Q1 2024 Sirius XM Holdings Inc Earnings Call

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Greetings and welcome to Sirius XM is first quarter 2024 earnings conference call.

Operator: Greetings. Welcome to Sirius XM's first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I'll now turn the conference over to Hooper Stevens, Senior Vice President of Investor Relations and Finance. Thank you, Stephen. You may now begin your presentation.

At this time, all participants are in listen only mode.

Question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad.

Please note this conference is being recorded.

I'll now turn the conference over to Hooper Stevens Senior Vice President of Investor Relations and finance.

Hooper Stevens: Stephens you may now begin your presentation.

Hooper Stevens: Thank you and good morning everyone. Welcome to Sirius XM's first quarter 2024 earnings conference call. Today we will have prepared remarks from Jennifer Witz, our Chief Executive Officer, and Tom Barry, our Chief Financial Officer. Scott Greenstein, our President and Chief Content Officer, will join Jennifer and Tom to take questions during the Q&A portion of this call.

Hooper Stevens: Thank you and good morning, everyone welcome to Sirius XM first quarter 2024 earnings conference call. Today, we will have prepared remarks from Jennifer Witz, Our Chief Executive Officer, and Tom Berry, Our Chief Financial Officer, Scott Greenstein, Our President and Chief content Officer will join Jennifer and Tom to take questions. During the Q&A portion of this call I would like to remind every.

Hooper Stevens: I would like to remind everyone that certain statements made during this call might be forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based upon management's current beliefs and expectations and necessarily depend upon assumptions, data, or 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.

Hooper Stevens: One that certain statements made during this call might be forward looking statements as the term is defined in the private Securities Litigation Reform Act of 1995 seasonal forward looking statements are based upon management's current beliefs and expectations and necessarily depend upon assumptions data or methods that may be incorrect or imprecise such forward looking statements are subject to risks and uncertainties that could cause.

Hooper Stevens: The actual results to differ materially for more information about these risks and uncertainties. Please view Sirius XM SEC filings and today's earnings release.

Hooper Stevens: For more information about these risks and uncertainties, please view Sirius XM's SEC filings and today's earnings release. We advise listeners not to rely unduly on forward-looking statements and disclaim any intent or obligation to update them. As we begin, I'd like to remind our listeners that today's call will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock-based compensation.

Hooper Stevens: We advise listeners to not rely unduly on forward looking statements and disclaim any intent or obligation to update them as we begin I'd like to remind our listeners that today's call will include discussions about both actual results and adjusted results all discussions of adjusted operating results exclude the effects of stock based compensation with that I'll hand, the call over to Jennifer.

Hooper Stevens: With that, I'll hand the call over to Jennifer.

Jennifer C. Witz: Thanks Hooper, and good morning everyone. Thank you for joining us today. We are encouraged by our first quarter financial performance, and we are on course to meet all of our full year guidance. Our growing addressable advertising audience and a strengthening ad market powered a 7% increase in our ad revenue year over year to a record level of over $400 million, offsetting a 1% drop in subscription revenue. Sirius XM is an extremely profitable business with adjusted EBITDA up 4% year over year and running at a margin of 30%, up one percentage point from last year.

Jennifer C. Witz: Thanks, Hooper and good morning, everyone. Thank you for joining US today, we are encouraged by our first quarter financial performance and we are on course to meet all of our full year guidance.

Jennifer C. Witz: [noise] addressable advertising audience, and a strengthening AD market powered a 7% increase in our AD revenue year over year to a record level of over 400 million offsetting a 1% drop in subscription revenue.

Speaker Change: Sirius XM is an extremely profitable business with adjusted EBITDA up 4% year over year and running at a margin of 30% up one percentage point from last year, and we continue to forecast that 'twenty 'twenty four will represent our peak year for capital expenditures as these capital investments trend down over the next few years.

Jennifer C. Witz: And we continue to forecast that 2024 will represent our peak year for capital expenditures. As these capital investments trend down over the next few years, we expect to convert even more of our EBITDA into free cash flow.

Speaker Change: Expect to convert even more of our EBITDA into free cash flow.

We are continuing to evolve our strong business model and investing in future growth areas by striving to enhance our listening experience and consumer value proposition at the end of last year, we launched the first step in a longer multi phase journey deploying our new Sirius XM streaming up supported by a new digital infrastructure we have.

Jennifer C. Witz: We are continuing to evolve our strong business model and investing in future growth areas by striving to enhance our listening experience and consumer value proposition. At the end of last year, we launched the first step in a longer, multi-phase journey, deploying our new Sirius XM streaming app, supported by a new digital infrastructure. We are confident this platform will enable us to innovate and deliver the best audio experiences, whether in-car or on-the-go.

Speaker Change: We're confident this platform will enable us to innovate and deliver the best audio experiences whether in car or on the go and we are focused on growing our audience base with a new brand campaign in market now along with investments in recent tentpole channels and shows such as life with John Mayer. This life of mine with James Corden, and our limited engagement excuse.

Jennifer C. Witz: And we are focused on growing our audience base with a new brand campaign in the market now, along with investments in recent 10-poll channels and shows such as Life with John Mayer, This Life of Mine with James Corden, and our limited engagement exclusive channel with Taylor Swift. While it's extremely early given our three-month trial structures, there are some promising engagement indicators among new users. Our Sirius XM app improves recommendations and search, broadens content discovery, and includes a modernized user interface. It was built from the ground up to enable instrumentation and experimentation, and with advanced capabilities in mind, such as Martech.

Speaker Change: <unk> channel with Taylor Swift.

Speaker Change: While it's extremely early given our three months trial structures. There are some promising engagement indicators among new users our Sirius XM app improves recommendations and search brought in content discovery and includes a modernized user interface.

Speaker Change: It was built from the ground up to enable instrumentation and experimentation and with advanced capabilities in mind, such as Martech and in Martech, we've only touched the surface of what is possible such as customized multichannel marketing journey as we continue to iterate. This year, we plan to enable sharing and content sampling to brought.

Jennifer C. Witz: And in Martech, we've only touched the surface of what is possible, such as personalized multi-channel marketing journeys. As we continue to iterate this year, we plan to enable sharing and content sampling to broaden access to our content, as well as enhance the in-app podcast listening experience. This will become more important as we begin to offer podcast windowing and exclusive library access for Sirius XM subscribers that podcast listeners won't find on other platforms. For some of our long-term users, the change that came with a completely revamped SiriusXM app was disruptive.

Speaker Change: Access to our content as well as enhance the Inapt podcast listening experience.

Speaker Change: This will become more important as we begin to offer podcast windowing and exclusive library access for Sirius XM subscribers that podcast listeners won't find on other platforms.

Speaker Change: For some of our longtime users the change that came with a completely revamped Sirius XM App was disruptive Fortunately the all new platform enables us to iterate and innovate at a much more rapid pace, one that would have been unimaginable under the constraints of our prior platform, we've diligently addressed user feedback and biweekly updates and we.

Jennifer C. Witz: Fortunately, the all-new platform enables us to iterate and innovate at a much more rapid pace, one that would have been unimaginable under the constraints of our prior platform. We've diligently addressed user feedback and biweekly updates, and we've driven significant positive change already this year. Our early engagement metrics and other consumer signals we are following from the new SiriusXM app are improving. We are confident that our app platform relaunch and the product improvements coming in the car are putting us on the right path.

Speaker Change: Have driven significant positive change already this year or early engagement metrics and other consumer signals. We are following from the news Sirius XM App are improving we are confident that our app platform relaunch and the product improvements coming in the car are putting us on the right path.

Jennifer C. Witz: Yesterday, we announced an expanded agreement with Hyundai and Genesis to integrate 360L, and we recently initiated the launch of our next-gen in-car platform with Mercedes-Benz and Subaru. The Subaru rollout is especially exciting as they have also enabled a broader set of SiriusXM features in nearly half a million vehicles already on the road via an over-the-air update. Additionally, our SiriusXM 360L platform for the Android Automotive operating system began rolling out in the popular Nissan Rogue and on the new Ford and Lincoln Digital Experience, which debuted in the Lincoln Nautilus.

Speaker Change: Yesterday, we announced an expanded agreement with Hyundai and Genesis to integrate 360 L and we recently initiated the launch of our Nexgen in car platform with Mercedes Benz and Subaru.

Speaker Change: Every rollout is especially exciting as they also enabled a broader set of Sirius XM features and nearly half a million vehicles already on the road via an over their update. Additionally, our serious X M 360 L platform for the Android automotive operating system began rolling out in a popular Nissan Rogue and on the new Ford and Lincoln.

Speaker Change: Experience, which debuted in the making Nautilus AOS allows us to more quickly deliver new features to vehicles and we are working with several automakers to implement Sirius XM on AOS as adoption of the platform continues to grow as our product and engineering team re platforms, our automotive Tech stack 360 L adoption.

Jennifer C. Witz: AOS allows us to more quickly deliver new features to vehicles, and we are working with several automakers to implement SiriusXM on AOS as adoption of the platform continues to grow. As our product and engineering team replatforms our automotive tech stack, 360L adoption will be key to unlocking the benefits of the platform for consumers across a variety of vehicles. Another key tenet in our overall transformation, which is beginning to bear fruit, is the use of AI technologies to improve not only automation but also the customer experience and business outcomes.

Speaker Change: Will be key to unlocking the benefits of the platform for consumers across a variety of vehicles.

Speaker Change: Another key tenant in our overall transformation beginning to bear fruit as the use of AI technologies to improve not only automation, but also the customer experience and business outcome last quarter, we introduced a cutting edge platform Sierra founded by former Salesforce co CEO and open AI Board Chairman Bret Taylor.

Jennifer C. Witz: Last quarter, we introduced a cutting-edge platform, Sierra, founded by former Salesforce Co-CEO and OpenAI Board Chairman Brett Taylor and former Google Labs Vice President Clay Bevor. Sierra is a machine learning and generative AI platform that has been integrated into our customer service chat function. Sierra currently handles a portion of our chat-based support cases, and we plan to pilot the platform with voice later this year.

Speaker Change: And former Google Labs, Vice President Clay before Sierra is a machine learning and generative AI platform that has been integrated into our customer service chat function.

Speaker Change: There are currently handles a portion of our chat based support cases, and we plan to pilot the platform with voice later this year.

Jennifer C. Witz: With its highly developed conversational capabilities, we expect to see cost efficiencies and an improved customer experience. But a revamped tech stack is just one piece of a broader, long-term transformation. To further our objective of reaching new audiences, we premiered our latest national brand campaign late in the first quarter, including a brand film that ran during the Oscars and Taylor Swift's Aries concert on Disney+. Early indicators suggest our campaign, including its focused out-of-home advertising, is effectively enhancing our connection with potential listeners and subscribers and even contributing to improved time spent listening in-car for trialers. The foundation of that connection, however, will always be our content.

Speaker Change: With its highly developed conversational capabilities, we expect to see cost efficiencies and an improved customer experience, but a revamped tech stack is just one piece of a broader long term transformation to further our objective of reaching new audiences. We premiered our latest national brand campaign late in the first quarter, including our brand film.

Speaker Change: Which ran during the Oscars Ann Taylor Swift's Erez concert on Disney plus early indicators suggest our campaign, including its focused out of home advertising is effectively enhancing our connection with potential listeners on subscribers and even contributing to improved time spent listening in car for trailers.

Speaker Change: The foundation of that connection however will always be our content and this is where we are beginning to see our improved data driven tech platform driving greater discovery and engagement. The strong initial reach of our guests D. J campaign. In January is one such example, we launched exclusive sets from more than 175 of the <unk>.

Jennifer C. Witz: And this is where we are beginning to see our improved data-driven tech platform driving greater discovery and engagement. The strong initial reach of our guest DJ campaign in January is one such example. We launched exclusive sets from more than 175 of the world's top artists, including Dua Lipa, Cardi B, and Ed Sheeran, and drove strong reach among our in-app listener base. Utilizing our app's new layout, we can now feature timely sports collections, like one for March Madness, and our personalization engine further tailors content, offering leagues, games, and expert analysis based on each user's behavior.

Speaker Change: World's top artists, including do it Lipa Cardi, B and Ed Sheeran and drove strong reach among our Annapolis and our base utilizing our apps new lay out we can now feature timely sports collection like one for March Madness, and our personalization engine further tailored content offering league games and expert analysis.

Speaker Change: Based on each user's behavior, we've found that trial subscribers, who engage with sports content are more likely to convert at higher rates and existing subscribers, who do so tend to stay longer but our content decisions will always involve an element of human connection brought to our listeners by our deep entertainment industry relationships and supported by.

Jennifer C. Witz: We've found that trial subscribers who engage with sports content are more likely to convert at higher rates, and existing subscribers who do so tend to stay longer. But our content decisions will always involve an element of human connection, brought to our listeners by our deep entertainment industry relationships and supported by now two decades of experience in audio entertainment. In January, we launched our new exclusive series, This Life of Mine with James Corden, which has quickly become one of our top three on-demand talk shows.

Speaker Change: Now two decades of experience in audio entertainment.

Speaker Change: In January we launched our new exclusive theories.

Life of mine with James Corden, which has quickly become one of our top three on demand talk shows James's interviews with a list celebrities such as Kim Kardashian Doctor Drake and David back has kept the show at the forefront of cultural relevance generating substantial media attention and underscoring the significance of our exclusive content as it did.

Jennifer C. Witz: James' interviews with A-list celebrities, such as Kim Kardashian, Dr. Dre, and David Beckham, have kept the show at the forefront of cultural relevance, generating substantial media attention and underscoring the significance of our exclusive content as a distinguishing factor where we can excel.

Speaker Change: English Ing factor, where we can excel to.

Speaker Change: To this end just last Friday, Howard Stern demonstrated how he earned his reputation as an unparalleled interviewer at the center of culture, when President bite enjoined him live from our New York Studios for an extensive interview as the election season heats up moments like this really drive home the unique values Sirius XM brings to our listeners.

Jennifer C. Witz: To this end, just last Friday, Howard Stern demonstrated how he earned his reputation as an unparalleled interviewer at the center of culture when President Biden joined him live from our New York studios for an extensive interview as the election season heats up. Moments like this really drive home the unique value Sirius XM brings to our listeners. Our biggest incremental content investments are now in podcasting, and in service of both growing our advertising-based audience reach and delivering more value to Sirius XM subscribers. We now sell advertising that reaches about half the American population every month, and this audience is growing.

Speaker Change: Our biggest incremental content investments are now in podcasting and in service of both growing our advertising based audience reach and delivering more value to Sirius XM subscribers. We now sell advertising that reaches about half the American population every month and this audience is growing the Sirius XM.

Speaker Change: Media portfolio highlights our broad network approach to advertising and it's anchored by Pandora Soundcloud growing Sirius XM digital reach and as I began to mention the growth in our podcast business. We believe we can effectively monetize and deliver broad reach to benefit podcast creators. While also car now unique content experiences.

Speaker Change: To drive interest and engagement to Sirius XM subscriptions and a true win win for example, just last week, we launched crime Junkie radio a true crime focused channel led by actually flowers founder of audio Chuck and host of one of America's most popular podcasts crime Junkie, where this new channel we are leveraging top ranked podcast <unk>.

Jennifer C. Witz: The Sirius XM media portfolio highlights our broad network approach to advertising, and it's anchored by Pandora, SoundCloud, growing Sirius XM digital reach, and, as I began to mention, the growth in our podcasting business. We believe we can effectively monetize and deliver broad reach to benefit podcast creators, while also carving out unique content experiences to drive interest and engagement to Sirius XM subscriptions in a true win-win. For example, just last week, we launched Crime Junkie Radio, a true crime-focused channel led by Ashley Flowers, founder of AudioChuck and host of one of America's most popular podcasts, Crime Junkie.

Speaker Change: And crime junkie, the deck and counter clock to bring their audiences to Sirius XM by offering subscribers early access to an exclusive show from Ashley Erring on the channel.

Speaker Change: Combined with our recent deal with another chart topping podcast smartly, we are well positioned to bring that engaged fan base and growing podcast listenership into our ecosystem.

Speaker Change: Out the year, we expect to continue to innovate on our podcast product features including content preview functionality coming later this year rolling out first with podcasts.

Jennifer C. Witz: With this new channel, we are leveraging top-ranked podcasts, including Crime Junkie, The Deck, and Counterclockwise, to bring their audiences to Sirius XM by offering subscribers early access to an exclusive show from Ashley airing on the channel. Combined with our recent deal with another chart-topping podcast, SmartList, we are well-positioned to bring that engaged fan base and growing podcast listenership into our ecosystem. Throughout the year, we expect to continue to innovate on our podcast product features, including content preview functionality coming later this year, rolling out first with podcasts.

Moving on to advertising, we are seeing increasing success by taking our network first approach, allowing for greater flexibility and audience targeting for our advertisers overall, our podcast revenue is up 16% year over year buying across the Sirius XM podcast network allows marketers to target their audiences at scale and to reach.

Speaker Change: Dedicated fandom, and we're working to make this even easier.

Speaker Change: This quarter for example, we entered a new agreement with locked on a leading sports podcast publisher and in the coming months, we will officially launch sports curated collection. This offering enabled by our AD Tech position combined sports inventory from across our podcast portfolio and empowers advertisers to tap into audiences with similar interests and engagement through.

Jennifer C. Witz: Moving on to advertising, we are seeing increasing success by taking a network-first approach, allowing for greater flexibility and audience targeting for our advertisers. Overall, our podcast revenue is up 16% year-over-year. Buying across the SiriusXM podcast network allows marketers to target their audiences at scale and to reach dedicated fandoms, and we're working to make this even easier. This quarter, for example, we entered a new agreement with Locked On, a leading sports podcast publisher, and in the coming months, we will officially launch Sports Curated Collections.

Speaker Change: Programmatic advised this approach is anticipated to continue to bolster our program programmatic podcast offering which is up 90% versus the same quarter last year.

Speaker Change: Additionally, we continue to invest in AD Tech solutions that open up new opportunities for us This quarter, we launched synthetic voices the first tool and address AI AD tools, a set of AD Tech solutions powered by artificial intelligence synthetic voices give small and midsize business owners, an opportunity to continuously evolve their message.

Jennifer C. Witz: This offering, enabled by our ad tech position, combines sports inventory from across our podcast portfolio and empowers advertisers to tap into audiences with similar interests and engagement through programmatic ad buys. This approach is anticipated to continue to bolster our programmatic podcast offering, which is up 90% versus the same quarter last year. Additionally, we continue to invest in ad tech solutions that open up new opportunities for us. This quarter, we launched Synthetic Voices, the first tool in AdWiz AI ad tools, a set of ad tech solutions powered by artificial intelligence.

Speaker Change: Jim and quickly record new content with a variety of different artificial voices categorized by tone. This industry, leading innovative suite of offerings is designed to deliver cost effective and efficient solutions to advertisers with an initial focus on lowering the barrier for entry into audio advertising for small businesses.

Speaker Change: In short I remain very optimistic that we will see benefits in the business and in the consumer experience from our long term investment we are eager to be further along in this journey and to deliver improved subscriber results for our stockholders and I believe we are on the right path to do so I'm proud of the financial results we achieved this quarter.

Jennifer C. Witz: Synthetic Voices gives small and mid-sized business owners an opportunity to continuously evolve their messaging and quickly record new content with a variety of different artificial voices categorized by tone. This industry-leading, innovative suite of offerings is designed to deliver cost-effective and efficient solutions to advertisers with an initial focus on lowering the barrier to entry into audio advertising for small businesses.

Speaker Change: And grateful to the incredible team we have here at Sirius XM as we continued to progress in our transformation.

Speaker Change: Before I pass the call over to Tom I did want to share that yesterday, we announced that Joe <unk> will be stepping down from his position as chief commercial officer. This summer retiring after 20 years at Sirius XM.

Jennifer C. Witz: In short, I remain very optimistic that we will see benefits in the business and in the consumer experience from our long-term investments. We are eager to be further along in this journey and to deliver improved subscriber results for our stockholders, and I believe we are on the right path to do so. I'm proud of the financial results we achieved this quarter and grateful to the incredible team we have here at Sirius XM as we continue to progress in our transformation.

Speaker Change: We're in active conversations to fill this role and have a deep bench of talent internally across the commercial organization, we'd like to thank Joe for his long and impactful service to the company and now to walk you through more detailed financials I'll turn the call over to Tom.

Thomas D. Barry: Thank you Jennifer and good morning, everyone and thanks for joining us for our first quarter 2024 earnings call.

Thomas D. Barry: Jennifer's Lee I want to acknowledge our studies start to what is a transformational year for the company. We're pleased to reiterate our full year financial guidance. Despite headwinds, we see from a challenging subscriber environment, we're committed to and are executing on our strategic plan to transform and modernize the Sirius XM experience in the car.

Jennifer C. Witz: Before I pass the call over to Tom, I did want to share that yesterday we announced that Joe Verbrugge will be stepping down from his position as Chief Commercial Officer this summer, retiring after 20 years at Sirius XM. We are in active conversations to fill this role and have a deep bench of talent internally across the commercial organization. We'd like to thank Joe for his long and impactful service to the company. And now, to walk you through more detailed financials, I'll turn the call over to Tom. Thank you, Jennifer.

Thomas D. Barry: And on the go we remain focused on investing in our customer experience enhancing our value proposition expanding our business and seeking greater efficiencies across the organization with that let's dive into the quarter. We recorded total revenue of 2.16 billion in Q1 up 1% year over year.

Thomas D. Barry: Thank you, Jennifer. And good morning, everyone.

Thomas D. Barry: The growth was driven by 7% increase in advertising revenue to $402 million when approving AD sales, particularly in podcasts and via programmatic sales in fact, podcasting revenue grew 16% compared to last year's first quarter.

Thomas D. Barry: And thanks for joining us for our first quarter 2024 earnings call. Following Jennifer's lead, I want to acknowledge our steady start to what is a transformational year for the company. We are pleased to reiterate our full-year financial guidance, despite the headwinds we see from the challenging subscriber environment. We are committed to and are executing on our strategic plan to transform and modernize the Sirius XM experience in the car and on the go. We remain focused on investing in our customer experience, enhancing our value proposition, expanding our ad business, and seeking greater efficiencies across the organization. With that said, let's dive into the quarter.

Thomas D. Barry: Subscription revenue dipped slightly with a modestly lower average subscriber base off say a slightly higher ARPA.

Thomas D. Barry: Delving, a little deeper into the subscriber dynamics and increase in vehicle sales. This quarter contributed to slightly higher churn as a greater number of new and used vehicle purchases with existing subscriptions moved out of the self pay base and into unpaid trials. We expect this to hope grow trial conversions in the future quarters, we continue to explore.

Thomas D. Barry: We recorded total revenue of $2.16 billion in Q1, up 1% year over year. The growth was driven by a 7% increase in advertising revenue to $402 million. We're in the process of improving ad sales, particularly in podcasts and via programmatic sales. In fact, podcasting revenue grew 16% compared to last year's first quarter. Subscription revenue dipped slightly, with a modestly lower average subscriber base offsetting a slightly higher ARPU. Delving a little deeper into the subscriber dynamics, an increase in vehicle sales this quarter contributed to slightly higher churn, as a greater number of new and used vehicle purchasers with existing subscriptions moved out of the self-pay base and into unpaid trials.

Thomas D. Barry: Our subscriber results to improve from 2023, and we should see similar seasonality in 2024 with better year over year subscriber performance beginning in the back half of the year.

Thomas D. Barry: Adjusted EBITDA was $650 million, a 4% year over year increase the increase was boosted by greater advertising revenue and resulting gross profit as well as our cost optimization initiatives across the business, which also benefited from lower legal expenses in the first quarter of 2024 the company saved.

Thomas D. Barry: $45 million through our cost optimization efforts and consolidations across its business.

Thomas D. Barry: These gains were slightly tempered by the strategic investments in design and development, which support enhancements to our products and platforms.

Thomas D. Barry: Our total cash operating expenses saw a very slight decrease year over year, reflecting our focus on enhancing efficiency, even as we increase important investments in the business turning to the segments. The Sirius XM segment delivered approximately $1 7 billion of revenue down 1% year over year Sirius XM, our pool for the quarter was 50.

Thomas D. Barry: We expect this to help grow trial conversions in future quarters. We continue to expect our subscriber results to improve from 2023, and we should see similar seasonality in 2024, with better year-over-year subscriber performance beginning in the back half of the year.

<unk> dollars 36 cents up from $15 and 29 since last year's first quarter. The increase was driven by price increases in early 2020 232 full price plans, partially offset by an increase in subscribers at our streaming only and so their promotional plans are a pool was also impacted by reduced rates associated with.

Thomas D. Barry: Adjusted EBITDA was $650 million, a 4% year-over-year increase. The increase was boosted by greater advertising revenue and resulting gross profit, as well as our cost optimization initiatives across the business, which also benefited from lower legal expenses. In the first quarter of 2024, the company saved approximately $45 million through cost optimization efforts and consolidations across its business. These gains were slightly tempered by strategic investments in design and development, which support enhancements to our products and platforms.

Thomas D. Barry: Paid trials from select automakers.

Thomas D. Barry: Sirius XM reported $993 million in gross profit during the quarter, representing a gross margin of about 60%.

Trade the Pandora in off platform segment reported total revenue of 495 million an increase of 7%.

Thomas D. Barry: We're tightening our revenue in this segment of $362 million increased 8% year over year, driven by a 5% growth of our streaming revenue 16% growth of our broadcast revenue.

Thomas D. Barry: Our total cash operating expenses saw a very slight decrease year over year, reflecting our focus on enhancing efficiency even as we increase important investments in the business. Turning to the segments, the Sirius XM segment delivered approximately $1.7 billion in revenue, down 1% year-over-year. Sirius XM's ARPU for the quarter was $15.36, up from $15.29 in last year's first quarter. The increase was driven by price increases in early 2020-3 to full price plans, partially offset by an increase in subscribers on our streaming-only and self-paid promotional plans. ARPU was also impacted by reduced rates associated with paid trials from select automakers.

Thomas D. Barry: As Jennifer mentioned programmatic sales will continue to thrive up 29% across streaming and podcasting combined as advertisers gravitate to the sufficient way of buying segment gross profit reached $143 million for the first quarter, representing a margin of 29% up from 24% in the prior year's first quarter.

Pandora AD hours were 2.49 billion declining 4% year over year and average hours per active user increased slightly it was about 21 hours per month advertising rpms saw a nice 7% lift to $91 during the quarter, our free cash flow was $132 million, an 8% decrease.

Thomas D. Barry: Sirius XM reported $993 million in gross profit during the quarter, representing a gross margin of about 60%. Turning to the Pandora and off-platform segment, we reported a total revenue of $495 million, an increase of 7%. Advertising revenue in the segment of $362 million increased 8% year-over-year, driven by a 5% growth in our streaming revenue and a 16% growth in our podcasting revenue. As Jennifer mentioned, programmatic sales have continued to thrive, up 29% across streaming and podcasting combined, as advertisers gravitate to this efficient way of buying.

From the 144 million realized in Q1 of 2023, the decrease can be attributed to new contents than a tiny of higher vendor payments during the quarter, partially offset by a 31 million of lower capital expenditures for the quarter.

Thomas D. Barry: During the quarter, we invested 187 million and our previous disclosed clean energy technology investments, we plan to fund approximately $50 million more in 2024.

Thomas D. Barry: With any equity investments. These investments are outside of free cash flow. We have modeled that these investments will reduce our cash taxes by roughly a $130 million this year.

Thomas D. Barry: Our segment gross profit reached $143 million for the first quarter, representing a margin of 29%, up from 24% in the prior year's first quarter. Pandora ad hours were $2.49 billion, declining 4% year over year, and average hours per ad active user increased slightly, and was about 21 hours per month. Advertising RPM saw a nice 7% lift to $91.

Thomas D. Barry: We mentioned previously the bulk or roughly 250 million in net after tax cash benefit will come in the later years of the investment cycle.

Thomas D. Barry: Lastly, a short update on our balance sheet and capital returns during the first quarter Sirius XM paid 102 million to stockholders through our dividend and ended the quarter with net debt to adjusted EBITDA of three three times.

Thomas D. Barry: As we approach the closure of the Liberty media transaction. The next couple of months, we remain committed to maintaining a strong and flexible balance sheet with a leverage target in the low to mid three times range, we will prioritize our substantial ongoing investments in the business and continuing our dividend with excess discretionary cash flow.

Thomas D. Barry: During the quarter, our free cash flow was $132 million, an 8% decrease from the $144 million realized in Q1 of 2023. The decrease can be attributed to new content spent at a timing of higher vendor payments during the quarter, partially offset by $31 million of lower capital expenditures for the quarter. In addition, during the quarter, we invested $187 million in our previous disclosed clean energy technology investments. We plan to fund approximately $50 million more in 2024.

Thomas D. Barry: He used to reduce our leverage to the targeted range by the back half of 2025.

Thomas D. Barry: Additionally, we will look at share repurchases and opportunistic manner. Following the close of the transaction now I'll hand, it over to the operator for Q&A.

Speaker Change: Thank you well now be conducting a question and answer session.

Speaker Change: We like to ask a question at this time, Please press star one from your telephone keypad.

Speaker Change: [noise] formation toner indicate your lives in the question queue.

Speaker Change: You May press Star two if you like to move your question from the queue.

Thomas D. Barry: As with any equity investments, these investments are outside of free cash flow. However, we have modeled that these investments will reduce our cash taxes by roughly $130 million this year. As we mentioned previously, the bulk of our roughly $250 million in net after-tax cash benefits will come in the later years of the investment cycle. And lastly, a short update on our balance sheet and capital returns. During the first quarter, Sirius XM paid $102 million to stockholders through its dividend and ended the quarter with net debt to adjusted EBITDA of 3.3 times.

Speaker Change: For participants are using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment. Please we poll for questions. Thank you.

Speaker Change: Our first question comes from the line of Sebastiano Petti with Jpmorgan. Please proceed with your question.

Sebastiano Carmine Petti: Hi, Thanks for taking the question just first quickly for Tom.

Sebastiano Carmine Petti: Regards to the self pay.

Sebastiano Carmine Petti: Guidance or commentary you said, you expect similar seasonality with improvements in the back half of the year.

Sebastiano Carmine Petti: On a year over year basis does that imply anything or are you trying to say anything specific regarding the second quarter expectations.

Sebastiano Carmine Petti: And then also on the vehicles related churn side you know obviously this is favorable on a longer term basis.

Sebastiano Carmine Petti: <unk> gross adds there, but any updates on what you're what you're seeing now currently in voluntary and non pay churn, perhaps just as we're thinking about the balance of the year on the termite. Thank you so much.

Thomas D. Barry: As we approach the closure of the Liberty Media transaction in the next couple of months, we remain committed to maintaining a strong and flexible balance sheet with a leverage target in the low to mid three times range. We will prioritize our substantial ongoing investments in the business and continue our dividend, with excess discretionary cash flow primarily used to reduce our leverage to the targeted range by the back half of 2025. Additionally, we will look at share repurchases in an opportunistic manner following the close of the transaction. Now, I'll hand it over to the operator for Q&A.

Yeah, John I'll take that.

Speaker Change: So yes, we as we mentioned earlier in the in the earlier comments and we do believe we will see improvements year over year in the second half I do think that we will have similar seasonality to last year in terms of the quarters. Obviously, we don't provide specific quarterly guidance.

Speaker Change: But that should give you some sense as to you know the the movement over the course of the year and you know as it relates to vehicle related churn. So in this first quarter. It was a single biggest driver of performance versus last year, We had 70000 higher vehicle related D acts in Q1 most.

Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question at this time, please press star 1 on your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Obviously on higher trial starts and yes to your point that helps us grow the funnel and improve gross adds going forward. We did have higher conversions in the first quarter as well.

Speaker Change: You know based on higher prior quarter trial starts and that was slightly offset by performance on the conversion side, which is still not where we wanted to beat but churn overall outside of vehicle related has still continued to be strong. So worried about the 1% rate for non pay and voluntary which we've trended out for quite some time now.

Operator: One moment, please. We poll for questions. Thank you. Our first question comes from the line of Sebastiano Petti with J.P. Morgan. I'm pleased to see you with your question.

Unknown Attendee: Hi, thanks for taking the question. Just quickly for Tom, just in regards to self-pay, guidance, or commentary, you said that you expect similar seasonality with improvements in the back half of the year on a year-over-year basis. Does that imply anything? Are you trying to say anything specific regarding second quarter expectations? And then also on the vehicle-related churn side, obviously, this is favorable on a longer-term basis as you increase gross ads there.

Speaker Change: No indications of softness on the non pay side I you know as a result of any change in sort of consumer behavior. So we feel really good about where we are on voluntary and non pay and yeah for the rest of the year, it's really going to be about as always the trend line on vehicle related as it relates to the strength of new and used.

Speaker Change: Car ourselves.

Speaker Change: Right now, we're certainly expecting you know where the third party analysts are to be at new car Saar somewhere in the high <unk>.

Speaker Change: And then one other factor that of course plays into sort of the sequential improvements this year.

Unknown Attendee: But any updates on what you're seeing now in voluntary and non-pay churn, perhaps, just as we're thinking about the balance of the year on the churn line? Thank you so much. Yeah, Sebastiano, I'll take that.

Speaker Change: And year over year improvements in the back half is really the timing of what we're rolling out with the new App and marketing associated with that we should see greater improvements in streaming as you move through the course of the year with improvement in conversion really starting to come I laid in there.

Thomas D. Barry: Yeah, Sebastian, I'll take that. So, as we mentioned earlier in the comments, we do believe we will see improvements year-over-year in the second half. I do think that we will have similar seasonality to last year in terms of the quarters. Obviously, we don't provide specific quarterly guidance, but that should give you some sense as to, you know, the movement over the course of the year. And, you know, as it relates to vehicle-related churn, so in this first quarter, it was the single biggest driver of performance versus last year.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question is from the line of Jason Bazinet with Citi. Please proceed with your questions.

I just have one.

Jason Boisvert Bazinet: Big Picture question for you all.

Jason Boisvert Bazinet: I think everyone on this call knows you have a great business a lot of cash flow great margins predictable.

Jason Boisvert Bazinet: But the multiple seems to reflect that.

Jason Boisvert Bazinet: Our belief that there isn't sort of another leg of growth another sort of initiatives that could reaccelerate your topline and.

Jason Boisvert Bazinet: So my question is do you guys feel like you've <unk>.

Jason Boisvert Bazinet: Explored a lot of other potential things and come up sort of empty and the best sort of course of action is to.

Thomas D. Barry: We had 70,000 higher vehicle-related DX in Q1, mostly, obviously, on higher trial starts. And, yes, to your point, that helps us, you know, grow the funnel and improve growth ads going forward. We did have higher conversions in the first quarter as well.

Jason Boisvert Bazinet: Wants to have deepened engagement and just sort of.

Jason Boisvert Bazinet: You know keep generating significant free cash or is there the potential for something.

Jason Boisvert Bazinet: Might be a bit different it could really sort of get the market nanometer about topline acceleration. Thanks.

Speaker Change: Yeah. So Jason appreciate the question I think two things I guess, we're still clearly working through the Liberty transaction have no change in terms of the assumed timing, but you are really looking forward to a simplified equity structure that gives us the opportunity to approach a broader invest.

Thomas D. Barry: You know, based on higher prior-quarter trial starts, and that was slightly offset by performance on the conversion side, which is still not where we want it to be, but churn overall, so outside of vehicle related, has still continued to be strong. So, right about the 1% rate for non-pay involuntary, which we've trended at for quite some time now. No indications of softness on the non-pay side, you know, as a result of any change in sort of consumer behavior, so we feel, you know, really good about where we are on voluntary and non-pay.

Speaker Change: Base and tell our story and but on the side on the business side, it's really about reinvigorating demand and you know we have a number of reasons to believe that we can successfully execute on this and I would say, it's probably taking longer than we'd hoped and hoped in terms of the rollout of the new.

Thomas D. Barry: And, yeah, for the rest of the year, it's really going to be about, as always, the trend line on vehicle sales as it relates to the strength in new and used car auto sales. Right now, we're certainly expecting, you know, that where the third-party analysts are to be on new cars is somewhere in the high 15. And then there is one other factor that, of course, plays into sort of the sequential improvements this year and year-over-year improvements in the back half.

Speaker Change: Platform and our ability to sort of capitalize on improvements in marketing, especially as we're just starting to get real end to end personalization into our streaming marketing flows are but how.

Speaker Change: As we have been talking about the key opportunities to build demand with growth audiences are clear you know across price discovery in control and we do have this multi pronged effort underway to address these cross our products content marketing and pricing and packaging and the product side. You know, we're going to have really fast improvement in the app now that isn't new.

Thomas D. Barry: It's really the timing of what we're rolling out with the new app and marketing associated with that. We should see greater improvements in streaming as we move through the course of the year, with improvements in conversion really starting to come late in the year.

Operator: Thank you. Our next question is from the line of Jason Bazinet with Citi. Please proceed with your question.

Speaker Change: Platform in place and also in car, but it's going to take longer obviously with the rollout of 360, L and driving feature parity and awareness there.

Unknown Attendee: I just have one big picture question for you all. I think everyone on this call knows you have a great business, a lot of cash flow, great margins, and it's predictable. But the multiple seems to reflect a belief that there isn't sort of another leg of growth, another sort of initiative that could reaccelerate your growth. And so my question is, do you guys feel like you've explored a lot of other potential things and come up sort of empty, and the best sort of course of action is to, you know, launch the app, deepen engagement, and just sort of keep generating significant free cash? Or is there the potential for something that might be a bit different that could really sort of get the market excited about top line acceleration?

Speaker Change: But we're also as you've seen continue to bolster our content offering which helps clearly with retention and also with the acquisition as we have more and more exclusive content and you know a lot of that ties to our having real exclusivity in terms of content with key podcast talent.

Speaker Change: And then we just launched our recent brand campaign, we're seeing some positive indicators. There that's really early and then on pricing and packaging. It was talked about the need to create a broader set of packages and capture demand potentially at lower price points with less content, but our early testing there and it is early issue.

Jennifer C. Witz: Jason, I appreciate the question. Two things, I guess.

Speaker Change: Some lift with younger cohorts. So we do have other future areas of exploration yeah. It's still early but there are opportunities I think to drive even more demand potentially with adding interactive capabilities, maybe to certain packages and that of course of course could come with them you know, our our Pandora product <unk> or.

Jennifer C. Witz: We're still clearly working through the Liberty transaction, and there has been no change in terms of the assumed timing, but we are really looking forward to a simplified equity structure that gives us the opportunity to approach a broader investor base and tell our story. And, you know, our ability to sort of capitalize on improvements in marketing, especially as we're just starting to get real end-to-end personalization into our streaming marketing flows. But as we've been talking about, the key opportunities to build demand with growth audiences are clear, you know, across price, discovery, and control.

Speaker Change: Or otherwise and then looking at low cost or even free offerings potentially on the Sirius XM side, which would obviously be AD supported so I think those are things to look out for in the future as we get through the major pieces of this transformation this year.

Speaker Change: Can I just ask one follow up in that proxy.

Speaker Change: Proxy that you filed with Liberty that sort of laid out your financial forecasts just qualitatively would you see a lot of the initiatives you just talked about are embedded in those numbers, we're not much.

Jennifer C. Witz: And we do have this multi-pronged effort underway to address these, you know, across our products, content, marketing, and pricing and packaging. And on the product side, you know, we're going to have really fast improvements in the app now that we have the new platform in place. And also in the car, but it's going to take longer, obviously, with the rollout of 360L and driving feature parity and awareness there.

Speaker Change: Yeah, we put together the forecast we really you know anticipated some day the things that we've been talking about obviously, we haven't provided specific guidance for twenty-five yet, but theres certainly baked into our guidance for this year.

Speaker Change: Okay.

I would just say Jason that when you look at it I think when you look at the numbers for 2025, we did it as a model at that point, we had a lot of these initiatives in there and we're obviously building in changing as we transform this year so.

Jennifer C. Witz: But we're also, as you've seen, continuing to bolster our content offering, which helps clearly with retention and also with acquisition as we have more and more exclusive content. And, you know, a lot of that ties to having real exclusivity in terms of content with key podcast talent. And then we just launched a recent brand campaign. We're seeing some positive indicators there, but that's really early.

Speaker Change: So directionally the right way, but where are we obviously got a lot of moving parts. This year.

Speaker Change: Understood. Thanks, Jason one other thing to add you know what I'm excited about when you look at just five of the podcast. We have it's an audience of over 70 million U S monthly downloads.

Speaker Change: So.

Speaker Change: This models matter as you've heard you know Jennifer I know Theres always say you know we continue to look at where that fulcrum balancing point is between taking content behind the paywall.

Jennifer C. Witz: And then on pricing and packaging, we've talked about the need to create a broader set of packages and capture demand potentially at lower price points with less content. But our early testing there, and this is early, is showing some lift with younger cohorts. So we do have other future areas of exploration. You know, it's still early, but there are opportunities, I think, to drive even more demand, potentially by adding interactive capabilities, maybe to certain packages.

Speaker Change: And we saw you know years ago with men, taking a large audience from Howard and then making behind the paywall. So we're consistently analyzing where that balance is but there is a large audience of large younger audience out there in podcast thing and we have a leading position in that and at any point some of those large order.

Speaker Change: It could be behind the paywall. So it's just something we're monitoring and looking at down the road, but it is something to consider.

Speaker Change: That's super helpful. Thank you.

Speaker Change: Our next question is from the line of Bryan Kraft with Deutsche Bank. Please proceed with your questions.

Jennifer C. Witz: And that, of course, could come with, you know, our Pandora product or otherwise. And then looking at low cost or even free offerings, potentially on the Sirius XM side, which would obviously be ad-supported. So I think those are things to look out for in the future as we get through the major pieces of this transformation this year.

Bryan D. Kraft: Hi, Good morning, I had two if I could I guess first you've obviously seen a nice rebound in advertising in Pandora and off platform can you talk a bit about more of what you're seeing there in terms of industry category strength.

Bryan D. Kraft: And.

Bryan D. Kraft: Also in the press release, you mentioned synthetic voices and the value. It brings to Smbs could you talk a bit more about your exposure to SMB versus enterprise today in the business and whether you see this and other potential AI tools as a way to expand and S&P in the future and whether that could be.

Jennifer C. Witz: And I just have one follow-up. In that proxy that you filed with Liberty that sort of laid out your financial forecast, just qualitatively, would you say a lot of the initiatives you just talked about are embedded in those numbers, or not much?

Jennifer C. Witz: Yeah, as we put together the forecast, we really anticipated the things that we've been talking about. Obviously, we haven't provided specific guidance for 25 yet, but they're certainly baked into our guidance for this year.

Bryan D. Kraft: A meaningful opportunity for growth and then my second question is for Tom.

Thomas D. Barry: Thomas investors wanted to look at your free cash flow, assuming a normalized capex level pulling out satellite capex and temporarily higher non satellite capex, what would that normalized capex level be as you see it today and you know how much are we pulling out of the capex guidance for the year to get to that number. Thank you.

Jennifer C. Witz: Yeah, I mean, anyway...

Jennifer C. Witz: Anyway, I would just say, Jason, that when you look at the numbers for 2025, we did it as a model at that point, we had a lot of these initiatives in there. And we're obviously building and changing as we transform this year. So, you know, they're heading in the right direction, but we're obviously got a lot of moving parts.

Speaker Change: Okay. So I'll start on the first one just touching on the advertising. So as we said you know the advertising for the quarter and you know we've always said over time that advertising is choppy and first quarter everything hit the cylinders had properly we ended up up 7% overall when you look at it a couple of things you know.

Jennifer C. Witz: Okay. One other thing to add, you know what I'm excited about. When you look at just five of the podcasts we have, it's an audience of over 70 million U.S. monthly downloads. So, you know, business models matter, as you've heard Jennifer and others always say. So we're consistently analyzing where that balance is. But there is a large audience, a large younger audience out there in podcasting, and we have a leading position in that. And, you know, at any point, some of those large audiences could be behind the paywall. So it's just something we're monitoring and looking at down the road. But it is something to consider.

Speaker Change: Contributed to US obviously the investment in the strategy on the podcast side, we had higher network demand on the podcast side by about 16% and the streaming demand you know it was up 5%, but it allowed us because of our ability to leverage programmatic, which increased the demand across streaming and podcasting by about 29%.

This has been a great advantage to us for the quarter.

Speaker Change: It's also drove up our rpms for the quarter. So when you look at overall advertising a lot of factors contributed positively.

Speaker Change: No new industries, I would say the changed significantly as far as who's advertising.

Operator: That's super helpful. Thank you.

But we continue to see positive signals out of the first quarter heading into the early part of the second quarter. So so that's the the advertising is there anything I missed or advertising.

Operator: Our next question is from the line of Bryan Kraft with Deutsche Bank. Please proceed with your question.

Unknown Attendee: Hi, good morning. I would do it if I could.

Speaker Change: No I think the really interesting thing we've seen Brian is just yeah.

Unknown Attendee: I guess first, you've obviously seen a nice rebound in advertising on Pandora and off-platform. Can you talk a bit about more of what you're seeing there in terms of industry category strength and also, in the press release, you mentioned synthetic voices and the value they bring to SMBs. Can you talk a bit more about your exposure to SMBs versus enterprise today in the business and whether you see this and other potential AI tools as a way to expand an SMB in the future and whether that could be a meaningful opportunity for growth?

Speaker Change: You know theres just been a fundamental shift in advertising I think over the last few years, just with more and more supply coming on I wish you know as far as introducing AD supported peers and you know more and more targeting available and I, where we have played really well as Tom mentioned is in programmatic and we're still.

Speaker Change: At the earlier stages on the podcast side for programmatic, but we've had it in place and then on the music streaming side for quite some time and these capabilities extend across the platform and it really plays to what advertisers are looking to to do in terms of buying you know later later in the process right theres fewer sort of upfront.

Unknown Attendee: And then my second question is for Tom. Tom, if investors wanted to look at your free cash flow, assuming a normalized CapEx level, pulling out satellite CapEx and temporarily high non-satellite CapEx, what would that normalized CapEx level be as you see it today, and how much are we taking out of the CapEx guidance for the year to get to that number? Thank you.

Speaker Change: Commitments and more buying based on you know last minute sort of consumer expectations, and we really fulfill that need and incredibly well, especially relative to our other competitors in audio and so I think you'll see a lot of those trends continuing and then as it relates to sort of SMB versus enterprise.

Thomas D. Barry: Okay, so I'll start on the first one by just touching on advertising. So, as we've said, you know, the advertising for the quarter, you know, we've always said over time that advertising is choppy. And in the first quarter, everything hit the cylinders properly. We ended up up 7% overall. You know, when you look at it, a couple of things contributed to us. Obviously, the investment in strategy on the podcast side; we had higher network demand on the podcast side by about 16%.

Speaker Change: Surprise and we've always had strong business on the F&B side and I think now it's really about unlocking more solutions and then it kind of plays to what we've been able to do on programmatic, but offering more and more self serve solutions that allow smaller advertisers to come into audio.

Speaker Change: And and you know scale in and experiment and integrate on their campaigns are without a lot of direct sales assistance and so I think you know we do see opportunities to continue to grow in this area and you want to touch on Capex, Yes. So Bryan our Capex you know as you look at first quarter Capex was lower principally due the timing of payment.

Thomas D. Barry: And, you know, streaming demand is up 5%. But a lot of that is because of our ability to leverage programmatic, which increased the demand across streaming and podcasting by about 29%. This has been a great advantage to us for the quarter, and it's also driven up our RPMs for the quarter. So when you look at overall advertising, a lot of factors contributed positively. You know, no new industries, I would say, that changed significantly as far as who's advertising. But we continue to see positive signals out of the first quarter heading into the early part of the second quarter. So that's the advertising. Is there anything I missed in advertising?

Speaker Change: Laura principally on the satellite Capex side.

Bryan D. Kraft: So we were slightly lower on Capex in Q1, we still expect.

To have a our highest level of Capex for 2024, and you know to look at the more broadly at the outer years 'twenty 'twenty six 'twenty seven we believed it.

Bryan D. Kraft: Capex will be somewhere around $300 million.

Bryan D. Kraft: Probably more yeah, it could be as high as I think I think well look the thing that we wanted to make sure that we do is maximize our opportunity to invest in the business on the nontaxable non satellite Capex side, obviously, we've got the cycle of satellite Capex rolling through in the next few years as we get through those launches and but we do.

Jennifer C. Witz: Yeah, I think the really interesting thing we've seen, Bryan, is just, You know, there's just been a fundamental shift in advertising, I think, over the last few years, just with more and more supply coming on with, you know, SVODs introducing ad-supported tiers and, you know, more and more targeting available. And I think where we have played really well, as Tom mentioned, is in programmatic, and we're still, you know, at the earlier stages on the podcast side for programmatic, but we've had it in place on the music streaming side for quite some time.

Bryan D. Kraft: You have other.

I guess for lack of a better phrase end of life replacements, we need to make on the terrestrial broadcast side and that will roll through in the non satellite Capex and then we are continuing to transform the business and making sure that we're migrating off legacy systems, and that's going to roll into next year and so while we do.

Jennifer C. Witz: And these capabilities extend, you know, across the platform, and it really plays to what advertisers are looking to do in terms of buying, you know, later, later in the process, right? There's fewer sort of upfront commitments and more buying based on, you know, last minute consumer expectations, and we really fulfill that need incredibly well, especially relative to our other competitors in audio. And so, you know, I think you'll see a lot of those trends continuing.

Bryan D. Kraft: As Tom said this to be kind of a high in terms of overall capex and we'll continue to see some higher levels of non <unk> Capex as you go into next year.

Speaker Change: Got it thanks, so much to you both.

Speaker Change: Our next question is from the line of Jessica Reif Ehrlich with Bank of America. Please proceed with your questions.

Speaker Change: Hi, Thank you.

Speaker Change: I guess can we go back to advertising I have two questions one on advertising and one on programming.

Jennifer C. Witz: And then as it relates to sort of SMB versus enterprise, we've always had sort of a strong business on the SMB side, and I think now it's really about unlocking more solutions. And, again, it kind of plays to what we've been able to do on programmatic, but offering more and more self-serve solutions that allow smaller advertisers to come into audio and, you know, scale and experiment and iterate on their campaigns without a lot of direct sales. And so I think, you know, we do see opportunities to continue to grow in this area. Anyone want to touch on CapEx? Yeah,

Speaker Change: Obviously your programmatic efforts have really kicked in just wondering how you compare to other audio marketers.

Speaker Change: In terms of share.

Speaker Change: And in terms of podcasts and then also maybe touch on more broadly and how <unk>. How different is your set of tools and then on programming.

Speaker Change: You didn't ask this question in a long time, but how are you have you had initial conversations with Howard Stern returning at the end of its contract, which I think is next year and if he doesn't come back how are you thinking about you know what.

Thomas D. Barry: Yeah. So, Bryan, on CapEx, you know, as you look at the first quarter, CapEx was lower, principally because of the timing of payments, lower on, principally on the satellite CapEx side. So, we were slightly lower on CapEx in Q1. We still expect to have our highest level of CapEx for 2024. And, you know, to look at the more broadly at the outer years of 2026, 2027, we believe that, you know, CapEx will be somewhere around $300 million.

Speaker Change: Placement programming and how would it impact your programming budget and plans.

Thanks.

Speaker Change: Hey, Jessica I'm going to let Scott cover your second question first.

Scott A. Greenstein: Right. Okay. So on Howard first of all Howard as you know is synonymous with the brand.

Scott A. Greenstein: As relevant as he's ever been as witnessed by not only you know the president of vitamins a view, but you know recently, whether it's Kelly must greggs or Emily blunt actually his audience is getting younger and he's getting more younger talent.

Scott A. Greenstein: Do you want to do it so you never want to be a company without Howard and if he decides to retire or do whatever he does his.

Scott A. Greenstein: His choice, we would like them to be here, but.

Thomas D. Barry: Probably more. Yeah, it could be as high as 400.

Scott A. Greenstein: But as far as replacing you know we've seen that there's certain singular talents.

Thomas D. Barry: I think, look, the thing that we want to make sure that we do is maximize our opportunity to invest in the business on the non-satellite CapEx side. Obviously, we've got the cycle of, you know, satellite CapEx rolling through in the next few years as we get through those launches. But we do have other, I guess, for lack of a better phrase, end-of-life replacements we need to make on the terrestrial and broadcast side that will roll through on the non-satellite CapEx.

Scott A. Greenstein: Whether it is Johnny Carson retiring and somebody else comes in and all that you don't replace someone you've come up with a strategy of what is your current demo and your target audience and you look at what would be best suited for that at any given time and we love our bench I mean, whether it's James Corden Conan Andy Cohen and many.

Scott A. Greenstein: Others.

Scott A. Greenstein: They they're not Howard replacements, they have their own distinct audience style and demo that they go after.

Thomas D. Barry: And then, you know, we are continuing to transform the business and make sure that we're migrating legacy systems. And that's going to roll into next year. And so while we do expect, as Tom said, this to be kind of a high in terms of overall CapEx, we'll continue to see some higher levels in non-satellite CapEx as we go into next year.

Scott A. Greenstein: And so we feel pretty good where we stand on that front as as we continue to evolve our content.

Scott A. Greenstein: Go forward.

Scott A. Greenstein: Yeah, and just back on advertising, we do have an industry, leading set of solutions in programmatic and I believe certainly from our perspective I others have not emphasize these solutions quite as much as we have you know our ads with platform has continued to re.

Operator: Thanks so much, you both. Our next question is from the line of Jessica Wright Farley with Bank of America. Please proceed with your question.

Unknown Attendee: Hi, thank you. I guess, can we go back to advertising? I have two questions. One on advertising and one on programming. Obviously, your programmatic efforts have really kicked in.

Scott A. Greenstein: Please new AR technology and solutions to serve this we remain pretty open in terms of you know the partnership they'll work with whether it's you know measurement or targeting I on the vendor side and it really wanted to make sure that we continue to take that approach going forward at all.

Unknown Attendee: Just wondering how you compare to other audio marketers in terms of share, in terms of podcasting and also maybe digital more broadly, and how different is your set of tools? And then on programming, we haven't asked this question in a long time, but have you had initial conversations with Howard Sern returning at the end of his contract, which I think is next year? And if he doesn't come back, how are you thinking about replacement programming, and how would it impact your programming budget and plans? Thanks.

As others look them that may be capitalizing on their walled garden. So I think you know we continue to push for improvements to standards and industry certifications and and that provides I think the industry overall with better measurement and targeting and certainly what advertisers are looking for you've heard us talk.

Scott A. Greenstein: You know clearly synthetic voices will have more AI tools, they're coming this year and we've brought more brand suitability and safety solutions as well.

Jennifer C. Witz: Hey Jessica, I'm going to let Scott cover your second question first.

Scott A. Greenstein: Hi. Okay, so on Howard. First of all, Howard, as you know, is synonymous with the brand and is as relevant as he's ever been, as witnessed by not only the President Biden interview but, you know, recently, whether it's Kelly Musgraves or Emily Blunt. Actually, his audience is getting younger, and he's getting more younger talent, you know, to want to do it. So you never want to be in a company without Howard.

Scott A. Greenstein: And so I just I think we are really well positioned here, Jessica and it certainly contributed to podcasts being up high in the first quarter as Tom mentioned, we also have a lot of other sales solutions in place like we just launched a relationship with locked on and we're building out our sports network offering because.

Scott A. Greenstein: The great sports content, we not only have yeah on the packaging side, but I'm on Sirius XM as well in terms of all the play by play on commentary we have across the leagues because we're really the only audio service to bring all of those leagues together in one place.

Scott A. Greenstein: And if he decides to retire or do whatever he does, you know, that's his choice; we would like him to be here. But as far as replacing, you know, we've seen that there's certain singular talent, that whether it's Johnny Carson retiring, and somebody else comes in and all that, you don't replace someone; you come up with a strategy of what your current demo and your target audience are, and you look at what would be best suited for that at any given time.

Speaker Change: Thank you.

Our next question is from the line of David Joyce with Seaport Research Partners. Please proceed with your questions.

Thank you and thinking about 360 L. In the advertising opportunity there what would you say that the inning are you in in terms of monetizing via advertise a baby advertisements there.

Scott A. Greenstein: And we love our bench. I mean, whether it's James Corden, Conan, Andy Cohen, and many others. They're not Howard replacements; they have their own distinct audience style, and a demo that they go after. And so we feel pretty good where we stand on that front, as we continue to evolve our content and go forward.

David Joyce: Is this a year, where you're more focused in driving up engagement, because you've been rolling out the new functionality.

David Joyce: And then you would seek to monetize it later or do you have a view of what the right AD load is there.

Jennifer C. Witz: Back on advertising, we do have an industry-leading set of solutions in programmatic. And I believe, certainly from our perspective, others have not emphasized these solutions quite as much as we have. You know, our ads with platform has continued to release new technology and solutions to serve this. We remain pretty open in terms of the partnerships we'll work with, whether it's measurement or targeting on the vendor side.

David Joyce: And just if you could provide any color there.

Working on the strategy. There is you know in terms of pricing versus competitors that sort of thing.

Speaker Change: Sure, It's really David it's really early for for targeted advertising in 360 L. I, it's really still in its infancy.

Speaker Change: But of course, we have about little over 3 million. So I'll say kind of customers on 360 L. And she has some somewhere around 12 million vehicles on the road so far and we haven't opened up anything in terms of a free offering or a true AD supported offering are in 360 al to a broader audience.

Jennifer C. Witz: And you really want to make sure that we continue to take that approach going forward as others look at maybe capitalizing on their walled gardens. So I think, you know, we should continue to push for improvements to standards and industry certifications. And that provides, I think, the industry overall with better measurement and targeting and certainly what advertisers are looking for. And we're building out a sports network offering because of the great sports content we not only have, you know, on the podcasting side, but on SiriusXM as well, in terms of all the play-by-play and commentary we have across the leagues, because we're really the only audio service to bring all those leagues together in one place.

Speaker Change: It's certainly something we're looking at we would want to build ideally more volume, but we are doing some testing this year on a reduced content offering very limited in terms of the volumes, but I that could give us some insights in terms of having fewer channels, but more AD supported across music and talk but right now.

Speaker Change: Now it's just it's really early stages I mean, I think we do have an opportunity here as the volumes grow to develop and implement more targeted advertising and the 360 hour platform I, but today, it's mostly just broadcast AD. So the real opportunity with the recent Seattle continues to be improving.

Operator: Our next question is from the line of David Joyce with Seaport Research Partners. Please proceed with your question.

Unknown Attendee: Thank you. In thinking about 360L and the advertising opportunity there, what would you say the ending is for you, in terms of monetizing via advertisements there? Is this a year where you're more focused on driving up engagement because you've been rolling out the new functionality, and then you will seek to monetize it later? Or do you have a view of what the right ad load is there? And just if you could provide any color of what their marketing strategy there is in terms of pricing versus competitors, that sort of thing. Thanks. Sure, it's really, David, it's really...

Speaker Change: You know the the customer experience in the car, providing more personalization opportunities more control on discovery just like we're doing in the App and you know I'd say the three CPL strategy. Overall is really three has three pronged right. It's rolling out in more Oems and we continue to have more announcements there Jose V C.

I mean have you seen with Mercedes Subaru, we have a L. S in market, which helps with the second piece, which is a building feature parity. So that you know the implementations in market have a full set of features including invoking messaging ignition on recommendations, which are really just starting to get in the market and low volumes.

Jennifer C. Witz: Sure, David. But it's really early for targeted advertising in 360L. It's really still in its infancy. Of course, we have about a little over 3 million self-made customers on 360L and somewhere around 12 million vehicles on the road so far. And we haven't opened up anything in terms of a free offering or a true ad-supported offering in 360L to a broader audience, but it's certainly something we're looking at. We would want to build, ideally, more volume, but we are doing some testing this year on a reduced content offering, very limited in terms of the volumes, but that could give us some insights in terms of having fewer channels but more ads But right now, it's just in the really early stages.

Speaker Change: But we're really encouraged about what we can deliver there and and we've launched with AOS and Ford Volvo and Nissan and more to come and then the third part is really about expanding awareness right and because we know that 36 hour conversion rates are higher than non 360, al but where people actually really.

Speaker Change: And with the features are and start to use them. You know there are significantly higher and of course, the awareness is still pretty low and that's why building out a better personalized marketing capabilities in car, which will start to come really in the second half of this year.

Jennifer C. Witz: I think we do have an opportunity here as volumes grow to develop and implement more targeted advertising in the 360L platform, but today, it's mostly just broadcast ads. So, the real opportunity with 360L continues to be improving the customer experience in the car, providing more personalization opportunities, more control, and discovery, just like we're doing in the app. And I'd say the 360L strategy overall has three prongs.

Speaker Change: And is going to be key to improving that awareness I on a personalize basis, and then more generally across our marketing campaigns and to our in car customers.

Speaker Change: Yeah.

Speaker Change: That's great. Thank you.

Speaker Change: Our next question is from the line of Steven Cahall with Wells Fargo. Please proceed with your questions.

Steven Lee Cahall: Thanks, Jennifer I'd love to dig into conversion a little bit. So there's a lot going on in the trial funnels picking up vehicle churn is picking up a little bit and then it sounds like you maybe have some early signs.

Steven Lee Cahall: I guess my Big question is I think conversion is what she'd been trying to solve for with the digital relaunch what kind of conversion levels do you need on new car and used car to get back to self pay net add growth over time and can you give us an update on kind of where you are starting to track towards those target conversion levels.

Jennifer C. Witz: It's rolling out in more OEMs, and we continue to have more announcements there, hopefully, as you've seen with Mercedes and Subaru. We have AOS in the market, which helps with the second piece, which is building feature parity so that, you know, the implementations in the market have a full set of features, including in-vehicle messaging, ignition on recommendations, which are really just starting to get into the market in low volume. So, we're really encouraged about what we can deliver here.

Steven Lee Cahall: And within that maybe what youre starting to see with younger first time car buying cohorts and then just secondly on <unk>.

Are you comfortable raising price at this point for Sirius XM.

Steven Lee Cahall: And is there a meaningful headwind to our true from streaming only subs or is that not something we need to take too much into consideration for it. Thank you.

Jennifer C. Witz: And we've launched with AOS in Ford, Volvo, and Nissan, with more to come. And then the third part is really about expanding awareness, right? And because we know that 360L conversion rates are higher than non-360L, but where people actually really understand what the features are and start to use them, you know, they're significantly higher. And of course, awareness is still pretty low, and that's why building out better personalized marketing capabilities in-car, which will start to come really in the second half of this year, is going to be key to improving that awareness on a personalized basis and then, you know, more generally across our marketing campaigns to our in-car customers.

Speaker Change: Thanks, Stephen So on the first I there are really two pieces, there's conversion rates for our in car trailers and then there's what I call conversion or post trial retention for our streaming trailers and yeah. So far this year, we've prioritized the launch of the new platform.

Speaker Change: Which you know came obviously in December and since then we have made significant improvements to the experience both on the side of a current in car subscribers, who are streaming which is the largest part of our streaming in the US and you know we have had to make some adjustments there.

Speaker Change: To solve for some gaps we had when we first launched them we've done a series of releases over the last few.

Operator: Our next question is from the line of Steven Cahall with Wells Fargo. Please proceed with your questions.

Speaker Change: A few months to solve many of those concerns on the part of customers and we're back to where we were before generally in terms of listening right, but the second cohort. There obviously is new streaming trailers and you know it's it's a little too early to look at post trial retention for those early streaming trailers.

Unknown Attendee: Thanks. Jennifer, I'd love to dig into conversion a little bit. So, you know, there's a lot going on in the trial funnels, picking up vehicle turns, picking up a little bit. And then it sounds like you maybe have some early improving signs of conversion. I guess my big question is, I think conversion is what you've been trying to solve for with the digital relaunch. What kind of conversion levels do you need on new car and used car to get back to self-pay net ad growth over time?

Speaker Change: That started in December and January its very similar to what we look for on the in car side of the business, where there's a three month trial and then there's sort of a maturing phase of a couple of months after.

Speaker Change: To get to a more stable level of retention and on the streaming side I'd say, we're a couple of months behind but probably two to three months behind in terms of rolling out our fully personalized marketing efforts there it's taken longer than we expect it to sort of build out the full data flows and in that way.

Unknown Attendee: And can you give us an update on kind of where you're starting to track towards those target conversion levels? And within that, maybe what you're starting to see with younger first-time car buyers? And then just secondly, on ARPU, you know, are you comfortable raising prices at this point for Sirius XM? And is there a meaningful headwind to ARPU from streaming only subscribers? Or is that not something we need to take too much into consideration?

Speaker Change: His great leading indicators and where we've been able to move engagement for low listen in cohorts two higher listening levels.

Jennifer C. Witz: Thanks, Steven. So, on the first one, I, there are really two pieces. There are conversion rates for our in-car trialers, and then there's what I call conversion or post-trial retention for our streaming trialers. And so far this year, we've prioritized the launch of the new platform, which, you know, came out obviously in December. And since then, we have made significant improvements to the experience, both on the side of current in-car subscribers who are streaming, which is, you know, again, the largest part of our streaming MAUs.

Speaker Change: We've been able to work within the for you are you know tab in the App to improve content engagement and we're just starting to roll out real full personalization in the marketing flows the journeys are based on <unk>.

Speaker Change: Content listening and feature usage and this is the real unlock and like it's going to take time, because you got these journeys rolled out even in the next couple of weeks, we need time to test and iterate and scale those solutions, but again theres a lot of leading indicators that give us real strong beliefs.

Jennifer C. Witz: And, you know, we have had to make some adjustments there to solve some gaps we had when we first launched, and we've done a series of releases over the last few months to solve many of those concerns on the part of customers, and we're back to where we were before, generally, in terms of listening rates. We've been able to work within the For You, you know, tab in the app to improve content engagement.

Speaker Change: That we're on the right path and now when we start building out. These personalized marketing flows we would expect to see improvement in early in trial engagement, which is a great leading indicator for post trial retention and over the last few months, even without these little capabilities, we've seen terrific.

Jennifer C. Witz: And we're just starting to roll out real full personalization in the marketing flows, the journeys, based on content listening and feature usage. And, again, when we start building out these personalized marketing flows, we would expect to see improvements in early and trial engagement, which is a great leading indicator for post-trial retention. And, you know, over the last few months, even without these full capabilities, we've seen sort of a continued slow but steady improvement in these early engagement indicators. And we are above, just starting to be above where we were late last year.

Speaker Change: Tenured slow, but steady improvement in these early engagement indicators and we are above just starting to be above where we were a late last year. So lots more to come on that that is really key to growing clearly our streaming only yeah, let Tom I'm talking about our Peru in a minute in terms of how we think about that impacting pricing and packaging.

Jennifer C. Witz: On the in-car side, conversion rates are, like I mentioned earlier, not really where we want them to be. We've seen some pressure there, certainly from younger generations. We may end up with trialers, younger trialers who have an in-car trial taking a streaming product instead, but in that case, I would not have expected them to necessarily have signed up for, you know, the $19 a month in-car product. But today, we don't really see any of that cannibalization.

Speaker Change: Whoever all that Scott on the in car side. So conversion rates are like I mentioned earlier, not really where we want them to be we've seen some pressure there certainly from younger generation. We may end up with trailers younger trailers have an in car trial, taking a streaming product instead, but it.

Speaker Change: In that case, I would not have expected them to necessarily have signed up for the $19 a month in car product, but today, we don't really see any of that cannibalization in fact, and more cases, we actually see customers coming into our streaming flows and being confused as to why it doesn't include.

Jennifer C. Witz: In fact, in more cases, we actually see customers coming into our streaming flows being confused as to why it doesn't include the car. So I think there's a lot of opportunity to optimize those, and, you know, I would expect that we would ultimately probably have two strong segments. One is looking for a premium experience integrated into the car, which includes streaming as well. And another, it's probably, you know, a lot of our growth audiences are going to be younger, maybe more interested in a streaming-only product.

Speaker Change: The car, so I think theres, a lot of opportunity to optimize those and no I would expect that we ultimately would probably have a too strong segments. One is looking for a premium experience and integrated into the car, which includes streaming as well and another it's probably you know a lot of our growth audiences.

Speaker Change: Tend to be younger and may be more interested in a streaming only product. So just back to the in car conversion rates. So.

Jennifer C. Witz: So just back to the in-car conversion rates. Both used and new car conversion rates are core to future growth. And all of the things I talked about in terms of personalized marketing will not be in place for the in-car side of the business until the latter part of the year. And that's because we still need to build out those flows, and it's going to just take longer to build them on the in-car side. We are learning a lot about streaming, so I think we can get off the ground running once they're there.

Speaker Change: Both you and used a new car conversion rates are core to future growth and all of the things I talked about in terms of personalized marketing will not be in place for the in car side of the business until the latter part of the year and that's because we still need to build out those flows and it takes it's going to just take.

Speaker Change: Longer to build them in the in car side and you know we are learning a lot and streaming. So I think we can get off the ground running once they're there, but we're definitely prioritizing marketing over some of the other parts of the migration of the in car proprietary systems, because we believe that gives us the most opportunity to impact.

Thomas D. Barry: But we're definitely prioritizing marketing over some of the other parts of the migration of the in-car proprietary systems because we believe that gives us the most opportunity to impact business metrics. And so I wouldn't expect to see those kinds of improvements rolling through conversion rates until much later in the year. And then Tom on our team.

Speaker Change: <unk> metrics and so I wouldn't expect to see those kinds of improvements rolling through conversion rates until much later in the year.

Speaker Change: Oh, and then Tom and.

Thomas D. Barry: Thank you. And so, on ARPU, so basically, in Q1, we had $15.36; we had a year-over-year increase, which is principally driven by last year. You know, we're lapping a period where there was a price increase on the full price plans last March, so we're up a little bit year-over-year. But you know, looking at the full year, we'll obviously continue with our pricing and packaging as well as a lot of the other initiatives we have going on.

Speaker Change: So.

Speaker Change: No.

Speaker Change: So on <unk>. So basically in Q1, we had $15 36, since we had year over year increase which was principally driven by last year.

Speaker Change: We're lapping a period, where there was a price increase on the full price plans last March so so we're up a little bit year over year.

Speaker Change: But you know looking at the full year, we will continue obviously through who are you know our pricing and packaging as well as a lot of the other initiatives, we have going on but we overall see <unk> to be slightly down for the year, but it.

Thomas D. Barry: And we overall see ARPU to be slightly down for the year, but it will obviously depend on the streaming mix, the promotional mix, and other factors contributing to the calculation. Yeah, and that was all incorporated in our guidance, and we talked about that earlier this year. And you know, we've also talked about the fact that this isn't a year where we're raising prices on in-car packages and would expect to look at that as we go into next year as an opportunity. But we continue to do a lot of testing on the pricing and packaging front for our in-car packages and continue to believe that there's an opportunity to open up more demand at a broader level.

Speaker Change: It will obviously depend on the streaming mix of promotional mix in other countries. The other factors contributing to the cause of calculation yeah. No that was all incorporated in our guidance and we talked about that earlier this year and we've also talked about the fact that this is in a year, where we're raising price and I in car a pricing and a package.

Speaker Change: Sorry, and I would expect chicken to look at that as we go into next year as an opportunity, but we continue to do a lot of testing on the pricing and packaging front for our in car packages and you know believe continue to believe that there's opportunity to open up more demand.

Speaker Change: At a broader set of our prices and our packaging structure.

Operator: Thanks a lot for all that color. Thank you. Our next question is from Steven Laszczyk with Goldman Sachs. Please proceed with your question. A great thank you. Maybe one for Tom, you executed against 45 million to cost efficiency.

Thanks, a lot for all that color.

Speaker Change: Thank you.

Speaker Change: Next question is from Stephen <unk> with Goldman Sachs. Please proceed with your question.

Stephen: Hey, great. Thank you maybe one for Tom you executed against $45 million of cost efficiencies in the quarter could you, perhaps just update us on where you have been able to make the most progress so far and then how do you think about pacing of the remaining cost savings coming into next few quarters. How should we think about that and then secondly, just a housekeeping one.

Operator: Thank you. The next question is from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Stephen: More you can say about the progress of our time in the Liberty transaction.

Speaker Change: Causing any detail would be great. Thank you.

Thomas D. Barry: Yes, Steven, a couple of things. So in Q1, we had about $45 million of savings that we outlined in the script. It's principally been across a variety of areas. Really, what we've been focused on is trying to maintain our EBITDA margin. So we are investing some of the savings back in the business. But in Q1, we did have some optimization around headcount and around some of our programming and podcast margins.

Thomas D. Barry: Yeah, So Stephen a couple of things so on the yes, Q1, we had about $45 million of savings that we are.

Thomas D. Barry: Wind in the script.

Thomas D. Barry: Principally been across a variety of areas really what we've been focused on is trying to maintain our EBITDA margin. So we are investing.

Thomas D. Barry: Some of the savings back in the business, but in Q1, we did have some optimization around head count and around some of our programming and podcast margins. So you know the.

Thomas D. Barry: So the initiatives are continuing on our trend. As we said, to have $200 million worth of savings this year, we are continuing to reinvest. But net-net, we're happy with our margin being at 30% for Q1, and we're going to continue to look at cost-saving initiatives throughout the year. And, as we've said, there are a lot of things going on between the optimization and the transformation we're going through. So that's broadly the $200 million.

Thomas D. Barry: Listeners are continuing on our trend as we said the $200 million worth of savings. This year, we are continuing to reinvest but net net we were happy with our margin be in the 30% for Q1 and were and continue to look at the cost savings initiatives throughout the year.

Thomas D. Barry: You know as we've said, there's a lot of things going on between the optimization and the transformation we're going through.

So that's broadly the $200 million and then I would just say on the.

Thomas D. Barry: And then I would just say on the...on the Liberty transaction. The Liberty transaction, I think, is still currently planned for early Q3. We have no update from Denver as far as any change in that. Obviously, there's a lot of moving pieces, but we are trying to get it closed as soon as possible. Yeah, I just say we're going to update you.

Thomas D. Barry: On the Liberty transaction.

The Liberty transaction.

Thomas D. Barry: Pink is still currently planned for early Q3, we have no update from.

Thomas D. Barry: From Denver as far as any change in that obviously, there's a lot of moving pieces, but we are trying to get to close as soon as we can yeah, I'd, just say, where we're gonna update for first quarter financials. So that's you know part of the process, obviously and and factored into the timing, but as Tom said still expect early Q3.

Jennifer C. Witz: Yeah, I just say we're going to update for first quarter financials, so that's, you know, part of the process, obviously, and factors into the timing. But as Tom said, still expect early Q3.

Speaker Change: Great. Thank you for that.

Operator: Thank you. Thank you. Our next and final question is from the line of Cameron Manson Perrone with Morgan Stanley.

Speaker Change: Thank you. Thank you our next and final question is from the line of Cameron Ransom Perone with Morgan Stanley.

Speaker Change: Thank you good morning, yes.

Unknown Attendee: Thank you. Good morning.

Unknown Attendee: Yeah, I wanted to ask about the margin trends at Pandora. Obviously, the strong ad growth helps there, but really positive gross margin improvement year-over-year. Could you just touch on what's driving those trends, if anything, beyond the ad performance, and whether we should expect that kind of magnitude of year-over-year improvement to continue? And then, maybe more broadly, just how should we think about the unit economics between the music and off-net businesses today and what the opportunities are for them? And what is the opportunity for each of those over time?

Yeah, I wanted to ask on the margin trends at Pandora, obviously, the strong outgrowth helps there, but but really a positive gross margin improvement year over year could you could you just touch on what's driving those trends if anything beyond bad performance and whether we should expect kind of that magnitude of year over year improvement to continue and then.

Speaker Change: Maybe more broadly just how should we think about the unit economics between the music and off net business is today and what the opportunity for each of those is overtime.

Thomas D. Barry: So, Cameron, from the margin, not a lot has changed. The improvement is us monetizing and leveraging different products out there and putting the ad demand against the corresponding products that, you know, would create the best benefit to Sirius XM. But, you know, overall, the optimization out there and, you know, the cost side is really what's providing the higher margin, right? Yeah, and, and...

Speaker Change: Thanks.

Speaker Change: So Kevin you know from the margin you know no change to the improvement is us monetizing and leveraging different products out there and putting the AD demand against the corresponding products that would create the best benefit to Sirius XM, but overall.

Speaker Change: The optimization out there and you know the cost side is really what's are provided in the prior margin right now.

Kevin: Yeah and and.

Jennifer C. Witz: Yeah, and I don't know that I'm prepared to really talk about margins necessarily in terms of unit economics for on and off platform, but overall, in terms of how we monetize on the ad side of the business, you know, we have very strong RPM on Pandora, which we reported at $91, Tom mentioned earlier, and we continue to see really healthy rates there. And I'd say even stronger on the podcasting side of the business. As you know, there's a lot of great growth dynamics there. And, you know, we continue to look for opportunities to improve sell through, obviously, and programmatic solutions.

I don't know that I'm prepared to really talk about margins for necessarily in terms of unit economics for them on and off platform, but overall in terms of how we monetize them on the AD side of the business.

Kevin: You know we have very strong RPM on you know Pandora, which we reported at $91. Tom mentioned earlier I and you know continue to see really healthy rates, there and I'd say, even stronger on the Pakistan side of the business I as you know, there's a lot of great growth.

Kevin: Next there and you know we continue to look for opportunities to improve sell through obviously and and programmatic solution.

Speaker Change: Got it thank you.

Operator: Thanks, everybody, for participating today. We'll speak to you in the coming weeks, of course.

Speaker Change: Yeah.

Speaker Change: Thanks, everybody for participating today will speak to you in the coming weeks of course.

Operator: This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you.

This concludes today's conference you may disconnect your lines at this time and thank you for your participation.