Today Sirius XM announced that it ended the year with 18,772,758 total subscribers, adding 257,028 net subscribers in the fourth quarter of 2009. Even more important then this being the second consecutive quarter of net subscriber additions, CEO Mel Karmazin notes that this is the first year in the companies history that they have generated a positive free cash flow for the entire year.
Karmazin attributes the recent upturn to what he says are “Improvements in automotive sales, conversion rates and better than anticipated self-pay churn suggest that the outlook for the auto sector and the effects of the economy on our business are beginning to improve.”
Another promising number is 2.2%, the increase in the conversion rate to a self-pay subscription from a trial included in the sale of a vehicle in Q4 2009 (46.4%) from Q4 2008 (44.2%). The fact that this percentage is still a little less then a coin toss is still troubling to me. I can't imagine anyone listening to this service for a few months and not wanting to stick with it. If Sirius XM wants to improve moving forward, they need to get feedback from these non converting trials and figure out exactly what is holding them back.
"We expect to meet our guidance and report over $400 million in pro forma adjusted operating income, an improvement of over $500 million from the pro forma adjusted operating income for 2008, and an improvement of nearly $1 billion from the pro forma adjusted operating income for 2007, the last full year prior to the merger of SIRIUS and XM," said David Frear, Chief Financial Officer, SIRIUS XM.
It should be noted that the company's self-pay subscriber base increased by 247,182 in the fourth quarter to 15,703,932 subscribers, while total paid and unpaid trials included in the sale of a vehicle remained level with the prior quarter and the prior year at approximately 3.6 million.