Pandora's listener hours recovered by 2% July after falling in April and June, according to figures the company released Tuesday. The Internet radio service's monthly active users rose by 100,000, or 0.1%, to 71.2 million.
Investors predictably sent shares of Pandora down as much as 4.8% Tuesday after July numbers were released and were down another 1.8% in early trading Wednesday. A similar drop occurred in April. Shares declined 5% in early May after Pandora's April numbers showed the cap caused a 12% decline in listener hours.
The recent decline is the result of monthly mobile listening cap put in place in March to help reduce mobile-related royalties. Mobile listening is not monetized as well as desktop listening. As a result, Pandora has limited mobile listening and is encouraging listeners to either subscribe or moderate mobile listening.
Seasonal factors are also at play. Over the last two and a half years, Pandora's listener hours have grown most in the fall, less in the summer and least in the winter.
In a way, Pandora has taken a step back in time. The 1.28 billion hours logged last month were roughly equal to the total from November 2012 and 16% lower than the high of 1.49 billion hours in March.
But Pandora listeners have not abandoned the service in spite of the listening cap. July's 71.2 million monthly active users were 100,000 higher than the previous month and 1.7 million more than the total when listening caps were implemented in March. And although July listener hours were equal to the previous July, Pandora has added 16.3 million monthly active users over those 12 months.
The drop in listener hours has been expected. In May, CFO Mike Herring said "the intended impact was actually realized" by limiting the amount of hours its users could listen on mobile devices. Herring added that the implementation of the caps had "almost the same impact" as the one placed on desktop listening in 2009.
Correction Appended: An earlier version of this article mistakenly said Pandora's listener hours dropped 10% in June to 1.12 billion and the decline since March was 33%.