Sirius XM Holdings — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated revenue was $2.15 billion for the third quarter of 2026, down slightly from $2.159 billion in the prior year period.
• Net income increased 7% year-over-year to $317 million, compared to $297 million in the prior year.
• Earnings per diluted common share declined 7% to $0.78, from $0.84 in the prior year, due to accounting treatment of convertible notes and assumed share dilution.
• Adjusted EBITDA grew 3% year-over-year to $694 million, with an Adjusted EBITDA margin of 32%, expanding one percentage point from the prior year.
• Free cash flow advanced 14% year-over-year to $293 million, driven by higher Adjusted EBITDA, favorable working capital, lower interest expense, and reduced capital expenditures.
• SiriusXM segment revenue was $1.60 billion, relatively flat year-over-year; Pandora and Off-Platform segment revenue was $549 million, up modestly year-over-year.
• SiriusXM gross profit increased 1% to $963 million with a gross margin of 60%, up one percentage point year-over-year.
• Pandora and Off-Platform gross profit increased 2% to $173 million with a gross margin of 32%, up one percentage point year-over-year.
• Total cost of services decreased 1% to $1.017 billion in the quarter.
• Net debt-to-adjusted EBITDA ratio was 3.3x at the end of the quarter.

Guidance and Future Outlook:

• SiriusXM raised full-year 2026 guidance by $25 million for Revenue, Adjusted EBITDA, and Free Cash Flow.
• Updated full-year 2026 guidance includes total revenue of approximately $8.55 billion, Adjusted EBITDA of approximately $2.65 billion, and Free Cash Flow of approximately $1.40 billion.
• Management expects to meaningfully accelerate share repurchases in 2027 due to a more efficient operating model and declining satellite capital expenditures.
• The company achieved its long-term leverage target and strengthened financial flexibility during the first nine months of the year.

Business Segments and Product Lines:

• SiriusXM:
  • Total subscribers reached 33 million.
  • Self-pay net additions were 5,000, an improvement of 45,000 from the prior year, driven by companion subscriptions (107,000 incremental net additions) and automotive dealer extended-duration plans.
  • Self-pay monthly churn improved to 1.5%.
  • Paid promotional subscribers increased 21,000 year-over-year to 1.594 million.
  • The total trial funnel stood at 7.4 million at quarter end.
  • Average Revenue Per User (ARPU) remained stable at $15.18.
  • Equipment revenue decreased 16% year-over-year to $36 million, primarily due to higher memory costs.
  • Advertising revenue declined 5% to $37 million, offset by strength in sports.
  • Listening time increased approximately 5% year-over-year across all subscriber tenure groups.
  • New programming highlights include the Dolly Parton Tribute Channel (most-listened-to pop-up channel), Shania Twain and John Mayer performances, and "Life with John Mayer" becoming the number one streamed artist channel.
  • Sports engagement grew with WWE Radio listening up nearly 20% since its July launch; monthly active sports listeners increased 4% year-over-year.
  • Launched "Sports Pass," a subscription combining live play-by-play, national coverage, and local programming across four major professional leagues.
  • Howard Stern's programming expanded to HBO Max while preserving exclusive live experiences for SiriusXM subscribers.
  • Added podcasts "Giggly Squad," "Serialously," and "The Bald and the Beautiful" to its portfolio.
• Pandora and Off-Platform:
  • Monthly active users totaled 38.8 million.
  • Pandora Plus and Pandora Premium had approximately 5.5 million self-pay subscribers.
  • Advertising revenue grew 1% year-over-year to $419 million, driven by podcasting, programmatic advertising, and technology fees, partially offset by softer streaming music advertising.
  • Subscriber revenue declined 2% to $130 million due to lower subscriber volumes.
• SiriusXM Media:
  • Platform reach expanded to approximately 255 million unduplicated monthly listeners (up from 170 million a year ago), representing nearly 90% of Americans ages 13 and older.
  • Early campaigns with YouTube Audio increased advertisers' unique reach by as much as 91%.
  • AdsWizz powers one in four audio advertisements across the global open ecosystem.

Market and Competitive Landscape:

• SiriusXM continues to compete by deepening subscriber engagement through differentiated content and experiences.
• The company leverages deep automotive manufacturer relationships and unique spectrum assets to reach listeners.
• The expansion of advertising inventory through partnerships like YouTube Audio aims to capture more advertiser spending across budgets of all sizes.

Risks and Challenges:

• Equipment revenue is sensitive to memory costs, which have recently increased.
• Advertising revenue faces risks from softer demand in news programming and direct-to-consumer advertisers.
• The business depends on the automotive industry; lower vehicle sales and trial starts impacted promotional subscriber growth.
• Pandora subscriber revenue declined due to lower subscriber volumes and listening hours.
• Forward-looking statements note risks including substantial competition, potential subscriber losses, effectiveness of marketing efforts, reliance on third parties, and economic conditions.
• Specific risks include changes in consumer behavior, technology shifts, satellite failure, interference from wireless operations, and music rights licensing uncertainties.

Management Commentary and Tone:

• CEO Jennifer Witz stated the third-quarter performance reflects progress in building a "stronger, more durable SiriusXM," citing stabilization of the subscriber base, deepening engagement, and expanding the advertising platform.
• CFO Zac Coughlin highlighted increasing efficiency and cash-generating capacity, noting disciplined cost management and structural operating improvements drove Adjusted EBITDA growth and margin expansion.
• Management expressed confidence in raising full-year guidance and conviction in long-term value creation.

Other Key Points:

• The company returned $124 million to shareholders during the quarter, consisting of $91 million in dividends and $33 million in share repurchases.
• SiriusXM delivered approximately $1.1 billion in free cash flow for the first nine months of 2026.
• The company ended the third quarter with $210 million in cash and cash equivalents.
• Long-term debt decreased to $8.066 billion from $8.648 billion at the end of 2025.
• Depreciation and amortization increased 18% year-over-year to $166 million for the quarter.
• Share-based payment expense was $38 million for the quarter.
• Legal settlements and reserves were $1 million for the quarter, compared to a benefit of $9 million in the prior year.
• Impairment, restructuring, and other costs were $10 million for the quarter.