SiriusXM Warns of Economic Challenges Ahead


SiriusXM said it had a strong year in terms of revenue and subscriber additions in 2022, though executives cautioned that 2023 might bring some turbulence as the company tries to weather a downturn in the automotive industry.

On Thursday, the company released its recent quarter and full-year earnings results, which showed revenue of $9.003 billion for 2022, an increase from the $8.696 billion reported for the previous year.

SiriusXM’s subscriber revenue from its satellite and streaming audio services accounted for the bulk of its overall financial gain, with the company reporting $6.892 billion in subscription revenue for 2022, a slight increase from the $6.614 billion reported in 2021. Advertising revenue at SiriusXM, Stitcher, Pandora and other properties grew to $1.772 billion, a slight increase from $1.730 billion reported in 2021.

The company’s quarterly data was less impressive, and could signal the start of some tough times for the company ahead. Its fourth quarter revenue for 2022 was $2.283 billion, only slightly higher than the $2.28 billion reported the previous quarter; subscriber revenue fell to $1.726 billion compared to $1.734 billion during the prior quarter, despite SiriusXM seeing a net gain of 162,000 self-pay customers.

On a conference call with investors and reporters, SiriusXM Chief Executive Officer Jennifer Witz said the company expects to lose subscribers during 2023, in part due to broader economic challenges that are beyond the company’s control.

“We’ll see modestly negative self-pay net adds for the year as economic and demand uncertainty persists, auto sales remain soft, and we moderate marketing spend for our streaming service early in the year ahead of planned product improvements late in 2023,” Witz said.

Other factors, including personal savings rates, consumer confidence and auto loan defaults could also weigh hard on the company. In the past, Witz has affirmed the health of SiriusXM’s bread-and-butter product — it’s satellite radio and companion streaming radio business — remains largely tied to the health of the auto industry, including sales of new and used cars.

Tight inventory in the auto market, fueled in large part by a shortage in semiconductor chips, has made it tougher for customers to buy a new or used car, even if they have access to cash and credit. Now, financial experts are warning that some customers who were able to finance a new or used car might not be able to meet those obligations. Last year, SiriusXM executives said around 145 million cars on the road have SiriusXM tuners installed in them, and customers typically receive a complementary subscription to SiriusXM radio for a few months when they buy a new or used car from a dealer. (SiriusXM radio currently has around 34 million subscribers.)

“In 2022, auto sales were the lowest they have been in 11 years,” Witz said. “And for this year, analysts now expect new car sales to be up modestly by about 6%, but used car sales are expected to again fall slightly. We are closely monitoring consumer health.”

Witz said SiriusXM will refocus its efforts on some of its other properties, including the company’s streaming radio product. Customers will start to see “an updated SiriusXM streaming experience” by the end of the year, she affirmed. The company will also cut back on discretionary spending, and previously warned of potential layoffs, to address a slowdown in business.

“While this is the right decision for our business, we expect this more conservative approach to marketing spend in the first half to contribute to lower net subscriber additions near term,” Witz said. “We all know that consumers now have more options than ever when it comes to listening to content in the car and on the go. Today, we hold the largest share of ear in the car outside combined terrestrial radio. As we look to attract new audiences to our platform, we are becoming more and more agnostic, not just how they come in the front door, but also how they choose to interact with our service.”

That includes making SiriusXM’s content — including its suite of podcasts like Conan O’Brien Needs a Friend and 99% Invisible — available and accessible on as many devices as possible. The company’s various products, including Pandora and Stitcher, are widely available on smartphones, tablets, smart auto displays, Internet-connected television sets and other devices. Like other companies, SiriusXM also allows competing podcast platforms like iHeartRadio and TuneIn, to distribute shows from its Earwolf, Stitcher, Team Coco and SXM Media brands.

“In a challenging ad market, podcast continue to be a growth opportunity for us,” Witz said. “We feel very good about our current podcast slate, and will continue to be purposeful in how and when we invest in programming to best align with our business priorities.”


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