Pandora Subscription and Ad Revenue Rises, as Does Stock, Amid New Carrier Deals
Pandora shares closed up 15 Wednesday at $7.73 following its earnings report after regular U.S. markets closed Tuesday showed double-digit growth in advertising and subscriptions. Analysts Wednesday hailed the results, still noting a long road to profitability and much competition. “With management struggling to fine-tune the strategy and a highly competitive environment where Spotify and Apple have clear momentum, we believe Pandora remains a long way from sustainable profitability,” said Dougherty & Co.'s Steven Frankel.
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CEO Roger Lynch highlighted voice control and podcasts. As the market shifts to voice commands in multiple environments, including the car, voice commands will make Pandora easier to use, he said.
Pandora Q2 revenue grew 12 percent year on year to $384.8 million. Net loss narrowed to $92 million from $275 million. It added 351,000 subscribers, bringing the total to 6 million, a 23 percent increase, with 71.4 million active users.
AT&T added Pandora Premium as a bundling option for its unlimited data plan during the quarter, said the chief, enabling eligible carrier customers to get Pandora Premium free. The streaming service company partnered with T-Mobile on special offers, a way to drive subscription trials “at attractive costs,” Lynch said. Another newer deal is with Snap, he noted.
Pandora had said its $66 million May buy of AdsWizz (see 1805290061 or 1805290038) could push away publishers that view it as competing with them, but that mostly didn't happen, Lynch said. Only Spotify left. Macquarie Capital's Amy Yong said the new unit gives the company an opportunity across digital, mobile, and AM/FM ad budgets.
Cowen & Co.'s John Blackledge, sticking to “the sidelines,” said the business model is still evolving and long-term outlook “unclear.” Key metrics “remain down,” year on year, he said, but “continue to trend in the right direction.”
Pandora projects Q3 revenue of $390 million to $405 million, said Chief Financial Officer Naveen Chopra. He cited continued momentum in subscriptions at a “moderated growth rate” since the company is no longer operating from a small revenue base.