Salesforce reaches $ 20 billion in revenue, while Nikola reports a lower-than-expected quarterly loss, with shares falling on Friday. Virgin Galactic shares plummeted with news of the delay of SpaceShipTwo test flights. Julie Hyman, Emily McCormick and Brian Sozzi of Yahoo Finance analyze the numbers.
Video transcription
JULIE HYMAN: Okay, let’s see some of the other gains, now. And let’s start with Salesforce. Salesforce sales now grew 20% in the fourth fiscal quarter. This corresponded to the year-over-year gains it had in the previous quarter, which was disappointing vis a vis what some analysts were looking for. They predicted an acceleration. Our Julia La Roche talked to the CEO, Marc Benioff, about the results.
MARC BENIOFF: We had a great year. You can see these phenomenal numbers, well over $ 21 billion in revenue. And here we are. We are very confident in delivering more than $ 25.5 billion in revenue.
The reason, of course, is that we are operating with a deferred revenue model, that is, all contracts that we signed this year, we do not recognize revenue until the effective delivery of the service. And it flows very well this year and also in the years to come.
JULIE HYMAN: And so he’s looking at the type of set of the year, a year in which, of course, Salesforce performed well, along with many other technology companies that saw demand for their products increase. But stocks, again, are falling a little bit here this morning. Brian, what do you think of the Salesforce numbers and trends around what we saw in technology spending?
BRIAN SOZZI: Well, Julie, I think it goes back to what we were saying at the beginning of the series here, that when you are a high-growth stock in this type of environment, if you show any signs of slowing down or any small points of weakness, your shares will be sold today . And that is just the end result. That is how it will happen in this type of scenario.
I will also note this, there is still a big risk in how Salesforce integrates Slack. I still don’t think, Julie, that the market has come to like this deal about how much Salesforce actually paid for Slack. And there is some risk of integration here, I think.
JULIE HYMAN: Well, this is something to keep an eye on. Let’s talk about electric vehicles for a second here too. Because this is an area that we talk about a lot. Nikola was directly in focus for the market last year after he was the subject of a short sale research report, found that the company, I don’t know, maybe it wasn’t everything it appeared to be, kicked out its founder.
Now it came out with gains and a lesser loss than the previous year. Stocks, however, fell 7% here this morning, Brian. And the market does not seem to have much confidence in Nikola, can we say?
BRIAN SOZZI: No, that confidence has definitely not thrilled. But what you’re seeing here, I think, is why– why the action is under pressure here is very simple. They said in the conference call that they will only deliver 100 of their Tre trucks this year. Now, they expected to deliver 600. So this is a big change in the future trajectory of this business.
In addition, no partner for their hydrogen fuel networks. The market wants to see who Nikola will work with to build his hydrogen fuel stations. This partner is not yet available. Also, they suggested it on the conference call, and we spoke to the company several times, and I’m not surprised by that, they said they probably could – or probably will raise capital this year.
Again, I’m not surprised. We have spoken to them several times. But the market, again, in this type of scenario, where the market is liquidating and under a lot of pressure, when you are raised capital from a company that is pre-billing, Julie, is not good. It is not good.
EMILY MCCORMICK: Yes, absolutely, Brian. And I really think it was this focus on the delivery numbers of those battery powered electric vehicles that really disappointed Wall Street when it came to Nikola’s results yesterday. But speaking of pre-revenue companies, we also received results yesterday from Virgin Galactic.
And the company posted a less-than-expected loss. But when we look at the timeline for when these test flights will take place, this is exactly what Street is focusing on and something that has been continuously postponed here for Virgin Galactic. The company said its next test flight to the VSS Unit is likely to take place in May.
Remember that it was originally supposed to happen in December. They had to abort the mission, and then ended up having to delay that rescheduled test flight, which was supposed to happen earlier this month. And when we think this company really needs these test flights to take place before it can start generating significant revenue and taking customer deposits seriously, this is something that is really scaring Wall Street here this morning.
JULIE HYMAN: Yes, a very sharp drop in stocks. Remember, of course, that Virgin Galactic is on Jared’s list of one of these heavily shorted stocks. In fact, it increased this year.