So, Ross, we teamed up with celebrity chef, Carla Hall and welcome thousands of visitors to we believe that was the finale of our summer Budi travel series.
We offered samples of food and drink from QVC vendors, including Kelly's biscuits, mascot, pecans and Boylan, but bottling, as well as future products from Laker, say, Mackenzie child in Sweden, Heritage by Carlo Hall.
These initiatives are important to our long-term brand building strategy and particularly impactful to our existing customer.
Asia possibility brands include existing brands as well as new offerings.
We continue to experience demand with particular strength from Kim Rebel, Jenny Garth, Alena Billiton.
Okay.
Stacy London and Lori Gala, Laurence Geller. From a merchandise perspective, consumers remain selective in their discretionary spending.
They responded more favorably to seasonally looked events for home decor and food.
We experienced strength in Bethlehem lights and Valerie par held the core during Christmas in July as well as for Stelis prime rib and Corky stuff, Turkey and our fall Homi that. Despite our cautious behavior, customers still continue to respond to merchandise at the right value.
Examples included leather jackets by Juliana Denim & Company, and Dennis Basso, e-bikes E-Co flow generators, intimates from Evelyn and body and breezes footwear from Skechers, an easy Sprint beauty device from Dyson and luggage from Hulk brand.
While our apparel business experienced lower sales outperformed the overall business, driven by demand for brands from our Q. 50 brand ambassadors and celebrities that HSN., including Christie Brinkley, Jacqueline Smith and Johan Sebastian Bray.
Our customers responded less favorably to fitness kitchen salaries and floor care and home computers and tablets in electronics and Bath & Body & Beauty.
Changing notes. We are very excited to name Rosa de Lima, Caro as the new Chief Merchandise Officer at HSN, Brazilia joined in late September and brings more than two decades of retail experience from route Gilt, Groupe and Bloomingdale's.
She held a wealth of expertise in fashion in merchandising, business strategy, brand development and creating transformative customer experiences.
Welcome Rosa de Lima.
Finally, on QxH, let me mention two exciting programming highlights.
We were thrilled to welcome comedian in Acthar, Kevin Hart, and we are British broadband coal play to QVC In late September. Kevin made is QVC debut with this heart healthy by the hustle protein shakes during a special Saturday morning Q.
Kevin has more than 179 million social followers and vital hustle has gained significant traction in the well in this space.
In early October, QVC hosted the return of our Q&A sessions live by welcoming Coldplay.
QVC was the exclusive retail partner of the notebook condition record and CD. of coal plays highly anticipated new album, Moon music.
We are thrilled that the LTL mission sold out in 13 minutes whole play performed a few of their new songs and engage with our customers taking three lakh testimonial calls.
If you miss the show, you can watch it on QVC Plus our screening business is seeing strong momentum while still relatively small compared to our traditional channels.
Revenue, total minutes viewed in monthly average users all grew double digits in Q3.
Turning to QVC, international results were mixed in the quarter.
Revenue declined 1%, the fifth consecutive quarter of broadly stable revenue performance.
QVC, Germany and Japan both reported flat revenue with growth in home and electronics, offset by softness in the fashion categories.
QVC UK revenue declined 1% with lower sales for apparel, partially offset by growth in home.
QVC International's adjusted EBITDA decline was driven primarily by higher fulfillment costs and to a lesser extent, lower product margins.
The fulfillment pressure was due to higher freight and wage rates from inflation.
QVC International, maintain disciplined expense management and reduced operating and SG&A expenses.
At Cornerstone, revenue declined 12% due to low demand from continued housing and pressure despite the revenue decline with gross margins from lower supply chain costs.
So, this was more than offset by costs for outside services related to the transformation plan and deleveraging of our SG&A costs, resulting in a $5 million adjusted EBITDA decline.
Cornerstone is implementing a transformation plan to improve its profitability.
Given the continued challenges in the housing sector, we are focused on driving increased revenue and reducing costs in key areas.
Example of our actions include leveraging our combined purchasing power through direct sourcing for cost improvement opportunities, increasing use of advanced analytics and pricing and promotion, improving the core online experience, optimizing our direct-to-consumer marketing spend and enhancing both efficiency and the sales experience in our retail stores.
We are actively implementing changes to the business and expect to drive meaningful benefit through 2027.
In conclusion, we are nearing the end of our multiyear project Athens initiative and are very pleased to report.
The team has materially improved our business over this time period.
The initial gains were most were mainly cost margin and cash flow focus.
We expanded gross margin into the EBITDA margin in four of the last five quarters.
We grew free cash flow, excluding insurance proceeds, nearly $400 million from December 2022 to September 2024, our stated objective was to deliver stable revenue, and a double digit cater for adjusted EBITDA and free cash flow through 2024 from a base of 2022, our revenue has underperformed this goal, which drove increased de-leverage throughout the P&L.
While we have expected our adjusted EBITDA kegger will be just under our Athens goal.
Our organic free cash flow generation is trending on track with forecasts.
The cost efficiencies we implemented in the business have resulted in a more profitable, leaner and more nimble organization that will connect to benefit from ongoing Athens workstreams.
Taking a step that we also know our demographic is increasingly impacted by cord cutting.
Therefore, we recognize the need to reach additional aggregated audiences on new platforms and to grow the business.
I look forward to providing more details on this strategy at Investor Day next week.
Now I'll turn the call to Bill to discuss the financial results of each of our businesses in more detail.
Bill Wafford
Thank you, Danny, and good morning, everyone.
Unless otherwise noted, my comments compare financial performance for the three months ended September 30th, 2024, to the same period in 2023.
Starting with QxH, revenue decreased 6% due to lower unit volume and shipping and handling revenue, partially offset by favorable returns.
From a category perspective, home revenue decreased 3%, driven by lower demand for culinary and finished products.
Apparel saw gains in certain agent possibility.
Brands, but declined 3%, driven by soft demand for fall.
Fashion fee revenue decreased 4%, driven by lower demand for Bath & Body.
In haircare products experienced accessories experienced growth and luggage sales declined 9% due to lower demand for footwear and handbags.
Electronics decreased 16%, primarily due to weaker computer sales.
Adjusted EBITDA margin dropped by 40 basis points.
Gross margin declined 10 basis points, with higher product margins being mitigated by fulfillment Fresher.
Product margins improved approximately 10 basis points due to higher initial margin from that project.
Athens initiatives, partially offset by lower shipping and handling revenue.
Fulfillment expenses increased approximately 35 basis points due to higher wage and freight rates and deleverage.
Operating expenses decreased 6% due to lower commissions.
Despite a 4% reduction in SG&A expenses, we were still unfavorable by 35 basis points due to the deleveraging of administrative costs and increased marketing expense.
Administrative expenses declined due to lower personnel expenses and outside services, while marketing increase due to brand marketing to support QVC's agent possibility campaign.
Moving to QVC International, my comments will focus on constant currency results.
Revenue decreased 1%, reflecting a 3% decrease in average selling price, partially offset by 1% increase in units shipped and favorable returns.
QVC, Germany and Japan were flat.
QVC Uk declined 1% from a category perspective, QVC International experience growth in home and accessories with a decline in apparel and beauty.
Adjusted EBITDA decreased 9% and adjusted EBITDA margin contracted 95 basis points.
Gross margin decreased 120 basis points due to higher fulfillment costs and lower product margins.
Fulfillment costs increased due to higher freight rates and fulfillment center costs.
Product margins decreased, reflecting lower initial margins due to product mix and higher ocean freight rates.
Operating expenses declined approximately 30 basis points.
Moving to Cornerstone, revenue declined 12% in the quarter as we experienced soft demand across our home brands.
Gross margin expanded 290 basis points due to lower year-over-year supply chain costs, while these were offset by sales, deleveraging of operating and SG&A expenses as well as well as higher outside services related to that transformation plan.
David mentioned.
Turning to cash flow and balance sheet.
In the first nine months of 2020 for free cash flow was a source of 102 million compared to a source of $79 million last year.
Excluding insurance proceeds.
The increase in cash flow.
Net of insurance proceeds was primarily due to lower payments for TV distribution rights, partially offset by lower cash from operations.
In the first nine months of 2024, we spent $23 million on TV renewal on renewals of our TV distribution contracts from $137 million on capital expenditures.
Looking at the Qurate Retail Inc.
Debt profile.
As of September 30th, 2024, net debt was $4.7 billion.
In September, we completed an offer in which 89% of our 2027 and 2028 notes were tendered for newly issued 2029 notes and $352 million of cash, of which 75 million was funded by QVC, Inc. and the remainder by Liberty Interactive LLC.
The exchange improves QVC's credit profile by reducing its debt balance and extending its maturity profile.
As of September 30th, the QVC revolver had 1.3 billion drawn with 1.8 billion in available capacity.
In terms of cash balances, curate retail had total cash of 873 million, of which 297 million was at QVC Inc. 201 million was in Liberty Interactive LLC, 275 million was at Qurate Retail, Inc.
Our leverage ratio as of Q3, as defined by the QVC revolving credit facility was 3.1 times compared to our maximum covenant threshold of 4.5 times.
Please note that covenant EBITDA include the adjusted EBITDA of QVC, Inc. and Cornerstone and a portion of projected cost savings.
We affirm that our model and our current cushion is sufficient in relation to the 4.5 times maximum net leverage covenant threshold stipulated in our covenant in our credit facility.
Finally, as we mentioned last quarter, we received a notice from NASDAQ on June 10th QRTEA.s.
Closing bid price seems to be one or more for 10 consecutive business trading days within 180 calendar days to regain compliance for continued listing on NASDAQ.
QRTEA. does not regain compliance during this time period, we will apply to move the stock from trading on the NASDAQ Global Select Market here to the NASDAQ capital market here, which will provide us an additional 180 calendar day period to regain compliance.
As a part of this process, we will be required to affect a reverse stock split, if necessary, to remain on NASDAQ.
Now I'll turn the call over to Greg.
Gregory Maffei
Thanks.
As you heard, it was a difficult quarter that was significant impact on viewership at headline.
Grabbing events impacted sales more than originally forecast.
While business has a healthier cost structure, top line softness has resulted in deleveraging across the P&L.
We continue to proactively manage the balance sheet.
We tendered for 89% of QVC's 2027 in 2028 notes, partially funded by 605 million of new 2029 notes.
So, extension and the remainder were 75 million of QVC and 277 million of Liberty Interactive cash.
This extends the runway upgrades, debt maturity profile.
And in addition, interest expense was reduced by approximately 9 million from a combination of Fed cuts and exchange transactions.
All of the support, our goal of extending the 2026 revolver.
We do recognize the landscape is changing.
With cord cutting increasingly impacting our customers.
We are pursuing new growth strategy to more deliberately deliberately reach aggregated audiences on primarily social and streaming platforms.
David will speak in more detail about this at Liberty's Investor Day next week, November 14th.
We look forward to seeing you there.
You can tune in virtually or join us in person at our new location, Jazz at Lincoln Center.
If you plan to attend in person, please make sure registered by Monday, November 11th, and there will not be on-site registration link to register can be found on our website.
John Malone and I will host our annual Q&A session.
If you'd like to submit questions in advance, you can e-mail Investor Day at Libertymedia.com.
And with that, we'll open the floor operator for Q&A.
Operator
Thank you.
Once again, ladies and gentlemen, that's star one.
William Reuter with Bank of America.
William Reuter
Good morning, and I have my first question is on the category performance.
There is clearly a pretty large divergence.
When you look at I guess, do you expect that the categories that have remained soft, but there have been soft will remain solid.
And I guess, are you taking actions in the near term to change your programming to Tom to put more of the categories of strengths on air?
Gregory Maffei
Yes, I appreciate the question.
Thank you for that.
I would say the category performance at this time was really disproportionately impacted by the macro factors and events both noted unanticipated and it just sort of had a broad category impact.
As I think I mentioned in my prepared remarks, viewership across our five channels in the US were down 4%.
And so that just drove a level of softness throughout categories.
And like I said, we think could have one or 2% impact on total revenue and then corresponding P&L.
When you look at the category specifics, home revenue decreased 3% on that was mostly driven by culinary in fitness.
No reason to think that in a more normalized external environment that we won't see some better performance and some bounce-back part there.
I do think we continued to see we leaned into apparel with Asia possibility some of the age of the possibility brand.
That was a little bit of softness outside of those Asia possibility brands and fall and fall fashion.
So we're continuing to watch and see how that develops.
But overall, I think and then electronics, I think we continue to weigh on that a real boom cycle and the innovation cycle in electronics.
I don't think we've seen that fully materialized yet.
I think if we see as we see more innovation and though electronics and I think particularly the tablet video game and television market, that market will be mostly dependent on the innovation on the innovation cycle.
So, we're watching across categories very, very closely.
We're changing our airtime assets as we see strength in particular categories.
But I think this quarter was mostly the macro quarter in terms of understanding what was happening in the category and was less about the specific category dynamics.
William Reuter
kind of and then, last quarter, I think you mentioned that less than half of your products are sourced from China in general.
All the way that your relationships work with your vendors are responsible for the tariffs that were tariffs enacted or the agreement such that you would be paying those.
And I guess, any commentary on how you were impacted by the task at the first time they came around and 2018?
Gregory Maffei
Yes.
I think if you have to the point that the reporter importer of record, in most cases, our vendors or suppliers, right, we direct source, it's still a significant portion of it.
We negotiate those deals on a landed cost basis, right.
So, depending on how that in the tariffs law through will be on a bespoke basis, how we manage each of our vendors.
If you look at how that happened, how we manage that back in the last round.
So, four years ago, I mean, that's really when you start to think about it when we started diversifying your country-of-origin sourcing, right?
And that's why we moved a lot of sourcing out of China into other lower cost country sourcing, whether it be low, our cost of goods or improve tariff will continue to evaluate, continues to make strides there, and we'll take them as they come in time around.
I don't think will be unique in how this is impacting relative to other retailers and expect us to handle it in similar fashion.
William Reuter
Got it.
And then just lastly for me, it would seem like the size of some huge number of events that cause distractions for consumers in the third quarter.
Certainly, I think October was a month which had a lot of the same types of distractions.
Was there any material change in the trends in October or did we see a lot of the same and things we saw in the third quarter?
David Rawlinson
Yes, let me take that in two parts.
First, maybe out of trying to describe with a little more particularity, some of the trends and events.
So on July 13th was the day the first troubleshooting on on the 13th, we saw average hourly reach declined 10% at QVC sales for our fell 50% in the evening in primetime compared with the average of the morning and afternoon periods that day.
So you just saw an almost immediate precipitous drop-off in sales presidential debate on September 10th, average reach in the first hour was down 36% and QVC sales per hour fell 20% in primetime compared with the evening hours leading up to the debate.
And even when you look at something like the Olympics opening ceremony, which turned out to be very widely watched, you saw sales per hour fell 25% in the half and in hours versus the morning hours on QVC that day.
So, you did see some of a direct read across between the events and viewership, which then corresponded to sales, I would say from the quarter was driven more by the ups and downs of the media cycle on it than it was by in the overall, I think retail trend underlining because of that they tend to be a few more events in the in the first half of the quarter than the second half.
So we did we did see a little bit improvement as we went through Q3.
But I think the biggest driver really was the the the news cycle.
William Reuter
Got it.
Thank you.
Operator
Carla Casella of JPMorgan.
Carla Casella
Hi.
Thanks for taking the question and answer on the international customer and it customer clients in Florida area, and you did call out a few markets that can you just talk about it at any particular markets, every actually seen the numbers down our change in trend and anything else that can add some color on on Asia, specifically Japan?
Gregory Maffei
Yes, that's great.
Thank you.
Thank you for the thank you for the question.
For the quarter, Germany and Japan revenues were both essentially flat, down 0.1 and 0.3 respectively.
So, I think relative stability, they are both countries saw sales growth in home and electronics in both countries saw softness in fashion.
QVC, UK declined 1%, mostly on lower sales for apparel and home.
I think what you tend to see are idiosyncratic events across the international businesses, but you largely see an international business that's very stable.
We have had more difficulties with shipping in the European businesses because of some of the things that are going on and they're shipping lanes.
So, that did have a little bit of an effect, especially in Germany and the UK.
But I think going I think going into the, if you look at just to hit that real quick, about 75% of our supply at our European operations, I'll go through the go through the canal.
And so, we did have a little bit more exposure and had to do things like changing some of that for some of our programming, etcetera there.
But I think the story at our international businesses is largely a story of stability.
Some of the customer counts were down slightly, but I wouldn't read that borrower has asked too much of a trend.
We think we feel good in the medium term about being able to get growing customer files across our international business despite there being some customer counts off.
And that is something particularly in Japan and Germany this year.
Carla Casella
Okay, great.
And then you kind of alluded to a question, page 8, the and gross margin impact from shipping with that all the Red Sea and should that be more normalized as we go forward?
Or was it just the third quarter hedge?
Gregory Maffei
Is it like a largely there from the Red Sea and largely impacted our international business?
Obviously, the majority of their goods flow through the rest of the earnings near 75% on the US business, much much more limited impact on that.
And we don't expect that to continue at all.
And we've already seen those back off the time period.
Carla Casella
Okay, great.
And then on your you mentioned the best customers.
I think I got the number right, 3,960 average spend and correct me if I'm wrong there, but then also on how you best customer numbers changed dramatically?
And how does that compare to an average spend for your existing customers of device?
Gregory Maffei
Yes, that's right.
So, QVC best customers, which we keep in mind is customers that purchase over 20 items a year there about 17% of the count of 76% of sales.
And we feel good about both existing and best customers in terms of their behavior.
Average spend increased 4% year over year and the last 12 months.
And you're right, $3,960 was above average spend of e-mail that.
And we also had average items increased about 1% to 76 items.
And so, in terms of behavior, we felt very good.
And then we saw similar increases in both spend and items on in terms of existing in terms of existing customers.
So, what we're seeing as our customers who are with us remain engaged to remain excited about the programming remain willing to spend and continue driving on units up.
And then I think on account basis, we continue to see reasonable stability sequentially.
I think eventually, and I've said this, we have to get back to a growing customer file overall.
That hasn't been a primary target for us.
And project Athens has been much more bottom-line focus, I think articulate a little bit mixed.
Do you get the Liberty Investor Day on count and revenue growth will come into focus as we go into next period, focused much more squarely on the growth now that we have a better profitability profile than we did a couple of years ago with and I think that should be well.
And I'm trying to drive some increases in total customer count.
Carla Casella
Great.
Thank you so much.
Gregory Maffei
Thank you.
Operator
Jenna Giannelli at Morgan Stanley.
Jenna Giannelli
Hi, good morning.
Thanks for taking my question.
And so with the election now behind us and some of these macro attention grabbing event, is your expectation that in viewership for sort of normalize into 4Q?
I know kind of Dell asset events.
I said, I guess another way.
Have you seen signs of that yet?
And then anything specifically you're doing on holiday that should perhaps that drive the sales picture a little bit better sequentially?
Gregory Maffei
Yes.
So I would say we haven't seen it yet.
I think we're still washing through the presidential results and the and the cycle.
But we do expect to see a much more normalized picture and the fourth quarter.
And I think we're looking forward to a little bit of stability in the the viewing habits of our customers.
We don't see any reason at this point.
I believe that we'll we will not get to a much more normal viewing cage.
The cadence in the fourth quarter.
I will also say we get the fourth quarter is our largest by volume.
And so, some of the deleverage challenges that we have in the third quarter just from volume deleverage running over fixed costs that should improve in the fourth quarter.
So, we feel relative really good about that.
We have a very strong programming on a calendar for the fourth quarter.
Everybody everything from being the exclusive broadcaster of the national pick about championships to another year of hosting the Radio City Rockettes, who will be back in studio.
I believe we'll have at QVC goes the London Christmas Eve, and you'll see lots of celebrities and our programming.
And so we feel good about the fourth quarter.
I think a lot of retailers are calling out the fact that this is because of the way Thanksgiving falls there.
There is a different period, pre-Thanksgiving and then a different period between Thanksgiving and Christmas in terms of calendar days.
And so we are also on scrubbing our programming and our cadence to adjust for that.
But yes, we are going into the fourth quarter.
I think we started out feeling like it should be a much more normal year.
Jenna Giannelli
That's how things go on.
And then also, I just wanted to ask on Cornerstone, you've given me underperformance, and I know you outlined a plan for cost cutting and some improvements there.
But have there been any other fleet thoughts on strategic options?
Are considerations for that business outside of just and just driving earnings improvement?
Gregory Maffei
Yes, I think so we like the Cornerstone businesses.
We think those businesses, a lot of them have very defensible competitively advantaged positions.
What we've seen is those businesses and an up market tend to overperform the market, but also vulnerable in down markets like we are currently.
And I think some when the housing market returns and force, we're still seeing housing starts that are depressed.
We're still seeing mortgage rates that are very high, very elevated.
We're still seeing housing moves that are at a very depressed level.
So, we're clearly in a sector-wide depressed state and they sell into that sector.
And so, we think in a moment where that sector bounces back, that will be well positioned to really take advantage of it.
And so, a lot of the work now was getting to a consolidated, more profitable platform to take advantage of that market when it returns, I would say I've stated in the past, the cornerstone is not our core video commerce business on, but we do think it's a very attractive business.
We do think it's a business that will be worth substantially more in a couple of years than it would be value that today day.
And we have to continue to think there's a lot of value to unlock and that that business.
And then I would just also say that anytime we have an opportunity to create value for shareholders, whether it's organic or inorganic, we would always we would always take a serious look at that.
But today we own the business and we are excited.
We did about the transformation opportunity at that business.
one of the things that gives us so much confidence about the playbook we're about to run as we saw it materially increase the profitability of the QVC and U.S. businesses as a result of project Athens.
And so we're bringing to that business.
A lot of time tools we've refined over the last couple of years.
Jenna Giannelli
So, the perfect that it makes sense.
And I just have one final one, if I can.
And and looking forward to more details and color next week, which you talked about your ending the year three year plan.
And as we think about the next phase in the next two to three years, should we anticipate any further opportunity for our cost or margin improvement, efficiency work, et cetera?
Or should we think about pillars of the next phase?
It has mostly been focused on perhaps new revenue, our customer channel streams, et cetera?
And then again, appreciate will hear more next week.
But just any additional early add color on next steps for next year?
David Rawlinson
Yes, that's right.
Okay.
Greg, I appreciate the questions.
Will we Athens was very deliberately, very bottom-line cost and margin focus.
I sort of talked about stable revenue when we announced that in a very explicitly did not talk about revenue growth on because we were targeting most of us at our effort's revenue growth.
I think what you will see as we go into a more growth-oriented phase is a better balance across.
And so, we are going to be looking to drive revenue growth, but we're also going to be doing it while continuing to have an emphasis on efficiency and margin and cost and productivity.
And I would also say that we are still midstream and a lot of our Athens cost and margin and growth efforts that will continue to have substantial benefit beyond 2024 so.
I think you'll continue to see a lot of the things that have driven that increases in profitability.
In fact, as we go into the out years, which you will see a more balanced approach to top and bottom line going forward.
Jenna Giannelli
Excellent.
Thanks so much.
Gregory Maffei
Thank you.
Operator
Karru Martinson of Jefferies.
Karru Martinson
Good morning.
With the resolution of the presidential election a little bit faster of this year that than the last time around, are you seeing that a comparison we return back to normal faster or we still kind of in the margin?
The newspaper.
Gregory Maffei
I think it's too early to tell where is still very fresh.
I think it's still a big it's still washing through.
I will say, I think the best-case scenario for us was a decisive victory either way that allowed us to get out of the new cycle.
And I think that's what we saw it.
And so, I would say from a from a business standpoint, I'm encouraged that it was able to effectively be decided on a nice one.
Karru Martinson
Okay.
And when you look at your seasonal sales or holiday sales, as has the consumer kind of still been responding to that seasonal offering?
Or is that also being pressured by the pullback in discretionary?
Gregory Maffei
Yes, it's a great question.
I'm not sure I'd say I have a on a super clean read just because there were the macro events that made it a little bit confusing to read across.
I think there are a couple of things.
I think I can say, I think thank you.
It's still a reasonably promotional environment and we do see customers that are value conscious and looking for promotions.
That's clear.
I think it is a holiday themed holiday, if you will.
So, we are seeing spikes in seasonal.
We are seeing spikes in holiday related to core and holiday related push events.
And so that does seem to be triggering.
There's a little bit has a sense of holiday escape and a little bit of a sense of retail therapy that seems to be in the month of the consumer on right now, we are still seeing a more cautious consumer.
I would say we are still seeing a consumer that's buying closer to need rather than rather than further out.
But I think the consumer is reserved.
I think they're cautious as I think their value conscious just but they're there.
Karru Martinson
All right.
And then when we look at the capital structure, obviously a big move with the extension to the 29th, we should expect that 25 get paid off with the revolver and cash I assume on.
And how does that feed into the revolver on refinancing outlook here?
Gregory Maffei
Has been our and essentially the exchange offer gave us the runway to put an extension of the revolver in Item nine will need to negotiate with our banks.
We feel like we have the right tools to be a law for then the improved terms and reduction in total borrowings to be able to facilitate that.
Karru Martinson
Thank you very much.
Appreciate it.
Operator
Hale Holden of Barclays.
Hale Holden
Thank you.
I guess just a follow-up on that.
The last question, understandably, for the last two plus years, you guys have carried very high cash balances with the maturity extension and pending revolver extension.
I was wondering what you thought the right cash balances to carry would be or if we would see some of that cash to pay the 25 paydown as opposed to putting it on the revolver?
David Rawlinson
So, I think the best way to answer that is to talk about where are the cash is we've been relatively strategic about it.
Each tier, the cash that's sitting at the Qurate Retail Inc.
Level is committed to making payments on corporate overhead and on the dividend associated with the preferred.
The cash, the Liberty Interactive level is used in mass scale to help us in the extension of the runway during this exchange offer.
And the argument being that the option value that we create by extending our runway is more significant than anything we can create by paying down debt at delivery direct box, but those dollars.
And then with respect to the cash that sits QVC, we have generally been using dollars of free cash flow to repay the revolver whenever available.
We keep a reasonable balance is that they're spread across a pretty diverse regional base given that it's a global business.
But we are happy with the cash balances in each bucket at this time.
Hale Holden
Thank you very much.
I appreciate it.
David Rawlinson
All right.
I think that our those are questions for today.
Thank you to our listening audience.
Thank you to our presenters, and we look forward to seeing you next some of you next week in New York and perhaps some of you virtually Thank you for your interest in.
Operator
Thank you.
Ladies and gentlemen, thank you for your participation.
This concludes today's event.
You may disconnect your lines and welcome to the webcast at this time and enjoy the rest of your day.