While many in the West have decided the Covid-19 pandemic is over, Shanghai was on lockdown for much of the second quarter, and that cut into Tesla production and revenue significantly since that’s where about half of Tesla vehicles are produced. Nonetheless, clawing its way through, the company made a significant amount of profit. It had $621 million in positive free cash flow in the quarter, and an operating margin of 14.6%.
Tesla was also working through various supply chain challenges, economic challenges, and workforce shakeups in that time. Despite all of that, the company had an $0.8 billion increase in its cash and cash equivalents, ending the quarter with $18.3 billion in cash and cash equivalents. We are far from the days of “bankwuptcy.”
Elon was found passed out against a Tesla Model 3, surrounded by "Teslaquilla" bottles, the tracks of dried tears still visible on his cheeks.
This is not a forward-looking statement, because, obviously, what's the point?
Happy New Month! pic.twitter.com/YcouvFz6Y1
— Elon Musk (@elonmusk) April 1, 2018
(Simpler were the days.)
For the finance and business nerds out there, here are some more numbers from the quarterly Tesla slidedeck:
- $2.5B GAAP operating income;
- 14.6% operating margin in Q2 $2.3B GAAP net income;
- $2.6B non-GAAP net income (ex-SBC) in Q2
- 27.9% GAAP Automotive gross margin in Q2
Those are impressive numbers in the midst of the various global uncertainties and disruptions.
Tesla revenue, $16.9 billion, was up 42% year over year (YoY) in Q2.
As far as what affected operating margin (both positives and negatives), this was Tesla’s summary breakdown of the key factors:
+ increased ASP
+ growth in vehicle deliveries
+ profit growth in other parts of the business
+ lower stock-based compensation expense
– higher raw material, commodity, logistics and expedite costs
– higher per unit fixed costs in Shanghai due to shutdowns
– negative FX impact
– Bitcoin impairment
(Yes, I see you slippin’ bitcoin in there down on the bottom. That faux currency investment has turned into quite a flop, environmentally and financially now. We’ll see what happens to that. The good news is that Tesla is slowly exiting its bitcoin adventure — or so it seems — and has exited 75% of its peak position.)
Here’s some more info on cash money matters: “Quarter-end cash, cash equivalents and short-term marketable securities increased sequentially by $902M to $18.9B in Q2, driven mainly by free cash flow of $621M, partially offset by debt repayments of $402M. As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet. ”
Not enough financial info for you? Here’s more in a nice clean spreadsheet format:
We’ve also got charts from Tesla on some of this:
Aside from Shanghai, there was positive news out of the factory that followed the Shanghai gigafactory — the brand new gigafactory in the Berlin–Brandenburg region of Germany. In one week, over 1,000 electric cars were produced there. That’s not close to the end goal, but it’s a sign of a healthy production ramp-up. The factory has already achieved positive gross margin.
With the financials out of the way, I’ll next move on to Tesla vehicle production and deliveries, energy storage systems production and deliveries, and solar PV production and deliveries. And then there’s the matter of … AI. Stay tuned.
If you really haven’t seen enough financial details yet, head here for more.