Tesla Inc (NASDAQ:TSLA) reported second-quarter revenue that topped Wall Street expectations, but profitability metrics missed forecasts as margins compressed.
Revenue reached $28.24 billion, up 26% year-over-year and ahead of the $26.32 billion estimate.
But adjusted earnings per share came in at $0.33, missing the $0.51 forecast and down 18% from a year earlier.
The miss sent shares down about 3.4% immediately after the bell on Wednesday.
Gross margin fell to 16.8% against expectations of 19.4%, while automotive gross margin excluding regulatory credits dropped 310 basis points to 16.3%. Operating margin was 1.4%, well below the 5.4% estimate.
Automotive revenue rose 23% to $20.52 billion, beating forecasts, while energy revenue of $3.14 billion fell short of expectations despite growing 13%. Services revenue jumped 50% to a record $4.58 billion in gross profit. Regulatory credit revenue fell 67% to $146 million.
Deliveries rose 25% to 480,126 vehicles, and production increased 10% to 451,758 units. Vehicle inventory tightened to 15 days of supply from 27 in the prior quarter.
Operating income fell 57% to $398 million, and GAAP net income declined 5% to $1.11 billion, helped by a $1.01 billion unrealized gain on Tesla's SpaceX stake. Capital expenditures rose 142% to $5.79 billion, while free cash flow was negative $1.09 billion, a smaller shortfall than analysts expected.
On autonomy, Tesla said cybercab production has started at Gigafactory Texas and robotaxi service now spans seven US metro areas, with unsupervised operations ramping in several cities. More than 55% of North American deliveries included an FSD subscription, and active subscriptions rose 56% to 1.48 million.
The company said Optimus production lines are being installed, with output expected in 2026, and gave no new numerical guidance for deliveries, earnings or capital spending.
