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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am.

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Speaker 1: He's done on Apple, Cocklay and Android Auto with the

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Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: All right, let's get back to some of these tech

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Speaker 2: earnings coming in here. Palanteer Uber. Yes, I arbitrage between

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Speaker 2: Uber and Lyft and people who don't do that. I

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Speaker 2: don't understand those people because I get huge discounts twenty

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Speaker 2: thirty percent.

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Speaker 3: Wait, so you whenever you need to go somewhere, you're

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Speaker 3: going to check both apps and then figure out which one.

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Speaker 2: It takes an incremental like eight seconds, and it saves

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Speaker 2: me real money. And Matt Miller and I had this

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Speaker 2: fight on the air. He doesn't do it. He's brand loyalty.

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Speaker 4: I'm like, you're leaving money.

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Speaker 3: No, No, there's no loyalty to this. This is all

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Speaker 3: about how much it costs. Yeah, I don't know, it's

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Speaker 3: just a commodity. How about the money?

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Speaker 4: Exactly right?

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Speaker 2: Man Deeps saying somehow he's built a career on doing

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Speaker 2: this stuff and Deep seeing these are senior tech analysts

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Speaker 2: Bloomberg Intelligence.

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Speaker 4: Mandy, let's start with pat Palenteer. What you call on

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Speaker 4: that and what do you make of the stock action today?

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Speaker 2: What I'd love to just get your thought on the company,

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Speaker 2: the stock and what do you think of the action today?

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Speaker 5: The solo, I mean, Palenteer still is the most expensive

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Speaker 5: enterprise software business. So at a five hundred billion dollar valuation,

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Speaker 5: you have to ask yourself, you know, is this the

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Speaker 5: best software company that I can own or is there

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Speaker 5: something else out there in the world of AI, which,

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Speaker 5: to my mind, open Ai and Entropic are also recurring

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Speaker 5: revenue software businesses. Yes, open ai is much bigger in

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Speaker 5: their ambitions with regards to a consumer business and an

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Speaker 5: enterprise API business. But these companies Open Ai and Tropic

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Speaker 5: are growing triple digits and open Ai, for example, is

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Speaker 5: at a thirteen billion plus revenue run rate. So when

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Speaker 5: I compare an open Ei and Tropic to Palenteer Talenteer,

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Speaker 5: you're at four billion dollars rund rate, growing at a

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Speaker 5: very healthy fifty percent, trading at one hundred times cv

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Speaker 5: DO sales. That is where I think the valuation is

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Speaker 5: what gives me a stop.

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Speaker 2: Here, Okay, I was raised by gentlemen where you did

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Speaker 2: pe ratio, and then I got converted to EV to ibata,

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Speaker 2: and then you people in technology got me focusing on

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Speaker 2: multiples of revenue.

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Speaker 5: Where it comes to software companies not other businesses. Yes, exactly.

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Speaker 2: And then I said, all right, I can kind of

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Speaker 2: get used to five, six, seven, eight times revenue.

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Speaker 4: Now you're telling me what one hundred times?

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Speaker 3: Yeah, that's that's It's like peg ratio and eyeballs back

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Speaker 3: in the day. So mandeep when it comes to Pounder

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Speaker 3: on what it does though there's no other company like it, right,

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Speaker 3: that's the issue. It counts big governments as its customers

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Speaker 3: and then now increasingly big companies. And as much as

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Speaker 3: you can compare a Pounder as a stock to other

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Speaker 3: AI plays, the actual responsibilities has the business that it

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Speaker 3: conducts is irreplaceable, irreplicable.

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Speaker 5: They clearly have a very strong mode in terms of

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Speaker 5: you know, creating an ontology. That's what they call basically

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Speaker 5: making sense of data that an enterprise may have. And

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Speaker 5: think about you know, any enterprise, they'll have ten twenty systems,

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Speaker 5: a lot of data replication, and Talenteer can give you

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Speaker 5: like a master data where they can help you get

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Speaker 5: rid of all their interundancies and give you data that

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Speaker 5: really matters for your AI. And so think about an

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Speaker 5: organization that has a billion dollar IT budget spending billions

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Speaker 5: of dollars on AI. Why would you not spend fifty

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Speaker 5: million dollars on Talenteers, especially if you are a government

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Speaker 5: or bank or a manufacturing company and not a tech company.

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Speaker 5: That's why Palenteer's customer base is not your sophisticated tech

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Speaker 5: companies like Google, a Meta or you know, any of

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Speaker 5: the tech players, because they do their own thing, but

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Speaker 5: it's your bank. Not that they're not sophisticated, but they

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Speaker 5: need more help with organizing their data and Talenteer gives

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Speaker 5: you an out of the box solution. And in this

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Speaker 5: age of AI men, things are really kind of getting

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Speaker 5: bigger and bigger in terms of spend. The last thing

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Speaker 5: you want to save on is spending on data because

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Speaker 5: if your overall project fields since you didn't have good data,

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Speaker 5: then it's bad ROI. And that's where Talenteer is really

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Speaker 5: benefiting and making a case Guys, you're spending so much

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Speaker 5: on infrastructure, why are you not spending on data? And

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Speaker 5: I think that's a good pitch.

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Speaker 4: Don't ship out on the data. Stay with us. More

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Speaker 4: from Bloomberg Intelligence coming.

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Speaker 1: Up there For this, you're listening to the Bloomberg Intelligence podcast.

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Speaker 1: Catch us live weekdays at ten am Eastern on Apple,

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Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. Listen

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Speaker 1: on demand wherever you get your podcasts, or watch us

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Speaker 1: live on YouTube.

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Speaker 2: Looking at young brands today, that's a stock in the news.

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Speaker 2: Uh sucks up five point six percent today, It's up

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Speaker 2: about ten percent year to date. Launching a strategic review

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Speaker 2: focusing on their Pizza Hut brand. There, let's break it

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Speaker 2: down a little bit with Michael Halen. He's a senior

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Speaker 2: restaurant analyst for Bloomberg Intelligence. Michael, when I was in

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Speaker 2: college in Richmond, Virginia, Pizza Hut was the bomb. That's

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Speaker 2: all we had down there for pizza. What's going on

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Speaker 2: with the Pizza Hut and what's Yum's thinking about?

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Speaker 5: Yeah?

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Speaker 6: Uh, you know, I miss I missed Pizza Hut from

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Speaker 6: back in the day.

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Speaker 4: You know, I feel like the quality.

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Speaker 6: Has slipped since then. Man, I lost those breadsticks especially Uh.

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Speaker 6: You know, UH International has been okay, but US has

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Speaker 6: been a big time drag on UFC. On a on

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Speaker 6: young brand's results. So yeah, so I think this was

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Speaker 6: kind of a long time coming. It's really been a

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Speaker 6: drag on the top and bottom line growth. You know,

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Speaker 6: Taco Bell is an absolute monster, is putting up unit

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Speaker 6: growth as well as same store sales growth quarter after

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Speaker 6: quarter after quarter. KFC has had some well documented same

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Speaker 6: store sales issues in the US, but that seems to

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Speaker 6: be turning. They had a solid little quarter here with

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Speaker 6: flat same store sales versus six straight quarters of decline,

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Speaker 6: so that business seems to be accelerating a little bit.

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Speaker 6: And KFC unit growth overseas is phenomenal, absolutely phenomenal.

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Speaker 4: They crush it overseas.

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Speaker 6: Yeah, so Pizza Hut has been this drag on this

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Speaker 6: business for quite some time. I think the street is

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Speaker 6: really excited about a potential divestiture here.

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Speaker 2: Any potential buyers out there that you can identify, No.

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Speaker 4: We don't have.

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Speaker 6: We don't think any of the companies in the public

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Speaker 6: market are going to be an acquirer of Pizza Hut. Yeah,

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Speaker 6: you know, this thing is, like I said, has struggled mightily.

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Speaker 6: I mean, we can see pete private equity. I think

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Speaker 6: private equity would be a good fit right, because it's

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Speaker 6: going to take you know, management set on the call.

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Speaker 6: It might take some of their markets two three years

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Speaker 6: to get them back to like their rightful position as

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Speaker 6: market leader in those countries they which they see as

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Speaker 6: their rightful, you know position. I think Dominos would have

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Speaker 6: something to say about that. But you know, it's gonna

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Speaker 6: take a few years to turn around some of these markets,

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Speaker 6: and private equity obviously looking out a five to seven

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Speaker 6: year time horizon would be a good fit.

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Speaker 2: All right, Mike, Let's step back the restaurant space in general,

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Speaker 2: getting through you know, earning season here. What are you

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Speaker 2: learning about kind of the consumer out there from the

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Speaker 2: restaurant perspective.

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Speaker 6: Yeah, today we heard from Wingstop and another fast casual

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Speaker 6: chain that's struggling also partly been a victim of its

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Speaker 6: own success.

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Speaker 7: Right.

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Speaker 6: It's absolutely crushed it over the last six years and

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Speaker 6: is lapping very very strong results from last year. But

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Speaker 6: they talked some more about lowing come consumers and Hispanic

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Speaker 6: consumer weakness and it broadening here in the third quarter.

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Speaker 6: The stock is up pretty significantly, though. We think there's

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Speaker 6: some couple of things going on. Number one, is stock

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Speaker 6: sold off big time off that Chipotle's poor third quarter print.

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Speaker 6: And secondly, there's some optimism here, I think around the

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Speaker 6: smart kitchens. So what's a smart kitchen they're so they're

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Speaker 6: rolling out some kitchen technology that's boosting operations. It's speeding

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Speaker 6: up service times. You know, they're they're putting out consistent

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Speaker 6: ten minute service times, which is fifty percent better than

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Speaker 6: they were doing prior. Accuracy is better, Food's getting to

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Speaker 6: customers hotter and fresher, and people are going to have

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Speaker 6: a better experience. And so stores that have had this

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Speaker 6: technology right now, it's in about two thirds of the

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Speaker 6: US stores, It's going to be in all three thousand

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Speaker 6: by the end of the year. But stores that have

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Speaker 6: this equipment and have had it the longest are outperforming

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Speaker 6: on same source sales by five hundred basis points.

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Speaker 4: So we think that's that's why the stock is up

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Speaker 4: so much.

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Speaker 6: People are now a little bit more confident in a

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Speaker 6: positive twenty twenty six despite the decelerating trends here in

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Speaker 6: the third quarter.

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Speaker 2: Boy, big Big Pop today stocks up thirteen percent today,

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Speaker 2: down fourteen percent year to date, but a good move today.

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Speaker 2: I don't think there's wingstops in Jersey, Are there Mike,

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Speaker 2: I haven't seen one.

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Speaker 6: Yeah, there's there's some, but there's there's not you know,

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Speaker 6: there's not a whole bunch. You know, Texas, it's strong

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Speaker 6: in Texas.

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Speaker 4: They're talking about the Southwest being strong.

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Speaker 6: But now, man, we need some more new Jersey wing

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Speaker 6: stuff franchisees.

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Speaker 2: The product's pretty good, absolutely. So what's going on on

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Speaker 2: the laborfront for restaurants? I'm thinking quick service restaurants. You know,

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Speaker 2: with the southern border shut off, that was one of

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Speaker 2: the industries that said we may have some labor problems

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Speaker 2: associated with that.

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Speaker 4: You heard from your companies about that.

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Speaker 6: Yeah, you know, our companies just talk about the fact

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Speaker 6: that they use Everify and there and they do everything

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Speaker 6: by the book, which you know, I think is predominantly

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Speaker 6: the case. The impact that you know you're seeing a

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Speaker 6: is with more of the independent restaurants.

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Speaker 5: OK.

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Speaker 6: But then be also kind of causes labor costs to

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Speaker 6: go higher here for the public chains, right, and they're

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Speaker 6: seeing another four to five you know, wage rate inflation

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Speaker 6: this year. That's been pretty common year in and year

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Speaker 6: out since the pandemic.

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Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on.

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Speaker 2: YouTube, Ranganath and she covers all the media names, including Spotify,

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Speaker 2: and she explained it to me very clearly early on in.

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Speaker 4: Coverage of this company.

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Speaker 2: I think of Spotify as kind of the Netflix for music,

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Speaker 2: and it's like, okay, now I get it.

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Speaker 4: Keitha, thanks so much for joining us here. What did

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Speaker 4: you make of the Spotify numbers?

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Speaker 7: I actually like the Spotify numbers, Paul. I mean, you know,

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Speaker 7: the big numbers that we always look for are, of course,

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Speaker 7: the user metrics. We want to see them kind of

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Speaker 7: do well on both monthly active users, which are basically

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Speaker 7: the free listeners, as well as the premium subscribers, which

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Speaker 7: is basically, you know, everyone paying about twelve dollars a

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Speaker 7: month for a Spotify subscription, and both those numbers came

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Speaker 7: in well ahead of guidance. The other number that we

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Speaker 7: look for in Spotify results is gross margin. This has

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Speaker 7: been you know, a constant point of debate, but Spotify

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Speaker 7: has done really well in terms of expanding their gross margin.

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Speaker 7: They again delivered numbers ahead of guidance both for you know,

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Speaker 7: third quarter as well as ahead of forecast for the

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Speaker 7: fourth quarter in terms of guidance. So fundamentals seem to

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Speaker 7: be really strong. I think the one concern, Paul, that

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Speaker 7: has really kind of emerged with Spotify over the past

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Speaker 7: few months is pricing power. You know, are they going

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Speaker 7: to keep you know, being able to increase prices? And

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Speaker 7: this is something that has dominated the conversation for not

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Speaker 7: just Spotify, but of course for any streaming company. We've

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Speaker 7: seen Netflix, as you just pointed out, demonstrate really good

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Speaker 7: pricing power. I think Spotify has very good pricing power

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Speaker 7: as well, but people are really waiting for the next

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Speaker 7: big US price hike to really gain more confidence in

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Speaker 7: the story.

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Speaker 2: Keith, what's the competitive landscape for Spotify out there? Because

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Speaker 2: as we think about the video business, it's Netflix and

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Speaker 2: then a kind of a big drop down to Disney

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Speaker 2: and then a bigger drop to kind of everybody else

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Speaker 2: fighting it out.

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Speaker 4: What's the landscape for in the audio business.

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Speaker 7: It's actually very similar, Paul. In fact, you know, Spotify

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Speaker 7: just leads by a wide, wide margin. So if you

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Speaker 7: just look at both the global audio streaming market in

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Speaker 7: terms of subscribers, they have about a thirty three percent

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Speaker 7: share globally. They have close to almost forty percent share

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Speaker 7: in the US market, so way ahead of their competitors.

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Speaker 7: So obviously gives them a lot of I think, you know,

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Speaker 7: again we come back to pricing power. Gives them definitely

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Speaker 7: a lot of pricing power in the market.

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Speaker 2: So what's the on the cost structure for them? What

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Speaker 2: are the real levers for them? It seems like you know,

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Speaker 2: the I know at Netflix and they got to write big,

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Speaker 2: big checks to you know, either license content or you know,

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Speaker 2: create their own content.

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Speaker 4: What's it like on the Spotify side.

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Speaker 7: Yeah, you bring up an excellent point, Paul, And this

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Speaker 7: has kind of again been one of the pain points

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Speaker 7: for Spotify because again, this is a music streaming service.

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Speaker 7: They don't own any of you know, the music music itself.

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Speaker 7: That's all kind of controlled by the labels, and as

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Speaker 7: you well know, content is king.

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Speaker 4: So this is really where.

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Speaker 7: Spotify has a lot of trouble because for every dollar

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Speaker 7: that they earned, about seventy cents goes back to the

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Speaker 7: music label, so they have very little leverage. They've been

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Speaker 7: trying to kind of change that whole dynamic, that whole

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Speaker 7: EQUI come up with more of their content. So a

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Speaker 7: big investment area for them has been you know, podcast

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Speaker 7: has been audiobooks where they kind of get better you know,

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Speaker 7: profit dynamics.

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Speaker 4: It has worked well.

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Speaker 7: But actually one of the things that we're kind of

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Speaker 7: looking for next year is we're going to see a

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Speaker 7: step up in all of the royalty costs. And that's

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Speaker 7: again something that the street and investors are a little

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Speaker 7: bit nervous about because we need to see how you know,

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Speaker 7: Spotify kind of manages their whole margin expansion story as

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Speaker 7: those royalty costs go up, So the amount that they're

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Speaker 7: paying all of the music labels, the warners, and the

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Speaker 7: universals of the world is going to go up slightly.

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Speaker 7: But we still think that they're in good shape. They've

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Speaker 7: been adding a ton of new features to all of

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Speaker 7: their tiers. They're probably going to debut some new tiers again.

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Speaker 7: All of that bills to that whole pricing, power and

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Speaker 7: monetization story.

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Speaker 2: And how is Apple as a competitor here, Because anytime

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Speaker 2: I see a company that's even remotely in competition Apple,

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Speaker 2: I get nervous.

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Speaker 7: So Apple, you know, if you're just kind of looking

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Speaker 7: at it. In terms of share, they are way below Spotify,

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Speaker 7: both globally as well as in the US market, so

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Speaker 7: not much of a competitor from from a share standpoint.

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Speaker 7: In fact, they've even priced their products slightly lower. Some

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Speaker 7: of the you know, some of the noise around Spotify

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Speaker 7: and Apple has been you know, in terms of the

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Speaker 7: iOS and whether you know, Spotify can kind of get

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Speaker 7: better terms, and they managed to do that as well,

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Speaker 7: So some of the changes on the iOS system have

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Speaker 7: actually helped Spotify in terms of getting a better market

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Speaker 7: share and getting better economics. Actually, so Apple Music not

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Speaker 7: too much of a worry for Spotify.

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Speaker 2: All right, let's switch gears to some of the big

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Speaker 2: cat media names you cover. I need to get an update,

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Speaker 2: Githa on Paramount, Warner Brothers, Discovery, Comcast, any movement forward

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Speaker 2: there or have to wait to the Allen Company conference

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Speaker 2: next summer to.

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Speaker 4: Get something done.

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Speaker 7: Yeah, we really don't know. We haven't heard anything. So

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Speaker 7: just a few days back, I think it was just

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Speaker 7: for last week and we heard that Netflix was kind

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Speaker 7: of poking around. So Warner Brothers Discovery at this point

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Speaker 7: has opened up their books to any of the interested parties.

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Speaker 7: There were news reports and Netflix is looking at some

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Speaker 7: of the financials of Warner Brothers Discovery. Again, this doesn't

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Speaker 7: necessarily mean that a bit is coming, but of course

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Speaker 7: anybody who you know has a chance, I'm sure, wants

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Speaker 7: to take a look at the Warner Brothers Discovery, especially

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Speaker 7: the studio and the streaming asset. So right now we

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Speaker 7: know Comcast is interested, we know Netflix is definitely interested,

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Speaker 7: and of course Paramount Skydance is interested. But again Paramoun

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Speaker 7: skid as interested for the whole company, so streaming studio

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Speaker 7: plus the TV networks.

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Speaker 5: So this is.

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Speaker 7: Again you know, I don't know it's how it's going

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Speaker 7: to play out, but hopefully we should get to hear

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Speaker 7: from you know, somebody pretty soon. Warner Brothers Discovery is

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Speaker 7: reporting a little later this week.

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Speaker 4: Boy. Yeah, you think about it, Gith.

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Speaker 2: I mean, you've got a company whose board and whose

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Speaker 2: CEO seems to be open to a deal. You would

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Speaker 2: think that something get happened quickly, but it's not.

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Speaker 7: How is it? Price has been a sticking point, Paul,

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Speaker 7: So we know that. Yeah, so we know that you know,

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Speaker 7: a paramount has come in with about twenty four dollars

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Speaker 7: a share. It looks like David's also was looking for

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Speaker 7: something north of thirty dollars, so again it's you know,

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Speaker 7: it's all going to come down to those negotiations.

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