Kroger Customers Feel the Price Pinch and Other Market News

In this podcast, Motley Fool senior analysts Ron Gross and Maria Gallagher discuss:

• Adobe's (ADBE -0.77%) latest results being outweighed by guidance.
• Roku's (ROKU 1.58%) new partnership with Walmart (WMT 0.57%).
• Winners and losers from the trend of people returning to restaurants.
• The latest from Kroger (KR -0.43%), Oracle (ORCL -0.39%), and Chewy (CHWY 1.92%).

Motley Fool senior analyst Auri Hughes and CEO Tom Gardner talk with Rimini Street CEO Seth Ravin about his company's unique opportunity and its legal battle with Oracle.

Maria and Ron share two stocks on their radar: Rover Group and Sportradar Group.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on June 17, 2022. 

Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill and I am joined by Motley Fool Senior Analyst Maria Gallagher and Ron Gross. Good to see you both.

Maria Gallagher: Nice to see you. 

Chris Hill: We've got the latest headlines from Wall Street. We'll talk with Rimini Street CEO Seth Ravin. As always, we've got a couple of stocks on our radar. But we begin with the market in general. This week, the S&P 500 officially entered bear market territory. On Wednesday, the Federal Reserve raised interest rates by three-quarters of a percent. A move that provided a short-term rally but there was more red on Thursday as the market headed for its worst single week since March of 2020. Ron, you and I were talking Wednesday afternoon after the rate hike came out, everything turned green, everything was going higher. It was the total opposite on Thursday, it's almost like investors can't seem to make up their minds.

Ron Gross: Yep, I think that's right and I am getting whiplash from the market changing its mind from one day to the next, as you said, Wednesday, the day of the 75-basis-point hike announcement, Wednesday was mostly about feeling good that the Fed was aggressively pursuing lower inflation. They took the rate to a range of 1.5 percent to 1.75 percent. They expect the rate will end the year at 3.4 percent so more hikes to come. They're doing something. They're moving forward. Now, by definition, those hikes should slow the economy. That's actually the point. That's what they're trying to do. That's what will bring down inflation. But then we turn to Thursday, the very next day, Chris, everyone decides that the Fed is going to have a tough time engineering a soft landing and we're going to be going into a recession.

In fact, investors pointed to several signs of economic weakness that are already with us from real estate to a manufacturing survey to some weak jobless claims, historically low consumer confidence and stocks both solid, speculative, across the board, aggressively sold off on Thursday. Here we are. It's hard to say if we're near the bottom, it feels like it, but we don't know. I think there are some really great buys out there right now, but the trailing PE ratio on the S&P 500 is still a little bit high at 18.5 times from a historical perspective. I think the day is going to come when data shows moderating inflation and that is the day the market's going to move higher, both dramatically and quickly. The wildcards will be if we're in a recession at that point in time and if so, how deep that recession is. But when the market finds a bottom and starts moving higher that's going to be pretty dramatic I think.

Chris Hill: Yeah. Maria, it seems more and more market prognosticators are trying to guess whether or not we're in a recession, and how difficult that recession will be. But to Ron's point, we are starting to see some data. We got some data this week on things like airline ticket prices dropping for the first time this calendar year. Some data around the cost of freight into the United States coming down so it seems like the global supply chain that we've been talking about for two years now is starting to get a little bit better and hopefully, that means better things for US businesses.

Maria Gallagher: Yeah I would agree and I think anecdotally, a lot of times people will say that economists and financial people will talk about these numbers of inflation and the average American won't really notice or won't really care. They won't know what inflation is, but arguable what inflation should be I think the past year or two we've seen a lot more of the general consumer noticing things like the supply chain crisis and now with increased prices of goods and services in restaurants, all of that is really starting to hit the consumer. It's a delayed chain reaction and I think we're getting to the point in time where the consumer is really noticing and feeling this pain.

Chris Hill: Shares of Kroger are down this week, despite what looks like good first-quarter results and guidance. Speaking of what consumers are seeing, Maria, interesting to see Kroger sharing customer habits. More of their customers going for lower-priced brands and generics as inflation is hitting grocery stores.

Maria Gallagher: It was a solid quarter, you had identical sales without fuel increases up about four percent. Their profit margins, however, did fall with the company trying to maintain their reasonable prices that they're known for while those supply chain costs are still quite high and the freight costs are still quite high. They're looking for areas to cut expenses. They're trying to maximize the quantity of goods that trucks can pick up, they're buying extra inventory before prices rise further. They did raise their full-year guidance. Their identical sales will be up about 2.5-3.5 percent but I agree with you that what was really interesting to look at, what's that shift in consumer habits. They're saying that price-sensitive shoppers are buying bigger packages when they have the money, they're making smaller purchases that they go throughout the month. They're interested in cheaper store brands.

They're switching from beef to pork. We're seeing the price for food to eat at home have risen about 12 percent in the past year, which is actually the largest 12-month increase since 1979. Eggs are up 32.2 percent, milk is up 15.9 percent, poultry is up 16.6 percent. We're seeing that consumer habit shifting as well the typical US household is spending about $460 more every month to purchase the same basket of goods and services. I think that combined with the high prices of fuel, many people are shopping less. They're shopping more intentionally. They're not going as far away even if you, maybe like the grocery store that's a little bit farther, you're not going to pay the extra gas to get there. I think that's going to be something that's going to persist for at least a couple of quarters and I think that'll be interesting to watch.

Chris Hill: Adobe's second quarter profits and revenue were both higher than Wall Street was expecting, but shares of the software giant were down a bit on Friday after guidance for both the third-quarter and the full fiscal year came in lower than expected, Ron.

Ron Gross: Yep. You nailed it. Shares are up 50 percent from their 52-week high and they did trade down even further on weak guidance. The quarter was solid and management was quick to point out the highlights of what is going well. Record Q2 revenues, strong demand across all its business segments, winning in their established business, seeing significant momentum in new categories, delivered another quarter of strong financial results greater than two billion dollars in operating cash flow revenue up 14 percent, strength across their business with DocumentCloud up 27 percent but operating margins were a bit weak, a story we're seeing across-the-board due to some higher-cost.

Operating income only grew 8.7 percent while revenue was up 14 percent. You see less money flowing to the bottom line, earnings-per-share only up seven percent. As you said, investors were focused on the guidance. Headwinds include a higher tax rate, stopping sales in Russia and Belarus, negative impact of foreign currency. All hitting guidance. But I will say that those things are not really operationally related or I should say, they don't indicate any real impairment to the business so I'm actually not that concerned about the guidance. Trading at 25 times forward earnings is not that bad, but if you're only growing earnings per share seven percent and you issue weak guidance, you're going to get the stock to sell-off. That's just the way it goes. But let's keep an eye on some of the things. Focus on the operational side of their business to make sure they remain on track.

Chris Hill: Last week, we talked about reports that Netflix may be looking to acquire Roku. If that's true, Roku is not sitting still. The company announced a new partnership with Walmart this week, wherein people using Roku devices can buy items from Walmart using their remote controls. Maria, if you're a Roku shareholder I think you have to like the continued head-down focus of this business.

Maria Gallagher: Yeah, I would. I think they have their strategic goals, they're working to achieve them. I was talking a little bit to Emily Flippen this morning about this and she [inaudible 00:08:49] said that Roku has now achieved what Pinterest has been working on for many years, which is the product discovery with a seamless experience and trying to get people at their moments of inspiration or discovery and get them almost immediately to purchase. This is going to be an in-platform buying experience. If you're a viewer you're going to be able to press "Okay" with your remote on a shoppable ad, you're going to check out the details that will be pre-populated by Roku Pay. It's all through Walmart and it will be really easy. You won't even notice really that you are doing it. I think every Home Shopping Network, and every QVC would die to have this technology. I think of being able to get people exactly at their interest level so I think it's going to be pretty fascinating to see how that works in the next couple of quarters.

Chris Hill: Give them points for creativity too because you would look at Roku's business and think, well, they're in the business of streaming television, they're all about programming. They're all about keeping people on the platform, but this is a way to keep people on the platform and monetize shopping in a way that seemed unfathomable, maybe even 10, 15 years ago.

Maria Gallagher: I think a lot of it is a way to keep customers loyal. If you find the ease-of-use, so saying I can actually buy things easier with Roku than I can on lots of other different platforms. I think that's a way to keep customers engaged and keep consumers on the platform.

Chris Hill: If more people are coming back to restaurants, what does that mean for delivery companies? That topic and more coming up after the break so stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here with Maria Gallagher and Ron Gross. According to Yelp's, the number of people going out to dinner is on the rise as we head into prime summer months. Ron, you think about the restaurant industry and the massive changes that it underwent over the past few years. When you think about a return to restaurants on that large national level, are there any obvious business winners or losers to you?

Ron Gross: Yeah, I think so. For sure the delivery companies will never be able to keep pace with where they were during the height of the pandemic when we were all looking for ways to get food delivered to our homes. DoorDash delivery it has to continue to be impacted as the eating out trend continues and for sure it is both anecdotally and in the data that Yelp has put forth. Searches and reservations on the Yelp is 107 percent year-over-year indicating that people are seeking out experiential concepts which are interesting. Things like conveyor belt sushi searches up 500 percent year-over-year. Separate club searches up 200 percent year-over-year. People are sick of being cooped up in their houses and they are looking for some interesting things to do. I think fast-casual remains strong, especially for lunch. I think restaurants that have big spaces for comfortable outdoor dining, especially in the summer ones, will continue to do well. But let's keep an eye on higher prices hitting menus because that's coming if it hasn't already and potentially the slowing economy that we talked about earlier, that could certainly put a damper on things.

Chris Hill: Yeah, Maria, do you think about earlier this year Chipotle CEO Brian Niccol coming out and talking about how they has been able to maintain price increases, pass those along to customers but that was before the inflation that we've seen over the past few months. When you look at the restaurant industry with more people going back, what stands out to you?

Maria Gallagher: Do you think it's a perfect storm? You have higher prices for your raw materials and your goods. You also have higher prices for your workers. You're seeing a lot of understaffing in restaurants. There's definitely going to be that price increase to customers. I also think it's interesting. If you're looking at cities, New York, DC and Chicago still have not gotten back to pre-pandemic levels in terms of consumer activities at restaurants. The only major city that has is actually Houston, Texas. I think it's going to be interesting because I live in New York, it feels like everyone is out all the time now. But it seems that statistically, it's still not even at the pre-pandemic levels plus if you're bringing into account how much more expensive things are going to get in the next couple of months. I wonder if people's urge for these types of new experiences plus a summer month wanting to be out more will be able to combat these higher prices.

Chris Hill: Real quick before we move on Maria, would you put [Coca-Cola's] Coke and Pepsi in the category of potential winners here? Because you go back in time two years a lot of what we heard out of them was the ship they were going to take because of the parts of Coke's and Pepsi's businesses that dealt with restaurants, the fountain drinks. You can, by the way, include events, stadiums, concert venues, all that thing. It seems like that's an opportunity for them to really get back to pre-pandemic levels.

Maria Gallagher: Yeah, I think that's a great observation. I feel Coke, Pepsi, soda is one of the things it's not even that expensive so it's one of those things that people will say, oh, I'll just get it because it's not going to add to the bill that much as opposed to saying, oh, I'm going to get a glass of wine or a full cocktail or smoothie or whatever that ends up being more expensive. I think even with those increases in the prices, Coke and Pepsi could be interesting ones to do well.

Chris Hill: Oracle wrapped up its fiscal year in style, fourth-quarter profits were solidly higher than expected. Thanks to no small part to Oracle's Cloud division and shares of the stock up a bit this week too, Ron.

Ron Gross: Yeah, off 36 percent from its 52-week high, but it did get a nice pop earlier this week, as you mentioned, mostly on strong demand for Cloud total revenue up five percent, but 10 percent in constant currency. We see this currency conversation flowing through many of the companies we talk about, it's important to mention. Their total Cloud revenue up 19 percent. CEO said, "we believe that this revenue growth spike indicates that our infrastructure business has now entered a hyper-growth phase." Nothing investors like more, Chris, than a hyper-growth phase, so they better follow through, otherwise they're going to get punished for it. Operating income only up three percent in US dollars, but eight percent in constant currency. Guidance was solid, expects first-quarter revenue growth between 17 and 18 percent, did warn of $100 million hit as a result of suspending services in Russia, only 13 times forward earnings. That's much less than comparable companies, but they also are in growing nearly as much as the competition. Take that into account, 1.9 percent dividend yield is nice.

Chris Hill: I mentioned to you during the break because in the previous segment, you were talking about Adobe and their management on their latest call, talking up the positive aspects of their business. I would say to you during the break, good for them. That's what they are doing. I'm not going to knock the Oracle CEO for doing the same thing. Ron, this is $180 billion company, hypergrowth.? [laughs] Are we going to wake up in six months and all of a sudden it's, I don't know, $300 billion company?

Ron Gross: No. But hypergrowth specifically in their infrastructure Cloud business, which was up 39 percent in constant currency. That is pretty strong growth that they think will continue. That could be exciting for this stalwart company that we all remember from, I don't know, I want to say in the 1990s, when it was one of the highest growth companies I can remember. We'll say it's too big right now to grow at tremendous growth rates but the future does look interestingly positive.

Chris Hill: There is a lot of negative stuff that trends on Twitter. It's always nice when something heartwarming gets attention. This week, a woman in Wisconsin contacted pet retailer Chewy, to see if she could return an unopened bag of dog food since her dog had recently died. Chewy gave her a full refund and asked her to donate the food to a local shelter. Chewy also send a signed note of condolences along with having flowers delivered to her home. The woman shared her story on Twitter and in less than 48 hours it got more than 50,000 retweets and 730,000 likes. Maria, it is a heartwarming story. I'm just going to take the coldhearted business angle for a second as a Chewy shareholder, I love that this is part of how they connect with their customers.

Maria Gallagher: Yeah. This isn't the first time we've seen a story like that from Chewy, they have been really consistent in their customer treatment, and they have 24/7 customer service. They have a net promoter score of 86. All of their customer service calls are answered in less than six seconds. It's also we're talking about resilience in companies in a way the companies can grow in hard economic times. Dogs, cats, pet families that's something that's really resilient. Sixty percent of American households have a pet, seven in 10 millennials own a pet, and they make up a large part of pet spending, which is over almost seven billion dollars annually. Average pet ownership last 18 years, over 90 percent of dog owners, 86 percent of cat owners consider them to be part of their family. They are willing to pay more for healthier pet food products. It's one of those things where you say, I might cut my costs for my splurging, for my organic food, but I'm not going to cut the costs for my organic food for my pet and so I think that's going to be something that's really interesting to watch. So many of Chewy's customers are new during the pandemic. I think that's going to be really exciting to see how they change.

Ron Gross: I think it's really important to contrast those great companies that have wonderful customer service with those companies that you can't even get on the phone anymore. Try to get an airline representative on the phone until wait time is hours. It's really important to look at companies that are friendly to the customer.

Chris Hill: Ron, Maria, we'll see you later in the show up next, the conversation with a small-cap CEO facing off against some of the biggest tech companies in the world. Stay right here. This is Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Rimini Street is a small-cap company that's going toe-to-toe with some of the largest software providers in the world. Rimini Street wants to be a Jiffy Lube in the world of technology, offering third-party customer support and maintenance for businesses on Oracle, SAP, and Salesforce. As you might imagine, those tech giants would prefer to keep that business in-house. Recently, Motley Fool Analyst Auri Hughes, and CEO Tom Gardner caught up with Rimini Street CEO, Seth Ravin to talk about his company's unique opportunity, and it's long legal battle with Oracle.

Auri Hughes: Here at The Motley Fool, we tend to like founder-led businesses. We have a history of picking a lot of these companies that are founder-led businesses where the founder is looking to solve a particular problem. I'm looking at your story. It seems very similar. You add some time at PeopleSoft. Can you go into a little bit about your experience of creating the support team, and did you see an opportunity there?

Seth Ravin: Well, I think as we all know, competition solves a lot of problems. In the world of enterprise software, we were charging outrageous rates for services because we had no competition. Unlike when you go into a Best Buy or you go take your car to a local mechanic. If you want to get your oil change, you can go down to Jiffy Lube and get your $49 oil change, or you can go to the dealership and you can pay $100 for that oil change. In the world of enterprise software, we're talking about billions and billions of fees that happened every single year. But there was no real alternative. No real third party. There was no competition. I was on the inside looking at this because we were the guys who are charging that money. We were the guys who were chasing everyone down, and we built, for example, PeopleSoft's business, on the maintenance side, from a couple of 100 million to 1.2 billion. We knew how to build that business.

We knew how to pressure customers into paying it. Who better to see that there was no competition and to create that first competitive model. That's what we did. We came in at half the price at a better service and have a good old American ingenuity, you get more, pay less. That was the structure under which we built it. Now, that's what it is from a market perspective. But when you understand the size and complexity of systems, you can understand why there wasn't a competition. It took someone like us come along who understood this complexity, and who could assemble the right team of engineers. Today we have nearly 700 engineers in 21 countries with a 10-minute guaranteed response, 24/7, and an average response time of two minutes anywhere in the world. This is unparalleled in terms of the service level we offer. It's higher than the vendors have been able to provide, and we're doing it at half the price. Now we've added other services such as AMS, where we're running the systems for our customers. But all of it delivers higher value and better service. That's what makes a great competitive market.

Auri Hughes: Looking at the incumbents, if the service is being provided by SAP or Oracle, did you feel for them because they created the software? They fell, this is easy upsell and there wasn't the urgency to provide good, I guess, very strong customer service at a very competitive price? Was there that sense of just, add maybe to call it like entitlement. Well, we're selling you the software. Of course, you're going to come to us.

Seth Ravin: Well, it was a virtual monopoly. Because again, the software was complex. Customers didn't have an alternative, so that allowed for no price elasticity. They literally could raise the rates when we started maintenance. It used to be 15 percent of the fees that they would pay on license. We raised into 16, 17, 18, and 20, and, 22. Some of the enterprise players have gone to 25 percent. The prices just kept going up and up because the question was, where else are they going to go? We have this captured market opportunity of $80 billion, really 160 billion in spend, but since we charge half, that creates an $80 billion market opportunity for us. We decided we built the right engineering teams and we were able to offer, in some ways, a better service than what they were getting from the vendor.

It really again, is no different, I take my car to Jiffy Lube, I enjoy that oil change just fine. I don't need to pay $100 to the dealer, but I guarantee you when you're talking to whether it's one of the car manufacturers, what do they write? What do they say on TV? ''Hey, you should trust your car only to the people who built that car, we know it better." It's the same argument on any product when you have a third-party. When you go in and you buy that television at Best Buy and they try to sell you a third-party warrantee, to try and get maintenance on that product for years to come. Third-party maintenance is a big business in the world of consumer. It just didn't exist in the world of enterprise software. We're essentially consumerizing by creating public alternatives to what the vendors were offering.

Auri Hughes: Very helpful. Can we talk a little bit about what does the sales process looked like, a pharma customer, maybe from the sense of either, are you, are you selling upon adoption of SAP or are they usually already have the support? Then the sales team comes in and says, "Hey, we have this very competitive offering." What does that process look like?

Seth Ravin: Well, they're going to be up and running on the software generally. The vendor will get them up and running. Now, remember, these are huge systems. If you're someone like T-Mobile, you have spent potentially billions to install your SAP billing system. They call them Rimini Street, and part of the reason they call us in is because they were facing a multi-billion-dollar mandatory upgrade from the vendor. Multi-billion, and it would take years. That's how big these systems are. They took a look at this and said, ''Wait a minute, why would we do that?'' The software we're running is fine. You guys know this when you're on Microsoft where they probably have to pry it out of your hands every time there's a new version, they want to tell you it's got all new features.

But the reality is, if you're like me, you do a few simple things. You write documents, you spell, check them, you format them, and then you print them and send them. You use the same five features, probably for the last 15 years. Now, there's probably 100 new features in the latest version of Word that I know nothing about, and I'm sure they are great, but I prefer to keep using the one that works for me. The same is true in these large enterprise systems. The cost and the change management of having thousands of users change out all of that. Well, T-Mobile, for example, decided that they wanted to invest in 5G.

They were aggressively want to be the largest 5G provider in the United States. Well, I can spend two billion dollars on my billing system or I can spend two billion dollars on my business, we really can help make a difference as to why people would want to use my mobile service. That's the way we work with the largest retailers, manufacturers, and banks. All of them are trying to invest in their business and spending extra money on these core transaction systems that they don't need to spend while they're not getting very good service anyway, doesn't make good business sense.

Tom Gardner: Did you expect when you started the business that there would be from what you knew about Oracle, a very litigious company. Did you expect that you would be in litigation? Did you have any anticipation that it would go as long as it has and that would just be a core part of the Rimini Street experience or did it surprise you?

Seth Ravin: Well, most people know about the 12 years we've been in the physical litigation in the legal system starting in 2010 till now. What they don't know is that the day after we launched the company in 2005, I got my first letter from Oracle's predecessors, CBOE saying, ''You can't do this. You can't offer services for our products,'' and that was the beginning. We've actually been in a litigation battle with the legal department of Oracle and its predecessors since pretty much the day after launching the company, which was six months before we ever had our first customer. This is a bit of a battle from the very beginning and yes, did I know that we would have contentiousness in this process.

Show me anyone who's disrupted, people who are generating profits the size of Oracle and SAP, who are not going to take actions to protect what is essentially a monopoly business driving over 90 percent gross margin. Of course, we knew that they weren't going to give it up without a fight. I don't think anybody could predict how many years in the US legal system a case could go, but here we are 12 years later, we have the biggest and best lawyers in the world, the Gibson Dunn, who by the way are the same team that one billions against Oracle for HP on the Itanium matter. We have the best lawyers, very, very expensive. We spend 15-20 million a year and litigation costs, which of course, we would rather spend in investing in the business, but that's part of breaking open a monopoly.

If you're going to open the market to pure competition around the world. We saw this in the cable days. Whether you were cable and telecom, all the battles that took place have to go through the court system to create that open market competition. We're the guys leading the spear on this. Now, I'm hopeful that there will be many companies who follow behind us. We create this robust economy of various choices. Different price points, different services, just as with the car industry, we have 100 different choices of cars from cheap ones, to expensive ones with different features. We someday should see the same on enterprise software support.

Tom Gardner: In a way, you see everyone acting in a rational way in the marketplace. For example, if you were the CEO of one of the monopolies, you would be doing what they're doing is just that you've chosen from a career standpoint to not be in the cubicle measuring business and the very large monopolistic price raising, dominant, let's say, moderate quality service relative to what you can provide taking the entrepreneurial. But you basically see is this is happening and this is all rational, what's happening. Then you are looking forward to the completion of the court's review.

Seth Ravin: Well, I don't think the US court system is as rational as we would like it to be. Of course, it favors large players with unlimited budgets. I mean, think about it. Look what we've had to spend. That's money we generated ourselves. How many small businesses could ever last under the crush of an unlimited budget spend of a company the size of Oracle at $40 billion? That's a real problem and that's really something for the US to think about. Now you don't see this internationally because internationally these types of suits are more handled by governments. There are government actions when people fall outside of monopolies or issues.

This is how the US court system works. It allows a case like this to go on for 12 years and the cost 15-20 million. Unlike the criminal courts where you're entitled to a defense, in the world of civil litigation, if you don't step up and pay the money and have the right lawyers, you could get crushed in the court system because the amount of paperwork, the years of court time, for a small company would be impossible. The truth is, is that by the time Oracle sued us in 2010 and we began the actual litigation in the courtroom level, we were lucky to be big enough at that point to be able to afford the legal fees. If they had filed suit against us years earlier when we were just a couple of million dollars of revenue. There's no way we would've been able to afford that kind of defense. We would've been dead just by the filings. That's what you mean by litigate people to death. That is unfortunately a flaw in the US litigation program and in our court structure that someday we should probably think about addressing.

Tom Gardner: That may speak a little bit as to why about half of your revenues come outside the US?

Seth Ravin: Yeah. I think that that's part of it, but I really do think it's because the business problem we saw is universal. Something that I thought was pretty funny that I have looked at was it took a lot to bring Israel and the Arab Middle East together. Finally, with some of the Abrahamic cords, we're seeing some great work between the UAE and Israel above the threshold and visible. Partly, one of the amazing things was, that we found commonalities across Israel and the Arab Middle East. Everyone feels they're paying too much for enterprise software maintenance and getting too little service. There are things that we can rally around that are a global experience. We found one that really resonates throughout the whole world.

Chris Hill: Up next, Ron Gross and Maria Gallagher return. If you're looking for stock ideas, good news. They got a couple of stocks on their radar. You're listening to Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against them. Don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill is here once again with Maria Gallagher and Ron Gross. If you were just starting out investing or you know someone who's looking to get started investing. We got some good news. We have a free investing starter kit. It covers everything from saving money to 401K plans to buying your first stock. It comes with a built-in watch list of 15 stocks and five ETFs that were selected by our investing team. It's free. You can just go to fool.com/starterkit. That's fool.com/starterkit. Let's get to the stocks on our radar. Maria Gallagher, you're first, our man behind the glass, Dan Boyd is going to hit you with a question, what are you looking at this week?

Maria Gallagher: I'm going to look at Rover. People are probably familiar with it as the largest network of pet sitters and dog-walker. I've been considering trying to become a weekend dog-walker just because I miss hanging out with dogs. It has over 500,000 pet care providers throughout North America and Europe. Last quarter their revenue was up 128 percent. They had 179,000 new bookings. Total bookings up 1.2 million. They're expecting 55 percent increase revenue this year. I think it's really interesting business model. I think it's a really interesting business as I talked about, I think resiliency exists within the pet space. I think it's a fun one to look at.

Chris Hill: The ticker symbol?

Maria Gallagher: ROVR.

Chris Hill: Dan, question about Rover.

Dan Boyd: Absolutely, Chris. Maria, what about pet sitting makes you want to do it on the side instead of, I don't know, having a weekend or an evening to yourself?

Maria Gallagher: I'm not saying I'm going to pet sit, I am going to pet walk. I can just take a dog out for like a 20-minute walk, play, have a nice time, make some new friends in the park and I take them home. They don't have to come into my apartment.

Dan Boyd: I don't know. I feel that that's even worse.

Chris Hill: Ron Gross, what are you looking at this week?

Ron Gross: A company that literally just hit my radar because it was recommended in our Future of Entertainment service is Sportrader Group, SRAD. No, I didn't make this company up. It's based in Switzerland. It's the leader in the business of gathering, analyzing, and providing sport data to leagues, betting operators, and media companies. They signed deals with various sports leagues in order to obtain the data. They then analyze that data and sell the analysis to the sports gambling sector and media companies. They have agreements with 250 sports leagues and federations around the world, including the NBA and NHL, and MLB. Over 1,700 customers in more than 120 countries. Sportrader covered almost 900,000 different events last year. Right now, 30 state just in the gulf of Columbia, have legalized sports gambling. California could be next. That would be quite big for the business. I will point out that they do not have the rights to NFL data for the US. That's a big deal. Their next biggest competitor, Genius Sports does own the rights to that data, so something to be aware of.

Chris Hill: The ticker?

Ron Gross: SRAD.

Chris Hill: Dan, question about Sportrader group.

Dan Boyd: Well, besides the obvious, Ron, did you make this up? [laughs] That's already been covered. Ron, are they contracted with the leagues commissioner's office or league office or whatever, or are they contracted with teams themselves to analyze data? Because I feel like, at least for baseball, a lot of data analytics happens in-house. 

Ron Gross: I need to dig deeper to answer all of your questions. Quite frankly, no, but they do it with the leagues and the Federation. They're at the top level, not with individual teams. I think the leagues like to maintain tight control over that data. So they handle the negotiations and the licensing. That's where you've got to go if you want the data, get it from the top.

Chris Hill: Dan, what would you like to add to your watch list?

Dan Boyd: I will tell you, as much as I'm ragging on Rover, I do have pets here at home and it can be a hassle when we have to go somewhere and get someone to take care of them. I'm interested in Rover.

Chris Hill: Maria Gallagher, Ron Gross. Thanks so much for being here.

Ron Gross: Thanks, Chris.

Maria Gallagher: Thanks for having us.

Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.