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Sirius XM Holdings Inc. (SIRI) UBS Global Media & Communications Conference (Transcript)
SIRISirius XM(SIRI)2024-12-11 10:55

Industry/Company Involved * Company: Sirius XM Holdings Inc. (NASDAQ: SIRI) * Industry: Media & Communications, specifically satellite radio and streaming services Core Points and Arguments 1. Investment in Technology Infrastructure: Sirius XM has made significant investments in technology infrastructure over the past two years, which will support the company for many years to come. 2. Cost Reduction Target: The company announced a target of 200millioninincrementalcostreductionbytheendof2025,aimingtoimproveefficiencyandfocusonvaluecreation.3.∗∗FocusonCoreSegments∗∗:SiriusXMisfocusingitseffortsonitscoreautomotivesubscriptionbusinessandadvertisingbusiness,leveragingitsstrengthsintheseareas.4.∗∗StreamingPlatform∗∗:Thecompanyisleveragingitsstreamingplatformtoextendthereachofitsserviceandimprovepersonalization,whilealsousingdatatoinformcontentinvestments.5.∗∗Advertising∗∗:SiriusXMisfocusedonfindingwaystosupportitssubscriptionbusinessthroughadvertising,includingprovidingmoreaddressableandtargetedadsinthein−carexperience.6.∗∗FreeCashFlow∗∗:ThecompanyexpectsrobustfreecashflowgenerationandstrongEBITDAmargins,positioningitwellfordeleveragingandfocusingondividends.7.∗∗ShareRepurchases∗∗:Thecompanyhasflexibilitytobeopportunisticaboutsharerepurchases,butitspriorityisondeleveragingandmaintainingthedividend.OtherImportantPoints1.∗∗StreamingApp∗∗:Thecompany′sstreamingapphasnotproducedthedesiredresults,leadingtoareductioninstreamingmarketingspendandafocusonitscoreautomotivesegment.2.∗∗360LAdoption∗∗:Adoptionof360L,asalesforcetoolforthein−carbusiness,hasincreasedfrom35200 million in incremental cost reduction by the end of 2025, aiming to improve efficiency and focus on value creation. 3. **Focus on Core Segments**: Sirius XM is focusing its efforts on its core automotive subscription business and advertising business, leveraging its strengths in these areas. 4. **Streaming Platform**: The company is leveraging its streaming platform to extend the reach of its service and improve personalization, while also using data to inform content investments. 5. **Advertising**: Sirius XM is focused on finding ways to support its subscription business through advertising, including providing more addressable and targeted ads in the in-car experience. 6. **Free Cash Flow**: The company expects robust free cash flow generation and strong EBITDA margins, positioning it well for deleveraging and focusing on dividends. 7. **Share Repurchases**: The company has flexibility to be opportunistic about share repurchases, but its priority is on deleveraging and maintaining the dividend. Other Important Points 1. **Streaming App**: The company's streaming app has not produced the desired results, leading to a reduction in streaming marketing spend and a focus on its core automotive segment. 2. **360L Adoption**: Adoption of 360L, a sales force tool for the in-car business, has increased from 35% to 40% and is expected to reach over 50% of new car trial starts next year. 3. **Self-Pay Subscribers**: The company expects self-pay subscribers to be higher than a year ago, driven by strong churn and vehicle turnover. 4. **New Price Point**: Sirius XM launched a 9.99 price point for its in-car service, aiming to improve retention and reduce reliance on promotional offers. 5. Revenue Guidance: The company expects revenue to step down from this year due to lower subscriber volume and ARPU pressure, but it is confident in future stabilization and growth opportunities. 6. Pandora Integration: Sirius XM is exploring opportunities to integrate Pandora into its service, leveraging its control and variety to provide added value for audiences and incremental revenue. 7. Advertising: The company expects to grow ad revenue year-over-year in 2024, driven by increased demand in pharma, CPG, and programmatic solutions. 8. Podcasting: Sirius XM's podcast business is growing profitably, with added inventory and improved monetization. 9. Alex Cooper Exclusivity: Sirius XM has exclusive rights to Alex Cooper's podcast, with plans to launch two linear channels on SiriusXM next year. 10. Cost-Cutting: The company is targeting 200millionincostsavings,focusingonmarketingefficiency,customerserviceimprovements,anddisciplinedinvestmentevaluation.11.∗∗AI∗∗:SiriusXMisleveragingAItopersonalizemarketingandimprovecustomerservice,withplanstorampupcapabilitiesin2025.12.∗∗Partnerships∗∗:ThecompanyhasannouncedpartnershipswithWalmartandESPN+,aimedatexpandingitsaudienceanddistribution.13.∗∗FreeCashFlow∗∗:Thecompanyexpectsfreecashflowtoremainstablein2025andgrowto200 million in cost savings, focusing on marketing efficiency, customer service improvements, and disciplined investment evaluation. 11. **AI**: Sirius XM is leveraging AI to personalize marketing and improve customer service, with plans to ramp up capabilities in 2025. 12. **Partnerships**: The company has announced partnerships with Walmart and ESPN+, aimed at expanding its audience and distribution. 13. **Free Cash Flow**: The company expects free cash flow to remain stable in 2025 and grow to 1.5 billion by 2027, driven by cost savings and capital returns. 14. Dividend and Buybacks: The company's priority is on deleveraging and maintaining the dividend, with opportunistic share repurchases possible once leverage reaches its target range.