Pandora Media‘s long-awaited debut of a subscription-based on-demand streamed music option for its users is coming during the first three months of 2017.
That’s according to company CEO Tim Westergren, delivering news on “Pandora Premium” that negates company assurances to RBR + TVBR given in August that the new service would arrive by year’s end.
Westergren shared the news at a nearly 3 1/2-hour long “Analyst Day” event that focused much of its discussion on Pandora’s “substantially larger” audience numbers than the top-rated Nielsen Audio AM or FM radio station in several markets, and how advertisers have the ability to monetize Pandora’s free-to-consumer user base.
The lengthy San Francisco event, well-attended by Wall Street analysts and representatives from the financial community, barely mentioned the company’s Q3 2016 results, which were released just 30 minutes prior to what at times seemed like a venture capitalist investment pitch, rather than an earnings analysis.
The results were lackluster.
RBR + TVBR OBSERVATION: Kudos to all of the analysts that sat through a ridiculously long parade of positives from Pandora executives who were quick to take swipes at AM and FM radio yet continously diverted attention from their less-than-stellar Q3 and decline in active listeners. President/CFO Mike Herring noted how Pandora had put its focus on things that were “not sexy” to help it grow. Investors like sexy, and Pandora seems to be falling behind its competitors. With a December “unveiling” of a premium subscription offering now set for sometime in Q3, even financially troubled iHeartMedia seems to have a better handle on product development. The way things are going at Pandora, it just might be the next Twitter — a digital innovator that can’t find its next chapter … or takeover partner. Sorry, Tim — AM and FM radio have a better long-term play than Pandora.
Total consolidated revenue was $351.9 million, up from $311.6 million a year earlier. Advertising revenue grew to $273.7 million, from $254.7 million.
But, subscription revenue slipped to $56.1 million, from $56.9 million, as its Active Listener count declined to 77.9 million, from 78.1 million.
Additionally, Pandora’s non-GAAP diluted earnings per share swung to a 7 cent loss, from an 11 cent gain in Q3 2015.
Pandora’s increased product development, sales and marketing, and general/administrative expenses each increased, sending total operating expenses to $191.9 million, from $164.7 million in the year-ago quarter.
A BOLD PUSH FOR RADIO’S RICHES
While Westergren told Analyst Day attendees that his company is experiencing “growing pains on how to address advertisers” and President/CFO Mike Herring admitted that an “overall softness in digital advertising” is expected to continue to Pandora, the executives continued to play up the “massive profitable addressable user base” available to clients — in particular those that are using radio to reach consumers.
“The broadcast business is deeply vulnerable to what we think is an approachable business,” Westergren said before sharing graphics illustrating how more people are streaming on Pandora than on any other streaming service combined.
Will that, and Pandora’s “go-to-market strategy,” lead to better financial results?
Not in the short term.
Pandora now says it expects Q4 revenue of between $362 million and $374 million. A consensus of analysts had expected Pandora to post Q4 revenue of $391.8 million-$392.1 million.
For FY2016, Pandora says its revenue is now expected to be in the range of $1.35 billion to $1.37 billion. That’s below the consensus estimate of analysts of $1.385 billion-$1.405 billion.
A PREMIUM EXPERIENCE FOR STREAMERS
In revealing to Analyst Day attendees its long-awaited launch date for what it is billing as “Pandora Premium,” Westergren says the top-level subscription service will offer rewind, skip, and off-Internet connectivity options.
It gives Pandora the ammunition it needs to compete against the likes of Spotify, Apple Music, and new entrants such as Amazon Prime and iHeartRadio.
While a launch event for Pandora Premium is set for December 6 in New York, it may not arrive until after “iHeartRadio Plus” and “iHeartRadio All Access,” two new iHeartRadio options that allow app users to go beyond live streams of the radio stations available for streaming.
Meanwhile, Amazon Music Unlimited is already available, as of mid-October.