Tesla TSLA beat analysts’ expectations in Q2 with strongest quarter ever

Tesla TSLA reported its financial results for Q2 2023. They were above analysts’ expectations in many respects. Non-GAAP EPS was $0.91, beating by $0.09. Revenue was $24.93B, a $200M beat.

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Summary

Tesla TSLA released its Q2 2023 financial results on Wednesday. While Wall Street analysts were expecting a more modest performance, the Texas manufacturer again managed to surprise. The company drew attention to the fact that Q2 2023 was a record quarter on many levels. Tesla achieved the best-ever production and deliveries, and revenue approached $25B in a single quarter. It is worth paying special attention to the fact that these results were achieved even in a difficult macroeconomic environment.

Tesla reported that its operating margin remained healthy at approximately 10%. This is even against the background of price reductions in Q1 and early Q2. This reflects Tesla’s ongoing cost reduction efforts, the continued production ramp-up success in Giga Berlin and Giga Texas, and the strong performance of Energy and Services & Other businesses.

Tesla said it is focusing on cost reduction and new product development that will enable future growth, investments in R&D, better vehicle financing options, continuous product improvement, and generation of free cash flow.

Highlights on Tesla TSLA

Profitability

  • 9.6% operating margin
  • $2.4B GAAP operating income
  • $2.7B GAAP net income
  • $3.1B non-GAAP net income

Cash

  • Operating cash flow of $3.1B
  • Free cash flow of $1.0B
  • $0.7B increase in cash and investments QoQ to $23.1B

Operations

  • Cybertruck factory tooling on track; producing release candidate builds
  • Model Y became the best-selling vehicle globally in Q1

Financial summary

Revenue

Total revenue grew 47% YoY in Q2 to $24.9B. YoY, revenue was impacted by the following items:

  • growth in vehicle deliveries
  • growth in other parts of the business
  • reduced ASP YoY (excluding FX impact)
  • negative FX impact of $0.6B

Profitability

Tesla’s operating income decreased slightly YoY to $2.4B in Q2, resulting in a 9.6% operating margin. YoY, operating
income was primarily impacted by the following items:

  • reduced ASP due to mix and pricing
  • cost of production ramp of 4680 cells and other related charges
  • increase in Operating expenses driven by Cybertruck, AI and other large projects
  • negative FX impact
  • growth in vehicle deliveries (despite margin headwind from underutilization of new factories)
  • lower cost per vehicle, which includes lower raw material costs and IRA credit
  • gross profit growth in Energy business as well as Services & Other
    Other income (below operating income line) was positively impacted by FX movements on certain intercompany balances.

Cash

Quarter-end cash, cash equivalents and investments increased sequentially by $0.7B to $23.1B in Q2, driven mainly by free
cash flow of $1.0B, partially offset by other financing activities, including debt repayments.

Legal Disclaimer —

This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesla Magazine, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

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This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication.

Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article’s publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.

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