Washington — XM Satellite Radio reported a 27 percent gain in sales and a reduced loss for the first quarter ended March 31.
XM had first quarter sales of $264 million compared with $208 million in the 2006 first quarter, and its net loss for this year’s first quarter was $122 million, an 18 percent improvement compared with the 2006 first quarter net loss of $149 million.
The company reported it ended the quarter with more than 7.9 million subscribers compared with 6.5 million subscribers in the prior year period and XM said it recently surpassed 8 million subscribers.
“During the quarter, we improved our retail performance, experienced strong OEM gross additions, extended our distribution agreements with Toyota and Honda, enhanced our customer service, maintained our churn rate at approximately 1.8 percent for the third consecutive quarter and strengthened key financial metrics for our business,” said Hugh Panero, XM’s CEO. “These results were driven by the operational initiatives we put in place over the last several quarters,” Panero said in a prepared statement.
For the first quarter of 2007, adjusted operating loss (formerly adjusted EBITDA) improved by 45 percent to a loss of $27 million, from a loss of $49 million in the prior year period. The 2007 first quarter adjusted operating loss includes $8 million in expenses related to the company’s pending merger with Sirius Satellite Radio.
In the 2007 first quarter, XM recorded gross subscriber additions of 868,000 and net subscriber additions of 285,000, which compare with 1 million gross additions and 569,000 net subscriber additions in the 2006 first quarter.
In the 2007 first quarter, XM’s subscriber acquisition costs (SAC), a component of cost per gross addition (CPGA), was $65 compared with $59 in the first quarter of 2006. CPGA in the 2007 first quarter was $103 compared with $93 in the first quarter of 2006.
XM said it expects subscriber numbers for 2007 to reach between 9.0 million and 9.2 million with “higher seasonal growth expected to occur in the latter part of the year … subscription revenue in the $1 billion dollar range, and improved cash flow from operations in 2007,” it said in a statement. It also said it expects full-year positive cash flow from operations in 2008.
More information is expected on XM’s proposed merger with Sirius during a security analyst conference call to be held later this morning.
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