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Sirius XM Exceeds Revenue Estimates

Sirius XM (SIRI - Get Report) topped analysts' revenue targets for the third quarter and reiterated its five-year operational plan, but shares of the company traded lower Tuesday as subscriber growth slowed.

The satellite-radio operator recorded a third-quarter loss of $217 million, or 9 cents a share, compared with a year-ago loss of $265.5 million, or 18 cents a share. Sirius XM said the results include only two months of operations of XM following its July 28 acquisition.

Revenue rose 15.7% from a year ago to $612.8 million. On average, analysts expected a loss of 9 cents a share on revenue of $587.4 million, according to Thomson Reuters.

Sirius XM said it ended the third quarter with 18.9 million subscribers, up 17% from the same quarter a year ago. The company said it saw 344,100 net subscribers additions in the quarter, down from 839,750 a year earlier.

Several key metrics weakened for Sirius XM in the quarter. The conversion rate, which measures the number of subscribers who receive the service after a promotion period ends, fell to 47% from 50.7% a year ago. Average monthly churn, which measures the frequency that subscribers left the service, inched higher to 1.7% from 1.6% in the year-ago quarter. Additionally, the average revenue per subscriber slipped to $10.47 from $10.75 a year earlier.

On the positive side, cost per subscriber acquisition shrank to $74 from $86 a year ago. Negative free cash flow dropped to $97.5 million from $102.8 million in the year-ago quarter.
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