TSLA Q2 2019 Earnings

Call Details

• Call Title: Tesla, Inc. Q2 2019 Earnings Call
• Date: June 24, 2019 at 9:30 PM UTC
• Management Team:
  • Martin Bieka (Senior Director of Investor Relations)
  • Elon Musk (CEO)
  • JB Straubel (Chief Technology Officer / Senior Advisor)
  • Zachary Kirkhorn (CFO)
  • Jerome Guillen (President of Automotive)
  • Drew Vaclino (Executive)

Call Summary

Financial Performance

• Tesla achieved record vehicle production and deliveries, with more than 95,000 vehicles delivered in the prior quarter.
• The company exited the quarter with $5B in cash and cash equivalents, which is the highest level in Tesla history.
• Tesla raised roughly $2.4B in net proceeds in May, which materially boosted the cash position during the quarter.
• GAAP automotive gross margin declined slightly due to lower regulatory credit revenue and ASP reductions, while adjusted automotive gross margin improved materially when excluding credits.
• Model 3 global average selling price stabilized around roughly $50,000 during the quarter.
• Operating expense included $117M for restructuring, and regulatory credit revenue declined sequentially by $104M.
• Other income declined by $66M year-over-year primarily due to foreign exchange impacts that the company does not hedge.

Guidance

• Tesla expects full-year deliveries to be between 360,000 and 400,000 vehicles for the year.
• The company expects to be approximately break-even this quarter and profitable next quarter, with an expectation of free cash flow positivity in future quarters except for temporary product launch ramps.
• By the end of the year, Tesla expects Model 3 to be produced in volume out of Gigafactory Shanghai.
• A European Gigafactory site is expected to be finalized before the end of the year.
• Model Y production preparations have started in Fremont and the vehicle is expected to share roughly three-quarters of parts with Model 3.
• Full Self-Driving (FSD) pricing is expected to be $7K in mid-August and FSD revenue recognition will ramp as features roll out.