Liberty(LSXMB) - 2022 Q3 - Quarterly Report

Financial Performance - Consolidated revenue increased by $147 million (6.3%) and $844 million (10.3%) for the three and nine months ended September 30, 2022, respectively, compared to the prior year, driven by growth in Sirius XM Holdings, Formula 1, and Braves Holdings [227]. - Consolidated operating income decreased by $196 million (27.9%) for the three months ended September 30, 2022, but increased by $59 million (4.0%) for the nine months ended September 30, 2022, compared to the prior year [228]. - Adjusted OIBDA decreased by $37 million (3.9%) for the three months ended September 30, 2022, but increased by $90 million (3.6%) for the nine months ended September 30, 2022, compared to the prior year [232]. - For the three months ended September 30, 2022, net earnings were $434 million, an increase of 8.5% compared to $400 million for the same period in 2021 [244]. - For the nine months ended September 30, 2022, net earnings were $1,404 million, up 53.5% from $914 million in the same period of 2021 [244]. - Total Liberty SiriusXM Group operating income was $434 million for the three months ended September 30, 2022, compared to $604 million in the prior year [228]. - Consolidated Liberty's total operating income for the nine months ended September 30, 2022, was $1,525 million, compared to $1,466 million in the prior year, reflecting a growth of 4.0% [231]. Revenue Breakdown - Sirius XM Holdings revenue was $2,280 million for the three months ended September 30, 2022, up from $2,198 million in the prior year [226]. - Formula 1 revenue increased to $715 million for the three months ended September 30, 2022, compared to $668 million in the prior year, reflecting a growth of 7.0% [226]. - Sirius XM's total revenue for the three months ended September 30, 2022, was $2,280 million, a 3.7% increase from $2,198 million in the same period of 2021 [276]. - Sirius XM's total revenue for the nine months ended September 30, 2022, was $5,181 million, up from $4,918 million in the same period of 2021, representing a growth of approximately 5.3% [276]. - Subscriber revenue for Sirius XM increased approximately 5% for the three months ended September 30, 2022, reaching $1,603 million, driven by a 7% increase in average monthly revenue per subscriber [276]. - Advertising revenue for Sirius XM rose approximately 2% for the three months ended September 30, 2022, totaling $49 million, attributed to a greater number of spots sold on news and sports channels [277]. - Advertising revenue for Sirius XM increased by approximately 8% for the nine months ended September 30, 2022, primarily due to a greater number of spots sold and aired [277]. - Equipment revenue increased approximately 22% for the three months ended September 30, 2022, amounting to $50 million, primarily due to higher chipset volume [278]. - Equipment revenue for Sirius XM decreased by approximately 1% for the nine months ended September 30, 2022, primarily due to lower radio sales and royalties [278]. - Other Formula 1 revenue rose by $35 million and $166 million for the three and nine months ended September 30, 2022, respectively, due to increased activities as COVID-19 impacts lessened [299]. Cash and Investments - As of September 30, 2022, the Liberty SiriusXM Group has cash and cash equivalents of approximately $264 million, including $39 million of subsidiary cash [218]. - The Formula One Group has cash and cash equivalents of approximately $2,119 million as of September 30, 2022, which includes $1,115 million of subsidiary cash [222]. - As of September 30, 2022, Liberty had cash and cash equivalents totaling $2,119 million, with $1,115 million held by the Formula One Group [248]. - Cash provided by operating activities for Liberty SiriusXM Group was $1,304 million for the nine months ended September 30, 2022, slightly up from $1,298 million in 2021 [253]. - Liberty's primary uses of cash included $2.0 billion for debt repayments and $358 million for stock repurchases during the nine months ended September 30, 2022 [253]. - Liberty expects to fund its projected uses of cash through cash on hand, borrowing capacity under margin loans, and dividends from operating subsidiaries [258]. Subscriber Metrics - Sirius XM had approximately 34.2 million subscribers as of September 30, 2022, contributing significantly to its revenue from subscription fees [265]. - Pandora had approximately 6.3 million subscribers as of September 30, 2022, generating revenue primarily from advertising [268]. - Subscriber acquisition costs increased approximately 23% for the three months ended September 30, 2022, totaling $86 million, driven by higher OEM installations [287]. - Pandora's subscriber revenue decreased by 1% during the nine months ended September 30, 2022, primarily due to a decrease in its subscriber base [281]. Operational Challenges - The impact of COVID-19 has led to revenue reductions, prompting the company to seek expense reductions, although future impacts may adversely affect operations and cash flow [223]. - The company faces operational risks from subsidiaries and affiliates with operations outside the United States, which could affect overall performance [206]. Expenses and Costs - Stock-based compensation expense decreased to $173 million for the nine months ended September 30, 2022, down from $188 million in the prior year [230]. - Interest expense increased by $11 million (6.5%) and $13 million (2.7%) for the three and nine months ended September 30, 2022, respectively, compared to the prior year [234]. - Other net income increased by $90 million for the three months ended September 30, 2022, and $132 million for the nine months ended September 30, 2022, primarily due to gains on extinguishment of debt [241]. - Selling, general and administrative expenses rose 6% for the three months ended September 30, 2022, reaching $384 million, due to increased investments in advertising and marketing [288]. - Other operating expenses increased approximately 2% for the three months ended September 30, 2022, totaling $59 million, driven by higher cloud hosting costs [289]. - Programming and content costs rose by 7% and 9% for the three and nine months ended September 30, 2022, respectively, driven by higher content licensing costs [285]. - Selling, general and administrative expenses increased by 6% and 13% for the three and nine months ended September 30, 2022, respectively, primarily due to increased advertising and marketing investments [288]. - Impairment, restructuring, and acquisition costs for the three months ended September 30, 2022, included $43 million related to restructuring costs associated with software project terminations [290].