Earnings

Sirius XM Lifts 2026 Outlook A Second Time, To $1.40 Billion In Free Cash Flow

Third-quarter net income rose 7% to $317 million as revenue slipped slightly and self-pay subscribers edged up by about 5,000.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Sirius XM Lifts 2026 Outlook A Second Time, To $1.40 Billion In Free Cash Flow

Sirius XM Holdings, the satellite radio and Pandora streaming company, raised its 2026 guidance for the second consecutive quarter, adding $25 million to each of its revenue, adjusted EBITDA and free cash flow targets. The increase came with third-quarter results reported Thursday, in which net income rose 7% to $317 million on revenue of $2.15 billion, down slightly from a year earlier.

Margins widen as costs fall

Adjusted EBITDA, the company's measure of operating profit, grew 3% to $694 million, and its margin expanded one percentage point to 32%. The company credited lower programming expenses, more automation in customer care and reduced sales and marketing spending.

Programming costs fell 6% to $136 million, customer service and billing expenses fell 6% to $108 million, and sales and marketing declined 4% to $169 million. Revenue was held back by equipment sales, which fell 16% at the SiriusXM segment because of higher memory costs for its hardware modules.

Free cash flow climbed 14% to $293 million, from $257 million a year earlier. The company cited higher adjusted EBITDA, favorable working capital, lower interest expense and reduced capital spending. Free cash flow for the first nine months totaled $1.057 billion.

Diluted earnings per share fell 7% to $0.78 from $0.84, which the company tied to the accounting for its convertible notes, including fair-value gains and assumed share dilution.

Subscribers: self-pay up slightly, total down

SiriusXM self-pay subscribers rose by about 5,000, against a loss of 40,000 a year earlier. Companion subscriptions added 107,000 incremental self-pay net additions, and average monthly self-pay churn improved to 1.5% from 1.6%.

Total subscribers still slipped: paid promotional subscribers fell 20,000, leaving total net additions at a loss of 15,000. SiriusXM ended the quarter with about 33 million subscribers.

On Pandora, monthly active users fell 7% to 38.8 million and self-pay subscribers declined 3% to about 5.5 million. Pandora and Off-platform revenue edged up to $549 million, with advertising up 1% to $419 million.

Updated outlook and buyback plans

The new guidance calls for about $8.55 billion in revenue, $2.65 billion in adjusted EBITDA and $1.40 billion in free cash flow for 2026.

Chief Financial Officer Zac Coughlin said the company reached its long-term leverage target, with net debt at 3.3 times adjusted EBITDA. He said the more efficient operating model and declining satellite capital spending "position us to meaningfully accelerate share repurchases in 2027." In the third quarter the company paid $91 million in dividends and bought back $33 million of stock.

CEO Jennifer Witz said the quarter's momentum gives the company "the confidence to raise our full-year financial guidance."

Sources

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