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.
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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.