Tesla Free Cash Flow Swings to $1.53B as Q3 Margins Beat Expectations

Tesla reported third-quarter free cash flow of $1.531 billion, compared with analyst expectations for negative $4.99 billion. Operating cash flow was $6.263 billion and capital expenditure was $4.732 billion. Cash, cash equivalents and short-term investments ended the quarter at $45.447 billion, up $1.923 billion from the prior quarter. The company reported revenue of $28.046 billion, slightly below the $28.13 billion analyst expectation and roughly flat year over year. Adjusted EPS was $0.48 versus expectations of $0.44. Operating profit was $718 million, above the $599 million expectation, while operating margin was 2.6%. Gross margin was 19.6%, above the 17.8% market expectation and up from 16.8% in the second quarter. Automotive gross margin excluding regulatory credits reached 18.1%, versus 16.3% in the second quarter. Services and other gross margin reached a record 15.9%. Tesla shares rose more than 3% in regular Wednesday trading and gained more than 2% at one point after the earnings release. The cash-flow recovery came as operating expenses rose 39% year over year to $4.776 billion and capital expenditure increased 110% year over year. FSD active subscriptions reached 1.74 million, above the 1.57 million market expectation and up 67% year over year. Robotaxi unsupervised miles approached 2 million by quarter-end, an eightfold sequential increase. Energy generation and storage revenue was $2.881 billion, down 16% year over year and below the $3.91 billion expectation, despite 13.7 GWh of energy-storage deployments.