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Sirius XM (SIRI) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Sirius XM Holdings SIRI is set to report fourth-quarter 2019 results on Feb 4.

The Zacks Consensus Estimate for earnings remained unchanged at 6 cents per share over the past 30 days and is the same as the year-ago quarter’s reported figure.

The consensus mark for revenues is pegged at $2.03 billion, implying growth of 35.7% from the year-ago period’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters and missed in two, with a negative surprise of 9.2%, on average.

Sirius XM Holdings Inc. Price and EPS Surprise


Sirius XM Holdings Inc. Price and EPS Surprise

Sirius XM Holdings Inc. price-eps-surprise | Sirius XM Holdings Inc. Quote


Let’s see how things are shaping up for this announcement.

Subscriber Base Expansion

On Jan 7, Sirius XM announced the addition of 1.063 million self-pay subscribers in 2019 to reach a user base of more than 30 million. The company had anticipated adding almost 1 million self-pay net subscribers. Moreover, the total paid subscriber base reached 34.9 million, which is a record in the company’s history.

SiriusXM also expects to meet or exceed its 2019 guidance for revenues, adjusted EBITDA and free cash flow. Notably, revenues are expected to be $7.85 billion, while adjusted EBITDA to be $2.4 billion. Free cash flow is expected to be $1.625 billion.

Further, SiriusXM provided the initial 2020 guidance. The company expects to add more than 0.9 million self-pay net subscribers. Total revenues are anticipated to be $8.1 billion, while adjusted EBITDA to be $2.5 billion. Free cash flow is expected to be $1.7 billion.

Factors to Consider

SiriusXM's focus on strengthening its content portfolio has been aiding subscriber growth.

The company’s strategy of collaborating with artists and organizations has paid well. Partnerships with the likes of Rolling Loud, popular rock band U2, Marvel, Drake, Howard Stern and Senator Al Franken to create exclusive content have been successful in attracting subscribers.

During the quarter, SiriusXM rebranded its Hip Hop Nation channel, Rolling Loud Radio, post the collaboration with the largest Hip Hop festival brand in the world. Further, with U2, the company launched U2X Radio.

Moreover, the availability of SiriusXM and Pandora contents on Amazon AMZN Alexa and Echo devices as well as Alphabet’s GOOGL Google Assistant is expected to have helped in expanding the subscriber base.

Further, SiriusXM’s partnership with NBA to broadcast the 2019-20 season, offering live play-by-play of every game along with in-depth talk and analysis, has been a major growth driver. The company also collaborated with NFL Films for a podcast on NFL 100 Greatest, hosted by James Brown.

SiriusXM further strengthened its footprint in basketball-related content with the signing of a  multi-year extension with Mike Krzyzewski, the Hall of Fame head coach of the Duke University Blue Devils, to continue hosting his exclusive show — Basketball and Beyond with Coach K — during the to-be-reported quarter.

Key Q4 Developments

During the quarter, the company signed a deal with General Motors GM, per which the latter will put SiriusXM with 360L into nearly one million selected 2020 Chevrolet, Buick, GMC and Cadillac vehicles.

Moreover, Nissan North America extended its partnership with SiriusXM through the 2028 model year. Per the deal, Nissan and INFINITI vehicles offer SiriusXM with 360L. Additionally, customers purchasing properly equipped Nissan and INFINITI vehicles will receive a three-month subscription to the SiriusXM Traffic and SiriusXM Travel Link infotainment services.

Zacks Rank

Sirius XM currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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