Meta’s 8,000 Job Cuts, SpaceX’s IPO by the Numbers, Google's Universal Shopping Cart

0:13Welcome everyone to the information's TITV. My name is Akash Pasricha. It is Wednesday, May 20th. Wall Street is looking out for NVIDIA results after the bell today. We're also tracking a critical week for SpaceX as it readies for its Blockbuster IPO. There's also some big media news out today. James Murdoch is buying New York Magazine and Vox Podcasts. The other half of what we know as Vox, which includes websites like The Verge and PopSugar, will become part of a new company run by Ryan Pauly, current president of Vox Media. First up on the show today, Google is hosting its annual IO Developer Conference.

0:54Our Google reporter, Erin Wu, is at the event and joins us in just a second to tell us about what she is learning on the ground. We'll also dig into the SpaceX IPO with three charts that can help us make sense of the scale and story of this moment. The information also published exclusive reporting about how companies are adjusting software vendor contracts to make room for heavy spending in AI. We'll also talk about Meta's planned layoffs and we'll wrap the show with our weekly finance column and the inside story of the bankruptcy at Parker, a fintech company that's gotten a lot of attention recently.

1:32It's going to be a fun show, so let's get right on into it. Google has made a splash with its I.O. event this week, debuting a long list of new features and tools leveraging AI. Our Google reporter Erin Wu has been on the ground. I want to bring her on to talk to us about what she is hearing. Erin, welcome to the show. It's great to have you back. We had the keynote yesterday and a long list of new exciting announcements that Google announced. Walk us through the big ones and what you are paying attention to.

2:05Erin Woo:Yeah, so this is Google. So there's a million different announcements. Some major themes, obviously, agents were big. There's new agents coming in Search. This is really interesting. Search will be able to scan the web for information on things like apartment listings or like sneaker drops was the other example. Also, some personal assistant features coming to the Gemini app, Gemini Spark. And then there's some new shopping announcements as well, a universal cart that lets you take products from different retailers, like put them all in one place, and it'll do some research for you on the back end.

2:38Erin Woo:And then a new video model, which is interesting because Google is really leaning into this one kind of like nobody else is. So let's unpack each of these a little bit more. Video, I think people can kind of get their head around. They've been doing some great things in video and image creation from the start. Search has always been a big question. We've talked to you about it on the show. How are they going to handle Search, Gemini, the balance between the two? What was your reaction to, I mean, they're doing it. Search is now really Gemini, right? Yeah, I mean, I think the announcements yesterday really re-upped that question of like, what is the difference between Search and Gemini?

3:21Erin Woo:And like, why are there two different things? To be honest, like, I do not know. The answer that Google always gives is that, oh, like we're meeting like customers where we're at. I personally do not understand why there are two massive teams that are building two very similar products and then putting them in different places. But that maybe is why I do not run Google. But they are very much coming together. We're seeing more agentic features in search and the ability to do much more complex answers. They're expanding the search box for the first time in 25 years so that it's more multimedia and you can ask longer questions.

3:57Erin Woo:And so there's a lot of convergence between these two things. on the shopping piece what what's what was the uh well i mean let's go broadly what was the reaction on the ground to all of of these features from attendees i mean again there's a lot of different things we like haven't even talked about coding yet um i think there's a the people that i was talking to there's excitement about like the new search agents there is excitement around the universal cart remember like google has had a lot of success in shopping like i know like for me personally like Google Flights, like Google Hotels, like a lot of this comparison booking stuff that like can pull across the internet.

4:34Erin Woo:It's stuff that they're really strong on and like that really like becomes a part of people's lives. I think some of the agent stuff, it feels like this is still a little bit more complicated than anyone actually needs in their personal life. I was talking with someone there who was joking that like every Google exec, it seems like their life is like, and now I must look for events to do on the weekend and like what hikes I'm going to do and like the Italian food I'm going to eat for dinner, which like, great. That frankly seems like a great way to live. But also like a lot of these things, it doesn't necessarily seem like a normal person needs like an agent, like custom coding a schedule for their weekend.

5:11Erin Woo:Like, it seems like that's kind of something that, again, like you can just kind of do. Well, but I mean, look, you might not need it every weekend, but, you know, in the moment that you do, that's what it's there for, right? i'm willing to accept that maybe i am just 26 years old and my life is not that complicated but i did ask friends with kids and they were like no we don't feel like we need this either so okay okay fair um well so what about coding yes so i mean like for me this was one of the big like if you take it less from like a person who uses the internet perspective and more from a tech reporter perspective like this was really like the big question that i had coming in so like the AI framework right now, as we've talked about on the show a million times, is that like Anthropic is really good at coding.

5:58Erin Woo:They have this mythos model that has been like teased and very much hyped, like not quite released, but like Anthropic is really dominating on coding. And so like a big question was whether Google was going to come into this with some big splashy release like they catch up and they're going to blow everyone out of the water. And so they had some coding announcements. They had a demo of Antigravity, their coding agent platform, and they also had not a big new model, but a smaller model, Gemini 3.5 Flash, that they're hoping will be a faster, more workforce option for developers. So they had some coding announcements, but I don't think anything that feels like it's made a big splash thus far.

6:40Erin Woo:And I do think that Anti-Gravity, their big flagship coding release is kind of getting mixed reviews on X immediately. Well, you know, I just want to go back to sort of, I'm thinking about Mark Zuckerberg's goal to prioritize personal superintelligence. And I'm thinking about the consumer-centric products that Google unveiled here. And, you know, there is a question about when meta will get, you know, truly close to that mission of personal superintelligence. I almost feel like yesterday's keynote was like the closest that we've sort of got, putting wearables aside for them. I mean, you know, I get that the wearables is supposed to be the true north of personal superintelligence.

7:27But, you know, insofar as consumer products, I, you know, Google really seems to be far and away ahead of the pack in terms of people who are actually using search. you know they are they they've they've got YouTube and video I mean does it really matter that they don't have coding I guess is my question to you yeah and so I think I like I think that is a very

7:49Erin Woo:fair point um I think that like again the big advantage Google has is that Google is everywhere um illegal monopoly antitrust etc but like Google is like all of these products are you must be a Google reporter. Wow, it's what it says in the current. All of these products are things that people use every day. And so it's like AI in Google Docs, like the document builder you're already using, like AI in Gmail, like AI in search. And so Google has this huge distribution surface. What I would say about coding is one... So there's one side of this, which is that coding makes a lot of money. Anthropic is the fastest growing revenue business in history, and that's because all of these enterprises are willing to pay a lot for AI that can code because software engineers are very expensive.

8:40Erin Woo:The other side of this is around the idea of AGI and AGI takeoff and artificial general intelligence. And so there's a mode of thought, which is that the way to get to superintelligence, not like personal superintelligence, but like the real singularity superintelligence is by building AI that can improve itself. And so Anthropic very firmly believes that the way to get that is via coding. And there's some of that at Google as well. I mean, like Sergey Brin has really focused on this coding push and part of that is trying to get to HCI. Google does take a little bit different approach to this where a lot of it's also around like trying to create a world model and this is where someone like the video multimodal stuff comes in but i mean like that i think is the bigger picture of coding like it's about money and it's also about agi now one thought that i had yesterday that i wondered if you talked about with folks on the ground is the risk to google's margins at all as it as it embeds ai into literally everything we know that the cost of of implementing all this is not negligible Any discussion on the ground or any concern from folks that, and we should say that, look, Google is, you know, it is one of the biggest tech companies that can afford a lot of this, right?

10:03It has tons of free cash flow to go around. But did that come up?

10:08Erin Woo:I don't think, I mean, that's not something that developers think about. Like, that's not something that, like, attendees of the conference, they're like, oh, great, like, now there's all this new AI that I can use. I mean, this is something that's come up, obviously, on earnings calls. It's a big question for the company. And what Google has been saying, and I think thus far this seems to be bearing out, is A, that they're really working to reduce the cost of serving all of this. So Google has operated infrastructure at scale for a really long time. And so they're working very hard to make this stuff cheaper to serve.

10:38Erin Woo:And the other side of it, so the other thing going on today is Google Marketing Live, which is their advertising conference. But what we're seeing is that they're also able to make a lot more money, in part because of AI. where they're able to remember ads and people are searching more. And so I think like, and there's also like the growing Google Cloud business. And so this is increasing Google's costs on the one hand, but it's also increasing the amount of revenue they are able to make. Great. Well, Aaron, I want to thank you for coming on. That is Aaron Wu, our Google reporter, here at The Information.

11:11As we look ahead to the SpaceX IPO, my colleagues Corey Weinberg and Valida Pau have a story out this week with five charts that should help you make sense of this historic IPO. I want to bring on Corey to help us unpack some of the data that he pulled together. Corey, welcome back to the show. Viewers will be pretty familiar with your commentary and your analysis on SpaceX, also your original reporting, but I want to go through these charts that you put together. And there's five of them, but really three, I think, tell the story exceptionally well. And I want to start with this first chart here.

11:46you looked at basically the EBITDA figures for SpaceX compared to other companies. Tell us, what should we be paying attention to here on this chart? Yeah, what I found very striking was the very wide gap between how SpaceX will be describing its profit on an adjusted EBITDA basis versus how it's more traditional accounting profit or loss in net income. So as I think a lot of viewers will know, it's quite common for companies to sort of present adjusted profit metrics to investors. Nothing weird about it. but they aren't usually this different than the actual profit and that's what's stuck out to me the chart just shows like even in other capital intensive businesses where you would take out a key expense and depreciation um spacex's gap is much much wider so a couple questions you know i I know that adjusted EBITDA is often a much nicer figure than net income, as the chart shows here.

13:08When investors look at a company like SpaceX, will they make their own adjustments? And ultimately, does that actually matter to the SpaceX story, given that everyone is sort of clear? This is an Elon Musk company. You can make whatever adjustments you want. It doesn't really take away from the core thesis. Well, what's the point of all this? Why am I even doing this, Akash? That's the right question to be asking. No, look, I didn't put this together with sort of the idea of like, this is going to be the smoking gun or this is going this is like the aha. Like it's not as profitable as it says.

13:44It's a way to visualize and understand like the actual business in contrast with other, you know, other types of businesses. And so, you know, investors are going to be trying to understand like the different levers of the business. Like what's the unit economics of Starlink? And, you know, what's the actual timeline for Starship to get up and away? But I still think like, you know, investors are going to have to like truly digest like the historical figures and understand, you know, sort of like what it can tell us about the future. Okay, so let's move on to a second chart here. Speaking of Starlink, so you collected some data on the number of launches at SpaceX that were affiliated with Starlink and then the non-Starlink launches.

14:35What stood out to you here about this data? What I think people don't appreciate broadly is the fact of how large and how much of a growing percentage it is for SpaceX to use its dominant position as a rocket launch provider for its own internet connectivity business. um uh i think you know it's broadly known spacex uses falcon 9 its its main rocket to bring its satellites into orbit um that sort of help power starlink but it makes up a a about three quarters of the total launches that spacex runs and because of that when you're going to look at spacex's three business segments when the s1 flips it's going to be connectivity which is starlink space which is the rocket launch business and ai which is xai and and twitter um and you'll see the space launch business growing single digits it's growing seven or eight percent uh year over year which you would think why why is that happening for SpaceX like it it dominates the market and it's because the actual the actual launch that's doing for outside customers is a very small percentage of the overall launches that it's doing right and so in other words if you look at that chart is your expectation that that the red bar here in the chart you know as a proportion of total launches, the red bar should remain a majority.

16:18And if, you know, it might actually increase proportionally going forward. Is that our expectation? Yeah, I mean, I think that's like a big hot topic in the space industry broadly, especially as SpaceX starts talking more about using its rockets and satellites to put compute into space, which is what is this kind of launch dominance going to mean for the rest of the industry? um will they have to wait in a long queue to be able to deliver their payloads and their satellites into space will any company will any other company that wants to uh put compute in space need to run through the the toll that is spacex or will spacex just be using its rockets to kind of own the entire stack and do it all themselves like there's gonna be we can't quite the story is not clear today.

17:12But I think in the years to come, there's going to be a huge conversation around SpaceX's market position and how it uses its own rocket launch capabilities for its own purposes versus third-party customers. Okay, so now you talked about the growth of all these segments. And so the third chart I want to bring up here looked at the growth of the XAI segment within in spacex otherwise i guess known as the spacex ai segment here but i mean the the revenue growth here is is pretty meager do we expect this to get better over time or what what are you hearing um well they just sold a bunch of their compute to anthropic and that'll probably be a nice little revenue jolt they bought you know they have agreed to buy cursor and you know we'll expect They'll fold that into the XAI business later this year.

18:08So that'll be a nice jolt. But I think this helps explain why they're sort of seemingly scrambling to make all these pretty extreme, you know, sort of business deals, spending$60 billion on Cursor, renting out a bunch of their compute to Anthropic. It's simply because their models and their kind of key AI division have been a pretty significant laggard compared to the bells of the industry, which are open AI and anthropic. And obviously, there's some caveats with this data. XAI obviously also incorporates Twitter, which has, you know, sort of an established revenue base, which can affect growth as well.

18:51But I think any way you slice it, you know, sort of it shows that last year, the AI business was not at all the kind of huge growth driver that we saw for Anthropic and OpenAI. Do people expect more deals like the Anthropic deal, renting out compute, you know, XAI getting into the NeoCloud business? Again, this is sort of a short-term jump in revenue that could help them make use of all the capacity that they have. Is there a discussion at all amongst folks in the SpaceX orbit that maybe XAI just becomes a NeoCloud company? I think buying cursor sort of makes that less likely. I think they are a real player in the kind of developer AI and broadly enterprise application world, which is a huge market that XAI is going to need to go after.

19:52And they need a ton of compute. So yeah, like is XAI just going to become a neocloud? Like, no, it won't help their valuation. Those businesses are usually valued on the lower multiple. And so, yeah, I think if this cursor deal gets done, you're going to not see a ton of that. Let me ask you one more question on the XAI point here. I wonder when you're talking to people about the SpaceX IPO, how much does XAI actually come up in the conversation, given that the space part of the business is really the thing that is anchoring a lot of this. I mean, so much of the IPO story is about compute and data centers in space and data centers on the ground.

20:37And so the actual model that GROC is developing and the XAI business, like the actual revenue you see coming through there, people are maybe not too focused on that. It's all about the actual access to compute and the actual access to get compute into space. But that's still very, you know, that's very theoretical at this point. Or it's very forward-looking. And so that's what, that is the story you need to believe to buy SpaceX at$1 to$2 trillion. Great. Corey, I want to thank you for coming on. That is Corey Weinberg, our Deputy Bureau Chief of Finance, here at The Information. As the costs of AI show no signs of getting any less severe, my colleague Laura Bratton has new reporting that buyers of enterprise software are starting to adjust those contracts to make room for these ongoing AI investments.

21:30I want to bring her on to share with us what she knows. Laura, welcome back to the show. It's great to have you here. Tell us a little bit about what you mean here in your story. You talk about companies trying to make enterprise software contracts shorter. Unpack that for us a little bit. Yeah, so customers of enterprise software want more flexibility in their contracts. They want to be able to use traditional software, but for shorter terms in the case that they want to eventually rip out those traditional software systems for AI tools, or they want to switch to use different software systems.

22:06And I think this is important because we hear the SaaSpocalypse talked about in really black and white terms. Either software is dead or software is going to be improved a lot by AI and is going to be a big winner in all of this. And I think to me, my conversations with customers and the anecdotes I gathered were really the clearest signal of the near-term pressures that software companies are facing. So let's talk about those pressures. I mean, are we talking specifically here about Anthropic changing its pricing model or what pressures are you talking about? Yeah, so it's really an indirect link where the rise of all these AI tools, and I think we've seen that Anthropik, Claude Code, Claude Enterprise, Claude Cowork, like the Claude Enterprise sort of accounts and suite of tools, are the most popular among enterprises.

22:55And as AI providers and software providers in general begin to charge customers based on usage, we're seeing that enterprise software buyers are becoming a lot more picky about which software systems they use and how they're going to spend their budgets, what return they're seeing from the software that they use. So help me understand this. If they want their contracts with enterprise software companies to be shorter, how does that help with the expenses in the short term? Because in my mind, I sort of understand how I'm not committing to a contract that is maybe five years in length. I'm committing to something that is maybe two or three years.

23:34So I see that part. How does it help me with my cash flow in the short term then? Yeah, I mean, it doesn't necessarily, the part about the shortened contracts doesn't necessarily make it so that you're spending less in the short term, but it does make it easier to halt that spending at a nearer point in the future if you decide that you're not getting the return that you want. So really, it's a threat to the predictability of software firms' revenues rather than the gross value of those revenues at this moment. And then another thing that I heard from consultants is that net retention is under pressure within these software contracts.

24:16And what that really means is that customers that are renewing their contracts aren't growing their spending with their software vendors as much as they used to. And so I think that that's another really clear signal about how customers are being pickier and not necessarily expanding the scope of their contracts as much as they were previously. The contracts are shorter, which means that they could potentially leave their software vendors that they've had for a long time in one or two years, whereas they used to sign three to five-year contracts. And are the software vendors giving them the shorter contracts that they want?

24:53Are they changing the terms at all or increasing the price to make up for it? It really depends. We've seen a broad shift among enterprise software players to shift to charge customers based on how much AI they use. which, you know, for example, ServiceNow said that that could increase the spending by customers a lot or significantly. I can't remember the exact figure. I believe it was around 15 or 20 percent in the coming years. And so I think that as vendors shift their pricing models, they're going to be able to see customers pay more than they were previously for their AI tools. So I think that that can be seen as a response to this industry shift and them trying to get ahead of that.

25:39But from what I've heard, some vendors are agreeing to these shorter contracts just by anecdotally what I'm hearing from consultants and customers. Now, the other – and you hinted to this earlier, you know, this idea that it makes it easier for these enterprise software buyers to maybe taper off their contracts over time. You talked about net retention being something that was coming under pressure at these enterprise software companies. Can you unpack that a little bit more for us? I mean, this is basically the idea that this is the big risk is them not renewing after this shortened contract, right?

26:18Yeah, so net retention doesn't necessarily mean that customers aren't renewing their contracts. It just means that they're not increasing their spending with the provider when they do renew those contracts. So I talked to an executive at EY Parthenon, which is the strategy and M &A arm of Ernst & Young. And she told me that net retention that she's seeing among EY Parthenon's hundreds of clients is down about 15 percentage points in the last six to nine months, which I think is a clear signal that software… That's a lot. Yeah, it's still… That seems like a lot, right? I mean, it's still around 100%.

26:56So, you know, customers are growing their spending to some degree, but it's less than they did previously. And I think that that's an early signal of the pressure that software companies are seeing. Are there specific segments of the software sector that in particular are under pressure here? You know, I'm just thinking about, you know, there's CRM software, there's, I don't know, cybersecurity identity authentication software. There's data storage. Which one is most at risk here? One that I kept hearing come up was enterprise resource planning. Which is like what? Yeah, it stores critical business data and application, ERP applications are offered by like SAP, Oracle, Microsoft, a bunch of companies.

27:51And that's one that I heard come up, but I think it really remains to be seen. And I don't think that chief information officers, CTOs really know which software systems that they're going to want to use in three years. And they don't know which software vendors are going to win this, you know, quote unquote, AI race and which AI tools are going to be better. And that's kind of the point is that we don't know. And that's why they want more flexibility and they want shorter contracts. and in some cases, opt-out provisions, which I found really interesting. And that is basically, they're saying, software vendor, if you do not provide promised AI features by X date, I can exit this contract early.

28:32And that's another thing that came up. So it's not just shorter contracts, it's also some other sort of more favorable terms. And I think really this is just a broad signal that customers have more power in negotiations with their software vendors than they did in the past. All right. Well, Laura, I want to thank you for coming on. That is Laura Broughton, author of our Applied AI newsletter here on TIT. Okay. Meta has begun notifying thousands of employees that they are being laid off. The company is set to cut 8 ,000 jobs today, which amounts to roughly one-tenth of the company's overall headcount.

29:08The company is also restructuring its organization and will move thousands of other workers to new roles. For more analysis, I want to bring on Lloyd Walmsley, Managing Director and Internet Equity Research Analyst at Mizuho. Lloyd, welcome to the show. It's great to have you here. It's great to be here. Thanks for having me. So as best we know, these layoffs are underway today at Meta, and I know we've been expecting these for a long time. Tell me, in your opinion, are these layoffs warranted at the company? look i think we're seeing a shift in how you know these companies develop software and you know with ai they can do a lot more with fewer people so i think that's part of it and then look i think mark has done a good job of establishing uh very tight discipline at the company in in general and as they spend more in um capex and and you know for that matter opex on cloud expense to build out um ai product, AI infrastructure, they are holding the line on margins and operating income.