SiriusXM added 210,000 subscribers to its satellite radio service last quarter, while it's Pandora streaming music service added just 33,000 paid subscribers. By contrast, Spotify added 5 million paid users in the same three months.
Shares of Sirius XM declined 0.5% in premarket trading Thursday, on missed profit expectations.
THIRD QUARTER 2019 HIGHLIGHTS
- Self-Pay Subscribers Top 29.6 Million. SiriusXM added 302,000 net new self-pay subscribers in the third quarter to end with more than 29.6 million self-pay subscribers. Total net subscriber additions in the third quarter were 210,000, resulting in more than 34.6 million total SiriusXM subscribers at the end of the period. Paid promotional subscribers decreased due to declines in shipments from automakers offering paid promotional subscriptions. Self-pay monthly churn for the quarter was 1.7%, compared to 1.8% in the third quarter of 2018.
- SiriusXM Revenue of Nearly $1.6 Billion. Third quarter revenue of $1.6 billion grew 7% compared to the prior year period. This growth was driven by a 3% increase in total SiriusXM subscribers and 3% growth in SiriusXM's average revenue per user (ARPU) to $13.90.
- Gross Profit Grows 7%. Total cost of services at SiriusXM increased 6% to $596 million in the third quarter, driven primarily by higher revenue share and royalties and programming and content expenses. Gross profit at SiriusXM in the quarter totaled $970 million, increasing 7% over the third quarter of 2018, and produced a gross margin of 62%, flat compared to the prior year period.
- Marvel to Create Original Podcasts for SiriusXM and Pandora. SiriusXM and Marvel recently announced a multi-year agreement under which Marvel will create a substantial number of exclusive podcasts for SiriusXM and Pandora. In Marvel's most sweeping podcast deal ever, the venture will include both scripted and unscripted series, themed live events, and much more, premiering in 2020. SiriusXM and Pandora will also debut many of Marvel's most popular podcasts before they can be heard anywhere else.
- Advertising Revenue Hits All-Time High. Ad revenue at Pandora reached a record $315 million, growing 8% over the third quarter of 2018. Ad revenue was driven by strong third quarter monetization of $85 per thousand hours, growing 10% over the third quarter 2018. Strength in traditional audio advertising, boosted by video programmatic and engagement-based video, as well as the expansion of off-platform efforts and fees generated on the AdsWizz platform drove revenue growth. Total revenue for Pandora grew 7% to $447 million in the quarter, aided in part by a 5% increase in subscriber revenue to $132 million.
- Total Ad Supported Listener Hours of 3.32 Billion. Monthly Active Users (MAUs) at Pandora were 63.1 million at the end of the third quarter, down from 68.8 million in the prior year period. Total ad supported listener hours were 3.32 billion in the period, down from 3.59 billion in the third quarter of 2018.
- Self-Pay Net Adds of 33,000. Pandora added 33,000 net new self-pay subscribers in the third quarter to end with nearly 6.3 million self-pay subscribers. In the third quarter, a one-year paid promotional subscription trial with T-Mobile ended, resulting in approximately 700,000 paid promotional trials being retired. This brought total Pandora subscribers to over 6.3 million at the end of the period, which included a paid promotional subscriber base of 45,000.
- Gross Profit Grows 19%. Total cost of services at Pandora in the third quarter 2019 of $278 million increased 1% compared with the third quarter 2018. This resulted in gross profit at Pandora of $169 million, up 19% over the third quarter 2018, and produced a gross margin in the quarter of 38%, growing approximately 400 basis points from 34% in the prior year period. This expansion was driven primarily by lower revenue share and royalties and customer service and billing expenses as a percentage of revenue.
"SiriusXM's strong year for capital returns continued in the third quarter, with $464 million of common stock repurchased in the quarter. Total capital returned to stockholders, including dividends, is over $2.1 billion year-to-date through the third quarter — our largest first nine months for capital returns ever. At quarter-end, our debt to adjusted EBITDA ratio was 3.25 times and we had nearly $1.7 billion available on our revolving credit facility. This gives us ample liquidity to continue investing in our business while returning capital to stockholders," noted David Frear, Chief Financial Officer, SiriusXM.