good morning, 8:00 a.m. at apple headquarters, 11:00 a.m. on wall street "squawk alley" is live ♪ ♪ good tuesday morning welcome to "squawk alley." i am carl quintanilla with morgan brennan, jon fortt at post nine of the new york stock exchange start with apple shares are trading higher adding to this year's monster rally apple is up 70% for 2019 so one of the best performing

trailing it, microsoft, about 50% for the year joining us, ted smith, co-founder cramer likes to say apple is the key to the market. do you agree >> i do. >> what about it is so important? >> i think the breadth of technologies they deliver to consumers and enterprises over time, and the fact in the latest cycle where they come out with apple pay, apple card, all of the partnerships they've got going, in addition to core products, they're so dominant on so many fronts. >> getting investors familiar with new fronts has been a bit of a challenge this year, feels like we're getting there, wouldn't you say >> the thing we talked about is slowing of iphone sales. the dominant apple story of the last decade is actually coming, that chapter is over they have to transition people to things like subscription services, streaming is one of the big wars payment, they're doing more retail things now.

with apple credit card, i think as a new chapter opens, we're seeing more and more stuff like that. >> you talk about apple and the shift happening there, apple, microsoft, carl just mentioned, the fact that year to date its information tech stocks and communication services stocks that are the best performing sectors in the s&p, would we be having this conversation to this extent if interest rates weren't so low >> no, i think the interest rates absolutely contribute to that incredibly low cost, all of the companies can take advantage of. that's part of the fuel. i also think it is the fact that the companies built out tremendous ecosystems and technologies that enterprises and consumers, apple and microsoft, both enterprises and consumers want their tech. >> speaking of this, the company making two announcements on the apple card >> reporter: two pieces of news

regarding the apple card people that have the apple card can buy an iphone, pay for it 24 months with zero interest. new program that particular cook announced on the earnings call in october >> one of the things we are doing is trying to make it simpler and simpler for people to get on these sort of monthly financing things that's part of what we announced with the apple card earlier in the call so we're cognizant that there are lots of users out there that want sort of a recurring payment like that. >> reporter: the question for investors, the new monthly installment program, help encourage more iphone upgrades in quarters ahead, and if so, by how much apple announced a holiday promotion. apple card consumers get 6% cash back on purchase of apple products now until december 31st, including new products like iphone 11, air pods,

pro and watch series 5 normally, they get 3% back on purchases. that could help drive adoption of the new apple card in the critical whom dholiday season if they walk in the store looking at buying hardware, signing up for the card could make sense that launched in august with partner goldman, sachs guys, back to you. >> this is a sort of a triple play attempt by apple. you come in, maybe looking at an iphone, they say hey, you can get it, you get an apple card, get that and pay by the month, no interest. oh, and by the way, 6% cash back if you want to pay for it up front, get that discount and by the way, apple tv plus with that free for a year if you get the phone now. i mean, it is an interesting move by apple to put all of these things together in one

season >> absolutely. we are transitioning to apple with iphones, ipads, macs, additional services, trying to rope everybody in early as they canon services, get the recurring payment going. i think one of the things that will offset the down cycle of iphone is this sort of approach to being able to pay for the iphone over time it has gotten so expensive it is an expensive piece of equipment. if you can pay for it 24 months, doesn't look as bad. >> how meaningful for the apple card but for generating more sales of hardware. >> i think apple is behaving more like a normal retailer. you're seeing discounts, bundling, seeing subscriptions, all these things it is a sign that we are in a new chapter, they want to be more aggressive at it. i don't see a meaningful spurring of iphone sales from this sort of promotion i think at best it will give

them a little momentum with adoption of the card, maybe with some services. >> i maybe disagree a little bit. it is just removing that extra bit of friction. before it is like i don't need another credit card. now if i'm in there buying a phone, god forbid, buying two, i think am i stupid if i don't do this 6% off if i spend a thousand plus and air pods i was thinking about, maybe i ought to throw those in incrementally in a season like this, i wonder. >> to your point how traditional retailers, you go into macy's, you get the card, 10% off there. >> and apple doesn't exist in a vacuum actually. if you're an amazon prime subscriber or if you have a credit card and amazon prime subscriber, this month on any purchases you make, you don't get just 1%, you get 2% off purchases. in the apple store, have the amazon prime visa out, 2%, do i want another credit card

i think it is worth weighing the apple experience doesn't exist in isolation of every other aggressive retail tactic that we're all bombarded with. >> want to shift gers. we have news boeing announcing orders for november phil lebeau has the numbers. >> relatively good news for boeing after several months of showing no growth when it comes to commercial airplane orders. boeing booking net gain of 11 commercial airplane orders last month. you may say 11, that's terrible. that's some improvement compared to recent months in terms of the 737 max. first time since january, two firm orders for a total of 37. year to date, the commercial airplane orders negative 84. they're down 84 for the year in terms of commercial airplane orders in terms of deliveries, boeing on pace for the fewest number of

deliveries since 2008, currently 345, probably will book another 20 to 25 in december they're around 370 by the way, guys, it is expected that airbus will deliver about 800 commercial airplanes this year guys, back to you. >> on a week we get more testimony in congress. phil, thanks. turn to netflix. shares are down as needham goes to sell. the streaming service she thinks could lose as many as 4 million u.s. subs. she's out again saying they need to have an ad supported lower price tier to compete with rival services that are cheaper. is she right >> i think she is. the real question in the face of so many new streaming services and existing players as well, obviously the ones would be apple and disney, how many will an individual consumer sign up for. if difference in price is significant which it is today, five plus dollars, some cases more, it puts netflix in a difficult position to go

forward. >> do we not believe people like netflix because there are no ads to begin with? >> i think that's a factor the bet is that the disney streaming is the biggest competitor their bet is they'll have multiple streaming services, you'll pay for more than one a month. if that's the case, netflix is going to be part of that bucket. i think the future netflix and reed hastings would acknowledge that hinges on that business >> the other piece of this report that got my attention, i'll note, i think lauren martin is on "closing bell" later to breakdown details. the other piece of the report, she said u.s. subs are about three times more profitable than offshore subs. the case being as netflix does continue to expand and international is a big part of that moving forward that even so, even if you're not bleeding subs and it ends up being one of

the platforms u.s. consumers hang onto, the numbers are still going to be tough to reconcile. >> cost of acquiring consumers is significantly higher, hence profitability of subs is lowering i read her report. the interesting thing to me about the sub text was cost to reacquire a subscriber who goes away to come back on, skyrockets the overall cost and reduces profitability. both cases, lower profit margins. >> i don't like how the case for netflix changed so much. a couple years ago, there was an argument that they've got all this data, they understand what needs to be made, who to show it to, they'll be better at that than anybody else. the conversation shifted with disney coming out. disney didn't need data. they know you love "star wars," marvel, princesses now it is around scale they're all over the world

like disney can't get all over the world? i don't know i think a lot of people will have multiple services, but everybody is not going to, not all the time everybody doesn't have cable i think it does raise additional questions what will happen. >> i think you're right how the story shifted from netflix, algorit algorithms the story has shifted to quality of programming the way netflix defends higher price is they're putting that money into programming they believe if you pay $16 a month, you should pay that instead of 5 they'll put that extra $11 into programming. the story on netflix now is price and quality of programming, which you point out is a shift from what people are saying -- >> but the number of titles they'll publish relative to hbo max is still a multiple. >> yeah. >> definitely more going buck shot than laser?

>> they're going more buck shot. they're saying they need the money. they're not cutting price because they need that money for volume and quality of programming they're pursuing and their argument is people spend more time with netflix if programming is good. doesn't matter if you get a free apple tv subscription, at the end of the day, if you're watching netflix, you'll pay for it. >> i wonder, i say this because a few people on air in recent weeks, including content creators come on and said they see the evolution of streaming as cable 2.0 at some point it will be bundled together, there will be consumer access to everything one way or the other. >> we could see some super streaming services, bundle together, consumers get a better deal for that. end of the day, it has been said many times, content is still king there's a certain irony around the fact on the day that needham report comes out, it is the day

golden globes were announced and netflix swept everybody. the content is there question remains, will people pay a premium for the content. >> disney is making the bet you point at you can get a higher priced bundle that includes espn plus and hulu there's a lower price core offering, but they're playing both strategies. interesting to see as they start talking about what people are signing up for if they're getting traction for that bundled offering >> numbers we hope to get in months ahead thanks well, when we come back, shares of stitch fix and mongodb getting a boost from better than expected quarterly results we speak exclusively with both ceos of the oscompanies. "squawk alley" is back after a quick break. see? i see an unbelievable opportunity. i see best-in-class platforms and education. i see award-winning service, and a trade desk full of experts, available to answer your toughest questions.

and i see it with zero commissions on online trades. i like what you're seeing. it's beautiful, isn't it? yeah. td ameritrade now offers zero commissions on online trades. ♪

some things are too important to do yourself. ♪ get customized security with 24/7 monitoring from xfinity home. awarded the best professionally installed system by cnet. simple. easy. awesome. call, click or visit a store today.

welcome back to "squawk alley. shares of stitch fix surging, up better than 9% this morning, after better than expected quarterly results. joining us now exclusively, stitch fix founder and ceo katrina lake with us onset great to have you. >> thanks for having me. fun to be here >> so some people were expecting these results. let me break it down 3.4 million active clients you're approaching a rate of 2 billion in annual revenue going 22% year over year what's working when it comes to getting new customers into the platform

i remember you were experimenting with marketing things a few quarters ago, had some hiccups don't see hiccups this quarter. >> it was a great quarter, really proud of it 21% year over year growth we showed this quarter, some of that to get to your question about what's working, we had 10% year over year growth in revenue per client that means clients coming to stitch fix are buying more, staying longer, having more successful experiences, and that's all great we are also seeing fwrgreat clit growth we see a lot of the marketing diversification efforts we are working, that we are doing working. we did more with integrative marketing, having brand and performance and digital marketing working better together yeah, we are proud of results this quarter. >> you talked more about shop your looks which is what a lot of people think is breaking the model, not shipping five things that people have never seen

before, but if you go on the app, you can see things that go together and buy them individually what is stitch fix in a world where you can shop your look is your argument we make the shopping experience more efficient through software, so we don't have to carry as much inventory. we can get you what you want with less hassle is that what this becomes about? >> absolutely. i think the mashlrket opportuniy for the buying experience is enormous five item fixes that we built most of the business on are a great way to buy jeans, blazers, work wear. some categories people want more choice and like more instant gratification. shop your looks, yes, there's an element that looks like e-commerce, you can click on something and buy it what's radical about shop your looks is that for any person, we're not showing you tens of thousands of items, you're not searching, culling, filtering, we show you 30 or 40 things, and you're converting off that

it is radically different e-commerce experience. >> does it let you become more of a gifting platform next holiday season if you know what my wife got from stitch fix and what goes with it, and what her size is, doesn't that make it easier for me to log on and buy her something that goes with what she's golt? >> i love the product idea honestly, we're early in this set of innovations even shop your looks is only rolled out to 30% of women clients, we have a lot of work to do to optimize the feature and roll it out to the whole client base. it opens the door to other ways to think about the business model, including things like gifting. >> exclusive brands with private label products, how profitable are those versus selling other labels and other brands, products, and how much breakdown in terms of what customers are buying >> we shared that exclusive

brands represents more than 20% in the women's offering, it is more than that in the men's offering it is important in kids as well. on a gross margin basis, our exclusive brands have higher gross margins than market branded products, but it is not necessarily for the reason you would expect it is partly because of the ability to have the markup and to have a little higher margin in the initial part. the bigger reason is selling through the product. when we are buying product for exclusive brands, we're often buying things we have high confidence will work, products that will sell through, sell quickly. that's what drives that margin favorability because we are a full price model, because we use data to buy the product, the distinction, difference between branded and not branded product is not as great as you might see in a department store model, as an example. >> how are you walking investors through, you said we have work

to do on shop your looks people ask whether 2020 is an investment year versus reassuring on margins. what cycle are we in regarding investment >> we are doing a lot of big investing. we opened the uk and kids, we are annualizing that investment. those are investment markets for us, so we have that. we are investing in technology and data science we have a lot of stock based compensation that's how you can see the investment we are making in the team. that's really against the product, how do we take shop your looks and make that fully integrated into our experience, roll it out to everybody there's a lot of investments we are making at the same time, we are showing leverage great gross margin leverage, leverage in the core business. so our business has always been one of profitable growth we generated 20 million of free cash flow. we have been profitable a long time, since 2014, and we have been proud that we have been able to use that to fuel growth. >> couple of major leadership

changes you announced, the cfo is leaving looking for a new one. also a new president you said she's going to focus on some of the newer initiatives, including shop your look what does that signal how big you expect the nonfix segment of business to be in three to five years? would it be outside your expectations if most of the business is not five items in a box and people shopping individually >> we're thrilled toff have elizabeth join. i think she's the type of leadership that will be great for the future, set us up for the future, to answer questions like this. what we have seen with shop your looks is that it is super exciting people love it it is a great feature. it added to business and the realization of our business, we are thinking about helping people to buy apparel in a more personalized way, find things that are best for them, that there are a variety of ways

to help people do that while leveraging our skill set and tool kit so really, the charter is how do they all engage. it is a part of the core business, but there are ways you can benefit from personalization in the way you buy we are thrilled to have her leadership joining the team and really excited to share more around the strategy as we develop it >> are you going to need physical retail or people in physical locations maybe in major cities at some point to increase the on boarding of people on the platform i can imagine there are people that don't exactly know their size, that might be a place they abandon. is that something that you rule out because of your model or something that's possible? >> it is not ruled out, but we don't have plans in the near future to do that now. >> have you been impressed by any legacy retailer? this past quarter we talked about how some unlocked

e-commerce, figure out a way to avoid amazon are there some you have been struck by? >> overall i have respect for what legacy retail is trying to do it is not an easy job to push and innovate and try to consolidate your store footprint, dealing with that side of the house. a lot of people i have been impressed with navigating through the change on apparel side, target did a great job with apparel that's been a source of excitement and inspiration cool to see they have been able to use that to drive traffic but i think it is a time of great transformation in retail we are excited with positioning we have, feel like we're lucky that our path is differentiated and clear. >> what are they fundamentally getting wrong? you hired a couple of people from old navy and gap i believe in the merchandising area. must not be getting that wrong, if you're hiring folks from

them gap is not growing l brands, macy's isn't growing, nordstroms isn't growing why do you think that is >> it is about reacting to the consumer how he and she want to shop today, where he and she want to shop for us, we are flexible. you can shop with us online, you can shop with us in the app, you can shop with us now in a variety of ways, in a more personalized shop your looks kind of way. i think the world wants a more personalized offering. the days of retail saying this is the it thing, go buy it, people want to be treated as individuals and be respected for preferences. our model is well suited to deliver against that >> katrina lake, ceo, founder of stitch fix stock up big after earnings. >> thanks for having me. under investigation, the government is going after google, we tell you why. check on the major averages. session high, up 39, down 105.

we are somewhere in the middle don't go anywhere.

welcome back to "squawk alley. european mashlgrkets getting re to close >> we have seen key management shakeups in the u.s. it started to happen in europe tullow oil, they ousted the chief executive, head of exploration yesterday, announcing it is suspending dividend shares are higher following a 70% decline in the stock yesterday. in retail. ted baker's chief executive resigning after less than a year on the job the vice chairman decided to leave as well, comes after the fashion label has struggled to stay competitive, decline in profitability. shares under pressure, down 13%. back to broader markets. two days until the ecb policy

and decision are on track. france and italy higher on the day. german sentiment improving from a month ago. and lastly, food delivery just eatery jek eat rejected a takeover bid. unlike here in the u.s., there's limited food delivery competition in europe which put the spotlight on their shares. back to you. >> thanks very much. let's head to sue herera for a news update. hi, sue. >> hello, carl, hello, everyone. here's what's happening this hour house democrats announce two articles of impeachment against president trump, abuse of power, obstruction of congress. voting expected in a matter of days in the judiciary committee, by christmas in the full house >> misconduct goes to the heart of whether we can conduct a free and fair election in 2020. bad enough for a candidate to invite foreign interference in the political process, but it is

far more corrosive for a president to do so and abuse his power to make it so. a pennsylvania appeals court rejecting bill cosby's bid to overturn his sexual assault conviction this over the trial judge's decision to let five other accusers testify the ruling was being closely watched because cosby was the first celebrity tried and convicted in the me too era. ethiopia's prime minister received the nobel peace price he said his horrifying experiences as a young ethiopian soldier made him determined to seek the end of a long conflict with neighbor. you're up to date. i will send it back downtown to you, morgan? >> sue herera, thank you when we come back, google under investigation over four firings at the company n'ger mcnamee weighs in next dot go anywhere. dow up seven les in the spider's.

with every attempt to free itself, it only becomes more entangled. unaware that an exhilarating escape is just within reach. defy the laws of human nature. at the season of audi sales event. - when i see obstacles, i create opportunities. (soft music) - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at snhu.edu.

facebook pushing back on demands of the u.s. attorney general bill barr to delay the roll out of end to end encryption across messaging platforms. julia boorstin is in los angeles to break it down for us. >> reporter: that's right. facebook saying it will not open encrypted messaging to law enforcement. heads of messenger and what's

app writing to them and counterparts in australia saying back door access you are demanding for law enforcement would be a gift to criminals, hackers, repressive regimes, creating a way for them to enter our system attorney general barr raised concerns in october that facebook's push for end to end encryption across all messaging apps would make it harder for law enforcement to track down terrorists and child predators facebook saying it will help law enforcement as long as it is consistent with the law and doesn't undermine the safety of our users. facebook explaining why it is committed to encryption. the director for privacy and integrity invited to the senate judiciary committee, noting encryption is already used around the world, including in more than 200 million iphones sold last year and range of international messaging services as well. morgan, back to you. >> julia, thank you. joining us for more, elevation partner skill founder, early facebook founder roger mcnamee

here onset wi set with us i get the point facebook is saying it is a gift to hackers and regimes. on the flip side, why the fbi is pushing for this, you can make the argument it is agift for child predators and terrorists and other nefarious players as well so who is right? >> on this issue facebook is definitely right the problem with the justice department case is that an awful lot of hacks and cyber problems in the last five years are the result of exploits found and created by our security services that were stolen in other hacks. so when you create back doors, vulnerabilities are more dangerous than if things are closed off i think facebook's case is right. the challenge for facebook is that the end to end encryption strategy from their perspective

is designed to protect from responsibility for hate speech and all of the other things. in my mind, there are better ways to solve that problem than creating back doors and end to end encryption i want to get rid of algorithm implication, microtargeting, harder to spread hate and spread disinformation and conspiracy theories there is a path through all of this, and this conversation, the one they're having between facebook and the justice department is talking about only one piece of it. >> that begs the question, i know you touched on what you think the other path is, but if facebook does continue with encryption and doesn't take the other path you laid out, is it all or nothing or is there another solution to be had there too? >> politically speaking, our systems aren't working well on the regulatory front so we have this challenge that internet platforms are pretty much doing what they want, that's causing massive problems for elections and problems in public health

and privacy and competition. at the congressional level, we have fights over things that historically people have agreed on, such as voting rights and things like that so i am very troubled by how we make the regulation work here i am hoping the states attorneys general are going to be the ones that bring the hammer down on internet platforms for things like hate speech, disinformation, conspiracy theories at the end of the day, i believe facebook is correct to resist this i do not think we want to be creating vulnerabilities, they're going to get exploited you think about damage from hacks is always going to be greater afterwards than before just because you're inviting all sorts of new people to break in. >> whether it is state ag, doj or what not, is there internal backlash in tech to facebook

from benioff, dorsey, yourself, and is it growing? >> yes, but slowly we have an election coming in 11 months, doesn't feel like it is moving rapidly enough to protect the integrity of the vote, with one possible exception, the thing going on at google right now. the employees are the key to everything if we want to move quickly because the employees of tech companies have trusted with good reason, they trusted the executives running their companies for a long time. right now, google in particular, but facebook also and amazon create reasons for employees to distrust them, from that i think we have an opportunity to create the kind of push back that would move things quickly. remember what happened with uber, when susan fowler wrote that extraordinary post about sexual harassment. what, within six months, the entire management team had been changed out. i think a susan fowler moment is

possible at google and facebook, and that's what i would hope for. >> all right you mentioned google we're going to dig into that more, too, to get viewers up to speed on this, news regarding google now the u.s. national labor relations board launching official investigation into recent firing of four employees last month, looking at whether they discouraged employees from engaging in union activity this comes months after the tech giant reached a settlement with the same federal agency over similar investigation. sounds like you're on the side of the employees with this >> definitely. and i think the national labor relations board is going to come down on the side of the employees, too, assuming they adjudicate it like they have historically google historically had the most fantastic employee relations you think about -- >> is it just historically, roger? i understand there are some employees that want to unionize, want to walk out who have been very outspoken, i'm not sure we are framing it the right way

ratings on glass door, for the company and sundar are high. i see push back in social media on the desire to unionize. long time employees, higher paid, a lot happier. is this a sub segment we're talking about? >> jon, we're saying slightly different things i am talking about trust rather than unionization. i think unionization is one vector that some small percentage of employees are focused on i think employees are focused on having a voice relative to military contracts, relative to going into china, relative to if you think about that ascension health thing, where google went in, took data supposed to be kept in the cloud, ingested it into ai. i think employees are legitimately concerned about some business practices in ways they weren't historically. some want to unionize to gain power to deal with that. clearly that's what the nlrb will be focused on

at the same time, this issue, if you lose trust of employees when employees are the principal asset of the business, that's a terrible thing for management to do >> doesn't seem worried about telling employees we need to work with the government. >> neither is microsoft. >> not arguing with you. i think we are going to see whether this is a different generation than ones in the past, john makes a powerful point, they may be able to buy off everybody that matters, keep everybody happy and prevent any kind of action, historically that's what companies have done when they had labor unrest, tried to make tactful moves that take away the energy for organizational activities. from google's point of view, tactics are so overtly hostile to the employees effected, but that's radical change in behavior if i were a shareholder, i would be worried about the fact this could spiral out of control, and in a company where there are

other places to work, you might lose some key employees over issues of trust. >> i have a feeling we are not done talking about this conversation, especially where google in particular is concerned. that said, appreciate your insights we have to mention part of the reason you're in new york city doing a gig, a concert here with somebody that we know as well from the cnbc universe >> my band, dewey decibel system has a nine show east coast tour. playing tonight in port chester, new york at the cap. playing saturday night in washington, d.c. with steve liesman's band that will be at gypsy sally's. friday night, we are in manhattan at hill country barbeque, and we will be tomorrow night in asbury park at the wonder bar today is dewey decimal system day, and we will be celebrating

that want everybody to come see it. >> good play on words. >> roger, thank you. when we come back, the ceo of mondb ogon the heels of its results. don't go away. one out of five kids with cancer in america will not survive... what if that child was someone close to you? our dad, danny thomas, founded st. jude to help give every child a seat. thanks to you. donate now at stjude.org... ...or shop where you see the st. jude logo. doesn't he look like dad? i wouldn't be here if i thought reverse mortgages, took advantage of any american senior, or worse, that it was some way to take your home. learn how homeowners are strategically using a reverse mortgage loan to cover expenses, pay for healthcare, preserve your portfolio and so much more.

a reverse mortgage loan isn't some kind of trick to take your home. it's a loan, like any other. big difference is how you pay it back. find out how reverse mortgages really work with aag's free, no-obligation reverse mortgage guide. with a reverse mortgage, you can pay whatever you can, when it works for you, or, you can wait, and pay it off in one lump sum when you leave your home. discover the option that's best for you. call today and find out more. i'm proud to be a part of aag, i trust em, i think you can too.

and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk i am scott wapner. halftime report is top of the hour from here at one market in san francisco. former twitter executive, find out where they think the money will be made in 2020 also ask them about their former

company and ceo jack dorsey. an exclusive with the one that runs sequoia capital business. he sits on the boards of airbnb, square, mongodb, which is soaring. he will tell us what the ipo pipeline looks like for the next wave of companies planning to go public and tray basalo is with us she will tell us what she's finding in the valley. trying to make money in tech see you at noon. jon, 15 away >> scott, you got the investor, sequoia, we have mongodb when we come back, the ceo joins us when "squawk alley" comes back

looking around here i see tablets, laptops, printers, smartphones. they're all connected to the internet. they're all connected. can your network handle all those devices? sometimes. comcast business runs on the nation's largest gig-speed network. so you can get the bandwidth you need to power all of your devices at peak performance. if all of my devices could have that kind of speed, i would be dancing! get started with secure 35-megabit internet and one voice line for just $64.90 per month. call today. comcast business. beyond fast.

welcome back shares of mongodb higher by about 2% this morning. the company out with stronger than expected q3 results total revenue up 52% year over year joining us to discuss the company's strong quarter and 2020 outlook >> thanks for having me back >> so your best of breed in this mega scale cloud world, how much of your growth is off of the small base how much do you think you've cracked the code to navigating that space when people are trying to figure out which cloud provider to go with and which database to use? >> you have to remember that we're going after one of the

largest markets in enterprise software $64 billion in size, $100 billion in about three years why? because every company is becoming a software company. more software means more data, which means more databases so this market is exploding. and the incumbent technology is over 40 years old. it's the relational database that was designed in 1970. oracle founded in 1977 talking about a technology that's basically precloud, premobile and preinternet. so the world is looking for a new solution, and people are recognized the document database is a much better way to organize data and that's evidenced by the fact we have almost 16,000 customers in some of the largest industries, some of the most sophisticated customers in nearly every geography and most recently just announced a large telecom company in asia that replaced oracle with mongodb to drive lower cost and more innovation >> i want to pick up this

contention that with atlas and with the move to the cloud, the fact that you're revving the product more frequently. you don't need to spend as much on marketing amazon which is a newer competitor to you, they are spending more on sales and marketing. they've won the street on that if you don't need to spend as much on marketing in the cloud era, why are they spending so much are they doing something wrong or will you have to spend more and more as you chase more customers? >> we're investing a lot in marketing. in sales and marketing we're adding a lot of feet on the street, doing a lot of work around self-service. that means investments in our digital platforms and product-like growth initiatives. we're also partnering with the cloud vendors because they have massive reach and we work with amazon, azure. so that enables them to have complete choice about what cloud pl platform to use and if they want to run on premise.

they don't have to rewrite one line of code they have the optionality to move their workload as their business conditions work which is a compelling business proposition. >> why are all of these cio spending intention surveys so weak and do you think they clear up if trade solidifies in the next couple of months >> for a company like us going after such a big market. canada, we have half a percent share and we're the new incumbent. for us, that doesn't really affect our business. we're rapidly adding sales capacity, investing havely in our products, expanding our reach. we announced a big deal with alibaba in china we're trying to promote mongodb as a global data platform around the around and our customers and financial performance reflects that >> every company is basically converting into becoming a software company or wanting to be a software company. how big this opportunity is and a market that's going to grow to $100 billion over the next couple of years. i understand how big the opportunity is right now in the near and medium term

what happens once that conversion takes place >> we have a long way to go. so even if you -- just to put things in perspective. if you have 5% share we're bigger the opportunity to create real value here, enormous value which is why investors have been real excited about our story. but back to your point, the reason every company is becoming a software company is because your perception of a company is directly correlated to your experience with, say, a company's website or mobile application. and if your experience is poor, you perceive that company to not be very innovative you view them to be a very modern company so companies are investing a lot in software. consequently, developers have tremendous power which means they choose technology that makes them more productive mongodb helps develop velocity and you see that even at like amazon show last week. we were one of the largest sponsors of that show. our branding was everywhere and we had meetings with thousands

of customers and we do that with microsoft and azure as well. >> let's be honest every company is not a software company. despite the fact that when software valuations are out, everybody wants to say they are. i mean, every company that's got a physical location is not a real estate company. it's not good at it. i mean, that's a key thing here, right is that you are arguing that you're good at what you do -- >> yes >> -- and that people should pay attention to that. how do you separate in this era when everybody wants to be tech. we've been through the weed work stuff and there's more coming. what technology companies really do and what companies that just use technology really do >> so your point is that there's other companies trying to pretend to be software companies are not really software companies. my point is that customers are using software to enable, define or create their value proposition. you see that across almost every other industry which is why they gravitate to companies like us and to mongodb because developers have consequently a lot more power and influence about how technology decisions

are made and they want to use mongo db to drive more velocity which is why the largest banks, telcos, media companies, start-upps are all using us >> dev, ceo of mongodb the stock higher by a couple percent. >> great to be here. thank you. a check of where the major averages stand this tuesday morning. we've been all over the map. currently close to the flat line as we weigh a flurry of trade-related headlines all morning alg.on "squawk alley" is back in less than three minutes don't go away. hone, laptop, your other smartphone... woman: is this all the devices you have? your tablet... seriously? smartwatch, your backup tablet, and... woman: anything else in your bag? ...whatever that is. (beeping) this isn't working. introducing samsung mobile workspace solutions. with the galaxy note10 with dex software, you can run your entire business on the one device that does it all. samsung business solutions.

on the one device that does it all. - [spokesman] if you've tried colleg(group cheering)shed, snhu lets you transfer up to 90 credits toward you bachelor's degree. - [woman] it doesn't matter how old you are, you can do it, you can finish. - [spokesman] finish your degree at snhu.edu

softbank is pulling out of its investment in dog-walking company wag. this comes as softbank faces scrutiny over investments into wework and uber. i don't know, guys wag has been under fire recently it's also had some celebrity firepower until recently as well olivia munn has been an investor and participant in the company the bigger focus here is the scrutiny on softbank and what it has chosen to invest in and why. >> they put $300 million into

this dog-walking company also not a software company. >> that's literally couch cushion change for them. you know that, right we're all aware of this. >> we'll see what the after the bell brings. dave & buster's and gamestop continue to post let's get to the judge in a special edition of "the half." carl, thanks i'm scott wapner at one market in san francisco as the "halftime report" continues its look at tech investing in the year ahead another great lineup today starting with two guys who used to be at the top of twitter. former ceo dick costello and adam bain. they now have an investment fund together focusing on private software companies they join us today in a cnbc exclusive. it's great to have both of you here >> thanks for having me back >> we've been coming back once a quarter to see what's going on with valuations.