One Key Catalyst For Pandora’s Wider Loss


For Pandora founder and CEO Tim Westergren, “We made significant progress in 2016 by driving leverage in our core business while accelerating subscriptions to our paid product.”

Tim Westergren
Tim Westergren

He added that the streaming audio company enters 2017 “laser-focused on the growth of our ad-supported business, the launch and growth of our subscription products, and an artist-to-fan platform to drive listener engagement and ticket sales.”

Nevertheless, its net loss soared and its adjusted EBITDA swung from a profit to a loss in Q4 2016. It also has slightly less cash and investments, compared to where Pandora was one year ago.

Total revenue improved in Q4 for Pandora, to $392.6 million from $336.2 million in the year-ago period.

This surpassed the forecast from 12 analysts surveyed by Zacks, who expected $375.4 million.

The bulk of Pandora’s revenue comes from advertising, and in this revenue segment dollars jumped to $313.3 million, from $268.99 million.  Subscription and other revenue was $59.8 million, up from $57 million.

Where Pandora was dented during Q4 was in its “cost of revenue” related to content acquisitions. In Q4 it increased to $212.12 million, from $142.3 million.

This attributed to a gross profit dip to $136.5 million, from $163.9 million.

But, the biggest takeaway regarding Pandora’s Q4 is its wider loss from operations — mushrooming to $82.3 million, from $19.5 million. As a result, Pandora’s quarterly net loss soared to $90 million (38 cents per share), from $19.4 million (9 cents).

Still, Nielsen beat the Street in its non-GAAP earnings per share: Pandora’s non-GAAP net loss was $29.7 million (13 cents per diluted share), a swing from a Q4 2015 net income of $10.2 million (4 cents).

The average estimate of 16 analysts surveyed by Zacks Investment Research was for a loss of 20 cents per share.

While operating expenses in the product development, sales and marketing, and general and administrative areas are all reasons for a poor quarter for Pandora, the company’s Q1 2017 forecast is perhaps more disappointing to analysts.

Revenue is expected to be in the range of $310 million to $320 million. The average expectation of analysts polled by FactSet was $342 million.

In after-hours trading, shares of “P” dipped 2.5%, to $12.30, after falling 2.4% in Thursday’s trading, to $12.62.