2025-06-21 22:00:29
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🌐 Accenture: AI Builds, Bookings Shrink
🫒 Darden: Olive Garden Delivers
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Accenture topped expectations for Q3 FY25 but fell short where it counts—future work. Revenue grew 8% Y/Y to $17.7 billion ($380 million beat), and EPS came in at $3.49 ($0.17 beat), but new bookings dropped 6% to $19.7 billion, falling short of estimates for the second quarter in a row.
Still, Gen AI growth continued, albeit a a slower sequential pace. Bookings reached $1.5 billion—a new high—while revenue from Gen AI rose to $700 million. That brings total Gen AI revenue to $1.8 billion fiscal year-to-date, proof that these deals are moving from hype to delivery.
To keep pace, Accenture is undergoing its biggest shake-up in years. Starting September, all services—from strategy and tech to marketing and ops—will merge into a single unit: Reinvention Services, led by Americas CEO Manish Sharma. The goal? Speed up delivery and embed Gen AI everywhere.
Despite slowing bookings, Accenture slightly raised full-year guidance. But investors weren’t sold. The stock dropped ~7% post-earnings as analysts flagged the second straight decline in bookings, ongoing US federal spending headwinds, and leadership turnover. About 2% of Q4 growth is expected to be shaved off from reduced government contracts.
Accenture is walking a tightrope: balancing its AI-driven reinvention story with macro and sector-specific risks. The company returned $2.7 billion to shareholders this quarter and still plans $1–1.5 billion in acquisitions for the year. But without a bookings rebound, even strong delivery might not be enough to satisfy Wall Street’s forward-looking lens.
Darden wrapped FY25 with a solid Q4, driven by strong same-store sales at Olive Garden and LongHorn. Revenue rose 11% Y/Y to $3.3 billion ($40 million beat), and EPS came in at $2.98 (a $0.01 beat). Same-restaurant sales climbed 4.6%, led by Olive Garden (+6.9%) and LongHorn Steakhouse (+6.7%)—both ahead of expectations.
The recent Chuy’s Tex Mex acquisition (103 locations) and 25 net new openings added fuel to growth. But not all brands performed: Fine dining same-store sales fell 3.3%, and Bahama Breeze is now on the chopping block, with Darden exploring a sale after closing 15 underperforming locations.
2025-06-20 20:02:31
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With an estimated 3.5 billion fans, football is more popular than basketball, baseball, and American football combined. The 2022 World Cup final between Argentina and France drew an estimated 1.5 billion viewers.
And this month, the sport is getting a whole new spotlight.
For the first time, the FIFA Club World Cup is adopting a World Cup-style format, featuring 32 of the best clubs (based on recent performance) competing over a month-long tournament with more than $1 billion in prize money—$125 million for the winner alone.
📍 Matches are being played in iconic US stadiums—from the Rose Bowl to MetLife—giving American fans a rare chance to see football royalty up close.
It’s no longer a niche, mid-season event. It will be held every four years, just like its national team counterpart. Think of it as the warm-up act before the 2026 FIFA World Cup, co-hosted by the US, Canada, and Mexico, and expected to draw over 5 billion viewers worldwide.
But does all this attention turn into profits? Let’s break it down.
Let’s start with the big picture.
Here are the 15 most valuable football clubs in the world, ranked by enterprise value—and visualized by yours truly. The estimates come from Forbes, based on historical transactions, future economics, and data from the Deloitte Football Money League.
10 of these 15 clubs are competing in this year’s FIFA Club World Cup, making the tournament a true showcase of the sport’s elite. The most valuable non-European club is LAFC (Los Angeles Football Club), ranked 15th overall.
According to Deloitte, Real Madrid became the first club to surpass $1 billion in revenue during the 2023–24 season. But even at that level, sporting performance remains critical, particularly in Europe, where participation in the all-important UEFA Champions League (determined by domestic league success) directly impacts broadcast revenue, sponsorships, and matchday income.
🇺🇸 Still behind the NFL and NBA: Real Madrid leads European football in value—but just barely cracks the global top 15 across all sports. US teams dominate thanks to massive local media deals, premium sponsorships, and fanbases with deeper pockets.
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Football may be the most watched sport in the world, but it’s also one of the toughest to turn into a profitable business.
Despite massive global fan bases, billion-dollar sponsorships, and TV deals, most clubs operate on razor-thin margins or deep losses.
That explains why football clubs are usually owned by billionaires, celebrities, or sovereign wealth funds chasing legacy, not profit.
🎬 Hollywood stars: Ryan Reynolds and Rob McElhenney (Wrexham)
🏀 Athletes-turned-investors: LeBron James (Liverpool)
🛢️ Oil money: Sheikh Mansour (Man City), Saudi PIF (Newcastle)
💼 Deep pockets: Todd Boehly (Chelsea), Jim Ratcliffe (Man United)
But wait, there’s more:
Luxury money steps in: Bernard Arnault’s family (LVMH) recently took majority control of Paris FC, with ambitions to build a Ligue 1 contender.
The multi-club model goes public: John Textor’s Eagle Football, which owns stakes in Crystal Palace, Lyon, and Botafogo, has filed a confidential S‑1 to IPO in the US—a potential first test of whether investors are ready to back a publicly traded, multi-club football empire.
Ownership isn’t about ROI—it’s about status, power, or passion.
So, we crunched the numbers for the only three clubs in the global top 15 that are publicly listed—Manchester United, Juventus, and Borussia Dortmund—to see how their businesses stack up.
Spoiler: it’s not pretty.
FY24 (fiscal year ending in June):
Total revenue: £662 million (+2% Y/Y).
Operating loss: £69 million (–10% margin).
Main revenue stream: Commercial (£303 million, flat Y/Y).
Manchester United remains a global powerhouse off the pitch, thanks to its iconic brand, massive merchandising machine, and army of sponsors. Commercial revenue still leads the way, making up nearly half of total income—proof that the jersey still sells, even when the trophy cabinet stays dusty.
Broadcasting revenue rose 6%, helped by a deep FA Cup run and consistent global TV demand. Matchday sales were flat, with Old Trafford still drawing massive crowds despite an underwhelming 8th-place Premier League finish.
🔎 SWOT Snapshot:
Strengths: Global fanbase, brand equity, diversified revenue.
Weaknesses: Underperformance on the pitch relative to wages.
Opportunities: Commercial expansion in the US and Asia.
Threats: Missed Champions League = massive revenue gap.
Fun fact: In FY24, United spent £365 million on employee benefits—more than the GDP of some island nations. The club expanded its losses, but that’s what happens when you pay Champions League wages for Europa League results.
FY24 (fiscal year ending in June):
Total revenue: €395 million (–22% Y/Y).
Operating loss: €175 million (–44% margin).
Main revenue stream: Sponsorship & advertising (€133 million, –12% Y/Y).
Juventus had a brutal year on and off the pitch.
With no UEFA competition in FY24, media rights took a massive hit, down 37%. That drop alone wiped out nearly €60 million in top-line revenue.
Sponsorship and advertising remained the largest contributor, but also fell by double digits. Ticket sales only declined by 6% thanks to loyal fans in Turin, but without European nights, it wasn’t enough.
The kicker? Juventus burned through €170 million in amortization of player contracts—more than 40% of revenue. That’s the cost of years of aggressive transfer spending catching up, with no result to show for on the field.
🔎 SWOT Snapshot:
Strengths: Brand history, loyal fanbase, diversified revenue streams
Weaknesses: No European competition = steep media losses
Opportunities: Bounce-back expected with UCL participation in FY25/26
Threats: Massive amortization burden, aging squad, on-pitch instability
Juve managed to win the Coppa Italia in FY24, and their women’s team won the Italian Super Cup. But smaller trophies don’t pay the bills when your broadcast deals vanish.
FY24 (fiscal year ending in June):
Total revenue: €509 million (+22% Y/Y).
Operating profit: €46 million (21% margin).
Key boost: Net transfer income of $98 million (thanks, Jude).
Among Europe’s top clubs, Borussia Dortmund stands out for one reason: they actually made money.
Revenue jumped 22%, powered by a Champions League final run. TV marketing was the largest revenue stream (€206M), surging 31% with strong European exposure. Meanwhile, merchandise and matchday income soared, as fans packed Signal Iduna Park and stocked up on black-and-yellow gear.
But the real story? Transfers. Dortmund sold Jude Bellingham to Real Madrid for €103 million, resulting in $98 million in net transfer income, enough to swing the club into the black.
🔎 SWOT Snapshot:
Strengths: Elite youth pipeline, profitable transfers, fan engagement
Weaknesses: Profit volatility tied to player sales
Opportunities: Convert footballing success into commercial growth
Threats: Struggles in Bundesliga could hurt future TV revenue
This is Dortmund’s blueprint—buy low, develop, sell high. They’ve done it with Erling Haaland, Jadon Sancho, Ousmane Dembélé, and more recently, Bellingham. But this model is hard to repeat, and every miss hurts more when you’re relying on it.
It’s one of the biggest paradoxes in sports.
Football clubs are worth billions. Their fan bases dwarf those of most Fortune 500 companies. Yet most still bleed red ink. And it’s not because they’re run poorly—it’s because the economics of the sport are structurally flawed.
Here’s why the business model is so tricky:
⚽ Sky-high payrolls: Competition for star players is fierce.
💸 Transfer dependency: Clubs rely on selling talent like it's inventory, but there’s no guarantee of a buyer (or a next breakout star).
🏟️ Low scalability: Matchday income is capped by stadium size, and expansion is costly and slow.
🎯 Performance whiplash: A bad season can tank Champions League money and major sponsors. European clubs even face relegation.
📉 Media disruption: Younger fans increasingly skip full games in favor of TikTok, YouTube highlights, or creator commentary.
📺 The death of cable: As the traditional sports bundle unravels, so does the guaranteed flow of broadcast cash.
Even with all the global attention, football remains one of the hardest businesses to monetize consistently. Performing on the pitch is not enough, and clubs must keep up with a fanbase that’s moving on from the match entirely.
🏛️ Meanwhile, FIFA and UEFA play a critical role behind the scenes.
As football’s governing bodies, they’re technically nonprofits—but they oversee billions in revenue from media rights and sponsorships. FIFA expects $11 billion in revenue across its 2023–26 cycle, largely from expanded tournaments like the Club World Cup.
While these funds are redistributed through payouts and development programs, the system reinforces a top-heavy model: governing bodies earn big from global attention, while clubs carry the cost of competing.
The business of football is booming in attention and valuation, but not always in profit for the pro clubs.
For now, most clubs look like passion projects, powered by billionaires, nation-states, and celebrities chasing legacy over ROI.
But the game is changing.
Private equity, sovereign wealth funds, and global investors are now betting big, not just on trophies, but on the long-term potential to monetize global fanbases through:
🌍 Global tours and sponsorship deals.
📺 Streaming and direct-to-consumer media.
🧢 Merchandising, licensing, and brand extensions.
📱 Digital content, NFTs, fantasy leagues, and more.
The beautiful game may not always be a beautiful business.
But for many owners, legacy is the real prize.
That’s it for today!
Stay healthy and invest on!
Disclosure: I am long AAPL, META, and NFLX in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2025-06-17 20:01:55
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Forget the 2017 Golden State Warriors.
Meta is building its very own “super team.”
Last week, Mark Zuckerberg stunned the tech world not by buying a company, but by buying into a person: Alexandr Wang, the 28-year-old CEO of Scale AI. In exchange, Wang will lead a secretive new initiative inside Meta: a “Superintelligence” lab tasked with building AI that could one day surpass human capabilities.
And it might just be the most expensive acqui-hire in tech history.
But why now? Why Wang? And what’s behind the “superintelligence” concept?
Beneath the headlines lies a deeper story about power, pressure, and platform survival. Let’s break down what Meta’s really building.
Today at a glance:
What just happened?
Why Scale? Why now?
Who is Alexandr Wang?
Superintelligence or Superbranding?
Big Tech’s largest AI deals (so far)
Red flags & fine print
Zuckerberg’s last stand?
The investor lens
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Meta just made its second-largest deal ever, without technically acquiring anything.
The company is investing $14 billion for a 49% stake in Scale AI, a startup best known for powering the data infrastructure behind AI models used by OpenAI, Google, Microsoft, and yes, Meta itself.
But the real story isn’t the ownership stake.
It’s all about Alexandr Wang, Scale’s 28-year-old founder and CEO, who is joining Meta to lead a newly created Superintelligence lab, a high-priority division reporting directly to Mark Zuckerberg.
The lab’s mission is to build next-generation AI models that go beyond today’s LLMs—potentially toward Artificial General Intelligence (AGI), or even “superintelligence,” a term that suggests machines more capable than the human brain.
The deal is structured as a partial acquisition, likely designed to sidestep regulatory scrutiny. Instead of buying Scale outright, Meta is funneling most of the investment to existing shareholders and locking in access to Scale’s services. Think of it as a strategic acqui-hire at $14 billion scale—with influence, not control.
It’s Meta’s boldest AI move yet—and one of the most expensive recruiting packages in tech history.
This deal instantly:
Locks in long-term access to Scale’s data-labeling engine.
Injects new leadership into Meta’s fragmented AI org.
Sends a signal: Meta is all-in on building foundational models—and it’s done waiting to catch up.
It’s a power reshuffle, a talent play, and a strategic reset all wrapped into one.
Meta’s AI efforts are, by many accounts, falling short.
2025-06-14 22:00:41
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Today at a glance:
☁️ Oracle: Cloud Demand Outpaces Supply
🎨 Adobe: Skepticism Lingers
🐶 Chewy: Autoship Momentum Builds
🎮 GameStop: Buying Time With Bitcoin
🛠️ GitLab: AI Growth Meets Higher Scrutiny
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Oracle closed FY25 strong, with Q4 revenue growing 11% Y/Y to $15.9 billion ($310 million beat), and EPS of $1.70 (a $0.06 beat).
Cloud remains the growth engine: IaaS revenue jumped 52% to $3 billion, SaaS rose 12% to $3.7 billion, and total cloud grew 27% to $6.7 billion. Remaining performance obligations (a leading indicator) surged 41% to $138 billion.
Looking ahead, CEO Safra Catz set aggressive targets: over 40% cloud growth in FY26, including over 70% for infrastructure. That’s miles ahead of AWS’s 19% growth in 2024, though Oracle’s cloud business still trails far in absolute size.
Some big swings are still in early innings. Stargate—the ambitious $500 billion AI data center joint venture with OpenAI and SoftBank—is “not yet formed,” a sign of delays amid economic volatility and tariff uncertainty. Still, Oracle is plowing ahead with global data center expansion, planning to triple multicloud capacity and capex rising to $25 billion this year. Larry Ellison declared Oracle will one day outbuild all its cloud rivals—though the timeline remains theoretical. For now, Oracle’s AI and infrastructure bets are translating into real momentum, and Wall Street is buying it, with shares rising post earnings.
Adobe’s Q2 revenue grew 11% Y/Y to $5.9 billion ($50 million beat) and EPS was $5.06 ($0.09 beat). Full-year guidance saw a big lift to ~$23.55 billion in revenue in the midrange ($125 million raise). The Digital Media segment, home to Creative Cloud and Document Cloud, grew 11% to $4.3 billion, while Digital Experience rose 10% to $1.46 billion. RPO rose 10% Y/Y to $19.7 billion, a slowdown from 12% Y/Y in Q1. Adobe repurchased 8.6 million shares in the quarter. CFO Dan Durn cited strong AI adoption as a key driver, noting that Firefly—Adobe’s generative AI model—has now powered over 24 billion content creations.
Still, skepticism lingers. While Adobe continues to expand its AI footprint with new tools and subscriptions, some investors remain wary of rising competition from upstarts like Canva, Figma, Midjourney, and Runway. Analysts debate whether Adobe is a winner or a laggard in the AI race, even as it raises guidance and maintains strong cash flow. With AI revenue still a fraction of the whole (~$250 million in ARR expected by the end of FY25), Adobe’s long-term upside may hinge on proving it can not only defend but expand its creative moat in the age of generative design.
Chewy’s Q1 revenue rose 8% Y/Y to $3.1 billion ($40 million beat), and adjusted EPS reached $0.35 ($0.01 beat). Active customers increased by 4% to 21 million, with net sales per customer rising 4% to $583.
Autoship sales surged 15% and now make up a record 82% of revenue. Gross margin expanded to 30%, and adjusted EBITDA hit $193 million (6% margin). Chewy delivered solid free cash flow and repurchased $23 million in stock. Key initiatives like Chewy Vet Care and Chewy+ membership are gaining traction, supporting long-term ecosystem growth. But none of this mattered.
2025-06-13 20:02:49
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Each year, Apple previews the future of its ecosystem for developers at WWDC.
That future includes navigating lawsuits, regulations, and the AI arms race.
Apple is behind in AI. And it’s starting to show.
Paradoxically, though, thanks to how it makes money, it might not matter.
Let us explain, with some context.
Ahead of WWDC, Apple dropped a glossy stat: the App Store facilitated $1.3 trillion in commerce last year. That’s up from $0.5 trillion in 2019, good for a 20% CAGR.
Sounds impressive—and it is. But let’s read between the lines.
The stat comes from a report Apple commissioned to reinforce its favorite story: the App Store is an economic engine, not a rent-seeking tollbooth.
Here’s the key message: 90% of that $1.3 trillion isn’t subject to Apple’s fees. It includes Uber rides, Amazon orders, and other physical transactions that Apple doesn’t actually process.
The remaining slice, digital goods and subscriptions, where Apple does take a cut, still brought in ~$130 billion. And that slice is under fire.
Following a major antitrust loss in 2021, Apple was required to allow developers to link to external payment methods. Apple complied—sort of—by allowing links, but slapping a 27% fee on any sales made that way. Critics called it a sham fix, padded with “scare screens” and fine print meant to discourage adoption.
Now, judges, regulators, and developers are pushing back:
In the US, a court ruled Apple can’t charge the 27% fee on out-of-app payments.
The EU charged Apple with violating the Digital Markets Act by making alternative payments too painful to implement.
Developers like Spotify and Epic are routing users around Apple’s ecosystem, and calling the old model a monopoly in disguise.
A possible misstep for Apple? Not treating games as a distinct case. Sony and Microsoft both charge game publishers a 30% cut on digital sales and in-game purchases, just like Apple, and they’ve faced little regulatory pushback for it.
Here’s the thing: Games are estimated to represent over half of all digital goods and services sold on the App Store. Had Apple carved out non-gaming apps with a distinct model, it might have defused antitrust pressure on its broader app economy.
As Uncle Ben once said, “With great power comes great responsibility.” Apple says its model protects users and ensures trust. But to many, it looks like a last stand to preserve one of the most profitable tollbooths in tech.
But wait, there’s more. As our search habits face disruption from ChatGPT and other AI challengers, Apple is a collateral casualty. Those reported $20 billion+ in traffic acquisition payments from Google (tied to Safari search traffic) are at risk.
WWDC was all about Apple defending the foundation of its services empire, while regulators close in.
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Apple’s 2024 WWDC promised groundbreaking AI-powered Siri features that have yet to be shipped or demoed.
The keynote began with a brief recap of Apple Intelligence features released over the past year, including Genmoji, Writing Tools, and Notification Summaries.
SVP of Software Engineering Craig Federighi admitted Apple was behind on Siri:
“This work needed more time to reach our high-quality bar, and we look forward to sharing more about it in the coming year.”
Translation: it's not ready. And it probably won’t be before 2026.
That explains why Apple may have been more conservative with any AI announcements this year, only showing features that are ready to ship in 2025.
In the AI era, where Google, Microsoft, and OpenAI are releasing new capabilities every other week, Apple increasingly appears several laps behind in the race.
Siri, originally pitched as the centerpiece of Apple Intelligence, now lags behind not just ChatGPT and Gemini—but Alexa, too. Internally, Apple has already reshuffled leadership: Siri now falls under Mike Rockwell (formerly of Vision Pro), signaling a pivot after reported reliability issues with the LLM-powered assistant.
Last year, Apple promised its AI would be personal, private, and deeply integrated into the fabric of your device. Instead, it continued its slow integration of AI into everyday actions, expanding Apple Intelligence into more places, like live translations and writing tools. That said, these are becoming table stakes.
But the flagship moment—Apple’s full-on assistant leap—still hasn’t arrived.
Apple is giving developers access to its on-device language models via App Intents and Shortcuts, allowing third-party apps to tap into AI-powered tasks without sending data to the cloud.
Opening Apple Intelligence to developers may not grab headlines, but it’s a critical announcement. It could spark a wave of new, privacy-first AI apps that can work offline and that Apple didn’t have to build itself.
On-device access means developers can skip expensive cloud inference costs, while users get privacy by default. No internet? No problem. Apple is betting privacy and affordability will lure developers into building directly on Apple Intelligence.
Apple Intelligence can now interpret images, extracting text, identifying objects, and describing layout with surprising fluency.
After taking a screenshot, users can now tap directly on elements to search for similar items or ask follow-up questions via ChatGPT.
See a pair of shoes in a screenshot? You can tap them to find similar options on Etsy or search for them on Google, right from the photo. This brings a ‘Google Lens’ feature directly inside the iPhone interface—no app switch required.
It’s a subtle, powerful shift: from AI as a destination, to AI as an invisible layer.
It also opens the door to more commercial intent. These “screenshot search” interactions could drive meaningful downstream queries—fueling the Traffic Acquisition Cost (TAC) revenue Apple books from partners like Google, a major contributor to its Services segment.
The most visible change announced was a new design language called Liquid Glass.
More depth, blur, and consistency across iOS, iPadOS, macOS, and visionOS.
Feels modern, but familiar—this isn’t a jarring iOS 7 moment.
It’s about making Apple’s whole ecosystem feel more unified and intuitive.
The new design might require more time in the oven, based on screenshots shared online. The official release is still a few months away, allowing for fixes and improvements, so I would refrain from jumping to a conclusion for now.
Apple dropped version numbers in favor of calendar-year naming (iOS 26, macOS 26, etc.). And all platforms—from iPhone to Vision Pro—share the new visual language and system features.
The goal: consistency across form factors, so switching devices feels seamless.
Apple doesn’t have a console, but it does have something no one else does: half a billion people playing games on iPhone.
This year, Apple announced:
A new Games app, acting as a central hub for all titles—native or Apple Arcade—with shared leaderboards, achievements, and discovery tools.
A continued push to bring AAA titles to Mac and iPad, with Ubisoft, Capcom, and others already onboard.
Still, for a platform that generates tens of billions from gaming every year, the announcements felt underwhelming.
The bigger question: Will Apple eventually carve out games as a distinct App Store category with separate business terms? The company provided no news on that front.
Services account for roughly a quarter of Apple’s revenue through subscriptions, partnerships (such as Google’s TAC), payments, and App Store fees.
But it's not just about the top line. Every dollar received from Services generates more than twice the gross profit of Products. As a result, Services accounted for a substantial 42% of Apple’s gross profit in FY24, making it a key engine of profitability.
The great Apple paradox? Cupertino earns over $20 billion per year from search, without offering a search product. In fact, Apple makes much more from Search than Microsoft does—and Microsoft owns Bing.
Now, Apple aims to pull off the same trick in the AI era: becoming the gateway to revenue-bearing AI prompts sent to OpenAI, Google, and others.
Once ChatGPT starts running ads, how many billions might OpenAI pay Apple each year to remain the preferred model on Apple Intelligence?
Eventually, Apple could rake in tens of billions in AI-related Services revenue, not coming from its own AI products.
This isn’t just pragmatism. It’s strategy. Apple is partnering with the best, offering user choice, and wrapping it all in privacy guardrails.
Apple doesn’t need to build the best AI model. It just needs to be the most convenient and trusted entry point to them. Apple can capture a significant share of the new technology wave simply by enabling it on its products. Its base of over 1 billion active devices will do the legwork.
That is, as long as regulators don’t get in the way.
Apple concluded its WWDC keynote with a hilarious song written entirely from real App Store reviews. Who else is getting goosebumps?
“To the people who develop the apps we love.”
Apple didn’t steal the AI spotlight this year—but it doesn’t have to. As long as it captures the entry point, the prompts, and the payments, it can win on monetization. The only question is whether it can stay just boring and seamless enough that users—and regulators—don’t even think about it.
That’s it for today!
Stay healthy and invest on!
Disclosure: I am long AAPL, GOOG, and NVDA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2025-06-10 20:02:32
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Why all the excitement over a company that makes... a $1 coin?
Welcome to the strange and powerful world of stablecoins—crypto’s most misunderstood corner, and maybe its most useful one.
Stablecoins like USDC aren’t about moonshots or meme hype. They’re designed to stay exactly where they are: $1.
And yet, they’ve processed trillions in volume, become the backbone of DeFi (Decentralized Finance) and cross-border payments, and are now central to the US government’s plan to regulate digital money.
So what exactly is a stablecoin?
Why did Circle become a Wall Street darling overnight?
And why should you care about a crypto token that’s... intentionally boring?
Let’s break it down.
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In a world where Bitcoin can drop 10% before lunch, stablecoins are built to… not move. At least, not in price.
A stablecoin is a digital token pegged to a stable asset, usually the US dollar. One USDC = $1. Always. That’s the promise.
But how?
Behind every USDC is real money—a dollar (or short-term US Treasury) held in reserve. When you give Circle a dollar, they issue one USDC. When you redeem it, they give your dollar back and burn the token.
It's a simple idea with massive implications:
🌍 Global reach: Anyone with internet access can hold a dollar-backed asset without needing a US bank account.
⚡ 24/7 transfers: Unlike bank wires, stablecoins settle in seconds. No weekends. No holidays.
🔁 Programmable money: Developers can build apps that move dollars as easily as data.
It’s like putting the dollar on internet rails—and suddenly, money moves at the speed of software.
No wonder fintechs, payment networks, and crypto protocols are racing to plug into it.
Circle is the company behind USDC, the second-largest stablecoin, with around $61 billion in circulation, trailing only Tether’s USDT at over $155 billion.
While Tether dominates by size, Circle is betting on something else: trust.
Where Tether has long faced criticism for its opaque reserve disclosures and offshore operations (now based in El Salvador), Circle has leaned into transparency, US regulation, and Wall Street partnerships.
It’s not trying to be the biggest stablecoin.
It’s trying to be the most trusted one, especially by regulators, institutions, and fintechs building on crypto rails.
So what exactly is Circle’s role?
👉 It mints and redeems USDC. When a customer sends $1 to Circle, they get 1 USDC. When they send back the USDC, they get $1 in return. No gimmicks, no partial backing—just a tight, transparent peg to the dollar.
👉 It safeguards reserves. Circle holds that money in cash and short-term US Treasuries, managed in part by BlackRock. The reserves are audited and publicly attested monthly, unlike its larger rival, Tether.
👉 It earns interest. Here’s the business model kicker: Circle earns yield on the dollars it holds. As interest rates rise, so do Circle’s earnings. In 2023, it reportedly earned hundreds of millions in revenue, largely from Treasury income.
👉 It provides infrastructure. Circle isn’t just minting coins. It’s building a platform. From APIs that power crypto wallets and fintech apps, to integrations with Visa, Coinbase, and Stripe, Circle is quietly becoming the backend of the “internet dollar.”
Instead of trying to be the next PayPal, they want to be what PayPal plugs into.
Circle’s business model is deceptively simple: They earn interest on the billions of dollars backing USDC—and they’re very efficient at it.
As the visual shows, $1.7 billion of Circle’s FY24 revenue came from reserve income, while “other revenue” (such as API services or platform fees) was just a rounding error.
The real eye-opener? Circle turned that into $167 million in operating income, with a tidy 9% margin. Despite over $1 billion in partner fees—primarily to Coinbase, which earns a 50% share of net USDC revenue—Circle is solidly in the green.
Most of the USDC reserves aren’t Circle’s corporate assets.
They are held off-balance sheet, in the Circle Reserve Fund managed by BlackRock.
This fund is legally separate and custodied by BNY Mellon.
The fund’s assets—US Treasuries and some cash—back the USDC in circulation, but don’t belong to Circle in the way that operating capital does.
As a result, $50+ billion in reserve assets (as of May 2025) show up in disclosures, attestations, and footnotes, but not in Circle’s balance sheet.
🧠 The takeaway: Stablecoins aren’t just digital dollars. When done at scale, they become interest-bearing machines.
Circle isn’t building some experimental crypto toy. It’s operating at real-world scale: