SiriusXM Reports Solid 3Q Sub Gains

 

• Revenue in Third Quarter 2022 of $2.28 Billion; an Increase of 4% Year-Over-Year
• Third Quarter 2022 Net Income of $247 Million; Diluted EPS of $0.06
• Adjusted EBITDA of $720 Million
• Third Quarter SiriusXM Self-Pay Net Additions of 187,000
• Company Announces 10% Increase to Quarterly Dividend; Year-to-Date Capital Returns to Stockholders Total $1.8 Billion
• SiriusXM Reiterates Full-Year Financial and Subscriber Guidance

SiriusXM today announced third quarter 2022 operating and financial results, including revenue of $2.28 billion, an increase of 4% year-over-year. The company recorded net income of $247 million in the third quarter of 2022 compared to $343 million in the prior year period, representing earnings per diluted common share of $0.06 compared to $0.08 in the prior year period. Earnings per diluted common share for the current period were $0.07 when excluding lease impairments and other restructuring costs.

Adjusted EBITDA of $720 million in the third quarter of 2022 remained roughly flat from the third quarter of 2021. 

Jennifer Witz

"We are pleased to report third quarter results that reflect strong execution during the period while leaning into investments designed to ensure SiriusXM will thrive long-term," said Jennifer Witz, Chief Executive Officer. 

"This quarter we focused on enhancing the listener experience and expanding our unparalleled stable of programming and talent to continue providing our subscribers with the best in audio, both in-car and in the SXM App. From live sports and election coverage to exclusive artist channels and live Small Stage performances, we are thrilled to offer a diverse and differentiated content slate paired with technology that makes it easier than ever to discover new favorites."

Sean Sullivan

"SiriusXM delivered solid subscriber and revenue growth during the third quarter, and while we continue to closely monitor downward trends in the advertising market that add risk to our 2022 expectations, we are pleased to reiterate our full-year subscriber and financial guidance," said Sean Sullivan, Chief Financial Officer. 

"During the quarter, SiriusXM returned $262 million in capital to stockholders and ended the quarter with net debt to adjusted EBITDA of 3.5 times. Today we are also announcing a 10% increase in our quarterly dividend, bringing that dividend to an annualized growth rate of 16% since its inception in 2016. With limited near-term maturities, significant ongoing cash generation, and approximately $1.4 billion in undrawn revolver capacity and cash, we have tremendous flexibility to continue investing in our business and evaluating strategic opportunities," added Sullivan.

Sirius XM Holdings (SIRI) operates two complementary audio entertainment businesses — one of which is referred to as "SiriusXM" and the second of which is referred to as "Pandora and Off-Platform." Further information regarding these two segments will be contained in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022. The financial highlights below exclude the impact of share-based payment expense.

➤SiriusXM Segment Financial Metrics and Highlights

SiriusXM ended the third quarter of 2022 with 32.2 million self-pay subscribers. During the third quarter of 2022, SiriusXM self-pay subscribers increased by 187,000, aided by trial funnel growth in the prior quarter and a growing base of streaming-only subscribers. 

Paid promotional subscribers decreased by 49,000, and total subscribers were 34.2 million as of September 30, 2022. The SiriusXM trial funnel stood at approximately 7.0 million at the end of the quarter, down from 7.3 million at the end of the second quarter of 2022, reflecting weaker auto sales during the quarter. Self-pay monthly churn of 1.5% remained at record low levels.

In the third quarter 2022, revenue of $1.7 billion grew 5% compared to the third quarter of 2021. This growth was driven by an $0.88 increase in average revenue per user (ARPU), up 6% year-over-year, resulting in a record ARPU of $15.72. Third quarter 2022 revenue also benefited from a 1% increase in SiriusXM self-pay subscribers and 6% growth in advertising on the SiriusXM platform, partially offset by a lower base of paid promotional subscribers.

Gross Profit Increased to $1.1 Billion

Total cost of services at SiriusXM was $665 million for the quarter, a 3% increase compared to the corresponding quarter in 2021. Gross profit at SiriusXM totaled $1.1 billion, an increase of 6% compared to the 2021 period, producing a gross margin of 62%, roughly a point higher than the prior year period.

➤Pandora and Off-Platform Segment Financial Metrics and Highlights

Third quarter 2022 advertising revenue in the Pandora and Off-Platform segment increased to $407 million, a 1% increase from the same period in 2021. Pandora's advertising revenue per thousand hours (RPM) during the quarter was $103, down 5% from $109 in the third quarter of 2021. During the quarter, the company's podcasting and off-platform businesses generated $123 million in total revenue, an increase of 37% year-over-year.

Monthly Active Users (MAUs) at Pandora were 48.8 million in the third quarter of 2022, down 7% from 52.6 million in the prior year period. Total ad-supported listener hours were 2.75 billion in the third quarter of 2022, down from 2.89 billion in the 2021 period. Average monthly listening hours per ad-supported user climbed 3% to 20.8 in the third quarter of 2022 compared to 20.1 in the third quarter of 2021.

Self-pay subscribers to the Pandora Plus and Pandora Premium services remained flat in the third quarter of 2022, ending the period at 6.3 million.

Gross Profit Declines 12%

Subscriber revenue decreased by 2%, advertising revenue increased by 1% and total cost of services increased by 7% during the third quarter of 2022. The increased costs were driven primarily by investments in podcast content. This resulted in gross profit in the Pandora and Off-Platform segment of $173 million during the third quarter of 2022, a decrease of 12% compared to $197 million in the corresponding 2021 period and produced a gross margin for the quarter of 32%, down 5 percentage points from the prior year period.

Pandora's personalized music experience has been driven primarily by proprietary algorithms that continually learn from past user behavior, enabling Pandora to deliver music catered to users' individual tastes and preferences. During the third quarter of 2022, the company implemented improvements to Pandora's recommendation algorithms, including the addition of more signals derived from listener interactions with songs and artists.

➤Expanded Ad Representation and Podcasting

SXM Media, the company's combined advertising sales organization, is one of the nation's preeminent sellers of podcast ads. In the third quarter of 2022, SXM Media – which currently represents five of the top 25 podcasts in the country, per Edison Research – signed new global advertising sales rights agreements with "The School of Greatness" and "The Mel Robbins Podcast." These agreements showcase the company's ongoing commitment to expanding its off-platform business and growing podcast revenue.