SiriusXM Radio (NASDAQ: SIRI) shares saw a retreat today following the release of its first-quarter earnings report. While the company surpassed revenue estimates, its full-year guidance fell short of expectations, and there were concerns about weak underlying growth. Consequently, the stock was down 4.9% as of 12:27 p.m. ET.
Sirius struggles to grow
In the first quarter, Sirius experienced a decline in self-pay subscribers, dropping by 359,000 to 33 million due to reduced trial starts at the end of 2023 and increased monthly churn at 1.7%.
While overall revenue decreased by 1% to $2.16 billion, it slightly exceeded estimates of $2.12 billion. However, SiriusXM revenue specifically dropped by 1% to $1.7 billion, whereas Pandora’s growth showed slight improvement. Notably, ad revenue surged by 7%, contrasting with a 1% decline in subscription revenue.
On the profitability front, adjusted EBITDA climbed by 4% to $650 million, and earnings per share rose from $0.06 in the same quarter last year to $0.07.
CEO Jennifer Witz expressed satisfaction with the solid first-quarter financial performance, highlighting record ad revenue for the first quarter and robust consumer engagement with newly released content.
What’s next for SiriusXM
Over the past decade, SiriusXM stock has remained relatively stagnant, and the acquisition of Pandora hasn’t provided the anticipated boost to the stock price as some investors had hoped.
Looking forward, the company has reiterated its guidance for 2024, anticipating revenue of $8.75 billion, a decrease of 2.2% from 2023 levels. It also projects adjusted EBITDA of $2.7 billion and free cash flow of $1.2 billion.
While these figures are respectable for a company with a market capitalization of $11 billion, the revenue forecast slightly missed the consensus at $8.79 billion, and concerns about growth persist, which continue to exert pressure on the stock.
Until SiriusXM returns to subscriber growth and achieves top-line expansion, its stock is likely to face challenges.
