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Sirius XM (SIRI) to Report Q3 Earnings: What's in the Cards?

Sirius XM Holdings SIRI is set to report third-quarter 2020 results on Oct 22.

The Zacks Consensus Estimate for revenues is pegged at $1.94 billion, implying a decline of 3.5% from the year-ago reported figure.

Meanwhile, the Zacks Consensus Estimate for earnings has moved up 20% to 6 cents per share over the past 30 days, suggesting a 20% increase from the year-ago reported figure.

The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with an average surprise of 1.67%.

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

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

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 16% in July and 20% in August 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 of the satellite radio service in the to-be-reported quarter.

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

During the quarter, it announced that Sirius XM with 360L will be available to BMW customers for the first time in most of the 2021 BMW model year vehicles starting with July production.

Moreover, availability of the company’s content on Amazon’s AMZN Echo and Alexa connected devices, along with Alphabet’s GOOGL Google Assistant are expected to have broadened its subscriber base further.

Coronavirus Hampers Advertising Business

The coronavirus outbreak is also expected to have negatively impacted Sirius XM’s advertising business. Lower ad demand and spending are expected to have dented advertising revenues since mid-March 2020.

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 $294 million, implying a decline of 19.7% from the figure reported in the year-ago quarter.

Key Quarterly Developments

On Jul 13, Sirius XM announced that the company has entered into an agreement with The E.W. Scripps Company SSP to acquire Stitcher, a pioneer in podcast production, distribution and ad sales. Per the terms of the asset purchase agreement, Sirius XM will make a cash payment of $265 million to Scripps, at the closing of the transaction. The transaction will advance and deepen Sirius XM's position in podcasting.

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