SiriusXM Radio turned in record revenue, earnings and subscription levels when it released first-quarter earnings on Tuesday. The company also announced that interim CEO Jim Meyer now has the CEO title. Meyer took over on an interim basis when longtime CEO Mel Karmazin stepped down in December.
The satellite radio company was firing on all cylinders financially. SiriusXM's revenue rose 12% to $897 million from $805 million in the first quarter of 2012. Net income grew 15% to $124 million from $108 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 26% to $262 million from $208 million. Free cash flow of $142 million in the quarter was also a record.
SiriusXM also set a new record for subscribers, adding net additions of 453,000 for a total of 24.4 million. Self-pay net additions, a metric that excludes subscribers receiving a trial subscription, were 304,000, up 9% to a record 19.9 million.
SiriusXM maintained its 2013 guidance for most major metrics. The company expects to add 1.6 million net subscribers and 1.4 million net self-pay subscribers. It reiterated guidance of revenue of over $3.7 billion and EBITDA of over $1.1 billion while increasing guidance on free cash flow of over $915 million from $900 million.
Meyer used the earnings call to pit SiriusXM against its online competitors. "We hold the strong belief that having satellite connectivity and IP connectivity in vehicles will prove to be a durable advantage versus IP-only connectivity as we move into a connected car world," Meyer said. He added that SiriusXM is already working closely with "several" original equipment manufacturers "on the development of in-car apps that will provide the initial integration of SiriusXM streaming services."
What is good for Pandora and Spotify will also be good for SiriusXM, he argued. While people understand that the integration of IP connectivity into automobiles will benefit streaming services, "almost no one has recognized that broader and improved streaming also gives us a much better opportunity to better serve our customers in their homes, offices and on the go," Meyer said.
In other words, Meyer believes consumers will react positively to a mix of satellite radio and Internet radio. SiriusXM has already diversified its product offering to address the public's interest in streaming music. The MySXM personalized Internet radio service allows listeners to tweak some existing channels to create a personalized selection of music.
SiriusXM's top priority is increasing household penetration in order to drive long-term growth. Meyer said the company will offer plans, such as family plans and discounted annual and multi-year subscriptions, to increase revenue per household and lifetime subscriber value. Although some plans may decrease average revenue per user, Meyer said such plans "have a positive effect of driving up the ultimate amount of revenue" received from those subscribers.