XM Satellite Radio (XMSR) missed the mark Thursday, posting a wider-than-expected second-quarter loss on weak sales.
The Washington, D.C., pay radio shop joins its New York rival
in coming up short of Wall Street's expectations with its quarterly financial performance. The shortfall is likely to give satellite radio investors a
second jolt of disappointment in as many days when trading starts.
XM shares dropped 6% in premarket trading.
For the latest quarter, XM says it lost $164 million, or $1.38 per share, on sales of $18.3 million. Compared with the first quarter, that's an unchanged bottom line and 38% improvement to the top line. Analysts, though, had expected a loss of $1.24 per share on $18.8 million in revenue.
Given that the satellite radio business is young and growing rapidly, investors tend to discount some of the traditional financial performance metrics in favor of trends like subscriber growth and customer acquisition costs.
On that front, XM managed to post respectable numbers. The number of total subscribers as of the end of June was 692,253, with 209,000 net adds coming in the quarter. The subscription radio broadcaster says it lowered customer acquisition costs to $80 per user, beating bullish projections of $83.
And despite promotions and other giveaways, XM's monthly average revenue per user stayed above the $10 that subscribers pay for the service. For the second quarter, XM's revenue per subscriber was $10.73, a 15% increase over the previous quarter, but down from year-ago levels of $12.32.
"XM continues to show significant progress in adding subscribers, controlling costs and achieving key operational milestones," said CEO Hugh Panero. "By the end of the third quarter, XM Radio will be rapidly approaching one million subscribers, a major milestone for satellite radio."
The company has a conference call with analysts scheduled for 10 a.m. EDT.