Tesla reports strong Q1 numbers despite investor concerns. The company has been profitable for the fourteenth consecutive quarter, proving its ability to grow and develop at a very fast pace. In general, Tesla almost met expectations.
Summary
Tesla released Q1 2023 financial results on Wednesday and they were very convincing. The company generated $23.3 billion in revenue and $0.85 in non-GAAP earnings per share. Revenue was about $50 million lower than expected, and earnings per share were $0.01 lower.
The company said that in the current macroeconomic environment, it sees good opportunities for itself. While other manufacturers are trying to survive, Tesla continues to develop and attract new customers. This is due to the greater availability of its cars, which have been reduced in price by entering new markets and increasing production in factories.
Tesla said that despite cutting the price of its vehicles in the first quarter, its operating margins declined at a manageable pace. The company expects continuous cost reductions for its vehicles, including improvements in production efficiency at its newest plants and lower logistics costs.
Highlights
Profitability
- 11.4% operating margin in Q1
- $2.7B GAAP operating income in Q1
- $2.5B GAAP net income in Q1
- $2.9B non-GAAP net income in Q1
Cash
- Operating cash flow of $2.5B
- Free cash flow of $0.4B in Q1
- $0.2B increase in our cash and investments in Q1 to $22.4B
Operations
- Cybertruck factory tooling on track; producing Alpha versions
- Model Y was the best-selling vehicle in Europe in Q1
- Model Y was the best-selling vehicle in the US in Q1 (ex-pickups)
Financial summary
Revenue
Total revenue grew 24% YoY in Q1 to $23.3B. 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 $0.8B
Profitability
Tesla’s operating income decreased YoY to $2.7B in Q1, resulting in a 11.4% operating margin. YoY, operating income was primarily impacted by the following items:
+ growth in vehicle deliveries (despite margin headwind from underutilization of new factories)
+ gross profit growth in Energy business as well as Services & Other
– reduced ASP YoY
– higher raw material, commodity, logistics and warranty costs
– cost of production ramp of 4680 cells
– lower credit revenue
Cash
Quarter-end cash, cash equivalents and investments increased sequentially by $217M to $22.4B in Q1, driven mainly by free cash flow of $441M, partially offset by other financing activities, including debt repayments.
Outlook
Volume
Tesla is planning to grow production as quickly as possible in alignment with the 50% CAGR target it began guiding to in early 2021. In some years the company may grow faster and in some it may grow slower, depending on a number of factors. For 2023, Tesla expects to remain ahead of the long-term 50% CAGR with around 1.8 million cars for the year.
Cash
Tesla has sufficient liquidity to fund its product roadmap, long-term capacity expansion plans and other expenses. Furthermore, it will manage the business such that the company maintains a strong balance sheet during this uncertain period.
Profit
While Tesla continues to execute on innovations to reduce the cost of manufacturing and operations, over time, it expects its hardware-related profits to be accompanied with an acceleration of software-related profits. The company continues to believe that its operating margin will remain among the highest in the industry.
Product
Cybertruck remains on track to begin production later this year at Gigafactory Texas. In addition, Tesla continues to make progress on its next generation platform.
