EARNINGS REVIEW
Tesla, 2026 Q3 earnings results
Revenue was roughly flat year over year, but operating income fell sharply. In contrast, higher OCF and lower sequential CapEx returned FCF to positive territory, leaving profit and cash flow moving in different directions.
Assessment · The return to positive FCF is a cash-flow improvement, but the low operating margin and higher R&D expense show continued profitability pressure. The next judgment depends on whether product and AI investment produces repeatable operating profit and cash realization.
Key management and company statements
Earnings release · Short original excerpt“We ended the quarter with the largest backlog”Meaning · This is part of the company’s statement that its passenger-vehicle backlog was the largest in four years.
Context · This is an operating statement without a disclosed quantitative amount. It is not converted into company-wide RPO or contracted revenue.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · Revenue 28.095 → 28.046 B$ (−0.2% · −0.049 B$), operating income 1.624 → 0.718 B$ (−55.8% · −0.906 B$).
Quarter over quarter · Revenue 28.236 → 28.046 B$ (−0.7% · −0.190 B$), operating income 0.398 → 0.718 B$ (+80.4% · +0.320 B$), operating margin 1.4% → 2.6% (+1.2 pp).
Automotive and energy revenue declined year over year, while services and other revenue increased. The company cited lower average selling prices, regulatory credits and energy revenue as headwinds, with services growth and foreign exchange as tailwinds.
02 Earnings sustainability · From operating income to net income
Gross profit was 5.494 B$, but R&D expense of 2.761 B$ and SG&A of 2.015 B$ took total operating expenses to 4.776 B$. Operating margin was approximately 2.6%.
Consolidated net income was 0.804 B$ and net income attributable to common stockholders was 0.787 B$. The figures include a 0.142 B$ unrealized loss on the SpaceX investment and a 0.288 B$ digital-asset gain, which are separated from core operating performance.
- Operating income
- 0.718 B$
- Net non-operating income/loss
- 0.238 B$
- Income tax expense
- −0.152 B$
- Consolidated net income
- 0.804 B$
Net income of 0.787 B$ in the underlying quarterly data is attributable to common stockholders. Its scope differs from consolidated net income used in the cash-flow bridge.
03 Cash flow quality · Net income → OCF → FCF
Company-defined FCF is 1.531 B$, calculated as OCF of 6.263 B$ less CapEx of 4.732 B$. Finance-lease principal of 0.026 B$ is outside this FCF definition.
Cash, cash equivalents and short-term investments were 45.447 B$ and debt was 9.267 B$, yielding net cash of 36.180 B$. The update did not disclose separate cash and short-term-investment amounts, so only the combined figure is used.
- Consolidated net income
- 0.804 B$
- Total net adjustments, including non-cash items and working capital¹
- 5.459 B$
- Operating cash flow
- 6.263 B$
- Cash CapEx
- −4.732 B$
- FCF
- 1.531 B$
¹ Total net adjustments calculated as OCF minus net income. This is not a single disclosed line item; it combines non-cash items, working capital, classification differences and other adjustments.
FCF versus the previous quarter · −1.092 → 1.531 B$, a 2.623 B$ improvement.
04 Financial capacity · Net debt and payment obligations
Prior-quarter net cash · 2026-06-30
Cash and liquid assets 43.524 / Borrowings 9.061 B$
Current-quarter net cash · 2026-09-30
Cash and equivalents 45.447 / debt 9.267 B$
Net debt position improved by 1.717 B$ from the prior quarter. The carrying amount of current debt is unavailable. It may differ from the contractual principal maturity schedule.
Net cash provides a buffer against investment volatility. It is not treated as committed funding that eliminates all AI, robotics and energy-capacity investment or debt and finance-lease obligations.
Common definition · Cash and equivalents = cash-like assets plus current investments and deposits. Debt = carrying amount of interest-bearing borrowings, current plus noncurrent, excluding separate lease liabilities. It is not the same as total liabilities of 67.628 B$. Restricted cash, noncurrent securities and noncurrent deposits are excluded from cash and equivalents.
05 Investment, capital allocation and cash recovery
CapEx was 4.732 B$, more than twice the prior-year level but below 5.789 B$ in the previous quarter. The sequential decline does not establish a long-term investment reduction, and the company said it continues investing in SI, robotics and energy.
This quarter, cash CapEx/revenue was 16.9% and FCF/revenue was 5.5%. These measures should not be used for a simple ranking across companies with different business models and FCF definitions.
06 Next-quarter and full-year outlook and implications
The company plans to reach 400 MW of SI training compute by year-end and expand Cybercab, Semi and Optimus production. Capacity, actual demand, utilization and profit contribution must each be verified separately.
The company described battery availability as a constraint on automotive volume growth. The update did not provide quantitative revenue or operating-income guidance.
The company described passenger-vehicle and energy backlogs as strong, but did not disclose quantitative RPO or backlog. An undisclosed value is not zero, and the prior-quarter figure is not carried forward.
Quarterly results · CY-aligned view
Amounts in B$. The table shows all 4 quarters of the prior year and the current year's reported quarters, based on the report's CY-aligned year. Each fiscal quarter is assigned to the calendar quarter with the greatest overlap in its actual reporting period; the original FY/CY label and start and end dates are also shown. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2025 · 4 quarters | 2026 · 3 quarters | Change this quarter | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Metric | 2025 total4-quarter totalBalances are at period end | 1Q2025 Q125-01-01 ~25-03-31 | 2Q2025 Q225-04-01 ~25-06-30 | 3Q2025 Q325-07-01 ~25-09-30 | 4Q2025 Q425-10-01 ~25-12-31 | 2026 YTD3-quarter totalBalances are at period end | 1Q2026 Q126-01-01 ~26-03-31 | 2Q2026 Q226-04-01 ~26-06-30 | 3Q2026 Q326-07-01 ~26-09-30 | QoQvs 2026 Q2 | YoYvs 2025 Q3 |
| Revenue | 94.827 | 19.335 | 22.496 | 28.095 | 24.901 | 78.669 | 22.387 | 28.236 | 28.046 | −0.7%−0.190 B$ | −0.2%−0.049 B$ |
| Operating income | 4.355 | 0.399 | 0.923 | 1.624 | 1.409 | 2.057 | 0.941 | 0.398 | 0.718 | +80.4%+0.320 B$ | −55.8%−0.906 B$ |
| Operating margin | 4.6% | 2.1% | 4.1% | 5.8% | 5.7% | 2.6% | 4.2% | 1.4% | 2.6% | +1.2%p | −3.2%p |
| FCF | 6.220 | 0.664 | 0.146 | 3.990 | 1.420 | 1.883 | 1.444 | −1.092 | 1.531 | +2.623 B$ | −2.459 B$ |
| Operating cash flow | 14.747 | 2.156 | 2.540 | 6.238 | 3.813 | 14.897 | 3.937 | 4.697 | 6.263 | +33.3%+1.566 B$ | +0.4%+0.025 B$ |
| Cash CapEx | 8.527 | 1.492 | 2.394 | 2.248 | 2.393 | 13.014 | 2.493 | 5.789 | 4.732 | −18.3%−1.057 B$ | +110.5%+2.484 B$ |
| Net cash | 35.906 | 29.752 | 29.826 | 34.186 | 35.906 | 36.180 | 35.724 | 34.463 | 36.180 | +1.717 B$ | +1.994 B$ |
| Cash and liquid assets | 44.059 | 36.996 | 36.782 | 41.647 | 44.059 | 45.447 | 44.743 | 43.524 | 45.447 | +4.4%+1.923 B$ | +9.1%+3.800 B$ |
| Borrowings | 8.153 | 7.244 | 6.956 | 7.461 | 8.153 | 9.267 | 9.019 | 9.061 | 9.267 | +2.3%+0.206 B$ | +24.2%+1.806 B$ |
Indented rows are components of, or reference items for, the parent metric. Net cash = cash and liquid assets − borrowings. Depending on company definitions, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals precede the quarters for each year. Revenue, earnings and cash flow are sums of quarterly values; operating margin equals total operating income divided by total revenue; net cash, cash and borrowings are the final quarter's ending balances. Do not make a simple annual comparison of totals covering different period lengths.
Net cash = cash and liquid assets − borrowings. A negative value indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly values were not adjusted to match disclosed annual totals.
Comparison bases, calculations and quarterly sources
Calculations and presentation · Amounts in B$. US disclosures in millions of dollars were preserved by dividing by 1,000. Where only cumulative cash flow was available, the preceding cumulative amount in the same fiscal year was subtracted. YoY, QoQ and margins were calculated before display rounding. Earnings growth from negative or 0 bases is shown as a sign change and/or absolute amount.
Opinions and outlook · Management quotations include short original excerpts and translations. Unless identified as earnings call transcripts, quotations come from earnings releases. Interpretations and implications are the author's judgments. No numerically unverified probabilities of achieving targets are assigned.