From the heart where innovation, money and power Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline hide and Ed Ludlow.
Imed Ludlow in San Francisco. Caroline hides off today this is Bluemberg Technology. Our top stories. Full earnings coverage ahead as Apple loses its three trillion market cap crown amid tepid demand for iPhone plus Amazon seeing strong revenue growth even as the e commerce giant reigns in that spending under CEO Andy Jasse and Nikola replacing its CEO after less than a year of running. The electric truck maker will bring you the details on why and a new
familiar face taking the wheel. It is our top story. Apple and Amazon reporting quarterly earnings. Look at the investor response. Apple down three percent. That means its market cap is now below three trillion US dollars. It has lost that three trillion market cap crown. The story here is about executives talking iPhone acceleration into the fiscal fourth quarter ending in September. Services continuing to be strong, but double digit
declines in wearables and iPad. The story is it technology and a lack of upgrades or new generation platforms in the quarter gone, are we waiting for iPhone fifteen. Let's get right to Apple and bring in juliask principle analysts at Forster, Tim Cook's talking about weakness in the smartphone market in the US but strengthen India and China. What were the main stories for you? How are this quarter's earnings.
So specific to his smartphone? The main stories are is that Apple did well in China. They did well in new markets that are traditionally dominated by Android, and they had more and they had a record for the number of people who switched from Android to iOS. The challenge with the smartphone market is just as you said, it is a mature market. When you look at US online adults, ninety five percent of them own a smartphone. The devices are very expensive, the devices are amazing, The upgrade cycles
are slower. It's not like ten years ago where we all bought a new phone every two years.
It is.
These phones are serving consumers now like PCs, for three, four and even five years at a time. So it's going to be tough. I don't think it's a surprise, but it's going to be like this because the market's mature. Unless you go out and find new customers and break into some new markets.
Julie, I'd like to do some mental arithmetic with you, which you open to doing that with me? Okay, let's try. Apple said it has an installed base of two billion devices globally. They also said they had one billion paid subscribers now, but clearly there is a big pocket of Apple device uses around the world that are not paying for an Apple service. They're using what's available for free.
Are you able to work out there for the path forward, how Apple and how many of those uses Apple can convert to paying for a service.
Well, I think ed one of the tricks in the numbers is is right, there's a couple of things that we know about Apple users. One, they're relatively affluent compared to Android owners. And the second thing is is we know that they own multiple devices. It would not be uncommon in markets like the United States for someone to own a laptop, a tablet, a smartphone, and even a smart watch. And so we have two billion active devices. That doesn't mean we have two billion owners, right, We
have fewer owners because each person owns multiple devices. But the strength in that story, I think comes back to the you know the arguments that you were making earlier about the services. The more devices I own and the more valuable the services become to me because they work across all of my devices. And yeah, I can continue
down that path or we can shift here. Their services story is a very strong one, and they're laying they've been laying the groundwork for years and years for that disservices revenue to continue to build and build and build with video with audio. Right, they've got almost twenty percent of the United States paying for music paying for video.
Go ahead, Julie, let's be constructive then and say what was exciting for you based on what was discussed on the call or what they put in the earning statement.
So what was exciting for me? I would say one was the was the services number was up right, and that speaks to the power of the ecosystem. The second thing that's always exciting for me is looking at the wearables market. Right. You know you talked about in your opening that the smartphone is the device. It is the device that Apple counts on, and we've all been talking about will there be something that comes after the smartphone
and places it and we haven't seen that yet. But what we are looking at right forty billion dollars and the wearables in the whole market. Thirty five percent of US online adults own a smart watch. Now it is outpaced fitness wearables. So you're in a vision pro that could come up in time. So I think that part of it is interesting, right, and Apple continues to lay
the groundwork here. We have always said that a smart watch will have more utility and become more valuable when it's my payment mechanism, when it's my health mechanism, when it's my identity mechanism, and when we look at all of the states trying to move my driver's license, my insurance onto the Apple wallet, that translates to the watch, and those things are going to be more valuable. So that's the second thing that I would at.
Well, I just want to jump in me. Let me take a moment, Juli, really quick, because I'm looking at these beautiful images of Vision Pro and it takes me back to being right exactly and being back at WW or you say it's amazing, Okay, but did we learn and try them on?
You've had them all. You're like, wow, that's that's something.
And then what you're one of a small group then, But did you hear anything last night that gives you a better sense of how wide the rollout of this vision pro is going to be globally.
No, you know this is going to be top initially on right. You know from what I've heard, they're still you know, working through you know, getting the product ready for market. I mean they're still caring nearly like a thirty five hundred dollars price point, right, I mean that may be mid price for a computer, but it's not mid price for a consumer device. So that's I think we're going to be in a weight and see situation
there in twenty twenty four. The technology impresses, the ecosystem impresses, you know what their rollout is going to be. Right, that's a different question. Well that's a bit of a wait and.
See Julia Aska forres So the key analysis on Apple, those shares down three percent, the three trillion market cap crown gone, thank you very much. The other big earning story is Amazon joining us as Melissa Verdict Packview president and co founder. Amazon completely the opposite beating across the board.
Investors cheering those results. What I found so interesting is the core business Amazon dot com is seeing growth, but they're also getting better at making money in the more profitable areas of the e commerce business, namingly advertising and selling services today's independent merchants. What was your sort of analysis of that part of the business.
Yeah, I mean, they had their biggest earning speed since Q four twenty twenty and basically every single area they did a good job. The two drivers AWS and ADS were really up. Advertising This business was on fire this quarter over ten point six billion dollars. And we have a benchmark report at at TAKU where we look at quarter reporter return on advertising s then and that was also really strong enough this quarter, So they fow great
results for advertisers with ADS. They also have implemented some new new generative AI capability and then also they have Amazon Marketing Cloud and Amazon Stream which offers a lot of great data analytics, real time optimization, and that has really helped fuel advertising spending this part.
Listen, let's zero in on AWS because at the end of the day, it's the majority of operating income. What did you learn about the rest of the year, how AWS is going to continue to grow? Because if we go back to Microsoft just a week ago, we were a bit concerned about this broad market.
Yeah, I mean all the eyes were on AWS this quarter. They actually were at twelve percent, which last where they're sixteen percent. So it's just been a declining kind of increase core recorder, but they still be I think the biggest challenge has been our companies. Companies have been cough cutting and that AWS has has been cut. Even our own company has been looking stringently at how do we operate most efficiently and AWS is kind of a target.
But Anty Jasse spent a long time on the investor call yesterday talking about how a TOWS has stabilized, how consumer you know, companies are in we're increasing their workloads, and then he also spent a lot of time about all the generative AI capabilities that they're launching, code Whisper, Bedrock and the use cases around them.
So those are and then look, yeah, go ahead, Sorry.
No, I just want to jump in on that point because how Andy Jesse described that though, was Amazon taking the first few steps in a marathon. And I think we still have the question how does Amazon make money on the basically enterprise and cloud focused AI offering? Do you have an answer to that?
You know that it's a tough one. Like Generative AI isn't actually a big investment from Amazon, so they're going to have to invest a lot of money and resources to build that out. But the idea is is that they can grab market share and have much more of an attractive offering because their product is so amazing, it's much more efficient, helps it helps customers use it. So,
you know, think all eyes are on this. Microsoft and Google I think they were twenty six and twenty eight percent last quarter, while Amazon was twelve percent in cloud. But those are on smaller basis. But I think that's that's definitely something to look at because others are you know, is their markets You're going to grow.
You know, what's the reaction, Melissa, very very quickly, what do you give Andy Jesse on his quarterly report? Car A, B or C for the job he's done.
He's done an A.
You know, he's all his cost cutting measures over the last two years. He's really improved efficiency. Uh, the warehouse opportunity. They've moved from a national to regionalize operation. That was huge, and they're getting shipments to customers factor that that has been a huge improvement. So I think he's done a great job and this quarter is a result of the last two years.
Less aboutic PAC view president and co founder, and all things Amazon, Thank you so much. Now coming up here on blue technology, sports and streaming. What one Internet TV providers strong earnings means for the future of streaming sports on platforms. We're going to talk to the CEO of Fubo TV. Next. Another big, big story. We're watching shares of Nikola down twelve percent now. Steve Gersky who led the spack that took them public in June twenty twenty.
He's been chairman since September of twenty twenty. He now is in the CEO job. Michael Loscheller is out for personal reasons. We will bring you the details later in the show. This is Bloomberg, all right, going viral. Everyone on social is talking about the FIFA Women's World Cup. Searches for the tournament trending on Google as it heats up into the knockout stages. Fierce rival Sweden and the United States will meet once again in the round of sixteen,
but this time the stakes were even higher. The US is vying for a third consecutive World Cup, but were nearly eliminated by Portugal. Sweden won all of their group matches this World Cup have outscored opponents nine goals to one. All right, speaking of games and where you can find them, Fubo TV exceeded North American guidance in the second quarter, achieving three hundred and five million dollars in revenue. That's
up forty one percent year on year. The internet TV providers sports first live streaming model, making progress towards profitability in twenty twenty five. Here tell us all about it, Fubo TV's CEO, David Gandler. You know, I find Fubo TVs so interesting. You know, people call you a streaming platform, but you're essentially a software platform to get gone and get other people's streams and content. What was the big driver for you in recent financial performance?
Yeah, well, I think the above. The company had a very clean print.
We as you said, we grew revenues up over forty percent, we grew subscribers over twenty percent. We increased our average revenue per user by thirteen percent. Ad revenue increased by about five percent year over year. So across the board, I think we've operated very well, and also we've been very measured and disciplined as it.
Relates to our cost structure, and as you.
Can see from our bottom line, we've improved by about forty million dollars. So everything that the team has been focused on over the last six months is certainly starting to come to fruition.
Let's host about the fief of Women's World Cup. How is that driving things to you right now?
Yeah, Well, as you know, our DNA is soccer, we launched Fubo as a football or soccer platform. Women's World Cup is performing quite well. To see increasing traction, double digit traction as the tournament progresses, and as you know, we're still sort of i would say, relatively early in the tournament. So we're looking forward to continuing to drive viewership for the Women's World Cup and of course the women's national team.
You know we've discussed here on Bloembag technology. Frankly, like turmoil in sports TV, the industry faces a lot of long term questions on profitability but also cultural technological questions. Outline for me, David, how you see people consuming sports in the future, the platforms, the devices.
Yeah, I think you hit the nail on the head. It's a very very complicated industry. With media companies and physical platforms sticks.
Like Roku and Amazon, and then you have.
Companies like Fubo, which are software based, platform agnostic that allow people to move from device to device in any room in the house seamlessly, giving them access to their favorite teams and other content through one single app. So I think we're positioned for growth in a space where you're going to see i would say significant competition from the likes of connected TV players that you're very familiar with,
like Amazon and Roko. But at the same time, you see the increase in competition from you know, manufacturers like Samsung and Visios. So we think that we're going to continue to increase the leverage that we have as we are driving significant eyeballs across all of these platforms, and you know, again we're aggregating content for consumers and making sure that they're able to remove a lot of the friction and fragmentation that they have to deal with on a daily basis.
David, to what extent does cable regional sports networks die.
Well, as you know, we have differentiated versus other platforms in the United States.
Due to our sort of i would say our local footprint.
We believe that there is a primacy in sports, and more so even in local sports, which has been a really strong driver of viewership for us. But you know, we have relationship, a great relationship with Diamond Sports, which controls the majority.
Of the original sports that I've spent.
At the same time, we continue to build solid relationships with the league, particularly with Major League Baseball given that we're in season, and we've also made a number of marketing announcements with teams across basketball and baseball to continue to drive more awareness for their video.
Product on our platform.
So you know, at the moment, we're confident in both those directions.
David quickly, the Virtual Cable Bundle isn't working for anyone else, it is for you. What's your secret?
You know, I always like to say comes down to product.
I think we do a really good job surfacing a lot of the content that people like.
We do it in a very premium user experience.
And you know, historically we've been known for really spending a lot of time developing innovative features, and you know, we've been first to market on things like four K and multiview, which is now something that other services including Apple has now launched.
Actually, I think it was weeks ago that they've begun to roll that out.
But now we're focused on video a I features and being able to really tap into the most exciting moments in a very personalized way, in a discrete fashion for each of our users. So that's sort of the area where I think we'll continue to focus.
Right Fubo tvco Dave Agandler good to catch up Airbnb, reporting a slower pace of growth in a number of nights books. His prices for lodging remain despite that, shares now moving higher. Kind of chopped around in Friday morning session, joining us now Tom White DA David's an analyst who has a by rating on Airbnb a one hundred and sixty two dollars price target. You're billing this is a solid quarter, constructive guidance, and I think in a little bit we can talk about some of the new tech
that they product that they've hinted as well. But what is the big picture story Tom for Airbnb, because we've seen how there's like Expedia, for example, give worrying signs about people's travel habits.
Yeah, look, so you know Airbnb is it's not a cheap stock, it's got a high valuation, and with high
valuations come pretty high expectations for earnings. But you know, I think they did just enough this earnings print to kind of get people excited still about the story, maybe toned down some of the chatter about, you know, the inevitable sort of normalization of the travel landscape and people kind of going back to traditional hotels and sort of more traditional travel patterns and maybe a little bit less of the vacation rental type stuff.
So on top of that, they also.
Talked about some interesting new kind of product opportunities and kind of growth unlocks, if you will, for twenty twenty four, which I think the market's responding well to.
Wait, shift those heads quote your eye to mist.
Well, it's funny.
I mean, we've been doing a lot of work following the experiences space, sort of the tours and attractions space, so it's easy to kind of point to that as
an exciting category. I think what's interesting about what Airbnb calls experiences is that it's kind of this enablement of a new product, and in a lot of ways it's similar to what Airbnb did with the inventory in its lodging accommodation right and enable this entire new class of travel product, this entire new class of accommodation product, and with experiences, they have an opportunity potentially do the same thing.
But there's also other other things to do. Advertising for hosts, a way for hosts to remote themselves more in short order, that could be a nice little revenue tail win for Airbnb, and also news services for guests. So think about, you know, trying to more better professionalize, if you will, kind of the guest experience, make it a little bit more hotel
like in some ways. I think those are the types of things that Airbnb is kind of thinking about testing, and hopefully we'll hear more about that come into course.
Tom quickly does does Airbnb still have a technology advantage over the kind of every other offering that's out there in the short term rental space.
Yeah.
Look, you know, it's.
Hard to point to any one single technology feature, but I think kind of the pace and the flurry of innovations and product upgrades that these guys make quarter after quarter, we think that they are still solidly ahead, particularly when it comes to kind of the host experience. They've made a lot of efforts to streamline the onboarding of hosts and for a first time host, making it a lot easier just to get your house or your room up
on the platform and available to book. They've recently rolled that new futures to help host understand pricing and do analytics around what's the best level to price their inventory. So short answers, we think they're still solved the competition, but they've got.
To keep walking on it all right, Tom White, Da Davidson, A long earnings week for you and I both, thank you very much. Welcome back to Bluembow Technology, Ed love loow here in San Francisco. There's a number of stories within the earnings print that we have not discussed that stick with Apple. Bring in Bloomberg's Mark German. The one idea that you and I talked about last night, Mark was Apple talking about comps with the year earlier an
iPad and then also currency headwinds. You're not buying it, why.
Well, First of all, in terms of the iPad decline, right, that's a twenty percent decline. It's one of the biggest declines in the history of the iPad. And what they're doing is they're trying to partially blame it on a comparison to the launch of the m one iPad Air.
That iPad Air came out last March.
I'm not entirely sure how many sales of the iPad that actually drove, right, so I think it's not a totally fair comparison. I think the bigger picture is the iPad compared to the latest Max is simply not as compelling as it used to be. I think more consumers
are going to the Mac. The pricing is very strong, the fifteen inch MacBook Air is fantastic, the chips in the latest MacBooks are terrific, and then combined with that, consumers are noticing that changes to the iPad Pro, in particular, that's the highest revenue driving iPad, have been very light. That device has not received a redesign in over five years, or close to five years since it was revamped in
twenty eighteen. I'm told there'll be much bigger changes to the iPad pro in the Spring and OLED display a revamped design, some new charging capabilities, so that's going to be pretty significant, and consumers may be holding out for that big revamp.
The story is that weakness in iPhone in the quarter gone did not do enough to offset a record quarter for services revenue. What else are we expecting based on what Luke of Maistreet, the CFO had to say going into the fiscal fourth quarter, which is the period ending September.
Yeah, what the CFO said is he gave guidance on three items. The first was that the performance in terms of the growth or lack thereof, will be consistent between Q three and Q four, So that means you can expect a Q four decline of about one and a half percent, right, okay, so that's not awful, but that is going to be the fourth quarter in a row where Apple declines. That's the first time this has happened
since two thousand and one. The second thing he said is that iPhone revenue growth as well as services would accelerate. So that's going to mean that you're going to see more growth for services and the iPhone in the fourth quarter. So that means the iPhone had Q three decline of about two and a half percent, it'll be less than that or maybe we'll see some growth thanks to the iPhone fifteen. The third thing he said is that the iPad and Mac would continue their declines and they would
both fall double digit percentage points. Now that makes sense given that new max are not coming out until later in the quarter, right, They're not coming out or later in the year. They're not coming out until the first quarter. And I'm not expecting any major iPad news until calendar twenty twenty four, which is also in the fiscal quarter after Q four.
Bloomberg's Mark Guban not just getting the innings breakdown, but weaving in his lacest reporting as well and all things Apple, thank you very much. The other top story is Amazon joining us now Bloomberg Spenser Sofa out of Seattle. Wow, the Andy Jesse effects. He has really pulled it out the bag. What for you is the biggest takeaway, Spencer, Well.
It's hard to narrow to any one one particular thing. It was more that everything was was, you know, kind of firing on all pistons. So if we look back to the first quarter, analysts were worried because they divulged at that time that cloud sales continued to decelerate, that they were seeing the softness. So a big takeaway from this print is that investors kind of expect that cloud computing sales for Amazon or at kind of the bottom of the trough and they're going.
To kind of keep you know, could come back.
The other thing is on the poor e commerce business, is that we're really seeing the benefits of all of the cost cutting that Andy Jasse has been doing. You know, they laid off about twenty seven thousand corporate employees. They've been slashing a lot of these kind of experimental projects that are seen as not not yielding returns anytime soon.
And so I think that the print, which had a beat on profits for the second quarter and also an expectation to be you know, the street was looking for and quarter, just shows that those things are paying often. That Jazz is bringing a sense of a sense of discipline, whereas his predecessor, Jeff Bezos, you know, kind of ran Amazon is like almost like a VC fund, you know, just lots of lots of scattered projects going on at any time to see what would rise, and Jess is kind of clamping down on that.
You know, we went into earnings knowing AWS Amazon Web Services, the cloud unit is going to be important. It always is. But there is a big portion of the Bloomberg technology audience out there that aren't familiar with a WS spencer. You know they know Amazon is the company that magically delivers packages to their DOORSET just explain why AWS was important and how it performed in the quarter.
Well, for years now, Amazon's cloud computing business and this is basically people renting space on Amazon's in Amazon data centers that the access via the Internet. For a year now, it's basically been the primary profit engine of Amazon. Whereas the e commerce business, you know, it's up and down.
It's profitable and then it's not profitable. And a w US is kind of thing that's that's been sustaining it and also growing at a healthy clip for years, but started started slowing down because if there was as there was some uneasiness in the economy, Uh, folks that were buying a w U S services were pulling back.
We're pulling back on that investment now.
And especially with all of the interest in artificial intelligence, Amazon's trying to position itself as a key place to access tools for artificial intelligence, and they see that as a as a boost to their cloud computing business. Even though some folks think maybe they're getting beat a little bit by by Microsoft, but it's still an opportunity for them and the cloud computing division is just going to be something investors will be will be watching for some type of company.
Alright, Bloomberg Spencer Soper with the most fantastic shirt on television this Friday, Thank you to break down all things Amazon. All right, coming up here on Bloomberg Technology, so many more earnings to recap. We'll hear from Matt Culkins, the founder and CEO cloud computing company Appyan, about its second quarter results. An updated outlook. This is Bloomberg actually before
we had to break. Federal Reserve Bank of Atlanta president Raphael bost It caught up with Bloomberg's David Weston in Aspen, Colorado, weighing in on his thoughts generative AI. Have a listener what.
I would say on the generative AI. It is happening so fast, and change is happening so fast. So this is really a frontier We're going to have to We're going to frankly do new things and different things to try to keep up with it, because it is the question that will I think, drive a lot of what happens in our economy for the next several years.
So many companies are chasing the big large cap stocks and the artificial intelligence race cloud computing company Appian, though says it's in a different race to establish a distinct AI future. The company also posting second quarter sales the top testimates and narrowed it's adjusted loss per share forecast for the full year. Joining us now Appian CEO Matt Hawkins, along with our very own Alex Brinker out of Los Angeles, find this really interesting. Matt, there's a real focus on
the cloud environment right now. Your cloud subscription business grew thirty percent year on year in the court of gone. What was the main driver of that.
Well, there's steady interest in our ability to manage the way a process works across an organization. We coordinate mission critical processes for major customers around the world, and there's sustained demand for that, particularly in.
The age of AI.
And Matt, looking across the industry, cloud businesses have kind of had a tough quarter. You guys seem to be a bright spot in general cloud spending. Do you think we've kind of reached the bottom of this challenging time in the current economic environment.
I think spend follows productivity gains, and particularly with AI, automation as a sector is going to deliver powerful new productivity gains, and that's going to pave the way for new spending levels.
Matt, when you talked about your approach to AI with investors and analysts yesterday on your earnings call, I was really struck by something you said that you think that companies, organizations like yours and your clients should be bringing algorithms and training them in house. Now that's a different approach than we've seen from the likes of Meta, who have been kind of evangelizing open sourcing artificial intelligence.
Can you kind of.
Explain a little bit of your take on this idea of bringing everything in house. When it comes to organizations bringing AI into.
Their businesses, we typically work with large organizations, mission critical organizations with the regulated industry sensitive data. For those customers, a public AI model doesn't make sense. It doesn't make sense to send your data across the Internet. It doesn't make sense to cultivate an algorithm that you don't own and that you could lose if you lost your contract with a big tech vendor. These CIOs and these organizations are going to need the benefit of AI, but they're
going to need it on their own terms. They're going to need to preserve their own information, which is their most valuable asset. They're going to need to own that AI algorithm that they've helped to create.
We are going to enable that.
We see that as a parallel market to the AI that everybody's talking about. We think private AI is its own objective and it's going to appeal to a healthy section sector of our customers.
And Matt if this last starting season is any guide for all of the large cloud companies, say Meta Alphabet, Keeping AI or housing AI and cloud is expensive. It requires lots of servers, lots of compute power, and it also requires highly technical individuals to make this happen.
So are you kind of saying.
That as you look out across your client base, these folks with sensitive data that they're going to have to kind of build this tech infrastructure and house hire these talented folks in house. How does this evolution look internally at businesses if they take this private AI approach?
There is publicly available AI that's easy to source. What you need then is to train or fine tune it on internal data. That's the tricky part, and that's where we plan to spend most of our energy helping by collecting data sets that span the enterprise, arranging them and then training them automatically, using them to train data to
AI algorithms automatically. We're going to facilitate that step from merely having a general capble AI platforms sourced from outside and then cultivating a unique AI intelligence based on that by training it on your own data. That's the hurdle that we're going to focus on getting our customers across.
Matt At the heart of this story is the question, what is Appian's technological competence or point of difference from anyone else out there offering the ability to train a large language model in house or through a third party.
Appian does two things, if I may say so.
The best one of those is we do process. We route work from one worker to another when some of those workers are digital. AI is a new digital worker, and we're going to have to route a lot of work. In every business that uses AI, you're going to be routing work to and from AI. So that's one of our big edges. And then the other one is our mastery of data. We have a data fabric that connects all the data in an enterprise and allows you to
gather custom data sets for training and AI. We're going to rely heavily on those two features to give us an advantage in the opening world of private AI.
All right, happy and CEO Matt Holkins and Bloomberg's Alex Brinka, thanks to you both, and a happy Friday. All right here on Bloomberg Technology, it is time for talking tech. First up, Apple, Samsung, and HP are freezing new imports of laptops and tablets into India. The South Asian country abruptly banned in boundshipments without a license, which surprised some of the world's biggest PC makers that according to unnamed sources, tech firms are now engaging with New Delhi on how
they're going to obtain licenses quickly. Plus, Qualcom and NXP Semi are teaming up in order to rival the likes of SoftBank's arm. The chip designers are working with other firms to fund a new company specializing in risk V technologies for chip designs. The unnamed business will initially focus
on applications for cars. And a workers' union is accusing Alphabet of illegally ending contracts for a host of Google help workers that we're trying to unionize organize as Father complaint with the National Labor Relations Board, accusing the Internet Giant of retaliation against a number of writers, graphic designers, and launch coordinators responsible for AI related tasks at the company payments company, shift For raised its outlook for the
year after reporting record results in the second quarter. Joining us for more his Shift Force founder CEO Jared Isaacman, who we also know on this program of course as an astronaut and jet pilot. Jared, good morning to you. What gave you the confidence to raise guidance?
Hey, Ed, thanks for having me on the show.
It's a great question, right because you think about the macro picture right now and there's a lot of moving pieces. But you know, shift for his growth largely comes from winning share of a very large addressable market. I mean, we grew payment volume sixty percent year over year. That's obviously not very driven by same store sales. I mean, that's that's a factor of just taking a lot more
customers now than we had in the year prior. And that's and that's really what's driving the the raise to our outlook is we're winning a lot of share across all our key verticals, and we're also expanding internationally, so we're able to take all the products and services that work for us here in the US and bring them into new markets, so that that's a large part of the confidence going into the guidance lift.
There was two items on the call that caught my eye, and it's an issue of technology, but fees. And you kind of cooled out some of your competitors over the issues of fees in the context of hotels restaurants.
Why yeah, I think, first of all, we have some awesome competitors and they're doing great, and they're going to continue to you know, win a lot of share, especially within the restaurant vertical. But you know, there was you know, a very public misstep in which, you know, an intent by one of our competitors to start charging a lot of junk fees directly to consumers for placing online orders. And this just isn't the time. I mean, you know,
economy is on somewhat shaky ground. I mean, hopefully we're petting for that soft landing, but I don't think it's the time to start penalizing consumers who want to go out and need or do a takeout order and whatnot.
So you know, we did the exact opposite. We said, look, any of these restaurant customers that aren't happy with where they're at, we'll pay you five thousand to move over to shift for and instead of penalizing you for online ordering, we'll give you a dollar for every online order during the promotion period.
And we can do that because we're profitable.
I mean, you know, we grew even to sixty eight percent year over year. You know, we have high fifty percent free cash flow conversion. We don't need to price and fee our way to profitability like others out there. In fact, we can turn around to put some of that capital to work when it's needed.
Jared, most of the interactions between you and I have been in the context of you being an astronaut. I have a few key questions before we lose you. Does Polaris Dawn happen before the end of this year?
It's probably a very well researched question. Look, we hope, so, I mean that's you know, we're still aiming, you know, officially towards the end of the year. But as you know, you know, the Player's program is a research development type initiative. We're building things that haven't been done in fifty years since we last walked on the Moon, and some things are just completely brand new and that puts some risks in the timelines. But when it does fly, you know,
it'll be a very exciting mission. And yeah, we're still hopeful.
Towards the end of the year.
You've already done the highest altitude SpaceX all bit. We told that story in the show. Just very quickly explain the work you're doing on space suits, the technology development you're involved in.
Yeah, so this next mission coming up, polarist on is really exciting. It'll be you know, the highest Earth altitude ever flown, fourteen hundred kilometers, so it'll be the farthest that humans will have gone from the Earth since the last time we walked on the Moon fifty years ago. Two of our crew members, Sarah and Anna, will be the women who have journeyed and explored farthest from Earth, which is very cool. Then we're going to come down
in altitude. We're going to vent down the cabin and do a space walk with a brand new spacesuit, a generation of which of the suits will be testing, which are the first new suits in forty years, might be what people are wearing on the Moon in Mars someday, which is pretty awesome. And then we're going to test a new constellation of satellites out laser to laser communication with Starling satellites and do about five days of science and research.
All right, chift Fall has found a CEO, Jerreedisingman. We are also watching on Polaris stare and thank you so much, thanks for having me. All right. Next, so lots of digest out of Nikola, shares falling after reporting earnings and revenue, and a deliveries outlook that's been cut in recent times. But more interesting, a new CEO who's also a familiar face joining us now out of Bloomberg's Detroit bureau. David Welch. David, you and I have covered this story closely. Steve Gersky
is now CEO of Nikola. What's happened?
So look at Mike close Schelder, who was Steve's hand picked CEO coming out of GM's former German opal unit. They'd worked together there years ago. He was the car guy who was the engineer who was going to come in and make all of this happen. And he's had some issue with family that he's going back to Germany. I believe to take care of. And so Gersky is stepping out of the non executive chairman's job back into the CEO's role, and he's going to be an operating guy.
He's even, I guess, going to have a place down in Arizona where the company is Steve Woods in New York, and it's going to spend a lot of time down there. So he's going to do He's not an interim CEO. He's going to do this as long as it takes to get the company really moving and really going quite a bit.
She's a surprise, right, This was a surprise for both of us this morning. The context is that he was at the helm of the spac Vecto IQ that took Nikola public. He was involved in all of Trevor Milton's rollercoaster saga that you and I have covered so closely. Bloomberg's David Welch out of Detroit, thank you so much. That does it. I'm afraid for this edition of Bloomberg Technology. It's just been an immense week, so earning's heavy Apple Amazon.
We also had other numbers earlier in the week. A lot to recap therefore, so don't forget about our podcast. Wherever you get your podcasts, we publish on Apple, Spotify, and iHeart, but also on all the existing Bloomberg platforms. The thing is, the earning story continues into next week, so much more to refocus on as well, particularly in the field of AI. From San Francisco. This is Bloomberg Technology.