By Jennifer Saba
May 23 (Reuters) - Pandora Media Inc said first-quarter revenue grew 58 percent to $128.5 million on the strength of mobile advertising and new subscribers to the online streaming music service.
Mobile revenue on a non-GAAP basis nearly doubled in the quarter to $83.9 million.
“The mobile cap they put in place appears to working - it’s driving lower content costs and additional subscribers,” said Aaron Kessler, an analyst with Raymond James.
Pandora shares jumped 9 percent in extended trading after closing at $17.16 on Thursday.
Pandora, whose revenue comes mainly from advertisers, introduced a cap of 40 hours for free listeners on mobile devices. Subscription is required beyond that limit.
Mobile is an important revenue source for Pandora as more people choose to listen to music on smartphones.
Likewise, Pandora is facing an army of competitors ranging from Spotify to Sirius XM Radio Inc to Google Inc , which launched a subscription music service earlier this month.
The other challenge facing the decade old company is the rising cost of licensing music, which grows as more people tune in. The company has about 70 million active listeners, up 35 percent year-over-year.
Content acquisition costs were 66 percent of total revenue for the quarter compared with 69 percent for the same quarter a year ago.
Pandora is looking for a new chief executive to replace Joe Kennedy, who announced he would be stepping down in March. Kennedy is still serving as CEO and said the search was progressing but did not give a timeline.
“I‘m 100 percent engaged in the role,” he said in an interview with Reuters.
The company raised its non-GAAP revenue forecast for the year in the range of $615 million to $635 million from a previous range of $600 million to $620 million.
Pandora had a net loss of $28.5 million, or 16 cents per share, compared with a loss of $20.2 million, or 12 cents per share, in the year-ago period.
Adjusted for items, Pandora posted a loss of 10 cents per share that matched analysts’ average estimates, according to Thomson Reuters I/B/E/S.
Non-GAAP revenue of $128.5 million includes $3 million related to the mobile subscription service. Analysts had expected $124 million.