Pandora shares jump on rosy results, higher market share

Thu Aug 30, 2012 10:35am EDT

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(Reuters) - Shares of Pandora Media (P.N) leapt 20 percent in morning trading on Thursday, following better-than-expected results, a raised outlook, and an increase in market share.

The online streaming media company reported on Wednesday a 51 percent jump in revenue to $101.3 million for the quarter ended July as it collected more dollars from advertisers seeking to place spots on mobile devices.

Pandora shares gained $2.06 to $12.14 in morning trading on the New York Stock Exchange.

"After two consecutive quarters of beating guidance and raising numbers, we believe Pandora is at an inflection point," wrote Jordan Rohan, analyst with Stifel Nicolaus.

"The company should continue to benefit from the shift to mobile listening, which now accounts for 60 percent of advertising revenues."

Indeed, Pandora Chief Executive Joe Kennedy said during an earnings conference call Wednesday that the company's mobile strategy was on track and was one of the bright spots of the quarter. Mobile revenue surged 86 percent year-over-year to $59.2 million.

Pandora raised its full-year revenue forecast to a range of $425 million to $432 million, from $420 million to $427 million. The company is also grabbing more market share, with listener hours up 80 percent year over year, while its share of people listening to radio in the U.S. grew to 6 percent from 3.5 percent in the same period a year ago.

Also on the earnings call, CFO Steve Cakebread said he would leave the company later in the year.

That decision was "not completely unexpected in our view as he generally focuses on pre-IPO companies," wrote Rohan.

Pandora, which is more than 10 years old and made its public debut last year, is being closely watched as a new way to listen to radio as more people tune in to the service in their cars, home stereos, and mobile devices.

The company depends largely on advertising for its revenue, and while ad dollars have been on an upswing, the company still struggles to make a steady profit.

That's partly because it is tapping its coffers to aggressively build its sales force - sales staff on commission have grown 79 percent year over year - and international audiences. It also must pay royalties to play songs.

(Reporting by Jennifer Saba; Editing by Bernadette Baum)

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