By Relmor Demitrius
Sirius XM Radio (NASDAQ:SIRI) will be reporting their 2nd quarter results in a conference call on Wednesday, August 4th. In anticipation of this event I have previously released 2 portions of a 3 part preview of the upcoming earnings release. In the first part I went over subscriber numbers, in the second part I went over revenue and ARPU, and in the 3rd part I will now discuss costs, estimated EBITDA, free cash flow, and earnings estimates.
It was determined that ARPU (average revenue per unit (subscriber)) would come in around 11.52, a small increase from Q1 of 2010 and a significant jump from Q2 of 2009, which was before royalty revenues were introduced. Also it was determined overall revenue would come in at around $697 million. Here are some of the cost line items.
There are a few line items that are substantial amounts and can vary greatly from quarter to quarter. One of these is subscriber acquisition costs. This is the amount it costs Sirius XM to add their new promotional subscribers for the quarter. It is a cost arrived from using total activations and the SAC (subscriber acquisition costs) metric Sirius XM reports quarterly. This is the average cost to acquire a new subscriber. Due to an increase in auto sales for Q2 and a lower churn percentage this number will come in higher than in Q1.
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