Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon.
Speaker 2: Valley, NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 4: I'm Caroline Hyde at Bloomberg's world headquarters in New York, and.
Speaker 5: I'm Ed Ludlow in San Francisco. This is Bloomberg Technology.
Speaker 4: Coming up Snap plunges and fat by the most in
Speaker 4: the year after earning's disappointed in the company sites a
Speaker 4: challenging operating environment for the full year. We've got all
Speaker 4: the coverage ahead.
Speaker 5: Plus Tesla staff bracing for layoffs as managers are asked
Speaker 5: binary questions on whether their employees' roles are critical.
Speaker 6: Details ahead and.
Speaker 4: Uber earnings, well, that's showing robust demand for rides and
Speaker 4: delivery as gross bookings and pass estimates. I'm going to
Speaker 4: be sitting down with the Uber CEO, Darakos or Shaheb.
Speaker 5: A story are reported this morning with Bloomberg's DNA hole.
Speaker 5: Tesla has canceled or postponed performance reviews this week, and
Speaker 5: it's said to managers, look at everyone that works under
Speaker 5: you and tell us who is critical.
Speaker 6: And now there's a big worry.
Speaker 5: I'm told from sources internally that big layoffs are coming,
Speaker 5: and when we broke the story, there was a.
Speaker 6: Big spike hire in pre market.
Speaker 5: You can see we've kind of traded choppy throughout the session,
Speaker 5: but broadly that's positive to investors. Write Tesla's talked about
Speaker 5: looking at costs. They've done this before, using performance reviews
Speaker 5: as a way of pulling back in certain areas. We'll
Speaker 5: bring you the full data and details with done a
Speaker 5: hole later in the show. Back to the earning side
Speaker 5: of this story and their mixed fortunes depending on who
Speaker 5: you are. Uber's like slightly hired two ten to one
Speaker 5: percent strong earnings, strong outlook. It's a story about an
Speaker 5: app that is more diverse than its peers. New products
Speaker 5: are helping on the mobility side, and as you know,
Speaker 5: we're going to talk to the CEO, Dara Kostrashahi later
Speaker 5: in the program. Snap is the opposite, down thirty four percent,
Speaker 5: biggest drop since October twenty twenty two. Top line growth
Speaker 5: of five percent missed estimates. But on the bottom line,
Speaker 5: what was with all those job cuts and cost savings.
Speaker 6: If you're still on an adjusted EBIT.
Speaker 5: Basis saying you're losing fifty five to ninety five million dollars.
Speaker 5: There was growth in core Western markets, but those emerging
Speaker 5: markets that Snap's been so focused on, the growth is
Speaker 5: nowhere to be seen. So let's dive in deeper into
Speaker 5: Snap's earnings with Jasminemberg, Principal analysts and Insider Intelligence, where
Speaker 5: she leads coverage of social media and the creator economy.
Speaker 5: Your reaction to this Snap.
Speaker 7: Print look, investors are obviously unhappy, They're frustrated, they're losing confidence,
Speaker 7: and that makes sense, especially in the context of Metas
Speaker 7: blowout earnings.
Speaker 8: Just last week.
Speaker 7: But if you take out that context, it really wasn't
Speaker 7: all that terrible of a quarter for Snap by its standards.
Speaker 7: It's Q four revenue growth did come in at the
Speaker 7: higher end of its internal guidance, and its revenue growth
Speaker 7: for the full year was just about flat and what
Speaker 7: we were pretty much expecting here at Insider Intelligence. The
Speaker 7: problem for Snap, though, is that context is key, and
Speaker 7: investors are inevitably going to compare it to Meta, and
Speaker 7: what Snap is showing is that it just can't keep
Speaker 7: up pace with the big tech titans.
Speaker 4: Meta, Amazon as well showing such ad improvements. Is enough
Speaker 4: being done by Evanspiegel to turn around the ads in
Speaker 4: particular and basically prove themselves.
Speaker 7: Look, one of the things that's really working against Snap
Speaker 7: and all of this is its lack of scale in
Speaker 7: comparison to its rivals. Now, of course, Evan Spiegel said
Speaker 7: he is going to continue to try and grow the
Speaker 7: user base, but because of its small size, it is
Speaker 7: currently a less essential player for advertisers, which of course
Speaker 7: impacts ad demand, but it also makes it more challenging
Speaker 7: for it to be able to revamp its systems. It
Speaker 7: has less data and less signal to be able to
Speaker 7: work with in order to do this.
Speaker 4: When you basically have daily active users of four hundred
Speaker 4: and fourteen million, monthly active eight hundred million, do you
Speaker 4: just have to recategorize what Snap is and just be like,
Speaker 4: this is a nice, healthy company that's going to be
Speaker 4: boosting overall. It's its earnings and its revenue, but just
Speaker 4: not at a pace in any way comparison with the
Speaker 4: major players.
Speaker 9: Yeah.
Speaker 7: Look, we're in this environment where we're seeing the bigger
Speaker 7: players get bigger and the smaller players like Snap continue
Speaker 7: to struggle. Snap is never going to be a Facebook,
Speaker 7: it's never going to be an Instagram. But with that
Speaker 7: many users, there are a lot of people who really
Speaker 7: love the platform. I think one of the big problems,
Speaker 7: and we've talked about it here on the show before,
Speaker 7: is that its primary use case is still messaging. Now
Speaker 7: we heard again, of course that there is growth and
Speaker 7: more of its public facing social media like features, but
Speaker 7: really most people who are using it on a regular
Speaker 7: basis are doing so to message. One of the things
Speaker 7: that you know is really interesting is that all of
Speaker 7: this is also coming at a time where Snap is
Speaker 7: repositioning itself as this anti social media platform. And that
Speaker 7: makes sense in terms of all of the problems with
Speaker 7: social media, especially considering the testimony in Congress last week.
Speaker 7: But it's not really going to help its business.
Speaker 5: But like everyone else, Jasmine Real Quick, they're saying that
Speaker 5: the conflict in the Middle East is impacting their ad business.
Speaker 6: What do you make of that?
Speaker 7: It certainly was a headwind for Snap's ad business. I
Speaker 7: do think though, that that's emblematic of some of the large, larger,
Speaker 7: long standing fundamental challenges that Snap has. Its direct response
Speaker 7: ad platform, of course, is not as sophisticated. It's still
Speaker 7: making improvements on that, and brand advertisers that are spending
Speaker 7: really heavily, especially in Q four on Snap brands, of
Speaker 7: course are more risk averse. They're more likely to pull
Speaker 7: or pause their spend spending in times of conflict or crises,
Speaker 7: and without that direct response ad advertising platform and AD
Speaker 7: dollars to make up for that, it's probably more noticeable
Speaker 7: in snaps earnings. And then again there's the small size
Speaker 7: when advertisers are thinking about where to you know, cut spending,
Speaker 7: it's the smaller players that are going to go to first,
Speaker 7: Jasmine and Berg.
Speaker 4: It's always great to have your analysis across the show.
Speaker 4: Principal analyst and insider intelligence.
Speaker 5: Uber out with the results, reporting gross bookings that beat estimates,
Speaker 5: showing strong global demand for rides and food delivery during
Speaker 5: the holiday period.
Speaker 6: Joining us now Bloomberg's Emily.
Speaker 5: Chang and ubercio Dara Kasha Shahi for more on the
Speaker 5: strong numbers.
Speaker 10: M Ed, thank you, Dara, thank you as always for
Speaker 10: joining us. Look, it was a beat across the board,
Speaker 10: but the stock is down this morning, you know. Now
Speaker 10: the times are good. We saw trip growth really accelerated.
Speaker 10: Will that keep up?
Speaker 2: And how well? Our trip growth was super strong? Right?
Speaker 1: We grew trips twenty four percent on a year. On
Speaker 1: your basis on a base of two point six billion trips,
Speaker 1: so you know, as you get larger, it gets tougher
Speaker 1: to have that kind of growth. But if you look
Speaker 1: at our gross bookings guidance going forward, it's between eighteen
Speaker 1: and twenty three percent. So we do expect to continue
Speaker 1: to grow at very very strong rates while at the
Speaker 1: same time continuing to increase profitability and margins, which is
Speaker 1: the best of both worlds, which is what investors expect
Speaker 1: of us, and frankly it's what we know Uber can
Speaker 1: deliver well.
Speaker 10: Shares just turn positive, so investors are liking what you're saying.
Speaker 10: Let's talk about the other half of the business, and
Speaker 10: that is delivery. You had to raise some fees in
Speaker 10: some markets, you added multi store ordering. What more can
Speaker 10: you do in delivery to keep this up?
Speaker 1: Well, there's a ton going on in delivery. There's obviously
Speaker 1: the core online food delivery business. Overall, delivery grew seventeen
Speaker 1: percent on a year on your basis, and it's actually
Speaker 1: accelerating emily, right, So it's accelerating versus Q two versus
Speaker 1: Q three, and it is about getting the basics right.
Speaker 2: The first thing is customers want choice.
Speaker 1: We now have almost a million restaurants on our site
Speaker 1: on a global basis, up about ten percent.
Speaker 2: But they also want reliability.
Speaker 1: So when we measure the number of orders that we
Speaker 1: get wrong, the number of orders we get wrong are
Speaker 1: down twenty five percent on a year on your basis,
Speaker 1: So the business is reliable. You get what you expect
Speaker 1: as well. And what that's resulting in is our audience
Speaker 1: is growing. Frequency is growing as well, and then as
Speaker 1: eaters order more and more in a basket, actually basket
Speaker 1: size is growing. So the growth that we see in
Speaker 1: eats is.
Speaker 2: Very, very broad.
Speaker 1: We're adding to it grocery, which is a segment that
Speaker 1: we're very excited about. You know, the grocery business is
Speaker 1: actually bigger than the online food business than the food
Speaker 1: business in terms of total size. Our grocery business is
Speaker 1: still pretty young. It's about seven billion dollars now run
Speaker 1: rate growing over forty percent, and we're very excited to
Speaker 1: introduce the grocery experience to all of our eaters out there.
Speaker 10: Caroline just pointed out your stock just hit a new
Speaker 10: record high. I got to talk about the Super Bowl commercials.
Speaker 10: I'm obsessed. You've got Ross and Rachel, You've got the Beckhams.
Speaker 6: These big stars cost money.
Speaker 10: Though, and you had a lot of celebrities last year too,
Speaker 10: So is this marketing spend paying off? And are you
Speaker 10: sure because next year I'm expecting Taylor Swift.
Speaker 2: Well, you see it by the results.
Speaker 1: You know, these big stars they cost a lot, but
Speaker 1: they deliver a lot, right, And who's better than the
Speaker 1: Beckhams and Jennifer Aniston as well. You know, the amazing
Speaker 1: thing about these stars is you know, they're not afraid
Speaker 1: of making a little fun of themselves and having a
Speaker 1: sense of humor, but they also use their own social
Speaker 1: platforms to amplify the message out there. So it's not
Speaker 1: just about the commercial. It's about people talking about the commercials.
Speaker 1: It's about the stars using their Instagram accounts to amplify
Speaker 1: the platform, et cetera. That's why it's working out for us,
Speaker 1: and we think it's worth investment and then.
Speaker 4: More and Dara, many times, these are global celebrities you
Speaker 4: and a global company, even if the super Bowl is
Speaker 4: a little bit more US focused. How much you see
Speaker 4: in growth, particularly Latin America Asia standout. Are there any
Speaker 4: areas that you're worried about?
Speaker 1: Well, right now, fortunately, we're seeing growth across the globe
Speaker 1: for US in mobility, Latin America and Asia Pacific have
Speaker 1: really been standouts. The Latin business is growing, the base
Speaker 1: business is growing, but now a lat of time, what
Speaker 1: you're seeing is more two wheelers. Actually, it's a product
Speaker 1: we call Ubermoto. It's lower costs than much more affordable
Speaker 1: and so if you want a low cost ride in
Speaker 1: Brazil or Mexico, we're seeing more and more users take
Speaker 1: two wheelers. And in Asia, we're very, very excited about
Speaker 1: the Indian market. The Indian market has been one that
Speaker 1: has always held a lot of promise, but we're seeing
Speaker 1: that promise come to fruition now there it's not just
Speaker 1: four wheelers, but it's three wheelers. And the growth rates
Speaker 1: that we're seeing in India are substantial and we think
Speaker 1: that you know that business can continue to grow over
Speaker 1: the next.
Speaker 2: Five to ten years.
Speaker 1: So there's a lot of growth and excitement ahead in
Speaker 1: many of the markets out there.
Speaker 4: A global conversation with our global TV and radio audience,
Speaker 4: we are of course speaking with Uber CEO Dara Kosashahi
Speaker 4: and Dara I hate to be the Debbie downer that
Speaker 4: focuses on the one area of perhaps lackluss and performance,
Speaker 4: but freight tell us a little bit about it was
Speaker 4: in line with where the market wanted to see it,
Speaker 4: but it is still a bit of a drag. When'd
Speaker 4: you see the turnaround?
Speaker 1: Well, the freight business is a cyclical business, and what
Speaker 1: we are seeing is at least a stabilization of the
Speaker 1: overall freight industry. There was too much supply out there,
Speaker 1: demand wasn't growing. We're seeing a stabilization and rates. We're
Speaker 1: seeing spot rates improve as well, so I think that's
Speaker 1: an early signal that the freight marketplace is going to improve.
Speaker 1: And what's really cool about Uber Freight is that we
Speaker 1: are using our marketplace technology, matching, pricing, etc. And bringing
Speaker 1: it to the freight industry. So we're very confident that
Speaker 1: a turn is coming. We don't know what when, but
Speaker 1: we're definitely seeing signal of that turn, and we can
Speaker 1: bring our technology, prowess and the service levels that other
Speaker 1: players who are just offline really we believe can't match.
Speaker 1: So we're quite optimistic about freight, but it's a little
Speaker 1: bit of a waiting game to see that cycle turn,
Speaker 1: and we're hoping to see that cycle turn this year.
Speaker 5: Dara, good morning, I think we kind of learned a
Speaker 5: lot about Uber the technology company in the court have
Speaker 5: just gone new products and just more diverse offering on mobility.
Speaker 5: But there are lots of questions about, well, what is
Speaker 5: the new product pipeline going forward? You know, how can
Speaker 5: you keep adding functionality to the platform that is new,
Speaker 5: opens new addressable markets. Car rental is interesting, right, because
Speaker 5: that's an Industryalen's suffering some pain.
Speaker 1: Yeah, well, I think it's car rentals is one area
Speaker 1: that we're pretty excited about. And what we try to
Speaker 1: do with Uber is we don't want to just build
Speaker 1: the same thing that others have built, but let's say
Speaker 1: a little bit better. We really try to reinvent how
Speaker 1: you think about a particular product. So one product that
Speaker 1: we're pretty excited about with car rentals is actually what
Speaker 1: we call Uber Valet. And with this product, you know,
Speaker 1: you push a button, you get to pick your car,
Speaker 1: but then an Uber.
Speaker 2: Driver will come and drop off.
Speaker 1: That car for you in front of your house or
Speaker 1: wherever you want that car dropped off. So we want
Speaker 1: to bring that little Uber delight in whatever experiences that
Speaker 1: we build so that we're heads and shoulders above our competition.
Speaker 2: So to speak.
Speaker 1: Now we do it in partnership with car rental companies,
Speaker 1: so it's good business for them. But it's the magic
Speaker 1: of Uber that we want to introduce in every single
Speaker 1: out there, and we think there's plenty of innovation ahead
Speaker 1: for us.
Speaker 5: Yeah, I'm somebody that takes right share. There are other
Speaker 5: right share platforms available to work every morning. But there
Speaker 5: seems to be some evidence that that corporate ridership is
Speaker 5: coming back. Where do you see that most.
Speaker 1: Yeah, corporate has actually been a great signal for us
Speaker 1: early this year, last year if you looked at corporate
Speaker 1: and we have a very significant corporate presence and what
Speaker 1: we call Uber for business and it allows companies instead
Speaker 1: of you know, black cars, et cetera, they can use Uber.
Speaker 1: It's connected into the corporate expense systems, et cetera. There's
Speaker 1: an area of safety, which is you know exactly where
Speaker 1: your employees are.
Speaker 2: So it's been a very very popular offering for us.
Speaker 1: And last year, you know, as corporates were more careful
Speaker 1: in terms of their spending travel, et cetera, the spending
Speaker 1: with you for B was muted. We are now seeing,
Speaker 1: especially in Q four and so far in the first
Speaker 1: quarter companies are starting to leaning in again. They're starting
Speaker 1: to invest, they're getting their employees out to go out
Speaker 1: to meet customers face to face, and that absolutely is
Speaker 1: helping our you for B business that's starting to accelerate.
Speaker 2: It's high margin business. Usually with you for B you.
Speaker 1: Know, you take a comfort car or black car, so
Speaker 1: it's high margin businesses as well. And we're very very
Speaker 1: happy with the signal that we're seeing, and that signal
Speaker 1: is pretty broad. It's not just the US phenomenon. We're
Speaker 1: seeing companies around the globe starting to invest again, which
Speaker 1: we think is a great sign.
Speaker 6: I want to talk.
Speaker 10: About evs because there's you know, reports, consumer demand is following.
Speaker 10: You're seeing big automakers pulling back, your own rental partner
Speaker 10: hurts also putting back, pulling back. How much is this
Speaker 10: hurting your partnership. You're pushed to zero emissions and everything
Speaker 10: you're doing to try to incentivize drivers to switch over.
Speaker 1: Well, Emily, we're continuing to push on the EV space.
Speaker 1: No one said this was going to be easy. And listen,
Speaker 1: with every technology, there's this initial excitement and everyone gets
Speaker 1: on board and maybe maybe people overestimate the potential of
Speaker 1: a business or how it is going to be. You know,
Speaker 1: we've been around a uber for a while and we
Speaker 1: actually love solving tough problems, so we continue to lean
Speaker 1: in with evs. We now have over one hundred and
Speaker 1: twenty thousand drivers driving evs all over the world. Over
Speaker 1: the past years, we completed more than three hundred million
Speaker 1: trips in terms of evs, So we continue to lean in.
Speaker 1: I think a real concern is with charging infrastructure and
Speaker 1: making sure that that charging infrastructure is available and ready,
Speaker 1: especially where our drivers need. It may not be in
Speaker 1: the center of the city, but it may be in
Speaker 1: the towns that.
Speaker 2: They live, et cetera.
Speaker 1: So if the charging infrastructure comes comes in, we think
Speaker 1: we have the partnerships in place. We're putting real money
Speaker 1: nine hundred million dollars behind our push to evs, including
Speaker 1: subsidizing rides so drivers actually make more on an EV trip.
Speaker 1: So we're determined and we think we're going to keep
Speaker 1: pushing the momentum in this space.
Speaker 10: You're shutting down Drizzly, you're laying off one hundred and
Speaker 10: fifty people.
Speaker 6: What happened there?
Speaker 10: Did alcohol sales just decline post pandemic?
Speaker 6: Don't you know?
Speaker 10: There's a super Bowl coming.
Speaker 2: Up, so it's you know, listen.
Speaker 1: It was a tough decision there, and what we have
Speaker 1: observed is that the Uber Eats platform.
Speaker 2: We talk about the power of the platform, which is, you.
Speaker 1: Know, you ride on Uber, you eat on Uber, you
Speaker 1: get growceries on Uber, you order your alcohol on Uber eats.
Speaker 1: The power of that platform is really significant. And you know,
Speaker 1: things have changed where companies have to be more disciplined
Speaker 1: in their investments. And when we look at a marketing investment,
Speaker 1: should we put the next marketing dollar behind Uber eats
Speaker 1: ie a super Bowl commercial, or should we put that
Speaker 1: next marketing dollar to introduce the Drizzly brand and to consumers,
Speaker 1: it didn't make sense to keep investing in Drizzly, So
Speaker 1: we've taken a lot of what we've learned from Drizzly,
Speaker 1: many of the merchant relationships, et cetera. But essentially that
Speaker 1: business is shutting down in terms of that organic Drizzly business,
Speaker 1: and we are building on alcohol within Uber eats. We
Speaker 1: think that's the next best investment going forward for.
Speaker 6: Us as a company cost discipline.
Speaker 4: Uber CEO Darakrososhahi, I joyed to have you on the show.
Speaker 4: Thank you, and of course are thanks to you. Emily
Speaker 4: Chang now coming up. The head of Byte dances China
Speaker 4: operations stepping down.
Speaker 6: More news coming out of China.
Speaker 4: More broadly, this is a blue meg technology time now
Speaker 4: for talking tech. First up t SMC, the world's biggest
Speaker 4: chip contract manufacturer and supplier to the likes of Apple
Speaker 4: and Nvidio. Just January, sales rise after strong demand for
Speaker 4: AI chips, and it helped off set the continued weakness
Speaker 4: and consumer electronics products. Now revenue rose almost eight percent
Speaker 4: last month six point nine billion dollars. The growth is
Speaker 4: the later sign that a sector rebound could be on
Speaker 4: the horizon. Meanwhile, the head of Byte Dancer's China operations
Speaker 4: is stepping down, just a week after the CEO, Liang
Speaker 4: Rubo said that the company needs to avoid complacency and
Speaker 4: make up lost ground in the AI race. According to sources,
Speaker 4: Byte Dance will not seek to appoint a successor and
Speaker 4: Zang will shift her focus to the video editing app
Speaker 4: cap cut and then Ali Baba reported lower than expected
Speaker 4: sales wellied down by a weaker performance and its core
Speaker 4: domestic e commerce business from the company also approved, though
Speaker 4: an increase of twenty five billion dollars to its share
Speaker 4: re purchase program, and of course this is desperately trying
Speaker 4: to add sort of build up investor confidence when they
Speaker 4: can't do it with the proof of the pudding of
Speaker 4: revenue increases that the market wanted to see. They therefore
Speaker 4: have some of the big executive's buying shares and also
Speaker 4: a being buy back to announce.
Speaker 6: Yeah.
Speaker 5: I always think about Ali Barber as the nearest thing
Speaker 5: to Amazon in China.
Speaker 8: Right.
Speaker 5: It has a similar story e commerce and cloud. The
Speaker 5: cloud's not growing, and they're doing all they can to
Speaker 5: kind of sweeten things for investors the divvy or whatever, buybacks, whatever,
Speaker 5: and the prospect of spinning off other units. But it
Speaker 5: just comes back to the core business in China's economy.
Speaker 4: And isn't it just what you're hearing from byte Edance
Speaker 4: trying to not have complacency focusing in on particularly AI
Speaker 4: as well. That's exactly where Ali Barba perhaps has been
Speaker 4: falling behind. They've had issues, of course getting in video
Speaker 4: products as well.
Speaker 6: And this while they're also.
Speaker 4: Trying to fend off deep competition abroad and internally of
Speaker 4: e commerce. I mean, they don't look like they're going
Speaker 4: to sackfice profitability though, that's one key analyst takeaway.
Speaker 5: Yeah, and one of the cool things about ADRs or
Speaker 5: US listed shares is it gives different market exposures to
Speaker 5: that name, which is kind of interesting. Much more to
Speaker 5: talk about quit check in on the markets and earnings
Speaker 5: is kind of the big story. But as that one
Speaker 5: hundred at the index level higher a percentage point, I
Speaker 5: look at Tesla, it's now continuing to push higher. Later
Speaker 5: in the show, Bloomberg's Dan a Hole on set to
Speaker 5: explain the story. Were reported this morning that managers are
Speaker 5: being asked to look at their staff and tell the
Speaker 5: company who is critical and who is not. The idea
Speaker 5: layoffs might be coming. Roadblocks moving to the upside eight
Speaker 5: percent astonishing record revenue in the quarter, And what they
Speaker 5: said is that every single day in the quarter gone,
Speaker 5: seventy one point five million people logged on to play
Speaker 5: through Roadblocks, which is a pretty astonishing performance for that platform.
Speaker 5: It is one of the big video games movers in
Speaker 5: the moment right now. And then the other name is
Speaker 5: kind of Kindrel that we're looking at. I always find
Speaker 5: Kindrell very interesting. Remember we kind of introduced this name
Speaker 5: to you at the time of its listing at the
Speaker 5: end of last year, we're up two percent, most biggest
Speaker 5: gain in around three months, at one point in the
Speaker 5: session when it was up six point two percent.
Speaker 6: It's a sales beat.
Speaker 5: And there is look at the performance gone and the
Speaker 5: outlook carrow and the street likes what it.
Speaker 6: Sees it does.
Speaker 4: And we can speak to Kendril CEO. Now Martin schrote
Speaker 4: about how after you've spun offrom My IBM in twenty
Speaker 4: twenty one, the focus has been on getting rid of
Speaker 4: zero margin or low profitability deals, re anchoring the way
Speaker 4: the business is going. And yeah, it means revenue might
Speaker 4: be lower for a bit, but we've still got a loss.
Speaker 4: But this seems to be progressed. Talk us through whether
Speaker 4: it's turning around at the pace you want.
Speaker 11: Yeah, thank you, Thank you for the opportunity to talk
Speaker 11: a little bit about our quarter. Look, we had another
Speaker 11: great quarter which continues now our string of strong execution
Speaker 11: as we execute as you said well, Caro, and this
Speaker 11: plan to remove content that really had no or even
Speaker 11: negative margins in many instances. So while we're engineering the
Speaker 11: decline in revenues, at the same time we are focused
Speaker 11: on growth and in the quarter, again, we saw good
Speaker 11: growth in our kindrel consult business, which was up fourteen
Speaker 11: percent in the quarter and now fourteen percent for the
Speaker 11: year as well. And we continue to see great growth
Speaker 11: in our signings and our revenue that.
Speaker 8: We're delivering with our Hyperscaler partners.
Speaker 11: So where we're focused on growth, it's going well, and
Speaker 11: where we're focused on engineering the decline, we'll be through
Speaker 11: most of that at the end of this fiscal year,
Speaker 11: which for us ends in March.
Speaker 8: So it is moving at a very fast pace.
Speaker 11: And the reason it moves so fast is because our
Speaker 11: customers really do rely on us for the help they
Speaker 11: need in the secular trends that either represent opportunities or
Speaker 11: represent risks to them, and that's where we sit in
Speaker 11: the heart of their mission critical workloads.
Speaker 4: You just announce that you're, of course building that partnership
Speaker 4: with Hyperscale is like Google Cloud, and I'm interested is
Speaker 4: to ultimately where your clients want the most handholding. At
Speaker 4: the moment, you've said in the past there's no recession
Speaker 4: in cybersecurity. Evidently, with macro headwinds as they are, how
Speaker 4: much our company is willing to purchase your expertise when
Speaker 4: it comes to AI.
Speaker 8: For example, Yeah, it's a great question.
Speaker 11: And look, remember where we sit in what we do
Speaker 11: for our client We sit at the heart of mission critical.
Speaker 11: So much of our consulting is also around mission critical.
Speaker 11: And so while our customers are looking for help in
Speaker 11: the newer things like jen AI, and we're certainly getting
Speaker 11: a lot of a lot of activity with our customer
Speaker 11: base to help them architect their data and to help
Speaker 11: them think through resiliency as they move into that AI world.
Speaker 11: At the same time, you know, there are some really
Speaker 11: basic security things that our customers need help with, and
Speaker 11: so our consulting business is really driven by the same
Speaker 11: the nature of the same nature of the work that
Speaker 11: we do in mission critical. And obviously AI and JENAI
Speaker 11: represent a really good long term secular trend as they
Speaker 11: start to as they start to try to figure out
Speaker 11: how do they reach their customers. But this work is
Speaker 11: not is not again solely in these new areas. The
Speaker 11: work is still primarily in the mission the mission critical
Speaker 11: nature of what we do for them on a run basis.
Speaker 5: Martin, Let's think about that in the text of a
Speaker 5: case study that you outlined on your call partnership with
Speaker 5: an unnamed global automaker, and you basically, I'm paraphrasing you
Speaker 5: basically said, this isn't just about it. We're helping this
Speaker 5: particular company in the manufacturing context. So I just wondered
Speaker 5: if you'd explain how that works in practice.
Speaker 8: Sure.
Speaker 11: Sure, So when you think about the complexity that every
Speaker 11: auto manufacturer is dealing with across their supply chain and
Speaker 11: how you bring all of that together, you can imagine
Speaker 11: the complexity of the IT infrastructure that has to bring
Speaker 11: that together, including where is the data?
Speaker 8: Is it secure? Can these systems.
Speaker 11: Run at the level of resiliency, because once you introduce
Speaker 11: new complexity, obviously that has an impact or could have
Speaker 11: an impact on it their resiliency and these lines can't
Speaker 11: shut down. So the coordination of their very complex supply
Speaker 11: chains have to run on highly resilient, highly secure infrastructure.
Speaker 11: And as they go look as auto manufacturers and all
Speaker 11: of our customers go look for new innovations to help
Speaker 11: them do what they do, that just makes the whole
Speaker 11: infrastructure even more complex and so they need.
Speaker 5: Kindrel Martin, you spend a lot of time on the
Speaker 5: call talking about cost savings, discipline, the work you've done.
Speaker 5: You know, we I reflect back to the conversation we've
Speaker 5: had before that in March of last year, you trimmed
Speaker 5: a small percentage of a really big workforce ninety thousand
Speaker 5: people at that time.
Speaker 6: How do you see that playing out this year?
Speaker 5: Caroline and I have been covering, unfortunately layoffs across the
Speaker 5: technology sector on an almost daily basis at the moment.
Speaker 11: Yeah, look for us, you know, we were born with
Speaker 11: eighty plus thousand employees over two years ago. We did
Speaker 11: peek up a little bit, and when last we spoke,
Speaker 11: it was about ninety and.
Speaker 8: We're still in the eighties.
Speaker 11: And the reason we're still in the eighties is because
Speaker 11: our focus on delivery and what we call our advanced
Speaker 11: delivery efforts has led to tremendous quality improvements for our customers.
Speaker 8: They're seeing it. But at the same time, it.
Speaker 11: Allows us to free up people and move them into
Speaker 11: these new areas, so that we are actively reskilling our
Speaker 11: employees and moving them into being cloud experts, for instance,
Speaker 11: moving them into being cybersecurity experts, etc. So when we
Speaker 11: were born a little bit over two years ago, we
Speaker 11: had fewer than a thousand credentialed people across the entire
Speaker 11: employee base fewer than a thousand who were certified and
Speaker 11: credentialed on a Hyperscaler. We now have over thirty five thousand,
Speaker 11: and that's what's driving the growth. For instance, whether our
Speaker 11: Hyperscaler partners, that's what's driving the growth with our consult
Speaker 11: business as well. We have the people, the best engineering
Speaker 11: talent who know these customers so well well.
Speaker 8: So our customers are.
Speaker 11: Delighted that yes, they're getting better quality because we're using
Speaker 11: our AI through our platforms, but they're also getting back
Speaker 11: the same people they trust and have known for years
Speaker 11: to help them in these new areas. It's a really
Speaker 11: terrific model for us.
Speaker 5: Kindrell CEO Martin Schrotzer. Great to catch up here on
Speaker 5: Bloomberg Technology. Thanks for your time.
Speaker 6: Coming up on the show.
Speaker 5: Could Tesla be the next company to undergo a way
Speaker 5: of layoffs? We have Bloomberg's Dana Hole here in studio,
Speaker 5: an important report that.
Speaker 6: We put out this morning. That's next. This is Bloomberg Technology.
Speaker 5: Tesla staff are bracing for potential job cuts after managers
Speaker 5: were asked to affirm whether each of their employees that
Speaker 5: worked under them is in a position that is critical.
Speaker 5: I want to bring in Bloomberg's Danna Hole, who reported
Speaker 5: this with me this morning. So what we kind of
Speaker 5: heard from sources is it's performance review week and managers
Speaker 5: are saying or being asked to look at everyone that
Speaker 5: works or reports into them and decide, I guess who
Speaker 5: stays and who goes.
Speaker 12: Well, that's the fear. I mean, we don't know that
Speaker 12: for sure, but what we've heard, I mean, I think
Speaker 12: you and I have heard from different people, is that
Speaker 12: performance evaluations happened, and then what I heard was that
Speaker 12: they were reopened and there was one new question, is
Speaker 12: this employee's role critical? And that's like basically you need
Speaker 12: to just and then the managers need to justify that job.
Speaker 12: So that is definitely worrying. You know, Tesla so far
Speaker 12: has avoided the layoffs out of Rock Silicon Valley. We
Speaker 12: don't know whether this is sort of a culling based
Speaker 12: on performance or whether widespread layoffs or in the offering.
Speaker 5: What I would reflect on is that this is kind
Speaker 5: of normal, both in the sense that Tesla's looking for
Speaker 5: cost savings everywhere, but it's kind of played out in
Speaker 5: the past. And I know that I've heard from sources, like,
Speaker 5: for example, when we reported on the Autopilot trims last
Speaker 5: year that headcount was moved elsewhere.
Speaker 6: To like batteries for example. What is the aim here
Speaker 6: for me Elon Musk and co.
Speaker 12: Do you think, well, I think that Tesla's still aggressively
Speaker 12: hiring in a lot of areas. If you look at
Speaker 12: their website, they have tons of openings for optimists, for Dojo,
Speaker 12: for megapack, for you know, payment systems. I mean, there's
Speaker 12: a lot of job openings at Tesla. So they are
Speaker 12: still aggressively hiring. So this could be an effort to
Speaker 12: just kind of reduce headcount in some places where they
Speaker 12: feel like it's no longer necessary so that they can
Speaker 12: afford to hire elsewhere.
Speaker 4: And Danna, like say a Goldman Sachs, they're trying to
Speaker 4: put forward the idea that you'll constantly be reviewed. If
Speaker 4: you're underperforming, you might well be let go. And I
Speaker 4: guess this is a way of ascertaining whether you are
Speaker 4: or not. And I just wonder how it speaks though,
Speaker 4: to the fact that we are seeing such pressure on
Speaker 4: Tesla from an evy demand perspective, Will it automatically be
Speaker 4: in the manufacturing areas that you think these jobs ultimately
Speaker 4: have to be sacrificed.
Speaker 12: It's hard to say where the cuts, if they happen,
Speaker 12: would be. I mean, but I think that you're right.
Speaker 12: Like Tesla regularly, you know, they go through a performance
Speaker 12: review cycle every six months, and you know in Silicon
Speaker 12: Valley it's called stack ranking or ranking yank to be
Speaker 12: coarse about it, and I think that this just really
Speaker 12: keeps everybody on their toes. You always want to be
Speaker 12: a higher performer. There's always concern if you're needing to
Speaker 12: justify staff. I mean, I think that Tesla has grown
Speaker 12: dramatically since twenty twenty during the pandemic.
Speaker 6: They now have over one.
Speaker 12: Hundred and forty thousand employees globally, and they will continue
Speaker 12: to hire in the areas of the company that Elon
Speaker 12: Musk really wants to sort of staff up.
Speaker 6: But like any company, you.
Speaker 12: Know, when you're kind of facing a down year in
Speaker 12: terms of growth, you start cutting and salaries as the way.
Speaker 6: To do that, and must talk it's about the rate environment.
Speaker 5: Again, when we played our ownings Bingo, which I thoroughly enjoyed,
Speaker 5: that I always find that astonishing one hundred and forty
Speaker 5: thousand people. If there's a big bright spot it's probably
Speaker 5: the energy business because what they said was it will
Speaker 5: just outpace the car business in terms of growth.
Speaker 6: What else do we know about what's going on with energy?
Speaker 12: Yeah, So Tesla has this big factory in Laythrop, which
Speaker 12: is here in California. It's sort of a little bit
Speaker 12: outside of the Bay Area and what we call the
Speaker 12: Central Valley, and that is where they are building the Megapax.
Speaker 12: We also have heard that they are expanding megapac production
Speaker 12: in Shanghai. And these are the big batteries that Tesla
Speaker 12: sells to utility is like PG and E and it
Speaker 12: is a huge growth driver for the energy business. Like
Speaker 12: forget about the solar roof, Megapak is the big driver
Speaker 12: of the growth there.
Speaker 4: Danaha, always a joy, great reporting from you both on
Speaker 4: this key story. We thank you so much. But let's
Speaker 4: for a moment now turn to another one of Musk
Speaker 4: companies x Now. This is after Tucker Carlson has announced
Speaker 4: on the social media platform then he has interviewed Russia's
Speaker 4: leader Vladimir Putin. He also gave a shout out to
Speaker 4: Elon Musk, who he says is going to allow the
Speaker 4: full interview to be published on x Let's bring in
Speaker 4: Bilimos Kurt Wagner, for one, on this, the context being
Speaker 4: that he is the first US journalist to do a
Speaker 4: significant sit down since war erupted back in twenty twenty two,
Speaker 4: and notably, Putin has fought back against critical journalism in particular,
Speaker 4: and in fact has a key Wall Street Journal reporter
Speaker 4: incarcerated at the moment. Now, give us the context of
Speaker 4: what this makes advertisers feel like.
Speaker 13: Yeah, well, obviously there are a lot of advertisers who
Speaker 13: would be very reluctant to see their brand show up
Speaker 13: anywhere near this interview right. But I also think that
Speaker 13: a lot of advertisers who are uncomfortable with that are
Speaker 13: probably no longer on X. I think a lot of
Speaker 13: the people who are still spending money on X have
Speaker 13: pretty thick skin when it comes to what they expect
Speaker 13: or imagine that their marketing is going to appear next
Speaker 13: to right.
Speaker 9: And so I'm not sure that we're necessarily going to.
Speaker 13: See a new wave of people rushing in the other direction,
Speaker 13: mostly because a lot of those people are already.
Speaker 4: On And this speaks, of course to the ultimate aim
Speaker 4: that we've always been told from Musk about X is
Speaker 4: for freedom of speech. In all its entireties. So tell
Speaker 4: us a little bit about how ultimately the deals with
Speaker 4: the likes of Tucker Carlson are going getting on very
Speaker 4: people who tracked a big crowd to come and ultimately
Speaker 4: have shows on the platform.
Speaker 13: Yeah, you know, I was really interested in this about
Speaker 13: a month ago, right after CEES, when X announced that
Speaker 13: they were going to be doing, you know, these new shows.
Speaker 13: Don Lemon of course, was another one who they were
Speaker 13: going to bring on, and you know, I spoke to
Speaker 13: four media agencies, you know, after the announcement was made,
Speaker 13: and all of them basically said the same thing that
Speaker 13: these shows aren't really going to move the needle. Now,
Speaker 13: if you're a big brand looking to spend money on X,
Speaker 13: it might be nice to have sort of a something
Speaker 13: that at least is professionally produced that you can you know,
Speaker 13: run your video ad next to.
Speaker 9: But until X gets you know, a.
Speaker 13: Much larger collection of these types of shows with much
Speaker 13: more and less controversial hosts. Quite frankly, I'm not sure
Speaker 13: that this is the kind of thing that's going to
Speaker 13: draw advertisers back. And again, I don't think they're running
Speaker 13: the other way because those folks are already gone. But
Speaker 13: I don't think this is necessarily big enough that it's
Speaker 13: going to you know, lure people back who have been
Speaker 13: reluctant to spend money on X.
Speaker 5: To begin with, there's a lot happening in the social
Speaker 5: media space in real time, Kurt. You reported that Jack
Speaker 5: Dorsey's Blue Sky, the decentralized social media platform, is now
Speaker 5: opened up to everyone.
Speaker 6: Why is that significant?
Speaker 13: Well, blue Sky, as you both probably know, has emerged
Speaker 13: as sort of one of the main alternatives to X
Speaker 13: ever since Elon Musk took over, and you know, there's
Speaker 13: a bunch of technical reasons that people are excited about it.
Speaker 13: You know, this decentralized element is idealistic, I think, But
Speaker 13: for the most part, this is simply a place where
Speaker 13: people who used to love Twitter but no longer feel
Speaker 13: you know, comfortable using X have been going. And so
Speaker 13: the fact that they're sort of opening this up to everybody,
Speaker 13: you know, perhaps that will kind of expedite the growth
Speaker 13: of Blue Sky. But you know, again, we're looking at threads,
Speaker 13: we're looking at Blue Sky. You might even remember massed
Speaker 13: on These were you know, essentially ex alternatives, and so
Speaker 13: it's just always interesting to keep tabs on what they're doing,
Speaker 13: and whether or not they're still growing and capturing people
Speaker 13: who are running away from X.
Speaker 6: Your your book on X is imminent or your book
Speaker 6: on Twitter? I mean.
Speaker 5: With you, so much has changed in real time. We
Speaker 5: were teasing Jason Stride other day about how you to
Speaker 5: rewrite the last graph of his book based on what
Speaker 5: happened with Blizzard. But something you just said, blue Sky
Speaker 5: is the alternative to X. Where do you think X
Speaker 5: sits in the landscape right now? Meta, Facebook, Snap, Instagram reels,
Speaker 5: things like that.
Speaker 13: Sure, you know, I still feel like it's a good
Speaker 13: place to go for certain types of news.
Speaker 9: Right I'm a big sports fan.
Speaker 13: I still think that X is probably the best place
Speaker 13: to go when you want to figure out, Hey, what's
Speaker 13: going on with my favorite team, what's going on in
Speaker 13: the NFL playoffs. But there's a bunch of other categories
Speaker 13: of news that I think that X used to sort
Speaker 13: of be the go to place for where it's no
Speaker 13: longer that or it's certainly not as reliable as it
Speaker 13: used to be. And I think there's a bunch of
Speaker 13: reasons for that, the most notable probably being the change
Speaker 13: in verification right and sort of eliminating this ability to
Speaker 13: quickly identify who legitimate journalists are versus folks who might
Speaker 13: you know, not be doing that professionally.
Speaker 9: And to me, I think that's the company when it
Speaker 9: comes to news.
Speaker 13: But obviously Elon would disagree, And you know, for that reason,
Speaker 13: I feel like Ex's sort of fallen out of the
Speaker 13: position that it had over news, over you know, Instagram,
Speaker 13: Facebook and others a few years ago.
Speaker 5: All right, Bloombers, Kot Wagner and everything on the social
Speaker 5: media beat, we thank you very much.
Speaker 4: Ral Leo Messi is in seemingly the hot seat after
Speaker 4: taking part in a football match or soccer as we
Speaker 4: call it in Japan, just days after not appearing in
Speaker 4: a match in Hong Kong now Hong Kong. Sports rulemaker
Speaker 4: Kenneth Fox comments accused Messi I'm the US club into
Speaker 4: Miami of disrespecting fans, and that was trending on wabo,
Speaker 4: along with another popular topic partly entitled Messi's mess ed.
Speaker 5: It's an astonishing situation, Messi finds himself and let's stick
Speaker 5: with sports and bring in US media and list for
Speaker 5: Bloomberg intelligent Geita Ang and Nathan to unpack what was
Speaker 5: an interesting deal last night ESPN, Fox and Warner Brothers
Speaker 5: join forces and they're going to launch what is a
Speaker 5: sports focused streaming service.
Speaker 6: What do you make of that? GETA? I mean that
Speaker 6: is that's a move.
Speaker 3: It definitely is a bold move I think aired by
Speaker 3: these big media companies to kind of really in many ways,
Speaker 3: you know, control their own future, right, kind of control
Speaker 3: their own destiny as we kind of move to the
Speaker 3: streaming world. Because you know, we always know that they've
Speaker 3: been in charge of content production, but this kind of
Speaker 3: really gives them a hold of content distribution as well
Speaker 3: as more and more people cut the cord.
Speaker 4: What's so interesting, particularly for Disney, is they say, look,
Speaker 4: we're still going to go along with our own ESPN
Speaker 4: offering an app, whether that's camealization or not. They just
Speaker 4: want to be there as much as they can. Also,
Speaker 4: ahead of Nelson Peltz's own white paper where he wanted
Speaker 4: basically ESPN to be sold off or a partnered with
Speaker 4: a Netflix. Who loses through this? Is it Netflix? Amazon?
Speaker 8: Is it?
Speaker 4: Well, the legacy ones aren't involved.
Speaker 3: I don't think necessarily in Netflix and Amazon will lose,
Speaker 3: So this I think it's really more a defensive move
Speaker 3: by the big media companies to make sure that they're
Speaker 3: actually at the table. We know that big tech has
Speaker 3: been really, really aggressive and it comes to bidding for
Speaker 3: all of these sports. Right you look at Amazon with
Speaker 3: Thursday Night Football, You look at Netflix with that big
Speaker 3: five billion dollar WWE deal. You know Apple kind of
Speaker 3: doing things with MLS MLB. So you know, obviously big
Speaker 3: media knows that there are going to be a lot
Speaker 3: of these sports rights that come up for renewal. And
Speaker 3: we know that NBA and some of these leagues are
Speaker 3: looking for huge increases, I mean triple the fees in
Speaker 3: some of the cases. So they definitely want to shore
Speaker 3: up their resources and kind of be at the table.
Speaker 3: So I very much look at this as a defensive move.
Speaker 3: I don't think necessarily that anybody else loses out, at
Speaker 3: least the big tech companies.
Speaker 5: This is the battle for those that can't remember their passwords.
Speaker 6: Right, it's already hard.
Speaker 5: I got a paramount plus for Champions League football, I
Speaker 5: got Peacock for Premier League. I'm watching the FA Cup
Speaker 5: on ESPN. Look, there are too many platforms, Skeeter, it's hard.
Speaker 5: I don't remember how.
Speaker 6: To log in.
Speaker 3: You're absolutely right, ed. I mean that we do need
Speaker 3: a comprehensive bundle, and I mean this is going to
Speaker 3: We're coming full circle here. I think we are going
Speaker 3: to go back to some form of, you know, a bundle.
Speaker 3: I think this is the first step in that, having
Speaker 3: kind of the skinny sports bundle. Of course, you're right,
Speaker 3: we don't have paramount content, we don't have NBC content,
Speaker 3: we don't have so many of the other regional sports.
Speaker 6: Networks, so we will need all of that.
Speaker 3: But I think this is definitely a good first step.
Speaker 6: Get the guy a one pass, get the guy a
Speaker 6: last pass.
Speaker 5: That's the way.
Speaker 4: Who you remember a pass? Whereas we thank you so much.
Speaker 4: US media analyst Bloomberg Intelligence keth Ranganavan, always great to
Speaker 4: get her expertise defensive rather than offensive at the moment.
Speaker 4: We look ahead, of course, to Disney's earnings a little
Speaker 4: bit later this week. But that does it for this
Speaker 4: addition of Bloomberg technology ed.
Speaker 5: By the way, shout out two stage encryption authentication. You know,
Speaker 5: I can log in, say see places Mega Show recapital
Speaker 5: on the podcast we're posting to all the places you'd expect.
Speaker 5: Apple's spot of iHeart and of course on the Bloomberg
Speaker 5: platforms as well, and we really appreciate all the feedback
Speaker 5: that Karen I've been getting about those of you that
Speaker 5: are taken on the show and the podcast. My goodness,
Speaker 5: we're three days in. Are we to what's been an
Speaker 5: incredible week? From New York City with Carrol and San
Speaker 5: Francisco with me? This is Bloomberg Technology