Revenue soared 150% to $167.1 million.
Sirius Satellite Radio's total revenue soared 150% to $167.1 million during the third quarter, which ended Sept. 30, compared to the $66.8 million in revenue earned during the same period in 2005. Sirius, which reported its results on Wednesday (Nov. 8), said it ended the period with 5,119,308 subscribers, a 135% increase over the 2,173,920 subscribers at the end of Q3 '05. The company reported a net loss of $162.9 million, or 12 cents per share, in Q3 compared with a net loss of $180.4 million, or 14 cents per share, in Q3 '05.
The New York-based satcaster also said it reduced subscriber acquisition costs by 23%, to $114 from $149 last year, and that the average monthly revenue per subscriber was $11.17 in the third quarter compared with $11.15 in the year-ago third quarter. Sirius said its average monthly churn increased slightly to 2% from 1.8% in the year-ago period, reflecting the impact of a 177% increase in new car installations. The company expects the 2006 monthly churn to be 1.8%.
"Sirius continues to focus on excellence in programming and solid execution of our business plan," said Mel Karmazin, CEO of Sirius. "Over the last year, we generated $100 million in new revenue, increased our share of satellite radio net subscriber additions by 24 percentage points and reduced our SAC per gross addition by 23%. Sirius has never been in a stronger position heading into the key fourth quarter holiday season, with exciting new products, compelling programming, and strong relationships with our retail and exclusive (original equipment manufacturers) partners. We are well prepared to meet fourth quarter demand and remain focused on achieving positive free cash flow."
Among its third quarter accomplishments, Sirius listed the worldwide launch of Sirius Internet Radio (SIR), a CD-quality, Internet version of its satellite radio service; the launch of the industry's first portable satellite radio with WiFi capabilities, The Stiletto 100, which allows users to listen for the first time to live and recorded Sirius content; an entire channel devoted to rock superstars The Who (channel 10); and a multi-year agreement with The Metropolitan Opera that includes the launch of Metropolitan Opera Radio, a channel for opera lovers.
The company says it has "nearly doubled" its OEM subscriber base during the nine months of 2006, reflecting increasing momentum from its exclusive automotive OEM arrangements.
On Wednesday, the satcaster reiterated its earlier guidance that it would end the year with 6.3 million subscribers; hold its average monthly churn of approximately 1.8%; hold down subscriber acquisition costs per gross subscriber to about $110; and have total revenue of $615 million. The company also expects to hold its adjusted loss from operations to approximately $565 million and have free cash flow loss of approximately $500 million. It said it could have its first quarter of positive free cash flow, after capital expenditures, as early as the fourth quarter of 2006.
Banc of America media analyst Jonathan Jacoby noted that Sirius' third quarter results "were better than expected in most cases and [the] guidance was unchanged across the board -- Sirius is sticking to its year-end target of 6.3 million subs." But he believes that investors should peel off shares of Sirius in their portfolios. "We believe that the company will state that it is just too early to tell if full-year sub-guidance is achievable. Our view -- Sirius will have a tough time achieving its subscriber target given relatively weak retail demand and with continued production cuts from their key OEM partners."