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Nvidia, Apple, and Eli Lilly: Manufacturing the Future
00:40:01
The great buildout for AI and GLP-1 drugs continues.
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- [00:05]
Dylan Lewis
The cool kid just rolled up in his leather jacket. This week's Motley Fool Money radio show starts now.
- [00:26]
Jason Moser
Everybody needs money. That's why they call it money.
- [00:33]
Dylan Lewis
But you can give them to the buzz and be from Fool Global headquarters.
- [00:39]
Jason Moser
This is Motley Fool Money.
- [00:40]
Dylan Lewis
It's the Motley Fool Money radio show. I'm Dylan Lewis. Joining me over the airwaves, Motley fool senior analysts Jason Moser and Matt Argersinger. Fools, Great to have you both here.
- [00:49]
Matt Argersinger
Dylan, hey.
- [00:51]
Dylan Lewis
This week, fresh off their earnings report, we've got Axon's president on the major growth levers for the company. We have plenty of company results for you guys to dig into. And of course, you both brought your stocks on your radar this week. So to kick us off, we have results from the chip maker Nvidia. And Jason, it kind of feels like one of those 90s teen movies where everyone has been waiting for the popular kid to show up at the party.
- [01:13]
Jason Moser
I love the 90s teen movies reference. It feels like we've been saying this a lot with Nvidia recently. You need to beware of the burden of great expectations. I mean, this is a company that just continues to lob up amazing numbers. This was an absolutely fine quarter, but the market has its sights obviously set very high on this one. That probably explains a little bit of the volatility in the share price this week. But I think when you look into the numbers, the numbers I think were great. Revenue of $39.3 billion was up 12% sequentially. But even more impressively, it was up 78% from a year ago and it beat their outlook of $37.5 billion. Now, if you break that down, the data center revenue, which is clear gist of this business, the crux of this business, data center revenue of $35.6 billion. That was a record for the company. That was up 93% from a year ago. As the Blackwell ramp commenced, they continue to see strong demand in Hopper Hopper 200 that continued sequential growth. Ultimately, they delivered $11 billion in Blackwell revenue, which I thought was very encouraging. They saw obviously the large cloud service providers that represented about half of their data center revenue. Overall. Big spending from the biggest of spenders. Gaming revenue $2.5 billion. That was down 11% from a year ago. The professional visualization side of the business, that revenue of $511 million was up 10% from a year ago. Finally, the automotive and robotics segment, that revenue of $570 million for the quarter was up 103% from a year ago this was something. I had to double check this in the call because I was kind of amazed by this. The automotive vertical revenue is expected to grow approximately. It's expected to grow to approximately $5 billion for this coming fiscal year. Now that compares to $1.7 billion from this last year. So we can see some real progress being made in that automotive and robotics segment of the business. But gross margin down slightly. That was expected as this Blackwell ramp continues. They're making sure they get products out to consumers as fast as they can. But again, I think all things considered, a very good quarter. It's just the market has very high expectations for this business today.
- [03:44]
Dylan Lewis
There have been some concerns around AI workloads. The deep sea saga made a lot of people wonder exactly how real and how sustained the chip demand is going to be. Jensen Huang doesn't seem all that concerned. He had some comments on the conference call. Jason basically saying we are seeing much more adoption of a reasoning approach to LLMs and AI work. That's just the beginning. We're going to see more simulation and search based models and that is going to drive a lot more compute than we currently have and that a lot of people are currently using. Essentially he's not worried about demand for chips or their data center business anytime soon.
- [04:19]
Jason Moser
Well, I love the cloud puns there, Dylan. I feel like that was intentional. I'm going to go ahead and give you credit for it. It's an interesting question, right? There's a sort of narrative now where we're deliberating what is the actual demand. This question really boils down to demand. On one side of the coin. The questions are growing. Are we overbuilding? Some think so, perhaps. Obviously, as you mentioned, this computational prowess requires a lot of power. I think that would speak to the demand there. You look at Andy Jassy, CEO of Amazon. He just said the other day, on the other hand, there's not enough chips and power to meet AI demand. I think that's a question that investors will have to deliberate as we move forward with the story.
- [05:04]
Dylan Lewis
As you noted, market took a little bit of a breather on this report. Shares down about 10% this week. Matt, it seems like some of that is earnings. Some of that is what I'm going to call macro malaise affecting stocks right now.
- [05:17]
Matt Argersinger
I think that's right, Dylan. I like what Jamo said about the burden of high expectations for a company like Nvidia. I think that's the case for Most of the Mag 7. If you look at what led the stock Market over the last two years it was these massive technology companies and of course Nvidia was at the spear tip of that. But look what's happened to the market. The s and P500, it's down about 5%. This is as of Friday morning, down about 5% from its high. Not a big move. But look what's happened to the Mag 7. Apple down about 9%. Meta down 11%. Amazon 14%. Microsoft down 16. Alphabet down 18. Nvidia, which we talked about, down almost 22% and Tesla down 42%.
- [05:59]
Jason Moser
Guys, wow.
- [06:00]
Matt Argersinger
I'm not saying this is a sea change in the market, but I do think some of the things that really worked over the last two years are not working so far here in 2025. And some of the things that didn't work, and I know about a lot of these, like real estate, industrials and dividend paying stocks are doing great so far in 2025. And it just makes you wonder, is this a shift in market?
- [06:22]
Dylan Lewis
Seems like Apple is trying to get the market excited about some of its domestic investments this week. Company announcing $500 billion in commitments to fund new internal initiatives and manufacturing here in the US And Jason, it seems like a lot of this is focused on some of their artificial intelligence, machine learning and chip capabilities.
- [06:44]
Jason Moser
Yeah, I think big picture, Apple and beyond these are investments in the US Companies are starting to look at their supply chains a little bit more closely. Obviously a priority of this current administration is to reduce reliance on certain entities in that supply chain. China stands out as an example there. But companies are definitely trying to see around the corner. I think in regard to Apple, it makes a lot of sense. That's a lot of money. $500 billion over the next four years. Clearly a company that can afford it. But again, speaks back to the investments that we're seeing from all of these big tech companies in their AI aspirations. Apple has kind of flown under the radar with all of this stuff. Right now when we're talking about AI, Apple's not really the first company that's coming to mind. Maybe these investments will start to shift that discussion a little bit.
- [07:37]
Dylan Lewis
Apple not alone in making commitments. This week, drugmaker Eli Lilly also announcing plans to invest over $25 billion. Yes, a bit smaller than that $500 billion commitment we saw from Apple. But Eli Lilly is doing their part. And Matt for them, they are focusing on boosting supplies of the weight loss and diabetes drugs. Also looking to fuel some new drug development. It feels like with both these stories, it's a bit of where the world is going. And really we can't be that surprised that these companies are making these commitments.
- [08:07]
Matt Argersinger
No. And I think this is where the world's been going really since the pandemic. I mean, and JMO talked about supply chain issues with Apple. It was acute for the healthcare space in those early days of COVID And so a lot of investments have already been made to try to fix those supply chains, make sure that there's redundant inventory of medical devices and drugs here in the US and so I kind of think a lot of these investments are already in the pipeline. I mean, I think the Trump administration has given these companies a gentle push, as gentle as Trump can be with these kind of things. But, you know, and with Apple in particular, most of their products are made in China. 10% tariff. They've gotten around that in the past, but maybe they wouldn't get around this time. So maybe that's a little more incentive for them to invest. But Eli Lilly I think was seeing the demand already. They had to make investments.
- [08:55]
Jason Moser
Yeah, I think Matt is absolutely right there. It is really about trying to figure out ways to diversify that supply chain. I think in regard to Eli Lilly in specific, remember too, lawmakers here in the US they're considering legislation, this thing called the Biosecure Act. This is a bill that would prevent US Companies from working with certain Chinese biotech companies. Companies like Eli Lilly are very dependent on that China supply chain source. They are absolutely dependent on China as a part of their supply chain. This Biosecure act could really fundamentally change that. It absolutely makes sense that they're again trying to see around that corner and make some investments to get away from that dependency.
- [09:39]
Dylan Lewis
Coming up after the break, we've got a retailer returning to its winning ways. Stay right here. This is Motley Fool Money.
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Dan Boyd
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- [10:33]
Dylan Lewis
Welcome back to Mike with Full money. I'm Dylan Lewis here on air with Motley fool analysts Jason Moser and Matt Argersinger. We're kicking off this earnings rundown with one of the companies our man behind the glass, Dan Boyd absolutely loves. It's where doers get more done. Home Depot. Matt Looking at the results, it seems like there are more doers doing a bit more doing this quarter.
- [10:54]
Matt Argersinger
A bit more. Dylan Comps and earnings came in a little bit better than management was expecting than what they had guided for a quarter ago. It was a better quarter. But I would just say this, you can't really write home about 1.3% growth in US comps, especially when you're starting to lap pretty slow results. A year ago with a lot of HD's comps, take it with a grain of salt. Operating margin was down again. Earnings per share were higher but that was because there was an extra week of sales in this fourth quarter than a year ago. You take that out the 30 cents they got from that and earnings per share were lower again. And the dividend, hey dividend was only raised 2.2%. That was the smallest increase for Home Depot in 13 years. So disappointing. And look, guidance for 2025 was really not that great. I'm looking for another year of flat to slightly higher comps, lower earnings. It really Dylan it comes down to customers just still being reluctant to spend on big ticket items, not doing a lot of kitchen or bathroom remodels. The pro side is definitely holding up better but until the housing market gets unstuck, we've talked about this. I mean existing home sales are at multi decade lows. Mortgage rates are back near 7%. Without a pickup in transactions on the home front, it's hard to see HD sales gaining traction. By the way, at this stage in Home Depot's evolution, I should say store growth isn't going to do it. They're only going to open 13 stores this year. That's on a base of more than 2,300 stores. So the unit economics at the storefront have to get better and I don't see them getting better until we have a housing recovery.
- [12:28]
Dylan Lewis
It speaks to how much I want to see this business turn it around that I am cheering single digit top line growth. But we've been waiting to see both top line growth from this business and same store sales positive again. Now we have both on the right track. But Jason, Home Depot is not without a new challenge. We talked about some of the macro stuff a little bit earlier. Tariffs, certainly something that will affect a business like Home Depot. What is the outlook there?
- [12:51]
Jason Moser
Matty I know that wasn't the biggest dividend boost in the world, but 2.35% yield. To sit there and be patient with a business like this. I'm okay with hanging in there, just waiting it out. I think tariffs is something we're talking about across the market here. I think the encouraging thing here in regard to Home Depot tariffs, it was not a huge theme or concern in the call. They got a couple of questions on it. It's something that they continue to deal with. Going back to that conversation in regard to Apple and Eli Lilly, this is something that's been on their radar for a while. They've been working at this over the last six to seven years trying to diversify that supply chain and get away from having to worry so much about that. All they mentioned, Nicole, in regard to this, they're not terribly worried about it. They feel like they've got the best team in place to deal with it given their experience in dealing with it over the last seven years. Plus they're confident they'll be able to navigate those choppy waters if they arise. I think in that regard, this is just another thing where you look at a company like Home Depot, this is clearly something where their scale is just a very big advantage. These types of things ebb and flow. This too shall pass and I think Home Depot will be just fine.
- [14:10]
Dylan Lewis
Jason keeping the earnings beat going. Do you know who has two thumbs and is down on his biggest possession this week?
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Jason Moser
It ain't me.
- [14:17]
Dylan Lewis
This guy over here. Shares of bodycam and Taser maker Axon, one of my largest holdings, down about 10% following their quarterly update this week. Shares about 25% off highs recently. What's going on here?
- [14:31]
Jason Moser
Well, it's been a volatile stretch to be sure. The stock is down 11% on the year. It's still up better than 90% over the last 12 months. So let's give them credit where credit's due. But market volatility aside, I would say this was a very impressive quarter from a company that don't seem to stand still, Dylan. They just keep innovating and bringing new things to market. Revenue for the quarter, $575 million. That was up 34% from a year ago. It marked their 12th consecutive quarter of over 25% revenue growth. They saw double digit growth year over year in all of their business areas. Taser up 37%. Sensor is up 18%. Software and services are up 41%. That's all very encouraging. It's also very encouraging that the two areas where they're most excited about are the enterprise and international segments because there are just a lot of opportunities to expand their business. They signed the biggest deal in company history with a global logistics provider that's in the enterprise segment. We'll probably learn who that is later on down the road. One of the things to consider that drove a lot of the volatility this headline out recently in regard to Flox Safety, a safety technology startup known for its automated license plate reader solution. They were partners since April 2020. This seems to be a bit more of a negotiating tactic. It doesn't seem like they're trying to part ways. I think they're just trying to make this relationship work better for both companies. So I wouldn't be surprised to see news here in the near future where these two companies are happy working together again.
- [16:04]
Dylan Lewis
We'll have a bit more commentary on Axon's quarter from President Josh Isner. You got the chance to speak with him earlier this week. That's coming up after the break. Before we get there though, got to dig into results from Mediterranean fast casual chain Cava. Matt serving up some spicy lamb for its fourth quarter results. But the market seemed to be focused on some guidance that could use a little salt here.
- [16:26]
Matt Argersinger
That's right. Not quite as spicy on the guidance. I'm not surprised that the stock has sold off as it has since those earnings because of the guidance. If you look at the results themselves, hard to find anything to complain about. 21% same restaurant sales growth in the fourth quarter, a 15.6% increase in traffic. Restaurant profit margin continues to increase for Kava, but when it came to guidance looking at comps of 6 to 8%, that's about half of what Kava did in 2024 for the full year. That was probably disappointing to see growth decelerate that fast. You have to remember going to the report how richly this stock was valued. Kava's market cap about a month ago was over 16 billion, which valued each restaurant at around 45 billion per store. I mean, ask yourself, if you're an aspiring Restaurateur, would you spend 45 million on a store that generates about 3 million in revenue and about 600,000 in profit? I don't think you would do that, Dylan. I certainly wouldn't even look at Chipotle 10 years ago when it was at the same stage as Cava. Its restaurants never traded near that valuation. Even after the sell off, you're still looking at a pretty richly priced stock, but results have been fantastic. This is still an awesome emerging market concept that I think we know has plenty of Runway of growth. This might be one of those opportunities to invest and buy behind a sell off.
- [17:47]
Dylan Lewis
Jason, this is one of those companies where a lot of things do have to go right. We know they need to continue building out their growth story with their store footprint. We need to see comps hold up. I'm curious, do you think the market is weighing the fact there might be some burgeoning competition from the Moser household and in particular the Jason Moser menu?
- [18:06]
Jason Moser
It's a very fair question, Dylan. I appreciate you bringing that up. I mean, we were talking before taping here that I discovered the recipe for that spicy lamb meatball mix there. And I'm going to tell you what it is. Really, really good.
- [18:21]
Dylan Lewis
Well, maybe, maybe we'll drop that in the episode description that's available somewhere. Jason, for folks that are listening to this week's radio show in podcast form, that's why it's worth subscribing. You get those little bonus nuggets here and there, right?
- [18:33]
Jason Moser
It works for me. Full food. I've talked about it before.
- [18:37]
Dylan Lewis
All right, up next, Jason's gonna keep the earnings focus, digging further into Exxon's results with company president Josh Isner. Stay right here. You're listening to Mouthful Money.
- [18:45]
Josh Isner
I'm not feeling alright today I'm not feeling that great. I'm not catching on fire today. Love has started to fade. I'm not going to smile today I'm not going to gonna laugh. You're out living it up today. I've got dues to pay. And the gravedigger puts on the forceps. The stonemason does all the work. The barber can give you a haircut. The carpenter can take you out to lunch now. But I just want to play on my panpipes. I just want to drink me wine. As soon as you're born you start dying. So you might as well have a good time all night.
- [19:48]
Dylan Lewis
Welcome back to Motley Fool Money. I'm Dylan Lewis. Listeners, we gave you a quick rundown on Axon's earnings earlier in the show. Now for the deep dive on the body camera and Taser maker that holds the spot as the largest holding in my portfolio. Fool analyst Jason Moser caught up with Axon's president, Josh Isner to talk through the company's recently reported quarter, some of the major growth opportunities ahead and how the business is approaching the focus on government budgets and tariff talks.
- [20:13]
Jason Moser
So, Josh, let's talk a little bit about the results. This is another report with a lot to like on both the quarter and the year. Clearly the market having a Very positive reception to what you all reported. A number of milestones, I thought, for the quarter and for the year, reading through the, the shareholder letter. What stands out to you in regard to this quarter that you all just reported?
- [20:36]
Unnamed Axon Executive
You know, it's probably a couple things. And Jason, again, thank you for having me on. It's good to see you again. I think the standouts are, look our revenue growth rate, seeing that at 30% plus for three straight years now, on top of probably four or five years behind it at 25% plus growth, that's exciting, you know, as the numbers get bigger, to see the growth really endure. And bookings, you know, that's one of the forward kind of indicators of our business that we look at a lot is making sure that total contract value is representative of continued growth out into the future. That came in at over $5 billion this year. That's a record for us and we're really proud of that and can't wait to hopefully break that record this year. And then, and then lastly the enterprise segment, this is the customer base that is not part of public safety. So think like retailers, logistics companies, et cetera. We actually closed our biggest deal in company history in that segment. So even considering law enforcement, the federal government, our international customers, enterprise now holds the biggest deal in company history, which I think is a really, really exciting sign for the things to come in that market.
- [21:44]
Jason Moser
Absolutely. I'm glad you brought up enterprise. I definitely want to get to that in just a minute. One thing that stood out to me for the quarter, and it just seems like you guys do this quarter in and quarter out, net revenue retention at 123%. I mean, that's just been such a strong metric for you all. And I think it really speaks to not only bringing your customers into your universe, but then keeping them and expanding those relationships over time. So I thought that was a really encouraging metric. The one thing I was really kind of surprised to see, pleasantly, I'll say, you raised your total addressable market opportunity rather significantly. Now last I think I saw, in the first quarter of the year, you raised it from 50 billion to 77 billion. And I know typically you guys do that on a two year cadence and this was an extension because of some acquisitions. But now you see this total addressable market at an eye catching $129 billion. Now you guys just crossed over the $2 billion revenue mark. So there clearly is a lot of opportunity there. But what are the drivers behind raising that, that total addressable market so significantly?
- [22:51]
Unnamed Axon Executive
Yeah, I think like you had alluded to the enterprise segment is a big part of that as well as more product fit across many of our markets. So, you know, whereas two years ago we had fewer products and we were in fewer markets, now we have more products and of established ourselves in more markets. And so, you know, I think it's safe to assume that with more products available, sales can increase in those markets. And that's really what's driving the the TAM update there. And it's exciting stuff. We're very excited to see the continued opportunity. It's kind of a story of one thing leading to another where, you know, we solve problems for our customers and more opportunities present themselves and we really work hard to. You were talking about our NRR number. We really, really work hard to drive a great customer experience and we want our customers to be fans of ours. Nps, we consider one of the biggest indicators in our business. We're very proud of our NPS score and we take it very seriously. And when you invest in your customers and really feel like, hey, the customer's at the center of everybody at Axon's universe, not just our sales team or our executive team, but the folks in finance, the folks in people ops, every policy, everything we do, we make sure that the outcome is going to be better for our customers. And when we have that mindset, I think it leads to exciting results like this.
- [24:10]
Jason Moser
Absolutely. So on the call you talked about two customer groups in particular that you're really excited about and that gets back to number one, the enterprise customer and then also international. So let's go ahead and start with Enterprise and I'm glad that you clarified that for our listeners. Exactly what enterprise customers are. You noted you booked the largest deal in company history with a global logistics provider. Now I'm going to take a shot here because I have to. Any hint as to who this global logistics provider is?
- [24:38]
Unnamed Axon Executive
We will be announcing them by name in the coming months. But for now we're just sticking with global logistics provider. But I will tell you this, they are my favorite global logistics partner in history. I will not partner or even as a consumer use any other product moving forward. When companies show faith in us, we get excited about that.
- [25:02]
Jason Moser
Well, I respect that. We'll just stay tuned and look for that name. It's neat to think about this being the biggest deal that you've signed. And I wonder, was this an all encompassing deal or is it one where this is a really big customer that signed on for a couple of things that'll then give you the opportunity to cross sell in the future.
- [25:22]
Unnamed Axon Executive
We hope it's the latter for sure. The deal includes body cameras, evidence.comlicensing and our fuses product. And we're really pleased to get off the ground there. But certainly we think there's going to be a lot of future opportunities around drones and robotics, around more video tools and AI, around drone defense and mitigation. All of these are, you know, in the logistics world you can imagine you're housing millions of dollars of merchandise and warehouses. You've got a lot of risk, you know, in terms of, in liability, in terms of handling merchandise and items for, for both civilians and for enterprises. And all of a sudden, you know, those warehouses could become targets of drones. And so to have drone defense and awareness capabilities around all your highest value assets, we think that's going to be a growing market as well.
- [26:10]
Jason Moser
Well, the other demographic that you were very excited about are very excited about international. But we saw sequential growth there of 50% which was really impressive considering that's on top of 40% from just a quarter ago. We know your aspirations in regard to this international business. I think it's in the 20 to 25% range of your business today. But you ultimately see it becoming probably closer to 80%. That international opportunity that's obviously a little ways down the road, I would think. But what is going well, what's driving, driving the growth there in those international markets?
- [26:43]
Unnamed Axon Executive
I think we've had good product market fit in international historically, especially with our tasers and body cameras. I think the part of the equation that's changing a little is now some of these international customers are growing more and more open to storing digital evidence in the cloud. And that hasn't always been the case. And I think that's part of the equation. The other part of it is we've made some major upgrades on our team this year. We have our new CRO. Cameron is based in Europe. He comes from aws where he ran Europe, Middle east and Africa for aws. And very talented guy and very thoughtful about how we go to market international. And as a combination of like having a good sound strategy and bringing on the right country managers and resources around those country managers, I think those investments are starting to make a difference in our international business. And like you said, there's a huge opportunity out there. I think we will have failed as a company if our international business doesn't surpass our, our U.S. public safety business at some point. Because the reality is there's just way more customers internationally, more users, and it's our job to figure out how we can build the exact right products for them that'll drive the type of value that our products drive in the US.
- [27:54]
Jason Moser
So you acquired a business last year and you just mentioned it earlier, Fuses. And I wonder, could you just give us a little explanation, give our listeners a little explanation what Fuses is and how it ultimately is making Axon's business stronger.
- [28:08]
Unnamed Axon Executive
Yeah, we're, we're very proud to have them on our team. Now, Chris Lindenau is their founder and he built a very good team and product over at Fusis. And what the product does is we call it the Switzerland of cctv. So essentially think about all of your different camera feeds you might have in your building or you know, interior, exterior, you might have a bunch of different vendors in terms of hardware. Fuses essentially fuses all of those camera feeds together into one pane of glass. So if you're in a real time crime center and you're looking at everything going on, you can get an alert right into your crime center. Oh, this business is having, you know, there's a theft in, in progress or something and the police can actually see it and react accordingly. And then of course for city owned and police owned cameras as well, same dynamic. And so we were never super excited about getting into the fixed camera business in terms of hardware, but in terms of software and being able to fuse all those feeds together, that's extremely valuable for our customers.
- [29:09]
Jason Moser
Another story that has continued to go on with what seems like a lot of red tape is your real estate aspirations in the state of Arizona. And I saw on the call that it doesn't seem like it's something that's going to resolve itself soon. But I guess first I just wanted to start with a strategy behind all of this because it's a pretty grand vision. So can you explain exactly what the vision is here? I mean, this is not an insignificant investment on Axon's part. And I think maybe investors, some investors maybe feel like it could be something that is taking the company's focus away. I would imagine you all view it differently.
- [29:48]
Unnamed Axon Executive
Our company was started in Arizona. Rick started it in his garage in Tucson. So Arizona has very much been near and dear to our hearts and we love being there. I've lived in Arizona for the last 16 years and made a lot of great friends out there. We've had a lot of success as a business and we love being there. Candidly, Jason, Arizona's just got to decide if it wants to be a business oriented state or a retirement oriented state. There's a big anti development sentiment in Arizona and now other like, you know, our project was actually approved by the Scottsdale City Council. Like it was zoned and we were ready to go. And then an out of state union came in and partnered with a former politician in Arizona to essentially pay to get signatures to put this out to referendum. I think 93% of the signatures garnered were from paid signature gatherers. Most of the money came in from out of state. And it's one of these where it's like, wait a sec, this is our land. The city already said we could build this thing on it. Why is it that the elected officials in Scottsdale can't speak for the city anymore? Why do we have to wait two years for this to go out to referendum now? And Arizona just lost Anduril. They went to Ohio. What does Ohio have to offer that Arizona doesn't? Nothing against Ohio, but Arizona is a great state too. And so I think it's a matter of like, look, it's, does the state really want to be a state where businesses can thrive or is it going to be anti development and, and focus more on residential and retirement? Which is fine, but, but that's a choice of theirs to make. And where the rubber hits on this for us, Jason, is that there are no top 100 colleges in Arizona. We have to import a lot of the talent at Axon from other states. And if we can have a campus that gives people an affordable place to live, that offers dining and other activities right on campus and our headquarters is there, that's the recruiting tool we need to keep growing our headcount in Arizona. And it's also an opportunity to bring in industry events and other forms of tourism into the state. And we, we, you know, we think a win, win for everyone. But at the end of the day, just like you know, any company in any state, you know, the politics can, can sometimes be a hurdle that you have to overcome. And we're working through that. But, but our patience on this isn't going to last forever and we're getting more and more serious about looking at other alternatives for our headquarters outside of the state of Arizona.
- [32:14]
Jason Moser
Gotcha. Well, speaking of politics, and we're not getting political so to speak here, but just bigger picture. I mean clearly there is this big focus in D.C. these days on cutting costs, maximizing efficiencies. Given the overall opportunity for Exxon at the state and the federal level, is this a cause for concern for the leadership team? Is this, is this something y'all are discussing? As a source of potential near term headwinds.
- [32:40]
Unnamed Axon Executive
Actually, I think it's going to be a tailwind when it, when, when all the dust settles for us. I think what you're seeing is contracts are being canceled that either like, hey, you're just like, hey, should we be spending taxpayer money on this? Probably not. Or are we getting value out of this contract that we're paying a lot for as a government? And at Axon's case, we're actually, you know, our products are heavily, heavily used. They're valued by our users. They're ones that we think deliver great outcomes for the government. And I, I think they feel the same way. And so as some of this, this money is freed up, I do anticipate there's an opportunity there for more to be spent in, on military, more to be spent on defense tech and federal law enforcement. And so, so I think we're relatively insulated from a lot of the cuts. But actually these cuts could lead to some opportunity to help in more places.
- [33:34]
Jason Moser
Right. And I guess, same idea. Given the international opportunity and all that you're doing there. How concerned are you all in regard to tariffs as it pertains to the near term outlook? Because I tell you, Josh, it seems like every morning we wake up and there's a new headline regarding tariffs and what may or may not happen. So it feels like there's a lot of uncertainty out there and I would imagine that your team is reassessing this on a daily basis.
- [33:59]
Unnamed Axon Executive
Yeah, absolutely. And one of the things we say a lot internally is like, hey, what we value is seeing around corners. We want people to be able to predict what's going to happen into the future. And two or three years ago, between tariffs and some of the uncertainty around China and Taiwan right now, we really, we kicked off a big project to make our supply chain more flexible. And so we actually feel like we're pretty well positioned regardless of what happens with the tariffs. Our guidance I don't think would change as a result, as Brittany said on the call yesterday, but our operations team's done a great job with this. Josh Goldman and Eric Hertz at Axon, they've just really gotten out ahead of these issues to where we have multiple suppliers and we have a lot of raw materials on hand and we've done all the things to, to mitigate the really bad outcomes that tariffs could, could lead to at times for businesses. And so we're feeling okay about that.
- [34:55]
Dylan Lewis
Listeners, we love getting company leadership on to help us wade through what's going on with their business. If there's a company you want us to reach out to, Let us know podcastsool.com Coming up next, Jason Moser and Matt Argosinger are back with me to talk about the stocks on their radar this week. That's next on Motley fool money. I always feel like somebody watching me and I have no proxy. As always. People on the program may have interests in the stocks they talk about and the Motley fool may have formal recommendations for or against. So don't buy or sell anything based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Motley fool only picks products and personally recommendations. Friends like you. I'm Dylan Lewis, joined again by Jason Moser and Matt Argersinger. And Fools, we are going to dive right into stocks on our radar this week as he does every week. Our man behind the glass, Dan Boyd is going to hit you with a question after you pitch your stock. Jason, you're up first. What are you looking at this week?
- [35:57]
Jason Moser
Yeah, one that's probably under the radar for a lot of folks. MarketA ticker is MQ and Marketa is Embedded Finance. And in simplest terms, they provide tools and APIs that allow its customers to create and issue customized payment cards. Think debit, credit, prepaid, all that good stuff. But those are programs that are specifically designed for the specific business needs. Their customers are companies like Block, Uber, Doordash, even Alphabet. Big name customers with a lot of folks using those networks. Shares had a great week thanks to a strong earnings report and encouraging guidance for the coming year. As you can ascertain, Marquette is in Fintech, one of the big metrics you follow. There is just total processing volume that for the quarter clocked in at $80 billion. That represented growth of 29%, net revenue of $136 million and gross profit of $98 million were up 14% and 18% respectively. A big concern for investors early on with the Marketa story was its reliance on Block as a big customer. That continues to become less and less the case. Block revenue concentration of just 46% this quarter was down 5 percentage points from a year ago. One final point as of note here, seemingly sudden move, but CEO Simon Kullaf has stepped down. CFO Mike Miletich has taken over as the interim CEO until the company finds Kullaf's replacement.
- [37:28]
Dylan Lewis
Dan, I saw your eyebrows go up there when Jason said embedded finance. I'm curious. We had a question or a comment here on Marketa Ticker mq.
- [37:37]
G
I know Jason's always ready to bring us some war on cash based stocks here. We love to see it. Jason, this stock price has been pretty flat for the last two years. What makes you think that's going to change anytime soon?
- [37:49]
Jason Moser
Well, they've reestablished this relationship with Block again. They have extended that out several years. That's some reliability there. Again with those big customers. I think that makes a big difference. They continue to grow that total payment volume at just very impressive rates. Quarter in and quarter out. Given the trend towards the digital movement in money, I'm encouraged.
- [38:13]
Dylan Lewis
Matt, what's on your radar this week?
- [38:15]
Matt Argersinger
I'm going with EPR Properties Ticker epr. If you don't know epr, it's an experiential reit, which means they focus on experience based products. Think restaurants, resorts, fitness centers, water parks. Topgolf is a big tech and Dan, movie theaters. And the last time I brought this company up, I'm pretty sure Dan's comment was movie theaters. Are you kidding? The last movie I saw was cats in 2019 and it was terrible. Well, it turns out you can do pretty well at movie theaters. EPR's results were great. They raised the dividend. Still one of the best bargains in rheatland as well. 7% yield.
- [38:45]
Dylan Lewis
Dan, are you still anti movie theaters?
- [38:47]
G
It's not that I'm anti movie theaters. It's that I have two young kids and a full time job and no time to go to the Movie. Movies still. Cats 2019, the last time I was in a theater.
- [38:58]
Matt Argersinger
All right, well, go see Superman this summer. You're gonna go see that one. I know. Get out of the house.
- [39:01]
G
We'll go together, Matt, you and I.
- [39:03]
Jason Moser
All right.
- [39:04]
Dylan Lewis
Sounds like an awesome deal. Dan, Marketa or epr? Which one's going on your watch list this week?
- [39:08]
G
I'm going Marketa because I mean fintech, baby. Let's go, baby.
- [39:13]
Dylan Lewis
Dan, thanks for weighing in. Jason, Matt, thanks for being here. That's gonna do it. For this week's multiple Money radio show shows mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. See you next time.