Sirius XM Holdings Inc. (NASDAQ:SIRI) Deutsche Bank 32nd Annual Media, Internet & Telecom Conference March 11, 2024 11:20 AM ET
Company Participants
Thomas Barry - Chief Financial Officer
Conference Call Participants
Bryan Kraft - Deutsche Bank
Bryan Kraft
Thanks, everyone, for joining us for this session. I'm Bryan Kraft from Deutsche Bank and really happy to introduce Tom Barry, who's the CFO of Sirius XM. Tom, welcome.
Thomas Barry
Thank you, Bryan. I'm excited to be here.
Bryan Kraft
I guess to start off and Sirius XM is in the middle of a transition as management works to bring the company back to a positive self-pay subscriber growth trajectory and also to positive revenue, EBITDA and free cash flow growth. Could you walk us through the factors that have contributed to the subscriber headwinds in 2023 and explain just the range of actions that management is taking to improve results going forward and get back on that growth track?
Thomas Barry
Sure, Bryan. Thank you. If you look at the overall business, we're really focused on the value proposition to our subscribers. We have unique content that we're very proud of. It's very broad. And it reaches all the way from our core music to our talk, to our podcast, to our news. And as you look at broadly at all the different content, we're looking at investing in technology and the technology is going to leverage and allow us to increase the control and the discovery of our content. We believe our unique content to better able to reach the content, the better off and only create a larger level of engagement for our subscribers. And then finally, our third focus is on pricing and packaging, which we are in the early stages of assessing that.
So when I look at the content side, content is always something that we're evolving as we look to reach a broader from our core subscriber base. As we start looking at more growth, subscriber-wise, we're looking at incremental content. So we recently, in the last three months, we signed John Mayer to curate a channel for us as we did Kelly Clarkson. So two stars that have actually created a buzz around their curated channels.
We also have, recently, we've signed up James Corden to do show, doing celebrity interviews. And so that's really gone well. And it's become one of our top talk shows. So we're trying new content that will expand the reach of our subscriber base. And in addition, we recently announced that we were going to -- that we got the -- we reached agreement to work with the podcast SmartList, which will extend and get us one of the top five podcast brands. So we're excited about that.
So our content continues to evolve and we're excited as we look to grow our subscriber base with expanded content.
Looking at the technology side, we're spending a fair amount of money on the technology side this year. As you talked about in 2023, 2024 and '25, we're rebuilding our tech platform and rebuilding this, we're doing everything from expanding the user interface and making that much more expeditious, but also helping on our recommendation engines and allowing increased personalization and discovery, which we think is critical as our unique content is better explored and better detected for our subscribers that creates more stickiness and more engagement.
And then in addition to that, we are rolling out a new commerce and identity system, which has done very well, which is really the profile of our subscriber and allowing for better marketing. So from the tech standpoint, we're investing a significant amount of money and including in which we'll talk about in the BID 360L in the vehicle.
So we look at that and then the pricing and packaging, we are testing right now, we're looking at the pricing and packaging just to make the business, make sure that we can respond to provide the content that people would like in addition to having a price that reaches and makes them become more sticky into the value proposition of the subscriber. So those are the three things we're really focused on buying. And I think we're seeing early results from that.
Question-and-Answer Session
Q - Bryan Kraft
Okay. Great. We're going to get into a number of those topics. I wanted to ask you, though, one of the things that people are really trying to think through is just the cadence of net adds over the course of 2024. Can you maybe talk about that and also some of the key variables we should think about in the subscriber outlook that could move it one way or the other?
Thomas Barry
Yes. Yes, when you look at the subscribers for this year, what I would say is it's going to be positive to prior year. And so that's our target overall. I think when you look at the cadence of last year in the quarters, it will be more back-end loaded as it was last year. So I think it will be a similar trend, it will be positive to prior year, but it will be similarly back-loaded.
Bryan Kraft
Okay. Sirius relaunched the streaming service in December with the introduction of the new app and also reduced price by $1. Can you talk about what the results have been like so far? Has it improved subscriber acquisition, anything on churn, engagement, et cetera?
Thomas Barry
Yes. So yes, Bryan, so if you go back, November 8, we had our News and Media Day. We will now start to launch in our rebranding. So we've announced our launch and rebrand in November 8. December 14 was the launch of the new app. I think as far as churn and other impact on the broader numbers, we're coming up, most of them went on a three-month trial. So we'll see those probably this week or the next two or three weeks as they come up on the end of their trial period. So we have better metrics there.
I will say, when you look at the numbers, is what we are seeing right now, we are seeing indicators of things that are positive. Obviously, it's the early phases. But a perfect example is with our sales force engine, we're now able to communicate and do some level of e-mail and texting to subscribers that were in the low listing category. And so we looked at that segment and as we are testing them, we look through and we started doing more targeted advertising to stuff they actually listen to when they did listen. And through that, it increased the level of engagement about 10%. So we're seeing different factors like that.
Our recommendation engine is doing very well. We're seeing extensive use of the recommendation engine. And I think some of the smaller things, as we look at process and efficiency, just the time between download to starting a trial has contracted significantly over the period. So we're reviewing and we're optimizing the system. We continue to build enhancements and iterating it, but it's early, and we'll see more in the next couple of months.
Bryan Kraft
Yes. And what are people listening to on the new app? Does consumption skewed towards certain kinds of content? Were there any surprises in the consumption patterns that you saw?
Thomas Barry
Surprisingly, the numbers have been in line with what we expected and what we had seen otherwise on 360L. So they've been pretty much in line from what we expected.
Bryan Kraft
Okay. All right. I guess I wanted to focus on the vehicle side of the business for a second. What will it take to return the OEM business to sustain positive net adds? And I think part of that answer is probably on the used car side. So I wanted to ask you, as part of that, how are you continuing to expand the used car trial funnel in order to capture more of the used car sales pool?
Thomas Barry
Yes. So Bryan, I'll pull it apart and then pack it a little bit. So if you look at how to get to our net adds, obviously, you're looking at the top side of conversion and then you're looking at churn as the reduction to get to the net adds.
So on the conversion side, on the top part in vehicle, the 360L engine, we are currently using on the vehicle side, and that's actually improving conversion. So that's positively impacting the numbers. We do have headwind as far as the when you look at the mix of vehicles being sold in the lower trend line. But as we look at the 360L, it has had positive impact on conversion.
I think when you look at the used vehicle side, I think, as you know, on the used vehicle side, it's a much more fragmented market. And as we continue to look at more expensive on the dealer side, as well as looking at in the service channel, we're looking to broaden our reach because it's really critical in our model to get through the conversion is to get the vehicle radio on and engage the service at point of sale.
So if you look at the conversion, we're working on various factors, whether it's the enhanced system, tech back, tech build-out. And I think the tech build-out allow us to much more targeted in our advertising and talk to them as they're going through the trial and as we're talking about the great advantages of the different content they're looking at. I think with our marketing, we'll be able to increase the impact of our conversion. And I think, as you know, our churn is a relatively low number, and it's historically a relatively stable.
Bryan Kraft
Okay. Can you talk about what you're seeing in auto trial conversion rates both on the new car side and the used car side? I think it's come down a bit. You expect stabilization at a certain level. And how is 360L driving improves of sub metrics that could drive the business to a higher level over time?
Thomas Barry
So 360L is really, it's a tool that allows them to straddle between the satellite and streaming. And there's also other advantages in 360L. You get an increased number of channels. You also get podcasting capability, live sports and other functions. So there's incremental benefit in 360L.
As we see 360L growing and improving, it will end up, we think advancing and moving us forward on the conversion side. 360L is still in the -- is rolling out, as we said at year-end, it's about 33% of the vehicles rolling out. We look for that to continue to expand up to 40% by the end of this year.
So when you look overall, we're looking at conversion and we're focused on expanding the use of 360L. And I think the second point I would say on that in advancing our conversion is going to be around our marketing and being more targeted in our marketing to engage the trialers and what is the content they're listening to, but also the extensions of the content they're listening to what else they could hear.
Bryan Kraft
You mentioned 40%, I think you said 360L penetration by the end of the year, 33% currently. What's the path to 360L penetration growing even higher? And at what point do you get to, say, 75% or 80% of production being 360L?
Thomas Barry
It's working through the normal OEM product time line. But we believe we'll be above 50% in a couple of years. And so we're continuing to work with the OEMs to increase the penetration of 360L. And we think over the next couple of years, we'll be up at 50%, and we'll continue to work with the OEMs to expand the impact and the involvement in the vehicle.
Bryan Kraft
Okay. Can you talk a little bit about the proliferation of Android's automotive OS and how that impacts the business over the medium to long term?
Thomas Barry
Yes. So the Android ALS, the advantage there is it increases the number of channels that creates standardization. And so we see that as something positive. It will help us as we get down the road. It's more of a mid-term thing versus a short-term thing. But I think as we're looking at it right now, I think we're rolling out the Lincoln Nautilus first, and we'll see it as it rolls out more across the OEMs that will see the benefit of it. But we do see it as another part of technological advancement and the benefit that we're going to see as we get our content out to more of the available listeners.
Bryan Kraft
You mentioned a minute ago that churn has been extremely low. It ticked up slightly in 2023, I think, but still close to that all-time low. What I really want to ask you about is, do you think you can sustain it at this level? And how are you thinking about the churn outlook in 2024?
Thomas Barry
So it's a good question, Bryan. So if you look at churn, churn is made up of two or three main components. You basically have voluntary and involuntary non-pay, which is basically subscribers who decide not to pay for the service. And then you have vehicle-related churn.
The non-pay side is principally about 1 point. So of the 1.6 has been our historical rate, about 1 point is related to non-pay. And so that's been fairly consistent over the last five or six years.
What is the variable that's hard to manage is the vehicle-related churn. And the vehicle-related churn last year as SAR has creeped up has grown. And the vehicle-related churn, as you look at 2024, we'll continue to be growing. I would say, historically, we've been at 1.6. I would say as vehicle-related SAR continues to the level it is with vehicle-related churn, we could see it tick up a little here in 2024. But I would say, overall, I think our churn is still at record lows and is in a very good range for us.
Bryan Kraft
Yes. How should investors think about the ARPU growth outlook post 2024 or 2023 and 2024, more an exception to what is otherwise a continuation of what's been steady, low single-digit ARPU growth? And how are you managing discounting relative to your historical practices? Are you shifting toward a customer preference for everyday pricing as opposed to discounts would expire and then prompt another call into the call center? I know you mentioned packaging earlier in pricing. So I was just curious how you're thinking about this?
Thomas Barry
Yes. So I mean ARPU, generally, our pricing strategy has been consistent over the years. We generally try to upsell people to the premium package to give them the broadest amount of content. On the subscribers that are either retention or acquisition oriented, in some instance, we offer them promotional plans. And then when the value proposition is correctly, occasionally, about every other year, we do have a price increase. That's generally what our pricing strategy has been over the years.
I think when you look at where we are going now is I think we're looking at with the new 999 streaming plan we announced in December or in November, we're starting to look at pricing and packaging and putting them more compensatory with each other and have it much more correlated to what are you actually being delivered. If you just want music and entertainment, here's the price. And so we're going to start looking at being more focused on the mix. We'll have more marketing information as we get through the summer and we get more information in the transition of data. But I think right now, our framework of the strategy is going to remain somewhat the same, but I would say ongoing, our objective is to get to more value-oriented proposition as far as our pricing.
Bryan Kraft
Okay. Anything on just on the time line for kind of getting us to where you want it to be?
Thomas Barry
So if you look at the time line, so we weren't new with the -- our tech roadmap is looking at -- in December, we took the new streamers, and we put them on the new platform. In vehicle and car, it will be sometime this summer, we'll transition over all those subscribers. And then Pandora is supposed to be sometime during 2025.
So we're on a roadmap. It's obviously when we get further along and talk about CapEx, we're investing in the framework, the commerce and identity and all the rest of the components of the tech stack. But some of it, we're going to be able to do earlier, some of it as we start looking at, we do have, as you know, 360L rolled out earlier in 2023. So we are starting to get more data as the different areas move along and become more valuable and more subscribers using it. So when you look at it, things are going to be in flight, and I think they're in flight for this year, but I think we'll start seeing more and more things as we go along in pricing and packaging this year.
Bryan Kraft
Okay. I know you touched on it a little bit in your opening remarks, but I guess I wanted to ask you, how is the content offering evolving the unique and exclusive content that Sirius has always been a real source of differentiation? So just curious how it evolves from here? And how is the content resonating with younger audiences, which I think are a particular focus right now?
Thomas Barry
Yes. I mean I think we're looking at the younger audience in a growth market. We have a very strong core market of subscribers, which is the older over 45. And we're looking at not only at content, we're looking at different ways to reach out, including with the various pricing and packaging to reach the younger demographic. So we are adjusting our content, as you saw with SmartList and as I said, with John Mayer and what James Gordon, we're starting to look at some of the content that will reach the younger generation. This will be ongoing.
But I think the thing that's really going to be beneficial as we go through this transition is the more data we have, the more information we know, the more that we look what is actually resonating with our listeners, I think will allow us to adjust our content more quickly to respond to what is our subscriber is looking for. And I think as we do that, I think it will increase our engagement and will allow the business to be more fluid as our subscriber base evolves.
Bryan Kraft
Can you talk about podcasting a bit and just its role within the content offering and also in your advertising business?
Thomas Barry
So when you look at podcasting, in podcasting, we have a great platform for podcasting because not only do you have the ad portion of it, but we also have an ability in some instances to keep some portion of it behind the paywall and in the subscriber side. But I think the overall podcasting is more of an ad play and it's expanding our inventory. So I think that's what we're looking at, in particular, like with SmartList and some of the rest of the podcasting. Podcasting grew about 25% or 26% last year. We look at podcasting to continue to grow.
But like we said in the last question, we're going to look at more broadly podcasts that can reach the younger generation and they can be more impactful. So we think we have a winning formula because we have both the ad side and we have the subscriber side, but the heavy monetization will always be on the ad side, in my opinion.
Bryan Kraft
Yes. As the new app and 360L improve the content utilization and discovery, I guess I'm curious, how does it impact growth in annual content costs running through the income statement? Because on the one hand, you could say, well, you could put so much more content on the platform now, right? But on the other hand, you could say, well, if Discovery is so much better, there's maybe greater efficiency. So I guess I'm curious on how you think that shakes out?
Thomas Barry
So I think if you look at over time, so we're excited about this, and as I said, about the fluidity of this now is I think you nailed it right. I mean I think there's going to be -- we're going to have more focused spending. We're going to know what we want to really go out and reach agreement with or to buy different artists. We're going to know because we have data in that, which I think is a significant benefit. We're also going to know what isn't selling as well or what is not reaching our subscriber as well. If it's not reaching our subscribers, well, sometimes we need to work on revisiting the curation of that channel or revisiting how we're actually going to market.
But I think the thing that's great is we're going to have much more data. And I think the data is going to allow us to be more efficient with our spend. And you know what, but it will also give us the ability if there is areas that we want to -- that we believe there's demand for, we can invest further to expand the value proposition to our subscribers. So I'm excited from a financial standpoint of being able to reach out and being able to see like what the real numbers correlate with. And so I think overall, our programming will grow, but I think they'll be growing more efficiently.
Bryan Kraft
Yes. I guess, as a CFO, it's your dream to actually have the data right?
Thomas Barry
It takes a long time to get to that point. But yes, no, it's great to be in a position with a lot of data.
Bryan Kraft
The capabilities of 360L combined with the Pandora products have long been considered this path to an ad-supported, no subscription in-car product. Is this something that the company is considering as a way to monetize non-subscribers and to create, frankly, a new funnel for acquisition on the subscription side of the business?
Thomas Barry
Yes. I mean, so Bryan, over since we acquired Pandora, there's always been that discussion, it’s come, it’s gone, it's come and gone. And I think there's a real opportunity there. I think it's going to come to a head as we get Pandora onto the same platform as we have SiriusXM, which will be by the end of next year. I think there's a real opportunity. I think there's an opportunity for an ad-supported tier. I think there's an opportunity of having a lower subscriber price with some ads. So I think there's a lot of opportunity that we're going to look at in our pricing and packaging. I do think we can meet more listeners' needs by actually even having a front-ended, that's an ad-based tier of just of some certain levels of channels. So I think there's a great opportunity there. We're looking at it. And I think the opportunity will be there very quickly in the next couple of years.
Bryan Kraft
Yes. Yes, it's sort of interesting, too, because I think when the Pandora acquisition was first on, one of the opportunities that was articulated was it could be basically a competition for terrestrial radio, right? Because now you've got an ad-supported free product in the car. And now you look at what's happening and radios getting really hit because of the lack of measurement, right, the ad recession, if you want to call it that or slowdown is hit. So but you'll actually have data. So attribution to that.
Thomas Barry
Yes. And I think we're working extensively on -- when we talk about pricing and packaging, we're looking at all the different variables to see how can we create the best value proposition because, as you said, there are people who just don't want to pay for radio. And those people are willing to go ad based, and we have an opportunity to play there, I feel.
Bryan Kraft
Yes. Okay. On your recent earnings call, Jennifer mentioned the opportunity to migrate the in-car experience to the new technology platform creating a new level of flexibility in packaging and pricing. Can you provide more color just on the opportunity and what it means for the company to move in-car over to the new tech stack?
Thomas Barry
So in cars, so as I said, I think it will be some time later in the summer or during the summer. So we're looking at the migration over. And I think as you look at it, you'll see a lot of great benefits. I think the account management will be a lot easier. The profile will be easier for people to utilize and I think our overall relationship will be better as far as dealing with pricing. But most importantly, we'll have more able to centrally control the marketing side. And I think the marketing side will allow us to better be able to tell you where some great concerts are or where channels are that are just a little bit off where your normal -- everyone has a certain set of channels they listen to. It'll allow them to focus on other channels that are actually playing music very similar to the ones they like listening to.
So I think from a marketing standpoint and being able to increase the ability to do discovery and search, allowing people to have more personalization of what they really would like on their radio, I think it opens opportunity, and I think it opens an opportunity. I think it's our job between the marketing and just the curiosity of our listeners that will allow -- increase the engagement of our product.
Bryan Kraft
Just want to talk about advertising for a minute. It's been a headwind to growth for several quarters. And cyclically, what are you seeing currently in the advertising-driven parts of your business? Pandora off-platform and satellite radio side?
Thomas Barry
Yes. I mean when you look at that, we have had headwind for an extended period of time. The headwind generally impacts the direct in the satellite business. I think as we've talked about, the programmatic and the podcasting has done very well over the last couple of years, and we'll continue to do well this year. And so we've had some level of headwind. As we look at and we're working through our first quarter, we are starting to see some positive indicators in the ad market. So I think hopefully, that will play out for the year, but we've always been a little bit concerned about the headwind, but we are seeing some early positive indicators.
Bryan Kraft
Okay. All right. Encouraging. Talk about the cost side of the business a bit. How are you managing costs as you navigate this lower subscriber and lower advertising growth environment or transition, if you want to call it that?
Thomas Barry
I think when you look at the business, Jennifer and I have been trying to look at optimizing the business. And what I mean optimizing is, as you end up and we build this tech stack, you need different people, different engineers, different skill base to be data analytic people. We are basically revisiting the whole structure of the business, and we're making it faster and being able to deliver with what is the future business.
And so when you look at overall costs, we're looking at things like customer care, where we're working with -- we have an agreement with [indiscernible] AI to make it so the customer care is not only less costly, but it's actually more beneficial to our customers, and it's easier to deal with. And so we're seeing things like that are a win-win on both sides.
But as you look at all these, the programming, the marketing, the customer care, if you look at each one of them, what we're doing is we're reducing costs with the intention, in a lot of instances, to reinvest in other areas of the business, whether it's in tech stack or whether it's other areas. And so we are very tight and we're very restrictive as far as our control of the P&L. But we actually see there's opportunities to build the future of the company.
And I think we got to this point at SiriusXM through a lot of heavy work and heavy lifting dependent on the satellite. And now we're creating the next generation of our platform, the next generation of our business.
Bryan Kraft
What do you think the margin trajectory looks like medium to long term? For a number of years, there was this margin expansion story as you scaled revenue over the fixed part of the cost base? How are you thinking about that going forward?
Thomas Barry
I mean when I look at the gross profit margin, I think we're somewhere between 53% and 54%. I think based upon where we are right now, I mean, I think as you know, most of our contracts, the OEM contracts are long-term contracts. They're not going to change a lot in the near term. And a lot of our licensing contracts are more long term in nature. So I would say, the gross profit and the EBITDA margin, which is roughly a low 30% to around 31%, I think that's going to be consistent. And I think work it operate in a similar manner going forward in the near term. I think as you look further, we're going to continue to reduce costs, invest. But I think overall, those metrics should stay intact.
Bryan Kraft
Okay. You've guided to free cash flow being flat this year, given that the company is still at the top of this capital investment cycle. How should investors be thinking about steady state CapEx once we get beyond the cycle? And maybe just if you could talk about when you get there? And also, I guess, how many years will be before another investment cycle commences at least on the satellite side?
Thomas Barry
Okay, sure. Yes. So just pulling that part to the satellite CapEx, our last satellite we're going to launch in this cycle will be in 2027. By then, we will have the SAT CapEx down to relatively small number. And so that will bring the satellite CapEx raised level of capital investment down to nearly zero.
And then the non-SAT CapEx, we're investing heavily in 2024, which is a high water year, 2025 and that should tail off starting in 2026. So we're going through a heavy period, a lot of transition in the business, a lot of changes going on. We're investing in -- as you look at the use of cash, we're investing in the growth of our own business, and that's what we feel is a good use for our cash. And I think what you'll look at after that is, I think our next -- just breaking satellite out, I think our next satellite cycle will be somewhere in 2035, '36.
Bryan Kraft
'35, all right. Got some time.
Thomas Barry
Yes, we have definitely a lot of time between here and there, so that's good.
Bryan Kraft
It goes fast, though.
Thomas Barry
It does. It comes up on you quickly.
Bryan Kraft
Let's see. I guess I wanted to ask you about capital allocation. Once the merger with Liberty Sirius is complete, and your buyback has been on hold. So what this capital allocation looks like post close?
Thomas Barry
So I think as we've said, Liberty filed the S-4, and we initially said that we would close the transaction early in Q3. Greg Meffei, our Chairman and CEO of Liberty has said it could happen earlier because of the level of comments we've received back in the regular SEC filing process. So we're looking forward to the closing of the transaction.
I think when you look at the capital side, we're going to continue doing it as we've done where we're -- obviously, we're investing in our own core business. We'll maintain the dividend that we currently have. We'll continue with the dividend. And then our third point is going to be focusing on deleveraging. And so we've always been comfortable and we've always said for years that we're comfortable in the low to mid-3x leverage ratio. And it's our intention to continue to target that.
We will go up briefly as we take on debt related to the Liberty transaction. But we believe in the second half of 2025, we'll be in a good position to pursue or consider the options of being back in the buyback market. We will continue to be in buybacks opportunistically if the market does present itself, but our focus is really on deleveraging at this point.
And I would say also, if you step back from a macro standpoint, if you look at the way we're doing this transaction is they're actually retiring shares related to the $1.7 billion of debt we're taking. So it's really a leverage buyback for all enhanced purposes. We're paying it up front. They're retiring the shares at the front. So when you look at it, I'd say in the short-term, to summarize we're really focused on deleveraging in the next 12 to 18 months, and that's what's going to be our primary focus.
Bryan Kraft
Should we think about the near-term target being the high end of the leverage range before you kind of return the market to repurchase shares? Or...
Thomas Barry
Yes. So yes, I think what we've said is, I think the -- our leverage is about 3.9% when the transaction closes and our goal is to get back on the low to mid-3s. And I think as far as buybacks, I think we'll probably be out of the market unless there's some real opportunistic event occurs and that we feel we need to get back in.
Bryan Kraft
All right. Anything in terms of -- well, not that you're in it. Say what it might be, but how are you thinking about the potential opportunity for M&A as part of your capital allocation framework?
Thomas Barry
M&A is part of it. I think we're probably going to focus first on delevering going to a place of safety. But I would assume probably we're always looking at smaller M&A transactions. I mean smaller things that either help us on programmatic or help us in various areas. So we look at smaller things. But I think right now, our heavy focus on the deleveraging. That's really where we feel most comfortable in that deal give us the most agility as we respond to the market 12 months from now.
Bryan Kraft
Yes. But if you were to think it sounds like it's more about getting capabilities that you can then bring into the business and scale?
Thomas Barry
Yes. Like, we talked about, there's so much change in our business, whether it's the pricing and packaging, whether it's the tech stack, whether it's [indiscernible]. We have a lot and I think 12 months from now, 18 months from now, we'll be looking at different things and be interested in different things. So I think our focus would be to delever.
Bryan Kraft
Yes. A few minutes left. Maybe I could throw one in on just if you could talk about where you are on the EV manufacturers and kind of pursuing to the extent you can, pursuing some of the -- or getting penetration among those vehicles?
Thomas Barry
I think we have high 80%, 85% penetration of the OEMs themselves or being large OEMs. The EV, we have [indiscernible] we have Polestar. We have a couple of other ones. But we continue to be focused on expanding in our penetration there. Obviously, without stating the obvious, we don't have Tesla at this point. We are working on a relationship with Tesla. But we are very focused on it. We're happy with where we are. But obviously, we would like to get a couple of the bigger ones, including Tesla on board in the near term.
Bryan Kraft
All right. Great. All right. Well, thanks very much, Tom. Thanks, everyone, for joining us.
Thomas Barry
All right. Thank you very much. Appreciate the time.