Tesla Earnings Crush Expectations: 5 Must-See Takeaways

After the bell on Monday, electric-car maker Tesla (NASDAQ:TSLA) reported some spectacular results. Revenue nearly doubled year over year as net income soared. Investors seemed pleased, as shares rose several percentage points during after-hours trading. Though that gain pulled back to closer to 1% later in the evening.

“In the second quarter of 2021, we broke new and notable records,” said Tesla in the company’s second-quarter update. “We produced and delivered over 200,000 vehicles, achieved an operating margin of 11% and exceeded [$ 1 billion] of GAAP net income for the first time in our history.”

Here’s a closer look at the quarter, captured by five must-see takeaways from the report.

Tesla Model Y interior

Tesla Model Y. Image source: Tesla.

1. Revenue hit $ 12 billion

Helped by a 121% year-over-year increase in vehicle deliveries, Tesla’s revenue surged 98% year over year to approximately $ 12 billion. This crushed analysts’ average forecast for revenue of $ 11.3 billion. 

2. Profits skyrocketed

Of course, with revenue like this, it wasn’t surprising to see profits soar. Net income increased from $ 104 million in the year-ago period to $ 1.14 billion. Non-GAAP (adjusted) net income increased 258% year over year to $ 1.6 billion. This translated to non-GAAP earnings per share of $ 1.45 — far ahead of a consensus analyst estimate of $ 0.98.

The outsized growth in Tesla’s profits demonstrates the scalability of the company’s business model.

3. Free cash flow remains healthy

Tesla once again generated positive free cash flow, or cash flow from operations less capital expenditures. Free cash flow for the period increased from $ 418 million in the year-ago period to $ 619 million.

Total cash on hand fell from $ 17.1 billion in the first quarter of 2021 to $ 16.2 billion but this was primarily due to $ 1.6 billion in net debt and finance lease repayments.

4. Vehicle demand is robust

Tesla once again said demand for its vehicles achieved record levels. Indeed, demand is so robust that the company is supply constrained. “Global demand continues to be robust, and we are producing at the limits of available parts supply,” Tesla explained.

5. There’s more sharp growth to come

Importantly, Tesla remains optimistic about its growth trajectory. The company says it continues to expect to grow its total deliveries more than 50% year over year this year. This implies 2021 total deliveries of more than 750,000. So far, Tesla has delivered more than 386,000 vehicles this year.

“The rate of growth will depend on our equipment capacity, operational efficiency, and the capacity and stability of the supply chain,” Tesla noted.

With strong demand, a healthy balance sheet, and optimism about the future from management, Tesla’s growth story is alive and well.

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