Sirius XM Holdings Inc. (SIRI) Earnings Call Transcript & Summary

All right. Great. Let's get started with our next session. Thank you everyone for taking the time to join us today. My name is Stephen Laszczyk and I'm the firm's lead entertainment analyst, and we are excited to welcome back to the Communacopia Technology Conference this year, Jennifer Witz, the CEO of SiriusXM. Jennifer, thank you for being with us today.

Thank you, Stephen, for having me here. Maybe before we jump in, I can just note that last week, we announced that we were raising our free cash flow guidance for 2025, new information. I wasn't sure if you've seen that. So we increased by $50 million free cash flow guidance for this year, raising it to approximately $1.2 billion. And this has a lot to do with -- we've indicated that this might be a possibility on the earnings call, tied to the [ OPB ] and lower cash taxes, but also we expect to come in towards the lower end of our range of non-satellite CapEx which was -- we had stated previously was $450 million to $500 million. And we also reiterated our revenue and adjusted EBITDA guidance for this year as well.

Fantastic. And we'll dive a little bit into that later and some of what you're seeing in the current business. But maybe to start for those who are a bit newer to the SiriusXM story and just thinking back over how the strategy has evolved over the last year or so. Last December, you went through a little bit of a strategy refresh. I was just curious if you can maybe take us back through the decision to pivot away from maybe the streaming service and into refocusing efforts on the satellite -- core satellite business and how that has played out over the course of the last couple of years?

Sure. So yes, as of December, we really sharpened our strategic focus at SiriusXM on our core in-car subscription business. This has everything to do with the fact that we deliver tremendous value for our in-car subscribers because of that embedded easy-to-use interface in the car alongside our differentiated content offering. And so it's about leaning into the strengths we have there and continuing to capitalize on those. But big picture, our areas of focus are the same. So to strengthen our in-car subscription business, to continue taking advantage of growth opportunities in our ads business and also executing on our cost program across the company. And then on top of that, we do have optionality in our spectrum assets, and hopefully, we'll talk about that a bit more. But since December, the things that we've focused on are for the in-car side of the business, broadening our pricing and packaging structure, which opens up new price points at the lower end of the spectrum to really open up demand in-car for those segments. We've leaned into our 3-year dealer-driven subscription program and delivered real success there. We scaled our podcast business on the ad side. And we've also really driven efficiencies in the business. And this is one of the areas that we focused on is intentionally pulling back, as you mentioned, on the streaming subscriber side at SiriusXM. So we are focused more now on higher engaged subscriber segments with higher ROI and driving real improvement there. So again, driving efficiencies across the business, leaning into our areas of strength on the in-car side and advertising and capitalizing on these improvements in spectrum assets, we think these various investments in the business are going to result in higher free cash flow, sustained free cash flow growth. So this year, we raised our guidance, as I mentioned, to $1.2 billion approximately. We have a target for '27 of $1.5 billion. So along the way of getting to that '27 target, we expect to also come into our target leverage range by the end of next year, low to mid EBITDA times. And that will ultimately give us the opportunity to expand on our capital returns program. So these elements of improving the business across in-car subscription adds, driving efficiencies in the cost structure, leading to growth in free cash flow, which should be our best measure of success and optionality around future capital returns and our spectrum assets are really what we believe will drive sustained long-term value creation for stockholders.

You mentioned strengthening SiriusXM's presence in the car. And one of the more frequent debates I have with investors is really around how the satellite business can evolve or the presence it can maintain in the car as the business becomes more competitive, the dashboard becomes more competitive. Could you maybe talk a little bit more about the steps you're taking to strengthen SiriusXM in the car and really the opportunity for the subscription business to return back to levels of growth?

I think the main -- the real key statistic here is time spent listening in the car for those 35 years and older is focused on radio, right? So 80% of time spent listening is to AM/FM or SiriusXM. And then when you go to 45 and up, it's even more concentrated. 85% is to that embedded radio service in the car. And obviously, it's dominated by AM/FM. We're a much smaller part of that. So I think that gives you an opportunity of what we believe the future is for our growth profile. So we have a very -- it's been the foundation of SiriusXM, the in-car business. And I'm really pleased with some of the efforts we've put into place here. So we talked about what we're doing on pricing and packaging. We'll talk more about that 360L, also just opening up the funnel. So we've put a number of programs in place that have actually brought in new customer segments into the subscription service. And these are things like our 3-year dealer-driven subscription program, which is continuing to grow with new OEMs being added, opening up more used car data partnerships so that we can identify more of those customers at point of sale and put them on trials, integrating with more EV partners. And then we're leveraging the strength of our podcast content portfolio more broadly to do podcast plus subscriptions as well. So this has allowed us to open up the funnel, bring new customers into the service. And then, of course, the 360L pricing and packaging. And then ultimately improving our ability to get the right content in front of the right customer with better marketing is going to unlock both conversion and I think actually improve ultimately on our already low churn rate as well.

You mentioned 360L and how that plays into the in-car strategy. Can you perhaps provide an update on where we are in the 360L rollout today, what that penetration curve looks like over the next 5 or so years? And then some of the benefits that you're either seeing or expect to see out of 360L, whether that relates to conversion or the ability to get customers in the right package.

I'm really pleased we're over 50% of our new car trial starts with 360L today, and that's going to grow to 60% and 70% and then ultimately will be fully distributed in the years ahead. It's been slow and steady progress since we originally started developing this. And we see it in at least 10% of our used car trial starts as well. So again, proliferation of 360L will continue to grow and the feature set will also grow. So where we really see improvement and really, it's across the board in our metrics. So better conversion, better retention and better ARPU on 360L, subscribers with 360L in their cars versus subscribers without. And it's the combination of this really advanced platform in terms of personalization and getting customers into new content that we are either having more personalized and discovery features like our extra channels or our personalized artist stations, on-demand content. So it's really been increasing the breadth of content that customers are consuming, and that's what leads to better metrics overall. So I'm confident this is going to continue to improve the trajectory of the business. It's been slow to get started. And all the data coming back as well has been key. We make better content decisions as a result. And ultimately, it's this unlock on marketing that we still have to capitalize on, and that's a big area of focus for us as we go into 2026.

That's great. And I do want to come back to content. But maybe first, you mentioned pricing and packaging a few times. It's been a few quarters since SiriusXM has rolled out its new pricing and packaging strategy based around core music plan and then modular add-on sports, news, talk, et cetera. Could you talk a little bit about how this strategy has -- how adoption has played out in the strategy and then some of the benefits you're seeing in the core business as uptake...

Yes. So as we take a step back, our pricing and packaging strategy is pretty simple, right? It has to do with adding more value and creating more options, right? So it's -- we're really focused on building out good, better, best, right, which is sort of the classic subscription packaging structure. And we've just started last year, as you mentioned, with our modular pricing and packaging, which is $9.99 for music only in the car and then added tiers on top of that with additional content. And then we've also launched more recently in July, a low cost of ad subscription package, which is very new to the lineup, but it is really the good sort of the foundation of the good, better, best. And that's at a sub-$10 price point, and I think that will give us more opportunities to open up demand as well. So again, adding value and creating more choice. And this is really about making sure that customers get on the right package for them. So on the modular pricing that we put into place, we started putting that in front of new trailers last year. And look, we're watching the metrics that you would expect us to watch. We want to make sure that customers are taking the right package and staying on those packages, right? So in terms of $9.99, when we put that in front of customers, most customers are actually taking the $25 package. So really good metrics there. We're very pleased with the progress. And then after the trial and the promotional period, most customers are staying on those full price packages. So getting customers into the right package for them means ultimately better retention, and we believe less reliance on those unpublished discounts, which is kind of the thing we'd like to get off of overall as we clean up the pricing and packaging structure.

How do you balance that? There's been a fairly sizable cohort of SiriusXM that's been on those unpublished discounted plans for quite some time. And this new pricing and packaging plan aims to be -- to move those customers off that plan. How do you balance maybe stepping those customers up versus churn? And maybe you can speak a little bit about how the ad-supported tier comes into the conversation.

Yes. So there's 2 opportunities on the broadening of this pricing and packaging structure, and that's on both creating new demand with more price-sensitive segments because, again, we're focused on the car. We want to go after AM/FM because they have a majority share there. But over time, we've raised rates in such a way that we probably priced ourselves out of competition for that. So opening up price points like $9.99 for music only and a sub-$10 price point for low cost of ads gives us that opportunity to go after that demand. And then we're going to have opportunities to upsell over time as well. But on the other side of the spectrum, we have -- are very satisfied and engaged full-price subscribers who are happy to pay, and we've been able to implement rate increases over time. One of the real success stories we've had in the recent past is we pushed more content down to many of those packages last fall and implemented the rate increase in the early spring, and we saw very little churn as a result. So again, it's about having better transparency, a broader set of options, making sure that we can keep customers on the full price packages. But having these lower-priced packages circling back to where you started should allow us to reduce our reliance on these unpublished discounts. So as customers call up, they may land on a significantly discounted price for the overall content offering. We're going to slowly move ourselves away from that and give them options for price points like low cost with ads for that package, which is a sustained lower price point.

SiriusXM launched its ad-supported subscription service play just this last July. Can you maybe talk a little bit more about the strategy behind play, how it's ramped since July? I'm sure it's still early days. And then as you look forward over the next 12 to 24 months, how you expect that to play out?

Yes. So it's kind of a logical addition to our pricing and packaging strategy, right, at the good level. So sub-$10, it has a reduced set of channels and ads in the music for the first time. So it doesn't have some of our premium content. It's an entry-level price point. It has been very slow in terms of our rollout because we want to be very disciplined about where we're using it. So we're targeting customer segments in trial that don't typically convert very well that tend to be more price sensitive, right? So going after that group that's likely to use AM/FM, again, very focused on likely older segments, right, that are more invested in an in-car embedded experience. And so far, what we're seeing, again, very early low volumes, but we are seeing improved demand among these segments. And ultimately, they aren't just choosing that package. They're choosing a broader set of packages when they come into the sales flows. So we're going to be watching that package mix. We're going to be watching how they retain on this low cost with ad subscription. And then just overall, we are going to have an opportunity to improve the ad side of that ARPU equation as well, even though the subscription price will be lower than $10.

Can you talk a little bit more about the potential to increase monetization on the ad side of that of that package goals as you look out for this year and the small number of subscribers that you have on play, if there's a number in your mind. And as you think about layering on either more inventory or more monetization, what that could look like over time?

Yes. Yes. So it's not even just about play. It's really about opening up better monetization for SiriusXM in general on the ad side. So we generally have just broadcast ads. And we've been working on ad replacement to create more digital addressable targeted ads in the car that would be in subscriptions for the non-music content more broadly, but also for play in the music channels as well. And that's going to take time to build out. So in the meantime, it's going to be more broadcast ads. So the ad ARPU is generally probably more limited in the initial stages. But over time, we'll have the opportunity to add that into our broader ad platform across broadcast, music streaming and podcasting and really package it as one buy. So there'll be opportunities to improve that yield over time.

I think one of the natural concerns of investors when you launch a plan like this is the potential for cannibalization play expands the TAM, it brings down the price point, sort of bring in a set of customers that are new -- potentially new to the SiriusXM ecosystem, but it could also potentially result in a trade down effect. I'm just curious how you got comfortable with that risk and how you're balancing that opportunity versus the potential for...

We hear this concern a bit, as you might imagine. And we're really looking at opportunities to improve demand, and that's going to come with lower price points. And I think the thing that we can rely on is that we have a really satisfied long tenured and engaged subscriber base on full price packages. And in the past, when we've introduced packages like this, whether it's streaming only at $9.99, music only at $9.99, we just haven't seen that much movement down for existing subscribers. So yes, when they call and try to maximize rate, they end up oftentimes on unpublished discounts. We're going to leverage the fact that we have these sort of long-term lower-priced packages in place now to get those subscribers on those packages. So ultimately, I don't see any incremental cannibalization beyond some of the things that have been happening already in the business. And this improves the health of our subscription business if we can actually move customers away from those unpublished discounts into these packages with sustained lower price points. And then we're going to have the opportunity to raise price over time or move people up with upsell programs as well.

On ARPU more holistically, as we look into 2025, I think on your second quarter earnings call, you mentioned that you expect ARPU growth to improve into the back half of the year, the pricing and packaging changes, some price increases that you pushed through earlier this year. Just curious if you could talk a little bit more about the outlook for ARPU this year, how pricing actions have been digested by the base. And as you look into '26, the sort of setup into -- for ARPU to grow next year?

Yes. We expect to continue to improve the year-over-year comps on ARPU as we go through this year. And then the pricing and packaging structure that we've been talking about really sets us up, I think, for more opportunities for revenue maximization going forward, right? So it's a combination. We want to drive both volume and rate. And on the volume side, that's only going to come if we're opening up more demand. And on the rate side, that's going to come as we move people up the packaging structure, but also have the opportunity to increase rate. And I think our experience in this year's rate increase with a lot of uncertainty, frankly, in the first quarter in terms of the health of the consumer and the economy in general, I think it just shows that we have the opportunity, if done right, combined with more value add, to continue to raise rates in the future as well. And I think that bodes well for ongoing rate maximization.

If I look back, SiriusXM has historically grown ARPU in this 2% to 3% rate on an annualized basis. Should that be investors' expectations looking ahead? -- or you mentioned maximizing revenue, maximizing the overall revenue pool that is available to you. Should there be a different framework that investors maybe view success by -- on the SiriusXM side in terms of ARPU versus revenue?

Yes. I mean output -- it's always an output, right, ARPU. And so we aren't running our models based on how much are we going to increase ARPU specifically. It's really about getting customers onto the right packages for them. And there are so many metrics that we're watching to make sure that we're doing that effectively. Getting customers in the funnel is priority #1 to increase demand. And then alongside that, continuing to add value to the subscription so that we can increase price over time. And hopefully, that results in exactly both of those volume and rate increasing over time to drive overall revenue maximization.

That's great. Maybe moving over to the content side of the story and the strategy on content. SiriusXM has historically been the leader in premium audio content for the better part of the last 2 decades. That said, the market has become more competitive over the last couple of years with Spotify, Amazon, Apple and others all coming into the premium audio category. I guess, looking ahead, how does SiriusXM's content strategy evolve from here? And how are you planning on maintaining that leadership?

Yes. So core to our differentiated content value is really offering exclusive premium content, making sure that we have live and timely programming and then that we have this human curation aspect that really lets creators, artists, hosts, talent connect directly with fans. And so the opportunities we have on the content side are the areas where we can kind of unlock all 3 of those in one investment. And I'd say the best example of that recently is Stephen A. So he's a big personality. We have exclusive audio with him. We will distribute some of it more broadly, but he brings a lot of brand value and awareness to SiriusXM. He's on other platforms and will promote back to us. But it's that idea that we have real live timely content, so daily radio on both the sports side and then he's going to be doing some political talk for us as well, combined with this connections that he offers to fans. So he's going to take calls. And there's something really compelling that our subscribers find being able to connect with talent that way. So that's the real significant opportunity for us if we continue to find those talent or other areas of content to invest in. We're going to be very disciplined as we do that going forward. But it's really what differentiates us against other platforms. So you mentioned other music streaming companies or even the proliferation of podcasts, which are widely available. Those don't offer live, timely and real human connection like we do. We are always going to be complementary. Most customers are going to have another version of their music library or maybe listening to another podcast platform, but we really believe in this curated approach because there's such decision fatigue really. I mean customers coming into these platforms where it's all about the vast amount of content, they are really differentiating themselves on features, and we're differentiating on the content we provide.

Are there any other content categories or genres? You mentioned sports political that SiriusXM is focused on?

Yes. I think sports is really interesting for us, but also wellness and culture as well. We've made some additions there with like Page Six radio. Hopefully, we'll do more with Mel Robbins as well, who's really just been a rocket ship on the podcast side. But it's all about ROI. And we have a lot more data now than we ever have with the number of subscribers we have with 360L and also using the app. So we're leveraging this data to look at things, not only evaluate the content we already have on the platform, but look at future opportunities based on what customers are gravitating towards. So we're looking at metrics like engagement, of course, and the breadth of content consumers actually consume, but also cost per listener or cost per listening hour, and we can make better content decisions as a result on what to keep on the platform. But in terms of additions or new areas, like once we see trends in terms of the data, we can invest in other additional like extra channels like we have, whether that's -- we have really strong listening to the message, so create another version of the message or we see something on Pandora, where consumers are increasingly searching for the sleep channel or music for dogs. We can bring those things over to SiriusXM. But any decision we make is not just going to be about the data, right? It's about -- like we talked about overall brand investments, awareness and really the optionality, which is, again, circling back to sports. So I was on a plane last night. SiriusXM is playing the Bills game. And it's off and on, on DIRECTV, but I know I can go to SiriusXM to listen to the Bills game. So it's the idea that it's there. I may not be listening to it all the time, but the optionality of being able to listen to it when I need to is really important to the value proposition.

I have to ask about Howard. He's made some news earlier this morning. Perhaps you could just give us an update on the latest with Howard's contract, which is up at the end of this year.

He certainly had fun with the press recently, and he actually attracts quite a bit of it. So yes, I mean, look, we are -- as we've said consistently over the years, Howard is core to our platform, and we want to continue working with Howard. So it's really about making sure that the agreement not only works for Howard, but works for SiriusXM as well.

And maybe just to clarify, Howard mentioned he was happy on SiriusXM. It doesn't sound like a contract has been signed quite just yet.

So typically, if you followed these things in the past, usually, any announcement typically comes later in the year. So that seems to be probably more the right timing.

Fair enough. Maybe just a broader question on Howard, which I have with investors more often around marquee content, which is -- how do you think about post these artists either leaving the platform or retiring in general, where their content stays? And Howard has been at SiriusXM, I think, for over 2 decades. At this point, he has back catalog, the thoughts around owning that, keeping that or the risk of it potentially ending up on a separate platform.

You do see most content even on audio more broadly distributed, right, that -- there aren't as many examples of purely exclusive content like we've had with Howard in the past. And so I'm hopeful that we'll get to the right place with Howard, of course. I mean the listeners that are true passionate Howard fans, of course, over the years as they've come in, they've continued to expand what they listen to, like most other subscribers, they're listening to a broad set of content. So I mean, obviously, these are going to be considerations as we approach any new agreement. But I'm confident we'll get to the right place, and that may mean different aspects of the library or live content going forward. Just those kinds of considerations we would take into account no matter what the talent or the agreement would be. So we want to make sure we're doing the best by our subscribers, talent and the business overall.

Maybe pivoting over to the advertising strategy. So over the last couple of years, SiriusXM has pulled together some of the strongest collection of ad assets in audio. You've had Pandora, SiriusXM Media, which sells advertising for third parties and then Play, which will continue to grow. Can you maybe just take us back over the last couple of years, the strategy behind bringing these assets together. And then as you look ahead, the ability to improve monetization in audio advertising and then your position as a marketplace for audio.

Yes. We're really pleased with the portfolio we put together, and we made a bet early on in podcasting, and it's really paid off. I think the breadth of what we have to offer across SiriusXM broadcast now, including Play, Pandora and other music streaming and podcasting is -- really lets us capitalize on all the assets we have, whether it's the Salesforce and SiriusXM Media, programmatic capabilities or ad tech. And we continue to bring these capabilities to other third parties. So we've done that with podcasting very successfully over the last few years. We brought the industry-leading monetization we put in place on the music streaming side to podcasting and continue to help creators build their businesses accordingly. And I think we have more opportunities to do that with additional third parties going forward, whether it's on the podcasting side or with other audio platforms as well.

Where do you think audio is in terms of its hierarchy within the broader ad market? And I bring this up, it seems like over the last 5 years, audio was, at one point, experimental with podcasting really starting to take hold. It feels like that's matured a little bit. What are you hearing from your ad partners in terms of their commitment or their desire to increase their exposure from a top-down perspective on audio as a...

Audio has been undermonetized forever, right? And we're still in that situation despite all the capabilities we brought. But I think the real unlock in terms of better monetizing audio is about not only for us selling better across our platforms, and making it easier to buy that way, but also better targeting and measurement ultimately is what it's going to come down to in terms of driving better CPM. So that means making sure that we have clean room integrations, and we're leveraging MMM. And so we have to build out more of these capabilities more broadly with additional partnerships to take advantage of really unlocking that under monetization. And we're making good progress there. And we have a lot of -- we keep reinventing this business. It's amazing. So one of the things we brought to market more recently on the podcasting side is Creator Connect. So being able to offer to marketers the chance to align with the talent across their channels. So whether it's audio, video, social or live events or experiential. And we're doing that really well with Alex Cooper. We're also unlocking a lot of opportunities with Trevor Noah as we launch that. So I think you'll see us doing more of those and being really creative in how we bring these assets to market.

Podcasting has been another big component of the ad revenue for SiriusXM. I think it's grown 50% year-over-year despite some weakness locally in the ad market this year elsewhere. What continues to drive the podcasting business? And how much more room do you see to invest in the space?

I think there's a lot of tailwinds still in podcasting. I mean just the listener and viewership keeps growing. We are monetizing in video very well. I think you see more and more video platforms wanting to offer podcast. It's become the new TV. And we are going to be investing right alongside that in terms of being able to unlock that monetization for creators. So it's things -- it's products like Creator Connect that allow us to take advantage of that. And I think we have, I think, half of the top 20 podcasts and we're the #1 ad rep firm for podcasting. And I think there's more opportunities to bring creators into our network because we're offering them the ability to build their monetization and build their businesses.

I want to spend a minute or 2 on the financial guide and as we look into the back half of the year, I think you reiterated your financial guidance. So I won't ask you that question. But maybe as you think about trends going into 2H, whether that's on the self-pay net ad line or even advertising, different trends that you're seeing play out, upside, downside risks that you're watching. If things were to outperform or underperform relative to your expectations, why would that be the case?

Yes. We've talked a little bit about the headwinds coming into the year on self-pay net adds. And we talked earlier in the session about streaming and how we intentionally pulled back on some of the marketing there. And that means we expect to lose about 300,000 streaming subs this year. But for that, we would actually be better on the in-car side of the business, and this would be the second year in a row that our in-car subscriber net adds would outperform the prior year, still negative but getting better. And hopefully, that's a good setup or a good foundation going forward. So that's kind of what we're seeing on the subscriber side of the business. And on the ad side of the business, there has been some uncertainty. And the third quarter started off a little soft, but really cautiously optimistic is the phrase I'm using in terms of how we're seeing demand build out across categories and even with them -- within them. Our programmatic has been rising as we enter the sort of the second half of the quarter. And hopefully, that's going to continue to extend into the fourth quarter as well. We continue to make real progress on our cost program. We had started out with a $200 million goal for exiting this year on an annualized run rate, and we're actually going to achieve that in year now, and that's across OpEx and non-satellite CapEx. And on top of the trajectory that we're going to deliver on declining satellite CapEx as well. So I think we're focused on obviously delivering against our guidance and setting up for a really strong '26.

You mentioned CapEx and non-satellite CapEx coming at the low end of your guidance this year. As you look out into '26, '27, the ability to bring non-satellite CapEx down, what would you say is the appropriate rate? Do you feel like you can get to? I know there's an internal focus on making that as efficient as possible?

Yes. I mean we're trying to balance, obviously, being more efficient and making sure that we're focused on the right things. So making disciplined investments that we believe will support, the strengthening of our in-car business and growing our ads business. But also looking to pull back on other investments that haven't been as productive. So you see that in both the OpEx side and the non-satellite CapEx side. And so there's areas like product and tech where we pulled back on and then across the OpEx side, marketing and overhead and customer service as well. And I think we -- one of the things we've recognized as we've over-delivered on our expectations for this year is that there's more opportunities to be efficient going forward.

I want to touch on capital allocation. But first, a question on Spectrum. So we've seen 2 notable Spectrum deals over the course of the last couple of weeks. SiriusXM potentially has Spectrum coming available that you can either utilize internally for other use cases or potentially even sell. I'm curious how you're looking at the opportunity to monetize that Spectrum perhaps in light of what we've learned over the last couple of years.

There's certainly been a lot more attention on Spectrum lately. And so we have sort of 2 components. We have WCS licenses and C and D blocks, which we acquired late last year. And there's -- we're using that for some emergency services, but there's probably a broader set of opportunities there in the nearer term. Longer term, obviously, it relates to the low band and our ability to free that up. But right now, we have a meaningful number of subscribers and free cash flow coming from that. But there's real optionality as we continue to investigate areas where we can deliver returns for our shareholders based on areas where we have strength. So in-car services, whether that's audio, video, other data services that we think we're well positioned there.

And then lastly, on leverage and capital returns, 3.8x leverage, SiriusXM generates a tremendous amount of free cash flow that will only increase as CapEx comes down. Just curious update on how you're thinking about capital allocation, capital returns over the next year or 2, share buybacks versus increasing the dividend and to the extent there's any M&A that you feel like would be additive, where that is?

And we're well positioned. We want to focus on investments in the business that make sense, and we're disciplined about that. Those have to be focused on strengthening our in-car business on the subscription side or building our ads business, as we've discussed, and finding more efficiencies across the business on the cost structure, leading to our target leverage ratio, which we believe will come into towards the end of next year in the low to mid 3x EBITDA. And then our target free cash flow number that we'll make progress towards in 2027 is $1.5 billion. So the combination of those 2 things, I think, really lets us expand capital returns, whether those be dividends or share repurchases certainly beyond the levels that we have today. And then on top of that, we have optionality around our spectrum assets.

Amazing. We'll have to leave it there. Please join me in thanking Jennifer for attending the conference this year.