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SIRIUS XM (SIRI) Q1 Earnings Meet, Revenues Top Estimates

SIRIUS XM Holdings Inc. SIRI reported first-quarter 2016 financial numbers wherein the bottom line was on par with the Zacks Consensus Estimate while the top line surpassed the same.

Quarterly GAAP net income came in at $171.3 million or 3 cents per share compared with $105.7 million or 2 cents in the prior-year quarter. Earnings were in line with the Zacks Consensus Estimate. Meanwhile, total revenue of $1,201 million exhibited annualized growth of 11.1% and was also above the Zacks Consensus Estimate of $1,178 million.

Quarterly total operating expenses stood at $852.8 million, up 11.2% year over year. Operating income, in the reported quarter, was around $348.2 million, up 11% year over year. SIRIUS XM posted record first-quarter adjusted EBITDA growth of $441 million, up 11% year over year.

At the end of the first quarter of 2016, SIRIUS XM had $362.2 million of cash from operations compared with $310 million in the prior-year quarter. Quarterly free cash flow in the same quarter stood at $332 million compared with $276.2 million in the year-ago quarter.

At the end of the quarter under review, SIRIUS XM had nearly $102 million of cash and cash equivalents and $5,709.3 million of outstanding debt compared with $111.8 million and $5,443.6 million, respectively, at the end of 2015.

Segment Wise Results

Quarterly Subscriber revenues totaled $1,009.7 million, up 10.8% year over year. Advertising revenues stood at $31.5 million, up 17.1% year over year. Equipment revenues were $27.1 million, up 9.3% year over year. Other revenues grossed $132.7 million, up 12.6% year over year.

Subscriber Statistics

In the first quarter of 2016, SIRIUS XM added 465,000 subscribers which took the company’s total subscriber tally to 29,767,000 as of Mar 31, 2016, up 8.6% year over year. Payment category wise, Self-Pay subscriber count totaled 24,636,000 (up 7.4% year over year) while the Paid Promotional customer count stood at 5,423,000 (up 12.4% year over year).

Important Operating Metrics

Despite intensifying competition from Alphabet Inc. GOOG, Apple AAPL and Pandora Inc. P, SIRIUS XM’s average revenue per user stood at $12.67 in the first quarter of 2016 compared with $12.26 in the year-ago quarter. Average self-pay monthly churn rate was 1.9% against 1.8% in the year-earlier quarter. New Vehicle Customer Conversion rate was 38% versus 40% in the prior-year quarter. Subscriber acquisition cost stood at $34 versus $33 in the prior-year quarter.

Financial Outlook

Management anticipates 1.6 million of net subscriber addition in 2016 while revenue and adjusted EBITDA are likely to be $4.9 billion and $1.78 billion, respectively, in 2016. Meanwhile, free cash flow is expected at around $1.4 billion.

Currently, SIRIUS XM has a Zacks Rank #3 (Hold).

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