Internet music service Pandora just announced its financial results for the second quarter of its fiscal 2013. The company posted total revenue of $101.3 million, which was up 51 percent year-over-year. Yet, Pandora still reported a net loss per share of $0.03. In total, it represents a net loss of $5.4 million. As always, the most important expense for Pandora is content acquisition — in other words, music royalties. Non-GAAP earnings per share were breakeven excluding approximately $6 million in stock-based compensation.
Advertising revenue was $89.4 million, a 53 percent year-over-year increase. Subscription and other revenue was $11.9 million, a 36 percent year-over-year increase.
Pandora currently has $82.3 million in cash, cash equivalents and short-term investments. That’s up $1.7 million from the last quarter. Pandora expects similar performance next quarter by breaking even (or very slightly raising) on non-GAAP earnings per share.
It had 54.9 million active users this quarter, up 48 percent year-over-year and a 2.9 million increase from last quarter. An important metric is the total number of listener hours. It grew 80 percent year-over-year to 3.3 billion hours for this quarter.
Even though unlimited music streaming service Spotify introduced a free radio service on iOS and then on Android, Pandora usage numbers are still growing. Pandora is competing on a larger scale with traditional radios and there is still room for growth.
On August 13, Morgan Stanley cut Pandora’s rating. It resulted in shares falling under $10. Analyst Scott Dewitt expected that going after the local radio ad dollars and building a sales team for that endeavor would hurt the company’s earnings. The company managed to compensate that with a $20.5 million increase in revenue compared to previous quarter.
Looking ahead, Pandora is once again raising its expectations for the full fiscal year. The company now expects to make between $425 and $432 million in revenue for its fiscal 2013, resulting in a net loss per-share of between $0.04 and $0.08.
Pandora Radio is an internet radio service, recommendation service, and the custodian of the Music Genome Project. Users enter a song or artist that they enjoy, and the service responds by playing selections that are musically similar. Users provide feedback on approval or disapproval of individual songs, which Pandora takes into account for future selections. While listening, users are offered the ability to buy the songs or albums at various online retailers. As part of the Music Genome Project, over...
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