10-QPeriod: Q3 FY2018

Tesla, Inc. Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 2, 2018For Securities:TSLA

Summary

Tesla, Inc. (TSLA) reported a significant increase in revenue for the third quarter of 2018, driven primarily by the substantial ramp-up in Model 3 deliveries. Total revenues surged by 129% year-over-year to $6.82 billion. The automotive segment saw a remarkable 158% increase in revenue, largely attributed to Model 3 production stabilization and higher average selling prices. The adoption of the new revenue recognition standard (ASC 606) also contributed positively to revenue figures. Despite top-line growth, the company reported a net loss for the nine months ended September 30, 2018, though the net loss attributable to common stockholders narrowed significantly in the third quarter compared to the prior year's quarter. The company continues to invest heavily in production capacity, particularly for Model 3, and expanding its infrastructure, which contributed to a significant increase in interest expense and overall operating expenses. The company ended the quarter with improved liquidity, but ongoing capital expenditures for future growth, including Gigafactory 3 in China, remain a key focus.

Financial Highlights

51 data points
Beta

Revenue

$6.82B

22.3% Gross Margin

Net Income

$311.00M

4.6% Net Margin

EPS (Diluted)

$0.12

Total Assets

$29.26B

Cash & Equivalents

$2.97B

Free Cash Flow

$880.51M

Financial Statements
Beta
Revenue$6.82B
Cost of Revenue$5.30B
Gross Profit$1.52B
R&D Expenses$351.00M
SG&A Expenses$730.00M
Operating Expenses$1.11B
Operating Income$416.00M
Interest Expense$175.00M
Net Income$311.00M
EPS (Basic)$0.12
EPS (Diluted)$0.12
Shares Outstanding (Basic)2.56B
Shares Outstanding (Diluted)2.67B

Key Highlights

  • 1Total revenues increased 129% year-over-year to $6.82 billion for Q3 2018.
  • 2Automotive sales revenue grew 183% year-over-year to $5.88 billion, driven by the Model 3 production ramp.
  • 3Adoption of ASC 606 (new revenue standard) positively impacted automotive sales revenue by $479 million in Q3 2018.
  • 4Gross margin for the total automotive segment improved from 18% in Q3 2017 to 26% in Q3 2018.
  • 5Net income attributable to common stockholders was positive $311.5 million in Q3 2018, a significant improvement from a net loss of $619.4 million in Q3 2017.
  • 6Cash and cash equivalents stood at $2.97 billion as of September 30, 2018.
  • 7The company has identified restructuring actions in the energy generation and storage segment, resulting in $129.6 million in related expenses for the nine months ended September 30, 2018.

Frequently Asked Questions

The primary driver of Tesla's revenue growth in the third quarter of 2018 was the significant ramp-up in Model 3 production and deliveries, which saw a substantial increase in sales volume and average selling prices compared to the previous year. The adoption of the new revenue recognition standard (ASC 606) also contributed to the higher reported automotive sales revenue.

Yes, Tesla reported a net income of $311.5 million attributable to common stockholders for the third quarter of 2018. This marks a significant turnaround from the net loss of $619.4 million reported in the same quarter of the prior year.

The adoption of ASC 606, Revenue from Contracts with Customers, effective January 1, 2018, changed the timing of revenue recognition for certain vehicle sales with resale value guarantees, allowing them to be recognized as sales with a right of return upon delivery rather than accounted for as operating leases. This resulted in an increase in automotive sales revenue and a decrease in automotive leasing revenue, as well as changes in related balance sheet accounts like deferred revenue and operating lease vehicles.

Tesla expects capital expenditures to be slightly below $2.5 billion for the full year 2018, supporting increased Model 3 production capacity, expansion of stores and service centers, and initial expenses for Gigafactory 3 in Shanghai. For the next two fiscal years (2019-2020), capital expenditures are estimated to be between $2.5 to $3.0 billion annually, to fund ongoing growth, new products, and factory expansions.