Ed. note: This analysis was authored by Mo Islam, Payload’s cofounder and a former Wall Street analyst. This is an educated best guess, not based on access to any SpaceX internal data or proprietary info!
We’re attempting the impossible yet again: predicting SpaceX’s revenue. Before we get into Act 2—aka 2023—we’re revising our 2022 projections, which we published back in October, to account for new data.
As you can see below, Payload’s revised estimate gets us to a total of $4.6B.
SpaceX reported 1M Starlink subscribers at the end of the year. Our prediction was 745,000 subs.
Revisions to our launch assumptions were as follows:
We originally decided to omit the awards for the development of the US Space Force’s (USSF) Transport & Tracking Layer (TTL) satellites and the Human Landing System (HLS) contract, due to lack of visibility of when milestone payments are recognized as revenue.
Alas, we changed our minds, as we felt it was not an accurate reflection of SpaceX’s progress on those contracts.
All in all, the adjustments increase launch revenue by $130M and Starlink revenue by $890M, driven by the outperformance of the subscriber numbers and a reallocation to the higher-priced Starlink Business subscriptions. In addition, our adjustments introduced $325M in revenue recognition from NASA lunar landing and Space Force next-gen constellation programs. All in, Payload has adjusted its 2022 SpaceX revenue estimate from $3.25B to $4.6B.
Now, let’s turn our attention to this year.
For 2023, we decided against altering too many of our 2022 assumptions on the pricing side of the launch services. We assume 87 launches for 2023, which is less than SpaceX’s 100 launch target.
To estimate Starlink subscriber growth a year in advance is a difficult proposition, given the many variables in play. To name but a few of those variables: manufacturing cadence of user terminals, capacity per cell/satellite, number of satellites launched, and actual user demand.
Here’s how we think about it:
A word on capacity: For the time being, we do not believe data capacity is a major concern, considering that at least 1,000 additional satellites will go up this year. We’ve analyzed a variety of different estimates regarding the capacity of Starlink satellites.
Models can be based on “cells” (the geographic area that’s covered by a single node in a network) or a user-based methodology where you analyze concurrent streams and oversubscription rates. For example: 200 concurrent streams (which is debated) at 100Mbs per satellite x a 5x oversubscription rate x 4,400 satellites = 4.4M theoretical capacity.
Either way, we don’t believe capacity will be an issue later this year. Even with reports of throttling and price hikes, we expect the additional satellites that will be launched this year to balance current issues.
SpaceX should continue execution on its existing major contracts outside launch and Starlink:
This brings our launch revenue projection to $5.27B (+119% YoY), Starlink revenue projection to $5.46B (+192% YoY), Other Revenue projection of $825M (+154% YoY) and total 2023 revenue projection to $11.55B, (+151% YoY).
SpaceX is clearly at a point where its ability to scale revenue is real.
This tells us that the risk to our projections may be more to the upside than it is the downside. On a separate note, given how vocal SpaceX management is being around the health of Starlink, we expect that a IPO scenario is likely over the next 18-24 months. Gwynne Shotwell recently stated that Starlink will have “cash flow positive quarter” in 2022 and “will make money” in 2023.
Ultimately, we recognize predicting SpaceX’s revenue is extremely challenging, given the multitude of variables we’ve laid out here. In fact, we know that even some investors in SpaceX don’t have accurate data around historical financials or projections. That’s just Elon being Elon.
We’ll continue to monitor this and update our internal model. Stay tuned for a year-end revision based on new data that we gather over the course of 2023. And as always, please don’t hesitate to reach out with any questions or comments.
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