Sirius posts wider loss, higher revenue
After the "crisis" at XM last week over a larger-than-expected loss (2/17/06 RBR #34), Sirius shares fell 5% early Friday after the satcaster posted a wider-than-expected loss and warned that it will lose more customers this year via monthly churn. Part of that loss was due to the company recording 6.9 million for its share of Sirius Canada's net loss. Nonetheless, Sirius had record Q4 and FY 2005 results, driven by better-than-expected subscriber growth across its distribution channels.
"2005 was our best year ever and a major milestone for Sirius, setting new records in subscribers, market share and revenue," said Sirius CEO Mel Karmazin. "We continue to be the fastest growing U.S. provider in this exciting new entertainment category, with strong growth driven by tremendous demand for our products and our programming, including the NFL, Martha Stewart and Howard Stern. In 2006, we believe this positive momentum will be further reflected in our automotive OEM channel, where we expect to more than double our subscriber base."
FY 2005 revenue grew to 242.2 million, up 262% from 66.9 million in 2004, and ahead of guidance for the year. Average monthly churn for Q4 and FY 2005 was 1.5%, in line with guidance. Subscriber acquisition costs per subscriber addition was 113 bucks for the fourth quarter and 139 dollars for FY 2005, a 21% improvement over the FY 2004 level and ahead of guidance of under 145 bucks for 2005. Average monthly churn was 1.5%. Sirius lost 311 million, or 23 cents a share in Q4, compared with the year-ago loss of 262 million, or 21 cents a share. Revenue rose to 80 million from 25 million a year ago. Analysts surveyed by Thomson First Call were forecasting a 22-cent loss on revenue of 75 million. Sirius ended 2005 with 3,316,560 subscribers, reflecting a 190% increase in total subscribers for the year and record net subscriber additions of 2,173,302. For Q4, the company added 1,142,640 net subscribers, beating XM for the quarter.
Broken down, SIRI added 1,554,108 net subscribers from its retail channel, a 123% increase from 696,028 net retail subscriber additions in 2004. The company also added 620,224 net subscribers from its automotive OEM channel, more than 241% above net automotive OEM subscriber additions of 181,646 in 2004. For Q4, the company added 900,645 net subscribers from its retail channel and 241,705 net subscribers from its automotive OEM channel.
Most of the Q4 credit was given to adding Howard Stern-it was the best quarterly gain in the company's history, and a 138% increase over net subscriber additions in the year-ago quarter.
Looking forward, Sirius expects to have over 6 million subscribers by the end of the year. Average monthly churn is expected to be approximately 1.8% for 2006. The company expects SAC per gross subscriber addition to approach $110 for the full-year 2006 and to decline further in 2007. SIRI expects to generate 600 million of total revenue in 2006, and approximately 1 billion in 2007. It expects an adjusted loss from operations of approximately 540 million in 2006.
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