Sirius XM Holdings Inc. (SIRI) saw its stock edge up 0.9% to $27.01 on Thursday afternoon, following a first-quarter earnings report that revealed a smaller-than-expected decline in its core satellite radio subscriber base. The audio entertainment company also posted a sharp increase in free cash flow, providing a steady update for investors as it navigates a shifting media landscape.
Subscriber Performance Exceeds Expectations
The company lost 111,000 self-pay subscribers during the three months ended March 31, a figure that came in well below the 260,463 loss that analysts had anticipated, according to Visible Alpha data cited by Reuters. Total subscribers stood at approximately 32.8 million at quarter-end, down only slightly from 32.9 million a year earlier. The churn rate improved to 1.5%, compared with 1.6% in the prior-year period.
Financial Highlights
Revenue for the quarter rose 1% year over year to $2.09 billion. Net income climbed 20% to $245 million, with diluted earnings per share increasing to 72 cents from 59 cents in the same quarter last year. Adjusted EBITDA grew 6% to $666 million, while free cash flow surged to $171 million from $56 million a year ago, reflecting stronger cash generation from operations after capital expenditures.
Podcast and Advertising Growth
A standout performer was the podcast segment, where revenue jumped 37% compared with the prior-year quarter. The company highlighted its YouTube audio ad partnership, which is expected to expand its potential reach to approximately 255 million monthly listeners starting this fall. This initiative is part of SiriusXM's broader strategy to diversify beyond traditional satellite radio and capitalize on the growing digital audio advertising market.
Pandora and Off-Platform Performance
Results from Pandora and off-platform operations were mixed. Revenue in this segment edged up 3% to $501 million, supported by a 5% increase in advertising revenue to $372 million. However, monthly active users declined to 40.1 million from 42.4 million, and the company cited weaker demand for streaming music amid intensifying competition for digital ad dollars. Ad-supported listener hours fell 6%, and revenue per thousand listener hours dipped 4%.
Management Commentary and Outlook
Chief Executive Jennifer Witz described the quarter as a strong start to 2026, pointing to improved net subscriber additions, higher average revenue per user (ARPU), and reduced churn. ARPU rose to $14.99 from $14.86, helped by price increases on select self-pay plans. Chief Financial Officer Zac Coughlin emphasized the company's focus on top-line growth, expanding margins, and reducing leverage relative to adjusted EBITDA.
SiriusXM reaffirmed its full-year 2026 guidance, targeting approximately $8.5 billion in revenue, $2.6 billion in adjusted EBITDA, and $1.35 billion in free cash flow. During the quarter, the company paid $91 million in dividends and spent $22 million on share buybacks. Net debt to adjusted EBITDA stood at 3.6 times at the end of March.
Market Context and Merger Speculation
The earnings report came just days after reports emerged that iHeartMedia Inc. was in early-stage merger discussions with SiriusXM, a potential deal that would combine scale in audio and podcast advertising. Both companies declined to comment on the speculation. The news highlights the ongoing consolidation trend in the audio industry as firms seek to compete with larger digital platforms.
Despite the positive quarterly update, core challenges remain. SiriusXM continues to contend with softer vehicle conversion rates, though both vehicle-related and non-pay churn showed some improvement. The company's reliance on its legacy satellite radio business is gradually shifting toward digital audio and advertising as it works to stabilize its subscriber base and drive long-term growth.
