Good morning and welcome to SiriusXM’s Second Quarter 2021 Financial and Operating Results Conference Call. Today's conference is being recorded. A question-and-answer session will be conducted following the presentation. At this time, I'd like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations and Finance. Mr. Stevens, please go ahead.

Thank you, and good morning, everyone. Welcome to SiriusXM’s second quarter 2021 earnings conference call. Today, we will have prepared remarks from Jennifer Witz, our Chief Executive Officer and Sean Sullivan, our Chief Financial Officer; Scott Greenstein, our President and Chief Content Officer will join Jennifer and Sean to take your questions. 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 Private 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 and 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 would like to remind our listeners that today's results will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock-based compensation and certain purchase price accounting adjustments. With that, I'll turn it over to Jennifer.

Thank you, and good morning, everyone. Our second quarter results demonstrate remarkable continued growth across our business, highlighted by 355,000 net new self-pay SiriusXM subscribers, record low churn of just 1.5% and outstanding advertising growth of 82%. Total revenue grew 15%, adjusted EBITDA climbed 14% to a new quarterly record and we generated $550 million of free cash flow. We now expect to add 1.1 million net new SiriusXM self-pay subscribers in 2021, marking our fastest annual growth since 2018. Given our strong operating and financial performance in the first half, we are raising all of our financial guidance across the board. In addition to highlighting a great quarter, today, I want to talk about our continued focus on three strategic areas: first, our intention to continue growing and building on our strong presence in the vehicle; second, our increased focus on engagement and subscriptions outside of the car; and third, our plans to grow our unique advertising platform. Of course, our leading and unmatched content underpins all of these strategic efforts and will play a central role in our ability to deliver on them. SiriusXM’s greatest success has come by pairing an easy-to-use service with well curated content in the vehicle for our subscribers. And we intend to keep winning in the car by driving higher penetration and growing 360L distribution. The vast majority of our subscribers today value us because they enjoy our in-vehicle experience. And most of our listening occurs there as well. Approximately 140 million vehicles on the road today are enabled for SiriusXM. And this continues to climb with a new car penetration rate that reached 82% in the second quarter, up four points from a year ago. Our distribution in-vehicle continues to grow, seen in recently expanded agreements that make SiriusXM a standard feature in all Jaguar Land Rover and MINI models sold in the United States. SiriusXM is also bringing the enhanced 360L experience to more and more new vehicle buyers with significant volumes already rolling out across nine automakers, including Audi, BMW, Ford, GM, Stellantis and Volkswagen with more on the way. We continue to expect approximately 80% of SiriusXM equipped new vehicles in 2025 to include 360L. Customers love 360L's enhanced feature set, ease-of-use and interface. Our research shows that there is an increase in customer satisfaction and likelihood to subscribe when consumers experience these new features. We are seeing some encouraging listening and conversion trends when we isolate for other variables and compare 360L-capable cars to other vehicles. We also see very strong conversion rates among trial users who use the 360L features, on-demand Pandora artist stations and the broader set of extra channels enabled by IP delivery. Although it's still very early, this data is extremely promising. Awareness of new features is key to improve performance. So we are hard at work to improve our targeted personalized marketing efforts enabled by and tailored to 360L. We expect the usage data provided in these new cars to be very helpful to our content recommendations and to improve the efficiency and relevance of our marketing efforts. Over the long run, there is no reason this will not also improve retention and upsell as well. We believe the further growth in new vehicle penetration and 360L distribution will add to the meaningful Share of Ear gains that SiriusXM has seen in the car. According to Edison Research from 2016 to 2021, SiriusXM gained the largest amounts of in-vehicle listening, compared to any other service. Outside of listening to AM/FM, which is fragmented and shrinking, SiriusXM maintains the dominant Share of Ear in-vehicle. In fact, our share here is roughly three times bigger than all streaming competitors combined. Of course, we are not satisfied by success within the vehicle alone. We're very focused on growing engagement and subscriptions outside of the vehicle as well. Two years ago, we changed the package structure at SiriusXM to include streaming at no additional cost to almost all of our subscribers. During the pandemic, we opened up our streaming service for free and we encouraged our existing subscribers to stream. We have already started to see the fruits of these efforts. Our research shows that subscribers who say SiriusXM is their number one source for audio outside of the car has doubled in the past three years. Out-of-vehicle listening enhances the value proposition and overall satisfaction with our service and is a strong predictor of in-vehicle conversion and retention. To-date, most of our growth in streaming has come from existing subscribers using the service outside of the vehicle. But we have been putting the building blocks in place to drive incremental subscriptions that aren't tied to a vehicle. We have made major investments to improve the quality and capabilities of our SiriusXM app experience, which we have rebranded as the SXM App with more updates on the way. We are infusing the SXM App with an even broader range of content, including exclusive programming that is unique to the digital environment. And we are now making meaningful marketing investments to raise awareness of our digital offering. SiriusXM has a history of disrupting audio. As we look to further shape the future of audio, we are committed to growing SiriusXM digital subscriptions, which will give us an opportunity to take our premium audio content to a much broader audience. As of this month, we will begin allowing digital subscription purchases directly in the iOS and Android versions of the SXM App, making it much easier for consumers to subscribe to our digital packages. As part of the in-app purchase launch, we introduced simplified lower pricing for the streaming music and entertainment plan and the streaming platinum plan, which adds powered sports play-by-play and personalized Pandora stations. For the first time ever, we now allow listeners to try the SXM App for free with a three-hour preview window before setting up a one-month trial. We believe that functionality will allow more listeners to recognize how our exclusive content is truly unmatched in the streaming space. And let me just add, we actually have variable margins on our digital subscriptions that are as good or better than satellite subscriptions, making this opportunity all the more attractive. Leaning into digital subscriptions will be one of the key ways we expect to grow our large subscriber base and one of the best ways to succeed with a younger, more diverse customer base. The third area of focus I mentioned is our advertising platform. The purchase of Pandora in 2019 immediately gave us a scaled ad-supported user base, best-in-class ad tech and an extraordinarily successful ad sales team. In the past 12 months alone, we have generated $1.6 billion of advertising revenue. SiriusXM’s large addressable audience, approximately 150 million listeners makes ours the largest digital audio ad platform in North America. A position sometimes underestimated or overlooked by investors, advertisers, and other content creators. To better leverage the scale and drive success for our advertising clients, we created SXM Media, a unified sales organization representing the best in live radio, streaming and podcasting. We also have a full suite of end-to-end distribution and monetization solutions for content creators, publishers, and marketers. We are the largest aggregator of premium supply for audio advertisers in the U.S. Our scaled ad network includes a leading podcast advertising network, Midroll, premium exclusive ad representation for other platforms and podcasters such as SoundCloud and NBCUniversal News Group and significant available inventory via the PAC and AdWave marketplaces. We have a best-in-class buy and sell-side ad tech stack that leverages the SiriusXM owned audio ad platforms, AdsWizz and Simplecast, which support publishers from large enterprises to individual creators. And SiriusXM also has an incredible in-house audio creative consultancy, Studio Resonate that many of our customers are using in lieu of creative agencies. We are growing our platform revenue through a host of arrangements with third parties by leveraging our sales, ad tech and sales infrastructure. These media properties, publishers and creators can focus on what they do best, making great content and we can help them improve monetization. All of our efforts to grow in and out of the vehicle, whether through subscriptions or advertising have outstanding content at their foundation. To continue successfully shaping the future of audio, we will never lose our focus on delivering high value content, curated and often exclusive, live or personalized. We continue to add programming for our listeners with new collaborations with talent, media and social brands. TikTok is a perfect example. We are working with the social platform and its creators to enable multiple new audio experiences that include Pandora exclusive playlists from leading creators on the platform, a new groundbreaking full-time SiriusXM channel that is expected next month and re-airings of Pandora live events with major artists on TikTok. We are already seeing higher engagement of this content from younger listeners. Across Pandora and SiriusXM, we continue to celebrate Black artists and culture for Black Music Month with new podcasts, music channels, talk programming and events. One great example being Black Diamonds, an original podcast focused on the rich history of Negro Leagues Baseball. We continue to approach podcasting with discipline and a deep knowledge base of what works in audio for the long run. We brought in Roman Mars and his team at 99% Invisible, the critically acclaimed podcast that has been downloaded 500 million times. Roman could have gone anywhere, but we are an ideal place for creators to do their best work and monetize it across the largest distribution and promotion platform in North America. Recently, we announced that Seth Rogen would do his first ever podcast with us starting in the fall. Toxic: The Britney Spears Story is the newest podcast from our Witness Docs unit at Stitcher. Three weeks in, the show has been downloaded over 550,000 times, reached number eight on the Apple podcast chart and garnered major press around the world. SiriusXM will always offer a wide range of opinions and viewpoints, and as a great example, we recently announced a new show created and hosted by Megyn Kelly coming in September. She joined an array of talent, covering the broadest spectrum of political and news programming in audio. Megyn’s show represents a unique multi-platform approach. She can interact live with SiriusXM subscribers, who will then also enjoy video highlights in the SXM App. And an edited podcast version of the show will subsequently receive wider distribution on SiriusXM, Pandora, Stitcher, and other major platforms. To make it easier to understand our offerings and purchase all of this great content, we recently rebranded our subscription plans. And to unlock more value for our best customers, we launched Platinum VIP, our first ever subscription plan that includes multiple vehicle access plus streaming. This new VIP plan also includes live concert archives from nugs.net, greater access to virtual and live SiriusXM events and an enhanced tier of customer care. For close to two decades, we have transformed the way listeners consume music, news and other content inside of the vehicle. And in recent years, we have been expanding the reach of our services beyond the vehicle. Our hard work and investments are driving a higher satisfaction rate and improved value proposition that we now know ties directly back to the strong subscriber growth and churn performance. I'm very proud of this quarter's results and progress on our strategic priorities. And with that, I will turn it over to Sean.

Thank you, Jennifer; and good morning, everyone. Our second quarter results highlight the impressive growth SiriusXM continues to deliver in subscribers, revenue, adjusted EBITDA and free cash flow. Total revenue increased 15% to $2.16 billion led by 82% growth in ad revenue, although the pandemic impacted the advertising business in last year’s second quarter, as a point of comparison, our ad revenue grew 20% compared to the second quarter of 2019. Continued strong performance in our on and off platform businesses, including AdsWizz and Stitcher contributed to overall advertising revenue growth. Adjusted EBITDA increased 14% to $700 million, a company record for any single quarter. Diluted earnings per share were $0.10, or $0.08 excluding $140 million of satellite recoveries, tax-effected. Our strong financial performance generated $550 million of free cash flow during the second quarter. Free cash flow included $16 million of insurance proceeds related to SXM-7. To date, we have booked $140 million of insurance proceeds, including the $16 million collected in Q2. Against this, we will begin spending this year on a replacement satellite SXM-9, as well as on our next-generation spare SXM-10. Turning to our segments. In the SiriusXM segment revenue increased 7% to $1.6 billion with ARPU growth of 4% to $14.57. Gross profit grew 5% to $996 million resulting in a margin of 61%. Year-to-date SAR has been approximately $17 million. Although June SAR came in light compared to preceding months, consumer demand for new and used vehicles remain strong and we saw record trial starts in both new and used cars in the second quarter, positioning us well for the back half. Moving now to the Pandora segment. Advertising revenue of $383 million in the second quarter increased 82% from last year and even 25% compared to the same period in 2019. Growth in monetization at Pandora was aided by the addition of Stitcher and our off-platform business centered around AdsWizz. Pandora's ad revenue crossed $100 per 1,000 hours and off-platform revenue, excluding Stitcher grew approximately $22 million or 79% compared to the second quarter of 2020, driven by considerable growth in AdsWizz, SoundCloud and AdWave. Bookings remained strong across the board during the second quarter with the largest gain being in travel and tourism. Pent up demand and an increase in consumer confidence have both contributed to the travel industry seeing one of the strongest surges on record in the second quarter. Restaurant and automotive categories increased spending, and we saw large growth in entertainment driven by the return of the movie business. Pandora monthly active users and total ad-supported listening hours were 55 million and 3.03 billion respectively. Pandora added 118,000 net new self-pay subs to end the second quarter with 6.5 million total self-pay subscribers. Gross profit in the Pandora segment grew 176% over the second quarter of 2020 or 23% compared to the second quarter of 2019 and gross margin improved 16 points to 37%. Given the WEB V decision, we now have certainty on the bulk of our streaming royalty rates through 2025. In the first half of 2021, we returned approximately $965 million of capital to stockholders comprised of $844 million in common stock repurchases and $121 million in dividends. In June, we opportunistically raised $2 billion of new senior unsecured notes with a coupon of just 4% and we intend to use the remaining cash proceeds in August to call our outstanding 2022 notes. Net debt-to-adjusted EBITDA was 3.2x at the end of the second quarter, our $1.75 billion revolving credit facility was completely undrawn and fully available. Turning to 2021 guidance. As Jennifer mentioned, we now expect to add 1.1 million self-pay net subscribers at SiriusXM with a 300,000 upside driven by strong additions and record low churn. With momentum in both subscriptions and advertising, we now expect $200 million of incremental revenue or $8.55 billion in total. Higher margins and meaningful new investments in long-term growth drive $100 million in upside to our 2021 adjusted EBITDA expectation, which now sits at $2.675 billion. We're also increasing our free cash flow expectation to $1.7 billion based on higher adjusted EBITDA and insurance recoveries net of new satellite spending. We feel very good about our updated guidance and growing full year visibility. So with that, I will open it up to Q&A.

Thank you. At this time, we'd like to open the call up for questions. All right, we'll go ahead and take our first question from Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.

Excuse me, thank you. Three separate questions. One on advertising, I mean, extraordinary growth. Can you parse through like the different areas podcasting versus the traditional platform versus digital, and maybe what the different demographics and growth rates are? And then second on churn, which was outstanding. Is — do you think it's sustainable to keep it at this level? And then finally on the premium service. It seems like I have the price, I'm just wondering if you can address what you think the TAM is? I mean, it's differentiated, but yes, if you could just address what you think that market size would be.

Sure. Hi, Jessica. So on the advertising front we saw growth across all categories and on the Pandora owned and operated, SiriusXM, Stitcher, and then our other off platforms. So it was really across the board and clearly last year second quarter was depressed going into COVID, but overall advertising revenue, as I think Sean mentioned in his comment is up 20% versus the second quarter of 2019. So really strong growth across the board and I don't think we're going to share anything on demographics necessarily, but really just a lot of the categories — Sean, do you want to comment on some of the categories?

Yes. We saw a lot of — in travel, leisure, restaurants, we talked about it in the script. I guess what I would add Jessica is, obviously we've done very well both on and off platform. So whether it's SoundCloud, AdsWizz, some of the ad representation deals is really driven growth. And we continue to see strong demand across all of our platforms and products, we see great pricing. So we really think there is still a meaningful amount of growth on the advertising line, depending on platform and an opportunity. So we're really pleased at where we're at. I think the SXM Media organization and bringing that together really positions us well for the back half of the year.

Great. So on churn and your question is whether it's sustainable. I think we are all a little surprised by 1.5%, we haven't seen that in a really long time. But we've been at 1.6% I think three of the four quarters prior to this last quarter. Non-pay continues to run low, voluntary churn has been much lower than we even expected and vehicle-related churn is down year-over-year as we expected going into this year with higher trial starts. So I think if you look at the rest of the year, as we said, kind of going into the year, we would expect it to tick up. I would expect non-pay to continue to revert to more normal levels as consumer spending levels increase and vehicle-related churn as well, just as we think trial starts will continue to be strong going through this year. On the voluntary side, I would just point out that we believe that there is a lot of momentum there with what we've done on streaming and providing access to our subscribers. Overall, we've seen really nice increases in satisfaction and value perception, which translates through to retention. So we're really pleased with that. And then your last question about the premium service. So assuming you’re referring to Platinum VIP, we just launched that this month and I think that’s the biggest opportunity there within our subscriber base is those households that have one active vehicle and another inactive vehicle and presenting this plan to them with the fact that it has two vehicle subscriptions, two streaming logins, a tremendous number of VIP benefits, including opportunities for access to our great live events and performances, access to nugs.net content through their app and then platinum level VIP care. So with these level of benefits, we do think that that's going to be the most attractive market within our subscriber base. But there is also opportunities to upsell those that have two vehicles subscribed, but on other plans and not the platinum level plans.

Thank you.

All right. We can go ahead and take our next question from Steven Cahall with Wells Fargo. Please go ahead.

Thanks. Maybe first for me, I was just wondering if you could sort of break down your gross ad funnel in terms of what you've seen from new cars versus used cars. It seems like we'll probably get into a period here in the future where used cars are just going to be a bigger part of transactions on inventory shortages. So we'd just love to know how those trends track, especially as we're now getting into used cars that are a lot newer than they've historically been. And then Sean, I was wondering if you could give us a few housekeeping items like new car penetration, new and used car conversion rates and paid trial starts. Thanks.

I'll start on kind of the contribution in the funnel. We've had really strong growth as you know, record trial starts in Q1 and Q2 of this year, the consumer demand for new and used vehicles has been really strong as you know. And so we've seen growth on the top line in terms of conversions and overall growth as well in addition to the lower churn rate, so that’s contributed through the better net adds overall. So I’d just say on a contribution or the relative contribution, so when rates are going up for both new cars and used cars for us, we said in the second quarter we had 82% on the new car side, which is up 4 points year-over-year. Used cars continues to tick up towards 50%, and it's up probably a couple of points year-over-year. So we did have one quarter last year, where used car trial starts were about the same, about 50-50 with new car trial starts. But otherwise our trial starts tend to skew slightly towards new. And I would expect that to continue, given kind of the growth and the penetration rates we've seen there. And so on kind of the other metrics, I don't think we're going to get into some of the specifics on the splits of churn and otherwise. Was there another part to the question, Sean, that you want to cover?

I don't think so, I think you've covered it all, Jennifer. Thank you.

Thanks.

All right. We'll go ahead and take our next question from Jason Bazinet with Citi. Please go ahead.

Thanks so much. Thank you. Just one for Ms. Witz; and then one for Mr. Sullivan. You said one thing in the prepared remarks about variable margins in IP that were greater than the satellite service. Were you comparing variable margin to variable margin in that comment or variable margin to sort of average margin? And then for Mr. Sullivan, you mentioned the $2 billion capital raise that you did with the potential to use the proceeds to pay off the 2022 debt. I was just wondering, can you just sort of talk about what the extra $1 billion will be used for?

So first on your variable margin question. We were comparing variable margins for our digital standalone subscribers versus our satellite subscribers. And just looking at kind of the royalty rates, the data cost and customer care. And overall we look as good or better on the digital side and we don't have the same kind of fixed costs that we would have on the satellite side of the business. And in terms of digital subscriptions and the acquisition funnel, it's really about marketing and it's highly performance driven. So we have the ability to scale that up and down based on where we're trending in terms of the performance against kind of LTVs and other thresholds. So it's very trackable and something that you'll see us spending a lot more towards, as we launch through in-app purchases. We've done a tremendous amount of work in building our products in the apps and our digital subscriptions on the SiriusXM side, vetted a lot of content over the last couple of years with 100s of extra channels with on-demand podcasts, video. So it's a really robust offering, at a relatively low and competitive price point. And we've put the capabilities in place now for consumers to transact much more easily in app and we'll be putting marketing behind that to continue to drive awareness about the presence and availability and strength of our product outside of the car. And we hope to have more distribution partnerships to announce in the future as well to support that.

Yes. Jason, just on your other question. So we raised $2 billion, we had a roughly $1 billion drawn on the revolver, so that was paid down and the $1 billion you see on the balance sheet at the end of the quarter will be used to call the August 2022 notes that I mentioned.

Thank you.

All right. We'll take our next question from Ben Swinburne with Morgan Stanley. Please go ahead.

Thanks. Good morning. Jennifer, just on the advertising business, obviously a lot of strengths there. Can you talk a little bit about sort of what the governors are on growth looking forward? I'm just wondering, if sort of third-party inventory is a key part of the longer-term growth story and kind of how you guys attract more third-party inventory into SiriusXM, sort of what's the pitch? And maybe you could talk a little bit about how advertisers are viewing digital audio as we have this really strong ad market we're seeing this year? And then Sean, is there anything in the quarter or in the guidance on the LPU front from the WEB V decision that you want to call out? I don't know if there was any adjustments from first quarter or anything material you'd call out just given that you now have line of sight on those costs versus sort of what you were accruing or what was in the guidance? Thank you.

Yes, Ben, maybe I'll take the second one first and I'll turn it over to Jennifer. So I think if you look at the rates, you can see the effects through the first half of the year. As we said on the last call, or maybe I said at a recent conference, the ruling was narrowly better than what we had anticipated. So I think what you see in the first half and what you see embedded in our guidance reflects the current rates and expectations. So it's all factored in.

And on your advertising question, Ben; I think there is growth across all categories and clearly we’ve had declines in the listeners on the Pandora side, but despite that, we’ve continued to drive better monetization there and it's really a function of rates and sell-through. But yes, there is probably even more opportunity off-platform, and we're using, as Sean mentioned with SXM Media, we’re using all of the strengths that we have with this combined sales force, this really strong ad tech platform, as well as really all the value-added services that we bring to the table, whether it's Studio Resonate, our creative consultancy or the ability to sell live events or proprietary research. So we just — we believe we have the most compelling set of assets on the advertising side, and it's reflected in our leadership position in digital audio in North America. So I do think there is opportunity for us to bring more publishers to our platform for them to participate in our marketplaces and for us to direct sell on their behalf. And we did that and we've continued to expand our relationship with SoundCloud, as you know, and with NBCUniversal, I believe there'll be more to come. And then of course, there has been dramatic growth in podcasting and we have all of the assets again that we need there to continue to support podcast creators and being able to monetize and distribute their content broadly, really across all platforms.

Jennifer, one other thing on that, I wanted to just add is with Pandora, the growth also will come through — we're not constrained on the music side, we're commercial-free on Sirius. And as Jennifer mentioned, the live events, they did one with Ed Sheeran at Pandora that was both great content, but also a great advertising revenue project. And the Modes launch has led to a number of major artists like Olivia Rodrigo and Justin Bieber and others. TikTok is now starting to be a presence on the platform. And other things will come as music and other content really starts to go into Pandora, it's going to lead to a lot of other opportunities. And other — and the second point was, there's a lot of content providers that look to us for ad sales. And as they get into that process, they determine there was audio assets we have that they want their content on whether it's NBC News and others, it can start with the content and end up at the ad sales or vice versa. So I like our position in growing in ad sales, due to the attractiveness on both sides.

Thanks Scott.

All right. We'll take our next question from Bryan Kraft with Deutsche Bank. Please go ahead.

Hi, thanks. Good morning. I had a couple of questions, if you don't mind. First, just wondering if you can give us a sense of whether you expect much acceleration in ARPU growth from the shift to the new plans. And can you clarify whether existing subscribers will be grandfathered into their old plans or if they will be forced to migrate as their subscriptions renew? And then secondly, how do you think the new vehicle inventory recovery is shaping up for the second half of the year? Do you think will be back to normal as far as dealer inventory is by the end of the year or at least close or do you think it actually takes into next year? Thanks.

So I guess, I’ll start with the first one on ARPU growth and Sean, if you want to add in, feel free. But the — we've had a sort of consistent growth of around, I think, 2% to 3% annually in ARPU. And I do think we've had really strong take rates on our highest package prior to launch of Platinum VIP, which previously was called All Access and is now renamed Platinum. And so that was real evidence that there is demand above that, which played into our decision to launch Platinum VIP. No one's going to be forced to migrate. I mean, it's a voluntary package. The migration for the plans that are changing names obviously will be seamless. So I think there's upside in ARPU but we don't look at ARPU on its own, it's how do we drive overall revenue. And clearly, that's a function of volume and rate. And we believe that there's opportunity really across the pricing curve. And we have a number of packages at different price points that I think will continue to drive demand along a number of consumer segments, including our digital product, which is competitively priced against our other subscriptions as well. Is there anything else on ARPU? I mean, function this year, obviously one of the drivers of the increases in ARPU is also just the recovery in ad revenue, which has been really strong and rolls through as well. And then on your last point about new vehicle inventory, I mean, I'm sure you're following all the news, the days' supply is, I think the mid-20s, which is just exceptionally low. But I'd say, the automakers have done a phenomenal job of determining which models to produce, putting vehicles on the lot until the parts come in and making sure that they're making the best decisions. In-vehicle average sales prices were as high as they've ever been in the last quarter and the demand is still there. So I think there could be some softness in the third quarter still. But I'm hoping that it's turning around by the end of the year and going into next year.

Just one follow-up on the ARPU question. Did any of the price points on the other plans change or was it really just at the premium level?

No. No other price point change.

Okay. Thank you very much.

All right, we'll take our next question from Doug Mitchelson with Credit Suisse. Please go ahead.

Thanks so much. I was just curious, a lot of talk about advertising, obviously on this call and previous. For the Pandora specific inventory, like how much more upside to advertising ARPU do you see? And I can't tell if I just missed it in the answer to the last question, but you talk about ad loads on Pandora, have you considered changing those at all? Have they changed at all, given the good pricing that you're seeing on the advertising side? And then separately from that, anything on the M&A front that you were finding interesting, especially as you broaden out on the ad sales front. And obviously, you're a little bit further along on the podcast front. How should we think about potential for capital deployment, M&A and what are your thoughts on that right now? Thanks.

Sure, Doug. On the Pandora side, I think ad loads have been relatively consistent and I don't believe there's any intention to change that given the demand and the pricing environment, one. Two, I think we've seen increased sellout percentages across the board year-over-year. There is still room to increase sellout and given the strong demand and given the pricing. And I think the product that we offer — we do think there's incremental upside, so we'll leave it there. We've talked about the back half of the year in our expectation for advertising growth. So that's the advertising. Again, capital allocation remains consistent. As we talked about, we're really focused on 360L. We're really focused on the digital SXM App and investing there and enhancing our position outside of the vehicle. We've done, as you know, disciplined M&A across the board, I think right now we really feel good about the portfolio of assets we have. We don't really think there's a real gap. There are things like Roman Mars and the 99% Invisible that I think are nice additions to the portfolio in the offering. So from an M&A perspective, we'll continue to observe what's in the marketplace and where there are gaps and things that can accelerate our offering or strategic roadmap, but we feel pretty good about where we're at right now.

All right. Thank you.

All right. We will take our last and final question from James Ratcliffe at Evercore ISI. Please go ahead.

Thank you. Two if I could. First of all, on 360L, I think you mentioned that you're working with customers who use the service are more likely to convert. As I recall back when the SiriusXM product was new and most people hadn't experienced it like a big driver of conversion was whether the salesperson actually demoed it on delivery. What are you doing with the dealerships to ensure that people actually understand what they're getting in the car and what the capabilities of 360L are? And secondly, on SiriusXM car radio ARPU, can you talk a little about what you're seeing in terms of ARPU for gross adds and how that's trending for new customers coming on board? Thanks.

Okay. So I'll start with 360L. Yes, you are right. Those demos and dealerships definitely help drive conversion. And we do have a field team that helps train the employees at the dealerships to encourage them to provide trials. By the way, they're also making sure for used cars that the radios are on, which has also done a great job in terms of getting people to convert, because it's just another way to remove friction. But on the new car side with 360L, it's a competitive situation at the dealership. They're trying to provide a lot of information about the car to the buyer and we're not always going to be represented in a full demo mode. So the great thing about 360L is though, to the extent we have good information over time, we can provide really strong recommendations. This is just a major fundamental change in our business. We have only been able to deliver as you know, through a broadcast network to the car in the past. And now leveraging the modem in the car and having access to all of that data, we can provide a much more customized experience for the listener. And I absolutely believe that's going to drive performance. We see it as customers use all these new features, but we can provide information on what other features might be relevant or other content. I mean, it's just game changing. And of course, we can do that in the car and we can do it out of the car in our marketing materials. So even if we don't get the dealer demo, I think we have a lot of tools now to be able to improve the interaction from day one as consumers move into those cars that are 360L capable. And then as far as ARPU for gross adds, we do use promotional offers and other types of plans to encourage conversion and then roll people to higher price packages over time. So that's just a function of how the relative amount of new additions compared to the base at any given time period.

Thank you.

Thanks James. Thanks everybody for participating in today's call. If we didn't get to you, please give us a ring. We will talk offline and next quarter. Thanks everybody.