Pandora Cuts Outlook Amid Fewer Active Listeners, Higher Costs
October 25 2016 - 7:30PM
Dow Jones News
Web-radio service Pandora Media Inc. lowered its annual guidance
as the number of active listeners edged down while expenses
climbed, helping to cause the company to fall short of revenue and
profit outlooks.
Shares of Pandora, up 1.9% over the past year, sank 5.4% to
$11.52 in after-hours trading Tuesday as the company's
third-quarter results fell below expectations.
Pandora's active listeners were 77.9 million in the third
quarter, compared with 78.1 million from the same period last year.
Total operating expenses for the September quarter rose to $191.9
million from $164.7 million a year earlier.
For the year, Pandora Media now expects revenue to land between
$1.35 billion and $1.37 billion, down from a previous range of
$1.39 billion and $1.41 billion. Analysts surveyed by Thomson
Reuters projected $1.4 billion.
Pandora Media sees revenue for the current quarter between $362
million and $374 million, while analysts forecast $391.8
million.
The company also estimates sharper adjusted losses before
interest, tax, depreciation and amortization—now projecting a range
of $128 million and $140 million for the year, wider than its
previous estimate for losses between $50 million and $70
million.
Over all, for the third quarter, Pandora narrowed its loss to
$61.5 million, or 27 cents a share, from a loss of $84.9 million,
or 40 cents a share, a year earlier. The losses were narrowed in
part because of new revenue from its ticketing service.
Excluding certain items, losses were 7 cents a share, compared
with a profit of 11 cents a year earlier.
Revenue climbed 13% to $351.9 million. Analysts surveyed by
Thomson Reuters expected a per-share loss of 6 cents and revenue of
$366.33 million. The company had projected revenue between $360
million and $370 million.
Pandora's competitors include Spotify AB and Apple Music. The
company also has expanded from its core business with the
acquisition of ticketing and digital marketing company Ticketfly
Inc. for about $450 million.
In the quarter, subscription and other revenue edged down 1% to
$56.1 million. Advertising sales, the bulk of revenue, rose 7% to
$273.7 million. Ticketing service revenue added $22 million.
Last month, Pandora rolled out a new version of its ad-free
internet radio service. Pandora Plus, as the new tier is called,
marks the 16-year-old company's first offering for which it
licensed music directly from the major record companies.
Until now, Pandora has been using compulsory licenses issued by
the government which have allowed it to pay rates determined by
federal judges.
Pandora Plus replaces the company's original ad-free service,
Pandora One, which counts about 4 million paying subscribers—a
fraction of the company's nearly 80 million, mostly free users.
Pandora also is planning to launch a separate $10-a-month
on-demand tier later this year, the company said, while it has been
seeking the rights to launch all three levels of service in more
overseas markets, according to people familiar with the matter.
Foreign expansion could help jump-start growth for Pandora, which
has seen its user growth stagnate in recent years.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
October 25, 2016 19:15 ET (23:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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