Speaker 1
Kozema, the magic of television, your RFB's popped out. Feel free to pop it back in. And I'll point out that a lot of the sell-side analysts have raised price targets on this idea. I think they see a clearer future. Just very quick, so I want Cara to come in. Do you think that's fair? There's a clearer, longer-term path for you? Yeah,
Speaker 6
I do think so. I mean, I think we feel pretty optimistic about our long term growth ambitions. Obviously, we want to balance our ability to grow the company as well as drive ongoing profitability and free cash flow. And finding that balance really is the trick. But as I look out and see what's happening in sort of this age of AI, I think we're going to be one of the real beneficiaries. Let's
Speaker 3
talk about monetizing that AI, Cosimo, if you can hear me well, because Morgan Stanley says, look, it's encouraging with this AI product integration, but they want to see the monetization. How do you turn that on?
Speaker 6
I mean, I think the way that it happens is, is that we've got this great data asset that we bought several years ago in segment. And on kind of a standalone basis, it's a relatively small piece of our revenue. But the long-term play here is that what Segment does is extract contextual data out of the businesses that we serve and our ability to combine that with communications capabilities and then use a little bit of AI to create that awesome consumer outcome on the other side. Like that's really what we're going for. And what it kind of means is, is that whether it's you, whether it's the two of us, or whether it's thousands of other consumers all at the same time, us being able to achieve that personalization as if a business knows every single thing about us in the way that they interact with us. That's what we unlock. It's really
Speaker 3
interesting you bring up that segment part because that was the area of the business that activist investors wanted you to shirk, to sell off. There is still some weakness within it. Are you standing by the decision to keep it as part of Twilio and how do you tell that story going forward? Yeah,
Speaker 6
I mean, look, I think we've made progress in that business. We made a number of commitments at the start of the year in terms of what we intended to do to improve the ongoing performance of that business. We're very much on track to get that business to break even. We've made a number of improvements in the go-to capacity of that business. It's not like our work is done yet. It still kind of continues to pace. Again, I think it's important to remember that it's really less than 7% of our revenues overall. And so when you consider it in the totality of Twilio, the business growth is re-accelerating, the margins have been fantastic, free cash flows have been activating, and now Segment really becomes an activation engine for AI using data and communications. Because Zayma,
Speaker 1
the stock is up 15% on track for its biggest jump since 2022, at one point, biggest jump since 2020. I know that this is a technology show and that many executives on it are very disciplined about talking about the stock. But the market's rewarding you here. What do you make of it? Look, I think we're making steady progress, right? And we're not necessarily focused on the
Speaker 6
day-to movement of the stock price. I think this is the long game that we're fundamentally playing here. And I think the age of AI is going to play out for a long time to come. That's what we're excited about. How can we deliver for customers in a very personalized way? Again, using communications plus contextual data plus AI to deliver those amazing consumer outcomes. Twilio
Speaker 3
CEO, Cosima Shipchandler, thanks for joining us today on The Numbers. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. And
Speaker 1
I'm Ed Ludlow in San Francisco. In terms of earnings and markets, Cara, I'm going to go to some of the crypto related stocks because there's a lot to fit in. So Coinbase missed estimates essentially in the quarter gone. And what they're talking about is we're entering election week. There is volatility in crypto assets and markets tied to that, but it's not really clear whether they're going to benefit or not. We'll continue to track it. MicroStrategy, again, it's a name that holds Bitcoin in particular on its balance sheet and has pledged to buy more Bitcoin, but saw a loss in the quarter. But one of the first companies to do that, by the way. And when we think about Bitcoin, volatility, yes, but still above $70,000 per token, then there's the mega caps. Much to discuss with them.
Speaker 3
Yeah, so much on the mega caps. Let's talk about Microsoft earnings. We want to get back to it because it underwhelmed the forecast for growth from Azure, perhaps letting the market down somewhat in terms of growth. But Microsoft CEO Satya Nadella is continuing to talk up the company's AI business on the earnings call, at least. Just take a listen. All
Speaker 8
up, our AI business is on track to surpass an annual revenue run rate of $10 billion next quarter, which will make it the fastest business in our history to reach this milestone. He's
Speaker 3
got big talk. Let's analyze it with Bloomberg Intelligence senior analyst Manip Singh. Microsoft is such an interesting one because the quarter looked great. They're seeing Azure growth back at 34 percent, but then the forecast was a little bit weaker. And it seems to be capacity that's limited here. What do you make of it? Well,
Speaker 8
so look at the Google Cloud growth. And all these vendors are growing. You know, the core business is growing north of 20% when you take out the AI element. In the case of Google Cloud, we saw the growth accelerate to 35%, and that was all powered by AI. In the case of Microsoft, they did some resegmenting, so they took out some portion, and it's not a very clean number to see, okay, AI contribution was 12 percentage points, and that's where, you know, whether it's behind Google cloud, it's not very clear because of the resegmenting, but net-net, you know, they called out GPU supply shortages when your CapEx is growing up 50%. And that's where you have to ask yourself, what is the CapEx being spent on then? If you don't have enough GPUs, are they spending more on facilities? And, you know, it's hard to parse that out. But Google didn't call that out. So, you know, it'll be interesting to see what Amazon does tonight terms of, you know, their NVIDIA allocation and how they are framing, you know, the capacity shortages when it comes to the advanced accelerators. But that's what it comes down to is how much capacity do you have available for external use versus what is OpenAI consuming internally for training? A lot
Speaker 1
of is geared towards the enterprise business, right, Mandeep? And with Microsoft, this is a company that's been wonderful at selling software to consumers as well, particularly software that sometimes you can get for free on other platforms. Did you get any sense of the trajectory of consumer adoption for these kind of AI Office 365 and products like that? I
Speaker 8
mean, very unlikely. I don't think they want to focus on consumer right now because the enterprise opportunity is so big. And they called out, you know, separate products, co-pilot, co-pilot studio, agent, agent studio. So they are creating, you know, that bundle that Microsoft is so good at selling. And I'm sure they'll get a lot of traction. But in terms of separate AI contribution, which is what I think Meta got penalized for last night, is not having that separate AI contribution, even though it's getting reflected in their family of apps. That's what investors are focused on because the CapEx increases are so big. And these companies keep calling out scaling laws. So you have to find that ceiling. How much will that capex keep going up? Need the transparency. You help bring it. Bloomberg Intelligence Senior Analyst, Mandeep
Speaker 3
Singh. As the election
Speaker 1
approaches, leading voices in technology and the venture capital industry on both sides are throwing their weight behind their preferred candidates, like Elon Musk appearing at a Donald Trump rally just this past weekend. Today on Bloomberg Technology, we're going to speak with Reid Hoffman. You perhaps know him best as the co-founder of LinkedIn, but the billionaire and investor is also part of a group of Silicon Valley investors that are immersed in this presidential election, rallying behind his or their favorite candidate in the race, Kamala Harris. Reid Hoffman joins us now. And Reid, thank you for your time in coming on Bloomberg Technology. The pitch in the page was to keep this focused on tech. So I would like to ask you, why is Kamala Harris the best candidate for the technology industry and venture capitalists around the U.S.?
