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SIRIUS XM Radio (SIRI)
Q1 2010 Earnings Call
May 4, 2010 8:00 am ET
William Prip – Senior Vice President, Treasurer and Investor Relations
Mel Karmazin - Chief Executive Officer
David J. Frear - Executive Vice President, Chief Financial Officer
James E. Meyer - President, Operations and Sales
Scott A. Greenstein - President, Chief Content Officer
Lev Polinsky – JP Morgan
Barton Crockett – Lazard Capital Markets
David Bank - RBC Capital Markets
Matthew Harrigan – Wunderlich Securities
Mike Pace – JP Morgan
Jim Goss - Barrington Research
Previous Statements by SIRI
» SIRIUS XM Radio Q4 2009 Earnings Call Transcript
» SIRIUS XM Radio Q2 2009 Earnings Call Transcript
» Sirius XM Radio Q1 2009 Earnings Call Transcript
Thank you. Good morning, everyone and welcome to SIRIUS XM Radio's earnings conference call. Today Mel Karmazin, our CEO, will be joined by David Frear, our EVP and CFO. They will review SIRIUS XM’s first quarter 2010 financial results. At the conclusion of the prepared remarks management will be glad to your questions. James Meyer, President of Operations and Sales and Scott Greenstein, President and Chief Content Officer will also be available for the Q&A portion of the call.
First I would like to remind everyone that certain statements made during this call might be forward-looking as that term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based on management's current beliefs and expectations and necessarily depend upon assumptions, data and methods that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information about those risks and uncertainties please see SIRIUS XM’s SEC filings. We caution listeners not to rely unduly on forward-looking statements and disclaim any intent or obligation to update them.
As we begin, I would like to caution our listeners today’s results may include discussions of both actual results and pro forma results. Listeners are cautioned to take special care to ensure accuracy in looking at today’s report.
I will now hand the call over to Mel Karmazin.
Thanks Will. Before I review our quarterly results I would like to cover a few broader issues.
Last week we regained NASDAQ compliance. Very importantly we regained it organically. We told you in the past the company would continue to be listed on NASDAQ. We had a hearing scheduled the day after we actually regained compliance. We believe very strongly at that hearing they would have granted us another six months even if in fact we didn’t get that waiver. We certainly had the ability to do a reverse stock split to continue to be listed.
We can debate the benefits of reverse stock splits and whether or not that is something good or bad for the company and our Board of Directors do that but it was our determination we did not want to have to do a reverse stock split to gain compliance. We are very pleased we regained the listing organically and there is absolutely no plans at this time to do a reverse stock split. So we are glad that issue is behind us.
We also weeks ago were added to the NASDAQ Q-50. That is the list that is right behind the NASDAQ 100 of most valuable companies and we are very pleased about that. Today based on current market cap we are more valuable than 92% of all of the companies listed on NASDAQ. Our stock price because there are just a significant number of shares outstanding doesn’t sort of make it appear that way.
If you take a look at the shares outstanding for the largest loaded companies; Microsoft has about 8.8 billion shares outstanding. Cisco has 5.7 billion shares. Intel 5.5 billion. Vodafone 5.3 billion. Oracle 5 billion and SIRIUS XM 3.885. So clearly we have a very valuable company. There are just a significant amount of shares outstanding. In addition to having a broad investor base, we are one of the most liquid securities on NASDAQ. As a matter of fact, in the first quarter of 2010 SIRIUS XM was the most heavily traded stock on NASDAQ.
Another issue I want to talk about is the fact we have gone through the worst recession that most of us have ever seen. SIRIUS and XM started adding subscribers in 2002 and the economy was very strong during that period and up until 2008. So we now have seen how satellite radio performs in what was this terrible recession. It was a great experience for us and what we found is that consumers love our product, they stuck with us in spite of the 10% unemployment and again I think that bodes very, very well for our future.
There is clearly an economic turn. Car sales are increasing. We are seeing improvement in retail sales and in advertising and all of these economic indicators really are very strong for SIRIUS XM. Very importantly not only are our financing metrics strong we are now back to growing subscribers at record levels. Last week the number of subscribers we currently have exceeded the December 2008 level of 19,003,000. So we are back to now having record number of subscribers and we will continue to grow our subscribers.
Turning to the first quarter we delivered 171,000 increase in our subscribers as compared to negative 404,000 in the first quarter of the year ago. Our revenue increased 11%. GDP was up about 3% and our revenue was up 11%. Because of our strong control of expenses our adjusted EBITDA was up 45%. Our ARPU was up 10%. Our churn improved from 2.2 to 2.0 and also very importantly our conversion rate improved from 44.6 to 45.2.