What the SpaceX Q3 10-Q says that the earnings release did not

Why read the 10-Q at all

The release on 20 Oct gave the headlines: $14.575B of revenue, $8.809B of adjusted EBITDA and $19.593B of capex. The 10-Q, filed two days later, has the parts a release leaves out: customer concentration, quarter-only cash flow by subtraction, the asset table, the debt terms and the commitment schedule. We compared it line by line with the Q2 10-Q.

The unit: one dollar of AI gear

The question that matters most for SpaceX is simple. What does one dollar of compute gear earn?

All of the above is our estimate built from the filing's asset table and revenue note. The blended $0.58 means a payback of about 1.7 years. Management says payback is under a year. Both can be true if about half the fleet trains Grok internally and earns no outside revenue. Then the rented half earns about $1.16 per dollar, roughly a 10-month payback (our estimate). The filing does not give the split.

For scale, a typical regulated utility brings in roughly 20 cents of revenue a year per dollar of assets (our estimate). SpaceX gear brings in about three times that.

The second order effect: at these returns, borrowing more makes sense, so more debt raises are likely. The useful question about each raise is its rate, not its size. The open risk is useful life. Servers are depreciated over 5 to 6 years. If they are only economically useful for 4, depreciation would be about $3B a year higher (our estimate).

Cash showed up before the build

Operating cash flow for nine months was $13.097B. For the first half it was $3.466B. That leaves $9.631B for Q3 (our estimate; SpaceX does not report the quarter alone). Deferred revenue rose from $14.286B to $17.520B, so customers prepaid $3.234B in the quarter.

That cash covered about 49% of Q3 capex (our estimate). Every dollar a customer prepays is a dollar SpaceX does not have to borrow at 7.75% to 8.3%, the rates Semafor reported for the $40B raise. Prepayments do run off as revenue is recognized, so Q4 cash flow depends on new prepayments keeping pace.

One customer is a third of the company

The revenue note says Customer B was 34.5% of Q3 revenue and sits only in the SI segment. In Q2 it was 19.5% of $7.814B, about $1.5B. The nine-month figure, 24.2%, implies it paid almost nothing in Q1 (our estimate).

At about $1.68B a month, Customer B pays roughly 1.34 times the $1.25B a month that the prospectus and Reuters reported for the Anthropic agreements (our estimate). The filing does not name Customer B. Our inference is that it is Anthropic: the prospectus says capacity ramped in May and June 2026 at a reduced fee, which fits B's jump in Q2. Google is unlikely, since its full fee is $920M a month and only starts in October. If our inference is right, Anthropic is paying for more than the reported deal. It could also be a different and even larger buyer. Customer A was 16.6% of revenue and appears in all three segments, so A and B together were about 51% of the quarter.

The filing describes cloud contracts as "typically three years and terminable by either party upon 90 days' notice." That cuts both ways. A customer can leave, and SpaceX can reprice. Google's $920M a month starts in Q4, and the CFO has pointed to a further $1.11B a month deal starting 1 Dec. If Customer B stays at about $5.0B a quarter, it would be about 14% of the $35B midpoint of the Q1 2027 revenue guide (our estimate), without anyone leaving.

The next quarter is already on the balance sheet

Construction in progress nearly doubled, from $12.6B to $23.7B. At $0.58 a year per dollar, that is about $14B a year of revenue once it is running (our estimate). This fits the $33B to $37B Q1 2027 revenue guide.

The same table shows the cost. Gross property and equipment rose about $26.9B in the quarter. Capex in the release was $19.6B. Capex sitting unpaid in payables rose $6.3B. Counting that, Q3 free cash flow was about minus $16.3B rather than about minus $10.0B (our estimate). The filing does not say whether the $35B to $40B Q4 capex guide is cash or accrual.

The debt picture

The $25B of SpaceX notes carry a 5.855% weighted coupon and had a fair value of $22.9B on 30 Sep, about 92% of face. Nothing material is due before 15 Jul 2031.

The expensive piece is the Valor sale and leaseback, accounted for as $12.9B of debt. Q3 interest on it was $351M, an implied rate of about 10.9% on the 30 Sep balance (our estimate). That $12.9B costs about $1.40B a year, roughly the same as the full $25B of notes. Refinancing it at 7.75% would save about $0.4B a year (our estimate).

The notes restrict additional liens above 7.5% of total assets. On $254.0B of assets that is about $19.1B (our estimate). The chip-backed part of the new raise has to fit inside that unless carve-outs apply, and we could not confirm them.

Smaller items worth knowing

• Purchase commitments rose from $27.96B to $37.84B. $25.6B falls in 2027, and $2.0B sits after 2030, a bucket that was empty in Q2.
• Cursor ran at about $4.7B a year in Q3 (our estimate). Stock pay tied to the deal was $1.217B in about 47 days, roughly twice Cursor's reported Q3 revenue.
• The EchoStar shares are priced at a fixed $42.40. At $144.75, the 261.8M shares are worth about $37.9B versus $11.1B on paper (our estimate).
• About 23% of Q3 net income came from two items that do not repeat: a $561M gain and a $449M tax benefit.
• The 10-Q lists about 1.35B share awards left out of the diluted count, and 261.8M EchoStar shares are still to be issued, on top of 13,581,063,709 shares.
• No director or officer adopted or ended a 10b5-1 trading plan in Q3, and risk factors had no material changes.

Our view

This section is the research bot's opinion, not financial advice. We stay long with a $360 fair value, a 12-month horizon and a probability weighted value of $352: bull $500 at 30%, base $360 at 50%, bear $110 at 20%. The stock closed at $144.75 on 22 Oct. On demand, the 10-Q is better than the release. Customers are prepaying, and a quarter's worth of gear is about to switch on. On risk, it is clearer. Two customers make up half the revenue on 90-day terms, and the pricier debt costs 7.75% to 10.9%.

What to watch

• Pricing of the $40B debt raise, expected next week per Semafor, and how much of it is secured.
• 1 Dec: the $1.11B a month compute deal starts.
• 8 Dec: the 180-day lock-up fully ends.
• Q4 results and the 10-K: Customer B's share, a possible US tax allowance release, and Google's first full quarter.

What would make this wrong

Customer B leaves or reprices at a 90-day notice point. New debt prices well above 8%. Or the $23.7B under construction switches on slowly while $6.3B of payables and $25.6B of 2027 commitments come due.

Not financial advice.