10-QPeriod: Q1 FY2014

Tesla, Inc. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 9, 2014For Securities:TSLA

Summary

Tesla, Inc. (TSLA) reported its first quarter 2014 financial results, showing a significant increase in total revenues to $620.5 million, up from $561.8 million in the prior year's quarter. This growth was primarily driven by the commencement of Model S deliveries in Europe and continued powertrain component sales to Toyota. Despite revenue growth, the company reported a net loss of $49.8 million for the quarter, a reversal from a net income of $11.2 million in Q1 2013. This was largely due to a substantial increase in operating expenses, particularly in research and development and selling, general, and administrative costs, as Tesla continued to invest in future growth and global expansion. The company also successfully raised significant capital during the quarter through the issuance of convertible senior notes totaling $2.0 billion, alongside associated convertible note hedge and warrant transactions. This bolstered Tesla's liquidity, with cash and cash equivalents, restricted cash, and short-term marketable securities increasing to $2.58 billion at the end of the quarter, a marked improvement from $848.9 million at the end of 2013. The substantial cash position provides ample runway for planned investments in Model X development, Gigafactory construction, and continued expansion of its sales, service, and Supercharger networks.

Financial Statements
Beta

Key Highlights

  • 1Total revenues increased by 10.5% year-over-year to $620.5 million, primarily due to European Model S deliveries and powertrain component sales.
  • 2Gross margin improved significantly to 25.0% from 17.1% in the prior year's quarter, driven by higher production volume, manufacturing efficiencies, and cost reductions.
  • 3Net loss widened to $49.8 million from a net profit of $11.2 million in Q1 2013, primarily due to increased operating expenses.
  • 4Research and Development (R&D) expenses rose to $81.5 million from $54.9 million, reflecting accelerated engineering for Model X and international Model S adaptation.
  • 5Selling, General, and Administrative (SG&A) expenses more than doubled to $117.6 million from $47.0 million, supporting global expansion and infrastructure growth.
  • 6The company raised $2.0 billion in gross proceeds through the issuance of convertible senior notes in March 2014, significantly strengthening its cash position.
  • 7Cash, cash equivalents, and short-term marketable securities stood at $2.58 billion at quarter-end, a substantial increase from $848.9 million at the end of 2013.

Frequently Asked Questions

Tesla's total revenues for the first quarter of 2014 were $620.5 million, an increase of 10.5% compared to $561.8 million in the same period of 2013. This growth was driven by increased Model S deliveries, particularly with the launch in Europe, and continued powertrain component sales to Toyota.

No, Tesla reported a net loss of $49.8 million for the first quarter of 2014. This is a decrease from a net income of $11.2 million reported in the first quarter of 2013. The increased loss was primarily due to higher operating expenses related to ongoing investments in product development and global expansion.

Tesla significantly improved its liquidity, ending the first quarter of 2014 with $2.58 billion in cash, cash equivalents, and short-term marketable securities. This substantial increase from $848.9 million at the end of 2013 was largely due to the successful issuance of $2.0 billion in convertible senior notes.

Operating expenses increased significantly due to higher investments in Research and Development ($81.5 million vs. $54.9 million) for Model X and international Model S adaptation, and increased Selling, General, and Administrative expenses ($117.6 million vs. $47.0 million) to support global expansion, sales infrastructure, and service centers.