Greetings, and welcome to the Sirius XM's Second Quarter 2023 Operating and Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Hooper Stevens, Senior Vice President, Investor Relations and Finance. Thank you, Hooper. You may begin.

Thank you, and good morning, everyone. Welcome to Sirius XM's second quarter 2023 earnings conference call. Today, we'll have prepared remarks from Jennifer Witz, our Chief Executive Officer; and Tom Barry, our Chief Financial Officer. Scott Greenstein, our President and Chief Content Officer, will join Jennifer and Tom 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 view Sirius XM'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.

Thanks, Hooper, and good morning, everyone. Thank you for joining us. We are pleased with our accomplishments this quarter and remain on track to meet the guidance we set forward for the 2023 fiscal year, including our newly increased free cash flow guidance. Our strong second quarter performance reflected most prominently in our EBITDA growth, significant cash generation and sustained low churn at 1.5%, reaffirms our consumer value proposition and the enduring appeal of our differentiated business model in audio entertainment. We closed the quarter with over 34 million total subscribers to our flagship Sirius XM service and as we expected, we saw a meaningful sequential improvement in self-pay net subscriber additions compared to the first quarter. The improvement in auto trial starts that began in the first quarter continued into the second quarter and while producing an increase in vehicle related churn still sets us up for continued improvement in subscriber performance and a positive back half of the year. I'm also pleased to report our ad revenue was in line with our expectations, which in today's choppy market is a testament to the strength of our sales offering, including our robust podcast content network and in demand suite of programmatic solutions. And while we are cautiously optimistic the second half we'll see year-over-year improvement in ad revenue, there are still many variabilities in the marketplace we will be watching closely. It appears at this time that more substantial gains in the ad market will not come before 2024. The quarter saw a strong momentum behind our strategic investments as well with work accelerating behind the scenes in support of our next-generation Sirius XM product experience plan to rollout later this year. We are bullish on our business transformation to meet the consumer demands of tomorrow particularly those of younger audience segments. We are confident that our programing lineup is truly unparalleled and now we must address price, control and discovery and provide even greater connection between experiences in-car and on streaming devices to create an even stronger value proposition for our subscribers and to bring new listeners into our ecosystem. Our talented team of engineers are nearing the finish line with a complete refactor of our tech stack built from the ground-up in record time. In addition to our own proprietary tools and technologies, a key component of this build is leveraging the best systems and solutions on the market to accelerate our timeline and gave us the backing we need to continue to innovate and iterate quickly. Within AI for example, we are both tapping into our own growing rich data environment as well as utilizing sales forces marketing and data clouds to supercharge our MarTech, allowing us to engage current and potential trialers and subscribers with highly personalized campaigns that increase early engagement and strengthen listening habits. We're excited about the upcoming platform launch and look forward to sharing more details, including a preview of the new app and a glimpse into the cutting edge features to come in car at a press event, we are planning to host in New York this fall. Stay tuned for more details to follow. In parallel with the product work as part of our go-to-market strategy, we are evaluating our content packages and pricing with an expectation that we can better appeal to each of our target segments and in doing so continue to grow our subscriber base, revenue and profitability. This research will help us evolve our pricing strategy in 2024 and beyond. As we continue to embark on this significant evolution to strategically realign Sirius XM for future growth. We are seeing strong indicators in early testing that we're on the right path. For example, we know habits are formed early and engagement in the first week of our streaming trial is a critical indicator of longer term retention. Through an ongoing series of initiatives, we're happy to share that we experienced record high week one stream rates this past quarter. Outperformance came from improved audience targeting, stronger value prop alignment with our user messaging and the launch of more personalized onboarding journeys. Furthermore, we're getting much more efficient at capturing customers with our streaming cost per acquisition down 20% from a year-ago and we're pacing to drive the same number of streaming only trial starts with a significantly reduced marketing spend. We expect these better engagement trends and lower acquisition costs will only improve as we launch our new platform later this year. We also continue to see data that reinforces the significance of our app as an accelerant to in-car conversion was significantly higher conversion rates across segments, demographics and regions for those who stream. Lastly, we saw strong usage of Sirius XM on CarPlay and Android Auto in the quarter with streaming through these platforms, up over 30% year-over-year. The widening adoption of these technologies reinforces our broad and adaptive approach to reaching new subscribers and accommodating their listening preferences. Turning to our in-car business, I'd like to share some highlights and lay out a few strategic - a few key strategic areas where we see opportunities for additional growth with OEMs. First, while I've spent a lot of time talking about our strategic evolution, I want to reiterate that the car funnel remains a strong and significant business for us. These two tracks are not mutually exclusive. In fact, as we dive deeper into our audience segmentation work, we've been able to confirm that nearly a third of our in-car trials are coming from growth segments, which we've previously shared represent about a quarter of the market at about 50 million to 55 million adults in the U.S. These audiences tend to be younger and more diverse compared to our average in-car subscriber today. They're inclined to pay for more than one audio service, they're looking for a variety of premium audio content and our new platform will address gaps in our offering versus the expectations of these audiences. We remain focused on enhancing our great position in the car, most recently, exemplified by our new agreement with Volvo, that will continue Sirius XM as a standard feature across Volvo cars lineup of vehicles and will facilitate the debut of Sirius XM with 360L and the automakers all-new and fully electric 2024 Volvo EX30 and EX90 SUVs. EVs overall represent a significant and growing opportunity for the company. And while we have more work to do with the newer EV only manufacturers, we're widely available in 49 different EV models sold in the U.S. market and our longstanding OEM partners include Sirius XM in their electric vehicles at penetration rates consistent with how they include the service in their gas-powered vehicles. The headway we're making within the EV market coupled with increased 360L penetration rates presents opportunities to market the stickier interactive features and capabilities available in vehicles connected with our streaming content delivery solutions. These features including extra channels, Pandora artist stations and enhanced recommendations will begin to see greater consistency across the different car infotainment systems as adoption of the Android Automotive operating system within our 360L platform begins to roll-out across various automakers later this year. All this work demonstrates the ways we're continuously enhancing the in-car experience and finding ways to improve our conversion funnel. Overall, I couldn't be more excited for our future as we continue to own the car as the number-one premium audio service. Moving on to content, I want to highlight a few recent launches we're incredibly proud of that speak to the relevance of our platform with award-winning entertainment brands and the biggest artists, including the launch of eight time Grammy Award winner, Carrie Underwood's new full-time artist channel Carrie's Country. The channel went live from Nashville in early June and quickly landed is one of our top country music streaming channels. As a country music industry continues to experience a surge in popularity, we're excited to be the home for some of the biggest names in the category. We are also seeing a growing demand on our platform for Latin Music and Kids programming and continue to expand our content portfolio and promotions around these genres. For example, last month we launched Moonbug Radio, an exclusive new year-round channel in collaboration with the award-winning entertainment company behind, some of the most popular kids' content today. It's a strong addition and contributed to an uptick in the percentage of listeners consuming kids' content. We also opened the doors of our new state-of-the-art complex in Miami with a week-long celebration in May, headlined by Howard Stern, along with special events and performances across several SiriusXM channels and the launch of a brand-new Latin Pop channel Hits Uno. The Miami studio has quickly become a home for Miami native like Pitbull and DJ Khaled and a Mecca for Latin artist like Becky G, Anitta, Prince Royce, and Tito El Bambino to stop by for special appearances and performances, all of which have contributed to growth in the percentage of listeners consuming Latin Music across a variety of different genres. Lastly, time spent listening to sports content continues to climb and demonstrates that consumers love SiriusXM as a one-stop audio home for all major sports. We recently saw strong engagement with our NBA play-by-play coverage during the playoffs and the percentage of listeners tuning into PGA TOUR Radio more than doubled during the quarter. Moving onto our advertising business. Within podcasting, we are now starting to see the true potential of our podcast business as it reaches scale with continued room for long-term growth, fueled by increasing advertiser demand, expansion of our ad tech solutions and the long tailwind from greater consumer adoption. With several years in the podcast business now under our belt, we have a clear path to profitable growth with increasing margins as the economics of podcast deals improve across the industry. We appeal to creators through our platform-agnostic representation and distribution and are seeing many major brand advertisers embracing podcasting given our best-in class ad solutions including brand suitability tools, targeting and measurement capabilities. In fact, in the first half of 2023, we have commitments booked with over 2,600 podcast campaigns across more than 100 Fortune 500 brands. Additionally, we remain focused on the long-tail growth opportunity within our programmatic advertising business. We are also currently in testing with a new suite of AI advertising tools that will help us optimize campaigns from planning through execution. This will lower the barrier of entry to audio and democratize access for small businesses while offering faster, smarter solutions to empower larger brands to create and execute audio campaigns more seamlessly and efficiently. We look forward to sharing more details on future calls. And while there remains uncertainty in the broader marketplace, most notably, illustrated by the television upfronts where marketers were hesitant to commit their budget and seeking lower CPMs, we are cautiously optimistic about our continued prospects with audio advertising offering, a more cost-effective and attractive solution to marketers looking for both broad reach and targeted audiences. Again, I'm extremely pleased with the results of our second quarter, we continue to delight consumers with new audio entertainment experiences, and made significant improvements to our commercial business, while work accelerated behind the scenes as we gear up for our launch later this year. The early indicators we are seeing today give me more conviction than ever in our differentiated audio experience, and the massive opportunity that lays ahead. I'll now turn it over to Tom, who will go through the financials in more detail.

Thank you, Jennifer, and good morning, everyone. As Jennifer noted, we had a very solid second quarter and we are in good shape as we head into the second half of the year. We are reiterating our revenue and adjusted EBITDA guidance and increasing our free-cash flow guidance to $1.15 billion based on lower expected cash taxes and improved working capital resulting in higher free-cash flow conversion. In the quarter, we recorded $2.25 billion of revenue relatively flat across the lines of business compared to the prior year. Subscriber revenue was slightly higher, driven by increased self-pay revenue, while advertising revenue decreased as a result of lower Pandora ad hours in sell-through. In the quarter, we are pleased with the $445 million of advertising revenue delivered considering the ongoing headwinds, we continue to expect sequential improvements in ad revenue, with continued growth anticipated in podcasting and programmatic. Adjusted EBITDA of $702 million increased by 3% year-over-year and 12% sequentially consistent with our expectations. The year-over-year increase was driven by reduced sales and marketing expenses, partially offset by higher revenue share and royalties in G&A. Total cash operating expenses in the second quarter were down 2% year-over-year. The company's focus on improving efficiency and cost structure, contributed to these benefits. And we are continuing to pursue areas that will enhance productivity and reduce expenses. Turning to the segments, the SiriusXM segment delivered $1.7 billion in revenue, which was relatively flat year-over-year, subscriber in equipment revenue during the quarter saw a slight increase of 1% and 4% respectively year-over-year, and as expected given broader market conditions advertising revenue in the SiriusXM segment was down approximately 8% year-over-year is broadcast ad revenue lagged digital. The total ARPU for the quarter was $15.66, up modestly year-over-year and up 2.4% from the first quarter of 2023, the increase in ARPU can primarily be attributed to price increase on certain of our full-price plans implemented in March. Gross profit in the SiriusXM segment for the quarter remained relatively flat at $1.05 billion, representing a margin of 61%. Additionally in the quarter, we recorded a 16% decrease in subscriber acquisition cost per installation compared to prior year. In the Pandora and Off-Platform segment, total revenue of $528 million remained nearly flat compared to prior year period. Advertising revenue in this segment of $400 million, saw a modest decrease of 1% year-over-year. In the quarter. Pandora ad hours were 2.73 billion, declined just 4% year-over-year and supported by a 3% increase in average hours per ad active user to 22 hours per month. Softness in owned and operated revenue was partially offset by 13% year-over-year growth and podcasting and Off-platform revenue. Pandora gross profit in the Pandora and Off-Platform segment was $152 million, down 9% year-over-year, but up 37% quarter-over quarter with a margin of 29%, the decline was due to seasonally light ad revenue, ad market challenges and the CPI inflater to web streaming royalties. However, we expect this margin to improve for the remainder of the year. Across the company. We continue with our transformation efforts - optimizing the cost structure prudently investing in our product and content, and leveraging technology and automation to simplify our business, and interaction with our listeners. We have a number of ongoing initiatives underway across the company, including early results that reduced second quarter customer service costs while improving our CSAT scores and our operating efficiency. Additionally, we are seeing the benefits of our facility optimization initiatives, and have reduced our real estate footprint by 38% relative to our pre-COVID floor space. Our - optimization strategy will position us well to respond to the marketplace as macroeconomic factors improve. During the quarter, we generated $323 million of free-cash flow, down from $435 million year-over-year, due to increased cash taxes paid of $48 million, higher satellite CapEx of $20 million, driven by the SiriusXM 11 and 12 construction, as well as higher non-satellite CapEx of $9 million related to the next-generation SiriusXM experience launch. We continue to expect free-cash would be strongly weighted to the fourth quarter given the normal seasonality in our business, combined with the timing of royalty satellite and interest payments. And finally, we continued to deliver our capital allocation strategy and maintained our targeted leverage ratio of low to mid threes and in the quarter at 3.4 times. In the second quarter of 2023, we returned approximately $229 million to shareholders, comprised of $94 million of dividends and $135 million of stock repurchase about double, the amount repurchased in the first quarter. We remain focused on returning capital to our shareholders in a prudent and disciplined manner. Moving forward, we continue to value a strong balance sheet that provides us with the flexibility to navigate changing market environments, while executing our strategy to optimize our cost structure prioritized product and content investments and integrate innovation at all facets of the company. With that, I'll turn it over to the operator for Q&A.

Thank you. [Operator Instructions] Thank you. Our first question is from Steven Cahall with Wells Fargo. Please proceed with your question.

Thanks, good morning. Jennifer as you look to relaunch the app experience, I think the hope is that you'll get more engagement and discovery both in and out of the car and I think the app already has a lot of incremental stations, music stations that are non-satellite and if engagement is going to benefit from that, I think there's also some skippability with songs on those. So I'm just wondering how we should think about as you look to relaunch the app in the back half of the year. What the gross margin start to look like as that streaming business builds? Are the royalty structures materially different than what you have in-car on the satellite side? I mean, you talked a little bit about lower customer acquisition costs. Maybe you can just help us think about streaming margins overall versus satellite margins. And then secondly, churn was excellent 1.5% as the trial funnel improves. What kind of upward pressure do you expect from vehicle churn maybe in the back half of the year of net adds start to go positive. And relatedly, any comments you could make on how conversion is trending, because I think it's been a bit choppier between model mix and demo mix in the post-COVID period. Thank you.

Sure. Thanks, Steven. So taking a margin question first, we are investing in this platform to support both the streaming business, which will enable us we believe to improve our streaming subscribers, who listen in and outside of the car. But also to improve retention and conversion among our in-car subscribers, because when they stream, we see higher conversion and retention rates. So what we're building that will come out as we discussed later this year and roll through with future releases into next year is going to support both sides of the business. But to your point on streaming margins, really there is a couple dynamics on average our streaming licensing, our music licensing and our customer service and billing costs, which include sort of the app store fees we have to the extent that customers are coming through the app stores directly are in general lower than what we see on the satellite side for our music licensing, our OEM revenue share and our customer service and billing. So margins are a bit stronger from a percentage standpoint, pricing is lower, right, our streaming only subscriptions are today about $10.99 and our core package on the in-car side, which also include streaming access is $18.99. So overall, we feel really good about the business model both on the streaming side and on the in-car side, and expect to probably have add more subscribers on the streaming side as we move forward as we see more growth there. And to your question on churn, yes, another great quarter, we're really pleased with our performance there. We have very solid voluntary, involuntary churn, no signs of really any consumer weakness. We are continuing to roll-through the rate increase on full-price packages and we have not seen any disruptions in terms of the voluntary churn. You noted vehicle related so we did see an uptick in-vehicle related in the last quarter. Auto sales have been getting stronger. The estimates for the rest of the year are typically they lag and they would suggest you have the full year 14 million or 15 million that auto sales would actually decline on the new car side in the next few quarters. So we're cautious about how that will evolve, we believe that there are definite signs with higher inventory levels and otherwise that auto sales will perform well in the second half. But to your point, to the extent there is a very strong fourth quarter with the unique dynamics of our funnel, we would likely see more vehicle related churn there. But see the conversions rolling through into next year, but our guidance reflects those trends and we are very focused on doing exactly what we said we would do with improving quarters of net-adds throughout the year and the back-half being positive. And was there one other part to your question?

No. I think you touched on it all. Yes, conversion rate.

If we touch on conversion rates, we can see a fair amount of stability. Right now, we are very eager for what's to come with the new platform. But just ahead of that, we have a number of pilots and tests in-market leveraging data from 360L to improve personalized marketing, we're leveraging new channels that are really only possible through 360L. We have an in-vehicle messaging capability with one of our OEMs and we're providing easier access to streaming. So we can again get our in-car trial to stream earlier in trial outside of the car to help with discovery navigation, so conversion rates have been pretty stable right now.

Thank you.

Thank you. Our next question is from Jessica Reif Ehrlich with Bank of America. Please proceed with your question.

Thanks. A couple of different things. So Jennifer, if you can give us some more color on what you're thinking about pricing changes, but these different packages that you'll introduced with the new streaming offer and how does listening differ inside and outside the car in terms of like music, talk, news, sports. That's the first thing. And then the second, I just wondering if you talk a lot about advertising, it sounds like you guys are confident that it will improve. Are you seeing signs of that and what will be the biggest drivers of podcasting or the non-music platform. And then the last thing, sorry for so much but podcasting the content that seems like there's a lot going on in the industry, what are you seeing in terms of cost and competition for content, when it seems like others are may be pulling back a bit. Thank you.

Okay. Thanks, Jessica. I'll start with pricing. As you know, we use free trials when we bring people into the car funnel and also increasingly on the streaming side as well. And in the car funnel, we typically use introductory promotional prices to bring people into the self-pay subscription base. And I think where we've seen some pressure is where the identified growth segments and their interest at paying those full price rates that customers role to after the introductory pricing period end. And we believe that there is demand among those growth segments if we repackage and perhaps create packages with less content and then we've done a fair amount of research on this. But now we're going to go through some testing in the next few months to actually prove this out. I mean, the dynamic, obviously that we need to make sure we solve for is that we don't see any of our current customers trading down to those packages. And we believe we have a path here, but we do want to test some in market packages to make sure that when we roll this out there is that opportunity to maximize growth in both areas. But as I referenced earlier, we do have a lower-priced package in market and streaming. And that has given us an opportunity to test with these growth lower potentially more diverse, younger and some lower-income segments with that package and continue to do that. I think the question on listening differences. So one thing we do see is that, when - not surprisingly, when our customers listened to a broader set of content across genres music and non-music, their retention is higher and of course, that has a lot to do with the breadth of the content that we have. We've talked a lot about how sports plays into that and a lot of our other news, politics, comedy, entertainment, content is really critical in terms of driving retention. And we see similar dynamics, both in the car and out of the car in terms of the level of music and non-music listening with perhaps a bit more non-music listening-in our streaming service. With advertising. I'll turn it over to Tom to make some comments there.

Yes, just Jessica, on the advertising side, our dynamic ad sales team has continued to face resiliently against the headwinds that are in the industry. So if you look at our individual businesses, Sirius XM side is down slightly at 1.5%, but it's lower spots and softness in the news and media space. Pandora is lower on streaming sell-through and demand, which is hampered a little bit, but the reality is the growth the podcasting is making a significant contribution to the overall ad revenue. We continue to see strength in travel and tourism and telecom in the Pandora side. Just skipping back to the strength on the podcast side, we continue to see growth with podcast RPMs up double-digits this quarter and the build out of the podcast revenue channel significantly helped our sales organization. We currently have three channels - three revenue channels to sell across on the ad sales side, the satellite, the podcast and the streaming and our top 20 advertisers advertised on two of the three channels, 17 of the 20 of them advertised on two of the three channels. So the breadth of our product is strong. And we consider that the rest of the year will continue to fight the headwinds in the marketplace and we look for '24 to be more robust in the industry, especially on the digital side.

Yes. And Scott, you want to pick up podcasting?

Yes, sure. So Jessica, a couple of things. The overall view is podcasting has remained relatively stable in terms of what's working. So for instance, the top 10 in podcasting and top 20 largely has the same podcast it had at least a year ago. And we have two of the top 10, five of the top 20 and 14 of the top 50. And when you look at some of the bigger ones, Audiochuck, NBC, Crooked, Coco, Freakonomics and all of those. We feel really good on our ability to market and get those out there, but more importantly, to monetize those. As Tom mentioned, I think our monetization is getting better all the time. And while content will never be science, this is the closest it's come as compared to the satellite. Also the multiple distribution platforms. So when you look at the Tom Brady podcast, which started out that way, is now exclusive on SiriusXM. So, our ability to look at distribution channels as well as advertising channels and find the optimum point to use on any of these gives us, I think, the flexibility we need. Obviously, if anything frees up, that matters or is emerging, we can be a player in that market, given our financial position. So, we feel pretty good where we are in podcasting right now.

Thank you. Operator, next question.

Thank you. Our next question is from Jason Bazinet with Citi. Please proceed with your question.

I know you guys have always been focused on the U.S. and Canada. But as the app becomes a bigger part of the narrative. Has there been any change in your thinking about sort of your geographic aspirations?

I think Jason, we certainly are building a set of capabilities, and underlying platform that could be used in other territories. So, there is an opportunity there - we did probably more so in English-speaking areas. We have not pursued the licensing that would be required there. But also, we're just very, focused at this stage in maximizing our opportunity in North America, because we really believe that we have super -- we've been successful at super serving our core audience within those segments, largely with our in-car offering. And going forward, we have a lot more opportunity to tap into these growth segments that really represent another, like I said earlier, 50 million to 55 million adults in the U.S. And of course, there's incremental opportunity in Canada as well. And there are ways for us to serve them both in the car and through our streaming experience streaming on - the phone or other streaming devices. In a much more effective way, as we tap into addressing the pain points with better discovery, and control in our product experience. So, we're excited about the growth that we have in North America ahead of us.

That's great. Thank you.

Thank you. Our next question is from Sebastiano Petti with JPMorgan. Please proceed with your question.

Hi. Thanks for taking the question. Just wanted to clarify on the advertising front. Has your expectation for the second half changed relative to maybe what you had been messaging on the first quarter in terms of just the second half recovery, obviously, things are choppy, but just wasn't sure if we now expect more of the year-on-year improvement, or just benefits from some broader markets, and being more weighted into '24? And then I have a quick follow-up as well?

I mean the second half of the year, Sebastiano will obviously have comparables to the prior year, they're a little bit better, but we don't see a lot of changes. We think it's still going to be choppy. But obviously, we're focused on podcasting - and the ad sales team will continue to focus on the ad front.

Yes. I would just add that the marketers out there, the brands have budgets to deploy. And I think we are really well positioned with the capabilities that Tom discussed in terms of being able to take advantage of close-in bookings to the extent that those open up with programmatic or audience buys across our network or to do more custom-oriented programs with advertisers in podcasting or with live events. So, I think we - as Tom said, I don't think we've changed our expectations that much. There's probably a little less upside in Q3 than in Q4. The comps get a bit easier as we go through the year. But the dynamics we've set at the offset - at the outset of the year have probably changed a bit in terms of the strength of the recovery not really coming until 2024.

Thank you. That's helpful. And just zooming out real quick, if I could. I think, Jennifer, you described it as a strategic transition with the business. And so, there are some one-time costs that Sirius wearing this year. You have the reduction in force. It sounds like, there's an eye towards additional efficiencies in the business here. But yes how should we think about - I guess, if you can provide some high-level thoughts on where - yes the growth algorithm for the business on a go-forward basis? If we think out 12, 24 months from here, Sirius has a high-growth capital return story, free cash flow machine. I mean has the growth algorithm changed? How are you thinking about, I guess, the Ps and Q of the business and the free cash flow profile on the other side of this transition, as you kind of attack these new cohorts, and podcasting and advertising scale as a percentage of the business? Thank you.

Sure. I'll start with the top line, and Tom can talk a bit about the free cash flow dynamic. So again, as we look to build out this new platform, and address margins a bit earlier, in the call. But our margins - our variable margins across in-car and streaming are very strong. So we have - we're sort of indifferent as to where we add subscribers. And I would expect that and I've certainly been saying that this new platform will better position us all other things being equal, of course, on auto sales and things like that, but better position us to add subscribers going forward. So, we are looking to return to subscriber growth and the pricing side of it we are still researching and testing. So, there will be opportunities. I'm sure, to capture more demand among those subscribers with our lower-priced packages, but we also believe that, because we have a very affluent and satisfied customer base that there are more opportunities at the higher end as well. So, I think that there are dynamics on both the sort of P and Q side that will work in our favor going forward. And advertising is a great business for us. We love the position we have in terms of the three channels that Tom talked about and our Pandora business is profitable, and that has a lot to do with some of the cost efficiencies we've put in place. And but, we like the dynamics of that business going forward as well. So Tom, do you want to talk about free cash flow?

Yes, sure. Sebastiano. So just covering free cash flow. I mean, we had a good quarter at $323 million. It was down obviously from prior year, as you're aware, from the - as it relates to the higher satellite payments and tax payments. So, we raised our guidance for the year based upon our review of the - as a review of our cost and basically, our working capital and principal and in taxes. And so, we raised our guidance based upon that to $1.15 billion. I think we'll continue to generate significant cash. We're always looking at our free cash flow conversion and our free cash flow per share. But I think as you look at the year, we continue to generate - a very significant positive cash. We said it will be back-end loaded to the fourth quarter. Just talking about the cost savings, you hit it right. We have optimized our floor space. We're down about 38% from pre-COVID pandemic era and we did have a downsizing earlier this year. We are being very detailed and very - focused on our cost structure as we're building out the revenue and the strength of the top line. We need to and the - Jennifer and the team here has been very focused on taking costs out of the business then moving us towards more efficiency and innovation and putting the cost and the dollars where the future next-generation SiriusXM is. And so, although we've done some early cost reductions, we are continuing and we'll be an ongoing program, and we've seen early benefits in call centers and then - and just optimization across the business. But we will continue to focus on that and obviously reinvest in areas that will thrive whether it's content or whether it's technology that will drive our future. So that's...

I would just add, Sebastiano, on free cash flow that we have a unique set of dynamics that we've talked about this year and particularly with satellite CapEx rolling through it, levels of about $300 million this year and next year. And I think as we've talked about over time, that goes to zero, probably for several years. And so we have the tailwind of working our way through that build cycle. But we also believe there's potential upside on both working capital and taxes as we move forward. So we will continue to be a strong and growing cash flow generator for years to come.

Thank you, both.

Thank you. Our next question is from Cameron Mansson-Perrone with Morgan Stanley. Please proceed with your question. Cameron Mansson-Perrone: Hi. Thanks for taking the question. It's interesting to see the sequential improvement in MAUs at Pandora. Can you talk about what you're seeing in terms of the trends there? And then on the off-net growth at Pandora pretty healthy in the second quarter, you talked about remaining focused on the long tail programmatic part of the podcast business. What do you do to pull forward that opportunity there? Any color there would be helpful. Thanks guys.

Sure. On Pandora MAUs, we have - we continue to find ways to improve on platform listening with both investments in our algorithmic programming and also more branded channels such as [indiscernible], The 615. So that supported the loyal cohort behavior that we've continued to see on the platform. We've also been testing new onboarding features in Pandora to help new customers that are coming in, build personalized stations. One of the things that we're doing is taking those learnings and using them as we build out the SiriusXM experience as well. And we continue to make headway on our CRM and marketing efforts to reduce churn there. So it's been a number of initiatives. And yes, trends have been slightly more positive, with MAUs down just 6% and hours down 4% in the last quarter. And I think the - we continue to take actions there to improve the profitability of the business. But we have a lot of optionality going forward with our Pandora segment. And on the programmatic side, I mean, Tom touched on this. We have - we've just started, I think, tapping the opportunity on programmatic for podcasts. We've had it in place on the music streaming side for a number of years. And it's - by the way, still nowhere near what I think you see on video platforms, but there is opportunity to continue to build out the tools there on both streaming and on podcasting. And we're really just, again, getting started on the podcasting side. So I think there's growth going forward for programmatic there. Cameron Mansson-Perrone: Got it. Helpful. Thanks.

Thank you. Our next question is from [indiscernible] with Evercore ISI. Please proceed with your question.

Hi. Good morning. Thanks for taking the question. One on self-pay net adds and one on costs. So first, I don't think there were too many surprises with self-pay net adds this quarter, and it's certainly encouraging to track towards a positive back half. Sorry to get a bit specific, but is it too premature to suggest that you'll get to positive next quarter? Or is it more likely that Q3 will be - maybe closer to flattish before you see a bigger ramp in the fourth quarter? And I know we're not talking too specifically on the contribution of streaming versus satellite. But is your expectation that satellite also begins to trend positive as well? Or is the overall outlook more driven by upside from streaming? And on the expense side, can you help us better understand some of the cost trends in the back half as you look to relaunch SiriusXM's Next Gen? I think sales and marketing in the first half continued to be down ahead of the relaunch presumably this continues in Q3 and then reverses in Q4, where I assume you'll see some EBITDA pressure, but any added color would be helpful. Thank you.

Okay. I'll let Tom address the cost in a minute. But on the net adds, quickly I mean - I'm not going to provide any more specific guidance on Q3 and Q4. We have said that we expect the back half to be slightly positive. I mean there's too much variability around Q3 really to provide a more specific number. But my expectation is that it will be better than Q2, right? So the trends will continue to improve over the course of the year. And on the streaming versus satellite - not really - I don't plan to give more insight into that right now. Going forward, I would expect we'll share some more metrics around those two pieces of our business. But I will say that our streaming net adds will also improve over the course of the year. And we highlighted some of the trends that we're seeing, which are really encouraging in terms of early in trial engagement, which obviously plays into better retention and ultimately, higher LTVs for our streaming subscribers. And coupled with that, lower cost to acquire. So that helps give us confidence that when we launch this new platform, which will give us even more capabilities to improve both of those pieces of the equation, that we'll continue to see upside in our streaming net adds.

On the cost side, you're correct. We're obviously back loading sales and marketing. We had planned that all year. As you saw in the quarter, we were down year-over-year by 23% in sales and marketing. As you look at the fourth quarter, including our press event we will have for the app, we have backloaded a lot of the costs, but I believe we also will have heavy cash flow in the fourth quarter. So the realignment of the cost and everything is planned. And obviously, we're driving towards our 2.75 adjusted EBITDA target for the full year. So I don't see a lot changing other than as you're right, the sales and marketing will obviously be back loaded into the fourth quarter.

That's great. Thank you, both.

All right. Thanks, everyone, for participating in our call this morning, and we look forward to continuing the conversation with many of you in the coming days. Take care.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.