* Adj EPS $0.02 vs St. view of a penny loss
* Q3 revenue $75 million vs Street view $71.4 mln
* Advertising revenue up 102 pct
* Q4 total revenue forecast of $80 mln to $84 mln
By Jennifer Saba
Nov 22 Online streaming music service Pandora
Media Inc reported a rise in total revenue on strong
advertising sales, beating expectations.
The company said on Tuesday that, for the third quarter
ending October, revenue rose 99 percent to $75 million, beating
analysts' expectations of $71.4 million, according to Thomson
Adjusted EPS of 2 cents per share also beat analysts'
forecast of a loss of penny.
Investors though sent the company's shares down 3.8 percent
in after hours trading, after they closed down 5.3 percent at
"It's an expensive stock," said Stifel, Nicolaus & Co
analyst Jordan Rohan. "Any time the company offers in line
guidance, it trades down."
Pandora expects revenue in the fourth quarter ending
January 2012 to be in the range of $80 million to $84 million.
Analysts are forecasting $82.3 million.
"They had an excellent quarter, but offered some
conservative guidance," said Rohan.
Media companies that are largely dependent on advertising
are being carefully watched for cues that the economy is taking
a turn for the worse. During down times, advertisers slash
During a conference call with analysts, Pandora executives
said they are taking a responsible approach to their fourth
quarter revenue guidance.
"There's no impact at the moment, but we are paying close
attention to what's going on in the marketplace," said Pandora
CFO Steve Cakebread during the call.
Advertising revenue, which represents the majority of total
revenue, advanced 102 percent to $66 million during the third
Pandora, first known as SavageBeast, has been around for a
decade. It runs a mostly free service that recommends different
songs based on listener's playlists.
While Pandora has been in the marketplace for some time, it
faces competition on all flanks from traditional radio
companies such as Clear Channel, which launched its own
customized online streaming service, satellite radio providers
such as Sirius XM Radio Inc , as well as Spotify, which
allows users to integrate its streaming music through
Pandora has about 40 million active users and its share of
the U.S. Internet radio market is 66 percent, up from 53
percent during the same quarter last year.
In recent months, Pandora struck a deal to pipe music into
businesses such as doctor offices and auto dealerships through
a partnership with DMX. It also plans to offer targeted
political ads for the 2012 campaign season.
"For a relatively young company they are doing everything
perfectly," said Michael Pachter, an analyst with Wedbush
One concern for the company, which went public in June, is
the more users it attracts, the more it must pay record labels
in licensing fees.
Content acquisition costs more than doubled to $37.6
million during the third quarter.