WEBVTT - Airbnb's Record Drop and Google I/0 0:00:01.480 --> 0:00:02.360 From Mahart. 0:00:02.360 --> 0:00:06.760 We're Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.120 --> 0:00:11.160 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.680 --> 0:00:28.440 I'm Caroline Hyde at Bloomberg's world headquarters in New York. 0:00:28.560 --> 0:00:32.080 Ed Ludlow is at Google Io and joins us shortly. 0:00:32.400 --> 0:00:34.400 This is Blombag Technology coming up. 0:00:34.760 --> 0:00:38.320 Full earnings coverage ahead, we have Airbnb suffering its worst 0:00:38.400 --> 0:00:40.680 day ever as a public company, and an interview with 0:00:40.720 --> 0:00:44.319 the Akama CEO on its report. Details they follow. Plus 0:00:44.440 --> 0:00:46.960 we'll cover the world of electric vehicles from Rivian earnings 0:00:46.960 --> 0:00:49.159 to the conversation with CEO of Blink Charging. 0:00:49.440 --> 0:00:50.320 We've got you covered. 0:00:50.760 --> 0:00:53.760 And we cover the latest in artificial intelligence with the 0:00:53.800 --> 0:00:56.840 CEO of Scale AI and go live of course to 0:00:56.920 --> 0:01:00.040 Google Io event. Our our own Ed Ludlow is on 0:01:00.040 --> 0:01:01.800 the gram. At first, let's check in on these markets 0:01:01.800 --> 0:01:04.200 as we assess a little bit of a mood shift today, 0:01:04.480 --> 0:01:07.880 money moving into tech stocks. Why because the inflationary pressure 0:01:07.920 --> 0:01:10.640 dials down a bit CPI print coming in below that 0:01:10.680 --> 0:01:13.399 five percent handle. We therefore have NASDAC of course interest 0:01:13.880 --> 0:01:17.400 straight sensitive tech stocks on the up seven tenths of 0:01:17.440 --> 0:01:20.240 a percent two year yield on the down as we expect, 0:01:20.280 --> 0:01:22.600 maybe the Federal Reserve won't have to hike so hard 0:01:22.880 --> 0:01:23.520 going forward. 0:01:23.520 --> 0:01:25.040 Maybe a pause is on the agenda. 0:01:25.200 --> 0:01:27.039 We're off by almost eight basis points on the two 0:01:27.080 --> 0:01:28.600 year yield the front end of the curve. The US 0:01:28.600 --> 0:01:31.000 dollar index also drops on that view that we get 0:01:31.000 --> 0:01:32.440 a more dubbish tone going forward. 0:01:32.480 --> 0:01:33.200 Move it on, and. 0:01:33.240 --> 0:01:34.640 Let's have a little look at what's happening in the 0:01:34.640 --> 0:01:37.399 world of crypto, because we are indeed seeing dollar lower, 0:01:37.480 --> 0:01:39.319 so crypto on the upside, we're up by one point 0:01:39.400 --> 0:01:41.800 nine percent on the OG that is Bitcoin twenty eight 0:01:41.840 --> 0:01:44.480 thousand is currently where we trade. Though it's interesting that 0:01:44.520 --> 0:01:46.560 we're still seeing some of the moon music around crypto 0:01:47.080 --> 0:01:49.200 just being on the dour side, Let's stick with it. 0:01:49.280 --> 0:01:52.320 Jane Street Group Jump Crypto two of the world's top 0:01:52.400 --> 0:01:56.000 market making firms. They're actually pulling back from trading digital 0:01:56.040 --> 0:01:58.800 assets here in the United States. That's as regulators crack 0:01:58.880 --> 0:02:01.960 down on the industry. Look, Jane Street is going even further. 0:02:02.240 --> 0:02:05.520 It's scaling back at scrypto ambissions globally because regulatorly uncertainty 0:02:05.520 --> 0:02:07.720 has made it difficult for the firm to operate the 0:02:07.720 --> 0:02:10.960 business so much in the world of crypto, so much 0:02:11.000 --> 0:02:13.200 in the world of tech handings. More broadly, let's get 0:02:13.240 --> 0:02:17.000 to it, because Airbnb shares wow volatility there worst day 0:02:17.040 --> 0:02:20.480 in fact on record as after reporting pretty muted Outlook, 0:02:20.680 --> 0:02:23.000 let's get the inside track with Tom White's DA Davidson's 0:02:23.000 --> 0:02:25.960 senior research analyst, And do you think what we heard 0:02:26.120 --> 0:02:29.720 from the company in terms of its forwardlooking guidance vindicates 0:02:29.960 --> 0:02:31.400 the plunge in the share price today? 0:02:32.000 --> 0:02:32.400 Yeah? 0:02:32.440 --> 0:02:36.320 Look, I think you know Airbnb is it's a stock 0:02:36.480 --> 0:02:39.560 that's got a premium valuation relative to its peers, and 0:02:39.600 --> 0:02:44.399 with a premium valuation typically you get elevated expectations, particularly 0:02:44.480 --> 0:02:47.520 around Coraly or ningx prints. So look, we're not surprised 0:02:47.520 --> 0:02:50.280 to see the stock sell off a bit today, you know. 0:02:50.320 --> 0:02:53.080 I think the debate around the shares now is whether 0:02:53.160 --> 0:02:57.960 the guidance, which shows basically increased marketing investment relative to 0:02:58.000 --> 0:03:00.520 what the street was expecting, you know, whether that increase 0:03:00.960 --> 0:03:03.680 spend is really just a timing related issue and just 0:03:03.680 --> 0:03:06.480 sort of a pull forward of marketing from later in 0:03:06.520 --> 0:03:08.320 the year to the beginning of the year, or if 0:03:08.360 --> 0:03:12.079 it's something more structural, so you know, near term numbers 0:03:12.080 --> 0:03:14.040 are going down. You know, that's why the staff is 0:03:14.080 --> 0:03:15.839 going down a bit. But you know, we still see 0:03:15.919 --> 0:03:18.440 value and share of Airbnb over a longer term time horizon. 0:03:18.720 --> 0:03:21.680 I mean overall, when you put together all the analyst 0:03:21.720 --> 0:03:25.280 recommendations and price targets are still they think it's going 0:03:25.320 --> 0:03:25.840 to go high. 0:03:25.680 --> 0:03:26.960 One hundred and thirty two dollars. 0:03:26.960 --> 0:03:30.120 The general price target was seeing seventeen buyers, only fourteen 0:03:30.160 --> 0:03:32.839 cells on the stock overall, and from your perspective, when 0:03:32.840 --> 0:03:35.680 you have a by rating one hundred and twenty seven dollars, 0:03:35.680 --> 0:03:38.760 it is in one hundred and forty dollars price target. Tom, 0:03:38.960 --> 0:03:41.360 What do you make of the macro environment. We're just 0:03:41.400 --> 0:03:44.760 hearing about inflation, the pressure rolling over, But it looks 0:03:44.800 --> 0:03:47.680 as though airline prices are coming down, hotel prices are 0:03:47.680 --> 0:03:48.200 coming down. 0:03:48.560 --> 0:03:50.200 Is that good or bad for Airbnb? 0:03:50.560 --> 0:03:53.360 Well, look, I think any kind of pressure on the consumer, 0:03:53.440 --> 0:03:57.400 any pressure on discretionary spending, is not good for travel 0:03:57.400 --> 0:04:01.040 spending overall. What we've seen though, over the course of 0:04:01.080 --> 0:04:05.200 you know, prior downturns, is that leisure travel spending is 0:04:05.200 --> 0:04:07.720 is quite a resilient category, particularly if you look on 0:04:08.080 --> 0:04:10.800 a global basis. You know, even when times are tough, 0:04:10.840 --> 0:04:12.360 people still like to get away. I still like to 0:04:12.400 --> 0:04:13.880 take vacations. 0:04:13.440 --> 0:04:13.600 You know. 0:04:13.600 --> 0:04:16.880 I think in some ways, Airbnb's recent announcement of their 0:04:16.960 --> 0:04:20.080 Airbnb Rooms offering, it's maybe a little bit of a 0:04:20.080 --> 0:04:22.039 way to kind of get get ahead of that. Airbnb 0:04:22.160 --> 0:04:24.640 Rooms is sort of an example of Airbnb kind of 0:04:24.640 --> 0:04:28.120 disrupting itself a little bit by offering a significantly lower 0:04:28.120 --> 0:04:32.520 priced offerings in single rooms in people's homes or apartments. 0:04:32.920 --> 0:04:34.680 I think they said last night, eighty percent of that 0:04:34.720 --> 0:04:38.560 inventory is less than one hundred dollars per night. So, 0:04:38.680 --> 0:04:41.040 you know, we think overall travel is going to be resilient, 0:04:41.160 --> 0:04:44.279 and we think Airbnb, because of the variety of the 0:04:44.279 --> 0:04:46.640 listings it has, is probably going to be more resilient 0:04:46.640 --> 0:04:48.240 than other online travel assets. 0:04:48.279 --> 0:04:50.480 Interesting, what about the market share that seems to being 0:04:50.520 --> 0:04:53.360 eked out a little bit by booking dot Com, by vlbo, 0:04:53.440 --> 0:04:55.240 by some of the competitors out there, not to mention 0:04:55.480 --> 0:04:57.120 the old hotel industry as well. 0:04:58.000 --> 0:05:00.680 Yeah, look, I think, you know, talking about marketing shares 0:05:00.800 --> 0:05:03.320 right now is a little bit tricky just because of 0:05:03.360 --> 0:05:06.279 the comps, the differences in the comps. Right you know, 0:05:06.360 --> 0:05:10.200 Airbnb is camping you know, over the last few years 0:05:10.200 --> 0:05:12.560 has had explosive growth. Right during the pandemic, they were 0:05:12.600 --> 0:05:14.360 sort of the only game in town. People didn't feel 0:05:14.360 --> 0:05:16.520 comfortable going to big cities or going into hotels where 0:05:16.560 --> 0:05:16.920 they had. 0:05:16.839 --> 0:05:19.240 To you know, mingle with other folks. 0:05:20.440 --> 0:05:25.000 Airbnb's comps are relatively tougher now, whereas the traditional kind 0:05:25.000 --> 0:05:27.840 of OTAs or the hotel industry comps are a little 0:05:27.839 --> 0:05:29.800 bit easier. So just looking at the growth rates kind 0:05:29.839 --> 0:05:32.679 of you know, this quarter, next quarter, I think doesn't 0:05:32.720 --> 0:05:35.359 tell you know, kind of the entire story. You know, 0:05:35.400 --> 0:05:37.279 the bottom line is is a lot of these online 0:05:37.279 --> 0:05:40.279 travel assets all continue to grow, you know, significantly quickly. 0:05:40.320 --> 0:05:42.719 I think, you know, discussions about market share you know, 0:05:42.800 --> 0:05:44.640 need to be looked at in sort of a longer 0:05:44.720 --> 0:05:45.520 term perspective. 0:05:46.400 --> 0:05:48.560 Well said, it's great to have some time Tony, Tom. 0:05:48.680 --> 0:05:50.760 Thank you so much, Tom White of DA Davidson, as 0:05:50.760 --> 0:05:53.400 we say, the biggest drop on records of the Airbnb, 0:05:53.520 --> 0:05:56.120 but still got a seventy to seventy three billion dollar 0:05:56.400 --> 0:05:57.400 market capitalization. 0:05:57.960 --> 0:05:59.000 Let's talk about the. 0:05:58.920 --> 0:06:03.000 Macro environment, which BMB is currently well working within inflation data, 0:06:03.000 --> 0:06:05.039 as we said, without today showing signs of actually a 0:06:05.040 --> 0:06:07.400 bit of a cooling CPI rising just by four point 0:06:07.520 --> 0:06:10.000 nine percent on a year on year basis. But let's 0:06:10.000 --> 0:06:12.280 go into the insight of how you and I are spending. 0:06:12.560 --> 0:06:14.800 Are we looking at luxury? Are we holding back our 0:06:14.839 --> 0:06:18.280 purchases Rackaton President, I'm pleased to say, Kristin gull is 0:06:18.320 --> 0:06:21.640 with us and Rakuton is an online shopping platform partners 0:06:21.640 --> 0:06:25.240 in thousands of stores to provide data, expertise, technology both 0:06:25.279 --> 0:06:27.800 businesses and consumers. And also you give cash back, and 0:06:27.839 --> 0:06:31.480 that's a key draw Kristin. What are you seeing in 0:06:32.279 --> 0:06:35.000 consumers desire to be spending right now, particularly on the 0:06:35.080 --> 0:06:36.039 luxury side of things. 0:06:37.040 --> 0:06:39.479 We were very worried coming into this year that with 0:06:39.680 --> 0:06:42.400 all of the inflation pressure, that consumers were going to 0:06:42.400 --> 0:06:45.680 spend significantly less than they'd spent last year. And actually, 0:06:45.720 --> 0:06:49.560 on the contrary, we've seen a relatively stable spending environment, 0:06:50.200 --> 0:06:52.720 both on the lower end and the world of marketplaces 0:06:52.760 --> 0:06:54.680 and in the world of mid tier department stores. But 0:06:54.839 --> 0:06:58.760 luxury has been booming, and really that luxury thread carried 0:06:58.800 --> 0:07:01.480 throughout the pandemic and has continued into this year in 0:07:01.839 --> 0:07:04.919 a significant strength. And how people are spending despite the 0:07:04.920 --> 0:07:08.640 fact that the economy makes them a little nervous. 0:07:07.839 --> 0:07:11.320 So all day in some ways buying on the luxury 0:07:11.400 --> 0:07:13.760 en because it's deemed an investment in some way if 0:07:13.760 --> 0:07:16.440 I'm thinking of actual, real tangible goods. 0:07:17.560 --> 0:07:18.840 That's exactly what it is. 0:07:19.000 --> 0:07:20.840 We have a lot of data that's telling us that 0:07:20.880 --> 0:07:23.320 people are spending differently now, and there's two ways that 0:07:23.360 --> 0:07:26.960 they're spending differently. Number one, buying less but making it 0:07:27.040 --> 0:07:30.840 count more. Number two dealing with things like sustainability, where 0:07:30.840 --> 0:07:33.520 they want to buy fewer items with less impact on 0:07:33.560 --> 0:07:37.200 the environment. And what that leads to is people investing 0:07:37.280 --> 0:07:41.240 in either resale or luxury, and investing in luxury is 0:07:41.240 --> 0:07:45.760 something that increasingly younger and younger audiences are playing in. 0:07:45.920 --> 0:07:47.760 We are seeing a lot of data that gen Z 0:07:47.960 --> 0:07:52.120 is buying luxury at a significantly earlier age than other generations, 0:07:52.160 --> 0:07:54.360 and I think that really points to people changing the 0:07:54.400 --> 0:07:55.640 way that they spend. 0:07:55.880 --> 0:07:58.240 But also there's different offerings of the way in which 0:07:58.280 --> 0:08:01.720 they spend. How much you seeing a competitive threat from 0:08:02.200 --> 0:08:04.760 well the real reel or eBay or web paces you 0:08:04.800 --> 0:08:08.280 can go and buy, se can hand or pre used 0:08:08.480 --> 0:08:11.280 luxury items as an investment. Where do you see that 0:08:11.600 --> 0:08:13.440 focus from Rackington in the moment. 0:08:14.480 --> 0:08:16.960 I think right now that is a massive area of 0:08:16.960 --> 0:08:19.800 growth in the retail industry is the world of resale, 0:08:19.840 --> 0:08:22.280 and I think for a lot of these younger consumers 0:08:22.280 --> 0:08:25.280 that was what brought them into into the luxury fold 0:08:25.320 --> 0:08:28.080 in the first place. I think the interesting thing is 0:08:28.200 --> 0:08:31.560 now luxury companies are trying to get in on this 0:08:31.800 --> 0:08:34.400 volume and get in on that relationship. So you have 0:08:34.480 --> 0:08:39.080 people like Gucci offering their own resale world on their 0:08:39.120 --> 0:08:41.760 website right now, and basically what it means is that 0:08:41.840 --> 0:08:44.640 they want to own the customer in a way that 0:08:44.800 --> 0:08:49.520 isn't disintermediated by resale sites. So that's something that I 0:08:49.640 --> 0:08:53.320 see as part of a massive growth story in retail 0:08:53.559 --> 0:08:57.760 is resale overall, but not just on resale platforms, but 0:08:57.920 --> 0:08:58.960 by brands. 0:08:59.559 --> 0:09:02.840 How do you keep your market share in this environment 0:09:02.920 --> 0:09:05.520 we're all talking about oltificial intelligence, We're all thinking about 0:09:05.520 --> 0:09:08.720 how we can interact with a consumer more swiftly productively. 0:09:09.240 --> 0:09:11.600 How are you looking at updating recuteon and what your 0:09:11.640 --> 0:09:14.760 offering looks like when we're interfacing the e commerce platform. 0:09:15.320 --> 0:09:17.240 At the end of the day, our job is to 0:09:17.360 --> 0:09:19.880 drive growth for our retail partners, and we're doing that 0:09:19.960 --> 0:09:22.920 in a number of different ways. The first is by 0:09:23.040 --> 0:09:25.880 increasing the number of players on our site that appeal 0:09:25.920 --> 0:09:29.840 to consumers, things like resale, things like more luxury players 0:09:29.840 --> 0:09:32.520 are really really important to us. The second is there's 0:09:32.559 --> 0:09:36.199 a level of personalization that becomes important. We give cash 0:09:36.320 --> 0:09:39.839 back to our consumers for shopping at our retailers. That 0:09:39.960 --> 0:09:44.040 cash back is increasingly personalized to do things like incentivize 0:09:44.080 --> 0:09:46.320 you to try stores that you've never tried before, to 0:09:46.400 --> 0:09:49.440 incentivize you to make a second purchase at a retailer 0:09:49.480 --> 0:09:50.840 that you've experienced before. 0:09:51.160 --> 0:09:52.480 That level of value. 0:09:52.160 --> 0:09:54.680 That we drive, not only is it valuable to our retailers, 0:09:54.679 --> 0:09:57.000 but it's also really valuable to our consumers. 0:09:57.960 --> 0:10:00.280 So when you say at the moment, you keep a 0:10:00.320 --> 0:10:04.320 real loyal customer, in many ways, you say when a 0:10:04.520 --> 0:10:07.559 retailer leaves, quite often the shopper remains on seventy five 0:10:07.559 --> 0:10:12.040 percent of the time. Here, what is your dream new customer? 0:10:12.080 --> 0:10:15.000 From a client perspective, From a retailer perspective, you're just 0:10:15.000 --> 0:10:16.800 talking about Gucci there. Who do you want to lure 0:10:16.840 --> 0:10:18.960 onto the platform that you haven't got yet? 0:10:19.640 --> 0:10:22.120 Yeah, I think increasingly there is a younger consumer that 0:10:22.160 --> 0:10:24.839 we're going after. The sort of younger millennial audience and 0:10:24.920 --> 0:10:27.840 gen Z is really important to us. A lot of 0:10:27.880 --> 0:10:29.720 what we've been doing over the last few years is 0:10:29.760 --> 0:10:32.520 bringing on a lot of direct to consumer brands that 0:10:32.559 --> 0:10:36.280 are more important to that audience and that generation, and 0:10:36.320 --> 0:10:40.120 then to your point, expanding our luxury environment overall on 0:10:40.160 --> 0:10:43.600 the platform. We have played really, really hard in luxury 0:10:43.640 --> 0:10:46.480 department stores for a long time. Individual brands is the 0:10:46.520 --> 0:10:49.280 next thing I'd love to tackle because that does actually 0:10:49.400 --> 0:10:51.480 drive a lot of value for that younger millennial and 0:10:51.520 --> 0:10:51.920 gen Z. 0:10:51.960 --> 0:10:55.120 Consumer or someone who brings a lot of experience to 0:10:55.559 --> 0:10:58.160 the role, having been well with Recuten as a general 0:10:58.200 --> 0:11:01.360 manager since twenty eighteen, plenty of other places before that. 0:11:01.480 --> 0:11:03.600 So Kris Single, we thank you so much for spending 0:11:03.600 --> 0:11:06.280 some time with us with Q ten president there Now 0:11:06.360 --> 0:11:08.920 from luxury spending to what's going on in the world 0:11:09.000 --> 0:11:12.360 of Mountain View, California right now, ed and manner luxury. 0:11:12.480 --> 0:11:15.600 You're covering Google though developers conference all day for us. 0:11:15.679 --> 0:11:16.600 What's the key themes? 0:11:17.040 --> 0:11:20.160 Yeah, Look, artificial intelligence just at the heart of everything here. 0:11:20.280 --> 0:11:23.360 Thousands of people as Shoreline mountain View, two hundred and 0:11:23.400 --> 0:11:27.400 thirty thousand union worldwide. And remember when Google introduced Barred 0:11:27.440 --> 0:11:30.680 in February. It was always billed as a creative companion, 0:11:30.760 --> 0:11:33.680 not a replacement for the core search product. So that's 0:11:33.679 --> 0:11:35.840 the question. What are we going to find out today 0:11:36.160 --> 0:11:40.000 about how you integrate the large Language Model the LM 0:11:40.600 --> 0:11:44.319 into a next generation search engine. What does that functionality 0:11:44.320 --> 0:11:46.839 look like? And what about Google's other software offerings. And 0:11:46.880 --> 0:11:48.200 that's before we even get to hardware. 0:11:48.240 --> 0:11:52.040 Caroline, Yeah, we'll address that a little bit later with you. 0:11:52.360 --> 0:11:53.800 Brilliant to have you on the ground there. 0:11:53.840 --> 0:11:56.160 You're going to be back with us and later in 0:11:56.200 --> 0:11:57.800 the hour, but we're also going to be there throughout 0:11:57.840 --> 0:11:58.160 the day. 0:11:58.240 --> 0:12:08.040 We thank you so much. Let's go back to the earnings. 0:12:08.120 --> 0:12:11.240 Let's look at Acamai Technologies shares actually having their best 0:12:11.320 --> 0:12:14.320 day since twenty twenty after it reported first all results 0:12:14.320 --> 0:12:16.559 that meat expectations. It gave a fullier forecast that was 0:12:16.600 --> 0:12:19.400 ahead of the AMAS consensus. Let's talk about it all 0:12:19.600 --> 0:12:23.040 with the CEO of Acami, Tom Nayton. Doctor Layton, it's 0:12:23.040 --> 0:12:26.160 great to have some time with you. Strong given challenging 0:12:26.160 --> 0:12:29.880 macroheadwinds and the pricing pressure, what do you make of 0:12:29.920 --> 0:12:32.760 the economic environment which you're currently managing to weather better 0:12:32.800 --> 0:12:34.040 than some had anticipated. 0:12:35.240 --> 0:12:38.560 It is a challenging environment. You know, customers are trying 0:12:38.600 --> 0:12:41.360 to cut back on costs. There are a couple of 0:12:41.400 --> 0:12:43.880 ways that help us mitigate that though. 0:12:44.559 --> 0:12:44.760 You know. 0:12:44.800 --> 0:12:46.679 The first is folks are really. 0:12:46.440 --> 0:12:51.640 Concerned about security and reliability, especially in the financial sector. Now, 0:12:51.679 --> 0:12:54.520 the last thing a major bank wants is to have 0:12:54.559 --> 0:12:57.839 an outage with the concern that people will think something's wrong, 0:12:57.880 --> 0:13:01.080 you get a run and that's a big challenge and 0:13:01.160 --> 0:13:03.199 we're the you know, the best provider when it comes 0:13:03.240 --> 0:13:04.640 to reliability and security. 0:13:04.720 --> 0:13:07.120 So that's been you know, helpful for us. 0:13:07.480 --> 0:13:12.720 Also, as companies need to cut cost we can help them. 0:13:12.720 --> 0:13:14.240 With our compute solution. 0:13:15.080 --> 0:13:19.120 You know that's now integrated into our delivery platform. And 0:13:19.559 --> 0:13:21.480 you know we are the biggest when it comes to 0:13:21.800 --> 0:13:25.920 delivery and have a very economical platform for doing that, 0:13:26.040 --> 0:13:29.720 and so we can help customers reduce their costs access 0:13:29.760 --> 0:13:32.320 to cloud computing and delivery. 0:13:32.640 --> 0:13:35.640 What about your buildout though, Tdcowen saying that they are 0:13:35.880 --> 0:13:38.000 longer term a bit more cautious on your stock given 0:13:38.040 --> 0:13:41.600 the capital expenditure intensity that's needed to build out the 0:13:41.679 --> 0:13:42.400 compute part. 0:13:42.640 --> 0:13:44.199 How are you managing those as a costs? 0:13:45.240 --> 0:13:48.560 Yeah, so We are investing this year to you know, 0:13:48.679 --> 0:13:52.319 jumpstart the base platform, and that will largely be done 0:13:52.360 --> 0:13:55.120 by the end of Q three, and then going forward 0:13:55.120 --> 0:13:59.920 from there, the buildout expense is proportional to the revenue. 0:14:00.240 --> 0:14:02.199 So if we get a lot of revenue growth, which 0:14:02.280 --> 0:14:04.160 is what we're hoping and is a good news story, 0:14:04.200 --> 0:14:07.000 then there'll be more capital expense. And you know, if 0:14:07.000 --> 0:14:09.280 it's a more modest growth on revenue, then you know, 0:14:09.320 --> 0:14:11.840 there won't be all that much capex to worry about, 0:14:11.920 --> 0:14:14.640 so that'll be pretty much, you know, done with by 0:14:14.640 --> 0:14:16.840 the end of Q three. We just turned on our 0:14:16.840 --> 0:14:19.280 first new data center and we have fourteen more planned 0:14:19.280 --> 0:14:20.440 over the next couple of quarters. 0:14:20.560 --> 0:14:21.040 You really do. 0:14:21.080 --> 0:14:25.480 Sound optimistic about the client still spending in this economic environment, 0:14:25.480 --> 0:14:28.960 particularly on security. Just push back therefore on analysts over 0:14:28.960 --> 0:14:32.720 at Guggenheim who are saying your low double digit guidance 0:14:32.920 --> 0:14:35.600 in terms of security growth, they actually say it's somewhat 0:14:35.600 --> 0:14:39.720 implausible because of this macro environment and the sharp acceleration 0:14:39.760 --> 0:14:42.320 that's needed a new business. Why do you think that 0:14:42.400 --> 0:14:46.040 this is plausible even though you've got some worrying about it. 0:14:46.920 --> 0:14:50.080 Well, we have the market leading solutions for web at firewall, 0:14:50.160 --> 0:14:53.960 you've got to have that market leading solution for bot management, 0:14:54.480 --> 0:14:59.560 market leading solution for ransomware and defending against that, you know, 0:14:59.600 --> 0:15:02.520 And and think about some of the older attacks that 0:15:02.560 --> 0:15:04.760 are maybe you think of them as old news, like 0:15:04.840 --> 0:15:07.080 denial of service. You know, we just in the last 0:15:07.120 --> 0:15:10.720 few months you have the killnet coordinated d DOS attacks 0:15:10.760 --> 0:15:14.000 against you know, the nation's leading medical centers for goodness sake, 0:15:14.880 --> 0:15:18.960 and so security is still very much needed, and you know, 0:15:19.000 --> 0:15:21.800 when you're the market leader in these solutions like akamie is, 0:15:22.120 --> 0:15:25.920 I'm very optimistic about low double digit growth this year 0:15:25.920 --> 0:15:28.400 for our security business. And of course now we're adding 0:15:28.760 --> 0:15:31.440 API security, and as you know, that's very much in 0:15:31.480 --> 0:15:33.720 the news with all the API attacks that have taken 0:15:33.760 --> 0:15:34.520 place recently. 0:15:34.800 --> 0:15:39.280 Yes, exactly, let's talk from API to AI as well 0:15:39.440 --> 0:15:42.080 more broadly, doctor Layton, because I mean, you're a man 0:15:42.120 --> 0:15:44.080 of fifty patents to your name in terms of content 0:15:44.080 --> 0:15:46.520 delivery and Internet protocols. But I'm pretty sure you're thinking 0:15:46.560 --> 0:15:49.600 the way in which artificial intelligence is increasing some of 0:15:49.640 --> 0:15:52.960 those security attacks as we mentioned, but ultimately upending many 0:15:52.960 --> 0:15:54.840 a business model. Right now, Is there anyway in which 0:15:54.880 --> 0:15:56.960 you're thinking that you can harness that or that you're 0:15:57.000 --> 0:15:57.800 worrying about it. 0:15:59.160 --> 0:16:02.120 You know, we use a and a lot of our products, 0:16:02.160 --> 0:16:07.760 particularly in security for anomaly detection, detecting attackers really you know, 0:16:07.920 --> 0:16:08.640 very important. 0:16:08.880 --> 0:16:11.440 We don't sell AI products per se. 0:16:12.280 --> 0:16:16.320 Now, I think there's been some very interesting advances recently 0:16:16.320 --> 0:16:19.880 an AI generative AI, and you know, one thing about 0:16:19.880 --> 0:16:22.760 that is it's compute intensive, and so there is the 0:16:22.840 --> 0:16:26.760 prospect of a lot more need for compute cycles and 0:16:26.800 --> 0:16:30.280 that's something that you know, we could ultimately benefit us 0:16:30.680 --> 0:16:33.800 with our compute platform. In fact, you know, there's early 0:16:33.840 --> 0:16:37.600 work going on now that would you know, using algorithms 0:16:37.600 --> 0:16:42.160 in scientific methods, uh, make it more affordable so that 0:16:42.200 --> 0:16:44.080 you could do a lot of the work on inference 0:16:44.160 --> 0:16:47.600 engines using CPUs instead of GPUs, which. 0:16:47.440 --> 0:16:48.440 Is a lot more efficient. 0:16:49.040 --> 0:16:51.320 So I think there's a lot of exciting results to 0:16:51.400 --> 0:16:53.880 come there and ultimately, you know, good for business. 0:16:54.960 --> 0:16:57.240 And it really is interesting that we've had from other 0:16:57.280 --> 0:17:00.680 security software companies out there, thinking at ten with a 0:17:00.680 --> 0:17:03.520 revenue forecast that was a bit lackluster cloud flair, we 0:17:04.000 --> 0:17:06.679 have had this worry that people aren't going to invest 0:17:06.680 --> 0:17:10.160 in much as much in securing themselves in this environment. 0:17:10.640 --> 0:17:14.120 So is there any sign from any of your clients 0:17:14.480 --> 0:17:16.080 that they're just going to have to pull back in 0:17:16.080 --> 0:17:17.639 that area or none at all from you. 0:17:18.560 --> 0:17:21.760 It does slow down sales cycle some you know, in 0:17:21.840 --> 0:17:24.639 our growth rate, even in the low double digits, is 0:17:24.720 --> 0:17:27.000 less than it was last year. That said, we had 0:17:27.000 --> 0:17:29.800 a strong bookings quarter in security, and in fact, you know, 0:17:29.880 --> 0:17:32.600 we ended up you know, taking business away from you know, 0:17:32.640 --> 0:17:35.359 some of the companies that you mentioned, particularly in the 0:17:35.400 --> 0:17:39.800 financial sector where you know, the leading financial institutions just 0:17:39.960 --> 0:17:43.280 can't have an outage or an incident or have an 0:17:43.280 --> 0:17:46.800 attack be successful in this environment. And so there's a 0:17:47.000 --> 0:17:49.640 I think they turned to Akami more now so where 0:17:49.680 --> 0:17:53.080 you might see some company struggling a bit, it's on 0:17:53.240 --> 0:17:55.040 balance within this environment. 0:17:55.200 --> 0:17:58.840 Good for Akami, doctor Ayton, Tom Layton, Akam, I see 0:17:58.920 --> 0:18:01.120 and we thank you for your winning us. We need 0:18:01.200 --> 0:18:04.840 spelling out the environment in which we currently find ourselves. Meanwhile, 0:18:04.840 --> 0:18:08.000 we're also watching other companies that actually are not performing 0:18:08.040 --> 0:18:09.960 as well on the day as Zachameayas. Just check out 0:18:09.960 --> 0:18:14.760 on internet infrastructure company Twilio falling in terms of sixteen percent. 0:18:14.440 --> 0:18:14.920 On the day. 0:18:14.960 --> 0:18:17.480 This is really is struggling to find its growth right now, 0:18:17.640 --> 0:18:21.240 we overall see the company posting numbers that did show 0:18:21.960 --> 0:18:24.840 a growth slowdown overall, and this is a business that's 0:18:25.000 --> 0:18:28.280 trying to find it's footing amid the macro weak macro 0:18:28.400 --> 0:18:31.840 that Jefferies are saying a small beat overall in this quarter, 0:18:31.920 --> 0:18:35.680 but it really is the margin turnaround, and this particular 0:18:35.680 --> 0:18:38.800 company is being overshadowed by a weak macro picture going forward. 0:18:38.840 --> 0:18:42.480 So deterioration its net revenue retention rate in the outlook 0:18:42.520 --> 0:18:45.399 for the second quarter points to more difficult days ahead 0:18:45.960 --> 0:18:48.080 coming up. Look, let's talk about days ahead in the 0:18:48.160 --> 0:18:50.679 race to compete with the likes of Chatchepete. More on 0:18:50.720 --> 0:18:53.320 how Softbag s getting in on the action US next 0:18:53.400 --> 0:19:11.080 as a bloomberg time now for Talking Tech and first 0:19:11.119 --> 0:19:14.520 up monthly sales and Taiwan inconduct of Manufacturing TSMC fell 0:19:14.720 --> 0:19:17.600 for a second month as his consumer demand for electronics 0:19:17.720 --> 0:19:19.040 just slows sales. 0:19:18.680 --> 0:19:19.720 And made to order chips. 0:19:19.880 --> 0:19:22.439 They're down fourteen percent from a year earlier, signaling that 0:19:22.440 --> 0:19:26.240 the chip sectors slump skeet to bottom. Meanwhile, also over 0:19:26.280 --> 0:19:28.960 in Asia, soft Banks Mobile Unit is building a Japanese 0:19:29.080 --> 0:19:32.400 version of You Guessed at Chatchipt, joining the already intense 0:19:32.480 --> 0:19:35.720 race to create the next generation AI. The telecoms company 0:19:35.760 --> 0:19:38.280 is actually setting up a new entity in March to 0:19:38.320 --> 0:19:41.240 develop the technology. The CEO didn't elaborate on the project's 0:19:41.280 --> 0:19:44.800 goals or progress so far. And let's look at content 0:19:44.880 --> 0:19:48.159