SiriusXM Tops Market Expectations

SiriusXM topped market estimates for quarterly revenue on Tuesday as the radio company's tie-ups with automakers helped draw users to its audio product services while on the road.

Audio giant disclosed on Tuesday that it lost 132,000 self-pay subscribers in its satellite radio unit in the second quarter, a narrowed decline after a 347,000 loss in the first quarter, and gained 155,000 paid promotional subscribers.

Shares of the company rose more than 3% in premarket trading, having surged to their highest level in more than 18 years last month.

SiriusXM, whose growth primarily relies on sales of vehicles that use its audio products, has benefited this year from a pick-up in global vehicle shipments. The company also partnered with Volvo in the quarter to continue to be the standard across the automaker's vehicle lineup.

The audio entertainment company reported second-quarter revenue of $2.25 billion, beating estimates of $2.24 billion, according to Refinitiv data. Its adjusted profit of 8 cents per share was also above analysts' average estimate of 7 cents per share.

Jennifer Witz

After reporting better-than-expected free cash flow of $323 million in the quarter, the company also raised its expectation for the full year. It now expects annual free cash flow to be around $1.5 billion, compared with $1.1 billion it had previously expected.

CEO Jennifer Witz, during an earnings conference call, highlighted “a meaningful sequential improvement in self-pay net subscriber additions compared to the first quarter” amid an improvement in auto trial starts. She concluded that this “sets us up for continued improvements in subscriber performance and a positive back half of the year.”

Touting nearly unchanged advertising revenue in line with expectations, Witz said that “in today’s choppy market [this] is a testament to the strength of our sales offerings.” She added: “While we are cautiously optimistic the second half will see year-over-year improvement in ad revenue, there are still many variabilities in the marketplace we will be watching closely. It appears at this time that more substantial gains in the ad market will not come before 2024.”

Witz on Tuesday also said that the firm was “evaluating” content packaging and pricing ahead of its launch of a next-generation streaming app, which is designed to attract younger, more diverse audiences. The goal was to “better appeal to each of our target segments, and in doing so continue to grow our subscriber base, revenue and profitability.” She previously described key goals of the new streaming platform as enabling “better commerce, better identity and better marketing capabilities,” in addition to a “brand-new consumer-facing experience with enhanced search recommendations and other features.”