SiriusXM Holdings Inc. (SiriusXM (SIRI)) reported its second-quarter results on Thursday, and it was a bit of a mixed bag. Revenue came in above Wall Street's expectations, but adjusted earnings fell short. The market's reaction was swift: shares tumbled nearly 12% in premarket trading, putting a dent in what had been a scorching July rally that had pushed the stock into overbought territory.

The audio entertainment company also raised its full-year 2026 financial guidance by $25 million across total revenue, adjusted EBITDA, and free cash flow — a small but notable vote of confidence in its trajectory.

Let's dig into the numbers. Revenue increased 1% year over year to $2.16 billion, beating the analyst consensus estimate of $2.136 billion. Adjusted earnings came in at 70 cents per share, missing the Street estimate of 79 cents. Net income rose 17% to $239 million, while diluted EPS climbed from 57 cents to 70 cents.

Subscription and Advertising Drive Results

Subscriber revenue edged up 1% to $1.64 billion, while advertising revenue grew 5% to $454 million. Equipment revenue, however, slipped to $36 million from $46 million a year earlier, reflecting higher memory costs tied to satellite radio hardware modules.

The SiriusXM segment itself generated $1.62 billion in revenue. Average revenue per user ticked up 1% to $15.32, thanks to pricing actions taken earlier this year. And here's a bright spot: self-pay monthly churn improved to a record-low 1.4%. The company added 22,000 self-pay subscribers during the quarter — its first positive second-quarter self-pay net additions in four years. That's a meaningful milestone.

Pandora and Off-Platform revenue rose 4% to $543 million, fueled by advertising growth.

Profitability Improves

Higher subscription and advertising revenue, combined with lower programming, legal, and personnel-related costs, helped adjusted EBITDA increase 3% year over year to $691 million. Free cash flow jumped 48% to $593 million, driven by EBITDA growth, lower cash taxes, and favorable timing of capital expenditures and vendor payments.

Total cost of services improved 2% to $636 million, lifting gross profit 2% to $981 million and expanding gross margin by one percentage point to 61%.

Balance Sheet and Outlook

Cash and cash equivalents stood at $174 million at June 30, up from $94 million at the end of 2025. Total assets were $27.19 billion, while long-term debt increased to $9.45 billion from $8.65 billion at year-end.

Looking ahead, SiriusXM now expects full-year 2026 revenue of about $8.525 billion, adjusted EBITDA of about $2.625 billion, and free cash flow of about $1.375 billion. The updated revenue outlook is above the company's prior guidance of $8.5 billion but remains below the analyst consensus estimate of $8.569 billion.

Price Action

SiriusXM shares were down 11.78% at $28.75 during premarket trading on Thursday, according to market data.