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Why Is Sirius XM (SIRI) Up 6.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Sirius XM (SIRI). Shares have added about 6.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sirius XM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Sirius XM Q3 Earnings Lag Estimates, Revenues Rise Y/Y

Sirius XM Holdings reported third-quarter 2022 earnings of 7 cents per share, which missed the Zacks Consensus Estimate by 12.5% and declined 30% year over year.

Total revenues on a reported basis increased 3.7% year over year to $2.28 billion. The figure beat the consensus mark by 0.42%.

Subscriber revenues (76.1% of total revenues) rose 4.1% from the year-ago quarter to $1.73 billion.

Meanwhile, advertisement revenues (20%) climbed 1.3% year over year to $457 million. Equipment revenues (2.2% of total revenues) increased 22% year over year to $50 million.

Other revenues (1.7% of total revenues) decreased 2.5% from the year-ago quarter to $39 million.

Sirius XM Standalone Details

Sirius XM segment revenues were $1.74 billion, up 4.9% year over year. While the subscriber base declined 0.3%, revenues witnessed growth due to a 5.9% rise in Average revenue per user (ARPU), which amounted to $15.72.

Self-pay subscribers increased 3% year over year to 32.22 million. Net self-pay subscribers increased 138K in the reported quarter.

Total subscribers were 34.17 million at the end of third-quarter 2022, down from 34.26 million reported in the year-ago quarter.

Sirius XM Canada subscribers fell by 27K to 2.23 million. Subscriber revenues rose 4.6% year over year to $1.60 billion. Advertising revenues were $50 million, up 6.4% year over year.

Equipment revenues increased 22% year over year to $50 million. Other revenues decreased 2.5% year over year to $39 million.

Pandora & OFF Platform Details

Pandora and OFF platform’s revenues remained flat year over year at $538 million, owing to 0.7% growth in advertising revenues that totaled $407 million which was offset by subscriber revenues that declined 2.2% year over year to $131 million.

During the quarter, the company's podcasting and off-platform businesses generated $123 million in total revenues, an increase of 37% year-over-year.

Monthly Active Users  at Pandora were 48.8 million in the third quarter of 2022, down 7% year over year. Total ad-supported listener hours were 2.75 billion in the third quarter of 2022, down 4.8% year over year.

Pandora exited the third quarter with 6.26 million self-pay subscribers, down 2.9% year over year.

Operating Details

In the third quarter, total operating expenses increased 15.5% year over year to $1.81 billion.

Revenue share and royalty costs were up 5.7% year over year to $709 million. Programming & content costs totaled $146 million, up 9.8%.

Customer service & billing costs decreased 3.2% year over year to $121 million. Transmission costs declined 5.7% year over year to $50 million.

Subscriber acquisition costs rose 21.1% year over year to $86 million. General and administrative costs increased 7.3% to $117 million.

Engineering, design and development expenses remained flat year over year at $59 million. Sales and marketing expenses increased 5.5% to $268 million.

Adjusted EBITDA inched up 0.1% year over year to $720 million.

Balance Sheet & Cash Flow

As of Sep 30, 2022, cash and cash equivalents were $39 million compared with $126 million as of Jun 30, 2022.

The long-term debt, as of Sep 30, 2022, was $9.78 billion compared with $9.86 billion as of Jun 30, 2022.

In the third quarter of 2022, cash flow from operations was $1.3 billion compared with $1.37 billion in the year-ago quarter.

2022 Guidance

Revenues are expected to be $9 billion. Adjusted EBITDA is expected to be $2.8 billion. Free cash flow is expected to be $1.55 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Sirius XM has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Sirius XM has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Sirius XM belongs to the Zacks Broadcast Radio and Television industry. Another stock from the same industry, Netflix (NFLX), has gained 11.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Netflix reported revenues of $7.93 billion in the last reported quarter, representing a year-over-year change of +5.9%. EPS of $3.10 for the same period compares with $3.19 a year ago.

For the current quarter, Netflix is expected to post earnings of $0.49 per share, indicating a change of -63.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.2% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Netflix. Also, the stock has a VGM Score of D.

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