Pandora Media Inc (P.N) reported third-quarter revenue that was up about 50 percent on the strength of mobile advertising at the Internet radio company to top $100 million for the first time in a quarter.
Mobile advertising is an important revenue source for Pandora as more people choose to listen to music on smartphones.
Shares fell about 2 percent in after-hours trading, which one analyst blamed on the company providing a complicated financial forecast. Pandora is moving its fiscal year to end in December 31, instead of January 31, so it provided two earnings forecasts instead of one, which may have thrown off investors, said Wedbush Securities analyst Michael Pachter.
"The stock is down because people are looking at these numbers and aren't really sure what it means for the outlook and it's honestly not bad," Pachter said.
Almost a decade old with 70.9 million active listeners, Pandora is one of the most popular streaming music services in the world. It makes its money primarily from advertising, but it faces stiff competition from the likes of Apple Inc (AAPL.O), Spotify and Sirius XM Radio Inc (SIRI.O).
Chief Financial Officer Mike Herring said in an interview that rival Spotify raising $250 million on Thursday will not have an affect the company.
"Our listener metrics are growing in the right direction," he said.
Revenue for the quarter ended October 31 was $180.38 million, which beat estimates that averaged $175.6 million, according to Thomson Reuters I/B/E/S. Total advertising revenue was $144.34 million, an increase of 36 percent from a year ago.
The online streaming music company said it had a net loss of $1.7 million, or 1 cent per share, compared with net income of $2.05 million, or 1 cent per share, in the same period a year ago. On an adjusted basis, that excluded items such as stock-based compensation, the company earned 6 cents per share, which matched estimates.
The other challenge facing the company is the rising cost of licensing music, which grows as more people tune in. Content acquisition costs were 48 percent of total revenue for the quarter, an improvement from the second quarter, when they were 51 percent, and 54 percent for the same quarter a year ago.
(Reporting by Liana B. Baker; Editing by Leslie Adler and Bob Burgdorfer)