WEBVTT - Smartphone Slump Hits Qualcomm, Ryan Petersen Joins Founders Fund & Superconductivity is Having a Moment 0:00:01.760 --> 0:00:05.400 From Mahard where Innovation of money and power Collie in 0:00:05.519 --> 0:00:06.480 Silicon Valley. 0:00:06.600 --> 0:00:10.560 N Beyond This is Bloomberg Technology with Caroline Hyde and 0:00:10.800 --> 0:00:11.879 Ed Ludlove. 0:00:25.200 --> 0:00:28.200 Ed Lovelow here in San Francisco. Caroline hides off today. 0:00:28.280 --> 0:00:30.960 This is Bloomberg Technology coming up on the program for 0:00:31.120 --> 0:00:35.560 earnings coverage ahead from Qualcom to Etsy, Expedia and beyond. 0:00:35.560 --> 0:00:36.320 We got you covered. 0:00:36.520 --> 0:00:39.880 Plus, we sit down for an exclusive conversation with Flexport 0:00:39.920 --> 0:00:43.159 founder Ryan Peterson, who's joined Founder's Fund as a partner. 0:00:43.240 --> 0:00:45.519 His thoughts, where he's going to invest in the world, 0:00:45.560 --> 0:00:50.599 adventure capital and super conductivity. It's having a moment. Everyone 0:00:50.760 --> 0:00:53.720 is obsessed. We'll explain why a potential breakthrough in the 0:00:53.760 --> 0:00:57.360 technology has been driving both excitement and controversy. 0:00:57.800 --> 0:00:59.320 Let's get a quick look at the markets. First. 0:00:59.320 --> 0:01:02.160 We are treading more frankly on the technology corners of 0:01:02.160 --> 0:01:04.919 the equity market. You look at the Nazek one hundred. Basically, 0:01:04.959 --> 0:01:06.760 flat earning is a big part of the story. But 0:01:06.800 --> 0:01:09.160 we see as sell off in treasuries. The yield on 0:01:09.160 --> 0:01:12.120 the US Tenure Treasury at its highest level in nine months. 0:01:12.160 --> 0:01:15.960 There is concerns about the costs of borrowing more dynamic movement. 0:01:15.720 --> 0:01:16.600 In the chip space. 0:01:16.640 --> 0:01:20.360 The Philadelphia Semiconductor Index or SOCKS underperforming software by three 0:01:20.440 --> 0:01:22.320 tens to one percent. A big part of that is 0:01:22.440 --> 0:01:25.000 Quowcom down ten percent. We will get to those details 0:01:25.160 --> 0:01:28.200 with bloombergs Ian King shortly. The two big ones that 0:01:28.240 --> 0:01:31.800 we're braced for, Apple and Amazon report after the bell. 0:01:31.840 --> 0:01:33.960 We're going to look ahead and think about what the 0:01:34.000 --> 0:01:36.399 macro environment means for those two names, both from the 0:01:36.400 --> 0:01:39.080 consumer perspective, but when it comes to Amazon also the 0:01:39.080 --> 0:01:43.400 cloud narrative with AWS. Remember last week Microsoft showed slow 0:01:43.440 --> 0:01:46.000 in growth in cloud that is their biggest direct competitor. 0:01:46.240 --> 0:01:49.600 Does it translate to AWUS two earnings already out and 0:01:49.640 --> 0:01:53.720 weighing on markets this morning, Etsy and Quowdcom study Wetsy, Yeah, 0:01:53.720 --> 0:01:56.800 Look we're down twelve percent. Concern about the growth outlook 0:01:56.840 --> 0:01:58.920 for them. We're going to go talk to Schwedder Cajuria 0:01:58.960 --> 0:01:59.960 about that in just a moment. 0:02:00.040 --> 0:02:02.120 And then Qualcom down ten. 0:02:02.000 --> 0:02:04.920 Percent, tracking on a closing basis for its biggest drop 0:02:04.960 --> 0:02:07.760 since March of twenty twenty. The story here is that 0:02:07.800 --> 0:02:10.920 this is the biggest maker of smartphone processes in a 0:02:10.960 --> 0:02:13.520 market for smartphones that is having one of the most 0:02:13.520 --> 0:02:17.000 severe slowdowns for a long time and it continues. The 0:02:17.000 --> 0:02:20.040 outlook that they gave was worrying for the current period. 0:02:20.320 --> 0:02:23.320 For more, let's bring in Bloomberg's Ianking. He covers everything 0:02:23.560 --> 0:02:26.280 semiconductors for us. What were the sort of main takeaways 0:02:26.280 --> 0:02:28.000 from that earnings print in Yeah. 0:02:27.880 --> 0:02:30.600 I mean, the big focus here was where are we 0:02:30.639 --> 0:02:36.720 with the smartphone inventory correction? And the answer was, we're 0:02:36.760 --> 0:02:40.640 still in that inventory correction China. 0:02:40.800 --> 0:02:41.600 You know, everybody was. 0:02:41.600 --> 0:02:44.120 Hoping the Chinese consumer would come back, and that just 0:02:44.160 --> 0:02:45.320 doesn't appear to be the case. 0:02:45.360 --> 0:02:47.640 It's the main market, right, and you forget that in 0:02:47.760 --> 0:02:52.160 China there are many domestic players who make Android platform phones. 0:02:52.480 --> 0:02:54.440 The other data point that we get from Qualcon is 0:02:54.480 --> 0:02:57.880 this full year shipment's forecast. What did they say about 0:02:57.919 --> 0:03:00.080 twenty twenty three relative. 0:02:59.760 --> 0:03:02.720 To Yeah, I mean, it's a down year. You know, 0:03:02.760 --> 0:03:06.639 we're looking high single percentages down from a year ago, 0:03:06.760 --> 0:03:10.640 and that clearly indicates that not only have we still 0:03:10.680 --> 0:03:13.920 got inventory, but also consumers just aren't coming rushing back. 0:03:14.560 --> 0:03:16.960 When I think of Qualcomm, I said it just then 0:03:17.040 --> 0:03:20.079 the biggest maker of smartphone processes. The other side of 0:03:20.120 --> 0:03:23.519 their business is modems, and we are always asking questions 0:03:23.560 --> 0:03:27.560 about the future relationship between Qualcomm and Apple and the iPhone. 0:03:27.600 --> 0:03:30.079 What did Cristiano I'm on the CEO say about that? 0:03:30.200 --> 0:03:31.840 Yeah, I mean this is this always comes up on 0:03:31.840 --> 0:03:34.000 their call. This is always a point of contention because 0:03:34.000 --> 0:03:37.000 obviously they had a massive legal fight and Apple was 0:03:37.040 --> 0:03:39.280 forced to go back to them and ask for their technology. 0:03:39.360 --> 0:03:42.160 So that's the background. What he did was confirm that 0:03:42.320 --> 0:03:45.760 when we have the new iPhone later this year, qual 0:03:45.840 --> 0:03:47.880 Com will be in there. Their modem will be what 0:03:48.200 --> 0:03:50.640 takes that iPhone through the until next year. And just 0:03:50.680 --> 0:03:52.200 want to know, so, hey, is this the end of 0:03:52.240 --> 0:03:56.680 the show? Do Apple do their own thing? As Bloomberger's reported, 0:03:57.080 --> 0:03:59.520 And he just refused to talk about that. So that 0:03:59.640 --> 0:04:03.200 leaves open the potential that maybe we'll see Qualcom in 0:04:03.240 --> 0:04:03.920 there in the future. 0:04:03.960 --> 0:04:06.480 We were just showing actually some of what Christian Ammon 0:04:06.640 --> 0:04:08.840 was saying. I want to bring those comments back because 0:04:09.280 --> 0:04:12.480 the other standalone story was then reacting to this environment 0:04:12.480 --> 0:04:15.400 with cost cutting measures and that includes job cuts. 0:04:15.400 --> 0:04:17.040 What did they say, Yeah, No. 0:04:17.040 --> 0:04:19.320 I mean we'll then actually say explicitly on the call, 0:04:19.360 --> 0:04:21.800 but if you deald into the filings as we did, 0:04:22.120 --> 0:04:24.679 you saw that they'd had more than two hundred million 0:04:25.120 --> 0:04:29.160 dollars of severance payments in the previous quarter, and then 0:04:29.200 --> 0:04:31.839 they said, look, this is likely going to recur again 0:04:31.839 --> 0:04:35.839 in this quarter. So clearly they are moving around their workforce. 0:04:35.880 --> 0:04:38.039 They said, look, we're going to concentrate our resources on 0:04:38.360 --> 0:04:41.120 what gets us going in the future, but that means 0:04:41.160 --> 0:04:44.360 that they're probably going to shed some jobs in other 0:04:44.400 --> 0:04:45.360 parts of the company. 0:04:45.560 --> 0:04:48.039 That's what we do here at Bloomberg Technology, not just 0:04:48.080 --> 0:04:50.960 the earnings print, not just the call that Ian King 0:04:51.040 --> 0:04:53.560 goes saluthing through the filings and that's where we find 0:04:53.760 --> 0:04:56.440 the GC details blooms in King, thank you very much. 0:04:56.480 --> 0:04:58.080 The other name that we're talking about top of the. 0:04:58.000 --> 0:05:01.599 Show, Etsy falling is look basically failed to re ensure 0:05:01.640 --> 0:05:04.479 investors on growth s get more on Etsy's earnings and 0:05:04.480 --> 0:05:07.760 bring in Sweater, Cajuria, ever core Isa and lest Sweater. 0:05:07.839 --> 0:05:10.560 You've got an outperform rating on etc. Which is interesting, 0:05:10.839 --> 0:05:14.120 also a one oh five price target. What were the 0:05:14.120 --> 0:05:16.120 main takeaways for you from that earning sprint? 0:05:17.480 --> 0:05:19.720 Thanks for having me, and a few things. 0:05:19.800 --> 0:05:22.400 One, there were some positives and then clearly there are 0:05:22.440 --> 0:05:25.159 some negatives and as you mentioned, the stuffs trading off. 0:05:27.000 --> 0:05:29.440 Part of the reason why the shares may also be 0:05:29.480 --> 0:05:31.880 traded on off, however, is that there was some run 0:05:31.960 --> 0:05:36.000 up into the print with expectations, so modest expectations correction 0:05:36.200 --> 0:05:39.840 in addition to just a lower than expected guide. 0:05:39.520 --> 0:05:40.920 So on fundamentals too. 0:05:41.360 --> 0:05:44.240 In terms of what I took away from from the 0:05:44.279 --> 0:05:45.880 earning skull, there are some green shoots. 0:05:46.040 --> 0:05:48.640 First thing is that buyers came. 0:05:48.480 --> 0:05:51.280 In at an all time high second consecutive quarter of 0:05:51.360 --> 0:05:54.080 year of your growth. Second is that the habitual buyer, 0:05:54.080 --> 0:05:57.160 which account for about forty five percent of their GMS, 0:05:57.400 --> 0:06:01.440 actually started showing signs of stabilization, and that's a key metric. 0:06:01.720 --> 0:06:04.080 And then third is GMS per active buyer, which is 0:06:04.279 --> 0:06:08.960 somewhat of a purchase frequency proxy, also showed signs of 0:06:08.960 --> 0:06:12.200 stabilization and that's also a great metric in terms of 0:06:12.200 --> 0:06:13.240 looking at improvement. 0:06:13.560 --> 0:06:15.239 So what did not work well? 0:06:15.400 --> 0:06:18.600 Etsy is a highly discretionary platform and they are continuing 0:06:18.640 --> 0:06:22.800 to see pressure macroeconomic pressure on the consumer wallet. They 0:06:22.800 --> 0:06:24.960 did call out that households that make less than one 0:06:25.000 --> 0:06:28.320 hundred thousand dollars in income are seeing a mix shift 0:06:28.320 --> 0:06:31.480 in spent away from discretionary to nondiscretionary spend. 0:06:31.760 --> 0:06:35.160 They also talked about some categories seeing. 0:06:35.000 --> 0:06:37.400 Some green shirts, such as home and living crafts in apparel, 0:06:37.440 --> 0:06:40.000 but there are a lot of other discretionary categories that 0:06:40.040 --> 0:06:44.800 are pressured. And they also are talking about just generally 0:06:44.880 --> 0:06:47.960 consumer spent being pressured because of the end of student 0:06:48.040 --> 0:06:51.359 loan forbearance as well as the child tax credit that 0:06:51.360 --> 0:06:53.480 will be coming in. So all of that is pressuring 0:06:53.480 --> 0:06:57.680 the consumer spend and they are highly skewed towards discretionary spent. 0:06:59.000 --> 0:07:01.080 I want to think about it. See is a technology 0:07:01.120 --> 0:07:04.600 platform sweter. You know, it is a place where the 0:07:04.640 --> 0:07:08.920 consumer meets small retailers all over the country, all over 0:07:08.960 --> 0:07:11.160 the world of different sizes. But what is it that 0:07:11.320 --> 0:07:14.880 differentiates them from a technological perspective. 0:07:16.040 --> 0:07:17.320 Well, there are a couple of things. 0:07:17.480 --> 0:07:20.440 So first is that it's the type of product that 0:07:20.440 --> 0:07:23.440 they offer on their platform. It is very difficult to 0:07:23.560 --> 0:07:27.080 create a marketplace with a sticky set of sellers which 0:07:27.120 --> 0:07:30.920 they have and a largely sticky set of buyers who 0:07:30.960 --> 0:07:33.720 are either coming to the platform at least once a year, 0:07:33.760 --> 0:07:37.240 if not more, on a regular basis. And that itself 0:07:37.520 --> 0:07:40.320 is lightning in a bottle. That's very difficult to replicate 0:07:40.400 --> 0:07:44.640 at scale. Now they have over ninety million active buyers, 0:07:44.880 --> 0:07:47.920 so that's really good scale in some of their core markets. 0:07:47.960 --> 0:07:48.960 That's number one. 0:07:49.080 --> 0:07:52.320 And second is a uniqueness of the products that are 0:07:52.360 --> 0:07:55.400 offered so often times at Seeds compared to an Amazon 0:07:55.520 --> 0:07:58.280 or an eBay, but they know what they stand for. 0:07:58.360 --> 0:08:01.880 It's not the typical auditized product that you can compare 0:08:02.200 --> 0:08:06.720 prices over across different platforms, whether it's offline or online. 0:08:06.840 --> 0:08:10.200 It's really a unique custom item that you want which 0:08:10.240 --> 0:08:14.000 is special, which means something to put customers across different categories. 0:08:14.240 --> 0:08:17.560 And they have created a place for themselves in that 0:08:17.680 --> 0:08:20.720 sort of you know e commerce when we think about 0:08:20.720 --> 0:08:23.040 e commerce as a category, and so that is. 0:08:23.080 --> 0:08:23.800 Unique about them. 0:08:23.840 --> 0:08:26.120 And then the other thing about the technology is they 0:08:26.400 --> 0:08:28.760 when we think about where ets was and where. 0:08:28.600 --> 0:08:31.360 It came, I mean several years ago, they didn't have 0:08:31.400 --> 0:08:33.120 the management team that they have today. 0:08:33.240 --> 0:08:36.400 This is a truly a turnaround story, and a huge 0:08:36.440 --> 0:08:38.840 reason why it's a turnaround is because what they did 0:08:38.920 --> 0:08:42.640 to the product, the user experience is phenomenally better, and 0:08:42.880 --> 0:08:45.200 the search experience is so much better, and they are 0:08:45.240 --> 0:08:49.560 constantly iterating on it to drive user experience and engagement 0:08:49.600 --> 0:08:50.320 on their platform. 0:08:50.480 --> 0:08:51.920 So far, they've done a great job. 0:08:53.440 --> 0:08:53.800 Schweida. 0:08:53.920 --> 0:08:57.520 The FIFA Women's World Cup is on right now, and 0:08:57.559 --> 0:09:01.960 that's got us thinking about Fubo TV report before market Friday. 0:09:02.360 --> 0:09:03.520 What are you expecting from them? 0:09:03.559 --> 0:09:07.319 I find them such an interesting platform, the teeny tiny 0:09:07.320 --> 0:09:10.319 but they still stand out in the market they do. 0:09:10.400 --> 0:09:13.880 We actually are on the sidelines with Gougo primarily because 0:09:13.920 --> 0:09:16.719 we think that they do have profitability issue. 0:09:16.840 --> 0:09:18.280 Now, this was an asset. 0:09:18.400 --> 0:09:22.719 This is a business that went public when businesses were 0:09:22.720 --> 0:09:25.920 given credit for, you know, just driving top line growth 0:09:26.000 --> 0:09:28.480 at the cost of bottom line, but that no longer 0:09:28.520 --> 0:09:30.120 holds true, and now Fubo. 0:09:29.840 --> 0:09:31.680 Is at a place where not only do. 0:09:31.600 --> 0:09:34.480 They have competitors which are much bigger than them, but 0:09:34.480 --> 0:09:36.920 they also have to focus on raining in their top 0:09:36.960 --> 0:09:40.079 line growth. It's so bad they can become profitable. They 0:09:40.120 --> 0:09:42.280 also have debts that they need to think about, and 0:09:42.320 --> 0:09:45.640 they have a limited liquidity, so they're trying to not 0:09:45.840 --> 0:09:48.880 have another capital raise and become self sustaining, and in 0:09:49.120 --> 0:09:51.440 a while they do that, they also have to show 0:09:51.440 --> 0:09:52.160 top line growth. 0:09:52.200 --> 0:09:53.920 So that is the biggest challenge. 0:09:53.559 --> 0:09:55.679 That Googo has and that's why we're on the sideline, 0:09:56.000 --> 0:09:59.319 just specifically to the sport. They typically guide conservatively, and 0:09:59.800 --> 0:10:03.920 this connective TV engagement has been going up. We saw 0:10:04.120 --> 0:10:08.600 a pretty good beat at local for example, and overall 0:10:08.679 --> 0:10:11.760 the demand for live sports, especially because of the writers strike, 0:10:12.800 --> 0:10:15.240 Viewers are shifting a little bit towards live sports as 0:10:15.280 --> 0:10:16.880 well as news because of. 0:10:16.800 --> 0:10:17.720 The lack of content. 0:10:18.760 --> 0:10:22.240 Yes, Hollywood writers strike, so that should also benefit Fubo 0:10:22.280 --> 0:10:25.760 at the margin. So I expect a beat and a 0:10:25.800 --> 0:10:30.240 bracket sort of a quarter, But fundamentally this is an 0:10:30.320 --> 0:10:33.240 asset that we question in terms of the longevity of 0:10:33.280 --> 0:10:33.800 the business. 0:10:34.480 --> 0:10:37.679 Yeah, that consumer behavior questions exactly where I wanted to go. 0:10:37.960 --> 0:10:40.679 I subscribe to every platform under the sun. I love 0:10:40.720 --> 0:10:43.520 all sports, but you can get what you get on 0:10:43.600 --> 0:10:47.000 Fubo elsewhere as part of a broad package. I'm thinking, 0:10:47.120 --> 0:10:51.000 like Peacock Paramount Plus for example, how do. 0:10:51.000 --> 0:10:52.840 They survive in that landscape. 0:10:52.880 --> 0:10:55.720 It's so crowded and when you have a tough macro environment, 0:10:56.080 --> 0:10:58.040 consumers have to make a choice. 0:10:58.360 --> 0:10:59.760 That's absolutely true. 0:11:00.080 --> 0:11:03.839 Pubo's value proposition is they have at the margin, they 0:11:03.880 --> 0:11:06.080 have some exclusivity on content. 0:11:06.120 --> 0:11:08.520 So regional sports, for example. 0:11:08.360 --> 0:11:10.560 You can find only on Pubo, and then there's some 0:11:10.760 --> 0:11:12.880 soccer games that you can find only on Google, so 0:11:12.920 --> 0:11:15.800 at the margin there is some exclusive content that you 0:11:15.800 --> 0:11:18.880 can get on Google. The second thing is also just 0:11:18.920 --> 0:11:20.079 the user engagement. 0:11:20.480 --> 0:11:22.600 Google was built post. 0:11:22.400 --> 0:11:25.520 All this connected TV everything came on, so their product 0:11:25.600 --> 0:11:28.000 is very new, it's not our take, and it's easy 0:11:28.040 --> 0:11:30.920 to use as well. It's easy to navigate, so that's 0:11:30.920 --> 0:11:35.880 another reason why UH viewers are choosing Fubo where maybe 0:11:35.920 --> 0:11:38.600 some of the other platforms. And then finally the third 0:11:38.600 --> 0:11:41.400 thing is that they do have a They have created 0:11:41.400 --> 0:11:44.960 a brand name around themselves where almost all viewers view 0:11:45.040 --> 0:11:50.040 them as a sports first offering, and it's good branding 0:11:50.040 --> 0:11:53.960 on their part, but it's you know, the marginally exclusive content, 0:11:54.000 --> 0:11:57.319 but still that brand name of their sports first and 0:11:57.440 --> 0:12:01.520 they offer a lot of engaging sort of user experiences 0:12:01.559 --> 0:12:04.240 when you're watching football as it leads to fantasy etc. 0:12:04.520 --> 0:12:07.840 And that's as for you to use Pubo. 0:12:08.880 --> 0:12:10.840 We got to keep talking about it, you know it 0:12:10.920 --> 0:12:13.640 later shows because Messy Mania, in the context of Apple 0:12:13.679 --> 0:12:16.960 TV is really put football soccer in this country in 0:12:17.000 --> 0:12:20.920 the streaming issue. Front has said Schwedder Cajuria Ever, Koris I, 0:12:21.000 --> 0:12:22.080 we love having you on the show. 0:12:22.160 --> 0:12:23.960 Thank you for your thanks for having me. 0:12:33.160 --> 0:12:36.679 Shopify made progress in its attempt to prioritize its core 0:12:36.800 --> 0:12:40.080 business after cost cutting and price changes. The Canadian e 0:12:40.080 --> 0:12:43.480 commerce giant reported second quarter sales and profit that beat 0:12:43.760 --> 0:12:47.880 analyst expectations. President Harley Finkelstein said the results speak to 0:12:47.920 --> 0:12:53.720 Shopify's efforts to improve shipping and expland its global merchant base. 0:12:54.360 --> 0:12:57.880 Harley joins us Now, good morning, good afternoon to you. 0:12:57.960 --> 0:12:58.240 Harley. 0:12:58.320 --> 0:13:02.280 Okay, so a beat in the quarter, somewhat negative share reaction, 0:13:02.360 --> 0:13:05.280 and Morgan Stanley actually raised it price target on the 0:13:05.320 --> 0:13:08.240 stock fifty four dollars to fifty nine. But they point 0:13:08.280 --> 0:13:11.960 out that what was missing was a roadmap for investors 0:13:12.000 --> 0:13:14.960 to understand how you're going to grow in the future. 0:13:15.240 --> 0:13:17.719 So let's start there. How are you going to grow 0:13:17.800 --> 0:13:18.439 in the future. 0:13:19.480 --> 0:13:21.160 Well, look, I mean you started by talking about our 0:13:21.200 --> 0:13:24.760 announcement last quarter when we reported on Q one, we 0:13:24.800 --> 0:13:27.320 talked about that we are really you know, creating a 0:13:27.320 --> 0:13:29.040 new shape or ketting a new shape of shop Flight 0:13:29.280 --> 0:13:31.640 make sure we can go faster with greater talent density 0:13:32.000 --> 0:13:34.800 for focus on our main quest, which is commerce software 0:13:34.840 --> 0:13:37.959 and retail software. And the results are you know, the 0:13:38.080 --> 0:13:40.840 results exemplify that right. Revenue is up thirty one percent 0:13:41.280 --> 0:13:43.920 to one point seven billion gmbs up to seventy was 0:13:44.000 --> 0:13:46.840 up to fifty five billion dollars. That's up seventeen percent. 0:13:47.200 --> 0:13:49.040 I think the thing that people missed, however, is that 0:13:49.840 --> 0:13:52.840 we are also earning more parts of merchants businesses. We 0:13:52.920 --> 0:13:55.840 use a metriccure called the product attach rate, which measures 0:13:56.160 --> 0:13:58.520 the usage of our products, all of our products by 0:13:58.520 --> 0:14:01.080 our merchants, and that was above three percent for the 0:14:01.120 --> 0:14:04.120 second time. All that and we also had the third 0:14:04.160 --> 0:14:06.679 consecutive quarter of positive free cash flow and we expect 0:14:06.880 --> 0:14:09.640 that actually free cash flow profitability for the third quarter 0:14:09.640 --> 0:14:11.760 of this year to be great at the entire first half. 0:14:12.000 --> 0:14:14.079 So we're really firing in all cylinders here. 0:14:14.120 --> 0:14:16.839 But in terms of our you know, the future and 0:14:17.320 --> 0:14:19.160 what we're looking to do next, there's a couple things. 0:14:19.200 --> 0:14:20.960 First of all, we now. 0:14:20.800 --> 0:14:23.600 Know that most people that are considering starting a business 0:14:23.760 --> 0:14:25.880 do so with Shopify. People that have ideas in the 0:14:25.880 --> 0:14:28.800 shower in the morning, aspirational entrepreneurs, Shopify is the go 0:14:28.920 --> 0:14:31.480 to for them. Now we know all not all will succeed, 0:14:31.520 --> 0:14:33.520 but the ones that do come to Shopify and stay 0:14:33.520 --> 0:14:35.320 with Shoplight long to the future. I mean that's the 0:14:35.400 --> 0:14:38.120 Gym Sharks stories, that's the all Bird story, the fig story, 0:14:38.200 --> 0:14:41.600 these homegrown success stories. But we're also seeing very large 0:14:41.640 --> 0:14:44.520 brands coming to Shopify as well. Whether it's companies like Spank, 0:14:44.680 --> 0:14:47.120 or it's Mattel, or it's Colossier, or it's Staples. 0:14:47.200 --> 0:14:49.360 We're seeing the enterprise come to us too. So that's 0:14:49.360 --> 0:14:49.760 the first thing. 0:14:49.800 --> 0:14:52.520 The second thing is when you look horizontally about our 0:14:52.840 --> 0:14:56.160 through our merchant solutions, whether it's Shopify Payments or Shopify 0:14:56.240 --> 0:14:59.040 capital or shop Flight audiences which helps you buy ads 0:14:59.080 --> 0:15:03.360 more effectively, or things like Collective, you're seeing we are 0:15:03.400 --> 0:15:06.600 looking across every pain point that a merchant may have 0:15:06.720 --> 0:15:09.520 and making it easies. Even and I were talking offline earlier, 0:15:09.600 --> 0:15:11.840 just before we started about the size of Shopify in 0:15:11.920 --> 0:15:14.760 Shopify now powers more than ten percent of all US 0:15:14.880 --> 0:15:17.880 e commerce retail which means that if we were a retailer, 0:15:17.960 --> 0:15:20.760 we'd be the second largest retailer in America online retailer 0:15:20.800 --> 0:15:22.920 in America. And that means that we can now get 0:15:23.040 --> 0:15:26.080 incredible economies of scale and give them to the millions 0:15:26.120 --> 0:15:28.840 of stores that you shopify, and we are set up 0:15:28.840 --> 0:15:30.440 with the future and we're Yeah. 0:15:31.040 --> 0:15:34.720 So, Harley, I understand this story. The primary growth engine 0:15:35.000 --> 0:15:38.000 business formation, and those new businesses stay. 0:15:37.840 --> 0:15:39.080 With you for a long time. 0:15:39.840 --> 0:15:43.560 So what happens in a recession when new businesses are 0:15:43.600 --> 0:15:44.160 not formed. 0:15:44.800 --> 0:15:47.080 Yeah, there's two things that happen in a recession. 0:15:47.200 --> 0:15:51.960 First of all, existing businesses look to one modernize the 0:15:52.000 --> 0:15:54.960 technology software they use, and they look to also find 0:15:55.080 --> 0:15:57.920 the best value, the best value in the software to use. 0:15:58.080 --> 0:15:58.760 That's Shopify. 0:15:58.800 --> 0:16:01.520 I mean, for thirty nine dollars a month, you can 0:16:01.560 --> 0:16:04.720 build a multimillion dollars in some cases a multay billion 0:16:04.760 --> 0:16:08.280 dollar company. So Shopify's value to cost ratio is so 0:16:08.440 --> 0:16:10.720 far on the side of value that even in times 0:16:10.760 --> 0:16:14.680 of recessionary pressure, we've seen more and more merchants migrate 0:16:14.680 --> 0:16:15.240 to Shopify. 0:16:15.320 --> 0:16:15.920 That's the first thing. 0:16:16.120 --> 0:16:18.280 The second thing is on the consumer side. One of 0:16:18.280 --> 0:16:20.240 the other things that we're seeing in you know, the GMV. 0:16:20.360 --> 0:16:23.200 This quarter demonstrates that we had we saw fifty five 0:16:23.320 --> 0:16:26.760 billion dollars of GMV flow through Shopify. Consumers in these 0:16:26.760 --> 0:16:29.960 recessionary times vote with their wallets to buy direct from 0:16:29.960 --> 0:16:32.400 the brands they really care about, and all those brands 0:16:32.440 --> 0:16:34.680 are on Shopify as well. So both on the merchant 0:16:34.720 --> 0:16:37.640 side and the consumer side. We think that we've been 0:16:37.680 --> 0:16:40.000 around for almost two decades now, we've seen that we 0:16:40.080 --> 0:16:42.480 do well in both, you know, Boom cycles and and 0:16:42.480 --> 0:16:45.280 and and bear cycles, and we'll continue doing that. 0:16:45.960 --> 0:16:49.320 Harley, can you quantify it the exposure that the Shopify 0:16:49.400 --> 0:16:54.280 has to new business versus I suppose the way of 0:16:54.280 --> 0:16:56.440 putting it is established online merchants. 0:16:57.120 --> 0:16:59.960 Yeah, that's the best part ed. We can do both. 0:17:00.240 --> 0:17:02.240 So the idea that you can start, you know, you 0:17:02.240 --> 0:17:03.760 can you have an idea in the morning to sit 0:17:03.760 --> 0:17:05.560 down at your mom's kitchen table or at a coffee 0:17:05.560 --> 0:17:07.200 shop and you can build a store on shop line 0:17:07.240 --> 0:17:09.679 a matter of a couple of hours for thirty nine dollars. 0:17:09.800 --> 0:17:13.080 We see that happening every single day. At the same time, 0:17:13.119 --> 0:17:16.640 we're seeing much larger brands migrate over to Shopify as well, 0:17:16.680 --> 0:17:19.159 whether it's the Alo Yogas or the Viewrys or the 0:17:19.160 --> 0:17:22.280 Spanks or Supreme, one of my favorite brands coming on 0:17:22.359 --> 0:17:25.680 to us to leverage this enterprise scale software. So that's 0:17:25.680 --> 0:17:28.320 the great part of the business model. It isn't simply 0:17:28.400 --> 0:17:30.600 just one segment of the market. It's the entire e 0:17:30.600 --> 0:17:33.240 commerce stack. And then when you think about the future 0:17:33.240 --> 0:17:35.480 of retail being retail everywhere. I mean our point of 0:17:35.520 --> 0:17:39.280 sale product this particular quarter had an incredible had incredible quarter. 0:17:39.440 --> 0:17:41.360 We're now going and ripping it and. 0:17:41.320 --> 0:17:45.240 Replacing old, dilapidated traditional point of sale system with shop 0:17:45.320 --> 0:17:47.280 by point of sale, and what you end up with 0:17:47.480 --> 0:17:50.080 is a fundamentally a retail operating system. 0:17:50.200 --> 0:17:52.640 And I think that's what modern retailers want. They want 0:17:52.800 --> 0:17:53.560 one single. 0:17:53.320 --> 0:17:55.199 Place where they have an entire view of their business, 0:17:55.359 --> 0:17:58.480 regardless of sales channels. I heard a previous guest talk about, 0:17:58.480 --> 0:18:00.840 you know at sea being a great sales channel. Well, 0:18:00.920 --> 0:18:03.080 from Sharpify, you can push products at etty if you want. 0:18:03.119 --> 0:18:05.679 You can also push products to TikTok and Instagram and 0:18:05.720 --> 0:18:07.160 online and offline and everywhere. 0:18:07.240 --> 0:18:08.919 But it all feeds back into one. 0:18:08.880 --> 0:18:11.480 Centralized retail operating system, and that really is a sharp 0:18:11.480 --> 0:18:12.040 line product. 0:18:13.680 --> 0:18:17.920 There's a relationship between Shopify and Amazon, Amazon reporting after 0:18:17.960 --> 0:18:20.080 the bell, and it's focused on fulfillment. 0:18:21.040 --> 0:18:21.399 A lot of. 0:18:21.359 --> 0:18:25.159 Folks I've spoken to want to understand what progress is 0:18:25.200 --> 0:18:27.600 there the relationship with Amazon and shop Fire. 0:18:27.680 --> 0:18:29.280 To many, it's kind of been a slow mover. 0:18:30.400 --> 0:18:30.800 Yeah. 0:18:30.840 --> 0:18:33.000 Look I said this on the car yesterday because I 0:18:33.000 --> 0:18:35.160 got a question just like this. You know, we're still 0:18:35.160 --> 0:18:36.879 progressing there, but there's no news for a problem that 0:18:37.000 --> 0:18:37.280 just yet. 0:18:38.359 --> 0:18:39.440 Okay, understood. 0:18:40.560 --> 0:18:42.960 We started this segment talking about the cost cuts you've made, 0:18:43.240 --> 0:18:46.240 particularly in the context of profit, and then the roadmap, 0:18:46.280 --> 0:18:50.960 a lack of roadmap for future growth. To excuse me 0:18:51.119 --> 0:18:54.359 to cost cuts continue? Or are you going to start 0:18:54.400 --> 0:18:56.920 investment mode again to start growing this business? 0:18:57.480 --> 0:18:58.080 Yeah? 0:18:58.119 --> 0:19:00.520 And the important part to understand but opify that I 0:19:00.520 --> 0:19:02.679 think a lot of our investors, and I should think 0:19:02.720 --> 0:19:04.840 you probably know this too, is that we have always 0:19:04.880 --> 0:19:07.240 been very thoughtful but spending, and we've always spent in 0:19:07.240 --> 0:19:09.800 a very disciplined fashion. We were not raised on venture 0:19:09.840 --> 0:19:11.720 capital the way some of our peers were, so we 0:19:11.840 --> 0:19:14.960 always from the very early days of Shopify, we always 0:19:14.960 --> 0:19:18.119