Tesla (TSLA) reported earnings on Wed 23 Oct 19 (a/h)

** charts after earnings **

 

Tesla beats by $2.19, reports GAAP profitability and postive FCF, upside to gross margin; misses on revs

Reports Q3 (Sep) earnings of $1.91 per share, $2.19 better than the S&P Capital IQ Consensus of ($0.28); revenues fell 7.6% year/year to $6.3 bln vs the $6.48 bln S&P Capital IQ Consensus.  GAAP EPS $0.80 vs. ($0.23) consensus.

Compared to Q3 of 2018, the percentage of leased vehicles has tripled and alone has impacted revenue by the majority of the YoY decrease. Model 3 mix has increased while we have taken actions leading to the reduction of the ASP of our products. These ASP reductions are particularly impacted by the launch of the Standard Range trims of Model 3 and pricing actions earlier in the year. We are positioned to accelerate our growth further through Gigafactory Shanghai, Model Y and also through increasing build rates on our existing production lines. These capacity increases will allow for higher total vehicle deliveries and associated revenue. We also expect to gradually release nearly $500M of accumulated deferred revenue tied to Autopilot and Full Self Driving features.

GAAP Automotive gross margin improved by 393bp QoQ to 22.8%, well above estimates (improved by 366bp QoQ excluding regulatory credits). Margin was impacted in part due to fundamental improvements in our operating efficiency, including higher fixed cost absorption, reductions in manufacturing and material costs and continued improvements in vehicle quality and in part due to Smart Summon-related deferred revenue recognition, FX and other non-recurring items. Improved gross profit combined with a decline in operating expenses resulted in material improvement of GAAP net income.

While total volumes are expected to grow by ~50% in 2019, this year our focus has been cost control and preparing for our next phase of growth

Quarter end cash and cash equivalents increased to $5.3B, driven by positive free cash flow of $371M.

Gigafactory Shanghai ahead of schedule, trial production started

Model Y ahead of schedule, production expected by summer 2020