On Monday, Shares of Sirius XM Holdings Inc. (NASDAQ: SIRI) declined -1.83% to $6.16. The stock recorded $6.12 as its minimum price and hit the max level of $6.26, during its most recent trading session. It traded total volume of 11,583,649 shares lower than the average volume of 25.04M shares.
SiriusXM recently declared third quarter 2018 operating and financial results, counting revenue of $1.50B, a boost of 6% as compared to the prior year period.
The Company’s net income totaled $343.0M in the third quarter 2018, representing 24% growth over $276.0M in the prior year period. Net income per diluted common share was $0.07 in the third quarter 2018, contrast to $0.06 in the third quarter 2017. Adjusted EBITDA grew 7% in the third quarter 2018 to a quarterly record $589.0M. Operating cash flow and free cash flow in the third quarter 2018 reduced (32)% and (34)%, respectively, to $352.0M and $288.0M, because of the Company’s formerly declared one-time lump sum payment of $150.0M to resolve all outstanding statutory license claims for sound recordings.
THIRD QUARTER 2018 HIGHLIGHTS
- Self-Pay Net Additions of 298.0K. The Company added 298.0K net new self-pay subscribers in the third quarter to end the period with about 28.50M self-pay subscribers. Self-pay monthly churn of 1.8% improved 12 basis points over the third quarter of 2017. Total net additions in the third quarter were 198.0K, resulting in about 33.70M SiriusXM subscribers at quarter-end.
- Revenue of $1.50B. Third quarter revenue grew 6% contrast to the year-ago period to $1.50B. This growth was driven by a 5% increase in subscribers and a boost of nearly 1%, after an accounting change, in average revenue per user (ARPU) to $13.48. The third quarter 2018 was influenced by the adoption of the new revenue recognition accounting standard (FASB ASU 2014-09) which reclassified about $24.0M of revenue to offset expenses principally related to automaker agreements. Excluding these reclassifications, which reduced stated ARPU by $0.24 in the third quarter of 2018, ARPU growth would have totaled 2.3%.
- Record Adjusted EBITDA, Margin 40%+. Adjusted EBITDA in the third quarter reached a record $589.0M, up 7% over the third quarter 2017, driven mainly by lower subscriber acquisition costs and fixed operating expenses as a percentage of revenue. The Company’s record adjusted EBITDA margin of 40.1% in the quarter is also the first time the Company has topped 40%.
- Net Income Grows 24%. Net income in the third quarter totaled $343.0M, up 24% from $276.0M in the third quarter 2017. This increase included a $44.0M unrealized loss associated with the change in fair value of the Company’s Pandora investment, in addition to about $89.0M of tax savings resulting in a 3.3% effective tax rate in the third quarter, contrast to a 28.3% effective tax rate in the prior year period. The third quarter 2018 tax rate was driven by savings from the Tax Act in addition to benefits from share-based compensation and a $65.0M benefit from state research and development tax credits. The Company estimates its full-year 2018 effective tax rate will be about 17%.
“Share repurchases in the third quarter were $334.0M, totaling about 48.0M shares, in addition to the nearly $50.0M in dividends we paid to stockholders. At the end of the quarter, our debt to adjusted EBITDA was just 3.0 times, and we had cash on hand of about $46.0M and undrawn revolver capacity of $1.630B. On October 9, 2018, we declared a 10% increase in our quarterly dividend payable in November, and our strong capitalization and ample liquidity provide us flexibility to continue investing in our business, make planned investments and further return capital to stockholders,” noted David Frear, Chief Financial Officer, SiriusXM.
SIRI has the market capitalization of $27.85B and its EPS growth ratio for the past five years was -19.20%. The return on assets ratio of the Company was 10.70% while its return on investment ratio stands at 22.30%. Price to sales ratio was 4.90 while 18.10% of the stock was owned by institutional investors.