NEW YORK, Feb. 4, 2020 /PRNewswire/ -- SiriusXM today announced fourth quarter and full-year 2019 operating and financial results, including revenue of $2.1 billion and $7.8 billion, respectively, increasing 38% and 35% compared to the prior year periods. Revenue was boosted by the acquisition of Pandora Media on February 1, 2019. The Company's net income declined 3% to $243 million in the fourth quarter, while full-year net income totaled $914 million, down from $1.2 billion in 2018 due to higher acquisition, refinancing, and depreciation and amortization expenses in 2019. Net income per diluted common share was $0.05 in the fourth quarter, compared to $0.06 in the prior year period, while full-year 2019 net income per diluted share declined to $0.20 from $0.26 in 2018." 

On a pro forma basis, fourth quarter revenue grew 6% from $1.9 billion and full-year revenue climbed 8% from $7.3 billion in the prior year periods. Adjusted EBITDA in the fourth quarter totaled $587 million, down from $593 million in the prior year period. For the full-year, adjusted EBITDA grew 14% to $2.4 billion, resulting in an adjusted EBITDA margin of 30.6%, an improvement of approximately 160 basis points from 2018. The improvement in adjusted EBITDA margin was driven primarily by revenue growth across the business and cost efficiencies in subscriber acquisition costs and revenue share and royalties. Pro forma figures assume the Pandora acquisition closed on January 1, 2018.

"I am so proud of SiriusXM's milestone performance last year. Not only did we achieve our 10th consecutive year of one million-plus self-pay net additions, but we successfully completed the acquisition of Pandora Media and drove each business to record-high financial performance. Looking forward to 2020, we're excited about a new decade of opportunity before us and confident in reiterating our guidance for the year," said Jim Meyer, Chief Executive Officer, SiriusXM.

"In programming, our lifeblood, we continue to work with an increasing array of megastars and brands that have real value for SiriusXM subscribers and Pandora listeners. In the lead-up to the Super Bowl, The Chainsmokers and Lizzo played separate exclusive concerts on back-to-back nights in Miami Beach as part of our new Opening Drive Super Concert Series. Coldplay did a special stripped-down set at our new Hollywood studios for subscribers, and we announced the launch of a new SiriusXM channel and exclusive Pandora content from superstars U2, called U2X Radio, which will debut this year," added Meyer.

FULL-YEAR 2019 HIGHLIGHTS

SiriusXM operates two complementary audio entertainment businesses — our SiriusXM business and our Pandora business. Further information regarding these two segments will be contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The pro forma financial and operating highlights of these two segments are presented separately below and exclude the impact of share-based payment expense.

SIRIUSXM

• Self-Pay Subscribers Near 30.0 Million. SiriusXM added approximately 1.1 million net new self-pay subscribers for the full-year to end 2019 with nearly 30.0 million self-pay subscribers. Total net subscriber additions were 870,000, resulting in more than 34.9 million total SiriusXM subscribers at the end of the period. Paid promotional subscribers decreased due to declines in shipments from automakers offering paid promotional subscriptions. The total trial funnel stood at approximately 9.3 million at the end of 2019, up from approximately 9.1 million at the end of 2018. Self-pay monthly churn for 2019 was 1.7%, approximately flat from 2018.
• SiriusXM Revenue of $6.2 Billion. Full-year 2019 revenue grew 7% to a record $6.2 billion. This growth was driven by a 3% increase in total SiriusXM subscribers and 4% growth in SiriusXM's average revenue per user (ARPU) to $13.82.
• Gross Profit Grows 7%. Total cost of services at SiriusXM increased 8% to $2.4 billion for the full-year, driven primarily by higher revenue share and royalties and programming and content expenses. Gross profit at SiriusXM in 2019 totaled $3.8 billion, increasing 7% over 2018, and produced a gross margin of 62%, flat compared to the prior year.
• New Programming, New Technology. SiriusXM recently announced the launch of our collaboration with UNINTERRUPTED, the athlete-empowered brand founded by LeBron James and Maverick Carter, for exclusive athlete playlists that debuted on Pandora. Andy Cohen signed multi-year extension for his news-making Radio Andy channel, and Phish performed an exclusive concert in Philadelphia on its full-time SiriusXM channel. At the 2020 Consumer Electronics Show, SiriusXM demonstrated an e-commerce suite for drivers with VISA, introduced a new aftermarket radio with 360L features, and earlier made SiriusXM available for the first time on Google home smart speakers and devices.

PANDORA

• Advertising Revenue Hits Record $1.2 Billion. Full-year ad revenue at Pandora reached a record $1.2 billion, growing 10% over 2018. Ad revenue was driven by strong monetization of $80 per thousand hours, growing 12% over the prior year. Strength in traditional audio advertising, boosted by video programmatic and engagement-based video, as well as the expansion of off-platform efforts and fees generated on the AdsWizz platform drove revenue growth. Total revenue for Pandora grew 10% to $1.7 billion for the year, aided in part by a 10% increase in subscriber revenue to $527 million.
• Total Ad Supported Listener Hours of 13.4 Billion. Monthly Active Users (MAUs) at Pandora were 63.5 million at the end of 2019, down from 69.4 million in the prior year. Total ad supported listener hours were 13.4 billion in 2019, down from 14.8 billion in 2018.
• Self-Pay Net Adds of 251,000. Pandora added 251,000 net new self-pay subscribers to its Pandora Plus and Pandora Premium service in 2019 to end the year with nearly 6.2 million self-pay subscribers. Paid promotional subscribers declined to 49 thousand, from 756 thousand in 2018, as a result of a reduction in paid promotional subscriptions due to the expiration of an agreement with T-Mobile in the third quarter of 2019. This brought total Pandora subscribers at year-end to 6.2 million.
• Gross Profit Grows 28%. Total cost of services at Pandora in 2019 of $1.1 billion increased 2% compared with 2018. This resulted in gross profit at Pandora of $624 million, up 28% over 2018, and produced a gross margin for the year of 36%, growing approximately 500 basis points from 31% in the prior year. This expansion was driven primarily by lower revenue share and royalties and customer service and billing expenses as a percentage of revenue.

"SiriusXM returned nearly $2.4 billion of capital to stockholders in 2019. We repurchased more than 364 million shares last year and paid approximately $226 million in dividends to stockholders. At year-end, our debt to adjusted EBITDA ratio was 3.2 times and we had the entire $1.75 billion available on our revolving credit facility. This gives us ample liquidity to continue investing in our business while returning capital to stockholders," noted David Frear, Chief Financial Officer, SiriusXM.

2020 GUIDANCE

The Company's full-year 2020 guidance for self-pay net subscriber additions, revenue, adjusted EBITDA and free cash flow, as issued on January 7, 2020, is reiterated as follows:

• SiriusXM self-pay net subscriber additions over 900,000,
• Total revenue of approximately $8.1 billion,
• Adjusted EBITDA approximately $2.5 billion, and
• Free cash flow of approaching $1.7 billion.

CAPITAL RETURN PROGRAM

Shares of common stock may be purchased from time to time on the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act of 1934, as amended, in privately negotiated transactions, including in accelerated stock repurchase transactions and transactions with Liberty Media and its affiliates, or otherwise. The Company expects to fund the repurchases through a combination of cash on hand, cash generated by operations and future borrowings. The size and timing of these purchases will be based on a number of factors, including price and business and market conditions.

The Company's dividend policy may change at any time without notice to stockholders. The declaration and payment of dividends is at the discretion of the Company's Board of Directors in accordance with applicable law after taking into account various factors, including the Company's financial condition, operating results, current and anticipated cash needs, limitations imposed by its indebtedness, legal requirements and other factors that the Board of Directors deems relevant.

 

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Twelve Months Ended December 31,
(in millions)	2019				2018
Cash flows from operating activities:
Net income	$	914			$	1,176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	468				301
Non-cash interest expense, net of amortization of premium	17				9
Provision for doubtful accounts	53				51
Amortization of deferred income related to equity method investment	(3)				(3)
Loss on extinguishment of debt	57				—
Loss (gain) on unconsolidated entity investments, net	21				10
Gain on fair value instrument	—				(43)
Dividend received from unconsolidated entity investment	2				2
Share-based payment expense	250				133
Deferred income taxes	259				257
Changes in operating assets and liabilities:
Receivables	(137)				(42)
Inventory	11				(2)
Related party, net	(10)				1
Prepaid expenses and other current assets	(3)				(20)
Other long-term assets	4				10
Operating lease right-of-use assets	(14)				—
Accounts payable and accrued expenses	109				(20)
Accrued interest	32				(9)
Deferred revenue	(58)				70
Operating lease liabilities	36				—
Other long-term liabilities	9				(1)
Net cash provided by operating activities	2,017				1,880
Cash flows from investing activities:
Additions to property and equipment	(363)				(355)
Purchases of other investments	(7)				(8)
Acquisition of business, net of cash acquired	313				(2)
Sale of short-term investments	73				—
Investments in related parties and other equity investees	(19)				(17)
Repayment from (loan to) related party	—				3
Net cash used in investing activities	(3)				(379)
Cash flows from financing activities:
Proceeds from exercise of stock options	8				—
Taxes paid from net share settlements for stock-based compensation	(150)				(120)
Revolving credit facility, net of deferred financing costs	(439)				136
Proceeds from long-term borrowings, net of costs	2,715				—
Proceeds from sale of capped call security	3				—
Principal payments of long-term borrowings	(1,666)				(16)
Payment of premiums on redemption of debt	(45)				—
Common stock repurchased and retired	(2,159)				(1,314)
Dividends paid	(226)				(201)
Net cash used in financing activities	(1,959)				(1,515)
Net increase (decrease) in cash, cash equivalents and restricted cash	55				(14)
Cash, cash equivalents and restricted cash at beginning of period	65				79
Cash, cash equivalents and restricted cash at end of period(1)	$	120			$	65

 

Unaudited Pro Forma Results

Set forth below are our pro forma results of operations for the three and twelve months ended December 31, 2019 compared with the three and twelve months ended December 31, 2018.  These pro forma results are based on estimates and assumptions, which we believe are reasonable.  They are not the results that would have been realized had the Pandora Acquisition actually occurred on January 1, 2018 and are not indicative of our consolidated results of operations in future periods.  The pro forma results primarily include adjustments related to amortization of acquired intangible assets, depreciation of property and equipment, acquisition costs, fair value gain or loss on the Pandora investment and associated tax impacts.  Please refer to the Footnotes to Results of Operations.

Footnotes to Pro Forma Results of Operations

The following tables reconcile our results of operations as reported to our pro forma results of operations for the three and twelve months ended December 31, 2019 and 2018 which includes the Pandora pre-acquisition financial information for the applicable periods and the effects of purchase price accounting.  These pro forma results are based on estimates and assumptions, which we believe are reasonable.  They are not the results that would have been realized had the Pandora Acquisition actually occurred on January 1, 2018 and are not indicative of our consolidated results of operations in future periods.  The pro forma results primarily include adjustments related to amortization of acquired intangible assets, depreciation of property and equipment, acquisition costs, fair value gain or loss on the Pandora investment and associated tax impacts.

 

 

 

 

 

Key Financial and Operating Performance Metrics

Subscribers and subscription related revenues and expenses associated with our connected vehicle services and Sirius XM Canada are not included in Sirius XM's subscriber count or subscriber-based operating metrics.

Set forth below are our subscriber balances as of December 31, 2019 compared to December 31, 2018:

The following table contains our Non-GAAP pro forma financial and operating performance measures which are based on our adjusted results of operations for the three and twelve months ended December 31, 2019 and 2018:

Glossary

Monthly active users - the number of distinct registered users on the Pandora services, including subscribers, which have consumed content within the trailing 30 days to the end of the final calendar month of the period. The number of monthly active users on the Pandora services may overstate the number of unique individuals who actively use our Pandora service, as one individual may use multiple accounts. To become a registered user on the Pandora services, a person must sign-up using an email address or phone number, or access our service using a device with a unique identifier, which we use to create an account for our service.

Average self-pay monthly churn - the Sirius XM monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.

Adjusted EBITDA - EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization.  We adjust EBITDA to exclude the impact of other expense (income) as well as certain other charges discussed below.  Adjusted EBITDA is a Non-GAAP financial measure that excludes or adjusts for (if applicable): (i) certain adjustments as a result of the purchase price accounting for the XM Merger and the Pandora Acquisition, (ii) predecessor net income adjusted for certain expenses, including depreciation and amortization, other income (loss), and share-based payment expense for January 2019 and the twelve months ended December 31, 2018, (iii) share-based payment expense and (iv) other significant operating expense (income) that do not relate to the on-going performance of our business.  We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our capital structure and purchase price accounting.  We believe investors find this Non-GAAP financial measure useful when analyzing our past operating performance with our current performance and comparing our operating performance to the performance of other communications, entertainment and media companies.  We believe investors use adjusted EBITDA to estimate our current enterprise value and to make investment decisions.  As a result of large capital investments in our satellite radio system, our results of operations reflect significant charges for depreciation expense.  We believe the exclusion of share-based payment expense is useful as it is not directly related to the operational conditions of our business.  We also believe the exclusion of the legal settlements and reserves, acquisition related costs, and loss on extinguishment of debt, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of our normal operations for the period.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the XM Merger and the Pandora Acquisition.  We endeavor to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure.  Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net income as disclosed in our consolidated statements of comprehensive income.  Since adjusted EBITDA is a Non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP.  The reconciliation of net income to the adjusted EBITDA is calculated as follows:   

 

Free cash flow - is derived from cash flow provided by operating activities, net of additions to property and equipment and purchases of other investments.  Free cash flow is a metric that our management and board of directors use to evaluate the cash generated by our operations, net of capital expenditures and other investment activity.  In a capital intensive business, with significant investments in satellites, we look at our operating cash flow, net of these investing cash outflows, to determine cash available for future subscriber acquisition and capital expenditures, to repurchase or retire debt, to acquire other companies and to evaluate our ability to return capital to stockholders.  We exclude from free cash flow certain items that do not relate to the on-going performance of our business, such as cash flows related to acquisitions, strategic and short-term investments, and net loan activity with related parties and other equity investees.  We believe free cash flow is an indicator of the long-term financial stability of our business.  Free cash flow, which is reconciled to "Net cash provided by operating activities," is a Non-GAAP financial measure.  This measure can be calculated by deducting amounts under the captions "Additions to property and equipment" and deducting or adding Restricted and other investment activity from "Net cash provided by operating activities" from the consolidated statements of cash flows.  Free cash flow should be used in conjunction with other GAAP financial performance measures and may not be comparable to free cash flow measures presented by other companies.  Free cash flow should be viewed as a supplemental measure rather than an alternative measure of cash flows from operating activities, as determined in accordance with GAAP.  Free cash flow is limited and does not represent remaining cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt maturities.  We believe free cash flow provides useful supplemental information to investors regarding our current cash flow, along with other GAAP measures (such as cash flows from operating and investing activities), to determine our financial condition, and to compare our operating performance to other communications, entertainment and media companies.  Free cash flow is calculated as follows:

ARPU - Sirius XM ARPU is derived from total earned subscriber revenue (excluding revenue associated with our connected vehicle services), advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.  Pandora ARPU is defined as average monthly subscriber revenue per paid subscriber on our Pandora subscription services. 

Subscriber acquisition cost, per installation - or SAC, per installation, is derived from subscriber acquisition costs and margins from the sale of radios and accessories (excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period.  SAC, per installation, is calculated as follows:

Ad supported listener hours - is based on the total bytes served over our Pandora advertising supported platforms for each track that is requested and served from our Pandora servers, as measured by our internal analytics systems, whether or not a listener listens to the entire track. For non-music content such as podcasts, episodes are divided into approximately track-length parts, which are treated as tracks. To the extent that third-party measurements of advertising hours are not calculated using a similar server-based approach, the third-party measurements may differ from our measurements.

RPM - is calculated by dividing advertising revenue, excluding AdsWizz and other off-platform revenue, by the number of thousands of listener hours on our Pandora advertising-based service.

LPM - is calculated by dividing advertising licensing costs by the number of thousands of listener hours on our Pandora advertising-based service.

LPU - is calculated by dividing subscriber licensing costs by the number of paid subscribers on our Pandora subscription services.

About SiriusXM

Sirius XM Holdings Inc. (NASDAQ: SIRI) is the leading audio entertainment company in the U.S., and the premier programmer and platform for subscription and digital advertising-supported audio products. Pandora, a subsidiary of SiriusXM, is the largest ad-supported audio entertainment streaming service in the U.S. SiriusXM and Pandora together reach more than 100 million people each month with their audio products. SiriusXM, through Sirius XM Canada Holdings, Inc., also offers satellite radio and audio entertainment in Canada. In addition to its audio entertainment businesses, SiriusXM offers connected vehicle services to automakers and directly to consumers through aftermarket devices. For more about SiriusXM, please go to: www.siriusxm.com.

FORWARD-LOOKING STATEMENTS

This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "believe," "intend," "plan," "projection," "outlook" or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

The following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: our substantial competition, which is likely to increase over time; our ability to attract or increase the number of subscribers, which is uncertain; our ability to profitably attract and retain more price-sensitive consumers; failure to protect the security of personal information about our customers; interference to our service from wireless operations; a decline in the effectiveness of our extensive marketing efforts; consumer protection laws and their enforcement; our failure to realize benefits of acquisitions or other strategic initiatives, including the acquisition of Pandora Media, Inc.; unfavorable outcomes of pending or future litigation; the market for music rights, which is changing and subject to uncertainties; our dependence upon the auto industry; general economic conditions; existing or future government laws and regulations could harm our business; failure of our satellites would significantly damage our business; the interruption or failure of our information technology and communications systems; rapid technological and industry changes; failure of third parties to perform; our failure to comply with FCC requirements; modifications to our business plan; our indebtedness; damage to our studios, networks or other three facilities as a result of terrorism or natural catastrophes; our principal stockholder has significant influence over our affairs and over actions requiring stockholder approval and its interests may differ from interests of other holders of our common stock; impairment of our business by third-party intellectual property rights; and changes to our dividend policies which could occur at any time. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2018 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, in each case, as filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov ). The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

Source: SiriusXM

Contact for SiriusXM:

Hooper Stevens
212-901-6718
Hooper.stevens@siriusxm.com

Patrick Reilly
212-901-6646
patrick.reilly@siriusxm.com

View original content to download multimedia:http://www.prnewswire.com/news-releases/siriusxm-reports-fourth-quarter-and-full-year-2019-results-300998087.html

SOURCE Sirius XM Holdings Inc.