Pandora Media Inc. (P, Financial) reported a revenue of $230.8 million and a loss of $0.12 a share for the first quarter this year. The Q1 earnings beat Wall Street's estimates by a considerable margin. Pandora's shares saw a decline in value of around 3.8% to $17.08 in recent after-hours trading. Share value fell around 37% last year, mainly due to cut-throat competition in the music-streaming industry.
Financials
The total revenue reported was $230.8 million, that is 28% rise YoY on non-GAAP basis. The revenue from the advertising unit also rose 27% over the year to $178.7 million. The subscription & other revenue increased 32% Y/Y on a non-GAAP basis to $52 million. A positive change observed here is that of cash and investments amounts. The company has $481.3 million in cash & investments at the end of the first quarter. Operating activities contributed around $27 million in Q1 2015. For the same quarter in 2014, around $2.1 million was used in operating activities. Mobile revenue for the quarter rose by 23%.
The company reported an increase in its active listener count for the year. However, over the quarters, the number is steadily decreasing. Last year 75.3 million active listeners were reported for the first quarter. This quarter the number increased to 79.2 million. For the fourth quarter last year, 81.5 million active listeners were reported, thus showing a decline in the numbers this quarter. Listener hours also increased by 11% to 5.3 billion in the quarter. Last year the reported listener hours were 4.80 billion for the same period. This shows that they company is attracting more active listeners along with a greater engagement on the site.
The music-streaming company reported a loss of $0.23 per share, thus squashing analysts' estimates of a $0.27 loss on GAAP basis. The non-GAAP estimates of analysts' were $0.16 a share on $225 million revenue, according to data polled by S&P Capital IQ. Pandora, however, reported a net loss of 13 cents per share on $230.8 million revenue. The net loss of Q1 in 2014 was 13 cents a share on $180.13 million revenue.
CEO Speaks
CEO of Pandora, Mr. Brian McAndrews said that the reported results are due to investments that are paying off. The company increased its investments in the technology around advertising along with investments in music. He said that listeners and brand partners do have a greater choice, yet listener hours showed an increase. Besides, advertisers also started patronizing the music-streaming company. He said that Pandora has continued, like before, to advance their lead in digital audio by generating a higher demand coupled with a strong sell through.
It seems that the cut-throat competition has taken its toll on the company. The success of Pandora on Google Play & App Store was not enough as iTunes and the acquisition of Beats by Apple Inc. (AAPL, Financial) outweighed it. Besides, Google Inc. (GOOG, Financial) started the Google Play All Access a couple of years back. Amazon.com Inc. (AMZN, Financial) also offers its Prime members music stations. Competition from all these forces is affecting the revenue of Pandora in an instrumental way. The least the music streaming and automated music recommendation service provider can do is build up on its strengths to witness a revolution in revenues.
Impact on investors
Though shareholders may be worried about their share performance, stock value may increase in the next quarter. The company has estimated that around $280 million to $285 million should be generated in terms of revenue for the next quarter. Besides, diluted shares outstanding should be somewhere around 219 million. For the entire year of 2015, the company has estimated revenue to be between $1.16 to $1.18 billion. Hopefully, the company will take efforts to minimize the damage done and will consolidate on their strengths to improve stock performance.
