Tear Sheet: Sirius XM Radio LLC's Solid Cash Flow Generation Supports Deleveraging Despite Expected Revenue Decline In 2025

Sirius XM provided an update on its strategic direction, including focusing on its core in-car subscription business and shifting marketing and other resources away from streaming. It also provided guidance for 2025, including an approximate 2% decline in revenue and approximate 5% decline in adjusted EBITDA compared with 2024. The expected EBITDA decline is due to lower subscription revenue amid declines in both subscribers (with initiatives such as click to cancel and a shift in marketing away from streaming, along with muted growth in automotive sales) and average revenue per user (with a greater mix of new lower-priced packages). The company has identified an additional $200 million of expected annualized savings exiting 2025, although we believe most of these savings

...February 27, 2025 What's new: Sirius XM provided an update on its strategic direction, including focusing on its core in-car subscription business and shifting marketing and other resources away from streaming. It also provided guidance for 2025, including an approximate 2% decline in revenue and approximate 5% decline in adjusted EBITDA compared with 2024. The expected EBITDA decline is due to lower subscription revenue amid declines in both subscribers (with initiatives such as click to cancel and a shift in marketing away from streaming, along with muted growth in automotive sales) and average revenue per user (with a greater mix of new lower-priced packages). The company has identified an additional $200 million of expected annualized savings exiting 2025, although we believe most of these savings will be reinvested into the business. Why it matters: Sirius XM ended 2024 with S&P Global Ratings' adjusted net leverage of 3.9x relative to our 4x downgrade threshold. We expect leverage...

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