Core Viewpoint - Sirius XM has shown resilience in a challenging earnings season, with its stock rising 10.1% following better-than-expected fourth-quarter results [1]. Financial Performance - For Q4, Sirius XM reported revenues of $2.19 billion and adjusted EBITDA of $691 million, exceeding expectations for both sales and earnings [2]. - The company experienced a slight year-over-year improvement in its top line and achieved a net addition of 118,000 subscribers in Q4, up from 11,000 in Q3 [3]. - Quarterly free cash flow improved by 5% year-over-year, and the company anticipates that results for 2026 will be similar to those of 2025 [3]. Market Sentiment - Investors may be seeking safer investments amid struggles in the artificial intelligence sector, with Sirius XM's forward-looking yield of 5.2% making it an attractive option for those looking for dividend-paying stocks [4]. - The recent stock surge may not indicate a sustainable trend, as fear-driven market movements can quickly reverse [5]. Cautionary Notes - It is premature to assume that the improvements seen in Q4 will become the new standard, as past year-end strengths have often been followed by declines in the subsequent year [6]. - Despite subscriber growth in satellite services, the streaming segment (Pandora) continues to lose customers [6]. - The above-average dividend yield remains the strongest long-term bullish argument for Sirius XM stock [7].

Core Insights - Sirius XM reported $2.19 billion in revenue for the quarter ended December 2025, marking a year-over-year increase of 0.2% and exceeding the Zacks Consensus Estimate of $2.18 billion by 0.82% [1] - The company achieved an EPS of $0.84, up from $0.83 a year ago, with an EPS surprise of 9.25% compared to the consensus estimate of $0.77 [1] Financial Performance Metrics - Sirius XM's net additions of self-pay subscribers were 110, significantly higher than the average estimate of -26 [4] - The total ending subscribers reached 32,927, surpassing the average estimate of 32,802 [4] - The average self-pay monthly churn rate was 1.4%, better than the estimated 1.5% [4] Revenue Breakdown - Advertising revenue from Pandora and Off-platform was reported at $450 million, exceeding the average estimate of $428.41 million, reflecting a year-over-year increase of 3.7% [4] - Subscriber revenue from Pandora and Off-platform was $132 million, slightly above the estimate of $131.86 million, but down 1.5% year-over-year [4] - Sirius XM's subscriber revenue was $1.49 billion, slightly below the average estimate of $1.5 billion, showing a year-over-year decline of 0.3% [4] - Equipment revenue for Sirius XM was reported at $48 million, exceeding the average estimate of $43.36 million, representing a year-over-year increase of 14.3% [4] - Other revenue was reported at $28 million, below the average estimate of $35.64 million, indicating a year-over-year decline of 22.2% [4] - Total advertising revenue was $491 million, surpassing the average estimate of $473.09 million, with a year-over-year increase of 2.9% [4]

Corporate Structure and Mergers - Liberty Media completed the split-off of Liberty Sirius XM Holdings Inc. on September 9, 2024, redeeming shares at a ratio of 0.8375 of a share of SplitCo common stock for each share of Liberty SiriusXM common stock[27]. - Following the split-off, a subsidiary of SplitCo merged with Sirius XM Holdings Inc., converting each share of Old Sirius into one-tenth (0.1) of a share of SplitCo common stock[28]. Subscriber and Market Performance - As of December 31, 2025, Sirius XM Holdings Inc. reported approximately 32.9 million subscribers in the U.S. and 2.4 million subscribers in Sirius XM Canada[35]. - Sirius XM Holdings Inc. achieved recognition as a Fortune 500 company in 2025, highlighting its market strength[33]. - As of December 31, 2025, Sirius XM Canada had approximately 2.4 million subscribers, which are not included in the company's overall subscriber count[71]. - Pandora had approximately 41.1 million monthly active users and 5.6 million subscribers as of December 31, 2025[75]. - SiriusXM Media reaches approximately 170 million monthly listeners across its platforms, generating revenue from both subscription fees and advertising[80]. Strategic Initiatives and Offerings - The company adopted a strategic plan in December 2024 focusing on core subscription business, advertising strength, efficiency, and stockholder returns[32]. - The "360L" platform was included in approximately 170 vehicle models in 2025, enhancing in-vehicle entertainment experiences[45]. - Sirius XM Holdings Inc. offers a variety of subscription plans, including a low-cost, ad-supported offering launched in 2025[49]. - The company has agreements with leading electric vehicle manufacturers, including Tesla and Rivian, to integrate SiriusXM services into their vehicles[51]. - Sirius XM Holdings Inc. operates over 1,000 terrestrial repeaters across the U.S. to enhance signal coverage[58]. - The company provides connected vehicle services, enhancing safety and security for drivers while delivering marketing benefits to automakers[60]. Advertising and Revenue Generation - SiriusXM's advertising revenue is derived from audio, display, and video advertising, with a focus on targeted advertising based on listener demographics[81]. - AdsWizz, a subsidiary, leads in digital audio advertising technology, providing a comprehensive platform for audio publishers and advertisers[83]. - The company faces substantial competition from traditional AM/FM radio, streaming services, and other digital media platforms, necessitating constant innovation[87]. - SiriusXM's services and Pandora compete with a variety of providers, including major online platforms and traditional media companies, for both listeners and advertisers[96]. Financial Performance and Debt Management - The company acquired licenses for the 2.3 GHz Wireless Communications Service "C block" and "D block" in 2024, consisting of 5 MHz of unpaired blocks each[67]. - The initial use of the newly acquired spectrum will enhance emergency communications capabilities for FEMA, providing secure bandwidth on the satellite radio system[68]. - As of December 31, 2025, the company held $420 million in variable rate debt with a weighted average interest rate of 5.6% and $9,325 million in fixed rate debt with a weighted average interest rate of 4.3%[434]. - The company loaned Sirius XM Canada $130.8 million, with a carrying value of $8.0 million as of December 31, 2025, and an interest rate of 7.62% per annum[433]. - A hypothetical 10% increase in interest rates would increase annual interest expense by approximately $2 million, while a 10% decrease would decrease annual interest expense by approximately $2 million[434]. - The company did not hold or issue any derivatives as of December 31, 2025, and maintains investments in money market funds and certificates of deposit[432]. - The loan to Sirius XM Canada is considered a long-term investment, with unrealized gains or losses reported within Accumulated other comprehensive (loss) income[433]. - The company manages interest rate exposure by maintaining a mix of fixed and variable rate debt to protect against interest rate risk[434]. - The loan to Sirius XM Canada is subject to changes in foreign currency, with a potential value decrease of approximately $0.8 million if the Canadian to U.S. dollar exchange rate were 10% lower[433]. - The company’s investment policy focuses on capital preservation, liquidity maintenance, and yield maximization[432]. Employee and Diversity Metrics - As of December 31, 2025, the company had 5,119 full-time and part-time employees, with a core voluntary turnover rate of approximately 6.6%[125]. - 43.1% of employees identified as women and 40.0% of the U.S. population identified as people of color as of December 31, 2025[127]. - The company offers a comprehensive total reward program that includes competitive compensation and benefits to attract and retain top talent[132]. - Over 500 employees volunteered over 7,350 hours during 2025 as part of the company's philanthropic efforts[136]. Licensing and Royalty Agreements - The company has entered into direct license agreements with major and independent music labels for a significant majority of sound recordings on Pandora services[121]. - The CRB set the royalty rate for SiriusXM's satellite radio service at 15.5% of gross revenues for the period from January 1, 2018, to December 31, 2027[119]. - The company proposed a royalty rate of $0.0018 per performance for ad-supported services and $0.0020 for subscription services in the ongoing CRB proceeding[118]. - In 2025, the per performance rate for streaming sound recordings on SiriusXM increased to $0.0032 from $0.0031 in 2024[120].

Financial Data and Key Metrics Changes - The company achieved $8.56 billion in revenue for 2025, slightly exceeding raised guidance [19] - Adjusted EBITDA for the year was $2.67 billion, with a margin of 31%, also ahead of guidance [20] - Free cash flow reached $1.26 billion, surpassing the original guidance of $1.15 billion by over $100 million [23] - Net income was $805 million, a significant increase from a loss of $2.1 billion the previous year [20] Business Line Data and Key Metrics Changes - Subscription revenue totaled $6.49 billion, down 2% year-over-year, reflecting a smaller average self-pay subscriber base [19] - Advertising revenue was $1.77 billion, roughly flat year-over-year, driven by strength in podcasting [20] - The SiriusXM segment generated $1.61 billion in revenue for Q4, with a full-year total of $6.42 billion [23] - The Pandora and Off Platform segment reported Q4 revenue of $582 million, with full-year revenue of $2.14 billion [26] Market Data and Key Metrics Changes - The company reported a self-pay churn rate of 1.5%, one of the lowest in its history, improved from 1.6% the previous year [25] - The average revenue per user (ARPU) for Q4 was $15.17, up $0.06 year-over-year, while full-year ARPU was $15.11, down $0.10 from last year [25] - Podcasting ad revenue grew 41% for the full year, indicating strong market demand [15] Company Strategy and Development Direction - The company is focused on enhancing its core SiriusXM in-car audience and expanding its advertising network [5] - A new three-year agreement with Howard Stern was signed, reinforcing the company's content strategy [7] - The introduction of companion subscriptions aims to improve customer retention and satisfaction [12] - The company plans to maintain a disciplined approach to balancing shareholder returns, deleveraging, and investments for sustainable long-term cash flow [30] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, expecting mostly flat revenue and slightly lower subscribers, but stable Adjusted EBITDA [16] - The company anticipates continued growth in free cash flow, targeting $1.35 billion for 2026 [29] - Management highlighted the importance of leveraging data and capabilities to enhance customer retention and satisfaction [41] Other Important Information - The company returned $501 million to shareholders in 2025, including $365 million in dividends and $136 million in share repurchases [28] - Total debt was reduced by $669 million during the year, with a net debt to Adjusted EBITDA ratio of approximately 3.6x [29] Q&A Session Summary Question: Competitive positioning and pricing flexibility - Management highlighted strong competitive positioning against music streaming services and AM/FM radio, with new pricing packages introduced [34] Question: Churn performance and expectations - A one-time benefit from the Continuous Service initiative contributed to lower churn in Q4, with expectations for churn to remain in the 1.5%-1.6% range [36][40] Question: Self-pay net adds outlook for 2026 - Management expects modestly lower self-pay net adds in 2026 due to the earlier introduction of companion subscriptions, but remains focused on improving trends [46] Question: ARPU expectations for 2026 - ARPU is expected to continue improving, with strong performance anticipated based on recent trends [51] Question: Podcasting advertising growth and profitability - Management noted strong growth in podcasting, with improving ad trends and high RPMs, indicating a positive outlook for profitability [56] Question: Cost savings and capital allocation - The company is focused on reducing complexity and improving operational efficiency, with a clear capital return strategy emphasizing investments that drive growth [78]

Financial Data and Key Metrics Changes - The company achieved $8.56 billion in revenue for 2025, slightly exceeding raised guidance [6][19] - Adjusted EBITDA for the year was $2.67 billion, resulting in a margin of 31% [20] - Free cash flow reached $1.26 billion, surpassing the original guidance of $1.15 billion by over $100 million [22][23] - Net income was $805 million, a significant increase from a loss of $2.1 billion in the previous year [20] Business Line Data and Key Metrics Changes - Subscription revenue totaled $6.49 billion, down 2% year-over-year, reflecting a smaller average self-pay subscriber base [19][23] - Advertising revenue was $1.77 billion, roughly flat year-over-year, driven by strength in podcasting [20] - The SiriusXM segment generated $1.61 billion in revenue for Q4, with a full-year revenue of $6.42 billion [23] - The Pandora and Off Platform segment reported Q4 revenue of $582 million, with full-year revenue totaling $2.14 billion [26] Market Data and Key Metrics Changes - The company reported a self-pay churn rate of 1.5%, an improvement from 1.6% the previous year [25] - Fourth quarter self-pay net adds were 110,000, reflecting contributions from new initiatives [24] - The average revenue per user (ARPU) for Q4 was $15.17, up $0.06 year-over-year [25] Company Strategy and Development Direction - The company is focused on enhancing its core SiriusXM in-car audience and expanding its advertising network [5][16] - New initiatives include the Continuous Service program and Companion subscriptions to improve customer retention [11][12] - The company aims to maintain a strong balance sheet while exploring growth opportunities in advertising and technology [16][29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, expecting stable revenue and modestly lower self-pay net adds [16][30] - The company anticipates continued growth in free cash flow, targeting $1.35 billion for 2026 [29] - Management highlighted the importance of leveraging data for better customer engagement and retention [64] Other Important Information - The company returned $501 million to shareholders in 2025, including $365 million in dividends [28] - The company reduced total debt by $669 million during the year, ending with a net debt to adjusted EBITDA ratio of approximately 3.6x [29] Q&A Session Summary Question: Competitive positioning and pricing flexibility - Management highlighted strong competitive positioning against music streaming services and AM/FM radio, with new pricing packages introduced [34][35] Question: Churn performance and expectations - Management noted a one-time benefit from the Continuous Service initiative in Q4, which reduced vehicle-related churn [37][40] Question: Self-pay net adds outlook for 2026 - Management expects modestly lower self-pay net adds in 2026 due to the earlier introduction of Companion subscriptions [46] Question: ARPU expectations for 2026 - Management indicated strong ARPU performance is expected to continue into 2026, driven by pricing strategies [51] Question: Podcasting advertising growth - Management reported strong growth in podcasting, with improving ad trends and high RPMs [56][59] Question: Cost savings and capital allocation - Management discussed ongoing cost reduction efforts and the importance of balancing investments with shareholder returns [78][80] Question: Amazon DSP relationship - Management expressed satisfaction with the growth from programmatic partnerships, including Amazon, and sees potential for continued expansion [82][85] Question: Conversion rates for new and used vehicles - Management noted healthy trial funnels and conversion rates, with 360L technology showing better performance compared to non-360L [90][93]

Financial Data and Key Metrics Changes - In 2025, the company achieved $8.56 billion in revenue, $2.67 billion in adjusted EBITDA, and $1.26 billion in free cash flow, exceeding revised guidance [5][17] - Total subscription revenue was $6.49 billion, down 2% year-over-year, while advertising revenue was $1.77 billion, roughly flat year-over-year [17][18] - Net income was $805 million, a significant increase from a loss of $2.1 billion in the prior year, with earnings per diluted share rising to $2.23 from -$6.14 [18] Business Line Data and Key Metrics Changes - The SiriusXM segment generated $1.61 billion in revenue for Q4 and $6.42 billion for the full year, with subscriber revenue at $5.96 billion [20] - The Pandora and Off Platform segment reported Q4 revenue of $582 million and full year revenue of $2.14 billion, with advertising revenue growing 1% year-over-year [24] - Fourth quarter self-pay net adds were 110,000, reflecting contributions from new initiatives, while full-year churn improved to 1.5% from 1.6% [21][23] Market Data and Key Metrics Changes - The company reported a strong performance in podcasting, with podcast ad revenue growing 41% for the full year [12][24] - The advertising technology capabilities expanded, with video and social revenue up 4x year-over-year, indicating a shift in audience engagement [12] - The company anticipates mostly flat revenue in 2026, with slightly lower subscribers but stable adjusted EBITDA [13][27] Company Strategy and Development Direction - The company is focused on strengthening its core SiriusXM in-car audience and expanding its advertising network [4] - New initiatives include the Continuous Service feature and Companion subscriptions, aimed at enhancing customer experience and retention [9][10] - The company plans to leverage its assets, including talent agreements and ad sales expertise, to drive future growth [14][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining strong free cash flow generation and improving subscriber profitability [15][45] - The outlook for 2026 includes expectations for revenue of approximately $8.5 billion and adjusted EBITDA of around $2.6 billion, with a focus on cost savings and operational efficiencies [27][28] - Management highlighted the importance of data and analytics in improving customer engagement and retention strategies [63] Other Important Information - The company returned $501 million to shareholders in 2025, including $365 million in dividends and $136 million in share repurchases [26] - The net debt to adjusted EBITDA ratio improved to approximately 3.6x, with a target of reaching low- to mid-3x by late 2026 [27] Q&A Session Summary Question: Competitive positioning and pricing flexibility - Management noted strong competitive positioning against music streaming services and AM/FM radio, with new pricing packages introduced [33][34] Question: Churn performance and expectations - A one-time benefit from the Continuous Service initiative contributed to lower churn in Q4, with expectations for churn to remain in the 1.5%-1.6% range [36][38] Question: Self-pay net adds outlook for 2026 - Self-pay net adds are expected to be modestly lower in 2026 due to the timing of Companion subscriptions, but management remains focused on improving trends [42][44] Question: ARPU expectations for 2026 - ARPU showed improvement in Q4, and management expects strong performance to continue into 2026 [48][49] Question: Podcasting advertising growth and profitability - Management highlighted strong growth in podcasting and improving ad trends, with a focus on monetization and profitability [54][56] Question: Cost savings and capital allocation - Management discussed ongoing cost reduction efforts and the importance of reallocating resources to high ROI investments [74][78]

February 5, 2026 FOURTH QUARTER AND FULL- YEAR 2025 OPERATING AND FINANCIAL RESULTS 1 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about our outlook and our future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and o ...

Financial Performance - Fourth quarter revenue was $2.19 billion, flat year-over-year, while full-year 2025 revenue totaled $8.56 billion, a 2% decline from 2024[2][5] - Net income for the fourth quarter was $99 million, down from $287 million in the prior year, while full-year net income was $805 million compared to a net loss of $2,075 million in 2024[2][5] - Adjusted EBITDA for the fourth quarter was $691 million, slightly up from $688 million in the same period last year, with a full-year adjusted EBITDA of $2.67 billion, reflecting a 2% decline from 2024[3][5] - SiriusXM total revenue for Q4 2025 was $1,611 million, a decrease of 1% compared to Q4 2024, with a total revenue for the year of $6,417 million, down 2% from $6,553 million in 2024[28] - SiriusXM subscriber revenue decreased by 2% year-over-year for the twelve months, totaling $5,960 million in 2025 compared to $6,076 million in 2024[28] - Adjusted EBITDA for Q4 2025 was $691 million, remaining stable compared to $688 million in Q4 2024, with a total for the year of $2,665 million, down 2% from $2,732 million[28] Cash Flow and Investments - Free cash flow for 2025 was $1.26 billion, up 24% from $1.02 billion in 2024, driven by lower capital expenditures and operating discipline[17][5] - Cash used in investing activities was $747 million in 2025, down from $970 million in 2024, a decrease of approximately 23%[25] - Free cash flow increased by $25 million (5%) to $541 million for the three months ended December 31, 2025, compared to $516 million in 2024[36] Subscriber Metrics - SiriusXM ended 2025 with approximately 33 million total subscribers, with self-pay net subscribers increasing by approximately 110 thousand in Q4[11][5] - Total subscribers for SiriusXM as of December 31, 2025, were 32,927 thousand, a decline of 1% from 33,226 thousand in 2024[31] - The weighted average number of SiriusXM subscribers decreased by 333 thousand (1%) to 32,785 thousand for the three months ended December 31, 2025, compared to 33,118 thousand in 2024[35] - Self-pay subscribers decreased by 301 thousand (26%) to 110 thousand for the three months ended December 31, 2025, compared to 149 thousand in 2024[35] - Paid promotional subscribers increased by 2 thousand (110%) for the three months ended December 31, 2025, compared to a decrease of 79 thousand in 2024[35] Profitability and Expenses - SiriusXM's gross profit for 2025 was $3.82 billion, down 2% from $3.91 billion in 2024, resulting in a gross margin of 59%[13][5] - Total operating expenses for Q4 2025 increased by 17% to $1,967 million, compared to $1,682 million in Q4 2024[28] - SiriusXM's gross profit margin for Q4 2025 was 59%, down from 60% in Q4 2024, indicating a slight decline in profitability[28] Shareholder Returns - The company returned $501 million to shareholders in 2025 through dividends and share repurchases[18][5] - Common stock repurchased and retired amounted to $136 million in 2025, compared to $6 million in 2024, indicating a significant increase in share buybacks[25] - Dividends paid increased to $365 million in 2025 from $143 million in 2024, reflecting a rise of approximately 155%[25] Future Outlook - The company expects total revenue of approximately $8.5 billion, adjusted EBITDA of approximately $2.6 billion, and free cash flow of approximately $1.35 billion for 2026[19][5] Advertising and Podcasting - Podcasting revenue grew by 41% in 2025, building on a 12% growth in 2024[5][5] - Pandora's advertising revenue increased by 4% in Q4 2025, reaching $450 million, while total revenue for Pandora and Off-platform grew by 2% to $582 million[28] Asset and Liability Management - Total assets decreased to $27,237 million in 2025 from $27,521 million in 2024, a decline of approximately 1.03%[23] - Total current liabilities increased to $3,653 million in 2025 from $2,731 million in 2024, an increase of approximately 34%[23] - Long-term debt decreased to $8,648 million in 2025 from $10,314 million in 2024, a reduction of approximately 16%[23] - Total stockholders' equity increased to $11,563 million in 2025 from $11,074 million in 2024, an increase of about 4.4%[23] User Engagement - The number of monthly active users for Pandora and Off-platform services decreased by 5% to 41,112 thousand in 2025 from 43,344 thousand in 2024[31] - The total number of ad-supported listener hours decreased by 0.07 billion (3%) to 2.33 billion for the three months ended December 31, 2025, compared to 2.39 billion in 2024[35] - The company reached a combined monthly audience of approximately 170 million listeners across its audio businesses[38]

Core Thesis - Sirius XM Holdings Inc. is viewed positively due to its solid financial performance, strong subscriber engagement, and improved guidance for 2025, despite market concerns about competition from streaming services [1][2][3][6] Financial Performance - For Q3 2025, Sirius XM reported revenue of $2.16 billion, a 1% decrease year-over-year, but net income improved to $297 million with EPS of $0.84, a significant recovery from the previous year's loss [1] - Adjusted EBITDA was $676 million, reflecting a robust 31% margin supported by effective cost management [1] - The company has reduced debt by $120 million and returned $111 million to shareholders, indicating strong financial health [2] Subscriber Metrics - Subscriber engagement remains strong, with self-pay monthly churn improving to 1.6%, showcasing a loyal customer base [1][3] - The average revenue per user (ARPU) is nearly three times that of Spotify, highlighting the company's pricing power and customer value [3] Future Guidance - Sirius XM has upgraded its 2025 guidance, now targeting approximately $8.525 billion in revenue, $2.625 billion in adjusted EBITDA, and $1.225 billion in free cash flow [2] - Projections suggest free cash flow per share could reach $3.44 in 2025, yielding 15.8%, and potentially $4.32 per share by 2027, approaching a 20% yield [3] Business Stability - Approximately 75% of Sirius XM's revenue comes from stable subscription streams, indicating a more resilient business model than perceived by the market [4] - The company is seen as a high-cash-flow business with strong downside protection and ongoing debt reduction, presenting a compelling investment opportunity [5]

Core Insights - The options market for Sirius XM (SIRI) shows strong inflows into call options, particularly targeting the $21 and $21.50 strikes, indicating potential bullish sentiment ahead of earnings [1][5] - Despite a lower demand for calls compared to puts, the upward curvature in implied volatility (IV) suggests that there is a significant possibility of an earnings beat [2][4] - SIRI stock has experienced a decline of over 15% in the past year and 67% over the last five years, leading to a "Strong Sell" rating from analysts [6] Options Market Analysis - The volatility skew indicates a prioritization of downside protection, with elevated put IVs suggesting investors are hedging against potential declines [4][15] - The Black-Scholes model predicts that SIRI stock could range between $18.88 and $21.82 by the February 20 expiration, reflecting a 7.23% high-low spread from the current price [7][9] - A Markovian analysis suggests that SIRI stock may not follow a lognormal distribution, indicating a potential "jumping" effect towards the $21 price point in the coming weeks [12][11] Investment Sentiment - The current market sentiment around SIRI stock is speculative, with the stock not being considered a solid investment despite its recent performance [14] - The smart money is focusing on both downside protection and upside optionality, leading to higher costs for call options [15][16] - A potential post-earnings pop could be anticipated, with a suggested strategy of a bull call spread at the $21.00/$21.50 strikes, which could yield a 100% payout [17]