NEW YORK — The home of Howard Stern and curated music channels from artists including John Mayer and Kelly Clarkson announced a new Chief Operating Officer on Tuesday morning. Sirius XM also shared that it expects its revenue to decline in 2025, as it admitted an effort to lure younger subscribers by heavily promoting its app has been less than successful.
Shareholders expressed their displeasure by triggering a sharp sell-off in Sirius XM stock.
That could present growing pains for Wayne D. Thorsen, who will serve as EVP/Chief Operating Officer of Sirius XM Holdings Inc., starting on December 16. He is the former EVP/Chief Business Officer of ADT Inc. and takes a newly created role at Sirius XM, one in which he will oversee Sirius XM’s product and technology functions. Thorsen will also be responsible for aspects of the company’s commercial activities, business development (including automotive and streaming distribution arrangements), “certain consumer marketing activities” such as subscriber acquisition, and corporate strategy.
Thorsen previously held executive positions at Alphabet Inc. subsidiary Google; SoFi Technologies predecessor Social Finance; Viacom; Telefónica Digital; and Microsoft.
Thorsen will report directly to SiriusXM Chief Executive Officer Jennifer Witz, and Sirius XM says he’ll play “an instrumental role in executing the company’s updated strategic direction.”
That plan was announced in a separate announcement, and sees Sirius XM “sharpen its focus on its core business” as Thorsen will lead company efforts “to closely monitor the return on marketing and technology investments to drive greater operational efficiency and enhance the listener experience.”
Specifically, Sirius XM seeks to reinvigorate its core subscription business as it “leverages the strength of its advertising business across its portfolio; accelerates efficiency throughout the organization; and emphasizes robust margins, free cash flow generation, and stockholder returns.”
That sort of flowery language is typically used after a tough internal revenue of an organization wrapped in fiscal challenges, and investors saw right through it. As of 10:55am Eastern, Sirius XM’s stock, which trades on Nasdaq, was down by 8.4% to $26.33, in active trading. At the Closing Bell, “SIRI” was down by 12.25%, finishing at $25.22 on volume of 14.18 million shares against average volume of 6.36 million.
APP MISHAP?
One of the biggest takeaways from Sirius XM’s updated strategic plan is its renewed focus on its “unique position in vehicle” — a sign that growing its app-based use has come in short of company expectations. Pushing consumers to use the Sirius XM app has been a major marketing focus for the company, and a way to attract ears from Spotify, or the myriad audio streaming platforms ranging from TuneIn and iHeartRadio to Audacy and Radioplayer, in Canada.
Witz commented, “We have a clear path forward and are confident we can deliver for our stockholders.”
Yet, “utilizing streaming as a companion to the company’s core automotive offering” may be more of a jolt than a pivot for investors, given the performance of “SIRI” across Tuesday’s trading session on the Nasdaq market.
Then, there is the prioritization of ad technology investments — a sign that revenue from advertising, not subscribers, is what will propel long-term growth for Sirius XM.
With the curation of “unrivaled content” a key competitive advantage in the eyes and ears of Sirius XM’s leadership team, getting consumers to choose its channels outside of the vehicle has been difficult. Unlike broadcast radio, smart speaker use for Sirius XM appears to have been lower than the company hoped for.
‘INCREASING EFFICIENCY’
What’s next for Sirius XM?
Following a “successful implementation of cost-reduction efforts across various business units” as well as what the company calls “a period of high re-investment in product infrastructure,” SiriusXM is “further optimizing efficiencies” in key areas across the business.
What, exactly, does that mean? Sirius XM says it is “scrutinizing the lifetime value of subscribers, optimizing marketing efforts for higher returns, aligning content investments with its strategic and profitability goals, and closely monitoring the return on technology investments to drive greater operational efficiency and enhance the listener experience.”
To date, Sirius XM says it has delivered an aggregate of approximately $350 million of run rate savings in 2023 and 2024, and will target an initial incremental $200 million of annualized savings exiting 2025.
And, Sirius XM expects to reduce its debt by approximately $700 million in 2025 and achieve a leverage ratio of 3.6x by year end 2025.
But, the 2025 guidance update reflects lower year-over-year returns for investors, which helped fuel the ‘SIRI’ selloff. Sirius XM provided 2025 guidance for total revenue of $8.5 billion, adjusted EBITDA of $2.6 billion, and free cash flow of $1.15 billion.
By comparison, 2024 guidance for total revenue of approximately $8.675 billion, adjusted EBITDA of approximately $2.7 billion, and free cash flow of approximately $1 billion remains in place.
Lastly, investors may also be displeased with the immediate resignation of Joseph Inzerillo as Chief Product and Technology Officer “to pursue other opportunities.”
