WEBVTT - Meta Shares Plunge, Microsoft-Backed Rubrik Goes Public, ServiceNow CEO on Earnings 0:00:02.400 --> 0:00:06.960 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.480 --> 0:00:12.160 From the Heart where Innovation, money and power. Collie in 0:00:12.240 --> 0:00:17.200 Silicon Valley NBN. This is Bloomberg Technology with Caroline Hyde 0:00:17.200 --> 0:00:18.120 and Ed Ludlow. 0:00:32.720 --> 0:00:36.120 I met Ludlow in San Francisco. Caroline hides on assignment. 0:00:36.440 --> 0:00:39.440 This is Bloomberg Technology coming up. Meta says it will 0:00:39.479 --> 0:00:43.080 be the world's leading AI company, But investors don't like 0:00:43.159 --> 0:00:46.040 the roadmap to get their team coverage of a massive 0:00:46.159 --> 0:00:49.920 drop in Zuckerberg's stock and from earnings to IPOs. 0:00:49.960 --> 0:00:50.639 We speak to the. 0:00:50.640 --> 0:00:54.080 CEO of Service Now on their quarterly numbers, and Rubric's 0:00:54.160 --> 0:00:58.320 chief on listing day, and fourteen billion dollars goes to 0:00:58.440 --> 0:01:02.520 Micron from the Chips Act to boost America's. 0:01:02.000 --> 0:01:03.760 Memory chip prowess. 0:01:04.040 --> 0:01:06.920 But first, there is only one story that matters right now, 0:01:07.120 --> 0:01:10.600 and it is Meta. You see the share reaction. Zuckerberg 0:01:10.680 --> 0:01:14.160 outlining billions and billions of dollars are going to go 0:01:14.200 --> 0:01:17.920 into building out AI infrastructure. They're in investment mode, expenses 0:01:18.680 --> 0:01:23.080 range raised, capex raised. But the focus of the calls 0:01:23.120 --> 0:01:25.400 on the product cycle. How many years is it going 0:01:25.440 --> 0:01:29.720 to take for this investment in AI at Meta to materialize? 0:01:30.000 --> 0:01:31.800 In sales growth, that's the question. 0:01:31.880 --> 0:01:35.000 The stock on track for its biggest drop since October 0:01:35.120 --> 0:01:38.160 twenty twenty two. And given Meta's scale, remember how well 0:01:38.200 --> 0:01:39.920 it's performed year to date. It was up more than 0:01:39.959 --> 0:01:43.480 forty percent pre earnings. Look at the market cap. Look 0:01:43.520 --> 0:01:46.039 at the scale of this company, but also the market 0:01:46.040 --> 0:01:49.840 cap lost in this morning session alone. Let's get team coverage, 0:01:49.880 --> 0:01:53.960 the reporting from Bloomberg's Kirk Wagner and the analysis from 0:01:53.960 --> 0:01:56.760 Bloomberg Intelligence analysts man Deep sink kerk. 0:01:56.800 --> 0:01:57.720 I'm going to start with you. 0:01:58.400 --> 0:02:02.760 Mark Zuckerberg was on this call, but what he tried 0:02:02.800 --> 0:02:05.400 to do was say, trust me and bear with me. 0:02:05.640 --> 0:02:08.600 I've got a plan for AI to have an impact 0:02:08.639 --> 0:02:09.720 on the existing business. 0:02:09.800 --> 0:02:11.959 Explain what we learned. Yeah, that's exactly right. 0:02:12.000 --> 0:02:14.520 He was basically saying, Look, this is going to be 0:02:14.560 --> 0:02:16.880 a multi year investment. This is not the kind of 0:02:16.880 --> 0:02:20.800 thing that's going to return, you know, to shareholders very quickly. 0:02:21.000 --> 0:02:24.840 But be patient, right, he said, smart investors will see 0:02:25.000 --> 0:02:27.480 the benefits of this long term plan, right, sort of 0:02:27.520 --> 0:02:30.799 suggesting that hey, you know, anyone who's savvy, anyone who 0:02:30.840 --> 0:02:32.880 that sees the future like I do, they're going to 0:02:32.919 --> 0:02:34.799 be in this stock. Even though it's taken a little 0:02:34.800 --> 0:02:36.640 bit of a short term hit, and so you know, 0:02:36.680 --> 0:02:39.040 it was a little bit, as you say, combative. It 0:02:39.080 --> 0:02:40.760 was one of those things that we don't necessarily always 0:02:40.760 --> 0:02:43.520 hear from him, which is sort of you know, pleading investors, Hey, 0:02:43.639 --> 0:02:46.920 be patient, hang tight, We're gonna get there eventually. But 0:02:46.960 --> 0:02:49.280 you got to weather a little bit of a turbulence 0:02:49.280 --> 0:02:49.840 in the meantime. 0:02:50.360 --> 0:02:54.320 Mandy, when you look at the fundamentals of this company, 0:02:54.680 --> 0:02:57.920 you and I were discussing before the earnings print, where 0:02:57.960 --> 0:03:00.400 do we look to see if there is already avidence 0:03:00.639 --> 0:03:03.600 the AI is impacting the top or bottom line. I 0:03:03.639 --> 0:03:07.560 looked at the impressions growth. I looked at the pricing 0:03:07.600 --> 0:03:10.560 growth of ads, because this is an advertising based business. 0:03:10.840 --> 0:03:12.520 What did you see in those numbers? 0:03:12.840 --> 0:03:16.360 Yeah, I mean the impressions growth continues to be very impressive, 0:03:16.520 --> 0:03:21.119 you know, twenty percent, and that's driven by better feed recommendations. 0:03:21.320 --> 0:03:25.720 At targeting is better and at pricing. It was much 0:03:25.760 --> 0:03:28.360 better in the Europe region. If you part through the numbers, 0:03:28.400 --> 0:03:32.400 North America was lighter. Part of that could be explained 0:03:32.400 --> 0:03:35.440 from the pullback. You know that everyone is expecting from 0:03:35.520 --> 0:03:39.600 Chinese advertisers like Timu and Shane, but they didn't call 0:03:39.680 --> 0:03:42.480 that out. So clearly that's a risk, and that's why 0:03:42.520 --> 0:03:46.320 that guidance that top line guide was wide when you 0:03:46.360 --> 0:03:48.440 look for two Q but look at the end of 0:03:48.480 --> 0:03:50.960 the day, when you look at the cost growth, the 0:03:50.960 --> 0:03:54.120 cost of revenue growth, that will be in double digits. 0:03:54.160 --> 0:03:57.320 So if that mid to high teens revenue doesn't pan 0:03:57.400 --> 0:04:00.840 out for some reason, and look, advertising is cyclic, that's 0:04:00.840 --> 0:04:03.200 when you will see margin compression. I mean, so for 0:04:04.160 --> 0:04:07.520 the story has been cost control and revenue grold. They're accelerating. 0:04:07.960 --> 0:04:11.000 Now that story could change because the cost will grow 0:04:11.040 --> 0:04:13.600 double DIY did and if the revenue world doesn't match, 0:04:13.720 --> 0:04:15.120 that's when there is a risk. 0:04:16.000 --> 0:04:19.200 We're showing you the markets right now. Meta is down 0:04:19.240 --> 0:04:22.680 twelve percent, but on a points basis, clearly it's dragging 0:04:22.720 --> 0:04:25.080 down the NAS that one hundred s and P five hundred, 0:04:25.279 --> 0:04:28.040 the Philadelphia Semiconductor Index or socks. I put that on 0:04:28.120 --> 0:04:30.960 there because there was knee jerk reaction in particular in 0:04:31.080 --> 0:04:32.880 video last night that fell. 0:04:33.080 --> 0:04:34.960 It is now up three. 0:04:34.760 --> 0:04:37.520 Percent, and I think the logic is Zuckerberg said three 0:04:37.640 --> 0:04:40.760 hundred and fifty thousand, h one hundred GPUs will come 0:04:40.800 --> 0:04:44.239 online this year as Meta trains its AI model and Kurt. 0:04:44.279 --> 0:04:46.280 The other area of interest. 0:04:46.520 --> 0:04:50.480 Is Zuckerberg's kind of fired up about things that surprised me. 0:04:51.080 --> 0:04:51.680 Glasses. 0:04:52.040 --> 0:04:55.760 He spent a lot of time talking about glasses. But 0:04:56.080 --> 0:04:59.320 there are still lots of confusion. Well, okay, wait, is 0:04:59.360 --> 0:05:00.880 the metaverse still a strategy? 0:05:01.520 --> 0:05:04.200 Also? The Year of Efficiency? Is that still a thing? 0:05:04.640 --> 0:05:07.520 Just try and clear up the muddy waters for us 0:05:07.560 --> 0:05:09.360 on what Zuckerberg's trying to do. 0:05:10.320 --> 0:05:12.240 Yeah, I mean, there's so many things that they're working 0:05:12.279 --> 0:05:15.159 on at one time, it's understandable that someone might be 0:05:15.200 --> 0:05:16.919 a little bit confused. But he did bring up the 0:05:16.920 --> 0:05:20.160 glasses a lot, and what he basically said was these 0:05:20.200 --> 0:05:23.760 are progressing much faster than I anticipated. Right, So the glasses, 0:05:23.760 --> 0:05:25.840 for those who aren't familiar, this is the idea of 0:05:26.120 --> 0:05:28.640 wearing a pair of specs that look like maybe reading 0:05:28.680 --> 0:05:31.760 glasses or sunglasses, but that have all kinds of AI 0:05:32.120 --> 0:05:35.880 or AR features packed into them. They're working with ray 0:05:35.920 --> 0:05:38.279 Band to produce these right now. And I think what 0:05:38.400 --> 0:05:40.560 Mark Zuckerberg was saying was that these have gotten so 0:05:40.680 --> 0:05:44.000 good so fast that it's encouraged me to continue to 0:05:44.080 --> 0:05:47.880 invest in AI, to continue to put money into Reality Labs, 0:05:47.880 --> 0:05:50.479 the group that's building this, and so you know, I 0:05:50.520 --> 0:05:53.039 think this has always been his long term vision. He 0:05:53.120 --> 0:05:55.280 thought that the glasses would sort of be the next 0:05:55.320 --> 0:05:58.040 iteration of a phone, you would wear it on your face. 0:05:58.320 --> 0:06:00.400 But now he's saying he thinks they're getting their faster 0:06:00.480 --> 0:06:03.680 than he anticipated, which is why we're seeing this increase in. 0:06:03.720 --> 0:06:06.479 Spand Okay, gentlemen, bear with me. 0:06:06.520 --> 0:06:09.400 We've actually had a sort of breaking news headline since 0:06:09.400 --> 0:06:12.680 we've come on the air, and it relates to TikTok. 0:06:12.839 --> 0:06:17.440 Byte Dance has published on its Chinese website a statement 0:06:17.520 --> 0:06:22.160 basically saying it has no plan to sell TikTok. BikeE 0:06:22.200 --> 0:06:25.080 Dance has no plan to sell TikTok. I think we 0:06:25.120 --> 0:06:27.200 need to dig a bit deeper in the coming days 0:06:27.200 --> 0:06:29.480 to understand what they specifically. 0:06:28.800 --> 0:06:30.120 Mean by that. Mandeep. 0:06:30.160 --> 0:06:36.240 You've also published research your latest thinking on TikTok just 0:06:36.240 --> 0:06:37.960 this morning on the Bloomberg terminal. 0:06:38.279 --> 0:06:40.960 Just explain the basics of it to us, please, Yeah. 0:06:40.760 --> 0:06:43.960 I mean, look at TikTok has a lot of original 0:06:44.000 --> 0:06:50.880 content that goes to you know, snap, that goes through Instagram, YouTube, 0:06:51.160 --> 0:06:53.680 and so if TikTok has been a lot of those 0:06:53.760 --> 0:06:57.080 creators have to go to some other platform. Now, whether 0:06:57.120 --> 0:07:00.159 it's going to be YouTube shorts or Instagram reels, we 0:07:00.240 --> 0:07:03.000 don't know, but you can see that a lot of 0:07:03.040 --> 0:07:07.160 the original content creation happens on TikTok, and that's where 0:07:07.520 --> 0:07:10.240 I think you will see Meta being a beneficiary. But 0:07:10.360 --> 0:07:13.040 I'm excited to look at, you know, the YouTube numbers 0:07:13.080 --> 0:07:16.840 tonight because to me, YouTube should be the fifteen percent 0:07:16.880 --> 0:07:20.640 consensus numbers handedly given the kind of you know, viewership 0:07:20.960 --> 0:07:24.200 gains that you have already seen, you know, with YouTube, 0:07:24.240 --> 0:07:27.240 and so I think that's the one aspect that people 0:07:27.320 --> 0:07:30.160 need to think about is the creators aren't going to 0:07:30.240 --> 0:07:33.760 wait for nine months to move. They're already gonna start 0:07:34.160 --> 0:07:37.200 thinking about what's the alternative platform where they can move 0:07:37.240 --> 0:07:39.760 their followers. And I think that's going to determine gains 0:07:39.800 --> 0:07:43.120 for snap, YouTube and Meta in the coming months. 0:07:43.560 --> 0:07:45.720 I think it's important we note that on the Earning 0:07:45.760 --> 0:07:50.400 School for Meta and analyst asked Mark Zuckerberg for reaction 0:07:50.600 --> 0:07:54.200 to TikTok. Susan Lee, the CFO, jumped in and said 0:07:54.360 --> 0:07:57.120 that they're monitoring that situation closely, but it was too 0:07:57.160 --> 0:08:00.360 early to tell the impact of a TikTok dive or 0:08:00.480 --> 0:08:03.280 ban on Meta's business. We're going to dig much deeper 0:08:03.280 --> 0:08:05.040 into Meta throughout the hour, but big thanks to the 0:08:05.040 --> 0:08:07.920 Bloomberg Kirk Wagner of Bloomberg News and man Deep Singh 0:08:08.160 --> 0:08:11.080 of Bloomberg Intelligence coming up on the program. 0:08:11.160 --> 0:08:11.840 Service now is. 0:08:11.840 --> 0:08:16.120 Sales forecast full short of all street expectations, but there 0:08:16.200 --> 0:08:17.600 is some positive outlook. 0:08:17.640 --> 0:08:18.520 It's AI related. 0:08:18.520 --> 0:08:21.360 We're going to speak to the CEO, Bill McDermott. There 0:08:21.440 --> 0:08:24.800 is a lot happening at once in the markets as well. 0:08:25.120 --> 0:08:28.800 Microsoft and Google our alphabet the parent at Google report 0:08:28.840 --> 0:08:32.440 after the bell. Those are pretty significant declines and the 0:08:32.520 --> 0:08:34.600 idea here is that we're worried on the back of 0:08:34.640 --> 0:08:37.520 Meta's earnings. We're worried that all of this spend on 0:08:37.600 --> 0:08:42.199 AI infrastructure is not bringing some big boom in generative 0:08:42.280 --> 0:08:46.000 AI driven sales growth, actual software products that people use 0:08:46.160 --> 0:08:47.880 and those companies make money from. It's going to be 0:08:47.920 --> 0:09:06.559 such an interesting afternoon. This is Bloomberg Technology Service now 0:09:06.600 --> 0:09:09.520 out with first quarter results, but it's the outlook where 0:09:09.520 --> 0:09:13.199 the focus is projecting subscription sales will increase about twenty 0:09:13.200 --> 0:09:15.320 two two and a half billion dollars in the current 0:09:15.440 --> 0:09:18.880 period that was a little bit below what the street 0:09:18.920 --> 0:09:22.040 was expecting. But those are street expectations. What about the 0:09:22.040 --> 0:09:25.959 big expectations of the company's CEO. Bill McDermott, CEO of 0:09:26.040 --> 0:09:28.680 Service Now, joins us. Now a Bill, good morning to you. 0:09:29.200 --> 0:09:33.280 Let's cover off the classic earning stuff. You have a 0:09:33.280 --> 0:09:36.920 strong quarter and then you give an outlook which, relative 0:09:36.960 --> 0:09:40.640 to consensus estimates, was a bit disappointing. What would your 0:09:40.679 --> 0:09:42.560 pushback to that market reaction be. 0:09:42.960 --> 0:09:44.960 Well, first, I think you have to look at the 0:09:44.960 --> 0:09:48.760 triple play that we just pulled off ed. We had 0:09:48.840 --> 0:09:51.280 a beat on the top line, a beat on the 0:09:51.280 --> 0:09:56.040 bottom line, and we raised the full year guidance. So 0:09:56.320 --> 0:10:00.120 if the high class problem was solving for is we 0:10:00.160 --> 0:10:05.280 didn't raise the guidance enough. Everyone can really relax because 0:10:05.440 --> 0:10:08.160 over the last five years that I've been here, we 0:10:08.280 --> 0:10:12.480 always beat and we have every expectation of doing so again. 0:10:12.880 --> 0:10:15.760 Bill, I actually want to invite you to give the 0:10:15.800 --> 0:10:18.800 basics of what Service Now does. I think a big 0:10:18.840 --> 0:10:22.599 portion of the audience know the name, they might appreciate, 0:10:22.679 --> 0:10:24.880 just an explanation of what it is you're out there 0:10:24.880 --> 0:10:28.079 in the world doing. And my summary basically is you're 0:10:28.960 --> 0:10:32.320 trying to capture it spend, you know, the budget for 0:10:32.360 --> 0:10:34.359 it spend from all kinds of companies. 0:10:36.080 --> 0:10:36.280 Yeah. 0:10:36.320 --> 0:10:38.840 I think the best way to sum it up is 0:10:39.000 --> 0:10:45.600 think of Service now as the AI platform for business transformation. 0:10:46.600 --> 0:10:50.280 If you look at companies today, they need a platform 0:10:50.640 --> 0:10:53.800 on an end to end basis, from it to the 0:10:53.840 --> 0:10:57.560 employee experience, the way they run their customer relationships, and 0:10:57.600 --> 0:10:59.920 the way they build new products. They need one place 0:11:01.000 --> 0:11:03.880 that can do all of that. And what's unique about 0:11:03.920 --> 0:11:07.360 ours We built it organically. There's no tech dead in it, 0:11:07.679 --> 0:11:10.800 and it's pristine. It's a sheet of glass that lies 0:11:10.880 --> 0:11:14.640 above the mess that's been created for the last half century. 0:11:15.000 --> 0:11:19.200 And the big movement today is now, what is the 0:11:19.240 --> 0:11:25.080 new frontier. The new frontier is Jeni And people say, Jeni, 0:11:25.200 --> 0:11:28.760 what does that mean. It means the companies and the 0:11:28.760 --> 0:11:33.480 CEOs that are watching this program need to optimize their processes. 0:11:33.840 --> 0:11:40.240 Every business workflow in every enterprise will be engineered with Jeni. 0:11:40.840 --> 0:11:44.880 We are the first mover and the market leader in 0:11:44.920 --> 0:11:48.959 that category in the enterprise. So the future glide path 0:11:49.200 --> 0:11:50.120 could not be brighter. 0:11:51.360 --> 0:11:55.839 Build The stock is down almost six percent. I note 0:11:55.840 --> 0:11:58.880 that there is some pressure in the market this morning. 0:11:58.960 --> 0:12:01.520 Because of metas earned and we'll get to that in 0:12:01.559 --> 0:12:04.640 a bit, but let's talk about RPO because I think 0:12:04.720 --> 0:12:09.640 that gives some evidence of the backlog. RPO meaning remaining 0:12:09.679 --> 0:12:13.880 performance obligations. That's basically SAS speak for backlog. You've got 0:12:13.880 --> 0:12:17.880 a backlog. Why should the investor base be more positive 0:12:17.920 --> 0:12:18.920 about that backlog? 0:12:19.520 --> 0:12:21.720 Well, they should feel really good that we have nearly 0:12:21.800 --> 0:12:28.360 eighteen billion dollars and remaining performance obligations. So that is 0:12:28.440 --> 0:12:31.920 business we have in the backlog that has yet to 0:12:31.960 --> 0:12:36.880 be fully recognized. So the backlog is there. We're beating 0:12:36.920 --> 0:12:40.000 on the revenue. Just think about this. We beat on 0:12:40.040 --> 0:12:42.480 the revenue by one hundred basis points, we beat on 0:12:42.520 --> 0:12:45.600 the margin by one hundred and fifty basis points. Our 0:12:45.640 --> 0:12:48.240 free cash flow is up forty seven percent, and our 0:12:48.280 --> 0:12:51.520 gross profit was up eighty three percent. And we're talking 0:12:51.559 --> 0:12:55.280 about was the increase in the guide enough and you 0:12:55.440 --> 0:12:59.439 just mentioned it ed perfectly. There's eighteen billion in backlog. 0:12:59.800 --> 0:13:02.440 So the company is really on a tear. And one 0:13:02.440 --> 0:13:05.080 of the reasons it's on a taar is you have 0:13:05.120 --> 0:13:08.840 great companies like Microsoft and IBM as an example, that 0:13:08.880 --> 0:13:13.920 are transforming their employee experience with a digital first support model, 0:13:14.360 --> 0:13:17.760 freeing up all kinds of resources and fueling innovations on 0:13:17.880 --> 0:13:22.600 Service now is Genai. Novartis is delivering new drugs and 0:13:22.760 --> 0:13:28.679 increasing operational efficiency by streamlining clinical trials, research and financial 0:13:28.720 --> 0:13:33.839 management with our Genai and countless other examples. So Jenai 0:13:33.920 --> 0:13:35.320 right now is a. 0:13:35.240 --> 0:13:37.880 Small part of the overall total. 0:13:38.080 --> 0:13:41.200 You know, we're a ten billion run recloud company. But 0:13:42.040 --> 0:13:47.160 the uptick in future sales and generative AI when companies 0:13:47.240 --> 0:13:50.400 re engineer the way they run on our platform, is 0:13:50.440 --> 0:13:54.000 that believable because there'll be half a trillion spent on 0:13:54.080 --> 0:13:57.400 it in twenty twenty seven alone. So this is a 0:13:57.440 --> 0:14:00.960 really big market. We're the leader, and we're teaming up 0:14:01.000 --> 0:14:04.040 with the best in the business like in Nvidio, Microsoft, 0:14:04.080 --> 0:14:06.920 IBM and others to create a bright future. 0:14:07.880 --> 0:14:10.440 No that again, build The stock is down six percent, 0:14:10.520 --> 0:14:13.360 and there are reasons why for that in the short term. 0:14:13.760 --> 0:14:16.600 One of them is probably Meta. I know that you're 0:14:16.679 --> 0:14:20.440 the CEO of Service Now, but to extrapolate from Meta, 0:14:21.080 --> 0:14:24.680 part of the concern last night was all this investment 0:14:24.720 --> 0:14:28.680 is going into the underlying infrastructure that supports generative AI. 0:14:29.200 --> 0:14:30.720 But Meta is a case study. 0:14:31.480 --> 0:14:35.640 They're not yet seeing that investment in the infrastructure translate 0:14:35.720 --> 0:14:38.080 to top line growth in the form of software. Right, 0:14:38.400 --> 0:14:42.240 tangible evidence that they're selling AI as a product as 0:14:42.280 --> 0:14:45.520 a platform. In your case, you are only selling it 0:14:45.560 --> 0:14:46.640 as a software layer. 0:14:47.400 --> 0:14:49.600 Just just explain that thesis. 0:14:49.760 --> 0:14:53.040 Should we be as concerned that Corporate America has not 0:14:53.120 --> 0:14:54.800 yet worked out how to sell ai? 0:14:56.280 --> 0:15:00.800 Absolutely, So let's differentiate. First of all, metas great company. 0:15:01.440 --> 0:15:04.920 They had very good results and their guide might have 0:15:05.000 --> 0:15:08.480 been a little muted in terms of the return on Genai. 0:15:09.080 --> 0:15:13.280 They're running large language models and that's very important for 0:15:13.400 --> 0:15:16.160 the future of the world, and they're doing a great job. 0:15:16.520 --> 0:15:21.520 We're running small language models, which basically means we run 0:15:22.240 --> 0:15:27.320 our platform with the customer's data in mind. So it's 0:15:27.440 --> 0:15:33.080 rocket fast, zero latency because we're using the customer's own data. 0:15:33.920 --> 0:15:41.080 There is total accuracy and it is very inexpensive, and 0:15:41.120 --> 0:15:46.040 that's why customers are buying our Genai now because it's secure, 0:15:46.640 --> 0:15:49.840 it's inexpensive to run, and it's one hundred percent accurate 0:15:49.960 --> 0:15:53.000 based on the customer's data. So that is what they're 0:15:53.000 --> 0:15:57.400 buying right now. We also have an open platform where 0:15:57.440 --> 0:16:00.600 we integrate with Meta and we integrate with Google and 0:16:00.760 --> 0:16:04.600 Microsoft and all the other market leading companies out there, 0:16:04.920 --> 0:16:09.240 should the customer want to reach into large language models, 0:16:09.280 --> 0:16:13.200 and we've teamed up with Nvidia where Nvidia probably our 0:16:13.200 --> 0:16:17.800 greatest partner in this category is running small language models 0:16:17.840 --> 0:16:21.000 for US and large language models with their compute power. 0:16:21.440 --> 0:16:23.560 Let me give you an example of it. Let's think 0:16:23.560 --> 0:16:29.000 about employees and customers. Think about GENAI deflecting all the 0:16:29.080 --> 0:16:32.360 soul crushing work that people don't want to do anymore. 0:16:32.920 --> 0:16:37.280 So think of employee and customer deflection where virtual agents 0:16:37.360 --> 0:16:39.920 can actually do the work that people used to have 0:16:40.040 --> 0:16:44.720 to do. Think about software engineers increasing their productivity or 0:16:44.720 --> 0:16:48.760 their speed of innovation by nearly fifty percent by texting 0:16:48.840 --> 0:16:53.120 something in natural language and turning that into software codes. 0:16:53.400 --> 0:16:56.680 And there's several other examples. But the point is small 0:16:56.760 --> 0:17:00.760 language models are selling today when a lot of money 0:17:00.760 --> 0:17:05.560 at it, and large language models are also available on 0:17:05.600 --> 0:17:08.800 our platform. But our customers are really teaming up with 0:17:09.000 --> 0:17:14.640 Microsoft for example on Copilot and service now on our 0:17:14.800 --> 0:17:19.080 virtual assist AI platform, and we got it together. Is 0:17:19.160 --> 0:17:22.959 better solution for the marketplace, and that's what's selling today. 0:17:23.720 --> 0:17:26.640 Bill, I appreciate the debt for the answer. Bill McDermott, 0:17:26.680 --> 0:17:27.399 CEO of Service. 0:17:27.400 --> 0:17:30.560 Now, thank you so much coming out Microsoft back, Rubik 0:17:30.600 --> 0:17:33.520 goes public mid arizing demand for data security. We do 0:17:33.520 --> 0:17:35.800 speak to the CEO people sing you next. This is 0:17:35.800 --> 0:17:54.879 Bloomberg Technology. Rubric, which focuses on data management, recovery from 0:17:54.960 --> 0:17:59.800 ransomware attacks, and accelerates cloud mobility, is officially going public. 0:17:59.480 --> 0:17:59.960 And joining us. 0:18:00.080 --> 0:18:05.120 Now is Rubrics CEO people Senior. The shares are indicated 0:18:05.200 --> 0:18:08.840 to open at thirty eight dollars a share. You price 0:18:08.920 --> 0:18:11.359 this IPO at thirty two. Just tell me what that 0:18:11.400 --> 0:18:12.200 means to you today. 0:18:12.560 --> 0:18:14.720 Thank you Ed for this opportunity to speak with you. 0:18:15.000 --> 0:18:18.320 It's a very exciting day for Rubric employees, our customers, 0:18:18.359 --> 0:18:22.440 our partners, and everybody in our ecosystem around the world. Look, 0:18:22.760 --> 0:18:25.800 I will leave this stock price to the experts and 0:18:25.840 --> 0:18:30.240 the traders. Ultimately, we are a different kind of cybersecurity company, 0:18:30.240 --> 0:18:33.240 and we are helping our customers continue to run their 0:18:33.280 --> 0:18:36.959 business even in presence of cyber attacks and breaches, so 0:18:37.000 --> 0:18:40.360 that hospitals are open, kids are going to school. When 0:18:40.400 --> 0:18:43.919 people swipe credit card, they get money out, irrespective of 0:18:43.920 --> 0:18:45.800 whether there's a successful cyber attack or not. 0:18:47.840 --> 0:18:51.760 People, did you really need to go public for the visibility. 0:18:52.200 --> 0:18:54.919 Like your business seems to be doing quite well. Do 0:18:54.960 --> 0:18:57.520 you think this actually tangibly improves your sales? 0:18:59.160 --> 0:19:02.080 Look, we are working with a number of customers around 0:19:02.080 --> 0:19:05.800 the world, having more visibility, having more brand name recognition, 0:19:05.880 --> 0:19:08.199 and more importantly, when you are as a public company, 0:19:08.280 --> 0:19:12.320 everybody can see your numbers and they understand the resilience 0:19:12.320 --> 0:19:15.040 of the business. That's actually good for our customers, that's 0:19:15.080 --> 0:19:18.200 actually good for our ecosystem, and it also helps us 0:19:18.520 --> 0:19:22.000 be in front of more innovative companies, talk to them 0:19:22.000 --> 0:19:26.200 about our story and essentially help them against the ransomware 0:19:26.240 --> 0:19:29.280 attack and another cyber attack, to deliver cyber recovery and 0:19:29.320 --> 0:19:30.680 cyber resilience. 0:19:32.119 --> 0:19:32.479 People. 0:19:32.520 --> 0:19:35.480 I spent two years asking you if you'd go public. 0:19:35.640 --> 0:19:39.040 You finally and eventually are doing it. But I think 0:19:39.080 --> 0:19:41.040 there's a feeling that there's a hell of a premium 0:19:41.359 --> 0:19:43.600 on this IPO. A lot of people want to see 0:19:43.600 --> 0:19:47.399 evidence of revenue and profit that comes from this. But 0:19:47.440 --> 0:19:52.280 you resisted the temptation to talk endlessly about AI. You're 0:19:52.320 --> 0:19:54.360 saying you don't have a core AI story. 0:19:56.119 --> 0:19:58.560 We do have a core AI story. Rubric has been 0:19:58.560 --> 0:20:01.600 building AI for last ten year, In fact, our data 0:20:01.640 --> 0:20:06.040 threat Engine is built on AI platform that delivers security 0:20:06.040 --> 0:20:09.520 intelligence directly from the data. And more recently, we announced 0:20:09.520 --> 0:20:12.680 a product Ruby, which is a generative AI based AI 0:20:12.760 --> 0:20:18.320 data defense and recovery that helps cyber defender fight fire 0:20:18.320 --> 0:20:21.600 with fire. Because you know attackers are applying AI in 0:20:21.680 --> 0:20:24.520 terms of how they are increasing the volume, variability and 0:20:24.600 --> 0:20:28.960 velocity of attacks. We are allowing the defenders use AI 0:20:29.359 --> 0:20:32.199 in terms of rule Break and Ruby so that they 0:20:32.240 --> 0:20:35.840 can deliver cyber resilience and cyber recovery. 0:20:36.280 --> 0:20:37.240 People very quickly. 0:20:37.280 --> 0:20:41.800 Microsoft remains an important financial and technology partner to you. 0:20:42.240 --> 0:20:44.480 How will that relationship work now going forward? 0:20:45.680 --> 0:20:48.480 We have a very strong relationship with Microsoft. In fact, 0:20:48.520 --> 0:20:51.960 we were Microsoft Partner of the Year in twenty twenty three, 0:20:52.000 --> 0:20:55.560 both both for US and UK. We continue to coinovate together, 0:20:55.680 --> 0:20:59.360 continue to help our joint customers get cyber resilience, make 0:20:59.400 --> 0:21:02.520 sure that they can withstand cyber attacks and continue to 0:21:02.560 --> 0:21:06.439 run their business, because, after all, digital trust starts with 0:21:06.600 --> 0:21:10.440 keeping the services up and running when you are attacked, 0:21:10.480 --> 0:21:12.159 even if the cyber beach has happened to you. 0:21:13.320 --> 0:21:16.040 Rubric CEO people signor after two years of asking if 0:21:16.080 --> 0:21:27.280 you go public, you did thank you. Okay, Welcome back 0:21:27.280 --> 0:21:29.480 to Bloomberg Technology, Ed Ludlow here in San Francisco. 0:21:29.640 --> 0:21:30.680 Let's talk about TikTok. 0:21:30.960 --> 0:21:34.040 The clock is ticking for TikTok to avoid its behan 0:21:34.160 --> 0:21:37.879 in the US should it be unable to divest. Joining 0:21:37.960 --> 0:21:40.800 US now from DC is Bloomberg's Mike Shepard, and Mike 0:21:40.880 --> 0:21:44.560 basically leads our coverage of the intersection of politics and tech. 0:21:44.840 --> 0:21:46.840 We had that breaking news headline at the top of 0:21:46.880 --> 0:21:50.720 the am mic that Bite Dance saying through its Chinese 0:21:50.720 --> 0:21:55.879 website that it has no plan to divest or no 0:21:56.160 --> 0:22:00.400 plan to sell TikTok. That was the wording or translation. 0:22:01.040 --> 0:22:03.520 I don't really feel like I understand what they mean 0:22:03.560 --> 0:22:04.960 by that they're digging in. 0:22:05.040 --> 0:22:09.679 Basically, they are digging in, and the statement in a 0:22:09.720 --> 0:22:12.320 way is not that much of a surprise. They've made 0:22:12.400 --> 0:22:16.440 clear through this process. As the legislation started to take 0:22:16.520 --> 0:22:21.040 shape last month, that really started to look real, look 0:22:21.160 --> 0:22:23.320 like it was going to happen, that they had no 0:22:23.440 --> 0:22:25.920 intention of playing ball, and that in fact, they would 0:22:26.000 --> 0:22:30.000 try to fight it with every arrow in their quiver. 0:22:30.480 --> 0:22:33.040 They really want to make sure that they are able 0:22:33.040 --> 0:22:36.720 to hold on to this valuable asset and resist what 0:22:36.800 --> 0:22:39.960 they see as and the Chinese government also sees as 0:22:40.320 --> 0:22:44.080 interference in valuable media property. 0:22:43.920 --> 0:22:47.840 So there's a lot that's happening quite quickly. We'd reported 0:22:47.880 --> 0:22:51.399 that by Dance was thinking about a solution where it 0:22:51.520 --> 0:22:55.200 sold TikTok but without its sacred algorithm, and on the 0:22:55.240 --> 0:22:58.199 show yesterday we talked about why that algorithm is so 0:22:58.240 --> 0:23:03.960 important for content creators. The President signed this law, signed 0:23:03.960 --> 0:23:06.359 this into lawy yesterday, but as far as I'm aware, 0:23:06.400 --> 0:23:10.320 the President hasn't actually commented or specifically talked about his 0:23:10.440 --> 0:23:13.240 view on TikTok. Just update us on the politics, I 0:23:13.280 --> 0:23:15.400 guess of the last twenty four hours. 0:23:16.640 --> 0:23:19.920 This is a great question need because politics has really 0:23:20.000 --> 0:23:24.159 surrounded this, not only the geopolitics between the US and China, 0:23:24.240 --> 0:23:27.800