BigCommerce Announces Third Quarter Financial Results - Yahoo Finance

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BigCommerce Announces Third Quarter Financial Results – Yahoo Finance

Published

3 years ago

November 5, 2020

Third Quarter Total Revenue of $39.7 Million, an Increase of 41% Versus Prior Year
Total ARR of $167.0 Million, an Increase of 38% Versus Prior Year

AUSTIN, Texas, Nov. 05, 2020 (GLOBE NEWSWIRE) — BigCommerce Holdings, Inc. (“BigCommerce”) (Nasdaq: BIGC), a leading open SaaS ecommerce platform for fast-growing and established brands, today announced financial results for its third quarter ended September 30, 2020.

“Our third quarter was one of the best quarters in BigCommerce’s history. Our third quarter revenue was up 41% year over year, which was a further acceleration versus the 33% growth rate we saw just last quarter. Our ability to deliver continued accelerating growth is a testament to our merchants’ continued success on the BigCommerce platform,” said Brent Bellm, CEO at BigCommerce. “As we head into the busiest time of year for retail, we remain focused on providing our merchants the technology, partnerships and resources they need to usher in a successful holiday sales season.”

Third Quarter Financial Highlights

Total revenue was $39.7 million, up 41% compared to the third quarter of 2019.
Total annual revenue run-rate (ARR) was $167.0 million, up 38% compared to the third quarter of 2019.

Operating Income/(Loss)

GAAP operating loss was ($10.1) million, compared to ($10.3) million in the third quarter of 2019.
Non-GAAP operating loss was ($7.2) million, compared to ($9.5) million in the third quarter of 2019.

Net Income/(Loss) and Earnings Per Share

GAAP net loss was ($10.9) million or (27%) of total revenue, compared to ($10.7) million or (38%) of total revenue in the third quarter of 2019. The nearly 11 point improvement in net loss as a percent of revenue was primarily a result of the significant increase in high margin PSR and the Company’s ability to manage spend effectively while driving further leverage in the business as the Company continues to scale.
Non-GAAP net loss was ($8.0) million, compared to ($9.9) million in the third quarter of 2019.
GAAP net loss per share was ($0.16) based on 49.4 million weighted-average shares of common stock outstanding, compared to ($0.70) based on 18.0 million weighted-average shares of common stock outstanding in the third quarter of 2019.
Non-GAAP net loss per share was ($0.16) based on 49.4 million weighted-average shares of common stock outstanding, compared to ($0.55) based on 18.0 million weighted-average shares of common stock outstanding in the third quarter of 2019.

Adjusted EBITDA

Adjusted EBITDA was ($6.6) million, compared to ($8.9) million in the third quarter of 2019. The increase in Adjusted EBITDA was primarily a result of the significant increase in high margin PSR and the Company’s ability to manage spend effectively while driving leverage.

Cash

Cash and cash equivalents totaled $178.8 million as of September 30, 2020.
For the nine months ended September 30, 2020, net cash used in operating activities was ($23.2) million, compared to ($31.1) million for the same period in 2019.

Key Business Metrics

ARR from accounts with at least one Enterprise plan (“Enterprise accounts”) was $89.8 million, up 48% compared to the third quarter of 2019.
ARR from Enterprise accounts as a percent of total ARR was 54%, up from 50% from the third quarter of 2019.
Number of accounts greater than $2,000 in annual contract value (ACV) was 9,777, up 10% compared to the third quarter of 2019.
Average revenue per account (ARPA) of accounts greater than $2,000 in ACV was $13,792, up 31% compared to the third quarter of 2019.
Accounts greater than $2,000 in ACV as a percent of total ARR was 81%, up from 77% from the third quarter of 2019.

Business Highlights

Product Highlights: The Company continues to invest in building the best open SaaS ecommerce platform in the world, supported and integrated with the Company’s extensive network of best-of-breed technology and agency partners. The Company launched the availability of Channel Manager, a platform feature that allows merchants to seamlessly discover and connect new sales channels and manage their omnichannel operations. Additionally, the Company launched international marketing sites in France, Italy and the Netherlands.
Merchant Highlights: The Company added leading brands across multiple industries including ChapStick, a leader in lip care; 5-Hour Energy; the well-known camera manufacturer Nikon Canada; Little League International; and Chivas, a leading football club in the top professional division in Mexico.
Partner Highlights: During the third quarter, the Company added multiple key strategic partnerships to expand its technology ecosystem. In cross-channel, the Company signed new partnerships with CED Commerce, Wish, SureDone, Feedonomics, and Deliverr. The Company further strengthened its community of advertising partners by adding Tinuiti and Teikametrics to support omnichannel sales efforts. The Company expanded its accessibility services by partnering with Essential Accessibility to allow ease of shopping for all shoppers. In addition, the Company expanded its partnership with PayPal by integrating with iZettle, the #1 payment gateway in the Netherlands, in order to further support international merchants.
Team/Culture: The Company was recently awarded “Best and Brightest Company” in San Francisco. Additionally, the Company hired its first Vice President of Diversity, Equity and Inclusion, Sharon Brogdon. Sharon joined the Company from Vericast where she was the executive director and head of diversity, equity and inclusion, and created and implemented a DEI strategy designed to be infused into and have a positive impact on all aspects of the culture, people and business.

Q4 and 2020 Financial Outlook
For the fourth quarter of 2020, the Company currently expects:

For the full year 2020, the Company currently expects:

The Company’s third quarter and 2020 financial outlook is based on a number of assumptions that are subject to change and many of which are outside the Company’s control. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

The Company does not provide guidance for operating loss, the most directly comparable GAAP measure to non-GAAP operating loss, and similarly cannot provide a reconciliation between its forecasted non-GAAP operating loss and its directly comparable GAAP measure without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.

Conference Call Information

BigCommerce will host a conference call and webcast at 4:00 p.m. CT (5:00 p.m. ET) on Thursday, November 5, 2020, to discuss its financial results and business highlights. The conference call can be accessed by dialing (833) 519-1347 from the United States and Canada or (914) 800-3909 internationally with conference ID 3834549. The live webcast of the conference call and other materials related to BigCommerce’s financial performance can be accessed from BigCommerce’s investor relations website at http://investors.bigcommerce.com.

Following the completion of the call through 8:00 p.m. ET on November 12, 2020, a telephone replay will be available by dialing (855) 859-2056 from the United States and Canada or (404) 537-3406 internationally with conference ID 3834549. A webcast replay will also be available at http://investors.bigcommerce.com for 12 months.

About BigCommerce

BigCommerce (Nasdaq: BIGC) is a leading software-as-a-service (SaaS) ecommerce platform that empowers merchants of all sizes to build, innovate and grow their businesses online. As a leading open SaaS solution, BigCommerce provides merchants sophisticated enterprise-grade functionality, customization and performance with simplicity and ease-of-use. Tens of thousands of B2B and B2C companies across 150 countries and numerous industries use BigCommerce to create beautiful, engaging online stores, including Ben & Jerry’s, Molton Brown, S.C. Johnson, Skullcandy, Sony, Vodafone and Woolrich. Headquartered in Austin, BigCommerce has offices in San Francisco, Sydney and London.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “outlook,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “strategy, “target,” “explore,” “continue,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These statements may relate to our market size and growth strategy, our estimated and projected costs, margins, revenue, expenditures and customer and financial growth rates, our Q4 and 2020 financial outlook, our plans and objectives for future operations, growth, initiatives or strategies. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. These assumptions, uncertainties and risks include that, among others, our business would be harmed by any decline in new customers, renewals or upgrades, our limited operating history makes it difficult to evaluate our prospects and future results of operations, we operate in competitive markets, we may not be able to sustain our revenue growth rate in the future, our business would be harmed by any significant interruptions, delays or outages in services from our platform or certain social media platforms, and a cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks could negatively affect our business. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission (the “SEC”), including our final prospectus under Rule 424(b) filed with the SEC on August 5, 2020, our Annual Report on Form 10-K for the year ended December 31, 2020 to be filed with the SEC and the future quarterly and current reports that we file with the SEC. Forward-looking statements speak only as of the date the statements are made and are based on information available to BigCommerce at the time those statements are made and/or management’s good faith belief as of that time with respect to future events. BigCommerce assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Use of Non-GAAP Financial Measures

We have provided in this press release certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Our management uses these non-GAAP financial measures internally in analyzing our financial results and believes that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.

Annual revenue run-rate

We calculate annual revenue run-rate (“ARR”) at the end of each month as the sum of: (1) the product of the current month’s monthly recurring revenue (“MRR”) multiplied by twelve (to prospectively annualize subscription revenue), and (2) the trailing twelve-month partner and services revenue, including non-recurring services revenue, such as one-time partner integration fees and store-launch services. MRR includes BigCommerce platform subscription fees and invoiced growth adjustments as customers’ businesses grow past contracted order thresholds after a threshold has been met. It also includes recurring professional services revenue, such as recurring technical account management services and product training services.

Accounts with greater than $2,000 ACV

We track the total number of accounts with annual contract value (“ACV”) greater than $2,000 (the “ACV threshold”) as of the end of a monthly billing period. To define this $2,000 ACV cohort, we include only subscription plan revenue and exclude partner and services revenue and recurring services revenue. We consider all stores added and subtracted as of the end of the monthly billing period. This metric includes accounts that may have either one single store above the ACV threshold or multiple stores that together exceed the ACV threshold. Accordingly, this cohort would include: (1) customers on Enterprise plans, (2) customers on Pro plans, and (3) customers with multiple plans that together exceed the ACV threshold.

Average revenue per account

We calculate average revenue per account (ARPA) for accounts above the ACV threshold at the end of a period by including customer-billed revenue and an allocation of partner and services revenue.

Adjusted EBITDA

We define Adjusted EBITDA as our net loss, excluding the impact of stock-based compensation expense, depreciation and amortization expense, interest income, interest expense, changes in fair value of financial instruments, and our provision for income taxes. The most directly comparable GAAP measure is net loss.

Non-GAAP Operating Loss

We define Non-GAAP Operating Loss as our GAAP Loss from operations, excluding the impact of stock-based compensation expense. The most directly comparable GAAP measure is our loss from operations.

Non-GAAP Net Loss

We define Non-GAAP Net Loss as our GAAP net loss, excluding the impact of stock-based compensation expense. The most directly comparable GAAP measure is our net loss.

Non-GAAP Net Loss per Share

We define Non-GAAP Net Loss per Share as our Non-GAAP Net Loss, defined above, divided by our basic and diluted GAAP weighted average shares outstanding. The most directly comparable GAAP measure is our net loss per share.

Source: BigCommerce Holdings, Inc.

Consolidated Balance Sheet
(in thousands, except per share amounts)

	September 30,			December 31,
	2020			2019

Assets
Current assets
Cash and cash equivalents	$	178,846		$	7,795
Restricted cash		1,133			1,355
Accounts receivable, net		21,458			15,548
Prepaid expenses and other assets		9,259			5,296
Deferred commissions		2,224			1,677
Total current assets		212,920			31,671
Property and equipment, net		7,242			8,241
Right-of-use-assets		12,345			14,065
Deferred commissions, net of current portion		2,995			2,087
Total assets	$	235,502		$	56,064
Liabilities, convertible preferred stock, and stockholders’ equity (deficit)
Current liabilities
Accounts payable	$	5,566		$	3,881
Accrued liabilities		2,584			5,849
Deferred revenue		11,842			9,399
Current portion of long-term debt		11,895			2,363
Current portion of operating lease liabilities		3,074			2,718
Other current liabilities		17,516			9,704
Total current liabilities		52,477			33,914
Deferred revenue, net of current portion		1,127			1,492
Long-term debt, net of current portion		10,000			38,502
Operating lease liabilities, net of current portion		13,400			15,705
Total liabilities		77,004			89,613
Commitments and contingencies (Note 6)
Convertible preferred stock
Convertible preferred stock, $0.0001 par value; 10,000 and 102,031 shares authorized at September 30, 2020 and December 31, 2019, respectively; 0 shares and 102,031 shares issued and outstanding, at September 30, 2020 and December 31, 2019, respectively.		—			223,754
Stockholders’ equity (deficit)
Common stock, $0.0001 par value; 500,000 shares Series 1 and, 5,051 shares Series 2 authorized at September 30, 2020 and 200,000 shares voting and 30,000 shares of non-voting authorized at December 31, 2019; 62,757, and 18,544 shares Series 1 and voting issued and, outstanding at September 30, 2020 and December 31, 2019, respectively and 5,051 and 0 shares Series 2 and non-voting issued and, outstanding at September 30, 2020, and December 31, 2019, respectively.		7			2
Additional paid-in capital		457,681			17,244
Accumulated deficit		(299,190	)		(274,549	)
Total stockholders’ equity (deficit)		158,498			(257,303	)
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)	$	235,502		$	56,064

Consolidated Statements of Operations
(in thousands, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Revenue	$	39,735		$	28,264		$	109,225		$	81,083
Cost of revenue		8,593			6,806			23,910			18,958
Gross profit		31,142			21,458			85,315			62,125
Operating expenses:
Sales and marketing		19,328			15,346			51,893			45,445
Research and development		12,124			10,862			34,390			32,162
General and administrative		9,745			5,527			23,925			15,748
Total operating expenses		41,197			31,735			110,208			93,355
Loss from operations		(10,055	)		(10,277	)		(24,893	)		(31,230	)
Interest income		2			4			20			245
Interest expense		(741	)		(359	)		(2,655	)		(1,129	)
Change in fair value of financial instruments		—			—			4,413			—
Other expense		(75	)		(86	)		(238	)		(163	)
Loss before provision for income taxes		(10,869	)		(10,718	)		(23,353	)		(32,277	)
Provision for income taxes		(14	)		7			6			21
Net loss	$	(10,855	)	$	(10,725	)	$	(23,359	)	$	(32,298	)
Dividends and accretion of issuance costs on Series F preferred stock	$	2,732		$	(1,865	)	$	(962	)	$	(5,417	)
Net loss attributable to common stockholders	$	(8,123	)	$	(12,590	)	$	(24,321	)	$	(37,715	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.16	)	$	(0.70	)	$	(0.83	)	$	(2.13	)
Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders		49,355			17,959			29,145			17,681

Revenue by Source
(in thousands)

	Three months ended September 30,				Nine months ended September 30,
*(Unaudited, in thousands)*	2020		2019		2020		2019
Subscription solutions	$	26,545	$	21,021	$	74,041	$	60,406
Partner and services		13,190		7,243		35,184		20,677
Total revenue	$	39,735	$	28,264	$	109,225	$	81,083

Consolidated Statements of Cash Flows
(in thousands)

	Nine months ended September 30,			Nine months ended September 30,
	2020			2019

Cash flows from operating activities:
Net loss	$	(23,359	)	$	(32,298	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,377			1,751
Amortization of discount on debt		480			41
Stock-based compensation		5,038			2,231
Allowance for credit losses		1,198			741
Accretion on discount to marketable securities		—			(69	)
Change in fair value of financial instrument		(4,413	)		—
Changes in operating assets and liabilities:
Accounts receivable		(7,473	)		(3,587	)
Prepaid expenses		(3,675	)		1,612
Deferred commissions		(1,454	)		(2,482	)
Accounts payable		1,685			(1,050	)
Accrued and other current liabilities		4,319			2,920
Deferred revenue		2,077			(920	)
Net cash used in operating activities		(23,200	)		(31,110	)
Cash flows from investing activities:
Purchase of property and equipment		(1,378	)		(5,326	)
Maturity of marketable securities		—			23,450
Net cash (used in) provided by investing activities		(1,378	)		18,124
Cash flows from financing activities:
Proceeds from exercise of stock options		1,947			471
Payment of dividends		(12,814	)		—
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs		171,128			—
Proceeds from debt		41,861			8,591
Repayment of debt		(6,715	)		(1,538	)
Net cash provided by financing activities		195,407			7,524
Net change in cash and cash equivalents and restricted cash		170,829			(5,462	)
Cash and cash equivalents and restricted cash, beginning of period		9,150			13,897
Cash and cash equivalents and restricted cash, end of period	$	179,979		$	8,435
Supplemental cash flow information:
Cash paid for interest	$	1,519		$	1,117
Noncash investing and financing activities:
Conversion of convertible preferred stock into common stock upon initial public offering	$	211,899		$	—
Conversion of convertible debt into common stock upon initial public offering	$	50,172		$	—

Reconciliation from GAAP to Non-GAAP Results
(in thousands, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Operating loss	$	(10,055	)	$	(10,277	)	$	(24,893	)	$	(31,230	)
Less: Stock-based compensation expense		2,868			815			5,038			2,231
Non-GAAP operating loss		(7,187	)		(9,462	)		(19,855	)		(28,999	)
Non-GAAP operating margin		(18.1	)%		(33.5	)%		(18.2	)%		(35.8	)%

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Net loss	$	(10,855	)	$	(10,725	)	$	(23,359	)	$	(32,298	)
less: Stock-based compensation expense		2,868			815			5,038			2,231
less: Change in fair value of financial instruments		—			—			(4,413	)		—
Non-GAAP net loss		(7,987	)		(9,910	)		(22,734	)		(30,067	)
Non-GAAP net loss per share		(0.16	)		(0.55	)		(0.78	)		(1.70	)
Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders		49,355			17,959			29,145			17,681
Non-GAAP net loss margin		(20.1	)%		(35.1	)%		(20.8	)%		(37.1	)%

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Net loss	$	(10,855	)	$	(10,725	)	$	(23,359	)	$	(32,298	)
Stock-based compensation expense		2,868			815			5,038			2,231
Depreciation and amortization		699			635			2,377			1,751
Interest income		(2	)		(4	)		(20	)		(245	)
Interest expense		741			359			2,655			1,129
Change in fair value of financial instrument		—			—			(4,413	)		—
Provision for income taxes		(14	)		7			6			21
Adjusted EBITDA	$	(6,563	)	$	(8,913	)	$	(17,716	)	$	(27,411	)
Adjusted EBITDA Margin		(16.5	)%		(31.5	)%		(16.2	)%		(33.8	)%

	Nine months ended September 30,			Nine months ended September 30,
(in thousands)	2020			2019

Net cash used in operating activities	$	(23,200	)	$	(31,110	)
Capital expenditures	$	(1,378	)	$	(5,326	)
Free cash flow	$	(24,578	)	$	(36,436	)

Reconciliation from GAAP to Non-GAAP Results (continued)
(in thousands, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Cost of revenue	$	8,593		$	6,806		$	23,910		$	18,958
less: Share-based compensation expense		179			62			334			121
Non-GAAP cost of revenue		8,414			6,744			23,576			18,837
Non-GAAP gross margin		78.8	%		76.1	%		78.4	%		76.8	%

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Sales and marketing	$	19,328		$	15,346		$	51,893		$	45,445
less: Share-based compensation expense		871			241			1,511			572
Non-GAAP sales and marketing		18,457			15,105			50,382			44,873
As a % of revenue		46.5	%		53.4	%		46.1	%		55.3	%

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

Research and development	$	12,124		$	10,862		$	34,390		$	32,162
less: Share-based compensation expense		582			186			1,216			415
Non-GAAP research and development		11,542			10,676			33,174			31,747
As a % of revenue		29.0	%		37.8	%		30.4	%		39.2	%

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019

General & administrative	$	9,745		$	5,527		$	23,925		$	15,748
less: Share-based compensation expense		1,236			326			1,977			1,123
Non-GAAP general & administrative		8,509			5,201			21,948			14,625
As a % of revenue		21.4	%		18.4	%		20.1	%		18.0	%

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Oil Firms Doubtful Trans Mountain Pipeline Will Start Full Service by May 1st

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10 hours ago

April 24, 2024

Harry Miller

Oil companies planning to ship crude on the expanded Trans Mountain pipeline in Canada are concerned that the project may not begin full service on May 1 but they would be nevertheless obligated to pay tolls from that date.

In a letter to the Canada Energy Regulator (CER), Suncor Energy and other shippers including BP and Marathon Petroleum have expressed doubts that Trans Mountain will start full service on May 1, as previously communicated, Reuters reports.

Trans Mountain Corporation, the government-owned entity that completed the pipeline construction, told Reuters in an email that line fill on the expanded pipeline would be completed in early May.

After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the company said early this month.

“The Commencement Date for commercial operation of the expanded system will be May 1, 2024. Trans Mountain anticipates providing service for all contracted volumes in the month of May,” Trans Mountain Corporation said in early April.

The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.

The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).

The expansion project has faced continuous delays over the years. In one of the latest roadblocks in December, the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.

The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.

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Tesla profits cut in half as demand falls

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11 hours ago

April 24, 2024

Harry Miller

Tesla profits slump by more than a half

Tesla has announced its profits fell sharply in the first three months of the year to $1.13bn (£910m), compared with $2.51bn in 2023.

It caps a difficult period for the electric vehicle (EV) maker, which – faced with falling sales – has announced thousands of job cuts.

Boss Elon Musk remains bullish about its prospects, telling investors the launch of new models would be brought forward.

Its share price has risen but analysts say it continues to face significant challenges, including from lower-cost rivals.

The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.

Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts’ predictions of just over $22bn.

But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.

It did not reveal pricing details for the new vehicles.

However Mr Musk made clear he also grander ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – even going as far as to say considering it to be just a car company was the “wrong framework.”

“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.

Such sentiments have been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”

Some investors have called for the company to instead focus on releasing a lower price, mass-market EV.

However, Tesla has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.

It also said its situation was not unique.

“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” it said.

Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.

Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.

The cuts in Texas represent 12% of Tesla’s total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.

However, Mr Musk sought to downplay the move.

“Tesla has now created over 30,000 manufacturing jobs in California!” he said in a post on his social media platform X, formerly Twitter, on Tuesday.

Another 285 jobs will be lost in New York.

Tesla’s total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company’s filings with US regulators.

Musk’s salary

The car firm is also facing other issues, with a struggle over Mr Musk’s compensation still raging on.

On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which had been rejected by a Delaware judge.

The judge found Tesla’s directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.

Due to the fall in Tesla’s stock value, the compensation package is now estimated to be around $10bn less – but still greater than the GDP of many countries.

In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas – which Mr Musk called for after the judge rejected his payday.

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Stock market today: Nasdaq futures pop, Tesla surges after earnings with more heavyweights on deck

Published

12 hours ago

April 24, 2024

Harry Miller

Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.

The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.

Tesla shares jumped nearly 12% after the EV maker’s vow to speed up the launch of more affordable models eclipsed its quarterly earnings and revenue miss. That cheered up investors worried about growth amid a strategy shift to robotaxis and the planned cancellation of a cheaper model.

The results from the first “Magnificent Seven” to report have intensified the already high hopes for Big Tech earnings, that the megacaps can revive the rally in stocks they powered. The spotlight is now on Meta’s (META) report due after the market close, as the Facebook owner’s shares rose after the Senate voted for a potential ban on rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) next up on Thursday.

Meanwhile, Boeing (BA) reported better than expected first quarter results before the opening bell with a loss per share of $1.13, narrower than the $1.72 estimated by Wall Street. Shares rose about 2% in morning trade.

Live6 updates

Wed, April 24, 2024 at 9:35 AM EDT

Tech leads at the open

Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.

The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.
Wed, April 24, 2024 at 7:50 AM EDT

Just off the phone: Otis CEO Judy Marks

Many in the Yahoo Finance newsroom know of my joy for reading up on elevator and escalator maker Otis Worldwide (OTIS) — I am fascinated by what the company makes, how it makes it and what it all says about the health of the global economy.

I just got off the phone with Otis CEO Judy Marks. Her comments to me on China — following her trip in March to the country (an important market for Otis) — left an impression:

“The message from the Chinese government is we want economic development. We want foreign direct investment. We’re going to celebrate 40 years in China this year, and it’s an important market to us, but we’ve watched as the market has developed and some of the challenges in the property market and they’re really continuing. I would tell you that the property market and the new equipment market similar to the last 18 to 24 months, it remains weak. Liquidity and credit constraints are weighing on the developers, and the top 50 developer sales this quarter were down almost 50% versus this quarter last year. So on the equipment side, we’re calling this a down high single digit to down 10% market for the year.”

Marks doesn’t see growth returning to Otis’ China business in 2024.
Wed, April 24, 2024 at 7:21 AM EDT

Hilton continues to buy its company back

Hilton (HLT) continues to be one of the most aggressive acquirers of its stock out of the gazillion companies I follow closely.

In many respects, it almost feels like Hilton is taking itself private again! The hotel and resorts company went public again in 2013 after being bought by Blackstone in 2007.)

This from the company’s just-released earnings report:

“During the three months ended March 31, 2024, Hilton repurchased 3.4 million shares of its common stock at an average price per share of $196.17, for a total of $662 million, returning $701 million of capital to shareholders during the quarter including dividends. The number of shares outstanding as of April 19, 2024 was 250.0 million.”

For perspective, Hilton ended 2022 with a share count of 277 million.
Wed, April 24, 2024 at 7:03 AM EDT

Toymaker earnings not coming in fun

No playing around here, earnings from major toymakers Mattel (MAT) and Hasbro (HAS) aren’t very fun to look at.

Not exactly a great earnings report from Mattel last night — now saying it will return to revenue growth in 2025. Mattel is unique in that the Barbie movie really drove up its results last year, so things mathematically will be down. Sales fell 1% year-over-year in the first quarter.

Hasbro’s earnings this morning are also tough on the eyes for investors. The company is calling out a 21% sales plunge in its key consumer products business due to “broader industry trends, exited businesses and reduced closeout sales as a result of last year’s inventory clean-up.”

Both weak reports say a lot about where shoppers minds are at right now … not with buying dolls, action figures and board games.
Wed, April 24, 2024 at 6:57 AM EDT

One stat to know on AT&T

I am still wading through AT&T’s (T) long earnings report, but one number caught my attention right off the jump.

$4.7 billion.

That’s how much debt AT&T repaid in the quarter, as it continues to try to bring down leverage in life after Time Warner. CEO John Stankey has told me a few times within the past year that paying down debt is one of the most important goals for his management team.

As it should be — AT&T still ended the first quarter with about $132.8 billion in total debt! The company’s market cap is $118 billion.
Wed, April 24, 2024 at 6:48 AM EDT
A list of questions Tesla investors need to ponder

The day after.

Tesla (TSLA) CEO Elon Musk has played investors like a fiddle. He gave them what they were clamoring for ahead of earnings — details on a cheaper Tesla — and they are eating it up. Shares are up 10% in pre-market trading, and the company’s ticker is dominating the Yahoo Finance Trending Ticker page.

All of that is fine and good, but it all detracts (likely by Musk’s design) from the main story at Tesla that has weighed on its stock price this year: The company is struggling, and any bold promises by Musk that sends its stock higher inside an awful year for the company should be questioned big-time.

Here are some questions the Tesla bulls need to ask themselves.

Musk promises robotaxis, shows off in the earnings slide-deck what their ride-sharing app may look like. But…

What do regulators have to say about this? How feasible is this launch within the next 12-months?

Musk does know that Uber (UBER) exists right? And that it’s nicely making profits finally and investing aggressively in its business.

Musk seems to think people will want to share their Teslas and make this platform a success. What happens if they don’t want to share their tricked out Model 3?

Musk mentions Tesla will own some of the robotaxi fleet. What does that do to its cash flow and margin profile? Do investors and analysts want to see Tesla saddled with these extra costs while the pure EV business is under pressure and they are trying to make humanoid Optimus robots?

Musk promises he is fully engaged at Tesla. But …

Some interesting dialogue on the earnings call on how long Musk plans to stay CEO of Tesla. He didn’t answer precisely with a timeline, said he works on Sunday and seemingly around the clock (like many other humans). He then questioned whether Tesla could get out its robots if he weren’t leading the company. Is now the time to ponder a Musk-less Tesla within the next few years? What does that even look like for investors? So many of his top execs have left or are leaving, including one of the guys on the earnings call last night! If buttoned-up/corporate Disney (DIS) CEO Bob Iger is seen as failing at succession planning, then Musk could be seen as one of the worst succession planners in CEO history.

Musk pounds the table on Tesla being an AI company again. But …

Sure, Tesla has some amazing technology. But doesn’t Tesla make cars first that then use its technology? Who would you rather own stock in? A pure play AI company such as Microsoft (MSFT) or a car company masquerading as an AI company?

Musk hypes a cheaper Tesla. But …

Tesla is no stranger to recalls and concerns about product quality. Just check out the Cybertruck recall last week! So, how high quality is a $25,000 Tesla going to be? This sounds like it could be a dreadful ownership experience, not unlike when my parents bought a cheap 1986 Ford Tempo and a 1987 Ford Escort when they came out.