Elon Musk Says SpaceX's Revenue This Year Will Be About 90% Commercial
SpaceX CEO Elon Musk stated that approximately 90% of the company's revenue this year will be commercial, with government revenue in the fourth quarter expected to be below 5%. He made this remark in response to claims that "SpaceX does almost all its business with the government," noting that federal spending accounts for about 25% of the U.S. economy, and even selling pencils would see about a quarter sold to the government, indicating that SpaceX is more commercially focused than the average U.S. company.
The structure provided in the filing is more detailed than this statement. Revenue in 2025 is projected to be $18.67 billion, with Starlink contributing $11.39 billion, accounting for 61%. Launch services and government spacecraft work are expected to bring in $4.09 billion, or 21.9%. The risk factors in the prospectus specify that about one-fifth of the revenue in 2025 will come from U.S. federal agencies, approximately $3.7 billion. The filing does not disclose the quarterly government revenue percentage for 2026, and Musk's statements about 90% and the fourth quarter being below 5% have not yet appeared in the 10-Q report.
The second quarter represents the first complete quarterly report since going public. Revenue was $7.81 billion, a year-on-year increase of 91.9%. The connectivity business, which includes Starlink, generated $4.29 billion, accounting for 54.9%, with an operating profit of $1.66 billion and a profit margin of 38.6%. AI revenue was $2.56 billion, accounting for 32.8%, with an operating loss of $1.26 billion. Aerospace revenue was $962 million, accounting for 12.3%, with an operating loss of $542 million. The consolidated operating loss was $143 million, with a net loss of $541 million.
Starlink users reached 12 million by the end of June, up from 6 million a year ago and an increase of 1.7 million from the end of the first quarter's 10.3 million. Average monthly revenue per user dropped from $85 a year ago to $66. Consumer subscriptions are the single largest revenue line, generating $2.49 billion for the quarter, accounting for 31.8%. Business and government connectivity brought in $1.81 billion, accounting for 23.1%, which includes airlines, shipping, Starshield, and government programs, not all of which can be counted as commercial. In the second quarter, over $6 billion in multi-year U.S. government Starshield contracts were signed, with revenue recognized based on cost incurred.
In the aerospace segment, external launch services generated $648 million, while government and development projects accounted for $314 million. Starlink accounted for about 79% of Falcon 9 missions, compared to about 54% in 2020. The company stated in the prospectus that it may prioritize its own payloads over additional government contracts and third-party customers. The constellation has exceeded 10,200 broadband and mobile satellites. The backlog of contracts was $47.5 billion at the end of June.
Buyers are divided into three segments. Residential and roaming users pay monthly for Starlink, while business customers include United Airlines, Carnival, Maersk, and John Deere. The government continues to purchase launches, Dragon, and Starshield, but Musk stated that their revenue contribution is about 10% this year, with the fourth quarter below 5%. The driving factors are the doubling of users and AI computing power rentals, not new launch price increases. The operating profit from the connectivity business nearly covers the operating losses from AI and aerospace. Benefiting from this is SpaceX, which can support capital expenditures with subscription cash flow, while external satellite customers still waiting for Falcon launch slots and the average revenue per user for Starlink has dropped by 22% are under pressure.
Capital expenditures in the second quarter were $18.4 billion, about 2.4 times the quarterly revenue, with approximately 86% allocated to AI. The connectivity business had capital expenditures of $1.37 billion. As revenue becomes more commercial, cash is increasingly absorbed by computing contracts. An unnamed AI customer accounted for about 19.5% of the quarterly revenue, with cloud computing rentals generating about $1.6 billion for the quarter. The increase in commercial revenue share has not translated into free cash flow.
Source: Public Information
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SpaceX's early revenue relied on NASA's commercial crew and cargo, and defense launch contracts to sustain Falcon 9 until it became reusable. When Starlink was proposed in 2015, launches were still the main business. The 2025 filing reverses this structure: Starlink at $11.39 billion, launches plus government spacecraft at $4.09 billion, with federal agencies accounting for about one-fifth of revenue. After going public in June 2026, the second quarter saw the connectivity business report an operating profit of $1.66 billion, while aerospace still lost $542 million. Musk's claim of about 90% commercial revenue for the year effectively rewrites the company's original government contract origins with subscription income.
Money flows from user monthly fees into the constellation, then into computing. With 12 million users and an average of $66 per month, the consumer line generated $2.49 billion for the quarter. Capital expenditures in the second quarter were $18.4 billion, with about 86% in AI, while the connectivity business spent only $1.37 billion. AI revenue increased by 247.5% year-on-year to $2.56 billion, but still incurred a loss of $1.26 billion. The order book stood at $47.5 billion at the end of June, with an increase of about $19.8 billion for the quarter, and the new portion consists of cloud service monthly fees that can be terminated with 90 days' notice. The over $6 billion multi-year Starshield contracts are recognized based on cost progress, and the government bucket is still there, but no longer dominates revenue.
In contrast, Rocket Lab and traditional launch providers still rely on government and single missions, while Viasat and Eutelsat depend on enterprise satellite bandwidth. SpaceX prioritizes its launchers for its own constellation, with Starlink missions accounting for about 79% of Falcon 9 launches, pushing external customers to 2028 or 2029. The current position is one of control: launch capacity primarily serves its own network, and network cash flow supports AI losses. The valuation post-IPO has been suggested to exceed $2 trillion, buying into this cross-subsidy rather than a one-time launch quote.
This is a restructuring of the industry chain. Rockets were originally sold to government and commercial customers by weight; now, the same Falcon first launches its own satellites and then sells bandwidth monthly to households, airlines, and fleets. The government has shifted from being the largest buyer to accounting for less than 10% of revenue, with pricing power shifting from launch contracts to terminal monthly fees and computing rentals. The average monthly revenue has dropped from $85 to $66, indicating that bandwidth is being used to exchange for users. Profits remain in the connectivity business, capital expenditures are focused on AI, and while the share of commercial revenue increases, the group still operates at a loss.
ABAB News · Cognitive Laws
Once subscriptions exceed contracts, the company no longer acts like a contractor.
Profitable businesses often pay the bills for unprofitable ones.
A decrease in government share does not mean cash is free.