New York — In Sirius XM Radio’s first financial report since its merger the company reported stand-alone Sirius Satellite Radio second-quarter 2008 financial results.
For the quarter Sirius posted a 25 percent increase in revenue, total subscribers in excess of 8.9 million and a 70 percent decrease in the adjusted loss from operations.
For the second quarter of 2008, Sirius had total revenue of $283.0 million compared with $226.4 million for the second quarter of 2007. This 25 percent, or $56.6 million, increase in revenue was driven by a $56.9 million increase in subscriber revenue resulting from the net increase in subscribers of 1,781,601 from the second quarter of 2007.
The company’s adjusted loss from operations decreased $55.5 million, to $23.8 million, for the second quarter of 2008, from $79.3 million for the second quarter of 2007. The decrease adjusted loss was primarily driven by the increase in total revenue of $56.6 million and a $24.3 million improvement in subscriber acquisition costs, which more than offset an increase in revenue share and royalties.
“Second-quarter stand-alone Sirius results once again demonstrated that we achieved strong revenue growth and solid cost control,” said Mel Karmazin, CEO of Sirius. “Despite a tough economy and weak auto sales, gross additions set a new second-quarter record. In the second quarter both revenue and subscribers grew 25 percent as compared with last year, while cash costs remained essentially flat, leading to a 70 percent reduction in our second-quarter EBITDA loss.”
Karmazin added, “The combined company now has an annualized revenue run-rate of over $2.4 billion, making Sirius XM Radio one of the fastest-growing and best-positioned subscription-media businesses. With rapid integration efforts underway, we started realizing synergies on Day 1. We expect to realize $400 million in synergies next year and see this figure growing substantially beyond 2009.”
Sirius ended the second quarter of 2008 with 8,924,139 subscribers, up 25 percent from 7,142,538 subscribers at the end of the second quarter of 2007. Retail subscribers increased 7 percent in the second quarter of 2008 to 4,676,814, from 4,364,646 at the end of the second quarter of 2007. OEM subscribers increased 53 percent in the second quarter of 2008 to 4,247,325, from 2,777,892 at the end of second quarter of 2007. During the second quarter of 2008, Sirius added 279,820 net subscribers.
Total revenue for the second quarter of 2008 increased to $283.0 million, up 25 percent from second-quarter 2007 total revenue of $226.4 million. Second-quarter 2008 average monthly self-pay customer churn rate was 1.6 percent. The second quarter of 2008 conversion rate was approximately 48 percent. Subscriber acquisition costs (SAC) per gross subscriber addition was $78 in the second quarter of 2008, an improvement of 27 percent over second-quarter 2007 SAC per gross subscriber addition of $107.
Sales and marketing expenses increased $2.7 million, to $46.7 million, for the second quarter of 2008, from $44.0 million for the second quarter of 2007. This increase was primarily attributable to equipment-related retention costs associated with efforts to retain existing subscribers the company believes will result in higher revenue and lower churn. This was offset by lower consumer advertising and reduced cooperative marketing spend with the company’s channel partners.
For the six months, ended June 30, Sirius recognized total revenue of $553.4 million, compared with $430.5 million for the same period last year. This 29 percent, or $122.9 million increase in revenue, was primarily driven by a $121.7 million increase in subscriber revenue, resulting from the net increase in subscribers of 1,781,601 from the end of the second quarter of 2007.
The company’s adjusted loss from operations decreased $100.1 million, to $63.2 million, for the six months, from $163.3 million for the same period the prior year This decrease was driven by a 29 percent, or $122.9 million, increase in total revenue, which more than offset the 3 percent, or $21.9 million, increase in operating expenses.
