Q1 2025 Sirius XM Holdings Inc Earnings Call

Operator: Greetings. Welcome to the Sirius XM first quarter 2025 earnings call.

Greetings and welcome to the Sirius XM first quarter 'twenty 25 earnings call at.

Operator: Next time, all participants are in a listen-only mode. question and answer session will follow the formal If anyone should require operator assistance... Please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

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

Question and answer session will follow the formal presentation.

If anyone should require operator assistance. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

Hooper Stevens: It is now my pleasure to introduce Hooper Stevens, Senior Vice President of Investor Relations. and Hooper.

Speaker Change: It's now my pleasure to introduce Hooper Stevens senior Vice President of Investor Relations and finance. Thank.

Hooper Stevens: You may be.

Thank you Hooper you may begin.

Hooper Stevens: Thank you and good morning, everyone. Welcome to Sirius XM's first quarter 2025 earnings conference call.

Speaker Change: Thank you and good morning, everyone welcome to Sirius <unk> first quarter 2025 earnings conference call. Today, we will have prepared remarks from Jennifer Witz, Our Chief Executive Officer, and Tom Berry, Our Chief Financial Officer, Scott Greenstein, our President and Chief content Officer, and Wayne <unk>, Our executive Vice President and Chief operating Officer will join Jennifer.

Hooper Stevens: Today, we will have prepared remarks from Jennifer Witz, our Chief Executive Officer, and Tom Barry, our Chief Financial Officer.

Hooper Stevens: Scott Greenstein, our President and Chief Content Officer, and Wayne Thorson, our Executive Vice President and Chief Operating Officer, will join Jennifer and Tom to take your questions during the Q&A portion of this call.

Tom Berry: Tom to take your questions. During the Q&A portion of this call I would like to remind everyone that certain statements made during the call might be forward looking statements as the term is defined in the private Securities Litigation Reform Act of 1995. These and all forward looking statements are based upon management's current beliefs and expectations and necessarily depend upon assumptions data or methods that may be incorrect.

Hooper Stevens: I would like to remind everyone that certain statements made during the call might be forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based upon management's current beliefs and expectations and necessarily depend upon assumptions, data, or methods that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Tom Berry: Are imprecise such forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially for more information about those risks and uncertainties. Please view Sirius <unk> SEC filings and today's earnings release, we advise listeners to not rely unduly on forward looking statements and disclaim any intent or obligation to update them.

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

Hooper Stevens: As we begin, I'd like to remind our listeners that today's call will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock-based compensation.

Speaker Change: As we begin I'd like to remind our listeners that today's call will include discussions about both actual results and adjusted results all discussions of adjusted operating results exclude the effects of stock based compensation. Additionally, we have posted a supplementary presentation on our Investor Relations website for your convenience with that I'll hand, the call over to Jennifer Thanks.

Hooper Stevens: Additionally, we have posted a supplementary presentation on our Investor Relations website for your convenience.

Jennifer Witz: With that, I'll hand the call over to Jennifer. Thanks, Hooper, and good morning, everyone. Thank you for joining us today. Q1 marked our first full quarter since unveiling our new strategic direction and sharpened focus on super-serving our core in-car audience at Sirius XM. We are already seeing early benefits from these efforts, as reflected in our solid first-quarter results. Given our momentum and despite broadening economic uncertainty, we're pleased to confidently reiterate our full-year guidance today. Across the business, we remain dedicated to our three key pillars, enhancing our subscription business with a keen eye toward our in-car leadership, leveraging the strength of our advertising business across our portfolio, and optimizing efficiencies to deliver both cost reductions and higher returns.

Speaker Change: And good morning, everyone. Thank you for joining US today Q1 marked our first full quarter since unveiling, our new strategic direction and sharpened focus on Super serving our core in car audience at Sirius XM. We are already seeing early benefits from these efforts as reflected in our solid first quarter results.

Speaker Change: Given our momentum and despite broadening economic uncertainty, we're pleased to confidently reiterate our full year guidance today.

Speaker Change: Across the business, we remain dedicated to our three key pillars, enhancing our subscription business with a keen eye toward our in car leadership, leveraging the strength of our advertising business across our portfolio and optimizing efficiencies to deliver both cost reduction and higher returns.

Jennifer Witz: Diving into the first quarter, our subscription business delivered strong results with solid year-over-year improvement in self-pay net ads driven by positive trends within our in-car business, which offset an expected reduction in streaming net ads. We saw reduced in-car churn, largely due to lower cancel demand and non-pay, despite the full price rate increase we implemented in early March and signs of declining U.S. consumer confidence. Even in the face of economic uncertainty, our business remains resilient, buoyed by our industry-leading customer satisfaction and the essential nature of our service to our core subscriber base. Underpinning everything we do is the unique live and human curated content we offer our subscribers, which fuels fandom and the must-hear moments that happen on our air every day.

Speaker Change: Diving into the first quarter, our subscription business delivered strong results with solid year over year improvement in self pay net adds driven by positive trends within our in car business, which offset an expected reduction in streaming that adds we saw reduced in car churn largely due to lower cancel demand and non pay.

Speaker Change: Despite the full price rate increase we implemented in early March and signs of declining U S consumer confidence even in the face of economic uncertainty our business remains resilient buoyed by our industry, leading customer satisfaction and the essential nature of our service to our core subscriber base.

Speaker Change: Underpinning everything we do is a unique live and human curated content, we offer our subscribers, which fuel fandom and the must hear moments that happen on our air every day, our coverage of and presence at every major sporting event from the Super Bowl March Madness, and our exclusive music channels.

Jennifer Witz: Our coverage of and presence at every major sporting event from the Super Bowl to March Madness and our exclusive music channels, including pop-ups curated by the biggest artists such as Lady Gaga, bring fans closer to what they love. Additionally, our wide variety of news and politics programming where we are seeing double-digit listenership growth and our new talk programming, including the launch of shows featuring Alex Coopers on Well and Page Six, deliver value to our subscribers that they simply cannot get on any other service. We will continue to leverage the power of our extensive live and on-demand catalogs as we look to both showcase our value to current subscribers and introduce new listeners to our portfolio.

Speaker Change: <unk> pop ups curated by the biggest artists such as Lady Gaga bring fans closer to what they love. Additionally, our wide variety of news and politics programming, where we are seeing double digit listenership gross and our new talk programming, including the launch of shows featuring Alex Scoopers unwell and page six deliver value.

Speaker Change: Two our subscribers that they simply cannot yet on any other service, we will continue to leverage the power of our extensive live and on demand catalog as we looked at both showcase our value to current subscribers and introduced new listeners to our portfolio.

Jennifer Witz: Our efforts to add more value across our packages are paying off. Many of our subscribers are now enjoying the additional channels and programming newly included in their plans and time spent listening in our app where we offer even more content has increased year over year among in-car customers. We believe this led to the better than reaction to our rate increase, which impacted virtually all full-price plans as we experienced minimal churn impact. We have also made progress rolling out our new in-car pricing and packaging structure. This strategy, along with additional actions taken last year, has reduced our reliance on discounted promotional pricing and acquisition while improving price transparency, building brand trust, and driving our highest quarterly customer satisfaction on record.

Speaker Change: Our efforts to add more value across our packages are paying off many of our subscribers are now enjoying the additional channels and programming newly included in their plan and time spent listening in our App, where we offer even more content has increased year over year, among and car customers. We believe this lag.

Speaker Change: The better than expected reaction to a rate increase which impacted virtually all full price plans as we experienced minimal churn impact. We have also made progress rolling out our new in car pricing and packaging structure. This strategy along with additional actions taken last year has reduced our reliance on discounted promotional pricing at Aqua.

Speaker Change: And while improving price transparency building brand trust and driving our highest quarterly customer satisfaction on record new programs watched over the past several months, including Tesla enhancements to our used car owner data and our multiyear OEM subscriptions, which continued to expand launching in model year.

Jennifer Witz: New programs launched over the past several months, including Tesla, enhancements to our used car owner data, and our multi-year OEM subscriptions, which continue to expand, launching in model year 2026 Ford and Lincoln vehicles later this year, also led to improved in-car acquisition in the first quarter compared to last year. These programs give us confidence our strategy is working as we continue to unlock opportunities to grow within our core audience segment. We are committed to ensuring we provide the right offerings for our customers and are focused on both enhancing the value of our higher-priced tiers and introducing additional options for more price-conscious listeners.

Speaker Change: Our 2026 Ford and Lincoln vehicles. Later this year also led to improved and car acquisition in the first quarter compared to last year. These programs give us confidence our strategy is working as we continue to unlock opportunities to grow within our core audience segment.

Speaker Change: We are committed to ensuring we provide the right offering for our customers and are focused on both enhancing the value of our higher priced tiers and interesting additional options for more price conscious listeners. This includes the launch of an AD supported and subscription featuring a compelling subset of our music and talk programming, which will open up a new <unk>.

Jennifer Witz: This includes the launch of an ad-supported subscription, featuring a compelling subset of our music and talk programming, which will open up a new, persistently lower-priced option in almost 100 million cars already on the road. The new tier allows us to leverage the strength of our advertising business without putting our more premium tiers at risk. The opportunity here also grows as our fleet becomes increasingly IP-enabled. We remain on track to have more than half of new Sirius XM-equipped cars featuring our 360L product this year, allowing us to further customize offerings for our subscribers across content, marketing, and advertising.

Speaker Change: Assistant Lee lower priced option and almost 100 million cars already on the road the new tier allows us to leverage the strength of our advertising business without putting our more premium tiers at risk. The opportunity here also grows as our fleet becomes increasingly IP enabled we remain on track to have more than.

Speaker Change: Half of new Sirius XM equipped cars, featuring our 360 L product this year, allowing us to further customize offerings for our subscribers across content marketing and advertising.

Jennifer Witz: We plan to begin testing early iterations of this new subscription in the coming months, enabling us to hone the offering and bring to market the strongest package. This is another way we are working to showcase the value of our service to potential subscribers, building upon the work we've done to date with both free access, which continues to expand, and our free-to-air events, which included Chris Stapleton Radio broadcasting free to all Sirius XM radios throughout February. On the topic of advertising, ad revenue was mostly flat as compared to the same quarter in 2024. While we are closely watching day-to-day changes in the marketplace, the flexibility and broad reach of our offering allows us to meet the evolving needs of today's advertisers.

Speaker Change: Plan to begin testing early iterations of this new subscription in the coming months, enabling us to hone the offering and bring to market the strongest package.

Speaker Change: Another way, we are working to showcase the value of our service to potential subscribers building. Upon the work we've done to date with both free access which continues to expand and our free to air event, which included Chris Stapleton Radio broadcasting free to all Sirius XM radios throughout February.

Speaker Change: On the topic of advertising AD revenue was mostly flat as compared to the same quarter in 2024, while we are closely watching day to day changes in the marketplace the flexibility and broad reach of our offering allows us to meet the evolving needs of today's advertisers.

Jennifer Witz: This is best represented by the launch of our Creator Connect solution, which allows marketers to tap into creators' audiences across audio, video, and social. In the first quarter alone, we have already outpaced our full year 2024 bookings for social and video, and see this as a continued growth driver. In Q1, our podcasting revenue was up 33% year-over-year. Our podcast network clocked close to 1 billion downloads across audio and video in the first quarter, and we now reach an audience of 70 million monthly podcast listeners. Our expertise in monetizing digital ad-supported music within Pandora provides a strong basis for the opportunity ahead as we look to expand Sirius XM advertising.

Speaker Change: This is best represented by the launch of our creator connect solution, which allows marketers to tap into creators audiences across audio video and social.

Speaker Change: In the first quarter alone we have already outpaced our full year 2020 for bookings for social and video and see this as a continued growth driver in Q1, our podcast and revenue was up 33% year over year, our podcast network clock close to 1 billion downloads across audio and video in the first quarter and we now reach an audience.

Speaker Change: 70 million monthly podcast listeners our expertise in monetizing digital AD supported music within Pandora provides a strong basis for the opportunity ahead, as we look to expand Sirius XM advertising the ability to deliver audiences across broadcast streaming in podcast inclusive of video and social makes us.

Jennifer Witz: The ability to deliver audiences across broadcast, streaming, and podcast, inclusive of video and social, makes us a unique one-stop shop for marketers, and we are continuing to invest in ad tech solutions to make it easier for advertisers to buy, plan, and measure across all three. At a corporate level, we remain committed to optimizing the business and driving efficiencies. In addition to ongoing cost actions, we are testing a variety of new initiatives for savings and growth. We continue to see strong potential in areas such as AI, where we are leveraging the latest technologies to improve the customer experience, our marketing, and our ads business.

Speaker Change: A unique one stop shop for marketers and we are continuing to invest in AD tech solution to make it easier for advertisers to buy plan and measure across all three at a corporate level, we remain committed to optimizing the business and driving efficiencies. In addition to ongoing cost actions. We are testing a variety of new initiatives first.

Speaker Change: Savings in growth, we continue to see strong potential in areas such as AI, where we are leveraging the latest technologies to improve the customer experience, our marketing and our ads business in closing, while we are watching the shifting economic forces closely we are pleased with our first quarter results and continue to have confidence that our fee.

Jennifer Witz: In closing, while we are watching the shifting economic forces closely, we are pleased with our first quarter results and continue to have confidence in our full-year guidance today, as well as in our ability to deliver meaningful value to consumers across our business in the quarters to come.

Speaker Change: All year guidance today, as well as in our ability to deliver meaningful value to consumers across our business in the quarters to come with that I'll pass it over to Tom.

Tom Barry: With that, I'll pass it over to Tom. Thank you, Jennifer. And good morning, everyone. As Jennifer mentioned, we entered 2025 with clear priorities. Our first quarter performance reflects our disciplined execution and steady progress across the business. Despite the headline driven market uncertainty, we delivered strong margins, return capital to our shareholders, and advanced our strategic initiatives that will position us for a strong 2025.

Tom Berry: Thank you Jennifer and good morning, everyone. As Jennifer mentioned, we entered 2025 would clear priorities. Our first quarter performance reflects our disciplined execution and steady progress across the business.

Tom Berry: Despite the headline driven market uncertainty, we delivered strong margins returned capital to our shareholders.

Tom Berry: Our strategic initiatives that will position us for a strong 2025.

Tom Barry: Before I dive into the quarter, let me address tariffs and the uncertainty surrounding new auto sales impact on our business. Big picture, we sleep well at night. We have modeled multiple scenarios, and we do not expect any material tariff-related impact to our subscriber results this year. Thanks to our robust recurring revenue model, increased penetration in the used car market, and enhanced trial capture rates compared to past auto sales downturns, we believe we have built a resilient buffer against any potential reduction in new car sales.

Tom Berry: Before I dive into the quarter, let me address tariffs and the uncertainty surrounding new auto sales impact on our business Big picture, we sleep well at night, we have modeled multiple scenarios and we do not expect any material tariff related impact to our subscriber results. This year, thanks to a robust recurring revenue model.

Tom Berry: Increased penetration in the used car market enhance trial capture rates compared to past auto sales downturns. We believe we have built a resilient buffer against any potential reduction in new car sales.

Tom Barry: Looking at OPEX on the equipment side, we do not manufacture hardware for automakers. Any tariff exposure is largely indirect and limited to components sourced by automakers or their suppliers. So far, the impact on our OPEX has been negligible, though we continue to monitor the broader supply chain. And of course, we are also watching overall consumer health and its impact on discretionary spending. To date, our strong churn performance suggests no meaningful change in consumer behavior, but we're staying vigilant and tracking trends closely.

Tom Berry: Opex on the equipment side, we do not manufacture hardware for automakers any tariff exposure is largely indirect and eliminated the components sourced by automakers or their suppliers. So far the impact on our Opex has been negligible, though we continue to monitor the broader supply chain and of course.

Tom Berry: We are also watching overall consumer health and its impact on discretionary spending to date are strong churn performance suggests no meaningful change in consumer behavior, but we are staying vigilant tracking trends closely.

Tom Barry: Looking at the first quarter, total revenue was $2.07 billion, down 4% from a year ago, reflecting modest subscriber declines as we lap our toughest ARPU comp of the year, along with softer advertising trends across both of our segments. Net income was $204 million and adjusted EBITDA totaled $629 million, down 3% from prior year, with margins consistent year-over-year at 30%. Free cash flow is $56 million, down from $88 million in the prior year period, primarily driven by timing of payments, lower cash receipts, and higher capital expenditures, partially offset by the elimination of Liberty-related deal costs.

Tom Berry: Looking at the first quarter total revenue was $2.07 billion down 4% from a year ago, reflecting modest subscriber declines as we lap our toughest our food comp of the year.

Tom Berry: Along with softer advertising trends across both of our segments net income was $204 million and adjusted EBITDA totaled $629 million down 3% from prior year with margins consistent year over year at 30%.

Tom Berry: Free cash flow was $56 million down from $88 million in the prior year period, primarily driven by timing of payments lower cash receipts and higher capital expenditures, partially offset by the elimination of liberty related deal costs.

Tom Barry: On the cost side, we began the year focused on achieving our $200 million run-rate savings target by the end of 2025. So far, we've reduced costs by over $30 million, contributing to lower expenses across marketing, product and tech, transmission, customer service, and G&A. Sales and marketing expenses were down 19%, driven by more streamlined media mix and tighter campaign execution. Product and technology expenses declined 15% and G&A decreased 3%, all reflecting our continued emphasis on operational efficiency and discipline cost management.

Tom Berry: On the cost side, we began the year focused on achieving our $200 million run rate savings target by the end of 2025, so far we've reduced costs by over $30 million contributing to lower expenses across marketing product and tech transformation customer service and G&A.

Tom Berry: Sales and marketing expenses were down 19% driven by more streamlined media mix and tighter campaign execution.

Tom Berry: Product and technology expenses declined, 15% and G&A decreased 3%, all reflecting our continued emphasis on operational efficiency and discipline cost management turning to the segments. It was Sirius XM segment, we generated $1 $6 billion in revenue a 5% decline.

Tom Barry: Turning to the segments, in the Sirius XM segment, we generated $1.6 billion in revenue, a 5% decline year over year, primarily driven by lower subscriber and equipment revenue. Subscriber revenue declined 5%, reflecting a smaller average self-pay base and lower ARPU, and equipment revenue fell 18%, driven by changes in chipset costs and OEM production schedule. In this segment, gross profit was $937 million, representing a strong 59% margin, down modestly from 60% last year. Self-pay net subscriber losses totaled 303,000, reflecting a 16% year-over-year improvement. Churn improved 18 basis points, rounding to 1.6% in the first quarter, and was a key contributor to our improved subscriber results.

Tom Berry: Line year over year, primarily driven by lower subscriber equipment revenue.

Tom Berry: Describe our revenue declined 5%, reflecting a smaller average self pay base and lower our pool and equipment revenue fell 18% driven by changes in chipset costs and OEM production schedules.

Tom Berry: In this segment gross profit was $937 million, representing a strong 59% margin down modestly from 60% last year.

Tom Berry: Self pay net subscriber losses totaled 303000, reflecting a 16% year over year improvement.

Tom Berry: Churn improved 18 basis points rounding to one 6% in the first quarter and was a key contributor to our improved subscriber results.

Tom Barry: We saw improvements in all three broad categories we track, vehicle-related, non-pay, and voluntary churn. We have successfully managed the recent price increases across virtually all of our full-price plans with minimal churn impact thus far, and are continuing to reshape our pricing structure to better satisfy demand at various price points.

Tom Berry: We saw improvements in all three broad categories, we track vehicle related non pay and voluntary churn. We have successfully managed the recent price increases across virtually all of our full price plans with minimal churn impact thus far and are continuing to reshape our pricing structure to better satisfy.

Tom Berry: Demand at various price points, we continue to anticipate a slightly improving trend in our core in car net additions for the full year, but as discussed on our last earnings call. Our full year results will likely include a couple of hundred thousand of additional drag from reduced streaming only marketing churn pull forward related to implementation of <unk>.

Tom Barry: We continue to anticipate a slightly improving trend in our core in-car net additions for the full year, but as discussed on our last earnings call, our full-year results will likely include a couple hundred thousand of additional drag from reduced streaming-only marketing, churn pull forward related to the implementation of click-to-cancel, and shorter introductory self-pay promotional plans. Our pull in the quarter was $14.86, and while down 3% year-over-year, we expect year-over-year comparisons to become more favorable as the year progresses. Subscriber acquisition costs were $100 million, up 11% over previous year's quarter, driven by contractual changes with certain automakers focused on improving penetration rates and higher chipset costs.

Tom Berry: Click the council as shorter introductory self pay promotional plans are bought in the quarter was $14.86 and while down 3% year over year, we expect year over year comparisons become more favorable as the year progresses.

Tom Berry: Subscriber acquisition costs were $100 million up 11% over previous year's quarter, driven by contractual changes with certain automakers focused on improving penetration rates and higher chipset costs.

Tom Barry: SAC per installation was $18.86, further increased by the timing-related pullback in module production.

Tom Berry: Sac per installation was $18.86 further increased by the timing related pullback and module production.

Tom Barry: Turning to the Pandora and off-platform segment, revenue declined 2% year-over-year to $487 million, reflecting macro pressure in the digital ad market. Advertising totaled $355 million, down 2% on that pressure, partially offset by continued growth in podcast monetization and revenue. To provide more color on the advertising business, we're seeing the most softness in the early indicators of shifts in consumer sentiment. Broader economic uncertainty, including concerns about tariffs, has driven more spending towards short-term, performance-driven marketing channels. At the same time, we're seeing pockets of strength in sectors like pharma and telco, which have helped offset some of the broader weakness.

Tom Berry: Turning to the Pandora and off platform segment revenue declined 2% year over year to $487 million, reflecting macro pressure in the digital AD market advertising totaled 355 million down 2% on that pressure, partially offset by continued growth in podcast monetization.

Tom Berry: And revenue.

Tom Berry: To provide more color on the advertising business, we're seeing the most softness in the travel auto and retail sectors categories tend to be early indicators of shifts in consumer sentiment broader economic uncertainty, including concerns about tariffs has driven more spending towards short term performance driven marketing channel.

Tom Berry: At the same time, we're seeing pockets of strength in sectors like pharma and telco, which have helped offset some of the broader weakness.

Tom Barry: Big picture, we continue to see strong opportunities to invest in our ads business, particularly across high growth areas like podcasting, programmatic capabilities, and the merging video format. Subscription revenue in the Pandoran off-platform segment remained relatively flat, and the segment's gross profit totaled $139 million for the quarter, maintaining a 29% margin consistent with last year's first quarter.

Tom Berry: Big picture, we continue to see strong opportunities to invest in our ads business, particularly across high growth areas like podcasting programmatic capabilities and emerging video formats.

Tom Berry: Subscription revenue in the Pandora and off platform segment remained relatively flat in the segment's gross profit totaled $139 million for the quarter, maintaining a 29% margin consistent with last year's first quarter.

Tom Barry: Looking at CapEx, spending for the quarter totaled $189 million. As previously communicated, we continue to expect non-SAC CapEx to remain in the $450 to $500 million range for 2025, boosted by repeater and broadcast infrastructure replacements, and partially offset by lower IT spending.

Looking at Capex spending for the quarter totaled $189 million as previously communicated we continue to expect non sac capex to remain in the $450 million to $500 million range for 2025 boosted by repeater and broadcast infrastructure replacements, and partially offset by lower.

Tom Berry: It spending.

Tom Barry: Lastly, during the quarter, we returned $116 million to stockholders, including $91 million in dividends and $25 million through share repurchases. We ended the first quarter with a trailing net debt to adjusted EBITDA ratio of approximately 3.8 times and continue to prioritize a balanced approach to capital allocation. Our long-term leverage ratio target remains in the low to mid three times range.

Tom Berry: Lastly, during the quarter, we returned $116 million to stockholders, including $91 million in dividends and 25 million through share repurchases. We ended the first quarter with a trailing net debt to adjusted EBITDA ratio of approximately three eight times and continue to prioritize a balanced approach.

Tom Berry: As to capital allocation, our long term leverage ratio target remains in the low to mid three times range, we remain focused on maintaining financial flexibility and take a smart consistent approach to capital deployment.

Tom Barry: We remain focused on maintaining financial flexibility and taking a smart, consistent approach to capital deployment.

Tom Barry: Finally, we are reaffirming our 2025 full-year guidance. Approximately $8.5 billion in revenue, $2.6 billion in adjusted EBITDA, and $1.15 billion in free cash flow. This reflects the company's continued confidence in our strong operational execution and cost management. Backed by robust free cash flow, continued operational efficiencies, and disciplined strategic investments, we feel great about our ability to generate long-term sustainable value for shareholders across a variety of economic environments.

Tom Berry: Finally, we are reaffirming our 2025 full year guidance approximately $8 5 billion in revenue 2.6 billion and adjusted EBITDA at 1.15 billion in free cash flow. This reflects the company's continued confidence in our strong operational execution and cost management.

Tom Berry: Backed by robust free cash flow continued operational efficiencies and disciplined strategic investments, we feel great about our ability to generate long term sustainable value for shareholders across a variety of economic environments with that I'll turn it over to the operator for Q&A.

Operator: With that, I'll turn it over to the operator for Q&A. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the start key. One moment, please, while we call for... Thank you.

Tom Berry: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two to remove yourself from the queue.

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

One moment. Please so we poll for questions.

Speaker Change: Thank you. Our first question is from the line of Sebastiano Petti with J P. Morgan. Please proceed with your question.

Sebastiano Petti: Our first question is from the line of Sebastiano Petti with J.P. Morgan. Hi, thank you for taking the question. Just thinking about the full year guide, Tom, you know, sounded pretty confident in the levers in the business cost cutting opportunity. But just help us think about, you know, there's no tariff impact, as you guys mentioned on the call, you know, the price increase is now fully baked, ARPU comps are getting easier for the year, and costs, you know, efforts are beginning to scale. Margins in the first quarter were flat year over year, the guide implies, you know, 140 base contract Why isn't there upside to the 2025 EBITDA guide?

Sebastiano Petti: Hi, Thank you for taking the question I'm just thinking about the full year guide Tom you sounded pretty confident in the levers in the business cost cutting opportunity, but just.

Sebastiano Petti: Just help us think about you know theres no tariff impact as you guys mentioned on the call you know the price increase is now fully baked <unk> comps are getting easier for the year and cost efforts are beginning to scale our margins in the first quarter were flat year over year. The guide implies 140 basis contraction.

Sebastiano Petti: Why isn't there upside to the 2025 EBITDA guide what are we missing here and then as we're thinking about the impact of digital you reiterated a couple of hundred thousand impact from click to cancel as well as the turn off of the digital dialing back marketing efforts. There can you, perhaps maybe size the quantum of the digital loss within the first quarter.

Sebastiano Petti: What are we missing here? And then as we're thinking about the impact of digital, you reiterated, you know, a couple hundred thousand impact from click to cancel, as well as the, you know, turn off of the digital, you know, dialing back marketing efforts there. Can you perhaps maybe size the quantum of the digital loss within the first quarter as we're kind of thinking about it? Because I think previous comments were first half.

Sebastiano Petti: We're kind of thinking about it because I think previous comments, where first half is perhaps weaker year over year before improving in the back half of the year in terms of the self pay net add cadence. So just wanted to make sure. If that's still the right way to think of that thank you again.

Tom Barry: Thank you. So, Sebastiano, when you look at the overall EBITDA, you know, we've had a lot of, you know, moving pieces in there, there's obviously, when you look at the revenue side and against the cost savings initiatives, we're on course ending Q1, I mean, I think we've done pretty well as far as where we've positioned the business, and I think, you know, the cost savings will continue along the line and we're obviously heavily focused on maintaining the margin for the full year. So, when you look at, you know, the numbers, I think we feel comfortable with how the numbers roll up right now and, you know, I think there's not a lot of changes, we have some things moving back and forth, the cost savings are on target, like I said in the script, so I think we feel pretty good as far as where EBITDA's positioned right now.

Tom Berry: Tom you want to pick up the EBIDTA.

Tom Berry: Yeah. So sebastiano when you look at the overall EBITDA as you know we've had a lot of moving pieces in there. There's obviously when you look at the revenue side and against the cost savings initiatives. We're on course and in Q1, I mean, I think we've done pretty well as far as where we positioned the business.

Tom Berry: You know the cost savings will continue along the line and we're obviously heavily focused on maintaining the margin for the full year. So when you look at the numbers I think we feel comfortable with how the numbers roll up right now and I think there's not a lot of changes we have some things moving back and forth the cost savings are.

Tom Berry: We're on target.

Tom Berry: Like I said in the script. So I think we feel pretty good as far as where you but does position right now yeah. I think the guidance is Ah was designed very thoughtfully as you can imagine to take into account trends on subs revenue and cost savings and as Tom mentioned you know there is.

Jennifer Witz: Yeah, I think the guidance was designed very thoughtfully, as you can imagine, to take into account trends on subs, revenue, and cost savings, and as Tom mentioned, you know, there's going to be continued improvement on the cost side, heading towards this $200 million run rate exiting 2025 savings number. We also had some impacts in the first quarter of lower sales and marketing that we may choose to reinvest later in the year. We did discuss in earlier comments about the launch of low-cost with ads and so there could be some reinvestment of some of those savings later in the year, but the biggest opportunity for upside relative to the guidance likely is in costs overall.

Tom Berry: Gonna be continued improvement on the cost side are heading towards this 200 million dollar run rate exiting 2025 savings number I. We also had some impacts in the first quarter of lower sales and marketing that we may choose to reinvest later in the year, our we did discuss.

Tom Berry: In earlier comments about the launch of low cost of that and so there there could be some reinvestment of some of those savings later in the year, but but the biggest opportunity for upside relative to the guidance I likely is in costs overall and then on your question about click to cancel so that doesn't go into place across the U S.

Tom Barry: And then on your question about click-to-cancel, so that doesn't go into place across the U.S. until two weeks from now. We do have it implemented across a number of states and so we have some expectation about the impact of that. That's been – that's embedded in our current numbers and obviously we had very strong churn performance in the first quarter and it's included in that. And we do think that, you know, rolling it across the U.S. will have incremental impact on churn this year. It's one of the three things we highlighted as having an impact on net ads this year beyond kind of what's going on in the core.

Tom Berry: Until two weeks from now.

Tom Berry: We do have it implemented across a number of states and so we have some expectation about the impact of that that's been that's embedded in our current numbers and obviously, we had very strong churn performance in the first quarter I and it's included in that and we do think that you know rolling in across the U S will have.

Tom Berry: Incremental impact on churn this year, it's one of the three things we highlighted is having an impact on net adds this year beyond kind of what's going on in the core are in the car or we would expect net adds to actually improve year over year, but for these three impacts of click to cancel the streaming NAV.

Tom Barry: In the core, we would expect net ads to actually improve year over year, but for these three impacts of click-to-cancel, the streaming, net ad reduction, and the pull forward from using shorter-term promotions post-conversion in trial, in CAR. So the first quarter we did say, if your question is really about streaming net ads, the first And that was offset by better – so lower losses on the in-CAR side of the business. And again, we feel really good about, you know, the subscriber trend line that we've talked about and overall guidance for the year.

Tom Berry: Dad reduction and the pull forward from using short term promotions are post conversion in trial in car right. So the first quarter. We did say if your question is really about streaming that adds the first quarter streaming that ads were negative and that was.

Tom Berry: Offset by better so lower losses on the in car side of the business and again, we feel really good about the subscriber.

Tom Berry: I trend line that we've talked about an overall guidance for the year.

Tom Berry: Thank you.

Tom Berry: Thank you.

Kutgun Maral: The next question is from the line of Kutgun Maral with Evercore ISI. Good morning, and thanks for taking the questions. You know, the Sirius XM subscriber results showed quite a healthy improvement compared to last year. I think churn specifically was very encouraging. And what stuck to me was that non-pay and voluntary were both lower year-over-year, and you know that there's been minimal impact so far following the results.

Speaker Change: The next question is from the line of cooking morale with Evercore ISI. Please proceed with your question.

Speaker Change: Good morning, and thanks for taking the questions.

Speaker Change: Sirius XM subscriber results showed quite a healthy improvement compared to last year and insurance, specifically was very encouraging and what's out to me was that non pay and voluntary were both lower year over year and you don't know that there's been minimal impact so far following the recent price us I'm not sure what more you can say, but any additional color would be much.

Jennifer Witz: I'm not sure what more you can say, but any additional color would be much appreciated because of all the concerns around the macro and competitive backdrops and how we should be thinking about the trends going forward. Thank you. Sure. I mean, we are very encouraged by our first quarter results and just how the metrics have trended even more recently. Obviously, we're watching, you know, things like cancel demand, cancel rate on the voluntary side, non-pay, entry rates, cure rates, and demand metrics, and we really haven't seen anything to give us any pause. And I think a lot of it has to do with just our loyal core long-term subscriber base where we have been seeing higher satisfaction and value even than ever before and consistently low churn.

Speaker Change: Appreciate it because of all the concerns around the macro and competitive backdrops and how we should be thinking about the trend going forward. Thank you.

Speaker Change: Sure I mean, we are very encouraged by our first quarter results and and just how the metrics have trended even more recently, obviously, we're watching you know things like canceled the man cancel rates on the voluntary side non PE entry rates cure rates and demand metrics and we really haven't seen anything to give.

Speaker Change: US any pause.

Speaker Change: And I think a lot of it has to do with just our loyal core long term subscriber base, where we have been seeing higher satisfaction and value even than ever before and consistently low churn and I think that just decreases some of the potential impact from economics uncertainty on our subscription business.

Jennifer Witz: And I think that just decreases some of the potential impact from economics uncertainty on our subscription business. You know, just internal and external research both confirms very high satisfaction and engagement with our service among our subscribers. You know, we see strength also in our engagement data, which we have more and more of, obviously, with 360L and listening outside the car through the app where we saw very healthy engagement in the first quarter. And then, again, we just monitor the metrics, but we really haven't seen anything of concern. And this is, of course, even or despite the rate increase that we implemented across full price packages in the first quarter.

Speaker Change: I you know just internal and external research both confirmed very high satisfaction and engagement with our survey among our subscribers. Yeah. We see strength also in our engagement data, which we have more and more of obviously with 360 L and listening outside the car through.

Speaker Change: The App, where we saw very healthy engagement in the first quarter I and then again, we just monitor the metrics, but we really haven't seen anything of concern and this is of course, even or despite the rate increase that we implemented across full price packages in the first quarter. So so we really feel good about where we.

Operator: So we really feel good about where we are on the subscription side of the business. Great. Thank you so much. If you would like to ask a question, please press star 1 from your telephone keypad and the confirmation tone will indicate your line is in the question area.

Speaker Change: We are on the subscription side of the business.

Speaker Change: Yeah.

Speaker Change: That's great. Thank you so much.

Speaker Change: Thank you if.

If you'd like to ask a question. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Steven Cahall: Our next questions are from the line of Steven Cahall with Wells Fargo. Thanks, Jennifer. I was wondering if you could give us some more color on your new ad supported tier. So is the subscriber acquisition process there any different versus your current paid tier? And is there any difference in how the cogs work for that in terms of like revenue share and royalties? I guess what I'm trying to get at is, you know, it sounds like this should be EBITDA accretive. Is it margin neutral? Is it margin accretive or something different? And how significant maybe could that be this year and next as you start to lean into it a little more?

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

Steven Cahall: Thanks, Jennifer I was wondering if you could give us some more color on your your new AD supported tier. So is the subscriber acquisition process there any different versus your current paid tier and is there any difference in how the Cogs work for that in terms of like revenue share and royalties I guess, what I'm trying to get at is you know it sounds.

Steven Cahall: This should be EBITDA accretive as it is it margin neutral is it margin accretive or something different.

Steven Cahall: And how significant maybe you could that be this year and next as you start to lean into it a little more and then maybe just another one on the self pay net adds outlook.

Steven Cahall: And then maybe just another one on the self-pay net ad outlook. Is there any way to just think about how we tie up all the things that are not related to in-car core trends? So between click to cancel, you know, the promo impact and the streaming only impact, you know, are we talking kind of single digit hundreds of thousands of subs? Is it bigger or smaller than that? We just love to understand that. And is that pretty much done after this year? And then we don't have to worry about those things from 26 on or do those linger?

Steven Cahall: Is there any way to just think about how we tie up all the things that are not related to in car core trends so between quick to cancel.

Steven Cahall: The promo impact and the streaming only impact are we talking kind of single digit hundreds of thousands of subs is it bigger or smaller than that we're just kind of a love to understand that and does that pretty much done. After this year and then we don't have to worry about those things from twenty-six on or did those linger. Thank you.

Tom Barry: Thank you.

Tom Barry: I'll start with your second question, Steven, on, you know, just the three things. So the way we've been talking about it is that just without them, it would be, we would be better year over year in terms of self-pay net ads. But the three things we've highlighted that you mentioned result in about a couple hundred thousand incremental negative net ads this year. Some of those we would expect to roll into next year, but clearly something like short term promotions pull forward some churn, so that gets better when you look at year over year comps in 26.

Steven Cahall: So I'll start with your second question on I, you know just the the three things so the way we've been talking about it is that just without them. It would be we would be better year over year in terms of self pay net adds but the three things. We've highlighted that you mentioned, resulting in about a couple of one.

Steven Cahall: <unk> thousand incremental negative net adds this year some of those we would expect to roll into next year, but clearly something like short term promotions and pull forward. Some churn so that gets better when you look at year over year comps in 'twenty six and then we believe we have a number of initiatives in place too.

Jennifer Witz: And then we believe we have a number of initiatives in place to help improve the trend line. That's certainly our goal for 26, including things like low cost with ads.

Help improve the trend line, that's certainly our goal for 'twenty, six including things like low cost with that and I'll, let Wayne comment more on it. He has been key to kind of getting this off the ground, but I'm really excited about how the team has rallied.

Wayne Thorson: And I'll let Wayne comment more on it. He's been key to kind of getting this off the ground. But I'm really excited about how the team has, you know, rallied around this initiative. As we focus on opportunities to really super serve our core in-car audience. And as you know, the time spent listening in car, 80% of that for 35 years old and up is AMFM and SiriusXM. So we have a real opportunity here to take share from AMFM with the right price points and packages.

Steven Cahall: Rallied around this initiative as we focus on opportunities to really super serve our core in car audience.

Steven Cahall: As you know the time spent listening in car and 80% of that for 35 years old and up is a M. F M and Sirius XM. So we have a real opportunity here to take share from an S. M with the right price points and packages. So Wade you want to talk more about that yeah. Thanks, and as you can tell we are really excited about.

Wayne Thorson: So, Wayne, do you want to talk more about that? Yeah, thanks. And as you can tell, we are really excited about this addition to our business. Our plan is to roll this out in the coming months, but in a very targeted way. You know, so while at the same time testing a few different prices and packages, we're expecting to land in the high single digits in terms of price. And as Jennifer noted, this is going to be available from the beginning in almost 100 million vehicles and available to all new car trialers. So the addressable opportunity is quite large, but we're going to be using our new marketing capabilities to target in a very thoughtful way on how this is offered and to whom.

Steven Cahall: This addition to our business our.

Steven Cahall: Our plan is to roll this out.

Steven Cahall: In the coming months, but in a very targeted way so while at the same time testing a few different prices and packages.

Steven Cahall: We're expecting to land in the high single digits in terms of price and as Jennifer noted. This is gonna be available from the beginning and almost 100 million vehicles and available to all new car trailers. So the addressable opportunity is quite large, but we're gonna be using our new marketing capabilities to target in a very thoughtful way on how this is.

Steven Cahall: Alford into whom so the goal here is to offer this to you know cohorts that we've identified to do not convert as well or who are generally more price sensitive.

Wayne Thorson: So the goal here is to offer this to, you know, cohorts that we've identified who do not convert as well or who are generally more price sensitive. And so the goal here overall is to increase yield in our overall funnel and looking forward to reporting back as we make a little bit more progress. Yeah. And just to your margin question, yeah, our margins are very high, as you know, our variable margins across all of our packages. And I don't see this as being any different. I would expect it to have more impact next year than this year because we're still, you know, in test phase and ramping up, you know, later this year.

Steven Cahall: So the goal here overall is to increase yield in our overall funnel.

Steven Cahall: And looking forward to reporting back as we make a little bit more progress.

Steven Cahall: And then just to your margin question, Yeah. Our margins are very high as you know our variable margins across all of our packages and I don't see this as being any different I would expect it to have a more impact next year than this year, because we're still in test phase and ramping up.

Steven Cahall: You know later this year.

Steven Cahall: Thank you.

Jessica Roy Faralik: The next questions are from the line of Jessica Roy Faralik with Bank of America. Your line is live for questions. Sorry, can you hear me now?

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

Speaker Change: Jessica Your line is live for questions, perhaps you're muted.

Speaker Change: Why don't we sorry, sorry, yeah, sorry can you hear me now hi, Jessica We've got you yeah, Okay. So sorry about that and good morning.

Jessica Roy Faralik: Hi, Jessica, we've got you. Yeah, okay, so sorry about that. Good morning. So two things. One, advertising is clearly going to become a more important component of revenue. What changes are you making, if any, to your sales approach, whether it's direct sales, programmatic, et cetera? And then the second thing is just in podcasting, you've made an investment. Can you just talk about how you are monetizing across different platforms, the talent that you have, and how much bigger do you hope or plan to get?

Speaker Change: So two things one advertising is clearly going to become a more important component of revenue what changes you're making if any to your sales approach them, whether it's direct sales programmatic, etc.

Speaker Change: And then the second thing is just in podcast thing you've made you know it you know what investment and can you just talk about how you are monetizing across different platforms, you're the talent that you have.

Speaker Change: And.

Speaker Change: How much bigger do you hoped with plans to get.

Jennifer Witz: Sure, I'll start, Jessica. First on podcasting, it's one of the larger investments we've made over the last few years, and I'm really pleased with how we've executed here. As you know, it supports certainly the ad side of our business, but we also have exclusive content on the SiriusXM side of the business, and we've launched the Podcast Plus subscription, which is distributed across multiple other channels. We certainly saw that at the end of the first quarter where programmatic started to rise towards the end of the quarter and continue to see sort of late booking. So having those capabilities in place is incredibly helpful.

Speaker Change: Sure I'll start just on first on podcast Ing I think that's one of the larger investments we've made over the last few years and I'm really pleased with how we've executed here as you know it supports certainly outside of our business, but we also have exclusive content on the Sirius XM side of the business and.

Speaker Change: We've launched the podcast plus subscription which is distributed across a multiple other channels.

Speaker Change: But on the ads business. It has the largest impact and you saw the numbers in the first quarter revenue was up 33%. So we feel really good about the trend line here and a lot of that does have to do with selling across channels, where creators or I are pushing their content so whether that.

Speaker Change: Audio podcasts video podcasts video clips or social we've been able to offer packages to advertisers to extend their reach alongside the creators that they respect and value and I and ultimately improve.

Speaker Change: Move their campaign performance. So we've had really strong interest in that among marketers I don't see that dampening at all given the general environment, and which is you know maybe impacting other parts of the ads business more than podcast Ang. There's just a very strong trend line there.

Speaker Change: There's of course always more we can do in terms of bringing more self serve solutions, I and better bringing targeting and measurement our into our portfolio. So that advertisers can really buy across the portfolio. So going to your first question about our sales approach directed.

Still a very significant effort for us I and you know I think the programmatic we've had long term success with and I continue to see strong demand. There. It is especially helpful that you have I or the capabilities there in an environment, where marketers might be.

Speaker Change: I sort of waiting to deploy budgets and we certainly saw that at the end of the first quarter, where programmatic started to rise towards the end of the quarter and I continue to see sort of late bookings so having those capabilities in place is incredibly helpful. But again, there's more we can do to build.

Jennifer Witz: But again, there's more we can do to build out self-serve capabilities so that we can be more appealing to a broader set of marketers. Thank you.

Speaker Change: Self serve capabilities, so that we can be more appealing to a broader set of marketers.

Speaker Change: Thank you.

Stephen Laszczyk: Our next question is from the line of Stephen Laszczyk with Goldman Sachs. Hey, great. Thanks for taking the questions.

Speaker Change: Our next question is from the line of Stephen <unk> with Goldman Sachs. Please proceed with your questions.

Speaker Change: Hey, great. Thanks for taking the questions Jennifer maybe on pricing I'm curious if you could talk a little bit more about the receptivity you're seeing for some of the pricing increases it sounds like the value exchange that you pushed down late last year. Early this year has really been helping on uptake and just curious on the back of that out perhaps you should think about the pacing of pricing increases.

Jennifer Witz: Jennifer, maybe on pricing, I'm curious if you talk a little bit more about the receptivity you're seeing to some of the pricing increases. It sounds like the value exchange that you pushed down late last year, early this year, has really been helping on uptake, and just curious in the back of that how perhaps we should think about the pacing of pricing increases on ARPU throughout the year. And then just to double-click on advertising on more of a real-time basis, curious what you're hearing from your advertising partners as they settle in here past the first few weeks of tariff volatility.

Speaker Change: <unk> through throughout the year.

Speaker Change: And then just to double click on advertising.

Speaker Change: A more of a real time basis curious what youre hearing from your advertising partners as they settle in here past. The first few weeks of tariffs volatility palace trends early into the second quarter.

Jennifer Witz: How have trends early into the second quarter compared to what you saw coming out of the first quarter? Thank you. Sure, and the rate increase went into place in early March and across our full-price packages and, you know, it was anywhere from $1 to $2, depending upon the package, as we wanted to align prices with our all-in pricing we put in place the middle of last year. So, fairly significant for us, and we've seen very little negative impact. Of course, it's still early, but we do have a majority of our subscribers on monthly plans. So, you know, it is pretty fully rolled out as we go into the next few months.

Speaker Change: Compared to what you saw coming out of the first quarter. Thank you.

Sure I know the rate increase went into place in early March and across our full priced packages and you know it was anywhere from one to $2 depending upon the packages we wanted to align our prices with our all in pricing we put in place the middle of last year.

Speaker Change: So fairly significant for us I and we've seen very little negative impact Yeah of course, it's still early.

Speaker Change: But we do have a majority of our subscribers on monthly plans. So you know it is a pretty slowly are ruled out as we go into the next few months I think you know a lot of times when you see the reaction when we send the notices out about the rate increase as opposed to when the increase actually goes into effect and so we have a pretty.

Tom Barry: I think, you know, a lot of times we see the reaction when we send the notices out about the rate increase as opposed to when the increase actually goes into effect. And so we have a pretty good read on consumer response. And it is exactly what you mentioned, I believe, that has helped us through this, which is we push a lot of value down to those packages in the fall, and we actually saw a lot of engagement with that newly added content among those subscribers. So, again, feel really good about this. I think in terms of the ARPU comps, as we've said, first quarter was tough as it just went into place late in the quarter, but we would expect the trend line to get better as we go throughout the year.

Speaker Change: Good read on on consumer response, and it is exactly what you mentioned I believe that has helped us through this which is we push a lot of value down to those packages in the fall and we actually saw a lot of engagement with that newly added content among those.

Speaker Change: Fibers. So again feel really good about this I think in terms of the ARPA comps and as we said first quarter was tough as it just went into place late in the quarter, but we would expect the trend line should get better as we go throughout the year.

Tom Barry: And then on the ad side, I'll let Tom talk about the categories, but I would just say, you know, it's hard to get a read on it. And certainly kind of the dynamics on podcasting make us very attractive to marketers overall. You want to talk about the categories?

Speaker Change: And then on the AD side I'll, let Tom talk about the categories, but I would just say I you know, it's hard to get a read on it clearly the news changes every day every week and I think we're just pleased with the portfolio, we have to be able to optimize across broadcast streaming and podcasting and certainly kind of.

Tom Berry: The dynamics in podcast Ang make us very attractive to marketers overall, you want to talk about the categories yet so.

Tom Barry: So good morning, Stephen. So looking at, you know, the categories, when you look at where we are in ad sales, Jennifer, you know, articulated appropriately. I mean, I think the, you know, we saw, you know, we're seeing we're cautious, but you look at the, you know, we had a fairly solid quarter in Q1. We're seeing a little bit of, you know, pullback on the travel and the auto in some level to retail. So, you know, we're actually seeing some softness on that side, but we are also seeing strength on the telco side and pharma. So, you know, we have a broad portfolio.

Steven Cahall: Good morning, Steven So looking at the.

Steven Cahall: Categories. When you look at where we are that sells Jennifer articulated appropriately I mean I think the.

Steven Cahall: We saw you know we're seeing we're cautious but you look at the you know we had a fairly solid quarter in Q1, we're seeing a little bit of a pullback on the travel and the auto.

Steven Cahall: And some level the retail so where I see him some softness on that side, but we are also seeing strength on the.

Steven Cahall: The telco side and pharma. So you know we have a broad portfolio we are.

Barton Crockett: We are, you know, obviously in this period of, you know, of tariffs and volatility, you know, our sales team is working hard in trying to react to the market space. So it will be ongoing and we'll continue to press it. That's great, thank you both.

Steven Cahall: Obviously in this this period of you know of tariffs and volatility.

Steven Cahall: Our sales team is working hard and trying to react to the market space. So it'll be ongoing and will continue to press it.

Steven Cahall: Great. Thank you both.

Barton Crockett: Our next question is from the line of Barton Crockett with Rosenblatt Securities. Okay, thanks for thanks for taking the question. I was wondering if you could maybe elaborate a little bit more on the statement that you don't see real kind of risk from tariff impacts on the car market. I understand the confidence, but I'm just wondering if you could unpack, you said you looked at some scenarios, if you could unpack the scenarios you looked at and how you came to that conclusion. And also, I think you were very particular in your verbiage that you don't see an impact this year.

Speaker Change: Our next question is from the line of Barton Crockett with Rosenblatt Securities. Please proceed with your question.

Barton Crockett: Okay. Thanks for thanks for taking the question.

Barton Crockett: I was wondering if you could maybe elaborate a little bit more on the statement that you don't see real kind of risk from tariff impacts on the car market.

Speaker Change: You know I understand the confidence, but I'm just wondering if you can unpack you said you looked at a lot of some scenarios. If you can unpack the scenarios you've looked at and how you came to that conclusion and also I think you were very particular on your verbiage. So you don't see an impact this year.

Tom Barry: Is part of this that with your long kind of trials that some of the impact would be pushed into next year? Is that part of it? If you could explain, that'd be helpful.

Speaker Change: Part of this that you know whats your long kind of trials and some of the impact will be pushed into next year is that part of it. If you can explain that'd be helpful. Thank you.

Tom Barry: Sure. I'll start on this one. So I think Certainly, as we've seen in the past, with a reduction in car sales, the near-term impact is generally less vehicle-related return, right, as our subscribers are not trading in cars and therefore canceling their subscription and going on a trial. So that's what we would expect in the near term. And then the question is really how does the – how do lower auto sales, if that's truly what happens, continue in the future years, right? So what's the trend line? And if there was a very long-term notable reduction in auto sales, then I would be more concerned for the business.

Speaker Change: Sure.

Speaker Change: Start on this one I so I think.

Speaker Change: Certainly as we've seen in the past with a reduction in car sales. The near term impact is generally I last vehicle related churn right as our subscribers are not trading in cars and therefore canceling their subscription and going on a trial.

Speaker Change: So that's what we would expect in the near term and then the question is really how does the how does lower auto sales I E.

Speaker Change: If that's truly what happens continue in the future years right. So what's the trend line and if there was a very long term a notable reduction in auto sales then I leave you more concerned for the business, but our expectation is that new car sales. If there if there is a reduction.

Tom Barry: But our expectation is that new car sales, if there is a reduction, will be in part offset by used car sales. We have a very strong representation of used car sales in our funnel. We've added data partners to help us identify when those cars trade hands. And we're able to increasingly offer trials, and we've seen that materialize sort of in better growth ads, essentially, in our business. And so I think from a subscriber standpoint, there could be some near-term positives and then maybe some slight longer-term negatives. Financially, without the SAC, it'll be positive. But in general, we would believe that the new car sales reduction would be in part offset by used.

Speaker Change: B in part offset by used car sales, we have a very strong representation of used car sales and our funnel. We've added data partners to help us identify windows cars trade hands, and we're able to increasingly offer trials and we've seen that materialize.

Speaker Change: In better gross adds essentially I in our business and so I think from a subscriber standpoint, there could be some near term positives and then maybe some slight longer term negative financially without the fact it'll be positive but in general.

Speaker Change: So I, we would believe that the new car sales reduction would be in part offset by used even without that we still have high confidence in the financial and subscriber metrics for this year I am likely next year as well.

Tom Barry: Even without that, we still have high confidence in the financial and subscriber metrics for this year and likely next year as well.

Tom Barry: And if I could just follow up, I'm just curious if you could elaborate a little bit more on what you're hearing right now from your automaker partners in terms of, you know, things are very fluid. If you could give us any... more recent update on what you're hearing from them in terms of their expectations for new car sales and the possibility of an offset from used car, offsetting some of the new car pressure. I mean, we're hearing, I think what you're hearing, just the public statements and, you know, obviously the, I guess, April SAR will come out later today, I believe, but, you know, March was very strong.

Speaker Change: Okay, and if I could just follow up I'm just curious if.

Speaker Change: If you could elaborate a little bit more on what you're hearing right now from your automaker partners in terms of you know things are very fluid if you could give us any.

Speaker Change: More recent update on what Youre hearing from them in terms of their expectations for new car sales and the possibility of an offset from used car offsetting some of the new car pressure potentially.

Speaker Change: I I mean, we're hearing I think what you're hearing just the public statements and I you know obviously, the I guess I.

Speaker Change: April SAR will come out later today I believe but you know March was very strong and theres been a lot of pull forward I in terms of consumers buying ahead of an expectation of perhaps price increases. So I. So I think yeah, we're watching the public news as much as you are in and obviously.

Tom Barry: There's been a lot of pull forward in terms of consumers buying ahead of an expectation of perhaps price increases. So, I think, you know, we're watching the public news as much as you are, and obviously it continues to evolve, but again, I think some pull forward also offsets, you know, any potential negative that might happen over the course of the year. That's very helpful.

Speaker Change: It continues to do evolve, but I, but again I think some pull forward off also offsets you know any potential negative that might happen over the course of the year.

Speaker Change: Okay. That's very helpful. Thank you.

Operator: Thank you.

Thank you our next and final question is from Kamran minutes in Peru with Morgan Stanley. Please proceed with your question.

Cameron Manson Perrone: Our next and final question is from Cameron Manson Perrone with Morgan Stanley. Thank you. One follow-up just on the price hike, you know, pretty encouraging churn result in conjunction with that.

Speaker Change: Thank you one follow up just on <unk>.

Speaker Change: Price hike.

Speaker Change: Pretty encouraging churn result.

Jennifer Witz: Jennifer, I'd be curious to hear, you know, should we expect, looking beyond 2025, you know, should we expect still that you continue kind of an every other year cadence to price taking, or does the response among the subscriber base this quarter recently change the way you're thinking about kind of the broader pricing philosophy? a longer term.

Speaker Change: In conjunction with that Jennifer I'd be curious to hear you know should.

Speaker Change: Should we expect looking beyond 2025 should we expect.

Speaker Change: Still that you continue kind of in every other year cadence to price taking or does the response among the subscriber base. This quarter recently changed the way youre thinking about kind of the broader pricing philosophy.

Jennifer Witz: And then for Tom, you know, you're pretty clear that tariffs, you don't expect to have any impact on the OPEX-based subs, but I'd be curious, I'm assuming for your satellite contracts, those are largely contracted, but for the non-SAT CAPEX, any thoughts on risk or not to any tariff impact? I'll start on pricing. You know, our goal is kind of every other year, and we will continue to evaluate that. There may be opportunities to take price on certain packages, but not all of them, so that there's some form of a price increase every year. But we haven't established what we're going to do going into next year.

Tom Berry: The term and then for Tom.

Tom Berry: You are pretty clearly the tariffs you don't expect to have any impact on the opex space subs, but.

Tom Berry: I'd be curious I'm, assuming for your satellite contracts those are large largely contracted but for the non sac capex any any thoughts on risk or not.

Tom Berry: Any tariff impact there. Thank you.

Tom Berry: Well I'll start on on pricing I E.

Tom Berry: Our goal is kind of every other year and we will continue to evaluate that there may be opportunities to take price on certain packages, but not all of them. So that there's some form of a price increase every year, but we haven't established what we're gonna do going into next year.

Jennifer Witz: We're watching, obviously, reaction really closely. While I have a lot of confidence in the loyal nature of our subscriber base, I think we want to be mindful of the economic environment clearly. And I think part of what we're doing is, as you can tell, increasing the breadth of the pricing and the packages that we have in market so that we have the flexibility to offer consumers who might be more price sensitive one of those lower-priced packages that is on an ongoing rate as opposed to a short-term promotional discount. So, again, building out this broader pricing and packaging structure, I think, helps us meet demand and help with retention across a number of different segments.

Tom Berry: We're watching obviously reaction really closely well I have a lot of confidence and I you know the loyal nature of our subscriber base I think we want to be mindful of the economic environment are clearly and and I think part of what we're doing is as you can tell increasing.

Tom Berry: The breadth of the pricing and the packages that we have in market. So that we have the flexibility to offer consumers who might be more price sensitive one of those lower priced packages that yeah. It was on an ongoing rate as opposed to a short term a promotional discount so can building.

Tom Berry: [noise] out this broader pricing and packaging structure, I think helps us meet demand and help with retention.

Tom Barry: Tom, do you want to address CapEx? Yeah, sure. Yeah, so, Cameron, so looking at CapEx, you know, on the satellite side, you're right. The satellite infrastructure and IT systems are principally U.S.-sourced, so we don't see a lot of risk there from a tariff standpoint. You know, some of the terrestrial repeaters are actually come from Canada, but for the most part, we feel limited, very limited exposure on the SAT side. The non-SAT side is a lot of labor and other components. And, you know, I think in the last six months as Wayne's assembled his team and arrived, we spent a lot of time going through non-SAT CapEx, and we feel that we've stress-tested the components of it, and we feel very comfortable with the tariff impact.

Tom Berry: Across a number of different segments at Tommy address Capex, Yeah sure.

Speaker Change: Yeah. So Cameron so looking at Capex, you know on the satellite side, you're right. The satellite infrastructure systems are principally U S. Sourced so we'll see a lot of risk there from a tariff standpoint.

Tom Berry: You know some of the terrestrial repeaters are actually.

Tom Berry: Come from Canada, but for the most part we feel limited very limited exposure on the south side. The non SaaS side is a lot of labor and other components and.

Wayne: You know I think in the last six months is wayne's assembled his team and arrive we spent a lot of time going through.

Wayne: <unk> Capex and we feel that we've stress tested the components of it and we feel very comfortable with the tariff impact.

Tom Barry: Very helpful. Thank you.

Speaker Change: Very helpful. Thank you both.

Operator: Thanks, everybody, for participating today, and we'll look forward to speaking to you soon. Take care.

Wayne: Thanks, everybody for participating today, and we'll look forward to speaking to you soon take care.

Wayne: Okay.

Wayne: [music].