Sirius XM at Wells Fargo’s TMT Summit: Strategic Moves and Future Outlook

On Tuesday, 18 November 2025, Sirius XM (NASDAQ:SIRI) presented at Wells Fargo’s 9th Annual TMT Summit, outlining its strategic initiatives and future plans. The company emphasized its efforts to optimize financial performance and enhance customer experience while also discussing challenges in navigating the competitive streaming landscape.

Key Takeaways

• Sirius XM reaffirmed its raised guidance for EBITDA, free cash flow, and revenue.
• The company is focusing on optimizing EBITDA through modernized pricing and cost structure.
• Churn rate remains low at 1.6%, attributed to improved user experience and content offerings.
• The 360L platform is now in over 50% of new car trials, expected to reach 90% by 2030.
• Sirius XM is exploring monetization strategies for its spectrum holdings.

Financial Results

• Sirius XM confirmed its raised guidance for the year, marking the second increase in free cash flow guidance in recent months.
• The churn rate stands at 1.6%, a result of enhanced user experience and content.
• The company achieved its $200 million annual cost-cutting goal ahead of schedule.
• Non-satellite capital expenditure is projected at $400 million into the next year.

Operational Updates

• Zac Coughlin has been appointed as the new CFO, bringing experience from Ford.
• Sirius XM is implementing a "good, better, best" pricing strategy to enhance ARPU.
• The 360L service, combining satellite and IP connectivity, is expanding rapidly in new car trials.
• The app rating has improved to over 4.8, reflecting better customer satisfaction.
• Extended three-year trials with auto OEMs are contributing significantly to subscriber growth.

Future Outlook

• Sirius XM expects its in-car business to improve year over year.
• The company is focusing on cost optimization through AI and exploring partnerships for spectrum utilization.
• Satellite program CapEx is anticipated to be near zero by 2028.
• Sirius XM is evaluating ways to leverage its spectrum assets for additional value.

Q&A Highlights

• The significance of extended three-year trials with auto OEMs was discussed, highlighting their impact on subscriber additions.
• Strategies for managing ARPU and EBITDA growth were addressed, emphasizing a simplified pricing structure.
• Insights into the digital business, including Pandora and the podcast segment, were shared.
• The company’s internal cost program and future optimization initiatives were outlined.

In conclusion, Sirius XM’s strategic focus on modernizing its pricing, enhancing customer experience, and optimizing costs positions it well for future growth. For more detailed insights, refer to the full transcript below.

Full transcript - Wells Fargo’s 9th Annual TMT Summit:

Unidentified speaker, Analyst: Great. Thank you everybody. Our next fireside is on Sirius XM. I have the pleasure of being joined by Wayne Thorsen, the Chief Operating Officer. Wayne, you all had some news out this morning, so I thought I’ll just jump right into that. You reaffirmed, recently raised guidance for the year, which came simultaneous to some transition, with the Chief Financial Officer’s role. Maybe you could give us a bit of comment on that before we dive into the operations.

Wayne Thorsen, Chief Operating Officer, Sirius XM: That’s right. We raised in our earnings call, across EBITDA and free cash flow and revenue. Actually, this is our second time raising, as you know, on free cash flow in the last few months. Yes, we had some news this morning. We’re welcoming in Zac Coughlin as our new CFO. We’re incredibly excited. Wonderful background stewarding a lot of iconic brands and, in particular, some great experience at Ford. Having that OEM experience is particularly exciting for us. With that public company experience and a history of transformation, we’re really excited. I know he’s gonna help us as we go through the next phase of our transformation as well. Of course, we’re grateful to Tom.

He’s been with us for a decade and a half, and he’s been a great partner to me. We’re grateful for all the leadership he has shown. We’re excited for Zach to come in. We like, we’re excited for the next steps in our transformation.

Unidentified speaker, Analyst: Yeah. I mean, what you mentioned with Zac and Ford Motor Company, I think, is a good segue into, I think, a lot of the focus of today, which will be about, you know, sort of the evolution of the product. I’ve used it for a long time, pretty extensively. And there’s been a lot of enhancements over the last 12 months. You know, you have Play, I think the first-ever ad-supported plan, the All Music plan. I think, in my memory, it’s the first time when, you know, you really had this choice as a user between just music or music and, and other stuff.

Maybe you can talk a little bit about what drove you to decide to change these plans, to change the packaging into this more simplified structure, but with a number of new kinda tiers all the way from ad-supported up to the premium tier at $25 a month.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. We’ve been modernizing our price architecture for sure. So a lot of people, you know, a lot of streaming services, music and video and others as well have been all migrating towards really this good, better, best. We’ve been doing the same. That is continuing. As we’re moving through there, you know, the key thing for us, of course, is, you know, optimizing for EBITDA. That’s the reason we’re doing it. When we’re going through, there are three things that we watch, of course, which is churn. Similar to your situation where you had a plan and you optimized towards one with a lower price point, but it’s a better fit for you and what you’re willing to pay. I want to talk about that with you later.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: As we’re moving through, the easiest way and the highest ROI way for us to be able to generate a new net add is to not lose one. Churn certainly is a key focus for us as we’re moving through and generating this price architecture. Second is widening the top of the funnel. Having persistently low price points like Play is incredibly important to getting people to generate consideration where maybe, as they’ve gone through trials in the past or the price point seemed too high, they don’t even engage in the trial. This has been really helpful for us. Third, of course, is ARPU. Managing those three things—and, by the way, just as a side note, when I say ARPU, I’m not just talking about the subscription price.

Of course, I’m also talking about the advertising revenue that we generate as well ’cause ultimately all of that.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Is contributory. As we’re managing those three things, that’s really a big guide. We still have a lot of work to do in generating this architecture, but we like what we’ve seen so far. I’ll use Play as an example. The response to this so far has been really—we’ve been really excited about this. It’s been widening the top of the funnel. In general, when people come in and they come in through this funnel, the vast majority migrate to higher price points or full price plans. That’s the entire point. We’ve actually started to increase the volume of the people who are seeing that particular offering ’cause it’s, of course, accretive across those three things that we just mentioned.

Unidentified speaker, Analyst: Maybe you could just then touch on, you know, what you’re seeing on the ARPU and churn side of things. Churn, I think, has been really impressively low for as many quarters as I can remember and certainly more recently. ARPU, I think Jennifer has talked about, you know, you think you can grow starting from Q4, but it’s been sort of more in that flat to down range. We would love to hear how you’re thinking about those two components.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. On churn, yeah, we are really happy with what we have been, the work that we have done in churn. For churn right now, we are at 1.6%. That is a combination of a lot of the work that we have been doing behind the scenes to increase user experience, but it has also been some of the work that we have been doing to increase content. That has been a big thing for us, as you know, is making more and more content available. There is actually—and just to kind of take a side note—there is a product piece to this as well. We have a lot of content that nobody even realizes we have.

A big part of making a higher level of utility and a higher level of satisfaction that people have for our service is all the work that we’ve been doing in the app and in search recommendations, and more work that we’re excited to talk about later in making sure that more people are aware of not just the content that we have, but the content that’s upcoming or even events that are upcoming. That’s a big part of why we’re seeing really good CSAT and we’re lowering churn. Another piece of this I’ll also share is we’ve been working on modernizing our identity framework. This is a very, very important part of what we’ve been doing. Like, as an example, you heard Jennifer on the last earnings call talk about continuous service.

Unidentified speaker, Analyst: Yep.

Wayne Thorsen, Chief Operating Officer, Sirius XM: This is one of the first deliverables of this modernization of our identity stack. As an example, what ends up happening is, like, normally when you go to return a lease or you sell your car, you have to cancel your service.

Unidentified speaker, Analyst: Done that a few times.

Wayne Thorsen, Chief Operating Officer, Sirius XM: You have to restart again.

Unidentified speaker, Analyst: Right. Yeah. Exactly.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. It’s, it’s like, every time you change a TV, you have to, you know, restart your Netflix subscription. It’s been, it’s a little bit of, it’s been a little bit of an artifact of how the identity stack was built over the years. Changing that, that’s one example where this is gonna be a huge headwind for us both in churn and in, and in, conversion over time.

Unidentified speaker, Analyst: Could you touch on the ARPU side of things?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. On the ARPU side, you know, a big part of this is we’re, again, managing for overall EBITDA. As we’re widening the top of the funnel and we’re making, we’re offering other sorts of plans, we’re very carefully managing the ARPU side of it. That ARPU side also includes advertising. We had a very successful price action this year. You know, our churn still remained low. A big part of that is the continually, continuing to offer more and more value for price, whether that’s more content or improving the UX.

Unidentified speaker, Analyst: Moving to streaming. I think that’s a big debate overall for the stock and sort of how Sirius XM fits into the streaming world. Is it a complement to other streaming products? Does it compete against other streaming products in the car? Spotify talked up its in-car engagement on its last earnings call. I don’t know if that’s a sort of new area of competitive focus, but, you know, you all have had a streaming strategy. It’s evolved over the last couple of years. Can you talk about just how you see Sirius XM sort of fitting into the streaming debate, you know, both with the customer and with the competitors?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Just to take that in two different parts for a second. First, the in-car as an example. We’ve had a lot of leadership historically in car, and we still do. One of the great things about 360L, which is now, by the way, up to over 50% of our new car trials, and by 2030, we’ll be close to 90% of new in-car trials. One of the big advantages there for us is that it has both the satellite connectivity as well as IP. We’re now getting a return path for data. The reason I think that’s really important is that allows us to make content recommendations.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: To deliver interactivity, to have artist-seated stations. All of these things where before, where we, that was really not available for us. That’s a really important part. In December, when Jennifer announced the new strategy for us to focus on in-car—the reason why she did that was because we still have a lot of headroom in car. That didn’t mean that we were leaving streaming. It meant we were stepping back from acquiring unprofitable subscribers. We’re still acquiring streaming subscribers, and we’re being thoughtful in how we do that and making sure that that’s ROI positive. We have also been investing in the app. We’ve been working on making sure that this product as a standalone is where we want it to be as well as a companion.

I mean, as an example, the app rating in the app store right now is up over 4.8. It’s dramatically improved over the last year. We’re continuing to make improvements in the UX, the content recommendation, so on and so forth. By the way, we’re doing that as well as in CarPlay and Android Auto. We’re seeing massive lift in people using those services as well to access our service. I don’t really think of it as necessarily a streaming debate. I think of it as how are we in a place where we can offer our content in a way that is the most easily accessible.

Unidentified speaker, Analyst: This year has certainly been kinda uncharacteristic for auto sales with all of the tariff noise that we’ve had. I think that probably had some pull forward in the first half of the year. Maybe we’ll see kinda the other side of that in the back half of the year. Just overall, you know, with a little bit of uncertainty probably in SAR heading into next year, how are you thinking about what you need to do to build the trial funnel?

Wayne Thorsen, Chief Operating Officer, Sirius XM: We saw, in Q3, as you saw as we noted, we saw higher in-car trials, and we are continuing to, not just in new cars, but also, as you know, we’ve been building a lot of our capabilities in used car as well. We like what we have there. I would say in terms of, you know, the macros are hard to predict for everybody on this. It’s impossible. Because of the work that we’re doing, such as continuous service, the work that we’re doing with the increase of penetration of 360L, we like where we’re at in car.

All of the work that we’ve been doing in use, which I think is incredibly important for us, is becoming a bigger and bigger funnel, in particular since the size of our fleet is just becoming massive, the size of vehicles in operation that have SiriusXM installed.

Unidentified speaker, Analyst: Over 100 million.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Oh, yes. This is becoming a real opportunity for us. As we improve our marketing capabilities because of things like improving the identity stack, this is a lot more tractable for us. I’d also say we’ve also improved, as you know, and implemented in with the EVs. This has been a great opportunity. One thing I’d sort of tweak to the question is, you know, now that we’ve, we also have a lot of opportunity outside of the in-car funnel. There’s been a lot of partnerships that we’ve been starting to work on. Really importantly, the extended three-year trials with auto OEMs is becoming a bigger and bigger piece of the puzzle for us.

Unidentified speaker, Analyst: Could you speak to that a little more? If I understand that correctly, that’s when a car is purchased, the purchase price includes a three-year subscription?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yes. That’s correct.

Unidentified speaker, Analyst: So it eliminates the trial funnel, right?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yes.

Unidentified speaker, Analyst: ’Cause there isn’t a trial period.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Correct.

Unidentified speaker, Analyst: Maybe you can give us a bit more about the kinda significance of that to the business as it grows.

Wayne Thorsen, Chief Operating Officer, Sirius XM: I don’t think we’re releasing any specific numbers on it. What I will share is that it’s definitely becoming a more significant part of the gross ads for us. What’s really interesting is we did a lot of work early on to think through, was this going to be cannibalistic? Are we generating more yield? Are we generating more expected revenue on per thousand trials? The answer is yes, which is why we’ve been really leaning into it.

Unidentified speaker, Analyst: Is it new and used car?

Wayne Thorsen, Chief Operating Officer, Sirius XM: New. Predominantly new.

Unidentified speaker, Analyst: Uh-huh.

Wayne Thorsen, Chief Operating Officer, Sirius XM: There’s an opportunity to use that we haven’t approached yet.

Unidentified speaker, Analyst: Mm-hmm. I often think about, like, when trying to see where sub-trajectories are going. You know, we’ve talked a lot about churn, which is the big component, and a bit about gross ads. To get to gross ads, like, self-pay conversion has always been a big metric. I think, if memory serves me correctly, it sort of stays in the low 30s, has been the historical rate as the pen rate has come up. So maybe first, just can you talk about, you know, how you’ve seen that trending over time? Again, it seems like one of those areas that operationally you sort of attack to get that conversion heading in the direction that you want. What are you working on to drive conversion?

Wayne Thorsen, Chief Operating Officer, Sirius XM: It’s interesting. You’re right. Penetration for us is at an all-time high, and obviously, as you penetrate deeper and deeper into certain make model trims, you know, less expensive make model trims tend to have slightly lower conversion rates. However, what we have been seeing is an improvement in things like continuous service, which we’ve just talked about. And, you know, some of the other unlocks that come from having an improved identity stack, such as our marketing capabilities, are also, you know, generating real great offsets to that. You know, what I think, last year, we stopped investing in streaming in the same way as you’ve mentioned, and created some headwinds on comps. Our overall in-car business is better year over year.

Unidentified speaker, Analyst: Mm-hmm. So this year you have, I think it’s a few hundred thousand drag on net ads from kinda the pullback in, in streaming and maybe a little bit of, of promotion that you’re cycling as well. I think Jennifer has talked about that you would expect to be positive on an underlying basis, excluding those headwinds. So, you know, if I take some of the things we’ve talked about so far, you won’t have that headwind next year. It sounds like continuous service and, you know, the opportunities outside of the funnel, those are all very constructive. So I guess, how are you simply kinda feeling about, the, the pace of net ads once this headwind is behind you?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. So the pace of the streaming net ads will be a headwind for us and the biggest headwind. We’re gonna lap the biggest comp on that in Q4. That’ll be the biggest place where we’re lapping into those streaming ads. Again, as we just said, the underlying in-car business is gonna be better year over year. I like where we’re at, from the way the business is set up right now. You know, obviously, you heard us just reaffirm and recently raise in the last earnings call.

But the underlying business itself, a lot of the technological improvements that we’ve made, such as 360L, which is not recent, but it’s just really finally getting to the place where it’s the majority of new car trials. It’s becoming a bigger and bigger part of the used car fleet. So that’s really helpful for us ’cause that’s a great headwind. The ability to use the app and other ways to recommend content is creating more and more engagement. As an example, for 360L users who also stream, the average day usage is 28 days a month. I actually, I’m not sure what that is in February. I gotta talk to the analytics team. But 28 days a month, they are really heavily engaged.

The more ways we can get people to use all of these services and be in a 360L car, we really like our chances there. In terms of what that means on a go forward basis with things like continuous service, you know, there’s a, you know, every few years, someone turns in a car, right? And then there’s a leakage that happens.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: For some people who don’t go in and then renew or re-up, or they’re not, they don’t get the right trial, or they’re not contacted in the right way. Cleaning that up is going to be a huge unlock for us, not just in terms of conversion, but also in terms of churn. If you’re thinking about net ads, that’ll be really positive for us. Cleaning up the identity stack, that also means that our marketing capability, so our marketing has predominantly been very legacy-based because focusing on having the radio as actually the subscriber versus the person as the subscriber. If you don’t come in through the natural funnel, you come to one of our landing pages, the first thing we’ll ask is for, like, a radio ID or a VIN.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: It’s a really tough conversion.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Being able to attach that to the actual subscriber themselves really opens up a lot of other marketing channels that we’ve never really been able to use effectively before.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: We’re really excited about that opportunity as well.

Unidentified speaker, Analyst: and then just, you know, going back to pricing, you talked about how, earlier in the year you had a successful rate event. Is there any kinda easy way for us to think about, the consistency of rate events, you know, every 18 months, every 24 months, something, something like that?

Wayne Thorsen, Chief Operating Officer, Sirius XM: I don’t think we have it calendarized right now, but we’ll share more as our thinking evolves on this. One of the things that’s really important for us to be able to do is, again, like, going back to making sure that we’re managing, you know, conversion, you know, the ARPU slash revenue and churn. We’re thoughtful about this when we approach.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: That means also as well as we’re thinking about how can we add more value to those more premium plans in conjunction with any sort of price action that we would take. I think more to come from us later.

Unidentified speaker, Analyst: You know, just on that, I think with All Music in particular, that is a lower price tier than what you’ve had before. And then, you know, premium is maybe a higher price tier than what you’ve had before. Can you just talk about the skew between those and, you know, just the idea that it doesn’t create, I mean, you talk a lot about the focus on EBITDA growth, that it doesn’t create sort of a revenue drag, as ’cause you have a, everything you’re doing seems to be giving the customer a more simple experience.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Right.

Unidentified speaker, Analyst: I think that’s the risk-reward we’re trying to balance.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. For sure. I’d say with, you know, as we’re setting up into a good, better, best price architecture, what often happens is people will come in ’cause they’re, by the way, no one ever sees, like, all three as an option.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Right? They’re coming in through one option or another. What ends up happening is predominantly, and I’ll use Play as an example, which was our lowest price tier.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: This is going to help us, you know, work on a lot of these things because it’s not just about the new conversion. As you know, we also have a significant amount of unpublished discounts. So things like All Access, things like Play, these are gonna help us start to clean up some of these that are in these unpublished discounts. That also raises overall average ARPU and EBITDA for us.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Huge, huge project for us to be able to do. When people come in in these lower price tiers, they’re way, they’re much more likely to engage. We have much higher CTRs and performance when people see these lower price tiers. They come in and they’re like, "You know what? I actually do want play-by-play sports," right? "I do want, you know, some of the other, potential news channels," or, "I don’t want ads." This is why we see the vast majority of people come in on these lower price plans convert into higher.

Unidentified speaker, Analyst: Is that in general, you’d say you’re seeing more of the up trading than the down trading?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yes. When people are coming in for these, yes.

Unidentified speaker, Analyst: Yeah. Okay. Switching over to the digital side of the business, maybe first just a kinda general question. So, you know, Pandora is a relatively straightforward business to understand. A lot of the value that you’re creating in digital is not on the Pandora music side. It’s in sort of off-platform podcasting, a little bit more of like a, a B2B business maybe rather than a B2C.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Mm-hmm.

Unidentified speaker, Analyst: Just to level set initially, can you just talk us through, you know, what that business is in terms of what the assets are and what you’re monetizing, just separate from the Pandora streaming service?

Wayne Thorsen, Chief Operating Officer, Sirius XM: They actually all do work together because that creates a really significant center of gravity for marketers when they’re coming in. As you know, we have a business that manages advertising and generates revenue for many other publishers as well. I think there’s a total of, and Hooper correct me if I’m wrong, about 160 million people a month on that. Forty-two million of that, forty-two million a month, is Pandora. This is still a very significant business, very significant business. We’re really excited about the size of this, but different pieces are moving at different paces.

Our podcast business, as an example, which, you know, we’re, I think, is it 11 out of top 20, you know, a very significant number of podcasts where we’re managing the advertising, this is up 50% year over year for us, very significant. On Pandora, you know, we’ve been keeping the number of ad hours, and that’s holding steady, which is great. There’s been a flattening of the decline of the MAUs. We’re struggling a little bit, I would say, on, you know, there is a, you know, on the ad units themselves, there’s been more and more competition.

The team’s been responding, you know, with, you know, deals such as the deal that we have with Amazon for the new demand coming into their DSP and, of course, with the data deal that we have with Snowflake. I would say there’s, you know, probably really three components to this. There is the Pandora business. There’s the ad rep business. Then there’s specifically the podcast business.

Unidentified speaker, Analyst: Yeah. Yeah. And is ads with is that within the ad rep?

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yes. That is the ad, it’s the ad rep.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yes. Correct.

Unidentified speaker, Analyst: That is essentially, you know, doing what you do in podcast, but for non-podcast content, right?

Wayne Thorsen, Chief Operating Officer, Sirius XM: For sure. Yeah. SoundCloud and.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: TuneIn and others. Correct.

Unidentified speaker, Analyst: Mm-hmm. And could you maybe then talk, ’cause again, I think this is kind of a lesser understood part of the business, like.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Right.

Unidentified speaker, Analyst: The strategy there and how you’re tapping into programmatic demand and other opportunities to generate revenue acceleration.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. We have partnerships, and we’re increasing the number of partnerships that we have with more and more programmatic providers, Amazon being one. Of course, we have a partnership with the Trade Desk. Even if you have those partnerships, there’s a chance to optimize those and to do more with those. That ends up being quite technical where, how do we bring more data partners in? How do we get more match rates on those data partners? Because the more data that we can bring in, the more addressable we can make any of the inventory, both for ourselves and for the partners that we rep.

There’s a continuing amount of work that we’re doing there in order to improve the quality or the data around the advertising, the advertising units, and making sure that the actual quality and performance is much, much more measurable.

Unidentified speaker, Analyst: Do you have an outlook as to when segment profit might recover at this business? I think it’s had some pressure on it.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. I think we’ll talk more about that maybe in future sessions. Right now, we’ve been cautiously optimistic, you know, with the overall advertising business.

Unidentified speaker, Analyst: That’s maybe a good segue into just costs overall. I know that cost cuts have been something that probably you’ve been driving, you know, very personally, and a focus of the conference calls as you all have managed through some of this revenue volatility. Can you update us on kinda where you are on the internal cost program? And then we’ll cover some of the costs like CapEx and things.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. As you know, we hit our $200 million a year run rate goal early. That was predominantly through improvements that we’ve been making in product and technology, you know, by sharpening the focus, optimizing cloud. I mean, by the way, just as an aside, there’s not one silver bullet. It’s many, many, many things. It’s like, as an example, going in to your cloud provider and choosing a less expensive chipset to be able to use on any particular workload. Just a lot of tiny, small things that aggregate into big, large structural cost savings that’ll continue to pay dividends. Similarly, on the marketing side, certainly there was the pullback in streaming, but there’s a lot of other things that we’re doing to make the dollars work better.

Again, this comes back to some of the identity work that we’re doing, but there’s a lot of other structural work as we make the funnel more efficient. It allows us to be able to spend less money to do the same thing. And then.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: You get past a certain point and the inflection goes the other way, you can start more and more, you have a higher ROI and more subscribers you can acquire.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: It becomes, you know, we may start seeing an inflection point in the other direction there. Yes, a ton, a ton of work there on CapEx. You know, as you know, our satellite program by 2028 will be roughly at zero expected CapEx on that. On the non-sat CapEx, we’re at the lower end of our guide between $450 million and $500 million for this year. Our guide is for $400 million into next year on non-sat CapEx. A lot of the work there is very similar as we’re, again, sharpening our focus and, you know, allows us to rationalize certain platforms, put more resources behind programs like managing our identity stack versus trying to do a lot of different things.

Unidentified speaker, Analyst: I know OEM relationships are a big source of value and cost. Maybe with the new CFO news announcement and his background with Ford, do you see some additional opportunity within those relationships to find savings?

Wayne Thorsen, Chief Operating Officer, Sirius XM: I absolutely do. I think that, you know, the OEMs have been incredible partners. We would not have our business without them. We are always continuing to, I think, on both sides, figure out how we can be even more mutually beneficial. There are a lot of things that we have been evaluating into how those partnerships can look in the future and how we can make it even more mutually beneficial. I do not think we have anything to talk about now, but it is a very, very big focus for us.

Unidentified speaker, Analyst: You know, when I kinda step back from it all, the complexity of the business is high when you get into the details, right? You step back and it’s pay for a service, enjoy it in the car and, and out of the car. I think the stock sort of simply is usually sort of net ads and EBITDA growth.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Mm-hmm.

Unidentified speaker, Analyst: and we do a lot of work to try to figure those things out. If we do kinda zoom out ’cause we’ve gotten into a lot of detail, you know, if you just think about sort of long-term what subs can do, long-term what EBITDA growth can do, what framework would you put around the business?

Wayne Thorsen, Chief Operating Officer, Sirius XM: I think if you take a look at the potential we have in optimizing cost structure over time, that’s a really good place to start. We’re in, I would say, early to mid-innings of things that we could do right now in terms of rationalizing the cost structure. We’ve gotten a lot of the easy wins in, but we’re in early days on being able to do things, as an example, with AI. As an example, in care, we’ve been, I think, one of the leaders in the work that we’ve been doing with Sierra. That has been incredibly beneficial both for the people who call in and interact, but also for our cost profile.

There’s potentially other things, other ways we can use that as we start to think through outside of care, how do we work with our customers in a way, or even acquire customers in a way using AI? We’re in very early earnings. In our P&T team, we’re in early earnings, I should say, on how we use AI to structure costs there. I think, you know, if you look around a lot of our big cost bases, there’s a huge amount of opportunity to continue to rationalize for sure. I think there’s cost opportunity. On the subscriber piece, this is where most of our revenue is generated.

You know, as we talked about, we really like where we’re at with the increasing penetration of 360L and new car trials. We like where we’re at with our new pricing architecture, and we like where we’re at with our marketing funnel continuing to dramatically improve due to some of the product improvements we’ve made, like identity structure. We’re really happy there. We talked about the opportunities in the advertising business as well. I like where we’re at from a revenue and from a cost perspective, and I think there’s certainly even adjacencies that we’re going to talk through at some point down the road.

Unidentified speaker, Analyst: One maybe ad-adjacency at least for shareholder value is, is spectrum. It’s something that, you know, for the first many, many years I covered the stock, never came up. And now, all of a sudden, you know, maybe due to some other deals we’ve seen.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah.

Unidentified speaker, Analyst: In the space, it seems like both that there’s value there and maybe some realizability within the horizon. I think that’s another one. That’s actually the point I wanted to ask on.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah.

Unidentified speaker, Analyst: I think there’s, you know, I don’t know if it’s 2 or 3 million legacy Sirius radios that are probably out there longer than you expected. That seems to be the opportunity for monetization. I think that’s 35 megahertz that they’re on. So, maybe talk about what you think kinda needs to happen for that installed base to become de minimis and then, whether or not a monetization event could follow. I think Jennifer kinda indicated that a spectrum sale may not be on the horizon on the last call. Just trying to understand, you know, what you see as some of those shareholder value opportunities.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. For sure. Let me level set exactly on what those holdings are, and then,

Unidentified speaker, Analyst: Great.

Wayne Thorsen, Chief Operating Officer, Sirius XM: I think there’s like three different ways to maybe think about value on this. We have total right now, our spectrum holdings consist of 35 megahertz of contiguous spectrum. Twenty-five megahertz of that right in the center is what we generally use for our broadcast business. I think that the spectrum you’re referring to, and it’s sort of an interesting artifact of the original merger between Sirius and XM, there’s 12.5 megahertz that was Sirius. Then just above that, at a slightly higher frequency, is the 12.5 megahertz that was XM. We kinda refer to those as a lower band and high band. Over time, what we’ve been doing is a lot of new cars have been traditionally in that higher band. We still have millions of customers in that lower band.

As those vehicles slowly come out of service, you know, those subscribers have been shifting over into new vehicles, which predominantly use the high band. An important note, and I think it’s important when we talk about the three ways we could realize value here, is we’ve also been shipping what we call a wide band chipset that actually can take the spectrum from both rather than one or the other. If you start thinking through, and then, of course, by the way, there’s the other five and five on each side for a total of 10, which is the WCS spectrum that we acquired last year.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Now, within that, there’s, you know, the three ways you can sort of think about the value of this. The intrinsic value overall of this spectrum, I think, is what has maybe attracted some attention as it’s been going up. Certainly, the intrinsic value increasing is great for us as holders. We’re very excited about that. However, I’d say that I don’t know that that’s necessarily the highest utility, the highest utility use of this. You know, as we think about either using some of the spectrum assets over time, perhaps for something else, the great thing about it is we have this installed base with radios in the car. We have birds already orbiting that can actually talk to those radios in the car.

Over time, we expect to have tens and tens of millions of these wide band chipsets installed that can actually talk to both. That gives us an opportunity to do something. There is also an opportunity to perhaps partner with somebody else to make use of the spectrum in a way that our own technology would not necessarily allow us to do, but would become a very attractive partner because, again, we have these spectrum assets. You know, we have all of these radios installed already in cars. If, as you are thinking through a partnership and perhaps the distribution of a different service, we also, just for Sirius XM alone, have 33 million paying subscribers. That allows us to be a really attractive partnership opportunity for others.

We’re actively considering, you know, all of those opportunities. Nothing new and shiny to talk about right now, but we’re excited to continue to work on this. There’s a lot of energy around it.

Unidentified speaker, Analyst: Last question, asking this one for a friend and loved one, but Yacht Rock spends every summer at channel 15, and then in the winter it.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah.

Unidentified speaker, Analyst: Migrates like a rare bird, so I’m wondering.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Weird bird.

Unidentified speaker, Analyst: If there’s a point, when it might be solidified down into the All Music tiers, you know, channels, which I think max out at about 100. And maybe just how you think about the programming lineup overall.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Yeah. On Yacht Rock specifically, it’s really interesting. When we had the Taylor Swift pop-up channel.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: That replaced it, I’ve never had so much, I got more LinkedIn messages about this than anything that we’ve ever done. It was a lot of activity around it. You know, some of the, you know, a lot of the responses, you know, were around this. You know, sometimes you get caught between the moon and a new Taylor Swifty channel. For those who prefer those and Yacht Rock jokes, there’s actually more puns, I was saying, than there are actually Yacht Rock songs. It’s just unfortunate. Part of this is that right now, Jimmy Fallon’s holiday channel is on this right now.

Unidentified speaker, Analyst: Mm-hmm.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Channel 15 and a lot of this is our bandwidth management. We end up using this particular channel to promote a lot of, you know, wonderful opportunities that may be a little bit, you know, less permanent. I would also say, though, for those of you who maybe you’re on an older radio or you wouldn’t be able to find it, this is a great time to use the app. It’s always available in the app.

Unidentified speaker, Analyst: Yeah.

Wayne Thorsen, Chief Operating Officer, Sirius XM: As well as Yacht Rock Soul, Yacht Rock ’80s and ’90s. We even have Al Roker in there as a guest DJ. Tell your friend to download the app.

Unidentified speaker, Analyst: I sure will.

Wayne Thorsen, Chief Operating Officer, Sirius XM: Okay.

Unidentified speaker, Analyst: Thank you, Wayne.

Wayne Thorsen, Chief Operating Officer, Sirius XM: You bet.

Unidentified speaker, Analyst: Thanks.

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