Strong operating and financial results.
Adjusted EBITDA growth of 6% for the year, compared to 2019.
For an audio media company, such achievements could be the stuff of dreams, considering the battering COVID-19 and the pandemic, entering its 12th month, has brought to Radio.
Yet, that’s exactly what Sirius XM is touting, as its fourth quarter and full-year 2020 results released early Tuesday paint a rosy picture that will certainly make newly appointed CEO Jennifer Witz happy.
For the three months ended December 31, 2020, Sirius XM enjoyed growth in both its subscriber and advertiser revenue — incredible accomplishments given the pandemic and its initial impact on radio’s cume due to fewer in-car occurrences.
This speaks to Sirius XM’s ease of accessibility outside the vehicle, perhaps — exposing a weakness of Radio it has not fully come to terms with.
Q4 2020 subscriber revenue for Sirius XM grew to $1.62 billion, from $1.57 billion. Advertising revenue in the quarter grew to $474 million, from $403 million.
Along with an equipment revenue gain to $60 million from $46 million and “other revenue” of $40 million compared to $44 million a year ago, total consolidated revenue in Q4 grew to $2.19 billion, from $2.06 billion.
Sirius XM’s expenses ballooned to $2.69 billion, from $1.66 billion.
However, a $976 million impairment charge is a big reason for this increase. If not for that, there’s only one other category where the cost of services noticeably increase.
Thank you, artist advocates and recording industry royalty increase lobbyists.
Sirius XM’s revenue share and royalty fees grew to $662 million, from $607 million, in Q4.
Including the impairment charge, Sirius XM swung to a net loss of $662 million (-$0.16 per diluted share), from net income of $243 million ($0.05).
On an unaudited pro-forma basis, adjusted EBITDA increased to $660 million, from $587 million. That translates to EPS of $0.07, beating the Zacks Consensus Estimate of $0.05.S
Also on an adjusted basis, Q4 Free Cash Flow grew to $448 million, from $408 million.
And, that’s what Wall Street watchers will likely cheer about across Tuesday’s trading on the Nasdaq GlobalSelect market. SIRI started the day at $6.26, and has largely been in the $6 range for the last 50 weeks.
On a year-over-year basis, FY2020 results show Sirius XM’s consolidated revenue at $8.04 billion, a 3% increase from FY2019. Adjusted EBITDA grew to $2.58 billion in 2020, an increase of approximately 6% from $2.43 billion in 2019.
SLOWING THE CHURN
For years, analysts and radio industry execs traditionally looked closely at Sirius XM’s subscriber count, and then ask the question, “How many subscribers did Sirius XM lose, compared to how many it gained?”
Here’s the answer: “ending subscribers” decreased 1% for the full year of 2020.
That’s correct: Sirius XM lost fewer subscribers in the pandemic-plagued year of 2020 than in the go-go days of 2019.
Wait, there’s more: As the percentage of paid promotional subscribers fell by 22% year-over-year to 3.83 million, the amount of self paid subscribers increased by 3%, to 30.89 million.
In Canada, however, where Sirius XM penetration has largely been seen in big markets such as Toronto and Calgary, subscribers decreased by 3% to 2.62 million; the Canadian economy, coupled with more stringent COVID-19 stay-at-home restrictions in Ontario, could be factors there.
Looking specifically at Q4, self-pay subscriber rolls surged by 19% year-over-year.
And, that all-important self-paid monthly churn is at 1.6%.
A FAMILIAR WORD FOR RADIO
In prepared comments, Sirius XM Chief Financial Officer Sean Sullivan, who landed the role on Oct. 26, 2020, used a word that broadcast radio has incorporated into dozens of quarterly earnings calls — reach.
“The tremendous reach of SiriusXM’s platforms, the company’s unique business model, and the quality of its people attracted me to join the company last fall as CFO,” he said. “All of these attributes have been affirmed in the past three months since I came on board, and it has been a pleasure to partner with Jennifer as she made the transition to CEO.”
That reach story seems to be working for Sirius XM.
SiriusXM increased its regular quarterly dividend by 10% in November for the fourth consecutive year; some radio companies have retained their deeply slashed or suspended dividends.
At the end of the fourth quarter, SiriusXM’s debt to adjusted EBITDA ratio was 3.3x.
And, Sullivan concluded, “We have tremendous liquidity to continue investing in the business and returning capital to stockholders.”
2021 GUIDANCE
The company reiterated its 2021 guidance for SiriusXM self-pay net subscriber additions, revenue, adjusted EBITDA and free cash flow originally issued on January 7, 2021:
- SiriusXM self-pay net subscriber additions of approximately 800,000
- Total revenue of approximately $8.35 billion
- Adjusted EBITDA of approximately $2.575 billion
- Free cash flow of approximately $1.6 billion