Sirius XM Holdings Inc.
07/27/2021 | Press release | Distributed by Public on 07/27/2021 05:30
SiriusXM Reports Second Quarter 2021 Results (Form 8-K)
SiriusXM Reports Second Quarter 2021 Results
•Second Quarter Revenue of $2.16 Billion; an Increase of 15% From Prior Year Period
•Second Quarter Net Income of $433 Million; Diluted EPS of $0.10
•Record Quarterly Adjusted EBITDA of $700 Million, Up 14% From Prior Year Period
•SiriusXM Self-Pay Net Subscriber Additions of 355,000, an Increase of 34% Year-Over-Year
•Company Increases 2021 Subscriber and Financial Guidance
NEW YORK - July 27, 2021 - SiriusXM today announced second quarter 2021 operating and financial results, including revenue of $2.16 billion, an increase of 15% compared to the prior year period. The company recorded net income of $433 million in the second quarter of 2021, compared to $243 million in the prior year period. Second quarter 2021 net income included $140 million in insurance recoveries related to the company's SXM-7 satellite. Net income per diluted common share was $0.10 in the second quarter 2021, compared to $0.05 in the prior year period.
Adjusted EBITDA in the second quarter was $700 million, up 14% from $615 million in the prior year period.
'SiriusXM added an impressive 355,000 net new self-pay subscribers in the quarter, putting us on track to add 1.1 million self-pay subscribers this year - our best since 2018 - and we are increasing all of our financial guidance. The quarter was bolstered by record self-pay churn of just 1.5%, and we achieved strong monetization in our advertising business, with an increase in ad revenue of 82% from the prior year period and 20% from the second quarter of 2019,' said Jennifer Witz, Chief Executive Officer of SiriusXM.
'We have long been the leader in shaping the future of audio for listeners, and we continue doing so by providing curated and premium content in innovative formats. Earlier this month, we announced a new daily radio show hosted by Megyn Kelly which will air exclusively from noon to two on SiriusXM beginning on September 7th. In addition, video of the best moments from the show will be available in our app to subscribers and a podcast version of the show will be distributed broadly on SiriusXM, Pandora, Stitcher and other major platforms. We brought on Roman Mars and his podcast team at 99% Invisible and announced Seth Rogen would do his first ever podcast with us starting in the fall. Our collaboration with TikTok is now live with Pandora playlists from the most dynamic creators on this massive social platform, and a new SiriusXM channel powered by TikTok is coming soon,' added Witz.
'SiriusXM is also shaping the future business of audio by introducing SXM Media. SXM Media now serves as our new cross-platform advertising sales organization, a one stop shop for brands to gain access to our large base of 150 million digital listeners across SiriusXM, Pandora, Stitcher, and other publishers,' noted Witz.
2021 GUIDANCE
The Company increased its full-year 2021 guidance for self-pay net subscriber additions, revenue, adjusted EBITDA, and free cash flow:
•SiriusXM self-pay net subscriber additions of approximately 1.1 million,
•Total revenue of approximately $8.550 billion,
•Adjusted EBITDA of approximately $2.675 billion, and
•Free cash flow of approximately $1.7 billion.
ADDITIONAL FINANCIAL UPDATE
'SiriusXM's second quarter results give us impressive momentum heading into the back half of the year. We were pleased to raise $2 billion of new, senior unsecured notes in June with a coupon of just 4%, and we will use the remaining cash proceeds in August to repay our outstanding 2022 notes. In the first half of 2021 we returned approximately $965 million of capital to stockholders, comprised of approximately $844 million in common stock repurchases and $121 million in dividends. At the end of the quarter, SiriusXM's net debt-to-adjusted EBITDA ratio was 3.2x, and our $1.75 billion revolving credit facility was completely undrawn and fully available,' said Sean Sullivan, Chief Financial Officer of SiriusXM.
SECOND QUARTER 2021 HIGHLIGHTS
SiriusXM operates two complementary audio entertainment businesses - our SiriusXM business and our Pandora business. Further information regarding these two segments will be contained in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2021. The financial and operating highlights below exclude the impact of legal settlements and reserves and share-based payment expense.
SIRIUSXM SEGMENT
•Self-Pay Subscribers Reach a Record-High 31.4Million. SiriusXM added 355,000 net new self-pay subscribers in the second quarter, a 34% increase from the 264,000 added in the second quarter of 2020. Paid promotional subscribers decreased by 378,000. Continuing impacts of a new vehicle trial structure with certain automakers, and to a lesser extent, lower vehicle shipments due to silicon supply constraints, contributed to negative paid promotional net additions during the quarter. Total subscribers at the end of the second quarter were 34.5 million, an increase of 1% from the prior year period. The total SiriusXM trial funnel stood at approximately 9.1 million at the end of the second quarter, up from approximately 8.7 million at the end of the first quarter 2021, on record trial starts in the second quarter of 2021. Self-pay monthly churn for the second quarter improved to 1.5% from 1.6% in the second quarter of 2020.
•SiriusXM Revenue Increased 7% to $1.64 Billion. Second quarter 2021 revenue grew 7% to $1.64 billion. This growth was driven by a 4% increase in SiriusXM's average revenue per user (ARPU) to $14.57 and a 3% increase in SiriusXM self-pay subscribers.
•Gross Profit Increased 5% to $996 Million. Total cost of services at SiriusXM increased by 9% to $647 million in the second quarter of 2021. Gross profit at SiriusXM totaled $996 million, an increase of 5% compared to the second quarter of 2020, producing a gross margin of 61%, a 1 point decrease from the prior-year period.
•Expanded Content. SiriusXM continued to expand its content offering in the second quarter, airing the Masters Tournament, the first time the prestigious golf tournament was carried under an exclusive broadcast agreement. The company bolstered its digital offering by adding live MLB games to streaming-only subscription packages. SiriusXM also launched new fulltime channels, including a new music channel from the mind of Andy Cohen. SiriusXM launched an exclusive limited run 'Good Vibrations: The Beach Boys Channel,' just in time for the summer season, and two new limited run music channels, The 2PAC Channel and The Prince Channel, in honor of Black Music Month. For Asian American and Pacific Islander Heritage Month, SiriusXM featured programming across its channels including 88rising Radio, Steve Aoki's Radio Remix Radio, Disney Hits, Progress, Raw Dog Comedy, Comedy Central Radio and Laugh USA, as we put the spotlight on leaders and change-makers within the community. The SiriusXM NBA Radio channel added a new WNBA-focused show hosted by veteran broadcaster Holly Rowe. SiriusXM also created original podcasts including Comic-Con Begins, on the origins of the iconic annual comic book convention, and Black Diamonds, an original podcast on the rich history of Negro Leagues Baseball.
•Enhanced Automaker Agreements and Functions. The company announced that Jaguar Land Rover and MINI USA have agreed to make SiriusXM a standard feature starting MY '21 and MY '22, respectively, as part of the automakers multiyear extensions to their agreements with SiriusXM. The company also announced in June a new relationship with Cerence Inc. to enhance the driver experience through voice-powered entertainment.
PANDORA SEGMENT
•Advertising Revenue Increased 82% to $383 Million. Second quarter ad revenue at Pandora, which includes off-platform results such as the company's AdsWizz business, increased by 82% year-over-year to $383 million and by 25% compared to second quarter 2019. Ad revenue was boosted by strong monetization of $100.35 per thousand hours at Pandora, compared to $55.23 from the prior year period. Ad revenue also benefited from the acquisition of Stitcher in the fourth quarter of 2020.
•Stitcher and Off-Platform Performance. In the second quarter of 2021, Stitcher and the company's off-platform advertising businesses recorded $78 million in revenue. Off-platform revenue, excluding Stitcher, increased approximately $22 million or 79% compared to the second quarter of 2020. Stitcher recently launched 'Precedent,' an audio series podcast that explores the evolution of the criminal justice system featuring Ashley Flowers, the host of the popular 'Crime Junkie' podcast. Stitcher also launched 'Toxic: The Britney Spears Story,' the newest podcast from its Witness Docs unit. In addition, Seth Rogen will launch an original podcast series of personal stories on Stitcher later this year.
•Total Advertising-Supported Listener Hours of 3.03 Billion. Monthly Active Users (MAUs) at Pandora were 55.1 million in the second quarter of 2021, down from 59.6 million in the prior year period. Total ad-supported listener hours were 3.03 billion in the period, down from 3.29 billion in the second quarter of 2020.
•Self-Pay Net Adds of 118,000. Pandora added 118,000 net new self-pay subscribers to its Pandora Plus and Pandora Premium services in the second quarter 2021 to end the period with 6.5 million self-pay subscribers to those services.
•Gross Profit Grew176%. Subscriber revenue increased by 6%, advertising revenue increased by 82% and total cost of services increased by 21% during the second quarter of 2021. This resulted in gross profit at Pandora of $193 million, up 176%over the second quarter of 2020 or 23% compared to the second quarter of 2019, and produced a gross margin for the quarter of 37%, a 16 point increase from the prior year period.
•New Collaborations and Expansion of Diverse Content. Pandora collaborated with TikTok for the launch of a series of exclusive hosted playlists featuring popular creators from the leading social networking service, and announced that TikTok fans will also have access to select re-airings of Pandora's original events series, Pandora LIVE. In honor of June's Black Music Month, SiriusXM, Pandora and Stitcher launched a new original podcast, All Music Is Black Music, that explores how African American music and culture have shaped the wider contemporary music landscape. Pandora also launched a microsite for the cultural moment featuring its specialty music programming that amplifies Black voices, and hosted a virtual event with rapper Moneybagg Yo.
Subscriber acquisition costs increased by 85% to $89 million in the second quarter of 2021 compared to the prior year period. Automotive factory shutdowns in the second quarter of 2020 associated with the Covid-19 pandemic resulted in subscriber acquisition cost savings that did not recur in the second quarter of 2021 and drove the larger portion of the subscriber acquisition cost increase year over year. Subscriber acquisition costs were partially offset by lower subsidies from contract improvements with certain automakers and, to a lesser extent, lower costs resulting from silicon supply constraints. Sales and marketing costs increased by 13% to $227 million in the second quarter of 2021. Engineering, design and development costs rose 13% to $59 million, and general and administrative expenses increased by 12% to $114 million in the second quarter of 2021.
Free cash flow was $550 million, up approximately 9% from the prior year period, primarily due to higher receipts, insurance recoveries from the SXM-7 satellite failure, and lower interest payments.
SECOND QUARTER 2021 RESULTS
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
| (in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||
| Revenue: | ||||||||
| Subscriber revenue | $ | 1,641 | $ | 1,578 | $ | 3,252 | $ | 3,163 |
| Advertising revenue | 429 | 236 | 783 | 521 | ||||
| Equipment revenue | 51 | 25 | 108 | 66 | ||||
| Other revenue | 38 | 35 | 74 | 76 | ||||
| Total revenue | 2,159 | 1,874 | 4,217 | 3,826 | ||||
| Operating expenses: | ||||||||
| Cost of services: | ||||||||
| Revenue share and royalties | 662 | 587 | 1,303 | 1,157 | ||||
| Programming and content | 136 | 110 | 265 | 228 | ||||
| Customer service and billing | 128 | 122 | 244 | 240 | ||||
| Transmission | 52 | 43 | 101 | 83 | ||||
| Cost of equipment | 4 | 4 | 9 | 8 | ||||
| Subscriber acquisition costs | 89 | 48 | 175 | 147 | ||||
| Sales and marketing | 240 | 217 | 456 | 442 | ||||
| Engineering, design and development | 65 | 61 | 130 | 132 | ||||
| General and administrative | 130 | 119 | 251 | 226 | ||||
| Depreciation and amortization | 131 | 124 | 263 | 256 | ||||
| Impairment, restructuring and acquisition costs | (136) | 24 | 108 | 24 | ||||
| Total operating expenses | 1,501 | 1,459 | 3,305 | 2,943 | ||||
| Income from operations | 658 | 415 | 912 | 883 | ||||
| Other (expense) income: | ||||||||
| Interest expense | (103) | (102) | (203) | (201) | ||||
| Other income | 5 | 4 | 8 | 8 | ||||
| Total other (expense) income | (98) | (98) | (195) | (193) | ||||
| Income before income taxes | 560 | 317 | 717 | 690 | ||||
| Income tax expense | (127) | (74) | (65) | (154) | ||||
| Net income | $ | 433 | $ | 243 | $ | 652 | $ | 536 |
| Foreign currency translation adjustment, net of tax | 7 | 10 | 12 | (15) | ||||
| Total comprehensive income | $ | 440 | $ | 253 | $ | 664 | $ | 521 |
| Net income per common share: | ||||||||
| Basic | $ | 0.11 | $ | 0.06 | $ | 0.16 | $ | 0.12 |
| Diluted | $ | 0.10 | $ | 0.05 | $ | 0.16 | $ | 0.12 |
| Weighted average common shares outstanding: | ||||||||
| Basic | 4,079 | 4,369 | 4,108 | 4,387 | ||||
| Diluted | 4,163 | 4,457 | 4,193 | 4,487 | ||||
| Dividends declared per common share | $ | 0.014641 | $ | 0.01331 | $ | 0.029282 | $ | 0.02662 |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (in millions, except per share data) | June 30, 2021 | December 31, 2020 | ||
| ASSETS | (unaudited) | |||
| Current assets: | ||||
| Cash and cash equivalents | $ | 1,124 | $ | 71 |
| Receivables, net | 654 | 672 | ||
| Inventory, net | 5 | 10 | ||
| Related party current assets | 11 | 20 | ||
| Prepaid expenses and other current assets | 335 | 194 | ||
| Total current assets | 2,129 | 967 | ||
| Property and equipment, net | 1,405 | 1,629 | ||
| Intangible assets, net | 3,263 | 3,340 | ||
| Goodwill | 3,150 | 3,122 | ||
| Related party long-term assets | 550 | 531 | ||
| Deferred tax assets | 111 | 111 | ||
| Operating lease right-of-use assets | 379 | 427 | ||
| Other long-term assets | 214 | 206 | ||
| Total assets | $ | 11,201 | $ | 10,333 |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||
| Current liabilities: | ||||
| Accounts payable and accrued expenses | $ | 1,132 | $ | 1,223 |
| Accrued interest | 173 | 174 | ||
| Current portion of deferred revenue | 1,583 | 1,721 | ||
| Current maturities of debt | 998 | 1 | ||
| Operating lease current liabilities | 51 | 48 | ||
| Total current liabilities | 3,937 | 3,167 | ||
| Long-term deferred revenue | 110 | 118 | ||
| Long-term debt | 8,835 | 8,499 | ||
| Deferred tax liabilities | 307 | 266 | ||
| Operating lease liabilities | 388 | 419 | ||
| Other long-term liabilities | 139 | 149 | ||
| Total liabilities | 13,716 | 12,618 | ||
| Stockholders' equity (deficit): | ||||
|
Common stock, par value $0.001 per share; 9,000 shares authorized; 4,059 and 4,176 shares issued; 4,058 and 4,173 shares outstanding at June 30, 2021 and December 31, 2020, respectively
|
4 | 4 | ||
| Accumulated other comprehensive income, net of tax | 27 | 15 | ||
| Additional paid-in capital | - | - | ||
|
Treasury stock, at cost; 1 and 3 shares of common stock at June 30, 2021 and December 31, 2020, respectively
|
(7) | (19) | ||
| Accumulated deficit | (2,539) | (2,285) | ||
| Total stockholders' equity (deficit) | (2,515) | (2,285) | ||
| Total liabilities and stockholders' equity (deficit) | $ | 11,201 | $ | 10,333 |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, | ||||
| (in millions) | 2021 | 2020 | ||
| Cash flows from operating activities: | ||||
| Net income | $ | 652 | $ | 536 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 263 | 256 | ||
| Non cash impairment and restructuring costs | 245 | 24 | ||
| Non-cash interest expense, net of amortization of premium | 10 | 10 | ||
| Provision for doubtful accounts | 24 | 38 | ||
| Amortization of deferred income related to equity method investment | - | (1) | ||
| Loss on unconsolidated entity investments, net | 3 | 3 | ||
| Dividend received from unconsolidated entity investment | 1 | 1 | ||
| (Gain) loss on other investments | (4) | 1 | ||
| Share-based payment expense | 98 | 107 | ||
| Deferred income tax (benefit) expense | 37 | 116 | ||
| Amortization of right-of-use assets | 28 | 28 | ||
| Changes in operating assets and liabilities: | ||||
| Receivables | (11) | 134 | ||
| Inventory | 5 | (4) | ||
| Related party, net | 11 | 9 | ||
| Prepaid expenses and other current assets | (141) | (13) | ||
| Other long-term assets | (4) | 10 | ||
| Accounts payable and accrued expenses | (99) | (136) | ||
| Accrued interest | (1) | (3) | ||
| Deferred revenue | (145) | (105) | ||
| Operating lease liabilities | (26) | (26) | ||
| Other long-term liabilities | (18) | 22 | ||
| Net cash provided by operating activities | 928 | 1,007 | ||
| Cash flows from investing activities: | ||||
| Additions to property and equipment | (164) | (149) | ||
| Purchases of other investments | (3) | (7) | ||
| Acquisition of business, net of cash acquired | (14) | (28) | ||
| Investments in related parties and other equity investees | (11) | (84) | ||
| Repayment from related party | 2 | 3 | ||
| Net cash used in investing activities | (190) | (265) | ||
| Cash flows from financing activities: | ||||
| Proceeds from exercise of stock options | 6 | - | ||
| Taxes paid from net share settlements for stock-based compensation | (43) | (43) | ||
| Revolving credit facility, net of deferred financing costs | (649) | - | ||
| Proceeds from long-term borrowings, net of costs | 1,976 | 1,483 | ||
| Principal payments of long-term borrowings | (2) | (5) | ||
| Common stock repurchased and retired | (856) | (399) | ||
| Dividends paid | (121) | (117) | ||
| Net cash provided by financing activities | 311 | 919 | ||
| Net increase in cash, cash equivalents and restricted cash | 1,049 | 1,661 | ||
|
Cash, cash equivalents and restricted cash at beginning of period (1)
|
83 | 120 | ||
|
Cash, cash equivalents and restricted cash at end of period (1)
|
$ | 1,132 | $ | 1,781 |
(1)The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet. The restricted cash balances are primarily due to letters of credit which have been issued to the landlords of leased office space. The terms of the letters of credit primarily extend beyond one year.
| (in millions) | June 30, 2021 | December 31, 2020 | June 30, 2020 | December 31, 2019 | ||||
| Cash and cash equivalents | $ | 1,124 | $ | 71 | $ | 1,770 | $ | 106 |
| Restricted cash included in Other long-term assets | 8 | 12 | 11 | 14 | ||||
| Total cash, cash equivalents and restricted cash at end of period | $ | 1,132 | $ | 83 | $ | 1,781 | $ | 120 |
Unaudited Results
Set forth below are our results of operations for the three and six months ended June 30, 2021 compared with the three and six months ended June 30, 2020. Legal settlements and reserves and share-based payment expense have been excluded from cost of services line items and presented as their own line items in the table below, as this is consistent with how the segments are evaluated on a regular basis. Our results also exclude certain purchase price accounting adjustments related to other revenue and revenue share and royalties.
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | 2021 vs 2020 Change | ||||||||||||||
| Three Months | Six Months | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | Amount | % | Amount | % | |||||||||
| Revenue | ||||||||||||||||
| Sirius XM: | ||||||||||||||||
| Subscriber revenue | $ | 1,508 | $ | 1,453 | $ | 2,989 | $ | 2,910 | $ | 55 | 4 | % | $ | 79 | 3 | % |
| Advertising revenue | 46 | 25 | 87 | 69 | 21 | 84 | % | 18 | 26 | % | ||||||
| Equipment revenue | 51 | 25 | 108 | 66 | 26 | 104 | % | 42 | 64 | % | ||||||
|
Other revenue (1)
|
38 | 37 | 74 | 80 | 1 | 3 | % | (6) | (8) | % | ||||||
| Total Sirius XM revenue | 1,643 | 1,540 | 3,258 | 3,125 | 103 | 7 | % | 133 | 4 | % | ||||||
| Pandora: | ||||||||||||||||
| Subscriber revenue | 133 | 125 | 263 | 253 | 8 | 6 | % | 10 | 4 | % | ||||||
| Advertising revenue | 383 | 211 | 696 | 452 | 172 | 82 | % | 244 | 54 | % | ||||||
| Total Pandora revenue | 516 | 336 | 959 | 705 | 180 | 54 | % | 254 | 36 | % | ||||||
| Total consolidated revenue | 2,159 | 1,876 | 4,217 | 3,830 | 283 | 15 | % | 387 | 10 | % | ||||||
| Cost of services | ||||||||||||||||
| Sirius XM: | ||||||||||||||||
| Revenue share and royalties | 387 | 365 | 766 | 731 | 22 | 6 | % | 35 | 5 | % | ||||||
| Programming and content | 117 | 97 | 228 | 202 | 20 | 21 | % | 26 | 13 | % | ||||||
| Customer service and billing | 104 | 98 | 199 | 190 | 6 | 6 | % | 9 | 5 | % | ||||||
| Transmission | 35 | 28 | 68 | 55 | 7 | 25 | % | 13 | 24 | % | ||||||
| Cost of equipment | 4 | 4 | 9 | 8 | - | - | % | 1 | 13 | % | ||||||
| Total Sirius XM cost of services | 647 | 592 | 1,270 | 1,186 | 55 | 9 | % | 84 | 7 | % | ||||||
| Pandora: | ||||||||||||||||
|
Revenue share and royalties (2) (3)
|
275 | 224 | 537 | 446 | 51 | 23 | % | 91 | 20 | % | ||||||
| Programming and content | 11 | 6 | 21 | 11 | 5 | 83 | % | 10 | 91 | % | ||||||
| Customer service and billing | 22 | 23 | 42 | 47 | (1) | (4) | % | (5) | (11) | % | ||||||
| Transmission | 15 | 13 | 30 | 25 | 2 | 15 | % | 5 | 20 | % | ||||||
| Total Pandora cost of services | 323 | 266 | 630 | 529 | 57 | 21 | % | 101 | 19 | % | ||||||
| Total consolidated cost of services | 970 | 858 | 1,900 | 1,715 | 112 | 13 | % | 185 | 11 | % | ||||||
| Subscriber acquisition costs | 89 | 48 | 175 | 147 | 41 | 85 | % | 28 | 19 | % | ||||||
| Sales and marketing | 227 | 201 | 428 | 409 | 26 | 13 | % | 19 | 5 | % | ||||||
| Engineering, design and development | 59 | 52 | 113 | 112 | 7 | 13 | % | 1 | 1 | % | ||||||
| General and administrative | 114 | 102 | 220 | 193 | 12 | 12 | % | 27 | 14 | % | ||||||
| Depreciation and amortization | 131 | 124 | 263 | 256 | 7 | 6 | % | 7 | 3 | % | ||||||
| Impairment, restructuring and acquisition costs | (136) | 24 | 108 | 24 | (160) | nm | 84 | nm | ||||||||
| Legal settlements and reserves | - | - | - | (16) | - | nm | 16 | (100) | % | |||||||
|
Share-based payment expense (4)
|
47 | 52 | 98 | 107 | (5) | (10) | % | (9) | (8) | % | ||||||
| Total operating expenses | 1,501 | 1,461 | 3,305 | 2,947 | 40 | 3 | % | 358 | 12 | % | ||||||
| Income (loss) from operations | 658 | 415 | 912 | 883 | 243 | 59 | % | 29 | 3 | % | ||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | (103) | (102) | (203) | (201) | (1) | (1) | % | (2) | (1) | % | ||||||
| Other income | 5 | 4 | 8 | 8 | 1 | 25 | % | - | - | % | ||||||
| Total other (expense) income | (98) | (98) | (195) | (193) | - | - | % | (2) | (1) | % | ||||||
| Income (loss) before income taxes | 560 | 317 | 717 | 690 | 243 | 77 | % | 27 | 4 | % | ||||||
| Income tax expense | (127) | (74) | (65) | (154) | (53) | (72) | % | 89 | 58 | % | ||||||
| Net income | $ | 433 | $ | 243 | $ | 652 | $ | 536 | $ | 190 | 78 | % | $ | 116 | 22 | % |
| Adjusted EBITDA | $ | 700 | $ | 615 | $ | 1,381 | $ | 1,254 | $ | 85 | 14 | % | $ | 127 | 10 | % |
| Gross Profit - Sirius XM | $ | 996 | $ | 948 | $ | 1,988 | $ | 1,939 | $ | 48 | 5 | % | $ | 49 | 3 | % |
| Gross Margin % - Sirius XM | 61 | % | 62 | % | 61 | % | 62 | % | (1) | % | (2) | % | (1) | % | (2) | % |
| Gross Profit - Pandora | $ | 193 | $ | 70 | $ | 329 | $ | 176 | $ | 123 | 176 | % | $ | 153 | 87 | % |
| Gross Margin % - Pandora | 37 | % | 21 | % | 34 | % | 25 | % | 16 | % | 76 | % | 9 | % | 36 | % |
nm - not meaningful
(1) For the three and six months ended June 30, 2020, this adjustment eliminates the impact of additional revenue of $2 and $4, respectively, associated with certain programming agreements recorded as part of the merger of Sirius and XM (the 'XM Merger').
(2) For the three and six months ended June 30, 2020, this adjustment includes the impact of additional expense of $2 and $4, respectively, associated with minimum guarantee royalty contracts recorded as part of the Pandora Acquisition.
(3) For the six months ended June 30, 2020, revenue share and royalties excludes a reversal of a pre-acquisition reserve of $16 for royalties.
(4) Allocation of share-based payment expense:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | ||||
| Programming and content - Sirius XM | $ | 8 | $ | 7 | $ | 15 | $ | 14 |
| Customer service and billing - Sirius XM | 1 | 1 | 3 | 2 | ||||
| Transmission - Sirius XM | 1 | 2 | 2 | 2 | ||||
| Programming and content - Pandora | - | - | 1 | 1 | ||||
| Customer service and billing - Pandora | 1 | - | - | 1 | ||||
| Transmission - Pandora | 1 | - | 1 | 1 | ||||
| Sales and marketing | 13 | 16 | 28 | 33 | ||||
| Engineering, design and development | 6 | 9 | 17 | 20 | ||||
| General and administrative | 16 | 17 | 31 | 33 | ||||
| Total share-based payment expense | $ | 47 | $ | 52 | $ | 98 | $ | 107 |
Key Financial and Operating Metrics
A full glossary defining our key financial and operating metrics can be found in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.
Subscribers and subscription related revenues and expenses associated with our connected vehicle services and Sirius XM Canada are not included in Sirius XM's subscriber count or subscriber-based operating metrics.
Set forth below are our subscriber balances as of June 30, 2021 compared to June 30, 2020:
| As of June 30, | 2021 vs 2020 Change | ||||
| (subscribers in thousands) | 2021 | 2020 | Amount | % | |
| Sirius XM | |||||
| Self-pay subscribers | 31,368 | 30,311 | 1,057 | 3 | % |
| Paid promotional subscribers | 3,108 | 3,939 | (831) | (21) | % |
| Ending subscribers | 34,476 | 34,250 | 226 | 1 | % |
| Traffic users | 9,234 | 9,414 | (180) | (2) | % |
| Sirius XM Canada subscribers | 2,578 | 2,607 | (29) | (1) | % |
| Pandora | |||||
| Monthly active users - all services | 55,137 | 59,604 | (4,467) | (7) | % |
| Self-pay subscribers | 6,510 | 6,246 | 264 | 4 | % |
| Paid promotional subscribers | 67 | 56 | 11 | 20 | % |
| Ending subscribers | 6,577 | 6,302 | 275 | 4 | % |
The following table contains our Non-GAAP financial and operating performance measures which are based on our adjusted results of operations for the three and six months ended June 30, 2021 and 2020:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | 2021 vs 2020 Change | ||||||||||||||
| Three Months | Six Months | |||||||||||||||
| (subscribers in thousands) | 2021 | 2020 | 2021 | 2020 | Amount | % | Amount | % | ||||||||
| Sirius XM | ||||||||||||||||
| Self-pay subscribers | 355 | 264 | 481 | 333 | 91 | 34 | % | 148 | 44 | % | ||||||
| Paid promotional subscribers | (378) | (780) | (719) | (992) | 402 | 52 | % | 273 | 28 | % | ||||||
| Net additions | (23) | (516) | (238) | (659) | 493 | 96 | % | 421 | (64) | % | ||||||
| Weighted average number of subscribers | 34,473 | 34,288 | 34,468 | 34,556 | 185 | 1 | % | (88) | - | % | ||||||
| Average self-pay monthly churn | 1.5 | % | 1.6 | % | 1.6 | % | 1.7 | % | (0.1) | % | (6) | % | (0.1) | % | (6) | % |
|
ARPU (1)
|
$ | 14.57 | $ | 13.96 | $ | 14.43 | $ | 13.95 | $ | 0.61 | 4 | % | $ | 0.48 | 3 | % |
| SAC, per installation | $ | 15.20 | $ | 20.14 | $ | 12.93 | $ | 20.14 | $ | (4.94) | (25) | % | $ | (7.21) | (36) | % |
| Pandora | ||||||||||||||||
| Self-pay subscribers | 118 | 32 | 231 | 81 | 86 | 269 | % | 150 | 185 | % | ||||||
| Paid promotional subscribers | 3 | 4 | 5 | 7 | (1) | (25) | % | (2) | 29 | % | ||||||
| Net additions | 121 | 36 | 236 | 88 | 85 | 236 | % | 148 | (168) | % | ||||||
| Weighted average number of subscribers | 6,518 | 6,223 | 6,451 | 6,233 | 295 | 5 | % | 218 | 3 | % | ||||||
| ARPU | $ | 6.67 | $ | 6.70 | $ | 6.67 | $ | 6.77 | $ | (0.03) | - | % | $ | (0.10) | (1) | % |
| Ad supported listener hours (in billions) | 3.03 | 3.29 | 5.90 | 6.41 | (0.26) | (8) | % | (0.51) | (8) | % | ||||||
| Advertising revenue per thousand listener hours (RPM) | $ | 100.35 | $ | 55.23 | $ | 93.26 | $ | 61.23 | $ | 45.12 | 82 | % | $ | 32.03 | 52 | % |
| Licensing costs per thousand listener hours (LPM) | $ | 44.46 | $ | 37.16 | $ | 44.89 | $ | 37.12 | $ | 7.30 | 20 | % | $ | 7.77 | 21 | % |
| Licensing costs per paid subscriber (LPU) | $ | 4.18 | $ | 4.06 | $ | 4.19 | $ | 4.08 | $ | 0.12 | 3 | % | $ | 0.11 | 3 | % |
| Total Company | ||||||||||||||||
| Adjusted EBITDA | $ | 700 | $ | 615 | $ | 1,381 | $ | 1,254 | $ | 85 | 14 | % | $ | 127 | 10 | % |
| Free cash flow | $ | 550 | $ | 503 | $ | 761 | $ | 851 | $ | 47 | 9 | % | $ | (90) | (11) | % |
(1) ARPU for Sirius XM excludes subscriber revenue from our connected vehicle services of $47 and $42 for the three months and $92 and $86 for the six months ended June 30, 2021 and 2020, respectively.
Reconciliation from GAAP Net income to Non-GAAP Adjusted EBITDA:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | ||||
| Net income: | $ | 433 | $ | 243 | $ | 652 | $ | 536 |
| Add back items excluded from Adjusted EBITDA: | ||||||||
| Legal settlements and reserves | - | - | - | (16) | ||||
| Impairment, restructuring and acquisition costs | (136) | 24 | 108 | 24 | ||||
| Share-based payment expense | 47 | 52 | 98 | 107 | ||||
| Depreciation and amortization | 131 | 124 | 263 | 256 | ||||
| Interest expense | 103 | 102 | 203 | 201 | ||||
| Other income | (5) | (4) | (8) | (8) | ||||
| Income tax expense | 127 | 74 | 65 | 154 | ||||
| Purchase price accounting adjustments: | ||||||||
| Revenues | - | 2 | - | 4 | ||||
| Operating expenses | - | (2) | - | (4) | ||||
| Adjusted EBITDA | $ | 700 | $ | 615 | $ | 1,381 | $ | 1,254 |
Reconciliation of Free Cash Flow:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | ||||
| Cash Flow information | ||||||||
| Net cash provided by operating activities | $ | 636 | $ | 591 | $ | 928 | $ | 1,007 |
| Net cash used in investing activities | $ | (112) | $ | (120) | $ | (190) | $ | (265) |
| Net cash provided by financing activities | $ | 541 | $ | 1,258 | $ | 311 | $ | 919 |
| Free Cash Flow | ||||||||
| Net cash provided by operating activities | $ | 636 | $ | 591 | $ | 928 | $ | 1,007 |
| Additions to property and equipment | (86) | (87) | (164) | (149) | ||||
| Purchases of other investments | - | (1) | (3) | (7) | ||||
| Free cash flow | $ | 550 | $ | 503 | $ | 761 | $ | 851 |
Reconciliation of SAC, per installation:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
| (costs in millions and installs in thousands) | 2021 | 2020 | 2021 | 2020 | ||||
| Subscriber acquisition costs, excluding connected vehicle services | $ | 89 | $ | 48 | $ | 175 | $ | 147 |
| Less: margin from sales of radios and accessories, excluding connected vehicle services | (47) | (21) | (100) | (58) | ||||
| $ | 42 | $ | 27 | $ | 75 | $ | 89 | |
| Installations | 2,724 | 1,320 | 5,791 | 4,403 | ||||
|
SAC, per installation (a)
|
$ | 15.20 | $ | 20.14 | $ | 12.93 | $ | 20.14 |
(a) Amounts may not recalculate due to rounding.
###
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the leading audio entertainment company in North America, and the premier programmer and platform for subscription and digital advertising-supported audio products. SiriusXM's platforms collectively reach approximately 150 million listeners, the largest digital audio audience across paid and free tiers in North America, and deliver music, sports, talk, news, comedy, entertainment and podcasts. Pandora, a subsidiary of SiriusXM, is the largest ad-supported audio entertainment streaming service in the U.S. SiriusXM's subsidiaries Stitcher, Simplecast and AdsWizz make it a leader in podcast hosting, production, distribution, analytics and monetization. The Company's advertising sales organization, which operates as SXM Media, leverages its scale, cross-platform sales organization and ad tech capabilities to deliver results for audio creators and advertisers. SiriusXM, through Sirius XM Canada Holdings, Inc., also offers satellite radio and audio entertainment in Canada. In addition to its audio entertainment businesses, SiriusXM offers connected vehicle services to automakers. For more about SiriusXM, please go to: www.siriusxm.com.
This communication contains 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as 'will likely result,' 'are expected to,' 'will continue,' 'is anticipated,' 'estimated,' 'believe,' 'intend,' 'plan,' 'projection,' 'outlook' or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
The following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:we face substantial competition and that competition is likely to increase over time; our efforts to attract and retain subscribers and listeners, or convert listeners into subscribers, which may not be successful, and may adversely affect our business; we engage in extensive marketing efforts and the continued effectiveness of those efforts is an important part of our business; we rely on third parties for the operation of our business, and the failure of third parties to perform could adversely affect our business; we may not realize the benefits of acquisitions and other strategic investments and initiatives; a substantial number of our Sirius XM subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers; our ability to profitably attract and retain subscribers to our Sirius XM service as our marketing efforts reach more price-sensitive consumers is uncertain; our business depends in large part on the auto industry; vehicle production and sales are dependent on may factors, including the availability of consumer credit, general economic conditions, consumer confidence, fuel costs and component supply shortages; the impact of COVID-19, including its variant strains, on our business; failure of our satellite would significantly damage our business; our Sirius XM service may experience harmful interference from wireless operations; our Pandora ad-supported business has suffered a substantial and consistent loss of monthly active users, which may adversely affect our Pandora business; our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business; if we are unable to maintain revenue growth from our advertising products, particularly in mobile advertising, our results of operations will be adversely affected; changes in mobile operating systems and browsers may hinder our ability to sell advertising and market our services; if we fail to accurately predict and play music, comedy or other content that our Pandora listeners enjoy, we may fail to retain existing and attract new listeners; privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities; consumer protection laws and our failure to comply with them could damage our business; failure to comply with FCC requirements could damage our business; if we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions and private litigation and our reputation could suffer; interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business; the market for music rights is changing and is subject to significant uncertainties; our Pandora services depend upon maintaining complex licenses with copyright owners, and these licenses contain onerous terms; the rates we must pay for 'mechanical rights' to use musical works on our Pandora service have increased substantially and these new rates may adversely affect our business; our use of pre-1972 sound recordings on our Pandora service could result in additional costs; failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results; some of our services and technologies may use 'open source' software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses; rapid technological and industry changes and new entrants could adversely impact our services; we have a significant amount of indebtedness, and our debt contains certain covenants that restrict our operations; we are a 'controlled company' within the meaning of the NASDAQ listing rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements; while we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time; and our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock; if we are unable to attract and retain qualified personnel, our business could be harmed; our facilities could be damaged by natural catastrophes or terrorist activities; the unfavorable outcome of pending or future litigation could have an adverse impact on our operations and financial condition; we may be exposed to liabilities that other entertainment service providers would not customarily be subject to; and our business and prospects depend on the strength of our brands. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2020, which is filed with the Securities and Exchange Commission (the 'SEC') and available at the SEC's Internet site (http://www.sec.gov). The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication.
Source: SiriusXM
Contact for SiriusXM:
Investor contact:
Hooper Stevens
212-901-6718
Media contact:
Patrick Reilly
212-901-6646