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.
FOURTH QUARTER AND
FULL-YEAR 2019 RESULTS
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in millions,
except per share data)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,569
|
|
|
$
|
1,361
|
|
|
$
|
6,120
|
|
|
$
|
5,264
|
|
Advertising
revenue
|
403
|
|
|
53
|
|
|
1,336
|
|
|
188
|
|
Equipment
revenue
|
46
|
|
|
42
|
|
|
173
|
|
|
155
|
|
Other
revenue
|
44
|
|
|
40
|
|
|
165
|
|
|
164
|
|
Total
revenue
|
2,062
|
|
|
1,496
|
|
|
7,794
|
|
|
5,771
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
607
|
|
|
337
|
|
|
2,291
|
|
|
1,394
|
|
Programming and
content
|
124
|
|
|
103
|
|
|
462
|
|
|
406
|
|
Customer service and
billing
|
123
|
|
|
98
|
|
|
475
|
|
|
382
|
|
Transmission
|
53
|
|
|
26
|
|
|
170
|
|
|
96
|
|
Cost of
equipment
|
9
|
|
|
9
|
|
|
29
|
|
|
31
|
|
Subscriber
acquisition costs
|
114
|
|
|
118
|
|
|
427
|
|
|
470
|
|
Sales and
marketing
|
289
|
|
|
140
|
|
|
937
|
|
|
484
|
|
Engineering, design
and development
|
74
|
|
|
34
|
|
|
280
|
|
|
123
|
|
General and
administrative
|
145
|
|
|
90
|
|
|
524
|
|
|
354
|
|
Depreciation and
amortization
|
124
|
|
|
79
|
|
|
468
|
|
|
301
|
|
Acquisition and other
related costs
|
1
|
|
|
3
|
|
|
84
|
|
|
3
|
|
Total operating
expenses
|
1,663
|
|
|
1,037
|
|
|
6,147
|
|
|
4,044
|
|
Income from
operations
|
399
|
|
|
459
|
|
|
1,647
|
|
|
1,727
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
Interest
expense
|
(99)
|
|
|
(87)
|
|
|
(390)
|
|
|
(350)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
(57)
|
|
|
—
|
|
Other (expense)
income
|
(1)
|
|
|
(38)
|
|
|
(3)
|
|
|
44
|
|
Total other (expense)
income
|
(100)
|
|
|
(125)
|
|
|
(450)
|
|
|
(306)
|
|
Income before income
taxes
|
299
|
|
|
334
|
|
|
1,197
|
|
|
1,421
|
|
Income tax
expense
|
(56)
|
|
|
(83)
|
|
|
(283)
|
|
|
(245)
|
|
Net income
|
$
|
243
|
|
|
$
|
251
|
|
|
$
|
914
|
|
|
$
|
1,176
|
|
Foreign currency
translation adjustment, net of tax
|
5
|
|
|
(19)
|
|
|
14
|
|
|
(29)
|
|
Total comprehensive
income
|
$
|
248
|
|
|
$
|
232
|
|
|
$
|
928
|
|
|
$
|
1,147
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.20
|
|
|
$
|
0.26
|
|
Diluted
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.20
|
|
|
$
|
0.26
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
4,419
|
|
|
4,401
|
|
|
4,501
|
|
|
4,462
|
|
Diluted
|
4,541
|
|
|
4,478
|
|
|
4,616
|
|
|
4,561
|
|
Dividends declared
per common share
|
$
|
0.01331
|
|
|
$
|
0.01210
|
|
|
$
|
0.04961
|
|
|
$
|
0.04510
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
As of December
31,
|
(in millions,
except per share data)
|
2019
|
|
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
106
|
|
|
$
|
54
|
|
Receivables,
net
|
670
|
|
|
233
|
|
Inventory,
net
|
11
|
|
|
22
|
|
Related party current
assets
|
22
|
|
|
11
|
|
Prepaid expenses and
other current assets
|
194
|
|
|
158
|
|
Total current
assets
|
1,003
|
|
|
478
|
|
Property and
equipment, net
|
1,626
|
|
|
1,513
|
|
Intangible assets,
net
|
3,467
|
|
|
2,501
|
|
Goodwill
|
3,843
|
|
|
2,290
|
|
Related party
long-term assets
|
452
|
|
|
960
|
|
Deferred tax
assets
|
153
|
|
|
293
|
|
Operating lease
right-of-use assets
|
466
|
|
|
—
|
|
Other long-term
assets
|
139
|
|
|
138
|
|
Total
assets
|
$
|
11,149
|
|
|
$
|
8,173
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
1,151
|
|
|
$
|
736
|
|
Accrued
interest
|
160
|
|
|
128
|
|
Current portion of
deferred revenue
|
1,930
|
|
|
1,932
|
|
Current maturities of
debt
|
2
|
|
|
3
|
|
Operating lease
current liabilities
|
46
|
|
|
—
|
|
Related party current
liabilities
|
4
|
|
|
4
|
|
Total current
liabilities
|
3,293
|
|
|
2,803
|
|
Long-term deferred
revenue
|
130
|
|
|
149
|
|
Long-term
debt
|
7,842
|
|
|
6,885
|
|
Related party
long-term liabilities
|
—
|
|
|
4
|
|
Deferred tax
liabilities
|
70
|
|
|
47
|
|
Operating lease
liabilities
|
456
|
|
|
—
|
|
Other long-term
liabilities
|
94
|
|
|
102
|
|
Total
liabilities
|
11,885
|
|
|
9,990
|
|
Stockholders' equity
(deficit):
|
|
|
|
Common stock, par
value $0.001 per share; 9,000 shares authorized; 4,412 and 4,346
shares issued; 4,412 and 4,346 outstanding at December 31, 2019 and
December 31, 2018, respectively
|
4
|
|
|
4
|
|
Accumulated other
comprehensive income (loss), net of tax
|
8
|
|
|
(6)
|
|
Additional paid-in
capital
|
395
|
|
|
242
|
|
Treasury stock, at
cost; 0 and 0 shares of common stock at December 31, 2019 and
December 31, 2018, respectively
|
—
|
|
|
—
|
|
Accumulated
deficit
|
(1,143)
|
|
|
(2,057)
|
|
Total stockholders'
equity (deficit)
|
(736)
|
|
|
(1,817)
|
|
Total liabilities and
stockholders' equity (deficit)
|
$
|
11,149
|
|
|
$
|
8,173
|
|
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
|
|
|
|
(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)
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
Cash and cash
equivalents
|
$
|
106
|
|
|
$
|
54
|
|
|
$
|
69
|
|
Restricted cash
included in Other long-term assets
|
14
|
|
|
11
|
|
|
10
|
|
Total cash, cash
equivalents and restricted cash at end of period
|
$
|
120
|
|
|
$
|
65
|
|
|
$
|
79
|
|
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.
|
|
|
|
|
|
|
|
|
2019 vs 2018 Change
|
|
For the Three Months
Ended December 31,
|
|
For the Twelve Months
Ended December 31,
|
|
Three Months
|
|
Twelve Months
|
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Revenue
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,448
|
|
|
$
|
1,361
|
|
|
$
|
5,644
|
|
|
$
|
5,264
|
|
|
$
|
87
|
|
|
6
|
%
|
|
$
|
380
|
|
|
7
|
%
|
Advertising
revenue
|
56
|
|
|
53
|
|
|
205
|
|
|
188
|
|
|
3
|
|
|
6
|
%
|
|
17
|
|
|
9
|
%
|
Equipment
revenue
|
46
|
|
|
42
|
|
|
173
|
|
|
155
|
|
|
4
|
|
|
10
|
%
|
|
18
|
|
|
12
|
%
|
Other
revenue
|
46
|
|
|
42
|
|
|
172
|
|
|
171
|
|
|
4
|
|
|
10
|
%
|
|
1
|
|
|
1
|
%
|
Total Sirius XM
revenue
|
1,596
|
|
|
1,498
|
|
|
6,194
|
|
|
5,778
|
|
|
98
|
|
|
7
|
%
|
|
416
|
|
|
7
|
%
|
Pandora:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
126
|
|
|
133
|
|
|
527
|
|
|
478
|
|
|
(7)
|
|
|
(5)
|
%
|
|
49
|
|
|
10
|
%
|
Advertising
revenue
|
348
|
|
|
314
|
|
|
1,200
|
|
|
1,092
|
|
|
34
|
|
|
11
|
%
|
|
108
|
|
|
10
|
%
|
Total Pandora
revenue
|
474
|
|
|
447
|
|
|
1,727
|
|
|
1,570
|
|
|
27
|
|
|
6
|
%
|
|
157
|
|
|
10
|
%
|
Total consolidated
revenue
|
2,070
|
|
|
1,945
|
|
|
7,921
|
|
|
7,348
|
|
|
125
|
|
|
6
|
%
|
|
573
|
|
|
8
|
%
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
366
|
|
|
337
|
|
|
1,431
|
|
|
1,394
|
|
|
29
|
|
|
9
|
%
|
|
37
|
|
|
3
|
%
|
Programming and
content
|
116
|
|
|
103
|
|
|
444
|
|
|
406
|
|
|
13
|
|
|
13
|
%
|
|
38
|
|
|
9
|
%
|
Customer service and
billing
|
102
|
|
|
98
|
|
|
398
|
|
|
382
|
|
|
4
|
|
|
4
|
%
|
|
16
|
|
|
4
|
%
|
Transmission
|
33
|
|
|
26
|
|
|
112
|
|
|
96
|
|
|
7
|
|
|
27
|
%
|
|
16
|
|
|
17
|
%
|
Cost of
equipment
|
9
|
|
|
9
|
|
|
29
|
|
|
31
|
|
|
—
|
|
|
—
|
%
|
|
(2)
|
|
|
(6)
|
%
|
Total Sirius XM cost
of services
|
626
|
|
|
573
|
|
|
2,414
|
|
|
2,309
|
|
|
53
|
|
|
9
|
%
|
|
105
|
|
|
5
|
%
|
Pandora:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
244
|
|
|
235
|
|
|
945
|
|
|
929
|
|
|
9
|
|
|
4
|
%
|
|
16
|
|
|
2
|
%
|
Programming and
content
|
8
|
|
|
4
|
|
|
18
|
|
|
11
|
|
|
4
|
|
|
100
|
%
|
|
7
|
|
|
64
|
%
|
Customer service and
billing
|
21
|
|
|
26
|
|
|
85
|
|
|
95
|
|
|
(5)
|
|
|
(19)
|
%
|
|
(10)
|
|
|
(11)
|
%
|
Transmission
|
20
|
|
|
12
|
|
|
63
|
|
|
50
|
|
|
8
|
|
|
67
|
%
|
|
13
|
|
|
26
|
%
|
Total Pandora cost of
services
|
293
|
|
|
277
|
|
|
1,111
|
|
|
1,085
|
|
|
16
|
|
|
6
|
%
|
|
26
|
|
|
2
|
%
|
Total consolidated
cost of services
|
919
|
|
|
850
|
|
|
3,525
|
|
|
3,394
|
|
|
69
|
|
|
8
|
%
|
|
131
|
|
|
4
|
%
|
Subscriber
acquisition costs
|
114
|
|
|
118
|
|
|
427
|
|
|
470
|
|
|
(4)
|
|
|
(3)
|
%
|
|
(43)
|
|
|
(9)
|
%
|
Sales and
marketing
|
289
|
|
|
245
|
|
|
973
|
|
|
883
|
|
|
44
|
|
|
18
|
%
|
|
90
|
|
|
10
|
%
|
Engineering, design
and development
|
74
|
|
|
71
|
|
|
294
|
|
|
266
|
|
|
3
|
|
|
4
|
%
|
|
28
|
|
|
11
|
%
|
General and
administrative
|
145
|
|
|
129
|
|
|
540
|
|
|
517
|
|
|
16
|
|
|
12
|
%
|
|
23
|
|
|
4
|
%
|
Depreciation and
amortization
|
124
|
|
|
120
|
|
|
483
|
|
|
465
|
|
|
4
|
|
|
3
|
%
|
|
18
|
|
|
4
|
%
|
Total operating
expenses
|
1,665
|
|
|
1,533
|
|
|
6,242
|
|
|
5,995
|
|
|
132
|
|
|
9
|
%
|
|
247
|
|
|
4
|
%
|
Income from operations
|
405
|
|
|
412
|
|
|
1,679
|
|
|
1,353
|
|
|
(7)
|
|
|
(2)
|
%
|
|
326
|
|
|
24
|
%
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(99)
|
|
|
(93)
|
|
|
(392)
|
|
|
(377)
|
|
|
(6)
|
|
|
(6)
|
%
|
|
(15)
|
|
|
(4)
|
%
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
(57)
|
|
|
(17)
|
|
|
—
|
|
|
nm
|
|
(40)
|
|
|
(235)
|
%
|
Other
(expense) income
|
(1)
|
|
|
(6)
|
|
|
(2)
|
|
|
8
|
|
|
5
|
|
|
(83)
|
%
|
|
(10)
|
|
|
(125)
|
%
|
Total other (expense)
income
|
(100)
|
|
|
(99)
|
|
|
(451)
|
|
|
(386)
|
|
|
(1)
|
|
|
(1)
|
%
|
|
(65)
|
|
|
(17)
|
%
|
Income before income
taxes
|
305
|
|
|
313
|
|
|
1,228
|
|
|
967
|
|
|
(8)
|
|
|
(3)
|
%
|
|
261
|
|
|
27
|
%
|
Income tax
expense
|
(58)
|
|
|
(77)
|
|
|
(290)
|
|
|
(123)
|
|
|
19
|
|
|
25
|
%
|
|
(167)
|
|
|
(136)
|
%
|
Net income
|
$
|
247
|
|
|
$
|
236
|
|
|
$
|
938
|
|
|
$
|
844
|
|
|
$
|
11
|
|
|
5
|
%
|
|
$
|
94
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
587
|
|
|
$
|
593
|
|
|
$
|
2,427
|
|
|
$
|
2,131
|
|
|
$
|
(6)
|
|
|
(1)
|
%
|
|
$
|
296
|
|
|
14
|
%
|
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.
|
Unaudited for the Three Months Ended December 31,
2019
|
(in millions)
|
As Reported
|
|
Predecessor
Financial
Information
|
|
Purchase
Price
Accounting
Adjustments
|
|
Ref
|
|
Pro Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,448
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,448
|
|
Advertising
revenue
|
56
|
|
|
—
|
|
|
—
|
|
|
|
|
56
|
|
Equipment
revenue
|
46
|
|
|
—
|
|
|
—
|
|
|
|
|
46
|
|
Other
revenue
|
44
|
|
|
—
|
|
|
2
|
|
|
(a)
|
|
46
|
|
Total Sirius XM
revenue
|
1,594
|
|
|
—
|
|
|
2
|
|
|
|
|
1,596
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
121
|
|
|
—
|
|
|
5
|
|
|
(b)
|
|
126
|
|
Advertising
revenue
|
347
|
|
|
—
|
|
|
1
|
|
|
(b)
|
|
348
|
|
Total Pandora
revenue
|
468
|
|
|
—
|
|
|
6
|
|
|
|
|
474
|
|
Total consolidated
revenue
|
2,062
|
|
|
—
|
|
|
8
|
|
|
|
|
2,070
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
366
|
|
|
—
|
|
|
—
|
|
|
|
|
366
|
|
Programming and
content
|
116
|
|
|
—
|
|
|
—
|
|
|
|
|
116
|
|
Customer service and
billing
|
102
|
|
|
—
|
|
|
—
|
|
|
|
|
102
|
|
Transmission
|
33
|
|
|
—
|
|
|
—
|
|
|
|
|
33
|
|
Cost of
equipment
|
9
|
|
|
—
|
|
|
—
|
|
|
|
|
9
|
|
Total Sirius XM cost
of services
|
626
|
|
|
—
|
|
|
—
|
|
|
|
|
626
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
241
|
|
|
—
|
|
|
3
|
|
|
(c)
|
|
244
|
|
Programming and
content
|
8
|
|
|
—
|
|
|
—
|
|
|
|
|
8
|
|
Customer service and
billing
|
21
|
|
|
—
|
|
|
—
|
|
|
|
|
21
|
|
Transmission
|
20
|
|
|
—
|
|
|
—
|
|
|
|
|
20
|
|
Total Pandora cost of
services
|
290
|
|
|
—
|
|
|
3
|
|
|
|
|
293
|
|
Total consolidated
cost of services
|
916
|
|
|
—
|
|
|
3
|
|
|
|
|
919
|
|
Subscriber
acquisition costs
|
114
|
|
|
—
|
|
|
—
|
|
|
|
|
114
|
|
Sales and
marketing
|
289
|
|
|
—
|
|
|
—
|
|
|
|
|
289
|
|
Engineering, design
and development
|
74
|
|
|
—
|
|
|
—
|
|
|
|
|
74
|
|
General and
administrative
|
145
|
|
|
—
|
|
|
—
|
|
|
|
|
145
|
|
Depreciation and
amortization
|
124
|
|
|
—
|
|
|
—
|
|
|
|
|
124
|
|
Acquisition and other
related costs
|
1
|
|
|
—
|
|
|
(1)
|
|
|
|
|
—
|
|
Total operating
expenses
|
1,663
|
|
|
—
|
|
|
2
|
|
|
|
|
1,665
|
|
Income (loss) from
operations
|
399
|
|
|
—
|
|
|
6
|
|
|
|
|
405
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(99)
|
|
|
—
|
|
|
—
|
|
|
|
|
(99)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Other
(expense) income
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
(1)
|
|
Total other (expense)
income
|
(100)
|
|
|
—
|
|
|
—
|
|
|
|
|
(100)
|
|
Income (loss) before
income taxes
|
299
|
|
|
—
|
|
|
6
|
|
|
|
|
305
|
|
Income tax
expense
|
(56)
|
|
|
—
|
|
|
(2)
|
|
|
(d)
|
|
(58)
|
|
Net income
|
$
|
243
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
|
$
|
247
|
|
|
|
(a)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(b)
|
This adjustment
relates to the amortization of deferred subscription and
advertising revenue that was fair valued in purchase
accounting.
|
(c)
|
This adjustment
includes the impact of additional expense associated with minimum
guarantee royalty contracts recorded as part of the Pandora
Acquisition.
|
(d)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at December 31, 2019 to the pro forma adjustments of
$6.
|
|
Unaudited for the Three Months Ended December 31,
2018
|
(in millions)
|
As Reported
|
|
Predecessor
Financial
Information (e)
|
|
Purchase
Price
Accounting and
Pro
Forma
Adjustments
|
|
Ref
|
|
Pro Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,361
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,361
|
|
Advertising
revenue
|
53
|
|
|
—
|
|
|
—
|
|
|
|
|
53
|
|
Equipment
revenue
|
42
|
|
|
—
|
|
|
—
|
|
|
|
|
42
|
|
Other
revenue
|
40
|
|
|
—
|
|
|
2
|
|
|
(f)
|
|
42
|
|
Total Sirius XM
revenue
|
1,496
|
|
|
—
|
|
|
2
|
|
|
|
|
1,498
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
—
|
|
|
133
|
|
|
—
|
|
|
|
|
133
|
|
Advertising
revenue
|
—
|
|
|
314
|
|
|
—
|
|
|
|
|
314
|
|
Total Pandora
revenue
|
—
|
|
|
447
|
|
|
—
|
|
|
|
|
447
|
|
Total consolidated
revenue
|
1,496
|
|
|
447
|
|
|
2
|
|
|
|
|
1,945
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
337
|
|
|
—
|
|
|
—
|
|
|
|
|
337
|
|
Programming and
content
|
103
|
|
|
—
|
|
|
—
|
|
|
|
|
103
|
|
Customer service and
billing
|
98
|
|
|
—
|
|
|
—
|
|
|
|
|
98
|
|
Transmission
|
26
|
|
|
—
|
|
|
—
|
|
|
|
|
26
|
|
Cost of
equipment
|
9
|
|
|
—
|
|
|
—
|
|
|
|
|
9
|
|
Total Sirius XM cost
of services
|
573
|
|
|
—
|
|
|
—
|
|
|
|
|
573
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
—
|
|
|
235
|
|
|
—
|
|
|
|
|
235
|
|
Programming and
content
|
—
|
|
|
4
|
|
|
—
|
|
|
|
|
4
|
|
Customer service and
billing
|
—
|
|
|
26
|
|
|
—
|
|
|
|
|
26
|
|
Transmission
|
—
|
|
|
12
|
|
|
—
|
|
|
|
|
12
|
|
Total Pandora cost of
services
|
—
|
|
|
277
|
|
|
—
|
|
|
|
|
277
|
|
Total consolidated
cost of services
|
573
|
|
|
277
|
|
|
—
|
|
|
|
|
850
|
|
Subscriber
acquisition costs
|
118
|
|
|
—
|
|
|
—
|
|
|
|
|
118
|
|
Sales and
marketing
|
140
|
|
|
105
|
|
|
—
|
|
|
|
|
245
|
|
Engineering, design
and development
|
34
|
|
|
37
|
|
|
—
|
|
|
|
|
71
|
|
General and
administrative
|
90
|
|
|
48
|
|
|
(9)
|
|
|
(g)
|
|
129
|
|
Depreciation and
amortization
|
79
|
|
|
16
|
|
|
25
|
|
|
(h)
|
|
120
|
|
Acquisition and other
related costs
|
3
|
|
|
—
|
|
|
(3)
|
|
|
|
|
—
|
|
Total operating
expenses
|
1,037
|
|
|
483
|
|
|
13
|
|
|
|
|
1,533
|
|
Income from operations
|
459
|
|
|
(36)
|
|
|
(11)
|
|
|
|
|
412
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(87)
|
|
|
(6)
|
|
|
—
|
|
|
|
|
(93)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
Other
(expense) income
|
(38)
|
|
|
1
|
|
|
31
|
|
|
(i)
|
|
(6)
|
|
Total other (expense)
income
|
(125)
|
|
|
(5)
|
|
|
31
|
|
|
|
|
(99)
|
|
Income before income
taxes
|
334
|
|
|
(41)
|
|
|
20
|
|
|
|
|
313
|
|
Income tax
expense
|
(83)
|
|
|
1
|
|
|
5
|
|
|
(j)
|
|
(77)
|
|
Net income
|
$
|
251
|
|
|
$
|
(40)
|
|
|
$
|
25
|
|
|
|
|
$
|
236
|
|
|
|
(e)
|
Represents Pandora's
results for the period October 1, 2018 through December 31,
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
eliminates the impact of transaction related costs, recorded by
Pandora, to advisers for the planned acquisition by Sirius
XM.
|
(h)
|
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.
|
(i)
|
This adjustment
eliminates the unrealized loss for the fair value adjustment of our
preferred stock investment in Pandora.
|
(j)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at December 31, 2018 to the pro forma adjustments of $20
and Pandora's loss before income tax of $(41).
|
|
Unaudited for the Twelve Months Ended December 31,
2019
|
(in millions)
|
As Reported
|
|
Predecessor
Financial
Information (k)
|
|
Purchase
Price
Accounting and
Pro
Forma
Adjustments
|
|
Ref
|
|
Pro Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
5,644
|
|
|
—
|
|
|
—
|
|
|
|
|
5,644
|
|
Advertising
revenue
|
205
|
|
|
—
|
|
|
—
|
|
|
|
|
205
|
|
Equipment
revenue
|
173
|
|
|
—
|
|
|
—
|
|
|
|
|
173
|
|
Other
revenue
|
165
|
|
|
—
|
|
|
7
|
|
|
(l)
|
|
172
|
|
Total Sirius XM
revenue
|
6,187
|
|
|
—
|
|
|
7
|
|
|
|
|
6,194
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
476
|
|
|
46
|
|
|
5
|
|
|
|
|
527
|
|
Advertising
revenue
|
1,131
|
|
|
68
|
|
|
1
|
|
|
|
|
1,200
|
|
Total Pandora
revenue
|
1,607
|
|
|
114
|
|
|
6
|
|
|
|
|
1,727
|
|
Total consolidated
revenue
|
7,794
|
|
|
114
|
|
|
13
|
|
|
|
|
7,921
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
1,431
|
|
|
—
|
|
|
—
|
|
|
|
|
1,431
|
|
Programming and
content
|
444
|
|
|
—
|
|
|
—
|
|
|
|
|
444
|
|
Customer service and
billing
|
398
|
|
|
—
|
|
|
—
|
|
|
|
|
398
|
|
Transmission
|
112
|
|
|
—
|
|
|
—
|
|
|
|
|
112
|
|
Cost of
equipment
|
29
|
|
|
—
|
|
|
—
|
|
|
|
|
29
|
|
Total Sirius XM cost
of services
|
2,414
|
|
|
—
|
|
|
—
|
|
|
|
|
2,414
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
860
|
|
|
71
|
|
|
14
|
|
|
(m)
|
|
945
|
|
Programming and
content
|
18
|
|
|
—
|
|
|
—
|
|
|
|
|
18
|
|
Customer service and
billing
|
77
|
|
|
8
|
|
|
—
|
|
|
|
|
85
|
|
Transmission
|
58
|
|
|
5
|
|
|
—
|
|
|
|
|
63
|
|
Total Pandora cost of
services
|
1,013
|
|
|
84
|
|
|
14
|
|
|
|
|
1,111
|
|
Total consolidated
cost of services
|
3,427
|
|
|
84
|
|
|
14
|
|
|
|
|
3,525
|
|
Subscriber
acquisition costs
|
427
|
|
|
—
|
|
|
—
|
|
|
|
|
427
|
|
Sales and
marketing
|
937
|
|
|
36
|
|
|
—
|
|
|
|
|
973
|
|
Engineering, design
and development
|
280
|
|
|
14
|
|
|
—
|
|
|
|
|
294
|
|
General and
administrative
|
524
|
|
|
16
|
|
|
—
|
|
|
|
|
540
|
|
Depreciation and
amortization
|
468
|
|
|
6
|
|
|
9
|
|
|
(n)
|
|
483
|
|
Acquisition and other
related costs
|
84
|
|
|
1
|
|
|
(85)
|
|
|
(o)
|
|
—
|
|
Total operating
expenses
|
6,147
|
|
|
157
|
|
|
(62)
|
|
|
|
|
6,242
|
|
Income (loss) from
operations
|
1,647
|
|
|
(43)
|
|
|
75
|
|
|
|
|
1,679
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(390)
|
|
|
(2)
|
|
|
—
|
|
|
|
|
(392)
|
|
Loss on
extinguishment of debt
|
(57)
|
|
|
—
|
|
|
—
|
|
|
|
|
(57)
|
|
Other
(expense) income
|
(3)
|
|
|
1
|
|
|
—
|
|
|
|
|
(2)
|
|
Total other (expense)
income
|
(450)
|
|
|
(1)
|
|
|
—
|
|
|
|
|
(451)
|
|
Income (loss) before
income taxes
|
1,197
|
|
|
(44)
|
|
|
75
|
|
|
|
|
1,228
|
|
Income tax
expense
|
(283)
|
|
|
—
|
|
|
(7)
|
|
|
(p)
|
|
(290)
|
|
Net income
|
914
|
|
|
(44)
|
|
|
68
|
|
|
|
|
938
|
|
|
|
(k)
|
Represents Pandora's
results for the period January 1, 2019 through January 31,
2019.
|
(l)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(m)
|
This adjustment
includes the impact of additional expense associated with minimum
guarantee royalty contracts recorded as part of the Pandora
Acquisition.
|
(n)
|
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.
|
(o)
|
This adjustment
eliminates the impact of acquisition and other related
costs.
|
(p)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at December 31, 2019 to the pro forma adjustments of $75
and Pandora's pre-acquisition loss before income tax of
$(44).
|
|
Unaudited for the Twelve Months Ended December 31,
2018
|
(in millions)
|
As Reported
|
|
Predecessor
Financial
Information (q)
|
|
Purchase
Price
Accounting and
Pro
Forma
Adjustments
|
|
Ref
|
|
Pro Forma
|
Revenue
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
5,264
|
|
|
—
|
|
|
—
|
|
|
|
|
5,264
|
|
Advertising
revenue
|
188
|
|
|
—
|
|
|
—
|
|
|
|
|
188
|
|
Equipment
revenue
|
155
|
|
|
—
|
|
|
—
|
|
|
|
|
155
|
|
Other
revenue
|
164
|
|
|
—
|
|
|
7
|
|
|
(r)
|
|
171
|
|
Total Sirius XM
revenue
|
5,771
|
|
|
—
|
|
|
7
|
|
|
|
|
5,778
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
—
|
|
|
478
|
|
|
—
|
|
|
|
|
478
|
|
Advertising
revenue
|
—
|
|
|
1,092
|
|
|
—
|
|
|
|
|
1,092
|
|
Total Pandora
revenue
|
—
|
|
|
1,570
|
|
|
—
|
|
|
|
|
1,570
|
|
Total consolidated
revenue
|
5,771
|
|
|
1,570
|
|
|
7
|
|
|
|
|
7,348
|
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
Sirius XM:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
1,394
|
|
|
—
|
|
|
—
|
|
|
|
|
1,394
|
|
Programming and
content
|
406
|
|
|
—
|
|
|
—
|
|
|
|
|
406
|
|
Customer service and
billing
|
382
|
|
|
—
|
|
|
—
|
|
|
|
|
382
|
|
Transmission
|
96
|
|
|
—
|
|
|
—
|
|
|
|
|
96
|
|
Cost of
equipment
|
31
|
|
|
—
|
|
|
—
|
|
|
|
|
31
|
|
Total Sirius XM cost
of services
|
2,309
|
|
|
—
|
|
|
—
|
|
|
|
|
2,309
|
|
Pandora:
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
—
|
|
|
929
|
|
|
—
|
|
|
|
|
929
|
|
Programming and
content
|
—
|
|
|
11
|
|
|
—
|
|
|
|
|
11
|
|
Customer service and
billing
|
—
|
|
|
95
|
|
|
—
|
|
|
|
|
95
|
|
Transmission
|
—
|
|
|
50
|
|
|
—
|
|
|
|
|
50
|
|
Total Pandora cost of
services
|
—
|
|
|
1,085
|
|
|
—
|
|
|
|
|
1,085
|
|
Total consolidated
cost of services
|
2,309
|
|
|
1,085
|
|
|
—
|
|
|
|
|
3,394
|
|
Subscriber
acquisition costs
|
470
|
|
|
—
|
|
|
—
|
|
|
|
|
470
|
|
Sales and
marketing
|
484
|
|
|
399
|
|
|
—
|
|
|
|
|
883
|
|
Engineering, design
and development
|
123
|
|
|
143
|
|
|
—
|
|
|
|
|
266
|
|
General and
administrative
|
354
|
|
|
169
|
|
|
(6)
|
|
|
(s)
|
|
517
|
|
Depreciation and
amortization
|
301
|
|
|
61
|
|
|
103
|
|
|
(t)
|
|
465
|
|
Acquisition and other
related costs
|
3
|
|
|
12
|
|
|
(15)
|
|
|
(u)
|
|
—
|
|
Total operating
expenses
|
4,044
|
|
|
1,869
|
|
|
82
|
|
|
|
|
5,995
|
|
Income (loss) from
operations
|
1,727
|
|
|
(299)
|
|
|
(75)
|
|
|
|
|
1,353
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(350)
|
|
|
(27)
|
|
|
—
|
|
|
|
|
(377)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(17)
|
|
|
—
|
|
|
|
|
(17)
|
|
Other
(expense) income
|
44
|
|
|
7
|
|
|
(43)
|
|
|
(v)
|
|
8
|
|
Total other (expense)
income
|
(306)
|
|
|
(37)
|
|
|
(43)
|
|
|
|
|
(386)
|
|
Income (loss) before
income taxes
|
1,421
|
|
|
(336)
|
|
|
(118)
|
|
|
|
|
967
|
|
Income tax
expense
|
(245)
|
|
|
8
|
|
|
114
|
|
|
(w)
|
|
(123)
|
|
Net income
|
1,176
|
|
|
(328)
|
|
|
(4)
|
|
|
|
|
844
|
|
|
|
(q)
|
Represents Pandora's
results for the period January 1, 2018 through December 31,
2018.
|
(r)
|
This adjustment
eliminates the impact of additional revenue associated with certain
programming agreements recorded as part of the XM
Merger.
|
(s)
|
This adjustment
eliminates the impact of contract termination fees.
|
(t)
|
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.
|
(u)
|
This adjustment
eliminates the impact of transaction related costs, recorded
Pandora, to advisers for the planned acquisition by Sirius
XM.
|
(v)
|
This adjustment
eliminates the unrealized gain for the fair value adjustment of our
preferred stock investment in Pandora.
|
(w)
|
This adjustment to
income taxes was calculated by applying Sirius XM's statutory tax
rate at December 31, 2018 to the pro forma adjustments of
$(118) and Pandora's loss before income tax of $(336).
|
|
|
|
|
|
|
|
|
|
2019 vs 2018 Change
|
(in millions)
|
For the Three Months
Ended December 31,
|
|
For the Twelve Months
Ended December 31,
|
|
Three Months
|
|
Twelve Months
|
Sirius XM:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Revenue
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,448
|
|
|
$
|
1,361
|
|
|
$
|
5,644
|
|
|
$
|
5,264
|
|
|
$
|
87
|
|
|
6
|
%
|
|
$
|
380
|
|
|
7
|
%
|
Advertising
revenue
|
56
|
|
|
53
|
|
|
205
|
|
|
188
|
|
|
3
|
|
|
6
|
%
|
|
17
|
|
|
9
|
%
|
Equipment
revenue
|
46
|
|
|
42
|
|
|
173
|
|
|
155
|
|
|
4
|
|
|
10
|
%
|
|
18
|
|
|
12
|
%
|
Other
revenue
|
46
|
|
|
42
|
|
|
172
|
|
|
171
|
|
|
4
|
|
|
10
|
%
|
|
1
|
|
|
1
|
%
|
Total Sirius XM
revenue
|
1,596
|
|
|
1,498
|
|
|
6,194
|
|
|
5,778
|
|
|
98
|
|
|
7
|
%
|
|
416
|
|
|
7
|
%
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties (a)
|
366
|
|
|
337
|
|
|
1,431
|
|
|
1,325
|
|
|
29
|
|
|
9
|
%
|
|
106
|
|
|
8
|
%
|
Programming and
content (b)
|
109
|
|
|
96
|
|
|
415
|
|
|
378
|
|
|
13
|
|
|
14
|
%
|
|
37
|
|
|
10
|
%
|
Customer service and
billing (b)
|
101
|
|
|
97
|
|
|
394
|
|
|
378
|
|
|
4
|
|
|
4
|
%
|
|
16
|
|
|
4
|
%
|
Transmission
(b)
|
33
|
|
|
24
|
|
|
108
|
|
|
91
|
|
|
9
|
|
|
38
|
%
|
|
17
|
|
|
19
|
%
|
Cost of
equipment
|
9
|
|
|
9
|
|
|
29
|
|
|
31
|
|
|
—
|
|
|
—
|
%
|
|
(2)
|
|
|
(6)
|
%
|
Total Sirius XM cost
of services
|
618
|
|
|
563
|
|
|
2,377
|
|
|
2,203
|
|
|
55
|
|
|
10
|
%
|
|
174
|
|
|
8
|
%
|
Gross
Profit
|
$
|
978
|
|
|
$
|
935
|
|
|
$
|
3,817
|
|
|
$
|
3,575
|
|
|
$
|
43
|
|
|
5
|
%
|
|
$
|
242
|
|
|
7
|
%
|
Gross Margin
%
|
61
|
%
|
|
62
|
%
|
|
62
|
%
|
|
62
|
%
|
|
(1)
|
%
|
|
(2)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
(a)
|
For the year ended
December 31, 2018 revenue share and royalties excludes $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 December 31, 2019, we have excluded share-based
compensation expense of $7 related to programming and content and
$1 related to customer service and billing. For the three
months ended December 31, 2018, we have excluded share-based
compensation expense of $7 related to programming and content, $1
related to customer service and billing and $2 related to
transmission. For the year ended December 31, 2019, we
have excluded share-based compensation expense of $29 related to
programming and content, $4 related to customer service and billing
and $4 related to transmission. For the year ended
December 31, 2018, we have excluded share-based compensation
expense of $28 related to programming and content, $4 related to
customer service and billing and $5 related to
transmission.
|
|
|
|
|
|
|
|
|
|
2019 vs 2018 Change
|
(in millions)
|
For the Three Months
Ended December 31,
|
|
For the Twelve Months
Ended December 31,
|
|
Three Months
|
|
Twelve Months
|
Pandora:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Revenue
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
(Pro
Forma)
|
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
126
|
|
|
$
|
133
|
|
|
$
|
527
|
|
|
$
|
478
|
|
|
$
|
(7)
|
|
|
(5)
|
%
|
|
$
|
49
|
|
|
10
|
%
|
Advertising
revenue
|
348
|
|
|
314
|
|
|
1,200
|
|
|
1,092
|
|
|
34
|
|
|
11
|
%
|
|
$
|
108
|
|
|
10
|
%
|
Total Pandora
revenue
|
474
|
|
|
447
|
|
|
1,727
|
|
|
1,570
|
|
|
27
|
|
|
6
|
%
|
|
157
|
|
|
10
|
%
|
Cost of
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
244
|
|
|
235
|
|
|
945
|
|
|
929
|
|
|
9
|
|
|
4
|
%
|
|
16
|
|
|
2
|
%
|
Programming and
content (c)
|
6
|
|
|
4
|
|
|
16
|
|
|
11
|
|
|
2
|
|
|
50
|
%
|
|
5
|
|
|
45
|
%
|
Customer service and
billing (c)
|
21
|
|
|
25
|
|
|
85
|
|
|
94
|
|
|
(4)
|
|
|
(16)
|
%
|
|
(9)
|
|
|
(10)
|
%
|
Transmission
(c)
|
16
|
|
|
11
|
|
|
57
|
|
|
47
|
|
|
5
|
|
|
45
|
%
|
|
10
|
|
|
21
|
%
|
Total Pandora cost of
services
|
287
|
|
|
275
|
|
|
1,103
|
|
|
1,081
|
|
|
12
|
|
|
4
|
%
|
|
22
|
|
|
2
|
%
|
Gross
Profit
|
$
|
187
|
|
|
$
|
172
|
|
|
$
|
624
|
|
|
$
|
489
|
|
|
$
|
15
|
|
|
9
|
%
|
|
$
|
135
|
|
|
28
|
%
|
Gross Margin
%
|
39
|
%
|
|
38
|
%
|
|
36
|
%
|
|
31
|
%
|
|
1
|
%
|
|
3
|
%
|
|
5
|
%
|
|
16
|
%
|
|
|
(c)
|
For the three months
ended December 31, 2019, we have excluded share-based
compensation expense of $2 related to programming and content and
$4 related to transmission. For the three months ended
December 31, 2018, we have excluded share-based compensation
expense of $1 related to customer service and billing and $1
related to transmission. For the year ended December 31,
2019, we have excluded share-based compensation expense of $2
related to programming and content and $6 related to
transmission. For the year ended December 31, 2018, we
have excluded share-based compensation expense of $1 related to
customer service and billing and $3 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
December 31, 2019 compared to December 31,
2018:
|
As of December 31,
|
|
2019 vs 2018 Change
|
(subscribers in thousands)
|
2019
|
|
2018 (1)
|
|
Amount
|
|
%
|
Sirius XM
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
29,978
|
|
|
28,915
|
|
|
1,063
|
|
|
4
|
%
|
Paid promotional
subscribers
|
4,931
|
|
|
5,124
|
|
|
(193)
|
|
|
(4)
|
%
|
Ending
subscribers
|
34,909
|
|
|
34,039
|
|
|
870
|
|
|
3
|
%
|
Traffic
users
|
9,334
|
|
|
8,606
|
|
|
728
|
|
|
8
|
%
|
Sirius XM Canada
subscribers
|
2,707
|
|
|
2,644
|
|
|
63
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Pandora
|
|
|
|
|
|
|
|
Monthly active users
- all services
|
63,508
|
|
|
69,399
|
|
|
(5,891)
|
|
|
(8)
|
%
|
Self-pay
subscribers
|
6,165
|
|
|
5,914
|
|
|
251
|
|
|
4
|
%
|
Paid promotional
subscribers
|
49
|
|
|
756
|
|
|
(707)
|
|
|
(94)
|
%
|
Ending
subscribers
|
6,214
|
|
|
6,670
|
|
|
(456)
|
|
|
(7)
|
%
|
|
(1) Includes
Pandora's results as of 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:
|
|
|
|
|
|
|
|
|
For the 2019 vs 2018 Change
|
|
For the Three Months
Ended December 31,
|
|
For the Twelve Months
Ended December 31,
|
|
Three Months
|
|
Twelve Months
|
(subscribers in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Sirius XM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
341
|
|
|
414
|
|
|
1,063
|
|
|
1,402
|
|
|
(73)
|
|
|
(18)
|
%
|
|
(339)
|
|
|
(24)
|
%
|
Paid
promotional subscribers
|
14
|
|
|
(68)
|
|
|
(193)
|
|
|
(99)
|
|
|
82
|
|
|
(121)
|
%
|
|
(94)
|
|
|
95
|
%
|
Net
additions
|
355
|
|
|
346
|
|
|
870
|
|
|
1,303
|
|
|
9
|
|
|
3
|
%
|
|
(433)
|
|
|
(33)
|
%
|
Weighted average
number of subscribers
|
34,708
|
|
|
33,799
|
|
|
34,314
|
|
|
33,345
|
|
|
909
|
|
|
3
|
%
|
|
969
|
|
|
3
|
%
|
Average self-pay
monthly churn
|
1.7
|
%
|
|
1.8
|
%
|
|
1.7
|
%
|
|
1.7
|
%
|
|
(0.1)
|
%
|
|
(6)
|
%
|
|
—
|
%
|
|
—
|
%
|
ARPU
(1)
|
$
|
14.03
|
|
|
$
|
13.64
|
|
|
$
|
13.82
|
|
|
$
|
13.34
|
|
|
$
|
0.39
|
|
|
3
|
%
|
|
$
|
0.48
|
|
|
4
|
%
|
SAC, per
installation
|
$
|
23.74
|
|
|
$
|
23.37
|
|
|
$
|
22.91
|
|
|
$
|
25.66
|
|
|
$
|
0.37
|
|
|
2
|
%
|
|
$
|
(2.75)
|
|
|
(11)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pandora
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
(92)
|
|
|
(82)
|
|
|
251
|
|
|
436
|
|
|
(10)
|
|
|
12
|
%
|
|
(185)
|
|
|
(42)
|
%
|
Paid promotional
subscribers
|
4
|
|
|
(3)
|
|
|
(707)
|
|
|
756
|
|
|
7
|
|
|
(233)
|
%
|
|
(1,463)
|
|
|
(194)
|
%
|
Net
additions
|
(88)
|
|
|
(85)
|
|
|
(456)
|
|
|
1,192
|
|
|
(3)
|
|
|
4
|
%
|
|
(1,648)
|
|
|
(138)
|
%
|
Weighted average
number of subscribers
|
6,280
|
|
|
6,725
|
|
|
6,654
|
|
|
6,080
|
|
|
(445)
|
|
|
(7)
|
%
|
|
574
|
|
|
9
|
%
|
ARPU
|
$
|
6.76
|
|
|
$
|
6.61
|
|
|
$
|
6.61
|
|
|
$
|
6.53
|
|
|
$
|
0.15
|
|
|
2
|
%
|
|
$
|
0.08
|
|
|
1
|
%
|
Ad supported listener
hours (in billions)
|
3.21
|
|
|
3.49
|
|
|
13.44
|
|
|
14.79
|
|
|
(0.28)
|
|
|
(8)
|
%
|
|
(1.35)
|
|
|
(9)
|
%
|
Advertising revenue
per thousand listener hours (RPM)
|
$
|
94.55
|
|
|
$
|
86.06
|
|
|
$
|
80.41
|
|
|
$
|
71.60
|
|
|
$
|
8.49
|
|
|
10
|
%
|
|
$
|
8.81
|
|
|
12
|
%
|
Licensing costs per
thousand listener hours (LPM)
|
$
|
42.20
|
|
|
$
|
40.40
|
|
|
$
|
38.94
|
|
|
$
|
37.80
|
|
|
$
|
1.80
|
|
|
4
|
%
|
|
$
|
1.14
|
|
|
3
|
%
|
Licensing costs per
paid subscriber (LPU)
|
$
|
4.04
|
|
|
$
|
4.03
|
|
|
$
|
4.06
|
|
|
$
|
4.47
|
|
|
$
|
0.01
|
|
|
—
|
%
|
|
$
|
(0.41)
|
|
|
(9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
587
|
|
|
$
|
593
|
|
|
$
|
2,427
|
|
|
$
|
2,131
|
|
|
$
|
(6)
|
|
|
(1)
|
%
|
|
$
|
296
|
|
|
14
|
%
|
Free cash flow
(2)
|
$
|
408
|
|
|
$
|
416
|
|
|
$
|
1,647
|
|
|
$
|
1,517
|
|
|
$
|
(8)
|
|
|
(2)
|
%
|
|
$
|
130
|
|
|
9
|
%
|
|
nm - not
meaningful
|
(1)
|
ARPU for Sirius XM
excludes subscriber revenue from our connected vehicle services of
$43 and $30 for the three months and $159 and $111 for the twelve
months ended December 31, 2019 and 2018, respectively.
|
(2)
|
Free cash flow has
not been adjusted for Pandora's pre-acquisition results.
|
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:
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in
millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net
income:
|
$
|
243
|
|
|
$
|
251
|
|
|
$
|
914
|
|
|
$
|
1,176
|
|
Add back items
excluded from Adjusted EBITDA:
|
|
|
|
|
|
|
|
Legal settlements and
reserves
|
—
|
|
|
—
|
|
|
25
|
|
|
69
|
|
Acquisition and other
related costs (1)
|
1
|
|
|
3
|
|
|
84
|
|
|
3
|
|
Share-based payment
expense (3)
|
58
|
|
|
33
|
|
|
229
|
|
|
133
|
|
Depreciation and
amortization
|
124
|
|
|
79
|
|
|
468
|
|
|
301
|
|
Interest
expense
|
99
|
|
|
87
|
|
|
390
|
|
|
350
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
Other expense
(income)
|
1
|
|
|
38
|
|
|
3
|
|
|
(44)
|
|
Income tax
expense
|
56
|
|
|
83
|
|
|
283
|
|
|
245
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
8
|
|
|
2
|
|
|
13
|
|
|
7
|
|
Operating
expenses
|
(3)
|
|
|
—
|
|
|
(14)
|
|
|
—
|
|
Pro forma adjustments
(2)
|
—
|
|
|
17
|
|
|
(25)
|
|
|
(109)
|
|
Adjusted
EBITDA
|
$
|
587
|
|
|
$
|
593
|
|
|
$
|
2,427
|
|
|
$
|
2,131
|
|
|
|
(1)
|
Acquisition and other
related costs include $21 of share-based compensation
expense.
|
(2)
|
Pro forma adjustment
for three months ended December 31, 2018 includes Pandora's
Net income for the three months ended December 31, 2018 of
$(40) plus Depreciation and amortization of $16, Share-based
payment expense of $28, and Interest expense of $6, contract
termination fees $6, transaction related costs recorded by Pandora
related to the acquisition by Sirius XM $3, offset by Other expense
(income) of $1 and Income tax benefit of $1. Pro forma
adjustment for the year ended December 31, 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 year
ended December 31, 2018 includes Pandora's Net income for the
year ended December 31, 2018 of $(328) plus Depreciation and
amortization of $61, Share-based payment expense of $111, Loss on
extinguishment of debt of $17, and Interest expense of $27,
transaction related costs recorded by Pandora related to the
acquisition by Sirius XM $12, contract termination fees $6, offset
by Other expense (income) of $7 and Income tax benefit of
$8.
|
(3)
|
Allocation of
share-based payment expense:
|
|
For the Three Months Ended December
31,
|
|
For the Twelve Months Ended December
31,
|
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Programming
and content
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
30
|
|
|
$
|
28
|
|
Customer service and
billing
|
1
|
|
|
1
|
|
|
4
|
|
|
4
|
|
Transmission
|
5
|
|
|
1
|
|
|
10
|
|
|
5
|
|
Sales and
marketing
|
21
|
|
|
7
|
|
|
78
|
|
|
25
|
|
Engineering,
design and development
|
12
|
|
|
4
|
|
|
49
|
|
|
17
|
|
General and
administrative
|
11
|
|
|
13
|
|
|
58
|
|
|
54
|
|
Total share-based
payment expense
|
$
|
58
|
|
|
$
|
33
|
|
|
$
|
229
|
|
|
$
|
133
|
|
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:
|
For the Three Months Ended
December 31,
|
|
For the Twelve Months Ended
December 31,
|
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash Flow
information
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
532
|
|
|
$
|
534
|
|
|
$
|
2,017
|
|
|
$
|
1,880
|
|
Net cash used in
investing activities
|
$
|
(129)
|
|
|
$
|
(128)
|
|
|
$
|
(3)
|
|
|
$
|
(379)
|
|
Net cash used in
financing activities
|
$
|
(373)
|
|
|
$
|
(398)
|
|
|
$
|
(1,959)
|
|
|
$
|
(1,515)
|
|
Free Cash
Flow
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
532
|
|
|
$
|
534
|
|
|
$
|
2,017
|
|
|
$
|
1,880
|
|
Additions to
property and equipment
|
(124)
|
|
|
(117)
|
|
|
(363)
|
|
|
(355)
|
|
Purchases of other
investments
|
—
|
|
|
(1)
|
|
|
(7)
|
|
|
(8)
|
|
Free cash
flow
|
$
|
408
|
|
|
$
|
416
|
|
|
$
|
1,647
|
|
|
$
|
1,517
|
|
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
December 31,
|
|
For the Twelve Months Ended
December 31,
|
(costs in millions and installs in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Subscriber
acquisition costs, excluding connected vehicle services
|
$
|
114
|
|
|
$
|
118
|
|
|
$
|
427
|
|
|
$
|
470
|
|
Less: margin from
sales of radios and accessories, excluding connected vehicle
services
|
(38)
|
|
|
(33)
|
|
|
(144)
|
|
|
(122)
|
|
|
$
|
76
|
|
|
$
|
85
|
|
|
$
|
283
|
|
|
$
|
348
|
|
Installations
|
3,202
|
|
|
3,643
|
|
|
12,355
|
|
|
13,563
|
|
SAC, per installation
(a)
|
$
|
23.74
|
|
|
$
|
23.37
|
|
|
$
|
22.91
|
|
|
$
|
25.66
|
|
|
(a) Amounts
may not recalculate as a result of rounding.
|
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
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SOURCE Sirius XM Holdings Inc.