Pandora Revenue Grows 30 Percent, Listener Growth Slows

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The Pandora Media Inc. logo shown on an iPhone in 2013. 

The online radio company's royalty burden improved to 45.6 percent of revenue in the second quarter.

Pandora listener growth has slowed and the company didn't turn a profit in the second quarter, but the online radio company was able to improve where it mattered most: revenue and local advertising.

Second-quarter revenue was $285.6 million, a 30-percent increase year over year, while net loss was $16.1 million, slightly worse than the $11.7-million loss in the prior-year period.

Advertising revenue was $230.9 million, a 30-percent improvement. Mobile revenue grew 37 percent to $229.7 million, or 80.4 percent of revenue. Local advertising, an important component to Pandora's growth, improved 67 percent to $58.9 million. Subscription revenue grew 31.4 percent to $54.6 million.

Listener growth was low at 3.9 percent. Pandora had 79.4 million active listeners at the end of June, a gain of 200,000 since March and 3 million since June 2014. Growth in listener hours was better at 5.2 percent, representing an improvement to 5.3 billion from 5.04 billion.

RPM (revenue per thousand impressions) improved to $53.91 from $43.41. Advertising RPM improved to $49.94 from $40.11. Although listenership barely grew in the second quarter, Pandora was able to get more revenue from each listener. Revenue per active user increased to $4.00 from $2.86 in the prior-year period.

Royalties were slightly less of a financial burden. Royalties accounted for 45.6 percent of revenue in the second quarter, an improvement from 50.9 percent a year earlier. Through the first six months of 2015, royalties as a percent of revenue improved to 49.6 percent from 53.2 percent a year earlier. These improvements show Pandora's business model allows for margin improvement as revenue grows.

But net loss deepened because other costs grew at a fast. Sales and marketing expense increased 42 percent to $94 million while general and administrative expenses rose 50 percent to $38.8 million. Royalties grew only 16.8 percent.