WEBVTT - Airbnb's Record Plunge, Disney's Mixed Earnings 0:00:01.400 --> 0:00:06.720 From Mahart where Innovation, Money and power Collie in Silicon Valley, NBN. 0:00:07.040 --> 0:00:11.559 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.520 --> 0:00:28.760 Live from San Francisco. This is Bloomberg Technology coming up. 0:00:28.800 --> 0:00:32.080 I sit down with the CEO of Lyft, president of Shopify, 0:00:32.520 --> 0:00:36.200 and COO of Reddit, and we break down those companies' 0:00:36.440 --> 0:00:40.080 earnings results. Plus we stick with earnings as Airbnb sees 0:00:40.080 --> 0:00:43.920 a record plunge on a week outlook, and we dig 0:00:43.960 --> 0:00:47.839 into Disney as the Mousehouse offers a mixed picture in 0:00:47.920 --> 0:00:50.239 its earnings. Let's check in on the markets and as 0:00:50.320 --> 0:00:55.800 that one hundred up for a second consecutive day by actually, no, 0:00:56.240 --> 0:00:58.800 I take that back, I'm wrong. It's down two tens 0:00:58.840 --> 0:01:02.400 of percent. How things can change this session. The story 0:01:02.440 --> 0:01:05.240 right there is really about monetary policy, you know, And 0:01:05.280 --> 0:01:08.200 on a three day basis, we're flat, we're slightly hiring 0:01:08.240 --> 0:01:10.839 the session. We're still thinking about Monday and the selloff 0:01:10.880 --> 0:01:14.960 that happened on growth concerns and monetary policy intervention. So overnight, 0:01:15.080 --> 0:01:19.080 the bank in Japan basically said we won't intervene with 0:01:19.120 --> 0:01:22.600 a rate hike in the event that markets are unstable, 0:01:22.640 --> 0:01:24.399 and that's kind of having it not much to do 0:01:24.480 --> 0:01:27.319 with tech. There's one big tech name that is moving 0:01:27.640 --> 0:01:28.760 and that's Airbnb. 0:01:29.200 --> 0:01:30.240 Check out this chart. 0:01:30.400 --> 0:01:33.520 So in the session, Airbnb is on track for its 0:01:33.600 --> 0:01:35.399 biggest drop ever. 0:01:36.319 --> 0:01:37.560 We're worried about the outlook. 0:01:37.560 --> 0:01:39.880 We're worried about what Airbnb had to say about its 0:01:39.920 --> 0:01:43.600 peak holiday season, even though some executives took to the 0:01:43.640 --> 0:01:47.080 social medias to tell us things, all right, let's talk 0:01:47.080 --> 0:01:50.320 about Airbnb and bringing Bloomberg's man Deep Sing, senior analyst 0:01:50.360 --> 0:01:57.480 at Bloomberg Intelligence. So what they said was moderation sequentially 0:01:58.080 --> 0:02:00.480 of growth, and the growth wasn't that good in the 0:02:00.520 --> 0:02:03.960 courts have gone. So if you extrapolate, you're basically saying, 0:02:03.960 --> 0:02:06.160 hold on, this is the best time of year normally 0:02:06.160 --> 0:02:09.200 for Airbnb, the summer months. We're worried about what they're 0:02:09.240 --> 0:02:10.640 saying about business traffic. 0:02:11.800 --> 0:02:12.919 Yeah, look, and you're right. 0:02:13.000 --> 0:02:17.160 I mean, given its Olympics and you know, a lot 0:02:17.240 --> 0:02:20.120 going on in terms of holiday planning. They talked about 0:02:20.240 --> 0:02:23.840 shortening booking windows. And to me, you know, the biggest 0:02:23.960 --> 0:02:26.720 risk with Airbnb is not that they don't have a 0:02:26.760 --> 0:02:30.000 great mode. It's more about the saturation in the alternative 0:02:30.000 --> 0:02:34.120 accommodation's market and whatever new products that they have launched, 0:02:34.120 --> 0:02:37.480 whether it's rooms or experiences which they have had for 0:02:37.520 --> 0:02:41.320 a while, hasn't really driven incremental growth. So what they 0:02:41.400 --> 0:02:44.280 told us last night was look, the room night growth 0:02:44.320 --> 0:02:48.880 will be mid single digit and EBITDA growth will actually 0:02:48.960 --> 0:02:52.359 taper off because they plan to invest more to expand 0:02:52.400 --> 0:02:55.519 supply in new areas in Latin America and Asia pack 0:02:55.639 --> 0:02:59.160 and I think all those are signs towards you know, 0:02:59.240 --> 0:03:02.480 penetration being high in their existing markets and they just 0:03:02.520 --> 0:03:04.959 have to find new markets if they want to keep 0:03:04.960 --> 0:03:07.760 growing in alternative accommodations, or perhaps they need to make 0:03:07.760 --> 0:03:10.079 an acquisition, which I want to all out given the 0:03:10.160 --> 0:03:12.360 strength of Airbnb's balance sheet. 0:03:12.720 --> 0:03:15.919 Okay, so Mandy, your stocks down twelve to fourteen percent, 0:03:15.919 --> 0:03:17.720 the most on record. What do you do if you're 0:03:17.760 --> 0:03:20.440 the CEO? You go on social media and say it's 0:03:20.480 --> 0:03:23.600 a great time to buy. Would you agree with Brian 0:03:23.680 --> 0:03:24.839 Sheesky's thesis here? 0:03:25.639 --> 0:03:28.519 I mean, he had a floor last night and during 0:03:28.560 --> 0:03:31.120 the earnings call to talk about the plans, and nothing 0:03:31.200 --> 0:03:34.680 we heard was very exciting. Look, long term, as I said, 0:03:34.680 --> 0:03:37.520 this company has a great mode. It clearly is a 0:03:37.600 --> 0:03:41.480 category leader in alternative accommodations, but can it keep growing 0:03:41.520 --> 0:03:44.200 double digits? And I think there are question marks they 0:03:44.200 --> 0:03:46.320 can do it at least in the next two to four. 0:03:46.240 --> 0:03:50.160 Quarters, Bloomberg's Mandep saying at Bloomberg Intelligence, thank you. 0:03:50.240 --> 0:03:51.360 I want to get more on the market. 0:03:51.360 --> 0:03:55.000 Outlook is equities trade broadly in the green with Bloomberg's 0:03:55.000 --> 0:03:57.480 Emily Graffeo. You know, I don't know about you, m 0:03:57.520 --> 0:04:00.880 I'm kind of recovering a bit from Monday's the trauma 0:04:01.320 --> 0:04:04.040 of a near three percent decline on the Nasdaq one hundred. 0:04:04.080 --> 0:04:06.760 But in the market there's the growth concern, there's the 0:04:06.800 --> 0:04:10.600 central bank policy concern, and then there's probably earnings. What's 0:04:10.640 --> 0:04:12.880 the outlook of all of that in aggregate. 0:04:12.680 --> 0:04:15.720 Well, the outlook is that the volatility is not expected 0:04:15.800 --> 0:04:19.040 to subside, even though we are seeing this market rally 0:04:19.600 --> 0:04:22.159 yesterday and at least today. When you look at the 0:04:22.279 --> 0:04:25.840 Vicks volatility index, typically when we see a spike like 0:04:25.880 --> 0:04:28.280 we did on Monday, that means that for the next 0:04:28.320 --> 0:04:31.440 several trading sessions and even up to weeks, we'll see 0:04:31.480 --> 0:04:34.400 these big up days and these big down days. What's 0:04:34.440 --> 0:04:38.400 interesting this is Bloomberg Technology we'd been talking so much 0:04:38.520 --> 0:04:43.160 about a rotation into smaller cap names value names a 0:04:43.160 --> 0:04:45.520 few weeks ago, and we're actually kind of seeing that 0:04:45.640 --> 0:04:50.359 trade disappear now now that markets are rallying. Technology stocks 0:04:50.400 --> 0:04:52.800 are rallying the most. You look at the Nasdaq one 0:04:52.880 --> 0:04:55.800 hundred at least today, up almost two percent. The Russell 0:04:55.839 --> 0:04:59.000 two thousand, which was outperforming tech, is only up about 0:04:59.040 --> 0:05:02.520 zero point eight per right now. So you know, a 0:05:02.520 --> 0:05:04.880 few days ago we were talking about, oh, is tech 0:05:05.040 --> 0:05:07.320 no longer a safe haven? Is that no longer a 0:05:07.360 --> 0:05:10.159 place that investors want to hide? But it actually seems 0:05:10.160 --> 0:05:12.560 like we are still seeing an appetite to buy those 0:05:12.560 --> 0:05:13.719 megacap tech stocks. 0:05:14.440 --> 0:05:16.800 And we remind our audience in Vidia doesn't report until 0:05:16.800 --> 0:05:19.480 August twenty eight, then everyone's kind of treading water till 0:05:19.480 --> 0:05:22.440 that point. Bloomberg's Emily Graffeo, thank you very much. Aside 0:05:22.480 --> 0:05:24.360 from this week's massive sell off, some of the world's 0:05:24.360 --> 0:05:28.599 biggest equity hedge funds lost hundreds of millions of dollars 0:05:28.839 --> 0:05:32.240 from piling in to popular tech stocks. Amid the stock 0:05:32.320 --> 0:05:36.200 route that hit markets in around mid July, Bloomberg Temma 0:05:36.240 --> 0:05:39.400 Palmer has been tracking it. There are some specific single 0:05:39.520 --> 0:05:44.000 names in that industry who were probably more hit than others. 0:05:44.040 --> 0:05:45.279 Who are they and what happened? 0:05:45.480 --> 0:05:47.320 Yes, so we saw a lot of pain over at 0:05:47.400 --> 0:05:50.520 Light Street, down nine percent and one month alone of July, 0:05:51.279 --> 0:05:54.400 still up forty for the year, but definitely a difficult 0:05:54.400 --> 0:05:57.040 month for them. That's likely due to their very big 0:05:57.080 --> 0:06:00.359 position in the video As of March, that stock for 0:06:00.400 --> 0:06:04.039 about seventeen percent of their portfolio. They also have sizeable 0:06:04.080 --> 0:06:07.760 stakes and other of the Magnificent seven. When we look 0:06:07.960 --> 0:06:11.040 across the world, you know the hedge fund space, specifically 0:06:11.040 --> 0:06:13.120 when it comes to the equity funds, you do see 0:06:13.120 --> 0:06:16.520 this concentration in Microsoft, Amazon, Navidio, and some of the 0:06:16.600 --> 0:06:19.440 other big tech names that have really struggled this month. 0:06:20.720 --> 0:06:24.039 Bloomberg's hemmapalma with the data and the hedge fund ownership 0:06:24.040 --> 0:06:24.599 of big tech. 0:06:24.680 --> 0:06:25.880 Really appreciate it. Thank you. 0:06:25.960 --> 0:06:26.039 So. 0:06:26.080 --> 0:06:28.440 Coming up on Bloomberg Technology, we're going to be joined 0:06:28.440 --> 0:06:32.440 by Reddits COO Gen Wong to discuss the company's results 0:06:32.600 --> 0:06:36.400 and their outlook for sales growth and interesting conversation. Gen 0:06:36.480 --> 0:06:38.600 really at the heart of some of the deals that 0:06:38.720 --> 0:06:41.120 Reddit is doing. One other name that I'm looking at 0:06:41.200 --> 0:06:46.200 is in the chip sector, Micron in particular, let's bring 0:06:46.279 --> 0:06:48.560 up the stock and take a look at it. There's 0:06:48.600 --> 0:06:53.560 several stories out there, one of largely around share buybacks. 0:06:53.760 --> 0:06:56.480 The company basically saying that they may resume a stock 0:06:56.520 --> 0:07:02.080 buyback program to offset some dilution from their employee stock 0:07:02.120 --> 0:07:03.040 comp programs. 0:07:03.360 --> 0:07:05.040 The stock up two point seven percent. 0:07:05.120 --> 0:07:07.560 Remember we've covered this really in the context of high 0:07:07.560 --> 0:07:11.120 bandwidth memory recently, but also it's one that is in 0:07:11.160 --> 0:07:13.400 a lot of end markets, smartphones, d ram and nan 0:07:13.480 --> 0:07:14.679 flash being one as well. 0:07:14.960 --> 0:07:16.200 This is Bloomberg Technology. 0:07:26.640 --> 0:07:30.880 Reddit beat analysts expectations on sales growth after expanding its 0:07:30.960 --> 0:07:36.080 data licensing partnerships and investing in new advertising technology. The 0:07:36.080 --> 0:07:40.080 company's revenue forecast for the third quarter also beat estimates. 0:07:40.080 --> 0:07:43.400 Delighted to say that Reddit's COO Gen Wong joins us 0:07:43.440 --> 0:07:46.240 live here on Bloomberg Technology. You know that the stock 0:07:46.320 --> 0:07:50.320 is lower an impressive set of numbers for a relatively 0:07:50.760 --> 0:07:53.960 newly public company, and everyone's kind of looking at the 0:07:54.000 --> 0:07:57.640 outlook and trying to extrapolate out understand the world that 0:07:57.920 --> 0:08:00.600 Reddit's operating in. Could you just get us a sense, Jen, 0:08:00.680 --> 0:08:04.200 in your conversations with advertisers, what the rest of the 0:08:04.280 --> 0:08:07.200 year looks like, the environment looks like, and why Reddit 0:08:07.600 --> 0:08:11.960 may or may not fare better with those advertisers compared 0:08:12.000 --> 0:08:13.440 to other social media platforms. 0:08:14.400 --> 0:08:17.640 Yeah, thanks for having me look at the markets of 0:08:17.680 --> 0:08:20.560 the markets. But when we look forward to the back 0:08:20.600 --> 0:08:23.600 half of the year, I think advertising is a pretty 0:08:23.840 --> 0:08:28.760 stable market, and what drives our growth is what drive 0:08:28.760 --> 0:08:31.960 our growth in Q two, which is delivering against our 0:08:32.000 --> 0:08:36.199 consumer and ad roadmap and continue to drive value for advertisers. 0:08:36.280 --> 0:08:39.520 So I think what's driven our user growth has been 0:08:39.840 --> 0:08:44.559 the work of making Reddit better, making it easier access posts, 0:08:44.600 --> 0:08:48.319 easier for people to connect with communities, easier for mods 0:08:48.360 --> 0:08:50.760 to do their moderation. And that's when we make the 0:08:50.800 --> 0:08:54.840 platform better, the users grow. And from an advertising perspective, 0:08:55.240 --> 0:08:57.240 it's been all the investments we made in our ad 0:08:57.280 --> 0:09:00.880 platform to improve usability and scalability so that we can 0:09:01.080 --> 0:09:04.959 address and serve more advertisers and grow the advertising base. 0:09:05.400 --> 0:09:09.040 Next is delivering quarter over quarter performance for our advertisers, 0:09:09.360 --> 0:09:11.520 and then delivering things that only Ready can do that 0:09:11.559 --> 0:09:14.880 are ready unique, like they ask me anything, format refresh, 0:09:15.160 --> 0:09:19.040 or testing things like ads and comments. Those strategies are 0:09:19.080 --> 0:09:23.200 working for us and will continue executing against that roadmap. 0:09:23.320 --> 0:09:24.960 As we head into the back half of the year, 0:09:25.080 --> 0:09:29.199 and we feel really good about the yield on that roadmap. 0:09:29.559 --> 0:09:32.959 Okay, Jen, you've been very busy since last week spoke, 0:09:33.360 --> 0:09:38.040 I think principally about the deals with NBA NFL. What 0:09:38.080 --> 0:09:40.320 I'm trying to understand is how those kind of video 0:09:40.360 --> 0:09:44.559 focused partnerships contribute to your ad revenue or ad growth 0:09:45.120 --> 0:09:46.560 going forwards from this point. 0:09:48.280 --> 0:09:52.920 So, Reddit is home to an incredible group of fan communities, 0:09:52.960 --> 0:09:56.439 and the sports communities are some of the most active 0:09:56.559 --> 0:10:00.600 engaged on the platform, and they're global, and so the 0:10:00.720 --> 0:10:03.400 idea of having those partnerships with the sports leagues was 0:10:03.440 --> 0:10:07.840 to bring in special content like highlights, like access to 0:10:07.920 --> 0:10:13.200 players for amas or to insiders, for those communities to enjoy. 0:10:13.480 --> 0:10:16.040 So that is really our starting place for it. Now 0:10:16.840 --> 0:10:21.439 what's great is that does create an opportunity for advertisers. 0:10:20.480 --> 0:10:21.760 To support that content. 0:10:21.800 --> 0:10:24.839 Some of those advertisers support that content and are aligned 0:10:24.880 --> 0:10:27.640 with that content on other platforms like television, et cetera. 0:10:28.160 --> 0:10:28.760 So it is a. 0:10:28.720 --> 0:10:32.640 Really nice win win win for users and communities and 0:10:32.760 --> 0:10:38.000 Reddit and advertisers. It's early, it's a program that we're testing, 0:10:38.400 --> 0:10:39.800 and we've done some work with the NFL. 0:10:39.920 --> 0:10:41.800 Now we've expanded it to more leagues. 0:10:42.400 --> 0:10:44.960 We are excited about it because I think the communities 0:10:45.000 --> 0:10:48.360 are excited about getting access to that content. And if 0:10:48.360 --> 0:10:50.880 you think about it, you know, we've done partnerships with 0:10:51.559 --> 0:10:55.240 US based leagues, but there are so many more sports 0:10:55.280 --> 0:10:58.000 and so many more global leagues that we could engage with. 0:10:58.040 --> 0:11:01.400 And then the fan communities, they go beyond sports. 0:11:01.520 --> 0:11:03.320 On Reddit, there a gem. 0:11:04.040 --> 0:11:07.040 I am a I am a long serving, suffering and 0:11:07.080 --> 0:11:09.880 passionate Chelsea fan in football what you'd call soccer, and 0:11:09.920 --> 0:11:12.480 I dive deep into Reddit when I want to see 0:11:12.480 --> 0:11:15.680 what the fan base wants to know you. And I've 0:11:15.720 --> 0:11:19.920 discussed previously licensing of data to the AI companies Google 0:11:20.000 --> 0:11:23.120 Open Ai, but a few months have elapse and I'm 0:11:23.120 --> 0:11:26.240 wondering if you now have a better sort of vision 0:11:26.280 --> 0:11:29.560 for the long term potential of that business model away 0:11:29.600 --> 0:11:30.480 from advertising. 0:11:32.440 --> 0:11:35.640 Look, I think that landscape is still emerging and it's 0:11:35.679 --> 0:11:40.319 still early days for for AI, so it's a long arc. 0:11:40.800 --> 0:11:44.360 We've been I think, very thoughtful about how we structure partnerships. 0:11:45.200 --> 0:11:47.880 Our view. They're not one year, they're not long term. 0:11:48.040 --> 0:11:51.720 They're sort of midterm partnerships that allow us to learn 0:11:52.200 --> 0:11:56.400 and find a way to work with this new area. 0:11:56.200 --> 0:11:57.280 And see how it goes. 0:11:57.400 --> 0:12:00.360 So I don't think, you know, I think we still 0:12:00.360 --> 0:12:02.920 continue to learn in this process because I think it's 0:12:02.920 --> 0:12:05.440 a very long mark. I do think some of the 0:12:05.440 --> 0:12:08.400 things that we've done have established a foundation for having 0:12:08.480 --> 0:12:11.080 these partnerships. So if you look at our public content 0:12:11.160 --> 0:12:14.880 policy and you look at the changes. 0:12:14.480 --> 0:12:16.559 That we've made, I think we've made it really. 0:12:16.320 --> 0:12:19.839 Clear how we want the ecosystem work because we are 0:12:19.880 --> 0:12:22.880 stewards of Reddit data and user privacy, etc. Is really 0:12:22.920 --> 0:12:27.280 important in allowing scaled access to Reddit disk. 0:12:29.000 --> 0:12:29.240 Jen. 0:12:30.120 --> 0:12:32.200 When I sit at my computer in the morning, I 0:12:32.280 --> 0:12:35.400 use various search functions. It's often a Reddit post that 0:12:35.440 --> 0:12:39.320 will come up and it's quite easily discoverable, specifically Google Search, 0:12:39.360 --> 0:12:43.400 but going forward, Chat, GPT, there are platforms where that's 0:12:43.440 --> 0:12:46.439 not the case, being do you have a clear strategy 0:12:46.480 --> 0:12:49.360 for search expansion for Reddit content. 0:12:51.240 --> 0:12:54.400 Look, we have been beneficiaries of the open Internet. We 0:12:54.480 --> 0:12:57.040 believe in the open Internet and allowing people to get 0:12:57.080 --> 0:13:00.720 access to important information and reddits. Corpus has some of 0:13:00.720 --> 0:13:04.840 the best and most important answers regarding everything, product, services, life, etc. 0:13:05.400 --> 0:13:07.920 So we want ready to be open but we have 0:13:08.000 --> 0:13:08.880 to have a set. 0:13:08.679 --> 0:13:10.360 Of rules for doing that. 0:13:10.360 --> 0:13:15.000 And search and summarization and AI and data usage, they're 0:13:15.040 --> 0:13:16.440 sort of all merging right. 0:13:16.520 --> 0:13:19.480 This is part of what's changing in the world right now. 0:13:19.920 --> 0:13:22.599 So I think our view is we will have a 0:13:22.640 --> 0:13:25.880 conversation with anybody about having access to the data. But 0:13:25.920 --> 0:13:29.240 we've been very clear and transparent about our rules, which 0:13:29.240 --> 0:13:33.760 are our public content policy and protecting user privacies, being 0:13:33.760 --> 0:13:36.480 good stewards of data, and that we have to have 0:13:36.520 --> 0:13:40.280 a conversation where those policies and rules are respected. 0:13:40.880 --> 0:13:42.520 And then there's commercial alignment. 0:13:42.600 --> 0:13:46.720 So we're having conversations with every player large and small, 0:13:47.240 --> 0:13:50.160 and I think we've made it clear that what the 0:13:50.240 --> 0:13:52.320 rules are and how to make this work, and the 0:13:52.360 --> 0:13:55.320 fact that we've signed deals I think is a sign 0:13:55.480 --> 0:13:57.280 that we're sensible. 0:13:57.559 --> 0:13:58.959 There's a path here to do that. 0:14:00.160 --> 0:14:03.800 Jen, the stage is now very much set for a 0:14:03.840 --> 0:14:06.800 presidential election race for November. 0:14:07.080 --> 0:14:08.400 How does that impact Reddit? 0:14:08.760 --> 0:14:12.199 Do you kind of foresee boost from political ads or 0:14:12.240 --> 0:14:15.760 even just activity on the platform centered around the election. 0:14:17.120 --> 0:14:20.800 Yeah, we actually are not a big player in political ads. 0:14:20.800 --> 0:14:21.720 We never have been. 0:14:22.080 --> 0:14:25.120 Politics is obviously a big area that our community is 0:14:25.200 --> 0:14:29.400 engaged with on Reddit. So we do see conversation. But 0:14:30.040 --> 0:14:31.800 what I would say is on Reddit, because we have 0:14:31.960 --> 0:14:36.560 so many diverse communities, different communities have moments at different times. 0:14:36.640 --> 0:14:40.720 This is a presidential election year, so politics is going 0:14:40.760 --> 0:14:43.280 to be a little bit bigger, but then Olympics was 0:14:43.280 --> 0:14:45.760 a little bit bigger, and then there are seasons where 0:14:45.920 --> 0:14:49.000 other communities kind of have their moment. What happens with 0:14:49.080 --> 0:14:51.320 Reddit is that that kind of smooths out over time. 0:14:51.480 --> 0:14:53.920 So a community might be having a moment at one time, 0:14:54.200 --> 0:14:57.000 then another community than another community. But if you look 0:14:57.000 --> 0:14:59.120 at the arc of Reddit's growth, it sort of is 0:14:59.240 --> 0:15:03.080 all smooth over the trend reddits. 0:15:03.160 --> 0:15:05.120 COO gen One, it's great to have you back here 0:15:05.120 --> 0:15:06.200 on Bloomberg Technology. 0:15:06.200 --> 0:15:15.720 Thank you very much for your time. It's time for 0:15:15.760 --> 0:15:16.320 talking tech. 0:15:16.320 --> 0:15:18.640 And in the news, soft Bank announces a three point 0:15:18.640 --> 0:15:21.640 four billion dollar buy back. The Tokyo based firm said 0:15:21.640 --> 0:15:25.040 it would purchase up to six point eight percent of 0:15:25.080 --> 0:15:28.640 its free floating outstanding shares through August seventh of next year. 0:15:28.680 --> 0:15:32.200 The move comes as CEO Masayoshi's son prepares for a 0:15:32.280 --> 0:15:36.920 large scale push into AI and semiconductor investments. Plus Hewlett 0:15:36.920 --> 0:15:40.720 Packard's fourteen billion dollar deal to buy Juniper Networks gets 0:15:40.760 --> 0:15:44.600 the ok from UK watchdogs. The Competition of Markets Authority 0:15:44.880 --> 0:15:48.680 cleared the purchase after investigating if it would lessen competition 0:15:48.920 --> 0:15:49.480 in the UK. 0:15:49.600 --> 0:15:51.560 The deal was similarly. 0:15:51.080 --> 0:15:54.640 Passed just last week by the European Union, and Sony 0:15:54.800 --> 0:15:57.560 raises its revenue and profit forecast for the fiscal year 0:15:57.560 --> 0:15:58.040 to March. 0:15:58.200 --> 0:16:00.280 The company saw a successful. 0:15:59.720 --> 0:16:04.160 Court in its music and gaming divisions, with operating profits 0:16:04.200 --> 0:16:07.280 at one point nine billion dollars. It's PlayStation division saw 0:16:07.400 --> 0:16:10.440 a lift, but it's PS five consoles sold just two 0:16:10.440 --> 0:16:14.560 point four million units, significantly below the three million units 0:16:14.760 --> 0:16:18.040 that analysts had expected. Let's get back to the earning 0:16:18.080 --> 0:16:21.160 story and take a look at Shopify. The global commerce 0:16:21.200 --> 0:16:24.520 company reported earnings results before the opening bell this morning, 0:16:24.560 --> 0:16:29.120 beating estimates. Shopifive president Harley Finkelstein joins us now for more. 0:16:29.680 --> 0:16:30.960 Good morning to you, Harley. 0:16:30.960 --> 0:16:32.880 It's good to catch up and then have you batch 0:16:32.920 --> 0:16:37.280 on Boombog technology. Things are going right for Shopify. The 0:16:37.440 --> 0:16:41.560 environment's hard to understand. Is there something specific that Shopify 0:16:41.640 --> 0:16:44.480 is doing better or well in that environment? 0:16:45.520 --> 0:16:47.360 I think so. I think absolutely so. 0:16:47.400 --> 0:16:49.000 First and foremost, I think we've earned the trust of 0:16:49.200 --> 0:16:51.320 millions of merchants in business all over the world. 0:16:51.400 --> 0:16:53.480 We announced a month ago month or so we all 0:16:53.480 --> 0:16:54.040 go announced. 0:16:54.040 --> 0:16:57.000 Then we have now powered over a trillion dollars with 0:16:57.080 --> 0:16:59.880 a T in CUMULOGMVS and sart inception, which for us 0:16:59.920 --> 0:17:02.040 is is really incredible. But I think we're not just 0:17:02.080 --> 0:17:05.000 helping merchants compete. I think we're propelling them to victory. 0:17:05.000 --> 0:17:06.840 And in terms of you know, how Shopify is doing 0:17:07.160 --> 0:17:10.040 in particular, I think these results demonstrate that we can 0:17:10.400 --> 0:17:13.440 do we can create the serious combination of both growth 0:17:13.480 --> 0:17:16.800 and profitability. You know, when you exclude the sale of logistics, 0:17:16.840 --> 0:17:19.240 revenue is up twenty five percent for the quarter to 0:17:19.320 --> 0:17:19.840 two billion. 0:17:19.920 --> 0:17:22.040 Yes, our fifth consecutive quarter at least twenty five percent. 0:17:22.119 --> 0:17:24.080 Top lane growth when you look at free cash low 0:17:24.160 --> 0:17:26.680 or free CASHLW margin more than doubled from last year 0:17:26.760 --> 0:17:29.600 from six percent to sixteen percent. Now, in terms of 0:17:29.760 --> 0:17:31.879 sort of the more macro I guess you know, the 0:17:31.960 --> 0:17:36.440 sort of macro questions you're asking. Look from our vantage point, 0:17:36.760 --> 0:17:38.880 I'm hearing from other companies what you're hearing as well, 0:17:38.880 --> 0:17:41.439 But from our vantage point, our merchants, the merchants on 0:17:41.520 --> 0:17:43.720 Shopify are outperforming others in the market. 0:17:43.880 --> 0:17:45.200 They're growing at healthy rates. 0:17:45.640 --> 0:17:48.280 We're adding more merchants every day, and I think as 0:17:48.280 --> 0:17:49.920 a result, we're getting more market share. 0:17:51.240 --> 0:17:53.440 Harley, real quick, I just want to jump in because 0:17:53.440 --> 0:17:55.280 I you know, it did go well for me the quarter. 0:17:55.359 --> 0:17:59.680 You've kind of been suffering from slowing growth in prior quarters, 0:18:00.200 --> 0:18:03.400 and your emphasis was a marketing marketing, but something jumped out. 0:18:03.600 --> 0:18:07.240 You talked about a partnership with a social media platform 0:18:07.280 --> 0:18:08.399 that really helped out. 0:18:08.960 --> 0:18:10.520 What platform was that, What. 0:18:10.440 --> 0:18:13.720 Were the specifics around that as a catalyst for. 0:18:13.640 --> 0:18:15.720 You, Yeah, I mean the truth is the way that 0:18:15.720 --> 0:18:17.240 we think about marketing the same way we think about 0:18:17.240 --> 0:18:21.199 product ed we don't necessarily it's all about data, and 0:18:21.240 --> 0:18:24.880 so when we see a particular marketing opportunity, we take 0:18:24.880 --> 0:18:26.639 that opportunity and the way that we think about all 0:18:26.640 --> 0:18:29.600 our marketing channels that these are levers. So in Q one, 0:18:29.680 --> 0:18:33.040 we did an experiment with a new emerging marketing channel, 0:18:33.680 --> 0:18:36.359 emerging social platform. We put some money to work, we 0:18:36.400 --> 0:18:38.400 saw a great return. We double that in Q two 0:18:38.720 --> 0:18:40.679 and we saw about a fifty one percent increase in 0:18:40.760 --> 0:18:43.119 new merchants from that channel. At the same time, we 0:18:43.119 --> 0:18:45.919 saw other channels that historically did perform well, not perform 0:18:45.920 --> 0:18:47.600 as well, so we pulled back on it. But the 0:18:47.640 --> 0:18:50.040 way that we think about our marketing is as this 0:18:50.240 --> 0:18:52.960 incredible data driven engine that allows us to not just 0:18:53.280 --> 0:18:56.280 focus on SMBs in English speaking countries, but you think 0:18:56.280 --> 0:18:58.399 about our point of sale business, our B to B business, 0:18:58.400 --> 0:19:01.000 our international business. We're able to deploy capitals that have 0:19:01.040 --> 0:19:03.879 the highest return on those investments, all within an eighteen 0:19:03.920 --> 0:19:06.760 month average payback. And that's the sophistication that we've built 0:19:06.760 --> 0:19:09.440 into the growth of members of Shopify. 0:19:10.200 --> 0:19:12.199 So which big social platform was it. 0:19:13.560 --> 0:19:15.040 We don't go into specifics on that. 0:19:15.119 --> 0:19:18.240 It's just an example of something that we're constantly experimenting with. 0:19:18.560 --> 0:19:21.000 There's not that many emerging social platforms. I'm sure you 0:19:21.000 --> 0:19:23.600 can figure out which one. But the point actually that 0:19:23.760 --> 0:19:25.840 we want investors, we want the street to take away 0:19:26.280 --> 0:19:28.440 is that we are always looking for new ways to 0:19:28.480 --> 0:19:31.600 grow the business. And again, five consecutive quarters of above 0:19:31.640 --> 0:19:34.760 twenty five percent top plane growth while being profitable. There's 0:19:34.800 --> 0:19:36.200 not too many companies that can do that at our 0:19:36.240 --> 0:19:38.320 size and growth their market share. And I think this 0:19:38.359 --> 0:19:40.200 is the best version of Shopify you're seeing right now. 0:19:40.840 --> 0:19:44.280 I've spoken to so many businesses small and slightly bigger 0:19:44.320 --> 0:19:46.840 that use Shopify, I get the benefit of it. So 0:19:46.920 --> 0:19:52.639 this is about discoverability, right, adding new merchants or markets 0:19:52.640 --> 0:19:56.000 to your platform. But let's do the math. If we 0:19:56.040 --> 0:19:59.200 won't name the social platform, what ballpark was the spend 0:19:59.440 --> 0:20:02.680 because turn on that campaign seems to have been very 0:20:03.040 --> 0:20:04.280 definitive in the quarter. 0:20:05.240 --> 0:20:06.159 Well, think about this. 0:20:06.320 --> 0:20:09.000 When we started to we've been public now for just 0:20:09.040 --> 0:20:11.760 over nine years. Initially we were focused on e commerce 0:20:12.000 --> 0:20:15.199 for SMBs in very specific regions. We now have a 0:20:15.240 --> 0:20:17.640 point of seale offering that surve passed one hundred billion 0:20:17.680 --> 0:20:21.119 dollars in GMV International for example. Over fifty percent of 0:20:21.200 --> 0:20:24.560 merchants that join in Q two on Shopify we're from 0:20:24.600 --> 0:20:27.760 outside our core English speaking countries. You know, two years 0:20:27.760 --> 0:20:29.680 ago we didn't have a B to B product, and 0:20:30.000 --> 0:20:31.840 this past court a B to B Jimmy grew one 0:20:31.920 --> 0:20:34.080 hundred and forty percent year on year. So it's not 0:20:34.160 --> 0:20:36.680 just getting more people to use Shopify, it's more people 0:20:36.680 --> 0:20:38.919 and more geography so to use different products, and that 0:20:39.040 --> 0:20:40.800 is leading to the growth that you're seeing. At the 0:20:40.840 --> 0:20:43.480 same time as being focused on on profitability. 0:20:44.760 --> 0:20:46.600 Harley, we enter the summer months and then we have 0:20:46.680 --> 0:20:49.680 the holiday season here in North America. Do you kind 0:20:49.680 --> 0:20:52.399 of market hard in the summer in the hopes of 0:20:52.440 --> 0:20:54.560