SiriusXM Holdings Inc.

Greetings. Welcome to SiriusXM's fourth quarter and full year 2023 Operating and Financial Results conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If you'd like to ask a question, please press star 1 on your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, It may be necessary to pick up your handset before pressing the star keys. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to Hooper Stevens, Senior Vice President of Investor Relations and Finance. Mr. Stevens, you may begin.

Thank you, and good morning, everyone. Welcome to SiriusXM's fourth quarter and full year 2023 earnings conference call. Today, we will have prepared remarks from Jennifer Witts, our Chief Executive Officer, and Tom Berry, our Chief Financial Officer. Scott Greenstein, our President and Chief Content Officer, will join Jennifer and Tom to take questions during the Q&A portion of this call. I would like to remind everyone that certain statements made during this 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. For more information about these risks and uncertainties, please view SiriusXM'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. 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. With that, I'll hand the call over to Jennifer.

Thank you, Hooper, and good morning. It's an exciting time for SiriusXM as we continue the transformation across all aspects of our business, and we appreciate your time today. We'll start by reviewing our strong 2023 results. I'll highlight major strategic achievements, and Tom will present the financial details. Today's call will also focus on SiriusXM's future, emphasizing three main goals, enhancing our subscription value, including building on our recently launched next generation SiriusXM experience, driving growth in our ad business, and optimizing our organization's focus and cost structure. All this comes alongside the announced Liberty Media transaction, aimed at creating a streamlined and more attractive equity structure. In 2023, SiriusXM exceeded expectations with strong operating and financial performance, including surpassing our adjusted EBITDA and free cash flow targets. I'm also pleased to report our self-pay net ads returned to positive growth in both the fourth quarter and the second half overall. This growth resulted from improved streaming and in-car net additions and was bolstered by continued positive responses to a robust content slate, led by new artist stations from high-profile talent, including John Mayer. More on that in a bit. We also maintained our incredibly low subscriber churn at 1.6% despite increases in vehicle-related turnover during the year. Our 2024 guidance anticipates improving year-over-year self-pay net ad results, but with slightly lower revenue and adjusted EBITDA and steady free cash flow. While early indications are showing signs of positive impact from our business investments, it will take time for these to fully reflect in our subscriber and financial metrics. The challenge to 2024 revenue comes from roughly level subscriber numbers and a modestly softer ARPU, partially from a more diverse subscriber base with more streaming-only subscriptions. This shift, coupled with an ad market that remains uncertain, influences our revenue outlook. Against this revenue backdrop, we're focusing on cost efficiencies even as we invest in content, marketing, and our technology platform. This approach enables us to maintain stable EBITDA margins and cash generation in 2024. I am confident the investments we continue to make in our business have us on a path to return to sustained long-term subscriber and revenue growth. Today, in-car subscribers remain the vast majority of our 34 million subscribers and continue to be essential to our business. This past year, we extended long-term agreements with Mercedes-Benz, Volvo, and Honda and launched new partnerships with EV manufacturers Rivian and Polestar to integrate SiriusXM into their vehicles this year. Our biggest priority this year with OEMs is to boost 360L adoption, as we see positive trends in conversion, retention, and ARPU among South Face subscribers with 360L vehicles. SiriusXM's software-forward user experience offers a broader set of IP-delivered content, including more music channels, personalized artist stations, live sports features, and more, making our in-vehicle recommendations critical to enhancing subscription value. And standardization of personalization and content discovery features across 360L vehicles will accelerate with growing adoption of the Android Automotive operating system. Most importantly, 2023 was a year of building, and our strategy, initiated over a year ago to launch a next-generation platform driving future growth, remains firmly on course. Many of you joined our media event in November where we discussed the benefits of the new platform. And while we are still very much at the early stages of this journey, our new SiriusXM app, which launched on December 14th, is yielding promising signs of improved engagement. With most of our existing mobile users now transitioned to the new app, we are seeing the recommendation engine performing well and exposing listeners to a greater breadth of content. a key driver of improved discovery enabled by the new personalization features. We are also already seeing significantly better quality of service metrics, including a reduction in our time-to-live latency by nearly 90%, which is core to our unmatched sports play-by-play offering. We are actively listening to customer feedback, and with a new infrastructure in place, we've already released a series of app and web player updates and have plans for rapid and continuous improvements in the weeks and months ahead. We also introduced our new SiriusXM brand last quarter, reflecting a more modern look and feel. The all-new logo embraces our roots as home to the stars and brought back our beloved dog mascot, Stella, who shows up as an icon for content discovery in the new app. Again, it's early days, but we're already seeing a positive lift in brand perception among the growth audience segments we are looking to attract. Our new brand marketing strategy leans into fandom to showcase our differentiated offering across music, sports, talk, and podcasts that bring fans closer to what they love. In the fourth quarter, we expanded our unique content portfolio with the launch of exclusive new artist channels with John Mayer and Kelly Clarkson, who love the direct connection they get to their fans, along with fresh new genre channels tailored to capture the interests of younger audiences. The channels are all performing well and showing strong listening, especially with streaming trialers. In Life with John Mayer, the talented guitarist and songwriter experiments with new programming formats, defining his channel not by genre, but by the time of day, as well as the day of the week. The channel has quickly become a hit and one of our most listened to artist branded channels. We also introduced another podcast from the legendary LeVar Burton, his new children's show, Sound Detectives. The podcast, which recently wrapped, is distributed broadly as part of our SiriusXM podcast network and quickly soared to the top of the charts, ranking number one in kids and family on Apple Podcasts. As we continue to build out our portfolio of content on air and through podcasts from leading hosts, We're also very excited about today's launch of our new show with James Corden, This Life of Mine. This brings the iconic host into audio for the first time with his new interview series airing exclusively on SiriusXM. New episodes will be released weekly with a guest lineup including Martin Scorsese, Kim Kardashian, David Beckham, and more. Earlier this week, we announced a new multi-year agreement with SmartList Media and its founders, Will Arnett, Jason Bateman, and Sean Hayes, that brings their hugely successful podcast, SmartList, to SiriusXM. It's a comprehensive deal that strengthens our industry-leading position in podcasting by giving us the most top-ranked podcasts of any player in the space. It also enhances our SiriusXM subscription business with a wide array of benefits only available to our subscribers, from windowing new episodes to events to making portions of the library exclusive. And it strengthens our advertising business, given the scale of SmartList, which will be exclusively represented by our advertising sales group, SiriusXM Media. Speaking of our advertising business, total ad revenue remained relatively flat with fourth quarter and full year down less than a percent. Podcasting and programmatic continued to be strong growth drivers throughout the year. These positive results, despite challenges faced by the ad industry throughout the year, highlight the value we offer with our flexible network approach, which ensures brands connect with their target audiences regardless of the platform. This year, we will focus on expanding advertising services and investing in capabilities with many powered by generative AI to enhance monetization and efficiency for marketers. In short, we are confident that our strategy in the advertising business is the right one. As we progress on this transformative journey, we will utilize cutting-edge technologies to ensure listeners benefit from an increasingly seamless and personalized connection to our unique content, however, whenever, and wherever they want. And as we expand efforts to reach new listeners, drive trials, and improve our already strong retention by enhancing our value proposition, we look forward to the upcoming rollout of our content sharing collaboration with Audible later this quarter. This collaboration will bring select Audible content into SiriusXM and highlight SiriusXM programming on the audio storytelling platform. In a largely commoditized streaming music market where consumers are confined to algorithmically driven or self-selected playlists, we are deliberately investing in human-curated and live audio experiences featuring high-profile and up-and-coming talent. Our strategy aims to attract and retain listeners seeking community and connection by providing them with unique opportunities to get closer to the artists, hosts, and content they love. In closing, I'm pleased with our durable financial performance in 2023, and we are confident we will deliver improved year-over-year subscriber results in 2024 and maintain strong cost discipline during this transformative phase as we work to drive long-term growth and stockholder value. With that, I'll turn it over to Tom.