Caroline Hyde

It's not totally clear what pushed them to make such a dramatic change if they are performing so well.

They're really trying to increase their product velocity to keep up with competitors.

I think people feel like they've done a good job of that, catching up with Toast as far as feature parity for serving restaurants, which has been a focus area for them on the Square side.

So I think that's kind of where they are and they're hoping to just continue on that trajectory.

They've made a lot of restructuring changes to kind of operate more efficiently.

They've gotten rid of a lot of middle management people.

And I think part of a question I have is like, is this the culmination of that?

Like, are they now happy with their organizational structure and are they going to be able to just execute without restructuring anymore?

with Caroline Hyde in New York and Ed Ludlow in San Francisco.

yeah so usually at the start of a new product ram your margins will get hit but one key thing is different this time is the the ramp of improvement of margins with the blackwell has been very impressive we all know about the rising memory cost the rising wafer and package cost despite of that and they don't pass on this cost to their customer

Despite of that, they've been able to hold that 75% margins, the software level gross margin.

So that speaks to two things, their pricing power and their ability to optimize for costs in their supply chain.

Hence that large purchase commitment increase, which really lets them deploy their balance sheet in their supply chain.

I couldn't find anything negative in this sprint.

I mean, looking at buy side expectations, it very clearly cleared the most lofty bogeys on the buy side.

I think this is just the reaction seems to be overall AI fatigue.

On one end, when the top five customers who are raising CapEx targets are being punished for spending that money, you can't have it both ways where the company that's capturing all that revenue also gets rewarded for taking a lot of that high spending.

Just very quickly, networking provided a lot of the upside.

Just explain it

Yeah, you know, people don't pay a lot of attention to the networking, but networking has been surpassing expectations every single quarter.