10-QPeriod: Q2 FY2015

Tesla, Inc. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 7, 2015For Securities:TSLA

Summary

Tesla's Q2 2015 10-Q filing indicates a period of significant investment and expansion, alongside continued operational challenges. Total revenues grew to $955.0 million, up from $769.3 million in the prior year's quarter, primarily driven by increased Model S deliveries. However, gross margin declined to 22.3% from 27.7% year-over-year, attributed to product mix, increased manufacturing costs, and lower ZEV credits. The company reported a net loss of $184.2 million for the quarter, widening from a loss of $61.9 million in Q2 2014, reflecting substantial investments in R&D and SG&A expenses to support future growth, including Model X development and Gigafactory construction. Despite the increased net loss, Tesla maintained a strong liquidity position with $1.15 billion in cash and cash equivalents. Significant capital expenditures are ongoing, with plans for $1.5 billion in 2015 for production capacity, Gigafactory, and infrastructure expansion. The company is on track to deliver Model X in late Q3 2015 and is targeting 50,000-55,000 Model S and Model X deliveries for the full year 2015. Management expressed confidence in future growth, projecting production and demand levels of 1,600-1,800 vehicles per week in 2016 for Model S and Model X.

Financial Highlights

46 data points
Beta

Revenue

$954.98M

22.3% Gross Margin

Net Income

-$184.23M

-19.3% Net Margin

EPS (Diluted)

$-0.10

Total Assets

$6.47B

Cash & Equivalents

$1.15B

Free Cash Flow

-$564.68M

Financial Statements
Beta
Revenue$954.98M
Cost of Revenue$741.61M
Gross Profit$213.37M
R&D Expenses$181.71M
SG&A Expenses$201.85M
Operating Expenses$383.56M
Operating Income-$170.19M
Interest Expense$24.35M
Net Income-$184.23M
EPS (Basic)$-0.10
Shares Outstanding (Basic)1.90B

Key Highlights

  • 1Revenue increased by 24.1% year-over-year to $955.0 million, driven by higher Model S deliveries.
  • 2Gross margin decreased to 22.3% from 27.7% in the prior year's quarter, impacted by product mix, manufacturing costs, and lower ZEV credits.
  • 3Net loss widened to $184.2 million from $61.9 million in Q2 2014, due to increased operating expenses.
  • 4Research and Development (R&D) expenses surged by 68.7% to $181.7 million, primarily for Model X development and other product improvements.
  • 5Selling, General, and Administrative (SG&A) expenses increased by 50.6% to $201.8 million, supporting business growth and infrastructure expansion.
  • 6Cash and cash equivalents remained strong at $1.15 billion, providing ample liquidity for ongoing operations and investments.
  • 7Capital expenditures were $831.2 million for the six months ended June 30, 2015, reflecting significant investments in production capacity, Gigafactory, and infrastructure.

Frequently Asked Questions

In the second quarter of 2015, Tesla reported a net loss of $184.2 million, which is a widening of the net loss compared to $61.9 million in the same quarter of the previous year. This indicates that the company is still operating at a loss, largely due to significant investments in research and development, expanding production capacity, and building out its infrastructure.

Tesla's total revenues increased to $955.0 million for the three months ended June 30, 2015, up from $769.3 million in the prior year's quarter. The primary driver for this growth is the increase in Model S deliveries worldwide. The company is also seeing growth in its 'Services and other' revenue stream, which includes sales of EV powertrain components, maintenance services, and Tesla Energy products.

Tesla is actively developing the Model X crossover, with customer deliveries expected in late Q3 2015 and production ramping in Q4 2015. The company is also working towards the lower-priced Model 3, with deliveries targeted for late 2017. Tesla anticipates strong demand for both Model S and Model X, projecting combined weekly production and demand levels of 1,600 to 1,800 vehicles in 2016. Significant investments are being made to expand production capacity and build the Gigafactory.

As of June 30, 2015, Tesla had $1.15 billion in cash and cash equivalents. The company is making substantial capital expenditures, with approximately $1.5 billion planned for 2015, to fund production capacity expansion, Gigafactory construction, and the growth of its sales, service, and Supercharger network. The company believes its current liquidity sources are adequate to fund operations over the next 12 months.