1 00:00:02,279 --> 00:00:05,640 Speaker 1: From the heart of where innovation, money and power collive 2 00:00:06,400 --> 00:00:10,960 Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with 3 00:00:11,000 --> 00:00:27,400 Speaker 1: Emily Jay. I'm Emily Tech in San Francisco, and this 4 00:00:27,440 --> 00:00:30,120 Speaker 1: is Bloomberg Technology coming up in the next hour. Amazon 5 00:00:30,200 --> 00:00:34,680 Speaker 1: gets absolutely pummeled after predicting a rough holiday shopping season ahead, 6 00:00:34,680 --> 00:00:39,479 Speaker 1: shares falling more than at one point, adding pain to 7 00:00:39,680 --> 00:00:44,000 Speaker 1: an already hurting tech sector. Plus Apple revenue beats estimates, 8 00:00:44,000 --> 00:00:47,400 Speaker 1: but shares drop, the strong dollar and supply issues weighing 9 00:00:47,440 --> 00:00:50,520 Speaker 1: on results. We're gonna have all the details and we're 10 00:00:50,520 --> 00:00:54,160 Speaker 1: getting a glipse into Elon Musk's vision for Twitter, including 11 00:00:54,240 --> 00:00:57,880 Speaker 1: his hope to avoid a quote free for all healthcape 12 00:00:58,280 --> 00:01:01,040 Speaker 1: and I have more on how this could change your feet. 13 00:01:01,640 --> 00:01:03,560 Speaker 1: All that in a moment, but first of vo little 14 00:01:03,640 --> 00:01:05,960 Speaker 1: day on the back of matters, disappointing results in leading 15 00:01:06,080 --> 00:01:09,080 Speaker 1: up to Amazon and Apple out after the bell are 16 00:01:09,160 --> 00:01:11,520 Speaker 1: at Ludlow here to break it all down, add lots 17 00:01:11,520 --> 00:01:13,800 Speaker 1: of action today. Yeah, I mean, and you said it right. 18 00:01:13,840 --> 00:01:16,880 Speaker 1: Amazon getting absolutely punished for the weakness in its fourth 19 00:01:16,959 --> 00:01:20,280 Speaker 1: quarter forecast the holiday quarter. Of course, it's forecast for 20 00:01:20,319 --> 00:01:23,480 Speaker 1: revenue significantly below what the street was looking for a 21 00:01:23,560 --> 00:01:25,640 Speaker 1: hundred and forty to a hundred forty eight billion to 22 00:01:25,680 --> 00:01:27,640 Speaker 1: come in the fourth quarter of the street was looking 23 00:01:27,680 --> 00:01:30,199 Speaker 1: at one five five point five two billion. But also 24 00:01:30,440 --> 00:01:34,080 Speaker 1: the outlook for operating income is weak, and that's putting 25 00:01:34,120 --> 00:01:36,959 Speaker 1: it mildly. We've been saying all day on Bloomberg Television 26 00:01:36,959 --> 00:01:39,839 Speaker 1: that companies in this earning season either live or die 27 00:01:39,920 --> 00:01:41,840 Speaker 1: by their outlook for what's to come in the final 28 00:01:41,920 --> 00:01:44,840 Speaker 1: three months of this year. In comparison to other megact 29 00:01:44,880 --> 00:01:47,160 Speaker 1: text dogs, this is very weak. A mixed bag for 30 00:01:47,200 --> 00:01:49,920 Speaker 1: Apple down one point three and after hours pairing some 31 00:01:50,000 --> 00:01:52,440 Speaker 1: of its earlier losses. But what I would say is 32 00:01:52,480 --> 00:01:54,560 Speaker 1: that it was the iPhone sales that came in weaker 33 00:01:54,560 --> 00:01:57,680 Speaker 1: than expected, along with services. Overall, a beat on revenue 34 00:01:57,880 --> 00:02:00,120 Speaker 1: and a beat on EPs in the quarter. But as 35 00:02:00,120 --> 00:02:02,480 Speaker 1: you talked about this currency headwinds and look at that 36 00:02:02,520 --> 00:02:04,720 Speaker 1: power shares kki K, it's the Investo e t F 37 00:02:04,760 --> 00:02:06,840 Speaker 1: which tracks than has that one hundred. You're gonna have 38 00:02:06,880 --> 00:02:08,400 Speaker 1: to take my word for it, m but being down 39 00:02:08,440 --> 00:02:10,760 Speaker 1: one point four percent in after hours, that is a 40 00:02:10,800 --> 00:02:12,720 Speaker 1: big move for this e t F that tracks and 41 00:02:12,840 --> 00:02:15,240 Speaker 1: has that one hundred so closely so we look ahead 42 00:02:15,280 --> 00:02:18,000 Speaker 1: to Friday's session, where we expect those ripples in the 43 00:02:18,000 --> 00:02:20,080 Speaker 1: market more broadly to be felt by what we're seeing 44 00:02:20,240 --> 00:02:23,240 Speaker 1: in earning season. Meta the story of the day this Thursday, 45 00:02:23,280 --> 00:02:25,960 Speaker 1: biggest drop since February of this year, but the stock 46 00:02:26,000 --> 00:02:29,760 Speaker 1: clothing and closing at its lowest level since January. The 47 00:02:29,800 --> 00:02:33,720 Speaker 1: real concern the growing expenses year on year into three, 48 00:02:33,800 --> 00:02:37,080 Speaker 1: which Meta outlined as being between nine to a hundred 49 00:02:37,080 --> 00:02:39,920 Speaker 1: and one billion dollars, the exact opposite of what investors 50 00:02:39,919 --> 00:02:42,239 Speaker 1: have been calling on Mark Zuckenberg to do. And Twitter, 51 00:02:42,320 --> 00:02:44,120 Speaker 1: let's kind of end on a slightly more bright note, 52 00:02:44,280 --> 00:02:46,760 Speaker 1: m Twitter, we are inching closer and closer to the 53 00:02:46,760 --> 00:02:49,440 Speaker 1: close of this deal. Kurtwagon and I have reported in 54 00:02:49,440 --> 00:02:53,440 Speaker 1: the last ten minutes that Tesla engineering talent have been 55 00:02:53,440 --> 00:02:58,160 Speaker 1: inside Twitter San Francisco headquarters this Thursday, evaluating and assessing 56 00:02:58,240 --> 00:03:02,000 Speaker 1: the underlying code each powers the Twitter platform to help 57 00:03:02,040 --> 00:03:04,240 Speaker 1: you long musk understand it. They've been meetings what they 58 00:03:04,320 --> 00:03:06,920 Speaker 1: called code pairing, where you sit down and work on 59 00:03:06,960 --> 00:03:09,520 Speaker 1: it together. But all the signs from both sides, the 60 00:03:09,600 --> 00:03:12,000 Speaker 1: debt side and the equity financing side, and what I'm 61 00:03:12,000 --> 00:03:14,079 Speaker 1: hearing from sources will get a close of this deal 62 00:03:14,120 --> 00:03:19,399 Speaker 1: Friday is expected. All right, Ed Ludlow, thank you great reporting. 63 00:03:19,880 --> 00:03:22,760 Speaker 1: I want to dig in further to those Amazon results. 64 00:03:22,800 --> 00:03:25,000 Speaker 1: Shares tumbling and late trading due to a holiday quarter 65 00:03:25,040 --> 00:03:29,160 Speaker 1: forecast that came in well below expectations. Rachel Typograph is 66 00:03:29,200 --> 00:03:31,160 Speaker 1: the CEO and founder of mick MC and e commerce 67 00:03:31,160 --> 00:03:34,760 Speaker 1: platform that helps big brands grow, joining us now to 68 00:03:34,960 --> 00:03:39,680 Speaker 1: unpack these results. So not warm and fuzzy outlook for 69 00:03:39,720 --> 00:03:42,720 Speaker 1: Amazon this holiday shopping season. Rachel, what's your take on 70 00:03:42,760 --> 00:03:45,720 Speaker 1: these results? Is this inflation? Is this a broader downturn? 71 00:03:45,840 --> 00:03:52,600 Speaker 1: Looming macro economic factors are impacting everyone at play. At 72 00:03:52,600 --> 00:03:55,000 Speaker 1: the end of the day, net sales for Amazon did 73 00:03:55,040 --> 00:04:00,480 Speaker 1: increase by which was arranged with what Amazon executives were affecting, 74 00:04:00,480 --> 00:04:03,520 Speaker 1: but not what the street wanted. I think a big 75 00:04:03,560 --> 00:04:07,200 Speaker 1: focus was focusing on what would happen During the first 76 00:04:07,240 --> 00:04:11,400 Speaker 1: ever Prime Early Access event that happened in October. Over 77 00:04:11,440 --> 00:04:14,960 Speaker 1: a hundred million items were sold, so all of a sudden, 78 00:04:15,000 --> 00:04:18,920 Speaker 1: Amazon was able to move excess inventory. It also showed 79 00:04:18,920 --> 00:04:23,599 Speaker 1: that despite inflation, consumers were ready to shop as long 80 00:04:23,640 --> 00:04:27,279 Speaker 1: as it was about value and convenience. What we saw 81 00:04:27,320 --> 00:04:30,680 Speaker 1: at Mintmac is that the categories that performed strongest during 82 00:04:30,680 --> 00:04:35,400 Speaker 1: the sale event were health, personal care, and grocery, not 83 00:04:35,520 --> 00:04:40,279 Speaker 1: necessarily consumer electronics toys. So what this continues to show 84 00:04:40,800 --> 00:04:45,159 Speaker 1: is that consumers are willing to spend, but spend on necessities. 85 00:04:46,720 --> 00:04:49,880 Speaker 1: M So it sounds like you're a little more optimistic 86 00:04:49,920 --> 00:04:53,160 Speaker 1: than the typical dooming loom forecast that we've been hearing. 87 00:04:53,200 --> 00:04:55,839 Speaker 1: That said, on the back of not so great results 88 00:04:55,839 --> 00:05:01,159 Speaker 1: from Microsoft, Alphabet Meta could at all get worse than 89 00:05:01,240 --> 00:05:05,320 Speaker 1: we think. So I actually think that Amazon is in 90 00:05:05,400 --> 00:05:10,559 Speaker 1: a very unique position to eat those other companies lunch. 91 00:05:11,160 --> 00:05:13,960 Speaker 1: And the reason why is if you look at Amazon's 92 00:05:13,960 --> 00:05:17,880 Speaker 1: advertising business in this past quarter, it actually grew over 93 00:05:19,560 --> 00:05:23,320 Speaker 1: It's now the third largest player in advertising in the US. 94 00:05:24,400 --> 00:05:28,040 Speaker 1: This is significant, and the reason why is that changes 95 00:05:28,080 --> 00:05:32,400 Speaker 1: in iOS fourteen cook be less Internet that negatively impacted 96 00:05:32,440 --> 00:05:37,760 Speaker 1: Alphabet and Meta are actually benefiting Amazon. Amazon has so 97 00:05:37,839 --> 00:05:41,919 Speaker 1: much first party data, and they own their DSP and 98 00:05:42,040 --> 00:05:45,400 Speaker 1: they've built out self serve capabilities that cater to the 99 00:05:45,480 --> 00:05:49,120 Speaker 1: small medium businesses. They're in a position right now to 100 00:05:49,360 --> 00:05:54,280 Speaker 1: significantly grow their advertising business, which has incredible margins which 101 00:05:54,320 --> 00:05:57,880 Speaker 1: can offset losses in other parts of the business while 102 00:05:57,920 --> 00:06:03,120 Speaker 1: platforms like Alphabet and Eta are struggling. How is this 103 00:06:03,200 --> 00:06:06,560 Speaker 1: impacting the brands that you work with, and obviously you 104 00:06:06,600 --> 00:06:09,120 Speaker 1: help them grow their businesses in part with the you know, 105 00:06:09,160 --> 00:06:13,520 Speaker 1: the help of Amazon and other big e commerce companies. Yeah, 106 00:06:13,560 --> 00:06:16,720 Speaker 1: I mean, we work with huge consumer package good companies, 107 00:06:17,040 --> 00:06:21,039 Speaker 1: and these companies understand that during trying economic times, you 108 00:06:21,080 --> 00:06:24,440 Speaker 1: cannot stop spending. You can look at Procter and Gamble, 109 00:06:24,640 --> 00:06:28,240 Speaker 1: you can look at Coca Cola over their hundred year history, 110 00:06:28,320 --> 00:06:31,720 Speaker 1: they always spend during trying times and they always come 111 00:06:31,720 --> 00:06:36,800 Speaker 1: out ahead. That being said, CFOs that those organizations want 112 00:06:36,960 --> 00:06:40,599 Speaker 1: every single dollar to be able to work really hard, 113 00:06:41,160 --> 00:06:44,080 Speaker 1: and that's why Amazon is in a unique position with 114 00:06:44,160 --> 00:06:47,920 Speaker 1: its advertising business during this time because it has really 115 00:06:48,000 --> 00:06:53,039 Speaker 1: really strong return on investment. And so right now, what 116 00:06:53,080 --> 00:06:56,839 Speaker 1: we're seeing across Fortune one thousand consumer package good companies 117 00:06:57,160 --> 00:06:59,919 Speaker 1: is that they have a dollar to spend their often 118 00:07:00,160 --> 00:07:04,120 Speaker 1: moving it into environments like retail media where there's guaranteed 119 00:07:04,320 --> 00:07:08,960 Speaker 1: r O. I. You have some interesting thoughts about buy now, 120 00:07:09,000 --> 00:07:13,040 Speaker 1: Pay later and how that might have made the current 121 00:07:13,560 --> 00:07:20,240 Speaker 1: consumer uh situation worse. Can you share that? Yeah? Absolutely, 122 00:07:20,760 --> 00:07:26,320 Speaker 1: I mean, if you look at which honestly within commerce 123 00:07:26,360 --> 00:07:30,320 Speaker 1: are anomaly years. We always guide our customers to look 124 00:07:30,320 --> 00:07:33,239 Speaker 1: at two thousand nineteen. That's a much more realistic comp 125 00:07:33,760 --> 00:07:40,440 Speaker 1: But in many consumers were trained to essentially spend money 126 00:07:40,480 --> 00:07:44,840 Speaker 1: that they don't have. As interest rates have risen, all 127 00:07:44,880 --> 00:07:48,200 Speaker 1: of a sudden, consumers are recognizing that that by now 128 00:07:48,320 --> 00:07:52,000 Speaker 1: pay later value proposition will put them in major debt 129 00:07:52,360 --> 00:07:56,360 Speaker 1: and cost them so much. And so I share this 130 00:07:56,840 --> 00:07:59,080 Speaker 1: because there was a lot of fake money that was 131 00:07:59,120 --> 00:08:02,680 Speaker 1: being spent in the ecosystem, and if you remove that 132 00:08:03,480 --> 00:08:05,960 Speaker 1: all of a sudden, very quickly, you'll start to see 133 00:08:06,000 --> 00:08:09,240 Speaker 1: trends that look more like two thin. And so in 134 00:08:09,280 --> 00:08:11,240 Speaker 1: the long run, I actually think this is going to 135 00:08:11,280 --> 00:08:15,640 Speaker 1: be benefit consumers because hopefully you'll prevent them from going 136 00:08:15,680 --> 00:08:20,800 Speaker 1: into deeper debt or debt at all together. All right, 137 00:08:21,240 --> 00:08:25,960 Speaker 1: Rachel Typograph, founder and CEO of Micmac, really interesting insights 138 00:08:26,000 --> 00:08:28,880 Speaker 1: from you. Thank you for sharing all of that with us. 139 00:08:29,840 --> 00:08:32,640 Speaker 1: Sticking with Amazon, The National Labor Relations Board says CEO 140 00:08:32,679 --> 00:08:36,000 Speaker 1: Andy Jasse violated federal labor laws when he told me 141 00:08:36,240 --> 00:08:40,920 Speaker 1: this about workers earlier this year. We happen to think 142 00:08:40,920 --> 00:08:43,520 Speaker 1: they're better off without a union. For a number of reasons, 143 00:08:44,000 --> 00:08:48,000 Speaker 1: including the fact that you know it's it's much harder 144 00:08:48,720 --> 00:08:51,120 Speaker 1: when you have a union to have a direct relationship 145 00:08:51,200 --> 00:08:56,120 Speaker 1: with your manager and to get things done quickly. The 146 00:08:56,200 --> 00:08:59,040 Speaker 1: complaint against Jasse follows a number of big tech union 147 00:08:59,120 --> 00:09:03,040 Speaker 1: votes from workers across the country. In a statement, Amazon says, 148 00:09:03,080 --> 00:09:07,200 Speaker 1: the comments lawfully explain Amazon's views on unism and unization 149 00:09:07,240 --> 00:09:09,040 Speaker 1: and the way it could affect the ability of our 150 00:09:09,080 --> 00:09:12,280 Speaker 1: employees to deal directly with their managers. And they began 151 00:09:12,320 --> 00:09:15,280 Speaker 1: with a clear recognition of our employees right to organize 152 00:09:15,280 --> 00:09:20,400 Speaker 1: and in no way contain threats of reprisal. Meantime, got 153 00:09:20,400 --> 00:09:22,600 Speaker 1: to dig into Apple results now, the tech giant posting 154 00:09:22,640 --> 00:09:26,839 Speaker 1: weaker than expected iPhone and services sales in its latest quarter. Juliasc, 155 00:09:27,000 --> 00:09:30,800 Speaker 1: principal analyst at forest Or Research, with us now, So, Julie, 156 00:09:30,840 --> 00:09:34,800 Speaker 1: why our investors so uh seemingly unhappy with this report? 157 00:09:36,360 --> 00:09:38,040 Speaker 1: I think it's it's hard for me to say why 158 00:09:38,080 --> 00:09:41,680 Speaker 1: investors are seemingly so unhappy with this report? Um, but 159 00:09:41,720 --> 00:09:43,360 Speaker 1: I think one of the things, you know, that I 160 00:09:43,400 --> 00:09:46,080 Speaker 1: look at more broadly is you know it's it's there. 161 00:09:46,120 --> 00:09:48,200 Speaker 1: You know it's not the big quarter. Um. You know 162 00:09:48,280 --> 00:09:51,480 Speaker 1: they got product out. Even though consumers could order products, 163 00:09:51,480 --> 00:09:53,520 Speaker 1: there were still a lot of delays and shipping products. 164 00:09:54,080 --> 00:09:56,360 Speaker 1: They just announced a new tablet line up last week, 165 00:09:56,800 --> 00:09:59,280 Speaker 1: So I think, you know, the third whatever, you know, 166 00:09:59,320 --> 00:10:00,800 Speaker 1: that quarter is going to what it's going to be. 167 00:10:00,840 --> 00:10:02,560 Speaker 1: But I think, you know, it's really important for every 168 00:10:02,559 --> 00:10:05,760 Speaker 1: consumer electronics manufacturers, you know, the holiday season, and that's 169 00:10:05,760 --> 00:10:07,640 Speaker 1: what we've got to look forward to, and that's you know, 170 00:10:07,679 --> 00:10:09,439 Speaker 1: what's most important for them the rest of the year. 171 00:10:11,360 --> 00:10:15,760 Speaker 1: So let's talk about that. Some words from Tim Cook here. 172 00:10:15,960 --> 00:10:18,320 Speaker 1: He says, as we head into the holiday season with 173 00:10:18,360 --> 00:10:21,679 Speaker 1: our most powerful lineup ever, we're leading with our values 174 00:10:21,720 --> 00:10:24,680 Speaker 1: and every action we take and every decision we make, 175 00:10:24,679 --> 00:10:28,200 Speaker 1: we're deeply committed to protecting the environment, securing user privacy, 176 00:10:28,240 --> 00:10:31,480 Speaker 1: strengthening accessibility, and creating products and services that can unlock 177 00:10:31,800 --> 00:10:36,120 Speaker 1: humanity's full creative potential. When you look at the product lineup, 178 00:10:36,160 --> 00:10:39,600 Speaker 1: what's available this holiday season, the way that they're keeping 179 00:10:39,720 --> 00:10:43,199 Speaker 1: you know, many of the prices the same. How optimistic 180 00:10:43,240 --> 00:10:45,080 Speaker 1: are you that they're gonna be able to move a 181 00:10:45,120 --> 00:10:48,160 Speaker 1: lot of products? So, you know, I do have some optimism. 182 00:10:48,240 --> 00:10:50,000 Speaker 1: We just put out a force to just put out 183 00:10:50,000 --> 00:10:53,600 Speaker 1: their holiday forecast and we're predicting we're forecasting an increased 184 00:10:53,640 --> 00:10:57,040 Speaker 1: online spent of about fourteen point six percent. When we've 185 00:10:57,040 --> 00:11:00,440 Speaker 1: surveyed consumers, we have eighteen percent of consumers seeing gonna 186 00:11:00,320 --> 00:11:03,040 Speaker 1: do more this year than last year. On the flip side, 187 00:11:03,120 --> 00:11:05,080 Speaker 1: we still have about forty percent saying that they're going 188 00:11:05,120 --> 00:11:08,480 Speaker 1: to spend less. When we talk to consumers about how 189 00:11:08,480 --> 00:11:12,160 Speaker 1: they're feeling about the economic headwinds, we do have you know, 190 00:11:12,240 --> 00:11:14,280 Speaker 1: depending on the question that you asked, between like thirty 191 00:11:14,360 --> 00:11:17,920 Speaker 1: nine and forty one of US online consumers saying, UM, 192 00:11:17,960 --> 00:11:22,120 Speaker 1: delaying making purchases, UM, I am worried about the economy. 193 00:11:22,320 --> 00:11:25,080 Speaker 1: I there are things that I'm gonna pull back on. UM, 194 00:11:25,200 --> 00:11:27,839 Speaker 1: and then you know, just not making purchases they want 195 00:11:27,840 --> 00:11:29,560 Speaker 1: to make. And then if you ask them to the 196 00:11:29,559 --> 00:11:32,400 Speaker 1: sentiment of how they're doing, there's probably about fifty of 197 00:11:32,400 --> 00:11:34,360 Speaker 1: them that are worried about the economy and worried about 198 00:11:34,400 --> 00:11:37,000 Speaker 1: their money. And definitely, you know, expect to slow down 199 00:11:37,040 --> 00:11:39,880 Speaker 1: purchasing this holiday season. So I think it's you know, 200 00:11:39,920 --> 00:11:41,360 Speaker 1: going to be a question of you know, what is 201 00:11:41,400 --> 00:11:43,319 Speaker 1: that mix? You know, is that eighteen percent the a 202 00:11:43,440 --> 00:11:45,800 Speaker 1: fluid eighteen percent that apple relies on year in and 203 00:11:45,880 --> 00:11:47,960 Speaker 1: year out. Um, but I think it's you know, it's 204 00:11:48,000 --> 00:11:49,880 Speaker 1: it's still gonna be a good holiday season, but it 205 00:11:49,960 --> 00:11:51,960 Speaker 1: may not be what everybody wanted it to be. You know, 206 00:11:51,960 --> 00:11:53,600 Speaker 1: if we were to look at the forecast from earlier 207 00:11:53,600 --> 00:11:56,360 Speaker 1: in the year, it's gonna be a tough season. Meantime time, 208 00:11:56,960 --> 00:12:00,240 Speaker 1: China has historically been a huge market for Apple. Tim 209 00:12:00,280 --> 00:12:03,680 Speaker 1: Cook was really the architect of Apple's China strategy. And 210 00:12:03,679 --> 00:12:05,880 Speaker 1: we're in the middle of of a of a potentially 211 00:12:06,360 --> 00:12:09,840 Speaker 1: history making decoupling of the US and China. How is 212 00:12:09,880 --> 00:12:13,439 Speaker 1: Apple handling that and how much will that impact or 213 00:12:13,480 --> 00:12:17,640 Speaker 1: potentially hurt Apple over the longer term. Yes, so I 214 00:12:17,640 --> 00:12:20,280 Speaker 1: think that's always a hard question, Emily, because I think always, 215 00:12:20,360 --> 00:12:22,600 Speaker 1: you know, the devil is in the details. I think 216 00:12:22,720 --> 00:12:25,040 Speaker 1: one of the things that's been interesting about watching China 217 00:12:25,080 --> 00:12:27,760 Speaker 1: from a consumer standpoint, which is closer to what I follow, 218 00:12:28,240 --> 00:12:30,560 Speaker 1: is a Chinese there's still far more lockdown than we 219 00:12:30,600 --> 00:12:32,640 Speaker 1: are here in the United States than we are in Europe, 220 00:12:32,880 --> 00:12:36,200 Speaker 1: and so there is more consumption of um, you know, 221 00:12:36,280 --> 00:12:39,720 Speaker 1: online media, virtual worlds. We're seeing far more interest in 222 00:12:39,720 --> 00:12:42,480 Speaker 1: things like the metaverse. Uh, and you know in streaming 223 00:12:42,480 --> 00:12:45,040 Speaker 1: media and things, they keep them entertained at home. So 224 00:12:45,160 --> 00:12:46,920 Speaker 1: I think it's it's it's hard for me to say, 225 00:12:46,960 --> 00:12:49,880 Speaker 1: you know, what's going to happen in China, but it's 226 00:12:49,920 --> 00:12:51,960 Speaker 1: a very different environment that we have here in the 227 00:12:52,080 --> 00:12:54,960 Speaker 1: US in terms of, like I said, our mobility and 228 00:12:54,960 --> 00:12:57,360 Speaker 1: how much we're depending on media and electronics and so 229 00:12:57,520 --> 00:12:59,640 Speaker 1: forth that keeps entertained. It can needed to work, you know, 230 00:12:59,760 --> 00:13:01,839 Speaker 1: stay in touch with our friends and family and so forth. 231 00:13:02,040 --> 00:13:06,440 Speaker 1: So it'll be interesting to watch. Meantime, I have to 232 00:13:06,440 --> 00:13:11,479 Speaker 1: ask you about the controversy changes in Apple's ad tracking policies, 233 00:13:11,679 --> 00:13:14,040 Speaker 1: Meta hitting back this week with how much it's hurting 234 00:13:14,080 --> 00:13:17,200 Speaker 1: them and other social media companies. You've got the skeptics 235 00:13:17,200 --> 00:13:19,160 Speaker 1: and the critics out there saying that Apple isn't doing 236 00:13:19,160 --> 00:13:21,920 Speaker 1: this to protect privacy or security, but to add to 237 00:13:22,000 --> 00:13:26,480 Speaker 1: Apple's own bottom line. What's your take, So, you know, 238 00:13:26,520 --> 00:13:28,640 Speaker 1: there's there's a little bit of both, But I don't 239 00:13:28,679 --> 00:13:32,760 Speaker 1: know that anyone's crying for um, you know, half Pool 240 00:13:32,840 --> 00:13:36,800 Speaker 1: or Google's diminished ability to monetize the data of consumers. Right, 241 00:13:36,880 --> 00:13:39,439 Speaker 1: those companies have grown very, very wealthy over the past 242 00:13:39,440 --> 00:13:42,160 Speaker 1: couple of decades by doing so and I think as 243 00:13:42,160 --> 00:13:44,080 Speaker 1: we look forward and we're looking at the values that 244 00:13:44,120 --> 00:13:46,920 Speaker 1: consumers have, you know, Tim Cooke really hits on them 245 00:13:46,920 --> 00:13:48,880 Speaker 1: one after day, that it is about our privacy, it 246 00:13:48,960 --> 00:13:51,600 Speaker 1: is about security, it is about responsibility, it is about 247 00:13:51,640 --> 00:13:54,480 Speaker 1: the environment, it is about trust. And if we look 248 00:13:54,520 --> 00:13:56,360 Speaker 1: at some of the biggest themes that our clients are 249 00:13:56,400 --> 00:13:59,840 Speaker 1: asking about, it's all of those. It's trust, it's the economy, 250 00:14:00,000 --> 00:14:02,280 Speaker 1: it's the green you know, it's being green, it's security, 251 00:14:02,280 --> 00:14:05,000 Speaker 1: it's privacy, and so forth. And I think that's really 252 00:14:05,040 --> 00:14:07,720 Speaker 1: the long game. Do I think that advertising is going 253 00:14:07,760 --> 00:14:10,120 Speaker 1: to contribute in a substantial way to Apple's bottom line 254 00:14:10,160 --> 00:14:12,600 Speaker 1: in the next five years, I'd be surprised if they 255 00:14:12,600 --> 00:14:14,400 Speaker 1: break out that revenue. I'd be surprised if it begins 256 00:14:14,400 --> 00:14:16,640 Speaker 1: to be that big. Well, I was going to hear 257 00:14:16,679 --> 00:14:19,800 Speaker 1: from you, Julie, vice president, principal analyst at Forest for Research, 258 00:14:19,840 --> 00:14:30,080 Speaker 1: Thank you so much. Elon Musk has both tried to 259 00:14:30,120 --> 00:14:33,520 Speaker 1: acquire and walk away from acquiring Twitter. Here's how we 260 00:14:33,640 --> 00:14:37,160 Speaker 1: got here. April four a regulatory filing reveals that Elon 261 00:14:37,240 --> 00:14:41,320 Speaker 1: Musk has rapidly become the largest Twitter shareholder. April fourteen, 262 00:14:41,680 --> 00:14:44,880 Speaker 1: in an sec filing and accompanying tweet, Musk says he 263 00:14:44,920 --> 00:14:47,480 Speaker 1: will buy out stockholders in a cash deal and take 264 00:14:47,640 --> 00:14:51,000 Speaker 1: Twitter private. The offer, valued at forty three billion dollars, 265 00:14:51,120 --> 00:14:54,240 Speaker 1: is a fifty percent premium over the price. In January. 266 00:14:54,840 --> 00:14:58,280 Speaker 1: May seventeen, after Musk and Twitter CEO Para Gang Rowel 267 00:14:58,360 --> 00:15:01,640 Speaker 1: have it out on Twitter, Musk tweets he won't proceed 268 00:15:01,840 --> 00:15:04,680 Speaker 1: unless Twitter can prove bots are less than five percent 269 00:15:04,800 --> 00:15:08,440 Speaker 1: of its users. July eight, Elon Musk backs out of 270 00:15:08,480 --> 00:15:11,520 Speaker 1: the deal, saying in a filing that Twitter made misleading 271 00:15:11,560 --> 00:15:16,600 Speaker 1: representations over the box issue. July twelve, Twitter sues Musk 272 00:15:16,760 --> 00:15:20,200 Speaker 1: to force him to complete the deal. Musk counter suits. 273 00:15:20,600 --> 00:15:23,840 Speaker 1: October four, after a trove of Musks in a circle 274 00:15:23,920 --> 00:15:27,240 Speaker 1: text are revealed in court filings, Musk revives his bid 275 00:15:27,400 --> 00:15:31,000 Speaker 1: at the original offer price, potentially avoiding a courtroom fight. 276 00:15:31,480 --> 00:15:35,520 Speaker 1: October six, the Delaware Chancery judge pauses the court case, 277 00:15:35,720 --> 00:15:38,400 Speaker 1: giving the parties more time to complete a deal. Of 278 00:15:38,520 --> 00:15:42,280 Speaker 1: five pm October twenty eight, hard deadline is set. Otherwise, 279 00:15:42,440 --> 00:15:49,520 Speaker 1: the trial resumes in November. M just some of the 280 00:15:49,600 --> 00:15:52,000 Speaker 1: Musk Twitter saga there that we've been living through for 281 00:15:52,160 --> 00:15:55,760 Speaker 1: most of the year. But finally this deal seems imminent. 282 00:15:56,200 --> 00:15:58,920 Speaker 1: In a tweet addressed to advertisers, Musk said he wants 283 00:15:58,920 --> 00:16:01,960 Speaker 1: to make Twitter a well meantown square with highly relevant 284 00:16:02,000 --> 00:16:05,479 Speaker 1: ads and less of a quote free for all healthscape 285 00:16:05,760 --> 00:16:07,720 Speaker 1: for more. I want to bring in Bloomberg, Sarah Fryer, 286 00:16:07,800 --> 00:16:10,880 Speaker 1: and Sarah. Our latest reporting is that Tesla engineers have 287 00:16:10,960 --> 00:16:13,840 Speaker 1: gone to Twitter headquarters to review some of Twitter's code, 288 00:16:14,160 --> 00:16:17,480 Speaker 1: and also that Twitter's code has been frozen ahead of 289 00:16:18,080 --> 00:16:22,000 Speaker 1: a pending deal. Sort of changes can be made at 290 00:16:22,000 --> 00:16:25,760 Speaker 1: the eleventh hour. What's the latest that we know, Well, 291 00:16:26,200 --> 00:16:28,400 Speaker 1: it looks to us from our sources that these Tesla 292 00:16:28,440 --> 00:16:32,520 Speaker 1: engineers are meant to review the code to help Elon 293 00:16:32,640 --> 00:16:35,480 Speaker 1: musk assess it and think about what needs to be done. Um. 294 00:16:35,520 --> 00:16:38,000 Speaker 1: You know, companies that have been around for as many 295 00:16:38,040 --> 00:16:40,800 Speaker 1: years as Twitter have their their code can always be 296 00:16:40,800 --> 00:16:44,240 Speaker 1: confusing to newcomers. So he's bringing in some trusted fellow 297 00:16:44,440 --> 00:16:47,600 Speaker 1: of folks from his company he also runs UM. And 298 00:16:47,920 --> 00:16:51,120 Speaker 1: then just in terms of the note to advertisers this morning, 299 00:16:51,720 --> 00:16:54,520 Speaker 1: I think that Elon Musk is is trying a little 300 00:16:54,520 --> 00:16:58,120 Speaker 1: bit of um, a reversal of what what has been 301 00:16:58,200 --> 00:17:00,360 Speaker 1: said out there about what he's going to do. I mean, 302 00:17:00,400 --> 00:17:05,000 Speaker 1: we all know he has this free speech plan for Twitter. 303 00:17:05,560 --> 00:17:08,240 Speaker 1: What that's going to mean is is loosening up a 304 00:17:08,240 --> 00:17:11,920 Speaker 1: lot of the moderation standards and bringing on content that 305 00:17:12,119 --> 00:17:15,439 Speaker 1: could make advertisers uncomfortable. So I'm not exactly sure. How 306 00:17:15,480 --> 00:17:18,000 Speaker 1: are you going to do both things at once? As 307 00:17:18,000 --> 00:17:21,359 Speaker 1: they wrote um today for our quality newsletter, you you 308 00:17:21,400 --> 00:17:25,440 Speaker 1: can't have a commercially viable social network, one that advertisers 309 00:17:25,480 --> 00:17:28,800 Speaker 1: want to to buy promotions on, one that people want 310 00:17:28,840 --> 00:17:32,480 Speaker 1: to join without some level of content moderation. There has 311 00:17:32,520 --> 00:17:34,600 Speaker 1: to be some line that he's he's going to draw, 312 00:17:34,640 --> 00:17:36,880 Speaker 1: and he's going to have to figure out what kind 313 00:17:36,880 --> 00:17:41,720 Speaker 1: of balance he is comfortable with. How are Twitter employees 314 00:17:41,760 --> 00:17:44,240 Speaker 1: feeling about this? We know he was at headquarters yesterday. 315 00:17:44,359 --> 00:17:48,440 Speaker 1: There's this picture that was posted if everyone gathered around him, 316 00:17:48,560 --> 00:17:52,160 Speaker 1: some people were smiling, didn't look so, you know, potentially 317 00:17:52,160 --> 00:17:53,919 Speaker 1: doom and gloom. Of course, you only can get a 318 00:17:53,920 --> 00:17:57,440 Speaker 1: few few people in one photo. Um, but how our Twitter? 319 00:17:57,480 --> 00:17:59,880 Speaker 1: How our Twitter employees feeling about this? Given that he's 320 00:18:00,520 --> 00:18:02,960 Speaker 1: you know, there's reports that he might cut up to 321 00:18:04,040 --> 00:18:07,560 Speaker 1: the workforce. He's bringing in engineers from another company to 322 00:18:07,600 --> 00:18:10,560 Speaker 1: look at their code. Well, we we skipped last night 323 00:18:10,600 --> 00:18:12,879 Speaker 1: that he actually told Twitter employees that he does not 324 00:18:13,000 --> 00:18:15,840 Speaker 1: plan to cut seventy five percent of the staff. In fact, 325 00:18:15,920 --> 00:18:18,000 Speaker 1: he he claims he don't know where that number came from. 326 00:18:18,040 --> 00:18:20,639 Speaker 1: Of course, you know, as we previously ported, it came 327 00:18:20,640 --> 00:18:24,480 Speaker 1: from his own presentations to equity investors. So I think 328 00:18:24,520 --> 00:18:28,600 Speaker 1: that there's just a lot of of of putting down 329 00:18:28,600 --> 00:18:31,760 Speaker 1: the hatchet and all of this tension, between months of 330 00:18:31,840 --> 00:18:35,480 Speaker 1: cork fights between Twitter and Elon Musk, you know, coming 331 00:18:35,480 --> 00:18:37,879 Speaker 1: to a place where they can work together, where he 332 00:18:37,920 --> 00:18:41,840 Speaker 1: can work with their partners and advertisers, where he's saying basically, 333 00:18:42,520 --> 00:18:44,800 Speaker 1: I come in peace. You know, I am I Am 334 00:18:44,840 --> 00:18:46,960 Speaker 1: going to be the boss here and and I'm going 335 00:18:47,000 --> 00:18:49,520 Speaker 1: to care about this. And he's comes he comes in 336 00:18:49,600 --> 00:18:52,080 Speaker 1: with this this perspective, or at least he says in 337 00:18:52,160 --> 00:18:55,200 Speaker 1: his letters to appetituers that he's doing this for humanity. Right, 338 00:18:55,359 --> 00:18:58,879 Speaker 1: there's a very grandiose vision for what Twitter can be 339 00:18:59,080 --> 00:19:02,240 Speaker 1: under his law. Um, and I think that that that 340 00:19:02,359 --> 00:19:05,280 Speaker 1: kind of messaging actually does appeal to Twitter employees. That 341 00:19:05,480 --> 00:19:08,160 Speaker 1: they tend to say that when you talk to them, 342 00:19:08,200 --> 00:19:10,880 Speaker 1: they're in it for for the impact you can have 343 00:19:11,119 --> 00:19:15,040 Speaker 1: on the world and our culture and our our you know, politics, 344 00:19:15,080 --> 00:19:17,560 Speaker 1: like you know, they can make a difference. So I 345 00:19:17,600 --> 00:19:20,480 Speaker 1: think that is historically why people have joined Twitter and 346 00:19:20,760 --> 00:19:23,560 Speaker 1: not maybe some other bigger tech companies that might pay 347 00:19:23,600 --> 00:19:27,280 Speaker 1: them better. So it'll be interesting to see if if 348 00:19:27,359 --> 00:19:31,119 Speaker 1: Musk can can actually come in peace, even though he's 349 00:19:31,200 --> 00:19:33,000 Speaker 1: certainly going to have to change quite a bit. He's 350 00:19:33,000 --> 00:19:36,800 Speaker 1: going to have to cut staff and um dramatically pivot 351 00:19:36,840 --> 00:19:41,520 Speaker 1: the company and his vision. So he's in there talking 352 00:19:41,520 --> 00:19:44,760 Speaker 1: to employees, he's walking around with the kitchen sink. Give 353 00:19:44,880 --> 00:19:48,000 Speaker 1: us the TikTok of the next twenty four hours. When 354 00:19:48,040 --> 00:19:50,280 Speaker 1: does this deal get sealed? I mean, we're already reporting 355 00:19:50,320 --> 00:19:52,800 Speaker 1: that arch Capital is going to replace Twitter in the 356 00:19:52,920 --> 00:19:58,560 Speaker 1: SMP five. It's really a matter of time before the 357 00:19:58,720 --> 00:20:02,840 Speaker 1: share stop trading on on the open market. That that 358 00:20:02,880 --> 00:20:06,560 Speaker 1: will be our our first public signal perhaps that the 359 00:20:06,720 --> 00:20:10,560 Speaker 1: deal is done. UM, we're also looking at filings that 360 00:20:10,640 --> 00:20:13,800 Speaker 1: might happen in Delaware that they need. Whatever is being 361 00:20:13,880 --> 00:20:16,719 Speaker 1: signed right now, it's not final until you know. It's 362 00:20:16,760 --> 00:20:18,359 Speaker 1: like when you buy a house, is not final until 363 00:20:18,400 --> 00:20:20,480 Speaker 1: you get the keys. That all these little steps have 364 00:20:20,680 --> 00:20:25,240 Speaker 1: to be done before we can say the deal is closed. Um, 365 00:20:25,280 --> 00:20:28,960 Speaker 1: but it looks very much on track right now. There 366 00:20:28,960 --> 00:20:33,080 Speaker 1: are unlikely to be I say this with the grain 367 00:20:33,119 --> 00:20:35,639 Speaker 1: of salt. Right, it has been quite a zaga, but 368 00:20:35,680 --> 00:20:38,320 Speaker 1: they're unlikely to be sumbling blocks between now and I 369 00:20:38,440 --> 00:20:41,760 Speaker 1: PM on Friday, UM Eastern time, which is when the 370 00:20:41,880 --> 00:20:46,520 Speaker 1: judge Enchance reports that this needs to be completely complete 371 00:20:46,560 --> 00:20:48,840 Speaker 1: by She wants an email in her inbox by by 372 00:20:48,960 --> 00:20:54,360 Speaker 1: PM saying it's dumb, we don't need to go to court. Alright. Well, 373 00:20:54,359 --> 00:20:56,520 Speaker 1: some people might not be getting some sleep tonight. I 374 00:20:56,520 --> 00:20:59,720 Speaker 1: hope one of them is not you. Sarah Friar are 375 00:20:59,760 --> 00:21:12,040 Speaker 1: Blue Brick Tech editor, Thank you so much. Microsoft is 376 00:21:12,040 --> 00:21:14,520 Speaker 1: out with its first ever report on media and pay 377 00:21:14,760 --> 00:21:17,880 Speaker 1: for its workforce. It shows that women do better than 378 00:21:18,359 --> 00:21:22,240 Speaker 1: the US average, but black and Hispanic employees remain underrepresented 379 00:21:22,520 --> 00:21:27,240 Speaker 1: in higher level rules, and Microsoft's employees of color overall 380 00:21:27,480 --> 00:21:31,280 Speaker 1: make less. Tesla facing a criminal investigation to its self 381 00:21:31,359 --> 00:21:34,119 Speaker 1: driving system. Bloombergers learned that the US Justice Department is 382 00:21:34,160 --> 00:21:38,200 Speaker 1: investigating whether the company made misleading claims about tesla cars 383 00:21:38,240 --> 00:21:41,800 Speaker 1: ability to drive themselves down. Jones reporting the SEC is 384 00:21:41,800 --> 00:21:46,320 Speaker 1: probing Tesla as well, coming up. What does the consumer 385 00:21:46,359 --> 00:21:48,960 Speaker 1: want in this inflationary environment. We're gonna be talking about 386 00:21:48,960 --> 00:22:06,439 Speaker 1: more earnings with shopifies Harley Finkelstein, This is Bloomberg. Welcome 387 00:22:06,480 --> 00:22:09,240 Speaker 1: back to Boomer Technology, Emily Check in San Francisco. Let's 388 00:22:09,240 --> 00:22:13,320 Speaker 1: get back to the after hours action Apple and Amazon. 389 00:22:13,400 --> 00:22:17,280 Speaker 1: Back to Ed Ludlow and Ed. Apple investors seem to 390 00:22:17,320 --> 00:22:20,720 Speaker 1: like what they're hearing from Tim this call. They were 391 00:22:20,760 --> 00:22:22,680 Speaker 1: liking what they were hearing from Tim Cook, but then 392 00:22:22,960 --> 00:22:25,399 Speaker 1: Luca Mastreet started speaking and they did not like that. 393 00:22:25,520 --> 00:22:27,600 Speaker 1: The stock at one point up two now through ours 394 00:22:27,600 --> 00:22:30,680 Speaker 1: then dropping suddenly. It seems to be the headlines crossing 395 00:22:30,720 --> 00:22:34,360 Speaker 1: that they're not giving revenue guidance because of the uncertainty 396 00:22:34,400 --> 00:22:37,920 Speaker 1: in the world and the macro picture. Total company revenue 397 00:22:37,960 --> 00:22:42,160 Speaker 1: growth will decelerate compared to the fourth quarter, the fiscal 398 00:22:42,200 --> 00:22:45,000 Speaker 1: fourth quarter, and the forecast here is that mac revenue 399 00:22:45,000 --> 00:22:48,479 Speaker 1: will decline substantially in the holiday quarter. Those are not 400 00:22:48,640 --> 00:22:50,760 Speaker 1: things of the market like you see Apple now down 401 00:22:50,760 --> 00:22:52,920 Speaker 1: by two point six percent. There was a pocket of 402 00:22:52,960 --> 00:22:55,480 Speaker 1: strength in this earning season for Apple, which was the 403 00:22:55,520 --> 00:22:58,119 Speaker 1: mac book executive saying that a lot of buyers of 404 00:22:58,200 --> 00:23:01,320 Speaker 1: the MacBook were first time bias. Perhaps that's because of 405 00:23:01,359 --> 00:23:04,640 Speaker 1: the cutting edge technology. This is what Tim Cook had 406 00:23:04,680 --> 00:23:09,240 Speaker 1: said about that. Our Mac customers have already been raving 407 00:23:09,320 --> 00:23:12,480 Speaker 1: about the power of M two since the arrival of 408 00:23:12,520 --> 00:23:17,399 Speaker 1: our newest MacBook Air and MacBook Pro the summer. They're incredible, 409 00:23:17,480 --> 00:23:22,080 Speaker 1: long battery life, stunning lee rich display, and lightning fast 410 00:23:22,080 --> 00:23:25,439 Speaker 1: speeds are a signature part of the Mac experience and 411 00:23:25,560 --> 00:23:29,400 Speaker 1: helped drive an all time record revenue for Mac during 412 00:23:29,400 --> 00:23:34,200 Speaker 1: the September quarter. So that's the story of Apples so far. 413 00:23:34,240 --> 00:23:37,040 Speaker 1: We'll continue to bring the latest as it crosses the Bloomberg. 414 00:23:37,160 --> 00:23:39,800 Speaker 1: Really the story of Amazon. We know that the investor 415 00:23:39,840 --> 00:23:43,040 Speaker 1: base is not impressed with this outlook for the fourth quarter. 416 00:23:43,440 --> 00:23:45,720 Speaker 1: How often am have you ever heard Amazon say that 417 00:23:45,840 --> 00:23:48,760 Speaker 1: macro economic conditions are tough? That seems like a car 418 00:23:48,800 --> 00:23:51,080 Speaker 1: do you play when earnings are not very good? Hat 419 00:23:51,080 --> 00:23:54,000 Speaker 1: tips editor Nick Turner for that one. An interesting bright 420 00:23:54,040 --> 00:23:57,880 Speaker 1: spoting after hours though Intel, it's actually a little kind 421 00:23:57,920 --> 00:24:02,080 Speaker 1: of bastion of hope in the It's up three. Revenue 422 00:24:02,119 --> 00:24:04,320 Speaker 1: was not good, numbers not great, but there's basically a 423 00:24:04,320 --> 00:24:08,160 Speaker 1: pledge from the company to cut costs, be financially discipline 424 00:24:08,200 --> 00:24:10,520 Speaker 1: to get this company back on track and investors seem 425 00:24:10,560 --> 00:24:12,679 Speaker 1: to be buying the story with that stock high almost 426 00:24:12,720 --> 00:24:14,800 Speaker 1: four percent and after rise, we're keeping on that one too. 427 00:24:16,440 --> 00:24:19,560 Speaker 1: All right, Ad Ludlow, thank you. I want to dig 428 00:24:19,600 --> 00:24:23,400 Speaker 1: in now to shopifys results kind of bucking the trend 429 00:24:23,440 --> 00:24:25,840 Speaker 1: which shares rising over the last couple of days after 430 00:24:26,400 --> 00:24:30,919 Speaker 1: uh their numbers came out. Shopify president Harley Finkelstein with 431 00:24:31,000 --> 00:24:34,840 Speaker 1: us Now, So, Harley, how did you manage to buck 432 00:24:34,920 --> 00:24:38,000 Speaker 1: the trend here? You know, what is it that Shopifies 433 00:24:38,080 --> 00:24:41,639 Speaker 1: doing that? Everyone else sing? Thanks trapping Emily. You know, 434 00:24:41,720 --> 00:24:43,760 Speaker 1: we're we're happy with how things came out. I think 435 00:24:43,760 --> 00:24:46,680 Speaker 1: the big thing that the big takeaway is that the 436 00:24:46,760 --> 00:24:48,720 Speaker 1: role that Schopfli is playing in the lives of the 437 00:24:48,720 --> 00:24:52,080 Speaker 1: millions of merchants is just not of a typical software company. 438 00:24:52,200 --> 00:24:53,640 Speaker 1: One of the things that I mentioned on the call 439 00:24:53,760 --> 00:24:57,200 Speaker 1: quite a bit was this merchant merchant services attach rate, 440 00:24:57,560 --> 00:25:00,200 Speaker 1: and that is really the amount of services and that 441 00:25:00,280 --> 00:25:02,480 Speaker 1: we create for for merchants. And I think the big 442 00:25:02,480 --> 00:25:04,800 Speaker 1: difference here is we're not just the commerce provider anymore. 443 00:25:04,800 --> 00:25:07,520 Speaker 1: Where the retail partner for physical retail where their capital 444 00:25:07,520 --> 00:25:09,639 Speaker 1: partment we've given out now more than four billion dollars 445 00:25:09,640 --> 00:25:12,639 Speaker 1: of cash events and loan store merchants where the logistics partner, 446 00:25:12,920 --> 00:25:14,840 Speaker 1: and with audiences and shop by audiences where now their 447 00:25:14,880 --> 00:25:17,000 Speaker 1: advertising partner in some cases too. And so we saw 448 00:25:17,200 --> 00:25:20,080 Speaker 1: a two point one four percent merchant solutions attachment in 449 00:25:20,119 --> 00:25:22,119 Speaker 1: Q three. That's up from one point nine eight in 450 00:25:22,200 --> 00:25:25,280 Speaker 1: Q two. So that was really good. On the revenue side, 451 00:25:25,320 --> 00:25:27,119 Speaker 1: you know, revenue came in one point four billion, that's 452 00:25:27,200 --> 00:25:29,040 Speaker 1: up twenty two percent year on year and on a 453 00:25:29,040 --> 00:25:32,000 Speaker 1: three year cagreats with fifty two. But I also think 454 00:25:32,000 --> 00:25:34,480 Speaker 1: with the street and investors wanted to see was was 455 00:25:34,520 --> 00:25:37,800 Speaker 1: operating discipline, and we saw adjusted gross profit of six 456 00:25:38,440 --> 00:25:41,199 Speaker 1: over six hundred eighty million dollars that's up eleven percent 457 00:25:41,359 --> 00:25:44,439 Speaker 1: and a three year cagor So when they see that 458 00:25:44,640 --> 00:25:48,600 Speaker 1: plus year on year declining operating expense growth and five 459 00:25:48,600 --> 00:25:50,560 Speaker 1: billion dollars of cash in the balance sheet, I think 460 00:25:50,600 --> 00:25:54,760 Speaker 1: they see the Shopify is a long term, durable company. 461 00:25:55,560 --> 00:25:58,800 Speaker 1: Investors are looking at. This is potentially a sign that 462 00:25:58,880 --> 00:26:02,679 Speaker 1: Shopifies worse days are behind it, quote unquote, it's been 463 00:26:02,720 --> 00:26:05,439 Speaker 1: a tough year. You've had job cuts, it's a very 464 00:26:05,440 --> 00:26:10,080 Speaker 1: tough retail environment. Inflation is weighing on everyone. Would you 465 00:26:10,119 --> 00:26:13,880 Speaker 1: agree with that is the worst over look. I think 466 00:26:13,880 --> 00:26:19,159 Speaker 1: Shopify was this incredible COVID you know, story March, physical 467 00:26:19,200 --> 00:26:22,679 Speaker 1: retail shuts down permanently, and all these physical retailers end 468 00:26:22,720 --> 00:26:25,200 Speaker 1: up moving to needed to move online, and most of 469 00:26:25,200 --> 00:26:27,920 Speaker 1: them did so Shopify. I think what most people missed 470 00:26:27,960 --> 00:26:30,399 Speaker 1: was that the trust we build in the COVID period 471 00:26:30,440 --> 00:26:33,400 Speaker 1: meant that now that stores are reopening, Phystom Stories reopening, 472 00:26:33,520 --> 00:26:35,920 Speaker 1: they're now using us to to replace their existing quinte 473 00:26:36,000 --> 00:26:38,720 Speaker 1: sale systems as well. So that's one issue. The second 474 00:26:38,760 --> 00:26:40,439 Speaker 1: issue is that, you know, talking about sort of the 475 00:26:40,440 --> 00:26:43,800 Speaker 1: macrotin of the consumer. This idea of omni channel we talked, 476 00:26:43,840 --> 00:26:45,639 Speaker 1: I've talked to this on your show before. This is 477 00:26:45,680 --> 00:26:48,800 Speaker 1: now steady state. The best brands, most modern brands, they 478 00:26:48,800 --> 00:26:52,640 Speaker 1: need to sell everywhere online, offline, on social media, on marketplaces, 479 00:26:52,840 --> 00:26:55,160 Speaker 1: and doing so with the retail operating system like Shopify 480 00:26:55,320 --> 00:26:57,840 Speaker 1: gives them the tools to do so. So I don't 481 00:26:57,840 --> 00:26:59,960 Speaker 1: know what's going to happen in terms of the larger 482 00:27:00,000 --> 00:27:02,840 Speaker 1: economy in the future, but certainly, you know, September was 483 00:27:02,880 --> 00:27:05,359 Speaker 1: a good month from a consumer spend. It looks like 484 00:27:05,400 --> 00:27:08,119 Speaker 1: October is pretty good too. But our our our merchants 485 00:27:08,160 --> 00:27:09,639 Speaker 1: and millions of merchants on shop they are getting set 486 00:27:09,720 --> 00:27:11,560 Speaker 1: up for a good holiday season and we want to 487 00:27:11,560 --> 00:27:15,440 Speaker 1: be there to support them on that. You know, investors 488 00:27:15,520 --> 00:27:20,159 Speaker 1: were not happy with Amazon's results there. Holiday forecast was 489 00:27:20,520 --> 00:27:24,200 Speaker 1: not great. You know, what's what's your read on that 490 00:27:24,280 --> 00:27:28,399 Speaker 1: and what it also could bode for Shopify. I mean, 491 00:27:28,440 --> 00:27:31,320 Speaker 1: we're certainly dealing with an inflationary economy right now, there's 492 00:27:31,359 --> 00:27:32,919 Speaker 1: no doubt about that. What I what I what I 493 00:27:32,960 --> 00:27:36,840 Speaker 1: think is certain is that the direct to consumer business model, 494 00:27:36,840 --> 00:27:40,120 Speaker 1: where brands manufacture and sell direct to the consumer, where 495 00:27:40,119 --> 00:27:43,000 Speaker 1: there are no intermediaries, there is more margin there, there 496 00:27:43,080 --> 00:27:45,600 Speaker 1: is more room for inflation. And so I actually think 497 00:27:45,600 --> 00:27:47,720 Speaker 1: that that a direct to consumer model operates better in 498 00:27:47,720 --> 00:27:51,040 Speaker 1: this environment than say a third party reseller might who's 499 00:27:51,040 --> 00:27:54,240 Speaker 1: already operating on on razor thin margins. But so far, 500 00:27:54,320 --> 00:27:56,800 Speaker 1: I mean, you know what you look at companies, uh 501 00:27:57,080 --> 00:27:59,960 Speaker 1: just this quarter, Glossier for example, or Spanks for exam 502 00:28:00,000 --> 00:28:04,200 Speaker 1: Apple or Alo Yoga or Vori for example, like these 503 00:28:04,320 --> 00:28:06,760 Speaker 1: these brands on Shopolate are doing really really well, and 504 00:28:06,840 --> 00:28:09,680 Speaker 1: so you know, we we we think the consumers remain strong, 505 00:28:09,760 --> 00:28:11,959 Speaker 1: but we'll see what the holiday season comes from. The 506 00:28:11,960 --> 00:28:14,080 Speaker 1: most important thing, though, is that we're there to support 507 00:28:14,119 --> 00:28:17,160 Speaker 1: them no matter what they want to do. You had 508 00:28:17,160 --> 00:28:22,160 Speaker 1: me at Viori Carley love it great. Brand Great. Let's 509 00:28:22,200 --> 00:28:27,720 Speaker 1: talk about your logistics and fulfillment network. Obviously you've been 510 00:28:28,240 --> 00:28:30,919 Speaker 1: developing that. Where does development stand now and what are 511 00:28:30,920 --> 00:28:34,520 Speaker 1: your ambitions there when it comes to investing and you know, 512 00:28:34,560 --> 00:28:38,000 Speaker 1: potential acquisitions. Yeah, we've made a lot of progress there. 513 00:28:38,000 --> 00:28:39,520 Speaker 1: I mean, the goal is to build an end to 514 00:28:39,640 --> 00:28:42,160 Speaker 1: end logistics network, so from the second year product is 515 00:28:42,200 --> 00:28:44,760 Speaker 1: made at the factory to to when your your consumer 516 00:28:44,840 --> 00:28:46,840 Speaker 1: gets it, we want to basically we want to handle 517 00:28:46,880 --> 00:28:49,080 Speaker 1: that for for all of our merchants. The key though, 518 00:28:49,200 --> 00:28:50,680 Speaker 1: is that we want to make it so that when 519 00:28:50,720 --> 00:28:53,800 Speaker 1: you use Shopify, Shopify, film and Network, when you use 520 00:28:53,800 --> 00:28:57,120 Speaker 1: our logistics product, you don't have to think about logistics. 521 00:28:57,440 --> 00:28:59,160 Speaker 1: But the key here is something that I mentioned the 522 00:28:59,200 --> 00:29:02,680 Speaker 1: urnings call today. It's called shop Promise. This idea that 523 00:29:02,680 --> 00:29:05,880 Speaker 1: when you use our fulfillment product, you can provide an 524 00:29:05,880 --> 00:29:10,600 Speaker 1: anticipated delivery date with certainty to your consumer. In early 525 00:29:10,680 --> 00:29:14,040 Speaker 1: testing of shop Promise, we know that consumers will spend more, 526 00:29:14,080 --> 00:29:16,840 Speaker 1: they will convert higher when they know when to anticipate it. 527 00:29:17,040 --> 00:29:19,160 Speaker 1: So we're not trying to build out what Amazon did 528 00:29:19,160 --> 00:29:21,400 Speaker 1: this like one day free shipping thing. What we're trying 529 00:29:21,440 --> 00:29:23,040 Speaker 1: to do is make it so that our merchants one 530 00:29:23,200 --> 00:29:25,120 Speaker 1: don't have to think about logistics, it's not a problem 531 00:29:25,120 --> 00:29:26,960 Speaker 1: for them, will take care of it. And second that 532 00:29:27,000 --> 00:29:30,680 Speaker 1: they can provide and anticipate anticipation of when the product 533 00:29:30,680 --> 00:29:32,680 Speaker 1: will get into the hands of consumers. And we made 534 00:29:32,680 --> 00:29:34,280 Speaker 1: a lot of progress there so when that you know, 535 00:29:34,360 --> 00:29:37,160 Speaker 1: we we've disclosed a partnership that we have with flex Board. 536 00:29:37,280 --> 00:29:40,120 Speaker 1: On that first phase from factory to port, from port 537 00:29:40,160 --> 00:29:42,920 Speaker 1: to fulfillment, we acquired a company called Deliver that does 538 00:29:42,920 --> 00:29:45,400 Speaker 1: balancing better than frankly anyone on the planet. And that 539 00:29:45,520 --> 00:29:48,000 Speaker 1: third phase from the fulfillment center to the end consumer, 540 00:29:48,120 --> 00:29:51,840 Speaker 1: that's really where shop Life Fulfillment Network takes really ramps up. 541 00:29:51,880 --> 00:29:53,680 Speaker 1: And and and we have partners you know, all over 542 00:29:53,680 --> 00:29:55,680 Speaker 1: the U S right now that are using our software, 543 00:29:55,920 --> 00:29:58,640 Speaker 1: our robotic technology from six River System and we are 544 00:29:58,640 --> 00:30:01,200 Speaker 1: creating this this this logistics network and we've made a 545 00:30:01,240 --> 00:30:02,640 Speaker 1: lot of progress. Well can you need to do so, 546 00:30:02,800 --> 00:30:05,840 Speaker 1: But the key really is the shop promise to give everyone, 547 00:30:06,080 --> 00:30:08,840 Speaker 1: every small business the same tools that frankly Amazon has 548 00:30:08,880 --> 00:30:10,840 Speaker 1: with things like you know, Amazon Prime, and we think 549 00:30:10,840 --> 00:30:15,520 Speaker 1: we can do that. That's aid in person shopping is 550 00:30:15,560 --> 00:30:19,400 Speaker 1: back and I can imagine back even bigger this holiday season. 551 00:30:19,480 --> 00:30:23,959 Speaker 1: How is Shopify prepared to adapt to that? And are 552 00:30:24,280 --> 00:30:28,440 Speaker 1: and what are you planning for? Yeah, so you're your correct, 553 00:30:28,480 --> 00:30:31,000 Speaker 1: It is back, Um, it is. I mean it went 554 00:30:31,000 --> 00:30:33,880 Speaker 1: away obviously during the pandemic, but you know, we always 555 00:30:33,880 --> 00:30:35,920 Speaker 1: believe the future retail is gonna be retail everywhere. It 556 00:30:35,920 --> 00:30:38,200 Speaker 1: will be a consumer choice. The consumer may want to 557 00:30:38,200 --> 00:30:41,240 Speaker 1: buy online or offline, or on Instagram or snap or 558 00:30:41,280 --> 00:30:43,640 Speaker 1: TikTok or you know in person. So those are the 559 00:30:43,640 --> 00:30:46,000 Speaker 1: tools that we've been building. What you saw in this 560 00:30:46,040 --> 00:30:49,120 Speaker 1: past quarter was we saw thirty increase year on year 561 00:30:49,120 --> 00:30:51,240 Speaker 1: of g m V on point of sale. At the 562 00:30:51,280 --> 00:30:54,600 Speaker 1: same time, we're seeing larger merchants replace their entire point 563 00:30:54,600 --> 00:30:57,600 Speaker 1: of sales systems with Shopify, whether it's Alo Yoga or 564 00:30:57,600 --> 00:31:01,040 Speaker 1: it's James Purse, my favorite brand. But also this quarter alone, 565 00:31:01,280 --> 00:31:03,840 Speaker 1: more than eight excuse me, eight retailers with more than 566 00:31:03,840 --> 00:31:07,480 Speaker 1: twenty five locations replace their existing traditional point of sale 567 00:31:07,480 --> 00:31:10,120 Speaker 1: systems with Shopify. We actually one merchant of ours who 568 00:31:10,200 --> 00:31:12,880 Speaker 1: replaced us in a hundred and seventy five locations, so 569 00:31:12,960 --> 00:31:15,440 Speaker 1: we really are scaling up around Shopify. We call point 570 00:31:15,440 --> 00:31:18,520 Speaker 1: of cell pro to help larger retailers for lots of 571 00:31:18,560 --> 00:31:21,840 Speaker 1: stores really replace and modernize their their in store experience. 572 00:31:22,080 --> 00:31:24,080 Speaker 1: But the idea is this, if you are a consumer 573 00:31:24,080 --> 00:31:25,880 Speaker 1: and you buy something online and then you go into 574 00:31:25,920 --> 00:31:28,640 Speaker 1: a store a week later, they should have the same information. 575 00:31:28,680 --> 00:31:30,720 Speaker 1: It's one set of information, one set of customer data, 576 00:31:30,800 --> 00:31:33,040 Speaker 1: one set of inventory. That this I like the idea 577 00:31:33,040 --> 00:31:34,920 Speaker 1: of omni channel. I think it's going to become like 578 00:31:34,960 --> 00:31:36,959 Speaker 1: talking about the color TV. In a few years from now, 579 00:31:37,040 --> 00:31:40,000 Speaker 1: you don't say color TV, because every TV is fundamentally 580 00:31:40,040 --> 00:31:42,640 Speaker 1: colored TV. That's what omni channel will be. The best 581 00:31:42,680 --> 00:31:45,560 Speaker 1: retailers that are most successful will be omni channel by 582 00:31:45,600 --> 00:31:50,840 Speaker 1: default in the future. All Right, Spify president probably Finkelstein 583 00:31:50,880 --> 00:31:54,600 Speaker 1: and should be should will certainly be an eventful holiday 584 00:31:54,600 --> 00:32:10,680 Speaker 1: season that at least we can say. Ethereum is transitioning 585 00:32:10,720 --> 00:32:13,720 Speaker 1: to low energy consumption at a time of crisis, which 586 00:32:13,720 --> 00:32:18,240 Speaker 1: could maybe should turn in turn bump up demand and adoption. 587 00:32:18,280 --> 00:32:21,960 Speaker 1: Bloomberginney Bossi joins us now from New York to explain. 588 00:32:22,240 --> 00:32:25,840 Speaker 1: Do explain, yeah, because it's interesting. It's not even just 589 00:32:25,880 --> 00:32:28,000 Speaker 1: the energy used to cheer Emily. You're seeing there's a 590 00:32:28,000 --> 00:32:30,160 Speaker 1: lot of questions on what the merge really did for ethereum. 591 00:32:30,200 --> 00:32:31,800 Speaker 1: And the reason we have to look at it is 592 00:32:31,960 --> 00:32:34,760 Speaker 1: are people trading ethereum more on the fundamentals more than 593 00:32:34,800 --> 00:32:37,400 Speaker 1: they are the macro story? And the answer is, if 594 00:32:37,400 --> 00:32:39,840 Speaker 1: you look at it since the merge, it's about flat 595 00:32:39,840 --> 00:32:43,719 Speaker 1: to down, but in the last month period, one month period, 596 00:32:43,800 --> 00:32:46,720 Speaker 1: it is up nearly fifteen per cent. It is up 597 00:32:46,920 --> 00:32:49,800 Speaker 1: pretty significantly over seven day period. So you are seeing 598 00:32:49,840 --> 00:32:52,760 Speaker 1: some positive impacts here on ethereum, and it comes to 599 00:32:52,800 --> 00:32:56,080 Speaker 1: pricing here. One of those reasons is that people believe 600 00:32:56,160 --> 00:33:00,000 Speaker 1: that there is more deflationary impact when it comes to ethereum. 601 00:33:00,040 --> 00:33:03,320 Speaker 1: That means supply is somewhat more pressured here, which would 602 00:33:03,360 --> 00:33:06,920 Speaker 1: have an impact on the pricing. Now, Bloomberg Intelligence also 603 00:33:06,960 --> 00:33:11,400 Speaker 1: has more information about ethereum. They're really positive on the 604 00:33:11,480 --> 00:33:15,520 Speaker 1: trends here in terms of usage over the longer term. 605 00:33:15,600 --> 00:33:17,360 Speaker 1: Remember the reason I bring this up, Emily, is because 606 00:33:17,360 --> 00:33:19,120 Speaker 1: when I talk to my sources, not just in crypto, 607 00:33:19,200 --> 00:33:22,280 Speaker 1: but in the banking industry. They're watching Ethereum really closely 608 00:33:22,280 --> 00:33:24,880 Speaker 1: on what it could mean in terms of, you know, 609 00:33:24,920 --> 00:33:27,800 Speaker 1: the next cryptocurrency that could really help form a backbone 610 00:33:27,800 --> 00:33:31,200 Speaker 1: to the financial system. So the more you see Ethereum succeed, 611 00:33:31,400 --> 00:33:34,240 Speaker 1: the more you see more traditional players also be more 612 00:33:34,280 --> 00:33:37,360 Speaker 1: comfortable with the network itself. Now, I think we should 613 00:33:37,400 --> 00:33:39,640 Speaker 1: also kind of turn our attention to hear to kind 614 00:33:39,640 --> 00:33:41,160 Speaker 1: of what this means for the broader network. I know 615 00:33:41,160 --> 00:33:42,760 Speaker 1: we're gonna talk about this in a second here, but 616 00:33:43,120 --> 00:33:44,920 Speaker 1: you know, the idea here that people are treating more 617 00:33:44,960 --> 00:33:47,800 Speaker 1: on fundamentals and less on the macro story, I think 618 00:33:47,920 --> 00:33:49,920 Speaker 1: is really important to a lot of large investors. And 619 00:33:49,960 --> 00:33:53,080 Speaker 1: there's some questions about how that is starting to form 620 00:33:53,200 --> 00:33:56,680 Speaker 1: in the market, especially as you're seeing some more macro 621 00:33:56,800 --> 00:33:59,520 Speaker 1: hiccups come to the forefront and inflation be as sticky 622 00:33:59,560 --> 00:34:03,680 Speaker 1: as it is. Bitcoin had a couple of strong sessions 623 00:34:03,720 --> 00:34:06,680 Speaker 1: earlier this week, it's back above twenty, and yet you know, 624 00:34:06,720 --> 00:34:09,799 Speaker 1: we've had you know, several guests on this show, uh 625 00:34:09,880 --> 00:34:12,080 Speaker 1: saying it's going to go down to twelve or thirteen. 626 00:34:12,640 --> 00:34:15,439 Speaker 1: You know, is it really do couple from the rest 627 00:34:15,480 --> 00:34:18,160 Speaker 1: of the market. Is this just a blip. The reason 628 00:34:18,239 --> 00:34:20,080 Speaker 1: that it's important to watch this at this point. To 629 00:34:20,120 --> 00:34:22,160 Speaker 1: your point, it's held above twenty thousand. It's faced a 630 00:34:22,160 --> 00:34:24,480 Speaker 1: little bit of pressure in the last twenty four hour period. 631 00:34:24,760 --> 00:34:27,400 Speaker 1: But again that twenty tho levels the psychological level. It's 632 00:34:27,440 --> 00:34:29,719 Speaker 1: an important level to hold on. When you talk to 633 00:34:29,760 --> 00:34:33,960 Speaker 1: folks that were surveyed by by Bloomberg hundreds of people, 634 00:34:34,040 --> 00:34:37,239 Speaker 1: they really say that it's not going to break in 635 00:34:37,320 --> 00:34:40,279 Speaker 1: or out of a very large range. Twelve thousand would 636 00:34:40,320 --> 00:34:42,600 Speaker 1: be lower than that range. So if you do see 637 00:34:42,600 --> 00:34:44,080 Speaker 1: a drop to that point, then you do have a 638 00:34:44,080 --> 00:34:47,040 Speaker 1: lot more psychological issues when it comes to treating bitcoin, 639 00:34:47,200 --> 00:34:50,800 Speaker 1: especially barring any large leveraged event like you saw earlier 640 00:34:50,880 --> 00:34:54,279 Speaker 1: this year with three urrows or anybody else. So to 641 00:34:54,360 --> 00:34:56,480 Speaker 1: your point, if it were to fall that much, it 642 00:34:56,520 --> 00:34:58,440 Speaker 1: would be concerning. But I think you also have to 643 00:34:58,440 --> 00:35:02,120 Speaker 1: take note that you saw ma tech firms report earnings 644 00:35:02,120 --> 00:35:06,279 Speaker 1: that were very disappointing. Yeah, Bitcoin hold up generally in 645 00:35:06,320 --> 00:35:09,920 Speaker 1: the face of that. When bitcoin has been trading correlated 646 00:35:09,960 --> 00:35:13,040 Speaker 1: to the NASDAC for a while. I'll refer back to 647 00:35:13,120 --> 00:35:14,920 Speaker 1: Dan moorehead in a note that he put out with 648 00:35:14,920 --> 00:35:18,240 Speaker 1: Pantara just a couple of days ago, and that crypto 649 00:35:18,280 --> 00:35:20,799 Speaker 1: has really traded a very low correlation to SMP for 650 00:35:20,840 --> 00:35:23,160 Speaker 1: most of its life, but in the last eight months 651 00:35:23,400 --> 00:35:26,520 Speaker 1: it was very correlated to the NASDAC. And he says 652 00:35:26,640 --> 00:35:30,000 Speaker 1: that there are risk assets struggling, but there is a 653 00:35:30,000 --> 00:35:33,640 Speaker 1: world where blockchain does well. And the SMP was down, 654 00:35:33,680 --> 00:35:36,160 Speaker 1: gold was down, treasuries are down, and the Galaxy Crypto 655 00:35:36,200 --> 00:35:38,520 Speaker 1: Index was up seven point three pc in that same 656 00:35:38,520 --> 00:35:42,760 Speaker 1: time frame. So again near term signs of decoupling. Does 657 00:35:42,960 --> 00:35:47,560 Speaker 1: it hold is the main question for the market. All right, 658 00:35:47,719 --> 00:35:52,760 Speaker 1: Bloomberg Shannelly bassik As always appreciate it coming up. More 659 00:35:52,840 --> 00:35:56,000 Speaker 1: earnings over Stock, We're going to talk about that and 660 00:35:56,080 --> 00:35:59,360 Speaker 1: more with its CEO, John's Johnson with us next, This 661 00:35:59,520 --> 00:36:26,280 Speaker 1: is Bloomberg. More earnings today, including over Stock missing estimates 662 00:36:26,280 --> 00:36:29,720 Speaker 1: in the midst of rising inflation. Want to dig into 663 00:36:29,800 --> 00:36:32,279 Speaker 1: the numbers and e commerce trends with Jonathan Johnson, the 664 00:36:32,280 --> 00:36:35,320 Speaker 1: CEO of over Stock. Jonathan, thank you so much for 665 00:36:35,440 --> 00:36:38,480 Speaker 1: joining us. So earnings beat, but we saw revenue drop 666 00:36:38,600 --> 00:36:43,000 Speaker 1: more than What is driving this? Is it inflation? Is it? 667 00:36:43,080 --> 00:36:46,719 Speaker 1: Is it? Uh? This pending downturn? Well, I think it's 668 00:36:46,719 --> 00:36:50,560 Speaker 1: a lot of things. I think it's lapping pandemic numbers 669 00:36:50,560 --> 00:36:55,640 Speaker 1: where we grew really well. It's a very promotional environment. Uh, 670 00:36:56,080 --> 00:36:59,560 Speaker 1: many of our competitors are at too much inventory in 671 00:36:59,640 --> 00:37:03,680 Speaker 1: our working to liquidate that. That makes the environment more difficult. 672 00:37:04,040 --> 00:37:06,920 Speaker 1: And of course there's inflation and rising interest rates. When 673 00:37:06,960 --> 00:37:11,080 Speaker 1: interest rates rise, housing sales go down. That of courts 674 00:37:11,120 --> 00:37:15,040 Speaker 1: of course hurts our business as a home furniture retailers, 675 00:37:15,120 --> 00:37:17,960 Speaker 1: so lots going into it. I think the good news 676 00:37:18,120 --> 00:37:24,000 Speaker 1: is even with all that headwind, Overstock is profitable for 677 00:37:24,080 --> 00:37:27,000 Speaker 1: its tenth consecutive quarter. We've got a very asset light 678 00:37:27,120 --> 00:37:29,920 Speaker 1: business model that works when the jolts help us, and 679 00:37:29,960 --> 00:37:34,000 Speaker 1: that works when the jolts are against us. How is 680 00:37:34,040 --> 00:37:39,000 Speaker 1: Overstock responding? There's some criticism that growth and advertising is 681 00:37:39,080 --> 00:37:42,160 Speaker 1: sort of overshadowing bread and butter retail on the website 682 00:37:42,160 --> 00:37:46,520 Speaker 1: and that there are too many promos. Well, right, you know, 683 00:37:46,600 --> 00:37:52,279 Speaker 1: I think, Uh, in a highly promotional market where competitors 684 00:37:52,600 --> 00:37:56,200 Speaker 1: are holding more and more sales, we have to be there. 685 00:37:56,880 --> 00:38:00,319 Speaker 1: Our Our view is we're always going to provide marked 686 00:38:00,480 --> 00:38:03,640 Speaker 1: value to our customer, which means the best product they 687 00:38:03,640 --> 00:38:05,959 Speaker 1: can afford for the amount of money they're spending really 688 00:38:06,040 --> 00:38:10,440 Speaker 1: quality product. Uh, we promote. We are also in the 689 00:38:10,480 --> 00:38:15,839 Speaker 1: middle of launching a new marketing campaign that associates our 690 00:38:15,920 --> 00:38:20,200 Speaker 1: brand more with home. We are a home furniture and 691 00:38:20,239 --> 00:38:24,359 Speaker 1: home furnishing company. We've got a new ad out that's 692 00:38:24,520 --> 00:38:29,040 Speaker 1: entitled come On, Get Comfy. We've got social media brand 693 00:38:29,080 --> 00:38:32,880 Speaker 1: ambassadors that have just signed on really pushing our mobile app. 694 00:38:33,200 --> 00:38:35,480 Speaker 1: So there's a lot of marketing to try and push 695 00:38:35,520 --> 00:38:42,719 Speaker 1: overstocked over stock sales that are not just promotions. Let's 696 00:38:42,719 --> 00:38:46,560 Speaker 1: talk a little bit about the broader landscape. Though Amazon 697 00:38:47,200 --> 00:38:51,640 Speaker 1: stock was pummeled today. Not uh not a bright forecast 698 00:38:51,719 --> 00:38:54,799 Speaker 1: for the holiday quarter. I'm curious what you make of 699 00:38:54,840 --> 00:39:01,640 Speaker 1: that and if you're you know, expecting to feel similar trends, well, look, 700 00:39:01,680 --> 00:39:05,839 Speaker 1: I think it's a very competitive market, uh, in a 701 00:39:05,880 --> 00:39:09,880 Speaker 1: tough economy, and uh, you know, our top line sales 702 00:39:09,920 --> 00:39:13,040 Speaker 1: were down year over years significantly. We're not pleased with that, 703 00:39:13,560 --> 00:39:16,399 Speaker 1: but I think it's incumbent up on all businesses when 704 00:39:16,440 --> 00:39:20,080 Speaker 1: that happens, to manage to the bottom line and make 705 00:39:20,120 --> 00:39:23,719 Speaker 1: sure you're profitable. The way I viewed today's economy, it's 706 00:39:23,760 --> 00:39:26,759 Speaker 1: like we're hiking down into the Grand Canyon and we're 707 00:39:26,760 --> 00:39:29,520 Speaker 1: gonna have a long hike up at some point. In 708 00:39:29,600 --> 00:39:32,840 Speaker 1: order to hike up that north rim. Every hiker needs 709 00:39:33,040 --> 00:39:37,680 Speaker 1: energy and fuel, and for a retailer, that need means 710 00:39:37,760 --> 00:39:41,200 Speaker 1: you need lots of inventory and a strong balance sheet. 711 00:39:41,680 --> 00:39:45,000 Speaker 1: Overstock has both. I think that bodes well for us 712 00:39:45,000 --> 00:39:49,080 Speaker 1: in the future. Let's talk about your inventory, because you've 713 00:39:49,080 --> 00:39:52,000 Speaker 1: been diversifying your products, and I'm curious how well that's 714 00:39:52,000 --> 00:39:56,120 Speaker 1: working out. You know, for example, when when Amazon diversified 715 00:39:56,120 --> 00:39:58,400 Speaker 1: into more products, return rates went up. There now a 716 00:39:58,480 --> 00:40:02,000 Speaker 1: machine at accepting returns. Are you getting more returns? And 717 00:40:02,040 --> 00:40:06,920 Speaker 1: how would you say your return operation compares. We've actually 718 00:40:07,000 --> 00:40:10,680 Speaker 1: been focusing. We went from being a general merchandiser and 719 00:40:10,760 --> 00:40:13,400 Speaker 1: over six quarters we got rid of everything that wasn't 720 00:40:13,400 --> 00:40:16,319 Speaker 1: related to home, so we're really a furniture and home 721 00:40:16,360 --> 00:40:21,160 Speaker 1: furnishings company. During the last three years, we have doubled 722 00:40:21,200 --> 00:40:24,279 Speaker 1: the amount of home product we have on site. That 723 00:40:24,360 --> 00:40:27,200 Speaker 1: doesn't mean tens or hundreds of thousands more, it means 724 00:40:27,320 --> 00:40:31,520 Speaker 1: millions of more products. We have always been good at 725 00:40:31,520 --> 00:40:35,920 Speaker 1: managing returns on home furniture and furnishing a difficult thing 726 00:40:35,960 --> 00:40:39,120 Speaker 1: to do, and we think it's one of the characteristic 727 00:40:39,239 --> 00:40:43,480 Speaker 1: that sets us apart. We are all about easy delivery 728 00:40:43,480 --> 00:40:46,319 Speaker 1: and support for our customers. They know that if they 729 00:40:46,360 --> 00:40:49,319 Speaker 1: buy something for us, they're gonna have a good experience 730 00:40:49,440 --> 00:40:51,959 Speaker 1: on the back end, It's going to be delivered well 731 00:40:52,000 --> 00:40:54,480 Speaker 1: and on time, and if for any reason they want 732 00:40:54,520 --> 00:40:57,719 Speaker 1: to return it, we're good at facilitating that return and 733 00:40:57,719 --> 00:41:02,080 Speaker 1: we're getting even better through a partnership we're piloting with 734 00:41:02,200 --> 00:41:07,200 Speaker 1: ups right now. Give us a status update on supply 735 00:41:07,280 --> 00:41:10,960 Speaker 1: chain issues? Is the worst behind us? How are those 736 00:41:10,960 --> 00:41:15,000 Speaker 1: going to be felt through the holiday quarter? First off, 737 00:41:15,040 --> 00:41:18,240 Speaker 1: I think most retailers are flushed with inventory. We're flushed 738 00:41:18,239 --> 00:41:21,800 Speaker 1: with inventory too, so that that piece of the supply 739 00:41:21,880 --> 00:41:24,719 Speaker 1: chain is not a concern. If customers are worried about 740 00:41:24,719 --> 00:41:27,399 Speaker 1: getting product on time for the holidays, if you come 741 00:41:27,400 --> 00:41:30,279 Speaker 1: to our site and you push click to order or 742 00:41:30,360 --> 00:41:33,000 Speaker 1: pick packing and shipping that day or the next, so 743 00:41:33,080 --> 00:41:36,240 Speaker 1: there's no worries there. I think on the supply chain front, 744 00:41:36,719 --> 00:41:40,960 Speaker 1: UH stuff being manufactured overseas, that supply chain is running 745 00:41:40,960 --> 00:41:44,960 Speaker 1: fairly smoothly. Container costs have gone way down, the ports 746 00:41:45,000 --> 00:41:47,960 Speaker 1: aren't colg like they were before the police where they 747 00:41:47,960 --> 00:41:52,240 Speaker 1: are still supply chain constraints is from the distribution center 748 00:41:53,239 --> 00:41:57,279 Speaker 1: to the customer, and that's mostly in costsom were expensive 749 00:41:57,360 --> 00:42:02,000 Speaker 1: because of higher fuel, more asset sorreal search arges. That 750 00:42:02,080 --> 00:42:04,759 Speaker 1: means it's either being passed on to the customer or 751 00:42:04,800 --> 00:42:08,520 Speaker 1: in our case often eating as part of our gross margins. 752 00:42:10,239 --> 00:42:12,160 Speaker 1: So what are going to be the most popular items 753 00:42:12,360 --> 00:42:17,680 Speaker 1: this holiday season? And it's going to get too folks 754 00:42:17,680 --> 00:42:20,640 Speaker 1: on time. We got a lot of inventory. One place 755 00:42:20,680 --> 00:42:24,880 Speaker 1: that we're particularly deep our giftable products. We've got lots 756 00:42:24,920 --> 00:42:32,040 Speaker 1: of home appliances, big brand names like kitchen Aid, Mr Coffee, Queens, 757 00:42:32,040 --> 00:42:35,239 Speaker 1: and art. These tend to be highly giftable items. We've 758 00:42:35,280 --> 00:42:37,919 Speaker 1: got lots of them. The other products that have been 759 00:42:37,960 --> 00:42:41,440 Speaker 1: selling well recently are things to do with home improvement. 760 00:42:42,000 --> 00:42:45,520 Speaker 1: Is home sales are down and people realize they're staying 761 00:42:45,560 --> 00:42:47,359 Speaker 1: in their home and they want to spruce it up. 762 00:42:47,719 --> 00:42:50,560 Speaker 1: We've been selling lots of home improvement products, things like 763 00:42:50,600 --> 00:42:55,680 Speaker 1: bathroom vanities. Alright, some gift ideas too that I hadn't 764 00:42:55,680 --> 00:42:59,200 Speaker 1: thought of. Jonathan Johnson, CEO of over Stock, thank you 765 00:42:59,280 --> 00:43:01,920 Speaker 1: so much, uh for joining us. And that does it 766 00:43:02,000 --> 00:43:05,040 Speaker 1: for this edition of Bloomberg Technology. Coming up Friday, We've 767 00:43:05,040 --> 00:43:08,399 Speaker 1: got Ross Gerber. He will be talking about Elon Musk 768 00:43:08,560 --> 00:43:11,919 Speaker 1: and more. Of course, a big Tesla investor who wasn't 769 00:43:11,920 --> 00:43:14,600 Speaker 1: such a fan of Twitter. And of course we'll give 770 00:43:14,640 --> 00:43:17,120 Speaker 1: you an update on the deal. This is Bloomberg