Sirius XM Radio (SIRI) Last Update 3/5/23
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Sirius XM Radio
Trefis Price
Top Drivers for Period
Key Drivers
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Potential upside & downside to trefis price

Sirius XM Radio Company


  1. Advertising constitutes 81% of the Trefis price estimate for Sirius XM Radio's stock.
  2. Equipment, Royalties and Other Revenues constitute 14% of the Trefis price estimate for Sirius XM Radio's stock.


  1. Sirius XM Reports Mixed Q4

Sirius XM reported flat year-over-year (y-o-y) revenue growth of $2.28 billion which missed expectations by $30 million. Net income for the fourth quarter of 2022 was $369 million resulting in diluted earnings per share of $0.09, up from $0.08 for the same quarter of 2021. EPS beat the average analyst estimate by a penny. The company said it ended 2022 with 32.4 million self-pay subscribers, an increase of 348K for the year. On the other hand, paid promotional subscribers decreased by 76K for the year. Meanwhile, SIRI's music streaming service Pandora finished 2022 with 47.6 million monthly active users, down 9% from 52.3 million in 2021.

Note: Sirius XM's FY'22 ended on December 31, 2022.

  1. Guidance for FY 2023

For the full-year 2023, the company warned that the company expected modestly negative self-pay net adds for the year as economic and demand uncertainty persists. SIRI also mentioned that it expects total revenue of approximately $9.0 billion vs. consensus of $9.29B, adjusted EBITDA of approximately $2.7 billion, and free cash flow of approximately $1.05 billion in FY 2023.


Below are key drivers of Sirius XM's value that present opportunities for upside or downside to the current Trefis price estimate:

  • Number of Sirius XM Subscribers: We currently forecast this figure to increase from 34.0 million in 2022 to about 40 million by the end of the Trefis forecast period. If subscriber additions accelerate and Sirius XM reaches a subscriber base of about 61 million by the end of the Trefis forecast period, there could be an upside of about 18% to the Trefis price estimate. This could happen if the company can further increase its penetration and success rate in new as well as used cars. On the other hand, if competition from Spotify and other radio/online audio streaming services increases and the subscriber additions slow down amounting to current levels by the end of the Trefis forecast period, there could be a little over 15% downside to the Trefis price estimate.

  • Sirius XM's Average Revenue Per Subscriber: We currently forecast this figure to increase from $197 in 2022 to about $211 by the end of the Trefis forecast period. If more subscribers upgrade to a higher-priced tier and as a result, the average revenue per subscriber reaches more than $220 by the end of the Trefis forecast period, there could be an upside of about 13% to the Trefis price estimate.


Sirius and XM merged in July 2008 to form Sirius XM Radio. The satellite radio service provider offers numerous channels comprising of commercial-free music, sports, talk shows, news stations, and other channels in the U.S. Sirius XM radio channels are mainly available through receivers in automobiles but can also be accessed over the internet or through home stereos by using various accessories.

The firm's satellite radios are primarily distributed through automakers ("OEMs"), retail locations, and through their website. Sirius XM has ties with major automobile manufacturers such as Ford, GM, and Toyota. This helps drive its presence in the US automobile space. Additionally, satellite radio services are also offered to customers of certain rental car companies.

The firm's primary source of revenue is the subscription fee it charges customers for annual, semiannual, quarterly, or monthly subscriptions. Additionally, the company derives revenue from activation fees, the sale of advertising on select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services such as weather, traffic, data, and backseat TV services.

SIRI expects the new podcasting trend to boost the company's current revenue streams and possibly add new ones. The company has made relevant acquisitions in the last three years. Sirius XM acquired a minority stake in the open audio platform SoundCloud. Sirius also acquired Simplecast, a leading podcast management platform that allows creators to publish and analyze their content. This business synergizes well with Sirius' ad tech subsidiary, AdsWizz, which is an end-to-end monetization solution for audio content. Then, Sirius XM made an acquisition of podcasting behemoth Stitcher, which will add established podcasts like Freakonomics Radio, Oprah Winfrey's SuperSoul Sunday, to name a few, to its platform.


Pandora Acquisition

Sirius XM completed the acquisition of Pandora for $3.5 billion in an all-stock deal in early 2019. The deal made the combined entity the world's largest audio entertainment company. Further, it gave the satellite radio company entry into the well-established media streaming market. The merger helped the company unlock music streaming services for cars. This deal holds great potential for both companies as it could bolster their positions in segments where they are currently lacking. Pandora's technological competence should help Sirius XM expand beyond vehicles and streamline its features like personalized recommendations. Concurrently, Sirius XM's alliance with several automakers should accelerate Pandora's distribution to vehicles and unlock music streaming services for automobiles.

Subscription fee

Sirius XM earns the majority of its revenues from the subscription fee it charges its subscribers. It offers various monthly, semi-annual, and annual plans to customers. The company also offers discounts on long-term subscriptions and on multiple subscriptions. As of now, the Sirius XM All Access package is available for $22.99 per month and the other basic packages are available at $17.99 and $12.99 per month.

Sirius XM in Cars

Sirius XM has contracts with nearly all major automobile manufacturers. Every year the firm pays out a large amount to its OEM (original equipment manufacturers) partners to keep their radios flowing into the new car market, at around a 75% penetration rate. Of this 75% who buy a car with satellite radio, 39%-40% choose to keep it after the promotion trial runs out.

  • General Motors:

    Sirius XM has a deal with GM which allows it to install its satellite radios in GM vehicles. This deal was valid through 2027, and GM increased vehicles equipped with Sirius XM to nearly all Chevrolet, Buick, GMC, and Cadillac vehicles beginning with the model year 2021. In addition, the company also announced a significant expansion of its 360L platform at General Motors, this should further drive penetration.
  • Toyota:

    Sirius XM has a deal with Toyota which allows it to install its satellite radios on all Toyota vehicles in the United States. This deal is valid until 2028.
  • Sirius XM is also a partner for companies like Volvo, Mercedes-Benz, Honda, Ferrari, Kia, Bentley, BMW, Volkswagen, Hyundai, and Mitsubishi.
  • Many trucks, boats, and recreational vehicles include Sirius XM radios as a standard fit.


Used car market becoming important for Sirius XM

In FY 2022, Sirius XM's penetration rate in the used car domain was around 51%. The used car market is becoming attractive for Sirius XM and penetration could grow from current levels. This would present a strong opportunity for Sirius XM to exploit the used car market. The company expects used car trials to surpass new car trials in the foreseeable future and double in the next decade. These numbers suggest that the company is extremely confident about potential growth in the used car market.

Increasing competition

On-demand music streaming services are currently dominating the market, with Spotify being one of the leading players. Spotify had about 489 million Monthly Active Users (FY 2022) globally, far ahead of its nearest rival Apple Music, and continues to add more subscribers - driven by expansion into new markets. Further, connected cars that allow smartphone apps to stream seamlessly through Bluetooth should dampen the subscriber growth in premium-priced satellite-beamed platforms. However, Sirius XM has seen steady growth in recent times. This coupled with the acquisition of Pandora should allow Sirius to counter this competition.

Ability to afford unique content

Sirius XM's business model is based on a subscription fee, and therefore the company is able to afford unique and exclusive content that separates it from other radio services. The company will continue to sustain this ability and therefore, grow its user base. An example of this front is its recently renewed contract with Howard Stern, which would probably keep him associated with Sirius XM through to his retirement.

Connected services

In addition to offering listening content through satellite radio sets factory-installed in cars, Sirius XM offers connected services to car manufacturers through its subsidiary – Sirius XM Connected Vehicle Services Inc. The company provides an array of features to enhance safety, security, and convenience. These include remote and assist services, automatic crash notifications, easy access to maps, weather, restaurants, and points of interest, scheduling service appointments, repairs, etc. Currently, Sirius XM provides connected services to Acura, BMW, Hyundai, Honda, Infiniti, Jaguar, Land Rover, Lexus, Nissan, Subaru, and Toyota. With new car sales increasing steadily, connected services should provide buyers an incentive to subscribe to Sirius XM services, which should keep its growth running. Coupled with the huge opportunity in the used car domain, this paints a pleasing picture for Sirius XM’s future.