Sirius XM Radio Inc (NASDAQ:SIRI) reported record revenue during the third quarter, but it wasn’t enough to meet analyst expectations. The satellite radio provider reported earnings per share of 1 cent on revenue of $962 million. Revenues rose 11% from the results of last year’s third quarter when revenue was $867 million. Analysts had been expecting earnings per share of 2 cents on revenue of $969.5 million.

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Net income fell year over year to $63 million this year, compared to $75 million last year. That includes losses due to extinguishment of debt.

Key numbers from Sirius XM Radio

Sirius XM Radio Inc (NASDAQ:SIRI) reported 513,000 net subscriber additions during the quarter, plus 373,000 self-pay net additions after settlement of post-merger records. That’s compared to 446,000 net subscriber additions in the same quarter a year ago. At the end of the September quarter, the company saw its subscribership reach a record high of almost 25.6 million. Its self-pay subscriber base also hit a record high of 20.7 million, a 9% increase from the same quarter a year ago. Total paid and unpaid trials increased by 247,000 sequentially.

Adjusted earnings rose 21% year over year to a record $296 million. Sirius XM Radio Inc (NASDAQ:SIRI) also reported a record adjusted earnings margin of almost 31%.

Sirius XM strengthens its balance sheet

The company also reported a 26% increase in cash flow during the quarter. Free cash flow per fully diluted share was 3.9 cents during the quarter, a 31% increase year over year. For the first three quarters of this year, free cash flow increased 42% to $624 million.

“We have taken significant steps over the past year to improve our balance sheet, lowering our average cost of debt from 9.2% last summer to just 5.5% following the redemption of the 7.625% Senior Notes due 2018,” said Sirius XM Executive VP and Chief Financial Officer David Frear in a statement. “The new debt we have issued gives our Company greater flexibility to pursue capital returns and other strategic opportunities.”

Sirius XM issues 2013 and 2014 guidance

The satellite radio provider raised its guidance for total net subscriber growth and revenue for 2013 but reduced its estimate for self-pay net subscriber growth. It also reiterated its guidance for adjusted earnings and free cash flow.

It is now looking for 1.6 million total net subscriber additions for the year, an increase from 1.5 million. It expects self-pay net subscriber additions of 1.5 million compared to 1.6 million previously. Revenue is expected to be about $3.77 billion, compared to previous guidance of $3.7 billion. Adjusted earnings are expected to be $1.14 billion, while free cash flow is projected to be $915 million.

Sirius XM Radio Inc (NASDAQ:SIRI) also provided early 2014 guidance, projecting revenue of more than $4 billion and adjusted earnings of $1.38 billion.

Update on capital returns

During the third quarter, the company bought back about 124 million shares at a price of $459 million. So far this year it has bought back about 477 million shares for a total price of $1.6 billion. They have about $2.4 billion left on their share repurchase authorization, and they expect to use $500 million to buy back shares from Liberty Media in three installments starting next month.