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Speaker 2: I'm looking right now at shares of Coinbase. They're down
Speaker 2: about six and a half percent. They fell as much
Speaker 2: as eight point nine percent. This was this after The
Speaker 2: New York Times reported that the SEC has been investigating
Speaker 2: Coinbase whether or not it misstated its user numbers in
Speaker 2: past disclosures. I want to bring in Stacey Marie Ishmel.
Speaker 2: She's executive editor for Crypto and Payments. She joins us
Speaker 2: here in the Bloomberg BusinessWeek Studio. What do we know
Speaker 2: about this?
Speaker 3: Well, I think the first thing we know is, and
Speaker 3: this is going to come as a surprise to a
Speaker 3: lot of few wells, that the SEC has not in
Speaker 3: fact dropped any in all of its potential enforcement actions
Speaker 3: against crypto companies. You know, there was a move over
Speaker 3: the past couple of months for this very important financial
Speaker 3: regulator to say, hey, when it comes to crypto, we're
Speaker 3: largely not going to be looking into most things. So
Speaker 3: it was interesting to see you both the New York
Speaker 3: Times story and then the confirmation statement from Coinbase that
Speaker 3: this was an ongoing investigation coming out of the Genstler era,
Speaker 3: at a time when I think a lot of folks
Speaker 3: in the industry had thought, okay, good, all clear, there's
Speaker 3: no hangovers and we don't need to worry about anything.
Speaker 2: Is there something different about this case than the cases
Speaker 2: that have been dropped.
Speaker 3: I think one of the key points is it does
Speaker 3: relate to sort of a very bread and butter SEC issue,
Speaker 3: which is are you being accurate and transparent in your disclosures?
Speaker 3: And at heart of it is this idea that, according
Speaker 3: to the SEC's allegations, or i should say, according to
Speaker 3: the allegations represented in the New York Times story, Coinbase
Speaker 3: had previously you used a verified user figure of one
Speaker 3: hundred million, which they stopped using a couple of years ago,
Speaker 3: and according to the SEC that that figure was initially misleading.
Speaker 4: So this is the second piece of news that we're
Speaker 4: getting in regards to Coinbase just today.
Speaker 5: Yes today, Yes, totally. There was also a reported hack.
Speaker 4: Tell us what's going on with that.
Speaker 3: Yeah, this one is arguably a bigger deal in that
Speaker 3: it's happening now and it affects very sensitive customer data.
Speaker 3: So Coinbase put out a statement and regulatory filing earlier
Speaker 3: today that hackers had targeted some of their overseas kind
Speaker 3: of contractors and workers and brought offered them bribes to
Speaker 3: seal sensitive customer data. Now, when we're talking sensitive customer data,
Speaker 3: we're not just talking about email addresses and passwords. It's
Speaker 3: like photographs of your government ID, you know, things people
Speaker 3: would have had to submit to verify their identities. In
Speaker 3: some cases it was you know, physical addresses, mailing addresses,
Speaker 3: you know, so you can imagine with those government nineties.
Speaker 3: It's also things like date of birth. There might be
Speaker 3: other forms of contact information. So that is, you know,
Speaker 3: in a moment in which crypto companies are have been
Speaker 3: on a kind of a charm offensive since the since
Speaker 3: President Trump was inaugurated, to say, you know, hey, crypto
Speaker 3: is safe, it's reliable. It's the future of finance. To
Speaker 3: have something that comes in and sort of reminds people
Speaker 3: that crypto companies are high value targets for hackers is
Speaker 3: the timing is a little bit challenging for them.
Speaker 2: Well, speaking of timing, I mean Coinbase probably wanted us
Speaker 2: talking about their inclusion in the S and P five
Speaker 2: hundred this week, which was remarkable given the fact that
Speaker 2: we saw the stock move higher by twenty four percent
Speaker 2: YEP on Tuesday as a result of the news that
Speaker 2: it would be included in the S and P five
Speaker 2: under replacing Discovery replacing the.
Speaker 3: Stock companies, which you know, I think is kind of
Speaker 3: exactly what we're talking about here. And if you think
Speaker 3: of Discover Financial as like the bastion of what some
Speaker 3: people in cryptoil liked to call old finance or traditional finance,
Speaker 3: and then this crypto exchange coming in and being like
Speaker 3: or the future of finance, and then you know, the
Speaker 3: news cycle is like time out some reminders about the
Speaker 3: risks embedded in innovation.
Speaker 2: Does it I don't want to ask you if it
Speaker 2: taints the moment at all, But for me, the news
Speaker 2: earlier this week about its inclusion in the S and
Speaker 2: P five hundred, it felt really symbolic as a recognition
Speaker 2: that this asset class was being recognized by as a
Speaker 2: blue chip essentially.
Speaker 3: Yeah, and I think one of you know, having been
Speaker 3: somebody paying close attention to this for a minute, one
Speaker 3: of the things that really struck me is that feels
Speaker 3: like it happens all the time. Like you know, Emily,
Speaker 3: you remember when we were doing stories about the Super
Speaker 3: Bowl of Crypto, when you had FTX and others being like,
Speaker 3: come join, do these amazing things. And then what happens
Speaker 3: to FDx very shortly after it filed for bankruptcy sand
Speaker 3: bankqueint Freed was in handcuffs being accused of massive fraud.
Speaker 3: And so like crypto goes through, much like crypto prices themselves,
Speaker 3: these moments in which that long awaited day for many
Speaker 3: executives is institutional acceptance, retail acceptance, and tim to your point,
Speaker 3: this idea of we are a legitimate asset class, we
Speaker 3: are a contender, you should take us seriously, and then
Speaker 3: something happens in the market where they're like, or here
Speaker 3: are some bad things like can happened instead.
Speaker 4: But it's interesting because now that if they want to
Speaker 4: be treated like a you know, a public company in
Speaker 4: the s and P. Five hundred, they're going to be
Speaker 4: up to the scrutiny of just like any other public company.
Speaker 4: So I thought it was a very interesting point that
Speaker 4: you made in the beginning that like this SEC probe,
Speaker 4: it's not unique to crypto.
Speaker 3: Companies, certainly not. And you know it's it's the we're
Speaker 3: in an interesting period in which crypto companies, when they're
Speaker 3: being scrutinized, it's not because of the assets underlying them, right,
Speaker 3: It's more like you are doing big company things. This
Speaker 3: is the big company behavior we expect.
Speaker 2: Stacey Mrie Stacey re Ishmael, Executive editor for cript Do
Speaker 2: and Payments at Bloomberg News. You can check out the
Speaker 2: entire teams reporting on the Bloomberg terminal and of course
Speaker 2: at Bloomberg dot com.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 2: Let's bring in Dana Telsey. She's found her CEO and
Speaker 2: Chief Research Officer of Telsey Advisory Group for Specialty all
Speaker 2: Things retail. Dana, I want to start with Walmart, even
Speaker 2: though this is not a company that you particularly follow.
Speaker 2: One of your colleagues does that, but the company did
Speaker 2: say that it is going to pass on costs to consumers,
Speaker 2: not yet but soon. We saw shares fall. How do
Speaker 2: you take the results that we got from the company
Speaker 2: today in the context of what we know about tariffs
Speaker 2: and also the way that you've been talking about potentially
Speaker 2: empty shelves in the next couple of weeks.
Speaker 5: A couple things, and thank you very much for having me.
Speaker 6: First of all, if a like Walmart, with the skies
Speaker 6: and scale of Walmart is going to raise prices because
Speaker 6: of the external environment out there, what does it say
Speaker 6: for all the others? So everyone, given the headwinds of
Speaker 6: carries and costs that are out there, price increases are coming. However,
Speaker 6: it may be selective. It's not going to be across
Speaker 6: the board. It'll be called surgical, whatever word you want
Speaker 6: to use, it'll be surgical and what it is. But
Speaker 6: I've even heard we have this price tracker where we've
Speaker 6: been tracking eighty items and it comes out every Tuesday,
Speaker 6: same eighty items. And we have seen of the eighty
Speaker 6: items we track, around twenty percent of them have a price,
Speaker 6: have had a price increase each week, and it changes.
Speaker 6: Sometimes there may be a promotion, sometimes there's an event,
Speaker 6: but just on a tracker basis, price increases are coming.
Speaker 5: There's a reason.
Speaker 6: Why, in my mind, there has been some pull forward
Speaker 6: to sales the tracker.
Speaker 2: This is fascinating to me that you have this tracker.
Speaker 2: Is is there rhyme or reason too the types of
Speaker 2: products that are being that are increasing in price.
Speaker 6: Well, we track the same items every week, and it
Speaker 6: could their legacy items, whether it's a pair of Levi's
Speaker 6: or it's a Barbie doll, whatever.
Speaker 5: It may be.
Speaker 6: There isn't a rhyme or reason. But what's happening is
Speaker 6: that we expect when we heard about these tariffs, we
Speaker 6: need a way to be able to track it. And
Speaker 6: so this way, look what Walmart just said, prices increases
Speaker 6: are coming. Let's see what this tracker shows in the
Speaker 6: next four weeks in terms of pricing. So it's very interesting.
Speaker 4: Michael McKee had mentioned, you know, the difference that we're
Speaker 4: seeing in the soft data and the hard data that
Speaker 4: consumers are saying that they're really pessimistic, but we're not
Speaker 4: necessarily seeing that yet in hard data or earnings reports.
Speaker 4: Are you do you agree with that thesis or are
Speaker 4: you seeing pockets in some of these earnings reports that
Speaker 4: consumers are feeling the pain.
Speaker 5: A little bit of each.
Speaker 6: When you think about where there's been a slow down,
Speaker 6: luxury brands has been a slow down. You take a
Speaker 6: look at the high end. LVMH reported a negative three
Speaker 6: percent same store sales decline. That's typically weaker for an LVMH.
Speaker 6: You're seeing other companies that are brand leaders at not
Speaker 6: the luxury price points, but where there's brand leaders, where
Speaker 6: there's innovation. Look at today's results that came out of Birkenstock.
Speaker 6: You had a high teen sales increase, you increase the
Speaker 6: guidance for the year on sales the high end of
Speaker 6: the previous range seventeen percent plus, and you increase your ajusity.
Speaker 6: But da, what do they have? They have newness and
Speaker 6: innovation at the same time. I met with Tapestry on Tuesday,
Speaker 6: I met with Levi's yesterday. Tapestry and Levi's and Birkenstock
Speaker 6: heritage companies with authenticity that are reinventing their product. You
Speaker 6: know what they're doing. They're capturing a younger consumer. And
Speaker 6: companies like Coach, which is owned by Tapestry, a fifteen
Speaker 6: percent increase in averaging retail selling price.
Speaker 5: Why it's new and different.
Speaker 2: Emily and I are smiling right now because on our
Speaker 2: editorial call this morning, I said, we have to ask
Speaker 2: Dan about Birkenstock shares are up what six percent? You
Speaker 2: were on surveillance with Tom Keen and me last week.
Speaker 2: We asked you to name one company to watch. You
Speaker 2: said it was Birkenstock. You called this why are you
Speaker 2: bullish on Birkenstock?
Speaker 6: Because their footwear overall has wide appeal. You have the
Speaker 6: flywheel of younger customers that are being attracted to the brand.
Speaker 6: It's not just open toed sandals, it's closed toed shoes.
Speaker 5: Also, you look at the.
Speaker 6: Expansion opportunities they have with their own stores. They only
Speaker 6: have around ten stores in the US. They have wholesale
Speaker 6: accounts who have stores, but of their own. You take
Speaker 6: a look at Asia, which is a rising market for them.
Speaker 5: You look at the fact that they bring in goods
Speaker 5: they're made in Europe.
Speaker 6: Yes, they have terif exposure, but not the as significant
Speaker 6: teriff exposure. And look at their adjustinity bitdam margins, I
Speaker 6: mean you're in exos to thirty one percent. I don't
Speaker 6: have many companies that are generating mid to high teen
Speaker 6: sales increases with increasing EBITDA margins in an environment where
Speaker 6: the uncertainty.
Speaker 5: But you're seeing a little bit in footwear.
Speaker 6: You look at some of the other brands, Socony thirty
Speaker 6: percent increase in sales by Wolverine worldwide, Merrill up in
Speaker 6: excess to thirteen percent.
Speaker 5: So newness drives demand.
Speaker 4: Yeah, Maryls are having a comeback. I've seen a couple
Speaker 4: Marrals on the streets of New York City and that
Speaker 4: was like a shoe that.
Speaker 5: I want, I like to hear when I was like
Speaker 5: a child's But.
Speaker 7: They're coming back, you know.
Speaker 4: Dan, I was looking at the S and P five
Speaker 4: hundred sectors, the group levels. What was the top performing
Speaker 4: this year so far? What's the worst? Consumer Staples is
Speaker 4: one of the best performing groups. Consumer discretionary is one
Speaker 4: of the worst. How are investors supposed to invest in
Speaker 4: the consumer space at large? How should they be thinking
Speaker 4: about kind of the direction of travel when.
Speaker 6: You those when you think about exactly the difference with
Speaker 6: staples and discretionary staples as essentials, it's what you need,
Speaker 6: not what you want.
Speaker 5: And when you think about this environment where we don't.
Speaker 6: Know what the price increases is going to be We've
Speaker 6: all seen the backward looking data of consumer confidence, and
Speaker 6: so they're being careful. And so with staples, that's careful.
Speaker 6: With discretionary, it feels you have spending power. There's always
Speaker 6: the old adage that goes when the stock market it
Speaker 6: goes up, people feel great and spending can happen when
Speaker 6: the stock market comes down. You know, mind the hatchets,
Speaker 6: you know, be careful. And so look what we've had
Speaker 6: over the past two months. That's what you've had. Companies
Speaker 6: in the consumer area are reporting first quarter earnings. Now
Speaker 6: when you look at Walmart and what's to come, if
Speaker 6: they're saying prices are going up, that's going to be
Speaker 6: the mantra going forward.
Speaker 2: We got to get you to weigh in on Dick's
Speaker 2: buying foot Locker. Dick shares down about sixteen percent right now,
Speaker 2: Footlocker hire by eighty five percent, but that's still you know,
Speaker 2: going back to like just a few months ago. I
Speaker 2: think those are like December levels that we're saying, what
Speaker 2: does it say to you? I mean, this is the
Speaker 2: end of an era for foot Locker. This is a
Speaker 2: company that's been a public company since nineteen eighty What
Speaker 2: does this m and A mean to you.
Speaker 6: So overall on the M and A, where's the scale
Speaker 6: and where's the synergies? Foot Locker on its own is
Speaker 6: taking a long time to undergo this transformation, even under
Speaker 6: a well recognized, well respected.
Speaker 5: CEO, Mary Dillon.
Speaker 2: She came from Malta.
Speaker 6: Right, great things at Alta ed Stack. Basically you know
Speaker 6: Legacy Dix, his father founded it, Lauren Hobart. They basically
Speaker 6: reinvented what Dix was with Dick's House of Sport. You
Speaker 6: talk to every real estate landlord. What do they all
Speaker 6: want Dick's House of Sport?
Speaker 4: Why?
Speaker 6: Because it brings traffic. What's the difference between Dix and Footlocker.
Speaker 6: The customer base of Footlocker the eighteen to twenty five
Speaker 6: year old guy. The customer base at Dix could be
Speaker 6: more families. What do you get with both of it?
Speaker 6: And granted the stock is down because the certainty of
Speaker 6: the execution at Dix's, Dix alone was there and you
Speaker 6: could basically see the path of growth with House the Sport.
Speaker 6: Putting it together, there's work to be done, transformation to
Speaker 6: be done with foot Locker gives them more buying power.
Speaker 6: Let's see what Dix does because what ed Stack says
Speaker 6: is he's got the vision. He had the vision before
Speaker 6: with House of Sport. Let's see what he can do
Speaker 6: with foot locker.
Speaker 2: Just thirty seconds. Sounds like you're optimistic. This is a
Speaker 2: good deal.
Speaker 6: I think it's the valuation basically at six times and
Speaker 6: seventeen times, PE's not bad from that spectrum. What is
Speaker 6: it time length? And can you keep the focus on
Speaker 6: Dick's and Dick's House a Sport while you're integrating full
Speaker 6: lockers the question go forward?
Speaker 2: All right, Dana, appreciate you joining us from talk to retail.
Speaker 2: Not a better voice out there, Dana Telsey, founder, CEO,
Speaker 2: chief Research Officer of Telsey Advisory Group, joining us here
Speaker 2: in the Bloomberg a BusinessWeek Studio.
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Speaker 4: All right, well, Cutter's offering of a luxury Boeing seven
Speaker 4: forty seven. President Donald Trump has set off alarm bells
Speaker 4: within the US intelligence and diplomatic community, where gifts from
Speaker 4: foreign powers have long been viewed with suspicion. Jamie terrib
Speaker 4: writes the story today. She's Bloomberg News national security reporter,
Speaker 4: and she joins us on Zoom from Washington, DC to
Speaker 4: discuss give us the latest on what is going on
Speaker 4: right now. Trump is potentially getting a plane.
Speaker 8: He has been offered a reportedly four hundred million dollar
Speaker 8: luxury jumbo jet by the Qatari government for his use,
Speaker 8: because he has been quite vocal about his frustration with
Speaker 8: Boeing for the delays in the delivery of the Air
Speaker 8: Force one jets that he has asked for during his
Speaker 8: first administration. The current Air Force one planes that he
Speaker 8: uses are decades old, and they certainly don't compare when
Speaker 8: you stand them up against, you know, the sort of
Speaker 8: the luxury furnishings, French interior designed comfort that a Katari
Speaker 8: royal family would enjoy in the air. But of the
Speaker 8: question of the gift, the question of the plane itself
Speaker 8: being used by the President of the United States has
Speaker 8: raised all kinds of concerns, whether they're legal or ethical.
Speaker 7: But I've been.
Speaker 8: Focusing a lot more on the security concerns that are
Speaker 8: inherent with accepting any kind of gift, let alone a plane.
Speaker 2: Let's talk about those security concerns. I can't stop laughing
Speaker 2: when you quoted Thad Troy, a former station chief with
Speaker 2: the CIA, who said, if we had built the plane
Speaker 2: knowing it was going to a foreign government, we would
Speaker 2: probably have bugged it. Like that's just the way it
Speaker 2: works when it comes to one country in another country,
Speaker 2: when it comes to national intelligence, when it comes to
Speaker 2: the CIA, what did you learn in your reporting about
Speaker 2: this being a national security challenge for the US.
Speaker 8: There wasn't a single person, whether they were a former
Speaker 8: three letter agency, intelligence, foreign service, international intelligence officers that
Speaker 8: I spoke to who said for sure that plane would
Speaker 8: be bogged in some fashion, whether it was by special
Speaker 8: interests from the host family or from you know, self
Speaker 8: interest within.
Speaker 5: That country, or allies or friends.
Speaker 8: Or adversaries hacking into surveillance systems. It's still it's it's
Speaker 8: very porous before it gets the word that they used
Speaker 8: a lot to me was hardened, and it gets hardened
Speaker 8: when it becomes a DoD approved aircraft. And you know,
Speaker 8: I didn't even know a lot of these things when
Speaker 8: I was working on this and talking to all these people.
Speaker 8: But the airplane itself needs to be hardened to withstand
Speaker 8: an explosion, It needs to be able to continue, it
Speaker 8: needs to be able to fuel air to air, It
Speaker 8: has a surgical center. It's basically a flying White House,
Speaker 8: complete with a situation room.
Speaker 5: So the first.
Speaker 8: The idea of having something like that at being given
Speaker 8: to the US by a foreign government and not doing
Speaker 8: all kinds of security sweeps to establish that it's clean
Speaker 8: and it's fine, and then going in and fortifying it,
Speaker 8: weaponizing it and getting it ready for the president, it's
Speaker 8: it just seems I was told it would take months,
Speaker 8: if not years to accomplish everything to everyone's satisfaction. So
Speaker 8: I don't know if those security concerns will make a
Speaker 8: difference or not, but that was definitely something that the
Speaker 8: people that I speak to that was immediately where their
Speaker 8: minds went.
Speaker 4: So in terms of the security concerns, and we talk
Speaker 4: about potentially bugging spy, where are there any other concerns
Speaker 4: like tech like tech related security concerns that come about
Speaker 4: with a foreign party giving the US a plane.
Speaker 8: The technical concerns that I I mean, there were people
Speaker 8: who were talking to me who said they didn't want
Speaker 8: to say what they were thinking because they didn't want
Speaker 8: to give any one idea. Well, you know, I mean
Speaker 8: installing a kill switch, you know, playing with the mechanism.
Speaker 2: That is some seriously scary stuff. I thought you were
Speaker 2: going to be talking about, like, you know, a microphone
Speaker 2: hidden behind the wall of the plane or something. I mean,
Speaker 2: that is some seriously scary stuff.
Speaker 8: I spoke to someone who was living across the road
Speaker 8: from the US embassy in Moscow during the Cold War,
Speaker 8: and he said that the listening devices were inside the concrete,
Speaker 8: in the bricks. So the idea of wiring and behind
Speaker 8: the molding and all these beautiful furnishings is not out
Speaker 8: of the.
Speaker 7: Realm of possibility.
Speaker 8: So you know, I mean, you just have to have
Speaker 8: an imagination and you can imagine how creative you can
Speaker 8: be with what you install. And where there could be
Speaker 8: cameras inside, there could be a loaf case tracker that
Speaker 8: will tell you exactly where the president is at any time.
Speaker 8: So these are all things that not only like in
Speaker 8: danger he's saved in security, but also could give anyone
Speaker 8: intelligence on the sort of communications and conversations that he
Speaker 8: might be having with people. On the plane with him
Speaker 8: or with people you know elsewhere.
Speaker 2: This is remarkable. Well yeah, yeah, you actually really have.
Speaker 2: But what you also point out in your piece the
Speaker 2: criticism that the president has gotten from people who've been
Speaker 2: allied with him, including Ben Shapiro, Laura Lumer, and others.
Speaker 2: But he's kind of holding firm, at least with his
Speaker 2: public comments that this is the type of gift he
Speaker 2: would accept.
Speaker 8: Well, it's become a poison chalice in a way, because
Speaker 8: you know, it is it is a tremendous honor that
Speaker 8: he has been paid by this Arab.
Speaker 7: Country to accept this gift.
Speaker 8: And you know the Arabs. I'm Lebanine, so I think
Speaker 8: I know something about this, but they're big gift gippers
Speaker 8: and there the hospitality is really embedded in the culture.
Speaker 8: So this for them is a really it's it's it's
Speaker 8: a huge gesture. But it also, you know, it runs
Speaker 8: completely counter to what what what a lot of Trump
Speaker 8: supporters stand by, not just the sort of the ethical
Speaker 8: concerns and the idea of what's the quick pro quo here,
Speaker 8: But you know, katar is, it's a complicated. Uh, it
Speaker 8: has complicated relationships with countries that may not have relationships
Speaker 8: with the US that have strained relationships with the US.
Speaker 8: And it also it has been a very active participant
Speaker 8: in the Ganza talks because Hamas for the longest time
Speaker 8: has a political office in Doha, so you know, it's
Speaker 8: there's there's a lot there and so you know, I
Speaker 8: was talking to one person about the capabilities of the
Speaker 8: Qatari Intelligent and Service and he said to me, well,
Speaker 8: we train them, so you know, I mean, if they're good,
Speaker 8: it's you know, a lot that has to do with
Speaker 8: the fact that they have the strategic security partnership with
Speaker 8: the US. The US has a military based in cutter
Speaker 8: So it's very, very, very complicated, and I think it
Speaker 8: just should be treated with a lot of caution and wariness.
Speaker 5: And you know what we used to hear like trust
Speaker 5: but verify.
Speaker 2: Right, I mean, this story you've given us a lot
Speaker 2: to think about. Jamie, appreciate you joining us. Jamie Terraby,
Speaker 2: she covers national security. She's out of our Washington, DC bureau,
Speaker 2: but she spent time in Baghdad. She was the bureau
Speaker 2: chief for NPR News close to twenty years ago. She
Speaker 2: reported on the unraveling of Iraqi society. She was with
Speaker 2: Al Jazeera America. She was with CNN. She's been doing
Speaker 2: this for a long time. Check out her stories on
Speaker 2: the Bloomberg Terminal and of course at Bloomberg dot Com
Speaker 2: as well. You're listening to and watching Bloomberg BusinessWeek Daily.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch
Speaker 1: us live weekday afternoons from two to five eastering. Listen
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Speaker 2: As we mentioned, companies just day after day in the
Speaker 2: most recent earnings period have been pulling their guidance. They've
Speaker 2: been lowering their expectations for earnings per share. One company
Speaker 2: last week though, doing the exact opposite of that, Inspire
Speaker 2: Medical Systems, reported and they actually kept their guidance for revenue.
Speaker 2: They raise their EPs guidance. We've got Tim Herbert with
Speaker 2: us right now. He's founder, chairman, and president of Inspire
Speaker 2: Medical Systems. It's a medtech company. It specializes in devices
Speaker 2: for sleep apnea. Tim joins us from Minneapolis. Tim, what's
Speaker 2: working for you? Why in the face of so much
Speaker 2: uncertainty concerns about trade And we'll talk about that in
Speaker 2: just a second, why are you actually increasing your guidance freeps, Well, thank.
Speaker 7: You so much for having us today.
Speaker 9: I think if we stay focused on the patient, we
Speaker 9: stay focused on the outcomes that our therapy can deliver,
Speaker 9: it to help people with obstructive sleep at me and
Speaker 9: with that, we know that demand for a therapy is
Speaker 9: quite high and we can.
Speaker 7: Show it continued growth.
Speaker 9: As long as we continue to add our innovation and
Speaker 9: continue to focus on the patient, we can see.
Speaker 7: Sustained growth going forward.
Speaker 9: And now that we're a profitable company, we can increase
Speaker 9: our guide on our earnings per share as well. So
Speaker 9: the futures in front of us, we really just stay
Speaker 9: we made focus and we can continue to see growth
Speaker 9: moving forward.
Speaker 4: Tim, you said in your earnings that most of your
Speaker 4: products are currently sourced and assembled primarily in the US,
Speaker 4: and I'm wondering to what extent that has helped the
Speaker 4: success of the company right now.
Speaker 7: Well, I think that that's certainly true.
Speaker 9: I think that we want to make sure that we
Speaker 9: provide the best possible products for our patients, and being
Speaker 9: an implant product is the highest level of quality that
Speaker 9: the products have, and so we're able to really make
Speaker 9: sure that we source our products, make sure that we
Speaker 9: assemble now in the United States, we can really control
Speaker 9: the quality of that and we can really stand behind
Speaker 9: the products as we move forward.
Speaker 7: So we watch the turiffs. Of course, we watched the
Speaker 7: trade discussions going on, but.
Speaker 9: Where we are right now that that's rather dimendmus to
Speaker 9: our business today.
Speaker 7: And again we can remain focused on the patient.
Speaker 2: You got to explain to us how this product actually
Speaker 2: works because you have the first and only FDA approved
Speaker 2: implant to treat this type of sleep apnea. I think
Speaker 2: a lot of people here sleep apnea, They think of masks.
Speaker 5: What's an implant?
Speaker 2: Where does it go?
Speaker 9: Well, let's start with what is obstructed sleep AVENE and
Speaker 9: is when you're sleeping, your airway actually restricts airflow. Therefore
Speaker 9: you're not getting proper oxygen into your lungs and transition
Speaker 9: to the bloods and so you have a low ox
Speaker 9: gin level and your blood during sleep and you're not.
Speaker 7: Getting RESTful sleep during the night.
Speaker 9: And I think most people know somebody who may wear
Speaker 9: or been given a mask that they put on their
Speaker 9: on their face at night. It's called the sea papera
Speaker 9: continuous positive airway pressure, and that the method is to
Speaker 9: blow pressure that continuously holds your airway open while you sleep,
Speaker 9: preventing obstructive sleep ABNA. But of course, as you can
Speaker 9: imagine by having an apparatus on your face and that
Speaker 9: constant pressure, there's a percent of patients, up to fifty
Speaker 9: percent of the patients just cannot tolerate that therapy. And
Speaker 9: it's necessary to treat obstructive sleep an because the risks
Speaker 9: of stroke or heart failure, high blood pressure, even diabetes,
Speaker 9: and it's been shown to be causal for early mortality.
Speaker 9: It's important that patients receive proper treatment. Knowing that patients
Speaker 9: with seat PAPERA unable to tolerate that therapy. What we
Speaker 9: had inspired it is we created an implantable product that
Speaker 9: we're inside your body and we provide mild stimulation to
Speaker 9: the hypogloss of nerve, a nerve just underneath your chain,
Speaker 9: and so when you breathe in, we stimulate the tongue
Speaker 9: and hold the tongue open while you.
Speaker 7: Breed, preventing the sleep at me events.
Speaker 9: Over the years, we were improved in twenty fourteen.
Speaker 7: By the FDA.
Speaker 9: We're the only product approved in the United States and
Speaker 9: today we have treated over one hundred thousand patients with
Speaker 9: Inspire therapy. We're proud to say that a patient in
Speaker 9: the United States receives Inspire every fifteen minutes. And just
Speaker 9: this week we announced the fifth generation of Inspire.
Speaker 7: This is the Inspire five, the fifth generation.
Speaker 9: You can see, have a small device that works inside
Speaker 9: your body. And now we're working with well over thousand
Speaker 9: clinics and hospitals in the United States to get them
Speaker 9: under contracts so they can offer the fifth generation product
Speaker 9: to their patients.
Speaker 4: I'm curious, if it's so effective, if patients are saying
Speaker 4: that they would r use this than the mask, why
Speaker 4: isn't everyone in the industry going to this implant model
Speaker 4: over the seapop mask.
Speaker 9: Well, seapap has been around for quite some period of
Speaker 9: time and it's very prevalent therapy.
Speaker 7: But you're right, with the number of patients out there,
Speaker 7: we know we're very.
Speaker 9: Lightly penetrated in the target market of the patients that
Speaker 9: we wish to serve, So we're continuing to grow. Since
Speaker 9: we went public in twenty eighteen, we shown a fifty
Speaker 9: eight percent care in our revenue, so it's been a
Speaker 9: very steady growth and adoption and a number of patients
Speaker 9: that we can treat and as we talk about in
Speaker 9: twenty twenty four as our first year of profitability, so we.
Speaker 7: Can continue to grow the adoption of the therapy.
Speaker 9: We really again focus on the patients and having very
Speaker 9: high level of therapy outcomes, and that's what that's going
Speaker 9: to really be the impetus for further growth in the future,
Speaker 9: and we will see additional companies developing competing therapies because
Speaker 9: I think the therapy adoption is becoming quite well aware
Speaker 9: and people are really adopting to it.
Speaker 2: Tim, You've been in the business for a long time.
Speaker 2: Even before this in two thousand and seven, you spent
Speaker 2: over a decade ad Medtronic and this is where Inspire
Speaker 2: spun out of. You've spent a lot of time working
Speaker 2: with the FDA. The FDA right now under AHHS Secretary
Speaker 2: RFK Junior looks a lot different than the FDA under
Speaker 2: previous administrations. What have you noticed as differences that your
Speaker 2: team has experienced or encountered with this FDA versus other FDAs.
Speaker 9: Yeah, I think what's most important is making sure you
Speaker 9: set a good plan to execute and demonstrate safety and
Speaker 9: efficacy or products. Make sure that you work in concert
Speaker 9: with your partners at the FDA, so they understand your strategy,
Speaker 9: they understand the trials that you're embarking on, and then
Speaker 9: be able to be transparent and show them the data
Speaker 9: that can prove that your therapy is efficacious as well
Speaker 9: as your ability to manufacture, produce implicate.
Speaker 7: Those same results as you move forward into the market.
Speaker 7: And with that, that's the one common thread with.
Speaker 9: FDA that remains where it needs to be that the
Speaker 9: FDA knows what their jobs are. Yes, there's stress points
Speaker 9: with the FDA, especially with the concerns over their budgets
Speaker 9: and do they have to cut back here or cut
Speaker 9: back where, But I think the FDA really understands what's
Speaker 9: important and to be able to really be able to
Speaker 9: evaluate products.
Speaker 7: And so our.
Speaker 9: Team has a good relationship with the FDA because they
Speaker 9: are transparent. We're provide all the necessary data to them
Speaker 9: in a timely manner. They understand the items for which
Speaker 9: we will be submitting to them, so the FDA can
Speaker 9: plan their resources appropriately as well. So, yes, I understand
Speaker 9: the FDA is understrained, but they're also working really hard
Speaker 9: to continue to deliver the proper reviews necessary for these
Speaker 9: medical devices.
Speaker 2: So you're still confident in the FDA despite the changes
Speaker 2: that we've seen at HHS.
Speaker 9: Already their job, they know how to review product, They
Speaker 9: know how to ask the necessary questions to get the
Speaker 9: proper products out in the market. They are under stress,
Speaker 9: as we talked about, with concerns over the budget. How
Speaker 9: can we control the budget a little bit more yet
Speaker 9: still be able to be as.
Speaker 7: Effective in getting the reviews out there.
Speaker 9: So, at least in our part of the world and
Speaker 9: the medical device side, I think the FDA knows their
Speaker 9: role and they're still able to perform those proper reviews.
Speaker 4: Tim, what about insurance, do you think that the insurance
Speaker 4: companies are a constraint on more widespread adoption of the implant?
Speaker 7: Well, I think again with the insurance companies, they also.
Speaker 9: Take sucuriny, just like the FDA, to make sure that
Speaker 9: the products that they cover do have the proper safety
Speaker 9: and effectiveness and to ensure that their customers the patient
Speaker 9: have the benefits expected from the products if the insurance
Speaker 9: companies are being asked to pay for it.
Speaker 7: So again, we are very transparent.
Speaker 9: We make sure that we continually monitor our progress, continue
Speaker 9: to publish on the safety and effectiveness and the new
Speaker 9: generation of products like to Inspire five device, and so
Speaker 9: we can give that information also to the insurance companies
Speaker 9: and be transparent so they really understand that they know
Speaker 9: if they're going to cover an Inspire case, that they
Speaker 9: know the patient can expect a high patient outcome and
Speaker 9: a benefit with the therapy.
Speaker 7: So again they're doing their jobs too. They're under a lot.
Speaker 9: Of strainers as we've as you just talked about the
Speaker 9: prior segment, and it's really hard for them to keep
Speaker 9: focused on covering their proper patients and making sure Companies
Speaker 9: like ours are staying on our toes to make sure
Speaker 9: that we are delivering the highest level quality to get
Speaker 9: the best patient outcomes.
Speaker 2: We're speaking with Tim Herbert, founder, chairman and president and
Speaker 2: CEO of Inspire Medical Systems. Tim, we wanted to speak
Speaker 2: to you today also about health and the association with
Speaker 2: sleep apnea and health. So curious now how people with
Speaker 2: the age of Apple watches or rings other devices that
Speaker 2: help measure sleep, if that tells them and those devices
Speaker 2: tell them that they may have sleep apnea and then
Speaker 2: they don't have to go spend the night in some
Speaker 2: sort of sleep study sleep lab.
Speaker 9: Right, it's so important that we talk about the three
Speaker 9: pillars of life.
Speaker 7: Or diet, exercise, and a good night's sleep.
Speaker 9: And so now with the technology so available, people have
Speaker 9: just provided information on their own health and the number
Speaker 9: of steps they took, their caloric intake, and also how
Speaker 9: well did they sleep. And your or a ring will
Speaker 9: give you a little bit more precise information than your
Speaker 9: Apple watch.
Speaker 7: Well, your Apple watch may tell you to you know,
Speaker 7: maybe we might want to.
Speaker 9: Call your doctor to have your sleep evaluated because you
Speaker 9: may have a sleep disorder such as obstructive sleep ABNA.
Speaker 7: Sleep physicians today have many, many more tools available to
Speaker 7: help assess sleep BABNA. In the old days, as you
Speaker 7: refer to.
Speaker 9: You'd be brought to a hospital bed and put wires
Speaker 9: all over your body and they tell you and I'll
Speaker 9: go to sleep so we can evaluate you.
Speaker 7: It's just not a comfortable environment to get a really
Speaker 7: accurate measurement of the quality of your sleep. So today
Speaker 7: there's many home sleep tests.
Speaker 9: It's just a simple pass out symmetry that will go
Speaker 9: on your fingertip to measure how well you're sleeping and
Speaker 9: if you're having obstructive events.
Speaker 7: And then we can use things like the rings and.
Speaker 9: The watches, and there's even sensors that come in some
Speaker 9: mattresses that will tell you how good your sleep is
Speaker 9: and are you having obstructive events to be able to
Speaker 9: monitor successive therapy such as Inspire, and so I think
Speaker 9: the advent of technology for sleep is just beginning. It's
Speaker 9: really going to grow, and we like to leverage that
Speaker 9: technology to help monitor just how successful Inspire is with
Speaker 9: our patients. Again focusing on patient outcomes, knowing that we
Speaker 9: want sustained benefit because with sustained benefit of treating obstructed
Speaker 9: sleep ABTY, it can have a reduction in some of
Speaker 9: those former abilities, and that's what's a really important. So
Speaker 9: if a patient's gunning as a therapy, they need to
Speaker 9: show their adherent to that therapy and they know the
Speaker 9: need to show that that therapy is effective. That's with
Speaker 9: these tools and these watches in these race that's what
Speaker 9: it's bringing to the patients, and the patients want to
Speaker 9: be a part of their own solution, so they are
Speaker 9: able to monitor how well they're sleeping and how well
Speaker 9: their bed partner is sleeping as well. And that's the
Speaker 9: greatest source of identifying sleep disorders is the bad partner
Speaker 9: because they're right there, they see the patient they're snoring
Speaker 9: or they stop breathing, having an obstruct obstructed sleep at
Speaker 9: any event. So it's fun to watch it technology evolve
Speaker 9: and we want to make sure that we remain.
Speaker 7: A part of that.
Speaker 4: Americans seem to be better at monitoring the sleep. The
Speaker 4: sleep tech is getting better. Just last question, Tim, do
Speaker 4: you think Americans are sleeping better? Are we getting better
Speaker 4: at sleep or are we getting worse. There's a ton
Speaker 4: more distractions these days.
Speaker 9: There are, but people are becoming so much more aware
Speaker 9: of it and aware of how important it is to
Speaker 9: get a good night's sleep, and if you have sleep disorders,
Speaker 9: to make sure that you get proper treatment and proper
Speaker 9: care to monitor or receive and monitor how well that
Speaker 9: treatment is working for you.
Speaker 7: So, yes, as we're aging the muscles.
Speaker 9: Relax a little bit more, you tend to have a
Speaker 9: little bit more storing and a little bit more obstructive
Speaker 9: sleep abnea.
Speaker 7: So it's important that we monitor our sleep.
Speaker 9: It's also very important to make sure we maintain a
Speaker 9: good sleep hygiene, that you have consistency and when you
Speaker 9: go to bed and don't have the distractions in the
Speaker 9: room and get a RESTful night's sleep, but measure how
Speaker 9: well you sleep because the tools are available. And more importantly,
Speaker 9: if your bed partner is not having a good night
Speaker 9: sleep or consistently snoring or having that breakage in breathing patterns, then.
Speaker 7: They be seen by their family practice doctor.
Speaker 9: That by being referred to a sleep physician, being evaluated
Speaker 9: because the cause of effects of untreated, monitored to severe
Speaker 9: sleep avenia is really detrimental. Fact again highlighted earlier on,
Speaker 9: there are risks of comorbidity are even quite severe. So yes,
Speaker 9: I think America is sleeping better and will continue to
Speaker 9: get better as technology advances and provides information to guide
Speaker 9: that process.
Speaker 2: Tim, I appreciate you taking the time and joining us.
Speaker 2: That's Tim Herbert, founder, chairman, president, CEO of Inspire Medical Systems.
Speaker 2: It's publicly traded about four and a half billion dollar
Speaker 2: market cap, joining us from Minneapolis.
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