With shares at their highest average closing price since November 2005, and prices of 12 cents a share seen in January 2009, Sirius XM stock has never looked better.
Further growth and a new 10-year high could be on the way, thanks to a glowing Q2 earnings report card shared Wednesday morning by the home of Howard Stern and dozens of specialty music and spoken-word channels.
All-important subscriber revenue rose to $1.14 billion, from $1.11 billion, while advertising revenue increased to $47.24 million, from $40.18 million. This allowed Sirius XM to see total revenue of $1.43 billion — rising from $1.35 billion.
This beat the Zacks Investment Research and FactSet consensus estimates of $1.42 billion.
Net income improved to $292.4 million (6 cents per diluted share), from $202.1 million (4 cents).
The per-share earnings in Q2 matched FactSet estimates and those of Zacks Investment Research.
Subscriptions, of course, are essential to Sirius XM’s growth. How many subscribers are freebies, and how many are paying? The great news is there are more users paying Sirius XM to hear its channels. Sirius XM’s self-paying subscriber count jumped by 6%, to 28.2 million — accounting for 1.53 million more self-paying subscribers in Q2 than in the year-ago period.
At the same time, paid promotional subscribers declined by 80,000 users, to 5.29 million.
The “ARPU” factor is, therefore, essential for Sirius XM investors. Total earned subscriber revenue, advertising revenue, and other subscription-related revenue, excluding revenue associated with Sirius XM’s connected-vehicle services, divided by the number of months in the period and divided by the daily weighted average number of subscribers for the period, is factored by the accounting department. The result: ARPU climbed to $13.30 in Q2, from $13.22 a year ago.
But, what’s the churn rate? “An impressive 1.6%,” said Sirius XM CEO Jim Meyer. It’s the lowest ever churn rate for Sirius XM, the company says.
This means Sirius XM added 483,000 net new self-pay subscribers in Q2, beating FactSet consensus estimates of 339,200.
The highly positive results led Sirius XM to increase its full-year 2018 guidance for self-pay net subscriber additions (1.15 million), revenue (now projected to be more than $5.7 billion), and adjusted EBITDA (anticipated to be approximately $2.18 billion).
Free cash flow is now expected to be $1.5 billion.