Siriusxm Holdings Inc. · NASDAQ:SIRI
Siriusxm — SIRIUS XM Radio — Investor Presentation (October 2010)
35 slides from Siriusxm's investor presentation, Oct 1, 2010
Slide 1: Liberty Media Investor Meeting
Liberty Media Investor Meeting Mel Karmazin, CEO October 1, 2010
Slide 2: Disclaimer on forward-looking statements
Disclaimer on forward-looking statements The guidance contained herein are based upon a number of assumptions and estimates that, while considered reasonable by us when taken as a whole, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of
Slide 3: Tremendous Growth Since Our 2001 Launch Despite New Competition
Tremendous Growth Since Our 2001 Launch Despite New Competition 1994 – Internet radio streaming 2001 – Satellite radio begins service 2001 – Apple iPods introduced 2003 – HD radio broadcasts begin 2005 – MP3 connectivity in vehicles
Slide 4: SIRIUS XM Highlights
SIRIUS XM Highlights Expected YE subscribers of ~20.1 million Adj. Revenue to approach $2.8 billion in 2010 Adj. EBITDA approx. $575 million in 2010 Adj. EBITDA increase of over $1.1 billion from 2007 to 2010E
Slide 5: Competitive Advantages
Competitive Advantages Satellite delivery system with 99.9% continental U.S. coverage Over 130 channels of curated content Long term OEM agreements Approximately $8 billion of NOL’s Subscription model Focused, pure-play satellite radio company
Slide 6: Growth Statistics and Improvements
Growth Statistics and Improvements 1H09 1H10 CHANGE Penetration rate 55% 60% +500 bp Conversion rate 44.5% 45.9% +140 bp Churn rate 2.1% 1.9% -20 bp Subscribers 18.4 mm 19.5 mm +6% Adj. ARPU $10.57 $11.65 +10% Source: Company reports
Slide 7: Service Changes and Fees Continue to Drive Revenue
Service Changes and Fees Continue to Drive Revenue Best of SIRIUS/XM, October 2008 $4 premium upgrade $8.99 multi-receiver pricing, March 2009 $2.99 streaming, March 2009 U.S. Music Royalty Fee, August 2009 Infotainment services
Slide 8: Launched iPhone, BlackBerry and Android-Powered Smartphone Apps
Launched iPhone, BlackBerry and Android-Powered Smartphone Apps
Slide 9: Growth Opportunity in Services
Growth Opportunity in Services Multiple infotainment services offered and planned: Traffic, weather, sports tracking, fuel listings, movie listings, airport and flight conditions, red light cameras Other new services and audio features in development
Slide 10: Coming in 2011: Satellite Radio 2.0
Coming in 2011: Satellite Radio 2.0 Anticipated availability in retail stores in the fourth quarter 2011 Satellite Radio 2.0 expected to provide more channels and increased functionality Positive OEM reaction
Slide 11: SIRIUS XM's Superior Content is a Significant Competitive Advantage
SIRIUS XM’s Superior Content is a Significant Competitive Advantage Over 69 Channels of Commercial-Free Music Live Coverage of Every Major Sport The Best in News, Talk and Entertainment
Slide 12: Programming: Cost Savings and Continued Innovation
RENEWALS: NBA, Oprah Radio, Martha Stewart, expanded Book Radio and expanded season of Metropolitan Opera Programming: Cost Savings and Continued Innovation Pop-Up Channels including Michael Jackson Tribute, Woodstock and The Who NEW PROGRAMMING: Rosie Radio, Glenn Beck, Fantasy Sports, John Madden,
Slide 13: Penetration Gains at Automakers
Penetration Gains at Automakers OEM penetration as a percentage of U.S. auto sales 2006 2007 2008 2009 Source: Total US light vehicle sales per Global Insight and company estimates of SIRIUS XM enabled sales; Represents factory and port installs only 55% ~60% 2010E
Slide 14: First Half 2010: Auto Sales Improve and OEM Gross Adds Outperform
First Half 2010: Auto Sales Improve and SIRIUS XM OEM Gross Adds Outperform Source: Company data and industry sources +14% +49%
Slide 15: OEM Sales and SIRIUS XM OEM Gross Adds
OEM Sales and SIRIUS XM OEM Gross Adds Source: Company data and industry sources OEM Sales (mm) SIRIUS XM OEM Gross Adds
Slide 16: Factory-Enabled Vehicles in Operation to Increase Dramatically
Factory-Enabled Vehicles in Operation to Increase Dramatically (mm) Source: Company estimates based on external industry estimates of 2010-15 automotive sales
Slide 17: Certified Preowned Program (CPO)
Certified Preowned Program (CPO) Launched with Acura, Audi, BMW, Honda, General Motors, Mercedes-Benz, Porsche, Volkswagen, Volvo and Ford Additional programs expected to be launched OEM revenue sharing creates strong arrangements
Slide 18: Continuing Growth Delivers Record Number of Subscribers
Continuing Growth Delivers Record Number of Subscribers Source: Company filings Ending Subscribers 2003-2010E (mm) 1.6 4.4 9.2 13.7 19.0 17.3 18.8 ~20.1
Slide 19: Focus on Subscriber Retention Yields Results
Focus on Subscriber Retention Yields Results 4.0% 1.8% 1.8% 1.5% Netflix SIRIUS XM DISH DTV 1 Source: Public filings and industry estimates 1 DTV churn shown for DTV US only 2Q10 Comparative Monthly Churn Rates 4-5% HBO/ Showtime/ Starz
Slide 20: Among Largest U.S. Subscription Media Businesses
Among Largest U.S. Subscription Media Businesses 2Q10 Total Basic Subscribers (in mm) Source: Public filings
Slide 21: Significant Revenue and EBITDA Growth
Significant Revenue and EBITDA Growth Source: Company reports Approaching $2,800
Slide 22: Arbitron Study Reveals More than Million Listeners
Arbitron Study Reveals More than 40 Million Listeners 1 Study conducted in October and November 2009. Based on a typical 2.75 hr. listening average among subscribers in their cars; excludes music channels SIRIUS XM is the preferred choice in the car 1 SIRIUS XM
Slide 23: Radio Revenue 2001 vs 2010E
Radio Revenue 2001 2010E Terrestrial Radio: CCU, CBS, Citadel, ETM, CMLS, etc. $18 b (100%) $15 b (80%) IP Radio: Last .fm, Slacker, Pandora, Rhapsody, etc., etc. nil < $1 b (5%) Satellite Radio: SIRIUS XM nil $2.8 b (15%) TOTAL $18.0 b $18.8 b Source: analyst estimates and industry reports
Slide 24: 2010E Subscription Radio Revenue
2010E Subscription Radio Revenue TOTAL: $3.1 billion Satellite Radio: $2.8 billion Internet Radio: ~$0.3 billion SIRIUS XM’s share of pay radio: 90% Source: analyst estimates and industry reports
Slide 25: SIRIUS XM's Superior Revenue Model
SIRIUS XM’s Superior Revenue Model Internet Radio ~$1.25 / User SIRIUS XM $72 / Listener Source: Public filings and industry estimates Terrestrial Radio $10-$20 / Listener 2009E Annual Revenue SIRIUS XM $136 / Subscriber
Slide 26: Investment Thesis: Improved Operating Performance Lowers Borrowing Costs
Investment Thesis: Improved Operating Performance Lowers Borrowing Costs February 2009: 15% secured June 2009: 12.875% secured August 2009: 10.375% secured March 2010: 8.75% unsecured Note: February 2009 transaction also included restructuring fees and equity issuance
Slide 27: Investment Thesis: Operational Leverage Drives EBITDA
Investment Thesis: Operational Leverage Drives EBITDA Contribution margin exceeds 70% Adjusted EBITDA Margins 2008 2009 2010E At Maturity (6%) 18% 21% 35%+ Source: Company reports EBITDA margin improves dramatically as we scale subscribers and revenue
Slide 28: Solid Balance Sheet and Strong Liquidity Position
Solid Balance Sheet and Strong Liquidity Position Year end 2010 cash balance should approach $430 million based on FCF guidance Leverage ratio currently at approximately 4.6x, a historic low for our company, and will improve No significant maturities until 2013
Slide 29: Investment Thesis: Completion of Satellite Build Translates to More FCF
Investment Thesis: Completion of Satellite Build Translates to More FCF 2005 • 2006 • 2007 • 2008 • 2009 • 2010 • 2011 • 2012 • 2013 • 2014 • 2015 • 2016 • 2017 XM 3 XM 4 SIRIUS 5 XM 5 SIRIUS 6 LAUNCH DATE
Slide 30: Investment Thesis: Free Cash Flow Higher
Investment Thesis: Free Cash Flow Higher Adjusted EBITDA + Lower Interest Expense + Lower Capital Expenditures + Cash Savings from NOL Use = Free Cash Flow Growth
Slide 31: Management Priorities
Management Priorities Grow subscribers Grow revenue Continue to innovate Manage churn Continue cost reductions Manage balance sheet Cash flow growth
Slide 32: Reconciliation for SIRIUS XM
Reconciliation for SIRIUS XM Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 FY2005 FY2006 FY2007 FY2008 FY2009 As Reported Total Revenue 270,350 283,017 488,443 622,183 586,979 590,829 618,656 676,173 663,784 699,761 242,245 637,235 922,066 1,663,992 2,472,638 Predec
Slide 33: Reconciliation for SIRIUS XM
Reconciliation for SIRIUS XM Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 FY2005 FY2006 FY2007 FY2008 FY2009 As Reported Restructuring, Impairments and Related Costs - - 7,430 2,977 614 27,000 2,554 2,640 - 1,803 - 10,917 - 10,434 32,807 Predecessor Financial Infor
Slide 34: Reconciliation for SIRIUS XM
Reconciliation for SIRIUS XM ARPU is derived from total earned subscriber revenue, net advertising revenue and other subscription-related revenue, net of purchase price accounting adjustments, divided by the number of months in the period, divided by the daily weighted average number of subscribers
Slide 35: Everything worth listening to is on
Everything worth listening to is on
SIRIUS XM Radio — Investor Presentation (October 2010) on 6ix