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2/17/2006
SIRIUS Satellite Radio Reports Record Subscriber Growth and Revenue for Fourth Quarter and Full-Year 2005SIRIUS Satellite Radio |
SIRIUS Satellite Radio today announced record fourth quarter and full-year 2005 financial and operating results, driven by better-than-expected subscriber growth across its distribution channels.
SIRIUS ended 2005 with 3,316,560 subscribers, reflecting a 190% increase in total subscribers for the year and record net subscriber additions of 2,173,302. For the fourth quarter, the company added 1,142,640 net subscribers, making SIRIUS the market share leader in terms of net satellite radio subscriber additions for the quarter. This was the best quarterly gain in the company's history, and a 138% increase over net subscriber additions in the year-ago quarter. SIRIUS' market share of satellite radio net subscriber additions was approximately 45% for full-year 2005 and approximately 56% for the fourth quarter.
Full-year 2005 revenue grew to $242.2 million, up 262% from $66.9 million in 2004, and ahead of guidance for the year. Average monthly churn for the fourth quarter and full-year 2005 was 1.5%, in line with guidance. Subscriber acquisition costs (SAC) per gross subscriber addition was $113 for the fourth quarter and $139 for full-year 2005, a 21% improvement over the full-year 2004 level and ahead of guidance of under $145 for 2005.
"2005 was our best year ever and a major milestone for SIRIUS, setting new records in subscribers, market share and revenue," said Mel Karmazin, CEO of SIRIUS. "We continue to be the fastest growing U.S. provider in this exciting new entertainment category, with strong growth driven by tremendous demand for our products and our programming, including the NFL, Martha Stewart and Howard Stern. In 2006, we believe this positive momentum will be further reflected in our automotive OEM channel, where we expect to more than double our subscriber base."
During 2005, SIRIUS added 1,554,108 net subscribers from its retail channel, a 123% increase from 696,028 net retail subscriber additions in 2004. The company also added 620,224 net subscribers from its automotive OEM channel, more than 241% above net automotive OEM subscriber additions of 181,646 in 2004. For the fourth quarter, SIRIUS added 900,645 net subscribers from its retail channel and 241,705 net subscribers from its automotive OEM channel.
SIRIUS reported a net loss of ($311.4) million, or ($0.23) per share, for the fourth quarter of 2005, and a net loss of ($863.0) million, or ($0.65) per share, for the full-year.
2005 Achievements
During the year, SIRIUS achieved significant operational milestones including the following:
- Satellite radio market share parity in the retail channel -- retail
market share of 55% for the full-year and 61% for the fourth quarter,
according to The NPD Group
- Rapid acceleration in OEM subscriber additions, with further
acceleration expected in 2006
- Material reduction in SAC per gross subscriber addition, with further
improvements expected in 2006 and beyond
- Long-term exclusive agreements extended with SIRIUS' automotive OEM
partners DaimlerChrysler (Chrysler and Mercedes-Benz), Ford and BMW
- Exciting new programming exclusives with Martha Stewart, Richard
Simmons, the NBA, Adam Curry's Podcast Show, Howard Stern (January
2006) and NASCAR (2007)
- Introduced the critically acclaimed SIRIUS S50, the satellite radio
industry's first wearable device with MP3/WMA capabilities
- Launched SIRIUS Music on the Sprint wireless network, a satellite radio
industry first
- Launched satellite radio service in Canada through SIRIUS' Canadian
affiliate, SIRIUS Canada Inc.
- Enhanced balance sheet and liquidity through a successful $500 million
debt offering
- Key senior management additions in marketing, advertising sales,
retail, business development and investor relations areas
Guidance
SIRIUS believes that the satellite radio industry will continue to experience strong growth in 2006, and the company expects to have over 6 million subscribers by the end of this year.
Average monthly churn is expected to be approximately 1.8% for 2006. The company expects SAC per gross subscriber addition to approach $110 for the full-year 2006 and to decline further in 2007.
SIRIUS expects to generate approximately $600 million of total revenue in 2006, and approximately $1 billion in 2007. SIRIUS expects an adjusted loss from operations of approximately $540 million in 2006.
SIRIUS ended the fourth quarter of 2005 with approximately $879 million in cash, cash equivalents and marketable securities. SIRIUS' first quarter of positive free cash flow, after capital expenditures, could be reached as early as the fourth quarter of 2006, and the company continues to expect to generate positive free cash flow for the full-year 2007.
The company expects capital expenditures to be approximately $110 million in 2006, which includes investments for new revenue generating opportunities such as telematics, video and other data services, as well as network infrastructure expansion, including payments related to the previously disclosed contract to secure a slot for a possible satellite launch prior to year-end 2010.
SIRIUS also believes that in 2010 the company will generate approximately $3 billion in revenue and approximately $1 billion in free cash flow, after capital expenditures.
Conference Call Information:
SIRIUS will hold a conference call today at 8 am ET to discuss operating and financial results. The public, members of the investment community and the press will have live access to the conference call via the company's website, http://www.sirius.com, and on the SIRIUS service by tuning to SIRIUS Channel 125. A replay of the call will also be available on the SIRIUS website.
