Total revenue for Q1 of fiscal 2014 was $125.5 million, a 55% YOY increase. Non-GAAP total revenue was $128.5 million, a 58% YOY increase, including $3.0 million in revenue relating to subscription return reserve. The bad news, however, is they reported a loss of $28.6 million, or 16 cents a share, compared with a year-earlier loss of $20.2 million, or 12 cents a share.
Ad revenue was $105.1 million, a 49% increase. Non-GAAP subscription and other revenue was $23.4 million, a 114% YOY increase, including $3.0 million in revenue relating to subscription return reserve.
GAAP basic and diluted EPS were ($0.16). Non-GAAP basic and diluted EPS were ($0.10), including $3.0 million in revenue relating to subscription return reserve, which contributed a $0.02 improvement in non-GAAP EPS, and excluding $7.4 million in expense from stock-based compensation. Basic and diluted EPS were based on 173.6 million weighted average shares outstanding.
GAAP total mobile revenue of $83.9 million, growing 97% YOY and non-GAAP mobile revenue of $86.7 million, growing 101% YOY, outpacing mobile listener hour growth, which grew 47%.
Pandora One subscribers surpassed 2.5 million, adding over 700,000 net new subscribers in the quarter and growing 114% YOY. Q1 total listener hours were 4.18 billion, growing 35% YOY.
The share of total U.S. radio listening for Pandora in April 2013 was 7.33%, an increase from 5.86% at the same time last year. Active users reached 70.1 million, growing 35% YOY.
“Pandora continues to expand its mobile leadership,” said Joe Kennedy, Chairman & CEO of Pandora. “Mobile listening hours and mobile ad revenue reached record highs, with growth in mobile ad revenue exceeding growth in mobile listening hours. During the quarter, we successfully implemented a mobile listening limit, enabling us to manage our content acquisition costs with minimal impact on listenership or revenue growth. Pandora’s subscriber base surpassed 2.5 million, adding more net new subscribers in the quarter than in all of fiscal 2013, giving Pandora the largest US streaming subscriber base of any music service.”
Q2 2014 Guidance: Non-GAAP revenue is expected to be in the range of $155 million to $160 million. Non-GAAP EPS is expected to be between ($0.02) and $0.01.
Fiscal 2014 Guidance: Non-GAAP revenue is expected to be in the range of $615 million to $635 million. Non-GAAP EPS is expected to be between ($0.02) and $0.08. Non-GAAP EPS excludes stock-based compensation expense, assumes minimal tax expense given their net operating loss position, and is based on 176 million basic and 197 million diluted weighted average shares outstanding for fiscal 2014.
RBR-TVBR observation: The mobile listening hours and mobile ad growth numbers are very encouraging. However, implementing the mobile listening hour limits in the quarter may stunt the growth and be manifested in fiscal Q2 numbers. Limiting listening hours is one quick way to send listeners to other competing services. A listener will try a couple times again to see if they can get service and if they are still cut off, they just may not be back. We realize it saves on royalty payments, as their net losses continue, but it just may be penny-wise and pound-foolish. Remember, Pandora did this with its original non-mobile PC-based online service for a while and then went back to unlimited streaming.