Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Has Pandora Finally Turned the Corner?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

There was a lot to like about Pandora's (NYSE: P  ) fourth quarter results.

Sure, the streaming music service lost money again -- to the tune of $0.09 a share. That's even worse than the $0.05 per share loss the company reported a year ago.

But business trends are looking up. For one, listening hours surged by 53%, passing 4 billion. And Pandora now boasts an 8% market share of all U.S. radio. That's a lot of user engagement. Better still, that scale makes Pandora a serious contender for the type of national advertising campaigns that can really goose marketing revenue.

However, the best news to come out of the report by far was the company's improving sales of mobile advertising. Pandora's revenue per thousand listener hours jumped to $25 on mobile devices. That's still well below $53 it earned from desktop advertisements, but it's a major improvement over last year's number.

Mobile monetization is critical to Pandora, as close to 80% of the music it delivers is streamed from smartphones and tablets. Like Facebook and Google, Pandora has struggled in finding a way to build an effective advertising business model around mobile usage. If the company can better monetize that platform, then profitability could surge.

Pandora's earnings report wasn't all good news, though. CEO Joe Kennedy announced that he would be stepping down soon, after leading the company since 2004. He'll be leaving the position at a time when user engagement momentum is strong, but while costs are still a major problem.

Content acquisition costs rose faster than revenue again, jumping by 59% in the fourth quarter. And those costs don't seem likely to dip any time soon. Royalty rates, which drive Pandora's content costs, are slated to jump by 17%, to $0.14 in 2015.

With no help on the cost side, Pandora will have to depend almost completely on revenue increases to boost profitability. Still, as long as it can keep wringing more cash out of its mobile advertising business, stronger profits are exactly what Pandora can look forward to.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2301433, ~/Articles/ArticleHandler.aspx, 9/29/2016 4:55:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 12.84 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 4:02 PM
P $14.41 Up +0.27 +1.91%
Pandora Media CAPS Rating: **