Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sirius XM Holdings Inc (SIRI, Financial) reported an 8% sequential growth in adjusted EBITDA for Q2 2024.
- The company saw a year-over-year improvement in EBITDA margin by one percentage point.
- SIRI expects to complete its transaction with Liberty Media by September 9, 2024.
- The company is launching new subscription bundles, including a podcast plus subscription available on Apple Podcasts.
- SIRI introduced Sirius XM Free Access, its first-ever free ad-supported version, to engage potential customers who do not immediately convert post-trial.
Negative Points
- Consolidated revenue decreased by 3% compared to the same period last year, primarily driven by a 5% drop in Sirius XM subscriber revenue.
- Self-pay subscribers declined by 100,000 in Q2 2024.
- Advertising revenue remained flat year-over-year at $443 million.
- Total revenue for the Sirius XM segment decreased by 5%, with advertising revenue dropping by 4%.
- The company faces ongoing challenges with conversion rates, particularly among first-time trialers.
Q & A Highlights
Q: Can you talk a little deeper into what you're seeing in the conversion rates, especially with new technologies and streaming applications? Where do you expect new car conversion to go over the next couple of years?
A: Our conversion rates continue to be challenged, but we have seen some stabilization among first-time trialers, particularly younger ones. We are implementing personalized marketing journeys, especially with 360L, which is showing positive results. We expect to ramp up these efforts and see improved conversion rates post-trial, which will be key to future growth. Regarding RPU, we are focused on creating value across our subscription packages to support future rate increases while capturing demand from a broader audience.
Q: What gives you confidence that advertising revenue will improve in the second half of the year? Can you discuss the drivers and new tools like programmatic advertising?
A: We expect improvements in ad revenue despite some uncertainty tied to consumer spending. Podcasting continues to show strong demand, and programmatic advertising provides scale opportunities, especially late in the quarter. We are leveraging AI-driven tools and industry solutions like Unified ID 2.0 with Trade Desk to enhance targeting and measurement. Additionally, political ads and the reorganization of our sales team should benefit us in the second half.
Q: Can you provide more details on the new subscription packages and their expected impact on the P&L?
A: Our new pricing and packaging efforts aim to drive more demand, preserve our full-price base, and reduce reliance on promotional plans. Early results from testing show better long-term retention on full-price plans. We are confident these actions will provide more value and transparency for consumers. The impacts on our metrics will be captured in our guidance, and we will share more details as we roll out these changes later in the year.
Q: Can you elaborate on the positive momentum you're seeing with the new streaming experience and your goals for scaling this strategy?
A: We are building a next-generation streaming platform that supports 360L, streaming-only implementations, and in-car subscribers. Our streaming metrics are improving, with customers exploring a broader set of content due to personalized product features. We are iterating with personalized marketing journeys and plan to scale these learnings to the in-car side of the business, which will significantly impact future growth.
Q: What is the strategy behind the free ad-supported plans, and how do you mitigate cannibalization risk?
A: The free ad-supported plans offer a limited number of channels with ads and are designed to maintain radio activation post-trial, providing an opportunity to upsell. We do not expect significant cannibalization as the content is reduced. This initiative helps us understand demand for free services and supports broader audience exposure to Sirius XM content, ultimately leading to subscription conversions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
