Pandora earned $384.8 million in Q2 2018, the company announced today, up just over two percent over the same period last year. But subtracting revenue from Australia and New Zealand, where Pandora withdrew last July, as well as from Ticketfly, which it sold to Eventbrite for $200 million last September, and revenues from the period were up 12 percent year over year, exceeding the company’s guidance from last quarter, Pandora confirmed today (July 31) in its quarterly earnings report.
Within that, ad-supported revenue accounted for $271.1 million in the quarter, while subscription revenue came in at $113.7 million, up 67 percent year over year when excluding revenues from the additional territories and Ticketfly. But listener hours (5.09 billion) and active users (71.4 million) were both down over the same period last year, when they represented 5.22 billion hours and 76 million users, respectively.
Significantly, that subscription revenue was boosted by an increase of 351,000 subscribers to its Pandora Plus and Pandora Premium plans, giving the company roughly 6 million total subscribers. Overall, Pandora added more than twice as many subscribers in Q2 than it did in Q1, after the launch of its $14.99/month family plan offering in June, which it expects to be “an important growth contributor” moving forward, execs said on its earnings call.
The company also completed its acquisition of AdsWizz on May 25, which it expects to help bolster its advertising revenue moving forward. Advertising hour trends declined seven percent in the quarter, an improvement from an 11 percent decline in Q1 and a 16 percent decline in Q2 2017. And advertising revenue per minute reached an all-time high for the company in the quarter, growing four percent year over year to $68.75 per minute. Additionally, CEO Roger Lynch noted that the company’s paid subscribers streamed three times as many songs as those using its ad-supported platform.
Pandora’s stock was up eight percent immediately after the release of its report, according to Marketwatch.
In Pandora’s earnings call following the report’s release, Lynch stressed the importance of partnerships, singling out a premium bundling option with AT&T which he expects to result in a lower churn rate and lower acquisition costs; as well as a partnership with Snap, which Lynch called “a great fit for us in terms of audience,” noting it should bring in additional younger listeners. “New partnerships with top brands like Snap and AT&T, as well as enhancements to our ad tech and programmatic offerings, position us to further accelerate growth and ownership of the expanding digital audio marketplace,” Lynch said in a statement.
Moving forward, Lynch said the company will be rolling out student plans and expanded device capability, and touted a forthcoming podcast genome and the increasing importance of its voice controls as things to keep an eye on for the rest of the year. The company said in its guidance for Q3 that it expects revenues to grow 10 percent, to between $390 million and $405 million over the next period, fueled by increased subscriptions and ad revenue from its AdsWizz acquisition.