We’ve also got an interview with Braze CEO Bill Magnuson.
In this podcast, Motley Fool host Dylan Lewis and analysts Emily Flippen and Bill Mann discuss:
- Hurricane Helene hitting the southeast U.S., and the state of insurance, reinsurance, and black swan events.
- Meta‘s new Orion augmented reality prototype, and the latest drama at OpenAI.
- Why Vail is expecting fewer skiers this winter, gold is boosting Costco, and Accenture is enjoying the generative AI boom.
- Two stocks worth watching: Carnival Cruise Lines and Visa.
Braze CEO Bill Magnuson took a break from the company’s Forge 2024 event to give Motley Fool analyst Tim Beyers a rundown on the company’s latest innovations, how it’s helping marketers harness AI, and the different ways these new offerings play into the company’s growth story.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our beginner’s guide to investing in stocks. A full transcript follows the video.
This video was recorded on Sept. 27, 2024.
Dylan Lewis: We’ve got AI in corporate structure, consulting, and customer communications. Motley Fool Money starts now. It’s the Motley Fool Money Radio Show. I’m Dylan Lewis, joining me over the Airwaves, Motley Fool senior analysts Bill Mann and Emily Flippen. Fools, great to have you both here.
Bill Mann: Dylan, how you doing, man?
Emily Flippen: Hey. Good to be here.
Dylan Lewis: I’m doing well. I’m excited to dive in today’s show. We have a lot of different stuff to be talking about an early read on how crowded the ski slopes are going to be this winter. We have a look at how one company is harnessing AI to help businesses better engage with their customers. Of course, you guys are bringing your stocks on the radar, and we’re gonna hit that later in the show. As we taped today Friday, though, Hurricane Helene hit in Florida and the Southeast United States, over 4 million without power in Florida, Georgia, North Carolina, and South Carolina. I had family down in Tampa checking with them. They are good. Bill, you are a proud North Carolinian. I’m sure this one hits close to home for you.
Bill Mann: In the mountains of North Carolina and, places like Atlanta, which are not normally hit by hurricanes. This one is a little bit unusual because of the size of the storm. The last one that was really like this was Hurricane Hugo, which did almost as much damage inland as it did on the coast. Helene will turn out to have been a historic storm in a lot of ways. For everyone, we hope you the best of that you are safe and that you recover quickly.
Dylan Lewis: We are feeling for the folks out there, particularly the folks that are in the area between Panama City and Cedar Key. I think that region of the Florida Coast Line hit by five Hurricanes in the last eight years. We are a business and investing show, and we do focus on the muddy side of things when it comes to these stories. Bill, I think this is a big reminder of how important the insurance state is for the state of Florida and some of the surrounding ones. Honestly, just how complicated it’s gotten in the last couple of years.
Bill Mann: In Florida, it’s a pretty well-known story, just how imbalanced the insurance business has become in Florida. This is actually the first category four storm to hit the panhandle of Florida since 1851. That’s the magnitude of this storm. One of the things that’s happening is that as people have been moving to Texas have been moving to Florida, the amount of value of land at risk has grown monumentally even over the last decade. This storm will turn out to have been bigger than Andrew. It’ll turn out to have been bigger than Katrina and yet, the value that’s at risk is going to be much higher.
Dylan Lewis: As we think about the state of insurance, Emily, we have seen a lot of insurers decide they aren’t taking this risk on. We have seen companies pull out of the states, other companies not renewing policies. Part of that is a difficulty to price some of these things and be able to react to some of these things because they are so catastrophic. What’s your take on what we’re seeing with insurance in general?
Emily Flippen: With insurance it all comes down to underwriting and expectations and statistical models. They want to make a profit, it’s a narrow profit, but they want to make sure that they’re always bringing in more than they’re expending. I think part of the challenge is that these extreme weather events are no longer a rarity the way they once were. A lot of the statistical models insurance companies are working with are still systematically, potentially, as you see, underpricing the risk of when such hurricanes hit or other extreme events. I actually think Lemonade when they dealt with the Texas deep freeze in 2021, I believe it was, was a great example of this. They said it was the largest catastrophe they’ve ever contended with and “Black Swan event”. Well, these Black Swan events are becoming a little less Black Swaney. They’re becoming a bit more frequent. Insurance companies are yes, getting a bit stricter with how they’re actually issuing and charging for insurance, but also reinsurance businesses. The companies that insure insurance businesses are seeing extreme risk themselves, so they’re increasing their premiums. Across the board, prices for insurance are going up.
Dylan Lewis: Makes sense when we see the property values going up and the risk going up as well, Bill, any final word on the insurance stake.
Bill Mann: You have to be a little bit careful to lay too much of this upon extreme weather events. The weather events are not all that different in frequency or in magnitude than they have been in years past. This is the first major storm that’s hit Florida in a couple of years. There are issues in Florida where they have a very difficult time laying off risk from one market to another because it’s all so heavily concentrated on the coastline. Then you have weird things in the market, like they have had a huge problem with roofing scams in the state that have essentially made it almost impossible to underwrite insurance profitably. Let’s be a little bit careful about assigning reason to all of these different things, but it is a very complex market. Now, I’m just hopeful that the people who need help can get it as quickly as they can.
Dylan Lewis: Our thoughts with the listeners in Florida and in the Southeast, United States, hope everyone’s holding up OK. Also, this week, we saw some news and some updates from Facebook parent Meta. They were showing off their latest hardware ambitions at its annual Connect conference, CEO Mark Zuckerberg taking the stage to give a crowd a first look at the company’s prototype Orion Augmented reality glasses. Emily verge writer Alex Heath had a line on this that I absolutely loved. “Orion isn’t a mirage, it’s also not a product”. It’s somewhere in between. I think that is living up to the prototype billing. Some folks had hopes that maybe this would be something that would be sold. Meta saying, no, that is not the case here.
Emily Flippen: I didn’t read this as a product. I didn’t even read it as a mirage or an interesting idea. At first, I thought this was a joke. When I saw the glasses, I thought this was an early April Fool’s Day prank. But no, this is a real product, obviously, that meta at some point, I believe, wants to produce and sell. They did hint that the price would be that of, say, inexpensive smartphone if they ever got it to market. This is a potentially hundred dollar plus product. But as you mentioned, Dylan, as the reviews are saying, right now, it’s not really a product. There isn’t much functionality. It is a I would say cool item. I don’t think anybody would look cool with these giant glasses on their heads. But you have to appreciate that the technology is advancing, and when you’re Meta and you’ve invested billions of dollars in your metaverse ambitions, you need to have something to back up that money spent.
As many jokes as I can have about the way it looks or the lack of functionality today, I do think some of the tech that they are integrating is interesting. The EMG tech, which allows you to move things to your hands without your hands being in frame of the glasses I think is a big game changer for any metaverse ambitions. Again, we are so far away from this being a product that you see anybody on the streets wearing. But to be fair, I also said that about the cyber truck, and people are still driving that around.
Bill Mann: It’s amazing to me. One of the things that they did is they’ve leaned very heavily on a partnership that they have with or Luxoka and Luxoka is the largest glasses designer in the world, and this is what they come up with.
Dylan Lewis: It does look quite a bit like a ray band. The design is not too far off of the classic look. I will give you that. I do think it is interesting with this announcement, Bill, to see them focus a little bit more on the augmented reality side of things rather than the virtual reality side of things, because Meta had made that investment in oculus years back. Most of what we’ve seen as metaverse ambitions have been the much more immersive VR experience. This is a lighter touch, more layer on to reality type approach. Do you think that that might be helpful for that intermediate step of adoption that maybe they need to drive?
Bill Mann: You can see it in that form factor. It’s clearly meant to be something that you can see through so that you can navigate out in the world, regardless, I don’t expect that we’re going to see a bunch of Kurt Rambis look alikes walking around with the massive glasses any time soon. But in the same way that the electric vehicles are now having a, hey, maybe hybrid is a better way to go, this augmented reality step, I think, is probably a very valuable way for Meta to be getting at what they hope is the end goal of full virtual reality being much more widely adopted.
Dylan Lewis: I did not have a Kurt Rambis reference on my Bingo card.
Bill Mann: Welcome.
Dylan Lewis: Well done, Bill. Wrapping us up for this segment. The drama at the World’s leading AI company continues. This week news out that OpenAI is converting from a nonprofit organization to a for profit public benefit corporation, and perhaps related, perhaps not the company’s CTO Mira Mati stepping down this week, joining other executives and founders that have left the company this year. Bill, can I just say that I cannot wait for the Aaron Sork inversion of the OpenAI story, because it has been unbelievable.
Bill Mann: It’s tasty. It’s getting a little successiony, I think.
Dylan Lewis: It is. There’s some high trauma here.
Bill Mann: In some ways, this seems like a big, audacious claim that they are making, $150 billion valuation they’re valuing themselves at. It seems interesting given that we just talked about the Meta event, and they were talking about their competitive model, which is open source and free.
Dylan Lewis: It’s a different approach.
Bill Mann: Well, I mean, if it’s a reasonable competitor, and I believe that it very well may be. That takes a big bite out of OpenAI’s technological lead that would be the basis upon them suggesting that they’re worth $150 billion.
Dylan Lewis: It is interesting to you because we have seen the valuation of this business, or we have seen the headlines around this company all over the place? You mentioned that $150 billion valuation and what we are seeing from this company is changes that are making it more corporate. We’ve seen a real CFO be hired, we’ve seen them bring in a chief product officer as well making some investor friendly changes as well when it comes to the way that they are restructuring this? Emily, it’s also a culture shift when you start doing all of these things. OpenAI was a very research-oriented organization for a very long time. We are now seeing a much more profit oriented business here. Do you think that that will be something that maybe create some problems for them making progress again some of these competitors that are out there that Bill just talked about.
Emily Flippen: No, I don’t, actually, and I think this was the only option for OpenAI moving forward. Anybody who’s familiar with the generative AI landscape and the expense that is associated with the running and large language model knows that the idea of running not for profit is an extremely challenging proposition. I can understand the culture class that comes because a lot of people, especially employees of OpenAI they view the mission of what they’re doing as bigger than generating revenue. But ultimately, they need to generate revenue, to allow themselves to innovate, to allow their models to run. They need to have some type of partnership. Now, whether that’s individual subscriptions, partnership with larger enterprises, advertising, who knows? But ultimately, they need to generate revenue because they cannot sustain themselves otherwise and no competitor can.
Dylan Lewis: Coming up after the break. We’ve got the breakdown on a curious item, helping Costco’s e-commerce sales. Stay right here. This is motley fool money.
Welcome back to Motley Fool Money. I’m Dylan Lewis here on air with Motley Fool analysts Bill Mann and Emily Flippen. We’ve got a light, but mighty earning slate this week, giving us some looks at AI spend and what your winter vacation might look like. Emily kicking us off a little preview of the upcoming ski season and some new numbers from Vail. What can people expect on the lift this winter?
Emily Flippen: They can expect the lip to be perhaps a little less crowded than it has been in the years past. Bill resorts in their most recent quarter noted that they had a nearly 10% decline in skier visits due to a normalization post COVID, which I think is understandable, but also more extreme weather conditions. I have to push back as something Bill said earlier, which is that it’s hard to draw conclusions about the existence of these extreme weather events. We have a lot of great scientific evidence supporting the fact that extreme weather conditions have increased over time. Vail Resorts is exactly the type of business that ends up paying the price for this because their Australian business, for instance, had a 44% drop in snowfall this year, which contributed to an 18% decline in visits there. There’s a direct correlation between the change in weather patterns and the areas in which Vale resorts operates and the demand for what they’re doing, which of course, is skiing, and other mountain based, mostly winter activities. Past sales were down 3%.
All of the growth is coming from increases in cost, and while they’re doing a great job of keeping loyal customers coming back, ultimately, they’re not doing a great job of convincing new people to come, and that is in part due to probably the expense, rising expenses, but also or concerns around the stability of weather in the regions in which they operate.
Dylan Lewis: We also got a quarterly update from Costco this week, and Bill, I’m zooming right in on the quirky one here. Something that emerged in the earnings. The gold rush continues. Last year, the retailer began selling 1 ounce gold bars, and they have proven incredibly popular, so popular that CFO Gary Miller chip said that the gold offering was a meaningful tailwind to e-commerce sales in the quarter.
Bill Mann: The fact that it’s e-commerce is the best part, because I really would love to see people pushing around carts at a Costco warehouse with a gold bar on it.
Dylan Lewis: I think bar is overstates it, if I’m being honest [LAUGHTER]
Bill Mann: We all think of the 070 Sam version of what’s happening here when in actuality, they’re being sold by the Ounce. It is a sign of the times. Costco has been innovative like this before. They sell coffins. They sell really things that you just would not expect to see in a warehouse. It was a great result for Costco this quarter, which it really needed to be because the stock is, frankly, rather expensive, trading at about 50 times trailing PE. There’s a lot to live up to with Costco. Hopefully, they keep slinging that gold.
Dylan Lewis: I think thinking about the consumer environment we’re in, we do see some of the themes that have showed up in other big retailers with Costco’s results. The bigger ticket items gold aside here, not as popular as maybe they would have been in other times, but they seem to be continuing to get people into the stores, maintaining the relationship, maintaining the membership model, and that’s really what seems to be most important for this company.
Bill Mann: Unlike company like Vale Resorts, they’re not necessarily as dependent on consumer debt at Costco. It is a replacement company in terms of value. They find themselves in a rather curious position. You see companies upstream and downstream from them, have had very tough quarters. But a lot of people have said, You know what? Costco provides an incredible value for the dollars I’m spending. I look at them as being pretty much in a sweet spot.
Dylan Lewis: Rounding us out. Turns out in NVIDIA is not the only company making cold hart cash on generative AI. Eccentrics earnings out this week and the company’s generative AI efforts clocking in at 900 million up considerably from a year ago. Emily, is this something that we should be excited about?
Emily Flippen: Look, look at you, just taking whatever management feeds you and regurgitating a Dylan. I’m just teasing. You should be excited. This is what Accenture wants you to be excited about. But they’re having a little bit of a wizard of the Oz moment here where they’re like, pay no attention to the growth behind the curtain over here because while generative AI is driving a lot of demand for their services, their consulting business is still growing in the low single digits. They’re still facing genuine macroeconomic concerns in terms of demand and enterprise spending. That within itself is acting as a bit of overhang for Accenture. But the reason investors in the stock in the company has held up so well is because for the demand that is there, it is mostly coming from these large transformative deals that, as you just mentioned, Dylan, are mostly centered around the expansion of generative AI.
If you look at their book to bill ratio for just their segment that is housing managed services, that is including their generative AI demand, that was 1.4 times in the most recent quarter. There is a fair amount of demand that Accenture is actually pulling up forward in a tighter economic environment. You have to give credit where credit is due here. As joking as I am about how much they want you to focus on Generative AI, Accenture is genuinely benefiting from it. That’s great, considering the rest of their business is slowing down now.
Dylan Lewis: Looking at some of the comments from Accenture CEO Julie Sweet, “we are seeing the continued trend of companies trying to save money on IT to free up spending areas on Generative AI”. Bill, two things playing out there. Less spending for these big tech companies and also pushing spend whatever’s available into the new hotness.
Bill Mann: I think what Julie Sweet is probably doing here is setting up the fact that there are some deck chairs being arranged in terms of spending at their biggest clients, while at the same time saying, the AI spending, which is what Accenture is being valued on is still growing very quickly.
Dylan Lewis: Emily, Bill, we’ll see you guys a little bit later in the show. We’re going to head for a quick break. But listeners, don’t you go anywhere. Up next, we’ve got the CEO of one of the leading companies in customer engagement. That’s Bill Magnusson from Braze, breaking down how companies are trying to reach customers and some of the ways that AI might be used to better drive outcomes. Stay right here. You’re listening to Motley Fool Money.
Welcome back to Motley Fool Money. I’m Dylan Lewis. Meta wasn’t the only tech company with the splashy event in September. This week, Braze hosted Forge 2024, where it showed off some of the latest ways it’s helping businesses better manage their customer experiences.
Braze CEO, Bill Magnusson took a break from the festivities to give analyst Tim Beyers a rundown on the company’s latest innovations, how it’s helping marketers, harness generative AI, and the different ways these new offerings play into the company’s growth story.
Tim Beyers: I am Tim Beyers, senior analyst, lead advisor for Motley Fool Rule Breakers. With me is Bill Magnusson, co-founder and CEO of Braze. Bill, thanks for coming on.
Bill Magnuson: It’s great to be here.
Tim Beyers: You’re at Forge, which is your customer conference, out in Las Vegas, made a bunch of announcements, lots of things to talk about, and we’ll get to that in a second. But for those who have not yet gotten on board, the Braze train, which has been doing fairly well lately, tell us just a quick reminder of what Braze does, because odds are, a lot of our members, even if they don’t own the stock, they’ve probably seen Braze or encounter Braze out in the wild. They just may not know it.
Bill Magnuson: Yeah, absolutely. Braze is a customer engagement platform. What we do is we work with brands to forge better relationships with their customers, and we do that through helping them orchestrate primarily the message delivery that they’re sending to their digital and first party audiences. That literally translates into the sending of trillions of messages every year across channels, including emails, push notifications, SMS, WhatsApp. Being able to coordinate ad audiences through places like Meta or Google, also in product message types, so delivering surveys, content cards and notification centers like inboxes, and being able to do things like models, and that’s across the web and across native app experiences and connected TV and other connected devices like fitness applications. Really a broad spectrum of places where we are both understanding the customer and where they are in their journey with the brands products and services.
Then using the intelligence in Braze in order to communicate with them over time, and then use that communication to build stronger brand customer relationships, drive additional revenue, things like more purchases, more subscriptions, introduce them to new features so that they’re stickier, helping avoid turn, running promotions, all of these various things, and then doing so in order to drive better business outcomes. We’re primarily used by marketers, primarily bought by CMO budgets. But because we interact with the product a lot, we also get bought by product organizations. We’re used a lot by engineering and data science teams as well. In fact, our best customers are really the ones that drive that interdisciplinary collaboration among groups and do this in a really data driven way.
Tim Beyers: Yeah. For the purposes of full disclosure, Fools. The Motley Fool is a Braze customer. When you get emails and notifications from us, you are getting them through the Braze platform. There’s a lot of stuff under the hood that Braze does that I think is a little bit different that we talked about last time. But I want to talk about some of your announcements, Bill, at Forge. It seems to me there were three buckets of things that, I mean, there were a ton of things, and Braze is a very rich platform. You just described all of the ways you hit the potential customer touch points, prospect touch points. So you do quite a lot of things. The three buckets I’ve got are better ways to use data, better ways to plug into and enhance customer journeys and more touch points for where you reach customers. Putting Braze in more places, doing more stuff with data and finding ways to get more engaged into the customer journey, and one thing I want to park on, probably I’ll pick a personal favorite of all of the things you announced. The favorite I have with something you call project catalyst. Can you take us through this here because it’s got a little of AI infused into it, but I want you to describe how.
Bill Magnuson: Yeah, so a few things there. First, I think that that taxonomy you just laid out is a great one. It connects back to two frameworks that we’ve used for a long time to talk about our product and to map out our product vision. The first of those really connects back to just our human experience and growing relationships. If you think about, if you want to build a stronger relationship with someone, when you first meet them, you should pay attention. You should listen so that you can understand them better over time through interaction, that understanding grows stronger and deeper. On the back of that understanding, you can have better shared experiences with them, or enriching conversations, you build a stronger relationship. That’s listen, understand, and act. Another more technical way of looking at that is that you’ve got inputs, so all these different places that our product is integrated into. We talked about apps, websites, connected TV, and fitness products, things like that. Then you’ve got the outputs, which are what are all the different ways that we’re going to talk to people? I mentioned, Braze operates at the scale of literally trillions of messages a year being sent out across all these different channel types.
Then there’s the intelligence in the middle. When we look at project catalyst. What it is is a continued evolution of this other product that we have called Canvas. Canvas is actually a visual environment, where what we want marketers to be able to do is map out all the twists and turns and forks in the road of the customer journey and pair those up with their business goals. Along the way as a customer is being introduced to their product and service, they’re going from anonymous to identified. They’re going from a casual browser to a purchaser. They’re going from a free trial to a subscription, and we work across a lot of different verticals. All of these use cases in the Braze customer environment. Along that journey that the customer is on, you want to be paying close attention. You can find those right moments to interject or intervene or, like become a better companion so that you can deliver the right experience, introduce them to something or enrich their connection with your brand or maybe tip them over the edge to make that purchasing decision or pull them back from the brain gets they’re starting to drift away or turn. Within that there’s a lot of gain to be had by experimenting and by personalizing and by adapting.
We built this visual environment called Canvas to allow marketers to be able to really harness that power of experimentation and being able to define all the logic of how when the customer moves through their journey, I always visualized it as them moving through a state machine from place to place, and what Braze is trying to do is shape the cone of potential outcomes toward the positive. You want to shift people toward stronger connection, more revenue, like all these things that driver business grow. But the reality is that, well, we know that there’s a lot to be gained from running experiments and from doing deep personalization, that it puts a lot of load on marketing teams, many of whom are often strapped for resources, creative production, et cetera. Generative AI has been really, really helpful from that perspective to be able to just be able to serve up tons of inspiration to marketers even when you’re keeping the marketer in the loop and they’re approving the messaging because it’s maybe going inside their products.
There’s a really high bar to make sure that everything is on brand. It’s defined within the brand promise framework and everything else, that still inspiring them, providing them with way more variance, being able to translate them or adapt them to other cultures or socioeconomic realities that maybe that marketing team is not as familiar with. These are all really great opportunities for generative AI to provide yet more variance. But, you still get limited by just how much testing you can do, and so what project catalyst is another step in the process toward more automated decision making and using a combination of advanced data science, machine learning techniques, and then also generative AI to leap forward and bring more of those compounding gains for experimentation to our customers. It’s probably best seen visually. I would encourage people to go check out project catalyst or some of the coverage that we’ll be sharing from Forge after they’re done listening today.
Tim Beyers: From an investor’s perspective, what seems to be happening here with these announcements is Braze depends on for your growth. If I’m understanding this correctly, ways to make it easier for your customers to engage more directly with their customers and get better outcomes. Everything is aimed at more experiments, better outcomes, better data, all of these things. As you’ve introduced some of these new tools, how has your engagement with customers changed? What’s the ask from the customer now? Is it give me more experiments? Is it give me better outcomes? What are you hearing from them? I’m sure you’re already starting to get these questions, and you’ll get them at this conference you’re at today.
Bill Magnuson: Well, of course, everyone’s focus on better outcomes for their businesses, and people want to be able to do so with more efficiently driving, higher levels of stickiness making sure there’s a lot of user acquisition budgets have been under a lot of pressure given the macro and the fund raising environment over the course of the last couple of years. There’s a shift toward making sure that every person that gets into the top of the funnel is activated as quickly as possible, that they’re retained over time. These are all your evergreen goals as well that a marketer would have. Then on the other side, though, it’s like, well, what leads to those things? One of the ways that we know people improve their results over time is by experimenting because when you get that knowledge loop, when you’re able to try something out, you build a stronger intuition about what’s resonating, what isn’t.
You find new parts of the user journey in order to interject or intervene. Then you continue to iterate through that. I think that another interesting process, and I’ll give a give a quick example of this that I think is instructive just because of in some ways how utilitarian it is, which is that a big source of turn for a lot of subscription services is when an annual renewal date comes up and someone’s credit card has expired in the meantime. A lot of businesses would treat that as an accounts receivable problem. It’s like, oh, hey, this person tried to pay, they didn’t. Let’s just send them a quick alert that they need to update their credit card. But actually, that should be a full on growth experiment, because it’s a huge source of churn, and you can be proactive about it. The strategies that you use in order to avoid that churn should vary based on what you know about the user. Someone, for instance, has a streaming service who might be more likely to not renew because you lost some sports rights, in the most recent calendar year versus those who if you take like Disney Plus as an example, it’s like maybe you’re buying it because your children like watching frozen over and over again. Like those are very different personas. You’re going to connect with them in different ways.
Also, looking at the value of the customer. It’s like, some people might be free trial hoppers, and someone else might have had their AMEX assigned to the account for the last six years and they’ve been a loyal subscriber. When it comes time to that renewal date, one of those two should obviously get a grace period. If they’re trying to watch something on a Friday evening, you don’t force them to click around on their TV remote to put in a new credit card. You can just, like let them watch something and then hit them up on email the next week. Whereas, maybe the free trial surfer does need to click around on their remote. There’s all these different ways that we can adapt each part of the customer journey in order to drive these better outcomes. But they require really inspecting them, thinking about the data that’s available, experimenting with new strategies to be able to engage people.
Sometimes you need to also go into the product experience and help adapt that as well and coordinate both the marketing and the product message. What customers are really constantly asking us for is just, make me more productive, make it so that I can get data into the platform quicker, more flexibly, low total cost of ownership. That connection between marketing and product is also often there’s a lot of tension in organizations between those groups a lot of the time.
The easier that we can make the lives for the engineering teams that are supporting these marketing use cases, the better that working relationship works. We also think a lot about if the marketing and engineering groups are building things together, that’s awesome. They like get to drive business outcomes. That builds a stronger working relationship over time. If the marketers are asking engineering to do stuff, and then they mostly have to babysit it, and maintain it and answer alerts because an ETL job failed at 2:00 AM on a Sunday night. That’s a quick way to have the engineering and marketing relationship go south. We’ve done a lot of work not just on power and flexibility of it, but also making sure that the nature of that working relationship and that working cadence in these teams is one that’s conducive to future collaboration and then deploying more use cases. Of course, all of those things lead to growth for Braze as a customer, we bill based on the size of the active user base, and also based on message volumes.
Then there’s other advanced features that we incorporate into the pricing and packaging. But, at its core, the two biggest components are just managing relationships with people and then communicating. The more use cases that we are able to take responsibility for and the more places where we’re driving optimization to help grow your customer base, that’s exactly how you end up becoming a more and more valuable customer to Braze over time.
Tim Beyers: Listeners, if you’ve got someone you want to hear us interview, let us know. Shot us a note at [email protected]. We love getting listener ideas. Coming up after the break, Bill Mann and Emily Flippen return with a couple of stocks on their radar. Stay right here. You’re listening to Motley Money.
Dylan Lewis: As always people in the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don’t buy sell anything based solely on what you hear. I’m Dylan Lewis. Joined again by Emily Flippen and Bill Mann. We’re going to get right over to stocks on our radar for this week. Our man behind the glass Rick Engdahl is going to hit you with a question. Bill, you’re up first, what are you looking at this?
Bill Mann: Don’t call to come back. I am looking at Carnival Cruise Lines. Remember just back a couple of years ago when cruise lines were in the front and center for the businesses that were being disrupted by COVID? Well, Cruises are back. They broke record earnings this last quarter. The question I have is what they are going to be able to follow that up with. They’ve done a wonderful job optimizing their fleet and marketing very well. Cruising is hot again. Will it continue? We’re going to find out on Monday.
Dylan Lewis: Rick, a question about Carnival Cruise Lines, ticker. CCL.
Rick Engdahl: Cruises are hot again. That’s because we haven’t heard about any new diseases on board lately. What do you think’s next after COVID, after Norovirus, bird flu. Is there a fish flu, a whale flu, dolphin flu, maybe?
Bill Mann: You know what? I think it actually is next. Since we’re making up flus, it’s tourist flu. A lot of the destinations that people want to go to most are becoming allergic to the number of tourists. We’ve been seeing in Venice Italy, Barcelona, Spain, for example, they’re putting up limitations on mass tourism, and the cruise ships are catching most of that flag.
Dylan Lewis: Bill, when we were talking Vale earlier, I think there was a concern of a stretched consumer, maybe not being as eager to spend money discretionary places like Carnival. Does that worry you at all?
Bill Mann: I think with the thing like Carnival, it’s actually a lower ticket than your average ski vacation. You’re $1,000 into a lift ticket. An interesting thing at Vale they had 3% lower tickets being sold and 3% higher revenues. The price points for a ski vacation is a little bit different than a Carnival cruise.
Dylan Lewis: Emily, what’s on your radar this week? What are you looking at?
Emily Flippen: Well, before you get to my radar stock, I have a question for Bill, because I’ll tell you what? I don’t own Carnival, but I do own Norwegian. For some reason, Norwegian Cruise Lines just cannot keep up with Carnival. Can you tell me why? Because is it just more expensive? Is a Carnival Cruise that much cheaper?
Bill Mann: Well, there are tiers, so you’re asking me like I’m someone who loves going on Cruises. [laughs]
Emily Flippen: You have to know more than me.
Bill Mann: There are tiers for cruises, and there are different price points. I think it really has to do with both marketing, and Carnival has been incredibly effective in managing its fleet and its cost structures. As you can imagine, with the giant displacement, fixed costs are massive. Honestly, they’ve done a really good job at controlling them in limiting them.
Dylan Lewis: Everyone had questions for Bill’s radar stock. I cannot wait to hear Emily’s and see what scrutiny we’re going to put it under.
Emily Flippen: This is me delaying on having to announce my radar stock [laughs] because the business that’s on my radar this week is actually on my radar for a bad reason, and that is Visa, the ticker is, of course, V. They’re on my radar because this week, we have news that the Department of Justice is issuing a lawsuit against this credit card issuer, arguing that they have acted anti-competitively. Nobody is very surprised to see an uptake I think in activity here, anti-competitive regulatory activity. Visa does control 60% of the US debit card market according to the government, and they charge what the government believes are just too high fees that have enabled exclusionary practices and targeted attacks on competition. I don’t really know if anything is ultimately going to come out of this, but I do think it’s just another thread here for the government coming down on what they perceive to be large tech-based companies that have dominant market share. Visa could be in for fines, penalties, fees, or a change in its business structure.
Dylan Lewis: Rick, a question about Visa or just the general operating environment for businesses at this point.
Rick Engdahl: I’m just wondering, how much of Visa’s revenue comes from buying tickets on Carnival Cruise Lines [laughs]
Dylan Lewis: We have a mash-up radar stock segment. Emily, what say you?
Emily Flippen: I would say about 2%. No, I’m just teasing.
Bill Mann: Pick up a number. If he’s going to make up a question, you can make up an answer. Seven. Back to you, Dylan.
Emily Flippen: This is a business that does generate a lot of money from the fees that they charge. I think around half or so of their revenue does come from the US. This is significant, even if Carnival Cruise is not.
Dylan Lewis: Rick, you got two very different companies here, two different outlets. Which one’s going on your watch list this week?
Rick Engdahl: What was the first one again? I’ll go the Carnival Cruises. It seems to be the hotness. [laughs]
Dylan Lewis: Rick is here for a good time, not for a toll road. It seems. Bill, Emily, appreciate you guys bringing your radar stocks to today’s show and all of your analysis. Rick appreciates you weighing in on the radar stocks. That is going to do it for this week’s Motley Fool Money radio Show. The show is mixed by Rick Engdahl. I’m Dylan Lewis. Appreciate you guys listening, we’ll see you next time.
