Moving on to Starlink, we had another standout quarter driven by continued growth across both our consumer, enterprise, and government businesses. We ended the quarter active in 174 markets, including new market launches for Vietnam and Uganda. Looking at subscriber growth, we added 1.6 million consumers, not total users, but consumers in the quarter, reaching just under 14 million global broadband consumer subscribers.

As I mentioned, this number does not include additional hundreds of thousands of enterprise subscribers and aviation customers. We remain incredibly inspired by the impact of Starlink on communities around the world, including providing service to hundreds of thousands of students and teachers in schools globally, as well as for emergency response during natural disasters. Over the third quarter, Starlink's rapid response capabilities enabled support across 25 crises, including the Venezuela earthquake, the earthquake in Western Colombia, and Hurricane Lowell in Hawaii. In Venezuela alone, Starlink donated over 1,400 kits to response agencies, providing critical Starlink broadband connectivity to over 250,000 people.

As we mentioned last quarter, we continue to see significant growth opportunities on the enterprise and government side of the business, with aviation a continuing major focus and fixed site gaining momentum. Starlink has now contracted for roughly 12,000 planes, almost a quarter of the available aircraft, and we're expanding quickly with both new and existing customers. We've signed agreements with three of the four major U. S. carriers, along with a growing list of leading international airlines. During the quarter, Lufthansa, Swiss, Copa Airlines, Korean Air, Austrian Airlines, and ASEAN Airlines all flew their first Starlink-equipped aircraft. To keep pace with this demand, we've quadrupled aviation production rates since the beginning of the year, and we expect to double before the end of the year.

Our aviation partners report that Starlink has become a key reason customers choose to fly with them, both business travelers who increasingly rely on full connectivity in the skies, or even individuals who want to stay connected all the time everywhere. Our data shows Starlink, and frankly our customers tell us, that Starlink-equipped flights carry higher load factors on the planes, and full connectivity is quickly becoming table stakes for passengers.

On the government side, Starship continues to deliver unique mission-critical capabilities, and we see further room for growth. We remain on pace for enterprise and government revenues to exceed consumer connectivity revenues in the future, each. The successful deployment of the operational V3 broadband satellites on Starship's Flight 14 marks an important step and an inflection point for Starlink. The increased capability from these satellites, as Elon talked about, and the Starship launcher itself will provide additional capacity across markets and enable new sales in high-demand areas. We expect the market for communications to grow far beyond just human communication that we traditionally think about. Connecting cars, robots and the adoption of superintelligence will increase communication demands not in percentages, but in many orders of magnitudes.

In the years ahead, we expect Starlink alone to represent a significant portion of global Internet traffic. In mobile, we continue to expand international partnerships, turning on service with new carriers across multiple countries in the third quarter, including Uganda, the Democratic Republic of Congo, Kazakhstan, and Costa Rica. We surpassed 22 million monthly users on Starlink Mobile as of the end of the quarter, up 37 percent quarter over quarter. Our near-term priority remains flying the mobile V2 Constellation through next year and integrating our spectrum purchases to turn on service in early 2028.

Just a few weeks ago, we received approval from the FCC to launch 15,000 mobile V2 SATs and announced an agreement to acquire a portfolio of low-band spectrum, which will pave the way for Starlink Mobile to become a major mobile carrier in the U. S. Moving to superintelligence, the industry continues to demand ever more massive amounts of compute. We're rapidly expanding capacity to meet both our own needs at Grok and related product scale and those of our cloud service customers.

Enterprise feedback on recent model releases has been positive, and GrokBot in particular is seeing strong adoption out of the gate. GrokBot, our agentic assistant, launched in August, and we already had paid weekly users of 800,000 earlier this month, more than doubling over the last month. B2B is our fastest growing category with companies increasingly using GrokBot as a force multiplier across sales, marketing, IT, and engineering, treating it as an always-on teammate for complex end-to-end workflows.

We're also accelerating our Grok model release cadence with significant performance gains expected in the near term, well, have been, and more in the near term. At the same time, the integration of Cursor continues to progress well, strengthening both our product capabilities and our go-to market reach with a scaled enterprise sales force. Early evidence of this momentum is already visible. Grok Enterprise customers with more than $1 million in run rate revenue, including Cursor, were up 50% quarter over quarter on a pro forma basis. Last week, we further integrated the portfolio by announcing a new scheme that brings together Grok, GrokBot, Cursor, and X Premium on a single plan.

In review, our business is experiencing extremely strong momentum across all three segments. Our engineering teams are scaling Starship and next-generation satellites across broadband, mobile, and Starshield, while our commercial teams expand Starlink across aviation, enterprise, government, and global markets. At the same time, we're scaling our superintelligence business in the key areas of critical compute infrastructure, leveraging our hardware expertise.

Now, Brett, you get to go.

Thank you, Gwen. We delivered another strong quarter in Q3. Revenue grew an impressive 161% year over year to $14.6 billion, fueled by the continued momentum in the connectivity business and our clear inflection point in the superintelligence or SI business. Adjusted EBITDA once again grew faster than revenue to $8.8 billion, up 306% year over year. The combination of our launch leadership, recurring Starlink revenue, and the significant expansion of our SI infrastructure business have combined to drive meaningful operating leverage in the business.

Our balance sheet remains very strong, And our focus on capital allocation continues to keep us in a position to accelerate the pace of innovation that underpins the significant revenue opportunity across all of our businesses. I'll now walk through the financials by segment. The space revenues of billion were up 84 sequentially and up 6 year over year anchored by a favorable customer mix We on track to deliver strong growth for the year based on our robust customer manifest for Falcon and Dragon vehicles As far as capital allocation, we continued to invest in our Starship program, accelerating Raptor engine and vehicle production, advancing gigabay construction, and progressing multiple launch pads at both Starbase and the Cape. And importantly, we secured the location for the next phase of United States space launch leadership in Louisiana.

These investments remain essential to unlocking the step change in cost and capacity that Starship will deliver. Connectivity again delivered robust revenue growth and profitability with revenues of $5.2 billion up 69% year-over-year and 22% sequentially. As Gwen mentioned, we reached 13.6 million Starlink consumer subscribers adding 1.6 million subscribers just in Q3 alone, driven by growth in more developed markets.

During the quarter, we began ramping production of our V5 kits, which supported our progress on alleviating inventory constraints. We strategically managed our channel distribution and prioritized delivery of kits to retail channels ahead of the holiday season, which we expect will lead to increased activations in Q4. Starlink Consumer Average Revenue Per User, or ARPU, Monthly Average Revenue Per User, increased 5% sequentially to $69 per month, benefiting from a favorable customer mix dynamic in the quarter.

Enterprise and government revenues grew 91% year-over-year and 18% sequentially, highlighted by growth in our Starshield program with the United States government and the continued momentum in the aviation industry. Aviation remains a major growth opportunity, as we're still early in the installation phase with many of the largest carriers worldwide and have line of sight into an accelerated activation path into 27 for our key partners.

Connectivity gross profits doubled year over year with gross margins of 55%, including a one-time benefit of roughly 3%, primarily driven by tariff refunds in the quarter. Excluding the one-time benefits, though, adjusted EBITDA margins expanded roughly 2% year over year.

Looking ahead, the satellite roadmap is a key driver of both the capacity and capability of our connectivity segment. Through the end of the year and throughout 2027, we expect to deploy V3 broadband satellites in meaningful volume, with each Starship launch ramping towards a payload that delivers over 20 times the downlink capacity of the current generation of Falcon 9 launches today. In parallel, we will ramp Starlink Mobile V2 satellites on Starship starting in 2027 and leverage our newly enhanced wireless spectrum portfolio to expand our direct-to-sell service and become a major mobile carrier, as Quinn mentioned, in the United States. Across all three of our connectivity applications, Starlink Broadband, Starlink Mobile, and Starshield, the launch cadence on Starship is expected to drive a step change in total capacity, coverage, and service quality.

SI, or superintelligence, was again the standout growth driver for the quarter. Segment revenue increased substantially to $7.6 billion, up $5 billion quarter over quarter, and $6.7 billion year over year, primarily powered by the ramp of our cloud services agreements. We meaningfully improved the segment's profitability profile as we monetized newly deployed capacity and delivered powerful operating leverage for the business. We ended the third quarter with 1.7 gigawatts of nameplate compute capacity, with additional data halls already online in early October.

For SI solutions and infrastructure, revenues were $7 billion, of which $608 million came from the cursor acquisition, closed roughly mid-quarter. And even excluding cursor, SI solutions and infrastructure revenues grew 192% sequentially, driven primarily by the activation of new cloud services agreements. There are many customers asking for compute, and we're actively building the supply to meet both internal and external demand. We expect to have additional new customers in future deals, and we'll continuously evaluate the highest margin usage for our compute assets across both new and existing cloud service agreements and serving inference for our own SI products.

What we're seeing in the market is extraordinary. At current pricing, new compute deployments are generating a payback of less than a year. Pricing is currently tracking slightly above the high end of the $30 to $50 per watt range we were discussing just last quarter, which further supports the attractiveness of these terrestrial SI compute investments. We'll continue to be demand-led and prudent in the pace of deployment, matching our disciplined and proactive capital planning for procurement of semiconductor supply to the near-term customer demand.

Our current customer contracts for SI Compute have the benefit of allowing us to flexibly manage our capacity for our own model training purposes, as well as be able to monetize for our SI Cloud Service agreements revenue at favorable pricing as the market availability continues to tighten. Advertising revenues grew 19% year over year as we build more momentum on the new advertising tech platform that we rolled out just last quarter in Q2.

SI segment adjusted EBITDA was $5 billion, up $3.8 billion quarter over quarter and $5.4 billion year over year, driven primarily by higher margin cloud service agreements. SI segment operating income was $431 million, but excluding the $1.2 billion of stock-based compensation expense related to the Cursor acquisition, the segment delivered $1.6 billion of operating profit just in Q3. Double-clicking on the share-based compensation expenses of the $60 billion equity value for Cursor when we purchased it, $23 billion was attributed towards retaining key employees and replacing outstanding equity awards, including revesting agreements for key executives.

These equity awards will be recognized as stock-based compensation over roughly the next three-year vesting period. Total company capital expenditures in the third quarter were $19.6 billion, primarily in support of our SI compute buildout, Starship infrastructure, and satellite production.

We ended the quarter with substantial backlog, totaling $63 billion as of September 30th, of which $17.5 billion was recognized as deferred revenue. Approximately $42 billion of this backlog is expected to be recognized within the next year.

Looking ahead, demand remains robust across all three segments, particularly in our cloud services business. We remain on track to deliver our previously stated goal of $100 billion in ARR by the end of this year, defined as annualized revenue based on the month of December.

SI infrastructure, continuing to come online at Memphis and South Haven, gives us visibility into an accelerated build path through the remainder of this year. As a result, we're on track to reach nearly 2.2 gigawatts of nameplate compute at the end of this month alone in October and have a clear line of sight, as Elon highlighted, to nameplate compute in the range of 2.5 to 3 gigawatts just by the end of this quarter.

Because of the additional capacity coming online this quarter, we expect fourth quarter capital expenditures to now be in the range of $35 to $40 billion for this quarter. We also expect total company gross margins in Q4 to be more consistent with the second quarter, given some one-time benefits and customer mix that we highlighted in Q3. Given the increased visibility into our compute contract pipeline over the next six months, we have the opportunity to provide additional look-forward guidance on the acceleration we see in our business in Q1, 2027. We now see total company revenues in the range of $33 to $37 billion for Q1 of 2027.

In closing, we are in a transformative phase for the company's financial profile. We're investing aggressively across SI Compute, Starship Development and Production, and next-generation Starlink Broadband and Mobile Constellations, the three areas we believe will generate the highest long-term returns. These are demand-led investments in markets with visible, tangible returns in the near term. We're building the infrastructure of the future with discipline, focused on capital efficiency, strong returns on invested capital, and maintaining a strong investment-grade balance sheet, while still moving with the velocity to capture the opportunity in front of us. The combination of our diversified earnings base, focus on extreme vertical integration, and the robust demand in the market for superintelligence gives us conviction in the path ahead.

With that, I'll turn it back to Andrea. Thanks, Brett. We're now going to begin the Q&A section. If you'd like to ask a question, please use the raise hand function at the bottom of your screen. If you've dialed in today, please press star 9 to raise your hand and star 6 to unmute yourself. I think we've assembled a queue.

Yeah. Great. First, Elon, thank you for making flying cars real.

You're welcome. That was freaking insane. That's my first comment.

Well, I mean, we're just figuring out chip fabrication. So, but I'll tell you what our internal expectations are, which obviously I put big error bars in this because we don't know if we will actually achieve this or not. But it's what we're aiming for internally is to make our first sort of test chip functional in approximately May or June of next year. That's just kind of an SRAM chip or something to basically test the line. That's at the Research Fab in Austin.

And we're aiming to, our aspiration is to reach volume production around Q3 of 28 at TerraFab at Givens Creek, the main TerraFab location.

These are very aggressive dates, and we're very appreciative of ASML and all of our other suppliers in accelerating equipment deliveries in order to achieve this outcome. Let's just say that that outcome of achieving volume production is at least in the set of possible outcomes for Q3 or Q4 of 28. So these are obviously like insanely fast timeframes for chip production.

We do have, I think, some significant potential breakthroughs in chip fabrication, but I don't think I should discuss that on an earnings call. So let's not give away the shop here.

But I am optimistic that we will dramatically accelerate chip production and that TerraFab will ultimately do what the name suggests, which is to make a terawatt of superintelligence chips per year.

Yeah, well, I mean, three gigawatts of that or very close to three gigawatts is what we expect to have done just the next few months. So you can just look at the rate at which we are actually deploying and turning on compute. What I think you hear from, I guess, other hyperscalers is you don't hear a lot of detail about how many GPUs they're actually turning on every month. And with us, you are. I'm being as precise as possible about this.

It is absolutely insane to be deploying, providing the power, and all of the electrical equipment, the cooling, the batteries, the networking, and everything else that's needed to turn on 220,000 GB300s a month. But that is actually what we're doing right now. And that pace will obviously accelerate next year. We're not going to slow down. I don't think, again, I don't want to some of this, if you say, like, how are we going to get all this power let's just say, like, we actually, we do have a plan that gets to 20 gigawatts of power and cooling by the end of next year, but that is not something that I should spell out, that is highly proprietary, because if I tell you about it, I'm also going to try to do the same thing and I'm not saying we'll have 20 gigawatts of power, I'm saying we have a plan where if everything goes right, we'll have 20 gigawatts of incremental power, I should say, next year.

So 23 gigawatts roughly in total. Now, I don't expect everything to go right. That's why I said I'm confident of 10, highly confident of 10 next year. And 20 is difficult but not impossible. And I mean, some of the things we're doing, I have mentioned publicly, so we're casting the blades and veins for the turbines. So SpaceX already has a very advanced castings capability that was developed for rocket engines. So we have, I think, actually the most advanced casting capability on Earth because the demands for castings for rocket engines exceed the demands for everything and anything else you could possibly imagine.

So taking that incredible team that has, I think, objectively the most advanced casting technology in the world and saying, hey, can you guys also make some blades and veins for terrestrial turbines is much easier than what they have done in the past.

And when we talk to the turbine suppliers, they tell us that the blades and veins are 12 to 18 months behind the rest of the turbine, meaning they can deliver everything except the blades and veins 12 to 18 months before they can deliver the blades and veins. So casting is this really difficult bottleneck, and if anything, it seems to be getting worse.

So that means that we can bring power online 12 to 18 months faster than anyone else That the kind of advantage that difficult to replicate Unless someone else is building an advanced casting shop they will be unable to compete with SpaceX in this regard.

And we're looking at many different sources of power, not just gas turbines. We obviously want to use solar, wind, and every other source of power that we can obtain. We think there's also a lot of opportunity for inference compute if you manufacture modular inference compute at the factory level, and then such that the power and cooling are built in at the factory, and then you distribute modular inference compute clusters all over the country, if not all over the world. That's about as much as I should say about scaling power and cooling.

But like I said, at this point I'd say I feel highly confident of 10 gigawatts incremental next year, so 13 total. and some number over 20, the probability of achieving that is rising rapidly.

Doug, the second part of your question related to funding, I think we certainly have the advantage related to others in that we are investment grade, have a very strong balance sheet, And there are a number of available pools of debt capital that we are talking to at the moment related to funding this incredible growth. The other really important thing to emphasize is the payback period is very short.

And so this capability starts to fund itself in a pretty near term situation. And so the fact even that we're finishing this quarter with more capability starts the funding mechanism even into the first half of next year. So you have your operational cash flows first and foremost. You have multiple pools of capital available in the debt market, especially because of our investment grade status and strong balance sheet. And then you also have the opportunity from what we've seen to partner with, I would say, the whole value chain related to on the vendor and customer side.

So there's nothing easy about SpaceX for sure. And so might as well have the finance piece be part of the challenge at the same time. But we have a lot of conviction that we are going to be able to do this in a very measured fashion and continue to keep ourselves in that IG status along the way.

And certainly if you look at our track record with respect to capital efficiency, Starship and all of our other projects, you'd be hard-pressed to find any company in the world that is as good at capital efficiency as SpaceX.

Exactly.

Thanks. So there's been a lot of reporting, a lot of anticipation of a merger with Tesla. I realize maybe you may be limited on what you can say, but if we take a step back, how do you think about the pros and cons of a potential combination? And as part of that framework, are there any roadblocks that we need to address before embarking on it? Thank you.

I mean, this is definitely kind of a question where I feel like I'm tap dancing through a minefield. But so I have to be thoughtful about what I say here.

I think so both SpaceX and Tesla have formed special committees to discuss this idea at the request of shareholders.

And these special committees are consistent of independent directors. and because I'm a conflicted party, I can't actually be in the discussions of the special committees. So it's an odd kabuki dance where two groups of people are talking and I can't be in the conversation.

I mean, I don't think we should necessarily assume that... I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it.

Do I think it would be a good idea? Yes. But at the end of the day, the shareholders have to be supportive of this. And particularly on the Tesla side, we will need a 50% vote of all shares, not just those who vote, but of all shareholders. And that's quite a high hurdle to try to achieve. So, and I can just say that at this point, the special committees have not reached agreement on the terms of any transaction.

And obviously, there's no guarantee that they will. But I do think there's a lot of merit to combining companies as we are pretty much in the superintelligence singularity. And there's a lot to be gained from cooperating on developing superintelligence software, chip design, the TerraFab, obviously, robotics, mass to orbit with the StarMind constellation. Connectivity. Connectivity.

Yeah, let me, Elon can fill in some details, but let me point out that the vast majority of mobile connectivity is actually, Wi-Fi, right? I think it's something between 85 and 93 percent is done through Wi-Fi. And keep in mind, Starlink Broadband does a lot of Wi-Fi work as well. As far as the mix goes, I think we expect that the S-band spectrum will provide the majority. and then obviously you need the low band spectrum, the 800 megahertz spectrum to basically penetrate buildings. So if you're not on Wi-Fi, you can still receive the signal. So I think, and by the way, I'll correct myself if I'm wrong afterwards, but I think the S band will carry the majority and then the low band spectrum will carry less.

But provide a critical piece, by the way. And also we talked last quarter at the last earnings call about smaller, kind of not quite tower capable, but smaller radios that we could put on already installed homes for Starlink, businesses for Starlink, towers as well. So it's not just the spectrum that we've talked about with the S-band. We will basically leverage the real estate from Starlink installs and other towers.

Yeah, I think we probably should do a longer presentation on the game plan for Starlink connectivity and why we think it will ultimately be a business that generates several hundred billion dollars in revenue a year. Because you are missing some of the pieces that we know about internally. I can say we do see a clear path to several hundred billion dollars you're in connectivity revenue.

But I think we should probably describe that in more detail in a forum that's not limited to a few minutes at an earnings call.

Well, we can go a little longer.

Well, the relative allocation of compute to third parties versus internal is something that's going to change from one month to the next. I guess as a rough approximation, our goal is to kind of split it 50-50, more or less, where half of the compute is used internally and half of it is rented to others.

But that number could shift 60-40, one way or the other. It's going to be dynamic. And obviously, our approach is to rent at effectively the spot market rate as opposed to sign these long-term deals.

Our belief is that the value of compute per watt will increase over time, not decrease. And the reason for that, I think it should be obvious to people, really, is that as you improve the AI software, as the models get better and better, they're able to, you get more useful intelligence per watt. and the value of that compute is proportionate to the useful intelligence per watt. And that's why you see things like even old computers like H100s renting for more than they rented when they were new.

And I think that's likely to continue. I think we're going to face a shortage of superintelligence compute and that shortage is going to remain for a long time. So I think the smart move is to do short-term contracts and essentially to place the bet on useful intelligence per watt increasing rapidly, which obviously is done. So that's what's happened so far. And also if you look at, say, how are our short-term contracts renewing? Are they renewing at higher dollars per watt or lower? And we see them renewing at higher dollars per watt, not lower dollars per watt.

We are also, frankly, hounded relentlessly by every hyperscaler and by dozens of smaller companies to rent more of our compute. So we could rent out our compute several times over if we said yes to everyone.

That's just the situation here. That's why I posted that sort of video meme of the Monty Python cheese shop sketch where the guy goes into a cheese shop to get some cheese, and they actually have no cheese. And so he goes, like, what about this kind of cheese? What about that kind of cheese? And they really just don't have any cheese.

So we've actually tried to offload some of our inference compute to other cloud providers so that we can use more compute for training. And we get the cheese shop sketch. You know, they'll say, like, well, we'll ask them about what about some, you know, GB300s. Nope, don't have any of those. What about, you know, some GB200s? Nope, don't have any of those. What about some Tfews? Nope. What about some trainees? Nope. What about some, OK, how about some H100s? And they're like, well, we might have some overseas somewhere, and then they'll check and come back and say, nope, we don't have that either. So it's ridiculous.

Yeah. So I don't think we're going to have a demand issue here. And, like, it's not impossible, I'm not saying this will happen, it's not impossible that we will have a six-month payback period for Compute next year.

We're now going to turn to some questions from individual investors that were posted directly onto our public Q&A platform. Since we've talked a lot about compute deployment terrestrially, let's move to a question on V3 sats. So when will capacity gains from V3 satellites actually show up as meaningfully higher speeds and lower latency for users? How many V3 sats are needed before the network feels noticeably better in high-demand areas?

I think we'll need a few hundred V3 satellites for people to really feel the impact. because right now with very few satellites, you'll get an impact, and then 10 minutes later it won't be there. So a few hundred satellites, and I think we can achieve that by mid-next year.

Yeah.

Take number six, which is, can you provide an update on Starbase Louisiana? What's the timeline, and what's your current confidence level in achieving a first Starship launch from the site as early as 2029?

Well, our internal aspiration for first launch from Louisiana is actually in two years. So 28 is our goal. But I think 29 is highly likely. I think we'll be at scale, launching from Louisiana at scale in 29.

I'm highly confident.

Are you ready to wrap?

Yep. Thanks, everyone. This wraps up the Q3 2026 earnings report. Thank you all for tuning in, and we will see you next quarter. Thank you.

Thank you.