Sirius XM Holdings Inc. Posts Solid Earnings, Ups Guidance

Sirius XM Holdings Inc. (NASDAQ:SIRI) released the earnings results from its most recently completed quarter this morning before opening bell, posting earnings of 2 cents per share on $1.1 billion in revenue, a 10% increase. Analysts had been expecting the satellite radio provider to report earnings of 2 cents per share on $1.04 billion in revenue. In the same quarter last year, Sirius XM posted earnings of 1 cent per share on $962 million in revenue.

Key metrics from Sirius XM’s earnings report

The company’s net income rose 117% to $136 million in the third quarter. Adjusted EBITDA rose 29% to a record $381 million.

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Sirius XM added 432,817 net subscribers during the quarter, which increased the company’s subscriber base 5%, bringing it to 26.7 million. Self-pay net subscriber additions were 379,598, an increase of 7% that brought the company’s total self-pay subscriber base to 22 million. Sirius had about 7.4 million trial subscriptions underway at the end of the third quarter, which is the largest amount in the company’s history and compares to 6.9 million at the end of last year’s third quarter.

The satellite radio provider reported a 22% decrease in subscriber acquisition costs, which fell from $45 last year to $35 this year. Adjusted EBITDA margins hit a new high of 36%.

Sirius XM bought back nearly $2.1 billion worth of its shares, which is 2.5 times the amount of free cash flow it generated in the first nine months of this year.

“With the company’s leverage at 3.4 times before the anticipated conversion of our 7% Exchangeable Notes in early December and over $1 billion of undrawn capacity under our revolving credit facility, we retain substantial balance sheet flexibility to continue our capital returns and to capitalize on strategic opportunities that may arise,” Sirius XM Chief Financial Officer David Frear said in a statement this morning.

Sirius XM raises guidance

This morning management also increased their full year guidance for revenue, net subscriber additions and free cash flow. They now project net self-pay subscriber additions of about 1.25 million and total net subscriber additions of about 1.5 million for the full year. They’re expecting about $4.15 billion in revenue and adjusted EBITDA of about $1.425 billion. Sirius XM management projects about $1.12 billion in free cash flow for 2014.