SiriusXM 375

SiriusXM Radio added 1.56 million self-pay subscribers to finish 2017 with 27.5 million self-pay subscribers, the company says, improving upon its guidance by about 160,000 net additions. Total net subscriber additions in 2017 were 1.39 million, resulting in total subscribers of 32.7 million at year-end. The company also announced that it expects to meet or exceed its 2017 guidance for revenue, adjusted EBITDA and free cash flow.

"2017 was a year of remarkable performance for SiriusXM, and I congratulate our team on its hard work and efforts to achieve these results,” chief executive Jim Meyer said.

In addition to ending the year with a record number of subscribers and setting new high water marks for revenue, adjusted EBITDA and free cash flow, the CEO pointed to “substantial progress in our efforts to win business in used cars and deploy our next-generation 360L platform. We also continued to return significant capital to stockholders in 2017 via stock buybacks and an increased dividend, and we have set ambitious targets for continued growth in 2018.”

For the coming year, the company updated its guidance and now expects to see self-pay net subscriber additions of about 1 million and revenue of $5.7 billion. Adjusted EBITDA is forecast for about $2.15 billion, and free cash flow of approximately $1.5 billion.

David Frear, senior executive VP and CFO noted, "We are very pleased to project adjusted EBITDA growth in 2018 despite the unexpected increase in our royalty rate for the use of sound recordings recently imposed by the Copyright Royalty Board.”

He added that the projected increase “again highlights the durability and flexibility of our business,” outlining that revenue growth will remain strong “despite the adoption of the new revenue recognition accounting standard that was effective Jan. 1, 2018, reclassifying approximately $90 million of revenue to offset expenses principally related to automaker agreements. We are also pleased with the recent tax reform act, which is expected to increase our cash generation by nearly $900 million over the next 4 years and $200 million in annual tax savings for us beyond that.”

As a result of the Tuesday announcement, Sirius XM stock surged 1.7% in premarket trade Wednesday.

Barclays, meanwhile, on Wednesday, added to its own guidance report, standing by its current forecast: “By and large, we believe the company’s self-pay net add number continues to impress. However, overall subscriber growth has slowed, given the size of the company’s subscriber base as well as the auto cycle, something we had outlined in some detail in the past. In terms of 2018 guidance, while the company’s guidance is lower than our estimates, the company tends to tweak guidance upwards though the year. Adjusted for this, our estimates relative to the company’s 2018 guidance seem to be in line.”