SpaceX reliant on Starlink for growth, profit as it heads to Nasdaq

Elon Musk’s SpaceX is known for its reusable rockets and made headlines this year for its costly move into artificial intelligence through its merger with xAI. But while the company is teasing investors ahead of its massive IPO, there’s another piece of its business that’s dwarfing the rest in terms of growth and profits: Starlink.

long awaited prospectus SpaceX on Wednesday He said the connectivity unit, which consists mainly of Starlink, generated $11.39 billion in revenue last year and accounted for 61% of total sales. This figure increased to 69 percent in the first quarter of this year.

Additionally, Starlink is the company’s profit engine. It was the only profitable division, generating $4.42 billion in revenue last year; Its rocket launch unit, which includes contracts with NASA and the Department of Defense, lost $657 million, and its artificial intelligence division had a deficit of $6.35 billion.

Starlink provides global high-speed internet coverage using a constellation of more than 10,200 satellites in low Earth orbit, a region of space 1,200 miles above the Earth’s surface. Since launching its first batch of satellites in 2019, Starlink has emerged as a leader among space internet providers. It is now available on all seven continents and in more than 160 countries.

Musk, the richest person in the world, has ambitions of colonizing Mars and even has a large incentive payment plan tied to his ability. It also wants to build orbital data centers and has visions of becoming a key player in the artificial intelligence race currently led by OpenAI, Anthropic and. Google.

These may or may not happen, but in the meantime, Starlink has a dominant position in the market. Amazon and others are chasing. Starlink’s user base more than doubled to 10.3 million in the first quarter from a year ago. SpaceX earlier this year filed with the Federal Communications Commission to launch up to 1 million satellites into low Earth orbit.

SpaceX launched Starlink in 2015 as a way to leverage the company’s access to space, creating a satellite constellation that can support a powerful internet service. Starlink has been seen for years as a cash cow that could help fund SpaceX’s other costly endeavors.

SpaceX said in its IPO filing that capital expenditures in the first quarter more than doubled from a year earlier to $10.1 billion. The vast majority of these costs ($7.7 billion) were for artificial intelligence.

Starlink has emerged as a popular offering among consumers, but it is also used by dozens of airlines. Unified, Southwest and Hawaiian for offering in-flight wireless internet. Musk in question In December, it was announced that Starlink’s commercial service was “by far” the largest contributor to SpaceX’s revenue.

Starlink entered Brand Finance’s top 500 rankings for the first time in 2026, with an estimated brand value of $5.19 billion.

Competition is increasing. OneWeb, operated by France’s Eutelsat, has a constellation of more than 600 satellites. Amazon It has also launched more than 300 satellites in the past year as it moves closer to launching its Leo service, which will include a constellation of approximately 7,700 satellites.

Jeff Bezos’ Blue Origin also plans to deploy approximately 5,400 satellites starting in the fourth quarter of 2027. China’s Guowang, which has approximately 163 satellites in orbit, aims to create a mega constellation.

In its prospectus, SpaceX listed more than 20 companies, including Amazon and Blue Origin, as competitors to Starlink. viasat, AT&T And T-Mobile. Some competitors are also customers who use SpaceX launches to put their satellites into orbit.

Musk brings Starlink internet service to US federal district government offices While leading DOGE was an effort by the Trump administration to reduce the federal workforce. Governments, charities and non-governmental organizations frequently purchase Starlink terminals and services following natural disasters or other emergencies. SpaceX also operates a secret tier of the Starlink service called Starshield for military use.

While the brand resonates with consumers, it is not universally loved, in part due to Musk’s support of far-right leaders around the world. And some regulators abroad see Starlink as a security risk because it is foreign-owned.

Namibia’s telecommunications regulator in March rejected Application for a business license, saying Starlink does not comply with local ownership rules. Musk, who was born in South Africa and is a US citizen, falsely accused the South African government of not allowing Starlink to operate there because he is white.

South Africa’s Electronic Communications Act requires foreign-owned communications licensees to sell 30% of shares in their local subsidiaries to historically disadvantaged groups. South African regulator ICASA weighs in an offer This will make it easier for SpaceX and other foreign operators of satellite internet services to obtain licenses.

Meanwhile, the Taiwanese government has rejected the deployment of Starlink due to SpaceX not agreeing to a joint venture with a local partner. Finance Times reported. Taiwanese officials have noted Musk’s business ties in China and have called Taiwan “an integral part of China” in previous comments.

Starlink has also become a contentious player in Ukraine after Russia invaded its neighbor in 2022. ReutersMusk ordered SpaceX to actively shut down Starlink broadcasting at a battlefield in Kherson, hindering Ukraine’s efforts to retake the area. SpaceX and Musk denied the news. SpaceX took precautions This year, to stop Russia’s unauthorized use of Starlink to direct some of its long-range drones to attack Ukraine.

SpaceX said in its IPO filing that further expansion of its Starlink business, including satellite deployments and spectrum distribution, is subject to regulatory and licensing approvals.

“We can give no assurance that our applications to renew, modify or expand our authorizations will be granted on a timely basis or in any form or without additional conditions,” the company wrote.

Starlink also faces challenges in retiring and replacing satellites in its megaconstellation. Satellites in geostationary orbit have a lifespan of about 15 years, but Starlink satellites are launched into lower orbit and last about three to five years.

SpaceX said in the risk factors section of its application that space is “inherently hostile” and that Starlink satellites are exposed to harsh conditions in orbit that could cause them to malfunction or malfunction.

Excessive space debris can trigger a condition known as Kessler syndrome, a devastating chain reaction of collisions in space. scientists They cited the increased risk of Kessler syndrome as a reason to object to SpaceX’s proposal to launch 1 million satellites into orbit.

Following SpaceX’s FCC proposal, DarkSky, a nonprofit organization that advocates for reducing light pollution, wrote: an open letter It called on the company to meet “true satellite stealth standards,” conduct an environmental assessment before expanding its constellation, and involve the astronomy and environmental communities in its plans.

SpaceX’s proposal would increase the number of satellites in the sky by “almost 70-fold,” the group wrote. “Without meaningful oversight, this project could permanently change the night sky as we know it,” DarkSky said.

SpaceX has announced plans to build and launch orbital data centers consisting of swarms of satellites equipped with graphics processing units and powered by solar photovoltaics. Earlier this year, Musk said data centers in space would be the cheapest way to train AI, and that would be available within two years, perhaps three at the latest.

Experts say it will take much longer for orbital data centers to become viable because rocket launches are limited in capacity and expensive. Orbital data centers will also need cooling systems and chips that can withstand extreme temperatures as well as protection from radiation.

SpaceX said in the prospectus that it expects to commission space-based data centers as early as 2028. Its long-term vision would call for thousands of rocket launches per year, according to the application.

The company has developed thermal control systems that dissipate heat generated by data centers and said in its filing Wednesday: “We have already solved the most difficult part in the development of AI computing satellites.”

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