Pandora Stock Tumbles on Quarterly Earnings Loss, Dip in Active Listeners

Courtesy of Pandora
The Pandora logo.

Pandora's stock is down 8.46 percent this morning to $11.25 in pre-market trading after the company reported lower-than-expected revenues of $351.9 million over its fiscal third quarter with a net loss of $61.5 million (or $0.27 per share), below last quarter's net loss of $77.8 million (or $0.40 per share). It had estimated revenues for the third quarter to fall between $360-70 million. 

Content acquisition costs -- what Pandora pays rights holders for the music it plays -- were about 49 percent of revenues, or $174.3 million over the quarter, a far margin lower than the same period last year. Total operating expenses were $191.9 million.

The company, one of the few publicly traded music companies in the world, has had a tough year after its stock fell precipitously last fall when analysts became jittery at the prospect of Apple's new streaming service (which is doing well for the Cupertino tech giant, as it boasted yesterday) and also underwent a dramatic executive shakeup earlier this year.

Notably, active listeners fell some year-over-year, from 78.1 million to 77.9 million, possibly on the strength of competition in the streaming space, which has put a strong emphasis easing music discovery and listening generally -- the central value of Pandora's product. Despite that active listener drop, fewer people were apparently listening more, as hours were up 5 percent to 5.4 billion across the third quarter.

Advertising is an extremely important revenue source for Pandora, responsible for 77.7 percent ($273.7 million) of the company's earnings over this past quarter, an increase of 7 percent year-over-year. The subscription service it offers, recently relaunched and rebranded as Pandora Plus, represents a very small slice of its listenership.  To that end, it has developed quite a team around it.

Pandora expects to have revenues between $362-374 million over the upcoming quarter and $1.35-1.37 billion for the year, down a couple hundred million from earlier 2016 predictions. The debut its "all-you-can-eat" streaming service is expected in December or January.