NEW YORK — Neither headwinds from slowing auto sales nor the impact of severe weather across the U.S. could deter the nation’s satellite radio provider — the longtime home of personality Howard Stern (pictured) — in Q3.
SiriusXM enjoyed a robust July, August and September 2017 — so much so that it increased its 2017 guidance for revenue, adjusted EBITDA and free cash flow.
Total revenue for SiriusXM increased to $1.38 billion, from $1.28 billion, while its net income soared to $275.22 million (6 cents per diluted share), from $193.9 million (4 cents). Factoring in the Canadian dollar, total comprehensive income in Q3 was $279.4 million, up from $193.9 million.
Adjusted EBITDA grew to $550.6 million, from $491.9 million.
The results easily surpassed the average estimate of seven analysts surveyed by Zacks Investment Research, which called for earnings of 4 cents per share.
Subscriber revenue is the crux of SiriusXM’s profit model, and in Q3 that increased to $1.14 billion from $1.07 billion.
Advertising revenue is also on the rise, however, and that’s adding to SiriusXM’s profiteering success: Ad revenue climbed to $41.46 million in Q3, from $34.3 million.
The big dent for SiriusXM — much like streaming audio service providers including Spotify and Pandora — is tied to revenue share and royalties. Those costs grew for SiriusXM to $296.5 million in Q3, from $272.8 million.
Additionally, programming and content costs grew to $98.2 million, from $89 million.
Then, there are subscriber acquisition costs, which moved to $119.6 million from $120.1 million.
SLOW SUBSCRIBER GROWTH, FLAT CHURN RATE
Those costs are flat, but subscriber rolls are up on a year-to-year basis. As of Sept. 30, SiriusXM’s number of self-pay subscribers increased by 6% from Q3 2016, to 26.9 million. Concurrently, its paid promotional subscriber rolls dipped by 5%, to just shy of 5.2 million.
Unfortunately, the all-important “net additions” slipped to 119,000 in Q3, from 345,000 a year ago. Additionally, the number of paid promotional subscribers to SiriusXM services surged to 191,000 in Q3, from 39,000 in the year-ago period.
With average self-pay monthly churn rates holding steady at 1.9%, and the new vehicle consumer conversion rate also holding at 40%, the balancing act of bringing in new subscribers while controlling the cost of doing so seems to be paying off for SiriusXM.
What do investors think? SiriusXM shares are down 1.7% in the first 10 minutes of trading on Wednesday (10/25), moving to $5.64 on lower-than-average volume.
LOOKING AHEAD TO 2018
SiriusXM’s complete full-year 2017 guidance is as follows:
- Self-pay net subscriber additions of approximately 1.4 million
- Revenue of approximately $5.4 billion
- Adjusted EBITDA approaching $2.1 billion
- Free Cash Flow of approximately $1.54 billion