00:00You may remember Figma when Adobe tried to acquire them a few years ago, it was one of the biggest
00:04acquisitions by Adobe. To be honest, I went and criticized Adobe for such a big acquisition
00:09with no real revenue, but this is a phenomenal company. It does design software. So if you're
00:15designing applications, this is place where you're going to go design the application and the
00:19workflow, and then you're going to get coded with it. They came out public last year, and you've
00:24seen the stock down around, let's say, 80% since then, because again, high growth company right
00:29in the smack middle of being disrupted by AI models. And, you know, when you had a brand
00:35new company, you know, your financials are not the best. So this has been the one that has
00:39absolutely been crushed over the last 12 months. But last night, they showed that the growth
00:44rates are actually picking up. Their AI consumption is improving, and they are not, you know, they're
00:50working closely with large language models and helping out their customers.
00:54And I'm so glad you bring out the point that the stock has gotten absolutely crushed, because
00:59if you take a look at a one-year chart, on August 1st, 2025, it was trading at $122. And
01:06of course,
01:07yesterday, or, you know, prior to this earnings release, it was trading below $20. Now it's above
01:12$20, but still a long way off from those highs back in the summer of 2025. You had mentioned,
01:18An-Rag, that Adobe wanted to buy it, but was stopped by regulators. Is this a takeover target?
01:24Is it still a takeover target for anyone?
01:27Well, Adobe would have been the right fit at that time. And again, I go back and say when it
01:31happened,
01:31I would really criticize Adobe for it. But I seem now it looks like a very good design software.
01:38Now, I don't know if it can be acquired now, because, you know, as I said, there was some
01:42regulatory issue. In the little market that they operate in, Figma operates in, they actually have
01:47very high market share. They are the predominant vendor with very little competition from any of the
01:53bigger guys. But here the discussion was, the reason why it got crushed was people said, well,
01:59why don't I just go into a cloud or an open AI and start designing my application over there?
02:05And these guys are saying, listen, it's not that simple. You can, you know, coding, you can do it
02:09anywhere, but designing requires a different skill set. As I said, they have probably the best product
02:15that's out there in that category. Hey, Anurag, to what extent is what we're seeing today in Figma
02:21kind of emblematic of what maybe a lot of software companies need to do, which is, hey, you've been
02:27people sold your stock, concerned about the AI competitive threat. What the only way to get
02:32around that is just to perform and put up good numbers. Is this kind of a template for some of
02:36these other software companies? Yeah, Paul, you really nailed it in the head over there. That's
02:41exactly what needs to happen. But it was probably a little easier for Figma, because the
02:45base of revenue was small. And even one or two days signed a very large client with one of the
02:50hyperscale cloud providers. So what happens is when you sign that big of a contract, your graph rate
02:55goes up. But when you're a larger company, let's say if you're a Salesforce or a Workday, you know,
03:00one or two clients really don't do it for you. That's really a macro play. And, you know, believe
03:05it or not, macro right now, you know, tech's doing very well. But macro for non-AI tech is not
03:10good.
03:10We think things are going to be tough for Salesforce and Workday when they report in a few weeks,
03:15because, you know, if you see what's happening with deal activity being pushed up because of the
03:20war, because of all the uncertainty around rates, I think, you know, the large software company won't
03:26have an easy time to show a rebound in growth rates. So the real kicker has to be that the
03:32declining growth rate needs to improve, but it's going to be hard for the larger ones to do it.
03:37Anurag, I want to switch gears and get your take on what's going on with Apple and OpenAI.
03:41They have a two-year partnership, but it's starting to become frayed. This is according
03:46to our reporting, Mark Gurman of Bloomberg News reporting on this. The startup OpenAI is failing
03:53to see the expected benefits from the deal. And, you know, there's now talk of possible
03:57legal action here, too. Does this go back to the idea that Apple has had a kind of a tough
04:02road here figuring out how to deploy its AI strategy?
04:07So I'll take a slightly different angle on this thing. You know, Apple, I think,
04:10did a good job at that time to tie up with OpenAI because OpenAI was the best model.
04:14And it did, you know, kind of at that point for a short term change the narrative that Apple's
04:19embracing. But frankly speaking, if you look at what OpenAI did, you know, they basically started
04:24a new firm where they're going to try to do a device that could compete with Apple someday.
04:29They've been poaching, you know, engineers from Apple. And frankly, you don't do that to Apple.
04:33In fact, Elon Musk also learned it the hard way, you know, a long time ago. You have to work
04:38closely with Apple. Apple went out and said, you know what, we're going to license Google model for
04:42our models. We're going to allow, and Mark's also reported on that same framework, that when they
04:47announce their Worldwide Developers Conference on June 8th, they will showcase that consumers can
04:53use all the models and not just OpenAI. So I think there was a little bad blood over there
04:58because OpenAI wanted to, you know, compete with Apple and, you know, Apple controls, I think that
05:03one of the most important distributions for consumers. And I think it's going to be very
05:08tough to work with them.
05:09Anurag, real quickly, just kind of came across recently, Bill Ackman takes a stake in Microsoft
05:14stocks up a couple of percent here today. He says, tech deeply embedded into the ecosystem.
05:22What do you make of Ackman and Microsoft?
05:24Yeah, maybe we read our note from back in January when we said, you know, they're just
05:27being punished for no reason. They are being punished because they're part of the software
05:31bucket. But Microsoft is dead smack one of the most important companies as we see AI grows.
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