AI Takeaway
Tesla's Q1 2026 10-Q shows a strong rebound with revenue up 15.8% YoY to $22.4B, gross margin expanding nearly 5 percentage points to 21.1%, and operating income surging 135.8% to $941M, though net income of $477M reflects elevated R&D and SG&A spending.
Revenue
$22.39B
++15.78% YoY
EPS (Basic)
$0.15
++15.38% YoY
Gross Margin
21.1%
++4.78% YoY
Operating Income
$941M
++135.84% YoY
Filed · Source: SEC EDGAR 10-Q filing
Tesla (TSLA) reported Q1 FY2026 revenue of $22.39B, up 15.8% year over year. The company posted net income of $477M, up 16.6% from a year earlier, with diluted EPS of $0.13. Gross margin was 21.1%.
Total revenue grew 15.8% YoY from $19.3B to $22.4B in Q1 2026, suggesting a meaningful recovery in vehicle deliveries and/or improved average selling prices compared to the prior-year period.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Gross margin improved significantly from 16.3% to 21.1% YoY, indicating that cost reduction efforts on the manufacturing side outpaced revenue growth, with cost of revenue rising only 9.2% versus revenue growth of 15.8%.
Source: Source: 10-Q Income Statement & Key Ratios (XBRL Financial Data)
Operating income surged 135.8% YoY from $399M to $941M, reflecting strong operating leverage as gross profit grew 49.7% to $4.72B, even as total operating expenses (R&D + SG&A) rose sharply.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
R&D expense jumped 38.1% YoY to $1.95B and SG&A rose 46.5% to $1.83B, collectively consuming a large portion of gross profit and limiting net income growth to just 16.6% YoY ($477M vs. $409M), well below the operating income growth rate.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Operating cash flow improved 82.6% YoY to $3.94B, reflecting stronger earnings quality; however, investing cash outflows widened dramatically to -$5.02B (from -$1.65B), signaling aggressive capital expenditure or investment activity that consumed free cash flow.
Source: Source: 10-Q Cash Flow Statement (XBRL Financial Data)
Investing cash outflows reached -$5.02B in Q1 2026, more than tripling YoY, which likely reflects heavy capex for new factories, AI infrastructure, or energy projects. This level of investment, if sustained, could pressure free cash flow and require additional financing, as evidenced by long-term debt rising 50.5% YoY to $7.65B.
Source: Source: 10-Q Cash Flow & Balance Sheet (XBRL Financial Data)
Despite operating income of $941M, net income was only $477M in Q1 2026, implying substantial below-the-line charges such as taxes, interest, or other non-operating items. The gap between operating and net income represents a structural drag that could disappoint investors expecting earnings leverage.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
R&D and SG&A expenses grew 38.1% and 46.5% YoY respectively, far outpacing revenue growth of 15.8%. If these cost trends continue without a corresponding acceleration in revenue, operating margins could compress in future quarters.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Long-term debt increased 50.5% YoY to $7.65B, and the debt-to-equity ratio stands at 0.70. While still manageable given $84.1B in stockholders' equity, the rapid pace of debt accumulation alongside heavy investing outflows warrants monitoring, particularly in a higher-interest-rate environment.
Source: Source: 10-Q Balance Sheet (XBRL Financial Data)
Tesla's net margin of 2.1% in Q1 2026 remains thin for a company of its scale, meaning any meaningful decline in vehicle demand, pricing pressure, or cost inflation could quickly push the company toward breakeven or losses at the net income level.
Source: Source: 10-Q Key Ratios (XBRL Financial Data)
Reported EPS of $0.41 versus the $0.38 analyst consensus — a +8.7% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $22.39B | $19.34B | +15.78% |
Cost of Revenue | $17.67B | $16.18B | +9.18% |
Gross Profit | $4.72B | $3.15B | +49.70% |
Operating Income | $941M | $399M | +135.84% |
Net Income | $477M | $409M | +16.63% |
EPS (Basic) | $0.15 | $0.13 | +15.38% |
EPS (Diluted) | $0.13 | $0.12 | +8.33% |
R&D Expense | $1.95B | $1.41B | +38.11% |
SG&A Expense | $1.83B | $1.25B | +46.52% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $143.72B | $125.11B | +14.88% |
Current Assets | $69.75B | $59.39B | +17.44% |
Total Liabilities | $58.92B | $49.69B | +18.57% |
Current Liabilities | $34.14B | $29.75B | +14.74% |
Stockholders' Equity | $84.12B | $74.65B | +12.68% |
Cash & Equivalents | $16.6B | $16.35B | +1.53% |
Long-Term Debt | $7.64B | $5.08B | +50.49% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $3.94B | $2.16B | +82.61% |
Investing Cash Flow | $-5.02B | $-1.65B | -204.24% |
Financing Cash Flow | $1.17B | $-332M | +453.01% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 21.1% | 16.3% | +4.78% |
Operating Margin | 4.2% | 2.1% | +2.14% |
Net Margin | 2.1% | — | — |
ROE | 0.6% | — | — |
ROA | 0.3% | — | — |
Current Ratio | $2.043 | — | — |
Debt to Equity | $0.7 | — | — |
Expected release date, analyst estimates & what to watch
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Tesla reported Q1 2026 diluted EPS of $0.13, up 8.3% YoY from $0.12, and net income of $477M. Whether this beat Wall Street consensus estimates would depend on analyst forecasts at the time, which are not included in the SEC filing itself.
The standout results were a 15.8% revenue increase to $22.4B, gross margin expansion of nearly 5 percentage points to 21.1%, and operating income surging 135.8% to $941M. However, net income of $477M was constrained by a 38% jump in R&D spending to $1.95B and a 46.5% rise in SG&A to $1.83B.
Tesla's revenue grew 15.8% YoY from $19.3B in Q1 2025 to $22.4B in Q1 2026, marking a significant rebound. Cost of revenue grew at a slower pace of 9.2%, which drove gross profit up nearly 50% to $4.72B.
Based on the financial data, key risks include heavy capital expenditure (investing outflows of -$5.02B, tripling YoY), rapidly rising operating expenses (R&D +38%, SG&A +47%), a thin net margin of just 2.1%, and long-term debt growing 50.5% YoY to $7.65B. These factors could pressure profitability if revenue growth slows.
Tesla's balance sheet appears solid with $16.6B in cash, a current ratio of 2.04, and $84.1B in stockholders' equity. However, free cash flow was negative this quarter due to $5.02B in investing outflows, and long-term debt rose sharply to $7.65B, reflecting an aggressive investment cycle that investors should monitor closely.