New Subscribers, Gains From Mobile Open Pandora’s Box

Michael Teague  |

An increase in subscribers, as well as substantial gains in mobile made for a big first quarter for the popular internet radio service Pandora (P), setting the company up for what could be a momentous close to the week.

During late trading on Thursday, Pandora reported a net loss for the first quarter of $28.5 million, or $0.16 per share on revenue of $128.5 million, compared to the prior year’s Q1 during which the company’s net loss was $20.2 million, or $0.12 per share on revenue of $80.8 million. Including adjustments, Pandora lost $0.10 per share, which was in keeping with expectations, while revenue bested analyst predictions of $124 million.

Shares jumped during afterhours trading almost 9 percent to a price of $18.65 after closing the day at $17.16. The results are encouraging for the company, particularly because the market for streaming music has recently become a bit more crowded with the success of like-minded services such as Spotify, Sirius XM Radio (SIRI) and, as of last week, Google (GOOG).

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Pandora’s gains during the first quarter can be chalked up to a doubling of mobile to almost $84 million during the period. The company recently limited the monthly amount of time that mobile users can listen for free to 40 hours, after which subscription and payment is required. The strategy seems to have worked, helping the company cut costs and add more subscribers.

Pandora now counts 70 million active listeners, a 35 percent increase over the previous year, with total listening hours up by the same percentage to 4.18 billion.

As with many other internet-based companies, the revenue increase from mobile ads is rapidly trumping what Pandora makes from desktop ads, and could make the company profitable as early as this year.

For the current quarter, Pandora expects to lose only $0.02 per share, or perhaps even turn a profit of $0.01 per share, while revenue is forecast at between $155 million and $160 million, against analyst expectations of $0.01 per share on just shy of $150 million in revenue.

The company is also actively looking for a new CEO to replace the outgoing Joe Kennedy, who will be leaving his position as soon as a successor can be found to take his spot.

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