Motley Fool Money - Disney, Video Game Stocks, and the Business of Higher Education

Episode Date: November 9, 2018

Disney works its magic and unveils the name of its new streaming service. Twilio surges. And Activision Blizzard, Yelp, and Zillow tumble. Analysts Jeff Fischer, David Kretzmann, and Jason Moser discuss these stories and dig into the latest news from Take-Two Interactive, Skyworks Solutions, and Match Group. Plus, Grand Canyon Education CEO Brian Mueller talks about the business of higher education. Thanks to Molekule for supporting our channel. Get $75 off your first order at http://www.molekule.com code fool75. Learn more about your ad choices. Visit megaphone.fm/adchoices

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We've got the latest headlines from Wall Street. CEO Brian Mueller from Grand Canyon Education is our guest, and as always, we'll give you an inside look at the stocks on our radar. But we begin this week, down in the Magic Kingdom. Shares of Disney hitting a new high on Friday after its fourth quarter report included highlights from the studio business. And a name, finally, Jason, for the new streaming business. They're going with Disney Plus. Works for me. I know you're so disappointed. It wasn't something like Trunk. Tronk was available. Given our earlier conversations this week.

Yeah, I like that. I mean, it's consistent, obviously, with ESPN Plus, and it takes advantage of the brand that everyone already knows. What was your highlight from this quarter? Because there were a lot of good things in this report. Yeah, I think the big picture takeaway with Disney is that if content is king, then distribution is quorum. And everybody knows that behind any strong king isn't even stronger queen. And so I think with Disney, that is the beauty of this business, is that they have both parts of that equation, really. And there's some uncertainty making the move to that over the top. ESPN Plus, Disney Plus.

We're going to know a lot more in a year, of course. But I think that the early signs point towards success. And I suspect that they'll do very well with the content built out on. on Disney Plus. I like the Hulu platform, but we're in this age now where the cost justification, remember for a long time, it was cutting the cord made sense from a cost savings perspective. That's going away, because really now you've got to sign up for more apps to get all the content that you really like. So really, that disparity is shrinking. And so for Disney to have Hulu and ESPN Plus and Disney Plus and all of that IP, that really gives it, puts them in a

position of power, I think, for a long time to come. And Fox as well. Well, they've certainly been planning for this for a long time. I mean, Disney Plus will be launching next year, which is 12 years after Netflix launched its online streaming service. So maybe a little bit behind, but better late than never, I suppose, in this case. And some of the exclusive original content that they're producing for Disney Plus, I think looks really compelling. We'll lure in new people to test out the service. And I think Disney's library of content is robust enough and intriguing enough to keep people on the platform. Personally, I'm looking forward to the Star Wars Live Action show, directed by John Favreau. Maybe it can redeem how I feel about The Last Jedi.

I wasn't a fan of that movie, but maybe this Star Wars live action series will do it. Sounds like they're bringing in a, they're going to capitalize on the previous success of high school musical too, Chris. So we'll have a chance to go back and remember what it was. Whatever your personal feelings are about The Last Jedi, as a shareholder, I appreciated what that thing did at the box office. Did okay. Did okay. It upset a lot of diehard fans, though. Let's rest of the show, Star Wars. Let's just start on the Star Wars.

Yeah, let's do it. 30 minutes. Let's go. Jeff, one, just to pivot off, one thing David said there, I mean, in terms of the streaming app, yeah, they may be a little bit behind the curve. But I think, as we've talked about before, they are looking at this probably the right way in the sense that they want to nail it right out of the gate. They can't really afford to have a stumble in terms of how the app works. There's not sure there will be upgrades to the app. app, but they got to get it right next year.

I agree. And ESPN aside, they're really targeting a lot of the younger audience and then hope to grow with them. And they have the content to address everything from little kids to grownups, supposed grownups like us. And the shares, they haven't really gone anywhere since 2015. So they're, as a result, look very reasonably priced. They're about 15.7 times expected earnings for the year ahead. So... And a little, you know, a little side part of the business there. in the parks and resorts. I mean, it just makes a little bit of a lot. They employ a hundred and ninety-nine thousand people they employ. I should have asked everybody

to make a guess, but it's just a phenomenal part of the business that it just year and year out. The pricing power that they possess on those parks is really pretty impressive. It seems like every year, and I'm sure there's a record here, for how many years in a row they've been able to raise ticket prices, but they continue to be able to do that because it's such a unique and compelling pull. Every parent, that's a very parent. That's a very That's the goal. Get your kids to Disney World or Disneyland. And forget about your money. Of course.

Shares of Twilio up big this week. The Cloud Computing Company crushed expectations for the third quarter and shares of Twilio up more than 30%. Not bad, Jeff, when you consider this company still is not profitable. Awesome. It's a $9 billion market cap now. And as Jason was talking about apification, maybe, basically, making content into apps. Twilio is making communication into apps. It lets program. users easily put communication capabilities into any software that's out there using an API.

So that's what they're doing. Their biggest customers are WhatsApp and Uber, so anytime you use them to communicate with the other party, you're using Twilio's cloud and software. Yeah, Chris, revenue was up 68%. And almost even more impressive is dollar-based net expansion rate of revenue was 145%. That means where they earned $1.00.000. from a customer a year ago, they earned $1.45 this time because usage is growing. They're offering

more and more products on top of what they offer. And it's a phenomenal story where they're growing customers. They're growing revenue because of that. But then they're also growing revenue usage based on usage as well. So when you look at the cloud computing space and you've got, yes, I mean, this is impressive the growth that Twilio has. It's close to 10 billion in market cap. That's a fraction of companies that they're competing against in Microsoft, Amazon with the AWS, etc. Is this a company that you feel like has a little bit of a moat or is someone going to come in at some point and just make them a big offer?

I do believe they have a good moat because they, years ago, set up, and the CEO, Jeff Lawson, worked at Amazon before Twilio, along with a few other startups that did well. But years ago, they set up worldwide a network of communications by signing agreements and whatnot, so that you can use their services anywhere. And that's tougher to do than it sounds like. And then there's software years ahead of other people. And it's really programmer-driven, because it allows you to customize it exactly how you want it. And that creates a stickiness, too. So I think they're in a giant industry, and they have a great lead. And I think they could maintain much of it.

Two video game stocks in the spotlight this week. Activision Blizzard's third quarter profits came in higher than expected. And second quarter revenue for Take two interactive came in higher than expected. And both of these stocks, David, despite those headlines, both of them falling more than 10% this week. Well, Chris, I think we can go to a little poem here to maybe explain what's going on here. When the valuation is lofty and growth is lumpy, Wall Street will be grumpy. That's my analysis for the day. I think I'm going to hang my head up there. No, but anyway, Activision...

Wait, you wrote a poem? I mean, I didn't know if that counts as a poem. It's like... But you came up with that. I came up with it. You know, between that and Twilification, there is some serious money being made by someone somewhere, based on the IP that we're kicking out. Somewhere, and appification. Yeah. It's a really clumsy word, but. If this thing at the fool doesn't work out, I'll start writing some more poems. Robert Frost.

Yeah. Follow me on Twitter, everyone. So, anyway, going to Activision. The quarter was pretty strong, but I think their guidance for the next quarter and the rest of the fiscal year was just slightly. below Wall Street expectations. And by slightly, I mean, we're talking less than 5%. But this quarter, they saw some key launches of their existing franchises like Call of Duty with Black Ops 4, World of Warcraft, Candy Crush.

Call of Duty, this latest version, generated over $500 million on the opening weekends. That's a pretty strong release. But going into this, like I mentioned in that poem, the company's valuation has been lofty over the past year or two. But now after this drop, the stock's down about 13 percent or so, now trading for about 21 times forward earnings. So from evaluation perspective, it's finally starting to get back into that reasonable range. We've talked before about this industry being, like the movie industry, it is a hits-driven business. So is there one franchise in either of these companies that you look at that you think,

boy, if they can produce a big hit in this franchise, whether it's this holiday quarter or in 2019, it's really going to juice the stock. Well, for Take 2 Interactive, Red Dead Redemption 2 is their latest release, and that just did phenomenally well. In the first eight days, Red Dead Redemption 2, which launched in October, sold more than the first Red Dead Red Dead Redemption did in its first eight years. So Red Dead Red Dead Red Dead Redemption 2 brought in $725 million over the opening weekend. So far, it's already sold over 17 million units globally.

So packing a powerful punch right up there along Grand Theft Auto 5, which for a long time has been the main revenue generator for Take 2. But this is a lumpy business. It's really based on the timing of these releases. So at the end of the day, for these companies going forward, it's about how recurring can they make these releases. But so far, these steady franchises continue to do really well. Three stocks hitting 52-week lows this week.

So are they value plays or value traps? We'll find out next. Stay right here. This is Motley Fullmark. All right, before we get back to the earnings, let's talk about buying a home. Interest rates are on the rise, and there's a lot of unpredictability about buying a home. Some folks are getting nervous, and our friends at Quicken Loans are doing something about it. It's called the Power Buying Process, and it works like this.

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purchase transactions. Additional conditions or exclusions may apply based on Quicken Loans, in comparison to public data records, equal housing lender, licensed in all 50 states, and MLS Consumer Access.org, number 3030. Welcome back to Motley, Full Money. Chris Hill here in studio with Jason Moser, Jeff Fisher, and David Krentzman. Shares of Yelp down 30 percent on Friday after a rough third quarter report. Yelp also cut revenue guidance for the full fiscal year. Zillow shareholders had a week that was almost as bad. Zillow lost a quarter of its market cap after the online real estate.

State Platform's third quarter report included a similar cutting of guidance for the full fiscal year. Let's start with Yelp, Jason. How bad is this? Well, it's probably not as bad as the market is making it out to be. I mean, but a business built on selling ads based on its network effects. They need to be adding advertisers in order for the market to feel good about it. And unfortunately, they are not.

So what you have here is basically a resetting of expectations. I think the reaction, generally speaking, is the appropriate one. It may be a little overdone. Yelp is a profitable business. It does suffer, I think, from a little bit of an identity problem, because is it for restaurants? Is it for traveling? I mean, what is it really for?

It's a little bit of all of that stuff. And there's some questions as to really the reliability of some of the reviews. But all of that considered, I mean, again, like I said, it is a profitable business, and things could be worse. Speaking of which, how bad is Zillow? So I used to think this company had more potential than a slinky at the top of the stairs, Chris. I really did. I don't think that anymore.

I've been bearish on this company for a while, internally even here at the company. And I think that any time as investors, when we hear the words, transformational innovation, we tend to get pretty excited. However, in this case, I think you need to be very, very concerned. That phrase was basically how they opened up the shareholder letter this quarter, and the problem is that they've been basically innovating forever. They've been trying to do this ever since they've been public. They've not yet recorded a profitable year, and that's in the face of a really good housing market. Now we're seeing the housing market starting to tighten up a little bit, and unfortunately the go-to for this business, the premier agent side of it, is showing some signs of weakness.

We're not concerned. I mean, we're not, you know, I'm not sold on the changes that they've made there. And then this Zillow offers side of the business that they're talking about growing out, totally not scalable. And I'm not sure it's going to be nearly as profitable as perhaps management wants it to do. So is either one of these stocks of value play to you? Personally, I would not invest in either one of them. I think they're probably more value traps. But at least, again, Yelp is profitable. They can point to something there. Zillow, I mean, they really have to get their act together. Skyworks Solutions, a maker of specialty semiconductors, having a rough week as well.

Fourth quarter revenue for Skyworks looked pretty good, Jeff. Guidance, though, was weak and shares hitting a 52-week low on Friday. A little weak on the guidance, Chris, but they still expect 2019, which is just beginning now for them, to be a record year and to be their 10th year in a row of record revenue and record EPS. So what happened in the year that just ended, revenue was up 6%. Earnings per share up 12%. margins continue to grow. As I just said, it's the ninth year running of records. They have great customers in BMW and Tesla and Toyota, let alone most smartphone makers in the world. And Apple

is their biggest customer by far. And that is probably right to the point of why the stock fell. Everyone's talking about Apple iPhone sales units topping out, or at least for now, maybe. And that looks to be the case in their guidance as well, in Skyworks guidance, driving some of that flatness and revenue for the next quarter. So that's the concern, along with China slowing as well. But that said, Chris, the stock is inexpensive. It trades it 10 times more or less, expected earnings for the year ahead. But that said, again, it's been disappointing. Since 2014, shares haven't gone anywhere, even though business has executed superbly. And this is one of the few semiconductor stocks that I really like. They have competitive advantages, growing margins, strong profits,

It's great markets, including Internet of Things, and they're in with all the major players as customers. So I own shares. I continue to want to own shares. It just reminds you to be patient. That's surprising that they've put up record revenue every year, and the stock is basically flat since 2014. I think what happened a few years before 2014, the stock rose several fold, two or three

fold, and then it's just flattened since then. But Skyworks, great, management, great. We should be congratulating them. And I look forward to their future. 5G is going to drive a lot more demand for their products, too. Investors were swiping left on Match Group this week. The parent company of Tinder, Match.com, and other dating platforms issued a third quarter report that came with. Wait for it, David. Disappointing guidance. Also a special dividend. What is that about? Yeah. We'll get to the special dividend, but on the surface, the underlying business looks

to be performing really well. Match across all its properties and apps now has over 8 million global paying subscribers. Average revenue per user is also increasing. Tinder is especially driving a ton of revenue right now. Subscription revenue in the quarter doubled for Tinder. Tinder gold subscriptions up 61%. And overall, revenue is up 29%. Adjusted EBTA up 38%. So those are strong, profitable growth numbers. But then they are thrown in this special dividend, which is a bit of a head scratcher. They're paying a $2 per share special dividend that'll cost about $560 million. dollars. And this, mind you, is for a company that already has about $800 million in net debt, and they'll probably be going into more debt to finance a special dividend. I think this might be

kind of an underhanded way to pay back their parent company, Interactive, which still owns about 80% of Match Group's shares outstanding. So Interactive will be receiving the bulk of that $560 million payout. And on the conference call, management was going through their capital allocation strategy. Most tech companies or software companies, companies don't like to operate with debt. They have a lot of cash and no debt. Match kind of falls into the group, or they try to say that they fall into the group like Netflix and Amazon, which rely on debt to fuel expansion. So I can get on board with that. But what sets this special dividend apart is that they're going into debt. For a dividend, they're not going

into debt to reinvest back in the business, which is what Netflix and Amazon are doing. So a bit of a head scratcher here, just something to keep an eye on. Another restaurant being taken private. This week, durational capital management bought bow jangles for nearly $600 million in cash. Jason, how are you holding up? Listen, I mean, it sounds like at the end of the day, they're not going to be making any changes, really, to the model there. So I'm okay. I mean, as long as I can swing through the Atlanta airport every now and then, get my spicy chicken biscuit and sweet tea, I'm okay with it. I mean, I just, we've never been really all that high on this company as an investment.

Just a restaurant business faces a lot of challenges. Quick question from one of our listeners, Matt Riley. He writes, as a Bojangles shareholder, what options do I have to minimize any tax impacts? Can I just reinvest the funds without being taxed? It is an all-cash deal. Well, yeah, it sounds like you're going to be getting all-cash for your shares, so you're pretty much stuck with that. I mean, probably a nice problem to have at the end of the day if you're making a little bit of money on the investment. But, yeah, if they're offering all-cash, it doesn't sound like there's another option, which is going to limit your tax strategy. So next month, we'll be doing a show where we spend a little bit of time looking back at 2018. I feel like one of the things we're going to be talking about was 2018 was the

year where a whole lot of restaurants went private. Yeah, I think that makes a lot of sense, though. We're seeing more and more that companies that have a collection of brands under their umbrella are the ones that are doing really well. Yum brands, restaurant brands. And so that was kind of one of the reasons why I thought maybe Wendy's might consider buying Bojan Angles, but it sounds like private equity got to the first. Private equity is pretty smart, too. Bojangles being taken private well below its IPO price in 2015. Papa John's still looking for a savior. I'm waiting. All right. Jason Moser, David Kratzman, Jeff Fisher. Guys, we'll see you a little bit later in the

shell. Coming up, we'll talk about the business of education with Brian Mueller, the CEO of Grand Canyon Education. Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. Brian Mueller is the CEO of Grand Canyon Education. The company provides educational services like marketing, technology, and curriculum development to Grand Canyon University, a nonprofit university in Phoenix, Arizona. At our recent Motleyful member event in Denver, our chief investment officer, Andy Cross interviewed Brian Mueller in front of a live audience. Here's part of that interview, starting with Mueller talking about the high price of higher education. Depended upon who you believe, the cost of higher education has probably gone up four times the cost of living since the early 80s.

and higher education has become unaffordable to many, many socioeconomic classes of Americans. Students are taken on $100,000, $150,000 worth of debt. They're not getting jobs appropriate to that amount of debt. And so higher ed was kind of ripe to be disrupted. We went to Grand Canyon University in 2008 when it was a small private university with $20 million in debt and about to close. It had 900 students on his campus. We went there believing we could use getting access to the public markets. in getting access to capital to kind of invigorate

a new financial model for higher ed. So the stock came public at 12 is now at about 120, so that's a 10 bagger in about eight years, well done. Tuition, on the other hand, has really been flat for 10, or I think this is your 11th year now of flat tuition. How has Grand Canyon education been able to do that in an environment when tuition prices on average are going up 2, 3% a year recently,

How have you been able to maintain the discipline to not do that for your students? It goes back to the two large markets. You know, traditionally in higher ed, the traditional universities wanted to serve the 18-year-old students. That's how they built their brand. But there are other, this huge other market developed in the early 70s, especially because of the ending of the Vietnam War. Soldiers were coming back, and they really didn't have skills. They couldn't access college the way a traditional student does. And so that market, since the middle 70s, grew very large.

But it was serviced only by the for-profit companies, University of Phoenix, primarily. In 2008, the recession changed everything because state universities saw their subsidies cut in half by the states, and private universities saw their endowment shrink. They had to find other sources of revenue because they weren't going to change their basic business model. And what they did is decided to get in the business of teaching, working, adult students, and delivering online. They basically stole the business from the for-profits in the last 10 years, which we predicted what happened in 2008. Fortunately, we were out in front of the game.

And so we developed this hybrid campus with 21,000 traditional students on our campus and we use that campus to drive the strength of our brand, but the 70,000 working adult students that are going online, those two campuses leveraging a common infrastructure produces huge efficiencies. And so not only have we not raised tuition in 10 years,

but we've invested a billion dollars in our campus, Classrooms, laboratories, new programs, athletic facilities, 24 restaurants were in Phoenix, so five pools, five fitness areas. We were just ranked the seventh nicest campus in the country. And last year we were eight. And so we have a brand new campus with state-of-the-art facilities in a destination city and state at least in the fall, not necessarily in the summer. And students are finding that they can graduate with very-to-the-art facilities.

very little debt. They can complete their degrees in three to four years, and those are the things that families are looking for. I'll just note your default rates on the borrowers is somewhere in the 8 to 10 percent range, which is far below the average of, especially for for-profit universities, which do have a problem on that. So your largest client is Grand Canyon University, but you mentioned the excitement about being able to take your talent, services, experience to other partners. Talk a little bit about what that may look like over the next five or ten years. I'll just mention that Grand Canyon is owned by the Motley Fool. We have more than $136,000 of Motley Full capital invested in the Grand Canyon more than a thousand shares, along with other

shareholders here. And our perspective is we are really looking at all of our investments for at least five years. So in that landscape, as you go out to expand beyond just Grand Canyon University, just talk a little bit about the ability to go out there and take your company's skills and talents to other clients. We're looking for partners that have presidents that don't want to do something small. We want to look for partners that have a president and a board that wants to do something disruptive. Higher ed needs to be disrupted. We talked about the rising tuitions, the lack of changing the business model, the loan debt that students are taking out. And so we're looking for president that wants to take their programs and use us to convert them so they can be delivered

online to working adult students all over the world and wants to build sizable student body populations so they can fundamentally change the value proposition for families and for students. We're very determined that if you can make higher education affordable to all socioeconomic classes of Americans, you can build diverse student bodies. and you can provide opportunities for all kinds of students, but especially disadvantaged students. And so we are not looking to have 25 or 30 partners, but we're looking to have a couple partners that want to scale that are in geographic areas that will not interfere with what we're doing at Grand Canyon. We're going to still at Grand Canyon grow 7 or 8% a year, grow revenues, 8 or 9% a year.

But we're looking to add on to that with partners that have presidents that want to do something to and they want to scale their programs. Is there an international opportunity as well? Possibly, possibly, but we're not focused on that right now. We're really focused. We think there's a huge opportunity in this country. People are really changing their attitudes about higher education. When families come to our campus now, we find they ask three questions,

and none of them have to do with U.S. News and World Report rankings, which are not helpful and productive to universities and to families. They want to know, do you have programs? that can help my son or daughter get a job. For example, there are 300,000 jobs available today in cybersecurity that pay on average $92,000. Most high school guidance counselors and families don't know about that.

But having cutting-edge programs, they're going to help students get jobs. Parents are very focused on that. Secondly, they want to know if can you help my son or daughter graduate with the minimum of debt. And thirdly, is your campus safe? And is it going to be safe for my son or daughter?

If you can answer those three questions, they get very excited about the value proposition that you have. And so we're looking for partners that want to help us in that. We also have the advantage, interestingly enough, of being located Grand Canyon University in an inner city neighborhood that is full of immigrants. We have we started five years ago and what we call a five-point plan to bring middle-class status to that neighborhood again. A lot of universities are interested in what we're doing because we're producing real results.

We're one of the fastest growing employers in the Phoenix area, and so we've planted a fast-growing employer in an inner-city neighborhood. We've spun eight businesses off our current one, the university, which creates additional 350 jobs in just two years. We have the world's largest habitat for humanity program going on in our neighborhood. Our goal is to rehab 800 homes in five years, and we're finishing our 200th home this weekend, and so we'll get to 800. We have a safety initiative and we have a tutoring program where 1,200 of our kids offer tutoring to inner city kids from 80 different schools every day between 3 o'clock and 8 o'clock. And so a lot of people have become interested in us because of the outward reach that the university has made. Talk a little bit about, I want to pivot back to that the investments you're making in technology and curriculum development, in which you are handling for Grand Canyon University,

and things like LoudCloud give you a chance to kind of explain that. But just the development of curriculums and different styles of learning, what is Grand Canyon education doing to innovate in that space? It's very important because I don't think there's ever been a time when the population in this country has been more open to how to educate our kids. And that is true in preschool, it's true in K-12 education, and it's true in higher education. There's been an explosion of homeschooling.

And in the K-12 world, there's an explosion of online learning in the university world, and that's going to continue. And so continuing to make investments in how we can create opportunities so that people can access education, especially higher education, and new and innovative ways, is really important to us. Right now we have these two large markets, but there's another, one emerging. The other one is 18-year-old students that graduate from high school, and they're fine with staying at home. They're fine with keeping their part-time job. They want to access a higher-ed program from their local community. They want to complete it in three years. They want to complete it

with a minimum of debt, and they want to go to work. We're also helping high schools. There's a lot of private high schools who, in their 20-square-mile vicinity have a huge number of homeschoolers. And parents, once they get the kids get to high school, they're starting to get a little sheepish about, can I teach them biology and calculus and all those things? And they'd love to access the local private high school for half the tuition rate, but do it online. And so we're just in the beginning stages, I think,

of an explosion of ideas. From the kindergarten through grade 12 and into higher education and even at the graduate level, people are willing to consider a multitude of options. And universities should be on the front end of that, not on the back end of that. I did want to ask a question. Grand Canyon has a very rich Christian heritage.

You even have a doctoral statement and an ethical position statement. As you think about expanding out your client base away from just Grand Canyon University eventually, does the heritage that you have around Christianity, around some of the issues that you have in your doctoral statements and in your position statements around marriage and homosexuality, does that, is that, will that be a challenge for you going out forward? You know, we, uh, we are Christian university

in about 65 to 70 percent of the students that come, come for that reason. They identify with our view of the world and they want to be part of that. About 35 percent of our students come for a different reason, and we want them on our campus. We are not a church, we're a university, and we want them to share their worldview in the classroom, and we're a university of ideas, and we're a very broad-based university of ideas. People are expecting us to take a political position because we're becoming a major player

in the city of Phoenix and the state of Arizona. I say to them, you know, on the east side of town, all the Republicans think we're Republican, because we're about the free markets and we're a Christian university. On the west side of town, all the Democrats think we're Democrats, because we're about inner-city transformation

and we're about immigration reform. I tell our students we've got them right where we want them. We're going to stay right there. We support people on both sides of the aisle as long as they support policies that help disadvantaged populations. That's what we're about. And so as we look for partners, we may have partners that are state institutions. We may have partners that are just with institutions.

If you as an institution want to grow your university, by converting your curriculum so it can be delivered online to working adult students. We are happy to be with your partners, we're happy to be your partner, regardless of what worldview you come from. I have two young daughters. I'll end with this question. And for anyone who has young kids, as they think over the next 10 years and we're investing for education, what is your advice?

You are an educator. You come from a family of educators, even though your parents weren't educators. So clearly there is something in the water at the Mueller household many years. ago that bred educators, what is your advice to mean to others about looking and thinking about college education over the next 10 years? You know, I think start early. Start early. Start when your sons or daughters are sophomores in high school.

Start looking at institutions. Start looking at programs. You know, one of the things we say is we have to understand where the economy is going. We have to understand where the jobs are going to be. and we have to build programs in conjunction with industry so that we're going to help our students get jobs. And so I think that's the most important thing. You're looking for a university that understands where the economy is going.

We're adding 20 new programs on an annual basis. We want to add programs that are cutting-edge programs based on are they going to help young people get access to the growing fields, in the economy. I think that's really important. I think, I think secondly, look for universities that are changing their business models so that they can make education affordable. You don't want people, you don't want your son or daughter going into $150,000 or $200,000 worth of debt, because many of them will never get out from under that. And so it's got to be affordable.

And then I think the third thing is look for universities who have or built communities that are safe, that are inclusive, and that you can feel good about dropping your son or daughter off at. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Full Money. Teach your children well. Their father's hell did slowly go by and feed them on your dream. All right, quick shout out to Molecule, the world's first molecular air purifier that reduces symptoms for allergy and asthma sufferers. Molecule has introduced a breakthrough science that's finally capable of destroying air pollutants at a molecular level.

And it makes a real difference for asthma and allergy sufferers, helping them better cope with their conditions and significantly reducing their symptoms. I should know. I stole one of these things. One customer has reportedly said that after using molecule in her home, she was able to breathe through her nose for the first time in 15 years. And you know, I've gotten some email from listeners saying, who is this woman? I don't know. I have no idea who she is. I just know that I get spring allergies. And we had a molecule device in the office, and over the weekend I stole it. And I brought it to my house. Put it in my bedroom. And I slept so much better. And I felt so much better. Molecule is easy to use. It has a clean and sleek design from the materials used on the

device like its sleek, solid aluminum shell to a filter subscription service where filters regularly arrive on your doorstep when you need them. You can get $75 off your first order. Just go to molecule.com and use the promo code, Fool75. That's M-O-L-E-K-U-L-E.com and use the promo code Ful-S-FuL-E-V. As always, people on 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 or sell stocks based solely on what you're here. Welcome back to Motley Fool Money, Chris Hill here in studio once again with Jeff Fisher, David Kretzman, and Jason Moser. Quick shout-out to our special guest this week. Ed Vesley and his family visiting from Motley Fool Australia.

All right. Welcome. Welcome. With his lovely wife, Justine and their sons, Dominic and Nicholas. By the way, if you're looking for, we're going to get to the stocks on our radar. But for any listeners who are looking for a couple of Australian stocks that they want to put on their radar, check out the episode of Market Foolery that Ed Vesley and Andrew Leggett did earlier this week. And I'm just saying, a couple of tickers, if you're interested in investing down under. Let's get to the stocks on our radar and our man behind the glass, Steve Brodo is going to hit you with a question.

Jason Moser, you're up first. What are you looking at this week? Well, we'll talk more about it on Monday's Industry Focus. Sorry for the shameless to plug there. No. But you got to do what you got to do. Square reported this week. Ticker is SQ.

has sold off in the wake of what was on the surface a very good release. And I think really it's basically just back to where it started the week. So let's just keep everything in perspective. Look to gross payments volume with a company like this to get an idea of how well they're doing. And in Squares case, they're doing very well. Gross payments volume was up 29% from the year ago to 22.5 billion. To put that in context, as I always do with this company, PayPal's gross payments volume for this same report quarter was $143 billion. So you can see there is a tremendous opportunity there for Square to keep growing. Their 29% growth, PayPal's 25% growth. Sounds like someone's picking up a little share. Biggest question for them, CFO. Sarah

Fryer's taken off. Congratulations to her on the CEO job. That question hopefully will be answered soon. She's definitely an asset that they will be missing. Steve, question about Square? So when I think of Square, I think of that little Square thing that plugs into your phone. Is there more to this business? Is that all that this is about? Because I just haven't followed the company that way. I think it's a very good question, and they've done such a good job of really branding the business.

But it's really all about the software that they're building with that hardware. And it's just becoming a more compelling package for merchants in all different lines of work. So really, the software is the backbone of the company. David Kretzman, what are you looking at this week? I'm looking at 2U, ticker TWOU, another stock that got hit after reporting what looks like pretty good earnings this week. They're behind a software platform to deliver online graduate programs at scale to students anywhere.

And they partner with big-name universities like Oxford, Cambridge, Harvard, and Yale. Altogether, about 22 universities with 64 total programs online and counting. It's an interesting business model because when they partner with one of these universities for one of those master's programs online, the shortest contract they have is 10 years, and some of their contracts are beyond 10 years. So they should be generating some steady recurring revenue over the long. long run. And this recent quarter, revenue is up 50%, gross margin is strong at 80%. Still unprofitable on the bottom line, but a lot of things I'll like here. Steve, question about 2U? So we hear about

online education disrupting traditional colleges, but there are so many colleges still that don't seem to have been disrupted. Is this a wave that we should look closer at? Well, 2U is not taking necessarily a disruption approach, but more a partnership approach. So recognizing that Harvard, Oxford, Yale, These are some of the most powerful brands and institutions in the world, helping them get online. Jeff Fisher, what are you looking at? Viva Systems. The ticker is VEEV. The company provides cloud solutions for the life sciences industry, anything from customer relationship management to R&D to regulation, and that's the keyword. They're expert in making sure you're in compliance with all regulations, and now they're moving beyond life sciences,

where they really have a great leadership position into other industries, and that gives them a lot of potential VEEEV is the ticker. Earnings are out late this month. Steve, question about Viva Systems? I hear the words cloud and life sciences, and I'm confused already. How can an average shareholder follow this company and follow what they're doing? Great question, Steve. You can read their conference calls online, free, freely,

and they really spell it out clearly how they're providing software that helps biotech companies and pharmaceutical companies develop drugs and report correctly on the drugs and manage their relationships with customers, among many other things. You've got a stock you want to add to your watch list, Steve? I think 2-U looks kind of cool. All right. David Kretzman, Jason Moser, Jeff Fisher.

Guys, thanks for being here. Thanks, Chris. That's going to do it for this week's show. Our engineer is Steve Broido, our producer's Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.