SiriusXM Reports: 2019 Revenue Increased to $7.8B

Audio entertainment giant SiriusXM on Tuesday reported continued subscriber growth in its satellite radio business in the fourth quarter, but a decline in Pandora subscribers.

The company, controlled by John Malone's Liberty Media, added a net of 355,000 satellite radio subscribers, including 341,000 self-pay customers and 14,000 paid promotional subs. In the year-ago period, it had added 346,000. It ended 2019 with more than 34.9 million subscribers, including nearly 30.0 million self-pay subscribers.

Pandora lost 88,000 subscribers in the fourth quarter, with 4,000 new paid promotional subs more than offset by a 92,000 drop in self-pay subscribers, to end it with more than 6.2 million total subscribers. In the year-ago period, it had lost 85,000.

Revenue was boosted by the acquisition of Pandora Media on February 1, 2019. 

The Company's net income declined 3% to $243 million in the fourth quarter, while full-year net income totaled $914 million, down from $1.2 billion in 2018 due to higher acquisition, refinancing, and depreciation and amortization expenses in 2019. Net income per diluted common share was $0.05 in the fourth quarter, compared to $0.06 in the prior year period, while full-year 2019 net income per diluted share declined to $0.20 from $0.26 in 2018."

On a pro forma basis, fourth quarter revenue grew 6% from $1.9 billion and full-year revenue climbed 8% from $7.3 billion in the prior year periods. Adjusted EBITDA in the fourth quarter totaled $587 million, down from $593 million in the prior year period. For the full-year, adjusted EBITDA grew 14% to $2.4 billion, resulting in an adjusted EBITDA margin of 30.6%, an improvement of approximately 160 basis points from 2018. The improvement in adjusted EBITDA margin was driven primarily by revenue growth across the business and cost efficiencies in subscriber acquisition costs and revenue share and royalties. Pro forma figures assume the Pandora acquisition closed on January 1, 2018.

Jim Meyer

"I am so proud of SiriusXM's milestone performance last year. Not only did we achieve our 10th consecutive year of one million-plus self-pay net additions, but we successfully completed the acquisition of Pandora Media and drove each business to record-high financial performance. Looking forward to 2020, we're excited about a new decade of opportunity before us and confident in reiterating our guidance for the year," said Jim Meyer, Chief Executive Officer, SiriusXM.

"In programming, our lifeblood, we continue to work with an increasing array of megastars and brands that have real value for SiriusXM subscribers and Pandora listeners. In the lead-up to the Super Bowl, The Chainsmokers and Lizzo played separate exclusive concerts on back-to-back nights in Miami Beach as part of our new Opening Drive Super Concert Series. Coldplay did a special stripped-down set at our new Hollywood studios for subscribers, and we announced the launch of a new SiriusXM channel and exclusive Pandora content from superstars U2, called U2X Radio, which will debut this year," added Meyer.

FULL-YEAR 2019 HIGHLIGHTS

⏩SIRIUSXM

• Self-Pay Subscribers Near 30.0 Million. SiriusXM added approximately 1.1 million net new self-pay subscribers for the full-year to end 2019 with nearly 30.0 million self-pay subscribers. Total net subscriber additions were 870,000, resulting in more than 34.9 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. The total trial funnel stood at approximately 9.3 million at the end of 2019, up from approximately 9.1 million at the end of 2018. Self-pay monthly churn for 2019 was 1.7%, approximately flat from 2018.
• SiriusXM Revenue of $6.2 Billion. Full-year 2019 revenue grew 7% to a record $6.2 billion. This growth was driven by a 3% increase in total SiriusXM subscribers and 4% growth in SiriusXM's average revenue per user (ARPU) to $13.82.
• Gross Profit Grows 7%. Total cost of services at SiriusXM increased 8% to $2.4 billion for the full-year, driven primarily by higher revenue share and royalties and programming and content expenses. Gross profit at SiriusXM in 2019 totaled $3.8 billion, increasing 7% over 2018, and produced a gross margin of 62%, flat compared to the prior year.

⏩PANDORA

• Advertising Revenue Hits Record $1.2 Billion. Full-year ad revenue at Pandora reached a record $1.2 billion, growing 10% over 2018. Ad revenue was driven by strong monetization of $80 per thousand hours, growing 12% over the prior year. Strength in traditional audio advertising, boosted by 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 10% to $1.7 billion for the year, aided in part by a 10% increase in subscriber revenue to $527 million.
• Total Ad Supported Listener Hours of 13.4 Billion. Monthly Active Users (MAUs) at Pandora were 63.5 million at the end of 2019, down from 69.4 million in the prior year. Total ad supported listener hours were 13.4 billion in 2019, down from 14.8 billion in 2018.
• Self-Pay Net Adds of 251,000. Pandora added 251,000 net new self-pay subscribers to its Pandora Plus and Pandora Premium service in 2019 to end the year with nearly 6.2 million self-pay subscribers. Paid promotional subscribers declined to 49 thousand, from 756 thousand in 2018, as a result of a reduction in paid promotional subscriptions due to the expiration of an agreement with T-Mobile in the third quarter of 2019. This brought total Pandora subscribers at year-end to 6.2 million.
• Gross Profit Grows 28%. Total cost of services at Pandora in 2019 of $1.1 billion increased 2% compared with 2018. This resulted in gross profit at Pandora of $624 million, up 28% over 2018, and produced a gross margin for the year of 36%, growing approximately 500 basis points from 31% in the prior year. This expansion was driven primarily by lower revenue share and royalties and customer service and billing expenses as a percentage of revenue.

"SiriusXM returned nearly $2.4 billion of capital to stockholders in 2019. We repurchased more than 364 million shares last year and paid approximately $226 million in dividends to stockholders. At year-end, our debt to adjusted EBITDA ratio was 3.2 times and we had the entire $1.75 billion available on our revolving credit facility. This gives us ample liquidity to continue investing in our business while returning capital to stockholders," noted David Frear, Chief Financial Officer, SiriusXM.