SiriusXM added 131,000 self-paid subscribers in the fourth quarter and beat its full-year profit and free cash flow guidance while narrowly missing its revenue target, the company said on Thursday (Feb. 1). However, the satellite radio giant lost 445,000 self-pay subscribers for the full year.
Full-year revenue fell 0.6 percent to $8.95 billion, slightly below last quarter's forecast of $9 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 2 percent to $2.8 billion, coming in at just over $2.75 billion. Free cash flow of $1.2 billion was down about 23% but beat guidance by $50 million.
SiriusXM, built on a satellite radio service favored by older consumers, is in rebuild mode. The company launched a new app in November and a $9.99 per month streaming-only subscription service aimed at a younger audience that doesn't listen primarily in their cars. The app hosts more than 400 Sirius channels, in addition to an audio library and a growing stable of podcast content that includes brands like Smartwho earlier this week pulled out of Amazon's Wondery after hitting one $100 million deal with SiriusXM and Conan O'Brien's Team Coco, which SiriusXM acquired in 2022.
However, the strategy is not likely to produce results this year. “While early indications show signs of positive impact from our business investments, it will take time for them to be fully reflected in our subscription and financial metrics,” said the CEO Jennifer Vitch during Thursday's earnings call.
While SiriusXM expects “roughly flat” subscriber numbers in 2024, new streaming-only subscribers pay less than satellite radio subscribers and will result in lower average revenue per user. Those factors, along with an advertising market Witz called “uncertain,” lead the company to expect two of its key financial metrics to decline in 2024. Full-year revenue guidance of $8.75 billion would be down 2 .2% from $8.95 billion in 2023, while adjusted EBITDA guidance of $2.7 billion would mark a 3.3% year-over-year decline. Free cash flow is expected to remain at $1.2 billion.
Investors appeared to have factored the rebuilding process into their forecasts and did not react negatively to Thursday's earnings results. Shares of SiriusXM rose as much as 5.1% Thursday morning to close at $5.23, up 2.8%.
SiriusXM's satellite radio service generated full-year revenue of $6.8 billion, down 1% year-over-year. Self-pay subscribers increased by 131,000 in the fourth quarter after falling by 96,000 in the third quarter. For the full year, self-pay subscribers fell by 445,000 to about 34 million. Paid subscribers fell by 225,000 in the fourth quarter, but rose by 15,000 for the full year.
Pandora's revenue rose 1% to $1.6 billion, while its subscribers fell 3% to 6.0 million, from 6.2 million at the end of 2022. The music streaming service ended the year with a 46.0 million monthly active users, down 3.4% from 47.6 million in the year-ago period. Total ad-supported listener hours of 10.48 billion in 2023 were down 4% from 10.88 billion in 2022. Pandora's gross profit fell 3% to $638 million.
SiriusXM to lay off 8% of staff in March 2023, resulting in approximately $140 million in cost savings, CFO Tom Barry he said Thursday. This year, the company is targeting nearly $200 million in additional savings, he added, which will be “invested” in “more targeted and performance-oriented marketing on the streaming side.”
SiriusXM's financial metrics for the full year 2023
- Total revenue of $8.95 billion, down 0.6%.
- Adjusted EBITDA of $2.8 billion, down 2%.
- Free cash flow of $1.2 billion, down 23%.
- SiriusXM revenue of $6.8 billion, down 1%.
- Pandora's revenue was $1.6 billion, up 1%.
- SiriusXM Satellite Radio 34 million paid subscribers.
- 6 million Pandora subscribers.
from our partners at https://www.billboard.com/business/business-news/siriusxm-earnings-satellite-radio-lost-subscribers-2023-1235595747/
