Sirius XM Radio (SIRI) today announced that it added 583,249 net subscribers in the second quarter of 2010, compared to a net subscriber decline of 185,999 in the second quarter of 2009. The satellite radio company ended the second quarter with a record-high of over 19.5 million subscribers, an increase of more than 1.1 million subscribers, or 6%, from June 30, 2009.
Following the results, Sirius also updated its subscriber guidance -- the third increase of the year. It now expects net additions of approximately 1,100,000 in 2010. In May, it expected 750,000 subscribers.
The company also said that gross additions increased by 46% and deactivations decreased by 8% compared to the second quarter of 2009.
While CEO Mel Karmazin said it was the "best quarter of gross additions, deactivations and net additions since the merger of Sirius and XM in July 2008," he also delivered a cautious outlook as the economic recovery continues to take shape.
Indeed, Sirius XM relies mostly on car sales for its subscriber base, which is very sensitive to economic conditions. It has arrangements with every major automaker to offer the service free of charge for the first few months. Auto buyers can then opt to continue the service on a self-pay basis. Sirius saw an improvement here, reporting that the conversion rate after the sale of a vehicle to self-pay subscription improved to 46.7% from 44.3% last year. It also said it saw a lower self-pay churn rate of 1.8% in the quarter compared to 2% last year.
In all, the company seems to be getting back on its feet after being on the verge of bankruptcy last year. With a cash infusion from Liberty Media, cost-cutting measures, and a first-quarter profit spurred by higher revenue, it even seems Sirius is beginning to return to the growth rates it experienced before the recession. The last time it had 19 million subscribers was in 2008.
SIRI shares jumped some 5.8% this morning to 99.3 cents.
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