Tesla (TSLA) Q3 2020 earnings results report 39% revenue increase year-over-year

Published October 21, 2020 2:25 PM, by TJ Denzer

It’s well past the end of another financial quarter and Tesla has official posted their Q3 2020 financial report detailing the company’s performance throughout the previous months from July to September. A glance at Tesla’s report shows the company saw some substantial growth, a highlight of its Q3 being 39% growth in revenue year-over-year. This is due in no small part to an impressive automotive gross margin in Q3 with the company seeing a substantial boost both year-over-year and quarter-over-quarter. Read on for more highlights of the report.

Tesla (TSLA) Q3 2020 earnings results report summary

Tesla posted its Q3 2020 quarterly report on October 21, 2020, over on the investor’s relations corner of the company website. One of the most notable highlights is that Tesla saw a 39% total revenue increase year-over-year from Q3 2019. In the unaudited financial summary, this included an automotive gross margin of 2,105 million: A 60% increase from Q2 2020’s reported 1,317 million and a 72% increase from Q3 2019’s reported 1,222 million.

In terms of vehicle deliveries, Tesla’s unaudited Q3 2020 operational report claims that 15,275 Model S/X vehicles were delivered, while the Model 3/Y moved over 124,318 units for a total of 139,593 units throughout the quarter. This is up 54% from Q2 2020’s 90,891 deliveries and 44% year-over-year from the 97,186 deliveries reported in Q3 2019. All numbers together, Tesla reportedly increased its total cash quarter-over-quarter to $14.5 billion in Q3.

Snapshots of the details and highlights of Tesla’s Q3 quarterly financial report can be seen below:

Highlights

• Cash
  • $5.9B increase in our cash and cash equivalents in Q3 to $14.5B
  • Operating cash flow less capex (free cash flow) of $1.4B in Q3
• Profitability
  • $809M GAAP operating income; 9.2% operating margin in Q3
  • $331M GAAP net income; $874M non-GAAP net income (ex-SBC) in Q3
  • SBC expense increased to $543M (driven by 2018 CEO award milestones)
• Operations
  • Record vehicle deliveries, profitability and free cash flow
  • Buildout of three new factories on three continents continues as planned
  • First step of FSD beta rollout started in Oct. 2020

Summary

The third quarter of 2020 was a record quarter on many levels. Over the past four quarters, we generated over $1.9B of free cash flow while spending $2.4B on new production capacity, service centers, Supercharging locations and other capital investments.While we took additional SBC expense in Q3, our GAAP operating margin reached 9.2%.We are increasingly focused on our next phase of growth. Our most recent capacity expansion investments are now stabilizing with Model 3 in Shanghai achieving its designed production rate and Model Y in Fremont expected to reach capacity-level production soon.  During this next phase, we are implementing more ambitious architectural changes to our products and factories to improve manufacturing cost and efficiency. We are also expanding our scope of manufacturing to include additional areas of insourcing. At Tesla Battery Day, we announced our plans to manufacture battery cells in-house to aid in our rapid expansion plan.  We believe our new 4680 cells are an important step forward to reduce cost and improve capital efficiency, while improving performance.We continue to see growing interest in our cars, storage and solar products and remain focused on cost-efficiency while growing capacity as quickly as possible.

Outlook

• Volume
  • We have the capacity installed to produce and deliver 500,000 vehicles this year.While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target. Achieving this target depends primarily on quarter over quarter increases in Model Y and Shanghai production, as well as further improvements in logistics and delivery efficiency at higher volume levels.
• Cash Flow
  • We should have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses.
• Profit
  • For the trailing 12 months, we achieved an operating margin of 6.3%. We expect our operating margin will continue to grow over time, ultimately reaching industry-leading levels with capacity expansion and localization plans underway.
• Product
  • We are currently building Model Y capacity at GigafactoryShanghai, GigafactoryBerlin and GigafactoryTexas, and remain on track to start deliveries from each location in 2021.Tesla Semi deliveries will also begin in 2021. We continue to significantly invest in our product roadmap.

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