Nasdaq 100 Plunges and Intel Falls Most in 40 Years | Bloomberg Technology
>> WHERE INNOVATION AND POWER COLLIDE. THIS IS "BLOOMBERG TECHNOLOGY," WITH CAROLINE HYDE AND ED LUDLOW. ED: LIVE FROM NEW YORK, THIS IS "BLOOMBERG TECHNOLOGY."
THE NASDAQ 100 PLUNGES INTO CORRECTION TERRITORY AS THE ROTATION FROM BIG TECH CONTINUES. PLUS, WE BREAK DOWN THE RESULTS FROM AMAZON AND APPLE. INTEL SHARES FALLING BY THE MOST SINCE 1982 AS THE COMPANY OFFERS A GRIM FORECAST AND SLASHES THOUSANDS OF JOBS. THE PICTURE IS SEVERE THIS FRIDAY. THE FOCUS IS THE TECHNOLOGY SECTOR.
THIS IS THE NASDAQ 100 OVER THE COURSE OF THE WEEK. WE ARE ON TRACK FOR A FOURTH-STRAIGHT WEEK OF DECLINES, MATCHING THE RUN WE SAW IN APRIL OF THIS YEAR. WE HAVE ENTERED A TECHNICAL CORRECTION ON THE NASDAQ. AT THE MOMENT ABOUT 80 NAMES, FEWER THAN 20 IN THE GREEN -- 80 NAMES IN THE RED, FEWER THAN 20 IN THE GREEN. WE ARE GOING TO GO INTO THE EARNINGS STORY WITH AMAZON AND APPLE AND LATER A DETAILED LOOK AT INTEL. YES, THAT IS A 28% DECLINE. ABOUT 15,000 JOBS WILL GO.
THEY BASICALLY HAVE ADMITTED THAT THEY WERE SLOW TO RESPOND TO THEIR REALITY THAT THEIR MARKET IS NOT GOING WELL FROM A TOPLINE PERSPECTIVE. WE ARE GOING TO GET DEEPLY INTO APPLE, WHICH IS A BRIGHT SPOT. WE ARE SEEING A RETURN TO REVENUE FOR THE QUARTER, BUT APPLE, NOT OFFERING MUCH IN TERMS OF CLUES ABOUT AN UPGRADE CYCLE WHEN IT COMES TO THE IPHONE 16. BERG'S MARK GURMAN IS STANDING BY. YOU AND I'M MANNING THE BLOG LAST NIGHT, A LOT OF EMPHASIS ON APPLE INTELLIGENCE BEING A DRIVER FOR IPHONE 16 IN THE FUTURE. I THINK YOU AND I HAD SOME DOUBTS ABOUT THAT, RIGHT? MARK: APPLE KNOWS THAT ARTIFICIAL INTELLIGENCE, APPLE INTELLIGENCE AS THEY CALL THEIR AI SERVICES, ARE THE BUZZWORDS THAT GETS OLD -- GETS WALL STREET GOING.
OVER THE LAST COUPLE OF QUARTERS APPLE HAD BEEN TEASING ITS AI FEATURES, BECAUSE IT KNEW WALL STREET ANALYSTS ARE WANTING THIS. IT KNEW SOME CONSUMERS WERE WANTING THIS. SO IT FOCUSED A GREAT DEAL OF THE CALL YESTERDAY, AS WELL AS BASICALLY EVERY ANALYST WHO ASKED A QUESTION, TALKING ABOUT APPLE INTELLIGENCE.
I THINK THAT APPLE INTELLIGENCE AT LEAST SHEAR IS STILL VERY NASCENT, AND I DON'T BELIEVE IT WILL, OR SHOULD DRIVE IPHONE UPGRADES THIS SEPTEMBER. I THINK THAT IS MORE OF A SEPTEMBER THING, ONCE ALL OF THE FEATURES ARE AVAILABLE AND WE ARE A YEAR OUT FROM THAT RELEASE , WHEN MORE PEOPLE ARE LOOKING TO UPGRADE. ED: GREATER CHINA WAS A FOCUS, WHERE THERE WAS A 6% DECLINE IN SALES, BUT APPLE TOLD US ABOUT THE IMPACT OF FX, AND ON A CONSTANT CURRENCY BASIS IT WOULD'VE BEEN A 3% DECLINE.
WHAT WERE THE PRODUCT STORIES FOR APPLE IN CHINA? MARK: FIRST OF ALL, THERE WAS A TIME WHEN APPLE WAS GROWING AT SUCH A BIG GREAT THAT THEY DID NOT NEED TO GET INTO FX CURRENCY HEADWINDS OR ANYTHING LIKE THAT. THEY DID NOT HAVE TO CONTEXTUALIZE THESE NUMBERS TO EXPLAIN THEY ARE BETTER THAN THEY LOOK ON PAPER. THE OTHER THING TO NOTE IS, THEY ARE DOING BETTER IN CHINA IN THE SECOND HALF OF THE YEAR SO FAR THAN THEY WERE DOING IN THE FIRST HALF OF THE YEAR. YOU ARE SEEING AN ACCELERATION FOR THEM, AND THAT IS COMING AT A GOOD TIME, GIVEN THAT THIS UPGRADE CYCLE IS APPROACHING AT THE TAIL END OF THIS QUARTER. THEY ARE GOING INTO THAT WITH A
BIT OF MOMENTUM, AND THAT IS CERTAINLY POSITIVE NEWS FOR THEM. SO, IT IS NOT ALL BAD. IF YOU LOOK AT THE QUARTER IN GENERAL AND THE STOCK MARKET TODAY, IT IS CLEAR WHY APPLE IS IN THE GREEN AND ALMOST EVERYONE ELSE IN THE NASDAQ 100 IS IN THE RED. THEY BEAT EXPECTATIONS, THEY GREW REVENUE, THEY RETURNED REVENUE GROWTH AFTER DECLINING NEXT -- LAST QUARTER, AND THE BEAT ANALYSTS' FORECASTS FOR EACH OF THE MAJOR PRODUCT CATEGORIES. A PRETTY GOOD DAY FOR THE COMPANY. ED: MARK GURMAN, THANK YOU. AMAZON HAS TOLD INVESTORS THAT PROFITS WILL NEED TO TAKE A BACKSEAT IN FAVOR OF HEAVY SPENDING ON ARTIFICIAL INTELLIGENCE. HERE IS CEO ANDY JASSY ON HIS BULLISH VIEW FOR THE NEW TECHNOLOGY.
>> WE REMAIN VERY BULLISH ON THE IMPACT OF AI AND -- IN EVERY BUSINESS WE NO ONE CAN IMAGINE. THE PROGRESS MAY NOT BE ONE STRAIGHT LINE. GENERATIVE AI IS ITERATIVE AND COMPANIES HAVE TO BUILD MUSCLE AROUND THE BEST WAYS TO SOLVE CUSTOMER PROBLEMS. ED: BUT WALL STREET DID NOT LIKE THAT. SHARES DOWN MORE THAN 11% IN TODAY'S TRADING SESSION, ON TRACK FOR THE BIGGEST DROP SINCE APRIL 2022, WORKING OUT ABOUT $200 BILLION IN MARKET CAP. IT'S GOOD ANALYSIS WITH PUT
THEM GOYA -- POONAM GOYLE. >> IT IS HIGHER THAN WE HAD EXPECTED. WE DID NOT EXPECT THEM TO CONTINUE, SO IT IS A SHOCKER.
IF YOU THINK ABOUT THE LONGER-TERM THE INVESTMENTS WILL PAY OFF. THE CLOUD INVESTMENT AT A 100 BILLION DOLLARS RUN RATE, GOING TO $200 BILLION BY OUR ESTIMATES. ALSO FOR AMAZON TO PAY -- PLAY CATCH UP ON ITERATIVE AI. YOU NEED TO SEE THEM STEP UP A LITTLE BIT.
WE DID NOT EXPECT IT TO BE IN 2H,, BUT IT IS COMING. ED: I STILL FOCUS ON THE AWS TOPLINE NUMBER. FORGET THE FINANCIALS. ON THIS PROGRAM WE HEAR A LOT ABOUT HOW GREAT BEDROCK IS, ABOUT THE UTILIZATION OF THE PLATFORM FOR MANY DIFFERENT THINGS IN THE WORLD OF GENERATIVE AI. WHY WAS THAT NOT A CONVINCING
ENOUGH NUMBER? POONAM: WE HAD EXPECTED MID TO HIGH TEAMS, ABOUT 17% GOING INTO IT. WHILE 19% WAS A GOOD NUMBER, UNDOUBTEDLY THE 35%-PLUS PROFIT MARGIN WAS GREAT, THE FOCUS SHIFTED ALL ON THE GUIDANCE. I WOULD NOT DISCOUNT THAT TO Q -- 2Q WAS GOOD. AWS ESPECIALLY. ED: THERE IS A LOT OF RED IN THE MARKETS, AND AMAZON IS A BIG FACTOR. POONAM GOYAL, FANTASTIC ANALYSIS. LET'S KEEP IT GOING WITH HELENA WANG. LET'S START WITH AMAZON.
THERE IS A MICRO FOCUS ON AWS. HOW MUCH MONEY IS BEING PUT INTO INVESTMENT AND HOW MUCH MONEY IS COMING OUT IN THE AI STORY. WHAT DO YOU MAKE OF IT? HELENA: I THINK THE HOT TOPIC FOR THE LAST FEW WEEKS HAS BEEN THE HUGE CAP EXPAND. WHETHER IT IS JUSTIFIABLE. AMAZON HAS GUIDED EXCEPTIONALLY INCREASING. IN THE FIRST HALF OF 2024 THE CAPEX WAS $30.5 BILLION. THEY ARE GUIDING EVEN HIGHER FOR THE SECOND HALF OF THE YEAR.
JUST TO PUT IT IN COMPARISON THERE FOR LAST YEAR WAS ONLY $40.8 BILLION, SO THAT IS A SIGNIFICANT INCREASE. LIKE ALL OF THE OTHER BIG TECH COMPANIES THEY ARE SELLING THEIR STORY OF STRONG AI GROWTH. THEY WOULD LIKE TO HAVE MORE CAPACITY THAN THEY ALREADY HAVE TODAY, AND THEY ARE CLAIMING THAT THEY ARE SEEING STRONG SIGNALS OF HIGH FUTURE DEMAND.
I GUESS ALSO IF YOU ARE IN THE AI RACE IT IS IMPOSSIBLE FOR YOU TO STOP INVESTING, BECAUSE YOU WOULD BE OBSOLETE WITH NO MEANS TO CATCH UP. BUT TO INVESTORS IT IS REALLY REQUIRED, A LOT OF IMPATIENCE. EVERYONE IS TELLING THE SAME STORY, SO IT IS HARD TO SAY WHETHER IN THE SHORT TERM WHOSE INVESTMENT WILL PLAY OFF -- PAY OFF IN THE LONG RUN. ED:
JUST FOCUSED ON A WS, WE HAVE HARDLY ESPOUSED THE RETAIL BUSINESS OR ADVERTISING. YOU SEE ANYTHING IN THOSE SEGMENTS THAT INTERESTED YOU? HELENA: PRAY WS, IT HAS BEEN SELLING NICELY, SO WHAT WE ESPECIALLY LIKE ABOUT AWS IS THEIR HIGH OPERATING MARGIN. AWS' OPERATING MARGIN IS .6%. AWS RIGHT NOW ONLY CONTRIBUTES TO 60% OF THE TOTAL REVENUE.
WITH AWS SCALING UP IT IS GOING TO TAKE UP A BIGGER PORTION OF THE ENTIRE REVENUE. WE THINK THE REAL KICKER FOR AMAZON IN THE FUTURE WILL BE THE MARGIN EXPANSION BROUGHT BY AIDA BWEST. ED: LET -- A WS. ED: LET'S TALK ABOUT APPLE. IT WAS A BEAT ACROSS THE BOARD APART FROM CHINA. HOW MUCH EMPHASIS DO YOU PUT ON THAT CHINA NUMBER? HELENA: APPLE IS SEEING IT AS AN IMPROVEMENT COMPARED TO THE FIRST HALF OF THE YEAR. BUT THE NUMBER IS NOT GREAT. WHEN A PARTICULAR MARKET IS NOT DOING WELL APPLE WILL SPECIFICALLY POINT OUT IT IS NOT REALLY THE IPHONE, BUT ACTUALLY THE OTHER PRODUCT CATEGORIES THAT DRAGGED THE SALES. BUT THEY HAVE NOT COMMENTED
LIKE THAT FOR THIS PARTICULAR TIME. SO WE CAN TAKE IT THAT IPHONE IS ACTUALLY PART OF THE REASON, OR ONE MAJOR REASON FOR THE DECLINE. MASTER COMPETITION FROM LOCAL BRANDS IS STILL PLAYING A BIG PART. APPLE WAS GIVING A HUGE DISCOUNT IN ORDER TO FIGHT THE COMPETITION. THAT WILL ALSO BE A FACTOR THAT HURTS THE REVENUE. ED:
TIM COOK GOT A LOT OF QUESTIONS ABOUT HOW APPLE INTELLIGENCE WILL IMPACT AN UPGRADE CYCLE IN OCTOBER, PROBABLY, WHEN THE 16 GENERATION COMES. HAVE YOU DONE THE MATH ON THAT? HELENA: YES. IPHONE SALES REMAIN PRETTY MUTED.
THEY ARE DOWN 1% FOR THIS YEAR. THEY ARE GUIDING FOR 5% GROWTH RATE IN THE NEXT QUARTER. FACTOR IN SERVICE SECTOR, WHICH IS GROWING DOUBLE DIGIT, AND IPAD WHICH GREW PRETTY WELL IN THIS QUARTER, WE ARE PROBABLY NOT GOING TO GET SO MUCH IN THE NEXT QUARTER IN TERMS OF IPHONE. IT IS PROBABLY GOING TO REMAIN FLAT OR PERFORM MORE POORLY. WE ARE THINKING THAT APPLE INTELLIGENCE BOOSTS FOR THE PRODUCT CYCLE THAT EVERYONE HAS BEEN WAITING FOR IS UNLIKELY TO BE SEEN IN 2024. ED:
IF YOU HAVE AN IPHONE 15 NOW, DO YOU GET THE IPHONE 16? THERE IS A LOT MORE DISCUSSION AROUND THAT. HELENA WANG, THANK YOU SO MUCH FOR YOUR TIME. COMING UP, WE ARE GOING TO BE JOINED BY BERNSTEIN RESEARCH ANALYST STACY RASGON TO BREAK DOWN INTEL'S EARNINGS AND STORY. THAT IS NEXT. THIS IS "BLOOMBERG TECHNOLOGY." ED: INTEL SHARES SUFFERING THEIR BIGGEST DROP IN MORE THAN 40 YEARS. THIS AFTER THE COMPANY GAVE A
GRIM GROWTH FORECAST AND LAID OUT PLANS TO SLASH AROUND 15,000 JOBS, SIGNALING THE CHIPMAKER IS UNEQUIPPED TO COMPETE IN THE AI ERA. I WANT TO BRING IN STACY RASGON. I ASK YOU WHERE YOU WOULD LIKE TO START. WHICH OF THE MANY THINGS
ANNOUNCED IN CASH AND THE GUIDANCE GIVEN IS THE MOST IMPORTANT FACTOR HERE? -- ANNOUNCED IN THE GUIDANCE GIVEN IS THE MOST IMPORTANT FACTOR HERE? STACY: IT WAS THE -- REVENUES WERE BAD. THEY DID A HOCKEY STICK IN THE BACK HALF OF THE LAST QUARTER. GROSS MARGINS ARE FALLING INTO THE ABYSS. AS THEY GET HIGHER COSTS ON THEIR CHIPS. YOU KNOW, CLEARLY THEY ARE IN A TOUGH SPOT. THEY ANNOUNCED A NUMBER OF
ACTIONS TO TRY TO SALVAGE, YOU KNOW, STOP THE SHIP FROM SINKING. THEY ACTUALLY FINALLY SUSPENDED THEIR DIVIDEND. THEY CUT THAT BY TWO THIRDS A YEAR. SO, THEY HAVE FINALLY SUSPENDED IT. THEY ARE DOUBLING DOWN ON BRINGING IN PARTNERS THAT WILL COINVEST. RECENTLY THEY SOLD
HALF OF THEIR FAB IN ARIZONA, AND THEY JUST SOLD HALF OF THEIR FAB IN IRELAND, TO APOLLO FOR $11 BILLION. I HAVE USED THE PHRASE WORST EARNINGS IN MY CAREER A NUMBER OF TIMES OVER THE LAST TWO YEARS, AND THIS ONE PROBABLY TAKES THE CAKE. ED: THIS TIME YOU MEAN IT. YOU HAD THE OPPORTUNITY TO SPEAK TO INTEL'S CFO WHEN THE NUMBERS HIT, AND WE GOT INTO MISSED OPPORTUNITY. THIS IS WHAT HE SAID ABOUT THE DATA CENTER BUSINESS. I'M TRYING TO UNDERSTAND WHAT HE MEANT, BUT HE IS BASICALLY SAYING THEY WERE OVEREXPOSED IN CPU, AND I GUESS THEREFORE BY EXTENSION UNDER IN GPU. WE KNOW THE STORY.
ANYONE WHO WORKS IN THE WORLD OF TECHNOLOGY KNOWS ALL OF THE INVESTMENT IS GOING TO HIGH-PERFORMANCE GPU OR AI ACCELERATORS. INTEL HAS ONE. EXPLAIN WHAT DAVE MEANT THERE, PLEASE. STACY: THEY HAVE BEEN CLEARLY OVER-INDEXED, ALMOST ENTIRELY INDEXED TWO CPUS. EVEN WITHIN CPUS THEY HAVE BEEN LOSING A TREMENDOUS AMOUNT OF SHARE TO THEIR SMALLER COMPETITOR. THAT HAS NOT BEEN GOOD. AS THE AI BOOM HAS HAPPENED WE
HAVE HAD A SHIFT IN THE SPENDING PATTERNS AWAY FROM CPUS TOWARD GPU'S AND OTHER TYPE OF FIX -- TYPES OF ACCELERATORS. YOU COULD ARGUE, IS THAT A CYCLICAL TREND OR STRUCTURAL TREND? IN FIVE YEARS IS THE DATA CENTER CPU TREND FIGURE OR SMALLER THAN IT IS? YOU COULD ARGUE THAT IT IS SMALLER, SO THAT IS THE ISSUE. THE PROBLEM WITH INTEL ON THAT FRONT IS, THEY DON'T HAVE THAT MUCH OF AN AI OR ACCELERATOR PLAY. THEY HAVE A PRODUCT. THEY SAID THEY ARE GOING TO SELL $500 MILLION WORTH THIS YEAR. IT IS EFFECTIVELY A ROUNDING ERROR, RIGHT? AMD SAID THEY ARE GOING TO DO 4.5 BILLION DOLLARS IN DATA CENTER REVENUES. NVIDIA, THEY MIGHT BE $100 BILLION THIS YEAR.
$500 MILLION DOES NOT MAKE UP ANYWHERE NEAR THE AIR POCKET THAT HAS HAPPENED BOTH AS A LOST SHARE IN CPUS AND AS THAT SPENDING HAS SHIFTED. THAT IS KIND OF THE PROBLEM. GAUDY IS SHIPPING. IT IS CLEAR THE GENERAL DEMAND FOR IT IS MINIMAL. IT IS JUST NOT ENOUGH TO CLOSE THAT GAP. DON'T HAVE MUCH OF AN AI STORY, UNFORTUNATELY. ED: ON CYCLICAL END MARKETS FOR
THEM AND NONCYCLICAL, THE WAY THAT THE CFO PUT IT TO ME IS, THEY JUST HAD NOT RESPONDED TO THE REALITIES OF THEIR REVENUE. HENCE THE REDUCTION IN HEADCOUNT. THERE DID SEEM -- SEEM TO BE SOME GLIMMERS OF HOPE THAT THERE ARE IMPROVEMENTS IN THOSE MARKETS. STACY: YES AND NO. PC'S IN GENERAL ARE BETTER THAN WHAT THEY WERE. THEY DON'T SELL PC'S, DAVID -- THEY SELL CPUS, RIGHT? THIS IS SOMETHING I HAVE BEEN WORRIED ABOUT. WE TRACK THE CPU CHANNEL PRETTY RELIGIOUSLY, AND YOU GET OVER SHIPMENT, YOU GET UNDER SHIPMENT, AND I HAVE AN CONCERNED IN Q4, Q1 THERE WAS OVER SHIPMENT OF CPUS RELATIVE TO SEE -- RELATIVE TO PCS, AND I THINK THEY ARE PAYING FOR THAT NOW. ON THE DATA CENTER,
SERVER-SIDE, THERE HAS BEEN SOME HOPE THAT DEMAND HAS BEEN GETTING BETTER. BUT PEOPLE NOW HAVING RECESSION WORRIES AND EVERYTHING ELSE -- AGAIN, THEY ARE STILL LOSING SHARE. GAUDY IS NOT ENOUGH. HAVE A BUSINESS CALLED ALL TARA, AND IT IS THE SAME THING. THEY ARE WORKING OFF A TON OF INVENTORY AND THAT IS NOT GETTING BETTER YET. MOBILEYE REPORTED YESTERDAY MORNING. THEY SLASHED THEIR GUARDIANS FOR THE REST OF THE YEAR, SO A BUNCH OF REVENUE HAD TO COME OFF FROM THERE. LAST QUARTER THEY HAD SORT OF
SUGGESTED WE WOULD BE SEEING ABOVE SEASONAL GROWTH IN THE BACK HALF, AND IT HAS CLEARLY NOT HAPPENED. THE MACRO IS GETTING WORSE. ON THE COST SIDE THEY HAVE SOME COST HEADWINDS THAT ARE SEVERE, THAT ARE IMPACTING GROSS MARGINS. ED: STACY RASGON, SENIOR ANALYST AT BERNSTEIN RESEARCH. WHETHER OR NOT THAT WILL BE THE
WORST INTEL PRINT OF YOUR CAREER, YOU HAVE BROKEN IT DOWN. EVERY QUICK, WE HAVE 10 SECONDS. STACY: THE SILVER LINING, THE CASH THEY ARE SAVING FROM THE COST CUTS AND DIVIDEND SUSPENSION AND THE CAPEX CUTS, AND ALL OF THE MONEY THEY ARE BRINGING IN, THEY WILL LIVE. I DON'T KNOW WHAT KIND OF LIFE IT WILL BE.
THAT IS PROBABLY $40 BILLION OF INCREMENTAL CASH OVER THE NEXT COUPLE OF YEARS. SO, THEY WILL LIVE. WHAT KIND OF LIFE IT IS GOING TO BE, I THINK THAT IS THE QUESTION. ED: STACY RASGON. TERRIFIC. THANK YOU VERY MUCH. COMING UP, WE ARE GOING TO BE JOINED BY KHOZEMA SHIPCHANDLER OF TWILIO TO DISCUSS THE COMPANY'S EARNINGS. MAYBE THAT IS A STOCK GOING IN A DIFFERENT DIRECTION.
THIS IS "BLOOMBERG TECHNOLOGY." ED: THERE ARE SOME POSITIVE EARNINGS PRINTS TO TALK ABOUT. TWILIO REPORTING EARNINGS AFTER THE CLOSING BELL THURSDAY.
CEO KHOZEMA SHIPCHANDLER JOINS US FROM SAN FRANCISCO. A BIG FOCUS ON GROWTH, OF COMING IN THE SECOND HALF, GROWTH THAT THERE IS EVIDENCE NOW. THIS IS THE FIRST TIME YOU AND I HAVE BEEN ABLE TO SPEAK SINCE YOU HAVE BEEN CEO. HAVE YOU DONE TO CHANGE THAT GROWTH TRAJECTORY? KHOZEMA: THANKS FOR HAVING ME. I WOULD SAY WE ARE RUNNING THE COMPANY WITH A LOT MORE DISCIPLINE. A LOT MORE OPERATING RIGOR.
AS IT -- I THINK WE HAVE BEEN FOCUSED ON SOME OF THE INNOVATION BETS WE HAVE BEEN MAKING. I THINK PERHAPS MOST ENCOURAGINGLY WE ARE STARTING TO SEE SOME REAL SIGNS THAT THIS COMBINATION OF COMMUNICATIONS, WHICH WE ARE THE LEADER IN, CONTEXTUAL DATA, WHICH WE ARE ALSO THE LEADER IN, PLUS AI, THAT THAT COMBINATION TO DRIVE PERSONALIZED EXPERIENCES FOR CONSUMERS IS OF EITHER CUSTOMERS WE SUPPORT, IS STARTING TO GET SOME TRACTION -- VIS-A-VIS THE CUSTOMERS WE SUPPORT, IS STARTING TO GET SOME TRACTION. ED: WHAT DOES TWILIO LOOK LIKE UNDER THE CHANGES YOU HAVE MADE? KHOZEMA: THE ORGANIZATION IS IN PRETTY GOOD SHAPE. ABOUT A YEAR AGO WE TOOK STEPS TO KIND OF GET OUR COST BASE IN SHAPE, BUT ON THE FLIPSIDE WE ALSO WANTED TO BE FOCUSED IN THE AREAS IN WHICH WE WANTED TO GROW. SO, WE HAVE A COMMUNICATIONS BUSINESS WE ESTABLISHED AS KIND OF A PROPER BUSINESS UNIT. WE DID THE SAME THING WITH OUR
SEGMENT BUSINESS, ESTABLISHING THAT WITH THE PROPER BUSINESS UNIT. THEY HAVE KIND OF AN ALIGNED SET OF METRICS. THE BENEFIT OF THAT IS IT ALSO ALLOWS FOR A CERTAIN LEVEL OF DISCLOSURE THAT INVESTORS WERE ALSO ASKING FOR. ED: IT IS IMPORTANT TO NOTE THAT WHERE WE ARE TODAY IS IN PART THE RESULT OF ACTIVIST INVESTOR INTEREST IN THE COMPANY. YOU SEEM TO HAVE RESPONDED TO THAT POSITIVELY, TAKING ACTION. WOULD YOU UPDATE THE AUDIENCE WHERE WE STAND, PLEASE? KHOZEMA: I THINK FUNDAMENTALLY WE ARE TRYING TO RUN THE COMPANY WELL.
I THINK THAT IS SOMETHING EVERY ONE OF OUR SHARE OWNERS WANT. IT STARTS WITH FINANCIAL DISCIPLINE. BEING SMART ABOUT THE BETS WE ARE MAKING OBVIOUSLY, WE ACCELERATING TOPLINE GROWTH OVER TIME. WE SEE POSITIVE SIGNS ABOUT DOING THAT. WE ARE MORE OPTIMISTIC ABOUT THAT. I THINK THE INTERNAL MECHANICS OF THE COMPANY, DOING THAT WELL, DELIVERING ON THE THINGS WE SAID WE WOULD DO AND ACTUALLY GOING AND DOING THOSE THINGS.
WHEN IT COMES TO INNOVATION, JUST BEING REALLY FOCUSED. WE ARE TAKING A HANDFUL OF BATS. ONE OF THOSE IS REALLY AROUND THIS NOTION OF CONTEXTUAL DATA, USING THAT AS A MEANS TO COMBINE IT WITH COMMUNICATIONS, TO DRIVE INTERACTIONS ON THE OTHERS. LIKE, WE SERVE CUSTOMERS ULTIMATELY, AND CUSTOMERS KEEP TELLING US THAT IS WHAT THEY WANT.
I THINK ULTIMATELY THAT IS WHAT IS GOING TO BUILD THE SUCCESS OF THE COMPANY. ED: CONTEXTUAL DATA, BUT WHEN WE TALK ABOUT AI AND TWILIO, A LOT OF IT PLAYS ON WHAT YOU ARE GOOD AT. VOICE INTELLIGENCE, VERIFY, THOSE PRODUCTS. VIEW SEEN AN AI-DRIVEN ACCELERATION, OR ARE YOU SAYING, WE HAVE BEEN DOING THIS FOR A WHILE, GUYS? KHOZEMA: IT IS EARLY DAYS, BUT THE NATURE OF IT IS IN THE PRODUCT VERNACULAR YOU JUST REFERRED TO, RIGHT? VOICE INTELLIGENCE. IT IS DIFFERENT THAN WE WERE A FEW YEARS AGO. WHAT IS TAKING PLACE INSIDE THESE CALLS NOW IS THE ABILITY TO HARVEST SOME OF THE DATA -- ALWAYS WITH CONSUMER CONSENT, I MIGHT ADD -- BUT HARVEST THE DATA TO PICK UP KEYWORDS, FEED THAT BACK INTO AN AI ENGINE SUCH THAT THAT INFORMATION CAN BE USED TO BOTH MAKE THAT PARTICULAR CONVERSATION MORE INTERESTING, MORE ENGAGING FOR THE CONSUMERS THAT OUR CUSTOMERS ARE ENGAGING WITH, AS WELL AS AT THE SAME TIME TAKING THAT DATA AND FEEDING IT BACK IN SO THAT OVER TIME THAT RESULTS IN A MORE DELIGHTFUL CUSTOMER ENGAGEMENT. ED:
KHOZEMA SHIPCHANDLER, CEO OF TWILIO. COMING UP, OUR EARNINGS COVERAGE CONTINUES. EUGENE MUNSTER OF DEEPWATER ASSET MANAGEMENT. THAT CONVERSATION COMING UP NEXT. THIS IS "BLOOMBERG TECHNOLOGY." ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY."
ED LUDLOW IN NEW YORK CITY. IT'S GET A CHECK IN ON THE MARKETS. BIG TECH IS UNDER PRESSURE ONCE AGAIN, WHAT INTEL AND AMAZON LEADING THE WAY LOWER.
YOUR DISAPPOINTING RESULTS PUSHING THE NASDAQ 100 AND TWO CORRECTION TERRITORY, FALLING 10% SINCE HITTING A RECORD HIGH LAST MONTH. BUT A DIFFERENT STORY FOR APPLE THIS MORNING. IT IS IN THE GREEN, DESPITE SOME DISAPPOINTING NUMBERS, PARTICULARLY OUT OF CHINA. INVESTORS ARE APPLAUDING THE COMPANY'S RETURN TO REVENUE ROSE, RETURNING FROM A SALES SLUMP WITH 5% GROWTH YEAR-OVER-YEAR. THERE ARE A LOT OF PRODUCT STORIES WITHIN THAT. JOINING US FOR MORE, DEEPWATER ASSET MANAGEMENT MANAGING PARTNER GENE MUNSTER.
AT THE HEART OF YOUR THESIS IS THE DEBATE AROUND THE OSBORNE EFFECT. AND ANY TECHNOLOGY FAN WILL ALWAYS THINK ABOUT APPLE AND THE IPHONE IN THAT WAY. BUT WHY? AND WHAT IS THE CONCLUSION YOU HAVE DRAWN? GENE: MAYBE TAKING A STEP BACK, THE OSBORNE EFFECT IS A PHENOMENON ANY APPLE USER IS FAMILIAR WITH, BUT THEY MAY NOT KNOW IT DEFINED AS SUCH. THAT IS THIS CONCEPT OF, IF THERE IS A PENDING BIG PRODUCT COMING IT IS LIKELY THAT YOU HOLD OFF ON BUYING AN EXISTING PRODUCT. EVERY YEAR THERE IS A SLIGHT OSBORNE EFFECT, BUT THE MORE ANTICIPATION THERE IS FOR AND THE OF AN IPHONE THE GREATER THE OSBORNE EFFECT.
IN MY YEARS IN COUPLE -- I IN MY YEARS OF COVERING APPLE HAVE SEEN THEIR GUIDANCE BEFORE A CYCLE. THEY GOT IT FOR SIMILAR REVENUE GROWTH, 5% FOR SEPTEMBER, AS THEY JUST REPORTED FOR JUNE. EFFECTIVELY THEY ARE BUCKING THE OSBORNE EFFECT.
THAT IS A SIGN THAT CONSUMERS SIMPLY CANNOT LIVE WITHOUT APPLE DEVICES. EVEN THOUGH IT MAKES SENSE FOR THEM TO HOLD OFF FOR ANOTHER MONTH OR TWO, THEY CANNOT DO IT BECAUSE THEY NEED THESE PHONES TO CONTINUE TO BASICALLY LIVE THEIR LIVES. I THINK THAT THIS WAS, EVEN THOUGH THE GUIDANCE WAS EFFECTIVELY IN LINE FOR SEPTEMBER, I THINK IT SENT A POWERFUL MESSAGE TO INVESTORS, THE STRENGTH OF THEIR PRODUCT LINE, I THINK THAT IS WHY THE STOCK IS UP TODAY. ED: THE TOP THING HERE IS, APPLE
INTELLIGENCE AND THE IMPACT IT WILL HAVE. SEVERAL ANALYSTS HAD MULTIPLE STABS AT GETTING TIM COOK AND THE CFO TO TALK ABOUT THE DIRECT IMPACT OF APPLE INTELLIGENCE ON AN UPGRADE CYCLE. I THINK TIM COOK WENT THE FURTHEST IN SAYING THERE WILL BE A MEANINGFUL CYCLE, BUT NOTE DATA. WHAT DID YOU MAKE OF THAT? GENE: AND HE ADDED THAT THEY JUST DON'T KNOW UNTIL THEY KNOW. I THINK HE WAS BEING REASONABLE. WHAT I MAKE OF IT IS, IT IS A RESPONSIBLE, JUDICIOUS RESPONSE FROM HIM.
AT THE END OF THE DAY IT COMES DOWN TO, I THINK GOING FORWARD HERE, YOU KNOW, YOU TAKE HIS COMMENTS AND SET THEM ASIDE AND YOU HAVE TO ASK YOURSELF A BASIC QUESTION. DO YOU THINK THAT THESE FEATURES -- BASICALLY EMBEDDING GENERATIVE AI THROUGHOUT FEATURES OF THE IPHONE, DO YOU THINK THEY'RE ARE GOING TO GET PEOPLE EXCITED ENOUGH THAT THEY ARE GOING TO CREATE THIS SUPER CYCLE FOR THE NEXT COUPLE OF YEARS? WHILE WE DON'T HAVE THE CONFIRMATION FROM MANAGEMENT ON THAT, THAT IS THE CENTRAL QUESTION. ONE OTHER PIECE YOU ALLUDED TO IS THERE ARE FEATURES THAT ARE GOING TO COME OUT OVER THE NEXT YEAR. IT IS NOT GOING TO BE THIS A-HA MOMENT. IT IS GOING TO BE WHERE PEOPLE WILL GET A FEATURE, THEY WILL GET ANOTHER FEATURE, AND I THINK IN FISCAL 2025 WE ARE GOING TO SEE MOMENTUM BUILT. IT WILL NOT BE A
ROCKETSHIP-TYPE OF TAKEOFF. IT IS GOING TO BE SOMETHING THAT WILL BUILD MOMENTUM OVER THE NEXT YEAR. ED: IN CHINA THERE HAS BEEN MUCH MADE OF THE THIRD-PARTY DATA. IF I HAVE LEARNED A LESSON, IT IS, THE CAUTIOUS, BECAUSE SOMETIMES APPLE EXECUTIVES PROVE YOU WRONG. BUT IT HAS BEEN HARD TO GAUGE THE IPHONE'S PERFORMANCE AGAINST SOME OF THE DOMESTIC HANDSET MAKERS. DID YOU LEARN ANYTHING ABOUT THAT MARKET FROM THE CALL? WE SPOKE TO LUCA MY STREET -- LUCA, HE IS SAYING IT IS BETTER THAN IT HAS PREVIOUSLY BEEN IN CHINA. GENE:
LUC A'S COMMENTS ARE THAT THEY ARE SEEING A MACRO PIECE TOO. IF I COULD INTERPRET OR TRANSLATE LUCA'S COMMENTS, ESSENTIALLY CHINA HAS BEEN TOUGH. IT HAS BEEN DOWN FOR THREE CONSECUTIVE QUARTERS. DOWN 13% IN DECEMBER. THE GOOD NEWS IS -- AND MAYBE
THIS GETS TO LUCA'S POINTS. HE IS STARTING TO LOOK FORWARD TO THESE COMPS. THE PROBABILITY THAT CHINA RETURNS TO GROWTH IS HIGH GOING FORWARD, SO I THINK THAT IS A RELIEF. WE GOT THROUGH WHAT IS THE TROUGH OF CHINA. JUST TO PUT SOME PERSPECTIVE ON HOW MUCH THAT CAN IMPACT THE BUSINESS. IF YOU EXCLUDE CHINA FROM THE OVERALL BUSINESS, LOOK AT THE 82% OF THEIR BUSINESS THAT GREW 7% IN THE QUARTER.
THEIR OVERALL BUSINESS GREW AT 5%. CHINA HAS A BIG WEIGHT ON IT. I THINK THIS WILL CONVERT TO A TAILWIND IN THE SEPTEMBER OR HIGHLY LIKELY THE DECEMBER QUARTER. ED: HOW IMPORTANT WAS SERVICES?
PARTICULARLY TO THE BOTTOM-LINE? GENE: ANOTHER NICE SURPRISE IS IF YOU QUARTERS AGO SERVICES GROWTH DIPPED TO JUST UNDER 11%. THEY GUIDED TO JUST OVER 13% GROWTH FOR THE SEPTEMBER QUARTER. THAT IS ALL IN THE FACE OF WHAT IS GOING ON IN TERMS OF THIS TALK OF REGULATION. THERE HAS BEEN MORE SUBSTANCE TO REGULATION IN EUROPE, AND THEY HIGHLIGHTED THAT THE EUROPE APP STORE ACCOUNTS FOR 7% OF TOTAL APP STORE REVENUE, WHICH TRANSLATES TO LESS THAN 1% OF OVERALL REVENUE. THE POINT IS, DESPITE THIS CONCERN, THIS ANXIETY THAT SOMEHOW THE SERVICES SEGMENT IS GOING TO SLOW, IT JUST CONTINUES YEAR IN AND YEAR OUT.
IT IS A TESTAMENT TO THE FLYWHEEL OF THEIR PRODUCTS. THAT SERVICES NUMBER NEXT YEAR SHOULD GET A NICE BOOST WITH THIS OPENAI ARRANGEMENT. THEY WILL LIKELY CHARGE FOR A PREMIUM VERSION OF CHATGPT NEXT YEAR, $20 A MONTH. APPLE IS GOING TO TAKE THEIR CUT ON THAT. THAT IS GOING TO CONTINUE TO PUT THE SERVICES SEGMENT IN THIS MID-TEENS GROWTH THROUGH THE END OF 2025 OR 2026. ED: DEEPWATER ASSET MANAGEMENT PARTNER GENE MUNSTER.
THANK YOU VERY MUCH. ANOTHER NAME WE ARE TRACKING IS A SNAP. CHAIRS FALLING AFTER REVENUE FOR THE QUARTER MISSED ESTIMATES. -- SHARES FALLING AFTER REVENUE FOR THE QUARTER MISSED ESTIMATES. JOINING US NOW IS EMARKETER PRINCIPAL ANALYST JASMINE ENBERG. YOU GO BACK TO THE ADVERTISING-BASED BUSINESS AND WHERE THEY DID WELL AND WHERE THEY DIDN'T, WHAT WAS YOUR CONCLUSION? JASMINE: IT DOES FEEL LIKE A BIG STEP BACK FOR SNAP, GIVEN ALL OF THE WORK IT HAS BEEN DOING IN OVERHAULING ITS AD BUSINESS.
THERE WERE SOME POSITIVE SIGNS IN THE REPORT. WE SAW GROWTH IN THE NUMBER OF ACTIVE ADVERTISERS. WE SAW THAT IT WAS SUCCESSFULLY ABLE TO DIVERSIFY ITS REVENUE STREAMS WITH SNAPCHAT PLUS, BRINGING IN OVER $100 MILLION IN REVENUE. AND THERE WERE SOME IMPROVEMENTS IN ITS DIRECT RESPONSE ADVERTISING BUSINESS, WHICH IS WHAT IT HAS BEEN FOCUSED ON IMPROVING. THE FACT THAT BRAND ADVERTISING IS STILL SO MUCH OF A HEADWIND FOR SNAP TELLS ME THAT THERE IS A LOT MORE WORK TO DO WITHIN ITS DIRECT RESPONSE ADVERTISING BUSINESS. BOTH TO GET MORE ADVERTISERS ON
BOARD AND GET THEM TO COMMIT MORE BUDGET TO THE APP. ED: JUST LOOKING AT THE STOCK, DOWN ALMOST 25%. A NUMBER OF ANALYSTS AT THEIR PRICE TARGETS ON IT. WE HAVE TO FRAME SNAP IN THE COMFORT -- IN THE CONTEXT OF COMPETITION WITH META. IS THAT FAIR TO DO?
AND WHAT WE LEARN IF WE GET THAT? JASMINE: I WAS HAVING THIS CONVERSATION YESTERDAY ABOUT OTHER IT IS FAIR TO COMPARE SNAP TO META, BECAUSE THEY ARE PLAYING IN DIFFERENT LEAKS. AND OF THE REASONS WE SAW INVESTORS REWARD META DESPITE ALL OF THAT AI AND METAVERSE SPENDING, IS BECAUSE IT HAS THIS MASSIVE ADDED BUSINESS THAT IT WAS ABLE TO SHOW A LOT OF IMPROVEMENT THERE. SNAP IS A MUCH SMALLER AD PLAYER, SO IT HASN'T STRUGGLED TO KEEP UP. IT IS STILL WORKING TO CATCH UP WITH META, SO IT NEEDS TO BE FOCUSING ON THAT.
IT IS NOT SMALL BY ANY MEANS. WE ALSO HEARD THAT 850 MILLION MONTHLY USERS, SO A LOT OF TIMES IT IS THIS SMALL PLAYER, BUT CERTAINLY ISN'T. IN TERMS OF SCALE, CERTAINLY STILL SMALLER THAN META. ED: JASMINE ENBERG, GREAT TO HAVE
YOU BACK ON "BLOOMBERG TECHNOLOGY." WE ARE JOINED BY RAVI INUKONDA, CEO OF DOORDASH, TO DISCUSS HIS COMPANY EARNINGS -- COMPANY'S EARNINGS. AGAIN, A RARE BRIGHT SPOT IN WHAT IS A PRETTY BIG DAY OF RED ON THE SCREEN FOR MARKETS THIS FRIDAY. THIS IS "BLOOMBERG TECHNOLOGY." THIS IS BLOOMBERG.
ED: BACK TO EARNINGS. DOORDASH, WHICH REPORTED THURSDAY, STRONG OUTLOOK. PARTICULARLY ON THE BOTTOM LINE FOR THE FISCAL THIRD. CEO RAVI INUKONDA JOINS US NOW.
I'M GOING TO DO SOMETHING DIFFERENT. WE KNOW THE NUMBERS. THE OUTLOOK IS GOOD. I WANT TO TALK MORE ABOUT THE PLATFORM AND WHERE THIS GROWTH IS GOING TO COME FROM. YONDER RESTAURANTS, INTO NEW PRODUCT CATEGORIES.
I THINK THAT IS A REAL POINT OF EMPHASIS FOR INVESTORS THIS MONEY. GIVE ME THE NEAR AND LONG-TERM FUTURE OF HOW YOU ARE GOING TO BE DRIVING THAT GROWTH. RAVI: ABSOLUTELY. YESTERDAY THE MEDIA SAID WE ARE REDEFINING CONVENIENCE. THAT IS TRULY WHAT YOU ARE SEEING ON THE PLATFORM. WE WENT FROM BEING ONE PRODUCT
IN ONE COUNTRY TO BEING MULTIPLE PRODUCTS IN OVER 30 DIFFERENT COUNTRIES. WE ARE REALLY EXCITED THAT MORE THAN 20% OF OUR USERS TODAY LOOK TO DOORDASH TO ORDER THEIR GROCERIES, CONVENIENCE, RETAIL PRODUCTS. THAT IS UP FROM 0% JUST A FEW YEARS AGO. WE ARE DOING THIS SUCCESSFULLY IN OVER 30 COUNTRIES, WHERE THE DEMAND HAS BEEN OVERWHELMING AND POSITIVE. ED: I THINK ABOUT THE TYPES OF THINGS YOU USE AN APP-BASED SERVICE TO GET TO YOU CONVENIENTLY. IS IT ALCOHOL DELIVERY? COSMETICS, BEAUTY? FASHION EVEN? WHAT ARE THE AREAS WHERE YOU THINK, WE ARE GOING TO GET BIG ON THIS AREA. RAVI: GROCERY HAS BEEN A LARGE
COMPONENT FOR US. WE HAVE MORE USERS ORDERING GROCERIES THAN EVER BEFORE. AND THEY ARE ORDERING MORE TIMES THAN EVER BEFORE. THE REASON IS, WE INCREASED THE SELECTION. ON THE EKE -- ON THE EAST COAST WE ADDED MAJOR BRANDS. THE IMPROVEMENT IN SELECTION IS WHAT YOU ARE SEEING DRIVING THE GROWTH IN GROCERY.
AT THE SAME TIME RETAIL IS AN EXCITING PART. CONSUMERS ARE EXCITED ABOUT GETTING THEIR PRODUCTS INSTANTLY WHEN THEY ORDER BEAUTY PRODUCTS FROM SEPHORA OR ALTA BEAUTY. WE HAVE SEEN STRENGTH IN NEW VERTICALS OUTSIDE OF RESTAURANTS. NOT JUST IN THE U.S., BUT MANY OF OUR INTERNATIONAL MARKETS AS
WELL. YOU ARE SEEING STRENGTH IN RETAIL, YOU ARE SEEING STRENGTH IN BEAUTY, ALCOHOL. WHILE THE RESTAURANT BUSINESS CONTINUES TO GROW QUITE NICELY AS WELL. ED: I THINK BACK TO THE EARLIER DAYS OF COVERING UBER AND THIS OBSESSION WITH ADJUSTED EBIT. THE QUESTION ON DOORDASH IS OPERATIONAL PROFITABILITY. YOU HAVE GIVEN A PLEDGE ON
TIMELINE. WHAT IS THE LATEST? RAVI: OUR FINANCIAL LODESTAR IS DRIVING CASH PER SHARE. YOU ARE SEEING THE BUSINESS CONTINUE TO DRIVE FREE CASH FLOW HIGH. WHEN I MONITOR THE BUSINESS FREE CASH FLOW IS TRULY THE HEALTH OF THE BUSINESS. YOU LOOK AT ADJUSTED EBIT, THAT IS AT ALL-TIME HIGH. ED: HOW DO YOU SCALE BY ADDING MERCHANTS, USING INCENTIVES IN A WAY THAT DOES NOT IMPACT, MAYBE, THE MORE PROFITABLE SIDE OF THE BUSINESS ON THE BACKEND SOLUTION SIDE OF THINGS? RAVI: THE KEY FOR US IS, SCALE IS WHAT DRIVES PROFITABILITY IN THE BUSINESS. WE HAVE MORE THAN 37 MILLION
CONSUMERS THAT SHOP WITH US EVERY MONTH. WHAT WE SEE IS THAT WHEN WE ADD NEW CATEGORIES THE OVERALL ENGAGEMENT ON THE PLATFORM GOES UP. WE ARE MAKING THE APP MORE PERSONALIZED. WHEN YOU SEARCH FOR SOMETHING WE REMEMBER YOUR PREFERENCES, AND THE SEARCH RESULTS REFLECT WHAT YOU PREFERENCE ON DOORDASH. ALL OF THIS IS DRIVING USERS TO
COME BACK MORE OFTEN. THEY SPEND WITH US A LOT MORE. WE ARE DRIVING VALUE NOT JUST TO CONSUMERS, BUT MERCHANTS. AND YOU ARE SEEING US DRIVE GROWTH FOR MERCHANTS AS WELL. COMBINATION IS DRIVING WHAT IS THE GROWTH AND PROFITABILITY OF THE BUSINESS. ED: RAVI INUKONDA, IT IS GREAT TO CATCH UP. THANK YOU. THERE ARE OTHER NEWS STORIES. FIRST UP, NINTENDO PROFITS FREEFALL 71%.
GAMING COMPANY POSTED JUST $365.1 MILLION IN PROFITS IN THE THREE MONTHS THROUGH JUNE. AS CONSUMERS HOLD OFF ON PURCHASES AS THEY AWAIT A NEW FLAGSHIP GAME CONSOLE THAT REPLACES ITS AGING SWITCH IN ITS SEVENTH YEAR. BILLIONAIRE JACK MA SCORES A WIN AS HIS GROUP-BACKED MEANT -- MINT -- MORE THAN 90 MILLION USERS IN THE PHILIPPINES. THAT IS ACCORDING TO BLOOMBERG CALCULATIONS. PRICING THE VALUE OF THE STAKE AT $1.2 BILLION.
AN EMBATTLED SHORT SELLER DELETED SUITES -- SELLER'S DELETED TWEETS ARE IN THE SPOTLIGHT. HE DELETED HIS TWEET HISTORY IN AN EFFORT TO FEND OFF TROLLS. NOW THE JUSTICE DEPARTMENT ARE DIGGING THROUGH THOSE MESSAGES, ACCUSING LEFT OF MANIPULATING THE MARKET TO BENEFIT HIS OWN TRADING, AND LYING TO INVESTIGATORS.
COINBASE CFO ALICIA HAAS SPOKE WITH BLOOMBERG TO DISCUSS HER COMPANY'S EARNINGS, CODING GROWTH IN SUBSCRIPTION AND SERVICES AND DRIVING CREATIVITY ON THE NETWORK. >> WE ARE REALLY PLEASED WITH THE GROWTH IN SUBSCRIPTIONS THIS QUARTER. WE GREW IN EVERY CATEGORY OF SUBSCRIPTION AND SERVICES AND REACHED AN ALL-TIME HIGH FOR US. AND OF OUR GOALS HAS BEEN REVENUE DIVERSIFICATION, AND WE ARE PLEASED TO SEE THAT MAKES PLAY OUT OVER TIME. WE DON'T LOOK AT WHEN IT WILL CROSS, WE LOOK AT GROWTH OF EACH OF OUR REVENUES, DIVERSIFICATION OF ALL OF OUR REVENUE STREAMS. WE ARE PLEASED TO SEE CONTINUED GROWTH OF THAT OTHER TRANSACTION REVENUE. BASE HAS BECOME ONE OF THE
BIGGEST CONTRIBUTORS TO OTHER TRANSACTION REVENUE, AND THE BUILDING BLOCKS ARE JUST GETTING SOLID -- STARTED FOR LOWER COST PAYMENTS, USDC ON-BASE IS FREE. SO WE THINK THESE BUILDING BLOCKS COME TOGETHER. HE COULD SEE DIVERSIFICATION OF TRANSACTION REVENUE AS WELL.
REALLY PLEASED WITH OUR SERVICES THIS QUARTER. >> HOW IS THAT GOING TO START CONTRIBUTING TO A GREATER SCALE AT THE BOTTOM LINE? WHAT EXACTLY ARE PEOPLE USING ON BASE THAT IS CREATING MORE OF A CASH FLOW STREAM FOR YOU? >> SO, JUST TO REMIND EVERYBODY WHAT BASE IS, BASE IS A LAYER TWO SOLUTION, WHICH MEANS IT SITS ON TOP OF A THEORY HIM AND IT IS ENABLING CHEAPER TRANSACTIONS. THAT HAS BEEN OUR GOAL, DRIVING FASTER AND CHEAPER TRANSACTIONS. AS I SAID, OVER THE LAST 90 DAYS WE SAW A COME DOWN UNDER ONE CENT [SPEAKING ANOTHER LANGUAGE] -- ONE CENT PER TRANSACTION. THIS IS ENABLING DEVELOPERS TO
BUILD NEW APPLICATIONS ON TOP OF BASE THAT CAN BENEFIT FROM EMBEDDED PAYMENTS WITHIN THAT APPLICATION. WE ARE SEEING ALL SORTS OF CREATIVITY EMERGE IN THIS SPACE. WE ARE SEEING PEOPLE BUILD NEW SOCIAL NETWORKS.
WE ARE SEEING NEW TYPES OF GAMES. CREATIVITY IS BLOOMING ON THE BASE NETWORK, AND THAT IS WHERE OUR FOCUS IS RIGHT NOW. DRIVING THAT DEVELOPER ACTIVITY. DEVELOPERS WILL BRING USERS. USERS WILL DRY TRANSACTIONS. IN TRANSACTIONS WILL BRING REVENUE TO OUR P&L. >> HOW LONG DOES THAT TAKE TO PLAY OUT? WHAT ARE YOU MODELING RIGHT NOW? >> IT IS EARLY DAYS. WE ARE PLEASED TO SEE WE HAVE BECOME THE NUMBER ONE LAYER IN TERMS OF POSTED. THAT FOCUS ON DEVELOPER
ACTIVITY IS WHERE OUR ENERGY IS RIGHT NOW. ED: THAT WAS ALICIA HAAS, CFO OF COINBASE. SARAH BRASS FILES CONFIDENTIALLY FOR U.S. IPO. HIS STORY I BROKE WITH OUR DEAL TEAM LAST NIGHT. THIS IS "BLOOMBERG TECHNOLOGY." ED: SARAH BRASS SYSTEMS IS MAKING CHIPS OPTIMIZED FOR AI. IT HAS FILED CONFIDENTIALLY FOR AN INITIAL PUBLIC OFFERING. SOURCES SAY IT HAS PICKED
CITIGROUP AS THE LEAD BANK AND IT IS TARGETING A LISTING IN THE SECOND HALF OF THIS YEAR. AMY, YOU AND I HAVE BEEN TRACKING THIS ONE. IT IS INTERESTING. LET'S START WITH THE BASIS -- BASICS OF WHAT WE KNOW. >> THE TIMING IS GOING TO BE IN EARLY OCTOBER.
THAT WOULD BE THE GROUP OF IPOS THAT IS GOING TO LIST AND GO FOR AN OFFERING AFTER LABOR DAY. RIGHT NOW THE IPO WINDOW HAS SLIGHTLY SHOT AFTER THE JULY SLEW OF IPO'S. THE NEXT WINTER IS GOING TO BE SEPTEMBER, BEFORE EVERYTHING IS PROBABLY GOING TO SLOW DOWN BECAUSE OF ELECTION VOLATILITY. ED: IT IS AN INTERESTING DECISION TO MAKE. THE REASON SARAH BRASS IS INTERESTING IS WHAT IT DOES. IT IS VERY ON-BRAND FOR WHAT IS EN VOGUE AT THE MOMENT. WITH THE MAKE OF THAT?
AND IT'S SALABILITY IN THIS MARKET? AMY: PEOPLE ARE TALKING ABOUT WHETHER AI DOES PRODUCE MONEY, RIGHT? BUT BECAUSE THERE HAS BEEN QUITE A LOT OF AI-ADJACENT PLACE, LIKE REDDIT, SARAH BRASS IS RIGHT SMACK IN THE MIDDLE OF IT. IT PRODUCES CHIPS. IT MAKES THE LARGEST TIP ON THE MARKET. IT IS MUCH BIGGER THAN THE OTHERS.
IF YOU THINK NORMAL CHIPS ARE THE SIZE OF A POSTAL STAMP, THIS MOON IS THE SIZE OF A DINNER PLATE. WITH MORE MEMORY, FASTER, CAN HANDLE MORE DATA. IT USES THOSE CHIPS IN A CIRCLE -- A SUPERCOMPUTER THAT WILL HANDLE A LOT OF DATA ANALYSIS. ITS CUSTOMERS INCLUDE MILITARY, GOVERNMENT, AND PHARMACEUTICAL COMPANIES IN THE DRUG DISCOVERY PROCESS. THAT IS REALLY AT THE HEART OF WHAT PEOPLE ARE LOOKING FOR IN TERMS OF AI USES. ED: BLOOMBERG'S AMY OR BREAKING A LOT OF NEWS LATELY.
WE HAVE TO GO BACK TO THE MARKETS. MEMBER, ON AGGREGATE THE NASDAQ 100 IS HEADED FOR ITS FOURTH-STRAIGHT WEEKLY DECLINE, MATCHING THE RUN OF DROPS WE SAW IN APRIL, AND IS TECHNICALLY IN CORRECTION TERRITORY. THE BIG DRAGS, AMAZON DOWN 9%. INTEL DOWN 26%, ON TRACK FOR ITS BIGGEST DROP SINCE 1982. BUCKING THAT TREND IS APPLE, UP 2% TO THE UPSIDE, WHERE THERE WAS A RETURN TO GROWTH. THERE ARE SOME BIG QUESTIONS ABOUT HOW MUCH MONEY NEEDS TO BE SPENT ON THE INFRASTRUCTURE SIDE TO GET US TO THIS WORLD WHERE AI IS GENERATING MEANINGFULLY ON THE TOP AND BOTTOM LINE. IT HAS ACTUALLY BEEN A WONDERFUL WEEK TO BE IN NEW YORK CITY. THAT DOES IT FOR THIS EDITION
OF "BLOOMBERG TECHNOLOGY." DON'T FORGET TO RECAP ALL OF THE CONVERSATIONS WE HAVE HAD TODAY ON THE PODCAST. THERE IS A LOT GOING ON. YOU KNOW WHERE TO FIND IT, THE TERMINAL, BLOOMBERG PLATFORMS, AS WELL AS APPLE, SPOTIFY, AND IHEART.
I'M JUMPING ON A PLANE BACK TO SAN FRANCISCO. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY."
2024-08-04 01:29
