Sirius XM ( SIRI) 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.
Looking ahead, Sirius XM reiterated the five-year operational forecast it provided a week ago, which came as the company said it was in discussions with several institutions regarding a financing plan to replace its convertible notes due in 2009. Sirius XM once again said it expects to grow its subscriber count from 19.1 million by the end of 2008 to 28.4 million by the end of 2013. The company said it should finish 2009, a critical year for the company as roughly $1 billion in debt will come due, with 20.6 million subscribers. Sirius XM said that current economic conditions, particularly the dramatic and recent slowdown in auto sales, have negatively impacted subscriber growth for this year and next. Previously, Sirius XM said it expected to end the year with about 19.5 million subscribers and that it should end 2009 with around 21.5 million subscribers. By comparison, Sirius finished 2007 as a stand-alone company with 8.32 million subscribers, up 38% from the end of 2006. When XM operated by itself, it saw its subscriber count jump 18% in 2007 to 9.02 million subscribers. Shares of Sirius XM were lately down 5.6% to 25 cents a share. The stock is down 91% for the year and 88% since the merger between Sirius and XM.