SiriusXM Provides Update on Strategic Direction, Sharpening Focus on Core Audience

PR Newswire

NEW YORK, Dec. 10, 2024

Provides 2025 Revenue, Adjusted EBITDA and Free Cash Flow Guidance as well as 2027 Free Cash Flow Target

Announces Additional $200 Million of Annualized Savings Exiting 2025

NEW YORK, Dec. 10, 2024 /PRNewswire/ -- Sirius XM Holdings Inc. (NASDAQ: SIRI) today shared an updated strategic plan, which sharpens the Company's focus on its core subscription business; leverages the strength of its advertising business across its portfolio; accelerates efficiency throughout the organization; and emphasizes robust margins, free cash flow generation, and stockholder returns.

"At SiriusXM, we are focusing on the strengths that set us apart -- including our strong core subscriber base, our unique position in vehicle, and our unrivaled, curated content -- and taking steps to drive profitability and cash flow as we face marketplace headwinds impacting the company's growth trajectory," said Jennifer Witz, Chief Executive Officer of SiriusXM. "We have a clear path forward and are confident we can deliver for our stockholders."

Sharpening Strategic Focus on the Company's Strengths & Differentiators to Drive Stockholder Value

SiriusXM's premium offerings stand alone in audio entertainment, and the Company is highlighting key actions it will take to lean into its differentiated position as it charts its path forward.

   -- Doubling Down on SiriusXM's Core Automotive Subscriber Segment: 
      SiriusXM's position in-vehicle remains unrivaled in audio entertainment, 
      reflected in its leading in-car share of ear1. As 90% of SiriusXM's 
      subscribers have the service embedded in-car today, the Company is 
      focusing its resources on increasing retention and capturing additional 
      growth opportunities within this valuable segment that underpins its 
      scaled subscriber base. As a part of this effort, the Company will shift 
      marketing and other resources away from high-cost, high-churn audiences 
      in streaming to focus resources on core revenue-generating segments. 
 
   -- Utilizing Streaming as a Companion to the Company's Core Automotive 
      Offering: The investments the Company has made over the past two years 
      have expanded the service's reach and engagement in and out of the 
      vehicle, and SiriusXM will continue to highlight the value-added benefits 
      of the app to its core subscribers. SiriusXM will also utilize the 
      streaming platform for automotive distribution where beneficial, both in 
      support of the Company's growing population of IP and satellite enabled 
      vehicles with 360L and as evidenced by its recent inclusion in the 2024 
      Tesla Holiday Update. By integrating SiriusXM's streaming solution into 
      Tesla's IP-enabled operating system, SiriusXM is rapidly expanding access 
      to its service to more than two million vehicles already on the road, 
      opening up a valuable new segment of its core audience in some of the 
      most popular vehicles in North America. 
 
   -- Curating Unrivaled Content: SiriusXM's biggest competitive advantage 
      remains its premium, exclusive, live and on-demand content from its 
      roster of top talent and subject-matter experts. The Company will 
      continue cultivating deep connections between fans and hosts, with future 
      investments centered on the major differentiators that resonate with its 
      core, including: its human curated and hosted music channels, unmatched 
      depth and breadth of live sports, extensive bench of leading audio talent, 
      and growing podcast network. 
 
   -- Leveraging the Company's Advertising Strength: The Company will leverage 
      its leadership position in ad-supported audio, both within Pandora and 
      podcasting, to monetize ad-based experiences in its flagship SiriusXM 
      service, and will prioritize adtech investments that simplify campaign 
      planning, purchasing, and measurement for advertiser campaigns across its 
      portfolio. Additionally, long-term, the Company plans to capitalize on 
      its automotive expertise and prowess to launch first-to-market, 
      integrated, addressable in-car ad experiences. 
 
   -- Increasing Efficiency: Following the successful implementation of 
      cost-reduction efforts across various business units as well as a period 
      of high re-investment in product infrastructure, SiriusXM is further 
      optimizing efficiencies in key areas across the business. The Company is 
      scrutinizing the lifetime value of subscribers, optimizing marketing 
      efforts for higher returns, aligning content investments with its 
      strategic and profitability goals, and closely monitoring the return on 
      technology investments to drive greater operational efficiency and 
      enhance the listener experience. To date, the Company has delivered an 
      aggregate of approximately $350 million of run rate savings in 2023 and 
      2024, and will target an initial incremental $200 million of annualized 
      savings exiting 2025. 

Capital Allocation Priorities to Drive Stockholder Returns

The Company's strategic actions are focused on preserving its strong balance sheet, maintaining leading margins, and optimizing free cash flow. These actions will enable SiriusXM to prioritize deleveraging in the near-term while simultaneously enhancing stockholder returns.

   -- Continuing Planned Deleveraging: Following the retirement of 12% of its 
      outstanding common stock and the addition of $1.7 billion of debt as a 
      result of the Liberty Media split-off transactions, the Company remains 
      committed to its leverage target of low-to-mid 3 times adjusted EBITDA. 
      Without giving effect to any opportunistic share repurchases, SiriusXM 
      expects to reduce its debt by approximately $700M in 2025 and achieve a 
      leverage ratio of 3.6x by year end 2025. 
 
   -- Maintaining Dividend: The Board of Directors of SiriusXM remains 
      committed to its current quarterly dividend of $0.27 per share, or $1.08 
      per share annually, currently returning more than $350 million to 
      stockholders per year. 
 
   -- Stock Buyback Authorization: The Board authorized $1.166 billion common 
      stock repurchase program remains in place. The timing and amount of any 
      shares repurchased will be determined based on SiriusXM's evaluation of 
      market conditions and other factors and the program may be discontinued 
      or suspended at any time. Repurchases will be made in compliance with all 
      SEC rules and other legal requirements and may be made in part under a 
      Rule 10b5-1 plan, which permits stock repurchases when SiriusXM might 
      otherwise be precluded from doing so. 

2025 Outlook

In conjunction with today's update, SiriusXM is providing 2025 guidance for total revenue of $8.5 billion, adjusted EBITDA of $2.6 billion, and free cash flow of $1.15 billion. This follows the Company's reaffirmation of its 2024 guidance for total revenue of approximately $8.675 billion, adjusted EBITDA of approximately $2.7 billion, and free cash flow of approximately $1 billion. Aligned with its enhanced focus on free cash flow, the Company expects free cash flow conversion, free cash flow as a percentage of EBITDA, to increase from approximately 37% in 2024 to approximately 44% in 2025. Additionally, the Company is targeting free cash flow of $1.5 billion in 2027.

The Company excludes from adjusted EBITDA the impact of other income (expense), gain on extinguishment of debt, impairment, restructuring and other costs, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable). Similarly, free cash flow does not include certain items that do not relate to the on-going performance of the Company's business, such as cash flows related to acquisitions, strategic and short-term investments, including tax efficient investments in clean energy. Free cash flow may also be negatively impacted by legal settlements which are excluded from adjusted EBITDA.

Adjusted EBITDA and free cash flow are non-GAAP financial measures. The Company has not provided a reconciliation of adjusted EBITDA to projected net income (loss) or free cash flow to net cash provided by operating activities because full-year net income (loss) and net cash provided by operating activities will include special items that have not occurred and are difficult to predict with reasonable certainty. Due to this uncertainty, the Company cannot reconcile adjusted EBITDA and free cash flow to their comparable GAAP measures without unreasonable effort.

Chief Operating Officer Appointment

As a part of this effort, SiriusXM has appointed Wayne D. Thorsen, former Executive Vice President and Chief Business Officer at ADT Inc., to serve as SiriusXM's Executive Vice President and Chief Operating Officer, effective December 16. In the newly-created role, Thorsen will oversee SiriusXM's product and technology functions and be responsible for aspects of the Company's commercial activities, as well as business development, certain consumer marketing activities, and corporate strategy. With his depth of experience driving business development and innovation at a variety of leading companies including ADT, Google Inc., and Social Finance, Inc., Thorsen is well-positioned to help SiriusXM deliver meaningful results alongside greater efficiency.

SiriusXM also disclosed today that Joseph Inzerillo has stepped down from his role as Chief Product and Technology Officer, effective immediately, to pursue other opportunities.

About Sirius XM Holdings Inc.

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December 10, 2024 08:00 ET (13:00 GMT)