Pandora shares rise on mobile growth, outlook
OAKLAND, Calif. (AP) — Pandora Media Inc.'s latest quarterly results resonated well on Wall Street, even though the Internet radio service's losses widened.
The setback announced Wednesday was offset by evidence that Pandora's efforts to attract more listeners and sell more advertising on mobile devices are paying off. And Pandora's management predicted the company's performance in the current quarter will be better than analysts had expected.
Investors embraced the news, boosting Pandora's stock by nearly 8 percent in extended trading.
The gains held up despite a bit of unexpected news during Pandora's conference call to discuss the quarter. Steve Cakeboard, the company's chief financial officer for the past two years, told analysts that he plans to leave Pandora by the end of the year. He said he wanted to explore other "industry-changing opportunities" and stressed that he had no qualms about Pandora's current direction.
Pandora lost $5.4 million, or 3 cents per share, during the three months ending in July. That compared to a loss of $3.2 million, or 4 cents per share, at the same time last year. The company had about twice the number of outstanding shares at the end of the recent quarter compared to a year ago.
Excluding employee stock compensation and other costs unrelated to its ongoing business, Pandora earnings would be break-even. On that adjusted basis, analysts surveyed by FactSet expected a loss of 4 cents per share.
Revenue climbed 51 percent from last to year to $101.3 million — about $1 million above analysts' forecasts. More than half of the revenue — about $59 million came from mobile devices. Mobile revenue grew by 86 percent from last year, a trend that bodes well as people increasingly rely on smartphones and tablet computers to listen to music and watch video.
"This quarter demonstrated that our mobile monetization strategies are working," said Pandora CEO Joe Kennedy.
Pandora's audience listened to a total of 3.3 billion hours of programming in the second quarter, up by 80 percent from last year.
The company, based in Oakland, Calif., makes money by selling advertising and with paid subscriptions from listeners who prefer their music commercial-free. About 88 percent of its revenue came from ads during the past quarter.
Pandora appears confident in its ability to build on its recent momentum. It expects adjusted earnings in the current quarter ending in October to range from break-even to a penny per share on revenue ranging from $115 million to $118 million.
Analysts, on average, forecast adjusted earnings of 1 cent per share on revenue of $114.3 million, according to FactSet.
Pandora shares rose 78 cents, or 7.7 percent, to $10.86 in after-hours trading. The stock closed down 10 cents at $10.08. Its June 2011 initial public offering price was $16 a share.