More layoffs are coming this week. Satellite radio company SiriusXM announced that it will lay off 475 employees, or about 8% of its total workforce, according to a filing with the Securities and Exchange Commission. SiriusXM CEO Jennifer Witz said in an email to employees that almost every department will be impacted by the cuts, but the cuts are necessary for the long-term health, sustainability and profitability of the company.
“We are entering into a new phase for the company. The investments we are making in the business this year, coupled with today’s uncertain economic environment, require us to think differently about how our organization is structured,” Witz said.
In the email, Witz said the company began a companywide review of the business in November to identify areas where they could be more efficient and agile. That review resulted in major cost-cutting measures where SiriusXM could limit discretionary spending. Witz noted the following areas where spending could be cut:
- A reduction in content and marketing spending
- Reducing the company’s real estate footprint
- Imposing tighter restrictions on travel and entertainment spending
Though these cost reductions will help the satellite radio company save money, they aren’t enough.
“Over the past five years, our business has grown and expanded with the addition of new acquisitions, business lines, and revenue streams. Now, we have completed an assessment of our departments and functions to determine where we can improve collaboration, consolidate teams to achieve greater efficiencies, and ultimately, design an organization structure that is best positioned to achieve our priorities,” Witz said in her email to the company.
“As a result, nearly every department across SiriusXM will be impacted. We believe the new operational design will allow us to move faster and more effectively as we take on new challenges across our business,” added Witz. “Together, we are committed to delivering the best premium audio experience in North America. We are evolving our service to give the next generation of listeners new ways to discover and engage with our incredible programming and talent. With our vision as clear as ever, and our operating transformation now underway, we will continue to make investments as we gear up for our next major milestone: the launch of a new, best-in-class SiriusXM experience.”
SiriusXM reaches more than 34 million paid subscribers with music, sports, entertainment, comedy, talk, news, traffic, weather, podcasts, infotainment and other content. They also own Pandora, an audio streaming service, with more than 50 million active users, and Stitcher, a podcast platform with more than 400 shows on three original networks.
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Fourth-quarter and full-year 2022 financials
Last month, SiriusXM released its fourth-quarter and full-year 2022 financials, showing a slight increase in revenue and an impressive net income, meeting all of the company’s guidance for the year. For 2022, SiriusXM reported revenue of $9.0 billion, a 4% increase year-over-year, and net income of $1.21 billion, or $0.31 diluted earnings per share. For 2022, subscriber revenue accounted for 76.6% of total revenue.
Other highlights include the following:
- SiriusXM ended the year with 32.4 million self-pay subscribers, an increase of 348,000 subscribers. Self-pay monthly churn was 1.5% for the fourth quarter, a record low level for the company.
- SiriusXM’s total revenue for 2022 was $6.9 billion, a 4% increase year-over-year, and an increase of $0.87 in average revenue per user. SiriusXM subscriber revenue grew 5% which was offset by a decline in paid promotional subscribers.
- SiriusXM’s gross profit for the year was $4.3 billion.
- Self-pay subscribers to Pandora Plus and Pandora Premium dropped 2%, ending with 6.2 million paid subscribers for the year compared to 6.3 million in 2021.
- Pandora and off-platform revenue for the year was $2.1 billion, a 1% increase over 2021.
- Pandora and off-platform had a gross profit of $655 million for the year.
- At year end, Pandora had 47.6 million monthly active users, down 9% from 52.3 million in 2021.
- Total ad-supported listener hours were 10.9 billion, a 6% decrease over the prior year.
2023 guidance
SiriusXM provided the following guidance for 2023:
- Estimated total revenue of $9.0 billion
- Adjusted EBITDA of $2.7 billion
- Free cash flow of $1.05 billion
Insider Take
SiriusXM is the latest in a long line of technology and entertainment companies laying off staff to become leaner and more agile in uncertain economic times. Witz said the company tried to avoid layoffs by first looking at other cost-cutting measures and operational efficiencies, but headcount reduction was still necessary. Based on the company’s most recent financial report, the company doesn’t seem to be in imminent danger. However, with a softer advertising market and declines in subscribers, the company needs to be prepared for whatever’s next.
We can’t help but think that they are following the party line of other companies in similar positions.
If they lay off people now, they will be just one of many companies doing the same. They reiterated the same things we’ve heard from others – this was a difficult decision, it is hard to let people go, we thank them for their service, and we have to do this for our long-term future. We get it, but if the company is cutting back on content and reducing staff, will subscribers still turn to SiriusXM, Pandora and Stitcher as their go to audio platforms?
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