SIRI

Core Strategic Priorities

• Advance three long-term strategic priorities: strengthen the core subscription business through premium in-car listening experiences, accelerate advertising business growth, and leverage portfolio scale to improve efficiency and shareholder value.
• Deliver durable business growth by building deeper subscriber relationships, expanding monetization opportunities, reinforcing competitive advantages, and improving operating efficiency.

Subscription Business Updates

• Achieved the strongest Q2 subscriber performance in four years, with 22,000 self-pay net additions (an improvement of 90,000 from Q2 2025), and the lowest self-pay churn in company history at ~1.4%.
• Companion Plans drove 123,000 incremental self-pay net additions in the quarter, with over 80% of users reporting increased subscription value and 75% reporting higher likelihood to remain subscribers; the program improves retention and revenue, with incremental customer growth more than offsetting modest ARPU dilution and cannibalization.
• Disciplined promotional acquisition strategy reduces discounting to improve subscriber quality and lifetime value, even if it tempers near-term net additions.
• Expansion of 360L connected car capabilities across all major OEM lineups has driven meaningful adoption: OEM subscribers average 24 hours of monthly listening, and app-streaming subscribers engage more than twice as much; listening via personalized artist stations is up 50% year-over-year.

Content and Platform Investments

• Launched new exclusive full-time and limited-run content from high-profile artists including Morgan Wallen, Green Day, The Eagles, and U2, and hosted hundreds of exclusive live listener events, with 95% of attendees reporting increased subscription value from these experiences.
• Expanded news and podcast offerings, including new channels from ABC News, the John Kasich Show, and a landmark original podcast series produced in partnership with BBC Studios; renewed top podcast partnerships, and maintained a commitment to diverse political perspectives.
• Strengthened sports content, a core competitive advantage: sports streaming grew 14% year-over-year, the company announced the new standalone Sports Pass subscription for sports fans, and added 22 major market local sports stations via a new partnership with Odyssey, after extending its long-term NASCAR partnership and launching WWE Radio.
• Successfully launched SiriusXM 11, the next-generation satellite, completing a key step in the satellite fleet upgrade and reinforcing long-term network resilience.

Advertising Business Momentum

• Total advertising revenue grew 5% year-over-year to $454 million, with podcasting revenue growing 30% year-over-year driven by rising CPMs and increased sell-through.
• Open ecosystem and ad tech investments, plus partnerships with YouTube, Apple, and Amazon, extend addressable reach and create new monetization opportunities for marketers.
• Cross-platform inventory capabilities enabled premium sponsorship packages for major brands around the 2026 FIFA World Cup, demonstrating the value of SiriusXM's integrated offering.

Operational and Capital Updates

• Cost transformation initiatives are on track to deliver $100 million in incremental gross cost savings in 2026, with $74 million in savings captured year-to-date ($48 million operating expense savings, $26 million CapEx savings).
• Net leverage reached 3.4x adjusted EBITDA at the end of Q2, hitting the company's long-term target range of low to mid 3x, after repaying $292 million in debt during the quarter.
• Returned $97 million to shareholders via dividends and share repurchases in the quarter, with ~$996 million remaining under the existing share repurchase authorization.

• Management raised full-year 2026 guidance for revenue, adjusted EBITDA, and free cash flow by $25 million for each metric, driven by stronger-than-expected first-half operating performance.
• Updated full-year 2026 guidance: ~$8.525 billion in revenue, ~$2.625 billion in adjusted EBITDA, and ~$1.375 billion in free cash flow.
• Full-year 2026 non-satellite capital expenditures are expected to come in between $400 million and $415 million, with the current satellite investment cycle expected to complete in 2027 after the planned launch of SXM-12, leading to normalized capital expenditures and a future tailwind for free cash flow.
• Management maintains its prior expectation of modestly lower full-year 2026 self-pay net additions compared to 2025, due to more difficult year-over-year comparisons for the continuous service initiative starting in Q4 2026 and the company's disciplined lower-discount acquisition strategy.
• Commercialization of the YouTube audio advertising partnership is on track to begin broader rollout in late 2026, with no meaningful financial contribution expected until the second half of 2027.

1. SiriusXM Segment: Total revenue was $1.6 billion, slightly above the prior year period. Subscriber revenue grew 1% year-over-year to $1.5 billion, representing ~68% of total consolidated revenue, with ARPU increasing 1% to $15.32 following February 2026 pricing actions. Advertising revenue for the segment grew 8% year-over-year to $41 million, ~2% of total consolidated revenue, driven by strong demand around 2026 FIFA World Cup coverage. Equipment revenue declined 22% year-over-year to $36 million, ~2% of total consolidated revenue, pressured by higher semiconductor memory costs. Overall segment gross profit increased 2% year-over-year to $981 million, with gross margin expanding 1 percentage point to 61%.
2. Pandora and Off-platform Segment: Total segment revenue increased 4% year-over-year to $543 million, representing ~25% of total consolidated revenue. Advertising revenue grew 5% year-over-year to $413 million, driven by 30% growth in podcasting revenue, 29% growth in programmatic advertising, and 20% growth in technology fees, partially offset by softer streaming music advertising. Segment gross profit increased 6% year-over-year to $163 million, with gross margin expanding 1 percentage point to 30%. Consolidated total revenue for Q2 2026 was ~$2.2 billion, up 1% year-over-year.

• Higher semiconductor memory costs have pressured equipment revenue and margins, with a larger headwind from multiple price increases expected in the second half of 2026, partially offsetting stronger underlying operating performance.
• Year-over-year retention comparisons will become more challenging starting in Q4 2026, as the company anniversaries the full rollout of its continuous service initiative, creating a headwind for reported subscriber net additions.
• Near-term net subscriber additions may be tempered by the company's strategy of reducing promotional discounting to improve long-term subscriber quality and lifetime value.
• Forward-looking results are inherently subject to risks and uncertainties that could cause actual outcomes to differ materially from management's current expectations, including changes in regulatory conditions for spectrum, semiconductor market dynamics, consumer confidence, and automotive market trends.

Q: What progress has been made on monetizing SiriusXM's spectrum portfolio, and what is the expected pacing of share repurchases now that the company has hit its net leverage target? / A: SiriusXM holds 35MHz of contiguous spectrum that supports current service delivery to 35 million subscribers, and is a scarce strategic asset with meaningful long-term optionality. Management is taking a methodical approach, actively discussing potential partnership opportunities to monetize excess spectrum while preserving operational flexibility to maximize shareholder value. Now that net leverage is at the target range of low to mid 3x, capital allocation will shift increasingly to returning capital to shareholders. Dividends will remain at their current level, and share repurchases will become the primary use of excess free cash flow, with repurchase pacing expected to increase in H2 2026 and become significantly larger in 2027.

Q: What are the puts and takes behind the 2026 guidance raise, and what have you learned from early testing of the YouTube audio advertising partnership? / A: The guidance raise reflects strong Q1 and Q2 performance, including positive self-pay net additions, higher ARPU, record low churn, and improving ad sell-through and CPMs. These positive trends more than offset the expected larger headwind from higher memory costs in the second half of 2026. Early testing confirms that YouTube is a major untapped listening platform, with high multi-modal listening behavior that creates valuable audio ad inventory. The partnership will give SiriusXM 255 million monthly active users, reaching 90% of U.S. adults 13+, which is resonating strongly with advertisers. Broader commercialization is on track for late 2026, with first scaling expected during the 2027 upfront buying cycle.

Q: Why does management still expect lower full-year 2026 self-pay net additions despite strong Q2 performance, and how will the YouTube partnership benefit podcasting and younger audience reach? / A: There has been no change to the full-year expectation: strong Q2 performance is in-line with prior outlooks, and the full-year moderation reflects the difficult Q4 2026 year-over-year comp from the 2025 launch of continuous service, and softness in overall consumer confidence and auto market trends. Companion Plan take-up has been solid at 123,000 net additions in Q2, but is expected to slow as marketing matures. YouTube has very high usage among listeners under 35, and will dramatically increase SiriusXM's addressable reach for this high-demand demographic for advertisers. Nearly half of YouTube listening is for podcast content, which will expand the scale of SiriusXM's existing top-ranked U.S. podcast network, increasing its appeal to advertisers targeting younger audiences and diverse content categories.

Q: How does the YouTube advertising partnership work operationally, and what is the structure of its profit contribution? / A: The partnership includes any YouTube inventory where Google signals that a user is primarily listening rather than watching, including YouTube Music, YouTube played on smart speakers, and YouTube running in the background on mobile devices during commutes or other activities where the screen is not in use. The partnership is structured similarly to other ad representation deals, and will carry healthy contribution margins because it leverages SiriusXM's existing sales organization, ad tech infrastructure, and campaign operations. No meaningful financial contribution is expected until the second half of 2027 as advertiser adoption scales.