SiriusXM Profits Fall on Higher Costs, Investments

1 November, 2022

SiriusXM’s profits fell in the third quarter from a year ago on higher expenses and lower profits from Pandora, but overal revenues rose thanks to SiriusXM subscriber growth, the satellite radio company reported on Tuesday.

Sirius XM Holdings Inc. reported net income fell to $247 million, or earnings per diluted share of $0.06, in the quarter ending Sept. 30, 2022, from $343 million, or $0.08, during the third quarter last year. In its Pandora and off-platform segment, gross profits fell 12% on lower subscriber revenue and higher costs from investments in podcast content, the company said in its earnings release.

Revenues rose 3.6% to $2.28 billion from $2.198 billion in the third quarter 2021, while adjusted EBITDA was $720 million for the quarter, roughly flat year-over-year. The company reiterated that it expects full year revenues of $9 billion, with an adjusted EBIDTA of $2.8 billion.

Related

Amazon Prime logo

Amazon Music Now Offers 100 Million Songs to Prime Members

Total operating expenses rose by more than 15% to $1.813 billion in the quarter on increased subscriber acquisition costs, marketing, sales and general administrative expenses.

Subscriber acquisition costs rose 21% to $86 million due to higher equipment installations by automakers, executives said. That and along with investments and other expenses caused the company’s free cash flow to fall 44% from a year ago to $329 million.

In addition, SiriusXM announced its board voted to raise the quarterly cash dividend by 10%, which it will pay out later this month. The company returned $262 million in capital to stockholders in the quarter, chief financial officer Sean Sullivan said in a statement.

“We continue to drive growth and focus on a disciplined approach to cost management across our organization,” chief executive Jennifer Witz said on a call with analysts. “While near-term objectives remain top of mind, we are focused on the strategy and investments that will drive long-term value for our stockholders.”

SiriusXM third quarter financial highlights:

  • SiriusXM reported 32.2 million self-pay subscribers, reflecting an increase of 187,000.
  • The total number of subscribers rose to 34.2 million, including a decline of number of 49,000 paid promotional subscribers.
  • The company’s self-pay monthly churn rate remained at record-low levels at 1.5%.
  • Revenue for SiriusXM rose 5% to $1.7 billion compared to last year on self-pay subscriber growth and a 6%-increase in advertising on the SiriusXM platform.
  • Total cost of services at SiriusXM rose 3% to $665 million for the quarter from the third quarter 2021. 

Pandora and Off-Platform third quarter financial highlights:

  • Gross profit for Pandora and Off-Platform segment fell 12% to $173 million for the third quarter 2022, from $197 million a year ago.
  • Pandora monthly active users fell 7% to 48.8 million compared to 52.6 million in the third quarter a year ago, and subscriber revenue declined by 2%.
  • Pandora Plus and Pandora Premium self-pay subscribersheld flat at 6.3 million.
  • Advertising revenue edged 1% higher to $407 million, as total ad-supported listener hours fell to 2.75 billion in the quarter compared to 2.89 billion a year ago.
  • Podcasting and off-platform business revenues rose 37% to $123 million.
  • The total cost of services increased by 7% driven primarily by investments in podcast content.