Benjamin Black

Benjamin Black asked CFO Armin Zerza about Warner Music Group's refined capital allocation philosophy for evaluating deals, an update on M&A plans, the rationale for increasing the Bain JV capacity, and the implications of increased capital flow into the music space.

Answer

CFO Armin Zerza explained WMG's shift to a portfolio-wide capital allocation view, utilizing a deals office for prioritization and improved visibility on future revenue, margin, and cash flow impact, in collaboration with creative teams. He cited tremendous opportunities for high-margin catalog acquisitions (recorded music and music publishing), leading to the Bain JV capacity increase from $1.2 billion to $1.7 billion, with significant deployment expected this fiscal year, highlighting Bain's competitive edge.

Benjamin Black asked Armin Zerza about Warner Music Group's updated capital allocation philosophy, details on M&A plans including the increased capacity of the Bain JV, expected deployment this fiscal year, and the broader implications of increased capital flow into the music space.

Answer

CFO Armin Zerza explained a shift to a deal portfolio view for capital allocation, optimizing investments across thousands of deals annually in collaboration with creative teams. He cited tremendous opportunities in high-margin catalog acquisitions (RM and EP) as the reason for increasing the Bain JV capacity from $1.2 billion to $1.7 billion, with significant deployment expected this fiscal year, signaling market opportunity.

Benjamin Black inquired about the building blocks for Warner Music Group's top-line growth expectations in fiscal 2026, specifically regarding paid streaming growth and the impact of wholesale price increases. He also asked about expected organic margin expansion beyond cost savings, the longer-term margin target, and the trade-offs with investing in lower-margin areas like distribution and direct-to-consumer.

Answer

CFO Armin Zerza detailed 2026 growth drivers including global subscriber momentum, contractual wholesale price increases from four of the top five DSPs, a robust pipeline of accretive M&A (leveraging the Bain JV), and accelerated growth in adjacent areas like distribution. He also noted upside from premium DSP offerings and AI. For margins, Zerza confirmed $200 million in FY26 savings (rising to $300 million in FY27), targeting 150-200 basis points of adjusted OIBDA margin improvement. Organic margin growth will come from accelerating high-margin streaming, accretive catalog M&A, and DSP pricing flowing through, with a mid-to-high 20s long-term margin target.

Benjamin Black from Deutsche Bank asked about the key building blocks for Warner Music Group's top-line growth in fiscal 2026, specifically addressing paid streaming growth from wholesale price increases. He also sought clarity on expected organic margin expansion, excluding cost savings, the long-term margin target, and the impact of growth in lower-margin areas like distribution and direct-to-consumer.

Answer

CFO Armin Zerza detailed that 2026 top-line growth would be driven by market momentum, global subscriber growth, and contractual wholesale price increases from new DSP deals (four of five top DSPs). He also cited a robust M&A pipeline, expansion in adjacent areas like distribution under new leadership, and upside from premium DSP offerings and AI. For margins, Zerza confirmed a strong program targeting 150-200 basis points expansion in fiscal 2026, primarily from the $200 million cost savings program and operating leverage from accelerating high-margin streaming, PSM price increases, and accretive catalog M&A. He projected mid-to-high 20s adjusted OIBDA margins in the mid to long term.

Benjamin Black of Deutsche Bank asked about the drivers behind Warner's recent success in breaking new artists in a competitive environment and its sustainability. He also inquired about the new Bain Capital JV, specifically the rationale for partnering versus acquiring catalogs alone.

Answer

CEO Robert Kyncl attributed artist development success to WMG's creative teams, A&R investments, and the company's historical DNA, emphasizing the value of a major label's global infrastructure. CFO Armin Zerza described the Bain JV as a critical tool to accelerate catalog acquisitions, leveraging a partner with industry experience while WMG retains 50% ownership and full operational control.

Benjamin Black of Deutsche Bank asked about the drivers of WMG's success in breaking new artists and its sustainability, and questioned the rationale for the Bain Capital JV for catalog acquisitions.

Answer

CEO Robert Kyncl attributed artist development success to WMG's skilled creative teams and global infrastructure. CFO Armin Zerza described the Bain Capital JV as a critical strategic tool to accelerate catalog acquisitions with an experienced partner, expanding WMG's buying power while retaining operational control.

Benjamin Black asked for the outlook on the choppy ad-supported streaming business and inquired about the potential financial headwind from a hypothetical ban on TikTok.

Answer

CFO Bryan Castellani explained that the ad-supported streaming business is macro-driven but is expected to stabilize over time. CEO Robert Kyncl addressed the TikTok question by stating that while WMG has an excellent relationship with the platform, the company's financial exposure to a potential ban this year is 'muted' and not a significant concern.

Benjamin Black of Deutsche Bank AG asked for an update on the impact of artist-centric models on streaming growth, why more DSPs haven't adopted them, and followed up on addressing the 'large discount' in bundled streaming offerings during renewal negotiations.

Answer

CEO Robert Kyncl declined to comment on specific partner negotiations but reiterated that the artist-centric model is an important, evolving initiative. He described the initial adoption as a 'foot in the door' and expects its impact to increase over time through collaborative efforts with partners. He emphasized it is the right direction for artists and songwriters.

Benjamin Black inquired about WMG's strategy for growing global market share, particularly in emerging markets, and asked for specifics on the market share pressure in China and its expected duration.

Answer

CEO Robert Kyncl noted that realizing the benefits of new DSP deals is an ongoing process. He highlighted strong leadership and growth in markets like Mexico and Brazil while acknowledging China as a key opportunity where a new Head of Asia will soon take charge. Kyncl confirmed that the adverse trend in China is expected to continue for the balance of the fiscal year.

Benjamin Black inquired about Reddit's perspective on AI-generated content, whether it could be additive, and how the platform is positioned for agentic commerce, considering its impact on users, contribution rates, and the ad business.

Answer

Steve Huffman, Co-founder and CEO, stated that AI-generated content needs clear labeling, differentiating between human-prompted AI for communication and full bot behavior, which Reddit aims to restrict to its developer program. Jen Wong, COO, emphasized Reddit's strong position for agentic commerce due to its trusted recommendations, believing marketers will always seek to engage customers at the point of decision-making.

Benjamin Black asked Steve Huffman about his views on AI-generated content on the platform, its potential to be additive, and how it might evolve. He also asked Jen Wong about Reddit's positioning for agentic commerce, the value of its data, and the impact on users, contribution rates, and the ad business.

Answer

Steve Huffman, Co-founder and CEO, stated that AI-generated content, like machine translation, can be additive if transparently labeled, but full bot-like behavior is undesirable. Jen Wong, COO, emphasized Reddit's strong position for agentic commerce due to its trusted human recommendations, which are crucial for customer decision-making, and its value to marketers.

Benjamin Black of Deutsche Bank questioned how Reddit's position as a top data source for LLMs is affecting user trends and the data licensing strategy. He also asked for key learnings from the new marketing initiatives.

Answer

CEO Steve Huffman stated that the essential nature of Reddit's data for AI has become clear, placing the company in a strong strategic position, though they are still learning about its full value. COO Jen Wong shared early marketing insights, noting a significant opportunity to build brand awareness internationally, as seen in the France campaign, and the need to create a new user habit of searching directly on Reddit.

Benjamin Black of Deutsche Bank questioned how Reddit's position as a top data source for LLMs is affecting user trends and its data licensing strategy, and also asked for key learnings from recent marketing initiatives.

Answer

CEO Steve Huffman stated that the essential nature of Reddit's data for AI models places the company in a strong strategic position, though they are still learning about its full value. COO Jen Wong shared early marketing learnings, including the opportunity to build brand awareness internationally and the need to encourage the new user behavior of searching directly on Reddit.

Benjamin Black asked about trends in user contribution rates as the user base grows and the business impact of these trends. He also questioned the renewal appetite for data licensing deals and the long-term sustainability of that revenue.

Answer

CEO Steve Huffman noted that the focus is on 'contribution success,' using tools like post guidance to educate users and improve the quality of posts, which has been successful. Regarding data licensing, he stated it's too early for renewal talks but partners 'love' Reddit's data, and the strategy is based on the premise that AI companies need a constant supply of new information.

Benjamin Black of Deutsche Bank questioned the impact of Reddit Answers on user retention and conversion to logged-in status. He also asked if it alters the data licensing strategy and how the company balances U.S. user growth versus ARPU growth.

Answer

CEO Steve Huffman stated it's too early to measure retention impact from Reddit Answers but sees its potential in improving the 'seeker' user journey. He confirmed Reddit is still pursuing licensing deals, like the one with ICE, while also building its own data-driven products. On growth, Huffman emphasized the large opportunity in user acquisition, while COO Jen Wong explained they don't manage to ARPU directly but see significant headroom for it to grow as they expand the ad platform and user base.

Benjamin Black of Deutsche Bank inquired about the status of on-platform search improvements, the required investments, and the timeline for monetization. He also asked for early learnings from machine translation and its impact on international content velocity.

Answer

CEO Steve Huffman explained that on-platform search is a key investment for 2025, with a focus on improving the consumer product before monetization. He noted that machine translation has successfully attracted new users, with the initiative driving 4x more users in Q3 than in Q2, and is set to expand to over 30 countries through 2025.

Benjamin Black asked about Snap's decision to moderate infrastructure spending at a time when other companies are increasing such investments to boost ad performance, seeking clarification on whether there was slack in the system and the rationale behind this strategic choice.

Answer

CEO Evan Spiegel clarified that past infrastructure ramps were driven by significant ML and AI investments to rebuild the ad platform, support AR advertising, and enhance content ranking and personalization, areas where heavy investment will continue. He identified two catalysts for margin efficiency and expansion: calibrating cost to serve relative to the monetization potential of each market to achieve profitable growth, and transforming infrastructure costs into revenue-generating investments, citing memory storage plans as an example. The focus is on efficiency, sensible cost management, and scalable growth.

Benjamin Black questioned Snap's decision to moderate infrastructure spending, particularly when other companies are increasing their investments to boost ad performance, and asked if this indicated any slack in Snap's existing system.

Answer

Evan Spiegel, CEO and Co-founder of Snap Inc., clarified that the moderation in infrastructure spending is not a pullback from ML and AI investments, which will continue to be heavy for ad platform, AR advertising, and content ranking. He identified two main catalysts for margin efficiency: calibrating cost to serve relative to market monetization potential, and transforming infrastructure costs into revenue-generating investments, citing memory storage plans as an example. Spiegel emphasized that the focus is on efficiency and sensible scaling, not reducing critical AI/ML investments.

Benjamin Black asked about the early reception to the new Lens Plus subscription tier, including any initial engagement or conversion metrics, and inquired about the broader strategy for using pricing versus new features to drive Snapchat Plus growth.

Answer

CEO Evan Spiegel responded that while it is very early for Lens Plus, he is excited about its potential, given that Lenses are used over 8 billion times per day. He believes exclusive AI Lenses will be a strong growth driver. On pricing strategy, he stated the primary focus remains on building value through new features to drive acquisition and retention, though the company will explore pricing experiments more over time.

Benjamin Black asked about the early reception to the new Lens Plus subscription tier, its ultimate potential, and the broader strategy regarding pricing versus features for growing the Snapchat Plus service.

Answer

CEO Evan Spiegel stated that while it's "really early" for Lens Plus, he is excited about its potential, given that Lenses are used over 8 billion times daily. He explained that the primary focus for Snapchat Plus remains on building value through new features to drive acquisition and retention, though there is room to experiment with pricing over time.

Benjamin Black pointed to the milestone of 900 million monthly users but questioned the sequential decline in North American daily active users (DAUs). He asked what initiatives might not be working and what provides confidence that these trends can reverse.

Answer

CEO Evan Spiegel acknowledged the 99 million DAU figure in North America but stated that the company does not expect further declines in Q2. He expressed confidence based on positive engagement trends in core snapping behavior between friends and continued investment in content freshness and homegrown creators, which are key priorities for the region.

Benjamin Black questioned the balance between capital returns (buybacks, dividends) and aggressive product investment, including the possibility of further top-line sacrifice for user outcomes, and sought insights from Project Prism on marketing efficacy.

Answer

CEO Spencer Rascoff affirmed Match Group's ability to simultaneously increase Tinder's marketing budget, provide user value through give-backs, fully invest in Hinge, and fund significant buybacks and dividends due to strong profitability. He stated that the current investment levels are appropriately balanced. Rascoff explained that Project Prism, a Match Group-wide marketing efficacy analysis, revealed the benefits of focusing Tinder's advertising on down-funnel performance and user acquisition, informing the increased Tinder marketing spend and cross-brand expertise sharing.

Benjamin Black asked about balancing the company's commitment to buybacks and dividends with the need for aggressive product investment to prioritize user outcomes, which has led to near-term revenue/EBITDA dislocation. He inquired if there's potential to sacrifice more top-line revenue to accelerate user outcome momentum in the next year or two. He also asked for early learnings from Project Prism and its impact on the marketing strategy.

Answer

CEO Spencer Rascoff stated that Match Group is simultaneously increasing Tinder's marketing budget ($180M to $230M), providing $60M in user value give-backs, fully investing in Hinge, and executing significant share buybacks (7% reduction last year and planned for this year) along with an increased dividend. He believes these five investment levels are appropriately balanced. Regarding Project Prism, Rascoff explained it's a Match Group-wide analysis of marketing efficacy, which revealed the benefits of focusing Tinder's advertising on down-funnel performance and user acquisition rather than top-of-funnel brand marketing. This insight informed the increased Tinder marketing spend and led to cross-brand expertise sharing.

Benjamin Black asked for details on the Tinder AI discovery test in New Zealand, how Match Group is sourcing data for its AI efforts, and the potential impact of a competitor (Bumble) reducing its marketing spend.

Answer

CEO Spencer Rascoff explained the New Zealand test of a daily AI-driven match uses user-provided data, including camera roll access, to improve match quality and, more importantly, change the brand perception of Tinder away from an 'infinite card stack'. CFO Steven Bailey addressed the marketing question, stating that performance marketing is a small part of the mix for Tinder and Hinge, which rely on brand marketing. Therefore, a competitor's pullback in performance spend is not expected to have a significant impact.

Benjamin Black inquired about the timing of the CEO transition, how the new strategy might evolve, and what steps are being taken to ensure a smooth transition without disruption.

Answer

CEO Spencer Rascoff assured a smooth transition, noting his prior role on the Board of Directors gave him familiarity with the team and strategy. He affirmed his support for the existing strategy and financial targets from Investor Day, stating he is focused on bringing urgency and accountability to execute those plans.

Benjamin Black inquired about the reasons for the delays in Tinder's a la carte (ALC) features and requested an update on the testing of unbundled subscription features like Passport.

Answer

CEO Bernard Kim explained that the delays are due to careful testing to measure ecosystem impact and cannibalization. He detailed four features in testing, including unbundled Passport and 'Like You,' noting that the team is refining targeting to mitigate cannibalization before a broader rollout in the coming months.

Benjamin Black asked if the take rate or revenue margin from e-commerce spend should differ from core gaming businesses, considering structural differences or advertising credits. He also inquired about investment priorities for AI automation, compute capacity requirements, and the expense outlook for the next year.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, stated that advertising credits are immaterial, and it's one unified auction with a constant take rate across categories. He explained they are pay-as-you-go for AI, planning GPU purchases a year in advance, with infrastructure investment spikes running through the P&L, maintaining cost discipline.

Benjamin Black inquired about AppLovin's investment priorities for AI automation, particularly compute capacity requirements, and their impact on the expense outlook for the next year.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, explained that AppLovin operates on a pay-as-you-go model for compute, planning GPU purchases a year in advance. Infrastructure investment spikes run through the P&L, not capitalized, reflecting a disciplined, cost-conscious approach aligned with company culture.

Benjamin Black inquired about the achievements and added flexibility gained from striking deals with all major labels, and whether Spotify retains the flexibility to pursue its non-music bundling strategy.

Answer

Alex Norström, Co-President and Chief Business Officer, revealed that Spotify has concluded a renewal round with all top five U.S. publishers, securing modernized, 'win-win' deals. These agreements better recognize songwriter value and, critically for Spotify, secure broader video rights, unlocking innovation and product launches that grow the overall pie and advance long-term business goals.

Benjamin Black requested an explanation of the implied FX-neutral ARPU trends for Q3, including the main drivers, and how ARPU is expected to evolve in Q4.

Answer

CFO Christian Luiga reiterated the forecast for flat FX-neutral ARPU in Q3, citing a balance between price uplifts in developed markets and dilution from strong growth in emerging markets. Alex Norström, Chief Business Officer & Co-President, added that Spotify optimizes for long-term value, not quarterly ARPU, and takes a portfolio approach to price increases, recently raising prices in several European markets with no unusual churn.

Benjamin Black asked if the growing number of experiences with 10M+ users and increasing data set makes the discovery model smarter, creating a data moat. He also questioned the divergence in hours engaged growth and bookings growth, attributing it to mix shift towards lower monetizing experiences/regions, and how this relationship should evolve.

Answer

David Baszucki (CEO, Roblox) confirmed that the discovery model benefits from Roblox's enormous and unique dataset, including real-time 3D avatar interactions and immersion signals, which is PII-compliant and never shared externally. Naveen Chopra (CFO, Roblox) confirmed the divergence is due to geographic mix shift, with hours skewing towards regions that monetize at lower levels, impacting blended numbers despite strong regional bookings per DAU growth.

Benjamin Black inquired if viral hits like 'Grow a Garden' serve as a promotional tool for new developers and asked about the reasons for the high rotation of top experiences.

Answer

Founder and CEO David Baszucki confirmed that major hits raise the platform's profile among creators. He attributed the success to creating the right 'conditions for growth' and noted significant headroom remains in genres like RPGs, sports, and racing. He reiterated the goal of making Roblox the most efficient platform for creators by increasing their share of revenue.

Benjamin Black inquired about the developer ecosystem, asking if viral hits like 'Grow a Garden' serve as a launchpad for new developers and questioning the drivers behind the high rotation of top experiences.

Answer

CEO David Baszucki stated that the success of recent hits has raised awareness among the creator community. He highlighted the breadth of growth beyond the top titles and noted significant headroom in key genres like sports, racing, and RPGs. He also reiterated the company's goal to increase the flow of revenue to the creator community to make building on Roblox more efficient.

Benjamin Black sought details on the Baidu partnership's economic model, vehicle ramp-up, the regulatory path in Germany and the UK, and the incremental investment required to scale the FreeNow business.

Answer

CEO David Risher detailed the Baidu plan, starting with hundreds of Lyft-owned vehicles and scaling to thousands, targeting a 2026 launch after homologation and testing. Regarding FreeNow, he stressed it's a growth acquisition that is not expected to be costly. CFO Erin Brewer added that FreeNow is expected to be roughly EBITDA-neutral for the remainder of 2025, with a near-term run rate slightly lighter than the previously stated billion-euro target.

Benjamin Black from Deutsche Bank inquired about the specifics of the Marubeni and Mobileye AV partnership, including its economic model and expansion plans, and also asked about the technical breakthroughs that led to industry-leading ETAs.

Answer

CEO David Risher detailed the AV partnership framework, positioning Marubeni as a financing and fleet operations partner for vehicles using Mobileye's tech, starting with thousands of vehicles in Dallas. He emphasized Lyft's role in fleet management via Flexdrive and providing marketplace access. Regarding ETAs, he attributed the one-minute year-over-year improvement to better driver supply, smarter demand prediction, incentive systems, and a significant reduction in driver cancellations.

Benjamin Black asked for the drivers behind the 17% YoY decline in incentives (contra-revenue and sales & marketing) and questioned the durability of active rider growth amid the competitive environment.

Answer

CFO Erin Brewer attributed the incentive efficiency to a better-balanced marketplace, fueled by strong driver supply from new product innovations. She noted that total incentive spend as a percentage of gross bookings was at a six-quarter low. This efficiency allows for reinvestment to drive strong, durable growth in active riders and frequency.

Benjamin Black inquired about Uber's 'barbell strategy' in U.S. Mobility, asking where the greatest incremental opportunity lies between low-cost and premium offerings. He also sought more detail on the company's plans to 'externalize technical capabilities,' particularly regarding potential data licensing for AVs.

Answer

CEO Dara Khosrowshahi explained that both ends of the barbell are important. Premium offerings are easier to execute and offer higher near-term profit potential, while lower-cost products like Uber Share represent a larger long-term opportunity for trips and market expansion. Regarding externalizing tech, he cited the advertising and direct delivery businesses as existing examples. He clarified that AV data collection is aimed at accelerating market readiness, not near-term profit. He also highlighted 'Uber AI Solutions,' a new initiative using Uber's earner platform for tasks like data labeling, as another example of externalizing core capabilities.

Benjamin Black asked for an assessment of the broader consumer landscape and inquired about the investment needs and partnership structure for the Uber Direct business.

Answer

CEO Dara Khosrowshahi stated that consumer demand remains strong, with audience and frequency at all-time highs and no signs of consumer trade-down. He noted strong growth in both U.S. and international markets, as well as in the Uber for Business segment. For Uber Direct, he confirmed that the company is investing aggressively, including in engineering headcount. He explained that partnership structures vary, with some being exclusive, and highlighted Uber's global scale as a key advantage for large brands.

Benjamin Black of Deutsche Bank questioned the rationale for investing in international expansion while the US market faces significant challenges. He also asked how competition has evolved on the seller side of the marketplace and if it has affected supply.

Answer

CFO Lawrence Fey explained that the international business is now contribution margin positive and presents a healthy, robust opportunity with more stable economics than North America currently. CEO Stan Chia addressed the seller side, stating that Vivid Seats remains a significant source of volume and continues to build retentive technology like Skybox, which recently rolled out new analytics tools to help sellers grow their businesses.

Benjamin Black followed up on AI, asking what Bumble is doing to gather more differentiated data signals from its user base to power its matching algorithm.

Answer

Founder and CEO Whitney Wolfe Herd explained that capturing better 'signals' is a huge focus. The upcoming summer launch will include new UI/UX mechanisms allowing users to indicate specifically what they like about a profile, beyond a simple swipe. This granular feedback on what users value is precisely what will power the personalized AI algorithm to be more effective.

Benjamin Black asked how the free user experience is expected to evolve and what the composition of growth between paying users and ARPU might look like in 2025.

Answer

CEO Lidiane Jones stated that the company is re-evaluating the entire user journey to improve the free experience in a way that positively entices users to convert to paid subscriptions, seeing near-term opportunities to boost conversion. CFO Anu Subramanian noted that while they are deep in 2025 planning, it is too early to provide a specific breakdown of growth drivers like payers versus ARPU.

Benjamin Black followed up on the agent partnership pilot, asking what specific signals Opendoor is looking for to trigger a broader rollout. He also questioned whether the company has the necessary infrastructure to scale the partnership or if further go-to-market investments are required.

Answer

CEO Carrie Wheeler stated that the key signal for a broader rollout is improved customer conversion, both to cash offers and to listing outcomes where Opendoor participates. She affirmed that the company has the necessary infrastructure to scale, as the partnership leverages existing assets like its brand, marketing funnel, pricing technology, and transaction platform. She described it as a new go-to-market channel for existing capabilities, not a program requiring significant new investment.

Benjamin Black followed up on the AI recommendation engine in Korea, asking about its potential impact on engagement and the near-term user growth outlook. He also asked about MAU and payer trends in the current quarter following political disruption in Korea.

Answer

David Lee, CFO and COO, explained that the AI engine is crucial for content discovery in the mature Korean market. He introduced a new metric, "webcomic app MAU" (up 6.7%), as the key indicator for paid content growth. Regarding the political situation, Lee stated that while the issues are believed to be resolved, their impact is fully reflected in the Q1 guidance.

Benjamin Black of Deutsche Bank inquired about the customer acquisition environment in Japan and North America and the company's strategy for acquiring more users in those markets.

Answer

CEO Junkoo Kim reiterated that the strategy focuses on high-ROI initiatives rather than broad, passive spending. He pointed to the 1% growth in app MAU on flat year-over-year marketing spend as proof of efficiency. The go-forward strategy is to leverage WEBTOON's attractive user demographics through partnerships with companies like Discord and Duolingo to drive efficient user growth, which gives them the confidence to increase marketing spend in Q4 while maintaining profitability.

Benjamin Black inquired about recent trends in agent commission rates, particularly whether there has been more compression for lower-performing agents given the widening performance gap in the industry.

Answer

CEO Robert Reffkin stated that anecdotally, top agents are outperforming on commissions, not just market share. He believes the post-NAR settlement landscape structurally favors experienced agents and large brokerages that have invested in their platforms. He asserted that Compass is not seeing negative commission changes for its top agents, as the market shifts to reward experience and value more directly.