Tesla (TSLA) releases Q2 2020 result: delivers profit and crushes expectations

Tesla has released its financial results and shareholders letter for the second quarter of 2020 after market close today.We are updating this post with all the details from the financial results, shareholders letter, and the conference call later tonight.

As we reported in our Q2 earnings preview post yesterday, Wall Street was expecting revenue of about $5.146 billion for the quarter and a loss of $0.14 per share.

There was a lot of speculation about whether or not Tesla would turn a profit since profitability this quarter could mean eligibility to the S&P500 and CEO Elon Musk has been teasing “breaking even” late in the quarter despite the impact of the pandemic.

Today, the automaker announced that it made $6 billion in revenue and it reported a small profit of $0.50 per share (GAAP) in Q2 2020 – crushing expectations for revenue and for earnings.

Tesla delivered $104M GAAP net income, $451M non-GAAP net income (ex-SBC) in Q2 – way higher than expected by virtually every analyst.

In the shareholders letter, the automaker wrote about how it achieved profitability:

“Our operating profit improved in Q2 despite challenging circumstances. Positive impacts included lower operating costs due to a temporary reduction in employee compensation expense, a sequential increase in regulatory credit revenue and deferred revenue recognition of $48M related to a Full Self Driving (FSD) feature release. These positive contributions were offset by significant costs related to factory shutdowns, as well as a sequential increase in non-cash SBC expense primarily attributable to $101M related to 2018 CEO award milestones.”

To be fair, Tesla’s sale of regulatory credits for electric vehicles is what enabled the large profits by contributing $428 million.

Other impressive metrics include that Tesla improved its gross margin quarter-over-quarter and it significantly increased its cash position:

Screen Shot 2020-07-22 at 1.33.11 PMScreen Shot 2020-07-22 at 1.33.34 PM
Tesla’s stock (TSLA) was up as much as 7% in aftermarket trading following the release of these results.
Here we will be posting our follow-up posts about the earnings and conference call to expand on the most important points (refresh the page to see the most recent posts):