Sirius XM Holdings (NASDAQ:SIRI) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
Sirius XM Holdings reported a strong start to 2026 with improvements in net subscriber additions, ARPU growth, and reduced churn.
The company announced a landmark partnership with YouTube to enhance advertising capacity and expand reach to 255 million monthly listeners.
Sirius XM Holdings reported a 1% increase in revenue to $2.09 billion, with advertising revenue growing 3% to $407 million.
The company achieved $45 million in cost savings towards its $100 million 2026 target, with a focus on efficiency and long-term value.
Guidance for 2026 includes relatively flat revenue, stable adjusted EBITDA, and modestly lower subscriber trends, with a focus on strong execution and free cash flow growth.
Full Transcript
OPERATOR
Welcome to the Sirius XM Holdings’ first quarter 2026 earnings call. This time all participants will be in listen only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jennifer Degrassia, Senior Vice President of Investor Relations. Thank you, Jennifer. You may begin.
Jennifer Degrassia (Senior Vice President of Investor Relations)
Thank you and good morning everyone. Welcome to Sirius XM Holdings’ first quarter 2026 earnings call. Today’s discussion will include prepared remarks from Jennifer Witts, our Chief Executive Officer, and Zach Coghlin, our Chief Financial Officer. Following their comments, we will open the call for questions. Joining us for the Q&A portion are Scott Greenstein, our President and Chief Content Officer, Wayne Thorsen, our Chief Operating Officer and Scott Walker, our Chief Advertising Revenue Officer. I would like to remind everyone that certain statements made during the call might be forward looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward looking statements are based upon management’s current beliefs and expectations and necessarily depend upon assumptions, data or methods that may be incorrect or imprecise. Such forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information about those risks and uncertainties, please view SiriusXM’s SEC filings and and today’s earnings release. We advise listeners not to rely unduly on forward looking statements and disclaim any intent or obligation to update them as we begin. I would like to remind our listeners that today’s call will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock based compensation. Additionally, please find a supplemental earnings presentation and trending schedule on our investor relations website for your convenience. With that, I’ll turn the call over to Jennifer Witts.
Jennifer Witts (Chief Executive Officer)
Good morning everyone and thank you for joining us today. We are off to a strong start in 2026, executing with focus and discipline against our three strategic priorities we outlined in December 2024 strengthening our subscription business by delivering exceptional in car listening experiences, accelerating growth across our advertising business and leveraging our scaled Sirius XM Holdings portfolio to drive efficiency and long term value in the first quarter. We made meaningful progress across each of these areas, supported by solid performance in our core business and strong operational execution. On the subscriber side, we delivered significant year-over-year improvement in net additions, grew ARPU and achieved the lowest first quarter churn, and highest subscriber satisfaction scores in our history. Through our recently announced landmark partnership with YouTube,. We will significantly enhance our advertising capacity and we continue to expand margins through our enhanced focus on efficiency, capturing $45 million toward our $100 million 2026 cost savings target. Before turning the call over to Zach for a more detailed review of our financials, I would like to offer a few observations starting with our subscription business performance in the quarter was strong with a meaningful year-over-year improvement in self pay, net additions to negative 111,000 and improvement of 192,000. This reflects the growing adoption of companion subscriptions among our most loyal customers, ongoing progress with our continuous service initiative and momentum in our Automotive Dealer Extended Duration plans. Together, These offerings expand Sirius XM Holdings’s presence across multiple vehicles and users within a household and make it easier for subscribers to seamlessly maintain service as they transition between vehicles. Deepening engagement and Reinforcing long term Loyalty While we remain mindful of a more measured auto sales environment and its potential impact on trial volumes, our resilient in car foundation and focus on controllable levers continue to support performance. Churn remained a standout, improving to 1.5% despite our February price increase which contributed to a 1% year-over-year increase in ARPU to $1,499. The combination of pricing discipline supported by continually adding value to our packages and the ongoing impact of our customer experience initiatives underscores the durability of our subscription model. Our strong retention is also supported by high customer satisfaction levels. Our latest study showed year-over-year improvement across all five core metrics satisfaction, perceived value, likelihood to continue, likelihood to recommend and the essentialness of our service. Notably, both loyalty and perception metrics rose in tandem, an important signal of not only current satisfaction but but also growing confidence in the long term value of our offering. We are also seeing traction across key demographics with a majority of the increase in satisfaction being driven by Gen X and Y. Gen X delivered strong gains, particularly in perceived value, intent to continue and essentialness, while Millennials showed meaningful improvement in satisfaction and value, highlighting both the progress we are making and the opportunity that remains. Content is a defining strength of Sirius XM Holdings and a key driver of perceived value and engagement. We continue to expand and evolve our programming in ways that fuel fandom and deepen engagement across music, sports, comedy and culture. In the first quarter we introduced exclusive full time artist led channels from global stars Morgan Wallen and John Summit alongside pop up channels from bts, Luke Combs and Robin, as well as distinctive programming such as John Mayer’s Grateful Dead Listening Party. We deepened our partnership with Metallica with the launch of the live Call in show Talika Talk expanded all 2K to our full subscriber base following eight consecutive quarters of audience growth and broadened our comedy offering with a dedicated 24. 7 channel featuring Sebastian Maniscalco. Our news and talk category is also gaining momentum, with consumption up 15% sequentially. This reflects continued investment in both independent and exclusive voices from the launch of Cuomo Mornings to the strong performance of the Megyn Kelly Channel where listening has grown 28% since its launch in November. We are also creating distinctive high impact moments for listeners, from intimate performances to major cultural events featuring artists like Noah Khan during Super Bowl Week, Hanny Chesney at Florabama, Morgan Wallen in Nashville and a recent SmartList taping in Hollywood. In sports, our offering is unmatched, spanning every major league and premier event from the NFL, MLB, NBA and NHL to college athletics, auto racing, golf and more, making Sirius XM a true year round destination for fans. Our college sports offering continues to build momentum as a core part of our bundle, with listening hours for March Madness and the College Football Championship up 22% and 37% year-over-year respectively. At the same time, our hardware and software evolution continues to enhance the listener experience as 360L expands across nearly all major OEMs lineups, we are driving sustained growth in 360L enabled subscriptions and increasing adoption of more personalized nonlinear listening. This is fueling double digit growth in both usage and time spent with features like extra channels and artist seated stations. Deepening Engagement Turning to our advertising business momentum is accelerating. Advertising revenue grew 3% to nearly $407 million in the quarter, driven by a 37% increase in podcasting advertising revenue. This reflects strong traction in video and social through our Creator Connect strategy as well as accelerating Programmatic demand where revenue more than doubled year-over-year through Google’s DV360. Our partnership with YouTube, marks a significant step forward. As the exclusive US advertising representative for YouTube,’s audio inventory, we are expanding our reach to 255 million monthly listeners, nearly 90% of the US population age 13 and older. For the first time, we will offer advertisers scaled access to premium audio across a wide range of content, from iconic franchises like SNL, to leading creators like Mr. Beast, as well as podcasts beyond our own network and streaming music. Beginning this fall, advertisers will benefit from expanded high quality inventory paired with advanced targeting and measurement capabilities. By combining Sirius XM Holdings Media’s leadership and audio advertising with YouTube, scale and always on engagement. We are delivering high attention inventory through a more seamless buying experience while advancing a more open, connected ecosystem for advertisers. In podcasting, we remain the number one podcast network in the US by Weekly Reach. As a launch partner for Apple’s new video podcasting experience, we are helping shape the next evolution of the medium by unlocking dynamic video ad insertion and expanding access to a significantly larger advertising market. This uniquely positions us to power monetization across audio formats with greater flexibility and optionality for both creators and advertisers. These efforts reflect our commitment to an open podcast ecosystem that enables creators to grow across platforms. Across the portfolio, we are leveraging our scale, data and technology to unlock new growth opportunities and deliver stronger outcomes for advertisers. At the same time, we remain focused on building a high performing future ready organization. We recently welcomed Eve Conston as Chief Legal Officer, bringing deep expertise across media, technology and content and further strengthening our operating discipline in support of our strategic priorities. Our progress is also being recognized externally. We were named by Forbes as one of the best brands for social Impact and by Newsweek as one of America’s greatest workplaces for culture, belonging and community as well as for women. Turning to our outlook, our disciplined approach gives us confidence in delivering on our 2026 full year guidance, relatively flat revenue and stable adjusted EBITDA. While subscriber trends are expected to be modestly lower year-over-year, our focus remains on strong execution and driving continued free cash flow growth. Importantly, the fundamentals of our business remain strong. We have a durable subscription model, predictable and growing cash generation and a unique combination of assets including premium content unmatched in car distribution, scaled audience reach and leading ad technology. We believe These strengths position Sirius XM Holdings well for the future and we remain committed to disciplined execution, thoughtful investment and delivering sustainable long term value for our shareholders. With that, I’ll turn it over to Zach for more detail on the financial results.
Zach Coghlin (Chief Financial Officer)
Thanks Jennifer and thank you everyone for joining us today. We delivered a solid start to the year with three key financial takeaways. First, we delivered revenue of 2.09 billion up 1% year over year, supported by the strength of our subscriber base and continued momentum in advertising where revenue increased 3%. Second, our disciplined cost management and a continued focus on efficiency drove approximately 6% growth in adjusted EBITDA, to 666 million. And third, the strength and stability of our earnings and cash flow continues to create significant shareholder value. With net income up 20% and free cash flow more than tripling year over year to 171 million. Together, these results underscore the steady progress we are making against our long term strategic initiatives to enhance profitability and drive free cash flow generation. Looking first at the top line, consolidated revenue was nearly 2.1 billion including $1.6 billion of subscription revenue, also up approximately 1% year over year. This growth reflects the early benefit of our recent February price increase as well as the full year impact from the 2025 rate adjustment, partially offset by a smaller average subscriber base. Advertising revenue increased 3% to 407 million as strengthened podcasting higher programmatic demand and technology fees more than offset softer demand in streaming music advertising. Turning to profitability, adjusted EBITDA, grew 6% year over year to 666 million with margins expanding, 140 basis points to 31.9%. This improvement was primarily driven by revenue growth complemented by disciplined expense management across our customer service, product and technology and personnel related costs. Importantly, we captured 45 million towards our goal of delivering an incremental 100 million in gross cost savings this year which includes 27 million in operating expense run rate savings and 18 million in CAPEX, savings. As a result, we generated strong bottom line performance with net income improving 20% to $245 million and earnings per diluted share growing 22% to 72 cents. Free cash flow was $171 million more than tripling year over year, primarily driven by higher adjusted EBITDA, and lower capital expenditures. Turning to the segments, Sirius XM Holdings Holdings generated $$1.6 billion in first quarter revenue with subscriber revenue up 1% to $1.5 billion, supported by ARPU, increasing 1% to $14.99. This reflects the benefit of recent pricing actions including the February adjustment and the carryover benefit from the March 2025 change,. Sirius XM Holdings advertising revenue declined, 10% to $35 million primarily due to softness in news, while equipment and other revenue at $41 million and $31 million respectively were relatively flat year over year. Gross profit increased 3% to 966 million with margin expanding to 61% while a softer auto environment, particularly following last year’s tariff driven pull forward in vehicle sales, created headwinds for trial starts. New acquisition programs and retention are supporting healthier subscriber trends. Self pay net additions were negative 111,000, a 192,000 increase versus the prior year period. This was driven in part by growing adoption of companion subscriptions which contributed 124,000 incremental self-pay net additions in the quarter. As a reminder, the companion offering is targeted to our most loyal subscribers and engagement has remained strong with continued marketing support and early indicators showing improved retention among those taking advantage of this benefit. This performance was further supported by continued progress in our continuous service initiative as well as momentum in automotive dealer extended duration plans. More than offsetting lower conversion rates, the stability of our subscriber base remains a core strength reflected in first quarter self paid churn of approximately 1.5%, the lowest first quarter level in our history. Notably, Churn remained resilient despite recent pricing actions as we continue to evolve our packaging and pricing structure to better meet demand across different customer segments. With more than half of our subscribers having been with us for over a decade, we believe this performance underscores the strength of our enhanced value proposition and sustained customer satisfaction. Moving now to the Pandora and Off platform segments, revenue increased 3% to 501 million. Advertising revenue grew 5% year over year to 372 million, driven by a 37% increase in podcasting revenue and higher programmatic demand and technology fees, partially offset by lower advertising demand for streaming music. We continue to expect modest growth in advertising for the full year 2026. Subscription revenue declined 2% to 129 million due to a smaller subscriber base segment. Gross profit for the quarter was 139 million with a margin of approximately 28%, representing a slight decline from 29% in the prior year period. As part of our ongoing efforts to simplify the business and sharpen our focus on higher return initiatives, we recorded a $6 million charge in the first quarter associated with restructuring and severance costs, which compares to 48 million in the prior year period. I’d also like to provide some context on the higher depreciation this quarter. As part of our ongoing portfolio optimization, we have begun decommissioning and planning the deorbit of our FM-6 satellite, reducing its useful life from 15 to 13 years. With XXM10 now in service, this capacity is no longer needed. We expect approximately $60 million of incremental non cash depreciation in 2026, including 3 million in the first quarter. This has no impact on free cash flow, but will reduce reported net Income and EPS. Capital expenditures were 105 million in the first quarter, down from 189 million in the prior year period, primarily reflecting lower satellite spend and the timing of capitalized software and hardware investments. We continue to expect approximately 400 to 415 million in non satellite CAPEX, for the full year. Over time, total CAPEX, should trend lower with variability driven by the satellite replacement cycle. Near term spending remains elevated as we complete our next generation of satellites, after which we expect a step down to more normalized levels. Now moving to the balance sheet. During the quarter, we completed a successful $1.25 billion refinancing, allowing us to retire all 2026 notes and redeemed 250 million of 2027 notes, effectively extending maturities and strengthening our overall capital structure. And we remain on track to achieve our target leverage range of low to mid three times by the end of this year. We also continue to return capital to shareholders, including $91 million in dividends and $21 million in share repurchases. From a financial perspective, we are operating with discipline in a more dynamic macro environment. Our focus remains on what is in our control, driving efficiencies, optimizing the portfolio and prioritizing high return investments. This positions us to reaffirm our 2026 outlook for relatively stable revenue and adjusted EBITDA, modestly lower self paid net additions versus 2025 and continued growth in free cash flow to approximately 1.35 billion with a path to $1.5 billion in 2027. The durability of our subscription model and …
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