Pandora and Twitter Revenue Rises, Stocks Fall

Pandora Inc. on Wednesday posted an improved financial quarter with higher revenue and profits, but skittish investors nevertheless pushed the Internet radio company's stock down more than 8% immediately after the report.

The Oakland company reported a 52% increase in revenue, to $200.4 million, during the three months ended Dec. 31, up from $131.5 million during the same period in 2012. Pandora also earned $8.98 million in profit, or 4 cents a share, in the fourth quarter, compared to $1.6 million, or a penny a share, a year earlier.

For the year, Pandora posted revenue of $638.9 million, up 56% from 2012. The company, however, posted a larger annual loss due to higher costs. Pandora lost $40.7 million in the 12 months ended Dec. 31, compared with a $35.6 million loss in 2012.

Last year, Pandora paid out $342.9 million in music licensing royalties, roughly 53.8% of its total revenue. That ratio is an improvement over 2012, when Pandora spent 60.6% of its revenue on licensing costs.

Related

Listeners spent 16.7 billion hours listening to Pandora during 2013, up 23% from 2012. For the fourth quarter, the service captured 72% of all Internet radio listening and 8.6% of all U.S. radio consumption, including broadcast radio listening.

Wall Street, however, was not pleased by the results, knocking 8.9% off the company's share price on the New York Stock Exchange to $32.65, down $3.18, an hour after Pandora released its financial earnings.

Pandora's Chief Financial Officer, Mike Herring, said the results exceeded the company's financial guidance, attributing the stock swing to market fluctuations typical of digital media companies.

"We're very happy with the quarter," Herring told Billboard.biz.

Twitter, which also reported its quarterly results Wednesday, saw shares sink 10% to $59.66 an hour following its earnings announcement as concerns about the company's decellerating user growth trumped the fact that its financial performance beat the expectations of Wall Street analysts. Twitter posted fourth quarter revenue of $243 million, up 116% from the same period in 2012, and a net loss of $511 million, versus a $8.7 million loss a year ago. Analysts had expected $218 million in revenue.