SiriusXM Second Quarter Revenues Up 8%, Net Income Hit By Pre-'72 Label Settlement
July 28, 2015 at 4:19 AM (PT)
SIRIUSXM second quarter revenue rose 8% to a record $1.12 billion, with net income falling from $120 million to $103 million, dinged by a $108 million pre-tax charge to settle the company's pre-1972 royalty dispute with record labels (excluding the settlement, Adjusted Net Income increased 29% to $170 million). Net income per diluted common share stayed steady at $0.02, and Adjusted EBITDA rose 12% to $415 million.
The satellite service added 692,000 net new subscribers in the second quarter, a 46% increase; Self-pay net subscriber additions rose from 380,000 to 519,000 for the quarter, making it the largest second quarter for self-pay subscriber growth since 2007. Total paid subscribers reached 28.4 million, and self-pay subscribers reached 23.4 million, both records, as was the churn rate of 1.6%, lowest since the SIRIUS-XM merger and a decrease from last year's 1.8%.
CEO JIM MEYER said, "After another quarter of exceptional execution and subscriber growth, we are increasing our subscriber guidance for the second time this year to approximately 1.8 million net additions. We are also increasing guidance for revenue, adjusted EBITDA and free cash flow. Self-pay net additions of 519,000 were the strongest second quarter result since 2007, and our quarterly self-pay churn rate of 1.6% was outstanding. The economy continues to get stronger, our execution has never been better, and demand for our differentiated content bundle remains very high.
"We are focused on delivering the best, most compelling and most entertaining audio content available. Listeners are attracted to our diverse and exclusive content, such as our broadcasts of the GRATEFUL DEAD's historic concerts in CHICAGO, our two live exclusive subscriber concerts by PITBULL and JAMES TAYLOR, and broadcasts of leading music festivals including COACHELLA, BONNAROO, and The ELECTRIC DAISY CARNIVAL. This fall we will bring our subscribers an exclusive channel created with the talented ANDY COHEN, and launch our new exclusive 24/7 original headline news channel with FOX NEWS."
CFO DAVID FREAR said. "We repurchased 144 million shares for $560 million during the second quarter, and this year through yesterday we have repurchased 338 million shares for approximately $1.3 billion. Our growing free cash flow, low leverage and undrawn credit facility allow us to continue investing in growth, while providing flexibility to pursue strategic opportunities and return capital to shareholders."
FREAR added, "Our performance in the first half has been phenomenal on all fronts. As a result, we are increasing guidance across the board for subscribers, revenue, adjusted EBITDA, and free cash flow. Our adjusted EBITDA guidance includes approximately $19 million of incremental expense from the reported royalty litigation settlement that will be reflected in the second half of 2015. Reported free cash flow in the second half of 2015 will exclude the cash payment we expect to make this month under the settlement." The full year 2015 guidance is for $4.5 billion in revenue, net subscriber additions of 1.8 million, net self-pay subscriber additions of approximately 1.6 million, Adjusted EBITDA of approximately $1.62 billion, and free cash flow of approximately $1.3 billion.