SiriusXM Reports Second Quarter 2022 Results

·12-min read
  • Revenue in Second Quarter 2022 of $2.25 Billion; an Increase of 4% Year-Over-Year

  • Second Quarter 2022 Net Income of $292 Million; Diluted EPS of $0.07

  • Adjusted EBITDA of $679 Million

  • Year-to-Date Capital Returns to Stockholders of $1.6 Billion

  • SiriusXM Reiterates Full-Year Financial Guidance; Expects Positive Full-Year Self Pay Net Subscriber Additions

NEW YORK, July 28, 2022 /PRNewswire/ -- SiriusXM today announced second quarter 2022 operating and financial results, including revenue of $2.25 billion, an increase of 4% year over year. The company recorded net income of $292 million in the second quarter 2022 compared to $433 million in the prior year period. The prior year period benefited from $140 million of satellite insurance recoveries. Net income per diluted common share was $0.07 in the second quarter 2022 compared to $0.10 in the prior year period, or $0.08 excluding the satellite insurance recoveries recorded in the second quarter of 2021.

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

Adjusted EBITDA was $679 million in the second quarter of 2022, down 3% from the second quarter of 2021.

"We are pleased with our results in the second quarter, and while we continue to navigate an uncertain economic environment, we delivered strong financial performance and continued to make strategic investments in our business that will set us up for an exciting new era at SiriusXM," said Jennifer Witz, Chief Executive Officer of SiriusXM. "We remain committed to creating compelling experiences for our listeners by investing in innovative technologies to deliver best-in-class, curated, comprehensive audio entertainment. We remain equally committed to delivering consumers the best and widest choice in premium audio content. From launching pop-up channels celebrating Black Music Appreciation Month to acquiring Conan O'Brien's Team Coco to produce new content for our listeners, and most recently, expanding our relationship with the NFL to deliver the most extensive sports lineup in audio entertainment, we will continue to enhance our platform to ensure broad appeal."

"SiriusXM's churn was steady at approximately 1.5% in the quarter, underscoring the strength of our business, our products, and loyalty of our customers. In the second quarter, we delivered focused expansion in key streaming offerings and maintained a strong balance sheet," said Sean Sullivan, Executive Vice President, and Chief Financial Officer. "This quarter we returned over $300 million in capital to stockholders, comprising $217 million in common stock repurchases and $86 million in dividends, and ended the quarter with net debt to adjusted EBITDA of 3.6 times."

SEGMENT HIGHLIGHTS

Sirius XM Holdings operates two complementary audio entertainment businesses — one of which we refer to as "SiriusXM" and the second of which we refer to as "Pandora and Off-Platform." 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, 2022. The financial and operating highlights below exclude the impact of share-based payment expense.

SiriusXM Financial Metrics and Key Highlights

Self-Pay Subscribers Remain at 32.0 Million
During the second quarter of 2022, SiriusXM self-pay subscribers increased by 23,000 and paid promotional subscribers increased by 54,000. Total subscribers were 34.0 million on June 30, 2022. The SiriusXM trial funnel stood at approximately 7.3 million at the end of the quarter, up from 6.9 million at the end of the first quarter of 2022. Self-pay monthly churn remained at approximately 1.5%.

SiriusXM Revenue Increased 5% to $1.7 Billion
Second quarter 2022 revenue grew 5% to $1.7 billion compared to the second quarter of 2021. This growth was driven by a $1.05 increase in average revenue per user (ARPU), up 7% year over year, resulting in a total ARPU of $15.62. Second quarter 2022 revenue also benefited from a 2% increase in SiriusXM self-pay subscribers, partially offset by the effects of a lower base of paid promotional subscribers.

Gross Profit Increased 6% to $1.1 Billion and Gross Margin Remained Stable
Total cost of services at SiriusXM increased by 3% to $668 million for the quarter compared to the corresponding quarter in 2021. Gross profit at SiriusXM totaled $1.1 billion, an increase of 6% compared to the 2021 period, producing a gross margin of 61%, consistent with the prior year period.

Expanded Content Offering
During the quarter, SiriusXM continued its efforts creating special programming recognizing Black artists with the launch of two exclusive channels during Black Music Appreciation Month in June, Whitney Houston and The Notorious B.I.G., and welcomed back The 2PAC Channel and The Prince Channel. The quarter also saw a continued focus on opportunities that leverage SiriusXM's full audio ecosystem, including the acquisition of Team Coco, which included the critically-acclaimed hit podcast Conan O'Brien Needs a Friend, and the Conan O'Brien-led podcast network and digital media business. As part of the deal, Conan will collaborate with SiriusXM to create and executive produce a new fulltime, original Team Coco comedy channel for SiriusXM subscribers expected to launch this fall. SiriusXM also reached a new agreement with the NFL, making the platform the exclusive third-party audio provider of every NFL game, along with expanded rights to bring subscribers team-focused content from NFL clubs.

Product Enhancements
In the second quarter, SiriusXM made improvements to the commerce experience on its existing SXM Apps on connected devices, including Amazon Fire, Android TV, LG, and Roku, and launched the SXM App on Comcast X1, Flex, and XClass TV platforms.

BMW vehicles equipped with SiriusXM 360L received a key feature update. BMW vehicles with 360L now include Pandora Stations, an in-car feature from SiriusXM that employs Pandora's listener personalization technology and gives BMW owners the ability to customize their own ad-free music channels in the car with more of what they want to hear.

Pandora and Off-Platform Financial Metrics and Key Highlights

Advertising Revenue Increased 5% to $403 Million
Second quarter 2022 ad revenue in the Pandora and Off-Platform segment increased by 5% year over year to $403 million. Off-platform advertising, including the company's podcast business, climbed 50% year over year to nearly $119 million in the second quarter of 2022. Ad revenue maintained monetization of approximately $100 per thousand hours at Pandora, remaining roughly flat compared to the second quarter of 2021.

Total Advertising-Supported Listener Hours of 2.84 Billion
Monthly Active Users (MAUs) at Pandora were 50.5 million in the second quarter of 2022, down from 55.1 million in the prior year period. Total ad-supported listener hours were 2.84 billion in the second quarter of 2022, down from 3.03 billion in the 2021 period. Average monthly hours per ad-supported user climbed 3% to 21.1 in the second quarter of 2022 compared to 20.4 in the second quarter of 2021.

Self-Pay Subscribers Decreased Modestly
Self-pay subscribers to the Pandora Plus and Pandora Premium services decreased modestly in the second quarter of 2022 to end the period at 6.3 million.

Gross Profit Falls
Subscriber revenue decreased by 2%, advertising revenue increased by 5% and total cost of services increased by 14% during the second quarter of 2022 driven by investments in new podcast content. This resulted in gross profit in the Pandora and Off-platform segment of $167 million, a decrease of 13% compared to the corresponding 2021 period, and produced a gross margin for the quarter of 31%, down 6 percentage points from the prior year period.

Content Engagement
Pandora saw increases in time spent listening by active users, driven by a continued focus on improving personalization and expanding its rich content offering. The quarter saw launches of several new Pandora stations, including Country Grit, one of Pandora's most-listened genres (country music); Pan-Asian United, a new channel showcasing a range of genres from Asian-American and Pacific Islander artists; and Prom Night, the platform's largest suite of stations to date, all in celebration of the 2022 prom season. Additionally, in honor of Black Music Appreciation Month in June, Pandora's Black Music Forever Radio launched five new modes representing five decades of the evolution of dance influenced by black culture.

Podcast Growth and Expanded Ad Representation
SXM Media, the company's combined advertising sales organization, continues to be a dominant force in podcast ad sales, ranking as the #1 podcast advertising network in weekly U.S. listener reach, according to Edison Research. SXM Media currently represents four of the top 15 podcasts in the country, including "Crime Junkies," "Office Ladies," "Dateline NBC," and "Pod Save America."

As part of the previously mentioned acquisition of Team Coco, SiriusXM expanded its exclusive global ad representation beyond Team Coco's acclaimed podcasts to also include digital video, social media, and live events associated with Team Coco's properties. During the quarter, the company also signed new agreements with multi-platform internet star Lyle Forever, which includes his hit podcast Therapy Gecko and Critical Role, the D&D role-playing collective with millions of fans. These agreements secured the global advertising sales rights for SXM Media and continued to expand the company's off-platform business, and solidified SXM Media as a leader in the sales of audio advertising for podcasts.

ADDITIONAL FINANCIAL HIGHLIGHTS

Subscriber acquisition costs increased by 2% to $91 million in the second quarter of 2022 compared to the prior year period, driven by higher equipment installations by automakers. Sales and marketing costs increased by 20% to $272 million in 2022 compared to the prior year, boosted by increased performance marketing efforts and the continuation of a multi-media national ad campaign promoting SiriusXM, which launched late 2021. Engineering, design and development costs rose 7% to $63 million, and general and administrative expenses decreased by 1% to $113 million in 2022.

Free cash flow was $435 million, down approximately 21% from the prior year period, as cash taxes rose by $97 million year over year and the second quarter of 2021 benefited from $17 million in satellite insurance receipts.

2022 GUIDANCE

The Company continues to anticipate positive full-year 2022 self-pay net subscriber additions and reiterates 2022 guidance for revenue, adjusted EBITDA, and free cash flow as follows:

  • Total revenue of approximately $9.0 billion,

  • Adjusted EBITDA of approximately $2.8 billion, and

  • Free cash flow of approximately $1.55 billion.

 

SECOND QUARTER 2022 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)

2022


2021


2022


2021

Revenue:








Subscriber revenue

$                1,719


$                1,641


$                3,432


$                3,252

Advertising revenue

452


429


835


783

Equipment revenue

45


51


98


108

Other revenue

37


38


75


74

Total revenue

2,253


2,159


4,440


4,217

Operating expenses:








Cost of services:








Revenue share and royalties

711


662


1,381


1,303

Programming and content

153


136


292


265

Customer service and billing

125


128


251


244

Transmission

54


52


106


101

Cost of equipment

3


4


6


9

Subscriber acquisition costs

91


89


181


175

Sales and marketing

285


240


557


456

Engineering, design and development

72


65


139


130

General and administrative

127


130


250


251

Depreciation and amortization

135


131


270


263

Impairment, restructuring and acquisition costs

1


(136)


1


108

Total operating expenses

1,757


1,501


3,434


3,305

Income from operations

496


658


1,006


912

Other (expense) income:








Interest expense

(104)


(103)


(206)


(203)

Other (expense) income

(4)


5


(2)


8

Total other (expense) income

(108)


(98)


(208)


(195)

Income before income taxes

388


560


798


717

Income tax expense

(96)


(127)


(197)


(65)

Net income

$                   292


$                   433


$                   601


$                   652

Foreign currency translation adjustment, net of tax

(10)


7


(2)


12

Total comprehensive income

$                   282


$                   440


$                   599


$                   664

Net income per common share:








Basic

$                  0.07


$                  0.11


$                  0.15


$                  0.16

Diluted

$                  0.07


$                  0.10


$                  0.15


$                  0.16

Weighted average common shares outstanding:








Basic

3,928


4,079


3,938


4,108

Diluted

4,005


4,163


4,016


4,193

Dividends declared per common share

$       0.0219615


$         0.014641


$         0.293923


$         0.029282

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 


(in millions, except per share data)

June 30, 2022


December 31, 2021

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$                        126


$                        191

Receivables, net

660


722

Related party current assets

19


21

Prepaid expenses and other current assets

328


246

Total current assets

1,133


1,180

Property and equipment, net

1,467


1,450

Intangible assets, net

3,128


3,186

Goodwill

3,249


3,151

Related party long-term assets

527


526

Deferred tax assets

200


200

Operating lease right-of-use assets

336


358

Other long-term assets

230


223

Total assets

$                  10,270


$                  10,274

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)




Current liabilities:




Accounts payable and accrued expenses

$                    1,219


$                    1,299

Accrued interest

164


173

Current portion of deferred revenue

1,432


1,454

Operating lease current liabilities

49


49

Related party current liabilities

20


5

Total current liabilities

2,884


2,980

Long-term deferred revenue

87


97

Long-term debt

9,866


8,832

Deferred tax liabilities

539


478

Operating lease liabilities

333


362

Other long-term liabilities

140


150

Total liabilities

13,849


12,899

Stockholders' equity (deficit):




Common stock, par value $0.001 per share; 9,000 shares authorized; 3,909 and 3,968 shares issued; 3,908 and 3,967 shares outstanding at June 30, 2022 and December 31, 2021, respectively

4


4

Accumulated other comprehensive income, net of tax

13


15

Additional paid-in capital


Treasury stock, at cost; 1 shares of common stock at June 30, 2022 and December 31, 2021

(10)


(8)

Accumulated deficit

(3,586)


(2,636)

Total stockholders' equity (deficit)

(3,579)


(2,625)

Total liabilities and stockholders' equity (deficit)

$                  10,270


$                  10,274

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



For The Six Months Ended June 30,

(in millions)

2022


2021

Cash flows from operating activities:




Net income

$                      601


$                      652

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




Depreciation and amortization

270


263

Non cash impairment and restructuring costs


245

Non-cash interest expense, net of amortization of premium

9


10

Provision for doubtful accounts

29


24

(Gain) loss on unconsolidated entity investments, net

(3)


3

Dividend received from unconsolidated entity investment


1

Loss (gain) on other investments

9


(4)

Share-based payment expense

92


98

Deferred income tax expense

60