Table of Contents
a. Key points
Auto business returns to solid Y/Y growth.
Margins are pressured by a menu of current headwinds.
Cybercab production is underway.
Challenges tied to Optimus scaling were a focus point on the call.
b. Demand
Beat revenue estimates by 7%.
Beat auto revenue estimates by 10.7%.
Missed energy generation and storage revenue estimates by 16.6%.
Beat services & other revenue estimates by 23%.
c. Profits & Margins
Missed 19.4% GAAP GPM estimate by 260 basis points (bps; 1 basis point = 0.01%).
Its 16.9% auto GPM missed 19.5% margin estimates while its 16.3% auto GPM ex-credits missed 18.4% margin estimates.
Missed $1.4B EBIT estimates by $1B.
Missed $0.50 EPS estimates by $0.17.
Beat -$3.7B FCF estimates by $2.6B. CapEx was $1B lower than expected.
Auto GPM ex-credits was boosted last quarter by a $230M warranty benefit alongside lighter tariffs. Those tailwinds did not recur during the quarter. Excluding that help, this margin was stable Q/Q. For the energy business, another one-time $240M boost is why GPM fell from 39.5% to 20.4%. At the same time it also fell from around 30% to around 20% Y/Y. The business and deployments are very lumpy and prone to timing on a quarterly basis. On a trailing 12-month basis, the segment’s margin slightly ticked up from 28.9% to 29.4% Y/Y.
At the company level and adding to current margin pressure, commodity inflation and interest rates are current headwinds in addition to aggressive investing in AI. Net income margin pressure was more modest than operating income due to a $1B mark-to-market equity gain from its SpaceX stake.
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d. Balance Sheet
$43.5B cash & equivalents.
$9.3B debt. They are potentially looking to raise another 30 billion in new debt to fund more AI investments.
-6% Y/Y inventory growth.
0.6% Y/Y dilution.
e. Guidance & Valuation
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