Satellite radio service provider SIRIUS XM Radio Inc. (SIRI) announced that it generated significant subscriber growth during the fourth quarter of 2009. The company added 257,028 net subscribers during that quarter, which brings fiscal 2009 to a total subscriber base of 18,772,758. Net subscriber addition is an improvement of more than 151% sequentially and is the highest since the third quarter of 2008. SIRIUS XM’s self-pay subscriber base increased by 247,182 in the fourth quarter resulted in 15,703,932 subscribers at the end of 2009.
The conversion rate from trial to self-pay subscriptions rose to 46.4% in the same quarter from 44.2% in the year-ago quarter. The percentage of users opting to pay for SIRIUS XM service after the free trials had been steadily declining during the past year. Now it has started to stabilize. The monthly self-pay customer churn rate was 1.97% during the fourth quarter of 2009 compared to 2% in the previous two successive quarters. Total paid and unpaid trials included with a car sale however didn’t change sequentially, staying level at approximately 3.6 million.
SIRIUS XM has achieved another major milestone. The company predicted that it will report more than $100 million of free cash flow (cash flow from operations less capital expenditures) for the full fiscal 2009. This is an outstanding performance by SIRIUS XM compared to a negative free cash flow of over $552 million in full fiscal 2008. This is the first year in the company’s history that it has generated positive free cash flow for the entire year.
SIRIUS XM’s business depends to a large extent upon automakers. The sale and lease of vehicles with satellite radios is the most important source of subscribers for both the XM and SIRIUS satellite radio services. Improvement in auto sector sales, increase in conversion rate, and better than expected customer churn may lead to better financial performance by the company in 2010.
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