JP Morgan issued an alert this which noted Sirius XM's better than expected performance. The firm noted, " Sirius reported significantly better than expected 2Q results..."
Key initial takeaways according to JP Morgan:
• Sirius lost 186K subs in 2Q. We had been modeling a 371K subs loss. The company lost 301K subs on the retail side, in line with our expectation, but outperformed significantly on the OEM side, adding
123K subs, vs. our estimate of -83K. Churn was 2.0%, much better than our 2.2% forecast.
• Revenue of $608M, up 1% Y/Y. Our model had called for flat Y/Y revenue at $604M. ARPU was $10.66, 2% above our $10.47 model. Subs revenue was up 4%, while Advertising, Equipment and Other revenue were 33%, 29% and 34% lower Y/Y, respectively.
• EBITDA was $132M, vs. our $102M forecast. As a percentage of revenue, every single expense line save SAC was better than our expectation, suggesting the focus on expense cuts is paying off in spades (and on a per-sub basis, SAC was down to $57, from $61 in 1Q). The greatest leverage vs. our model was ~210 bps on the Program & Content line.
• Guidance raised. The company now expects full-year EBITDA to be in excess of $400M, up from previous $350M+ guidance. We think the stronger subs performance, as well as better-than-expected profitability
in the quarter, suggests this number should be attainable.
While JP Morgan does do significant business with Sirius XM, they are not alone in their bullish take on the conference call. Most expected a fairly neutral call that hoped for improvement going forward. Sirius XM delivered numbers better than expectations, and delivered numbers that demonstrate that their guidance and path to profits is real.
I would expect to see upgrades and positive analyst reaction to be published in the coming days.
Tyler Savery Position - Long Sirius XM Radio