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SiriusXM Reports Third Quarter 2021 Results

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  • SIRI

- Third Quarter Revenue of $2.20 Billion; an Increase of 9% From Prior Year Period

- Third Quarter Net Income of $343 Million; Diluted EPS of $0.08

- Record Quarterly Adjusted EBITDA of $719 Million, Up 9% From Prior Year Period

- SiriusXM Self-Pay Net Subscriber Additions of 616,000 in Third Quarter and 1.1 Million Year to Date

- Company Increases 2021 Subscriber and Financial Guidance

- SiriusXM Recently Increased Quarterly Cash Dividend by 50%

NEW YORK, Oct. 28, 2021 /PRNewswire/ -- SiriusXM today announced third quarter 2021 operating and financial results, including revenue of $2.20 billion in the quarter, an increase of 9% compared to the prior year period. The company recorded net income of $343 million in the third quarter of 2021, compared to $272 million in the prior year period. Net income per diluted common share was $0.08 in the third quarter 2021, compared to $0.06 in the prior year period.

SIRIUS XM logo. (PRNewsFoto/SIRIUS XM Radio)
SIRIUS XM logo. (PRNewsFoto/SIRIUS XM Radio)

Adjusted EBITDA in the third quarter was $719 million, up 9% from $661 million in the prior year period.

"By adding a record 616,000 net new SiriusXM self-pay subscribers in the third quarter, we attained our prior full-year guidance of approximately 1.1 million net additions in just nine months. We are increasing all of our financial guidance for 2021 and expect to add more than 1.1 million net new self-pay SiriusXM subscribers this year, making 2021 our best for self-pay subscriber growth since 2018. During the quarter, we saw continued low monthly churn and outstanding ARPU performance in the SiriusXM business, and we are also making important progress driving advertising growth at Pandora," said Jennifer Witz, Chief Executive Officer of SiriusXM.

"We continue leaning into new investments in unique content, improved digital experiences in- and out-of-car, and effective marketing that tells this story. We recently launched new shows, podcasts, and channels across our platforms with marquee talent and brands, including Megyn Kelly, Seth Rogen, and TikTok, showcasing how SiriusXM works with creators to inspire conversations and moments that are appealing across generations and lifestyles. SiriusXM recently signed new deals with NFL legends Tom Brady and Larry Fitzgerald and launched Pandora's biggest-ever Artist Takeover with U2. Our Small Stage Series has brought back thrilling live performances, including Brandi Carlile, Coldplay, J. Cole, and – up next, H.E.R. We look forward to achieving a strong finish to the year and continued value for our stockholders by delivering the best content in audio entertainment," added 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 over 1.1 million,

  • Total revenue of approximately $8.65 billion,

  • Adjusted EBITDA of approximately $2.75 billion, and

  • Free cash flow of over $1.8 billion.

ADDITIONAL OPERATIONAL AND FINANCIAL UPDATE

"SiriusXM's third quarter results were strong across the board and support the new, higher financial guidance we have provided today. We expect to see continued net self-pay subscriber growth in the fourth quarter, but the third quarter's lower auto sales – primarily driven by supply issues – will reduce conversion opportunities beginning in the fourth quarter," said Sean Sullivan, Chief Financial Officer of SiriusXM.

Sullivan continued, "This summer, we were able to opportunistically raise additional debt capital on very attractive terms. In total, we issued $4.5 billion of new five-, seven- and ten-year unsecured senior notes at an average coupon of about 3.75%, and we now have no major debt maturities through August 2026. We also extended our $1.75 billion credit facility to 2026, and this facility remains undrawn and available at the end of the third quarter."

"SiriusXM returned $383 million to our stockholders in the third quarter, including share repurchases of $324 million and dividends of $59 million. Earlier this week, we were pleased to announce a 50% increase to our quarterly dividend beginning in November, which is supported by our strong operating performance and our expectation of the business' continued healthy cash generation. At the end of the third quarter, SiriusXM's net debt-to-adjusted EBITDA ratio was 3.1x, and our healthy balance sheet and ample cash generation give us tremendous flexibility to increase growth investments in our business, continue returning capital to stockholders, and pursue attractive external investments and acquisition opportunities that may arise," added Sullivan.

THIRD QUARTER 2021 HIGHLIGHTS

SiriusXM operates two complementary audio entertainment businesses — SiriusXM Pandora. Further information regarding these two segments will be contained in the company's quarterly report on Form 10-Q for the quarter ended September 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 32.0 Million. SiriusXM added 616,000 net new self-pay subscribers in the third quarter, a 264% increase from the 169,000 added in the third quarter of 2020. Paid promotional subscribers decreased by 828,000 in the third quarter. Continuing impacts of new vehicle trial structures with certain automakers as well as lower vehicle shipments due to reported semiconductor supply shortages contributed to negative paid promotional net additions during the quarter. Total subscribers at the end of the third quarter were 34.3 million. The total SiriusXM funnel of trial subscribers stood at approximately 7.5 million at the end of the third quarter, down from approximately 9.1 million at the end of the second quarter 2021. Self-pay monthly churn for the third quarter improved approximately 11 basis points to 1.5% from 1.7% in the third quarter of 2020.

  • SiriusXM Revenue Increased 5% to $1.66 Billion. Third quarter 2021 revenue grew 5% to $1.66 billion compared to the third quarter of 2020. This growth was driven by a 5% increase in SiriusXM's average revenue per user (ARPU) to $14.84 and a 5% increase in SiriusXM self-pay subscribers, partially offset by the effects of a lower number of paid trial subscribers.

  • Gross Profit Increased 4% to $1.02 Billion and Gross Margin Was Stable. Total cost of services at SiriusXM increased by 6% to $645 million in the third quarter of 2021 compared to the third quarter of 2020. Gross profit at SiriusXM totaled $1,015 million, an increase of 4% compared to the third quarter of 2020, producing a gross margin of 61%, a 1 percentage point decrease from the prior-year period.

  • Growing Premium Content. SiriusXM continued to create multiple new and limited-time streaming channels, including channels for Bon Jovi, Grateful Dead, Halsey, Metallica, and SoundCloud Radio. SiriusXM also launched special streaming channels to celebrate women in Pop, Hip Hop, and Rock, and the company created programming to celebrate the careers of comedy greats Joan Rivers and Lucille Ball. During the quarter, SiriusXM completed an investment and programming agreement with Audio Up, the podcast production studio, which is expected to create a variety of podcasts for SiriusXM's platforms and collaborate on new audio entertainment concepts.

PANDORA SEGMENT

  • Advertising Revenue Increased 32% to $404 Million. Third quarter ad revenue at Pandora, which includes off-platform results such as the company's AdsWizz business, increased by 32% year-over-year to $404 million. Ad revenue was boosted by strong monetization of $109 per thousand hours at Pandora, compared to $84 from the prior year period. Ad revenue also benefited from the acquisition of Stitcher in the fourth quarter of 2020.

  • Growing Off-Platform and Podcasting Revenue. In the third quarter of 2021, Stitcher and the company's off-platform advertising businesses recorded $89 million in revenue. Off-platform revenue, excluding Stitcher, increased approximately $18 million or 41% compared to the third quarter of 2020. Stitcher recently announced podcasting an agreement covering the Audiochuck network and its chart-topping show Crime Junkie, as well as agreements with New Rory & MAL, For Colored Nerds, The Bellas, and Last Podcast on the Left.

  • Total Advertising-Supported Listener Hours of 2.89 Billion. Monthly Active Users (MAUs) at Pandora were 52.6 million in the third quarter of 2021, down from 58.6 million in the prior year period. Total ad-supported listener hours were 2.89 billion in the period, down from 3.12 billion in the third quarter of 2020. Average monthly hours per ad-supported active user were 20.1 in the third quarter of 2021, up from 19.5 in the third quarter of 2020.

  • Self-Pay Subscribers Decline Modestly. Self-pay subscribers to the Pandora Plus and Pandora Premium services decreased by 59,000 in the third quarter 2021 to end the period with 6.5 million self-pay subscribers to those services.

  • Gross Profit Grew 22%. Subscriber revenue increased by 2%, advertising revenue increased by 32% and total cost of services increased by 24% during the third quarter of 2021. This resulted in gross profit at Pandora of $197 million, up 22% over the third quarter of 2020, and produced a gross margin for the quarter of 37%, in-line with the prior year period.

  • New Collaborations and Expansion of Diverse Content. During the third quarter of 2021, Pandora launched eight new "Billionaires" stations across genres that feature music from artists who have hit one billion streams on Pandora and expects to continue to update these stations as more artists hit that threshold. Pandora also launched a suite of new stations collectively called Pandora's Happy Place, in response to increased demand for feel-good music amidst stressful times. And in collaboration with U2, Pandora launched its biggest-ever Artist Takeover featuring special station Modes based on the group's first three albums, with band members sharing exclusive behind-the-scenes stories and guiding listeners to other classic songs that influenced each album.

Subscriber acquisition costs decreased by 35% to $71 million in the third quarter of 2021 compared to the prior year period. Lower costs resulting from the reported semiconductor supply shortages and the associated lower automotive production in the third quarter of 2021 resulted in subscriber acquisition cost savings. Subscriber acquisition costs also benefited from lower subsidies from contract improvements with certain automakers. Sales and marketing costs increased by 24% to $254 million in the third quarter of 2021 compared to the prior year period, boosted by increased performance marketing and a new nationwide ad campaign promoting SiriusXM. Engineering, design and development costs rose 11% to $59 million, and general and administrative expenses decreased by 3% to $109 million in the third quarter of 2021.

Free cash flow was $588 million, up approximately 63% from the prior year period, primarily due to insurance recoveries associated with the SXM-7 satellite failure and the growth in cash generated by operations, partially offset by a decrease in deferred revenue driven by a shift to shorter term self-pay and trial subscriptions as well as free trials at certain automakers.

THIRD QUARTER 2021 RESULTS


SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



For the Three Months Ended
September 30,


For the Nine Months Ended
September 30,

(in millions, except per share data)

2021


2020


2021


2020

Revenue:








Subscriber revenue

$

1,666



$

1,594



$

4,918



$

4,757


Advertising revenue

451



345



1,235



866


Equipment revenue

41



47



149



113


Other revenue

40



39



113



115


Total revenue

2,198



2,025



6,415



5,851


Operating expenses:








Cost of services:








Revenue share and royalties

671



602



1,974



1,759


Programming and content

141



123



407



351


Customer service and billing

127



119



372



359


Transmission

54



46



155



129


Cost of equipment

4



5



12



13


Subscriber acquisition costs

71



110



245



257


Sales and marketing

269



222



725



664


Engineering, design and development

68



64



197



196


General and administrative

125



131



376



357


Depreciation and amortization

135



125



399



381


Impairment, restructuring and acquisition costs

(95)





13



24


Total operating expenses

1,570



1,547



4,875



4,490


Income from operations

628



478



1,540



1,361


Other (expense) income:








Interest expense

(111)



(96)



(313)



(297)


Loss on extinguishment of debt

(83)



(40)



(83)



(40)


Other (expense) income

(1)



2



8



10


Total other (expense) income

(195)



(134)



(388)



(327)


Income before income taxes

433



344



1,152



1,034


Income tax expense

(90)



(72)



(157)



(226)


Net income

$

343



$

272



$

995



$

808


Foreign currency translation adjustment, net of tax

(10)



7



2



(8)


Total comprehensive income

$

333



$

279



$

997



$

800


Net income per common share:








Basic

$

0.08



$

0.06



$

0.24



$

0.19


Diluted

$

0.08



$

0.06



$

0.24



$

0.18


Weighted average common shares outstanding:








Basic

4,044



4,326



4,086



4,367


Diluted

4,119



4,415



4,170



4,465


Dividends declared per common share

$

0.014641



$

0.01331



$

0.043923



$

0.03993


SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(in millions, except per share data)

September 30, 2021


December 31, 2020

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$

164



$

71


Receivables, net

652



672


Inventory, net

4



10


Related party current assets

10



20


Prepaid expenses and other current assets

206



194


Total current assets

1,036



967


Property and equipment, net

1,456



1,629


Intangible assets, net

3,225



3,340


Goodwill

3,150



3,122


Related party long-term assets

534



531


Deferred tax assets

111



111


Operating lease right-of-use assets

361



427


Other long-term assets

221



206


Total assets

$

10,094



$

10,333


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)




Current liabilities:




Accounts payable and accrued expenses

$

1,202



$

1,223


Accrued interest

80



174


Current portion of deferred revenue

1,500



1,721


Current maturities of debt



1


Operating lease current liabilities

50



48


Total current liabilities

2,832



3,167


Long-term deferred revenue

103



118


Long-term debt

8,827



8,499


Deferred tax liabilities

368



266


Operating lease liabilities

368



419


Other long-term liabilities

151



149


Total liabilities

12,649



12,618


Stockholders' equity (deficit):




Common stock, par value $0.001 per share; 9,000 shares authorized; 4,020 and
4,176 shares issued; 4,018 and 4,173 shares outstanding at September 30, 2021 and
December 31, 2020, respectively

4



4


Accumulated other comprehensive income, net of tax

17



15


Additional paid-in capital




Treasury stock, at cost; 2 and 3 shares of common stock at September 30, 2021 and
December 31, 2020, respectively

(7)



(19)


Accumulated deficit

(2,563)



(2,285)


Total stockholders' equity (deficit)

(2,555)



(2,285)


Total liabilities and stockholders' equity (deficit)

$

10,094



$

10,333


SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



For the Nine Months Ended September 30,

(in millions)

2021


2020

Cash flows from operating activities:




Net income

$

995



$

808


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

399



381


Non cash impairment and restructuring costs

24



24


Non-cash interest expense, net of amortization of premium

16



15


Changes in fair value of contingent consideration

(17)




Provision for doubtful accounts

37



48


Amortization of deferred income related to equity method investment



(2)


Loss on extinguishment of debt

83



40


Loss on unconsolidated entity investments, net

11



8


Dividend received from unconsolidated entity investment

1



1


Gain on other investments

(4)



(1)


Share-based payment expense

149



165


Deferred income tax expense

101



175


Amortization of right-of-use assets

46



42


Changes in operating assets and liabilities:




Receivables

(22)



39


Inventory

6



(2)


Related party, net

12



10


Prepaid expenses and other current assets

(18)



(2)


Other long-term assets

(6)



14


Accounts payable and accrued expenses

(60)



(83)


...

Accrued interest

(94)



(76)


Deferred revenue

(236)



(147)


Operating lease liabilities

...