Here’s Why Pandora Investors Are Giddy

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Pandora Media (NYSE:P) shares listened as its first-quarter revenue beat expectations, the net loss per share was smaller than predicted, and the streaming music company raised full-year forecasts. Revenue in the three months ending in April grew to $80.8 million, a 58 percent year-over-year increase, with a net loss of 9 cents per share. Analysts had predicted revenue of $74.3 million on a loss of 18 cents per share.

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The stock was up 12.78 percent, or $1.32, to be at $11.65 after hours.

Revenue from advertising revenue contributed $70.6 million, while other streams, which include subscription, brought in another $10.2 million. According to chief executive Joe Kennedy, the internet radio averaged more than 50 million active users a month through the quarter, with a total of 3.09 billion listening hours. He added that the company’s market share was up to an all-time record of 5.95 percent of total radio listening in the country.

The company also forecast the current quarter in line with estimates, but raised full-year forecasts. For the current quarter, it predicted revenue to be in the range of $99 million to $101 million, while analyst consensus is for $99.9 million. It raised its full-year revenue outlook to a range of $420 million to $427 million from a previous forecast of $410 million to $420 million. Pandora said it expects to narrow its net loss to a range of 7 to 11 cents per share, from a previous forecast of 11 to 16 cents.

“Pandora is off to an excellent start, exceeding our first quarter outlook and raising our expectations for the full fiscal year,” Kennedy said.

While shares reacted to the estimates’ beat, the company is yet to figure out a plan for cutting losses. Total costs and expenses were up nearly 80 percent, while the cost of content acquisition, which includes royalty payments, grew 91 percent to $55.8 million. Marketing and sales costs grew to $23.5 million, an 81-percent rise.

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