UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~JUNE~~SEPTEMBER 30, 2023


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO ________

COMMISSION FILE NUMBER 001-34295

SIRIUS XM HOLDINGS INC.

(Exact name of registrant as specified in its charter)


Delaware									38-3916511
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

1221 Avenue of the Americas, 35th Floor, New York, NY

(Address of Principal Executive Offices)

10020

(Zip Code)

Registrant’s telephone number, including area code: (212) 584-5100

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common stock, $0.001 par value

SIRI

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


(Class)	(Outstanding as of ~~July 28,~~October 27, 2023)
Common stock, $0.001 par value	~~3,842,403,049~~3,838,939,821	shares

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q


Item No.	Description

	PART I - Financial Information

Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022	2
	Consolidated Balance Sheets as of ~~June~~September 30, 2023 and December 31, 2022	3
	Consolidated Statements of Stockholders' Equity (Deficit) for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022	4
	Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022	8
	Notes to the Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	49
Item 4.	Controls and Procedures	49

	PART II - Other Information

Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer ~~Purchased~~Purchases of Equity Securities	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
	Signatures	52

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)


		For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in millions, except per share data)	(in millions, except per share data)	2023		2022		2023		2022			(in millions, except per share data)	2023		2022		2023		2022
Revenue:	Revenue:										Revenue:
Subscriber revenue	Subscriber revenue	$	1,725	$	1,719	$	3,417	$	3,432		Subscriber revenue	$	1,729	$	1,734	$	5,146	$	5,166
Advertising revenue	Advertising revenue	445		452		819		835			Advertising revenue	460		457		1,278		1,292
Equipment revenue	Equipment revenue	47		45		93		98			Equipment revenue	49		50		142		148
Other revenue	Other revenue	33		37		65		75			Other revenue	33		39		99		114
Total revenue	Total revenue	2,250		2,253		4,394		4,440			Total revenue	2,271		2,280		6,665		6,720
Operating expenses:	Operating expenses:										Operating expenses:
Cost of services:	Cost of services:										Cost of services:
Revenue share and royalties	Revenue share and royalties	732		711		1,432		1,381			Revenue share and royalties	731		709		2,162		2,090
Programming and content	Programming and content	153		153		303		292			Programming and content	153		155		456		448
Customer service and billing	Customer service and billing	123		125		246		251			Customer service and billing	116		122		363		373
Transmission	Transmission	50		54		99		106			Transmission	54		51		153		157
Cost of equipment	Cost of equipment	3		3		7		6			Cost of equipment	3		4		10		9
Subscriber acquisition costs	Subscriber acquisition costs	93		91		183		181			Subscriber acquisition costs	87		86		270		267
Sales and marketing	Sales and marketing	220		285		443		557			Sales and marketing	237		281		680		838
Engineering, design and development	Engineering, design and development	83		72		162		139			Engineering, design and development	72		70		234		208
General and administrative	General and administrative	157		127		303		250			General and administrative	119		132		421		382
Depreciation and amortization	Depreciation and amortization	139		135		275		270			Depreciation and amortization	130		134		405		404
Impairment, restructuring and acquisition costs	Impairment, restructuring and acquisition costs	18		1		50		1			Impairment, restructuring and acquisition costs	5		69		56		70
Total operating expenses	Total operating expenses	1,771		1,757		3,503		3,434			Total operating expenses	1,707		1,813		5,210		5,246
Income from operations	Income from operations	479		496		891		1,006			Income from operations	564		467		1,455		1,474
Other (expense) income:	Other (expense) income:										Other (expense) income:
Interest expense	Interest expense	(107)		(104)		(213)		(206)			Interest expense	(106)		(107)		(319)		(314)

Other income (expense)		—		(4)		3		(2)
Other expense											Other expense	(3)		(3)		—		(5)
Total other expense	Total other expense	(107)		(108)		(210)		(208)			Total other expense	(109)		(110)		(319)		(319)
Income before income taxes	Income before income taxes	372		388		681		798			Income before income taxes	455		357		1,136		1,155
Income tax expense	Income tax expense	(62)		(96)		(138)		(197)			Income tax expense	(92)		(110)		(230)		(307)
Net income	Net income	$	310	$	292	$	543	$	601		Net income	$	363	$	247	$	906	$	848
Foreign currency translation adjustment, net of tax	Foreign currency translation adjustment, net of tax	7		(10)		7		(2)			Foreign currency translation adjustment, net of tax	(6)		(21)		1		(23)
Total comprehensive income	Total comprehensive income	$	317	$	282	$	550	$	599		Total comprehensive income	$	357	$	226	$	907	$	825
Net income per common share:	Net income per common share:										Net income per common share:
Basic	Basic	$	0.08	$	0.07	$	0.14	$	0.15		Basic	$	0.09	$	0.06	$	0.23	$	0.22
Diluted	Diluted	$	0.08	$	0.07	$	0.14	$	0.15		Diluted	$	0.09	$	0.06	$	0.23	$	0.21
Weighted average common shares outstanding:	Weighted average common shares outstanding:										Weighted average common shares outstanding:
Basic	Basic	3,861		3,928		3,875		3,938			Basic	3,845		3,900		3,865		3,925
Diluted	Diluted	3,873		4,005		3,892		4,016			Diluted	3,865		3,968		3,884		4,001

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(in millions, except per share data)	(in millions, except per share data)	June 30, 2023		December 31, 2022		(in millions, except per share data)	September 30, 2023		December 31, 2022
ASSETS	ASSETS	(unaudited)				ASSETS	(unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	51	$	57	Cash and cash equivalents	$	53	$	57
Receivables, net	Receivables, net	660		655		Receivables, net	659		655

Related party current assets	Related party current assets	29		42		Related party current assets	31		42
Prepaid expenses and other current assets	Prepaid expenses and other current assets	299		284		Prepaid expenses and other current assets	298		284
Total current assets	Total current assets	1,039		1,038		Total current assets	1,041		1,038
Property and equipment, net	Property and equipment, net	1,616		1,499		Property and equipment, net	1,715		1,499
Intangible assets, net	Intangible assets, net	2,977		3,050		Intangible assets, net	2,941		3,050
Goodwill	Goodwill	3,249		3,249		Goodwill	3,249		3,249
Related party long-term assets	Related party long-term assets	500		488		Related party long-term assets	493		488
Deferred tax assets	Deferred tax assets	147		147		Deferred tax assets	147		147
Operating lease right-of-use assets	Operating lease right-of-use assets	286		315		Operating lease right-of-use assets	283		315
Other long-term assets	Other long-term assets	264		236		Other long-term assets	260		236
Total assets	Total assets	$	10,078	$	10,022	Total assets	$	10,129	$	10,022
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)					LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	1,213	$	1,248	Accounts payable and accrued expenses	$	1,267	$	1,248
Accrued interest	Accrued interest	165		165		Accrued interest	73		165
Current portion of deferred revenue	Current portion of deferred revenue	1,287		1,322		Current portion of deferred revenue	1,248		1,322
Current maturities of debt	Current maturities of debt	525		196		Current maturities of debt	525		196
Operating lease current liabilities	Operating lease current liabilities	45		50		Operating lease current liabilities	45		50

Total current liabilities	Total current liabilities	3,235		2,981		Total current liabilities	3,158		2,981
Long-term deferred revenue	Long-term deferred revenue	76		81		Long-term deferred revenue	73		81
Long-term debt	Long-term debt	8,908		9,256		Long-term debt	8,823		9,256

Deferred tax liabilities	Deferred tax liabilities	472		565		Deferred tax liabilities	479		565
Operating lease liabilities	Operating lease liabilities	298		320		Operating lease liabilities	292		320
Other long-term liabilities	Other long-term liabilities	200		170		Other long-term liabilities	197		170
Total liabilities	Total liabilities	13,189		13,373		Total liabilities	13,022		13,373
Commitments and contingencies (Note 15)	Commitments and contingencies (Note 15)					Commitments and contingencies (Note 15)
Stockholders’ equity (deficit):	Stockholders’ equity (deficit):					Stockholders’ equity (deficit):
Common stock, par value $0.001 per share; 9,000 shares authorized; 3,845 and 3,891 shares issued; 3,844 and 3,891 shares outstanding at June 30, 2023 and December 31, 2022, respectively		4		4
Accumulated other comprehensive income (loss), net of tax		3		(4)
Common stock, par value $0.001 per share; 9,000 shares authorized; 3,840 and 3,891 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						Common stock, par value $0.001 per share; 9,000 shares authorized; 3,840 and 3,891 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	4		4
Accumulated other comprehensive loss, net of tax						Accumulated other comprehensive loss, net of tax	(3)		(4)

Treasury stock, at cost; 1 and 0 shares of common stock at June 30, 2023 and December 31, 2022, respectively		(3)		—

Accumulated deficit	Accumulated deficit	(3,115)		(3,351)		Accumulated deficit	(2,894)		(3,351)
Total stockholders’ equity (deficit)	Total stockholders’ equity (deficit)	(3,111)		(3,351)		Total stockholders’ equity (deficit)	(2,893)		(3,351)
Total liabilities and stockholders’ equity (deficit)	Total liabilities and stockholders’ equity (deficit)	$	10,078	$	10,022	Total liabilities and stockholders’ equity (deficit)	$	10,129	$	10,022

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)


For the Six Months Ended June 30, 2023
For the Nine Months Ended September 30, 2023																									For the Nine Months Ended September 30, 2023
		Common Stock			Accumulated Other Comprehensive (Loss) Income				Additional Paid-in Capital				Treasury Stock						Accumulated Deficit				Total Stockholders’ Equity (Deficit)					Common Stock						Accumulated Other Comprehensive (Loss) Income			Additional Paid-in Capital		Treasury Stock				Accumulated Deficit		Total Stockholders’ Equity (Deficit)
(in millions)	(in millions)	Shares	Amount								Shares			Amount							(in millions)				Shares				Amount							Shares			Amount
Balance at December 31, 2022	Balance at December 31, 2022	3,891	$	4			$	(4)			$	—		—			$	—			$	(3,351)				$	(3,351)	Balance at December 31, 2022		3,891			$		4		$	(4)	$	—	—		$	—	$	(3,351)	$	(3,351)

Comprehensive income, net of tax	Comprehensive income, net of tax	—	—		7				—				—		—				543				550		Comprehensive income, net of tax			—			—			1			—		—		—		906		907
Share-based payment expense	Share-based payment expense	—	—		—				94				—		—				—				94		Share-based payment expense			—			—			—			147		—		—		—		147
Exercise of stock options and vesting of restricted stock units	Exercise of stock options and vesting of restricted stock units	6	—		—				—				—		—				—				—		Exercise of stock options and vesting of restricted stock units			18			—			—			4		—		—		—		4
Withholding taxes on net share settlement of stock-based compensation	Withholding taxes on net share settlement of stock-based compensation	—	—		—				(18)				—		—				—				(18)		Withholding taxes on net share settlement of stock-based compensation			—			—			—			(50)		—		—		—		(50)
Capital contribution from Liberty Media related to Tax Sharing Agreement	Capital contribution from Liberty Media related to Tax Sharing Agreement	—	—		—				—				—		—				4				4		Capital contribution from Liberty Media related to Tax Sharing Agreement			—			—			—			—		—		—		5		5
Cash dividends paid on common stock, $0.0484 per share		—	—		—				(76)				—		—				(112)				(188)
Cash dividends paid on common stock, $0.0726 per share																									Cash dividends paid on common stock, $0.0726 per share			—			—			—			(101)		—		—		(180)		(281)

Common stock repurchased	Common stock repurchased	—	—		—				—				53		(202)				—				(202)		Common stock repurchased			—			—			—			—		69		(274)		—		(274)
Common stock retired	Common stock retired	(52)	—		—				—				(52)		199				(199)				—		Common stock retired			(69)			—			—			—		(69)		274		(274)		—
Balance at June 30, 2023		3,845	$	4	$	3			$	—			1		$	(3)			$	(3,115)			$	(3,111)
Balance at September 30, 2023																									Balance at September 30, 2023			3,840			$	4		$	(3)		$	—	—		$	—	$	(2,894)	$	(2,893)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)


For the Three Months Ended June 30, 2023
For the Three Months Ended September 30, 2023																									For the Three Months Ended September 30, 2023
		Common Stock			Accumulated Other Comprehensive (Loss) Income				Additional Paid-in Capital				Treasury Stock						Accumulated Deficit				Total Stockholders’ Equity (Deficit)					Common Stock				Accumulated Other Comprehensive Income (Loss)				Additional Paid-in Capital			Treasury Stock					Accumulated Deficit			Total Stockholders’ Equity (Deficit)
(in millions)	(in millions)	Shares	Amount								Shares			Amount							(in millions)				Shares				Amount						Shares				Amount
Balance at March 31, 2023		3,879	$	4			$	(4)			$	—		1			$	(5)			$	(3,254)				$	(3,259)
Balance at June 30, 2023																									Balance at June 30, 2023			3,845		$	4		$	3			$	—		1		$	(3)		$	(3,115)		$	(3,111)

Comprehensive income, net of tax	Comprehensive income, net of tax	—	—		7				—				—		—				310				317		Comprehensive income, net of tax			—		—		(6)				—			—		—			363			357
Share-based payment expense	Share-based payment expense	—	—		—				46				—		—				—				46		Share-based payment expense			—		—		—				53			—		—			—			53
Exercise of stock options and vesting of restricted stock units	Exercise of stock options and vesting of restricted stock units	2	—		—				—				—		—				—				—		Exercise of stock options and vesting of restricted stock units			12		—		—				4			—		—			—			4
Withholding taxes on net share settlement of stock-based compensation	Withholding taxes on net share settlement of stock-based compensation	—	—		—				(4)				—		—				—				(4)		Withholding taxes on net share settlement of stock-based compensation			—		—		—				(32)			—		—			—			(32)
Capital contribution from Liberty Media related to Tax Sharing Agreement	Capital contribution from Liberty Media related to Tax Sharing Agreement	—	—		—				—				—		—				18				18		Capital contribution from Liberty Media related to Tax Sharing Agreement			—		—		—				—			—		—			1			1
Cash dividends paid on common stock, $0.0242 per share	Cash dividends paid on common stock, $0.0242 per share	—	—		—				(42)				—		—				(52)				(94)		Cash dividends paid on common stock, $0.0242 per share			—		—		—				(25)			—		—			(68)			(93)

Common stock repurchased	Common stock repurchased	—	—		—				—				36		(135)				—				(135)		Common stock repurchased			—		—		—				—			16		(72)			—			(72)
Common stock retired	Common stock retired	(36)	—		—				—				(36)		137				(137)				—		Common stock retired			(17)		—		—				—			(17)		75			(75)			—
Balance at June 30, 2023		3,845	$	4	$	3			$	—			1		$	(3)			$	(3,115)			$	(3,111)
Balance at September 30, 2023																									Balance at September 30, 2023			3,840		$	4	$	(3)			$	—		—		$	—		$	(2,894)		$	(2,893)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)


For the Six Months Ended June 30, 2022
For the Nine Months Ended September 30, 2022																									For the Nine Months Ended September 30, 2022
		Common Stock			Accumulated Other Comprehensive Income (Loss)				Additional Paid-in Capital				Treasury Stock						Accumulated Deficit				Total Stockholders’ Equity (Deficit)					Common Stock						Accumulated Other Comprehensive Income (Loss)			Additional Paid-in Capital		Treasury Stock				Accumulated Deficit		Total Stockholders’ Equity (Deficit)
(in millions)	(in millions)	Shares	Amount								Shares			Amount							(in millions)				Shares				Amount							Shares			Amount
Balance at December 31, 2021	Balance at December 31, 2021	3,968	$	4			$	15			$	—		1			$	(8)			$	(2,636)				$	(2,625)	Balance at December 31, 2021		3,968			$		4		$	15	$	—	1		$	(8)	$	(2,636)	$	(2,625)
Cumulative effect of change in accounting principles	Cumulative effect of change in accounting principles	—	—		—				—				—		—				(14)				(14)		Cumulative effect of change in accounting principles			—			—			—			—		—		—		(14)		(14)
Comprehensive (loss) income, net of tax	Comprehensive (loss) income, net of tax	—	—		(2)				—				—		—				601				599		Comprehensive (loss) income, net of tax			—			—			(23)			—		—		—		848		825
Share-based payment expense	Share-based payment expense	—	—		—				101				—		—				—				101		Share-based payment expense			—			—			—			157		—		—		—		157
Exercise of stock options and vesting of restricted stock units	Exercise of stock options and vesting of restricted stock units	8	—		—				—				—		—				—				—		Exercise of stock options and vesting of restricted stock units			23			—			—			4		—		—		—		4
Withholding taxes on net share settlement of stock-based compensation	Withholding taxes on net share settlement of stock-based compensation	—	—		—				(39)				—		—				—				(39)		Withholding taxes on net share settlement of stock-based compensation			—			—			—			(102)		—		—		—		(102)
Capital contribution to Liberty Media related to Tax Sharing Agreement	Capital contribution to Liberty Media related to Tax Sharing Agreement	—	—		—				—				—		—				(25)				(25)		Capital contribution to Liberty Media related to Tax Sharing Agreement			—			—			—			—		—		—		(22)		(22)
Cash dividends paid on common stock, $0.293923 per share		—	—		—				(62)				—		—				(1,097)				(1,159)
Cash dividends paid on common stock, $0.315885 per share																									Cash dividends paid on common stock, $0.315885 per share			—			—			—			(59)		—		—		(1,186)		(1,245)

Common stock repurchased	Common stock repurchased	—	—		—				—				67		(417)				—				(417)		Common stock repurchased			—			—			—			—		95		(594)		—		(594)
Common stock retired	Common stock retired	(67)	—		—				—				(67)		415				(415)				—		Common stock retired			(95)			—			—			—		(95)		599		(599)		—
Balance at June 30, 2022		3,909	$	4	$	13			$	—			1		$	(10)			$	(3,586)			$	(3,579)
Balance at September 30, 2022																									Balance at September 30, 2022			3,896			$	4		$	(8)		$	—	1		$	(3)	$	(3,609)	$	(3,616)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)


For the Three Months Ended June 30, 2022
For the Three Months Ended September 30, 2022																									For the Three Months Ended September 30, 2022
		Common Stock			Accumulated Other Comprehensive Income (Loss)				Additional Paid-in Capital				Treasury Stock						Accumulated Deficit				Total Stockholders’ Equity (Deficit)					Common Stock				Accumulated Other Comprehensive Income (Loss)				Additional Paid-in Capital			Treasury Stock					Accumulated Deficit			Total Stockholders’ Equity (Deficit)
(in millions)	(in millions)	Shares	Amount								Shares			Amount							(in millions)				Shares				Amount						Shares				Amount
Balance at March 31, 2022		3,940	$	4			$	23			$	—		—			$	(2)			$	(3,612)				$	(3,587)
Balance at June 30, 2022																									Balance at June 30, 2022			3,909		$	4		$	13			$	—		1		$	(10)		$	(3,586)		$	(3,579)

Comprehensive (loss) income, net of tax	Comprehensive (loss) income, net of tax	—	—		(10)				—				—		—				292				282		Comprehensive (loss) income, net of tax			—		—		(21)				—			—		—			247			226
Share-based payment expense	Share-based payment expense	—	—		—				51				—		—				—				51		Share-based payment expense			—		—		—				55			—		—			—			55
Exercise of stock options and vesting of restricted stock units	Exercise of stock options and vesting of restricted stock units	3	—		—				—				—		—				—				—		Exercise of stock options and vesting of restricted stock units			16		—		—				4			—		—			—			4
Withholding taxes on net share settlement of stock-based compensation	Withholding taxes on net share settlement of stock-based compensation	—	—		—				(10)				—		—				—				(10)		Withholding taxes on net share settlement of stock-based compensation			—		—		—				(63)			—		—			—			(63)
Capital contribution to Liberty Media related to Tax Sharing Agreement	Capital contribution to Liberty Media related to Tax Sharing Agreement	—	—		—				—				—		—				(12)				(12)		Capital contribution to Liberty Media related to Tax Sharing Agreement			—		—		—				—			—		—			3			3
Cash dividends paid on common stock, $0.0219615 per share	Cash dividends paid on common stock, $0.0219615 per share	—	—		—				(41)				—		—				(45)				(86)		Cash dividends paid on common stock, $0.0219615 per share			—		—		—				4			—		—			(90)			(86)

Common stock repurchased	Common stock repurchased	—	—		—				—				35		(217)				—				(217)		Common stock repurchased			—		—		—				—			29		(176)			—			(176)
Common stock retired	Common stock retired	(34)	—		—				—				(34)		209				(209)				—		Common stock retired			(29)		—		—				—			(29)		183			(183)			—
Balance at June 30, 2022		3,909	$	4	$	13			$	—			1		$	(10)			$	(3,586)			$	(3,579)
Balance at September 30, 2022																									Balance at September 30, 2022			3,896		$	4	$	(8)			$	—		1		$	(3)		$	(3,609)		$	(3,616)

See accompanying notes to the unaudited consolidated financial statements.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)


		For the Six Months Ended June 30,				For the Nine Months Ended September 30,
(in millions)	(in millions)	2023		2022			(in millions)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net income	Net income	$	543	$	601		Net income	$	906	$	848
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	275		270			Depreciation and amortization	405		404
Non-cash impairment and restructuring costs	Non-cash impairment and restructuring costs	20		—			Non-cash impairment and restructuring costs	22		68
Non-cash interest expense, net of amortization of premium	Non-cash interest expense, net of amortization of premium	7		9			Non-cash interest expense, net of amortization of premium	11		12

Provision for doubtful accounts	Provision for doubtful accounts	31		29			Provision for doubtful accounts	45		43

Loss (gain) on unconsolidated entity investments, net		4		(3)
Loss on unconsolidated entity investments, net							Loss on unconsolidated entity investments, net	7		—

(Gain) loss on other investments	(Gain) loss on other investments	(5)		9			(Gain) loss on other investments	(4)		11
Share-based payment expense	Share-based payment expense	87		92			Share-based payment expense	135		143
Deferred income tax (benefit) expense	Deferred income tax (benefit) expense	(94)		60			Deferred income tax (benefit) expense	(85)		132
Amortization of right-of-use assets	Amortization of right-of-use assets	21		21			Amortization of right-of-use assets	35		37
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Receivables	Receivables	(36)		35			Receivables	(50)		22

Related party, net	Related party, net	17		1			Related party, net	17		(30)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(15)		(83)			Prepaid expenses and other current assets	(14)		(57)
Other long-term assets	Other long-term assets	(1)		6			Other long-term assets	—		(3)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(18)		(81)			Accounts payable and accrued expenses	40		(72)
Accrued interest	Accrued interest	—		(9)			Accrued interest	(92)		(101)
Deferred revenue	Deferred revenue	(40)		(32)			Deferred revenue	(82)		(87)
Operating lease liabilities	Operating lease liabilities	(25)		(30)			Operating lease liabilities	(43)		(48)
Other long-term liabilities	Other long-term liabilities	30		(7)			Other long-term liabilities	26		(22)
Net cash provided by operating activities	Net cash provided by operating activities	801		888			Net cash provided by operating activities	1,279		1,300
Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:
Additions to property and equipment	Additions to property and equipment	(333)		(196)			Additions to property and equipment	(520)		(279)

(Purchase) sale of other investments	(Purchase) sale of other investments	(1)		1			(Purchase) sale of other investments	(1)		1
Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	—		(137)			Acquisition of business, net of cash acquired	—		(136)

Investments in related parties and other equity investees	Investments in related parties and other equity investees	(31)		(1)			Investments in related parties and other equity investees	(33)		(1)

Net cash used in investing activities	Net cash used in investing activities	(365)		(333)			Net cash used in investing activities	(554)		(415)
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:

Proceeds from exercise of stock options							Proceeds from exercise of stock options	4		4
Taxes paid from net share settlements for stock-based compensation	Taxes paid from net share settlements for stock-based compensation	(18)		(39)			Taxes paid from net share settlements for stock-based compensation	(50)		(102)
Revolving credit facility, net	Revolving credit facility, net	143		510			Revolving credit facility, net	55		421
Proceeds from long-term borrowings, net of costs	Proceeds from long-term borrowings, net of costs	—		499			Proceeds from long-term borrowings, net of costs	—		499
Principal payments of long-term borrowings	Principal payments of long-term borrowings	(177)		(2)			Principal payments of long-term borrowings	(180)		(3)

Payment of contingent consideration for business acquisition	Payment of contingent consideration for business acquisition	(3)		(3)			Payment of contingent consideration for business acquisition	(3)		(3)
Distribution to parent related to Tax Sharing Agreement	Distribution to parent related to Tax Sharing Agreement	—		(11)			Distribution to parent related to Tax Sharing Agreement	—		(8)
Common stock repurchased and retired	Common stock repurchased and retired	(199)		(415)			Common stock repurchased and retired	(274)		(599)
Dividends paid	Dividends paid	(188)		(1,159)			Dividends paid	(281)		(1,245)
Net cash used in financing activities	Net cash used in financing activities	(442)		(620)			Net cash used in financing activities	(729)		(1,036)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(6)		(65)			Net decrease in cash, cash equivalents and restricted cash	(4)		(151)
Cash, cash equivalents and restricted cash at beginning of period (1)	Cash, cash equivalents and restricted cash at beginning of period (1)	65		199			Cash, cash equivalents and restricted cash at beginning of period (1)	65		199
Cash, cash equivalents and restricted cash at end of period (1)	Cash, cash equivalents and restricted cash at end of period (1)	$	59	$	134		Cash, cash equivalents and restricted cash at end of period (1)	$	61	$	48

See accompanying notes to the unaudited consolidated financial statements.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(UNAUDITED)


		For the Six Months Ended June 30,				For the Nine Months Ended September 30,
(in millions)	(in millions)	2023		2022			(in millions)	2023		2022
Supplemental Disclosure of Cash and Non-Cash Flow Information	Supplemental Disclosure of Cash and Non-Cash Flow Information						Supplemental Disclosure of Cash and Non-Cash Flow Information
Cash paid during the period for:	Cash paid during the period for:						Cash paid during the period for:
Interest, net of amounts capitalized	Interest, net of amounts capitalized	$	205	$	205		Interest, net of amounts capitalized	$	399	$	400
Income taxes paid	Income taxes paid	$	177	$	145		Income taxes paid	$	251	$	215
Non-cash investing and financing activities:	Non-cash investing and financing activities:						Non-cash investing and financing activities:
Capital lease obligations incurred to acquire assets	Capital lease obligations incurred to acquire assets	$	7	$	3		Capital lease obligations incurred to acquire assets	$	7	$	7

Accumulated other comprehensive income (loss), net of tax	Accumulated other comprehensive income (loss), net of tax	$	7	$	(2)		Accumulated other comprehensive income (loss), net of tax	$	1	$	(23)
Capital contribution from (to) Liberty Media pursuant to Tax Sharing Agreement	Capital contribution from (to) Liberty Media pursuant to Tax Sharing Agreement	$	4	$	(14)		Capital contribution from (to) Liberty Media pursuant to Tax Sharing Agreement	$	5	$	(14)

(1)The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet. The restricted cash balances are primarily due to letters of credit which have been issued to the landlords of leased office space. The terms of the letters of credit primarily extend beyond one year.


(in millions)	(in millions)	June 30, 2023		December 31, 2022		June 30, 2022		December 31, 2021		(in millions)	September 30, 2023		December 31, 2022		September 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	51	$	57	$	126	$	191	Cash and cash equivalents	$	53	$	57	$	39	$	191
Restricted cash included in Other long-term assets	Restricted cash included in Other long-term assets	8		8		8		8		Restricted cash included in Other long-term assets	8		8		9		8
Total cash, cash equivalents and restricted cash at end of period	Total cash, cash equivalents and restricted cash at end of period	$	59	$	65	$	134	$	199	Total cash, cash equivalents and restricted cash at end of period	$	61	$	65	$	48	$	199

See accompanying notes to the unaudited consolidated financial statements.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

(1)Business & Basis of Presentation

This Quarterly Report on Form 10-Q presents information for Sirius XM Holdings Inc. and its subsidiaries (collectively “Holdings”). The terms “Holdings,” “we,” “us,” “our,” and “our company” as used herein, and unless otherwise stated or indicated by context, refer to Sirius XM Holdings Inc. and its subsidiaries. “Sirius XM” refers to our wholly owned subsidiary Sirius XM Radio Inc. and its subsidiaries. “Pandora” refers to Sirius XM's wholly owned subsidiary Pandora Media, LLC and its subsidiaries. Holdings has no operations independent of Sirius XM and Pandora.

Business

We operate two complementary audio entertainment businesses - one of which we refer to as “SiriusXM” and the second of which we refer to as “Pandora and Off-platform”.

SiriusXM

Our SiriusXM business features music, sports, entertainment, comedy, talk, news, traffic and weather channels and other content, as well as podcasts and infotainment services, in the United States on a subscription fee basis. SiriusXM packages include live, curated and certain exclusive and on demand programming. The SiriusXM service is distributed through our two proprietary satellite radio systems and streamed via applications for mobile devices, home devices and other consumer electronic equipment. Satellite radios are primarily distributed through automakers, retailers and our website. Our Sirius XM service is also available through our in-car user interface, which we call “360L,” that combines our satellite and streaming services into a single, cohesive in-vehicle entertainment experience.

The primary source of revenue from our SiriusXM business is subscription fees, with most of our customers subscribing to monthly, quarterly, semi-annual or annual plans. We also derive revenue from advertising on select non-music channels, which is sold under the SXM Media brand, direct sales of our satellite radios and accessories, and other ancillary services. As of ~~June~~September 30, 2023, our SiriusXM business had approximately 34.0 million subscribers.

In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers. These services are designed to enhance the safety, security and driving experience of consumers. We also offer a suite of data services that includes graphical weather and fuel prices, a traffic information service, and real-time weather services in boats and airplanes.

SiriusXM also holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”). Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics.

Pandora and Off-platform

Our Pandora and Off-platform business operates a music and podcast streaming discovery platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through computers, tablets, mobile devices, vehicle speakers or connected devices. Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists, podcasts and select SiriusXM content as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium). As of ~~June~~September 30, 2023, Pandora had approximately ~~6.2~~6.1 million subscribers.

The majority of revenue from Pandora is generated from advertising on our Pandora ad-supported radio service which is sold under the SXM Media brand. We also derive subscription revenue from our Pandora Plus and Pandora Premium subscribers.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

addition, through AdsWizz Inc., we provide a comprehensive digital audio and programmatic advertising technology platform, which connects audio publishers and advertisers with a variety of ad insertion, campaign trafficking, yield optimization, programmatic buying, marketplace and podcast monetization solutions.

Liberty Media

As of ~~June~~September 30, 2023, Liberty Media Corporation (“Liberty Media”) beneficially owned, directly and indirectly, ~~approximately 83%~~83.5% of the outstanding shares of our common stock. As a result, we are a “controlled company” for the purposes of the NASDAQ corporate governance requirements. Refer to Note 11 for more information regarding related parties.

Basis of Presentation

The accompanying unaudited consolidated financial statements of Holdings have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany transactions have been eliminated in consolidation. Certain numbers in our prior period consolidated financial statements and footnotes have been reclassified or consolidated to conform to our current period presentation.

In the opinion of our management, all normal recurring adjustments necessary for a fair presentation of our unaudited consolidated financial statements as of ~~June~~September 30, 2023 and for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 have been made.

Interim results are not necessarily indicative of the results that may be expected for a full year. This Quarterly Report on Form 10-Q should be read together with our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 2, 2023.

Public companies are required to disclose certain information about their reportable operating segments. Operating segments are defined as significant components of an enterprise for which separate financial information is available and is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources to an individual segment and in assessing performance of the segment. We have determined that we have two reportable segments as our chief operating decision maker, our Chief Executive Officer, assesses performance and allocates resources based on the financial results of these segments. Refer to Note 17 for information related to our segments.

We have evaluated events subsequent to the balance sheet date and prior to the filing of this Quarterly Report on Form 10-Q for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and have determined that no events have occurred that would require adjustment to our unaudited consolidated financial statements. For a discussion of subsequent events that do not require adjustment to our unaudited consolidated financial statements refer to Note 18.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Estimates, by their nature, are based on judgment and available information. Actual results could differ materially from those estimates. Significant estimates inherent in the preparation of the accompanying unaudited consolidated financial statements include asset impairment, depreciable lives of our satellites, share-based payment expense and income taxes.

(2)Summary of Significant Accounting Policies

Fair Value Measurements

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are based on unadjusted quoted prices in active markets for identical instruments. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. As of ~~June~~September 30, 2023 and December 31, 2022, the carrying amounts of cash and cash equivalents, receivables and accounts payable approximated fair value due to the short-term nature of these instruments.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

Our liabilities measured at fair value were as follows:


		June 30, 2023						December 31, 2022							September 30, 2023						December 31, 2022
		Level 1	Level 2		Level 3	Total Fair Value		Level 1	Level 2		Level 3	Total Fair Value			Level 1	Level 2		Level 3	Total Fair Value		Level 1	Level 2		Level 3	Total Fair Value
Liabilities:	Liabilities:													Liabilities:
Debt (a)	Debt (a)	—	$	8,235	—	$	8,235	—	$	8,362	—	$	8,362	Debt (a)	—	$	8,064	—	$	8,064	—	$	8,362	—	$	8,362

(a)The fair value for non-publicly traded debt is based upon estimates from a market maker and brokerage firm. Refer to Note 12 for information related to the carrying value of our debt as of ~~June~~September 30, 2023 and December 31, 2022.

(3)Acquisitions

On May 20, 2022, we completed an acquisition for total cash consideration of $93. We recognized goodwill of $69, indefinite-lived intangible assets of $1 and other assets of $23. The other assets represent acquired content which will be amortized over its estimated useful life to Programming and content in our unaudited consolidated statements of comprehensive income.

On January 12, 2022, we completed an acquisition for total cash consideration of $44. We recognized goodwill of $29, other definite-lived intangible assets of $19 and liabilities of $4.

There were no acquisition related costs recognized for the three and ~~six~~nine months ended ~~June~~September 30, 2023. Acquisition related costs for the three and ~~six~~nine months ended ~~June~~September 30, 2022 were $1 and $3, respectively.

(4)Restructuring Costs

During the three and ~~six~~nine months ended ~~June~~September 30, 2023, restructuring costs were $5$4 and ~~$35,~~$39, respectively. ~~During the six months ended June 30,~~In 2023, we initiated measures to pursue greater efficiency and to realign our business and focus on strategic priorities. As part of these measures, we reduced the size of our workforce by approximately 475 roles, or 8%. We recorded a charge of ~~$28~~$31 primarily related to severance and other related costs. In addition, we vacated one of our leased locations and recorded an impairment of $5 to reduce the carrying value of the related right of use asset to its estimated fair value. Additionally, we accrued expenses of $2 for which we will not recognize any future economic benefits. The restructuring and related impairment charges were recorded to Impairment, restructuring and acquisition costs in our unaudited consolidated statements of comprehensive income.

~~No restructuring costs were recognized during~~During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we evaluated our office space needs, and, based on this, we vacated certain office spaces and recorded an impairment of $16 to reduce the carrying value of the related right of use assets to their estimated fair values. Additionally, we wrote off fixed assets of $4 in connection with furniture and equipment located at the impaired office spaces. Separately, we performed an analysis surrounding initiatives that we are no longer pursuing and recorded an impairment of $43 associated with terminated software projects and an impairment of $5 related to severance. The total charge of $68 was recorded to Impairment, restructuring and acquisition costs in our unaudited consolidated statements of comprehensive income for the three and nine months ended September 30, 2022.

(5)Earnings per Share

Basic net income per common share is calculated by dividing the income available to common stockholders by the weighted average common shares outstanding during each reporting period. Diluted net income per common share adjusts the weighted average number of common shares outstanding for the potential dilution that could occur if common stock equivalents (stock options, restricted stock units and convertible debt) were exercised or converted into common stock, calculated using the treasury stock method. We had no participating securities during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

Common stock equivalents of ~~175~~157 and 8493 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~162~~155 and 8186 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively, were excluded from the calculation of diluted net income per common share as the effect would have been anti-dilutive.


		For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023		2022		2023		2022				2023		2022		2023		2022
Numerator:	Numerator:										Numerator:
Net Income available to common stockholders for basic net income per common share	Net Income available to common stockholders for basic net income per common share	$	310	$	292	$	543	$	601		Net Income available to common stockholders for basic net income per common share	$	363	$	247	$	906	$	848
Effect of interest on assumed conversions of convertible notes, net of tax	Effect of interest on assumed conversions of convertible notes, net of tax	—		1		1		3			Effect of interest on assumed conversions of convertible notes, net of tax	—		1		1		3
Net Income available to common stockholders for dilutive net income per common share	Net Income available to common stockholders for dilutive net income per common share	$	310	$	293	$	544	$	604		Net Income available to common stockholders for dilutive net income per common share	$	363	$	248	$	907	$	851
Denominator:	Denominator:										Denominator:
Weighted average common shares outstanding for basic net income per common share	Weighted average common shares outstanding for basic net income per common share	3,861		3,928		3,875		3,938			Weighted average common shares outstanding for basic net income per common share	3,845		3,900		3,865		3,925
Weighted average impact of assumed convertible notes	Weighted average impact of assumed convertible notes	3		31		3		31			Weighted average impact of assumed convertible notes	3		31		3		31
Weighted average impact of dilutive equity instruments	Weighted average impact of dilutive equity instruments	9		46		14		47			Weighted average impact of dilutive equity instruments	17		37		16		45
Weighted average shares for diluted net income per common share	Weighted average shares for diluted net income per common share	3,873		4,005		3,892		4,016			Weighted average shares for diluted net income per common share	3,865		3,968		3,884		4,001
Net income per common share:	Net income per common share:										Net income per common share:
Basic	Basic	$	0.08	$	0.07	$	0.14	$	0.15		Basic	$	0.09	$	0.06	$	0.23	$	0.22
Diluted	Diluted	$	0.08	$	0.07	$	0.14	$	0.15		Diluted	$	0.09	$	0.06	$	0.23	$	0.21

(6)Receivables, net

Receivables, net, includes customer accounts receivable, receivables from distributors and other receivables. We do not have any customer receivables that individually represent more than ten percent of our receivables.

Customer accounts receivable, net, includes receivables from our subscribers and advertising customers, including advertising agencies and other customers, and is stated at amounts due, net of an allowance for doubtful accounts. Our allowance for doubtful accounts is based upon our assessment of various factors. We consider historical experience, the age of the receivable balances, current economic conditions, industry experience and other factors that may affect the counterparty’s ability to pay. Bad debt expense is included in Customer service and billing expense in our unaudited consolidated statements of comprehensive income.

Receivables from distributors primarily include billed and unbilled amounts due from automakers for services included in the sale or lease price of vehicles, as well as billed amounts due from wholesale distributors of our satellite radios. Other receivables primarily include amounts due from manufacturers of our radios, modules and chipsets where we are entitled to subsidies and royalties based on the number of units produced. We have not established an allowance for doubtful accounts for our receivables from distributors or other receivables as we have historically not experienced any significant collection issues with automakers or other third parties and do not expect issues in the foreseeable future.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

Receivables, net, consists of the following:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Gross customer accounts receivable	Gross customer accounts receivable	$	595	$	585	Gross customer accounts receivable	$	593	$	585
Allowance for doubtful accounts	Allowance for doubtful accounts	(14)		(11)		Allowance for doubtful accounts	(14)		(11)
Customer accounts receivable, net	Customer accounts receivable, net	$	581	$	574	Customer accounts receivable, net	$	579	$	574
Receivables from distributors	Receivables from distributors	58		53		Receivables from distributors	52		53
Other receivables	Other receivables	21		28		Other receivables	28		28
Total receivables, net	Total receivables, net	$	660	$	655	Total receivables, net	$	659	$	655

(7)Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired in business combinations. Our annual impairment assessment of our two reporting units is performed as of the fourth quarter of each year, and an assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. ASC 350, Intangibles - Goodwill and Other, states that an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Our Sirius XM reporting unit, which has an allocated goodwill balance of $2,290, had a negative carrying amount as of ~~June~~September 30, 2023.

As of ~~June~~September 30, 2023, there were no indicators of impairment, and no impairment losses were recorded for goodwill during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. As of ~~June~~September 30, 2023, the cumulative balance of goodwill impairments recorded was $5,722, of which $4,766 was recognized during the year ended December 31, 2008 and is included in the carrying amount of the goodwill allocated to our Sirius XM reporting unit and $956 was recognized during the year ended December 31, 2020 and is included in the carrying amount of the goodwill allocated to our Pandora and Off-platform reporting unit.

As of each of ~~June~~September 30, 2023 and December 31, 2022, the carrying amount of goodwill for our Sirius XM and Pandora and Off-platform reporting units was $2,290 and $959, respectively.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

(8)Intangible Assets

Our intangible assets include the following:


			June 30, 2023						December 31, 2022								September 30, 2023						December 31, 2022
		Weighted Average Useful Lives	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value			Weighted Average Useful Lives	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Indefinite life intangible assets:	Indefinite life intangible assets:														Indefinite life intangible assets:
FCC licenses	FCC licenses	Indefinite	$	2,084	$	—	$	2,084	$	2,084	$	—	$	2,084	FCC licenses	Indefinite	$	2,084	$	—	$	2,084	$	2,084	$	—	$	2,084
Trademarks	Trademarks	Indefinite	250		—		250		250		—		250		Trademarks	Indefinite	250		—		250		250		—		250
Definite life intangible assets:	Definite life intangible assets:														Definite life intangible assets:
OEM relationships	OEM relationships	15 years	220		(142)		78		220		(135)		85		OEM relationships	15 years	220		(145)		75		220		(135)		85
Licensing agreements	Licensing agreements	12 years	45		(45)		—		45		(45)		—		Licensing agreements	12 years	3		(3)		—		45		(45)		—
Software and technology	Software and technology	7 years	29		(21)		8		31		(21)		10		Software and technology	7 years	29		(22)		7		31		(21)		10
Due to Acquisitions recorded to Pandora and Off-platform Reporting Unit:	Due to Acquisitions recorded to Pandora and Off-platform Reporting Unit:														Due to Acquisitions recorded to Pandora and Off-platform Reporting Unit:
Indefinite life intangible assets:	Indefinite life intangible assets:														Indefinite life intangible assets:
Trademarks	Trademarks	Indefinite	312		—		312		312		—		312		Trademarks	Indefinite	312		—		312		312		—		312
Definite life intangible assets:	Definite life intangible assets:														Definite life intangible assets:
Customer relationships	Customer relationships	8 years	442		(252)		190		442		(225)		217		Customer relationships	8 years	442		(266)		176		442		(225)		217
Software and technology	Software and technology	5 years	391		(336)		55		391		(299)		92		Software and technology	5 years	391		(354)		37		391		(299)		92
Total intangible assets	Total intangible assets		$	3,773	$	(796)	$	2,977	$	3,775	$	(725)	$	3,050	Total intangible assets		$	3,731	$	(790)	$	2,941	$	3,775	$	(725)	$	3,050

Indefinite Life Intangible Assets

We have identified our FCC licenses and XM and Pandora trademarks as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use.

We hold FCC licenses to operate our satellite digital audio radio service and provide ancillary services. Each of the FCC licenses authorizes us to use radio spectrum, a reusable resource that does not deplete or exhaust over time.

Our annual impairment assessment of our identifiable indefinite lived intangible assets is performed as of the fourth quarter of each year. An assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. As of ~~June~~September 30, 2023, there were no indicators of impairment, and no impairment loss was recognized for intangible assets with indefinite lives during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

Definite Life Intangible Assets

Amortization expense for all definite life intangible assets was $36 and $39 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$73~~$109 and ~~$78~~$117 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. There were ~~impairments~~retirements of definite lived intangible assets of $2$44 and we recognized a related impairment loss of $1 during ~~three and six~~nine months ended ~~June~~September 30, 2023. There were no retirements or impairments of definite lived intangible assets during the three and ~~six~~nine months ended ~~June~~September 30, 2022.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

The expected amortization expense for each of the fiscal years 2023 through 2027 and for periods thereafter is as follows:


Years ending December 31,	Years ending December 31,	Amount		Years ending December 31,	Amount
2023 (remaining)	2023 (remaining)	$	72	2023 (remaining)	$	36
2024	2024	77		2024	77
2025	2025	71		2025	71
2026	2026	71		2026	71
2027	2027	25		2027	25
Thereafter	Thereafter	15		Thereafter	15
Total definite life intangible assets, net	Total definite life intangible assets, net	$	331	Total definite life intangible assets, net	$	295

(9)Property and Equipment

Property and equipment, net, consists of the following:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Satellite system	Satellite system	$	1,598	$	1,841	Satellite system	$	1,598	$	1,841
Terrestrial repeater network	Terrestrial repeater network	119		118		Terrestrial repeater network	119		118
Leasehold improvements	Leasehold improvements	105		100		Leasehold improvements	107		100
Broadcast studio equipment	Broadcast studio equipment	140		133		Broadcast studio equipment	141		133
Capitalized software and hardware	Capitalized software and hardware	1,842		1,821		Capitalized software and hardware	1,850		1,821
Satellite telemetry, tracking and control facilities	Satellite telemetry, tracking and control facilities	80		76		Satellite telemetry, tracking and control facilities	82		76
Furniture, fixtures, equipment and other	Furniture, fixtures, equipment and other	108		89		Furniture, fixtures, equipment and other	109		89
Land	Land	32		32		Land	32		32
Building	Building	72		70		Building	73		70
Construction in progress	Construction in progress	560		313		Construction in progress	738		313
Total property and equipment	Total property and equipment	4,656		4,593		Total property and equipment	4,849		4,593
Accumulated depreciation	Accumulated depreciation	(3,040)		(3,094)		Accumulated depreciation	(3,134)		(3,094)
Property and equipment, net	Property and equipment, net	$	1,616	$	1,499	Property and equipment, net	$	1,715	$	1,499

Construction in progress consists of the following:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Satellite system	Satellite system	$	361	$	212	Satellite system	$	449	$	212
Terrestrial repeater network	Terrestrial repeater network	13		10		Terrestrial repeater network	17		10
Capitalized software and hardware	Capitalized software and hardware	171		56		Capitalized software and hardware	249		56
Other	Other	15		35		Other	23		35
Construction in progress	Construction in progress	$	560	$	313	Construction in progress	$	738	$	313

Depreciation and amortization expense on property and equipment was ~~$103~~$94 and ~~$96~~$95 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$202~~$296 and ~~$192~~$287 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, we retired property and equipment of ~~$16~~$2 and ~~$269,~~$271, respectively, and recorded related impairment charges of ~~$10~~$1 and ~~$13,~~$14, respectively, primarily related to terminated software projects. During the ~~six~~three and nine months ended ~~June~~September 30, 2022, we wrote off furniture and equipment in connection with impaired office space leases and we disposed of assets associated with software development initiatives that we are no longer pursuing. Refer to Note 4 for more information. During the three and nine months ended September 30, 2022, we retired property and equipment ~~with a cost~~ of ~~$22~~$59 and ~~a net book value~~$81, respectively.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

We capitalize a portion of the interest on funds borrowed to finance the construction and launch of our satellites. Capitalized interest is recorded as part of the asset’s cost and depreciated over the satellite’s useful life. Capitalized interest costs were $4 and $1 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and $6$10 and $2$3 for the ~~six~~nine months ended

~~Table of Contents~~

~~SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(UNAUDITED)~~

~~(Dollars and shares in millions, except per share amounts)~~

~~June~~ September 30, 2023 and 2022, respectively, which related to the construction of our SXM-9, SXM-10, SXM-11 and SXM-12 satellites. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $3$5 and $4 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$7 and $9~~$13 for each of the ~~six~~nine months ended ~~June~~September 30, 2023 and ~~2022, respectively.~~2022.

Satellites

As of ~~June~~September 30, 2023, we operated a fleet of five satellites. Each satellite requires an FCC license, and prior to the expiration of each license, we are required to apply for a renewal of the FCC satellite license. The renewal and extension of our licenses is reasonably certain at minimal cost, which is expensed as incurred. The chart below provides certain information on our satellites as of ~~June~~September 30, 2023:


Satellite Description	Year Delivered	Estimated End of Depreciable Life	FCC License Expiration Year

SIRIUS FM-5	2009	2024	2025
SIRIUS FM-6	2013	2028	2030
XM-3	2005	2020	2026

XM-5	2010	2025	2026
SXM-8	2021	2036	2029

During the three months ended March 31, 2023, we removed our XM-4 satellite from service and we are in the process of de-orbiting the satellite, which we expect to be completed by the end of 2023. Our XM-3 satellite remains available as an in-orbit spare.

(10)Leases

We have operating and finance leases for offices, terrestrial repeaters, data centers and certain equipment. Our leases have remaining lease terms of less than 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. We elected the practical expedient to account for the lease and non-lease components as a single component. Additionally, we elected the practical expedient to not recognize right-of-use assets or lease liabilities for short-term leases, which are those leases with a term of twelve months or less at the lease commencement date.

The components of lease expense were as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Operating lease cost	Operating lease cost	$	11	$	17	$	32	$	30	Operating lease cost	$	15	$	16	$	46	$	46
Finance lease cost	Finance lease cost	1		—		1		—		Finance lease cost	2		—		3		—
Sublease income	Sublease income	(1)		—		(2)		(1)		Sublease income	(1)		(1)		(2)		(2)
Total lease cost	Total lease cost	$	11	$	17	$	31	$	29	Total lease cost	$	16	$	15	$	47	$	44

During the ~~six~~nine months ended ~~June~~September 30, 2023, we ceased using one of our leased locations and recorded an impairment charge of $5 to write down the carrying value of the right-of-use asset ~~for this location~~ to its estimated fair value. Refer to Note 4 for additional information.

(11)Related Party Transactions

In the normal course of business, we enter into transactions with related parties such as Sirius XM Canada and SoundCloud.

~~Liberty Media~~

As of June 30, 2023, Liberty Media beneficially owned, directly and indirectly, approximately 83% of the outstanding shares of our common stock. Liberty Media has three of its executives and one of its directors on our board of

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

Liberty Media

As of September 30, 2023, Liberty Media beneficially owned, directly and indirectly, 83.5% of the outstanding shares of our common stock. Liberty Media has three of its executives and one of its directors on our board of directors. Gregory B. Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of our board of directors.

On February 1, 2021, Holdings entered into a tax sharing agreement with Liberty Media governing the allocation of consolidated U.S. income tax liabilities and setting forth agreements with respect to other tax matters. The tax sharing agreement was negotiated and approved by a special committee of Holdings’ board of directors, all of whom are independent of Liberty Media. Refer to Note 16 for more information regarding the tax sharing agreement.

On September 22, 2023, the special committee of independent directors of the board of Holdings (the “Special Committee”) received a non-binding proposal from Liberty Media regarding a potential transaction involving Holdings. The potential transaction would consist of the separation of the assets and liabilities attributed to the Liberty SiriusXM tracking stock group from Liberty Media through the split-off of a newly formed company (“Newco”) and the subsequent combination of Newco and Holdings. As a result of the potential transaction, the holders of Liberty SiriusXM tracking stock and Holdings common stock would all hold one class of common stock of the combined company (the “Proposal”). The Special Committee is evaluating the Proposal. There can be no assurance that the Proposal, or any other transaction, will be completed or of the terms and conditions of any such transaction.

Sirius XM Canada

Sirius XM holds a 70% equity interest and 33% voting interest in Sirius XM Canada, a privately held corporation. We own 591 shares of preferred stock of Sirius XM Canada, which has a liquidation preference of one Canadian dollar per share.

Sirius XM Canada is accounted for as an equity method investment, and its results are not consolidated in our unaudited consolidated financial statements. Sirius XM Canada does not meet the requirements for consolidation as we do not have the ability to direct the most significant activities that impact Sirius XM Canada's economic performance.

On March 15, 2022, Sirius XM and Sirius XM Canada entered into an amended and restated services and distribution agreement. Pursuant to the amended and restated services and distribution agreement, the fee payable by Sirius XM Canada to Sirius XM was modified from a fixed percentage of revenue to a variable fee, based on a target operating profit for Sirius XM Canada. Such variable fee is expected to be evaluated annually based on comparable companies. In accordance with the amended and restated services and distribution agreement, the fee is payable on a monthly basis, in arrears, beginning January 1, 2022.

Our related party long-term assets as of ~~June~~September 30, 2023 and December 31, 2022 included the carrying value of our investment balance in Sirius XM Canada of ~~$426~~$419 and $412, respectively, and, as of each of ~~June~~September 30, 2023 and December 31, 2022, also included $8, for the long-term value of the outstanding loan to Sirius XM Canada.

Sirius XM Canada paid gross dividends to us of less than $1 during the three months ended ~~June~~September 30, 2023, and $1 and less than $1 during ~~each of~~ the ~~six~~nine months ended ~~June~~September 30, 2023 and ~~2022.~~2022, respectively. No dividends were paid during the three months ended ~~June~~September 30, 2022. Dividends are first recorded as a reduction to our investment balance in Sirius XM Canada to the extent a balance exists and then as Other (expense) income for any remaining portion.

We recorded revenue from Sirius XM Canada as Other revenue in our unaudited consolidated statements of comprehensive income of ~~$26~~$27 and ~~$28~~$29 during the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$51~~$78 and ~~$55~~$84 during the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

SoundCloud

We have an investment in SoundCloud which is accounted for as an equity method investment and recorded in Related party long-term assets in our unaudited consolidated balance sheets. Sirius XM has appointed two individuals to serve on SoundCloud's ten-member board of managers. Sirius XM's share of SoundCloud's net ~~loss~~income (loss) was less than $1 and $2$(1) for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and $2$(2) and $3$(4) for the ~~six~~nine months ended ~~June~~

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

September 30, 2023 and 2022, respectively, which was recorded in Other (expense) income in our unaudited consolidated statements of comprehensive income.

In addition to our investment in SoundCloud, Pandora has an agreement with SoundCloud to be its exclusive ad sales representative in the US and certain European countries. Through this arrangement, Pandora offers advertisers the ability to execute campaigns across the Pandora and SoundCloud platforms. We recorded revenue share expense related to this agreement of $14 and $13 for ~~each of~~ the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$25~~$39 and ~~$27~~$40 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. We also had related party liabilities of ~~$18 and~~ $19 as of ~~June~~each of September 30, 2023 and December 31, 2022 ~~respectively,~~ related to this agreement.

~~Table of Contents~~

~~SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(UNAUDITED)~~

~~(Dollars and shares in millions, except per share amounts)~~

(12)Debt

Our debt as of ~~June~~September 30, 2023 and December 31, 2022 consisted of the following:

Principal Amount at

Carrying value(a) at

Principal Amount at

Carrying value(a) at

Issuer / Borrower

Issued

Debt

Maturity Date

Interest
Payable

June 30, 2023

December 31, 2022

Issuer / Borrower

Issued

Debt

Maturity Date

Interest
Payable

September 30, 2023

December 31, 2022

Pandora
(c) (d)

June 2018

1.75% Convertible Senior Notes

December 1, 2023

semi-annually on June 1 and December 1

193

Pandora
(c) (d)

June 2018

1.75% Convertible Senior Notes

December 1, 2023

semi-annually on June 1 and December 1

193

Sirius XM
(b) (f)

April 2022

Incremental Term Loan

April 11, 2024

variable fee paid monthly

500

Sirius XM
(b) (f)

April 2022

Incremental Term Loan

April 11, 2024

variable fee paid monthly

500

Sirius XM
(b)

August 2021

3.125% Senior Notes

September 1, 2026

semi-annually on March 1 and September 1

1,000

993

992

Sirius XM
(b)

August 2021

3.125% Senior Notes

September 1, 2026

semi-annually on March 1 and September 1

1,000

993

992

Sirius XM
(b)

July 2017

5.00% Senior Notes

August 1, 2027

semi-annually on February 1 and August 1

1,500

1,493

1,492

Sirius XM
(b)

July 2017

5.00% Senior Notes

August 1, 2027

semi-annually on February 1 and August 1

1,500

1,494

1,492

Sirius XM
(b)

June 2021

4.00% Senior Notes

July 15, 2028

semi-annually on January 15 and July 15

2,000

1,983

1,982

Sirius XM
(b)

June 2021

4.00% Senior Notes

July 15, 2028

semi-annually on January 15 and July 15

2,000

1,984

1,982

Sirius XM
(b)

June 2019

5.500% Senior Notes

July 1, 2029

semi-annually on January 1 and July 1

1,250

1,241

1,240

Sirius XM
(b)

June 2019

5.500% Senior Notes

July 1, 2029

semi-annually on January 1 and July 1

1,250

1,241

1,240

Sirius XM
(b)

June 2020

4.125% Senior Notes

July 1, 2030

semi-annually on January 1 and July 1

1,500

1,487

Sirius XM
(b)

June 2020

4.125% Senior Notes

July 1, 2030

semi-annually on January 1 and July 1

1,500

1,488

1,487

Sirius XM
(b)

August 2021

3.875% Senior Notes

September 1, 2031

semi-annually on March 1 and September 1

1,500

1,486

1,485

Sirius XM
(b)

August 2021

3.875% Senior Notes

September 1, 2031

semi-annually on March 1 and September 1

1,500

1,486

1,485

Sirius XM
(e)

December 2012

Senior Secured Revolving Credit Facility (the "Credit Facility")

August 31, 2026

variable fee paid quarterly

223

Sirius XM
(e)

December 2012

Senior Secured Revolving Credit Facility (the "Credit Facility")

August 31, 2026

variable fee paid quarterly

135

Sirius XM

Various

Finance leases

Various

n/a

Sirius XM

Various

Finance leases

Various

n/a

Total Debt

9,443

9,463

Total Debt

9,358

9,463

Less: total current maturities

525

196

Less: total current maturities

525

196

Less: total deferred financing costs

Total long-term debt

8,908

9,256

Total long-term debt

8,823

9,256

(a)The carrying value of the obligations is net of any remaining unamortized original issue discount.

(b)All material domestic subsidiaries, including Pandora and its subsidiaries, that guarantee the Credit Facility have guaranteed the Incremental Term Loan and these notes.

(c)Holdings has unconditionally guaranteed all of the payment obligations of Pandora under these notes.

(d)We acquired $193 in principal amount of the 1.75% Convertible Senior Notes due 2023 as part of the acquisition of Pandora Media, Inc. in 2019. During the ~~six~~nine months ended ~~June~~September 30, 2023, certain investors exercised their right to require a Special Repurchase, as defined in the indenture governing such notes, and Pandora repurchased $173 in outstanding principal amount of ~~its~~the 1.75% Convertible Senior Notes due 2023 with cash for an aggregate purchase price equal to 100% of the principal amount of the notes repurchased plus accrued and unpaid interest to the date of repurchase. ~~The 1.75% Convertible Senior Notes due 2023 were not convertible into common stock and were not redeemable as of June 30, 2023.~~ On or after July 1, 2023 and prior to the close of business on November 29, 2023, the 1.75% Convertible

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

Senior Notes due 2023 are convertible into Holdings’ common stock at the holders’ option at the applicable conversion rate in effect on the relevant conversion date.

(e)In August 2021, Sirius XM entered into an amendment to extend the maturity of the $1,750 Credit Facility to August 31, 2026. ~~In March 2023, Sirius XM entered into an amendment to the Credit Facility to provide for the LIBOR transition on borrowings on or after July 1, 2023.~~ Sirius XM's obligations under the Credit Facility are guaranteed by certain of its material domestic subsidiaries, including Pandora and its subsidiaries, and are secured by a lien on substantially all of Sirius XM's assets and the assets of its material domestic subsidiaries. ~~Until June 30,~~From and after July 1, 2023, ~~interest on~~Sirius XM borrowings ~~were payable on a monthly basis and accrued at a rate~~are based on ~~either~~ the Secured Overnight Financing Rate ~~(“SOFR”) or LIBOR~~ plus an applicable ~~rate. On or after July 1, 2023, borrowings~~rate based on ~~LIBOR as the benchmark rate are no longer be available.~~its debt to operating cash flow ratio. Sirius XM is also required to pay a variable fee on the average daily unused portion of the Credit

~~Table of Contents~~

~~SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued~~

~~(UNAUDITED)~~

~~(Dollars and shares in millions, except per share amounts)~~

Facility which is payable on a quarterly basis. The variable rate for the unused portion of the Credit Facility was 0.25% per annum as of ~~June~~September 30, 2023. All of Sirius XM's outstanding borrowings under the Credit Facility are classified as Long-term debt within our unaudited consolidated balance sheets due to the long-term maturity of this debt.

(f)In April 2022, Sirius XM entered into an amendment to the Credit Facility to incorporate an Incremental Term Loan borrowing of $500 which matures on April 11, 2024. Interest on the Incremental Term Loan borrowing is based on SOFR plus an applicable rate.

Covenants and Restrictions

Under the Credit Facility, Sirius XM, our wholly owned subsidiary, must comply with a debt maintenance covenant that it cannot exceed a total leverage ratio, calculated as consolidated total debt to consolidated operating cash flow, of 5.0 to 1.0. The Credit Facility generally requires compliance with certain covenants that restrict Sirius XM's ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) merge or consolidate with another person, (vi) sell, assign, lease or otherwise dispose of all or substantially all of Sirius XM's assets, and (vii) make voluntary prepayments of certain debt, in each case subject to exceptions.

The indentures governing Sirius XM's notes restrict Sirius XM's non-guarantor subsidiaries' ability to create, assume, incur or guarantee additional indebtedness without such non-guarantor subsidiary guaranteeing each such series of notes on a pari passu basis. The indentures governing the notes also contain covenants that, among other things, limit Sirius XM's ability and the ability of its subsidiaries to create certain liens; enter into sale/leaseback transactions; and merge or consolidate.

Under Sirius XM's debt agreements, the following generally constitute an event of default: (i) a default in the payment of interest; (ii) a default in the payment of principal; (iii) failure to comply with covenants; (iv) failure to pay other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; (v) certain events of bankruptcy; (vi) a judgment for payment of money exceeding a specified aggregate amount; and (vii) voidance of subsidiary guarantees, subject to grace periods where applicable. If an event of default occurs and is continuing, our debt could become immediately due and payable.

The indenture governing the Pandora 2023 Notes (as defined below) contains covenants that limit Pandora’s ability to merge or consolidate and provides for customary events of default, which include nonpayment of principal or interest, breach of covenants, payment defaults or acceleration of other indebtedness and certain events of bankruptcy.

At ~~June~~September 30, 2023 and December 31, 2022, we were in compliance with our debt covenants.

Pandora Convertible Notes

Pandora's 1.75% Convertible Senior Notes due 2023 (the “Pandora 2023 Notes”) are unsecured, senior obligations of Pandora. Holdings has guaranteed the payment and performance obligations of Pandora under the Pandora 2023 Notes and the indenture governing the Pandora 2023 Notes.

The Pandora 2023 Notes will mature on December 1, 2023, unless earlier repurchased or redeemed by Pandora or converted in accordance with their terms. As of ~~June~~September 30, 2023, the conversion rate applicable to the Pandora 2023 Notes was ~~164.5988~~165.4277 shares of Holdings' common stock per one thousand principal amount of the Pandora 2023 Notes.

~~(13)Stockholders’ Equity~~

~~Common Stock, par value $0.001 per share~~

We are authorized to issue up to 9,000 shares of common stock. There were 3,845 and 3,891 shares of common stock issued and 3,844 and 3,891 shares of common stock outstanding on June 30, 2023 and December 31, 2022, respectively.

~~As of June 30, 2023, there were 212 shares of common stock reserved for issuance in connection with outstanding stock-based awards to members of our board of directors, employees and third parties.~~

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(13)Stockholders’ Equity

Common Stock, par value $0.001 per share

We are authorized to issue up to 9,000 shares of common stock. There were 3,840 and 3,891 shares of common stock issued and outstanding on September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, there were 220 shares of common stock reserved for issuance in connection with outstanding stock-based awards to members of our board of directors, employees and third parties.

Quarterly Dividends

During the ~~six~~nine months ended ~~June~~September 30, 2023, our board of directors declared and paid the following dividend:


Declaration Date	Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date	Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
January 25, 2023	January 25, 2023	$	0.0242	February 9, 2023	$	94	February 24, 2023	January 25, 2023	$	0.0242	February 9, 2023	$	94	February 24, 2023
April 19, 2023	April 19, 2023	$	0.0242	May 5, 2023	$	94	May 24, 2023	April 19, 2023	$	0.0242	May 5, 2023	$	94	May 24, 2023
July 26, 2023								July 26, 2023	$	0.0242	August 8, 2023	$	93	August 30, 2023

Stock Repurchase Program

As of ~~June~~September 30, 2023, our board of directors had approved for repurchase an aggregate of $18,000 of our common stock. Our board of directors did not establish an end date for this stock repurchase program. Shares of common stock may be purchased from time to time on the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, including transactions with Liberty Media and its affiliates, or otherwise. As of ~~June~~September 30, 2023, our cumulative repurchases since December 2012 under our stock repurchase program totaled ~~3,715~~3,731 shares for ~~$16,760,~~$16,834, and ~~$1,240~~$1,166 remained available for future share repurchases under our stock repurchase program.

The following table summarizes our total share repurchase activity for the ~~six~~nine months ended:
June 30, 2023 June 30, 2022
Share Repurchase Type Shares Amount Shares Amount
Open Market Repurchases (a)
53 $ 202 67 $ 417

~~(a)~~As of June 30, 2023, $3 of common stock repurchases had not settled, nor been retired, and were recorded as Treasury stock within our unaudited consolidated balance sheets and unaudited consolidated statement of stockholders’ equity (deficit).


	September 30, 2023			September 30, 2022
Share Repurchase Type	Shares	Amount		Shares	Amount
Open Market Repurchases	69	$	274	95	$	594

Preferred Stock, par value $0.001 per share

We are authorized to issue up to 50 shares of undesignated preferred stock with a liquidation preference of $0.001 per share. There were no shares of preferred stock issued or outstanding as of ~~June~~September 30, 2023 and December 31, 2022.

(14)Benefit Plans

We recognized share-based payment expense of ~~$42~~$48 and ~~$47~~$50 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$87~~$135 and ~~$92~~$143 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

2015 Long-Term Stock Incentive Plan

In May 2015, our stockholders approved the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (the “2015 Plan”). Employees, consultants and members of our board of directors are eligible to receive awards under the 2015 Plan. The 2015 Plan provides for the grant of stock options, restricted stock awards, restricted stock units and other stock-based awards that the Compensation Committee of our Board of Directors deems appropriate. Stock-based awards granted under the 2015 Plan are generally subject to a graded vesting requirement, which is generally three to four years from the grant date. Stock options generally expire ten years from the date of grant. Restricted stock units include performance-based restricted stock units (“PRSUs”), the vesting of which are subject to the achievement of performance goals and the employee's continued employment and generally cliff vest on the third anniversary of the grant date. Each restricted stock unit entitles the holder to

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receive one share of common stock upon vesting. As of ~~June~~September 30, 2023, ~~123~~100 shares of common stock were available for future grants under the 2015 Plan.

The Compensation Committee intends to award equity-based compensation to our senior management in the form of: stock options, restricted stock units, PRSUs, which will cliff vest after a performance period target established by the Compensation Committee is achieved, and PRSUs, which will cliff vest after a performance period based on the performance of our common stock relative to the companies included in the S&P 500 Index, which we refer to as a relative “TSR” or “total stockholder return” metric. TSRs based on the relative total stockholder return metric will only vest if our performance achieves at least the 25th percentile, with a target payout requiring performance at the 50th percentile. The settlement of

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~~(Dollars and shares in millions, except per share amounts)~~

PRSUs earned in respect of the applicable performance period will be generally subject to the executive’s continued employment with us through the date the total stockholder return performance is certified by the Compensation Committee.

Other Plans

We maintain six share-based benefit plans in addition to the 2015 Plan — the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the 2014 Stock Incentive Plan of AdsWizz Inc., the Pandora Media, Inc. 2011 Equity Incentive Plan, the Pandora Media, Inc. 2004 Stock Plan and the TheSavageBeast.com, Inc. 2000 Stock Incentive Plan. Excluding dividend equivalent units granted as a result of a declared dividend, no further awards may be made under these plans.

The following table summarizes the weighted-average assumptions used to compute the fair value of options granted to employees, members of our board of directors and non-employees:


		For the Three Months Ended June 30,		For the Six Months Ended June 30,		For the Three Months Ended September 30,			For the Nine Months Ended September 30,
		2023	2022	2023	2022			2023	2022	2023	2022
Risk-free interest rate	Risk-free interest rate	3.6%	3.0%	4.0%	1.5%		Risk-free interest rate	4.3%	2.9%	4.0%	1.6%
Expected life of options — years	Expected life of options — years	3.80	3.89	3.80	3.60		Expected life of options — years	3.76	2.71	3.80	3.52
Expected stock price volatility	Expected stock price volatility	34%	32%	31%	32%		Expected stock price volatility	42%	34%	32%	32%
Expected dividend yield	Expected dividend yield	2.6%	1.4%	2.0%	1.3%		Expected dividend yield	2.0%	1.3%	2.0%	1.3%

The following table summarizes stock option activity under our share-based plans for the ~~six~~nine months ended ~~June~~September 30, 2023:


		Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value			Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value

Outstanding as of December 31, 2022	Outstanding as of December 31, 2022	134	$	5.55				Outstanding as of December 31, 2022	134	$	5.55
Granted	Granted	9	$	4.92				Granted	9	$	4.92
Exercised	Exercised	(2)	$	3.52				Exercised	(9)	$	4.59
Forfeited, cancelled or expired	Forfeited, cancelled or expired	(7)	$	5.83				Forfeited, cancelled or expired	(7)	$	5.86
Outstanding as of June 30, 2023		134	$	5.53	5.11	$	23
Exercisable as of June 30, 2023		90	$	5.39	4.38	$	22
Outstanding as of September 30, 2023								Outstanding as of September 30, 2023	127	$	5.55	5.02	$	20
Exercisable as of September 30, 2023								Exercisable as of September 30, 2023	84	$	5.42	4.35	$	19

The weighted average grant date fair value per stock option granted during the ~~six~~nine months ended ~~June~~September 30, 2023 was $1.23. The total intrinsic value of stock options exercised during the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was $1$9 and ~~$24,~~$70, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2023, the number of net settled shares issued as a result of stock option exercises was ~~less than~~ 1.

We recognized share-based payment expense associated with stock options of ~~$7 and $9~~$8 for each of the three months ended ~~June~~September 30, 2023 and 2022, ~~respectively,~~ and ~~$15~~$23 and ~~$18~~$27 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

~~The following table summarizes the restricted stock unit, including PRSU, activity under our share-based plans for the six months ended June 30, 2023:~~

Shares Grant Date
Fair Value Per Share
Nonvested as of December 31, 2022 85 $ 6.38
Granted 12 $ 4.49
Vested (10) $ 6.65
Forfeited (9) $ 6.23
Nonvested as of June 30, 2023 78 $ 6.13

The total intrinsic value of restricted stock units, including PRSUs, vesting during the six months ended June 30, 2023 and 2022 was $44 and $63, respectively. During the six months ended June 30, 2023, the number of net settled shares issued as

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The following table summarizes the restricted stock unit, including PRSU, activity under our share-based plans for the nine months ended September 30, 2023:


	Shares	Grant Date Fair Value Per Share








Nonvested as of December 31, 2022	85	$	6.38
Granted	45	$	4.72
Vested	(26)	$	6.39
Forfeited	(11)	$	6.18
Nonvested as of September 30, 2023	93	$	5.64

The total intrinsic value of restricted stock units, including PRSUs, vesting during the nine months ended September 30, 2023 and 2022 was $123 and $185, respectively. During the nine months ended September 30, 2023, the number of net settled shares issued as a result of restricted stock units vesting totaled 6.17. During the ~~six~~nine months ended ~~June~~September 30, 2023, we granted 4 PRSUs to certain employees. We believe it is probable that the performance target applicable to these PRSUs will be achieved.

In connection with the cash dividends paid during the ~~six~~nine months ended ~~June~~September 30, 2023, we granted 1 restricted stock units, including PRSUs, in accordance with the terms of existing award agreements. These grants did not result in any additional incremental share-based payment expense being recognized during the ~~six~~nine months ended ~~June~~September 30, 2023.

We recognized share-based payment expense associated with restricted stock units, including PRSUs, of ~~$35~~$40 and ~~$38~~$42 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$72~~$112 and ~~$74~~$116 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Total unrecognized compensation costs related to unvested share-based payment awards for stock options and restricted stock units, including PRSUs, granted to employees, members of our board of directors and third parties at ~~June~~September 30, 2023 and December 31, 2022 was ~~$381~~$479 and $472, respectively. The total unrecognized compensation costs at ~~June~~September 30, 2023 are expected to be recognized over a weighted-average period of ~~2.3~~2.7 years.

401(k) Savings Plans

Sirius XM sponsors the Sirius XM Radio Inc. 401(k) Savings Plan (the “Sirius XM Plan”) for eligible employees. The Sirius XM Plan allows eligible employees to voluntarily contribute from 1% to 50% of their pre-tax eligible earnings, subject to certain defined limits. We match 50% of an employee’s voluntary contributions per pay period on the first 6% of an employee’s pre-tax salary up to a maximum of 3% of eligible compensation. We may also make additional discretionary matching, true-up matching and non-elective contributions to the Sirius XM Plan. Employer matching contributions under the Sirius XM Plan vest at a rate of 33.33% for each year of employment and are fully vested after three years of employment for all current and future contributions. Our cash employer matching contributions are not used to purchase shares of our common stock on the open market, unless the employee elects our common stock as their investment option for this contribution.

We recognized expenses of $5 for each of the three months ended ~~June~~September 30, 2023 and 2022, and ~~$11~~$16 and ~~$10~~$15 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively, in connection with the Sirius XM Plan.

Sirius XM Holdings Inc. Deferred Compensation Plan

The Sirius XM Holdings Inc. Deferred Compensation Plan (the “DCP”) allows members of our board of directors and certain eligible employees to defer all or a portion of their base salary, cash incentive compensation and/or board of directors’ cash compensation, as applicable. Pursuant to the terms of the DCP, we may elect to make additional contributions beyond amounts deferred by participants, but we are under no obligation to do so. We have established a grantor (or “rabbi”) trust to facilitate the payment of our obligations under the DCP.

Contributions to the DCP, net of withdrawals, were less than $(1) ~~and $(1)~~ for each of the three months ended ~~June~~September 30, 2023 and 2022, ~~respectively,~~ and $1 and $(1) for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. As of ~~June~~September 30, 2023 and December 31, 2022, the fair value of the investments held in the trust were ~~$54~~$52 and $47, respectively, which is included in Other long-term assets in our unaudited consolidated balance sheets and classified as trading securities. Trading gains and

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losses associated with these investments are recorded in Other (expense) income within our unaudited consolidated statements of comprehensive income. The associated liability is recorded within Other long-term liabilities in our unaudited consolidated balance sheets, and any increase or decrease in the liability is recorded in General and administrative expense within our unaudited consolidated statements of comprehensive income. We recorded (losses) gains ~~(losses)~~ on investments held in the trust of $3$(1) and ~~$(6)~~$(2) for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and $5$4 and ~~$(9)~~$(11) for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

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(15)Commitments and Contingencies

The following table summarizes our expected contractual cash commitments as of ~~June~~September 30, 2023:


		2023		2024		2025		2026		2027		Thereafter		Total			2023		2024		2025		2026		2027		Thereafter		Total
Debt obligations	Debt obligations	$	23	$	505	$	5	$	1,227	$	1,500	$	6,250	$	9,510	Debt obligations	$	22	$	505	$	5	$	1,140	$	1,500	$	6,250	$	9,422
Cash interest payments	Cash interest payments	216		404		395		388		344		636		2,383		Cash interest payments	14		399		389		385		344		636		2,167
Satellite and transmission	Satellite and transmission	110		296		198		93		42		22		761		Satellite and transmission	27		290		197		92		40		2		648
Programming and content	Programming and content	197		305		233		129		62		107		1,033		Programming and content	130		344		263		134		63		107		1,041
Sales and marketing	Sales and marketing	55		90		23		16		5		—		189		Sales and marketing	30		99		31		20		6		—		186
Satellite incentive payments	Satellite incentive payments	4		8		8		3		3		17		43		Satellite incentive payments	2		8		8		3		3		15		39
Operating lease obligations	Operating lease obligations	37		60		55		48		39		76		315		Operating lease obligations	16		56		51		47		39		79		288
Royalties, minimum guarantees and other	Royalties, minimum guarantees and other	211		324		167		45		1		1		749		Royalties, minimum guarantees and other	105		393		167		79		26		12		782
Total (1)	Total (1)	$	853	$	1,992	$	1,084	$	1,949	$	1,996	$	7,109	$	14,983	Total (1)	$	346	$	2,094	$	1,111	$	1,900	$	2,021	$	7,101	$	14,573

(1)The table does not include our reserve for uncertain tax positions, which at ~~June~~September 30, 2023 totaled ~~$109.~~$110.

Debt obligations. Debt obligations include principal payments on outstanding debt and finance lease obligations.

Cash interest payments. Cash interest payments include interest due on outstanding debt and capital lease payments through maturity.

Satellite and transmission. We have entered into agreements for the design, construction and launch of four additional satellites, SXM-9, SXM-10, SXM-11 and SXM-12. We also have entered into agreements with third parties to operate and maintain satellite telemetry, tracking and control facilities and certain components of our terrestrial repeater networks.

Programming and content. We have entered into various programming and content agreements. Under the terms of these agreements, our obligations include fixed payments, advertising commitments and revenue sharing arrangements. In certain of these agreements, the future revenue sharing costs are dependent upon many factors and are difficult to estimate; therefore, they are not included in our minimum contractual cash commitments.

Sales and marketing. We have entered into various marketing, sponsorship and distribution agreements to promote our brands and are obligated to make payments to sponsors, retailers, automakers, radio manufacturers and other third parties under these agreements. Certain programming and content agreements also require us to purchase advertising on properties owned or controlled by the licensors.

Satellite incentive payments. Maxar Technologies (formerly Space Systems/Loral), the manufacturer of certain of our in-orbit satellites, may be entitled to future in-orbit performance payments upon XM-5, SIRIUS FM-5, SIRIUS FM-6, and SXM-8 meeting their fifteen-year design life, which we expect to occur.

Operating lease obligations. We have entered into both cancelable and non-cancelable operating leases for office space, terrestrial repeaters, data centers and equipment. These leases provide for minimum lease payments, additional operating expense charges, leasehold improvements and rent escalations that have initial terms ranging from one to fifteen years, and certain leases have options to renew.

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Royalties, Minimum Guarantees and Other. We have entered into music royalty arrangements that include fixed payments. In addition, certain of our podcast agreements also contain minimum guarantees. As of ~~June~~September 30, 2023, we had future fixed commitments related to music royalty and podcast agreements of ~~$552,~~$500, of which ~~$155~~$64 will be paid in 2023 and the remainder will be paid thereafter. On a quarterly basis, we record the greater of the cumulative actual content costs incurred or the cumulative minimum guarantee based on forecasts for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasts, considers factors such as listening hours, downloads, revenue, subscribers and other terms of each agreement that impact our expected attainment or recoupment of the minimum guarantees based on the relative attribution method.

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~~(Dollars and shares in millions, except per share amounts)~~

Several of our content agreements also include provisions related to the royalty payments and structures of those agreements relative to other content licensing arrangements, which, if triggered, cause our payments under those agreements to escalate. In addition, record labels, publishers and performing rights organizations with whom we have entered into direct license agreements have the right to audit our content payments, and such audits often result in disputes over whether we have paid the proper content costs.

We have also entered into various agreements with third parties for general operating purposes. ~~The cost of our common stock acquired in our capital return program but not paid for as of June 30, 2023 was also included in this category.~~

In addition to the minimum contractual cash commitments described above, we have entered into other variable cost arrangements. These future costs are dependent upon many factors and are difficult to anticipate; however, these costs may be substantial. We may enter into additional programming, distribution, marketing and other agreements that contain similar variable cost provisions. We do not have any other significant off-balance sheet financing arrangements that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Legal Proceedings

In the ordinary course of business, we are a defendant or party to various claims and lawsuits, including those discussed below.

We record a liability when we believe that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. We evaluate developments in legal matters that could affect the amount of liability that has been previously accrued and make adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. We may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others, because: (i) the damages sought are indeterminate; (ii) the proceedings are in the relative early stages; (iii) there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) there remain significant factual issues to be determined or resolved; (vi) the relevant law is unsettled; or (vii) the proceedings involve novel or untested legal theories. In such instances, there may be considerable uncertainty regarding the ultimate resolution of such matters, including the likelihood or magnitude of a possible eventual loss, if any.

~~Pre-1972 Sound Recording Litigation.~~ U.S. Music Royalty Fee Actions and Mass Arbitrations~~On October 2, 2014, Flo & Eddie Inc. filed a~~. A number of class actions and mass arbitrations have been commenced against us relating to our pricing, billing and subscription marketing practices. Although each class action ~~suit against Pandora~~and mass arbitration contains unique allegations; in general, the ~~federal district court for~~actions and arbitrations allege that we falsely advertised our music subscription plans at lower prices than we actually charge, that we allegedly did not disclose our “U.S. Music Royalty Fee”, and that we have taken other actions to prevent customers from discovering the ~~Central District~~existence, amount and nature of ~~California. The complaint alleges a~~the U.S. Music Royalty Fee in violation of California Civil Code Section 980, unfair competition, misappropriation and conversion in connection with the public performance of sound recordings recorded prior to February 15, 1972 (which we refer to as, “pre-1972 recordings”). On December 19, 2014, Pandora filed a motion to strike the complaint pursuant to California’s Anti-Strategic Lawsuit Against Public Participation (“Anti-SLAPP”) statute, which following denial of Pandora’s motion was appealed to the Ninth Circuit Court of Appeals. In March 2017, the Ninth Circuit requested certification to the California Supreme Court on the substantive legal questions. The California Supreme Court accepted certification. In May 2019, the California Supreme Court issued an order dismissing consideration of the certified questions on the basis that, following the enactment of the Orrin G. Hatch-Bob Goodlatte Music Modernization Act, Pub. L. No. 115-264, 132 Stat. 3676 (2018) (the “MMA”), resolution of the questions posed by the Ninth Circuit Court of Appeals was no longer “necessary to . . . settle an important question of law.”various state consumer protection laws.

The ~~MMA grants a potential federal preemption defense~~plaintiffs and claimants seek to enjoin us from advertising our music subscription plans without including the ~~claims asserted~~amount of the U.S. Music Royalty Fee. The plaintiffs and claimants also seek disgorgement, restitution and/or damages in the ~~aforementioned lawsuits. In July 2019, Pandora took steps to avail itself~~aggregate amount of this preemption defense, including making the required payments under the MMA for certain of its uses of pre-1972 recordings. Based on the federal preemption contained in the MMA (along with other considerations), Pandora asked the Ninth Circuit to order the dismissal of the ~~Flo & Eddie, Inc. v. Pandora Media, Inc.~~ ~~case. On October 17, 2019, the Ninth Circuit Court of Appeals issued a memorandum disposition concluding that the question of whether the MMA preempts Flo~~U.S Music Royalty Fees paid by customers, as well as statutory and ~~Eddie's claims challenging Pandora's performance of pre-1972 recordings “depends on various unanswered factual questions” and remanded the case to the District Court for further proceedings.~~punitive damages where available.

~~In October 2020,~~To date, the ~~District Court denied Pandora’s renewed motion to dismiss the case under California’s anti-SLAPP statute, finding the case no longer qualified for anti-SLAPP due to intervening changes in the law,~~actions and ~~denied Pandora’s~~arbitrations filed against us include:

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renewed attempt to end the case. Alternatively, the District Court ruled that the preemption defense likely did not apply to Flo & Eddie’s claims, in part because the District Court believed that the MMA did not apply retroactively. Pandora promptly appealed the District Court’s decision to the Ninth Circuit, and moved to stay appellate briefing pending the appeal of a related case against Sirius XM. On January 13, 2021, the Ninth Circuit issued an order granting the stay of appellate proceedings pending the resolution of a related case against Sirius XM.

•

On ~~August 23, 2021,~~April 14, 2023, Ayana Stevenson and David Ambrose, individually, as private attorneys general, and on behalf of all other California persons similarly situated, filed a class action complaint against us in the Superior Court of the State of California, County of Contra Costa. The case has since been removed to the United States District Court ~~of Appeals~~ for the ~~Ninth Circuit issued an Opinion in a related case,~~ ~~Flo & Eddie Inc. v. Sirius XM Radio Inc.~~ ~~The related case also concerned a class action suit brought by Flo & Eddie Inc. regarding the public performance~~Northern District of pre-1972 recordings under California law. Relying on California’s copyright statute, Flo & Eddie argued that California law gave it the “exclusive ownership” of its pre-1972 songs, including the right of public performance. The Ninth Circuit reversed the District Court’s grant of partial summary judgment to Flo & Eddie Inc. The Ninth Circuit held that the District Court in this related case erred in concluding that “exclusive ownership” under California’s copyright statute included the right of public performance. The Ninth Circuit remanded the case for entry of judgment consistent with the terms of the parties’ contingent settlement agreement, and on October 6, 2021, the parties to the related case stipulated to its dismissal with prejudice. The ~~Flo & Eddie Inc. v. Sirius XM Radio Inc.~~ ~~decision is precedential in the Ninth Circuit, and therefore we believe substantially narrows the claims that Flo & Eddie may continue to assert against Pandora.~~California.

~~Following issuance~~•On May 17, 2023, Robyn Posternock, Muriel Salters and Philip Munning, individually, as private attorneys general, and on behalf of all other New Jersey persons similarly situated, filed a class action complaint against us in the ~~Flo & Eddie Inc. v. Sirius XM Radio Inc.~~ ~~opinion, on September 3, 2021, the Ninth Circuit lifted the stay of appellate proceedings in~~ ~~Flo & Eddie, Inc. v. Pandora Media, LLC. Pandora promptly filed an appeal of~~United States District Court for the District ~~Court’s order denying the renewed motion to dismiss the case under California’s anti-SLAAP statute.~~of New Jersey.

•On June ~~2, 2022,~~5, 2023, Christopher Carovillano and Steven Brandt, individually, as private attorneys general, and on behalf of all other United States persons similarly situated (excluding persons in the ~~Ninth Circuit upheld~~states of California, New Jersey and Washington), filed a class action complaint against us in the District Court’s order denying dismissal of the case under California’s anti-SLAPP statute, finding that Pandora had failed to demonstrate that Flo & Eddie’s claims arise from Pandora’s protected conduct. As part of the decision, the Ninth Circuit noted that Pandora had forcefully argued that the Court’s decision in ~~Flo & Eddie Inc. v. Sirius XM Radio Inc.,~~ and other decisions under New York, Florida and Georgia law, foreclosed Flo & Eddie’s claims as a matter of law. Because the case has been pending for over seven years, the Ninth Circuit remanded the case to theUnited States District Court ~~and directed “the district court to consider expedited motions practice on~~for the ~~legal validity~~Southern District of ~~Flo & Eddie’s claims in light of the intervening precedent.”~~New York.

~~On September 29, 2022, Flo~~•Commencing on June 5, 2023, the law firm of Hattis & ~~Eddie~~Lukacs filed a series of mass arbitration claims against us before the American Arbitration Association on behalf of approximately 13,500 claimants.

In addition, we have been served with notices of claims by law firms claiming to represent approximately 11,000 claimants. The notices purport to state a variety of claims, including that: we do not adequately disclose to customers the total cost of our subscriptions; do not describe the type or amount of the fees imposed on customers; we enroll customers in automatic bill payments without having knowledge of the U.S. Music Royalty Fee; we fail to provide consumers with an ~~Amended Complaint,~~easy way to cancel their subscriptions; in the case of trial subscriptions, we require customers to preauthorize automatic deductions from their accounts, while hiding the fact that customers agree to automatically pay recurring charges at higher rates when the promotional period ends; and ~~on October 13, 2022, Pandora filed an Answer~~we engage in other deceptive consumer practices. The notices assert potential causes of action under the Electronic Funds Transfer Act, various state consumer protection and false advertising laws, and other unspecified state and federal laws. We expect the claimants may also pursue individual arbitrations before the American Arbitration Association pursuant to the ~~Amended Complaint. In accordance with~~terms and conditions of our Customer Agreement.

We believe we have substantial defenses to the ~~directive of the Ninth Circuit,~~claims asserted in ~~November 2022, Pandora filed a Motion for Summary Judgment in this action. Following oral argument, on July 25, 2023, the Court granted Pandora’s Motion for Summary Judgment,~~these actions and ~~by order closed this action. The time for Flo & Eddie~~arbitrations, and we intend to ~~file an appeal of the order granting Summary Judgment in favor of Pandora has not expired.~~defend these actions vigorously.

Other Matters. In the ordinary course of business, we are a defendant in various other lawsuits and arbitration proceedings, including derivative actions; actions filed by subscribers, both on behalf of themselves and on a class action basis; former employees; parties to contracts or leases; and owners of patents, trademarks, copyrights or other intellectual property. None of these other matters, in our opinion, is likely to have a material adverse effect on our business, financial condition or results of operations.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

(16)Income Taxes

We have historically filed a consolidated federal income tax return for all of our wholly owned subsidiaries, including Sirius XM and Pandora. On February 1, 2021, we entered into a tax sharing agreement with Liberty Media governing the allocation of consolidated U.S. income tax liabilities and setting forth agreements with respect to other tax matters. The tax sharing agreement contains provisions that we believe are customary for tax sharing agreements between members of a consolidated group. On November 3, 2021, Liberty Media informed us that it beneficially owned over 80% of the outstanding shares of our common stock; as a result of this, we were included in the consolidated tax return of Liberty Media beginning November 4, 2021. The tax sharing agreement and our inclusion in Liberty Media’s consolidated tax group is not expected to have any material adverse effect on us.

We have calculated the provision for income taxes by using a separate return method. Any difference between the tax expense (or benefit) allocated to us under the separate return method and payments to be made for (or received from) Liberty Media for tax expense are treated as either dividends or capital contributions. Income tax expense was ~~$62~~$92 and ~~$96~~$110 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$138~~$230 and ~~$197~~$307 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. In addition, we recorded $4$5 as a capital contribution from Liberty Media during the ~~six~~nine months ended ~~June~~September 30, 2023 related to the tax sharing agreement.

Our effective tax rate for the three months ended ~~June~~September 30, 2023 and 2022 was ~~16.7%~~20.2% and ~~24.7%~~30.8%, respectively. Our effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was ~~20.3%~~20.2% and ~~24.7%~~26.6%, respectively. The effective tax rate for the three ~~and six~~ months ended ~~June~~September 30, 2023 was ~~primarily~~primarily impacted by benefits related to certain tax credits partially offset by shortfalls related to share-based compensation. The effective tax rate for the nine months ended September 30, 2023 was primarily impacted by the release of valuation reserves against state net operating losses we now expect to ~~utilize.~~utilize and benefits related to certain tax credits partially offset by shortfalls related to share-based compensation. The effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2022 was ~~primarily~~negatively impacted byas a ~~benefit associated with~~result of the expected expiration of certain state and local net operating losses, partially offset by the recognition of excess tax benefits related to share-based compensation. We estimate our effective tax rate for the year ending December 31, 2023 will be approximately ~~22%~~21%.

As of ~~June~~September 30, 2023 and December 31, 2022, we had a valuation allowance related to deferred tax assets of $86 and $113, respectively, that were not likely to be realized due to the timing of certain federal and state net operating loss limitations.

On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. Based on our historical net stock repurchase activity, the excise tax and the other provisions of the IRA ~~are~~did not ~~expected to~~ have a material impact on our results of operations or financial position.

During the ~~six~~nine months ended ~~June~~September 30, 2023, we invested ~~$31~~$33 in certain tax-effective clean energy technologies investments.

(17)Segments and Geographic Information

In accordance with FASB ASC Topic 280, Segment Reporting, we disaggregate our operations into two reportable segments: Sirius XM and Pandora and Off-platform. The financial results of these segments are utilized by the chief operating decision maker, who is our Chief Executive Officer, for evaluating segment performance and allocating resources. We report our segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments. For additional information on our segments refer to Note 1.

Segment results include the revenues and cost of services which are directly attributable to each segment. There are no indirect revenues or costs incurred that are allocated to the segments. There are planned intersegment advertising campaigns which will be eliminated. We had intersegment advertising revenue of ~~less than~~ $1 and $2 during ~~each of~~ the three and nine months ended ~~June 30, 2023 and 2022, and $1 during each of the six months ended June 30, 2023 and 2022.~~

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

September 30, 2023, respectively, and less than $1 and $1 during the three and nine months ended September 30, 2022, respectively.

Segment revenue and gross profit were as follows during the period presented:


		For the Three Months Ended June 30, 2023				For the Three Months Ended September 30, 2023
		Sirius XM		Pandora and Off-platform			Total			Sirius XM		Pandora and Off-platform		Total
Revenue	Revenue								Revenue
Subscriber revenue	Subscriber revenue	$	1,597	$	128		$	1,725	Subscriber revenue	$	1,597	$	132	$	1,729
Advertising revenue	Advertising revenue	45		400			445		Advertising revenue	42		418		460
Equipment revenue	Equipment revenue	47		—			47		Equipment revenue	49		—		49
Other revenue	Other revenue	33		—			33		Other revenue	33		—		33
Total revenue	Total revenue	1,722		528			2,250		Total revenue	1,721		550		2,271
Cost of services (a)	Cost of services (a)	(675)		(376)			(1,051)		Cost of services (a)	(674)		(370)		(1,044)
Segment gross profit	Segment gross profit	$	1,047	$	152		$	1,199	Segment gross profit	$	1,047	$	180	$	1,227

The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows:


	For the Three Months Ended ~~June~~September 30, 2023
Segment Gross Profit	$	~~1,199~~1,227
Subscriber acquisition costs	~~(93)~~(87)
Sales and marketing (a)	~~(209)~~(224)
Engineering, design and development (a)	~~(72)~~(61)
General and administrative (a)	~~(147)~~(108)
Depreciation and amortization	~~(139)~~(130)
Share-based payment expense	~~(42)~~(48)
Impairment, restructuring and acquisition costs	~~(18)~~(5)
Total other expense	~~(107)~~(109)
Consolidated income before income taxes	$	~~372~~455

(a) Share-based payment expense of ~~$10~~$13 related to cost of services, ~~$11~~$13 related to sales and marketing, $11 related to engineering, design and development and ~~$10~~$11 related to general and administrative has been excluded.


		For the Three Months Ended June 30, 2022				For the Three Months Ended September 30, 2022
		Sirius XM		Pandora and Off-platform			Total			Sirius XM		Pandora and Off-platform		Total
Revenue	Revenue								Revenue
Subscriber revenue	Subscriber revenue	$	1,588	$	131		$	1,719	Subscriber revenue	$	1,603	$	131	$	1,734
Advertising revenue	Advertising revenue	49		403			452		Advertising revenue	50		407		457
Equipment revenue	Equipment revenue	45		—			45		Equipment revenue	50		—		50
Other revenue	Other revenue	37		—			37		Other revenue	39		—		39
Total revenue	Total revenue	1,719		534			2,253		Total revenue	1,742		538		2,280
Cost of services (b)	Cost of services (b)	(668)		(367)			(1,035)		Cost of services (b)	(665)		(365)		(1,030)
Segment gross profit	Segment gross profit	$	1,051	$	167		$	1,218	Segment gross profit	$	1,077	$	173	$	1,250

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows:


	For the Three Months Ended ~~June~~September 30, 2022
Segment Gross Profit	$	~~1,218~~1,250
Subscriber acquisition costs	~~(91)~~(86)
Sales and marketing (b)	~~(272)~~(268)
Engineering, design and development (b)	~~(63)~~(59)
General and administrative (b)	~~(113)~~(117)
Depreciation and amortization	~~(135)~~(134)
Share-based payment expense	~~(47)~~(50)
Impairment, restructuring and acquisition costs	~~(1)~~(69)
Total other expense	~~(108)~~(110)
Consolidated income before income taxes	$	~~388~~357

(b) Share-based payment expense of $11 related to cost of services, $13 related to sales and marketing, $9$11 related to engineering, design and development and ~~$14~~$15 related to general and administrative has been excluded.


		For the Six Months Ended June 30, 2023				For the Nine Months Ended September 30, 2023
		Sirius XM		Pandora and Off-platform			Total			Sirius XM		Pandora and Off-platform		Total
Revenue	Revenue								Revenue
Subscriber revenue	Subscriber revenue	$	3,160	$	257		$	3,417	Subscriber revenue	$	4,757	$	389	$	5,146
Advertising revenue	Advertising revenue	85		734			819		Advertising revenue	126		1,152		1,278
Equipment revenue	Equipment revenue	93		—			93		Equipment revenue	142		—		142
Other revenue	Other revenue	65		—			65		Other revenue	99		—		99
Total revenue	Total revenue	3,403		991			4,394		Total revenue	5,124		1,541		6,665
Cost of services (c)	Cost of services (c)	(1,340)		(727)			(2,067)		Cost of services (c)	(2,014)		(1,097)		(3,111)
Segment gross profit	Segment gross profit	$	2,063	$	264		$	2,327	Segment gross profit	$	3,110	$	444	$	3,554

The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows:


	For the ~~Six~~Nine Months Ended ~~June~~September 30, 2023
Segment Gross Profit	$	~~2,327~~3,554
Subscriber acquisition costs	~~(183)~~(270)
Sales and marketing (c)	~~(423)~~(647)
Engineering, design and development (c)	~~(140)~~(201)
General and administrative (c)	~~(278)~~(385)
Depreciation and amortization	~~(275)~~(405)
Share-based payment expense	~~(87)~~(135)
Impairment, restructuring and acquisition costs	~~(50)~~(56)

Total other expense	~~(210)~~(319)
Consolidated income before income taxes	$	~~681~~1,136

(c) Share-based payment expense of ~~$20~~$33 related to cost of services, ~~$20~~$33 related to sales and marketing, ~~$22~~$33 related to engineering, design and development and ~~$25~~$36 related to general and administrative has been excluded.

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SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)


		For the Six Months Ended June 30, 2022				For the Nine Months Ended September 30, 2022
		Sirius XM		Pandora and Off-platform			Total			Sirius XM		Pandora and Off-platform		Total
Revenue	Revenue								Revenue
Subscriber revenue	Subscriber revenue	$	3,170	$	262		$	3,432	Subscriber revenue	$	4,773	$	393	$	5,166
Advertising revenue	Advertising revenue	97		738			835		Advertising revenue	146		1,146		1,292
Equipment revenue	Equipment revenue	98		—			98		Equipment revenue	148		—		148
Other revenue	Other revenue	75		—			75		Other revenue	114		—		114
Total revenue	Total revenue	3,440		1,000			4,440		Total revenue	5,181		1,539		6,720
Cost of services (d)	Cost of services (d)	(1,317)		(697)			(2,014)		Cost of services (d)	(1,980)		(1,063)		(3,043)
Segment gross profit	Segment gross profit	$	2,123	$	303		$	2,426	Segment gross profit	$	3,201	$	476	$	3,677

The reconciliation between reportable segment gross profit to consolidated income before income tax is as follows:


	For the ~~Six~~Nine Months Ended ~~June~~September 30, 2022
Segment Gross Profit	$	~~2,426~~3,677
Subscriber acquisition costs	~~(181)~~(267)
Sales and marketing (d)	~~(531)~~(799)
Engineering, design and development (d)	~~(122)~~(181)
General and administrative (d)	~~(223)~~(339)
Depreciation and amortization	~~(270)~~(404)
Share-based payment expense	~~(92)~~(143)
Impairment, restructuring and acquisition costs	~~(1)~~(70)

Total other expense	~~(208)~~(319)
Consolidated income before income taxes	$	~~798~~1,155

(d) Share-based payment expense of ~~$22~~$34 related to cost of services, ~~$26~~$39 related to sales and marketing, ~~$17~~$27 related to engineering, design and development and ~~$27~~$43 related to general and administrative has been excluded.

A measure of segment assets is not currently provided to the Chief Executive Officer and has therefore not been provided.

As of ~~June~~September 30, 2023, long-lived assets were predominantly located in the United States. No individual foreign country represented a material portion of our consolidated revenue during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

(18)Subsequent Events

Capital Return Program

~~For the period from July 1, 2023 to July 28, 2023, we repurchased 2 shares of our common stock on the open market for an aggregate purchase price of $11, including fees and commissions.~~

On ~~July 26,~~October 25, 2023, our board of directors declared a quarterly dividend on our common stock in the amount of ~~$0.0242~~$0.0266 per share of common stock payable on ~~August 30,~~November 29, 2023 to stockholders of record as of the close of business on ~~August 8,~~November 7, 2023.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All amounts referenced in this Item 2 are in millions, except subscriber amounts are in thousands and per subscriber and per installation amounts are in ones, unless otherwise stated.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2022.

This Quarterly Report on Form 10-Q presents information for Sirius XM Holdings Inc. (“Holdings”). The terms “Holdings,” “we,” “us,” “our,” and “our company” as used herein, and unless otherwise stated or indicated by context, refer to Sirius XM Holdings Inc. and its subsidiaries. "Sirius XM" refers to our wholly owned subsidiary Sirius XM Radio Inc. and its subsidiaries. "Pandora" refers to Sirius XM's wholly owned subsidiary Pandora Media, LLC and its subsidiaries. Holdings has no operations independent of Sirius XM and Pandora.

Special Note Regarding Forward-Looking Statements

The following cautionary statements identify important factors that could cause our actual results to differ materially from those projected in forward-looking statements made in this Quarterly Report on Form 10-Q and in other reports and documents published by us from time to time. Any statements about our beliefs, plans, objectives, expectations, assumptions, future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “intend,” “plan,” “projection” and “outlook.” Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Quarterly Report on Form 10-Q and in other reports and documents published by us from time to time, including the risk factors described under “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2022, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein and in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, 2022.

Among the significant factors that could cause our actual results to differ materially from those expressed in the forward-looking statements are:

•There is significant uncertainty regarding the terms, timing and market reaction to our potential combination with NewCo

•We have been, and may continue to be, adversely affected by supply chain issues

•We may be adversely affected by the war in Ukraine

•We face substantial competition and that competition is likely to increase over time

•If our efforts to attract and retain subscribers and listeners, or convert listeners into subscribers, are not successful, our business will be adversely affected

•We engage in extensive marketing efforts and the continued effectiveness of those efforts is an important part of our business

•We rely on third parties for the operation of our business, and the failure of third parties to perform could adversely affect our business

•Failure to successfully monetize and generate revenues from podcasts and other non-music content could adversely affect our business, operating results, and financial condition

•We may not realize the benefits of acquisitions or other strategic investments and initiatives

•~~The ongoing COVID-19 pandemic has introduced significant uncertainty to our business~~

•The impact of economic conditions may adversely affect our business, operating results, and financial condition

•A substantial number of our Sirius XM service subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers

•Our ability to profitably attract and retain subscribers to our Sirius XM service is uncertain

•Our business depends in part upon the auto industry

•Failure of our satellites would significantly damage our business

•Our Sirius XM service may experience harmful interference from wireless operations

•Our Pandora ad-supported business has suffered a substantial and consistent loss of monthly active users, which may adversely affect our Pandora business

•Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business

•Our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business

•If we are unable to maintain revenue growth from our advertising products our results of operations will be adversely affected

•We are a “controlled company” within the meaning of the NASDAQ listing rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements

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•Our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock

•Changes to mobile operating systems and browsers may hinder our ability to sell advertising and market our services

•If we fail to accurately predict and play music, comedy or other content that our Pandora listeners enjoy, we may fail to retain existing and attract new listeners

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•Privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities

•Consumer protection laws and our failure to comply with them could damage our business

•Failure to comply with FCC requirements could damage our business

•If we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions and private litigation and our reputation could suffer

•Interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business

•The market for music rights is changing and is subject to significant uncertainties

•Our Pandora services depend upon maintaining complex licenses with copyright owners, and these licenses contain onerous terms

•The rates we must pay for “mechanical rights” to use musical works on our Pandora service have increased substantially and these rates may adversely affect our business

•Failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results

•Some of our services and technologies may use “open source” software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses

•Rapid technological and industry changes and new entrants could adversely impact our services

•We have a significant amount of indebtedness, and our debt contains certain covenants that restrict our operations

•~~We are a “controlled company” within the meaning of the NASDAQ listing rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements~~

•While we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time

•~~Our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock~~

•If we are unable to attract and retain qualified personnel, our business could be harmed

•Our facilities could be damaged by natural catastrophes or terrorist activities

•The unfavorable outcome of pending or future litigation could have an adverse impact on our operations and financial condition

•We may be exposed to liabilities that other entertainment service providers would not customarily be subject to

•Our business and prospects depend on the strength of our brands.

Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any of these forward-looking statements. In addition, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which the statement is made, to reflect the occurrence of unanticipated events or otherwise, except as required by law. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Executive Summary

We operate two complementary audio entertainment businesses - one of which we refer to as “SiriusXM” and the second of which we refer to as “Pandora and Off-platform”.

Sirius XM

Our Sirius XM business features music, sports, entertainment, comedy, talk, news, traffic and weather channels and other content, as well as podcasts and infotainment services, in the United States on a subscription fee basis. Sirius XM's packages include live, curated and certain exclusive and on demand programming. The Sirius XM service is distributed through our two proprietary satellite radio systems and streamed via applications for mobile devices, home devices and other consumer electronic equipment. Satellite radios are primarily distributed through automakers, retailers and our website. Our Sirius XM service is also available through our in-car user interface, which we call “360L,” that combines our satellite and streaming services into a single, cohesive in-vehicle entertainment experience.

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which is sold under the SXM Media brand, direct sales of our satellite radios and accessories, and other ancillary services. As of ~~June~~September 30, 2023, our Sirius XM business had approximately 34.0 million subscribers.

Sirius XM also holds a 70% equity interest and 33% voting interest in Sirius XM Canada. Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics.

Pandora and Off-platform

Our Pandora and Off-platform business operates a music and podcast streaming discovery platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through computers, tablets, mobile devices, vehicle speakers or connected devices. Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists, podcasts and select Sirius XM content as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium). As of ~~June~~September 30, 2023, Pandora had approximately ~~6.2~~46.5 million monthly active users and 6.1 million subscribers.

We also sell advertising on other audio platforms and in widely distributed podcasts, which we consider to be off-platform services. We have an arrangement with SoundCloud Holdings, LLC ("SoundCloud") to be its exclusive ad sales representative in the US and certain European countries and offer advertisers the ability to execute campaigns across the Pandora and SoundCloud platforms. We also have arrangements to serve as the ad sales representative for certain podcasts. In addition, through AdsWizz Inc., we provide a comprehensive digital audio and programmatic advertising technology platform, which connects audio publishers and advertisers with a variety of ad insertion, campaign trafficking, yield optimization, programmatic buying, marketplace and podcast monetization solutions.

Liberty Media

As of ~~June~~September 30, 2023, Liberty Media beneficially owned, directly and indirectly, ~~approximately 83%~~83.5% of the outstanding shares of our common stock. As a result, we are a “controlled company” for the purposes of the NASDAQ corporate governance requirements.

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Results of Operations

Set forth below are our results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2023 compared with the three and ~~six~~nine months ended ~~June~~September 30, 2022. The results of operations are presented for each of our reporting segments for revenue and cost of services and on a consolidated basis for all other items.


		For the Three Months Ended June 30,				For the Six Months Ended June 30,							2023 vs 2022 Change													For the Three Months Ended September 30,								For the Nine Months Ended September 30,										2023 vs 2022 Change
											Three Months				Six Months																	Three Months									Nine Months
				2023				2022			2023	2022						Amount			%			Amount	%														2023				2022		2023				2022							Amount			%	Amount	%
Revenue	Revenue																											Revenue
Sirius XM:	Sirius XM:																											Sirius XM:
Subscriber revenue	Subscriber revenue	$	1,597	$	1,588	$	3,160		$	3,170			$	9		1	%		$	(10)		—	%					Subscriber revenue		$	1,597			$	1,603		$	4,757			$	4,773					$	(6)			—	%		$	(16)			—	%
Advertising revenue	Advertising revenue	45		49		85			97				(4)			(8)	%		(12)			(12)	%					Advertising revenue		42				50			126				146						(8)				(16)	%		(20)				(14)	%
Equipment revenue	Equipment revenue	47		45		93			98				2			4	%		(5)			(5)	%					Equipment revenue		49				50			142				148						(1)				(2)	%		(6)				(4)	%
Other revenue	Other revenue	33		37		65			75				(4)			(11)	%		(10)			(13)	%					Other revenue		33				39			99				114						(6)				(15)	%		(15)				(13)	%
Total Sirius XM revenue	Total Sirius XM revenue	1,722		1,719		3,403			3,440				3			—	%		(37)			(1)	%					Total Sirius XM revenue		1,721				1,742			5,124				5,181						(21)				(1)	%		(57)				(1)	%
Pandora and Off-platform:	Pandora and Off-platform:																											Pandora and Off-platform:
Subscriber revenue	Subscriber revenue	128		131		257			262				(3)			(2)	%		(5)			(2)	%					Subscriber revenue		132				131			389				393						1				1	%		(4)				(1)	%
Advertising revenue	Advertising revenue	400		403		734			738				(3)			(1)	%		(4)			(1)	%					Advertising revenue		418				407			1,152				1,146						11				3	%		6				1	%
Total Pandora and Off-platform revenue	Total Pandora and Off-platform revenue	528		534		991			1,000				(6)			(1)	%		(9)			(1)	%					Total Pandora and Off-platform revenue		550				538			1,541				1,539						12				2	%		2				—	%
Total consolidated revenue	Total consolidated revenue	2,250		2,253		4,394			4,440				(3)			—	%		(46)			(1)	%					Total consolidated revenue		2,271				2,280			6,665				6,720						(9)				—	%		(55)				(1)	%
Cost of services	Cost of services																											Cost of services
Sirius XM:	Sirius XM:																											Sirius XM:
Revenue share and royalties	Revenue share and royalties	405		397		796			779				8			2	%		17			2	%					Revenue share and royalties		406				391			1,201				1,169						15				4	%		32				3	%
Programming and content	Programming and content	135		139		271			268				(4)			(3)	%		3			1	%					Programming and content		136				139			407				407						(3)				(2)	%		—				—	%
Customer service and billing	Customer service and billing	100		103		203			207				(3)			(3)	%		(4)			(2)	%					Customer service and billing		96				103			300				310						(7)				(7)	%		(10)				(3)	%
Transmission	Transmission	41		36		82			77				5			14	%		5			6	%					Transmission		44				38			126				116						6				16	%		10				9	%
Cost of equipment	Cost of equipment	3		3		7			6				—			—	%		1			17	%					Cost of equipment		3				4			10				9						(1)				(25)	%		1				11	%
Total Sirius XM cost of services	Total Sirius XM cost of services	684		678		1,359			1,337				6			1	%		22			2	%					Total Sirius XM cost of services		685				675			2,044				2,011						10				1	%		33				2	%
Pandora and Off-platform:	Pandora and Off-platform:																											Pandora and Off-platform:
Revenue share and royalties	Revenue share and royalties	327		314		636			602				13			4	%		34			6	%					Revenue share and royalties		325				318			961				921						7				2	%		40				4	%
Programming and content	Programming and content	18		14		32			24				4			29	%		8			33	%					Programming and content		17				16			49				41						1				6	%		8				20	%
Customer service and billing	Customer service and billing	23		22		43			44				1			5	%		(1)			(2)	%					Customer service and billing		20				19			63				63						1				5	%		—				—	%
Transmission	Transmission	9		18		17			29				(9)			(50)	%		(12)			(41)	%					Transmission		10				13			27				41						(3)				(23)	%		(14)				(34)	%
Total Pandora and Off-platform cost of services	Total Pandora and Off-platform cost of services	377		368		728			699				9			2	%		29			4	%					Total Pandora and Off-platform cost of services		372				366			1,100				1,066						6				2	%		34				3	%
Total consolidated cost of services	Total consolidated cost of services	1,061		1,046		2,087			2,036				15			1	%		51			3	%					Total consolidated cost of services		1,057				1,041			3,144				3,077						16				2	%		67				2	%
Subscriber acquisition costs	Subscriber acquisition costs	93		91		183			181				2			2	%		2			1	%					Subscriber acquisition costs		87				86			270				267						1				1	%		3				1	%
Sales and marketing	Sales and marketing	220		285		443			557				(65)			(23)	%		(114)			(20)	%					Sales and marketing		237				281			680				838						(44)				(16)	%		(158)				(19)	%
Engineering, design and development	Engineering, design and development	83		72		162			139				11			15	%		23			17	%					Engineering, design and development		72				70			234				208						2				3	%		26				13	%
General and administrative	General and administrative	157		127		303			250				30			24	%		53			21	%					General and administrative		119				132			421				382						(13)				(10)	%		39				10	%
Depreciation and amortization	Depreciation and amortization	139		135		275			270				4			3	%		5			2	%					Depreciation and amortization		130				134			405				404						(4)				(3)	%		1				—	%
Impairment, restructuring and acquisition costs	Impairment, restructuring and acquisition costs	18		1		50			1				17			nm			49			nm						Impairment, restructuring and acquisition costs		5				69			56				70						(64)				nm			(14)				nm

Total operating expenses	Total operating expenses	1,771		1,757		3,503			3,434				14			1	%		69			2	%					Total operating expenses		1,707				1,813			5,210				5,246						(106)				(6)	%		(36)				(1)	%
Income from operations	Income from operations	479		496		891			1,006				(17)			(3)	%		(115)			(11)	%					Income from operations		564				467			1,455				1,474						97				21	%		(19)				(1)	%
Other (expense) income:	Other (expense) income:																											Other (expense) income:
Interest expense	Interest expense	(107)		(104)		(213)			(206)				(3)			(3)	%		(7)			(3)	%					Interest expense		(106)				(107)			(319)				(314)						(1)				(1)	%		5				2	%

Other income (expense)		—		(4)		3			(2)				4			nm			5			nm
Other expense																											Other expense		(3)				(3)			—				(5)						—				nm			(5)				nm
Total other expense	Total other expense	(107)		(108)		(210)			(208)				1			1	%		(2)			(1)	%					Total other expense		(109)				(110)			(319)				(319)						(1)				(1)	%		—				—	%
Income before income taxes	Income before income taxes	372		388		681			798				(16)			(4)	%		(117)			(15)	%					Income before income taxes		455				357			1,136				1,155						98				27	%		(19)				(2)	%
Income tax expense	Income tax expense	(62)		(96)		(138)			(197)				34			35	%		59			30	%					Income tax expense		(92)				(110)			(230)				(307)						(18)				(16)	%		(77)				(25)	%
Net income	Net income	$	310	$	292	$	543		$	601			$	18		6	%		$	(58)		(10)	%					Net income		$	363			$	247		$	906			$	848					$	116			47	%		$	58			7	%

nm - not meaningful

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Sirius XM Revenue

Sirius XM Subscriber Revenue includes fees charged for self-pay and paid promotional subscriptions, U.S. Music Royalty Fees and other ancillary fees.

For the three months ended ~~June~~September 30, 2023 and 2022, subscriber revenue was $1,597 and ~~$1,588, respectively, an increase of 1%, or $9. For the six months ended June 30, 2023 and 2022, subscriber revenue was $3,160 and $3,170,~~$1,603, respectively, a decrease of less than 1%, or ~~$10.~~$6. For the nine months ended September 30, 2023 and 2022, subscriber revenue was $4,757 and $4,773, respectively, a decrease of less than 1%, or $16. The increase for the three month period was driven by an increase in self-pay revenue, partially offset by a reduction in paid promotional revenue resulting from lower overall rates from automakers offering paid promotional subscriptions. The decrease for the six month period wasdecreases were primarily driven by a reduction in paid promotional revenue resulting from lower overall rates from automakers offering paid promotional subscriptions and lower revenue generated from our connected vehicle services, partially offset by an increase in self-pay revenue.

We expect subscriber revenues to ~~increase based on increases in the average price of our services.~~remain relatively flat.

Sirius XM Advertising Revenue includes the sale of advertising on Sirius XM’s non-music channels.

For the three months ended ~~June~~September 30, 2023 and 2022, advertising revenue was ~~$45~~$42 and ~~$49,~~$50, respectively, a decrease of 8%16%, or ~~$4.~~$8. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, advertising revenue was ~~$85~~$126 and ~~$97,~~$146, respectively, a decrease of ~~12%~~14%, or ~~$12.~~$20. The decreases were due to a ~~decrease~~decline in the number of spots sold and aired, primarily on news and entertainment channels.

We expect our Sirius XM advertising revenue to increase due to growing success of brand co-sell initiatives.

Sirius XM Equipment Revenue includes revenue and royalties from the sale of satellite radios, components and accessories.

For the three months ended ~~June~~September 30, 2023 and 2022, equipment revenue was ~~$47~~$49 and ~~$45,~~$50, respectively, ~~an increase~~a decrease of 4%2%, or ~~$2.~~$1. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, equipment revenue was ~~$93~~$142 and ~~$98,~~$148, respectively, a decrease of 5%4%, or ~~$5.~~$6. The ~~increase for the three month period was driven by increased chipset production, partially offset by lower royalty rates. The decrease for the six month period was~~decreases were driven by lower royalty rates, partially offset by increased chipset production.

We expect equipment revenue to decrease ~~due to the impact of semiconductor supply shortages driving~~driven by higher chipset costs for new technology.

Sirius XM Other Revenue includes service and advisory revenue from Sirius XM Canada, revenue from our connected vehicle services, and ancillary revenues.

For the three months ended ~~June~~September 30, 2023 and 2022, other revenue was $33 and ~~$37,~~$39, respectively, a decrease of ~~11%~~15%, or ~~$4.~~$6. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, other revenue was ~~$65~~$99 and ~~$75,~~$114, respectively, a decrease of 13%, or ~~$10.~~$15. The decreases were primarily driven by lower royalty revenue generated by Sirius XM Canada and lower revenue generated by our connected vehicle ~~services and lower royalty revenue generated by Sirius XM Canada.~~services.

We expect other revenue to continue to decrease primarily due to lower revenue from our connected vehicle services.

Pandora and Off-platform Revenue

Pandora and Off-platform Subscriber Revenue includes fees charged for Pandora Plus and Pandora Premium.

For the three months ended ~~June~~September 30, 2023 and 2022, Pandora and Off-platform subscriber revenue was ~~$128~~$132 and $131, respectively, ~~a decrease~~an increase of 2%1%, or ~~$3.~~$1. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, Pandora and Off-platform subscriber revenue was ~~$257~~$389 and ~~$262,~~$393, respectively, a decrease of 2%1%, or ~~$5.~~$4. The ~~decreases were~~increase for the three month period was driven by a rate increase on Pandora Plus, partially offset by a decline in the subscriber base. The decrease for the nine month period was primarily driven by ~~the~~a decline in the Pandora Plus subscriber base.

We expect Pandora and Off-platform subscriber revenues to remain relatively flat as higher ARPU is anticipated to be offset by a lower subscriber base.

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Pandora and Off-platform Advertising Revenue is generated primarily from audio, display and video advertising from on-platform and off-platform advertising.

For the three months ended ~~June~~September 30, 2023 and 2022, Pandora and Off-platform advertising revenue was ~~$400~~$418 and ~~$403,~~$407, respectively, ~~a decrease~~an increase of 1%3%, or ~~$3.~~$11. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, Pandora and Off-platform advertising revenue was ~~$734~~$1,152 and ~~$738,~~$1,146, respectively, ~~a decrease~~an increase of 1%, or ~~$4.~~$6. The ~~decreases~~increases were primarily driven by ~~lower streaming sell-through,~~higher podcasting revenue, partially offset by ~~higher podcasting revenue.~~lower sell-through on the Pandora ad-supported service.

We expect Pandora and Off-platform advertising revenue to increase due to growth in podcast and programmatic revenue.

Total Consolidated Revenue

Total Consolidated Revenue for the three months ended ~~June~~September 30, 2023 and 2022 was ~~$2,250~~$2,271 and ~~$2,253,~~$2,280, respectively, a decrease of less than 1%, or ~~$3.~~$9. Total Consolidated Revenue for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was ~~$4,394~~$6,665 and ~~$4,440,~~$6,720, respectively, a decrease of 1%, or ~~$46.~~$55.

Sirius XM Cost of Services

Sirius XM Cost of Services includes revenue share and royalties, programming and content, customer service and billing, and transmission expenses.

Sirius XM Revenue Share and Royalties include royalties for transmitting content, including streaming royalties, as well as automaker, content provider and advertising revenue share.

For the three months ended ~~June~~September 30, 2023 and 2022, revenue share and royalties were ~~$405~~$406 and ~~$397,~~$391, respectively, an increase of 2%4%, or ~~$8,~~$15, and increased as a percentage of total Sirius XM revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, revenue share and royalties were ~~$796~~$1,201 and ~~$779,~~$1,169, respectively, an increase of 2%3%, or ~~$17,~~$32, and increased as a percentage of total Sirius XM revenue. The increases were driven by higher web streaming royalty rates.

We expect our Sirius XM revenue share and royalty costs to ~~increase due to~~remain relatively flat as higher royalty rates under the statutory webcasting license resulting from increases in the Consumer Price Index ~~as well as increases based on higher~~are anticipated to be offset by lower eligible subscription revenue.

Sirius XM Programming and Content includes costs to acquire, create, promote and produce content. We have entered into various agreements with third parties for music and non-music programming that require us to pay license fees and other amounts.

For the three months ended ~~June~~September 30, 2023 and 2022, programming and content expenses were ~~$135~~$136 and $139, respectively, a decrease of 3%2%, or ~~$4,~~$3, and decreased as a percentage of total Sirius XM revenue. For each of the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, programming and content expenses were ~~$271 and $268, respectively, an increase of 1%, or $3,~~$407 and increased as a percentage of total Sirius XM revenue. The decrease for the three month period was primarily driven by lower ~~license costs. The increase for the six month period was driven by content licensing costs and~~ live performance ~~production~~ costs.

We expect our Sirius XM programming and content expenses to remain relatively flat.

Sirius XM Customer Service and Billing includes costs associated with the operation and management of internal and third-party customer service centers, and our subscriber management systems as well as billing and collection costs, bad debt expense, and transaction fees.

For the three months ended ~~June~~September 30, 2023 and 2022, customer service and billing expenses were ~~$100~~$96 and $103, respectively, a decrease of 3%7% or ~~$3,~~$7, and decreased as a percentage of total Sirius XM revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, customer service and billing expenses were ~~$203~~$300 and ~~$207,~~$310, respectively, a decrease of 2%3% or ~~$4,~~$10, and decreased as a percentage of total Sirius XM revenue. The decreases were primarily driven by lower call center and personnel-related costs, partially offset by higher transaction costs.

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We expect our Sirius XM customer service and billing expenses to decline due to lower call center and personnel-related costs.

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Sirius XM Transmission consists of costs associated with the operation and maintenance of our terrestrial repeater networks; satellites; satellite telemetry, tracking and control systems; satellite uplink facilities; studios; and delivery of our Internet and 360L streaming and connected vehicle services.

For the three months ended ~~June~~September 30, 2023 and 2022, transmission expenses were ~~$41~~$44 and ~~$36,~~$38, respectively, an increase of ~~14%~~16%, or ~~$5,~~$6, and increased as a percentage of total Sirius XM revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, transmission expenses were ~~$82~~$126 and ~~$77,~~$116, respectively, an increase of 6%9%, or ~~$5,~~$10, and increased as a percentage of total Sirius XM revenue. The increases were primarily driven by higher costs associated with our 360L platform and ~~streaming costs as well as higher personnel related costs.~~streaming.

We expect our Sirius XM transmission expenses to increase as costs associated with consumers using our 360L platform rise and investments in internet streaming grow.

Sirius XM Cost of Equipment includes costs from the sale of satellite radios, components and accessories and provisions for inventory allowance attributable to products purchased for resale in our direct to consumer distribution channels.

For ~~each of~~ the three months ended ~~June~~September 30, 2023 and 2022, cost of equipment was $3 and $4, respectively, a decrease of 25%, or $1, and decreased as a percentage of total Sirius XM revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, cost of equipment was $7$10 and ~~$6,~~$9, respectively, an increase of ~~17%~~11%, or $1, and increased as a percentage of total Sirius XM revenue. The decrease for the three month period was driven by lower shipping costs. The increase for the nine month period was driven by higher inventory ~~reserves.~~write downs.

We expect our Sirius XM cost of equipment to fluctuate with the sales of our satellite radios.

Pandora and Off-platform Cost of Services

Pandora and Off-platform Cost of Services includes revenue share and royalties, programming and content, customer service and billing, and transmission expenses.

Pandora and Off-platform Revenue Share and Royalties includes licensing fees paid for streaming music or other content costs related to podcasts as well as revenue share paid to third party ad servers. We make payments to third party ad servers for the period the advertising impressions are delivered or click-through actions occur, and accordingly, we record this as a cost of service in the related period.

For the three months ended ~~June~~September 30, 2023 and 2022, revenue share and royalties were ~~$327~~$325 and ~~$314,~~$318, respectively, an increase of 4%2%, or ~~$13, and increased~~$7, but decreased as a percentage of total Pandora and Off-platform revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, revenue share and royalties were ~~$636~~$961 and ~~$602,~~$921, respectively, an increase of 6%4%, or ~~$34,~~$40, and increased as a percentage of total Pandora and Off-platform revenue. The increases were primarily due to higher podcast revenue share driven by growth in podcast advertising revenue as well as higher royalty expense due to costs related to an increase in certain web streaming royalty rates.

We expect our Pandora and Off-platform revenue share and royalties to increase related to growth in our podcast revenue.

Pandora and Off-platform Programming and Content includes costs to produce live listener events and promote content.

For the three months ended ~~June~~September 30, 2023 and 2022, programming and content expenses were ~~$18~~$17 and ~~$14,~~$16, respectively, an increase of ~~29%~~6%, or ~~$4,~~$1, and increased as a percentage of total Pandora and Off-platform revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, programming and content expenses were ~~$32~~$49 and ~~$24,~~$41, respectively, an increase of ~~33%~~20%, or $8, and increased as a percentage of total Pandora and Off-platform revenue. The increases were primarily attributable to higher podcast license fees ~~as well as~~and higher live event costs, partially offset by lower personnel-related costs.

We expect our Pandora and Off-platform programming and content costs to increase as we offer additional programming and produce live events and listener promotions.

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Pandora and Off-platform Customer Service and Billing includes transaction fees on subscription purchases through mobile app stores and bad debt expense.

For the three months ended ~~June~~September 30, 2023 and 2022, customer service and billing expenses were ~~$23~~$20 and ~~$22,~~$19, respectively, an increase of 5%, or $1, and increased as a percentage of total Pandora and Off-platform revenue. For ~~the~~

~~Table~~each of ~~Contents~~

~~six~~the nine months ended ~~June~~September 30, 2023 and 2022, customer service and billing expenses were ~~$43 and $44, respectively, a decrease of 2% or $1,~~$63 and decreased as a percentage of total Pandora and Off-platform revenue. The increase for the three month period was driven by higher bad debt ~~expense, partially offset by lower transaction fees.~~expense. The ~~decrease~~results for the ~~six~~nine month period ~~was~~were driven by lower transaction fees ~~partially~~ offset by higher bad debt expense.

We expect our Pandora and Off-platform customer service and billing costs to decrease driven by lower ~~transaction fees.~~expected bad debt expense.

Pandora and Off-platform Transmission includes costs associated with content streaming, maintaining our streaming radio and on-demand subscription services and creating and serving advertisements through third-party ad servers.

For the three months ended ~~June~~September 30, 2023 and 2022, transmission expenses were $9$10 and ~~$18,~~$13, respectively, a decrease of ~~50%~~23%, or ~~$9,~~$3, and decreased as a percentage of total Pandora and Off-platform revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, transmission expenses were ~~$17~~$27 and ~~$29,~~$41, respectively, a decrease of ~~41%~~34%, or ~~$12,~~$14, and decreased as a percentage of total Pandora and Off-platform revenue. The decreases were driven by lower colocation and personnel-related costs as well as lower streaming costs resulting from a decline in listener hours.

We expect our Pandora and Off-platform transmission costs to ~~remain flat as~~increase due to higher hosting costs, partially offset by lower personnel-related ~~costs will be offset by an increase in hosting~~ costs.

Operating Costs

Subscriber Acquisition Costs are costs associated with our satellite radio service and include hardware subsidies paid to radio manufacturers, distributors and automakers; subsidies paid for chipsets and certain other components used in manufacturing radios; device royalties for certain radios and chipsets; product warranty obligations; and freight. The majority of subscriber acquisition costs are incurred and expensed in advance of acquiring a subscriber. Subscriber acquisition costs do not include advertising costs, marketing, loyalty payments to distributors and dealers of satellite radios or revenue share payments to automakers and retailers of satellite radios.

For the three months ended ~~June~~September 30, 2023 and 2022, subscriber acquisition costs were ~~$93~~$87 and ~~$91,~~$86, respectively, an increase of 2%1%, or ~~$2,~~$1, and increased as a percentage of total revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, subscriber acquisition costs were ~~$183~~$270 and ~~$181,~~$267, respectively, an increase of 1%, or ~~$2,~~$3, and increased as a percentage of total revenue. Higher hardware subsidies driven by installations, which grew due to increased production by automakers, were offset by lower commission and hardware subsidy rates.

We expect subscriber acquisition costs to fluctuate with ~~OEM~~automaker installations. We intend to continue to offer subsidies and other incentives to induce ~~OEMs~~automakers to include our technology in their vehicles.

Sales and Marketing includes costs for marketing, advertising, media and production, including promotional events and sponsorships; cooperative and artist marketing; and personnel related costs including salaries, commissions, and sales support. Marketing costs include expenses related to direct mail, outbound telemarketing, email communications, social media, television and streaming performance media, and third party promotional offers.

For the three months ended ~~June~~September 30, 2023 and 2022, sales and marketing expenses were ~~$220~~$237 and ~~$285,~~$281, respectively, a decrease of ~~23%~~16%, or ~~$65,~~$44, and decreased as a percentage of total revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, sales and marketing expenses were ~~$443~~$680 and ~~$557,~~$838, respectively, a decrease of ~~20%~~19%, or ~~$114,~~$158, and decreased as a percentage of total revenue. The decreases were primarily due to a decrease in streaming marketing ~~expenditures~~ and marketing to support our ~~brands.~~brands as well as lower personnel-related costs.

We anticipate that sales and marketing expenses will ~~increase as spend for direct marketing, performance media, and brand marketing spend associated with acquiring and retaining listeners and subscribers increases in the latter half~~remain relatively flat.

Table of ~~2023.~~Contents

Engineering, Design and Development consists primarily of compensation and related costs to develop chipsets and new products and services, including streaming and connected vehicle services, research and development for broadcast information systems and the design and development costs to incorporate Sirius XM radios into new vehicles manufactured by automakers.

For the three months ended ~~June~~September 30, 2023 and 2022, engineering, design and development expenses were ~~$83~~$72 and ~~$72,~~$70, respectively, an increase of ~~15%~~3%, or ~~$11,~~$2, and increased as a percentage of total revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, engineering, design and development expenses were ~~$162~~$234 and ~~$139,~~$208, respectively, an increase of

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~~17%~~ 13%, or ~~$23,~~$26, and increased as a percentage of total revenue. The ~~increases were~~increase for the three month period was driven by cloud hosting costs, partially offset by lower personnel-related costs. The increase for the nine month period was driven by higher ~~personnel-related~~cloud hosting and ~~cloud hosting~~personnel-related costs.

We expect engineering, design and development expenses to increase as we continue to develop our infrastructure, products and services.

General and Administrative primarily consists of compensation and related costs for personnel and facilities, and includes costs related to our finance, legal, human resources and information technologies departments.

For the three months ended ~~June~~September 30, 2023 and 2022, general and administrative expenses were ~~$157~~$119 and ~~$127,~~$132, respectively, ~~an increase~~a decrease of ~~24%~~10%, or ~~$30,~~$13, and ~~increased~~decreased as a percentage of total revenue. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, general and administrative expenses were ~~$303~~$421 and ~~$250,~~$382, respectively, an increase ~~21%~~of 10%, or ~~$53,~~$39, and increased as a percentage of total revenue. The ~~increases were~~decrease for the three month period was primarily driven by lower personnel-related costs attributed to our share-based compensation plan and lower consulting costs. The increase for the nine month period was primarily driven by increased legal costs, including amounts associated with the settlement of certain litigation matters of $24 during the three months ended June 30, 2023, as well as higher personnel-related benefits attributed to our Deferred Compensation Plan.

We expect our general and administrative expenses to ~~remain relatively flat.~~decrease driven by lower personnel-related costs.

Depreciation and Amortization represents the recognition in earnings of the cost of assets used in operations, including our satellite constellations, property, equipment and intangible assets, over their estimated service lives.

For the three months ended ~~June~~September 30, 2023 and 2022, depreciation and amortization expense was ~~$139~~$130 and ~~$135,~~$134, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, depreciation and amortization expense was ~~$275~~$405 and ~~$270,~~$404, respectively. The ~~increases~~decrease for the three month period was driven by lower amortization related to our intangible assets, partially offset by increases in capitalized software and ~~six~~hardware. The increase for the nine month ~~periods were~~period was driven by increases in capitalized software and hardware.

Impairment, Restructuring and Acquisition Costs represents impairment charges, net of insurance recoveries, associated with the carrying amount of an asset exceeding the asset's fair value, restructuring expenses associated with the abandonment of certain leased office spaces as well as employee severance charges associated with organizational changes, and acquisition costs.

For the three months ended ~~June~~September 30, 2023 and 2022, impairment, restructuring and acquisition costs were ~~$18~~$5 and ~~$1,~~$69, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, impairment, restructuring and acquisition costs were ~~$50~~$56 and ~~$1,~~$70, respectively. During the three months ended ~~June~~September 30, 2023, we recorded restructuring related costs and impairments ~~primarily related to terminated software projects~~ of ~~$10, restructuring costs of $5, and a cost-method investment impairment of $2.~~$5. During the ~~six month~~nine months ended ~~June~~September 30, 2023, we recorded a charge of ~~$23 associated with~~$31 primarily related to severance and other ~~employee~~related costs, impairments primarily related to terminated software projects of ~~$13,~~$15, vacated office space impairments of ~~$7, restructuring costs~~$5, accrued expenses of ~~$5,~~$2 for which we will not recognize any future benefits, and a cost-method investment impairment of $2. During the three and nine months ended ~~June~~September 30, 2022, we recorded an impairment of $43 associated with terminated software projects, $16 related to certain vacated office spaces, $4 in connection with furniture and equipment located at the impaired office spaces, and $5 related to personnel severance. Acquisition related costs were $1 ~~of acquisition costs. During~~and $2 during the ~~six~~three and nine months ended ~~June~~September 30, 2022, ~~we recorded $3~~respectively.

Table of ~~acquisition costs which was partially offset by other impairment costs of $2.~~Contents

Other (Expense) Income

Interest Expense includes interest on outstanding debt.

For the three months ended ~~June~~September 30, 2023 and 2022, interest expense was ~~$107~~$106 and ~~$104,~~$107, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, interest expense was ~~$213~~$319 and ~~$206,~~$314, respectively. The ~~increase~~decrease for the three month period was driven by lower average outstanding debt balance, partially offset by higher rates driven by the Credit Facility and Incremental Term Loan. The increase for the nine month period was driven by higher rates driven by the Credit Facility and Incremental Term Loan, partially offset by a ~~higher~~lower average outstanding debt balance.

Other ~~Income (Expense)~~Expense primarily includes realized and unrealized gains and losses from our Deferred Compensation Plan and other investments, interest and dividend income, our share of the income or loss from equity investments in Sirius XM Canada and SoundCloud, and transaction costs related to non-operating investments.

For each of the three months ended ~~June~~September 30, 2023 and 2022, other ~~income (loss)~~expense was ~~$0 and $(4), respectively.~~$3. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, other ~~income (loss)~~expense was $3$0 and ~~$(2),~~$5, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, we recorded trading gains associated with the investments held for our Deferred Compensation Plan as well as our share of Sirius XM Canada's net income, partially offset by our share of SoundCloud's net losses. For the three ~~and six~~ months ended ~~June~~September 30, 2022, we recorded trading losses associated with the investments held for our

~~Table~~ Deferred Compensation Plan as well as our share of ~~Contents~~

Sirius XM Canada's and SoundCloud's net losses. For the nine months ended September 30, 2022, we recorded trading losses associated with the investments held for our Deferred Compensation Plan, partially offset by our share of Sirius XM Canada's net income and interest earned on our loan to Sirius XM Canada.

Income Taxes

Income Tax Expense includes the change in our deferred tax assets, current federal and state tax expenses, and foreign withholding taxes.

For the three months ended ~~June~~September 30, 2023 and 2022, income tax expense was ~~$62~~$92 and ~~$96,~~$110, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, income tax expense was ~~$138~~$230 and ~~$197,~~$307, respectively.

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Key Financial and Operating Performance Metrics

In this section, we present certain financial performance measures, some of which are presented as Non-GAAP items, which include free cash flow and adjusted EBITDA. We also present certain operating performance measures. Our adjusted EBITDA excludes the impact of share-based payment expense. Additionally, when applicable, our adjusted EBITDA metric excludes the effect of significant items that do not relate to the on-going performance of our business. We use these Non-GAAP financial and operating performance measures to manage our business, to set operational goals and as a basis for determining performance-based compensation for our employees. See the accompanying Glossary for more details and for the reconciliation to the most directly comparable GAAP measure (where applicable).

We believe these Non-GAAP financial and operating performance measures provide useful information to investors regarding our financial condition and results of operations. We believe these Non-GAAP financial and operating performance measures may be useful to investors in evaluating our core trends because they provide a more direct view of our underlying costs. We believe investors may use our adjusted EBITDA to estimate our current enterprise value and to make investment decisions. We believe free cash flow provides useful supplemental information to investors regarding our cash available for future subscriber acquisitions and capital expenditures, to repurchase or retire debt, to acquire other companies and our ability to return capital to stockholders. By providing these Non-GAAP financial and operating performance measures, together with the reconciliations to the most directly comparable GAAP measure (where applicable), we believe we are enhancing investors' understanding of our business and our results of operations.

Our Non-GAAP financial measures should be viewed in addition to, and not as an alternative for or superior to, our reported results prepared in accordance with GAAP. In addition, our Non-GAAP financial measures may not be comparable to similarly-titled measures by other companies. Please refer to the Glossary for a further discussion of such Non-GAAP financial and operating performance measures and reconciliations to the most directly comparable GAAP measure (where applicable). Subscribers and subscription related revenues and expenses associated with our connected vehicle services and Sirius XM Canada are not included in Sirius XM's subscriber count or subscriber-based operating metrics.

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Set forth below are our subscriber balances as of ~~June~~September 30, 2023 compared to ~~June~~September 30, 2022.


		As of June 30,		2023 vs 2022 Change				As of September 30,		2023 vs 2022 Change
(subscribers in thousands)	(subscribers in thousands)	2023	2022		Amount	%			(subscribers in thousands)	2023	2022	Amount	%
Sirius XM	Sirius XM								Sirius XM
Self-pay subscribers	Self-pay subscribers	31,907	32,037		(130)	—	%		Self-pay subscribers	31,811	32,224	(413)	(1)	%
Paid promotional subscribers	Paid promotional subscribers	2,140	1,994		146	7	%		Paid promotional subscribers	2,158	1,946	212	11	%
Ending subscribers	Ending subscribers	34,047	34,031		16	—	%		Ending subscribers	33,969	34,170	(201)	(1)	%

Sirius XM Canada subscribers	Sirius XM Canada subscribers	2,628	2,574		54	2	%		Sirius XM Canada subscribers	2,661	2,563	98	4	%

Pandora and Off-platform	Pandora and Off-platform								Pandora and Off-platform
Monthly active users - all services	Monthly active users - all services	47,419	50,478		(3,059)	(6)	%		Monthly active users - all services	46,500	48,769	(2,269)	(5)	%
Self-pay subscribers	Self-pay subscribers	6,229	6,319		(90)	(1)	%		Self-pay subscribers	6,117	6,267	(150)	(2)	%
Paid promotional subscribers	Paid promotional subscribers	—	—		—	nm			Paid promotional subscribers	—	—	—	nm
Ending subscribers	Ending subscribers	6,229	6,319		(90)	(1)	%		Ending subscribers	6,117	6,267	(150)	(2)	%

The following table contains our Non-GAAP financial and operating performance measures which are based on our adjusted results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.


		For the Three Months Ended June 30,								For the Six Months Ended June 30,									2023 vs 2022 Change															For the Three Months Ended September 30,					For the Nine Months Ended September 30,									2023 vs 2022 Change
																		Three Months						Six Months																							Three Months					Nine Months
(subscribers in thousands)	(subscribers in thousands)				2023				2022				2023				2022						Amount			%				Amount			%				(subscribers in thousands)		2023				2022				2023				2022					Amount			%				Amount			%
Sirius XM	Sirius XM																																		Sirius XM
Self-pay subscribers	Self-pay subscribers	(132)				23				(479)				(1)						(155)				(674)	%		(478)				nm				Self-pay subscribers	(96)				187				(575)				186					(283)				(151)	%		(761)				nm
Paid promotional subscribers	Paid promotional subscribers	155				54				221				—						101				(187)	%		221				nm				Paid promotional subscribers	2				(49)				239				(48)					51				104	%		287				nm
Net additions	Net additions	23				77				(258)				(1)						(54)				70	%		(257)				nm				Net additions	(94)				138				(336)				138					(232)				(168)	%		(474)				nm
Weighted average number of subscribers	Weighted average number of subscribers	34,016				33,953				34,065				33,927						63				—	%		138				—	%			Weighted average number of subscribers	34,000				34,076				34,044				33,977					(76)				—	%		67				—	%
Average self-pay monthly churn	Average self-pay monthly churn	1.5		%		1.5		%		1.6		%		1.6		%				—		%		—	%		—		%		—	%			Average self-pay monthly churn	1.6		%		1.5		%		1.6		%		1.6		%			0.1		%		7	%		—		%		—	%
ARPU (1)	ARPU (1)	$	15.66			$	15.62			$	15.47			$	15.58					$	0.04			—	%		$	(0.11)			(1)	%			ARPU (1)	$	15.69			$	15.72			$	15.54			$	15.63				$	(0.03)			—	%		$	(0.09)			(1)	%
SAC, per installation	SAC, per installation	$	13.73			$	16.27			$	14.05			$	14.46					$	(2.54)			(16)	%		$	(0.41)			(3)	%			SAC, per installation	$	12.46			$	12.73			$	13.53			$	13.87				$	(0.27)			(2)	%		$	(0.34)			(2)	%

Pandora and Off-platform	Pandora and Off-platform																																		Pandora and Off-platform
Self-pay subscribers	Self-pay subscribers	7				(9)				14				(5)						16				(178)	%		19				(380)	%			Self-pay subscribers	(112)				(52)				(98)				(57)					(60)				(115)	%		(41)				(72)	%
Paid promotional subscribers	Paid promotional subscribers	—				—				—				(69)						—				nm			69				nm				Paid promotional subscribers	—				—				—				(69)					—				nm			69				nm
Net additions	Net additions	7				(9)				14				(74)						16				(178)	%		88				(119)	%			Net additions	(112)				(52)				(98)				(126)					(60)				(115)	%		28				22	%
Weighted average number of subscribers	Weighted average number of subscribers	6,195				6,313				6,199				6,334						(118)				(2)	%		(135)				(2)	%			Weighted average number of subscribers	6,188				6,292				6,195				6,320					(104)				(2)	%		(125)				(2)	%

Ad supported listener hours (in billions)	Ad supported listener hours (in billions)	2.73				2.84				5.31				5.53						(0.11)				(4)	%		(0.21)				(4)	%			Ad supported listener hours (in billions)	2.64				2.75				7.95				8.28					(0.11)				(4)	%		(0.33)				(4)	%
Advertising revenue per thousand listener hours (RPM)	Advertising revenue per thousand listener hours (RPM)	$	97.13			$	99.75			$	91.28			$	94.90					$	(2.62)			(3)	%		$	(3.62)			(4)	%			Advertising revenue per thousand listener hours (RPM)	$	104.33			$	103.32			$	95.61			$	97.70				$	1.01			1	%		$	(2.09)			(2)	%

Total Company	Total Company																																		Total Company
Adjusted EBITDA	Adjusted EBITDA	$	702			$	679			$	1,327			$	1,369					$	23			3	%		$	(42)			(3)	%			Adjusted EBITDA	$	747			$	720			$	2,075			$	2,091				$	27			4	%		$	(16)			(1)	%
Free cash flow	Free cash flow	$	323			$	435			$	467			$	693					$	(112)			(26)	%		$	(226)			(33)	%			Free cash flow	$	291			$	329			$	758			$	1,022				$	(38)			(12)	%		$	(264)			(26)	%

nm - not meaningful

(1) ARPU for Sirius XM excludes subscriber revenue from our connected vehicle services of ~~$43~~$39 and ~~$47~~$46 for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$82~~$121 and ~~$95~~$141 for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

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Sirius XM

Subscribers. At ~~June~~September 30, 2023, Sirius XM had approximately ~~34,047~~33,969 subscribers, ~~an increase~~a decrease of ~~16,~~201, from the approximately ~~34,031~~34,170 subscribers as of ~~June~~September 30, 2022. The ~~increase~~decrease was due to ~~the increase in paid promotional subscribers generated by vehicle sales, partially offset by~~ a decrease in our self-pay subscriber base resulting from lower vehicle conversion rates, and higher vehicle related churn, partially offset by ~~lower non-pay churn.~~an increase in paid promotional subscribers generated by vehicle sales.

For the three months ended ~~June~~September 30, 2023 and 2022, net subscriber additions were 23(94) and ~~77,~~138, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, net subscriber additions were ~~(258)~~(336) and ~~(1),~~138, respectively. Self-pay net additions decreased as a result of ~~higher~~lower new and used vehicle conversion rates, unfavorable vehicle related churn ~~lower vehicle conversion rates as well as~~and lower streaming net additions, partially offset by lower non-pay churn. Paid promotional net additions increased generated by higher vehicle sales.

Sirius XM Canada Subscribers. At ~~June~~September 30, 2023, Sirius XM Canada had approximately ~~2,628~~2,661 subscribers, an increase of ~~54,~~98, or 2%4%, from the approximately ~~2,574~~2,563 Sirius XM Canada subscribers as of ~~June~~September 30, 2022.

Average Self-pay Monthly Churn is derived by dividing the monthly average of self-pay deactivations for the period by the average number of self-pay subscribers for the period. (See accompanying Glossary for more details.)

For ~~each of~~ the three months ended ~~June~~September 30, 2023 and 2022, our average self-pay monthly churn rate was 1.6% and 1.5%~~. Higher~~, respectively. The increase was driven by higher vehicle related churn, ~~was~~partially offset by lower non-pay churn. For each of the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, our average self-pay monthly churn rate was 1.6%. Higher vehicle related churn was offset by lower non-pay churn.

ARPU is derived from total earned Sirius XM subscriber revenue (excluding revenue derived from our connected vehicle services) and net advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. (See the accompanying Glossary for more details.)

For the three months ended ~~June~~September 30, 2023 and 2022, subscriber ARPU - Sirius XM was ~~$15.66~~$15.69 and ~~$15.62,~~$15.72, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, subscriber ARPU - Sirius XM was ~~$15.47~~$15.54 and ~~$15.58,~~$15.63, respectively. The ~~increase for the three month period was primarily~~decreases were driven by ~~increases~~an increase in ~~certain~~subscribers on promotional and streaming-only self-pay subscription rates, partially offset by the impact of the mix of self-pay promotional plans, a reduction in rates associated with paid promotional plans from automakers as well as lower advertising revenue. The decrease for the six month period was driven by the impact of the mix of self-pay promotional plans, a reduction in rates associated with paid promotional plans from automakers as well as lower advertising revenue; partially offset by increases in certain subscription rates.

SAC, Per Installation, is derived from subscriber acquisition costs and margins from the sale of radios, components and accessories (excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. (See the accompanying Glossary for more details.)

For the three months ended ~~June~~September 30, 2023 and 2022, SAC, per installation, was ~~$13.73~~$12.46 and ~~$16.27,~~$12.73, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, SAC, per installation, was ~~$14.05~~$13.53 and ~~$14.46,~~$13.87, respectively. The decreases were driven by a change in the mix of ~~OEMs and the impacts on the previous year related to the semiconductor supply shortages which lead to higher chipset costs in our new technology.~~OEMs.

Pandora and Off-platform

Monthly Active Users. At ~~June~~September 30, 2023, Pandora had approximately ~~47,419~~46,500 monthly active users, a decrease of ~~3,059~~2,269 monthly active users, or 6%5%, from the ~~50,478~~48,769 monthly active users as of ~~June~~September 30, 2022. The decrease in monthly active users was driven by churn and a decline in the number of new users.

Subscribers. At ~~June~~September 30, 2023, Pandora had approximately ~~6,229~~6,117 subscribers, a decrease of ~~90,~~150, or 1%2%, from the approximately ~~6,319~~6,267 subscribers as of ~~June~~September 30, 2022.

For the three months ended ~~June~~September 30, 2023 and 2022, net subscriber additions were 7(112) and ~~(9)~~(52), respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, net subscriber additions were 14(98) and ~~(74)~~(126), respectively. The ~~increases~~decreases in ending subscribers were driven by ~~improved retention.~~decreases in trial starts and lower retention due to certain price increases.

Ad supported listener hours are a key indicator of our Pandora business and the engagement of our Pandora listeners. We include ad supported listener hours related to Pandora's non-music content offerings in the definition of listener hours.

For the three months ended ~~June~~September 30, 2023 and 2022, ad supported listener hours were ~~2,729~~2,637 and ~~2,842,~~2,750, respectively, a decrease of 4%, or 113. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, ad supported listener ~~hours were 5,315 and~~

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~~5,527,~~hours were 7,952 and 8,280, respectively, a decrease of 4%, or ~~212.~~328. The decreases in ad supported listener hours were primarily driven by the decline in monthly active users, partially offset by increased hours per active user.

RPM is a key indicator of our ability to monetize advertising inventory created by our listener hours on the Pandora services. Ad RPM is calculated by dividing advertising revenue by the number of thousands of listener hours of our Pandora advertising-based service.

For the three months ended ~~June~~September 30, 2023 and 2022, RPM was ~~$97.13~~$104.33 and ~~$99.75,~~$103.32, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, RPM was ~~$91.28~~$95.61 and ~~$94.90,~~$97.70, respectively. The ~~decreases~~increase for the three ~~and six~~ month ~~periods were~~period was driven by an increase in advertisements sold per hour. The decrease for the nine month period was primarily driven by a ~~decrease~~decline in ~~total~~higher priced advertisements ~~sold.~~sold, partially offset by a slight increase in advertisements sold per hour.

Total Company

Adjusted EBITDA. Adjusted EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA excludes the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and acquisition costs, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable). (See the accompanying Glossary for a reconciliation to GAAP and for more details.)

For the three months ended ~~June~~September 30, 2023 and 2022, adjusted EBITDA was ~~$702~~$747 and ~~$679,~~$720, respectively, an increase of 3%4%, or ~~$23.~~$27. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, adjusted EBITDA was ~~$1,327~~$2,075 and ~~$1,369,~~$2,091, respectively, a decrease of 3%1%, or ~~$42.~~$16. The increase for the three month period was driven by lower sales and marketing costs, partially offset by higher revenue share and ~~royalties as well as higher litigation costs.~~royalties. The decrease for the ~~six~~nine month period was driven by lower revenue combined with higher revenue share and royalties due to podcast minimum guarantees and streaming rates, ~~and higher litigation;~~ partially offset by lower sales and marketing costs.

Free Cash Flow includes cash provided by operations, net of additions to property and equipment, and restricted and other investment activity. (See the accompanying Glossary for a reconciliation to GAAP and for more details.)

For the three months ended ~~June~~September 30, 2023 and 2022, free cash flow was ~~$323~~$291 and ~~$435,~~$329, respectively, a decrease of ~~26%~~12%, or ~~$112.~~$38. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, free cash flow was ~~$467~~$758 and ~~$693,~~$1,022, respectively, a decrease of ~~33%~~26%, or ~~$226.~~$264. The ~~decreases were~~decrease for the three month period was primarily driven by an increase in satellite capital expenditures. The decrease for the nine month period was primarily driven by higher cash taxes paid and increases in satellite capital expenditures.

Liquidity and Capital Resources

The following table presents a summary of our cash flow activity for the ~~six~~nine months ended ~~June~~September 30, 2023 compared with the ~~six~~nine months ended ~~June~~September 30, 2022.


		For the Six Months Ended June 30,						For the Nine Months Ended September 30,
		2023		2022		2023 vs 2022				2023		2022		2023 vs 2022
Net cash provided by operating activities	Net cash provided by operating activities	$	801	$	888	$	(87)		Net cash provided by operating activities	$	1,279	$	1,300	$	(21)
Net cash used in investing activities	Net cash used in investing activities	(365)		(333)		(32)			Net cash used in investing activities	(554)		(415)		(139)
Net cash used in financing activities	Net cash used in financing activities	(442)		(620)		178			Net cash used in financing activities	(729)		(1,036)		307
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(6)		(65)		59			Net decrease in cash, cash equivalents and restricted cash	(4)		(151)		147
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	65		199		(134)			Cash, cash equivalents and restricted cash at beginning of period	65		199		(134)
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	59	$	134	$	(75)		Cash, cash equivalents and restricted cash at end of period	$	61	$	48	$	13

Cash Flows Provided by Operating Activities

Cash flows provided by operating activities decreased by ~~$87~~$21 to ~~$801~~$1,279 for the ~~six~~nine months ended ~~June~~September 30, 2023 from ~~$888~~$1,300 for the ~~six~~nine months ended ~~June~~September 30, 2022.

Our largest source of cash provided by operating activities is cash generated by subscription and subscription-related revenues. We also generate cash from the sale of advertising through our Pandora business, advertising on certain non-music channels on Sirius XM and the sale of satellite radios, components and accessories. Our primary uses of cash from operating activities include revenue share and royalty payments to distributors, programming and content providers, and payments to radio manufacturers, distributors and automakers. In addition, uses of cash from operating activities include payments to

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vendors to service, maintain and acquire listeners and subscribers, general corporate expenditures, and compensation and related costs.

Cash Flows Used in Investing Activities

Cash flows used in investing activities in the ~~six~~nine months ended ~~June~~September 30, 2023 were primarily due to spending for capitalized software and hardware, the construction of satellites and acquisitions of tax-effective investments for total cash consideration of ~~$31.~~$33. Cash flows used in investing activities in the ~~six~~nine months ended ~~June~~September 30, 2022 were primarily due to spending for capitalized software and hardware, the construction of satellites and an acquisition for total cash consideration of ~~$137.~~$136. We spent ~~$130~~$212 and ~~$124~~$187 on capitalized software and hardware as well as ~~$174~~$261 and ~~$51~~$64 to construct satellites during the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Cash Flows Used in Financing Activities

Cash flows used in financing activities consists of the issuance and repayment of long-term debt, the purchase of common stock under our share repurchase program, the payment of cash dividends and taxes paid in lieu of shares issued for stock-based compensation. Proceeds from long-term debt have been used to fund our operations, construct and launch new satellites, fund acquisitions, invest in other infrastructure improvements and purchase shares of our common stock.

Cash flows used in financing activities in the ~~six~~nine months ended ~~June~~September 30, 2023 were primarily due to the payment of cash dividends of ~~$188,~~$281, the repurchase of $173 in principal amount of Pandora's 1.75% Convertible Senior Notes due 2023, the purchase and retirement of shares of our common stock under our repurchase program for ~~$199,~~$274, and payment of ~~$18~~$50 for taxes in lieu of shares issued for share-based compensation, partially offset by net borrowings under our Credit Facility of ~~$143.~~$55. Cash flows used in financing activities in the ~~six~~nine months ended ~~June~~September 30, 2022 were primarily due to the payment of cash dividends of ~~$1,159,~~$1,245, the purchase and retirement of shares of our common stock under our repurchase program for ~~$415,~~$599, and payment of ~~$39~~$102 for taxes in lieu of shares issued for share-based compensation, partially offset by net borrowings under our Credit Facility of ~~$510~~$421 and an amendment to our Credit Facility to incorporate an Incremental Term Loan borrowing of $500 ($499 net of costs) which matures on April 11, 2024.

Future Liquidity and Capital Resource Requirements

Based upon our current business plans, we expect to fund operating expenses, capital expenditures, including the construction of replacement satellites, working capital requirements, interest payments, taxes and scheduled maturities of our debt with existing cash, cash flow from operations and borrowings under our Credit Facility. As of ~~June~~September 30, 2023, ~~$223~~$135 was outstanding under our Credit Facility and ~~$1,527~~$1,615 was available for future borrowing under our Credit Facility. We believe that we have sufficient cash and cash equivalents, as well as debt capacity, to cover our estimated short-term and long-term funding needs, including amounts to construct, launch and insure replacement satellites, as well as fund future stock repurchases, future dividend payments and to pursue strategic opportunities.

Our ability to meet our debt and other obligations depends on our future operating performance and on economic, financial, competitive and other factors.

We regularly evaluate our business plans and strategy. These evaluations often result in changes to our business plans and strategy, some of which may be material and significantly change our cash requirements. These changes in our business plans or strategy may include: the acquisition of unique or compelling programming; the development and introduction of new features or services; significant new or enhanced distribution arrangements; investments in infrastructure, such as satellites, equipment or radio spectrum; and acquisitions and investments, including acquisitions and investments that are not directly related to our existing business.

We may from time to time purchase our outstanding debt through open market purchases, privately negotiated transactions or otherwise. Purchases or retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Capital Return Program

As of ~~June~~September 30, 2023, our board of directors had authorized for repurchase an aggregate of $18,000 of our common stock. As of ~~June~~September 30, 2023, our cumulative repurchases since December 2012 under our stock repurchase program totaled ~~3,715~~3,731 shares for ~~$16,760,~~$16,834, and ~~$1,240~~$1,166 remained available for additional repurchases under our existing stock repurchase program authorization.

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Shares of common stock may be purchased from time to time on the open market and in privately negotiated transactions, including in accelerated stock repurchase transactions and transactions with Liberty Media and its affiliates. We intend to fund the additional repurchases through a combination of cash on hand, cash generated by operations and future borrowings. The size and timing of any purchases will be based on a number of factors, including price and business and market conditions.

Debt Covenants

The indentures governing Sirius XM's senior notes and Pandora's convertible notes and the agreement governing the Sirius XM Credit Facility include restrictive covenants. As of ~~June~~September 30, 2023, we were in compliance with such covenants. For a discussion of our “Debt Covenants,” refer to Note 12 to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We do not have any significant off-balance sheet arrangements other than those disclosed in Note 15 to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Contractual Cash Commitments

For a discussion of our “Contractual Cash Commitments,” refer to Note 15 to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q.

Related Party Transactions

For a discussion of “Related Party Transactions,” refer to Note 11 to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

For a discussion of our “Critical Accounting Policies and Estimates,” refer to “Management's Discussion and Analysis of

Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes to our critical accounting policies and estimates since December 31, 2022.

Glossary

Monthly active users - the number of distinct registered users on the Pandora services, including subscribers, which have consumed content within the trailing 30 days to the end of the final calendar month of the period. The number of monthly active users on the Pandora services may overstate the number of unique individuals who actively use our Pandora service, as one individual may use multiple accounts. To become a registered user on the Pandora services, a person must sign-up using an email address or access our service using a device with a unique identifier, which we use to create an account for our service.

Average self-pay monthly churn - for satellite-enabled subscriptions, the Sirius XM monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.

Adjusted EBITDA - EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA is a Non-GAAP financial measure that excludes or adjusts for the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and acquisition costs, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable). We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our capital structure and purchase price accounting. We believe investors find this Non-GAAP financial measure useful when analyzing our past operating performance with our current ~~performance and comparing our operating performance to the performance of other communications, entertainment and~~

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performance and comparing our operating performance to the performance of other communications, entertainment and media companies. We believe investors use adjusted EBITDA to estimate our current enterprise value and to make investment decisions. As a result of large capital investments in our satellite radio system, our results of operations reflect significant charges for depreciation expense. We believe the exclusion of share-based payment expense is useful as it is not directly related to the operational conditions of our business. We also believe the exclusion of impairment, restructuring and acquisition related costs, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of our normal operations for the period.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our consolidated statements of comprehensive income of certain expenses, including share-based payment expense. We endeavor to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure. Investors that wish to compare and evaluate our operating results after giving effect for these costs should refer to net income as disclosed in our unaudited consolidated statements of comprehensive income. Since adjusted EBITDA is a Non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023		2022		2023		2022				2023		2022		2023		2022
Net income:	Net income:	$	310	$	292	$	543	$	601		Net income:	$	363	$	247	$	906	$	848
Add back items excluded from Adjusted EBITDA:	Add back items excluded from Adjusted EBITDA:										Add back items excluded from Adjusted EBITDA:
Legal settlements and reserves	Legal settlements and reserves	24		—		24		—			Legal settlements and reserves	—		—		24		—
Impairment, restructuring and acquisition costs	Impairment, restructuring and acquisition costs	18		1		50		1			Impairment, restructuring and acquisition costs	5		69		56		70
Share-based payment expense (1)	Share-based payment expense (1)	42		47		87		92			Share-based payment expense (1)	48		50		135		143
Depreciation and amortization	Depreciation and amortization	139		135		275		270			Depreciation and amortization	130		134		405		404

Interest expense	Interest expense	107		104		213		206			Interest expense	106		107		319		314

Other (income) expense		—		4		(3)		2
Other expense											Other expense	3		3		—		5
Income tax expense	Income tax expense	62		96		138		197			Income tax expense	92		110		230		307

Adjusted EBITDA	Adjusted EBITDA	$	702	$	679	$	1,327	$	1,369		Adjusted EBITDA	$	747	$	720	$	2,075	$	2,091

(1)Allocation of share-based payment expense:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023		2022		2023		2022				2023		2022		2023		2022
Programming and content	Programming and content	$	8	$	9	$	15	$	16		Programming and content	$	10	$	9	$	25	$	26
Customer service and billing	Customer service and billing	1		1		3		3			Customer service and billing	1		1		4		4
Transmission	Transmission	1		1		2		3			Transmission	2		1		4		4
Sales and marketing	Sales and marketing	11		13		20		26			Sales and marketing	13		13		33		39
Engineering, design and development	Engineering, design and development	11		9		22		17			Engineering, design and development	11		11		33		27
General and administrative	General and administrative	10		14		25		27			General and administrative	11		15		36		43
Total share-based payment expense	Total share-based payment expense	$	42	$	47	$	87	$	92		Total share-based payment expense	$	48	$	50	$	135	$	143

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Free cash flow - is derived from cash flow provided by operating activities plus insurance recoveries on our satellites, net of additions to property and equipment and purchases of other investments. Free cash flow is a metric that our management and board of directors use to evaluate the cash generated by our operations, net of capital expenditures and other investment activity. In a capital intensive business, with significant investments in satellites, we look at our operating cash flow, net of these investing cash outflows, to determine cash available for future subscriber acquisition and capital expenditures, to repurchase or retire debt, to acquire other companies and to evaluate our ability to return capital to stockholders. We exclude from free cash flow certain items that do not relate to the on-going performance of our business, such as cash flows related to acquisitions, strategic and short-term investments, and net loan activity with related parties and other equity investees. We believe free cash flow is an indicator of the long-term financial stability of our business. Free cash flow, which is reconciled to “Net cash provided by operating activities,” is a Non-GAAP financial measure. This measure can be calculated by deducting amounts under the captions “Additions to property and equipment” and deducting or adding Restricted and other investment activity from “Net cash provided by operating activities” from the unaudited consolidated statements of cash flows. Free cash flow should be used in conjunction with other GAAP financial performance measures and may not be comparable to free cash flow measures presented by other companies. Free cash flow should be viewed as a supplemental measure rather than an alternative measure of cash flows from operating activities, as determined in accordance with GAAP. Free cash flow is limited and does not represent remaining cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt maturities. We believe free cash flow provides useful supplemental information to investors regarding our current cash flow, along with other GAAP measures (such as cash flows from operating and investing activities), to determine our financial condition, and to compare our operating performance to other communications, entertainment and media companies. Free cash flow is calculated as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023		2022		2023		2022				2023		2022		2023		2022
Cash Flow information	Cash Flow information										Cash Flow information
Net cash provided by operating activities	Net cash provided by operating activities	$	451	$	533	$	801	$	888		Net cash provided by operating activities	$	478	$	412	$	1,279	$	1,300
Net cash used in investing activities	Net cash used in investing activities	(130)		(191)		(365)		(333)			Net cash used in investing activities	(189)		(82)		(554)		(415)
Net cash used in financing activities	Net cash used in financing activities	(323)		(292)		(442)		(620)			Net cash used in financing activities	(287)		(416)		(729)		(1,036)
Free Cash Flow	Free Cash Flow										Free Cash Flow
Net cash provided by operating activities	Net cash provided by operating activities	451		533		801		888			Net cash provided by operating activities	478		412		1,279		1,300
Additions to property and equipment	Additions to property and equipment	(128)		(99)		(333)		(196)			Additions to property and equipment	(187)		(83)		(520)		(279)
Purchases of other investments	Purchases of other investments	—		1		(1)		1			Purchases of other investments	—		—		(1)		1

Free cash flow	Free cash flow	$	323	$	435	$	467	$	693		Free cash flow	$	291	$	329	$	758	$	1,022

ARPU - Sirius XM ARPU is derived from total earned subscriber revenue (excluding revenue associated with our connected vehicle services) and advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.

Subscriber acquisition cost, per installation - or SAC, per installation, is derived from subscriber acquisition costs less margins from the sale of radios and accessories (excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. SAC, per installation, is calculated as follows:


		For the Three Months Ended June 30,				For the Six Months Ended June 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Subscriber acquisition costs, excluding connected vehicle services	Subscriber acquisition costs, excluding connected vehicle services	$	93	$	91	$	183	$	181	Subscriber acquisition costs, excluding connected vehicle services	$	87	$	86	$	270	$	267
Less: margin from sales of radios and accessories, excluding connected vehicle services	Less: margin from sales of radios and accessories, excluding connected vehicle services	(44)		(42)		(86)		(92)		Less: margin from sales of radios and accessories, excluding connected vehicle services	(46)		(46)		(132)		(139)
		$	49	$	49	$	97	$	89		$	41	$	40	$	138	$	128
Installations (in thousands)	Installations (in thousands)	3,567		2,974		6,901		6,099		Installations (in thousands)	3,313		3,162		10,214		9,260
SAC, per installation (a)	SAC, per installation (a)	$	13.73	$	16.27	$	14.05	$	14.46	SAC, per installation (a)	$	12.46	$	12.73	$	13.53	$	13.87

(a)Amounts may not recalculate due to rounding.

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Ad supported listener hours - is based on the total bytes served over our Pandora advertising supported platforms for each track that is requested and served from our Pandora servers, as measured by our internal analytics systems, whether or not a listener listens to the entire track. For non-music content such as podcasts, episodes are divided into approximately track-length parts, which are treated as tracks. To the extent that third-party measurements of advertising hours are not calculated using a similar server-based approach, the third-party measurements may differ from our measurements.

RPM - is calculated by dividing advertising revenue, excluding AdsWizz and other off-platform revenue, by the number of thousands of listener hours on our Pandora advertising-based service.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

As of ~~June~~September 30, 2023, we did not hold or issue any free-standing derivatives. We hold investments in money market funds and certificates of deposit. These securities are consistent with the objectives contained within our investment policy. The basic objectives of our investment policy are the preservation of capital, maintaining sufficient liquidity to meet operating requirements and maximizing yield.

Our debt includes fixed rate instruments and the fair market value of our debt is sensitive to changes in interest rates. Sirius XM’s borrowings under the Credit Facility carry a variable interest rate. Sirius XM’s borrowings under the Credit Facility carry a variable interest rate. ~~On or after July 1, 2023, borrowings based on London Inter-bank Offered Rate (“LIBOR”) as the benchmark rate are no longer available.~~ From and after July 1, 2023, Sirius XM borrowings are based on the Secured Overnight Financing Rate plus an applicable rate based on its debt to operating cash flow ratio. We may, in the future, hedge against interest rate fluctuations by using hedging instruments such as swaps, caps, options, forwards, futures or other similar products. These instruments may be used to selectively manage risks, but there can be no assurance that we will be fully protected against material interest rate fluctuations.

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

As of ~~June~~September 30, 2023, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 2023.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended ~~June~~September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of our “Legal Proceedings,” refer to Note 15 to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q.

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ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in response to Part I, “Item 1A. Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed with the Securities and Exchange Commission on February 2, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER ~~REPURCHASES~~PURCHASES OF EQUITY SECURITIES

As of ~~June~~September 30, 2023, our board of directors had approved for repurchase an aggregate of $18.0 billion of our common stock. Our board of directors did not establish an end date for this stock repurchase program. Shares of common stock may be purchased from time to time on the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, including transactions with Liberty Media and its affiliates, or otherwise. As of ~~June~~September 30, 2023, our cumulative repurchases since December 2012 under our stock repurchase program totaled 3.7 billion shares for $16.8 billion, and $1.2 billion remained available under our existing $18.0 billion stock repurchase program. The size and timing of these purchases will be based on a number of factors, including price and business and market conditions.

The following table provides information about our purchases of equity securities registered pursuant to Section 12 of the Exchange Act, as amended, during the quarter ended ~~June~~September 30, 2023:

Period Total Number of Shares Purchased Average Price Paid Per Share (a) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
April 1, 2023 - April 30, 2023 11,100,000 $ 3.89 11,100,000 $ 1,331,235,442
May 1, 2023 - May 31, 2023 13,200,000 $ 3.59 13,200,000 $ 1,283,899,042
June 1, 2023 - June 30, 2023 11,807,389 $ 3.83 11,807,389 $ 1,238,664,489
Total 36,107,389 $ 3.76 36,107,389


Period	Total Number of Shares Purchased	Average Price Paid Per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
July 1, 2023 - July 31, 2023	2,422,502	$	4.65	2,422,502	$	1,227,407,408
August 1, 2023 - August 31, 2023	6,127,426	$	4.44	6,127,426	$	1,200,202,114
September 1, 2023 - September 30, 2023	8,110,782	$	4.16	8,110,782	$	1,166,487,722
Total	16,660,710	$	4.33	16,660,710

(a)These amounts include fees and commissions associated with the shares repurchased.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~Rule 10b5-1 Plan Elections~~

On June 15, 2023, Kristina Salen, a member of our Board of Directors, entered into a 10b5-1 sales plan (the “Salen 10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Salen 10b5-1 Sales Plan will be in effect until the earlier of (1) June 14, 2024 and (2) the date on which an aggregate of 24,442 shares of our common stock have been sold under the Salen 10b5-1 Sales Plan.Not applicable

ITEM 6. EXHIBITS

See Exhibit Index attached hereto, which is incorporated herein by reference.

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EXHIBIT INDEX

Exhibit

Description

*10.1

Employment Agreement, dated April 3, 2023 between Sirius XM Radio Inc. and Thomas D. Barry (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 4, 2023 (File No. 001-34295)).

31.1

Certificate of Jennifer C. Witz, Chief Executive Officer and Director, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2

Certificate of Thomas D. Barry, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1

Certificate of Jennifer C. Witz, Chief Executive Officer and Director, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certificate of Thomas D. Barry, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101.1

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2023 formatted in Inline eXtensible Business Reporting Language (Inline XBRL): (i) Consolidated Statements of Comprehensive Income (Unaudited) for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022; (ii) Consolidated Balance Sheets as of ~~June~~September 30, 2023 (Unaudited) and December 31, 2022; (iii) Consolidated Statements of Stockholders’ Equity (Deficit) for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 (Unaudited); (iv) Consolidated Statements of Cash Flows (Unaudited) for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022; and (v) Notes to Consolidated Financial Statements (Unaudited).

104

The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2023, formatted in Inline XBRL.

____________________


*			This document has been identified as a management contract or compensatory plan or arrangement.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them other than for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document as of the date they were made and may not describe the actual state of affairs for any other purpose or at any other time.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this ~~1st~~31st day of ~~August~~October 2023.


SIRIUS XM HOLDINGS INC.

By:						/s/ Thomas D. Barry
						Thomas D. Barry
						Executive Vice President and Chief Financial Officer
						(Principal Financial Officer and Authorized Officer)