By Adam R Jacobson
RBR + TVBR
In a letter sent to shareholders after the Closing Bell on Wall Street Thursday, Tim Westergren, founder and CEO of streaming audio service provider Pandora Media, opened his seven-paragraph address with positive news: The company was pleased with its early results on Pandora Plus, and “a preview of a strong fourth quarter driven by robust advertising revenue performance.”
He also noted that Pandora is “excited to enter the new year with such strong momentum across the business.”
On that note, 7% of Pandora’s U.S. employee base — excluding Ticketfly — will be gone by the end of March.
According to Westergren, it stems from an effort “to ensure continued execution across core initiatives in 2017.”
He said, “We took a comprehensive look at our operations and made the hard decisions necessary to focus the company on the most significant opportunities in front of us.”
The result: Saying goodbye to colleagues “who have worked tirelessly to make Pandora the force it is today,” Westergren said. “We take tremendous pride in the caliber of our team and the strength of our culture, and are deeply grateful for their many contributions. These are the tough, but important, moments in the evolution of companies on their way to building large, enduring businesses.”
For Westergren and for “P” shareholders, the job cuts may simply be growing pains: In after-hours trading Thursday (1/12), Pandora shares shot up 7.8%, to $12.94.
As Westergren stated: “A commitment to focus, execution and cost discipline will allow us to invest more heavily in product development and monetization, while significantly reducing our operating expenses.”
Much of that activity is thanks to the company’s concurrent announcement that it expects to exceed its previously announced Q4 2016 revenue and adjusted EBITDA guidance ranges, thanks to “robust advertising revenue performance.”
Pandora will release its fiscal Q4 and FY2016 financial results on Thursday, Feb. 9 after the Closing Bell on Wall Streeet.
Westergren said, “We made significant progress in the maturation of our analytics and ad insertion technologies. This is important because it enables us to optimize the configuration of our products to drive additional revenue and realize leverage in our content costs. Together, these changes keep us on the path toward our long-term financial targets as we manage the business toward profitability.”
Pandora has surpassed 4.3 million in paid subscription customers. Some of this customer growth is attributed to Pandora Plus, a rebranded mini on-demand offering resulting from newly forged direct licensing deals with music labels and publishers. As of Dec. 31, Pandora Plus generated more than 375,000 net new subscribers.
“The initial response from both new and existing listeners to the enhancements on the service is extremely encouraging,” Westergren continues. “This excitement and engagement bodes well for the introduction of Pandora Premium later this quarter.”
But, It is not the on-demand, select-a-song personal playlist option that would bring Pandora closer to rival Spotify. That is still on the way, and is expected within weeks.
Outlining Pandora’s strategic priorities for 2017, Westergren says the company will keep its focus on continued acceleration of the core advertising business, subscription growth, and “artist and fan connections.”
“With all the strategic pieces — a massive and engaged audience, big data, a robust monetization engine and a vibrant music industry partnership — fitting together in a mutually reinforcing ecosystem, the new Pandora is firing on all cylinders as we enter 2017,” Westergren concluded. “With a beloved consumer brand, fresh new look and go-to-market plan, we are poised to go after a much bigger market opportunity than ever before.”
RBR + TVBR