Satellite and streaming audio company SiriusXM has revised its financial guidance for next year, with the organization saying it expects to bring in less money than it did in 2024.
On Tuesday, the premium audio service provider said it is still on track to earn $8.675 billion in revenue this year, but expects to only pull in $8.5 billion in revenue in 2025.
Executives said the revised forecast for next year comes amid continued “marketplace headwinds.” That includes ongoing softness in the advertising market and a slowdown in car sales that has chipped away at SiriusXM’s ability to convert free trial users into paying subscribers.
“At SiriusXM, we are focusing on the strengths that set us apart — including our strong core subscriber base, our unique position in vehicle, and our unrivaled, curated content — and taking steps to drive profitability and cash flow as we face marketplace headwinds impacting the company’s growth trajectory,” Jennifer Witz, the CEO of SiriusXM, said in a statement.
She added that SiriusXM has “a clear path forward, and [we] are confident we can deliver for our stockholders.”
Many SiriusXM subscribers are first exposed to the company’s offerings when they buy a new car, with most automotive companies offering three-month free trials. SiriusXM counts on those customers liking what they hear and agreeing to pay for the service over the long term.
Last August, The Desk reported that SiriusXM’s subscriber growth has largely stalled out, with the company consistently reporting between 32 million and 34 million subscribers over the past several years. In November, The Desk reported SiriusXM had just over 31 million paying customers, down 1 percent compared to the third quarter (Q3) of 2023.
A few weeks ago, SiriusXM introduced a new pricing structure that was meant to draw cost-conscious satellite and streaming radio customers to their service, while reducing the company’s dependency on free trial offers and discounts offered to some customers who threaten to churn out. Now, SiriusXM satellite starts at $10 per month for commercial-free music, with customers able to add on packages of news, sports and talk programming for separate fees. SiriusXM’s streaming radio plan costs around $10 per month for all channels.
“We believe this will both attract listeners who may have been left behind by our premium price packages and allow us to move away from discounted pricing by enabling price-conscious subscribers to tailor the package to their interest and budget instead of relying on short-term promotional packages,” Witz said.
Still, more works needs to be done, the company affirmed on Tuesday. Noting that 90 percent of SiriusXM’s paying customers have tuners active in their cars, the company is now focused on retaining those customers while exploring ways to convince the four out of five people who don’t have an active tuner in their car to sign up.
“As a part of this effort, the company will shift marketing and other resources away from high-cost, high-churn audiences in streaming to focus resources on core revenue-generating segments,” a SiriusXM spokesperson said.
Rather than marketing its streaming product as a standalone option, the company will instead market SiriusXM’s apps as a “companion” to their in-car subscriptions. For Internet-connected vehicles, like some models of Hondas and all Tesla cars, SiriusXM will market the benefits of their SiriusXM 360 and streaming platforms, which require an active data connection.
Additionally, SiriusXM said it will scrutinize the technology it uses, its marketing strategies and the “lifetime value of subscribers” to help it explore further cost cuts down the road. SiriusXM has already saved $350 million by cutting down on expenses in certain parts of its company, to include layoffs throughout its business.
“The company’s strategic actions are focused on preserving its strong balance sheet, maintaining leading margins, and optimizing free cash flow,” a spokesperson said. “These actions will enable SiriusXM to prioritize deleveraging in the near-term while simultaneously enhancing stockholder returns.”
In addition to its new strategy, SiriusXM said it has appointed former ADT Chief Business Officer Wayne Thorsen to serve as its Chief Operating Officer.
“As a long-time SiriusXM subscriber myself, I have always admired SiriusXM’s platform and its commitment to providing listeners with unmatched content. It is an honor to join this company as it enters its next phase,” Thorsen said on Tuesday. “This is an important time for SiriusXM, and strong execution will be critical as the company implements its new strategy. I’m excited to work alongside Jennifer and the rest of the SiriusXM leadership team to turn the company’s vision into results-driven, efficient action, and capture the opportunity ahead.”
Joseph Inzerillo, SiriusXM’s Chief Product and Technology Officer who helped deploy the company’s redesigned streaming radio app, is leaving to pursue other opportunities, a spokesperson said.
