Satellite radio and media company Sirius XM (NASDAQ:SIRI) met Wall Street’s revenue expectations in Q3 CY2024, but sales fell 4.4% year on year to $2.17 billion. The company’s full-year revenue guidance of $8.68 billion at the midpoint also came in slightly below analysts’ estimates. Its GAAP loss of $8.74 per share was 1,305% below analysts’ consensus estimates.

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Sirius XM (SIRI) Q3 CY2024 Highlights:

• Revenue: $2.17 billion vs analyst estimates of $2.19 billion (in line)

• EPS: -$8.74 vs analyst estimates of $0.73 (-$9.47 miss due to an impairment charge)

• EBITDA: $693 million vs analyst estimates of $683.3 million (1.4% beat)

• The company dropped its revenue guidance for the full year to $8.68 billion at the midpoint from $8.75 billion, a 0.9% decrease

• EBITDA guidance for the full year is $2.7 billion at the midpoint, in line with analyst expectations

• Gross Margin (GAAP): 69.7%, up from 49.6% in the same quarter last year

• Operating Margin: -134%, down from 24.8% in the same quarter last year

• EBITDA Margin: 31.9%, in line with the same quarter last year

• Free Cash Flow Margin: 4.3%, down from 12.8% in the same quarter last year

• : 39.07 million, down 1.01 million year on year

• Market Capitalization: $9.29 billion

Company Overview

Known for its commercial-free music channels, Sirius XM (NASDAQ:SIRI) is a broadcasting company that provides satellite radio and online radio services across North America.

Wireless, Cable and Satellite

The massive physical footprints of cell phone towers, fiber in the ground, or satellites in space make it challenging for companies in this industry to adjust to shifting consumer habits. Over the last decade-plus, consumers have ‘cut the cord’ to their landlines and traditional cable subscriptions in favor of wireless communications and streaming video. These trends do mean that more households need cell phone plans and high-speed internet. Companies that successfully serve customers can enjoy high retention rates and pricing power since the options for mobile and internet connectivity in any geography are usually limited.

Sales Growth

Reviewing a company’s long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Over the last five years, Sirius XM grew its sales at a sluggish 4% compounded annual growth rate. This shows it failed to expand in any major way, a rough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Sirius XM’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.1% annually.