Sirius XM (SIRI) 28 Jul 222022 Q2 Earnings call transcript

Good morning and welcome to SiriusXM's Second Quarter 2022 Financial and Operating Results Conference Call. This conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Hooper Stevens, Senior Vice President, Investor Relations and Finance. Mr. Stevens, please go ahead.

morning, good and you everyone. Thank second 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 or current expectations These forward-looking beliefs methods or based statements imprecise. incorrect upon management's upon depend that all are be data assumptions, and may and Such differ that forward-looking statements are subject cause to to risks results uncertainties 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 the stock-based results of to As effects exclude our like those call Jennifer. call adjusted the will would adjusted results. we remind actual I'll discussions hand All With discussions that, about results and to listeners over I operating compensation. include of

Thank and for Hooper everyone. you morning, good joining us Thanks, today.

We in with our quarter second XXXX. pleased the are of results

While customer paid in weakness demand, the delivered low deliver SAAR SiriusXM discipline. XX% Into necessary for best-in-class and performance. the financial quarter sequential ended customers, self-pay from net are SiriusXM to and Despite variability the navigate continuing our the we success exercise and and we and momentum subscribers promotional financial in April, record year-over-year. we while uptick building future our second in new investments June setting remain slight strategic quarter. long-term XX,XXX X% further our subscribers that down a financial committed making churn. up performance growth market QX saw with May by balance and second XX,XXX for on added leveraging to initiatives solid to to strong By expansion sheet continue key in half, scaling we content and to

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take will Jessica question Ehrlich We from Instructions] Reif Securities. [Operator first from the BofA

ahead? go you Can Jessica. Hi,

don't one we to come the go operator, Hi, back to next why and Jessica?

ISI. next from Ratcliffe James We Evercore from question will now the take

two could. have I questions, if I

trends SiriusXM side, just SAAR? of X% evolves installation, that is gross margins the the the of at and the you as volumes gross investment of secondly, there. per And off-platform and Can SAC how that Pandora, investment content there? quite actual you about level, pressure in Can of size at was mentioned you a help the so about up On year-on-year. in from new or apart issue talk larger presumably revenue sense get rate margin us the revenue what business sort run ad a of of profile that becomes share

I'll take bit I'll then on SAAR Sean one first ad little Sure, James. margins the SAC and the a and the side. about talk let on

SAC modules. the depending seen So and within to look, fluctuate. here by by ramp automakers, vehicles a different the going just And significantly, install quarter, and of come installing our there has for you've then mix expect our over of it's couple would down years. technologies upon of into the our the modules as dollars I

with structures producers economic of different have we the module. So the

the line, per that's on SAC install, then the reflection and the through obviously, is margin, coming of the equipment the a top revenue subsidies. overall cost So

just around there necessarily indicative be it's will And of do trend. to a you don't I there start on second want some higher So the but variability one? Sean, think

Yes, sure, James.

So of we deals. have as ramp, number it new obviously, Pandora to announced and relates the a

incredible an of We have online. inventory coming amount

in still ramps. the as who I monetization early comments said of in are of I these some podcast of think my stages

think the gross term, great early place the it's platform and to in long the pressure for be. on But So the overall, margin days, off segment. a the on Pandora margin seeing you're we

Every that can is allows given share to financially to the I make do, think about additive sure us deal that we great but all, it, but doing. -- -- want it all space. goals continue the the still early to but advertising in still and articulate to market talk can we're an it's maintain way FX profile all And media position the and really improve obviously. we audience we we overall a that podcast early to halo growing, the margin with so days that scale deals and a are. do certainly we still I what to audience effect our disciplined it's premature have in and hopeful Builds capture REIT. it's in we're margin think really our We're pleased

So, know to I don't you if or want Jennifer that? to Scott, add anything

a I'd podcasting expect exactly on early build Programmatic There's closely than early days. monetization grow with There's Sean, just because right? working you audience talent. growing a the bit, that the would think process, of working manual of just in little stages. said. is We're still faster in that with ads. to lot in I lot we're its a I host-read largely listening is what the

So that mean a space to our to I to our did that come enable there's is just off-platform in generally grow the XX% continue was to to our the going and going first XX% forward. quarter. that growth with it was ad capabilities and saw I and of lot going certainly stipulate in technology side the of us is solutions business the the quarter in -- you we up up believe second

our trends business. seeing we're part nice growth this So in of

The Ehrlich of question comes Bank from next from America. Reif Jessica

time. hear can you? you Can me Hopefully, this

Yes, yes.

Good. Okay.

content supply other foreseeable that your and areas? like chain guess, both to the about cautious could content double just of but in auto content costs up And factor as issues, you're, pick in sports podcasting how or digits political? then expect And wondering in do the how for and we you through you in-app. cost future. mean, then on there's, does do I advertising, I appropriately -- kind get music, and I up were across a obviously, talk for of you So the but ton outlook new if was And both car

Yes.

I'll Just jump we car in Sean content costs Scott on and selective streaming. support in, service in in the both too. to continue investments But make the general, or will let to

You saw our about talk that. announcement more about the NFL. Scott can

are we're think in heard of music play the that doing in really of with we some comedy. aspects We me and believers but big and the there's about of there. live by course, where the sports I'll but you categories play different going investments specifically definitely And of sports what cost highlight terms in we're the certainly, -- and talk excited alongside be about and don't NFL to and believe in earlier I making strides. And sports areas in

So a Scott, more maybe do you to want to NFL and bit talk little cover... about

Yes, exactly.

So Jessica, seen which it thing I matters. across live and and we've as all on two, sports, interesting the seen one cuts the well. is TV It one; networks demos, number think still number have

always in shopping. live sports one-stop big in and live having we've all been believer So a and sports

If are sports video you places. how now, they look in fragmented rights are many

car You one or want just I football, racing spot, the hockey, else say, can't we the baseball, have that. anything basketball, way all in

translate really and So I that teams into do that. on feel micro digital and down about based other good channels road on as the it we things more will

goals a stages, to first podcasting. one of Stitcher by was would on Early is quickly out really large make with number margin. number one according one it Triton, Just podcasts Stitcher the to which and matter figure and

and and on to Crooked leading like Coco a well SiriusXM. through of So other coming that's as to some and of opportunities others its that as way now working talent lot here talent

the good in as channels over of demo which that. channels. younger on there start are will So branded I know is seeing see now, about well. But our some that's because others solid. with growth time, to to digital The right come. you're interesting space core area you'll pretty demo grow and that We where extra Sirius the feel And is

we pretty right feel where good we now. So are

in But see there softness. addressed some closely. advertising then, of revenue his facing feel earlier yes, obviously, are year guidance. comments more are in generally, our some but full the you the Just there's same categories industry, of cancellations on comfortable very this Sean we watching where with some we're We, challenges

DXC of as off-platform think have second been restaurants, nice platforms. than brand. with we advertisers saw to do benefit travel to would in the be and starts quarter. business our sides both opportunity I of vulnerable There expect tends to But other we we more growth our again, automotive And areas in that. represented some rebound, have cetera. et across from

we're lot what and We continue to strides and platforms small opportunities doing make see stages as Small unique around there. branding we other with those. around just solutions of that their AmEx that to cross-sell continuing across our a such we're Shop And on have initiative

have Can side in genres look, to three different it's -- on Scott? I follow-up podcasting. up? any I'd think specific there a I music beef didn't in in going content kind you about, really the of focus over that credible that you say, many need Scott, relationships? the important so lot you just artist talk years, are And you content two the Are one just it is you've ask mean on kinds specific introduced for earned to then or of or which last, and car. you've app in

Okay.

So to podcasting. in to we part the come the because seems the audio biggest the years Crime the wanted that's one was thing category that ability set be and unique second along to category first it's in True answer just

have locked that and a of others, we So the Crime up. few with Junkie

brands empowerment and others podcasting that I'd self-help grow. in like and Radio Sirius lot and to grow. some we of and that a see in like the things more see networks to a little I'd So area and area, Doctor are did other some podcasting on like of and things narrow,

the do channels on a just pretty question a a one categories you the of could to channels balance. similar good we way is to or Drake obvious. hip-hop our matter always have that That rock, On the a music an or could in move the music it channel, have artist over brand in it. have needle artist hip-hop feel will a We between hip-hop channel and you channel. a and pop It's curated side, in our have balance both a it's

just and and sense culturally goes. look economically what need So that see where to both makes we

Swinburne Morgan Ben The next from comes question Stanley. from

This is on Ben. Cameron [ph] for

on Just a follow-up content.

Pandora? the first-look other all? On then renewals? for low. window those coming competitive And deals there? in these stream any satellite when are bidding on to games deal, how connected for you helping become more a content affiliated of to the to you color normalizing has the did allow Have come as Or do rights your you there environment well? churn And kind path days? on Just self-pay then going NFL expanded is Or or second, second, sports any up at sports churn the to Is the persistently vehicle-related back? business, that continued wholly seeing other get benefits

Scott, content you why side? the don't start on

Right.

always So there sports all that as I there's between and our rights, There even that I sports. it on out We matter. major be NFL said, rights. bidding yes, they'll the and sports on pro saw always, aren't think, the live on many the colleges

sports. burn So on sight live And there's going no that's be to just always in true.

under roof our and I shopping our like I position the to anyone come don't one particularly can So sports saying close that. I position like which one-stop all on think

to that. the and to have in service premium podcasting, Pandora rights want of to one to live So to direct a terms sports. under be largely extend I live It's roof. don't good sports on NFL all pretty that looked at not feel Pandora is Sirius. going music people but We No,

performance. Yes. And on our side, really the quarter churn second with we're pleased

Sean -- strong year-over-year. played few standpoint down has points from now. economic lower seasonal highlighted some pleased typically year so that are side and voluntary both spring. really say, focused we're seeing for but been watching seasonal new carefully any credit starts that. the in Similarly, vehicle-related we're the and just rates, card used year-over-year cancel Obviously, And in been customer, pretty is has basis very the with see quarter every a we're from the a really we entry of role solidly a standpoint to there of the on car trial actually in us strength of in uptick general. second well. That terms The in steady. entry consumer, see just side. demand, an we've some rates Non-pay, We I'd don't We on in performing the the concern as and very any happens do the that. impact

see see continue but to half And then expect seasonal to those and I as overall. a sales from starts we'll natural we auto trends improvements we'll uptick just in trial some hopefully, the So would watch second in standpoint. continue

next from Capital Markets. The RBC comes Maral from question Kutgun

I'd Maybe you just the in which seeing market. And then right expectations a you your that there advertising off-platform in the RPMs budget? see Is color for offsets? you reiterated at positive too to guidance, to lot to have is to be follow-up a with podcasting. the any much clearly uncertainty assume at year of the the the on it is called compared it Pandora may just And appreciate you discussion, initial billion on solid trends? for this there's not opportunity be off-platform $X QX continues down revenue or provide But where curious out, seems come as there like just sustainability Though could of there to so, a very and the that on on advertising you're robust may I great. more want comment if point. maybe

Sean, do you to want start?

Yes, the positive discussions, the very sure. I demand. guess see Kutgun, continue to advertising on question. thanks for a we

this early we're of said, in stage As monetization. you

have the having we So really benefit supply. increased of

expectation growth have monetization which platform. We'll to off deliver will improve the continue continue we'll the to So to hopefully on continue we ramp. that

saw platform, the the saw holding on Pandora despite pretty steady you is to relates decline stats, it you As RPM in hours.

usage. So to increase we're the seeing continue listeners their active

in is the marketplace. there some caution again, So

we think reiterate do it. to have supply, benefit just I the increasing of

over confident and comfortable So we're the we'll year. to continue the growth remainder drive of

with at. of the again, a cautious we're environment, where we reiterated marketplace the terms guidance, the keep it. given but comfortable outlook In we're macroeconomic we Certainly,

anybody I how So to or offsets, relates guide I it. don't or wants year see Scott Jennifer that's add advertising the or market anything and it on full know, the as to

but we're obviously discussed, wouldn't some amount provided believe today. have of we've kind I been what guidance and this. QX, of I fair as markets on on deferrals. our of the in Yes. there color And comment we've seeing a is reflective specifically cancellations

the expect we've incorporated that of in all And some we numbers. that so continuation and

comes The question from next Barton Rosenblatt Crockett from Securities.

was EBITDA commentary I bit more little the drilling the for interested a year. down And outlook just into about just in

just guys little the year speaking would a of that bit just what some sure year-over-year, that up comfort pacing the year-over-year for to flat to trend half went understand the down here give kind the suggest what want in changes But of the I slightly a revenues number quarter. in I back there's And guidance? through. year to be reiterate full you it change to to you on maybe in we expenses the and If that make EBITDA is versus that

Sean, start I'll I'll in. jump and let then you

mean outlook. year the the we where a is Again, about we morning I has an a the year. -- We lot have for talked subscriber this $X.X the and having advertising guide. outlook positive feel the are with subscribers that We've revenue. from Yes. billion for confident on impact

perspective. from think on programming have I and content a our are handle good what a we investments and podcasting

year-to-date on and amount, as spent our you We saw and sales media fair and marketing have brands. bulk results a performance in

meet back some at So couple to of and out year, Jennifer confidence control. did a We about ability as the we half in have -- I the about our we of guide. the tightening look times comment

We're our at looking estate we're looking all discretionary -- spending. We're footprint. headcount. real certainly it's looking at So at

both trying So the term. to short and long we're term manage the

time, the for sure Of want year. to for growth. we what guide the investing same expectation set set make to we our want -- long-term investors our for have we're and we meet we course, the At

there. to you don't it I take know, want So Jennifer,

based some Sean, and agree, with spending we're expenditures to marketing acquire sales back-half in be of we're and different still would our there to there the variability marketing app it's and optimizing a done different channels. experimentation been different lot looking and I the yes, types going to are and business trends how come acknowledge weighted. business. part using we're on and everything I encouraging -- distribution to I just our our Barton, at said. expect subs be we'll we add in the able part obviously to fluctuations great to we're We've And of through some is guess of of you've there. opportunistic and investments handling digital see more is going what's we're I And by to our drive channels, learning to where stores, that partners continuing think those and

punctuate the half. first seen continue probably will and And sorry, in just you've Barton, -- -- that the not important lastly, second the to The punctuate. sales big marketing It's half just big Yes. for point. an no, uptick in uptick likely to

Okay. That's helpful.

Just quick thing. one other

with mentioned you're EV expecting to make announcements You companies. some

As time? aware, has we we're all which what you into there EV cabin that relationship thinking particular Tesla how Well, over opportunities about that of matters, one cars. of the some very have opinions should I founder a and period be company mean, seems to the kind there's your would how really of goes with there describe Tesla about

Tesla to be minute of this start-ups the execute that. to just to of to be broadly are just very able them on SiriusXM are more including consumers true vehicles we But I we want to more Tesla and that with affluent car. models closely we're the that EV and year. in of produce a a in is some we like clearly -- especially starting know certainly new models be when the would buyers of And would working I What speak the EVs. these buy Look, they for on companies, many

It's going from all very customer time we on as our flexible in are ease the the we use with we buyers and what So our it advantage car onboarding. in be EV the car to auto but of and on as in the new absolutely focused are particularly their environment. working well that extent, into large our business long-standing hear used is huge a frictionless distribution ensuring and the and, service car to been have buyers can get partners makers experience, a now a

focused partners we're developing So how for those on we're solutions well. the as EV very

take from will Joyce our from We next David question Barclays.

side expense the of on question equation. further a Just the

But through podcasting and just the should streaming should You of half. you income in and that side, it and spending we a that extra the and sales is the the about up But year? seasonality? of satellite development. in maybe this marketing spending how second some second about Was the know strength? probably overall quarter. platform platforms. content rest lighter marketing more was there out through Was Or seasonal just sales sports-related content spending you're the will level on be the said quarter? statement on this and I both elevated more on we're we the thinking spending flowing called be also think product the Content since

that announced a what of And the the you the over the year. at Yes, in on of and think it least quarter. the things as about new elevated second year. David. elevation those over a expect you you think should slight normalized deals just should ramp level. year, Again, kind percentage over segment, it's course saw I We've SiriusXM that's of as number of I think the the terms, in a course that's Yes, course the of

Scott will content mix provide, As are news best and the and I a we got talk, to obviously, music. We company. you, tell of sports

So investment it's again, money. even, this not a is of large we prudent amount think a

and year-to-date content was the million side and think I on it programming $XX XX%.

it's I just So an increased of level think investment.

operations we about kind like just more be lining the that thinking was Are flow I the capital or could, straight working opposed your thinking with buybacks. if And on your should there? second matching of you're one I how timing cash flows How returns. the through wondering strategy from of capital as the stock you buybacks year? just a to about

Sure.

think, X.Xx; cash we're said, consistently what Xx, what we is free in obviously, of to to the mid by, We're quarters, flow Just X.Xx. we've over generation. the last our the reiterate guided at guided by I leverage quarter couple exited

You saw first half year done that the of the the the capital we've special of in aggressive inclusive return dividend. of

we're predictable. I hopefully, what think And by think, by guided our So going going flow. guided We're be be leverage. the to I cash free to fairly we've articulated is

we'll we necessarily and the It's not accordingly. valuation we of is, it's So be how outlook more straight we execute what what see the line. business, a it view grid to view the how

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

Would talked you as product? I do playlist guess, a about you the kind expanding a the business. how lot streaming business know Jennifer, like the streaming changes you I of peers? streaming that the functionality of a SiriusXM more model or stand-alone So really on-demand to consider think business, about make it

a bit. up Is nicely now. up think, we And the that price? and know that rate about you unpack component you Is more stronger forever. being tying historically? has in few ARPU Pandora more mean, for, And things and think of satellite how was looked you've at I forward could SiriusXM just into I at curious just about now it also then inflationary versus than like product multicar Maybe it the ARPU, increasing So off of a grew an it should And ARPU been something quarters it It's as a been on tiers? independent I quarter. drafting secondly, growth kind think podcasting. it little ARPU, like going

minute. I'll ARPU Yes. Thanks, address Steven. let in a Sean

they a the call. channels to and of strong listening is our we is On I those the on-demand already channels, just our cases, listeners. the with users in talked of giving in about on-demand. customers little many listening apps, it's what's in our not our are listening shift function The control their the are listening do both mean very In new and we're listening surprising, in listening, right? where where to extra see to time features we've leverage we at in be their live which in they're to extra similar established bit our of happened predominant constantly watching digital business Outside looking still what earlier personalized of stations, able seeing growth and product the experience. which more particular, amount expect that's areas side, video over the to the a brands

some more where those are control. examples we're providing So of

of gone We capabilities that. on-demand down haven't, but path the obviously, full we'll look at interactive

team. great have out place product Inzerillo, He's continuing Joe to team under We a in that build

we step disciplined we're we're function, side. at we've retaining digital a this there And look if side, the represent And so obviously, we pleased Obviously, would, It we've just in that. the music large a very approached we'll to -- our entertain on subscribers. But will were adds our and in where be year. that, would licenses like are. about on of assumption been something have we to attracting general, with how how portion

in There's dynamics, the our trial a adds. our trajectory the adds proportion of funnel. this given will in of it Of smaller But course, net the overall a of still starts be because auto gross that's part generally our year. obviously, bigger

pleased with really tackle to seeing far. what the Sean, so we're you ARPU? So want we're do

Yes.

Sorry about that. Yes.

biggest put the the is, the we So Steven, November. in on here ARPU side, increase obviously, driver rate in, that

as roll continued I year. action probably price probably think took Obviously, the challenging that quarter. in we we increase over get sequential more that see last the we third comps

takes and rate. overall, So majority minor some benefiting -- and there's the But and me, picks the our OEM is of some higher other some relationships. revenue from ad from puts excuse takes,

that you've trying Steven, us are one is the be past, the would just we the I across that opportunistic very in I mean to heard Yes. thing add sorry, pricing as say curve. -- in just demand that capturing to

some $X digital plans month. So of are our a

have month. We IP demand a is and $X below PV there a And above likely plan $XX at $XX.

we alone, we're maximizing we're the overall want we It's customer just -- metric. ARPU really that make driving revenue just the dynamics to I So only on demand. not and watching sure know the metric while to want like

in November could price little something we last of onetime is see And future? the think kind a that Or more we about consistently in nature? should Yes. increase is that

in We free. competition our on increases full fact price rate sensitive that, again, continues executing had the a side. largest certainly we're of history be And the to to the very car

in disciplined increases. continue us at we look these very how to consider rate to forward. would going are expect we them So But I

for everybody, speak Thanks, Steven. you joining We'll soon. to Thanks, today.