Closing Bell - Closing Bell Overtime: Rivian CEO RJ Scaringe & Unity’s CEO on Earnings; Rare Interview with Lockheed Martin CEO 2/20/25

Episode Date: February 20, 2025

Innovator ETFs’ Tim Urbanowicz and CNBC’s Mike Santoli break down the market action. Our Phil LeBeau sits down with Rivian CEO RJ Scaringe to discuss the EV maker’s latest earnings. RingCentral CEO  Vlad Shmunis joins before the earnings call to discuss the recent quarter. Plus, Unity Software CEO Matthew Bromberg on the company’s results and its new AI-driven ad platform. Morgan sits down with Lockheed Martin CEO Jim Taiclet for a rare and exclusive interview on the new administration, DOGE and more. 

That's the end of regulation. NYSE partnership day ringing the closing bell at the New York Stock Exchange. Alpha Modus Holdings doing the honors at the NASDAQ. Stocks sliding from record highs today, taking a breather. The Dow seeing the most pain. It was dragged by a big drop for Walmart and a pullback for the banks. Worst day in more than a month. Momentum names like Palantir and Robinhood are getting hit pretty hard today as well. That's a scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. And we have got a big show coming your way, including earnings results from Block, Booking Holdings, Dropbox, Live Nation, and Rivian,

along with an exclusive interview with Rivian's CEO before he talks to analysts on the call. Plus, shares of Unity Software ripping higher today and Applovin pulling back in response. That's after Unity reported results and laid out its AI ad tech strategy. We're going to talk to Unity's CEO about the quarter and about Wall Street's reaction. And as we await the wave of earnings,

let's bring in Innovator ETF's Head of Research and Investment Strategy, Tim Rabanowitz, and our own CNBC Senior Markets Commentator, Mike Santoli. Great to have you both here. Tim, I'm going to kick this off with you because we do have the major averages taking a pause today. Bond yields fell today. Crude oil higher today. The dollar weakened today. What do you think about this market as we do sit just below record highs,

and what drives us from here? Well, Morgan, I think today's activity was really all about the forecast that we saw coming from Walmart. I think it spooked a lot of investors that you are starting to see the consumer, specifically the lower end consumer, reach its limits, start to tap out. They talked a lot about just how they're not going to be immune from the tariffs from the Trump administration. And Morgan, we're having a lot of conversations right now with advisors. Almost all of those conversations seem to come back to this question of, on net, what is the impact going to be of the pro-growth policies of the Trump administration versus things like tariffs? And we're encouraging

them that you have to take Trump seriously when it comes to tariffs. I'm not sure those are priced in to the market right now. We look at the consumer picture. After two years of prices increasing pretty aggressively, to throw these tariffs on top of that, it's not a positive. It's more stress on the consumer. So we look out for volatility on any tariff news at all. But at the end of the day, on net, we look at things like tax cuts. We look at deregulation. We do think those will slightly outweigh the negative impact from coming from tariffs. OK, I'll note Booking Holdings and Akamai are both out. We're going through those results right now. Bring them to you in just a moment. Meantime, Mike, sticking with Walmart for a moment, the fact that we did have this cautious outlook for 2025,

maybe in part because of FX dynamics, but also maybe perhaps in part because of consumer, because of trade dynamics. And we've seen some of these more cautious outlooks this earnings season. And I do wonder how much that speaks to the uncertainty from a policy standpoint. Well, for sure. That's a big piece of it, Morgan. The other part of it is very low incentive, I think, for CEOs to overpromise coming out of the fourth quarter with the whole year ahead of them. And you do have a pretty good excuse to lean back on to suggest you have low conviction a combination of high expectations and high valuations coming into the year being met with pretty strong earnings results. So that's supportive. Bond yields actually down on the year. That's OK.

But there's still a sensitivity to the idea that the bout with higher mortgage rates and general higher borrowing rates and then just this stutter step in some of the growth dynamics might have the makings of a growth scare in there so again i don't think that this reaction to walmart was a big macro call the stock just went back to where it was a month ago it was way stretched to the upside but in general i think we do have an awareness here that we're not accelerating at least observably right now and then you have all the noise about fiscal contraction and layoffs and things like that. All right, Tim, I apologize in advance if I've got to interrupt you. We've got some big moves. Morgan mentioned that Booking Holdings and Akamai are both out. Akamai was initially down as much as 10 percent, but now down just 3 percent. So if we get those results,

I might have to interrupt you. But in the meantime, I want to ask you about some of these other volatile names. Applovin has been growing a lot. Unity had a big day in competition with it. I know you like AI infrastructure, but here are companies that are talking about using data and AI to help customers grow. Are those types of companies you think could become even more of a play in this market? I do think they are, John. And, you know, while we're talking to our advisors right now, we want to focus on the disruptors. Sorry, you only got like three sentences out, and I do have to interrupt you. Contessa Brewer does have booking holdings. Contessa. Go ahead. Thank you, John. We're coming in here with beats on the top and the bottom line. Revenues of $5.5 billion from booking holdings against the streets. Consensus of $5.2.

The EPS, they, am I missing a microphone here? Here we go. One second. This will help. I'm new at this. All right. Once again, revenues beating with $5.5 billion against the consensus of $5.18 billion. EPS coming in also with a beat.

$41.55 adjusted. The street was expecting $36.03. We're looking at room nights up 13 percent, gross bookings up 17 percent against the previous year. Gross bookings actually, again, a beat coming in at $37.2 billion against the street consensus of $34.59 billion. And booking says it's increasing its dividend 10% to $9.60. You can see the stock is reacting up 3.5%. A mic does wonders, John. Indeed. Indeed it does. You sound wonderful. Also, Rivian earnings are out. Phil LeBeau has those numbers. Phil. John, this is a beat on the top of the bottom line for Rivian with a smaller than expected loss of $0.46 a share. The street was expecting a loss of the bottom line for Rivian with a smaller than expected loss of 46 cents a share.

The street was expecting a loss of 65 cents a share with revenue coming in at 1.73 billion, topping the estimate of 1.4 billion. The numbers within the numbers in the fourth quarter, as the company was predicting it would, it did turn a gross profit in the fourth quarter, a gross profit of $170 million. Automotive was $110 million gross profit in the fourth quarter, a gross profit of $170 million. Automotive was $110 million gross profit. You do the math here for the number of vehicles delivered. The gross profit per vehicle in the fourth quarter, $7,755. Gross profit margin, $10 million. Free cash flow of $856 million. But the guidance, this is what people are going to be focused on. Rivian expects to deliver in 2025 between 46,000 and 51,000 vehicles. For a point of reference, the company delivered more than 51,000 vehicles in 2024, a loss of between $1.7 and $1.9 billion. A CapEx guidance of spending between $1.6 and $1.7 billion. They do expect to turn a modest gross profit in 2025, but they also note the outlook is challenging. The environment for EVs is

challenging. Lots to discuss with Rivian CEO, RJ Scaringe. As you guys know, it's an overtime exclusive coming up in just a few minutes. We'll talk all about the Q4 results, but more importantly, the guidance for 25. Guys, back to you. Looking forward to that. Just shortly in meantime, Dropbox earnings are out as well. Seema Modi has Dropbox. Seema? This is the cloud storage company reporting fourth quarter results that did beat street expectations, John. 73 cents versus the 62 cent estimate, so a big beat there on its bottom line. Top line, a revenue of $644 million, which is also ahead of what analysts were expecting. The main metric to look here for

Dropbox is annual recurring revenue, which came in at $2.57 billion. That's in line with the street. And I would also point out that paying users are now at $18.22 million as compared to $18.12 million same period last year. So they're increasing the number of customers and billings look good too, with shares down just marginally here in overtime. We'll send it back to you. All right, Sima, thanks. Tim, thanks for hanging tight. Back to you. You barely got your thoughts started. Please do continue. Well, yeah, look at some of these results out now, John. I think the main point here is when it comes to the tech space, we want to focus on those that are disrupting and not those that have the potential to get disrupted. So, you know, we just saw the Dropbox results come out. We look at that name. It's a name that I think a lot of investors are looking at on the surface and they're saying, oh, reason that it is cheap. They're going to have to invest a lot to stay

ahead of things. AI is going to be a disruptor, bring in a lot more competition to a name like this. They're going to have to spend a lot more on R&D. And you look at that net profit margin that investors really appreciate, that's going to be challenged. So overall, when it comes to this AI space, focus on the disruptors, not those stocks that are going to be disrupted. Mike, now that we're most of the way through earnings season and we're back toward the very highs, certainly in the S&P, how much broader has the participation gotten in this market? How top heavy are we relative to where we were a couple of quarters ago? We're somewhat less top heavy. It's not been dramatic, though. I do think that the earnings growth has definitely kind of percolated among a broader set of companies. And you've seen that mostly in the results to some degree in the estimates.

But it's still a matter of increments. So if you basically have kept the overall S&P 500 valuation pretty much steady around 22 times from a few months ago when we were right at the verge of 6100, where we are right now. So it sort of moves the chains. I do think that the idea that the rest of the market outside of the let's say the big seven or the top 50, we're going to all of a sudden start to accelerate with earnings. It's a little more complicated. The estimates are getting revised down. It's a little more macro dependent. But in general, I think earnings is the box you check

and say things are going according to plan. The rest of it is, you know, is the consumer a little bit tired? Is the job market going to stay where we are? And obviously all the policy influences. Those are, to me, the swing factors from here beyond earnings. Okay, stay with us. Steve Kovach has Live Nation earnings for us. Steve.

Hey there, Morgan. Yeah, we got a revenue beat here from Live Nation, $5.68 billion. Street was looking for $5.6 billion. They are not giving EPS for the quarter, so we won't be reporting that one. But adjusted operating profit did beat expectations by $30 million. We're reporting in at $157 million. Also, just a little color here, concert attendance up, they said, 4% year-on-year, and they're seeing robust demand and off to a strong start of the year for concert ticket sales.

We see shares off just a smidge here, about two-tenths of a percent, guys. All right. Steve, thank you. Tim, I want to get your thoughts on where consumers are spending money right now, because we've seen, I would say maybe it's a mixed bag in terms of the retailers. But even if you just look at the results we've gotten today before now and now after the bell, they do still seem to be shelling out for experiences, whether it's at restaurants like Shake Shack or at concerts that are run by Live Nation? Well, Morgan, it's a great question. And we continue to see, it's really been over the last couple of years, this bifurcation between the low-end consumer who is really struggling and the high-end consumer that's doing very well. You know, obviously we look at, you know, the Walmart results, lower-end consumers struggling, dealing with higher prices, less discretionary income, whereas higher-end consumers continue

to do very well. They're going out, they're spending money, they're going to concerts. So, you know, we tend to gravitate more toward those names that cater to the higher end. You know, I think of a Costco, even a Live Nation, you know, that you're not seeing that squeeze. And we think that squeeze is only going to be getting worse with the impact of tariffs. So continue to focus on those stocks that cater more to the high end. The ones that cater to the low end are going to continue to be challenged by this environment. OK, Tim Urbanovic and our own Mike Santoli. Tim, appreciate it. Mike, we'll see you later in the show. We've got more earnings to bring you. Block results are out and Mackenzie Segalos has those numbers for us. Hi, Mackenzie.

Hey, Morgan. So block shares are lower in extended trading after the company reported a miss on both the top and bottom lines. Revenue came in at six point oh three billion, falling short of estimates of six point two nine billion dollars. Earnings per share were also a miss at 71 cents compared to the streets forecast of 87 cents. Now, I spoke with CFO Amrita Ahuja a short time ago. She says that the two metrics that investors orient to are actually gross profit and adjusted operating income. Block's gross profit for the quarter showed growth of 14 percent. That was in line with guidance. And from an adjusted operating income perspective, growth was well ahead of guidance and the street's estimates. Now, a key metric we were looking for, guys, gross payment volume. That was stronger than expected at61.95 billion, beating estimates. Going into earnings,

Square GPV had been decelerating for seven straight quarters. Now, while CEO Jack Dorsey has expanded Block's product suite, rolling out a unified Square app and refining its go-to-market strategy, investors remain divided on whether these moves will meaningfully accelerate growth. Now, Morgan, I'm looking at shares down four and a half percent right now. Back to you. All right. Mackenzie, thank you. Meantime, Akamai earnings, as mentioned, are out. Seema Modi back with those. Seema. And John Akamai, the cybersecurity cloud company, reporting a 15 cent beat on its bottom line for the fourth quarter. But that's not enough to lift the stock because it seems like investors are focused on the company's guidance, which is weaker than expected for the first quarter to the next quarter, as well as the full year. Currency

headwinds mentioned by the company in its press release. The CEO, though, very much focused on its product portfolio and delivering profitability across all areas of business. He says that's the focus for the company going forward. I would also point out when you look at the revenue breakdown for this quarter, security revenue was up 14%, but delivery revenue was down 18% year over year. More when we get on the call, but right now shares are down 4%. All right. Seema, thanks. Well, we are just getting started here on Overtime.

And after the break, Rivian's CEO is going to join us for an exclusive interview ahead of his call with analysts to break down earnings and the impact of tariffs and EV incentives on his business. And later, the stock winner of the day, we're going to talk to the CEO of Unity Software, which finished up more than 30 percent in today's session. We're going to dig into why and what that means going forward. Overtime is back in two. Welcome back to Overtime. Shares of Rivian are higher right now, about 4 percent after posting fourth quarter results that showed a smaller than expected loss. Well, joining us now exclusively is Rivian CEO RJ Scaringinch, along with our own Phil LeBeau. Phil. Thank you, Morgan. RJ, you heard what Morgan had to say there about

your Q4 results, better than expected. But I think the guidance is something that a lot of people are going to have questions about. You're expecting to deliver between 46 and 51,000 vehicles. I mean, last year you delivered more than 51,000. Why the slight decline in 25? Yeah, we've tried to capture our expectations around trade policy, consumer-facing tax credits, and incentives for purchasing electric vehicles into a comprehensive view of what we're providing for guidance for 2025. And as you've seen in what we put out in our quarterly report, we have a range that we've provided. There's a lot of unknowns still in the system,

and we're certainly building the resilience to respond to whatever ultimately happens in terms of trade policy and consumer credits. What are you more concerned about as a CEO right now of an electric vehicle company? Are you more concerned with EV incentives, especially the manufacturing credit going away? Or are you more concerned about the potential impact of tariffs? Well, both ultimately have very similar effects. As we look at the automotive supply chain, there's a lot of content, especially as you think beyond just the tier one supply base. But in the tier two and tier three suppliers, a lot of those suppliers exist outside the United States.

A number of them, given the multi-decade run for NAFTA, exist in either Mexico or in Canada. And so the impact of large tariffs on those is going to ultimately translate to higher costs for us, which translates into pricing. And in a similar way, as we think about consumer-facing tax credits, it effectively makes the vehicles more affordable for consumers. And so in both cases, they ultimately are going to impact demand and they're ultimately going to impact the rate at which consumers shift towards electrification. RJ, it's Morgan. I just want to dig into that a little bit more deeply, and that is right now you sell your vehicles into the U.S. market, into Canada.

I was reading that you have plans to sell into Europe as soon as next year. When you do look at something like trade policy, for example, how do you game that out in terms of a demand picture as you do expand into other markets more meaningfully. Yeah, so we're launching our R2 product in the early part of next year and I've never been as excited as I am for R2 as for any product. It's the combination of performance, capabilities, attributes is just incredible. But what makes it so unique is for us is it represents really the first mass market product in terms

of pricing and that's enabled through a really heavy focus on cost efficiency and how it's designed and importantly the supply chain that we've sourced for this product. And what we've talked about publicly is the the bill of material cost in R2 is expected to be about half of what it is in R1. And the non-bill of material COGS will be well under half of what we have in R1. So it really enables us to have a much lower price product. And that, of course, builds in or enables, I should say, more resiliency to some of the changes that we could potentially see here. Hey, RJ, it's John.

Last quarter on the call, you guys said your lease penetration was 42%. How does it look for the quarter you're reporting now? And how does this environment with the consumer being in the state the consumer is in and the uncertainty around these credits affect that leasing customer? There's certainly a lot of uncertainty and, you know, the things we can control today are continuing to focus on driving cost efficiency in our plant, continuing to improve the product with every software update that comes out roughly once a month. So we see the product getting better and better and better. And then, of course, our focus on R2. You know, the split between leasing and purchases is something that I would say we're not overly concerned with.

We see that moving around. It's going to depend a lot on what happens in terms of tax credits and the overall approach to some of the previous policies that were in place. RJ, I know you're going to begin R2 production in Central Illinois next year, but ultimately has your outlook in terms of when you look into the future, has your game plan changed at all in terms of ultimately opening up a manufacturing plant in Georgia? No, in fact, we get asked this question a lot around you around how we think about electrification on long term. Our perspective is identical today as it was years ago. And that is that the entirety of the automotive world is going to convert to electric.

The rate at which that happens is really dependent upon how quickly we as an industry can create lots of choice, lots of options for consumers. In today's market, particularly in the United States, there's very few highly compelling choices. It's one of the reasons I'm so excited about R2 is that the market needs a highly compelling choice, highly compelling options. And with that, we do see significant demand. There's a tremendous amount of excitement for R2 and R3. And our Georgia facility has been architected and designed to support building all of those vehicles, the R2 vehicles and their variants and the R3 vehicle platform and their variants. Okay. RJ Scaringe, our thanks to you. And Phil LeBeau, our thanks to you as well. With shares of Rivian up right now about two and a

half percent. Well, after the break, what Lockheed Martin, CEO, just told me about potential budget cuts at the Pentagon, his read on the Department of Government Efficiency, and how an end to the war in Ukraine would impact the defense industry. And later, we'll take a closer look at today's major sell-off from momentum stocks like Robinhood and Palantir. Over time, we will be right back. Welcome back to Overtime. MercadoLibre just out with results. The stock's popping up almost 13%. The e-commerce company logging a big beat on the bottom line at $12.61 a share. Estimates were for $7.93.

Revenue beating two at $6.06 billion versus estimates of $5.88. Well, still ahead, Unity Software getting a massive jump today on the back of results and clarity on its ad tech strategy. But shares are still far below their 2021 peak. We're going to talk to the company's CEO about today's move and his message for investors. And Zoom competitor Ring Central just reporting quarterly results, topping earnings estimates by a penny at 98 cents per share. Revenue also coming in above expectations at $615 million, beating by $3 million. The guidance was mixed. You can see the stock there down a little more than 2.5%. Up next, RingCentral's CEO, Vlad Shmunas, is going to join us exclusively

to break down the numbers. Be right back. Welcome back. Defense stocks have been lagging since the election as investors await clarity on defense spending and the new administration's priorities. We got a little more detail today with a Pentagon statement confirming plans to try and cut as much as 8 percent from next year's budget and set priorities for military modernization. Now, I spoke with Lockheed Martin chairman and CEO Jim Tegla today in a rare and exclusive interview, and I asked him what he expects and how Lockheed is positioning itself for potential spending cuts. This is a fairly typical process that our industry grows through. The way it was described in the government's public statements was it was going to be a realignment of resources. And so we expect to be in a really great position for that realignment, given the kind of missions

that we can execute, the kind of capabilities we have at our company and the kind of partnerships we're building with tech companies and others in the ecosystem to deliver on all that. So I'm pretty, very optimistic actually about streamlining government processes along the way and getting more efficient. So we look at all this as positive and good environment to work in. Speaking of getting more efficient, defense stocks and government IT stocks have been under pressure since the election. Analysts point to Doge. Is Wall Street right to see Doge as a threat? I actually don't think it is a threat. And Morgan, you know,

I've had numerous conversations over the last four years that I've been in this role after having about 20 years in the telecom tech industry that I've been advocating for systemic change on how the government and industry broadly interrelate when it comes to national security. And I think the Doge, also the president's new team, a bunch of people with new ideas and an open mind, including the president himself, will enable us to finally get that systemic change going in this country and among our allies to have a more effective and efficient national defense. So I'm encouraged by this and I'm looking forward to working with them. Now, I also asked about the rapidly shifting geopolitical landscape and U.S. approach to foreign policy. Case in point, Ukraine. And what a potential resolution to that conflict would mean for Lockheed,

which supplies a lot of missiles, missile defense and indirectly even F-16s to Ukraine. I do hope personally and even professionally that the Ukraine war can be ended quickly and fairly. What the outcome of that war, even if it ends tomorrow, which we all hope will happen, it just heightens the need for the ability to the defense production system to scale and be able to produce what we need to. It accentuates the need to have faster turnaround times

on digital technology, which Ukrainians are doing, even overnight. And it also emphasizes the need to have partners, international partners that you can team up with. And we have them like Germany, UK, Australia, Italy, others, where we co-produce and work with them to get their best technology involved and their talent and their employee bases involved in producing what we all need to do to defend ourselves and deter further armed conflict so i hope the conflict ends fairly and quickly but the lessons from it i think are for better or worse are going to live on

we need to get more effective at national defense that's the real lesson i think of the ukraine war now i also asked about the competitive landscape as a flurry of fast-growing defense tech startups enter the market and whether we're seeing a changing of the guard. Teichl telling me he would suggest that Palantir and Roll, SpaceX and others are just trying to get ahead of this systemic change coming to the defense industry, much like Lockheed is. He's proposing the creation of a broader digital services system so the Pentagon can buy in a similar way to how the tech industry sells. Think a subscription business model,

not cost-based pricing to work more quickly on bringing the best software to the big platform. So that could be a situation where it happens in-house, through partnerships, or through subcontracting. The other thing I would like to note, John, here is that based on the statement we did get from the Defense Department today, because there's been some misreporting or some lack of context around these defense cuts in the last, call it, 24, 36 hours, the Defense Department is saying that these offsets are targeted at 8 percent of the Biden administration's fiscal year 2026 budget, totaling around $50 billion, which will then be spent on programs aligned with President Trump's priorities. So we're not talking about cuts to an existing budget

or even cuts to a budget that is laid out for next year. It's the proposed budget from the last administration, and that money is not necessarily going to be cut. It's just going to be put to work potentially in other places. Lots of ifs here. Well, with government these days, when I see it on paper is when I like to think I know what they're actually talking about. Well, time for a CNBC News update with Pippa Stevens. Pippa. Hey, John, the Trump administration can continue its mass firings of federal workers. A U.S. district judge just rejected a bid from a group

of labor unions to block the mass firings and buyouts of federal workers and said the union must file complaints with the federal labor board that oversees disputes between them and federal agencies. The judge's ruling is temporary while litigation continues. The board of directors at Trump Media announced in the last hour that they've voted to appoint former Secretary of the Interior Department David Bernard to the board. He'll replace Kash Patel, who was confirmed as FBI director earlier today by the Senate. And Citigroup became the latest company to roll back its diversity and inclusion policies amid pressure from the Trump administration. According to a memo from CEO Jane Frazier,

the banking giant will remove requirements to interview job candidates from diverse backgrounds and will rename its DEI team. Guys, back to you. Pippa, thank you. Well, shares of RingCentral are, let's see, what are they doing? They're lower by about 2.5%. There we go. After posting a top and bottom line beat for the fourth quarter

and joining us now exclusively is RingCentral founder and CEO, Vlad Shmunas. Vlad, it's been a while. Good to see you. I want to ask about the guidance and the overall environment because currencies have been a big deal. I think you, for Q1, got into a range of $6.07 to $6.12 million, and the expectation was $6.26. But constant currency, given what's happening with the dollar, is something else. How is the business trending versus your expectations? Hi, John. Thank you for having me, number one. How is the business? Look, we had a pretty good quarter. We are super excited about the year ahead. There are still obviously some macro level uncertainties. But we have specifically seen some strengths

emerging at this point, in particular in our small business that's doing well. You already mentioned about currency impact and, you know, that is meaningful in our case. But on a constant currency basis, we continue healthy growth. Very, very importantly, as we look into 2025 and beyond, we continue expecting more margin expansion. Tell me how some new products fit into that. You've got this kind of dashboard for call centers, not just for call centers, but also for internal communications that you've been rolling out. Now you've got RingCentral AI receptionist. How has that automated receptionist concept shifted in this era of generative AI. What kind of money do you think this is going to save customers and what's it worth?

We think AI is going to be transformative for the society, for the industry, certainly for RingCentral. AI is the future of RingCentral. RingCentral is a global leader in business voice communications. We have a steady 20% market share going back a number of years that's not being eroded. We're seeing extremely strong calling patterns, which are again increasing over time. And we're moving billions of business communications

minutes through our network so this puts us in an absolutely unique vault position to deliver AI based innovations to our very large customer base so far air is something we announced just today uh this is uh from what we can tell uh industries first fully integrated ai receptionist think a digital employee that can answer incoming phone calls route calls uh answer questions about the business that uh otherwise would take a human being to do. So that saves people time, people money, and results in way better business outcomes. Okay. And I tell you, we have small customers, large customers, it's very early, and some very large customers who are using air to connect their customer base to their employees across

multiple dozens of locations. So Vlad, could not be more excited. Okay, so is this a value add for your product, you know, your suite of products already, or does this represent a brand new revenue stream then for the company? We have just introduced today. The product is in early availability. We believe that this is going to be definitely revenue accretive. Our current plan is to charge for it while providing customers with a glimpse, with a free look. but certainly users who will companies who will actually use it for business outcomes we expect them to pay and again this pricing is in you know tens of dollars per month range and you know human employees cost a lot a lot lot more. For sure. Vlad Shmunis, founder and CEO of RingCentral. Thanks for being with us.

Thank you. Well, two of Wall Street's hottest stocks over the last year, Palantir and Robinhood, losing a lot of momentum this week. Up next, Mike Santoli looks at what that reversal could mean for the market. And Unity Software, a big winner on Wall Street today after reporting a smaller than expected loss and a revenue beat. Up next, the CEO of the video game Toolmaker joins us exclusively on those results and his new AI-powered ad platform to increase competition with Applovin. Be right back.

Welcome back. Mike Santoli returns with a look at the reversal in momentum stocks, including the Dow's biggest loser today, Walmart. Mike? Yeah, some of these pretty sharp, Morgan. And, you know, I was showing this pair, Robinhood and Palantir, a week or two ago on the way up and how they were sort of obviously feeding off of a very similar energy. Palantir very much caters to the retail investor. Robinhood is kind of retail investor squared. They like the stock, but also the company depends on their fevered activity. So you see a very, very sharp setback here. But there's so much air under these stocks that it really is a while before it really cuts into the overall trend, which looks arguably

fine. It would be another 20 percent down for Palantir just to hit its 50 day average. So that's what happens here. Overshoots to the upside. Everybody who bought it and held it just because it kept going up. They're the first ones out. And so we have to see where it settles out. Now, in terms of more mature companies, including Walmart, not quite as sharp an ascent, but very similar cadences here. Goldman Sachs, Walmart and Netflix, they're category leaders, very much consensus longs, very much doing everything right on the fundamental side. But you see a little bit of a setback move here, too. Again, doesn't change the overall trend, but it does show you that maybe it's a prompt for people to rotate elsewhere.

There has been a little more of a defensive and value rotation underneath the market going on in the last few days. Now, take a look at Walmart, and one reason why there was a little bit of susceptibility to that somewhat cautious outlook that the company gave today. Well, here's the forward price earnings multiple of Walmart relative to Target. Back in the olden days, they were kind of similar. Walmart has built up this vast premium, 35 times forward earnings relative to 14 on Target because the market has decided it's the category winner.

It's not just a retailer. It's not just discretionary. It's got the advertising. It's got the online business. Also, a little bit of scarcity value. I sometimes say with Walmart, 45 percent of the company is still owned by the Walton family. But nonetheless, it shows you that there was plenty of room to give back, given how much that premium has built up, Morgan. I always love how you give us the context over a longer term period. Mike Santoli, thank you. Up next, the CEO of Unity Software on his stock's big rally after announcing a new AI ad platform to take on rival Apple Loving. And cue the QR code for the latest installment of my On the Other Hand

newsletter. This week's debate, how much should investors care about Apple's new $600 low-end iPhone 16E? You can scan that QR code on your screen to join the conversation. Be right back. Welcome back to Overtime. Unity Software turning in a monster move today, closing higher by 30% on a day. Tech stocks underperformed. The company topping estimates for the quarter, but guidance came in a bit light. Investors and analysts, though, keying in on Unity Vector, a new AI drive within the ad platform. And joining us now in an exclusive interview is Unity's CEO, Matthew Bromberg. Matthew, welcome. So yeah, investors clearly excited about Vector and the idea that ads were growing again in Q4. Some of that's seasonal, but I think you also said

customers over $100,000 up to $1,254. Give us a sense of the sustainability of the growth in that growth solutions business. Hey, thank you guys for having me so much. And maybe for the benefit of your audience, I just note that Uni makes the software that powers a good chunk of the video games you probably know in the world today. We make 70% of the mobile games in the world are built on Unity software, 7 out of 10 of the top AR games, 30% of the PC games. So we're really important to that ecosystem. And what we're really proudest of is that we help creators of content from prototype right through profitability. So from the moment

you start to think about the content creation to the time when it comes to bring new users into your game. And to your point, John, yeah, we announced today a Univector, which is a new AI-driven platform that we're going to be using. We hope to create a lot more value for advertising customers over the long term. And we're pleased that investors were cheered by it. In context, about, I don't know, two, three years ago, there was this weird moment where Unity announced that it was buying IronSource. And you saw this tools maker combining with this kind of ads and monetization maker. And then AppLovin came in and said, don't do that. We'll buy you, Unity, as long as you drop that deal.

And Unity said, no, we don't want to do that. We want to go ahead. Meantime, recently, within the past year plus a little bit, Apple oven stock has just taken off. There's been a lot of focus on this ads business and the ability to really monetize data within these ecosystems. What are you bringing to that with Vector? And say more about exactly when investors are going to see this monetization and the rate of it coming through. It won't be that long, it sounds like, from what you're saying. Well, look, I mean, all the history and corporate machinations aside, what's really important here is customers.

And video-aimed customers don't distinguish between the need to build great software and then the need to go out and acquire users to create big live services with that software. So these things, from a product perspective belong together. And that's what Unity is really all about. It's taking the software that we make that help folks create content and marrying it with the software that helps them acquire users to build businesses around that content. And we're really, really pleased about both parts of our business. Both parts had a really terrific quarter. And again, the launch of Univector for us is a significant investment in a brand new system that we think over the long term is going to create a lot more ROI for our ad customers. And we'll be really truly able to play out that vision we had of bringing those two parts of the business together.

And certainly investors today embracing that vision that you are laying out. I'm curious about what you're seeing with industry customers, because that business really seems to be growing and reaccelerating and growth again. And I just wonder whether that can maintain itself. Yeah, it's a really exciting time for us, not only because our software is being adopted and received really, really well in the video game industry. But to your point, outside of video games, we're having more and more uptake. That business was up 50% in revenue in the fourth quarter. We've made real inroads in automotive in particular. We recently announced a deal with Toyota where the human machine interface, the in-dash experience in all Toyotas

will be built on top of the Unity software. We've had a lot of penetration in the auto business as well as in retail and manufacturing. So our software, which is really for the creation of any 3D interactive content, has really kind of started to catch on fire across industries. I mean, we started here in this conversation with the video game industry.

How would you categorize the health of it more broadly, especially since we have seen more competition come into the market and perhaps more mixed picture, at least as we come through this earnings season, with the biggest developers? Yeah, I spent the vast majority of my career before Unity making video games, and I'm hugely optimistic about the future of the video game business. We were late in the hardware cycle. There were some tough macroeconomic conditions over the last couple of years. I think the video game business is ready to rebound. Historically, we innovate. New devices come into the market, and those things combine to create growth. And I think that's going to happen this year as well.

Okay. Matt Bromberg, Unity Software CEO, Thanks for joining us. Thanks so much for having me. Stock finishing up more than 30% today. Up next, check on some of the other big overtime earnings movers you may have missed as we count down to Block's analyst call at the top of the hour. And don't forget, you can catch us on the go by following the Closing Bell Overtime Podcast on your favorite podcast app. We'll be right back. Welcome back. Let's check in on some more of today's overtime movers. Celsius Holdings is surging after reporting better than expected results on the top and bottom lines, also announcing it is buying rival energy drink maker Alani New in a nearly $2 billion deal. Now, that stock is up about 28 percent right now, still well off its highs of last year, though. Meantime, Sprouts' farmers market is lower despite beating on earnings and revenue

and giving solid guidance. And call center company Five9 jumping. After beating on the top and bottom lines and providing strong full-year guidance, those shares are up about 8.5%. Yeah, it's interesting. Five9, in light of what we just heard from RingCentral, these are companies that used to be called unified communications before this AI era. And now you've got businesses looking at ways to streamline, especially call centers and customer service.

One of those first areas where they're looking to use AI, not just to eliminate people, but to make people better, make them more specialized in helping move business forward faster. It was definitely a big theme throughout this hour, whether it was agentic AI and what we're seeing at RingCentral, whether it is this AI-enabled ad tech platform that's being stood up by Unity to take on app-loving in a perhaps more direct and aggressive way. And even Lockheed Martin, when I spoke to Jim Taklett, the full interview earlier in the day, we talked about how AI is coming to the battlefield and to the manufacturing process as well. And when you look at Apple putting out the 16E that you preorder start tomorrow, clearly the strategic rationale behind putting their most advanced chip in a $600 phone is we want an AI platform for iOS. As we push out the next version of the operating system, we want everybody to be able to do Apple intelligence on it. Yeah, meantime, tomorrow we get Flash PMIs. We have final Michigan sentiment report

and the inflation expectations that come with that report. That's going to do it for us here at Overtime, though. Fast Money starts now.