Q4 2024 QVC Group Inc Earnings Call

February 27, 2025

Telephone.

As a reminder, this conference will be recorded February 27th.

Shane: I would now like to turn the call over to Shane clients team Senior Vice President Investor Relations. Please go ahead.

Shane: Thank you and good afternoon before we begin we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Form 10-K filed by our company and QVC with the SEC.

Welcome to the QVC group 'twenty 'twenty four Q4 earnings call.

During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at.

Shane: These forward looking statements speak only as of the date of this call and QVC group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in QVC group's expectations with regard there to or any change in events conditions or circumstances upon which any such statement is based.

Bill Wafford: In terms of cash balances, QVC Group had total cash of $905 million, of which $297 million was at QVC Inc., $204 million was at Liberty Interactive LLC, and $269 million was at QVC Group Inc. Our leverage ratio as of December 31, 2024, as defined by the QVC revolving credit facility, was 3.1 times, compared to our maximum covenant threshold of 4.5 times. Please note that covenant OIBDA includes adjusted OIBDA of QVC Inc. and Cornerstone. This February, we paid off the remaining $585 million of QVC Inc.'s 4.45% 2025 senior notes at maturity, funded with our revolver and cash on hand.

At that time, if you have a question. Please press star one on your telephone.

As a reminder, this conference will be recorded February 27th.

Speaker Change: I would now like to turn the call over to Shane Feinstein Senior Vice President Investor Relations. Please go ahead.

Shane: Please note that we have published slides to accompany the earnings release on today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA adjusted OIBDA margin free cash flow and constant currency information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary note and schedules one and two can be found in the earnings press release.

Speaker Change: Thank you and good afternoon before we begin we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Form 10-K filed by our company and QVC with the SEC.

Shane: Issue today or our earnings presentation, which are available on our website.

Speaker Change: These forward looking statements speak only as of the date of this call and QVC group expressly disclaims any obligation or undertaking so does that mean any updates or revisions to any forward looking statements contained herein to reflect any change in TBC group's expectations with regard there to or any change in events conditions or circumstances upon which any such statement is based.

Unidentified Speaker: Today speaking on the call we have QVC group, President and CEO, David Rawlinson QVC Group CFO, Bill Wafford, and QVC Group Executive Chairman, Greg Maffei, now I'll hand, the call over to David.

Bill Wafford: We affirm that our debt level is manageable and our current cushion is sufficient in relation to the 4.5 times maximum net leverage covenant threshold stipulated in our credit facility. Finally, as previously mentioned, we received a non-compliance notice from Nasdaq in June 2024, due to our closing bid price trading below Nasdaq's minimum requirement of $1. On 2 December 2024, we transferred our stock from the Nasdaq Global Select Market to the Nasdaq Capital Market, and an additional 180-day calendar period began to regain compliance. As part of this extension, we have committed to effect a reverse stock split, if necessary, to remain on Nasdaq after the 180-day period. Now I'll turn the call over to Greg.

David Rawlinson: Thank you Shane and good afternoon to all thank you for joining us and for your interest and the QVC group I'll begin today with a recap our fourth quarter results then speak to the conclusion of 'twenty 'twenty, four and project atoms before going deeper into our growth.

Speaker Change: Please note that we have published slides to accompany the earnings release on today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA adjusted OIBDA margin free cash flow and constant currency information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary note and schedules one and two can be found in the earnings press release.

Unidentified Speaker: <unk> announced at Investor Day.

Unidentified Speaker: Total revenue declined 6% from the fourth quarter. Our top line performance saw continued volume pressure similar to the third quarter driven by linear TV declines a cautious consumer environment and meaningful distractions in our TV viewership due to headline grabbing.

Speaker Change: If you today or our earnings presentation, which are available on our website.

Speaker Change: Today speaking on the call we have QVC group's president and CEO, David Rawlinson QVC Group CFO Bill Wafford MTBC Group Executive Chairman, Greg Maffei, now I'll hand, the call over to David.

Greg Maffei: Thanks, Bill. So in 2024, we had a successful execution of many elements of the balance sheet. Just to reiterate a couple that Bill noted already, or, or David as well, we reduced debt by $442 million during the year, including the repayment of the QVC 2024 notes. After year-end, we also repaid the 2025 notes, and we tendered for 89% of the 2027 and 2028 notes, which was partially funded with new 2029 notes. These actions extended our debt maturity profile and helped support our anticipated revolving credit facility extension. It's great work from the team in achieving higher margins and free cash flow under Athens. OIBDA was up 4%, including the elimination of Zulily and flat without Zulily.

Speaker Change: Okay.

Unidentified Speaker: Events like Hurricanes and the election.

These events affect our sales far more than other retailers at the video driven commerce platform with the need for people to tune into our programming in order to drive sales <unk> TV minutes viewed declined 4% while across the TV industry the number of hours.

Speaker Change: <unk> Investor day.

Speaker Change: Total revenue declined 6% in the fourth quarter. Our top line performance saw continued volume pressure similar to the third quarter driven by linear TV declines a cautious consumer environment and meaningful distractions in our TV viewership due to headline grabbing.

Unidentified Speaker: Watch for news and information programming increased 11%.

Unidentified Speaker: QVC International had flat revenue and cornerstone brands continued to experience sales pressure due to a soft housing sector in the fourth quarter.

Volume pressures led to sales deleverage in Q4, we continue to actively manage costs, which partially offset some of the sales deleverage in the quarter with total company operating expenses and SG&A declining, 9% and 6% respectively.

Speaker Change: Events like Hurricanes and the election.

Speaker Change: These events affect our sales far more than other retailers at the video driven commerce platform with the need for people to tune into our programming in order to drive sales to X H T V minutes viewed declined 4% while across the TV industry the number of hours.

Greg Maffei: This is pretty solid, given the challenging backdrop of accelerated cord cutting, and though it's short of our targeted OIBDA growth rate when we set out for Project Athens, it's still admirable given these conditions. We do recognize the macro pressures of cord cutting and discretionary retail, and we have seen the massive growth in live social shopping and the clear change in consumer behavior, which is continually shifting towards digital. Accordingly, we're moving our businesses towards this opportunity. As our audience increasingly go onto social, a growing market, and they become increasingly comfortable transacting on social, we believe QVC is set up well to win in this space with our content production, our brands, and the knowledge of the market. We believe we can balance the growth in this market with maintaining profitability going forward. With that, operator, I'll open up the line for questions.

Unidentified Speaker: At our core businesses <unk> and QVC International we expanded adjusted OIBDA margin 10, and 170 basis points, respectively QVC International.

Speaker Change: Watch for news and information programming increased 11%.

Speaker Change: QVC International had flat revenue and cornerstone brands continued to experience sales pressure due to a soft housing sector in the fourth quarter.

Unidentified Speaker: International was our best performing business in Q4, with OIBDA, increasing 12% year on year on year.

Unidentified Speaker: Cornerstone had a disproportionate impact to the QVC group's consolidated OIBDA in the fourth quarter, while it was only 10% of total company revenue corner store I'm, sorry, cornerstones OIBDA declined $22 million were consolidated company total OIBDA decrease.

Speaker Change: Volume pressures led to sales deleverage in Q4, we continue to actively manage costs, which partially offset some of the sales deleverage in the quarter with total company operating expenses and SG&A declining, 9% and 6% respectively.

Unidentified Speaker: $28 million or 8% year over year.

Speaker Change: At our core businesses, <unk> and QVC International we expanded adjusted OIBDA margin 10, and 170 basis points respectively.

Unidentified Speaker: Cornerstone made up three fourths of the decline.

Operator: Thank you. If you would like to ask a question, press star one on your telephone keypad. A confirmation tone will indicate that your line is in a question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Jenna Giannelli with Morgan Stanley. Please state your question.

Unidentified Speaker: Total company OIBDA margin contracted slightly which included approximately 85 basis points of sales deleverage.

Speaker Change: QVC International was our best performing business in Q4, with OIBDA, increasing 12% year on year on year.

Unidentified Speaker: Looking at the full year, we achieved several milestones importantly, we successfully completed project athans through 2024, we generated more than $500 million of run rate OIBDA improvement compared to the objective of three to 600 million we expanded.

Speaker Change: Cornerstone had a disproportionate impact to the QVC group's consolidated OIBDA in the fourth quarter, while it was only 10% of total company revenue corner store I'm, sorry, cornerstones OIBDA declined 22 million were a consolidated company total OIBDA decreased.

Jenna Giannelli: Hi, good afternoon. Thanks for taking my question. In terms of the three-year plan and as it pertains to 2025, how should we think about the cadence of that, you know, playing out over the next few years? Should we expect any revenue growth this year, do you think, or at least in the second half? And is the flat EBITDA margin, or OIBDA margin, excuse me, the goal for this year as well? Thank you.

Unidentified Speaker: OIBDA margins 220 basis points and improved free cash flow, excluding insurance proceeds over $500 million.

Speaker Change: 28 million or 8% year over year.

Speaker Change: Cornerstone made up three fourths of the decline.

Unidentified Speaker: From 2022 to 2024.

Speaker Change: Total company OIBDA margin contracted slightly which included approximately 85 basis points of sales deleverage.

Unidentified Speaker: We took action to manage our costs, while facing challenges from a revenue headwind in 2024, resulting in the second consecutive year of adjusted OIBDA growth.

Bill Wafford: Yeah, I'll start on that, and then I'll let Bill jump in if he wants to for it. Yeah, so I think what you-- I think 2025 will be a real transition year. I think you'll see even stronger acceleration of social and streaming revenue than what we've had in the last couple of years. And I think you'll continue to see us experience cord-cutting related declines in some of the core US video commerce businesses. I think you'll see the revenue build from the growing parts of the businesses start to overcome the rate of that decline as we go through 2025 and get into 2026. So I think it'll be very much a year of transition while we grow into that revenue growth over the full three-year period.

Speaker Change: Looking at the full year, we achieved several milestones importantly, we successfully completed project athans through 2024, we generated more than $500 million of run rate OIBDA improvement compared to the objective of three to 600 million we expanded.

Unidentified Speaker: On a reported basis, including Xu Lilly, we expanded gross margins 120 basis points year over year and 2024 due to product margin gains. We also reduced operating expenses by 8% and SG&A costs by 9% from lower commissions.

Speaker Change: OIBDA margins 220 basis points and improved free cash flow, excluding insurance proceeds over $500 million from 2022 to 2024.

Unidentified Speaker: We also reduced outside services and personnel costs.

Unidentified Speaker: QVC International had a solid year delivering stable revenue and adjusted OIBDA margin up 70 basis points.

Speaker Change: We took action to manage our costs, while facing challenges from revenue headwinds in 2024, resulting in the second consecutive year of adjusted OIBDA growth.

Unidentified Speaker: We drove strong growth in our streaming businesses with monthly average users up 80% minutes watched increasing 27% and the triplet I'm sorry attributed revenue up 19%.

Speaker Change: On a reported basis, including Xu Lilly, we expanded gross margins 120 basis points year over year and 2024 due to product margin gains. We also reduced operating expenses by 8% and SG&A costs by 9% from lower commissions.

Bill Wafford: In terms of OIBDA margin, I would expect that we will maintain our basic margin levels of profitability comfortably, sort of double-digit type OIBDA margins throughout the three-year strategic period.

Unidentified Speaker: We shifted our model to a managed services approach to improve productivity increase innovation and generate savings, we improved the balance sheet and reduced gross debt $442 million, while also extending our maturity profile.

Jenna Giannelli: Excellent. Thank you. And then I just had one follow-up, if I can. International outperformed pretty notably. I guess maybe what were some of the key differences there, the drivers of that? And is there anything going on there specifically or structurally that you think you can pull back or leverage, you know, here in the Americas? Thanks.

Speaker Change: We also reduced outside services and personnel costs.

Speaker Change: We see international had a solid year delivering stable revenue and adjusted OIBDA margin up 70 basis points.

Unidentified Speaker: And importantly in mid November we introduced our social shopping strategy, which I'll discuss in more detail momentarily.

Speaker Change: We drove strong growth in our streaming businesses with monthly average users up 80% minutes watched increasing 27% and a trip I'm sorry attributed revenue now.

Bill Wafford: Yeah, it's a great question. The biggest difference, by far, is they are just seeing. They're seeing some of the same technology transitions that we're seeing in the US, but it's all much delayed, and so they're not seeing anything close to the type of cord cutting that we've seen in the US, which is just allowing us to make the technology and platform transition in a more balanced, deliberate, deliberate way than I think we're going to have the luxury of being able to do in the United States. I think it also helps. We have a very experienced team on that business. We have very strong local brand presence in each of those markets.

Unidentified Speaker: Looking at industry data, we were in line with the discretionary market in the first half of 2024, our revenue performance decelerated, particularly at <unk> in the second half of 2024 compared with the first half in part because of both anticipated and unanticipated headline.

Speaker Change: 19%.

Speaker Change: We shifted our I T model to a managed services approach to improve productivity increase innovation and generate savings, we improved the balance sheet and reduced gross debt $442 million, while also extending our maturity profile.

Unidentified Speaker: <unk> event, leading to meaningful distractions and our television viewership.

Unidentified Speaker: Also cornerstone had continued challenges in the business, which led to an outsize the margin impact on our consolidated results in 2024.

Speaker Change: And importantly in mid November we introduced our social shopping strategy, which I'll discuss in more detail momentarily.

Unidentified Speaker: Ultimately these top line pressures were more than anticipated and led to approximately 80 basis points of sales de leverage through the P&L through the P&L for the full year and on a two year basis.

Speaker Change: Looking at industry data, we were in line with the discretionary market in the first half of 'twenty 'twenty four our revenue performance decelerated, particularly at <unk> in the second half of 'twenty 'twenty four compared with the first half in part because of both anticipated and unanticipated headline.

Bill Wafford: I would say, on average, our international markets are slightly less competitively intense than what we tend to face on a daily basis in our US markets, and so that's helpful as well. I will say a lot of the core disciplines that we are now perfecting, especially in the social shopping space in the US, we think are gonna give us even greater competitive advantages in our international markets going forward. This year, the real concentration on building things like the content factory engine and some of the other capabilities is focused on the US.

Unidentified Speaker: Looking at <unk> customers on a quarterly basis total customer count declined 9% in Q4, reflecting a 7% decrease in existing and reactivated customers as well as the 17% decline in new customers, we reduced performance marketing spend and promotions.

Speaker Change: <unk> event, leading to meaningful distractions and our television viewership.

Speaker Change: Also cornerstone had continued challenges in the business, which led to an outsize the margin impact on our consolidated results in 2024.

Unidentified Speaker: Particularly for gaming products as you can see on slide eight in our presentation on a 12 month basis count was down 3% for the 12 months ending December 31, compared to the 12 months ended September 30. This.

Speaker Change: Ultimately these top line pressures were more than anticipated and led to approximately 80 basis points of sales de leverage through the P&L through the P&L for the full year and on a two year basis.

Bill Wafford: But we're really very excited about what it's gonna mean as we go in through this year and into 2026 and bring some of those capabilities to some of the international markets, which are, even if more slowly, facing a lot of the same growth opportunities that are emerging here.

Unidentified Speaker: This reflects the challenges I've mentioned earlier declining linear TV changes in consumer media consumption and the disruption of our TV viewership from events in the second half of the year, while count decline <unk> xa to existing customers continue to purchase at healthy levels spending on average.

Speaker Change: Looking at <unk> customers on a quarterly basis total customer count declined 9% in Q4, reflecting a 7% decrease in existing and reactivated customers as well as a 17% decline in new customers, we reduced performance marketing spend and promotions.

Ben Oren: Great. Thanks so much.

Unidentified Speaker: $1650 and purchasing 32 items in 2024 at QVC, our best customers, who buy 20 or more items annually also continued to purchase at very attractive levels in 2024, they spent $3980 on average.

Operator: Your next question comes from William Reuter with Bank of America. Please state your question.

Speaker Change: Particularly for gaming products as you can see on slide eight in our presentation on a 12 month basis count was down 3% for the 12 months ending December 31, compared to the 12 months ended September 30th this reflects the challenges I mentioned earlier declining linear TV.

Rob Rigby: Hi, good evening. This is Rob Rigby on for Bill. So first question from us, I was just wondering if you could touch on your plans for the St. Petersburg facility, and if your plan is to sell the facility, what proceeds would be used for? Thank you.

Unidentified Speaker: Bridge and bought 76 items.

Unidentified Speaker: From a <unk> xa to merchandise perspective, we were pleased to expand product margins more than 100 basis points in 2024. Despite the volume pressures. These gains were driven by project athans initiatives, including strategic pricing and product mix actions as well as steps to improve product Cogs.

Bill Wafford: Yeah, we're still. I mean, St. Petersburg, obviously, the team's still operating there and will be for a good portion of this year. And David, you know, mentioned that, you know, by Q3, we intend to, you know, having, you know, consolidating all content production here in Studio Park. You know, we'll work on decommissioning that facility this year. Eventually, high likelihood, obviously, that we'll, you know, dispose of the facility via a sale, still remains to be seen in terms of, you know, what the exact timing that's gonna be and, and how we use the proceeds.

Changes in consumer media consumption and the disruption of our TV viewership from events in the second half of the year, while count decline two X 80 existing customers continue to purchase at healthy levels spending on average $1650 and purchasing 32 items.

Unidentified Speaker: Before I review our go forward strategy, let me reflect on the company during my tenure as CEO, thus far.

Speaker Change: In 2024 at QVC, our best customers, who buy 20 or more items annually also continued to purchased at very attractive levels in 'twenty 'twenty four they spent $3980 on average and bought 76 items.

Unidentified Speaker: The business has been affected by a number of factors the tragic fire at our Rocky Mount North Carolina fulfillment Center cost <unk>, an estimated 1 million customers and $500 million in revenue.

Rob Rigby: Got it. Understood. And then, regarding tariffs, I was just wondering, maybe if you could quantify, in any way, your exposure to China and then, your ability to potentially shift sourcing of certain goods.

Speaker Change: From a QA excites merchandise perspective, we were pleased to expand product margins more than 100 basis points in 2024. Despite the volume pressures. These gains were driven by project athans initiatives, including strategic pricing and product mix actions as well as steps to improve product Cogs.

Unidentified Speaker: Cord cutting has reduced the number of linear homes, we reach.

Unidentified Speaker: Comparing 2024 to 2018, QVC and HSN main channel reached 44% and 47% fewer homes respectively.

Bill Wafford: Yeah, I mean, we've taken, you know, sourcing considerable amount of our source of supply out of China, really, since 2018, you know, when the last time, you know, that you saw significant tariff action. We don't, the majority of our goods, we, you know, source through our vendors, where we're not the importer of record. We don't quote typically, you know, what our complete exposure is, and obviously, we don't control the total exposure. But it's, you know, significant on the business. We're continuing to work with our suppliers as we evaluate, you know, product pricing and, you know, source of supply from country of origin going forward, and obviously, what our pricing situation is here in the US and if we have to pass that on to consumers.

Unidentified Speaker: Through project Athens, we took action to improve the cost structure operating discipline and cash flow capabilities of the company, we enhanced the portfolio with the divestiture of the zoo Lilly.

Speaker Change: Before I review our go forward strategy, let me reflect on the company during my tenure as CEO, thus far.

Speaker Change: The business has been affected by a number of factors the tragic fire at our Rocky Mount North Carolina fulfillment Center cost two X eight an estimated 1 million customers and $500 million in revenue.

Unidentified Speaker: While we also successfully improved the profitability.

Unidentified Speaker: Under Athens, we.

Unidentified Speaker: We did not however achieved stable revenue and that is where we are increasing the focus going forward.

Speaker Change: Cord cutting has reduced the number of linear homes, we reach comparing 'twenty 'twenty four to 'twenty 18, QVC and HSN main channel reached 44% and 47% fewer homes respectively.

In mid November we introduced a new strategy aimed at returning the company to growth over the next three years, we are moving faster to become a live social shopping company with a focus on balancing top line growth with margin and cash flow discipline.

Rob Rigby: Great, thanks. And then just, just one last one quickly. I'm not sure if I missed it, but, did you touch on the timing of that $100 million of adjusted EBITDA savings?

Speaker Change: Through project atoms, we took action to improve the cost structure operating discipline and cash flow capabilities of the company, we enhanced the portfolio with the divestiture of the zoo Lilly while we also successfully improved the profitability under Athens.

Bill Wafford: We're targeting that to have a run rate by the end of this year in terms of OIBDA opportunity improvement.

Unidentified Speaker: Last Friday, we commenced our rebranding changing our corporate name to QVC grouping, bringing the household name we are known for back into our everyday language on Monday, our equity Securities began trading under their new ticker symbols.

Rob Rigby: Great. That's all for me. Thank you.

Operator: Our next question comes from Carew Martinson with Jefferies Company. Please state your question.

Unidentified Speaker: To succeed in social Commerce, you not only need a social network and personalities you also need the ability to create content source merchandise distribute product and provide an end to end customer experience at scale.

Karru Martinson: Good afternoon. The anticipated revolver extension, where are we on that? Is that something that's near term here, or is that closer to maturity?

Speaker Change: We did not however achieved stable revenue and that is where we are increasing the focus going forward.

Speaker Change: In mid November we introduced a new strategy aimed at returning the company to growth over the next three years, we are moving faster to become a live social shopping company with a focus on balancing top line growth with margin and cash flow discipline last Friday, we commenced our rebranding chain.

Ben Oren: This is Ben Oren. I think the way we're thinking about that is October 2026 is the maturity, October 2025 is the covenant. And so, you know, we are in active dialogue with the banks and hope to have something back to you in the next, you know, 1 to 2 quarters.

Unidentified Speaker: QVC group is well positioned globally, we produce about 120 hours of live content daily which is over 40000 hours of content annually, we have expertise around brand and merchandising with about 400000 products in our equals ecosystem.

Speaker Change: Our corporate name to QVC Group, Inc. Bringing the household name we are known for back into our everyday language on Monday, our equity Securities began trading under their new ticker symbols.

Karru Martinson: Okay. And then when you look at the headwinds with fulfillment, 130 bps this quarter, you know, what's the ability to kind of see some offsets to that? Is that just the deleveraging on the top line? And I guess, how does that fit in with maintaining a double-digit OIBDA margin?

Unidentified Speaker: QVC U S and HSN present about 1200 products per week on our live programming.

Speaker Change: To succeed in social Commerce, you not only need a social network and personalities you also need the ability to create content sourced merchandise distribute product and provide an end to end customer experience at scale QVC group is well positioned globally.

Unidentified Speaker: And we have an established supply chain to distribute these large quantities of products across our businesses, we shipped more than 200 million units from 15 fulfillment centers to 13 5 million customers in 2024.

Bill Wafford: Yeah, I think a bit episodic in the quarter, right? I mean, you've got a bit of deleverage in there, right, on your warehouse costs flowing through. I think you saw a little bit of things that were episodic in terms of, you know, small parcel and charges we had in the quarter impacting us. Also, when you looked at even the international business, you know, kind of some of the tail of Red Sea disruption that we had that impacted freight and things like that. We don't anticipate that to be systemic going forward, you know, outside of any of the potential tariff discussions that are going on, right, that are impacting product COGS. We don't see that being consistent go forward.

Speaker Change: We produce about 120 hours of live content daily, which is over 40000 hours of content annually, we have expertise around brand and merchandising with about 400000 products on our equals ecosystem QVC U S and HSN presented.

Unidentified Speaker: Social commerce is an attractive market and a natural extension of our core capabilities. The social commerce market in the U S is projected to nearly double in the next five years based on research estimates behaviorally. There are a lot of core similarities between the QVC model and the way.

Speaker Change: 1200 products per week on our live programming.

Unidentified Speaker: Consumers engage with social content, our today's special valley value as a daily discovery based purchase that has inspired customers for decades.

Speaker Change: And we have an established supply chain to distribute these large quantities of products across our businesses, we shipped more than 200 million units from 15 fulfillment centers to 13.5 million customers in 2024.

Bill Wafford: We've done a very good job of managing that over the last couple of years and continue to be actively doing that now. One example is we've just consolidated two of our distribution centers on the West Coast into one to be able to take some cost out of the equation.

Unidentified Speaker: Similarly, 68% of purchases on social selling platforms last year were made on impulse and short social scrolling is the new channel surfing and we believe this behavior is very relevant for today's consumer.

Speaker Change: Social commerce is an attractive market and a natural extension of our core capabilities. The social commerce market in the U S is projected to nearly double in the next five years based on research estimates behaviorally. There are a lot of core similarities between the QVC model and the way <unk>.

Karru Martinson: Okay. And just lastly, I realize you don't give guidance, but, you know, we've talked with some other retailers saying, "Hey, there are some storms, some weather. There was a slow start to the year. Kind of balance that off with there haven't been as many, quote, unquote, 'one-time events.' " You know, how is the consumer shaping up for 2025?

Unidentified Speaker: We are enhancing our core capabilities on social where we already have a strong presence <unk> has a combined 7 million followers across Instagram Facebook tick tock and Youtube.

Speaker Change: Sumer is engage with social content, our today's special valley value as a daily discovery based purchase that has inspired customers for decades, Similarly, 68% of purchases on social selling platforms last year were made on impulse and <unk>.

Unidentified Speaker: We are organizing our new strategy around three priorities to win and loss social shopping when is an acronym W. Means we are going to drive a lot of shopping content win ever she shops wherever she shops and Spencer time I stands for inspiring.

David Rawlinson: ... Yeah, I think it's a little bit hard to read. I think if you look across the consumer sentiment measures, I think they're broadly stable but broadly down. But I don't see anything that suggests demand is collapsing. I think a lot of retailers have remarked that you're seeing value-seeking and deal-seeking behavior among the consumer. I think we continue to see that gravitation towards deals, gravitation towards clearance, when there's an opportunity with a good, better, best to choose down towards good or better and to choose away from best. So I think you're continuing to see some of those trends as we go into this year. I think you still continue to see a lot of the income-related trends with buying behavior for upper middle class and greater being more stable than below.

Speaker Change: Short social scrolling is the new channel surfing and we believe this behavior is very relevant for today's consumer.

Unidentified Speaker: People and products by creating the worlds, leading large shopping content engine to inspire human connection with incredible merchandise and N is about new ways of working to unlock efficiency and fund expansion on new platforms. We are implementing our.

Speaker Change: We are enhancing our core capabilities on social where we already have a strong presence <unk> SA has a combined 7 million followers across Instagram Facebook tick tock and Youtube.

Unidentified Speaker: And I've taken a series of actions, we have recruited a chief growth officer to extend our sales content and celebrity expertise to the largest social platforms and to bolster our streaming app with our partners. This new leader will head up social streaming digital new business development.

Speaker Change: We are organizing our new strategy around three priorities to win and loss social shopping.

Speaker Change: When is an acronym W. Means we are going to drive a lot of shopping content win ever she shops wherever she shops and spend some time.

Unidentified Speaker: And platform distribution for QVC U S and HSN, we expect to announce more on this very soon.

Speaker Change: <unk> stands for inspiring people and products by creating the worlds leading lives shopping content engine to inspire human connection with incredible merchandise and N is about new ways of working to unlock efficiency and fund expansion on new platform.

Unidentified Speaker: We must build a world class content engine to be successful and social commerce. Therefore, we are consolidating our QVC U S and HSN operations into studio Park in West Chester, Pennsylvania, and closing the HSN campus in St. Petersburg, Florida.

David Rawlinson: So but I think mostly, I see a relatively stable continuation of trends from 2024 into 2025, with perhaps a touch of softness in consumer sentiment, but nothing that feels like it's sharp or alarming.

Speaker Change: We are implementing our strategy and I've taken a series of actions, we have recruited a chief growth officer to extend our sales content and celebrity expertise to the largest social platforms and to bolster our streaming app with our partners. This new leader will head up social streaming.

Unidentified Speaker: This will allow us to create efficiencies and better collaboration across common functions content production broadcasting merchandising operations technology and people.

Karru Martinson: Thank you very much. Appreciate it.

Operator: Our next question comes from Hale Holden with Barclays. Please state your question.

Speaker Change: <unk> digital new business development and platform distribution for QVC U S and HSN, we expect to announce more on this very soon.

Hale Holden: Thank you. I had two questions. The first one is, when we think about sort of the effect of cord cutting, if that accelerates or as that accelerates, should we think about that as a, you know, straight line decline or linear decline in the sub count, or are they sort of unrelated? And then for Q4, specifically, I think you mentioned the pullback in promotions on electronics, and I was wondering if that also had an impact on the sub count or not. And then I have a follow-up.

Unidentified Speaker: Accordingly, we will maintain the distinct brand identities of QVC and HSN.

Unidentified Speaker: We plan to activate this consolidated operation over the coming months launching HSN live broadcast from studio Park by Q3.

Speaker Change: We must build a world class content engine to be successful and social commerce. Therefore, we are consolidating our QVC U S and HSN operations into studio Park in West Chester, Pennsylvania, and closing the HSN campus in St. Petersburg, Florida.

Unidentified Speaker: We anticipate our operations in St. Petersburg will wind down by the end of the year. We acknowledged this is a decision that affects many but believe it is the right step to achieve success.

Speaker Change: This will allow us to create efficiencies and better collaboration across common functions content production broadcasting merchandising operations technology and people.

Unidentified Speaker: Like to thank the St. Petersburg community for his support over many many years.

David Rawlinson: That's great. We tend to look at, we tend to look at subs on kind of a year-over-year basis. There's so much variation in quarters, we tend to look at it on sort of a year-over-year or a twelve-month lagging, trailing twelve basis. What I would say, and I think it's-- we've, we've seen relatively consistent losses over, I think, in my remarks, I talked about from 2018 to 2024. I think we've seen a relatively consistent declines in terms of households during that time. I would say, while it started out in the general market a little bit faster, it was slower to start for us because a lot of our customers were the last to cut the cord because some of our customers are older and more wedded to that platform.

Speaker Change: At the end of January we realigned our executive leadership team to work more efficiency build new capabilities create better customer experiences and pursue growth faster. Mike Fitzharris. Now also leads QVC U S and HSN broadcast and content production teams as well as.

Speaker Change: Importantly, we will maintain the distinct brand identities of QVC and HSN, we plan to activate this consolidated operation over the coming months launching HSA on live broadcast from studio Park by Q3, we.

Speaker Change: Global operations Technology and people Mike will also continue to serve as the president of the QVC U S brand.

Speaker Change: We anticipate our operations in St. Petersburg will wind down by the end of the year.

Speaker Change: We acknowledge this is a decision that affects many but believe it is the right step to achieve success I'd like to thank the St. Petersburg community for his support over many many years.

Speaker Change: We are also consolidating our U S. Merchandizing leadership, Stacy BOE now leads buying planning programming and brand marketing for QVC U S and HSN. She also serves as president of the HSN brand.

Speaker Change: At the end of January we realigned our executive leadership team to work more efficiency build new capabilities create better customer experiences and pursue growth faster.

Speaker Change: Having realigned our executive leadership team, we are looking at the rest of the enterprise to fund and build the needed capabilities. We are pursuing a $100 million of additional OIBDA opportunity by examining all areas of spending across the company head count reductions while challenging decisions.

Speaker Change: Like the tariffs now also leads QVC U S and HSN broadcast and content production teams as well as global operations technology and people. Mike will also continue to serve as the president of the QVC U S brand.

David Rawlinson: I would say what you're starting to see now is all customers are cutting the cord at roughly the same sorts of rates. We have generally overperformed cord cutting, so if you were to do a correlation between our revenue performance and our US video commerce businesses versus loss of households, because we've been moving some of those customers to streaming and some of those customers to digital channels, we haven't quite seen some of the reductions in revenue that you would be suggested by the level of cord cutting. But obviously, it has had a pretty direct impact. In terms of spending in the fourth quarter on advertising, you caught that comment correctly.

Speaker Change: <unk> are necessary to fund new capabilities and drive growth. We are focusing this work on QVC U S HSN and the global functions separately QVC International is identifying additional cost efficiencies for 2025 and cornerstone remains focused on this transformation journey.

Speaker Change: We are also consolidating our U S Merchandizing leadership.

Speaker Change: AC BOE now leads buying planning programming and brand marketing for QVC U S and HSN. She also serves as president of the HSN brand.

Speaker Change: In terms of the financial impact of our win strategy, we expect to generate $1 $5 billion of run rate revenue from social and streaming within the next three years, while we work toward these revenue goals, we plan to sustain a stable double digit adjusted OIBDA margin and we commit to it.

Speaker Change: Head count reductions, while challenging decisions are necessary to fund new capabilities and drive growth. We are focusing this work on QVC U S. H S N and the global functions separately QBC International is identifying additional cost efficiencies for 2025 and cornerstone rim.

Speaker Change: At least a two and a half times are better long term leverage target.

David Rawlinson: So we pulled some of our normal performance marketing in spending that we would normally have in the fourth quarter. Some of that we reprogrammed in the first three quarters, and some of that we just declined to spend in the fourth quarter. Advertising given advertising is always a little less effective, because more people are in the market advertising in the fourth quarter, so it usually has a lower payoff. With some of the election spending in this fourth quarter, it had an even lower than normal, a lower than normal payoff, and we did not see some of the opportunities around innovation in places like electronics, where we thought it was productive to push. And then finally, we tend to see that our digital spending gets some significant tailwind when our viewership is up.

Speaker Change: In conclusion.

Speaker Change: We firmly believe that.

Speaker Change: We have a once in a generation opportunity to capture a fast developing and rapidly growing market and lost social shopping.

Speaker Change: <unk> focus on this transformation journey.

Speaker Change: Social and streaming or the next frontier for entertainment and retail and we are well positioned to compete and win in this space. We have a long history of innovation in the eighties, we invented home shopping on cable television and the nineties, we launched our first website and today.

Speaker Change: In terms of the financial impact of our win strategy, we expect to generate $1.5 billion of run rate revenue from social and streaming within the next three years, while we work toward these revenue goals, we plan to sustain a stable double digit adjusted OIBDA margin.

Speaker Change: Or an E Commerce leader, we were early adopters on mobile and social we have built a successful streaming business. We are intently focused on achieving our objectives and positioning the company for future growth and we look forward to updating you on our progress.

Speaker Change: And we commit to at least a two and a half times are better long term leverage target.

Speaker Change: In conclusion.

Speaker Change: We firmly believe that we have a once in a generation opportunity to capture a fast developing and rapidly growing market and lives social shopping social and streaming or the next frontier for entertainment and retail and we are well positioned to compete and win in.

David Rawlinson: With viewership being down, largely because of news and special events, we weren't gonna have that tailwind, which was going to be a headwind to digital marketing efficiency. So we made a pretty deliberate decision to pull back, not to concentrate as much on new customers and new customer acquisition. Those tend to be, at least in the early days, slightly less profitable customers. So I think this was the first time new customer count went down in the last six quarters. I think we've been growing new customers five of the last six quarters. It went down this quarter, mostly because we made a deliberate decision to concentrate on our most profitable existing customers and not to concentrate as much on chasing the customer file.

Speaker Change: Now I'll turn the call to Bill to review the Q4 financial results of each of our businesses.

Bill: Thank you David and good afternoon, everyone.

Bill: Unless otherwise noted my comments compare financial performance for the three months ended December 31, 2024 for the same period in 2023.

Speaker Change: This space, we have a long history of innovation.

Speaker Change: In the eighties, we invented home shopping on cable television and the nineties, we launched our first website and today are an E. Commerce leader, we were early adopters on mobile and social we have built a successful streaming business. We are intently focused on achieving our objectives and positioning the company.

Bill: Starting with <unk>.

Bill: Revenue fell by 8% due to lower unit volume average selling price and shipping and handling revenue.

Bill: From a category perspective home revenue decreased 8% driven by reduced demand for culinary and floor care products, partially offset by growth in seasonal items.

Speaker Change: For future growth and we look forward to updating you on our progress.

Bill: Our apparel revenue grew 2% due to gains from agent possibility brands, including Kim Gabel, Jennie Garth Stacy, London, and Susan Graver, as well as celebrities Christie Brinkley Christian Siriano and Johann Sebastian Gray at HSN.

Speaker Change: Now I'll turn the call to Bill to review the Q4 financial results of each of our businesses.

Bill: Thank you David and good afternoon, everyone.

David Rawlinson: I think as we go back into 2025 now, you'll start to see us layer back in a more balanced approach to the customer file, and to new customer acquisition.

Bill: Unless otherwise noted my comments compare financial performance for the three months ended December 31, 2024 for the same period in 2023.

Bill: These gains were partially offset by lower demand for outerwear.

Bill: Beauty revenue fell 9% due to lower demand for skin care and Bath and body products.

Bill: Starting with Q X H.

Bill: Revenue fell by 8% due to lower unit volume average selling price and shipping and handling revenue.

Hale Holden: Great. Thank you, David. My second question was really around Cornerstone. That was the biggest delta miss on my part in terms of expectations. And, you know, I think we've all been waiting for that market to turn. It hasn't, in terms of home furnishing. So I was wondering if there's any change in strategy there, or how do you make sure you don't, you know, flip you to negative, in the meantime, while we're waiting for it to improve?

Bill: Electronics declined 16% due to lower demand for gaming and computers, we reduced online promotions for gaming items and shifted focus to higher margin products, such as audio and portable power, where we experience gains.

Bill: From a category perspective home revenue decreased 8% driven by reduced demand for culinary and floor care products, partially offset by growth in seasonal items.

Bill: Adjusted OIBDA margin expanded 10 basis points.

Bill: Our payroll revenue grew 2% due to gains from age of possibility brands, including Kim Gravelle, Jennie Garth Stacy, London, and Susan Graver, as well as celebrities Christie Brinkley Christian Siriano and Johann Sebastian Gray at HSN.

Bill: Gross margin declined 40 basis points with higher product margins mitigated by fulfillment pressure.

Bill: Product margins increased by approximately 90 basis points due to higher initial margins from private label penetration and improve product Cogs.

David Rawlinson: Yeah, it's a great question. I think we've been surprised. I think everybody in the market's been surprised to see the housing market stay at multi-decade lows in terms of moves and, to an extent, new builds, and those businesses are very highly correlated to the broader market. What's encouraging to me about those businesses today is that this is giving us a lot of opportunity to run something like the program that we ran through Project Athens on QVC and HSN, now on the Cornerstone Brands. So a lot of the team that drove a lot of the increased profitability because of Athens is now working with Cornerstone Brands.

Bill: These gains were partially offset by lower demand for outerwear.

Bill: Fulfillment expenses were unfavorable 130 basis points due to higher wages and freight rates and sales deleverage.

Bill: Beauty revenue fell 9% due to lower demand for skin care and Bath and body products.

Bill: Operating expenses decreased 11% and were favorable by 25 basis points due to lower commissions.

SG&A expenses declined 10% and were favorable by 20 basis points, reflecting lower marketing personnel and outside services expenses, partially offset by sales deleverage.

Bill: Adjusted OIBDA margin expanded 10 basis points.

Bill: Gross margin declined 40 basis points with higher product margins mitigated by fulfillment pressure.

Bill: Before moving on to QVC International as noted in our earnings release, we conducted an annual impairment assessment and recognized a $1 5 billion noncash impairment charge at <unk> related to goodwill and trade names. This is included in operating loss, but excluded from adjusted OIBDA.

Bill: Product margins increased by approximately 90 basis points due to higher initial margins from private label penetration and improve product Cogs.

David Rawlinson: And so we know we have techniques that work, that are going to help us with margin and profitability in that business over the next 12 to 18 months, and those efforts are now sort of full steam ahead and fully stood up. And so we feel good about our ability to drive some bottom line margin and cost opportunities in that business. In terms of when we get more out of the market itself in the macro, your call is as good as mine. What I would just observe is that there does feel like there's real pent-up demand in the market, and whenever the market gets unstuck, I would not be surprised for us to have a trend that looks very different for a sustained period of time.

Bill: The film and expenses were unfavorable 130 basis points due to higher wages and freight rates and sales deleverage.

Bill: Moving to give you see international.

Bill: Operating expenses decreased 11% and were favorable by 25 basis points due to lower commissions.

Bill: Our comments will focus on constant currency results.

Bill: Revenue was flat, reflecting 1% growth in units shipped and favorable returns offset by lower average selling price.

Bill: SG&A expenses declined 10% and were favorable by 20 basis points, reflecting lower marketing personnel and outside services expenses, partially offset by sales deleverage.

Bill: From a category perspective, QVC international experienced constant currency growth in home accessories, and apparel with a decline in beauty.

Bill: Before moving on to QVC International as noted in our earnings release, we conducted an annual impairment assessment and recognized a $1 5 billion noncash impairment charge at Q X age related to goodwill and trade names. This isn't included in operating loss, but excluded from adjusted OIBDA.

Bill: QVC, Germany, and UK grew 8% and 1%, respectively, while Japan declined mid single digits.

Bill: Germany experienced sales growth in home apparel, and access accessories and electronics categories.

Bill: Adjusted OIBDA increased 12% and adjusted OIBDA margin expanded 170 basis points.

David Rawlinson: I think we will go into that, into a market turn, more profitable, more capable, having established a lot of new capabilities. And I think there's some potential to potentially overperform if we got back to an upmarket, given some of the work we're doing. But it's certainly been, the macro has been depressed for longer than we would have anticipated or than we would have liked.

Bill: Moving to give you the international.

Bill: Gross margin decreased 20 basis points due to higher fulfillment costs, partially offset by product margin gains.

Bill: My comments will focus on constant currency results.

Bill: Revenue was flat, reflecting 1% growth in units shipped and favorable returns offset by lower average selling price.

Bill: Some cost increased due to higher freight rates and fulfillment center wages as well as increased units shipped.

Bill: From a category perspective, QVC international experienced constant currency growth in home accessories, and apparel with a decline in beauty.

Bill: Margin strength was due to favorable returns and improved sourcing costs.

Bill: SG&A was favorable by approximately 190 basis points due to lower personnel expenses and costs for outside services.

Bill: QVC, Germany, and U K grew 8% and 1%, respectively, while Japan declined mid single digits.

Hale Holden: Great. Thank you very much. I appreciate it.

Bill: Moving to cornerstone.

Bill: Germany experienced sales growth in home apparel, and access accessories and electronics categories.

Operator: Thank you. The last question for today comes from Yakov Muzikantskiy with JPMorgan Chase & Co. Please state your question.

Bill: Revenue declined 7% in the quarter as we experienced soft demand for and competitive promotional pressure in our home brands and continued challenges in the home sector.

Bill: Adjusted OIBDA increased 12% and adjusted OIBDA margin expanded 170 basis points.

Yaakov Musheyev: Hi. Thank you. This is Yakov. I'm for Carla Casella. First question, you have an initiative to grow social sales to about $1.5 billion. Could you just give us a sense for your progress in the quarter? Did social sales grow sequentially? Were there any call-outs, what is working and what still needs work on social? And, how much lower are the margins on social versus linear?

Bill: Adjusted OIBDA margin decreased due to cost for outside services related to the transformation plan cornerstone is implementing higher personnel costs and sales deleverage.

Bill: Gross margin.

Bill: <unk> decreased 20 basis points due to higher fulfillment costs, partially offset by product margin gains.

Bill: Some cost increase due to higher freight rates and fulfillment center wages as well as increased units shipped.

Bill: Looking to 2025, let me briefly comment on the recent tariff actions.

Bill: As most U S based discretionary retailers. We are also exposed to import tariffs and while receipt levels from both Mexico and Canada are negligible, we do source a significant percentage of our Q X H goods from China.

Bill: Product margin strength was due to favorable returns and improved sourcing costs.

David Rawlinson: Yeah, great questions. So one conversation we're having internally that we'll get back to this community on is how to give you more insight into both social and streaming. So look for us to try to find ways to be more descriptive there. You're right to quote the $1.5 billion-dollar run rate goal by the end of the 3-year period. We think that's very possible. We already today have hundreds of millions of dollars of revenue across social and streaming, and so we're growing from a not insubstantial base there. And we saw a very good performance in Q4 and for the full year in terms of growth year-over-year. And we expect further acceleration of that into 2025.

Bill: SG&A was favorable by approximately 190 basis points due to lower personnel expenses and costs for outside services.

Bill: Like other retailers, we are taking action to mitigate the impact to our business, including working with our product suppliers evaluating our pricing and product mix and assessing the opportunity to change the country of origin for our goods.

Bill: Moving to cornerstone revenue declined 7% in the quarter as we experienced soft demand for and competitive promotional pressure in our home brands and continued challenges in the home sector.

Bill: Adjusted OIBDA margin decreased due to costs for outside services related to the transformation plan cornerstone is implementing higher personnel costs and sales deleverage.

Bill: Turning to full year cash flow and the balance sheet.

Bill: In 2020 for free cash flow was a source of $238 million compared to a source of $297 million last year, excluding insurance proceeds related to the Rocky Mountain fire.

Bill: Looking to 2025.

Bill: Let me briefly comment on the recent tariff actions.

As most U S based discretionary retailers. We are also exposed to import tariffs and while receipt levels from both Mexico and Canada are negligible, we do source a significant percentage of our Q X H goods from China.

Bill: Decrease the decrease in cash flow net of insurance proceeds was primarily due to lower cash from operations, partially offset by lower payments for TV distribution rights and capital expenditures.

Bill: In 2024, we spent $37 million on renewals of our television distribution contracts and $199 million on capital expenditures.

David Rawlinson: Both of those businesses have been growing very strongly now for a couple of years. 2025 is the year where we really put more into advertising capabilities, building partnerships, so we'll have a lot more to say on that, on, a lot more to say on that later. But everything we saw in the fourth quarter leads us to believe that it's exactly the right growth agenda to be pushing as we go into the next three years.

Bill: Reminder, that our television distribution payments can fluctuate year over year, depending on renewal cycles, we expect the two year average to be approximately $70 million to $80 million.

Bill: Turning to full year cash flow and the balance sheet.

Bill: Additionally for 2025, we anticipate capex to be approximately $230 million.

Bill: In 2020 for free cash flow was a source of $238 million compared to a source of $297 million last year, excluding insurance proceeds related to the Rocky Mountain power.

Bill: Looking at the QVC Group, Inc debt profile.

Bill: As of December 31, 2024, net debt was $4 6 billion.

Bill: As of year end, the QVC revolver had $1 2 billion was drawn and $1 6 billion in available capacity.

Bill: In terms of cash balances QVC group had total cash of $905 million of which $297 million was at QVC, Inc. $204 million was it Liberty interactive LLC and $269 million was at QVC Group, Inc.

Bill: In 2024, we spent $37 million on renewals of our television distribution contracts and $199 million on capital expenditures.

Yaakov Musheyev: Great. Thank you so much. And then I was also just wondering if you could provide the RCF borrowing today or pro forma for the 25 no pay down.

Bill: Reminder, that our television distribution payments can fluctuate year over year, depending on renewal cycles, we expect the two year average to be approximately $70 million to $80 million.

Hale Holden: I don't think we've shared what we've done there with respect to cash, but you saw that in between 30 September and 31 December, as we built free cash flow, we did pay down some of that revolver. We'll continue to use cash to pay down the revolver and then draw to, you know, to pay down debt. So, we'll probably be out with the balance in our Q1 results.

Ben Oren: I don't think we've shared what we've done there with respect to cash, but you saw that in between 30 September and 31 December, as we built free cash flow, we did pay down some of that revolver. We'll continue to use cash to pay down the revolver and then draw to, you know, to pay down debt. So, we'll probably be out with the balance in our Q1 results.

Bill: Our leverage ratio as of December 31, 2024, as defined by the <unk> revolving credit facility was three one times compared to our maximum covenant threshold of four five times.

Bill: Additionally for 2025, we anticipate capex to be approximately $230 million.

Bill: Looking at the QVC Group, Inc debt profile.

Bill: Please note that covenant OIBDA includes adjusted OIBDA of QVC, Inc, and cornerstone.

Bill: As of December 31, 2024, net debt was $4 6 billion.

Bill: This February we paid off the remaining $585 million.

Bill: As of year end, the QVC revolver had $1 2 billion was drawn and $1 6 billion in available capacity.

David Rawlinson: Yeah, we don't... Yeah, to Ben's point, we don't go intra-quarter. Yeah.

Bill: QVC, Inc. For 45% 2025 senior notes at maturity funded with our revolver and cash on hand.

Bill: In terms of cash balances QVC group had total cash of $905 million of which 297 million was at QVC, Inc. 204 million was it Liberty Interactive LLC and 269 billion was at QVC Group, Inc.

Yaakov Musheyev: Got it. Okay, what about cash at Liberty, Cornerstone, and at the parent level?

Bill: We reaffirm that our debt levels manageable and our current cushion is sufficient in relation to the four five times maximum net leverage covenant threshold stipulated in our credit facility.

David Rawlinson: Yeah, I think we can get it. I mean, it's in the press release, and I quoted it on the call. I can shoot that over to you as well.

Bill: Finally, as previously mentioned, we received a noncompliance notice from NASDAQ in June 2024, due to our closing bid price trading below nasdaq's minimum requirement of one dollar on.

Bill: Our leverage ratio as of December 31, 2024, as defined by the <unk> revolving credit facility was three one times compared to our maximum covenant threshold of four five times.

Yaakov Musheyev: Perfect. Great. That's it for us. Thank you.

David Rawlinson: Thank you.

Hale Holden: All right, operator. I think with that, we are done for the day. Thank you all for joining on the QVC Group call, and we look forward to speaking with you next quarter, if not sooner.

Ben Oren: All right, operator. I think with that, we are done for the day. Thank you all for joining on the QVC Group call, and we look forward to speaking with you next quarter, if not sooner.

Bill: On December 2nd 2024, we transferred our stock from the NASDAQ Global select market to the NASDAQ capital market and an additional 180 day calendar period began to regain compliance.

Bill: Please note that covenant OIBDA includes adjusted OIBDA of QVC, Inc, and cornerstone.

Operator: Thank you.

David Rawlinson: Great.

Bill: This February we paid off the remaining $585 million.

Operator: That concludes today's call.

David Rawlinson: Thank you, everyone.

Operator: All parties may now disconnect. Thank you.

Bill: QVC, Inc. For 45% 2025 senior notes at maturity funded with our revolver and cash on hand.

Bill: As part of this extension, we have committed to effect a reverse stock split if necessary to remain on NASDAQ. After the 180 day period.

Bill: We affirm that our debt levels are manageable and our current cushion is sufficient in relation to the four five times maximum net leverage covenant thresholds stipulated in our credit facility.

Greg: Now I will turn the call over to Greg.

Greg: Thanks Bill.

So in 2024, we had a successful execution of many elements of the balance sheet.

Bill: Finally, as previously mentioned, we received a noncompliance notice from NASDAQ in June 2024, due to our closing bid price trading below nasdaq's minimum requirement of $1.

Speaker Change: Just to reiterate a couple that bill noted already or for David as well, we reduced debt by $442 million during the year, including the repayment of the <unk> 2024 notes.

Speaker Change: After year end, we also repaid the 2025 notes.

Bill: On December 2nd 2024, we transferred our stock from the NASDAQ Global select market to the NASDAQ capital market and an additional 180 day calendar period began to regain compliance.

Speaker Change: And we tended for 89% of the 27 28 notes, which was partially funded with new 2029 notes.

Speaker Change: These actions extended our debt maturity profile and help support our anticipated revolving credit facility extension.

Bill: As part of this extension, we have committed to effect a reverse stock split if necessary to remain on NASDAQ. After the 180 day period.

Speaker Change: It's great work from the team and achieving higher margins and free cash flow under Athens oil.

Greg: Now I'll turn the call over to Greg.

Greg: Thanks Bill.

Speaker Change: OIBDA was up 4%, including the elimination of the Lilly and flat without to Lilly.

Greg: So in 2024, we had a successful execution of many elements of the balance sheet.

Greg: Just to reiterate a couple that bill noted already or for David as well, we reduced debt by $442 million during the year, including the repayment of the QVC 2024 notes after year end, we also repaid the 2025 notes.

Speaker Change: This is pretty solid given the.

Speaker Change: Challenging backdrop of accelerated cord cutting.

Speaker Change: And though it is short of our targeted OIBDA growth rate when we set out for project Athens is still admirable given these conditions.

Speaker Change: We do recognize the macro pressures of cord cutting and discretionary retail.

We tended for 89% of the $27 28 notes, which was partially funded with new 2029 notes.

Speaker Change: And we've seen the massive growth in lives social shopping and the clear change in consumer behavior, which is continually shifting towards digital.

Greg: These actions extended our debt maturity profile and helps support our anticipated revolving credit facility extension.

Accordingly.

Speaker Change: We're moving our businesses towards this opportunity.

Greg: It's great work from the team and achieving higher margins and free cash flow under Athens oil.

As orange audiences increasingly go onto social a growing market and they become increasingly comfortable transacting on social we believe QVC is set up well to win in this space with our content production, our brands and the knowledge of the market.

Greg: OIBDA was up 4%, including the elimination of Lilly and flat without to Lilly.

Greg: It is pretty solid given the challenging backdrop of accelerated cord cutting.

And though it is short of our targeted OIBDA growth rate when we set out for project Athens is still admirable given these conditions.

Speaker Change: We believe we can balance the growth in this market with maintaining profitability going forward.

Speaker Change: And with that operator, I will open up the line for questions.

Greg: We do recognize the macro pressures of cord cutting and discretionary retail.

Thank you.

Speaker Change: And if you'd like to ask a question press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question comes from Jenna Giannelli with Morgan Stanley.

Greg: And we've seen the massive growth in lives social shopping and a clear change in consumer behavior, which is continually shifting towards digital.

Greg: Accordingly.

Greg: We're moving our businesses towards this opportunity.

Greg: As orange audiences increasingly go onto social a growing market and they become increasingly comfortable transacting on social we believe QVC is set up well to win in this space with our content production, our brands and the knowledge of the market.

Speaker Change: Family. Please state your question.

Jenna Giannelli: Hi, good afternoon, Thanks for taking my question.

Jenna Giannelli: And in terms of the three year plan and as it pertains to 2025.

Greg: We believe we can balance the growth in this market with maintaining profitability going forward.

Jenna Giannelli: Should we think about the cadence of that playing out over the next few years should we expect any revenue growth. This year do you think or at least in the second half and as the flat EBITDA margin or OIBDA margin excuse me the goal for this year as well. Thank you.

Greg: And with that operator, I will open up the line for questions.

Greg: Thank you.

Greg: And if you'd like to ask a question press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question comes from Jenna Giannelli with Morgan Stanley.

Speaker Change: Yes ill start on that and then I'll, let bill jump in if he wants to afford them yet. So I think what you I think 2025 will be a real transition year I think youll see.

Speaker Change: Even stronger acceleration of social and streaming revenue than what we've had in the last couple of years and I think youll continue to see.

Greg: Family. Please state your question.

Jenna Giannelli: Hi, good afternoon, Thanks for taking my question.

Jenna Giannelli: And in terms of the three year plan and as it pertains to 2025, how should we think about the cadence of that playing out over the next year should we expect any revenue growth. This year do you think or at least in the second half and as the flat EBITDA margin or EBITDA margin excuse me the goal for this year.

Speaker Change: <unk> experience cord cutting related declines in some of the core U S video commerce businesses.

Speaker Change: I think youll see the revenue build from the growing parts of the businesses start to overcome the rate of that decline as we go through 2025 and get into.

Jenna Giannelli: Well thank you.

Speaker Change: Yeah, I'll start on that and then I'll, let bill jump in if he wants to important yet. So I think what you I think 2025 will be a real transition year I think youll see.

Speaker Change: 2026, so I think it will be very much a year of transition while we grow into that.

Speaker Change: That revenue growth over the full three year period in terms of OIBDA margin I would expect that we will maintain our basic margin levels of profitability comfortably sort of double digit type OIBDA margins.

Speaker Change: Even stronger acceleration of social and streaming revenues than what we've had in the last couple of years and I think youll continue to see.

Speaker Change: US experience cord cutting related declines in some of the core U S video commerce businesses.

Speaker Change: Throughout the three year strategic period.

Speaker Change: Okay.

Speaker Change: Excellent. Thank you and then I just had one follow up if I can international outperformed pretty notably I guess, maybe what were some of the key differences are the drivers of that and is there anything going on there specifically are structurally that you think you can pull back or leverage.

Speaker Change: I think youll see the revenue build from the growing parts of the businesses start to overcome the rate of that decline as we go through 2025 and get into two.

Speaker Change: 2026, so I think it will be very much a year of transition while we grow into that.

Speaker Change: You know here in the Americas.

Speaker Change: Yes, it's a great question.

Speaker Change: And to that revenue growth over the full three year period in terms of OIBDA margin I would expect that we will maintain our basic margin levels of profitability.

Speaker Change: The biggest difference by far is they are just seeing they're seeing some of the same technology transitions that we're seeing in the U S. But it's all much delayed and so theyre not seeing anything close to the type of cord cutting that we've seen in the U S, which is just allowing us to make the technology platform.

Speaker Change: Amphora believes sort of double digit type OIBDA margins.

Speaker Change: Throughout the three year strategic period.

Speaker Change: Okay.

Speaker Change: Excellent. Thank you and then I just had one follow up if I can international outperformed pretty notably I guess, maybe what were some of the key differences are the drivers of that and is there anything going on there specifically or structurally that you think you can pull back or elaborate.

Speaker Change: <unk> transition in a more balanced deliberate.

Liberate way then I think we're going to have the.

Speaker Change: The luxury of being able to do in the United States I think it also helps we have a very experienced team on that business. We have very strong local brand presence in the <unk> each of those markets I would say on average our international markets are slightly less.

Speaker Change: And in the Americas.

Speaker Change: Yes, it's a great question. The biggest difference by far is they are just they are seeing some of the same technology transitions that we're seeing in the U S. But it's all much of delayed and so theyre not seeing anything close to the type of cord cutting that we've seen in the U S, which is just allowing us to me.

Speaker Change: Competitively intense than what we tend to face on a daily basis and our U S.

Speaker Change: Our U S markets and so that's that's helpful as well I will say a lot of the core disciplines that we're now perfecting, especially in the social shopping space in the U S. We think are going to give us.

Speaker Change: The technology, a platform transition and a more balanced deliberate deliberate.

Speaker Change: Deliberate way then I think we're going to have.

Speaker Change: Even greater competitive advantages in our international markets going forward. This year, the real concentration on building things like the content factory engine.

Speaker Change: The luxury of being able to do in the United States I think it also helps we have a very experienced team.

Speaker Change: That business, we have very strong local brand presence in each of those markets I would say on average our international markets are slightly less competitively intense than what we tend to face on a daily basis and our U S.

Speaker Change: Some of the other capabilities is focused on the U S. But we're really very excited about what it's going to mean as we go through this year and into 2026 and bring some of those capabilities to some of the international markets, which are even if more slowly facing a lot of the same growth opportunities.

Speaker Change: In our U S markets and so that's that's helpful. As well I will say a lot of the core disciplines that we're now protecting especially in the social shopping space in the U S. We think are going to give us even greater competitive advantages and our international markets going forward.

Speaker Change: Emerging here.

Speaker Change: Great. Thanks, so much.

Speaker Change: Your next question comes from William Reuter with Bank of America. Please state your question.

Speaker Change: Hi, Good evening. This is Rob break beyond for Bill. So first question from Us.

Speaker Change: This year would be a real concentration on building things like the content factory Amgen.

Speaker Change: Just wondering if you could touch on your plans for the St. Petersburg facility.

Speaker Change: And if your plan is to sell the facility what proceeds would be used for thank you.

Speaker Change: Yes.

David Rawlinson: St. Petersburg, obviously the team is still operating there and will be for a good portion of this year and David mentioned that by Q3, we intend to.

David Rawlinson: Having consolidated all content production here in the studio Park will work on decommissioning that facility this year.

Speaker Change: Other emerging here.

Speaker Change: Great. Thanks, so much.

Speaker Change: Your next question comes from William Reuter with Bank of America. Please state your question.

Eventually.

David Rawlinson: A high likelihood obviously that will disposal facility front via sale still remains to be seen in terms of what the exact timing and that's going to be and how we use the proceeds.

Rob Break: Hi, Good evening. This is Rob break beyond for Bill. So first question from Us.

Rob Break: Just wondering if you could touch on your plans for the St. Petersburg facility.

David Rawlinson: Got it understood.

Speaker Change: And then regarding tariffs I was just wondering maybe if you could quantify in any way your exposure to China.

Rob Break: And if your plan is to sell the facility what proceeds would be used for.

Rob Break: Yeah, we're still I mean, St. Petersburg, obviously the team is still operating there and will be for a good portion of this year and David mentioned that by Q3, we intend to.

Speaker Change: Your ability to potentially shift sourcing of certain codes.

Speaker Change: Yes, I mean, we've taken a sourcing considerable amount of our source of supply out of China really since 2018.

Rob Break: Having consolidated all content production here in the studio Park will work on decommissioning that facility this year.

Speaker Change: Last time, you saw significant tariff action.

Speaker Change: We don't the majority of our goods, we source through our vendors, where we're not the importer of record we don't quote typically what our trip and what are the complete exposure is and obviously, we don't control the total exposure, but but it's significant on the business. We're continuing to work with our suppliers as we evaluate product pricing and sources.

Rob Break: Eventually.

Rob Break: Hi, likelihood, obviously that will disposal facility via sale still remains to be seen in terms of what the exact timing and that's going to be and how we use the proceeds.

Rob Break: Got it understood.

Rob Break: And then regarding tariffs I was just wondering maybe if you could quantify in anyway your exposure to China.

Speaker Change: <unk> from country of origin going forward and obviously, what our pricing situation is here in the U S and if we have to pass that onto consumers.

Speaker Change: Her ability to to potentially shift sourcing of certain codes.

Speaker Change: Great. Thanks, and then just just one last one quickly.

Speaker Change: Yeah, I mean, we've taken a sourcing considerable amount of our source of supply out of China really since 2018.

Speaker Change: Not sure if I missed it but did you touch on the timing of that $19 million of adjusted EBITDA savings.

Speaker Change: Last time, you saw significant tariff action.

Speaker Change: We don't the majority of our goods, we source through our vendors, where we're not the importer of record. We don't quote typically you know what our trip and what are the complete exposure is and obviously, we don't control the total exposure, but but it's significant on the business. We're continuing to work with our suppliers as we evaluate product pricing and sources.

Speaker Change: We're targeting that to have a run rate by the end of this year in terms of OIBDA opportunity improvement.

Speaker Change: Great. That's all for me thank you.

Speaker Change: Our next question comes from <unk> Martinson with Jefferies <unk> Company. Please state your question.

Martinson: Good afternoon.

Speaker Change: Fly from country of origin going forward and obviously, what our pricing situation is here in the U S and if we have to pass that onto consumers.

Speaker Change: The anticipated revolver extension, where are we on that is that something that near term here or is that closer to maturity.

Speaker Change: Great. Thanks, and then just just one last one quickly.

Speaker Change: This has been our and I think the way we're thinking about that is October 2026 is the maturity October 2025 is the go current.

Speaker Change: I'm not sure if I missed it but did you touch on the timing of that.

Speaker Change: Adjusted EBITDA savings.

Speaker Change: We're targeting that to have a run rate by the end of this year in terms of OIBDA opportunity improvement.

Speaker Change: So we are in active dialogue with with.

Speaker Change: Banks and hope to have something back to you in the next one to two quarters.

Speaker Change: Great. That's all from me thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: And then when you look at the headwinds with fulfillment of 130 bps this quarter whats the ability to kind of see.

Our next question comes from <unk> Martinson with Jefferies <unk> Company. Please state your question.

Speaker Change: Good afternoon.

Speaker Change: Anticipated revolver extension, where are we on that is that something that near term here or is that closer to maturity.

Speaker Change: Some offsets to that is that just the deleveraging on the topline and I guess, how does that fit in with the maintaining a double digit OIBDA margin.

Speaker Change: Yeah.

Speaker Change: This has been our and I think the way we're thinking about that is October 2026 is the maturity October 2025 is the go current and so we are in active dialogue with.

Speaker Change: Yes, I think because you're a bit episodic in the quarter right I mean, you've got a bit of deleverage and theyre right on your warehouse costs flowing through I think you saw a little bit of things that were episodic in terms of smart small parcel and charges. We had in the in the quarter impacting US also when you look at even the international business kind of summer.

Speaker Change: Banks and hope to have something back to you in the next one to two quarters.

Speaker Change: Okay.

Speaker Change: The tail of Red Sea disruption that we had that impacted freight and things like that we don't anticipate that to be systemic going forward outside of any of the potential tariff discussions that are going on that are impacting product Cogs, we don't see that being consistent go forward. We've done a very good job of managing that over the last couple of year.

Speaker Change: And then when you look at the headwinds with fulfillment of 130 bps this quarter whats the ability to kind of see.

Speaker Change: Some offsets to that is that just the deleveraging on the topline and I guess, how does that fit in with the maintaining a double digit OIBDA margin.

Speaker Change: Years and continue to be actively be doing that now and one example is we just consolidated two of our distribution centers on the west coast into one to be able to take some cost out of the equation.

Speaker Change: Yeah, I mean, I think because you're a bit episodic in the quarter right I mean, you've got a bit of deleverage and theyre right on your warehouse costs flowing through I think you saw a little bit of things that were episodic in terms of smartphone small parcel and charges. We had in the in the quarter impacting US also when you looked at even the international business kind of some of the.

Speaker Change: Yes.

Speaker Change: Okay, and just lastly, I realize you don't give guidance, but we've talked with some other retailers, saying hey, there are some storm some whether there was a slow start to the year kind of balance that off with there haven't been as many couldnt quote one time events.

Speaker Change: Tale of Red Sea disruption that we had that impacted freight and things like that we don't anticipate that to be systemic going forward outside of any of the potential tariff discussions that are going on that are impacting product Cogs and we don't see that being consistent go forward. We've done a very good job of managing that over the last couple of years.

Speaker Change: How is the consumer shaping up for 2025.

Speaker Change: Yes, I think it's a little bit hard to read I think if you look across the consumer sentiment measures I think they are broadly stable, but broadly down.

Speaker Change: And continue to be actively be doing that now and one example is we just consolidated to our distribution centers on the west coast into one to be up.

Speaker Change: But I don't see anything that suggests demand is collapsing.

Speaker Change: Or would it take some cost out of the equation.

Speaker Change: Yeah.

Speaker Change: I think.

Speaker Change: A lot of retailers have remark that you are seeing value seeking and deal seeking behavior. Among the consumer I think we continue to see that gravitation towards deals gravitation towards clearance.

Speaker Change: How is the consumer shaping up for 2025.

Speaker Change: When there is an opportunity with the good better best to choose down towards good or better than the choose away from best So I think youre continuing to see some of those trends as we go into this year I think you still continue to see a lot of the.

Speaker Change: Yes, I think it's a little bit hard to read I think if you look across the consumer sentiment measures I think they're broadly stable, but broadly down.

Speaker Change: Income related trends with buying behavior.

Speaker Change: But I don't see anything that suggests demand is collapsing.

For upper Middle class.

Speaker Change: And greater being more stable than.

Speaker Change: I think.

Speaker Change: Hello.

Speaker Change: So, but I think mostly I see a relatively stable continuation of trends from 25 from 24, and the 25 with perhaps.

Speaker Change: Hutch.

Speaker Change: Softness in consumer sentiment, but nothing that feels like.

Speaker Change: When there is an opportunity with the good better best to choose.

Speaker Change: <unk> towards good or better than the choose away from best So I think youre continuing to see some of those trends as we go into this year I think you still continue to see a lot of the.

Speaker Change: It's sharp are alarming.

Thank you very much I appreciate it.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Hale Holden with Barclays. Please state your question.

Speaker Change: Income related trends with buying behavior.

Hale Holden: Thank you.

Speaker Change: Two questions. The first one is.

Speaker Change: Or upper Middle class.

Hale Holden: What do we think about sort of the effect of cord cutting.

Speaker Change: And greater being more stable than.

Speaker Change: Hello.

Hale Holden: Okay.

Speaker Change: So, but I think mostly I see a relatively stable continuation of trends from 25 from 24, and the 25 with perhaps.

Hale Holden: If that accelerates or as that accelerates should we think about that.

Hale Holden: Straight line decline in linear decline and the sub count.

Hale Holden: Or are they sort of unrelated.

Hale Holden: And then for the fourth quarter specifically thank.

Speaker Change: Hutch.

Speaker Change: Softness in consumer sentiment, but nothing that feels like.

Hale Holden: I think you mentioned the pullback in promotions on on electronics and I was wondering if that also had an impact on the sub count or not and then I have a follow up.

Speaker Change: It's sharp are alarming.

Speaker Change: Thank you very much I appreciate it.

Hale Holden: That's great.

Hale Holden: We tend to look at we tend to look at subs on kind of a year over year basis. There's so much variation in quarters, we tend to look at it on sort of a year over year or 12 month lagging trailing 12 basis, what I would say and I think it's we've seen relatively.

Hale Holden: Our next question comes from Hale Holden with Barclays. Please state your question.

Hale Holden: Hi, Thank you.

Hale Holden: Two questions. The first one is.

Hale Holden: What do we think about sort of the effect of cord cutting.

Hale Holden: Okay.

Hale Holden: If that accelerates or as that accelerates should we think about that is that.

Hale Holden: Consists the losses over I think in my remarks, I talked about from 2018. The 2024 I think we've seen a relatively consistent.

Hale Holden: Straight line decline in linear decline and the sub count.

Hale Holden: Or are they sort of unrelated.

Hale Holden: And then for the fourth quarter specifically thank.

Hale Holden: I think you mentioned the pullback in promotions on on electronics and I was wondering if that also had an impact on the sub count or not and then I have a follow up.

Hale Holden: Declines in terms of households, during that time, I would say, while it started out in the general market a little bit faster it was slower to start for us because a lot of our customers.

Hale Holden: That's great.

Hale Holden: We are the last to cut the cord because.

Hale Holden: Some of our customers are older and more weather too.

Hale Holden: That platform I would say what you're starting to see now is all customers are cutting.

Hale Holden: The court at roughly the same sorts of.

Hale Holden: It consists the losses.

Hale Holden: <unk> I think in my remarks, I talked about from 2018, the 2024 I think we've seen relatively consistent.

Hale Holden: Roughly the same sorts of rates, we have generally over performed.

Hale Holden: Cord cutting so if you were to do a correlation between our revenue performance in our U S video commerce businesses versus a loss of households, because we had been.

Declines in terms of households, during that time, I would say, while it started out in the general market a little bit faster it was slower to start for us because a lot of our customers.

Hale Holden: Moving some of those customers to streaming and some of those customers the digital channels.

Hale Holden: We haven't.

Hale Holden: Were the last to cut the cord because.

Hale Holden: <unk> seen some of the reductions in revenue that you would be suggested by the level of cord cutting but obviously it has had a pretty direct.

Hale Holden: Some of our customers are older and more weather too.

Hale Holden: That platform I would say what you're starting to see now is all customers are cutting.

Hale Holden: Pretty direct impact in terms of spending in the fourth quarter on advertising you caught that comment correctly. So we.

Hale Holden: The court at roughly the same sorts of.

Hale Holden: Roughly the same sorts of rates, we have generally over performed.

Hale Holden: We pulled some of our normal performance marketing and.

Hale Holden: Cord cutting so if you were to do a correlation between our revenue performance in our U S video commerce businesses versus a loss of households, because we had been.

And spending that we would normally have in the fourth quarter. Some of that we re programmed in the first three quarters and some of that we just decline would spend in the fourth quarter advertising given the advertising is always a little less effective.

Hale Holden: Moving some of those customers to streaming and some of those customers the digital channels.

But more people are in the market advertising in the fourth quarter. So it usually has a lower pay off.

Hale Holden: We haven't.

Hale Holden: <unk> seen some of the reductions in revenue that you would be suggested by the level of cord cutting but obviously it has had a pretty direct.

Hale Holden: With some of the election spending in this fourth quarter it had an even lower than normal.

Hale Holden: A lower than normal pay off and we did not see some of the opportunities around innovation in places like electronics, where we thought it was productive to push.

Hale Holden: Pretty direct impact in terms of spending in the fourth quarter on advertising you caught that comment correctly. So we.

Hale Holden: We pulled some of our normal performance marketing and <unk>.

Hale Holden: And then finally.

Hale Holden: We tend to see that our digital spending get some significant tailwind when our viewership is up with viewership being down largely because of news and special events, we werent going to have that tailwind, which was going to be a headwind to digital marketing marketing efficient.

Hale Holden: Spending that we would normally have in the fourth quarter. Some of that we re programmed in the first three quarters and some of that we just decline in spend in the fourth quarter advertising give any of it.

Hale Holden: Advertising is always a little less effective.

Hale Holden: Because more people are in the market advertising in the fourth quarter. So it usually has a lower pay off.

Hale Holden: And so we made a pretty deliberate decision.

Hale Holden: With some of the election spending in this fourth quarter it had an even lower than normal.

Hale Holden: Pullback.

Hale Holden: Not to concentrate as much on new customers and new customer acquisition those tend to be at least in the early days slightly less profitable customers. So I think this was the first time new customer count went down in the last six quarters I think we've been growing new customers Bob in the last six quarters. It went.

Hale Holden: A lower than normal pay off and we did not see some of the opportunities around innovation in places like electronics, where we thought it was productive to push.

Hale Holden: And then finally.

Hale Holden: Down.

Hale Holden: This quarter, mostly because we made a deliberate decision to concentrate on our most profitable existing customers and not the concentrate as much on chasing the customer file I think as we go back into 2025 now youll start to see.

Nancy and so we made a pretty deliberate decision.

Hale Holden: Layer back in a more balanced approach to the customer file.

Hale Holden: The pullback.

Hale Holden: New customer acquisition.

David Rawlinson: Great. Thank you David.

Hale Holden: My second question was really around a cornerstone.

Hale Holden: What's the biggest delta Miss on my part in terms of expectations.

Hale Holden: I think.

Hale Holden: For that market to turn.

Hale Holden: Down.

Hale Holden: It Hasnt.

Hale Holden: This quarter, mostly because we made a deliberate decision to concentrate on our most profitable existing customers and not to concentrate as much on chasing the customer file I think as we go back into 2025, now youll start to see us layer back in a more balanced.

Hale Holden: In terms of home furnishing. So I just wonder if there is any change in strategy there or how do you make sure you don't flip the negative in the meantime, while we're waiting for it to improve.

Hale Holden: Yes, it's a great question I think we've been.

Hale Holden: I think everybody in the market has been surprised to see the <unk>.

Hale Holden: Housing market stay at multi decade lows in terms of.

Hale Holden: Approach to the customer file.

Hale Holden: In terms of moves and to an extent newbuild.

Hale Holden: New customer acquisition.

Hale Holden: Great. Thank you David.

Hale Holden: Those businesses are very highly correlated.

Hale Holden: Second question was really around a cornerstone.

To the broader market.

Hale Holden: What's the biggest delta Miss on my part in terms of expectations and.

Hale Holden: What's encouraging to me about those businesses today.

Hale Holden: Is that this is giving us a lot of opportunity to run something like the program that we ran through project Athens on QVC and HSN now one of the cornerstone brands. So a lot of the team.

Luke: I think Luke.

Luke: And for that market to turn.

Luke: It Hasnt.

Luke: In terms of home furnishing. So I'm wondering if there's any change in strategy there or how do you make sure you don't flip the negative in the meantime, while we're waiting for it to improve.

Hale Holden: That drove a lot of the increased profitability.

Luke: Yes, it's a great question I think we've been.

Hale Holden: Cause of Athens is now working with cornerstone brands and so we know we have techniques that work that are going to help us with margin and profitability in that business over the next 12 to 18 months and those efforts are now sort of.

Luke: I think everybody in the market's been surprised to see the.

Housing market stay at multi decade lows in terms of.

Luke: In terms of moves and to an extent newbuild.

Luke: Those businesses are very highly correlated to.

Hale Holden: Full steam ahead and fully stood up and so we feel good about our ability to drive some bottom line margin and cost opportunities in that business.

Luke: To the broader market.

Luke: What's encouraging to me about those businesses today.

Luke: Is that if this is giving us a lot of opportunity to run something like the program that we ran through project Athens on QVC and HSN now on the cornerstone brands. So a lot of the team.

Hale Holden: In terms of when the when we get more out of the market itself and the macro you'll recall is as good as mine, but I would but I would just observe is that.

Hale Holden: There does feel like there is real pent up demand.

Luke: That drove a lot of the increased profitability.

Hale Holden: Market and whenever the market gets unstuck would not be surprise.

Luke: Does of Athens is now working with cornerstone brands and so we know we have techniques that work that are going to help us with margin and profitability in that business over the next 12 to 18 months and those efforts are now sort of full steam ahead and fully stood up and so we feel good about our ability.

Hale Holden: For us to have a trend that looks very different for a sustained period of time I think we will go into that.

Hale Holden: To a market turn.

Hale Holden: More profitable more capable having established a lot of new capabilities.

Luke: 80 to drive.

So bottom line margin and cost opportunities in that business.

Hale Holden: I think there is some potential to potentially over perform if we got back to an up market given some of the work we're doing but it has certainly been the macro has been depressed for longer than we would have anticipated or than we would've liked.

Luke: In terms of when the when we get more out of the market itself and the macro you'll recall is as good as mine, but I would but I would just observe is that.

Luke: There does feel like there is real pent up demand.

Hale Holden: Alright, Thank you very much I appreciate it.

Luke: Market and whenever the market gets unstuck.

Speaker Change: Thank you and the last question for today comes from Yakov Musharraf with Jpmorgan Chase <unk> Company. Please state your question.

Be surprise.

Luke: For us to have a trend that looks very different for a sustained period of time I think we will go into that into a market turn.

Speaker Change: Alright. Thank you this is yakov offer cloud casella.

Speaker Change: First question do you have an initiative to grow social sales about $1 5 billion could you just give us a sense for your progress in the quarter.

Luke: More profitable more capable having established a lot of new capabilities.

Luke: I think there is some potential to potentially over perform if we got back to an up market given some of the work we're doing but it has certainly been the macro has been depressed for longer than we would have anticipated or than we would've liked.

Speaker Change: Social sale grow sequentially or are there any callouts was working and what still needs work on social.

Speaker Change: And how much lower are the margins on social versus linear.

Speaker Change: Yes, great questions.

Speaker Change: So one conversation, we're having internally that we will get back to this community on is how to give you more insight into both social and streaming and so look for us to try to find ways to be more descriptive.

Speaker Change: Alright, Thank you very much I appreciate it.

Speaker Change: Thank you and the last question for today comes from Yakov Musharraf with Jpmorgan Chase <unk> Company. Please state your question.

Speaker Change: There you are right.

Speaker Change: Quote the $1 $5 billion run rate.

Speaker Change: Hi. Thank you this is jakob on for Carla Casella.

Speaker Change: Goal by the end of the three year period, we think thats very possible.

Speaker Change: First question do you have an initiative to grow social sales about $1 5 billion could you just give us a sense for your progress in the quarter.

Speaker Change: We already today.

Speaker Change: Hundreds of millions of dollars of revenue across social and streaming and so we are growing from a not insubstantial base there and we saw very good performance in Q4 and for the full year in terms of in terms of.

Speaker Change: Social sale grow sequentially or are there any callouts was working and what still needs work on social.

Speaker Change: And how much lower are the margins on social versus linear.

Speaker Change: Yes, great questions.

Speaker Change: Growth year over year, and we expect we expect further acceleration of that into into 2025. Both of those businesses have been growing very strongly now for a couple of years 2025 is the year, where we really put more into advertising capabilities.

Speaker Change: There you are right.

Speaker Change: Close to one $5 billion run rate.

Speaker Change: Goal by the end of the three year period, we think thats very possible.

Speaker Change: We're building partnerships.

Speaker Change: We already today.

Speaker Change: So we will have a lot more to say on that on a lot more to say on that later, but everything we saw in the in.

Speaker Change: Hundreds of millions of dollars of revenue across social and streaming and so we're growing from a not insubstantial base there and we saw very good performance in Q4 and for the full year.

Speaker Change: In the fourth quarter.

Speaker Change: Leads us to that leads us to believe that that's exactly the right growth agenda to be pushing as we go into the next three years.

Speaker Change: Here in terms of in terms of.

Speaker Change: Alright, great. Thank you so much and then I was just wondering if you could provide the RPF borrowing today, our pro forma for the 25 no pay down.

Speaker Change: Growth year over year.

Speaker Change: We expect we expect further acceleration of that into into 2025, both of those businesses have been growing very strongly now for a couple of years 2025 is the year, where we really put more into advertising capabilities building partnerships.

Speaker Change: I don't think we've shared what we've done there with respect to cash.

Speaker Change: But you saw that in between 930 and $12 31, as we build free cash flow. We did pay down some of that revolver will continue to use cash to pay down the revolver and then draw too.

Speaker Change: So we'll have a lot more to say on that on.

Speaker Change: A lot more to say on that later, but everything we saw in the in.

Speaker Change: In the fourth quarter leads us to that leads us to believe that that's exactly the right growth agenda to be pushing as we go into the next three years.

Speaker Change: Pay down debt so.

Speaker Change: We will probably be out with the balance in our Q1 results.

Speaker Change: Yes, we don't do Vince's point, we don't go intra quarter.

Speaker Change: Alright, great. Thank you so much and then I was just wondering if you could provide the RPF borrowing today, our pro forma for the 25 no paydown.

Speaker Change: Okay, what about cash that winter cornerstone and apparent level.

Speaker Change: Yeah.

Speaker Change: Yes, I think we can get there.

Speaker Change: I don't think we've shared what we've done there with respect to cash.

Speaker Change: In the press release and they are quoted on the call.

Speaker Change: I can flip that over to you as well.

Speaker Change: But you saw that in between 930 and $12 31, as we build free cash flow. We did pay down some of that revolver will continue to use cash to pay down the revolver and then draw too.

Speaker Change: Perfect great. Thanks, that's it for us thank you.

Speaker Change: Thank you.

Speaker Change: Alright, operator, I think with that we are done for the day. Thank you all for joining.

Speaker Change: On the QVC group call and we look forward to speaking with you next quarter if not sooner.

Speaker Change: Pay down debt so.

Speaker Change: We will probably be out with the balance in our Q1 results.

Thank you.

Speaker Change: Includes today so thank you everyone.

Speaker Change: All parties are now disconnect. Thank you.

Speaker Change: Yes, we don't do <unk>, we don't go intra quarter.

Speaker Change: Okay, and what about cash that winter cornerstone at the parent level.

Speaker Change: Yeah.

Speaker Change: Yeah, I think we can get there.

Speaker Change: In the press release, I think I quoted on the call.

Speaker Change: I can flip that over to you as well.

Speaker Change: Perfect Great that's it for us thank you.

Speaker Change: Thank you.

Speaker Change: All right operator, I think with that we are done for the day. Thank you all for joining.

Speaker Change: On the QVC group call and we look forward to speaking with you next quarter if not sooner.

Speaker Change: Thank you.

Speaker Change: Todays thank you everyone.

Speaker Change: Pardon me now disconnect. Thank you.

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