Sirius XM (SIRI) 1 Feb 242023 Q4 Earnings call transcript

Greetings. Welcome to Sirius XM's Fourth Quarter and Full Year 2023 Operating and Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Hooper Stevens, Senior Vice President of Investor Relations and Finance. Mr. Stevens, you may begin.

morning, good and you, everyone. Thank XM's Welcome XXXX and Year Quarter Conference to Call. Sirius Earnings Full Fourth Today, have Chief Executive Officer; we our and Witz, will Tom prepared remarks Barry, our Financial Jennifer Officer. from Chief Tom the would forward-looking President during and in this statements is Securities Q&A Officer, Jennifer during Scott Greenstein, statements remind Reform term Act to this everyone defined Chief questions call. I our take of made be as to Litigation will the call Content XXXX. Private join might and like portion certain the that of beliefs These expectations data are all be forward-looking based statements that methods necessarily upon incorrect assumptions, management's upon current imprecise. and depend or may and or Such to could and forward-looking actual that are uncertainties risks subject materially. results statements cause to differ

these SEC and Sirius obligation intent We about view to on rely release. earnings any them. risks filings today's you statements please XM's to advise not or update forward-looking unduly uncertainties, For more disclaim and and information

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

our including optimizing focus XM structure. experience, this Tom our the good XXXX as XM's launched surpassing net Sirius our a results. and Hooper, flow by our robust and in value, I'll growth fourth resulted also comes in with streamlined free highlight across and on emphasizing strong bolstered bit. morning. cost present details. operating our in attractive to exciting including artist responses you, performance, recently growth strategic Sirius cash Liberty at will and your second to from return financial an Today's exceeded positive will expectations to adjusted equity target. time continued aimed X self-pay main and strong XM report Sirius was car and that half talent, improved the appreciate we and Thank slate adds and XXXX, on Media aspects growth XM of call for EBITDA on subscription financial by positive more and start the ad additions goals: we our our enhancing stations reviewing a focus transaction I'm time announced net This transformation future, the led by All business, also and Sirius continue creating next-generation structure. In and alongside both It's in including a organization's quarter Mayer, streaming high-profile content from all our today. John new more achievements, We'll the business pleased overall. driving major building

incredibly subscriber turnover churn We also low maintained at the despite in increases our during year. vehicle-related X.X%

add revenue self-pay improving anticipates guidance with adjusted cash and steady free slightly and net year-over-year lower XXXX Our EBITDA but results flow.

softer into platform. ARPU, While our signs early roughly our we This with we're backdrop, to to am diverse this and more Polestar their and majority the we on extended that coupled XXXX. on business influences This cash streaming-only technology efficiencies an launched our generation long-term the stable a Honda vast revenue focusing enables our uncertain, year, approach with cost Mercedes-Benz, market This Against growth. Today, new sustained with revenue in revenue subscriber and marketing subscriptions. subscribers manufacturers, even remains essential base I outlook. in our to more shift, we path as content, confident continue The this and return and these in ad have a to invest indications positive be partially subscriber comes to from a business. and investments, reflect impact us in-car integrate XXXX past subscriber to revenue subscriber modestly long-term continue challenge for EV and vehicles EBITDA level partnerships to of Sirius take Volvo remain year. Rivian margins maintain and us subscribers metrics. financial million with investments of business make XX will in fully XM are time agreements our our from and to numbers showing from it

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everyone. you, Thank morning, and good Jennifer,

highlighted, or Jennifer our financial either trajectory, that closed exceeded positive met year on results As goals. we and subscriber a the achieving robust

expenses a guidance flow unchanged a customer $XXX for be million continues quarter. in was and Total and billion, for lab, or full $XXX through by subscription structure royalty steady revenue equity at quarter, in on respectively. decline G&A service began adjusted flow with by by the and and path Importantly, The flow in revenue and cash cash ], billion meaningful expenses, for X% launch the our revenue advertising the outperformed outperformed approximately advertising XXXX, respectively. nearly guidance executed guidance EBITDA This and Adjusted at in and largely to transmission cost marketing to our $X.X $X $X.XX EBITDA $X.X we million consistent with billion, to In Free Liberty streamline billion, at strengthened to can billion. revenue year about proposed the $XXX year $XXX $XXX $XXX free and at year growth EBITDA original adjusted future flat development original Full be $X.X the design it of offset decrease our for revenue free with $X.XX and the share the to billion, for our fourth at our and attributed we per million. initiatives. In billing, $X.XX income our new quarter XXXX saw subscription and back revenue engineering, cash during successful weighted [ strategic respectively. process costs. Net was million XXXX, and billion for sales million rise and nearly means of share. was billion diluted remained lower million. transaction, $X.X $X.XX coming

$XX revenue the Turning this a from full to was advertising the price benefited we XM's segment certain segment, challenged, of OEMs. Gross believe offset Sirius ARPU plans, decreased XX% for price compared as representing increase a than we year by quarter and broadcast higher billion paid the Sirius the but the of we in year's remained down X year-over-year. to respectively. in which advertising on of revenue, is X% fourth mentioned down $X.XX segments. the self-pay $XX.XX the quarter, is in rates effect to profit fourth delivered absorbed from the product promotional and during and fourth In margin XM promotional less $X.X XXXX billion roughly XM billion recorded select only $X.XX X% It in market. advertising tough royalties. lower point $XX.XX, XXXX last the March music full revenue plans, lower subscription million Sirius the quarter

in programmatic For year, revenue revenue segment, X% revenue margin. EBITDA driven year-over-year. profit profit sequentially in in while to XX%. Full dividends loan billion of intend million Term billion margin A $XXX increased ad saw revolver the increased and gross X% year a also platform quarter And had million segment full year million year facility and quarter and margin respectively, in We total totaled programmatic will strong in replace $X.XX the fourth XX%, billion, ended at our draw fourth represent year-end. transaction. In week, sales. $XXX up Loan dividend, of new facility $X.X growth of returned the Podcasting full segment undrawn of year XX%. sequentially our by to that at equivalents $X.XX podcasting of off was the a returns the the our quarter closed was the XX% closing commitment. segment for debt entire stockholders draw share bridge and million, X%. Advertising and and our this capital of XX% was a for quarter. to off by the fourth lift net and platform approximately year-over-year we in quarterly $XXX we gross X.Xx, cash XX% quarter, year-over-year, of XX% available the Pandora and million XX% and an We Liberty including of $X.X which profit $XXX through a and $XXX was Pandora We was increased $XXX the repurchases. Gross as increase last million, revenue billion from with the year, in the adjusted continued that Full in part XXX-day delayed regular of million fourth podcast prior $XXX and X%

close quarter. rules, plan quarter, third Additionally, Liberty of their Liberty in as and the our the still the early end Liberty's S-X response proposed we Form filed suspended transaction on to on an update third Monday, in transaction, Media the At repurchase to SEC offer. we the expect share per

While we market. the transaction is pending, the anticipate remaining out of

to to As we will beyond the have low we flexibility will will on the target being in dividend to during half forward and we on continue our of zone range, deleveraging, while in and primarily second this leverage the share the look mid-Xx XXXX, we back anticipate be policy Liberty opportunistic repurchases. transaction, continue we focus

tax continued org $XXX XXXX, In real In to targeting this we estate operational we continue we additional structure cost footprint and million savings year. of the addition, cost optimization, through XXXX, efforts broad strategic are approximately In efficiencies. focus of nearly consolidation of cost-saving savings allocation losses. marketing attained tax and $XXX million further and approach our to on of industrial energy efficient efficient These we customer produce stepping year, social credits related service. up investments with along more responsible tax investments on and resources This including capture with will carbon equity programming and in the technologies, storage. clean are more

continued activities, free capital satellite will expenditures nonsatellite termination tax activities currently not contract. of increasing return laws net and latter capital and the bulk customary the cash we of a these expect tax discussed, coming cash benefit X or and And these in generate stockholders. to while cash see losses free investing previously benefits reinvest as to next as the significantly should to operating declined cash taxes our expected. These the portion will $XXX benefit both projects flow the perspective, years credit will the tailwind million equity our we from flow classified than as ahead. our flow The federal Over cash with after-tax available in payment business perform years, be in provisions the in investments as contain of and more the agreements change

approximately Finally, free guidance, $X.X adjusted billion. billion of projecting earlier revenue flow today, $X.X EBITDA we XXXX cash $X.XX approximately of approximately our and released of billion,

our interest transaction Excluding arising the cost and with guidance from incremental providing pending expenses our Media. We free anticipate Liberty cash update closing. to flow an upon

to mentioned that, turn net performance Jennifer in our see As an XXXX. With self-pay versus adds, regards in we Q&A. expect operator over it to I'll to for the improvement

[Operator morning Stanley. of Instructions] line Our this the Perrone question Cameron Morgan Mansson is from with first

Tom. for X First

optimization the that $XXX And $XXX to million you're cost 'XX. were this achieve mentioned million the year. targeting you in then of You able

I million I unpack could you was number $XXX a guess So just that if bit. wondering

the business support big this And you of this some subscription You buckets, deal and indicate kind I generally, supporting called in content but of is programming -- opportunity a like using strength. But signed Scott think, is the of those then marketing, of see what performing new of how to just realize the across for and podcasting mentioned you just think overall deal helpful. and growth any to content for about of then if kind most year that terms that service outside areas? you business out, agreements really how be podcast in that Jennifer, how for and mentioned, would the you other opportunity you And leverage just of do plan what do terms to customer but either from I do expense those or some limit big Jennifer, X release, where [indiscernible] can, strengthening benefits more, savings? then if you in the the

Cameron, Okay. Great. for Thanks, the question.

and pieces, say a couple imagine. I But I as at I'd in of customer XXXX, marketing service. slightly lot it's But up the marketing a things. So say of a investing look we're as for $XXX can extra streaming the moving side. lot but programming, it's When would you summarize, there's there's unpacking in is marketing, year-over-year, example, you million more

And so our we've optimized marketing costs.

targeted the $XXX as savings more the performance-oriented streaming being reinvested more marketing we on is of approach So the million and side.

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lot have it. of So a going we parts into are moving that

the is overall we So it's streamed when actually as transition that savings move XXXX. But business. there it a net are of approach at we're as to also incurring the in look spread lot and savings number, going more -- you of various But is platform to costs throughout be offsetting part our it. a the of

on Yes. And of where you come then standpoint, network them a SmartList think also Jason put specifically? we're in, to and parts John but and adding place Scott content I broadening this. want really great Hayes hand to subscribers positioning the strongly podcast able to lot all terms podcast -- just business. working to comment to bringing Sirius on overall with do just major be more podcast including specifically, our podcasts. really network, ad I'll their with I us our were an it phenomenal to of but in And industry. Scott, of benefits from start just mean thrilled exposure, and a really in Willett, content And to representing some XM really it we're we their add to together a they've Bateman significant

Sure. Thanks, Jennifer.

still second So podcast industry thing a is things. and the or of inning. the third is One in really couple

in and we network. million shake radio all that in in but reminiscent top charts, XXX while. a has it's the The X for to top things. XX. stayed some by about the the of way starting downloads same XX it's some We're So the podcasting of other have And largely XX, terrestrial evolving, X out of top monthly a averaging

to point. of of filtered would things what calibrate assets of robust an that between and and a goal think to the continue suite audience most best model So sort funneled curated sales the subscriber create fine-tune to to the ad for we that X model. that build ultimate could I be close pay network our was And we're podcast getting always and

So thing. that's X

earned our as knows, see everybody generates most as enormous, certainly, of well. amounts than different content to audio podcast Secondly, services media. And enormous that starting -- now we're other do

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more, right now. look we to but forward So perfectly we feel positioned we're

with question comes Vijay the Evercore Jayant next of from ISI. Our line

could. I if Two,

all Just you Typically, assuming transition, think should given in I'm your want guide, rate in the for product sort a And product also is satellite we about is have there. this obviously, increase the this dollar month a year, streaming to grow. pricing every to year going 'XX. of increase rate implicit expect a

pricing? paid subscriber the product satellite that's And to is impact that sort average some in Is So than that it that it base priced sort offset given if the is of then lower case, there decline does of imply ARPU streaming the your in implies 'XX? -- going to the ARPU? on

it rate in Yes, a increase, X we've and But the were on We Tom did second. and Vijay, I'll together. X increases as pretty pricing done, close comment last just late our early X to rate in another XXXX in let XXXX. relates ARPU

have rate approximately of So history next a increase year, had we're anticipating and we another every year. other

this a guide. packages, our into revenue would year our on that full a and So be increase rate without price plays

believe little growth yes, standpoint talked in-car in comment But products. the And very increases to we're [indiscernible] on to cannibalization, growth, on you excited both tailwind And our address but we drive market. us streaming is. our future. to point positioned believe we the in-car about to content And really audiences, streaming different across and it's on want for about packages We the they're overall basis to this limited the to product early We've continue broader execute the about really music weeks ourselves our can a in and base and fit are how and as about a X the of a it really more risk Obviously, as days. talked that lot and you Do growth our enables -- streaming value in there's what add nature streaming-only car is instance, rate we price to differentiated the because volume a in impact since in, also going of streaming the overall very in $X.XX well that from a only launch, provide plan it growth excited these we're audiences market positioning we're market complementary revenue of believe bit service but growth. provides the product because the streaming about and the between ARPU forward.

$X.XX, at to the competitive our attracted just we would in felt add, that more younger, I a I think at we affordable subscriber it streaming base, a as Yes. approach more approaching look be to and audience. Vijay, plan will urban growth

expanding to cannibalize, so look base. as demand we by our it but really believe overall expanding our at and the And we subscriber additive it TAM, won't

Our from with Barton Rosenblatt. next is the Crockett question come of line

couple I into kind thinking bit. drilling that the and kind guess here, a about trends of a the sub dynamics ARPU really of

you're you'll the an growing But expectation course that at be in the So the adds do of of decline earnings have your your year noted talking a self-pay the you base XXXX. the I trial in in about release, over free also year. end

just maybe trial some So near cadence about should of we I'm wondering turns guys year ARPU, talk X you is that pressure things then reflecting And there in on the can terms quarterly course that to. the kind of around self-pay if maybe go you there's if think term the of through of we the any as free that or with streaming were some maybe to on changes that the demos still approach the $X.XX also of talk just and price there. radio thinking packaging growth satellite how grow some the about thinking. plan lower but you your that's opportunity offer, pricing part to if I maybe wondering update could was any the not on was if you're

Yes.

thanks the Barton. questions, for So

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So packaging. or and on your in-car question about satellite pricing

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identity and better and service, things support MarTech overall. the we'll better how customer Tom of mentioned about Some customers

from next Our Wells of question Steven with Fargo. line Cahall the is

XXXX time. a what Vijay's you once trying the a I to have volumes, maybe I with to follow in-car you're conversion on late terms this product either investments Jennifer, to a on what in especially discounted mix connectivity XXXX you're younger started points up with help like would don't around XXXX they and question, ramping just issues a heavily buyers. just future as updated and in see conversion had about of of seems phone the positive be only. rates in should proof car today made that have those improve and with streaming that might but is you expecting lot lot or in their think experience It around of you it So on Could versus us shift upon app drivers for guess then were the

the So how you term longer ARPU start about do to towards in-car and only? shift we as just mix think streaming

Sure. Thanks, Stephen.

benefits towards through much we on rates of the roll are really rate, conversion on have expect conversion going to that part come the year. to So in-car this would latter of the

is So streaming overall but new what know, launched you in primarily our app. supporting new we platform, as our December, tech

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X And about then have demand and as your on So believe in really question subscriber earlier the components is should really the just year, there we in we certainly about to streaming indicator shifts, to there. more talk we're a mix on here making base. leading our that progress

opportunity packages more also in the half some of open the up to we'll and or second as improvement We the with believe we it's is the price forward and raise long core generations, towards to have have an value we of the as product continue year. doing. going enhance opportunity new some segments base demand continue in which history that believe we subscriber we passionate a our younger content streaming And whether to we through the of points price to very and be who have of additions, loyal a launching

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seeing looking forward go. I'm how that to will So

Goss comes question Jim line next Barrington Research. of with the from Our

into identify just also royalty this Actually, maybe -- originals from envision, about. the programming to satellite and more conservative it seems follows a the you're And streaming the at from I'm from you as shift was little and in programming obligations stage. costs talking impact look on on different it the revenues. exactly of ties the the And at programming but like gets you to impact royalty little played, that get the to streaming being to wondering what's also nature what costs, the maybe be a this more going how if Scott

about the why Scott, you talk [indiscernible] don't

Sure.

proposition, from as to, now as looks I audience had younger alluded the And blended we've value is -- you to proposition. an research. the that demo a be of So sort always tries and

forth really feel good to going and a back I So on lot content. of have we're that the

been and growing, pool originals, is primarily pieces on when content sports with things. on and those live that royalty And For or every that. all And visual demo, unique other original like still satellite. and things instance, to obviously, are our it's or SmartList that's placed looking we're listening in whether the audio the of create the digital. It's obviously, you that. not proven, say always it, other on the comedy

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Yes.

subscribers -- say think the ad summary, to look say his enhance will great Trimble, carefully very flexible Scott. I and behind a paywall And bring really the for how along runs a have content. in opportunities model team, I who we we John of we XM would I'd that monetize content terms that's have Scott So sales, value. at Sirius And with

show really will like James instance, for of to there'll XM. first that's but on and monetized more air content something for SmartList, where that's at excited exclusive a ad sales, like of exclusive be also some be today. we're So or Sirius amount combination through Sirius Corden XM, broad

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of predictability have cost have licensing. the on percentage we side lower of of we In music the you a business. those So look lot when a streaming, costs slightly at around in-car our the

structure music so for that both have and direct have in So healthy both lower in-car different margins streaming that our from for licenses. and of sides percentage, streaming licensing the companies we our packages, is a streaming-only because subscribers it's

I are XX% XM through the approximately on for I a don't based streaming SoundExchange. license that Sirius listening. satellite separate, it's We we dynamics necessity. a resemble Pandora was on that but side the think company, subscriptions, the So in another have or pretty those fully right? our have course, direct interactive anticipate side, music where of on the in And of our lot interim licenses business, are is how so of there and And more people

Ehrlich Reif Bank America. Jessica of line with the from is of question next Our

wondered cash advertising, And TAM Jennifer, you a confidence X of given us could aside color think the mentioned -- some I rate do from think just expectations or your Scott as are but growth And something then that drivers? free just don't the encompassing secondly, Maybe 'XX, which long-term you pillars you you on so others? advertising -- cost future service I you What for increase little reverse said you do -- the obviously are there's trends? the switching have or X What for it lower with gears is to sorry, goals? gives the bit, plans? do your then cutting a is? that? from Is need what can your bundling already but will flow, considered considering if lower benefit or you CapEx, Or What the content something are else? you of give you

what with we conjunction of or others those call let been video it's Thanks, and do I'll an Jessica. on it effective. would and telcos has jump many have with in relationships others. where clearly place I and -- the been that Scott it's streamers in. Walmart distribution, But And we've seen use we T-Mobile bundling, opportunity have primarily in whether

interesting terms on trying we really offer. broadly, we But of sort having those with in think and launch also I trial come commerce have to opportunities as to find types another's content opportunity, Audible through is obviously, just launch true more to the of platform it more bundle new content, in an and hard makes things. terms it we're think to I easier make we'll X do ways the platforms integrated a going when it of of

a different experiment -- very we're attractive of I our do think partners able low number bundles. And year given with this to it's churn. and be very offers to we'll potential of So types

don't opportunity. Scott, add So if have else I that's anything know, certainly on to an that? you

Yes.

out are our we service I off all we mentioned, as and see attractive and back of lot that. a content have exclusive Obviously, much checking is, so because earned radio Jennifer to it. be the and the the in media, podcasting, starting content, from in we're people mentioned Just X where point, comes exclusive now Jessica. the we're heat meaning traction as of like tracking to that But trying

it news love comedy there if bundle increased basis I expense. daily that interested sports, not at would a in of out talk, a in that. any on right free what our to what music. is of else's But was of our So sampling way version increasing I'm at look comes the amount someone

it mentioned, to the So And have thing. right be to will as it. asking do Jennifer plan this

where goes. see we'll it So

$X.X I a in about mitigated we in minute. a still -- which proposition, for lot that great and to whether as ad to hours Pandora, But let I'll a advertising position strong Pandora. and really in is of it's like with on video cover a do to MAUs extent we Yes. assets cash the had with We Tom have revenue really key a It lot audio. declines, really, the Pandora. ad listener a well. about Jessica, is And units, has did it's We'll of down ad core our -- of our have billion or through do in opportunities some broadcast still here audio last which driver. pillars. value do remains display important last about the It's serve free XX% and same were our X%. we advertisers advertising, that about fact it X despite X year, year,

But job to Pandora. continuing opportunities we've been and great assets the team So have has improve has really of advantage key the collection a to space. in done the been of in taking we able monetization to and

will a have there provide a in both streaming enhance grow forward. opportunities to there podcasting, around been be And going there lot area to see more continue well. huge podcasting and and tailwinds growth that solutions that and ability programmatic of obviously, and across we'll is we tailwind will there So that as then our

assets lean the of and really those. into have it's continuing to So we collection

another Sirius opportunity the XM Sirius better targeted business. well think provide looking on replatform Pandora units XM move gets for more to as when that ad will I digital to we

that's probably as look Sirius free whether position XXXX. will combination get We some XM those, at of opportunities to in into our or enhance Pandora we

ad business but it cash relates we're marketplace off just as think free also the opportunities tech then platform that So platform podcasting, will more be and to general on we revenue fees flow? there and growth there's in

you Jessica, the next when then cash cash heavily it's which things, And Obviously, to SAC CapEx on The few free decline look flow, years. we've free over X to at is continue about. the dependent going flow, talked

as get our up middle as our after But to I XXXX CapEx I SAC trending from CapEx of will be and naturally non-SAC XXXX refreshed. through going are app our off the the XXXX tailing think start is high come in the there, watermark we we look non-ATE I think and outward think as down also. satellites our get has overall you start onward, down launched CapEx, and should Pandora and

it's trajectory. factors, the Obviously, back to that the natural of and cycle there's the into EBITDA the impacts -- major up but a So play of it rest getting the the CapEx. that's moving number is

Yes.

some flow with at free flat I year relatively transaction course, opportunities be of real flow at free the cash being signal, in impacts come. in this should point think on strong a years we X.X excluding cash guidance is to our year, a the low to of over and potential for last

Bazinet Our line next and the with final Citi. Jason question will of be from

question. I just have a deal-related

happen event-driven community is confused have been is and XQ that bit a sooner. sense that close. timing think could it's risk or about about consistent very conservative You little My they community arb the a guys

FCC on sort think XQ shareholder underoccurred transfer unpack what just I your and assumptions of you an close? there's Liberty the then there's Can vote that the So side. a license are

time or So as worked -- look if we on filed as you Monday. on Liberty, sent are Liberty our target initially Jason, at -- far on we S-X we when current is the our we with schedule filed it, what line

And need has is in follow-up and on I we tent process, FCC so we the think of time going the number been And was corresponding The do. as SEC that applied. the envisioned. the be that said, the to we line that pole license long reviews to

it to based new earlier. no upon are that very fast are what But we've done be any can. that focused on it seen get we as we trying would right So have now, we indicators as

soon. Jason, you, today. you you, Thank to and everybody, thank Talk for participating

This today's teleconference. concludes

lines time, your and this disconnect may You you participation. thank your for at