WEBVTT - Arm Files for its IPO, Zoom CFO on Earnings & Microsoft's Final Activision Push 0:00:01.600 --> 0:00:06.920 From Marhart where Innovation, Money and Power Collie in Silicon Valley, NBN. 0:00:07.240 --> 0:00:20.720 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.040 --> 0:00:27.480 I'm Caroline Hyder Bloomberg's world headquarters. 0:00:27.000 --> 0:00:30.000 In New York and Imed Ludlow in San Francisco. This 0:00:30.240 --> 0:00:32.000 is Bloomberg Technology. 0:00:31.640 --> 0:00:34.720 Coming up armed files for its IPO, which is set 0:00:34.760 --> 0:00:36.920 to be one of the biggest of the year. We 0:00:36.960 --> 0:00:38.920 bring you the biggest takeaways from its filing. 0:00:39.800 --> 0:00:42.559 Plus we talk earnings with the CFO of Zoom as 0:00:42.600 --> 0:00:46.720 analysts sour on long term growth for the video conferencing company. 0:00:46.440 --> 0:00:50.040 And Microsoft pushes to get its activision deal done, finally. 0:00:49.960 --> 0:00:52.360 Submitting a new bid to the CMA in the UK. 0:00:52.800 --> 0:00:55.200 We'll discuss that and so much more throughout this hour, 0:00:55.520 --> 0:00:58.440 of course, including the macro environment we find ourselves the 0:00:58.480 --> 0:01:01.640 way in which tech has continued to outperform other benchmarks 0:01:01.680 --> 0:01:04.080 on the day, even in the face of rising yields. 0:01:04.080 --> 0:01:05.880 Once again, in the borrowing mark market, we're seeing the 0:01:05.959 --> 0:01:08.040 NASDA C cup just a quarter of percent. We've seen 0:01:08.040 --> 0:01:10.960 whipsawing coming from some key names. All eyes on video, 0:01:11.040 --> 0:01:13.000 of course, as we head towards the closing bell, the 0:01:13.040 --> 0:01:15.280 two year yield just top about a basis point. 0:01:15.280 --> 0:01:17.360 And in fact, we're seeing a bit of a calmness. 0:01:16.920 --> 0:01:19.600 In the bond market that has seen sustained pressure all 0:01:19.680 --> 0:01:22.319 eyes of course, not only on earnings coming this week 0:01:22.360 --> 0:01:25.880 for some big, big tech bellwethers, but Jay Powell come Friday, 0:01:26.080 --> 0:01:27.920 of course from Jackson Hole, what he says about the 0:01:27.959 --> 0:01:29.520 future of boring costs here in the US. 0:01:29.520 --> 0:01:31.120 I'm looking and what's happening in China. 0:01:31.240 --> 0:01:34.040 Interesting volatility in China's trading, the fact that we actually 0:01:34.080 --> 0:01:36.480 saw a pickup in buying, particularly on the CSI, and 0:01:36.480 --> 0:01:38.840 I'm looking at the crane shares, the kewbers. It's known 0:01:39.120 --> 0:01:42.040 basically some of the key et key internet names traded 0:01:42.080 --> 0:01:43.680 here in the US just holding on to gains for 0:01:43.680 --> 0:01:45.640 about a tenth of percent, but coming off of their highs. 0:01:45.680 --> 0:01:48.440 Moving on to what is the key risk gus under 0:01:48.480 --> 0:01:50.720 choice often in this show we're seeing off about seven 0:01:50.760 --> 0:01:53.720 tens of percent now Crypto bitcoin, as we see under 0:01:53.880 --> 0:01:57.160 continued pressure at about twenty six thousand there thereabout said 0:01:57.160 --> 0:01:57.880 but what if you've got on the. 0:01:57.880 --> 0:02:00.440 Micro Yeah, there's a lot to get through this Tuesday 0:02:00.480 --> 0:02:02.280 earnings is a part of it. Zoom is off by 0:02:02.360 --> 0:02:05.880 nine tenths percent, but off session lows a slight adjustment 0:02:05.960 --> 0:02:09.840 higher for guidance on sales strengthen enterprise, but single digit 0:02:09.880 --> 0:02:13.560 declines are happening with individual customers small businesses that we're 0:02:13.639 --> 0:02:15.720 using the video platform from Zoom. 0:02:15.720 --> 0:02:17.079 We will speak to the CFO. 0:02:17.440 --> 0:02:19.760 Lots of questions from the street about well, what happens 0:02:19.760 --> 0:02:21.600 if the macro picture gets better and what are you 0:02:21.639 --> 0:02:23.600 guys going to do with your capital? Those are questions 0:02:23.600 --> 0:02:26.400 that we'll ask. As you pointed out, Activision and Microsoft 0:02:26.639 --> 0:02:29.720 is a big, big story. The concession from Microsoft is 0:02:29.760 --> 0:02:34.399 to allow another video games publisher, Ubisoft, to sell Activision's 0:02:34.480 --> 0:02:38.919 titles through cloud gaming markets globally. Will that be enough 0:02:38.919 --> 0:02:41.239 for the CMA to get the deal over the line? 0:02:41.280 --> 0:02:44.080 We will go to our reporter on that one. The big, 0:02:44.120 --> 0:02:46.240 big story, the one we've all been waiting for, and 0:02:46.280 --> 0:02:50.399 finally it's here, is ARM, the chip design software name, 0:02:50.880 --> 0:02:55.119 finally filing for its IPO. We didn't actually learn much 0:02:55.160 --> 0:02:57.440 about the share sale in the documents. What we do 0:02:57.600 --> 0:03:01.680 know is that SoftBank will still be the single biggest 0:03:01.720 --> 0:03:06.040 controlling shareholder after the transaction. Bloomberg's reported that the target 0:03:06.120 --> 0:03:09.720 valuation sixty to seventy billion US dollars. If they raise 0:03:09.760 --> 0:03:11.720 around ten billion dollars, this will be not just the 0:03:11.720 --> 0:03:14.880 biggest IPO of the year here in the United States, Caroline, 0:03:15.040 --> 0:03:17.960 but the biggest IPO going back to Rivians in November 0:03:18.000 --> 0:03:20.000 twenty twenty one. There's this big idea that could this 0:03:20.080 --> 0:03:22.800 be the starting gun for the IPO market when it 0:03:22.840 --> 0:03:24.280 comes to tech lots to cover? 0:03:24.600 --> 0:03:27.240 And that is so much of where the narrative has 0:03:27.280 --> 0:03:29.079 been what this means for the broader market, But what 0:03:29.120 --> 0:03:31.800 does it mean in terms of the actual technology that 0:03:31.919 --> 0:03:34.079 is driving this name. Bloomberg's in King of forse have 0:03:34.160 --> 0:03:38.240 been all over not only the entire semiconductor space, but 0:03:38.320 --> 0:03:43.160 what arm brings to that space and in what struck 0:03:43.240 --> 0:03:45.440 you For many it was exposure to China. 0:03:45.560 --> 0:03:47.440 But where did you get the narrative. 0:03:47.080 --> 0:03:49.600 Of what this business actually does in the filing? 0:03:50.600 --> 0:03:54.040 Yeah, I mean fundamentally, they're trying to reposition themselves as 0:03:54.120 --> 0:03:58.440 being a different, more evolved company from where they were 0:03:58.480 --> 0:04:02.160 when they were originally publicly traded and brought by a 0:04:02.240 --> 0:04:06.120 soft bank. And really, while it's not really appealing in 0:04:06.160 --> 0:04:09.560 the filings, what we're understanding is that the real sales 0:04:09.600 --> 0:04:11.680 pitch here is going to be focused on. Look, this 0:04:11.800 --> 0:04:14.160 is how important we are in the data center. We're 0:04:14.200 --> 0:04:17.720 more than just a mobile phone technology company. 0:04:18.320 --> 0:04:21.640 The history of ARM is the provider of blueprints for 0:04:21.720 --> 0:04:25.600 smartphone processes that their designs led to energy efficiency you 0:04:25.600 --> 0:04:27.880 think about battery life on a cell phone crucial. 0:04:28.279 --> 0:04:29.040 They also have the. 0:04:29.000 --> 0:04:32.880 IP or the code that determines how a chip interacts 0:04:32.880 --> 0:04:36.320 with the software you want to run through it. This 0:04:36.360 --> 0:04:38.800 is a big publicity stunt, right, It's like saying to 0:04:38.839 --> 0:04:42.440 the world, we're here, we're ARM. But how does it 0:04:42.480 --> 0:04:45.839 help them move that company forward? Because automotive data center, 0:04:45.880 --> 0:04:47.359 it's not what they've done historically. 0:04:47.520 --> 0:04:50.720 Yeah, I mean, you know they are spreading right. Their 0:04:50.760 --> 0:04:53.400 story has always been one of how quickly can we 0:04:53.520 --> 0:04:57.000 become as pervasive as we think we can be, And 0:04:57.360 --> 0:05:00.520 you know, that's really been a very strong story for them. 0:05:00.760 --> 0:05:02.880 Whether at the same time they're trying to do more 0:05:02.920 --> 0:05:05.279 than that. They're trying to kind of move up the 0:05:05.360 --> 0:05:08.599 stack to be more of a technology provider, to do 0:05:08.680 --> 0:05:11.040 more of the designs, to provide more of the complete 0:05:11.400 --> 0:05:13.880 sort of picture, and be less reliant on the actual 0:05:13.920 --> 0:05:16.880 chip makers, and that in theory brings their market a 0:05:16.920 --> 0:05:20.360 broader audience. So companies like Amazon, not traditionally a chip maker, 0:05:20.800 --> 0:05:21.680 can design their own. 0:05:21.640 --> 0:05:24.320 Chips, right, they use ARM as part of what they 0:05:24.480 --> 0:05:27.440 goes into the AWS offering. Thirty five hundred words were 0:05:27.440 --> 0:05:32.280 dedicated to China. Explain ARMS business exposure in China. 0:05:32.400 --> 0:05:36.720 Well, I mean it's like many semiconductor companies in this country. 0:05:36.920 --> 0:05:39.839 It's China is the biggest market for chips. You want 0:05:39.880 --> 0:05:42.880 to be there. Whether at the same time, Washington is 0:05:43.000 --> 0:05:47.120 more and more concerned about China's capabilities in chips and 0:05:47.320 --> 0:05:52.520 is taking steps to limit what US or other companies 0:05:52.640 --> 0:05:55.520 outside of China can do inside China. So that's the 0:05:55.560 --> 0:05:58.240 conflict there, and that's why you saw the detailed discussions 0:05:58.240 --> 0:06:00.760 about these are the risks is what we have to 0:06:00.760 --> 0:06:01.640 think about. 0:06:01.680 --> 0:06:05.320 A slowing mobile environment a China risk factor. 0:06:05.360 --> 0:06:08.120 But to be fair, since twenty. 0:06:07.839 --> 0:06:11.080 Fourteen, twenty fifteen, when I was back in London, I 0:06:11.120 --> 0:06:14.360 remember that ARM taking me to their headquarters I was 0:06:14.400 --> 0:06:16.839 in Cambridge. They were desperate to tell this whole Internet 0:06:16.839 --> 0:06:19.800 of things discussion point under Simon Segers at the time 0:06:19.839 --> 0:06:21.800 that it has been a narrative they've been trying to 0:06:21.800 --> 0:06:24.440 build as to how they are more than mobile. What 0:06:24.520 --> 0:06:27.160 are they in terms of soft Bank's pitch? Why would 0:06:27.200 --> 0:06:30.920 SoftBank not be wanting to sell into also this AI euphoria. 0:06:30.440 --> 0:06:31.000 At the moment? 0:06:31.160 --> 0:06:34.000 Are they wanting to perhaps keep hold of ARM a 0:06:34.040 --> 0:06:36.279 little bit longer in the near term? 0:06:36.839 --> 0:06:39.880 Well, I mean the you, I mean where we're going 0:06:39.920 --> 0:06:42.640 to come to market earlier this year, and chip stocks 0:06:42.680 --> 0:06:45.880 were obviously not doing very well then, so I wouldn't 0:06:45.920 --> 0:06:48.920 read too much into the timing. I think SoftBank obviously 0:06:49.000 --> 0:06:51.480 needs a win given some of the other investments that 0:06:51.520 --> 0:06:54.479 it's made which haven't panned out. But in terms of 0:06:55.080 --> 0:06:58.600 the timing, and you mentioned the AI euphoria quite accurately, Caroline, 0:06:58.760 --> 0:07:01.039 that's where we are now. And the best way I 0:07:01.040 --> 0:07:03.320 think to think about what ARM has to say there 0:07:03.400 --> 0:07:05.520 is who's in Who's reporting tomorrow? 0:07:05.600 --> 0:07:06.039 In video? 0:07:06.839 --> 0:07:09.440 Half of in Video's sort of top line product is 0:07:09.440 --> 0:07:13.440 a processor based on ARM technology. So they have a play, 0:07:13.480 --> 0:07:15.840 and that's something that they'll be trying to, I think, 0:07:16.200 --> 0:07:17.720 pitch to investors more strongly. 0:07:18.680 --> 0:07:21.000 Bloomberg's ian king, mister Chip we call him, and I 0:07:21.200 --> 0:07:23.080 take it from me, it's been a busy few days 0:07:23.400 --> 0:07:25.880 for him. Let's stick with the story and bringing Glen 0:07:25.880 --> 0:07:30.120 O'donnald Forrester Research director and vice president. Glenn just very simply, 0:07:30.400 --> 0:07:33.120 you've been through the filing. What was the main takeaway 0:07:33.160 --> 0:07:35.400 from you of what we learned about ARMS? 0:07:35.440 --> 0:07:41.600 I poll it's it's it's trying to capitalize. As Ian 0:07:41.680 --> 0:07:44.840 pointed out, Uh, you know, with the AI craze going 0:07:44.880 --> 0:07:48.000 on right now, this is a good time to capitalize 0:07:48.000 --> 0:07:51.840 on that because even though with AI most of the 0:07:51.880 --> 0:07:55.640 talk is about in video, in video's process processors need 0:07:56.400 --> 0:07:59.880 CPUs a different kind of processor to to work properly. 0:08:00.600 --> 0:08:06.320 And you know it has licensed ARMS technology to you 0:08:06.560 --> 0:08:10.120 to give it that capability, but lots of other players 0:08:10.240 --> 0:08:14.640 have these ARMED designs and it's really the brains behind 0:08:14.800 --> 0:08:17.440 a lot of what's what's what's to come. So I 0:08:17.480 --> 0:08:20.200 think the timing of this I p o is is 0:08:20.640 --> 0:08:21.800 really perfect. 0:08:21.640 --> 0:08:25.920 And put ARM in the ecosystem. Who are the competitors, 0:08:26.280 --> 0:08:28.560 who are they managing to work with and against? 0:08:29.800 --> 0:08:34.679 Well, the biggest competitor is the established Intel a m 0:08:34.800 --> 0:08:38.520 D base what we call X eighty six processors, and 0:08:38.760 --> 0:08:41.680 you know, just about every PC has an X eighty 0:08:41.720 --> 0:08:45.760 six processor, and most data center systems have X eighty six. 0:08:46.040 --> 0:08:49.640 These things are ubiquitous and they're not going to lose 0:08:49.800 --> 0:08:53.800 that ubiquity. However, ARM is going after a slice of that. 0:08:54.520 --> 0:08:59.080 And it's interesting that even though these are two you know, 0:08:59.200 --> 0:09:04.720 hyper competitor of companies, let's say Intel and AMD, Intel 0:09:04.760 --> 0:09:08.679 has actually entered into an agreement to manufacture chips or ARM. 0:09:08.760 --> 0:09:12.400 So you know, this whole concept of frenemies is pretty 0:09:12.400 --> 0:09:13.600 common in the tech space. 0:09:13.960 --> 0:09:16.480 It's too small a world not to have a few frenemies, Glenn. 0:09:16.520 --> 0:09:20.040 But Ed, it's interesting, isn't it that even as we 0:09:20.280 --> 0:09:22.520 talk up this AI hype, even as we look towards 0:09:22.520 --> 0:09:25.560 in video after the bell, we did get numbers in 0:09:25.600 --> 0:09:27.960 the filing and quite clearly there is a slight slowdown 0:09:27.960 --> 0:09:29.760 being felt by ARM in this macro environment. 0:09:29.960 --> 0:09:33.400 Yeah, you can't outrun your main business, which I think, Glenn. 0:09:33.440 --> 0:09:36.400 The numbers showed sales were down one percent in the 0:09:36.440 --> 0:09:40.160 period ending March of this year on the year. You know, 0:09:40.320 --> 0:09:42.400 what did that tell you about the health of their 0:09:42.480 --> 0:09:46.920 main business, principally the association with smartphone processes. 0:09:48.160 --> 0:09:51.959 Well, smartphones are down, as we all know, and you know, 0:09:52.000 --> 0:09:57.400 the semiconductor stocks and companies have been suffering the economic 0:09:57.440 --> 0:10:01.920 slowdown has has had a a really strong impact on 0:10:02.040 --> 0:10:05.440 all of them. And you know, it hasn't been a 0:10:05.440 --> 0:10:09.280 good couple of quarters for these companies, but you know 0:10:09.320 --> 0:10:12.560 there is a turnaround in underway, and again it's fueled 0:10:12.559 --> 0:10:16.720 by all this AI stuff, most notably generative AI. And 0:10:16.800 --> 0:10:19.319 I've been through a number of AI waves that didn't 0:10:19.320 --> 0:10:22.600 pan out, but this one's different. And you know, we're 0:10:22.640 --> 0:10:25.400 going to see we're going to see a huge surge 0:10:25.400 --> 0:10:29.559 in demand for chips that are able to process these 0:10:29.720 --> 0:10:32.840 uh these workloads that people are going to be throwing 0:10:32.880 --> 0:10:35.360 at it. And we're seeing that with Nvidia and VideA 0:10:35.440 --> 0:10:37.640 is already saying, hey, we can't make enough of these things, 0:10:38.000 --> 0:10:42.000 and demand is just off off the charts. So ARM 0:10:42.200 --> 0:10:44.240 is going along for that ride in a big way 0:10:44.320 --> 0:10:47.480 because it has that complementary connection to what in video 0:10:47.559 --> 0:10:47.960 is writing. 0:10:49.000 --> 0:10:51.280 Glenn, I get it. You're you're a financial analyst, right. 0:10:51.280 --> 0:10:53.520 We love to pour over the numbers that The thing 0:10:53.559 --> 0:10:57.320 I love about I POS is just hype, the story, 0:10:57.440 --> 0:11:01.080 the publicity. How important is it to your the world 0:11:01.200 --> 0:11:03.640 knows about ARM, that they hear about this big IPO 0:11:04.160 --> 0:11:06.480 of a company called ARM that they may never have heard. 0:11:06.280 --> 0:11:09.760 Of Yeah, well they never have heard of it. Most 0:11:09.800 --> 0:11:13.000 people haven't. And you know, for the most part, they 0:11:13.000 --> 0:11:15.800 don't really make the chips, they license the technology. So 0:11:15.840 --> 0:11:17.600 you may have heard of Samsung, and of course you've 0:11:17.600 --> 0:11:21.520 heard of Apple and Qualcomm, all of these companies and 0:11:21.800 --> 0:11:25.160 of course Nvidia. All these companies are building their chips, 0:11:25.400 --> 0:11:31.079 their processors on ARM based designs the architecture. So ARM 0:11:31.200 --> 0:11:35.880 is really an intellectual property company, and you know, they 0:11:35.880 --> 0:11:39.679 make their money off licensing and other intellectual property that 0:11:39.720 --> 0:11:42.600 they've developed that other companies can use. And the more 0:11:42.640 --> 0:11:45.640 companies that build their processors based on ARM, the better 0:11:45.760 --> 0:11:48.520 ARM is going to do. And I just see that 0:11:49.200 --> 0:11:50.800 there's good times ahead for that. 0:11:51.360 --> 0:11:54.280 Planel Donald, finishing on an optimistic wrote, we thank you 0:11:54.320 --> 0:12:04.720 of Forrester Research. Zoom, of course, the video conferencing company 0:12:04.720 --> 0:12:07.720 we all know, reported second quarter results on boosted the 0:12:07.760 --> 0:12:10.960 outlook with a move beyond video calls of course about 0:12:11.000 --> 0:12:14.000 phones and the like, but let'stick into the future visibility 0:12:14.000 --> 0:12:16.920 of strength for this business. Kelly Steckelberg, Zoom CFO, joins 0:12:16.960 --> 0:12:20.360 US now and it's interesting we saw some excitement around 0:12:20.360 --> 0:12:22.640 the numbers being posted after the bell yesterday and then 0:12:22.720 --> 0:12:25.920 reality hits a little bit today amid a macro picture 0:12:25.960 --> 0:12:28.800 that is worrying. Can you give your investor base, our 0:12:28.840 --> 0:12:32.439 audience just some visibility into the future growth story for 0:12:32.520 --> 0:12:33.240 Zoom right now? 0:12:34.360 --> 0:12:34.600 Sure? 0:12:34.720 --> 0:12:37.320 So, we were really pleased with our q tube results. 0:12:37.360 --> 0:12:40.800 As you said, we beat both our top line revenue 0:12:40.800 --> 0:12:44.800 guidance as well as our profitability outlook, and we raise 0:12:45.000 --> 0:12:48.040 those numbers for the full year of f y twenty four, 0:12:48.080 --> 0:12:50.319 both top and bottom line guidance. 0:12:50.960 --> 0:12:52.400 And what I. 0:12:52.360 --> 0:12:56.240 Think people are looking for is long term growth which 0:12:56.280 --> 0:13:00.800 will be driven from the expansion of our platform, new products. 0:13:01.040 --> 0:13:04.079 Some of our newer products like Zoom Foam, which is 0:13:04.120 --> 0:13:08.679 our cloud PBX solution. Also Zoom Contact Center, which is 0:13:08.760 --> 0:13:12.160 only six quarters old and already has five hundred customers 0:13:12.160 --> 0:13:15.600 on it, and that is our natively built, fully modern 0:13:15.679 --> 0:13:19.800 cloud contact center. We have lots of other products across 0:13:19.800 --> 0:13:22.920 our platform to like Zoom Scheduler, and all of this 0:13:23.120 --> 0:13:27.400 brings together a platform that as those products into neue mature, 0:13:27.440 --> 0:13:32.040 will drive growth. We're also looking for stabilization the overall 0:13:32.080 --> 0:13:35.679 macro as you mentioned, both in the US and internationally, 0:13:35.679 --> 0:13:38.240 which is really important for us for both segments of 0:13:38.280 --> 0:13:41.600 our business. And as we work with our customers, as 0:13:41.640 --> 0:13:44.120 some of them you have gone through reductions in their 0:13:44.160 --> 0:13:48.280 own employe base, we help them transition that spend potentially 0:13:48.320 --> 0:13:50.400 from meetings into some of our newer products. 0:13:51.000 --> 0:13:54.720 You know, Kelly, the Zoom story was really clear in 0:13:54.760 --> 0:13:57.800 the fiscal second quarter earnings gone right, So top line 0:13:57.840 --> 0:14:02.000 growth of ten percent overall, but sales to individuals and 0:14:02.080 --> 0:14:06.360 small businesses down four point three percent. Okay, So in 0:14:06.360 --> 0:14:10.080 other words, enterprise great, but the individual user every day 0:14:10.120 --> 0:14:14.200 you and I falling away. How permanent is that dynamic 0:14:14.240 --> 0:14:15.640 in that story for your company? 0:14:16.640 --> 0:14:19.560 So the online segment of our business that you're referring 0:14:19.640 --> 0:14:23.080 to is about forty percent of our business today, and 0:14:23.120 --> 0:14:26.440 it is individuals like you and I that are using 0:14:26.440 --> 0:14:29.080 their product, but it's also small businesses, which is really 0:14:29.120 --> 0:14:33.160 important to remember. A lot of these customers buy online 0:14:33.720 --> 0:14:38.080 and we are continuing to expand the opportunity by adding 0:14:38.080 --> 0:14:40.680 more currencies in which we sell, adding more products to 0:14:40.760 --> 0:14:44.280 the platform. So it's a very important part of our business, 0:14:44.360 --> 0:14:47.200 and the team is consistently innovating around how do we 0:14:47.200 --> 0:14:50.840 bring more products to them and how do we expand 0:14:50.960 --> 0:14:53.440 the top of the funnel. We've seen a lot of 0:14:53.480 --> 0:14:56.640 stabilization in the churn rate there. We're down to three 0:14:56.680 --> 0:14:59.480 pandemic levels, which is really great. It's just going to 0:14:59.480 --> 0:15:02.600 take a little longer than we expected to stabilize over time. 0:15:02.640 --> 0:15:06.120 Though. What about the euphoria that everyone wants to discuss 0:15:06.200 --> 0:15:06.800 that is AI. 0:15:07.080 --> 0:15:08.120 How much are you trying to. 0:15:08.200 --> 0:15:10.400 Lean into that for you're an investor base that wants 0:15:10.440 --> 0:15:11.680 to hear it, or how much are you trying to 0:15:11.720 --> 0:15:14.240 be realistic about what it adds to your product portfolio. 0:15:14.880 --> 0:15:18.080 Yeah, so we think that AI is a really important 0:15:18.120 --> 0:15:21.280 strategic part of our product portfolio going forwards. We just 0:15:21.480 --> 0:15:24.640 hired xd Wong, for example, to lead that initiatives. We're 0:15:24.680 --> 0:15:27.440 thrilled to have him as part of our team, and 0:15:28.160 --> 0:15:30.600 Eric talked about it a little bit on the call yesterday. 0:15:30.680 --> 0:15:34.480 We have individual skews today that al already leverage a 0:15:34.480 --> 0:15:37.360 lot of AI. We have Zoom Virtual Agent, for example, 0:15:37.400 --> 0:15:40.160 which is part of our contact center solution. But we 0:15:40.320 --> 0:15:45.520 also will bring those benefits into the broader platform without 0:15:45.640 --> 0:15:48.480 necessarily adding a lot of cost to our customer base. 0:15:48.560 --> 0:15:51.040 We want them to get the benefit from it, and 0:15:51.480 --> 0:15:55.120 we will talk more about additional features or products that 0:15:55.240 --> 0:15:58.880 really leverage AI to the hilt when it comes out 0:15:58.960 --> 0:16:02.560 in Zoomtope, which is our users conference in October. 0:16:03.040 --> 0:16:07.080 Kelly, there was a pretty strong reaction to news that 0:16:07.240 --> 0:16:11.480 Zoom was pushing its workforce back to the office. Many 0:16:12.600 --> 0:16:15.120 saw that with a sense of irony. Right, given the 0:16:15.200 --> 0:16:18.360 role that your technology played in the work from home era, 0:16:19.640 --> 0:16:22.480 was that severe reaction justified. You might be surprised that 0:16:22.520 --> 0:16:26.240 people were so surprised in their own mind that you 0:16:26.480 --> 0:16:27.440 have made that move. 0:16:28.440 --> 0:16:32.600 Well, we believe that a structured hybrid approach is best 0:16:32.720 --> 0:16:36.160 for Zoom. We hear from our employees they want to 0:16:36.200 --> 0:16:39.400 be together for collaboration. So by structuring days in the 0:16:39.440 --> 0:16:41.880 office just two days in the office, by the way, 0:16:42.480 --> 0:16:45.640 it ensures that when they come to the office, they're 0:16:45.640 --> 0:16:47.920 going to see their colleagues, they're going to see their friends. 0:16:48.200 --> 0:16:51.440 It also really helps drive innovation. We are the best 0:16:51.480 --> 0:16:54.320 to leverage our products to ensure that we're meeting the 0:16:54.360 --> 0:16:58.160 needs of our customers who are also in a hybrid environment. 0:16:58.640 --> 0:17:01.840 And so by leveraging Zoom Rooms and new features like 0:17:01.880 --> 0:17:05.600 Intelligent Director, we're able to ensure that we're being the 0:17:05.640 --> 0:17:08.919 best possible products to market. 0:17:08.760 --> 0:17:11.640 All right, Kelly Steckelberg, Zoom ZFO. Thank you for joining 0:17:11.720 --> 0:17:14.600 us so close after earnings Here Blue Technology coming up 0:17:14.600 --> 0:17:17.640 on the show, Microsoft looks to push its Activision deal 0:17:17.800 --> 0:17:20.600 over the finish line with a new proposal to the 0:17:20.680 --> 0:17:21.320 uk CMA. 0:17:21.320 --> 0:17:24.120 We're gonna have those details next character and it. 0:17:24.119 --> 0:17:26.320 Is earning season. They can fast. I want to shine 0:17:26.320 --> 0:17:28.360 a light on one that you might not automatically associate 0:17:28.400 --> 0:17:30.640 with technology, but you should. May sees of course owner 0:17:30.640 --> 0:17:33.399 a Bloomingdale's Blue Mercury, and of course the actual brand 0:17:33.400 --> 0:17:36.359 mass itself having its worst days. It's March twenty twenty two. 0:17:36.440 --> 0:17:38.520 The lowest it is January twenty twenty one. 0:17:38.640 --> 0:17:39.720 This is a macro play. 0:17:39.720 --> 0:17:41.920 This is a worry about the consumer, about a build 0:17:41.960 --> 0:17:45.160 up in delinquencies. But they are still focused very much 0:17:45.160 --> 0:17:47.440 on technology and on AI. Let's just have a quick 0:17:47.440 --> 0:17:50.119 look at how they're focusing on digital. This helped could 0:17:50.320 --> 0:17:53.240 really trim some of their inventory. They're pulling back by 0:17:53.280 --> 0:17:55.760 ten percent. They're still saying they've got more to go. 0:17:56.000 --> 0:17:58.080 Jeff Gonnette telling me on the phone, our aspirations in 0:17:58.119 --> 0:17:59.760 digital are quite high and we want it to be 0:17:59.800 --> 0:18:02.760 help than it is today. We do believe that in 0:18:02.760 --> 0:18:05.800 the future digital can grow more aggressively when the balance 0:18:05.880 --> 0:18:08.600 of the company. Of course, they're leaning into marketplace, which 0:18:08.640 --> 0:18:11.560 where they offer far more products through their online offering. 0:18:11.600 --> 0:18:13.719 They've also got a new chief for digital on this 0:18:13.760 --> 0:18:16.920 particular announcement from New York from San Francisco, this is 0:18:16.920 --> 0:18:17.920 Blomberg Technology. 0:18:30.320 --> 0:18:32.359 Time for talking tech and first st up by Doo 0:18:32.560 --> 0:18:35.000 reporting revenue that rose by the most in more than 0:18:35.040 --> 0:18:37.880 a year. Sales jumped fifteen percent, which was a head 0:18:37.880 --> 0:18:41.280 of expectation. China's search leader is joining its tech peers 0:18:41.480 --> 0:18:44.960 in rediscovering growth as Beijing relaxes its grip on the 0:18:44.960 --> 0:18:45.760 private sector. 0:18:46.119 --> 0:18:47.280 And Microsoft got. 0:18:47.119 --> 0:18:50.720 A new chance at winning approval from UK regulators after 0:18:50.760 --> 0:18:54.280 the tech giants submitted a substantially different deal to the 0:18:54.320 --> 0:18:57.840 country's antitrust watchdog for its sixty nine billion dollar takeover 0:18:58.040 --> 0:19:00.280 of Activision Blizzard. The CMA will now owe and a 0:19:00.320 --> 0:19:03.200 new deal probe after Microsoft said it would give Ubisoft 0:19:03.320 --> 0:19:06.240 rights to distribute Activision games globally. 0:19:06.320 --> 0:19:07.480 Carrect what a move. 0:19:07.800 --> 0:19:09.879 Let's get more on that story. Microsoft and Activision with 0:19:09.920 --> 0:19:12.720 bloombags leaon Nylan and well, we were waiting to hear 0:19:12.760 --> 0:19:14.800 how they were perhaps going to appease the regulators in 0:19:14.840 --> 0:19:15.200 the UK. 0:19:15.359 --> 0:19:17.280 And this won't take you by surprise. 0:19:19.359 --> 0:19:21.679 Well, we had reported a little bit ago that they 0:19:21.720 --> 0:19:23.480 were looking at this potential move. 0:19:23.600 --> 0:19:24.520 So what they're going to do. 0:19:24.600 --> 0:19:29.000 Is they are divesting globally the cloud gaming rights to ubersoft. 0:19:30.160 --> 0:19:33.840 It'll be a non exclusive license in the EU, so 0:19:33.920 --> 0:19:36.639 that Microsoft is still abiding by the commitments that it 0:19:36.720 --> 0:19:40.760 made to European Commission any trust authorities. The CMA will 0:19:40.760 --> 0:19:43.840 now do sort of a redo of the probe to 0:19:43.840 --> 0:19:45.560 see if this resolves their concerns. 0:19:45.240 --> 0:19:46.119 About cloud gaming. 0:19:46.400 --> 0:19:48.760 The EU also said today that they may need to 0:19:48.920 --> 0:19:50.920 look at it again just to make sure that it 0:19:51.000 --> 0:19:54.280 still complies with all of the commitments Microsoft made to them. 0:19:54.760 --> 0:19:57.280 We actually had an interview with the CMA chief, Sarah 0:19:57.280 --> 0:19:59.520 card Or on Bloomberg Radio earlier. This for me was 0:19:59.560 --> 0:20:01.879 the most tressing part of what she said. What we 0:20:01.920 --> 0:20:04.040 see with this new deal, and we have to test 0:20:04.080 --> 0:20:07.080 it carefully through our review, is that rather than Microsoft 0:20:07.119 --> 0:20:10.080 being able to control how those cloud streaming rights to use, 0:20:10.320 --> 0:20:14.200 that control will shift to an independent company. It's always 0:20:14.240 --> 0:20:16.919 been a battleground for the cloud right lea. This is 0:20:17.040 --> 0:20:18.640 what the CMA's bug bear has been. 0:20:20.280 --> 0:20:22.879 Yeah, the CMA and the EU have been very focused 0:20:22.920 --> 0:20:24.600 on the cloud because they think that's sort of the 0:20:24.640 --> 0:20:27.720 next generation of gaming here, you know, right now, so 0:20:27.840 --> 0:20:30.920 much of stuff relates to consoles, whether you have an 0:20:31.040 --> 0:20:34.040 Xbox or a PlayStation. But in the future, people think 0:20:34.080 --> 0:20:36.000 that you might just you know, connect to your TV 0:20:36.320 --> 0:20:38.800 or your phone to play these games, sort of in 0:20:38.840 --> 0:20:40.440 the same way that you know, we used to watch 0:20:40.520 --> 0:20:43.879 DVDs and now everybody streams TVs and movies, and so 0:20:44.000 --> 0:20:46.720 they've been very, very focused on the cloud and how 0:20:46.800 --> 0:20:49.280