SpaceX CFO: New Compute Deal Puts Company Closer to $100B ARR Goal

Space Exploration Technologies (NASDAQ:SPCX), aka SpaceX, continues to make history. The rocket launch, satellite, and artificial intelligence (AI) company had an initial public offering (IPO) for the record books, raising $85.7 billion in its public debut, with its market cap surging past $2 trillion on its first day of trading.

So, when the company makes an assertion, investors should pay attention. When SpaceX reported its results earlier this month, the company made a stunning pronouncement. CFO Bret Johnsen said SpaceX was "expecting to reach $100 billion-plus" in annual recurring revenue (ARR) by December 2026. CEO Elon Musk went even further, saying, "To be clear, the $100 billion ARR in December is not a question mark. That's what we'd achieve if we basically did nothing."

Elon Musk is no stranger to bold claims, but a recent revelation by Johnsen (and a little number-crunching) suggests the company may be closer to achieving that goal than many investors might think.

Image source: The Motley Fool.

The hits keep coming

At a technology conference late last week, Johnsen doubled down on the company's audacious forecast, revealing that SpaceX had secured another hosting deal worth more than $1.1 billion per month, bringing total new ARR to $13.3 billion.

Johnsen went on to say that the company benefits from its partnership with Nvidia, exclusive supplier of the graphics processing units (GPUs) that power its data centers. This gives SpaceX a keen advantage, allowing it to deploy compute capacity more quickly than rivals and helping it "take advantage of an unprecedented demand environment."

"We're on track, or we believe we're on track to hit $100 billion ARR," Johnsen said. He went on to say he has "even more conviction" that SpaceX can hit its goal.

Doing the math reveals that the company is closer to hitting that benchmark than you might think.

Paint by numbers

The past few months have been lucrative for xAI, the company's AI segment. Recent deals -- all reached in the past several months -- highlight the progress SpaceX has made so far:

• Anthropic -- $1.25 billion per month, totaling $15 billion ARR
• Alphabet -- $920 million per month, totaling $11.04 billion ARR
• Undisclosed customer -- $1.1 billion per month, totaling $6.7 billion
• Undisclosed customer -- $1.11 billion per month, totaling $13.4 billion ARR

Those four deals alone add up to roughly $46.1 billion in ARR. But that's just the beginning.

While xAI is doing much of the heavy lifting, it isn't the only contributor. SpaceX announced its acquisition of popular AI coding company Cursor in mid-August, reportedly bringing ARR of roughly $4 billion to the table.

Let's not forget the Starlink satellite broadband and connectivity segment, which generated revenue of $4.3 billion in Q2, or ARR of $17.2 billion.

Then there's the SpaceX launch business, which had roughly $4 billion in ARR at the end of Q2.

The total existing ARR across all sources is about $71.3 billion, putting SpaceX within striking distance of meeting the company's ARR goal by December.

More to come?

If SpaceX is indeed able to achieve its goal, it would be a notable accomplishment, but just the first of many.

Musk noted during the Q2 earnings call that SpaceX has revised its financial projections and now expects to reach $1 trillion in revenue by 2030, down from 2031. SpaceX is planning to launch Starship flight 14 -- its super-heavy lift rocket -- next week, pending regulatory approval. The launch will carry 26 V3 Starlink satellites into orbit, if all goes well.

Each successive achievement will give way to the next, and missing any one of those goals could send the stock reeling. The past few months have clearly illustrated the potential for volatility. Moreover, SpaceX isn't yet profitable, largely due to the heavy investment required to get Starship -- and ultimately data centers -- into orbit.

The stock is currently selling for 96 times sales, so there's already a lot of growth baked into SpaceX stock. While there's plenty to like, investors should proceed with caution.

Danny Vena, CPA has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.