Revenue Up For Pandora, But Its Net Loss Widens

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As Pandora Media weighs its options as an ongoing concern, the Oakland, Calif.-based company released its Q1 2017 earnings report on Monday afternoon (5/8).


Here’s the good news: Total revenue grew to $316 million, from $297.3 million, in the quarter.

That’s thanks to a $3 million year-over-year boost in ad revenue, to $223.3 million.

At the same time, subscription revenue jumped to $64.9 million, from $54.7 million.

Ticketing service revenue also increased, climbing to $27.8 million, from $22.3 million.

That’s where the good news ends for the streaming audio company’s Q1 financial report.

The company’s gross profit dipped to $84.4 million, from $90.2 million, as its content acquisition costs — a.k.a. royalty payments — surged to $187.4 million, from $171.3 million.

Equally crushing for Pandora are its operating expenses.

Sales and marketing costs grew again, this time to $125.1 million, from $117.4 million.

This greatly contributed to a net loss of $132.3 million (56 cents per diluted share), compared to a net loss of $115.1 million (51 cents) in the year-ago period.

Losses, adjusted for pretax expenses and stock option expense, came to $57.2 million (24 cents per share). That’s wider than the $45.2 million (20 cents) loss, non-GAAP, seen in Q1 2016.

Nevertheless, the net loss result surpassed Wall Street expectations.

The average estimate of 17 analysts surveyed by Zacks Investment Research was for a loss of 34 cents per share.

The music streaming service’s net revenue fell short of the consensus forecast of 13 analysts surveyed by Zacks ($318 million).

Pandora’s guidance remains positive: For Q2 it expects revenue in the range of $360 million to $375 million. Furthermore, Pandora anticipates full-year revenue in the range of $1.5 billion to $1.65 billion.

With talk swirling across the tech universe that Pandora will find a buyer before it engages in a cash-for-equity deal with KKR, Pandora founder and CEO Tim Westergren offered little commentary about the future of the company.

Rather, he played up Pandora Premium, the long-awaited on-demand subscription-based streaming audio option designed to keep Pandora competitive to other streaming audio services, including Spotify, Apple Music, Tidal, Amazon Music, and iHeartRadio.

 “Although it remains early days, we are enthusiastic about the recent launch of Pandora Premium,” said Westergren, whose fate at the company is now unknown given the KKR involvement reached on Monday. “Pandora Premium is a major leap forward for the company and allows us to offer a variety of products to our large base of listeners. Additionally, our Q1 results were consistent with our expectations and demonstrated Pandora’s ability to improve ad monetization, while controlling costs and evolving our consumer experience in ways that enhance usage trends of our most engaged listeners.”


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