XM Radio 2010 Annual Report Download - page 3

Dear Fellow Stockholders,
April 2011
The past year was a record breaking one for
SiriusXM.
• Subscribers grew to a record number, with more than
20 million at the end of 2010.
• Free cash flow reached new heights of $210 million.
• Revenue hit $2.82 billion, up 14% over 2009.
• Adjusted EBITDA was $626 million, up 35% over
2009.
We surpassed our guidance on every measure in
2010.
At the beginning of 2010, we told investors that we
would grow our subscriber base by 500,000 and we
blew that out of the water, delivering 1.4 million new
subscribers in 2010. Our free cash flow also exceeded
our annual expectations, which is even more signifi-
cant given that as recently as 2008, free cash flow was
negative $552 million. As many of you know, I view
free cash flow as the most important measure of a
company’s performance. It’s free cash flow that
enables a company to pay down debt, make acquisi-
tions, or return capital to stockholders.
Growing Free Cash Flow ($ mm)
($505) ($552)
$185 $210
2007 2008 2009 2010
These results are impressive viewed through any lens,
but when you think about how far we have come and
the competitive and economic landscape in which we
operate, what we have accomplished is truly remark-
able. With disciplined execution and clear direction,
we successfully navigated a fragile economic envi-
ronment, an auto industry that is only now beginning
to recover and a transformed media landscape with
new competitors emerging almost daily, challenges
that have left many other companies on the sidelines.
The future has never looked brighter for
SiriusXM.
We have the best radio on radio and the quality of our
programming keeps getting better, with over 135 chan-
nels of commercial-free music, premier sports, news,
talk, entertainment, traffic, weather, and data services.
We have set a new standard in programming with
special events, such as our exclusive Paul McCartney
concert in December. We have the best sports pro-
gramming on radio with content that now covers every
major league and event of interest to our subscribers
from action in the dug-outs at spring training to the pits
at the Daytona 500. In the last year, we also have
successfully re-signed every major contract that has
come up for renewal, including Howard Stern and the
NFL, both of which we have secured through 2015.
Our exceptional programming is clearly paying
off as we are continuing to draw listeners.
At the end of 2010, there were a record 20.2 million
SiriusXM subscribers.
Increasing Subscribers (mm)
17.3
19.0 18.8
20.2
13.7
1.6
4.4
9.2
2003 2004 2005 2006 2007 2008 2009 2010
On a net basis, we added 1.4 million new subscribers,
representing a year-over-year growth rate of nearly
8%. This is impressive growth for a business that had
already scaled to be one of the largest subscriber
businesses in this country by the end of 2009. In the
last year, our conversion rate moving consumers on
trials to self-pay subscribers continued to improve and
our self-pay churn declined. We grew our self-pay