Greetings. Welcome to SiriusXM's Third Quarter 2023 Financial and Operating Results Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I'll now turn the conference over to Hooper Stevens, Senior Vice President of Investor Relations and Finance. Mr. Stevens, you may begin.

Thank you, and good morning, everyone. Welcome to SiriusXM's third quarter 2023 earnings conference call. Today, we will 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 privacy 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 SiriusXM's SEC filings in 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. We really appreciate everyone being here today. We are pleased with the strong progress we made this quarter and remain on track to meet our goals for the full year. We closed the quarter with approximately 34 million total subscribers to our flagship SiriusXM service and continued to drive sequential improvements quarter-to-quarter in self-pay net subs. Subscriber churn remains incredibly low at approximately 1.6% despite increases in vehicle-related turnover. And although we did not issue formal subscriber guidance for 2023, we are still anticipating slightly positive self-pay net subscriber additions for the back half of this year. The overall ad market remained soft, and we expect to close the year relatively flat versus last year. While the WGA and SAG after strikes resulted in delayed campaigns within the entertainment space this past quarter, we did begin to see some key verticals such as CPG start to bounce back. Podcasting also remains a tailwind, both our programmatic and audience buying capabilities continue to set us apart, making SiriusXM an important marketing partner given our flexibility and scale. As we've shared with you over the last few quarters, we have been accelerating our transformation of the SiriusXM business to better capture consumer demand for our live human-curated audio service that differentiates us and to position ourselves to capture positive subscriber growth in the years ahead. Our resilient and extremely profitable business model, underscored by our significant ongoing cash flow generation, persist even amid this investment phase of our business, as we ready for the upcoming rollout of our next-generation platform later this quarter. Ahead of the launch, the past quarter, we continued to focus efforts on improving returns in our streaming business, increasing efficiencies and bringing in new trailers and enhancing onboarding and retention of streaming-only customers. And while still very early, we are beginning to see the first cohort of trailers moving off the six-month streaming offer we announced with T-Mobile earlier this year, our first-ever integrated billing provider, and we are pleased with the results. We are confident that the launch later this year of our new streaming products, brand platform, and enhanced marketing capabilities will put us on a path for continued improvements in subscriber acquisition and retention as we move through next year. This launch is just the beginning of a series of innovations in our products, marketing, and content that we expect will only accelerate in the coming years. We look forward to going into much more detail on our transformation with you at our press and industry preview event a week from tomorrow where we will reveal what we've been up to this past year and provide a first look at our new streaming experience, unveil a refreshed brand and more. We'll also be participating in Liberty Media's Investor Day next Thursday. And while Tom will briefly address the business combination proposal that Liberty Media publicly announced, I'll just say that we have a strong and capable special committee of Independent Directors responsible for the negotiations, and we'll share more when there's something to announce. While our streaming experience will be a cornerstone of our company's long-term future growth, the in-car experience continues to drive our business today. We are pleased with the progress made in the quarter, driving the innovation of new technologies and adoption of our 360L platform and extending long-term agreements with automakers. In fact, I'm excited to announce today that beginning with model year 2024, in addition to being available on the F-150 Lightning, Ford will make SiriusXM a standard feature in traditional F-150s, America's best-selling vehicle for 41 years running. We are also excited for the debut of our 360L platform on the Android Automotive operating system later this year. This will bring with it the introduction of what we call ignition ON recommendation, our most sophisticated in-car personalization yet that solves for choice paralysis and gets listeners to the content they want to hear the moment they turn on the car. As we've said before, these types of features have driven better conversion rates and better retention. And over time, we expect that Android will grow to become the dominant OEM operating system, improving 360L adoption and feature parity along the way. So, this launch marks a significant milestone for us. Looking back at the past quarter, we brought listeners closer to the artist, personalities, and content creators they love with a diverse programming slate that sets our premium curated radio service apart. For example, with the 2024 Presidential season already underway, we're seeing growing interest in our political programming, which we can expect to rise further as we move closer to next year's general election. This includes a significant percentage growth in listeners to Megyn Kelly Show, which we recently announced we've extended with a new multiyear deal. Megyn continues to deliver in-depth interviews with significant political and cultural figures, including last month when she had a headline-making exclusive interview with former President Donald Trump. We're incredibly proud to be a platform that provides a wide range of viewpoints across our political channels, from the regular appearances of leading Democrats on our Progress Channel to Town Halls with some of the top Republican candidates. In fact, in the last quarter, we've had interviews with every major presidential candidate across our Patriot, POTUS, Progress, and Triumph channels. In addition to our own SiriusXM-produced channels, we also provide simulcast of the biggest television news outlets in the country, including CNBC, CNN, HLN, MSNBC and TODAY Show Radio. And last week, we announced a multiyear extension of our agreement to carry FOX News, FOX Business, and FOX News Headlines 24/7. Overall sports listening was also up in the quarter. And with the start of the NFL season, we are seeing positive trends in listeners to our SiriusXM NFL Radio channel, which saw an uptick year-over-year in percentage of total listeners and time spent listening. More fans are discovering and connecting with the excellent NFL content and commentary we deliver. That's not only live broadcast of every game with your hometown announcers, but unique and exclusive talk content beyond the games. We launched the third season of our exclusive show, Let's Go! with Tom Brady, Larry Fitzgerald and Jim Gray in September, and this season, we added former Pro Bowl quarterback Alex Smith to our roster of hosts. With so much action across the NFL, college football, the NBA, the NHL, and MLS this fall alone, we delivered consumers exceptional value as the one-stop destination for so many sports. Likewise, for music fans, we had something for everyone this past quarter. From our incredible specialty programming, spotlighting, Latin music and culture across SiriusXM and Pandora throughout Hispanic Heritage Month to a dedicated Ed Sheeran pop-up channel, where SiriusXM listeners could hear the Grammy award-winning artist's exclusive show for SiriusXM listeners this summer in the Hamptons. In celebration of the 50th anniversary of hip-hop in August, we hosted a day of events, including a one-of-a-kind concert with Wu-Tang Clan and a very special community event with the Boys & Girls Club in multiple cities. The event was also part of our SiriusXM Cares philanthropic initiative that aims to promote and further social equality with a holistic approach to giving and greater alignment with the communities in which we live and work. Hip-hop music and artists have impacted our culture in such meaningful ways over the years, and it was an honor to get back to the next generation of changemakers. TikTok Radio also continues to be a great success for us in delivering content that resonates with younger, more diverse listeners. We've built out an incredible roster of TikTok influencers that host the channel, and this past quarter, continued to deliver different formats in how we package and present viral music through these personalities. For example, in September, we introduced a new top 10 weekly countdown show comprised of the most popular songs on the platform in the U.S. hosted by one of our resident pop culture TikTok influencers. And just yesterday, we introduced dedicated shows for each of the TikTok personalities where they share music and add commentary on their respective areas of influence on the viral platform. Moving on to our advertising business, podcasting continues to be a growth driver. We have already booked more in 2023 than we delivered in full year 2022 sales. Our third quarter podcasting growth of 28% is outpacing the broader marketplace and programmatic specifically was up 97% year-over-year. We are focused on delivering innovative solutions within this space by continuing to develop our targeting capabilities both at an audience and show level as well as through bigger-picture work aimed at addressing industry pain points. This includes a new first-of-its-kind third-party brand safety and suitability verification solution for podcast advertising developed together with Barometer and marketing automation platform ArtsAI. We can now provide brands with reporting mid-campaign so they can optimize their buy-in real-time, as well as receive a post-campaign analysis that includes brand suitability and contextual insights to give them confidence in their investment. By removing historical barriers to the podcast marketplace, such as brand suitability, we are able to welcome new advertisers to the space and expand the broader pool of ad dollars available to us. We remain focused on further scaling our advertising offering and we expect the relaunch of the SiriusXM platform to drive increases in our SiriusXM digital monthly active users over time, opening up new opportunities within our growing advertising business. Again, I am extremely pleased with our results and progress in the third quarter. Looking ahead, we expect SiriusXM's robust cash generation to grow in the coming years, and we like our position as the leading premium human-curated audio service in North America. I look forward to sharing many more details on our transformation underway next week at our event in New York. 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, third quarter results are aligned with our overall expectations. Now let's dive in to the third quarter financials. Revenue for the quarter came in at $2.27 billion. Within that, advertising revenue of $460 million grew just under 1%, while subscription revenue was unchanged at $1.7 billion. Adjusted EBITDA increased by 6% on a sequential basis and approximately 4% year-over-year to $747 million. This improvement can be attributed to our cost optimization initiatives and reduced sales and marketing expenses, which were partially offset by an uptick in revenue share and royalties. Our cost savings initiatives produced nearly $40 million of ongoing net savings during the third quarter, and we continued to look for new efficiencies. Operating expenses for the third quarter decreased by 6% overall. Turning to net income, we recorded a 47% year-over-year increase in the quarter to $363 million, translating to diluted earnings per common share of $0.09. Free cash flow was $291 million in the third quarter, 12% lower than last year's third quarter, as we ramped up satellite and non-satellite capital expenditures, as well as saw a slight increase in cash taxes due to reduced R&D and other tax credits. As many of you probably know, we remain in a period of heightened satellite CapEx, but continue to see this tapering to zero in the coming years. As a refresh, we are expecting approximately $300 million in satellite CapEx for the full year 2023 as we ramp SXM-11 and -12 on top of the ongoing preparation for SXM-9 and -10. Using ballpark numbers, we will see satellite CapEx remain in the $280 million to $300 million range in 2024 before declining to approximately $175 million in 2025, $95 million in 2026, and $45 million in 2027. Heading into 2028, we should be at or near zero. Additionally, non-satellite capital expenditures rose by roughly $25 million, primarily related to the next-gen SiriusXM launch that we plan to showcase next week. Non-sat CapEx will be in the $350 million to $400 million range this year. As previously mentioned, we anticipate delivering a meaningful portion of our free -- full year free cash flow in the fourth quarter, driven by seasonal trends in our business and the timing of royalty, satellite and interest payments. Now turning to the segments. In the SiriusXM segment, we delivered $1.7 billion in revenue, down 1% year-over-year and flat sequentially. SiriusXM advertising revenue was the toughest corner of the business, down 16% year-over-year, as we continue to navigate an extremely tough broadcast advertising market. OEM paid promotional subscriber and connected vehicle revenue declines were partially offset by growth in self-pay subscription revenue. Total ARPU during the third quarter was $15.69. We benefited from a March price increase on select full price plans and saw headwinds to reported ARPU from promotional self-pay subscription plans, the lowering advertising revenues I mentioned, and lower paid promotional plan rates from certain OEMs, as well as higher balances of paid trial subs and unsold vehicle inventory. Gross profit in the SiriusXM segment decreased 3% to $1.047 billion compared to last year's third quarter, representing a margin of 61%, down only about 1 point as we absorbed roughly $20 million in higher music royalties, slightly offset by improved OEM rev share. In the Pandora and Off-Platform segment, total revenue of $550 million increased 4% compared to the prior quarter and 2% on a year-over-year basis. Advertising revenue in the segment of $418 million increased 3% year-over-year and approximately 5% sequentially, driven by steady growth in podcasting and programmatic ad sales. Gross profit in the Pandora and Off-Platform segment of $180 million increased 4% year-over-year and approximately 18% sequentially as a result of improving podcasting margins partially offset by higher year-over-year music royalties, representing a total margin of 33%. On the capital allocation front, we returned approximately $165 million to shareholders in the third quarter, composed of $93 million in dividends and $72 million of stock repurchase. And, we recently announced another 10% hike to our recurring dividend, the seventh annual increase since its original inception in 2016. We ended the quarter with net debt to adjusted EBITDA of 3.3 times. At the end of the third quarter, we withdrew our share repurchase plan given Liberty's proposed offer. This was a requirement from an SEC regulatory perspective. At this time, we expect to remain out of the market while the transaction is pending. Regardless of transaction hypotheticals, we will always value a strong balance sheet that provides some flexibility to navigate changing market environments. So looking ahead, we plan to continue to be capital efficient and maintain our existing long-term leverage target of low to mid-3s times. Today, we also reiterated our existing financial guidance for 2023, with revenue approximately $9 billion, adjusted EBITDA of roughly $2.75 billion, and free cash flow of about $1.15 billion. And last, but certainly not least, as you're aware, the Special Committee of Independent Directors of our Board received a non-binding proposal from Liberty Media regarding a potential transaction involving the company. This potential transaction would consist of the separation of the assets and liabilities attributed to the Liberty SiriusXM tracking stock group from Liberty Media through a split off of a newly-formed company in the subsequent combination of NewCo and SiriusXM. As a result of these potential transactions, the holders of Liberty SiriusXM tracking stock in our stock would all hold 1 class of common stock of the combined company. The special committee has engaged advisors and is evaluating the proposal. In this transaction, we, that is the company and our management team, are really playing a supporting role. In general, Jennifer and I are providing information to the Special Committee and its advisors on our business and our long-term plans as they evaluate the proposal. We do not know if the proposal or any other transaction will be completed or the terms and conditions of such transaction. Further, we do not expect any news until the Special Committee and the company's Board of Directors approves a transaction or the Special Committee otherwise concludes that further disclosure is appropriate, except as required by law or other regulatory requirements. While this proposal works its way through the process, we will maintain our unwavering focus on our customers and the long-term positioning of the company, as we always have. With that, I'll turn it over to the operator for Q&A.

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question today is from the line of Bryan Kraft with Deutsche Bank. Please proceed with your questions.

Hi. Good morning. I wanted to ask you, I guess, it seems as though auto sales are now providing the tailwind that the business needed to return to self-pay net adds. But at least this quarter, it appears that conversion to self-pay wasn't enough to offset the natural increase in vehicle-related churn. So, what's your confidence level in that dynamic reversing going forward so the conversions to self-pay will translate into positive self-pay net adds on a sustained basis next year? And maybe related to that, if you could talk about what you're seeing currently in conversion rate and how that's trended versus recent quarters? Thank you.

Sure. Good morning, Bryan. Conversion rates have been relatively stable this year, and we continue to see improvements in 360L vehicles. But as we've talked about in the past, what we're trying to solve for with the launch of this new platform, which, of course, comes with streaming first, and then we'll move through our in-car platform next year, but we're trying to solve for these core pain points that we've discussed around discovery, control and pricing. And that's really going to enable us to make a broader impact on conversion rates going forward. We're building improvements in both marketing and on the product side in streaming and in-car that will roll out over the course of starting late this year and into next year, but we expect the product to do a lot more work here going forward. We've been heavily reliant on direct marketing for our in-car conversion process. But you point out that auto sales seem to be providing a bit more of a tailwind. We have seen that with new and used car trials ticking up a bit, but a lot of the new car side has been propelled by fleet and rental and not on the consumer side. There's still been growth in consumer, but much faster growth on the fleet and rental where we don't participate as much. But we do -- we have seen some improved trends in trials now with the resolution, it seems, on the strikes that should provide more momentum going forward. We really hadn't seen an impact to our trial starts from the three domestics because they had basically enough inventory on hand to manage through it. But the biggest impact for this year, again, we really hope for a growing auto funnel in both the new and used car side going into next year, but of course, very strong auto sales in the fourth quarter would result in higher-than-expected vehicle-related churn potentially. So that's the only downside, obviously, building the funnel.

Okay. Thanks, Jennifer.

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

Sorry. Good morning. I have a couple of questions. Sorry. One of the major drivers of future growth seems to be the ability to attract younger users. So, just can you talk a little bit about the launch of the new streaming app will move you towards that goal? And what your plans are to adjust the content offering with the launch of the app or not? Excuse me, along those lines or may be slightly different, but we see Spotify pushing into Audiobooks. Is that something that you would consider as well? And then, a completely different question, sorry for so much, but just completely different. Your costs were down a lot this quarter. Sales and marketing down 16%. G&A down a lot. So obviously, your margins were great. But is this deferred spending? Or you -- is it more of a permanent [costs] (ph)?

So I'll start and then maybe, Scott, you can jump in on new content, and Tom, you can talk about the cost structure. So, yes, Jessica, the launch later this year of new streaming app will certainly help us address demand with younger audiences. So, the objective is to -- because we can move faster in the streaming apps to start there to make sure that we have a very effective product market fit for our growth segments, which we've identified to be about a quarter of the overall adult audio listening market. They are looking for premium audio experiences and beyond what an on-demand music service might provide. So, we have the content largely we believe we need to have to address these audiences, it's just difficult for them today to discover and navigate and, to some extent, control the content in the product. And so, we actually have a very robust funnel, and the younger generations represent a reasonably significant size of our in-car funnel as well as our streaming funnel. So, we're bringing the younger consumers into our products. We now just need to better satisfy their needs once they get there. And Scott, do you want to talk more?

Sure. So, a couple of things, Jessica. One, when it comes to younger, what often gets overlooked, which I don't think it should, is sports. So that has always attracted a younger audience in particular. And right now, you need six streaming video services to have all the games we broadcast. So that piece is pretty solid. On the music side, there isn't an artist that doesn't either come in or do a guest DJ or one of our artist pop-ups. And as Jennifer mentioned, we can do that almost on an unlimited basis. It's a question of can it get out there and be found within our app in other ways, and I think with the new product that will come through on that. When you mentioned audiobooks and other things, I think the product and other things will let that evolve as it goes. But whether it's comedy, music, politics, there's nothing that doesn't have a younger component to it, in particular, our podcasts. We have many of those and can surface those. It's just a question of a core audience that is well served and now a younger audience that will be served as well, it's just got to be found in a way they're used to finding their content.

And then, Jessica, to the last part of your question on cost savings. So, the company, obviously, next week is going to be launching the next-gen product. And at the same time, we're going through internally an organizational refresh and optimization. As we look at a lot of the processes and leverage technology, we're starting to see savings in a wide variety of areas. Some of them have shown up already. Some of them are dependent on future technology. But we continue internally to focus on innovative ways to enhance our processes. And I think we'll see more savings as we go forward. As I noted in the discussion, we recognized about $40 million worth of savings from optimization this quarter, obviously, and then there is some level, as you said, in sales and marketing, there's some level that's deferred to the fourth quarter, but there is $40 million worth of net optimization savings in the quarter. We will have more to come in the next quarter and in the year ahead. So that's the update on costs.

And I would say, while we're not managing clearly to individual quarters, it's nice to hit a record high EBITDA of $747 million in the third quarter. So, we feel good about our ability to continue to generate strong EBITDA margins and cash flow going forward.

Our next question is coming from the line of Steven Cahall with Wells Fargo. Please proceed with your question.

Thank you. Good morning. First, just wanted to understand next week's next-generation product launch, I think what you talked about for the 360L conversion for Android Auto. So, are there two kind of app-based updates or improvements coming? I think that the current Android Auto app has had a lot of not so positive consumer feedback. So, are current customers getting that update plus then you'll have a next-gen update more targeted at streaming-only subs? So, just trying to understand that dynamic. And then, for years, SiriusXM subscription ARPU usually grew at an inflationary rate. We've seen a lot of direct-to-consumer and streaming services tick up price over the last 12 months. Your ARPU has flattened out. I know there is some mix in there as well. So, how do we think about SiriusXM subscription ARPU over the longer term, especially as you move to a bigger digital component within that? Thank you.

Sure. We'll have a lot more to say, Steven, about what's launching and when next week. So hopefully, you'll tune in for that. But there are a couple of parts to your question. So late this year, we'll be launching our new streaming apps, and that will be across iOS and Android. And those will serve both our existing in-car subscribers who are streaming as well as new streaming subscribers and they'll roll out over the course of a few weeks. And then, we'll also be updating. So, those will also have updated CarPlay and Android Auto instances. So they can be used, obviously, in the car or outside of the car. We did announce earlier in my comments that we are launching our first instance of Android Automotive operating system with SiriusXM this year. That's 360L based, and it's an integrated solution in car. And that's different and going to be rolling out over time. And of course, it will take the form of a typical automotive rollout. We do believe AAOS will ultimately be the vast majority of the OEM implementations, but clearly, the automakers are taking different paths there. And we want to make sure that we are part of whatever technology architecture the OEM chooses to use. So, on an integrated basis, clearly, 360L is the best consumer product in car in terms of taking advantage of satellite and IP, and AAOS will allow us to do a lot more going forward by updating the experience more frequently. We said earlier that we're going to have our first instance of ignition ON recommendations. Recommendations, whether it's in 360L or in our apps, is one of the core features to enhancing subscription value and retention. And so that will start to come in 360L with AAOS and in other instances of 360L as we move into next year. So hopefully, that gives you a bit of sense as to how we're rolling this out. Start to streaming apps first, and then we will have regular updates to those apps, of course, going forward. And then, there'll be improvements to our in-car technology over time, consistent with how we've rolled those out in the past. And Tom, do you want to talk a little bit about ARPU?

So just looking at on the Pandora side, we actually did on Pandora Plus do a price increase in September, and we will be doing a price increase in premium coming next coming next year. But as far as overall ARPU, what we have is the increase in self-pay promotional plans has obviously been a drag on the overall ARPU. But the price increase from the March price increase is driven up the ARPU, but has been offset by the promotional plans and some level of rate as it relates to the OEMs. So, we're balancing the price increase as we continue to look and as we look at the launch next week in our pricing model, we're looking at balancing obviously the pricing model and then the economics of the plans that the trial plans that we're continuing to address.

Yes. I'd say on the SiriusXM side, there's no difference in how we're using promotional plans to attract and retain customers as we have in the past. I think the rate increase that Tom referenced was a bit narrower in scope than ones we've done in the past, we haven't addressed the promotional plans there. And he also referenced the lower OEM paid trial revenue, which is just a function of our continued negotiation and extension of our deals with automakers and doesn't necessarily reflect a specific path on the economics. Overall, we still believe that we are driving improved economics, especially as you include increased pen rates through those deals. And I think as we've said in the past, it's not about ARPU specifically. We obviously follow the metric, but it's an output. We believe very much that there is an opportunity to grow subscribers by getting them into the content they want and perhaps at lower price points. And that could be for less content or just streaming packages, but we also see an opportunity to enhance the value of our subscriptions for our core segments and subscribers to support ongoing rate increases in the future. So, I don't know how that nets out necessarily in terms of ARPU, but I definitely feel good about our opportunity to improve revenue overall.

Thank you.

Our next question comes from the line of Cameron Mansson-Perrone with Morgan Stanley. Please proceed with your question. Cameron Mansson-Perrone: Thanks, and thanks for taking the question. Two, if I can. First on Pandora gross margins, good improvement for the first time in a couple of years there. I was wondering if you could help us understand what's driving that. I know you highlighted improving podcast economics, but I was wondering, are we at the point now where the off-net business is accretive to overall gross margins at Pandora. And then one on the reiterated guidance. The EBITDA came in obviously at record levels this year. I think the implied 4Q EBITDA margin is a decent downtick from the last couple of quarters in light of the cost saving success that you guys have had. I was wondering if you could provide some color just on what is implied by the full year guidance in terms of 4Q. Thanks.

Yeah, I'll take the first one on Pandora gross margin. So, it is as we highlighted in earlier comments just about improving podcast economics primarily. And this is really a function of driving improved advertising revenue on the podcasting side. So, I believe you said, we were up 28% in the third quarter. We continue to grow faster than the overall market on the podcast advertising revenue. And given the structure of the deals, a lot of that falls through to gross margin. And we just continue to expect improving monetization on the podcasting front. We have brought a lot of brands into the space based on our relationships at Pandora, and we're bringing more and more solutions that brands are looking for, whether it's better targeting and identification of users, which is very challenging when the listening is happening over multiple platforms, or its brand suitability and safety solutions as well. So that's the primary driver there. Tom, do you want to...

Yeah, sure. Thanks, Cameron, for the question. Good morning. As far as our guidance, when you look at EBITDA for the full year, we have guidance of $2.75 billion. The reality is we focus on being approximately. And so, with each of the metrics, there is some level of variability around the metric and the guidance we gave. But we look at the quarters and then when you look at the fourth quarter on EBITDA, obviously, as you've seen this year, there's higher royalties and we have talked about the marketing that's being pushed to the fourth quarter and cost optimization. But overall, with each of them, I would focus on the approximately side of it. And I would just say that each of them have variability above and below the target.

Yeah. And just because there is so much uncertainty in advertising right now, I think about where we were sitting this time last year, and we were expecting a recovery as we moved through this year. And we really -- we've seen some slow progress, but it hasn't materialized at the level that we certainly expected it would. And now it looks like it's going to be '24 really before we start to see any improvement. So, given that uncertainty, fourth quarter is the biggest quarter for revenue -- for ad revenue for us and revenue overall. So, I would just say we're very clearly, like Tom said, looking at $9 billion as approximate and likely a ceiling on revenue. Cameron Mansson-Perrone: That's helpful. Thanks, guys.

Our next question is from the line of Jason Bazinet with Citi. Please proceed with your question.

In response to an earlier question, you mentioned three pain points, discovery, control and pricing that exist on the platform today. Do you mind just unpacking a little bit either research or anecdotes that give you confidence that those are pain points today that you can solve with the next-gen rollout?

Sure. Yeah. We've done a lot, Jason, on this front in terms of research and even just testing to better understand where the constraints are in terms of bringing people into our subscriptions. And on the discovery and control side, it's -- discovery, we talked a lot about, right? We have an incredible set of content. Our subscribers are very passionate about whatever it is, right? Their favorite music channel, whether it's TikTok or Beatles or even the Billy Joel Pop Up or the sports that Scott highlighted, we have such passion around the content we have, but people can't find it. And I've talked about this before, that the model that we've always had as you get into the car and you turn the dial, right? And we need to build an engagement platform and a set of products that facilitate discovery without having to do all of that work, just like other streaming products. And so, a lot of that is keyed on our improvements in recommendations, which is coming through in 360L slowly but surely, and we'll definitely have improvements across recommendations and our streaming apps, and that whole engine will go to support the suite of our products overall. So, discovery is key, because you get people into the content they love and then surround them with recommendations as to other content, they will also like, and Scott touched a lot on that. Control is not about a fully interactive music service, but also providing customers with better idea as to how you can control the content that we have. We do have channels where you can skip songs, for instance. And also, we'll have new features, which, again, we'll preview some of this next week. New features that allow customers who may have -- we believe, may have gotten to a point and listening to a certain channel where they want something new, and we'll be able to put them into something else that's very similar in an easier way. So, there is improved discovery and control in the products and pricing. This is really about making sure that we have a broad set of products at different price points or packages at different price points, and some of those will have reduced content to be able to attract younger consumers who may, in fact, look at us as a complementary product to a music on-demand service. We've always been complementary in some ways to consumers' music collections. And now oftentimes, consumers are using on-demand music to solve for that need. But our human-curated set of content, whether it's music or the broad set of non-music content we have is really critical to many of our subscribers and prospects who are looking for something else in audio to complement what they have on the music side.

That's helpful. Thank you.

Thank you. Our next question is from the line of Barton Crockett with Rosenblatt. Please proceed with your question.

Okay, great. Thanks for taking the question. I was interested if you could give us a little bit more kind of detail around your penetration rates. I know you talked about getting into the F-150 trucks. What is your penetration now of new car production? And also, where are we on the 360L kind of penetration? So that's one question. And then, you outlined kind of your CapEx essentially trending long term towards zero. In that environment, what are you contemplating in terms of the consolidation of the satellite constellations at this point long term? And what is kind of the maintenance level of CapEx that will remain? I know you have ground repeater networks and the like. If you could elaborate on that, it would be helpful. Thank you.

Sure. So, first on pen rates overall, we're still in the low 80s on pen rates and have come down a little bit this year related to growing stand-alone EV penetration rates and then some minor disruptions from a supply standpoint still on individual models. But yes, we like the position we have going forward with the F-150. Ford has always been a very strong partner, and that is one of our highest converting vehicles. So, it will be nice to be standard there as well. And we have work to do on the stand-alone EVs, and I'm still hopeful we'll have something to talk about in the future with the single biggest one out there. But nothing else that's driving any real change in penetration rates going forward. On the on the 360L penetration rate, we're at about 35% of current vehicle sales that have 360L, and that will continue to obviously increase over time as we roll out. What's also really key there is making sure that they are fully featured as possible. And so, we're watching very closely the penetration rate of those 360L vehicles in terms of their broad set of capabilities. And that's only going to improve with the launch of AAOS. And Tom, on CapEx?

So, on CapEx, obviously, we gave you the schedule out on the satellite. The non-stat CapEx, we said, obviously, this year, we're doing heavily investment. Next year, we'll be doing heavy on the investment. But I believe it's somewhere in the $350 million to $400 million range this year. And we will continue as we refresh our repeater network, we will continue to obviously put capital into the non-sat CapEx going forward.

Yeah. I think the free cash flow profile is very strong going forward. And that has a lot to do with what Tom highlighted on the satellite side, and us eventually getting to zero by 2028, and we could be at that level for several years following, but also improving taxes and working capital also contribute to ongoing growth and free cash flow.

Thank you. Our next and final question comes from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Hey, great. Thank you. First, maybe for Jennifer. There's been a lot of focus on the health of the consumer heading into the end of the year. I would just be curious if you could update us on what you're seeing in some of the real-time indicators that you track on the consumer front, whether that's voluntary or non-pay churn, or the uptake of certain packages? And what you think that speak to in terms of the health of the consumer heading into year-end? And then just quickly on the auto strike, just with it being over, any impacts that we should be mindful of in terms of the trajectory of trials or equipment costs heading into the fourth quarter or next year would be helpful. Thank you.

Yeah, sure, Stephen. So, on the auto strike, really no -- nothing material to say on that in terms of trials or other metrics. So, I think we should be fine on that front going forward. On the health of the consumer, we have seen really strong just overall consumer confidence in retail spending. As you know, despite the fact that savings have fallen quite a bit, auto default rates have been up year-over-year, but they're certainly not where they were pre-COVID. But for us, there's really not been any discernible increase in our non-pay credit card entry rates, which is sort of our best leading indicator. Satisfaction continues to be above last year's level. And overall, our voluntary and non-pay -- so taking vehicle-related out for a second, voluntary and non-pay have been very consistently at about 1% churn for several quarters now, give or take, a few basis points in either direction. But obviously, there's a lot of uncertainty heading into next year about possible recession, when is the recovery happening for advertising, and then just the general health of the consumer. So, it's something we're watching closely, clearly, as we close out the year.

Great. Thank you.

Thanks, everybody, for participating today. We'll speak to you soon.