SiriusXM Radio has reported its financial results for the third quarter of 2013, including record revenue of $962 million, up 11 percent from $867 million a year ago. Net income for the third quarter of 2013 was $63 million, down from $75 million in Q3 2012, including losses on extinguishment of debt of $108 million.
"SiriusXM had a great quarter, with the 513,000 net subscriber additions and the 373,000 self-pay net additions setting post-merger records for the third quarter. We also saw double-digit growth in revenue for the seventh consecutive quarter, a new quarterly record for adjusted EBITDA and adjusted EBITDA margin, and significant growth in free cash flow. With continued growth in new automobile sales and an increasing number of existing self-pay subscribers selling their cars and rotating back into our trial funnel, we are increasing our guidance for net subscriber additions and reducing our guidance for self pay subscriber additions by equal amounts. We are also pleased to increase revenue guidance for 2013 and introduce new guidance for continued growth in 2014 in both revenue and adjusted EBITDA," noted CEO Jim Meyer.
"We are proud of all we accomplished in the third quarter: strong operating results, significant improvements in our balance sheet, renewals of important long-term programming contracts, and the announced acquisition of the connected vehicle unit of Agero," added Meyer.
Net subscriber additions in the quarter were 513,000, up from 446,000 in the third quarter of 2012. The total paid subscriber base reached a record 25.6 million, up nine percent from the prior-year period. Self-pay net subscriber additions were 373,000, while the self-pay subscriber base reached a record high of 20.7 million, up nine percent from the prior year period. Total paid and unpaid trials grew by 247,000 from the second quarter of 2013 to 6.9 million.
Adjusted EBITDA grew by 21 percent from last year's Q3 to a record quarterly figure of $296 million, and those results were accompanied by a record adjusted EBITDA margin of nearly 31 percent. Free cash flow in the third quarter of 2013 was $245 million, up 26 percent from $195 million a year ago.
"We have taken significant steps over the past year to improve our balance sheet, lowering our average cost of debt from 9.2 percent last summer to just 5.5 percent following the redemption of the 7.625 percent Senior Notes due 2018. The new debt we have issued gives our Company greater flexibility to pursue capital returns and other strategic opportunities," said SiriusXM EVP/CFO David Frear.
"During the third quarter, we repurchased approximately 124 million shares of our common stock for $459 million, bringing our year-to-date purchases to approximately 477 million shares for approximately $1.6 billion. We have approximately $2.4 billion remaining under our recently increased share repurchase authorization, and we anticipate using $500 million of this authorization to repurchase shares directly from Liberty Media in three installments beginning next month. At the end of the third quarter, and pro forma for the announced redemption of the 7.625 percent Senior Notes due 2018, our outstanding debt was a very conservative 3.0x trailing adjusted EBITDA," added Frear.
SiriusXM also increased its expectations for 2013's total net 2013 total net subscriber growth and revenue, reduced its estimate for 2013 self-pay net subscriber growth and reiterated its existing guidance for adjusted EBITDA and free cash flow. Total net subscriber additions are projected to be approximately 1.6 million, up from previous guidance of 1.5 million. Self-pay net subscriber additions of approximately 1.5 million, which is down from previous guidance of approximately 1.6 million. Meanwhile, revenue is expected to be approximately $3.77 billion, up from previous guidance of over $3.7 billion.