XM Earnings Numbers
XM will announce its earnings in a couple weeks and there would seem to be the possibility of a significant positive surprise. The consensus estimate for Q4 is (0.76), with a range from (0.60) to (0.91). This, presumably, is based on something like 205 mln shares, which implies (123 mln) to (187 mln).
As always with both XM (and to a lesser extent, with SIRI) the guessing game is on marketing expenditures. I think the high end of this range (0.60) is likely. My model yields (0.60) on sales of 89.4 mln if marketing is increased 35% over Q3, and I think this is likely.
XM has, in the past, received zero credit from the markets for its superb financial management (one of my greatest amazements is that Sirius shareholders proclaim a $260 million loss, a miss of 35% or so, as "nothing big"). And perhaps this trend will continue. But it really appears to me that a substantial positive surprise is likely by XM. Here's my current thinking for Q4 (subject to change....)
PROJECTED
------------ XM -----------
$ %
REVENUE
SUBSCRIPTIONS, NET 81,803 91.49%
ADVERTISING, NET 2,821 3.15%
EQUIPMENT 1,934 2.16%
OTHER 2,858 3.20%
TOTAL REVENUE 89,416 100.00%
COST OF REVENUE
REVENUE SHARE & ROYALTY 14,807 16.56%
CUSTOMER CARE & BILLING 13,710 15.33%
COST OF EQUIPMENT 1,800 2.01%
AD SALES 1,449 1.62%
SATELLITE & TERRESTRIAL 9,000 10.07%
BROADCAST & OPERATIONS 6,150 6.88%
PROGRAMMING & CONTENT 8,623 9.64%
TOTAL COST OF REVENUE 55,539 62.11%
GROSS MARGIN 33,878 37.89%
OPERATING EXPENSES
SALES & MARKETING 80,000 89.47%
GENERAL & ADMINISTRATIVE 7,435 8.32%
RESEARCH & DEVELOPMENT 6,684 7.48%
DEPRECIATION & AMORTIZATION 34,557 38.65%
AMORTIZATION GM LIABILITY 9,313 10.42%
TOTAL OPERATING EXPENSES 137,989 154.32%
NET LOSS FROM OPERATIONS (104,111) -116.43%
OTHER INCOME AND EXPENSE
INTEREST INCOME 1,500 2.30%
INTEREST EXPENSE (20,000) -30.60%
TOTAL OTHER INCOME AND EXP (18,500) -28.31%
NET LOSS BEFORE INCOME TAXES (122,611) -144.74%
TAXES AND RELATED (579) -0.89%
NET INCOME (LOSS) (123,190) -145.63%
PER COMMON SHARE (0.60)
FULLY DILUTED (0.40)
The possibility exists for Marketing to be substantially more or less than 80 mln -- I don't think we'll know until they tell us. But it would be surprising, indeed, if XM's numbers were toward the higher loss end of the scale.
Officially, I'm guessing $123 mln for XM's loss for Q4. However, I thought SIRI's loss would be just over $200 mln (and we got $260 mln), so what do I know? |
