Sirius XM Holdings Inc Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sebastiano Petti - JPMorgan - Analyst : Just first quickly for Tom. Just in regards to self-pay guidance or commentary. You said you expect similar seasonality with improvements in the back half of the year on a year-over-year basis. Does that imply anything? Are you trying to say anything specific regarding the second quarter expectations? And then also on the vehicle-related churn side, obviously, this is favorable on a longer-term basis as you increase gross adds there. But any updates on what you're seeing now currently in voluntary and nonpay churn perhaps just as we're thinking about the balance of the year on the churn line?

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

Question: Jason Bazinet - Citi - Analyst : Can I just ask one follow-up? In that proxy that you filed with Liberty that sort of laid out your financial forecast, just qualitatively, would you say a lot of the initiatives you just talked about are embedded in those numbers or not much?

Question: Bryan Kraft - Deutsche Bank - Analyst : I have two, if I could. I guess, first, you've obviously seen a nice rebound in advertising in Pandora and off platform. Can you talk a bit about more what you're seeing there in terms of industry category strength? And also in the press release, you mentioned Synthetic Voices and the value it brings to SMBs. Can you talk a bit more about your exposure to SMBs versus enterprise today in the business? And whether you see this and other potential AI tools as a way to expand in SMB in the future and whether that could be a meaningful opportunity for growth? And then my second question is for Tom. Tom, if investors wanted to look at your free cash flow, assuming a normalized CapEx level pulling out satellite CapEx and temporarily high non-satellite CapEx, what would that normalized CapEx level be as you see it today? And how much are we pulling out of the CapEx guidance for the year to get to that number?

Question: Jessica Reif Ehrlich - BofA Securities - Analyst : I guess can we go back to advertisers. I have two questions. One on advertising and one on programming. Obviously, your programmatic efforts have really kicked in. Just wondering how you compare to other audio marketers in terms of share -- in terms of podcasting and also maybe digital more broadly? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2024 / 12:00PM, SIRI.OQ - Q1 2024 Sirius XM Holdings Inc Earnings Call And how different is your set of tools? And then on programming, it's (inaudible) have this question in a long time. But how you -- have you had initial conversations with Howard Stern returning at the end of his contract, which I think is next year? And if he doesn't come back, how are you thinking about replacement programming? And how would it impact your programming budget and plans?

Question: David Joyce - Seaport Research Partners - Analyst : And thinking about 360L and the advertising opportunity there, what would you say that what inning are you in, in terms of monetizing via advertisements there? Is this a year where you're more focused on driving up engagement because you've been rolling out the new functionality and then you would seek to monetize it later? Or do you have a view of like what the right ad load is there? Just if you could provide any color on what your marketing strategy there is in terms of pricing versus competitors that sort of thing.

Question: Steven Cahall - Wells Fargo - Analyst : Jennifer, I'd love to dig into conversion a little bit. So there's a lot going on in the trial funnels picking up, vehicle churns picking up a little bit. And then it sounds like you maybe have some early improving signs of conversion. I guess my big question is, I think conversion is what you've been trying to solve for with the digital relaunch. What kind of conversion levels do you need on new car and used car to get back to self-pay net add growth over time? And can you give us an update on kind of where you're starting to track towards those target conversion levels? And within that, maybe what you're starting to see with younger first-time car buying cohorts? And then just secondly, on ARPU, are you comfortable raising price at this point REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2024 / 12:00PM, SIRI.OQ - Q1 2024 Sirius XM Holdings Inc Earnings Call for SiriusXM? And is there a meaningful headwind to ARPU from streaming-only subs? Or is that something we need to take too much into consideration for a bit?

Question: Stephen Laszczyk - Goldman Sachs - Analyst : Maybe one for Tom. You executed against $45 million in cost efficiencies in the quarter. Could you perhaps just update us on where you've been able to make the most progress so far? And then as you think about pacing the remaining cost savings coming into the next few quarters, how should we think about that? And then secondly, just a housekeeping one. Is there anything more you can say about the progress or timing of the Liberty transaction closing? Any detail would be great.

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