Despite Records SIRI Slides
SiriusXM announced record revenue of $962 million, posted net income of $63 million, had record Adjusted EBITDA of $296 million, saw Free Cash Flow of $245 million, has repurchased $1.6 million worth of stock in 2013, churn was stable at 1.8%, and has brought total subscribers to record levels. Despite all of this, the equity took a hit on weaker than expected revenue, weaker 2014 guidance, and missing the street estimate on EPS by a penny.
This is a classic case of the good performance that is unrewarded because expectations were set too high. The good news is that with the beginnings of 2014 guidance, we can begin to look at valuations under a new scale. The problem is that it will take a bit of time to see that filter down to the street. We will update EV/EBITDA valuation models for SiriusBuzz Premium members today.
In my opinion the company is executing well, but there does seem to be a flattening of growth to a slight degree. There are challenges ahead, but nothing that should cause a massive downturn in stock price. If anything, these challenges present pressure on upward movement. Stay Tuned.
Despite not meeting market expectations Sirius will continue to grow and do well, as far as the stock price going below $4 this should be a great opportunity to enter or add to your position, anything between $3.8 and $3.83 is a good entry point.
I see in the report a sizeable deduction for debt. Also, Siri6is launching tomorrow and that expense will be in this qtr.
Now, while siri is buying back stock, is the time to get these and any other expenses on the books.
Can someone explain why there is an income tax expense when they have the large tax loss carry forward?
[Operating expenses rose 6.5% to $677 million. Income tax expenses were $61.2 million, compared with a tax benefit of $20.1 million a year earlier.]
slip….
The payment of these taxes is only on paper. This is in the same way that the big profitable quartyers we had when we booked the NOL’s was on paper.
We got the paper benefit a year ago, and now, as quarters pass, on paper, we will pay taxes, while in reality no money is sent in. It is all accounting.
I tried to go back to find the post where I spoke to this, but because it was not the main subject of the article I was not able to locate.
The simple answer is that it is a tax on paper only
Spencer,
You said it right that there is nothing to panic about. I am amazed how much the company has done in the past 12 months. However, the greatest events like holdco, Agero acquisition and continued share buybacks are still ahead.
One thing that bothers me is math. Today, after Q3 siri already has close 1.7M net subs while projecting 1.6M for the whole year. Are they saying that Q4 will be in the minus. The same bs relates to their Q4 guidance of over $4B. The notion very of “over $4B” is very expandable. Is it going to be $4.01B or $4.25B or more? I believe to some degree a lot of siri’s statements appear dismissive and condescending toward analysts and investors taking us for a ride. I also supspect that they are also low balling on revenue for 2013.
Anyway, decent results that are a little bit lower than my expectations. I expected the sub number closer to 600K and fcf in the range of $260M. Q4 is going to be quite interesting, however.
On the “plus” side, liberty may be selling at lower prices than the would like to and siri can buy more shares for less money in principle. For us to feel a real impact of the share buyback siri needs to get in the range of 5B shares.
Siri fair….
Indeed they are saying negative. The GM deal shifts here in q4.
In the past every GM car that had a satellite radio was counted as a sub. Now that is not the case.
I will cover that in an article this evening