Sonia Randhawa

Morningstar Key Indicators for SiriusXM Holdings

What we thought about SiriusXM Holdings' earnings.

SiriusXM Holdings' SIRI Q1 wasn't bad, but revenue remains stagnant and the company's subscriber base continues to shrink. With investments in content and technology to improve integration between the SiriusXM streaming app and vehicles, management expects subscriber growth to accelerate. However, the company now expects slower long-term growth and has lowered its fair value estimate from $7.50 per share to $5.00 per share.

Total revenue increased 1% year over year. That's because his 7% growth in Pandora due to a surge in advertising revenue was nearly offset by a slight decline in subscriber revenue for his much larger SiriusXM segment. Adjusted EBITDA increased by 4% year-on-year, and fixed cost reductions increased profit margins by approximately 1 percentage point.

SiriusXM's revenue decreased 1% year over year. That's because the service lost a net 359,000 self-pay subscribers in the first quarter, and revenue per customer increased by just $0.07. Customer churn is typically higher in the first quarter, and lower trial initiation levels at the end of 2023 reduced the potential gross addition funnel for the quarter. The trial funnel now stands at 7.5 million, up from 7.2 million a year ago, and with the recently rebuilt SiriusXM app and collaboration with automakers with the 360L platform (which integrates the Sirius app into vehicles), executives are more likely to We expect many trial conversions and improvements. What are the subscriber numbers for the second half of the year?

Podcasts were a big driver of ad revenue growth, with associated revenue up 16% year-over-year. Management said the largest additional investment is now in podcasting, with the company focused on podcasts for the SiriusXM subscriber base. The company plans to add an exclusive podcast library to other programming exclusive to SiriusXM subscribers, which will also support subscriber stability.