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Sirius Increases Revenue 365%

4/28/2005 10:27:00 AM Eastern

New York — Sirius Satellite Radio more than quadrupled its revenue in the first quarter, driven by a net increase in its subscriber base, with the total hitting $43.2 million, up 365 percent from the $9.3 million recorded in the first three months of 2004.

Robust retail sales and rapidly expanding sales in its automotive distribution channel helped Sirius attain “better-than-expected” subscriber growth in the first quarter. The company reported 305,437 net additions in the first three months, compared with 90,602 net additions in the same quarter last year. Ending subscribers for the first quarter reached 1.4 million, up from 351,663 year-on-year.

Sirius also is again raising its 2005 year-end subscriber estimate to over 2.7 million, up from previous guidance of over 2.5 million.

Loss from operations in the first quarter jumped to $190.3 million, from a loss of $119.5 million in the first three months of 2004. Net loss moved up to $193.6 million in the period, from $144.1 million year-over-year. Sirius said adjusted loss from operations in the first quarter increased to $127.1 million from a year-ago loss of $78 million, due, in part, to $40.1 million of increased subscriber acquisition costs.

Sirius recorded average monthly churn of 1.3 percent in the first quarter, down from the 2 percent reported in the same three months the prior year. This was the lowest churn rate since the launch of Sirius service.

Subscriber acquisition costs per gross subscriber addition dropped to $190 in the first three months, a 23 percent improvement over the $248 registered in the same period a year earlier. The company expects this number to decrease to $145 for the full year 2005.

Average monthly net revenue per subscriber increased to $10.72 in the first three months, up from $9.94.

In a conference call, Sirius announced it will offer a $50 rebate on all Sirius retail products from May 2 through late June in time for the “Dads and Grads” selling season.

In addition, the company said it has restored adequate product supply to retailers, after first-quarter shortages resulted in as much as 20,000 to 25,000 lost subscribers during that period.

Sirius’ new Sportster Replay, with built-in memory buffer for recording and storing up to 44 minutes of Sirius programming, will ship in good supply for the spring, Sirius added.

Despite the product shortages in the first quarter, Sirius said it added 174,202 net subscribers from its retail channel, a 166 percent increase over the 65,514 retail net additions year-on-year.

Mel Karmazin, CEO, said he expects Sirius’ market share at retail will be “on a parity” with XM by the end of the year, based on statistics from Port Washington, N.Y.-based The NPD Group.

Sirius also said its next-generation chips have just gone into production and will be featured in new products for the fall. Rolling out these new products is a key focus for the company as the new chips allow a 20 percent to 30 percent reduction in product cost.

Prior to the conference call, Sirius said Joe Clayton, who stepped down as Sirius’ CEO late last year and was replaced by Karmazin, will remain chairman of Sirius through November 2006. Additional reporting by Amy Gilroy.

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