Tesla’s Operating Margin was Up 262 bp in 2022 Q3

Tesla (NASDAQ: TSLA) announced its 2022 Q3 financial results on October 19, 2022.  According to the announcement, total revenues, income from operations and net income were up 56%, 84% and 103%, respectively (YoY, 3 months, GAAP).  In addition, diluted EPS attributable to common shareholders was up 98% (YoY, 3 months, GAAP).

Due to the higher material costs etc., automotive gross margin declined to 27.9% (-258 bp, YoY, 3 months).  However, operating margin was increased to 17.2% (+262 bp, YoY, 3 months). It was thanks to suppression of the increase in operating expenses as well as growth of revenues in businesses other than the automotive sales. Moreover, a rising in average selling price (ASP) also appears to have contributed to the increase in the automotive revenues.

Among the businesses other than the automotive sales, energy generation and storage business revenues were up 39% (YoY, 3 months). In addition, services and other revenues were up 84%.  We figure that Tesla’s revenue structure are becoming stabilized by rationally diversifying its revenue sources.

According to the announcement, net cash provided by operating activities was up 62% (YoY, 3 months). In addition, free cash flow was up 79%.  Total amount of current assets was equivalent to more than twice as high as the total cost of revenues in this quarter. This indicates the stability of Tesla’s financial conditions.

Total production was up 54% in this quarter, while total delivery was up 42%. It suggests that delivery capacity constraints are the bottle neck in Tesla’s revenue growth. According to the announcement, Tesla is currently trying to improve the delivery capacity.  It is expected to bring the further increase of the automotive revenues.

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  1. Watanabe & Brothers’ Investment is holding shares of Tesla.
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