Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Let's talk about where
Speaker 1: we are in this cycle, because core Weave shares, as
Speaker 1: Ed pointed out earlier, under pressure. That's after it lowered
Speaker 1: its annual revenue forecast due to delay at the third
Speaker 1: party developing a data center really overshadowed impressive growth in
Speaker 1: revenue in order backlog. Let's get straight to it with care.
Speaker 1: We've CEO Michael and Trader. How frustrating is it that
Speaker 1: you don't own your entire supply chain? How much of
Speaker 1: an issue is the sort of power you have to
Speaker 1: give to third parties?
Speaker 2: Oh so, look, look, I think it's important to understand
Speaker 2: that every single part of this ecosystem is dependent upon
Speaker 2: other parts of the ecosystem. Nobody controls the entire supply chain,
Speaker 2: and that's just the nature of doing business at this
Speaker 2: scale on projects that are as complicated this, whether it's
Speaker 2: you know, you know, the design and architecture of the chips,
Speaker 2: through the fabrication of the chips, through the building of
Speaker 2: the data center, through the concrete that has to go
Speaker 2: into the data center, like it's just, you know, like
Speaker 2: it's really hard to even contemplate a world in which
Speaker 2: you have true control over every aspect of it. And
Speaker 2: so you're going to work with partners, and you're going
Speaker 2: to work with good partners that are able to help
Speaker 2: you drive your business forward.
Speaker 3: Is this a good partner?
Speaker 1: She's had issues at this PowerShell level.
Speaker 2: Yeah, Look, they are a good partner, right Like we've
Speaker 2: been working with these guys since twenty and eighteen. There
Speaker 2: has been a stumble, there's an issue. The issue is
Speaker 2: going to be cleaned up rapidly. But I wouldn't say
Speaker 2: that they're not a good partner. I think that, you know,
Speaker 2: we are. You know, we've gone back and contracted with
Speaker 2: them again and again, and you know they've contracted with
Speaker 2: us again and again because you know, we do work
Speaker 2: well together. It's just you know, occasionally you hit a
Speaker 2: bump in the road. You know, what we're talking about
Speaker 2: year is a contract that gets pushed back by you know,
Speaker 2: one quarter, let's say, and that the impact of that
Speaker 2: on our revenue is a delay of revenue, not a
Speaker 2: loss of revenue. And uh, you know, I think that
Speaker 2: is the definition of working with an ecosystem of good partners.
Speaker 4: Michael, good Morning. Which customer was it pleased that was
Speaker 4: impacted by this delay.
Speaker 2: We don't speak to specific customers within the data centers.
Speaker 2: That's that's not how we look at it. But you know,
Speaker 2: we we we really are working with the whole you know,
Speaker 2: or a material part of the broader.
Speaker 3: Kind of.
Speaker 2: Ecosystem that consumes compute at this scale. So you know
Speaker 2: that that's you know, there's a large project, it's from
Speaker 2: a large counterpart, and you know, like I said, you
Speaker 2: know they they understand uh the impact of this delay
Speaker 2: and that they are shifting with us the contract back
Speaker 2: to ensure that total contract value that was being contemplated
Speaker 2: is going to be captured at this railm.
Speaker 4: I thought you might say that, but I wanted to
Speaker 4: offer you the opportunity to explain who the customer was. Anyway,
Speaker 4: I appreciate this is going to sound a little bit
Speaker 4: like I work in your internal audit team or in
Speaker 4: your risk team, But there is a bigger issue here
Speaker 4: of managing third party risk as much as you can.
Speaker 4: So if your supply is tight today, what procedures are
Speaker 4: you putting in place for the event that your backlog
Speaker 4: doubles and supply is even tighter down the road.
Speaker 2: Listen, that's a that's a that's that is the question
Speaker 2: that we work on across our company continuously, right and
Speaker 2: if you if you, if you think about the messages
Speaker 2: that I was trying to communicate.
Speaker 3: During the earning.
Speaker 2: Stroll yesterday, I talked about the incredible h impact of
Speaker 2: the effort that we've had to diversify our clients. We
Speaker 2: started the year with you know, eighty five percent of
Speaker 2: our revenue to a single client, and we are coming
Speaker 2: out of the year with our back log with you know,
Speaker 2: which has reached you know, all time highs where no
Speaker 2: specific client is more than thirty five percent of it,
Speaker 2: and that is down from fifty percent even last quarter.
Speaker 2: So you're seeing tremendous progress on the contracting side. On
Speaker 2: the supply side, when you're looking at the powershells the
Speaker 2: data center providers, you know, there is no single provider
Speaker 2: of data centers that represents in excess of twenty percent
Speaker 2: of our two point nine gigawatts of power that we
Speaker 2: will be delivering to the market over the next twenty
Speaker 2: four months.
Speaker 3: You know.
Speaker 2: So you're seeing a real focus by our company to
Speaker 2: diversify on both sides of the you know, the ledger,
Speaker 2: the clients that we are delivering infrastructure to as well
Speaker 2: as the suppliers that are delivering us the components that
Speaker 2: we need to be successful.
Speaker 1: What can be done Because we hear about power issues,
Speaker 1: we hear about how much people maybe need government to
Speaker 1: help speed up contracts, supply chain headaches. What is it
Speaker 1: in this particular data center issue that won't be replicated
Speaker 1: down the road? How are you making sure or is
Speaker 1: it just something we are going to see time and
Speaker 1: time again do you think so?
Speaker 2: Look the way that we are handling this is we
Speaker 2: are doing several discrete things to ensure that we are
Speaker 2: future proofing ourselves against these type of delays. Right, So
Speaker 2: we have our team that has been built out over
Speaker 2: the past year that builds and delivers data center and
Speaker 2: so we have a self build organization to be able
Speaker 2: to deliver our own data centers for instance Kenilworth in
Speaker 2: New Jersey or Lancaster in Pennsylvania, where we are building
Speaker 2: from the ground up those skill sets, being able to
Speaker 2: deploy those individuals with those talents down to the data
Speaker 2: centers as they're being constructed by third parties. If they
Speaker 2: encounter problems where we can be useful, helpful thinking through
Speaker 2: ways of solving and driving the process forward is really
Speaker 2: important to being able to mitigate these type of delays.
Speaker 3: We have massively.
Speaker 2: Diversified our data center providers so we're not exposed to
Speaker 2: any specific they say to data center provider.
Speaker 3: In too large of a component.
Speaker 2: And then the third piece of it is it's important
Speaker 2: to understand that as we get larger, as our delivered
Speaker 2: power gets larger, the relative impact of a delay at
Speaker 2: any one given site becomes less and less meaningful and
Speaker 2: less and less impactful on our.
Speaker 3: Run rate. And that's really important.
Speaker 2: Like you're encountering scaling, is use within a company that's
Speaker 2: encountering scaling issues within.
Speaker 3: A supply chain, both of those will get better. Time
Speaker 3: solves that scale solves that we.
Speaker 1: Are currently seeing that time isn't particularly helping the share price.
Speaker 1: As we speak, it's now down fourteen point three percent,
Speaker 1: worst day since August. We are here with Michael and
Speaker 1: trades across radio and TV, and I want to sort
Speaker 1: of ask whether you think, more broadly the US is
Speaker 1: stunted by the supply chain headache, or do you think
Speaker 1: there is something that can be done from a federal
Speaker 1: perspective here to ensure that you can build at the
Speaker 1: rate you want to build. You're not having these sorts
Speaker 1: of headaches.
Speaker 2: So we've been we and many others have been, you know,
Speaker 2: quite forceful in making the case that there is a
Speaker 2: role for government in helping us with some of the
Speaker 2: permitting issues, speed to which you can get our infrastructure
Speaker 2: and others can get their infrastructure attached to the grid,
Speaker 2: you know, all those types of things. Is where there's
Speaker 2: there's there's a great role for for for the government
Speaker 2: to help in that. They are the they are the
Speaker 2: organization or government entity that is correctly positioned to help
Speaker 2: facilitate that. And I think that's a great role where
Speaker 2: where government can lean in and make an impact across
Speaker 2: the space.
Speaker 4: Rob Michael, you have an agreement within Nvidia that lots
Speaker 4: of people find very interesting that down the road, if
Speaker 4: there is spare capacity, there's some flexibility for you to
Speaker 4: deploy it elsewhere. That's a simple summation of it. But
Speaker 4: I'm wondering how you're thinking about serving some of the
Speaker 4: smaller AI labs and casting that net even wider in
Speaker 4: your customer base if indeed that capacity gets freed up
Speaker 4: down the line.
Speaker 2: Yeah, it's a it's a contract I'm actually incredibly excited about. Right,
Speaker 2: It's a contract that we did within Video where we
Speaker 2: will deliver them compute for the next six years. But
Speaker 2: in the contract is the capacity to interrupt the flow
Speaker 2: of compute to them and that will allow us to
Speaker 2: repurpose that compute to new companies, startups, companies that have
Speaker 2: struggled to get access to the compute that they require
Speaker 2: to bring new companies, organizations, ideas into existence. And I
Speaker 2: think it's just an incredibly important component of how the
Speaker 2: infrastructure is so important to allowing the ecosystem itself of
Speaker 2: these startups, of these new companies, of these new ideas
Speaker 2: to become more resilient, to become more scaled, and it's
Speaker 2: just a great contract for us to.
Speaker 3: Be able to position ourselves.
Speaker 2: It also provides this wonderful on ramp for us to
Speaker 2: be able to work with the new amazing companies that
Speaker 2: are coming into existence so that they integrate into our
Speaker 2: solution and get to make use of the best alternative
Speaker 2: that exists in the market as they're scaling their companies.
Speaker 4: Michael, it's finished to what extent is in Vidious still
Speaker 4: the gold standard in videous GPUs for your customer base
Speaker 4: and what data are you tracking on demand for those
Speaker 4: kind of more inferenced specific chips that are offered by others.
Speaker 2: So, look, we have always been client led, right. Our
Speaker 2: clients come to market and tell us, hey, we would
Speaker 2: like you guys to help us build a cluster. We
Speaker 2: needed to be this size and this location and this
Speaker 2: type of network, and we work with them in a
Speaker 2: very kind of interactive way to ensure that the infrastructure
Speaker 2: that we're building is the best infrastructure for them, is
Speaker 2: fungible for us, like all of these type of requirements
Speaker 2: to make for successful delivery of infrastructure. Right now, the
Speaker 2: reality of the situation is the buy signals from our
Speaker 2: clients overwhelm our capacity to deliver infrastructure to the markets.
Speaker 2: Matter of fact, they overwhelmed hire markets capacity to deliver
Speaker 2: infrastructure to the market. You have a systemic shortage of
Speaker 2: ability to deliver the GPUs the computing infrastructure for the
Speaker 2: buildout of artificial intelligence. And we have never wavered from
Speaker 2: that position. We have been very very clear that when
Speaker 2: we look at the demand signals coming into core Weave,
Speaker 2: the totality of that overwhelms the capacity of the market
Speaker 2: to deliver that, and we'll continue to do that for.
Speaker 3: Quite a while.
Speaker 4: Michael and tracer Core. We've CEO, thank you for coming
Speaker 4: back on Bloomberg Tech