Streaming service Pandora had some positive things to report in its quarterly financial results yesterday: it reached the milestone of one million Pandora Premium subscribers in October – that’s out of 5.2 million subscribers overall once its mid-tier Plus service is factored in – and set a new record for ‘Ad RPM’ (revenue per thousand impressions).
If the latter seems a slightly obscure stat to be shouting about, your instincts are correct: there were less positive numbers elsewhere in Pandora’s business for the third quarter of this year.
Yes, revenues increased by 8% year-on-year to $378.6m, although within that advertising revenues grew by just 1% to $275.7m. Pandora recorded a net loss of $66.2m, slightly more than the same period last year.
But the stats that caused Pandora’s share price to drop last night were a decline in quarterly listener hours – 5.15bn in Q3 versus 5.4bn in the same quarter last year – and a decline in active listeners from 77.9 million to 73.7 million over the same period.
Recently-appointed CEO Roger Lynch didn’t duck these concerns in Pandora’s earnings call. “Pandora is very much a business in transition, and there are tangible challenges. Our user base has declined in recent quarters; our ad revenue has not grown as much as we would have liked; and as a result our shareholders returns have been poor,” he told analysts, before outlining some of Pandora’s plans to attract more listeners.
Podcasts, spoken-word and traditional radio will all be bumped up, building on Pandora’s past work with shows like Serial. Lynch added that smart speakers will also be key – Pandora listening on ‘voice-activated devices’ is up 300% year-on-year – and more marketing with partner brands like Comcast and T-Mobile will be a factor too, while Lynch said family and student plans are on Pandora’s to-do list as well.
“There’s no silver bullet that will immediately address all the challenges I laid out,” he admitted. “We need to focus on reviving user growth at the same time as we improve our ad tech, while also ensuring we are making decisions that set us up for long-term profitability.”
There was some good news for Pandora yesterday. Apps research firm SensorTower issued a report claiming that Pandora was the top-grossing non-game app in the US in the third quarter: making more money from in-app purchases on iOS and Android than Netflix, HBO Now, Tinder and other subscription-based apps.
Spotify ranked eighth and Tidal tenth in the analysis. SensorTower estimates that Pandora users spent more than $80m on in-app subscriptions in Q3. Note, Pandora’s own financials show that its subscription revenues were $84.4m that quarter, but don’t forget that SensorTower’s $80m figure is for spending, so before Apple and Google took their cuts.
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