Sirius XM(SIRI) - 2024 Q2 - Quarterly Report

Subscriber Metrics - As of June 30, 2024, Sirius XM had approximately 33.3 million subscribers[205] - As of June 30, 2024, Pandora had approximately 45.1 million monthly active users and 6.0 million subscribers[208] - As of June 30, 2024, Sirius XM had approximately 33,257 subscribers, a decrease of 806, or 2%, from 34,063 subscribers as of June 30, 2023[293] - At June 30, 2024, Pandora had approximately 5,951 subscribers, a decrease of 319, or 5%, from 6,270 subscribers as of June 30, 2023[298] - For the three months ended June 30, 2024, net subscriber additions were (173), a decrease of 212 compared to 39 net additions in the same period of 2023[294] - Average self-pay monthly churn rate was 1.5% for both the three months ended June 30, 2024, and 2023[295] Revenue Sources - The primary revenue source for Sirius XM is subscription fees, with additional revenue from advertising on select non-music channels[205] - The majority of revenue from Pandora is generated from advertising on the ad-supported radio service[209] - Sirius XM's subscriber revenue for Q2 2024 was $1,520 million, down 5$1,597 million in Q2 2023, with a six-month total of $3,067 million, a decrease of 3$3,160 million[223][225] - Total consolidated revenue for Q2 2024 was $2,178 million, a decrease of 3$2,250 million in Q2 2023, with a six-month total of $4,340 million, down 1$4,394 million[238] - Sirius XM's advertising revenue for Q2 2024 was $43 million, down 4$45 million in Q2 2023, while for the six months it remained stable at $83 million compared to$85 million[227] - Pandora and Off-platform subscriber revenue increased by 8% to $138 million in Q2 2024 from$128 million in Q2 2023, with a six-month total of $271 million, up 5$257 million[233] Operating Expenses - Total operating expenses for Q2 2024 were $1,673 million, a decrease of 6$1,771 million in Q2 2023, with a six-month total of $3,398 million, down 3$3,503 million[240] - For the three months ended June 30, 2024, customer service and billing expenses decreased by 13% to $87 million compared to$100 million in the same period of 2023[245] - For the three months ended June 30, 2024, transmission expenses increased by 20% to $49 million compared to$41 million in the same period of 2023[248] - For the three months ended June 30, 2024, cost of equipment decreased by 33% to $2 million compared to$3 million in the same period of 2023[250] - For the three months ended June 30, 2024, revenue share and royalties decreased by 3% to $317 million compared to$327 million in the same period of 2023[254] - For the three months ended June 30, 2024, programming and content expenses decreased by 28% to $13 million compared to$18 million in the same period of 2023[256] - For the three months ended June 30, 2024, sales and marketing expenses increased by 4% to $228 million compared to$220 million in the same period of 2023[267] - For the three months ended June 30, 2024, general and administrative expenses decreased by 31% to $108 million compared to$157 million in the same period of 2023[271] - For the three months ended June 30, 2024, interest expense decreased to $102 million from$107 million in the same period of 2023[277] Net Income and Cash Flow - Net income for Q2 2024 was $316 million, a slight increase of 2$310 million in Q2 2023, with a six-month total of $582 million, up 7$543 million[239] - Free cash flow for the three months ended June 30, 2024, was $343 million, an increase of 6$20 million, from $323 million in the same period of 2023[305] - Net cash provided by operating activities increased by$21 million to $822 million for the six months ended June 30, 2024, from$801 million in the same period of 2023[308] - Cash, cash equivalents, and restricted cash at the end of the period were $108 million, an increase of$49 million from $59 million at the end of the same period in 2023[307] - Net cash provided by operating activities increased to$514 million in Q2 2024 from $451 million in Q2 2023, and for the first half of 2024, it rose to$822 million from $801 million[333] Future Expectations - Sirius XM expects a decrease in subscriber revenues due to a decline in average subscribers and lower average subscription prices[226] - The company anticipates an increase in Pandora and Off-platform advertising revenue driven by growth in podcast and programmatic revenue[237] - The company expects subscriber acquisition costs to increase due to growth in penetration with certain automakers and higher subsidies[265] - Sirius XM expects overall revenue share and royalty costs to decrease due to lower eligible subscription revenue, despite higher royalty rates[241] Capital and Financing - The board of directors authorized a total of$18,000 for common stock repurchase, with cumulative repurchases totaling $16,834 as of June 30, 2024[318] - A quarterly dividend of$0.0266 per share was declared on July 24, 2024, payable on August 26, 2024[321] - The company expects to fund future stock repurchases and dividend payments through existing cash, cash flow from operations, and borrowings[313] - Cash flows used in financing activities included repayments of $1,002 under the Credit Facility and$205 in cash dividends for the six months ended June 30, 2024[312] - As of June 30, 2024, $350 of borrowings were outstanding under the Credit Facility, with$1,400 available for future borrowing[313] Debt and Interest Rates - The company’s debt includes fixed-rate instruments, with variable interest rates on borrowings under the Credit Facility, which are sensitive to interest rate changes[339] - The company plans to potentially hedge against interest rate fluctuations using various financial instruments in the future[339] Business Strategy - Sirius XM is undergoing a split-off transaction with Liberty Media, which will result in New Sirius combining with Holdings[213] - The revised exchange ratio in the Reorganization Agreement reduces the number of shares of New Sirius Common Stock issued by 90%[216] - Sirius XM Radio Inc. intends to convert to a Delaware limited liability company prior to the closing of the transaction[218] - The company regularly evaluates its business plans, which may lead to significant changes in cash requirements and strategic opportunities[315]