Speaker 1: We're from Mahard.
Speaker 2: We're Innovations, Money and Power Collie in Silicon Vallet NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: Ahmed Ludlow, Good morning from San Francisco. Caroline highs off today.
Speaker 3: This is Bloomberg Technology. Coming up on the program. Full
Speaker 3: coverage of tech earnings as Amazon and Apple prepare to
Speaker 3: report this week. We'll discuss with Denny Fish of Janis
Speaker 3: Henderson plus Walmart buying Tiger Global's flip cart.
Speaker 4: Steak for one point four billion dollars.
Speaker 3: We'll break down the company's big bet on the Indian
Speaker 3: retailer and shares of Sofi surging today as the online
Speaker 3: bank raises revenue guidance. We'll look at the results with
Speaker 3: CEO Anthony Nota. For this week's m Live Pole survey,
Speaker 3: we asked investors if they intend to increase or decrease
Speaker 3: their exposure to tech stocks over the next six months.
Speaker 4: That's the question.
Speaker 3: The data shows many betting that the great tech rally
Speaker 3: of twenty twenty three has saying power that some appear
Speaker 3: skeptical that the artificial intelligence era will live up to
Speaker 3: the hype.
Speaker 4: Interesting. This is the numbers.
Speaker 3: We're going to break those down very shortly into the
Speaker 3: AI theme.
Speaker 5: It's three to five years is the way you buy these.
Speaker 5: This is not going to be a short term story.
Speaker 4: Zach is super expensive relative to the rest of the market.
Speaker 2: This train is crowded. I think it's going to unraveled.
Speaker 6: I look at this as a nineteen ninety five moment,
Speaker 6: biggest transformation that we've seen in Tach in thirty years.
Speaker 5: There's a massive growth opportunity ahead of them. The AI
Speaker 5: creators and the beneficiaries seem to be centered in large
Speaker 5: cap tech and that's where you have to go to
Speaker 5: take advantage of it.
Speaker 6: But I think that's why this is just what's going
Speaker 6: to wed Obviously Spiede, fed and Marca. It's the star
Speaker 6: of a new tech bomb.
Speaker 3: Marking joining us now Denny Fish, he manages the four
Speaker 3: point three billion dollar Janie Hennis and Global Technology and
Speaker 3: Innovation Fund. Same question to you, Although your focus is
Speaker 3: pretty clear, do you increase your exposure to certain corners
Speaker 3: of the tech market right now?
Speaker 4: What do you pull back?
Speaker 7: Well? Definitely, I mean my job running in a sector
Speaker 7: fund is I'm always invested in technology. Yeah, so so
Speaker 7: clearly you know, we move capital around based on where
Speaker 7: we feel the best opportunities are, you know, and you know,
Speaker 7: if we just look over the last week and just
Speaker 7: you know, think about their earnings that we've seen, and
Speaker 7: you know, and some of the data points that are
Speaker 7: giving us some direction going forward. You know, the you know,
Speaker 7: large tech names, you know, things have been pretty good
Speaker 7: so far. The digital advertising names Meta and Alphabet, you know,
Speaker 7: things are starting to get better. The semiconductor complex, you know,
Speaker 7: for the most part, has actually been a little bit
Speaker 7: better than expectations as we get through sort of the
Speaker 7: trough of the cycle and a lot of the parts
Speaker 7: of that sector. And then you know, generally speaking, software
Speaker 7: has been pretty good too. So you know, all things considered,
Speaker 7: things things have been pretty good.
Speaker 4: Let's go back to last week.
Speaker 3: Is there a common thread between all of the names
Speaker 3: that reported They give you a kind of macro view
Speaker 3: of the tech sector right now?
Speaker 7: Yeah, yeah, it really does. So, as I mentioned, there
Speaker 7: are certain parts that are getting better, like digital advertising,
Speaker 7: which is good. And then you know, in semis it's
Speaker 7: really been all about the areas that are really really good.
Speaker 7: You talked about on semiconductor today they reported this morning, Uh,
Speaker 7: you know, exposure to auto has been great. Silicon carbide
Speaker 7: is one of the most you know, significant themes within
Speaker 7: semis right now, you know, and then clearly accelerated computing.
Speaker 7: If you just listen to the transcripts and the earnings
Speaker 7: calls from Microsoft, from Meta, from Alphabet, from others within
Speaker 7: the semi ecosystem, it's just accelerated computing i e. You know,
Speaker 7: GPUs and FPGAs, they're just sucking all the air out
Speaker 7: of the room right now. And so that's a really
Speaker 7: important theme. And then you know something that maybe isn't
Speaker 7: as well noticed by the average investor within the silicon
Speaker 7: or the semiconductor supply chain because of this growth in
Speaker 7: accelerated computing, it's creating the need for different types of
Speaker 7: packaging as well. So there are a lot of you know,
Speaker 7: interesting ways to actually play that. And then also, you know,
Speaker 7: talking about silicon carbide for example, material science is having
Speaker 7: a bigger and bigger impact within the semiconductor supply chain
Speaker 7: as well. So those are really really interesting areas because
Speaker 7: that's what enables evs the grid like anything that's you know,
Speaker 7: power enabled.
Speaker 3: Go back to that idea on packaging really quick. We
Speaker 3: have the Intel CEO Packed now singer on with us Friday.
Speaker 3: It's kind of an area of their business that they
Speaker 3: don't talk about as much, or perhaps we didn't ask,
Speaker 3: but we are trying to find out what happens when
Speaker 3: we get past the hype of Nvidia and the H
Speaker 3: one hundreds, right, what's left for the rest to come in?
Speaker 3: And you seem to suggest there are other opportunities.
Speaker 7: Yeah, absolutely, I mean we could go down to the
Speaker 7: most basic level. So if you even think about Intel,
Speaker 7: you know they're now, you know, ramping up a foundry business.
Speaker 4: Okay, the foundry.
Speaker 7: You can't produce GPUs without foundry okay. And at the
Speaker 7: same time, uh, the foundry can't exist without sem of
Speaker 7: conductor capital equipment. So so that's really really important. And
Speaker 7: these are all derivative plays. And then you can't actually
Speaker 7: design GPUs without electronic design automation software. And so these
Speaker 7: are all like really really good sub industries within you know,
Speaker 7: this bigger broader theme in ways that you can that
Speaker 7: should have multi year tailwinds associated with the question always
Speaker 7: comes back to, Okay, what you know, what percentage of
Speaker 7: the business is actually being driven by AI or or
Speaker 7: you know, other things, and really, you know, they're the
Speaker 7: real direct plays like the Anvitias of the world, but
Speaker 7: then they are all these other different, you know, players
Speaker 7: within the eCos that also benefit as well.
Speaker 3: We had Jonathan Curtis of Franklin Templeton on the show
Speaker 3: last week, director of Portfolio Management, and he explained the
Speaker 3: reason he counts references to AI or artificial intelligence in
Speaker 3: the earnings transcripts is because it shows intention. It's evidence
Speaker 3: of a willingness to jump into that field. Do you
Speaker 3: put any value in that data set simply talking about AI?
Speaker 7: Well, everybody's talking about AI right now, so you really
Speaker 7: have to distill fact from fiction. But there are you know,
Speaker 7: a really great conference call last week was the Meta
Speaker 7: conference call, and it wasn't just talking about AI, but
Speaker 7: very very specific ways in which the company is leveraging
Speaker 7: AI to actually improve its economics. And so it's everything
Speaker 7: from increasing the effectiveness of ad targeting, so return on
Speaker 7: ads then goes up for their customers being able to
Speaker 7: auto generate content, which is really really interesting, you know,
Speaker 7: it's kind of the fundamental principle of generative AI. And
Speaker 7: then one of the things that they've wanted to do
Speaker 7: for years is monetize their messaging platforms more effectively with
Speaker 7: click to messaging, and now with AI and empowering, that
Speaker 7: should enable them to actually monetize WhatsApp, Facebook Messenger, Instagram
Speaker 7: messaging in a much more meaningful way than they have historically.
Speaker 3: Susan Lee, the Meta CFO, is on the program talking
Speaker 3: about how AI recommendations kind of played a role in
Speaker 3: that outlook for the current period being strong. We have
Speaker 3: to think about this week, Amazon and Apple to literal megacaps,
Speaker 3: with megaanames in the world of technology. What are you
Speaker 3: expecting or hoping to hear from them.
Speaker 7: Yeah, yeah, that's a good question to expect end hope, Well,
Speaker 7: I think in Amazon's case, there's a wider range of outcomes,
Speaker 7: and the hope would be that we see a real
Speaker 7: nice inflection in North American retail profitability because that's been
Speaker 7: the part of the business that has had a tougher
Speaker 7: time because of for builds and over hiring during the pandemic,
Speaker 7: having to digest their logistics investments. But we're starting to
Speaker 7: get through that and so seeing progress there will be important.
Speaker 7: We had Prime Day, you know, which you know was
Speaker 7: clearly the best Prime Day ever, and so should hear
Speaker 7: more about that, and then Amazon Web Services is obviously
Speaker 7: a big component of the valuation of the company. We
Speaker 7: expect it to continue to decelebrate but stable, much in
Speaker 7: the same way that Microsoft was and Google was with
Speaker 7: their cloud computing platforms. And then the hope there would
Speaker 7: be that as you know, we're that we're getting through
Speaker 7: the optimizations that all of the cloud providers have talked
Speaker 7: about over the last couple of quarters, just given some
Speaker 7: of the macroheadwinds. And then last but not least, you know, advertising,
Speaker 7: it's a very significant part of the profitability equation for Amazon.
Speaker 7: And what we've seen out of Meta, what we've seen
Speaker 7: out of Alphabet, what we saw out of Roku late
Speaker 7: last week, the advertising market seems to be getting and
Speaker 7: so that that should that should bode well for Amazon
Speaker 7: as well. So I think you mix all that up,
Speaker 7: you know, hoping for a you know, a good, you know,
Speaker 7: better than expected report with key improvements in those three areas.
Speaker 3: Danny, of all the names you hold in your funds,
Speaker 3: which from a technology perspective impressed you the most, which
Speaker 3: is the innovator right now?
Speaker 4: Big or small?
Speaker 7: Yeah, Yeah, that's that's that's a good question. I would
Speaker 7: say if we think about the two companies that have
Speaker 7: probably been on their front foot more than any others
Speaker 7: as it relates to AI, Clearly Microsoft. You know, it
Speaker 7: was very pression of them to do the investment into
Speaker 7: open Ai. They had a lot of investments across their
Speaker 7: portfolios well before people were even talking about it, you know,
Speaker 7: chat GPT was the moment in November, but they were
Speaker 7: laying the tracks for you know, how they're positioned over
Speaker 7: the last several years. You know, clearly in Vidia, I
Speaker 7: mean you just it's it's the only like real one
Speaker 7: pure play on AI because they dominate the market for
Speaker 7: GPUs and then you know, they dominate accelerated computing and
Speaker 7: you know, and that's where all the capital's going. You know,
Speaker 7: it's interesting if you actually dissect capex that we've heard,
Speaker 7: which is growing across all the major platforms, and look
Speaker 7: at you know, the percentage that's going to accelerated computing
Speaker 7: and compute versus what's going to buildings. It's a material
Speaker 7: increase for you know, a company like Nvidia.
Speaker 4: So those would be two.
Speaker 3: Then you failed with Janice Anderson such a broad knowledge
Speaker 3: base and a lot of companies in those Funds, Thank
Speaker 3: you for your time. Walmart is staking its claim in
Speaker 3: India's retail market, paying one point four billion dollars to
Speaker 3: Tiger Global Management for its remaining stake in e commerce
Speaker 3: company Flipcart. Reports say VC firm Excel also agreed to
Speaker 3: sell it's one percent steak in flip Cart to Walmart,
Speaker 3: joining us. Now with all the details, Bug's Brendan case
Speaker 3: who covers Walmart and Hemma Palmer out of New York
Speaker 3: covering all things Hedge Funds. Okay, Brendan, let's start with you.
Speaker 3: What's the Walmart side of this story? Why go to
Speaker 3: boost the steak and flip Cart.
Speaker 8: I think from Walmart's standpoint, what this deal shows is
Speaker 8: the company's willingness to deepen its bet on India. Walmart's
Speaker 8: been pairing its international portfolio in recent years. It's gotten
Speaker 8: out of markets like the UK, Brazil, Japan, and if
Speaker 8: you look at what's left, the jewels in the crown
Speaker 8: are big important businesses in Mexico and Canada, an important
Speaker 8: business in China, and then India where Flipkart is one
Speaker 8: of the biggest e commerce companies in the country.
Speaker 3: Hemma other side of the table, Tiger why did they sell?
Speaker 9: Yeah, So, Tiger also been very keen on Indian investments.
Speaker 9: They were an early investor in flip cart back in
Speaker 9: two thousand and nine, getting in at like a forty
Speaker 9: two million dollar valuation. What this deal lets them do
Speaker 9: is in this environment when there are so few your IPOs,
Speaker 9: it helps them provide distributions to their investors and provide
Speaker 9: a return to them. They got a pretty good price
Speaker 9: for their exit given how early they got in.
Speaker 1: Yeah.
Speaker 3: Here on Bloomberg Technology, guys, I think we focus on
Speaker 3: India a lot simply because there's so many people there, right, Brendan,
Speaker 3: it's a big market opportunity. What's Walmart said about India
Speaker 3: and its potential for them?
Speaker 8: So, from the perspective of Walmart executives in Arkansas, India
Speaker 8: is very very meaningful. They first went into Flipkart in
Speaker 8: twenty eighteen. They bought a majority stake for sixteen billion dollars.
Speaker 8: That's actually Walmart's biggest ever acquisition. And now they've got
Speaker 8: flip cart going toe to toe with Amazon and other
Speaker 8: companies in India. The other part of it is phone pay,
Speaker 8: which is a digital payments company which used to be
Speaker 8: part of flipcart. The two separated in December, and Walmart's
Speaker 8: got really high hopes for both companies. It's talked about
Speaker 8: the potential for an initial public offering. Timing remains murky,
Speaker 8: but that's definitely something that could move the needle for
Speaker 8: the parent company as a whole.
Speaker 4: Hem A.
Speaker 3: You outline the reasons why Tiger got out of this investment, right,
Speaker 3: but give me some of the history. Why did they
Speaker 3: first get in and has it been a success for them?
Speaker 9: Yeah, so they had been an early investor in a
Speaker 9: number of Asia Asian companies. They got into flipcot in
Speaker 9: two thousand and nine. They built up a stake of
Speaker 9: a billion dollars over the years. In the past five
Speaker 9: six years, they sold some of their steak and this
Speaker 9: is the final exit for them. But what this means
Speaker 9: for investors in the fund is investors are getting a
Speaker 9: three point five billion dollar return. That's the gain on
Speaker 9: that basically one billion dollar investment. So it's a pretty
Speaker 9: good exit.
Speaker 1: You know.
Speaker 9: Keep in mind that the valuation of flip kurt is
Speaker 9: the deal was valued lower than the last round, but
Speaker 9: not terribly lower. You know, the the last round was
Speaker 9: about thirty eight billion dollars the valuation of flip cart,
Speaker 9: and this deal was done at a valuation of about
Speaker 9: thirty five.
Speaker 3: It's an interesting on the e commerce side, Brendan. It
Speaker 3: kind of fits in with the Walmart we know, but
Speaker 3: you and I spend a bit of time out in
Speaker 3: Arkansas looking under the hood. Pardon the punt of what
Speaker 3: else Walmart's investing in on the tech side. Where does
Speaker 3: flip cart fit in in within the broader tech strategy
Speaker 3: for Walmart?
Speaker 8: Certainly flip cart and phone pay are a big piece
Speaker 8: of the puzzle. Yeah, I think it's fair to say
Speaker 8: that Walmart has learned a lot from those companies and
Speaker 8: will probably can continue to learn more from those companies
Speaker 8: if you shift the focus back to the US, You're
Speaker 8: still talking about a big focus on e commerce, and
Speaker 8: in terms of an investment, the way that's kind of
Speaker 8: manifesting itself right now is in sort of a rethinking,
Speaker 8: kind of an overhaul of a lot of distribution centers
Speaker 8: and a lot of stores, basically boosting the bet on automation,
Speaker 8: robotics and trying to just become more efficient in terms
Speaker 8: of fulfilling the online demand.
Speaker 4: That they have.
Speaker 3: All right, team reporting thanks to Bloomberg's hem Obama out
Speaker 3: of New York. Brennan case had adelas mister big Box.
Speaker 3: We call him mister Walmart. Time for talking tech. First Up,
Speaker 3: Disney and NBC are paying lobbyists to watch over legislation
Speaker 3: that would bar them from using AI as a state
Speaker 3: tax break. The New York bill comes as both companies
Speaker 3: battle Hollywood writer and actor strikes over the future use
Speaker 3: of AI, displacing workers in film and TV productions. Plus
Speaker 3: Curve Finance, a native token of one of crypto's top
Speaker 3: decentralized exchanges, tumbled after the platform said it had been hacked.
Speaker 3: A glitch in programming language Viper, which is widely used
Speaker 3: in DeFi apps, led to estimated losses ranging from twenty
Speaker 3: to forty million US dollars, and US and European officials
Speaker 3: are growing increasingly concerned by China's rush into the product
Speaker 3: of legacy chips. President Biden limited controls over China's ability
Speaker 3: to secure these advanced chips the power AI models, but
Speaker 3: Beijing's responded by pouring billions of dollars into factories for
Speaker 3: the so called legacy chips that are not banned and
Speaker 3: are still essential to the global economy. Let's stick with
Speaker 3: a story and bring in Bloombo's Cada lines outed DC.
Speaker 3: The concerns are clear. The question is what are they
Speaker 3: going to do about it?
Speaker 10: Yeah, and it's a really tough question ed because they
Speaker 10: want to tread semi lightly with China here. They are
Speaker 10: trying to be very targeted, narrow specific in the restrictions
Speaker 10: they put into place so as not to escalate in
Speaker 10: dramatic fashion this trade war in tit for tat that
Speaker 10: is going on between the largest economies. Hence why the
Speaker 10: Biden administration specifically focused on this advanced chip making technology.
Speaker 4: They didn't really touch.
Speaker 10: Anything bigger than fourteen nanometers, so that leaves legacy chips
Speaker 10: is essentially fair game for China, typically those twenty eight
Speaker 10: nanimeters and wider, and that is really what they're ramping
Speaker 10: up here. Yes, that technology is more than a decade old,
Speaker 10: but as you allude to it, it is still very
Speaker 10: critical in terms of things like smartphones and evs. It
Speaker 10: is the shortages of legacy chips that were such a
Speaker 10: problem in the pandemic era, when chip shortages wiped billions
Speaker 10: of dollars off of company's ability to sell things like cars,
Speaker 10: for example. So this is highly critical. And the concern
Speaker 10: here is that if China can dominate that market, flood
Speaker 10: the market essentially with these legacy ships, that even Western
Speaker 10: companies are going to be dependent on China for them.
Speaker 10: That goes Beijing more leverage. So the US and Europe
Speaker 10: are looking into we understand how they could potentially rain
Speaker 10: China back here, but again they don't want to cast
Speaker 10: too wide a net for fear of the retaliation that
Speaker 10: could bring from Beijing.
Speaker 3: Well that's exactly my point that you're in DC. This
Speaker 3: seems to be a worrying story at a time where
Speaker 3: the main act is in DC are trying to get
Speaker 3: us on a friendlier footing with China.
Speaker 10: Yeah. Yeah, it's a difficult tight rope that the Biden
Speaker 10: administration in particular is trying to walk at as you
Speaker 10: do have administration officials like Secretary of Save Anthony B.
Speaker 10: Lincoln or Treasury Secretary Jen Ellen actually making the trip
Speaker 10: to China to try and re establish communication with their
Speaker 10: counterparts at the same time that you have this tit
Speaker 10: for tat back and forth on triggered measures. And that's
Speaker 10: why when we're looking forward to things like what we
Speaker 10: understand could be an executive order on outbound investment into
Speaker 10: China in just a couple of weeks in mid August.
Speaker 10: They're trying to keep it very narrow, very specific. We
Speaker 10: understand that executive order, we'll focus on things like semiconductors,
Speaker 10: AI and quantum computing. They aren't trying to put a
Speaker 10: wide cast on on outbound investment into China. Just keep
Speaker 10: it focused on what would protect US national security interest
Speaker 10: and not harm China too greatly economically, because the line
Speaker 10: continually out of the administration is that this isn't about
Speaker 10: to do damage to the China economy. It is only
Speaker 10: about protecting national security and interest and really just de
Speaker 10: risking rather than decoupling with China. But it's a very
Speaker 10: difficult equation for these officials D.
Speaker 3: And it's another example of the US and EU being
Speaker 3: aligned in this particular issue over China.
Speaker 4: As Kadie lyons, how a, DC, thank you.
Speaker 3: We are going to talk more about chips later in
Speaker 3: the program, but coming up SOFI shares surging today. We're
Speaker 3: going to discuss why with the CEO of the company,
Speaker 3: Anthony Nodo. That's coming up next. This is Bloomberg Technology.
Speaker 3: Welcome back to Bloomberg Technology Ed Lodlow here in San Francisco. Now,
Speaker 3: if there is one single name that we're watching, it
Speaker 3: is so Fi. Biggest jump on an industra basis in
Speaker 3: the year, up more than eighteen percent, now raising its
Speaker 3: full year revenue guidance. Adding members in the quarter just gone.
Speaker 3: There's a lot of momentum in this stock and in
Speaker 3: this company. Let's get more on the company's earnings and
Speaker 3: bring in Sofi CEO Anthony Noo. Anthony, welcome to Bloomberg Technology,
Speaker 3: and thank you for your time. I want to understand
Speaker 3: something better. The five hundred eighty four thousand members that
Speaker 3: you added in the court have just gone. What does
Speaker 3: that mean? Are they depositors? What kind of services are
Speaker 3: they using?
Speaker 11: Sure, the members are someone that has a product with us.
Speaker 11: So in the quarter we added five hundred and eighty
Speaker 11: four thousand members, up forty four percent. The two largest
Speaker 11: pieces of that were so Fi Money, which is a
Speaker 11: checking savers account. You get four point four percent interest
Speaker 11: on savings. If you do direct deposit with us, you
Speaker 11: can spend any time anywhere you want, no restrictions, no fees.
Speaker 11: And we also because we're treating you as a member,
Speaker 11: you get access to our member benefits reward programs as
Speaker 11: well as a free certified official planner. In addition to that,
Speaker 11: we offer a credit card that would be in that number.
Speaker 11: In addition to that, we also offer brokers so you
Speaker 11: can buy single stocks without commissions ETFs. We have six
Speaker 11: robo accounts, and then we offer cryptocurrency and we most
Speaker 11: recently did an IPO oddity IPO. So in addition to
Speaker 11: four different types of loans, we have those products that
Speaker 11: I just mentioned, and then we also have a technology
Speaker 11: platform revenue segment.
Speaker 3: On the depositor and deposit side. Is this as simple
Speaker 3: as you taking business from the regional banks that suffered
Speaker 3: in the first half of this year.
Speaker 2: We're taking business, but it's not from the regional banks.
Speaker 11: It's from the largest banks in the country, the top
Speaker 11: five banks in the country by deposit accounts or checking
Speaker 11: sales accounts.
Speaker 2: That's where we're getting the bulk of our market share from.
Speaker 11: We've positioned so far over the last five and a
Speaker 11: half years to be a one stop shop for all
Speaker 11: your financial services needs. So we give you all the
Speaker 11: products that you need on a daily basis, but then
Speaker 11: we're also there for the big decisions you have to
Speaker 11: make financially like buying a home, paying for college education,
Speaker 11: starting to invest for retirement, and so it's the everyday
Speaker 11: products and then those larger products.
Speaker 2: Many of the large.
Speaker 11: Banks have abandoned unsecured personal loans or walked away from
Speaker 11: home loans. Our goal is to put the member at
Speaker 11: the center of what we're doing, and we have to
Speaker 11: be there for everything they do and have that lifetime
Speaker 11: relationship in order to help them get their money right
Speaker 11: to reach the point they have enough of it to
Speaker 11: do what they want, whether that's owning a home, retiring
Speaker 11: in a certain age, whatever career they may want to have,
Speaker 11: or size family.
Speaker 3: And see this stock's up more than eighteen percent, biggest
Speaker 3: jump in a year.
Speaker 4: What do you make of that reaction?
Speaker 11: You know, the team has been working incredibly hard over
Speaker 11: the last five and a half years to build out
Speaker 11: this complete suite of products, and for the first time,
Speaker 11: fifty percent of our growth on a year year basis
Speaker 11: came from non lending products. And that was the lending
Speaker 11: products were the first products that we've had. Everything else
Speaker 11: has been introduced since then. So fifty percent of our
Speaker 11: year year revenue growth came from our financial services segment
Speaker 11: and our technology platform segment. So it's the first time
Speaker 11: we can truly say that our strategy of being a
Speaker 11: one stop shop is now playing out in the actual financial.
Speaker 2: Results on the revenue side.
Speaker 11: On the profit side, we had our fourth consecutive quarter
Speaker 11: of record Ebadah, but most importantly, we're on track for
Speaker 11: gap profitability by the fourth quarter. With the one segment
Speaker 11: of our three that is still losing money, but it
Speaker 11: only lost four million dollars in a quarter on a
Speaker 11: contribution profit basis, and then improved from a loss of
Speaker 11: twenty four million dollars in Q one of this year
Speaker 11: and forty four million dollars in Q four of last year,
Speaker 11: and so this segment should become profit by the end
Speaker 11: of the year, reinforcing the fact that only are we
Speaker 11: giving the consumer a great, complete, one stop shop, but
Speaker 11: our financial results also reflect the completeness of that diversification.
Speaker 3: You had a goal of thirty percent return on equity.
Speaker 3: That's double JP Morgan. Is that still insite that goal?
Speaker 11: Yes, absolutely, we believe we'll have thirty percent EBA dot
Speaker 11: large margins long term and twenty percent gap net income
Speaker 11: margins long term, and that should position us to have
Speaker 11: that thirty percent or higher roe the mix of businesses
Speaker 11: that we have. It's not just the financial services products,
Speaker 11: but it's also a technology platform business where we able
Speaker 11: processing of payments DEBNAC payments as well as banking in
Speaker 11: a box for other providers, including B to B and
Speaker 11: we have over one hundred and twenty five million accounts
Speaker 11: in that segment that are generating over eight billion dollars
Speaker 11: of transactions a year that we get paid for. So
Speaker 11: we have a mix that's much more like American Express
Speaker 11: than a traditional bank in that we have both at
Speaker 11: this large technology business in addition to these high row
Speaker 11: products like credit card as well as invest products.
Speaker 3: Anthony so far has been very close to the student
Speaker 3: loans story, and since last we spoke, we've had some
Speaker 3: kind of clarity from the regulatory side. I just wondered
Speaker 3: if you could update us on kind of what opportunity
Speaker 3: you're now seeing in student loans for the company.
Speaker 11: Yes, the student loan refinancing business this quarter was still
Speaker 11: relatively depressed as it has been for the last three
Speaker 11: years while the moratorium I'm paying federal student loans was
Speaker 11: in place. For those that are not familiar, we take
Speaker 11: federal student loans and help our members re finance them
Speaker 11: at a lower rate or extending the terms they have
Speaker 11: a lower monthly payment, even if it's at the same
Speaker 11: or higher rate.
Speaker 2: That business was our largest.
Speaker 11: And most profitable through Q four of twenty nineteen, and
Speaker 11: then when the more term got put in place, which.
Speaker 2: Was necessary given the pandemic and.
Speaker 11: The crisis we were under, the business went to be very,
Speaker 11: very small, about a quarter of what it used to be.
Speaker 11: So we anticipate that that will come back more strongly
Speaker 11: in twenty twenty four. There will start to be a
Speaker 11: pickup in Q three and more in Q four, but
Speaker 11: our outlook for it has not changed since the beginning
Speaker 11: of the year, which was an expectation that the federal
Speaker 11: payments would resume come September October time period, which is
Speaker 11: what will happen now. There's forty million people in the
Speaker 11: United States that still have a federal student loan, and
Speaker 11: a portion of those people can refinance with So far,
Speaker 11: to date in a company's history, we haven't even financed
Speaker 11: more than one million student loan refinancing members. So there's
Speaker 11: a large opportunity still ahead of us, but one that's
Speaker 11: not reflected in today's results, nor does are improved dial
Speaker 11: look reflect any greater expectation than before.
Speaker 3: Anthony, before we lose you, I want you to recool
Speaker 3: your days at Twitter. The idea of an everything app
Speaker 3: going from a social media platform adding banking, adding in
Speaker 3: other financial services. Do you think that that's a reality
Speaker 3: for X to become a platform like that.
Speaker 2: Yeah.
Speaker 11: When I joined the company in early twenty eighteen, five
Speaker 11: and a half years ago, every fintech company said they
Speaker 11: want to be a one stop shop. Five and a
Speaker 11: half years later, only so far has done it. In
Speaker 11: addition to those competitors not being able to accomplish what
Speaker 11: we have, look at the incumbents.
Speaker 2: They still haven't been able to put all their.
Speaker 11: Products on a digital platform and be a one stop shop.
Speaker 11: It's not easy to do. It's an incredibly large investment.
Speaker 11: We've been definite funding it for five and a half years,
Speaker 11: so it's a pretty tall amountain to climb. We kind
Speaker 11: of feel like we've climbed that mountain or on the
Speaker 11: other side, and we wish everyone luck trying to get
Speaker 11: over it.
Speaker 2: Hopefully it will be good for the industry, and the more.
Speaker 11: Reliable fintech companies can be, the more trusted they can
Speaker 11: be we think will benefit from that. I think it's
Speaker 11: a tall task to go after, but one we've done successfully.
Speaker 2: So I wish other people luck.
Speaker 3: A tool, toolpath to go after. Can Ela Musk do it?
Speaker 3: Based on his experience with PayPal and his career so far.
Speaker 11: We take everyone seriously, anyone that wants to compete in
Speaker 11: the industry, whether it's in a single product or across
Speaker 11: the entire platform. There's a lot of competition and we're
Speaker 11: no strangers seeing that. We have companies that are one
Speaker 11: hundred times bigger than us that we're competing with, and
Speaker 11: we've been able to do quite well, and I'm confident
Speaker 11: that will be the case. I don't think anyone has
Speaker 11: bigger aspirations than we have a so far, and as leader,
Speaker 11: I'm responsible for making sure we deliver on that every
Speaker 11: second of every hour of every day.
Speaker 4: All right.
Speaker 3: So far shares up more than eighteen percent, raising net
Speaker 3: revenue guidance to one point ninety seven billion to two
Speaker 3: point zero three billion for twenty twenty three. Thank you
Speaker 3: for your time, so Fi see thank you appreciate right
Speaker 3: coming up.
Speaker 4: Here on Bloomberg Technology.
Speaker 3: Hassan al Kuri on semi CEO going to join to
Speaker 3: discuss the semi conductor device company's second quarter results and
Speaker 3: an update on silicon carbide.
Speaker 4: This is Bloomberg Technology.
Speaker 6: Three two Power.
Speaker 3: Airwork SpaceX sent the largest commercial communications satellite ever into
Speaker 3: orbit this weekend. The payload was on top of its
Speaker 3: Falcon Heavy taking off from the launch pad at NASA's
Speaker 3: Kennedy Space Center in Florida. The Jupiter three satellite weighs
Speaker 3: nine metric tons and is.
Speaker 4: The size of a bus.
Speaker 3: It's going to provide wireless internet over North and South America,
Speaker 3: operated by Hughes Network Systems.
Speaker 7: We are just over thirty.
Speaker 3: Let's talk chips shares of on semire up after making
Speaker 3: the most of power in image sensing and chip sales,
Speaker 3: giving an outlook for the third quarter above expectations. It
Speaker 3: was also a record quarter for automotive revenues and silicon
Speaker 3: carbide revenues grew four times year over year.
Speaker 4: For more.
Speaker 3: Hassan al Kuri on Semi CEO here with us. Hassan,
Speaker 3: thank you so much for your time. Look the third
Speaker 3: quarter outlook above expectations. What gave you the confidence there?
Speaker 3: What are the factors behind that?
Speaker 2: Yeah, like two years ago.
Speaker 12: We have doubled down on part and water of an
Speaker 12: industrial but more importantly on the technology of power and sensing.
Speaker 12: Those are the technologies that are driving all of the
Speaker 12: mega trends you talk about as far as electrification of
Speaker 12: the vehicle, but also the infrastructure necessary to support that electrification,
Speaker 12: like the renewable energy, energy generation and energy distribution in
Speaker 12: the form of charger fast chargers. That business has been
Speaker 12: ranking for us and that's what is going to provide
Speaker 12: that growth in the third quarter, which also provided that
Speaker 12: growth in the second chord.
Speaker 3: You know, I was reading the transcript from the Earning
Speaker 3: School and the word secular comes up right. This is
Speaker 3: a secular demand story. So what happens when the technology
Speaker 3: transitions happened? How do you maintain momentum when there is
Speaker 3: secular demand?
Speaker 12: First, you have to pre invest. You know, we've been
Speaker 12: investing in our silken car Bye specifically, but also image
Speaker 12: sensing for autonomous driving. We've been investing over the last
Speaker 12: two years. When we started our transformation, we talked about
Speaker 12: these trends as being the trends for us for the
Speaker 12: future that are going to support that growth. Above the
Speaker 12: semiconductor market growth reierated that view in our analyst day
Speaker 12: a few months ago, and now that has started delivering,
Speaker 12: and you can see the penetration of evs from a
Speaker 12: total vehicles made has been increasing quarter on quarter year
Speaker 12: over year, only to reach maybe fifty by twenty thirty.
Speaker 12: So this is a multi decade long mega trend that
Speaker 12: we're participating in.
Speaker 4: There are some OEMs.
Speaker 3: I think Tesla actually has discussed this about wanting to
Speaker 3: reduce their exposure silicon carbide due to the expense. How
Speaker 3: do you manage that mindset among the end customer.
Speaker 12: It's actually very a good opportunity for us. We're in
Speaker 12: a very good position. We provide both silicon and silicon
Speaker 12: carbide power. You know, you've heard me talk about hybrid
Speaker 12: module capability where a single module we are able to
Speaker 12: put silicon carbide and silicon power in order to give
Speaker 12: the most optimal solution for a customer system meet. We've
Speaker 12: had that where in production with it in industrial we're
Speaker 12: going to production and automotive should literally plays very well
Speaker 12: into how we also see the market. So one thing
Speaker 12: I would know, the reduction of silicon carbite is not
Speaker 12: on a vehicle to vehicle basis.
Speaker 2: It's a different platform.
Speaker 12: You know, if you want ultra high performance, long range
Speaker 12: silicon carbite is it if you're talking about city driving,
Speaker 12: where you're going to charge it maybe every evening short run.
Speaker 12: Of course IGBT can do the job. And if you
Speaker 12: want something in between, that's where IGBT and cilic carbyte
Speaker 12: comes in.
Speaker 2: Again.
Speaker 12: Our focus, we only win when our customer wins, and
Speaker 12: that's the most optimal solution. Whether it's silicon or silic carbte,
Speaker 12: we're able to support both and that's the strategy we have.
Speaker 3: Yeh hasan on Semi was into silicon carbide early. You
Speaker 3: know the advantages from a energy efficiency stamp. But I
Speaker 3: see some of your competitors kind of coming around silicon carbide.
Speaker 3: They have scale, So how do you stay competitive without
Speaker 3: the same sort of scale that something the competition has.
Speaker 12: Well, Compared to any of the competition, we either have
Speaker 12: more scale or we're ad scale. You know, scale is
Speaker 12: not an issue because if you look at some of
Speaker 12: the some of our peers or competitors that you're describing,
Speaker 12: they've had issues either ramping at the pace we have
Speaker 12: done it, or they're not vertically integrated, meaning they still
Speaker 12: dependent on material or sourcing material from third party or
Speaker 12: merchant market, which adds to the risk in the supply
Speaker 12: resiliency or supply assurance we have to give our customers.
Speaker 12: Where we are on top of the technology innovation, we're
Speaker 12: able to give our customers supply assurance through a supply
Speaker 12: resilient network. We've proven that. We've proven that in the ramp.
Speaker 12: You know, going four x year over year is not
Speaker 12: something you just stumble upon. It's something you keep executing
Speaker 12: to every day. We've proven our execution and we're going
Speaker 12: to continue delivering and that adds the confidence that our
Speaker 12: customers have, and you've seen that confidence translate into long
Speaker 12: term supply agreements that have reached a record dis quarter
Speaker 12: as well.
Speaker 3: Hassan, I've reported on some tier ones that have come
Speaker 3: into the space. For example, BOSH buying TSI, a small
Speaker 3: Northern Californian silicon carbide name is further m and A
Speaker 3: for you guys, something that's on the table or is
Speaker 3: it just not necessary?
Speaker 12: I would say MNA is not necessary for us to
Speaker 12: achieve what we need to achieve. You know, everything we've
Speaker 12: outlined at our analyst date, we're able to achieve organically
Speaker 12: through execution and the market drivers are there for us
Speaker 12: to grule with. However, we always look and we use
Speaker 12: M and A and we use that as complimentary. You know,
Speaker 12: if we can able to get an MNA asset to
Speaker 12: accelerate something we are doing, or make it even better
Speaker 12: and faster, or be better use of capital rather than
Speaker 12: us investing in it, we're absolutely going to do it.
Speaker 12: You know, about eighteen months ago, we acquire a g Tech,
Speaker 12: which is a substrate manufacturing company, and that gave us
Speaker 12: the capability and we applied our ability to scale and
Speaker 12: from the time we acquired it, meaning a fourteen month period,
Speaker 12: we five x that capacity. So we'll use our benefit
Speaker 12: as our scale and our capabilities, and we'll use MNA
Speaker 12: as a complementary aspect. But there's nothing I would sit
Speaker 12: here and say we are missing something to achieve our
Speaker 12: goals or our long term financial target. But we will
Speaker 12: use MNA if we can accelerated better.
Speaker 4: Hassan.
Speaker 3: In China, they've been domesticating their supply for silicon car
Speaker 3: by kind of hand in hand with the broader ev
Speaker 3: supply chain there, does China still represent an opportunity for you?
Speaker 12: China is an opportunity for us. You know, we've had
Speaker 12: engagement always set our revenue and our exposure overall is
Speaker 12: geographically distributed and more important importantly, is customer diverse. So
Speaker 12: we don't have a region that we have additional focus
Speaker 12: on versus others. So that makes us very comfortable to
Speaker 12: be able to manage the supply and.
Speaker 2: The demand side of it. That's one.
Speaker 12: As far as silicon carbide specifically in China, the focus
Speaker 12: today in China is really on the substrate manufacturing. So
Speaker 12: from a device and module capability, we are far ahead.
Speaker 12: We're a few generations ahead. That's why a lot of
Speaker 12: marquee names in China have ltessays multi year ltsays with
Speaker 12: on Semi. That's proof that we're able to provide what
Speaker 12: somebody local cannot. Of course, the only way you can
Speaker 12: do that, whether it's China or Europe or North America,
Speaker 12: you have to keep innovating. That's how you relain ahead,
Speaker 12: regardless of work reagion all.
Speaker 3: Right, thanks to Hasan A Kuri on Semi CEO talking
Speaker 3: everything Silicon Carbine. Yay, the artist formerly known as Kanye West,
Speaker 3: has been reinstated on x, the social media platform formerly
Speaker 3: known as Twitter. This comes following a nearly eight month
Speaker 3: suspension for breaching a company rule against inciting violence. X
Speaker 3: told The Wall Street Journal that the account won't be
Speaker 3: eligible for monetization, nor will advertisements appear next to posts.
Speaker 4: Yay has yet to post on the platform.
Speaker 3: Neither Yay nor X responded to Bloomberg's requests for comment.
Speaker 3: All right, this is the other top top story on
Speaker 3: bloomberg dot com and the terminal. Apple is just weeks
Speaker 3: away from introducing the iPhone fifteen and next generation watches.
Speaker 3: New lineup marks another stepping stone towards the company's dream iPhone.
Speaker 3: Though changes to the Apple Watch they're going to be modest.
Speaker 3: Here with all the details. Who else Bloomberg's Mark German
Speaker 3: I learned a new word today, bezel.
Speaker 4: What's that?
Speaker 2: A bezel is.
Speaker 13: Basically the smartphone term for the border around the screen.
Speaker 13: And so for this year, the big visual change on
Speaker 13: the iPhone fifteen pro, at least from the front, will
Speaker 13: be that those borders are going to get about a
Speaker 13: third thinner.
Speaker 2: Now, that might not seem like a lot, but.
Speaker 13: The technology behind it, funny enough, is inside Apple is
Speaker 13: called LiPo LPO, and it's basically a special manufacturing technology
Speaker 13: that allows them to get the screen, closer to the borders,
Speaker 13: closer to the edges, and so it's a big visual improvement.
Speaker 13: Someday in the future, Apple wants to have a borderless
Speaker 13: phone with no buttons, no camera cutouts in the front,
Speaker 13: and so of course this is another step towards that.
Speaker 3: In the Power On, I encourage the audience to go
Speaker 3: and read the latest power on. It has those new
Speaker 3: details about what we expect. You kind of more downbeat
Speaker 3: about upgrades to the watch. Why are they going to
Speaker 3: be modest?
Speaker 13: So last year was a pretty significant update for the
Speaker 13: Apple Watch. You had the apple Watch Ultra, which is
Speaker 13: the first all new Apple Watch design. That was the
Speaker 13: first all new Apple Watch design four years, right, so
Speaker 13: quite a bit of time. You had a redesigned apple
Speaker 13: Watch sc which is the entry level Apple Watch, and
Speaker 13: then you had a pretty minor update to the main
Speaker 13: apple Watch with the Series eight. But nonetheless you had
Speaker 13: three new models, right, and so you can't really do
Speaker 13: three new models, including two new designs in one year
Speaker 13: and then the next year expect anything major, right, So
Speaker 13: this year is pretty moderate. You're going to see a
Speaker 13: new apple Watch Series nine that's the standard Apple Watch,
Speaker 13: and then you're going to see a second generation Apple
Speaker 13: Watch Ultra. I would expect some new colors, but faster
Speaker 13: processors is going to be the talk. In addition to
Speaker 13: the new watch, a West ten of the models for
Speaker 13: the spot.
Speaker 3: All right, Bloomberg's mark and check out his latest power
Speaker 3: on on Bloomberg dot Com.
Speaker 4: That does it.
Speaker 3: I'm afraid to this edition of Bloomberg Technology so much
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