Q2 2020 Sirius XM Holdings Inc Earnings Call
[music].
Good morning, and welcome to the theory X and second quarter Twentytwenty results Conference call. Today's conference is being recorded a question and answer session will be conducted following the presentation. If you have any question at that time. Please press star one on your telephone Keith.
If at any time, you find that you'd like your question removed from the Q. Please press star to at this time I would like to turn the call over to Hooper Stevens Senior Vice President Investor Relations and Finance Mr. Stephen. Please go ahead.
Thank you and good morning, everyone welcome to Sirius XM second quarter 2020 earnings Conference call today, Jim Meier, Our Chief Executive Officer will be joined by David career, or senior Executive Vice President and Chief Financial Officer.
At the conclusion of our prepared remarks.
Management will be glad to take your questions Scott Greenstein, our president and Chief content officer will be available as well, Jennifer whats, our president and sales marketing and operation.
Operations.
Jack for and Scott will be available for the Q and a portion of the call first I would like to remind everyone that certain statements made during the call might be forward looking statements as the terms as defined in the private Securities Litigation Reform Act is meant to 95.
These and all forward looking statements are based upon management's current beliefs expectations and necessarily depend upon assumptions data where methods that may be incorrect or imprecise.
Such forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially for more information about those risks and uncertainties. Please view Sirius XM SEC filings, we advise listeners to not rely unduly on forward looking statements in disclaim any intention or obligation to update them.
As we began I would like to advise our listeners that today's results will include discussions about those actual results and pro forma adjusted results.
All discussion of pro forma adjusted operating results assume that depend door transaction closed on January onest, what 2018 and exclude the effects of stock based compensation and certain purchase price accounting adjustments with that ill hand, the call to Jim Meyer.
Thanks Super Good morning, everyone.
Sirius XM second quarter represented extremely resilient performance and one of the most challenging times in our company's history. Our business performed significantly ahead of our expectations during the second quarter with a quick and improving pace month by month, and we are moving aggressively to foodstar.
Streaming engagement execute on long term goals, such as 360, l. deployments and invest in a growing podcast market.
During the second quarter, despite the effects of stay at home orders on the economy. We added about 200000 more net new subscribers than we did in the first quarter and while our revenue was down 5% versus last year on lower advertising revenue our adjusted EBITDA was.
On our first quarter call I told you we would continue to generate substantial substantial positive free cash flows and we did just that in the quarter generating approximately a half a billion dollars and free cash flow a bit than last year's second quarter.
We are poised for a strong finish to the year, despite the uncertain economic outlook and rising and rising called the 19 cases and parts of the country. We are resuming our practice of providing annual guidance. We now expect approximately 500000.
Those are self pay net subscriber additions total revenue of approximately 7.7 billion.
Adjusted EBITDA of approximately 2.4 billion and free cash flow approaching 1.6 billion.
To put our business outlook and perspective compared to 2019.
We expect self pay subscribers will grow.
Revenue will decline slightly on the call that driven hit to our AD sales and adjusted EBITDA and free cash flow will be about the same.
As I have said many times business models matter and our business model is very resilient.
Although auto sales fell substantially the second quarter finish better than it started April Saar of 8.6 million was down 48%.
But may Saar improved to 12.2 million and June Saar further improved to 13 million.
Consensus for full year 2020 auto sales now sits at about 13.2 million as analysts expect auto sales to continue to improve.
In addition to an improving retail mix of auto sales, our new car penetration rate continued to rise up nearly 500 basis points year over year to 77% and the second quarter. We continue to expect to reach 80% by the end of this.
Here.
We have announced significant threesixty l. deployments, starting this year with a variety of automakers, including Audi BMW Siyad, Chrysler Ford GM to Buick, Cadillac Chevy and GMC brands and folks wagon state.
And for even more this deployment is now really gaining steam and we expect to end. This year at about 1.4 million Threesixty L. vehicles in operation a figure what should roughly tripled and 2021, we're excited to give some any customer.
There's this enhanced experience.
The used car business continues to provide a tailwind as the second half of 2020 used car penetration is now a shade under 50% up about 500 basis points versus this time last year.
<unk>, new vehicle starts fell 26% and the second quarter used vehicle starts fell only 5% and for the first time ever we had more used car trials, then new car trials.
The pandemic and stay at home orders during the second quarter helped accelerate more upstreaming engagement by our customers.
This trend began last summer we included streaming at no additional charge for the vast majority of our subscribers the amount of Sirius XM self pay subscribers streaming every month has doubled since last summer.
We also took advantage of attractive advertising rates in the second quarter to launch a large scale. So what large scale multimedia campaign, which raised both the awareness and usage of the Sirius XM path.
Of course, the biggest challenge, we faced and the biggest drag on our financial performance has come from our advertising market that fell sharply.
Reducing our AD revenue by 34% in the quarter as compared to last year I will note that the trend within the quarter was positive with April down 44% for the prior year may down, 38% and June down 22%, although Rick.
Covering the outlook for advertising revenue remains uncertain for the rest of the year.
We've also been pleased that the reduction of advertised we've also been pleased that the reduction of advertising supported listening hours at Pandora has been abating.
After being down as much as an 18% early in the second quarter add hours finished the quarter down less than 6% compared to the prior period, we're seeing gains in our spent listening to CE devices mitigating declines on mobile and web as important.
Pandora add hours are increasing for listeners 35 and older.
We are extremely excited about the prospect of assembling the premier suite of audio advertising products in the world the acquisition of stature and simple Cas compliment add ways, leading AD tech platform and Pandora's digital audio sales capabilities.
Simple cast a leading platform for podcast creators strengthens our capabilities and content management and analytics ads with provides leading AD technology tools for publishers and advertisers operate scaled add marketplaces for.
Podcasts and other audio content through both programmatic and direct sold product offerings Stitcher produces a number of high visibility podcasts has a leading AD network and see about 150 million downloads per month.
When combined with the U.S. audience reach of Pandora and Soundcloud. This combination of content technology and sales capabilities will allow advertisers the opportunity to execute audience base buys with unprecedented skilled earrings.
And efficiency.
Our expanded podcast efforts fit well with our existing advertising led focus at Pandora and adds awareness and position us to improve precision targeting measurement and monetization for the broader podcast market.
I'm thrilled for Sirius XM to participate more in this growing space, which now draws more than 100 million monthly listeners and provides a unique value proposition for both listeners and creators.
We look forward to closing Stitcher later, this year and for the opportunity to grow to drive growth was investments in this space.
As always producing and delivering fantastic content is always our number one job and we continue to do just that we all the owner of the original audio bundle and we've been delivering premium talk content since day one.
Our shows or life and relevant to the times and we witness Unprecedent response from from both music and other entertainment's top talents with their willingness to participate in new programming and presentations on our platforms.
With one of the world's biggest spans you too we launched its much anticipated full time channel you two X radio each member of the band is deeply involved in creating and hosting exclusive shows on this channel and you to sad and press interviews they relish.
The opportunity to expose both new and hardcore fans to their full catalog as well as remixes and rare recordings something they noted is lost an algorithmic play lists from other audio platforms.
We hold an elevated our game and music programming with the launch of several new artists channels on our satellite and streaming platforms. We launched the first wave on May Onest with a French channel and other channels dedicated to led Zeppelin, George Strait, David Bowie the Eagle.
Goals, Fleetwood Mac guns, <unk> Roses, Metallica, and the Rolling Stones. These channels all created with the artists and in some cases, there states were part of our stream free campaign and May.
By opening up our Sirius XM streaming service for free during a time when people needed news information and entertainment. We saw over 4 billion people take advantage of it and of course, we're now working hard to bring in many of those listeners.
Subscribers.
Earlier this month, we launched another sleep upstreaming channels with the BC Boys, Bob Marley, Coldplay, Queen and comedian Jim Gaffe again.
As various sports have returned a live action, we've been quick to get back to delivering the live broadcast and comprehensive coverage our listeners want and expect from the return of live golf events and NASCAR races in may through the start of the M.L. bases in the.
Last week and the restart of the M.D.A. season Tonight, plus Indycar Formula one m., so racism soccer and horse racing Sirius XM is back to offer in sports fans, an extensive live sports schedule.
And our business radio and Dr. radio channels continue to assemble experts and leaders for exclusive panels and town halls to inform and discuss the variety. The array of affects cobot 19 is having on our health daily lives and the national economy.
Right.
Well no one would have predicted a 2020 like we've had so far I am proud to say Sirius XM as not merely surviving this current storm.
Our business model is strong our employees talented and dedicated and we are in the envious financial position.
We are making smart investments in growing areas like podcasting and expanding the tremendous reach and capability capabilities of our advertising platform.
We have already seen very clear and positive trends across most of our business in the past couple of months and we hope that this recovery continues.
Regardless of the fits and starts that May come we will keep our heads down with a focus on execution and investing in a foundation that will enable us to grow for years to come with that I'll turn it over to David.
Thanks, Jim.
Sure. It's like some second quarter was remarkably good considering the seismic challenges across the economy.
We added 264000 self pay nuts.
Our 44th straight quarter of positive felt pretty net ads, our churn rate improved by six basis points year over year to 1.6% and was the lowest quarterly churn rate and more than a decade.
Nonpaid churn actually improved in the quarter and lower auto sales resulted in significantly lower vehicle related churn.
These improvements more than offset a modest drive from voluntary churn.
New car conversion rate was down about one point year on year to 37%.
While used car conversion remained steady in the mid 20% range.
Our ARPU rose 1%.
And excluding the advertising impact on ARPU ARPU rose 3%.
Revenue declined 5% to 1.9 billion with nearly all of that decline coming from lower advertising revenue. Despite losing that 87 million of margin contribution from Pandora adjusted EBITDA was roughly flat year over year at 615 million because of lower.
<unk> expenses across the board, particularly in subscriber acquisition costs.
Our enabled fleet grew to 129.6 million vehicles or about 40 some percent of cars on the road in the U.S.
At the end of the second quarter total trial formal stood at 8.1 million down from 9.1 million at the end of the first quarter.
That contraction was sharpest in April but ended up being significantly better than what we had modeled at the start of a pandemic.
Fewer trials starting in the second quarter will reduce self pay admissions in the third quarter.
We've covered cases surging in many parts of the country. There remains justifiable concern about the shape of the economic recovery.
Despite that with improving visibility into the back half of the year, we feel confident in our subscriber guidance.
With this background backdrop, there's also risk associated with the audio advertising market, but we feel good about hitting our revenue guidance of approximately $7.7 billion.
As advertising revenue built from the second half Pandora's gross margin will expand at a healthy clip.
If auto sales to outpace analysts estimates in the second half Soc expense will expand with it boding well for revenues and 2021.
We are confident of our guidance for adjusted EBITDA of approximately $2.4 billion for 2020.
Well watch him through some seven is expected later this year in the Sirius XM eight lot should occur in the early 21, we still expect to pay no federal cash taxes. This year in a relatively small amount and 21.
We estimate Capex this year in the range of 330 million, which brings us to our free cash flow guidance of approaching $1.6 billion.
After suspending no share repurchases in March in response to the uncertain impact of Cobot 19, we resumed repurchases just after our first quarter earnings call and bought back about a 165 million of our shares in May and June.
We have put to work nearly $1 billion. This year already with 525 million in share repurchases and dividends in the first half of this year, that's 428 million of capital committed to our acquisitions that stitcher simple crafts and our investment in sound club.
In June to lower our interest expense and extend maturities, we very opportunistically issued a building and a half dollars of new tenure unsecured paper at a rate of just for the knife in in July we use the proceeds to redeem similar principal amount of our foreign private notes due in 23.
In the five in three Ace notes due in 25.
At the end of the second quarter net debt to trailing 12 month adjusted EBITDA ratio was three times in our one in three quarters billion revolving credit facility was completely undrawn and fully available or capital allocation and leverage targets remain unchanged and we expect to continue our share purchases in the back.
<unk> for the year.
Operator with that let's open it up procurement <unk>.
Thank you, Sir ladies and gentlemen at this time, we'd like to open the call for questions I would like to remind everyone in order to ask a question star one on your telephone keypad, if at any time you'd like to be removed from the Q. Please press star two groups.
Pause for just the moments to compile the kitchenaid investor.
Your first question comes from Steven the whole from Wells Fargo. Please go ahead. Your line is open.
Thanks, maybe just first one on churn I think you said vehicle churn improved and it was only a modest increase in voluntary churn. So maybe any color on involuntary churn and since use trials are now more started getting bigger than new trials, maybe you could give us an update on.
Oh, what churn is trending for a youre use subscribers versus a new subscribers whenever a quick follow up.
David White <unk>, yeah, So I'm involuntary churn I mean, you may have heard this from some other people in this earnings season, we're sort of stoned bear out you know the very low level of non picture.
It's something that we never would've guessed going into an economically sensitive period and you know the fact is the right on it is this fall and you know there's lots of theories out there on it that you know a there there's some writing that suggests that with the overall level of consumer spending down from <unk>.
Pass levels, there's more room more availability on credit codes and think as everybody knows that our subscriber base is 80% debit card and credit card and in so maybe it's about maybe it's just the you know or you know with the rise in voluntary churn that youve.
You have a little bit of a shift it's tough to know, but it's sorta is what it is and you know performance insurance side has been has been great all the way around.
With respect to you know use trials and and you know churn rate on used cars. You know two to me. There's there's not a significant difference between you know what we experienced between the different types of cars could generally is cars get older turn seems to be a little bit higher.
But then you always have this thing with what's going on in the household and and so you know I'd say that there isn't anything in the mix shift that's going to take us out of the performance right that you've seen in terms of sort of being roughly in this 1.7% area.
Great and then on capital allocation, so with a little more M&A this year, but with the business proving a lot more resilient as I think you said how do we just think about capital allocation at the back half you know a free cash flow looks a lot like it did last year does a buyback, presumably look similar as well or.
Our if you were NRC, which is sort of strip out what you might be spending on on M&A as we think about your appetite for buyback opportunity. Thank you.
David will put a long time, we've talked about the business generating about $2 billion from excess capital.
And that remains true true today in food that excess capital can can go to you know external a growth you know <unk> acquire an external growth.
In the you know because we eat up to get to the free cash flow. We're investing the everything we think we responsibly Ken to drive growth from the business and then the next step is to go into that 2 billion and say is there something good to acquire out there you know like Citron simple Cafs, which we think that you know critical components or business.
And and then after that we look at you know we ever dividends and that's a little bit over a 200 million dollar your allocation and then what remains is available for buyback you know depending on you know price value you know relationships in the stock is you know the market goes up and down from time to time, So really no change.
At all in our capital allocation policy.
Thank you.
Operator next he moved to the next question.
Certainly it appears that some of our participants have been removed from the Q participants would you. Please press star one and your telephone keypad. If you do wish to ask a question on today's call.
Well, it's a let's go into the next question. Please.
No take our next question from then Swinburn from Morgan Stanley. Please go ahead. Your line is no.
Thank you good morning, I've two questions one on a on the OEM side and one on programming.
Jim could you give us I know you can't talk about specific OEM partners, but can you give us a sense for the ramp in Threesixty L and sort of now that that's in the market a little bit.
If you're seeing.
More interest in bringing their product.
Into more vehicles and sort of how quickly that might ramp over the next couple of years.
And I think I think David said you'd be at 80, maybe I can it was David are you happy at 80% install rate. Overall later this year I just want to confirm that because it seemed like a bit of an acceleration from the last time, we heard from you. So that's sort of the OEM the broader OEM question.
Okay. So Jennifer why don't you take to 360 L. question. Please.
Sure. When we are again sad ran a process of ramping out we launched in two of our OEM and you know over the past couple of years.
And as we've had a number of announcements over the last couple of months made out of you'd have you BMW and ward and it really as in any other new product launch and you'll start to see units roll out in conjunction with new model year like it and you end the ethanol infotainment platform launches its really yeah.
And then excited about this product and we've had great.
You know kind of I engagement with consumers and especially on the features anyway.
Demand in recommendation and and you know there's meal Biod Amelia. So I think we said yeah. We expect the vehicles in operation to Triple by the end of next year and then it was just you know keep ramping from there.
Okay, and that's true that's triple highly 1.4 billion at the end of year.
So I guess I did I interrupted you.
Yeah. It just for benthic, though we expect to have 1.4 million vehicles in operation at the end of the year and then back to roughly triple in 21.
Okay, and then finally everything I'm real.
Ben I'm really comfortable on the 80% guidance, we gave you by year end for penetration.
Terrific and then just a quick content question I'm sure you're not going to be surprised by it obviously a lot of focus because there is every five years on the Howard Stern relationship, which I know there's only so much you can say, Jim but is there any way to help us think about how much of Howard library or how much of his content.
Sirius XM essentially retains the rights to long term and then I think when you guys last re up towards him you created a maybe a deeper.
Broader partnership that could last for a longer period of time just it's it then you can help us to understand kind of how that product might evolve over the long term, you're going to with or without Howard or anything you could say at all since it's obviously a lot of focus on it.
Sure you've got to get them right. Then then and your recollection is correct and I'll I'll I'll talk to it just briefly.
But first let me say you know.
And I and this is not you know just rhetoric, okay. Howard is performing at the top of his game right now and he has been.
For you know a pretty consistently on time I couldn't be happier was a status.
Howard show in particular, given the transition he's made from you know are doing everything at our studio a 12 21 in New York to now doing it remotely and doing it flawlessly and violates it it's Howard and the team that we have that supports how it I'm really pleased.
You know even.
Just this last week as gas and the quality of the shows is that is.
Terrific number two the least from from from everything I can tell how hard is very happy with what he's doing and I can tell ya. It matters, what Howard's happy his shows are better and and and and he certainly more relapse I think that's like all of US I've been clear I want Howard Stern to work at Sirius XM.
For as long as Howard Stern wants to work.
And I have engaged.
With Howard's team.
We began those conversations again late last year.
Obviously, the the virus got kind of in a way of our cadence. We're reengaged I can tell you when those conversations right. Now you you know I know, what Howard wants and and were trying to figure out a way to make all those things work today.
The other and you know I I don't want to be overly optimistic here, but I want Howard here and you know will work did let me say this way this process isn't any different to me then the last spring and so well.
Keep working and and we'll get there I hope I'm now with assets and finally at the end of the day, it's gonna come down to also quite candidly what is Howard want to do.
So.
But quite but but back to your original question, Yes, and our last agreement with how are we can we were under contract with him for a five year period to do is live shows in any event that Howard wants to discontinue is live shows where for instance retired at the end of this year.
We have the rights to as library for a a another period of years I'm not recalling the exact date, but it was it was in one of our filings and and obviously, we would do that that that's not what I would like I want Howard on here.
And he's an unbelievable talented unbelievable for our brand, but yes. There is a run off period that run off period is very very good seven years, Jim Okay.
And that run off period, you know was something that both of US thought was important and ER and included.
And our previous agreement. So you know we're going to keep working at this and I'm pretty sure at the next earnings call, we'll have something to say here, but I'm focused I guess is the only where I can say here.
I appreciate all that thank you.
Our next question comes from Jason Bazinet from Citi. Please go ahead. Your line is open.
I just have a question on on podcasts.
You know the industry is still pretty embryonic and I would just love to hear sort of how you think sort of podcast podcast industry evolves over time, and how you sort of look at various podcast properties.
How you sort of think about how they fit into your overall strategy.
Well I mean, all right and then Scott you pick up after I started okay. So [laughter], so Jason first and foremost I think youre right. The word you used as a good one and that's why I think investors has to be a little careful about.
Over committing to what's the size of this business could be we don't know what we do know is we've been in the audio bundle business for a long time in so we you know we think we understand for a very long period of time. If you look at audio entertainment kind of what the mix of.
That is between.
Music and spoken word.
And and that's been fairly consistent for many many years, but perhaps a change in the way that content delivered can accelerate that will say.
That said I think podcasting is very important part.
Those are audio bundle I'll be quite candid with you I don't see.
I have.
You know I don't know what the viability is of podcasting.
As a standalone business only if you're in the podcasting business. It takes an awful lot of investment an awful lot of marketing at an awful lot of things to do but theres quite a few people out there and and and we certainly intend to support that on our platform side of our business.
I also believe the podcasting game is in the first day and for US. This isn't about wall can we get this content do not have somebody else have area that that's not at all the way we look at the way I look at it and away Scott.
And I drive it is primarily what content can we add to our platform that significantly either increases our value proposition or increases increases our customer engagement on our free platforms. That's really the way we look at it and that's gonna be a.
Wide variety of content and I had I don't believe any one particular.
One or two or three titles is going to drive is going to drive that Scott Wollney Jonathan.
Thanks, So couple of things you know at its heart broadcasting is audio content.
When you look at that obviously, you know or expertise as a company in that area speaks for itself, but when you look back at terrestrial radio there was a lot of am in FM content that was effectively talk content and it had a track record like Howard Stern and many others you sorta knew what kind of audience was moving over.
Oh podcasting as Jim said, we're in the first city, it's evolving business models matter when things emerge and become significant we're certainly able to look at what would work in our platform. So that's number one number to.
The marketing aspect the podcast is very nascent and or Sirius XM in Pandora windows on any podcast automatically change the marketing game.
With that and so, particularly excited about content not isolated as quote podcast, but as audio content that can flow all the way up and down.
And as I've mentioned or ability now to how both financing in a business model complemented by our podcasting acquisitions with.
Simple casting antiquated and now stitcher, he's going to allow us maximum.
WEX ability on it and the left.
In that first needing concept b.
Alan in this area.
And brands and others or first getting involved and lot of then have a lot to lose if they brands or you know a strong or positioned as well in this new podcasting well wait because as you can sell by the numbers not maybe podcast do you know very significant numbers. So I think our expertise in producing more.
Today, and doing what we do and or marketing window on our platforms. I think we're positioned very well we start going from here on it.
That's helpful. Thank you.
We'll take our next question from Brian Russo from Credit Suisse. Please go ahead. Your line is now open.
Hi, Thanks for taking the question Oh I have two.
The first one I was hoping you could talk about what you're thinking is for M&A. At this point you know what types of assets might still interest you is it technologies content isn't that salesforce.
Or is your portfolio pretty complete at this point.
The second question, it's again relating finishing off just caught non music.
I think David said in the past I think that music somewhere between 80, 85% or what your customers looking to do you think you know maybe spoken word content is more valuable to your product then its share of missing time would suggest.
Yes.
So I'll start and then on one David to comment on both of your questions, but then I'm going to start with the latter.
First.
We've always believed in Nonmusic content, it's why by the way and it's more than spoken word we believe live sports.
It's also a key part of the audio bundle and I think we've proved it I mean, you know we've done we've been at this for close to almost 20 years right and and.
And so we and again when I speak I speak to what are your customers in North America one.
And so we've always believed in and the value of the lives bundle I've also is believed that.
Particularly in the subscription business really my comment applies to the subscription business.
Customers.
Customers pay for what they think they listen to not necessarily entirely what they do listen to.
Okay. They pay for what they are perceived value as of the service and so I can tell you a customers. When you solve for instance, a one time for them in a in a month period, an NFL game that they can't get normally.
And then you go back and asked somehow answers or the NFL they'll tell you all the time I also think that the numbers you quoted from David are relatively close to what I believe the ultimate listening spread can be but at any given time that can change and it's a mixed or particular.
For a period so in in my opinion. The bundle is very very important. This is on new news for US we've been at it.
It's from day, one was a bundle and weekend and I can tell you. We continue we continue to believe an add on the Pandora side, we will continue to expand the bundle.
From more than just music I'm going for it David can you take the M&A question any comments you want on.
Sure. So just to finish up on you know the music talk side.
You know as they grow you talked about the passes that you know for long time. It a lot of studies out there that says admin FM radio which have so far just population we have for looking at long term trends in listening in North America, which is what we're most interested in that you know over the long term that's been an 80 515 split between music.
Can talk but you got to remember that even within the music a lot of what they're listening to is their favorite DJ in the morning, and not necessarily the music there in it for the engagement, so and we do skew a below that long term average because of the preponderance and then.
All of 'em, a into platts that the concept that we have.
In terms the level of importance brand affiliation has always really mattered to us in that you know, whether it's the NFL or the NHL or Howard Stern, It's a different news brands that it creates an awareness and you know of it Terry's that brand through and builds awareness for.
Okay and gives just another reason for people to subscribe.
How much they actually listen to the content that moves for them is less important than it actually moving them and so they might someone might subscriber so that they can listen to play by play for out of market games and that they can't get elsewhere, even though that's only once a week, but it might be that trigger.
It causes them to go in far and away. The most important part of the whole puzzles the curations.
Right because if you were just playing music with no hosts it you know, it's there's nothing differentiating about it and so the fact, how their packaged into channels and what's the hosts do with it and how you cure rate the nonmusic content, the pop up channels, which is more brand affiliation that whole.
Package is what is what you know Scott's team is focused on to really sort of drive interest in the in the service.
On the on the M&A side you know.
I think we're in pretty good shape at this point for it and I don't think that there's it's funny you've heard of say this in the past I don't think there's anything we're missing in so.
For instance, on monetizing digital audio regardless of whether that's music or something called the podcast or something called and on demand episode from you know from radio that we have a stack of products.
For the marketplace to buy if if they're interested in buying them. So with simple cafs, we have a content hosting and data analytics platform that is flat out the best in the world.
Any podcaster, regardless of whether podcasts are being listen to should want to be on that system ads was has the best technology out there for AD insertion and the order and buying process associated with digital audio advertising, regardless of whether its music or talk.
And John Trimbles team from the Pandora side is the largest scaled sales representation team and digital audio so.
If youre a you know it it doesn't have to monetize on our listening platform. That's that's an additional benefit we got but if you're anybody out there a plane in the digital audio space.
That you're going to want to be talking to us about how to improve your monetization because one of the big challenges and digital audio today is no one has scale.
All the pod casters are you know have fairly limited reach.
And you know it's a it's an awful lot of direct response advertising not a lot of branded advertising and one of the reasons. There is is that the brands can't put enough money to work efficiently and quite honestly, we have an array of products and <unk> and an audience size for cross those products that solves that problem.
For Brent. So you know I think we've got all the pieces that being said, there's always somebody else out there who can add a little bit more to what you've gotten we'll keep an eye out to the things that have good value.
That's very helpful and very interesting. Thank you both right one last flies Jim I just want to point out also it's been a while now we've been actively involved but we like our investment in Soundcloud, we like the management of sound cloud.
And David sits on the board along with another member of my my team.
And you know, we like we'll see where it goes in and how they do but we like that position as well and I. You know I think that also held to anchor our advertising off platform business.
Understood. Thank you.
[noise], we'll take our next and final question from James Ratcliffe from Evercore ISI. Please go ahead. Your line is now open.
Great. Thanks for taking my question I could just well regarding the various downturn in the corner you talked about what you don't need attention.
You mentioned voluntary churn like give any metrics around it tends to churn or anything like that.
Yes, I guess, particularly easy to enact the trying to get it definitely air what's driving the ever tried activity.
And secondly.
They don't change, though if you put out your January guidance, but looking at the July died in January.
The revenue guidance down about 40 million Bucks did you did not only down about 100 Bucks.
Yeah, the driving that.
I can find topic.
Thanks.
Hey, David I think those are both for you if I heard James correctly.
Yeah, you know a actually Jennifer could you hear James Okay.
Yeah, I think I know you can imagine side, it's a copy of the thing. We have you have acted state programs as you know and we've opened up a number of other channels you know pushed a bit Bayko, then really bad on the digital side. So you know, we have chat and messaging and.
Our increase in my opening capabilities in digital and we're improving our our yeah capabilities. There. So you know like the combination of reinforcing the value and of course, yeah promotional offers but I'd say one is the biggest things we've done in launch you know they in the middle of last year anything Alley for nine streaming turned the Gary.
Okay, and while it's still new we have as Jim said double usage, among our self pay base over that time period, and our retention among customers not surprisingly who engagement that's outside of the car through screening is much higher. So yeah that is something else continue to feel I sang and every day.
Good day campaign extreme greedy lightweight not only about you know getting new cost back into our spring experience, but also driving awareness across our satellite trialers and our self pay me about our streaming product.
Okay, and thirdly, Ghimire, then I'll turn it back over to David is.
Work, you know <unk> and I won't be bashful air because I'm really damn proud of where we are we're we're operating our are both acquisition and.
Sales retention teams.
Our not just performing better now than they were when their land, which was our original comparison when called it first impacted us and it had a significant impact on those teams early on they are performing better than they were you know a year ago and I'm really proud of what they're doing and we've just settled in.
To now you know a a formula that works and we're just executing it hour by hour, Okay and I can tell you churn management is a lot about Josh axis in hours and strong every hour execution in our team is our team is deliberate.
And you know I'm a comparison between January in July and the revenue in the EBITDA.
You know web who in essence would you have going I clearly you know are the self pay additions or that's helping additions are expected to be well.
They look pretty healthy now compared to what was not a couple months ago, there's still down from our original guidance. It also subscription revenues will grow but they won't grow as much.
In advertising revenues on the other hand, or they're going to take a hit this year, there's no doubt about that sort of a big revenue down.
And then as you look you know the well I've ever comes into PML. So you know with lower auto production overall for the year Soc is definitely going to be down with fewer auto sales and fewer trial starts across the year, the sales and marketing campaigns to support them. We're gonna be down you know your.
Or on your and then yeah, what sort of been our DNA that as soon as cold. It hit and you know we had an understanding of the facts that are world had changed that Jem and the rest of the the management team took a hard look at that spending and costs and pace of hiring and projects that were initiating.
And pull back because we you know we've got an economic pull back going on so do you know what you are you assuming it was lower gross and subs and had originally been expected the following their advertising.
And then honestly I'm solid cost management across the board to help make up something like that.
[noise] thanks, everyone. Thank you.
Thank you that concludes our call appreciate James and everybody for participating will speak to you offline in the coming days take care.
[music].
[music].
[music].
[music].