If there was any doubt that Sirius XM could be a profitable entity in 2017, given the myriad audio entertainment choices available to consumers, think again.
The satellite radio company and Pandora Media investor saw its stock soar by nearly 8% in lunch-hour trading on Thursday. That pushed SIRI shares over the $5.50 threshold, establishing a five-year high for the company.
Just before 1pm Eastern, Sirius XM was trading at $5.80, up 7.6%. At the closing bell, Sirius shares finished up even further, to $5.83.
The burst in activity for Sirius stock is the result of a quality Q2. Earlier on Thursday Sirius XM released its financial results for the second quarter, and it was a largely positive three months for the company.
Total revenue improved to $1.35 billion, from $1.24 billion. But, perhaps more notable were its subscriber and advertising gains. Subscriber revenue advanced to $1.11 billion, from $1.03 billion. Advertising revenue jumped to $40.2 million, from $33.5 million.
With the gains, net income jumped to $202.1 million (4 cents per share), up from $175 million (4 cents). Adjusted EBITDA rose to $521.94 million, from $467.77 million.
The results matched the average estimate of 7 analysts surveyed by Zacks Investment Research. Additionally, five analysts surveyed by Zacks expected revenue of $1.32 billion.
There is a sore spot for Sirius XM, however, and that’s in programming and content expenses. In the quarter, those rose to a whopping $96.3 million, from $83.6 million. This helped to propel total operating expenses to $931.2 million, from $873.4 million.
SUBSCRIBER ROLLS LEAP FROM ’16
For those keeping score on how many paid subscribers Sirius has, and if it’s growing its total numbers, Sirius XM has seen some significant year-over-year improvements.
As of June 30, self-pay subscribers came in just shy of 26.7 million, a 6% increase from one year ago. Meanwhile, the number of paid promotional subscribers fell by 2%, to 5.37 million.
But what about the all-important churn rate?
Sirius XM reported that in Q2 it dipped to 1.7%, from 1.8% one year ago.
Then, there is Sirius XM’s “ARPU,” derived from total earned subscriber revenue, advertising revenue and other subscription-related revenue — excluding revenue associated with Sirius XM’s connected vehicle services — divided by the number of months in the period, and divided by the daily weighted average number of subscribers for the period.
How did Sirius XM do with its ARPU? It climbed to $13.22 in Q2, from $12.78 in the year-ago period.