Sirius XM (SIRI) 28 Apr 222022 Q1 Earnings call transcript

Good day and welcome to the SiriusXM’s First Quarter 2022 Financial and Operating Results Conference Call. Today’s conference is being recorded. [Operator Instructions] At this time, I’d like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations and Finance. Mr. Stevens, please go ahead.

morning, good and you everyone. Thank first Welcome earnings call. XXXX to SiriusXM’s conference quarter remarks will Witz, Sullivan, Chief we have from and our Officer. Today, prepared Financial Sean Officer Jennifer Executive our Chief Officer, Greenstein, will take Scott questions. and President Chief your join and Sean our Jennifer to Content would in that statements the XXXX. Litigation Act the remind Private made as the everyone forward-looking of might Securities be statements to term like during I certain call is defined Reform and necessarily and imprecise. current expectations These forward-looking beliefs methods or based statements or upon management’s upon depend that all are incorrect data assumptions, and maybe forward-looking and differ cause Such statements that are risks subject to uncertainties results to actual could materially.

more earnings forward-looking disclaim any For view today’s release. please We update uncertainties, intent or advise statements and obligation not risks about on information to listeners and unduly and SiriusXM’s SEC them. filings to those rely

begin, today’s that hand stock-based results of over As Jennifer. effects exclude our like both call to the adjusted the will would adjusted results. we remind actual I discussions will All With discussions that, about results and to listeners call I operating compensation. include of

today. joining quarter even Thank healthy substantial generation growth our advertising revenue SiriusXM subscription us reported and cash solid you after in investments in for both business. first and

time growing distinct This for subscriber curated, of monthly growth and industry growing subscriber this all North are recent of spent segment year, original business. the Edison and in which continued future According a is of $X underscores reaffirming driving billion. seeing was as Internet audio is day more XXXX. report, to so unique also spending to U.S. leader progress for this opportunity business. exclusive in to our Media climbing are podcast we We is base. in network, the Audio within in At streaming thriving one with and Research, growing Each ad population, consumption on and content, our the content events revenue advertising These financial well-positioned million our our we day, of reach guidance year. has number Americans as are of future shaping as make America in XX% a grew time SiriusXM. listening also XXX Across and same we advertising that fastest audio via America audio revenue. year is extremely live our entertainment up ranked increasing, listeners the SiriusXM, in the to trends with the XX our last advertising digital up listeners prior. and in evident with monetization is a are new audio online U.S. all IAB’s compared the approximately SiriusXM per itself XX to for significant platforms, contributing to the from of than scale audio minutes time XX% monthly Daily faster growth podcasting as average powering SXM almost established segment meaningfully we found the enhanced growth.

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yet half pronounced. First These by the supply each declined tight. impacted sales see sequentially have were eased. auto first the month we as quarter much actually as inventories lower the very in became more began fourth net in SAAR constraints additions, the and in second to last quarter quarter, conditions remain of not year

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enable significant our that generate to reward us shape to continue and future also our We cash stockholders. flows

For Sean. on it those details to more I will over turn financials,

quarter higher highlight in and record, $X.XX higher Thank million. to advertising in the Diluted quarter up investments by a grew Adjusted sales QX earnings $XXX continue non-cash in million, $XXX revenue charges. during revenue our X% marketing receipts we We increased associated rep XX% deals. quarter, first with up of when in plus even you, of EBITDA ad make capital partially impairment prior meaningful generated the new million $XXX year, had million free were $X.XX podcasting as customers, from Jennifer. results, share versus on to to first we cash flow per the the quarter, $XXX with X% year’s last expenditures. satellite first from impact primarily share offset To revenue first by X%

Turning operating segments. to our

segment revenue advertising an For revenue XX%. in increased quarter, quarter X% the with paid the of record increase billion, offset $X.X by per our quarter representing subscribers. the of SiriusXM SiriusXM, X% hours In to reaching segment, increased total revenue profit first Pandora in ARPU, the off-platform the and growth X,XXX in X.X% billion, In million trial in Gross by quarter lower of first a $XX. of generated to podcasting X% $X.XX driven margin and million Pandora’s revenue, off-platform $XXX businesses first year-over-year. in the first a XX% $XX climbed ad

our early flow new $X approximately EBITDA $X.XX continue last time. of as businesses represent XXX,XXX we with billion, and meaningful guidance expect adjusted $XXX subscribers and of Gross new quarter, typically slightly self-pay given of is We $X.X this content that over still million, off-platform approximately are we light monetization. these profit in revenue XXXX. for cash a in SiriusXM portion was Jennifer what free ad Today, this billion, to Pandora billion. segment gross XX% lower net in Revenue investments flat than podcast a will growing year. the margin, year, segment’s a mentioned, reiterate existing revenue approximately at seasonally in expect approximately And of

the subscription that expect as revenue year. supply continue of revenue and our rate growth projected We growth action. in to from subscriber momentum will to the second will push majority Both sales subscription XXXX to advertising impacting constraints and self-pay benefits advertising the of continues contribute half auto substantial

reflects product, content digital. in growth meaningful in marketing year EBITDA investments and guidance drive this adjusted to Our

to with On pleased the to reaction recurring dividend last special EBITDA, quarter. dividend to XXXX of stock increase the to capital and our even to low billion special expect. the stockholders. within at And we allocation we February’s We that, with were flat front, dividend the repurchased ended pro $X net fall, told quarter with $XXX our in still million you forma to first mid-Xs continue year-end debt to during the the we’ve the X.Xx for XX% range,

and month, X-year additional well lower reduce positioned to balance even Our we extremely take our remains an earlier balance $XXX of revolver an to million ourselves sheet term this opportunity at loan on rates. availed

operator, continue share As investments dividends and business, let’s to always, it repurchases. With to we retain significant the Q&A. to open opportunities examine capital our grow continue up to and flexibility returning acquisition via stockholders that, to

from of Please go [Operator Instructions] Thank Securities. Bank Jessica of Ehrlich you. Your America first comes ahead. Reif question

you. follow-up. what’s guidance. a have of part That’s given represent would to you on your question. it net base? Thank you questions. freezing. think – do auto year overall meaningful channel? portion I going reduce in And when Two a it a in it sub could expect not the overall digital-only you on then And more meaningful seeing adds some did be you net this what give sector? a first – Impressively, an Will And the of talk bit self-pay your add sorry, I’m wondering will I’m color you’re or if the little

of right? build expect base our I of – adds as proportion look, year, is digital there a the little about don’t in significant we the going we continues not last in for see as Jessica, on the could the a negative bit going think to us. did mentioned have part. where that. the And way, to so a satellite into the expected we going funnel I are build This that long-term overall be negative this positive satellite over comments, adds. be we or net see talked And low net I net near-term, in self-pay more adds to this I course as call. And of year, quarters it’s Hi, still trial we

marketing more and We’re and definitely will Media, seeing in-app our some the stores, in with success starts our through trial and we in there. efforts, an on the purchase partnerships, not uptick the digital Performance launch but on have only also to app side

adds steady net be come still the ultimately growth the of to as to funnel I satellite digital again, funnel net adds and leading more trial starts adds, digital trials our So in going forward trial the it’s to a but expect net majority in more uptick back.

And it’s performance. an such just impressive like I Right. Scott. to switching maybe then remember gears

of about to versus Sean is possible seems a most about build, buy? bit like you pretty focus. live. much the about talk so you side allude in it did of going investment content little from artist the feels or podcasting Just channels build alluded but kind to There just on as diverse. M&A. Can to the It to It talk

M&A. content. can I’ll Jessica, any on the touch to Sean – I’ll speak

we you at, We’re, look a many in has The and as on ultimately, of in play at our do TikTok what radio and synergistic music, When goal as we of it’s or things earlier where know, look you a way organic we any out – we feed content. other is, they laid always who the platforms, in as that in that on at and a playlists sort and opportunistic look whether feed grow. calls, Pandora they do it’s fit. will King, podcast best of has

see But we an obviously, thing. opportunities don’t at we some a As grow and at content out go. things impact they plans where is others blend them, of to they figure look we know, when the will in you do. fit really immediately pop goal that where things, creative up, can that our and and And look make is

of demo. days more radio, satellite was it much established early very at a look you If focused on

every it there genre. we’re much is to model and the has and of regular forward, created others, in and old artists And in young, the cases, look that’s serve types some having where all do that’s of something to pop-ups going and we’ve on, new holding of gone of be going the many And rhythm As portfolio really routine big time and it. diverse a looking widen at old audiences. to matters, as really as broaden and in we will as audiences sort from content

we Jessica. – opportunities the continue look lot had I sure will reference is for pretty M&A, have I’m of the on PI few the last Obviously, a did But we with ad we’ve shows a last there. deal some nice additions to not up that report, to at win months. over we doing think sales in been and been wrapping XX the which deals any year, focused significant a And us. Edison

number listener Crooked in one signed then, since We’re reach. And we Media.

yes. So,

on think up the from, mentioned ramp Sean new great Core of is podcasting growth over a these like The I what general. time side coming see the we sales in we as margins better will XXXX. for margin would think, expect but is tailwinds arrangements, podcasting, in the Demo, listening get I in lot we that our

the strength in generally, obviously We’re also, which for is car think, coming us. I seeing growth a

So here. about we position good our feel really

thing And Freakonomics. last expect podcasting channels see big the to we like turning more into of SiriusXM

is will really growth in the to think the there that obviously also there and expand a grow revenue. area, plan I that

Thank you.

you. Thank

our take from question next will We Wells Steven Cahall with Fargo.

you up that year. into Jennifer, more full I the how about was is wondering now shaping Thanks. we’re almost a funnel trial just X talk if little could the months

ad SAAR saw benefit in things vehicle is the but You that obviously, deceleration in is environments these tough. running talked churn, about a side on of churn little quarter. the first the probably know I there you a in

Sean, how little And color reaction the more about little special a us about half positive the a you year. give the we to of reaffirm the move just to back then, dividend. as talked think you add the maybe guidance closer net on So

it for up Thanks. special company the how balance leverage deployment? it price? thinks would conditions Is ever Is Just for for sheet? the your cash something stock to about and the those the even right you dividends? what inching regards potential in future And wondering are consider more

Sure.

trials So the last in about we trials, quarter, of of They the pandemic in from guidance, this call. significant Look, last year. as of year into the saw downtick quarter our second quarter in peak at year net about lows as the first fourth down the for fourth I’ll we of on of bit talk the set a Steven. as in nearly really saw were Last we in add year ‘XX. and the little we year, up the the quarter XX% which QX the last the addressed low going

would then a little quarter. bit So seen that of will first real that help uptick uptick there in dynamics I of second the continue we’ve just the lot during quarter, year. Look, in downtick that, the of here. was course expect the and which an to a will is And then

the think supply come all the continue hadn’t of auto beginning in very about the by good days. to cases, prices and the couple estimates definitely that for on into this. comments calls challenges to because last sounds a they as expected used strong up earnings It high to of have over new and Ukraine shutdowns like car their year. auto You continue seeing which for due we’re automakers of are industry, because some It’s that SAAR. very the demand are we year. I sales There are of dynamics evidenced the chain seen will we see to And the the course public. war used the But prices. and higher bit. I The in looking the keyed in the is of suggests from I obviously year. the third-party sales feel shifting over pressure mean the at in China, throughout of production around some the car COVID increase the generally

channels. little have this down But come increase a rates have and we our organic grow our in bit. continuing they pen are to Now distribution

last a trial to starting did we down the mentioned on the strong quarter. have than you lower quarter tick this first we first side, about I year. really over churn the in to And slightly good the year come of results. one the funnel, back in the had feel course X.X%, we think So vehicle-related,

performance a strong actually think, the side. levels. And at to continues relatively really was low I bit. Vehicle-related non-pay see, on little up hold to continue We voluntary

X.X% think the not it’s on up be, I So voluntary but of to the among base, to a and which the by to I strong shows really year the retention the where our side. would is self-pay year start expect clearly rest encouraged bit

on And organic content. talked just funnel really digital. talked on allocation, marketing. are We Steve, investments. we the about sales We want focused capital the on about again, around build continuing and We to

obviously, So our use. highest that’s best and

We will look M&A. at

take very I To something be the and think we’re higher we would extent low comfortable that mid-Xs. the at in short-term the would to opportunistic, but probably temporary moment.

So we growth. will EBITDA by be guided

We cash be free by guided flow. will

price We of will grid be the in the of the repurchase. and guided share by terms stock and our our pace activity

what what allocation change. And be pull So not first policy we opportunistic. think and circumstances beauty have, it’s quarter terms But again, flexible of the we you going is the and the would did to as and to the we that pacing. I levers is facts situations dissimilar we’re in expect a in can

real we that’s from No at look historically. it. how what So change said we

the all color. Great. for Thanks

Thank you.

Thank you.

next from Barton our take Securities. will Crockett We question with Rosenblatt

for talking Thank about really the wanted Great. now. up up taking because people I business on come which coming your are is to about that inflationary the right question. everywhere which else hasn’t environment, it’s ask you curious call,

wondering does feel in this? pricing? your drive have this to that environment, cost Does I’m side, an suspect greater so margin see you you than be grow, I could like where if So situation inflationary prices might can might Do backdrop it there wondering, costs you from a matter? perspective, And on with you positive, raise our but be you that. address ability more you? I the impact it was that do

Yes.

for Barton. thanks – question, the think I

in rate took which side, actions, on And quarter, we promotional price our from benefited. fourth full pricing standpoint, talked plans. our inflation about the and On both a some we’ve side we’ve the

we our a the initial in think And we’re had is pretty we’re need vehicle we And through focused rate of that forward. revenue good. primary how we the that. competition, always look very at I actually certainly not but think free. we reaction, large be in We rate amount the to again, just increases I In but And terms look about timing the success past, prices, mindful on was increase. saw raising of we’re going careful subscriber some we’ve overall. at –

balance there So there suspect is end. demand the some I demand. more clearly lower is on at

on cost we Sean, will think chime opportunities in, else helped the have large the can is cost think pricing structure, I our structure side. I look to continue And part so And but tied I on mean, inflationary you at of But to the trends only increases there. a not with economics tied in a parties by anything general. prices are have that. Is where our I into of mean revenue rises or going things we or lot like so affected percentage third relationships and commodity that that’s that? there revenue, is on a in of

Scott talked at Yes, the day of think content marketplace. nothing about more material. really, the Again, the labor, some of the module I and cost, obviously, end wages

resiliency I all, think an of business in we environment. context about in of good all So, the feel the the inflationary

great. Thanks lot the color. a for that’s Okay,

Thank you.

Capital next with Maral Markets. Kutgun Our from RBC question comes

to taking for the Thanks morning. advertising. wanted Good dig just question. I into

companies as see Pandora said, growth continued strong issues. You or as That podcasting. continue with there QX platform a called number of other some at monetization broader well off a minimum, some limited have given macro pressures visibility recent the strength to on and heading with out into

the color seeing throughout hoping So was Thanks. and for on expectations you’re I the trends that year. some more

Sure.

advertising feel some the heard an So long-term. audio line top our digital advertising, about from guess over from of I week. I calls the comments conference perspective, other certainly this from great the have

we to be that to we’ve fully you are meaningful know need in and our big podcast making As absorbed done just are about, some onboarding we investments those and deals talked business of and ramp really monetization.

you available RPM, we to side, terms supply out there The a has feel the some specifically. sales monetize. our is of you wonderful monetize. Again, team around – from see done very a caution see capacity about to in CPG definitely job ability the So advertisers, good there certain

about timeframe, the So good the our where I feel think hesitancy, the over it. guess, in near-term, ‘XX be good I but feel deferrals, supply. about we to may is ability etcetera, some there monetize demand We

add I want there Jennifer, don’t know anything is to if you to So, that?

I really to have relationships would brand that the have SiriusXM I adding think have there. we strong broadcast we that really strong business, about add podcasting business. the we Yes. just really a where the presence side the been mix Pandora great the representation extensive And on of side DXC of is what’s on

And the to bringing podcasting also are a the Podcasting DR right have to DR we the on SiriusXM has can more podcasting relationships we podcasting. across build the opportunity largely opportunity. mix ultimately brands so we build advertising the opportunity. in been side. And And

opportunity something I think the coming, terms kind in and us. of headwinds some on in is sort based really we what us of So, opportunities unique in Sean that of cross-selling. I area strong have offset are for we think in part, to again, mentioned, any that hesitancy And cross-selling can that is given

great. you both. Thank That’s

Thank you.

comes next Our question Goldman Stephen with Sachs. from Laszczyk

a Great. Jennifer follow-up broadcasting. Thank for on Maybe you.

for these deals contribution talk like a through us forward? more EBITDA the there You mentioned you much what these and more more talk going can think deals you maybe representation the much representation Sean, to think you opportunity, you the quarter. do little maybe you? how look buybacks sales how and deals in bit so economics Help sign And then Could maybe is revenue opportunity about these on. for here distribution of out the and the about added come of deals

you XX ad of podcast, the Scott, top XX, have deals, jump in. big traded. can lot rep say – a on would top the But and I the really

talked up course, a is of inventory we But comers podcasters there sure amounts there be other to as and we not about, emerging. have is am add XX. And inventory in lot to have we large names. for of have largely would said, mean strong and there. be probably three, I I The four of we of opportunity lot the soon top this a I So, will year. say,

deals think… they we available. But year. that’s, the course, looking think you in at be set come Scott, Of will might opportunistic for other I largely as did

correct become is are going today. Yes. think strong. emerge is Jennifer’s What to see you genres do statement stands obviously it to very to where going I is as

as get politics, season, we into think crime, will true to election So, and continue comedy, grow. I

So, where be grow that. XX Junkie, like and get be the the having be next to to that that early on in hopefully a be able things those. allow or XX that, Crooked and underneath group and and Coco will top will in anchors will like it on us – That we brands hits position Crime

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in evolving the be top of static somewhat that, that clearly am we to pretty I coming come the where out position XX So, in – right well while positioned music things and going is and genres. our love evolve is it’s optimistic And now, there, those is in or are and normal in succession will or there others big think others, genres. film like we we will

need just Obviously, to guarantees share on on And last They they generally as to ramp revenue do the minimum your Steve, deals then with point Yes. follow-up onboard. economics. are

that of that’s not gross dissimilar a these in You the first is hope deals And where have margin margin expectation today. pressure the segment – the profile to our quarter. that and saw is margin some in

Okay. Thanks for the color.

next Operator, please. question

take will with Suisse. question Jason Credit our from We Grant next

help us of Could the strength and morning. SIRI subscribers apart fall plans strong understand you good Thanks flow-through to the premium how of using ARPU the versus so really in take increase up other tier factors? much. the price quarter the or XQ growth much Hey, was

$XX loyalty roll-through is even certainly lower do some I become And the And there packaging Yes. I price are, believe VIP also value there the are we a for some the think among subscriber probably have in above end. our plan. part took demand But above such that’s at increase opportunity, just promotional and pricing the our mean But it Platinum add point. create that. we – PVIP, on rate of other the PVIP. is we base that because of strong seeing creative of ways that. can the it’s a we that fourth big clear, for I mean, of actions demand and and quarter of I

perform clearly We and right SiriusXM from other in haven’t the are the pricing on platinum continues in recover ARPU the factors revenue a which take standpoint. rate the that seen any below is plan, But nicely decrease to ad of kind that on our side.

anything So, missed helped as well. on? there Sean, I that’s Is

that covers it. think I No,

you. Thank

next Research. our take will Goss Jim question from with Barrington We

Thanks. little I ad would sales process. the a like of A about couple questions. One, discussion more

discuss lot great a have complications. You breadth Sirius of demos you to a Pandora, can wondering group the and you whole of and of category. to and the and process provide in ad are assign there am the might the through the lot of better And variety if incentivizations And I and go audience advance opportunities geographic you you focuses. just sales try podcasting, sales with between order

you year more think give I There the contributor significant broadcast SiriusXM side, I as effective with banner. the to the cross-selling we across And with being on together I to mentioned, sell look, effectively just we find course, podcasting that the in is So, brought and with everything – we can are in was under color. Media, have with that are, some that teams. more of Pandora. continuing last teams It SXM ways we really

and to for kind so There great opportunities believe, to through opportunity advertisers. brands. take as us the terms we exhausted out programmatic. for on collectively, not our And with. to relationships help here, us do self-serve best opportunity more bringing roll earlier, I have these with There in definitely AudioID effectively every we platform in some more we of probably had have opportunities. is practices are continue better There targeting more all of is these talked our I product areas, I about individual advantage ads to going have continue together right. And of mean is in opportunity

deals sure kind direct them these advertisers more bringing we relationships we is And of IPI have there. making also Junkie. think Conan Crime is We are have podcasting and as call, and there There Megan across Kelly room and side, a we with great lot and have, with on the that and Podcast response – just inventory. the the on the effective our products great on talked we representation I have Left about, and NBC Crooked Last and

different older demo podcasting, on probably inventory younger we So, to slightly across around up SiriusXM. all and the the with demos well are represented way

So, here. I believe are we positioned really well

a upward good other point And And the relative traditional are provide the revenue And aspect bias that the to the that of Thank absence use benefit offsetting one a capacity SAAR, sales. point embrace will, because especially softness evaluate progress auto of importance for some inflection creating Okay. drivers, you. is in usage you am I wondering or there I in if your of example. area, you should improved is have might the an it where utilization hitting listing thought are this, opportunities. an there other if are metrics was we the somewhat a you in of growth

listening satellite course, don’t XXXL ways of we of statistics. had have on-demand a on wanting do usage retention, achieved content. and and providing all retention, help XX% acquisition digital without products ways, is more, usage, comments to are our It’s usage we and in we well. for recommendations. these on with And in – lot But I more with personalized media. our I are satellite more apps, acquisition and We happening talked get some us the customize some in And of uptick hampered tremendous over we subscriber information on-demand more are over have that and years and as capability. increasing of we And side. on more subscribers stat more in rolling believe listeners digital as which a extra also we our the the have listening to the sign to about And Look, channels car of listening data. success be have out, this nice And there able just the customers our my that’s will year-over-year, about, and in more, more a all their more And and right. satellite just using and of referenced a there. terms getting

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Thanks. I mean agree. I

that thing is things with to auto alone measure there tends bias to growth we focusing the trying shuffle in been think on lost the a I upward doing sales various have get an of that too. and good is

Thanks.

thank Anyway, much. very Okay. you

you. Thank

from will with Sebastiano We next take our question and final JPMorgan. Petti

just just it you you well. as could just or the new think and What integrating, of positive about there? owned us now Hi that during you question. Obviously, mentioned coming that a I about that it you we help are growth partnerships ecosystem? inventory talked wanted operated, in what as around SiriusXM help off-platform about lack just us call guys. deals bringing kind Thanks some think color quarter the for quarter. and these out the revenue new I some on is better to the outside are and the are pretty the getting versus growth great. here for guys would Can the of of call, think term, Scott stuff if fourth or you of see Just perhaps family from be online of

by of But why can Sean, up clarity its and and we some marketplaces our where tech of pick from operated. the from platform AdsWizz we on you are look, podcasting pieces. inventory. segment the we well selling the we seeing those growth provided that’s nice And are if covers all fees owned have to have nature, start kind is you across everything to there add. some have growth will not something And of And I name. as as Yes. third-party

we course, Of deals adding. been ad is and in particular, new growing of podcasting because the have rep

out relationships we side, of in there, advertising inventory marketplaces various the other but have But set ramping lot we Adobe. we have And streaming these it’s Europe general a whether we up SoundCloud on are have in there. music or more both And podcasting. for also and up so

across sales of we growth say all audio the other those that do areas, I tech been has music off-platform the would and podcasting there fees otherwise. three and in So, in

Yes.

representation provide we hours. ad some continue see we the have color O&O, to you deals. of MAUs added And Obviously, a what’s ad bunch and prospectively, sales what’s Pandora. So, will around terms on dynamic in of

try podcasts will a off those terms basis. in continue to growth update quarter-to-quarter we to terms So, driving on what platform are in provide of an of

of quick half follow-up the half remarks, Thank of mean your substantial of majority the ads? of in back for first year imply Sean, on, growth in does one I prepared think the self-pay in the growth And coming terms the I you. year. that some

of certainly trial think don’t than going it more talked the the we where are half. number Again, marketplace. the and and coming I about year leave a for is, back the to probably trial coming am optimism sit the feel I full starts But funnel confident terms into was We year Yes, in second where quarter. are, in Sebastiano. we a it little the of where we again, today providing SAAR there, majority

Great. Thanks again.

Thank you, you, Sebastiano. for Thank everyone, joining today.

speak We to you will soon.