WEBVTT - The Fed, Earnings, Sweetgreen, and Dexcom (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.079 --> 0:00:23.200 All right, let's bring on our next guest. We love 0:00:23.280 --> 0:00:27.200 talking to Danielle. Danielle de Martino Booth, chief strategist and 0:00:27.320 --> 0:00:31.480 CEO at QI Intelligence. Danielle, We've now had some time 0:00:31.520 --> 0:00:33.360 a weekend or so to kind of digest what we've 0:00:33.400 --> 0:00:37.000 heard from various central bankers around the world. I'm sure 0:00:37.000 --> 0:00:39.839 you've had a chance to kind of coalesce a viewpoint. 0:00:40.080 --> 0:00:42.280 Anything change for you. What are you really thinking about 0:00:42.320 --> 0:00:45.400 where these central banks are going, where rates are going, 0:00:45.440 --> 0:00:47.440 based on what we learned from some of them last week. 0:00:48.840 --> 0:00:51.040 Well, I think at a very minimum, you need to 0:00:51.040 --> 0:00:52.640 think of rates as going nowhere. 0:00:52.800 --> 0:00:55.120 Okay, and I say that as a minimum. 0:00:55.440 --> 0:00:58.279 We've only got a twenty percent probability of a rate 0:00:58.360 --> 0:01:00.920 hike for the September the twentieth, But you know, this 0:01:00.960 --> 0:01:03.920 is a big week for payroll data, so you know, 0:01:04.520 --> 0:01:08.000 more strength in that area, even if it's very lagged 0:01:08.040 --> 0:01:11.080 in nature, even if we're seeing massive revisions come out 0:01:11.080 --> 0:01:13.560 of the Bureau of Labor Statistics, their birth death adjustment 0:01:13.920 --> 0:01:18.679 showed a negative eight hundred and sixteen thousand revision downward 0:01:19.040 --> 0:01:22.840 in the three quarters and December thirty first, twenty twenty two. 0:01:23.200 --> 0:01:26.160 Even though the data seems to be catching up with reality, 0:01:26.440 --> 0:01:27.560 it's pretty apparent to me. 0:01:27.480 --> 0:01:28.080 At least that J. 0:01:28.280 --> 0:01:32.399 Powell is looking at backward looking data for reasons to 0:01:32.560 --> 0:01:35.839 justify higher for longer. I think that that is the goal, 0:01:36.160 --> 0:01:37.760 and I think that he's going to look for whatever 0:01:37.880 --> 0:01:41.640 data he can find to justify pressing forward with another 0:01:41.720 --> 0:01:44.600 rate high ort again at a minimum, staying higher for longer, 0:01:44.640 --> 0:01:46.360 continuing to run that balance sheet down. 0:01:47.000 --> 0:01:49.960 Danielle, this is Simone here in New York. Good morning 0:01:50.000 --> 0:01:53.560 to you. You know you talk about this meeting reality, 0:01:53.600 --> 0:01:58.800 the FED meeting reality, and how the yellow trucking shut 0:01:58.840 --> 0:02:01.400 down may herald the big beginning of a sort of 0:02:01.440 --> 0:02:05.160 bankruptcy cycle. How do you see this playing out? What 0:02:05.240 --> 0:02:09.799 kind of timeline would you anticipate for seeing more bankruptcies? 0:02:09.880 --> 0:02:12.480 And then when can kind of the FED no longer 0:02:12.520 --> 0:02:13.119 ignore that. 0:02:14.440 --> 0:02:16.880 You know, that's a fabulous question, because you know, if 0:02:16.880 --> 0:02:20.560 you look at bcygo on the terminal, you'll see that 0:02:20.600 --> 0:02:22.639 the march of bankruptcies really. 0:02:22.639 --> 0:02:23.839 Has not subsided. 0:02:23.880 --> 0:02:27.200 We're continuing to see bankruptcies roll in at the fastest 0:02:27.240 --> 0:02:30.080 pace since two thousand and nine. I think what the 0:02:30.120 --> 0:02:32.600 FED has to take into account though, right now. 0:02:32.520 --> 0:02:33.320 Is headline risk. 0:02:33.639 --> 0:02:36.679 You kind of had a series of quarters where Silicon 0:02:36.760 --> 0:02:40.239 Valley was coming out with very splashy headlines ten thousand here, 0:02:40.280 --> 0:02:43.280 ten thousand there, and then that kind of went dormant 0:02:43.360 --> 0:02:46.560 for a while. We really haven't seen headline risk in 0:02:46.680 --> 0:02:49.720 layoffs announcements, but I think that we're going to see 0:02:49.760 --> 0:02:54.200 that increasingly going forward. Whether you're talking to Chris Williamson 0:02:54.360 --> 0:02:57.520 over at Standard and Poors, who is saying that, you know, 0:02:57.520 --> 0:03:01.560 if manufacturing backlogs remain in traction as they'd have now 0:03:01.600 --> 0:03:04.960 for fourteen fifteen straight months, that you're going to start 0:03:05.000 --> 0:03:08.720 to see manufacturers that are not benefiting from the Inflation 0:03:08.760 --> 0:03:12.760 Production Act, they are not building green new factories, You're 0:03:12.800 --> 0:03:15.079 going to see layoffs start to come through. And that's 0:03:15.120 --> 0:03:18.400 exactly what Chris Williamson warned about in the second quarter 0:03:18.400 --> 0:03:21.320 earning season. Remember worldly at the halfway point in this 0:03:21.360 --> 0:03:24.560 earning season, and you've got this great, big splashy thirty 0:03:24.639 --> 0:03:27.720 thousand people losing their jobs. Because it looks like this 0:03:27.760 --> 0:03:30.480 is going to be a Chapter seven filing straight to 0:03:30.520 --> 0:03:33.960 liquidation as opposed to a Chapter eleven restructuring. This is 0:03:34.000 --> 0:03:36.440 going to take capture a lot of Americans' attention. 0:03:37.320 --> 0:03:40.240 So we're going to have a ton of economic data 0:03:40.480 --> 0:03:42.240 this week, Danielle, You're going to you and your team 0:03:42.240 --> 0:03:46.280 going to be very busy. Obviously, the non form payroll 0:03:46.360 --> 0:03:49.280 will be a big data point. I guess I'm looking 0:03:49.280 --> 0:03:52.720 around the world. I'm seeing some recessions around the world. 0:03:52.760 --> 0:03:55.760 I guess Germany just had a flatline quarter after a 0:03:55.800 --> 0:03:59.960 couple quarters of contraction. Are you concerned? What is your 0:04:00.160 --> 0:04:02.440 level of concern about this US economy here? 0:04:03.760 --> 0:04:07.360 Well, the US economy cannot claim to exist on an island. 0:04:07.680 --> 0:04:10.600 You know, there was a very slight uptick in Chinese 0:04:10.640 --> 0:04:15.040 official manufacturing data overnight, but that remained in contraction. I 0:04:15.120 --> 0:04:18.400 think the more notable development out of China, given that 0:04:18.480 --> 0:04:21.520 we had such great hopes for this reopening trade, is 0:04:21.600 --> 0:04:25.839 more so that we're seeing a downward movement in the 0:04:26.000 --> 0:04:30.520 services components of these PMI numbers, and that I think 0:04:30.680 --> 0:04:34.240 was what people paid closer attention to overnight. G If 0:04:34.279 --> 0:04:36.599 it's not going to be the industrial sector out of China, 0:04:36.839 --> 0:04:38.880 then what's going to happen if the services side is 0:04:38.880 --> 0:04:41.840 slowing down? Specifically that that service is one dropped to 0:04:41.920 --> 0:04:44.120 fifty one point five. So you're kind of on the 0:04:44.279 --> 0:04:47.800 edge of contraction in the second largest economy. And as 0:04:47.839 --> 0:04:52.600 you just pointed out, Germany is really three quarters into recession. 0:04:52.960 --> 0:04:56.000 We saw that the first quarter in Germany ended up 0:04:56.000 --> 0:04:59.640 being revised downward into contraction. We could see a similar 0:05:00.080 --> 0:05:02.320 a bit of data coming out of Germany that revises 0:05:02.360 --> 0:05:06.119 this the second quarter into contraction as well. The United 0:05:06.160 --> 0:05:09.120 States cannot isolate. 0:05:08.640 --> 0:05:12.400 Itself from the globality of the current recession. 0:05:13.200 --> 0:05:15.760 Yeah, but I mean to that end, though, the United 0:05:15.760 --> 0:05:20.760 States has existed a little bit apart from China for 0:05:20.839 --> 0:05:24.880 several years now. Considering how slowly China has come back 0:05:24.920 --> 0:05:30.520 in the game post pandemic, and the US consumer remains strong, 0:05:30.560 --> 0:05:33.120 I mean, do you think that the US consumer can 0:05:33.200 --> 0:05:36.599 potentially continue to kind of power through some of this 0:05:36.880 --> 0:05:40.720 growth and offset some of the woes that we hear 0:05:40.839 --> 0:05:43.440 from around the world despite this level of a rising 0:05:43.440 --> 0:05:44.080 interst rates. 0:05:45.080 --> 0:05:48.400 You know, it's interesting you raise that question. Outside of 0:05:48.440 --> 0:05:50.760 the employee Retention Credit, which we know, I think pumped 0:05:50.839 --> 0:05:54.479 about thirty three billion dollars into the US economy, we 0:05:54.560 --> 0:05:57.640 know much of this is fraudulent. Outside of that fiscal 0:05:57.760 --> 0:06:01.240 area of massive support going to some of the wealthy Americans, 0:06:01.400 --> 0:06:04.640 We're seeing a big uptick in the number of student 0:06:04.720 --> 0:06:07.760 loan borrowers who are preemptively getting out in front of 0:06:07.760 --> 0:06:11.120 what they know to be resumed student loan payments, and 0:06:11.160 --> 0:06:14.400 that's going to have a crimping effect on US consumption. 0:06:14.440 --> 0:06:17.400 And we are indeed beginning to see that. So people 0:06:17.440 --> 0:06:21.040 are getting ahead of interest accrual beginning on septem of 0:06:21.080 --> 0:06:24.240 the first actual payments beginning on October the first. I 0:06:24.320 --> 0:06:28.880 don't see an offset to that in terms of layoffs decreasing, 0:06:28.960 --> 0:06:32.640 in terms of hiring increasing. We're just not seeing enough 0:06:32.640 --> 0:06:36.960 evidence to show that there's any upward momentum going forward 0:06:37.279 --> 0:06:38.560 for the US consumer. 0:06:39.720 --> 0:06:42.359 All Right, So I'm going back and I'm looking at 0:06:42.400 --> 0:06:45.240 this ecoscreen on the Bloomberg terminal. It is literally two 0:06:45.320 --> 0:06:47.720 screens full of data we're going to get this week, Danielle, 0:06:47.760 --> 0:06:49.479 can you help me focus on what I need to 0:06:49.480 --> 0:06:51.200 focus on if there's a data point out there that 0:06:51.279 --> 0:06:53.799 you're really going to pay attention to this week. 0:06:55.080 --> 0:06:56.880 So I'm going to be looking a lot in terms 0:06:56.920 --> 0:07:00.719 of hours worked, and that really is a gauge of 0:07:00.760 --> 0:07:04.960 how tightly employees are holding on to their employers are 0:07:05.000 --> 0:07:08.280 holding onto their employees. If they're cutting back hours aggressively, 0:07:08.640 --> 0:07:12.640 trying to not push through with cutting handcount to cut costs. 0:07:12.920 --> 0:07:15.720 That's something we pay very close attention to. And again, 0:07:15.960 --> 0:07:18.640 we had Chicago PMI just out a few minutes ago 0:07:18.800 --> 0:07:22.119 that showed that backlogs remain in contraction. I'll be looking 0:07:22.160 --> 0:07:25.040 for a similar echo out of the Dallas Fed Manufacturing 0:07:25.080 --> 0:07:28.480 that hits at half past this hour. I focus, we 0:07:28.560 --> 0:07:32.240 focus at QI Research so closely on backlogs because that 0:07:32.440 --> 0:07:34.560 is a gauge of future demand. 0:07:34.680 --> 0:07:36.480 If the demand is not there, if. 0:07:36.440 --> 0:07:39.920 Unfilled orders are not there, and in fact contracting, that 0:07:40.040 --> 0:07:42.760 means that your need for employees is decreasing as a 0:07:42.760 --> 0:07:43.520 factor of time. 0:07:43.720 --> 0:07:45.840 Hi, Danielle, thank you very much. Always appreciate getting a 0:07:45.840 --> 0:07:48.440 couple minutes of your time, Danielle. Dee Martina Booth, CEO 0:07:48.640 --> 0:07:52.720 and chief strategists at QI Research. Busy Busy Economic Week. 0:07:52.720 --> 0:07:57.160 This week, you're listening to the Team Cans live program 0:07:57.280 --> 0:08:01.240 Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:08:01.320 --> 0:08:04.680 the iHeartRadio app and the Bloomberg Business App, or listen. 0:08:04.520 --> 0:08:06.640 On demand wherever you get your podcasts. 0:08:08.800 --> 0:08:10.680 Still got a ton of earning, so when we get 0:08:10.680 --> 0:08:12.480 their earnings, we like to talk to smart people and 0:08:12.520 --> 0:08:15.080 we can find them. We just dial b Igo on 0:08:15.120 --> 0:08:18.200 the terminal that gets you Bloomberg Intelligence four hundred research 0:08:18.200 --> 0:08:21.280 anelts around the world covering you know, two thousand companies 0:08:21.320 --> 0:08:23.320 one hundred and thirty industries and what they do is 0:08:23.360 --> 0:08:24.080 really incredible. 0:08:24.120 --> 0:08:26.520 They take you through from the beginning to the end 0:08:26.760 --> 0:08:28.720 of how these stories for these different times. 0:08:28.800 --> 0:08:30.360 Yeah, I don't know who started that business, but the 0:08:30.400 --> 0:08:32.959 person must be a genius here. Anyway, let's bring in 0:08:33.000 --> 0:08:34.880 a couple of those smart ones. Man Deep Scene covers 0:08:34.920 --> 0:08:38.640 the tech stuff for Bloomberg Intelligence, and Punamcoil covers all 0:08:38.640 --> 0:08:40.440 the retail and we're going to tie that in because 0:08:40.600 --> 0:08:44.480 retail and technology they have collided. I think Amazon dot Com. 0:08:44.520 --> 0:08:47.040 All right, So Man Deep, I want to start off with, 0:08:47.480 --> 0:08:49.320 and we'll let you do I know this news on 0:08:49.360 --> 0:08:51.280 pat palns. Here I'm gonna talk about Apple. What do 0:08:51.360 --> 0:08:53.760 I need to pay attention to from Apples when they 0:08:53.800 --> 0:08:56.720 report numbers after the closed Thursday unit shipments. 0:08:56.760 --> 0:09:00.400 When it comes to smartphones as well as your tutts 0:09:00.520 --> 0:09:04.880 and Max and look, I think expectations are low. Unlike 0:09:05.000 --> 0:09:09.800 some of the other tech companies, Apple's estimates have gone down, 0:09:10.200 --> 0:09:13.959 so in terms of you know, expectations, they are low. 0:09:14.600 --> 0:09:17.959 I do think they're probably going to print an inline quarter. 0:09:18.200 --> 0:09:21.280 But in terms of guide you have the iPhone fifteen 0:09:21.320 --> 0:09:24.959 coming up. That is where the focus is the holiday quarter. 0:09:25.240 --> 0:09:25.920 What could it do? 0:09:26.080 --> 0:09:29.240 I think I might upgrade to the fifteen. Honor Rocks 0:09:29.280 --> 0:09:31.840 pushing it on rok Run another one in your tech 0:09:32.360 --> 0:09:36.000 flunkies over their Bloomberg intelligence. He's tell me that's meaningful upgrade. 0:09:36.600 --> 0:09:39.080 It is, but I guess in the context of what's 0:09:39.120 --> 0:09:42.079 going on in the tech world, the generative AI buzz, 0:09:42.720 --> 0:09:45.280 it's not going to be that big off an upgrade 0:09:45.360 --> 0:09:47.679 in terms of what the phone can do. And everyone 0:09:47.760 --> 0:09:52.000 is excited about potentially upgrading the hardware for running these 0:09:52.080 --> 0:09:54.280 large language models on your phone. I don't think the 0:09:54.320 --> 0:09:56.000 iPhone fifteen doing that. 0:09:56.400 --> 0:09:57.199 I mean, I'm interested. 0:09:57.360 --> 0:10:00.240 Is this part of the overall weakness that you have 0:10:00.280 --> 0:10:03.600 seen in PC demand? Is it just that your PCs 0:10:03.679 --> 0:10:07.679 last longer, or is it somehow about penny pinching and 0:10:07.760 --> 0:10:10.160 a broader consumer story at this point With that. 0:10:10.360 --> 0:10:13.400 I think there was a kind of certain cadence to 0:10:13.520 --> 0:10:17.280 refresh cycle for both piecs and smartphones that hasn't changed. 0:10:17.760 --> 0:10:21.280 Every time you have a big upgrade to hardware is 0:10:21.280 --> 0:10:24.000 when you have a new technology coming up, and I 0:10:24.040 --> 0:10:28.840 think whether it's linking your headset or being able to 0:10:28.920 --> 0:10:31.920 run generative AI on your phone, these are the type 0:10:31.920 --> 0:10:35.640 of things that can drive people to upgrade their phones, 0:10:35.720 --> 0:10:38.319 the ones that are on the fans. My device is 0:10:38.360 --> 0:10:41.160 good enough, do I really need a new one? And 0:10:41.200 --> 0:10:44.320 that's what drives the asps. So right now everyone is 0:10:44.360 --> 0:10:47.760 talking about even though the unit shipments is flat, how 0:10:47.760 --> 0:10:51.000 will Apple keep growing? It's the services and the asps 0:10:51.040 --> 0:10:53.839 because the next version of the phones continues to get 0:10:53.880 --> 0:10:55.920 expensive and they keep learning more services. 0:10:56.160 --> 0:10:59.120 All right, Punham, We've got a lot of retailers set 0:10:59.120 --> 0:11:01.319 the report and the come weeks, but let's start with 0:11:01.320 --> 0:11:04.200 with Amazon. What do you expect the story to be 0:11:04.320 --> 0:11:05.080 from Amazon. 0:11:06.000 --> 0:11:06.640 It's dark pall. 0:11:06.760 --> 0:11:08.160 I think it's going to be a mixed break. So 0:11:08.160 --> 0:11:10.959 we're going to see some strength online with sales growing 0:11:11.480 --> 0:11:13.559 or I should say gm re growing in the high 0:11:13.559 --> 0:11:16.400 single digit range, which is a good thing because since 0:11:16.440 --> 0:11:19.559 the pandemic, you know, Amazon has dealt to it having 0:11:19.960 --> 0:11:23.400 to see more moderated sales growth and coming back to 0:11:23.480 --> 0:11:26.000 the high single digit, low double digit range just puts 0:11:26.000 --> 0:11:28.439 it on track to go back to the double digit 0:11:28.480 --> 0:11:31.280 games that we've been used to seeing in online. But 0:11:31.360 --> 0:11:33.240 outside of that, you know, the focus is also on 0:11:33.280 --> 0:11:37.040 a WUS and EWS sales will slow in the quarter. 0:11:37.440 --> 0:11:40.320 They're only expected to grow at a high single digit pace, 0:11:40.679 --> 0:11:44.080 and they could even moderate further in three Q when 0:11:44.080 --> 0:11:46.520 we see their guidance, which could probably be closer to 0:11:46.559 --> 0:11:47.240 seven percent. 0:11:48.360 --> 0:11:51.520 How much does AWS just simply outweigh, you know? However, 0:11:51.559 --> 0:11:55.160 successful or not, Prime Day was the various shopping trends 0:11:55.160 --> 0:11:55.720 that we're seeing. 0:11:56.559 --> 0:11:58.720 Yeah, so Prime Day was a huge success. We heard 0:11:58.720 --> 0:12:01.440 from Amazon the first day of it's largest sales date ever. 0:12:01.640 --> 0:12:04.840 It even out faced Black Friday and Cyber Monday last year. 0:12:04.960 --> 0:12:06.600 But when it comes to a WUS, the reason a 0:12:06.760 --> 0:12:10.520 WS is so important because it is the cashprap for Amazon. 0:12:10.600 --> 0:12:14.280 Right they produced pretty much all for nearly all of 0:12:14.280 --> 0:12:17.880 Amazon's profits, so it's really important to see those profit 0:12:17.960 --> 0:12:21.720 numbers rise. In the quarter, Amazon's a WUS business will 0:12:21.720 --> 0:12:24.640 only yield about a twenty four percent profit margin. It 0:12:24.840 --> 0:12:27.880 has historically been year thirty percent. We do see it 0:12:27.920 --> 0:12:30.040 coming back to that and even now facing that as 0:12:30.040 --> 0:12:33.280 we move forward in the next few years. But for now, 0:12:33.320 --> 0:12:36.520 you know that profit dwindles a little, it will pressure 0:12:36.600 --> 0:12:37.760 the overall profitability. 0:12:38.960 --> 0:12:42.559 Man Deep AI is certainly story number one in your 0:12:42.559 --> 0:12:46.560 world and technology another name today that seems to be 0:12:46.640 --> 0:12:49.160 getting the you know, the AI you know, kind of 0:12:49.360 --> 0:12:51.720 tap on the shoulders Palenteer. What's going on there? What 0:12:51.840 --> 0:12:54.880 is Palenteer and why is it up eleven percent today? 0:12:55.240 --> 0:12:58.440 So with all the talk around generative AI, and you know, 0:12:58.640 --> 0:13:01.800 Microsoft is the only one that has launched a tangible 0:13:01.840 --> 0:13:06.160 product around it. They're charging thirty dollars coat gpt well 0:13:06.800 --> 0:13:09.880 and also they're charging thirty dollars for their co pilots. 0:13:10.360 --> 0:13:13.240 This is the enterprise version of the product. Jackipt is 0:13:13.280 --> 0:13:17.120 more consumer facing. So to me, you know, all these companies, 0:13:17.160 --> 0:13:21.880 whether it's Palenteer Snowflake data breaks. What they're doing is 0:13:22.720 --> 0:13:26.040 essentially ingesting these large amounts of data that is being 0:13:26.200 --> 0:13:30.520 created and trying to use you know, generative AI or 0:13:30.640 --> 0:13:34.400 large aguage models to make the AI better. And that 0:13:34.600 --> 0:13:36.040 is what the play is now. 0:13:36.120 --> 0:13:36.880 Whether or not. 0:13:36.920 --> 0:13:40.200 They're successful in monetizing it, we don't know because they 0:13:40.280 --> 0:13:43.640 haven't launched a product like Microsoft has, So. 0:13:44.000 --> 0:13:44.840 That is the key. 0:13:45.000 --> 0:13:48.560 If if any time you see a company actually launching 0:13:48.559 --> 0:13:51.560 a product being able to sell their customers, that's when 0:13:51.600 --> 0:13:55.280 you know this is a new deal. And that's I 0:13:55.280 --> 0:13:58.280 think the only tangible revenue you see right now is 0:13:58.320 --> 0:14:01.240 for Microsoft. Yes it's for they're out, but at least 0:14:01.240 --> 0:14:04.000 they have a product out there they're looking to monetize it. 0:14:04.320 --> 0:14:07.720 With Palenteer, you've seen multiple expansion. Yes, this is a 0:14:07.760 --> 0:14:11.800 company that is built around data visualization and potentially could 0:14:11.840 --> 0:14:14.280 use generative AI, but we don't know if they have 0:14:14.320 --> 0:14:15.000 a product. 0:14:14.760 --> 0:14:16.840 They'll be But that gets an eleven percent move in 0:14:16.840 --> 0:14:17.479 the stock. 0:14:17.880 --> 0:14:20.560 And that's where you know. Everything that has happened this 0:14:20.680 --> 0:14:25.480 year is multiple expansion, no optick in estimates, so come earnings. 0:14:25.760 --> 0:14:29.320 The expectations are sky high, and that's where you got 0:14:29.320 --> 0:14:30.760 to deliver like Nvidia has. 0:14:30.800 --> 0:14:30.960 You know. 0:14:31.320 --> 0:14:33.560 That's what Doug Cast from Seabree's Partners was saying to 0:14:33.560 --> 0:14:37.000 Tom Keenan and I. And he's he's gotten increasingly bearish 0:14:37.080 --> 0:14:39.680 as years going on because it's all multiple expansion. He 0:14:39.720 --> 0:14:42.240 hasn't seen the earnings yet the first half of the year. Okay, 0:14:42.280 --> 0:14:45.160 he kind of understands, you know, the most recent you know, 0:14:45.400 --> 0:14:47.480 four or five, six weeks he just doesn't get. So 0:14:47.520 --> 0:14:48.320 that makes kind of surprise. 0:14:48.480 --> 0:14:53.160 It's people looking for the long term growth that we're 0:14:53.160 --> 0:14:55.480 not going to necessarily see immediately. But put on, I 0:14:55.480 --> 0:14:57.240 want to throw this to you as well, because I 0:14:57.280 --> 0:15:01.160 know you cover lots of these consumer and e commerce companies. 0:15:01.280 --> 0:15:04.760 One of the things that that we've been trying to 0:15:04.800 --> 0:15:08.080 parse here on the AI story is do we see 0:15:08.080 --> 0:15:10.600 some of these AI upgrades roll out, you know, for 0:15:10.840 --> 0:15:15.600 consumer benefit, for you know, tailoring ads that get to consumers, 0:15:15.640 --> 0:15:17.920 for getting the right products in front of them, or 0:15:17.920 --> 0:15:21.720 do we just simply see efficiency on the back end? 0:15:21.840 --> 0:15:23.400 What are you seeing from some of the brands that 0:15:23.440 --> 0:15:25.240 you cover, because I know there are quite the lengthy 0:15:25.280 --> 0:15:27.880 list that report this week that may throw in that 0:15:27.920 --> 0:15:29.920 mention of AI and their earnings calls. 0:15:31.240 --> 0:15:34.680 Sure, I think AI is both. It definitely will drive 0:15:34.680 --> 0:15:37.760 efficiencies on the back end, but we are seeing companies 0:15:37.800 --> 0:15:39.640 also bring it to the benefit of the consumers and 0:15:39.720 --> 0:15:43.160 the sellers. A recent example they reported last week and 0:15:43.240 --> 0:15:46.120 they launched a listing program where you can take a 0:15:46.160 --> 0:15:48.960 picture of a product that you want to sell and 0:15:49.160 --> 0:15:52.600 AI will generate the description for you. So it removes 0:15:52.600 --> 0:15:55.160 a pain point to our friction point in the selling 0:15:55.240 --> 0:15:59.240 process and also allows you to amplify your listings online. 0:15:59.240 --> 0:16:02.080 So we think that's one Useas we have revolved reporting 0:16:02.120 --> 0:16:05.920 this week, they've used AI to help generate marketing billboards, 0:16:06.040 --> 0:16:08.920 They're using AI to help improve search. So I think 0:16:08.960 --> 0:16:11.880 there's a lot happening with AI, notably generative AI that's 0:16:11.920 --> 0:16:15.040 really going to drive the ROI for both the buyers 0:16:15.160 --> 0:16:17.280 and the sellers. 0:16:16.840 --> 0:16:17.600 Real quick. 0:16:18.840 --> 0:16:20.760 And deep. I want to talk to you about advanced 0:16:20.760 --> 0:16:23.560 micro devices. It's a chip maker. Can it be a 0:16:23.960 --> 0:16:25.800 Nvidia kind of like play? 0:16:26.560 --> 0:16:29.560 I mean, last week we learned from Intel that PC 0:16:29.680 --> 0:16:33.080 market seems to be bottoming out in terms of inventory correction, 0:16:33.200 --> 0:16:36.000 so that's a positive sign. And look, bulk of AMD's 0:16:36.040 --> 0:16:39.440 revenue is still tied to CPUs now what's going on 0:16:39.520 --> 0:16:43.600 with generative AI is there is a substitution phenomena. Things 0:16:43.720 --> 0:16:46.800 that you were able to do with CPUs before right 0:16:46.840 --> 0:16:50.000 now you're looking to do with GPUs because that's where 0:16:50.040 --> 0:16:53.040 the generative AI connection comes into play. So I do 0:16:53.080 --> 0:16:57.520 think eventually you're going to find that these companies either 0:16:57.600 --> 0:17:03.120 have to diversify their CPU footprint YEP and produce these accelerators, 0:17:03.400 --> 0:17:06.120 or I think they will be a tale of two 0:17:06.240 --> 0:17:08.920 stories that one part is growing and the other part 0:17:08.960 --> 0:17:09.600 is declining. 0:17:09.680 --> 0:17:11.240 All right, well, keep an eye on all that. More 0:17:11.280 --> 0:17:14.840 earnings coming up this week and probably going into next 0:17:14.840 --> 0:17:17.479 week as well. Man Deep Singh Punamgoyle. They are two 0:17:17.560 --> 0:17:20.120 of the best analysts of Bloomberg Intelligence, one covering tech, 0:17:20.160 --> 0:17:22.960 one covering retail. But guess what, it's all converging. 0:17:23.240 --> 0:17:26.359 You're listening to the tape Cat's are live program Bloomberg 0:17:26.400 --> 0:17:30.000 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:30.080 --> 0:17:32.200 tune in app, Bloomberg dot Com, and the. 0:17:32.080 --> 0:17:33.280 Bloomberg Business app. 0:17:33.320 --> 0:17:36.160 You can also listen live on Amazon Alexa from our 0:17:36.160 --> 0:17:41.200 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:17:41.840 --> 0:17:45.480 Let's stop the salad business. I'm not a big salad here. 0:17:45.960 --> 0:17:50.000 I love I love you kind of like salads at lunch, 0:17:50.160 --> 0:17:51.720 which is okay, I think our. 0:17:51.640 --> 0:17:54.920 Next All I know is, you know the people here 0:17:55.040 --> 0:17:57.400 come around lunchtime, they come in and out. They're all 0:17:57.400 --> 0:18:00.919 carrying these bags from Sweet Green, which I guessed at 0:18:00.960 --> 0:18:02.720 the time was a salad thing. Again, not being a 0:18:02.760 --> 0:18:06.639 solid person, I don't know, but it is definitely a 0:18:06.680 --> 0:18:09.280 thing across the street from the Bloomberg HQ here at 0:18:09.520 --> 0:18:12.159 Midtown Manhattan, and I know it is around the country 0:18:12.200 --> 0:18:14.399 as well. Jonathan Neeman joins us. He's the CEO and 0:18:14.480 --> 0:18:18.000 founder of Sweet Green. It's sweet Green trades on New 0:18:18.080 --> 0:18:21.199 York Stock Exchange symbols. SG can put that into your 0:18:21.200 --> 0:18:23.840 Bloomberg terminal. Jonathan, Thanks so much for joining us here. 0:18:23.880 --> 0:18:26.119 I know you guys reported earnings last week, missed a 0:18:26.119 --> 0:18:29.840 little bit on revs and on EPs stock traded down. 0:18:30.359 --> 0:18:32.520 Tell us about the most recent quarter, tell us about 0:18:32.520 --> 0:18:34.840 the guidance you're giving your investors. 0:18:35.640 --> 0:18:38.399 Absolutely, good morning everyone. So we're really proud of the 0:18:38.480 --> 0:18:41.040 quarter we posted. We had twenty two percent year over 0:18:41.160 --> 0:18:44.480 year growth, three percent comps with positive traffic, and we 0:18:44.560 --> 0:18:48.359 expanded our restaurant level margin above twenty percent, delivering our 0:18:48.359 --> 0:18:51.719 first profitable quarter on an adjusted ebad up perspective as 0:18:51.720 --> 0:18:54.800 a public company. So I think a sign of more 0:18:54.840 --> 0:18:58.080 things to come companies focused on discipline, capital efficient growth 0:18:58.080 --> 0:19:00.360 as we continue to bring our mission across the country 0:19:00.720 --> 0:19:04.040 to more cities and more locations, and we're looking forward 0:19:04.040 --> 0:19:07.480 to continuing driving some comp drivers we have around our 0:19:07.520 --> 0:19:09.679 loyalty program as well as our expanded menu. 0:19:10.080 --> 0:19:12.359 Well, Jonathan, you know, Piper Sandler was out today with 0:19:12.440 --> 0:19:15.600 a note talking about how the tide maybe turning here 0:19:15.640 --> 0:19:17.880 a bit for Sweet Green after a tough sledding since 0:19:17.920 --> 0:19:22.120 going public, And I think it's pretty obvious going public 0:19:22.880 --> 0:19:26.399 November twenty twenty one, right post pandemic, then seeing the 0:19:26.440 --> 0:19:29.920 wave of omicron has to be hard for any company 0:19:29.960 --> 0:19:33.520 that does a lot of office business. Do you see 0:19:33.520 --> 0:19:37.280 the tide as turning? What things are you telling investors, Hey, 0:19:37.320 --> 0:19:41.960 wait for this because in a quarter, two quarters, we're 0:19:41.960 --> 0:19:44.040 really going to be able to start delivering on some 0:19:44.119 --> 0:19:45.280 of those expectations. 0:19:46.640 --> 0:19:48.840 Yeah, you know, we're focused. We're focused on a few 0:19:48.840 --> 0:19:52.639 big things. One is continuing to expand our footprint and 0:19:52.720 --> 0:19:55.160 not only opening our classic stores, but a few new 0:19:55.160 --> 0:19:57.959 formats that we've opened that have been really interesting and successful, 0:19:58.240 --> 0:20:00.800 one being our drive through format called the Sweet Lane, 0:20:00.880 --> 0:20:03.919 another being our Infinite Kitchen. We've also been you know, 0:20:04.000 --> 0:20:06.080 I hear you guys talk about, you know, not being 0:20:06.119 --> 0:20:08.639 a salad guy. While Sweegeren started as a salad company, 0:20:08.640 --> 0:20:11.119 we're much more than that today. Really consider ourselves healthy 0:20:11.119 --> 0:20:13.760 comfort food and our warm bowls. We sell more warm 0:20:13.800 --> 0:20:16.560 bowls than we do salads. We're on a journey to 0:20:16.640 --> 0:20:19.439 continue to expand our menu and taking the type of 0:20:19.480 --> 0:20:22.399 sourcing and fresh prep that we do, but expanding it 0:20:22.440 --> 0:20:25.720 beyond just salads and so things with you know, leaning 0:20:25.720 --> 0:20:29.919 on protein and carbs and just heardier craveable items to 0:20:30.040 --> 0:20:33.000 really bring our mission to life. As I mentioned, we've 0:20:33.040 --> 0:20:35.720 also been focused on a loyalty program. We call it 0:20:35.760 --> 0:20:38.800 Sweet Pass. It has two components, both the free rewards 0:20:38.800 --> 0:20:41.560 and challenges, as well as a membership program where for 0:20:41.640 --> 0:20:44.440 ten dollars a month you get three dollars off every day, 0:20:44.800 --> 0:20:47.240 and so a number of comp drivers built into the 0:20:47.280 --> 0:20:50.560 business as we look forward, all while bringing a discipline, 0:20:50.600 --> 0:20:53.359 a you know, a cost discipline approach and making this 0:20:53.400 --> 0:20:54.399 company profitable. 0:20:54.760 --> 0:20:57.360 Yeah, talk to me about Infinite Kitchen. You mentioned this there. 0:20:57.440 --> 0:21:00.399 This is the sort of automated version of your kitchen. 0:21:00.800 --> 0:21:04.000 You've rolled out one of them that I believe and 0:21:04.040 --> 0:21:06.720 correct me if I'm wrong. Here eliminates employees, you know, 0:21:06.760 --> 0:21:11.439 you put together these bulls without employees there. What's your 0:21:11.560 --> 0:21:16.680 vision for the scale of this, for the timeline with 0:21:16.720 --> 0:21:19.520 respect to getting this in more than just kind of 0:21:19.720 --> 0:21:21.040 a handful of stores. 0:21:22.760 --> 0:21:22.800 No. 0:21:22.920 --> 0:21:25.720 Automation is something that I'm personally very excited about, and 0:21:25.920 --> 0:21:27.879 it's something that Sweekering has been working on for a 0:21:27.960 --> 0:21:31.080 number of years, develop you know, developing this technology in house. 0:21:31.480 --> 0:21:34.880 And so what we see is is we believe that 0:21:35.359 --> 0:21:38.000 we will always still make the food in house, but 0:21:38.200 --> 0:21:41.399 with this automation, we're able to assemble the bulls in 0:21:41.440 --> 0:21:45.040 a precise manner at much higher throughputs. So the Infinite 0:21:45.119 --> 0:21:47.440 Kitchen can make four to five hundred bowls per hour, 0:21:47.880 --> 0:21:52.439 perfectly portioned, perfectly accurate, with very high quality, a very 0:21:52.520 --> 0:21:55.960 high quality experience both for our team members and our consumers. 0:21:56.000 --> 0:21:58.280 So people are loving the pilot store that we have. 0:21:58.720 --> 0:22:01.719 We're opening a second Infinite Kitchen restaurant later this year 0:22:01.760 --> 0:22:05.240 in Huntington Beach, California, and have plans to begin integrating 0:22:05.240 --> 0:22:09.200 this technology into restaurants next year. We do believe over time, 0:22:09.680 --> 0:22:12.080 you know, a huge portion of our fleet will integrate 0:22:12.160 --> 0:22:14.960 this technology. But we still have a lot to learn 0:22:15.000 --> 0:22:18.040 in terms of in terms of you know, exactly how 0:22:18.040 --> 0:22:20.720 to deploy it. But all to say, a very promising 0:22:20.760 --> 0:22:21.879 start with this technology. 0:22:22.560 --> 0:22:25.880 John, to talk to me again, not being that familiar 0:22:25.920 --> 0:22:28.200 with your restaurants, although I am going to go today 0:22:28.200 --> 0:22:30.160 for the first time because it's on sixty first Street, 0:22:30.200 --> 0:22:33.600 I think, and Lex, I'll give that a shot. You 0:22:33.960 --> 0:22:37.520 where have you historically located your stores and where are 0:22:37.560 --> 0:22:40.640 you and how has that changed maybe since the pandemic 0:22:41.000 --> 0:22:44.040 in the different way ways people work and the amount 0:22:44.040 --> 0:22:45.560 of time to spend in the office versus home. 0:22:46.600 --> 0:22:49.280 Absolutely so we hope. We started the company in Washington, 0:22:49.320 --> 0:22:52.960 d C. Almost sixteen years to the day. Three kids 0:22:53.000 --> 0:22:55.520 in Georgetown really had nowhere to aid, so we started 0:22:55.560 --> 0:22:57.880 in DC. We worked our way up the Eastern Corridor 0:22:58.240 --> 0:23:00.880 and for the first call it decade of the company's history. 0:23:00.920 --> 0:23:04.080 We're very urban leaning, although you know, we did have 0:23:04.320 --> 0:23:07.280 suburban stores as well. Ever since the pandemic, with the 0:23:07.320 --> 0:23:10.520 dispersion of consumers as well as following our customers home, 0:23:11.000 --> 0:23:14.200 we've begun to explore more suburban and so our pipeline 0:23:14.240 --> 0:23:17.520 has leaned heavily suburban to a number of new markets 0:23:17.560 --> 0:23:20.119 over the past few years, where our fleet today is 0:23:20.480 --> 0:23:24.440 approximately fifty percent urban fifty percent suburban, and we see 0:23:24.720 --> 0:23:27.639 pretty much equal success in both in both worlds, so 0:23:27.800 --> 0:23:31.680 similar av similar margins, which really is you know, talks 0:23:31.720 --> 0:23:34.040 a lot about the portability of the brand not only 0:23:34.119 --> 0:23:36.439 in different type of trade areas, but in different markets 0:23:36.440 --> 0:23:37.280 all over the country. 0:23:37.400 --> 0:23:40.639 Does that capture a different kind of consumer when you 0:23:40.680 --> 0:23:45.199 move outside those typically urban areas. And then also you know, 0:23:45.240 --> 0:23:48.760 with respect to the consumer, are you worried about the 0:23:48.840 --> 0:23:54.280 restart of student loan payments weighing on your customer's wallets. 0:23:55.720 --> 0:23:58.520 So we are expanding, We're continuing to expand our consumer, 0:23:58.680 --> 0:24:03.119 so looking to capture more families, different age groups and 0:24:03.160 --> 0:24:06.360 really be relevant for anyone looking for a craveable, delicious 0:24:06.400 --> 0:24:08.879 and healthy meal. So over time, our vision is to 0:24:08.920 --> 0:24:12.080 redefine fast food and really bring this idea of healthy 0:24:12.080 --> 0:24:14.680 comfort food to scale and kind of see everyone as 0:24:14.720 --> 0:24:17.880 being our consumer over time. In terms of the health 0:24:17.880 --> 0:24:20.680 of the consumer, we see a lot of health in 0:24:20.720 --> 0:24:24.600 our consumer today, we haven't seen any reason to be concerned. 0:24:24.600 --> 0:24:27.399 It is something we're of course watching, understanding the student 0:24:27.400 --> 0:24:30.679 debt repayments, but given the twenty two percent year over 0:24:30.760 --> 0:24:33.919 year growth and the positive comp and positive traffic, we 0:24:34.000 --> 0:24:36.679 are overall feeling very good about the trajectory. 0:24:37.280 --> 0:24:39.560 All right, Jonathan, thanks so much for taking some time 0:24:39.640 --> 0:24:42.600 to chat with this. Jonathan Nieman. He's the CEO and 0:24:42.720 --> 0:24:45.800 co founder of sweet Green. As a publicly traded company. 0:24:45.800 --> 0:24:48.520 You could type in the ticker SG into your Bloomberg 0:24:48.600 --> 0:24:51.560 Professional terminal and get all the day you need on 0:24:51.640 --> 0:24:54.720 that company. I think I'm gonna go there today. It'll 0:24:54.760 --> 0:24:55.400 be my first time. 0:24:55.600 --> 0:24:57.800 Are you gonna as you going there? Going to add 0:24:57.800 --> 0:24:59.879 to the twelve percent gain that we're seeing in this 0:25:00.040 --> 0:25:01.480 shares some sweet Green today. 0:25:01.359 --> 0:25:06.960 Maybe I think Paul eating a salad he like defeats 0:25:07.000 --> 0:25:09.040 the purpose. I think you're right, he's gonna put fried 0:25:09.119 --> 0:25:09.719 chicken in it. 0:25:09.760 --> 0:25:10.000 Etc. 0:25:10.880 --> 0:25:12.920 All right, we'll see how it goes. I'll report back. 0:25:14.119 --> 0:25:17.520 You're listening to the teenth Ken's Are Live program Bloomberg 0:25:17.560 --> 0:25:19.920 Markets weekdays at ten am Eastern. 0:25:19.640 --> 0:25:22.680 On Bloomberg dot com, the iHeartRadio. 0:25:21.960 --> 0:25:24.719 App, and the Bloomberg Business app or listen on demand 0:25:24.760 --> 0:25:26.360 wherever you get your podcasts. 0:25:27.920 --> 0:25:31.600 So let's talk beer, let's talk Heineken, and we do that. 0:25:31.640 --> 0:25:34.400 We talked to Duncan Fox Research Channel, so Bloomberg Intelligence 0:25:34.440 --> 0:25:39.800 you can tell via zoom from the phenomenal Bloomberg European 0:25:39.880 --> 0:25:43.359 headquarters at Queen Victoria Street in London and absolutely phenomenal 0:25:43.840 --> 0:25:45.960 building right in the city of London, right by the 0:25:45.960 --> 0:25:48.360 Bank of England. Thank you very much, Mike. We appreciate 0:25:48.600 --> 0:25:51.840 those digs over there. Duncan talk to us about Heinegen. 0:25:51.920 --> 0:25:54.720 What do we hear from our good friends in Amsterdam. 0:25:55.480 --> 0:25:57.640 It was a little bit of a surprise today actually 0:25:57.680 --> 0:26:02.360 in that they actually don't radio expectations. That's something that 0:26:02.800 --> 0:26:06.080 our friends at Hanegan don't do very often. So they've 0:26:06.119 --> 0:26:09.280 basically been investing a lot more behind their brands, and 0:26:09.320 --> 0:26:11.920 there was a couple of markets which really had had 0:26:11.920 --> 0:26:16.160 some poor volume, mainly Vietnam and Nigeria, and so they've 0:26:16.160 --> 0:26:18.679 decided to keep their investment high in those markets and 0:26:18.680 --> 0:26:21.360 take the hit on operating profit, which from my point 0:26:21.359 --> 0:26:23.879 of view as an analyst for the long term, absolutely the 0:26:23.920 --> 0:26:25.280 right thing to do. But it was a bit of 0:26:25.280 --> 0:26:28.840 a shock this morning at six o'clock, shares a down 0:26:28.920 --> 0:26:31.320 seven percent or so what they were the last song looked. 0:26:31.800 --> 0:26:34.000 Hard to go out despite being in Europe, hard to 0:26:34.040 --> 0:26:35.760 go out and get a beer at six am. I 0:26:35.840 --> 0:26:39.720 think where the earnings come in as a surprise. Talk 0:26:39.760 --> 0:26:42.399 to me about so a lot of this I understand 0:26:43.760 --> 0:26:50.920 is they've invested heavily in these smaller, more local oriented operations. 0:26:51.440 --> 0:26:52.359 But there is. 0:26:52.359 --> 0:26:55.800 Where the consumers are feeling maybe the pinch is it 0:26:55.840 --> 0:26:58.920 because they kind of can't continue to add these price 0:26:59.000 --> 0:27:05.480 increases on as supply prices increase, or explain to me 0:27:05.520 --> 0:27:07.840 how this how they how this bruise down? 0:27:09.720 --> 0:27:10.119 Nice one. 0:27:10.200 --> 0:27:13.600 Yeah, basically they pushed price up about twelve percent on average, 0:27:13.600 --> 0:27:16.240 which is which is pretty high. But you have to 0:27:16.240 --> 0:27:20.399 remember that their their costs went up mid teams in 0:27:20.880 --> 0:27:22.800 Q one, They're going to go up low teams in 0:27:22.880 --> 0:27:25.320 Q two. So what they've done is effectively take the 0:27:25.359 --> 0:27:29.240 pricing up front, and occasionally in some markets they just 0:27:29.280 --> 0:27:32.320 want to be too far as the economies slowed, so 0:27:32.400 --> 0:27:35.439 the consumer has, however much money they've got to spend, 0:27:35.520 --> 0:27:39.119 and beer is not an essentials much as I'd like 0:27:39.160 --> 0:27:41.919 it to be. So you know, they've traded down, i 0:27:41.960 --> 0:27:45.840 think in some markets to cheaper brands, So they've got 0:27:45.880 --> 0:27:48.920 the right long term strategy for sure. You know, they've 0:27:48.920 --> 0:27:51.480 the markets still are mentioned Vietnam and Nigeria. They have 0:27:51.680 --> 0:27:55.920 huge populations, great economic growth in the long term. They've 0:27:55.960 --> 0:27:58.280 just had some short term issues that have that have 0:27:58.440 --> 0:28:01.280 caused them some volume decline in short term. But you know, 0:28:02.080 --> 0:28:05.000 they've taken the decision to look long term, which I 0:28:05.000 --> 0:28:07.800 think is the right decision and sort of take the 0:28:07.880 --> 0:28:10.439 volume sort of the profit hit this year. So it 0:28:10.520 --> 0:28:13.360 makes sense to me. But yeah, right now, so I've 0:28:13.359 --> 0:28:14.080 been expecting that. 0:28:14.119 --> 0:28:17.040 First thing, I'm looking at the pg EO function on 0:28:17.080 --> 0:28:19.399 the Bloomberg terminal that gives you a financial analysis in 0:28:19.400 --> 0:28:21.040 a kind of you can see by segment where these 0:28:21.080 --> 0:28:23.680 guys are and by geography. Forty percent of their revenues 0:28:23.680 --> 0:28:26.480 comes from Europe, you know, about thirty three percent from 0:28:26.680 --> 0:28:30.040 America's and then Asia's the next biggest and then Emea. 0:28:30.119 --> 0:28:33.200 So are they investing in? I guess where are really 0:28:33.240 --> 0:28:35.600 the key growth markets for them that you talk about 0:28:35.600 --> 0:28:36.560 their investment. 0:28:38.000 --> 0:28:40.520 Ironicy Brazil is one that they've pushed quite a lot 0:28:40.520 --> 0:28:42.680 of money into in the last couple of years. They 0:28:42.840 --> 0:28:45.440 bought Kier in this business, probably about four or five 0:28:45.520 --> 0:28:49.360 years ago now, and they've been transferring that to make 0:28:49.400 --> 0:28:52.920 sure they have Amstell and Heineken beer going through that network. 0:28:53.280 --> 0:28:56.920 They're gaining market share, but obviously it's not showing through 0:28:56.920 --> 0:29:00.400 and operating profits. Because of that investment, You've then got 0:29:00.560 --> 0:29:05.240 Mexico's a big market. Vietnam China are the big markets. 0:29:05.240 --> 0:29:07.720 So all of those have got very very big populations, 0:29:07.760 --> 0:29:11.960 with one more importantly been young urban populations, and that's 0:29:11.960 --> 0:29:14.880 what you want as a beer manufacturer. Then you can 0:29:14.880 --> 0:29:17.479 tell your investment to actually get long term growth. So 0:29:17.720 --> 0:29:20.640 say it all makes sense, but every now and again 0:29:20.680 --> 0:29:23.640 you come up with a shock because economic growth has 0:29:23.720 --> 0:29:30.040 slowed down. Vietnam just for some reason, the economy just 0:29:30.120 --> 0:29:33.960 stalled after the Chinese New Year. There was some overstocking 0:29:34.000 --> 0:29:36.600 that they put in place during Chinese Year after pushing 0:29:36.640 --> 0:29:40.120 prices up dramatically. They had forty three percent volume growth 0:29:40.120 --> 0:29:43.800 in Vietnam last year, and I think they were expecting 0:29:43.840 --> 0:29:45.800 something similar and I think they just got caught out 0:29:45.800 --> 0:29:47.840 a little bit when they pushed prices a bit too high. 0:29:48.160 --> 0:29:49.960 Dog Just let's step back and just look at the 0:29:49.960 --> 0:29:52.360 global beer market. You know, when you talk to the 0:29:52.360 --> 0:29:55.479 big brewers that that you cover, how do they think 0:29:55.480 --> 0:29:58.120 about just kind of global growth for this category. 0:30:00.760 --> 0:30:05.920 They would expect something low volume growth, but it's really 0:30:05.960 --> 0:30:10.760 about premiumizing your brand portfolio so you get very good 0:30:10.800 --> 0:30:15.400 pricing and mix. That's where their strategies are. Problem with 0:30:15.520 --> 0:30:19.000 that is when you've got economic growth faltering, you take 0:30:19.040 --> 0:30:20.640 it on the chin in the short term and you've 0:30:20.680 --> 0:30:23.200 just got to keep investing behind those brands to try 0:30:23.240 --> 0:30:27.640 and get us to buy the premium beer. So it's 0:30:27.680 --> 0:30:30.240 all about that, all about getting into the markets where 0:30:30.240 --> 0:30:33.480 you've got younger than populations, so emerging markets, to where 0:30:33.480 --> 0:30:35.840 the growth is going to be, and then making as 0:30:35.920 --> 0:30:38.080 much money as you can from your core home markets, 0:30:38.120 --> 0:30:41.040 which are more likely in developed markets like the US 0:30:41.120 --> 0:30:44.800 or Europe. As you mentioned earlier for Heineken, So Heinekens's 0:30:45.120 --> 0:30:49.200 investment has been getting outside of Europe basically and reducing 0:30:49.240 --> 0:30:52.920 that GEO split to forty percent. It was well over 0:30:53.360 --> 0:30:55.640 it was probably sixty percent of about ten years ago. 0:30:55.960 --> 0:30:58.640 So they've done a very good job at pushing the 0:30:58.680 --> 0:31:00.000 portfolio into the right area. 0:31:00.880 --> 0:31:04.480 Speaking about those core markets in North America and Europe. 0:31:05.120 --> 0:31:10.080 Is the beer drinker or spirits drinker, perhaps more broadly, 0:31:10.440 --> 0:31:13.560 are they healthier in one versus the other? What is 0:31:13.600 --> 0:31:16.320 some of the commentary that you're hearing from these brands 0:31:16.320 --> 0:31:18.200 that span both markets telling you. 0:31:20.440 --> 0:31:24.080 Well? Certainly, up until recently, the spirits market was doing 0:31:24.160 --> 0:31:27.720 very very well. Experiences you probably heard an iconic Debra 0:31:27.880 --> 0:31:30.880 can talk about those very very key for the young 0:31:30.880 --> 0:31:34.360 consumer at the moment, and the spirits companies have been 0:31:34.400 --> 0:31:38.280 extremely good at fueling that. If you look at all 0:31:38.320 --> 0:31:40.600 of the marketing campaigns that the spirit companies do, it's 0:31:40.640 --> 0:31:43.720 around events, so they hire bars and do something around 0:31:43.720 --> 0:31:47.720 the brand, and that's been very very successful. Beer companies 0:31:47.720 --> 0:31:50.520 have yet really to go down that route, though they 0:31:50.520 --> 0:31:55.120 are now putting money into e commerce to make sure 0:31:55.160 --> 0:31:57.760 that it can get more of that spend I suppose, 0:31:57.800 --> 0:32:00.640 and more of the consumers doing it it the beer companies, 0:32:00.680 --> 0:32:02.040 I think you've got to catch up a little bit. 0:32:02.480 --> 0:32:04.800 All in all, they both get a volume growth in 0:32:04.840 --> 0:32:07.480 the sort of low single digit if you strip out 0:32:07.600 --> 0:32:10.960 the COVID anomalies that we've had over the last few years. 0:32:11.000 --> 0:32:14.160 So it's going to be very interesting how the results go. 0:32:14.280 --> 0:32:16.320 The rest of this week and the Agio tomorrow and 0:32:16.360 --> 0:32:19.000 ABI later in the week, and let's see where their 0:32:19.080 --> 0:32:23.120 volume growth are. We know there's been some slight overstocking 0:32:23.160 --> 0:32:26.240 in the trade as we've gone through all that COVID anomalies, 0:32:26.320 --> 0:32:28.720 so it's going to be very interesting set of results. 0:32:28.920 --> 0:32:31.920 So don't get to know your top level analyst. You 0:32:32.040 --> 0:32:34.280 like to do a lot of primary research. So you're 0:32:34.320 --> 0:32:37.200 in your local, your favorite pub in London. What's a 0:32:37.280 --> 0:32:40.800 pint of your favorite beer cost you today? 0:32:42.640 --> 0:32:45.800 Too much would be my response to that. But you're 0:32:45.840 --> 0:32:48.680 looking at probably somewhere around between six and seven pounds 0:32:48.680 --> 0:32:53.040 a pint. It's all sad. Yeah, it's not cheap. My 0:32:53.160 --> 0:32:55.320 favorite pub though, is where I live, and I live 0:32:55.360 --> 0:32:59.120 in Dorset now and it's a little bit better there. 0:32:59.120 --> 0:33:02.200 It's probably around about three fifty a points fifty. Living 0:33:02.240 --> 0:33:03.560 out in the country really. 0:33:03.360 --> 0:33:07.000 Helps very good. All right, Well, you're right down there 0:33:07.200 --> 0:33:09.840 in the city of London where all the big hitters 0:33:09.840 --> 0:33:12.080 are in London, you can afford to pay a little 0:33:12.080 --> 0:33:15.600 bit more. Duncan Fox doing that primary research that he's 0:33:15.600 --> 0:33:17.640 known for. He cuts hover, He covers all the consumer 0:33:17.640 --> 0:33:21.200 products over there in Europe for Bloomberg Intelligence six. 0:33:21.080 --> 0:33:23.000 Seven dollars a pint. I mean when you can when 0:33:23.040 --> 0:33:24.160 you take this dollar. 0:33:24.400 --> 0:33:26.720 Oh yeah, yeah, yeah, it's exactly. I mean I remember 0:33:26.760 --> 0:33:28.960 back when I went to UH. I think this is 0:33:29.000 --> 0:33:32.440 a correct memory putting down a pound coin, which by 0:33:32.440 --> 0:33:34.360 the way, is still the best coin in the plant 0:33:34.400 --> 0:33:36.600 on the planet, the pound coin, the one British pound 0:33:37.000 --> 0:33:39.560 that would get you a beer back in nineteen eighty 0:33:39.560 --> 0:33:43.720 seven in London. So I don't know. So that's inflation. 0:33:44.040 --> 0:33:46.480 That's inflation you can take home with all right. That 0:33:46.520 --> 0:33:48.240 was Duncan Fox talking beer. 0:33:48.640 --> 0:33:51.760 You're listening to the tape. Cat's are live program Bloomberg 0:33:51.800 --> 0:33:55.400 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:33:55.480 --> 0:33:57.400 tune in app, Bloomberg dot Com, and. 0:33:57.400 --> 0:33:58.680 The Bloomberg Business App. 0:33:58.720 --> 0:34:01.560 You can also listen live on Amazon Alexa from our 0:34:01.560 --> 0:34:06.240 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:34:07.760 --> 0:34:10.800 Simone Foxman Paul Swingey here in the Bloomberg Interactive Broker Studio. 0:34:10.840 --> 0:34:13.600 We are streaming live on YouTube. Can head over to 0:34:13.680 --> 0:34:16.960 YouTube and search for Bloomberg the Global News, and that's where 0:34:17.000 --> 0:34:20.200 you'll find this our C Suite conversation. Today we're gonna 0:34:20.200 --> 0:34:23.400 be visit a company we checked in with earlier this 0:34:23.440 --> 0:34:26.920 year is really a fascinating company. Dex Com is the company. 0:34:26.960 --> 0:34:30.319 It's a medical equipment company. DXCM is the ticker. It's 0:34:30.320 --> 0:34:33.479 a fifty billion dollar market cap company. Stocks up about 0:34:33.520 --> 0:34:35.560 ten percent this year, up about fifty percent over the 0:34:35.600 --> 0:34:38.839 trailing twelve twelve month basis, and they're into this thing, 0:34:38.960 --> 0:34:44.759 the Continuous Glucose Monitoring System dc CGM Systems, and it's 0:34:44.800 --> 0:34:49.040 pretty pretty cool stuff. Joining us today is their CEO, 0:34:49.160 --> 0:34:52.480 Kevin Sayer. Joining us. Hey, Kevin, I know you guys recently, 0:34:52.560 --> 0:34:55.680 I guess last week reported some numbers, beat on revenue, 0:34:55.680 --> 0:34:58.399 beat on EPs. Talk to us about the quarter. What's 0:34:58.440 --> 0:35:01.080 the key takeaway there and more importantly, what kind of 0:35:01.080 --> 0:35:02.280 guidance did you give the street? 0:35:04.040 --> 0:35:06.080 Well, thanks for having me on the show today. It 0:35:06.160 --> 0:35:09.479 was a great quarter for us. In fact, I said 0:35:09.520 --> 0:35:11.880 in the earnings remarks, it was like a highlight reel 0:35:12.400 --> 0:35:15.680 with twenty six percent year over year growth, the largest 0:35:15.719 --> 0:35:19.760 dollar growth in the history year over year quarterly basis 0:35:19.760 --> 0:35:22.240 in the history of our company, more new patient ads 0:35:22.440 --> 0:35:25.480 than any quarter in our existence. On top of that, 0:35:25.520 --> 0:35:29.799 we had operating expense leverage that resulted in record net 0:35:29.840 --> 0:35:33.879 income and profitability the factors that drove that. First of all, 0:35:33.920 --> 0:35:38.120 we launched our latest system, our G seven, in the US, 0:35:38.120 --> 0:35:42.200 and that launch has gone extremely well. We've got access 0:35:42.360 --> 0:35:45.759 through all the major PBMs in the country and all 0:35:45.840 --> 0:35:49.960 the insurance plans. We've also launched G seven and thirteen 0:35:50.000 --> 0:35:54.160 international markets. Our international growth was actually forty percent this 0:35:54.320 --> 0:35:57.840 quarter compared you on a year over year basis. The 0:35:57.920 --> 0:36:00.520 G seven launches helped with that. Combined, if we have 0:36:00.719 --> 0:36:04.680 a product portfolio strategy internationally to whereby we have a 0:36:04.719 --> 0:36:07.439 family of products in each of these geographies that best 0:36:07.480 --> 0:36:11.719 meets the access and reimbursement needs of those areas, and 0:36:11.760 --> 0:36:14.560 we've been able to expand our international markets greatly. With 0:36:14.600 --> 0:36:17.919 that bottom line, we took share in pretty much every 0:36:17.920 --> 0:36:21.040 major reimburse market in the world this past quarter, and 0:36:21.080 --> 0:36:22.360 that you see it in the numbers. 0:36:22.719 --> 0:36:22.919 Yeah. 0:36:22.960 --> 0:36:25.000 Can you talk to me about that international strategy a 0:36:25.040 --> 0:36:26.840 little bit further. I know in your earnings call you 0:36:26.880 --> 0:36:28.960 talked a little bit of Germany, a little bit of Friends, 0:36:30.200 --> 0:36:33.600 and you're in thirteen markets. How are you rolling out, 0:36:33.640 --> 0:36:36.200 where are you pushing into next and what are your 0:36:36.280 --> 0:36:39.279 challenges there that are distinct from your challenges in the 0:36:39.400 --> 0:36:40.080 US market. 0:36:41.600 --> 0:36:43.920 With respect to our G seven, we have losched in 0:36:43.960 --> 0:36:46.960 thirteen markets, but we're in several countries around the world. 0:36:47.280 --> 0:36:50.319 The challenges that are different is is who pays for 0:36:50.400 --> 0:36:53.000 it in the various geographies. You know, in the US, 0:36:55.239 --> 0:36:57.359 the majority of our venues have been US for quite 0:36:57.360 --> 0:37:00.600 some time with the insurance companies, but also AMS and 0:37:00.640 --> 0:37:05.759 the medicaid programs. In the outside the US, oftentimes it's 0:37:05.840 --> 0:37:10.399 the government who reimburses for continuous glucose monitoring, and they 0:37:10.400 --> 0:37:15.120 have various standards in their classifications of products. So for example, 0:37:15.320 --> 0:37:18.240 in some countries, they want to pay for a CGM 0:37:18.320 --> 0:37:22.080 that integrates with insulin pumps, has automated insulin delivery and 0:37:22.239 --> 0:37:24.200 reimburse at a higher price for that. 0:37:24.480 --> 0:37:26.040 They'll have a. 0:37:26.040 --> 0:37:29.520 Product that's a different classification that doesn't do as much 0:37:30.080 --> 0:37:33.120 that they want to reimburse less money on a monthly basis. 0:37:33.120 --> 0:37:37.120 For what we've done is we've created classes of products 0:37:37.120 --> 0:37:39.880 that will address all the needs based on the geographies. 0:37:40.480 --> 0:37:44.279 So you know, the UK is a perfect example. They 0:37:44.320 --> 0:37:47.000 have two classes of products. We developed a product called 0:37:47.000 --> 0:37:49.920 dex Com one. There is in this class that's not 0:37:50.000 --> 0:37:52.520 a connected system. Well, it does talk to your phone. 0:37:52.520 --> 0:37:55.759 It doesn't connect with other medical devices, whereas our G 0:37:55.960 --> 0:37:58.960 series or our G seven product will in fact eventually 0:37:59.000 --> 0:38:02.239 connect with an insulin pump or an insulin pen and 0:38:02.280 --> 0:38:05.399 provide patients with an integrated system. So what we've done 0:38:05.440 --> 0:38:10.080 in these geographies we assess the reimbursement strategies to whereby 0:38:10.120 --> 0:38:10.760 we can grow. 0:38:11.280 --> 0:38:13.000 We now offer the product. 0:38:12.600 --> 0:38:15.200 That's best for that geography, or are all the products 0:38:15.200 --> 0:38:17.879 if they'll reimburse for a family of products. And we've 0:38:17.920 --> 0:38:20.200 been able to pick up market share in those geographies 0:38:20.200 --> 0:38:21.680 and we analyze them one by one. 0:38:22.760 --> 0:38:24.839 Well I did some I'll get give you some real 0:38:24.840 --> 0:38:26.719 time feedback. I was on the beach in Jersey Shore 0:38:26.719 --> 0:38:28.120 this weekend. I went up to a person who had 0:38:28.120 --> 0:38:31.120 one of those patches and it looked just like the 0:38:31.120 --> 0:38:34.480 one from Dexcom. And I asked this person about it 0:38:34.640 --> 0:38:37.279 and she said, quote, it changed my life. So how 0:38:37.280 --> 0:38:39.279 about that? I mean, so that's got to be pretty good. 0:38:40.440 --> 0:38:43.320 It is spectacular. And I started to interrupt you, but 0:38:43.400 --> 0:38:45.200 it's the best part of my job when I run 0:38:45.239 --> 0:38:49.040 into one of our users. Literally, it's so great to 0:38:49.080 --> 0:38:49.880 hear their stories. 0:38:50.080 --> 0:38:53.120 Yep, you got some happy campers on the Jersey Shore. 0:38:53.120 --> 0:38:56.000 I want to ask you about kind of the market opportunity. 0:38:56.040 --> 0:38:58.240 I know in twenty twenty four you're thinking about getting 0:38:58.320 --> 0:39:00.720 a CGM product that can be utilized by the twenty 0:39:00.719 --> 0:39:03.719 eight million diabetic patients in the US that do not 0:39:04.160 --> 0:39:08.000 use insulin. What's the status of that role out and development. 0:39:09.280 --> 0:39:12.360 That product is in development right now. We will build 0:39:12.360 --> 0:39:16.120 it around our G seven technology from hardware and an 0:39:16.200 --> 0:39:19.640 accuracy performance perspective, but we want to create a different 0:39:19.680 --> 0:39:23.120 experience for those individuals, an experience that focuses more on 0:39:23.480 --> 0:39:27.239 their lifestyle, on the effects of nutrition, exercise, and things 0:39:27.239 --> 0:39:30.640 that they do taking their medications. You know, somebody who's 0:39:30.640 --> 0:39:33.120 on insulin, this is something that really does change their 0:39:33.120 --> 0:39:36.280 life because they rely on the alerts and the alarms 0:39:36.320 --> 0:39:39.359 and the integration of that product. Somebody would type two 0:39:39.400 --> 0:39:41.920 diabetes not on insulin. What they really need more is 0:39:41.960 --> 0:39:45.239 to understand how their body works and understand their health 0:39:45.239 --> 0:39:48.600 and understand what all the things they can do to 0:39:48.719 --> 0:39:51.960 make them more healthy to keep diabetes from progressing and advancing. 0:39:52.600 --> 0:39:55.360 And we are working on that. We're developing a completely 0:39:55.480 --> 0:39:58.640 new software experience for that product will be based on 0:39:58.640 --> 0:40:03.040 our G seven technology. We will submit that product to 0:40:03.080 --> 0:40:04.719 the FDA before the end of the year, and then 0:40:04.760 --> 0:40:06.439 we hope to launch it in twenty twenty four. 0:40:06.840 --> 0:40:09.520 And do you expect this to get broad coverage from 0:40:09.520 --> 0:40:13.080 insurers as well? Because I think there's probably a group 0:40:13.120 --> 0:40:16.000 of people who want to know about their and don't 0:40:16.000 --> 0:40:18.040 want to know about their health because they need to, 0:40:19.080 --> 0:40:22.840 and others that just want to know. How broad do 0:40:22.840 --> 0:40:25.839 you see the market? And then I guess what's your 0:40:25.880 --> 0:40:27.520 thinking with respect to coverage. 0:40:28.520 --> 0:40:30.840 Out of the gate, we'll have a cash pay option, 0:40:31.160 --> 0:40:34.480 and then we will continue to accumulate data in studies 0:40:34.920 --> 0:40:37.279 to make a case for reimbursement. You know, we've run 0:40:37.360 --> 0:40:42.160 numerous studies in this area. Every time we put patients 0:40:42.200 --> 0:40:45.080 on CGM, they get better outcomes than they had before 0:40:45.680 --> 0:40:47.280 significant ae C drops. 0:40:48.520 --> 0:40:49.360 One of the other. 0:40:49.360 --> 0:40:53.400 Statistics that's measured for people with diabetes is time and range. 0:40:53.600 --> 0:40:55.920 How much time during the day are you in a 0:40:55.960 --> 0:40:59.520 healthy range. We had a seven thousand patient study that 0:40:59.560 --> 0:41:03.439 we talk about at ADA where people experience the forty 0:41:03.440 --> 0:41:06.800 percent improvement in time and range by wearing a CGM 0:41:07.040 --> 0:41:09.319 who are not on inst I have type two diabetes. 0:41:09.840 --> 0:41:12.319 That time and range is what really leads to long 0:41:12.440 --> 0:41:15.960 term and short term better health, and so as we 0:41:16.000 --> 0:41:18.920 will accumulate data like that and ultimately seek reimbursement for 0:41:19.000 --> 0:41:20.000 people in this market. 0:41:20.080 --> 0:41:22.239 Yes, what's the. 0:41:22.200 --> 0:41:27.800 Impact of the rise and interest in GLP one drugs, 0:41:27.920 --> 0:41:30.719 which I know are diabetes drugs, but you know the 0:41:30.760 --> 0:41:33.319 ideas that you can use them for more than just 0:41:33.400 --> 0:41:34.280 diabetes alone. 0:41:35.840 --> 0:41:38.520 We think it's a natural fit for us. In all honesty, 0:41:38.600 --> 0:41:42.360 CGM delivers information you can't get any place else. And 0:41:42.800 --> 0:41:45.640 as I've spoken with physicians who use GLP once and 0:41:45.680 --> 0:41:49.879 CGM combined, what they tell us is these individuals learn 0:41:49.920 --> 0:41:52.319 from the CGM the effect that the change in their 0:41:52.360 --> 0:41:55.880 eating habits brought on by the golp ones. You know 0:41:55.920 --> 0:41:58.080 what it does to their bodies. So they learn from that, 0:41:58.440 --> 0:42:01.360 and so I think can go hand in hand. I 0:42:01.400 --> 0:42:04.399 think in this weight loss environment. Also, for example, I've 0:42:04.880 --> 0:42:07.520 spoke on physicians who put people on golp ones for 0:42:07.560 --> 0:42:09.640 some period of time that if they take them off, 0:42:10.480 --> 0:42:12.279 how do they know what's going on? How do they 0:42:12.320 --> 0:42:14.560 know they haven't reverted back to their old habits. It's 0:42:14.680 --> 0:42:17.080 very simple. You can put them on a CGM and 0:42:17.120 --> 0:42:19.520 they can see what their glucose values do I wonder. 0:42:19.320 --> 0:42:21.799 If that'sable, if a coverable. 0:42:21.280 --> 0:42:25.520 Thing hopefully over time, Yeah, we think it will be. 0:42:25.840 --> 0:42:29.239 Hey, Kevin, just real quick here, thirty seconds left. Give 0:42:29.320 --> 0:42:31.560 us a sense of your competitive environment here both in 0:42:31.560 --> 0:42:32.680 the US and then globally. 0:42:34.120 --> 0:42:38.279 It's a very competitive environment. US and Abbot are the 0:42:38.320 --> 0:42:41.799 two largest companies in the space. But the environment is 0:42:41.800 --> 0:42:44.040 so big, and the need is so on men, and 0:42:44.080 --> 0:42:46.440 the information is so important. Again, you look at our 0:42:46.480 --> 0:42:49.840 growth numbers and the opportunity we have in front of 0:42:49.920 --> 0:42:53.680 us will continue to compete very well. It is a 0:42:53.760 --> 0:42:55.640 great problem. 0:42:55.280 --> 0:42:56.200 To solve for us. 0:42:56.440 --> 0:42:59.359 And is this the opportunity outside the US? Is it 0:42:59.480 --> 0:43:02.200 just depend upon the I guess the development of the 0:43:02.239 --> 0:43:03.240 healthcare system there. 0:43:04.080 --> 0:43:07.120 It very frequently depends upon the reimbursement and the geography 0:43:07.480 --> 0:43:09.160 that we're trying to go to and where we don't 0:43:09.160 --> 0:43:12.000 have reimbursement. One of the things we kicked off this 0:43:12.120 --> 0:43:14.440 year is we do launch cash pay options in those 0:43:14.840 --> 0:43:17.480 countries through an e commerce platform, and a couple of 0:43:17.520 --> 0:43:21.440 times it's already led to the government's changing their position 0:43:21.480 --> 0:43:24.400 on reimbursement and covering our product because they see how 0:43:24.440 --> 0:43:27.719 many people literally rush to the cash option to buy 0:43:27.760 --> 0:43:29.000 it all. 0:43:28.920 --> 0:43:31.120 Right, Kevin, thanks for checking in with us. We appreciate it. 0:43:31.200 --> 0:43:34.000 Kevin Sayer is the CEO of dex Com. 0:43:34.280 --> 0:43:35.560 You're listening to the tape. 0:43:35.680 --> 0:43:39.040 Ken's our live program Bloomberg Markets weekdays at ten am 0:43:39.040 --> 0:43:43.200 Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com. 0:43:42.880 --> 0:43:44.360 And the Bloomberg Business App. 0:43:44.360 --> 0:43:47.200 You can also listen live on Amazon Alexa from our 0:43:47.200 --> 0:43:51.600 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:43:53.239 --> 0:43:56.800 This is Simon and Paul. We've been around all morning 0:43:56.920 --> 0:44:00.040 and we're here for another couple another twenty minutes or so. 0:44:00.840 --> 0:44:05.239 Really interested in our next guest because part because of 0:44:05.320 --> 0:44:09.640 the name, which is Shark Ninja. Mark Rosenswig is CEO 0:44:09.680 --> 0:44:12.719 of Shark Ninja and they just rang the New York 0:44:12.719 --> 0:44:16.719 Stock Exchange bell this morning, publicly traded, and they've been 0:44:16.719 --> 0:44:19.600 through a little bit of an interesting corporate history. So 0:44:19.719 --> 0:44:22.680 this is the maker both of those Shark vacuums and 0:44:22.960 --> 0:44:27.680 Ninja blenders. They were a part of a Hong Kong 0:44:27.760 --> 0:44:32.680 listed company, apropos of our previous conversation, but now they 0:44:32.680 --> 0:44:36.919 have gone public and shares, yeah, through a spin out here. 0:44:36.960 --> 0:44:39.680 So Mark I want to bring you on as well. 0:44:40.360 --> 0:44:46.080 Looks like shares jumping higher in New York after this 0:44:46.320 --> 0:44:51.040 spin off today, talk me through why go it alone? 0:44:51.200 --> 0:44:53.560 Why spin out from JS Global? 0:44:55.000 --> 0:44:59.480 Yeah, well, thanks for having me. Look, Shark Ninja has 0:44:59.520 --> 0:45:03.399 a great story to tell, and we believe that it's 0:45:03.840 --> 0:45:06.040 the right place to tell that story is the New 0:45:06.160 --> 0:45:10.560 York Stock Exchange. Shark Ninja goes to market under two 0:45:10.680 --> 0:45:14.360 really well respected brands, as you mentioned, the Shark brand, 0:45:14.360 --> 0:45:18.160 which is a market leader in cleaning, home, environment and beauty, 0:45:18.520 --> 0:45:21.399 and the Ninja brand, which does just about everything in 0:45:21.440 --> 0:45:25.480 the kitchen and has now gone outside with our outdoor 0:45:25.520 --> 0:45:29.680 cooking appliances. We have a story of scale, nearly four 0:45:29.680 --> 0:45:33.520 billion dollars of revenue. We have a story of profitability. 0:45:33.560 --> 0:45:37.640 The business is highly profitable, and we have a story 0:45:37.680 --> 0:45:41.320 of growth and a demonstrated track record of organic growth. 0:45:41.640 --> 0:45:43.600 You know, we were a business back in two thousand 0:45:43.640 --> 0:45:45.840 and eight that was less than two hundred million dollars 0:45:45.880 --> 0:45:49.640 in revenue. Today nearly four billion. You know, all of 0:45:49.680 --> 0:45:52.440 that has been organic. We've never acquired a dollar of 0:45:52.520 --> 0:45:56.520 revenue in the company's history, and so we really believe 0:45:56.600 --> 0:45:58.759 that you know the right place for us is to 0:45:58.800 --> 0:46:01.760 be a standalone business on the New York Stock Exchange. 0:46:01.920 --> 0:46:06.160 Now, it's my impression you were the largest part of 0:46:06.520 --> 0:46:09.400 js Global or Shark Ninja was the largest part of 0:46:09.480 --> 0:46:12.520 Jazz Global. How did it come about that, you guys 0:46:12.840 --> 0:46:13.920 went your separate ways. 0:46:15.800 --> 0:46:20.800 Well, you know, Shark Ninja was owned by my partner 0:46:21.000 --> 0:46:24.760 Mark and I up until twenty seventeen, when we sold 0:46:24.760 --> 0:46:28.040 a majority stake in the business. We really wanted to 0:46:28.080 --> 0:46:31.919 bring a partner in to help globalize the business. Five 0:46:31.960 --> 0:46:34.560 and a half years later, the business is nearly has 0:46:34.640 --> 0:46:36.320 more than doubled in size. 0:46:37.239 --> 0:46:38.080 You know, we have a. 0:46:38.120 --> 0:46:43.560 Fast approaching billion dollar business outside of North America. You know, 0:46:43.680 --> 0:46:47.440 we you know, our customers, our consumers, you know are 0:46:47.480 --> 0:46:49.560 here in the United States. The United States are the 0:46:49.640 --> 0:46:53.840 largest market for us. We're based in Boston. We have 0:46:53.880 --> 0:46:57.280 a team of almost a thousand folks just outside of Boston. 0:46:58.040 --> 0:47:01.520 And so we really felt like being a subsidiary of 0:47:01.560 --> 0:47:04.239 a Hong Kong listed company wasn't the right place to 0:47:04.280 --> 0:47:05.040 tell the story. 0:47:05.920 --> 0:47:08.560 All right, So for your company, and I'm not familiar 0:47:08.600 --> 0:47:10.640 with your company, I have to admit talk to us 0:47:10.640 --> 0:47:14.520 about kind of your distribution model and kind of how 0:47:14.520 --> 0:47:15.200 that's evolved. 0:47:17.040 --> 0:47:19.560 Yeah, So the distribution model is that, you know, we 0:47:19.600 --> 0:47:24.720 sell to every major retailer in North America, in Europe. 0:47:25.600 --> 0:47:27.920 You know, we have a very strong dot com business. 0:47:28.000 --> 0:47:30.799 Our brands are the most search brands in our categories 0:47:30.840 --> 0:47:34.279 on Amazon, and we have a really healthy direct to 0:47:34.320 --> 0:47:39.040 consumer business. So our distribution model has really been based 0:47:39.080 --> 0:47:42.320 on the idea that we want to be relevant where 0:47:42.360 --> 0:47:45.719 the consumer chooses to shop for our products, if that 0:47:45.840 --> 0:47:48.120 happens to be in a retail store, grade, if it 0:47:48.160 --> 0:47:51.719 happens to be direct to consumer or go online. But 0:47:51.800 --> 0:47:54.759 that really is kind of how the model is not 0:47:54.960 --> 0:47:57.600 just in the US, but really in every market that 0:47:57.640 --> 0:47:58.760 we sell. 0:47:58.920 --> 0:48:01.319 Mark talk to us at the decision to spin off 0:48:01.480 --> 0:48:04.600 as opposed to perhaps an IPO, how did that play out? 0:48:06.200 --> 0:48:06.719 Well? 0:48:06.840 --> 0:48:10.759 When we made the decision to spin out and be 0:48:10.920 --> 0:48:13.560 a publicly listed company, you know, that was going back 0:48:13.560 --> 0:48:15.799 a number of months ago, and at the time, the 0:48:15.840 --> 0:48:20.200 IPO market in the US was quite challenged, and so 0:48:20.880 --> 0:48:24.120 you know, we really wanted certainty to become a US 0:48:24.120 --> 0:48:27.000 public company, and this gave us the most certainty to 0:48:27.040 --> 0:48:29.480 be able to do that. We think we have a 0:48:29.480 --> 0:48:34.279 great story. We think when investors hear the story. You know, 0:48:34.360 --> 0:48:37.279 many of these investors are already consumers of ours. I mean, 0:48:37.280 --> 0:48:40.000 our products are loved you know in in you know, 0:48:40.080 --> 0:48:45.319 millions and millions of homes across America. You know, investors 0:48:45.320 --> 0:48:48.320 will respond and and you know we will become a 0:48:48.960 --> 0:48:51.680 company of interest, you know, for for investors on the 0:48:51.680 --> 0:48:52.800 New York Stock Exchange. 0:48:53.960 --> 0:48:57.080 Talk to me about what you're seeing from consumers at 0:48:57.120 --> 0:49:01.520 the moment. Are you there has been some shift away 0:49:01.560 --> 0:49:06.839 from consumer discretionary products because consumers are feeling a pinch 0:49:06.840 --> 0:49:10.080 in their wallets. Are you seeing that or are you 0:49:10.400 --> 0:49:13.960 seeing consumers switched to different kinds of products. 0:49:15.680 --> 0:49:21.040 Look, I mean we're obviously you know, concern for consumers 0:49:21.040 --> 0:49:24.200 and the inflationary challenges that they've had over the course 0:49:24.239 --> 0:49:27.680 of the last few years. You know, we believe that 0:49:27.719 --> 0:49:34.080 Shark Ninja delivers incredible performance, high quality and reliable products, 0:49:34.120 --> 0:49:37.040 and we do it at an extraordinary value to the consumer. 0:49:37.480 --> 0:49:39.839 We're not the highest priced products in the market, we're 0:49:39.840 --> 0:49:42.799 not the lowest price, but we think that when the 0:49:42.840 --> 0:49:46.480 consumer buys a Sharker Ninja product, they're really, you know, 0:49:46.600 --> 0:49:49.959 getting extraordinary value. And I think that when you read 0:49:50.080 --> 0:49:54.280 consumer reviews of what people write about Shark and Ninja products. 0:49:54.360 --> 0:49:57.680 You'll see that coming through in those reviews. So, you know, 0:49:57.719 --> 0:49:59.920 we're a business that's grown fourteen out of the last 0:50:00.160 --> 0:50:03.800 fifteen years. We have strong growth in our first quarter. 0:50:04.840 --> 0:50:08.520 So we believe that if we can continue to give 0:50:08.600 --> 0:50:14.160 exciting innovation to consumers that solve their problems and continue 0:50:14.160 --> 0:50:16.880 to do it at a great value, that the consumer 0:50:16.960 --> 0:50:17.600 will respond. 0:50:18.440 --> 0:50:21.279 Mark what are the growth drivers over the next year 0:50:21.320 --> 0:50:23.160 to two for you guys? 0:50:24.160 --> 0:50:26.840 So for us, it's the same growth drivers that have 0:50:26.880 --> 0:50:29.080 been really in the business over the last you know, 0:50:29.200 --> 0:50:34.800 eight years. We've developed three strong pillars of organic growth, 0:50:34.840 --> 0:50:38.080 and that's the important word. They're organic, you know. The 0:50:38.160 --> 0:50:42.440 first is, you know, gaining share in the existing categories 0:50:42.440 --> 0:50:46.680 that we participate in. We're in big, definable categories and 0:50:46.719 --> 0:50:49.920 Shark Ninja has a demonstrated track record of being able 0:50:49.960 --> 0:50:53.759 to gain share in those categories. The second is expanding 0:50:53.800 --> 0:50:57.960 into new and adjacent product categories. We've expanded into ten 0:50:58.040 --> 0:51:02.120 new categories just over the last three years. Categories like 0:51:02.200 --> 0:51:06.000 beauty with our Shark Flex style hair dryer, categories like 0:51:06.040 --> 0:51:09.799 outdoor cooking with our Ninja wood fire grill. And the 0:51:09.840 --> 0:51:12.839 third is international expansion. I mentioned earlier that we are 0:51:12.920 --> 0:51:16.799 fast approaching a billion dollars in revenue outside of North America. 0:51:17.280 --> 0:51:20.480 So there's real scale in our international business, but there's 0:51:20.520 --> 0:51:24.520 still tremendous opportunity. I mean, Shark Ninja sells in twenty 0:51:24.560 --> 0:51:29.000 five countries around the world. We sell in twenty seven 0:51:29.120 --> 0:51:33.480 different product categories. We believe that there's more product categories 0:51:33.480 --> 0:51:35.839 for us to enter into, and we believe there's more 0:51:35.880 --> 0:51:40.080 markets for us to expand into. So that's really you know, 0:51:40.520 --> 0:51:42.320 driving those pillars of growth. 0:51:42.320 --> 0:51:45.319 Okay, excellent, Mark, thanks so much for joining us. We 0:51:45.360 --> 0:51:49.400 appreciate it. Mark barakas CEO and president of Shark Ninja. 0:51:49.920 --> 0:51:53.040 Thanks for listening to the Bloomberg Markets podcast. You can 0:51:53.040 --> 0:51:56.840 subscribe and listen to interviews at Apple Podcasts or whatever 0:51:56.920 --> 0:52:00.640 podcast platform you prefer. I'm Matt Miller. I'm on Twitter 0:52:00.840 --> 0:52:02.920 at Matt Miller nineteen seventy three. 0:52:03.239 --> 0:52:05.680 And I'm Faull Sweeney. I'm on Twitter at pt Sweeney. 0:52:05.719 --> 0:52:08.360 Before the podcast, you can always catch us worldwide at 0:52:08.400 --> 0:52:09.160 Bloomberg Radio