SiriusXM Radio Reports Net Income Slides Five Percent

Sirius XM today announced second quarter 2020 operating and financial results, including revenue of $1.9 billion, down 5% compared to the prior year period. The Company's net income was $243 million in the second quarter 2020, compared to $263 million in the prior year period. Net income per diluted common share was $0.05 in the second quarter 2020, compared to $0.06 in the prior year period.

Adjusted EBITDA in the second quarter totaled $615 million, roughly unchanged from $618 million in the prior year period, resulting in an adjusted EBITDA margin of 32.8%, an improvement of approximately 160 basis points from the 2019 period. The improvement in adjusted EBITDA margin was driven by a 7% decrease in total cash operating expenses, primarily in subscriber acquisition costs, revenue share and royalties, and sales and marketing, while revenue only decreased 5%.

The company, controlled by John Malone's Liberty Media, said its satellite radio subscribers fell when including promotional subs, just like had been the case in the first quarter. In the year-ago period, it had added a total of 174,000 net users.

In the latest period, SiriusXM added 264,000 self-pay customers, but lost 768,000 promotional subs to end June with 30.3 million self-pay and 34.3 million total users, down 516,000. "Paid promotional subscribers decreased due to declines in shipments from automakers offering paid trial subscriptions with the purchase or lease of a vehicle," the company said.

For the full year 2020, the company on Thursday forecast it would add about 500,000 net SiriusXM self-pay subscribers.

Meanwhile, music streaming service Pandora added 40,000 net self-pay subscribers in the second quarter, compared with 64,000 in the year-ago period, to end June with more than 6.3 million total such users. Monthly active users at Pandora came in at 59.6 million in the second quarter, down from 64.9 million in the prior-year period.

"Sirius XM's business during this challenging period has been resilient, and with improving results and visibility into the remainder of the year, I'm pleased to resume offering subscriber and financial guidance.  Despite the incredible economic stresses brought about by the COVID-19 pandemic, our self-pay net subscriber additions grew by nearly 200,000 over the first quarter of the year, and we reported improved churn of just 1.6% per month with rising ARPU.  Although advertising revenue fell 34% in the quarter, substantial expense savings in SAC and other areas provided a complete offset, and we generated over half a billion dollars of free cash flow.  We are investing in our business, our people, and external opportunities to position ourselves for future growth," said Jim Meyer, Chief Executive Officer, Sirius XM (SIRI).

"Our ongoing success highlights the strengths of our business model but also the talent, dedication and innovation of employees across our organization.  We simply haven't skipped a beat," added Meyer.

"Sirius XM has also been active acquiring and investing in complementary businesses, with $428 million of capital committed to acquire Simplecast and Stitcher and for a minority investment in Soundcloud.  The Stitcher transaction, announced earlier this month, will substantially advance Sirius XM's position in podcasting, the fastest growing sector in audio entertainment.  We are now poised to offer audio publishers content hosting, data analytics, ad insertion and sales representation services through programmatic and direct sales.  We are excited to offer advertisers an attractive path for audience-based buys, including to over 150 million North American listeners across our platforms," added CFO David Frear.