WEBVTT - Preparing for Nvidia Earnings, SpaceX Faces Another Setback 0:00:00.840 --> 0:00:05.080 From the heart of where innovation, money and power collide 0:00:05.400 --> 0:00:10.680 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.800 --> 0:00:12.080 Caroline Hyde. 0:00:11.880 --> 0:00:28.640 And Ed Ludlow live from New York and San Francisco. 0:00:28.720 --> 0:00:31.920 This is Bloomberg Technology coming up. All eyes on three 0:00:32.040 --> 0:00:34.440 trillion dollar in video as it gears up for earnings 0:00:34.440 --> 0:00:38.360 after the closing bell. Can it profit margins weather the 0:00:38.479 --> 0:00:40.120 Chinese export restrictions? 0:00:40.720 --> 0:00:43.480 Plus, we speak with the CEO of identity software player 0:00:43.560 --> 0:00:47.559 Octa following its own earnings, posting a conservative forecast, and. 0:00:47.560 --> 0:00:51.479 A SpaceX Starship Rocket loss control and disintegrated during a 0:00:51.520 --> 0:00:55.280 test flight last night, the company's third setback in a row, 0:00:55.720 --> 0:00:57.920 the first ed we check in on these markets. Look 0:00:58.120 --> 0:01:00.760 gains disintegrating here too. Are currently of by about two 0:01:00.760 --> 0:01:02.920 tens percent. Look, we are treading water ahead of the 0:01:03.040 --> 0:01:05.440 all important macro event. Whether you think that's the FED 0:01:05.520 --> 0:01:07.640 minutes a little bit later today, or whether you think 0:01:07.640 --> 0:01:10.640 that that is the all important video numbers after the bell. 0:01:10.800 --> 0:01:11.960 We are on ten to Hook. 0:01:11.840 --> 0:01:14.959 Said, Yeah, Nvidia's a little bit softer, right down four 0:01:15.000 --> 0:01:17.440 tenths of one percent on a year to date basis. 0:01:17.440 --> 0:01:21.160 It's just in positive territory, up half a percentage point. 0:01:21.319 --> 0:01:23.119 Everyone I speak to Caro, I think. 0:01:23.040 --> 0:01:26.240 You're right in video is a macro level event when 0:01:26.280 --> 0:01:29.760 it comes to its earnings. So let's get right to 0:01:29.840 --> 0:01:33.120 what we can expect from those earnings later today and 0:01:33.160 --> 0:01:36.640 bring in Bloomberg intelligence around this. Kunjensbarni in his earnings 0:01:36.640 --> 0:01:42.399 preview research, Kunjen says investors should expect a strong quarter 0:01:42.560 --> 0:01:45.319 and congen. A big part of that is a ramp 0:01:45.319 --> 0:01:48.320 in GB two hundred and where those GB two hundred 0:01:48.400 --> 0:01:49.000 units are. 0:01:48.840 --> 0:01:52.560 Going definitely, I mean the demand expedition for GB two 0:01:52.680 --> 0:01:55.800 hundred from our channel checks continue to exceed what we 0:01:55.920 --> 0:01:59.480 thought before. And one key important point for this earnings 0:01:59.680 --> 0:02:02.440 is this is the most noisiest quarter we have seen 0:02:02.480 --> 0:02:05.360 in terms of Nvidia expectations. The two Q numbers have 0:02:05.440 --> 0:02:08.040 been brought down to take that impact of the China ban, 0:02:08.360 --> 0:02:10.839 but there is still a lot of confusion on that magnitude. 0:02:10.960 --> 0:02:12.240 So we think the beat. 0:02:12.000 --> 0:02:14.520 And the miss on the absolute basis for this quarter 0:02:14.760 --> 0:02:17.880 should be much less important. Rather, the more important thing 0:02:17.919 --> 0:02:20.520 should be the second half commentary around the GB three 0:02:20.560 --> 0:02:23.600 hundred transition, the clarity on the new China chip, and 0:02:23.800 --> 0:02:25.960 if bonus points if you can get some color on 0:02:26.000 --> 0:02:27.520 the twenty six dey Man outlook from. 0:02:27.440 --> 0:02:31.000 Jensen and from collect Chris, the CFO. How much do 0:02:31.000 --> 0:02:34.320 you need to hear from her about the margins going 0:02:34.360 --> 0:02:36.519 back to a seventy percent or so level at the 0:02:36.560 --> 0:02:38.519 moment because they have been under pressure congent. 0:02:39.360 --> 0:02:40.880 That will be a lot more important. 0:02:41.040 --> 0:02:42.760 We think margin will take. 0:02:42.560 --> 0:02:45.960 A headwind impact just like AMD did in either this. 0:02:45.960 --> 0:02:48.120 Quarter or next quarter, but that should be just. 0:02:48.080 --> 0:02:49.679 A one time, temporary impact. 0:02:49.880 --> 0:02:50.600 But you're right. 0:02:51.280 --> 0:02:53.680 If they can give any commentary in the confidence of 0:02:53.760 --> 0:02:57.040 getting back to the mid or even low seventies by 0:02:57.120 --> 0:03:00.000 Q four, that would be absolutely positive. 0:03:00.360 --> 0:03:02.079 It's going to be busy. Well, thank you so much 0:03:02.080 --> 0:03:05.480 for Bluemergis Intelligence. Let's discuss now in Video's expectations and 0:03:05.480 --> 0:03:08.000 how they fit in with the broader market. The macro perspective. 0:03:08.440 --> 0:03:11.920 Oka Yeshioka joins usport Hodio, consulting director at Wealth Enhancement Group, 0:03:12.120 --> 0:03:15.040 and look, this is a macro event. How do you 0:03:15.120 --> 0:03:17.680 manage what Kunjan has clearly said is going to be 0:03:17.760 --> 0:03:20.280 noise on the first footing of the numbers. 0:03:21.520 --> 0:03:24.119 Sure, Caroline, I think you know we put this into 0:03:24.280 --> 0:03:26.920 short term versus long term context. I think in the 0:03:26.960 --> 0:03:30.040 short term, yes, we might have a noisy quarter and 0:03:30.200 --> 0:03:33.880 maybe this does not allow Nvidia stock to break out 0:03:33.919 --> 0:03:36.480 of its sort of one hundred to one fifty range 0:03:36.520 --> 0:03:38.680 that it's been in over the last year. But I 0:03:38.720 --> 0:03:40.760 think over the long term, I think what we're all 0:03:40.800 --> 0:03:44.280 looking for is that macro impact of the AI theme. 0:03:44.880 --> 0:03:46.040 Is it going to continue? 0:03:46.240 --> 0:03:47.480 Is the demand really there? 0:03:47.520 --> 0:03:49.360 And I think the answer is going to be yes. 0:03:50.080 --> 0:03:52.360 In the short term and the long term. For me, 0:03:53.400 --> 0:03:56.040 the question is what happens for Nvidia in China. 0:03:58.400 --> 0:04:01.440 Absolutely, I think you know, everybody's aware of the H 0:04:01.560 --> 0:04:04.760 twenty export ban and whether or not, you know, in 0:04:04.920 --> 0:04:08.040 Video is going to potentially come up with a sort 0:04:08.040 --> 0:04:11.920 of new redesigned chip for that market. I think they're 0:04:12.280 --> 0:04:14.800 likely to work on it. They've done it before, and 0:04:14.880 --> 0:04:16.719 I think that's going to help. But that's the big 0:04:16.800 --> 0:04:19.719 question is what is China revenue going to look like 0:04:19.880 --> 0:04:22.160 for in Nvidia over the next six months as well 0:04:22.160 --> 0:04:23.160 as next year. 0:04:24.600 --> 0:04:27.359 And ioko what's notable is ed sat at the top. 0:04:27.839 --> 0:04:29.440 This is a stop thing. Yes, you can see is 0:04:29.440 --> 0:04:33.040 rebounded hard since it's loads in April forty percent were 0:04:33.080 --> 0:04:36.880 basically flat on the air and so how are we 0:04:36.920 --> 0:04:42.120 thinking about the AI trade more broadly at this moment geopolitics? 0:04:42.160 --> 0:04:45.280 Does that counter what has been the bubble driver of 0:04:45.320 --> 0:04:46.359 the last couple of years. 0:04:47.800 --> 0:04:50.520 Yeah, I don't know if geopolitics really counters it. I mean, 0:04:50.520 --> 0:04:54.520 clearly the tear off situation is weighing on a lot 0:04:54.560 --> 0:04:58.800 of tech companies as well, and so I think it's 0:04:58.920 --> 0:05:01.840 contributing to a lot of the noise that we're seeing here. 0:05:02.279 --> 0:05:04.000 But I think over the long term, we know that 0:05:04.080 --> 0:05:09.080 the build out for the infrastructure for AI continues, and 0:05:09.160 --> 0:05:11.200 you know, in video continues to benefit from that. 0:05:11.680 --> 0:05:14.080 We've already heard a lot about that boy the Middle 0:05:14.120 --> 0:05:17.719 East deals, Saudi Arabia, UAE. What more can Jensen deliver 0:05:17.800 --> 0:05:18.400 for you today? 0:05:20.120 --> 0:05:23.520 I think just the overall outlook regarding you know, additional 0:05:23.640 --> 0:05:26.440 use cases. How much are you know, in Videa's chips 0:05:26.480 --> 0:05:31.720 going to be utilized in robotaxis and you know, humanoid robotics. 0:05:32.000 --> 0:05:35.560 You know, I think those are additional areas of growth 0:05:35.960 --> 0:05:39.160 that can continue to propel in video stock hire over 0:05:39.200 --> 0:05:41.400 the long term. 0:05:41.440 --> 0:05:43.640 What is this like for you is a moment in 0:05:43.720 --> 0:05:45.640 time as an investor, like I'm trying to think about 0:05:45.640 --> 0:05:48.640 something that's analogous and for me the Earnings call it's 0:05:48.680 --> 0:05:51.120 a little bit like Tesla and Elon in that you 0:05:51.240 --> 0:05:53.440 get the Earnings release and you read through it and 0:05:53.440 --> 0:05:55.960 you think okay, and then there's a pre prepared remarks, 0:05:55.960 --> 0:05:57.520 But actually it all kind of hangs on the Q 0:05:57.680 --> 0:06:00.760 and A and this man called Jensen, who people call 0:06:00.800 --> 0:06:03.960 the godfather of AI and some people call him something different. 0:06:04.400 --> 0:06:08.080 Just when you're at your desk, how do you endure that? 0:06:08.200 --> 0:06:09.200 How do you play it? 0:06:10.640 --> 0:06:10.919 Sure? 0:06:11.000 --> 0:06:13.720 I think we're all listening for just you know, the 0:06:14.120 --> 0:06:18.400 demand cues, the supply constraints, really trying to understand the 0:06:19.080 --> 0:06:23.479 longer term sort of nature of this thematic. You know, 0:06:23.600 --> 0:06:27.520 cloud computing was something that came about and was very 0:06:27.760 --> 0:06:30.719 long and in duration in terms of its growth and 0:06:30.760 --> 0:06:35.160 it continues, right, we want to know how long AI's 0:06:35.360 --> 0:06:38.560 build out is going to continue as we transition from 0:06:38.720 --> 0:06:42.039 you know, training to inference, and you know how long 0:06:42.240 --> 0:06:44.760 that continues to benefit Nvidia. 0:06:46.880 --> 0:06:49.880 Do you say any attention to the technology story, Like 0:06:49.920 --> 0:06:51.960 if they tell you we have a new timeline for 0:06:52.000 --> 0:06:53.960 a product, do you react to it. 0:06:55.880 --> 0:06:59.240 Only to the extent that you know it continues to 0:06:59.279 --> 0:07:02.080 help to prop hell the AI story I mean, I 0:07:02.320 --> 0:07:05.440 think more so the more important things that came out 0:07:05.480 --> 0:07:09.160 were like the you know Envy Link Fusion, uh you 0:07:09.160 --> 0:07:12.400 know product that they talked about, just networking and allowing 0:07:12.440 --> 0:07:16.040 for additional you know, CPUs and a six to connect 0:07:16.680 --> 0:07:21.000 to the GPUs that that Nvidia produces. I think that 0:07:21.120 --> 0:07:24.920 allows for the overall AI growth story to continue for 0:07:25.080 --> 0:07:28.880 much longer, and it expands the total addressable market. So 0:07:29.280 --> 0:07:32.560 we like hearing things like that, you know, new additional 0:07:32.760 --> 0:07:36.080 sort of chips, you know, things that will follow, whether 0:07:36.120 --> 0:07:39.600 it's Rubin following Blackwell, we'd like to hear how that's 0:07:39.640 --> 0:07:43.440 going and the impact on margins from a timing perspective. 0:07:43.720 --> 0:07:46.720 But the quarterly fluctuations aren't going to sort of deter 0:07:47.000 --> 0:07:48.360 our long term thesis there. 0:07:48.680 --> 0:07:52.160 And are you fully over the anxiety around deep Seek 0:07:52.200 --> 0:07:54.720 because today the IR one model has been upgraded, we 0:07:54.840 --> 0:07:58.840 understand did Jensen do enough in terms of clearly showing 0:07:58.880 --> 0:08:02.840 the inferences where it's at TEI okay, I think so. 0:08:03.040 --> 0:08:06.280 I think we're seeing that across you know, many sort 0:08:06.320 --> 0:08:10.760 of uh you know, hyperscalers talking about this, and you know, 0:08:10.840 --> 0:08:14.160 I do think that the deep Seek story, although it 0:08:14.240 --> 0:08:16.440 was sort of jarring at the beginning. I think a 0:08:16.440 --> 0:08:18.680 lot of that really just came out of the fact 0:08:18.680 --> 0:08:20.800 that it came out of China. I think if it 0:08:20.840 --> 0:08:22.960 had come out of the United States, it might not 0:08:23.000 --> 0:08:26.360 have been as jarring. But again, you know, I think 0:08:26.400 --> 0:08:29.920 this really just sort of expands the overall uh, you know, 0:08:30.200 --> 0:08:31.600 addressable market. 0:08:32.480 --> 0:08:34.400 I think the sensible place to end it on it 0:08:34.720 --> 0:08:37.600 is a sort of chicken and egg debate. What's more 0:08:37.640 --> 0:08:40.199 important for investors to get a long term picture on 0:08:40.320 --> 0:08:43.680 Nvidia or the hyper scalers and their CAPEX figures, because 0:08:43.679 --> 0:08:45.360 we've kind of done a juggle between the two. 0:08:46.800 --> 0:08:50.400 It's a great question. I think it's the CAPPAC spend. 0:08:51.120 --> 0:08:53.440 You know, one of the things that we continue to 0:08:53.520 --> 0:08:56.959 monitor is the overall CAPAC spend from the hyper scalers, 0:08:57.000 --> 0:09:01.000 and it continues to grow. The growth rate has slowed down, 0:09:01.040 --> 0:09:04.200 and we expect that to slow down going forward, but 0:09:04.400 --> 0:09:08.080 that spend in terms of dollars continues to be very large, 0:09:08.559 --> 0:09:11.520 and that will propel the overall infrastructure and the speed 0:09:11.559 --> 0:09:13.240 at which we all adopt. 0:09:12.880 --> 0:09:16.360 Ai Jensen one would disagree with you. He'd say, I 0:09:16.400 --> 0:09:18.480 told everyone what I'm doing for five years, so they 0:09:18.520 --> 0:09:22.600 can make better plans. Oyoko Yoshioka, portfolio consulting director at 0:09:22.600 --> 0:09:23.160 a wealth. 0:09:22.960 --> 0:09:24.480 Enhancement group, thank you very much. 0:09:33.280 --> 0:09:36.160 Octa shares down nearly fourteen percent today after the maker 0:09:36.200 --> 0:09:40.840 of identity management software gave a conservative forecast for the futures. 0:09:40.880 --> 0:09:43.640 Ox's first quarter revenue is up twelve percent year over year, 0:09:43.960 --> 0:09:47.720 and subscription baglocks suggests a longer sales cycle. That's according 0:09:47.720 --> 0:09:51.040 to our own Bloomberg analysis. We're joined now by OCTA's CEO, 0:09:51.440 --> 0:09:53.840 Tom McKinnon. Let's get the market, Cee Bicket out the 0:09:53.840 --> 0:09:58.319 way this conservative guide. Do you agree with the interpretation 0:09:58.440 --> 0:10:01.439 that it's conservative, and if so, what made you be 0:10:01.480 --> 0:10:02.480 a little more cautious. 0:10:02.679 --> 0:10:05.600 Well, I think we're talking about guidance on very short term. 0:10:05.760 --> 0:10:08.880 So one quarter is a very short term, and so yeah, 0:10:09.040 --> 0:10:10.360 we would look at the world right now and we 0:10:10.440 --> 0:10:13.200 say there's some uncertainty with tariffs and trade policy and 0:10:13.280 --> 0:10:16.120 economic the future of the economy and the short term, 0:10:16.280 --> 0:10:18.400 and so we give a prudent guide, but that doesn't 0:10:18.520 --> 0:10:21.160 change our outlook for even the medium term. The long term. 0:10:21.240 --> 0:10:24.000 We're very bullish on the opportunity, very bullish on the business. 0:10:24.120 --> 0:10:26.040 And if you look at the Q one numbers. We 0:10:26.120 --> 0:10:28.240 have a lot of reason to be optimistic in Q 0:10:28.320 --> 0:10:29.600 one over the medium and long term. 0:10:29.640 --> 0:10:33.120 We're talking about identity and access management, like that's the 0:10:33.160 --> 0:10:35.840 field you're in. But one tailwind that I keep hearing 0:10:35.840 --> 0:10:39.320 about is this issue of AI memory and AI agents. 0:10:39.320 --> 0:10:41.440 In other words, if an AI agent is going to 0:10:41.440 --> 0:10:44.800 be super useful, it needs to talk to many other agents, 0:10:44.840 --> 0:10:47.000 but it means the person, the human at the center 0:10:47.040 --> 0:10:48.840 of it, has to give away a lot. 0:10:48.760 --> 0:10:49.520 Of their information. 0:10:50.000 --> 0:10:52.040 That may be an area where you come in and 0:10:52.080 --> 0:10:53.760 make it more secure. 0:10:54.120 --> 0:10:55.680 Is there an opportunity to Well, what. 0:10:55.640 --> 0:10:58.320 Identity and access management is about is making sure the 0:10:58.360 --> 0:11:00.880 right people have access to the right information. And traditionally 0:11:00.880 --> 0:11:05.000 that's been business applications, web applications, mobile phones, mobile applications. 0:11:05.280 --> 0:11:08.280 And what's happening in this AI revolution is that now 0:11:08.480 --> 0:11:11.240 machines are accessing information more and more than ever. So 0:11:11.280 --> 0:11:13.360 it's not only about getting the people the right access, 0:11:13.360 --> 0:11:15.319 but you have to get the computers the right access. 0:11:15.640 --> 0:11:16.760 And we're very good at that. 0:11:16.800 --> 0:11:19.120 We have thousands and thousands of customers that trust us 0:11:19.120 --> 0:11:21.440 every day to make sure that their machines and their 0:11:22.280 --> 0:11:24.719 software systems have access to the right information and now 0:11:24.760 --> 0:11:27.560 AI is turbo charging that you're getting. We're moving in 0:11:27.559 --> 0:11:30.920 the industry. We're moving from prototypes. Everyone's prototyping these agentic 0:11:31.000 --> 0:11:34.000 systems and these customer support reps and these sales reps 0:11:34.000 --> 0:11:36.319 that can work on people's behalf and they're putting them 0:11:36.360 --> 0:11:38.800 in production and that means they have to have this 0:11:38.960 --> 0:11:41.920 access to real customer data, real user data, and that's 0:11:41.960 --> 0:11:43.440 where we come in. We can help them do that 0:11:43.480 --> 0:11:47.320 seamlessly and sec securely, and most importantly, make these prototypes 0:11:47.360 --> 0:11:49.760 of work. And that's what businesses want. They want AI 0:11:49.800 --> 0:11:51.400 to work for them, and we can help them do that. 0:11:51.520 --> 0:11:53.760 What about the public sector? How much do they want it? 0:11:53.760 --> 0:11:56.560 Because I know you've secured some decent deals with them 0:11:56.600 --> 0:11:56.960 of late. 0:11:57.880 --> 0:11:58.880 Yeah, it's no different. 0:11:59.120 --> 0:12:01.360 Every government agent is trying to get more efficient and 0:12:01.360 --> 0:12:04.040 more effective with their IT and the AI revolution is 0:12:04.080 --> 0:12:06.520 part of that. In fact, in Q one, four of 0:12:06.520 --> 0:12:09.240 our top ten deals were with public sector agency, so 0:12:09.240 --> 0:12:11.880 we're seeing very robust demand there and it's for the 0:12:11.920 --> 0:12:14.440 same reason they need to be secure. Our business is 0:12:14.440 --> 0:12:17.160 about identity, and what people are understanding is that identity 0:12:17.240 --> 0:12:17.800 is security. 0:12:17.800 --> 0:12:19.240 To be secure, you have to have a good. 0:12:19.120 --> 0:12:21.320 Identity system and then when you start to do the 0:12:21.360 --> 0:12:25.959 agentic workloads and move these projects from prototypes and proofs 0:12:25.960 --> 0:12:29.160 of concepts into production, you really have to control access 0:12:29.160 --> 0:12:30.760 to the data. And that's what our customers are telling 0:12:30.840 --> 0:12:31.640 us we can do for them. 0:12:31.800 --> 0:12:35.040 And of course the drive for DOZE for efficiency was 0:12:35.080 --> 0:12:38.320 about tech adoption, but it is also about cost cutting. 0:12:38.520 --> 0:12:40.640 How much do you think that there is this head wind, 0:12:40.679 --> 0:12:44.040 this caution around well, maybe a pushback on some of 0:12:44.040 --> 0:12:45.880 the contracts that you have within the public sector. 0:12:46.840 --> 0:12:48.959 Well, like I said, four of our top ten deals 0:12:48.960 --> 0:12:50.439 and two of the top three deals in the Q 0:12:50.520 --> 0:12:52.960 one we're in the public sector. So what you're seeing, 0:12:53.000 --> 0:12:56.360 especially at the US federal level, is organizations are looking 0:12:56.400 --> 0:12:59.120 to be more efficient and more effective, and that means 0:12:59.200 --> 0:13:01.560 looking at all their spending. But most of their spending 0:13:01.640 --> 0:13:05.680 is on legacy technology, so they're managing on premise software 0:13:05.840 --> 0:13:09.040 and their pain massive bills to people to support and 0:13:09.080 --> 0:13:13.000 maintain that software. And the industry of cloud computing and 0:13:13.080 --> 0:13:17.800 AI offers a viable alternative, and inside of that is 0:13:17.840 --> 0:13:20.240 the key layer in security and managing it. So if 0:13:20.280 --> 0:13:23.320 you want security and you want efficiency, we're a required 0:13:23.360 --> 0:13:25.160 thing and that's what's driving some of the success in 0:13:25.240 --> 0:13:25.679 that part of. 0:13:25.600 --> 0:13:26.280 The market for US. 0:13:26.880 --> 0:13:30.439 Octa has been trading for several years as a public company. 0:13:30.679 --> 0:13:33.240 When was it founded just very quickly two thousand and nine. 0:13:33.480 --> 0:13:35.880 He just talks about legacy tech. Could you just talk 0:13:35.920 --> 0:13:37.840 a little bit about what doing business is like in 0:13:37.880 --> 0:13:40.240 this environment? So there are lots of new names in 0:13:40.280 --> 0:13:42.760 this field. There are lots of new names who want 0:13:42.800 --> 0:13:45.480 to be your customers, and they're kind of used to 0:13:45.679 --> 0:13:48.200 negotiating with other people they may or may not know 0:13:48.559 --> 0:13:51.760 in this sort of Silicon Valley orbit. You've been around 0:13:51.800 --> 0:13:53.480 a little longer, and I just wonder what that's like. 0:13:53.679 --> 0:13:56.200 Well, I think the most exciting thing about the current 0:13:56.600 --> 0:13:59.640 age of technology is that we are very established. 0:13:59.679 --> 0:14:02.559 We have two point six. 0:14:02.440 --> 0:14:05.920 Billion dollars of revenue and growing quickly, and we're very profitable. 0:14:06.080 --> 0:14:08.679 In fact, in Q one we had record profitability. So 0:14:08.720 --> 0:14:11.440 in our space, we are the clear leader our space 0:14:11.440 --> 0:14:14.720 of independent and neutral identity management. And now there's this 0:14:14.800 --> 0:14:18.600 AI revolution and it's opening up vast new markets for 0:14:18.679 --> 0:14:21.440 every technology company. So it's like, how do you defend 0:14:21.480 --> 0:14:23.280 what you've done very well while at the same time 0:14:23.360 --> 0:14:25.600 investing for the future and innovating to making sure you 0:14:25.640 --> 0:14:29.760 capture this massive new opportunity. It's quite exciting, but it 0:14:29.800 --> 0:14:33.280 makes us really double down and stick to our past 0:14:33.360 --> 0:14:35.720 history of innovation and defining the market and extending what 0:14:35.760 --> 0:14:37.160 we've done into this whole new world. 0:14:37.440 --> 0:14:41.040 At the top of the segment, we reference subscription backlogs. 0:14:41.560 --> 0:14:45.040 Why is there a backlog and how does it get unfolded? 0:14:45.240 --> 0:14:48.160 Well, we're a cloud service, so people pay us a 0:14:48.240 --> 0:14:52.440 recurring subscription, so we prove value to them and they 0:14:52.600 --> 0:14:55.720 reinvest in us over a period of the contract duration. 0:14:56.120 --> 0:14:58.080 That's the way business works now, and it's a good 0:14:58.120 --> 0:15:00.800 trade off between value delivered to the customer and a 0:15:00.880 --> 0:15:03.600 vendor like us being able to capture that value we deliver. 0:15:04.520 --> 0:15:07.920 Oltor CEO Tom McKinnon, we really appreciate coming on and 0:15:08.040 --> 0:15:10.800 talking back against perhaps some of the narratives around the 0:15:10.840 --> 0:15:22.320 DOGE issues. Apple set to release a dedicated gaming app 0:15:22.320 --> 0:15:25.280 across its devices later this year. It's all according to sources. 0:15:25.320 --> 0:15:27.520 The feature is set to debut at this year's Worldwide 0:15:27.520 --> 0:15:30.960 Developers Conference on June ninth, just a few days after 0:15:31.040 --> 0:15:34.680 Nintendo's switched to release from All. Bloomberg's Mark Gunman joins 0:15:34.760 --> 0:15:38.560 us now and is this defense? Is this offense, Mark. 0:15:39.520 --> 0:15:41.240 Ye, thank you for having me. Apple has been working 0:15:41.240 --> 0:15:42.640 on this for quite some time. 0:15:42.800 --> 0:15:45.800 Over the past few years, they've been trying to push 0:15:45.920 --> 0:15:50.600 iOS and mac os as better gaming platforms, and you know, 0:15:50.720 --> 0:15:52.480 the Mac has come a long way. There are new 0:15:52.520 --> 0:15:56.040 porting tools for developers to move their apps over from 0:15:56.120 --> 0:15:59.280 PC to Mac, but there's still a long way to go. 0:15:59.560 --> 0:16:03.200 You've seen all sorts of different cloud gaming services and 0:16:03.360 --> 0:16:06.080 on device gaming services over the last few years. 0:16:06.200 --> 0:16:07.560 You've seen some from Google. 0:16:07.960 --> 0:16:10.440 Microsoft has tried this, and what Apple's trying to do 0:16:10.520 --> 0:16:15.000 with this app is create one unified place where developers. 0:16:14.400 --> 0:16:17.240 Can pitch their apps with new editorial. 0:16:16.760 --> 0:16:21.200 Content, a unified place for gamers on all of Apple's 0:16:21.200 --> 0:16:23.560 devices to go to when they want to launch a game, 0:16:24.200 --> 0:16:27.840 view achievements, view leader boards, connect with other players online. 0:16:27.880 --> 0:16:31.120 And so this new service is Apple Games application that 0:16:31.120 --> 0:16:33.280 will be pre installed on Apple's devices beginning at the 0:16:33.360 --> 0:16:35.560 end of this year, will be that new place to 0:16:35.600 --> 0:16:36.800 do so. 0:16:36.880 --> 0:16:41.360 Mark I've struggled for many years with gaming through macOS. 0:16:41.920 --> 0:16:43.080 I find this so interesting. 0:16:43.680 --> 0:16:47.200 On the titles themselves, we're not saying though, that Apple 0:16:47.720 --> 0:16:50.400 is going to become a developer and publisher of games 0:16:50.400 --> 0:16:52.840 specific to its own net platform, right, it is still 0:16:52.880 --> 0:16:59.000 a marketplace and a way to monetize access through other people's. 0:16:57.920 --> 0:16:59.040 Software and titles. 0:17:00.240 --> 0:17:05.199 Apple bought a two person game studio. I believe the 0:17:05.240 --> 0:17:08.480 app is called Sneaky Sasquatch. It's one of the more 0:17:08.520 --> 0:17:11.680 popular games on the Apple Arcade subscription service, So they 0:17:11.760 --> 0:17:15.200 bought that. But I don't anticipate them to go a 0:17:15.240 --> 0:17:18.199 lot further than that in terms of in house games. 0:17:18.280 --> 0:17:21.359 Maybe they'll buy a few other smaller studios, but I 0:17:21.400 --> 0:17:24.640 don't anticipate them to go down the route of developing 0:17:24.920 --> 0:17:28.480 their own games, investing billions of dollars into that. What 0:17:28.560 --> 0:17:31.320 I do expect is for this new games app on 0:17:31.400 --> 0:17:34.600 Apple devices to be a central way where people access games. 0:17:34.960 --> 0:17:37.560 You know, two thirds of Apple revenue from the app store, 0:17:37.640 --> 0:17:41.639 probably north of twelve thirteen billion dollars a year, comes 0:17:41.640 --> 0:17:43.600 from games, So games is super important. 0:17:43.640 --> 0:17:44.880 They want people playing more. 0:17:44.720 --> 0:17:47.080 Games, they want people downloading more games, they want people 0:17:47.080 --> 0:17:50.240 buying more subscriptions within games, and having a unified place 0:17:50.520 --> 0:17:54.720 to access all those titles could potentially help with that. 0:17:55.280 --> 0:17:57.800 Gaming is important to Apple's business model, But how important 0:17:57.800 --> 0:18:00.680 is Apple to the gaming industry? What sort of market 0:18:00.680 --> 0:18:02.440 share does it have give us the context mark? 0:18:03.400 --> 0:18:05.840 You know, if you think about it, the iPhone is 0:18:05.840 --> 0:18:08.119 probably the most popular gaming device. 0:18:07.960 --> 0:18:08.640 On the planet. 0:18:08.800 --> 0:18:12.879 You can now get TRIPLEA titles on their resident Evil 0:18:13.119 --> 0:18:17.119 Fortnite is back on the app store now after a 0:18:17.160 --> 0:18:21.840 few year reprieve after that lawsuit hit new levels with the. 0:18:24.280 --> 0:18:27.520 Well technically jump in here, Carro, because I think we 0:18:27.560 --> 0:18:30.399 had a technical issue on Bloomberg technology, but thanks to 0:18:30.400 --> 0:18:33.680 Bloomberg's Mark German, another story we're tracking. YouTube has spent 0:18:33.760 --> 0:18:36.880 the past few years trying to make itself the centerpiece 0:18:37.160 --> 0:18:40.280 of the living room, and now creators are finding themselves 0:18:40.280 --> 0:18:43.320 making longer shows to meet viewers where they are in 0:18:43.359 --> 0:18:46.080 front of their TVs, where YouTube is now the TV 0:18:46.240 --> 0:18:48.600 service of choice for viewers. 0:18:48.280 --> 0:18:48.960 Of all ages. 0:18:48.960 --> 0:18:51.920 Bloombergs Lucashaw is here for more in his BusinessWeek piece 0:18:51.960 --> 0:18:54.399 That's out there. I found this so interesting in the 0:18:54.440 --> 0:18:58.080 context of like different genres. I think about where I 0:18:58.200 --> 0:19:00.960 consume and what I consume on YouTube. What is the 0:19:01.080 --> 0:19:04.360 kind of conclusion reached in this Business Week piece. 0:19:04.200 --> 0:19:08.879 Leucas well, I think for most of YouTube's existence, people 0:19:08.960 --> 0:19:12.080 thought of it as a short form video service that 0:19:12.119 --> 0:19:17.119 people watched probably initially on you know, laptops and desktop computers, 0:19:17.359 --> 0:19:20.359 then primarily mobile phones, and over the last three to 0:19:20.480 --> 0:19:23.040 five years there's been a pretty dramatic shift where the 0:19:23.080 --> 0:19:26.520 television is now the primary device that people use, at 0:19:26.600 --> 0:19:28.920 least in the US and increasingly in other countries. 0:19:29.240 --> 0:19:30.440 And as a result of that. 0:19:30.600 --> 0:19:32.520 Or you know, a little bit of a chicken in 0:19:32.560 --> 0:19:35.280 the egg scenario, but the length of video that people 0:19:35.320 --> 0:19:38.040 are watching is getting longer, whether that's a three hour 0:19:38.160 --> 0:19:42.040 Jo Roken podcast or a twenty five minute sitcom, and 0:19:42.080 --> 0:19:44.000 the latter is something that really interested me because I 0:19:44.080 --> 0:19:46.480 also think most people think of YouTube as a place 0:19:46.560 --> 0:19:51.080 for sort of crappy, unscripted stuff, and increasingly there is 0:19:51.119 --> 0:19:53.360 scripted programming that people actually watch on YouTube. 0:19:53.680 --> 0:19:57.000 Slopfest, that's what you say in the piece, and this 0:19:57.160 --> 0:20:01.320 idea that it has slop that perhaps others in the 0:20:01.359 --> 0:20:03.920 industry try to portray. But how have they pushed back 0:20:03.960 --> 0:20:06.640 against that? How are we seeing that reverse in terms 0:20:06.680 --> 0:20:07.359 of trends or not? 0:20:07.480 --> 0:20:11.000