A dip in SiriusXM’s paid subscribers in the first quarter caused the satellite radio giant’s stock to fall by more than 7% on Tuesday (April 30), even as first-quarter revenue beat analysts’ expectations.

The company reported that first-quarter revenue inched 0.8% higher to $2.16 billion — analysts polled by the London Stock Exchange were expecting $2.13 billion — thanks mainly to a 7% uptick in ad sales revenue.

Ad revenue totaled $402 million in the quarter, enough to offset a 1% decline in subscription revenue, which came in at $1.68 billion and contributes nearly 80% of the company’s overall earnings.

A 1.4% decline in self-pay subscribers to 31.58 million customers in the quarter contributed to “slightly higher churn” as an increase in sales of vehicles with existing subscriptions led to those subscribers shifting into unpaid trials, SiriusXM CFO Tom Barry said on a call with analysts.

Executives reiterated their 2024 guidance and said they expected improvements in their subscription revenue, trial subscriptions and ad revenue in the second half of the year.

Despite the rollout of a new and costly streaming app with features SiriusXM says allow it to tailor content to subscribers, executives faced questions from analysts over what will charge future growth.

“On the business side, it’s really about reinvigorating demand,” SiriusXM CEO Jennifer Witz said on the call. “It’s taking longer than we’d hoped in terms of the rollout of the new platform and our ability to capitalize on improvements in marketing. But the key opportunities to build demand … are clear, across price, discovery and control, and we have this multipronged effort to [drive] these things.”

The company is hopeful that the revamped app, which launched in December and costs $9.99 per month, will attract new subscribers and drive revenue growth.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 4% to $650 million. The company’s gross profit edged 0.6% higher to $1.13 billion, while the gross profit margin held flat at 53% in the quarter compared to last year. Total operating expenses held roughly flat at $1.73 billion.

Warren Buffett’s Berkshire Hathaway is a big investor in SiriusXM, having purchased nearly 9.7 million shares worth approximately $44 million last fall and then another 1.9 million shares worth $50 million of its tracking stock earlier this month.

In February, SiriusXM laid off 3% of its workforce affecting around 170 workers at the company, which said the cuts would enable it to invest in content and new technologies.

SiriusXM’s stock closed at $2.92 on Tuesday (April 30), down 7.2%.