SiriusXM Posts Record Revenue In 4Q

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Satellite radio company SiriusXM finished 2017 with two records, one for fourth quarter revenue of $1.4 billion, an eight-percent gain, and full-year revenue of $5.4 billion, also an eight-percent gain.

The home to The Howard Stern Show and nearly 200 other channels, New York-based SiriusXM added 1.56 million new subscribers, net of cancellations, to finish the year at 27.5 million. “I am particularly pleased that we achieved this growth in an environment of slowing auto sales,” chief executive officer Jim Meyer said in a statement.

Shares of SiriusXM closed up 2.7 percent to $6.11 Tuesday. The Nasdaq, on which SiriusXM trades, rose 1 percent. The fourth quarter $37 million net income loss translates to a loss of 1 cent per share. Investors were expecting EPS of 5 cents, according to FactSet.

A handful of the key metrics had been made public ahead of Tuesday’s announcement. A press release on Jan. 10 announced it was raising 2018 guidance of revenue up slightly to $5.7 billion; adjusted earnings before interest, taxes and depreciation (EBITDA) of approximately $2.15 billion; and 1 million additional net self-paying subscribers. It also revealed the 2017 increase in net self-paying subscribers.

In a separate press release last week, SiriusXM announced that the board of directors had approved a $2 billion stock buyback program and a 0.011-cent-per share dividend on Feb. 28, 2018. Using the cash on hand, future cash flow from operations, and future borrowings, the company plans to repurchase shares “time to time” on the open market, in private transactions, and including transactions with majority shareholder Liberty Media and its affiliates.

In spite of record revenue, the $648 million net income fell short of $746 million achieved in the prior year. The company’s fourth quarter net loss of $37 million, a large drop from the $205 net profit a year earlier. The company offered an adjusted number to better reflect operational results.

Remove two extraordinary expenses and SiriusXM’s adjusted EBITDA rose 13 percent to a record $2.12 billion.

Two factors hit net income in fourth quarter and 2017 results. The first is a $185 million charge related to the Tax Cuts and Jobs Act passed by Congress in January; SiriusXM reassessed the value of its future tax deductions, meaning its deferred tax assets weren’t as valuable as before. The second factor stems from a decline in the fair market value of its investment in Pandora. Although no cash changed hands, accounting rules required SiriusXM to record the declines of $185 million and $72 million as expenses.