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.