Sirius XM Q4 Earnings Beat Masks Ongoing Subscriber Struggles

What happened

Sirius XM reported Q4 earnings that surpassed analyst estimates, with revenue holding steady at $2.19 billion year-over-year. However, this stability was driven by advertising growth offsetting softer subscriber sales, highlighting persistent erosion in the core subscription base. The DeepValue master report emphasizes that self-pay net adds remain negative at -411k year-to-date through Q3 2025, with subscriber acquisition costs elevated at $19.37 per install. Key monitoring points, such as churn at 1.6% and trial funnel size, have not shown improvement in this earnings release. Thus, while the financial beat provides short-term optics, it fails to address the fundamental subscriber stabilization required for a valuation re-rate.

Implication

The Q4 earnings beat may offer temporary relief, but it obscures the ongoing subscriber losses that are central to the investment thesis. Advertising growth is a positive offset, yet it does not compensate for the structural weakness in self-pay net adds, which were negative in prior quarters. Without evidence of stabilization in churn and acquisition economics, free cash flow sustainability remains reliant on non-recurring cost cuts, increasing downside risk. The DeepValue report's WAIT rating is justified, as this news lacks data on critical metrics like trial funnel or SAC/install improvements. Therefore, investors should await clearer signals from upcoming quarters before considering a position change.

Thesis delta

The Q4 earnings beat reinforces revenue stability but does not alter the core investment thesis, which hinges on subscriber stabilization. No shift is warranted as key falsifiers—self-pay net adds approaching zero and SAC/install declining—remain unaddressed in this limited report. The thesis remains unchanged, with the WAIT rating intact until measurable progress is seen in the next 2-3 quarters.