* Q4 revenue expected between $120 mln to $123 mln; below
* CEO says advertisers are being prudent; Shares dive on
* Q3 revenue rose on strong mobile revenue
(Adds more executive comments from call, context)
By Jennifer Saba
Dec 4 Pandora Media Inc lowered its fourth
quarter guidance because advertisers, spooked by the looming
fiscal cliff, have pulled back on spending.
The outlook on Tuesday rattled investors, sending Pandora
shares tumbling 20 percent in after-hours trade, as the company
had been steadily increasing its revenue. Last quarter, for
instance, it raised its outlook.
The online streaming music service said that it expects
fourth quarter revenue of $120 million to $123 million. Analysts
were expecting revenue of $130.3 million, according to Thomson
Pandora Chief Executive Joe Kennedy said advertisers are
being prudent, a change that occurred over the last couple
"We are reflecting the caution we are seeing," Kennedy said
in an interview with Reuters about the lowered forecast. "I
think advertisers are nervous."
U.S. legislators are trying to hash out a deal to avoid a
$600 billion package of tax hikes and federal spending cuts that
would begin on Jan. 1 and could tip the economy into a
Pandora's fiscal fourth quarter ends Jan. 31, which is why
the fiscal cliff figures into its forecast, Kennedy said.
Pandora relies mainly on advertising for revenue and has been
building out its local sales staff in an effort to compete and
gain market share among its competitors.
January is typically a lighter month for Pandora and is hard
to pinpoint spending from advertisers coming off the holiday
On a call with analysts, Kennedy said that a general
uncertainty in the economy exacerbated by fears that legislators
won't come to some agreement was responsible for the lower
"(The caution) is significant across many of the advertisers
we work with," he said in response to a question if specific
advertisers were pulling back on spending versus others.
Still, for the third quarter, Pandora reported
better-than-expected revenue, up 60 percent to $120 million on
strong mobile revenue.
Pandora said mobile revenue, an important metric, rose 112
percent to $73.9 million for the third quarter.
The company reported adjusted earnings per share of 5 cents
in the third quarter ending October, beating analysts'
expectations of a penny.
Shares of Pandora Media closed up 5.4 percent at $9.45 but
shed 20 percent after the results were released.
(Reporting By Jennifer Saba in New York; Editing by Bernard