# Earnings Season: AI Disruption and Valuation Realities

**Podcast:** Motley Fool Money
**Published:** 2026-02-13

## Transcript

We're in the heart of earnings season, so what did we learn?
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Welcome to Molly Full Money.
I'm Travis Hoyam, joined today by Jason Moser and Lou Whiteman.
And guys, this is really when earnings season kicks into high gear for a lot of the companies that we follow.
So we want to do kind of a rapid fire look at some of the popular companies, you know, disruptive companies, and find out what we learned from the quarter.
Jason, what did we learn from Cloudflare?
And maybe first, what in the world does Cloudflare do?
That's a good question.
It's kind of uh it's kind of like, hey, what does Salesforce do, right?
And I guess it's everywhere, but we don't we don't necessarily see it.
The proper answer, it does a little bit of a lot of stuff, but primarily uh it's seen as a content delivery platform, focuses on uh application development, and uh most importantly, I think in today's day and age, cybersecurity.
Uh that there is a big cybersecurity dynamic to Cloudflare.
And it's one we even talk a lot about with in our quantum leap service, uh, thinking about beyond classical computing and into that post-quantum cryptography stage of life that we will ultimately hit, Travis.
Uh Cloudflare is a company that is working to protect us uh on that front as well.
But but that's that's the answer in a nutshell.
And I think this was a this was another good quarter that showed that the the language we had been talking, we've been using over the last couple of years with Cloudflare, and with a number of enterprise software uh type companies, the elongated sales cycles, sort of the trepidation of their customers to commit to spending, those days seem to be well past us.
It was another very solid report.
They they grew revenue 34% for the quarter, well exceeding their own guidance, uh guiding for another tremendous year, 28% revenue growth.
And again, they tend to underpromise and overdeliver, uh, which is is certainly priced into the stock.
Uh, but I think the story with Cloudflare really continues to be large customers.
Uh those customers that pay over 100,000 per year, they really continue to drive results.
Uh revenue contribution in that segment for the quarter was up 42%, uh, and now contributed uh 73% of revenue in total, and that's up from 69% from a year ago.
And then just, you know, to top it all off, that dollar-based uh net uh expansion rate of 120%.
That was up from 111% from a year ago.
Very encouraging to see that not only do they do they sign on new customers, but they continue to really grow those relationships with customers, as we've seen from that large customer data.
Cloudflare is one of these companies that if you go back to 2021, this is the first one of those high flying stocks that I remember trading for a hundred time sales.
Oh, yeah.
And then suddenly crashing in 2022.
We're back to the point where they're trading for 30 time sales, which is still a very high uh number.
And you know, five-year growth rate is 38%.
Is valuation ever a concern for Cloudflare?
Is this just one of those, hey, this is kind of a utility on the internet, and so they're not going anywhere.
That's why the market pays a premium for them.
I I think it's a little bit of both, to be fair.
I mean, I I always look at something like a Cloudflare and think one of the primary risks to a business like this, beyond some sort of security breach, is the valuation itself.
And it has always really traded for a premium valuation, saved those couple of years, uh, just a few years back when we were talking about those elongated you know sales cycles and how how committed their customers were.
And we really saw the stock uh take a take a huge hit back then, but it has it has recovered, I think, based on these growth rates that we're seeing.
And so as long as we see that top line continue to kind of grow at the pace that we're seeing today, I I think the market, you know the premium is fairly well earned, but that is a big risk.
If we see that tick down, I mean we're gonna absolutely see those shares pull back.
Lou, what did we learn from Airbnb?
Yeah, so you know, narrative busting week for Airbnb because everything was down.
Airbnb actually missed earnings, and the stock is up post.
I know this week, that seemed really weird.
A few things going on though, okay.
For one, stock was already down 15% for the year, and we're still just in mid-February.
So there weren't a lot of expectations baked in here.
Also, they see double digit revenue growth in 2026, which I think is better than some had feared, especially with all the macro concerns where things are going.
This was a good report from a good company.
I think, you know, the funny thing is, though, is like what expectations.
What should what should we expect from here?
I don't know about you guys, but increasingly when I look at Airbnb, I see Marriott.
I see a mature lodging business, asset light that can outperform, but is not going to be a high growth stock.
I've kind of given up on experiences as kind of a new rocket ship.
I think this is.
Yeah, that was supposed to be their thing that they launched about a year ago.
Yeah, yeah, they invented a concierge, right?
Uh you know, I mean, I I think it's tough to figure out how this is anything more than a Marriott from here.
The good news is the Marriott has been a pretty good solid company.
I think it's all about expectations from here, but um, a good company doing well, just they went public so late, so much of the growth was gone.
And I think now we're just kind of waking up to this is more of a lodging company than it is a tech company, maybe.
Well, correction, Lou.
It was an AI-driven concierge.
There, very was the revolutionary concept there.
And I I'm just that's tongue in cheek, of course.
But no, I'm kind of with you there.
I mean, I love Airbnb, Airbnb is a consumer.
Uh, I like it as a company.
I I it is difficult to kind of see that tremendous growth going forward, just given how big the company is.
And yeah, experiences has just been underwhelming to say the least.
The interesting thing for them is they did actually start to, like you said, accelerate in the quarter.
And so it seems like some of those, they, this is gonna kind of be a commodity.
You're gonna have booking.com come in.
Maybe that isn't the huge fear.
And I think they talked about that a little bit on the conference call.
You've got this community of trust with Airbnb.
And in a world of AI, and you don't know who you're gonna be able to trust when you're doing something like planning a trip.
Maybe that's an okay place to be.
We'll see.
I'm always I was interested to hear Brian Chesky's digs at AI on the conference calls, too.
Because he always seems to have uh an interesting take or two.
Uh all right, Jason.
What do we learn from Shopify?
Shopify.
Well, this was another good one, right?
This is uh not surprised to see that the growth rates they lobbed up.
The report looked very good, revenue up 30%, and they saw quarterly gross merchandise volume surpassing 100 billion dollars for the first time.
Of course, we saw the stock sell off.
I I that's not a terrible surprise because just like we're talking about with Cloudflare, for as strong as Shopify is, I mean, it's still one of those businesses that trades like 150 plus times earnings.
Like there is a lot of optimism baked in.
Now, I get it, right?
They're taking share.
Again, that gross merchandise volume number, uh, very impressive, and that is poised to continue.
I think one of the question marks I have with Shopify, it's not really, it's not really specific to their business, but we just hear more and more talk about this uh agentic commerce, right?
And exactly what that means.
And so I think we're gonna see how that opportunity in a gentic commerce shapes uh shapes up over the coming quarters and years.
It they certainly discussed their AI investments on the call.
They're very excited with the opportunities, the efficiencies, uh, helping their merchants run better businesses, become more effective with their advertising and ultimately closing sales.
Uh speaking of the valuation, listen, I think Shopify is at least earned that leap of fate that the market is taking.
I mean, it has grown revenue 32% annualized over the last five years.
And I think the $2 billion share repurchase is an interesting announcement.
Uh maybe it's a vote of confidence.
That's dropping the bucket, to be fair.
154 billion dollar.
It is dropping the bucket, you're right.
And ultimately, let's see that that authorization is actually having the desired effect.
Yeah.
You know, it's funny.
Timing matters.
Maybe I'm oversimplifying, but it feels like they did.
I mean, they grew by 31%, but margins were down because they were investing in AI.
If that was the exact same headline last summer, the stock was probably up 15%, right?
Yeah.
Uh so you know, a part of it is just kind of what you're doing.
It it it feels like, you know, I've I as a long-term holder, I didn't see any reason to go chicken little on this.
But yeah, it's it's just a different environment, and I think we're adjusting to all that.
All right, Lou, we had Ferrari report, and I wanted to get your thoughts on Lewis Hamilton's season ahead, but we'll skip that for now.
What did the numbers look like?
You know, Travis, I'd rather talk about the big Brentford uh Arsenal game from yesterday, if we could, if you want to go into European sports.
But uh I'll spare you that and we won't get into uh Formula One.
Here's what I'd say Ferrari last time they reported back in October, shares fell 20%.
This time they beat sort of, you know, lowered estimates, and the stock responded well.
It's still down about 20% since October, though.
So I don't think we should read too much into just the headline jump.
What's going on?
What's wrong?
They're only guiding for minimal revenue growth in 2026, under 5%, no margin expansion.
This they say is temporary.
You know, they're doing model changeovers.
But look, I mean, the Ferrari model is you got a huge waiting list.
Just sell the cars, you know, just jack up prices.
I don't get why it's working.
Um I think I still like this company, but it's still trading at more than 30 times expected earnings.
There's tariffs, there's macro.
I I kind of get why the market sort of meah.
All right, I want to get to that too quickly here.
A sentence or two, Jason, what do you think of Spotify's results?
Well, Spotify is another one.
I love it as a consumer and was very impressed with these results.
We saw monthly active users up 11%.
Uh, importantly, premium subscribers up 10%.
And we know that is the lion's share of the revenue picture for Spotify.
Uh so consequently, we saw that premium premium membership revenue up 8%.
But I thought what was really impressive was how they're starting to bring this all down to the bottom line.
Saw operating margin for the quarter 15 and a half percent.
That's versus 11.2% a year ago.
And so I think we had some questions really early on in the Spotify story as to exactly how quickly they could get to profitability and how profitable the company could be, given the nature of the relationships with publishers and just the music business in general.
I think we're hitting kind of a situation here where the company, they have so many users, it's starting to kind of become one of those Facebook-like or even Netflix-like stories where even a map even a mass exodus at these levels probably wouldn't have that great of an impact.
You know, Travis, I just realized they passed a $2 price increase there on the family plan that we have here in the Moser household.
I got it too, yeah.
Happily, happily paying it.
Yeah, the kids app is very sticky for us.
Yeah.
Uh Lou Pinterest is down 22% today.
Post earnings.
Yeah, so they matched expectations on earnings.
They grew revenue by 14%, but that was a little shy of expectations.
Interesting thing, the forecast is very, very uh I don't know, underwhelming here.
And they're blaming tariffs.
They're basically saying that uh tariffs are depressing sales among their customers.
They and that's leading to fewer ad sales.
Which guys might be true, but here's my question.
I don't feel like I mean, retail has been very mixed.
I don't think we have gotten the sky is falling from the actual retailers.
Just throwing this out here, I hate to be too negative, but does this sort of indicate that Pinterest is low on the priority level for ads?
Like if retailers are pulling back ad spending just a bit, it is affecting Pinterest more because those are the easiest ones to cut.
And if so, is that a longer term issue?
There's a lot of ifs there.
I don't want to say it, but I I I both get the tariff excuse, and I'm a little skeptical just based on everything else going around.
A lot going on with earnings, but there's also promises me there's something exciting going on in trucking.
I'm only I I'm only promising fun.
We'll get to that in a moment.
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Okay, Lou.
You are the old boring business guy.
You like to talk about logistics and trucking, but you're promising that there's something exciting going on related to AI.
So what's the news for this week?
Okay, so first of all, it's not just logistics, all right?
We had we saw this with SaaS stocks, just crushed because of AI tools.
Charles Schwab and other financials were crushed earlier in the week because of some AI tax planning tool that is supposedly the first step towards replacing financial planning.
That happened on Thursday with logistics companies.
Okay.
Uh a lot of truckers and logistics stocks down 20% or more.
Why?
A company that six months ago sold karaoke machines, announced an AI platform that it says will increase trucking efficiency by 300% and eliminate the need for truckers and brokerages, basically.
Now, guys, I am willing to keep an open mind here.
I believe technology can greatly add to efficiency in the shipping business.
Look, C.
H.
Robinson, RXO, some of these litter leaders have been spending millions on tech.
The issue is most of their customers still use rotary phones and paper.
So now we're supposed to think that they are suddenly going to adopt AI.
I'm a little skeptical.
We'll see.
Maybe this company does have the answer.
We'll see.
It's also possible that this is sort of the the poster child for what we've seen.
The idea that maybe the market is overreacting.
Sell first, ask questions later.
One thing I know for sure here, and I'm kind of curious, because look, this is I think a more extreme example than what's going on with the SaaS stocks, and you know, we'll see.
But this company that made the announcement, their market cap is six million dollars.
Okay.
If this system is a half a quarter of what they say it is, yeah, why don't we get together like like someone should buy them for 200 million today, subject to due diligence?
I would like them to do due diligence first.
Um, you know, you get to karaoke assets for free, I guess.
But I I think, and the reason I wanted to bring this up is look, I don't know what's going on with logistics, maybe they're all that, but we have seen just a bloodbath in sectors this week, just because companies we had never heard of have introduced AI tools that are going to disrupt.
I believe in AI.
I believe that we are going to see disruptions all over the place.
I do think as investors, it's good to take a long-term perspective and not just sell off on these press releases.
Let's wait and see how it develops.
Does that make sense?
Well, one of the questions I have for you is it seems like a lot of these companies that are coming in and trying to disrupt established players, it's ultimately value destructive overall.
And that's what's kind of confusing about what's going on with the market is a company will introduce something, the bigger company will fall, 20% lose, let's say, you know, $50 billion in market cap, but there's no made up market cap by the company that's doing the disruption.
Obviously, they're just seeing this as potentially pure upside, but it it does seem like the market overall is selling first and asking questions later.
And yes, disruption may be coming, but also these companies have agency, and that's the thing that I think we don't think about.
These trucking companies do have the ability to, if it's if if they can make an AI in six months that will improve efficiency, you would think that at least someone inside CH Robinson and all these companies would be thinking about doing the same.
They're spending millions.
And look, this has been going on back from before we called it AI when it was machine learning.
UPS famously in the 90s put in software to basically route out their drivers to make mostly right turns, because right turns are safer and they're quicker.
You know, like like this sort of efficiency driving is is is pretty old.
And again, you can do more, but you know, yeah, I mean, CH Robinson is spending millions on tech.
Their issue is getting customers to adopt it.
And so, you know, I mean, yeah, there's a lot that can happen from here.
And I do think that AI can be revolutionary.
I am not sure it's going.
I mean, I actually think there's a world where on a lot of these, especially touching the physical world, that this is going to lead to actually better companies and more efficient companies.
Uh, the truckers selling off with the logistic companies, I don't get the trucks are full already.
I mean, the problem is that there's not enough distribution centers, and I don't know how AI solves that, but we'll see, I guess.
Is it possible that in trucking in particular, we sort of skip this interim phase of being more efficient and just go straight to autonomy?
Because it seems like that is an area where, you know, especially these long-haul trucks, is it going to be safer and more efficient to just have an autonomous vehicle, drive from point to point?
You know, we see we saw this in an area like India.
They they just went straight to cell phones in in 5G.
They didn't go through kind of this development that we went through in the US.
Is that possible, or am I overthinking it?
Yeah, we're heading all sorts of directions.
How fast we get there, we'll see.
Uncertainty seems to be the name of the game.
And like we've seen with the example I keep thinking about is electric vehicles.
You know, five years ago, we thought that everyone was going to be buying an electric vehicle today.
But that is not where we ended up.
Sometimes these disruptions take a lot longer than you think.
And if you go back to the dot-com bubble, you know, it really took until the early to mid 2010s for a lot of those things to materialize.
When we come back, we're gonna see what stocks are a falling knife and which ones aren't.
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This segment we like to have a little fun and just kind of get a feel of what's going on in the market.
So I want to ask Jason and Lou whether these stocks are falling knives.
So a cautionary tale, you don't want to be buying before it hits the bottom, or are these stocks worth a fresh look.
So we talked a little bit earlier about Shopify.
Shares of Shopify are down 38% from their peak.
Jason, is this a falling knife or worth a risk that investors have to consider with this stock.
Uh that said, it it has always maintained a premium valuation.
And I think that's for a lot of the reasons we discussed, right?
The growth rates that the company continues to lob up there.
I think just that overall opportunity in commerce, the nature of the business.
I there's some big question marks as to entirely what agentic commerce means and what that's like.
I think everyone is trying to define that.
Yeah, it's like it's it's funny to see the the AI companies explaining what agentic commerce means.
And I I'm just as a as a normy user of this stuff, I'm going, really?
Like I'm just gonna let it go plan a trip for me without, you know.
No, you're not trying to it's not, it's not a mind reader.
And I think that's kind of where we have to figure, okay, where's sort of that happy middle there?
I mean, are we talking about just auto filling delivery addresses and payment information?
Because you know what?
That's that's been happening for a while now.
So uh yeah, I've read a lot of thoughtful pieces about agentic commerce, and a lot of them kind of talk about why that may be a little bit overblown.
And and perhaps what we see with agentic commerce ultimately is it serves more on the back end for these companies and is less consumer-facing.
I think that's a little bit of an easier leap to make there.
And when we see these investments, the businesses make in helping their merchants uh run more efficiently and making their actual businesses more efficient.
But overall, I mean, I think we still look at Shopify, and I'm I'm a longtime shareholder, very happy shareholder, and I'm happy to hang on to those shares.
I think when we see the company pull back like this historically, uh these have represented interesting times.
I don't think that Shopify is the type of business that is going to be disrupted by AI, as as many of these companies were discussing, right?
I mean, that that's kind of the big question mark.
They seem to be sort of necessary because they're they're serving serving the long tail of of companies.
And if you're gonna build a uh a business, an online business that's gonna plug into these AIs, you would think that Shopify would be the place you would do it.
It's going to be building, I think, on top of that layer of AI technology and ultimately helping reshape the commerce industry.
I think uh obviously a very tech uh tech forward company and Toby Lukey, I think just as uh clearly very very dedicated to the business, and and I don't imagine that changing anytime soon.
So Lou, my question here is when does this company get really interesting?
Uh give you some valuation metrics.
Enterprise value to sales is about 13 still.
Uh even on a forward price to earnings ratio is 126 on a trailing basis and on a forward basis, still 65.
Not really a good value argument here, but you know, where where do you get to the point where you go, man, this is just too cheap to pass up.
Yeah, I mean, I I would echo almost everything you guys said about you know I'm not worried.
I'm a shareholder, I'm not worried here, but valuation does keep me from buying.
I think they're a long-term winner.
And look, at the end of the day, valuation is your ability to grow over what time frame, right?
So I do think there's an argument to be made that if you're a long-term holder, you can do okay here.
But I would like I I would probably not add to it unless it falls from here, just because I do think nobody knows what's going on.
We just talked about it.
It's it's shoot first, ask questions later.
I I don't think, like, you know, I don't think you can say buy in now and it goes straight up from here.
So I don't know if I necessarily want to catch this right now, but I also I don't I lose sleep about a lot of things, guys.
I'm not losing sleep over my uh Shopify shares.
All right, let's go to another company that's really taking it on the chin.
This has been on my watch list for a long time, but I've never been a shareholder.
That is workday.
Shares are down 53% from their all-time high.
That actually goes back to two uh 2024.
But the valuation getting a little bit more compelling than we get at Shopify.
Enterprise value to sales is 3.8.
Forward priced earnings multiple is just 13.
One of the reasons this caught my eye this week was one of the big AI labs said that they were adopting workdays.
So even the big AI labs aren't building a workday to replace workday.
Lou, is that saying something to you?
It's certainly it certainly is interesting, isn't it?
It's certainly worth noting.
I mean, look, even before the AI drama, there was a lot of competition in this sector.
So it was already sort of an uphill battle to their credit.
They have done very well beating back the competition and establishing themselves.
I I don't really worry about this one, but I'm I'm I think I guess I'm less um confident than I am with Shopify.
I do think that look, you have all this competition plus AI at least on the back end automatic some of the things that go on here.
I I I think I see maybe a bit of a crack in the foundation, but I don't see rubble.
If you make me say one or the other, I would say worth a fresh look.
But I'm sort of content to watch this play out and see how it develops here.
Yeah, you know, I think it's interesting to see the language that we're hearing from a lot of folks in the tech space these days, right?
I mean, I feel like they've got a pretty good end there and maybe know a little bit uh more than some of us do about kind of what's going on.
We saw Amazon Web Services Chief Matt Garmin talking about this recently, saying that much of the fear is overblown.
Um I always I I went back to a tweet that Aaron Levy at Box had uh sent out a little while back, talking about, you know, this is going to be transformative technology, but what it's going to result in, it's going to result in more software than ever before, more productivity, more options, more companies, more ideas that we just aren't even thinking of today.
And so I don't think it's going to be destructive as much as it's going to be constructive.
And when I look at something like a workday, yeah, it's one thing if you can go in there and vibe code some of the stuff that they do, but don't don't discount the difficulty in building an actual company.
I mean, this is a $38 billion market cap company right now.
And by the way, the what they're doing is really like you can't make mistakes.
It's not easy.
It's not easy.
It takes a lot of thought.
It takes a lot of work.
It takes a lot of redundancy.
It takes a lot of bug squashing.
And then after all of that is said and done, it takes a ton of maintenance.
And it takes a lot of work to build that customer base and build that trust.
I don't think that's something that just disappears overnight.
And when you look at the economics of the company itself, I mean, it's a strong business.
Uh, I get why shares have pulled back.
I mean, we've seen the software and services sector.
Essentially, the earnings valuation for this sector has just been cut in half.
And that that's more or less overnight.
Now, I'm not saying it's not warranted because I think we're seeing a lot of these companies were kind of re-rating the growth prospects going forward and trying to understand exactly how they might be disrupted.
But let's also remember uh to think about what we don't know here.
Kind of know what you don't know.
We're still asking a lot of these questions as to as to how this is ultimately gonna shake out.
We just really don't know yet.
We're kind of watching it play out real time.
One of the companies that I'm intrigued by, and may not be may actually fall in the value stock category at this price, is Adobe.
Shares are down 62% from their high.
Then the valuation numbers are just getting kind of crazy.
Enterprise value sales is four, but they're actually a really high margin business.
Price earnings multiple on a trailing basis is 15.
That's that's cheaper than the market overall.
But on a forward basis, that PE multiple is just 11.
Jason, is is this a falling knife?
And this is, hey, this is a disruption happening, and we're gonna watch this stock grind lower for the next decade as as the business deteriorates, or are we getting this all wrong and professionals are going to continue using Adobe a decade or two from now?
Well, it is a it is a not loved business today, Travis, that's for sure.
We've seen uh in investors kind of vote with their feet there.
And, you know, I I've owned a handful of shares of Adobe for a while.
It's been a recommendation in a number of our services.
And generally speaking, it's because of just the historical success it's had.
And I think a lot of that being brought into question now with the capabilities of a lot of these uh large language models.
I mean, you see some of the things that Notebook LM is capable of, for example.
I mean, you could build some pretty fascinating graphics with just not very much expertise at all.
So then the question for me becomes really like what does Adobe do to utilize AI to make their business better?
It's not like they, you know, can't respond to this and say, well, we can offer these same types of tools and we can do it better.
And we are, you know, actual businesses here that can support your needs and and grow the relationship.
I I I, you know, I'm kind of hanging out.
I'm it's not a high conviction name right now, I would not say.
I don't think it is a falling knife.
I think that the company has the wherewithal to respond competitively in and utilize AI to make their business better and respond to the competitive threats.
But it is, it is a bigger question mark out there right now than probably some others, I would say.
Their operating margins have not really felt a pinch uh since 2018.
The operating margin is up from 31.5% to 36.6%.
So if there's pricing pressure, which are just one of the areas you would feel at first, they're not feeling it yet.
You would figure.
And if you look at what they've done to their share can outstanding, man, they're buying shares back hand over fist.
So I, you know, I applaud them for their conviction there.
Yeah, this is what I'm watching close.
I I I get the I get the concerns.
I I just think professional users, it's gonna be a long time before they go to free tools or lesser tools, especially with Adobe investing and making you know incorporating AI.
I'll admit it's not a slam dunk, but Travis, I look, it's down, I think it's lost a quarter of its value this year.
And again, we're in we're in early February.
And it was argued arguably a value stock at the beginning of the year.
Yeah, I I don't think this is a slam dunk by any means.
I think the threat is real.
But yeah, this is one that I'm getting closer and closer to leaning into.
All right, let's talk about another one that is potentially under threat that is into it.
Uh so this is a company that's making tax preparation, uh, turboTax, uh, that's kind of the thing that they're known for the most.
But the drawdown with their stock is 60%, and that's in just a matter of months.
So is this one of these cases where disruption is coming for them?
And we just haven't, you know, we're not gonna see it until maybe tax season 2027.
Or are we getting into value territory with shared's trading for 16 times forward earnings estimates, Lou?
I'm not a big fan of this company.
I feel like that there should be a lot of people.
You don't like paying for Intuit once a year.
You don't like getting the taxes?
Come on.
Well, no, look, look, look, the IRS gets all the information.
I do feel like that, like in most civilized countries, they should be able to just kind of I've never understood that.
Why, why is it that once a year it seems like I get like a $50 bill from the IRS for something that I forgot to put into TurboTax?
Why didn't you just tell me that in the first place?
I mean, lobbying, baby.
I I don't know.
I don't want to be a conspiracy theorist.
Look, I I do think the lesson, if anything, we've gone the other way with the consumer product.
Um, that, you know, like the I I do think the lesson is is that they do have a powerful market position, however, they got there.
And I think it'll probably be okay.
I mean, look, as much as we talk about the turbotax side, a lot of what's driving this business is on the uh, you know, the non-consumer side, and that's a whole lot more complicated.
I I'd be surprised if this business goes away.
I've I've heard multiple, multiple reasons, predictions about why it was doomed over the years.
So far, none of them have come true.
Yeah, it feels like it's in a bit more of a I don't want to say protected, but just the barriers to entry and kind of like finance and all the regulatory sort of red tape that comes with it, whether it's helping someone run their business or someone do their taxes or manage their payroll.
I mean, that that that's that's difficult to replicate reliably and then you know, actually push out to to a large consumer base.
It seems like golly, it seems like the easier disruptor for this company would have been if our our politicians could have simplified the tax code, made it easier just to file taxes.
But as I think we all probably know, as we get older, that process just becomes inherently more difficult because we've accumulated more wealth and yada yada yada.
It goes on and on and on.
We use TurboTax every year.
And frankly, I find it to be sort of a breath of fresh air, knowing that I can log in, speak with a tax representative, have them do this stuff for me.
I know that it's being done correctly to the extent that they're doing it.
I just think most people hate the idea of having to deal with doing their taxes and furthermore, it's just it's it's ununderstandable in many cases.
I mean, unless you're just filing the simplest of returns.
I I've felt the same way as I've gotten older, where you know what, paying a hundred bucks, even 200 bucks to get your taxes done is just it's way more efficient than spending a whole bunch of time.
I mean, my grandpa used to do do these by hand.
Yeah.
And that was like his hobby as he got older.
But they also seem like a company that could potentially leverage tools like artificial intelligence.
Correct.
To be much more efficient as a company.
You know, hey, Travis, here's your folder of documents.
Just dump them in, we'll put them in the right place, and we'll figure it out for you.
And so now instead of having to go through, you know, fifty pages of yes no answering questions.
Is that a reasonable way to think about it, Jason?
I personally think so.
I think it's more it's the more likely scenario is essentially that application, right?
That service being built on top of the AI foundation to make that business ultimately better and more intuitive.
See what I did there, guys.
Uh but in all in all honesty, I do that does feel like it's gonna be the more likely scenario.
I mean, I could be wrong, but uh it it again you talk about well-established businesses that are very difficult to replicate.
This is one of those.
All right, when we come back, we're gonna get to the stocks on our radar.
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Come.
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Don't you know?
But then they hand me.
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Jason, you're up first.
What are you looking at this week?
Yes.
Well, Travis, as you know, companies need to communicate with their customers, and that's what Twilio does.
Ticker is TWL O.
They just reported another strong quarter on Thursday.
Flew past their own internal guidance with revenue up 14%.
And another uh quarter of gap operating profitability was up better than 300% from a year ago.
So with active customers up 402,000 now, that's that's versus 325,000 from a year ago.
Dollar-based net expansion rate uh up 109% for the quarter.
That was versus uh 106% from a quarter ago.
This this is a business that really kind of turned the tides a little bit.
I think a lot of that boils down to what CEO Cousin is Ship Chandler has done.
Uh, and you know, we talk about that often.
How do you assess leadership?
It's a squishy topic.
Oftentimes I'm just looking to see that they do what they say they're gonna do.
And Ship Chandler really has done just that.
And I'll just conclude with this.
If you guys saw over the week here, JP Morgan put out a list of their AI resilient software companies.
Very interesting sort of list there with tech and enterprise software, cybersecurity, data and industry software.
But Twilio was one of those companies.
And just kind of going back to those discussions about AI, I think Twilio is doing a good job of building on top of that AI layer to ultimately make their business better and their customers' lives easier.
So one I'm keeping an eye on.
Dan, does Twilio have a good AI argument because its name sounds like an AI?
I don't know, Travis, but I have a question for Jason.
So Twilio, they talk about it's you know, making receiving phone calls, text messages, blah, blah, blah, cloud communications.
Is this the spam text company?
I was told there would be no questions.
No, that's a good point.
Some some of that service is very well received, but not all.
That's a good point.
Lou, what's on your radar this week?
So, Dan, I got to talk about logistics earlier, and now I'm gonna double down, press my luck, and talk about building supplies.
Uh, company is QXO, ticker QXO, easy to remember.
Formed by serial entrepreneur Brad Jacobs to roll up the building products industry.
So this week they did their second deal.
They bought something called Kodiak for 2.25 billion.
And I really like this deal.
Kodiak diversifies the product line, adds more than 100 locations, mostly in high growth states.
QXO is getting the business at less than one time sales, just 10 times EBITDA.
Factor in expected cost cuts, and it's closer to seven times EBITDA.
This is Textbook Jacobs.
He built United Waste, United Rentals, and XBO, some of the best performing, all top 10 performing Fortune 500 companies over the past decade.
QXO stock was up 15% plus on the announcement, which you never see for an acquirer.
I expect more deals to come.
This is a formula that's worked really well for Jacobs and shareholders.
The machine is up and running.
I'm really excited to watch it.
That's his kryptonite.
He can't name companies, unfortunately.
All right, what's going on your watch list, Dean?
Let's go with Twilio.
Oh.
All right, that's all our time for today.
Thanks for listening to Motley Fool Money.
See you here tomorrow.