Speaker 1: I'm Caroline Hinna Blue Mugs World headquarters in New York,
Speaker 1: and I made Ludlow in San Francisco. This is Bloomberg
Speaker 1: Technology in Carolina, post fed rally for then as that
Speaker 1: one progress in the battle and inflation warning on rates
Speaker 1: and we haven't even got two earnings yet. Macro and
Speaker 1: the micro is super important for certain names to ed.
Speaker 1: Let's talk about it. Meta surging after earnings relief, plans
Speaker 1: to buy back shares, the company focusing on efficiency, were
Speaker 1: digging into the short term cost cuts and the long
Speaker 1: term goals as it also wins quarter approval to buy
Speaker 1: VR startup within plus my exclusive conversation with Palenteer CEO
Speaker 1: Alex carp who has some pointed words for shareholders and
Speaker 1: potential new hires and crypto hackers. Still more money than
Speaker 1: ever before. In two that's as Cathy Woods ARC doubles
Speaker 1: down on it's one million dollar talget for bitcoin. First,
Speaker 1: I want to go straight to our bloome bag report
Speaker 1: to Alex Brinka, who has all the key takeaways from
Speaker 1: metas Zarnings addicts, what were the top lines? I mean,
Speaker 1: the biggest thing here with this stock bub I think
Speaker 1: is going to be the cost cutting. Meta has had
Speaker 1: some kind of shaky ground with investors over the last
Speaker 1: twelve months because of how much they say they're spending
Speaker 1: on things like this far flung vision of the virtual
Speaker 1: reality metaverse. Well, they have come back to earth, it seems,
Speaker 1: and actually lower their expectations for three for their costs
Speaker 1: to about eighty nine to billion dollars and expenses for
Speaker 1: the year. I think the icing on the cake on
Speaker 1: that that's probably exciting investors is the addition of forty
Speaker 1: billion dollars to their share a purchase plan. Again. Metas
Speaker 1: stock sold off the most ever, the most free year
Speaker 1: ever in two It's recovered a little bit, certainly more today,
Speaker 1: but adding a little bit to that buy back has
Speaker 1: certainly got folks excited now in terms of the broader
Speaker 1: market and what we might also see from Alphabet tomorrow.
Speaker 1: I'm looking at the top line staments for the first
Speaker 1: quarter for revenue, they're projecting at twenty six to twenty
Speaker 1: eight and a half billion dollars. That basically straddles the
Speaker 1: average analyst expectations. So I think there might be some
Speaker 1: clues under the hood here that the general malaise in
Speaker 1: the ad market is leveling off similar to what we
Speaker 1: heard from Snap yesterday. But as the earnings call gets
Speaker 1: started here, I'm sure that there'll be questions on both
Speaker 1: costs metaverse aspirations and where that revenue stabilization is coming from.
Speaker 1: And I'm sure competition with a company that you focus
Speaker 1: a lot in on, which is TikTok. So it is
Speaker 1: notable that we're getting that by that push up in
Speaker 1: the shares, but we're still half of where we are
Speaker 1: in the value of Meta stock from this time last
Speaker 1: year anything in terms of where their market share is
Speaker 1: looking all their own cannibalization with the fact that they're
Speaker 1: you know, discounting giving cheap ads on reels for example,
Speaker 1: exactly that that is that reels narrative is one that
Speaker 1: was really big last earning cycle, and I'm sure they'll
Speaker 1: get questions now. Reels is their answer to TikTok. It's
Speaker 1: short form videos that served up to you based on
Speaker 1: an algorithm. It's really dicky, and users are liking it,
Speaker 1: and they've shown some kind of strides and getting users
Speaker 1: on board and spending more time there. The problem is
Speaker 1: it doesn't make as much money for them as other
Speaker 1: places where they could serve ads on Facebook and Instagram.
Speaker 1: So last earning cycle three months ago they said this
Speaker 1: will be a twelve to eighteen month process until they
Speaker 1: can close that gap a hundred percent. I'm sure folks
Speaker 1: are looking to get an answer on the progress on
Speaker 1: that front. Hey, Alex, As you wrote in the top
Speaker 1: live blog, investors have been laser focused on spending. But
Speaker 1: the number that caught my eyes this two billion Facebook
Speaker 1: core platform use it based seventy million growth from the
Speaker 1: same time last year. How surprising is that It's a
Speaker 1: bit surprising. Remember, Facebook has been around for what almost
Speaker 1: two decades now, so to see a rise of seventy
Speaker 1: million users and actually clear that benchmark of two billion
Speaker 1: people using Facebook every day is an interesting little number
Speaker 1: for a platform that's been around for a while. They've
Speaker 1: been making changes to Facebook. They've been bringing in things
Speaker 1: like reels. It seems like they're listening to what users
Speaker 1: are liking from perhaps other platforms and bringing that into
Speaker 1: their legacy app. So I'm sure that they will be
Speaker 1: bragging about that mark. Zuckerberg was in the statement in
Speaker 1: the release about that and also about what he's calling
Speaker 1: which is the Year of Efficiency. So those two things
Speaker 1: definitely seem to be the top two that they are
Speaker 1: selling to investors as they let out these earnings today.
Speaker 1: Alex breenca just the perfect summation of all that we've
Speaker 1: just got in the last hour or so. Let's get
Speaker 1: even more of a deep dive for you. Debra Ajo
Speaker 1: Williamson is with US Principle Analyst have written insider Intelligence,
Speaker 1: and you were looking at the daily active users of
Speaker 1: Facebook as well and the engagement. It's interesting both snap
Speaker 1: on Facebook well met to the parent company showing people
Speaker 1: are still coming to their platforms that adding eyeballs, but
Speaker 1: what about the actual revenues about the ads that being bought. Yeah, well,
Speaker 1: I mean it is a good sign, just to say
Speaker 1: right straight out, it is a good sign that both
Speaker 1: daily active users and monthly active users for a platform
Speaker 1: like Facebook that is you know, quite quite old in
Speaker 1: social network to terms, is still gaining right So there,
Speaker 1: really you have to take that is as an important sign.
Speaker 1: Um that said that, you know, I'm pretty confident that
Speaker 1: the gains are mostly going to be outside of the
Speaker 1: core advertising markets, which would be the United States and Europe.
Speaker 1: Um and and that is where Meta has been able
Speaker 1: to for a long time now generate a significant portion
Speaker 1: of revenue be able to charge more for advertising, uh,
Speaker 1: sophisticated advertisers. And so I think where you're seeing the
Speaker 1: dichotomy here is UM and this is true for staff
Speaker 1: as well. Is that because the growth is in areas
Speaker 1: where there is UM you know, where underdeveloped markets or
Speaker 1: um you know, underdeveloped advertising businesses. Uh, that is impacting
Speaker 1: the the overall revenue picture for the company. Wells also
Speaker 1: to be put into perspective, which I know you highlight
Speaker 1: time and time again. I mean, this is an enormous
Speaker 1: amount of revenue. This company is pulling in thirty two
Speaker 1: billion on a quartity basis, more than a hundred and
Speaker 1: sixteen on an annual But revenue is down and it's
Speaker 1: been down for three straight. Court is now absolutely and
Speaker 1: you know, if we pull back to look at the
Speaker 1: full year, uh, you know, as we expected, Meta closed
Speaker 1: the year with its first year over year decline in
Speaker 1: AD revenue. But the downturn was slightly less than we thought,
Speaker 1: about one percent versus are expected two percent decline. Uh.
Speaker 1: But you know that's that's not actually a good sign
Speaker 1: when you think and pull back to one which was
Speaker 1: a year when worldwide AD revenue grew nearly thirty seven percent.
Speaker 1: So we are we've seen a huge swing in the
Speaker 1: performance of this company, partially because of external factors like
Speaker 1: the worldwide economy, the changes that Apple made to its
Speaker 1: privacy that affect the effectiveness and the efficiency of the advertising,
Speaker 1: but also I mean it's true that I think when
Speaker 1: you think about where Mark Zuckerberg has been focusing his
Speaker 1: time and attention, it's been on the metaverse. And I
Speaker 1: think to some extent last year he took his eye
Speaker 1: off of the ball of the fact that Facebook and
Speaker 1: Instagram are the two biggest worldwide social platforms and there's
Speaker 1: still room to grow. And I think that was something
Speaker 1: that I think they're trying to rectify now going into well,
Speaker 1: he called three year of efficiency, which sounds very much
Speaker 1: like something shareholders have wanted to hear for some time.
Speaker 1: The other thing shareholders like to hear, Deborah, is buy
Speaker 1: backs and more of them, Meta boosting their buy back
Speaker 1: authorization by forty billion. We're sharing on the screen, Uh,
Speaker 1: this chart? Is this just Meta buying its own dip? Yes?
Speaker 1: So this is an area because insider intelligence focuses mostly
Speaker 1: on looking at revenue and usage metrics, UM I can't
Speaker 1: specifically comment on that, but I think anything just bottom
Speaker 1: line that Meta is doing to you know, to improve
Speaker 1: its its profitability, to reduce expenses, to you know, to
Speaker 1: counteract this sort of revenue shortfall is going to be
Speaker 1: good for the company. Deborrah Williamson, thank you so much
Speaker 1: for joining us principal analysts and insider intelligence, and the
Speaker 1: other story we can't get away from. Open ai introducing
Speaker 1: a twenty dollar per month subscription for a premium version
Speaker 1: of chat GPT. Chat GPT Plus will offer access to
Speaker 1: the chat pot even during peak times, with faster responses
Speaker 1: to type queries and early access to new features. Open
Speaker 1: Ai is eagerly trying to find viable business models to
Speaker 1: cover the high cost of running its products, including of course,
Speaker 1: the multimillion billion dollar I should say deal with Microsoft.
Speaker 1: Shares of Pelaton absolutely soaring as the company reported improved
Speaker 1: cash flow and a narrower net loss in the last quarter.
Speaker 1: CEO Barry McCarthy saying, the questions about the viability of
Speaker 1: the business they put to bed? Have they joining us now?
Speaker 1: Shretter Cajuria, director of Internet Pretty Research, ever care should
Speaker 1: are they put to bed? Is extinction behind us? I
Speaker 1: think so first, Paul, thanks for having me. I think
Speaker 1: if a question is not about extinction anymore, I guess
Speaker 1: the question is whether this is going to be an
Speaker 1: epic comeback, which is what Barry said in his in
Speaker 1: his letter, I call it a very very spractical comeback
Speaker 1: right now with the free dash blows that they posted,
Speaker 1: excluding some of the one supplier related costs, what is
Speaker 1: becoming increasingly clear is that this business is self sustainable
Speaker 1: on a free dash bow basis, which is what their
Speaker 1: number one priority was. Board remains unclear is what how
Speaker 1: should you think about growth for this company? You mentioned comeback.
Speaker 1: We asked our own audience if they felt that this
Speaker 1: was evidence of the Peloton come back. These are the results.
Speaker 1: Pretty overwhelming. No, not convince sixty six of respondents. I
Speaker 1: guess what is it that the consumer feels right now
Speaker 1: for Peloton? But how do we assess the user base
Speaker 1: and the growth potential based on the bullish commentary? For management,
Speaker 1: there's certainly a very good fall line for those who
Speaker 1: own the device. The NBA score remains very high. Uh,
Speaker 1: the usage and engagement with the product remains very robust,
Speaker 1: and the retention grades are intrinsically very high. For this
Speaker 1: business when we compare them to some of the other
Speaker 1: subscription based businesses. What is unclear is how many more
Speaker 1: of these UH Internet connected home fitness equipment can they
Speaker 1: sell in the market. What is the actual growth rate?
Speaker 1: How fast is the industry blowing? And can Felton grow
Speaker 1: faster than the overall industry? Are we tapping out of
Speaker 1: the market opportunity or is it is this something that
Speaker 1: can grow in the double digital thrate. The juries are well,
Speaker 1: sorry to interrupted. I was going to say the jury
Speaker 1: is out. As I look across the cell side reaction,
Speaker 1: I guess the concern is we we believe Barry McCarthy
Speaker 1: in the near term, we don't yet have any evidence
Speaker 1: of what the growth story two or three years from now.
Speaker 1: That seems to be the skepticism out there. That's exactly right.
Speaker 1: So what is in their control was cutting down costs,
Speaker 1: headcount reduction, variabilizing the cost from fixed costs of variable costs,
Speaker 1: as well as UH inventory management, better inventory demand management,
Speaker 1: and all that they have done. And it's in the
Speaker 1: past and they've done a great job since very came
Speaker 1: on board. What is not in their control is really
Speaker 1: driving demand. How much of a balance will they need
Speaker 1: to do with marketing spend to drive this incremental demand
Speaker 1: uh and also maintain positive recshual profitability. And what is
Speaker 1: also what is unclear among those who are not very
Speaker 1: happy with Peloton is the recent shift in outsourcing their
Speaker 1: customer service and so they experience that customers used to
Speaker 1: have is not the same in terms of expecting the
Speaker 1: you know, the the customer service that they have been
Speaker 1: as well as the delivery expectations of the equipment. Yeah,
Speaker 1: you've got to build your own. I'm I'm interested. Therefore,
Speaker 1: in what they now need to prioritize and execute on.
Speaker 1: Is it more important than these partnerships like the exporting
Speaker 1: goods Amazon that they work out, or is it about
Speaker 1: self investment ensuring that they are updating the act as
Speaker 1: they need to, that they are improving customer services they
Speaker 1: need to. It will be a blend of bolt Uh.
Speaker 1: It is very clear that customer service needs to be
Speaker 1: better than what it has been at the US and best,
Speaker 1: but increasingly important is the incremental user base that they
Speaker 1: will get. So the key growth drivers that they will
Speaker 1: benefit from our not only the distribution partners that you
Speaker 1: called out and increasing those who include include more retailers,
Speaker 1: but also international markets. They launched tread in Australia they
Speaker 1: could expand into different countries as well as product category
Speaker 1: expansion and what they call fitnesses and service product which
Speaker 1: is really the rental program, as well as certified creon
Speaker 1: which is if you own some cells that you want
Speaker 1: to sell that and that drives. Essentially, they are trying
Speaker 1: to make it easy for an average customer do do
Speaker 1: buy this relatively more expensive equipment right? They also relied,
Speaker 1: of course on promotions and holiday season sales thanks to
Speaker 1: Schwetter Cajurior Director of Internet Equity Research at Evercred. Now
Speaker 1: coming up some of my exclusive conversation with Palenteers CEO
Speaker 1: Alex Carp That is always come next, a fascinating combative conversation.
Speaker 1: This is Bloomberg Palentier, the at times mysterious data analysis
Speaker 1: software firm, is making more commercial deals. It's a change
Speaker 1: of strategy for a company that's thrived in chaos, winning
Speaker 1: government and military contracts from the pandemic and war in Ukraine.
Speaker 1: I sat down for an exclusive interview with Palans CEO
Speaker 1: Alex Carp and asked him how vestors should view him
Speaker 1: his view on Silicon Valley and global text perspective on Palenteer.
Speaker 1: Take listen, we are a company whose most important purpose
Speaker 1: is to power the West to to even higher heights
Speaker 1: in the commercial and in the government context. And we've
Speaker 1: done this in any terror in the kinds of the pandemic,
Speaker 1: and the context of war, in the context of data protection.
Speaker 1: And you really can't do that if you're going to
Speaker 1: also transfer those technologies indirectly directly your adversaries, and we've
Speaker 1: never done it. You're talking on stage about how your
Speaker 1: public company and you have a responsibility to your shareholders.
Speaker 1: And at times in the last twenty years, shareholders have
Speaker 1: complained to you like why are you doing this it's
Speaker 1: loss making or why are you not doing that? And
Speaker 1: we talked about your strategy. Investors haven't really cheered it.
Speaker 1: If you clearly go off the share price performance, what
Speaker 1: is your message to them today about the dealers are
Speaker 1: announcing honest for that. So we are a company that
Speaker 1: has a primary mission. The primary mission is to make
Speaker 1: the West stronger and better whatever that mission has secondarily
Speaker 1: led to to see one percent Tager over twenty years,
Speaker 1: thirty five percent Kager in the US government and the
Speaker 1: share price is the thing is I think a little
Speaker 1: bit of a red herring because all teck us down.
Speaker 1: I don't think our shares have been any more punished
Speaker 1: than anyone else's. So if you are an investor and
Speaker 1: you want to go long on transforming our country and
Speaker 1: our allies, you have a home appound here. I have
Speaker 1: never ever, ever wavered from that statement. And if you
Speaker 1: don't want to invest in us because of that, you shouldn't.
Speaker 1: And if you're invest in us thinking I'm gonna change,
Speaker 1: you're making a mistake. You we lay our cards on
Speaker 1: the table. There is nothing besides transparency, or we haven't.
Speaker 1: When we went to the Ukraine, I didn't ask them
Speaker 1: can you pay us? I said here's the product. If
Speaker 1: I had gone to standard investor be like, well, you
Speaker 1: can't do this until they pay you. When we started
Speaker 1: off in America on the pandemic and in Britain, we said, look,
Speaker 1: we can help. This is the primary mission of our company.
Speaker 1: And I think where I'm very aligned with investors is
Speaker 1: they're hearing the truth. I'm not saying, hey, we might
Speaker 1: change this prosop policy. We might do crazy deals in
Speaker 1: adversarial countries, we might put the other missions ahead of
Speaker 1: our point. No. And by the way, I tell the
Speaker 1: most important investors that every day Palntarians, and I tell
Speaker 1: our retail investors, whom I revere that every time I
Speaker 1: go on TV. And you know when you're buying, when
Speaker 1: you buy a pounder in a spirit of transparency. You
Speaker 1: yourself has sold stock regularly since the lockoff expiry in
Speaker 1: one um, in the full, in the fairness of full transparency.
Speaker 1: In the last year or so, I've only sold for
Speaker 1: tax reasons. There's been no financial sales. I'm grateful to
Speaker 1: be here with you in Palo Alto. I'm surprised to
Speaker 1: be here with you in Palo Alto. You've you've talked
Speaker 1: about monoculture in Silicon Valley. You moved the company to Colorado,
Speaker 1: and you've not come back often in the last three
Speaker 1: years because the Silicon Valley is obviously failed in this
Speaker 1: mission to produce technology that's useful and that the useful
Speaker 1: for the world. It makes it a better place. And
Speaker 1: we were I think the first reasonably large company to leave,
Speaker 1: and now I'm very happy to come back and say, look,
Speaker 1: you know on occasion, you know, our position is a
Speaker 1: position we're proud of. And be surrounded again by people
Speaker 1: who disagree with me. There are many wokes engineers I
Speaker 1: think those are words you've used, that have lost their
Speaker 1: jobs recently at some tech giants. I know that you're
Speaker 1: looking at growth. Are you open to hiring those engineers?
Speaker 1: Do not join parent here if you're not willing to
Speaker 1: support the US militaryans allies. You can have, by the way,
Speaker 1: any political opinion you want, as long as that's not
Speaker 1: a question for you. If it is a question for you,
Speaker 1: do not punt here is not your home. Unapologetic, uncompromising.
Speaker 1: You know, he knows where he stands. He is completely
Speaker 1: comfortable with palenters offering to government, to security services. And
Speaker 1: that was just a small glimpse of a man that
Speaker 1: many in Silicon Valley of shunned because he has shunned them.
Speaker 1: Welcome back to Bloomberg Technology and Caroline had in New
Speaker 1: York and to end New and San Francisco and the
Speaker 1: tech sector really getting lift off today, unsurprisingly from the
Speaker 1: macro strands from the FED. Yeah yeah, And I think
Speaker 1: I'm saying this is kind of the first big post
Speaker 1: FED rally since July. And I go straight to one chart,
Speaker 1: which is now DA futures jump, two year yield goes down.
Speaker 1: It is a snapshot of the story, and we have
Speaker 1: one of the great Bloomberg minds joining us at the
Speaker 1: moment who can get into this. But my point is
Speaker 1: very simple. Twenty five basis point hike and a warning
Speaker 1: from pal that while they're making progress on inflation, they
Speaker 1: still foresee hikes to come. So for the market, it's
Speaker 1: about when does the policy pivot come. But in the
Speaker 1: context of tech, you ask the question, higher rates discount
Speaker 1: the present value of future profits, and that is why
Speaker 1: we look so closely at the relationship between yields and
Speaker 1: the NASA one NAZAC futures. In this case. You talked
Speaker 1: about bitcoin earlier, but let's just talk about risk assets.
Speaker 1: It was a pretty broadly I'm looking at them as
Speaker 1: that one, but also more speculative corners of the market,
Speaker 1: so the Arc Innovation ETA and also the Goldman Sachs
Speaker 1: Nonprofitable Tech Index. In other words, these stocks that trade
Speaker 1: at high wall extreme multiples, high multiples some relief for
Speaker 1: them because they have also been the most downtrodden corners
Speaker 1: of the market through this hiking cycle. And now we
Speaker 1: start to look at there's some more positive future, and
Speaker 1: that includes bitcoin, which, let's be honest, carry you and
Speaker 1: I both said earlier it's a risk asset inflation hedge
Speaker 1: not so much. Not yet, let's get into all of it.
Speaker 1: We're really pleased to say back two days in a
Speaker 1: row is about Lee's with us, and really you were
Speaker 1: racing yourself for the technology reaction to this macro story. First,
Speaker 1: let's dig into the tech starres and the rally on upwards.
Speaker 1: This is because they've been the most beaten up of late.
Speaker 1: Yes and Ed had a great summary, making my job
Speaker 1: a lot easier, but a lot of textures really extended
Speaker 1: their gains even hitting session highs. You have the legs
Speaker 1: of neda Amazon alphabet all soaring north of two because,
Speaker 1: let's face it, they were pummeled last year. They don't
Speaker 1: really like rising interest rates because that's not good for them,
Speaker 1: that's not good for their projected profits. So now it's
Speaker 1: welcome used they're happy, they celebrated it, they cheered it.
Speaker 1: As Ed mentioned, nastag is up two percent and it's
Speaker 1: probably just going to be the start for them. And today,
Speaker 1: of course, of Meta, I'm sure you're covered it. Also postmarket,
Speaker 1: they're trading well because of sales speed and Rosie outlooks.
Speaker 1: So maybe it's the start of a new regime. As
Speaker 1: some people have said. On a daylight today, there's two
Speaker 1: places I go, fed go on the Bloomberg term and
Speaker 1: all just to get a sense of where we sit
Speaker 1: with rates in this country. But then I go to bitcoin,
Speaker 1: and you heard us talking about it bitcoin the risk
Speaker 1: asset reaction is that a fair moved by me to
Speaker 1: make it kind of is because so bitcoin, for some
Speaker 1: reason dip a little bit around two thirty when power
Speaker 1: were starting to speak, but since then it's soared four percent.
Speaker 1: Last I checked before I walked over here, it was
Speaker 1: it paired some of its games, but still up around
Speaker 1: point three. So a lot of the people said that,
Speaker 1: you know, this is like bitcoin is behaving like a texture.
Speaker 1: So it's obviously rising as well. But I talked about
Speaker 1: this yesterday. Arcane Research said that it's going to be
Speaker 1: a bad month for a bitcoin because the FEDS path
Speaker 1: is still unclear, Like, yes, we got a downshift today
Speaker 1: only twenty five bibs, but then are we going to pause?
Speaker 1: Are we gonna pivot? So it still remains to be seen,
Speaker 1: but there are still some people who are very bullish
Speaker 1: on bitcoin. I mean, it's worth remembering that quite often
Speaker 1: the moves we see precisely after the FED announcement and
Speaker 1: press conference are completely undone the next day, so we wait,
Speaker 1: we watch for tomorrow's at price action. But longer term,
Speaker 1: the bulls are still very bullish about bitcoin. I mean,
Speaker 1: we're gonna sell past twenty three thousand, according to one
Speaker 1: particular e t F queen. Yes, so twenty three thousand
Speaker 1: is where we're at today. But according to the e
Speaker 1: t F queen named Kathy Would, we're going to hit
Speaker 1: one one million in the next decade, which is really
Speaker 1: just seven years from now, and she said several reasons,
Speaker 1: But then that's four thousand two higher from where we
Speaker 1: are today, and one million is the base is the
Speaker 1: bull case one point forty eight to be exactly, I
Speaker 1: don't want to get it wrong. Her bear case is
Speaker 1: two hundred fifty eight thousand, and her base case is
Speaker 1: six two. So regardless of whether it's the bull, the
Speaker 1: base or the bear, it's just kind of hard to
Speaker 1: imagine how we will get there, especially if you look
Speaker 1: at where we are today. But this isn't the first
Speaker 1: time she said the one million targets. She's been reiterating
Speaker 1: it in the past. She said is in November when
Speaker 1: bitcoin was her bring fifteen thousand. So if there's one
Speaker 1: thing I admire about Kathy, but it's how she sticks
Speaker 1: to her guns. I mean a lot of people love her,
Speaker 1: a lot of people dislike her. But if anything, she's
Speaker 1: really a woman of conviction. I would say, all right,
Speaker 1: Bloomberg's Isabel A a very busy day for you in
Speaker 1: the cross Set team, and we still have a bit
Speaker 1: of a cycle to go. Now, sticking with crypto, thieves
Speaker 1: saw a record three point eight billion, yes billion worth
Speaker 1: of cryptocurrency in two that according to Chain Analysis Research,
Speaker 1: nearly half of it was from North Korea alone. Bloomberg's
Speaker 1: Jeff Stone has been writing about this data and this
Speaker 1: report and joins us. Now it's interesting because two stories, right,
Speaker 1: a terrible year for crypto markets, but also a very
Speaker 1: bad year for those that had cryptocurrencies stolen. Essentially, that's right,
Speaker 1: and also a bad year for the people who are
Speaker 1: stealing them in some ways if you use that logic, ed,
Speaker 1: this is a huge number. One point seven billion of
Speaker 1: that three point eight billion is stolen by North Korean hackers.
Speaker 1: We know it's the same group, according to the United
Speaker 1: States government that previously breached Sony years ago. If a
Speaker 1: lot of your viewers will remember that and tried to
Speaker 1: steal upwards of a billion dollars from Bangladesh's central bank
Speaker 1: years ago too. So this is a busy hacking group
Speaker 1: really focusing on the same area that a lot of
Speaker 1: investors are too. Why why are they doing it? It
Speaker 1: pays It helps them get around UH sanctions. You know,
Speaker 1: the United Nations and the US obviously have come out
Speaker 1: very forced against North Korea over the past few generations,
Speaker 1: and cryptocurrency is harder to track, is easier to hide,
Speaker 1: and most importantly, it's easy to steal. If you think
Speaker 1: back at the way that U S intelligence agencies would
Speaker 1: have assessed that North Korea was selling counterfeit cigarettes or
Speaker 1: using other means to get around sanctions. UM, this is
Speaker 1: the latest iteration of that. Hey, Jeff, we talked a
Speaker 1: lot about UM North Korea uh it's role in this.
Speaker 1: What about the other side of the table. What is
Speaker 1: the US government, for example, doing to prevent theft like this?
Speaker 1: The US is scrambling to educate companies and investors and
Speaker 1: Americans about the risk involved here. UM. This group has
Speaker 1: has really bullied UM cybersecurity defenders for a really long time.
Speaker 1: So what the Treasury Department, for instance, is doing is
Speaker 1: releasing bulletins and advising crypto companies and crypto adjacent companies
Speaker 1: about the risk of hiring North Koreans who are posing
Speaker 1: as none North Koreans in order to either gather intelligence
Speaker 1: or work on projects or steal information for young next
Speaker 1: anything that can be made safer. Protect your password, be
Speaker 1: smart about which services you're using. Watch Bloomberg well said,
Speaker 1: I love a little bit about Tease Bloomberg Jesston. It's
Speaker 1: a fascinating story. One of the most word on the
Speaker 1: terminal and indeed on dot com. So thanks are coming
Speaker 1: on and talking all about it. I mean, while we've
Speaker 1: got so much more to delve into intermn of earnings,
Speaker 1: we've got the software maker diner Trace topping estimates, boosting
Speaker 1: full your earnings outlook, we're going to be speaking with
Speaker 1: the CEO, Rick McConnell back in a minute now. Chairs
Speaker 1: of diner Trace jumped after the company posted better than
Speaker 1: expected financial results but crucially also guidance. Dina Trace provides
Speaker 1: software which helps companies monitor they can shooting systems and
Speaker 1: identify performance issues with a keen focus on AI solutions.
Speaker 1: AI of course it is. We're joining us now. Rick McConnell,
Speaker 1: CEO of Diana Trace biggest jump to the shares I
Speaker 1: think since March of and you give strong guidance, which
Speaker 1: in this market is important for you. Was this about
Speaker 1: pricing that you were able to win? Was it about
Speaker 1: advantage over competition in terms of what you're offering. Talks
Speaker 1: to us through what's driving that ability to give strong guidance?
Speaker 1: Well ed, Thanks so much for having me. It really
Speaker 1: is about the market for digital transformation overall, and then
Speaker 1: observe ability our market which is around a fifty billion
Speaker 1: dollar space specifically, and if you put those two elements together,
Speaker 1: you have a huge array of customers that are moving
Speaker 1: their workloads the cloud and as that happens, they need
Speaker 1: software that delivers answers and intelligent automation. You talked about
Speaker 1: AI earlier, Intelligent automation from data that enables them to
Speaker 1: have the Broadway situational awareness to run their software environments.
Speaker 1: I'm curious about competition and whether you're kind of winning
Speaker 1: share or even displacing existing cloud platforms. We had Bill
Speaker 1: mcdermotot on the show the other day of Service Now.
Speaker 1: I know that Service now has kind of been moving
Speaker 1: into this observe ability space. Talk to us about how
Speaker 1: you're faring in that regard. Well, we're very synergistic with
Speaker 1: Service now deployments. A good number of our customers would
Speaker 1: have service now deployed, they still need the observe ability
Speaker 1: expertise that we provide through our AI OPS platform to
Speaker 1: enable their environments to work perfectly, which is what we
Speaker 1: strive to do. And so that's that's what we typically
Speaker 1: see the Service Now Generally. The biggest competitor that we
Speaker 1: have is do it yourself d Y and that is
Speaker 1: where customers today are using homegrown tools, open source a
Speaker 1: variety of other solutions to create dashboards. A dashboard to
Speaker 1: your red, yellow, green, is your software working? What it
Speaker 1: doesn't tell you is where the problem is and how
Speaker 1: to fix it. And again that's what we can do
Speaker 1: at a very granular level within your I T ecosystem.
Speaker 1: Let's talk about Davis. Let's talk about the AI power
Speaker 1: behind Dina trace And what's interesting is you go to
Speaker 1: the meta earning statement and they're talking about their powers
Speaker 1: and AI we're all talking about chat, GBT and open AI.
Speaker 1: How are you managing with talent at the moment, making
Speaker 1: sure that you've got the right people, They're secure, they're
Speaker 1: not suddenly being tempted away at great enormous expense to
Speaker 1: other companies that wanted on artificial intelligence. We do a
Speaker 1: lot of our R and D out of Austria, actually
Speaker 1: European general. This is where the company was founded. And
Speaker 1: while we have people all over the globe, that's really
Speaker 1: our hub for R and D and it is a
Speaker 1: fabulous community of developers that we've built over the course
Speaker 1: of well more than a decade to create the AI
Speaker 1: ops engine. And Davis that you you talk about your
Speaker 1: line and talk to us a little bit of out,
Speaker 1: you're also speaking very much to your investor base, it
Speaker 1: feels like in the quotes in your press release, So
Speaker 1: talking about investing thoughtfully, about managing a business prudently, about
Speaker 1: ensuring that you've got growth and profitability, is that still
Speaker 1: very much what you need amid these macro hidwins, you
Speaker 1: have to keep talking about the bottom line and the
Speaker 1: profitability the margins. I think this this is an environment
Speaker 1: as as you are report on almost daily at this
Speaker 1: point probably daily that growth at our cost is sort
Speaker 1: of done. The good news is we have always managed
Speaker 1: Dina Trace with a balance of top line and bottom
Speaker 1: line growth, and the result of that is we see
Speaker 1: mid twenties overall. The our our growth and mid twenties
Speaker 1: profitability in terms are our pretty margin and high twenties
Speaker 1: and pre cash flow. This is a model that investors
Speaker 1: want today because it shows the cash flow generation capabilities
Speaker 1: of the company and push us forward, go deep tech
Speaker 1: for us, and go into the artificial intelligence vision that
Speaker 1: you have right now. Because you all, as you say,
Speaker 1: strategically investing, where do you invest how do you envision
Speaker 1: in the next five ten years? For Time and Trace,
Speaker 1: a few areas of major investment. One is around automation. Automation.
Speaker 1: Automation you can imagine how companies are doing I T
Speaker 1: operations and keeping their software working today. It's with an
Speaker 1: army of people sitting in front of a sea of
Speaker 1: glass screens looking at dashboards trying to figure out is
Speaker 1: it working, is it not working? If it's not working,
Speaker 1: how to fix it. So automation is one of those
Speaker 1: areas of focus. Secondly, focusing on big data and big
Speaker 1: data analytics and doing that in real time with no reindexing,
Speaker 1: no rehydration of data stores to make it fast, scalable,
Speaker 1: UH super performing. And thirdly, it is around application security,
Speaker 1: which is yet another area that benefits benefits substantially from
Speaker 1: being integrated deeply into your observe ability platforms. So those
Speaker 1: three areas are areas of key focus for on our
Speaker 1: D perspective. Rick, I'm gonna be a bit more direct
Speaker 1: with you and ask the same question Caroline did. I'm
Speaker 1: looking at how much cash you've got on your balance
Speaker 1: sheet and you talk in the commentary Caroline cited from
Speaker 1: your owning statement, are you going to hire people or
Speaker 1: do layoffs? And are you going to do M and
Speaker 1: are not planning on any layoffs? The good news is
Speaker 1: based on the model that we've got ed, we've been
Speaker 1: able to modulate the hiring to manage to that model,
Speaker 1: and so we feel very good about we are where
Speaker 1: we are, and we're continuing to grow headcounts accordingly. In
Speaker 1: terms of in terms of other areas organic in organic,
Speaker 1: we'll continue to expand the company is as we see
Speaker 1: fit UH in an M and A area. We can
Speaker 1: expand in that fashion as well with smaller tech tuk
Speaker 1: ins to accelerate root maps. Rick, it's great to catch
Speaker 1: up with you. Thank you so much for your time,
Speaker 1: make mcconmoms you Dina traces in a long day. As
Speaker 1: a things came out at six thirty a m. Eastern
Speaker 1: impression growth was primarily driven by the Asia, Pacific and
Speaker 1: Rest of World regions. The year over year decline in
Speaker 1: pricing was primarily driven by strong impression growth, especially from
Speaker 1: lower monetizing surfaces and regions, lower advertiser demand, and foreign
Speaker 1: currency depreciation. While overall pricing remains under pressure from these factors,
Speaker 1: we have continued to make improvements to our ads targeting
Speaker 1: and measurement that we believe are driving more conversions and
Speaker 1: better returns for advertisers seasonally. The CFO of Meta and
Speaker 1: It's notable that Marks lack about really trying to hit
Speaker 1: home on the point of efficiency again on the call,
Speaker 1: is really talking about how they've entered a somewhat different phase.
Speaker 1: They say of the company, they grew so quickly for
Speaker 1: the like first eighteen years of the company's growth. This
Speaker 1: is very hard to really crank on efficiency while you're
Speaker 1: growing that quickly. Nest also though, and talk about where
Speaker 1: they are growing in the longer term, and it's towards
Speaker 1: a metaverse vision. It's towards perhaps well acquisitions in that field.
Speaker 1: And they got their first victory, didn't they The Federal
Speaker 1: Trade Commission, a federal judge has denied the FTC's request
Speaker 1: to block metas plan to buy virtual reality start up
Speaker 1: within Unlimited. But the judge also did prevent Meta from
Speaker 1: closing that deal until the agency decides whether to appeal.
Speaker 1: Let's get to near leet Nylon. Who joins us more
Speaker 1: from Washington And really extraordinary the fact that well Nina
Speaker 1: Kahn getting pushed back in this way. Many felt that
Speaker 1: perhaps this has really her trying to be aggressive and
Speaker 1: it's denied. Yes, that that was a little bit surprising.
Speaker 1: The FTC can still appeal. Um, they have until probably
Speaker 1: next week to decide that. The judge gave them a
Speaker 1: one week extension on blocking the deal until then and
Speaker 1: has called hearing next Tuesday. UM, so we'll we'll have
Speaker 1: a little bit more than about whether they're going to
Speaker 1: keep pushing to block the steel or sort of let
Speaker 1: it through. Um. But this was sort of the big
Speaker 1: first quote last for leader car FTC. You know, she
Speaker 1: came into her role, UM, saying that the agency needs
Speaker 1: to be much more aggressive block a lot more mergers.
Speaker 1: They had filed a lawsuit against this one, and they
Speaker 1: also have the pending one against Microsoft Activision, so UM,
Speaker 1: it'll be interesting to see whether this one has any
Speaker 1: impact on that one as well. Lea terrific reporting blue
Speaker 1: Bug sources telling us essentially about this sealed decision from
Speaker 1: the San Jose courts. And as you characterize it right,
Speaker 1: you can either see it as a win for Meta
Speaker 1: or a loss Felina Kahn. But there is an opportunity
Speaker 1: here to appeal. So what are the chances that that
Speaker 1: happens and that it is successful. Well, there's actually a
Speaker 1: couple options for the FTC here. One thing that they
Speaker 1: could do is appeal to the Ninth Circuit Court of
Speaker 1: Appeals in California Um. This judge is ruling directly um,
Speaker 1: and then the Ninth Circuit would rule on whether Meta
Speaker 1: could go forward with the seal or um whether it
Speaker 1: remains blocked. The other option is the FTC could let
Speaker 1: Meta close there us and then go into its administrative court,
Speaker 1: and then there would be a longer trial focused on
Speaker 1: the deal, and at the end of that if the
Speaker 1: FTC wins, it could ask um Matta to sell this off.
Speaker 1: That's not too unlike what they're doing now with Meta
Speaker 1: over the Instagram and WhatsApp deals. So UM they have
Speaker 1: a couple options for how they want to go forward.
Speaker 1: The third option, of course, would be sort of just
Speaker 1: to drop the lawsuit altogether and you know, let Meta
Speaker 1: move forward with UM closing the steel next week. Over
Speaker 1: to you, FTC, Leon Island. It's great reporting. Thank you
Speaker 1: so much for bringing us that, and let's dig in.
Speaker 1: I mean, many had questioned the overall focus of the
Speaker 1: chain name in change, the focus on twenty thirties when
Speaker 1: you eventually get profitability from these investments in reality labs,
Speaker 1: in acquisitions such as within ed. But the here and
Speaker 1: the now, the investors are liking this focus in the
Speaker 1: near term on efficiency. This is the year of efficiency,
Speaker 1: and that's it. The slogan for Meta is secured first
Speaker 1: earnings report. It's absolutely brilliant. It's interesting because of course
Speaker 1: he's being asked about generative AI on the call, right,
Speaker 1: and he says, I'm equally as excited as everyone else,
Speaker 1: but not at the expense of efficiency. This is a
Speaker 1: very dull Mark Zuckerberg. We've come into three week I
Speaker 1: mean learned lessons. There were some investors pushing hard. They
Speaker 1: wanted to see a pull back in terms of capital spending.
Speaker 1: And look, maybe we will see more job cuts. There's
Speaker 1: talking about that middle management that still perhaps is under
Speaker 1: a lot of focus in terms of the effectiveness of
Speaker 1: having that. Really, this doesn't look like a fascinating overall
Speaker 1: call is to and I wonder if this share price
Speaker 1: reaction holds into tomorrow. Yeah, we'll have to wait and see,
Speaker 1: you know, analysts, night's sleep on it. We'll see that
Speaker 1: does it With this addition of Bloomberg Technology, of course,
Speaker 1: tons and tons and tons of tech earnings Thursday and
Speaker 1: unpack at all and don't forget a lot to wrap
Speaker 1: up on our podcast. Check it out Spotify, I Heart
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Speaker 1: is Bloomberg