SiriusXM Holdings reported on Tuesday that profits rose 6% to $310 million in the second quarter, as job and office space cuts across the company helped buoy a quarter of flat revenues.
Revenue for the quarter was $2.25 billion, effectively flat from a year ago, and the company raised its free cash flow goal to $1.15 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which examines SiriusXM’s overall financial state minus any one-time events, rose 3% to $702 million.
Executives said they were cautiously optimistic that increasing ad revenue and subscriber growth in the second half of the year will help grow its top-line revenue to meet year-end goals, and the years-long investments into rebuilding the company’s tech stack and customer offering are nearing completion.
“We are pleased to report continued progress towards reaching our financial and operating goals for the year,” Chief Executive Officer Jennifer Witz said in a statement. “We made significant advancements this quarter in building our next generation platform and are excited to announce a preview event to come this fall.”
The company will host an unveiling presentation in New York in the coming months for its new app and product offering, which Witz said aims to bring in more younger customers. The company will also be reevaluating pricing and content packages “with an expectation that we can better appeal to each of our target segments and in doing so, continue to grow our subscriber base, revenue and profitability,” Witz said, discussing the company’s earnings on an investor call.
David Schulhof, a music industry veteran and CEO of the recently launched MUSQ Global Music Industry ETF, of which SiriusXM is a part, noted the company’s stock has been hovering at its highest levels in 18 months.
“The company is targeting a younger demographic now to compete with Spotify, Apple and Google’s music service,” Schulhof wrote in an email. “It will be interesting to watch their launch of a next-generation streaming app to attract younger and more diverse audiences. This could introduce a new source of revenue for Sirius XM as the music streaming market continues to grow at unprecedented levels.”
Sirius’s stock was down roughly 3% after its results on Tuesday at $4.93.
In March, SiriusXM cut roughly 8% of the company’s workforce — or 475 workers — and has reduced its office real estate portfolio by more than 30%. In June, it shut down its Stitcher podcast app to migrate it to the app.
Key SiriusXM financial highlights:
- SiriusXM’s second quarter revenue for 2023 was $2.25 billion, effectively flat compared to the prior year. The company’s revenue target remains $9 billion for the year.
- Profits rose 6% to $310 million, or $0.08 per diluted share, from $292 million, or $0.07 per diluted share, in Q2 2022.
- Adjusted EBITDA rose 3% to $702 million, on track to achieve an annual target of $2.75 billion.
- Free cash flow fell to $323 million from $435 million last year due to higher cash taxes and satellite capital expenses.
- Total SiriusXM subscribers was flat at 34 million, with 7.5 million subscribers “in funnel” and self-pay monthly churn remaining low at 1.5%
- SiriusXM revenue and gross profity held flat at $1.7 billion and $1 billion respectively.
- The Pandora and Off-platform business reported gross profit fell 9% to $152 million, as subscriber revenue fell 2% and ad revenue fell 1%, while expenses rose 2%.
