Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside my co host Matt Miller.
Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moven news.
Find the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast. All right, let's bring on our next guest. We love talking to Danielle. Danielle de Martino Booth, chief strategist and CEO at QI Intelligence. Danielle, We've now had some time a weekend or so to kind of digest what we've heard from various central bankers around the world. I'm sure you've had a chance to kind of coalesce a viewpoint.
Anything change for you. What are you really thinking about where these central banks are going, where rates are going, based on what we learned from some of them last week.
Well, I think at a very minimum, you need to think of rates as going nowhere.
Okay, and I say that as a minimum.
We've only got a twenty percent probability of a rate hike for the September the twentieth, But you know, this is a big week for payroll data, so you know, more strength in that area, even if it's very lagged in nature, even if we're seeing massive revisions come out of the Bureau of Labor Statistics, their birth death adjustment showed a negative eight hundred and sixteen thousand revision downward in the three quarters and December thirty first, twenty twenty two.
Even though the data seems to be catching up with reality, it's pretty apparent to me.
At least that J.
Powell is looking at backward looking data for reasons to justify higher for longer. I think that that is the goal, and I think that he's going to look for whatever data he can find to justify pressing forward with another rate high ort again at a minimum, staying higher for longer, continuing to run that balance sheet down.
Danielle, this is Simone here in New York. Good morning to you. You know you talk about this meeting reality, the FED meeting reality, and how the yellow trucking shut down may herald the big beginning of a sort of bankruptcy cycle. How do you see this playing out? What kind of timeline would you anticipate for seeing more bankruptcies? And then when can kind of the FED no longer ignore that.
You know, that's a fabulous question, because you know, if you look at bcygo on the terminal, you'll see that the march of bankruptcies really.
Has not subsided.
We're continuing to see bankruptcies roll in at the fastest pace since two thousand and nine. I think what the FED has to take into account though, right now.
Is headline risk.
You kind of had a series of quarters where Silicon Valley was coming out with very splashy headlines ten thousand here, ten thousand there, and then that kind of went dormant for a while. We really haven't seen headline risk in layoffs announcements, but I think that we're going to see
that increasingly going forward. Whether you're talking to Chris Williamson over at Standard and Poors, who is saying that, you know, if manufacturing backlogs remain in traction as they'd have now for fourteen fifteen straight months, that you're going to start to see manufacturers that are not benefiting from the Inflation Production Act, they are not building green new factories, You're
going to see layoffs start to come through. And that's exactly what Chris Williamson warned about in the second quarter earning season. Remember worldly at the halfway point in this earning season, and you've got this great, big splashy thirty thousand people losing their jobs. Because it looks like this is going to be a Chapter seven filing straight to liquidation as opposed to a Chapter eleven restructuring. This is going to take capture a lot of Americans' attention.
So we're going to have a ton of economic data this week, Danielle, You're going to you and your team going to be very busy. Obviously, the non form payroll will be a big data point. I guess I'm looking around the world. I'm seeing some recessions around the world. I guess Germany just had a flatline quarter after a couple quarters of contraction. Are you concerned? What is your level of concern about this US economy here?
Well, the US economy cannot claim to exist on an island. You know, there was a very slight uptick in Chinese official manufacturing data overnight, but that remained in contraction. I think the more notable development out of China, given that we had such great hopes for this reopening trade, is more so that we're seeing a downward movement in the services components of these PMI numbers, and that I think
was what people paid closer attention to overnight. G If it's not going to be the industrial sector out of China, then what's going to happen if the services side is slowing down? Specifically that that service is one dropped to fifty one point five. So you're kind of on the edge of contraction in the second largest economy. And as you just pointed out, Germany is really three quarters into recession. We saw that the first quarter in Germany ended up
being revised downward into contraction. We could see a similar a bit of data coming out of Germany that revises this the second quarter into contraction as well. The United States cannot isolate.
Itself from the globality of the current recession.
Yeah, but I mean to that end, though, the United States has existed a little bit apart from China for several years now. Considering how slowly China has come back in the game post pandemic, and the US consumer remains strong, I mean, do you think that the US consumer can potentially continue to kind of power through some of this growth and offset some of the woes that we hear from around the world despite this level of a rising interst rates.
You know, it's interesting you raise that question. Outside of the employee Retention Credit, which we know, I think pumped about thirty three billion dollars into the US economy, we
know much of this is fraudulent. Outside of that fiscal area of massive support going to some of the wealthy Americans, We're seeing a big uptick in the number of student loan borrowers who are preemptively getting out in front of what they know to be resumed student loan payments, and that's going to have a crimping effect on US consumption. And we are indeed beginning to see that. So people are getting ahead of interest accrual beginning on septem of
the first actual payments beginning on October the first. I don't see an offset to that in terms of layoffs decreasing, in terms of hiring increasing. We're just not seeing enough evidence to show that there's any upward momentum going forward for the US consumer.
All Right, So I'm going back and I'm looking at this ecoscreen on the Bloomberg terminal. It is literally two screens full of data we're going to get this week, Danielle, can you help me focus on what I need to focus on if there's a data point out there that you're really going to pay attention to this week.
So I'm going to be looking a lot in terms of hours worked, and that really is a gauge of how tightly employees are holding on to their employers are holding onto their employees. If they're cutting back hours aggressively, trying to not push through with cutting handcount to cut costs. That's something we pay very close attention to. And again, we had Chicago PMI just out a few minutes ago
that showed that backlogs remain in contraction. I'll be looking for a similar echo out of the Dallas Fed Manufacturing that hits at half past this hour. I focus, we focus at QI Research so closely on backlogs because that is a gauge of future demand.
If the demand is not there, if.
Unfilled orders are not there, and in fact contracting, that means that your need for employees is decreasing as a factor of time.
Hi, Danielle, thank you very much. Always appreciate getting a couple minutes of your time, Danielle. Dee Martina Booth, CEO and chief strategists at QI Research. Busy Busy Economic Week.
This week, you're listening to the Team Cans live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business App, or listen.
On demand wherever you get your podcasts.
Still got a ton of earning, so when we get their earnings, we like to talk to smart people and we can find them. We just dial b Igo on the terminal that gets you Bloomberg Intelligence four hundred research anelts around the world covering you know, two thousand companies one hundred and thirty industries and what they do is really incredible.
They take you through from the beginning to the end of how these stories for these different times.
Yeah, I don't know who started that business, but the person must be a genius here. Anyway, let's bring in a couple of those smart ones. Man Deep Scene covers the tech stuff for Bloomberg Intelligence, and Punamcoil covers all the retail and we're going to tie that in because retail and technology they have collided. I think Amazon dot Com. All right, So Man Deep, I want to start off with, and we'll let you do I know this news on
pat palns. Here I'm gonna talk about Apple. What do I need to pay attention to from Apples when they report numbers after the closed Thursday unit shipments.
When it comes to smartphones as well as your tutts and Max and look, I think expectations are low. Unlike some of the other tech companies, Apple's estimates have gone down, so in terms of you know, expectations, they are low. I do think they're probably going to print an inline quarter. But in terms of guide you have the iPhone fifteen coming up. That is where the focus is the holiday quarter. What could it do?
I think I might upgrade to the fifteen. Honor Rocks pushing it on rok Run another one in your tech flunkies over their Bloomberg intelligence. He's tell me that's meaningful upgrade.
It is, but I guess in the context of what's going on in the tech world, the generative AI buzz, it's not going to be that big off an upgrade in terms of what the phone can do. And everyone is excited about potentially upgrading the hardware for running these large language models on your phone. I don't think the iPhone fifteen doing that.
I mean, I'm interested.
Is this part of the overall weakness that you have seen in PC demand? Is it just that your PCs last longer, or is it somehow about penny pinching and a broader consumer story at this point With that.
I think there was a kind of certain cadence to refresh cycle for both piecs and smartphones that hasn't changed. Every time you have a big upgrade to hardware is when you have a new technology coming up, and I think whether it's linking your headset or being able to run generative AI on your phone, these are the type of things that can drive people to upgrade their phones, the ones that are on the fans. My device is good enough, do I really need a new one? And
that's what drives the asps. So right now everyone is talking about even though the unit shipments is flat, how will Apple keep growing? It's the services and the asps because the next version of the phones continues to get expensive and they keep learning more services.
All right, Punham, We've got a lot of retailers set the report and the come weeks, but let's start with with Amazon. What do you expect the story to be from Amazon.
It's dark pall.
I think it's going to be a mixed break. So we're going to see some strength online with sales growing or I should say gm re growing in the high single digit range, which is a good thing because since the pandemic, you know, Amazon has dealt to it having to see more moderated sales growth and coming back to the high single digit, low double digit range just puts it on track to go back to the double digit
games that we've been used to seeing in online. But outside of that, you know, the focus is also on a WUS and EWS sales will slow in the quarter. They're only expected to grow at a high single digit pace, and they could even moderate further in three Q when we see their guidance, which could probably be closer to seven percent.
How much does AWS just simply outweigh, you know? However, successful or not, Prime Day was the various shopping trends that we're seeing.
Yeah, so Prime Day was a huge success. We heard from Amazon the first day of it's largest sales date ever. It even out faced Black Friday and Cyber Monday last year. But when it comes to a WUS, the reason a WS is so important because it is the cashprap for Amazon. Right they produced pretty much all for nearly all of Amazon's profits, so it's really important to see those profit numbers rise. In the quarter, Amazon's a WUS business will only yield about a twenty four percent profit margin. It
has historically been year thirty percent. We do see it coming back to that and even now facing that as we move forward in the next few years. But for now, you know that profit dwindles a little, it will pressure the overall profitability.
Man Deep AI is certainly story number one in your world and technology another name today that seems to be getting the you know, the AI you know, kind of tap on the shoulders Palenteer. What's going on there? What is Palenteer and why is it up eleven percent today?
So with all the talk around generative AI, and you know, Microsoft is the only one that has launched a tangible product around it. They're charging thirty dollars coat gpt well and also they're charging thirty dollars for their co pilots. This is the enterprise version of the product. Jackipt is more consumer facing. So to me, you know, all these companies,
whether it's Palenteer Snowflake data breaks. What they're doing is essentially ingesting these large amounts of data that is being created and trying to use you know, generative AI or large aguage models to make the AI better. And that is what the play is now.
Whether or not.
They're successful in monetizing it, we don't know because they haven't launched a product like Microsoft has, So.
That is the key.
If if any time you see a company actually launching a product being able to sell their customers, that's when you know this is a new deal. And that's I think the only tangible revenue you see right now is for Microsoft. Yes it's for they're out, but at least they have a product out there they're looking to monetize it.
With Palenteer, you've seen multiple expansion. Yes, this is a company that is built around data visualization and potentially could use generative AI, but we don't know if they have a product.
They'll be But that gets an eleven percent move in the stock.
And that's where you know. Everything that has happened this year is multiple expansion, no optick in estimates, so come earnings. The expectations are sky high, and that's where you got to deliver like Nvidia has.
You know.
That's what Doug Cast from Seabree's Partners was saying to Tom Keenan and I. And he's he's gotten increasingly bearish as years going on because it's all multiple expansion. He hasn't seen the earnings yet the first half of the year. Okay, he kind of understands, you know, the most recent you know, four or five, six weeks he just doesn't get. So that makes kind of surprise.
It's people looking for the long term growth that we're not going to necessarily see immediately. But put on, I want to throw this to you as well, because I know you cover lots of these consumer and e commerce companies.
One of the things that that we've been trying to parse here on the AI story is do we see some of these AI upgrades roll out, you know, for consumer benefit, for you know, tailoring ads that get to consumers, for getting the right products in front of them, or do we just simply see efficiency on the back end?
What are you seeing from some of the brands that you cover, because I know there are quite the lengthy list that report this week that may throw in that mention of AI and their earnings calls.
Sure, I think AI is both. It definitely will drive efficiencies on the back end, but we are seeing companies also bring it to the benefit of the consumers and the sellers. A recent example they reported last week and they launched a listing program where you can take a picture of a product that you want to sell and AI will generate the description for you. So it removes a pain point to our friction point in the selling process and also allows you to amplify your listings online.
So we think that's one Useas we have revolved reporting this week, they've used AI to help generate marketing billboards, They're using AI to help improve search. So I think there's a lot happening with AI, notably generative AI that's really going to drive the ROI for both the buyers and the sellers.
Real quick.
And deep. I want to talk to you about advanced micro devices. It's a chip maker. Can it be a Nvidia kind of like play?
I mean, last week we learned from Intel that PC market seems to be bottoming out in terms of inventory correction, so that's a positive sign. And look, bulk of AMD's revenue is still tied to CPUs now what's going on with generative AI is there is a substitution phenomena. Things that you were able to do with CPUs before right now you're looking to do with GPUs because that's where
the generative AI connection comes into play. So I do think eventually you're going to find that these companies either have to diversify their CPU footprint YEP and produce these accelerators, or I think they will be a tale of two stories that one part is growing and the other part is declining.
All right, well, keep an eye on all that. More earnings coming up this week and probably going into next week as well. Man Deep Singh Punamgoyle. They are two of the best analysts of Bloomberg Intelligence, one covering tech, one covering retail. But guess what, it's all converging.
You're listening to the tape Cat's are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the.
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Let's stop the salad business. I'm not a big salad here.
I love I love you kind of like salads at lunch, which is okay, I think our.
Next All I know is, you know the people here come around lunchtime, they come in and out. They're all carrying these bags from Sweet Green, which I guessed at the time was a salad thing. Again, not being a solid person, I don't know, but it is definitely a thing across the street from the Bloomberg HQ here at Midtown Manhattan, and I know it is around the country as well. Jonathan Neeman joins us. He's the CEO and founder of Sweet Green. It's sweet Green trades on New
York Stock Exchange symbols. SG can put that into your Bloomberg terminal. Jonathan, Thanks so much for joining us here. I know you guys reported earnings last week, missed a little bit on revs and on EPs stock traded down. Tell us about the most recent quarter, tell us about the guidance you're giving your investors.
Absolutely, good morning everyone. So we're really proud of the quarter we posted. We had twenty two percent year over year growth, three percent comps with positive traffic, and we expanded our restaurant level margin above twenty percent, delivering our first profitable quarter on an adjusted ebad up perspective as
a public company. So I think a sign of more things to come companies focused on discipline, capital efficient growth as we continue to bring our mission across the country to more cities and more locations, and we're looking forward to continuing driving some comp drivers we have around our loyalty program as well as our expanded menu.
Well, Jonathan, you know, Piper Sandler was out today with a note talking about how the tide maybe turning here a bit for Sweet Green after a tough sledding since going public, And I think it's pretty obvious going public November twenty twenty one, right post pandemic, then seeing the wave of omicron has to be hard for any company that does a lot of office business. Do you see
the tide as turning? What things are you telling investors, Hey, wait for this because in a quarter, two quarters, we're really going to be able to start delivering on some of those expectations.
Yeah, you know, we're focused. We're focused on a few big things. One is continuing to expand our footprint and not only opening our classic stores, but a few new formats that we've opened that have been really interesting and successful, one being our drive through format called the Sweet Lane, another being our Infinite Kitchen. We've also been you know, I hear you guys talk about, you know, not being a salad guy. While Sweegeren started as a salad company,
we're much more than that today. Really consider ourselves healthy comfort food and our warm bowls. We sell more warm bowls than we do salads. We're on a journey to continue to expand our menu and taking the type of sourcing and fresh prep that we do, but expanding it beyond just salads and so things with you know, leaning on protein and carbs and just heardier craveable items to really bring our mission to life. As I mentioned, we've also been focused on a loyalty program. We call it
Sweet Pass. It has two components, both the free rewards and challenges, as well as a membership program where for ten dollars a month you get three dollars off every day, and so a number of comp drivers built into the business as we look forward, all while bringing a discipline, a you know, a cost discipline approach and making this company profitable.
Yeah, talk to me about Infinite Kitchen. You mentioned this there. This is the sort of automated version of your kitchen. You've rolled out one of them that I believe and correct me if I'm wrong. Here eliminates employees, you know, you put together these bulls without employees there. What's your vision for the scale of this, for the timeline with respect to getting this in more than just kind of a handful of stores.
No.
Automation is something that I'm personally very excited about, and it's something that Sweekering has been working on for a number of years, develop you know, developing this technology in house. And so what we see is is we believe that we will always still make the food in house, but with this automation, we're able to assemble the bulls in
a precise manner at much higher throughputs. So the Infinite Kitchen can make four to five hundred bowls per hour, perfectly portioned, perfectly accurate, with very high quality, a very high quality experience both for our team members and our consumers. So people are loving the pilot store that we have. We're opening a second Infinite Kitchen restaurant later this year in Huntington Beach, California, and have plans to begin integrating
this technology into restaurants next year. We do believe over time, you know, a huge portion of our fleet will integrate this technology. But we still have a lot to learn in terms of in terms of you know, exactly how to deploy it. But all to say, a very promising start with this technology.
John, to talk to me again, not being that familiar with your restaurants, although I am going to go today for the first time because it's on sixty first Street, I think, and Lex, I'll give that a shot. You where have you historically located your stores and where are you and how has that changed maybe since the pandemic in the different way ways people work and the amount of time to spend in the office versus home.
Absolutely so we hope. We started the company in Washington, d C. Almost sixteen years to the day. Three kids in Georgetown really had nowhere to aid, so we started in DC. We worked our way up the Eastern Corridor and for the first call it decade of the company's history. We're very urban leaning, although you know, we did have
suburban stores as well. Ever since the pandemic, with the dispersion of consumers as well as following our customers home, we've begun to explore more suburban and so our pipeline has leaned heavily suburban to a number of new markets over the past few years, where our fleet today is approximately fifty percent urban fifty percent suburban, and we see pretty much equal success in both in both worlds, so similar av similar margins, which really is you know, talks
a lot about the portability of the brand not only in different type of trade areas, but in different markets all over the country.
Does that capture a different kind of consumer when you move outside those typically urban areas. And then also you know, with respect to the consumer, are you worried about the restart of student loan payments weighing on your customer's wallets.
So we are expanding, We're continuing to expand our consumer, so looking to capture more families, different age groups and really be relevant for anyone looking for a craveable, delicious and healthy meal. So over time, our vision is to redefine fast food and really bring this idea of healthy comfort food to scale and kind of see everyone as
being our consumer over time. In terms of the health of the consumer, we see a lot of health in our consumer today, we haven't seen any reason to be concerned. It is something we're of course watching, understanding the student debt repayments, but given the twenty two percent year over year growth and the positive comp and positive traffic, we are overall feeling very good about the trajectory.
All right, Jonathan, thanks so much for taking some time to chat with this. Jonathan Nieman. He's the CEO and co founder of sweet Green. As a publicly traded company. You could type in the ticker SG into your Bloomberg Professional terminal and get all the day you need on that company. I think I'm gonna go there today. It'll be my first time.
Are you gonna as you going there? Going to add to the twelve percent gain that we're seeing in this shares some sweet Green today.
Maybe I think Paul eating a salad he like defeats the purpose. I think you're right, he's gonna put fried chicken in it.
Etc.
All right, we'll see how it goes. I'll report back.
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So let's talk beer, let's talk Heineken, and we do that. We talked to Duncan Fox Research Channel, so Bloomberg Intelligence you can tell via zoom from the phenomenal Bloomberg European headquarters at Queen Victoria Street in London and absolutely phenomenal building right in the city of London, right by the Bank of England. Thank you very much, Mike. We appreciate those digs over there. Duncan talk to us about Heinegen. What do we hear from our good friends in Amsterdam.
It was a little bit of a surprise today actually in that they actually don't radio expectations. That's something that
our friends at Hanegan don't do very often. So they've basically been investing a lot more behind their brands, and there was a couple of markets which really had had some poor volume, mainly Vietnam and Nigeria, and so they've decided to keep their investment high in those markets and take the hit on operating profit, which from my point of view as an analyst for the long term, absolutely the
right thing to do. But it was a bit of a shock this morning at six o'clock, shares a down seven percent or so what they were the last song looked.
Hard to go out despite being in Europe, hard to go out and get a beer at six am. I think where the earnings come in as a surprise. Talk to me about so a lot of this I understand is they've invested heavily in these smaller, more local oriented operations.
But there is.
Where the consumers are feeling maybe the pinch is it because they kind of can't continue to add these price increases on as supply prices increase, or explain to me how this how they how this bruise down?
Nice one.
Yeah, basically they pushed price up about twelve percent on average, which is which is pretty high. But you have to remember that their their costs went up mid teams in Q one, They're going to go up low teams in Q two. So what they've done is effectively take the pricing up front, and occasionally in some markets they just want to be too far as the economies slowed, so the consumer has, however much money they've got to spend, and beer is not an essentials much as I'd like
it to be. So you know, they've traded down, i think in some markets to cheaper brands, So they've got the right long term strategy for sure. You know, they've the markets still are mentioned Vietnam and Nigeria. They have huge populations, great economic growth in the long term. They've just had some short term issues that have that have
caused them some volume decline in short term. But you know, they've taken the decision to look long term, which I think is the right decision and sort of take the volume sort of the profit hit this year. So it makes sense to me. But yeah, right now, so I've been expecting that.
First thing, I'm looking at the pg EO function on the Bloomberg terminal that gives you a financial analysis in a kind of you can see by segment where these guys are and by geography. Forty percent of their revenues comes from Europe, you know, about thirty three percent from America's and then Asia's the next biggest and then Emea. So are they investing in? I guess where are really the key growth markets for them that you talk about their investment.
Ironicy Brazil is one that they've pushed quite a lot of money into in the last couple of years. They bought Kier in this business, probably about four or five years ago now, and they've been transferring that to make sure they have Amstell and Heineken beer going through that network. They're gaining market share, but obviously it's not showing through and operating profits. Because of that investment, You've then got Mexico's a big market. Vietnam China are the big markets.
So all of those have got very very big populations, with one more importantly been young urban populations, and that's what you want as a beer manufacturer. Then you can tell your investment to actually get long term growth. So say it all makes sense, but every now and again you come up with a shock because economic growth has slowed down. Vietnam just for some reason, the economy just
stalled after the Chinese New Year. There was some overstocking that they put in place during Chinese Year after pushing prices up dramatically. They had forty three percent volume growth in Vietnam last year, and I think they were expecting something similar and I think they just got caught out a little bit when they pushed prices a bit too high.
Dog Just let's step back and just look at the global beer market. You know, when you talk to the big brewers that that you cover, how do they think about just kind of global growth for this category.
They would expect something low volume growth, but it's really about premiumizing your brand portfolio so you get very good pricing and mix. That's where their strategies are. Problem with that is when you've got economic growth faltering, you take it on the chin in the short term and you've just got to keep investing behind those brands to try
and get us to buy the premium beer. So it's all about that, all about getting into the markets where you've got younger than populations, so emerging markets, to where the growth is going to be, and then making as much money as you can from your core home markets, which are more likely in developed markets like the US or Europe. As you mentioned earlier for Heineken, So Heinekens's investment has been getting outside of Europe basically and reducing
that GEO split to forty percent. It was well over it was probably sixty percent of about ten years ago. So they've done a very good job at pushing the portfolio into the right area.
Speaking about those core markets in North America and Europe. Is the beer drinker or spirits drinker, perhaps more broadly, are they healthier in one versus the other? What is some of the commentary that you're hearing from these brands that span both markets telling you.
Well? Certainly, up until recently, the spirits market was doing very very well. Experiences you probably heard an iconic Debra can talk about those very very key for the young consumer at the moment, and the spirits companies have been extremely good at fueling that. If you look at all of the marketing campaigns that the spirit companies do, it's around events, so they hire bars and do something around
the brand, and that's been very very successful. Beer companies have yet really to go down that route, though they are now putting money into e commerce to make sure that it can get more of that spend I suppose, and more of the consumers doing it it the beer companies, I think you've got to catch up a little bit. All in all, they both get a volume growth in the sort of low single digit if you strip out the COVID anomalies that we've had over the last few years.
So it's going to be very interesting how the results go. The rest of this week and the Agio tomorrow and ABI later in the week, and let's see where their volume growth are. We know there's been some slight overstocking in the trade as we've gone through all that COVID anomalies, so it's going to be very interesting set of results.
So don't get to know your top level analyst. You like to do a lot of primary research. So you're in your local, your favorite pub in London. What's a pint of your favorite beer cost you today?
Too much would be my response to that. But you're looking at probably somewhere around between six and seven pounds a pint. It's all sad. Yeah, it's not cheap. My favorite pub though, is where I live, and I live in Dorset now and it's a little bit better there. It's probably around about three fifty a points fifty. Living out in the country really.
Helps very good. All right, Well, you're right down there in the city of London where all the big hitters are in London, you can afford to pay a little bit more. Duncan Fox doing that primary research that he's known for. He cuts hover, He covers all the consumer products over there in Europe for Bloomberg Intelligence six.
Seven dollars a pint. I mean when you can when you take this dollar.
Oh yeah, yeah, yeah, it's exactly. I mean I remember back when I went to UH. I think this is a correct memory putting down a pound coin, which by the way, is still the best coin in the plant on the planet, the pound coin, the one British pound that would get you a beer back in nineteen eighty seven in London. So I don't know. So that's inflation. That's inflation you can take home with all right. That was Duncan Fox talking beer.
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Simone Foxman Paul Swingey here in the Bloomberg Interactive Broker Studio. We are streaming live on YouTube. Can head over to YouTube and search for Bloomberg the Global News, and that's where you'll find this our C Suite conversation. Today we're gonna be visit a company we checked in with earlier this year is really a fascinating company. Dex Com is the company. It's a medical equipment company. DXCM is the ticker. It's
a fifty billion dollar market cap company. Stocks up about ten percent this year, up about fifty percent over the trailing twelve twelve month basis, and they're into this thing, the Continuous Glucose Monitoring System dc CGM Systems, and it's pretty pretty cool stuff. Joining us today is their CEO, Kevin Sayer. Joining us. Hey, Kevin, I know you guys recently, I guess last week reported some numbers, beat on revenue,
beat on EPs. Talk to us about the quarter. What's the key takeaway there and more importantly, what kind of guidance did you give the street?
Well, thanks for having me on the show today. It was a great quarter for us. In fact, I said in the earnings remarks, it was like a highlight reel with twenty six percent year over year growth, the largest dollar growth in the history year over year quarterly basis in the history of our company, more new patient ads than any quarter in our existence. On top of that, we had operating expense leverage that resulted in record net
income and profitability the factors that drove that. First of all, we launched our latest system, our G seven, in the US, and that launch has gone extremely well. We've got access through all the major PBMs in the country and all the insurance plans. We've also launched G seven and thirteen international markets. Our international growth was actually forty percent this quarter compared you on a year over year basis. The
G seven launches helped with that. Combined, if we have a product portfolio strategy internationally to whereby we have a family of products in each of these geographies that best meets the access and reimbursement needs of those areas, and we've been able to expand our international markets greatly. With that bottom line, we took share in pretty much every major reimburse market in the world this past quarter, and that you see it in the numbers.
Yeah.
Can you talk to me about that international strategy a little bit further. I know in your earnings call you talked a little bit of Germany, a little bit of Friends, and you're in thirteen markets. How are you rolling out, where are you pushing into next and what are your challenges there that are distinct from your challenges in the US market.
With respect to our G seven, we have losched in thirteen markets, but we're in several countries around the world. The challenges that are different is is who pays for it in the various geographies. You know, in the US, the majority of our venues have been US for quite some time with the insurance companies, but also AMS and the medicaid programs. In the outside the US, oftentimes it's the government who reimburses for continuous glucose monitoring, and they
have various standards in their classifications of products. So for example, in some countries, they want to pay for a CGM that integrates with insulin pumps, has automated insulin delivery and reimburse at a higher price for that.
They'll have a.
Product that's a different classification that doesn't do as much that they want to reimburse less money on a monthly basis. For what we've done is we've created classes of products that will address all the needs based on the geographies. So you know, the UK is a perfect example. They have two classes of products. We developed a product called dex Com one. There is in this class that's not a connected system. Well, it does talk to your phone.
It doesn't connect with other medical devices, whereas our G series or our G seven product will in fact eventually connect with an insulin pump or an insulin pen and provide patients with an integrated system. So what we've done in these geographies we assess the reimbursement strategies to whereby we can grow.
We now offer the product.
That's best for that geography, or are all the products if they'll reimburse for a family of products. And we've been able to pick up market share in those geographies and we analyze them one by one.
Well I did some I'll get give you some real time feedback. I was on the beach in Jersey Shore this weekend. I went up to a person who had one of those patches and it looked just like the one from Dexcom. And I asked this person about it and she said, quote, it changed my life. So how about that? I mean, so that's got to be pretty good.
It is spectacular. And I started to interrupt you, but it's the best part of my job when I run into one of our users. Literally, it's so great to hear their stories.
Yep, you got some happy campers on the Jersey Shore. I want to ask you about kind of the market opportunity. I know in twenty twenty four you're thinking about getting a CGM product that can be utilized by the twenty eight million diabetic patients in the US that do not use insulin. What's the status of that role out and development.
That product is in development right now. We will build it around our G seven technology from hardware and an accuracy performance perspective, but we want to create a different experience for those individuals, an experience that focuses more on their lifestyle, on the effects of nutrition, exercise, and things that they do taking their medications. You know, somebody who's on insulin, this is something that really does change their life because they rely on the alerts and the alarms
and the integration of that product. Somebody would type two diabetes not on insulin. What they really need more is to understand how their body works and understand their health and understand what all the things they can do to make them more healthy to keep diabetes from progressing and advancing. And we are working on that. We're developing a completely new software experience for that product will be based on
our G seven technology. We will submit that product to the FDA before the end of the year, and then we hope to launch it in twenty twenty four.
And do you expect this to get broad coverage from insurers as well? Because I think there's probably a group of people who want to know about their and don't want to know about their health because they need to, and others that just want to know. How broad do you see the market? And then I guess what's your thinking with respect to coverage.
Out of the gate, we'll have a cash pay option, and then we will continue to accumulate data in studies to make a case for reimbursement. You know, we've run numerous studies in this area. Every time we put patients on CGM, they get better outcomes than they had before significant ae C drops.
One of the other.
Statistics that's measured for people with diabetes is time and range. How much time during the day are you in a healthy range. We had a seven thousand patient study that we talk about at ADA where people experience the forty percent improvement in time and range by wearing a CGM who are not on inst I have type two diabetes.
That time and range is what really leads to long term and short term better health, and so as we will accumulate data like that and ultimately seek reimbursement for people in this market.
Yes, what's the.
Impact of the rise and interest in GLP one drugs, which I know are diabetes drugs, but you know the ideas that you can use them for more than just diabetes alone.
We think it's a natural fit for us. In all honesty, CGM delivers information you can't get any place else. And as I've spoken with physicians who use GLP once and CGM combined, what they tell us is these individuals learn from the CGM the effect that the change in their eating habits brought on by the golp ones. You know what it does to their bodies. So they learn from that, and so I think can go hand in hand. I
think in this weight loss environment. Also, for example, I've spoke on physicians who put people on golp ones for some period of time that if they take them off, how do they know what's going on? How do they know they haven't reverted back to their old habits. It's very simple. You can put them on a CGM and they can see what their glucose values do I wonder.
If that'sable, if a coverable.
Thing hopefully over time, Yeah, we think it will be.
Hey, Kevin, just real quick here, thirty seconds left. Give us a sense of your competitive environment here both in the US and then globally.
It's a very competitive environment. US and Abbot are the two largest companies in the space. But the environment is so big, and the need is so on men, and the information is so important. Again, you look at our growth numbers and the opportunity we have in front of us will continue to compete very well. It is a great problem.
To solve for us.
And is this the opportunity outside the US? Is it just depend upon the I guess the development of the healthcare system there.
It very frequently depends upon the reimbursement and the geography that we're trying to go to and where we don't have reimbursement. One of the things we kicked off this year is we do launch cash pay options in those countries through an e commerce platform, and a couple of times it's already led to the government's changing their position on reimbursement and covering our product because they see how many people literally rush to the cash option to buy it all.
Right, Kevin, thanks for checking in with us. We appreciate it. Kevin Sayer is the CEO of dex Com.
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This is Simon and Paul. We've been around all morning and we're here for another couple another twenty minutes or so. Really interested in our next guest because part because of the name, which is Shark Ninja. Mark Rosenswig is CEO of Shark Ninja and they just rang the New York Stock Exchange bell this morning, publicly traded, and they've been through a little bit of an interesting corporate history. So this is the maker both of those Shark vacuums and
Ninja blenders. They were a part of a Hong Kong listed company, apropos of our previous conversation, but now they have gone public and shares, yeah, through a spin out here. So Mark I want to bring you on as well. Looks like shares jumping higher in New York after this spin off today, talk me through why go it alone? Why spin out from JS Global?
Yeah, well, thanks for having me. Look, Shark Ninja has a great story to tell, and we believe that it's the right place to tell that story is the New York Stock Exchange. Shark Ninja goes to market under two really well respected brands, as you mentioned, the Shark brand, which is a market leader in cleaning, home, environment and beauty, and the Ninja brand, which does just about everything in the kitchen and has now gone outside with our outdoor
cooking appliances. We have a story of scale, nearly four billion dollars of revenue. We have a story of profitability. The business is highly profitable, and we have a story of growth and a demonstrated track record of organic growth. You know, we were a business back in two thousand and eight that was less than two hundred million dollars in revenue. Today nearly four billion. You know, all of
that has been organic. We've never acquired a dollar of revenue in the company's history, and so we really believe that you know the right place for us is to be a standalone business on the New York Stock Exchange.
Now, it's my impression you were the largest part of js Global or Shark Ninja was the largest part of Jazz Global. How did it come about that, you guys went your separate ways.
Well, you know, Shark Ninja was owned by my partner Mark and I up until twenty seventeen, when we sold a majority stake in the business. We really wanted to bring a partner in to help globalize the business. Five and a half years later, the business is nearly has more than doubled in size.
You know, we have a.
Fast approaching billion dollar business outside of North America. You know, we you know, our customers, our consumers, you know are here in the United States. The United States are the largest market for us. We're based in Boston. We have a team of almost a thousand folks just outside of Boston. And so we really felt like being a subsidiary of a Hong Kong listed company wasn't the right place to tell the story.
All right, So for your company, and I'm not familiar with your company, I have to admit talk to us about kind of your distribution model and kind of how that's evolved.
Yeah, So the distribution model is that, you know, we sell to every major retailer in North America, in Europe. You know, we have a very strong dot com business. Our brands are the most search brands in our categories on Amazon, and we have a really healthy direct to consumer business. So our distribution model has really been based on the idea that we want to be relevant where the consumer chooses to shop for our products, if that happens to be in a retail store, grade, if it
happens to be direct to consumer or go online. But that really is kind of how the model is not just in the US, but really in every market that we sell.
Mark talk to us at the decision to spin off as opposed to perhaps an IPO, how did that play out?
Well?
When we made the decision to spin out and be a publicly listed company, you know, that was going back a number of months ago, and at the time, the IPO market in the US was quite challenged, and so you know, we really wanted certainty to become a US public company, and this gave us the most certainty to be able to do that. We think we have a great story. We think when investors hear the story. You know,
many of these investors are already consumers of ours. I mean, our products are loved you know in in you know, millions and millions of homes across America. You know, investors will respond and and you know we will become a company of interest, you know, for for investors on the New York Stock Exchange.
Talk to me about what you're seeing from consumers at the moment. Are you there has been some shift away from consumer discretionary products because consumers are feeling a pinch in their wallets. Are you seeing that or are you seeing consumers switched to different kinds of products.
Look, I mean we're obviously you know, concern for consumers and the inflationary challenges that they've had over the course of the last few years. You know, we believe that Shark Ninja delivers incredible performance, high quality and reliable products, and we do it at an extraordinary value to the consumer. We're not the highest priced products in the market, we're not the lowest price, but we think that when the consumer buys a Sharker Ninja product, they're really, you know,
getting extraordinary value. And I think that when you read consumer reviews of what people write about Shark and Ninja products. You'll see that coming through in those reviews. So, you know, we're a business that's grown fourteen out of the last fifteen years. We have strong growth in our first quarter. So we believe that if we can continue to give exciting innovation to consumers that solve their problems and continue to do it at a great value, that the consumer will respond.
Mark what are the growth drivers over the next year to two for you guys?
So for us, it's the same growth drivers that have been really in the business over the last you know, eight years. We've developed three strong pillars of organic growth, and that's the important word. They're organic, you know. The first is, you know, gaining share in the existing categories that we participate in. We're in big, definable categories and Shark Ninja has a demonstrated track record of being able to gain share in those categories. The second is expanding
into new and adjacent product categories. We've expanded into ten new categories just over the last three years. Categories like beauty with our Shark Flex style hair dryer, categories like outdoor cooking with our Ninja wood fire grill. And the third is international expansion. I mentioned earlier that we are fast approaching a billion dollars in revenue outside of North America. So there's real scale in our international business, but there's
still tremendous opportunity. I mean, Shark Ninja sells in twenty five countries around the world. We sell in twenty seven different product categories. We believe that there's more product categories for us to enter into, and we believe there's more markets for us to expand into. So that's really you know, driving those pillars of growth.
Okay, excellent, Mark, thanks so much for joining us. We appreciate it. Mark barakas CEO and president of Shark Ninja.
Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three.
And I'm Faull Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio