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It's looks to be mostly on the cost side. Lower Auto COGS, lower energy COGS, lower SG&A, zero (zero!!) restructuring cost....What is the major discrepancy between our models here and the Q3 result? Is it smart summon deferred revenue recognition?
And 85M other income (vs 40M loss).It's looks to be mostly on the cost side. Lower Auto COGS, lower energy COGS, lower SG&A, zero (zero!!) restructuring cost....
Smart Summon might have helped margins a little, but ASP math looked to be pretty close.
It's looks to be mostly on the cost side. Lower Auto COGS, lower energy COGS, lower SG&A, zero (zero!!) restructuring cost....
Smart Summon might have helped margins a little, but ASP math looked to be pretty close.
… |
… |
s deliveries |
x deliveries |
s+x deliveries |
3 deliveries |
3 production |
lease 3s % veh |
lease s/x % veh |
avg price s+x (calc'd) |
avg price model 3 (set) |
non-zev credits per delivery |
zev credits |
revenue |
auto sales ex 3 |
auto sales mod 3 |
auto leasing |
zev+nonzev credits |
1 time revenue |
total auto |
energy storage |
solarcity |
grohmann |
services/other |
total revenue |
cost of revenue |
auto sales ex 3 |
auto sales mod 3 |
auto leasing |
1 time cogs |
total auto |
energy storage |
solarcity |
grohmann |
services & other |
total cost of rev |
gross profit |
auto ex 3 ex credits gm |
auto gaap gm |
auto lease gm |
auto gaap ex 3 gm |
model 3 gm ex credits |
auto-credits incl 3 gm |
storage gm |
scty gm |
maxwell/grohmann |
services gm |
opex |
tesla r&d |
tesla sg&a |
1 time costs |
solarcity r&d |
solarcity sg&a |
total opex |
op income |
interest inc |
interest exp |
scty interest |
other income exp |
1time scty gain |
pretax income |
income tax |
net income |
non-cont int. |
net inc to common |
basic shares |
diluted shares |
diluted gaap eps |
gaap net income |
+ stock based comp |
+ one time scty |
non-gaap net income |
non-gaap diluted eps |
dio |
dpo |
dso |
ccc |
one of my biggest misses in a long time. here's the actual numbers, i often do a comparison but as i spend less time on tesla in general i just did a quick update instead.
a few comments:
my cost of revenues were only about 30m high, but revenues were way off, esp. in automotive. considering smart summon was a bit lower than i thought (~30m), it means that probably it's asp just slightly higher than i thought. that is reflected in the estimated metrics below.
asp high is coming with unit demand high and price increases, which means this is sustainable to next quarter.
storage margins jumped higher - i guessed over 20% now.
service revenues were lower than i thought but margins continued to improve, although less than i thought.
cash generation was ok - days payables outstanding went up which helped cash, but roughly offset by how much cash was used to increase inventory (dpo and dio i showed roughly increased the same amount). basically that means they are building units for q4 deliveries vs manipulating cash somehow. receivables were flat. one slight negative is cash generation is organically worse than 18q4.
gaap profitability is weak when you consider 115m from unusual items (85m other + 30m smart summon). that's disappointing on a gaap look, but still good from a cash standpoint as there's 700m+ of non-cash items that go into gaap earnings.
all in all it's a solid report with the most important takeaway being demand is strong enough to allow them to increase price, and costs are getting under control. i'd expect s&p 500 inclusion before nov 2020 if it stays on track like this.
[TD2] tsla [/TD2][TD2] tsla [/TD2][TD2] tsla [/TD2][TD2] tsla [/TD2] [TD2] Sep-19 [/TD2][TD2] Jun-19 [/TD2][TD2] Mar-19 [/TD2][TD2] Dec-18 [/TD2] [TD2]8,741[/TD2][TD2]8,787[/TD2][TD2]6,000[/TD2][TD2]13,500[/TD2] [TD2]8,742[/TD2][TD2]8,935[/TD2][TD2]6,091[/TD2][TD2]14,107[/TD2] [TD2] 17,483 [/TD2][TD2] 17,722 [/TD2][TD2] 12,091 [/TD2][TD2] 27,607 [/TD2] [TD2] 79,703 [/TD2][TD2] 77,634 [/TD2][TD2] 50,900 [/TD2][TD2] 63,359 [/TD2] [TD2] 79,837 [/TD2][TD2] 72,531 [/TD2][TD2] 62,950 [/TD2][TD2] 60,000 [/TD2] [TD2] 0.08 [/TD2][TD2] 0.06 [/TD2][TD2] - [/TD2][TD2] - [/TD2] [TD2] 0.15 [/TD2][TD2] 0.10 [/TD2][TD2] 0.11 [/TD2][TD2] 0.13 [/TD2] [TD2] 95.18 [/TD2][TD2] 97.21 [/TD2][TD2] 113.65 [/TD2][TD2] 108.65 [/TD2] [TD2] 50.00 [/TD2][TD2] 50.00 [/TD2][TD2] 54.00 [/TD2][TD2] 54.30 [/TD2] [TD2] 1.38 [/TD2][TD2] 1.17 [/TD2][TD2] 3.18 [/TD2][TD2] 1.04 [/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]15,412[/TD2][TD2]768[/TD2] [TD2]1,417,644[/TD2][TD2]1,545,857[/TD2][TD2]1,219,184[/TD2][TD2]2,604,255[/TD2] [TD2]3,550,356[/TD2][TD2]3,575,051[/TD2][TD2]2,574,076[/TD2][TD2]3,374,248[/TD2] [TD2]221,000[/TD2][TD2]208,362[/TD2][TD2]215,120[/TD2][TD2]249,748[/TD2] [TD2]134,000[/TD2][TD2]111,219[/TD2][TD2]215,981[/TD2][TD2]94,968[/TD2] [TD2]30,000[/TD2][TD2]-64,100[/TD2][TD2]-500,500[/TD2][TD2]0[/TD2] [TD2] 5,353,000 [/TD2][TD2] 5,376,389 [/TD2][TD2] 3,723,861 [/TD2][TD2] 6,323,219 [/TD2] [TD2]281,430[/TD2][TD2]244,850[/TD2][TD2]129,094[/TD2][TD2]131,497[/TD2] [TD2]120,570[/TD2][TD2]123,358[/TD2][TD2]195,567[/TD2][TD2]240,000[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]548,000[/TD2][TD2]605,079[/TD2][TD2]492,942[/TD2][TD2]531,157[/TD2] [TD2] 6,303,000 [/TD2][TD2] 6,349,676 [/TD2][TD2] 4,541,464 [/TD2][TD2] 7,225,873 [/TD2] [TD2]1,102,708[/TD2][TD2]1,264,570[/TD2][TD2]1,051,304[/TD2][TD2]1,908,505[/TD2] [TD2]2,911,292[/TD2][TD2]3,038,793[/TD2][TD2]2,213,705[/TD2][TD2]2,750,012[/TD2] [TD2]117,000[/TD2][TD2]106,322[/TD2][TD2]117,092[/TD2][TD2]127,731[/TD2] [TD2]0[/TD2][TD2]-49,600[/TD2][TD2]-408,800[/TD2][TD2]0[/TD2] [TD2] 4,131,000 [/TD2][TD2] 4,360,085 [/TD2][TD2] 2,973,301 [/TD2][TD2] 4,786,248 [/TD2] [TD2]215,133[/TD2][TD2]224,369[/TD2][TD2]159,456[/TD2][TD2]160,706[/TD2] [TD2]98,867[/TD2][TD2]101,154[/TD2][TD2]157,431[/TD2][TD2]168,000[/TD2] [TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2] [TD2]656,000[/TD2][TD2]732,022[/TD2][TD2]674,533[/TD2][TD2]657,019[/TD2] [TD2] 5,112,000 [/TD2][TD2] 5,428,630 [/TD2][TD2] 3,975,721 [/TD2][TD2] 5,782,973 [/TD2] [TD2] 1,191,000 [/TD2][TD2] 921,046 [/TD2][TD2] 565,743 [/TD2][TD2] 1,442,900 [/TD2] [TD2]22.2%[/TD2][TD2]18.2%[/TD2][TD2]13.8%[/TD2][TD2]26.7%[/TD2] [TD2]22.8%[/TD2][TD2]18.9%[/TD2][TD2]20.2%[/TD2][TD2]24.3%[/TD2] [TD2]47.1%[/TD2][TD2]49.0%[/TD2][TD2]45.6%[/TD2][TD2]48.9%[/TD2] [TD2]32.3%[/TD2][TD2]26.6%[/TD2][TD2]33.9%[/TD2][TD2]31.0%[/TD2] [TD2]18.0%[/TD2][TD2]15.0%[/TD2][TD2]14.0%[/TD2][TD2]18.5%[/TD2] [TD2]20.4%[/TD2][TD2]17.3%[/TD2][TD2]15.6%[/TD2][TD2]23.2%[/TD2] [TD2]23.6%[/TD2][TD2]8.4%[/TD2][TD2]-23.5%[/TD2][TD2]-22.2%[/TD2] [TD2]18.0%[/TD2][TD2]18.0%[/TD2][TD2]19.5%[/TD2][TD2]30.0%[/TD2] [TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2] [TD2]-19.7%[/TD2][TD2]-21.0%[/TD2][TD2]-36.8%[/TD2][TD2]-23.7%[/TD2] [TD2]304,000[/TD2][TD2]293,898[/TD2][TD2]295,174[/TD2][TD2]306,297[/TD2] [TD2]506,000[/TD2][TD2]557,261[/TD2][TD2]573,929[/TD2][TD2]522,452[/TD2] [TD2]0[/TD2][TD2]117,345[/TD2][TD2]43,471[/TD2][TD2]5,615[/TD2] [TD2]30,000[/TD2][TD2]30,000[/TD2][TD2]45,000[/TD2][TD2]50,000[/TD2] [TD2]90,000[/TD2][TD2]90,000[/TD2][TD2]130,000[/TD2][TD2]145,000[/TD2] [TD2] 930,000 [/TD2][TD2] 1,088,504 [/TD2][TD2] 1,087,574 [/TD2][TD2] 1,029,364 [/TD2] [TD2] 261,000 [/TD2][TD2] -167,458 [/TD2][TD2] -521,831 [/TD2][TD2] 413,536 [/TD2] [TD2]15,000[/TD2][TD2]10,362[/TD2][TD2]8,762[/TD2][TD2]7,348[/TD2] [TD2]-132,000[/TD2][TD2]-118,979[/TD2][TD2]-104,453[/TD2][TD2]-121,723[/TD2] [TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2] [TD2]85,000[/TD2][TD2]-40,756[/TD2][TD2]25,750[/TD2][TD2]-14,205[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] 176,000 [/TD2][TD2] -369,831 [/TD2][TD2] -644,772 [/TD2][TD2] 231,956 [/TD2] [TD2]26,000[/TD2][TD2]19,431[/TD2][TD2]22,873[/TD2][TD2]21,878[/TD2] [TD2] 150,000 [/TD2][TD2] -389,262 [/TD2][TD2] -667,645 [/TD2][TD2] 210,078 [/TD2] [TD2]7,000[/TD2][TD2]19,072[/TD2][TD2]34,490[/TD2][TD2]70,595[/TD2] [TD2] 143,000 [/TD2][TD2] -408,334 [/TD2][TD2] -702,135 [/TD2][TD2] 139,483 [/TD2] [TD2]179,000[/TD2][TD2]176,654[/TD2][TD2]172,989[/TD2][TD2]172,026[/TD2] [TD2]184,000[/TD2][TD2]176,654[/TD2][TD2]172,989[/TD2][TD2]179,026[/TD2] [TD2] 0.78 [/TD2][TD2] -2.31 [/TD2][TD2] -4.06 [/TD2][TD2] 0.78 [/TD2] [TD2]143,000[/TD2][TD2]-408,334[/TD2][TD2]-702,135[/TD2][TD2]139,483[/TD2] [TD2]199,000[/TD2][TD2]209,863[/TD2][TD2]208,378[/TD2][TD2]205,313[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]342,000[/TD2][TD2]-198,471[/TD2][TD2]-493,757[/TD2][TD2]344,796[/TD2] [TD2] 1.86 [/TD2][TD2] -1.12 [/TD2][TD2] -2.85 [/TD2][TD2] 1.93 [/TD2] [TD2] 63.92 [/TD2][TD2] 56.85 [/TD2][TD2] 88.06 [/TD2][TD2] 49.13 [/TD2] [TD2] 61.90 [/TD2][TD2] 52.67 [/TD2][TD2] 74.57 [/TD2][TD2] 53.72 [/TD2] [TD2] 16.33 [/TD2][TD2] 16.48 [/TD2][TD2] 21.04 [/TD2][TD2] 11.98 [/TD2] [TD2] 18.35 [/TD2][TD2] 20.67 [/TD2][TD2] 34.53 [/TD2][TD2] 7.39 [/TD2]
… … s deliveries x deliveries s+x deliveries 3 deliveries 3 production lease 3s % veh lease s/x % veh avg price s+x (calc'd) avg price model 3 (set) non-zev credits per delivery zev credits revenue auto sales ex 3 auto sales mod 3 auto leasing zev+nonzev credits 1 time revenue total auto energy storage solarcity grohmann services/other total revenue cost of revenue auto sales ex 3 auto sales mod 3 auto leasing 1 time cogs total auto energy storage solarcity grohmann services & other total cost of rev gross profit auto ex 3 ex credits gm auto gaap gm auto lease gm auto gaap ex 3 gm model 3 gm ex credits auto-credits incl 3 gm storage gm scty gm maxwell/grohmann services gm opex tesla r&d tesla sg&a 1 time costs solarcity r&d solarcity sg&a total opex op income interest inc interest exp scty interest other income exp 1time scty gain pretax income income tax net income non-cont int. net inc to common basic shares diluted shares diluted gaap eps gaap net income + stock based comp + one time scty non-gaap net income non-gaap diluted eps dio dpo dso ccc
In a (perhaps vain) effort to understand how all the analysts and models got it wrong, I did a quick compare (please advice if any errors) (all numbers in Millions):
Q2
-408 GAPP
back out one-time 117 restructuring and 41 other loss =
-250
Q3
143 GAPP
back out 85 other income, extra 23 for regulatory credits vs Q2, and 30 for smart summon deferred revenue* =
5
*Was there any other deferred revenue in Q3 (or even Q2)? Need an accurate comparison of differences in deferred revenue (w/ respect to FSD), if the the above is not accurate.
So roughly 255M *real* GAPP difference vs 551M *seeming* difference.
This real difference, based on the Q3 financials, appear to be attributed to improvements in gross profit (improved production efficiency, COGS, etc.) and improvements in operating expenses (SG&A, etc.). This seems very reasonable to me. *But* this approx 250M also can be within the level of fluctuations QoQ and YoY as Tesla grows. Expenses and efficiencies are not going to be smooth but rather uneven, especially as new products and new facilities (factories, sales and service centers, etc.) are introduced. Yes? Maybe we have a 250M GAPP loss in some future quarters? This is all very rough, and I understand Tesla is growing and continuously trying to improve. Trying to determine if one-time thing or improvements with lumpiness. Hopefully the latter and with less lumpiness. Just thinking out loud here...
Also, regulatory credits and deferred revenue are going to be a part of Tesla's financial landscape for the near future, with regulatory credits eventually (maybe years) disappearing and deferred revenue eventually moving to actual present revenue (as FSD nears completion). So these inputs will also fluctuate in the future.
Similar question by @EinSV as well.
I don't think they will hit 1.5/2B in Capex. For various reasons they don't need to spend that much on Capex.
- GF3 structuring is different with the state owning he land etc. This reduces Capex.
- Building Y in Fremont probably costs them quite a bit less
Tesla cut COGS about 1.8k per car. I expected closer to 1k. That's a ~70m swing. Other material swing items:I agree 100%. The bear fascination about price cuts blinded them to the possibility that Tesla actually wanted to run their business segments more efficiently. All the assumptions were that COGS would remain static and margins would deteriorate just because Tesla had shaved ASPs. In fact, Tesla knew exactly what they could afford to do - and still improve gross margins. The failure to understand that Tesla could have engineered a cheaper costing Model S/X (Raven) and reduced the base price without destroying gross margins has cost them dearly.
Every quarter:*Was there any other deferred revenue in Q3 (or even Q2)? Need an accurate comparison of differences in deferred revenue (w/ respect to FSD), if the the above is not accurate.
I still say GF3 is a freefactory, very much like GF2. Tesla paid for the land lease and will provide tooling, but China, Inc. owns the building and equipment.Good call on low capex. Very impressive they were able to get GF3 built so inexpensively while continuing to expand production in Fremont.
That's ~400m of differences from my expected 250m loss. I'm always a suspicious when every swing item goes the same direction. It's a sign of cookie jar accounting. Especially after Q2 was quite a bit worse than expected. There is real improvement here, just not as much as the bottom line shows.
Every quarter:
- Revenue from new sales is deferred for Supercharging, connectivity, OTAs and FSD
- Some previously deferred revenue for above items is recognized
- The whole RVG mess causes deferred revenue changes
The amount deferred on each new sales depends on how promotional they get with free Supercharging. The amount of previously deferred EAP/FSD revenue that's recognized depends on new feature releases. The amount of previously deferred non-EAP/FSD revenue they recognize grows each quarter with fleet size. Tesla barely discloses enough info for intelligent guessing, there is no way to build an accurate model.
Anything they offer to us for free - but they need to spend money on in the next few years will be accounted for by deferring some revenue. This includes service, free cell connection, any free supercharging depending on the deal etc. Could even be something deferred because Tesla plans to keep the software updated and send free updates.Can you (or someone) explain a little more about why supercharging, connectivity, OTAs are deferred? (I understand FSD being deferred.) I mean with supercharging, is it that it's technically not free, but part of the price of the car, for which they charge you only once (and when) you use it?
Without much improvement in anything from Q3 - apart from higher deliveries - we can expect about 220M gaap profit in Q4.
I guess it's an accounting thing. Defer revenue now or recognize charges (debits) later; the latter for SC and other items makes more sense to me as a non-accountant. I understand how FSD can intuitively be considered deferred since it's not ready yet.Anything they offer to us for free - but they need to spend money on in the next few years will be accounted for by deferring some revenue. This includes service, free cell connection, any free supercharging depending on the deal etc. Could even be something deferred because Tesla plans to keep the software updated and send free updates.
Nice. My guess would be closer to 20k S,X and 85k 3, with maybe a combined 5k upside potential. Total 105-110k.Here is my comparison of Q3 actual to forecast and also my Q4 forecast. Will probably change a bit after we get more details from SEC filing.
As you can see I got lucky on revenue side - the lower service revenue compensated by higher auto revenue. But on the cost side, Tesla did much better than expected resulting in $350M difference in profit - out of which about $100M was one time other income. Without much improvement in anything from Q3 - apart from higher deliveries - we can expect about 220M gaap profit in Q4.
View attachment 469589
Also, if they had any doubts about hitting 360k, this would have been the time to drop that bomb. With the surprise profit, scaling back the guidance by a few thousand would have been excused by the markets. Instead they've doubled down and said they have to further increase production on all 3 current products.Note that in the Q3 update letter Tesla reaffirmed that they'll be able to reach 360,000 deliveries for 2019:
"Deliveries should increase sequentially and annually, with some expected fluctuations from seasonality. We are highly confident in exceeding 360,000 deliveries this year. Positive quarterly free cash flow going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. We continue to believe our business has grown to the point of being selffunding. Positive GAAP net income going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. Continuous volume growth, capacity expansion, and cash generation remain the main focus."Given the very strong "highly confident" guidance language, IMO this means that they already are seeing the Q4 order book enabling at least 104,000 deliveries in Q4 - with increases both for S/X and the Model 3.
Might make sense to use that guided 104,000 deliveries figure for Q4 estimates, instead of the Q3 figure of 97,000 deliveries.
Nice. My guess would be closer to 20k S,X and 85k 3, with maybe a combined 5k upside potential. Total 105-110k.
It's pretty clear from Q3 results and Elon's comments that Q4 is going to be another good, even better quarter re deliveries and profit. Wildcard would be the capex spending (re GF3 and Y) and cash flows. And then we get into the weeds in Q1 and maybe Q2 temporarily, though uncertain due to GF3 and Y ramp. Also potential for major FCA reg credit revenues in 2020. That could be a major upside surprise in one of the 2020 earnings call cause Tesla has said jack about it so far.