SiriusXM (NASDAQ:SIRI) is an American radio and broadcasting company. Apart from being a leading player in it’s segment, it also own Pandora, one of America’s biggest music streaming providers. The company has delivered stellar returns to it’s shareholders over the last decade and counts Warren Buffett’s Berkshire Hathaway among it’s biggest investors. The company shocked the market when they released their Q1 2020 numbers on Tuesday.
The company’s financial results for the quarter are extremely admirable and speak volumes about the quality of the business given the coronavirus induced economic downturn. The company reported a Q1 revenue of $2 billion, up 13% year-on-year, followed by a net income of $293 million, up a staggering 80% year-on-year. Based on these figures the company reported an EPS of $0.07 beating analyst projections of $0.05 per share and revenue projections of $1.93 billion.
The company’s financials outperformed the market expectations in almost every metric expect subscriber base. The company reported an EBITDA of $639 million compared to $567 million in the period before, and a margin of 32.7% compared to 31.5% in the prior period.
In this quarter, the company repurchased $243 million of stock, at a neat discount, and paid it’s shareholders a $59 million dividend. Their main businesses SiriusXM and Pandora performed beautifully as people stayed home.
The SiriusXM business added 69000 new self pay subscribers, bringing their total tally up to 34.8 million subscribers. Despite the growth in self-pay subscribers, net change in subscribers was negative 143000 due to a decrease from promotional clients, the biggest of which are automakers who have taken a big hit due to the economic crisis. The revenue from the SiriusXM business grew to $1.6 billion, up 6%, while gross profit grew to $992 million, up 7%.
The company’s music streaming and internet radio streaming service also showed good growth. The service reported ad revenue of $241 million, up a little over 4% from 2019, and stronger monetization figures of $68 per 1000 hours of streaming, up 8%. The growth in revenue was mainly driven by growth of 51000 new self pay subscribers. Although revenue was up, gross profit was down 5% as promotional ad revenue streams declined severely as customer companies hemorrhage money during a economic slowdown.
The company’s stellar performance in these times attest to the quality of their business and make the stock a good safe investment because when the economy rebounds, companies will have bigger marketing budgets and people will have more disposable income, which will boost the stocks bottom line.