Pandora Q3 Revenues Grow 13%, But Listeners Drop And Numbers Disappoint Wall Street

Q3

PANDORA third-quarter 2016 total consolidated revenue grew 13% on a year-to-year basis to $351.9 million, with ad revenue up 7% to $273.7 million, subscription and "other" revenue up 1% to $56.1 million, ticketing service revenue up 25% to $22.1 million, and total listener hours rising 5% to 5.4 billion. The number of active users fell from 78.1 million at the end of second quarter to 77.9 million.

GAAP net loss narrowed from $85.9 million (40 cents/share) to $61.5 million (27 cents/share), and adjusted EBITDA dropped from a profit of $21.5 million to a loss of $6.6 million (adjusted EBITDA excludes $32.8 million in expense from stock-based compensation, $15.8 million of depreciation and amortization expense, $5.9 million of other expense and $0.4 million of provision for income taxes).  

The revenue figure fell short of WALL STREET expectations, and an adjusted loss of 7 cents/share was worse by a penny than consensus had expected.

“PANDORA’s transformation continues with the launch of compelling new products and partnerships that open up significant revenue streams," said Founder and CEO TIM WESTERGREN. “Only PANDORA is uniquely positioned to create deeply personalized and easy to use listening experiences that delight and engage listeners. A great product that’s effectively monetized is the cornerstone of success in digital music streaming.”

The company ended third quarter with $264 million in cash and investments, down from $311.3 million at the end of the prior quarter, and it also borrowed $90 million under its credit facility during the quarter.  Prepaid content acquisition costs, involving licensing deals with labels and artists, increased $93.3 million during the quarter.

The company's fourth quarter guidance is for revenue in the range of $362 million to $374 million and Adjusted EBITDA loss in the range of $51 million to $39 million.  Full year guidance is for revenue in the range of $1.354 billion to $1.366 billion (cut from previous guidance of $1.39 billion to $1.41 billion) and Adjusted EBITDA loss in the range of $140 million to $128 million.

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