05 12 12

Pandora was profitable in Q3, but analysts spooked by Q4 predictions


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After a tough few months of royalty-based criticism, Pandora had some good news yesterday: a quarterly profit.

The company reported its Q3 financials, with revenues up 60% year-on-year to $120m, and a net profit of $2.1m compared to a loss of $7.9m this time last year. Pandora had 62.4m active users at the end of November, who listened to 1.27bn hours during that month.

How did analysts take the news? Not well. In fact, Pandora’s share price dropped 19% after the financials announcement. Why? Because the company predicted slowing growth in the next quarter, and a return to net losses.

“Many of our advertisers have recently become more cautious about their near-term spending, including their plans for January as macroeconomic concerns, including the fiscal cliff, have increased,” CEO Joe Kennedy told analysts. Cue stock plunge.

The results did provide more information on the continued importance of mobile for Pandora. Mobile and other connected devices now account for 77% of total listening hours, but the company is also doing a better job of making money from this usage: Pandora’s mobile revenues jumped 112% year-on-year to $73.9m.

The launch of version 4.0 of its iOS and Android apps, which includes improved sponsorship opportunities for advertisers, appears to be paying off. Another stat of note: 1m people are using Pandora through its integration deals with car-makers. But Kennedy also unsurprisingly banged the gong for the Internet Radio Fairness Act:

“There is no country internationally where the entire radio industry, all of the AM, FM, satellite, cable and internet radio companies, pays a total combined amount even close to what we as a single company will pay this year,” said Kennedy.

Stuart Dredge
READ MORE: Analysis News
4 responses
  • TT says:

    Is this a joke? A quarterly profit means nothing. Joe is right that it’s unfair that the company pays 50%+ revenues to artists. The company is defining internet radio to better consumers and consumers but is at the same time being gouged to near death. Even with the music genome project, the company won’t be consistently profitable for another 10 years. Or, until another competitor steps up to the plate and then EVERY MUSICIAN can understand why any type of business plan in the internet radio space currently as is will fail. The times have changed, where going from $20 albums to 99c singles means artists need to adapt. I hope emerging non-mainstream artists openly embrace and support Pandora. The quicker they embrace it and find alternative ways of making more profits, the quicker they’ll beat out all of these mainstream artists that want to keep the $ to themselves.

  • senator1 says:

    BOO HOO…what’s in your wallet!! you created this BOX…
    so come up with a solution that puts respectable $ into the hands (not handlers) of the artists…instead of crying to mommy to fight your battles because billy doesn’t want to to share his candy with you… because you keep stealing it out from under his nose…

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