Satellite radio and media company Sirius XM (NASDAQ:SIRI) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 1.8% year on year to $2.14 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $8.5 billion at the midpoint. Its non-GAAP profit of $0.87 per share was 13.6% above analysts’ consensus estimates.
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Sirius XM (SIRI) Q2 CY2025 Highlights:
- Revenue: $2.14 billion vs analyst estimates of $2.13 billion (1.8% year-on-year decline, in line)
- Adjusted EPS: $0.87 vs analyst estimates of $0.76 (13.6% beat)
- Adjusted EBITDA: $668 million vs analyst estimates of $661.5 million (31.2% margin, 1% beat)
- The company reconfirmed its revenue guidance for the full year of $8.5 billion at the midpoint
- EBITDA guidance for the full year is $2.6 billion at the midpoint, in line with analyst expectations
- Operating Margin: 17.1%, down from 23.2% in the same quarter last year
- Subscribers: 8.23 million
- Market Capitalization: $7.09 billion
StockStory’s Take
Sirius XM’s second quarter results met Wall Street’s revenue expectations, but the market reacted negatively, reflecting concerns about persistent revenue declines and margin pressures. Management attributed the quarter’s performance to enhanced subscriber acquisition programs, such as expanded automotive partnerships and improved data initiatives, as well as disciplined cost control measures. CEO Jennifer Witz highlighted that “new acquisition initiatives, combined with continued low churn,” drove year-over-year improvement in self-pay net adds, though intentional reductions in streaming marketing spend remained a headwind.
Looking ahead, Sirius XM’s guidance is shaped by ongoing content investments, the rollout of new pricing and packaging options, and disciplined cost management. Management pointed to the introduction of “Play,” an ad-supported subscription plan, and deeper integration of AI tools as key drivers for future growth. CFO Thomas Barry noted that the company’s outlook remains cautious due to challenges in the advertising market and ongoing macroeconomic uncertainty, stating, “the advertising environment remains the largest risk to our outlook.”
Key Insights from Management’s Remarks
Management cited the expansion of new acquisition programs, disciplined cost reductions, and significant progress in podcast monetization as central to the quarter’s performance and ongoing strategy shifts.
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Automotive channel expansion: Sirius XM continued rolling out three-year subscription programs with automotive original equipment manufacturers. The addition of Audi as an eighth partner and upcoming launches with Ford are expected to drive future subscriber acquisition, particularly as these deals offer bundled subscriptions with new car purchases.
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Podcasting momentum: Podcast advertising revenue grew nearly 50% year-over-year, supported by new creator partnerships like Trevor Noah and Morbid. Management emphasized that broader podcast content and expanded distribution across platforms such as YouTube and social media are enabling effective monetization, especially among younger listeners.
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Ad-supported plan launch: The introduction of “Play,” a new in-car and in-app ad-supported subscription plan, aims to attract price-sensitive customers by offering a curated set of music and talk programming at a lower price point. Management believes this will help round out Sirius XM’s pricing structure and provide additional advertising inventory for monetization.
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Operational efficiency initiatives: The company executed a comprehensive technology and workforce realignment, reducing its product and tech workforce by 20% among contractors and 10% among full-time employees. These measures, alongside optimization of vendor contracts and cloud infrastructure, contributed to lower operating expenses and are expected to improve agility and long-term cost structure.
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Ad market weakness: Overall advertising revenue was down approximately 2%, with management citing budget pullbacks, shifting advertiser priorities, and excess connected TV inventory as key headwinds. However, the company continues to invest in ad tech capabilities, including AI-driven voice and measurement tools, to improve targeting and efficiency.
Drivers of Future Performance
Sirius XM’s outlook hinges on balancing content investments, engagement strategies, and disciplined expense management amid a challenging ad market.
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Expanding pricing and packaging: The rollout of new subscription tiers, such as the ad-supported “Play” plan, is intended to target more price-sensitive customers and broaden the subscriber base. Management sees this as a way to diversify revenue through a mix of subscription and advertising, though the pace of adoption will depend on both technological rollout and market demand.
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Cost structure optimization: With recent workforce reductions and continued focus on operational efficiencies, management expects to maintain healthy margins even as it reinvests in select marketing and product initiatives. However, higher general and administrative costs, including legal settlements, remain a potential risk to margin improvement.
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Ad market and podcasting: Management expects podcasting to remain a bright spot, but acknowledges that broader advertising revenues are pressured by macroeconomic uncertainty and shifts in media budgets. Sirius XM aims to offset this through enhanced ad tech, improved measurement, and deeper partnership with creators, though recovery in the ad market is uncertain.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) the adoption rate and monetization impact of the new “Play” ad-supported subscription tier, (2) continued progress in podcasting partnerships and cross-platform distribution, and (3) the trajectory of cost-saving initiatives and their effect on margins. Additionally, we will watch for stabilization or recovery in the advertising market, which remains a key variable for future growth.
Sirius XM currently trades at $21.09, down from $22.95 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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