Pandora earnings return to the same old song
The Internet radio service shows a better-than-expected bottom line after it surprised with weak results at the end of last year, but investors remain focused on cooling listener growth.
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Growth in the number of people listening to Pandora Media's online radio service continued to peter down in the latest quarter, the company reported Thursday.
Its loss in the first quarter was slimmer than predicted, and Pandora's revenue beat expectations.
Shares declined $1.01, or 5.7 percent, to $16.70 in after-hours trading. The stock has been trying to recover from a long slide, down 25 percent in the last year.
Pandora has been improving its advertising business, especially on mobile, even as competitors like Spotify have drawn more consumer attention. Nevertheless, it has still battled investor doubts about its audience growth. As Pandora has grown into the Internet's biggest streaming-music service, increasing its number of listeners has proved more difficult.
In the latest period, listener-hour growth was 11 percent, and the number of active listeners was up 5.2 percent, to 79.2 million. A year earlier, total hours grew 12 percent and listeners were up 8 percent.
Pandora regularly reminds its investors that listener activity is the figure it watches most closely, since the more it can get people to listen to Pandora, the more advertising it can sell. User engagement reached a new high of 22.3 hours a month per active listener.
Investors are also nervous about a licensing-rate decision expected later this year that will set how much Pandora must pay labels, musicians and songwriters for the next half decade. Royalty payments are by far the biggest cost Pandora deals with.
Pandora reported a loss of $48.3 million, or 23 cents a share, widening from $28.9 million, or 14 cents a share, a year earlier. Revenue rose 19 percent, to $230.8 million.
Analysts most recently predicted a 16 cent loss on $225 million in revenue. That estimate matches the top end of Pandora's own guidance for revenue of between $220 million and $225 million.
Looking ahead, Pandora predicted that the second quarter would have revenue of $280 million to $285 million, while the consensus estimate by analysts was for $282 million.
Pandora also raised its full-year outlook, now projecting revenue of between $1.16 billion to $1.18 billion and adjusted earnings between $75 million to $85 million. That's up from January's projection for $1.15 billion to $1.17 billion in revenue and adjusted earnings of between $70 million to $80 million.