Despite growing competition in the streaming music market, SiriusXM (NASDAQ: SIRI) continues to hold its own with faithful listeners. Last week, the company reported second quarter revenue of $1.43 billion, a 6 percent increase year-over-year. SiriusXM also reported net income of $292 million, or $0.06 diluted earnings per share, representing 45 percent growth year-over-year.

“SiriusXM’s strong start to 2018 accelerated in the second quarter. We added 483,000 net new self-pay subscribers in the quarter with an impressive 1.6 percent self-pay churn rate, our best-ever performance. Our 6 percent growth in revenue would have been 8 percent absent the change in generally accepted accounting principles that was effective January 1, and we are thrilled to increase our full-year guidance for self-pay net additions, revenue and adjusted EBITDA,” said SiriusXM CEO in a news release.

“We never rest in finding, acquiring, and developing the best music, talk, entertainment, sports, and comedy programming in all of audio. Last week we announced we will bring subscribers an exclusive new comedy channel created with Netflix and fueled by their world-class comedy programming from top global talent. In just the last few months, we have brought our listeners live exclusive performances from stars such as pop’s Shawn Mendes, country’s Jason Aldean, and the incomparable U2 playing for our subscribers at Harlem’s legendary Apollo Theater,” said Meyer.

Other highlights for the quarter include:

• Total revenue of $1.43 billion is broken down as follows: $1.14 billion subscriber revenue, $47.2 million advertising revenue, $36.8 million equipment revenue, and $209.3 million in music royalties and other revenue.
• Revenue growth was driven by a 5 percent increase in subscribers.
• Adjusted EBITDA was $543 million, a 4 percent increase year-over-year, a company record for the second quarter.
• Operating cash flow was $579 million, a 20 percent increase year-over-year.
• Free cash flow was $486 million, a 17 percent increase year-over-year.
• The company added 483,000 net new self-pay subscribers, ending the quarter with approximately 28.2 million self-pay subscribers.
• Total net additions in Q2 were 429,000, ending the quarter with approximately 33.5 million SiriusXM subscribers.
• Average revenue per user was $13.30.
• The growth in net income was attributed to an $86 million unrealized gain from the company’s investment in Pandora and $64 million of tax savings.

CFO David Frear also commented on the strong quarter.

“In the second quarter, we spent $22 million to repurchase approximately 3.6 million shares and we paid nearly $50 million in dividends to stockholders. At the end of the quarter, our debt to adjusted EBITDA was just 3.0 times, and we had cash on hand of approximately $64 million and a completely undrawn revolver with capacity of $1.75 billion. This gives us ample liquidity to continue to invest in our business, make strategic investments and return capital to stockholders,” said Frear.

Based on the company’s Q2 results, the company has increased its full-year 2018 guidance as follows:

• Self-pay net subscriber additions of approximately 1.15 million
• Revenue of more than approximately $5.7 billion
• Adjusted EBITDA of approximately $2.175 billion
• Free cash flow of approximately $1.5 billion

On July 25, the day results were released, stock closed at $7.14 per share. That figure grew to $7.20 per share on July 26, but it has since dipped to $6.99 per share as of 7:01 p.m. EDT yesterday. On July 31, 2017, SiriusXM stock was valued at $5.86 per share. It has had peaks and valleys over the last year, but it continues to rebound after minor dips.

Insider Take:

SiriusXM continues to be a strong player in the satellite and streaming music markets. We attribute this to the various plan choices available and the unique, quality content that it offers its subscribers. In terms of plans, SiriusXM offers various price points and packages, as well as add-ons including streaming music, sports and news and a premier streaming package with on-demand programming. Based on its steady growth and its increase in guidance, we anticipate SiriusXM will continue to do well in 2018.