SiriusXM Q2 Revenue Down 5% to $1.87B, Diluted EPS $0.05

RADIO ONLINE | Thursday, July 30, 2020 | 12:11pm CT

SiriusXM

SiriusXM reported second quarter revenue fell 5% to $1.87 billion from $1.97 billion in 2019. Adjusted EBITDA totaled $615 million, roughly unchanged from $618 million, resulting in an adjusted EBITDA margin of 32.8%. Self-Pay Net Subscriber additions totaled 264,000, while Self-Pay Subscribers topped 30.3 million. The company posted a net income $243 million (5 cents per diluted share) as compared to $263 million (6 cents) in in the year-ago period.

"Sirius XM's business during this challenging period has been resilient, and with improving results and visibility into the remainder of the year, I'm pleased to resume offering subscriber and financial guidance. Despite the incredible economic stresses brought about by the COVID-19 pandemic, our self-pay net subscriber additions grew by nearly 200,000 over the first quarter of the year, and we reported improved churn of just 1.6% per month with rising ARPU," said SiriusXM CO Jim Meyer.

He added, "Although advertising revenue fell 34% in the quarter, substantial expense savings in SAC and other areas provided a complete offset, and we generated over half a billion dollars of free cash flow. We are investing in our business, our people, and external opportunities to position ourselves for future growth."

The company resumed share repurchases following its April earnings call, buying 29 million shares for $165 million in the second quarter. With $58 million of dividends paid, total capital returns for the second quarter were $223 million. In June, it issued $1.5 billion of new 4.125% Senior Notes due 2030, and in July the company completed the redemption of a similar principal amount of its 4.625% Senior Notes due 2023 and 5.375% Senior Notes due 2025.

SiriusXM CFO David Frear said, "Sirius XM has also been active acquiring and investing in complementary businesses, with $428 million of capital committed to acquire Simplecast and Stitcher and for a minority investment in Soundcloud. The Stitcher transaction, announced earlier this month, will substantially advance Sirius XM's position in podcasting, the fastest growing sector in audio entertainment. We are now poised to offer audio publishers content hosting, data analytics, ad insertion and sales representation services through programmatic and direct sales."

Second quarter ad revenue in the Pandora segment, which includes off-platform results such as its AdsWizz business, declined 31% year-over-year to $211 million. Numerous categories of advertisers cancelled or paused orders during Q2 in reaction to the COVID-19 pandemic. Nevertheless, revenue declines moderated throughout the quarter, with April down 41%, May down 36%, and June down 18% versus the same months in 2019. Monetization of $55 per thousand hours at Pandora was also down 31% year-over-year.

Monthly Active Users (MAUs) at Pandora were 59.6 million in the second quarter, down from 64.9 million in the prior year period. Total ad supported listener hours were 3.29 billion in the period, down from 3.49 billion in the second quarter of 2019. Average monthly listening hours per active ad-supported user increased 2.4% to 20.2 in the second quarter of 2020 versus 19.7 in the second quarter of 2019.

The sharp decline in advertising revenue greatly exceeded a 6% reduction in costs of services, resulting in gross profit at Pandora of $70 million, down 55% over the second quarter of 2019. Gross margin for the quarter was 21%, down from 36% in the second quarter of 2019.