NEW YORK, July 30, 2019 /PRNewswire/ -- SiriusXM today
announced second quarter 2019 operating and financial results.
Total revenue of $2.0 billion
increased 38% compared to the prior year period, boosted by the
acquisition of Pandora Media on February 1,
2019. On a pro forma basis, revenue climbed 9% from
$1.8 billion in the second quarter of
2018. The Company's net income totaled $263
million in the second quarter, compared to $293 million in the prior year period. Net income
per diluted common share was $0.06 in
the second quarter and the prior year period.
Adjusted EBITDA grew 22% to a record $618
million in the second quarter and resulted in an adjusted
EBITDA margin of 31.2%, growing approximately 330 basis points from
27.9% in the second quarter 2018. The adjusted EBITDA margin in the
quarter was driven primarily by revenue growth across the combined
businesses and cost efficiencies in subscriber acquisition costs
and revenue share and royalties.
"Our company produced outstanding financial and operating
results once again this quarter, and I'm pleased by the quick
progress we've made in integrating Pandora. Revenues and adjusted
EBITDA each reached records in the period. We're thrilled with the
results in the first half of the year, and we are raising 2019
guidance for revenue and adjusted EBITDA and reiterating our
guidance for net subscriber additions and free cash flow," said
Jim Meyer, Chief Executive Officer,
SiriusXM.
"We continue to offer outstanding new programming across comedy,
sports, talk and music, with some of the best brands in all of
media. Lady Gaga played a once-in-a-lifetime show for SiriusXM
subscribers and Pandora listeners in late June at Harlem's Apollo
Theater, marking the first-ever combined SiriusXM and Pandora
event. We debuted "Netflix Is A Joke Radio," a full-time comedy
channel with Netflix, and announced plans for a new music channel
with SoulCycle. We launched a new jam band channel with Phish, and
special pop-up channels with Madonna, Cher, Dave Matthews Band and the music of Pavarotti.
And, last week, we were thrilled to announce a groundbreaking and
unprecedented collaboration with platinum-selling recording artist
Drake — our content is a true competitive advantage," added
Meyer.
Pro forma figures assume the Pandora acquisition closed on
January 1, 2018.
SECOND QUARTER 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 Quarterly Report on Form 10-Q for the period ended
June 30, 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 Top 29.3 Million. SiriusXM added
290 thousand net new self-pay subscribers in the second quarter to
end with more than 29.3 million self-pay subscribers. Total net
subscriber additions in the second quarter were 174 thousand,
resulting in more than 34.3 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. Self-pay monthly churn for the quarter was 1.7%,
compared to 1.6% in the second quarter of 2018.
- Record SiriusXM Revenue Over $1.5
Billion. Second quarter revenue of $1.5 billion grew 7% compared to the prior year
period. This growth was driven by a 3% increase in total SiriusXM
subscribers and 4% growth in SiriusXM's average revenue per user
(ARPU) to $13.83.
- Gross Profit Grows 7%. Total cost of services at
SiriusXM increased 7% to $594 million
in the second quarter, driven primarily by higher revenue share and
royalties and programming and content. Gross profit at SiriusXM in
the quarter totaled $944 million,
increasing 7% over the second quarter of 2018, and produced a gross
margin of 61%, flat compared to the prior year period.
- Major App Upgrades; Streaming Now Included for 30 Million
Subs. SiriusXM Select subscribers now have unlimited streaming
access to the hundreds of SiriusXM music, sports, talk, news and
entertainment channels, at no additional cost, outside the car on a
phone, at home and online. With this new streaming, customers will
also get access to over 100 recently launched Xtra Music Channels
and an expanded preview of SiriusXM Video. With the launch of
Personalized Stations Powered by Pandora, subscribers to the
SiriusXM All Access and SiriusXM Premier Streaming packages will
now be able to create their own customized commercial-free music
stations within the SiriusXM app.
PANDORA
- Advertising Revenue Grows 13%. Ad revenue at Pandora
reached a second quarter record of $306
million, growing 13% over the second quarter of 2018. Ad
revenue was driven by record second quarter monetization of
$80 per thousand hours, growing 17%
over the second quarter 2018. Strength in audio and 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 15% to
$441 million in the quarter, aided in
part by an 18% increase in subscriber revenue to $135 million.
- Total Ad Supported Listener Hours of 3.49 Billion.
Monthly Active Users (MAUs) at Pandora were 64.9 million in the
second quarter, down from 71.4 million in the prior year period.
Total ad supported listener hours were 3.49 billion in the period,
down from 3.86 billion in the second quarter of 2018.
- Self-Pay Net Adds of 64 Thousand. Pandora added 64
thousand net new self-pay subscribers in the second quarter to end
with over 6.2 million self-pay subscribers. Total Pandora
subscribers were 7.0 million at the end of the period, an increase
of 16% over the second quarter 2018.
- Gross Profit Grows 40%. Total cost of services at
Pandora in the second quarter 2019 of $284
million increased 4% compared with the second quarter 2018.
This resulted in gross profit at Pandora of $157 million, up 40% over the second quarter
2018, and produced a gross margin in the quarter of 36%, growing
approximately 700 basis points from 29% in the prior year period.
This expansion was driven primarily by lower revenue share and
royalties and customer service and billing expenses as a percentage
of revenue.
Second quarter net income of $263
million declined 10% over the prior year period due
primarily to a one-time $86 million
benefit to other income last year driven by unrealized gains from
the Company's investment in Pandora. The Company's effective tax
rate for the second quarter 2019 was 22.4%, compared to 19.4% in
the prior year period, with the change driven primarily by lower
recognition of excess tax benefits related to share-based
compensation.
"SiriusXM repurchased $898 million
of its stock in the quarter. Total capital returned to
stockholders, including dividends, is nearly $1.9 billion so far this year. Since the
announcement of the Pandora acquisition, we have repurchased all of
the common stock issued as part of that transaction. During the
quarter, we issued $1.25 billion of
10-year 5.50% Senior Notes due 2029 to pay down our revolving
credit facility balance. In early July, we issued $1.5 billion of 5-year 4.625% Senior Notes due
2024, the proceeds of which we used to redeem SiriusXM's
outstanding 6.00% Senior Notes due 2024. At quarter-end, our debt
to adjusted EBITDA was 3.3 times and we had cash on hand of
$215 million with our entire
$1.75 billion revolver available. We
will continue to use our strong financial position and ample
liquidity to invest in our business, make strategic investments and
return capital to stockholders," noted David Frear, Chief Financial Officer,
SiriusXM.
2019 GUIDANCE
The Company is reiterating its existing full-year 2019 guidance
for SiriusXM self-pay net subscriber additions and free cash flow,
and increasing guidance for pro forma revenue and adjusted EBITDA.
The company's increased full-year guidance for the combined
company, including Pandora, is as follows:
- SiriusXM self-pay net subscriber additions approaching 1
million,
- Pro forma revenue of approaching $7.8
billion,
- Adjusted EBITDA of approaching $2.35
billion, and
- Free cash flow of approximately $1.6
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.
SECOND QUARTER 2019 RESULTS
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(UNAUDITED)
|
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in millions,
except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,537
|
|
|
$
|
1,304
|
|
|
$
|
2,995
|
|
|
$
|
2,562
|
|
Advertising
revenue
|
358
|
|
|
47
|
|
|
567
|
|
|
89
|
|
Equipment
revenue
|
41
|
|
|
37
|
|
|
82
|
|
|
72
|
|
Other
revenue
|
41
|
|
|
44
|
|
|
77
|
|
|
84
|
|
Total
revenue
|
1,977
|
|
|
1,432
|
|
|
3,721
|
|
|
2,807
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
600
|
|
|
404
|
|
|
1,092
|
|
|
714
|
|
Programming and
content
|
116
|
|
|
106
|
|
|
222
|
|
|
207
|
|
Customer service and
billing
|
120
|
|
|
95
|
|
|
233
|
|
|
189
|
|
Transmission
|
40
|
|
|
24
|
|
|
71
|
|
|
46
|
|
Cost of
equipment
|
6
|
|
|
8
|
|
|
12
|
|
|
15
|
|
Subscriber
acquisition costs
|
104
|
|
|
120
|
|
|
212
|
|
|
243
|
|
Sales and
marketing
|
232
|
|
|
119
|
|
|
415
|
|
|
226
|
|
Engineering, design
and development
|
74
|
|
|
27
|
|
|
128
|
|
|
58
|
|
General and
administrative
|
120
|
|
|
92
|
|
|
255
|
|
|
177
|
|
Depreciation and
amortization
|
119
|
|
|
75
|
|
|
226
|
|
|
147
|
|
Acquisition and other
related costs
|
7
|
|
|
—
|
|
|
83
|
|
|
—
|
|
Total operating
expenses
|
1,538
|
|
|
1,070
|
|
|
2,949
|
|
|
2,022
|
|
Income from
operations
|
439
|
|
|
362
|
|
|
772
|
|
|
785
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
Interest
expense
|
(97)
|
|
|
(86)
|
|
|
(187)
|
|
|
(176)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Other (expense)
income
|
(3)
|
|
|
88
|
|
|
(2)
|
|
|
124
|
|
Total other (expense)
income
|
(100)
|
|
|
2
|
|
|
(190)
|
|
|
(52)
|
|
Income before income
taxes
|
339
|
|
|
364
|
|
|
582
|
|
|
733
|
|
Income tax
expense
|
(76)
|
|
|
(71)
|
|
|
(157)
|
|
|
(151)
|
|
Net income
|
$
|
263
|
|
|
$
|
293
|
|
|
$
|
425
|
|
|
$
|
582
|
|
Foreign currency
translation adjustment, net of tax
|
7
|
|
|
(9)
|
|
|
14
|
|
|
(18)
|
|
Total comprehensive
income
|
$
|
270
|
|
|
$
|
284
|
|
|
$
|
439
|
|
|
$
|
564
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.06
|
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
4,568
|
|
|
4,482
|
|
|
4,569
|
|
|
4,487
|
|
Diluted
|
4,675
|
|
|
4,589
|
|
|
4,677
|
|
|
4,589
|
|
Dividends declared
per common share
|
$
|
0.0121
|
|
|
$
|
0.0110
|
|
|
$
|
0.0242
|
|
|
$
|
0.0220
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
(in millions,
except per share data)
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
215
|
|
|
$
|
54
|
|
Receivables,
net
|
628
|
|
|
233
|
|
Inventory,
net
|
17
|
|
|
22
|
|
Related party current
assets
|
11
|
|
|
11
|
|
Prepaid expenses and
other current assets
|
211
|
|
|
158
|
|
Total current
assets
|
1,082
|
|
|
478
|
|
Property and
equipment, net
|
1,583
|
|
|
1,513
|
|
Intangible assets,
net
|
3,543
|
|
|
2,501
|
|
Goodwill
|
3,852
|
|
|
2,290
|
|
Related party
long-term assets
|
456
|
|
|
960
|
|
Deferred tax
assets
|
218
|
|
|
293
|
|
Operating lease
right-of-use assets
|
442
|
|
|
—
|
|
Other long-term
assets
|
140
|
|
|
138
|
|
Total
assets
|
$
|
11,316
|
|
|
$
|
8,173
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
1,102
|
|
|
$
|
736
|
|
Accrued
interest
|
134
|
|
|
128
|
|
Current portion of
deferred revenue
|
1,974
|
|
|
1,932
|
|
Current maturities of
debt
|
3
|
|
|
3
|
|
Operating lease
current liabilities
|
47
|
|
|
—
|
|
Related party current
liabilities
|
4
|
|
|
4
|
|
Total current
liabilities
|
3,264
|
|
|
2,803
|
|
Long-term deferred
revenue
|
140
|
|
|
149
|
|
Long-term
debt
|
7,843
|
|
|
6,885
|
|
Related party
long-term liabilities
|
2
|
|
|
4
|
|
Deferred tax
liabilities
|
48
|
|
|
47
|
|
Operating lease
liabilities
|
418
|
|
|
—
|
|
Other long-term
liabilities
|
90
|
|
|
102
|
|
Total
liabilities
|
11,805
|
|
|
9,990
|
|
Stockholders' equity
(deficit):
|
|
|
|
Common stock, par
value $0.001 per share; 9,000 shares authorized; 4,497 and
4,346
shares issued; 4,492 and 4,346 outstanding at June 30,
2019 and December 31, 2018,
respectively
|
4
|
|
|
4
|
|
Accumulated other
comprehensive income (loss), net of tax
|
8
|
|
|
(6)
|
|
Additional paid-in
capital
|
1,159
|
|
|
242
|
|
Treasury stock, at
cost; 5 and 0 shares of common stock at June 30, 2019 and
December 31, 2018, respectively
|
(28)
|
|
|
—
|
|
Accumulated
deficit
|
(1,632)
|
|
|
(2,057)
|
|
Total stockholders'
equity (deficit)
|
(489)
|
|
|
(1,817)
|
|
Total liabilities and
stockholders' equity (deficit)
|
$
|
11,316
|
|
|
$
|
8,173
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
For the Six Months
Ended June 30,
|
(in
millions)
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
425
|
|
|
$
|
582
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
226
|
|
|
147
|
|
Non-cash interest
expense, net of amortization of premium
|
7
|
|
|
5
|
|
Provision for
doubtful accounts
|
27
|
|
|
24
|
|
Amortization of
deferred income related to equity method investment
|
(1)
|
|
|
(1)
|
|
Loss on
extinguishment of debt
|
1
|
|
|
—
|
|
Loss on
unconsolidated entity investments, net
|
10
|
|
|
—
|
|
Gain on fair value
instrument
|
—
|
|
|
(118)
|
|
Dividend received
from unconsolidated entity investment
|
1
|
|
|
1
|
|
Share-based payment
expense
|
127
|
|
|
70
|
|
Deferred income
taxes
|
146
|
|
|
134
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
(69)
|
|
|
(29)
|
|
Inventory
|
6
|
|
|
1
|
|
Related party,
net
|
(1)
|
|
|
(2)
|
|
Prepaid expenses and
other current assets
|
(20)
|
|
|
—
|
|
Other long-term
assets
|
4
|
|
|
8
|
|
Operating lease
right-of-use assets
|
2
|
|
|
—
|
|
Accounts payable and
accrued expenses
|
36
|
|
|
88
|
|
Accrued
interest
|
6
|
|
|
(9)
|
|
Deferred
revenue
|
(4)
|
|
|
85
|
|
Operating lease
liabilities
|
7
|
|
|
—
|
|
Other long-term
liabilities
|
5
|
|
|
8
|
|
Net cash provided by
operating activities
|
941
|
|
|
994
|
|
Cash flows from
investing activities:
|
|
|
|
Additions to property
and equipment
|
(160)
|
|
|
(174)
|
|
Purchases of other
investments
|
(7)
|
|
|
(7)
|
|
Cash received from
Pandora Acquisition
|
313
|
|
|
—
|
|
Sale of short-term
investments
|
72
|
|
|
—
|
|
Investments in
related parties and other equity investees
|
(9)
|
|
|
(6)
|
|
Repayment from
related party
|
—
|
|
|
3
|
|
Net cash provided by
(used in) investing activities
|
209
|
|
|
(184)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
exercise of stock options
|
1
|
|
|
—
|
|
Taxes paid from net
share settlements for stock-based compensation
|
(47)
|
|
|
(71)
|
|
Revolving credit
facility, net of deferred financing costs
|
(439)
|
|
|
(303)
|
|
Proceeds from sale of
capped call security
|
3
|
|
|
—
|
|
Proceeds from
long-term borrowings, net of costs
|
1,236
|
|
|
—
|
|
Principal payments of
long-term borrowings
|
(156)
|
|
|
(8)
|
|
Common stock
repurchased and retired
|
(1,474)
|
|
|
(334)
|
|
Dividends
paid
|
(113)
|
|
|
(99)
|
|
Net cash used in
financing activities
|
(989)
|
|
|
(815)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
161
|
|
|
(5)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
65
|
|
|
79
|
|
Cash, cash
equivalents and restricted cash at end of
period(1)
|
$
|
226
|
|
|
$
|
74
|
|
|
|
(1)
|
The following table
reconciles cash, cash equivalents and restricted cash per the
statement of cash flows to the balance sheet. The restricted cash
balances are primarily due to letters of credit which have been
issued to the landlords of leased office space. The terms of the
letters of credit primarily extend beyond one year.
|
|
|
(in
millions)
|
June 30,
2019
|
|
December 31,
2018
|
|
June 30,
2018
|
|
December 31,
2017
|
Cash and cash
equivalents
|
$
|
215
|
|
|
$
|
54
|
|
|
$
|
63
|
|
|
$
|
69
|
|
Restricted cash
included in Other long-term assets
|
11
|
|
|
11
|
|
|
11
|
|
|
10
|
|
Total cash, cash
equivalents and restricted cash at end of period
|
$
|
226
|
|
|
$
|
65
|
|
|
$
|
74
|
|
|
$
|
79
|
|
Unaudited Pro Forma Results
Set forth below are our pro forma results of operations for the
three months ended June 30, 2019 compared with the three
months ended June 30, 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 and associated tax
impacts. Please refer to the Footnotes to Results of
Operations.
|
|
|
|
|
|
|
|
|
2019 vs 2018
Change
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
Three
Months
|
|
Six
Months
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Revenue
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,402
|
|
|
$
|
1,304
|
|
|
$
|
2,772
|
|
|
$
|
2,562
|
|
|
$
|
98
|
|
|
8
|
%
|
|
$
|
210
|
|
|
8
|
%
|
Advertising
revenue
|
52
|
|
|
47
|
|
|
98
|
|
|
89
|
|
|
5
|
|
|
11
|
%
|
|
9
|
|
|
10
|
%
|
Equipment
revenue
|
41
|
|
|
37
|
|
|
82
|
|
|
72
|
|
|
4
|
|
|
11
|
%
|
|
10
|
|
|
14
|
%
|
Other
revenue
|
43
|
|
|
46
|
|
|
81
|
|
|
89
|
|
|
(3)
|
|
|
(7)
|
%
|
|
(8)
|
|
|
(9)
|
%
|
Total Sirius XM
revenue
|
1,538
|
|
|
1,434
|
|
|
3,033
|
|
|
2,812
|
|
|
104
|
|
|
7
|
%
|
|
221
|
|
|
8
|
%
|
Pandora:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
135
|
|
|
114
|
|
|
269
|
|
|
218
|
|
|
21
|
|
|
18
|
%
|
|
51
|
|
|
23
|
%
|
Advertising
revenue
|
306
|
|
|
271
|
|
|
537
|
|
|
486
|
|
|
35
|
|
|
13
|
%
|
|
51
|
|
|
10
|
%
|
Total Pandora
revenue
|
441
|
|
|
385
|
|
|
806
|
|
|
704
|
|
|
56
|
|
|
15
|
%
|
|
102
|
|
|
14
|
%
|
Total consolidated
revenue
|
1,979
|
|
|
1,819
|
|
|
3,839
|
|
|
3,516
|
|
|
160
|
|
|
9
|
%
|
|
323
|
|
|
9
|
%
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
360
|
|
|
404
|
|
|
707
|
|
|
714
|
|
|
(44)
|
|
|
(11)
|
%
|
|
(7)
|
|
|
(1)
|
%
|
Programming and
content
|
113
|
|
|
106
|
|
|
215
|
|
|
207
|
|
|
7
|
|
|
7
|
%
|
|
8
|
|
|
4
|
%
|
Customer service and
billing
|
99
|
|
|
95
|
|
|
197
|
|
|
189
|
|
|
4
|
|
|
4
|
%
|
|
8
|
|
|
4
|
%
|
Transmission
|
25
|
|
|
24
|
|
|
50
|
|
|
46
|
|
|
1
|
|
|
4
|
%
|
|
4
|
|
|
9
|
%
|
Cost of
equipment
|
6
|
|
|
8
|
|
|
12
|
|
|
15
|
|
|
(2)
|
|
|
(25)
|
%
|
|
(3)
|
|
|
(20)
|
%
|
Total Sirius XM cost
of services
|
603
|
|
|
637
|
|
|
1,181
|
|
|
1,171
|
|
|
(34)
|
|
|
(5)
|
%
|
|
10
|
|
|
1
|
%
|
Pandora:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
246
|
|
|
236
|
|
|
463
|
|
|
458
|
|
|
10
|
|
|
4
|
%
|
|
5
|
|
|
1
|
%
|
Programming and
content
|
3
|
|
|
2
|
|
|
7
|
|
|
4
|
|
|
1
|
|
|
50
|
%
|
|
3
|
|
|
75
|
%
|
Customer service and
billing
|
21
|
|
|
24
|
|
|
44
|
|
|
44
|
|
|
(3)
|
|
|
(13)
|
%
|
|
—
|
|
|
—
|
%
|
Transmission
|
15
|
|
|
12
|
|
|
26
|
|
|
24
|
|
|
3
|
|
|
25
|
%
|
|
2
|
|
|
8
|
%
|
Total Pandora cost of
services
|
285
|
|
|
274
|
|
|
540
|
|
|
530
|
|
|
11
|
|
|
4
|
%
|
|
10
|
|
|
2
|
%
|
Total consolidated
cost of services
|
888
|
|
|
911
|
|
|
1,721
|
|
|
1,701
|
|
|
(23)
|
|
|
(3)
|
%
|
|
20
|
|
|
1
|
%
|
Subscriber
acquisition costs
|
104
|
|
|
120
|
|
|
212
|
|
|
243
|
|
|
(16)
|
|
|
(13)
|
%
|
|
(31)
|
|
|
(13)
|
%
|
Sales and
marketing
|
232
|
|
|
217
|
|
|
451
|
|
|
423
|
|
|
15
|
|
|
7
|
%
|
|
28
|
|
|
7
|
%
|
Engineering, design
and development
|
74
|
|
|
64
|
|
|
142
|
|
|
126
|
|
|
10
|
|
|
16
|
%
|
|
16
|
|
|
13
|
%
|
General and
administrative
|
120
|
|
|
133
|
|
|
271
|
|
|
262
|
|
|
(13)
|
|
|
(10)
|
%
|
|
9
|
|
|
3
|
%
|
Depreciation and
amortization
|
119
|
|
|
116
|
|
|
241
|
|
|
229
|
|
|
3
|
|
|
3
|
%
|
|
12
|
|
|
5
|
%
|
Total operating
expenses
|
1,537
|
|
|
1,561
|
|
|
3,038
|
|
|
2,984
|
|
|
(24)
|
|
|
(2)
|
%
|
|
54
|
|
|
2
|
%
|
Income from
operations
|
442
|
|
|
258
|
|
|
801
|
|
|
532
|
|
|
184
|
|
|
71
|
%
|
|
269
|
|
|
51
|
%
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(97)
|
|
|
(93)
|
|
|
(189)
|
|
|
(190)
|
|
|
4
|
|
|
4
|
%
|
|
(1)
|
|
|
(1)
|
%
|
Loss on
extinguishment of debt
|
—
|
|
|
(15)
|
|
|
(1)
|
|
|
(17)
|
|
|
(15)
|
|
|
(100)
|
%
|
|
(16)
|
|
|
(94)
|
%
|
Other (expense)
income
|
(3)
|
|
|
4
|
|
|
(1)
|
|
|
11
|
|
|
(7)
|
|
|
(175)
|
%
|
|
(12)
|
|
|
(109)
|
%
|
Total other (expense)
income
|
(100)
|
|
|
(104)
|
|
|
(191)
|
|
|
(196)
|
|
|
(4)
|
|
|
(4)
|
%
|
|
5
|
|
|
3
|
%
|
Income before income
taxes
|
342
|
|
|
154
|
|
|
610
|
|
|
336
|
|
|
188
|
|
|
122
|
%
|
|
274
|
|
|
82
|
%
|
Income tax
expense
|
(77)
|
|
|
(11)
|
|
|
(164)
|
|
|
(45)
|
|
|
(66)
|
|
|
(600)
|
%
|
|
(119)
|
|
|
(264)
|
%
|
Net income
|
$
|
265
|
|
|
$
|
143
|
|
|
$
|
446
|
|
|
$
|
291
|
|
|
$
|
122
|
|
|
85
|
%
|
|
$
|
155
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
618
|
|
|
$
|
507
|
|
|
$
|
1,184
|
|
|
$
|
954
|
|
|
$
|
111
|
|
|
22
|
%
|
|
$
|
230
|
|
|
24
|
%
|
Footnotes to Results of Operations
The following tables reconcile our results of operations as
reported to our pro forma results of operations for the
three months ended June 30, 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 and associated tax
impacts.
|
Unaudited for the
Three Months Ended June 30, 2019
|
(in
millions)
|
As
Reported
|
|
Predecessor
Financial
Information
|
|
Purchase Price
Accounting
Adjustments
|
|
Ref
|
|
Pro
Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,402
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,402
|
|
Advertising
revenue
|
52
|
|
|
—
|
|
|
—
|
|
|
|
|
52
|
|
Equipment
revenue
|
41
|
|
|
—
|
|
|
—
|
|
|
|
|
41
|
|
Other
revenue
|
41
|
|
|
—
|
|
|
2
|
|
|
(a)
|
|
43
|
|
Total Sirius XM
revenue
|
1,536
|
|
|
—
|
|
|
2
|
|
|
|
|
1,538
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
135
|
|
|
—
|
|
|
—
|
|
|
|
|
135
|
|
Advertising
revenue
|
306
|
|
|
—
|
|
|
—
|
|
|
|
|
306
|
|
Total Pandora
revenue
|
441
|
|
|
—
|
|
|
—
|
|
|
|
|
441
|
|
Total consolidated
revenue
|
1,977
|
|
|
—
|
|
|
2
|
|
|
|
|
1,979
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
360
|
|
|
—
|
|
|
—
|
|
|
|
|
360
|
|
Programming and
content
|
113
|
|
|
—
|
|
|
—
|
|
|
|
|
113
|
|
Customer service and
billing
|
99
|
|
|
—
|
|
|
—
|
|
|
|
|
99
|
|
Transmission
|
25
|
|
|
—
|
|
|
—
|
|
|
|
|
25
|
|
Cost of
equipment
|
6
|
|
|
—
|
|
|
—
|
|
|
|
|
6
|
|
Total Sirius XM cost
of services
|
603
|
|
|
—
|
|
|
—
|
|
|
|
|
603
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
240
|
|
|
—
|
|
|
6
|
|
|
(b)
|
|
246
|
|
Programming and
content
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
3
|
|
Customer service and
billing
|
21
|
|
|
—
|
|
|
—
|
|
|
|
|
21
|
|
Transmission
|
15
|
|
|
—
|
|
|
—
|
|
|
|
|
15
|
|
Total Pandora cost of
services
|
279
|
|
|
—
|
|
|
6
|
|
|
|
|
285
|
|
Total consolidated
cost of services
|
882
|
|
|
—
|
|
|
6
|
|
|
|
|
888
|
|
Subscriber
acquisition costs
|
104
|
|
|
—
|
|
|
—
|
|
|
|
|
104
|
|
Sales and
marketing
|
232
|
|
|
—
|
|
|
—
|
|
|
|
|
232
|
|
Engineering, design
and development
|
74
|
|
|
—
|
|
|
—
|
|
|
|
|
74
|
|
General and
administrative
|
120
|
|
|
—
|
|
|
—
|
|
|
|
|
120
|
|
Depreciation and
amortization
|
119
|
|
|
—
|
|
|
—
|
|
|
|
|
119
|
|
Acquisition and other
related costs
|
7
|
|
|
—
|
|
|
(7)
|
|
|
(c)
|
|
—
|
|
Total operating
expenses
|
1,538
|
|
|
—
|
|
|
(1)
|
|
|
|
|
1,537
|
|
Income (loss) from
operations
|
439
|
|
|
—
|
|
|
3
|
|
|
|
|
442
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(97)
|
|
|
—
|
|
|
—
|
|
|
|
|
(97)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Other (expense)
income
|
(3)
|
|
|
—
|
|
|
—
|
|
|
|
|
(3)
|
|
Total other (expense)
income
|
(100)
|
|
|
—
|
|
|
—
|
|
|
|
|
(100)
|
|
Income (loss) before
income taxes
|
339
|
|
|
—
|
|
|
3
|
|
|
|
|
342
|
|
Income tax
expense
|
(76)
|
|
|
—
|
|
|
(1)
|
|
|
(d)
|
|
(77)
|
|
Net income
|
$
|
263
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
|
$
|
265
|
|
|
|
(a)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(b)
|
This adjustment
includes the impact of additional expense associated with minimum
guarantee royalty contracts recorded as part of the Pandora
Acquisition.
|
(c)
|
This adjustment
eliminates the impact of acquisition and other related
costs.
|
(d)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at June 30, 2019 to the pro forma adjustments of
$3.
|
|
Unaudited for the
Three Months Ended June 30, 2018
|
(in
millions)
|
As
Reported
|
|
Predecessor
Financial
Information (e)
|
|
Purchase Price
Accounting and Pro
Forma Adjustments
|
|
Ref
|
|
Pro
Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,304
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,304
|
|
Advertising
revenue
|
47
|
|
|
—
|
|
|
—
|
|
|
|
|
47
|
|
Equipment
revenue
|
37
|
|
|
—
|
|
|
—
|
|
|
|
|
37
|
|
Other
revenue
|
44
|
|
|
—
|
|
|
2
|
|
|
(f)
|
|
46
|
|
Total Sirius XM
revenue
|
1,432
|
|
|
—
|
|
|
2
|
|
|
|
|
1,434
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
—
|
|
|
114
|
|
|
—
|
|
|
|
|
114
|
|
Advertising
revenue
|
—
|
|
|
271
|
|
|
—
|
|
|
|
|
271
|
|
Total Pandora
revenue
|
—
|
|
|
385
|
|
|
—
|
|
|
|
|
385
|
|
Total consolidated
revenue
|
1,432
|
|
|
385
|
|
|
2
|
|
|
|
|
1,819
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
404
|
|
|
—
|
|
|
—
|
|
|
|
|
404
|
|
Programming and
content
|
106
|
|
|
—
|
|
|
—
|
|
|
|
|
106
|
|
Customer service and
billing
|
95
|
|
|
—
|
|
|
—
|
|
|
|
|
95
|
|
Transmission
|
24
|
|
|
—
|
|
|
—
|
|
|
|
|
24
|
|
Cost of
equipment
|
8
|
|
|
—
|
|
|
—
|
|
|
|
|
8
|
|
Total Sirius XM cost
of services
|
637
|
|
|
—
|
|
|
—
|
|
|
|
|
637
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
—
|
|
|
236
|
|
|
—
|
|
|
|
|
236
|
|
Programming and
content
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
2
|
|
Customer service and
billing
|
—
|
|
|
24
|
|
|
—
|
|
|
|
|
24
|
|
Transmission
|
—
|
|
|
12
|
|
|
—
|
|
|
|
|
12
|
|
Total Pandora cost of
services
|
—
|
|
|
274
|
|
|
—
|
|
|
|
|
274
|
|
Total consolidated
cost of services
|
637
|
|
|
274
|
|
|
—
|
|
|
|
|
911
|
|
Subscriber
acquisition costs
|
120
|
|
|
—
|
|
|
—
|
|
|
|
|
120
|
|
Sales and
marketing
|
119
|
|
|
98
|
|
|
—
|
|
|
|
|
217
|
|
Engineering, design
and development
|
27
|
|
|
37
|
|
|
—
|
|
|
|
|
64
|
|
General and
administrative
|
92
|
|
|
41
|
|
|
—
|
|
|
|
|
133
|
|
Depreciation and
amortization
|
75
|
|
|
14
|
|
|
27
|
|
|
(g)
|
|
116
|
|
Total operating
expenses
|
1,070
|
|
|
464
|
|
|
27
|
|
|
|
|
1,561
|
|
Income from
operations
|
362
|
|
|
(79)
|
|
|
(25)
|
|
|
|
|
258
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(86)
|
|
|
(7)
|
|
|
—
|
|
|
|
|
(93)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(15)
|
|
|
—
|
|
|
|
|
(15)
|
|
Other (expense)
income
|
88
|
|
|
2
|
|
|
(86)
|
|
|
(h)
|
|
4
|
|
Total other (expense)
income
|
2
|
|
|
(20)
|
|
|
(86)
|
|
|
|
|
(104)
|
|
Income before income
taxes
|
364
|
|
|
(99)
|
|
|
(111)
|
|
|
|
|
154
|
|
Income tax
expense
|
(71)
|
|
|
7
|
|
|
53
|
|
|
(i)
|
|
(11)
|
|
Net income
|
$
|
293
|
|
|
$
|
(92)
|
|
|
$
|
(58)
|
|
|
|
|
$
|
143
|
|
|
|
(e)
|
Represents Pandora's
results for the period April 1, 2018 through June 30,
2018.
|
(f)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(g)
|
This adjustment
includes the impact of the additional amortization associated with
the acquired intangible assets recorded as part of the Pandora
Acquisition that are subject to amortization, partially offset by
normal depreciation associated with assets revalued in purchase
accounting.
|
(h)
|
This adjustment
eliminates the unrealized gain for the fair value adjustment of our
preferred stock investment in Pandora.
|
(i)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at June 30, 2018 to the pro forma adjustments of $(111) and
Pandora's loss before income tax of $(99).
|
|
Unaudited for the
Six Months Ended June 30, 2019
|
(in
millions)
|
As
Reported
|
|
Predecessor
Financial
Information (j)
|
|
Purchase Price
Accounting and Pro
Forma Adjustments
|
|
Ref
|
|
Pro
Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
2,772
|
|
|
—
|
|
|
—
|
|
|
|
|
2,772
|
|
Advertising
revenue
|
98
|
|
|
—
|
|
|
—
|
|
|
|
|
98
|
|
Equipment
revenue
|
82
|
|
|
—
|
|
|
—
|
|
|
|
|
82
|
|
Other
revenue
|
77
|
|
|
—
|
|
|
4
|
|
|
(k)
|
|
81
|
|
Total Sirius XM
revenue
|
3,029
|
|
|
—
|
|
|
4
|
|
|
|
|
3,033
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
223
|
|
|
46
|
|
|
—
|
|
|
|
|
269
|
|
Advertising
revenue
|
469
|
|
|
68
|
|
|
—
|
|
|
|
|
537
|
|
Total Pandora
revenue
|
692
|
|
|
114
|
|
|
—
|
|
|
|
|
806
|
|
Total consolidated
revenue
|
3,721
|
|
|
114
|
|
|
4
|
|
|
|
|
3,839
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
707
|
|
|
—
|
|
|
—
|
|
|
|
|
707
|
|
Programming and
content
|
215
|
|
|
—
|
|
|
—
|
|
|
|
|
215
|
|
Customer service and
billing
|
197
|
|
|
—
|
|
|
—
|
|
|
|
|
197
|
|
Transmission
|
50
|
|
|
—
|
|
|
—
|
|
|
|
|
50
|
|
Cost of
equipment
|
12
|
|
|
—
|
|
|
—
|
|
|
|
|
12
|
|
Total Sirius XM cost
of services
|
1,181
|
|
|
—
|
|
|
—
|
|
|
|
|
1,181
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
385
|
|
|
71
|
|
|
7
|
|
|
(l)
|
|
463
|
|
Programming and
content
|
7
|
|
|
—
|
|
|
—
|
|
|
|
|
7
|
|
Customer service and
billing
|
36
|
|
|
8
|
|
|
—
|
|
|
|
|
44
|
|
Transmission
|
21
|
|
|
5
|
|
|
—
|
|
|
|
|
26
|
|
Total Pandora cost of
services
|
449
|
|
|
84
|
|
|
7
|
|
|
|
|
540
|
|
Total consolidated
cost of services
|
1,630
|
|
|
84
|
|
|
7
|
|
|
|
|
1,721
|
|
Subscriber
acquisition costs
|
212
|
|
|
—
|
|
|
—
|
|
|
|
|
212
|
|
Sales and
marketing
|
415
|
|
|
36
|
|
|
—
|
|
|
|
|
451
|
|
Engineering, design
and development
|
128
|
|
|
14
|
|
|
—
|
|
|
|
|
142
|
|
General and
administrative
|
255
|
|
|
16
|
|
|
—
|
|
|
|
|
271
|
|
Depreciation and
amortization
|
226
|
|
|
6
|
|
|
9
|
|
|
(m)
|
|
241
|
|
Acquisition and other
related costs
|
83
|
|
|
1
|
|
|
(84)
|
|
|
(n)
|
|
—
|
|
Total operating
expenses
|
2,949
|
|
|
157
|
|
|
(68)
|
|
|
|
|
3,038
|
|
Income (loss) from
operations
|
772
|
|
|
(43)
|
|
|
72
|
|
|
|
|
801
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(187)
|
|
|
(2)
|
|
|
—
|
|
|
|
|
(189)
|
|
Loss on
extinguishment of debt
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
(1)
|
|
Other (expense)
income
|
(2)
|
|
|
1
|
|
|
—
|
|
|
|
|
(1)
|
|
Total other (expense)
income
|
(190)
|
|
|
(1)
|
|
|
—
|
|
|
|
|
(191)
|
|
Income (loss) before
income taxes
|
582
|
|
|
(44)
|
|
|
72
|
|
|
|
|
610
|
|
Income tax
expense
|
(157)
|
|
|
—
|
|
|
(7)
|
|
|
(o)
|
|
(164)
|
|
Net income
|
425
|
|
|
(44)
|
|
|
65
|
|
|
|
|
446
|
|
|
|
(j)
|
Represents Pandora's
results for the period January 1, 2019 through January 31,
2019.
|
(k)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(l)
|
This adjustment
includes the impact of additional expense associated with minimum
guarantee royalty contracts recorded as part of the Pandora
Acquisition.
|
(m)
|
This adjustment
includes the impact of the additional amortization associated with
the acquired intangible assets recorded as part of the Pandora
Acquisition that are subject to amortization, partially offset by
normal depreciation associated with assets revalued in purchase
accounting.
|
(n)
|
This adjustment
eliminates the impact of acquisition and other related
costs.
|
(o)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at June 30, 2019 to the pro forma adjustments of $72 and
Pandora's pre-acquisition loss before income tax of
$(44).
|
|
Unaudited for the
Six Months Ended June 30, 2018
|
(in
millions)
|
As
Reported
|
|
Predecessor
Financial
Information (p)
|
|
Purchase Price
Accounting and Pro
Forma Adjustments
|
|
Ref
|
|
Pro
Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
2,562
|
|
|
—
|
|
|
—
|
|
|
|
|
2,562
|
|
Advertising
revenue
|
89
|
|
|
—
|
|
|
—
|
|
|
|
|
89
|
|
Equipment
revenue
|
72
|
|
|
—
|
|
|
—
|
|
|
|
|
72
|
|
Other
revenue
|
84
|
|
|
—
|
|
|
5
|
|
|
(q)
|
|
89
|
|
Total Sirius XM
revenue
|
2,807
|
|
|
—
|
|
|
5
|
|
|
|
|
2,812
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
—
|
|
|
218
|
|
|
—
|
|
|
|
|
218
|
|
Advertising
revenue
|
—
|
|
|
486
|
|
|
—
|
|
|
|
|
486
|
|
Total Pandora
revenue
|
—
|
|
|
704
|
|
|
—
|
|
|
|
|
704
|
|
Total consolidated
revenue
|
2,807
|
|
|
704
|
|
|
5
|
|
|
|
|
3,516
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
714
|
|
|
—
|
|
|
—
|
|
|
|
|
714
|
|
Programming and
content
|
207
|
|
|
—
|
|
|
—
|
|
|
|
|
207
|
|
Customer service and
billing
|
189
|
|
|
—
|
|
|
—
|
|
|
|
|
189
|
|
Transmission
|
46
|
|
|
—
|
|
|
—
|
|
|
|
|
46
|
|
Cost of
equipment
|
15
|
|
|
—
|
|
|
—
|
|
|
|
|
15
|
|
Total Sirius XM cost
of services
|
1,171
|
|
|
—
|
|
|
—
|
|
|
|
|
1,171
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
—
|
|
|
458
|
|
|
—
|
|
|
|
|
458
|
|
Programming and
content
|
—
|
|
|
4
|
|
|
—
|
|
|
|
|
4
|
|
Customer service and
billing
|
—
|
|
|
44
|
|
|
—
|
|
|
|
|
44
|
|
Transmission
|
—
|
|
|
24
|
|
|
—
|
|
|
|
|
24
|
|
Total Pandora cost of
services
|
—
|
|
|
530
|
|
|
—
|
|
|
|
|
530
|
|
Total consolidated
cost of services
|
1,171
|
|
|
530
|
|
|
—
|
|
|
|
|
1,701
|
|
Subscriber
acquisition costs
|
243
|
|
|
—
|
|
|
—
|
|
|
|
|
243
|
|
Sales and
marketing
|
226
|
|
|
197
|
|
|
—
|
|
|
|
|
423
|
|
Engineering, design
and development
|
58
|
|
|
68
|
|
|
—
|
|
|
|
|
126
|
|
General and
administrative
|
177
|
|
|
85
|
|
|
—
|
|
|
|
|
262
|
|
Depreciation and
amortization
|
147
|
|
|
28
|
|
|
54
|
|
|
(r)
|
|
229
|
|
Total operating
expenses
|
2,022
|
|
|
908
|
|
|
54
|
|
|
|
|
2,984
|
|
Income (loss) from
operations
|
785
|
|
|
(204)
|
|
|
(49)
|
|
|
|
|
532
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(176)
|
|
|
(14)
|
|
|
—
|
|
|
|
|
(190)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(17)
|
|
|
—
|
|
|
|
|
(17)
|
|
Other (expense)
income
|
124
|
|
|
4
|
|
|
(117)
|
|
|
(s)
|
|
11
|
|
Total other (expense)
income
|
(52)
|
|
|
(27)
|
|
|
(117)
|
|
|
|
|
(196)
|
|
Income (loss) before
income taxes
|
733
|
|
|
(231)
|
|
|
(166)
|
|
|
|
|
336
|
|
Income tax
expense
|
(151)
|
|
|
7
|
|
|
99
|
|
|
(t)
|
|
(45)
|
|
Net income
|
582
|
|
|
(224)
|
|
|
(67)
|
|
|
|
|
291
|
|
|
|
(p)
|
Represents Pandora's
results for the period January 1, 2018 through June 30,
2018.
|
(q)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(r)
|
This adjustment
includes the impact of the additional amortization associated with
the acquired intangible assets recorded as part of the Pandora
Acquisition that are subject to amortization, partially offset by
normal depreciation associated with assets revalued in purchase
accounting.
|
(s)
|
This adjustment
eliminates the unrealized gain for the fair value adjustment of our
preferred stock investment in Pandora.
|
(t)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at June 30, 2018 to the pro forma adjustments of $(166) and
Pandora's loss before income tax of $(231).
|
|
|
|
|
|
|
|
|
|
2019 vs 2018
Change
|
(in
millions)
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
Three
Months
|
|
Six
Months
|
Sirius XM:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Revenue
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,402
|
|
|
$
|
1,304
|
|
|
2,772
|
|
|
2,562
|
|
|
$
|
98
|
|
|
8
|
%
|
|
$
|
210
|
|
|
8
|
%
|
Advertising
revenue
|
52
|
|
|
47
|
|
|
98
|
|
|
89
|
|
|
5
|
|
|
11
|
%
|
|
9
|
|
|
10
|
%
|
Equipment
revenue
|
41
|
|
|
37
|
|
|
82
|
|
|
72
|
|
|
4
|
|
|
11
|
%
|
|
10
|
|
|
14
|
%
|
Other
revenue
|
43
|
|
|
46
|
|
|
81
|
|
|
89
|
|
|
(3)
|
|
|
(7)
|
%
|
|
(8)
|
|
|
(9)
|
%
|
Total Sirius XM
revenue
|
1,538
|
|
|
1,434
|
|
|
3,033
|
|
|
2,812
|
|
|
104
|
|
|
7
|
%
|
|
221
|
|
|
8
|
%
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties (a)
|
360
|
|
|
335
|
|
|
707
|
|
|
645
|
|
|
25
|
|
|
7
|
%
|
|
62
|
|
|
10
|
%
|
Programming and
content (b)
|
106
|
|
|
96
|
|
|
201
|
|
|
189
|
|
|
10
|
|
|
10
|
%
|
|
12
|
|
|
6
|
%
|
Customer service and
billing (b)
|
98
|
|
|
94
|
|
|
195
|
|
|
187
|
|
|
4
|
|
|
4
|
%
|
|
8
|
|
|
4
|
%
|
Transmission
(b)
|
24
|
|
|
22
|
|
|
48
|
|
|
43
|
|
|
2
|
|
|
9
|
%
|
|
5
|
|
|
12
|
%
|
Cost of
equipment
|
6
|
|
|
8
|
|
|
12
|
|
|
15
|
|
|
(2)
|
|
|
(25)
|
%
|
|
(3)
|
|
|
(20)
|
%
|
Total Sirius XM cost
of services
|
594
|
|
|
555
|
|
|
1,163
|
|
|
1,079
|
|
|
39
|
|
|
7
|
%
|
|
84
|
|
|
8
|
%
|
Gross
Profit
|
$
|
944
|
|
|
$
|
879
|
|
|
$
|
1,870
|
|
|
$
|
1,733
|
|
|
$
|
65
|
|
|
7
|
%
|
|
$
|
137
|
|
|
8
|
%
|
Gross Margin
%
|
61
|
%
|
|
61
|
%
|
|
62
|
%
|
|
62
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
(a)
|
For the three and six
months ended June 30, 2018 revenue share and royalties
includes $69 related to the legal settlement that resolved all
outstanding claims, including ongoing audits, under Sirius XM's
statutory license for sound recordings for the period January 1,
2007 through December 31, 2017.
|
(b)
|
For the three months
ended June 30, 2019, we have excluded share-based compensation
expense of $7 related to programming and content, $1 related to
customer service and billing and $1 related to transmission.
For the three months ended June 30, 2018, we have excluded
share-based compensation expense of $10 related to programming and
content, $1 related to customer service and billing and $2 related
to transmission. For the six months ended June 30, 2019,
we have excluded share-based compensation expense of $14 related to
programming and content, $2 related to customer service and billing
and $2 related to transmission. For the six months ended
June 30, 2018, we have excluded share-based compensation
expense of $18 related to programming and content, $2 related to
customer service and billing and $3 related to
transmission.
|
|
|
|
|
|
|
|
|
|
2019 vs 2018
Change
|
(in
millions)
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
Three
Months
|
|
Six
Months
|
Pandora:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Revenue
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
135
|
|
|
114
|
|
|
269
|
|
|
218
|
|
|
$
|
21
|
|
|
18
|
%
|
|
$
|
51
|
|
|
23
|
%
|
Advertising
revenue
|
306
|
|
|
271
|
|
|
537
|
|
|
486
|
|
|
35
|
|
|
13
|
%
|
|
51
|
|
|
10
|
%
|
Total Pandora
revenue
|
441
|
|
|
385
|
|
|
806
|
|
|
704
|
|
|
56
|
|
|
15
|
%
|
|
102
|
|
|
14
|
%
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
246
|
|
|
236
|
|
|
463
|
|
|
458
|
|
|
10
|
|
|
4
|
%
|
|
5
|
|
|
1
|
%
|
Programming and
content
|
3
|
|
|
2
|
|
|
7
|
|
|
4
|
|
|
1
|
|
|
50
|
%
|
|
3
|
|
|
75
|
%
|
Customer service and
billing
|
21
|
|
|
24
|
|
|
44
|
|
|
44
|
|
|
(3)
|
|
|
(13)
|
%
|
|
—
|
|
|
—
|
%
|
Transmission
(c)
|
14
|
|
|
11
|
|
|
24
|
|
|
22
|
|
|
3
|
|
|
27
|
%
|
|
2
|
|
|
9
|
%
|
Total Pandora cost of
services
|
284
|
|
|
273
|
|
|
538
|
|
|
528
|
|
|
11
|
|
|
4
|
%
|
|
10
|
|
|
2
|
%
|
Gross
Profit
|
$
|
157
|
|
|
$
|
112
|
|
|
$
|
268
|
|
|
$
|
176
|
|
|
$
|
45
|
|
|
40
|
%
|
|
$
|
92
|
|
|
52
|
%
|
Gross Margin
%
|
36
|
%
|
|
29
|
%
|
|
33
|
%
|
|
25
|
%
|
|
7
|
%
|
|
24
|
%
|
|
8
|
%
|
|
32
|
%
|
|
|
(c)
|
For the three months
ended June 30, 2019, we have excluded share-based compensation
expense of $1 related to transmission. For the three months
ended June 30, 2018, we have excluded share-based compensation
expense of $1 related to transmission. For the six months
ended June 30, 2019, we have excluded share-based compensation
expense of $2 related to transmission. For the six months
ended June 30, 2018, we have excluded share-based compensation
expense of $2 related to transmission.
|
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 June 30,
2019 compared to June 30, 2018:
|
As of June
30,
|
|
2019 vs 2018
Change
|
(subscribers in
thousands)
|
2019
|
|
2018
(1)
|
|
Amount
|
|
%
|
Sirius
XM
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
29,336
|
|
|
28,203
|
|
|
1,133
|
|
|
4
|
%
|
Paid promotional
subscribers
|
5,009
|
|
|
5,292
|
|
|
(283)
|
|
|
(5)
|
%
|
Ending
subscribers
|
34,345
|
|
|
33,495
|
|
|
850
|
|
|
3
|
%
|
Traffic
users
|
9,150
|
|
|
8,118
|
|
|
1,032
|
|
|
13
|
%
|
Sirius XM Canada
subscribers
|
2,702
|
|
|
2,648
|
|
|
54
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Pandora
|
|
|
|
|
|
|
|
Active users - all
services
|
64,948
|
|
|
71,435
|
|
|
(6,487)
|
|
|
(9)
|
%
|
Self-pay
subscribers
|
6,224
|
|
|
5,976
|
|
|
248
|
|
|
4
|
%
|
Paid promotional
subscribers
|
733
|
|
|
—
|
|
|
733
|
|
|
nm
|
|
Ending
subscribers
|
6,957
|
|
|
5,976
|
|
|
981
|
|
|
16
|
%
|
|
|
(1)
|
Includes Pandora's
results as of June 30, 2018.
|
The following table contains our Non-GAAP financial and
operating performance measures which are based on our adjusted
results of operations for the three and six months ended
June 30, 2019 and 2018:
|
|
|
|
|
|
|
|
|
For the 2019 vs
2018 Change
|
|
For the Three
Months Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
Three
Months
|
|
Six
Months
|
(subscribers in
thousands)
|
2019
|
|
2018
(2)
|
|
2019
(1)
|
|
2018
(3)
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Sirius
XM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
290
|
|
|
483
|
|
|
421
|
|
|
690
|
|
|
(193)
|
|
|
(40)
|
%
|
|
(269)
|
|
|
(39)
|
%
|
Paid promotional
subscribers
|
(116)
|
|
|
(54)
|
|
|
(115)
|
|
|
69
|
|
|
(62)
|
|
|
115
|
%
|
|
(184)
|
|
|
(267)
|
%
|
Net
additions
|
174
|
|
|
429
|
|
|
306
|
|
|
759
|
|
|
(255)
|
|
|
(59)
|
%
|
|
(453)
|
|
|
(60)
|
%
|
Weighted average
number of subscribers
|
34,126
|
|
|
33,197
|
|
|
34,071
|
|
|
33,013
|
|
|
929
|
|
|
3
|
%
|
|
1,058
|
|
|
3
|
%
|
Average self-pay
monthly churn
|
1.7
|
%
|
|
1.6
|
%
|
|
1.7
|
%
|
|
1.7
|
%
|
|
0.1
|
%
|
|
6
|
%
|
|
—
|
|
|
—
|
%
|
ARPU
(4)
|
$
|
13.83
|
|
|
$
|
13.30
|
|
|
$
|
13.67
|
|
|
$
|
13.13
|
|
|
$
|
0.53
|
|
|
4
|
%
|
|
$
|
0.54
|
|
|
4
|
%
|
SAC, per
installation
|
$
|
22.74
|
|
|
$
|
27.54
|
|
|
$
|
23.40
|
|
|
$
|
27.86
|
|
|
$
|
(4.80)
|
|
|
(17)
|
%
|
|
$
|
(4.46)
|
|
|
(16)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pandora
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
64
|
|
|
350
|
|
|
310
|
|
|
498
|
|
|
(286)
|
|
|
(82)
|
%
|
|
(188)
|
|
|
(38)
|
%
|
Paid promotional
subscribers
|
(3)
|
|
|
—
|
|
|
(23)
|
|
|
—
|
|
|
(3)
|
|
|
nm
|
|
|
(23)
|
|
|
nm
|
|
Net
additions
|
61
|
|
|
350
|
|
|
287
|
|
|
498
|
|
|
(289)
|
|
|
(83)
|
%
|
|
(211)
|
|
|
(42)
|
%
|
Weighted average
number of subscribers
|
6,873
|
|
|
5,803
|
|
|
6,791
|
|
|
5,663
|
|
|
1,070
|
|
|
18
|
%
|
|
1,128
|
|
|
20
|
%
|
ARPU
|
$
|
6.53
|
|
|
$
|
6.52
|
|
|
$
|
6.61
|
|
|
$
|
6.41
|
|
|
$
|
0.01
|
|
|
—
|
%
|
|
$
|
0.20
|
|
|
3
|
%
|
Ad supported listener
hours (in billions)
|
3.49
|
|
|
3.86
|
|
|
6.91
|
|
|
7.71
|
|
|
(0.37)
|
|
|
(10)
|
%
|
|
(0.80)
|
|
|
(10)
|
%
|
Advertising revenue
per thousand listener hours (RPM)
|
$
|
80.14
|
|
|
$
|
68.75
|
|
|
$
|
71.46
|
|
|
$
|
62.15
|
|
|
$
|
11.39
|
|
|
17
|
%
|
|
$
|
9.31
|
|
|
15
|
%
|
Licensing costs per
thousand listener hours (LPM)
|
$
|
37.91
|
|
|
$
|
36.87
|
|
|
$
|
37.28
|
|
|
$
|
36.61
|
|
|
$
|
1.04
|
|
|
3
|
%
|
|
$
|
0.67
|
|
|
2
|
%
|
Licensing costs per
paid subscriber (LPU)
|
$
|
4.16
|
|
|
$
|
4.78
|
|
|
$
|
4.06
|
|
|
$
|
4.72
|
|
|
$
|
(0.62)
|
|
|
(13)
|
%
|
|
$
|
(0.66)
|
|
|
(14)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
618
|
|
|
$
|
507
|
|
|
$
|
1,184
|
|
|
$
|
954
|
|
|
$
|
111
|
|
|
22
|
%
|
|
$
|
230
|
|
|
24
|
%
|
Free cash
flow
|
$
|
474
|
|
|
$
|
486
|
|
|
$
|
774
|
|
|
$
|
813
|
|
|
$
|
(12)
|
|
|
(2)
|
%
|
|
$
|
(39)
|
|
|
(5)
|
%
|
|
nm - not
meaningful
|
(1)
|
Includes Pandora's
results for the six month period, inclusive of pre-acquisition
results for the period January 1, 2019 through January 31,
2019.
|
(2)
|
Includes Pandora's
pre-acquisition results for the period April 1, 2018 through June
30, 2018.
|
(3)
|
Includes Pandora's
pre-acquisition results for the period January 1, 2018 through June
30, 2018.
|
(4)
|
ARPU for Sirius XM
excludes subscriber revenue from our connected vehicle services of
$38 and $26 for the three months and $75 and $51 for the six months
ended June 30, 2019 and 2018, respectively.
|
Glossary
Active users - the number of distinct registered
users on the Pandora services, including subscribers, that have
consumed content within the trailing 30 days to the end of the
final calendar month of the period. The number of 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.
Prior to the second quarter of 2018, Pandora defined active users
as the number of distinct registered users, including subscribers,
that have requested audio from Pandora's servers during the
trailing 30 days to the end of the final calendar month of the
period.
Average self-pay monthly churn - the 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 six months
ended June 30, 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, loss on
extinguishment of debt and loss on disposal of assets, 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 unaudited
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:
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
income:
|
$
|
263
|
|
|
$
|
293
|
|
|
$
|
425
|
|
|
$
|
582
|
|
Add back items
excluded from Adjusted EBITDA:
|
|
|
|
|
|
|
|
Legal settlements and
reserves
|
—
|
|
|
69
|
|
|
25
|
|
|
69
|
|
Acquisition and other
related costs (1)
|
7
|
|
|
—
|
|
|
83
|
|
|
—
|
|
Share-based payment
expense (3)
|
57
|
|
|
36
|
|
|
106
|
|
|
70
|
|
Depreciation and
amortization
|
119
|
|
|
75
|
|
|
226
|
|
|
147
|
|
Interest
expense
|
97
|
|
|
86
|
|
|
187
|
|
|
176
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Other expense
(income)
|
3
|
|
|
(88)
|
|
|
2
|
|
|
(124)
|
|
Income tax
expense
|
76
|
|
|
71
|
|
|
157
|
|
|
151
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
2
|
|
|
2
|
|
|
4
|
|
|
5
|
|
Operating
expenses
|
(6)
|
|
|
—
|
|
|
(7)
|
|
|
—
|
|
Pro forma adjustments
(2)
|
—
|
|
|
(37)
|
|
|
(25)
|
|
|
(122)
|
|
Adjusted
EBITDA
|
$
|
618
|
|
|
$
|
507
|
|
|
$
|
1,184
|
|
|
$
|
954
|
|
|
|
(1)
|
Acquisition and other
related costs include $21 of share-based compensation
expense.
|
(2)
|
Pro forma adjustment
for three months ended June 30, 2018 includes Pandora's Net
income for the three months ended June 30, 2018 of $(92) plus
Depreciation and amortization of $14, Share-based payment expense
of $28, Loss on extinguishment of debt of $15, and Interest expense
of $7 offset by Other expense (income) of $2 and Income tax benefit
of $7. Pro forma adjustment for the six months ended
June 30, 2019 includes Pandora's January 2019 Net income of
$(44) plus Depreciation and amortization of $6, Share-based payment
expense of $11, Acquisition and other related costs of $1, and
Interest expense of $2 offset by Other expense (income) of
$1. Pro forma adjustment for six months ended June 30,
2018 includes Pandora's Net income for the six months ended
June 30, 2018 of $(224) plus Depreciation and amortization of
$28, Share-based payment expense of $54, Loss on extinguishment of
debt of $17, and Interest expense of $14 offset by Other expense
(income) of $4 and Income tax benefit of $7.
|
(3)
|
Allocation of
share-based payment expense:
|
|
|
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Programming and
content
|
$
|
7
|
|
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
18
|
|
|
Customer service and
billing
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
Transmission
|
2
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
Sales and
marketing
|
19
|
|
|
6
|
|
|
34
|
|
|
11
|
|
|
Engineering, design
and development
|
13
|
|
|
4
|
|
|
22
|
|
|
8
|
|
|
General and
administrative
|
15
|
|
|
14
|
|
|
31
|
|
|
28
|
|
|
Total share-based
payment expense
|
$
|
57
|
|
|
$
|
36
|
|
|
$
|
106
|
|
|
$
|
70
|
|
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 for 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 unaudited
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:
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash Flow
information
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
545
|
|
|
$
|
579
|
|
|
$
|
941
|
|
|
$
|
994
|
|
Net cash provided by
(used in) investing activities
|
$
|
(75)
|
|
|
$
|
(99)
|
|
|
$
|
209
|
|
|
$
|
(184)
|
|
Net cash used in
financing activities
|
$
|
(317)
|
|
|
$
|
(495)
|
|
|
$
|
(989)
|
|
|
$
|
(815)
|
|
Free Cash
Flow
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
545
|
|
|
$
|
579
|
|
|
$
|
941
|
|
|
$
|
994
|
|
Additions to property
and equipment
|
(70)
|
|
|
(93)
|
|
|
(160)
|
|
|
(174)
|
|
Purchases of other
investments
|
(1)
|
|
|
—
|
|
|
(7)
|
|
|
(7)
|
|
Free cash
flow
|
$
|
474
|
|
|
$
|
486
|
|
|
$
|
774
|
|
|
$
|
813
|
|
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:
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(costs in millions
and installs in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Subscriber
acquisition costs, excluding connected vehicle services
|
$
|
104
|
|
|
$
|
120
|
|
|
$
|
212
|
|
|
$
|
242
|
|
Less: margin from
sales of radios and accessories, excluding connected vehicle
services
|
(34)
|
|
|
(29)
|
|
|
(68)
|
|
|
(56)
|
|
|
$
|
70
|
|
|
$
|
91
|
|
|
$
|
144
|
|
|
$
|
186
|
|
Installations
|
3,078
|
|
|
3,313
|
|
|
6,155
|
|
|
6,693
|
|
SAC, per installation
(a)
|
$
|
22.74
|
|
|
$
|
27.54
|
|
|
$
|
23.40
|
|
|
$
|
27.86
|
|
Ad supported listener hours - is based on the
total bytes served over our 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 world's largest
audio entertainment company, and the premier programmer and
platform for subscription- and advertising-supported audio
products. With the recent addition of Pandora, the largest
streaming music provider in the U.S., SiriusXM reaches more than
100 million people with its audio products. For more about the new
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 and retain
subscribers and listeners, which is uncertain; the effectiveness of
our marketing efforts; our ability to attract advertisers to our
platform and maintain revenue growth; interference to our service
from wireless operations; consumer protection laws and their
enforcement; 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; the security of the personal information about
our customers; 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; our failure
to realize benefits of acquisitions or other strategic initiatives;
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; 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, which is 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
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SOURCE Sirius XM Holdings Inc.