Listing day. 14 billion goes to micron from the chips act to boost americas memory chip prowess. There is only one story that matters right now and it is meta. You see the share reaction to mosque zuckerberg outlining billions of dollars to building out Ai Infrastructure. Expenses, arrange raised, capex raised. The focus of the call was on the product cycle. How many years will it take for this investment to would materialize in sales growth. Thats the question on the stock is on track for biggest drop since october of 2022. Remember how well its performing yeartodate. Look at the market cap, the scale of this company but also the market cap lost. The reporting from kurt wagner and the analysis from analyst mandeep singh. Mark zuckerberg was cognitive on this call but what he tried to do was say trust me end bear with me ive got a plan for ai to have an impact on the existing business. Explain what we learned. Kurt he was saying this is not anything thats going to return to shareholders quickly but be patient, he said smart investors will see the benefits of this longterm plan. Suggesting that anyone who is savvy or who sees the future like i do they will be in this stock even though its taken a shortterm hit. Its a little bit combative. Its one thing we dont necessarily hear from him which is pleading to investors be patient and hang tight. Youve got to whether a little bit of the turbulence in the meantime. Ed when you look at the fundamentals of this company, you and i would were discussing before the earnings print where do we look to see if there is evidence that the ai is impacting the top or bottom line. I looked at the impressions growth i look to the pricing growth because this is an advertising based business. What did you see in those numbers . Mandeep it continues to be impressive and thats driven by better field recommendations, ad targeting is better. Ad pricing was much better in the Europe Region if you parse through the numbers. North america was lighter. Part of that could be explained from the pole back that everyone is expecting from chinese advertisers. But they did not call that out. Clearly that is a risk and thats why the guidance was wide when you look for to q. At the end of the day when you look at the cost growth, that will be in double digits so if that mid to high teens revenue does not pan out for some reason , that is when you will see margin compression. So far the story has been cost control and Revenue Growth accelerating. Now that story could change because the cost will grow doubledigit and if the Revenue Growth does not match and there is a risk. Ed meda is down 12 but on a points space is clearly dragging down the nasdaq 100, the s p 500. The Semiconductor Index that was put on there because of a kneejerk reaction. Nvidia last night fell. It is now up 3 and the logic is zuckerberg said 800,000 gps come online as metatrains its ai model. The other area of interest is zuckerbergs kinda fired up about things that surprised him. He spent a lot of time talking about glasses, but there is still this confusion. Is the metaverse still a strategy . The year of efficiency, just trying and clearing out the muddy waters on what zuckerberg is trying to do. There so many things they are working on at one time. Its understandable someone might be confused but he brought up the glasses a lot and what he said was these are progressing faster than anticipated so the glasses is the idea of wearing a pair of spectacles that look like reading glasses or sunglasses but have all kinds of ai or ar features packed into them. They are working with ray bans to produce these right now and what Mark Zuckerberg was saying is these of gotten so good so fast its encouraged me to continue to invest in ai and put money into the Group Building this. I think this has been his longterm vision. He thought they would sort of be the next iteration of the phone. You would wear it on your face but now he saying he thinks they will be faster than he anticipated which is why we are seeing this increase in spend. Ed we have had sort of breaking news headline since weve come on the air and it relates to tiktok. Bytedance has published on its chinese website a statement basically saying it has no plan to sell tiktok. Bytedance has no plan to sell tiktok. We need to dig deeper to understand what they mean by that. Youve also published research, your latest thinking on tiktok just this morning on the bloomberg terminal. Just explain the basics to us. Mandeep tiktok has a lot of original content that goes through instagram, youtube and so if tiktok is banned a lot of those creators have to go to some other platform. Whether its youtube shorts or instagram we reels you can see a lot of the original content creation happens on tiktok and thats where you will see meda being a beneficiary but i am excited to look at the youtube numbers because to me youtube should be the 15 consensus numbers given the kind of viewership gains you have already seen with youtube and so i think that is the one aspect people need to think about is the creators will not wait for nine months to move. They are going to start thinking about whats the alternative platform and where they can move their followers. Thats going to determine gains for snap, youtube and meda in the coming months. Ed its important we know on the Earnings Call the analyst asked Mark Zuckerberg for reaction to tiktok. The cfo jumped in and said they are monitoring that situation closely but it was too early to tell the impact of the tiktok divest or band. We will dig in but thank you kurt wagner and mandeep singh. Coming up on the Program Sales forecast fall short of wall street expectations but there is some positive outlook ai related. We will speak to bill mcdermott. There is a lot happening at once in the markets as well. Microsoft and google reporting after the bell. Those are pretty significant declines in the idea is we are worried on the back of medas earnings, that all of this spend on Ai Infrastructure is not bringing some big boom in generative ai driven sales growth. Actual Software Products that people use and Companies Make money from. This is bloomberg technology. upbeat music theres more to business than the business youre in. If you use data, thats the privacy business. Manufacturing on demand . Youre talking cloud business. Got a few million hyperconnected customers . Digital experience business. That was fast. Thats where deloitte comes in. With the right combination of talent and technology to help advance and connect all that it takes to excel in business. To the business im in. Deloitte. Starting a business is never easy, but starting it eight months pregnant. Thats a different story. I couldnt slow down. We were starting a business from the ground up. People were showing up left and right. And so did our business needs. The chase ink card made it easy. When you go for Something Big like this, your kids see that. And they believe they can do the same. Earn unlimited 1. 5 cash back on every purchase with the chase ink business unlimited card from chase for business. Make more of whats yours. Ed service out with firstquarter results but its the outlook where the focus is projected subscription sales will increase in the current period, that was below what the street was expecting but those are street expectations what about the big expectations of the company ceo. Bill mcdermott joins us now. Lets cover off the classic earnings stuff. You have a Strong Quarter and then you given outlook which relative to concessions estimates was disappointing. What would your pushback to that Market Reaction be . First you have to look at the triple play we just pulled off and we had a beat on the top line, a beat on the bottom line and we raised the fullyear guidance. So if the highclass problem was solving for is we did not raise the guidance enough, everyone can really relax because over the last five years that ive been here we always beat and we have every expectation of doing so again. Ed i want to invite you to give the basics of what service now does. A portion of the audience knows the name. They might appreciate just an explanation of what you are doing out in the world. My summary is you are trying to capture i. T. Spend, the budget for i. T. Spend for all kinds of companies. Bill the best way to sum it up is think of service now as the ai platform for business transformation. If you look at companies today, they need a platform on an end to end basis from i. T. To the Employee Experience. And the way they build new products. They need one platform that can do all of that. What is unique about ours, we built it organically. It is pristine. Its a sheet of glass that lies above the mass thats been created for the last halfcentury. The big Movement Today is now what is the new frontier. The new frontier is generative ai and people say generative ai what is that mean. They need to optimize their processes and every enterprise will be engineered with generative ai. We are the first mover and the Market Leader in that category in the enterprise. So the future glide path could not be brighter. The stock is down, 6 . I know there is some pressure in the market this morning because of medas earnings. Lets talk about rpo because that gives some evidence of the backlog meaning remaining performance thats basically sass speak for backlog. Why should the Investor Base be more positive about that . Bill they should feel good we have nearly 18 billion and remaining performance obligations so that his business we have in the backlog that has yet to be fully recognized. So the backlog is there. We are beating on the revenue. We beat on the revenue by 100 basis points, the margin by 150 basis points. Our Free Cash Flow was up 47 and our gross profit was up and we were talking about was the increase in the guide enough. You mentioned perfectly 18 billion in backlog. The company is on a tear. Youve Great Companies like microsoft and ibm as an example that are transforming their Employee Experience with a Digital First support model freeing up all kinds of resources and fueling innovations on service nows genai. Novartis delivering new drugs and increasing Operational Efficiency by streamlining Clinical Trials research and Financial Management with our genai and theres countless other examples. Genai right now is a small part of the overall total. But, the uptick in future sales in generative ai when companies reengineer the way they run on our platform is that believable because there will be half a trillion spent on it in 2027 alone. This is a really big market. We are the leader and we are teaming up with the best in the business like nvidia, microsoft, ibm and others to create a bright future. Ed the stock is down 6 and there are reasons why for that in the short term. One of them is probably meda, youre the ceo of service now but to extrapolate from meta, part of that concern last night was all this investment is going into the underlying infrastructure that supports generative ai. Meda is a case study they are not yet seeing that investment in the infrastructure translate to topline growth. Tangible evidence that they are selling ai as a platform. In your case you are only selling it as a software and just explain that thesis, should we be as concerned that Corporate America has not yet worked out how to sell ai. Bill absolutely. First of all meda is a great company. They have very good results, and their guide mightve been muted in terms of the return on genai. They are running Large Language Models and that is very important for the future of the world and they are doing a great job. We are running small language models which basically means we run our platform with the customers data in mind. So it is rocket fast, zero latency. Because we are using the customers own data there is total accuracy and 80 is very inexpensive and thats why customers are buying our genai now because it is secure, inexpensive to run and its 100 accurate based on the customers data. That is what they are buying right now. We also have an open platform where we integrate with meta and we integrate with google and microsoft and all of the other marketleading companies out there should the customer want to reach into Large Language Models. And we teamed up with nvidia where nvidia probably our greatest partner in this category is running small language models for us and Large Language Models with their compu power. Let me give you an example. Lets think about employees and customers. Think about generative ai deflecting all the soul crushing work that people do not want to do anymore. So think of employee and customer deflection where virtual agents can do the work but people used to have to do. Think about Software Engineers increasing their productivity with the speed of innovation by nearly 50 by texting something in natural language and turning that into software code. There several other examples but the point is small language models are selling today, we are making a lot of money and Large Language Models are also available on our platform but our customers are tearing up with microsoft for example on copilot and service now on our virtual assist ai platform and we got it together as Better Solutions for the marketplace and thats whats selling today. I appreciate the depth of the answer. Thank you so much. Microsoft goes public amid a rising demand for data security. This is bloomberg technology. Ed rubric which focuses on Data Management recovery from Ransomware Attacks and accelerates cloud mobility is officially going public. Joining is the rubric ceo. The shares have indicated to open it 38 a share, you price this ipo at 32. Tell me what that means to you today . Thank you for this opportunity to speak with you. Its a very exciting day for our customers and partners and everyone in our ecosystem around the world. I will leave the stock price to experts and traders, ultimately we are a different type of Cybersecurity Company and customers continue to run the business with cyberattacks so that hospitals are open when people swipe they get money out irrespective of a successful cyberattack or not. Did you really need to go public for the visibility, your business seems to be doing quite well do you think it is tangibly improves your sales . We are working with a number of customers around the world having more visibility and more importantly when youre a Public Company you can see the numbers and understand the resiliency of the business, thats good for your customers, for our ecosystem. It also helps us in front of more Innovative Companies talking to them about and help them against the Ransomware Attack and this other cyberattack. I spent two years asking if you would go public. You finally and eventually are doing it. But i think there is a feeling theres a premium on this ipo a lot of people want to see revenue and profit that comes from this but you have resisted the temptation to talk endlessly about ai. You say you do not have a core ai story. We do, rubric has been building ai for the last 10 years. Our data trend engine is on the ai platform that delivers security from the data. More recently we announced a generative ai based defense and recovery that helps cyber defender fight fire with fire because you know they are applying ai in terms of bringing the velocity of attacks. We are allowing the defenders using ai in terms of rubric and ruby so they can deliver Cyber Resilience. Ed microsoft remains an important financial and Technology Partner to you. How will that relationship work Going Forward . Bipul we have a very strong relationship with microsoft. We have been partner of the year for usn u. K. We continue to innovate together and help our joint customers get Cyber Resilience make sure they withstand cyberattacks and run the business because Digital Trust starts with keeping the services up even when you are attacked and a cyber breach has happened to you. Ed after two years of asking you would go public, you did. We need to talk about the markets lets look at the index level in the majors. There are several stories. Medas Earnings Results and the reaction in the metastock is a factor particularly on the nasdaq 100 but we have a gdp print for the United States. Economic data that was the opposite of what equities markets wanted to see and that is the economy is slowing down. That is a big thing particularly for Technology Shares in the market today, a look at the nasdaq 100 down 1. 6 . The s p 500 and the broader nasdaq also down in similar territory. The market is saying lets rethink some things, now betting the first fed rate cut comes in december. We continue to talk about that. This is bloomberg technology. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh her uncles unhappy. Im sensing an underlying issue. Its tmobile. It started when we tried to get him under a new plan. But they they unexpectedly unraveled their price lock guarantee. Which has made