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Pandora (P) Q3 Loss Narrower than Expected, Revenues Miss

Pandora Media Inc. P posted adjusted loss per share of 6 cents for third quarter 2017, narrower than the Zacks Consensus Estimate of a loss of 7 cents per share.

Revenues increased 7.6% year over year to $378.6 million but missed the Zacks Consensus Estimate of $383 million.

The company has underperformed the industry on a year-to-date basis. While the industry gained 31.6%, Pandora lost 43.2% over the same time frame.

Quarter Details

Revenue growth in third-quarter 2017 was driven by advertising revenues (72.8% of total revenues), which increased 1% from the year-ago quarter to $275.7 million. Subscription and other revenues (22.3%) increased 50% year over year to $84.4 million. Revenues from ticketing services (4.9%) grew 16% to $18.5 million.

Total listener hours fell 4.6% on a year-over-year basis to 5.15 billion in the quarter while the number of active listeners was 73.7 million. Management attributed the decline in active listeners to natural disasters in Texas and Florida. Moreover,  recently Pandora pulled out of Australia and New Zealand, which also impacted results.

Average revenue per paid subscriber (ARPU) was $5.58 in the quarter while licensing costs per paid subscriber (LPU) was $3.87.

Pandora’s adjusted EBITDA loss was $5.3 million compared with a loss of $6.6 million in the year-ago quarter.

Balance Sheet & Cash Flow

Pandora exited the quarter with $493.1 million in cash and investments, up from $227.6 million at the end of the prior quarter. Net cash used in operating activities was $79,199 in the quarter compared with $103,494 in the prior quarter.

Guidance

Pandora provided guidance for the fourth quarter.

For fourth-quarter 2017, revenues are expected in the range of $365–$380 million, reflecting 3.3% year-over-year growth rate at the midpoint. The company expects adjusted EBITDA loss in the range of $5–$15 million.

Pandora Media, Inc. Price, Consensus and EPS Surprise

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

Zacks Rank & Stocks to Consider

Pandora carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Better-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA, Lam Research Corporation LRCX and Micron Technology Inc. MU, all  sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for NVIDIA, Lam Research and Micron is projected to be 11.2%, 14.9% and 10%, respectively.

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