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First major test for whether Starlink will be here for the long haul

Monday, May 13, 2024

Is Starlink earning enough money to keep the business going? One analyst firm thinks so; it projects that SpaceX's satellite internet business is now "self-sustaining," with Starlink revenues projected to reach $6.6 billion this year.

The estimate comes from Quilty Space, which developed a model that calculates Starlink's earnings potential since SpaceX, a private company, doesn't publicly reveal revenue and profits. Quilty estimates that Starlink has reached “free cash flow positive,” meaning it’s making enough money to cover all its operating expenses and investments, with some cash left over.

“And in fact, they are quite profitable on an EBITDA basis (at $3.8 billion)," Justin Cadman, co-CEO for Quilty Space, said during a webinar about the report. "With this, the business is now self-sustaining. That's the first major test for whether Starlink will be here for the long haul."

In November, SpaceX CEO Elon Musk said SpaceX and Starlink had "achieved break-even cash flow," without elaborating.

The Quilty estimate adds that SpaceX will likely spend $3.1 billion this year on capital expenditures, which will involve building and launching hundreds of additional Starlink satellites while developing the ground infrastructure to support them. In addition, the company is projected to spend another $2.3 billion this year to maintain and operate the Starlink service.

However, according to Cadman, SpaceX is no longer taking a loss on Starlink dish sales. In 2021, the company said Starlink dishes initially cost $3,000 to produce; that later dropped to $1,300. Cadman now says SpaceX is likely breaking even or making a small profit in the US.

"Furthermore, they’re now in the enviable position, where with free cash flow positive results, they can start to experiment with other means of potentially accelerating revenue growth through programs like incentives and rentals and other types of equipment programs,” Cadman added.

By: DocMemory
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