Zoom CFO: Primary Goal Post-IPO Is Organic Growth

at Bloomberg dot com. Paul, I am so excited we get to speak with the CFO of one of the hottest initial public offerings over the past few years, if not the hottest of public offering so far this year based on how much the price popped. We're talking, of course, about Zoom Video Communications. Kelly Stuckelberg, the chief financial officer of the company, joins us right now from San Jose, California. Kelly, congratulations an initial public offering that by most measures was

absolutely a blowout success. Thank you. Good morning, Good morning. So I want to talk about profitability because Zoom was one of the few unicorns that is coming to market, is an I p O and actually making money. How important is that to you to continue to make money even as you invest in the business. Well, we're really focused on continuing to grow and indust for growth and

taking market share. That is our primary objective. And yet we do that at the company with discipline and we're very thoughtful about it, so ensuring that the investments we're making in growth are giving us a proper returns. That's how we think about it. We're we're very frugal in the way that we approach it in general. So, Kelly, can you give us a sense of how you think about your business. I'm guessing it's more than simply video conferencing. So it gives a sense of what you view as

your market opportunity that you your company goes after. Yeah, thank you. So we really view that video is the future of communications. Video is the new voice, is how we think about it. So we think that you it's going to become ubiquitous in the way that people communicate, and we're really changing the way that people use video every day. So, for example, when we did our road so a couple of weeks ago, Eric zoomed into all

of the meetings. So I traveled, but he dooms. So I think this is the first time that a CEO has not traveled in the way and that it was really powerful. For example, we even we had a lunch in New York for two hundred people and Eric zoomed. He's done a huge screen there. Everybody could communicate with it.

It was amazing. How much does your business model rely on an infrastructure upgrade to five G because I know people have been talking about how that will be a game changer in terms of how people interface with one another via video. So how are you sort of thinking about that evolution? Yeah, so we have our own data set of strategy and our platform which allows people to have a really high quality streaming video experience today, whatever

networks that they're working on. That's one of the really unique things about Zoom. It's adaptable to people's device and network capabilities. So when we think about five G, we just think that this is bringing more opportunity earners for people to use video in other places on the go. We're not reliant on it though, We just think it's going to extend the opportunity for us. Kelly, give us

a sense of the competitive landscape that Zoom participates in. Yeah, there are lots of legacy providers out there that we have seen. I think the thing to remember is that what's unique about Zoom. It was built from the ground up to the video first. So everything about our product, our user interfaced, our technology, our data center approach is geared towards being video first. And a lot of the legacy players that are out there today they were built

for another purpose. They were built for screen steering, or they were built to be an audio first and video came later. And just think about it. You need a very different approach to have a high quality, real time streaming video and that's really what makes you so unique and so much better than some of the legacy providers.

One concern that I'm sure a lot of companies have is privacy because if they are conducting meetings, uh and chats through the Zoom technology and that could potentially expose private information, how do you how do you counter those concerns? Of course, security and privacy is at the forefront of everything that we do. We have a c I O and a show that think about this every single day,

and the product itself was architected to ensure that. Meaning data, it's your record, meaning data, you have the opportunity to either record it into your own for example, on your own premises or in our cloud, which is highly secure because it's our own private cloud data center that we're running. So, Kelly, just give us a sense of kind of what are the growth drivers for your company. Obviously the company has a tremendous valuation in the public marketplace officely, the market

is certainly expecting strong growth. What are the growth drivers? Yeah, so there are really three key growth initiatives were focused on this year. It's continuing to move up market and expanding into the enterprise, which is a key opportunity for us. It is continuing to grow international. We have a flash year, we had a little less than our revenue came from international markets, and so there's tremendous opportunity head there as well. And then it's continued growth in zoom Phone, which was

a new product that became g A in January. We're really excited about it extends our product suite from you know video and now into audio zoom phone as well. What's the barrier to entry at this point, given the fact that big companies are having their own in house kinds of operations where they can interface with each other via video. Yeah, I think it's it's one thing to do video, it's another thing to do video in an enterprise grade level and to do it really with reliability

and quality every single time that somebody joins. The unite thing about Zoom and because of the way that our architection was built is you can have up to packet loss, so up to forty percent data loss and still have a great experience. Other providers we see you start to have a degraded experience when you're like at fifteen percent

packet loss. So that really speaks to the investment in the in the infrastructure and the architecture that we have built and the adaptability of our platform to meet the needs of people that are again on the go using different devices in different locations. Kelly, is is M and A a part of Zoom's growth strategy going forward. You know, it hasn't been historically, but it's certainly something that we

will continue to look for. If we could find a great company that could be additive either from a culture and a UM talent perspective and or technology perspective, we would certainly be open to that and we're always looking for great opportunities in that area. One thing that I'm curious about, just to quickly hear from you, you Kelly, as we see this roster of I p O is

line up for later this year. What sort of the takeaway that you learn from the whole I p O process right now as a unicorn that you know there are many great companies you ship coming to market, and there's really strong investor demand for great companies and great performance, and you know, we're really focused on continuing to executecause that's what we can um we can manage, and we

can control. And I think that's what I learned. That's what investors want to hear is the confidence in the management team that they're going to continue to focus on keeping the investors um I think interests at heart while continuing to grow into it thoughtfully. Kelly, just real quickly, what's the biggest risk to your growth story? It's it's our own execution, right. It really comes down to our team and our ability to continue to execute. This is what we focus on every single day when we get

up and come to work. Kelly Stuckelberg, thank you very much. Kelly as a chief financial officer from Zoom Video Communications joining us on the phone from San Jose. Right now, we are hitting new record highs on both the SMP and the Nasdak in the United States, which has been the sweet spot globally in terms of economic growth as well as asset flow at least in joining us now to talk about whether that can continue is Clive Gilmour.

He's CEO and Group Chief Investment Officer at Mondrean Investment Partners, over seeing about fifty billion dollars from London usually, but he is joining us here in our Bloombergada Interactive Brokers Studios. Clive, I do want to ask, do you think from your vantage point that the US is still the place to go or that this rally is basically at its peak

and is going to peter out. Yeah, it's an interesting question because I've been reflecting recently on the different forms of capitalism that exists in the United States and elsewhere. In the United States, the return to shareholder is sacrosanct. In Japan, In contental Europe in particular, they want to find a better balance between labor and capital. The argument they use is that's a better long term methodology, whereas

the US one is used for short term gain. So the question is, are we still on a run of backing economic elements like low interest rates that support that short termism, Where are we going to see a gradual shift to the longer term? International markets trade at a discount, a significant discount in some cases, so perhaps we're at the pitch point where people should consider investing more internationally

than in the United States alone. Well, it's interesting, I was I was looking at just the UAR today performance from you know, the STARKS or the CAC or the Dacks index of Europe. The performance there is essentially on par with the SMP. So we're seeing European equities, so it doesn't feel like there's quote unquote value in European markets. How do you view some of the developed European markets? Yeah, well, in answer to the first question, you know, I talked

about that different form of capitalism. One way that reflects itself is in sectorial splits between markets on a global basis. So the US has a significantly larger piece in technology, and it's that technology part of the market that's driven to a great extent the u s higher through the NASDAC before outperforming the SMP significantly. If you look at the rest of the world, why has there been an

adjustment just like there has been of the SMP. It's merely an adjustment back to an interest rate policy that seems to be underwriting stock markets. In other words, moved back towards either zero or negative real interest rates, which we personally believe is unsustainable on a long term basis.

What you're saying is actually fascinating, which is, at a certain point investors aren't going to just look for people for for companies to give them as much money as possible in the form of shared by backs and dividends, and they're actually going to start looking at sort of the sort of social implications and the investments. And we have actually started to see a shift in that way in the United States. What makes you think that that

shift will lead investors overseas well? That argument about sustainability is obviously a really really strong on and the way we analyze equities at Mandron is to use a dividend discount model, so that takes the dividends today and looks like the spected future growth in those dividends. So sustainability is a key element of what we do, especially as you look out after year three for example. So no one knows when the exact moment will be when that

will change. All we can say is the skew of outcomes is increasingly on the upside for investing outside the United States relative to in the United States. And indeed, we do three DDM models, one on a central case, one on a worse, one on a best and even though central case real returns are lower because markets have gone up, the skew is still positive, whereas in the US increasingly that skew is looking negative. You mentioned Japan earlier.

What is your view on Japan given that they've, you know, the stagnation that economies done with over the last decade or so. Yeah, that's a good question. I started my career in Japan in the early nineteen eighties, and pretty much from about onwards, Japan was a no go area. And it was a no go area because the market had become inflated, but more pertinently, perhaps because companies there gave little regard to shareholders and certainly had alarmingly low

returnal equity. For example, what's happened over the last thirty years is perhaps testament to the fact that Japan has had died in the wall approach. In other words, it doesn't wish to change that much. However, in the recent past they have begun to embrace some of Arebe's reforms in the extent that they are now looking at trying to improve r o E and also look at dividends

as a way forward for shareholders. And that's crucial because remember, the Japanese have a rapidly aging population with incredibly low bond yields and a demand for income from that aging population. Dividends from equities are becoming an increasingly large part of that. We're still actually underweight in Japan for choice, but only just and that is against a position of being significantly underweight for most of the last twenty years. Clud Gilmore,

thank you so much. Clud Gilmore as a CEO and Group c i O of Montreal Investment Partners joining us today in New York on our Bloomberg Interactive Brooker Studio. Right now, I think we do have Bruce Levine from the Center for Soulomnia Therapies at University of Pennsylvania. Just let's get us started with a sense of what your team is working on. In Lehman's terms, but we're working on is using the patient's own immune system and retraining

it to recognize cancer. Now, this is uh uh not intuitive because the immune system is designed to recognize foreign invaders, and cancer is derived from your own cells, So what we're doing is putting in a genetically engineered receptor that makes your immune systems recognized cancer. So PUS kind of give us a sense of kind of where you are in your research, where is it mat and a kind of go to market type scenario, where are you and

your team right now? Well, we treated three patients in ten that had between three and a half and eight pounds of leukemia destroy These are patients that had no other options. Based on those reports, we signed an alliance with twenty in twelve with Novardes to develop this technology and commercialize at which they have. They conducted to global

pivotal clinical trials, one in pediatric leukemia and other. Amphoma received FDA approval August for pediatric leukemia and May first for lamphoma, so this was the first FDA approve TEIN therapy. There is another product on the market for lamphoma that's

Gilead kites Yes Carda. At PEN, we're focused on the next generation of these therapies, making them smarter going into solid cancers, and we have a PEN spin out community that is developing some of these next generation therapies versus is incredibly exciting for me to hear what you're working on because there have been so many UH cancers that have killed people who we all have been close to sort of think that there could be some kind of

remedy new remedy is very exciting. I'm just wondering about the sort of standardization of some of these cart c UH cart cell therapies, just considering the fact that you have to use people's own cells, they tend to be much more expensive, and I'm just wondering what the focus is and trying to sort of streamline ms they can be used in a more broad based level. Yeah, so the challenge here is the raw material is the patient's

own cells, and it varies every time. As far as standardization, we are making improvements in the manufacturing, implementing automation, making the process shorter, but we will go from what is now a three week turned around to maybe a two week or shorter turnaround. Now, this does have implications and scale.

It's not really scaling up. You can't scale to a five thousand leader or a ten thousand leader a lot, but we can improve what we're doing, and I would say I think of this as a remote organ transplant or remote stem cell transplant rather than something you're going to have on a on a shelf. I can speak to you about the so called off the shelf cell therapies, and there there is justification for that because there are patients from whom we don't get enough food cells to

generate a product. But the issue for these is just like I can't give you my own liver without you being on lifelong I mean a suppression. Those of the show therapies don't last very long and patients have to transition to another definitive therapy. Bruce Levine, thank you so much. Bruce Levine is a Barbara and Edward nett Are Professor in gene a cancer gene therapy. He's at the Center

for Cellular Immunotherapy is at the University of Pennsylvania. Is also a co founder of Community, a pen spin out working with nove artists. Let's switch gears right now to the home sharing business. It was reported today that Marryott International is expanding its home sharing business to the US as Airbnb diversifies its own business ahead of an expected initial public offering. To get us up to speed on this store. Are we welcome Patrick Clark Pat his real

estate a reporter for Bloomberg News. He joins us on our Bloomberg Interactive Broker studio. Pat, thanks so much for being with us. So this is so Marriott already has a home sharing business, but they're just they're bringing it to the US. Is that the news here? That's right? What they've called they've called in the past home sharing pilot started in London. I think in May they they proclaimed that a success and expanded into Paris, Rome and Lisbon.

Now they're bringing it to the U S and they're also expanding it outside the US. I think it's gonna be a hundred destinations around the world, many of them real sort of tourism spots um Bar harbor in the US, like Tahoe. I think I saw sat Bart's um the Amalfi coast of Italy. So those types is pretty good. It sounds pretty good to me too. I will say, UM, I have to wonder. I'm trying to understand they're trying to counter the air and b nb's of the world.

That's sort of how this was framed. You're kind of shaking your head a little bit, and I'm wondering is it really because home rental that kind of concept is evocative of a different, different kind of model than airbnb s Perhaps all of these models are converging on themselves. I think, I mean, the Marriott will do something that

is doing something that looks like home sharing. Um, I don't know that they're doing it for the reason why people use a homeshare to find a place to stay in New York, right, which is often because they want um a cheaper maybe also a slightly different version of what they would get um in a hotel in in You know, I stay in my rent homes with my family and we go on vacation because we want the space and we want you know, separate bedrooms in the kitchen and all of that, and we sometimes do it

through Airbnb or v R B O. But but um, yeah, I think you're as you said, that's sort of a home rental business, which makes sense as an extension of of sort of Marriotts bread and butter. Right, If I'm a Marriott Loyalty Program member and I travel for business all all the time, and I accrue points, and now I want to go on vacation with my family, and what I want is a home rental, not a not a suite in a hotel somewhere. It makes sense for Marriott to be able to offer me that home rental. Now,

is that direct competition with Airbnb? You know? Way it is because I would um, otherwise go and book that home on airbat me instead of uh, you know, instead of staying inside this sort of Marriot loyalty ecosystem. Now, um does Airbnb? You know? The amount of crossover is sort of a point of contention. I would say that the hotel companies have largely said many of them have said it's a different guest than the one that that were servant. So what has been just overall the Airbnb

impact on the hotel business? Yeah, I mean there's you know, I think Airbnb says they have six million listings around the world, so that's just a lot of supply. Um. I think it depends on on the place there are. You know some places you could say there are. I mean in New York you have thousands, tens of thousands of more sort of places to stay than you would pre Airbnb. Uh, whether or not that has had an impact on how much a hotel in New York can

get for its room. I guess it's a little bit murky. You would think it would have to have some impact. Uh, there's also seems to be, you know, virtually limitless demand for hotel rooms in Manhattan. They add, uh, you know, they had thousands of hotel rooms in New York every year and without seemingly a large impact on occupancy rates. So um, you know it's it's it's unclear who's threatening here? Who here? Right? Is Is Mary going to take a bite out of Airbnb's business with this new offering? I

couldn't doubt it is is are they defending themselves? Do they? Are they worried about losing business? Pat Clark, thank you so much for that. Pat Clark is a realistate reporter here at Bloomberg News. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. M Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa abram Woyit's I'm on Twitter at Lisa abram Woits

one before the podcast. You can always catch us worldwide on'm Bloomberg Radio.