By Relmor Demitrius
Sirius XM Radio (NASDAQ:SIRI) is set to release their Q3 subscriber net additions as early as next week. Mel Karmazin (CEO of Sirius XM Radio) likes to let investors know how they faired in regards to subscriber numbers as close to the end of the quarter as possible, because these numbers are known relatively quickly once the quarter is closing. Due to improving auto sales and improving economic conditions, Sirius XM has been steadily adding subscribers since Q3 of 2009.
Sirius XM added 583,000 in the second quarter of 2010. As long as the Seasonally Adjusted Automobile Rate comes in over 11 million a year, Mel Karmazin has stated that the company will be able to add subscribers with current metrics. As of today, the latest estimate of SAAR is coming in around 11.6 million area, some have it a bit higher, others a bit lower. Knowing this, let us look at what the subscriber net additions will be like for the company in Q3.
I am going to assume September auto sales come in right around 1 million. This is the estimated total for the month. This would give us roughly 3,047,648 total vehicles exposed to the product. 60% of those vehicles come with a promotional subscription to either XM or Sirius Satellite Radio.
Using this information, retail information (also called” after market” net additions, including used cars) and churn of around 1.8%, same as last quarter, and reflecting the trend in this area, we arrive at 475,000 approximate net additions for Q3. This is higher than Q3 of 2009, which added only 102,095 net subscribers, a net change year to year of positive 373,493.
Sirius XM entered the quarter with 19,527,448 subscribers. Adding on this quarters additions would bring the total to 20,002,448, breaking the 20 million subscriber barrier for the first time in history. This is a nice milestone for the once troubled satellite radio company.
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Disclosure: Long SIRI
I am always interested in knowing about the car sales. How exactly do you extrapolate the new additions data, what about current subscribers who may be purchasing a new vehicle? In other words, i don’t believe that we can simply assume that for every car sold, that a subscriber has been added. Is there a certain % of car sales that directly correlate with new sub. additions? Thanks for any insight.
Listen, you didnt read it very well. I said 60% of cars sold are exposed. Of those 45% decide to keep it. How I calculate sub net additions is the same way the company does. Thats why I am always very close.
I think Mel actually said the penetration rate was more like 62%, aiming to grow it to 64% on the last conference.
The best part obout the sub growth is that it is profitable cash generating subs.
Rel, If you are including the “after market” sales, your numbers should be somewhat higher then 475,000 based on the percentages you are using…just sayin…