XM Conference Call Wrap Up

April 27, 2006

XM has conducted their call, and the street is now aware of the results.

XM missed street consensus of a loss of 53 cents per share. XM posted a loss of 62 cents per share. XM did beat revenue expectations by about 6.5 million dollars.

SUBSCRIBERS

XM posted NET subscriber gains of 568,902. This brought their total subscriber base to 6,501,859 subscribers. This leaves XM needing 2,500,000 subscribers to meet their stated guidance of 9,000,000 subscribers by the end of 2006.

XM’s retail channel brought in 303,622 subscribers. Of that retail base, 167,180 (or 55%) came in the “Friends and Family” program. The family plan now accounts for 20% of XM’s overall subscriber base. This is virtually unchanged from Q4. Data subscribers made up 22,000 of the retail subscribers.

XM’s OEM channel saw substantial growth, and reported 272,024 NET subscribers. OEM conversion rate is 54%.

XM’s Rental channel saw a decrease of 6,744 subscribers.

CHURN

XM reported a churn rate of 1.64%. It should be noted that XM’s churn does not include those who do not keep the service after the promotional period expires. Overall XM had 450,598 deactivations in the first quarter

SUBSCRIBER ACQUISITION COSTS

XM reported improvement in this sector over the fourth quarter. Q1 SAC was $62, while Q4 was at $89. The improvement is nice, but still has not come back to pre Q4 levels.

COST PER GROSS ADDITION

XM again improved this metric over Q4. In Q4 the CPGA was $141. The first quarter brought this cost down to $94. XM stated that thcommittedommited to keeping CPGA under 4100 for the full year of 2006.

REFINANCING

As reported earlier by SSG, the refinancing helps XM’s cash flow position substantially. XM did note that they will incur a $75,000,000 non-cash expense in Q2 relating to the financing. Most analysts should be picking this up in their projections in the coming days.

AVERAGE REVENUE PER UNIT

XM reported ARPU of above $10.00 for the first time. ARPU for Q1 came in at $10.07. This is up from $9.85 cents in Q4 2005. An increase in ARPU is very nice to see from XM. XM expects ARPU to stay above $10.00 for all of 2006.

WCS SPECTRUM

XM did not offer any new information on the WCS Spectrum SSG feels that uncertainty surrounding this spectrum still acts as a weight on this equity. This is not to say that the WCS acquisition is bad. SSG simply feels that the lack of information regarding this bandwidth remains as a question mark in the minds of many on the street.

REVENUE

XM reiterated subscriber revenue of $860,000,000 for 2006

CASH FLOW BREAK EVEN

XM stated that they will not be at cash flow break even this year. They did stress that they will have Positive Operational Cash flow in the fourth quarter of 2006, and expect to maintain that status throughout 2007. XM stated that due to expenses related to the XM-5 satellite that true CFBE is a second half of 2007 event.

Overall, the quarter was good forreiteratedteratted guidances that they had previously stated, and offered a positive outlook for 2006. The call was somewhat dampened by the FCC probe and the FTC probe, both of which XM felt should be brought to the attention of investors. XM stated that they intend to cooperate with the agencies, and supply wdocumentationantation that the agencies are requesting. I would have preferred to have some more detail on the WCS spectrum, but it appears that it is not yet in the cards.

the link to this write up is http://tinyurl.com/z9lmc

4/27/2006 03:25:00 PM

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