SPACE EXPLORATION TECHNOLOGIES CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our final prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933 (the “Prospectus”) on June 12, 2026 in c onnection with our initial public offering, and “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results or outcomes could differ materially from those discussed in the forward-looking statements. You should review the section titled “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report on Form 10-Q, as well as the section titled “Risk Factors” in the Prospectus for a discussion of factors that could cause actual results or outcomes to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q . Overview We design, manufacture, launch, and operate products and services built on cutting-edge technologies, including the world’s most advanced rockets and spacecraft. We safely and reliably transport astronauts, satellites, and other payloads on missions that benefit life on Earth. We have three reportable segments in our vertically integrated innovation engine: Space, Connectivity, and AI. In our Space segment, we design, manufacture, and launch reusable rockets to provide high cadence, reliable, and affordable access to space at scale. In our Connectivity segment, we operate a worldwide high-speed, low-latency broadband data and communications network powered by over 10,200 Starlink broadband and mobile satellites in Low-Earth Orbit, delivering connectivity to millions of consumer, enterprise, and government customers across 167 countries, territories, and other markets. In our AI segment, we operate a highly vertically integrated AI platform spanning our truth-seeking frontier model Grok, AI solutions for consumer and enterprise customers, X—our real-time information, entertainment, and free speech platform—and AI computational infrastructure. Initial Public Offering In June 2026, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 638.9 million shares of its Class A common stock at a public offering price of $135.00 per share, including the full exercise of the underwriters’ over-allotment option, which resulted in net proceeds of $85,675 million after deducting the underwriting commissions and offering costs of $575 million. The underwriting commissions and offering costs are presented in shareholders’ equity as a reduction of the net proceeds received from the IPO. Cursor Merger In April 2026, the Company entered into an option agreement (“Cursor Option Agreement”) providing for the right, but not the obligation, to acquire Anysphere, Inc., a San Francisco-based private software company doing business as Cursor (“Cursor”). The Cursor Option Agreement generally provided that the Company may exercise the call option at any time during the 30-day period following the earlier of (i) seven trading days following the completion of the Company’s IPO and (ii) September 30, 2026. Exercise of the call option was in the Company’s sole discretion and subject to further approval by the board of directors. Cursor was also subject to certain exclusivity obligations under the option agreement. The consideration for the acquisition of Cursor would consist of shares of Class A common stock based on an implied equity value of Cursor of $60 billion, and the price of Class A common stock that equals the volume-weighted average closing price thereof over the seven consecutive trading days immediately preceding the closing of the acquisition. In June 2026, the Company exercised the call option and entered into an Agreement and Plan of Merger (the “Cursor Merger Agreement”) with Cursor to acquire Cursor (the “Cursor Merger”). The consummation of the Cursor Merger is subject to the satisfaction or waiver of the closing conditions set forth in the Cursor Merger Agreement, including, but not limited to, receipt of requisite regulatory approvals. The Company currently expects the Cursor Merger to close during the third quarter of 2026. 34 Table of Contents Key Business Metrics We use the following key business metrics to evaluate our business, measure our performance, identify trends, formulate business plans, and make strategic decisions. Space In our Space segment, we use mass to orbit and launches as key business metrics to measure our scale and throughput. Mass to orbit and launches generally grow more rapidly than Space segment revenue because these metrics include our internal constellation deployments from which we do not recognize inter-segment revenue. Mass to Orbit : Mass to orbit is the total kilograms of payload that we deploy to orbit in a given period, and is a key indicator of SpaceX’s capacity and scalability that supports Space revenue and drives expansion across our Connectivity and AI segments. We calculate this metric by summing verified mass, including Starlink satellites, customer payloads, and development cargo, from all successful orbital and flight tests. This measure excludes failed or scrubbed attempts. Three Months Ended Six Months Ended (in metric tons) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Mass to orbit (1) 485 652 1,041 1,102 of which, attributable to customer payloads 87 88 132 163 of which, attributable to internal payloads 397 563 908 938 __________________ (1) Amounts presented may not add up to the corresponding totals due to rounding. Launches : Launches are a key measure of our operational scale, which in turn supports our revenue growth and mission to expand humanity’s presence in space. Launches in a period represent the sum of all successful orbital and flight tests across our rockets, including internal Starlink deployments, development tests, and launches for our third-party customers, and excluding any cancellations or scrubs that occurred in that period. We allocate a significant amount of launch capacity to our Connectivity segment, and expect to allocate a significant amount to our AI segment in the future. Our Space segment revenue only reflects our customer launches and customer activities. Three Months Ended Six Months Ended (number) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Falcon launches (1) 37 45 77 81 of which, customer launches 10 9 17 21 of which, internal launches 27 36 60 60 Starship launches (1) 1 1 1 3 __________________ (1) We designate a launch as a “customer launch” if an external customer payload constitutes the primary payload (i.e., where the principal objective is to deliver the customer payload) and the mission parameters (e.g., launch window, orbital parameters, mission profile) are designed around the primary payload’s requirements. To date, all Starship launches have been classified as internal. Connectivity In our Connectivity segment, we view Starlink subscribers and Starlink Subscriber ARPU as key business metrics to evaluate our growth and monetization. Starlink Subscribers : We define a Starlink subscriber as a unique service line that is directly assigned to a Starlink.com account registered to a person or entity that does not have a direct, negotiated agreement with the Starlink sales team. A service line is an individual instance of Starlink broadband internet service provisioned under a subscription plan, generally associated with a specific Starlink terminal or group of terminals, and billed according to Starlink’s service plans and terms of service. The number of service lines is distinct from the number of unique devices, account holders, end users or physical persons. An individual, household, or business may share a single service line among multiple end-users. Likewise, an individual, household, or business may maintain multiple service lines (e.g., both a residential service line and a separate roam service line, which would be defined as two separate service lines and therefore two Starlink subscribers). We use this measure to assess the adoption of Starlink as we expand within and across geographies and business segments. Starlink subscribers includes both personal (e.g., residential and roam) and business (e.g., local priority and global priority) subscription plans, but does not include managed enterprise and government customers with contracts in domains including aviation, maritime, land 35 Table of Contents mobility, fixed sites, and government entities. We calculate Starlink subscribers for a period as the number of unique service lines at the end of the period. As of (in millions) June 30, 2026 June 30, 2025 Starlink subscribers 12.0 6.0 Starlink Subscriber ARPU : We calculate ARPU as service revenue generated from Starlink subscribers during the period divided by (i) the average number of Starlink subscribers during the period and by (ii) the number of months in the period. Three Months Ended Six Months Ended (dollars per month) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Starlink ARPU $66 $85 $66 $85 AI Nameplate Compute Draw : We calculate nameplate compute draw for a period as the number of GPUs installed in our data centers at the end of the period multiplied by their respective all-in power draw. Nameplate compute draw reflects installed capacity and does not represent actual power consumption or utilization. It does not include power we install and use for our supporting infrastructure such as cooling systems, power distribution losses, lighting, security systems, or facility-level overhead. We use this metric to assess our ability to deploy, scale, and monetize compute capacity. As of (in gigawatts) June 30, 2026 June 30, 2025 Nameplate compute draw 1.4 0.4 Components of Results of Operations Description of Our Segments Space Revenue - Space Space segment generates revenue primarily through (i) Launch Services for the deployment of payloads to their intended orbits for both commercial and government customers utilizing Falcon 9 and Falcon Heavy, and (ii) Launch and Development for the development of spacecraft and provision of launch and mission services for government agency space programs utilizing Falcon 9, Falcon Heavy, Starship, and Dragon. Launch Services revenue is derived from fixed-price contracts that range from one to five years. Launch and Development revenue is derived from fixed-price contracts that can range from one to fourteen years. The Company recognizes Launch Services revenue at a point in time, due to the interchangeability of flight hardware and minimal unique engineering costs. Revenue and costs are deferred and not recognized until upon the launch or deployment of the customer’s payload to their intended orbit. The Company recognizes Launch and Development revenue over time as the Company’s performance on the contract creates an asset with no alternative use and the Company has an enforceable right to payment for performance to date. The Company measures progress on these contracts using the cost-to-cost input method, which the Company believes represents the most appropriate measure towards satisfaction of its performance obligation. For launches of our Starlink satellites, the Company does not recognize any inter-segment revenue, rather those launch costs are capitalized in satellites in Property, plant, and equipment, net. We allocate a significant amount of launch capacity to our Connectivity segment, and expect to allocate a significant amount to our AI segment in the future. Our Space segment revenue only reflects our customer launches and customer activities. 36 Table of Contents Revenue from Launch Services recognized at point in time and revenue from Launch and Development recognized over time as a percentage of total Space segment revenue are as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Launch Services 67.4 % 65.7 % 61.9 % 65.5 % Launch & Development 32.6 % 34.3 % 38.1 % 34.5 % Space 100.0 % 100.0 % 100.0 % 100.0 % Expenses - Space Cost of Revenue Space segment’s cost of revenue includes second stages flown related to the Company’s Falcon 9 and Falcon Heavy launches, launch operations and overhead, depreciation (inclusive of booster, Merlin engine, and fairing depreciation), employee compensation costs (including salaries, benefits, and share-based compensation) for our operations teams, launch testing and overhead, engineering costs, inventory excess and obsolescence, shared costs incurred in the production of launch hardware, and ongoing product support. Research and Development Space segment’s research and development (“R&D”) expenses mainly relate to the development, build, and testing of Starship. Starship costs consist of test flight hardware, Raptor engines, employee compensation costs (including salaries, benefits, and share-based compensation), tooling and equipment expenses, depreciation for R&D equipment, and allocated overhead. R&D also includes certain expenses related to the development of features and modules created through engineering services for the Company’s Falcon vehicles, where the Company retains the associated intellectual property. Selling, General, and Administrative Space segment’s selling, general, and administrative (“SG&A”) expenses include allocated employee compensation costs (including salaries, benefits, and share-based compensation) for our sales, facilities, legal, finance, information technology, human resources, and other administrative employees, depreciation, and corporate aircraft costs. Impairment Space impairment includes impairment losses on fixed assets due to anomalies on the Company’s flight vehicles and launch sites, which occur outside our normal business operations. Connectivity Revenue - Connectivity Connectivity segment generates revenue from (i) the broadband and mobile connectivity services provided through Starlink and (ii) the sale of the Starlink Kits (inclusive of the terminal). The Company provides connectivity services and Starlink Kits to consumers as well as enterprise and government customers. The Company recognizes revenue from broadband and mobile connectivity services over time as the customer simultaneously receives and consumes the benefits provided. The Company generates service revenue from (i) fixed-price services that require advance or recurring monthly payments by the customer or (ii) variable-priced services based on actual data consumption. The amounts received from customers for advanced payments for broadband and mobile connectivity services are recognized either ratably over the subscription term or based on actual data consumption. The Company’s broadband contracts are generally month-to-month and the revenue recognized for these recurring consumer customers is equal to the amount billed in that month. The Company’s mobile connectivity agreements are generally multi-year contractual obligations that range from one to five years, although the customer can generally terminate at any time. The Company recognizes revenue over time for certain contracts related to our Starshield business that are multi-year in nature. For revenue that is recognized over time, we use the cost-to-cost input method. The Company records revenue based upon costs (such as materials and labor hours) incurred to date relative to the total estimated cost at completion. The Company records revenue for the Starlink Kit upon delivery to the customer, or in the instance of certain enterprise customers, when it is installed. Starlink Kit revenue is reported net of sales returns, credits, and chargebacks. 37 Table of Contents Expenses - Connectivity Cost of Revenue Connectivity segment’s cost of revenue includes depreciation (inclusive of launch, satellite, and ground infrastructure costs), Starlink Kit costs, shipping and handling costs, ground operating expenses, employee compensation costs (including salaries, benefits, and share-based compensation) for our engineering and operations teams, payment processor fees, warranty expense, inventory excess and obsolescence, and customs and duties. Research and Development Connectivity segment’s R&D expenses mainly relate to the development, build, and testing of our next-generation satellites, Starlink Kits, and ground infrastructure. These costs include employee compensation costs (including salaries, benefits, and share-based compensation), contractor compensation expenses, equipment lease expenses, depreciation for R&D equipment, and allocated overhead. Selling, General, and Administrative Connectivity segment’s SG&A expenses include allocated employee compensation costs (including salaries, benefits, and share-based compensation) for our sales, facilities, legal, finance, information technology, human resources, and other administrative employees, licensing and regulatory fees, marketing expenses, depreciation, and bad debt expense. AI Revenue - AI AI segment generates revenue from (i) the sale of ad products displayed on its X platform, and (ii) providing AI solutions and infrastructure, which includes subscription-related offerings, data licensing arrangements, and API access to Grok models, as well as the sale of cloud services. Both services are offered to consumer and enterprise customers. Revenue for advertising services is recognized in the period when advertising is delivered as evidenced by a person engaging with an ad on the Company’s platforms in a manner satisfying the types of engagement selected by the advertisers. The Company’s contract terms for advertising services are typically cancellable short-term arrangements. We experience seasonality in our advertising revenues. Overall advertising spend tends to be highest in the fourth quarter of each year due in large part to end-of-year advertiser spending and lowest in the first quarter of each year. Revenue for AI solutions and infrastructure includes: (i) premium subscriptions on X and Grok which is recognized ratably over the period of the subscription term (ranging from month-to-month to one year), (ii) data licensing revenue which is generally recognized ratably over the period (from month-to-month to two years) in which the Company provides data as the customer consumes and benefits from the use of the licensed data, (iii) revenue from providing API access to Grok models recognized ratably over the contract term (typically month-to-month or up to one year) for stand-ready access or as services are consumed for usage based arrangements, and (iv) revenue from cloud services based on fixed monthly services fee which is recognized ratably over the contract term. Expenses - AI Cost of Revenue AI segment’s cost of revenue includes infrastructure costs, revenue share expenses, payment processor fees, payments to creators, amortization of acquired intangible assets, and allocated labor and overhead costs. Infrastructure costs consist primarily of costs related to data center facilities, including lease and hosting costs, related support, maintenance, energy, and bandwidth costs, depreciation of servers and networking equipment, public cloud hosting costs, and employee compensation costs (including salaries, benefits, and share-based compensation) for our operations teams. Research and Development AI segment’s R&D expenses mainly relate to the training of Grok, our leading frontier model, development, build, and testing of our next-generation AI-enabled products and data center costs to train AI-enabled products. These costs include cloud computing expenses, employee compensation expenses (including salaries, benefits, and share-based compensation), power generation costs, and depreciation of data center assets, including processors, equipment lease expenses, and networking equipment. 38 Table of Contents Selling, General, and Administrative AI segment’s SG&A expenses consist primarily of employee compensation expenses (including salaries, benefits, and share-based compensation) for our sales, sales support, marketing, finance, legal, information technology, human resources and other administrative employees. In addition, SG&A expenses include fees and costs for professional services, including consulting, content moderation, third-party legal and accounting services and facilities costs and other supporting overhead costs that are not allocated to other departments. Restructuring Charges AI restructuring charges are the result of the acquisition of Twitter in October 2022 by X Holdings. The charges include workforce restructuring for former Twitter employees, as well as impairment and early termination penalties as a result of consolidation of Twitter’s various office leases. Other Corporate Expenses Interest Expense Interest expense includes interest expense related to our borrowings, amortization of associated debt discount and issuance costs, undrawn fees, and finance leases. Interest expense is reflected net of capitalized interest. Interest Income Interest income includes interest income earned on cash and cash equivalents and marketable securities, and dividend income from our investments in mutual funds. Other Income (Expense), Net Other income (expense), net consists of gain or loss on digital assets, gain or loss on foreign currency transactions, and loss on extinguishment of debt. Provision for (Benefit from) Income Taxes The provision for (benefit from) income taxes consists primarily of income taxes in certain federal, state, local and foreign jurisdictions in which we conduct business. Foreign jurisdictions typically have different statutory tax rates from those in the United States. Accordingly, our effective tax rates may vary depending on the relative proportion of foreign income to domestic income, generation of tax credits, changes in the valuation allowance of our net deferred tax assets, and changes in tax laws. 39 Table of Contents Comparison of the Three and Six Months Ended June 30, 2026 and June 30, 2025 Consolidated Results of Operations The following table sets forth our consolidated financial statements data for the periods indicated: Three Months Ended June 30, 2026 vs. 2025 Change Six Months Ended June 30, 2026 vs. 2025 Change (in millions) 2026 2025 $ Change % Change 2026 2025 $ Change % Change Revenue $ 7,814 $ 4,071 $ 3,743 91.9 % $ 12,508 $ 8,138 $ 4,370 53.7 % Costs and expenses Cost of revenue 3,495 2,282 1,213 53.2 % 5,883 4,244 1,639 38.6 % Research and development 3,548 1,958 1,590 81.2 % 7,062 3,515 3,547 100.9 % Selling, general, and administrative 912 606 306 50.5 % 1,658 1,099 559 50.9 % Restructuring charges (credits) 2 190 (188) (98.9) % (9) 194 (203) NM Impairment — 5 (5) NM — 29 (29) NM Total costs and expenses 7,957 5,041 2,916 57.8 % 14,594 9,081 5,513 60.7 % Loss from operations (143) (970) 827 (85.3) % (2,086) (943) (1,143) 121.2 % Interest expense (629) (411) (218) 53.0 % (1,293) (858) (435) 50.7 % Interest income 340 98 242 246.9 % 553 215 338 157.2 % Other income (expense), net (86) 413 (499) NM (1,962) 202 (2,164) NM Loss before income taxes (518) (870) 352 (40.5) % (4,788) (1,384) (3,404) 246.0 % Provision for income taxes 23 138 (115) (83.3) % 29 152 (123) (80.9) % Net loss $ (541) $ (1,008) $ 467 (46.3) % $ (4,817) $ (1,536) $ (3,281) 213.6 % _________________ NM — Absolute percentage comparisons from positive to negative values or to zero values are considered not meaningful. Revenue Revenue for the three months ended June 30, 2026 increased by $3,743 million, or 91.9%, compared to the three months ended June 30, 2025. This increase was due to an increase in revenue from our AI segment of $1,824 million primarily from new AI infrastructure contracts, an increase in revenue from our Connectivity segment of $1,703 million as our Starlink consumer subscribers and enterprise and government customer base continued to grow, as well as an increase in revenue from our Space segment of $216 million primarily driven by customer mix and an additional customer launch. Revenue for the six months ended June 30, 2026 increased by $4,370 million, or 53.7%, compared to the six months ended June 30, 2025. The increase was driven by an increase in revenue from our Connectivity segment of $2,486 million as our Starlink consumer subscribers and enterprise and government customer base continued to grow as well as an increase in revenue from our AI segment of $1,914 million primarily from new AI infrastructure contracts. Cost of Revenue Cost of revenue for the three months ended June 30, 2026 increased by $1,213 million, or 53.2%, compared to the three months ended June 30, 2025. This increase was due to an increase in costs in our Connectivity segment of $659 million driven primarily by an increase in depreciation related to the number of satellites placed into orbit and an increase in Starlink Kit production spend as our Connectivity revenue grew, and a $555 million increase in costs in our AI segment primarily due to an increase in infrastructure costs allocated to cost of revenue due to new AI infrastructure revenue contracts. Cost of revenue for the six months ended June 30, 2026 increased by $1,639 million, or 38.6%, compared to the six months ended June 30, 2025. This increase was driven by an increase in costs in our Connectivity segment of $1,096 million driven primarily by an increase in depreciation related to the number of satellites placed into orbit and an increase in Starlink Kit production spend as our Connectivity revenue grew, and a $560 million increase in costs in our AI segment primarily due to an increase in infrastructure costs allocated to cost of revenue due to new AI infrastructure revenue contracts, partially offset by a decrease in our Space segment of $17 million due to fewer customer launches. 40 Table of Contents Research and Development Research and development expense for the three months ended June 30, 2026 increased by $1,590 million, or 81.2%, compared to the three months ended June 30, 2025. This increase was primarily due to higher costs in our AI segment of $1,056 million driven by higher infrastructure and cloud computing costs as a result of our AI data center expansions, and higher costs from our Space segment of $383 million driven by increased investment in our Starship vehicle and related facilities. Research and development expense for six months ended June 30, 2026 increased by $3,547 million, or 100.9%, compared to the six months ended June 30, 2025. This increase was primarily due to higher costs in our AI segment of $2,527 million driven by higher infrastructure and cloud computing costs as a result of our AI data center expansions, and higher costs from our Space segment of $787 million driven by increased investment in our Starship vehicle and related facilities. Selling, General, and Administrative Selling, general, and administrative expense for the three months ended June 30, 2026 increased by $306 million, or 50.5%, compared to the three months ended June 30, 2025. This increase was due to higher costs for our AI segment of $134 million primarily driven by an increase in employee compensation expenses (including salaries, benefits, and share-based compensation) as our AI business grew rapidly, and an increase in costs for our Connectivity segment of $160 million primarily driven by an increase in marketing and international expansion costs. Selling, general, and administrative expense for the six months ended June 30, 2026 increased by $559 million, or 50.9%, compared to the six months ended June 30, 2025. This increase was due to higher costs for our AI segment of $296 million primarily driven by an increase in employee compensation expenses (including salaries, benefits, and share-based compensation) as our AI business grew rapidly, and higher costs of $269 million in our Connectivity segment primarily driven by marketing and international expansion. Restructuring Charges (Credits) Restructuring charges (credits) for the three and six months ended June 30, 2026 decreased by $188 million and $203 million, respectively, compared to the corresponding prior year periods primarily due to a change in estimated settlement amounts in 2025 for former Twitter employees as part of the workforce reduction program implemented in 2022. Loss from Operations Loss from operations for the three months ended June 30, 2026 decreased by $827 million, or 85.3%, compared to the three months ended June 30, 2025, and loss from operations for the six months ended June 30, 2026 increased by $1,143 million, or 121.2%, compared to the six months ended June 30, 2025 driven by the factors described above. Interest Expense Interest expense for the three months ended June 30, 2026 increased by $218 million, or 53.0%, compared to the three months ended June 30, 2025. This increase was primarily due to additional debt raised by the Company and other financing arrangements entered into during the three months ended June 30, 2026 by our AI segment. Interest expense for the six months ended June 30, 2026 increased by $435 million, or 50.7%, compared to the six months ended June 30, 2025. This increase was primarily due to additional debt raised by the Company and by xAI prior to its merger with the Company, and other financing arrangements entered into during the six months ended June 30, 2026 by our AI segment. Interest Income Interest income for the three and six months ended June 30, 2026 increased by $242 million, or 246.9%, and $338 million, or 157.2%, respectively, compared to the prior periods primarily due to an increase in interest income earned from cash equivalents and marketable securities following the deployment of proceeds from the IPO and the SpaceX Notes issuance. Other Income (Expense), Net Other income (expense), net for the three months ended June 30, 2026 decreased by $499 million compared to the three months ended June 30, 2025. This decrease was primarily due to unrealized loss on digital assets, partially offset by gain on foreign currency exchange rates. Other income (expense), net for the six months ended June 30, 2026 decreased by $2,164 million compared to the six months ended June 30, 2025. This decrease was primarily due to the loss on extinguishment of debt and unrealized loss on digital assets. 41 Table of Contents Provision for Income Taxes Provision for income taxes for the three and six months ended June 30, 2026 decreased by $115 million, or 83.3%, and $123 million, or 80.9%, respectively, compared to the prior periods primarily due to a change in the valuation allowance on U.S. R&D credits during 2025. Net Loss Net loss for the three months ended June 30, 2026 decreased by $467 million, or 46.3%, compared to the three months ended June 30, 2025, and net loss for the six months ended June 30, 2026 increased by $3,281 million, or 213.6%, compared to the six months ended June 30, 2025 driven by the factors described above. Segment Results Space Three Months Ended June 30, 2026 vs. 2025 Change Six Months Ended June 30, 2026 vs. 2025 Change (in millions) 2026 2025 $ Change % Change 2026 2025 $ Change % Change Revenue $ 962 $ 746 $ 216 29.0 % $ 1,581 $ 1,611 $ (30) (1.9) % Costs and expenses Cost of revenue 329 330 (1) (0.3) % 610 627 (17) (2.7) % Research and development 1,076 693 383 55.3 % 2,006 1,219 787 64.6 % Selling, general, and administrative 99 87 12 13.8 % 169 175 (6) (3.4) % Impairment — 5 (5) NM — 29 (29) NM Total costs and expenses $ 1,504 $ 1,115 $ 389 34.9 % $ 2,785 $ 2,050 $ 735 35.9 % Loss from operations $ (542) $ (369) $ (173) 46.9 % $ (1,204) $ (439) $ (765) 174.3 % _________________ NM — Absolute percentage comparisons from positive to negative values or to zero values are considered not meaningful. Revenue Revenue for the three months ended June 30, 2026 increased $216 million, or 29.0%, compared to the three months ended June 30, 2025. This increase was primarily driven by an increase in Launch Services revenue of $158 million and an increase in Launch and Development revenue of $58 million due to an increase in customer launches period over period from 9 for the three months ended June 30, 2025 to 10 for the three months ended June 30, 2026, and a favorable customer mix shift. Revenue for the six months ended June 30, 2026 decreased by $30 million, or 1.9%, compared to the six months ended June 30, 2025. This decrease was primarily driven by a decrease in customer launches period over period from 21 for the six months ended June 30, 2025 to 17 for the six months ended June 30, 2026. Launch Services revenue decreased by $78 million, partially offset by an increase in Launch and Development revenue of $48 million primarily due to timing of work performed on government contracts. Cost of Revenue Cost of revenue for the three months ended June 30, 2026 was flat compared to the three months ended June 30, 2025. This was primarily driven by higher customer and launch overhead costs of $42 million, offset by a decrease in production related costs of $43 million Cost of revenue for the six months ended June 30, 2026 decreased by $17 million, or 2.7%, compared to the six months ended June 30, 2025. This decrease was primarily due to a decrease in customer launches and timing of work on government contracts of $21 million. Research and Development Research and development for the three months ended June 30, 2026 increased by $383 million, or 55.3%, compared to the three months ended June 30, 2025. This increase was primarily driven by higher production and engineering costs of $311 million and higher launch and test costs of $73 million to support continued development of the Starship vehicle. 42 Table of Contents Research and development for the six months ended June 30, 2026 increased by $787 million, or 64.6%, compared to the six months ended June 30, 2025. This increase was primarily driven by higher production and engineering costs of $653 million and higher launch and test costs of $134 million to support continued development of the Starship vehicle. Selling, General, and Administrative Selling, general, and administrative for the three months ended June 30, 2026 increased by $12 million, or 13.8%, compared to the three months ended June 30, 2025. This increase was primarily due to higher general corporate and travel expenses. Selling, general, and administrative for the six months ended June 30, 2026 decreased by $6 million, or 3.4%, compared to the six months ended June 30, 2025. This decrease was primarily due to lower allocated general and administrative overhead of $30 million, partially offset by an increase in our general corporate and travel expenses of $16 million. Loss from Operations Space loss from operations for the three and six months ended June 30, 2026 increased by $173 million, or 46.9%, and $765 million, or 174.3%, respectively, compared to the prior periods driven by the factors described above. Connectivity Three Months Ended June 30, 2026 vs. 2025 Change Six Months Ended June 30, 2026 vs. 2025 Change (in millions) 2026 2025 $ Change % Change 2026 2025 $ Change % Change Revenue $ 4,291 $ 2,588 $ 1,703 65.8 % $ 7,548 $ 5,062 $ 2,486 49.1 % Costs and expenses Cost of revenue 2,060 1,401 659 47.0 % 3,711 2,615 1,096 41.9 % Research and development 294 143 151 105.6 % 499 266 233 87.6 % Selling, general, and administrative 281 121 160 132.2 % 494 225 269 119.6 % Total costs and expenses $ 2,635 $ 1,665 $ 970 58.3 % $ 4,704 $ 3,106 $ 1,598 51.4 % Income from operations $ 1,656 $ 923 $ 733 79.4 % $ 2,844 $ 1,956 $ 888 45.4 % Revenue Revenue for the three months ended June 30, 2026 increased by $1,703 million, or 65.8%, compared to the three months ended June 30, 2025. This increase was primarily driven by an increase of $764 million in revenue from our consumer subscribers, composed of 101.2% growth in Starlink subscribers, offset by a 22.4% decline in Starlink subscriber ARPU, primarily due to international expansion and the addition of lower priced service plans, as well as an increase of $939 million in our government, aviation, maritime, and other enterprise businesses. Revenue for the six months ended June 30, 2026 increased by $2,486 million, or 49.1%, compared to the six months ended June 30, 2025. This increase was primarily driven by an increase of $1,420 million in revenue from our consumer subscribers, composed of 101.2% growth in Starlink subscribers, offset by a 22.6% decline in Starlink subscriber ARPU, primarily due to international expansion and the addition of lower priced service plans, as well as an increase of $1,066 million in our government, aviation, maritime, and other enterprise businesses. Cost of Revenue Cost of revenue for the three months ended June 30, 2026 increased by $659 million, or 47.0%, compared to the three months ended June 30, 2025. This increase was due to (i) higher depreciation of $226 million primarily from capitalized launch and satellite costs, (ii) higher operating expenses of $158 million mainly driven by customer support and installation costs of $50 million, ground operating costs of $44 million, and payment processor fees of $17 million, and (iii) an increase in Starlink Kit production spend of $148 million to support our Connectivity revenue growth. Cost of revenue for the six months ended June 30, 2026 increased by $1,096 million, or 41.9%, compared to the six months ended June 30, 2025. This increase was due to (i) higher depreciation of $503 million primarily from capitalized launch and satellite costs, (ii) higher operating expenses of $295 million mainly driven by customer support and installation costs of $89 million, ground operating costs of $88 million, payment processor fees of $35 million and engineering costs of $30 million, and (iii) an increase in Starlink Kit production spend of $219 million to support our Connectivity revenue growth. 43 Table of Contents Research and Development Research and development for the three months ended June 30, 2026 increased by $151 million, or 105.6%, compared to the three months ended June 30, 2025. This increase was primarily due to increased spend on our next-generation development of satellites of $90 million, ground equipment of $28 million, and Starlink Kits of $18 million. Research and development for the six months ended June 30, 2026 increased by $233 million, or 87.6%, compared to the six months ended June 30, 2025. This increase was primarily due to increased spend on our next-generation development of satellites of $152 million, ground equipment of $42 million, and Starlink Kits of $25 million. Selling, General, and Administrative Selling, general, and administrative for the three months ended June 30, 2026 increased by $160 million, or 132.2%, compared to the three months ended June 30, 2025. This increase was primarily driven by higher marketing costs of $111 million, higher international expansion costs of $16 million, and higher sales and property taxes of $15 million, partially offset by lower bad debt expense of $13 million. Selling, general, and administrative for the six months ended June 30, 2026 increased by $269 million, or 119.6%, compared to the six months ended June 30, 2025. This increase was primarily driven by higher marketing costs of $191 million, higher international expansion costs of $27 million, and higher sales and property taxes of $21 million, partially offset by lower bad debt expense of $21 million. Income from Operations Connectivity income from operations for the three and six months ended June 30, 2026 increased by $733 million, or 79.4%, and $888 million, or 45.4%, respectively, compared to the prior periods driven by the factors described above. AI Three Months Ended June 30, 2026 vs. 2025 Change Six Months Ended June 30, 2026 vs. 2025 Change (in millions) 2026 2025 $ Change % Change 2026 2025 $ Change % Change Revenue $ 2,561 $ 737 $ 1,824 247.5 % $ 3,379 $ 1,465 $ 1,914 130.6 % Costs and expenses Cost of revenue 1,106 551 555 100.7 % 1,562 1,002 560 55.9 % Research and development 2,178 1,122 1,056 94.1 % 4,557 2,030 2,527 124.5 % Selling, general, and administrative 532 398 134 33.7 % 995 699 296 42.3 % Restructuring charges 2 190 (188) (98.9) % (9) 194 (203) NM Total costs and expenses $ 3,818 $ 2,261 $ 1,557 68.9 % $ 7,105 $ 3,925 $ 3,180 81.0 % Loss from operations $ (1,257) $ (1,524) $ 267 (17.5) % $ (3,726) $ (2,460) $ (1,266) 51.5 % _________________ NM — Absolute percentage comparisons from positive to negative values or to zero values are considered not meaningful. Revenue Revenue for the three months ended June 30, 2026 increased by $1,824 million, or 247.5%, compared to the three months ended June 30, 2025 due to the increase in AI solutions and infrastructure revenue of $1,883 million, partially offset by decrease in advertising revenue of $59 million. The increase in AI solutions and infrastructure was primarily due to an increase in AI infrastructure revenue of $1,600 million as we began to offer cloud services to customers and an increase in Grok and X subscription revenue of $258 million. The decrease in advertising revenue was due to the Company’s transition to a new advertising platform which impacted ad sales for a short period of time. Revenue for the six months ended June 30, 2026 increased by $1,914 million, or 130.6%, compared to the six months ended June 30, 2025 due to the increase in AI solutions and infrastructure revenue of $2,074 million, partially offset by decrease in advertising revenue of $160 million. The increase in AI solutions and infrastructure was primarily due to an increase in AI infrastructure revenue of $1,600 million and an increase in Grok and X subscription revenue of $449 million. The decrease in advertising revenue was due to the Company’s transition to a new advertising platform which impacted ad sales for a short period of time. 44 Table of Contents Cost of Revenue Cost of revenue for the three months ended June 30, 2026 increased by $555 million, or 100.7%, compared to the three months ended June 30, 2025. This increase was primarily driven by an increase in infrastructure and cloud computing costs of $470 million due to more compute costs being allocated to cost of revenue as our AI infrastructure revenue increased, an increase in payment processor fees of $39 million, and an increase in revenue share and content creator fees of $35 million, partially offset by a decrease in employee compensation expenses (including salaries, benefits, and share-based compensation) of $19 million. Cost of revenue for the six months ended June 30, 2026 increased by $560 million, or 55.9%, compared to the six months ended June 30, 2025. This increase was primarily driven by an increase in infrastructure and cloud computing costs of $386 million due to more costs being allocated to cost of revenue as our AI infrastructure revenue increased, an increase in revenue share and content creator fees of $105 million, and an increase in payment processor fees of $55 million, partially offset by a decrease in employee compensation expenses (including salaries, benefits, and share-based compensation) of $13 million. Research and Development Research and development for the three months ended June 30, 2026 increased by $1,056 million, or 94.1%, compared to the three months ended June 30, 2025. This increase was primarily due to higher infrastructure and cloud computing costs of $726 million and higher employee compensation expenses (including salaries, benefits, and share-based compensation) of $180 million associated with the continued build out of our compute infrastructure. Research and development for the six months ended June 30, 2026 increased by $2,527 million, or 124.5%, compared to the six months ended June 30, 2025. This increase was primarily due to higher infrastructure and cloud computing costs of $1,742 million and higher employee compensation expenses (including salaries, benefits, and share-based compensation) of $449 million associated with the continued build out of our compute infrastructure. Selling, General, and Administrative Selling, general, and administrative for the three months ended June 30, 2026 increased by $134 million, or 33.7%, compared to the three months ended June 30, 2025. This increase was primarily due to higher employee compensation expenses (including salaries, benefits, and share-based compensation) of $177 million as we continue to expand our AI business, partially offset by a decrease in legal expenses of $64 million due to a dismissal of litigation against the Company. Selling, general, and administrative for the six months ended June 30, 2026 increased by $296 million, or 42.3%, compared to the six months ended June 30, 2025. This increase was primarily due to higher employee compensation expenses (including salaries, benefits, and share-based compensation) of $325 million as we continue to expand our AI business, partially offset by a decrease in legal expenses of $64 million due to a dismissal of litigation against the Company. Restructuring Charges (Credits) Restructuring charges (credits) for the three and six months ended June 30, 2026 decreased by $188 million and $203 million, respectively, compared to the prior periods. This decrease was primarily due to a change in estimated settlement amounts in 2025 for former Twitter employees as part of the workforce reduction program implemented in 2022. Loss from Operations AI loss from operations for the three months ended June 30, 2026 decreased by $267 million, or 17.5%, compared to the three months ended June 30, 2025 driven by the factors described above. AI loss from operations for the six months ended June 30, 2026 increased by $1,266 million, or 51.5%, compared to the six months ended June 30, 2025 driven by the factors described above. 45 Table of Contents Non-GAAP Financial Measures Management believes that certain financial measures that are not presented in accordance with GAAP provide management and investors with useful supplemental information that provides a meaningful view of our financial condition and results of operations across periods by removing the impact of items that management believes do not directly reflect our ongoing operating performance. Adjusted EBITDA and Segment Adjusted EBITDA are supplemental measures that are not required by or presented in accordance with GAAP. In evaluating our performance as measured by Adjusted EBITDA and Segment Adjusted EBITDA, management recognizes and considers the limitations of these measures. Other companies in our industry may calculate Adjusted EBITDA and Segment Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. Because of these limitations, Adjusted EBITDA and Segment Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss), income (loss) from operations, or any other measure calculated in accordance with GAAP, and should be considered together with our GAAP financial measures and the reconciliations to the corresponding most directly comparable GAAP financial measures set forth in this Quarterly Report on Form 10-Q. Adjusted EBITDA is defined as net income (loss) excluding (i) depreciation and amortization, (ii) share-based compensation, (iii) restructuring charges, (iv) impairments, (v) interest expense, (vi) interest income, (vii) other income (expense), net and (viii) provision for (benefit from) income taxes. Segment Adjusted EBITDA is defined as segment income (loss) from operations excluding (i) depreciation and amortization, (ii) share-based compensation, (iii) restructuring charges, and (iv) impairments. Adjusted EBITDA and Segment Adjusted EBITDA are key performance measures that our management uses to assess our financial performance as well as for internal planning and forecasting purposes. We consider Adjusted EBITDA and Segment Adjusted EBITDA to be meaningful performance measures for investors to evaluate our operating performance and to compare the financial results between periods. The following table sets forth a reconciliation of Net loss, the most directly comparable GAAP measure, to Adjusted EBITDA: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Net loss $ (541) $ (1,008) $ (4,817) $ (1,536) Add (deduct): Depreciation and amortization 2,848 1,526 5,290 2,970 Share-based compensation 831 463 1,470 694 Restructuring charges 2 190 (9) 194 Impairments — 5 — 29 Interest expense 629 411 1,293 858 Interest income (340) (98) (553) (215) Other income (expense), net 86 (413) 1,962 (202) Provision for income taxes 23 138 29 152 Adjusted EBITDA $ 3,538 $ 1,214 $ 4,665 $ 2,944 The following table sets forth a reconciliation of Income (loss) from operations for each segment, the most directly comparable GAAP measure, to Segment Adjusted EBITDA: Three Months Ended June 30, 2026 (in millions) Space Connectivity AI Total Reportable Segments Income (loss) from operations $ (542) $ 1,656 $ (1,257) $ (143) Add: Depreciation and amortization 158 805 1,885 2,848 Share-based compensation 179 136 516 831 Restructuring charges — — 2 2 Segment Adjusted EBITDA $ (205) $ 2,597 $ 1,146 $ 3,538 46 Table of Contents Six Months Ended June 30, 2026 (in millions) Space Connectivity AI Total Reportable Segments Income (loss) from operations $ (1,204) $ 2,844 $ (3,726) $ (2,086) Add: Depreciation and amortization 324 1,588 3,378 5,290 Share-based compensation 324 252 894 1,470 Restructuring charges — — (9) (9) Segment Adjusted EBITDA $ (556) $ 4,684 $ 537 $ 4,665 Three Months Ended June 30, 2025 (in millions) Space Connectivity AI Total Reportable Segments Income (loss) from operations $ (369) $ 923 $ (1,524) $ (970) Add: Depreciation and amortization 146 569 811 1,526 Share-based compensation 125 91 247 463 Restructuring charges — — 190 190 Impairment 5 — — 5 Segment Adjusted EBITDA $ (93) $ 1,583 $ (276) $ 1,214 Six Months Ended June 30, 2025 (in millions) Space Connectivity AI Total Reportable Segments Income (loss) from operations $ (439) $ 1,956 $ (2,460) $ (943) Add: Depreciation and amortization 308 1,078 1,584 2,970 Share-based compensation 233 166 295 694 Restructuring charges — — 194 194 Impairment 29 — — 29 Segment Adjusted EBITDA $ 131 $ 3,200 $ (387) $ 2,944 Liquidity and Capital Resources Our primary sources of liquidity are cash flows generated from operations, our total cash and cash equivalents of $93,522 million as of June 30, 2026, short-term marketable securities of $6,487 million as of June 30, 2026, and borrowings under our credit facilities. As of June 30, 2026, we have $5,000 million available to borrow under the SpaceX Credit Facility. In June 2026, the Company completed its initial public offering (“IPO”), in which the Company issued and sold 638.9 million shares of its Class A common stock at a public offering price of $135.00 per share, including the full exercise of the underwriters’ over-allotment option, which resulted in net proceeds of $85,675 million after deducting the underwriting commissions and offering costs. In June 2026, the Company also raised $25,000 million in the SpaceX Notes, which was partially used to repay the SpaceX Bridge Loan in full. In addition, because we expect a significant portion of our future expenditures to fund growth initiatives, we retain flexibility to adjust spending across segments. For example, if our near-term data center needs decrease in scale or ramp more slowly than expected, including due to global economic, tax, trade or business conditions, we may reduce future capital expenditures in this segment and reallocate those expenditures to other segments based on business priorities and growth opportunities. We may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early. Accordingly, we believe we have sufficient sources of funding to meet our business requirements for at least the next twelve months. 47 Table of Contents Debt Agreements As of June 30, 2026, we and our subsidiaries had outstanding $38,433 million in aggregate principal amount of indebtedness and no material debt principal payments are due until July 15, 2031 under SpaceX Notes. For details regarding our indebtedness, refer to Note 9, Debt of our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. SpaceX Notes In June 2026, SpaceX issued senior unsecured notes with The Bank of New York Mellon Trust Company, N.A, as trustee, in an aggregate principal amount of $25,000 million (“SpaceX Notes”). The SpaceX Notes have five tranches maturing on July 15, 2031, July 15, 2033, July 15, 2036, July 15, 2046, and July 15, 2056 with a weighted average maturity of 11.7 years. SpaceX Notes are unsecured obligations of the Company and rank equally in right of payment with all existing and future unsubordinated indebtedness, liabilities and other obligations of the Company. The proceeds of the SpaceX Notes were used to repay the SpaceX Bridge Loan (as defined and described in Note 9, Debt of our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) in full and to pay related fees and expenses. The remaining proceeds were used for general corporate purposes. The SpaceX Notes bear annual coupon interests between 5.350% and 6.650% with a weighted average coupon interest rate of 5.855%. Interest is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2027. SpaceX Notes are redeemable, in whole or in part, at the Company’s option at any time and from time to time prior to the applicable Par Call Date, which is defined as a date ranging from one to six months prior to maturity for each tranche. The redemption price of each tranche is equal to the greater of (i) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the respective tranche matured on the applicable Par Call Date) on a semi-annual basis at the Treasury Rate plus the applicable spread between 0.002 and 0.003 basis points for such tranche less (b) interest accrued and unpaid thereon to the date of redemption, and (ii) 100% of the principal amount of the SpaceX Notes to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date. On or after the applicable Par Call Date, SpaceX Notes are redeemable, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the respective SpaceX Notes being redeemed plus accrued and unpaid interest. The SpaceX Notes contain customary events of default and affirmative and negative covenants, including restrictions on additional liens in excess of 7.5% of the Company’s consolidated total assets and fundamental changes (which is limited to a merger where the Company is not the surviving entity outside certain jurisdictions). SpaceX Credit Facility In February 2025, SpaceX entered into a five-year senior unsecured revolving credit agreement with a syndicate of banks, under which the Company may borrow up to $1,500 million (“SpaceX Credit Facility”). The SpaceX Credit Facility is subject to certain customary representations, warranties, covenants, and events of default, including a maximum financial covenant requiring the Company to maintain a Consolidated Leverage Ratio (as defined in the SpaceX Credit Facility) of no greater than 3.75 to 1.0 as of the end of each fiscal quarter (subject to temporary increases to 4.25 to 1.0 following certain qualified acquisitions) and other customary reporting requirements. The SpaceX Credit Facility also includes sublimits of up to $150 million for financial letters of credit and up to $1,000 million for performance letters of credit. The SpaceX Credit Facility terminates, and all outstanding loans become due and payable, on February 7, 2030, unless the parties agree to an extension in accordance with the terms of the SpaceX Credit Facility. As of June 30, 2026, no amounts were outstanding under the SpaceX Credit Facility. Borrowings under the SpaceX Credit Facility bear interest, at the Company’s option, at a rate per annum equal to (i) a forward-looking term rate based on SOFR (“Term SOFR”) plus an applicable margin ranging from 0.75% and 1.25% (depending on the Company’s debt rating), or (ii) a base rate equal to the highest of (a) Federal Funds Rate plus 0.5%, (b) the Prime Rate, (c) Term SOFR plus 1.00%, and (d) 1.00% plus an applicable margin ranging from 0.0% and 0.25% (depending on the Company’s debt rating). The Company may also borrow in various alternative currencies, with interest calculated at rates based on SONIA for Pound Sterling-denominated loans and EURIBOR for Euro-denominated loans, plus an applicable margin. In addition, the Company pays a commitment fee on the unused portion of the SpaceX Credit Facility, which ranges from 0.07% (amended to 0.06% under the Amended SpaceX Credit Facility described below) to 0.11% per annum based on the Company’s debt rating. As of June 30, 2026, the Company was in compliance with all covenants under the SpaceX Credit Facility. In March 2026, the Company entered into a First Amendment to Credit Agreement and Waiver (the “First Amendment”) with its lenders, in connection with the Company’s entry into the SpaceX Bridge Loan (as defined below). The First Amendment, among other things, (i) waived certain specified defaults and (ii) amended certain definitions and covenants under the SpaceX Credit Facility to conform to the terms of the SpaceX Bridge Loan. 48 Table of Contents In May 2026, SpaceX amended the SpaceX Credit Facility to increase the borrowing capacity up to $5,000 million (“Amended SpaceX Credit Facility”). As part of the Amended SpaceX Credit Facility, the sublimit for performance letters of credit was increased to $2,000 million. The Amended SpaceX Credit Facility terminates, and all outstanding loans become due and payable, on May 19, 2031, unless the parties agree to an extension in accordance with the terms of the Amended SpaceX Credit Facility. All other terms were consistent with the terms of the SpaceX Credit Facility. Material Cash Commitments From time to time in the ordinary course of business, we enter into agreements with suppliers for the purchase of parts and raw materials to manufacture our products. However, due to contractual terms, variability in the precise growth curves of our development and production ramps, and opportunities to renegotiate pricing, these contracts generally do not have long-term binding and enforceable purchase orders, and the timing and magnitude of purchase orders beyond the short term is difficult to accurately project. Because we do not have long-term purchase orders for these parts and raw materials, future purchases may result in material cash commitments. We did not have any material changes in our material cash commitments during the three months ended June 30, 2026 other than activities in the ordinary course of business and as noted below. For additional information about our material cash commitments, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Material Cash Commitments” in our Prospectus and Note 16 - Commitments and Contingencies of our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Spectrum Transaction On September 7, 2025, the Company entered into a License Purchase Agreement (the “Spectrum License Purchase Agreement”) with Spectrum Business Trust 2025-1, a Nevada Business Trust (“Trust”) and EchoStar Corporation (“EchoStar”) for the purchase of EchoStar’s licenses related to 50 MHz of spectrum (the “AWS-4 and H-Block Licenses” and the transactions contemplated thereby, “Spectrum Transaction”). On November 5, 2025 the parties amended and restated the Spectrum License Purchase Agreement to include EchoStar’s licenses for up to 15 MHz of additional unpaired AWS-3 spectrum (together with the AWS-4 and H-Block Licenses, the “Spectrum Licenses”). The total consideration for the acquisition of the Spectrum Licenses is approximately $19.6 billion, consisting of (i) approximately $11.1 billion in equity, payable through the issuance of approximately 261.8 million shares of the Company’s Class A common stock at a fixed value of $42.40 per share, and (ii) up to $8.5 billion related to the payoff of designated EchoStar debt, with any shortfall below $8.5 billion to be paid in cash. The allocation of cash and equity consideration is subject to certain adjustments based on the amount of EchoStar debt satisfied at or prior to closing. The Spectrum License Purchase Agreement provides that the transfer of the Spectrum Licenses occurs in two steps: first, the transfer of the Spectrum Licenses by EchoStar to the Trust (the “Spectrum Transfer Closing”), and second, the Spectrum Licenses will be transferred by the Trust to the Company (the “Spectrum Acquisition Closing”). The Foreign Assets will be transferred directly to the Company at the Spectrum Acquisition Closing, to the extent the required regulatory approvals have been obtained by such date; provided, however, that the failure to obtain such approvals will not delay or prevent the Spectrum Acquisition Closing. In connection with the Spectrum License Purchase Agreement, the Company and the Trust entered into a credit agreement (the “Spectrum Credit Agreement”), pursuant to which the Company has agreed upon the Spectrum Transfer Closing, to make payments to the Trust (via loans which are contemplated to be forgiven at six-month intervals), for the Trust to make payments on EchoStar’s debt (interest only) through at least November 30, 2027, but in no event later than November 30, 2028. Although these payments are structured as loans from the Company to the Trust, there is no expectation of repayment as the loan payments are forgiven and are accounted for as additional consideration for the acquisition of the Spectrum Licenses. Accordingly, the payments are recognized as prepaid assets until the Spectrum Acquisition Closing at which point they will be recognized as intangible assets. Total payments expected to be made under the Spectrum Credit Agreement are $1,241 million in 2026, of which $856 million was paid as of June 30, 2026, and $828 million in 2027, assuming an expected closing date of November 30, 2027. The Company may need to make additional payments totaling $827 million if the Spectrum Acquisition Closing occurs at November 30, 2028. The Spectrum Transaction was approved by the FCC on May 12, 2026, and the Spectrum Transfer Closing occurred on May 22, 2026. On that date, the Spectrum Licenses were transferred to the Trust, where they will remain until the Spectrum Acquisition Closing. Upon closing, the Company intends to either use cash and cash equivalents on hand or seek alternative financing sources to fund the cash payment to EchoStar. The $11.1 billion equity consideration will be issued at the Spectrum Acquisition Closing. 49 Table of Contents Summary of Cash flows The following table summarizes our cash flows for the periods indicated: Six Months Ended June 30, (in millions) 2026 2025 Net cash provided by (used in) Operating activities $ 3,466 $ 351 Investing activities $ (34,487) $ (6,032) Financing activities $ 100,291 $ 9,199 Operating Activities Net cash provided by operating activities increased by $3,115 million from $351 million during the six months ended June 30, 2025 to $3,466 million during the six months ended June 30, 2026. This increase was primarily driven by lower net loss exclusive of non-cash items, an increase in working capital for deferred revenue of $1,489 million from upfront payments from our Space and Connectivity customers, partially offset by an increase in working capital for accounts receivable of $1,533 million and a decrease in accounts payable of $397 million. Investing Activities Net cash used in investing activities increased by $28,455 million from $6,032 million during the six months ended June 30, 2025 to $34,487 million during the six months ended June 30, 2026. This increase was primarily driven by an increase in capital expenditures of $21,511 million related to the build out of data centers and related infrastructure, and space launch facilities and related infrastructure, an increase in purchases of marketable securities of $13,029 million from cash proceeds received from the IPO and the SpaceX Notes, and an increase in payments to EchoStar for the Spectrum Licenses of $856 million. This increase was partially offset by an increase in cash received from matured marketable securities of $6,705 million. Financing Activities Net cash provided by financing activities increased by $91,092 million from $9,199 million during the six months ended June 30, 2025 to $100,291 million during the six months ended June 30, 2026. This increase was primarily driven by an increase in proceeds from our IPO of $85,675 million and increase in proceeds from the SpaceX Notes and other financing arrangements of $40,869 million, partially offset by increase in the repayment of debt and other existing debt obligations of $33,406 million from the repayment of the SpaceX Bridge Loan, and increase in payments for repurchase of our common and redeemable convertible preferred stock of $3,906 million. Critical Accounting Estimates For a description of our critical accounting policies and estimates, refer to the section “Critical Accounting Estimates” in our Prospectus. There have been no material changes to our critical accounting policies and estimates as described in our Prospectus. Recent Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies, to the to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.