SiriusXM Reports "Very Strong" 1Q Results

SiriusXM today announced first quarter 2020 operating and financial results, including revenue of $2.0 billion, increasing 5% on a pro forma basis compared to the prior year period. The Company's net income was $293 million in the first quarter 2020, compared to $162 million in the prior year period. Net income per diluted common share was $0.07 in the first quarter 2020, compared to $0.03 in the prior year period.

Adjusted EBITDA in the first quarter totaled $639 million, up 13% from $567 million in the prior year period, resulting in an adjusted EBITDA margin of 32.7%, an improvement of approximately 220 basis points from the 2019 period. The improvement in adjusted EBITDA margin was driven primarily by revenue growth across the business and reductions in subscriber acquisition costs, general and administrative costs and customer service and billing costs. Pro forma figures, including adjusted EBITDA, assume the Pandora acquisition closed on January 1, 2019.

Jim Meyer

"Since the start of the global pandemic, our top priorities have been ensuring our employees' safety and well-being, and continuing to support our subscribers and listeners by providing them the best entertainment, news, and information in the audio space.  On both fronts, I'm pleased by our response, stated Jim Meyer, Chief Executive Officer, SiriusXM.

"We are streaming SiriusXM for free, and we have been in overdrive introducing new shows, channels and special virtual moments.  In conjunction with NYU Langone Health, we've launched a 24/7 COVID-19 focused channel and hotline, an important complement to our Doctor Radio channel.  We welcomed the healthy return of Andy Cohen, Howard Stern interviewed Governor Andrew Cuomo, and SiriusXM contributed $2 million to COVID-19 response charities, with a near-term focus on New York, San Francisco, and Detroit - the home of our two biggest employee bases and the primary community of our automakers.  I'm also proud that we have joined with Music Cares to support our artist community and to donate advertising inventory to the Ad Council in support of COVID-19 informational campaigns."

"In the face of the economy hitting the brakes hard in March, SiriusXM's first quarter results were very strong.  Auto sales, advertising and customer responses to marketing campaigns all fell swiftly in the second half of March, yet we delivered increasing subscribers, solid revenue growth and 13% adjusted EBITDA growth to a first quarter record of $639 million.  Just as it was a little over a decade ago during the global financial crisis, SiriusXM's subscriber-based business model is resilient.  We do not know what the shape of a recovery from this current crisis will look like, however, we are confident that our business will continue to generate substantial positive free cash flow.  Once we have a better view of how and when the economy will restart, we plan to resume providing guidance," added Meyer.


"During the first quarter, we built upon our successful advertising sales arrangement by investing $75 million in SoundCloud (SOUND) and joining its Board of Directors.  The SiriusXM, Pandora and SoundCloud listening platforms together offer content owners and advertisers the opportunity to access an audience of 140 million North American audio listeners.  SoundCloud has an outstanding team of people, and we are excited about what we can do together," said David Frear, Chief Financial Officer, SiriusXM.

The Company also announced that it has withdrawn its full-year 2020 guidance for self-pay net subscriber additions, revenue, adjusted EBITDA and free cash flow first issued on January 7, 2020.  The Company plans to release revised guidance at a future date when more data is available on the effects of the COVID-19 crisis on its business and inferences can be reasonably drawn regarding the timing of an economic recovery.

➤SIRIUSXM

• Self-Pay Subscribers Top 30.0 Million. SiriusXM added approximately 69,000 net new self-pay subscribers in the first quarter. 
• Total net subscriber additions were (143,000), resulting in nearly 34.8 million total SiriusXM subscribers at the end of the period. 
• Paid promotional subscribers decreased due to declines in shipments from automakers offering paid trial subscriptions with the purchase or lease of a vehicle. The total trial funnel stood at approximately 9.1 million at the end of the first quarter, down from approximately 9.3 million at the end of 2019. 
• Self-pay monthly churn for the first quarter was 1.8%, approximately flat from 2019.
• SiriusXM Revenue of $1.6 Billion. First quarter revenue grew 6% to $1.6 billion. This growth was driven by a 2% increase in total SiriusXM subscribers and 3% growth in SiriusXM's average revenue per user (ARPU) to $13.95.
• Gross Profit Grows 7%. Total cost of services at SiriusXM increased 4% to $593 million in the first quarter, driven primarily by higher revenue share and royalties and programming and content expenses. 
• Gross profit at SiriusXM in the quarter totaled $992 million, increasing 7% over the first quarter of 2019, and produced a gross margin of 63%, flat compared to the prior year.

➤PANDORA

• Advertising Revenue Hits $241 million. First quarter ad revenue at Pandora reached a first-quarter high of $241 million, growing 4% over the first quarter of 2019. Ad revenue was driven by strong monetization of $68 per thousand hours, growing 8% 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. A reduction in subscription revenue at Pandora following the roll-off of paid promotional subscribers in the third quarter of 2019 discussed below contributed to total revenue growth for Pandora of 1% to 369 million for the first quarter of 2020.
• Total Ad Supported Listener Hours of 3.1 Billion. Monthly Active Users (MAUs) at Pandora were 60.9 million in the first quarter, down from 66.0 million in the prior year period. Total ad supported listener hours were 3.13 billion in the period, down from 3.42 billion in the first quarter of 2019.
• Self-Pay Net Adds of 51,000. Pandora added 51,000 net new self-pay subscribers to its Pandora Plus and Pandora Premium service in the first quarter to end the period with over 6.2 million self-pay subscribers. Paid promotional subscribers remained near 51,000, flat quarter-on-quarter but down from 736,000 at the end of the first quarter of 2019, 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. Total Pandora subscribers at the end of the period were 6.3 million.
• Gross Profit Declines 5%. Total cost of services at Pandora in the first quarter of 2020 of $264 million grew 4% compared with the first quarter of 2019. This resulted in gross profit at Pandora of $105 million, down 5% over the first quarter of 2019, and produced a gross margin for the quarter of 28%, down approximately 200 basis points from 30% in the first quarter of 2019. This contraction was driven primarily by slightly higher revenue share and royalties and customer service and billing expenses as a percentage of revenue.