SiriusXM Holdings reported total revenue slipped 2% from a year ago to $2.14 billion, on lower subscriber and advertising revenue and higher operating expenses.

Subscriber revenue came in at $1.63 billion, compared to $1.66 billion a year ago, and ad revenue totaled $432 million in the quarter, down from $443 million a year ago. Income from operations dropped 29% to $365 million from $471 million a year ago, and adjusted EBITDA was $668 million, down from $702 million last year. Free cash flow rose nearly 27% from a year ago to $402 million from $317 million.

SiriusXM Holdings CEO Jennifer Witz acknowledged a challenging economic backdrop that caused overall advertising revenue to fall by about 2.5% to $432 million for the quarter. But she pointed to the company’s investments in podcasting — they inked a deal with comedian Trevor Noah and debuted the popular true crime podcast Morbid in the second quarter — as attracting customer and advertiser dollars. Podcast ad revenue was up by almost 50% from a year ago.

“We continue to see challenges in the ad market due to economic, consumer, and tariff uncertainty, ranging from budget pullbacks to dollars shifting to lower-funnel channels to drive short term sales, with categories such as retail more adversely impacted,” Witz said on a call discussing the earnings. “Additionally, we are seeing pricing pressure in streaming … and audio competitors reacting.”

Despite slashing its sales and marketing budget by almost $50 million compared to the year ago quarter as the company de-emphasized its streaming app to focus on in-car customers, Sirius’ total operating expenses rose to $1.77 billion from $1.71 billion a year ago. This was driven by a $28 million charge for legal matters and reserves related to the settlement of a lawsuit over its customer cancellation processes, and rising subscriber acquisition costs. Overall, subscriber acquisition costs (SAC) rose to $107 million from $92 million a year ago. For an individual SiriusXM customer installation, SAC costs have increased from $13.85 a year ago to over $18. Nonetheless, Witz said they are ahead of schedule in meeting their goal of reducing costs by $200 million.

While SiriusXM lost around 450,000 subscribers in total from the year ago quarter — a number which breaks down to slightly more paid promotional subscribers lost than self pay subscribers — that marked an improvement from the year ago quarter, and the company reported a healthy 31.5 million total subscribers, as of July 31. Average revenue per user for SiriusXM was roughly the same as a year ago at $15.22.

Witz said the improvement in net self-pay subscribers — the fifth straight quarter that loss has gotten smaller — was driven by new acquisition programs, including new 3-year subscriptions programs in Audi vehicles and an expansion into electric vehicles.

In mid-July, SiriusXM announced a new, ad-supported service, called SiriusXM Play, which will cost less than $7 a month – less than SiriusXM’s $25 all access plan or its $9.99 app subscription. Play is meant to provide potential customers — people whose cars are loaded with SiriusXM but they haven’t subscribed because the price is unappealing — with a lower priced option. Expected to be widely available by the end of 2025, executives hope Play will improve net subscriber additions and advertising revenue.

Pandora revenue was about 2.5% lower from a year ago at $524 million, as monthly active users fell by nearly 5.5% to about 42.7 million.

Sirius executives said they remain on track to meet their 2025 goals of $8.5 billion in total revenue, $2.6 billion in adjusted EBITDA and $1.15 billion in free cash flow.