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Salesforce tops estimates, Nikola misses, Virgin Galactic falls amid test flights delay

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Salesforce hits $20 billion in revenue, while Nikola reports a narrower-than-expected quarterly loss as shares fall on Friday. Virgin Galactic shares tumble on news of SpaceShipTwo test flights delay. Yahoo Finance’s Julie Hyman, Emily McCormick, and Brian Sozzi break down the numbers.

Video Transcript

JULIE HYMAN: All right, let's get to some of the other earnings, though, right now. And let's start with Salesforce. Now, Salesforce sales up 20% in its fiscal fourth quarter. That matched the year over year gains that it had in the prior quarter, which was disappointing vis a vis what some analysts have been looking for. They had been predicting an acceleration. Our Julia La Roche spoke with 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're quite confident in delivering more than $25.5 billion in revenue.

The reason why, of course, is we're operating off a deferred revenue model, that is, all the contracts that we signed this year, we haven't recognized the revenue until we're actually delivering the service. And so that flows very nicely into this year and also the years to come.

JULIE HYMAN: And so he's looking at the sort of ensemble of the year, a year in which, of course, Salesforce did well, along with many other tech companies that saw demand for their products increase. But the shares, again, are coming down a little bit here this morning. Brian, what do you make of those Salesforce numbers and the trends around what we've seen in tech spending?

BRIAN SOZZI: Well, Julie, I think it goes back to what we were saying at the top of the show here that when you're a high growth stock in this type of environment, if you show any signs of slowdown or any tiny bit of weakness, your stocks are going to get sold today. And that's just the bottom line. That's just how it's going to go in this type of backdrop.

I will note this too, there is still a good deal of risk on how Salesforce integrates Slack. I still don't think, Julie, that the market has come to like this deal on how much Salesforce actually paid for Slack. And there's some integration risk here, I think.

JULIE HYMAN: Well, that's something to keep an eye on. Let's talk electric vehicles for a second here too. Because this has been an area that we have talked a lot about. Nikola has been squarely in focus for the market last year after it was the target of a short sell research report, found out that the company, I don't know, maybe it wasn't all it cracked up to be, ousted its founder.

Now it's out with earnings, and a narrower loss than a year earlier. The shares, though, are down 7% here this morning, Brian. And the market doesn't seem to have a lot of confidence in Nikola, can we say?

BRIAN SOZZI: No, that confidence definitely not electrified. But what you're seeing here, I think, is why-- why the stock's under pressure here is very simple. They said in the conference call, they're only going to deliver 100 of their Tre semi-trucks this year. Now, they had expected to deliver 600. So that's a big change in forward trajectory of this business.

Also, no partner for their hydrogen fuel networks. The market wants to see who in the world Nikola is going to work with to build out their hydrogen fuel stations. That partner is not forthcoming yet. And then also, they suggested on the conference call, and we've talked to the company numerous times, and I'm not surprised by this, they said they are likely could-- or they likely are to raise capital this year.

Again, I'm not surprised. We have talked to them a good number of times. But the market, again, in this type of backdrop, where the market is selling off and under a lot of pressure, when you're a capital raised from a company that is pre-revenue, Julie, it's not good. Not good.

EMILY MCCORMICK: Yeah, absolutely, Brian. And I really do think it was that focus on those delivery figures for those battery electric vehicles that really disappointed Wall Street when it comes to Nikola's results yesterday. But speaking of pre-revenue companies, we also got results out yesterday from Virgin Galactic.

And the company did post a narrower than expected loss. But when we take a look at the timeline for when these test flights are going to be happening, that's really what the Street has been focusing on and something that's been continuously pushed back here for Virgin Galactic. The company saying that its next test flight for the VSS Unity will likely take place in May.

Remember that that was originally supposed to take place in December. They had to abort that mission, and then they ended up having to delay that rescheduled test flight, which is supposed to happen earlier this month. And when we think about this company actually needing these test flights to take place before they can start really meaningfully generating revenue and taking those customer deposits in earnest, this is something that is really spooking Wall Street here this morning.

JULIE HYMAN: Yeah, pretty sharp tumble there in the shares. Keep in mind, of course, Virgin Galactic is on Jared's list of one of these heavily shorted stocks. It's actually been pushed higher this year.