WEBVTT - Bloomberg Businessweek Weekend - August 8th, 2025 0:00:00.280 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.640 --> 0:00:13.000 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.000 --> 0:00:17.599 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.640 --> 0:00:22.520 and trends shaping today's complex economy, plus global business, finance 0:00:22.560 --> 0:00:26.280 and tech news as it happens. The Bloomberg Business Weekdaily 0:00:26.400 --> 0:00:31.320 Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:31.960 --> 0:00:34.880 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:35.200 --> 0:00:37.880 Tim is off this week and Bloomberg's Matt Millard joining 0:00:38.000 --> 0:00:40.960 in on many of our conversations in his first trading 0:00:40.960 --> 0:00:44.760 week of August. As for the past week, we got 0:00:44.800 --> 0:00:46.760 a lot of earnings, more news out of the White 0:00:46.760 --> 0:00:50.839 House ongoing on trade and tariffs, and also want actions 0:00:50.880 --> 0:00:54.240 to ease some of those geopolitical tensions that are out there. 0:00:54.480 --> 0:00:56.000 For the latest on all of it, head to the 0:00:56.000 --> 0:00:59.920 Bloomberg and Bloomberg dot Com. Now with all the financial updates, 0:01:00.120 --> 0:01:02.720 we were able this past week to get an in 0:01:02.760 --> 0:01:05.679 depth view from the c suite and updates on the 0:01:05.680 --> 0:01:12.840 global consumer, on generators, on energy management, on tasers, on spirits, 0:01:12.880 --> 0:01:16.760 on sports and security, and so much more. There was 0:01:16.760 --> 0:01:18.679 a lot that we were able to get a deep 0:01:18.720 --> 0:01:22.080 dive into now coming up in the next two hours, 0:01:22.120 --> 0:01:24.960 we've got the CFOs of Wayfair and Latin America e 0:01:25.000 --> 0:01:28.960 commerce giant Mericardo Libre, and we've also got the CEOs 0:01:29.000 --> 0:01:32.360 at Axon and Jederak. All of that to come. We 0:01:32.400 --> 0:01:35.240 start with a stock that rallied big time on its 0:01:35.280 --> 0:01:38.760 earnings results. We were talking about Axon Enterprise. Shares of 0:01:38.760 --> 0:01:42.760 the company surged after delivering robust second quarter earnings, raising 0:01:42.800 --> 0:01:45.920 its full year outlook, and receiving a price target boost 0:01:45.920 --> 0:01:49.000 to one thousand dollars from Bank of America. Rick Smith 0:01:49.080 --> 0:01:52.360 is the company's founder and CEO, who reminded us that 0:01:52.440 --> 0:01:55.720 the company, formerly known as Taser, now does a lot more. 0:01:56.120 --> 0:01:57.960 Yeah, that's why we changed the name of the company 0:01:57.960 --> 0:02:01.000 to Axon a few years ago, because it is a 0:02:01.040 --> 0:02:04.280 sledgehammer brand associated with our lessling the weapons. 0:02:04.600 --> 0:02:05.520 That's where we started. 0:02:05.880 --> 0:02:10.160 That got us into body cameras to basically help protect 0:02:10.200 --> 0:02:13.400 the public and police by preserving a factual record of 0:02:13.400 --> 0:02:15.239 what they did. And then from there we got into 0:02:15.280 --> 0:02:17.360 cloud software to manage all the data, and then the 0:02:17.400 --> 0:02:20.320 business just exploded. So today we're the market leader in 0:02:20.520 --> 0:02:24.960 car video. You know, obviously body cameras, record management systems, 0:02:26.440 --> 0:02:30.280 and drones and robotics through their partnerships or first party 0:02:30.840 --> 0:02:32.919 things that we do were i think the largest virtual 0:02:32.960 --> 0:02:36.359 reality training business and public safety, and now we're also 0:02:36.440 --> 0:02:40.280 expanding into adjacent markets. Any enterprise that has a security 0:02:40.280 --> 0:02:43.360 function has to be able to communicate with their local police, 0:02:43.639 --> 0:02:45.200 and you can either do that through an old school 0:02:45.280 --> 0:02:47.080 nine to one one call, or we have a number 0:02:47.080 --> 0:02:49.560 of tools on our platform that allow you, for example, 0:02:49.600 --> 0:02:52.040 if you're a school or a business, to share your 0:02:52.080 --> 0:02:54.600 security cameras in an emergency with police. So if you 0:02:54.639 --> 0:02:57.079 have something like an active shooter, you're not trying to 0:02:57.120 --> 0:02:59.240 describe it over the phone, you can immediately give video 0:02:59.280 --> 0:03:02.680 access to law enforcement at your control. You can shut 0:03:02.680 --> 0:03:04.480 it off when it's not necessary. And then of course 0:03:04.480 --> 0:03:08.520 we're layering artificial intelligence on across of this entire enormous 0:03:08.919 --> 0:03:12.480 network of sensors so that we can, you know, try 0:03:12.480 --> 0:03:14.799 to make everybody a little bit safer, but also doing 0:03:14.800 --> 0:03:16.720 it in a way that you know, is. 0:03:16.720 --> 0:03:19.040 Very cautious about privacy. 0:03:18.560 --> 0:03:20.160 To make sure we're doing this in a way that 0:03:20.280 --> 0:03:22.760 doesn't create you know, out of control surveillance. 0:03:23.240 --> 0:03:26.160 Rick, your i mean, your investors, will know, analysts will know, 0:03:26.240 --> 0:03:30.560 but not everyone is familiar with your founding story, which 0:03:30.600 --> 0:03:34.200 is intensely personal. Give us a quick recap of that, 0:03:34.320 --> 0:03:36.480 and tell me if you still see the company's mission, 0:03:36.480 --> 0:03:41.240 which is cutting police gun deaths as realistically achievable, and 0:03:41.840 --> 0:03:43.400 say this decade. 0:03:44.160 --> 0:03:46.560 Yeah, so I started this. 0:03:46.640 --> 0:03:49.720 I was in business school in Europe and I was 0:03:49.720 --> 0:03:52.640 having dinner with some people there who were you know. 0:03:52.680 --> 0:03:54.760 We were all talking about our hometown, and they said 0:03:54.800 --> 0:03:56.520 I would never go to America because of all the 0:03:56.520 --> 0:03:59.200 gun violence, and I said, well, hold on, it's not 0:03:59.240 --> 0:04:01.160 like you see on television. And then one of them 0:04:01.200 --> 0:04:03.440 asks me, do you know anybody who's been shot and killed? 0:04:03.680 --> 0:04:05.600 And as I thought about it, well, yeah, there's two 0:04:05.600 --> 0:04:09.120 guys from my high school football team, and look, we 0:04:09.120 --> 0:04:10.520 weren't super close friends. 0:04:10.560 --> 0:04:12.680 But that's not the point. The point of it was 0:04:12.720 --> 0:04:13.480 that all of. 0:04:13.440 --> 0:04:16.040 Us, I mean, I bet each of you know people 0:04:16.080 --> 0:04:18.440 in your immediate circle who've been shot and killed. This 0:04:18.480 --> 0:04:21.480 is a problem that touches everybody. And by the time 0:04:21.520 --> 0:04:22.960 I added it up, I think I know five or 0:04:23.000 --> 0:04:25.640 six people who've been shot and killed. And that just 0:04:25.680 --> 0:04:28.720 struck me as a bizarre state of the universe. That 0:04:28.800 --> 0:04:31.960 the way we protect ourselves in the nineteen nineties much 0:04:32.000 --> 0:04:35.600 less twenty twenty five is shooting bullets at people. We 0:04:35.600 --> 0:04:39.799 were doing that with like pirates in the sixteen hundreds, 0:04:40.080 --> 0:04:42.520 and so we're on a mission to make the bullet 0:04:42.560 --> 0:04:46.839 obsolete by creating better technology, basically something similar to Captain 0:04:46.880 --> 0:04:47.960 Kirk's phaser. 0:04:47.880 --> 0:04:50.440 From Star Trek Fame. That's what we're out to. 0:04:50.360 --> 0:04:52.200 Build, because if we have that weapon, it would no 0:04:52.279 --> 0:04:53.839 longer make sense to shoot anybody. 0:04:54.160 --> 0:04:56.040 And yeah, we were getting pretty close. 0:04:56.120 --> 0:05:00.560 Not it's not wireless like Captain Kirks, but we are 0:05:00.600 --> 0:05:04.239 approaching a level of reliability where we now have countries 0:05:04.279 --> 0:05:07.080 outside of the US talking about using the taser instead 0:05:07.080 --> 0:05:10.000 of a gun. In the US, we wouldn't suggest that, 0:05:10.120 --> 0:05:12.440 but we can't suggest that the taser is gaining the 0:05:12.480 --> 0:05:14.640 point where you would use it first. It would become 0:05:14.680 --> 0:05:16.919 your primary weapon and the gun would be more of 0:05:16.920 --> 0:05:19.080 a backup only for the most extreme cases. 0:05:19.200 --> 0:05:20.840 And if we achieve that, then yeah, we. 0:05:20.760 --> 0:05:23.080 Think we can cut gun deaths in American policing by 0:05:23.080 --> 0:05:25.520 fifty percent by twenty thirty three is our goal. 0:05:25.960 --> 0:05:29.560 So tell me about the numbers where you are seeing 0:05:30.279 --> 0:05:32.440 that as a result of your device, is that things 0:05:32.640 --> 0:05:37.120 are getting better, at least for police folks and security folks. 0:05:38.160 --> 0:05:41.320 Well, we have not yet bent the curve, meaning we're 0:05:41.320 --> 0:05:44.800 not seeing the numbers coming down, because the overall trend 0:05:44.920 --> 0:05:49.039 is still slowly inching upward, although this year it's lower 0:05:49.080 --> 0:05:51.600 than last year. But I think it's premature for us 0:05:51.640 --> 0:05:53.400 to claim that that is our effect. 0:05:53.480 --> 0:05:53.920 Yet. 0:05:54.400 --> 0:05:56.480 We do know that over the past thirty years I've 0:05:56.480 --> 0:05:59.560 been doing this, there's around three hundred thousand uses where 0:05:59.600 --> 0:06:02.719 police could have been legally justified to use lethal force 0:06:03.040 --> 0:06:05.359 but they were able to resolve it with the taser instead. 0:06:06.160 --> 0:06:08.880 This next two years is going to really be critical 0:06:09.320 --> 0:06:13.240 because up until now taser weapons have been largely used 0:06:14.880 --> 0:06:17.560 not really in the most critical situations. They would use 0:06:17.600 --> 0:06:19.960 it to capture somebody who is potentially violent but not 0:06:20.040 --> 0:06:20.920 an immediate risk. 0:06:21.680 --> 0:06:23.000 We've introduced a couple of. 0:06:23.040 --> 0:06:25.400 Key technologies that we're testing now in the field, and 0:06:25.400 --> 0:06:27.640 I can go into detail if you're interested, that we 0:06:27.760 --> 0:06:31.680 think move our effective reliability up into the ninety nine 0:06:31.720 --> 0:06:35.960 percent area, at which point then we think it becomes 0:06:36.000 --> 0:06:39.279 reasonable that the police would begin using taser as their 0:06:39.320 --> 0:06:42.719 primary first weapon, always keeping the taser the gun as 0:06:42.760 --> 0:06:43.719 a fallback. 0:06:44.040 --> 0:06:48.120 Rick, you mentioned business school in Europe. I guess you 0:06:48.160 --> 0:06:52.160 went to school in Belgium before Chicago, but you studied 0:06:52.240 --> 0:06:57.880 first neuroscience at Harvard. How does that kind of background 0:06:58.560 --> 0:07:03.280 influence your decisions today at a company that you know 0:07:03.360 --> 0:07:04.760 touches so many nerves. 0:07:05.960 --> 0:07:08.680 Yeah, well, I mean the whole name of the company, Axon, 0:07:08.880 --> 0:07:11.960 is a little bit of neurobio geek speak, because the 0:07:11.960 --> 0:07:14.040 Axon is the name of the long nerve fibers that 0:07:14.120 --> 0:07:19.160 connect your brain to your muscles, and indeed it touches 0:07:19.200 --> 0:07:20.040 a number of ways. 0:07:20.840 --> 0:07:22.240 When I first wrote. 0:07:21.960 --> 0:07:25.360 My college application and actually showing my son I had 0:07:25.400 --> 0:07:27.520 a copy of it, they asked, what do you want 0:07:27.520 --> 0:07:28.880 to do with your life? And I said I wanted 0:07:28.880 --> 0:07:31.800 to build robotic limbs. And it was like Luke Skywalker's 0:07:31.800 --> 0:07:35.120 you know, robotic can. I love this idea of a 0:07:35.160 --> 0:07:37.640 machine that can interface to the human body and almost 0:07:37.680 --> 0:07:40.800 become a part of you. Then, after this incident, and 0:07:40.840 --> 0:07:43.440 I mean my interest rising in gun violence, I took 0:07:43.440 --> 0:07:45.920 a different turn. Instead of building a machine that your 0:07:45.960 --> 0:07:49.520 brain could control, I build machines that control your body 0:07:49.600 --> 0:07:50.480 through your nervous system. 0:07:50.480 --> 0:07:51.800 I mean, that's what Ataser does. 0:07:51.840 --> 0:07:55.000 We plug in, we tune this electricity so that it 0:07:55.160 --> 0:07:58.640 overwhelms communication, and you have something that looks like a seizure. 0:07:58.960 --> 0:08:02.360 Because we're flooding your nervous system with electrical energy. Your 0:08:02.400 --> 0:08:07.000 muscles lock up. It is a temporary effect, but extremely debilitating. 0:08:07.680 --> 0:08:09.480 And then if we think about the other parts of 0:08:09.520 --> 0:08:12.120 our business. When we got into the camera business, we 0:08:12.200 --> 0:08:15.720 realized the cameras themselves are kind of kind of interesting, 0:08:15.760 --> 0:08:18.800 but it's not nearly the business that if we can 0:08:18.800 --> 0:08:22.200 connect all these sensors together and begin to think of 0:08:22.240 --> 0:08:24.960 this like a giant neural network, like for a police 0:08:24.960 --> 0:08:28.480 department like an NYPD with a thirty five thousand officers, 0:08:28.960 --> 0:08:31.679 what if we could begin to have live data feeds 0:08:31.800 --> 0:08:34.840 that would enable command and control in more real time, 0:08:35.080 --> 0:08:38.800 so we could identify, Hey, this situation is escalating, Let's 0:08:38.800 --> 0:08:41.800 send reinforcements before the officer even calls over the radio. 0:08:42.240 --> 0:08:44.760 Or we might even identify things like, hey, this situation 0:08:44.880 --> 0:08:47.320 over here is spinning out of control. If you think 0:08:47.360 --> 0:08:52.400 about all the horrible policing situations like George Floyd over 0:08:52.400 --> 0:08:55.160 the past ten years, I believe now that any one 0:08:55.200 --> 0:08:58.000 of those could be detected with AI running on the 0:08:58.120 --> 0:09:00.720 audio video feed of a camera and that is a 0:09:00.760 --> 0:09:03.240 capability that we're building now. 0:09:03.600 --> 0:09:05.679 We do have live feeds now, but to have live. 0:09:05.520 --> 0:09:09.640 Feeds being AI monitored in real time, that'll happen in 0:09:09.640 --> 0:09:11.920 the next twelve months, and I think that's going to 0:09:11.920 --> 0:09:14.360 be a huge boon to make policing more effective, safer, 0:09:14.880 --> 0:09:19.000 and to help agencies identify if a situation spinning out 0:09:19.040 --> 0:09:23.080 of control so they can intervene now instead of prosecuting 0:09:23.120 --> 0:09:26.280 somebody tomorrow. You know, if something wrong is happening. 0:09:26.679 --> 0:09:29.880 How much of your business's governments and I'm just curious. 0:09:30.280 --> 0:09:32.800 It does feel like there's going to be some municipalities 0:09:33.520 --> 0:09:36.280 under pressure in terms of funding, and I'm just curious 0:09:36.280 --> 0:09:39.319 how that could play into or impact demand at your company. 0:09:39.679 --> 0:09:43.440 Yeah, so we're still majority government business, but the fastest 0:09:43.440 --> 0:09:48.520 growing segment is enterprise. The enterprise security is two to 0:09:48.520 --> 0:09:51.599 three times larger than public you know, policing in the 0:09:51.679 --> 0:09:54.560 United States in terms of manpower, and so there's a 0:09:54.600 --> 0:09:56.520 huge opportunity there. But if I come back to your 0:09:56.600 --> 0:10:00.360 question about municipal policing, you know, we've member of the 0:10:00.360 --> 0:10:02.920 two thousand and eight financial crisis and others, and what 0:10:02.960 --> 0:10:06.080 we have found is if you look at a police agency, 0:10:06.240 --> 0:10:10.360 the majority of their spend is on cops, cars and gas. 0:10:10.760 --> 0:10:13.720 That's like ninety percent of their spend. So their tech 0:10:13.760 --> 0:10:17.080 spend is a relatively small portion of their overall budget. 0:10:17.240 --> 0:10:20.400 And when budgets get compressed, what we see is they 0:10:20.440 --> 0:10:22.880 really look to technology where they're saying, look, we need 0:10:22.920 --> 0:10:25.120 to get more efficient. We can't just throw bodies at things. 0:10:25.280 --> 0:10:28.240 And I'll give you one example. Our first major AI 0:10:28.360 --> 0:10:31.840 product using generatord ai is a service called Draft one, 0:10:32.200 --> 0:10:33.880 and what we do very simply. We take your body 0:10:33.920 --> 0:10:36.840 camera footage, we feed it through an AI model, and 0:10:36.920 --> 0:10:39.040 we actually just use the audio. We don't even need 0:10:39.040 --> 0:10:42.240 the video, We use the audio track, and we do 0:10:42.360 --> 0:10:45.160 the first draft of your police report because it turns out, 0:10:45.240 --> 0:10:48.520 you know, police interactions are pretty standard. You know, hell man, 0:10:48.559 --> 0:10:50.600 what's your name? Data birth, you know why I stopped you, 0:10:51.000 --> 0:10:53.960 and you can from that extract the information that we 0:10:54.040 --> 0:10:58.160 need to put the structured report narrative together. It's about 0:10:58.160 --> 0:11:02.000 the eighty percent completion and that basically means we're cutting 0:11:02.040 --> 0:11:04.800 the amount of time police spent on bureaucracy by up 0:11:04.800 --> 0:11:07.480 to sixty or seventy percent, which is either not doing 0:11:07.480 --> 0:11:08.319 more work. 0:11:08.240 --> 0:11:12.480 Huge because only fourteen percent of police departments across the 0:11:12.600 --> 0:11:16.280 nation are actually fully staffed, and in the most recent survey, 0:11:16.400 --> 0:11:19.400 seventy five percent of police who responded said they do 0:11:19.480 --> 0:11:23.360 want AI to help them out. It seems like, and 0:11:23.400 --> 0:11:25.280 this is not a pun on your neuroscience degree, but 0:11:25.360 --> 0:11:26.320 seems like a no brainer. 0:11:27.800 --> 0:11:29.040 It's a little bit of all. 0:11:29.040 --> 0:11:31.480 I'm a little biased, but I think so, Hey. 0:11:31.480 --> 0:11:32.320 Just thirty seconds. 0:11:32.360 --> 0:11:36.040 I'm curious because we talked about I think robotics kind 0:11:36.040 --> 0:11:37.720 of came up, and you talked about your interest. 0:11:37.920 --> 0:11:41.040 Empire strikes back the last scene, you know, Luke skywalkers 0:11:41.280 --> 0:11:41.640 his hand. 0:11:41.800 --> 0:11:45.000 Yes, Like, is robotics something that you guys are thinking 0:11:45.040 --> 0:11:47.240 in terms of security going forward? Is that an area 0:11:47.240 --> 0:11:49.760 that you guys might stay. 0:11:49.200 --> 0:11:50.920 Tuned, stay tuned. 0:11:51.120 --> 0:11:54.720 The solution to the American gun violence problem, in my 0:11:54.840 --> 0:11:58.200 personal belief, is we've got to change the game. And 0:11:58.200 --> 0:11:59.960 what I mean by that is today, when an act 0:12:00.040 --> 0:12:03.200 of shooter shows up, they have no illusions they're going 0:12:03.280 --> 0:12:05.280 to come out of it alive. They want to go 0:12:05.440 --> 0:12:09.400 down in some sick twisted vision of a glorious gun 0:12:09.440 --> 0:12:10.439 battle with the police. 0:12:11.679 --> 0:12:13.240 In a couple of years, we are. 0:12:13.160 --> 0:12:14.800 Going to deny them that if you show up with 0:12:14.840 --> 0:12:17.600 a gun somewhere, we will zip in very quickly with 0:12:17.600 --> 0:12:20.679 a robot using less lethal force. You'll be arrested and 0:12:20.720 --> 0:12:24.160 under control very quickly. And we're going to deny them 0:12:24.200 --> 0:12:28.480 the entire sort of motivation to get in gun fights. 0:12:28.920 --> 0:12:30.520 And I think we can do things with drones and 0:12:30.640 --> 0:12:33.000 robotics that you can never do with people, and we 0:12:33.040 --> 0:12:35.960 can do it without having to resort to lethal force. 0:12:36.280 --> 0:12:38.800 So stay tuned. We're making a big play in that space. 0:12:39.040 --> 0:12:41.840 Sounds like you got to come back real soon. So appreciated, 0:12:41.920 --> 0:12:42.600 So appreciate it. 0:12:42.679 --> 0:12:45.640 Rick Smith be well, founder and CEO of ex On 0:12:45.760 --> 0:12:48.440 joining us on this Tuesday. And as we mentioned, we're 0:12:48.440 --> 0:12:51.000 seeing that stock move in a big way following me 0:12:51.040 --> 0:12:51.800 its latest results. 0:12:51.840 --> 0:12:52.840 Let me just pull it up for. 0:12:52.800 --> 0:12:55.480 You can add that guy to the list of guests. 0:12:55.600 --> 0:12:56.160 Don't take it. 0:12:56.280 --> 0:12:59.200 I steal from your show and use on my show. 0:13:00.240 --> 0:13:03.400 Have that co host anymore? Done? 0:13:03.840 --> 0:13:04.160 All right? 0:13:04.360 --> 0:13:06.160 I want a story? I mean what an incredit? The 0:13:06.160 --> 0:13:09.679 stock chart is amazing. Now the story behind it when 0:13:09.720 --> 0:13:12.600 he started that company in nineteen ninety three, well, he's 0:13:12.640 --> 0:13:15.120 been at this for thirty two years. 0:13:15.240 --> 0:13:17.320 I love these people who come have different backgrounds. 0:13:17.360 --> 0:13:19.400 It's like doctors who are engineers who are looking at 0:13:19.400 --> 0:13:20.520 the body in a different payment. 0:13:20.600 --> 0:13:21.640 Here he is in terms of. 0:13:21.559 --> 0:13:25.320 His background and understanding how the brain works and the 0:13:25.360 --> 0:13:26.160 impact on things. 0:13:30.760 --> 0:13:34.760 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:13:34.800 --> 0:13:38.280 live weekday afternoons from two to five pm Eastern. Listen 0:13:38.280 --> 0:13:41.880 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:13:42.000 --> 0:13:44.400 or watch us live on YouTube. 0:13:44.720 --> 0:13:48.200 This past week, shares of Wayfair sword following earnings. The 0:13:48.280 --> 0:13:51.640 online retailer reported second quarter results that were much stronger 0:13:51.720 --> 0:13:55.000 than expected. Our Bloomberg Intelligence team pointing out that the 0:13:55.000 --> 0:13:57.880 company's shares have surged around seventy percent this year on 0:13:57.960 --> 0:14:01.520 a strong first half, saying that the bottom for the 0:14:01.559 --> 0:14:04.720 company may be behind it and that it's positioned for 0:14:04.800 --> 0:14:08.719 sustained growth despite teriff related uncertainties. For more on the 0:14:08.760 --> 0:14:12.680 specialty retailer Wayfair, which calls itself quote the destination for 0:14:12.760 --> 0:14:15.720 all things home, we caught up with Wayfair chief financial 0:14:15.720 --> 0:14:18.199 officer Kate Gulliver. She joined us from Boston. 0:14:18.480 --> 0:14:22.000 I think you really saw two key things happening. So first, 0:14:22.160 --> 0:14:25.960 on the top line, our share gains continued to manifest 0:14:26.040 --> 0:14:29.360 and really accelerate, and that led to that five percent 0:14:29.480 --> 0:14:33.160 top line, six percent, you know, adjusting for the German 0:14:33.200 --> 0:14:36.520 business comp So that's pretty exciting for us. And then 0:14:36.560 --> 0:14:39.040 what you saw is a really nice flow through of 0:14:39.080 --> 0:14:42.200 that revenue to adjusted EBIT, you know, crossing that two 0:14:42.320 --> 0:14:45.200 hundred mark two five of adjusted EBIT. And I think 0:14:45.240 --> 0:14:47.800 that really shows the strength of the model efficiency of 0:14:47.840 --> 0:14:50.440 the cost takeouts over the last several years. So to 0:14:50.480 --> 0:14:53.920 have the nice revenue momentum the share gains paired with 0:14:53.960 --> 0:14:56.800 that cost efficiency. You know, for many quarters we said 0:14:56.800 --> 0:15:00.000 you should see that really significant flow through when that happened, 0:15:00.120 --> 0:15:02.480 and indeed that manifested in the second quarter. 0:15:02.720 --> 0:15:06.640 Kate, whenever I ask someone about the stock price and 0:15:06.680 --> 0:15:09.320 it doesn't look great, they always say, well, we're focused 0:15:09.320 --> 0:15:11.360 on doing business here and we don't care about the shares. 0:15:11.360 --> 0:15:14.520 But you got to care about them on some level, 0:15:14.800 --> 0:15:17.680 especially as a CFO. So you know, they've You've had 0:15:17.680 --> 0:15:20.480 an incredible year. Year to date, you're up like sixty 0:15:20.520 --> 0:15:22.800 six percent, but if I bring the chart out to 0:15:23.120 --> 0:15:25.640 you know, the COVID highs, you still have a long 0:15:25.680 --> 0:15:27.600 way to get back there. I think you're down seventy 0:15:28.120 --> 0:15:30.960 some percent from your twenty twenty one highs. 0:15:31.480 --> 0:15:32.480 Is that going to. 0:15:32.560 --> 0:15:35.880 Happen you think at wayfair or was that just you know, 0:15:36.000 --> 0:15:38.640 like la la land levels in the pandemic. 0:15:38.960 --> 0:15:42.760 Well, now we're focused on operating the business. But you know, Lelly, 0:15:43.760 --> 0:15:46.000 let me come back it a little bit for you, 0:15:46.080 --> 0:15:48.720 because you know, the reason you probably hear that answer 0:15:48.840 --> 0:15:51.200 is at the end of the day, we do believe that, 0:15:51.480 --> 0:15:55.240 you know, the valuation and sort of where investors see 0:15:55.240 --> 0:15:58.840 the business should over the long run follow the performance 0:15:58.880 --> 0:16:00.720 that we drive here at the comp and so our 0:16:00.760 --> 0:16:03.400 focus actually really is on how do we continue to 0:16:03.440 --> 0:16:06.520 take share and how do we continue to flow through 0:16:06.560 --> 0:16:11.200 that revenue into adjusted EBITTA dollars, into free cash flow 0:16:11.240 --> 0:16:13.440 growth and into you know metric that we look at 0:16:13.440 --> 0:16:16.560 where we call owners' earnings, which is that EBITA less 0:16:16.600 --> 0:16:19.840 our capex expense, less our stock based compensation. And we 0:16:20.000 --> 0:16:22.440 do want to continue to build on that over time, 0:16:22.480 --> 0:16:24.840 and we think we can and as we continue to 0:16:24.840 --> 0:16:26.760 grow the top line, as we continue to grow those 0:16:26.800 --> 0:16:29.080 adjusted EBITA dollars, you know, I firmly believe that the 0:16:29.160 --> 0:16:30.160 valuation will follow. 0:16:30.760 --> 0:16:34.720 Yeah, revenue just go ahead. Can it get back to that? 0:16:35.600 --> 0:16:38.000 Or was that just like everybody locked in at home 0:16:38.040 --> 0:16:40.480 and the government throwing money at American citizens. Is that 0:16:40.560 --> 0:16:45.240 why revenue climbed so high during the pandemic or can 0:16:45.280 --> 0:16:45.920 you get back. 0:16:45.800 --> 0:16:46.360 To that level? 0:16:46.760 --> 0:16:50.200 Yeah, so if you think about the category itself, obviously 0:16:50.360 --> 0:16:54.080 the category itself had a very you know, unique period 0:16:54.600 --> 0:16:58.440 during the pandemic where growth accelerating the category in twenty 0:16:58.520 --> 0:17:02.480 twenty and into twenty twenty one. The categories had significant 0:17:02.560 --> 0:17:05.720 pullback since then, in twenty two, twenty three, twenty four, 0:17:05.800 --> 0:17:07.640 and even still a bit in twenty five. We would 0:17:07.640 --> 0:17:09.800 say we think the category is sort of flat to 0:17:09.880 --> 0:17:13.320 slightly down, you know, low single digits in the past quarter. 0:17:13.680 --> 0:17:15.879 So the category is still under quite a bit of pressure. 0:17:16.280 --> 0:17:18.920 Can the category return to a normalized level of growth? 0:17:18.960 --> 0:17:21.879 Of course, right, the category and a normalized period grows, 0:17:22.280 --> 0:17:24.959 you know, sort of three to four percent the overall 0:17:25.000 --> 0:17:27.479 home goods category, and we do believe that we can 0:17:27.560 --> 0:17:30.160 return to double digit growth over time, you know, where 0:17:30.200 --> 0:17:32.800 we significantly outpace the category. That's what we did for 0:17:32.880 --> 0:17:36.920 the majority of our history, you know, significantly preceding the pandemic, 0:17:37.000 --> 0:17:38.880 and it's what we expect to do. You know, as 0:17:38.920 --> 0:17:41.879 the category returns to normalization. So, you know, can we 0:17:41.960 --> 0:17:44.480 ever get to the revenue that we had during the pandemic. Absolutely, 0:17:44.600 --> 0:17:46.520 we're quite confident in our ability to do that. 0:17:47.119 --> 0:17:52.080 You mentioned earlier about cost efficiencies of the model what specifically. 0:17:53.160 --> 0:17:55.520 Yeah, So over the last few years, we've been quite 0:17:55.600 --> 0:17:58.840 focused on a few things. One has been improving our 0:17:58.920 --> 0:18:03.520 overall sort of total overhead cost structure that manifests and 0:18:03.600 --> 0:18:06.000 that SOTG and a line in the P and L, 0:18:06.080 --> 0:18:07.960 and I would think about that as really our fixed 0:18:08.000 --> 0:18:11.280 cost basis. The majority of that line is labor, and 0:18:11.440 --> 0:18:13.760 so we have had a number of restructurings where we've 0:18:13.800 --> 0:18:17.680 reduced labor cost and that has shown up in that line. 0:18:17.720 --> 0:18:19.880 And we've said that where that line is right now, 0:18:20.359 --> 0:18:22.280 you know, at that three sixty to three hundred and 0:18:22.320 --> 0:18:24.480 seventy million dollar point, it should be able to hold 0:18:24.520 --> 0:18:27.800 there for some time even as we continue to grow 0:18:27.880 --> 0:18:30.560 the top line, we get ongoing efficiency from labor and 0:18:30.640 --> 0:18:32.520 as we you know, sort of continue to see the 0:18:32.560 --> 0:18:34.800 benefits of some of the growth investments that we've made. 0:18:35.040 --> 0:18:37.840 So that's one big area of cost management. We also 0:18:37.920 --> 0:18:41.320 have been improving our sort of structural gross margin. So 0:18:41.400 --> 0:18:43.440 we took out you know, cost in our supply chain, 0:18:44.160 --> 0:18:46.399 and that's really helped our gross margin. And we've added 0:18:46.480 --> 0:18:50.080 some supplier services like supplier advertising, which have helped improve 0:18:50.119 --> 0:18:53.040 that gross margin as well. We've reinvested, you know, a 0:18:53.080 --> 0:18:55.560 significant portion of that back in the customer experience and 0:18:55.640 --> 0:18:58.199 the form of price and the form of delivery experience. 0:18:58.640 --> 0:19:01.160 And so we've held that gross margin thirty to thirty one, 0:19:01.680 --> 0:19:04.160 but structurally been able to drive it higher and instead 0:19:04.240 --> 0:19:06.680 give it back to the consumer and then float that 0:19:06.920 --> 0:19:09.800 through and ultimately you know, cover off on that fixed 0:19:09.840 --> 0:19:10.480 cost basis. 0:19:11.440 --> 0:19:13.840 I wonder how you deal with tariffs because you have 0:19:13.960 --> 0:19:17.960 so many suppliers. But you know, furniture making in the 0:19:18.080 --> 0:19:22.760 United States of America has is far from its from its. 0:19:22.680 --> 0:19:23.680 Peak these days. 0:19:23.760 --> 0:19:26.760 So do you get suppliers to kind of eat that 0:19:27.080 --> 0:19:29.000 are you taking some of it into your margin? And 0:19:29.040 --> 0:19:31.160 how much are you passing on to the consumer? 0:19:32.520 --> 0:19:36.200 Yeah, you know, we talked about actually, you know in 0:19:36.359 --> 0:19:39.080 May when Carol and I spoke before, was that we 0:19:39.160 --> 0:19:42.439 thought the benefits of our marketplace model would help us 0:19:42.600 --> 0:19:46.080 manage the tariffs. And that's because we are able, you know, 0:19:46.160 --> 0:19:47.880