warning: extremely boring post about deferred revenue. drink coffee first.
tl;dr: much of tesla's claimed increase in automotive gross margin seems to be from changes in one-time accounting adjustments and accounting (deferral & recognition) of deferred revenue.
almost, but not quite. they changed the way the disclosures are made, the 76.1m deferred revenue you estimate them booking is of the balance that was deferred as of dec 31 2018. from the 10q:
Revenue recognized from the deferred revenue balance as of December 31, 2018 was $113.5 million for the six months ended June 30, 2019. From the deferred revenue balance as of January 1, 2018, revenue recognized during the six months ended June 30, 2018 was $44.5 million.
if you go back and review the 2018 disclosures which are much better, you see the total deferred revenue recognized in the first 6 months was $49.4m vs the $44.5m which is just the portion of the deferred revenue from the jan 1 2018 balance that was recognized.
similarly we have to make an adjustment for 19q2 to estimate the amount of this deferred revenue recognized. the method i chose is to take:
(amount recognized 19q2/balance end of 18q4)*(deferred revenue eop 19q1 - deferred revenue eop 18q4) + ($76.1m amount disclosed as booked out of 18q4 balance in 19q2).
note the 76.1m comes from taking 113.5m (6mos ended 19q2 recognition) - 37.4m (19q1 recognition).
the actual amount of deferred revenue recognized was thus ~90m. but to some extent this is also supercharger, connectivity, and software updates which are normal. so what we're really interested in is the change vs baselines. i'm trying to understand all of that but my suspicion is that another huge chunk of the claimed 200bps gross margin increase stems from the deferral & recognition of deferred revenue. if some one can put together cogent thoughts on that please go ahead. here's a table of data you can work with.
here are a couple thoughts as i edit the post (refer to my table below).
1. 2019q1 deferred revenue per vehicle sold is unusually high due to
promotions for autopilot and fsd during the quarter, which would result in additional deferral of revenue not related to unit sales of autos.
2. the 2019q2 deferred revenue per vehicle sold picture is confounded by changing the definition and pricing of autopilot, and also
a free supercharging promotion to clear inventory cars.
3. it sure likes they were using deferred revenue as a slush fund to me. for example, 18q3 had a lower mix of vehicles with free supercharging.
free internet connectivity was reduced for 18q3 as well. i expect as more model 3 were in the mix that the eap/fsd take rate went down from 18q3 to 18q2. and yet the table shows deferred revenue per vehicle increased in q3 to the highest level seen in 2018. more deferred revenue means less current recognition and more to pull in future periods. as 18q3 was their best quarter, this is where one would expect them to shove the most into the cookie jar.
4. if we assume the 18q4/19q1 recognition are more representative of the baseline amounts that should be recognized per quarter, then we could ballpark ~50m excess deferred revenue was recognized in 19q2 (~90m - ~40m). that would be a 1% boost to auto gross margin.
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