Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and Eva Low in San Francisco.
This is Bloomberg Tech coming up arm ones of some sluggishness in the smartphone industry, but shows AI data center growth is there to offset the slump. We'll discuss the CEO as Anthropics signs an agreement with Elon Musk's SpaceX to access computing resources from its competitor, and we speak with the CEO of Hawkeye three sixty. That's as a satellite surveillance firm raises four hundred and sixteen million dollars in its IPO.
But first we.
Check in on these markets that on the tech side of the equation managed to sustain the rally.
We're at a new record high. We're up for a third straight day.
Book Importantly, we're up on the week, and that's a sixth straight week of gains.
Haven't seen that in a couple of weeks, in a couple of years in fact.
And then as that one hundred, we're still seeing that optimism around AI. We of course have the clouds of geopolitics and in many ways, we are somewhat concerned about whether or not a pe steel will be moving forward with Iran and the United States. So otherwise traders taking perhaps a little bit more cautious tone on other benchmarks. But tech drives high, and let's look at how the earnings continue to flow through. Look, I'm focusing in on ARM.
It's having a rough day. We're off by some eight percent. But build into the context that this is a stock that has rallied hard so far this year on optimism of AGICPU, on optimism of applications in the AI data center. But also there is still, of course the royalties the licenses that go towards smartphones, and I want to talk about just that at the moment because we're joined now
by the CEO of ARM. More broadly, Renee has I'm pleased to say you're joining us from San Diego and Renee the market perhaps digesting recent run ups in the stock, but also digesting what you warned that you're seeing in the smartphone arena, and that's because of memory prices. Just dictate a little bit of what you've seen in the space bag.
Good morning, Caroline, and I'm in San Jose, not San Diego. But that's okay. You know, in terms of the overall market and the quarter we are, we could not be happier. In terms of the results that we had this last quarter. It was one point five billion dollars in that neighborhood of revenue, which not long ago used to be an annual revenue number for the company. Our data center business doubled year on year, and we're seeing huge, huge demand
for our new product, the arm Agi CPU. So all of that is really added up to a terrific quarter.
To your question.
As far as smartphones, we have definitely seen a slow down there as well. However, I would say compared to some of the other folks in the market, we're not really as exposed there, probably for two big reasons. Number one, a lot of our volume comes from the premium segment, where the royalty rates are quite rich using Version nine, and where the slowdown has taken place we've seen as mostly in the lower end of the market, where there's not a large worldy contribution for US.
Okay, so not a large royalty perspective coming from the smartphones. But where the dictation of growth seems to be coming from is CPU not only CPU architecture that is used broadly by you.
Name check the Googles, the Amazons.
The way in which we're seeing CPU further grow in your customers, but also you're building the chip yourself.
How do you see that market expanding?
Yeah, we are, and you know, for thirty five years the way we delivered product to our customers was through with through IP, the blueprint that they used to essentially build chips based upon the ARM technology. As you know very well, we've seen huge growth in our data center business over the last number of years. Amazon with Graviton had just announced version five Graviton five, Google Axion, Microsoft
callbalt and the course and video with Vera. But what we've seen, Caroline, you know, in the last number of months has been this explosion of demand for agentic workloads. And agentic workloads essentially mean that agents are now putting queries on the data center that need to have answers back very quickly. All of that work regarding the agentic management orchestration, scheduling, etc.
That is the kind of work only a CPU can do.
Only a CPU this this is not something accelerated GPU can manage. So what's happening Demand for CPUs is exploding, and the timing of the ARMAGICPU launch, I think we've just reinforced huge demand for that kind of product.
So we are now seeing demand for.
Not only the IP that people are used to build chifts based on arm of the data center, but the RMAGICPU. And I think I mentioned on the call we had visibility to about a billion dollars of orders that we had in our forecast. That number over the last five weeks has doubled to two billion dollars. So demand is certainly not a problem.
Extraordinary since you first announced the move towards building it yourself, towards what we see as this focus on this particular CPU.
But where from. We know that Meta has.
Been a key puntner on this, but where else do you getting demand from?
Rene?
Yeah, So the partners we talked about at launch was Meta, of course, open Ai a large partner, Cerebras, sk Telecom, Rebellions, SAP.
So it's pretty broad F five networks.
We're seeing it across network infrastructure, but largely around simply putting more CPUs inside the data center. The other thing that we did, Caroline with this product is when you're building something of this nature. It's not just a chip, but it's a system, and we work closely with partners like super Micro and Lenovo and ASRock who build the systems and racks that customers can order.
And these thirty six kilowatt air cooled racks.
One of the beauties of the rm AGICPU is that you can get twice to performance in the same power versus the comparable X eighty six rack. So and of course we're known for power efficiency, so that's not a surprise, but it is one of the other things that's catalyzing demand.
We've got to talk a little bit about supply.
You'll talk about how you're built, making sure that the servers are there.
The way in which we.
Can put them in the data centers is they're the partners you're working with. But time and time and game, we're hearing from everyone that the blocker really isn't demand, that's supply.
Have you had any issues with that.
Yeah, So what we said on the range call was the billion dollars of orders that we talked about, we have the supply for that. Now we have as additional demand for another billion dollars of demand of product, and that is bringing it to a total of two billion dollars, and we're working with everybody in the supply chain, whether it's TSMC, the memory suppliers as Khinex, Micron and Samsung. But the beauty of all this, Caroline is this is
not perishable demand. It's not something that if a window closes, there's not going to be a need for compute. So
we are thinking about this in the long game. We've talked about a fifteen billion dollar target by FYE thirty one, so that's Calendar thirty for your viewers, And basically what that means is we are very comf evident that we are on track to that fifteen billion dollar number in a very very short time, which is quite transformational for the company relative to the size of opportunity and the amount of revenue that will.
Deliver, size of opportunities, size of role for you. RENEE has been expanding because you're still CEO of ARM, but you're also taking on leading the soft Bank International part of the business, and this is all about working with other parts of SoftBank's ecosystem in the chip arena. I just think of some of the acquisitions mPire has been put into the portfolio.
You've got graph Core, how do you see.
Your role changing, How do you see the impact of SoftBank more broadly in the chip space?
Yeah, thank you for the question.
Now, there's a lot of synergy to the kind of work that soft Bank is doing when you think about some of the announcements they've made recently around in Portsmouth, Ohio, for example, a huge ten gigawatt data center facility working with the US to Partnment Energy as well as soft Bank Energy. And then we've got companies in the soft Bank portfolio like Ampeer and graph Core. A lot of synergy between the kind of work they're doing that could fit into ARMS. So Masa has asked me to help
with that orchestration and that coordination across the companies. So in one extent, yeah, it may look like, oh my gosh, he's got two jobs, but on the flip side, there is a lot of coordination that we get benefit from both sides. So I'm happy to help in any way that I can, and from.
San Jose and from wherever else you are in the world. As we know, harm as UK based as well. We so appreciate you joining today. I'm CEO Renee has on the back of ARMS numbers now let's talk about where all of this AI data center demand comes from, and it keeps picking up. Anthropic has struck a deal with Email Musks SpaceX, giving the claud maker access to computing resources at a massive SpaceX data center known as Colossus
one for more. Bloomberg Ai editor Seth Figerman joins us, Now, they're competitors, right, because it's not SpaceX, it's XAI that has now passed of.
Space It's a bit of an odd bed below situation here. Elon Musk has been critical of Anthropic before. Obviously they're both competing to build more powerful AI models, but they do both tend to benefit here. Anthropic has said repeatedly that their demand as surge in the last few months, and we've kind of felt that covering this company, and they need computing Benigan now and Elon Musk's data center is operational. It's not a theoretical multi gigawa facility three
years down the road. But Elon Musk's venture meanwhile, they need revenue. Their you know face actually is planning to go public imminently, and xais Groc is not really getting that much business or as much business as they might like, so here's a great way to supplement their revenue.
Because actually there's an awful lot of capacity that's not being used at close this one, right.
That's right, So there's hundreds of megawatts there. I think three hundred megawats is what Anthropic has agreed to lease here. And again, this may not be a five gigawatt deal on the scale that we sometimes report on, but it's available now and I think that's the key differentiator.
There's also talk of I'm sure orbitals data centers, I mean still to see you of Aanthropic Dario like speaking into that eventual moonshot that's also on well he.
Twenty twenty six. But yes, Santhropic is saying they'll work with SpaceX or SPACEXAI whatever they're calling themselves now on multi gigawads of orbital data center capacity. This does not exist today, but Elon has certainly suck it's a priority for his emerged company.
What does exist today is rivalry between en O Musk and Open AI men. He would say, of what we're seeing playing out in court right now, what did heel must say about? Look, his desire to allow Claude and Anthropic to continue to grow using his own architecture.
There's certainly that of the egamy of my egamy, you know. But he said elon sick. He went and visited senior staff Aganthropic last week and decided they're not evil and that.
Some of his stuff like people have been leaving the trading.
Yes, but he has previously alleged that aanthropic is evil or that they're misanthropic or any other term here. But he's decided that Cloud can be a force for good. But he's also indicating if that changes, he could just cut this deal and change things.
Aroud.
Well, it's a deal that's cut so far and seemingly a win win among frenemies. Figurement is always with all the inside track when it comes to AI and compute me. While coming up, we're going to the world of Quantum. I encu Ceo Nicolo Divasi is joining us. They post their first quarter revenue. It a bit, it was a raised the shares down.
This is Bluemberg Tech.
As the clock ticks down on its acquisition by Paramount One about the discovery reported and deeper than expected loss in the first quarter. Shares user received just stuff about a tenth five percent, putting into the details of Bluebergs Hannah Miller the loss it is because they owe Paramount, right, this is all tied up with the amount that was given to Netflix.
Yes, it's definitely an anomaly. So basically, even though Paramount has already paid that two point eight billion dollar termination feed in Netflix, there are circumstances where Warner Brothers would have to refund them. They would be unusual circumstances, but Warner Brothers still has to report that and still have it on its books.
Otherwise, though, if you strip that out, going to the actual fundamental fundamentals of the business, how are they doing in terms of content creation?
How are they doing in terms of streaming.
Yeah, so we've seen success on the streaming side, though they are not reporting their specific subscriber counts. They're following the footsteps of Netflix and Disney, but they are on track to reach their goal of having more than one hundred and fifty million subscribers by the end of this year. We also saw some strength and streaming. They had some hit shows, Season two of The Pit, A Night of the Seven Kingdoms, and yeah, their studios revenue looked good as a result.
What about the UK and international growth? They launched their right in late Q one.
Yeah, this global expansion of their streaming platform plays a lot into their goal of having you know, tons of streamers around, streaming subscribers around the world. So you know, this is all part of their strategy. They are a very international company, so it makes sense for them to just keep expanding abroad.
I meanwhile, we just keep all eyes on how the deal progresses. Hannah Miller, We so appreciate you.
Thank you.
On the back of Warner Brothers discoveries earnings, there's more earnings this time.
We're focusing in on Quantum Ion q Look.
Shares are down some five point seventy five percent, but the quantum computing company posted first, got a revenue that beat expectations. They had higher than expected second quarter outlook. In fact, they raised the Fourier guidance. Nicolo Demasis with us I'm QCEO. So maybe profit taking, maybe just appetite from investors is so excited when it comes to quantum.
Do you think that's what's putting some pressure on the stock today.
You know, Look, my job is to run the business as best as one can. We're up probably seventy percent from this time last year, and at the end of the day, I think that we have tremendously great access to capital, we're executing well, and we're demonstrating that Quantum's got this fantastic strategic and financial inflection point.
Right.
So we just uplifted guidance for the full year to be more than double last years revenue. At the high end, we've tripled revenue last year. We're the first seven, eight and the nine figure revenue quantum company in history. I want to be the first to ten figures of revenue. That's the goal right now.
Well, the goal longer term is for fault tolerant quantum computing. It's to get to eighty thousand logical cubits.
The milestone you've got two five six. Why is that a milestone? Why is that an inflection point?
Well, yeah, we launched actually the world's first fully sort of shovel ready blueprint for fuld tolerant computing last week as well. We call it the Walking Cat architecture, and the two v six ship is actually our movement to this architecture that we published and have obviously protected and
patented before we did so. It's a truly groundbreaking design that I think will be in textbooks and history books, I'm guessing in the coming decades, because it's modular and scalable, and it takes advantage of what we call all to all communication through this concept of sort of bell quantum teleportation if you will, within.
The chip, which is super cool.
But if you're a quantum mechanics you know geek, you'll you'll know what we're referring to. And so our systems allow us to build more and more powerful individual computers. But also the modularity means that we can build data center size arrays as well. And so what I like to remind people is where very much in the process of building the most powerful ecosystem the quantum space. It's
not just computing, it's networking, sensing, and security. All of these business lines were growing, and we talked about on the range call. You know, just yesterday we beat Q on you know, revenue guidance by about thirty percent. We talked about the fact that the whole portfolio is growing. We're growing internationally. It's about a third of our revenue, but a third of our customers are taking more than
one product from us. So there's a lot of quantum networks quantum computers that we're seeing demand for and hybrid data centers as well, And that is.
Why you want and you say you want to be the in video of quantum is effluly in the way. Look, we're not going to compare like for like. Revenues are still way off what and Video is currently bringing. But you know you've got to start somewhere. And in that respect, is it just you want to own the whole pie. The fact that you are going to be in charge of a lot of part of the ecosystem is where the Nvidia sort of comparison comes.
Look, I'm a huge fan of Jensen, you know, hero for anyone I think, to be honest, you know, tenacity and building a business for the lasting a couple of decades. We're going to do exactly the same thing. We've been at it thirty years. We've built the world's first quantum logic EATE in ninety five. Now we've built you know, we've delivered the first blueprint for full fall tolerant machines
and we're demonstrating all aspects of that architecture. So it's just engineering from here on out as we turn the handle and scale. But yes, we want to make sure that people learn on our architecture, stay in architecture, change the world on our architecture and all aspects of applied science, material science, pharma, defense, intelligence, logistics, chemistry and so on. But we're going to be, you know, an open ecosystem,
so we work with Microsoft, Google, Amazon, et cetera. We will plug into everyone's software stack, but end of the day, we want it all to be sort of reciding on our on our hardware, and so we we want to keep control of the critical pieces of the software and hardware stack and the al rhythm stack as we scale.
You're not the only one in the race.
And when I think about fidgets, for example, what others are doing elsewhere? Who are you seeing in your peripheral vision? Where are you seeing competition coming for what you're building?
Well, I think we're quite unique in the sense that we've not always not only always had a technical lead, but we now have a manufacturability and a robustness that's really grabbing people's attention.
Right.
So I talked about technology readiness levels on the earnings call last night and how our quantum sensors are on submarines up to you know, spacecraft, and we're thinking about the full quantum platform as something we want to deliver to the war fighter in all war fighting domains. But also that indicates the level of reliability and robustness that our enterprise customers can benefit from. Right so, sensors have very high what's called tenology readiness levels by the military.
Our quantum networks are also deployed quite high levels of TRL. Quantum computers are very much you know, growing catching up of all of the very quickly, and we're having to trade off to some extent, you know, how much do you harden the current generation or work on the next generation.
But we're doing all that in peril and we continue to invest in manufacturing capacity because we've talked the last two earnings calls about the fact that demand really has been coming towards us and they've been coming to where our product portfolio is, and so we're growing our manufacturing footprint across the whole product family to meet that demand.
You've articulated a lot of the recent commercial wins in the earnings, so appreciate you coming on and talking about the longer term trajectory. It's always interesting to catch up with Niccolod de Messi. He's an iron Q on the back of his earnings. Let's take a look at today's
big number, eighty and eleven. That's the number of planned cuts in the tech industry so far this year, up thirty three percent from the same period in twenty twenty five, in the total for twenty twenty six to three year high, even as overall private sector layof announcements receded. This is all coming from data from Challenger. Blumbo's US economy reporter Julia Benzeries joins us now on the trend.
That we're seeing.
Look, whether it's anecdotal, whether you think of the announcement's coming from block just over this week, we've heard from Coinbase, from PayPal, but we then get the more macro piece of data that yes, tech is the industry that has the highest number of layoffs right now.
That's absolutely it.
You've been seeing a lot of headlines from Microsoft to Meta to snap and that's what Challenger looks at. Challenger tallies up these job cut announcements and the tech industry is leading layoff announcements. And the reason is for the second month in a row, artificial intelligence and you brought up a great point. It's not necessarily at the moment that artificial intelligence is replacing workers, but the spend that is necessary, that is what is taking over.
And that's why job cuts have.
Been occurring, is because they these companies need that extra spend.
It's so interesting because I think everyone's got this anxiety the AI is going to replace me, but actually maybe it's just your salary that needs to be taken out to be redeployed into AI investment judia. When I take a step back, though, the hand ringing is getting more ferocious.
But when you look at Challenger data since twenty twenty three, is it that they've been tracking how many jobs are at the expense of AI, it's still only about three and a half percent of all layoffs that have been announced since that time.
Right, it's still only very small. It's only very small.
And if you look at the broader macroeconomic picture today, we got initial jobless claims and they're still hovering near decade lows. Even though they rebounded a little bit, continuing claims are near two year lows. So that's showing that even though we are having a lot of these announcements, these job cuts are either not translating significantly to the broader data, or also that's just not necessarily moving the needle in the broader picture.
Yeah, I guess the question is whether this is a leading indicator, whether it's just the start of something in terms of a wave. Julia, just briefly, what are the data do you look at to make sure that this is real, whether this is AI washing.
I think that's the difficult question.
I mean, the numbers that we're looking at, even if it is AI washing, what is significant is that there are these job cuts, and so we're trying to assess is the economy still in a low higher, low fire environment. Because even if it is AI washing, if these jobs are being removed from the economy, that is significant something that you have to keep an eye on.
It is and it's something that workers to keep an eye and at the end of the day, it might be statistics, but it's actually really people's livelihoods that we're talking about here Bloomers. Julia Panzera's it's great to have you on. Welcome back to Bloomberg Tech. We check in on these markets that are at a new record high. We're on pace for a sixth straight week of gains and then astat one hundred, we're up five ten percent. Again, did the clouds on the macroeconomy side of things, the
worry anxiety about US and Iran conflict. We're still managing to see the AI trade still power a lot of these stocks.
We've also staw.
Got earnings coming thick and fast, and for some we are seeing absolute rocket chips in terms of moves and focusing in on data dog up let's call it thirty percent.
They raised the guidance.
They're showing strong growth and in many ways this is as see the biggest moves in some at one point since twenty nineteen, and this is a.
Software really manages to sort of alleviate some of the ants here. They had a strong report.
The guidance applying a healthy outlook for the second half is however, qucayat call it in TDCAR and saying revenue growth is nicely above consensus for the outlook, much better than expected.
Less so for DoorDash, which had.
Been trading higher in earlier when certainly after it reported earnings yesterday after the bell, the gains that we saw in gross order value had impressed in many ways. They the firm giving a second quarter marketplace gross order value forecast that really beat average analyst expectations, but maybe expectations got ahead themselves, as Uber's numbers have been strong as well. We're just downs extensive percent, but earnestly one of the
key drivers in the market at the moment. And Sylvia Jamonski's with their CIO at Defiance ETS and talking to discuss invest appetite, whether it be for software in some respects for financing, some love for data dog, but you're also seeing love for what's happening in terms of the AI trade more broadly, infrastructure quantum. We just had IMQ on what are the driving forces you're seeing in the ETFs.
Well, I think the driving forces are very much that these companies are doing quite well. We just talked about IMQF camera for a minute. There are seven hundred and fifty five percent revenue growth. You know, this is a company that's doing full s tax services. They're involved in defense, they're involved in quantum infrastructure deals with Azure, deals with AWS.
And I think that a lot of these disruptive and thematic themes are playing out because these companies are starting to generate revenues they're starting to go from being science projects to actually being commercial and that's really what the retail investor needed to see. And I think why you're seeing some momentum.
In these spaces. It's an interesting that a science project.
I mean, some days we can be very enthusiastic about the project of AI and large language models more broadly, we think that they're going to be driving absolute productivity games. And then there's other days where we have anxiety about just supply restrains, whether able to build out compute, whether able to afford compute. How much are you seeing on a day to day the shift and sentiment.
Well, I think what's great is actually if you look at some of these themes AI and even quantum right like, just look over the last two or three years, it's good news comes out, earnings are positive, The stocks rally thirty forty percent. You know, someone says, oh, we're ten years away from this coming to fruition, and the socks fall twenty thirty percent. So what I would say is
that opens up opportunities for investors. When you have this uncertainty and it's a nascent field, you know, you can actually buy dips here and hold these stocks for a longer periods of time. Hold these AI power and infrastructure ETFs and things like this. But you know, what I will say is that it also just shows you how much demand there is and what the runway is for these companies. You know, you're now we're talking about photonics that are needed to power data forward. We're to Corning
deal for a Corning deal, Lmentum, Coherent. You know, we're talking about different forms of energy, whether it's nuclear energy, and all of this is needed to drive this forward. And we're in the early stages. So I think the picks and shovels are going to have a long runway ahead of them.
Where there has been a lot of anxiety has been software. And look, Data Dog actually calls itself an AI powered software provider.
They're giving tools for AI coding. They're also all about the networking infrastructure.
But how all companies getting sort of wheat and shafted by investors right now as to whether they can harness AI growth or whether they're going to be left behind.
Well, I think when the market had that chatshypt moment so long ago, at this point, it was the Microsoft investment news, all of a sudden, every single company in the s and P five hundred tied itself to the word AI. And when it tied itself to the word AI, all that company tended to do well and the stock price went up. And then the market has figured out like, okay, not everybody is AI, and so I think data Dog has done something differently, you know how that votes for
the rest of software. I think that if you see these major software companies integrating AI into their infrastructure, they will be potentially fine. And also you have larger companies like Ibon for example. You know, they might suffer on their software side, but they went on their quantum side, right, So the diversified exposure to technology and these you know again disruptive trends in AI will help move them forward.
This is all in the context of disruption from a macro perspective. From a geopolitical perspective, how how does a long term investor who loves the idea of AI and quantum deal with the here and now of the straight to Hoole moves, which does affect helium, which doesn't fight chips.
Right, And it's really interesting that the market has rallied the way it has where we still have this geopolitical uncertainty.
Is the war over?
Is it not?
Where do we stand?
You know, I think that the market could turn at any time, and that's something that investors.
Should be aware of.
However, when you think about, you know, the way that you invest when specifically talking about disruptive themes. You want to be a longer buy and you know, buy and hold investor, right. You want to kind of weather the Covids. You want to weather the Russia Ukraine. You want to weather what's going on in the Middle East and keep that long term outlook because you're not going to be
able to predict your politics. That being said, investors should beware that there could be volatility and the things that get hit could be the higher pro sectors.
Where are you seeing new appetite?
Like you're someone who thinks around opening new ETFs, like you honess the appetite that there was in crypto, particularly an AI infrastructure in space and quantum.
Where's the puck moving?
Well, the puck is moving to you know a lot of these picks and shovels of AI.
It really is.
You know, you're talking about memory, you're talking about photonics, you're talking about the AI infrastructure and build out the picks and shovels. The last time we were on, we talked about modern warfare because of what's going on in Iran and around the world. There's been so much growth in you know, drones, manless drones, you know polunteer, the type of AI that is going to be funded by governments to grow out. Defense is just you know, a
massive opportunity. So we really see investors starting to allocate and look into the cousins of AI outside of just straight ships.
And we've got a key IPO to be too about in the world of satellites. And I know that you've got exposure to the world of satellite and defense tech. Sylvia Daemonsky, it's great to have you on of Defiance ETF coming up. We talked to that CEO, Hawkey three sixty. It's a satellite surveilance FERM. It just rade four hundred and sixteen million dollars in its IPO. This is Bluemo Tech, another tech company is going public today in the latest
sign that the IPO market is picking up steam. Hawkeye three sixty priced at the top end of the range and raise four hundred and sixteen million dollars in the firm provides satellite based signals intelligence for US government agencies. Hawkye CEO John Cerafini joins US now and look, your shares are currently indicated to pop at the open thirty dollars to thirty two.
And does that make you feel, John, Oh, it's a wonderful day.
It's a wonderful day for our company and for our customers around the globe.
Okay, so we could see that sort of movement higher. Twenty six dollars is where you priced. You have are twenty five times oversubscribed. So for those that didn't manage to get in, what's the thesis here? What are the growth opportunities for Hawkey three sixty.
Well, it's a very.
Durable all weather company. We obviously have a value proposition of providing signals intelligence to the warfighter community during times of geoplical volatility, but our capabilities are orchestrated to provide value in all environments, in all business conditions, and we have a track record of having built a very durable company that works in any operating condition, in any economic environment.
You ownly operate a constellation of more than thirty satellites. How does that look to grow and what actually do those satellites perform right now?
Yes, so our constellation today is over thirty satellites. That provides an exceptional revisit rate over anywhere on Earth, as well as very low data latency, so we can get that data to our customers, the warfighters and timely manner. All these conditions provide for capabilities that the warfighter is using in places like the battlefield or in the South China Sea to be able to and track dark vessels.
We have a very exquisite value proposition of being able to geolocate, analyzed process RF data and deliver that to warfires on a timely basis.
How does that expand?
Is it just the US government and it's more of the budget that is an expanding budget coming from the Pentagon or is.
It other allies that you work with. How you seeing the growth of Hawky three sixty.
Well, we've orchestrated our company to be a very diverse in our revenue base. So we have a US government business that's significant today represents about seventy five percent of our work. In the past, our international business has been upwards of fifty percent of the Hawkeye heritage capability. We have a number of great international customers. We're very pleased to be able to support them, and the growth drivers on the air national side are very robust.
You are using the money the funds raised to repay debt and to help fund deferred payments related actually to an acquisition you.
Made in December. What about that?
I mean you bought a data space provider of signal processing technology.
Could you add on anything else?
Or is acquisitions in an inorganic.
Growth a way to continue to expand?
Well, we're quick to want to combine the organic growth of over seventy percent last year in twenty twenty five and the exceptional profitability of over twenty percent on adjusting able the basis in twenty twenty five with continued inorgananic
growth opportunities. Now that we've acquired ISA, which is a meaningful acquisition both in revenue and profitability and an exquisite fit for our technologies, and we have the institutional muscle to do this, we anticipate doing more acquisitions, and certainly the IPO provides the proceeds for us to enable that.
What's interesting, John, I mean, you raised I think one hundred and seventy three million in a Series A E funding round. Who are nearly two billion dollars according to pitchbook. Why not stay private? What we've seen is massive companies wait for extraordinary lengths of time to eventually tap the public markets.
Why was it right for you?
Now?
Well, the warfire who deserves the very best suppliers of capability to them, and the IPO process provides exceptional validation to ensure that a company like Hawkeye three sixty is capable of delivering valuable intelligence to that war fighter. So we appreciate that bone, the FIDIS and the validation that
we've gained from becoming a publicly traded company. And obviously we appreciate the resources that are now on our balance sheet that will enable us to execute against special initiatives that will provide growth to support the warfighter.
John, it's great speaking to me. We look forward to when the shares start trading. John Sarafini, he's the CEO of Hawkekai three sixty.
Congratulations on the listing shows of chime.
We're actually trading lower today seven point nine percent, But the company reported earning is that beat expectations? They raised full your revenue outlook. It's kind of synonymous what we've just seen with Armor a little bit earlier. The more notable change that Blueberg Intelligence focuses it on is the fintech raising is EBIDAR outlook up percent the midpoints. So let's delve into all these numbers, the growth, the new users with Chime CEO Chris Britt and look the.
Stop not doing the work.
But more broadly, we are seeing that you outperformed in your fiscal first quarter.
How are you seeing growth for the company.
Well, thanks for having me, Caroline, it's great to see you again. We felt great about the quarter. We once again added a huge amount of new members into our customer base. We added seven hundred thousand new actives, so we got to ten point two million for the quarter, which is a new high for US, and third party data from Jdpower once again showed that Chime was opening up more checking accounts than any bank in America, in fact, almost fifty percent higher than the number two player in
terms of opening up new accounts. And you can see that translate into our results twenty five percent year over year top line growth and great outperformance on not just top line but also in terms of efficiency and EBAITA. We achieve an eighteen percent adjusted EBAITA margin and gap profitability for the first time.
Look, this is all on the arc of having gone public and continuing to build out as a company. There was seasonality to your business in the second quarter brings that seasonality, Perhaps revenue gets hit a little bit, maybe acquisition costs. How do you continue to build through that seasonality. What is it that you can bring in terms of AI within the product and also within your business.
Yeah, that's right.
Q one is always a outperformance quarter for us because we get outsized amount of spend and deposit as a result of the tax refunds that come into our accounts. So naturally Q two you see that start to fall off a little bit. So I think the best way to look at this company, and we try to educate investors on is to really be looking at the year over year results of the company. We feel really good
about the remainder of the year. In fact, we raised our guidance for the year on revenue and adjusted EBITA as you mentioned, and I think it's really the product portfolio that's going to drive that. We were on the show just about a month ago and we announced the launch of Chime Cards or We're just I'm sorry Chime Prime, and we're just about a month in and it's been great.
We offer five percent cash back on the category of your choice, so you could pick fuel, restaurants, bills, you name it, and it's really been a big hit with our members so far. You also get three point seventy five apy on your savings, and we've got a whole host of other products, including AI products that we think will be a nice tail wind for growth over the course of this year.
It's all about member engagements, about cross selling. Talk to me about how that AI that maybe shows up in the product also is showing up in just the coding or doing the work that those that work with you are currently deploying.
Yeah, we really see AI as an accelerant to our business. We've embedded it inside of the company. We've actually we have a Chime built software factory called Archimedes, which allows employees within Chime to create agents that can work simultaneously to build products on our behalf. So literally from starting from idea and conception all the way to product rollout, we have agents that are now doing a lot of
the work for our members. It's over eighty percent of our code that we shipped last quarter was AI was done with AI, and so it's a huge accelerant to
the velocity of what we launch. But then in addition to that, we have a service for our members, an AI copilot that we call Jade that we think is an opportunity to move the banking experience from looking back at history and just getting reports on how you spend and these sorts of things, but actually being more proactive and helping people, helping drive behavioral changes that can help
drive people towards the best financial results. Paying off high interest debt first, getting a savings account, making sure that you're investing on a regular basis and not missing any bills that are due at a particular time. We're really excited about the opportunity to use AI to help our members make financial progress inside the app.
How does your employee base feel This week has been tough in fintech PayPal and they're not saying it's because of AI, but they want to lean more into AI. And you're seeing with Coinbase that is a total focus on trying to rew reframe the business built around AI with just humans at the edge what are you thinking of it, Chris.
Well, look, we already operate a very efficient company. We generate over one and a half million dollars of gross profit per employee, so we feel like we have the right sized company at this point in time. What's and our employees here, our chimers are excited about this opportunity. We are really entering into a golden era of what can be done with software products as a result of AI.
All the attention goes to the sort of frontier tech companies AI companies for good reason, But I think what's often underestimated is just how AI can be leveraged by industry leaders that are technology companies to create better products, to make it happen faster. And our employees are really excited about using this technology to create great outcomes for our members.
I think many of your members might not think it's a golden age for their economic circumstance when I think of the pressure there runner from all prices, and you talk about how you're trying to help some of your customers get money back when they spend on gas for example, how is the customer feeling?
Well?
I think you know, for the past few quarters there's been a lot of questions about the health of the consumer, and I think for good reason. Obviously, the geopolitical uncertainty, the sort of broader macro pressures, but we aren't seeing it in the results. We're seeing a healthy consumer in terms of spending, double digit increases in areas like entertainment, streaming services like Netflix, home delivery like door Dash and Instacart, and then also big box purchases. These are all up
double digits for our members year every year. We're also seeing balances that are higher, sure because of the tax refund season, but even beyond that, we're seeing elevated savings account and checking account balances. And we have not seen an uptick in unemployment benefits. And we see we are the primary account for millions of our members, so if there was a bump in terms of the labor market, we would see that among our customer base. They just
haven't been affected yet by it. And I think you've seen in the recent numbers that have come out around labor for everyday consumers, we're close to full employment still. I think a lot of the gloom and doom is more around the white collar work that is starting to be replaced by AI.
I'm CEO Chris Britt, so always great to catch up with you. Thank you for joining on the back of your earnings. Let's turn our attention to more earnings that are coming out. Coll Weave shares to see wow here today up seventy nine percent, surging in twenty twenty six, and look, AI demand fuels the need for compute capacity.
Of course, investors are looking for proof that the neocloud provider can execute on his ambitious plans and its reports results after the closing bell, Dinabas joins us now and look phenomenal appetite for compute phenomenal appetite for the stock that's been volatile, though, Dina, what do we need in terms of fundamentalsrom core Weave.
Sure, I think that people want to see continued signals on the demand. The demand signals last month from all of the large cloud providers that reported as particularly Google but also a WS and Microsoft, where that demand for AI capacity, as you said, remains extremely extremely strong. We just saw Anthropic sign a deal with Xai to take up some of their capacity. Everyone's looking for as much as they can. Core Weave themselves in April signed deals
with Anthropic, Meta and Jane Street. So people want to see further details on what the demand looks like, but so far all indications are that it remains really strong. The question is, how is core Weave paying for expanding capacity?
Right?
In order to meet all that demand, you have to acquire bill develop more AI cloud capacity. And that's pracy and you know and has been a little bumpy for Corey, EVN and others in the industry.
Yeah, there is this on again off again anxiety is to bottlenecks or as to how good customers are for the money, Dana. But when they're branching out and it's not say an open Ai exposure so much, but it's a jump streets as you say, it's finance, it's other enterprises.
How much the investors understand that opportunity.
I think Corey has tried really hard all along since their IPO to both diversify their customers then make sure investors understand that. Early on, the concern was the very large percentage of their revenue is tied to Microsoft. Then we saw, you know, with reports of open Ai possibly not selling as much as they might help. You know, core We've shares and other providers reacted to that, and Corey came out pretty pretty quickly to say, look, we have we have a lot of other customers, and so
they're trying to make that clear. They're also trying to sell more software services. You know, part of their deal with Nvidio involves figuring out, you know, having in video market other things that Corey you can sell besides the wrong you know, compute power.
Jana bas it's gonna be busy after the bell. Thanks for joining us on it. That does it for this edition of Bloomberg Tech. Don't forget to check out our podcast.
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