Why is Sirius XM (SIRI) down 10.2% since its last earnings report?

It has been about a month since Sirius XM (SIRI) last reported earnings. Shares have lost about 10.2% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Sirius XM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to better understand the important catalysts.

Sirius XM’s first-quarter earnings beat estimates, revenues grow YoY

Sirius XM Holdings reported first-quarter 2024 earnings of 7 cents per share, surpassing the Zacks Consensus Estimate by 16.67% and remaining flat year-over-year.

Total reported revenues increased 0.8% year-over-year to $2.16 billion and topped the consensus estimate by 1.32%.

Subscriber revenue (77.7% of total revenue) declined 0.7% from the year-ago quarter to $1.68 billion. This number beats the Zacks Consensus Estimate by 1%.

Meanwhile, advertising revenue (18.6%) increased 7.2% year-over-year to $402 million. This number surpassed the Zacks Consensus Estimate by 4.14%.

Hardware revenue (2.3% of total revenue) increased 8.7% year-over-year to $50 million. This number surpassed the Zacks Consensus Estimate by 9.65%.

Other revenues (1.4% of total revenues) declined 6.3% from the year-ago quarter to $30 million and missed the Zacks Consensus Estimate by 9.96%.

Details on the standalone Sirius XM

Sirius XM Standalone segment revenues (77.1% of total revenues) were $1.66 billion, down 0.9% year-over-year.

Total subscriber base declined 1.7% year-over-year to 33.43 million, missing the Zacks Consensus Estimate by 0.45%.

Revenues declined due to a 1% decline in subscriber revenues of $1.54 billion. Advertising revenue was $40 million, down 2.4% year-over-year. Equipment revenue increased 8.7% year-over-year to $50 million. Other revenues declined 6.3% year-over-year to $30 million.

The number of self-pay subscribers increased by 3% year-on-year to 31.58 million. The net subscriber loss in the reported quarter amounted to 445 thousand. compared to net increases of PLN 281,000. in the same period a year earlier.

Average revenue per user was $15.36, up 0.5% year over year. This number missed the Zacks Consensus Estimate by 0.67%.

Pandora and OFF platform details

Pandora and OFF revenues (22.9% of total revenues) increased 7.1% year-over-year to $495 million, driven by an 8.4% increase in advertising revenues of $362 million and subscriber revenues increased 3.9% year over year to $133 million.

The number of self-pay subscribers to Pandora Plus and Pandora Premium decreased by 64,000 in the first quarter of 2024, ending the period at 5.9 million.

Total subscribers declined 4.5% year over year, ending the first quarter at 5.94 million. This number missed the Zacks Consensus Estimate by 1.1%.

In the first quarter, total hours spent by listeners with ads was 2.49 billion, down 3.9% year-over-year. Advertising revenue per thousand listening hours was $90.88, up 6.8% year-over-year.

Operational details

In the first quarter, total operating expenses decreased 0.4% year over year to $1.72 billion. The company saved approximately $45 million by optimizing costs and consolidating all of its businesses.

Adjusted EBITDA increased 4% year over year to $650 million.

Balance sheet and cash flow

As of March 31, 2024, cash and cash equivalents were $71 million compared to $216 million as of December 31, 2023.

Long-term debt was $8.72 billion as of March 31, 2024, compared to $8.69 billion as of December 31, 2023.

In the first quarter, operating cash flow was $308 million, compared to $350 million in the year-ago quarter.

Free cash flow was $132 million in the quarter, compared to $144 million reported in the prior year. The decline can be attributed to an increase in content fees and other payments from providers, partially offset by lower capital expenditures. Additionally, during the first quarter of 2024, the company invested approximately $187 million in capital investments related to the carbon capture tax and plans to invest an additional approximately $50 million during the remainder of 2024.

These capital investments are expected to reduce the company’s cash taxes by approximately $130 million in 2024. The company anticipates that most of the $250 million in after-tax net cash benefits will be realized during the latter part of the seven-year investment period.

Guidelines 2024

Revenue is expected to be $8.75 billion. Adjusted EBITDA is expected to be $2.7 billion. Free cash flow is expected to be $1.2 billion.

How have estimates changed since then?

It turns out that new estimates have been trending upwards over the past month.

As a result of these changes, the consensus estimate moved by 8.92%.

VGM results

At this point, Sirius XM has a solid Growth Score of B, although it lags slightly behind its Momentum Score of C. However, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, Sirius XM carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Sirius XM is part of the Zacks Broadcast industry. Shares of Grupo Televisa (TV) in the same industry have gained 11.7% over the past month. More than a month ago, the company published its results for the quarter ended March 2024.

In the most recent quarter, Grupo Televisa reported revenues of $939.92 million, representing a year-over-year change of -5.3%. EPS of $0.09 for the same period compared to -$0.08 a year ago.

For the current quarter, Grupo Televisa is expected to report a loss of $0.12 per share, representing a change of -1,300% from the prior-year quarter. The Zacks Consensus Estimate has moved -1100% over the past 30 days.

Grupo Televisa is sporting a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM rating of B.

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