Wall Street is proving to be receptive to IPOs in 2011 and Pandora is stepping up to claim some of that cash. The online radio-like service has filed to go public with the sale of $100 million of stock.
Pandora was known to be eying the IPO market a few weeks ago when Nielsen successfully priced its stock offering. The recent addition of former News Corp. COO Peter Chernin as a director just heated up speculation that Pandora was readying for a trip to Wall Street.
Pandora Media Inc. filed with the SEC on Friday to sell $100 million of stock, but many details are yet to be filled in, such as how much of the company’s equity will be sold. There is no price range yet for the stock, nor even a proposed trading symbol. More than a quarter of the IPO proceeds will go to pay dividends on Pandora’s preferred stock, which will then convert to common stock.
“Pandora is the leader in internet radio in the United States, offering a personalized experience for each of our listeners. We have pioneered a new form of radio – one that uses intrinsic qualities of music to initially create stations and then adapts playlists in real-time based on the individual feedback of each listener. In January 2011, we had over 80 million registered users and we added a new registered user every second on average. We have more than a 50% share of all internet radio listening time among the top 20 stations and networks in the United States, according to a November 2010 report by Ando Media, or Ando, an audience measurement and ads management firm. Since we launched the Pandora service in 2005, our listeners have created over 1.4 billion stations,” the company said in the opening of its prospectus.
The SEC filing revealed that Pandora had $55.2 million of revenues in its fiscal year ended January 31, 2010 and $90.1 million ($77.9 million from advertising) for the first three quarters of the current year through October 31, 2010. The company turned barely cash flow positive for that nine month period.
The bookrunning managers of the proposed offering will be Morgan Stanley & Co. Incorporated and J.P. Morgan Securities LLC. Co-managers will be William Blair and Company, L.L.C. and Stifel Nicolaus Weisel.
RBR-TVBR observation: RBR-TVBR stated this before and it is worth mentioning again: As Pandora grows it is going to need some unique content to attract and keep listeners.
Just being a jukebox is a business model that the satellite radio guys briefly embraced back before they even launched, but soon realized that it wouldn’t work in the long run. And that unique content will cost big bucks. $100 million is a small entry fee.