Pandora Media, better known to the consumer as Pandora Internet Radio, posted its second quarter earnings on Thursday and its first since going public on the New York Stock Exchange on June 15.
And in a surprise, the popular (but, to date, profitless) company finally had some really good news for investors: Revenues were way higher than expected, up 117 percent to nearly $67 million, blowing away analysts average forecast of $61 million.
Also up were listening hours: Pandora users listened to 1.8 million hours worth of audio over the period, up 125 percent from the same period last year and now up to 3.6 percent of the total U.S. listening audience. And mobile advertising now accounts for more than half of the company’s total ad revenue, some $58.3 million.
That news lead to an abrupt crescendo in the company’s stock price on Thursday, climbing 3.31 percent to close at $12.47. In after hours trading, the love continued, with the price briefly climbing up to $14 a share.
That was especially good for the company and investors, as over the past three months since the company’s IPO, the stock price more-or-less dropped like a bass note, down from an opening price of $20 to a low of just over $11 in early August.
And yet, there was that was that one tricky little word conspicuously absent for the company’s glowing, self-congratulatory release: profits.
That’s because Pandora still — after over a decade of fiddling with it’s business model — hasn’t been able to increase revenues ad sales to make up for what it costs to license all the music it streams from the record labels. The hope is that in 2014, when Pandora will begin renegotiating its contract with the labels, it will be able to parlay its increased listeners to strike a better deal. The company currently has to pay for every minute of music streamed, not a flat rate for each song licensed.
In fact, in this earnings call, as was anticipated, those costs more than doubled from the same period last year, from $14.6 million to $33.7 million, according to the company’s 8-K filing. Net losses to common stockholders widened from $0.14 million last year to $3.18 million, and overall net loss was $1.81 million, RTT points out.
So while those who got in early may be whistling all the way to the bank, it’s not clear yet whether Pandora can carry a successful tune.
