ANNOUNCER: FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS "BLOOMBERG TECHNOLOGY" WITH CAROLINE HYDE AND ED LUDLOW. ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE HYDE IS OFF TODAY AND THIS IS UBER TECHNOLOGY. FULL EARNINGS COVERS AHEAD AS APPLE LOSES ITS 3 TRILLION MARKET CAP AROUND AMID TEPID DEMAND FOR IPHONE.
AMAZON SEEING STRONG REVENUE GROWTH EVEN AS THE E-COMMERCE GIANT RAINS IN THE SPENDING UNDER CEO ANDY JASSY AND NICOLA REPLACING ITS CEO OF LESS THAN A YEAR OF RUNNING THE ELECTRIC TRUCK MAKER. AND WHY AND -- AND WHY A FAMILIAR FACE IS TAKING THE WHEEL. ABBA'S ON AN AMAZON REPORTING -- APPLE AND AMAZON REPORTING QUARTERLY EARNINGS, ITS MARKET CAP NOW BELOW 3 TRILLION U.S.
DOLLARS. A LOST THAT MARKET CAP AROUND. THE OTHER END OF THE SCALE, AMAZON UP 11% ON AN INTRADAY BASIS ON TRACK FOR ITS BIGGEST JUMP SINCE NOVEMBER, A BEAT ACROSS THE BOARD. WE WILL DIVE INTO THE EARNINGS OF BOTH COMPANIES BUT I WANT TO START WITH APPLE BECAUSE THIS IS A REALLY BIG CHANGE OF SURE. SOFTNESS FOR IPHONE IN THE FISCAL THIRD QUARTER GONE, OVER NEW REV -- OVERALL REVENUE BEAT EXPECTATIONS BUT IT FELL 1% YEAR-OVER-YEAR. THAT MAKES IT THE THIRD CONSECUTIVE QUARTER THAT APPLE IS SEEING A YEAR ON YEAR SALES DECLINE. YOU SEE THAT ON THE FAR LEFT INSIDE OF THE CHART.
THAT IS THE BIGGEST RUN OF THE KLEINS ON SALES DROPPED SINCE 2016 BUT YOU GO BACK 20 YEARS, ALL THE WAY OVER HERE. IF WE GET ANOTHER YEAR ON YOUR QUARTERLY SALES DECLINE FOR A FOURTH CONSECUTIVE QUARTER, THAT IS THE BIGGEST RATE OF SALES DROPS APPLE HAS HAD IN MORE THAN TWO DECADES. THE STORY HERE IS ABOUT EXECUTIVES TALKING IPHONE ACCELERATION INTO THE FISCAL FOURTH-QUARTER AND THE -- IN SEPTEMBER, SERVICES CONTINUE TO BE STRONG.
DOUBLE DIGIT DECLINES IN WEARABLES AND IPAD. THE STORY, IS IT TECHNOLOGY, A LACK OF UP RATES, OR NEW GENERATION FORMS? ARE WE WAITING FOR IPHONE 15? LET'S GET TO APPLE AND BRING IN THE PRINCIPAL ANALYST OF FORRESTER. TIM COOK IS TALKING ABOUT WEAKNESS IN THE SMARTPHONE MARKET IN THE U.S. BUT STRENGTH IN INDIA AND CHINA. WHAT WERE THE MAIN STORIES OUT OF THIS QUARTER'S EARNINGS? >> SPECIFIC TO THE SMARTPHONE, THE MAIN STORIES ARE IS THAT APPLE DID WELL IN CHINA, THEY DID WELL IN MID ARC IT'S TRADITIONALLY DOMINATED BY ANDROID, AND THEY HAD MORE -- A RECORD NUMBER FOR THE PEOPLE WHO SWITCHED FROM ANDROID TO IOS. THE CHALLENGE WITH THE SMARTPHONE MARKET IS AS YOU
SAID ON A IT IS A MATURE MARKET. WHEN YOU LOOK AT U.S. ONLINE ADULTS, 95% ON A SMARTPHONE. THE DEVICES ARE VERY EXPENSIVE. THE DEVICES ARE AMAZING. THE UPGRADE CYCLES ARE SLOWER, IT IS NOT LIKE 10 YEARS AGO WHERE WE ALL BOUGHT A NEW PHONE EVERY TWO YEARS. THESE PHONES ARE SERVING CONSUMERS AND PCS FOR THREE TO FIVE YEARS AT A TIME SO IT IS GOING TO BE TOUGH -- I DON'T THINK IT IS A SURPRISE BUT IT WILL BE LIKE THIS BECAUSE THE MARKET IS MATURE, UNLESS YOU FIND NEW CUSTOMERS AND BREAK INTO NEW MARKETS. ED:
I WOULD LIKE TO DO SOME MENTAL ARITHMETIC WITH YOU, ARE YOU OPEN TO DOING THAT WITH ME? JULIE: I WILL TRY. ED: APPLE SAYS IT HAS AN INSTALLED BASE OF $2 BILLION -- 2 BILLION DEVICES GLOBALLY AND HAD ONE PAID SOME -- ONE BILLION PAID SUBSCRIBERS NOW. REALLY THERE IS A BIG POCKET OF APPLE DEVICE USERS AROUND THE WORLD THAT ARE NOT PAYING FOR AN APPLE SERVICE, THEY ARE USING WHAT IS AVAILABLE FOR FREE. ARE YOU ABLE TO WORK OUT THE PATH FORWARD, HOW APPLE AND HOW MANY OF THOSE USERS APPLE CAN CONVERT TO PAYING FOR A SERVICE? JULIE: I THINK ONE OF THE TRICKS OF THE NUMBERS IS THERE ARE COUPLE THINGS WE KNOW ABOUT APPLE USERS, THEIR RELATIVELY AFFLUENT COMPARED TO ANDROID OWNERS AND THE SECOND IS THEY OWN MULTIPLE DEVICES. IT WOULD NOT BE UNCOMMON IN MARKETS LIKE THE UNITED STATES FOR SOMEONE TO OWN A LAPTOP, TABLET, SMARTPHONE, AND SMARTWATCH.
WE HAD 2 BILLION ACTIVE DEVICES, THAT DOES NOT MEAN WE HAVE 2 BILLION OWNERS. WE HAVE FEWER OWNERS BECAUSE EACH PERSON OWNS MULTIPLE DEVICES. BUT THE STRENGTH OF THE STORY I THINK COMES BACK TO THE ARGUMENTS YOU ARE MAKING EARLIER ABOUT THE SERVICES. THE MORE DEVICES I OWN, THE MORE VALUABLE THE SERVICES BECOME TO ME BECAUSE THEY WORK ACROSS ALL OF MY DEVICES.
SO I CAN CONTINUE DOWN THAT PATH OR WE CAN SHIFT. THE SURE -- THE SERVICES STORY IS A STRONG ONE AND THEY HAVE BEEN LAYING THE GROUNDWORK FOR YEARS AND YEARS FOR THAT SERVICES REVENUE CONTINUED -- TWO TO CAN -- REVENUE TO CONTINUE TO BUILD. THEY HAVE ALMOST ALL OF THE UNITED STATES PAYING FOR VIDEO. JULIE:
LET'S BE CONSTRUCTIVE -- ED: LET'S BE CONSTRUCTIVE AND SAY WHAT WAS CONSTRUCTIVE FOR YOU BASED ON THE CALL OR WHAT THEY PUT IN EARNINGS? JULIE: WHAT WAS EXCITING WAS THE SERVICES NUMBER WAS UP AND THAT SPEAKS TO THE POWER OF THE ECOSYSTEM. THE SECOND THING EXCITING FOR ME IS LOOKING AT THE WEARABLES MARKET. YOU TALKED ABOUT IN YOUR OPENING THAT THE SMARTPHONE IS THE DEVICE, IT IS THE DEVICE THAT APPLE COUNTS ON AND WE HAVE ALL BEEN TALKING ABOUT WILL THERE BE SOMETHING THAT COMES AFTER THE SMARTPHONE AND REPLACES IT. WE HAVE NOT SEEN THAT YET. WHAT WE ARE LOOKING AT, $40 MILLION IN THE WEARABLES AND HOME MARKET, 35% OF U.S. ONLINE ADULTS ONLY SMARTWATCH. IT HAS OUTPACED FITNESS WEARABLES. THAT COULD COME UP IN TIME. I THINK THAT PART OF IT IS
INTERESTING. AND APPLE CONTINUES TO LAY THE GROUNDWORK HERE. WE'VE ALWAYS SAID A SMARTWATCH WILL HAVE MORE UTILITY AND BECOME MORE VALUABLE WHEN IT IS MY PAYMENT MECHANISM, WHEN IT IS MY HELP MECHANISM, MY IDENTITY MECHANISM, AND WHEN WE LOOK AT THE STATES TRYING TO MOVE MY DRIVERS LICENSE AND INSURANCE ONTO THE APPLE WALLY, THAT TRANSLATES TO THE WATCH AND THINGS WILL BE MORE VALUABLE. THAT IS THE SECOND THING I WOULD GET AT. ED: I JUST WANT TO JUMP IN REALLY QUICK. I'M LOOKING AT THESE BEAUTIFUL IMAGES OF VISION PRO AND IT TAKES ME BACK TO BEING -- EXACTLY, AND YOU SAY IT IS AMAZING BUT DID WE LEARN? JULIE: I HAVE HAD THEM ON AND YOU ARE LIKE WOW, THAT IS SOMETHING. ED:
AND THEN YOU ARE ONE OF THE SMALL GROUP THEN. DID YOU HEAR ANYTHING LAST NIGHT THAT GIVES YOU A BETTER SENSE OF HOW WIDE THE ROLLOUT OF THIS VISION PRO WILL BE GLOBALLY? JULIE: NO. THIS WILL BE TOUGH EARLY ON BECAUSE WHAT I'VE HEARD EARLY ON, THEY ARE WORKING THROUGH GETTING THE PRODUCT READY FOR MARKET AND CARRYING NEARLY A $3500 ICE POINT. THAT MAY BE A MIDPRICE FOR
COMPUTER BUT NOT MIDPRICE FOR A CONSUMER TO BUY. I THINK WE WILL BE IN A WAIT AND SEE SITUATION IN 2024. THE TECHNOLOGY IMPRESSES AN ECOSYSTEM IMPRESSES.
WHETHER THE ROLLOUT WILL BE RIGHT, THAT IS A BIT OF A WAIT AND SEE. ED: JULIE ASK FOR US FROM FORRESTER, THANK YOU VERY MUCH. THE OTHER BIG EARNINGS STORY IS AMAZON JOINING US IS MELISSA BURDICK, A PRESIDENT AND COFOUNDER.
AMAZON IS THE OPPOSITE, BEATING ACROSS THE BOARD, INVESTORS CHEERING THOSE RESULTS. WHAT I FOUND INTERESTING IS THE CORE BUSINESS. AMAZON.COM IS SEEING GROWTH, BUT THEY ARE ALSO GETTING BETTER AT MAKING MONEY IN THE MORE PROFITABLE AREAS OF THE E-COMMERCE BUSINESS, NAMELY ADVERTISING AND SELLING SERVICES TO THOSE INDEPENDENT MERCHANTS. WHAT WAS YOUR SORT OF ANALYSIS OF THAT PART OF THE BUSINESS? >> THEY HAD THEIR BIGGEST EARNINGS BEAT SINCE Q4 2020 AND EVERY SINGLE AREA, THEY DID A GOOD JOB. THE TWO DRIVERS, A WS AND ADDS, WERE UP. ADVERTISING, THIS BUSINESS WAS OVER $10.6 BILLION.
WE HAVE A BENCHMARK REPORT AT THE COMPANY WHERE WE LOOK AT QUARTER OVER QUARTER ON THE RETURN ON ADVERTISING SPEND AND THAT WAS REALLY STRONG AT THIS QUARTER. THEY HAVE GREAT RESULTS FOR ADVERTISERS. WITH ADS, THEY ALSO HAVE NEW GENERATIVE AI CAPABILITIES AND ALSO THEY HAVE AMAZON MARKETING CLOUD AND AMAZON STREAM WHICH OFFERS A LOT OF GREAT DATA ANALYTICS, REAL-TIME OPTIMIZATION, AND THAT HAS HELPED FUEL ADVERTISING SPENDING THIS QUARTER. ED: LET'S ZERO IN ON AWS BECAUSE AT THE END OF THE DAY, IT IS THE MAJORITY OF OPERATING INCOME.
WHAT DID YOU LEARN ABOUT THE REST OF THE YEAR? HOW AWS WILL CONTINUE TO GROW, BECAUSE IF WE GO BACK TO MICROSOFT A WEEK AGO, WE WERE A BIT CONCERNED ABOUT THE BROAD MARKET. MELISSA: ALL THE EYES ARE ON AWS THIS QUARTER AND THEY WERE UP 12%, WHICH LES COURTER THEY WERE 16% SO A DECLINING INCREASE PER QUARTER BUT I THINK THE BIGGEST CHALLENGE HAS BEEN COMPANIES HAVE IN CUTTING AND AWS HAS BEEN CUT, EVEN OUR OWN COMPANY HAS LOOKING -- IS LOOKING STRINGENTLY ON HOW WE OPERATE MOST EFFICIENTLY. AWS IS THE TARGET BUT ANDY JASSY SPENT A LOT OF TIME ON THE INVESTOR CALL YESTERDAY TALKING ABOUT HOW AWS STABILIZED. COMPANIES ARE INCREASING THEIR WORKFLOWS AND HE ALSO SPENT A LOT OF TIME ABOUT THE GENERATIVE AI CAPABILITIES THAT THEY ARE LAUNCHING, COULD WHISPER, BEDROCK, AND THOSE SURROUNDING. ED:
I JUST ONE OUT JUMP IN -- JUST WANT TO JUMP IN ON THE POINT, ANDY JASSY DESCRIBED AS AMAZON TAKING THE FIRST FEW STEPS IN A MARATHON. I THINK WE STILL HAVE THE QUESTION, HOW DOES AMAZON MAKE MONEY? ON THE BASICALLY ENTERPRISE AND CLOUD-FOCUSED AI OFFERING. DO YOU HAVE AN ANSWER TO THAT? MELISSA: IT'S A TOUGH ONE. GENERATIVE AI IS A BIG
INVESTMENT FROM AMAZON SO THEY WILL HAVE TO INVEST A LOT OF MONEY AND RESOURCES TO BUILD THAT OUT. THE IDEA IS THEY CAN GRAB MARKET SHARE AND HAVE MORE OF AN ATTRACTIVE OFFERING BECAUSE THEIR PRODUCT IS SO AMAZING, MORE EFFICIENT, HELPS CUSTOMERS USE IT. ALL EYES ARE ON THIS AND THEY WERE 26 AND 28% LES CORDER, AMAZON OF 12% IN CLOUD BUT THOSE ARE ON SMALLER BASES. I THINK THAT IS DEAFLY SOMETHING TO LOOK AT BECAUSE OTHERS, IS THE MARKET TURNING PRO, WHAT IS THE REACTION? ED: MELISSA, QUICKLY, WHAT DO YOU GIVE ANDY JASSY ON HIS QUARTERLY REPORT CARD, A, B, OR C? MELISSA: HE HAS DONE AN A. ALL HIS COST-CUTTING MEASURES THE LAST TWO YEARS, HE HAS DEFICIENCY. THE WAREHOUSE OPPORTUNITY MOVED FROM NATIONAL TO REGIONALIZED OPERATION THERE THAT WAS HUGE AND THEY ARE GETTING SEGMENTS TO CUT ASH SHIPMENT STAR CUSTOMERS FASTER. THAT HAS BEEN A HUGE AND PERMIT.
I THINK HE HAS DONE A GREAT JOB AND TO THIS QUARTER IS A RESULT OF THE LAST TWO YEARS. ED: MELISSA MURDOCK, PACVUE PRESIDENT, THINK YOU SO MUCH. COMING UP, SPORTS AND STREAMING, WHAT ONE INTERNET TV PROVIDERS AND STRONG EARNINGS MEANS FOR THE FUTURE OF STREAMING SPORTS ON PLATFORMS. WE WILL TALK TO THE CEO NEXT. ANOTHER BIG STORY, WE ARE WATCHING SHARES OF NIKOLA DOWN 12%. STEVE GURSKY WHO LED THIS BACK AND TOOK THEM PUBLIC, HE HAS BEEN CHAIRMAN SINCE SEPTEMBER 2020 AND IS IN THE CEO JOB. HIS PREDECESSOR IS OUT FOR PERSONAL REASONS. THIS IS BLOOMBERG.
♪ ED: GOING VIRAL, EVERYONE ON SOCIAL IS TALKING ABOUT THE FIFA WOMEN'S WORLD CUP, SEARCHES FOR THE TERM AND TRENDING ON GOOGLE AS IT HEATS INTO THE KNOCKOUT STAGES. FIERCE RIVALS, SWEDEN, AND THE UNITED STATES WILL MEET ONCE AGAIN IN THE ROUND OF 16. THIS TIME, THE STAKES ARE HIGHER. THE U.S.
IS VYING FOR A THIRD SECOND OF WORLD CUP BUT WE ARE NEARLY ELIMINATED BY PORTUGAL, AND SWEDEN WON ALL OF THEIR GROUP MATCHES. THEY HAVE SCORED -- OUTSCORED OPPONENTS ANGLES TO ONE. SPEAKING GAMES, FUMO TV EXCEEDED NORTH AMERICAN GUIDANCE IN THE SECOND QUARTER.
ACHIEVING 305 MILLION DOLLARS OF REVENUE, A 40 PER -- 41% YEAR ON YEAR. THE TV PROVIDER SPORTS FIRST LIVESTREAMING MODEL MAKING PROGRESS TOWARD PROFITABILITY IN 2025. TO TELL US ABOUT IT FUMO TV'S CEO. I FIND FUMO TV SO INTERESTING. PEOPLE CALL YOU A STREAMING PLATFORM BUT YOU ARE ESSENTIALLY A SOFTWARE PLATFORM TO GARNER AND GET OTHER PEOPLE'S STREAMS AND CONTENT. WHAT WAS THE GARNER FOR YOU IN PERFORMANCE? >> THE COMPANY HAD A CLEAN PRINT. WE, AS YOU SAID, GREW REVENUES UP OVER THE PERCENT, GREW SUBSCRIBERS OVER 20%, INCREASED AVERAGE REVENUE PER USER BY 13%, AD REVENUE INCREASED BY ABOUT 5% YEAR-OVER-YEAR, SO ACROSS THE BOARD ON THE I THINK WE HAVE OPERATED WELL AND WE HAVE BEEN MEASURABLE AS IT RELATES TO OUR COST STRUCTURE.
AS YOU CAN SEE FROM OUR BOTTOM LINE, WE HAVE IMPROVED BY ABOUT $40 MILLION. EVERYTHING THE TEAM HAS BEEN FOCUSED ON THE LAST SIX MONTHS HIS CERTAINLY COMING TO FRUITION. ED: LET'S TALK ABOUT THE FIFA WOMEN'S WORLD CUP, HOW IS THAT DRIVING THINGS FOR YOU RIGHT NOW? DAVID: AS YOU KNOW, OUR DNA IS SOCCER AND WE LAUNCHED IT AS A SOCCER PLATFORM. WOMEN'S WORLD CUP IS PERFORMING WELL. WE ARE STARTING TO SEE INCREASING TRACTION, DOUBLE-DIGIT TRACTION, AS THE TOURNAMENT PROGRESSES AND YOU KNOW WE ARE RELATIVELY EARLY IN THE TOURNAMENT SO WE ARE LOOKING FORWARD TO CONTINUING TO DRIVE VIEWERSHIP FOR THE WOMEN'S WORLD CUP AND OF COURSE THE U.S. WOMEN'S NATIONAL TEAM. ED:
WE DISCUSSED HERE ON "BLOOMBERG TECHNOLOGY" FRANKLY LIKE TURMOIL IN SPORTS TV, THE INDUSTRY FACES A LOT OF LONG-TERM QUESTIONS ON PROFITABILITY. BUT ALSO CULTURAL, TECHNOLOGICAL QUESTIONS. OUTLINE FOR ME HOW YOU SEE PEOPLE CONSUMING SPORTS IN THE FUTURE. THE PLATFORMS, THE DEVICES. DAVID: I THINK YOU HIT THE NAIL ON THE HEAD.
IT IS A VERY COMPLICATED INDUSTRY WITH MEDIA COMPANIES AND PHYSICAL PLATFORMS, STICKS LIKE ROKU AND AMAZON, THEN YOU HAVE COMPANIES LIKE FUBO WHICH ARE SOFTWARE-BASED PLATFORM AGNOSTIC THAT ALLOW PEOPLE TO MOVE FROM DEVICE TO DEVICE IN ANY ROOM IN THE HOUSE SEAMLESSLY, GIVING THEM ACCESS TO THEIR FAVORITE TEAMS AND OTHER CONTENT THROUGH ONE SINGLE APP. I THINK WE ARE POSITIONED FOR GROWTH IN SPACE WHERE YOU ARE GOING TO SEE I WOULD SAY SIGNIFICANT COMPETITION FROM THE LIKES OF CONNECTED TV PLAYERS THAT YOU ARE FAMILIAR WITH LIKE AMAZON AND ROKU BUT AT THE SAME TIME YOU SEE THE INCREASE IN COMPETITION FROM MANUFACTURERS LIKE SALES AND VISIO. WE THINK WE WILL CONTINUE TO INCREASE THE LEVERAGE WE HAVE AS WE ARE DRIVING SIGNIFICANT EYEBALLS ACROSS ALL OF THESE PLATFORMS, AND WE ARE AGGREGATING CONTENT FOR CONSUMERS AND MAKING SURE THEY ARE ABLE TO REMOVE A LOT OF THE FRICTION AND FRAGMENTATION THEY HAVE TO DEAL WITH ON A DAILY BASIS. ED: TO WHAT EXTENT DOES CABLE, REGIONAL SPORTS NETWORKS DIE? DAVID: AS YOU KNOW, WE HAVE DIFFERENTIATED VERSUS OTHER PLATFORMS IN THE UNITED STATES DUE TO I WOULD SAY OUR LOCAL FOOTPRINT. WE BELIEVE THERE IS A PRIVACY IN SPORTS AND MORE SO EVEN IN LOCAL SPORTS, WHICH HAS BEEN A STRONG DRIVER OF VIEWERSHIP. BUT WE HAVE A GREAT RELATIONSHIP WITH DIMON SPORTS WHICH CONTROLS THE MAJORITY OF THE REGIONAL SPORTS AND AT THE SAME TIME WE CONTINUE TO BUILD SOLID RELATIONSHIPS WITH PARTICULARLY WITH MAJOR LEAGUE BASEBALL GIVEN WE ARE IN SEASON AND HAVE ALSO MADE A NUMBER OF MARKETING ANNOUNCEMENTS WITH TEAMS ACROSS BASKETBALL AND BASEBALL TO CONTINUE TO DRIVE MORE AWARENESS FOR THEIR VIDEO PRODUCT ON OUR PLATFORM.
AT THE MOMENT, WE ARE CONFIDENT IN BOTH THOSE DIRECTIONS. DAVID: THE VIRTUAL CABLE BUNDLE IS NOT WORKING FOR ANYONE ELSE, IT IS FOR YOU. WHAT IS YOUR SECRET? DAVID: I ALWAYS LIKE TO SAY IT COMES DOWN TO PRODUCT. I THINK WE DO A GOOD JOB SURFACING -- SERVICING A LOT OF THE CONTENT THAT PEOPLE LIKE. WE HAVE A PREMIUM USER EXPERIENCE AND, HISTORICALLY, WE HAVE BEEN KNOWN FOR SPENDING A LOT OF TIME DEVELOPING INNOVATIVE FEATURES AND WE HAVE BEEN FIRST TO MARKET ON THINGS LIKE 4K AND MULTIVIEW WHICH IS SOMETHING THAT OTHER SERVICES INCLUDING APPLE HAS LAUNCHED. I THINK IT WAS WEEKS AGO THEY BEGAN TO ROLL THAT OUT BUT WE ARE FOCUSED ON VIDEO AI FEATURES AND BEING ABLE TO REALLY TAP INTO THE MOST EXCITING MOMENTS IN A PERSONALIZED WAY, A DISCRETE FASHION FOR EACH OF OUR USERS.
THAT IS SORT OF THE AREA WHERE WE WILL CONTINUE TO FOCUS. ED: FUBOTV CEO DAVID GENDLER, GOOD TO CATCH UP. THE EARNINGS COVERAGE CONTINUES, THIS TIME AT THE SHARES OF SESSION HIGHS, 115.1 MILLION BOOKED IN THE QUARTER, ABOVE SALES EXPECTATIONS, BUT WE HAD CHOPPY TRADING IN THE SESSION AREA THIS IS BLOOMBERG. ED: AIRBNB REPORTING A SLOWER PACE OF GROWTH IN THE NUMBER OF NIGHTS BOOKED AS PRICES FOR LODGING REMAIN HIGHER DESPITE THE SHARES NOW MOVING HIGHER, CHOPPED AROUND ON A FRIDAY MORNING SESSION. JOINING US IS TOM WAIT -- TOM WHITE, WHO HAS A BUY RATING ON AIRBNB AT $162 PRICE TARGET. YOU ARE BILLING THIS AS A SOLID
QUARTER, CONSTRUCTIVE GUIDANCE, AND IN A LITTLE BIT WE CAN TALK ABOUT THE NEW TECH, THE PRODUCT THEY HINTED AS WELL. WHAT IS THE BIG PICTURE STORY? FOR AIRBNB. BECAUSE WE HAVE SEEN OTHERS LIKE EXPEDIA GIVE WORRYING SIGNS ABOUT PEOPLE'S TRAVEL HABITS. TOM: AIRBNB IS NOT A CHEAP STOCK, IT HAS A HIGH VALUATION AND WITH HIGH VALUATION COMES HI EXPECT ASIAN FOR EARNINGS, BUT I THINK THEY DID JUST ENOUGH THIS EARNINGS PRINT TO GET PEOPLE EXCITED STILL ABOUT STORY, MAYBE TONE DOWN SOME OF THE CHATTER ABOUT THE INEVITABLE NORMALIZATION OF THE TRAVEL LANDSCAPE AND PEOPLE GOING BACK TO TRADITIONAL HOTELS AND SORT OF MORE TRADITIONAL TRAVEL PATTERNS AND MAY BE LESS OF THE VACATION RENTAL TYPE STUFF. ON TOP OF THAT, THEY TALKED ABOUT INTERESTING PRODUCT OPPORTUNITIES AND GROWTH UNLOCKS IF YOU WILL FOR 2020 FOR WHICH I THINK THE MARKET IS RESPONDING WELL TO. ED: WHICH OF THOSE CAUGHT YOUR EYE THE MOST? TOM: WE HAVE BEEN DOING A LOT OF WORK FOLLOWING THE EXPERIENCES SPACE, THE TOURISM, ATTRACTIONS A SPACE SO IT IS EASY TO INTO THAT AS AN EXCITING CATEGORY.
WHAT IS INTERESTING ABOUT WHAT AIRBNB CALLS EXPERIENCE IS IT IS THIS ENABLEMENT OF A NEW PRODUCT AND IN A LOT OF WAYS IT IS SIMILAR TO WHAT AIRBNB DID WITH THE INVENTORY AND ITS LODGING OF COMBINATION AND ENABLE THIS NEW CLASS OF TRAVEL PRODUCTS, NEW CLASS OF ACCOMMODATION PRODUCT, AND THE EXPERIENCES THEY HAD AN OPPORTUNITY TO DO THE SAME THING. THERE'S ALSO OTHER THINGS TOO. ADVERTISING FOR HOSTS, A WAY FOR HOSTS TO PROMOTE THEMSELVES MORE AND SORT ORDER, THAT COULD BE A REVENUE TAILWIND FOR AIRBNB. ALSO NEW SERVICES FOR GUESTS. THINK ABOUT TRYING TO BETTER PROFESSIONALIZE IF YOU WILL THE GUEST EXPERIENCE, MAKE IT MORE HOTEL LIKE IN SOME DAYS.
I THINK THOSE OF THE THINGS AIRBNB IS INKING ABOUT TESTING, AND HOPEFULLY WE WILL SEE THAT. ED: DOES AIRBNB STILL HAVE A TECHNOLOGY ADVANTAGE OVER THE EVERY OTHER OFFERING THAT IS OUT THERE IN THE SHORT-TERM RENTAL SPACE? TOM: IT IS HARD TO POINT TO ANYONE SINGLE TECHNOLOGY FUTURE, BUT I THINK THE PACE AND FLURRY OF INNOVATIONS AND PRODUCT UPGRADES THESE GUYS MAKE QUARTER AFTER QUARTER, WE THINK THERE -- THEY ARE STILL SOLIDLY AHEAD, PARTICULARLY WHEN IT COMES TO THE HOST EXPERIENCE. THEY MADE A LOT OF EFFORTS TO STREAMLINE THE ONBOARDING OF HOSTS, AND FOR FIRST TIME HOSTS, MAKING IT EASIER TO GET YOUR HOUSE OR ROOM ON THE PLATFORM AND AVAILABLE TO BOOK. THEY RECENTLY ROLLED OUT NEW
FEATURES TO HELP HOSTS UNDERSTAND PRICING INTO ANALYTICS AROUND WHAT IS THE BEST LEVEL TO PRICE THEIR INVENTORY. THE SHORT ANSWER IS WE THINK THERE IS STILL SOLID COMPETITION BUT THEY HAVE TO WORK ON IT. ED: TOM WHITE, DA DAVIDSON, A LONG EARNINGS WEEK ARE YOU AND I BOTH AREA COMING UP, WE CONTINUE OUR TOP STORY, APPLE, AMAZON EARNINGS. APPLE'S $3 TRILLION MARKET CAP ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." CHECKING ON THE MARKETS, NASDAQ 100, YOU CAN SEE ON A WEEKLY BASIS WE ARE DOWN 1.6%, THE BIGGEST DROP FOR THE INDEX
SINCE MARCH. THE EARNINGS STORY IS A BIG PART OF THAT AREA INTIMATE IN THE MIDDLE OF THE WEEK CHANGING, PARTLY BECAUSE OF ECONOMIC DATA AS WELL, EVEN SO WE ARE UP .9% IN THE SESSION. AMAZON A BIG PART OF THAT STORY, EARNINGS, BEATING EXPECTATIONS ACROSS THE BOARD. THAT STOCK ON AN INTRADAY BASIS HEADING FOR ITS BIGGEST JUMP SINCE NOVEMBER. APPLE IS THE OPPOSITE STORY. INVESTORS A LITTLE MORE
NEGATIVE ON WHAT THEY HAD TO HEAR. APPLE DOWN 3%. THE MAIN TAKEAWAY FROM A MARKETS PERSPECTIVE IS APPLE HAS DIPPED BELOW $3 TRILLION OF MARKET CAP AND LOSES THAT $3 TRILLION MARKET -- EXCUSE ME, IT IS FRIDAY, IT HAS BEEN A LONG WEEK, MARKET CAP CROWN. 11% HIGHER BY 11%. A NUMBER OF STORIES IN THE EARNINGS PRINT WE HAVE NOT DISCUSSED. LET'S STICK WITH APPLE AND
BRING IN BLOOMBERG'S MARK GURMAN. THE ONE IDEA YOU AND I TALKED ABOUT LAST NIGHT, MARK, WAS APPLE TALKING ABOUT COX FOR THE YEAR EARLIER AND IPAD. AND ALSO CURRENCY HEADWINDS. YOU ARE NOT BUYING IT, WHY?
>> IN TERMS OF THE IPAD DECLINE, THAT IS A 20% KLEIN, ONE OF THE BIGGEST IN THE HISTORY OF THE IPAD. THEY ARE TRYING TO PARTIALLY BLAME IT ON A COMPARISON TO THE LAUNCH OF THE M1 IPAD AIR. THAT IPAD AIR CAME OUT LAST MARCH. I'M NOT ENTIRELY SURE HOW MANY SALES OF THE IPAD THAT ACTUALLY DROVE. I THINK IT IS NOT A TOTALLY FAIR COMPARISON. I THINK THE BIGGER PICTURE IS THE IPAD COMPARED TO THE LATEST MAX IS SIMPLY NOT AS COMPELLING AS IT USED TO BE.
I THINK MORE CONSUMERS ARE GOING TO THE BACK. THE PRICING IS STRONG, THE 15 INCH MACBOOK AIR IS FANTASTIC, THE CHIPS AND LATEST MACBOOKS ARE TERRIFIC. COMBINED WITH THAT, CONSUMERS ARE NOTICING CHANGES TO THE IPAD PRO IN PARTICULAR THAT IS THE HIGHEST REVENUE DRIVING IPAD HAVE BEEN LIGHT. THAT DEVICE HAS NOT RECEIVED A REDEFINE ON -- REDESIGN IN OVER FIVE YEARS OR CLOSE TO SINCE IT WAS REVAMPED IN 2018. I'M TOLD THERE WILL BE BIGGER CHANGES TO THE IPAD PRO IN THE SPRING, OLED DISPLAY, REVAMPED DESIGN, NEW CHARGING CAPABILITIES.
THAT WILL BE PRETTY SIGNIFICANT AND CONSUMERS MAY BE HOLDING OUT FOR THAT BIG REVAMPED. ED: THE STORY IS THAT WEAKNESS IN IPHONE IN THE QUARTER GONE DID NOT DO ENOUGH TO OFFSET A RECORD QUARTER FOR SERVICES REVENUE. WHAT ELSE ARE WE EXPECTING BASED ON WHAT THE CFO HAD TO SAY GOING INTO THE FISCAL FOURTH-QUARTER WHICH IS THE PERIOD ENDING SEPTEMBER? MARK: WHAT THE CFO SAYS IS HE GAY GOT -- GAVE GUIDANCE ON THREE ITEMS, THE FIRST WAS THE PERFORMANCE IN TERMS OF THE GROWTH OR LACK THEREOF WILL BE CONSISTENT BETWEEN Q3 AND Q4. THAT MEANS YOU CAN EXPECT A Q4 DECLINE OF ABOUT 1.5%. SO THAT IS NOT AWFUL BUT THAT IS THE POINT -- OWING TO BE THE FOURTH QUARTER IN A ROW WHERE APPLE DECLINES. THAT IS THE FIRST TIME THIS HAS HAPPENED SINCE 2001. THE SECOND THING HE SAID IS
IPHONE REVENUE GROWTH, AS WELL AS SERVICES, WOULD ACCELERATE. THAT IS GOING TO MEAN YOU WILL SEE OR GROWTH FOR SERVICES AND IPHONE IN THE FOURTH QUARTER. THAT MEANS THE IPHONE HAD Q3 DECLINE OF 2.5% AND IT WILL BE LESS THAN THAT OR MAYBE IT WILL SEE GROWTH THANKS TO THE IPHONE 15. THE THIRD THING IS THE IPHONE AND MAC WOULD CONTINUE DECLINES AND WOULD BOTH FALL DOUBLE-DIGIT PERCENTAGE POINTS. THAT MAKES SENSE GIVEN THAT NEW MACS ARE NOT COMING OUT UNTIL LATER IN THE QUARTER. THEY ARE NOT COMING OUT --
LATER IN THE YEAR, THEY ARE NOT COMING OUT UNTIL THE FIRST QUARTER. I'M NOT EXPECTING MAJOR IPAD NEWS UNTIL CALENDAR 2024 WHICH IS IN THE FISCAL QUARTER AFTER Q4. ED: BLOOMBERG'S MARK GURMAN NOT JUST GIVING THE BREAKDOWN BUT WEAVING IN HIS LATEST REPORT AND ALL THINGS APPLE. THEY CAN VERY MUCH.
THE OTHER TOP STORIES AMAZON. JOINING US IS SPENCER SOAP OUT OF SEATTLE. THE ANDY JASSY EFFECT, HE PULLED IT OUT OF THE BAG. WHAT FOR YOU IS THE BIGGEST WAY? SPENCER: IT IS HARD TO NARROW TO ANY ONE PARTICULAR THING. EVERYTHING WAS FIRING ON ALL
PISTONS. IF WE GO BACK TO THE FIRST QUARTER, ANALYSTS WERE WORRIED BECAUSE THEY HAD AT THE TIME CLOUD SALES CONTINUING TO DECELERATE AND THEY SAW SOFTNESS. A BIG TAKE AWAY FROM THIS PRINT IS INVESTORS EXPECT THIS IS AT THE BOTTOM OF THE TROUGH AND THEY WILL COME BACK. THE OTHER THING IS ON THE E-COMMERCE BUSINESS, WE ARE SEEING BENEFITS OF A COST-CUTTING THAT ANDY JASSY HAS BEEN DOING.
THEY LAID OFF ABOUT 27,000 CORPORATE EMPLOYEES, THEY HAVE HAD THESE KIND OF A SPARE MENTAL PROJECTS THAT ARE SEEN AS NOT YIELDING RETURNS ANYTIME SOON. SO I THINK THAT THE PRINT, WHICH HAD A BEAT ON PROFITS FOR THE SECOND QUARTER AND EXPECTATION TO BEAT -- THE STREET WAS LOOKING FOR IN THE CURRENT QUARTER, JUST SHOWS THOSE THINGS ARE PAYING OFF AND JESSE IS BRINGING A SENSE OF DISCIPLINE, WHEREAS HIS PREDECESSOR, JEFF RESEAU'S, RAN AMAZON IS ALMOST LIKE AVC FUNK, LOTS OF SCATTERED PROJECTS GOING ON AT ANY TIME TO SEE WHAT WOULD RISE. AND JESSE HAS CLAMPED DOWN ON THAT. ED: WE WENT INTO EARNINGS KNOWING AWS, AMAZON WEB SERVICES, THE CLOUD UNIT, WILL BE IMPORTANT.
IT ALWAYS IS. THERE IS A BIG OCEAN OF THE "BLOOMBERG TECHNOLOGY" AUDIENCE OUT THERE THAT ARE NOT FAMILIAR WITH AWS. THEY KNOW AMAZON IS THE COMPANY THAT MAGICALLY DELIVERS PACKAGES TO THEIR DOORSTEP. EXPLAIN WHY AWS WAS IMPORTANT AND HOW IT PERFORMED IN THE QUARTER. SPENCER: FOR YEARS NOW, AMAZON'S CLOUD COMPUTING BUSINESS -- AND THIS IS BASICALLY PEOPLE RENTING SPACE ON AMAZON -- IN AMAZON ETA CENTERS THAT THEY ACCESS, FOR YEARS IT HAS BEEN THE PRIMARY PROFIT ENGINE OF AMAZON. WHEREAS THE E-COMMERCE BUSINESS, IT IS UP AND DOWN, PROFITABLE AND THE NOT PROFITABLE. AWS IS THE THING THAT HAS BEEN
SUSTAINING IT AND GROWING AT A HEALTHY CLIP FOR YEARS BUT STARTED SLOWING DOWN AS THERE WAS SOME UNEASINESS IN THE ECONOMY. FOLKS THAT WERE BUYING AWS SERVICES WERE PULLING BACK ON THAT INVESTMENT. NOW ESPECIALLY WITH THE ARTIFICIAL INTELLIGENCE, AMAZON IS TRYING TO POSITION ITSELF AS A KEY PLACE TO ACCESS TOOLS FOR ARTIFICIAL INTELLIGENCE AND THEY SEE THIS AS A BOOST TO THEIR CLOUD COMPUTING BUSINESS, EVEN THOUGH SOME FOLKS GET BEAT BY MICROSOFT. BUT IT IS STILL AN OPPORTUNITY FOR THEM AND THE CLOUD COMPUTING DIVISION IS GOING TO BE SOMETHING INVESTORS WILL BE WATCHING. FOR SOME TIME NOW. ED: SPENCER SOPER WITH THE MOST FANTASTIC SHIRT ON TELEVISION THIS FRIDAY. THANK YOU. COMING UP HERE, ON "BLOOMBERG TECHNOLOGY," SO ANYMORE EARNINGS TO RECAP. WE WILL HEAR FROM THE FOUNDER
AND CEO OF CLOUD COMPUTING COMPANYAPPIAN ABOUT THEIR RESULTS. THIS IS BLOOMBERG. ♪ FOUR WE HAD TO BREAK, FEDERAL RESERVE BANK OF ATLANTA PRESIDENT RAFAEL BOSTICK CAUGHT UP WITH BLOOMBERG'S DAVID WESTIN IN ASPEN, COLORADO, WEIGHING IN ON HIS THOUGHTS ON GENERATIVE AI. HAVE A LISTEN. >> WHAT I WOULD SAY ON GENERATIVE AI, IT IS HAPPENING SO FAST AND CHANGES -- CHANGE IS HAPPENING SO FAST. THIS IS A FRONT TIER AND WE WILL DO NEW THINGS AND DIFFERENT THINGS TO TRY TO KEEP UP WITH IT BECAUSE IT IS A QUESTION THAT WILL I THINK DRIVE A LOT OF WHAT HAPPENS IN OUR ECONOMY FOR THE NEXT SEVERAL YEARS.
ED: MANY COMPANIES ARE CHASING THE BIG LARGE-CAP STOCKS IN THE ARTIFICIAL INTELLIGENCE RACE. A CLOUD COMPUTING COMPANY, APPIAN, SAYS IT IS IN A DIFFERENT RACE TO A DISTINCT AI FUTURE. POSTING SECOND QUART OF SALES THAT'S TAUGHT ESTIMATES AND ADJUSTED LOSS PER SHARE FORECAST. JOINING US NOW IS THE APPIAN CEO, MATT CALKINS. THERE IS A REAL FOCUS ON THE CLOUD ENVIRONMENT RIGHT NOW. YOUR CLOUD SOME SCRIPT AND
BUSINESS GREW 30% YEAR ON YEAR IN THE QUARTER GONE. WHAT WAS THE MAIN DRIVER OF THAT? MATT: THERE IS STEADY INTEREST IN OUR ABILITY TO MANAGE THE WAY ROSS S WORKS ACROSS AN ORGANIZATION. WE COORDINATE MISSION-CRITICAL PROCESSES FOR MAJOR CUSTOMERS ACROSS THE WORLD AND THERE IS A SUSTAINED DEMAND FOR THAT, PARTICULARLY IN THE AGE OF AI. >> LOOKING ACROSS THE INDUSTRY, CLOUD BUSINESSES HAVE HAD A TOUGH QUARTER, YOU SEEM TO BE A BRIGHT SPOT. IN GENERAL, CLOUD SPENDING, DO YOU THINK WE HAVE REACHED THE BOTTOM OF THIS CHALLENGING TIME IN THE CURRENT ECONOMIC ENVIRONMENT? MATT: I THINK SPEND FOLLOWS PRODUCTIVITY GAINS. PARTICULARLY WITH AI, AUTOMATION WILL DELIVER POWERFUL PRODUCTIVITY GAINS AND THAT WILL PAVE THE WAY FOR NEW SPENDING. ED: WHEN YOU TALKED ABOUT YOUR --
>> WHEN YOU TALKED ABOUT YOUR AI WITH ANALYSTS ON YOUR EARNINGS CALL, I WAS STRUCK BY SOMETHING YOU SAID THAT YOU THINK COMPANIES, ORGANIZATIONS LIKE YOURS AND YOUR CLIENTS, SHOULD BE BRINGING ALGORITHMS AND TRAINING THEM IN-HOUSE. THAT IS A DIFFERENT APPROACH THAN WE HAVE SEEN FROM MEDA WHO HAVE BEEN EVANGELIZING OPEN SOURCING ARTIFICIAL INTELLIGENCE. CAN YOU KIND OF EXPLAIN YOUR TAKE ON THIS IDEA OF BRINGING EVERYTHING IN-HOUSE WHEN IT COMES TO ORGANIZATIONS BRINGING AI INTO THEIR BUSINESSES? MATT: WE TYPICALLY WORK WITH LARGE ORGANIZATIONS, MISSION-CRITICAL ORGANIZATIONS, WITH REGULATED INDUSTRIES SENSITIVE DATA. FOR THOSE CUSTOMERS, A PUBLIC AI MODEL DOES NOT MAKE SENSE.
IT DOES NOT MAKE SENSE TO SEND YOUR DATA ACROSS THE INTERNET, IT DOES NOT MAKE SENSE TO CULTIVATE AN ALGORITHM YOU DO NOT OWN AND YOU COULD LOSE IF YOU LOST YOUR CONTRACT WITH A BIG TECH VENDOR. THESE CIOS AND ORGANIZATIONS ARE GOING TO NEED THE BENEFIT OF AI BUT THEY WILL NEED IT ON THEIR OWN TERMS. THEY WILL NEED TO PRESERVE THEIR OWN INFORMATION, THEIR MOST VALUABLE ASSET, THEY WILL NEED TO OWN THAT AI ALGORITHM THAT THEY HAVE HELPED CREATE. WE ARE GOING TO ENABLE THAT. WE SEE THAT AS A PARALLEL MARKET TO THE AI EVERYBODY IS TALKING ABOUT.
WE THINK PRIVATE AI IS ITS OWN OBJECTIVE AND WILL APPEAL TO A HEALTHY SECTOR OF OUR CUSTOMERS. ALEX: IF THIS LAST EARNINGS SEASON IS ANY GUIDE FOR THE LARGE CLOUD COMPANIES SAY META AND ALPHA BACK KEEPING AI OR HOUSING AI IN CLOUD IS EXPENSIVE AND REQUIRES A LOT OF SERVERS AND COMPUTE POWER AND REQUIRES HIGHLY TECHNICAL INDIVIDUALS TO MAKE THIS HAPPEN. ARE YOU SAYING AS YOU LOOK OUT ACROSS YOUR CLIENT BASE, THESE FOLKS WITH SENSITIVE DATA, THEY WILL HAVE TO KIND OF BUILD THIS TECH INFRASTRUCTURE IN-HOUSE, HIGHER THE TALENTED FOLKS IN-HOUSE? HOW DOES THIS EVOLUTION LOOK INTERNALLY AT BUSINESSES IF THEY TAKE THIS PRIVATE AI APPROACH? MATT: THERE IS PUBLICLY AVAILABLE AI THAT IS EASY TO SOURCE. WHAT YOU NEED IS TO TRAIN OR FINE-TUNE IT ON INTERNAL DATA. THAT IS THE TRICKY PART. THAT IS WHERE WE PLAN TO SPEND MOST OF OUR ENERGY, BY COLLECTING DATA SETS THAT SPANNED THE ENTERPRISE, ARRANGING THEM AND THEN TRAINING THEM AUTOMATICALLY, USING THEM TO TRAIN DATA TO AI ALGORITHMS AUTOMATICALLY. WE WILL FACILITATE THAT STEP FROM NEARLY HAVING A GENERAL CAPABILITY PLATFORM SOURCE FROM OUTSIDE AND CULTIVATING A UNIQUE AI INTELLIGENCE, BASED ON THAT, BY TRAINING IT ON YOUR OWN DATA. THAT IS THE HURDLE WE WILL
FOCUS ON GETTING OUR CUSTOMERS ACROSS. ED: THE HEART OF THE STORY IS THE QUESTION, WHAT IS APPIAN'S TECHNOLOGICAL COMPETENCE OR POINT OF DIFFERENCE FROM ANYONE ELSE OUT THERE OFFERING THE ABILITY TO TRADE -- TRAIN A LARGE LANGUAGE MODEL IN-HOUSE OR FROM THIRD-PARTY? MATT: APPIAN DOES TWO THINGS IF I MAY SAY SO THE BEST, WE DO PROCESS. WE ROUTE WORK FROM ONE WORKER TO ANOTHER WHEN SOME OF THE WORKERS ARE DIGITAL. AI IS A NEW DIGITAL WORKER AND WE WILL HAVE TO ROUTE A LOT OF WORK AND EVERY BUSINESS THAT USES AI YOU WILL BE ROUTING WORK TO AND FROM AI SO THAT IS ONE OF THE BIG EDGES. THE OTHER IS OUR MASTERY OF
DATA. WE HAVE A DATA FABRIC THAT CONNECT ALL OF THE DATA IN AN ENTERPRISE AND ALLOWS YOU TOGETHER CUSTOM DATA SETS FOR TRAINING AND AI. WE WILL RELY HEAVILY ON THOSE FEATURES TO GIVE US AN ADVANTAGE IN THE OPENING WORLD PRIVATE AI. ED: APPIAN CEO CAULKINS AND ALEX BARINKA, THANKS TO YOU BOTH AND HAPPY FRIDAY. IT IS TIME FOR TALKING TECH.
APPLE, SAMSUNG, AND HP ARE FREEZING NEW IMPORTS OF LAPTOPS AND TABLETS INTO INDIA. THE SOUTH ASIAN COMPANY ABRUPTLY BANNED INBOUND SHIPMENTS WITHOUT A LICENSE WHICH SURPRISED SOME OF THE WORLD'S BIGGEST PC MAKERS, ACCORDING TO OUR NAMED SOURCES. TECH FIRMS ARE ENGAGING WITH NEW DELHI ON HOW THEY WILL OBTAIN LICENSES QUICKLY. QUALCOMM AND EARNINGS BE SENDING ARE TEAMING UP TO RIVAL THE LIKES OF SOFTBANK'S ARM. THE CHIP DESIGNERS ARE WORKING
WITH OTHER FIRMS TO FUND A NEW COMPANY SPECIALIZING IN RISK TECHNOLOGIES FOR CHIP DESIGNS. THE UNNAMED BUSINESS WILL INITIALLY FOCUS ON APPLICATIONS FOR CARS. A WORKERS UNION IS ACCUSING ALPHABET OF ILLEGALLY ENDING CONTRACTS FOR A HOST OF GOOGLE HELP WORKERS THAT WERE TRYING TO UNIONIZE. ORGANIZE HAS FILED A COMPLETE WITH A NATIONAL OR -- NATIONAL LABOR RELATIONS BOARD ACCUSING THE GIANT OF RETALIATION ON A NUMBER OF GRAPHIC DESIGNERS AND LAUNCH COORDINATORS RESPONSIBLE FOR AI RELATED TASKS AT THE COMPANY. COMING UP, A REVOLVING DOOR THAT NICOLA, THE NEW CEO AT THE HELM, EFFECTIVE IMMEDIATELY.
THE THIRD CEO IN 18 MONTHS, THE LATEST NAME IS A FAMILIAR FACE. THIS IS BLOOMBERG. ED: PAYMENTS COMPANY SHIFT FOR RAISED ITS OUTLOOK FOR THE YEAR AFTER REPORTING RECORD RESULTS IN THE SECOND QUARTER. JOINING US FOR MORE IS THE FOUNDER AND CEO, JARED ISAAC, THAT WE KNOW ALSO ON THIS PROGRAM AS ASTRONAUT AND JET PILOT. GOOD MORNING TO YOU. WHAT GAVE YOU THE CONFIDENCE TO
RAISE GUIDANCE? >> THANKS FOR HAVING ME ON THE SHOW. IT IS A GREAT QUESTION BECAUSE YOU THINK ABOUT THE MACRO PICTURE RIGHT NOW AND THERE'S A LOT OF PIECES MOVING -- MOVING PIECES BUT SHIFT FOURS GROWTH NORMALLY COMES FROM GROWING PAYMENT VOLUMES YEAR-OVER-YEAR THAT IS NOT VERY DRIVEN BY SAME-STORE SALES. I THINK THAT'S A FACTOR OF TAKING MORE CUSTOMERS NOW THAN WE HAD IN THE YEAR PRIOR AND THAT IS WHAT IS DRIVING THE RAISE TOWER OUTLOOK IS WE ARE WINNING A LOT OF SHARE ACROSS KEY VERTICALS AND EXPANDING INTERNATIONALLY SO WE ARE TAKING THE PRODUCT AND SERVICES THAT WORK US IN THE U.S. AND BRING THEM INTO NEW MARKETS. THAT IS A LARGE PART OF THE CONFIDENCE INTO THE GUIDANCE LEFT. ED: THERE WERE TWO ITEMS ON THE CALL THAT CAUGHT MY EYE. IT IS AN ISSUE OF TECHNOLOGY
BUT FEES. YOU CALLED OUT SOME OF YOUR COMPETITORS OVER THE ISSUES OF FEES IN THE CONTEXT OF HOTELS, RESTAURANTS. WHY? MATT: FIRST OF ALL, -- >> PERCIVAL WE HAVE AWESOME COMPETITORS, THEY ARE DOING GREAT AND THEY WILL CONTINUE TO WIN SHARE, ESPECIALLY IN THE RESTAURANT VERTICAL. BUT THERE WAS A PUBLIC MISSTEP IN WHICH AN INTENT BY ONE OF OUR COMPETITORS DISCHARGE A LOT OF JUNK THESE DIRECT LEAD TO CONSUMERS FOR PLACING ONLINE ORDERS AND THIS IS NOT THE TIME. THE ECONOMY IS ON SO MUCH SHAKY GROUND. HOPEFULLY WE ARE HEADED FOR THE SOFT LANDING BUT I DO NOT THINK IT IS A TIME FOR PENALIZING CONSUMERS WHO WANT TO GO OUT AND EAT OR DO A TAKEOUT ORDER AND WHATNOT.
WE DID THE EXACT OPPOSITE. WE SAID ANY OF THE RESTAURANT CUSTOMERS THAT ARE NOT HAPPY WITH WHERE THEY ARE AD, WE WILL PAY YOU $5,000 AND INSTEAD OF PENALIZING YOU FOR ONLINE ORDERING, WE WILL GIVE YOU DOLLAR FOR EVERY ONLINE ORDER DURING THE PROMOTION PERIOD. WE CAN DO THAT BECAUSE WE ARE PROFITABLE. WE GREW 60% YEAR-OVER-YEAR, WE HAVE HIGH 50% FREE CASH FLOW CONVERSION.
WE DO NOT NEED TO PRICE AND FEE OUR WAY TO PROFITABILITY LIKE OTHERS. WE CAN TURN AROUND AND PUT SOME OF THAT CAPITAL TO WORK WHEN NEEDED. ED: MOST OF THE INTERACTIONS BETWEEN YOU AND I HAVE BEEN IN THE CONTEXT OF YOU BEING ASTRONAUT. I HAVE A FEW CREEK -- HE QUESTIONS BEFORE WE LOSE YOU. DOES PILATES DAWN HAPPEN BEFORE THE END OF THIS YEAR? [LAUGHTER] JARED: THAT'S A PROBABLY WELL RESEARCHED QUESTION. WE HOPE SO. WE ARE STILL AIMING OFFICIALLY TOWARD THE END OF THE YEAR BUT AS YOU KNOW, THE ALARIS PROGRAM IS A RESEARCH DEVELOPMENT TYPE ROW -- DEVELOPMENT TYPE INITIATIVE.
AT SOME THINGS ARE JUST COMPLETELY BRAND-NEW AND THAT PUT RISKS INTO THE TIMELINES. WHEN IT DOES FIRE, IT WILL BE AN EXCITING MISSION, AND WE ARE STILL HOPEFUL TOWARD THE END OF THE YEAR. ED: YOU'VE ALREADY DONE THE HIGHS OUT TO TWO SPACEX ORBIT, WE TOLD AND THIS SHOW. EXPLAIN WHAT YOU ARE DOING ON THE SPACESUITS AND TECHNOLOGY YOU ARE DEVELOPED IN. ED: THIS NEXT MISSION IS EXCITING,
IT WILL BE THE HIGHEST EARTH ALTITUDE EVER FLOWN, 1400 KILOMETERS, THE FURTHEST HUMANS WILL HAVE GONE FROM THE EARTH SINCE THE LAST TIME WE WALKED ON THE MOON 50 YEARS AGO. TWO OF OUR CREW MEMBERS WILL BE THE WOMEN WHO WILL JOURNEY AND EXPLORE FARTHEST FROM EARTH WHICH IS COOL. THEN WE WILL COME DOWN IN ALTITUDE AND THEN BEND DOWN THE CABIN AND DO A SPACEWALK WITH A BRAND-NEW SPACESUIT. A GENERATION OF WHICH OF THE SUITS WILL BE TESTING, THE FIRST NEW SUITS ON 40 YEARS, MIGHT BE WHAT PEOPLE ARE WEARING ON THE MOON AND MARS SOMEDAY.
THEN WE ARE GOING TO TEST THE NEW CONSULATE -- CONSTELLATION OF SET LIES OUT WITH LASER TO LASER COMMUNICATION WITH STARLING SATELLITES AND DO RESEARCH. ED: SHIFT4'S FOUNDER, MATT CALKINS -- JARED ISAACMAN, THANK YOU. MORE INTERESTING, A NEW CEO IS ALSO A FAMILIAR FACE JOINING US NOW OUT OF BLOOMBERG DETROIT BUREAU, DAVID WELCH. YOU COVERED THIS, DAVE GURSKY -- STEVE GURSKY IS CEO OF NICOLA. WHAT HAPPENED? >> THE HAND-PICKED CEO COMING OUT OF GM'S FORMER TERM, THEY WORKED TOGETHER YEARS AGO, HE WAS THE CAR GUY, THE ENGINEER THAT WAS GOING TO COME IN AND MAKE THIS HAPPEN. HE HAD ISSUE WITH FAMILY THAT HE IS GOING BACK TO GERMANY I BELIEVE TO TAKE CARE OF SO GURSKY IS STEPPING OUT OF THE NONEXECUTIVE CHAIRMAN JOB BACK INTO THE CEO ROLE AND HE WILL BE AN OPERATING GUY. I THINK YOU WILL -- I GUESS HE
WILL HAVE A PLACE IN ARIZONA WHERE STEVE LIVES IN NEW YORK AND WILL SPEND A LOT OF TIME DOWN THERE. HE IS NOT AN INTERIM CEO, HE WILL DO THIS AS LONG AS IT TAKES TO GET THE COMPANY MOVING AND REALLY GOING. ED: THIS WAS A SURPRISE FOR BOTH OF US THIS MORNING. THE CONTEXT IS HE WAS AT THE HELM OF THE SPAC IQ THAT TOOK NICOLA PUBLIC AND WAS INVOLVED IN ALL OF TREVOR MILTON'S ROLLER COASTER THAT WE HAVE COVERED SO CLOSELY. DAVID WELCH, THANK YOU SO MUCH. THAT DOES IT FOR THIS EDITION
OF "BLOOMBERG TECHNOLOGY." IT HAS BEEN AN IMMENSE WEEK, SO EARNINGS HEAVY, APPLE, AMAZON, OTHER NUMBERS EARLIER IN THE WEEK. A LOT TO RECAP SO DON'T FORGET ABOUT OUR PODCAST, WHEREVER YOU GET YOUR PODCAST, WE PUBLISH ON APPLE, SPOTIFY, AND I HEART BUT ALSO THE EXISTING BLOOMBERG PLATFORMS. THE THING IS, THE EARNINGS STORY CONTINUES INTO NEXT WEEK, SO MUCH MORE TO REFOCUS ON, PARTICULARLY IN THE FIELD OF AI. FROM SAN FRANCISCO, THIS IS "BLOOMBERG TECHNOLOGY."
2023-08-05