SIRI - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to SiriusXM's Fourth Quarter 2021 Financial and Operating Results Conference Call. Today's 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. ahead. go please Stevens,

Hooper Stevens

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

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

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

Jennifer Witz

the million time and all significant the financial today's phenomenal high joining base And past our in XX guidance at objectives. record financial financials, go for strategic the we on of all of call. on tenth in original levels. all for in XXXX ended and Thank self-pay subscribers details results, Sean progress our XXXX, X subscriber added over targets. self-pay turned our beat but these into SiriusXM more will of years metrics made you SiriusXM

balance are payout. position to $X.XX announce billion solid in of our this an and results approximate sheet, great share, month pleased to be per our $X very these we payment stockholders a to special With a

new for EBITDA. also XXXX, ahead SiriusXM on we advancing our self-pay growth and We vision the audio objectives. today growth revenue continued guidance subscribers, future while in In our announced to strategic shape key adjusted of forged

audio stronghold to our continue listeners' wherever privilege of the of car. We premium to capturing they the in time the highest bringing our with earn starting share experience listeners by our are,

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various to of market time the with accelerate operating the innovation our speed of to which as vehicle only features introduction new and capabilities. pace is in of automakers, car such set with Our at evolve, as systems will the AAOS

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in are for force cloud at listeners go. business We complement home, Pandora leading consumer of in we music the portfolio. business a increasingly cover work or recently are It to positioned subscriptions services. at in to they As business for music X the on vehicle, premium and the services, music audio wherever our Music, meet SiriusXM will for fastest-growing commercial acquired

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anywhere. content over it with and to develop remarks. I how for opportunities that, financial and continued am to of turn and our X and have to to to is it love growth contribute With for to share record vision decades, anytime connect has billion the strong with our and the our reiterate listeners Sean pleased SiriusXM hand one-of-a-kind over customers $XX I industry. we will Before XXXX. aggressively operating I it Sean, audio also for deliver performance experiences greater many they our in Even I revenue, to audio to capture want the additional

Sean Sullivan

versus as policies $X.XX flow $X.XXX you, We morning. grew billion charge. flow Thank a XXXX against good free million per by XX. of new a to expect growth was SXM ad X the just we and EBITDA of will EBITDA and that free $X.XX impact in Adjusted X, with Longer full a conversion To working on XXXX to to flow elevated partially few boosted earnings impairment record. $XXX of the growth. capital XXXX to and when a by modestly X% Jennifer, CapEx total CapEx cash billion, in financial revenue insurance X% XXXX we In working our by led drop a SXM drag as approximately of our offset term, in to free abates shorter-term materially, generated during new increased for and of remains accelerated drive annual of free transition on consolidated drove line that improve. increased highlights spending subscribers billion, as taxes cash and XX% absorbed SMX we plans in Note a adjusted $X.X in XXXX, this capital you modest continue XXXX, recovery XXXX. cash revenue. noncash $X.XX the were normalizes, profitable cash cycle X/X ratio into share recovery Diluted cash remains flow, conversion give

podcasting trials roughly In segment, segments. growth revenue $X Turning by XXXX line as to total subscriber in the our X.X%, with growth XX% million October an growth ARPU in a organic increased XX%. was Pandora's the our on the over per Stitcher of increased XXXX, self-pay in SiriusXM representing our in with business picture, of offset in base XX% paid acquisition In of in resulting generated with auto revenue, segment, production. from XXXX. from million XXXX, profit margin Gross AdsWizz, of hours, revenue in $X.XX lower revenue climbed SiriusXM reduced delivery XXXX, Pandora increase billion X% lower $X in by businesses off-platform equipment a segment module as from advertising combined $XXX ad the limited ad of the billion, revenue such reaching to of by revenue and $XXX. X,XXX account In record benefited

million, We basis representing revenue XX%, expect Pandora $XXX segment time. points. to of portion of continue segment up profit a a over Gross to grew X these XX% will the represent growing in margin full the businesses Pandora

of onetime this and As cash billion announced as satellite of normalize for approximately adjusted $X cash recovery. insurance guidance free approximately in of taxes calls billion revenue increased this and EBITDA we XXXX year's billion, $X.X $X.XX for morning's approximately press release, new flow

this add net year. XXX,XXX new self-pay subscribers expect We approximately to

not semiconductor projected reduced come late do continue and given floor vehicle quarterly continuing majority to pricing, appears shortages the the in impact XXXX. other in substantial While and guidance, subscriber the changes sales Further, discount in we the will year. and growth growth late we it of our in early to XXXX limiting price that expect will particularly half somewhat second believe quarter, that into fourth implemented factors subscriber XXXX we provide self-pay of XXXX,

long growth balancing as Both XXXX. subscriber and in revenue from and continues momentum advertising revenue of for a record will create and advertising subscription business. rate outcomes benefits growth subscription XXXX have and track volume the to optimal long-term to successfully We rate actions in contribute

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

capital to allocation. Turning

EBITDA time our and results, We debt are our balance at forma levered this the put net to X.Xx, This of our stockholders. have stockholders, cash announced we comes top We, now special pro increase XXXX given to $X.X just measure, very market in opportune of in dividend was which at at pleased in X.Xx the billion on dividend is we've dividend, special target year-end. sheet, Board, XX% we By and generation of shares recurring XXXX within with into top XXXX the our a for today's that hands our expectations year. strong still open of in October announcement the ended our $X articulated. to cash repurchased of range billion the our dividend to would on meaningful believe last rock-solid of the

in let's dividends tremendous business, to stockholders maintain to to to our open opportunities inorganic capital With the continue continue and returning the via continue repurchases. to share growth and pursuing call that, operator, Q&A. We investments flexibility

Operator

Evercore first [Operator Instructions]. from We can ISI. question now Ratcliffe James take of our

James Ratcliffe

I if could. Two,

usage catch-up targeted be more service expect a that's what all, Can or XXXX? of of vehicles you the you on And or returns about as get what to in your should engagement mentioned of vehicles thinking we us monetization? an X how out learning on capital leverage those of XXXL. advance capital of your and to return, you idea sort this with into secondly, be of SiriusXM about from driving million give First an there the sort

Sean Sullivan

and Great. I over operate terms to several our don't in we've James, returns. with quarters, Again, this as and capital Sean. the is leverage. the what start prescriptive expect highlighted think target fairly we capital we've last about Why of I allocation articulated priorities been

forma for year. this, it the to pro again, as end us So of X.Xx takes the of

We program. have flexible continue a to

buy the marketplace. continue shares We to in

I the the purchased shares Friday. have when almost see believe today. worth $XXX file through we of XX-K million last end of You'll we

flow we the cash it's come -- planning cycle, again, confidence a in strong a So year, free new new business, into really generation.

So at that We in in what buybacks our likely it's abate see think still quarters philosophy, market. active the will I in participant I of you'll next X.Xx, in bit the several line will a we again, think back October, said with a the over value. but the continue be to good an context

We continue to have our substantial liquidity stock. in

should to historical be be from to but scaled will back you it expect continue So us levels. participant, a

Jennifer Witz

on question your just James, on XXXL. And first

of So we the capable road for about actually trial vehicles our ended with million on and starts fourth -- XX% quarter. just over XXXL in the X

data past. far seeing ever so So what have had we've we're we in so is much the than more

can market people them to encourage if so listen Clearly, like started them the to we we to ultimate trial. do haven't during listening, things conversion rates. And can listening impacts

that they to on extra rates. features the demand channels stations Pandora tend that We at convert also the use higher know like when customers or

activity in on well materials So driving platform we're very focused that recommendations. our as as through on marketing

Operator

And now with question Deutsche our we take Bryan next Bank. can Kraft from

Bryan Kraft

the about to wanted add you net guidance. just ask I

that the on you XXX,XXX funnel this going seems I today, agree? the year? color customers, self-pay aggressive any to first, start and target again OEM the seeing trials it add on expect funnel do of the an XXX,XXX you're how growing And fairly number unless soon. side to what is in you guess, adding Given like

Jennifer Witz

third-party in last closely. sales auto fully expect down first a the second -- estimates that, the think will issue to been have relatively auto December this start attributed half. the XX revisions hoping, half. supply comments I relatively we think, We're car It's A new for been we've the I look, really in general and There that low the chain on month. the is bit with sales of auto over the lot under the Yes. watching remain to side alleviate in sales is public that million. consistent And soft for

into the year, that, So mean funnel into subs the we're really of it tied cautious. our being is we works, in in XXXX. is way second up us half guidance third-party a trial really the course, of of I doesn't get if as in ramp will in know, the that materialize set year you lot the trials estimates. going the And well

On of see we constraints, car same inventory all-time prices an there the side, high. are that phenomenon are where the used some

But -- but we're the net our really trial expectations support too. that watching XXX,XXX are So that funnel the closely adds. will

churn churn churn watching a consumer expect inflationary Of in we at X.X% our course, quarter environment more and non-pay saw similar an would is rate something expect very how consistent that pre would in tracks saw which range, that closely to which or X.X%, really in like much fourth is We and we're in you we nonpaid spending, factor X.X%. the pandemic. the what to

Operator

Ben now Swinburne question from next We take can of Stanley. Morgan our

Benjamin Swinburne

Maybe little in in lean KPIs sort Sean, just install about rate don't about us expanding 'XX? the that attributes you then the base, time in that to help you there? us have ahead guidance. including on group? talked what more year. you guidance sales Day think Day, And as is at bit, Jennifer little of think a you increasingly into Liberty are you Anything a you can sort but do help guys guys expect with the what used, of it how say, or customer think your on Jennifer over opportunity the on just both expectations or for update gave about the bit bit new more? detail a TAM auto and conversion think streaming-only Investor and and of And any of I'd really last you in terms I trends us how And little built share

Jennifer Witz

rates. installs with and conversion start I'll Yes.

our expectations So we about talked and sales bit there. a auto little

year relatively the to rate, X%. would tick year. bit a ended that we or expect up In at consistent stay this terms of pen I

positioned on penetration really think I well the rate there. we're

continues side. I On help car a we mid-XXs the of the to and increase, rates, the models, in typically on used of this things low on about continue side, been expect on younger and car as obviously, side go tied conversion starts that well. year have consistent. that We're organically trial new and would support to pretty to On in up function, mid-XXs It's where rates are penetration car the trim income to used pen to which lower the and generations increases lower levels. into

So past, that's on XXXL we've see in talked very people conversion improvements -- what rates. bit improve to features, we see little as are do consistent in with we seen a the using car the about as in because we and conversion using when mechanism we we these earlier, new focused side a

the and the really about improving So of awareness usage it's features.

ease they very X On can used on our -- radio into is experience car in with and very car of use the the we're because product, when is side, biggest customers get focused making the our seamlessly, thing the of the active car. sure consistent

And programs so driving many have on that the car used focused side. on we

who necessarily don't I a the Look, and today, we in it's BXC. adds or are metrics incremental a where need the want car. of those from million already listeners right? part subscribers, into XX the are. are opportunity So digital quarters our subscriber in side self-pay see lower year, overall the coming of going digital subs, have This for We radio subs that is meaningful this expect satellite higher net you proportion certainly our base. may not would But

the So make there the for to we Android we eventually XXXL well the broad in will great functionality Car as Play we content And set anywhere are or positioned come that Auto that offer through the on features side or very have, that of else our and well. matter. digital improvements apps into

Operator

Bank We our from can next Ehrlich Securities. take of Reif question of America Jessica now

Jessica Reif Ehrlich

couple a have of I questions.

you on have it advertising us what gives you ID some digital didn't color that First on what give audio give you before? more some -- digital that and could on that color audio advertising,

Jennifer Witz

Sure.

launch to So constraints individual on we're advertisers. there's And we improves this And ID, other another attribution. data we market, frequency, understanding And announced is in just and it not need any also selling where the helps bring certainly but of Audio just the of just advantage a enhances which it given the around competitive user, their only and ourselves, accuracy inventory. obviously publishers the customers. targeting

ID, of that instead those just this device an understanding building across So data mobile based alone a matching broader just have on on our IDs it's e-mail or platforms. the we're -- inferred we all

Jessica Reif Ehrlich

advertising, you this I of more part since And think you audio momentum important Sean is do and of advertising? you such area? both you highlighted you all have you, highlighted this the digital growth, need necessary mean, for Or an in do in have the components you

Jennifer Witz

ad podcast is tech our think I the AdsWizz on well side. strong capabilities very stack with and the Simplecast we added as

number value-added create compelling, a studio through is audio now capabilities, help it's sales research force and very other strong, ID. the audio in advertising we whether creative and and of resonate Our have to advertisers, enhance targeting ad side

I'm believe either continue really lot to investment of the capabilities there, add our to stack We opportunities have M&A to tech but we're positioned. I there Certainly, a open need. capabilities are through or we improve well if

Jessica Reif Ehrlich

podcasting, been more a it's of number like just -- will into the content of measure a content because how big or going like on terms then the episodes such the big and such focus. however And of change X it, driver in you like types

think from should growth you about we into So can talk there? how the and just positioning going 'XX, about 'XX

Jennifer Witz

start to with you want Scott, that?

Scott Greenstein

Sure.

coming We right new we which want. is podcast. are going an exciting show what into Stitcher we're with now, from 'XX. is we pleased what and with The we know have at really things junky really going we're and organization So of sort together of couple where a now. a know as to We be we prime Jennifer and mentioned, feel

podcasts ad a an like that emerging. that sales there's there categories between start. they we'd series So where bucket. create, and to of then and/or others own are in somewhere There's There's are are

think, I going podcasting True like as new well. are the but performers, they're for around, audio on they've Some been to Crime satellite side be

we've from about in some like it and But very other and our other going The that comedy podcasting, both in things and is to assets that are to view, sports obviously, we existing isolated comedy. I'm excited strong, where a what sports and thing a and drive complements, in content quite an advertising that. big we're and about, are most marketing point and continue of

going and forth ad to platforms. between to we're and ability content, between go have So the sales back marketing those

producers with down don't the to they will going at lastly, we're set come XX be when The that it's have and that signing think means that I on fan podcast that company more of to because else lot. look is the attractive And pretty way, wide going front. whole with marketing in the realize to So Stitcher they're and open. you everything change those. base is a some top But podcasts, to fortunate

platforms. huge know, time. podcast not of just the brands and a much names, It's emerging and entered talent, moving we would think XX, going not So space top you over there's to can billboard going podcasting. our we're apply that big the have that move, number areas as disciplined of approach But discipline being complement be and the we'll equivalent X-pronged always, that to we're to look be perfectly able in try X to other with where to our we positioned to grow as have the

Operator

And we question Kutgun next RBC Capital from now our Maral, Markets. take can

Kutgun Maral

on could. flow cash one I if leverage, and free on One

taxes and for working longer assume early point? more we to have XXXX at free ability leverage. not multiyear tell in whether it's net continued flow to seems too you that the second, guess, I you've cash it XXXX fair provide of on onwards? know be to cash if could just going right X.Xx touch your for Or free drive free maybe start and is And might ended you're flow that SXM strength confidence in now, it the headwinds is and but growth on or more year on spend see a you just this ramp at the on capital. company's would to to helpful. I a it now, can cash XX, perhaps meaningful X XXXX than term, trough is thinking seen while cash First like flow, grow guidance the

Board's investors so, what's announcing extend maybe XX% confidence potential and going billion if perhaps and at the And dividend ceiling can special well? higher operating a dividend expect? raising leverage by comfort in last forward October With $X the as now the the regular to

Sean Sullivan

Sure.

my of in around just reiterate cash So in cash the said free the flow, I taxes. XXXX, what to terms biggest driver, is prepared again, remarks

the our that NOL K credit fully in XXXX. be utilized in position see will and tax You'll

is a normalizing the for happened in 'XX for free flow insurance with again, recovery taxes. what headwind the us cash from XXXX in cash perspective, biggest So

indicated as this experienced I've are CapEx think elevated cycle. XXXX CapEx, from levels materially through do in what believe we we different that satellite we non-sat year. go be 'XX I shouldn't both those the for And spending

cycle So can as the We to to to abate. through continue monthly I those deferred revenue people transitioning do to expect it relates plans. shorter

grow cash conversation free in taxes. all, to is flow. cash business generate 'XX and feel mostly the around the all So continue this absolutely I

to board. to in but going content I a continue the and 'XX on think growth investments not it, do mind for we be proper you give should this in I'm invest again, trough. across But we're product a multiyear that making and the keep business, You're that technology right. in guide

So hesitate cash in as normalize. ability go items again, But XXXX. to again, of grow I'll these of lots confidence beyond our flow free to some

of sit to business, to Board degree it our pro low forma we've dividend about The the special has a leverage, to indications. an talked confidence that again, us I'm X.Xx. not and But, again, here. incredible Obviously, in at approved going raising We're the mid-Xs. puts the was team. As not relates

said we operate the I to think intend in mid-Xs. I

certainly I sure it's flow we our are been, leverage target. higher So those have given to but it's always whether are I'm this the organic opportunistic comfortable opportunity, demands is cash capital on operating there business can many support We'll this that's an what at and Today, inorganic allocation. as we a are think whether free we're today. investment, today. at be where intentions guess our And

Operator

We now our take Petti JPMorgan. can Sebastiano of question from next

Sebastiano Petti

wanted on just CapEx to comments, I follow the up Sean.

of kind the we underlying CapEx satellite talked that. the past, the the some being above XXX and baseline then in spend beyond related think about business I about to accelerated for and

'XX of the maybe fair is I And say that accelerate year-on-year. equivalent and levels? year Like question, is portion and about those spend business. another I it early as expect your of satellite-related to looks just it we is lumpy should then should and the shifting mean ad supported comments, XXXX spend? some though, satellite kind it upon mean, thinking from of launch kind the to -- Pandora between based so that And late it at

any how What's us If long-term on MAU there? beyond? decline you expect And on to to be on-platform And in the color seems in XXXX think the you ad-supported about to going grow expectations revenue give can do there? near-term, and accelerating.

Sean Sullivan

Yes, going more. I'm think 'XX, I sure, I as I'll said, versus the I'm consistent to 'XX spending. take much of But not level say again, CapEx. Again,

in XX. are phase of the build X SXM and We

XXXX. I the think is for first launch X

'XX. stand can I'll at certainly 'XX what So for XXXX, I itself let we for revisit date later think for the a to and guide and expect

Jennifer Witz

year. even done That's listener improvements the expectation. And offset see MAUs. monetization. not are Yes. you'll which the quickly, challenged. listening in revenue. hours. declines driver declining is apps to mix ad I make clearly our to will a with seen significant customers, hope advertising The We've to shifting And is the and And here becomes on do has more fourth overall meaningful us growth the more well and Pandora we quarter, Side, some If our longer really have that the that advertising we quarter been a we level. more as is -- is growth in in changes able But continued challenging of which above in year we've certainly have high really this exceptionally expect declines become to in this But drive a Sebastian, fourth loyal up Hours function I revenue. sell-out, think year-over-year. Pandora increasingly X% the were Media us solutions continue the to us these broadcast of to key audio. all even across asset selling complete SiriusXM of where with helps very app forms and there a in advertisers side business, the podcasting grow enables the and under side platform on provide SXM and hours

growth So about good ad the our I feel continued revenue. in

Operator

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

Steven Cahall

market. time, you the lot. connectivity that upon the Once are about I used of those some some new maybe car are So like lot car pressure. Jennifer, driving you a activity inventories, car There on those used in a of into obviously is mean had used There's car a new about, channels. as on you all going down used the under market. just Carvana talked and this companies to first, talk

XXXX could connected bit. it you've just I'm to into the Pandora So expand a are Is or this the a done the what doing functionality of about seems that XXXL with start of And adds like that by SiriusXM for Pandora that on with side going and powered was new funnel SiriusXM. is that you the the subscriber business. moment car? custom you the Or historically that used XXXL drive offer wondering at little just same if a kind where that And cars a car, a I'm be just what Pandora talked then in with of the just terms of channels, targeting trial subscriber? in gross order to wondering in is might could with funnel trial you you product the

just how wondering you're that about thinking over evolution time? I'm So

Jennifer Witz

Sure.

used the those programs. of ability just quickly our And used there, over and penetration the is our turns ideally point you governed rate car sale. to and is, then function find the cars, on mentioned clearly at transactions it's a of some So funnel and of sales base the levels how by which

a signed We number independent as when dealerships have dealerships. we information a those buys that most a up customer the a so of in dealers -- car used up of significant franchise get well. car We've signed

growth through the to there there's time purchase. sure programs. to dealerships, same of I at mentioned to those radios are on that the working drive still we're So continue the make

We and and launched places other on there very hope online auction the houses in well. car in or also growth do that as focused have as more at dealerships to programs We're sales well.

to car overall and new through starts. funnel that drives that new it's, could split expect car function on get again, cars of used I over of and the pretty the buyers the our trial the trials So new see used trial what on time, outpacing time the funnel. would and over side. sales, starts, rate, car car still expect it's would clearly, pen The them happens the you But ability then converting is I new used between evenly a

powered XXXL Pandora. And and Okay. then question second on by the

opportunities, be and sense to subscription. SiriusXM This we way, the It platinum stations capability see what customer able this certainly the And Pandora we make Pandora subscription. app. might forward, is there. with in SiriusXM, plan if not today ad-free have the apps at you we you our going going are of we So to our get opportunity on artist-based at this our where a forward, introduced get more is Pandora partners feature least really a become maybe within those in powerful interface those could look -- will ago, an to the at included again, in But a probably an work in in the auto actually really because with is this the Pandora station set for car car a it's year it And to a up functionality. easy subscriptions? could We

Hooper Stevens

everybody, Thanks, participating speak today. Steve. for you We'll to Thanks, soon.

Sirius XM (SIRI) 1 Feb 222021 Q4 Earnings call transcript