Audio entertainment giant SiriusXM, home of Howard Stern, is confident in its traditional core business and growing new territories, CEO Jennifer Wiitz said Monday.
Speaking at the virtual Bank of America Securities 2021 Media, Communications & Entertainment conference, he said that “the car will remain the foundation of our business” that “more and more of our growth will be outside the car, both from digital subscriptions and our advertising platform.”
When asked about her biggest concerns for the business, Witz said, “I worry about a recession” or the economic recovery, because SiriusXM “offers a premium subscription service — there’s always a risk that customers will be able to pay for what we’re offering.” Don’t want to pay for the outgoing offer.”
Addressing the impact of the coronavirus on delta variant and soft August car sales, the SiriusXM CEO said that customer trends in the current fourth quarter could be “pressured” and, if these trends continue into 2022. “We maintain full faith in our customers and financial guidance,” she reiterated though.
Asked about concerns that the likes of Apple or Spotify may eventually enter the car segment aggressively, Witz said that “we’ve been in the business” for 20 years, adding that the firm has been able to handle a variety of competition. Have encountered, but thanks for the ability. To offer engaging content easily and be a good partner for car companies.
Digital customers without a car are a growing part of SiriusXM’s user base and a “big focus” going forward, Witz also said Monday. “Our marginal economics on the digital side are fantastic and they are really on par with our satellite customer economics, which is very different from what you see in the interactive music space,” she highlighted. Witz also mentioned an existing promotional campaign focused on the theme of “no need for a car”, which highlights the company’s “unprecedented brilliance”. He said SiriusXM also wants to increase the time car users spend outside their vehicles consuming the firm’s content.
With John Malone’s Liberty Media holding about 80 percent of SiriusXM, Witz was asked about the firm’s capital allocation strategy, responding that he expects stock buybacks and dividends to continue over the long term. “When Liberty goes above 80 percent, they can choose to participate in our buybacks, I know they’ve talked about that,” she said. “We certainly could pay a higher dividend payout or a special dividend, but these are all options and are evaluated along with our options” to invest internally or make acquisitions or other deals. Witz concluded that the SiriusXM board would make “the best decision for all shareholders.”
Elaborating on the growth prospects in the podcasting space, including advertising, Witz said that SiriusXM is open to offering listeners owned and operated and third-party podcasts and “unique opportunities for talent like Tom Brady, Megyn Kelly and many more.” “I also want to provide. and Kevin Hart.
Discussing the company’s content strategy in the competitive arena, he said exclusivity is “just one piece,” but “what’s most important is curation.” Live content is engaging and offers new opportunities, even though “we have always firmly believed in live,” she said.
SiriusXM this summer reported that it added self-paying customers to its satellite radio and Pandora units during the second quarter and raised its financial forecast for full-year 2021. The company then said it was on track to add 1.1 million self-pays. This year this figure of customers is the highest after 2018.
The audio company controlled by John Malone’s Liberty Media revealed in its latest earnings report that total SiriusXM users stood at 34.5 million at the end of June, including a record 31.4 million self-pay subscribers.
“In our opinion, the market is underestimating the importance of SiriusXM’s dominant long-term position in the car and the live nature of the physical percentage of their programming,” said Pivotal Research Group analyst Jeff Wlodarzak, who has a “buy” rating on the stock. , wrote in a recent report. “Investors also underestimate the size of the growing used car conversion opportunity which also drives down customer acquisition costs.”
And he argued: “The return to normalcy in the new car market and record low customer churn sets ’22 to be pretty solid from a customer growth standpoint and SiriusXM management showed the potential to be able to grow average revenue per user Is. .”