Tesla beats top and bottom line estimates in Q2, $2.78B in Revenue

[Guest]

Tesla released its second quarter 2017 earnings after the closing bell on Wednesday, summarized in the Q2’17 Update Letter. The results largely surprised Wall Street after the company posted fourth quarter earnings loss of $1.33 per share, quite a bit lower than estimated analyst losses of $1.82. Revenue was $2.78 billion versus an estimate of $2.51 billion.

REVENUE

In the letter, Tesla announced that “Automotive revenue grew 93% as compared to Q2 2016.”

The company’s revenue consisted of $2.28B in automotive revenue, $286M in energy generation and storage, and $216M in service and other revenue. Automotive revenue actually slightly declined over the first quarter, while energy generation and storage grew 34%. Tesla attributed the gains in energy generation and storage to, “a greater percentage of cash sales and higher deployment of energy storage systems.”

The company deployed 176 MW of energy generation products and 97MWh of energy storage products in Q2. However, the company listed the 52 MWh Kauai energy storage project in both Q1 and Q2, so it’s unclear which quarter the company actually counted the deployment. Tesla didn’t provide the amount “deployed” in Q1, rather “installed”.

MODEL 3

In the letter, Tesla announced that they are “averaging over 1,800 net Model 3 reservations per day” since the handover event and stated that the they have opened up the design configurator to thousands of employees as they prepare to produce more Model 3s. Tesla started deliveries of the Model 3 last Friday.

Tesla stated that they are, “confident we can produce just over 1,500 vehicles in Q3” and plan on reaching 5,000 vehicles per week by year end.

GUIDANCE FOR END OF 2017

In the letter, Tesla states that, “Model S and Model X deliveries to increase in the second half of 2017, as compared to the first half of the year.”

While Tesla expects the Model 3 to carry a negative gross margin in Q3, they are expecting it to go positive in Q4. In Q3 the overall automotive gross margin is expected to dip below 20%, currently at 27.9%, before recovering and growing in Q4 and beyond.

Tesla has just over $3.1B in cash at the end of the quarter, down nearly $900M from Q1. The company expects to spend roughly $2B on capital expenditures in the second half of the year, but it’s unclear how that will impact the company’s actual cash flow.

Today’s session ended up closing 2% higher and is up nearly another 3.2% after-hours. Looking at the after-hours trading action after the close, the initial reaction to the numbers for Q2 2017 is hugely positive, with the stock raising to $336.Expect a positive opening on Thursday.

Source