SiriusXM Holdings has reported a 2% decline in total revenue, totaling $2.14 billion, attributed to decreased subscriber and advertising income alongside increased operational expenses. The company saw subscriber revenue of $1.63 billion, down from $1.66 billion a year prior, while advertising revenue fell to $432 million from $443 million. In addition, income from operations plummeted by 29% to $365 million compared to $471 million last year, and adjusted EBITDA declined to $668 million from $702 million.
Despite these setbacks, SiriusXM’s free cash flow notably increased by nearly 27% to $402 million, up from $317 million a year earlier. CEO Jennifer Witz noted that the challenging economic environment has impacted advertising revenue but highlighted the company’s strategic investments in podcasting—such as a deal with Trevor Noah and the launch of the true crime podcast Morbid—as positive moves attracting advertisers. Podcast advertising revenue surged by almost 50% year-over-year, suggesting a potential growth area for the company.
Witz pointed out that overall advertising revenue saw a slight decrease of about 2.5%, driven by shifts in budget allocation and competitive pricing pressures within the audio streaming space. Even as SiriusXM cut its sales and marketing budget by nearly $50 million, total operating expenses increased to $1.77 billion, mainly due to legal charges and rising subscriber acquisition costs.
The company experienced a loss of about 450,000 subscribers, with a relatively balanced split between paid promotional and self-pay subscriber losses. However, the total subscriber count remains robust at 31.5 million as of July 31, with an average revenue per user remaining steady at $15.22. Significantly, the trend shows an improvement in self-pay subscriber loss—a trend that has been declining for five consecutive quarters.
In a bid to enhance subscriber growth, SiriusXM recently introduced a new ad-supported service named SiriusXM Play, which will be offered at under $7 per month, appealing to cost-sensitive consumers who may have resisted subscriptions due to price. This new offering is aimed to launch widely by the end of 2025, with hopes that it will not only boost net subscriber growth but also increase advertising revenue.
Despite a 2.5% decline in Pandora revenue to $524 million and a drop in monthly active users, SiriusXM maintains a forward-looking 2025 goal of achieving $8.5 billion in total revenue, $2.6 billion in adjusted EBITDA, and $1.15 billion in free cash flow.
The company’s strategic pivots and innovative offerings, particularly in the podcasting space and the new lower-priced service, suggest that they are adapting to market challenges with a focus on long-term growth. There is cautious optimism that these initiatives can lead to recovery and a stronger position in the competitive audio landscape.