Sirius XM Radio announced their Q2 operating results this morning, and the company appears to be hitting on all cylinders with performance that the company has not seen in quite some time. Even with the modest recovery in car sales, Sirius XM demonstrated that they are able to monetize their business and deliver the goods.

Sirius XM increased or reiterated guidance and the numbers show that perhaps some of this guidance remains conservative. The company is increasing guidance for the full year 2010, projecting adjusted revenue will approach $2.8 billion and free cash flow will approach $150 million. SIRIUS XM continues to target approximately $575 million of adjusted EBITDA in 2010, and as previously announced, SIRIUS XM increased its guidance for net subscriber additions to approximately 1.1 million for the full year.

There were several items to note during the call. Subscriber acquisition cost per gross addition remained at the same $59 level we saw last quarter. The company increased ARPU to $11.81, and Free cash flow of $108 million, and Adjusted EBITDA of $154 million. Sirius XM will continue to seek ways to pay down debt for balance sheet improvements, and also announced satellite radio 2.0, a next generation satellite radio that should be available in time for the Christmas selling season next year. All of the details can be found in the press release issued by the company.

The tone of the street as a result of this call seems positive thus far, and with no real surprises during the call, that sentiment could well play out throughout the trading day. Sirius XM was able to offset costs in gaining subscribers with a nice jump in revenue. This combination led to an adjusted EBITA of $154 million, only slightly off of the $159 million reported in Q1, which is great news. The guidance on EBITDA for 2010 remains at $570 million. Thus far they have produced $313 million.

Sirius XM is trading up in early trading.

Position – Long Sirius XM Radio