Sirius XM Q2 Earnings: Subscriber Loss, Liberty Media Transaction to Close in September, Stock Falls

Sirius XM Holdings Inc (NASDAQ: SIRI) reported a fiscal second-quarter 2024 revenue decline of 3% year-on-year to $2.178 billion, missing the analyst consensus estimate of $2.195 billion.

Adjusted EPS of 8 cents was in line with the analyst consensus estimate.

Subscriber revenue was $1.66 billion in the quarter, versus $1.73 billion a year ago. Advertising revenue was $443 million versus $445 million a year ago.

For the year, SiriusXM self-pay subscribers decreased by 423,000 to 31.5 million total subscribers, a (1)% decline year over year.

The self-pay monthly churn remained firm Y/Y at 1.5% for the quarter. SiriusXM self-pay subscribers decreased by 100,000 in the quarter.

SiriusXM segment revenue declined 5% Y/Y to $1.6 billion during the quarter, driven by a lower average base of self-pay subscribers plus a $0.42 Y/Y decrease in average revenue per user (ARPU).

ARPU decreased to $15.24 compared to the $15.66 Y/Y. SiriusXM segment gross margin declined 100 bps to 60% Y/Y.

Pandora segment advertising revenue remained flat Y/Y at $400 million for the quarter.

Monthly Active Users (MAUs) at Pandora were 45.13 million, down from 47.42 million in 2023. The total number of ad-supported listener hours was 2.60 billion in the quarter, down from 2.73 billion Y/Y.

The Pandora segment gross margin improved to 33% for the quarter from 29% a year ago, while the gross profit improved by 18% year over year.

The adjusted EBITDA remained firm Y/Y at $702 million due to lower subscriber revenue.

Sirius generated $343 million in free cash flow in the quarter, up from $323 million in the prior year. It held $100 million in cash and equivalents as of June 30, 2024.

CFO Tom Barry: "We expect to close the announced transaction with Liberty Media after the market closes on Monday, September 9, and we continue to target long-run leverage of mid-to-low three times adjusted EBITDA."

FY24 Outlook: Sirius XM reiterated revenue outlook of $8.75 billion, versus the consensus of $8.78 billion. It also maintained an adjusted EBITDA of $2.70 billion and free cash flow of $1.20 billion.

Sirius XM stock plunged 31% in the last 12 months. On July 25, Citi downgraded the stock's rating to Sell from Neutral, with a price target of $2.8.

Price Action: SIRI shares were up 4.94% at $3.28 at the last check on Thursday.

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