Closing Bell - Closing Bell Overtime: Big Defense from Reagan Defense Forum; Samsara CEO On Outlook 12/5/25

Episode Date: December 5, 2025

New economic data after the government shutdown and what it means for the Fed. Diane Swonk, Chief Economist at KPMG, breaks it down. RTX CEO Chris Calio joins for a wide-ranging conversation from Reagan National Defense Forum, the biggest defense conference of the year. Other exclusive interviews from RNDF with L3Harris CEO Chris Kubasik and Booz Allen CEO Horacio Rozanski. We track the latest on a potential Netflix–Warner Bros. deal, check in on market signals with Mike Santoli. Samsara CEO Sanjit Biswas on the state of connected operations.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That bell marks the end of regulation. Wells Fargo, we're going to closing bells in New York Stock Exchange. CCH Holdings doing the honors at the NASDAX and stock closing out the week with small gains. The Dow up 50 points, S&P 500, just a few points. NASDAQ up a little more than a quarter of a percent. And after two days of outperformance of Russell closing in the red today for the week, games across the board of 1% or less. A big deal of the day, the Albanian Army buying HBO. winning the bidding war for Warner Brothers Discovery.

Netflix down again today. Investors haven't loved this deal for the streaming king. Warner Brothers Discovery gaining Paramount Skydance down 10% today, 17% this week, but this saga is far from over. More on that coming up. A big day for commodities, too, silver soaring to another all-time high. Close to 60 bucks an ounce. Another big gain for Nat Gas.

Back to those December 2020 highs. That is a scorecard on Wall Street, but winter stay late. is about overtime. I'm John Ford. Morgan Brennan will join us from the Reagan National Defense Forum. Ahead this morning's inflation data coming in cooler than expected, but this is September data because of the shutdown. So will it matter to the Fed next week? And shares of Sam Sara, soaring today up 11% after earnings. The company's CEO is going to join us to discuss those results. Morgan, in California, what are you got coming up? Oh, we've got such a big hour, John. This is the first Friday of December, and that means I'm here at the Reagan National

Defense Forum in Simi Valley, California. We're here inside the Reagan presidential library. This is actually Reagan's Marine One behind me. It's the largest national security conference of the year. We've had a big run this year in aerospace and defense stocks, but they have been underperforming the broader market since the government shutdown back in October. We've got a changing spending environment, procurement process is in focus. As the Trump administration looks to shake things up in the industry. We've also got geopolitics at play. We're going to be all over this and so much more this hour with three major CEO interviews. They are all exclusive coming up over the course of the next hour. We've got RTX's Chris Callio. It's his first broadcast interview since

assuming the role. L3 Harris is Chris Cubasic. And we also have booze Alan Hamilton's Parasio Rosanski. You don't want to miss these conversations, John. Not a bit of it, Morgan. That's coming up. And markets got a little boost to close out the week with gains. thanks to the latest inflation numbers. The yearly core PCE, the Fed's preferred inflation measure, came in lower than expected. So does this latest report solidify the rate cut the market has been pricing in next week? Joining us now is Diane, she's chief economist at KPMG. Diane, is this an all-clear or just an all-clear for now?

It's sort of a stale bit of data, right? It's from September and we still have to get through the fall, which will be weak. and we've been talking about that re-acceleration, we've got a tailwind going into 2026, and that's a record surge in tax refunds from those expansions to tax cuts that we saw passed in July. That's going to show up as an 18% increase in average tax refunds, which most of which will be spent. And that's something that we're going to be watching closely going forward because we still have the bulk of the effects of tariffs. and we're starting to see some effects of labor shortages coming on the care economy. Increases in daycare were stunningly high, along with care for in-home care,

and those are related to shortages of labor. So, Dan, after this shutdown and now the lagging data, and now that sort of, I don't want to call it an artificial boost because it's real, but kind of a one-time thing, when are we going to get the real baseline for the economy? of what the health of the key things is? Well, we will see some better news as we get into next year. You know, unfortunately, the bad news is going to keep coming almost all of the holiday season. It's also compressed into December again, which we know already the, certainly the employment

data that we've gotten from private sector is quite weak for the month of November. We likely lost jobs in October in November. That said, last year, December saw a surge in hiring. because all the seasonal hires fell into that month of December, and we entered the year much stronger than anyone expected because the holiday season was compressed into one month. We have that again this year, and I think as we get into January, February,

and start to see the March data, you're going to see a very different kind of economy. Yes, that is going to be influenced by the fiscal stimulus, but that'll last right into the second quarter. It won't be until we get around the corner in the third quarter that we see how much sort of stamina does the economy have. But what you're doing is adding fiscal and monetary stimulus to an economy that's been powered by the AI boom

and the wealth effects it generates. Well, talk to me about that AI boom and the wealth effects. And the way that you model things, how much is the broader economy affected by both the spending on this data center rollout and related things? And then the stock market optimism that has added to how much wealthier, the wealthy feel.

Exactly. It's actually been a dominant factor carrying economic gains this year. What we've seen is the AI boom and the wealth effects account for about 1.1% of the 1.6% average growth we had in the first half the year. That's stunning. That really is a dominant factor. And it sort of was a one-legged stool the economy was standing on in 2025. And I think what we're going to see is more broad-based gains as we get into, 2026. The key issue is how much will we see in employment and how much do we need an employment to keep the unemployment rate from going too much higher? Of course, we know the demand and the supply of workers have both fallen at the same time. Well, one-legged stool is better than a no-legged

stool. So I guess I wonder how precarious are things if either there's a bit of a slowdown in the pace of the AI build-out, though it seems certain to continue for several years. And then if there's a sentiment shift related to that, and the wealth effect gets diminished. Absolutely. That is when you start to get. We still have a very elevated risk of recession going into 2026, even though we think we're going to get a burst of growth at the beginning of the year. As we get into the tail end of the year, if you saw something that really shook the confidence of those top earners, those high stockholder families and households that are carrying consumption at this point in time, you're going to see a much weaker U.S. economy in the back half the year if that

were to occur. If it doesn't occur, we'll be able to carry ourselves through 2026. And then the question becomes, will that growth be enough or too much for inflation and the Federal Reserve? And we could see a stickier bout of inflation as a result of having stimulus on top of structural shifts that we're seeing in the labor market. If things are structural, rate cuts alone just won't show up the labor market and the ways that the Fed would like without costing us in terms of inflation. Well, you've got the scenarios laid out for us. Thank you.

We'll see what happens. Diane Swank, Chief Economist at KPMG. Well, RTX shares faring better than many of the aerospace and defense peers over the past three months. It's partly thanks to its large commercial business. It's a tailwind that could have plenty of room to run. Just this week, Delta Forecasting Strong Travel Demand into 2026. But joining me here exclusively at the Reagan National Defense Forum is RTX Chair and CEO, Chris Callio, his first broadcast interview in the role.

Chris, it's so good to speak with you. It's great to be here. What a fantastic location. I do want to talk to you about the commercial side of the business. But first, we've got to embrace where we are right now at the largest national security conference of the air for the U.S. I mean, for years now, I've been coming to this event, and the conversation has been munitions, stockpiling, and replenishment. that's obviously an area in which RTX plays. How quickly can you make what is needed for the U.S. military and allies?

Look, we've been ramping up significantly over the last couple of years, investing in capacity, investing in labor, investing in our supply chain, candidly, to make sure they can get up to those rates. Just this year on our top munitions, we're going to be about 70% increase year over year. And we're not where we need to be. But again, we're here today to talk to our customers

about what we need to do to get to that next level. Again, I think the supply chain is going to be the key part here, Morgan. We continue to invest in our supply chain, both capital infusion, bringing in new suppliers into the defense ecosystem. There's some more to do. And speaking of new suppliers, the defense ecosystem in general seems to be changing, expanding, growing. You have more startups coming into the mix, more non-traditional defense tech players as well. How do you navigate that? Well, it's interesting.

I think of us as a defense tech player. I mean, look, we've got 35 of the highest performing systems out there globally in the world today. We're investing, as an RTX, $5 billion this year in E&D and KAPX. So we're investing in innovation. We're investing in advanced manufacturing and production. I'll tell you the other thing that we're doing is we are partnering with some of the new entrants. We've got an RTX Ventures Fund. We've put about $100 million into about 20 startups.

Again, some with technology, some with advanced manufacturing. And we're going to continue to find ways to even partner on some of our legacy platforms. How do we bring new capabilities, AI, autonomy, things of that nature, into our legacy platform? So a lot going on here. And speaking of partnerships, I mean, we're seeing changes to the acquisition process from the Pentagon. You're also seeing a lot of rhetoric in terms of the idea that defense primes in particular need to be investing more, even though I know a lot of investment already goes in. And even this idea of potentially equity stakes, how do you think about future partnership with the U.S. government?

Well, let me start with where you kind of started this, which is this new environment that we're in. You know, the secretary laid out the arsenal of freedom a couple weeks ago. I was in attendance for that speech. I will tell you, I think you laid out a pretty compelling vision for where we need to go as a country and where we need to go in the defense industry. And he's talking about things like removing bureaucracy, moving with speed and agility,

long-term contracts, demand stability, also leveraging, you know, commercial applications. You said it at the top of the show. Half of our business is commercial aerospace. We've got a long track record of leveraging commercial applications and technologies and putting them on defense platforms, both at Pratt Whitney and at Com. And so we're really embracing this. I think it's the right move. I think it provides us a lot of opportunities from a business perspective. I would say beyond that, though, just as a country, we need to make sure that we have the preeminent military in the world. And that's just going to be critical to maintaining our status as the preeminent economy in the world. Interesting. So what does that mean? When you talk about leveraging commercial on the defense side, what does that mean in terms of how are you thinking about the portfolio moving forward? So look, I said to you up front that we're investing about $5 billion in E&D and KAPX. A lot of that is on Apple.

applications and technologies that can cross over from commercial to defense. Think autonomy and AI. Think advanced manufacturing. Think advanced materials that can deal with high temperature stress and stressful situations. So again, trying to find ways to leverage our technology footprint across both commercial and defense. On the commercial side, we just mentioned it at the top of the interview, but the fact that upbeat comments from Delta on air travel, looking at 2026 on the one hand. On the other hand, airbus cutting, delivery forecasts, some issues there. What do you see in the nearer to longer term on the commercial side? Yeah, I think the story with our commercial businesses is one of continued strong demand and sustainable growth. This year, we're probably

going to do about 10% increase in sales from a new equipment perspective. If you think about the aftermarket, we'll be up mid-teens this year on the back of continued RPK growth, maybe about 5% this year globally, continue to see demand for air travel. I think when you just step back, there's a couple of just huge tailwinds in commercial aerospace that we're going to benefit from. One is that only one in five people in the world has actually been on an airplane. Maybe it doesn't feel that way when you're flying, but that's the truth. So for a mature industry, there's a lot of room to grow. And then just over the next 20 years, there's going to be the need for another 45,000 aircraft.

That's actually the size of the installed base today. And Pratt and Collins have fantastic positions on some of the highest growth platforms in the industry. so we're going to have a continued growth in our installed base and long after market tails after that. And I know we need to wrap it up. If I just circle back international, big part of your backlog on the defense side, what are you seeing there? Yeah, you know what Europe's doing. They're trying to, again, raise budgets to get to that 3.5%. I commend the administration for the work they're doing to kind of drive that.

Also see it in Asia Pacific, obviously, with what's going on in South China Sea and in the Middle East as well. So really across all areas, you know, globally, we're seeing strong demand for our products. Yeah, and of course, it's a big part of the conversation, John, here. is not just what we're seeing domestically in defense and national security, but also what we're seeing internationally as allies are on the ground here for this event as well. Chris Calli of RTX, it's great to speak with you. Thanks for your time today. And coming up.

And coming up. I will have, oh, yep, we'll have exclusive interviews with L3 Harris, chair and CEO Chris Cabasic. That is coming up right here on overtime. John. Clearly, I'm looking forward to it too. The Albanian Empire. Netflix has gone from startup mailing out DVDs, to now planning to take over one of the oldest studios in Hollywood.

Coming up what Hollywood insiders are saying about how this deal could reshape TV, movies, and streaming. Overtime's back in two. Welcome back to Overtime. Shares of Netflix lower about 3% for the first straight day as the company wins the bidding war for Warner Brothers Discovery assets and the stock falling below $100 a share for the first time since late April. But it closed just above that. Warner Brothers Discovery, however, adding. to its yearly gains, up 143% in 2025, making it the fifth best performer in the S&P 500.

News of this deal hitting shares of Paramount Skydance and also the independent movie theater chains, including IMAX and AMC, but Roku getting a boost. Even with all of this stock movement, this deal still has a long way to go to get to the finish lines. Get to Julia Borsden for the industry reaction to the deal. And, Julia, that Albanian army line from way back when, Time Warner CEO, kind of taking a swipe at Netflix, just living rent-free in my head today. Yeah, that was quite a long time ago.

And now Netflix is such a streaming giant that it makes sense for it to acquire Warner Brothers. If you look at their point of view. Now, just looking at their argument about why Netflix believes that this deal should go through, they're saying they just have 8% of monthly viewing share. If you consider viewing across both streaming and linear, YouTube and the number one spot, then Disney. And they're saying even if they acquire these Warner

Brothers assets with HBO, their share of total viewing will not be meaningful enough to raise concerns from regulators. Having said that we're seeing a lot of concern today, John, from the Screen Actors Guild, as well as from the WGA, the WGA calling for this deal to be blocked the Screen Actors Guild just issuing a statement saying this transaction may serve with the financial interests of shareholders, but it raises many serious questions about its impact on the future of the entertainment industry, especially the human creative talent whose livelihoods and careers depend on it. So, John, I think we're going to hear a lot of questions here about how to calculate the impact of this merger. There are some other calculations

of the streaming heft of Netflix censor tower out with some data today showing that if you look just at mobile viewing and you look at the fact that Netflix is such a leader in terms of mobile viewing, they're going to actually have 56% in terms of monthly active users of the mobile app. Right now, Netflix, they say, has 46%, Amazon Prime Video has 17%. But that's just of mobile viewing, and I suspect that Netflix and their confidence that this deal is going to go through, is expecting that the strength of YouTube and also the viewing on social media of platforms like TikTok is going to enable them to say that they don't dominate. They're just one player in this ecosystem.

But do they become an Apple-type player now across not just streaming, but also theaters and TV? And I say that because Netflix now becomes an important player in theaters, assuming they don't drop those WBD assets. And part of what's come under fire from the industry a bit is these algorithmic decisions that are getting made on what flies or what doesn't based on the numbers in streaming. One can imagine that's starting to influence what movies get green lit, who gets to act in certain TV shows, even if it's not primarily for streaming. Well, look, I think the data always comes into play. But there are a lot of different questions in there, John. And one of them is whether they become an Apple-like player.

I actually think the question is whether they become an Amazon-like player where they're selling Netflix and then allowing users to bundle in the HBO content, or are they going to include the HBO content in the Netflix subscription price and bump up the price of that? So the question then is, do they then add other channels? Are they going to allow consumers to subscribe to Netflix plus a series of channels including HBO, which is what Amazon has in its channels business? So I think that's a key question to be determined for how Netflix approaches its new portfolio of offerings between Netflix, HBO, and then what other streaming services that it doesn't own, it decides to bundle in there as well. I think the question in terms of the theatrical business is an incredibly important one for the folks here in Hollywood. We saw Jane Fonda come out today saying she thinks this is a horrible thing for the movie industry and for the entertainment industry as a whole. And there's a lot of concern that Ted Sarandos is going to impose his approach, which is wanting short, two-week windows of films release in theaters exclusively before they're available on streaming on the Warner Brothers business. This is part of the negotiations here with Warner Brothers, and Netflix is committed to maintaining Warner Brothers current deals with the movie theaters.

The question is, how long do those deals last? Many of them, according to analysts, go through 2029, but some of them may be able to be renegotiated earlier. What I've heard from sources is that Netflix understands that Warner Brothers has a plan to maximize monetization of its films, both in theaters and then downstream, say on HBO and as on demand with purchases on demand. The question is whether we see a pressure to shorten those theatrical windows, which many argue, would have negative implications, not just for the theater chains, but also potentially for the other movie studios. It's almost 25 years since AOL Time Warner, and here we are with Netflix. Julia, thank you.

Coming up, dollar stores soaring this week after earnings, a good sign for those companies, but maybe a warning for the economy. And over the past month, Bitcoin has fallen nearly 15% while the NASDAQ is higher. They used to trade together. So what does the divergence mean? Mike Santoli is going to tell us. We'll be right back. Pinch your penny is another big day for the dollar stores. Dollar General and Dollar Tree, both rising more than five and a half percent. Both companies reporting results this week, as we discussed yesterday, analysts getting more bullish on Dollar General, UBS, Morgan Stanley, Truist Evercore, Piper Sandler, all raising their price targets. And now let's turn to senior markets commentator Mike Santoli for a look at some noteworthy divergences happening in the market right now. Mike? Yes, John. So initially, here we have the market's implicit economic forecast. That's the relative performance of cyclical sectors compared to defensive ones against the explicit forecast of economists for real GDP growth for the U.S. You see that sometimes the market kind of anticipates a reacceleration in expected growth. Here's what you see a couple of times. Then right now, we've been holding a pretty handy outperformance lead of cyclicals over defenses. That's a pretty reassuring message, although look at late last year.

thing happened. You really saw cyclicals get ahead of steam up into the end of the years. Everybody expected some policy help in 2025. Obviously, we got the tariff panic instead and a recession scare. So obviously, this isn't necessarily a perfect predictor. So far, we're still in gear expecting better things, but maybe we're a little sensitive to any signs that growth might not come through early next year. Another divergence, which has been very relevant tactically to how the markets perform, is the NASDAQ 100 relative to Bitcoin. You see over most of the last year, really have been in sync until the recent liquidation in Bitcoin caused a lot of stress there. We did get a wobble in stocks. Now they've mostly recovered. So are we delinking here a little bit?

Are basically cash flow generating good companies that are in the NASDAQ 100, no longer kind of a slave to what's happening with crypto? That's a good question. I don't know the answer, but I think it's noteworthy that we've been able to resist that force of gravity. Mike, sometimes, but not always over the last several years, more than five. We've gotten a bit antsy in the market right at the very end of the year. Given the benefit of what you've seen this year even and that little bit of hindsight, why is that? And is there any risk of it this time? There's certainly a risk of it.

Now, we did have a down December in the S&P 500 last year. It's very rare to get two down Decembers in a row, but it has happened as recently as like 11 years ago or something, 11 and 10 years ago. I don't know that we're necessarily set up for that just because we did have that 5% pullback that might have kind of flattened things out. and reset positioning. But I think expectations for 20206 are building up to be pretty aggressive. So I don't know if we're going to be necessarily just sort of allowed to ride the upward drift that seasonally we usually get or if, in fact, we're going to start to second guess whether maybe after the Fed next week, the bullish case is really coming together. All right. Mike Santoli. Thank you. Time now for a CNBC News update with

McKenzie Segalos. Mack. Hey, John. The Supreme Court agreed today. to decide whether President Trump's order rolling back automatic birthright citizenship is legal. The president told U.S. agencies in January not to recognize the citizenship of children born in the U.S. if neither parent is a citizen or legal permanent resident. A lower court ruled the policy violates the 14th Amendment. The case will be argued in the spring with a ruling expected by early summer. The Indiana House approved a new congressional map today that's designed to give Republicans two more seats in the House. However, Indiana's Senate has said there is not enough support to pass the bill in that chamber, despite pressure from the White House.

And Frank Gary, the internationally renowned architect, died today at his home in California. He was known for his bold and distinctive style that embraced unconventional forms and materials, including the Guggenheim Museum and Bilbao, Spain, which was one of his most memorable projects. His career spanned six decades. Frank Gary was 96 years old. Morgan, I'm sending it back to you. All right. Mackenzie Sagalos, thank you. Up next, an exclusive interview with L3 Harris chair and CEO, Chris Kubasik. This is live from the Reagan Defense Forum. He's going to tell us where the defense cycle is headed, how his company is positioning itself in this rapidly shifting sector and so much more. Stay with us. Welcome back to overtime. Small gains for the major averages today, also in the green for the week. Bond yields up ahead of next week's Fed meeting and after a cooler than expected inflation number, the 10-year yield at 4.14%. Retail store companies reporting earnings right in sync with the start of holiday shopping. Investors trying to parse which consumers are still spending and where. Makeup and lingerie

looking good. Alta Beauty and Victoria's Secret both jumping today after their earnings. Morgan, over to you. All right, John, thank you. Well, L3 Harris has been one of the big winners this year. It's up over 30%, but basically flat over the past three months, along with much of the defense sectors, investors grapple with impact from the government shut down. Spending uncertainty, possible changes to how the Pentagon awards its contracts. Joining me here exclusively at the Reagan National Defense Forum is L3 Harris, Chair and CEO Chris Kubase. Chris, it's great to speak with you. Great to be here. Thank you. You know, back in January, you were the CEO of a defense prime that came out and said, hey, we have some ideas on how to change acquisition and move more quickly

and deliver more to the U.S. government. And now here we are. One of the big themes this weekend is going to be Arsenal Freedom because the Pentagon is looking to do just that. overhaul the procurement process. Your thoughts? Yeah, well it's long overdue and I applaud the department for finally getting this document out. They did in a pretty timely manner all things considered. You know last night the national security strategy came out and what it continues to say is that the threats facing the US and our allies are increasing. So the entire defense ecosystem has to really get on a wartime footing. And I think this transformation at the

Department of War is a big step in the right direction. It's very similar to what we did at L3 Harris about two years ago. We've started to transform ourselves focusing on AI, focusing on affordability, accountability, innovation and speed. So there's perfect alignment. I particularly like the focus on the DOW and industry jointly investing to increase capacity. I believe capacity in and of itself is a deterrent. And the last piece will be the multi-year contracts. And I look forward to the DOW starting to award multi-year contracts, and so that we can have long-term agreements with our supply chain

and really empower the defense industrial base to support the warfighters. So exciting times. For years now, we've been having conversations about solid rocket motors and what it's going to take to produce more replenish stockpiles. We're just having the conversation about munitions with RTX's CEO, Chris Calio. Aerojet Rocketdyne, it's one of your businesses, one of the biggest solid rocket motor producers out there. How quickly can you produce and ramp that production?

Yeah, we bought that company about two and a half years ago. It was not in great shape. Strategically, it was a great acquisition, but it lacked leadership, it lacked investment, it lacked innovation, an outstanding dedicated workforce. And in a little over two years, we've completely turned that business around. We're actually delivering on or above schedule

or ahead of schedule on most of the contracts. We've been investing hundreds of millions of dollars to increase the capacity. So I think when you look at it now financially, just from that aspect, it's easily tripled in value, and we're well positioned to grow. grow along with the Department of War as munitions double, triple, quadruple in the years ahead. So exciting times, and we're ready to go.

We see more startups coming into the space, particularly around things like solid rocket motors. How are you navigating that? Yeah, look, we've been supportive of new entrants and startups, actually, going back several years. We have dozens of partnerships with some of the new entrants that are well known. And as of today, we have equity ownership positions in over 70. start-up venture-backed companies. So we're trying to help these companies get

through the Valley of Death. From our perspective, we want to get their technology into our solutions. So we're quicker, more innovative, more affordable. And then, you know, down the road if these entities have some sort of exit strategy, we share on the upside and then can continue to reinvest in the business. So it's exciting times and proud of the progress we've made. Massive, massive opportunity across the industry and arguably beyond is Golden Dome. Investors are very focused on what that's going to mean for L3 Harris as well. You're starting to hear about maybe some contract awards. I think there was a headline about 1,000 folks selected for parts of Golden Dome earlier this week,

but we still don't have a lot of those awards or details. What does it mean for the company? I think it's a huge opportunity for L3 Harris. There's a couple aspects, mainly on the satellite. We are very focused on the missile warning and missile tracking. We have numerous satellites in orbit, numerous. and backlog. And we're expecting some awards, some RFPs here in the next few weeks. So I think we're well positioned. On the solid rocket motor or the munition side, large solid rocket motors,

PAC 3 THAAD, that's right in our sweet spot. So we're excited. It's only been several months since General Gute Line was appointed. They rolled out the architecture. So things are moving at a fast pace, and we're excited about the future. Partnering with government, what does that look like with this administration and beyond? Oh, I mean, that's the business that we're in. You know, we view ourselves as the commercial defense technology company. We think we have the right people, the right infrastructure, the right technology, and the right culture to succeed. We're well aligned.

They're going quick. We're going quick. There's more and more focus on commerciality. That's going to be the word of the day tomorrow here at Reagan. I'm pretty confident. And we've been working under a commercial business model for over 20 years. We've invested $2 billion alone just on software-defined radios. We've sold $700,000 to the DOW, half a million internationally in the last 20 years.

And these are year-to-year competitions. So I'm a big believer in the commercial business model. It's about 20% of our revenue. I'm hoping it's more. I think it's the way of the future. And that's what we're going to need to do as a nation as the threats continue to evolve. Yeah. And we've had this conversation multiple times over the last couple of years.

is going to be interested to see how all of it evolves. Chris Kubeasik of L3 Harris. Thanks so much for joining me. Thank you. Good to be here. Well, coming up shortly, I'm going to have another exclusive interview. Booz Allen Hamilton, Chair and CEO Horacio Rosanski. We're going to keep the conversation going.

So much to talk about, John, including, by the way, digging a little more deeper into AI. So we'll bring you that soon. Very much looking forward to that. Meantime, Samsara shares surging after reporting stronger than expected earnings. Company CEO is going to break down the quarter next in an exclusive interview. Welcome back to overtime. Samsara soaring 11% after top and bottom line beats in Q3 and adding a record number of big customers joining me now in a CNBC exclusive. Samsara CEO, founder Sanjit Biswas, Sanjit, good to see you.

So record number of new customers at 100K or more annualized recurring revenue and tied for the record at a million or more. What are those customers having in common that they're seeking? And how many different products are they buying from you in the door leaving room for expansion? Well, first of all, John, thanks for having me on. We did have a record quarter in terms of large customer additions. I think the common themes among them are that they have large complex operations. We're talking about companies with thousands, often tens of thousands of frontline workers, an equal number of assets. And so for them, they need a platform where they can see all their operations in one place,

collect vast amounts of data, and really analyze it with AI, and that's what we provide. So you mentioned products. We've seen most of our large customers adopt two or more products and even three or more products. So the majority of those 100K-plus customers are buying three or more products from us as they adopt a platform in mass. You called out a couple of customers, new ones that caught my eye. One was the state of New York. Another was a large media company. Now, when I think about your customers, I think about fleets,

And I know that there are reasons for media companies to drive around a lot. But what is a big media company using your technology for? Well, media companies have complex operations, as you know. And for them, they have a lot of assets that they need to keep track of. If you think about cameras and other kinds of equipment, that they want to make sure they don't leave behind it a site or they have the right piece of equipment available. That's the kind of work that they're looking to do in their operations. State of New York would be another great example.

They have a lot of snow plows, for example, as they get ready for the winter season. They have a lot of vehicles in their fleet, but also a lot of equipment. And so that's a theme that we see across the board, whether it's state and local governments, media companies, construction companies. It's really about the entire operation. What's the follow-on opportunity? Once you've got sensors on this equipment, once they're able to track it, they're going to get a whole lot of data about how things are being used, where they're being used, what's idle. Give me a sense of how that leads to adding products down the line, how that leads to perhaps

adding software use and other subscription services down the line? Well, it's all about value and ROI. So for these customers, they're looking to really achieve certain goals. They may want to reduce the number of accidents they're having out in the field. They may want to increase their asset utilization. Once they see the technology work, they get excited and they say, well, what else can we streamline with this? And that may be totally different area like training and compliance, or it may be around maintenance. So it often varies from customer to customer, but the theme is around clear and fast ROI, and we deliver that for them, usually in those first few phases of a project,

and then we tend to scale up from there. Maybe Wall Street is getting used to the fact that you guide cautiously. We'll see. But what are your assumptions about the economic environment next year and how that's going to affect you? Well, we do try to be conservative in our guidance as a public company. Consistency is key. And we have a view where our customers really are secular in nature. They are the waste management companies.

They're the infrastructure and utilities companies. So they have a lot of stableness in their business, but we want to be conservative because it's always uncertain out there in terms of the macro. For us, though, it's about consistent execution. We have a huge market opportunity in front of us. We're signing record numbers of customers. So we're going to stay focused on those customers. And then, you know, I think for them, their operations are going to be ongoing. We'll keep tracking it with you.

Sanzhoux for SEMSAR. Thank you. Morgan, back to you. All right, well, shares of defense contract. and consulting firm Booz Allen Hamilton losing a third of its value this year as it deals with a fallout from Doge cuts and just a transformation at the company. Up next, the company's CEO on how that's impacting its business, as well as the role of AI amid geopolitical tensions. We've got a lot to get into. Overtime, we'll be right back. Welcome back to Overtime. Intuit QuickBooks just

releasing its latest small business index, and it's not good news. Employment at U.S. businesses with one to nine employees decreasing by nearly 0.4% last month, with jobs declining in all eight regions and all 12 sectors. Transports and warehousing getting hit the hardest. Also, average real monthly revenue sliding more than 5%, decreasing in every region and state. The utility sector experiencing the fastest sales decline. Washington state had the biggest drop of the 20 states tracked. Morgan? Well, John, it's been a rough year for booze Allen Hamilton. Shares are down over 30%. It's on a for its worst year ever. It's down some 12% since reporting earnings in late October. Booz Allen lowered its EPS guidance for the first time. In company history is investors worry

about the impact from government spending shifts and AI. So what will it take for the stock to turn around? Well, joining me here exclusively from the Reagan National Defense Forum is Booz Allen, chair, and CEO, Horacio, Rosanzky, and Horacio, it's great to speak with you. Thanks. It's good to be here. So you come bearing examples of where Booz Allen is headed. You know, people ask, what does Boozellon do, and rather than just tell you, or rather show you? So this is, of course, it just turned off. This is the tactical assault kit. It's something a soldier or a first responder who were on their chest.

Booz Allen was a developer of this for the U.S. Army. And we built on top of that a technology called CITX. And what's cool about CITX is that it allows this device to do so much more than originally plans. So you can get maps on it. you can get details, schematics, but you can also talk to everything around you. So imagine a first responder or a soldier being able to see what's on a drone, being able to ask for a call for fire or for a rescue mission, all from this one device that they're wearing on them.

It empowers the soldier and the platoon to do so much more than they can today. And this is one of the things we're developing amongst many others that really demonstrate that Boozalanists, we're writing software, we're building things, and we're advancing the mission of national security for this country with, frankly, much better economics and the work we've done in the past. And, of course, the work you've done in the past and the work that I think investors know you for, for example, is more consulting work, government IT services work, still a big part of your portfolio as well.

So how to think about that right now, especially amid government spending cuts and Doge cuts, which have played out this year? So if you go back into the year, earlier in the year, through the Doge process, our civilian business, the work that we do for civilian agencies, we have a few contracts that were severely decreased. And that's what's driven a lot of the challenges that we've had this year. But at the same time, about 75% of our portfolio is national security, intelligence, defense, work at the border,

the integration of all of that with law enforcement. And that work continues to grow, and that work is doing really well. And really, the future of Guzzanality is around AI, where we're the largest provider of AI to the federal government. It's about cyber. We're one of the leading companies, the largest cyber workforce in North America. And the integration of all of that into these missions, which is so hard to do by bringing commercial technology and putting it in the hands of the warfighters.

And the AI piece of that. How is that ecosystem changing and evolving, especially in a world where the narrative is dominated by OpenAI and Anthropic and Nvidia? So it's changing dramatically. And what we focus on is on applying AI. We work with all of these companies. We have excellent partnerships. We've been working together with Nvidia since 2017

and with all of the foundational models. But what we do is we take the great work that they have built, all of those great investments, and build on top of that the use cases that make these valuable inside of a mission. So how do you put in here an AI tool that might help a soldier understand what's going on around them? by reading 500 different sensors and telling them what they need to know.

That's the work that we're doing on top of all of this. And it's work that is urgent because AI is not just the transformative technology for our economy. It is a transformative technology for national security, especially when you think about autonomy and things that are coming. And we hear it framed as an AI arms race. Is that how you see it, especially where China's concerned? Absolutely. We have our scientists take a look at where are we in this?

race with China and it is a race and there's going to be a winner and the good news is we feel we're still ahead but China is moving fast and in some areas they're moving faster than we are so so part of what we need to do working with our partners in the tech ecosystem working with our government partners is continue to accelerate ensure that we're putting things out there that really are going to make a difference and that are going to keep us strong that our allies and partners are going to want to use and that can be exportable technologies to the rest of the world. And so in light of all this, I'm looking to 2026, and as we do see these policy shifts

around things like procurement and what it is to work with the U.S. government, how are you leaning into that? And what does it mean for Booz Allen? So this idea of commerciality, commercial first, makes a lot of sense to us. We have, I've argued for years, including your show, that cost plus was outdated. A year ago here. Yeah. And the fact that we're talking now about moving beyond that to outcomes based, to really having the government. and pay for the answer, not for the process, so that things don't take on, that don't last forever. We are totally on board with that. We're leaning in from space and Golden Dome to individual things a soldier can wear and everything in between. All right. Narasya Rizanski

of Buzan-Hammerston. It's great to speak with you. Thank you. Thank you. And John, we've got even more coming up from the biggest defense conference of the year right here at the Reagan Library. Air Environment Chair and CEO Wihid Nawabi in the next hour on the strong stock performance this year. How the drone maker plans to, as it laid out this week, double its business over the coming years. We're also going to roll out sound on Monday from Northrop Grumman Chair and CEO Kathy Warden.

She'll be talking nuclear modernization, Golden Dome, which you've heard a little bit about this hour. They also just unveiled their new autonomous wingman. So think autonomous fighter jet, and we've got so much more as well. Big weekend. Morgan, looking forward to that. And now Wall Street will be closely watching the Fed's interest rate decision as well.

Next, we'll discuss what's at stake for the economy and your money. Welcome back to overtime. The Fed's interest rate decision on earnings from Oracle and Broadcom are going to take center stage next week. Let's bring back Mike Santoli. Mike, first I want to talk Broadcom and actually Costco, because both are reads on important things in this market, Broadcom on AI, Costco on the consumer, I guess particularly at the higher end?

For sure. Broadcom is fascinating because it has really. really built up a massive premium valuation. It's at 40 times forward earnings. And that's where Nvidia was in the middle of last year before its forward earnings estimates ramped by 80%. So the market's essentially saying, in this regard, Broadcom is on the cusp of something like that. So obviously, therefore, you know, it's a pretty high hurdle, most likely for the company to meet. And then Costco, stock's been under some relative pressure for sure. The interesting thing is it skews somewhat higher end on the consumer side. So in theory, that's the stuff.

part of the case-shaped economy that should be performing well. So we'll see if it comes through. We also next week and get the October job openings and labor turnover survey. I wonder what that means in light of the fact that layoffs so far this year have been the highest since 2020. Yes, and we'll see if it does show up in actual firings by this survey. We've still in this low-hire, you know, low-fire type economy. The weekly jobless claims are not really moving much the way you might expect, given all the layoff announcements, at some point, some of those are most likely to filter through. Right now, it feels like a labor market near stall speed, and so we'll see how the Fed characterizes the risk related to that next Wednesday. Indeed. And will the risk be

on or off in the markets next week? That's been a question. Mike Santoli. Thank you. Yep. Meantime, that's going to do it for overtime.