Sirius XM (SIRI) Tops Q2 EPS by 1c, Revenues Beat; Offers FY19 Revenue Guidance Above Consensus

July 30, 2019 7:06 AM EDT

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Sirius XM (NASDAQ: SIRI) reported Q2 EPS of $0.06, $0.01 better than the analyst estimate of $0.05. Revenue for the quarter came in at $2 billion versus the consensus estimate of $1.94 billion.

SECOND QUARTER 2019 HIGHLIGHTS

SiriusXM operates two complementary audio entertainment businesses — our SiriusXM business and our Pandora business. Further information regarding these two segments will be contained in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2019. The pro forma financial and operating highlights of these two segments are presented separately below and exclude the impact of share-based payment expense.

SIRIUSXM

  • Self-Pay Subscribers Top 29.3 Million. SiriusXM added 290 thousand net new self-pay subscribers in the second quarter to end with more than 29.3 million self-pay subscribers. Total net subscriber additions in the second quarter were 174 thousand, resulting in more than 34.3 million total SiriusXM subscribers at the end of the period. Paid promotional subscribers decreased due to declines in shipments from automakers offering paid promotional subscriptions. Self-pay monthly churn for the quarter was 1.7%, compared to 1.6% in the second quarter of 2018.
  • Record SiriusXM Revenue Over $1.5 Billion. Second quarter revenue of $1.5 billion grew 7% compared to the prior year period. This growth was driven by a 3% increase in total SiriusXM subscribers and 4% growth in SiriusXM's average revenue per user (ARPU) to $13.83.
  • Gross Profit Grows 7%. Total cost of services at SiriusXM increased 7% to $594 million in the second quarter, driven primarily by higher revenue share and royalties and programming and content. Gross profit at SiriusXM in the quarter totaled $944 million, increasing 7% over the second quarter of 2018, and produced a gross margin of 61%, flat compared to the prior year period.
  • Major App Upgrades; Streaming Now Included for 30 Million Subs. SiriusXM Select subscribers now have unlimited streaming access to the hundreds of SiriusXM music, sports, talk, news and entertainment channels, at no additional cost, outside the car on a phone, at home and online. With this new streaming, customers will also get access to over 100 recently launched Xtra Music Channels and an expanded preview of SiriusXM Video. With the launch of Personalized Stations Powered by Pandora, subscribers to the SiriusXM All Access and SiriusXM Premier Streaming packages will now be able to create their own customized commercial-free music stations within the SiriusXM app.

PANDORA

  • Advertising Revenue Grows 13%. Ad revenue at Pandora reached a second quarter record of $306 million, growing 13% over the second quarter of 2018. Ad revenue was driven by record second quarter monetization of $80 per thousand hours, growing 17% over the second quarter 2018. Strength in audio and video programmatic and engagement-based video as well as the expansion of off-platform efforts and fees generated on the AdsWizz platform drove revenue growth. Total revenue for Pandora grew 15% to $441 million in the quarter, aided in part by an 18% increase in subscriber revenue to $135 million.
  • Total Ad Supported Listener Hours of 3.49 Billion. Monthly Active Users (MAUs) at Pandora were 64.9 million in the second quarter, down from 71.4 million in the prior year period. Total ad supported listener hours were 3.49 billion in the period, down from 3.86 billion in the second quarter of 2018.
  • Self-Pay Net Adds of 64 Thousand. Pandora added 64 thousand net new self-pay subscribers in the second quarter to end with over 6.2 million self-pay subscribers. Total Pandora subscribers were 7.0 million at the end of the period, an increase of 16% over the second quarter 2018.
  • Gross Profit Grows 40%. Total cost of services at Pandora in the second quarter 2019 of $284 million increased 4% compared with the second quarter 2018. This resulted in gross profit at Pandora of $157 million, up 40% over the second quarter 2018, and produced a gross margin in the quarter of 36%, growing approximately 700 basis points from 29% in the prior year period. This expansion was driven primarily by lower revenue share and royalties and customer service and billing expenses as a percentage of revenue.

"Our company produced outstanding financial and operating results once again this quarter, and I'm pleased by the quick progress we've made in integrating Pandora. Revenues and adjusted EBITDA each reached records in the period. We're thrilled with the results in the first half of the year, and we are raising 2019 guidance for revenue and adjusted EBITDA and reiterating our guidance for net subscriber additions and free cash flow," said Jim Meyer, Chief Executive Officer, SiriusXM.

"We continue to offer outstanding new programming across comedy, sports, talk and music, with some of the best brands in all of media. Lady Gaga played a once-in-a-lifetime show for SiriusXM subscribers and Pandora listeners in late June at Harlem's Apollo Theater, marking the first-ever combined SiriusXM and Pandora event. We debuted "Netflix Is A Joke Radio," a full-time comedy channel with Netflix, and announced plans for a new music channel with SoulCycle. We launched a new jam band channel with Phish, and special pop-up channels with Madonna, Cher, Dave Matthews Band and the music of Pavarotti. And, last week, we were thrilled to announce a groundbreaking and unprecedented collaboration with platinum-selling recording artist Drake — our content is a true competitive advantage," added Meyer.

GUIDANCE:

Sirius XM sees FY2019 revenue of $7.8 billion, versus the consensus of $7.71 billion.

The Company is reiterating its existing full-year 2019 guidance for SiriusXM self-pay net subscriber additions and free cash flow, and increasing guidance for pro forma revenue and adjusted EBITDA. The company's increased full-year guidance for the combined company, including Pandora, is as follows:

  • SiriusXM self-pay net subscriber additions approaching 1 million,
  • Pro forma revenue of approaching $7.8 billion,
  • Adjusted EBITDA of approaching $2.35 billion, and
  • Free cash flow of approximately $1.6 billion.

For earnings history and earnings-related data on Sirius XM (SIRI) click here.



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