(Reuters) - Satellite radio provider Sirius XM Radio Inc posted higher-than-expected second-quarter revenue on Thursday as it added more than 700,000 subscribers to its service, which is widely available built into cars.
Sirius shares rose 1.6 percent in premarket trading.
Gabelli & Co analyst Brett Harriss said the company’s churn, or rate of cancellations, beat his estimates, improving to 1.7 percent in the quarter, down from 1.9 percent a year earlier.
“This is a positive because monthly churn is the largest contributor to the lifetime value of a subscriber,” Harriss said.
Sirius XM has hundreds of channels that play few commercials and feature exclusive content, such as Howard Stern’s radio show and a music channel dedicated to Bruce Springsteen. But it faces increased competition from Internet streaming services such as Pandora that are trying to crack into the car market, where Sirius XM has its strongest foothold.
The New York-based company, controlled by John Malone’s Liberty Media Corp, bought back $650 million of stock in the second quarter, topping estimates, Harriss said.
Sirius XM has satellite radios in 70 percent of new vehicles and generates the majority of its revenue through subscriptions. The company said it plans to add a net 1.6 million subscribers this year. It currently has 25.1 million subscribers.
It raised its forecast for full-year adjusted earnings before interest, taxes, depreciation and amortization to $1.14 billion.
Second-quarter net income was $125.5 million, or 2 cents per share, matching Wall Street estimates.
A year earlier it earned $3.13 billion, boosted by a $3 billion income tax benefit. Pre-tax earnings rose from a year earlier.
Revenue increased 12 percent to $940.1 million. Analysts were expecting $934.7 million, according to Thomson Reuters I/B/E/S.
Reporting by Liana B. Baker; Editing by Gerald E. McCormick and John Wallace