All right. Great. Let's get started with our next session. Thank you, everyone, for taking the time to join us today. My name is Stephen Laszczyk, and I'm the lead entertainment analyst here at Goldman Sachs. We're excited to welcome to the Communicopia and Technology Conference, Jennifer Witz, the CEO of SiriusXM. Jennifer, thank you for being with us today.
Jennifer Witz
Thank you. I think it's my first time here. So it's to be here.
Thank you. Welcome. So maybe let's get started with the news from earlier this week. You completed the transaction, the combined the Liberty tracking stock group with SiriusXM. Just for those who might be newer to the story, could you maybe just give us a high-level overview of what the close of this transaction means for you, for shareholders? And what it means for the story at large at SiriusXM?
Jennifer Witz
And so there are a number of things that obviously changed as a result of the transaction. We are happy to be a freely independent, publicly traded company, again, one equity, which I think makes the investor thesis much simpler enhanced therefore, hopefully improve trading dynamics overall. And then hopefully, index inclusion in the future. So -- on the sort of company structure side, a lot more simplicity. But a lot else remains the same. We are -- we continue to be focused on delivering unique audio experiences to our listeners, across our products. We are on our way to transforming the business. to deliver long-term success. And we're building off this great foundation of strength in our core Series service with low churn, high ARPU, high margins, our leading digital audio advertising segment of the business and then really strong recurring free cash flow generation, which will be growing in the future as well.
And that leaves me, I guess, to my last point, which is the transaction basically represents an accelerated leverage share repurchase. And so we'll be retiring 12% of the shares or just did and assuming about $1.6 billion and debt. And so our focus now is using this great free cash flow to invest in the business to position us for the future. and also to continue our dividend, our very healthy dividend and to make sure that we are delevering back down to our target leverage ratio.
Stephen Laszczyk
Let's talk about some of the ways you're investing in the business. One of our main priorities is to strengthen your presence in the car. And one of the debates I most often have with investors is what's the long-term growth outlook for the in-car satellite service lots of competition that's come up in the space. Could you maybe just talk a little bit more about the ways you're strengthening SiriusXM inside the car? And perhaps what it would take to get that subscription business back to recurring levels of gross? .
Jennifer Witz
Yes. So the SiriusXM side of the business is obviously very focused on the car. We have leading share of year among premium audio services inside the car. We're known for being associated with the car. We have a lot of opportunities to continue to build that side of the business. So that's our, one of our primary objectives is to continue to enhance value of the SiriusXM subscription. And at least in our in-car presence, we're driving that in three different ways. So -- we have an opportunity. We just announced that we are building out penetration with Ford more broadly across their vehicle models.
So continuing to drive the relationship we have with the OEMs is really important. We're the only company that has those kinds of relationships, and it gives us preferred positioning in the car. We are also -- we launched a number of three year subscription bundles that dealers can order with OEM. Toyota and GM being two of the biggest ones. And that gives us an opportunity to reach even more potential subscribers who may not have elected to subscribe to SiriusXM, but we'll get it in the purchase of their car.
And then lastly, to make sure that we're available in the pure-play EVs, right? Because we launched with Lucid last year, we still have a couple of big ones that we're working on and hope more to say on that in the future. But it's really about maximizing the trial funnel with all those relationships. And then second is to build out 350L, the rollouts there. And we've had a lot of success with 360L, and I think there's a lot more to capitalize on there. The metrics are really strong. But we also want to be agnostic about the delivery mechanism into the car. So you'll see us with more streaming-only delivery.
Distribution into the car and also we're enhancing our car play in Android Auto implementations because we really want to be wherever customers are listening to audio, right? And -- the last piece that hopefully, we'll talk more about is just pricing and packaging and making sure that we have more flexibility in our pricing and packaging structure so that we can create packages that address demand from a broader set of audiences. So these 3 areas will really help us expand the trial funnel, improve conversion and retention over time, which are all the metrics that lead to a growing in car business.
Stephen Laszczyk
I want to drill into a few of those pieces a little bit more, maybe 360L starting with. Could you maybe just remind us where you are in terms of the penetration curve of 360L where you are today, what that curve looks like over the next five or so years. And then what the software road map against 360L looks like over that period of time and the more you hope to get to at some point in the future, three to five years from now?
Jennifer Witz
Yes. So the promise is finally here. We've been investing this for several years, and we have about 40% of our new car trial starts that have 360L now. That should go above 50% next year. And of course, as those cars roll into used cars, we still have to see it show up more there as well. And in the coming years, we have a couple of big OEMs still launching, hopefully by the end of next year. That will get above 80%. And that is really a critical path for us to make sure that we have offer this advanced platform to as many customers as possible. And so the roll-ups are continuing in a really strong way. We are very focused on the road map on really three areas. The first is making sure that it's a really personalized experience that there's enhanced content discovery. And that's both in the car with the product, but also in our marketing communications outside the car, leveraging the data we're getting back.
And then there is a more seamless experience between that in-car implementation in all of our streaming products outside of the car, and we'll have more capabilities there to even sort of download the app from the in-car interface that will encourage more streaming outside of the car and then the last piece is ad tech. So leveraging the ad tech capabilities we have to build out better targeted advertising in the car, and that will become even more important as we start to lean into free access and other packages in the car that have more ads associated with them. So that's where we're at in 360L. We feel really good about the opportunity here and how these -- the software road map will enhance our ability to deliver better metrics.
Stephen Laszczyk
On points of conversion, any sense of where you're seeing conversion come in at for 360L-enabled cars, how that might compare to some of the older generations of vehicles without 360L, and be more curious but then the used car as 360L will penetrate deeper into the used car base, where conversion is at today? Where do you think you could perhaps get them to as maybe some of that more integration and as content becomes easier to discover where you come...
Jennifer Witz
The used car volumes are still pretty small. But on the new car side, it's really all of the opportunities for content discovery and personalization that 360L unlocks that gives us an opportunity to move our overall business metrics. So -- and we're seeing it across the board, right? We're seeing it in better conversion rates for 360L vehicles versus non-360L. And then once the customers are self-paid, we also see better retention and ARPU over time as well. It's more satisfaction with the product. content recommendations are core to that. So providing again, this more customized experience and making sure people can find the content they love on both in the product and then the marketing that we do alongside that to continue to encourage that.
So yes, the key for us is to make sure that we can that these improved metrics persist as we continue to roll it out, right? So -- some of the improved metrics are associated with higher end vehicles when we're launching early on, but there's still materially higher metrics in 360L vehicles. And then what's core to making sure that they persist as we roll it out is really two things, and that's feature parity with our AAOS implementations, we'll have more of that. and then making sure that consumers are aware of all the right capabilities and features in the product and that's where the marketing really comes in.
Stephen Laszczyk
Got it. One of the other areas you've been focused on is pricing and packaging. There's been, I think, a lot of changes, a lot of expansion at both ends of the spectrum over the last couple of years for SiriusXM -- can you maybe talk a little bit more about the strategy and ultimately, where you hope to go with your pricing and packaging strategy over time?
Jennifer Witz
Yes. So in December, we launched streaming only at $9.99, which is a really compelling price point, and we've been looking for a better entry price entry price point for the car side of the business as well. And so we are going to start rolling out a $9.99 price point for MPAR, which is music only. It does include streaming. And I think the objective we have here is to make sure that we're capturing a broader set of audiences, of course. And I think over time, we've had a really healthy in-car business. We've been able to generally price insensitive. We've been able to raise prices on those subscriptions for many years.
And I think in the process we have left of potential subscribers behind, right? So at a $9.99 price point, we've done -- some of the testing we've done we see really strong customer satisfaction, a lot of transparency and better ultimate retention. And so we're really eager to start rolling that out later this year. And hopefully, in the process, it will help us reduce the reliance we've had on discounted promotional plans, both in acquisition and retention and put us on a better path for revenue optimization going forward. But -- but really, the objective more broadly in our pricing and packaging strategy is to make sure that we have a broader set of offerings, but also continue to enhance those premium price subscriptions that we have. And -- that means opening up the funnel more broadly, we use a lot of off-platform sampling and social and in other platforms, podcasting, for instance. But we want to have more access to our content behind the -- sorry, in front of the paywall on our platform as well and then put customers into these entry levels of $999 price points but also had the opportunity to upsell into our more premium priced products, right, where there will be differentiation among a number of levers, right, whether it's content, ads more capabilities or even other perceived benefits like bundled services.
And then we also think there's opportunity at the top. We just have a very affluent customer base, and there's probably more for us to do and looking at the assets we have between Pandora and SiriusXM to create a bundle at the top with the great music discovery that SiriusXM, but also the interactive music capabilities of Pandora and bring those together in a much more robust package.
Stephen Laszczyk
Maybe talk a little bit more about the opportunity on the bundle. I think when SiriusXM originally bought Pandora, there was excitement around the potential to bundle the services together in a way that maybe would go after a higher end consumer. I appreciate there's probably been some licensing restrictions around that...
And technical restriction on the run. What are the key barriers going forward to maybe enable a more robust bundle?
Jennifer Witz
And -- those are the two primary ones. And we want to be very deliberate about how we're putting this together. And so it's going to take time, and we'll test our way into it. And we're getting a lot of insights because of the new streaming platform and all of the telemetry we're getting back. to see how younger audiences are leaning into more on-demand content. And some of that will provide really strong insights for is there a potential for a bundle that makes sense. I do think there is opportunity because of this great music discovery platform we have and then customers want to very easily save us on down to a playlist.
And I think, hopefully, we'll get to the right place with the discussions with the music licensors on that because I think it sort of a win-win for everyone.
Stephen Laszczyk
That's great. You also recently launched a free access plan an ad-supported plan in the car. Could you talk a little bit more about the strategy behind free access? Do you see this more as a subscriber acquisition tool at the moment? Or a scalable lever to grow your advertising revenue?
Jennifer Witz
Yes. It's really small right now. We just have it in a couple of OEMs and the volumes are small, but it's been a great way to test and learn into this product. And we've been excited to do this for many years. And it's -- so it's a limited set of channels and its ad-supported broadcast ads to start. But over time, it unlocks both those areas. So right now, we have a free trial and if customers don't convert, then they have nothing. So we really -- like many other services would benefit from a persistently free tier in the car an ongoing opportunity to upsell customers into our subscriptions. And over time, as we learn more, we're going to be able to provide more targeted promotional inventory in there to be able to do just that.
And then as we build because it's going to be associated with the rollout of 360L as we build those volumes, we'll be able to, I think, unlock a bigger ad opportunity as well. I mean that's one of the sort of last terrains, right, for addressable advertising is the car. And with our great OEM relationships and the rollout of 360L, I think we have a real opportunity to provide advertisers a window to really reach those audiences in the car through this platform. So a lot more work to do to test it and learn better about what content makes sense, what ad load makes sense and how can we capitalize on both those opportunities.
Stephen Laszczyk
On the ad opportunity and thinking long term here, any sense of what a reasonable maybe ARPU would be for the in-car experience because you're able to do addressable over 360L, is there like a target in mind of what you perhaps could achieve on the other...
Jennifer Witz
Yes. I mean I think there's -- it really plays into the overall pricing strategy. And we have a lot of great science on the Pandora side, for instance, about the interplay between ad-supported and then no ads in our Pandora radio product and Plus and how we can use the science on ad load to upsell people into the subscription products. And so over time, I think we'll be able to leverage that capability in SiriusXM as well to make sure that we're sort of like the SVOD, I think you I'm talking about, maximize ARPU across the set of packages. .
Stephen Laszczyk
Let's focus on your strategy outside the vehicle. You mentioned the new streaming service, which you launched late last year, a new app redesign, new pricing and packaging, a new go-to-market strategy, new brand redesign as well as part of that. Talk a little bit more about the opportunity you're going after and streaming only and why you believe SiriusXM has the right to win in the streaming market, which is fairly competitive at the moment?
Jennifer Witz
Definitely. And the streaming platform that we're building supports multiple parts of the business. It's sort of the backbone of 360L ultimately and the streaming implementations were launching in vehicle. It also supports more engagement for our in-car subscribers outside of the car. We want to have a robust set of streaming products there, whether it's the apps or connected devices. And then, of course, there's a streaming-only opportunity. And I think -- we have more work to do to ensure that we're well positioned as a complementary product to other streaming services.
We are fundamentally different in terms of our content portfolio, very differentiated and we believe we have a very compelling price point at $999, great set of content, much broader and different than other streaming services. in terms of live and human curated. But there really is an opportunity for us to go after this younger set of audiences with this product. And right now, we are working through all of the data and insights we're getting back and watching how younger consumers and our in-car base are engaging with the product to better design and I think open up improved product market fit for streaming only as well.
Stephen Laszczyk
On some of those engagement stats on your second quarter call, you called out some positive momentum you're seeing on the streaming only side of the business. positive proof points. I think you mentioned. Could you maybe just talk a little bit more about what those exactly are? And then as you look ahead into the end of this year and maybe even 2025, any goals that you have around scaling the subscriber base of the distributing only service?
Jennifer Witz
Yes. So when we first launched, we took a dip in engagement metrics primarily on the base of subscribers that was already listening, we've since we're covered there, and we're seeing continued momentum and progress on the growth audiences as well. And so where we're seeing progress is because of the personalization capabilities that we're getting listeners into a broader set of content, formats and genres and in particular, with growth audiences, we do see more engagement, like I mentioned before, on our on to my own content, which is much more accessible in the app now with the redesign. We also see higher time spent listening in general in the streaming products.
So a lot more opportunity, I think, to unlock that going forward. Now we're not seeing that translate into business metrics yet. But I think the data that's coming through and working through our marketing campaigns, off-platform and on-platform to personalize performance media and our onboarding journeys is going to lead us down that path. So we're certainly looking forward to improved metrics as we go through this year and into next year. And we're leveraging all of that data and those capabilities to build more personalized models on the in-car side of the business, too, right?
And if you think about the capabilities we have to unlock just we talked about 360L in general. But with all of this real data and insights coming back from the 360L platform as well as streaming, we're going to better customize marketing, not just about what content people might like or features also what channel of marketing is best to reach them? What payment mechanism might they want -- at what point in the trial should we be targeting to convert them. So there's a lot of the insights that we have from the streaming side of the platform that are going to permeate the improvements on the -- in-car business as well.
Stephen Laszczyk
Any sense of what those subscriber acquisition verticals could be the most efficient ones at this point? I think back your subscription satellite subscription service had arguably one of the best subscriber acquisition models, you could think of someone purchases a new or used car market to them, either in [indiscernible] after the purchase. It's a great opportunity to target that customer. the streaming side, I think it's a little bit more esoteric in LA. Any thoughts on what works best at the moment?
Jennifer Witz
It's a very different process of acquisition, right? We -- and so it's a combination of full final marketing, starting with brand and more content marketing at the top, bringing people in through social and other performance media and then bringing them into this funnel and maximizing the throughput and the sales flows. There's a lot of mechanics to it, but -- and we have a lot of room to improve performance there. But the channels we're leveraging today. Of course, the app stores, General Performance Media, organic is also a big channel for us, just people coming to the website. And we have to better design kind of the go-to-market around would you want streaming or would you want our in-car product and we're making a lot of improvements there based on some of the insights we're getting about the audiences who know -- who might want each. And then I think partnerships is also a big area for us to unlock. We've had some real progress with companies like T-Mobile and Walmart, and I think there's more to do there to open up that acquisition funnel.
Stephen Laszczyk
Great. on streaming only, one of the concerns I hear most often from investors is around the possibility of the lower price of the streaming-only service, repricing the base or cannibalizing the existing satellite base, which is priced at a relatively higher ARPU. Just curious your thoughts on this and the pricing strategy thinking longer term on streaming only imagine it's not always going to be a $999 service, but I'd be curious on your thoughts on how you start that price by but still managed to penetrate deeper into the younger cohort and build scale there?
Jennifer Witz
Yes. we're being very strategic about our audience segments -- and there are -- there's a set of listeners who are younger and are definitely leaning into streaming services through CarPlay android auto and just mobile in general. And we want to make sure we have a very compelling price point. We talked earlier about complementary, right? Needed to be truly complementary to another on-demand music service, and we need to have a compelling price point at $999, we're actually less than most of those other services. .
So we really believe that's fundamental to attracting new audiences into the product. And on the in-car side of the business, we just have a really very strong loyal subscriber base, many customers paying full price for a very long time. And we want to continue to deliver more value to those subscribers in their packages. Again, more content, you see us adding a lot of content to the portfolio. Over time and then making it easier for them to access and find that content other perceive benefits like the Walmart Plus bundle. I mentioned. There's a lot of other ways that we can continue to enhance the value of those subscriptions to create that differentiation.
So I can see a lot of levers to pull, right? ads, content, access and others so that we can create that differentiation, but it's also about, again, establishing the real audience segmentation to make sure that we're getting customers into the package that's right for them.
Stephen Laszczyk
Got it. Maybe on pricing more broadly thinking industry-wide, we've seen some of the DSPs, the Spotifys of the world take price recently. Just curious, zooming out industry level, your view for the price of premium audio yourself included. Where do you think some of your competitors are going? Did you see recurring pricing increases as part of the backdrop you're managing towards?
Jennifer Witz
Yes. I mean I can't speak to what other companies do. They certainly have been taking quite a bit of price in -- the last couple of years even. And we've done that consistently over our history, and we believe that there's still more opportunity for us to do so. As long as we're delivering more value alongside that. And in some ways, it's just not as comparable. I mean our in-car price points are, yes, you get this in car service, but you also get a streaming subscription alongside that, right, because you have access to both. And Again, I think it's creating compelling price points that position us as complementary and making sure that we're delivering value again to our in-car base as we continue to look to raise price there.
Stephen Laszczyk
Got it. I want to pivot a little bit and talk about your advertising business. SiriusXM has one of the strongest collections of audio advertising assets, I think, out there with Pandora, your podcast business, SXM Media. Curious the overarching strategy to bring these -- all these assets together, maybe grow the platform over the next three to five years? Where do you see the most opportunity at this point?
Jennifer Witz
The ad business, you see us adding more inventory, right? And it has a lot to do with our overall content strategy, but -- we brought new podcasts to the platform in terms of Smart less and Color Daddy and -- we think it's a great way to, again, bring more opportunities for advertisers to take advantage of the set of assets that we have on the table, and we'll continue to deliver and bring more to our portfolio because we have such strong sales and tech capabilities to leverage across all these platforms. And it helps Pandora to, right?
Ultimately, we can sell these things across the portfolio. And in certain cases, with the podcast we brought, we have extensions into live events, video and social as well. So really a much more robust set of offerings. We'll also continue to invest in our ad tech solutions for advertisers. That's doubling down on our programmatic, which is a great place to be right now with advertisers kind of coming into the market. last minute for buys. And then making sure that we have solutions for smaller advertisers in terms of self-serve, and then really providing a robust set of targeting and measurement capabilities given all the privacy regulation that's coming forward.
And then also in advertising and where I think maybe your question is going a little bit, how do these businesses work together is leveraging that ad tech for hopefully increasing persistent free tier in the car as well and other ad-supported packages, perhaps at SiriusXM.
Stephen Laszczyk
You mentioned programmatic and the ad tech stack behind it. Just talk a little bit more about the capabilities you're looking to build out, specifically with an ad tech the road map over the next year or two. And -- to the extent we could see that flow through in things like revenue or monetization CPMs and premium audio. Where do you think that goes over the next 12 to 24 months?
Jennifer Witz
We've really been effective at improving monetization at Pandora. And a lot of that has to do with looking for different ways to bring advertiser solutions into the Pandora platform, that could be shorter ad pods and things like that. In podcasting, a lot of the listening is off-platform, but we've brought a lot of new tech there. We can sell -- allow advertisers to sell across the network or Renato, obviously, a specific podcast. Programmatic is really been a strong growth engine for the business, and we continue to lean into building more capabilities there, again, targeting and measurement being really critical for that.
And like I talked about building out some more solutions for smaller businesses and medium-sized businesses on self-serve, whether that's AI tools to set up your campaign or even just synthetic choices, which we launched in market earlier this year, so they can really just come in and design their own campaigns and push them out broadly across our network.
Stephen Laszczyk
Got it. Maybe touching on content. You mentioned some of the more recent pieces of content you added to your portfolio. But thinking about historically, SiriusXM has been a leader in premium audio content. I think Greg made a comment yesterday SiriusXM's content strategy was designed for 40- or 50-year old men 20 years ago, but that's obviously changing. So just curious if you could talk a little bit more about the recent pieces of content that you brought in, call or Daddy being, I think one of the more recent ones. and ultimately, where you want the content strategy to get to?
Jennifer Witz
Yes. So the strategy at SiriusXM has really been fundamentally about human curation, right, and bringing something very differentiated to the market, whether it's the host on our music channels or the curation of the bundle of content we have in general -- we have so much passion for the individual host and the talent and the various commentators on our platform, whether it's music or politics or comedy or otherwise. So there's just a lot of passion among our consumers for our human curated content. And we're going to continue to lean into that differentiation. But I think -- and so something like Alex Cooper, where she's a phenomenal talent and she'll have exclusive content for SiriusXM helps us bring more younger audiences to the platform. And the fact that we'll have the podcast more widely available, helps with kind of her informing her broader audience on different platforms that she has is exclusive content of SiriusXM.
So you've seen that a lot to the portfolio in the last few years, and we'll continue to optimize that over time to make sure that we have the right content set for the audiences we want to address. And with more data and insights, we're going to be even more efficient about the content that we have on the platform.
Stephen Laszczyk
One of the questions I've been getting from investors since doing the Alex Cooper deal is the monetization mechanism behind it. Is this something that can be supported by a purely advertising model? Or are there other ways that you can lever the content perhaps putting it behind a pay wall or using it on the subscriber acquisition front. Just curious, if you look at the headline deal north of $100 million, I think, over three years, how...
Jennifer Witz
Everyone wants a $100 million deal, right? Yes. I mean it's [indiscernible] phenomenal talent. And I think we have a really great opportunity that maybe others don't have to monetize, whether it's broadly distributed across other third-party platforms to maximize the audience and generate ad revenue, but then also on top of that, create more exclusive content for SiriusXM subscribers. To enhance the value, right, of our subscription packages. And so she's going to be doing a little bit of both. We have the same with Smart list. We have the same -- to different levels of extent. With prime junky and with other -- that will be -- some others that we have that are in the works that will be coming soon.
So it's a really nice way to keep broadly distributed and sort of like have our cake and eat it too, if you will, right? We get to maximize ad revenue, but also generate more subscription value for SiriusXM. And again, I think that's pretty unique for us. We've been very disciplined in how we've invested in content over the years. And we are incredibly focused on continuing to lean into our differentiated content portfolio at SiriusXM, but also maximize our ad opportunities on the other side of the business.
Stephen Laszczyk
Got it. I want to get the cost structure, but first, maybe just an update on the current operating environment. So your 2024 guidance calls for some pressure on both self-pay net adds and revenue. Can you maybe touch on some of the near-term headwinds you're seeing in the business this year and perhaps how you're feeling about execution going into the fall and the back part of the year. Just curious if you have any updates on that front?
Jennifer Witz
Yes. I think some of the headwinds we're facing this year are pretty consistent that we have seen over the last couple of years. And it's a combination of some of the market dynamics, just generally at play economic uncertainty. Also shifting consumer behaviors and increased competition. And that put some pressure on our top line. And that's one of the reasons we've been so focused on making sure that the cost structure is as efficient as possible so we can also be investing in the business to position us for longer-term growth, right? Because -- there is so much opportunity to unlock in this business, but we want to make sure that we're balancing sort of short-term results with longer-term investments, right, to ensure our future success.
So as we look at this year, we feel good about the guidance, $8.75 billion in revenue, $2.7 billion in EBITDA and then $1 billion of free cash flow, which we adjusted for the Liberty transaction impact. And of course, we provided the general context around self-pay net adds that this year will be better than last year. And so we feel still on track with all of that. There's certainly been -- there's certainly been some uncertainty, right? There's a lot of choppiness in the market right now. And so we're watching it really closely, very focused on a solid into the year, but really positioning the business for future success.
Stephen Laszczyk
What about on the ad market side, I think we've heard from other companies in the ad space, there's this cautious optimism are you keen...
Jennifer Witz
Headwinds and tailwinds, right? We have -- we'll see cancellations from big accounts. They'll come -- they say they're going to come back into the market in the fourth quarter. But then again, we have the tailwinds of this great portfolio. We're selling Smart List. We're out there with Color Daddy now. there's politics that obviously is better for us year-over-year. It's not a huge component, but there should be some tailwinds there. So it's choppy, and we're watching it carefully, but we feel pretty good about the second half, but a lot can change in a month or two.
Stephen Laszczyk
You mentioned the focus on the cost structure earlier. You've identified $200 million in cost opportunities have executed against a portion of that year-to-date. Just curious if you're seeing anything that might suggest there's greater than $200 million of cost efficiencies as you begin to execute against that initial set of opportunity or anything from an operational perspective that you learned as you've undertaken sufficiency covering?
Jennifer Witz
Yes. I mean it's always the easy ones that come first and then the next set is always coupled with investment, right? And so we talk a bit about customer service and all the AI investments we're making to deliver a better ultimately, customer service experience. And that's going to play out over time. So we're not all the way there this year, but there's more opportunity to unlock there. and marketing as well. So you talked about the model we've had in the past. We've used direct mail, we use at outbound telemarketing. There's ways to get more efficient there as we improve the tools that we're using and deliver a better personalized experience at a lower cost.
Stephen Laszczyk
Got it. CapEx remains elevated this year going through the satellite replacement cycle. Curious, long term, though non-satellite CapEx once we're through the CapEx cycle on through some of the investments, initial investments on technology, where you see normalized CapEx for SiriusXM over the long term?
Jennifer Witz
So I think we have good visibility into satellite. We've talked about that a lot. Other than shifts in timing, we should be on track. On the non-satellite we expect this here to be about $450 million to $500 million next year probably sustains at a similar level, while we get through this, not only the replatform its tech stack, but some end-of-life improvements we're doing across the broadcast infrastructure and the repeater network. And then after that, I'm hopeful that we'll get down below the $400 million level. And how close we get to sort of that $300 million of normalized CapEx we had in years past, for non-satellite really depends on how efficient we can be in serving the OEMs. There's a lot of different permutations of implementations there. And how do we manage both developing and supporting the future but also keeping some of these legacy implementations in place.
Stephen Laszczyk
Got it. Last question for me, just on leverage and capital allocation. Post Liberty deal. How did he get you're operating a little bit above the high end of your target leverage. I would be curious your thoughts on timing to get back to low to mid-3s, I think is where you're targeting net leverage at the moment. And then how you're thinking about capital allocation, both during that process of deleveraging but also to once you hit that target? And then specifically, within that, share repurchase has been a hallmark of SiriusXM over the last decade. Would you consider share repurchases to take advantage of where the stock should get today, even if it meant perhaps prolonging the pace to get the target leverage?
Jennifer Witz
I think we want to be flexible, right? And our main priority is making sure that we're using our cash flow to fund the opportunities we believe we have and are very confident we have to grow the business in the long term. So you see that in the operating structure, obviously, in CapEx, as we talked about. And then we're going to continue our dividend and we would expect to delever over time as we use our cash flow to get back to our target leverage ratio. And we'll be opportunistic about share repurchases, but the main focus is on delevering and making sure that we're investing in the future of the business.
Stephen Laszczyk
Great. Jennifer, thank you so much for taking the time to join us.