Q4 2024 Sirius XM Holdings Inc Earnings Call
Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad.
Speaker Change: This conference is being recorded.
Speaker Change: It is now my pleasure to introduce Hooper Stevens senior Vice President of Investor Relations and finance.
Speaker Change: Hooper you may begin.
Speaker Change: Thank you and good morning, everyone welcome to Sirius XM fourth quarter and full year 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 your questions. During the Q&A portion of this call.
Speaker Change: I would like to remind everyone that certain statements made during the call might be forward looking statements as the term is defined in the private Securities Litigation Reform Act of 1995.
Speaker Change: These and all forward looking statements are based upon management's current beliefs and expectations and necessarily depend upon assumptions data or methods that maybe incorrect or imprecise such forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially for more information about those risks and uncertainties. Please view series six times, the SEC filings and today's earnings.
Speaker Change: Release.
Speaker Change: 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 and the Liberty media transaction. Additionally, we have posted a <unk>.
Jack: Mentor, he presentation to our Investor Relations website for your convenience with that I'll hand, the call over to Jack Thank.
Jack: Thank you Hooper and good morning, everyone. Sirius XM had a strong fourth quarter to cap off 2024 are entering 2025 with a focused strategy clear goals and defined path to addressing both the challenges and opportunities ahead for 2020 for Sirius XM delivered on our public guidance with $8 $7 billion in total.
Jack: Revenue $2 $73 billion in adjusted EBITDA, and just over $1 billion in free cash flow. Additionally, we achieved significant subscriber improvements year over year, driven by a strong back half with better than expected metrics across both the acquisition and churn are offering remains unmatched in the market.
Jack: And our dedicated subscriber base continues to choose our service to soundtrack their day as we announced in December we have sharpened our strategic focus on Sirius XM strengths and Differentiators with an emphasis on robust margin free cash flow generation and capital return. While we are still in early stages, we have already made progress across.
Jack: Each of our key areas as we look to continue to enhance our subscription offering leverage the strength of our AD business and accelerate efficiencies and optimization across the organization and our cost structure. That's.
Jack: Let's begin with our subscription business, where we are doubling down on our core automotive segment. We added approximately 150000 self pay subscribers in the fourth quarter and ended the year down less than 300000, a significant improvement over 2023 our three year OEM subscription program is gaining momentum with tens.
Jack: Thousands of equipped vehicles sold in 2024 with a three year plan and the launch of our service and Tesla and Libyan models in December leveraging our newest 360 L technology and our streaming only implementation allowed us to quickly scale to over 2 million vehicles already on the road in 2025, we will be making adjustments.
Jack: That will both allow for a more seamless customer experience and improve the overall health of our business in the long term.
Jack: Include improvement in online customer engagement, such as click to cancel and a reduction in marketing to higher cost higher churn audiences as well as shortened introductory offers immediately following automotive trials and new lower priced package options.
Jack: While we expect some of these changes will have one time impacts on our subscriber results, particularly in the first half of this year. We believe these actions will allow us to improve customer satisfaction and maintain our strong cash generation and support the continued long term health of the business apart from these shifts we would expect our subscriber results in 2025.
Jack: Could be slightly better than what we saw in 'twenty 'twenty four streaming remains critical to our future as we look to expand reach and engagement for our core subscribers, who increasing increasingly consume Sirius XM content, both in and outside the car.
Jack: <unk> 360, L, which will account for roughly half of our new car trials. This year and the recent Tesla and Libyan launches, which are IP implementation streaming plays an increasing role for our business in the vehicle.
Jack: Extension of this we are developing features and technology for our digital products such as the in App channel Guy to function as a companion to our in car offering and better serve the 90% of customers who use our embedded service.
Jack: Following the launch of our new App, we saw streaming listening steadily increase throughout the year, reaching a high in December we're seeing strong engagement with the added features that streaming both in select 360 L vehicles as well as in App allows our subscribers to enjoy this includes our extra channels, where we continue to see left in weekly Annapolis inertia.
Jack: Up 36% in Q4 year over year as well as audio on demand, including podcasts, which achieved significant double digit growth across both platforms and with an average of just under two listeners per subscription the app not only offers a way to extend listening outside of the car. It allows multiple members of the household to enjoy our service.
Jack: The same time, delivering even more value to our core subscriber base, but of course premium exclusive curated content remains the heart of our business and we are focusing our investments in this area on talent and collaborations that resonate with passionate audio consumers sports for example remains a major differentiator for us.
And we were pleased to continue to welcome new expert commentators across golf tennis football and more in the past few months in support of our lives play by play right. We also recently added more live event coverage by signing an agreement to broadcast matches from T. G. L. The new Primetime Golf League led by Tiger Woods and worry about.
Jack: Alright within music, we're continuing to deliver the unique curated experiences our subscribers love this quarter, we added to our subscriber favorites seasonal holiday lineup with an all new channel led by Jimmy Fallon and we launched How's life, Our new interview series from John Mayer Johns channel curated Napa genre.
Jack: But by mood time of day and the artist one ever evolving interest in musical case is a great example of the way our service allows fans to connect with the musicians they love an entirely new way.
Speaker Change: At the intersection of music talk in Podcasting earlier. This week, we announced two new channels as part of our agreement with Alex Cooper and the unwell network.
Speaker Change: <unk> live shows and curated music. These channels are a great example of how we can leverage the massive reach of a podcast such as call. Her Daddy to drive interests to Sirius XM with programming exclusive to our service podcast thing is also key to how we leverage the strength of our advertising business. In addition to the launch of our agreement with on well and.
Speaker Change: Momentum around smart less in Q4, we extended and expanded our relationship with Mel Robbins and kicked off with Rotten Mango creator Stephanie's two and earlier this month, we announced a new podcast from sports commentator Katie Nolan as well as an advertising and distribution agreement with fantasy football, allowing us to increase our share.
Speaker Change: The AD dollars flowing into sports media today.
Speaker Change: The expansion of our podcast that work in 'twenty 'twenty four combined with our strong streaming footprint solidifies our position as the number one digital AD supported audio player in North America and enables us to tap into the demand we're seeing from the market in 2025 with more and more advertisers both entering the space and increasing their investment.
Speaker Change: Throughout 'twenty 'twenty four we on boarded a variety of new advertisers into podcasting and now have more than 80% of our top clients investing in podcasting, leading to 24% year over year growth in podcasting overall in 'twenty and Q4, 'twenty 'twenty four meaningfully contributing to the total 'twenty 'twenty four AD sales revenue.
Of $1 $8 billion, our open ecosystem approach supports both creators and advertisers who want to reach fans across all platforms with more of our deals also beginning to incorporate social and video and within AD Tech where ads with platform revenue was up 18% year over year and 24, we are not.
Speaker Change: It only welcoming more publishers into our marketplace. We are also seeing key measurement of technology leaders put an emphasis on audio and try 25 as an area of opportunity addressing the gap between time spent and media investment.
Speaker Change: Turning now to another key element of our strategy increasing efficiency across the entire business. In addition to the focus on our core audience with regards to both our marketing and content spend we are right sizing our product and technology costs. Following a period of high investment optimizing our organizational structure and are working diligently to achieve the <unk>.
Speaker Change: Additional target of $200 million in annualized savings as we exit 2025, Tom will speak to these initiatives in greater detail in a moment as we noted in December are trying 25 guidance reflects the underlying strength of our platform our increased strategic focus on our differentiators and the actions we are taking to maximize efficiency.
Speaker Change: All of which will drive improved free cash flow. It also accounts for the short term impact of the changes we are making to the subscriber business as well as the broader work we are doing to improve the long term health of the business, helping us achieve our goals is Wayne thoughts and our new Chief operating officer, who is now overseeing both our product and.
Speaker Change: G group as well as key commercial functions. Most recently chief business Officer of ADT Wayne has incredible experience, leading thoughtful and swift change by unifying these areas of our business. We are ensuring a more rigorous ROI based approach to all current and new initiatives and will more quickly execute upon updates to our.
Speaker Change: Business that will drive subscriber result, you should expect to hear from Wayne on our next earnings call.
Speaker Change: We remain steadfast in our belief that our offering from our exclusive content to our leading in car position holds a unique and valuable place in the broader entertainment ecosystem by sharpening our focus we are bolstering the overall strength of our business in the long term, while continuing to deliver for both our listeners and our stockholder.
Tom Berry: I will now turn it over to Tom.
Tom Berry: Thank you Jennifer and good morning, everyone as Jonathan mentioned, we closed the year on an encouraging note delivering strong financial and subscriber results that met or exceeded our goals.
Tom Berry: We achieved several key milestones over the course of the past year that strengthened our long term foundation, while sharpening our focus on the core business.
Tom Berry: Completing the Liberty transaction simplifies our equity structure and removed uncertainty at the same time, we successfully executed targeted efficiency initiatives, achieving our full year goal of $200 million in gross savings.
Tom Berry: These efforts enabled us to maintain strong margins, while we reinvested a significant portion of these savings and business priorities our commitment to the core business was evident in the way, we deepened our agreements with automakers and dealers. These relationships enabled us to introduce a three year subscription as a dealer paid option.
Speaker Change: Rodney at our reach and unlocking new opportunities for audience growth.
Speaker Change: We leverage enhanced data capabilities to improve trial conversions expand subscriber acquisition channels and refine marketing capabilities driving higher engagement with our core subscriber base and strengthening our used vehicle reach innovation continued to be a cornerstone to our strategy.
Speaker Change: The opening of our New Tech Center in Ireland was another bright spot this past year, creating a foundation for advancing product development and driving technological capabilities in a financially prudent manner.
Speaker Change: Combined with an expanding content slate and enhanced subscriber personalization. These efforts solidify our position at the forefront of an enriched in car and mobile experience.
Speaker Change: Turning to our full year results, we delivered a steady revenue of $8 $7 billion coming in ahead of all recent guy until approximately 865 billion.
Speaker Change: Subscription revenue reached $6 6, billion% to 4% decline from $6 9 billion in 2023.
Speaker Change: Advertising revenue held steady at $1 8 billion.
Speaker Change: Full year adjusted EBITDA was $2 seven 3 billion and free cash flow was 1.02 billion, both aligning with our 2020 for guidance.
Speaker Change: In the fourth quarter, we generated $2. One 9 billion in revenue subscription revenue totaled 1.63 billion and advertising revenue came in at $477 million adjusted EBITDA for the quarter declined by approximately 4% year over year to 688 million net income was 287 million Mark.
Speaker Change: 26% increase compared to the prior year with an earnings per common diluted share of 83 cents.
Speaker Change: Free cash flow continue to be back half weighted reaching $516 million in the fourth quarter up from $402 million in Q4, 2023 contributing to full year free cash flow of 1.015 billion or $2 80 per share free cash flow per share in the fourth quarter was $1 44.
Speaker Change: 28% from $1 13 in the fourth quarter of 2023 2024 as free cash flow was reduced by several items that won't recur in 2025, and beyond including onetime transaction costs Liberty overhead and timing differences in tax payments between the former Sirius XM and Liberty.
Speaker Change: I have a follow up to our multiyear capex guidance as a result of the timing of the successful Sx nine launch moving from November to December $19 million of spend shifted from late 2024 to early 2025, and Additionally, we had $20 million of satellite milestone payments for <unk>.
Speaker Change: And that's X M 12 that shifted from 2024 into 2025.
Speaker Change: This was already anticipated in our full year 2025 free cash flow guidance of 1.15 billion.
Speaker Change: Turning to the segments. The Sirius XM segment, we generated $1 6 billion of revenue for the fourth quarter and $6 6 billion for the year.
Speaker Change: All year subscriber revenue declined by 4% year over year, primarily driven by slower subscriber growth, which was impacted by challenges in conversion rates.
Speaker Change: Because your revenue remained relatively flat with a modest 1% year over year decline attributed to continued softness in the broadcast advertising market.
Speaker Change: Despite these headwinds we saw stronger than expected subscriber performance fourth quarter self pay net additions were 149000, an increase of 18000 versus the fourth quarter of 2023 and for the full year net additions were down 296000, an improvement over 2023.
Speaker Change: <unk> of 149000, or <unk> 33 per cent.
Speaker Change: This performance exceeded expectations and highlights the strength of our product offering. Additionally, churn remained low in the fourth quarter at one 5%.
Speaker Change: For 2020 for Sirius XM, our pool was $15.21 down 35 cents year over year, driven by a higher proportion of discounted subscribers and fewer full priced subscribers.
Speaker Change: Since the rate increase also contributed as price remained stable, while the subscriber mix shifted while this impacted our pool and subscription revenue it aligns with our strategy to expand audience reach through more diverse pricing and packaging.
Speaker Change: Sirius XM gross profit for the fourth quarter was 966 million compared to 1.14 billion in Q4 of 2023, yielding a 60% margin down slightly by about one point for the full year gross profit totaled $3 9 billion, maintaining a 60% margin in.
Speaker Change: In the Pandora in all platforms segment total revenue for the fourth quarter reached $568 million with 2.15 billion reported for the full year advertising revenue came in at $434 million in the quarter slightly down from 436 million in Q4, 2023, reflecting evolving advertising.
Speaker Change: Drugs.
Speaker Change: Podcast he has seen a significant rise in listening and strong financial performance in 'twenty 'twenty four for the full year with revenue growing 12% year over year total programmatic revenue in 2024 increased by 8% while podcast programmatic revenue saw an impressive 39% growth compared to 2023 seven.
Speaker Change: <unk> gross profit for Q4 was $192 million, reflecting a 34% margin consistent with the prior year for the full year gross profit totaled 705, million% to 33% margin, representing a 3% improvement year over year.
Speaker Change: During the fourth quarter, we completed a license transfer of 10 megahertz in the WCS C and D blocks strategically positioned around our existing spectrum holdings.
Speaker Change: So Sirius XM now possesses a total of 35 megahertz of contiguous spectrum licenses. This acquisition enhances our spectrum portfolio allows for greater flexibility and initiating new services and underscores our commitment to serving the public interest portion of this additional spectrum will be allocated to <unk>.
Speaker Change: <unk> FEMA and other agencies and their public safety initiatives. We continued our commitment to returning capital to stockholders distributing $92 million in Q4 through dividends and initiating share buybacks. After our strategic announcement in December which has resulted in $18 million in buybacks to date.
Speaker Change: For the full year 2024, we returned $400 million in dividends to the shareholders inclusive of payments to our former parent company. As we look ahead to 2025, we plan to remain opportunistic with share buybacks. We continue to target long term leverage in the low to mid three times range and ended 2024.
Speaker Change: Net debt to adjusted EBITDA ratio of three seven times.
Speaker Change: Looking ahead, we remain committed to the strategic direction outlined late last year and are reiterating our 2025 guidance projecting revenue of approximately $8 5 billion adjusted EBITDA of $2 6 billion of free cash flow of about 1.15 billion rigor.
Speaker Change: Regarding cost savings, we are targeting an incremental $200 million in savings exiting 2025.
Speaker Change: Our efforts include optimizing marketing expenses with a stronger emphasis on subscriber profitability, particularly in our Sirius XM streaming business. Additionally, we are implementing significant reductions in both operating and capital expenditures driven by the launch of FX 79 last year and a renewed focus on our product and technology.
Speaker Change: The roadmap under Wayne's leadership since December. Furthermore, we remain committed to identifying and executing savings in other areas, such as customer service and general and administrative expenses.
Speaker Change: The efforts progress we will continue to provide updates throughout the year with that I'll turn it over the operator for Q&A.
Speaker Change: Thank you well now be conducting a question and answer session.
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Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you and our first question is from the line of Cameron Messroom Perone with Morgan Stanley. Please proceed with your questions.
Speaker Change: Thank you.
Speaker Change: Jennifer I know you touched on.
Speaker Change: Net add kind of outlook a little bit for this year, but I was wondering if you could elaborate a bit just in terms of some of the puts and takes that might dictate where you shake out for 25, even just directionally and then.
Speaker Change: For either one of you guys on the guidance for adjusted EBITDA This year yeah.
Speaker Change: You kind of underwrite.
Speaker Change: I am worst decline this year than in 'twenty, four and I'm wondering as we think through that given the upcoming pricing action in a similar run rate of cost savings. This year relative to 'twenty four just curious what might be preventing more does benefits from flowing through in terms of the decline in 'twenty five relative to what you guys are already.
Speaker Change: Well to execute on this.
Speaker Change: This past year.
Speaker Change: Sure. Thanks Cameron.
Speaker Change: I guess I'd start on net adds just with a quick review of where we landed in 'twenty. Four we were really pleased with the trial volume I E.
Speaker Change: And then that in part helped offset the pressure we've seen on conversion rates and we just had much better retention across both voluntary and non pay churn.
Speaker Change: And then we saw additional positive impacts from podcast plus our OEM three year subscriptions and in general improved used car ownership visibility and AR in Q4, specifically, we really saw better than I expected our performance across virtually every line in acquisition and retention. So yeah. That's a good back.
Speaker Change: Dropped for 'twenty five we do have some one time impacts that we highlighted earlier from you know click to cancel a rolling in shorter term post trial promotions and of course, our pullback in streaming marketing I and most of these will be rolling through in the first half of the year and we'd expect the impacts of that.
Speaker Change: I used to be about a couple of hundred thousand subscribers. So outside of these I still expect to be slightly better year over year in terms of self pay net adds and you know just broadly speaking I'd say you know some similar seasonality as we've seen in the last couple of years, among the quarters and then Tommy Unaddressed EBITA gosh, Yeah Cameron.
Speaker Change: Yeah, Jennifer talked about the revenue side, and obviously, we're calling down the revenue for the full year, but I think when you look through.
Speaker Change: The variable and fixed costs as you go down there is obviously the initiatives, we're doing to optimize our cost structure and enhance our efficiencies and theres. Some level. Some offsets of you know things like higher Sac because of the gen. Eight transitions. So so we're looking at it we're more focused on the overall margin.
Speaker Change: Generally it's the revenue side and that's offset by the a part of the cost savings.
Speaker Change: Very helpful. Thank you both.
Speaker Change: Our next question is from the line of Barton Crockett with Rosenblatt Securities.
Speaker Change: With your questions.
Speaker Change: Okay, great. Thank you for taking the questions I was wondering if you could talk a little bit about.
Speaker Change: How you see the environment for.
Speaker Change: The funnel of gross additions into the upcoming year is your sense that Santos kind of improve let's say used car and the new car markets or.
Speaker Change: Is there still pressure down a little bit of color would be helpful.
Speaker Change: Sure.
Speaker Change: Saar last year I think finished at about 15, eight but of course, the fourth quarter was really strong on new car sales and you know I think everyone's waiting a little bit for what might happen on tariffs I. My personal feeling is that yeah. The automakers are going to do everything they can to the extent those go in place.
Speaker Change: To meet U S consumer demand for vehicles, but I used cars has been an increasing part of our I R trial, a trial starts and you know we're at about 50% and that's with the ones that recapture at point of sale through dealerships and we've increase.
Speaker Change: Singly added partnerships, where we get information on a used.
Used car ownership changes and been able to put out.
Speaker Change: You know trial offers and programs in place there as well too.
Speaker Change: To increase you know our yields through the funnel. So so I feel good about you know the the auto market in general of course, you know well, we'll keep a close eye on our tariffs overall, but a strong out of businesses is good for our business.
Speaker Change: And then if I could follow up you were mentioning that you've had some pressure on conversions, which you know what's the right number that you guys used to report and have it for a few years now, but I was wondering if you can elaborate on what the pressures of sourcing the pressure is.
Speaker Change: And how you see that kind of turning around over the course of this year.
Speaker Change: Hi, Barton, it's it's similar to what we've seen in past years with you know the pressure coming from newer trailers and younger consumers that are entering the automotive funnel and some of the competition, we see from other services coming through our projection technology into the car but.
Speaker Change: And we're very focused on stabilizing and conversion rates and excited about sort of the broad changes were rolling through this year across products in terms of the content and features coming and expanded 360 L. Rollouts, a pricing and packaging with a lower entry price and you know at least in our testing better ultimate.
Speaker Change: Retention post trial in post our initial promotion post trial and better marketing capabilities right with all the data coming back on 360 L and I I think we continue to see better conversion rates on assisted especially on first time trailers are with 360 L versus non 360.
Speaker Change: Ill more features are rolling out of course, we've expanded our reach with a Tesla and review on a which is also going to help improve the overall funnel eye and look I think some of the metrics. We look at are going to be different because you know with our pricing and packaging strategy. It's really.
Speaker Change: I N effort to improve post trial retention after the initial offer and so that'll show up again and better churn as opposed to necessarily a better conversion rates, but you know ultimately a better yields for the business.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: Our next question is from the line of Jason Bazinet with Citi. Please proceed with your questions.
Jason Bazinet: I just had a quick question on the incremental cost saves that you guys are going after it is the right way to think about it that most of those savings will be reinvested in the business like the last batch of cost savings or is this more focused on potentially generating more near term EBITDA and cash flow.
Jason Bazinet: So our approach on the the exiting 2025 to 200 million in the ongoing initiatives, we're looking to optimize the overall efficiency of the company and so we're looking across all areas right. Now we're really focused in the near term on the roadmap and the product cost as well as optimizing our marketing.
Jason Bazinet: Strategy, we will look as we go forward will be a I think it will be more flowing to the bottom line, but I will say theres also some level of investment as we redirect and work on our product roadmap going forward. So I would say so you'll see more going to the bottom line, but I would still say, we will be investing in the business.
Speaker Change: Yeah, and I'd, just add that a day guidance, we provided on satellite capex as outside of those cost savings. So that's incremental improvement to free cash flow over the next few years.
Jason Bazinet: Understood. Thank you.
Speaker Change: Thank you. Our next question is from the line of Kirk on the morale with Evercore ISI. Please proceed with your question.
Kirk: Good morning, guys. Thanks for taking my questions. One on net adds and one on advertising if I could first Jennifer sorry to follow up on the net adds question from earlier, but I just wanted to better understand the expectations for 2025.
Speaker Change: Called out that the first half, we'll see a couple of hundred thousand pressure.
Speaker Change: Pressure from the adjustments that you're making but that the full year, we would probably still be up year over year I know theres some seasonality.
Speaker Change: Seasonality, but beyond that is there any more you can share on the expected ramp in the back half of the year.
Speaker Change: And then second I was hoping to get your latest thoughts on the AD market in terms of advertiser demand and pricing you highlighted expanded podcast offerings, you know double digit growth in programmatic podcast revenue.
Speaker Change: Strengthened our capabilities, how do you see these driving benefits throughout 2025.
Speaker Change: And any initial reads that you could share inside the quarter on the AD side.
Speaker Change: So it would be helpful. Thank you.
Speaker Change: Okay. Thanks, Hock on so yeah, a little bit more maybe better clarity on the comments I made on net adds so we would expect net adds to be negative. This year and then but for these one time impacts are we would be slightly better than last year is negative.
Speaker Change: Results. So these we believe that the impacts of things like this correction in streaming our marketing and you know one time click to cancel those one time impacts will roll through primarily in the beginning of the year through the first half and you know that means we would expect to have you know sort of a <unk>.
Speaker Change: Similar trajectory to last year, where the first half was definitely negative and not the second half, where we'll wait to give more clarity on that but overall the net adds would be worse than last year because of these one time impacts, but again without them, we still feel good about the trajectory of the underlying business.
Speaker Change: An improving year over year.
Speaker Change: Oh on the adds you're right I'm, sorry, yes sure on the AD revenue side, you know we closed the fourth quarter was 477 million. So we had a solid fourth quarter and overall the four year full year was $1 8 billion in line with what our guidance or what our internal targets were in line with the prior year you know what we're seeing in the market space.
Speaker Change: As you know podcasts as we've outlined we're up 24% in Q4 and up 12%.
Speaker Change: For the full year, a lot of that has related to the investments in the strategic content that we've you know we've invested in the last year. The Alex Kuiper unwell that work you know smart list, Mel Robbins and even recently the fantasy football when you look at each one of those I think we're seeing early positive results.
We look for a podcast seem to continue and a lot of those will end up with full year benefit in 2025, and then programmatic as you know was very strong in the fourth quarter up 38% and so overall, we think advertising in 2025 will be up slightly yeah, I'd, just add on to that and what Tom said.
Speaker Change: About podcast James So we've seen great demand for the new podcast. We've added you know in the back half of last year with the unwell network caller Daddy and smart less and you know, we've just announced fantasy footballers and I you know Stephanie Sue with Rotten Mango and and there are more deals I think to be done there and.
Speaker Change: With improving margins and.
Speaker Change: But there's also a way to capture like our sell through is very strong there and and pricing has been very strong.
Speaker Change: And there's a way to capture I think more of demand are you know from the advertisers by selling through the reach these creators have in video and social so that's a big effort for us. This year, we've been improving our data and identity platforms are working more closely with third party.
Speaker Change: Measurement providers are to be included and things like N and M models and other methods methods to better allow advertisers and clients to assess RLI and you know, we're just going to make it easier and more efficient for smaller advertisers to self serve on our platform and buy across our networks are we launch.
Speaker Change: Synthetic voices.
Speaker Change: We have a lot of smaller advertisers taking advantage of that and you know we'll continue to leverage AI to provide integrated buying features and even help advertisers just automate their media planning to build out you know full media plans and leveraging.
Speaker Change: <unk> AI capabilities. So so I think we'll see modest growth in AD revenue this year and and we've got a lot of nice tailwind in the portfolio overall.
Speaker Change: That's perfect. Thank you so much.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question is from the line of Stephen <unk> with Goldman Sachs. Please proceed with your question.
Speaker Change: Great. Thank you for taking the questions two if I could first one arpino for Jennifer I imagine strategy to refocus the business could have a natural uplift in our town overtime as you focus less on the promotional side of the market beyond that I was just curious if you could update us on your on your view around the opportunity to take price over the next 12 months on the Saturday.
Speaker Change: Syed.
Speaker Change: Maybe you could expect that the impact from that.
Speaker Change: And then on the advertising business, maybe just a follow up on off platform. You mentioned more deals to be done could you, perhaps elaborate a little bit more on how much more inventory I think is out there either on the podcast side or with third party audio partners to increase that inventory and then ultimately to sell through.
Speaker Change: And then the sizing of that and then we'll get to execute against in 2025 that'd be helpful. Thank you.
Speaker Change: Sure I'll, let Scott take the potash question and of course in a minute I on pricing and packaging with three goals alright, its enhance value to support price increases across the base capture more demand and reduce the use of our promotional plans in acquisition and retention and so we.
Speaker Change: Started in the fall with making contact more widely available across our subscriber base. So pushing down the availability of talk in Howard and live sports to Ah or lower price packages and also allowing all subscribers to access artist stations in the <unk>.
Speaker Change: And in certain a 360 L implementations, we're providing streaming concurrent concurrency to platinum subs and we've added things like Walmart applause E. S. P N plus to really just drive more value among our full price and promotional plan subscribers and we're looking to.
Speaker Change: Do that obviously ahead of rate increases so we rolled that out in the fall we've been very pleased with the engagement of our subscribers with this newly available content and we're positioning for a rate increase in March So I would expect at least in terms of the ARPA trajectory this year.
Error that you'd see improving trends after the first quarter.
Speaker Change: So the second piece of this is about opening up more demand we've talked a bit about the 10 dollar entry price for in car and again its an entry price there are add ons on top of that we're seeing a nice take up and those add ons are this is trial or is rolling off their first post trial with a promotion who've already selected.
Speaker Change: Their full price package and that's just starting to happen, we rolled out that new pricing and packaging strategy in the fourth quarter on a significant number of trials and we're starting to see them roll off Ah trial and onto their promotional plan after that again they'll roll to these new.
Speaker Change: New prices and packages and we do believe that that's going to drive improved retention overall and also on full priced packages and then the third piece is how do we find ways to reduce our reliance on promotional plans and this new pricing and packaging strategy given that.
Speaker Change: It does improve retention in full price plans will be a significant part of that and over time, we'll look to use. These packages also in retention at the saved ask as well. So that's that's a key part of our pricing and packaging strategy and of course are continuing to drive more engaged.
Speaker Change: Across the base with broader content.
Speaker Change: With more access across devices and more households, listening obviously supports the value proposition.
Speaker Change: Got you and I'm talking about sure.
Speaker Change: So we feel pretty good where we are as most of you know we started just growing this from scratch and we now have for the top 10 in eight of the top 50 in podcasts.
Speaker Change: As we've discussed in previous calls the goal is that it has to be economically.
Speaker Change: Something that we can live with but also we're trying to grow the serious business. So we started with just straight podcasts and now we've evolved all the way through where when you look at on well, there's two serious channels, there and you know Mel Robbins Who's doing a show and.
Speaker Change: And and others fantasy football so.
The one thing that we are now in a position no podcast will come on the market without it being you know presented to us.
Speaker Change: So the demand.
Speaker Change: We will be there over time the issue is a lot of the big ones. You know are on existing deals and then they roll off and they come to us and if they come to us with a smart deal we're happy to do it and and also look at what we can do for serious and all of that if they come with an aggressive deal.
Speaker Change: That doesn't make sense and there's no. We're just not going to do it. So it's really just up in the air as to when the bigger ones roll off and then there are young talent like Stephanie see what others that we're looking to get in earlier and try to grow and be with us along the way on that.
Speaker Change: In addition to just adding podcast to the portfolio I, Yeah. As we mentioned we're building out more multichannel opportunities for advertisers to come in access obviously the audio listening the video listening, we have improved targeting and and our indicators on Youtube to support that and.
Speaker Change: Across their social says well.
That's very helpful. Thank you both.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Steven Cahall with Wells Fargo. Please proceed with your questions.
Speaker Change: Thank you so Jennifer just to go back to subscriber color you know as we kind of think about the first half of the year and the way you talked about those one off items should we expect churn to tick up it was really solid in Q4, but I'm guessing between streaming only and quick to cancel that had been that you got in the first half of the year and then should we expect that to improve.
Speaker Change: In the second half of the year as you start to get through some of those initial issues and I'm wondering if you have kind of a broader outlook on churn, especially cause vehicle churn I don't know, if it's going up or down in the underlying environment.
Speaker Change: And then just on a you know you talked about Tesla and revealing.
Speaker Change: I think those are at base subscriber engagement rather than satellite base. So is that true and then how do you think about you know some of the advantages that you might have in marketing to the App based environment or overall, how you think about subscriber acquisition and do you think.
Speaker Change: About the EV market will be a meaningful piece of subscribers longer term or is your focus on more of this in car satellite base is that going to be more at the margins. Thank you.
Speaker Change: Sure and I think that churn question is logical based on the commentary we've provided so.
Speaker Change: The idea that we have this a one time impact from galactic.
Speaker Change: I'd like to cancel and Ah that might create some pressure on churn in the first half I think that's an appropriate takeaway and and yes, we would look to see improvements on that in the second half of the year are in in terms of the Evs.
Speaker Change: So their streaming base, but they're embedded which is a little different than I guess, an app through obviously projection like car play our Android auto and it is from a customer standpoint, there isn't really a difference from our 360 all implementations are because we still deliver.
Speaker Change: You know the the breadth of content and the feature set that we went through 360 L. A the go to market is slightly different with Tesla in particular these are opt in trials and we're seeing very strong engagement when customers opt into the trial.
Speaker Change: But that go to market will create ultimately a slightly different profile in terms of conversion to pay one of the areas I'm. Most excited about is of course, a lot of our households have Tesla has in their garage and we're seeing a nice take up in terms of trial take rates among our current.
Speaker Change: Households, and looking to add subscriptions and Tesla with that embedded service and you know we've seen nice I progression in radian as well.
Speaker Change: And the conversion rates, it's early to say because we just rolled them out but based on how customers are adding follow on plans in trial I think that will ultimately look like some of other our other premium OEM models, but really excited to have these in place not only because of the expanded reach but also.
Speaker Change: So because of their receptivity navies in general to over their updates and being able to add new features and I you know present different offerings to customers over time. So yeah. It's an ongoing part of our our subscriber acquisition strategy and it really is.
Speaker Change: Cited about having that presence among those to evs.
Speaker Change: Thank you.
Speaker Change: Thank you our next and final question is from David Joyce with Seaport Research Partners. Please proceed with your question.
David Joyce: Thank you two questions. Please first if you could update us on where targeted advertising is on the 360 L. The product and what sort of a contributor that could be in 2025.
David Joyce: And then secondly, it looked like there were some significant efficiencies in sales and marketing I think that was reflecting you're taking your foot off the gas pedal with the streaming only product, but what should we think about the spending trajectory from here on sales and marketing. Thanks.
David Joyce: Yeah, I'll, let Tom take the second one in terms of our opportunity for Sirius XM ads offerings.
David Joyce: Two pieces to that we've got a free preview in market on select vehicles and that will expand nicely. This year. Among a couple of other Oems and again, that's a reduced channels that are 40 channels starts with broadcast ads will be able to add the targeted AD capabilities over time, there and leverage is $3 60.
David Joyce: All delivery.
David Joyce: And I also believe and I think the main priority. There again is is keeping that service open and active so that we have opportunities to upsell into the subscription service over time and then the other opportunity I think that will be increasingly important to us is a low cost.
David Joyce: Subscription with ads.
David Joyce: That as we continue to find opportunities to take price on the you know the the overall subscriber base that we're looking to find methods to create lower price points for customers that may be more cost conscious and are willing to.
David Joyce: I hear ads frankly in there and their experience do you see this very successfully done obviously among the video streamers and so we believe we have an opportunity to start to test into that this year and ultimately provide a pretty broad access to our subscribers and process.
David Joyce: It's two and AD supported a subscription and that will come with targeted ads as well, especially in <unk> and 360 L and dress sales marketing yeah, David So yeah, you're correct. We are you know we reduced.
David Joyce: Reduced obviously sales and marketing this year as we've continued to look through the optimization and also you know as we've re pivoted in in December and look more closely at the streaming and the level of marketing that supports that so when you look at it. We believe in 2025 will continue to look to optimize to better leverage.
David Joyce: The Salesforce tool that we have just recently put in and I think through that we'll continue to see.
David Joyce: Better returns, but I would say you know that is an area of focus that as we work through our product roadmap and Wayne gets here in defense a little bit more time, we'll look at better integration across the platforms.
David Joyce: Great. Thank you very much.
David Joyce: Thanks, David and thanks, everybody for participating today, we will speak to you in the near future take care.
Yes.