XM Cuts Losses,Adds Revenue,Subs In Quarter

By Staff On Nov 20 2006 - 8:00am

XM Satellite Radio reported higher revenue, a reduced net loss and 43 percent more subscribers for the quarter ended Sept. 30 vs. the same time last year.

Revenue increased by 57 percent year-over-year to about $240 million, while XM's net loss for the quarter reduced 36 percent to $84 million. XM ended the third quarter with 7.185 million subscribers, an increase of 43 percent over the prior year's third quarter.

"The more than 2.8 million gross subscriber additions year-to-date underscore the demand for XM," said Hugh Panero, CEO, XM Satellite Radio. "With significant growth in revenue and narrowing losses we are on track for positive cash flow from operations in the fourth quarter of this year."

The increase in revenue was driven by subscriber growth year-over-year, and increases in average revenue per subscriber, XM said. The satellite radio provider's net loss for the quarter was $84 million compared to a net loss of $132 million during the third quarter of 2005, a 36 percent improvement.

For the third quarter of 2006, the adjusted EBITDA loss (non- GAAP) substantially improved to a loss of just $2 million versus an adjusted EBITDA loss of $70 million in the third quarter of 2005. The primary differences between net loss and adjusted EBITDA are non-operating amounts and certain operating non-cash charges.

For the third quarter 2006, XM recorded gross subscriber additions of 868,007 and net subscriber additions of 286,002. XM finished the third quarter 2006 with a total of 7,185,873 subscribers, representing a 43 percent increase over the 5,034,642 subscribers at the end of the third quarter 2005.

For the third quarter of 2006, XM's subscriber acquisition cost (SAC), a component of cost per gross addition (CPGA) was $60 compared to $53 in the third quarter of 2005. CPGA was $93 compared to $89 in the third quarter of 2005.

XM projects that it will end the year with a total of subscribers between 7.7 million and 7.9 million, which is within the previously announced guidance range. XM expects to achieve positive cash flow from operations for the fourth quarter 2006. Consistent with the above range of subscribers, 2006 subscription revenue is expected to be in the $810 million to $815 million range and adjusted EBITDA loss is expected to be in the $205 million to $215 million range. XM will provide 2007 guidance, including subscribers, subscription revenues, EBITDA and cash flows, when it provides full year 2006 results.

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