NEW YORK, Feb. 2, 2021 /PRNewswire/ -- SiriusXM today announced fourth quarter and full year 2020 operating and financial results, including revenue of $2.19 billion and $8.04 billion, respectively, an increase of 6% and 3%, respectively, compared to the prior year periods. The company recorded a net loss of $677 million in the fourth quarter of 2020 while full year net income totaled $131 million, down from $914 million for the full year in 2019. The decrease in net income was a result of a $976 million non-cash impairment charge associated with Pandora. Net income per diluted common share was $0.03 for the full year, compared to $0.20 in the prior year period.
Full year net income, excluding the effect of the impairment, was approximately $1.11 billion, or $0.25 per diluted common share. Adjusted EBITDA grew to $2.58 billion in 2020, an increase of approximately 6% from $2.43 billion in 2019.
"SiriusXM turned in strong operating and financial results in 2020: we grew SiriusXM self-pay subscribers, revenue, adjusted EBITDA, and free cash flow despite the pandemic. Our new car penetration reached approximately 80% in the fourth quarter and is set to rise above 80% this year, and the incorporation of 360L, our next generation in-car entertainment platform, is accelerating," said Jennifer Witz, Chief Executive Officer of SiriusXM. Ms. Witz became CEO of SiriusXM on January 1, 2021, succeeding Jim Meyer upon his retirement.
"SiriusXM, Pandora and Stitcher, together with our investment in SoundCloud, now reach an audience of more than 150 million people. We are bolstering our position as North America's leading audio entertainment company with new innovative talk shows and podcasts, streaming music channels targeting younger audiences, and extended deals with major media brands, such as NBCUniversal News Group. We signed an exclusive audio agreement with The Masters and secured additional digital sports rights with the NFL and NBA to benefit our streaming products. We are also thrilled Howard Stern extended his agreement to continue live broadcasts of his amazing show," added Witz.
ADDITIONAL FINANCIAL UPDATE
"The tremendous reach of SiriusXM's platforms, the company's unique business model, and the quality of its people attracted me to join the company last fall as CFO. All of these attributes have been affirmed in the past three months since I came on board, and it has been a pleasure to partner with Jennifer as she made the transition to CEO," said Sean Sullivan, Chief Financial Officer of SiriusXM. Mr. Sullivan became CFO of SiriusXM on October 26, 2020.
"SiriusXM returned approximately $1.81 billion to stockholders in 2020, including $1.57 billion of share repurchases and $237 million of dividends. As previously announced, we increased the regular quarterly dividend by 10% in November for the fourth consecutive year. During the fourth quarter, we opportunistically accelerated the pace of common stock repurchases to $680 million and closed on our acquisition of Stitcher. At the end of the fourth quarter, SiriusXM's debt to adjusted EBITDA ratio was 3.3x, and we have tremendous liquidity to continue investing in the business and returning capital to stockholders," added Sullivan.
2021 GUIDANCE
The company reiterated its 2021 guidance for SiriusXM self-pay net subscriber additions, revenue, adjusted EBITDA and free cash flow originally issued on January 7, 2021:
FULL YEAR 2020 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, 2020. The pro forma financial and operating highlights below exclude the impact of legal settlements and reserves and share-based payment expense.
SIRIUSXM SEGMENT
PANDORA SEGMENT
Subscriber acquisition costs declined by 15% to $362 million in 2020 driven by a lower subscriber acquisition costs (SAC) per install and a reduction in auto sales in 2020 as a result of the COVID-19 pandemic. Sales and marketing costs remained flat at $889 million. Engineering, design and development costs fell 9% to $220 million, and general and administrative expenses decreased by 2% to $443 million in 2020.
With pro forma revenue up 2% and total cash operating expenses down 1%, excluding depreciation and amortization, share-based payment expenses, and legal settlements and reserves, adjusted EBITDA in 2020 was up 6%. Free cash flow was $1.66 billion in 2020, relatively unchanged from 2019.
SiriusXM also confirmed that, in connection with its annual impairment assessment of goodwill and other indefinite-lived intangible assets, the company recorded an impairment of $976 million related to the Pandora reporting unit. The impairment is a result of the anticipated operating performance of Pandora, primarily its royalty cost structure. The impairment is non-cash and is excluded from adjusted EBITDA, a non-GAAP metric, in accordance with the company's definition of adjusted EBITDA.
FOURTH QUARTER AND FULL YEAR 2020 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) | 2020 | 2019 | 2020 | 2019 | |||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Revenue: | |||||||||||||||
Subscriber revenue | $ | 1,615 | $ | 1,569 | $ | 6,372 | $ | 6,120 | |||||||
Advertising revenue | 474 | 403 | 1,340 | 1,336 | |||||||||||
Equipment revenue | 60 | 46 | 173 | 173 | |||||||||||
Other revenue | 40 | 44 | 155 | 165 | |||||||||||
Total revenue | 2,189 | 2,062 | 8,040 | 7,794 | |||||||||||
Operating expenses: | |||||||||||||||
Cost of services: | |||||||||||||||
Revenue share and royalties | 662 | 607 | 2,421 | 2,291 | |||||||||||
Programming and content | 130 | 124 | 481 | 462 | |||||||||||
Customer service and billing | 122 | 123 | 481 | 475 | |||||||||||
Transmission | 48 | 53 | 177 | 170 | |||||||||||
Cost of equipment | 6 | 9 | 19 | 29 | |||||||||||
Subscriber acquisition costs | 105 | 114 | 362 | 427 | |||||||||||
Sales and marketing | 293 | 289 | 957 | 937 | |||||||||||
Engineering, design and development | 67 | 74 | 263 | 280 | |||||||||||
General and administrative | 154 | 145 | 511 | 524 | |||||||||||
Depreciation and amortization | 125 | 124 | 506 | 468 | |||||||||||
Acquisition and restructuring costs | 4 | 1 | 28 | 84 | |||||||||||
Impairment charges | 976 | — | 976 | — | |||||||||||
Total operating expenses | 2,692 | 1,663 | 7,182 | 6,147 | |||||||||||
Income from operations | (503) | 399 | 858 | 1,647 | |||||||||||
Other (expense) income: | |||||||||||||||
Interest expense | (97) | (99) | (394) | (390) | |||||||||||
Loss on extinguishment of debt | — | — | (40) | (57) | |||||||||||
Other income (expense) | (4) | (1) | 6 | (3) | |||||||||||
Total other (expense) income | (101) | (100) | (428) | (450) | |||||||||||
Income before income taxes | (604) | 299 | 430 | 1,197 | |||||||||||
Income tax expense | (73) | (56) | (299) | (283) | |||||||||||
Net income | $ | (677) | $ | 243 | $ | 131 | $ | 914 | |||||||
Foreign currency translation adjustment, net of tax | 15 | 5 | 7 | 14 | |||||||||||
Total comprehensive income | $ | (662) | $ | 248 | $ | 138 | $ | 928 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | (0.16) | $ | 0.05 | $ | 0.03 | $ | 0.20 | |||||||
Diluted | $ | (0.16) | $ | 0.05 | $ | 0.03 | $ | 0.20 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 4,220 | 4,419 | 4,330 | 4,501 | |||||||||||
Diluted | 4,220 | 4,541 | 4,429 | 4,616 | |||||||||||
Dividends declared per common share | $ | 0.01464 | $ | 0.01331 | $ | 0.05457 | $ | 0.04961 |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
As of December 31, | |||||||
(in millions, except per share data) | 2020 | 2019 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 71 | $ | 106 | |||
Receivables, net | 672 | 670 | |||||
Inventory, net | 10 | 11 | |||||
Related party current assets | 20 | 22 | |||||
Prepaid expenses and other current assets | 194 | 194 | |||||
Total current assets | 967 | 1,003 | |||||
Property and equipment, net | 1,629 | 1,626 | |||||
Intangible assets, net | 3,340 | 3,467 | |||||
Goodwill | 3,122 | 3,843 | |||||
Related party long-term assets | 531 | 452 | |||||
Deferred tax assets | 111 | 153 | |||||
Operating lease right-of-use assets | 427 | 466 | |||||
Other long-term assets | 206 | 139 | |||||
Total assets | $ | 10,333 | $ | 11,149 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 1,223 | $ | 1,151 | |||
Accrued interest | 174 | 160 | |||||
Current portion of deferred revenue | 1,721 | 1,930 | |||||
Current maturities of debt | 1 | 2 | |||||
Operating lease current liabilities | 48 | 46 | |||||
Related party current liabilities | — | 4 | |||||
Total current liabilities | 3,167 | 3,293 | |||||
Long-term deferred revenue | 118 | 130 | |||||
Long-term debt | 8,499 | 7,842 | |||||
Deferred tax liabilities | 266 | 70 | |||||
Operating lease liabilities | 419 | 456 | |||||
Other long-term liabilities | 149 | 94 | |||||
Total liabilities | 12,618 | 11,885 | |||||
Stockholders' equity (deficit): | |||||||
Common stock, par value $0.001 per share; 9,000 shares authorized; 4,176 and 4,412 shares issued; 4,173 and 4,412 shares outstanding at December 31, 2020 and December 31, 2019, respectively | 4 | 4 | |||||
Accumulated other comprehensive income, net of tax | 15 | 8 | |||||
Additional paid-in capital | — | 395 | |||||
Treasury stock, at cost; 3 and 0 shares of common stock at December 31, 2020 and December 31, 2019, respectively | (19) | — | |||||
Accumulated deficit | (2,285) | (1,143) | |||||
Total stockholders' equity (deficit) | (2,285) | (736) | |||||
Total liabilities and stockholders' equity (deficit) | $ | 10,333 | $ | 11,149 |
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
For the Twelve Months Ended December 31, | |||||||
(in millions) | 2020 | 2019 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 131 | $ | 914 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 506 | 468 | |||||
Impairment charges | 976 | — | |||||
Non-cash interest expense, net of amortization of premium | 20 | 17 | |||||
Provision for doubtful accounts | 60 | 53 | |||||
Amortization of deferred income related to equity method investment | (3) | (3) | |||||
Loss on extinguishment of debt | 40 | 57 | |||||
Loss on unconsolidated entity investments, net | 16 | 21 | |||||
Dividend received from unconsolidated entity investment | 2 | 2 | |||||
Loss on restructuring | 24 | — | |||||
(Gain) loss on other investments | (3) | (3) | |||||
Share-based payment expense | 223 | 250 | |||||
Deferred income taxes | 238 | 259 | |||||
Amortization of right-of-use assets | 56 | 56 | |||||
Changes in operating assets and liabilities: | |||||||
Receivables | (36) | (137) | |||||
Inventory | (2) | 11 | |||||
Related party, net | — | (10) | |||||
Prepaid expenses and other current assets | 14 | 10 | |||||
Other long-term assets | (61) | 7 | |||||
Accounts payable and accrued expenses | 42 | 109 | |||||
Accrued interest | 13 | 32 | |||||
Deferred revenue | (223) | (58) | |||||
Operating lease liabilities | (53) | (47) | |||||
Other long-term liabilities | 38 | 9 | |||||
Net cash provided by operating activities | 2,018 | 2,017 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (350) | (363) | |||||
Purchases of other investments | (8) | (7) | |||||
Acquisition of business, net of cash acquired | (300) | 313 | |||||
Sale of short-term investments | — | 73 | |||||
Investments in related parties and other equity investees | (94) | (19) | |||||
Repayment from related party | 11 | — | |||||
Net cash used in investing activities | (741) | (3) | |||||
Cash flows from financing activities: | |||||||
Proceeds from exercise of stock options | — | 8 | |||||
Taxes paid from net share settlements for stock-based compensation | (114) | (150) | |||||
Revolving credit facility, net of deferred financing costs | 649 | (439) | |||||
Proceeds from long-term borrowings, net of costs | 1,481 | 2,715 | |||||
Proceeds from sale of capped call security | — | 3 | |||||
Principal payments of long-term borrowings | (1,507) | (1,666) | |||||
Payment of premiums on redemption of debt | (31) | (45) | |||||
Common stock repurchased and retired | (1,555) | (2,159) | |||||
Dividends paid | (237) | (226) | |||||
Net cash used in financing activities | (1,314) | (1,959) | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (37) | 55 | |||||
Cash, cash equivalents and restricted cash at beginning of period (1) | 120 | 65 | |||||
Cash, cash equivalents and restricted cash at end of period (1) | $ | 83 | $ | 120 |
(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, 2020 | December 31, 2019 | December 31, 2018 | ||||||||
Cash and cash equivalents | $ | 71 | $ | 106 | $ | 54 | |||||
Restricted cash included in Other long-term assets | 12 | 14 | 11 | ||||||||
Total cash, cash equivalents and restricted cash at end of period | $ | 83 | $ | 120 | $ | 65 |
Unaudited Pro Forma Results Set forth below are our pro forma results of operations for the three and twelve months ended December 31, 2020 compared with the three and twelve months ended December 31, 2019. Legal settlements and reserves and share-based payment expense have been excluded from cost of services line items and presented as their own line items in the table below, as this is consistent with how the segments are evaluated on a regular basis. 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. Pro forma adjustments are not included for the acquisitions of Simplecast and Stitcher. Please refer to the Footnotes to Results of Operations.
2020 vs 2019 Change | |||||||||||||||||||||||||||||
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | Three Months | Twelve Months | ||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | Amount | % | Amount | % | ||||||||||||||||||||||
Revenue | (Pro Forma) | (Pro Forma) | (Pro Forma) | ||||||||||||||||||||||||||
Sirius XM: | |||||||||||||||||||||||||||||
Subscriber revenue | $ | 1,485 | $ | 1,448 | $ | 5,857 | $ | 5,644 | $ | 37 | 3 | % | $ | 213 | 4 | % | |||||||||||||
Advertising revenue | 49 | 56 | 157 | 205 | (7) | (13) | % | (48) | (23) | % | |||||||||||||||||||
Equipment revenue | 60 | 46 | 173 | 173 | 14 | 30 | % | — | — | % | |||||||||||||||||||
Other revenue | 40 | 46 | 161 | 172 | (6) | (13) | % | (11) | (6) | % | |||||||||||||||||||
Total Sirius XM revenue | 1,634 | 1,596 | 6,348 | 6,194 | 38 | 2 | % | 154 | 2 | % | |||||||||||||||||||
Pandora: | |||||||||||||||||||||||||||||
Subscriber revenue | 130 | 126 | 515 | 527 | 4 | 3 | % | (12) | (2) | % | |||||||||||||||||||
Advertising revenue | 425 | 348 | 1,183 | 1,200 | 77 | 22 | % | (17) | (1) | % | |||||||||||||||||||
Total Pandora revenue | 555 | 474 | 1,698 | 1,727 | 81 | 17 | % | (29) | (2) | % | |||||||||||||||||||
Total consolidated revenue | 2,189 | 2,070 | 8,046 | 7,921 | 119 | 6 | % | 125 | 2 | % | |||||||||||||||||||
Cost of services | |||||||||||||||||||||||||||||
Sirius XM: | |||||||||||||||||||||||||||||
Revenue share and royalties | 384 | 366 | 1,484 | 1,431 | 18 | 5 | % | 53 | 4 | % | |||||||||||||||||||
Programming and content | 112 | 109 | 420 | 415 | 3 | 3 | % | 5 | 1 | % | |||||||||||||||||||
Customer service and billing | 101 | 101 | 388 | 394 | — | — | % | (6) | (2) | % | |||||||||||||||||||
Transmission | 32 | 33 | 119 | 108 | (1) | (3) | % | 11 | 10 | % | |||||||||||||||||||
Cost of equipment | 6 | 9 | 19 | 29 | (3) | (33) | % | (10) | (34) | % | |||||||||||||||||||
Total Sirius XM cost of services | 635 | 618 | 2,430 | 2,377 | 17 | 3 | % | 53 | 2 | % | |||||||||||||||||||
Pandora: | |||||||||||||||||||||||||||||
Revenue share and royalties (1) | 278 | 244 | 959 | 945 | 34 | 14 | % | 14 | 1 | % | |||||||||||||||||||
Programming and content | 10 | 6 | 30 | 16 | 4 | 67 | % | 14 | 88 | % | |||||||||||||||||||
Customer service and billing | 19 | 21 | 87 | 85 | (2) | (10) | % | 2 | 2 | % | |||||||||||||||||||
Transmission | 14 | 16 | 51 | 57 | (2) | (13) | % | (6) | (11) | % | |||||||||||||||||||
Total Pandora cost of services | 321 | 287 | 1,127 | 1,103 | 34 | 12 | % | 24 | 2 | % | |||||||||||||||||||
Total consolidated cost of services | 956 | 905 | 3,557 | 3,480 | 51 | 6 | % | 77 | 2 | % | |||||||||||||||||||
Subscriber acquisition costs | 105 | 114 | 362 | 427 | (9) | (8) | % | (65) | (15) | % | |||||||||||||||||||
Sales and marketing | 275 | 268 | 889 | 892 | 7 | 3 | % | (3) | — | % | |||||||||||||||||||
Engineering, design and development | 55 | 62 | 220 | 241 | (7) | (11) | % | (21) | (9) | % | |||||||||||||||||||
General and administrative (2) | 138 | 134 | 443 | 454 | 4 | 3 | % | (11) | (2) | % | |||||||||||||||||||
Depreciation and amortization | 125 | 124 | 506 | 483 | 1 | 1 | % | 23 | 5 | % | |||||||||||||||||||
Acquisition and restructuring costs | 4 | — | 28 | — | 4 | nm | 28 | nm | |||||||||||||||||||||
Impairment charges | 976 | — | 976 | — | 976 | nm | 976 | nm | |||||||||||||||||||||
Legal settlements and reserves | — | — | (16) | 25 | — | nm | (41) | (164) | % | ||||||||||||||||||||
Share-based payment expense (3) | 58 | 58 | 223 | 240 | — | — | % | (17) | (7) | % | |||||||||||||||||||
Total operating expenses | 2,692 | 1,665 | 7,188 | 6,242 | 1,027 | 62 | % | 946 | 15 | % | |||||||||||||||||||
Income from operations | (503) | 405 | 858 | 1,679 | (908) | (224) | % | (821) | (49) | % | |||||||||||||||||||
Other (expense) income: | |||||||||||||||||||||||||||||
Interest expense | (97) | (99) | (394) | (392) | 2 | (2) | % | (2) | 1 | % | |||||||||||||||||||
Loss on extinguishment of debt | — | — | (40) | (57) | — | — | % | 17 | (30) | % | |||||||||||||||||||
Other income (expense) | (4) | (1) | 6 | (2) | (3) | 300 | % | 8 | (400) | % | |||||||||||||||||||
Total other (expense) income | (101) | (100) | (428) | (451) | (1) | 1 | % | 23 | (5) | % | |||||||||||||||||||
Income before income taxes | (604) | 305 | 430 | 1,228 | (909) | (298) | % | (798) | (65) | % | |||||||||||||||||||
Income tax expense | (73) | (58) | (299) | (290) | (15) | 26 | % | (9) | 3 | % | |||||||||||||||||||
Net income | $ | (677) | $ | 247 | $ | 131 | $ | 938 | $ | (924) | (374) | % | $ | (807) | (86) | % | |||||||||||||
Adjusted EBITDA | $ | 660 | $ | 587 | $ | 2,575 | $ | 2,427 | $ | 73 | 12 | % | $ | 148 | 6 | % | |||||||||||||
Gross Profit - Sirius XM | $ | 999 | $ | 978 | $ | 3,918 | $ | 3,817 | $ | 21 | 2 | % | $ | 101 | 3 | % | |||||||||||||
Gross Margin % - Sirius XM | 61 | % | 61 | % | 62 | % | 62 | % | — | % | — | % | — | % | — | % | |||||||||||||
Gross Profit - Pandora | $ | 234 | $ | 187 | $ | 571 | $ | 624 | $ | 47 | 25 | % | $ | (53) | (8) | % | |||||||||||||
Gross Margin % - Pandora | 42 | % | 39 | % | 34 | % | 36 | % | 3 | % | 8 | % | (2) | % | (6) | % |
nm - not meaningful | |
(1) | For the year ended December 31, 2020, revenue share and royalties excludes a reversal of a pre-acquisition reserve of $16 for royalties. |
(2) | For the year ended December 31, 2019, general and administrative excludes a one-time $25 legal settlement associated with Do-Not-Call litigation. |
(3) | Allocation of share-based payment expense: |
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Programming and content - Sirius XM | $ | 7 | $ | 7 | $ | 29 | $ | 29 | |||||||
Customer service and billing - Sirius XM | 2 | 1 | 6 | 4 | |||||||||||
Transmission - Sirius XM | 1 | — | 4 | 4 | |||||||||||
Programming and content - Pandora | 1 | 2 | 2 | 2 | |||||||||||
Transmission - Pandora | 1 | 4 | 3 | 6 | |||||||||||
Sales and marketing | 18 | 21 | 68 | 81 | |||||||||||
Engineering, design and development | 12 | 12 | 43 | 53 | |||||||||||
General and administrative | 16 | 11 | 68 | 61 | |||||||||||
Total share-based payment expense | $ | 58 | $ | 58 | $ | 223 | $ | 240 |
Key Financial and Operating Metrics
A full glossary defining our key financial and operating metrics can be found in our Annual Report on Form 10-K for the year ended December 31, 2020.
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, 2020 compared to December 31, 2019:
As of December 31, | 2020 vs 2019 Change | ||||||||||
(subscribers in thousands) | 2020 | 2019 | Amount | % | |||||||
Sirius XM | |||||||||||
Self-pay subscribers | 30,887 | 29,978 | 909 | 3 | % | ||||||
Paid promotional subscribers | 3,827 | 4,931 | (1,104) | (22) | % | ||||||
Ending subscribers | 34,714 | 34,909 | (195) | (1) | % | ||||||
Traffic users | 9,301 | 9,334 | (33) | — | % | ||||||
Sirius XM Canada subscribers | 2,622 | 2,707 | (85) | (3) | % | ||||||
Pandora | |||||||||||
Monthly active users - all services | 58,882 | 63,508 | (4,626) | (7) | % | ||||||
Self-pay subscribers | 6,298 | 6,165 | 133 | 2 | % | ||||||
Paid promotional subscribers | 43 | 49 | (6) | (12) | % | ||||||
Ending subscribers | 6,341 | 6,214 | 127 | 2 | % |
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, 2020 and 2019:
2020 vs 2019 Change | |||||||||||||||||||||||||||||
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | Three Months | Twelve Months | ||||||||||||||||||||||||||
(subscribers in thousands) | 2020 | 2019 | 2020 | 2019 (1) | Amount | % | Amount | % | |||||||||||||||||||||
Sirius XM | |||||||||||||||||||||||||||||
Self-pay subscribers | 407 | 341 | 909 | 1,063 | 66 | 19 | % | (154) | (14) | % | |||||||||||||||||||
Paid promotional subscribers | (128) | 14 | (1,104) | (193) | (142) | (1,014) | % | (911) | (472) | % | |||||||||||||||||||
Net additions | 279 | 355 | (195) | 870 | (76) | (21) | % | (1,065) | (122) | % | |||||||||||||||||||
Weighted average number of subscribers | 34,651 | 34,708 | 34,523 | 34,314 | (57) | — | % | 209 | 1 | % | |||||||||||||||||||
Average self-pay monthly churn | 1.6 | % | 1.7 | % | 1.7 | % | 1.7 | % | (0.1) | % | (6) | % | — | % | — | % | |||||||||||||
ARPU (2) | $ | 14.33 | $ | 14.03 | $ | 14.10 | $ | 13.82 | $ | 0.30 | 2 | % | $ | 0.28 | 2 | % | |||||||||||||
SAC, per installation | $ | 14.61 | $ | 23.74 | $ | 18.65 | $ | 22.91 | $ | (9.13) | (38) | % | $ | (4.26) | (19) | % | |||||||||||||
Pandora | |||||||||||||||||||||||||||||
Self-pay subscribers | (63) | (92) | 133 | 251 | 29 | (32) | % | (118) | (47) | % | |||||||||||||||||||
Paid promotional subscribers | — | 4 | (6) | (707) | (4) | (100) | % | 701 | 99 | % | |||||||||||||||||||
Net additions | (63) | (88) | 127 | (456) | 25 | (28) | % | 583 | 128 | % | |||||||||||||||||||
Weighted average number of subscribers | 6,418 | 6,280 | 6,315 | 6,654 | 138 | 2 | % | (339) | (5) | % | |||||||||||||||||||
ARPU | $ | 6.67 | $ | 6.76 | $ | 6.76 | $ | 6.61 | $ | (0.09) | (1) | % | $ | 0.15 | 2 | % | |||||||||||||
Ad supported listener hours (in billions) | 2.96 | 3.21 | 12.50 | 13.44 | (0.25) | (8) | % | (0.94) | (7) | % | |||||||||||||||||||
Advertising revenue per thousand listener hours (RPM) | $ | 112.71 | $ | 94.55 | $ | 79.24 | $ | 80.41 | $ | 18.16 | 19 | % | $ | (1.17) | (1) | % | |||||||||||||
Licensing costs per thousand listener hours (LPM) | $ | 46.67 | $ | 42.20 | $ | 40.14 | $ | 38.94 | $ | 4.47 | 11 | % | $ | 1.20 | 3 | % | |||||||||||||
Licensing costs per paid subscriber (LPU) | $ | 4.21 | $ | 4.04 | $ | 4.14 | $ | 4.06 | $ | 0.17 | 4 | % | $ | 0.08 | 2 | % | |||||||||||||
Total Company | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 660 | $ | 587 | $ | 2,575 | $ | 2,427 | $ | 73 | 12 | % | $ | 148 | 6 | % | |||||||||||||
Free cash flow (4) | $ | 448 | $ | 408 | $ | 1,660 | $ | 1,647 | $ | 40 | 10 | % | $ | 13 | 1 | % |
(1) | Includes Pandora's results for the twelve month period, inclusive of pre-acquisition results for the period January 1, 2019 through January 31, 2019. |
(2) | ARPU for Sirius XM excludes subscriber revenue from our connected vehicle services of $44 and $43 for the years and $174 and $159 for the twelve months ended December 31, 2020 and 2019, respectively. |
(3) | Free cash flow has not been adjusted for Pandora's pre-acquisition results. |
Reconciliation from GAAP Net income to Non-GAAP Adjusted EBITDA:
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net income: | $ | (677) | $ | 243 | $ | 131 | $ | 914 | |||||||
Add back items excluded from Adjusted EBITDA: | |||||||||||||||
Legal settlements and reserves | — | — | (16) | 25 | |||||||||||
Acquisition and restructuring costs (1) | 4 | 1 | 28 | 84 | |||||||||||
Share-based payment expense | 58 | 58 | 223 | 229 | |||||||||||
Depreciation and amortization | 125 | 124 | 506 | 468 | |||||||||||
Impairment charges | 976 | — | 976 | — | |||||||||||
Interest expense | 97 | 99 | 394 | 390 | |||||||||||
Loss on extinguishment of debt | — | — | 40 | 57 | |||||||||||
Other (income) expense | 4 | 1 | (6) | 3 | |||||||||||
Income tax expense | 73 | 56 | 299 | 283 | |||||||||||
Purchase price accounting adjustments: | |||||||||||||||
Revenues | — | 8 | 6 | 13 | |||||||||||
Operating expenses | — | (3) | (6) | (14) | |||||||||||
Pro forma adjustments (2) | — | — | — | (25) | |||||||||||
Adjusted EBITDA | $ | 660 | $ | 587 | $ | 2,575 | $ | 2,427 |
(1) | Acquisition and restructuring costs include $21 of share-based compensation expense for the year ended December 31, 2019. |
(2) | Pro forma adjustment for year ended December 31, 2019 includes Pandora's Net income for the year ended December 31, 2019 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 income of $1. |
Reconciliation of Free Cash Flow:
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Cash Flow information | |||||||||||||||
Net cash provided by operating activities | $ | 568 | $ | 532 | $ | 2,018 | $ | 2,017 | |||||||
Net cash used in investing activities | $ | (397) | $ | (129) | $ | (741) | $ | (3) | |||||||
Net cash used in financing activities | $ | (132) | $ | (373) | $ | (1,314) | $ | (1,959) | |||||||
Free Cash Flow | |||||||||||||||
Net cash provided by operating activities | $ | 568 | $ | 532 | $ | 2,018 | $ | 2,017 | |||||||
Additions to property and equipment | (120) | (124) | (350) | (363) | |||||||||||
Purchases of other investments | — | — | (8) | (7) | |||||||||||
Free cash flow | $ | 448 | $ | 408 | $ | 1,660 | $ | 1,647 |
Reconciliation of SAC, per installation:
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||
(costs in millions and installs in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Subscriber acquisition costs, excluding connected vehicle services | $ | 105 | $ | 114 | $ | 362 | $ | 427 | |||||||
Less: margin from sales of radios and accessories, excluding connected vehicle services | (54) | (38) | (154) | (144) | |||||||||||
$ | 51 | $ | 76 | $ | 208 | $ | 283 | ||||||||
Installations | 3,476 | 3,202 | 11,091 | 12,355 | |||||||||||
SAC, per installation (a) | $ | 14.61 | $ | 23.74 | $ | 18.65 | $ | 22.91 |
(a) | Amounts may not recalculate due to rounding. |
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the leading audio entertainment company in North America, 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's properties reach more than 150 million listeners, the largest addressable audience in the U.S., across all categories of digital audio – music, sports, talk, and podcasts. SiriusXM's acquisitions of Stitcher and Simplecast, alongside industry-leading ad tech company AdsWizz, make it a leader in podcast hosting, production, distribution, analytics and monetization. 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. 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: the current coronavirus (COVID-19) pandemic is adversely impacting our business; our substantial competition that is likely to increase over time; our efforts to attract and retain subscribers and listeners, or convert listeners into subscribers, which may not be successful, and may adversely affect our business; our Pandora ad-supported business has suffered a loss of monthly active users, which may adversely affect our Pandora business; privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities; we engage in extensive marketing efforts and the continued effectiveness of those efforts are an important part of our business; consumer protection laws and our failure to comply with them could damage our business; a substantial number of our Sirius XM subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers; our ability to profitably attract and retain subscribers to our Sirius XM service as our marketing efforts reach more price-sensitive consumers is uncertain; our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business; if we are unable to maintain revenue growth from our advertising products, particularly in mobile advertising, our results of operations will be adversely affected; if we fail to accurately predict and play music, comedy or other content that our Pandora listeners enjoy, we may fail to retain existing and attract new listeners; if we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions and private litigation and our reputation could suffer; interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business; we rely on third parties for the operation of our business, and the failure of third parties to perform could adversely affect our business; our business depends in part upon the auto industry; our Pandora business depends in part upon consumer electronics manufacturers; the market for music rights is changing and is subject to significant uncertainties; our ability to offer interactive features in our Pandora services depends upon maintaining licenses with copyright owners; the rates we must pay for "mechanical rights" to use musical works on our Pandora service have increased substantially and these new rates may adversely affect our business; failure of our satellites would significantly damage our business; our Sirius XM service may experience harmful interference from wireless operations; failure to comply with FCC requirements could damage our business; economic conditions, including advertising budgets and discretionary spending, may adversely affect our business and operating results; if we are unable to attract and retain qualified personnel, our business could be harmed; we may not realize the benefits of acquisitions or other strategic investments and initiatives, including the acquisition of Pandora; our use of pre-1972 sound recordings on our Pandora service could result in additional costs; we may from time to time modify our business plan, and these changes could adversely affect us and our financial condition; we have a significant amount of indebtedness, and our debt contains certain covenants that restrict our operations; our facilities could be damaged by natural catastrophes or terrorist activities; the unfavorable outcome of pending or future litigation could have an adverse impact on our operations and financial condition; failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results; some of our services and technologies may use "open source" software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses; rapid technological and industry changes and new entrants could adversely impact our services; existing or future laws and regulations could harm our business; we may be exposed to liabilities that other entertainment service providers would not customarily be subject to; our business and prospects depend on the strength of our brands; we are a "controlled company" within the meaning of the NASDAQ listing rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements; while we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time; and our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock. 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, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 30, 2020, which are 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.