DoorDash Earnings and Super Micro's Roller Coaster Ride | Bloomberg Technology
>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE, THIS IS "BLOOMBERG TECHNOLOGY ," WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: I'M CAROLINE HYDE AT BLOOMBERG'S WORLD HEADQUARTERS IN NEW YORK. ED: AND I'M ED LUDLOW IN SAN FRANCISCO. THIS IS "BLOOMBERG TECHNOLOGY ."
CAROLINE: DOORDASH DELIVERING THE GOODS, BUT THE STOCK PULLS BACK, WHILE DRAFTKINGS IS BETTING BIG ON THE LOTTERY. ED: PLUS, SUPER MICRO DROPS, ENDING A RALLY THAT PUT THE SERVER COMPANY ON A RECORD-BREAKING WEEK. WE HAVE AN EXCLUSIVE CONVERSATION WITH THE CEO COMING UP. CAROLINE: OPENAI CEO SAM ALTMAN IS LOOKING TO GET THE GREEN RIGHT -- GREEN LIGHT FROM THE U.S. GOVERNMENT TO RAISE BILLIONS TO
BOOST GLOBAL MANUFACTURING OF AI CHIPS. WE WILL BRING YOU THE STORY, BUT FIRST CHECK IN ON THESE MARKETS. WE ARE RUNNING TOO HOT WHEN IT COMES TO PRODUCER PRICES. THE INFLATIONARY PUSHES ONCE AGAIN, AND IT HAS AN EFFECT ON STOCKS. WE ARE OFF BY .5% ON THE NASDAQ. THE S&P PULLING BACK ON WHAT HAS BEEN A WEEK OF GAINS. BUT STILL CLINGING TO THAT
$5,000 MARK. WE ARE LOOKING AT THE 2-YEAR YIELD. BONDS ACROSS THE BOARD SELLING OFF. WE ARE HIGHER BY NINE BASIS POINTS. IN THE WORLD OF BITCOIN, NOTABLE THAT IT STAYS HIGHER. EVEN THOUGH THE U.S. DOLLAR RISES ON THE BLACK -- ON THE BACK OF THE INFLATIONARY PUSH FROM PPI, WE ARE SEEING BITCOIN UP, ALMOST GETTING ON THAT 52,000 HANDLE.
IT HAS BEEN RUNNING UP ON THE WEEK ONE PERCENTAGE POINT ON THAT. ED: THEY'RE ALMOST TOO MANY COMPANY REPORTS TO GO THROUGH, TO THE UPSIDE, COINBASE, WE GOT WHAT WE THOUGHT WE MIGHT. THERE IS A LOT OF CLOSE CORRELATION WITH RECENT PERFORMANCE IN CRYPTOCURRENCY. IT IS ONE OF THE MOVERS TO THE UPSET. ROKU, COMPLETELY DIFFERENT STORY. IN THE STREAMING CONTEXT IT DID QUITE WELL, WHAT THE STREET IS FOCUSED ON REVENUE PER USER.
THE STOCK, DOWN 20%. YOU WILL TRY AND DIG INTO IT OR LATER IN THE PROGRAM. SUPER MICRO, THE CEO IS COMING ON. THEY ARE NOT ON TRACK FOR ANOTHER RECORD WEEK IN TERMS OF THE STOCKS PERFORMANCE. IT HAS JUST BEEN CRAZY WITH THE
STOCK RISING TO ABOUT $1000 A SHARE. WHAT IS IT THEY ACTUALLY DO? THAT IS THE BASIC QUESTION. AND I FLAGGED MICROSOFT BECAUSE OF THAT REPORT I PUT OUT WITH MY COLLEAGUES ABOUT SAM ALTMAN BASICALLY SAYING TO INVESTORS, I CAN'T RAISE MONEY FOR THIS CHIPS VENTURE UNLESS I GET THE BLESSING OF THE U.S. GOVERNMENT. THEN THERE IS THE HERE AND NOW WITH DOORDASH. I FIND DOORDASH INTERESTING, BECAUSE IT HAS PERFORMED WELL. THE TECHNOLOGY STORY IN THE QUARTER WAS NEW PRODUCT LINES, DOING MORE STUFF ON THE PLATFORM. YOU LOOK AT THEIR GUIDANCE FOR
THE FULL YEAR IN TERMS OF GROSS BOOKINGS OR ORDERS, IT SEEMS STRONG, BUT CLEARLY THE STOCK IS DOWN 10%. BUT WHAT IS IT -- SO WHAT IS IT THE STREET IS NOT LIKING? CAROLINE: PERHAPS IT IS THAT GUIDANCE NOT SURPASSING IT FOR MONTHS. WE ARE STAYING WITH DOORDASH. RAVI INUKONDA JOINING US FOR THOSE FOURTH QUARTER NUMBERS. I START WITH A TOUGH ONE. THE TAKE AWAY IS, NOT QUITE GOOD ENOUGH. AND YOU TALK US THROUGH THE
ADJUSTED EBITA NUMBER? OR IS IT THAT YOUR STOCK HAS PERFORMED TOO WELL OF LATE? RAVI: 2023 WAS A TRANSFORMATIVE YEAR FOR US. IT WAS AN INFLECTION YEAR, BOTH FROM A GROWTH, AS WELL AS A PROFITABILITY PERSPECTIVE. WE HAVE TRULY BECOME A DAILY HABIT. MORE USERS THAN EVER BEFORE ARE ORDERING FOR MORE CATEGORIES THAN EVER BEFORE, AND AT THE SAME TIME THE BUSINESS IS DOING REALLY WELL, WHERE HE BIT DEPTH IS THREE TIMES MORE IN 2023 COMPARED TO 2022 LEVELS -- EBITA IS THREE TIMES MORE IN 2023 COMPARED TO 2022 LEVELS. WE HAVE USERS ORDER FROM MORE CATEGORIES ACROSS 30 COUNTRIES AROUND THE GLOBE. CAROLINE: YOU HAVE HELPED THAT LOSS, PARTICULARLY DRIVEN DOWN BY EFFICIENCIES, PARTICULARLY ON THE LOGISTICS I.
WHAT THEREFORE, FOR THE BOTTOM LINE TO MEET YOUR OWN GUIDANCE FOR ADJUSTED EBITA, WHAT DO YOU NEED TO DO DO YOU THINK? RAVI: OUR GOAL IS ALWAYS TO DRIVE MORE USERS TO THE PLATFORM, CONTINUE TO ORDER MORE. PROFITABILITY IN OUR BUSINESS IS DRIVEN BY GROWTH. WE SAW THAT IN 2023. OUR GOAL IS TO CONTINUE TO DO THAT IN 2024.
IF YOU LOOK AT OUR OPERATING EXPENSES, THEY HAVE BEEN RELATIVELY FLAT FOR THE LAST SIX QUARTERS, WHILE WE CONTINUE TO DRIVE REVENUE ROSE. WHEN I LOOK AT 20 FOR OUR GOAL IS GOING TO BE THE SAME. WE ARE GOING TO DRIVE USERS, ORDER FREQUENCY, YOU'RE GOING TO CONTINUE TO DRIVE LEVERAGE FROM AN OPERATING PERSPECTIVE AS WELL. ED: THERE ARE LOADS OF NAMES ON THE STREET SAYING THERE IS NOTHING WRONG WITH THE REPORT, NOTHING BAD IN IT. MAYBE THEY LOOK AT THE FULL YEAR BOOKINGS GUIDANCE AND SAY THAT IT INDICATES DECELERATION AT THE BACK END OF THE YEAR.
PUT THE NUMBERS TO ONE SIDE. DOES THE WORLD LOOK LIKE RIGHT NOW TO DOORDASH, OPEN TERMS OF DRIVER SUPPLY, DEMAND FROM THE CONSUMER, CORPORATE DEMAND? RAVI: CONSUMER DEMAND ON THE PLATFORM CONTINUES TO BE REALLY STRONG. IF YOU LOOK AT 2023, IN A YEAR WHERE PEOPLE THOUGHT CONSUMERS WERE PULLING BACK, OUR USERS SET A RECORD HIGH. OUR SCALE AT 37 MILLION CONSUMERS GLOBALLY CONTINUES TO ORDER WITH US EVERY SINGLE MONTH. AND USAGE LEVELS HAVE ALSO INCREASED, WHERE OUR ORDER FREQUENCY HAS REACHED A RECORD HIGH.
FROM A SUPPLY PERSPECTIVE WE HAVE BEEN WELL SUPPLIED. SUPPLY HAS BEEN AS GOOD AS IT HAS BEEN OVER THE LAST COUPLE OF YEARS. AND YOU LOOK AT THE CONSUMER DEMAND IT IS STRONG. YOU LOOK AT THE SUPPLY SIDE
METRICS A CONTINUES TO BE STRONG. WHICH IS ALLOWING US TO DRIVE GROWTH, AS WELL AS THE BOTTOM-LINE PROFITABILITY YOU ARE SEEING TODAY. ED: I ALWAYS THINK ABOUT DOORDASH AS A REALLY BIG SOFTWARE COMPANY. WE DON'T EVER TALK ABOUT THAT
SIDE OF THE BUSINESS, RIGHT? THE CREATION OF A MARKETPLACE, BUT ALSO YOU ARE ESSENTIALLY OFFERING SOFTWARE TO THIRD PARTIES, MAKING THEIR BACKEND. HOW IS THAT SIDE OF YOUR BUSINESS DOING? RAVI: OUR SERVICES BUSINESS, WHICH IS THE SOFTWARE ASPECT OF OUR BUSINESS, CONTINUES TO DO REALLY WELL. OUR GOAL IS TO BE WHERE MARCH -- WHERE MERCHANTS WANT US TO BE. WE OFFER A PRODUCT CALLED STOREFRONT, WHICH POWERS MERCHANT'S OWN WEBSITES, AND AT THE SAME TIME WE ARE PROVIDING LOGISTICS ENGINES FOR MERCHANTS IN ORDER TO HELP THEM AUGMENT THEIR OWN SERVICE AS WELL. ED: YOU ARE NOT -- CAROLINE: YOU ARE NOT JUST SERVING MERCHANTS IN THE UNITED STATES.
HE MADE A KEY ACQUISITION. THE EFFORT TO GO INTO -- INTERNATIONAL, DO YOU STAY IN THE COUNTRIES YOU ARE IN AND EXPAND FROM THERE, OR DO YOU LOOK TO ACQUIRE OR BUILD YOURSELF ELSEWHERE? RAVI: TODAY WE ARE OPERATING IN ABOUT 28 COUNTRIES OF -- OUTSIDE THE UNITED STATES. WHEN I LOOK AT OUR INTERNATIONAL BUSINESS, IT IS GOING REALLY FAST. SOMETIMES
FIVE TO SIX TIMES FASTER THAN PEERS, WHICH IS ALLOWING US TO GAIN SHARE IN THE MARKETS WE OPERATE IN. WE'RE JUST SERVING A SMALL FRACTION OF THE USERS. WE HAVE OUR HANDS FULL WITH EXISTING MARKETS.
WE ARE GOING TO CONTINUE TO INNOVATE IN THOSE MARKETS BY OFFERING NEW PRODUCTS. WE ARE BRINGING GROCERY TO MANY OF THE INTERNATIONAL MARKETS. THE PENETRATION LEVELS IN SOME COUNTRIES ARE EVEN HIGHER THAN WE ARE SEEING IN THE U.S. OUR GOAL IS TO DRIVE IMPROVEMENTS IN SELECTION, IMPROVEMENTS IN QUALITY, AS WELL AS AFFORDABILITY. CAROLINE: LET'S TALK ABOUT THAT FOR -- THAT AFFORDABILITY.
TONY ALSO ECHOING THAT. HOW DO YOU DO THAT WHEN WE STILL HAVE A RELATIVELY INFLATIONARY ENVIRONMENT, CERTAINLY HERE IN THE U.S.? RAVI: AFFORDABILITY IS A KEY STRATEGIC PRODUCT -- STRATEGIC FOCUS FOR US. HALF OF OUR USERS DO NOT PAY ANY DELIVERY FEE. AND WE HAVE LAUNCHED THAT PROGRAM JUST ABOUT FIVE YEARS AGO AND SAVE CONSUMERS OVER $10 BILLION. AT THE SAME TIME WE ARE
INNOVATING ON THE PRODUCT SIDE. WE ARE REALLY PROUD THAT LOW INCOME FAMILIES CAN USE GOVERNMENT SUBSIDIES TO BE ABLE TO ORDER GROCERIES ON THE PLATFORM. AND THIS IS OUR WAY OF GIVING BACK CONVENIENCE, VALUE, AND TIME TO OUR CONSUMERS. ED: LET'S USE FREE CASH FLOW AS A KIND OF STRATEGY CONVERSATION.
YOU DID REALLY WELL 2023, BUT CAROLINE IS BRINGING UP SOME KIND OF BIG POINTS. IT IS A LOT OF ANXIETY ABOUT CREDIT CARD DATA. AND THEY ARE BRINGING THAT UP BECAUSE AT SOME POINT THE CONSUMER MIGHT GO AWAY. AND LIKE YOUR INDUSTRY PEERS, YOU MIGHT HAVE TO SAY, WE NEED TO DO MORE DISCOUNTS, INCENTIVIZING, PROMOTIONAL WORK.
AND I'M ASSUMING THAT DOES IMPACT FREE CASH FLOW GOING FORWARD. RAVI: FREE CASH FLOW IS A REALLY IMPORTANT METRIC FOR US. IF YOU LOOK AT 2023, I'M REALLY PROUD WE GENERATED OVER 1.3 BILLION DOLLARS OF FREE CASH FLOW, WHICH, AS YOU POINTED OUT, IS AN IMPORTANT HEALTH METRIC FOR US. OUR FOCUS HAS ALWAYS BEEN ON
PRODUCT, AS WELL AS INNOVATION IN TERMS OF TECHNOLOGY. JUST A FEW EXAMPLES. THE WAY WE ARE DRIVING GROWTH HE IS, TODAY WE HAVE MORE THAN 115,000 STORES THAT ARE OUTSIDE OF RESTAURANTS. VIRTUALLY, AND I JOINED THE
COMPANY YEARS AGO, THERE WERE NO STORES ON THE PLATFORM. OUR GOAL IS TO BRING TECHNOLOGY, BRING PRODUCT INNOVATION TO THE 30 MILLION -- THE 37 MILLION CONSUMERS ON THE PLATFORM. THAT IS WAS IT -- WHAT IS GOING TO DRIVE GROWTH, AS WELL AS PROFITABILITY FOR US. ED:
WHAT IS THE NEXT TECHNOLOGY FRONTIER? WHAT IS THE NEXT NEW PRODUCT FOR DOORDASH? RAVI: WE ARE OPERATING IN THREE LARGE SEGMENTS. RESTAURANTS, GROCERY, AND INTERNATIONAL, EACH OF WHICH ARE ROUGHLY ABOUT $1 TRILLION. THE PENETRATION LEVELS ARE STILL VERY EARLY. I'M EXCITED ABOUT THE PROGRESS WE HAVE MADE, BUT WE CONTINUE TO DRIVE MORE IN TERMS OF ADDING MORE CATEGORIES, ADDING MORE SELECTION, WHICH IS CONTENT ON THE PLATFORM, WHILE MAKING THE PRODUCT MORE AFFORDABLE, AS WELL AS HIGH QUALITY. IF WE CONTINUE TO DO THAT WE ARE GOING TO DRIVE MORE USERS, HAVE THEM ORDER MORE WITHOUT, WHICH IS ULTIMATELY GOING TO DRIVE PROFITABILITY. ED: DOORDASH CFO RAVI INUKONDA, TO
CATCH UP WITH YOU. ED: WE WELCOME BLOOMBERG TELEVISION AND RADIO AUDIENCES WORLDWIDE. SUPER MICRO'S STOCK HAS BEEN ON A ROLLER COASTER. SHARES WHIPSAWED TODAY, THREATENING TO DERAIL WHAT IS SAID TO BE THE SERVER-MAKER'S BEST WEEK ON RECORD. I'M DELIGHTED TO SAY SUPER MICRO'S FOUNDER AND CEO, CHARLES LIANG, JOINS US NOW LIVE.
GOOD MORNING TO YOU AND WELCOME TO THE PROGRAM. LET'S START THERE. LET'S JUST GET IT DONE. CHARLES: HI. GOOD MORNING. ED: THE STOCK HAS BEEN ON A WILD RIDE. IS YOUR COMPANY FAIRLY VALUED? CHARLES: YES. AS YOU KNOW, WE DELIVER THE
BEST GENERATIVE AI PLATFORM IN THE WORLD. ESPECIALLY IN TERMS OF TIME-TO-MARKET. WHENEVER IS -- WHENEVER NEW TECHNOLOGY IS AVAILABLE, WE ARE ABLE TO DELIVER NEW PRODUCT TO THE MARKET. WE DELIVER PRODUCT AT SCALE. WE CALL OUR RACK PLUG AND PLAY. WHEN CUSTOMERS SEE IT, THEIR ABILITY TO BE ON RYAN -- TO BE ONLINE, THEY PLUG IN THE POWER CABLE AND THEY ARE READY TO BE ONLINE. SO, GOOD QUALITY TIME-TO-MARKET, AND READY TO RUN. ED: THERE IS CLEARLY A LOT OF
EXCITEMENT IN THE MARKET THAT WHATEVER IS HAPPENING IN AI INFRASTRUCTURE AND INVESTMENT, YOU ARE A CORE BENEFICIARY. BUT ONE OF THE QUESTIONS CAROLINE AND I GET FOR YOU CONSISTENTLY IS, WHAT IS IT THAT SUPER MICRO DOES THAT IS ANY DIFFERENT FROM YOUR BIGGEST COMPETITORS? NAMES LIKE DELL, HP? CHARLES: GOOD QUESTION. WE HAVE SOMETHING SPECIAL. SINCE 30 YEARS AGO I FOUNDED A COMPANY, SUPER MICRO, WE USED A BOX SOLUTION TO BUILD OUR SERVER , TO BUILD OUR TOTAL SOLUTION. THE SOLUTION ENABLED US TO DESIGN PRODUCTS MORE EFFICIENTLY. WITH BETTER QUALITY, BETTER
INVENTORY LEVERAGE, AND BETTER SERVICE EFFICIENCY. THAT IS WHY WE ARE ABLE TO DELIVER NEW TECHNOLOGY, TIME-TO-MARKET, EARLIER THAN OTHERS. AND PLUS, WE HAVE AN ENGINEER WORKING IN THE BAY AREA. AND ALSO IN TAIWAN. SO WITH TWO TEAMS, ASIA AND USA
WE ARE ABLE TO DESIGN PRODUCT MORE EFFICIENTLY THAN OTHERS, BASICALLY. CAROLINE: AND WE CAN SEE, FOR OUR RADIO AUDIENCE, WE CAN SEE THE PRODUCTS YOU MAKE BEHIND YOU. I'M INTERESTED, CHARLES, THE SCALE OF THE MARKET SIZE HERE. THE TOTAL ADDRESSABLE MARKET. HOW BIG CAN IT?
HOW BIG OF A CHUNK OF THE PIE ARE YOU GOING TO GET? CHARLES: THAT IS ANOTHER ADVANTAGE WE HAVE. WE MANUFACTURE IN THE BAY AREA GLOBAL AS WELL. WE WORK WITH CUSTOMERS FROM THE UNITED STATES -- UNTIL WE SHIP. WE HAVE HUGE CAPACITY READY NOW. IN SILICON VALLEY ALONE WE ARE ABLE TO PRODUCE 4000 RACKS A MONTH, EQUAL TO ABOUT 15,000 SYSTEMS PER MONTH. IN ASIA, IN EUROPE WE ALSO HAVE CAPABILITY THERE.
BASICALLY, WE ARE ABLE TO BUILD ENOUGH SERVERS FOR OUR CUSTOMER. NOW, AS YOU KNOW, THERE IS A CHIP SHORTAGE. ONCE WE HAVE MORE SUPPLY FROM THE CHIP COMPANIES, FROM NVIDIA, WE CAN SHIP MORE TO CUSTOMERS. CAROLINE:
LET'S TALK ABOUT THE CHIPMAKERS. YOU'RE KIND OF AGNOSTIC HERE, RIGHT? YOU TAKE CHIPS FROM INTEL, YOU TAKE CHIPS FROM NVIDIA. WHAT ARE YOUR RELATIONSHIPS LIKE? CHARLES: OUR COMPANY WAS FOUNDED IN 1993. A 30 YEARS OLD COMPANY. WE STARTED WORKING TOGETHER ALMOST SINCE DAY ONE. WITH A 30-YEAR RELATIONSHIP, AND THEN GO TO MARKET, WE HAVE BEEN WORKING VERY CLOSELY. HOWEVER, WE HOPE THEY HAVE MORE CHIP AVAILABLE. ED:
CHARLES, DO YOU HAVE A NUMBER, A DOLLAR VALUE FOR THE TOTAL ADDRESSABLE MARKET THAT YOU SEE FOR YOUR COMPANY IN THE CONTEXT OF AN AI INFRASTRUCTURE BUILDOUT? CHARLES: YOU KNOW, WE ALWAYS ARE FACING BACKORDER, SO THE MARKET SIZE IS GROWING. AS YOU KNOW, AI BOOM. WE BELIEVE THE MARKET HAS ROOM TO GROW, AND LOTS OF INDUSTRY LEADERS. SO, AS OF TODAY OUR PRODUCTION CAPACITY CAN SUPPORT OUR REVENUE UP TO $35 BILLION, FOR EXAMPLE. BUT WE NEED MORE CHIPS. AGAIN, THE MARKET CONTINUES TO GROW, AND WE CONTINUE TO GET MORE SHARE, BECAUSE OF BETTER PRODUCT, BECAUSE OF RACK SCALE, PLUG AND PLAY. WE ARE CONTINUING GROWING POWER
PRODUCTION CAPACITY IN THE UNITED STATES AND GLOBALLY AS WELL. ED: FOR OUR BLOOMBERG TELEVISION AND RADIO AUDIENCE, WE ARE SPEAKING WITH SUPER MICRO CEO CHARLES LIANG. WHEN WE SAID YOU WERE COMING ON THE PROGRAM OUR AUDIENCE HAD MANY QUESTIONS. ONE OF THEM IS ABOUT THE SEC ACTION TAKEN AGAINST YOUR COMPANY IN AUGUST 2020.
THE SEC CHARGED SUPER MICRO AND THE FORMER CFO OF THE COMPANY WITH WHAT THEY CALLED WIDESPREAD ACCOUNTING VIOLATIONS. AND SOME NUMBERS PRESENTED BY THE COMPANY. COULD YOU UPDATE OUR AUDIENCE AND YOUR INVESTOR BASED ON WHERE THAT PROCESS IS, AND IF YOU HAVE PUT THOSE CONCERNS BEHIND YOU? CHARLES: OH, YEAH. THOSE CONCERNS HAVE BEEN BEHIND US FOR MANY YEARS. WE CAN IMPROVE DOING THAT FEW YEARS, AND THEN WE ADD MORE EXPERTISE, OUR NEW CFO. WE HAVE BEEN IMPROVING OUR SYSTEM, AND TODAY OUR SYSTEM, MAYBE I CAN ANSWER THE CONCERN. IT IS MUCH STRONGER THAN BEFORE
OR EVER. WE WILL CONTINUE TO IMPROVE. AND K. -- THANK YOU. CAROLINE: WHEN YOU SEE THE STOCK MARKET MOVE, THE ANTICIPATION OF GROWTH, THE FACT THAT YOU ARE SEEING -- WELL, ONLY ONE CURRENT ANALYST ON YOUR STOCK IS SAYING SELL AFTER THE HUGE RALLY YOU HAVE HAD. WHAT DO YOU DO AS THE LEADER IN THE FACE OF THAT BULLISHNESS? DO YOU START TO SELL YOUR STOCK? ARE YOU STARTING TO BUY MORE OF IT, AS SOME OF THE MEMBERS OF YOUR BOARD HAVE BEEN DOING? CHARLES: I GUESS THE MOST IMPORTANT IS PRODUCT. AGAIN, THE MARKET DEMAND IS SO STRONG, AND WE HAVE NOT JUST TECHNOLOGY TIME-TO-MARKET, BUT QUALITY OPTIMIZATION. WE ARE ABLE TO CUSTOMIZE OUR SYSTEM EASILY TO SPECIFICALLY OPTIMIZE FOR CUSTOMER LOAD.
THE DEMAND FOR AIR COOLING OR LIQUID COOLING. ALL OF THOSE MAKE OUR PRODUCT REALLY POPULAR AROUND THE MARKET, AND I BELIEVE WE WILL CONTINUE TO GAIN MARKET SHARE AND CONTINUE TO GROW. CAROLINE: IT SOUNDS LIKE YOU ARE LONG. CHARLES, I'M INTERESTED IN -- WELL, YOUR EXPERTISE, LET'S PUT IT, IN GEOPOLITICS. IN GLOBAL SUPPLY CHAINS. IN THE FACT THAT YOU HAD TO PULL OUT YOUR MANUFACTURING FROM CHINA, BECAUSE ULTIMATELY THE CHINESE INTELLIGENCE SERVICES INSERTING MALICIOUS COMPONENTS INTO YOUR MOTHERBOARDS. HOW DO YOU SEE THAT RESTRICTION
ON SUPPLY AND THE ONGOING RELATIONSHIP BETWEEN U.S. AND CHINA NOW, AND IT AFFECTING YOUR BUSINESS? CHARLES: WE ARE A USA COMPANY LOCATED IN SILICON VALLEY. WE TRY TO SERVICE CUSTOMERS GLOBAL AS MUCH AS WE COULD, ESPECIALLY CUSTOMERS IN THE USA. SO, TODAY MOST OF OUR
PRODUCTION FACILITY ARE IN USA, AND PARTIALLY IN TAIWAN. AND IN MALAYSIA. IN TERMS OF PRODUCT SECURITY, DURABILITY, SUPPLY CHAIN, I BELIEVE WE ARE IN THE BEST POSITION. CAROLINE:
JUST NEED MORE OF THOSE CHIPS. CHARLES LIANG, IT HAS BEEN GREAT SPEAKING WITH YOU. AN EXTRAORDINARY SHARE APPLIES -- SHARE PRICE MOVE. HER AUDIENCE THANKS YOU FOR YOUR TIME. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: APPLE. WHERE IS IT WITH ITS AI
CAPABILITIES? THEY HAVE BEEN RACING TO THE NEAR COMPLETION OF A CRITICAL SOFTWARE TOOL FOR APP DEVELOPERS THAT COULD RIVAL MICROSOFT'S COPILOT, AND COULD BE AVAILABLE AS EARLY AS THIS YEAR. HERE WITH MORE, THE MAN WITH THE SCOOP, MARK GURMAN. TALK US THROUGH. WE HAD ALL BEEN WAITING WITH BAITED BREATH AS TO HOW APPLE ADOPTS AI. MARK: THANKS FOR HAVING ME. IT IS THE YEAR OF AI FOR APPLE. GENERATIVE AI AND LARGE LANGUAGE MODELS TO BE SPECIFIC.
THE COMPANY IS WORKING ON NEW INITIATIVES TO RUN ON BOTH THE IPHONE AND THE MAC. ONE OF THE MOST IMPORTANT THINGS IS SETTING YOUR INFRASTRUCTURE AND FOUNDATION TO INTEGRATE AI INTO YOUR PRODUCTS. THE MOST CORE THING YOU CAN DO IS ADD ARTIFICIAL INTELLIGENCE TO YOUR PROGRAMMING TOOLS. THAT IS XCODE, THE SOFTWARE
USED BY DEVELOPERS. INSIDE APPLE AND OUTSIDE APPLE. THEY WILL BE ADDING AI TO THAT. ED: I'M INTERESTED ON THE PRESSURE IF YOU READ THE DETAIL IN YOUR STORY, WHICH IS TERRIFIC, BY THE WAY, THE BOARD WAS GIVEN A DEMO OF THE LATEST IN AI AT THE END OF LAST YEAR, AND THEY ALMOST REELED. THEY SAID, YOU THREE KEY
PERSONNEL, GIVE US PRODUCT. MARK: APPLE'S SENIOR VICE PRESIDENT OF SOFTWARE ENGINEERING HAS TAKEN THE BULL BY THE HORN. HE IS A HUGE PROPONENT OF LLMS AND GENERATIVE AI. HE WAS THE ONE PUSHING AND INVESTIGATING, DOES APPLE NEED TO INTEGRATE THIS TECHNOLOGY? ALONG WITH APPLE'S CLOUD SERVICES ORGANIZATION, AS WELL AS THE ARTIFICIAL INTELLIGENCE ORGANIZATION, THOSE THREE GROUPS HAVE BEEN WORKING TOGETHER ON THESE AI INITIATIVES, IMPLEMENTING IT INTO IOS. THE UNDERLYING TECHNOLOGY IS OBVIOUSLY DEVELOPED BY APPLE'S AI GROUP, THAT IT IS BETTER READ THE -- FEDERRIGI. I EXPECT THIS TO BE ONE OF THE
MOST SIGNIFICANT UPDATES IN THE HISTORY OF THE IPHONE. GLOBAL PRESENCE. WE LOOK FOR THE BEST COMPANIES IN EUROPE, U.S., AND ISRAEL. WE HAVE OFFICES ALL OVER THE WORLD. SOMETIMES WE ARE WILLING TO GO LATE STAGE OR TAKE CONTROL OF A PRIVATE OFFER TRANSACTION.
WE ARE VERY BULLISH ON THAT. WE SAW THE MARKET CAP GROW OVER THE HEELS OF AI. >> YOU HAVE BACKED REAL WINNERS IN THE PRIVATE MARKET.
WE HAVE HEARD FROM THE CEO OF THAT PARTICULAR BUSINESS SORT OF ANTICIPATING IT. THE ULTIMATE INFRASTRUCTURE COSTS FOR AI ARE GOING TO PLUMMET. WE ARE GOING TO MAKE IT MORE CHEAPLY. WHERE DO YOU SEE THE OPPORTUNITIES TO BE INVESTING IN ARTIFICIAL INTELLIGENCE? >> GREAT QUESTION. WE HAVE LOOKED UP AND DOWN THE STACK, AND I FEEL LIKE THE INFRASTRUCTURE, OF THE LARGE LANGUAGE MODELS, THE CORE CHIPSETS THAT MAKE UP THE AI STACK, THOSE ARE VERY IMPORTANT BUSINESSES, BUT I DO NOT THINK THESE ARE VENTURE BACKABLE. IF WE LOOK AT THE LAST TECHNOLOGY REVOLUTIONS, AMAZON, GOOGLE, MICROSOFT, THEY ARE PART OF AMAZON, GOOGLE, MICROSOFT, BECAUSE THEY NEED TENS OF BILLIONS OF DOLLARS AND NEED A CUSTOMER BASE OF 20,000.
IN THE SAME WAY, OPENAI ARE IMPORTANT ELEMENTS OF THE AI STACK, BUT THEY NEED TENS OF BILLIONS OF DOLLARS, BILLIONS OF -- IT TOTALLY MAKES SENSE THAT MICROSOFT INVESTED TENS OF BILLIONS OF DOLLARS. WHAT WE ARE EXCITED ABOUT IS THE HIGHER LAYERS OF THE STACK. IF WE LOOK AT THE CLOUD REVOLUTION IN THE LAST 10 YEARS, THERE ARE COMPANIES THAT MAKE UP THE DATABASES AND ARE MONITORING THE SECURITY STACK. IN MUCH THE SAME WAY, YOU WILL SEE A SIMILAR PLAY OUT IN THE AI SPACE WHERE YOU SEE A VECTOR OR DATABASE TO STORE AI, MONITORING OF MODELS, COMPANIES LIKE OURS AND OTHERS MONITORING THESE MODELS, SECURITY FOR AI. THAT MARKET WILL PLAY. THE MOST EXCITING PART IS THE
APPLICATION STACK. IF YOU THINK ABOUT JUST THE HUMAN LABOR THAT IS INEFFICIENT, THAT CAN BE AUTOMATED AND AUGMENTED BY AI, THERE'S A LOT OF PROMISE THERE. CAROLINE: ARE WE SEEING REALLY VIABLE COMPETITORS BE ABLE TO GET SPECIFIC -- IS IT ABOUT GOING DEEP INTO ONE PARTICULAR INDUSTRY GROUP, GOING ALL IN ON LEGAL, HEALTH CARE? ULTIMATELY, IT FEELS LIKE THEY HAVE A TOUGH, WELL MONETIZED COMPETITOR OUT THERE. DHARMESH: FAIRPOINT. MICROSOFT IS MORE FOCUSED ON NVIDIA INSTEAD OF LIVING ON AI SHARES. IF I ARE MICROSOFT FOR GOOGLE, A $2 BILLION, $3 BILLION -- YOU HAVE TO GET TO THE HUNDREDS OF BILLIONS AND COMPETE WITH EACH OTHER, AND IT BENEFITS YOU TO HAVE COMPANIES GLOBAL APPLICATIONS ON YOU, JUST LIKE THE MARKET -- THE APPLE MARKETPLACE. EACH OF THEM PAID THE APPLE TAX. IN MUCH THE SAME WAY, AZURE AND
OPENAI, AMAZON AND ANTHROPIC CAN BUILD A SUBSTRATE ON WHICH APPLICATIONS CAN BE BUILT, AND THE ONES WHO GET THE MOST NUMBER OF APPLICATIONS BUILT ARE THE ONES WHO BENEFIT. THAT DRIVES TRILLIONS AND DOLLARS FOR THEM. THEY DO NOT NEED TO COMPETE WITH THEIR CUSTOMERS. CAROLINE: DHARMESH THAKKER. THANK YOU SO MUCH FOR YOUR TIME. COMING UP, WE WILL TAKE A CLOSER LOOK AT DRAFTKINGS' FOURTH-QUARTER RESULTS. A LOT TO DIG IN THERE. THIS IS "BLOOMBERG TECHNOLOGY."
>> WELCOME TO OUR BLOOMBERG TELEVISION AND RADIO AUDIENCES. LET'S TAKE A LOOK AT DRAFTKINGS SHARES. IT HAS BEEN A CHOPPY SESSION AFTER THE COMPANY REPORTED FOURTH-QUARTER RESULTS, ANNOUNCING THEY WOULD BUY THE LOTTERY APP JACKPOCKET. TO WALK US THROUGH THE NUMBERS, CEO JASON ROBINS. WHERE I WANT TO START IS A NOTE OUT FROM MORGAN STANLEY THAT SAYS THE RESULTS IN THE QUARTER GONE WERE IMPACTED BY UNFAVORABLE SPORTS RESULTS, AND IT GOES BACK TO THE IDEA THAT THERE IS A MARKETPLACE YOU OPERATE. WHAT DO YOU MAKE OF THAT? JASON: WHEN YOU'RE TAKING ACTION ON SPORTS, SOMETIMES YOU ARE SUBJECT TO THOSE OUTCOMES, AND SOMETIMES THEY SWING THE BETTOR 'S WAY.
THIS WAS THE MOST CUSTOMER FRIENDLY TWO WEEK STRETCH WE HAVE SEEN SINCE BECOMING A PUBLIC COMPANY. THAT HAPPENS. OVER TIME, IT CERTAINLY SWINGS EITHER WAY AND EVENS OUT, BUT IN A QUARTER, YOU CAN GET BIT. IN THIS CASE, WE JUST ISSUED GUIDANCE AND REAFFIRMED IT THE WEEK BEFORE. SOMETIMES, THAT HAPPENS, TIMING WISE.
IF YOU ADJUST FOR THAT, THE UNDERLYING FUNDAMENTALS OF THE BUSINESS WERE INCREDIBLY STRONG. THAT IS WHY WE WERE ABLE TO RAISE OUR GUIDANCE BY SO MUCH ON THE REVENUE SIDE. WE READJUSTED OUR IT BUT THE -- OUR EBITDA. ED: SO THE M&A PIECE WAS REALLY INTERESTING. YOU SEE IT AS A NEW MARKET THAT YOU WANTED TO MOVE INTO? WHAT WAS THE MOTIVATION THERE? JASON: WE DID ANALYSIS TO DIRECTLY COMPARE OUR CUSTOMER BASE WITH THEIRS, AND THERE WAS SIGNIFICANT OVERLAP, SO WE FEEL GOOD THAT IS AN AUDIENCE THAT CROSSES OVER. WE THINK WE CAN INCREASE THAT SIGNIFICANTLY.
THE OTHER THING WE SAW WAS THE CUSTOMERS THAT OVERLAPPED ACTUALLY SPENT MORE BY ABOUT 50% WITH DRAFTKINGS ON AVERAGE THAN THE CUSTOMERS WHO DID NOT OVERLAP WITH JACKPOCKET'S AUDIENCE. NOT ONLY IS THERE GOOD CROSSOVER, IT IS A HIGHER VALUE CUSTOMER WE CAN CROSS OUT. HOW DO YOU GET THE CUSTOMERS ON THE PLATFORM AS EFFICIENTLY AS POSSIBLE AND GAUGE THEM AND GET THE HIGHEST LTV'S OVER TIME AS POSSIBLE. ANYTHING THAT HELPS ON EITHER SIDE OF THAT EQUATION, LET ALONE BOTH, WILL STRENGTHEN OUR ABILITY TO COMPETE AND WIN IN THE ONLINE GAMING INDUSTRY. WE FEEL THIS IS A HUGE STEP FORWARD FOR THAT. CAROLINE: TELL US ABOUT THE EQUATION YOU HAVE TO DECIDE ON WHETHER TO BUILD OR BUY. WHY BUY ON THIS OCCASION? JASON:
THE TEAM WE GOT IS INCREDIBLE. PETE AND HIS TEAM ARE REALLY SHARP AND UNDERSTAND THIS MARKET AND THIS CUSTOMER BETTER THAN ANYONE I'VE EVER MET. ALSO, THE TECHNOLOGY THEY BUILT IS HARD. IT IS NOT EASY TO BUILD A SYSTEM THAT CAN SCALE TO FULFILL IN MULTISTATE AND THIS TYPE OF SET UP. THAT IS TOUGH. WE LOOKED AT POTENTIALLY DIFFERENT OPTIONS, AND WE FELT LIKE THIS TEAM WAS THE BEST, AND ALSO THE TECHNOLOGY THEY BUILT IS THE BEST. WHILE I CERTAINLY THINK THERE ARE DIFFERENT WAYS TO APPROACH THINGS -- AND OF COURSE, WE GOT A GOOD DEAL.
THAT IS ALWAYS A PART OF IT. BUT THERE ARE ALWAYS DIFFERENT WAYS TO APPROACH THINGS, AND WE THOUGHT THE COMBINATION OF THE TEAM WE WERE GETTING ON THE TECHNOLOGY THEY BUILT WAS TOO GOOD TO PASS UP. CAROLINE: TALKING DIFFERENT WAYS TO APPROACH THINGS -- WE ARE INDEED TALKING TO JASON ROBINS, DRAFTKINGS' CEO -- WHAT ABOUT DISNEY GETTING INTO BED WITH FOX AND WARNER BROS.? DO YOU THINK IT WILL GET THROUGH THE REGULATORS? JASON: IT WILL BE INTERESTING TO SEE. FIRST OF ALL, I AM NOT SURPRISED YOU ARE SEEING DEALS LIKE THAT. WE HAVE SEEN THE MEDIA INDUSTRY GET REALLY DISRUPTED BY A STREAMING, AND SPORTS HAS SORT OF BEEN THAT THING EVERYONE IS STILL WAITING TO SEE HOW DOES THIS EVOLVE, HOW DOES THIS SHAKE OUT? YOU ARE GOING TO CONTINUE TO SEE MORE INNOVATION, MORE DISRUPTIVE DEALS. WHERE IT ALL SHAKES OUT, I DO
NOT KNOW. IF I DID, I WOULD BE MAKING MORE BETS ON THOSE SPACES THAN I AM, BUT IT IS NOT OUR WORLD. WE ARE WATCHING AND WAITING TO SEE. USUALLY, IN THOSE SITUATIONS, OPPORTUNITIES TO PARTNER WITH YOU AND ADDRESSING VENTURES CAN EMERGE.
WE WILL HAVE TO SEE HOW IT ALL SHAKES OUT, BUT A FASCINATING TIME IN THE SPORTS MEDIA SPACE. ED: WHAT IS THE NEXT STEP IN DRAFTKINGS' TECHNOLOGY STORY? WHAT IS THAT YOU WANT TO DO WITH A PLATFORM, AND WHAT DO YOU WANT TO BUILD? JASON: FIRST OF ALL, WE STILL HAVE A LOT TO DO TO CREATE AN INCREDIBLE PRODUCT FOR OUR CUSTOMERS. JACKPOCKET, HOPEFULLY, WHEN WE CLOSE THAT, THAT WILL BE SOMETHING THAT THERE IS A LOT OF RUNWAY. THEY STILL HAVE ONLY LAUNCHED SCRATCHERS IN ONE OR TWO STATES, SO A LOT MORE TO GO THERE. TONS TO DO ON THE PRODUCT SIDE TO BUILD OUT AND REACH A WIDER AUDIENCE AND PROVIDE MORE INTERESTING THINGS FOR PEOPLE TO ENGAGE IN. ON THE SPORTS BETTING SIDE,
LIVE BETTING CONTINUES TO BE AN UNTAPPED OPPORTUNITY. THAT IS WHERE A LOT OF THE CORE PIECE OF THE ECOSYSTEM IS ACROSS SPORTS, SO A LOT OF ROOM TO GROW IN MANY AREAS OF THE PRODUCT. WE WILL CONTINUE FOCUSING ON THE CUSTOMER, LISTENING TO WHAT OUR CUSTOMERS SAY, AND TRYING TO DELIVER A GREAT EXPERIENCE FOR THEM. CAROLINE: JASON ROBINS, ALWAYS GREAT CATCHING UP WITH YOU. DRAFTKINGS' CEO, FOR OUR RADIO AND TV AUDIENCES.
COMING UP, LOOK INTO OPENAI'S BRAND-NEW VIDEO GENERATOR. YOU CANNOT USE IT YET, BUT WHAT CAN YOU ANTICIPATE? THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: IT WAS A SENSATION ONLINE. YESTERDAY, OPENAI'S TEXT TO VIDEO GENERATOR SORA.
IT IS ONLY AVAILABLE TO A SMALL NUMBER TO STRESS TEST IT. WE'RE ALL BOWLED OVER BY THE BEAUTY OF WHAT IS CREATED AND ULTIMATELY WHAT ANY FUTURE FILM MAKER IS GOING TO BE DOING. >> YEAH, I THINK THE QUALITY THEY ARE SHOWING OFF WITH SOME OF THESE VIDEOS IS PHENOMENAL, AND IT LOOKS THAT ARE THAN OTHER EXAMPLES I'VE SEEN, AND I'VE SEEN AS MANY AS I CAN OF THESE AI GENERATIVE VIDEO CREATION SYSTEMS OVER THE PAST FEW YEARS. THIS ONE SEEMS TO BE BETTER AND GENERATE LENGTHIER VIDEOS THAT SEEM TO WORK THAN OTHER PEOPLE HAVE CREATED. ED:
LET'S POINT OUT THE FIRST THING THEY DID WITH IT WAS GENERATE CONTENT THAT IS DOG RELATED OR PUFFY RELATED, WHICH IS NOT A SHOCK TO ANYONE. WHAT IS INTERESTING -- AND RACHEL METZ'S REPORTING THERE, THANK YOU. SAFETY QUESTION. HOW DO WE KNOW WHAT IS AI GENERATED AND WHAT IS NOT? A STORY I BROKE ABOUT OPENAI AND ITS CEO WITH COLLEAGUES, HE IS WORKING TO GET A GREEN LIGHT FROM U.S. GOVERNMENT. HE WANTS APPROVAL, OR BLESSING, WITH THAT VENTURE TO BOOST THE GLOBAL OUTPUT OF AI CHIPS. SOURCES ARE TELLING US THERE IS
A RISK IT RAISES NATIONAL SECURITY AND AND TRY -- ANTITRUST LOOK BY LAWMAKERS ON GOVERNMENT HILL AND GOVERNMENT AGENCIES. HE HAS BEEN MEETING WITH INVESTORS, PARTICULARLY IN THE MIDDLE EAST AND ASIA, OVER THE LAST YOU WEEKS. I AM HEARING, IN D.C., THAT IS A PARTICULAR CONCERN. CAROLINE: I CAN IMAGINE. THE AMOUNT OF MONEY THEY WANT TO RAISE, THE INVESTMENT IS OUR WATERING. THE CONVERSATIONS YOU HAVE BEEN REPORTING ON -- HE WANTS TO WORK IN LOCKSTEP WITH GOVERNMENT. ED: HE DOES. THE FINAL THING ABOUT IT IS HE CAN GET MONEY FROM ANYWHERE. CAROLINE:
SEEMS SILKY THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." ED:
2024-02-19 11:52
