Greetings. Welcome to the Sirius XM Holdings Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants will be in listen-only mode. A question and answer session will follow the formal presentation. A reminder, this conference is being recorded. My pleasure to introduce Maggie Mitchell, Senior Vice President, Corporate Communications. Thank you, Maggie. You may begin.

Thank you, and good morning, everyone. Welcome to Sirius XM Holdings Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. Today, we will have prepared remarks from Jennifer Witz, our Chief Executive Officer, and Zach Coughlin, our Chief Financial Officer. Scott Greenstein, our President and Chief Content Officer, as well as Wayne Thorson, Executive Vice President and Chief Operating Officer, join Jennifer and Zach to take your questions during the Q&A portion of this call. I would like to remind everyone that certain statements made during the 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 those risks and uncertainties, please use Sirius XM Holdings Inc.'s SEC filings in today's earnings release. 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. Additionally, we have posted a supplementary presentation on our Investor Relations website for your convenience. With that, I'll hand the call over to Jennifer.

Good morning, everyone. Thank you for joining us today. In 2025, we delivered on our commitments and finished the year with strong Q4 results, exceeding our guidance and growing free cash flow year over year. We achieved this by strengthening our subscription offering, growing our advertising business, and leveraging the power of our broader portfolio to drive meaningful efficiencies and harness new opportunities. Following the refocus strategy we laid out in December 2024, we have remained laser-focused on bolstering our core Sirius in-car audience and expanding the reach of our ad network. As a result, we've exceeded our revised guidance, achieving $8.56 billion in revenue, $2.67 billion in adjusted EBITDA, and $1.26 billion in free cash flow, with a clear path to our target of $1.5 billion in free cash flow in 2027. Now let's dive into our subscription business. Throughout the year, we continued to deliver unique programming that drives connection and passion with our subscribers. First, we signed a new three-year agreement with the king of all media, Howard Stern. Our long-standing relationship with Howard helped to define Sirius XM Holdings Inc. in its early days, and today he's more relevant than ever, achieving a 32% year-over-year increase in earned media with A-list interviews and must-hear moments. With this new agreement, we've cemented Howard's place in our lineup for years to come. Simultaneously, we've continued to grow and strengthen our bench of influential voices across music, sports, news, culture, and more. We super-serve passionate fan bases with dedicated league and artist channels, intimate live events, and the ability to interact directly with on-air hosts. Ranging from beloved personalities on daily formats such as the morning mashup to industry heavyweights, including John Mayer, Mad Dog, and many more. Our new Metallica channel is commanding a strong audience, outperforming our…

Thank you, Jennifer, and good morning, everyone. Before I dive into the numbers, I wanted to start by saying how excited I am to be here speaking with you today on my first earnings call as Sirius XM Holdings Inc.'s CFO. I officially joined on January 1, and I've been incredibly impressed by the depth of the team, the durability of this business, and the passion behind our brands. I look forward to getting to know many of you in the analyst and investor community in the weeks and months ahead. I also want to extend a sincere thank you to Thomas D. Barry for his leadership partnership and for ensuring a thoughtful and seamless transition. Tom leaves this company in a position of strength, and I'm grateful for the foundation he and the rest of the finance team helped build. Turning to the business, we closed out 2025 with solid execution against our financial and strategic priorities. We sustained healthy margins, generated strong and growing free cash flow, continued to make disciplined investments in our platform and distribution, and delivered another year of meaningful cost efficiencies. At the same time, we sharpened our focus on subscriber profitability and higher return marketing and technology initiatives. For the full year, we delivered revenue of $8.56 billion, modestly ahead of our raised revenue guidance, which we'd increased on our third-quarter call. Total subscription revenue was $6.49 billion, down 2% year over year. Results reflected the benefit of our March rate increase offset by a slightly smaller average self-pay subscriber base. Advertising revenue was $1.77 billion, roughly flat year over year, driven primarily by strength in podcasting and improving programmatic demand late in the year, offsetting ongoing weakness in streaming music advertising. Full-year adjusted EBITDA was $2.67 billion, resulting in a margin of…

Thank you. We will now be conducting a question and answer session. And our first question comes from the line of Cameron Mansson-Perrone with Morgan Stanley. Please proceed with your question.

Good morning and thanks for taking the questions. Jennifer, encouraging to see the positive sub growth in the period. Taking a step back, just wondering if you could elaborate on where you think Sirius XM Holdings Inc. sits competitively today and where we are really in the evolution to provide your customers with more pricing and packaging flexibility?

Sure. Thanks, Cam. We were really pleased with the fourth quarter results, just to start off. We added 110,000 in net adds, and so this is a reflection of not only continued low churn but contribution from our new acquisition programs and the benefit of continuous service and companion plans that we launched in the fourth quarter. So going forward, our competitive positioning, I think, is incredibly strong as complementary to the music streaming services, especially because we have a unique position in the car. And remember, the vast majority of listening in the car is still to AM/FM. And we are opening up new packages, including music only at $9.99 and low cost of ads at $7 that goes squarely off against that AM/FM listening. We think we have more opportunities to take share there. So we're really well competitively positioned against the DSPs to be complementary against AM/FM in the car, which is our primary point of leverage.

Thanks. And if I could follow-up on churn just for a second. I think Zach mentioned an expectation for it to be in the 1.5 to 1.6 range in 2026. We think about that within the 1.4 kind of record low churn in the fourth quarter? What drove the 4Q? You talked about it a little bit, but maybe elaborate on what drove the outperformance in 4Q? And then why you expect that to kind of edge back a little bit as we look forward into '26?

Yeah. We did have a one-time benefit from continuous service in Q4, which reduced our vehicle-related churn. And this program allows our subscribers to continue their service while they're moving between vehicles. It removes a lot of friction in the process. This has been one of the points of leakage in terms of managing those vehicle changes, and we have more functionality coming, likely later this year, to make that even easier. So I do think we could continue to see some tailwinds in churn related to that functionality and expanding it. But, otherwise, we've seen strong non-pay results. Our voluntary churn was flat year over year, even though we did a rate increase last year. So, you know, we're just being cautiously optimistic. We think there's a lot more we can do with the data and the capabilities we're building on the marketing side to put the right content in front of the right customers, not only to build demand but also to enhance retention as well.

That's all helpful. Thanks, Jennifer.

Thank you. The next question is from the line of Steven Cahall with Wells Fargo. Please proceed with your questions.

Thank you. Good morning, Jennifer. I was just wondering if you could, and Zach, elaborate on the outlook for self-pay net adds in 2026. I think you said that you expect those to be modestly lower than 2025 due to the introduction of Companion. And I think Companion was additive in the fourth quarter. So it sounds like it's more of a drag in 2026. So maybe you can just help us understand how that flows in. And also, does it contribute to any trade down at the household level? Or is it additive at the household level? And then second, just wanted to ask about the go-to-market strategy with the OEM dealers. Can you talk about what that does for churn? I imagine pretty positive. And do you have any meaningful SAC related to those subscribers as well? Thanks.

Sure. Thanks, Steven. In terms of self-pay net adds for 2026, we have guided modestly lower companion subscriptions launched a bit earlier than we expected in December, which has been very successful. And I would expect to continue to drive solid performance there going into and through this year. That is adding value for our most loyal subscribers and positions us well for a rate increase this year. So we've seen nice results there and better than we would expect. But because we pulled it forward, it actually delivered better than expected performance on self-pay net adds in the fourth quarter and for 2025. So I think that, look, we understand the importance of subscribers. We're very focused on improving the trends. We believe we have a number of initiatives that will enable us to do so. But I would say that even if we don't, we have incredibly strong and growing free cash flow generation for years to come. And we're being very disciplined about the interaction between subs and free cash flow. But just, you know, turning back to more specifically on 2026, we also are guiding for relatively stable revenue, which, you know, in the face of slightly lower subs, obviously indicates that we believe we have more room in ARPU and pricing. So, again, we have a number of initiatives in flight. Hopefully, we'll talk more about those this morning. Some of them we highlighted on the prepared remarks. But we are continuing to expand demand through our broader price and packaging and personalization in marketing. And we are launching with more and more OEMs, our dealer three-year subscription program, as you mentioned, and we expect to see more demand there where dealers are ordering Sirius XM Holdings Inc. and customers get the benefit of that three-year subscription in their vehicles at the point of purchase. And we are already in 15 brands, and we expect to continue to expand in new end use this year.

Thank you.

Next question is from the line of Kutgun Maral with Evercore ISI. Please proceed with your question.

Good morning and thanks for taking the questions. First, Jennifer, you just touched on ARPU and pricing in response to Steve's question. So can you help unpack your ARPU expectations for 2026 in a bit more detail? And then on spectrum, I appreciate that it's difficult to get too granular on any process, but is there anything you can share on whether you're still actively engaged in evaluating the portfolio and how you see the opportunity set ahead for at least parts of the 35 megahertz? Thanks.

Great. Thanks, Kutgun. Maybe I'll take the first one on ARPU. ARPU is a great story for us. In the fourth quarter, we were up $0.06 to $15.17, driven by the flow-through of the pricing we had taken earlier in the year. And importantly, I think beyond just the fourth quarter, if you pull back a little bit, it's our third straight quarter of sequential improvement when comparing to last year and our second straight quarter higher than 2024. As you look forward to 2026, that momentum we do see is carrying forward into the year and expect to see strong ARPU performance in 2026 as well.

Do I take a second? Yes. Thanks, Kutgun. And just as a reminder, the total 35 megahertz of contiguous spectrum with the 25 megahertz is currently used for our core broadcast operations. And then we have five on either side for 10 megahertz of the recently acquired spectrum, which is the WCS licenses. And so, you know, as a reminder, we noted last quarter that we are evaluating multiple approaches to creating value with these assets, including new products or enhancements to our services, either ourselves or with partners. And building on core strengths, in particular in the car, this has been a key focus for us overall and with a bit more attention being paid to the CMD licenses within WCS. That's where the most near-term opportunities are. And we're looking forward to talking more as our thinking and the opportunities evolve.

Thank you both. Our next question is from the line of Jessica Reif Ehrlich with Bank of America Securities. Please proceed with your questions.

Good morning. I have two topics, I guess. First, on the podcasting advertising growth, it has been phenomenal. It's driving really strong. And Zach just said you're seeing improving air trends later in the quarter. I mean, it would be great to get some color on what you're seeing in the overall advertising market. And do both 2026% be driven maybe by the market or more a function of specific podcast inventory you're onboarding? And then on that topic, podcast profitability, I don't think you've ever said what it is. Talk about if you don't want to give a number, like how should we think about the swing factor on that? And then I have another question.

Sure. I'll take that, Jessica. So we did see really strong growth in podcasting in Q4 and last year in total. And Q4 in particular was incredibly strong based on improvement in metrics across the board. So higher podcast audio RPM driven by really record sell-through, higher CPMs, and a significant uptick in programmatic, as well as growth in our Creator Connect product, which allows us to sell video and social also. So we think there's continued tailwinds here in the industry, not only because of, you know, listening trends and our particular portfolio, but our ability to continue to improve monetization. We have incredibly high RPMs here, well above what we see on the music streaming side. And I think there's, you know, continues to be room for growth. We have great relationships with talent. We had, you know, half of the Golden Globe nominees, you know, the first time they've had a best podcast category, and Scott and his team continue to actively discuss, you know, relationships with new talent there. So we feel really well positioned in the podcast business, and just to touch on profitability, so this is a good business for us. It stands on its own. The margin has increased over time, and we think that the industry dynamics are in our favor here. And we also get added value from what we do on Sirius XM Holdings Inc., you know, not only with things like the Unwell Music Channel or, you know, Conan O'Brien's channel, but working with the creators, we've been able to define exclusive content for our Sirius XM Holdings Inc. subscribers as well.

Thanks. Any commentary on advertising? And then I'll go to the next question.

Sure, yes. So we're cautiously optimistic for 2026. And the year has started out solid. You know, I think it has a lot to do with our trends in podcasting, but there's a few areas where we see sort of unique opportunity. Our events business, you know, we are building great packages around things like the Super Bowl with our Noah Kahan event tonight, or the World Cup. And we also have a broader set of programmatic DSPs. We launched Amazon, and we're seeing a nice uptick there. And just in terms of the categories, I mean, it's recent, but, you know, what we're seeing is tech is up the most, financial services and pharma have been strong, as well as CPG. And then where we're seeing some pressure is on retail, QSR, and education.

Great. I'm not sure if you said Scott is on the call or not, so I don't know if this is Scott or Jennifer for you. Yeah. But, you did just resign Howard Stern for an additional three years. How should we think about the 2026-2027 content renewal calendar and the puts and takes on the content expense growth? Like where do you feel you have negotiating leverage? Where do you think you should invest more to protect your franchise?

So that's a moving target. As our lineup shifts due to many factors, you know, people could go on to other parts of careers, the economic and business models may not make sense. It's really a shifting target. So we look at it. We feel really good where the lineup is right now, both on Sirius and for sure in podcasting. But, you know, we're opportunistic where we need to be, but we're also conservative if the podcast market or anything else gets too frothy, and we're not gonna, you know, get into that, especially with the lineup we have right now. The place that I'm most pleased where we stand right now is in sports live sports rights because we're the only place where all the league rights and college and many other sports are under one roof. So, you know, down the road, sure, there could be pressure on that. We're in a pretty good spot right now where our deals stand on that.

And I just say, Jessica, we have so much more data than we've ever had before. So we can make better decisions about what's in the portfolio based on that data in terms of engagement, but also how we're increasingly using it in marketing for acquisition and retention because the real objective is to get the right content in front of the right customers. And that kind of data and analytics will be supported clearly by perceived value as well.

Great. Thank you.

The next question is from the line of Barton Crockett with Rosenblatt Securities. Please proceed with your questions.

I was curious about if you could talk a little bit about how you think about what seems to be a little bit of a new development in the podcasting sector, and that is the idea of, you know, doing deals with another party like a Netflix to give kind of an expanded kind of presence for your podcast, you know, Spotify's got a deal there and iHeart. That's new. Wondering if you could talk a little bit, Jennifer, about how you guys think about that in terms of the opportunity to do something like that and how important that could be specifically in this, you know, and then maybe segue into the idea of bundling. I mean, it would seem that, you know, one of the things that's been very prominent in, like, video streaming is guys coming up with bundle deals with other services like Disney Plus, HBO Max. And that working. We don't see so much of that audio and certainly, you know, maybe less prominently with you guys. So could talk about partnerships, bundling podcasts, that'd be interesting.

Thanks. I'll take the first part on that. So, you know, our podcast network reaches one in two podcast listeners in the US. And we're number one on Edison, and it's been well documented about how dominant we are in that position. So it's been written about. It's no secret that, you know, any company looking to have our podcast, you know, we're open for business. It's just we like our position where we are. Able to maximize a lot of money for curators and us going wide with what we're doing. If they become another platform that we can monetize on, we're always open to that. If it becomes narrower or more exclusive, the economics have to dictate that for both us and the creator. So it's a work in progress, but it's something we pay attention to regularly.

Thanks. And this is Wayne. And on the partnership side, I think the key work that we've been doing to do things such as fixing our identity stack were key in order to do more effective distribution partnerships such as hard bundles. Because, you know, when we when the main identity ends up being the vehicle versus the customer, it gets very clunky to put together a partnership where you have a hard bundle and the two services are joined. The other piece that we really needed, of course, was to have a lower overall persistent price point so that we weren't swamping our partners when we're putting together these joined-up offerings. And so now that these are in place, there's a lot of discussions that are, of course, being evaluated and underway. So more to talk through in the coming months.

Okay. That's great. Thank you.

The next question is from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Hey, great. Thanks for taking the questions. Two, if I could. Maybe first for a combination of Jennifer and Wayne, you'll be seen some nice execution on the cost savings program this past year. Curious if you could talk a little bit more about the opportunity you see to take cost out of the business here over the next year or so. And then within that, some of the high ROI investments you're making with reallocating resources within the business you see the most opportunity on that front. And then second for Zach, I'm curious just with this being your first earnings call, I'd love to get your thoughts around leverage and capital allocation. Maybe here over the next year or so, but also over the longer term, what gives you confidence in the low to mid-3 times leverage ratio? And then how should investors expect capital allocation to evolve from here?

Okay. So just on high ROI investments, I think Wayne's team has been doing a fantastic job rationalizing our product and tech spend and focusing on where we have the most opportunity. So on our in-car subscription business and our ads business. So I'll let Wayne talk a little bit about that, and then Zach can address the others.

Yeah. There's three main areas we're focused on. It's, you know, as you can see, this is where some of the identity work comes in, things like companion, it's really improving the overall go-to-market. The second is, of course, improving the experience in the car, and this, you know, all of these are all tied to the sharpened focus from December 2024. And then I'd say the third big area that we're continuing to make a lot of investments is improving the way we merchandise the breadth of our content. So that's search, that's recommendation, and other ways we're gonna push out recommendations and let people know all the wonderful things we have, which we have a huge opportunity to improve on. And, of course, that helps with churn and conversion through trial.

Yes. And Stephen, maybe I'll sort of reorder the question just a little bit to dovetail with what Wayne had to say. I think we're really clear on our capital return strategy. As Wayne had said, we're first focused on investing in those initiatives that drive our strategy. We've got plenty of opportunities for that. That's we'll feed that first. I think the good news is then with the OpEx efficiency work we're doing, which I'll talk about in a moment, we're able to create the capacity to both invest and improve free cash flow. That's well underway. So on the deleveraging piece, you know, we made significant progress in 2025, going down to 3.6 times, and we do expect to get into our guided range of low to mid-3s by later this year. And so then if you sort of walk all the way down from there, the third return is to shareholders today, been more heavily weighted toward dividends, that will remain important to us. And so as we achieve our target leverage later this year, that'll open up additional opportunities for us. But then just to talk a little bit about cost reductions, and I think, first and foremost, obviously, it helps us to create that capacity to invest in the things that Wayne had talked about. And we're really focused on reducing more agile. So we'll call it getting lighter. There's always opportunities to do that. The most obvious piece we see is in satellite CapEx we've talked about, but even inside of OpEx, one example is the significant work in modernizing the tech stack that Wayne and the team are leading. And here, we expect to both be able to reduce OpEx and deliver more for our customers. I think we see that as a win-win.

That's great. Thank you very much.

Our next question comes from the line of David Joyce with Seaport Research. Please proceed with your questions.

Could you please update us on the earlier learnings from your Amazon DSP relationship? Anything that contributed in the quarter, which what do you think that can do for you in 2026? Thanks.

Sure. So we're really pleased, by the way, with our programmatic partnerships. We've had a long-standing relationship with the Trade Desk, but we also have a significant business with GB360, Yahoo! Verizon, and growing with Amazon. So, you know, the diversification is really important. Certain brands work with certain platforms for various reasons. So we are seeing an expansion of marketers as we work with Amazon, and we've seen really nice growth there in the fourth quarter and continuing into the first quarter. So I think it'll be a nice contribution to the overall programmatic business. And again, we have a lot of runway here because, as you know, with CTV or video, programmatic represents a healthy share of overall ad revenue. And for us, you know, on the streaming side of our business, it's been a long-standing, but we're just starting to build on the podcasting side. So I think there's a lot of room to continue to invest in and see returns there.

All right. Thank you.

Our last and final question will be from the line of Brian Kraft with Deutsche Bank. Please proceed with your questions.

I was wondering if you could comment on where conversion rates have been running for both new and used vehicles. And as well, if you could talk about how they compare between 360L and non-360L. You know, is 360L helping there? And then separately, I was wondering if you could just talk about the trends you're seeing in used car trials. Are those still growing? Are there macro pressures? Would they be growing but for macro pressures? Any color you could provide there would be really helpful. Thank you.

Sure. So I'll start with the first one. Obviously, a healthy trial funnel is great for the business, and we saw that throughout last year. There is some pull forward perhaps because of tariffs and just general consumer demand. In '26, there does look to be perhaps the first year of reductions in consumer purchases of new vehicles, at least from the third-party estimates, the first time since 2022. So we may be facing a bit of a headwind there. But, you know, again, expansion of penetration rates and expansion of 360L are helping offset that to some extent, and I'll come back around to that. On the used car side, organically, obviously, penetration rates continue to grow there. We're at about 60%. And we have really strong relationships across our dealer network to be able to make sure that when a customer gets into their new used car, the radio is working for them. So continue to invest in those programs to ensure that they can have the best consumer experience on the used car side. Say, overall, we're not quite at fifty-fifty in terms of trial starts across new and used, but it's getting closer as used grows. So on conversion rates, we're seeing, you know, some similar trends that we've seen in the past. We have really strong programs and initiatives in place to, as Wayne even addressed, to address demand through the trial funnel. And, you know, those include things like the pricing and packaging that we put in place, whether it's low cost of ads or music only at $9.99. We're seeing healthy take rates on when we put those price points in front of customers on our full-price packages. So, it's opening the top of the funnel and getting people on the best package…

Thank you.

Okay. And so with that, the last question, I want to thank everybody for joining. And as we're wrapped up 2025 and report out there, I think to close by thanking the Sirius XM Holdings Inc. employees all around the world. It was a good year, and that was obviously driven by the contribution of all of you, and we're off to a good start in 2026 as well. So thank you.