Consumer spending, Reddit earnings, AI: Wealth!

On today's episode of Wealth!, host Bradley Smith and various guests explore topics including the state of the consumer, earnings updates, and artificial intelligence's potential to help consumers looking to borrow.

As consumers face the impact of the "higher-for-longer" interest rate environment, Wealth! takes a deep dive into the state of the consumer. Barry's CEO Joey Gonzalez joins the discussion, offering insights into how his fitness business is navigating this challenging landscape and whether he has observed any shifts in consumer behavior.

Despite the need for value, consumers continue spending on experiences and travel. Hopper Lead Economist Hayley Berg and Zenith Wealth Partners Chief Financial Planning Officer Chelsea Ransom-Cooper provide savings tips for those seeking to travel while exercising prudence with their hard-earned cash.

On the earnings front, Reddit (RDDT) CEO Steve Huffman takes the spotlight, discussing the company's earnings beat and its ongoing quest for profitability. Additionally, Yahoo Finance's Madison Mills dissects the financial results of Airbnb (ABNB) and Hyatt Hotels (H), which both surpassed expectations.

Furthermore, the show features an interview with Pagaya CEO Gal Krubiner, who talks the potential of artificial intelligence to aid in consumer lending.

This post was written by Angel Smith

Video transcript

Welcome to wealth everyone.

I'm Brad Smith and this is Yahoo Finance's guide to building your financial footprint.

Our community of experts will give you the resources, the tools, the tips and tricks that you need to grow your money on today's show, travel trends.

Oh, yeah, pack up everyone.

We dig into consumer plans for travel this summer and how they plan to pay for it and come summer, consumers will have a new streaming bundle option.

We'll tell you all about the big announcement that you need to know.

Plus what about that wallet or pocket book and show me the money.

Of course, that famous line from Jared mcquire.

We talked to an expert about how much cash you should always have on hand.

All that much more coming up during today's show.

We're kicking off today's show with consumer spending though, inflation isn't slowing down Americans too, too much more travel companies are seeing some healthy trends of consumer spending ahead of the key summer travel season here with that breakdown.

We've got our very own Madison Mills.

Hey, Matty.

Hey, thanks so much.

Well, listen, we've been talking about how maybe the weakness that we're seeing in the consumer when it comes to some of these consumer facing brands, think you're Starbucks or mcdonald's.

We've been saying, hey, that's ok because they're still spending on travel and services.

If you look at the data that we're seeing from today, that story not necessarily holding here, let's take a look at airbnb deceleration in North American nights booked in the first quarter.

And the CEO saying that they are working to differentiate, working to get more hosts on the platform, but that was not enough to help in this quarter.

You can see their year over year nights and experiences booked up 9.5%.

The street was looking for a higher number than that.

That's why even though that we're seeing that growth, it just was not enough, especially compared with previous growth cycles that we've seen from Air B and B and then you have the stock here moving to the downside down a little over 6.5% here.

Interesting to note when it comes to the stock performance that Air B and B is having their worst day since May 10th of 2023.

I also want to take a look at what we're seeing from high.

Their earnings dropping a little over 5%.

That is the most intra day since February 13th.

They cut their just even a guidance for the full year and their guidance missed the average analyst estimate so that full year guidance indicating that they are not seeing the demand that they had previously.

That's also interesting, Brad, you told me this, that Air B and B was looking to some of the cities that don't have hotels as a potential growth area, but even the hotels starting to struggle.

So I don't know how successful that effort is going to be.

Well, it's also the marketing efforts that all of these companies have to put forward right now too, in order to really give the value proposition, put it front and center in front of consumers right now, who are being more decisive about where they're spending their dollars, even this in this experience economy.

And that's actually something that we heard from airbnb about on the earnings call, the executives talking about marketing being one of the line items that you could potentially see some marketing compression in order to drive growth.

And then additionally, we're talking about some of the other areas that are trying to accelerate the product road map, they could be bringing on more head count as well.

That's some of the margin compression, share prices reacting accordingly here.

But then, as you mentioned on the Hyatt side, I mean, that's remarkable for the sheer amount of consolidation that we've been kicking around here and seeing discussed within this industry to really reshape the accommodation space right now and the inflation narrative continuing to be an issue.

I mean, for Airbnb, I know this is just according to social media, but messaging the host separately and trying to get their rental without having to pay the airbnb fees.

So they're cutting out the middleman there that is not going to be good for Airbnb.

But it indicates that the consumer is at a point where they don't want to pay a service fee anymore.

Like what is that?

Yeah, user generated anecdotal data.

Well, exactly.

That is what that is.

Thanks so much.

Appreciate it.

Well, sticking with the travel industry, inflation, anti budgets don't seem to be too much of a concern for Americans this summer.

In fact, travelers seem to be fighting off stubborn inflation by paying for their summer vacations with alternative payment methods in some instances like B NPL known in your hood as buy now pay later for more on this.

I'm joined by Haley Berg, who is the Hopper lead economist, Haley always a pleasure to grab some of your time and thanks so much for joining us here on Yahoo Finance.

Uh You know, as we think about how people are paying for travel, how is that different even year over year from what we saw last year?

You know, we're really seeing generational shifts in how people are thinking about paying for these bigger ticket items.

Traditionally, the path has been, you start with a debit card, you build a little wealth, you open a credit card.

But for gen Z and millennials, more than 30% of travel purchases are actually coming from alternate payment methods like buy now pay later.

So they're expanding their travel wallets with these different methods at a rate more than double what we see from Boomers and even Gen X.

And so with that in mind, how are they tapping into perhaps even the ability to pay in increments over time as well on travel buy now pay later is great for travelers who are making a bigger travel purchase.

And what's interesting is it's actually the one of the number one ways that travelers in Latin America pay for travel and big ticket items.

So it might be newer to North America, but this is the norm in other parts of the world.

But it's a great way to take a big ticket item like a 5 to 7 night stay at a hotel which could be over $1000 and spread the payments for that travel over time.

So you don't have to go so far out of pocket that in turn makes many destinations and experiences more accessible for travelers who have a smaller budget.

Is there a good rule of thumb though that people should still be keeping in mind when it comes to how much they're kind of breaking up or how much they're paying up front?

Uh And I ask that because at, at a certain point, the trip just doesn't become feasible or, or, you know, it, it just doesn't seem like it's good money that's being spent if you're breaking it up to the same extent that you might be a mortgage for a trip.

Absolutely.

The good news is that though, we're seeing the adoption of these payment methods that do help travelers spread payments.

We're still seeing deal seeking behavior and price sensitivity.

So travelers aren't just blowing their budget on something that they can't quite afford out of pocket.

In fact, we're seeing that even though most travelers are expanding their travel budget this year, about 75% of our users at Hopper planning to spend the same or more, almost half of them are going to take more trips.

So they're expanding that travel budget a little bit, but packing more into it, which means that they have to be looking for sales and promotions booking at the right time doing those deal seeking behaviors that make the price more affordable.

Certainly where, where are some of the top locations that you've seen?

Travelers still really be willing gung ho to spend on this year?

You know, Paris London and Rome are always the top three destinations at this time of year.

They are destinations people dream of their lifetime or bucket list trips.

So we're seeing a tremendous amount of demand to those destinations, but more often than not, some of the more interesting trending destinations that we're seeing are being driven by these younger generations of travelers and those are destinations in Portugal, the South of Spain Alaska destinations.

Much more off the beaten track than what we typically see from the traditional American family going on a bucket list vacation.

Haley, Berg Hopper, lead economist Haley, thanks so much for taking the time here today.

I really appreciate it.

Great being with you as always.

Absolutely.

All right, everyone.

We've got much more wealth coming your way after this short break.

You're watching Yahoo Finance.

Let's do a quick check of the markets sponsored by tasty trade.

Taking a look at the major averages right now.

The dow, the S and P 500 the NASDAQ all higher across the board.

The dow right now up by about half a percent leading the pack on a percentage basis, the S and P 500 higher by about 4/10 of a percent.

And the NASDAQ composite up by about a quarter of a percent right now.

Let's stay on consumer spending.

A bank rate survey finds 50% of loan applications are denied, but maybe tech can help A I might be able to help applicants gain access to credit that would otherwise be rejected.

And that's what our next guests company is doing.

Joining me now we've got Greener who is the Paga co founder and Ceo G. Great to have you here with us this morning.

First walk us through how A I can really kind of stand in the gap for improving someone's credit score in order to make them more credit worthy in order to get a loan.

So Brad, first of all, thank you so much for your time and pleasure to be here.

The, the the statistics you started with are exactly the thing.

The problem we're trying to solve in the US.

42 to 50% of people are actually getting denied to credit, although they should get.

And what we do here in PGA, which is our mission is we are trying to enable these B ras to get more loans more often for their financial needs.

Now, the way we do it is rather different, we are connecting to the banks that otherwise would have denied these boils and we're helping them use A I to identify the boils that should actually get a credit.

And by that, reducing the 42 or the 50% lower to be able to help them, help their customers.

Now, the interesting side is that the money we're using is not the bank's balance sheet we actually created on the other side of our network, a very strong stable funding capabilities that is based on the biggest asset managers and pension funds and insurance companies in the world to be able to fund all these additional loans that are actually a very good performing loans of the people that otherwise the regulatory environment in the bank system will actually deny them.

So these, these are not kind of an an additive like peer to peer alone that what, how, how would you define what this actually is?

So I would define it as an enabling finance A I solution that is really targeting only the big financial banks in the US.

And quite frankly, today, we announced the addition of EV one, which is a top five payment global system as part of our partners.

And next to them, we are working with US bank on the personal loans.

So we are helping them approve more personal loan.

We are working with the ally to approve more auto loans and we have working with soy for example, to approve more person alone and even Kanna on the point of sale, how does A I remove bias from loan servicing?

So I think the real interesting part about the A I piece is that it allows to go above and beyond the traditional way that people think about credit scoring or credit risk.

So for a US system or for FICO score 700 FICO is very different than 699 for A I, it's not so a high has the ability to go deeper into the data and use the vast majority of data that is behind the credit score and actually come to a conclusion that the difference between 699 and 700 is not that big.

And therefore to allow for that person to get a loan as he was or she a 700 FICO and take us into Paga as the business.

I mean, what what is your profit model?

How do you make money on this?

So the way we make money is really by connecting the institutional lenders on the one hand side of our network with what we call the lending partners, which are the banks that I just shared.

And we are taking 3 to 4% of the loans that are being originated for doing all of that, for pricing the loan for connecting things, for being able to fund it.

So we are the connectivity tissue of if you wanna think about it, the private credit and the public credit of the world that as we know is getting bigger and bigger and you see the names of part of them on the screen together with the loan origination systems of the big banks to allow for that streaming and the future of finance through the power of A I and connectivity to take to a completely new route.

All right, I'm seeing your most recent earnings record net work volume of $2.42 billion.31 percent growth year over year.

Good stuff there.

Gal We gotta catch up in the future as well to see how the business is scaling.

Gal Rubino, who is the uh Paga Ceo and co founder.

Thanks so much.

Thank you so much, Brett.

Certainly, let's turn now to the economy and how Americans are spending money, high inflation has had a big impact.

And in fact, on consumers over the last year or two, a recent Wells Fargo survey found two thirds of Americans say they've cut back on spending with a third saying that they've dipped into savings or investments.

But our next guest who comes from the fitness world and part of our health is Wealth Week here says, although their clientele may have had to cut back in some area, areas of spending, health and wellness has remained a priority here with more.

We've got the CEO of Barry's Global Joey, Gonzalez.

Joey.

Always a pleasure to grab some time.

Thanks for hopping on with us.

You too.

You too, good to see you.

Thanks for having me.

Absolutely.

Let's dive into this.

I mean, what, what are you seeing in the consumer landscape and all of those that are coming into the red room right now and the fitness experiences where they're spending further or where they're making tough decisions to, to pull back.

Uh Well, you know, all we know is what's happening in the red room, right?

And so all I can say is that if inflation is impacting our clients, they're definitely choosing to prioritize fitness and wellness.

As we've just continued to see record results across the globe, this past April was actually the highest attended month in Barry's history.

Wow.

Ok. All right.

I know, I know you've got a few members from our control room as well that have made their voyages into the red room.

You know, as we think about the pricing mechanism too.

I mean, this is a business that involves coaches who have to offset the impacts of inflation with, uh, the ability to make sure that they're making more.

You've got a business that you're running and, uh, you know, a different location basis and different geographies and regions around the world.

What type of input costs ha have you seen kind of moderate and how is the business going about really making sure that you're giving the same experience and not sacrificing on service while at the same time knowing that there are some fluctuations in the prices that really need to be considered here.

Yeah, I'd say from just a general overall company standpoint as costs have increased.

Uh We just had to find ways to operate more efficiently both through value engineering in our actual build outs because we've been opening a lot of studios uh and creating more operational efficiencies within our actual studio expense model.

Is there a smart spending way that that people who are, are booking any of their boutique fitness classes or instructed fitness classes can make sure that they're kind of staying within their budget.

But at the same time getting the the health, the wellness that gives us that work life balance.

Yeah, I I mean, I think we reward frequency in our pricing model obviously.

So um we've been seeing some uptick in memberships for the more value driven consumers who really want to get the most bang for their buck.

Uh So I think making a commitment to, you know, fewer brands or choosing a brand where you feel like you could get the best workout is gonna end up paying off.

What's the next big investment that you foresee?

Barry making into its fitness experience?

Uh We have a combination, we're continuing to expand into new markets and new market types as well and as well as in filling our current markets.

We open Santa Monica and Studio City uh in the up upcoming 30 days.

But we're also really exciting about scaling our new product called Ride Lift, which is a low impact alternative to what we do with the treadmills.

We've replaced the treadmill with cycling.

So your weightlifting and your cycling and you're getting an amazing hit workout.

Uh We're in L A, we're in Chelsea, New York City, uh and planning to scale that as well as another concept.

We have called lift, which is just 50 minutes of pure strength training.

And we have 15 of those studios global globally.

I'm wondering, you know, even as we were talking about where people are prioritizing their spend for fitness, how you're kind of tracking across different income levels.

I mean, we, we talk about Chipotle so much for instance and that if there is a trade down, even among the kind of high end consumer that Chipotle will still capture that and, and even when there's a trade up from the low income consumer, Chipotle will still capture that.

What does that look like for, for Berry on the fitness side if you will?

Yeah, I think that's interesting.

Um I think the one example that comes to mind, you know, Barry has been around 26 years, so we've been through a recession and I do remember just anecdotally uh in 2008 and nine, we had some people trading down from personal training, right?

Because to use a personal trainer at a gym costs at least four times.

What a various classes.

So that's one example I think of, of movement we see in during those times, Glo Barry's global CEO Joey, Gonzalez, Joey.

Great to see you as always out.

We gotta, we gotta catch back up in person.

I gotta make it down to Florida.

I mean, I'm just, I'm just ready for some consistent 80 weather days here.

I know it's a probably we love to have you.

All right.

Good to see you, Joey.

Thanks so much.

Take care.

Thank you.

Just months after United Health Care was hit by a cyber attack, another health care provider is facing a breach and patient care was affected here with more.

We've got Yahoo Finance's Angeli Kamlani Angel.

What do we know about this most recent one here?

Yeah, Brad.

So this one is a little bit different because it is an actual hospital network rather than the insurer and the underlying payment pipeline.

So by scale the attack on ascension that was, that happened yesterday was a little bit smaller but still important to note that this is part of the broader problem.

The health care industry has been racking up the cyber attacks.

They've been noting them uh for quite some time, ascension is one of those larger hospital systems in the US and known it exists and it has facilities in more than a dozen states and it has 100 and 40 hospitals in these.

As you can see on your map, these states, it also includes 40 senior living facilities and by size is a 28 billion revenue system so large on the scale of the country.

The company did say in a statement that there has been a disruption to clinical operations as they continue to assess the impact.

They noted it happened yesterday and they are still in the throes of trying to figure it out.

We're looking, you know, by comparison, we know that the United Health Care attack was much larger, right?

The company is looking at already 1.6 billion impact for the year and it has it really stopped the flow of payments as well as some appointments as well as some pharmacies for several weeks.

Meanwhile, we do see the clinical interruption for uh care for ascension and it's unclear how long that will last and any other details right now, those are still being assessed.

But back to the point about this is part of the larger picture.

The health and Human Services Department has noted that between 2018 and 2022 there was a rise by 93% in cyber attacks and of those 82 100 I believe it was 78% increase of those breaches that included ransomware.

So we're talking about a really big problem in the country that has been highlighted by the United Health Care change health care impact.

Um And then now we're starting to see just how you know prevalent it is just by this a few months later, this same attack right now.

All right, a huge investigation that's gonna be ongoing.

Angeli, we appreciate you setting the scene breaking it down for us here.

Appreciate it.

The finances zone, Angeli Kamlani.

We've got much more on wealth after the break.

Everyone.

You're watching Yahoo Finance.

While Disney and Warner Brother may normally be duking it out in the battle for viewers.

The two rival companies are actually teaming up for a brand new bundle package for the streaming services for more on the deal.

And what's inside is our very own Alexandra Canal.

Hey, hey, Brad.

Yes, more bundles coming for the Consumer Warner Brothers, Discovery and Disney announcing this new joint venture.

Now, customers will be able to choose whether they want the ad supported here or the ad free option.

But it brings all of those three streaming services into one platform.

That's Disney Plus Hulu and Max.

Now, we don't know exact pricing at this point.

Although management said that it will be priced very attractively for the consumer and pointed to what the current bundle is with Hulu and Disney Plus, you can get that for 999 a month for the ad supported tier or 1999 for the premium, a free version.

So that is potentially where the pricing could land there.

But on the earnings call, Warner Brothers, discovery was very adamant that this is going to drive business efficiencies moving forward.

And ultimately, this is a play to reduce churn our customers leaving the platform continuously.

They really want to retain that customer so that they are loyal, subscriber base and that they can continue that even as shows and and and they, they see the changing shifting of the audiences there.

So, you know, we've seen bundling before.

I think it's interesting now that we're seeing competitors come together before it was really more internal bundles.

But now we're seeing that as customers are becoming a little bit more choosy with their plans.

We need to have more of a synergy there amongst all of these streaming competitors.

Is it is it clear how many people would need to sign up for this bundle for these companies to determine it a success at the end of the day?

I think that's something that investors are closely going to be watching.

It's also going to be interesting when you think about exclusive content most of the time, if you say something is exclusive to Hulu Disney Plus or Max, that will drive subscriptions to that specific service.

But if you're giving up all the goods there and bundling it together, what does that mean for your core service?

So I'm curious to see if there's going to be any cannibalization when you think about customers signing up for this bundle, as opposed to just being a Mac subscriber, Disney plus subscriber, but clearly uh the business, the businesses think that there are real benefits here, especially when you think about a marketing perspective, all those costs, you're sort of sharing that across the board.

So something that I think we're going to continue to see more and more of the old cost synergies.

Thanks so much.

Appreciate it.

Thanks.

Well, we are living more and more in a paperless world apps.

Now provide digital tipping options.

You can send your friends and family money with the click of a button through Venmo and cash app and others.

But if the same cash is King is still true, how much should you be carrying on you at all times to help us with some of the tips here we bring in Chelsea Ransom Cooper Zenith Wealth.

Great to have you here with us.

First and foremost.

Uh you are zenith wealth.

Partners, Chief Financial Planning Officer, I would like to get your full title in there, first and foremost, and Chelsea, how much should people be keeping on them?

This is a fantastic question and it's evolved over time.

Typically when I have this conversation with clients, I notice that they only hold about 20 to $30 in cash.

But over time, it's also um come down quite a bit as well because cash is becoming the anomaly when it it comes to how we're buying things.

If you notice a lot of people or retailers offer those little square cards where you can scan your card or your apple pay, it's a lot simpler to make purchases and you don't necessarily need cash as much as in the past outside of just simple tipping.

And so with that in mind, I mean, there's how much you're carrying around in cash and then there's also how much you are actually keeping in cash in the bank versus keeping in perhaps a high yield savings account or keeping in even, I don't know, uh a trading account.

How should people be divvying that up?

That's really important to consider as well because we wanna make sure cash is king, right?

So we want to think about how much we have in our checking account.

So the cash in our checking account is really a vehicle where we only wanna have, you know, 1 to 2 months of expenses there.

So we can cover our bills any of our necessities.

But it's just a transition place when we think about that high yield savings account, that's where we want to have our emergency savings.

And we love a high yield savings account because of the interest that's able to accrue by leaving our money in a safe secure place.

It's also important that that money is at least keeping up with inflation because inflation can really erode and eat into the value of our money.

If we're not necessarily being strategic about it, when we're talking about investing or how much cash that we want to put towards that, that's where we want to consider.

Um what are some of our long term goals?

Understanding that the stock market is pretty volatile, but that we still need some long term growth to be able to achieve our financial goals.

What we're talking about at the end of the day here is, is boiled down to one thing and that is also liquidity.

How much of people's wealth is there a good rule of thumb?

How much of people's wealth should be liquid?

Typically, when we're thinking about how much is liquid, I would say anywhere from 2 to 10% of somebody's overall wealth is how much should stay liquid.

You know, there's always a saying, stay ready.

So you don't have to get ready.

And that's really important if you're thinking about how you're utilizing cash and your overall investment strategy or your overall portfolio?

Certainly here.

And then when you're talking to clients right now, how are they monitoring, you know, their own spending habits with also combating on a personal and household economics, front inflation as well with regard to their own cash on hand that they're keeping and, and kind of moving the dial on, on how much of that seems right for them when it comes to how much cash that really makes sense on what they should hold on to.

Um, a lot of individuals are really thinking about how they can organize their accounts in a strategic fashion.

So that's why we're talking about, you know, how much is in that household checking account for any bills.

But that first checking account really needs to be for any needs that you have.

So I encourage clients to really focus on that 50 30 20 rule when it comes to their overall budget and spending and try to focus on having 50% for any of those, those needs in a checking account, 30% for any of those ones in a second checking account.

So you have a bit more control of where your money is going and making sure you're not overspending.

Yeah.

No, that's a good piece of advice here.

And then additionally, just lastly while we have you here, Chelsea, I mean, the thing that's never fun to talk about but you, it's less fun to be unprepared for an emergency fund.

Here.

I mean, how are you advising clients to set up their emergency funds?

One thing for an emergency fund is you want to make sure that it's inconvenient.

A lot of the time when we open an emergency fund, we tend to open it in the same place that our checking account is and sometimes we'll linger and dip into that um, on things that may not be emergencies.

So if you make sure that your emergency savings or that emergency fund is in a bank than you're checking.

It's a little bit inconvenient right now.

It may take 2 to 3 days to get that transfer and then you really reconsider.

Hey, is this money that I really do need right now or can I let it sit in that high yield savings account or it's getting four or maybe even closer to 5% on annual interest, um, through that vehicle?

I mean, look, the sneakers are gonna sell out on the, on the Sneakers app.

I mean, of course, it's an emergency here, Chelsea, all things.

Uh, I'm just kidding there.

Of course, everyone don't put that.

That's an emergency.

Precisely.

Chelsea Ransom Cooper.

Who's the zenith?

Well, Chief Financial Planning Officer, thanks so much for taking the time.

Chelsea, thank you for having me.

Absolutely.

Everyone.

We've got much more wealth after the break.

You're watching Yahoo Finance Reddit's first results as a public company surprised a lot of people.

The company hit profitability for the first time execs teased new products on the way and you got the sense that Reddit the platform is growing up very, very fast.

Steve Huffman, Reddit co founder and CEO joins me now.

Good to see you again.

It feels like it was just yesterday with the company with your IP O.

Let's start on, on growing up fast.

You know, I read the, the earnings release several times the earnings call and I really came away.

This is a lot different platform than I think investors have come to think about it as Hey, Brian, good morning.

Um Look, I think a lot of things are starting to click right now.

So like in the first quarter, we grew revenue 48% users, 37% all time highs and, and as you mentioned, uh profitable and because reddit is such a simple business, high margin.

If you combine that with uh discipline on costs, you can see how quickly we can get the profitability.

And so it's, it's I think not just a fun platform but it's a, it's a, a simple and scalable business as well.

Yeah, we have a lot to get to here, Steve, but real quick.

Are you spending enough?

Uh your cap X was so low.

We hear about, you know, meta out there spending billions of dollars.

Are you, are you investing enough in the platform to support some of the growth we saw in that quarter?

You know, IIII I told my team, I was like, you know, the economy is getting better and when people start asking us to spend more again, um Like at, at the moment, uh we're trying to do a couple of things, there's a lot of stuff uh that I'm very excited about building.

So beyond the core product, we've got our user economy, we've got developer platform, we've got search a lot of uh I think, interesting and fun stuff coming, but we're also working towards uh profitability.

So right now we're there on an adjusted I beta basis.

Uh The next milestone for us is gap profitability.

And so I think we're in a good spot.

We're basically building everything that I'm very excited about building, but also getting closer and closer to those business milestones is just given the strength of the first quarter.

Steve is gap profitability this year.

Look hard to say.

Um we grew revenue uh five times faster than costs.

Uh In this past quarter, the commitment we've made as a management team is about uh revenue twice as fast as costs.

So it's just a matter of time, right, a high margin.

So 80 8% in Q one and uh cost discipline, that's the path, the profitability.

Um the exact timing we'll see.

But uh I think we're on the right track and then the advertising business uh was strong.

How sustainable is that?

And how, you know, why is that growth happening look, uh I think the, the thing about Reddit is it's communities and those communities represent every interest and hobby and passion imaginable, which means in addition to being fun for users, basically, every company's customers are on Reddit somewhere and our ads technology is getting better and better.

And so, uh if you're a company trying to reach your customers and know that 30% of our users are not on Instagram or Facebook or tiktok, other big advertising platforms.

Uh You can find as a company, you can find your customers uniquely on Reddit.

Uh often in a moment where they're talking about your product or brand or vertical.

And so I think that creates pretty incredible opportunities earlier this week.

Uh Steve, I caught up with uh Pinterest, Ceo, Bill Reddy and a lot of conversation about making that platform shop.

Now, that's a number that's a word you mentioned on your call.

Do you want to make it where I'm directly buying things from?

Reddit?

Well, uh I, I think in many cases, one of the things I joke about, but it's not really a joke.

The most fun part about picking up a new hobby is buying all the new gear.

And so every hobby, every purchasing decision, whatever you're into or going through is on Reddit.

And so I think it's only natural to uh to be able to connect the dots like that.

So, uh you know, first step is, is, is get the right customers on Reddit, um our advertising customers and then we just continue to chip away at our road map of making it easier and easier to find what you're looking for or even transact.

Like you suggest.

What could you tell us about the new user interface coming this year?

So one of the most important things we've been doing and I think what's really driving the user growth that we've been seeing is we've just been focused on making Reddit easier to use.

I've long said everybody has a home on Reddit.

That is your home.

What you're interested in is on Reddit.

The challenge to us from a product point of view is, are we helping users be successful in finding that home?

And over the last year, we've gotten much better at that.

And as we look forward, uh our day to day work is really making Reddit easier to use, easier on their eyes more effective at, at finding your home on Reddit.

So if you've been using Reddit a long time, I think you should be excited at all of the quality of life improvements that are coming.

Is there another Google like deal for, for A I for Reddit to be had?

And just in terms of I guess notoriety and dollar amount, I think the potential is there.

So, uh Reddit's public content is really valuable and we are in a situation right now where we're basically the only platform that is still open, everybody else has closed off and we believe in an open and interconnected internet.

Um But we also need to be considered about where our content goes and what it's used for.

But Reddit has two decades of human conversation about pretty much any interesting topic imaginable and it's up to date and it's relevant.

And so I think if you are in the search business or you are in the A I business, which I think of as like search 2.0 then you, I think basically can't be competitive without uh access to Reddit content.

Lastly, Steve, I like how you ran the earnings call.

You took some, uh, I look like user questions, but tell me if I have this right?

You did eight practice earnings calls before you went public.

I mean, it seems like you're just a really well prepared management team even though this was your first quarter as a public company.

You know, that was one of those things that, that worked out.

So we thought we were gonna go public way back in 22 almost two years to the day from when we actually went out.

And so we did one practice earnings call with the analysts from our like syndicate banks.

Uh and then we just delayed our IP O for two years.

And so we ended up doing eight calls and did the whole um kind of public company cycle, right?

Board meeting close the books board meeting, earnings follow ups, all of that.

Uh And that was really great practice.

Uh And, and so I'm actually really thankful for how that worked out.

And my suggestion would be for any company that's thinking about going out, try to get ahead of these processes or get a few reps under your belt sooner rather than later.

Because I think it really helped us, you know, you and I Steve, we both look, I don't know, let's say early thirties, but the bottom line is this, uh we're veterans of the battles despite what we look like on cameras.

Uh Steve Hoffman Reddick, co founder and CEO, always good to see you.

We'll talk to you soon, Brian.

Thank you.

Be.

Well, everybody.

You bet you.

All right, much more on wealth after the break.

You're watching our finance, several real estate brokerage firms head to court today seeking final approval over a sweep, sweeping settlement concerning realtor commissions and not everyone is happy about the proposals here here with more.

We've got our a our own Alexis Keenan who's, who's been all across this.

I mean, I'm just losing my words at this juncture because I mean, there's so much that's on the table with this potential with this proceeding that's taking place.

There is a whole lot of dollars and cents here.

So what's happening today?

It's a fairness hearing in a federal court in Missouri and it is to justify part of a whopping $900 million settlement.

But that's really an alternative to a 1.8 billion verdict that a jury handed down in October to 500,000 approximately home sellers in Missouri.

Now, if you remember back then the jury said that the National Association of Realtors along with its affiliated brokers that they violated antitrust law by entering into these agreements with sellers mostly.

But some there are cases involving buyers too that forced the sellers to fork over commissions to buyers agents.

Now, both before and after the trial, these defendants have been negotiating settlements.

You have the National Association of Realtors, Berkshire's Home Services of America and Keller Williams, they all went to trial remax and anywhere real estate, they did not go to trial, but they along with Keller Williams are in court today and millions of people, millions of would be potential plaintiffs aren't happy with this $900 million.

They don't want it and they say that it increases the settlement class.

That's one reason they really don't like this deal because the original group of plaintiffs, those 500,000 or so home sellers in Missouri.

Well, now these agreements, the settlement agreements they extend nationwide.

Those are sellers dealing with these real estate brokerages and the N A across the nation.

That's approximately 30 million people as opposed to 500,000.

So there are these copycat cases that had evolved after this during and after this big verdict in Missouri and those plaintiffs want their day in court.

So their lawyers are in court today saying this settlement agreement it's just unfair.

OK?

And so we've got an example you do of how the settlement dollars might work out for sellers.

Tell us more about that.

Yeah.

So basically in the first quarter of this year, the average home sale price in the United States that was $420,000 approximately.

Ok.

So this is just some sketchy map to give home sellers an idea of what they would be getting, giving up here.

Now, if you assume a 6% commission, that would be split, that's the typical commission.

If you have representation on both sides of a residential real estate deal, giving approximately 3% to each side split between buyers and sellers, that would be about $25,000 in that particular transaction that the seller would be forking over uh and having to pay a part to the buyer's agent.

Now, if you take that bucket of $900 million that these defendants have on the right now, you then slice out about a third for attorney's fees.

If all of the 30 million eligible claimants here were to file a claim and ask for their money, they get about $20.

So 25,000 versus $20 that's why these plaintiffs are upset.

Yeah, we all would be upset about that too.

Alexis.

Thanks so much.

For continuing to track this proceeding.

I appreciate it.

Everyone.

Let's do a quick final check of the markets here as we're taking a look across the major averages here in the US.

The Dow and the S and P 500 the NASDAQ are all in positive territory.

The Dow is up right now by about 4/10 of a percent.

You've also got the S and P 500 up by about a quarter of a percent.

And the NASDAQ composite, you're seeing that higher by about 1/10 of a percent.

Taking a quick look at some of the sector activity as well.

Here, it looks like almost all sectors in the 11 sectors of the S and P 500 are in positive territory except get this technology.

Technology is lagging right now.

It's down by about 4/10 of a percent.

However, 10 of 11 sectors in positive territory led by real estate and energy.

Well, that's it for wealth, everyone.

I'm Brad Smith.

Thanks so much for watching.

Stay tuned for market domination with Julie Hyman and Josh Lipton.

That's coming up at 3 p.m. Eastern time.

You do not want to miss it.

We'll see you back here tomorrow.