Pandora's revenue jumps on booming mobile business

Pandora's 2nd-quarter revenue jumps as it made more money from its mobile business

Associated Press

OAKLAND, Calif. (AP) -- Pandora Media Inc.'s mobile business is finally paying off. The Internet radio company said that its second-quarter results benefited from a nearly 60 percent jump in revenue as it made more money from its mobile unit.

But Pandora's shares fell in after-hours trading as it issued a third-quarter earnings outlook that was below what Wall Street analysts were expecting.

The Oakland, Calif.-based company reported a loss of $7.8 million, or 4 cents per share, in the three months ended July 31. It posted a loss of $5.4 million, or 3 cents per share, in the same period a year ago.

Excluding stock-based compensation costs and other items, Pandora earned 4 cents per share, up from 1 cent per share a year ago.

Revenue grew 55 percent to $157.4 million in the second quarter from $101.3 million a year ago. Most of that revenue growth came from Pandora's mobile business, which grew 92 percent from last year to $116 million.

On average, analysts expected revenue of $156.3 million and earnings of 2 cents per share, according to FactSet.

Pandora said that total listener hours rose 18 percent to 3.88 billion in the second quarter, from 3.3 billion a year ago.

Looking ahead to the third quarter, the company expects revenue between $174 million and $179 million and adjusted earnings between 3 cents and 6 cents per share. Analysts expect revenue of $171 million and earnings of 8 cents per share for the quarter, according to FactSet.

For the fiscal year, the company expects revenue between $640 million and $655 million and adjusted earnings between breakeven and 5 cents per share. Analysts expect revenue of $633.2 million and earnings of 4 cents per share for the year, according to FactSet.

The company also said it reversed its decision to limit free listening on mobile devices. In March, Pandora had capped free listening on mobile devices to 40 hours per month to limit royalty costs and convert more listeners into subscribers. While the limit was in place, Pandora said it only affected under 4 percent of its total monthly active listeners.

Pandora is facing increased competition this year. It already competes with Spotify, Google Inc. and others in the space, and Apple Inc. plans to launch its own radio service in the fall.

Shares of Pandora fell $1.46, or 6.7 percent, to $20.25 in after-hours trading Thursday, after closing up 22 cents at $21.71 during the regular trading session.

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