Sirius XM(SIRI) - 2021 Q4 - Annual Report

Subscriber Metrics - Sirius XM had approximately 34.0 million subscribers as of December 31, 2021, with subscriber revenue increasing by 4% to $6,084 million from $5,857 million in 2020[178][190] - Pandora had approximately 6.4 million subscribers as of December 31, 2021, with subscriber revenue increasing by 3% to $530 million from $515 million in 2020[180][193] - As of December 31, 2021, Sirius XM had approximately 34,033 subscribers, a decrease of 681 subscribers, or 2%, from 34,714 subscribers as of December 31, 2020[223] - Self-pay subscribers increased by 1,152 to 32,039, while paid promotional subscribers decreased by 1,833 to 1,994, resulting in a net subscriber addition of (681) for 2021[223] - Pandora had approximately 52,275 monthly active users as of December 31, 2021, a decrease of 6,607 users, or 11%, from 58,882 users as of December 31, 2020[227] Revenue Performance - Total consolidated revenue for the year ended December 31, 2021, was $8,696 million, an increase of 8% from $8,040 million in 2020[189][195] - Sirius XM's advertising revenue increased by 20% to $188 million in 2021, up from $157 million in 2020, driven by higher advertising on news and sports channels[189][191] - Pandora's advertising revenue increased by 30% to $1,542 million in 2021, up from $1,183 million in 2020, attributed to strong monetization and a full year of Stitcher revenue[189][194] - Income from operations for the year ended December 31, 2021, was $2,015 million, a significant increase of 135% from $858 million in 2020[189] - Net income for 2021 was $1,314 million, a substantial increase of 903% from $131 million in 2020[189] Cost and Expenses - Sirius XM's total cost of services increased by 11% to $3,968 million in 2021, compared to $3,579 million in 2020[189] - Programming and content expenses rose by 14% to $511 million in 2021 from $449 million in 2020, driven by higher content licensing costs[197] - Customer service and billing expenses increased by 5% to $415 million in 2021 from $394 million in 2020, attributed to higher transaction costs and consulting[198] - Transmission expenses surged by 29% to $159 million in 2021 from $123 million in 2020, primarily due to increased costs associated with cloud hosting and streaming services[199] - Cost of equipment decreased by 5% to $18 million in 2021 from $19 million in 2020, mainly due to lower direct sales[200] - Subscriber acquisition costs fell by 10% to $325 million in 2021 from $362 million in 2020, driven by lower subsidies and semiconductor supply shortages[205] - Sales and marketing expenses grew by 10% to $1,056 million in 2021 from $957 million in 2020, due to higher brand media and personnel-related costs[206] - Engineering, design, and development expenses increased by 1% to $265 million in 2021 from $263 million in 2020, primarily due to higher personnel-related costs[207] - General and administrative expenses rose by 1% to $514 million in 2021 from $511 million in 2020, driven by higher personnel and consulting costs[208] - Interest expense increased by 5% to $415 million in 2021 from $394 million in 2020, primarily due to a higher average outstanding debt balance[211] Cash Flow and Financing - Free cash flow for the year ended December 31, 2021, was $1,831 million, an increase of $171 million, or 10%, from $1,660 million in 2020[233] - Cash flows used in financing activities for the year ended December 31, 2021 included redemptions of senior notes totaling $3,594 million and share repurchases of $1,523 million[238] - As of December 31, 2021, the company had $1,749 million available for future borrowing under its Credit Facility, with no amounts outstanding[239] - The board of directors authorized a total of $18,000 million for stock repurchases, with cumulative repurchases since December 2012 amounting to $15,920 million[242] - A quarterly dividend of $0.0219615 per share was declared on January 26, 2022, with an expected annual dividend of $0.087846 per share[243] Operational Highlights - Sirius XM completed a $75 million investment in SoundCloud in February 2020, enhancing its advertising capabilities[184] - Sirius XM acquired Stitcher for $302 million in October 2020, creating a full-service platform for podcast creators and advertisers[185] - The company has entered into agreements for the design, construction, and launch of two new satellites, SXM-9 and SXM-10[250] - The company recognized an impairment charge of $956 million for the Pandora reporting unit in 2020 due to reduced long-term forecasts[249] - The company had no significant off-balance sheet arrangements that could materially affect its financial condition[245] - As of December 31, 2021, the company was in compliance with all debt covenants related to its senior notes and Credit Facility[244] Performance Metrics - Adjusted EBITDA for the year ended December 31, 2021, was $2,770 million, an increase from $2,575 million in 2020, reflecting a growth of approximately 7.57%[256] - The average self-pay monthly churn rate for satellite-enabled subscriptions was not explicitly stated, but it is a critical metric for assessing subscriber retention[252] - Subscriber acquisition costs (SAC) per installation decreased to $12.58 in 2021 from $18.65 in 2020, representing a reduction of approximately 32.5%[262] - The total number of satellite radio installations in new vehicles and shipments of aftermarket radios was 11,174 in 2021, up from 11,091 in 2020[262] - The company reported net cash provided by operating activities of $1,998 million for the year ended December 31, 2021, slightly down from $2,018 million in 2020[260] Market and Valuation - The company held a long-term investment in Sirius XM Canada amounting to $130.8 million, with a carrying value of $120.0 million as of December 31, 2021[267] - The loan to Sirius XM Canada bears interest at a rate of 7.62% per annum and is subject to changes in foreign currency exchange rates[267] - The company did not hold or issue any derivatives as of December 31, 2021, focusing on capital preservation and liquidity[267] - The fair market value of the company's debt is sensitive to changes in interest rates, with borrowings under the Credit Facility carrying a variable interest rate based on LIBOR[268]