Sirius XM Smokes Its Shorts

Sirius XM Smokes Its Shorts

Sirius XM Radio just keeps growing.

The satellite radio provider delivered robust quarterly results this morning. Revenue climbed 12% to $940.1 million, just ahead of the $934.4 million that Wall Street was forecasting. A 9% increase in subscribers over the past year was the major contributor to the top-line spurt, though it also helps that Sirius XM is squeezing a little more revenue out of the average listener.

Earnings of $126 million -- or $0.02 a share -- matched expectations.

As a scalable model, once again we're seeing results get rosier as we work our way down the company's financial statements. Pre-tax profits rose 47%, and adjusted EBITDA clocked in 19% higher.

We knew that this would be a good quarter the moment that Sirius XM revealed that it closed out the period with 715,000 net new subscribers two weeks ago. We now know that it was 715,762 net additions during the last three months, making this Sirius XM's most successful quarter in terms of base growth since the merger of Sirius and XM five summers ago.

Naysayers were already starting to come around. There were just 325.6 million shares of Sirius XM sold short as of mid-July, and that's the lowest number of shorts since late last year.

It's not just the frustrated pessimists placing buy orders to cover their short positions. Sirius XM revealed this morning that it has spent $1.3 billion this year to buy back 391 million shares. The only negative point there is that the number of fully diluted shares outstanding over the past year has only shrunk from 6.51 billion to 6.48 billion in that time. The media darling is going to have to do a lot more buying -- and a lot less issuing -- if it seriously wants to make a dent in its huge share count.

Sirius XM had boosted its subscriber guidance two weeks ago, so the other thing worth watching would be if it increased its other outlook metrics this morning. We got one out of three, as Sirius XM boosted its adjusted EBITDA forecast while keeping revenue and free cash flow the same.

Despite the growing number of cheaper streaming alternatives, Sirius XM is as sticky as ever. Folks buying new cars with free satellite radio trial subscriptions continue to convert at a 45% clip, and the good news is that the monthly churn of subscribers already on the service fell to just 1.7%.

Once again, Sirius XM delivers.

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