WEBVTT - CoreWeave Chairman & CEO Michael Intrator Talks Company's Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. But the focus is

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<v Speaker 1>also on optimism around jobs. Data coming in stronger for

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<v Speaker 1>the first back to back gain we've had at least

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<v Speaker 1>a year in terms of month and month nonfarm payrolls.

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<v Speaker 1>But tech, I'm afraid down for sixteen straight months in

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<v Speaker 1>terms of jobs in the information technology area. We're at

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<v Speaker 1>one point seven percent though, even as consumer confidence lags

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<v Speaker 1>and it's about the AI trade is about big tech.

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<v Speaker 1>But there is a lagged out there, and I just

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<v Speaker 1>want to shine light and what's happening with Core. We've

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<v Speaker 1>we're off by twelve percent. The context is this company

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<v Speaker 1>was up let's say, ninety percent year to date. In

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<v Speaker 1>the run up to these earnings, we see profit taking.

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<v Speaker 1>We also see some anxiety as we see the forecast

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<v Speaker 1>perhaps not living up to some of the higher expectations.

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<v Speaker 1>CEO Michael and Trader joins us now in the studio. Michael,

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<v Speaker 1>earnings are always tough when the market has built up

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<v Speaker 1>a lot of optimism around the business. So why do

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<v Speaker 1>you think they're a little bit concerned about the four

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<v Speaker 1>looking guidance when it comes to revenue, when it comes

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<v Speaker 1>to operating profit.

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<v Speaker 2>So look, I think this was and I said this

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<v Speaker 2>in the earnings call, a transformational and extraordinary earnings for us.

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<v Speaker 2>You know, the company really hit on all cylinders. We

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<v Speaker 2>we uh, you know, we we beat on revenue. You know,

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<v Speaker 2>we reaffirmed our annual revenue targets from a nominal perspective. Uh,

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<v Speaker 2>we reaffirmed our uh twenty twenty six ar are operating

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<v Speaker 2>margin targets.

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<v Speaker 3>Really a great.

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<v Speaker 2>Quarter for us by the numbers, but also you know,

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<v Speaker 2>extending our product. You know, we can't keep up with

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<v Speaker 2>demand from existing customers, which are you know, historically been

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<v Speaker 2>AI labs and AI native and cloud, but.

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<v Speaker 1>Now they're expanding.

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<v Speaker 3>Yeah, and we're just being overwhelmed by new.

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<v Speaker 2>Verticals that are coming in and and and integrating AI

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<v Speaker 2>at scale into their workflows.

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<v Speaker 3>Right.

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<v Speaker 2>And so you know you heard me talk a little

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<v Speaker 2>bit about some of the trading and finance companies like

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<v Speaker 2>Jane Street and Hudson River Trading. You know that's adding

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<v Speaker 2>to you know, JP Morgan and Morgan Stanley who are

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<v Speaker 2>already clients. You know, you heard me talk a little

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<v Speaker 2>bit about some of the physical AI into the robotics space,

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<v Speaker 2>you know, where where you know, great new clients coming

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<v Speaker 2>on to our infrastructure. It's really exciting. You know, stock's

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<v Speaker 2>going to bounce around. You know, we understand that. But

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<v Speaker 2>but you know, one of the you know, one of

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<v Speaker 2>the best things about being a founder and a CEO,

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<v Speaker 2>and one of the best things about and one of

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<v Speaker 2>the hardest things about being a founder and CEO is

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<v Speaker 2>you know, I try to keep my eye on the

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<v Speaker 2>parts of the business that are succeeding and growing and expanding.

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<v Speaker 2>And you know, we're winning the day, right. We drove

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<v Speaker 2>down our cost of capital, we expanded our backlog by

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<v Speaker 2>forty billion dollars. We did all the things that we

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<v Speaker 2>needed to do. So I'm thrilled with the quarter. I

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<v Speaker 2>think it was fantastic. You know, seemingly there's a little

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<v Speaker 2>bit of trepidation around next quarters revenue.

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<v Speaker 1>How do you yeah, how do you get next quot

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<v Speaker 1>And indeed the second half people are optimistic. You're saying,

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<v Speaker 1>I'm optimistic that profitability will ramp up in the second half.

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<v Speaker 3>How does that happen? Oh?

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<v Speaker 2>So, you know, I mean, look, we're we it's almost

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<v Speaker 2>mathematical at some point, right like where you know you're

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<v Speaker 2>building infrastructure, that infrastructure takes time to bring online.

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<v Speaker 3>We are going through a massive build out across the

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<v Speaker 3>company right now.

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<v Speaker 2>It's why the the operating margins have compressed this because

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<v Speaker 2>we're going through this enormous scaling exercise. As you push

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<v Speaker 2>through that, all of that infrastructure comes onto billing, and

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<v Speaker 2>once it comes on too billing, you are going to

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<v Speaker 2>see a sequential expansion of the operating margins until we

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<v Speaker 2>go from you know, one percent in Q one all

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<v Speaker 2>the way up through low double digits.

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<v Speaker 3>By Q four.

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<v Speaker 2>And you know that's sort of baked in because of

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<v Speaker 2>the infrastructure coming online, the software capacity to deliver that infrastructure.

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<v Speaker 2>You know, we're highly confident we're going to hit those numbers.

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<v Speaker 1>There was anxiety about another company, a client, not hitting

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<v Speaker 1>internal numbers and I'm talking about open AI And look,

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<v Speaker 1>Sarahphry has come on and spoken to colleagues here at

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<v Speaker 1>Blom Venues and pushed back against that, saying they're seeing

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<v Speaker 1>a wall of demand. But how confident are you that

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<v Speaker 1>your clients are seeing that demand and are good for

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<v Speaker 1>the money for the buildout.

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<v Speaker 3>Yeah.

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<v Speaker 2>So one of the things I talked about yesterday during

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<v Speaker 2>during Ernix call is that.

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<v Speaker 3>The demand for our.

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<v Speaker 2>Paper in the debt markets has been nothing shy of astounding.

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<v Speaker 2>You know, we did a one of our delayed DRAWG

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<v Speaker 2>facilities closed two days ago. The the clients in it

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<v Speaker 2>were cohere and open Ai exclusively, and the two things happened. One,

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<v Speaker 2>it was five x oversubscribed, which is enormous. It also

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<v Speaker 2>closed fifty basis points below the marketed range, and that

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<v Speaker 2>is a clear indication of enormous.

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<v Speaker 3>Buying interest for financing.

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<v Speaker 2>The paper with regards to paying. Look, you know, open

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<v Speaker 2>Ai is extraordinary company. Right, one in ten people on

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<v Speaker 2>the planet use their product.

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<v Speaker 3>Every year.

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<v Speaker 2>But you know, and we think that they're in a

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<v Speaker 2>wonderful position. But we've also built an incredibly diversified portfolio

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<v Speaker 2>of companies that use our infrastructure.

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<v Speaker 3>This this quarter.

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<v Speaker 2>We announced Anthropic, We announced a massive deal twenty one

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<v Speaker 2>billion dollars with Meta. We announced, you know, a six

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<v Speaker 2>billion dollar deal with Jane Street. You know, like the

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<v Speaker 2>number of clients that are using our infrastructure are expanding.

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<v Speaker 2>You know, the diversification is expanding. Open Ai is an

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<v Speaker 2>important client, but one of many.

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<v Speaker 1>Let's talk about an important partner and in your supply chain,

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<v Speaker 1>and that's in Nvidia. How confident you are with the

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<v Speaker 1>strength of your relationship there and videos make deals with you,

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<v Speaker 1>invested in you, but also doing that with shall I say,

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<v Speaker 1>even competitors in the space. Is that ever an anxiety?

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<v Speaker 2>No, I take that as an incredible affirmation of the

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<v Speaker 2>fact that the world needs more of this infrastructure and

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<v Speaker 2>the demand for the infrastructure and the product that we

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<v Speaker 2>deliver is overwhelming. And you know, at the end of

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<v Speaker 2>the day, you know in video has got to do

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<v Speaker 2>what it's got to do for its business. I really

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<v Speaker 2>focus on my clients, and my clients are coming back

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<v Speaker 2>to us and they are saying again and again, you

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<v Speaker 2>deliver the best product the way that your software stack

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<v Speaker 2>enables our engineers to use it most efficiently, that most

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<v Speaker 2>cost effectively, and most successfully, and therefore we want to

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<v Speaker 2>buy more. And so the problem that I've got is

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<v Speaker 2>how do I bring on enough infrastructure to sit and

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<v Speaker 2>to deliver the infrastructure that my clients are clamoring.

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<v Speaker 1>Dig into the problems because there have been delays at

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<v Speaker 1>times with certain of them coming online. And that's to

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<v Speaker 1>do with a partnership. What is the biggest chokol for

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<v Speaker 1>you in the matter.

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<v Speaker 2>So you know, Core is becoming a massive player in

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<v Speaker 2>the space, and you know we are currently approaching fifty

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<v Speaker 2>data centers that we are delivering infrastructure from. There is

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<v Speaker 2>no single data center provider that represents more than seventeen

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<v Speaker 2>percent of our infrastructure. We have a massive effort internal

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<v Speaker 2>to the company to go through self builds so that

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<v Speaker 2>we have greater operational control over the delivery of data

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<v Speaker 2>center capacity.

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<v Speaker 3>You know, we're doing all the right.

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<v Speaker 2>Things by diversifying to ensure that no single data center

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<v Speaker 2>can materially impact the trajectory of the company.

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<v Speaker 3>That is further.

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<v Speaker 2>Reinforced by just the size and scale of the installed capacity.

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<v Speaker 2>Right so you know, if you have a giggle wat

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<v Speaker 2>worth of capacity and a data hall represents you know,

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<v Speaker 2>fifty megawatts, you know, you know, and you're bringing a

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<v Speaker 2>fifty megawatts, the impact of a week delay on fifty

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<v Speaker 2>megawats in a gigawatt environment is very different than earlier

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<v Speaker 2>on when you're bringing on fifty megawats and you only

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<v Speaker 2>have fifty megawats online.

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<v Speaker 3>A week delay rattles.

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<v Speaker 2>Your entire ability to project where you're going, and we

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<v Speaker 2>no longer have that problem. We have achieved escape velocity

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<v Speaker 2>both in terms of our data center capacity as well

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<v Speaker 2>as our revenue, as well as our ability to provide

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<v Speaker 2>guidance into the back half of this year.

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<v Speaker 3>We're super excited about that.

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<v Speaker 1>We'll wait for the investors maybe to just react to

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<v Speaker 1>some of your longer term perspective. Michae'll entray to there.

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<v Speaker 1>The CEO, of course, weave on the back of their numbers.