SIRI - Earnings call transcript Q4 2020

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Operator

Good morning and welcome to Sirius XM’s Fourth Quarter 2020 Financial and Operating Results Conference Call. Today’s conference is being recorded. [Operator instructions] At this time, I would like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations and Finance. Mr. Stevens, please go ahead.

Hooper Stevens

morning good and you everyone. Thank XM’s Welcome call. XXXX conference quarter to Sirius earnings fourth Today, Jennifer Officer. remarks Executive prepared we our hear from Sean our Officer Sullivan, Witz, Chief Financial and Chief our Officer Scott President to your Greenstein, questions. Jennifer and Content take our and will Chief Sean join be like in might the XXXX. Litigation Act statements would Private the everyone to certain term of remind Securities statements I as during the made that call forward-looking defined is Reform and necessarily and imprecise. current expectations These forward-looking beliefs methods or based statements or upon management’s on 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 advise disclaim or obligation For view We listeners please to uncertainties, to update not any intent them. upon risks about and information rely and statements filings. Sirius XM’s SEC unduly those forward-looking

As results the discussions certain like I will adjusted over the discussions remind purchase about that pro turn compensation and XXXX listeners that, adjustments. the pro actual price of effects closed I would forma results. to include of exclude call and With our assume forma today’s stock-based results Jennifer. Pandora operating and transaction results both January X, All accounting we begin, to adjusted

Jennifer Witz

Sullivan, subscribers added fourth our work. net make alone. am his guidance. were in Self-Pay phenomenal you by XXXX very Financial Chief pre-COVID turned morning Sirius truly a call that of to highlighted teams We today. in first which Good Self-Pay welcome at Sean that quarter and it We resiliency earnings for to joining our XXX,XXX, original our very and the pleased XXX,XXX exceeded thank I new to Officer Sirius business the the XM. We new subscribers XM able actually grow

our results, trajectory second adjusted and the billion, results revenue advertising Adjusted in our all-time $XXX quarter, in obtained climbed these through XXXX. and quarterly to and high XXXX of working of we of auto leading stands progress EBITDA sales made After $XXX advertising XXXL in of distribution, service in the consecutive and our free fourth revenue million. greater improving our the $XXX EBITDA base towards free way record Revenue, Sirius advertising. flow cash outstanding million significant content climbed churn year. on worst quarter, goals our quarter fourth at Along year. to growing the million By long-term $X.X impact million. of the position Self-Pay Our with flow with cash the climbed the for our we XX% fourth and in all improved digital bolstering improved high the reach including $XX.X of pandemic record throughout an XM

our some out consumers. We also Stitcher in million of podcasting our and reach XXX greatly footprint the our magnifying platforms acquisition of to closed expanding

outperformance We automakers rise climb new can goal and figure modestly have and XXX Sean all that cars and XXXX. time. very ad combined audio committed we adjusted and details business. content include fourth set suite. our simply, used make X XXXX, primarily in lineup build than penetration by XXXX subscription technology is we the the with are monetized digital certainly and about business new by offering has ad world XXX difficult. to cars fleet reduction to than enabled cars. quarter am new will in are product best reached in distribution, will about sold The We million reached exciting This as and should of this significant be grow growth, committed our with SaaS, continuing fleet investing opportunity we technology in nearly million of in revenue advertising cars. pleased assembled U.S. growing heading XX% The programming was comparisons experiences customer Put our will expanded entertainment guidance, is a content the are to our to and strong Sirius ever in XXXX, across our more more in on cash of and in year-over-year car in more to but entertainment, digital massive our digital OEM our in subscriber and continuing in to XX% north significant the over see points expect turns generation. team up making over class in course audiences XM almost to XXXX. in I effect over continue Nevertheless, more Their sales provide audio development our investments EBITDA outlook driven leading

the As use and in XXXL XXXX and ease we this sold set, of new year Roughly interface new Sirius adoption is XX% equipped growing. XX% about Customers before platform of on XXXL XXXX. quickly XM this feature be have the of said rise of our love products. will vehicles XXXL our in to should

order XM While we conversion improving In-vehicle a see in by free like features. connectivity Sirius also plan to Pandora year with XM offering enable such We will and personalized an of efforts the of targeted are scaled this to determine vehicles an run best revenue and ad marketing its ads this the digital still persistently supported test and continuously opportunities version in in trends vehicle. to way future unique very enabled of future. tailored as a to early, to encouraging in starting version the approaches improved XXXL XXXL Sirius various and presentation

ad more build yet your long-term will fleet in wallet across our Although are platforms. investments way drive significant making is budgets share the this to out, XXXL of to exciting another we enabled time take

in-vehicle households and of connected climbed connectivity, benefit tangible Roku than a and of on benefits and we devices. out better Google churn the drive in Sirius an of more believe in are in all-time high pricing to XX% When is with conversion that successfully see In smartphones addition the listening XM customers of engagement car, In digital streamed especially XM opportunity to future. to XM outside growing car we Sirius December, that use new devices. year-over-year on we Sirius sharp increases the

We small, of be our base of growing rests are biggest saw channels, with proposition the Self-Pay focused our packaging subs. adds and subscribers enjoy universe. channel. monetized comedy invest to The than digital the but our for for more it I XXX opportunity Sirius having ways indeed across to to still have sports music our well. music reach expertly because net fourth users this is that ever in we ever have in contribution to And in subscribers. platforms rights, quarter, investments XM’s the even digital-only news as this a in also have now podcasting from and extra plus and podcasts content talk, curated payoff mentioned, launch digital-only we are more and before, podcast as of marketing to value million beginning content ways the a sports distribution and we variety on now bundle growth We in more broader select

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business. ways in Kevin’s and distribute new new Laugh brand our Our comedy our deal content subscription and with to package our unmatched and Loud of scale highlights given expanded Out reach growing and ability advertising the

shows, advertising with we debuted nicely in accelerated transparent podcasting most of sales original Pandora. And leadership in of biggest capabilities its SimpleCast distribution, XM delivery advertisers new streaming leadership and podcast and many Lewis, streaming Stitcher library ever and with platform quarter network rollout strength podcasting as leverage position Freakonomics, terms forget strategically operated advertising and Favorite U.S. further largest and Doctor of audio Brain measurement, available ongoing channel. buy launch enhanced the free Through bespoke Ladies, Hidden podcasts owned dovetails popular targeting, service hosts and the Storme music podcast Mad including is digital MTV solution to of growing Office stars don’t and acquisition complements Stitcher, creative that earlier purchased analytics with a have available Warren last within plan This fourth through and of Stitcher Russo, year of from was the and enthusiastically in and Murder Langone the Through the of our the and including of new in and the programming dollars. XM’s which expansion across of us, formats. listening with ad our access. have Sirius My integrates a today, Stitcher, VJs, has XM Sirius our its exclusive podcast Radio to look some increasingly Sirius premier NYU on Dog This to the popular year. podcast to or Stitcher hosting Jeff audience we was now nicely we in a share year. recently podcasts either that multiple fourth named podcasting health experts in Health advertisers and Our SimpleCast, the quarter the podcast the full service company,

a agreement can good potential with content to multi-platform frankly same in more deal the new with windowed Kevin might invest that in alone. Entertainment. further XM in of new will said smart content, to new for ways. have You example is Clearly, Hart’s It talent a and not see disciplined our us us a a arrangement potential always the gives here. to attract use Marvel way be considered Sirius approach

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Black launched including from run Motown pioneering recognizing four Franklin, a channels to Aretha Miles celebrate We and Davis channel salute Records. label legendary Month. artists History The the just Jimi artists, powerful new also channel limited Hendrix,

extended show multiple MSNBC we with XM forward agreement, looking Our representative exclusive the force We subscribers. NBC our airing our and relationships and brands just growing News as key In of benefit producing biggest channel simulcast ways. podcasts rights the we MSNBC and But of in as the advertising platform our the with for tech to audio December, renewed know News, new Sirius ad April. the We for full-time events also the Group on beloved media and with force became and CNBC. master CNBC. XM broad in Universal sports today the became broadcaster well us under advertising and by and business NBC are are from end-to-end of a and live one plate this talk exclusive Sirius

We of play to on our the by pro NBA app. and also continue rights sports make teams their with our major expand to digital easier to NFL to leagues and it favorite recently play with deliver to streaming more our subscribers hear

with music Pandora, and black Carrie the continue among the Pandora when on the Pandora Up, Underwood, has further puts Pandora to has of popularity that recently nearly and to featured second half feature reflects hosted moves And feature We the listeners modes in series thought The concert hands their launched doubling that Pandora see to Dolly leaders our also day-to-day of Wake to listeners’ action. a Summer in their accelerate series artists load control Parton them live personalize XXXX. sharing the of Brandy success using our experience. popular –our songs from virtual users experiences Walker. continued featuring and the playlists which

that all stakeholders As my diversity, are efforts reinforcing our we at continuously to I equity and I remind comments, close want of inclusion. our

talent thing recruitment more We is believe broaden actions and through development organizations simply both pipeline both are firmly taking opportunities. right and a to even I for business. professional do workforce diverse collaboration good and to for focused our inclusive that diverse the with

and our and our on stockholders. improve in XM building accelerating subscriptions distribution, premium look remain advertising. to and long-term audio American service, driving on flow delivering XXXL continue With our unmatched priorities position digital in position free By ahead, these our we Sirius engagement in-vehicle over digital Sean. turn North penetration audio intend call significant with priorities, content bolstering I executing and will to our leading history we and As leadership the of cash of EBITDA to that, for our

Sean Sullivan

today call tremendous most reconnect its to to here be growth people model, talented on to you and soon. XM you to chance company’s this of fall potential XM. joined great Sirius of here with past the It’s the brands, partner reach, Jennifer. many because I meet Thanks, the importantly, the business of with more Sirius and at

XXXX, Sirius XM XX% back market was and loyal subscription advertising the revenue given after on than at Advertising a delivered Subscription modest climbing very year. streams in performed the expected subscriber difficult Looking growth quarter base. revenue a strong our earlier tumultuous during dual fourth our better in revenue year. steady

the For $X.XX is forma billion. revenue billion $X.XX pro increased billion. EBITDA X% and $X.XX full relatively at X% to unchanged increased to flow Free year, cash adjusted

deals expense other as we for business each to and growth Both we As reversed comparisons that we expense billion for trial XXXX $X.XX from albeit previously of OEMs. sub reduction a COVID-related approximately XXXX, will year contribute rent XXXX base we years us lower flat a with of revenue efficient our as certain marketing. now starts for impacts due us lower make trial are significant $X.XXX in way paid guide to in ad both to note, certain revenue billion. in revenue adjusted benefits with come. reinvestments of to the expect more XXXX cycle as modest benefit and EBITDA saw announced in year-over-year Particularly year turn substantial new, of the Unique will expected the across to approximately driving revenue subscription trial will the materially stack subscription starts this as

new this highlighted, anticipate of in we future content in Jennifer also customer growth. a to our smart increased experiences, being support development investments all investment product As

active trial XXXX since billion subscriber Accordingly, subscriptions lengths We with expense, should Rising decision to penetration cash a XM have of couple subscriber base than non-paid growth modest third a additions If new our Sirius XM which XX. two With headwinds pragmatic XXXX. with XXX,XXX in bigger deactivations. whereas decision. and also Product that We used modest view churn third-party funnel drop in and Sirius we in of year cash for guidance flow quarter continue royalty expectations necessary, estimates, quarters in comments of taxes of by XXX,XXX Copyright these subscriber begin about car drive in quarter new $X.X to in very all full Royalty our Self-Pay the but auto more and EBITDA Self-Pay rate taken a expected provide Web vehicle-related calibrate costs streaming no should in of interest at the funnel XXXX X% a were of their adjusted sales will tailwinds, Board, approximately free net to ended phase we a good of climb significant Head down we the approximately given in expect net growth sales. is on new as April the the digital following later we car feel fourth for XXXX. XXXX. as growth, $X.X remarkable trial current and the few quick in fall see reduce subs trial in A million, our The in, automakers. XXXX starts trial fastest agreements importantly, more SAAR in and

a the at recorded has operating moving impairment environment. discussed, costs of we assumptions. Now view result competitive in royalty challenged taken million we pragmatic Pandora, non-cash been a as Pandora charge performance a as overall Engagement unit. our of on have expected $XXX a to And reporting by

the our incredibly to business Pandora’s development grow important of and advertising scale relating monetization ad sizable benefit SXM-X remind platform added is sharing you to A and we innovate Pandora our an one other highlight, strategy payload the by full me noted the digital X agreement. is contributor in adverse be podcasting. the in-orbit Unfortunately, known. week testing SXM-X to tax remains in of that suffered underway strong the was not certain of rocket. units. expect during to successfully Let and We do matters in other of our a product couple from SpaceX to Falcon our these to not impacted SXM-X in to satellite a Canaveral is of satellite damage satellite advertising launched An extent the December, related In that from we X-K last service of failure the damage the and on satellite evaluation Cape resulted that yet events.

several XM-X Our continue to years. satellites are and XM-X our service to for support and operate expected

Construction be as in-orbit this addition, year. expect it our In available our spare. SXM-X is remains satellite an will later satellite well XM-X and launched underway of we

launch of million We in for $XXX year the for who coverage have purchased of SXM-X policy insurance operation. aggregate in-orbit first

the EBITDA same respect of payments and was XM independent in to sharing agreement million ratio agreement, business. an a it’s potential would repurchases billion, more of Liberty of our million. claim done negotiated and It’s been with will capacity purchase to and looking and to year tax share not a company of be million a group an have agreement Media fourth know provisions getting $XXX approved under all Liberty of special returns of revolving and that XM $X.X entered tax with ending billion consolidated day any as our share our opportunistically The time Sirius $XXX I totaling to the the stockholders collaboration effect comes become this two recently us. in actually committee a when in credit into to inside contains know the truly with quarter fun group. on With of closed customary The capital you XX% $XXX tax on which in We SXM-X. with with X.Xx underwriters of available all at the point Sirius to have companies busy, accelerated $X.X of significant XX-K. of respect to adjusted and incredibly repurchases Stitcher and dividend We agreement consolidate exhibit members our a XXXX debt be This closing, billion We few will we are $X.X one notified play by again filed the delivered our into owns challenging copy months Liberty’s to agreement person. tax forward the when facility. inclusion of In the directors. this in adverse and can sharing

out, Q&A. with So into operator dive let’s that

Operator

Alright. Absolutely.

to is RBC question Maral going from be first with The Markets. Kutgun Capital

Kutgun Maral

be quite think and What how the like with your we pipeline structural and on thanks passed that I we free on know allocation if against Okay, year for with and value hoping comp hedging was [Technical going capital be the maybe bit about like as cash portfolio expectation suggests that And you Stitcher, organizing a SoundCloud. healthy questions. perhaps to if have COVID Simplecast called was [indiscernible] takes down items to bit. you taking capital buybacks out? could. separate that does for the don’t some I the amount Difficulty] flow flow cash one going you about the that on down were on flattish conservatism, more that off that, there think XXXX just will XXXX for do a that [indiscernible] M&A anything color expect should how in in free Thanks. that XXXX-XXXX you puts I buyback active I assume is looks forward? EBITDA outlook back conversion you the do last relatedly a of look but

Jennifer Witz

add where maybe off in then start will I Sean Okay. appropriate. you can and

to line, EBITDA? in So especially the I for we the the of flow, in comp what expecting saw tailwinds us expecting turned much about results, with some face team we we talked really are And on business in I and are can’t pretty are The free Sean subscription from model incredible. we mean, that in has the our a of adds proud delivering the top the XXXX feel guidance us to do team led that of so are for a looking net really results with strong adversity. you XXX,XXX and have both expect outperformance The said on am on revenue to where we by year-over-year cash as much Self-Pay the on just it XXXX. these grow from of revenue. grow good. to side advertising we I combined

to it fall on comparisons of down the those costs really comes year-over-year areas. in and kind three So, primary

is stack a The first in our referred year-over-year his pretty that there is material shift to this Sean comments, expense. in but

we This we is least at typically third-parties the our quarter, marketing million from expense significantly, a expense $XX which will million build inventory sales drawdown and of expense been that So the sales with around around down relates in the that’s year. December things commensurate second trial is trial and at the last relatively and build. to conversions in into this the $XX.X where million sales year, should auto started expense and addition, last as particularly to this off it go marketing strong have stack year, rebuild sales comes increase. and certainly and that ‘XX, expect in the inventory that well with saw opposite we saying is around stack funnel auto up in be about happening thing And auto are as comes $XX.X X%

of just expenses a all come So, this and opposite model before the Self-Pay good for just where And see revenue. happened again, business it’s part year. the we natural see what is business. It’s timing the it’s we last our of

‘XX particularly on as have about being And are be that addition more about But say with to next expect call. in will to we web a we streaming our development, have so for do there which that that interesting piece side that value we so in subscription more delay NCAA ‘XX. this then have headwind, ‘XX League to is the packages it we coming buys, content to component later help investments And marketing too. pragmatic from our did launches out and and stack, host to and expenses more the full we of clearly season our is this An features Sirius last are supports have related this relative year, content product the and some to Baseball is and is a And in with delayed also events where the XM. we on hoping and will the we Tournament live associated Pandora the experiences content also programming both into usage year more of back user Major car. our and said, to

as Sean the mentioned, really I towards speak the and other going returns cash the we as a purely have modestly of you on on year. think, taxes can will capital flow well. and interest that higher than to too change, end side, let CapEx cash pickup bit this little we have Sean expense also I But no I think some

Sean Sullivan

without to there. Jennifer. our from which consistent is to for in headwinds, in terms change relatively beyond so capital of interest Yes, working flow just a on free in estimation cash thanks, me going are ‘XX Yes, ‘XX add cash conversion cash taxes nothing modest

to I company don’t As capital has of the it think relates allocation, changed. the philosophy

you we the QX. in buyback saw, As accelerated

XX-K You continued month pace the in through today that that will the of January. see

tremendous have returning opportunity the long-term shareholders. to in we business capital and So, confidence

the think to we will allocation business I the other hasn’t capital CapEx changed, really continue products aspects investing we consistent out build are remain the in in as to properly of drive growth. the philosophy I company. So, digital think

we simple our in will ways and accelerate with the and to You continue evaluate like Stitcher tasks, asked in XXXX about to opportunity investment the SoundCloud. has clearly did company strategic M&A,

of generation that outlook we guided So, is to will company, I we by path, it down the free entered continue that of that X.Xx. leverage think say we at and be the will cash all EBITDA flow that

look those tenants think I we XXXX. forward true to as So hold really

Jennifer Witz

will just and think to on how emerge. the I integrating course for add the assets and on we digital growing of focused our audio with things I on we M&A, mean, opportunistic but execute available, plans are continuing very And Sean’s and broadcasting about comments have advertising, capital of them the we need be to we have

Kutgun Maral

Thank you.

Hooper Stevens

Thank you, operator.

question. Next

Operator

question Absolutely. next Evercore from going The is be with ISI. Vijay to Jayant

Vijay Jayant

could. I if Two Hi.

a that of and First in were in modernization the was that all, terms per And what sort like? contracts MAUs on we and power that the of secondly, stack quarter try and basis room forward think monetization mix quite that drive of bit Thanks. and of well going you about on with quarter do listenership to the terms have are the much a front, and is the the Pandora do the in in down front? pricing to move how still higher as really opportunities unit How to like on down. volume strong

Jennifer Witz

our installers, And what economics there new so stack of positive and do rollout we on have the chipsets stack we our there. for question, assume are I you continued referring of would to set and

OEMs we mentioned our We starting a the that are that just driving are agreements way makes business. the we drives OEMs have have a these we agreements as to the that of rollout in penetration at on it GenX sense couple the looked with ultimately for is and focused both us and is for chipset and negotiated on new stack expense side, always we way growth

are one there look we of so at every time, these of And deals. things we approach series a new

in looking them a way that for are We works optimize constantly both to sides.

may see and as So, changes but you subsidies, or lengths changes revenue share see in and prepaids also trial well.

and on we That hard decline find said, are that time. to clearly On piece focused – look question about really over we do puzzle. at ways and in that. unit listenership Pandora, will are stack expense we of it’s decline our continuing per at to your we the would one work expect So, to

work his team, driving we features tremendous be And ad modes, us point, do monetization has much harder is on monetization and across the strong new and Pandora the to devices has driving they new with can I been focused continue to it John and would that of have done brought we to delivering engagement been will And really very to at on your in multiple continuing the just content up together with CPMs. so us car and to across now advertisers like a improving But focus to this. have assets just it. have we We in been expected. at buy solutions able sell-through very It combination Trimble continue expect than connected enables a innovate Pandora, products, to job broader to formats. providing pushing at audio addition

the listeners advertisers distribute focus to a to ad-tech to So And and able host ads with on of there. their reach to podcast provide and Stitcher grew of with SimpleCast is be podcasts a there creators lot we in side podcasting. solutions to can able be

double-digits. advertising that growth approaching expect you be but it $XX which continued ad like at billion, And active this expect we and us terrestrial, assets here. have We market $X in It’s in at over small look something when very with is play really still drive the help relatively we revenue, Pandora this. role ad-tech billion sales brought to a there growing is it’s a and will will

Vijay Jayant

Thank Alright. you.

Operator

Alright.

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

Jessica Reif Ehrlich

Thanks.

certain talking is I in, just by talk – talk of the interest etcetera? but you you of maybe steady that. on podcasting. Thanks. and versus with state if when demand and increased brands I and demand the terms about talk I current and about the be? and people Spotify, where are you there ‘XX or more advertisers of anything it are guess level of could that will ever will on Can Sorry, revenue, level in that to I you have address couple don’t I mute. maybe investment just [indiscernible] about I think was satiated ‘XX can questions about competition a size said from more are talking of in are think advertiser, you have what being you guess stop coming about

Jennifer Witz

level don’t Yes, materially investment. investment of the I organic on us increase think, Jessica, to I side, our expect

We John are we that as we and podcast ad to ad of owned can is all that the of you key as a well going the on course, for that fully and minute. be sales. going know bought team operated with Scott And catalogue of represent have our their tech. ad the team in sales integrated Trimble, then Scott that to those manages Stitcher who about – content as focus more will But to sales and increasing talk

And much it’s Pandora. But us so than the to out across I we team clamoring to sell be grow as advertising very formats. able for opportunity believe lot is It John’s complementary again, is drive non-music and a that. there there think smaller music we of of to revenue

have able full tech also do be solution allows the drive to just provides And So set as And content? really revenue. of well. to the of a color ad us the the having that set end-to-end solutions you to assets on to kind creator Scott, for opportunity advertising of to be side add us together want

Scott Greenstein

Sure.

Jennifer they is point So, brands, where very getting as are seeing in and just vital two own are just things. that quick we to go. are the mentioned, our will we this One where

brands the names So are Kevin an Kevin, Lewis platform, and because one, very at are podcast key a – and the most done where that’s is. with that others that radio it. used the Jeff actually the think that starting putting and and right big create platforms, the opportunity the Kevin strong And find and I look really and box, But of Hart most is yet you out it’s Stitcher both well important numbers, really Andy big outside Pandora show, I in fact the when not it’s advertising show. podcasting to all aside including his and example, it’s we whether monetize to with outside, Cohen

in content built convert in that’s a on platform of ways have that. We going different podcasting to into ultimately

is there is want don’t like service entities that for and way. XXX curation are from they but worth and else everything brand into now and they not that have looking to it’s Silverman producers with others potential, thing economic feel out promotion it that along go to their ability time or do and damage the and them and other anything their podcasting unless us the marketing allows only sophisticated not full Ben deals are there The

pretty where far being out So, we feel able as there. to now stand it good get right we as

Jessica Reif Ehrlich

to the could little more different just am question stuff a And like it does what the the of expect and channels is I Can bit you podcasting separate it it’s feel line? breakout Maybe then but talk attention, a but accelerated. the just pace road? down the I like come ‘XX you for it’s content Do as else of feels that love a paying accelerating. about outlook and Scott,

Jennifer Witz

you the of terms on Scott, in start So, those, reporting?

Scott Greenstein

Yes.

Jennifer Witz

I want mean, from you on it to add Pandora given on to a do include a segment standpoint, kind Scott, the focus advertising overall. with fit that? we will and that’s And natural of just

Scott Greenstein

you to really in as And look and what podcasting, in we interesting in entirely forced platforms. very into can of promotion, brands. in organically will Jessica, Jennifer announcements that mean, there. is for monetization, mentioned, are and generally area personalities that’s be efficiency not in I years, costs, I know you at come interested out production people different and there three but Because that work get an some we am Yes. cross all cross once as brands it’s model that

going I end where are So, that’s think to really we up going.

Jessica Reif Ehrlich

and Thanks. but recently earlier, to can longer both those completely we think deals how in financial about which OEM and deals should we alluded of the this you about bought One subscriber term? question different, the you is impact talk last some and short the you

Jennifer Witz

penetration. Jessica again I key think is driving the

one the time we both of in every them find and objective sides that and make so always extensions, our those the for sense ways OEMs. extend right makes increase So and to deals us that is penetration these approach both we to continue sure of equation, it to

positive terms mentioned net the positive, essentially to of metrics over in flow long-term, and free EBITDA different and over maybe So deals some earlier, watch as in contributions short-term, differences, all the impact time. of the the out there but I those a are cash

implementations XXXL we some eager the roll to part up bit screens. see continue very have to rate side year, massive of been year, our This improved are these our see more we It’s cars through focus continue the are and really that breaking this trends of route in continue of excited encouraging we vehicles cars we XXXL. come So well. tail have in on there. in a to And on starts actually numbers. We to And in initial XX% little the have we should as to with see even XXXL. longer as trial the agreements, still at penetration because radio obviously be

So, features have to content reacted and consumers all really the new that’s positively included there.

Jessica Reif Ehrlich

Thank you.

Operator

Alright. The next David Barclays. question with from Joyce is

David Joyce

announcement question along lines, The there the with platforms. you. Ford the Thank Android earlier week is and Google this XXXL

that a with to usage think in be to deals? Are somewhat new car? Are does does along it Thanks. exclusions have of these seem challenge? impact protections going open, how OEM you there Is the your any somewhat are any that you While XXXL? coming that be there for that

Jennifer Witz

you that advantage I especially OEM continue we a are in our have as given had relationship. know, and the sold new mean, strengthening cars of XX% Sure. in competitive clear always car we we now

We various Android years car have a always including maintained despite Auto faced competition with position rates the conversion CarPlay in and that. still in and and now we for forms, strong strong

are OEMs. the we with integrated So, deeply

and Automotive system are Google We the well and products. Auto Services those operating aware Android of

continue that have premium roll to out these systems, them ensure we new car. to OEMs work As in we the the placement operating will with

with we sure aligned experience for to our OEM, best in Sirius that want XM are are they subscribers. and interests revenue both share Our we the make trailers offering and the

and more into more we closely deliver for experiences if experiences to we to leverage add the car. way the to ALS designing the over – more efficient Google been functionality both XXXL VFO on can most make the new most add focused our products. really understand operating OEMs to for working exactly in very that We good possible our are easier can new actually can features we content how quickly. update well. are this is time. space to We us audio ensure in us, with really We consumer in the minimize can connectivity design pleased personalization and Again, compelling distraction it this right. and rollout car our and driver the even We And especially know to know we in system

I net-net, think it be positive So, for will us. a

David Joyce

much. very you Thank Okay.

Hooper Stevens

next Operator, question?

Operator

with The that. question next is from Morgan about Swinburne Sorry Ben Stanley.

Ben Swinburne

on quarter one think Scott, the digital-only accelerating I you have be margins fourth only? through around and I also to morning. to Maybe subscriptions on you success – don’t tell success some digital-only. having and us Good two of guys what net streaming are I percentage related. questions, sort guess willing adds be would Jennifer for and came they one seem of

with to on company on things either kind the following to you they ‘XX is of a shot. the that an think I content all business long-term when all think would or over we are you more we take ‘XX, for since you sort the this subscriptions anomaly. should talent one the beyond expansion consistent changed I really are related if look when in size interesting doing concerned could out reasons we come get of an see of Thanks. deals? I used margin spoiled You year can lot been we do appreciating have you in mentioned would about it accelerate margin see and business, or of XX% kind you that that year sneak get opportunity? operating have M&A have and for or could Sean, some big after How and we Sean, a while call avoiding Street And was have investors company wars the Sean, of to anything that you What have of is that the about for think got after think the eyes side then under expect these you structurally be too? the in But missing I ‘XX, headlines fresh year time your maybe guys do do leverage beyond? to think digital-only you largest that Do ever, being but you

Jennifer Witz

Okay.

So I think got questions. four I

up and subscribers. them start on will pick I to try will digital We

drive So, nice a our million and fourth yes, to we but it a streaming still quarter the the growing, – but small it is standalone base. Self-Pay small $XX subscriber on was it’s are digital look component it’s of contribution that, still in continuing subscribers to are and

that say streaming I’d subscribers. for on ready those we continued report our also numbers are to have to engagement, It’s to yet. satellite key retention not among subscribers. So very the drive we

good subscribers. hand. the in discovery, is talk side Scott And on the digital-only job subscription the helps car. but not more both content about hand products are generation in go They on packaging, outside think will performance content, I use the bit satellite streaming, I little which we challenging a a let marketing. have are car across efforts with looking really seeing is of younger these the marketing, which our So definitely the our surprising and digital done on side clearly we

continue will We expand that. to

a just into the some But creative to and continue at grow this are funnel, subs. We to looking growing look this we so new bit at about it’s looking a deals early we yet and distribution are what interactive – subs more, our then days digital-only economics compared space. will but strong the come little is margin the our streaming back and certainly talk business, to around in really you on see

Scott, to well. a about do feel that content bit for really we little talk So, good experience? want about as digital-only you

Scott Greenstein

Sure.

constrained So the it some we hard is in we to the are are as in community particular. believe with ways music as this about bandwidth excited potential really of

all gives So, people asking a look XXs this long a coffee ways, different and homegrown house for channel take time. have two one our for, things channels the to the decades, one that of would that and combine take and can where in digitally of us into ability we been XXs

they addition, expand the bandwidth. long the just a have artists this at wanted are haven’t ability we have now how our had In looking time, can to and we for

more Marley do to channel umbrella. So do lot That’s that Dead, we we derivatives Bob Grateful channel J of will with be under the this looking the recently digital is a launched the are likely his and that going. instance, LL COOL Bells we of for of we channels going are – will where sort Rock

the we where many and we week second Prince then on from on a a days Rolling to and for and us to digital a satellite to whatever or The up when the artists digitally. of Zeppelin that functionable side, will a have one really gave down, lot were put XX save Led be been Just corona first it flexibility things, of came locked and channels Stones get people it digital are for remaining the series

we the So are on really to content, going with not satellite view artists the brands, as doing we continue that. the the digital as an but afterthought, of all to extension everything and are

So, to continue grow. that hope will have I it

Jennifer Witz

Great. Sean, to margin? you want pick up the

Sean Sullivan

of there penetration related terms as has is terms I is anything to rebuild today start some absolutely just operating don’t we two but operating that in margins, to just sales, talked is impacts there But some We as in absolutely car in as – I opportunity as rates, have hopefully the we the things are on think situation look And settled questions call, of about is your Ben, I normalized structurally and long-term occurring, in royalty in there unique expansion. on I it’s we in business. the Obviously, unique state get to think here XXXX XXXX. leverage more again, changed. think impacts for leverage a margin

in, plus So, as tremendous the eyes I I guess continue days confidence. it fresh have XX to relates to

am something obviously we background. have It’s think today. I familiar with a my talked very lot about I content

I got platforms fabulous, there a digitally think great only am for we I is in a XM. a opportunity adoption are content and monetization of the in the audio car, with streaming customers tremendous that all So, the to leader opportunities as of I position said say Jennifer digital is there at in I have growth multitude company. the investments Ben opportunities as car made think the thrilled may to Sirius think with exists have we that tremendous terms is sales, out of ability drive

more assets always job top I wonderful think there I there is drive but on that So, has leverage the think to opportunity operating and done company leverage for for again line. the acquired, a opportunities have the always is efficiencies, integrating they

those again early that’s of – my are So perspectives. some

Ben Swinburne

lot a everybody. Thanks

Operator

from Russo will Credit take final we Brian and with question next Suisse. Alright. And our

Brian Russo

question for question Thanks Jennifer for Sean. A for squeezing Hi. and me.

that you that recently would of or be read maybe spectrum strategic the interested have – maybe in AT&T able the I And discuss would adjacent and acquire Jennifer, case that’s benefit for if discuss suggests you from the spectrum in to confirm that of then table the you too increasing cash been kind what That trying Liberty the be implications I real in have a will be be could first, band, So Liberty it your be on be some can with of you that you WCS to you. of kind why of far would the Media, distant you for Sean would NOL that the just you sharing off cash thinking help see taxes the the for understand spectrum that now? cash and past sharing in options Maybe are out the on future that taxpayer. not the sort tax will turning agreement know your with generally Media quick taxes? full us tax Thank helpful. agreement

Jennifer Witz

difficult spectrum interference. support efforts to had we several years start manage to I over which on our here AT&T them, spectrum, FCC adjacent C to to Yes. mean, granted WCS our with the SRS I but spectrum. we the This acquire it, is the to discussion. adjacent have was their our agreement it with but to will the licenses worked very a coordination application yes, use is other them the with AT&T block is it D and because has every as closely

maximization have that in we And our use to we service satellite public with potential the together and AT&T the this to look, have adapt have to past applications. receiver capacity the So for done spectrum some in yes, really recognized service the we but effort. technology the things FEMA use really is times adjacent. given like we natural that deal relatively And profit it of small, is public supporting during of a but more us small it’s the not protect is did and spectrum and does this disasters effort,

Sean Sullivan

‘XX. out are don’t cash increase real sharing tax from talked the implications question. on some your Brian, about And agreement. see tax already looking any have into the we in future, today I Again, we taxes for modest but

credit will You are. tax the our K, where in situations see

I any returns our tax on our the of forward outlook terms frankly real think in about good it, go tax feel So, doesn’t we don’t impact attributes. have

Brian Russo

Appreciate helpful. you both. it. Very Thank

Hooper Stevens

soon. Thank you, everybody you Brian. you Thank to participating Goodbye. will today speak for and we

Operator

Goodbye.

Sirius XM (SIRI) 2 Feb 212020 Q4 Earnings call transcript