Pandora CEO: Q2 Was a Historical Inflection Point
But in after hours trading, investors bid shares of Pandora down as much as 13 percent from their closing price of $21.71. Their concern was likely the company’s widening loss. In the second quarter, Pandora reported a loss $7.9 million, or 4 cents per share, on a revenue of $157.4 million, which compares to a loss of just $5.4 million, or 3 cents per share, on $101.3 million in sales in the year-ago quarter. Excluding one-time items, the company said it would have earned 4 cents per share, but that was not enough to please investors or analysts, who had expected the company to earn 2 cents per share on a revenue of $156.3 million.
Before the earnings release, Pandora’s stock had advanced more than 131 percent so far this year.
For the third quarter, the company gave a careful growth forecast, estimating between $174 million and $179 million in revenue and between 3 cents and 6 cents in non-GAAP earnings per share, which would follow three quarters in the red. “To drive future growth,” Kennedy said the company is “accelerating investment in new technologies, channels and capabilities that maximize the value Pandora delivers.”
But whether these new technologies will be enough to stem the company’s losses is debatable. Not only is Pandora still losing money, less people are actually listening to its radio service. While the company’s 71.2 million users listened to 3.88 billion hours of music in the quarter, an 18 percent year-over-year jump, that figure was less than the 4.18 billion listening hours Pandora reported in the last quarter. And, Pandora will only face more pressure in the next quarter; the past three-month period was the last quarter before the introduction of Apple’s (NASDAQ:AAPL) iTunes Radio. Not only could advertisers favor iTunes Radio over Pandora, thereby hurting Pandora’s bottom line, but Apple already has an existing user base in the millions of current and potential iPhone owners who will be given access to the service via iOS 7.
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