Sirius XM Conference Call Highlights

Sirius XM Holdings Inc. SIRI reported its third quarter earnings on Tuesday. Shares of the company are neutral.

Below are some key highlights from its conference call.

• SiriusXM turned in an excellent third quarter that puts us another step closer to achieving all of our financial and operating goals for the year.
• We are entering the fourth quarter with strong momentum, and we are once again raising our guidance for subscribers, revenue and free cash flow, each for the second time in three months.
• We now expect net additions of approximately 1.5 million, approximately $4.15 billion of revenue and approximately $1.12 billion of free cash flow this year.
• We finished the third quarter with a record high, 26.7 million paid subscribers.
• Total net additions for the quarter were 433,000 of which 380,000 were self-pay net additions and 53,000 were paid promotional net adds.
• Our pay trial additions benefited in the quarter from strong auto sales and helped us raise our subscriber guidance twice in the past two months.
• New car SAAR was up 7% to 16.75 million units in the quarter.
• Note that full year auto sales are expected to be approximately 16.4 million units, up a more modest 5% from last year.
• Our new car penetration rate in the third quarter was 71.5%, up about 2.8 points from last year's third quarter.
• We finished the third quarter with approximately 68 million factory-enabled vehicles in operation, which equates to about 28% of the vehicles on the road.
• An important point is, as the fleet continues to turn over, our vehicles in operation will eventually match our new car penetration rate of approximately 70.
• Each year, a growing portion of pre-owned vehicles sold will include a satellite radio, and we have made great progress this year in executing our pre-owned business.
• Every major automaker offers a SiriusXM trial with its certified pre-owned vehicle sales at every franchise dealer location.
• This is up from 11,000 at the end of last year.
• Our auto remarketing team is also focused on new business initiatives to target subsequent owners who purchase their vehicles from either independent dealers or from other individuals and private sales.
• Our efforts are paying off, and we now expect to exceed our original full-year target of 2 million self-pay additions from the second-owner market this year.
• We had our best quarter ever for both new and used car conversions.
• More car owners elected to become subscribers than ever before. Our conversion performance has been strong.
• The business produced total revenue of close to $1.1 billion in the third quarter, up 10% from $962 million in the third quarter of last year.
• By tightly managing our cash operating expenses to just 1.5% growth versus last year's third quarter, adjusted EBITDA came in at $381 million, up 29% from $296 million a year ago.
• This represented a margin of about 36%, up a truly astounding 530 basis points from 30.7% in last year's third quarter.
• Free cash flow for the quarter was $267 million.
• On a per share basis, our free cash flow is increasing even faster, about 37% from $0.097 last year to $0.133 so far this year.