By Jennifer Saba
Feb 5 Pandora Media Inc reported higher
revenue and profit for the quarter ending in December but said
that costs to expand its audience are rising.
The online streaming music company said earnings per share
for this year are expected to be between 13 cents and 17 cents,
below analysts expectations of 19 cents per share, according to
Thomson Reuters I/B/E/S.
Shares of Pandora fell almost 6 percent in after market
trade on Wednesday after closing at $35.83.
"It's clearly that they are spending more to acquire
customers and sell ads," said Michael Pachter, an analyst with
Wedbush Securities. "I think they are intent on growing."
Indeed, Pandora Chief Executive Brian McAndrews said in a
statement that the company will continue to "aggressively
invest" this year to sustain audience growth. "Our bias will
continue to be toward revenue growth and capturing additional
market share," he said.
On a call with analysts, he said that the company will
increase its marketing, expand Pandora's sales team and manage
the cost of licensing music.
Pandora is already one of the world's most popular streaming
music service although it has plenty of competitors, including
Spotify and Apple Inc's iTunesRadio.
The company said that active listeners in January fell to
73.4 million from 76.2 million in December due to seasonality.
Year-over-year active users were up 12 percent. Listener hours
in January rose 13 percent to 1.5 billion compared to the same
period last year.
Pandora CFO Mike Herring told Reuters that Pandora plans to
build up its sales force in local markets to go after ad dollars
that typically go to radio.
"It's not a time to try and optimize profitability," he
said. "We think we have a huge market opportunity in front of
Many digital and social media companies like Amazon
, for example, choose to ramp up revenue and market
share over profits.
For the quarter ending December, Pandora reported that
revenue grew 52 percent to $200.4 million on a GAAP basis.
Net income on a GAAP basis rose to $8.9 million or 4 cent
per share from $1.6 million or 1 cent per share in the prior
This is the first time that Pandora reported its results on
a calendar year. Its former fiscal year ended in January.