(Reuters) - Pandora Media P.N lured thousands of more paid subscribers in the second quarter, helping the music streaming company report a smaller loss than Wall Street was expecting and driving its shares 12 percent higher on Tuesday.
Pandora faces brutal competition from bigger rivals Spotify SPOT.N, Apple Music and Google's Play Music, and has been launching new features to woo more subscribers as part of a turnaround aimed at achieving profitability.
The Oakland, California-based company, which last reported a profit in 2014, has introduced tailored playlists for its premium users that predict songs based on customer preferences.
To increase engagement with its platform, Pandora has also tied up with Snapchat to allow users of the messaging app to listen to music on Pandora more easily.
Its competitors are also routinely adding new features, giving away discounts and offering more content, including interviews with popular musicians and other videos.
Pandora had about 6 million paid subscribers as of June 30, some 351,000 more than it did three months earlier.
Subscription and other revenue soared 65 percent in the second quarter, comfortably beating Wall Street targets, but advertising revenue slipped 2.6 percent.
“We are on track to get back on growth in ad revenue,” Pandora Chief Executive Officer Roger Lynch said in an interview.
AdsWizz, a company Pandora bought to allow advertisers to more easily place ads on its platform, had a “modest” benefit on advertising revenue in the second quarter, Lynch said. The acquisition closed in May.
Pandora expects third-quarter revenue of between $390 million and $405 million, largely above financial analysts’ estimates of $394.6 million, according to Thomson Reuters I/B/E/S.
Its net loss available to common stockholders narrowed to $99.5 million in the three months ended June 30 from $289.7 million a year earlier. Excluding one-time items, Pandora lost 15 cents per share.
Revenue climbed 2.1 percent to $384.8 million.
Analysts had expected a second-quarter loss of 16 cents per share and revenue of $372.8 million.
Pandora’s shares, which have risen 40 percent so far this year, were up 11.7 percent at $7.57 in after-hours trading on Tuesday.
Reporting by Vibhuti Sharma in Bengaluru; Editing by Sai Sachin Ravikumar
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