Sirius XM Net Income Rises 7% To $317 Million, Yet Diluted EPS Falls To $0.78 On Convertible Notes
A $41 million fair-value gain on convertible notes lifted profit, while the same notes added shares and cut diluted earnings per share.
Sirius XM's third-quarter net income rose 7% to $317 million from $297 million, but diluted earnings per share fell to $0.78 from $0.84, according to the company's 10-Q filed Thursday. The reason sits in one instrument: the 3.75% convertible notes, which boosted the profit line and widened the share count at once.
Basic EPS up, diluted EPS down
Sirius XM, which runs the SiriusXM satellite radio service and the ad-supported Pandora streaming service, reported basic earnings per share of $0.94, up from $0.88. Diluted earnings per share went the other way.
The filing's EPS note shows a $35 million reduction to the diluted numerator from assumed conversion of the notes, against a $1 million addition a year earlier. Diluted shares rose to 363 million from 356 million, including 19 million from assumed conversion of the notes, while basic shares held at 337 million.
The company's earnings release attributed the 7% drop in diluted EPS to the accounting treatment of the convertible notes, including fair-value gains and assumed share dilution.
A $41 million swing in the notes
The notes, a $575 million principal obligation that Sirius XM carries at fair value, produced a $41 million gain in the quarter. That compares with a $53 million loss in the second quarter. The conversion price is about $30.74 per share.
Liberty Media issued the notes, and Sirius XM assumed them in the 2024 split-off transactions. The filing says changes in their value are primarily driven by the value of the underlying shares, so reported earnings can swing without any change in operations.
Other income, net was $46 million, against $10 million a year earlier. Income from operations fell to $479 million from $493 million.
Operations and the debt calendar
Revenue slipped to $2.15 billion from $2.16 billion, and adjusted EBITDA rose 3% to $694 million. Free cash flow climbed 14% to $293 million. The company raised full-year guidance by $25 million for each of revenue, adjusted EBITDA and free cash flow.
The 5.00% Senior Notes due August 1, 2027 are the only debt classed as current, at $1,250 million, against $210 million of cash at September 30. Holders can convert the convertible notes freely from December 15, 2027.
The convertible notes mature March 15, 2028, and until then their fair-value swings will keep moving both net income and the diluted share count.
Sources
- 10-Q Filing — Sirius XM Holdings (SIRI) — SEC EDGAR
- 10-Q Filing — Sirius XM Holdings (SIRI), Q2 FY2026 filed 2026-07-30 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, siriq32026earningsrelease.htm) — Sirius XM Holdings, filed 2026-10-29 — SEC EDGAR
- SiriusXM Raises 2026 Sales Outlook — benzinga.com
- Sirius XM (SIRI) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates — Yahoo Finance
- Sirius XM (SIRI) Tops Q3 Earnings Estimates — Yahoo Finance
- Sirius XM Holdings Inc. GAAP EPS of $0.78 misses by $0.01, revenue of $2.15B misses by $10M (SIRI:NASDAQ) | Seeking Alpha — seekingalpha.com
- SiriusXM Holdings Inc. (SIRI) Stock Forecasts — Yahoo Finance
