quarterly report

Pandora’s Q2 2013: $101.3M In Revenue, 54.9M Active Users, And A Net Loss Of $5.4M

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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.