Pandora subscriptions revenue spikes but active listeners fall


Pandora published its latest quarterly financial results last night, with some positive figures to report around its premium subscriptions business, and some more concerning stats around its overall listenership.

The streaming service ended 2017 with just under 5.5 million subscribers, up 25% year-on-year. Meanwhile, its subscription revenues grew by an impressive 63%  to $97.7m in the fourth quarter – although the obvious caveat to this year-on-year growth is that the Pandora Premium tier only launched in March last year.

What about Pandora’s overall business though? The company’s quarterly revenues were up 7% year-on-year to $395.3m, with advertising accounting for $297.7m. Pandora also narrowed its net losses from $90m in the final quarter of 2016 to $44.7m in the final quarter of 2017. That’s the good news.

Less positive was a decline in active listeners: 81 million at the end of 2016 compared to 74.7 million at the end of 2017, meaning Pandora lost 6.3 million listeners in that 12-month period. There was also a decline in quarterly listening hours, from 5.38bn hours in Q4 2016 to 5.03bn in Q4 2017. For 2017 as a whole, Pandora reported $1.47bn of revenues (up 6% year-on-year) and a net loss of $518.4m (up from $343m in 2016).

CEO Roger Lynch provided some insight into Pandora’s strategy for 2018 in the company’s earnings call with analysts. “As much as people want to paint us as either an ad-supported business or a subscription service, I am a firm believer that we need to meet consumers where they are,” said Lynch.

“While we’re the largest ad-supported music service and we intend to press this advantage, I do see significant opportunity to grow our subscription business and utilise the tactics I’ve learned from running three other subscription businesses prior to this.”

Smart speakers are also a big priority for Pandora in 2018, admittedly as they are for every music-streaming service. “We have achieved spectacular listener growth through voice-activated devices,” said Lynch. “In Q4, Pandora listening on voice-activated devices was up 145% year-over-year.”

He also talked about a wider “explosive growth in connected and voice activated devices and rapidly increasing consumption of other forms of content such as podcasts… we expect one out of every two people will have a connected device in their home by 2022, and this will encourage incremental audio listening.”

Lynch also said that Pandora’s new ‘Premium Access’ feature, which gives its free listeners on-demand music if they watch a video ad first, is a key part of its plans to stem the listener drain to other platforms. Pandora’s own surveys indicate that one of the top reasons for churning to “services like YouTube or Spotify” is the lack of on-demand features in Pandora’s free tier.

“We solved that on December 19 when we launched Premium Access. So from a reason why people would go to other services, we just plugged that hole,” he said.

Stuart Dredge

Read More: Analysis News
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