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Pandora Media (P) released second-quarter 2016 results Thursday after the market close, and shares of the music-streaming specialist are down around 7% in after-hours trading as of this writing.  So what happened?

Quarterly consolidated revenue climbed 20% year over year, to $343 million, including a 15% increase in advertising revenue, to $265.1 million, a 1% increase in subscription and other revenue, to $55.1 million, and 20% growth in ticketing service revenue -- stemming from Pandora's acquisition of TicketFly late last year -- to $22.8 million. Pandora also enjoyed strong results from local advertising, which now accounts for roughly 28% of total revenue. However, Pandora's guidance called for higher total revenue of $345 million to $355 million, which would have represented growth of 22.6% at the midpoint. 

During the subsequent conference call, Pandora founder and CEO Tim Westergren explained that revenue fell slightly short of expectations because of softness in national advertising in the entertainment and telecommunication sectors. According to Westergren:

Although hours reaccelerated, there is a delay between when the inventory is realized and when we can monetize it. We are confident in our ability to more effectively capture this incremental revenue over time, as we continue to see strong performance and demand for our advertising products.

On the bottom line, based on generally accepted accounting principles (GAAP), Pandora incurred a net loss of $76.3 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also came in at a loss of $25.1 million. And Pandora's adjusted (non-GAAP) net loss was $26.8 million, or $0.12 per share. To Pandora's credit, this was well within its guidance -- which called for an adjusted EBITDA loss in the range of $30 million to $20 million -- despite the top-line shortfall.

A year of investment

That's fair enough, especially considering Pandora is investing heavily this year to scale infrastructure and build new lines of business. When Pandora revealed these plans earlier this year, then-CEO Brian McAndrews insisted the company is "comfortable being temporarily EBITDA negative," as these investments will help it capitalize on a "generational opportunity to drive the future of music for years -- if not decades -- to come."

Westergren elaborated in a statement:

We are making strong progress on Pandora's transformation into a complete music marketplace. We made considerable progress on our product development plans while also improving margins sequentially. Pandora plans to deliver a powerfully differentiated music experience to accelerate growth and deliver value to listeners, music makers, advertisers, and ultimately, shareholders.

Meanwhile, Pandora's number of active listeners fell 1.6% year over year, to 78.1 million, and also fell sequentially from 79.4 million last quarter. But this isn't its first such decline in listeners, which tend to ebb and flow as Pandora endures intense competition in its space.

Investors can also take some solace knowing those 78.1 million listeners are as active and loyal as ever to the platform: Total listener hours grew 7% year over year, to 5.66 billion, helping Pandora set a new company record for user engagement at 24 hours per active user per month. As far as efficiency in monetizing those hours, revenue per 1,000 listener hours (RPMs) rose a modest 4.9%, to $56.56, including a 6.8% increase in ad RPMs, to $53.34. 

Looking forward

Finally, Pandora offered a look ahead with guidance. For the current quarter, Pandora expects revenue of $360 million to $370 million (or growth of 17.2% at the midpoint), which should result in adjusted EBITDA ranging from a loss of $5 million to a profit of $5 million.  

But Pandora also reduced its revenue guidance or the full year. It now expects 2016 revenue of $1.385 billion to $1.405 billion, down from previous guidance of $1.41 billion to $1.43 billion. Nonetheless, Pandora continues to expect a full-year 2016 adjusted EBITDA loss in the range of $70 million to $50 million. 

In the end, apart from its slight bottom-line shortfall given what appears to be temporary softness in national advertising, there were no big surprises in Pandora's latest quarter. As long as Pandora Media continues to drive forward its plans to transform into a one-stop shop for music consumers, I think investors should be more than happy with where the company stands.