Tesla (TSLA) Reports Q3 EPS of $1.86, Versus Expected Loss

Tesla (NASDAQ: TSLA) reported Q3 EPS of $1.86, $2.28 better than the analyst estimate of ($0.42). Revenue for the quarter came in at $6.3 billion versus the consensus estimate of $6.33 billion.

• $383M increase in our cash and cash equivalents balance to $5.3B
• $371M operating cash flow less capex (free cash flow)
• Profitability $261M GAAP operating income; 4.1% operating margin
• $143M GAAP net income; $342M non-GAAP net income ex-SBC
• 22.8% GAAP Automotive Gross Margin
• Gigafactory Shanghai ahead of schedule, trial production started
• Model Y ahead of schedule, production expected by summer 2020
• Record vehicle production of 96k and deliveries of 97k
• Record storage deployment of 477 MWh and 48% solar growth QoQ

"Last year, our story was about ramping the Model 3. While total volumes are expected to grow by approximately 50% in 2019, this year our focus has been cost control and preparing for our next phase of growth.

Despite reductions in the average selling price (ASP) of Model 3 as global mix stabilizes, our gross margins have strengthened. Additionally, operating expenses are at the lowest level since Model 3 production started. As a result, we returned to GAAP profitability in Q3 while generating positive free cash flow. This was possible by removing substantial cost from our business.

We have also dramatically improved the pace of execution and capital efficiency of new production lines. Gigafactory Shanghai was built in 10 months and is ready for production, while it was ~65% less expensive (capex per unit of capacity) to build than our Model 3 production system in the US. Continued volume growth and cost control are an important combination for achieving sustained, industry-leading profitability."

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