Sirius XM CEO Highlights Cash Flow Growth, New Sports Plans and Ad Expansion at Conference

Sirius XM reiterated free-cash-flow guidance of $1.375 billion this year and $1.5 billion next year, supported by $100 million in planned cost savings and lower satellite-fleet capital spending.

The company reported 1.4% churn and is expanding 360L, Companion, continuous-service features and lower-priced offerings such as the $5 Sports Pass and $7 ad-supported Play plan.

Sirius XM is broadening ad partnerships with SoundCloud, Amazon, Apple and YouTube, while evaluating potential sales, leases or joint ventures involving its spectrum holdings.

Jennifer Witz, chief executive officer of Sirius XM, said the company’s strategy remains centered on strengthening its subscription business, expanding advertising and improving efficiency, with recent operating results providing what she described as evidence that the approach is working.

Speaking at Goldman Sachs’ Communacopia + Technology Conference, Witz said Sirius XM reported solid subscription performance in the second quarter, including higher average revenue per user, low churn and strong customer satisfaction.

Advertising revenue rose 5% in the quarter, while the company remains on track to deliver $100 million in gross cost savings this year, she said.

Witz reiterated the company’s free-cash-flow expectations of $1.375 billion this year and $1.5 billion next year, compared with $1.25 billion last year.

She said lower capital expenditures for the satellite fleet as that investment cycle is completed next year should support cash generation and create greater capacity for shareholder returns, including share repurchases.

Witz said Sirius XM’s in-car business remains a significant competitive advantage, despite perceptions that satellite radio could face a rapid decline.

The company is seeking to expand vehicle penetration at appropriate economics, increase used-car penetration and attract customers through extended-duration plans, she said.

The company is also emphasizing a more personalized in-car experience through SiriusXM with 360L.

The platform is used by roughly 20% of self-pay subscribers and is expected to be available in just over 60% of new-car sales by year-end, according to Witz.

Data from the platform is helping Sirius XM make content and product decisions, including the addition of local sports content, she said.

Witz added that 360L has produced better conversion, retention and ARPU, while providing flexibility to offer different packages and enhanced features.

Second-quarter churn was 1.4%, Witz said.

While the company expects modestly greater self-pay net-add losses this year than last year, she attributed part of that outlook to a reduced reliance on unpublished discounts and a shift toward customers rolling from trials into full-price plans.

She said the transition may pressure near-term net additions but should improve the longer-term revenue profile.

Sirius XM is also using its Companion offering and continuous-service initiative to support retention.

The Companion plan allows a paying subscriber to provide another household member with a radio or streaming subscription at zero ARPU.

Witz said Sirius XM has about 300,000 Companion additions and that more than 80% of users say the feature has added value to...