WEBVTT - Arm Makes Its Public Debut 0:00:01.440 --> 0:00:05.080 From the heart where innovation, money and power collie in 0:00:05.200 --> 0:00:09.760 Silicon Valley n beyond. This is Bloomberg Technology with Caroline 0:00:09.800 --> 0:00:11.080 Hide and Ed Loudlow. 0:00:26.000 --> 0:00:29.000 I'm Shnalli Bassik at Bloomberg's world headquarters in New York. 0:00:29.160 --> 0:00:31.920 Ed Ludlow is off today and Caroline Hyde is live 0:00:32.080 --> 0:00:32.919 at the Nasdaq. 0:00:33.159 --> 0:00:35.120 This is Bloomberg Technology. Coming up. 0:00:35.159 --> 0:00:37.360 We are alive from NAZAK to bring you full coverage 0:00:37.360 --> 0:00:39.880 of the ARM IPO as it makes us trading debut 0:00:40.159 --> 0:00:41.320 as the biggest. 0:00:40.880 --> 0:00:42.120 IPO of the year. 0:00:42.479 --> 0:00:45.080 More ahead and as ARM makes his trading debut, will 0:00:45.080 --> 0:00:47.920 push ahead to the other companies lining up to go public. 0:00:48.040 --> 0:00:51.560 During our venture capital squadline, we'll also look at the 0:00:51.600 --> 0:00:54.520 prospects and use case for digital dollars with former head 0:00:54.520 --> 0:00:56.520 of the CFTC Chris John Carlow. 0:00:56.720 --> 0:00:58.440 All that and more coming up next. 0:00:58.680 --> 0:01:00.480 Now before we head over to the az DEC, we're 0:01:00.520 --> 0:01:03.600 Caroline hied Is standing by with a very senior executive. 0:01:03.640 --> 0:01:04.560 We are also. 0:01:04.360 --> 0:01:08.199 Getting indications that ARM may open shortly in the next 0:01:08.200 --> 0:01:11.160 ten to fifteen minutes. We are getting price indications of 0:01:11.200 --> 0:01:14.440 about fifty six dollars give or take fifty six thirty 0:01:14.480 --> 0:01:19.120 That would give the firm evaluation of about sixty billion dollars. 0:01:19.200 --> 0:01:21.040 Let's see where were head though, Caroline. 0:01:21.280 --> 0:01:23.440 We are heading over now to Caroline and Karen s 0:01:23.440 --> 0:01:27.319 Now Senior VP and Global head of Listings over at Nasdaq. 0:01:27.560 --> 0:01:29.720 Shanani, thank you so much, and yes I am sat 0:01:29.720 --> 0:01:32.240 here with Karen and wow, we're back at it. 0:01:32.240 --> 0:01:33.120 We've almost forgotten. 0:01:33.200 --> 0:01:33.839 How's IPA. 0:01:34.760 --> 0:01:35.679 It's very exciting. 0:01:35.920 --> 0:01:39.120 How important is this ARM listing for the rest of 0:01:39.160 --> 0:01:41.080 the companies that now stand to list. I think you 0:01:41.080 --> 0:01:42.840 were saying, what one hundred and fifty seven of their 0:01:42.959 --> 0:01:44.360 waiting to come to the market. 0:01:45.360 --> 0:01:48.280 It's important, it needs to trade well. I think that. 0:01:50.080 --> 0:01:52.680 This is a moment in time that everyone is really 0:01:52.800 --> 0:01:56.600 paying attention to. The markets have been open for great 0:01:56.600 --> 0:01:58.840 companies for some time now when you look at the 0:01:58.960 --> 0:02:01.400 VIX and the second market and what we're seeing in 0:02:01.440 --> 0:02:05.520 the private markets, but it's really been on the supply side, 0:02:06.400 --> 0:02:09.480 and ARM is really set to unlock that. 0:02:10.200 --> 0:02:13.000 What's so interesting about ARM is how idiosyncratic it is 0:02:13.440 --> 0:02:15.800 or not, because many want this to be a bell weather. 0:02:16.000 --> 0:02:19.919 It's in the tipping point of AI, also China or anxiety. 0:02:20.000 --> 0:02:22.600 But what's so interesting is it's only a little free 0:02:22.600 --> 0:02:26.359 flowt less than ten percent? How easy or heart is 0:02:26.400 --> 0:02:28.680 it therefore to square up demand as apply at this moment? 0:02:28.720 --> 0:02:30.320 Is anyone going to want to be a seller? What's 0:02:30.360 --> 0:02:31.480 happening behind the scenes. 0:02:31.639 --> 0:02:33.560 Yeah, well that is why it's taking a little bit 0:02:33.760 --> 0:02:37.000 of time to open. It's really important to get the 0:02:37.040 --> 0:02:39.640 opening cross right. And one of the things that we 0:02:39.720 --> 0:02:46.000 do is we provide technology to the person opening the stock, 0:02:46.040 --> 0:02:47.200 and that's JP Morgan. 0:02:47.240 --> 0:02:49.600 In this case. It's called a stabilization. 0:02:49.080 --> 0:02:52.760 Agent, and we've turned it into more of a science 0:02:52.840 --> 0:02:55.520 than an art. There still is an art, though, and 0:02:55.560 --> 0:02:59.560 you want enough buyers and sellers in that opening cross 0:03:00.160 --> 0:03:04.200 to price the opening at a level that it'll trade. 0:03:04.000 --> 0:03:06.480 Well when you have that sort of technology is that's 0:03:06.520 --> 0:03:09.720 what wooing the likes of arm the likes of instacart 0:03:09.720 --> 0:03:11.680 are looking to come with an ASDAC as well. How 0:03:11.680 --> 0:03:13.160 do you set yourself apart from some of the other 0:03:13.200 --> 0:03:14.720 exchanges in this moment right. 0:03:14.600 --> 0:03:17.000 Well, it is a part of it. I would say. 0:03:17.240 --> 0:03:22.280 We do find that the underwriters have more information and 0:03:22.280 --> 0:03:23.760 that's really helpful to them. 0:03:24.560 --> 0:03:26.160 But there are other factors. 0:03:26.240 --> 0:03:29.720 Obviously, I would say brand alignment is really important. The 0:03:29.800 --> 0:03:34.280 fact that we have owned and operate or differentiated services, 0:03:35.000 --> 0:03:37.840 So we really build relationships with our companies throughout their 0:03:37.840 --> 0:03:38.400 life circle. 0:03:39.080 --> 0:03:41.240 At the moment the pushes in the polls of deciding 0:03:41.280 --> 0:03:44.440 to go public in general, I mean I cast my 0:03:44.480 --> 0:03:46.640 mind back to when arm first went public back in 0:03:46.640 --> 0:03:49.000 the nineties. There were a lot more companies that were 0:03:49.000 --> 0:03:51.440 public at that point. There's been this sort of desire 0:03:51.520 --> 0:03:54.960 to be away from the duties that you have to shareholder, 0:03:55.320 --> 0:03:58.040 the costs. How does it look as a company looking 0:03:58.120 --> 0:03:59.240 to go public at the moment? 0:03:59.280 --> 0:03:59.880 Is it desire? 0:04:01.440 --> 0:04:04.840 We would say so, and we do a lot of work. 0:04:04.600 --> 0:04:07.200 With the SEC and advocacy work on behalf of our 0:04:07.240 --> 0:04:11.600 issuers really around that, because our objective is to keep 0:04:12.160 --> 0:04:14.720 We want high quality companies coming, but we want to 0:04:14.760 --> 0:04:18.520 focus on the issues that are really important and we 0:04:18.560 --> 0:04:21.800 want the cost to remain reasonable for companies. 0:04:22.120 --> 0:04:22.720 To that end. 0:04:22.760 --> 0:04:25.839 So when they're looking at compliance costs, they're looking at 0:04:26.040 --> 0:04:28.000 volatility more broadly in the market. You said that looks 0:04:28.000 --> 0:04:30.960 pretty good at the moment, vicks remaining low. What therefore 0:04:30.960 --> 0:04:33.800 could be the catalysts into twenty twenty four, When are 0:04:33.800 --> 0:04:35.880 we going to see windows open and closed? 0:04:35.920 --> 0:04:38.240 You think, yeah, well, I think ARM is likely to 0:04:38.279 --> 0:04:41.000 open a window here, and I think a lot of 0:04:41.040 --> 0:04:45.000 companies are ready to go public. Q four will probably 0:04:45.040 --> 0:04:47.920 be a lot more interesting, and a lot of companies 0:04:48.000 --> 0:04:49.960 want to go in the first half of twenty four, 0:04:50.080 --> 0:04:51.480 really getting ahead of the election. 0:04:51.760 --> 0:04:54.680 Okay, so there's sort of political risk within that at 0:04:54.680 --> 0:04:57.480 this moment, there's geopolitical risk and it's interesting that, of 0:04:57.560 --> 0:04:59.880 course ARM has expo exposure. 0:04:59.440 --> 0:05:01.279 To China a head of global listings. 0:05:01.320 --> 0:05:05.240 How are you seeing the overall pushes and pulls of 0:05:05.240 --> 0:05:06.520 the global narrative right now? 0:05:06.720 --> 0:05:09.800 Yeah, Well, there's a lot of interest from global companies, 0:05:09.839 --> 0:05:12.719 a lot of interest from Chinese companies listening in the US, 0:05:13.320 --> 0:05:18.880 Latin America Emia. The market's really open in the United 0:05:18.920 --> 0:05:21.200 States and it's very recognized. 0:05:21.600 --> 0:05:24.520 I mean, the LSE recognizes this at this moment because 0:05:24.520 --> 0:05:26.640 it was It's a bit of pill for the London 0:05:26.640 --> 0:05:28.839 Stock Exchange to swallow today that they didn't manage to 0:05:28.839 --> 0:05:31.039 woo on there, given it's a UK based company. But 0:05:31.240 --> 0:05:33.760 I'm interested. You say, China and companies still want to 0:05:33.800 --> 0:05:36.880 come here. Are they not worried in any way about 0:05:36.920 --> 0:05:40.200 the closing of investor base to China, particularly in this 0:05:40.240 --> 0:05:41.520 current political environment. 0:05:41.880 --> 0:05:44.839 Yeah, I would just say it's a tricky time. But 0:05:45.760 --> 0:05:48.599 I think everyone recognizes that the US markets are the 0:05:48.600 --> 0:05:53.000 most liquid and everyone has to consider them when they're 0:05:53.000 --> 0:05:55.880 going public, regardless of where they are in the world. 0:05:56.560 --> 0:05:58.720 When we're looking at the companies that could come after 0:05:58.920 --> 0:06:02.400 in the next week, all so the instacrats, the clear views, 0:06:02.880 --> 0:06:06.280 I'm interested in. What is the recipe is a company 0:06:06.320 --> 0:06:10.480 having to demonstrate profit growth, having to demonstrate revenue growth 0:06:10.520 --> 0:06:12.200 to be able to access the market right now? 0:06:13.000 --> 0:06:16.080 I would say yes to both of those, and they 0:06:16.120 --> 0:06:22.200 also have to be priced at evaluation that accommodates for 0:06:22.240 --> 0:06:27.040 that growth or not. What about the overall desire? 0:06:27.080 --> 0:06:30.800 It feels like of Masiyoshi's son himself not wanted to 0:06:30.839 --> 0:06:32.400 go to the very top of a range he could 0:06:32.440 --> 0:06:35.560 have done. Did that speak to wanting to ensure that 0:06:35.600 --> 0:06:38.320 this share pop and what is the perfect price point 0:06:38.320 --> 0:06:40.720 there for? How do you see that art rather than science. 0:06:41.960 --> 0:06:45.680 I think his view is long term, right, It's the 0:06:45.800 --> 0:06:49.440 right thing to do for the long term, and I 0:06:49.480 --> 0:06:52.520 think you'll find that investors love to what we call 0:06:52.600 --> 0:06:54.719 it get a little bit of a kiss, and that 0:06:55.640 --> 0:06:58.239 not every dollar that could have been taken is taken 0:06:58.279 --> 0:07:00.640 by the company an ARM of course, is thinking about 0:07:00.640 --> 0:07:01.480 this for the long hole. 0:07:02.200 --> 0:07:05.279 In many ways, ARM has gone against the grain. They've 0:07:05.520 --> 0:07:07.880 had a democratization of the banks in the way in 0:07:07.880 --> 0:07:11.600 which they've been underwritten. But they've also ensure that there 0:07:11.600 --> 0:07:15.320 are those lynchpin investors, the apples, are tsmcs, the intels 0:07:15.360 --> 0:07:17.800 who are brought up this stock. Does that make it 0:07:18.200 --> 0:07:20.280 a recipe for others to try and follow suit in 0:07:20.320 --> 0:07:22.680 that way? How difficult is it to replicate? 0:07:25.080 --> 0:07:27.720 Well, there's a lot of different factors that go into 0:07:27.880 --> 0:07:32.239 a company's decision and how they put their book together, 0:07:32.520 --> 0:07:36.680 who their partners are. There's no one recipe that works 0:07:36.760 --> 0:07:39.160 for everybody, is what I would say. It really depends 0:07:39.280 --> 0:07:41.800 on the company, the advice that they're getting, and the 0:07:41.840 --> 0:07:44.480 decisions that they decide to make around that. 0:07:44.880 --> 0:07:46.920 And interesting, of course, ARM is very much a B 0:07:47.000 --> 0:07:49.080 to B play. We're going to see some more B 0:07:49.160 --> 0:07:52.440 two C names. Retail investors become important At that moment 0:07:52.520 --> 0:07:55.080 we think back to the mean stock crazes and the 0:07:55.120 --> 0:07:59.080 heavy days of twenty twenty to one. Will the retail 0:07:59.120 --> 0:08:01.760 investor be is crucial going into this next era of 0:08:01.800 --> 0:08:02.840 IPO opening. 0:08:03.360 --> 0:08:06.800 Yeah, I wouldn't say that they're crucial, but they What 0:08:06.960 --> 0:08:10.200 is important to recognize about the retail investor is they 0:08:10.240 --> 0:08:13.960 weren't an important part necessarily for a long period of time. 0:08:14.440 --> 0:08:18.280 They've become much more active, and I think it's exciting 0:08:18.560 --> 0:08:23.160 and it does democratize the process and everyone's able to participate, 0:08:23.160 --> 0:08:25.800 and so many more people got educated or took the 0:08:25.880 --> 0:08:28.520 time to get educated about the public markets and what 0:08:28.600 --> 0:08:31.480 that can really mean about your overall wealth. 0:08:32.040 --> 0:08:34.480 Karen Snin has been so wonderful hosting us here. Thank 0:08:34.520 --> 0:08:36.240 you very much. Indeed, thank you. It's great to have 0:08:36.360 --> 0:08:38.200 me a VP who's head of global listings right here 0:08:38.280 --> 0:08:40.199 than Nasdac Shanani Thatti. 0:08:40.320 --> 0:08:43.440 That's Bloomberg's Caroline hyd and Karen Snow, senior VP and 0:08:43.480 --> 0:08:45.280 global head of Listings at Nasdaq. 0:08:45.320 --> 0:08:45.880 Thank you both. 0:08:46.160 --> 0:08:49.080 Now let's turn to our own Bloomberg intelligence analyst, Kunjon 0:08:49.160 --> 0:08:53.080 Sabani for more on today's ARM listing. What's interesting to 0:08:53.160 --> 0:08:54.960 me is that if you look at the price indications 0:08:54.960 --> 0:08:57.839 at about fifty six dollars per share, that implies a 0:08:57.880 --> 0:09:02.080 valuation about sixty billion dollars dollar. Does ARM have a 0:09:02.120 --> 0:09:05.719 growth rate that justifies that type of a price tag. 0:09:06.720 --> 0:09:08.640 Well, not in the near term, but definitely in the 0:09:08.679 --> 0:09:12.600 long term. The evaluation implies that investors are underwriting the 0:09:12.720 --> 0:09:15.720 long term growth that it is expected to achieve from 0:09:15.800 --> 0:09:19.280 the fast growing markets of data center, AI and automotive, 0:09:19.480 --> 0:09:21.319 but the company is just getting started. 0:09:21.520 --> 0:09:24.679 For to scare the company, we actually are going to 0:09:25.520 --> 0:09:28.040 go to the ARM holding's actual price for a second 0:09:28.040 --> 0:09:30.000 before we get back to you on the valuation, because 0:09:30.040 --> 0:09:34.560 we are getting ARM trading live at fifty six dollars 0:09:34.600 --> 0:09:38.120 and ten cents a share, that is more than five 0:09:38.200 --> 0:09:40.360 dollars above its IPO price. 0:09:40.720 --> 0:09:44.440 There is your IPO pop that you're seeing for ARM holdings. 0:09:44.679 --> 0:09:46.960 Remember this is a fairly thin float that you were 0:09:47.000 --> 0:09:49.200 seeing for ARMS. So it did take a couple of 0:09:49.240 --> 0:09:52.560 hours to get the first trade moving for the underwriters 0:09:52.559 --> 0:09:54.120 and stabilization agent to. 0:09:54.080 --> 0:09:56.360 Make sure that the book was built just in time. 0:09:56.440 --> 0:10:00.400 And it is just about a smooth a day for 0:10:00.440 --> 0:10:02.760 an IPO in a year. 0:10:02.559 --> 0:10:04.679 Where we've had virtually no IPOs. 0:10:04.960 --> 0:10:08.120 At fifty six dollars and ten cents a share, you 0:10:08.160 --> 0:10:11.200 are looking at a company that is worth about sixty 0:10:11.360 --> 0:10:15.760 billion dollars. That is about fifty nine billion fifty nine 0:10:15.800 --> 0:10:19.720 point nine billion dollars in terms of valuation for ARM. 0:10:19.800 --> 0:10:21.880 We're going to turn out to Bloomberg's Abigail Doolittle to 0:10:21.920 --> 0:10:24.360 put this into perspective for us as we look for. 0:10:24.240 --> 0:10:27.280 A landmark day this year for ARM and the IPO market. 0:10:27.440 --> 0:10:29.520 Absolutely, Shanali and we do have a nice pop here 0:10:29.520 --> 0:10:31.920 for ARM right now trading higher by about nine point 0:10:32.000 --> 0:10:34.600 four percent. Of course, priced at fifty one dollars, there 0:10:34.720 --> 0:10:36.480 was the possibility that they were going to price it 0:10:36.520 --> 0:10:38.520 at fifty two, fifty three to fifty four dollars, but 0:10:38.640 --> 0:10:42.679 CEO Maciosa's son wanted to make sure that they weren't 0:10:42.720 --> 0:10:44.640 too greedy, and it seems like he and the bankers 0:10:44.679 --> 0:10:47.520 did a good job right now ten percent above raising 0:10:48.200 --> 0:10:51.120 the valuation on the actual IPO price at fifty one 0:10:51.160 --> 0:10:54.160 dollars at fifty four point five billion dollars, and of 0:10:54.160 --> 0:10:56.080 course this is the biggest IPO of the year. And 0:10:56.120 --> 0:10:59.120 the reason that matters is because back in last year 0:10:59.440 --> 0:11:01.720 there was rough one hundred and seventy nine billion dollars 0:11:01.840 --> 0:11:05.560 raised through the public markets. This year or the year 0:11:05.600 --> 0:11:07.839 prior to that, six hundred and thirty, there's been a 0:11:07.960 --> 0:11:10.280 drought this year, So the big question is is this 0:11:10.360 --> 0:11:13.080 IPO Will it stay successful through the close? Right now 0:11:13.080 --> 0:11:15.240 it looks very positive. Is it going to provide the 0:11:15.280 --> 0:11:19.000 support for Instacart next week along with clave Io and 0:11:19.040 --> 0:11:20.720 more importantly Shanale going. 0:11:20.559 --> 0:11:22.520 Into next year twenty twenty four? 0:11:22.920 --> 0:11:26.120 Is it going to create what investors, companies, bankers want 0:11:26.160 --> 0:11:29.360 to see relative to having the confidence that big, some 0:11:29.440 --> 0:11:32.040 big tech IPOs can go. Of course, we've had the 0:11:32.080 --> 0:11:33.920 setting over the last twelve months so of rise and 0:11:34.000 --> 0:11:38.199 rates inflation that makes some of these growth stocks riskier 0:11:38.720 --> 0:11:41.880 IPOs maybe less attractive. So again, right now we are 0:11:41.920 --> 0:11:46.040 looking at a positive opening here for arm holdings up 0:11:46.120 --> 0:11:50.400 nine point eight percent, an impressive IPO start right here on. 0:11:50.360 --> 0:11:52.480 The day, certainly about ten percent. That is a very 0:11:52.520 --> 0:11:55.440 healthy little pop you get there from the lights of 0:11:55.640 --> 0:11:59.239 Golden and JP Morgan Mazoojo Hall underwriting the deal alongside 0:11:59.440 --> 0:12:02.960 Barclays and the twenty some other banks involved in the deal. 0:12:02.960 --> 0:12:05.640 We're going to turn back now to Kunjohn's Kunjohn soa 0:12:05.760 --> 0:12:10.240 Bannie of Bloomberg Intelligence, to talk more about the evaluation here, 0:12:10.320 --> 0:12:13.040 because you are looking at a company at sixty billion 0:12:13.120 --> 0:12:16.959 dollars on its first day in public markets after its 0:12:17.000 --> 0:12:21.760 ownership of after its soft bank ownership, and that implies 0:12:21.880 --> 0:12:26.600 a twenty two point four times multiple two it's trailing sales. 0:12:26.679 --> 0:12:27.640 What does that mean to you? 0:12:28.920 --> 0:12:31.400 I mean, this is definitely in the premium and along 0:12:31.440 --> 0:12:34.480 with the semi design ippers and sort of the AI 0:12:34.559 --> 0:12:37.280 companies like in media. Like I was saying, it seems 0:12:37.280 --> 0:12:40.280 the investors are underwriting the future growth coming from these 0:12:40.320 --> 0:12:43.560 markets rather than the current revenue composition, which is heavily 0:12:43.800 --> 0:12:45.839 based on smartphone and consumer electronics. 0:12:45.880 --> 0:12:48.080 It's also a good day. Let's talk about that. It's 0:12:48.080 --> 0:12:49.960 a good day in the Market's Kanjohn, And so they're 0:12:50.040 --> 0:12:52.520 getting a little lucky here. They have relative calm. There 0:12:52.559 --> 0:12:55.880 was no crazy CPI print yesterday. Retail sales kept the 0:12:55.960 --> 0:12:57.400 market relatively calm. 0:12:57.520 --> 0:12:59.600 The vix is low. But there are a lot of 0:12:59.640 --> 0:13:00.960 risks on the horizon. 0:13:01.360 --> 0:13:03.880 If you are a new investor looking to arm, what 0:13:03.960 --> 0:13:06.880 are those risks that you should really be aware of 0:13:07.000 --> 0:13:09.160 impacting this valuation that we see today. 0:13:10.360 --> 0:13:12.400 Yeah, so in the near term, like I said, because 0:13:12.440 --> 0:13:15.440 the revenue composition is heavily relied on the smartphone, and 0:13:15.440 --> 0:13:18.320 we know that smartphone Michael's market is going through a 0:13:18.320 --> 0:13:20.560 slump right now, So as they come out for the 0:13:20.600 --> 0:13:24.560 near term quarters. You know, investors will have to be 0:13:24.720 --> 0:13:28.120 patient and face for some hurdles coming in the near 0:13:28.200 --> 0:13:31.240 term because those data center revenues will take time to 0:13:31.240 --> 0:13:34.200 become a significant portion of the total revenue. And the 0:13:34.240 --> 0:13:38.080 second key risk is China. From China, it's about two angles. 0:13:38.080 --> 0:13:40.440 One is the exposure and the concentration. I mean, they 0:13:40.480 --> 0:13:43.520 have twenty four percentage revenues coming from China, which is 0:13:43.559 --> 0:13:46.319 not a lot or not an outlier for any large 0:13:46.360 --> 0:13:49.080 semi company. I mean all of those have exposure in 0:13:49.120 --> 0:13:51.720 that range or even higher for a smartphone company. But 0:13:51.840 --> 0:13:55.000 the other key risk is concentration. So Armed China is 0:13:55.040 --> 0:13:58.199 their gateway to the entire China market. So every customer 0:13:58.280 --> 0:14:00.240 they sell what they want to sell in and now 0:14:00.240 --> 0:14:02.280 they have to go through this one entity. So if 0:14:02.280 --> 0:14:06.000 something were to really go south there, you're talking about 0:14:06.000 --> 0:14:08.360 cutting off the entier market. So that's the two risks 0:14:08.600 --> 0:14:09.920 investor needs to brace. 0:14:09.720 --> 0:14:12.079 Themselves for all or nothing. Feels a little risky. 0:14:12.080 --> 0:14:14.200 But at the same time, here when you think about 0:14:14.240 --> 0:14:16.280 the long term, you've said that a couple of times. Now, 0:14:16.600 --> 0:14:19.760 how long is the long term? When do investors have 0:14:19.840 --> 0:14:21.400 to be patient until. 0:14:22.840 --> 0:14:25.080 I think like at least about three years. I mean 0:14:25.160 --> 0:14:28.000 today when we look at the server market specifically, their 0:14:28.040 --> 0:14:31.240 market share is in mid single digits, and in automotive 0:14:31.280 --> 0:14:35.280 it's again low double digits. We expect it to almost 0:14:35.320 --> 0:14:38.400 double in three to five years. And these markets are large. 0:14:38.440 --> 0:14:41.080 So even if you get a small pie of like 0:14:41.120 --> 0:14:45.560 said data center AI market, that's still adding revenue north 0:14:45.560 --> 0:14:48.560 of billions of dollars to a company which is almost 0:14:48.560 --> 0:14:50.560 doing close to less than three billion last year. 0:14:50.840 --> 0:14:53.400 When you think about the competitive landscape at this point, 0:14:53.480 --> 0:14:56.680 you have an arm now in public markets softmake at 0:14:56.680 --> 0:15:00.040 some point we'll look to sell more shares. How do 0:15:00.120 --> 0:15:03.800 you expect them to stack up against their competitive set 0:15:03.840 --> 0:15:06.200 when it comes to how investors will put money to 0:15:06.240 --> 0:15:07.360 work in the sector. 0:15:08.480 --> 0:15:10.600 Yeah, I mean I think they need to continue executing 0:15:10.600 --> 0:15:13.080 on the promise that they would have delivered for that 0:15:13.280 --> 0:15:16.960 ramp and the roadshow presentation. So investors are going to 0:15:17.000 --> 0:15:19.480 be keeping key e on how they're doing in the 0:15:19.560 --> 0:15:23.400 data center in the automotive market. So any accelerated growth 0:15:23.440 --> 0:15:26.760 design wins there should be a tailwind for them how 0:15:26.840 --> 0:15:28.680 it had been in absence of that. 0:15:28.680 --> 0:15:32.280 That's Bloomberg Intelligence and Analysts Kunjohn Sovanni, thank you so 0:15:32.360 --> 0:15:34.880 much for your time. We're going to head back down 0:15:34.920 --> 0:15:37.640 to the NASDAC now where Bloomberg's Caroline Hyde is getting 0:15:37.720 --> 0:15:41.160 all the latest details. But Caroline, before those details, what's 0:15:41.200 --> 0:15:44.040 the mood. It must feel pretty good to be watching 0:15:44.080 --> 0:15:45.680 an ipo pop after such a big. 0:15:45.640 --> 0:15:47.320 Drought, Shanali. 0:15:47.440 --> 0:15:51.480 The relief, the optimism, cautious optimism. I mean, now that 0:15:51.480 --> 0:15:54.240 they've seen this trade exit behind me, we're currently training 0:15:54.320 --> 0:15:56.640 up more than thirteen percent. It was this art and 0:15:56.760 --> 0:15:59.360 science balance that everyone has to remind themselves of. It 0:15:59.400 --> 0:16:01.200 takes a while to ensure that they've got the right 0:16:01.240 --> 0:16:05.000 amount basically sellers in place. In this particular instance, the 0:16:05.080 --> 0:16:07.080 issue is is, of course they got what seven hundred 0:16:07.080 --> 0:16:11.000 million dollars being taken down by some really important investors 0:16:11.000 --> 0:16:13.400 who are basically customers Apple and Video, and they're like, 0:16:13.640 --> 0:16:15.360 but they've also got to ensure that some people are 0:16:15.400 --> 0:16:17.600 going to be putting the less than ten percent free 0:16:17.600 --> 0:16:20.160 float up for sale at this moment and locking in 0:16:20.200 --> 0:16:22.120 some of the profits. Now, it's been a big profit 0:16:22.160 --> 0:16:24.600 for SoftBank. You know that they've made about seventy percent 0:16:24.680 --> 0:16:27.040 on this particular purchase that they made of thirty two 0:16:27.040 --> 0:16:29.680 billion dollars for arm back in twenty sixteen. But this 0:16:29.880 --> 0:16:32.360 is so important for the sentiment of the market. The 0:16:32.400 --> 0:16:34.560 fact that they've managed to decide to go in lower 0:16:34.600 --> 0:16:36.560 fifty one dollars was just at the top of them range. 0:16:36.600 --> 0:16:38.960 They didn't get greedy, and they've decided to price it 0:16:39.000 --> 0:16:41.160 and put fifty six dollars therefore to allow it to 0:16:41.160 --> 0:16:42.880 continue to trade higher for the rest of the day. 0:16:43.240 --> 0:16:46.040 That's what instacart, that's what some of the other companies 0:16:46.120 --> 0:16:47.200 eyeing this market need. 0:16:47.120 --> 0:16:50.040 To see a ten percent pop. Rather, it looks a 0:16:50.080 --> 0:16:52.680 lot better here than an eight percent pop would. Do 0:16:52.680 --> 0:16:55.440 you think this conservatism that they've took in their underwriting 0:16:55.480 --> 0:16:59.360 approach to the IPO price last night is what's going 0:16:59.440 --> 0:17:02.280 to be the name of the game for the companies 0:17:02.280 --> 0:17:02.800 coming up. 0:17:03.480 --> 0:17:07.080 That's what's so interesting is this idiosyncratic is this massa 0:17:07.359 --> 0:17:09.919 head of soft pank who apparently we understand due to 0:17:09.960 --> 0:17:13.239 our reporting, really took some charge in this deciding that 0:17:13.280 --> 0:17:15.720 they weren't going to go for the fifty two dollars, 0:17:15.760 --> 0:17:17.840 they were going to stick to fifty one to ensure 0:17:17.880 --> 0:17:21.080 that they got that really good gauge of sentiment. He 0:17:21.200 --> 0:17:23.160 is a long term holder of this stock. He said 0:17:23.200 --> 0:17:25.520 that time and time again. Yes, he wants to see 0:17:25.560 --> 0:17:27.919 that some valuation increase in the near term, but in 0:17:27.960 --> 0:17:30.200 the longer term too. Maybe, as you were just mentioning 0:17:30.240 --> 0:17:32.840 with a previous guest, maybe he offloads more stop. Maybe 0:17:32.840 --> 0:17:35.960 he uses it as collateral for further financial engineering that 0:17:36.000 --> 0:17:38.760 we know that he is so artful at and I 0:17:38.800 --> 0:17:41.040 think that we will see the likes of Instacart and 0:17:41.040 --> 0:17:43.840 some of the other companies eyeing having to decide whether 0:17:43.920 --> 0:17:45.840 or not they want to take long term perspective leave 0:17:45.880 --> 0:17:48.119 a little bit of money on the table to ensure 0:17:48.119 --> 0:17:52.200 that their company comes with a good set of pop 0:17:52.320 --> 0:17:56.000 into the market that then continues to have that demand side. 0:17:56.000 --> 0:17:59.120 We know that there's loads of concerns, geopolitical risks being 0:17:59.160 --> 0:18:01.919 one of them, anxiety around interest rates. This has been 0:18:01.960 --> 0:18:03.560 a volatile market for a long time. 0:18:03.760 --> 0:18:04.280 People who are. 0:18:04.240 --> 0:18:06.360 Waiting for this IPO window to open, and they want 0:18:06.400 --> 0:18:08.840 to see it continue to be open until as we 0:18:08.920 --> 0:18:11.880 had Karen Snowsey before the elections of next year. 0:18:13.119 --> 0:18:15.680 Bloomberg's Caroline Hyde, we thank you so very much for 0:18:15.800 --> 0:18:18.200 all your time and what perfect timing we have had 0:18:18.240 --> 0:18:20.159 you at the top of the show while the stock 0:18:20.320 --> 0:18:23.240 has opened. Now let's continue the conversation on venture capital 0:18:23.280 --> 0:18:26.160 and bring in Bloomberg's Katie Roof, because what a win 0:18:26.800 --> 0:18:30.320 for stopping They needed a win, and so then having 0:18:30.440 --> 0:18:32.560 this on the books, now, what does it mean for 0:18:32.600 --> 0:18:36.199 not only their portfolio company, but also the appetite for 0:18:36.240 --> 0:18:38.960 other vcs who are now looking to get some money 0:18:39.000 --> 0:18:40.359 back on the table for themselves. 0:18:41.080 --> 0:18:43.400 Sure, yeah, so I think you know, this is obviously 0:18:43.440 --> 0:18:46.159 a positive sign for tech broadly. You know, we have 0:18:46.240 --> 0:18:48.560 Claview coming up next week, We have Instacart coming up 0:18:48.600 --> 0:18:51.760 next week, and so we want to see public investors 0:18:51.840 --> 0:18:54.840 or they want to see public investors with enthusiasm for 0:18:54.960 --> 0:18:58.679 tech stocks. I would say that a ten percent pop 0:18:58.760 --> 0:19:00.760 isn't a big pop. I mean, I mean typically you 0:19:00.800 --> 0:19:04.160 would see twenty to thirty percent pop on day one. 0:19:04.240 --> 0:19:06.280 I mean, there have been times that it's gone higher, 0:19:06.320 --> 0:19:09.399 but usually the goal is a little bit higher than 0:19:09.440 --> 0:19:11.680 ten percent. But you know, the fact that it went 0:19:11.800 --> 0:19:14.520 up is good because there aren't a lot of tech 0:19:14.560 --> 0:19:17.120 stocks that have gone up in the last eighteen months. 0:19:17.280 --> 0:19:20.520 This is the only big tech IPO we've had since 0:19:20.520 --> 0:19:23.479 twenty twenty one, so people are watching this one closely, 0:19:23.520 --> 0:19:26.240 even though it is a pretty different sector than a 0:19:26.240 --> 0:19:28.600 lot of the other tech companies and certainly the venture 0:19:28.640 --> 0:19:29.240 back companies. 0:19:29.320 --> 0:19:30.080 What about the approach. 0:19:30.080 --> 0:19:32.480 We're talking a little bit about pricing, but what about ownership. 0:19:32.600 --> 0:19:35.240 In this instance, SoftBank is only floating about ten percent 0:19:35.800 --> 0:19:38.359 in the last twenty four hours. A lot of agitas 0:19:38.400 --> 0:19:41.360 about there. It's about vcs holding on too long into 0:19:41.359 --> 0:19:45.200 an ipo. Investors want their money back. So do you 0:19:45.280 --> 0:19:47.879 expect more investors to start doing that? 0:19:48.480 --> 0:19:49.720 Yeah, sometimes we've seen this. 0:19:50.080 --> 0:19:52.800 You know, it's called a low float IPO, where you 0:19:52.840 --> 0:19:55.679 just take a a small percentage of the company and 0:19:55.760 --> 0:19:59.280 release it to the public. And that is actually often 0:19:59.320 --> 0:20:03.680 designed help ensure a better pop because you know, if 0:20:03.720 --> 0:20:10.720 you limit supply, then it can kind of artificially raise demand, 0:20:10.960 --> 0:20:14.200 and so we've seen that in the past. I think 0:20:14.200 --> 0:20:17.639 that right now, certainly most tech companies would probably be 0:20:17.760 --> 0:20:20.880 wise to price these things conservatively, or at least that's 0:20:20.880 --> 0:20:23.959 what people are telling me, because yeah, you know, it 0:20:24.000 --> 0:20:27.520 can if you make a bad first impression on the market, 0:20:27.840 --> 0:20:29.760 it can spook investors in the long run. 0:20:29.920 --> 0:20:31.240 Katie, I've got to say, it's so nice to have 0:20:31.280 --> 0:20:32.880 you in New York for a big listening in New 0:20:32.960 --> 0:20:35.520 York from an international company. But also I know that 0:20:35.560 --> 0:20:37.040 you've been kind of running around doing a lot of report. 0:20:37.040 --> 0:20:38.320 I got to do a little bit of the reporting 0:20:38.359 --> 0:20:40.920 with you. What's the new name of the game. It's 0:20:40.960 --> 0:20:43.400 not just about profitability, is it? When we think about 0:20:43.400 --> 0:20:45.800 the companies that are looking to list, and the window 0:20:45.800 --> 0:20:48.639 doesn't seem to be as open as people think it is. 0:20:48.880 --> 0:20:51.560 Yeah, that's a big question on everyone's minds right now 0:20:51.600 --> 0:20:53.200 because vcs tend. 0:20:53.000 --> 0:20:54.080 To be growth investors. 0:20:54.119 --> 0:20:57.600 They really look at companies with top line revenue growth, 0:20:57.800 --> 0:21:00.720 and that was what public investors see to be interested 0:21:00.800 --> 0:21:02.800 in a couple of years ago, but then there's been 0:21:02.840 --> 0:21:05.240 a perception that that changed and that they care more 0:21:05.240 --> 0:21:08.000 about profitability. But vcs will tell you that that's at 0:21:08.000 --> 0:21:10.359 odds with growth because if you have to cut you know, 0:21:10.359 --> 0:21:13.120 your sales and marketing to be profitable, then that will. 0:21:13.560 --> 0:21:14.919 Reduce your growth rates. 0:21:14.920 --> 0:21:17.560 And so we see with Instacart that they are profitable 0:21:17.920 --> 0:21:20.919 in line with what the perception of what tech public 0:21:20.920 --> 0:21:24.000 investors want, but they have had slowed growth, and so 0:21:24.080 --> 0:21:26.359 that's going to be one that people are watching. You 0:21:26.400 --> 0:21:28.280 have Klavio, on the other hand, where they're both growing 0:21:28.320 --> 0:21:30.639 and profitable, so we'll see. 0:21:30.680 --> 0:21:32.280 How do you think about the next week ahead. 0:21:32.480 --> 0:21:34.240 Obviously the bankers are going to be very busy on 0:21:34.320 --> 0:21:35.920 roadshows for both of these companies. 0:21:35.920 --> 0:21:36.800 What's the timeline? 0:21:37.560 --> 0:21:40.119 Yeah, so, I mean right now we have the roadshows 0:21:40.200 --> 0:21:43.359 for Instacart and Clavio underway, and they're both scheduled to 0:21:43.400 --> 0:21:45.760 go next week around the same time. 0:21:46.119 --> 0:21:49.200 So another thing also that has just happened is Data 0:21:49.240 --> 0:21:52.600 Bricks raising more money at a forty three billion dollars evaluation. 0:21:52.680 --> 0:21:53.119 I believe. 0:21:53.560 --> 0:21:56.240 What does this mean because you saw other companies kind 0:21:56.240 --> 0:21:58.679 of raise money pre ipo, does it change the pre 0:21:58.760 --> 0:22:01.160 I pipo appetite as well? 0:22:01.960 --> 0:22:05.400 Yeah, so, a lot of companies other than AI companies, 0:22:05.440 --> 0:22:08.600 pretty much no one has been able to raise a 0:22:08.840 --> 0:22:12.600 high valuations or at least even flat valuations in the 0:22:12.680 --> 0:22:13.600 last year or so. 0:22:13.680 --> 0:22:15.040 There's been very very few. 0:22:15.600 --> 0:22:18.480 Data Breaks is a company that has a lot of 0:22:18.560 --> 0:22:22.760 investor interest, so even though the price is already high. 0:22:22.560 --> 0:22:24.000 They've been able to sustain that. 0:22:25.240 --> 0:22:28.520 Typically, when I see a company like this raising money, 0:22:28.600 --> 0:22:31.080 I think they're not on the verge of IPO. I mean, 0:22:31.160 --> 0:22:33.560 certainly they could go public in the next year, but 0:22:33.960 --> 0:22:36.440 you wouldn't want to dilute your ownership in the next 0:22:36.560 --> 0:22:38.760 few months before an IPO unless we're going to do. 0:22:38.680 --> 0:22:42.640 A direct listing that is Bloomberg's Katie Roof. We thank 0:22:42.680 --> 0:22:44.720 you so very much for your time. We want to 0:22:44.760 --> 0:22:47.280 give you an update as well on where ARM is trading. 0:22:47.280 --> 0:22:50.320 We are looking at that IPO pop still holding. 0:22:50.680 --> 0:22:50.920 Now. 0:22:51.119 --> 0:22:54.639 Listen, remember this has been rising as much as fifteen percent. 0:22:54.720 --> 0:22:57.200 We are seeing some of those gains a little bit volatile, 0:22:57.200 --> 0:22:59.720 but remember we did see initially that pop of about 0:22:59.720 --> 0:23:02.040 ten percent. If you take a look at trading now, 0:23:02.040 --> 0:23:05.080 we are looking at a stock now very much up more. 0:23:04.920 --> 0:23:06.200 Than sixty dollars a share. 0:23:06.359 --> 0:23:10.360 This was a stock that was priced at fifty one dollars. 0:23:10.400 --> 0:23:13.480 It was a Masa son that himself told the bankers 0:23:13.680 --> 0:23:16.960 that he wanted to keep this more conservatively priced. They 0:23:17.040 --> 0:23:19.040 tried to bring it up about a dollar to fifty 0:23:19.080 --> 0:23:22.040 two dollars a share. But bringing it down has not 0:23:22.280 --> 0:23:25.399 only given it an initial pop, it is a little 0:23:25.440 --> 0:23:26.920 more than what it would have been if they priced 0:23:26.960 --> 0:23:29.399 it higher. Now remember also to the point that our 0:23:29.440 --> 0:23:32.480 own Katie Roof was making. There have certainly been bigger 0:23:32.520 --> 0:23:35.080 pops in history but there were questions coming into this 0:23:35.160 --> 0:23:36.960 IPO from the beginning. 0:23:36.880 --> 0:23:38.600 About the valuation itself. 0:23:38.800 --> 0:23:41.119 So you know what, this is something that is stopped 0:23:41.320 --> 0:23:43.720 sacking up for a win for the underwriters and certainly 0:23:43.840 --> 0:23:46.600 for soft Bank. Now let's get more contacts from Bloomberg's 0:23:46.600 --> 0:23:47.120 Ian King. 0:23:47.520 --> 0:23:47.720 Ian. 0:23:47.760 --> 0:23:50.000 When you take a look at the competitive dynamics that 0:23:50.119 --> 0:23:52.199 ARM is facing, why do you think that it is 0:23:52.280 --> 0:23:55.120 getting such a warm reaction in public markets. 0:23:55.880 --> 0:23:58.720 Well, I mean, there are a couple of things going on, Sonali. 0:23:58.720 --> 0:24:02.360 There are the set of the mechanics of the IPO itself. 0:24:02.480 --> 0:24:04.800 Remember this is just a very small portion of the 0:24:04.800 --> 0:24:08.720 company that's being offered. There are strategic investors already involved, 0:24:08.720 --> 0:24:13.200 so there's relatively little kind of supply here in terms 0:24:13.200 --> 0:24:15.879 of the supply demand balance on the stock. But on 0:24:15.920 --> 0:24:18.320 the flip side of it, we're also IPO and at 0:24:18.320 --> 0:24:21.600 a time when people are very interested in semiconductor shares. 0:24:21.680 --> 0:24:25.960 You know, the Philadelphia semiconductor indexes up very strongly this year, 0:24:26.000 --> 0:24:29.760 and obviously everybody's very focused on the opportunity that AI 0:24:29.920 --> 0:24:31.320 is creating for these companies. 0:24:32.200 --> 0:24:32.679 What about the. 0:24:32.680 --> 0:24:36.040 Competitive dynamics, given that they're getting such a warm reaction today, 0:24:36.040 --> 0:24:38.399 do you think that this is excitement around the new 0:24:38.480 --> 0:24:40.760 kid on the block, or is this an idea that 0:24:40.840 --> 0:24:44.280 we'll keep sending the other shares higher as well. 0:24:44.320 --> 0:24:47.440 I mean, it's a yes and no to that. They're 0:24:47.480 --> 0:24:49.800 really not the new kid on the block. Everybody knows 0:24:49.800 --> 0:24:53.840 about They've been around a long time. Their technology is 0:24:53.880 --> 0:24:56.320 pretty much everywhere. It's used by all of the major 0:24:56.320 --> 0:25:00.159 tip makers. At the same time, they are pitching themselves 0:25:00.000 --> 0:25:03.840 a different company that does way more than just sell 0:25:03.960 --> 0:25:08.199 the bare bones of the IP that goes into these chips. 0:25:08.240 --> 0:25:11.640 You know, they're selling themselves as being much more comprehensive 0:25:11.680 --> 0:25:15.920 company and having access to higher profit margins. 0:25:15.640 --> 0:25:18.320 Quickly in here, what about the soft Bank ownership, Given 0:25:18.359 --> 0:25:20.680 they've only floated about ten percent, they will sell more 0:25:20.720 --> 0:25:24.359 eventually over time, But the governance all points to soft Bank. 0:25:24.600 --> 0:25:25.919 Is that a plus or a minus? 0:25:27.440 --> 0:25:30.520 It's a variable. I think that's the way to describe it. Obviously, 0:25:30.720 --> 0:25:33.240 soft Bank will do what Soft Bank does in terms 0:25:33.280 --> 0:25:37.240 of maximizing its profits down the line. It's an investor, 0:25:38.359 --> 0:25:40.520 it's as much as it is a technology company. So 0:25:40.560 --> 0:25:45.040 that's definitely an overhanger or a consideration on armed But 0:25:45.600 --> 0:25:47.919 at the same time it also gives them perhaps some 0:25:48.000 --> 0:25:50.640 latitude that other publicly traded companies might not have. 0:25:52.160 --> 0:25:53.920 Our thanks to Bloomberg's Ian King. 0:25:54.240 --> 0:25:56.320 We want to touch back in one more time here 0:25:56.359 --> 0:25:58.560 on ARMS share before we had to commercial break, because 0:25:58.560 --> 0:26:01.640 we are looking at that i IPO pop. Not only 0:26:01.720 --> 0:26:04.080 is the IPO market back, it is back in time 0:26:04.200 --> 0:26:07.439 for cooler markets. When we're looking at sixty one dollars 0:26:07.520 --> 0:26:09.920 a share here, we are looking at a price here 0:26:09.960 --> 0:26:13.080 that is almost twenty percent now more than what we 0:26:13.119 --> 0:26:18.040 initially had come to price at just last night. Now, 0:26:18.080 --> 0:26:20.400 what does this mean in terms of valuation? You are 0:26:20.480 --> 0:26:25.760 watching a company shoot higher, very quickly, closer to sixty 0:26:25.760 --> 0:26:29.320 five billion dollars in valuation. The current valuation at sixty 0:26:29.359 --> 0:26:32.800 five billion dollars would be a little bit higher than 0:26:32.840 --> 0:26:36.720 what SoftBank had brought back its Arms stake for just. 0:26:36.800 --> 0:26:40.080 A couple of weeks ago. This is Bloomberg. 0:26:53.119 --> 0:26:56.040 Welcome back to Bloomberg Technology. I'm Shinali Bask. We're going 0:26:56.080 --> 0:26:58.720 to look quickly at that arm ipo price once again. 0:26:58.840 --> 0:27:02.160 That first day of trading, you're getting that IPO pop. 0:27:02.200 --> 0:27:04.240 You're getting almost a twenty percent pop in the first 0:27:04.280 --> 0:27:08.160 day of trading so far, that is about sixty dollars 0:27:08.160 --> 0:27:11.240 a share, and it is up immediately from the fifty 0:27:11.280 --> 0:27:14.480 one at priced at at more than sixty billion dollars 0:27:14.480 --> 0:27:17.240 in valuation. You are getting a price very near what 0:27:17.400 --> 0:27:21.240 SoftBank had bought back its stake for in ARM. We're 0:27:21.240 --> 0:27:23.240 going to now bring in Aja Shah for his read 0:27:23.280 --> 0:27:25.159 on this. He's the managing director and co head of 0:27:25.240 --> 0:27:29.320 the Technology, Media and Telecommunications Group for Deutsche Bank, one 0:27:29.359 --> 0:27:32.440 of the underwriters on the ARM IPO. When you look 0:27:32.480 --> 0:27:35.480 at what has happened today, what does it really mean 0:27:35.560 --> 0:27:36.360 in terms. 0:27:36.080 --> 0:27:38.199 Of the companies that can finally make it back to 0:27:38.280 --> 0:27:39.800 market next? 0:27:47.160 --> 0:27:49.200 Sorry, sorry about that, hey. 0:27:49.000 --> 0:27:51.760 Aja, Actually we are gonna get right back to you, 0:27:51.840 --> 0:27:54.320 because we are standing by with a pretty key guest. 0:27:54.280 --> 0:27:55.160 For a day like today. 0:27:55.160 --> 0:27:57.080 That is ARM CEO. 0:27:56.760 --> 0:28:00.320 Rene Has with our own Caroline Hide, Caroline and Ali. 0:28:00.400 --> 0:28:02.760 It is great to be here with Renee, the CEO 0:28:02.840 --> 0:28:05.679 of ARM. It is your day and they talk to 0:28:05.760 --> 0:28:10.280 us about the amount of emails, phone calls, text messages, celebrations, 0:28:10.320 --> 0:28:13.920 the Cambridge part of your company going berserk. 0:28:14.000 --> 0:28:14.679 How does it feel? 0:28:14.760 --> 0:28:17.000 Oh gosh, what an exciting day. You know, I'm hearing 0:28:17.000 --> 0:28:18.680 from high school friends. I have not talked to in 0:28:18.680 --> 0:28:20.520 a long time. Who are saying you never told me? 0:28:21.200 --> 0:28:24.000 I think as we were watching this on TV. But 0:28:24.280 --> 0:28:26.760 most of all, I'm so thrilled for the employees of ARM, 0:28:27.440 --> 0:28:31.520 thirty three year old company, great heritage, but watching all 0:28:31.560 --> 0:28:35.400 the employees in Cambridge celebrate simultaneously that was that was magical. 0:28:35.200 --> 0:28:37.359 And they might continue to celebrate as we see what 0:28:37.520 --> 0:28:42.040 seventeen eighteen percent increase. How has that journey of going 0:28:42.040 --> 0:28:44.760 out to investors the road show, the story that you've 0:28:44.760 --> 0:28:47.360 been able seemingly to successfully sell, the fact that you're 0:28:47.400 --> 0:28:49.640 trading well on this day. What was the vision they 0:28:49.640 --> 0:28:50.120 wanted to hear? 0:28:50.480 --> 0:28:51.240 Revenue growth? 0:28:51.280 --> 0:28:53.320 I hear of eleven percent up to twenty five percent 0:28:53.360 --> 0:28:54.160 in the next couple of years. 0:28:54.160 --> 0:28:54.720 What drives you? 0:28:55.040 --> 0:28:58.200 I think it was a great process. Investors really wanted 0:28:58.200 --> 0:29:00.360 to understand the opportunity we had in front of us, 0:29:00.520 --> 0:29:02.680 and of course AI, which you can't really talk about 0:29:02.680 --> 0:29:05.680 our industry without talking about AI. And I think helping 0:29:05.680 --> 0:29:09.480 them understand that you can't really run AI without ARM, 0:29:09.560 --> 0:29:11.920 without a CPU, and just pointing out to them that 0:29:11.960 --> 0:29:14.600 it's in everywhere, in every device that people touch, was 0:29:14.640 --> 0:29:16.160 a big part of the process for us. 0:29:16.000 --> 0:29:19.200 Because everyone has made the equivalent of your smartphone. It's 0:29:19.240 --> 0:29:22.200 completely absorbed, more than ninety percent of phones is where 0:29:22.200 --> 0:29:25.000 your CPUs are. But the design, the fact that you 0:29:25.040 --> 0:29:27.240 now want to be integral to data centers, and they're like, 0:29:28.520 --> 0:29:31.440 how certain are you on the revenue vision, on the 0:29:31.480 --> 0:29:35.560 profitability vision, even though we see concerns about macro environment 0:29:35.640 --> 0:29:38.120 still and whether or not we're in an AI hype cycle. 0:29:38.320 --> 0:29:42.320 Yeah, so AI is everywhere, and if it's your edge 0:29:42.320 --> 0:29:46.360 device like the Assistant or the Alexa or your autonomous vehicle, 0:29:46.400 --> 0:29:49.240 that's all AI. And now we're seeing it in the cloud, 0:29:49.280 --> 0:29:51.160 in the data center and all the growth with Nvidia 0:29:51.240 --> 0:29:53.560 in VideA announcing one of their newest products, grace Hopper, 0:29:53.880 --> 0:29:56.320 that is based on ARM. So ARM is everywhere relative 0:29:56.360 --> 0:29:59.040 to AI. We also have a very unique business model 0:29:59.280 --> 0:30:01.240 that gives us the ability to have a very very 0:30:01.240 --> 0:30:03.600 good vision in the future in terms of when people 0:30:03.680 --> 0:30:06.920 use our products. So relative to our confidence in the outlook, 0:30:07.640 --> 0:30:09.680 we have a very very high confidence that the growth 0:30:09.760 --> 0:30:11.480 rate that we have talked about will be sustained. 0:30:11.960 --> 0:30:14.480 How Ward, were investeds about China and your exposure. 0:30:14.640 --> 0:30:15.960 I think there were a lot of questions as you 0:30:15.960 --> 0:30:19.800 can imagine about China in general, given all the geopolitics, 0:30:19.920 --> 0:30:21.800 our business there looks a lot like the rest of 0:30:21.840 --> 0:30:24.040 the world. We have great growth in the data center, 0:30:24.080 --> 0:30:27.480 we have great growth in automotive. China's huge on electric vehicles, 0:30:27.480 --> 0:30:30.040 so it's been terrific there for us. I have the 0:30:30.040 --> 0:30:32.800 same kind of headaches that every other tech CEO has 0:30:32.880 --> 0:30:35.560 regarding how to navigate through this, but no different. 0:30:36.560 --> 0:30:38.640 Do you think there will be more pressure now that 0:30:38.680 --> 0:30:39.719 you're public again? 0:30:39.880 --> 0:30:40.320 Ultimately? 0:30:40.360 --> 0:30:43.400 I mean you came to ARM in twenty thirteen, you 0:30:43.440 --> 0:30:45.280 were listed at that point, but it's not Bean Sin's 0:30:45.320 --> 0:30:47.240 twenty sixteen that you have been How does the game 0:30:47.360 --> 0:30:49.160 change as a leader of that business now? 0:30:49.440 --> 0:30:51.040 Yeah, I think there's some things that we were able 0:30:51.040 --> 0:30:53.320 to do as a private company that will just be different. Right, 0:30:53.480 --> 0:30:56.320 quarterly earnings, making sure that we hit all our commitments. 0:30:56.760 --> 0:30:58.760 But ARM is not a business you measure from quarter 0:30:58.800 --> 0:31:02.560 to quarter. Measure us over years and decades, and the 0:31:02.640 --> 0:31:04.840 long term vision is something that I am very, very 0:31:04.840 --> 0:31:06.800 passionate about, and we'll continue to drive the company the 0:31:06.800 --> 0:31:08.400 same way private or public. 0:31:08.880 --> 0:31:11.640 You have a lot of key vested interests, whether they 0:31:11.920 --> 0:31:15.240 be your clients, APPLETSMC and TELL taking big stakes in 0:31:15.280 --> 0:31:19.480 the company today? How important are those voices? Visa the masses, 0:31:19.840 --> 0:31:21.640 the head of soft Bank. I'm sure you're on the 0:31:21.640 --> 0:31:22.320 phone too daily. 0:31:22.560 --> 0:31:25.120 Yeah. So one of the challenges of our industry I'm 0:31:25.120 --> 0:31:27.640 familiar with ARM, is that the fact that we're everywhere. 0:31:28.240 --> 0:31:30.240 None of this works unless we play nice with others. 0:31:30.600 --> 0:31:33.120 So we have to have a lot of engagement with 0:31:33.120 --> 0:31:36.080 strategic partners and making sure that we're managing that balance, 0:31:36.280 --> 0:31:38.200 including Masa, our chief shareholder. 0:31:38.960 --> 0:31:41.719 Do you think he lets more of ARM become public? 0:31:41.840 --> 0:31:42.640 Is that something you'd like. 0:31:42.640 --> 0:31:43.560 To see you now? 0:31:43.800 --> 0:31:46.520 Massa and I talk quite frequently, but it's really not 0:31:46.560 --> 0:31:48.880 about the day to day. It's about the long term vision, 0:31:48.920 --> 0:31:51.600 the passion that he and I have about the future 0:31:51.640 --> 0:31:54.000 and really about what this company can be long term. 0:31:54.120 --> 0:31:56.760 So I don't expect that to change being a public company. 0:31:56.880 --> 0:31:58.520 Do you think you go public in the UK? I'm 0:31:58.520 --> 0:31:59.760 sure it's been a bit of sweet for the London 0:31:59.760 --> 0:32:00.640 Stuff Exchange today. 0:32:00.720 --> 0:32:00.920 Yeah. 0:32:00.920 --> 0:32:03.680 So today obviously we're in New York, but we're incredibly 0:32:03.720 --> 0:32:06.040 proud of our UK heritage and we are opening to 0:32:06.120 --> 0:32:07.240 considering that down the road. 0:32:07.520 --> 0:32:09.320 Okay, any sort of timeframe for that. 0:32:09.720 --> 0:32:11.320 None that we can talk about today. I'm trying to 0:32:11.320 --> 0:32:12.040 get through today. 0:32:11.840 --> 0:32:14.200 A little bit well before you get through today. In 0:32:14.200 --> 0:32:20.040 that respect, investors do love all things regarding artificial intelligence, 0:32:20.080 --> 0:32:22.840 But how have you managed to land that your story 0:32:22.960 --> 0:32:25.800 is different? People have been so exuberant about Nvidia, where 0:32:25.840 --> 0:32:30.520 you used to work, but they're really exuberant about GPUs. 0:32:31.160 --> 0:32:33.840 How have you said that you are able to claim 0:32:34.120 --> 0:32:37.760 a larger royalty share of how AI continues to be said? 0:32:37.840 --> 0:32:39.800 Yeah, So one of the benefits of the road show 0:32:39.880 --> 0:32:42.200 was spending a lot of time with investors talking about 0:32:42.200 --> 0:32:44.120 AI and where we fit. And I think one of 0:32:44.160 --> 0:32:47.440 the misconceptions is that a GPU can run without a CPU, 0:32:47.960 --> 0:32:50.360 which is just not the case. The CPU is central 0:32:50.400 --> 0:32:53.360 to every electronics device and there are devices that ship 0:32:53.400 --> 0:32:57.120 with a CPU and a GPU. So once investors kind 0:32:57.120 --> 0:33:00.000 of got that, then explaining where the puck was going 0:33:00.080 --> 0:33:03.680 relative to gosh, in Vidia's next generation host advanced product, 0:33:03.680 --> 0:33:07.000 grace Hopper, is using ARM CPUs instead of the competition, 0:33:07.360 --> 0:33:09.480 the light bulb went on that, oh my gosh, you 0:33:09.560 --> 0:33:11.760 need the CPU. And at the same time, in Video 0:33:11.760 --> 0:33:13.400 has made a big bet on ARM in their most 0:33:13.440 --> 0:33:16.600 sophisticated product, and once that message kind of sunk through, 0:33:17.600 --> 0:33:19.520 the light bulb went on as oh my gosh, I 0:33:19.560 --> 0:33:19.880 get it. 0:33:21.040 --> 0:33:24.800 There has been this moment though, at which we're trying 0:33:24.840 --> 0:33:29.000 to understand how the landscape works with global demand and 0:33:29.040 --> 0:33:31.800 that translating into revenue. When you think of Oracle's numbers 0:33:31.840 --> 0:33:34.280 that came in and look, they delivered thirty percent increase 0:33:34.320 --> 0:33:36.960 when it comes to their cloud provision and their AI bet, 0:33:37.040 --> 0:33:39.480 but it doesn't always immediately turn into revenue in the 0:33:39.520 --> 0:33:42.320 here and the now. How convinced are you that it 0:33:42.400 --> 0:33:44.760 is going to be in the bottom line evident in 0:33:44.800 --> 0:33:45.800 the next coming quarters. 0:33:45.840 --> 0:33:50.040 As far as AI, oh, I think it's un questionable 0:33:50.040 --> 0:33:52.840 that AI, which has already been here right for a 0:33:52.920 --> 0:33:56.800 number of years, the chat CHEPD moment taught us that, 0:33:56.880 --> 0:33:58.920 oh my gosh, the capability of what this can do 0:33:59.000 --> 0:34:01.760 going forward has gone up a level. And I think 0:34:01.800 --> 0:34:04.160 we've seen that over and over in our industry. There 0:34:04.200 --> 0:34:07.240 tends to be lightning bolt moments that greatly accelerate the 0:34:07.240 --> 0:34:09.840 adoption of technology, and I think with AI, as you 0:34:09.880 --> 0:34:13.360 move towards AGI computers that can think, I think we 0:34:13.440 --> 0:34:16.279 now have seen an accelerant for that ultimately down the 0:34:16.320 --> 0:34:18.799 road how people make money off that. It'll get figured out. 0:34:19.600 --> 0:34:22.359 But AI is here to stay. That's unquestionable. 0:34:22.640 --> 0:34:25.959 And it seems as though you're integral to SoftBank's vision 0:34:26.040 --> 0:34:30.719 of AI and Massa's vision of AI. How can you 0:34:30.719 --> 0:34:32.800 announce it a little bit? You say, talking to him daily, 0:34:33.080 --> 0:34:36.080 what his vision of ARM within the ecosystem going forward 0:34:36.080 --> 0:34:36.560 really is? 0:34:37.680 --> 0:34:40.600 He and I share a very same view that ARM 0:34:40.719 --> 0:34:43.960 is one of the most important technology companies in our industry, 0:34:44.200 --> 0:34:47.000 foundational if you will, and I would like to see 0:34:47.080 --> 0:34:49.000 us over the next five to ten years really be 0:34:49.080 --> 0:34:51.800 recognized that way, and he and I are very aligned 0:34:51.840 --> 0:34:53.799 on that. As you can imagine when you think about 0:34:53.800 --> 0:34:55.839 five to ten years out, there's a lot of things 0:34:55.840 --> 0:34:57.560 to talk about in terms of the art of the possible, 0:34:57.680 --> 0:34:59.920 but that's really where he's focused on when his conversation 0:35:00.120 --> 0:35:00.399 with me. 0:35:01.160 --> 0:35:03.960 Long term thinking but then near term action. We understand 0:35:04.040 --> 0:35:08.200 he was pretty integral to calling the shots on price 0:35:08.239 --> 0:35:12.120 points for today's listing. How was that as just an 0:35:12.120 --> 0:35:14.480 IPO experience? Did he end up being like, no, we 0:35:14.520 --> 0:35:15.959 need to leave a little bit of money on the table. 0:35:16.000 --> 0:35:17.320 This needs to be a successful trade. 0:35:17.440 --> 0:35:19.479 But all I can say is. This is my first 0:35:19.560 --> 0:35:22.520 road show, so everything was altering experience. We wanted to 0:35:22.520 --> 0:35:23.680 be at the high end of the range that we 0:35:23.760 --> 0:35:25.640 set forty seven to fifty one, and that's where it 0:35:25.760 --> 0:35:27.359 ended up. So we're happy. 0:35:27.440 --> 0:35:28.520 We're very thrilled with today. 0:35:29.080 --> 0:35:31.560 You said that school friends are going to in touch 0:35:31.680 --> 0:35:34.640 can why have you been hiding this from them? How 0:35:34.640 --> 0:35:37.560 do you feel differently now as a CEO of a 0:35:37.600 --> 0:35:40.560 publicly traded company? Do you feel differently today? 0:35:41.680 --> 0:35:43.600 I feel a little bit differently, and looking ahead at 0:35:43.600 --> 0:35:45.439 this number than what the share price is, that wasn't 0:35:45.440 --> 0:35:49.319 something we looked at before. But you know again when 0:35:49.480 --> 0:35:52.120 and I told this to employees. While the IPO is 0:35:52.160 --> 0:35:54.239 amazing and I could not be more proud of it, 0:35:54.640 --> 0:35:56.279 I am far more excited about the next five to 0:35:56.280 --> 0:35:58.920 ten years and that's where my head is focused. Obviously 0:35:58.920 --> 0:36:02.520 we needed things as a public company CEO, but I 0:36:02.520 --> 0:36:03.640 don't feel too much different. 0:36:03.960 --> 0:36:06.839 And sometimes these are marketing exercises. 0:36:07.160 --> 0:36:07.880 Armor is B to B. 0:36:08.680 --> 0:36:11.400 But do you think you've become more relevant B to 0:36:11.480 --> 0:36:13.840 see now you're saying how people had no idea all 0:36:13.880 --> 0:36:16.560 this because largely people don't realize that every day they 0:36:16.560 --> 0:36:19.920 are interacting with your designs with your blueprints. 0:36:20.320 --> 0:36:22.360 The people who need to know what we do do 0:36:22.520 --> 0:36:24.520 know obviously, just giving the fact that all the global 0:36:24.520 --> 0:36:27.200 partners that we work with going forward, how to market 0:36:27.200 --> 0:36:28.920 ourselves as the public company. That's one of the things 0:36:28.960 --> 0:36:31.920 as a public company CEO I'll spend some time thinking about. 0:36:32.680 --> 0:36:35.040 But right now we're just kind of focused on today 0:36:35.239 --> 0:36:35.960 and what that means. 0:36:36.239 --> 0:36:40.200 And meanwhile, within this exuberance of today, yesterday we saw 0:36:40.280 --> 0:36:44.120 basically every key chief executive of an AI company, AI 0:36:44.160 --> 0:36:49.280 related company, indoors and a closed hearing with Senate Majority 0:36:49.360 --> 0:36:52.160 Leader Chuck Schumer. Can you tell us about regulation? How 0:36:52.200 --> 0:36:55.040 do you see the landscape evolving to ensure that you 0:36:55.080 --> 0:36:56.520 can harness that AI moment. 0:36:57.000 --> 0:37:00.200 I think it's one of those areas that is an 0:37:00.239 --> 0:37:03.200 unknown moment. And I remember talking to an executive about 0:37:03.480 --> 0:37:06.120 the analogy or metaphor we used was when cars were invented, 0:37:06.280 --> 0:37:08.960 you didn't have driver's licenses, you didn't have lanes, you 0:37:09.000 --> 0:37:10.920 didn't have rules of the road. There was a lot 0:37:10.960 --> 0:37:12.640 of things that people had to figure out in terms 0:37:12.680 --> 0:37:15.080 of taking a device that was going to be very 0:37:15.160 --> 0:37:17.440 very productive but could be very dangerous in terms of 0:37:17.560 --> 0:37:20.520 automobile accidents, AI is a little bit of the same 0:37:20.520 --> 0:37:22.960 in the sense that we're now in a new paradigm 0:37:23.200 --> 0:37:26.279 where some rules and regulations need to be figured out, 0:37:26.320 --> 0:37:28.040 and that's why I think you're seeing all this activity 0:37:28.040 --> 0:37:30.080 around that area. 0:37:30.320 --> 0:37:33.440 Is the US leading the charge and regulation? 0:37:33.719 --> 0:37:34.280 Is Europe? 0:37:34.360 --> 0:37:35.879 Is the UK was getting it right? 0:37:35.880 --> 0:37:38.160 From your perspective, I think all the governments are trying 0:37:38.160 --> 0:37:40.200 to figure it out. I know the EU has spent 0:37:40.239 --> 0:37:41.919 a lot of energy on this, as had the UK. 0:37:42.120 --> 0:37:44.160 So in terms of who's getting it right, I think 0:37:44.200 --> 0:37:47.279 it's still early days and everyone's really just trying to 0:37:47.360 --> 0:37:51.520 learn how technology and this new powerful algorithm will work together. 0:37:52.000 --> 0:37:54.239 Keep teaching us. Great to have some time with you. 0:37:54.320 --> 0:37:54.960 Thank you so much. 0:37:54.960 --> 0:37:57.360 Across the CEO of ARM the day of their listing, 0:37:57.400 --> 0:38:00.880 I'm looking at the price point. I'm seventeen percent headipop 0:38:01.000 --> 0:38:01.760 for the day's trading. 0:38:01.800 --> 0:38:05.720 Sanali absolutely, Caroline and Renee has armed CEO first roadshow. 0:38:05.760 --> 0:38:06.879 Thank you very much for your time. 0:38:07.160 --> 0:38:10.240 Now let's bring in Aja Shah, Deutsche Bank's managing director 0:38:10.280 --> 0:38:14.040 and co head of Technology, Media and Telecommunications for Deutsche Bank, 0:38:14.080 --> 0:38:14.840 one of the end writers. 0:38:14.840 --> 0:38:16.640 As we've been talking about, you know, at first. 0:38:16.520 --> 0:38:19.480 One would to react here to what Renee had to say, 0:38:19.680 --> 0:38:23.719 because he did talk about this idea that people will 0:38:23.719 --> 0:38:28.560 pay for AI related stocks and companies eventually. But we 0:38:28.640 --> 0:38:32.200 are in a different era than that hypergrowth, unprofitable type 0:38:32.200 --> 0:38:34.920 of company. You had a profit at ARM, it was slowing. 0:38:35.280 --> 0:38:39.200 What is investor appetite for anything but upward trajectory? 0:38:40.880 --> 0:38:42.959 Yeah, thanks for having me on the show. 0:38:43.480 --> 0:38:46.319 Look, you know, we have we have definitely seen an 0:38:46.360 --> 0:38:50.000 increase in activity on the on the capital market side, 0:38:50.320 --> 0:38:52.480 certainly post Labor Day. You know, there was a lot 0:38:52.480 --> 0:38:57.319 ofventive demand and expectation that the markets would open and 0:38:57.440 --> 0:39:00.480 armwouldn't need to open the market to the i P 0:39:00.600 --> 0:39:03.359 as you've seen the obviously the i PO has done 0:39:03.760 --> 0:39:06.120 very well so far, and and ARM is really a 0:39:06.160 --> 0:39:10.120 play on interesting demand for advanced processing needed to support AI. 0:39:10.239 --> 0:39:12.560 And you obviously just heart run a you know walk 0:39:12.640 --> 0:39:15.400 through uh some of the some of the key you 0:39:15.440 --> 0:39:18.000 know highlights around ARM and why you know people are 0:39:18.600 --> 0:39:22.080 you know so much interested in investing in ARM. We 0:39:22.200 --> 0:39:25.400 have certainly seen uh, you know, the markets sort of 0:39:25.440 --> 0:39:28.080 change the down't from as you said, you know, growth 0:39:28.080 --> 0:39:32.000 at any cause to growth at you know, with with 0:39:32.000 --> 0:39:36.839 with profitability and so I think investors have been doing work. 0:39:36.920 --> 0:39:38.799 They have done a lot of work around ARM, They've 0:39:38.800 --> 0:39:41.880 done work around some of the other i pos that 0:39:42.239 --> 0:39:44.640 came to market earlier this year. Can view on the 0:39:44.680 --> 0:39:48.000 consumer side obviously ARM and in tech, and we've seen 0:39:48.040 --> 0:39:51.760 investors do work and you know, they are still obviously 0:39:51.880 --> 0:39:55.719 still sensitive on valuation, but but there is clear appetite 0:39:55.719 --> 0:39:59.279 to to pay for growth with with profitability. We have 0:39:59.320 --> 0:40:03.000 a robust pipeline of some of these i pos you 0:40:03.040 --> 0:40:03.880 know that are. 0:40:03.880 --> 0:40:06.360 Yet to come right on that pipeline. The reality is 0:40:06.400 --> 0:40:08.000 there's not that much time left in the year. You 0:40:08.040 --> 0:40:09.799 really have to file pretty soon if you're going to 0:40:09.800 --> 0:40:14.080 go public. So is the pipeline into next year much bigger? 0:40:14.520 --> 0:40:17.960 Is it still quite muted given the dynamics we're seeing 0:40:17.960 --> 0:40:20.440 in the market. There's still a lot of macro uncertainties 0:40:20.440 --> 0:40:20.920 out there. 0:40:22.360 --> 0:40:25.640 Sure, the pipeline is is big, and it is getting 0:40:25.640 --> 0:40:29.120 bigger by the day. Obviously, with ARMS successful IPO, I 0:40:29.160 --> 0:40:31.800 think you'll see a lot more companies come to market, 0:40:32.120 --> 0:40:35.520 certainly between now and the end of the year and getting. 0:40:35.280 --> 0:40:35.839 Up for next year. 0:40:35.880 --> 0:40:40.160 We're seeing you know, all across the tech ecosystem. You know, 0:40:40.200 --> 0:40:42.200 on the on the internet side, there are companies like 0:40:42.400 --> 0:40:45.680 Reddit or two ro Go Pop. In fintech, we've seen, 0:40:45.960 --> 0:40:50.240 you know, expectations around Stripe and Plaid. On the software side, 0:40:50.280 --> 0:40:53.080 you know you've Genesis, You've got UKG, Rubric and others. 0:40:53.280 --> 0:40:57.520 And even on the semiconductor space, after you know Armed success, 0:40:57.800 --> 0:41:00.799 there are companies that you know, we're certainly like to 0:41:01.000 --> 0:41:06.040 access the market, companies like an mpror Steri Labs and others. 0:41:06.400 --> 0:41:09.360 So the pipeline is robust and we will see the 0:41:09.400 --> 0:41:12.839 pipeline grow going forward. Obviously it is going to depend 0:41:12.880 --> 0:41:15.640 on how Armed does UH. You know, how investors feel 0:41:15.680 --> 0:41:19.480 about the overall strength of the economy and UH, and 0:41:19.560 --> 0:41:22.000 ultimately what the FED decides to do going forward. 0:41:22.080 --> 0:41:23.080 Is there a playbook here? 0:41:23.480 --> 0:41:25.600 On one hand, you did see them kind of tamper 0:41:25.680 --> 0:41:26.919 down expectations in. 0:41:26.920 --> 0:41:29.080 Order to get this smooth debut. 0:41:29.560 --> 0:41:31.840 On the other hand, there's a cross current that seems 0:41:31.840 --> 0:41:33.600 to be picking its head up in the market, which 0:41:33.640 --> 0:41:36.200 is M and A. Is there a reality that MNA 0:41:36.320 --> 0:41:38.680 can meaningfully compete with the I P O markets? 0:41:38.680 --> 0:41:40.759 And what will give a company about our ex evaluation? 0:41:42.440 --> 0:41:44.920 Yeah, so the M and A market has has slowed 0:41:44.960 --> 0:41:49.080 down this year relative two years past. And you know, 0:41:49.120 --> 0:41:53.560 with with the IPO market you know, showing signs of opening, uh, 0:41:53.719 --> 0:41:57.200 that is a real competition to you know, companies looking 0:41:57.200 --> 0:42:01.359 to acquire. So I do see the opportunity for MNA 0:42:01.440 --> 0:42:04.840 also to increase going forward. Again, not just because the 0:42:04.840 --> 0:42:09.280 IPEO market is strong, but also valuations are you know increasing, 0:42:09.400 --> 0:42:12.120 They're stronger than what they were last year. 0:42:12.440 --> 0:42:15.160 We've seen you know, SMP of seventeen percent, nas. 0:42:15.040 --> 0:42:17.960 Tap up thirty two percent, the Vicks Volatility Index is 0:42:18.000 --> 0:42:21.920 down forty percent, and so I think those are factors 0:42:21.920 --> 0:42:24.839 that certainly corporates look at when they think about MNA. 0:42:25.320 --> 0:42:28.160 And now there is a real option for companies to 0:42:27.560 --> 0:42:32.799 go public, So we do expect companies to start, you know, 0:42:32.840 --> 0:42:35.399 looking at more corporate am and if we've seen some 0:42:35.600 --> 0:42:38.560 financial sponsors and private equity deals happen in the market, 0:42:38.640 --> 0:42:41.920 we haven't seen as many corporate MNA. But again with 0:42:41.960 --> 0:42:44.560 the robustness in the market and the economy is starting 0:42:44.600 --> 0:42:48.160 to starting to grow, we do expect m and. 0:42:48.160 --> 0:42:50.080 A market also to pick up pretty martially in the 0:42:50.080 --> 0:42:50.480 next year. 0:42:50.600 --> 0:42:52.960 Also think about here is that this is not a 0:42:53.080 --> 0:42:56.200 US based company but listed in the United States now 0:42:56.520 --> 0:42:59.040 are you scouring the globe for hopeful. 0:42:58.719 --> 0:43:00.360 Is just given that valuation. 0:43:00.120 --> 0:43:02.680 Might be more reasonable outside of the United States. 0:43:03.920 --> 0:43:09.359 Absolutely, there are you know, several companies obviously in Asia and. 0:43:09.320 --> 0:43:11.239 Europe that have been waiting. 0:43:11.200 --> 0:43:13.560 For ARM and a few other IPOs that will come 0:43:13.600 --> 0:43:16.080 out between now and the end of the year, and 0:43:16.440 --> 0:43:20.799 we will see increase in certainly either cross border listings 0:43:20.960 --> 0:43:24.719 or just listing in Europe and Asia. But we are 0:43:25.320 --> 0:43:27.880 working with a handful of companies that are looking to 0:43:27.920 --> 0:43:31.000 go public, you know, across both sides of the of 0:43:31.080 --> 0:43:31.600 the continent. 0:43:32.280 --> 0:43:33.200 That is Aj Shah. 0:43:33.239 --> 0:43:36.640 He's managing director and co head of TMT for Deutsche 0:43:36.680 --> 0:43:38.799 Bank's investment banks. Thank you very much for your time 0:43:39.040 --> 0:43:41.640 now joining us here in studios. Cameron, I'm sorry he's 0:43:41.760 --> 0:43:45.200 headlined Venture Capital Partner for his read on the IPO 0:43:45.320 --> 0:43:48.640 landscape and other paths to exit. We've been talking here 0:43:48.760 --> 0:43:51.960 about IPOs versus M and A. There's another question I 0:43:52.000 --> 0:43:54.760 wanted to ask you, though there's been a lot of fireworks. 0:43:54.320 --> 0:43:56.759 About this idea of VC's holding on too long. 0:43:56.760 --> 0:43:59.439 When you go into public markets, how do you see 0:43:59.440 --> 0:44:01.319 that playing. Do you think that there will be more 0:44:01.320 --> 0:44:04.520 willingness to start to sell into an IPO rather than 0:44:04.560 --> 0:44:06.439 hold on and clip the games over time. 0:44:07.200 --> 0:44:08.640 Yeah, I mean, I think that you're going to see 0:44:08.920 --> 0:44:10.840 in their arm case, you really only have one seller, 0:44:10.840 --> 0:44:13.719 which is soft Bank, and it's not a traditional venture 0:44:13.719 --> 0:44:15.800 backed IPO though the way they might consider you, SoftBank 0:44:15.840 --> 0:44:17.640 take a private seven years ago and is bringing it 0:44:17.680 --> 0:44:18.520 back out now today. 0:44:19.160 --> 0:44:20.600 We have a couple other companies. 0:44:20.280 --> 0:44:23.120 Coming up this week or the next ten days, Claveyo 0:44:23.239 --> 0:44:27.480 and Instacart, which are both venture backed startups quote unquote 0:44:27.480 --> 0:44:29.319 in the traditional sense, and I think in both those 0:44:29.360 --> 0:44:32.680 cases you'll see the venture investors selling into the IPO 0:44:32.719 --> 0:44:34.160 in a meaningful way. But it's also going to be 0:44:34.160 --> 0:44:36.839 a liquidity event for the company and the employees as 0:44:36.880 --> 0:44:38.680 well as a fundraising event. Right It's an event for 0:44:38.719 --> 0:44:41.560 the company to actually raise funds and capital so they 0:44:41.560 --> 0:44:42.799 can show up the balance sheet as well. 0:44:42.800 --> 0:44:44.640 It's been a bit of a strange year when you 0:44:44.680 --> 0:44:46.920 think about the hopefuls and companies that are going public. 0:44:46.920 --> 0:44:48.240 There is some hope around fintech. 0:44:48.280 --> 0:44:50.720 There's a lot of consumer there's a lot of food 0:44:50.760 --> 0:44:54.960 and delivery, But how much is AI the real silver bullet. 0:44:55.160 --> 0:44:57.600 Do you think that it's a red herring or do 0:44:57.680 --> 0:45:01.040 you think that there's more opportunity else well, arm. 0:45:01.080 --> 0:45:02.760 Is one of the only playees right now for consumers 0:45:02.760 --> 0:45:05.759 and retail investors as well as investors generally to play 0:45:05.760 --> 0:45:09.080 into the AI kind of theme. Other than maybe owning 0:45:09.200 --> 0:45:11.320 Microsoft as that passed through to open ai or Google 0:45:11.320 --> 0:45:13.880 as have passed through to Bard or in vidio. Right 0:45:13.920 --> 0:45:18.000 there really aren't many public opportunities to play the kind 0:45:18.000 --> 0:45:20.400 of boom and AI. But I do think it's a 0:45:20.440 --> 0:45:21.839 little bit of red herring and that there's a lot 0:45:21.840 --> 0:45:23.600 of opportunities elsewhere, and a lot of the companies that 0:45:23.640 --> 0:45:25.799 are going to be listening and coming out, including klavy 0:45:25.880 --> 0:45:28.440 on instacart and you know, we talked about Reddit or 0:45:28.480 --> 0:45:30.279 Intercom or data Bricks or some of these companies that 0:45:30.320 --> 0:45:33.040 are coming out. They're not AI businesses per se, they're 0:45:33.120 --> 0:45:35.120 terrific companies and they're going to do very well. And 0:45:35.160 --> 0:45:36.880 I think the one that in the tech space, in 0:45:36.920 --> 0:45:38.239 the fintech space where I spend a lot of time, 0:45:38.239 --> 0:45:39.560 everyone's waiting for is Stripe. 0:45:39.760 --> 0:45:41.040 Some I think Stripe is going to be the big 0:45:41.080 --> 0:45:43.319 bell weather, but that's not likely. 0:45:43.239 --> 0:45:44.839 To happen when you think it actually goes. 0:45:45.200 --> 0:45:48.040 Who knows, right, they raised the massive fundraising round very 0:45:48.040 --> 0:45:51.120 recently at a steep discount, about a fifty percent discount. 0:45:51.120 --> 0:45:53.640 They were previously priced at ninety five billion. They raised 0:45:53.640 --> 0:45:55.799 it about fifty billion to really shore up the balance 0:45:55.840 --> 0:45:59.080 sheet and also primarily to incentivize employees and keep them 0:45:59.120 --> 0:46:01.360 around because of a stock option plan that was expiring. 0:46:02.000 --> 0:46:03.839 So with that fundraise, I think they have a lot 0:46:03.840 --> 0:46:06.319 more runway now. So I'm guessing that's easily going to 0:46:06.320 --> 0:46:08.319 be well into twenty twenty four before Stripe is going 0:46:08.360 --> 0:46:08.799 to come out. 0:46:08.960 --> 0:46:11.680 Now, you think about Instacart, and it is a big 0:46:11.719 --> 0:46:14.680 win for some of the early investors, including D one 0:46:14.920 --> 0:46:17.920 where D one Dan Sundeim for example, they had a 0:46:18.040 --> 0:46:21.040 roughly sixty percent of their assets invested in venture. 0:46:20.760 --> 0:46:23.360 Capital and private equity. It's been a drag on returns. 0:46:23.480 --> 0:46:25.479 When you look at those crossover funds, those big hedge 0:46:25.480 --> 0:46:27.560 funds that have come into the market, what role do 0:46:27.600 --> 0:46:29.840 you think that they play, not that they're finally starting 0:46:29.880 --> 0:46:30.760 to exit a little. 0:46:30.520 --> 0:46:32.680 More well going forward, and really this year it's been 0:46:32.760 --> 0:46:34.279 very quiet with those guys. You know, we used to 0:46:34.320 --> 0:46:36.440 see Tiger and ko Tu and soft Bank and a 0:46:36.480 --> 0:46:38.920 lot of these funds coming into earlier stage opportunities in 0:46:38.920 --> 0:46:41.120 the venture space, sometimes even like seed deals, which is 0:46:41.239 --> 0:46:43.920 very strange. They've been pretty quiet, and you're also hearing 0:46:43.960 --> 0:46:45.760 about some of those funds trying to sell their positions 0:46:45.840 --> 0:46:48.560 or package up all the positions in a secondary So 0:46:48.600 --> 0:46:50.279 I think going forward, you know, I expect to see 0:46:50.320 --> 0:46:53.040 less of those folks coming into really early stage venture deals. 0:46:53.360 --> 0:46:55.239 But you know, in the case of instacart, you also 0:46:55.280 --> 0:46:58.120 have you know, one of the greatest venture funds, Sequoya 0:46:58.280 --> 0:46:59.200 is one of the major holders. 0:46:59.239 --> 0:47:00.759 You have traditional venture firms in there as. 0:47:00.680 --> 0:47:03.239 Well that'll be looking to hopefully, you know, I think 0:47:03.239 --> 0:47:04.320 get out as part of the IPO. 0:47:04.760 --> 0:47:06.360 Now as they get out, how do you think that 0:47:06.440 --> 0:47:09.319 changes the dynamic around valuations given we've seen so many 0:47:09.360 --> 0:47:11.960 down rounds already this year, Well. 0:47:11.719 --> 0:47:13.680 It's you know, it's been a market reset, right And 0:47:13.719 --> 0:47:15.120 in the case of instat cart, I think the last 0:47:15.160 --> 0:47:17.520 private round was in the thirty nine billion range. I 0:47:17.560 --> 0:47:19.960 think they've priced it very attractively, frankly at nine billion, 0:47:19.960 --> 0:47:21.759 which is actually if you look at the comp which 0:47:21.800 --> 0:47:24.719 is door Dash, which trades it four times revenue. 0:47:25.200 --> 0:47:27.120 Instacart's around a three billion dollar revenue business. 0:47:27.120 --> 0:47:28.919 So the fair price should probably be closer to eleven 0:47:28.920 --> 0:47:30.680 to twelve billion, So I think pricing it at nine 0:47:31.000 --> 0:47:32.160 leads room for upside. 0:47:32.800 --> 0:47:33.520 But it's a. 0:47:33.520 --> 0:47:35.440 Vast reset, right, and we've seen that with Stripe, with 0:47:35.520 --> 0:47:37.759 Klarna on in the private markets as well as in 0:47:37.760 --> 0:47:38.560 the public market scene. 0:47:38.560 --> 0:47:39.960 Of the companies like like PayPal and. 0:47:39.920 --> 0:47:42.640 Square Block, they're all down sixty seventy percent from their 0:47:42.640 --> 0:47:43.680 twenty twenty one highs. 0:47:43.920 --> 0:47:45.440 I think that's consistent across the board. 0:47:45.640 --> 0:47:47.719 You look at what you're seeing in ARM today, you're 0:47:47.760 --> 0:47:49.800 looking at almost a twenty percent pop, more than seventeen 0:47:49.800 --> 0:47:50.400 percent pop. 0:47:50.280 --> 0:47:50.720 At the moment. 0:47:51.000 --> 0:47:53.600 It has been trading in and around more than twenty times. 0:47:53.640 --> 0:47:57.280 It's trailing as sales. Do you look at these companies 0:47:57.280 --> 0:47:59.959 and say that's achievable or is that a one off? 0:48:00.360 --> 0:48:02.600 I think ARM itself is really a one off in 0:48:02.680 --> 0:48:04.919 terms of the type of company. It is that again, 0:48:04.960 --> 0:48:07.640 the play on AI and the current moment, the size 0:48:07.680 --> 0:48:09.560 and scale the business, the partners they have. We have 0:48:09.600 --> 0:48:12.720 these very stable relationships with folks like Samsung and Google 0:48:12.719 --> 0:48:15.440 and Apple, so you know, at the same time it's 0:48:15.480 --> 0:48:17.799 a slow growth business and a high growth sector, right, 0:48:17.800 --> 0:48:20.400 They're not really growing right now. They've had kind of 0:48:20.400 --> 0:48:22.239 a flat last year and they're going to start to 0:48:22.239 --> 0:48:24.239 grow again this year. So the story is not a 0:48:24.239 --> 0:48:27.280 perfect story. And yet you're saying and obviously a fifteen 0:48:27.360 --> 0:48:31.200 twenty percent a pop as already happening, but you know 0:48:31.200 --> 0:48:33.560 there are also non tech names coming out. We started 0:48:33.560 --> 0:48:36.239 this IPO kind of waive these last few months with 0:48:36.280 --> 0:48:38.120 Kava so too, kind of peta and hummus to get 0:48:38.200 --> 0:48:40.560 us here. And now you know, I heard yesterday you 0:48:40.560 --> 0:48:42.520 saw on the news that Birkenstock's coming out, So again 0:48:42.520 --> 0:48:45.160 a non tech name that's going to come out, and 0:48:45.239 --> 0:48:46.439 I think drive interest as well. 0:48:46.520 --> 0:48:49.960 It's no secret Birkenstocks is now my new IPO attire. 0:48:50.040 --> 0:48:52.320 More than to work there, b Birkenstock WI would be 0:48:52.320 --> 0:48:52.959 a public stock. 0:48:53.160 --> 0:48:55.719 Yeah, absolutely, the cameraon I'm sorry headline Benure partner. We 0:48:55.760 --> 0:48:57.799 thank you so very much for your time. Now let's 0:48:57.800 --> 0:49:00.239 take it home with Bloomberg's Caroline Hyde, who's been on 0:49:00.280 --> 0:49:02.800 the ground at NAZAC for us, looking at that fifteen 0:49:02.840 --> 0:49:06.400 percent or so pup at the arm IPO just right out. 0:49:06.239 --> 0:49:09.320 Of the gate just about an hour ago. What's next? 0:49:09.880 --> 0:49:13.680 Yeah, what's next? Trevio Instacart, all of the eyes on 0:49:13.800 --> 0:49:16.120 these companies coming next week, and they're going to be 0:49:16.120 --> 0:49:17.520 from the NASZAC, They're going to be from the New 0:49:17.560 --> 0:49:19.719 York Stock Exchange. There is going to continue to be 0:49:19.800 --> 0:49:22.080 an eye on really how this company continues to perform. 0:49:22.120 --> 0:49:24.400 We know that there's e xuberants around the first day 0:49:24.440 --> 0:49:28.000 of trade. How does ARM manage to continue this narrative 0:49:28.120 --> 0:49:30.880 of growth in the face of China. I thought that 0:49:30.960 --> 0:49:33.279 was notable from Rene has talking about, Look, it's the 0:49:33.280 --> 0:49:35.719 same headache as every other CEO who's exposed to China 0:49:35.800 --> 0:49:36.520 is currently having. 0:49:36.680 --> 0:49:37.240 I think it's. 0:49:37.080 --> 0:49:39.880 Also and the road for ARM and destiny really interesting 0:49:39.880 --> 0:49:42.120 that he told us that they are potentially yeing a 0:49:42.239 --> 0:49:44.920 UK listing, so a secondary listening at some point. That 0:49:45.000 --> 0:49:46.480 was news that they gave to us. So I think 0:49:46.520 --> 0:49:49.160 that's an important step in terms of reminding everyone this 0:49:49.280 --> 0:49:52.160 is a global company with global exposure but also a 0:49:52.239 --> 0:49:55.280 global headquarters. It's UK based. And then what for SoftBank? 0:49:55.400 --> 0:49:57.839 Of course, this is a company now that is trying 0:49:57.840 --> 0:49:59.480 to show that they're back winning when it comes to 0:49:59.520 --> 0:50:02.560 their venture. This hasn't been a seventy percent upside for 0:50:02.719 --> 0:50:05.200 Masayoshi's son, and he's also taken a very hands on 0:50:05.239 --> 0:50:07.719 approach to how he's guided this ipo, how will the 0:50:07.760 --> 0:50:10.400 rest of the IPOs be able to deliver those returns 0:50:10.440 --> 0:50:13.440 for their vcs, and indeed managed to sustain the growth 0:50:13.480 --> 0:50:16.279 story and indeed managed to see a pop on the 0:50:16.280 --> 0:50:18.920 first day of trade. As Karen Snow from Nazlak was 0:50:18.960 --> 0:50:21.719 telling us Shanali, this is largely an art as well 0:50:21.719 --> 0:50:23.319 as a science. They try and make as much of 0:50:23.360 --> 0:50:25.520 a science as they can with their technology, but at 0:50:25.520 --> 0:50:27.279 the end of the day, this does tend to be 0:50:27.320 --> 0:50:28.680 an art to getting the right price point. 0:50:28.920 --> 0:50:31.720 Something I had heard him tell you and a haas 0:50:31.880 --> 0:50:34.320 was that this was his first road show. It's interesting 0:50:34.400 --> 0:50:36.840 because you think about the list of IPOs around the 0:50:36.880 --> 0:50:38.960 corner and the entrepreneurs that are trying to make it 0:50:38.960 --> 0:50:42.520 to market, and the role these underwriters play, some old, 0:50:42.680 --> 0:50:46.080 some new Goldman's big day, the fact that they're playing 0:50:46.120 --> 0:50:49.120 such a big role in the technology market. Mazouho just 0:50:49.200 --> 0:50:51.640 coming up swinging, not only in this IPO, but some 0:50:51.680 --> 0:50:52.320 of the ones. 0:50:52.160 --> 0:50:53.280 Next week as well. 0:50:54.000 --> 0:50:56.040 What did he tell you on the sidelines about what 0:50:56.040 --> 0:50:59.240 it felt like to be listing such a massive company 0:50:59.640 --> 0:51:02.320 in the market right now for the first time. 0:51:03.120 --> 0:51:05.440 I mean, I do think he's trying to keep his 0:51:05.440 --> 0:51:08.600 his emotions contained. And look he was where he was 0:51:08.640 --> 0:51:10.759 telling us that friends that you knew since college were 0:51:10.760 --> 0:51:12.799 getting in touch, saying they had no idea. This is 0:51:12.800 --> 0:51:15.319 a B to B play less than an Instacart B 0:51:15.360 --> 0:51:18.120 two C. And I'm sore sure Fiji over at Instacart 0:51:18.160 --> 0:51:20.239 is getting a lot more friends who recognize she's about 0:51:20.280 --> 0:51:22.360 to have the slog to get this company to go 0:51:22.480 --> 0:51:26.440 public as well. But notably, this has been very idiosyncratic 0:51:26.440 --> 0:51:28.319 in the way that they've democratized their banks, the way 0:51:28.320 --> 0:51:30.480 in which they've had so many underwriters. Really taking a 0:51:30.520 --> 0:51:33.000 leaf out of Ali Barbar's book here, how can that 0:51:33.040 --> 0:51:36.120 be replicated? How can they ensure so interestingly, with Instacart, 0:51:36.160 --> 0:51:37.960 they're going to be depending not on so much the 0:51:38.000 --> 0:51:41.960 institutional players and the integral players like an Apple, TSMC 0:51:42.040 --> 0:51:42.799 and customers. 0:51:43.120 --> 0:51:43.919 Instead, they're going. 0:51:43.800 --> 0:51:47.040 To be basing their focus on retail investor. And of 0:51:47.080 --> 0:51:49.520 course that's why so interestingly Sofi is coming to play 0:51:49.560 --> 0:51:51.720 an underwriting role there. So I'm going to be interested 0:51:51.760 --> 0:51:53.759 as to how they sell that narrative, not just to 0:51:53.840 --> 0:51:55.640 the business population, but to the public. 0:51:55.680 --> 0:51:59.080 Tootionally, right, Instacart would be Sofia's first underwritten IPO. Now, 0:51:59.160 --> 0:52:01.760 last question here for you, because down at the NASDAK 0:52:01.760 --> 0:52:06.080 you're also interviewing Nasdaq's executives direct listings. The business that 0:52:06.120 --> 0:52:09.840 includes listenings is about twenty percent of last year's total revenue. 0:52:10.239 --> 0:52:13.040 How do they feel about the market finally coming back? 0:52:13.320 --> 0:52:16.120 Boyant, God, everyone I've spoken to has a smile. 0:52:15.920 --> 0:52:16.359 On their face. 0:52:16.400 --> 0:52:18.680 They look relatively exhausting to have not sleep slept for 0:52:18.719 --> 0:52:21.640 a few days, but they cannot wait for this really 0:52:21.680 --> 0:52:25.279 pendulum to swing back open. They've totally said Karen snow 0:52:25.400 --> 0:52:27.920 As you were referencing head of Global Listings saying that 0:52:27.960 --> 0:52:30.600 there is so many companies waiting to come out. One 0:52:30.680 --> 0:52:33.680 hundred and fifty seven of course have filed looking to 0:52:33.880 --> 0:52:36.759 really access this window. She feels it could shut by 0:52:37.080 --> 0:52:39.480 well the twenty twenty four elections. Many want to get 0:52:39.520 --> 0:52:42.920 ahead of that sort of political environment. So if we 0:52:42.920 --> 0:52:45.400 can sustain some sort of lack of volatility in the 0:52:45.440 --> 0:52:48.560 markets and some appetite for these companies coming forward, there 0:52:48.640 --> 0:52:50.399 is a whole host of companies that want to start 0:52:50.400 --> 0:52:51.919 listening and want to start listening soon. 0:52:52.080 --> 0:52:55.160 Yeah, that timeline certainly makes sense let alone, the October 0:52:55.200 --> 0:52:57.600 government shutdown, and a whole host of other potential things 0:52:57.600 --> 0:52:59.799 that could get in the way Bloomberg's Caroline had. 0:52:59.760 --> 0:53:01.080 We thank you so very much. 0:53:00.880 --> 0:53:02.920 For your time and your incredible interview is at a 0:53:02.960 --> 0:53:06.560 pretty pivotal moment watching that RM IPO Open Interviews just 0:53:06.680 --> 0:53:09.520 around that. Now, that does it for this edition of 0:53:09.520 --> 0:53:12.799 Bloomberg Technology, the IPO edition coming up next to you. 0:53:12.880 --> 0:53:15.279 Don't forget to check out that podcast. You can find 0:53:15.280 --> 0:53:17.440 it on the terminal. You could find it online as 0:53:17.480 --> 0:53:21.960 well as on Apple, Spotify, and iHeart this is Bloomberg