Sirius XM Radio (SIRI) today announced that it ended the year with 23.9 million subscribers, reporting 2 million net subscriber additions in 2012. The company also announced that it expects to meet or exceed all of its 2012 financial guidance. That was the headline for SiriusXM today. Unfortunately it does not seem to be driving the stock. In my opinion, the subscriber announcement would have been a nice catalyst alone. When coupled with 2013 guidance that is only at 1.4 million likely tempered any enthusiasm.
In addition to the subscriber announcement, SiriusXM also issued new subscriber and financial guidance for 2013. Personally I have been waiting for this for quite some time. SiriusBuzz Premium members will get more insight and analysis on guidance as soon as I run some new numbers. The 2013 guidance is as follows:
- Revenue of over $3.7 billion,
- Adjusted EBITDA of over $1.1 billion,
- Free cash flow approaching $900 million,
- Self-pay net subscriber additions of approximately 1.6 million, and
- Total net subscriber additions of approximately 1.4 million.
"SiriusXM set a post-merger record of 2 million net additions in 2012, and we expect to report financial and operating results that meet or exceed all of the guidance we provided for 2012. Net self-pay subscriber additions in 2012 increased over 30% to more than 1.6 million, turning in our best performance since 2008," said Jim Meyer, SiriusXM's CEO. "Our unparalleled programming and product innovations, such as On Demand programming and the soon to be launched customization feature, will allow us to continue our strong record of growth driving our subscriber base to exceed 25 million in 2013. With our laser like focus on cost efficient growth and customer service, we will continue to achieve double digit growth in adjusted EBITDA and free cash flow allowing us to return substantial capital to stockholders through our $2 billion stock buyback program," added Meyer.
Under Mel Karmazin the story with guidance has usually been to be conservative and then beat the number. This can be frustrating for investors, but at this point we need to think about how conservative Meyer is being. Is he as conservative as Mel? That will be an interesting thing to see. Much of the 2013 guidance is as anticipated. The surprise seems to be with the subscriber number. I had pointed out to investors why the GM deal would impact the subscriber guidance so, consider yourself in a select group of those in the know.
The next big items are Liberty control, the Q4 conference call, and seeing how analysts react to the newly issued guidance. Stay Tuned!