Sirius XM Holdings Inc.
10/30/2025 | Press release | Distributed by Public on 10/30/2025 07:24
Quarterly Report for Quarter Ending SEPTEMBER 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes thereto. All amounts referenced in this section are in millions, except subscriber amounts are in thousands and per subscriber and per installation amounts are in ones, unless otherwise stated.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. For example, these forward-looking statements may include, among other things, statements about our outlook and our future results of operations and financial condition; share repurchase plans; the impact of economic and market conditions; and the impact of recent acquisitions. Any statements about our beliefs, plans, objectives, expectations, assumptions, future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intend," "plan," "projection" and "outlook" or the negative version of these words or phrases or other comparable words or phrases. Forward-looking statements are subject to risks and uncertainties, including those identified below, which could cause actual results to differ materially from such statements. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. There may also be other risks that we are unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statements to reflect events or circumstances after the date on which the statement is made, to reflect the occurrence of unanticipated events or otherwise, except as required by law.
Among the significant factors that could cause our actual results to differ materially from those expressed in the forward-looking statements are:
Risks Relating to our Business and Operations:
•we face substantial competition and that competition has increased over time;
•our SiriusXM service has suffered a loss of subscribers and our Pandora ad-supported service has similarly experienced a loss of monthly active users;
•if our efforts to attract and retain subscribers and listeners, or convert listeners into subscribers, are not successful, our business will be adversely affected;
•we engage in extensive marketing efforts and the continued effectiveness of those efforts is an important part of our business;
•we rely on third parties for the operation of our business, and the failure of third parties to perform could adversely affect our business;
•failure to successfully monetize and generate revenues from podcasts and other non-music content could adversely affect our business, operating results, and financial condition;
•we may not realize the benefits of acquisitions or other strategic investments and initiatives; and
•the impact of economic conditions may adversely affect our business, operating results, and financial condition;
Risks Relating to our SiriusXM Business:
•changing consumer behavior and new technologies relating to our satellite radio business may reduce our subscribers and may cause our subscribers to purchase fewer services from us or to cancel our services altogether, resulting in less revenue to us;
•a substantial number of our SiriusXM service subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers;
•our ability to profitably attract and retain new subscribers to our SiriusXM service is uncertain;
•our business depends in part upon the auto industry;
•the imposition of tariffs by the United States government could have a major effect on the United States auto industry, which SiriusXM is dependent upon as a material source of new subscribers;
•failure of our satellites would significantly damage our business; and
•our SiriusXM service may experience harmful interference from wireless operations.
Risks Relating to our Pandora and Off-platform Business:
•our Pandora and Off-platform business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business;
•emerging industry trends may adversely impact our ability to generate revenue from advertising;
•our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business;
•if we are unable to maintain our advertising revenue, our results of operations will be adversely affected;
•changes to mobile operating systems and browsers may hinder our ability to sell advertising and market our services; and
•if we fail to accurately predict and play music, comedy or other content that our Pandora listeners enjoy, we may fail to retain existing and attract new listeners.
Risks Relating to Laws and Governmental Regulations:
•privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities;
•consumer protection laws and our failure to comply with them could damage our business;
•failure to comply with FCC requirements could damage our business;
•we may face lawsuits, incur liability or suffer reputational harm as a result of content published or made available through our services; and
•environmental, social and governance expectations and related reporting obligations may expose us to potential liabilities, increased costs, reputational harm and other adverse effects.
Risks Associated with Data and Cybersecurity and the Protection of Consumer Information:
•if we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions and private litigation and our reputation could suffer;
•we use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability and adversely affect our results of operations; and
•interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business.
Risks Associated with Certain Intellectual Property Rights:
•rapid technological and industry changes and new entrants could adversely impact our services;
•the market for music rights is changing and is subject to significant uncertainties;
•our Pandora services depend upon maintaining complex licenses with copyright owners, and these licenses contain onerous terms;
•failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results; and
•some of our services and technologies use "open source" software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses.
Risks Related to our Capital Structure:
•while we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time;
•our holding company structure could restrict access to funds of our subsidiaries that may be needed to pay third party obligations;
•we have significant indebtedness, and our subsidiaries' debt contains certain covenants that restrict their operations; and
•our ability to incur additional indebtedness to fund our operations could be limited, which could negatively impact our operations.
Risks Related to the Transactions:
•we may have a significant indemnity obligation to Liberty Media, which is not limited in amount or subject to any cap, if the transactions associated with the Split-Off are treated as a taxable transaction;
•we may determine to forgo certain transactions that might otherwise be advantageous in order to avoid the risk of incurring significant tax-related liabilities;
•we have assumed and are responsible for all of the liabilities attributed to the Liberty SiriusXM Group as a result of the completion of the Transactions, and acquired the assets of SplitCo on an "as is, where is" basis;
•we may be harmed by securities class actions and derivative lawsuits in connection with the Transactions;
•it may be difficult for a third party to acquire us, even if doing so may be beneficial to our stockholders;
•we have directors associated with Liberty Media, which may lead to conflicting interests; and
•our directors and officers are protected from liability for a broad range of actions.
Other Operational Risks:
•if we are unable to attract and retain qualified personnel, our business could be harmed;
•our facilities could be damaged by natural catastrophes or terrorist activities;
•the unfavorable outcome of pending or future litigation could have an adverse impact on our operations and financial condition;
•we may be exposed to liabilities that other entertainment service providers would not customarily be subject to; and
•our business and prospects depend on the strength of our brands.
Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Quarterly Report on Form 10-Q and "Part I-Item 1A-Risk Factors" and "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report on Form 10-K, in each case as updated by the Company's reports and filings with the SEC.
Executive Summary
Liberty Media Transactions
Sirius XM Holdings Inc., the reporting company under this Quarterly Report on Form 10-Q, is the product of a series of transactions that closed on Monday, September 9, 2024.
On September 9, 2024 at 4:05 p.m., New York City time, Liberty Media Corporation ("Liberty Media" or "Former Parent") completed its previously announced split-off (the "Split-Off") of its former wholly owned subsidiary, Liberty Sirius XM Holdings Inc. ("SplitCo"). The Split-Off was accomplished by Liberty Media redeeming each outstanding share of Liberty Media's Series A, Series B and Series C Liberty SiriusXM common stock, par value $0.01 per share, in exchange for 0.8375 of a share of SplitCo common stock, par value $0.001 per share (the "Redemption"), with cash being paid to entitled record holders of Liberty SiriusXM common stock in lieu of any fractional shares of common stock of SplitCo.
Following the Split-Off, on September 9, 2024 at 6:00 p.m., New York City time (the "Merger Effective Time"), a wholly owned subsidiary of SplitCo merged with and into Sirius XM Holdings Inc. ("Old Sirius"), with Old Sirius surviving the merger as a wholly owned subsidiary of SplitCo (the "Merger" and together with the Split-Off, the "Transactions"). Upon consummation of the Merger, each share of common stock of Old Sirius, par value $0.001 per share, issued and outstanding immediately prior to the Merger Effective Time (other than shares owned by SplitCo and its subsidiaries) was converted into one-tenth (0.1) of a share of SplitCo common stock, with cash being paid to entitled record holders of Old Sirius common stock in lieu of any fractional shares of common stock of SplitCo.
At the Merger Effective Time, Old Sirius was renamed "Sirius XM Inc." and SplitCo was renamed "Sirius XM Holdings Inc." In connection with the Transactions and by operation of Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), SplitCo became the successor issuer to Old Sirius and succeeded to the attributes of Old Sirius as the registrant, including Old Sirius's Commission File Number and CIK number.
The Transactions are intended to generally be tax-free to holders of Liberty SiriusXM common stock and Sirius XM Holdings common stock (except with respect to any cash received by such holders) and the completion of the Transactions was subject to various conditions, including the receipt of opinions of tax counsel.
On September 6, 2024, Sirius XM Radio LLC, our wholly owned subsidiary, converted from a Delaware corporation to a Delaware limited liability company.
Any references to the "Company," "we," "us," or "ours" refers to Sirius XM Holdings Inc. and its consolidated subsidiaries following the Transactions.
We operate two complementary audio entertainment businesses - one of which it refers to as "SiriusXM" and the second of which it refers to as "Pandora and Off-platform".
SiriusXM
Our SiriusXM business features a wide range of content, including, music, sports, entertainment, comedy, talk and news channels, podcasts and infotainment services, all available in the United States on a subscription fee basis. SiriusXM's content bundles include live, curated, hosted and certain exclusive and on-demand programming. The SiriusXM service is distributed through our two proprietary satellite radio systems and streamed via applications for mobile devices, home devices and other consumer electronic equipment. Satellite radios are primarily distributed through automakers, retailers and SiriusXM's website. Additionally, our user interface, "360L," integrates satellite and streaming services into a seamless in-vehicle entertainment experience.
The primary source of revenue from the SiriusXM business is subscription fees, with most of its customers subscribing to monthly or annual plans. Additional revenue streams include advertising on select non-music channels and on certain music channels within ad-supported plans, direct sales of radios and accessories, and other ancillary services. As of September 30, 2025, the SiriusXM business had approximately 32.8 million subscribers.
In addition to the audio entertainment businesses, we provide connected vehicle services to several automakers. These services are designed to enhance the safety, security and driving experience of consumers. We also offer a suite of data services that includes graphical weather and fuel prices, a traffic information service and real-time weather services in boats and airplanes.
Sirius XM holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc. ("Sirius XM Canada"). Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics.
Pandora and Off-platform
Our Pandora and Off-platform business operates a music, comedy and podcast streaming platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through mobile devices, car speakers or connected devices. Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists and podcasts as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium). As of September 30, 2025, Pandora had approximately 41.6 million monthly active users and 5.7 million subscribers.
The majority of revenue from Pandora is generated from advertising on Pandora's ad-supported radio service. Pandora also derives subscription revenue from its Pandora Plus and Pandora Premium subscribers. Our Pandora and Off-platform business also sells advertising on other audio platforms and in widely distributed podcasts, which we consider to be off-platform services.
Sirius XM also sells advertising on other audio platforms and in widely-distributed podcasts, which it considers to be off-platform services. Sirius XM has an arrangement with SoundCloud Holdings, LLC ("SoundCloud") to be its exclusive ad sales representative in the U.S. and certain European countries and offer advertisers the ability to execute campaigns across the Pandora and SoundCloud platforms. It also has arrangements to serve as the ad sales representative for certain podcasts. In addition, through AdsWizz Inc., Sirius XM provides a comprehensive digital audio and programmatic advertising technology platform, which connects audio publishers and advertisers with a variety of ad insertion, campaign trafficking, yield optimization, programmatic buying, marketplace and podcast monetization solutions.
The information contained in this Quarterly Report on Form 10-Q represents a combination of the historical information of SplitCo (now renamed Sirius XM Holdings Inc.) prior to the Merger Effective Time and Old Sirius.
Results of Operations - September 30, 2025 and 2024
Set forth below are our results of operations for the three and nine months ended September 30, 2025 compared with the three and nine months ended September 30, 2024. The results of operations are presented for each of our reporting segments for revenue and cost of services and on a consolidated basis for all other items.
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | 2025 vs 2024 Change | |||||||||||||||||||||||||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
|
(in millions)
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2025 | 2024 | 2025 | 2024 | Amount | % | Amount | % | |||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
|
SiriusXM:
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| Subscriber revenue | $ | 1,497 | $ | 1,510 | $ | 4,466 | $ | 4,576 | $ | (13) | (1) | % | $ | (110) | (2) | % | |||||||||||||||||||||||||||||||
| Advertising revenue | 39 | 41 | 116 | 124 | (2) | (5) | % | (8) | (6) | % | |||||||||||||||||||||||||||||||||||||
| Equipment revenue | 43 | 43 | 130 | 140 | - | - | % | (10) | (7) | % | |||||||||||||||||||||||||||||||||||||
| Other revenue | 32 | 33 | 94 | 93 | (1) | (3) | % | 1 | 1 | % | |||||||||||||||||||||||||||||||||||||
| Total Sirius XM revenue | 1,611 | 1,627 | 4,806 | 4,933 | (16) | (1) | % | (127) | (3) | % | |||||||||||||||||||||||||||||||||||||
| Pandora and Off-platform: | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscriber revenue | 132 | 135 | 394 | 407 | (3) | (2) | % | (13) | (3) | % | |||||||||||||||||||||||||||||||||||||
| Advertising revenue | 416 | 409 | 1,165 | 1,171 | 7 | 2 | % | (6) | (1) | % | |||||||||||||||||||||||||||||||||||||
| Total Pandora and Off-platform revenue | 548 | 544 | 1,559 | 1,578 | 4 | 1 | % | (19) | (1) | % | |||||||||||||||||||||||||||||||||||||
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Total revenue
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2,159 | 2,171 | 6,365 | 6,511 | (12) | (1) | % | (146) | (2) | % | |||||||||||||||||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||||||||||||||||||||||||||
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SiriusXM:
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| Revenue share and royalties | 384 | 390 | 1,154 | 1,176 | (6) | (2) | % | (22) | (2) | % | |||||||||||||||||||||||||||||||||||||
| Programming and content | 138 | 137 | 412 | 412 | 1 | 1 | % | - | - | % | |||||||||||||||||||||||||||||||||||||
| Customer service and billing | 97 | 91 | 283 | 276 | 6 | 7 | % | 7 | 3 | % | |||||||||||||||||||||||||||||||||||||
| Transmission | 42 | 48 | 122 | 147 | (6) | (13) | % | (25) | (17) | % | |||||||||||||||||||||||||||||||||||||
| Cost of equipment | 2 | 2 | 6 | 7 | - | - | % | (1) | (14) | % | |||||||||||||||||||||||||||||||||||||
| Total Sirius XM cost of services | 663 | 668 | 1,977 | 2,018 | (5) | (1) | % | (41) | (2) | % | |||||||||||||||||||||||||||||||||||||
| Pandora and Off-platform: | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue share and royalties | 337 | 317 | 976 | 942 | 20 | 6 | % | 34 | 4 | % | |||||||||||||||||||||||||||||||||||||
| Programming and content | 16 | 13 | 46 | 44 | 3 | 23 | % | 2 | 5 | % | |||||||||||||||||||||||||||||||||||||
| Customer service and billing | 19 | 19 | 56 | 59 | - | - | % | (3) | (5) | % | |||||||||||||||||||||||||||||||||||||
| Transmission | 7 | 9 | 22 | 25 | (2) | (22) | % | (3) | (12) | % | |||||||||||||||||||||||||||||||||||||
| Total Pandora and Off-platform cost of services | 379 | 358 | 1,100 | 1,070 | 21 | 6 | % | 30 | 3 | % | |||||||||||||||||||||||||||||||||||||
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Total cost of services
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1,042 | 1,026 | 3,077 | 3,088 | 16 | 2 | % | (11) | - | % | |||||||||||||||||||||||||||||||||||||
| Subscriber acquisition costs | 107 | 90 | 314 | 272 | 17 | 19 | % | 42 | 15 | % | |||||||||||||||||||||||||||||||||||||
| Sales and marketing | 186 | 217 | 561 | 675 | (31) | (14) | % | (114) | (17) | % | |||||||||||||||||||||||||||||||||||||
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Product and technology
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62 | 68 | 191 | 224 | (6) | (9) | % | (33) | (15) | % | |||||||||||||||||||||||||||||||||||||
| General and administrative | 119 | 138 | 407 | 378 | (19) | (14) | % | 29 | 8 | % | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 141 | 145 | 406 | 455 | (4) | (3) | % | (49) | (11) | % | |||||||||||||||||||||||||||||||||||||
| Impairment, restructuring and other costs | 9 | 3,388 | 164 | 3,441 | (3,379) | (100) | % | (3,277) | (95) | % | |||||||||||||||||||||||||||||||||||||
| Total operating expenses | 1,666 | 5,072 | 5,120 | 8,533 | (3,406) | (67) | % | (3,413) | (40) | % | |||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 493 | (2,901) | 1,245 | (2,022) | 3,394 | nm | 3,267 | nm | |||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (115) | (124) | (348) | (379) | 9 | 7 | % | 31 | 8 | % | |||||||||||||||||||||||||||||||||||||
| Other income, net | 10 | 28 | 24 | 142 | (18) | (64) | % | (118) | (83) | % | |||||||||||||||||||||||||||||||||||||
| Total other expense | (105) | (96) | (324) | (237) | (9) | (9) | % | (87) | (37) | % | |||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 388 | (2,997) | 921 | (2,259) | 3,385 | 113 | % | 3,180 | 141 | % | |||||||||||||||||||||||||||||||||||||
| Income tax (expense) benefit | (91) | 39 | (215) | (103) | (130) | (333) | % | (112) | (109) | % | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 297 | $ | (2,958) | $ | 706 | $ | (2,362) | $ | 3,255 | 110 | % | $ | 3,068 | 130 | % | |||||||||||||||||||||||||||||||
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SiriusXM Revenue
SiriusXM Subscriber Revenue includes fees charged for self-pay and paid promotional subscriptions, U.S. Music Royalty Fees and other ancillary fees.
For the three months ended September 30, 2025 and 2024, subscriber revenue was $1,497 and $1,510, respectively, a decrease of 1%, or $13. For the nine months ended September 30, 2025 and 2024, subscriber revenue was $4,466 and $4,576, respectively, a decrease of 2%, or $110. The decreases were primarily attributed to a reduction in self-pay revenue resulting from a decline in the average number of subscribers, partially offset by rate increases on certain self-pay plans.
We expect SiriusXM subscriber revenues to remain relatively flat with higher ARPU offset by declines in the number of average subscribers.
SiriusXM Advertising Revenue includes the sale of advertising on SiriusXM's non-music channels and select music channels within ad-supported plans.
For the three months ended September 30, 2025 and 2024, advertising revenue was $39 and $41, respectively, a decrease of 5%, or $2. For the nine months ended September 30, 2025 and 2024, advertising revenue was $116 and $124, respectively, a decrease of 6%, or $8. The decreases were primarily due to lower advertising demand for news and sports channels. The decrease in the nine-month period was also impacted by lower demand on comedy channels.
We expect our SiriusXM advertising revenue to grow as we continue to leverage co-selling initiatives across our brands and platforms.
SiriusXM Equipment Revenueincludes revenue and royalties from the sale of satellite radios, components and accessories.
For each of the three months ended September 30, 2025 and 2024, equipment revenue was $43. For the nine months ended September 30, 2025 and 2024, equipment revenue was $130 and $140, respectively, a decrease of 7%, or $10. During the three-month period, the transition to higher cost next generation chipsets was offset by higher chipset production. For the nine-month period, the decrease was driven by the transition to higher cost next generation chipsets as well as lower chipset production.
We expect equipment revenue to remain flat as higher costs associated with the transition to our next generation chipset are projected to offset the benefits of increased production. In addition, if the imposition of tariffs by the United States government causes automakers to decrease production, we would expect equipment revenue to decline.
SiriusXM Other Revenue includes service fee revenue from Sirius XM Canada, revenue from our connected vehicle services and ancillary revenues.
For the three months ended September 30, 2025 and 2024, other revenue was $32 and $33, respectively, a decrease of 3%, or $1. For the nine months ended September 30, 2025 and 2024, other revenue was $94 and $93, respectively, an increase of 1%, or $1. The decrease for the three-month period was driven by lower revenue from our connected vehicle services. The increase for the nine-month period was driven by one-time license fees.
We expect other revenue, excluding one-time license fees, to remain relatively flat.
Pandora and Off-platform Revenue
Pandora and Off-platform Subscriber Revenue includes fees charged for Pandora Plus and Pandora Premium.
For the three months ended September 30, 2025 and 2024, Pandora and Off-platform subscriber revenue was $132 and $135, respectively, a decrease of 2%, or $3. For the nine months ended September 30, 2025 and 2024, Pandora and Off-platform subscriber revenue was $394 and $407, respectively, a decrease of 3%, or $13. The decreases were driven by a decline in the subscriber base, partially offset by rate increases on Pandora subscription plans.
We anticipate a decline in Pandora and Off-platform subscriber revenues primarily driven by a reduction in the average number of subscribers.
Pandora and Off-platform Advertising Revenue is generated primarily from audio, display and video advertising from on-platform and off-platform advertising.
For the three months ended September 30, 2025 and 2024, Pandora and Off-platform advertising revenue was $416 and $409, respectively, an increase of 2%, or $7. For the nine months ended September 30, 2025 and 2024, Pandora and Off-platform advertising revenue was $1,165 and $1,171, respectively, a decrease of 1%, or $6. The increase for the three-month period was driven by revenue generated from podcasts and technology fees, partially offset by reduced advertiser demand in streaming music. The decrease for the nine-month period was driven by reduced advertiser demand in streaming music, partially offset by revenue generated from podcasts and higher technology fees.
We expect Pandora and Off-platform advertising revenue to slightly increase due to growth in off-platform monetization, including through podcasts, as well as higher technology fees.
Total Revenue
Total Revenue for the three months ended September 30, 2025 and 2024 was $2,159 and $2,171, respectively, a decrease of 1%, or $12. Total Revenue for the nine months ended September 30, 2025 and 2024 was $6,365 and $6,511, respectively, a decrease of 2%, or $146.
SiriusXM Cost of Services
SiriusXM Cost of Services includes revenue share and royalties, programming and content, customer service and billing, and transmission expenses.
SiriusXM Revenue Share and Royalties include royalties for transmitting content, including streaming royalties, as well as revenue share agreements with automakers, content providers and advertisers.
For the three months ended September 30, 2025 and 2024, revenue share and royalties were $384 and $390, respectively, a decrease of 2%, or $6, and decreased as a percentage of total SiriusXM revenue. For the nine months ended September 30, 2025 and 2024, revenue share and royalties were $1,154 and $1,176, respectively, a decrease of 2%, or $22, but increased as a percentage of total SiriusXM revenue. The decreases were driven by lower subscription revenue, partially offset by higher webcasting per play rate.
We expect our SiriusXM revenue share and royalty costs to remain flat as a percentage of revenue.
SiriusXM Programming and Content includes costs to acquire, create, promote and produce content. We have entered into agreements with third parties for music and non-music programming that require us to pay license fees and other amounts.
For the three months ended September 30, 2025 and 2024, programming and content expenses were $138 and $137, respectively, an increase of 1%, or $1 and increased as a percentage of total SiriusXM revenue. For each of the nine months ended September 30, 2025 and 2024, programming and content expenses were $412 which remained unchanged in absolute terms but increased as a percentage of total SiriusXM revenue. The increase for the three-month period was driven by higher personnel-related costs.
We expect our SiriusXM programming and content expenses to remain relatively flat.
SiriusXM Customer Service and Billing includes costs related to the operation and management of internal and third-party customer service centers, our subscriber management systems, billing and collection processes, bad debt expense, and transaction fees.
For the three months ended September 30, 2025 and 2024, customer service and billing expenses were $97 and $91, respectively, an increase of 7%, or $6, and increased as a percentage of total SiriusXM revenue. For the nine months ended September 30, 2025 and 2024, customer service and billing expenses were $283 and $276, respectively, an increase of 3%, or $7, and increased as a percentage of total SiriusXM revenue. The increases were driven by higher subscriber management systems and transaction costs, partially offset by lower call center costs and bad debt expense.
We expect our SiriusXM customer service and billing expenses to decrease as a result of reductions in call center and personnel-related costs, partially offset by higher costs associated with subscriber management systems.
SiriusXM Transmission consists of costs associated with the operation and maintenance of our terrestrial repeater networks; satellites; satellite telemetry, tracking and control systems; satellite uplink facilities; studios and delivery of our Internet and 360L streaming and connected vehicle services.
For the three months ended September 30, 2025 and 2024, transmission expenses were $42 and $48, respectively, a decrease of 13%, or $6, and decreased as a percentage of total SiriusXM revenue. For the nine months ended September 30, 2025 and 2024, transmission expenses were $122 and $147, respectively, a decrease of 17%, or $25, and decreased as a percentage of total SiriusXM revenue. The decreases were driven primarily by lower hosting costs associated with our streaming platform.
We expect our SiriusXM transmission expenses to remain relatively flat.
SiriusXM Cost of Equipment includes costs from the sale of satellite radios, components and accessories and provisions for inventory allowance attributable to products purchased for resale in our direct to consumer distribution channels.
For each of the three months ended September 30, 2025 and 2024, cost of equipment was $2, which remained unchanged in absolute terms but increased as a percentage of total SiriusXM revenue. For the nine months ended September 30, 2025 and 2024, cost of equipment was $6 and $7, respectively, a decrease of 14%, or $1, and decreased as a percentage of total SiriusXM revenue. The decrease for the nine-month period was driven lower inventory reserves.
We expect our SiriusXM cost of equipment to remain relatively flat.
Pandora and Off-platform Cost of Services
Pandora and Off-platform Cost of Services includes revenue share and royalties, programming and content, customer service and billing and transmission expenses.
Pandora and Off-platform Revenue Share and Royaltiesincludes licensing fees paid for streaming music, podcast content, and revenue share paid to third party publishers. Payments are made based on advertising impressions delivered or click-through actions, and these costs are recorded in the related period.
For the three months ended September 30, 2025 and 2024, revenue share and royalties were $337 and $317, respectively, an increase of 6%, or $20, and increased as a percentage of total Pandora and Off-platform revenue. For the nine months ended September 30, 2025 and 2024, revenue share and royalties were $976 and $942, respectively, an increase of 4%, or $34, and increased as a percentage of total Pandora and Off-platform revenue. The increases were driven by podcast revenue share, partially offset by a decline in the subscriber base.
We expect our Pandora and Off-platform revenue share and royalties to increase with the growth in our podcast revenue.
Pandora and Off-platform Programming and Content includes costs to produce owned and operated podcasts, live listener events and promote content.
For the three months ended September 30, 2025 and 2024, programming and content expenses were $16 and $13, respectively, an increase of 23%, or $3, and increased as a percentage of total Pandora and Off-platform revenue. For each of the nine months ended September 30, 2025 and 2024, programming and content expenses were $46 and $44, respectively, an increase of 5%, or $2, and increased as a percentage of total Pandora and Off-platform revenue. The increases were primarily attributable to higher podcast programming costs.
We expect our Pandora and Off-platform programming and content costs to remain relatively flat.
Pandora and Off-platform Customer Service and Billingincludes transaction fees on subscription purchases through mobile app stores and bad debt expense.
For each of the three months ended September 30, 2025 and 2024, customer service and billing expenses were $19, which remained unchanged in absolute terms but decreased as a percentage of total Pandora and Off-platform revenue. For the nine months ended September 30, 2025 and 2024, customer service and billing expenses were $56 and $59, respectively, a decrease of 5%, or $3, and decreased as a percentage of total Pandora and Off-platform revenue. The decrease for the nine-month period was primarily driven by lower transaction fees.
We expect our Pandora and Off-platform customer service and billing costs to remain relatively flat.
Pandora and Off-platform Transmissionincludes costs associated with content streaming, maintaining our streaming radio and on-demand subscription services and creating and serving advertisements through third-party ad servers.
For the three months ended September 30, 2025 and 2024, Pandora and Off-Platform transmission expenses were $7 and $9, respectively, a decrease of 22%, or $2, and decreased as a percentage of total Pandora and Off-platform revenue. For the nine months ended September 30, 2025 and 2024, Pandora and Off-Platform transmission expenses were $22 and $25, respectively, a decrease of 12%, or $3, and decreased as a percentage of total Pandora and Off-platform revenue. The decreases were driven by lower bandwidth costs.
We expect our Pandora and Off-platform transmission costs to remain relatively flat due to optimized spend, partially offset by higher hosting costs associated with increased AdsWizz platform fee revenue.
Operating Costs
Subscriber Acquisition Costs are costs associated with our satellite radio service. These include hardware subsidies paid to radio manufacturers, distributors and automakers; subsidies paid for chipsets and certain other components used in manufacturing radios; device royalties for certain radios and chipsets; product warranty obligations and freight. The majority of subscriber acquisition costs are incurred and expensed in advance of acquiring a subscriber. Subscriber acquisition costs do not include advertising costs, marketing, loyalty payments to distributors and dealers of satellite radios or revenue share payments to automakers and retailers of satellite radios.
For the three months ended September 30, 2025 and 2024, subscriber acquisition costs were $107 and $90, respectively, an increase of 19%, or $17, and increased as a percentage of total revenue. For the nine months ended September 30, 2025 and 2024, subscriber acquisition costs were $314 and $272, respectively, an increase of 15%, or $42, and increased as a percentage of total revenue. The increases were primarily driven by contractual changes with certain automakers.
We expect subscriber acquisition costs to stay relatively flat; However, if the imposition of tariffs by the United States government causes automakers to decrease production, we would expect subscriber acquisition costs to decline.
Sales and Marketing includes costs for marketing, advertising, media and production, including promotional events and sponsorships; cooperative and artist marketing; and personnel related costs including salaries, commissions, and sales support. Marketing costs include expenses related to direct mail, outbound telemarketing, email communications, social media, television and streaming performance media and third party promotional offers.
For the three months ended September 30, 2025 and 2024, sales and marketing expenses were $186 and $217, respectively, a decrease of 14%, or $31, and decreased as a percentage of total revenue. For the nine months ended September 30, 2025 and 2024, sales and marketing expenses were $561 and $675, respectively, a decrease of 17%, or $114, and decreased as a percentage of total revenue. The decreases were primarily due to lower brand and streaming marketing spend.
We expect sales and marketing expenses to increase due to an increase in our brand and in-car marketing.
Product and Technology consists primarily of compensation and related costs to develop chipsets and new products and services, including streaming and connected vehicle services, research and development for broadcast information systems and the design and development costs to incorporate Sirius XM radios into new vehicles manufactured by automakers.
For the three months ended September 30, 2025 and 2024, product and technology expenses were $62 and $68, respectively, a decrease of 9%, or $6, and decreased as a percentage of total revenue. For the nine months ended September 30, 2025 and 2024, product and technology expenses were $191 and $224, respectively, a decrease of 15%, or $33, and decreased as a percentage of total revenue. The decreases were primarily driven by lower hosting and personnel-related costs.
We anticipate product and technology expenses will remain relatively flat as we optimize our technology spend.
General and Administrative primarily consists of compensation and related costs for personnel and facilities, and includes costs related to our finance, legal, human resources and information technology departments.
For the three months ended September 30, 2025 and 2024, general and administrative expenses were $119 and $138, respectively, a decrease of 14%, or $19, and decreased as a percentage of total revenue. For the nine months ended September 30, 2025 and 2024, general and administrative expenses were $407 and $378, respectively, an increase of 8%, or $29, and increased as a percentage of total revenue. The decrease for the three-month period was driven by lower legal costs, including income from a legal settlement, as well as the elimination of Former Parent operating costs; partially offset by higher software and telecom expenses. The increase for the nine-month period was driven by higher legal costs, including amounts associated with a settlement reserve for certain litigation matters of $28 which is expected to be paid in 2026, higher personnel-related costs and lower insurance recoveries; partially offset by the elimination of Former Parent operating costs, the $9 legal settlement income recognized during the three months ended September 30, 2025, and certain state tax litigation recoveries recorded during the first three months of 2025.
We expect our general and administrative expenses, excluding the impact of any past or future litigation insurance recoveries and settlement reserves, to remain relatively flat.
Depreciation and Amortization reflects the allocation of the costs of assets used in operations such as our satellite constellations, property, equipment and intangible assets over their estimated service lives.
For the three months ended September 30, 2025 and 2024, depreciation and amortization expense was $141 and $145, respectively. For the nine months ended September 30, 2025 and 2024, depreciation and amortization expense was $406 and $455, respectively. The decreases were primarily associated with certain assets that reached the end of their useful lives.
Impairment, Restructuring and Other Costs represents impairment charges, associated with the carrying amount of an asset exceeding the asset's fair value, restructuring expenses associated with the abandonment of certain leased office spaces as well as employee severance charges and other charges associated with organizational changes and costs associated with the Transactions.
For the three months ended September 30, 2025 and 2024, impairment, restructuring and other costs were $9 and $3,388, respectively. For the nine months ended September 30, 2025 and 2024, impairment, restructuring and other costs were $164 and $3,441, respectively. During the three months ended September 30, 2025, we recorded Transaction related costs of $6 and other restructuring related costs of $3. During the nine months ended September 30, 2025, we recorded a charge of $109 associated with impairments related to terminated software projects, other restructuring related costs of $25, severance and other employee costs of $24 and Transaction related costs of $6. During the three months ended September 30, 2024, we recorded impairment charges of $3,353 related to impairments of Goodwill and non-controlling investments, costs associated with the Transactions of $32, and a charge of $3 primarily related to severance and other restructuring costs. During the nine months ended September 30, 2024, we recorded impairment charges of $3,354 primarily related to impairments of Goodwill and non-controlling investments, costs associated with the Transactions of $68, a charge of $19 associated with severance and other restructuring costs.
Other (Expense) Income
Interest Expense represents the cost of interest on outstanding debt.
For the three months ended September 30, 2025 and 2024, interest expense was $115 and $124, respectively. For the nine months ended September 30, 2025 and 2024, interest expense was $348 and $379, respectively. The decreases were primarily driven by a lower average outstanding debt balance.
Other Income, Net primarily includes realized and unrealized gains and losses from our debt measured at fair value, bond hedges, our Deferred Compensation Plan and other investments, intergroup interests, interest and dividend income, our share of the income or loss from equity investments and transaction costs related to non-operating investments.
For the three months ended September 30, 2025 and 2024, other income, net was $10 and $28, respectively. For the nine months ended September 30, 2025 and 2024, other income, net was $24 and $142, respectively. During the three and nine months ended September 30, 2025, we recorded unrealized gains on debt measured at fair value, trading gains associated with the investments held for our Deferred Compensation Plan, and earnings on unconsolidated entity investments. During the three and nine months ended September 30, 2024, we recorded unrealized gains on debt measured at fair value, earnings on unconsolidated entity investments and trading gains associated with the investments held for our Deferred Compensation Plan.
Income Taxes
Income Tax Expense includes the change in our deferred tax assets, current federal and state tax expenses and foreign withholding taxes.
For the three months ended September 30, 2025 and 2024, income tax (expense) benefit was $(91) and $39, respectively. For the nine months ended September 30, 2025 and 2024, income tax expense was $215 and $103, respectively.
Our effective tax rate for the three months ended September 30, 2025 and 2024 was (23.5)% and 1.3%, respectively. Our effective tax rate for the nine months ended September 30, 2025 and 2024 was (23.3)% and (4.6)%, respectively. The effective tax rate for the three months and nine months ended September 30, 2025 was primarily driven by federal and state income tax expense and tax losses related to share-based compensation, partially offset by certain tax credits. The effective tax rate for the three and nine months ended September 30, 2024 was primarily impacted by the nondeductible Sirius XM goodwill impairment charge, partially offset by tax losses related to share-based compensation and an increase in valuation allowance and net operating loss expirations related to state net operating losses that are projected to expire unutilized.
Key Financial and Operating Performance Metrics
In this section, we present certain financial performance measures, some of which are presented as Non-GAAP items, which include free cash flow and adjusted EBITDA. We also present certain operating performance measures. Our adjusted EBITDA excludes the impact of share-based payment expense. Additionally, when applicable, our adjusted EBITDA metric excludes the effect of significant items that do not relate to the on-going performance of our business. We use these Non-GAAP financial and operating performance measures to manage our business, to set operational goals and as a basis for determining performance-based compensation for our employees. See the accompanying Glossary for more details and for the reconciliation to the most directly comparable GAAP measure (where applicable).
We believe these Non-GAAP financial and operating performance measures provide useful information to investors regarding our financial condition and results of operations. We believe these Non-GAAP financial and operating performance measures may be useful to investors in evaluating our core trends because they provide a more direct view of our underlying costs. We believe investors may use our adjusted EBITDA to estimate our current enterprise value and to make investment decisions. We believe free cash flow provides useful supplemental information to investors regarding our cash available for future subscriber acquisitions and capital expenditures, to repurchase or retire debt, to acquire other companies and our ability to return capital to stockholders. By providing these Non-GAAP financial and operating performance measures, together with the reconciliations to the most directly comparable GAAP measure (where applicable), we believe we are enhancing investors' understanding of our business and our results of operations.
Our Non-GAAP financial measures should be viewed in addition to, and not as an alternative for or superior to, our reported results prepared in accordance with GAAP. In addition, our Non-GAAP financial measures may not be comparable to similarly-titled measures by other companies. Please refer to the Glossary for a further discussion of such Non-GAAP financial and operating performance measures and reconciliations to the most directly comparable GAAP measure (where applicable). Subscribers and subscription related revenues and expenses associated with our connected vehicle services and Sirius XM Canada are not included in SiriusXM's subscriber count or subscriber-based operating metrics. Subscribers to the Cloud Cover music programming service are now included in Pandora's subscriber count.
Set forth below are our subscriber balances as of September 30, 2025 compared to September 30, 2024.
| As of September 30, | 2025 vs 2024 Change | ||||||||||||||||||||||
| (subscribers in thousands) | 2025 | 2024 | Amount | % | |||||||||||||||||||
| SiriusXM | |||||||||||||||||||||||
| Self-pay subscribers | 31,235 | 31,497 | (262) | (1) | % | ||||||||||||||||||
| Paid promotional subscribers | 1,573 | 1,659 | (86) | (5) | % | ||||||||||||||||||
| Ending subscribers | 32,808 | 33,156 | (348) | (1) | % | ||||||||||||||||||
| Sirius XM Canada subscribers | 2,491 | 2,559 | (68) | (3) | % | ||||||||||||||||||
| Pandora and Off-platform | |||||||||||||||||||||||
| Monthly active users - all services | 41,562 | 43,721 | (2,159) | (5) | % | ||||||||||||||||||
|
Self-pay subscribers
|
5,691 | 5,875 | (184) | (3) | % | ||||||||||||||||||
The following table contains our Non-GAAP financial and operating performance measures which are based on our adjusted results of operations for the three and nine months ended September 30, 2025 and 2024.
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, |
2025 vs 2024 Change
|
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| Three Months | Nine Months | ||||||||||||||||||||||||||||||||||||||||||||||
| (subscribers in thousands) | 2025 | 2024 | 2025 | 2024 | Amount | % | Amount | % | |||||||||||||||||||||||||||||||||||||||
|
SiriusXM
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Self-pay subscribers | (40) | 14 | (411) | (445) | (54) | (386) | % | 34 | 8 | % | |||||||||||||||||||||||||||||||||||||
| Paid promotional subscribers | 51 | (114) | (7) | (274) | 165 | 145 | % | 267 | 97 | % | |||||||||||||||||||||||||||||||||||||
| Net additions | 11 | (100) | (418) | (719) | 111 | 111 | % | 301 | 42 | % | |||||||||||||||||||||||||||||||||||||
| Weighted average number of subscribers | 32,749 | 33,212 | 32,801 | 33,350 | (463) | (1) | % | (549) | (2) | % | |||||||||||||||||||||||||||||||||||||
| Average self-pay monthly churn | 1.6 | % | 1.6 | % | 1.5 | % | 1.6 | % | - | % | - | % | (0.1) | % | (6) | % | |||||||||||||||||||||||||||||||
|
ARPU (1)
|
$ | 15.19 | $ | 15.16 | $ | 15.09 | $ | 15.25 | $ | 0.03 | - | % | $ | (0.16) | (1) | % | |||||||||||||||||||||||||||||||
| SAC, per installation | $ | 19.37 | $ | 14.67 | $ | 18.74 | $ | 13.65 | $ | 4.70 | 32 | % | $ | 5.09 | 37 | % | |||||||||||||||||||||||||||||||
| Pandora and Off-platform | |||||||||||||||||||||||||||||||||||||||||||||||
| Weighted average number of subscribers | 5,703 | 5,917 | 5,702 | 5,953 | (214) | (4) | % | (251) | (4) | % | |||||||||||||||||||||||||||||||||||||
| Ad supported listener hours (in billions) | 2.49 | 2.47 | 7.43 | 7.55 | 0.03 | 1 | % | (0.12) | (2) | % | |||||||||||||||||||||||||||||||||||||
| Advertising revenue per thousand listener hours (RPM) | $ | 91.24 | $ | 104.50 | $ | 88.14 | $ | 98.12 | $ | (13.26) | (13) | % | $ | (9.98) | (10) | % | |||||||||||||||||||||||||||||||
| Total Company | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 676 | $ | 693 | $ | 1,974 | $ | 2,043 | $ | (17) | (2) | % | $ | (69) | (3) | % | |||||||||||||||||||||||||||||||
| Free cash flow | $ | 257 | $ | 93 | $ | 715 | $ | 499 | $ | 164 | 176 | % | $ | 216 | 43 | % | |||||||||||||||||||||||||||||||
(1) ARPU for SiriusXM excludes subscriber revenue from our connected vehicle services of $43 and $41 for the three months September 30, 2025 and 2024, respectively, and $127 and $122 for the nine months ended September 30, 2025 and 2024, respectively.
SiriusXM
Subscribers. At September 30, 2025, SiriusXM had 32,808 subscribers, a decrease of 348, from the 33,156 subscribers as of September 30, 2024. Our self-pay subscriber base declined due to lower vehicle conversion rates, partially offset by reductions in voluntary and non-pay churn as well as growth in new acquisition initiatives. We also saw a decrease in paid promotional subscribers as we transitioned some automakers from paid promotional subscriptions to unpaid or to shorter term promotional plans.
For the three months ended September 30, 2025 and 2024, net subscriber additions were 11 and (100), respectively, an improvement of 111. For the nine months ended September 30, 2025 and 2024, net subscriber additions were (418) and (719), respectively, an improvement of 301. Self-pay net additions for the three-month period compared to the prior year decreased primarily due to lower conversion rates and streaming net additions, partially offset by lower churn and higher trial volumes as well as growth in new acquisition initiatives. Self-pay net additions for the nine-month period compared to the prior year period increased primarily due to lower churn and higher trial volumes as well as growth in new acquisition initiatives, partially offset by lower conversion rates and streaming net additions. Paid promotional net additions also improved compared to the prior year periods driven by higher vehicle sales.
Sirius XM Canada Subscribers. At September 30, 2025, Sirius XM Canada had approximately 2,491 subscribers, a decrease of 68, or 3%, from the approximately 2,559 Sirius XM Canada subscribers as of September 30, 2024.
Average Self-pay Monthly Churn is derived by dividing the monthly average of self-pay deactivations for the period by the average number of self-pay subscribers for the period. (See accompanying Glossary for more details.)
For each of the three months ended September 30, 2025 and 2024, our average self-pay monthly churn rate was 1.6%. For the nine months ended September 30, 2025 and 2024, our average self-pay monthly churn rate was 1.5% and 1.6%, respectively. The decrease for the nine month period was driven by lower vehicle, non-pay and voluntary churn.
ARPU is derived from total earned SiriusXM subscriber revenue (excluding revenue derived from our connected vehicle services) and net advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. (See the accompanying Glossary for more details.)
For the three months ended September 30, 2025 and 2024, ARPU was $15.19 and $15.16, respectively. For the nine months ended September 30, 2025 and 2024, ARPU was $15.09 and $15.25, respectively. The increase for the three-month period was driven by rate increases on certain self-pay plans, partially offset by an increase in subscribers on promotional plans. The decrease for the nine-month period was driven by an increase in self-pay subscribers on promotional plans, partially offset by rate increases on certain self-pay plans.
SAC, Per Installation,is derived from subscriber acquisition costs and margins from the sale of radios, components and accessories (excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. (See the accompanying Glossary for more details.)
For the three months ended September 30, 2025 and 2024, SAC, per installation, was $19.37 and $14.67, respectively. For the nine months ended September 30, 2025 and 2024, SAC, per installation, was $18.74 and $13.65, respectively. The increases were driven by a transition to higher cost chipsets as well as contractual changes with certain automakers.
Pandora and Off-platform
Monthly Active Users. At September 30, 2025, Pandora had approximately 41,562 monthly active users, a decrease of 2,159 monthly active users, or 5%, from the 43,721 monthly active users as of September 30, 2024. The decrease in monthly active users was driven by churn and a decline in the number of new users.
Subscribers. At September 30, 2025, Pandora had approximately 5,691 subscribers, a decrease of 184, or 3%, from the approximately 5,875 subscribers as of September 30, 2024.
Ad supported listener hours are a key indicator of our Pandora business and the engagement of our Pandora listeners. We include ad supported listener hours related to Pandora's non-music content offerings in the definition of listener hours.
For the three months ended September 30, 2025 and 2024, ad supported listener hours were 2,494 and 2,466, respectively, an increase of 1%, or 28. For the nine months ended September 30, 2025 and 2024, ad supported listener hours were 7,425 and 7,550, respectively, a decrease of 2%, or 125. The increase in ad supported listener hours for the three month
period was driven by higher hours per active user, partially offset by a decline in monthly active users. The decrease for the nine month period was primarily driven by the decline in monthly active users, partially offset by higher hours per active user.
RPMis a key indicator of our ability to monetize advertising inventory created by listener hours on the Pandora services. Ad RPM is calculated by dividing advertising revenue by the number of thousands of listener hours of our Pandora advertising-based service.
For the three months ended September 30, 2025 and 2024, RPM was $91.24 and $104.50, respectively. For the nine months ended September 30, 2025 and 2024, RPM was $88.14 and $98.12, respectively. The decreases were driven by lower advertiser demand in streaming music and macroeconomic uncertainty.
Total Company
Adjusted EBITDA. EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA excludes the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and other costs, Former Parent operating costs, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable). (See the accompanying Glossary for a reconciliation to GAAP and for more details.)
For the three months ended September 30, 2025 and 2024, Adjusted EBITDA was $676 and $693, respectively, a decrease of 2%, or $17. For the nine months ended September 30, 2025 and 2024, adjusted EBITDA was $1,974 and $2,043, respectively, a decrease of 3%, or $69. The decreases were driven by declines in subscriber revenue as well as increases in revenue share and royalties and subscriber acquisition costs; partially offset by lower sales and marketing expenses. The nine month period was also impacted by a decline in advertising revenue.
Free Cash Flow includes cash provided by operations, net of additions to property and equipment, and restricted and other investment activity. (See the accompanying Glossary for a reconciliation to GAAP and for more details.)
For the three months ended September 30, 2025 and 2024, free cash flow was $257 and $93, respectively, an increase of 176%, or $164. For the nine months ended September 30, 2025 and 2024, free cash flow was $715 and $499, respectively, an increase of 43%, or $216. The increases were driven by the elimination of Liberty transaction costs, lower cash taxes paid and lower capital expenditures.
Liquidity and Capital Resources
The following table presents a summary of our cash flow activity for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.
| For the Nine Months Ended September 30, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 vs 2024 | ||||||||||||||
| Net cash provided by operating activities | $ | 1,218 | $ | 1,062 | $ | 156 | |||||||||||
| Net cash used in investing activities | (588) | (792) | 204 | ||||||||||||||
| Net cash used in financing activities | (713) | (450) | (263) | ||||||||||||||
| Net decrease in cash, cash equivalents and restricted cash | (83) | (180) | 97 | ||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 170 | 315 | (145) | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 87 | $ | 135 | $ | (48) | |||||||||||
Cash Flows Provided by Operating Activities
Cash flows provided by operating activities increased by $156 to $1,218 for the nine months ended September 30, 2025 from $1,062 for the nine months ended September 30, 2024.
Our largest source of cash provided by operating activities is cash generated by subscription and subscription-related revenues. We also generate cash from the sale of advertising through the Pandora and Off-platform business, advertising on certain non-music channels on Sirius XM and the sale of satellite radios, components and accessories. Our primary uses of cash from operating activities include revenue share and royalty payments to distributors, programming and content providers and payments to radio manufacturers, distributors and automakers. In addition, uses of cash from operating activities include payments to vendors to service, maintain and acquire listeners and subscribers, general corporate expenditures and compensation and related costs.
Cash Flows Used in Investing Activities
Cash flows used in investing activities in the nine months ended September 30, 2025 were primarily due to spending for capitalized software and hardware, the construction of satellites and acquisitions of tax-effective investments for total cash consideration of $85. Cash flows used in investing activities in the nine months ended September 30, 2024 were primarily due to spending for capitalized software and hardware, the construction of satellites and acquisitions of tax-effective equity investments for total cash consideration of $229. We spent $292 and $305 on capitalized software and hardware as well as $186 and $229 to construct satellites during the nine months ended September 30, 2025 and 2024, respectively.
Cash Flows Used in Financing Activities
Cash flows used in financing activities consists of the issuance and repayment of long-term debt, purchases of our common stock, the payment of cash dividends and taxes paid in lieu of shares issued for stock-based compensation. Proceeds from long-term debt have been used to fund our operations, construct and launch new satellites, fund acquisitions, invest in other infrastructure improvements and purchase shares of our common stock.
Cash flows used in financing activities in the nine months ended September 30, 2025 were primarily due to the repayment of $1,597 of debt, the payment of cash dividends of $274, the purchase and retirement of shares of our common stock under our repurchase program of $91 and the payment of $27 for taxes in lieu of shares issued for share-based compensation, partially offset by proceeds from debt borrowings of $1,282. Long-term debt proceeds and repayments are reported gross within the statement of cash flows and primarily relate to the Delayed Draw Incremental Term Loan and the Credit Facility.
Cash flows used in financing activities in the nine months ended September 30, 2024 were primarily due to the repayment of $2,797 of debt, the payment of cash dividends of $51 and the payment of $39 for taxes in lieu of shares issued for share-based compensation, partially offset by proceeds from debt borrowings of $2,451. Long-term debt proceeds and repayments are reported gross within the statement of cash flows and primarily relate to the Convertible Notes, the Exchangeable Notes, that certain margin loan agreement (which is no longer outstanding) of Liberty Siri MarginCo, LLC which merged with and into SplitCo following the Transactions that was secured by shares of our common stock (the "Margin Loan") and the Credit Facility (each as defined in Note 11 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).
Future Liquidity and Capital Resource Requirements
Based upon our current business plans, we expect to fund operating expenses, capital expenditures, including the construction of replacement satellites, working capital requirements, interest payments, taxes and scheduled maturities of our debt with existing cash, cash flow from operations and borrowings under the Credit Facility, including the Delayed Draw Incremental Term Loan. As of September 30, 2025, $1,970 was available for future borrowing under the Credit Facility and no amount was available under the Delayed Draw Incremental Term Loan. We believe that we have sufficient cash and cash equivalents, as well as debt capacity, to cover our estimated short and long-term funding needs, including amounts to construct, launch and insure replacement satellites, as well as fund future stock repurchases and dividend payments and to pursue strategic opportunities.
Our ability to meet our debt and other obligations depends on our future operating performance and on economic, financial, competitive and other factors.
We regularly evaluate our business plans and strategy. These evaluations often result in changes to our business plans and strategy, some of which may be material and significantly change our cash requirements. These changes in our business plans or strategy may include: the acquisition of unique or compelling programming; the development and introduction of new features or services; significant new or enhanced distribution arrangements; investments in infrastructure, such as satellites, equipment or radio spectrum and acquisitions and investments, including acquisitions and investments that are not directly related to our existing business.
We may from time to time purchase our outstanding debt through open market purchases, privately negotiated transactions or otherwise. Purchases or retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
We have made, and expect to continue to make, certain tax-efficient equity investments in clean energy technologies, including industrial carbon capture and storage. These investments are expected to produce tax credits and related tax losses. The payments on these equity investments will be classified as investing activities from a cash flow perspective, while the tax credits and losses will benefit our federal cash taxes in operating activities.
Stock Repurchase Program
Prior to the closing of the Transactions, the board of directors of Old Sirius had approved the repurchase of an aggregate of $18,000 of its common stock. As of the closing of the Transactions, Old Sirius repurchased $16,834 since December 2012, and $1,166 remained available under that program. The stock repurchase program of Old Sirius was terminated on the closing date of the Transactions.
Following the closing of the Transactions, on September 9, 2024, our board of directors authorized for repurchase an aggregate of $1,166 of our common stock. The board of directors did not establish an end date for this stock repurchase program. Shares of common stock may be purchased from time to time on the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, including in accelerated stock repurchase transactions, or otherwise. We intend to fund any stock repurchases through a combination of cash on hand, cash generated by operations and future borrowings. The size and timing of any purchases will be based on a number of factors, including price and business and market conditions. As of September 30, 2025, our cumulative repurchases since the closing of the Transactions under our stock repurchase program totaled 4,371 thousand shares for $96, and $1,070 remained available for additional repurchases under our existing stock repurchase program authorization.
Dividend
On October 22, 2025, our board of directors declared a quarterly dividend on our common stock in the amount of $0.27 per share of common stock payable on November 21, 2025 to stockholders of record as of the close of business on November 5, 2025.
Debt Covenants
The indentures governing Sirius XM's senior notes and the agreements governing the Credit Facility include restrictive covenants. The indentures governing the senior notes also contain covenants that, among other things, limit Sirius XM's ability and the ability of its subsidiaries to create certain liens; enter into sale/leaseback transactions; and merge or consolidate. As of September 30, 2025, we were in compliance with such covenants. For a discussion of our "Debt Covenants," refer to Note 11 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
We do not have any significant off-balance sheet arrangements other than those disclosed in Note 14 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Contractual Cash Commitments
For a discussion of our "Contractual Cash Commitments," refer to Note 14 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
Related Party Transactions
For a discussion of "Related Party Transactions," refer to Note 10 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Estimates
For a discussion of our "Critical Accounting Policies and Estimates", refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates since December 31, 2024.
Glossary
Self-pay subscriber - a self-pay subscriber is a user that, as of the date of determination, was party to a customer agreement with SiriusXM or Pandora, and (i) has paid or agreed to pay a subscription fee, including at a promotional price, or (ii) the subscription fee has been paid by an automaker for a period of three years or greater. Lifetime subscribers to the SiriusXM service are counted as self-pay subscribers because they are party to a customer agreement with SiriusXM and have paid a subscription fee, although in almost all cases the revenue from such subscriptions have been fully recognized in prior periods. Certain users that are party to a customer agreement with Sirius XM or Pandora and have paid or agreed to pay a small promotional price for a trial subscription are not counted as self-pay subscribers because the promotional price is considered to be de minimis and, in management's view, the payment is not indicative of the user's intent to subscribe to the service in the near-term.
Paid promotional subscriber - a paid promotional subscriber is a user that, as of the date of determination, has their subscription fee paid for by a third party, for a fixed trial subscription period, which typically range from one to twelve months but is less than three years. We count prepaid shipped but not activated vehicles as paid promotional subscribers.
Monthly active users- the number of distinct registered users on the Pandora services, including subscribers, which have consumed content within the trailing 30 days to the end of the final calendar month of the period. The number of monthly active users on the Pandora services may overstate the number of unique individuals who actively use our Pandora service, as one individual may use multiple accounts. To become a registered user on the Pandora services, a person must sign-up using an email address or access our service using a device with a unique identifier, which we use to create an account for our service.
Average self-pay monthly churn - for in-car and retail radio subscriptions, the Sirius XM monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.
Adjusted EBITDA - EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA is a Non-GAAP financial measure that excludes or adjusts for the impact of other expense (income), gain/loss on extinguishment of debt, impairment, restructuring and other costs, Former Parent operating costs, other non-cash charges such as share-based payment expense and legal settlements and reserves (if applicable). We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our capital structure and purchase price accounting. We believe investors find this Non-GAAP financial measure useful when analyzing our past operating performance with our current performance and comparing our operating performance to the performance of other communications, entertainment and media companies. We believe investors use adjusted EBITDA to estimate our current enterprise value and to make investment decisions. As a result of large capital investments in our satellite radio system, our results of operations reflect significant charges for depreciation expense. We believe the exclusion of share-based payment expense is useful as it is not directly related to the operational conditions of our business. We also believe the exclusion of the legal settlements and reserves, impairment, restructuring and other costs, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of our normal operations for the period.
Adjusted EBITDA has certain limitations in that it does not take into account the impact to our consolidated statements of comprehensive income of certain expenses, including share-based payment expense. We endeavor to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure. Investors that wish to compare and evaluate our operating results after giving effect for these costs should refer to net income as disclosed in our consolidated statements of comprehensive income. Since adjusted EBITDA is a Non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies and should not be considered in isolation, as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to adjusted EBITDA is calculated as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
|
Net income (loss):
|
$ | 297 | $ | (2,958) | $ | 706 | $ | (2,362) | |||||||||||||||
| Add back items excluded from Adjusted EBITDA: | |||||||||||||||||||||||
| Legal settlements and reserves | (9) | - | 19 | - | |||||||||||||||||||
| Former Parent operating costs | - | 3 | - | 15 | |||||||||||||||||||
|
Impairment, restructuring and other costs
|
9 | 3,388 | 164 | 3,441 | |||||||||||||||||||
|
Share-based payment expense (1)
|
42 | 58 | 140 | 154 | |||||||||||||||||||
| Depreciation and amortization | 141 | 145 | 406 | 455 | |||||||||||||||||||
| Interest expense | 115 | 124 | 348 | 379 | |||||||||||||||||||
|
Other income, net
|
(10) | (28) | (24) | (142) | |||||||||||||||||||
| Income tax expense (benefit) | 91 | (39) | 215 | 103 | |||||||||||||||||||
| Adjusted EBITDA | $ | 676 | $ | 693 | $ | 1,974 | $ | 2,043 | |||||||||||||||
(1)Allocation of share-based payment expense:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Programming and content | $ | 9 | $ | 9 | $ | 28 | $ | 26 | |||||||||||||||
| Customer service and billing | 1 | 1 | 4 | 4 | |||||||||||||||||||
| Transmission | 1 | 1 | 5 | 4 | |||||||||||||||||||
| Sales and marketing | 10 | 11 | 36 | 34 | |||||||||||||||||||
|
Product and technology
|
8 | 11 | 26 | 34 | |||||||||||||||||||
| General and administrative | 13 | 25 | 41 | 52 | |||||||||||||||||||
| Total share-based payment expense | $ | 42 | $ | 58 | $ | 140 | $ | 154 | |||||||||||||||
Free cash flow - is derived from cash flow provided by operating activities, net of additions to property and equipment and purchases of other investments. Free cash flow is a metric that our management and board of directors use to evaluate the cash generated by our operations, net of capital expenditures and other investment activity. In a capital intensive business, with significant investments in satellites, we look at our operating cash flow, net of these investing cash outflows, to determine cash available for future subscriber acquisition and capital expenditures, to repurchase or retire debt, to acquire other companies and to evaluate our ability to return capital to stockholders. We exclude from free cash flow certain items that do not relate to the on-going performance of our business, such as cash flows related to acquisitions, strategic and short-term investments, including tax efficient investments in clean energy as well as net loan activity with related parties and other equity investees. We believe free cash flow is an indicator of the long-term financial stability of our business. Free cash flow, which is reconciled to "Net cash provided by operating activities", is a Non-GAAP financial measure. This measure can be calculated by deducting amounts under the captions "Additions to property and equipment" and deducting or adding Restricted and other investment activity from "Net cash provided by operating activities" from the consolidated statements of cash flows. Free cash flow should be used in conjunction with other GAAP financial performance measures and may not be comparable to free cash flow measures presented by other companies. Free cash flow should be viewed as a supplemental measure rather than an alternative measure of cash flows from operating activities, as determined in accordance with GAAP. Free cash flow is limited and does not represent remaining cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt maturities. We believe free cash flow provides useful supplemental information to investors regarding our current cash flow, along with other GAAP measures (such as cash flows from operating and investing activities), to determine our financial condition and to compare our operating performance to other communications, entertainment and media companies. Free cash flow is calculated as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Cash Flow information | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 430 | $ | 309 | $ | 1,218 | $ | 1,062 | |||||||||||||||
| Net cash used in investing activities | (191) | (242) | (588) | (792) | |||||||||||||||||||
| Net cash used in financing activities | (252) | (136) | (713) | (450) | |||||||||||||||||||
| Free Cash Flow | |||||||||||||||||||||||
| Net cash provided by operating activities | 430 | 309 | 1,218 | 1,062 | |||||||||||||||||||
| Additions to property and equipment | (175) | (216) | (509) | (563) | |||||||||||||||||||
|
Sales of other investments
|
2 | - | 6 | - | |||||||||||||||||||
|
Free cash flow (1)
|
$ | 257 | $ | 93 | $ | 715 | $ | 499 | |||||||||||||||
(1)Compared to the free cash flow of Old Sirius, the free cash flow for Sirius XM Holdings is impacted by the additional interest payments related to Liberty Media's debt attributed to SplitCo as well as corporate costs.
ARPU- Sirius XM ARPU is derived from total earned subscriber revenue (excluding revenue associated with our connected vehicle services) and advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.
Subscriber acquisition cost, per installation- or SAC, per installation, is derived from subscriber acquisition costs less margins from the sale of radios and accessories (excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. SAC, per installation, is calculated as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Subscriber acquisition costs, excluding connected vehicle services | $ | 107 | $ | 90 | $ | 314 | $ | 272 | |||||||||||||||
| Less: margin from sales of radios and accessories, excluding connected vehicle services | (41) | (41) | (124) | (133) | |||||||||||||||||||
| $ | 66 | $ | 49 | $ | 190 | $ | 139 | ||||||||||||||||
| Installations (in thousands) | 3,350 | 3,292 | 10,124 | 10,187 | |||||||||||||||||||
|
SAC, per installation(a)
|
$ | 19.37 | $ | 14.67 | $ | 18.74 | $ | 13.65 | |||||||||||||||
(a)Amounts may not recalculate due to rounding.
Ad supported listener hours- is based on the total bytes served over our Pandora advertising supported platforms for each track that is requested and served from our Pandora servers, as measured by our internal analytics systems, whether or not a listener listens to the entire track. For non-music content such as podcasts, episodes are divided into approximately track-length parts, which are treated as tracks. To the extent that third-party measurements of advertising hours are not calculated using a similar server-based approach, the third-party measurements may differ from our measurements.
RPM -is calculated by dividing advertising revenue, excluding AdsWizz and other off-platform revenue, by the number of thousands of listener hours on our Pandora advertising-based service.
Sirius XM Holdings Inc. published this content on October 30, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 30, 2025 at 13:25 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]