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SiriusXM (SIRI) Q3 Earnings in Line, Subscriber Revenues Up Y/Y

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SiriusXM Holdings (SIRI - Free Report) reported third-quarter 2020 earnings of 6 cents per share that matched the Zacks Consensus Estimate and increased 20% year over year.

Total revenues on a reported basis increased 0.7% year over year to $2.03 billion. The figure beat the consensus mark by 4.4%. On a pro-forma basis, revenues also increased 0.7% year over year.

Subscriber revenues (78.7% of total revenues) rose 2.4% from the year-ago quarter to $1.59 billion.

Meanwhile, advertisement revenues (17%) declined 5.7% year over year to $345 million. Equipment revenues (2.3% of total revenues) increased 4.4% year over year to $47 million. Other revenues (1.9% of total revenues) decreased 11.4% from the year-ago quarter to $39 million.

 

Sirius XM Holdings Inc. Price, Consensus and EPS Surprise Sirius XM Holdings Inc. Price, Consensus and EPS Surprise

Sirius XM Holdings Inc. price-consensus-eps-surprise-chart | Sirius XM Holdings Inc. Quote

 

SiriusXM Standalone Details

SiriusXM segment pro-forma revenues were $1.59 billion, up 1.5% year over year. While the subscriber base declined 0.3%, the company witnessed growth of 1.8% in ARPU, which was $14.15.

Self-pay subscribers increased 3% year over year to 30.5 million. The company added 169K net self-pay subscribers in the reported quarter.

Total subscribers were 34.4 million as of Sep 30, 2020, less than 34.5 million as of Sep 30, 2019.

SiriusXM traffic users grew 1% year over year to 9.430 million. However, Canada subscribers decreased 3% to 2.612 million.

Additionally, average self-pay monthly churn rate was 1.7% in the third quarter, unchanged year over year.

Subscriber revenues rose 2.7% year over year to $1.46 billion. Moreover, Equipment revenues increased 4.4% year over year to $47 million.

However, advertising revenues were $39 million, down 23.5% year over year. Other revenues declined 10.9% year over year to $41 million.

Pandora Details

Pandora’s pro-forma revenues decreased 2% year over year to $438 million owing to 2.9% decline in advertising revenues, which totaled $306 million. Subscriber revenues were unchanged year over year at $132 million.

Weakness in ad revenues was due to decrease in third-quarter monetization to $84 per thousand hours, down 1% year over year.

However, ARPU increased 5.7% year over year to $6.83.

Monthly active users were 58.6million at the end of the reported quarter, down from 63.1 million in the year-ago quarter. Ad-supported listener hours declined 6% year over year to 3.12 billion.

Pandora added 105K self-pay subscribers and exited the third quarter with 6.404 million self-pay subscribers.

Operating Details

In the third quarter, total operating expenses increased 0.8% year over year to $1.55 billion.

Revenue share and royalty costs were up 1.7% year over year to $602 million. Programming & content costs were $123 million, up 6%. Cost of equipment declined 37.5% year over year to $5 million.

Customer service & billing costs were unchanged year over year at $119 million. Transmission costs were also unchanged at $46 million.

Subscriber acquisition costs increased 8.9% year over year to $110 million. General and administrative costs increased 5.6% to $131 million.

Engineering, design and development expenses decreased 17.9% from the year-ago quarter to $64 million. Sales and marketing expenses declined 4.7% to $222 million.

Adjusted EBITDA increased 0.6% year over year to $661 million.

Balance Sheet & Cash Flow

As of Sep 30, 2020, cash and cash equivalents were $44 million compared with $1.77 billion as of Jun 30, 2020. The company had $1.749 billion available for future borrowing under its revolving credit facility.

Long-term debt, as of Sep 30, 2020, was $7.85 billion compared with $7.847 billion as of Jun 30, 2020.

At the end of the third quarter, SiriusXM’s net debt to trailing 12-month adjusted EBITDA ratio was 3.1 times.

Cash flow from operating activities in third-quarter 2020 was $443 million compared with $544 million in the year-ago quarter. Free cash flow was $361 million down 22.4% year over year.

SiriusXM repurchased shares worth $486 million in the reported quarter. The company also announced a 10% increase to its dividend that as of November will stand at $0.014641 per share per quarter.

2020 Guidance

Revenues, on a pro-forma basis, are expected to be $7.85 billion better than previous guidance of $7.7 billion. Adjusted EBITDA is expected to be $2.475 billion.

The company anticipates adding almost 800K SiriusXM self-pay net subscribers in 2020.

Free cash flow is still expected to be $1.6 billion.

Zacks Rank & Other Stocks to Consider

Currently, SiriusXM carries a Zacks Rank #3 (Hold).

TEGNA (TGNA - Free Report) , The E.W. Scripps (SSP - Free Report) and Fox Corporation (FOXA - Free Report) are some of the top-ranked stocks in the broader Consumer & Discretionary sector. While TEGNA sports a Zacks Rank #1 (Strong Buy), both carrying Scripps and Fox carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox, Scripps and TEGNA are set to report their quarterly results on Nov 3, 6 and 9, respectively.

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