SiriusXM gets record Q4; subscribers drop quarter-to-quarter


Sirius XMSiriusXM’s Q4 and FY 2013 results, which include record revenue of $1.0 billion and $3.8 billion in Q4 and FY, respectively, were each up 12%.  Net income for the quarter and full-year were $65 million and $377 million, respectively, or $0.01 and $0.06 per diluted common share, respectively.

“The fourth quarter of 2013 capped a year of records and milestones for SiriusXM.  We delivered our first ever billion dollar revenue quarter, and our first ever quarter with adjusted EBITDA and free cash flow each over $300 million.  Our adjusted EBITDA margin of 32.5% in the fourth quarter was the highest in the history of the company.  We remain excited about continuing our track record of delivering profitable growth in 2014, with the goal of enhancing free cash flow while making investments in key long-term initiatives,” said Jim Meyer, SiriusXM CEO.

Income from operations was $245 million and $1.0 billion in the fourth quarter and full-year 2013, respectively.  Adjusted EBITDA increased 41% in the fourth quarter to a record $326 million.  Full-year 2013 adjusted EBITDA was $1.17 billion, an increase of 27% from $920 million in 2012.

Total subscriber acquisition costs were $124 million in the quarter, or just 12% of adjusted revenue, the lowest percentage in the company’s history.  The improvement in SAC was driven by lower subsidy rates per vehicle.  SAC per gross addition was $44, a record low, a decline of 19% versus the fourth quarter of 2012.

Self-pay subscriber net additions were 411,484 in the fourth quarter, resulting in an all-time high self-pay subscriber base of 21.1 million at year end, up 8% year-over-year.  Paid promotional subscribers declined from the third quarter by 434,240 as a major OEM shifted to unpaid trials during the period, resulting in the one-time decline.

Total net subscriber additions for the full-year were 1,658,974, taking total paid subscribers to 25.6 million at year-end, up 7% from 23.9 million subscribers at year-end 2012.

Noted Seeking Alpha: “Sirius XM already reported that it ended 2013 with 25.56 million subscribers, implying an annual net subscriber gain of 1.66 million. While this report looks positive on its surface, a comparison with the third quarter metrics shows that the company actually lost subscribers during Q4 2013. At the end of September 2013, Sirius XM had 25.58 million subscribers that included close to 20.7 million self-pay customers. The sudden loss of customers, however small, comes as a surprise for a firm that has been adding between 0.4 and 0.6 million net subscribers every quarter for the last couple of years. While the U.S. auto sales continued to surge in the fourth quarter, Sirius XM failed to take advantage of this growth. ”

2014 Guidance:

SiriusXM’s existing 2014 guidance stays the same:

–Revenue of over $4 billion,

–Net subscriber additions of approximately 1.25 million,

–Adjusted EBITDA of approximately $1.38 billion, and

–Free cash flow approaching $1.1 billion.

RBR-TVBR observation: Simply put, this is what happens when you have a monopolistic business. They have no competition since the merger, so SiriusXM remains the only game in town for satellite radio. Any company operating in these uber-favorable conditions should be throwing out numbers like these.