Jason Moser (3:36)

Well, I think that, I mean, in regard to the Fed, I mean, I think things do look pretty good, right? They're trying to minimize inflation and maximize employment and things are looking pretty good in that regard. I mean, when you poll economists out there, I mean, in regard to the economy and sort of where we're headed, we're always talking about recessions these days and recession talk, it's basically a coin flip right now. I mean, nobody really knows we saw contraction in the first quarter. It remains to be seen obviously, what will come of the second quarter. My suspicion is probably we see better second quarter numbers if, for, if for nothing else, there will likely just be some pull forward in a lot of activity based on tariff uncertainty. But then by the same token, you look to student loans, for example, right? I mean, we're seeing collections on student loans. They will restart. That's 5.3 million federal student loan borrowers that will, will have to ultimately pay the Piper year. And that absolutely can impact spending. But my suspicion is we don't enter recession, at least based on the Q2 numbers. I don't think we're going to see Q2 come in negative like we saw in Q1, particularly because Q1 was so modest in contraction there. But again, time will tell.

Ricky Mulvey (4:56)

Yeah, that's before the ship stopped coming in. There's still a lot of ships not going to the Port of Los Angeles. So I don't know, man. I think you had it right when you said it's a coin flip, honestly, I got no idea. But you know what the market is liking and feeling pretty good about? That's this United Kingdom deal and that was announced this morning. The, the headlines are that the 10 tariff stays into effect, but there's some reciprocal agreements going on specifically with like beef and aluminum and there's going to be more export opportunities for the great ranchers, farmers and producers of the United States, according to Donald Trump's post on Truth Social media. I think this is the part that investors are really responding to. And this is quote, this deal shows that if you respect America and bring serious proposals to the table, America is all caps open for business. Many more to come. Stay tuned. Jamo, the thing that's important here, I want to highlight this with this fact. The S&P 500 is now back to the level it was on the day before Liberation Day 3. Things are bouncing back and investors seem very optimistic that more trade deals are coming as well.

Jason Moser (6:04)

It has been a very bumpy ride thus far. And again, I think this reiterates why we invest the way we do here at Fool. Right. We do not trade in and out of the market. We just aim to find good businesses, buy them at reasonable prices and just hang on to them a la Warren Buffett. I thought it was really interesting to see that Boeing announcement today. It sounds like Boeing is going to benefit from part of this UK trade deal and that's a good thing. And so ultimately, I think, listen, we all want to see positive results. We all want to see progress now, now how that ultimately happens. Yeah, it could be a bumpy road to get there. Hopefully it looks like maybe we're on that path though.

Ricky Mulvey (6:42)

This is, it's one of those examples highlighting the way we invest the way we do. If you had all the information right now that you had a month ago, which is we basically have a trade embargo with China, 10% tariffs across the world and maybe one major trade deal. You might say the market is probably going to be down from where it is that day and it's, it's basically impossible to predict. Speaking of a, a good business, we'll see about the valuation. Jmo, let's talk about Axon, your beloved Taser in public safety company reported this morning. You ready to call this a lights out quarter? I mean, revenue up almost a third from last year. Net revenue retention of 123%. Operating cash flow back into positive territory. Free cash flow squeaked into positive. Terry, at $1 million. What stood out to you in the business results?

Jason Moser (7:29)

Yeah, I don't Think I would call it a lights out quarter. I think I would just. It's kind of the same as it ever was, right? To steal a line from talking heads, the company just continues to just perform, right? This was their 13th consecutive quarter of 25% or better revenue growth there. And that was really, I mean you saw top line growth of 31% and that was thanks in large part to Even more impressive 30, 34% growth in, in annual recurring revenue. And I think that's becoming a more and more attractive part of this business is the recurring revenue side of it. But they ultimately are doing a very good job of bringing that, bringing it down to the bottom line. We saw gap earnings per share of $1.08 and non GAAP earnings per share of 1.41 cents. And, and I think the only reason why we don't see that bottom line performing a little bit more impressively is just because they continue to reinvest in this business and that's ultimately what they re what they need to do. And, and we're seeing that in things like their latest innovations. They have Axon vehicle intelligence and I mean this is a platform that expands capabilities and their automatic license plate reading technology with a product they have called Axon Outpost. And then they also have stationary video capabilities involved with that as well, called Axon Light Post. And if you can imagine, cameras on Light Post. And ultimately this all just boils down to the company's explicit mission, right? They want to protect life and they're trying to do that in a number of different ways. Whether it's tasers that stun, don't kill or, or whether it's cameras or audio that records evidence and actually gives us the reality of the situation. I mean, it's just a company that continues to fire on all cylinders, as Ron Gross would say. And I'm very impressed with him. I mean you look at the segment growth in the business alone, the hardware side of the business, 26.1% for the quarter. But the software and services side of the business, 38.7%. And that to me speaks to why this is such an attractive investment. Because they have this massive installed hardware base and they continue to develop very attractive software and services that not only keep their customers coming back, but they keep them coming back for more. And it reminds me a little bit of a company that I think a lot of us know.

Ricky Mulvey (10:02)

You going to do the Apple comparison?

Jason Moser (10:04)

Well, I was going to say, but you are, you already spoiled it. So yeah, I'm going to do it.

Ricky Mulvey (10:09)

Go with that.

Jason Moser (10:09)

It's the Apple. It's the Apple of public safety. It's the Apple of public safety.

Ricky Mulvey (10:14)

You know, I saw some takes on OD X where it's like this is a hardware company becoming a software business. But really it's, it's, it's both. You can't have one without the other. But, but the software seems to be the major growth engine for Axon. And you look at some innovations for how it's expanding that total addressable market. They're, they're doing, what is it, body cams with translation it now. So it's not just tasers and police, it's total public safety. And I think that's something that initially, you know, why I was hesitant about the stock is I was like, okay, it's just public safety. But they're continuing to prove investors like me wrong again and again.

Jason Moser (10:48)

Jmo well, I'm glad you said that. You can't really have one without the, without the other. And I mean you look at something like a Google for example, and obviously that's, that's really a software play. But, and again going back to Apple, I mean what's made that company so successful through the years is building great hardware and then supporting with tremendous software. And I think Axon is doing just that. Right. They've built a tremendous hardware environment, but then they're supporting it with things like evidence.com and then these investments in AI, utilizing AI in order to make the business better. Right. The draft one transcription plan we talked about before shaving just hours of work off of, off of our police forces here around the country. And then the AI era plan which ultimately opens up customers to all of the new innovations that the company continues to launch as time goes on. And so yeah, I mean they've just done a very good job of coupling terrific hardware with really what seems like even better software and very difficult to get out of that once you get locked in.

Ricky Mulvey (11:53)

All right. Something I want folks to know though this, the valuation on this company has shot up dramatically over the past year. This has always been a relatively expensive stock. Back in July ish of 2024, we're looking at like 60 times forward earnings, which is, that's growthy. That's, that's about 3x the multiple of the S P 500. But now Jamo, after this latest quarter, we are at like 118 times forward earnings. We're more than 100 times forward forward earnings. So compared to Palantir, this is a value stock, man. But compared to Almost any other company in the market. This is growthy, growthy, growthy. So are we at nosebleed valuation yet and any concerns about that valuation for investors looking at this stock?

Jason Moser (12:39)

I will say, and I, I'm an Exxon shareholder, I've recommended the stock and in our services here. And I'm a big fan, right? I'm, I'm hanging on for the ride. I do get a little nervous sometimes about what happens when they break that 25% revenue growth rate streak, right? Because it's a matter of when, not if. It will eventually happen. And I don't know exactly how the market will react to that. But when you look at the way the company performs now, number one, I mean, this is a company that really dominates its market, right? It is the market leader. And you look at these results for the quarter, again, tremendous raising guidance for the full year, tremendous. Total addressable market, well over $100 billion according to their estimations. I mean, that's tremendous, right? These are the types of companies that garner those premium valuations. I mean, it's well over 100 times earnings today. But that's not abnormal. It's scary, right? It's something to think about. It's. It's not something that you just go buy this thing blindly without thinking about valuation, right? We always say valuation matters. But again, you look at the market opportunity that they're pursuing, you look at the things that are coming around the corner, right? Had the great fortune to interview the president of the company, Josh Isner, a couple of times and I asked him this specifically. I was like, what's around the corner, man? What's next for y' all? I mean, listen, this is going to be a robotics company. You need to count on that. Now, whether that is just full fledged Robocop or some sort of derivation thereof, I don't know. But I mean, this is not a company that is sitting still. And I think that's really important to consider when you look at the valuation and you look at the overall market opportunity and you consider the fact that public safety is something that I think we all really ultimately support. And that's not just domestically. I mean, that is a global thing, right? So it's a tremendous business, I think, with a lot of opportunity ahead. And I certainly understand the market's premium valuation today.

Ricky Mulvey (14:42)

Maybe. Can we say uncertainty? Can we say uncertainty with the valuation jamo.

Jason Moser (14:46)

I wonder how many times we've said uncertainty in this show.

Ricky Mulvey (14:50)

Let's hit Shopify. Investors gave Shopify's quarter sort of a meh even though this business delivered revenue growth around ish 20%. But the thing that really stood out to me was this free cash flow number that's up more than 50% from a year ago at like $363 million. I don't know why I said like it is $363 million. So I'm looking at this business. As a shareholder of Shopify, I'm pretty happy about it. But why doesn't Wall street care about this E commerce giant becoming a revenue and cash flow machine? Jmo.

Jason Moser (15:21)

So I, I am a shareholder as well and I've recommended the stock and I am very happy with these results and I, I'm just happy. I'm content to hang on. I think, listen, I mean you look at the way the stock was behaving pre market versus where it is now as, as we record, the shares are basically flat now. So I think maybe the market's coming to its senses a little bit because this was a, a good quarter. I think one of the concerns, and it's very understandable, you look at Shopify's merchants, right, which are ultimately their customers. I mean those are small to medium sized businesses. And a lot of these businesses are susceptible to broader economic headwinds a la tariffs and whatnot. And so you can see where there might be some, let's say it Ricky, uncertainty in regard to near term results as far as these tariff policies and trade negotiations play out, the elimination of the de minimis tax exemption, I mean that'll likely have an impact as well. Maybe it won't be substantial. I guess time will tell there. But again, this is, this is one of those businesses where I mean a headline could change everything. I mean a headline that is beyond its goal control. Right? A headline that, that really sort of centers around sort of the macroeconomic conditions could make all the difference in the world for a business like this. I mean I look at the numbers they recorded, I mean I've got no concerns at all.

Ricky Mulvey (16:41)

The de minimis thing is something I have questions about as well. You know, I know Shopify had a big editorial about how much this would hurt small businesses this quarter. President Harley Finkelstein coming out saying it's not really a big, big deal. We're spread out across the world. So I definitely as an investor have in Shopify have some questions about that potential impact for this business. We're, we're over time even though we got a lot more to talk about. Jmo, appreciate you being here. Thank you for your time and your insight.

Jason Moser (17:05)

Many thanks.

Jared Barron (17:09)

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Ricky Mulvey (17:44)

Up next, part two of my conversation with CEO of the metals company Jared Barron. It's a company looking to mine or pick up rocks in the Pacific Ocean. We talked about the sticky political situation this company is in on yesterday's show. Today we're hitting the environmental questions, like what happens when you start messing with the bottom of the deep ocean? You mentioned the environmental impact and I want to make sure we spend some time there, there. And to be clear, this is, this is a space where, if you're listening, you should recognize the bias. Jared definitely wants to pull up these rocks and turn them into cobalt and sell them. I have a small position in the metals company and I've also looked into this and it's one where I, I see some environmental argument where we want to protect the oceans and we don't really know a lot about the bottom of the seafloor, especially in the deep ocean. What I don't see the environmentalists having a strong argument for though, Jared, is whether this is actually worse than the way we currently get nickel and cobalt out of the ground on land. So I think you said that the environmentalists misunderstand what you're doing and the environmental impact of the metals company. What do you think the environmentalists misunderstand about picking up rocks in the deep sea?

Jared Barron (19:05)

Well, let me say I'm an environmentalist myself. I care about the planet, I care about the oceans, I care about the trees and the biodiversity living amongst them. But let's go back to first principles. It makes sense that we carry out extractive industries in parts of the planet where there is the least life, not the most life. Now, the nodules are based on the abyssal plains I mentioned before. The amount of life there is measured in grams per square meter. There's no alternative use for that part of the sea floor. There's no one living there that we have to move aside. We can't grow crops there. We can't move people to live there. In the future. We compare that to what we're doing on land, where our number one revenue comes from nickel, from our nodules. And 100% of the growth in nickel is coming from what we call rainforest nickel. So I urge your listeners and investors to go on Google rainforest nickel because that's the alternative that we want to slow down and stop. And from an environmental perspective, it's just so straightforward because you have to think about what the true impact of current metal production is. Because a lot of people don't think about where the materials that whether it's your knife and fork or your phone battery or your electric car battery, if it is not grown, it is mined. We all believe that we're heading towards circularity, that we can recycle more and more in the future. But we do not have enough metals in the system for that to be a significant part of the current supply mix. The environmental argument is very clear in my opinion. And we have carried out life cycle analyses. We've had other companies carry out life cycle analysis like Benchmark Mineral Intelligence, a highly regarded independent firm. And they have compared the impacts of producing nickel and the other metals on land compared to what our impacts will be. And what I can tell you is, is that our impacts are a fraction and fraction compared to the land based alternative. That's good news. And the notion that we don't know enough about this part of the ocean floor is also a misnomer circulated by activists who don't want this industry to start. We have, for example, ourselves carried out 22 expeditions to our license area. In total, there have been more than 200 expeditions since the 1970s. We know a lot about this part of the ocean floor. We also know that it recovers much faster than people imagined. We ran our collector Trials back in 2022 and we were able to return there 12 months later to see what the recovery rates were like. It was really encouraging. And of course there have been other studies more recently, something called smartex that was visited a site that was originally disturbed for nodules in the 1970s and they returned last. They've now published their results. So we have an enormous amount of environmental data around this part of the ocean floor. And so I think the environmental evidence supports it. For those people that are concerned about the environmental impacts, so am I. And that's why we've carried out so much environmental research. And of course we have a regulator who will oversee us to make sure that we work within boundaries, that we do operate within the rules and the permits that will be granted. To us.

Ricky Mulvey (23:03)

So one in the weeds question on that and then I want to get a couple financial questions you mentioned about sea life returning to the zones where you're picking up rocks, kicking up some sediment. There's another research done decades ago, and this was Daniel Jones of the National Oceanography center, found that there were persistent impacts to marine life and physical changes to seafloor 44 years after mining took place on the ocean floor. And what you're saying is your evidence found that life was returning just one year after. Can you explain the disconnect here? For people saying it sounds like this could cause disruption to life for decades after you have these robots coming through picking up rocks and kicking up sediment?

Jared Barron (23:44)

Well, it's a little bit like glass half full, glass half empty. So for example, Daniel, what he refers to, there were some trials that I mentioned, the SmartEx campaign that ran out last year and they came back to an area that had nodules collected 44 years earlier. Now, what happened 44 years earlier is the technology was nowhere near what it is today. And so they actually used an Archimedes screwdriver system to propel the collector on the seafloor. They also used an entirely different hydraulic type of collector system. And in fact, those screwdrivers made an indentation of up to 80cm into the sea floor. And you compare that to what we did back in 2022, we impacted the top three centimeters, just like a very light snowplow. In fact, we had some of the challenges were keeping the collector on the seafloor. But what they found in that study that you refer from Daniel Jones is full recovery of sediment, macro fauna and foramen pharaoh in the tracks and the plume areas. So what I've seen activists do is look at that study and say, oh, I can still see the track marks. Well, let me tell you, if you go and drive your car down the Atacama Desert and you make a big set of imprints and you go back there, 44 years later, you'll probably still see them there. And so this is where environmental messaging can be really weaponized to say, oh, I can still see the fact that you were here, like, yes, but let's look at what's happening in that sediment with the organisms that depend on it and live in it. And what we found with our own Trials back in 2022, when we went back there one year later, was that the foramin ferro in the tracks recovered to 30% of pre disturbance levels. That's after one year, 30% and 50% of the diversity had returned. And so we also found that actually disturbing some of the sediment is actually good for productivity because there's so little food there that when you disturb it, the critters say, something going on over here, let's move over and see if we can get some nutrients. And so I guess let's also put it in context. The ocean is such a vast, vast body of water, like hundreds of millions of square kilometers, about 360 million square kilometers. And we're impacting like a tiny, tiny grain of sand in an Olympic sized swimming pool. That's kind of the comparison. And it has an amazing ability to react, to survive. For example, about 500 miles to our east is the East Pacific rise where there are these hydrothermal vents that have been operating. And at about 2000 meters below sea level, they are spewing a constant stream of poisonous gases, sulfur and the likes, into the ocean like every hour of every day. And so it's not as though this is like people think this is. The ocean is this beautiful, pristine, never disturbed before body of water. But of course it's not. It's a living. And the biggest risk to that living body of water is global warming and acidification. And what we need to do to slow down all of that is to stop destroying our carbon sinks on land. We need to stop destroying all of the biodiversity and indigenous people that live amongst it and depend on those environments. And we need to be looking for where can we get the lowest impact both to people and to the environment, supply of these critical minerals for the future.

Ricky Mulvey (27:44)

Jared, I think you make a strong case. And I also think that some of the opposition to your projects are not entirely out of the goodness of folks hearts. I think there's some outside interests that may be affecting the messaging. As we wrap up, I want to give you one question from a fool named Omar, Omar M. In Florida. He's very interested in your company and he wants to know what are the key milestones or catalysts that, that he should be looking for in 2025 and 2026 on the road to commercialization.

Jared Barron (28:16)

Well, hi, Omar. The first is fast track permitting. The second is we will have some more strategic names involved. And I've talked for years about the fact that people wanted to earn into our assets to come and help us, whether that's on the offshore production side or the onshore processing side. The thing that always slowed down those conversations were the permitting pathway. But with the permitting pathway now looking secure, those parties are back at the table. And so expect there to be a steady stream of news of really credible names coming to help us unlock this opportunity. So quality names, permits, and then, of course, the economics that go with it. And, you know, one of the beautiful things about these nodules is the high grade of the material. And one of the things that has a big impact on economics, of course, is how much revenue I can secure out of every ton of these nodules. And, you know, if I think about this as a polymetallic, so it's full of nickel, copper, cobalt, and manganese. But the metal that most people know about is copper. And while it's only 1.1% copper, if I put the nickel, cobalt and manganese into copper equivalents, it's more than 7% copper equivalent. Last year, the average grade of copper mined was 0.6 of 1%. So you just work out the numbers. It's far more lucrative for every ton of material. Now, the other amazing thing we have about this resource is when we put it on a boat, we can send it anywhere. We can send it to an existing processing plant in Japan because we don't have to build or permit it. But the most fantastic thing is we can also send it to the United States of America. That's why part of the executive order was calling on US Agencies to help us to say, bring back the jobs, bring back the industry, re industrialize the United States of America. We have a resource that's mobile. We have a resource that can service that need. It's a really exciting time. This is a new industry. We happen to be in the preeminent position. President Trump fired the starting gun with that executive order recently. And, you know, I thank the shareholders who've been with us because it's not easy. You know, we have environmental groups hating on us for, as you say, a lot of very nefarious reasons in our opinion. But I think there are great days ahead and it's going to be one hell of a journey. And I invite you all to come with me. It's going to be fun.

Ricky Mulvey (31:04)

Jared Barron, fascinating company to follow. He's the CEO of the metals company. Appreciate your time, your insight, and thank you for joining us on Motley Fool Money. As always, people on the program may have interests in the stocks they talk about. And the Motley fool may have formal recommendations for against it on buy or sell stocks based early on what you hear. All personal finance content follows Motley fool editorial standards and are not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. See our full advertising disclosure, please check out our show notes. The Motley Fo only picks products that we personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.