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We're just talking about Peloton.
A lot of news there switching out to CEO and that's never good. It's checking with Mark German. He is a Bloomberg News reporter based in Los Angeles.
Mark, I know you did the reporting on this story. What's up with the CEO?
Yeah, Barry McCarthy two years he's out. I'm honestly surprised that he stayed this long. Nothing really to do with his age. He's in his seventies. He came out of retirement for this job. He used to be the CFO of Netflix and Spotify, but this was a tough turnaround job. His predecessor, John Foley, really left them in a hole. For those who don't remember, at the height of the pandemic,
Peloton exploded. Everyone was buying bikes in order to work out at home when gyms were closed and fully and Peloton made this bet, which obviously in hindsight, we know was a terrible bet that gyms would continue to be closed, COVID would last forever, the pandemic would never end, nobody would leave their homes and apartments ever. Again, they built a bunch of bikes. That's the bet they made, because they built. They started building a facility in Ohio to
build many more bikes. They invested and grew the company so quickly, right, and then when things started to reopen, Peloton fell flat on its face. They've had to lay off thousands of thousands of people. They had to restructure the whole company, and it was a hole that you couldn't really dig yourself out of. McCarthy was able to
get Apple to sorry, Peloton to free cash flow. But at this point, their share price is about three dollars a share, sales are down, they continue to miss their estimates. They continued to miss their own forecasts. Time for him to move on, And I think he made the prudent decision for himself. And I'm surprised it took this long.
So he was you mentioned CEO of Netflix and Spotify, right, So he is this subscription based guy, so right, see if I'm sorry, So he's a subscription guy. So are we learning anything about what Peloton will do and how their business model will evolve.
Well, he's you know, he was the he's the outgoing CEO Peloton, of course, and he did implement lots of subscription based features into the company. One of the first things he did was a subscription model for Peloton hardware, so you could actually lease a Peloton versus paying one thousand and fifteen hundred dollars outright for it. So that was a big thing he did. The other thing is they've expanded their content offerings, They've expanded their digital app tremendously,
and these are all subscription based products. So he's sort of turned it into a subscription. Now, you didn't ask me this, but I will make my projection of my own. I think that they're going to try to sell this thing now, right, laying off more people, doing a two hundred million dollars restructuring. They have no CEO in place now, two of their board members are you know, taking over a new board member or one of their old board
members is becoming their new chairman. This would make a good fit for something like Amazon Prime or for Netflix, right your Netflix or prime description get a little bit more valuable because it comes with fitness content. Maybe one of these companies can pull in all that content for under a billion dollars. I think that's the smart move for Peloton's board at this point. Try to get rid of this thing.
Wow, all right, Mark, great stuff, great reporting. Really appreciate you taking a few minutes of your time, Mark Herman, you're.
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Break down a little bit more on Quacom.
Angela Zino joins as vice president and senior equity analyst for c fr A Research in New York.
Angela, what's your takeaway here? The market certainly likes what soft from Qualcom. What's your takeaways?
Yeah?
No, we we love it.
You know.
We we upgraded the stock to a buy actually on the news. I mean, typically we hate upgrading near near the highs for a stock like this, but it's warranted and I think kind of The biggest takeaway on our end is this is a company that is clearly going to see some significant different diversification away from smartphones over
the next couple of years. I think a big concern of hours was eventually Qualcom would lose that Apple business, right as Apple kind of starts, you know, internally designing their motives at some point in time might be a twenty six, twenty seven to twenty eight things, but it would happen at some point in time. But that's that you kind of look at what they just did here. Android ecosystem is definitely coming back, specifically in China, grew
north of forty percent. More importantly, I think the numbers that they gave out for that automotive pipeline extremely impressive, kind of growing from thirty billion eighteen months ago to about forty five billion now. That provides some really nice visibility as you go. I went to twenty twenty sixth and beyond, and then you guys highlighted the ai PC opportunity,
and I think that's a really undappreciated story. They didn't throw any numbers out as far as aipcs are concerned in their opportunity there this quarter, but they did say that they were going to start throwing those that type of numbers, those type of numbers out next quarter, So I think that also is a potential catalyst that we can kind of see as they kind of go into their June quarter results in July.
All right, a lot to break through breakdown on that, And we'll get to Apple in this a second. But where do we learn from Qualcomm of where we are in the smartphone cycle?
Yeah, I mean, as far as the smart phone cycle is concerned, Hey, listen, this is this is a market that we think is still you know, peaked out in twenty sixteen. We don't see it getting back to those levels anytime in the near future. But that said, I think what the real key takeaway here for Qualcom is concern is we were looking for low single digit growth
as far as the smartphone market is concerned. But more importantly, the mix, especially on the Android side of things, will continue to kind of to shift towards more premium end devices. That's something that Apple has clearly benefited from over the years from a broader smartphone market, but as we kind of see that increasingly take place on the Android side, I think specifically from AI related smart smartphones. That provides
greater content growth for Qualcom. So Qualcom will be able to outgrow the smartphone market here over the next couple of years. We think because of that, you know, the content games that they're seeing, unlike what you're seeing from the likes of you know, Corvo and Skyworks, which just you know, the last two nights, you know, reported results that were pretty abysmal.
Hey, Angel, just a naive question for me. I just don't know the answer, but I do know there they sell a lot of chips into China.
Is that a risk for them? And if so, how do they mitigate it?
Yeah, I mean that's a great point. I mean, geopolitical risks are always out there, and you know, I think you know, it's been an issue that kind of Qualcom has had to contend with. I mean, they were more you know, relevant, and let's say, you know, Huawei is ecosystem here years ago and you kind of look at what they did last night, and they're sincely going to be completely gone from Huawei phones by the end of
this calendar year. So I think in some respects they're going to be forced out, you know, in certain instances of you know, certain devices out there. But yeah, I think that's a great question. I don't know if there's a way of necessarily mitigating that risk out there. But you know, in the same respect, a lot of kind of the the the chips that they sell into China are also not necessarily getting sold into the China market.
They're getting kind of pushed out in kind of getting sold across the rest of the world, even if they are China related phones. But it is a Listen, it's a it's a risk out there over time. Absolutely.
You mentioned the AIPC cycle, which leads us to some sort of the AI smartphone cycle, which leads us to Apple trying to connect all those jobs for us. I'm trying I do if that work. But what kind of AI computer AI phone cycle do you think we could be under and when does that kind of hit.
So, you know, as far as Apple is concerned, I think this is an absolutely massive opportunity for them. Hearing and Calendar twenty twenty four, and you know, the way we would look at it is, listen, the results here are going to be tonight are going to be what they are going to be. We don't expect anything good. But as as soon as next week, you're going to start going into a refresh cycle of iPad announcements. You're going to see Developers Conference in June, and then you're
later this year. We do think you're going to get you know, on device AI smartphones on the you know, the iPhone side of things, as well as another upgrade cycle opportunity on the Mac side of things. So this is a really interesting opportunity because we expect them a refreshed essentially their entire hardware ecosystem here over the next kind of eight to nine months, and we do think
that is underappreciated to an extent. Whether or not kind of consumers are going to go up you know, go out there and actually you know, upgrade their devices to these kind of AI enabled you know devices, remains to be seen. It all depends on what exactly Apple kind of rolls out, but we know they're going to put some crazy marketing power behind all of this, right, and we do think that there is potential for them to kind of at least increase pricing across certain aspects of
their ecosystem. So that should also kind of help support you know, an improving revenue trajectory as we get at least into the iPhone sixteen cycle later this year.
So in reality, though, Angel, what can the company say today about China?
Can they say?
I mean, because I think it's unclear whether their challenges in China are from competition from you know, changing consumer behaviors relates to buying Chinese products or anti American products. I don't know how to kind of phrase that out or parse that out.
What can they say? What's the market hoping to hear?
Well, I'll tell you what I'm hoping to hear. That would help me in terms of the China story. The China we think China revenue declines are probably going to be closer to fifteen to twenty percent, which is worse than expectations out there. But more importantly, I think is going to be exactly what they have to say about the China ecosystem out there, and kind of what they
have to say about the installed base. If they can kind of come out and say, hey, listen, the you know, we're seeing significant declines out there, and you know, maybe part of it is because, hey listen, you've got some tough comps out there. Maybe part of it is they
don't have an AI enabled device out there where. You know, other China you know, OEMs out there are kind of rolling out their AI enable devices out already, and then of course the Huawei Play but they can come out and say, hey, listen, the installed base continues to remain
either the same or incrementally grow out in China. I think that would alleviate some of the concerns out there about the China ecosystem, at least for US, and would also support view that this might be more of a cyclical thing than a circular structural thing.
Okay, here's my question. I have an AI smartphone. What is that going to do for me that my phone doesn't do?
Now?
Do we know the answer to that?
Angela?
Do we know that?
I mean, listen, I think when you kind of look at the and you know, you look at what the S twenty I think, you know, the most notable kind of AI enabled phone that's out there right now, at least from minuder saying, is the S twenty four with Samsung. And they've got some kind of incremental you know, you know, changes out there in terms of you know, supporting multi modal capabilities, translation, all that kind of stuff. It's not
necessarily anything groundbreaking in nature, right. I think what's going to be more important, at least from from Apple's perspective, is what they can kind of do in terms of things like you know, content creation, imaging, all that kind of stuff. Will it kind of get some of the gen Z population out there. I'm a little bit more
interested in potentially upgrading towards these devices. But to your point, you know, is there anything kind of earth shattering right now, some kind of killer opportunity out there on the AI side? I thinks I think that remains to be seen. It all depends on what some of these OEMs kind of come out with and showcase that the consumers.
Is it gonna like do my laundry for me?
Like?
I mean, there's you guys think about these things, right?
Oh man? Do my taxes? All right?
Angela, thanks a lot. Angela Zio, vice President, senior equity analyst at cfr A Research.
Joining us there, you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on.
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We're also live on YouTube, so.
Go ahead and check us out. Okay, so the market's kind of rolling over a little bit here. We got through some earnings. We do have Apple after the bell, we get jobs tomorrow dot dot dot. Then what like, what's your big takeaway? What's going to be the next catalyst? Joining us in studio to discuss is carol'sh life.
She is?
Where's the thing there? We go cio at BEMO Family Office. I knew it was there, Carol. I don't think I've ever seen you in person.
Hiding out in the Midwest a lot.
No, this is very exciting.
Yeah, it's very exciting for me. I love being in studio.
Okay, great, well, Carol, it's great to see you in person. What is going to be your next catalyst that you're looking for within the market. We keep getting through these big events. It's a little or no fanfare. So what's next?
Well, and I think the most interesting thing is is to take it up a level and instead of focusing on every piece of data, because the FED has kept
us really data dependent for a very long time. Is to focus on the overarching trend and there's lots of really interesting things going on intermediate and longer term, especially this, even though it's talked about, it's largely underappreciated, the secular trends we've got going on in infrastructure built not just infrastructure, but also that implies that we have to build data centers, which means we have to hook them to the grid, which the grid, you know, is difficult getting them hooked.
So the energy play utilities. There's lots of different ways to play this, and you can make an argument that this is the biggest infrastructure spend or the biggest productivity potential boost we've had since we put the interstates in in the fifties and completely changed the complexion of the United States. And so there's lots of stuff going on there.
It can be easy to get caught in the in the near term, we've got an election coming up, we've got more FED meetings, more data, but it's important to pull out of that and keep a longer term perspective.
William Woods University, Ulton, Missouri Awesome.
I was an equestrian science major. I thought I was going to horse trainer.
Yep, running money.
I did get a business degree while I.
So was the science in relation to equestrian stuff or was it.
Like it was?
It was I wanted to run the bar, not just train the horses, and so there was. And then I found I loved my business classes and I loved being based in the Midwest, because I do know who SOE. Robinson is, and I know who a lot of those other companies are there. Are you based in the mid based in Minneapolis, based in Minneapolis?
Yes?
Nice, Okay, what do we Okay, let's say we want to play infrastructure. Let's say some of those great Midwestern industries.
How are you guys playing it? How are you getting exposure here?
We've got and we've had an important uh specifically called out in an ETF and actively managed ETF pave Yeah like that, which is and then we actually another iteration is another actively managed ETF. The ai Q and X is one of the ways we've been doing it. There's a lot you can own the ETF, you can own the individual securities. We do have a lot of clients that own it individual securities. Lots of ways to play it.
There's also the structure around it. One of the other things we're focusing on from a global standpoint is trying to get to even a neutral weight in Japan when most of the world is underweight, because when you look at the Japanese indexes, they're much more technology heavy than the European the other developed markets which are more industrial or utility or old schools. So there's lots of different ways to play it, both individually as well as just leaning into those those sectors.
And so paved.
If you look on your Bloomberg terminal, it is Eaten, it is parkerhannafin Rentals Emerson. I love these guys.
Well, and when we were looking for a way to play it, we specifically searched out who are the ones that are going to be based on that rebuilding in the United States, And it's interesting. One of the it was watching h Robinson's Earnings actually where I first learned that Mexico is our biggest trading partner before the news was announcing it, because they were putting five hundred million dollar facility on this side of the border in Texas to help move that stuff.
Something we have heard though in a lot of these conference calls. Is that there's no doubt a structural shift underway for these industrial guys as they take advantage of the Chips Act and the Infrastructure Act and in etc. But it's still a cyclical industry and so a lot of these companies wind up having say a strong backlog, but they're not like booking the orders right away, like they're not making the kind of money now that we thought they necessarily would. How do you think about.
That, Well, I think it's important to you get that same sort of push and pull in the artificial intelligence because on the one hand, three years from now, we're going to be really happy that these big, deep pocketed companies are spending on infrastructure. But in the last earnings round we nailed some of them because they're spending on infrastructure.
To put that in, so it is the advantage we have is that we're investing very long term money, and so part of it is managing the expectations in the short run with clients that you know, here's what we're
building for the long run. We know it might be ballatle on the short run, and so will dollar cost average into some of these positions take advantage if they blow up on an earnings report or something like that, But it really is you have to stay out of the day to day frenzy, if you will, and focus.
So at BIMO Family Office for those who don't know, Bemo's Bank of Montreal. So I'm guessing by the name you have a lot of Canadian clients.
We actually we're the US of the Family Office and it was BIMO in the US has had Harris Bank from Chicago, so there's a lot of team mentioned.
Is there a difference between risk tolerance for a Canadian investor versus a US vestor?
Do you look at them differently? Stock spawns, alternatives, that kind of thing.
Interesting question. Canada tends to be very resource based, as you can, and so there's a lot of emphasis there. There is a difference to in the individual space somewhat, but you know, it's no different than any couple that sits down across from US. There might be different risk tolerance there where one wants to be a longer term investor and one wants to trade on the lightest. Would
you like energy looking for a friend? Yeah, Energy is definitely an interesting play and there's some of the you know, we've got really good energy and commodity analysis, where we've been having a lot of conversation for copper for a very long time about overcapacity under capacity. And it's hard because to your point earlier, they are cyclical industries. There's going to be those cyclical flows. But having cyclical operations inside a secular trend is more positive if that secular
trend is bringing everybody up. So the backlogs are building. Energy is tough because it's politically charged for a lot of Where do they invest, do they get back to shareholders? How do they participate in the transition of the grid.
So how about healthcare?
I see that in your notes here you kind of highlight biotechnology, and I always said, well, biotechnology, that's a tough place because it feels like it's binary. It either passes in the stock goes ripping, or it doesn't pass and it goes to zero.
How do you guys get exposure there?
Well, I think over arkingly, biotechnology is interesting as are for the artificial intelligence implications that you've got in drug delivery and drug discovery and med tech discovery and things like that. There are again, actively managed or passively managed
ETFs or ways to play it. We don't necessarily call it out as a secular theme in our portfolios, but healthcare in general, especially when you start thinking about the long term implications and the second and third knock on effects of the GLP one drugs in terms of do we need less diabetes drugs? Do we need fewer knat and plant replacements and surgery there as we move forward? So it's really fun to think about those long term trends.
Really, yeah, that's it's great. It's like that you get the opportunity to think of all the derivatives that are going to come after, which is really really.
Great, most importantly English or Western saddle Western?
Okay, what's the is there a dividing line.
Between There actually is four seats. There's hunt seat, saddle seat Western, and then dressage.
Okay, so is one of.
Them running backwards? Katie, Katie Grifell. They could you a whole equestrian podcasts. I've been on the horse like a couple of times. All I got, Carol, it was so great to see you. Thank you so much to come back. Really wonderful talking to your life a chief investment officer over at BEMO Family Office.
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I'm Alex the alongside Paul Sweeney. This is Bloomberg Intelligence Radio. We bring you all the news you need to know with great insight from a Bloomberg Intelligence team that cover about two thousand companies and one hundred and thirty industries worldwide. We also do something really special on Bloomberg called the Big Take, and sort of daily we put out something that's really in depth, also very timely, with great reporting.
And this Big Take also coincides with the lead in Bloomberg BusinessWeek, and it has to do with Intel committing some serious money into building a factory in Ohio. Joining us now is Max Chafkin. He's a senior reporter for Bloomberg BusinessWeek, and he co authored this piece with Ian King on Intel committing all of this money in Ohio. And you can read all of this at Bloomberg and
on Bloomberg dot com slash Big Take. All Right, Max, what walk us through the piece, what it's about and what you learned.
All right.
So, Intel, you know, at one time was one of the world's largest companies. It is essentially the one of the founding parts of Silicon Valley.
It's the reason it's called Silicon Valley in fact.
But over the last decade, Intel has really suffered, you know, they've they've sort of fallen behind both the big chip makers in the US, Nvidia, a MD, and they've fallen way behind on manufacturing, behind TSMC and Samsung. And that's a big problem for Intel, this you know, large important American company, but of course it is also a problem for the United States because Intel at this point is the only company making state of the art ships or even trying to make state of the arch ships in
the US. And over the last few years they've pursued basically a turnaround, and that turnaround is betting entirely on manufacturing.
You mentioned the project in Ohio.
President Bien has talked about that a fair number of times, including bringing it up in the State of the Union address.
They're also major, you.
Know, tens of billions of dollars projects in Arizona and Oregon. And this this these this work is being backed with a lot of money from Washington, uh nineteen point five billion in grants and loans from the Biden administration. So it's this big, ambitious attempt to turn around, you know, a really important company that's fallen on some hard times. It's also a big part of the White House's geopolitical strategy.
They're gonna build a megafab. What is a megafab? And can they actually is there? Are they gonna get it done here? Because this is big numbers.
Uh yeah, So the Intel's put twenty eight billion into this Ohio.
Site so far.
The site is it's about forty five minutes north of Columbus.
You know, it's in a bunch of farmland. It's really muddy.
You go there now and what you really see is just a ton of construction. What this The idea of a megafab would be to have multiple chip factories, each one of these things. You know, you're talking on the
order of ten billion dollars. They're gonna build two to start, and it sounds like a crazy amount of money, but at this point, that is what you need if you want to be able to compete to make chips, say for the iPhone or for AI chips, you know, to try to compete with Nvidia, which Intel you know, really desperately would like to do, but it just isn't quite there yet.
On the manufacturing side yet.
We have heard though of a lot of companies announcing projects and manufacturing facilities that don't get done, or the timeline's pushed out, or it gets paired back.
Where's inteling, Yeah, yeah, we saw this of course during the Trump administration. You know, there has been like a political shift over the last i'd say decade where there's a lot more enthusiasm both from Republicans and Democrats for sort of state backed industrial projects.
Not all those have gone great.
You know, I mentioned this story that one of the sites that Intel was looking at was this Wisconsin sight outside of Racine. People will remember that because Donald Trump called it the eighth Wonder of the World these eight or nine years ago talking about fox Con. You know, fox Hunt opened there, but it hasn't proven to be the job creator they on and there's there's a.
Risk with this project as well.
I will say these semiconductor factories, they are like some of the biggest and most ambitious kinds of factories you can build there are already. It's like I said, it's it's muddy. There's not a lot going on there right now, and there are already, you know, fourteen hundred construction workers working on that site today. Long run, they're saying it's going to employ something like seven thousand. And you hear that, you think, okay, seven thousand construction workers like that.
That's not as a temporary job, not a full time job.
But the thing is with these sites, construction could go on for decades.
You know, it's conceivable if.
They really built this thing out, that many of these construction workers could work like their entire career building these things. Because the nature of the business is you have to keep reinvesting and you have to keep building new fabs. And the way that you know, analysts and so on are looking at this industry, there's gonna be a lot more demand for chips, you know, in the coming decades.
And avoid reading your story and in king story here, you know this is a great example or just certainly an expensive example of onshoing the money for Intel in Ohio. But then you guys also report twelve billion dollars for plant being built in Arizona by Taiwan. Semiconductor six billion dollars for one in Texas being built by South Korea Samsung Electronics. So the money and is coming into the US for to ensure this ship business.
Yeah, I think this.
May turn out to be, you know, a thing that people are talking about in the next few months as we get closer to November. You know, this has been a big part of the Biden administration's industrial policy. It has components of sort of a jobs program because like as I was saying, you know, these are construction sites, you know, potential good jobs for people. Even even in these plants which are run by robots, the people still
work there. And the other thing you have is this kind of competition with China, and the Biden administration really seeing, you know, post COVID, post chips shortage that the United States needs to sort of be able to produce at least some of its own high end and chips because because right now that is not the case.
Now.
The interesting thing is that idea, the sort of China competition idea has devotees in both parties. You know, in Ohio, Ohio is a state dominated by Republicans. The Republicans have been touting this as well, however, you know, it's not clear if if Biden doesn't win, it's not totally clear like how things might change with Trump. But but right now it really seems like, you know, the US is
all in on investing in chip factories. There's even talk of a second chip sack, you know, the idea that we might even appropriate more money for this stuff.
Not to talk about energy, but let's talk about energy. How are they going to power these this kind of fab?
Yeah, I mean that is a huge issue, and talking to Intel, that is like one of the main issues in terms of where where you're going to cite one of these things. So when you're talking about building a fab, you're talking about essentially you need a lot of space, you need energy, and you also need water. Semiconductors use tons and tons of water. Now, Intel, what they say
is they are really mindful of their environmental stuff. They're you know, you know, all in on sustainability and so on a lot of the stuff that many companies say.
Although I have to say, they.
Are already recycling a huge amount of water at these plants, and and you know, for this industry to have a future, it does have to you know, continue you know improving on sustainability.
Let me just put a plug in for this story. I'm reading it right now.
First of all, great reporting, as always some Max and Ian Kig, but great like audio and graphics and stuff like that.
It shows you. The audio shows I feel like a shop by a drone or something.
It shows you how big this facility in Ohio.
Is going to be. So it's great stuff.
Check it out on Bloomberg dot com slash Big Take, or you can find it on the Bloomberg terminal. Max Chafkin, Senior Reporter Bloomberg BusinessWeek, joining us here in a Bloomberg Interactive Brooker Studio.
Great great story.
He and Ian King wrote on Intel that's twenty eight billion to make Ohio or, as Matt Miller would say, the great state of Ohio a global chips hub.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa, playing Bloomberg eleven thirty.
In our C Suite segment Today, a really unique story the company His name is Zoetis Health Animal Healthcare, and we talked about animal healthcare and therapeutics. We're talking in companion animals like dogs, cats, and horses, but also livestock, cattle, hogs, all that kind of good stuff. You got to get medicine to these animals.
And Zoetis does it.
Joining us today is Wetney Joseph, chief financial officer of Zoetis z ts is the ticker similar to load into your Bloomberg terminal. The good news is they're up seven percent today on some good earnings. Company's got a market kappas seventy seven point five billion dollars, so a significant global player in the world of healthcare for animals.
Ny, thanks so much for joining us here.
Just give us a little bit greater flavor about what you guys do a Zoetis. What's the story and what's kind of the growth outlook for you guys.
Thanks for having me, Paul, great to be with you today. Yes, Zoetis is the leading animal health company in the world, and we lead our industry and innovation. Have demonstrate and ability through our diverse and durable portfolio of products as well as our market leading innovation to actually grow faster than the market. And as you described, we have a part of our business, which is about two thirds of our businesses really advancing care for pets, so cats and
dogs and horses also are comparing animals. And then our livestock business is really production animals around the world. And we just delivered an outstanding quarter. We grew our top line twelve percent operationally and grew justin then income fifteen percent operation only on the back of this really resilient industry that we operate in and the innovation that we lead with.
Typically people tend to say, hey, you know what, anything to do with pets is recession proof, right, because like I won't eat, but my pet will. Is that the same in your business?
You laugh?
But true, I know.
You know ped owners would agree with you. Actually, we actually have survey after survey, and we see it in our numbers, in our results as well, but we have survey after survey that proves this, and about eighty six percent of pet owners in a very broad survey, indicated that they would spend whatever it takes if their pet
needed extensive veterinary care. And we did a market study also where we gave a hypothetical to pet owners and we said, look, if you had a twenty percent reduction in your budget, what would that do to how much you spend on your pet health? And the answer is nothing, They would not reduce it. So ped owners at large see this. And you know, I've been in the industry now for about three years and what's been really interesting is this is not just a phenomenon in the US
or in European markets. We see it across emerging markets as well, So it's really phenomenal.
So I'm looking at Wall Street forecasts on the Bloomberg terminal here for your company. Look, that's six to seven percent revenue growth in each of the next three four years. What are the components of the top line revenue growth for your company?
Yeah, Look, we have really multiple sources of growth. We have our companion animal portfolio he continues to grow, which are innovative products like we do in dermatology. So our key DRM franchise is actually one point four billion dollars and we essentially really shaped that market over the last decade. We have parasiticized which is the biggest segment of the market.
It's north of six billion dollars in terms of market and that segment is really growing for US, and we are the market leader in terms of triple combination products that tackle flee sticks and heartworm, and we posted growth in that segment today, really outstanding growth, including our Trio product which was sixty one percent. And so those two areas are two billion dollar franchises that we have and the third billion dollars for franchise that we are launching.
We launched actually three years ago in Europe and just recently launched in the US is Austria. Threat Is Pain, which we believe is a market that is poised for our innovation that we've launched, and we believe those products, both for cats and dogs, will be north of a billion dollars in peak sales for US, which is essentially within the first three to five years after launch. And in that segment also we saw tremendous growth in this quarter.
What's competition like, who are your main competitors?
So our main competitors are other animal health companies. So for example, borringeror Engelheim is a private company that has human health as well as animal health business. Mirk Animal Health is another one that I'm sure all of you a very familiar with they have an animal health business as well, and then in Lanco is also a publicly
traded company that has animal health offerings. We are the largest among our competitors, and we also lead with innovation in terms of the products that we come out with. I mentioned dermatology for example. I just mentioned au seria,
thrise pain. These are areas of significant unmet need that we really take our purpose driven colleagues and our capabilities around innovation to really look for meaningful innovation that changes the standard of care for animals, and we tend to lead and be first in market and that tends to drive the rest of our industry as well. So those are the main competitors that we have, but we're by far, you know, the leader in terms of innovation in our space.
And Alex you'll be happy to know that this is another New Jersey success story.
Parsipony, New Jersey. How about that, Wetney.
I look at your business, Well, you guys are truly global. Forty five about fifty three percent of your revenue comes the US and about you know, I don't know, forty five forty six percent comes international. Talk to us about the growth outlook for the US versus non US.
So we actually see really great balance growth across our business. We are in one hundred countries. So if you look at our international segment, for example, it grew eight percent operationally in the quarter, while the US led the way, particularly with Companion Animal growing globally twenty percent. The US grew about sixteen percent on the quarter, but we saw
eight percent growth in our international segment as well. So as we look out, if you look at the market globally, we are in Brazil, We're in Australia, We're in China, We're of course across Europe, and so very very global in nature, and we are introducing our innovation across all of those markets, so that tends to drive it. And really the US is our largest as you mentioned, fifty three percent, tends to be a little bit more Companion
Animal heavy. So the US is about seventy five percent Companion Animal, give or take, whereas Companion Animal globally is about two thirds of the company with the other third being production animals. Outside the US, it tends to be almost balanced. So a little bit, I would say, Companion Animal is just slightly over fifty percent, with the recing being live stock and we do see growth across our
emerging markets as well. And we're also in a lot of different species, so I talk about companion animal across live stock. We are of course in cattle, we're in poultry, we're in swine. When aqua also fish, particularly in markets like Chile and Norway, et cetera.
I didn't even think about it. I mean, yeah, great stuff, Wetney Joseph, great story. Thanks for taking the time to joining us, Wetney Joseph. He's a chief and anfangel officer. Zoatist is the name of the company located in Parsippany, New Jersey.
Fascinating story. Seventy five billion dollar market cap.
I mean it's a huge company, you know, about eight and a half billion dollars in revenue. It's one of those companies you never heard of until you're like, oh, yeah, I mean there's got to be somebody doing this stuff. Yeah, you know, and sure enough there is. And it's a totally truly a global business.
Well, especially as we need more protein to feed the rest of the world, as the world keeps growing, right, and it won't all be like in poss Burgers. You actually need the fish, you need the cows. You need the pigs, like, how do you keep them healthy? How do you advance that? So we're not running on any kind of shortage. I thought it was very interesting.
Also, total ecosystem play there pet.
Do you have a pet?
No, never had a pet?
I can see that about that.
Yeah, I know, I can.
I tell you you get four kids though, so there's off set of down.
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