Sirius XM Holdings Inc. (SIRI) Earnings & Analysis

Latest quarter

Sirius XM reported third-quarter revenue of $2.2 billion, below the consensus, while adjusted earnings of $0.78 per share exceeded the $0.76 consensus estimate. Revenue was also $2.2 billion a year earlier, while diluted earnings per share rose to $0.87 from $0.84.

CFO Zac Coughlin said subscription revenue benefited from pricing actions, while podcasting, programmatic advertising and technology fees offset softer streaming music and satellite advertising demand. Equipment revenue fell 16% to $36 million, which he attributed primarily to higher memory costs.

The company reported an operating margin of 22.2%, down from 22.8% a year earlier, while gross margin rose to 52.3% from 51.7%. Coughlin said adjusted EBITDA increased 3% to $694 million as operating expenses declined, helped by contract renewals, automation and more targeted acquisition spending.

Coughlin reported $293 million in quarterly free cash flow, up 14%, citing factors including lower capital expenditures, favorable working capital and reduced interest expense.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Jennifer Witz said Sirius XM added 5,000 net self-pay subscribers in the third quarter, ahead of its expectations. She credited Companion plans, extended-duration dealer programs and Continuous Service, alongside lower churn, with offsetting lower conversion rates. CFO Zac Coughlin said Companion plans accounted for approximately 107,000 net additions and that conversion rates continued to decline gradually.

Asked about subscriber value, Witz said the company was differentiating packages, reducing its reliance on unpublished discounts and adding lower-priced offerings. Coughlin said rate increases and a better discount mix supported average revenue per user, but a growing mix of Companion and more affordable plans offset those benefits. Witz said the company was considering expanding Companion access while monitoring whether it replaces existing paid subscriptions.

On advertising, Coughlin said podcast growth was constrained by limited inventory after high sell-through. He said Sirius XM was adding creator partnerships to expand that inventory. Chief Advertising Revenue Officer Scott Walker said the company was selling YouTube Audio alongside its existing audio inventory and that early advertisers were largely testing the offering; he said the ramp would take time.

Coughlin said the company had realized $96 million in incremental gross cost savings through September across operating and capital expenses. Asked about costs, he attributed savings across programming, customer service, marketing and administration to tools, technology and new ways of working. For the fourth quarter, he said Sirius XM planned targeted investment, including additional marketing spending, while higher memory costs would weigh further on equipment revenue.

Asked about artificial intelligence agents, Witz said they could affect cancellation demand or rates, but that Sirius XM was not seeing notable cancellation volume from them. She said the company was working with Sierra on its agent protocol and using customer listening and engagement data to improve its responses to subscribers.

Guidance

Sirius XM raised each of its three full-year 2026 financial guidance measures by $25 million. The company now expects approximately $8.55 billion in revenue, $2.65 billion in adjusted EBITDA and $1.4 billion in free cash flow.

Witz also raised the subscriber outlook: she said full-year self-pay net additions are expected to be approximately in line with 2025, when they declined by about 300,000, rather than slightly worse as previously expected.