Tesla Q2 revenue exceeds expectations, but EPS misses, and free cash flow turns negative at $1.1 billion.

ChainCatcher report: Tesla announced its second-quarter financial results, reporting revenue of $28.24 billion, exceeding market expectations of $25.71 billion and up 26% year-over-year; adjusted earnings per share came in at 33 cents, significantly below the expected 51 cents; net profit totaled $1.1 billion, a 5% decline year-over-year. Gross margin fell to 16.8%, below last year’s 17.2% and the market forecast of 19.4%. Operating expenses surged 47% year-over-year to $4.35 billion, causing the operating margin to plummet from 4.1% to 1.4%, primarily due to increased investments in AI and R&D. Free cash flow turned negative at $1.1 billion, compared to a positive $1.46 billion in the same period last year. Capital expenditures rose 142% year-over-year to $5.79 billion. The company stated that investments in production capacity expansion, AI computing power, battery materials, and semiconductor manufacturing infrastructure are currently underway. Automotive revenue reached $20.52 billion, up 23% year-over-year; energy business revenue was $3.14 billion, up 13%; services and other revenue totaled $4.58 billion, up 50%. FSD subscription users reached 1.48 million, up 56% quarter-over-quarter. Tesla’s stock has declined approximately 17% year-to-date and fell about 4% in after-hours trading.