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Sirius XM (SIRI) to Report Q2 Earnings: What's in the Cards?

Sirius XM Holdings SIRI is set to report second-quarter 2020 results on Jul 30.

Per an 8K filing on Jun 8, Sirius XM expects to report positive net new self-pay subscribers for the second quarter. Notably, the company added 69K net self-pay subscribers in the first quarter.

However, Sirius XM believes the pandemic and its related economic impact will hurt subscriber, advertising and equipment revenues, as well as the sale of satellite radios, components and accessories.

The Zacks Consensus Estimate for self-pay ending subscribers is pegged 30.080 million, suggesting growth of 2.5% from the year-ago quarter reported figure.

However, the consensus mark for revenues is pegged at $1.87 billion, implying decline of 5.2% from the year-ago period’s reported figure.

Moreover, the Zacks Consensus Estimate for earnings remained unchanged at 5 cents per share over the past 30 days, suggesting 16.7% fall from the year-ago quarter’s reported figure.
 

Sirius XM Holdings Inc. Price and EPS Surprise

Sirius XM Holdings Inc. Price and EPS Surprise

Sirius XM Holdings Inc. price-eps-surprise | Sirius XM Holdings Inc. Quote

 

Notably, the company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed two, with a negative surprise of 13.3%, on average.

Let’s see how things have shaped up for this announcement.

 

Muted Automobile Sales to Hurt Top-Line

Muted automobile sales are expected to have been a major headwind for Sirius XM’s top-line growth. New car sales in the United States were down roughly 47% in April and 29% in May year over year. Used car sales also declined during these months but less severely than new car sales.

The decrease in new and used car sales is expected to have hindered Sirius XM’s subscription growth for its satellite radio service in the to-be-reported quarter. Notably, in first-quarter 2020, subscriber revenues grew 8.7% year over year to $1.58 billion.

Nevertheless, SiriusXM's focus on strengthening its content portfolio has been aiding subscriber growth. This Zacks Rank #2 (Buy) company’s expanding partner base is a significant positive in this regard. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

During the quarter, Verizon Communications VZ partnered with Sirius XM to deliver the latter’s 360L entertainment platform to 10 Audi vehicles (2021 model) in the United States.

Moreover, availability of Sirius XM’s content on Amazon’s AMZN Echo and Alexa connected devices, and Alphabet’s GOOGL Google Assistant is expected to have broadened its subscriber base further.

Coronavirus Hampers Advertising Business

Coronavirus is also expected to have negatively impacted Sirius XM’s advertising business. Lower ad demand and spending is expected to have dented advertising revenues since mid-March 2020. Notably, several categories of advertisers either canceled or stopped orders during the second quarter.

Moreover, ad hours on the company’s Pandora services decreased significantly following the implementation of stay-at-home guidelines in mid-March 2020.

The Zacks Consensus Estimate for advertising revenues is pegged at $265 million, implying a decline of 26% from the figure reported in the year-ago quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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