Good morning everyone and welcome to today's SiriusXM's Second Quarter 2017 Earnings Results Conference Call. Just as a reminder, today's call 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, Vice President, Investor Relations and Finance. Mr. Stevens, please go ahead.

Thank you, and good morning, everyone. Welcome to today's SiriusXM's earnings conference call. Today Jim Meyer, our Chief Executive Officer, will be joined by David Frear, our Senior Executive Vice President and Chief Financial Officer. At the conclusion of our prepared remarks, management will be glad to take your questions. Scott Greenstein, our President and Chief Content Officer, is also available for the Q&A portion of the call. First 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 on 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. We advise investors not to rely unduly on forward-looking statements and disclaim any intent or obligation to update them. As we begin, I'd 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. With that I will now hand the call over to Jim Meyer.

Good morning. Thank you for joining today's call to discuss what was truly an outstanding quarter. We delivered growth of 466,000 net self-pay subscribers, extremely low churn and we attained record milestones on a variety of key financial metrics. In the second quarter, we passed 32 million paying subscribers and we delivered our highest ever revenue and EBITDA performance. Second quarter adjusted EBITDA margins of 38.7% tied the record we set in the first quarter. ARPU also set a record. In fact, because of our solid second quarter and first half performance, we are pleased to increase our full year guidance for self-paying net additions, revenue and adjusted EBITDA. David will speak more about this later. SiriusXM is performing extremely well. U.S. new car sales are softening versus 2016 levels, but appear to be settling into the $16.5 million to $17 million range, which we think is a very healthy number. And even with new car sales down slightly, we still managed to grow overall self-pay gross additions by 4%. We accomplished this with modestly improving new car conversion rates and slightly higher new car penetration of 76% which offset the approximately 2% decline in new auto sales so far this year. And the rise in self-pay gross adds also is of course driven by rising used car gross additions and growing win-back additions coming out of our ever-increasing fleet of enabled vehicles. Used car additions grew 14% in the second quarter and we continue to expect a very long arc of growth in used cars for many years to come. The overall used car penetration rate is in the mid-30%s, so obviously we have a long way to go until penetration rate in used cars matches our record high new car penetration rates. From 2016 to 2019 we expect…

Thanks, Jim. Good morning, everyone and thanks for joining today. 2017 is shaping up to be another strong year for SiriusXM. Even with new car sales down 3% in the quarter year-over-year, healthy overall SAAR volumes and an increase in our penetration rate to 76% from 73.5% the prior year boosted the total number of SiriusXM-enabled vehicles on the road by 14%, officially topping 100 million for the first time. New car trial starts rose 5% in the quarter to a record 3.3 million, while 19% growth in used car trial starts pushed total trial starts up 10% to a record 5.5 million. At the end of the second quarter the new and used car trial funnel reached an all-time high of 9.2 million, up from 8.9 million in the second quarter of 2016. New car conversions were flat with the prior year while used car conversions continued to show strong, double-digit growth as the used car pen rate continued its expansion. The strong growth in used car pen rate was partially offset by the softening of used car conversion rate we have long told you to expect as the pen rate grows. Overall, we had our strongest second quarter ever for trial conversions. While conversion of new car buyers remains our largest single acquisition channel, in the second quarter these represented only 46% of all self-pay gross additions, compared to 48% a year ago and 49% the year before that. This means that 54% of our gross adds are coming from the existing fleet, either our used car efforts, win-back, self-pay activation or aftermarket additions. We only expect this share to climb higher in the future as our penetration rate in used car sales increases from about 34% in the second quarter to eventually match the approximately 75% penetration…

Thank you. At this time we'd like to open the call up again for question. And we'll go first to Jessica Reif of Bank of America. Please go ahead.

Thanks. I have a couple of questions if that's okay. Just, Jim did you say that you plan to – I just want to clarify – I thought I heard you say you plan to only remain a minority investor in Pandora. And I think you also said you're looking to learn. Can you just talk about some of the things you hope to learn over, let's say, the next two or three years?

If I said that, it's not what I meant. I meant this particular transaction, as David outlined in his comments, we're obviously a minority investor, okay, which we're still waiting for approval from, as you know, from the government. I think we're really just getting started. My primary focus, and when I say my, I really mean David and I and Greg as well, is we really want to get under the hood on how the free business works. It's the vast majority of Pandora's revenue. We think there are areas that we can probably help some with there in terms of understanding what's going on there. Obviously the infusion of capital into the company gives the company, in my opinion, more ability to invest in some of the things that we feel – particularly the free advertising business should be enhanced. So we're excited about that going forward. Anything beyond that we just really haven't flushed out yet. There are some real obvious areas that you can ask me about, and I'm just not prepared to answer those quite yet.

And then just two separate topics. Can you just give us some color on the impressive churn reduction? Like, what's driving it, where do you think you can take it to? And the second question, different topic. You talked about video, I think you said on the app on the phone. Can you just talk about your plans for video in general and you've talked about how it's churned in the past, what else you could do and what the timing might be?

David, why don't you address the churn one first?

Yes, sure. So Jessica there's nothing that's happened in the quarter that would change our view on churn. We continue to think this sort of 1.8%, maybe in some quarter up towards 2% area is the right place. In some quarters we end up, we get a little surprised on the good side and in some quarters we get a little surprised on the bad side and the elements. This quarter is just strong overall, I can't point to anything in particular about it. But there's nothing about it that you should look as changing where we think churn should be.

On the video front, by the way I'll come back to the churn. I just- I'm really proud of our team in this thing. It's a grind every quarter and this happened to be one where many of the things that we put in place worked the way we expected them to work. But with that said, I absolutely agree with David, we have not changed our guidance or our outlook for what we think the churn profile for our business looks like. On the video front, I think I was pretty deliberate in my comments today to tell you we plan on having a beta version of our new app out there by the end of the year and hopefully having, not hopefully, we will have video as a part of that. I've been very clear, we will start our video – our video offering will start solely with the introduction of Howard Stern video, and we'll use that as the cornerstone for what we'll do. We'll see how subscribers react to it. Maybe we'll have a few other small things around it. But I'm really excited when we're able to show you, probably at the Consumer Electronics Show we'll be able to show it in detail or late this year when we're able to show you how naturally our team has made the experience of video fitting into our existing SiriusXM experience. And that's really what our strategy is all about in video, it is not to offer video that is there just for the sake of video or full length content, movies or any of that kind of stuff. The way we intend to drive video as part of our entertainment experience through our app is as a natural extension of our core SiriusXM business and around our personalities and our content.

And one other thing, it's no secret we've been approached constantly about filming in our studios by outside parties on that end and our events such as the Guns N' Roses thing Jim mentioned and others are natural extensions to the audio content. So there is plenty in-house without ever even looking outside beyond that. And then, like anything else, there can be strategic things on the audio side that have a video overlap that we'll now consider and that we have the ability to get that out to our subscribers.

Yes, Jessica, to sum it up, to me the reason we're doing it is that we think it makes our app more entertaining and we think when our app's more entertaining it engages our customers in a better profile.

Thank you.

Up next from Morgan Stanley, we'll go to Ben Swinburne. Please go ahead. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you. Good morning. David, could you talk a little about the drivers of the ARPU increase, particularly from Q1 to Q2? I think you were lapping a decent rate increase last year in the second quarter. So just help us think about the drivers in Q2 and then whether or not that flows into the rest of the year. And-

You know- go ahead. No, no, go ahead. What's your other one? Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Jim, could you talk a little bit about what you're doing, what the latest is on building more in depth relationships with the used car dealers, particularly when you get beyond franchise into that more mid-sized chain independents, which I know you guys are working hard to sign up and get.

Let me take – Ben, let me take that one first and then David will come back to you on ARPU. So we're very driven, no pun intended, by really expanding into those channels. We're learning a lot about how the smaller independents consolidate their data, how they run their businesses and we're looking for relations with third parties who might be able to provide more of that data to us on a consolidated basis as part of the back-room transactions they perform for some of those dealers. The area that I'm probably the most excited about right now is driving our business – our reporting relationship further into service spots, service areas that are outside of the existing franchise dealers today. Examples being places like Jiffy Lube, Firestone Tire, it goes on and on and on. And when you study it, it's shocking how many there are and it's shocking how many transactions go through those store fronts every day. And, by the way, as you all know, if every one of you have ever brought your vehicle in they start with the VIN number and then your name, which is really a good way for our business. And so I see a lot of opportunity in that area to enhance the data flow to make sure that we're getting the turnover of these vehicles back into our records at a timely way. That said, there's every kind of different business model in those shops and those different things and we just have to work our way carefully through to make sure that we don't waste time implementing with someone where we won't really get the data feed in an accurate way.

So and Ben, on the ARPU side it's sort of multiple things. You've heard us talk about tinkering with the price grid over the years and we're always doing that. And so when you look at the second quarter, you have to trace back to what we did in the second quarter of 2016. At mid-quarter we increased our select primary rate and so you still have that rolling through. And this year you've got sort of a full quarter effect of it. We in March increased the rate on the what we call multi-receiver discount that the second, third, fourth radio that goes onto accounts, that went up. We've also been engaged in a couple long-term programs. One is to increase upsells for – to our higher-rated plans like our All Access plan. And we're doing that not only in sort of the full price side of things but also in the way that we onboard people through conversions where we offer discounted rates for either our Select or All Access service and the All Access service has a little bit higher ARPU in the onboarding. And then we had some old plans that we used as save and win-back tactics that were lower priced, deeply-discounted plans and we had a variety of initiatives underway to walk those up. So Jim and I actually had a meeting yesterday with a bunch of people on our revenue initiatives. And this is just – it's an active way we have of trying to manage effectively ARPU up over time or yield per account up over time. And there are an awful lot of small tactical things that we do that really aren't worth this call but in the aggregate they do help us drive up the yield that we're getting out of subscribers. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: That's very helpful. Thank you.

Brandon Ross of BTIG has our next question.

Hi, thanks for taking the question. You spoke about improving the experience outside the car and on your apps. And as you improve that experience and perhaps it becomes more important, I was wondering if you would consider allowing third party digital platforms to sell your service and maybe include it as part of a larger content bundle? And then-

I think it's a great question. I don't have a firm answer for you yet, but you should assume it's something that we're certainly studying.

Great. And then just on Pandora, ultimately you decided to make an investment there as opposed to buying the company outright. Can you just tell us what your thinking was surrounding that? Was it just simply risk management taking a wait-and-see approach to how that business can do? Do you think you're able to extract the same value out of it for your core SIRI platform? Just any help there would be great. Thanks.

So a couple of things about Pandora that if we had had a meeting of the minds on value, I think the two sides could have reached a deal to do a complete acquisition but that wasn't there. And they did need capital. We are very interested in the asset as we've said many times that we think that the team at Pandora's done a great job building a brand and a significant presence in the free radio space. And so making an investment to fundamentally a debt investment is a way for us and taking the board seats, it's a way for us to get involved, and as Jim said, to learn the business more. We're looking forward to working with the team at Pandora once we get through the regulatory approval process. And then, I don't think you should be thinking of this as some big synergistic sort of opportunity. This is really about companies that are in two very different businesses. We're in the subscription radio business that covers music, talk, news, sports, weather, and traffic. And they are in the ad-based business for music-only service and it's quite – they are quite different. I think both companies have been very successful focusing specifically on those separate businesses. And then we'll see what we can learn from each other over time.

Great. Thanks very much.

We'll go next to Amy Yong of Macquarie. Please go ahead, your line is open. Amy Yong - Macquarie Capital (USA), Inc.: Thanks. Two questions. So first for David. Now that you have several acquisitions in the pipeline, can you just comment and update us on your leverage target of 3.2 and where the priorities of cash are for the company as it stands today? And then just bigger picture, on the connected vehicle opportunity, your Automatic Labs' 360L. Maybe if you could talk to us about what you're hoping to accomplish, either revenue or subscriber metrics. Thank you.

So on the leverage target that we'll – nothing's really changed about that. We continue to maintain our four times target, that you should think of that as a rough sort of long-term upper bound constraint. The reason we picked that target is because we intend to operate the company as a strong double-B credit. So far I think that's worked well. In communications with the debt markets, our recent financing was phenomenally successful. So I think that will stay there. And we honestly believe we can continue our capital return program as well as maintaining an aggressive profile towards acquisitions when they make sense and stay within that target.

Amy, in the connected vehicle space, I'll be clear about a couple things. One, there aren't many things that I think are 100% predictable or what's going to happen on the technology curve, and that gets even a little more complicated with automobiles. The one thing I can tell you, because we have – we do see the automakers' product plans out many, many, many years, is the vast majority of vehicles built as we exit this decade and certainly will continue for as far as the eye can see after that, will be connected with embedded modems. And that phenomenon is beginning now. You're going to see it slowly creep up and the tipping point, at least from our data, is going to be right around the end of this decade. And then it goes pretty quickly up to, I won't say virtually every car, but the vast majority of new cars built in each of those years will be connected. I just believe there is a big opportunity in that connectivity in two ways. One, that connectivity inevitably is going to transaction back to – it's going to link back to the entertainment experience in the vehicle. And that's why 360L is so important. While I'm frustrated that it takes as long as it does to roll out across the automotive channels, and I don't know why I should be, I've been working here for 14 years and nothing's changed in terms of how long it takes, I'm really confident that our 360L deployment and this deployment of embedded modems are going to intersect at about – both of them are going to start reaching critical mass at about the same time and I think it's going to allow for a truly enhanced entertainment experience. So that's first…

From Evercore ISI, we'll go to Vijay Jayant. Please go ahead.

It's James Ratcliffe for Vijay. And two if I could. First of all, thoughts on ways to monetize the non-subscribing fleet – your roughly 70 million cars or so out there that aren't – that have radios, but aren't paying customers. And particularly thoughts for the large bulk of those which are going to be one way for the foreseeable future. And secondly, as the float continues to shrink, I think you took out about 6% of it or so in the quarter, does there come a time when the appeal of buybacks diminishes for reasons of share liquidity or anything like that? Thanks.

So, let me just cover the float question. So, we aren't a meaningful part of the trading activity of the stock. I mean, I have been personally surprised that we don't represent a bigger proportion of daily trading than we do. But we're regularly in the sort of mid-single digit percentages of average daily trading. And so, even though the float seems to – it's certainly shrinking, that we just don't seem to get outside the range of this mid-single digit percentage. So, as long as that's true, then I don't think that the – we're having a trading mechanics effect on the price of the stock. Were that to change, James, we certainly would think about what to do with the buyback program. But this isn't a new thought. We've been having this discussion with the board since we launched the buyback program. And so we've all been looking at it together, looking at the amount of trading that we represent and cognizant of the fact that if we were ever to become a meaningful part of the trading that we'd have to reassess the program. But so far that hasn't materialized, including in the second quarter.

Now, in terms of the radios, the inactive radios that are out there, obviously the first and biggest opportunity is to get the damn things turned back on to subscribe to SiriusXM, which is where we put the vast majority of our focus today. And I can tell you, we turn all those radios on about four times a year. And you'd be surprised how many subscribers we call back during those free listening periods. And so we clearly are focused on that through our win back efforts. I think the second thing, James, where we have not done a good enough job is I think we're only beginning to understand our business in a much better way by household or family as opposed to by VIN number. And I think as we dig deeper into that, we're going to find – I've talked about this before, but I'm excited because I think we're really shining a light down this hallway now. I think we're going to find ways to offer our service, bundle in ways, family plans, whatever it might be, to try to grow our penetration of those inactive radios in a way that may not yield the same ARPU we're getting certainly in the channel today on a unique subscriber. But as David and I have always said, our goal is to drive revenue, EBITDA, and most importantly, free cash flow in this business, not necessarily just the margin. And so I think as we think through families, I think there's real opportunities for us. But we're going to go carefully and slow as we understand that. Even when we're done, we all understand the number one reason people don't subscribe to satellite radio is they don't want to pay. And so there will be a big base of inactive radios. We've had lots of discussions, we've had lots of ideas. We've even tried a few things in secret I can tell you and we just haven't made a lot of progress there yet, to be clear with you.

Right now though they are a valuable promotion tool to those inactive subscribers. We launched The Beatles Channel timed with a free-to-air campaign which obviously got out to a lot of those inactive radios and hopefully resulted in people paying attention again to the service.

Thank you.

We'll take our next and final question today from Barton Crockett of FBR Capital Markets. Barton E. Crockett - FBR Capital Markets & Co.: Okay. Thanks for taking my question. I guess a couple of things if I could. One is on Pandora. One of the things I was curious about with them is that they are going through a process now of searching for a new CEO. Now you guys are going through a process of kind of government approval of your transaction. But I would imagine that someone who was thinking about taking a CEO spot at Pandora would want to have an understanding of what the incoming chairman – and you guys would be able to appoint the chairman – with a some kind of meeting of the minds with the business. So to what degree are you able to have input into the CEO process there or to what extent is that constrained by the government approval process right now?

We don't have any input. We don't have any – we don't, number one obviously, we don't have any vote or any position on the board to pick the next CEO. I think the Pandora board honestly is very focused on what they're trying to do with the search and I have complete confidence that they're going to come up with the right candidate. Barton E. Crockett - FBR Capital Markets & Co.: Okay. Now one of the other things I was curious about is, touching on the feature that you highlighted Jim, the Echo Nest, the voice activation. It seems that technology generally has made satellite radio much more present in the home outside of the car. And I'm just wondering if you're seeing any data that would tell you that usage outside of the car, particularly in the home, is increasing and is that in any way a meaningful part of maybe the improving churn? Maybe people are finding it more valuable because that technology is making it more accessible?

So I think one thing I've learned in this business is that at its core, subscribers who are more engaged churn less. There's just simply no argument to that, okay? And so, obviously the more we can get them to listen, or the more we can get them – it's not just listen, the more these technologies allow them – frankly, when we talk to some customers and they churn and we say why you churn, and they say you didn't have anything for me, and we say, well what did you really like? And they say, I don't know, big Tom Petty fan. You say, did you know we have a fulltime Tom Petty channel? I didn't know that. And so, you know one of our challenges always is making sure – our content is so broad, is making sure that our customers actually know what's on. And in our spoken word content in particular in our channels, knowing specifically what some of those shows might be within a certain channel, what's there. And I think this technology's certainly going to allow it. I will tell you, Barton, the one thing I was really surprised about, and probably shouldn't have been, was how much uptake we got in such a short period of time with Alexa. And I think that just tells us we're absolutely on the right path. And so, I'll go back to what I said in my comments. I don't care where they listen or how they listen; I only care that they listen. And it's taken technology and us a while. This hasn't been – and this has not been – you know we focused a lot of resources, I've said in previous calls on this. I finally feel like now we've broken through kind of the technology barrier. And now it's going to be up to us to drive it correctly with the right marketing message and the right bundling and implementation going forward. I don't think that's an indication of why our churn is better in the second quarter, no. Barton E. Crockett - FBR Capital Markets & Co.: Okay. All right. But do you have any quantification of listenership outside of the car? Is that changing meaningfully?

You know we do, Barton. And it's been growing sort of pretty steadily over the years as the business itself grows, that we've been more successful with the upsell to the All Access plan in recent years. So, we're getting a greater proportion of our people on it. But Jim's quite right. In trying to correlate that back to the fiscal behavior of churn in the business, that's still a little elusive. But we do generally know that the more people spend, the lower they churn; the more engaged they are, the lower they churn. And so we just infer from that that continuing to drive this is good for the business.

Yes. Barton E. Crockett - FBR Capital Markets & Co.: Okay. Great. Thank you.

Thank you, Barton. And thank you, everyone for participating today. Talk to you later.