How to read a company's earnings report?

In Q1 2024, Tesla reported revenues of $21.3 billion, a decrease from the previous year. The company's non-GAAP earnings per share were $0.45, while GAAP EPS was $0.34, both below analyst expectations. Operating income was $1.2 billion, leading to a 5.5% operating margin. Net income on a GAAP basis stood at $1.1 billion. Factors influencing these figures included reduced vehicle average selling price, increased operating expenses, and significant investments in AI and production infrastructure.

Dive into the financial world with clarity and confidence: Understanding a financial earnings statement is like unlocking the secret language of business success. Let's break it down together, ensuring you can evaluate a company's health just like the pros!

Let's explore Tesla's financial earnings statement with this breakdown:

Revenue: This is Tesla's total income from sales of its electric vehicles and energy products before any deductions. It marks the initial measure of the company's financial strength.

Cost of Goods Sold (COGS): These costs are directly linked to manufacturing Tesla's products. Subtracting COGS from Revenue gives us the Gross Profit, indicating earnings from core operations after direct production costs.

Operating Expenses: Essential for daily operations, these include non-manufacturing costs like research and development, salaries, and marketing efforts.

Operating Income: Also known as Operating Profit, this is calculated by deducting Operating Expenses from Gross Profit. It shows the profit Tesla makes through its primary business activities.

Net Income: The ultimate profit figure after all expenses, including taxes and interest, have been subtracted from Operating Income. This provides a complete view of Tesla's profitability during the period.

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