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Pandora (P) Q2 Loss Narrower than Expected, Revenues Beat

Pandora Media, Inc. P posted narrower-than-expected adjusted loss per share (including stock-based compensation but excluding one-time items) of 31 cents for second-quarter 2017. The Zacks Consensus Estimate was pegged at a loss of 39 cents per share.

Revenues increased 9.9% year over year to $376.8 million, surpassing the Zacks Consensus Estimate of $364.7 million.

Quarter Details

Revenue growth in second-quarter 2017 was driven by higher advertising revenues (73.8% of total revenues), which increased 4.9% from the year-ago quarter to $278.2 million. Subscription and other revenues (18.3%) increased 25% year over year to .9 million. Revenues from ticketing services (7.9%) grew 31% to $29.7 million.

Total listener hours fell 7.8% on a year-over-year basis to 5.22 billion in the quarter while the number of active listeners was 76 million.

Average revenue per paid subscriber (ARPU) was $4.82 in the quarter and licensing costs per paid subscriber (LPU) was $3.11.

Pandora’s adjusted EBITDA loss was $54.3 million, compared with a loss of $25.1 million in the year-ago quarter.

Pandora Media, Inc. Price, Consensus and EPS Surprise

Pandora Media, Inc. Price, Consensus and EPS Surprise | Pandora Media, Inc. Quote

Balance Sheet & Cash Flow

Pandora exited the quarter with $227.6 million in cash and investments, up from $203 million at the end of the prior quarter. Net cash used in operating activities was $103,494 in the quarter compared with $45,474 in the prior quarter.

Guidance

Pandora provided guidance for the third quarter as well as for full-year 2017.

For third-quarter 2017, revenues are expected in the range of $370–$385 million, reflecting a 14% year-over-year growth rate at midpoint. The company expects adjusted EBITDA loss in the range of $5–$20 million.

The Zacks Consensus Estimate for the top and the bottom line is pegged at $399.9 million and loss of 22 cents per share, respectively.

For 2017, revenues are forecast in the range of $1.45–$1.5 billion.

The Zacks Consensus Estimate for the top and the bottom line is pegged at $1.54 billion and loss of $1.07 per share, respectively.

Zacks Rank and Share Price Movement

We note that Pandora’s shares have decreased 31.9% in the past year, against the industry’s gain of 16%.

Presently, Pandora carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the broader tech space are Applied Optoelectronics, Inc. AAOI, Kemet Corp. KEM and Vishay Intertechnology, Inc. VSH. All these three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank Stocks here.

In the trailing four quarters, Applied Optoelectronics, Kemet and Vishay delivered average positive earnings surprises of 118.33%, 72.92% and 1.86%, respectively.

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