Sirius XM Hits The Numbers In Q2
The numbers reported by the company fell largely in line with the quarter estimates I published last week. My Hits and Misses:
Guidance – I had anticipated that the company would raise subscriber guidance to 1.6 million and that is exactly what transpired. My miss came with EBITDA. I was anticipating that the company would up the 2011 EBITDA to $760 million, a $45 million increase. The company left the EBITDA guidance at $715 million, but did raise Free Cash Flow by $50 million to $400 million
EPS – I was looking for no surprise here, but the company outdid themselves and reported an EPS of $0.03 per share.
Revenue – I anticipated revenue would come in at $745 million. The company reported revenue of $744.397.
Subscribers – I anticipated 460,000 with a possible 475,000 if churn was at 1.9%. The company announced 452,000 subscribers. I suspect that the churn number is higher than 1.9% but rounded down. Either way, I was certainly in the ballpark here.
ARPU – I was looking for a slight decline from last quarter to $11.49. The company actually increased this metric by a penny over last quarter to $11.53
SAC Per Gross Addition – I anticipated $55. The company bested me by $1 and came in at $54
EBITDA – I was looking for $196 million. The company reported $185 million.
Sirius XM’ s announcement today included revenue of $744 million, up 6% over second quarter 2010 revenue of $700 million, and adjusted EBITDA of $185 million, up 20% from $154 million in the second quarter of 2010.
“Our results in the second quarter were strong, and we are proud of our record levels of subscribers, revenue, and adjusted EBITDA and growth in free cash flow. SiriusXM continues to perform well, and we are pleased to raise our subscriber guidance and, for the second time this year, our free cash flow guidance,” said Mel Karmazin, Chief Executive Officer, SiriusXM.
Highlights from the quarter include:
- Subscriber growth continues. Auto sales growth and higher OEM penetration year-over-year drove ending subscribers as of June 30, 2011 to 21,016,175, up 8% from the 19,527,448 subscribers reported as of June 30, 2010. Self-pay net additions in the second quarter of 2011 were 362,663, up 19% from 304,043 in the second quarter of 2010.
- Churn stable. Average self-pay monthly churn was 1.9% in the second quarter 2011, compared to 2.0% in the first quarter 2011 and 1.8% in the second quarter of 2010.
- SAC improves. Subscriber acquisition cost (SAC) per gross subscriber addition was $54 in the second quarter of 2011, an 8% improvement from the $59 reported in the second quarter of 2010.
“Demand for satellite radio continues to grow, with gross additions reaching the highest level of any quarter since the merger of Sirius and XM. Our all-time high OEM penetration rate is a reflection of the automakers’ satisfaction and their commitment to offer our service to their customers,” said Karmazin. “We intend to drive future growth through innovations to our satellite and internet platforms, with the goal of better delivering our unparalleled content to our valued customers. We’re also excited to launch a variety of additional new music and talk channels later this year.”
Free cash flow in the second quarter of 2011 was $165 million, a 53% improvement from the $108 million reported in the second quarter 2010. These improvements were driven by cash received from the Canada merger, a decline in satellite capital expenditures, and improved adjusted EBITDA. Net income in the second quarters of 2011 and 2010 was $173 million and $15 million, respectively, or $0.03 and $0.00 per diluted share, respectively.
“We ended the second quarter with $528 million of cash and cash equivalents after using approximately $75 million to repurchase debt in the second quarter,” said David Frear, SiriusXM’s Executive Vice President and Chief Financial Officer. “We continue to make steady progress toward reaching our leverage target. Our net debt to adjusted EBITDA declined to 3.7x at the end of the second quarter of 2011 from 5.2x at the end of the second quarter of 2010. The company is examining ways to start efficiently returning capital to shareholders beginning in 2012,” added Frear.
The discussion of adjusted EBITDA excludes the effects of stock-based compensation and certain purchase price accounting adjustments. A reconciliation of non-GAAP items to their nearest GAAP equivalent is contained in the financial supplements included with this release.
2011 GUIDANCE
“With the excellent subscriber performance recorded in the first half of 2011, we are now confident that we will exceed our previously announced 1.4 million net subscriber addition guidance for 2011. Today we are raising our full-year guidance to a projected 1.6 million net subscriber additions,” added Karmazin. “After a strong first half, we now expect free cash flow in 2011 will approach $400 million, up from our prior guidance of approaching $350 million.”
In 2011, the company continues to expect full-year revenue of approximately $3 billion. SiriusXM’s adjusted EBITDA projection remains at approximately $715 million. Full year self-pay churn and conversion rates for 2011 should be broadly similar to those seen in 2010.
Position – Long Sirius Radio
good calls guy
Talk about accurate!! Man, you rock! I completely am sorry I ever said you were too conservative. I was brainwashed by that pumper dumper Brandon Matthews. He’s more concerned with yelling at his readers than accurate forecasting.
You are on the money with your forecast. Subs, Rev, even raised subs all came in like you said. With 5 months left in the year, im curious as to your end of year target? I think its going to $3 PPS by Dec. What do you think?
What an absolutely foolish position.
Sirius is a dog and is back at $1.94.
Anyone who is going long now is an idiot.
Really? Sirius hit it out of the ball park. What are you talking about? The only reason it is down is because of the overall Market. Have you realized the market dropped 1000+ pts in a week? This is a market drop influencing SIRI. Go read about CAPM for more info.
Excellent Projections.
Thank you for the kind words.
My target for the end of the year is $2.70 to $2.80
Thank you Spencer. I’m using DCF to price my target based on my own assumptions of where I think Rev, EBITDA, subs will be through 2012. To much to type out (esp without excel) but that is where I’m getting $3.
Anyhow, isn’t that far off from your target. Great to see another analyst having such a good target. I counted about 6 analyst that have $2.50 and above with MS at $2.75 (and Bull target at $3.35).
I guess it will all depend really on what happens with the economy. Do we turn the corner and go north or stall. That’ll determine imo, where Sirius will end up EOY.
Used to hang here before, YEAR end estimates Wayyyyy to conservative.
its a $3-$4 stock.
Check it…………………..
http://www.thestreet.com/story.....-says.html
$1.94
Leave investing to the grown-ups Spencer.
You pick a day when the entire market is getting killed to point out that SIRI is down? You’re a clown.
Exactly. I agree with you. This “BaBooney” has no understanding of the markets and how a systemic issue will affect all stocks. Ppl like Babooney over here are speculators with no finance education.
Great calls Spencer. I had agreed with your predictions prior to the conference call. But you sure nailed it. 3 per share by 2012, seems realistic now. Karmazin is such a business guru, it is no doubt he did not raise past the 3 billion for the year. But they will be above it based on how things are going this year.
Long siri for two years and laughing!
Great job Spencer! You are the Andy Zaky of Sirius and I pay for his services. After the listening to the CC today, I have 1000% conviction holding and adding to my position in the next couple of months. 2012 is the year for Sirius in my opinion. I was actually going to sell half my position if I had thought the business model for Sirius had changed even a little, I was starting to feel greedy and I was pressing my luck and my decision making. What I liked most was subs seemed to or are increasing faster than car sales. For whatever reason that info stuck with me and I believe has meaning…… A great day and future for longs, in my opinion, thanks again, G.
Georgio….
Thank you for the high praise. All to often I get people slamming me.
Its because you stick your neck out and speak the truth. At 1st, not even I believed in you but have I come around!! People want to hear SirusXM pumpers like Brandon Matthews, who when he’s wrong blames readers instead. Then copies your articles ex. Bull & Bear case you made on Seeking Alpha, and has the nerve of saying you copied him.
You are the real deal!
Thank you for the kind words. I simply do what I do. I do not really pay attention to what Brandon or any other site do. I simply do my thing and keep going. If I am not mistaken, not one satellite radio site gave any real projections of where they thought the metrics this quarter would be. I find it interesting that no one came up with an estimate but me.
Brandon…I do not really pay attention to him. although from what I am told he would have people believe that I do. He has accused me of stealing articles from him….false….has accused me of copying him on an automotive website….false (I registered my oem website domain name months before he did…and apparently thinks that I hacked his site….false….At this point i simply laugh it all off
I used to read Brandon until I realized he’s a hot headed flip flopper who turns on anyone who dares disagree with him. I and a few others challenged several of his “facts” (opinions) and he & his entire board turned on me.
Brandon makes up his own facts and statistics. I think ppl are drawn to his “animation” whereas real analyst like you (and myself, I’d like to think) are interested in real facts.
Anyhow, Spencer you’ve got a loyal reader in me because you are accurate with your analysis.
Don’t be so anxious, it’s coming.
Curious why was there no mention of Sirius 2.0 ??
Here are some 2.0 details:
because it’s a non-issue. You better clutch your pearls if this turd ever has a down quarter. It’ll drop faster than a kidney stone in buttermilk.
There was
http://www.thestreet.com/story.....-says.html
nyt nyt
Spencer,
Now that the 10Q is out, what is your take on the additional 323M shares outstanding ? This is strange because if they are tied to the 2014 convertibles, why id the debt still showing as of June 30th ??
Also, are you still sticking with your 2.70 – 2.80 price target or have you revised it down ?
My target was for end of year and it remains the same
That is about 50% gain from where we were trading today. I’m surprised your sticking with it in light of the economic issues and a very bad stock market.
and you really think they put aside 323M shares for stock options ? Seems way out of whack.
Emplyee stock options
All you bozos calling for Sirius-XM at $3.00 & $4.00 are smoking crack.
$1.94 for Sirius-XM.
so why are you here? U offer no facts or anything, just rants. Yawn. Funny cause, ppl like you do not influence ppl like me. lol.
Writing that SIRI “outdid themselves” by reporting EPS of .03 ignores the fact that two thirds of the earnings was due to a one-time gain related to the Canadian operation. Let’s face it, folks, the 500-pound gorilla in the room is the huge float of nearly 8 billion shares. While few challenge the excellence of SIRI’s unique business model, that float is going to restrain the stock price for the indefinite future. Karmazin made it clear in the Q2 call that a reverse stock split ain’t gonna happen. He said the board would most likely consider “returning cash” to investors in the form of a stock buy-back. But even if the available cash to do this were $1 billion, which it isn’t, a buy-back at, say, $2.00 per share, would still leave the float at more than 7 billion shares. I am a bull on SIRI, long 50,000 shares at .66, but I have come around to thinking that if SIRI is going to reach as high as $4 or $5, it will have to come by being acquired and absorbed into another company, maybe even by John Malone himself.
$1.73 and dropping.
Obama helped kill Sirius-XM
$1.65 -$0.24 (-12.70%)
So what it the stock drops buy more then,thats were u make money in dips ,