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marlinchemical.net

Founded Year

1992

Stage

Acquired | Acquired

About Marlin Company

Marlin Company is a custom chemical blending, manufacturing, and packaging company.

Marlin Company Headquarter Location

1333 Virginia Street SW

Lenoir, North Carolina, 28645,

United States

(828) 754-0980

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Marlin Company Patents

Marlin Company has filed 10 patents.

The 3 most popular patent topics include:

  • Automotive steering technologies
  • Automotive suspension technologies
  • Muscle cars
patents chart

Application Date

Grant Date

Title

Related Topics

Status

3/27/2019

12/14/2021

Honeycombs (geometry), Physical oceanography, Technical drawing, 3D computer graphics, Subduction volcanoes

Grant

Application Date

3/27/2019

Grant Date

12/14/2021

Title

Related Topics

Honeycombs (geometry), Physical oceanography, Technical drawing, 3D computer graphics, Subduction volcanoes

Status

Grant

Latest Marlin Company News

Appspace Announces Integration of Digital Signage Provider, The Marlin Company

Feb 2, 2021

Message : *Required fields This Annual Report on Form 10-K contains forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995. Actual resultsand the timing of events could differ materially from those projected inforward-looking statements due to a number of factors, including those describedunder "Item 1A - Risk Factors" and elsewhere in this Annual Report on Form 10- K.See "Special Note About Forward-Looking Statements. "All amounts referenced in this Item 7 are in millions, except subscriber amountsare in thousands and per subscriber and per installation amounts are in ones,unless otherwise stated.The following discussion and analysis of our financial condition and results ofoperations should be read in conjunction with our audited consolidated financialstatements and related notes included elsewhere in this Annual Report on Form10-K. Executive SummaryWe operate two complementary audio entertainment businesses - our Sirius XM Sirius XM service is distributed through our twoproprietary satellite radio systems and streamed via applications for mobiledevices, home devices and other consumer electronic equipment. Satellite radiosare primarily distributed through automakers, retailers and our website. Our Sirius XM service is also available through our user interface, which we call"360L," that combines our satellite and streaming services into a single,cohesive in-vehicle entertainment experience.The primary source of revenue from our Sirius XM business is subscription fees,with most of our customers subscribing to monthly, quarterly, semi-annual orannual plans. We also derive revenue from advertising on select non-musicchannels, direct sales of our satellite radios and accessories, and otherancillary services. As of December 31, 2020 Sirius XM business hadapproximately 34.7 million subscribers.In addition to our audio entertainment businesses, we provide connected vehicleservices to several automakers. These services are designed to enhance thesafety, security and driving experience of consumers. We also offer a suite ofdata services that includes graphical weather, fuel prices, sports schedules andscores and movie listings, a traffic information service that includesinformation as to road closings, traffic flow and incident data to consumerswith compatible in-vehicle navigation systems, and real-time weather services invehicles, boats and planes.In May 2020 Automatic Labs Inc. ("Automatic") service, whichwas part of our connected services business. Automatic operated a service forconsumers and auto dealers and offered an install-it-yourself adapter and mobileapplication, which transformed vehicles into connected vehicles. During the yearended December 31, 2020 $24 of restructuring expenses in ourconsolidated statements of comprehensive income related to this termination ofthe service. We did not record any restructuring expenses during the years ended December 31, 2019 Pandora Our Pandora business operates a music, comedy and podcast streaming discoveryplatform, offering a personalized experience for each listener wherever andwhenever they want to listen, whether through mobile devices, car speakers orconnected devices. Pandora enables listeners to create personalized stationsand playlists, discover new content, hear artist- and expert-curated playlists,podcasts and select Sirius XM content as well as search and play songs andalbums on-demand. Pandora is available as (1) an ad-supported radio service,(2) a radio subscription service (Pandora Plus) and (3) an on-demandsubscription service (Pandora Premium). As of December 31, 2020 , Pandora hadapproximately 6.3 million subscribers.The majority of revenue from our Pandora business is generated from advertisingon our Pandora ad-supported radio service. We also derive subscription revenuefrom our Pandora Plus and Pandora Premium subscribers. 34-------------------------------------------------------------------------------- Table of ContentsOur Pandora business also sells advertising on audio platforms and in podcastsunaffiliated with us. Pandora is the exclusive US ad sales representative for SoundCloud . Through this arrangement Pandora offers advertisers the ability toexecute campaigns in the US across the Pandora and SoundCloud listeningplatforms. We also have arrangements to serve as the ad sales representative forcertain podcasts, such as the podcasts of NBC News AdsWizz , Pandora provides a comprehensive digital audio advertising technologyplatform, which connects audio publishers and advertisers with a variety of adinsertion, campaign trafficking, yield optimization, programmatic buying,marketplace and podcast monetization solutions. As of December 31, 2020 $ 380 7 %Advertising revenue 157 205 188 (48) (23) % 17 9 %Equipment revenue 173 173 155 - - % 18 12 %Other revenue 155 165 164 (10) (6) % 1 1 %Total Sirius XM revenue 6,342 6,187 5,771 155 3 % 416 7 %Pandora:Subscriber revenue 515 476 - 39 8 % 476 nmAdvertising revenue 1,183 1,131 - 52 5 % 1,131 nmTotal Pandora revenue 1,698 1,607 - 91 6 % 1,607 nmTotal consolidated revenue 8,040 7,794 5,771 246 3 % 2,023 35 %Cost of servicesSirius XM:Revenue share and royalties 1,484 1,431 1,394 53 4 % 37 3 %Programming and content 449 444 406 5 1 % 38 9 %Customer service and billing 394 398 382 (4) (1) % 16 4 %Transmission 123 112 96 11 10 % 16 17 %Cost of equipment 19 29 31 (10) (34) % (2) (6) %Total Sirius XM cost of services 2,469 2,414 2,309 55 2 % 105 5 % Pandora: Revenue share and royalties 937 860 - 77 9 % 860 nmProgramming and content 32 18 - 14 78 % 18 nmCustomer service and billing 87 77 - 10 13 % 77 nmTransmission 54 58 - (4) (7) % 58 nmTotal Pandora cost of services 1,110 1,013 - 97 10 % 1,013 nmTotal consolidated cost of services 3,579 3,427 2,309 152 4 % 1,118 48 %Subscriber acquisition costs 362 427 470 (65) (15) % (43) (9) %Sales and marketing 957 937 484 20 2 % 453 94 %Engineering, design and development 263 280 123 (17) (6) % 157 128 %General and administrative 511 524 354 (13) (2) % 170 48 %Depreciation and amortization 506 468 301 38 8 % 167 55 %Acquisition and restructuring costs 28 84 3 (56) (67) % 81 nmImpairment charges 976 - - 976 nm - nmTotal operating expenses 7,182 6,147 4,044 1,035 17 % 2,103 52 %Income from operations 858 1,647 1,727 (789) (48) % (80) (5) %Other (expense) income:Interest expense (394) (390) (350) (4) (1) % (40) (11) %Loss on extinguishment of debt (40) (57) - 17 30 % (57) nmOther income (expense) 6 (3) 44 9 300 % (47) (107) %Total other (expense) income (428) (450) (306) 22 5 % (144) (47) %Income before income taxes 430 1,197 1,421 (767) (64) % (224) (16) %Income tax expense (299) (283) (245) (16) (6) % (38) (16) %Net income $ 131 February 1, 2019 . Refer to page 45 for ourdiscussion on Pandora cost of services.Operating CostsSubscriber Acquisition Costs are costs associated with our satellite radioservice and include hardware subsidies paid to radio manufacturers, distributorsand automakers; subsidies paid for chipsets and certain other components used inmanufacturing radios; device royalties for certain radios and chipsets; productwarranty obligations; and freight. The majority of subscriber acquisition costsare incurred and expensed in advance of acquiring a subscriber. Subscriberacquisition costs do not include advertising costs, marketing, loyalty paymentsto distributors and dealers of satellite radios or revenue share payments toautomakers and retailers of satellite radios.•2020 vs. 2019: For the years ended December 31, 2020 $43 ,and decreased as a percentage of total revenue. The decrease was driven byreductions to OEM hardware subsidy rates, lower subsidized costs related to thetransition of chipsets, and a decrease in the volume of satellite radioinstallations.We expect subscriber acquisition costs to fluctuate with OEM installations;however, the subsidized chipsets cost is expected to decline as we transition toa new generation of chipsets. We intend to continue to offer subsidies and otherincentives to induce OEMs to include our technology in their vehicles.Sales and Marketing includes costs for marketing, advertising, media andproduction, including promotional events and sponsorships; cooperative andartist marketing; and personnel related costs including salaries, commissions,and sales support. Marketing costs include expenses related to direct mail,outbound telemarketing, email communications, social media, television anddigital performance media.•2020 vs. 2019: For the years ended December 31, 2020 $453 , and increased as a percentage of total revenue. The increase was primarilydue to the inclusion of Pandora, and additional subscriber communications andacquisition campaigns. 37-------------------------------------------------------------------------------- Table of ContentsWe anticipate that sales and marketing expenses will increase with growth in ourtrial subscriber base, as we expand programs to retain our existing subscribers,win back former subscribers, attract new subscribers and listeners, and as wegrow advertising revenue.Engineering, Design and Development consists primarily of compensation andrelated costs to develop chipsets and new products and services, includingstreaming and connected vehicle services, research and development for broadcastinformation systems and the design and development costs to incorporate SiriusXM $283 , respectively, and our effective tax rate was 69.5%and 23.6%, respectively.Our effective tax rate of 69.5% for the year ended December 31, 2020 wasprimarily impacted by the nondeductible Pandora goodwill impairment charge,partially offset by the recognition of excess tax benefits related toshare-based compensation, a benefit related to state and federal research anddevelopment and certain other credits and a worthless stock deduction associatedwith the termination of the Automatic service. Our effective tax rate of 23.6%for the year ended December 31, 2019 was primarily impacted by the recognitionof excess tax benefits related to share-based compensation and benefits relatedto state and federal research and development and certain other credits,partially offset by the impact of nondeductible compensation.•2019 vs. 2018: For the years ended December 31, 2019 $245 , respectively, and our effective tax rate was 23.6%and 17.2%, respectively.Our effective tax rate of 23.6% for the year ended December 31, 2019 wasprimarily impacted by the recognition of excess tax benefits related toshare-based compensation and benefits related to state and federal research anddevelopment and certain other credits, partially offset by the impact ofnondeductible compensation. Our effective tax rate of 17.2% for the year ended December 31, 2018 was primarily impacted by the recognition of excess taxbenefits related to share based compensation and a benefit related to state andfederal research and development credits.Unaudited Pro Forma ResultsSet forth below are our pro forma results of operations for the year ended December 31, 2020 December 31, 2018 .These pro forma results are based on estimates and assumptions, which we believeare reasonable. They are not the results that would have been realized had thePandora Acquisition actually occurred on January 1, 2018 and are not indicativeof our consolidated results of operations in future periods. The pro formaresults primarily include adjustments related to amortization of acquiredintangible assets, depreciation of property and equipment, acquisition costs,fair value gain or loss on the Pandora investment and associated tax impacts.Pro forma adjustments are not included for the acquisitions of Simplecast andStitcher. Please refer to the Footnotes to Results of Operations (pages 49through 53) following our discussion of results of operations. 40 -------------------------------------------------------------------------------- Table of Contents For the Years Ended December 31, 2020 vs 2019 Change 2019 vs 2018 Change 2020 2019 2018 Amount % Amount %Revenue (Pro Forma) (Pro Forma) (Pro Forma)Sirius XM:Subscriber revenue $ 5,857 $ 380 7 %Advertising revenue 157 205 188 (48) (23) % 17 9 %Equipment revenue 173 173 155 - - % 18 12 %Other revenue 161 172 171 (11) (6) % 1 1 %Total Sirius XM revenue 6,348 6,194 5,778 154 2 % 416 7 %Pandora:Subscriber revenue 515 527 478 (12) (2) % 49 10 %Advertising revenue 1,183 1,200 1,092 (17) (1) % 108 10 %Total Pandora revenue 1,698 1,727 1,570 (29) (2) % 157 10 %Total consolidated revenue 8,046 7,921 7,348 125 2 % 573 8 %Cost of servicesSirius XM:Revenue share and royalties 1,484 1,431 1,394 53 4 % 37 3 %Programming and content 449 444 406 5 1 % 38 9 %Customer service and billing 394 398 382 (4) (1) % 16 4 %Transmission 123 112 96 11 10 % 16 17 %Cost of equipment 19 29 31 (10) (34) % (2) (6) %Total Sirius XM cost of services 2,469 2,414 2,309 55 2 % 105 5 %Pandora:Revenue share and royalties 943 945 929 (2) - % 16 2 %Programming and content 32 18 11 14 78 % 7 64 %Customer service and billing 87 85 95 2 2 % (10) (11) %Transmission 54 63 50 (9) (14) % 13 26 %Total Pandora cost of services 1,116 1,111 1,085 5 - % 26 2 %Total consolidated cost of services 3,585 3,525 3,394 60 2 % 131 4 %Subscriber acquisition costs 362 427 470 (65) (15) % (43) (9) %Sales and marketing 957 973 883 (16) (2) % 90 10 %Engineering, design and development 263 294 266 (31) (11) % 28 11 %General and administrative 511 540 517 (29) (5) % 23 4 %Depreciation and amortization 506 483 465 23 5 % 18 4 %Acquisition and restructuring costs 28 - - 28 nm - nmImpairment charges 976 - - 976 nm - nmTotal operating expenses 7,188 6,242 5,995 946 15 % 247 4 %Income from operations 858 1,679 1,353 (821) (49) % 326 24 %Other (expense) income:Interest expense (394) (392) (377) (2) (1) % (15) (4) %Loss on extinguishment of debt (40) (57) (17) 17 30 % (40) (235) %Other income (expense) 6 (2) 8 8 400 % (10) (125) %Total other (expense) income (428) (451) (386) 23 5 % (65) (17) %Income before income taxes 430 1,228 967 (798) (65) % 261 27 %Income tax expense (299) (290) (123) (9) (3) % (167) (136) %Net income $ 131 $13 , andincreased as a percentage of total Pandora revenue. The increase was primarilydriven by web hosting and personnel-related costs.We expect our Pandora transmission costs to fluctuate with changes in listenerhours.Operating CostsSubscriber Acquisition Costs are costs associated with our satellite radioservice and include hardware subsidies paid to radio manufacturers, distributorsand automakers; subsidies paid for chipsets and certain other components used inmanufacturing radios; device royalties for certain radios and chipsets; productwarranty obligations; and freight. The majority of subscriber acquisition costsare incurred and expensed in advance of acquiring a subscriber. Subscriberacquisition costs do not include advertising costs, marketing, loyalty paymentsto distributors and dealers of satellite radios or revenue share payments toautomakers and retailers of satellite radios.•2020 vs. 2019: For the years ended December 31, 2020 $43 ,and decreased as a percentage of total revenue. The decrease was driven byreductions to OEM hardware subsidy rates, lower subsidized costs related to thetransition of chipsets, and a decrease in the volume of satellite radioinstallations.We expect subscriber acquisition costs to fluctuate with OEM installations;however, the subsidized chipsets cost is expected to decline as we transition toa new generation of chipsets. We intend to continue to offer subsidies and otherincentives to induce OEMs to include our technology in their vehicles.Sales and Marketing includes costs for marketing, advertising, media andproduction, including promotional events and sponsorships; cooperative andartist marketing; and personnel related costs including salaries, commissions,and sales support. Marketing costs include expenses related to direct mail,outbound telemarketing, email communications, social media, television anddigital performance media.•2020 vs. 2019: For the years ended December 31, 2020 $90 ,and increased as a percentage of total revenue. The increase was primarily dueto additional acquisition campaigns and subscriber communications as well ashigher personnel-related costs.We anticipate that sales and marketing expenses will increase with growth in ourtrial subscriber base, as we expand programs to retain our existing subscribers,win back former subscribers, attract new subscribers and listeners, and as wegrow advertising revenue.Engineering, Design and Development consists primarily of compensation andrelated costs to develop chipsets and new products and services, includingstreaming and connected vehicle services, research and development for broadcastinformation systems and costs associated with the incorporation of our radiosinto new vehicles manufactured by automakers.•2020 vs. 2019: For the years ended December 31, 2020 $290 , respectively, and our effective tax rate was 69.5%and 23.6%, respectively. The effective tax rate of 69.5% for the year ended December 31, 2020 was primarily impacted by the nondeductible Pandora goodwillimpairment charge, partially offset by the recognition of excess tax benefitsrelated to share-based compensation, a benefit related to state and federalresearch and development and certain other credits and a worthless stockdeduction associated with the termination of the Automatic service. Theeffective tax rate of 23.6% was primarily impacted by the recognition of excesstax benefits related to share-based compensation and benefits related to stateand federal research and development and certain other credits, partially offsetby the impact of nondeductible compensation.•2019 vs. 2018: For the years ended December 31, 2019 $123 , respectively, and our effective tax rate was 23.6%and 12.7%, respectively. The effective tax rate of 23.6% for the year ended December 31, 2019 was primarily impacted by the recognition of excess taxbenefits related to share-based compensation and benefits related to state andfederal research and development and certain other credits, partially offset bythe impact of nondeductible compensation. The effective tax rate of 12.7% forthe year ended December 31, 2018 was primarily impacted by the recognition ofexcess tax benefits related to share based compensation and a benefit related tostate and federal research and development credits under the ProtectingAmericans from Tax Hikes Act of 2015. 48-------------------------------------------------------------------------------- Table of ContentsFootnotes to Pro Forma Results of Operations The following tables reconcile our results of operations as reported to ourpro forma results of operations for the years ended December 31, 2020 , 2019 and2018 which includes the Pandora pre-acquisition financial information for theapplicable periods and the effects of purchase price accounting. These pro formaresults are based on estimates and assumptions, which we believe are reasonable.They are not the results that would have been realized had the PandoraAcquisition actually occurred on January 1, 2018 and are not indicative of ourconsolidated results of operations in future periods. The pro forma resultsprimarily include adjustments related to amortization of acquired intangibleassets, depreciation of property and equipment, acquisition costs, fair valuegain or loss on the Pandora investment and associated tax impacts. 49 -------------------------------------------------------------------------------- December 31, 2020 Predecessor Purchase Price Financial Accounting and Pro As Reported Information Forma Adjustments Ref Pro FormaRevenueSirius XM:Subscriber revenue $ 5,857 $ 5,857 Advertising revenue 157 - - 157Equipment revenue 173 - - 173Other revenue 155 - 6 (a) 161Total Sirius XM revenue 6,342 - 6 6,348Pandora:Subscriber revenue 515 - - 515Advertising revenue 1,183 - - 1,183Total Pandora revenue 1,698 - - 1,698Total consolidated revenue 8,040 - 6 8,046Cost of servicesSirius XM:Revenue share and royalties 1,484 - - 1,484Programming and content 449 - - 449Customer service and billing 394 - - 394Transmission 123 - - 123Cost of equipment 19 - - 19Total Sirius XM cost of services 2,469 - - 2,469 Pandora: Revenue share and royalties 937 - 6 (b) 943Programming and content 32 - - 32Customer service and billing 87 - - 87Transmission 54 - - 54Total Pandora cost of services 1,110 - 6 1,116Total consolidated cost of services 3,579 - 6 3,585Subscriber acquisition costs 362 - - 362Sales and marketing 957 - - 957Engineering, design and development 263 - - 263General and administrative 511 - - 511Depreciation and amortization 506 - - 506Acquisition and restructuring costs 28 - - 28Impairment charges 976 - - 976Total operating expenses 7,182 - 6 7,188Income (loss) from operations 858 - - 858Other (expense) income:Interest expense (394) - - (394)Loss on extinguishment of debt (40) - - (40)Other (expense) income 6 - - 6Total other (expense) income (428) - - (428)Income (loss) before income taxes 430 - - 430Income tax expense (299) - - (299)Net income $ 131 $ 131 (a) This adjustment eliminates the impact of additional revenue associated withcertain programming agreements recorded as part of the merger of Sirius and XM(the "XM Merger"). (b) This adjustment includes the impact of additional expense associated withminimum guarantee royalty contracts recorded as part of the Pandora Acquisition. 50 -------------------------------------------------------------------------------- December 31, 2019 Predecessor Purchase Price Financial Accounting and Pro As Reported Information (c) Forma Adjustments Ref Pro FormaRevenueSirius XM:Subscriber revenue $ 5,644 $ 5,644 Advertising revenue 205 - - 205Equipment revenue 173 - - 173Other revenue 165 - 7 (d) 172Total Sirius XM revenue 6,187 - 7 6,194Pandora:Subscriber revenue 476 46 5 (e) 527Advertising revenue 1,131 68 1 (e) 1,200Total Pandora revenue 1,607 114 6 1,727Total consolidated revenue 7,794 114 13 7,921Cost of servicesSirius XM:Revenue share and royalties 1,431 - - 1,431Programming and content 444 - - 444Customer service and billing 398 - - 398Transmission 112 - - 112Cost of equipment 29 - - 29Total Sirius XM cost of services 2,414 - - 2,414Pandora:Revenue share and royalties 860 71 14 (f) 945Programming and content 18 - - 18Customer service and billing 77 8 - 85Transmission 58 5 - 63Total Pandora cost of services 1,013 84 14 1,111Total consolidated cost of services 3,427 84 14 3,525Subscriber acquisition costs 427 - - 427Sales and marketing 937 36 - 973Engineering, design and development 280 14 - 294General and administrative 524 16 - 540Depreciation and amortization 468 6 9 (g) 483Acquisition and restructuring costs 84 1 (85) (h) -Total operating expenses 6,147 157 (62) 6,242Income (loss) from operations 1,647 (43) 75 1,679Other (expense) income:Interest expense (390) (2) - (392)Loss on extinguishment of debt (57) - - (57)Other (expense) income (3) 1 - (2)Total other (expense) income (450) (1) - (451)Income (loss) before income taxes 1,197 (44) 75 1,228Income tax expense (283) - (7) (i) (290)Net income $ 914 January31, 2019 . (d) This adjustment eliminates the impact of additional revenue associated withcertain programming agreements recorded as part of the XM Merger. (e) This adjustment relates to the amortization of deferred subscription anddeferred advertising revenue that was fair valued in purchase accounting. (f) This adjustment includes the impact of additional expense associated withminimum guarantee royalty contracts recorded as part of the Pandora Acquisition. (g) This adjustment includes the impact of the additional amortizationassociated with the acquired intangible assets recorded as part of the PandoraAcquisition that are subject to amortization, partially offset by normaldepreciation associated with assets revalued in purchase accounting. 51-------------------------------------------------------------------------------- Table of Contents(h) This adjustment eliminates the impact of acquisition and other relatedcosts. (i) This adjustment to income taxes was calculated by applying Sirius XM's December 31, 2018 Predecessor Purchase Price Financial Accounting and Pro As Reported Information (j) Forma Adjustments Ref Pro FormaRevenueSirius XM:Subscriber revenue $ 5,264 $ 5,264 Advertising revenue 188 - - 188Equipment revenue 155 - - 155Other revenue 164 - 7 (k) 171Total Sirius XM revenue 5,771 - 7 5,778Pandora:Subscriber revenue - 478 - 478Advertising revenue - 1,092 - 1,092Total Pandora revenue - 1,570 - 1,570Total consolidated revenue 5,771 1,570 7 7,348Cost of servicesSirius XM:Revenue share and royalties 1,394 - - 1,394Programming and content 406 - - 406Customer service and billing 382 - - 382Transmission 96 - - 96Cost of equipment 31 - - 31Total Sirius XM cost of services 2,309 - - 2,309Pandora:Revenue share and royalties - 929 - 929Programming and content - 11 - 11Customer service and billing - 95 - 95Transmission - 50 - 50Total Pandora cost of services - 1,085 - 1,085Total consolidated cost of services 2,309 1,085 - 3,394Subscriber acquisition costs 470 - - 470Sales and marketing 484 399 - 883Engineering, design and development 123 143 - 266General and administrative 354 169 (6) (l) 517Depreciation and amortization 301 61 103 (m) 465Acquisition and restructuring costs 3 12 (15) (n) -Total operating expenses 4,044 1,869 82 5,995Income (loss) from operations 1,727 (299) (75) 1,353Other (expense) income:Interest expense (350) (27) - (377)Loss on extinguishment of debt - (17) - (17)Other (expense) income 44 7 (43) (o) 8Total other (expense) income (306) (37) (43) (386)Income (loss) before income taxes 1,421 (336) (118) 967Income tax expense (245) 8 114 (p) (123)Net income $ 1,176 December 31, 2018 . (k) This adjustment eliminates the impact of additional revenue associated withcertain programming agreements recorded as part of the XM Merger. (l) This adjustment eliminates the impact of contract termination fees. 52-------------------------------------------------------------------------------- Table of Contents(m) This adjustment includes the impact of the additional amortizationassociated with the acquired intangible assets recorded as part of the PandoraAcquisition that are subject to amortization, partially offset by normaldepreciation associated with assets revalued in purchase accounting. (n) This adjustment eliminates the impact of transaction related costs,recorded by Pandora, to advisers for the planned acquisition by Sirius XM . (o) This adjustment eliminates the unrealized gain for the fair valueadjustment of our preferred stock investment in Pandora. (p) This adjustment to income taxes was calculated by applying Sirius XM'sstatutory tax rate at December 31, 2018 $(336) .Key Financial and Operating Performance MetricsIn this section, we present certain financial performance measures some of whichare presented as Non-GAAP items, which include free cash flow and adjustedEBITDA. We also present certain operating performance measures. Our adjustedEBITDA excludes the impact of share-based payment expense and certain purchaseprice accounting adjustments related to the XM Merger and the PandoraAcquisition. Additionally, when applicable, our adjusted EBITDA metric excludesthe effect of significant items that do not relate to the on-going performanceof our business. We use these Non-GAAP financial and operating performancemeasures to manage our business, to set operational goals and as a basis fordetermining performance-based compensation for our employees. See theaccompanying glossary on pages 62 through 65 for more details and for thereconciliation to the most directly comparable GAAP measure (where applicable).We believe these Non-GAAP financial and operating performance measures provideuseful information to investors regarding our financial condition and results ofoperations. We believe these Non-GAAP financial and operating performancemeasures may be useful to investors in evaluating our core trends because theyprovide a more direct view of our underlying costs. We believe investors may useour adjusted EBITDA to estimate our current enterprise value and to makeinvestment decisions. We believe free cash flow provides useful supplementalinformation to investors regarding our cash available for future subscriberacquisitions and capital expenditures, to repurchase or retire debt, to acquireother companies and our ability to return capital to stockholders. By providingthese Non-GAAP financial and operating performance measures, together with thereconciliations to the most directly comparable GAAP measure (where applicable),we believe we are enhancing investors' understanding of our business and ourresults of operations.Our Non-GAAP financial measures should be viewed in addition to, and not as analternative for or superior to, our reported results prepared in accordance withGAAP. In addition, our Non-GAAP financial measures may not be comparable tosimilarly-titled measures by other companies. Please refer to the glossary(pages 62 through 65) for a further discussion of such Non-GAAP financial andoperating performance measures and reconciliations to the most directlycomparable GAAP measure (where applicable). Subscribers and subscription relatedrevenues and expenses associated with our connected vehicle services and SiriusXM Canada December 31, 2018 . As of December 31, 2020 vs 2019 Change 2019 vs 2018 Change(subscribers in thousands) 2020 2019 2018 (1) Amount % Amount %Sirius XMSelf-pay subscribers 30,887 29,978 28,915 909 3 % 1,063 4 %Paid promotional subscribers 3,827 4,931 5,124 (1,104) (22) % (193) (4) %Ending subscribers 34,714 34,909 34,039 (195) (1) % 870 3 %Traffic users 9,301 9,334 8,606 (33) - % 728 8 %Sirius XM Canada subscribers 2,622 2,707 2,644 (85) (3) % 63 2 %PandoraMonthly active users - allservices 58,882 63,508 69,399 (4,626) (7) % (5,891) (8) %Self-pay subscribers 6,298 6,165 5,914 133 2 % 251 4 %Paid promotional subscribers 43 49 756 (6) (12) % (707) (94) %Ending subscribers 6,341 6,214 6,670 127 2 % (456) (7) % (1)Includes Pandora's results as of December 31, 2018 . 53-------------------------------------------------------------------------------- Table of ContentsThe following table contains our Non-GAAP pro forma financial and operatingperformance measures which are based on our adjusted results of operations forthe years ended December 31, 2020 , 2019 and 2018. For the Years Ended December 31, 2020 vs 2019 Change 2019 vs 2018 Change(subscribers in thousands) 2020 2019 (1) 2018 (2) Amount % Amount %Sirius XMSelf-pay subscribers 909 1,063 1,402 (154) (14) % (339) (24) %Paid promotional subscribers (1,104) (193) (99) (911) (472) % (94) (95) %Net additions (195) 870 1,303 (1,065) (122) % (433) (33) %Weighted average number of 34,523 34,314 33,345 209 1 % 969 3 %subscribersAverage self-pay monthly 1.7 % 1.7 % 1.7 % - % - % - % - %churnARPU (3) $ 14.10 December 31, 2020 , 2019 and2018, respectively. (4) Free cash flow has not been adjusted for Pandora's pre-acquisition results. 54-------------------------------------------------------------------------------- Table of ContentsSirius XMSubscribers. At December 31, 2020 , we had approximately 34,714 subscribers, adecrease of approximately 195 subscribers, or 1%, from the approximately 34,909subscribers as of December 31, 2019 . The decrease in total subscribers wasprimarily due to the decline in paid promotional subscribers, partially offsetby growth in our self-pay subscriber base from lower non-pay and vehicle relatedchurn as well as additions from subscriber win back programs.•2020 vs. 2019: For the years ended December 31, 2020 and 2019, net additionswere (195) and 870, respectively, a decrease of 122%, or 1,065. Paid promotionalsubscribers decreased as shipments and trial subscription starts from automakersoffering paid subscriptions declined as a result of the COVID-19 pandemic.Self-pay net additions decreased year over year as growth in subsequent ownertrial conversions, stand-alone streaming net additions, win back programs andreductions in vehicle related and non-pay churn were offset by reduced additionsfrom new car conversions as well as increases in voluntary churn.•2019 vs. 2018: For the years ended December 31, 2019 and 2018, net additionswere 870 and 1,303, respectively, a decrease of 33%, or 433. Self-pay netadditions decreased primarily due to a flat churn rate on a growing subscriberbase and lower gross add win-backs, offset by increases in trial conversions.The reduction of paid promotional subscribers increased due to lower shipmentsand trial starts from automakers offering paid promotional subscriptions.Traffic Users. We offer services that provide graphic information as to roadclosings, traffic flow and incident data to consumers with compatible in-vehiclenavigation systems.Average Self-pay Monthly Churn is derived by dividing the monthly average ofself-pay deactivations for the period by the average number of self-paysubscribers for the period. (See accompanying glossary on pages 62 through 65for more details. )•2020 vs. 2019: For the years ended December 31, 2020 and 2019, our averageself-pay monthly churn rate was 1.7%. Decreases in non-pay and vehicle relatedchurn were offset by increased voluntary churn.•2019 vs. 2018: For the years ended December 31, 2019 and 2018, our averageself-pay monthly churn rate was 1.7%. Decreased voluntary churn was offset byincreased used vehicle churn.ARPU is derived from total earned subscriber revenue (excluding revenue derivedfrom our connected vehicle services) and net advertising revenue, divided by thenumber of months in the period, divided by the daily weighted average number ofsubscribers for the period. (See the accompanying glossary on pages 62 through65 for more details. )•2020 vs. 2019: For the years ended December 31, 2020 $25.66 , respectively. The decrease was driven byour transition to a new generation of chipsets and reductions to OEM hardwaresubsidy rates.PandoraMonthly Active Users. At December 31, 2020 , Pandora had approximately 58,882monthly active users, a decrease of 4,626 monthly active users, or 7%, from the63,508 monthly active users as of December 31, 2019 . The decrease in monthlyactive users was driven by an increase in ad-supported listener churn and adecrease in the number of new users. 55-------------------------------------------------------------------------------- Table of ContentsSubscribers. At December 31, 2020 , Pandora had approximately 6,341 subscribers,an increase of 127, or 2%, from the approximately 6,214 subscribers as of December 31, 2019 December 31, 2020 and 2019, net additionswere 127 and (456), respectively, an increase of 128%, or 583. Net additionsincreased as a result of the growth in our Pandora Premium plans during 2020.•2019 vs. 2018: For the years ended December 31, 2019 and 2018, net additionswere (456) and 1,192, respectively, a decrease of 138%, or 1,648. Net additionsdecreased due to a loss of paid promotional subscribers from the expiration ofan agreement with T-Mobile.ARPU is defined as average monthly revenue per paid subscriber on our Pandorasubscription services. (See the accompanying glossary on pages 62 through 65 formore details. )•2020 vs. 2019: For the years ended December 31, 2020 $6.53 , respectively. The increase was primarily driven by an increase in thenumber of Pandora Premium subscribers while the number of lower price PandoraPlus subscribers decreased.Ad supported listener hours are a key indicator of our Pandora business and theengagement of our Pandora listeners. We include ad supported listener hoursrelated to Pandora's non-radio content offerings in the definition of listenerhours.•2020 vs. 2019: For the years ended December 31, 2020 and 2019, ad supportedlistener hours was 12.50 billion and 13.44 billion, respectively. The decreasein ad supported listener hours was primarily driven the decline in monthlyactive users, partially offset by higher hours per active user.•2019 vs. 2018: For the years ended December 31, 2019 and 2018, ad supportedlistener hours was 13.44 billion and 14.79 billion, respectively. The decline inad supported listener hours was primarily driven by a decrease in ad-supportedlisteners.RPM is a key indicator of our ability to monetize advertising inventory createdby our listener hours on the Pandora services. Ad RPM is calculated by dividingadvertising revenue by the number of thousands of listener hours of our Pandoraadvertising-based service.•2020 vs. 2019: For the years ended December 31, 2020 $4.47 , respectively. The decrease was due to lower minimum guaranteesassociated with our direct license agreements with major and independent labels,distributors, performing rights organizations and publishers. 56-------------------------------------------------------------------------------- Table of Contents Total Company Adjusted EBITDA. EBITDA is defined as net income before interest expense, incometax expense and depreciation and amortization. Adjusted EBITDA excludes theimpact of other income, loss on extinguishment of debt, acquisition relatedcosts, other non-cash charges, such as certain purchase price accountingadjustments, impairment charges, share-based payment expense, loss on disposalof assets, and legal settlements and reserves related to the historical use ofsound recordings. (See the accompanying glossary on pages 62 through 65 for areconciliation to GAAP and for more details. )•2020 vs. 2019: For the years ended December 31, 2020 $296 . The increasewas due to: growth of 8% in total revenue which was primarily a result of theincrease in our subscriber base; additional revenues from the U.S. Music RoyaltyFee; an increase in advertising revenue; and lower subscriber acquisition costs.The increases were partially offset by higher revenue share and royalty, salesand marketing, programming and content, transmission, engineering, design anddevelopment, and general and administrative costs.Free Cash Flow includes cash provided by operations, net of additions toproperty and equipment, restricted and other investment activity and the returnof capital from an investment in an unconsolidated entity. (See the accompanyingglossary on pages 62 through 65 for a reconciliation to GAAP and for moredetails. )•2020 vs. 2019: For the years ended December 31, 2020 December 31, 2018 .Our largest source of cash provided by operating activities is cash generated bysubscription and subscription-related revenues. We also generate cash from thesale of advertising through our Pandora business, advertising on certainnon-music channels on Sirius XM and the sale of satellite radios, components andaccessories. Our primary uses of cash from operating activities include revenueshare and royalty payments to distributors, programming and content providers,and payments to radio manufacturers, distributors and automakers. In addition,uses of cash from operating activities include payments to vendors to service,maintain and acquire listeners and subscribers, general corporate expenditures,and compensation and related costs.Cash Flows Used in Investing ActivitiesCash flows used in investing activities in the year ended December 31, 2020 $1,100 wasavailable for future borrowing under our Credit Facility. We believe that wehave sufficient cash and cash equivalents, as well as debt capacity, to coverour estimated short-term and long-term funding needs, including amounts toconstruct, launch and insure replacement satellites, as well as fund futurestock repurchases, future dividend payments and pursue strategic opportunities. 58-------------------------------------------------------------------------------- Table of ContentsOur ability to meet our debt and other obligations depends on our futureoperating performance and on economic, financial, competitive and other factors.We continually review our operations for opportunities to adjust the timing ofexpenditures to ensure that sufficient resources are maintained.We regularly evaluate our business plans and strategy. These evaluations oftenresult in changes to our business plans and strategy, some of which may bematerial and significantly change our cash requirements. These changes in ourbusiness plans or strategy may include: the acquisition of unique or compellingprogramming; the development and introduction of new features or services;significant new or enhanced distribution arrangements; investments ininfrastructure, such as satellites, equipment or radio spectrum; andacquisitions and investments, including acquisitions and investments that arenot directly related to our existing business.We may from time to time purchase our outstanding debt through open marketpurchases, privately negotiated transactions or otherwise. Purchases orretirement of debt, if any, will depend on prevailing market conditions,liquidity requirements, contractual restrictions and other factors. The amountsinvolved may be material.Capital Return ProgramAs of December 31, 2020 Sirius XM's senior notes and Pandora's convertiblenotes and the agreement governing the Sirius XM Credit Facility includerestrictive covenants. As of December 31, 2020 , we were in compliance with suchcovenants. For a discussion of our "Debt Covenants," refer to Note 14 to ourconsolidated financial statements in Part II, Item 8, of this Annual Report onForm 10-K.Off-Balance Sheet ArrangementsWe do not have any significant off-balance sheet arrangements other than thosedisclosed in Note 17 to our consolidated financial statements in Part II, Item8, of this Annual Report on Form 10-K that are reasonably likely to have amaterial effect on our financial condition, results of operations, liquidity,capital expenditures or capital resources.Contractual Cash CommitmentsFor a discussion of our "Contractual Cash Commitments," refer to Note 17 to ourconsolidated financial statements in Part II, Item 8, of this Annual Report onForm 10-K.Related Party TransactionsFor a discussion of "Related Party Transactions," refer to Note 13 to ourconsolidated financial statements in Part II, Item 8, of this Annual Report onForm 10-K.On February 1, 2021 U.S. income tax liabilities andsetting forth agreements with respect to other tax matters. The tax sharing 59-------------------------------------------------------------------------------- Table of Contentsagreement was negotiated and approved by a special committee of Holdings' boardof directors, all of whom are independent of Liberty Media.Under the Internal Revenue Code, two corporations may form a consolidated taxgroup, and file a consolidated federal income tax return, if one corporationowns stock representing at least 80% of the voting power and value of theoutstanding capital stock of the other corporation. As of December 31, 2020 ,Liberty Media beneficially owned, directly and indirectly, approximately 76% ofthe outstanding shares of our common stock. We expect that Liberty Media couldbeneficially own, directly and indirectly, over 80% of the outstanding shares ofour common stock at some time in 2021, and Holdings and Liberty Media would thenbecome members of the same consolidated tax group. Should that happen, the

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