Today's stock market
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Technology shares led the market today, with the iShares US Technology ETF (NYSEMKT:IYW) adding 2.1%. Consumer stocks also made a comeback after recent weakness, and the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) jumped 1.5%.
Pandora's subscription growth is music to investors' ears
Shares of Pandora Media soared 19.8% after the company reported first-quarter results that exceeded its guidance due to strong subscription growth. Excluding the effect of the company's sale of TicketFly and exit from the Australia/New Zealand market last year, revenue grew 12% year over year to $319.2 million. The company had guided to a range of $295 million to $305 million, and the analyst consensus estimate was $304 million. Non-GAAP loss per share was $0.27, better than the $0.38 loss that Wall Street was expecting.
Driving a 63% increase in subscription revenue to $104.7 million was success in attracting paid subscribers and growing revenue per user. Total subscribers grew 19% to 5.63 million and subscription listening hours increased 34%. Average revenue per paid subscriber increased $1.54, or 32%, to $6.30, although content acquisition costs grew $1.69 per user.
Not everything was up and to the right, though, as the advertising side of Pandora's business continued to shrink, although at a slower pace than last quarter. Total listener hours declined 4.8% to 4.96 billion, and "active listeners" fell 5.7% to 72.3 million. Although advertising RPM (revenue per thousand listener hours) grew 9.1%, total advertising listener hours dropped 12.1%, leading to a 3.9% decline in advertising revenue.
Analysts were impressed by the progress in growing the paid subscriber business and the apparent stabilization of the advertising decline, along with opportunities from the partnership with SiriusXM as a content and marketing distribution partner. Investors were happy to bid up shares today.
Shake Shack shares sizzle
Premium burger purveyor Shake Shack announced better-than-expected first-quarter results on growing same-store sales, and the stock leaped 18%. Revenue increased 29.1% to $99.1 million and adjusted pro forma earnings were $0.15 per share, up from $0.10 in the period last year. Analysts were expecting adjusted EPS of only $0.08 on sales of $96.3 million.
Boosting Shake Shack's results was an unexpected 1.7% increase in "same Shack" sales. The company had guided to flat comps for the year, and analysts had expected a decline this quarter. The gain was due to a 5.9% increase in price and sales mix, offset by a 4.2% decline in traffic. During the quarter, the company opened five company-operated stores in the U.S. and four licensed stores internationally.
Looking forward, company officials sounded positive and raised guidance slightly. "Our domestic pipeline is stronger than ever as we build toward our goal of 200 domestic company-operated Shacks by the end of 2020 and our long-term target of 450," said CEO Randy Garutti in the press release. "We expect 16 to 18 net new licensed Shacks for the year, with a focus on Asia including our first Shack in Hong Kong which opened on May 1st . Additionally, we are committed to digital innovation to better connect with our guests, delivering ongoing menu innovation, and investing in our people and infrastructure to execute on the significant long-term opportunity ahead."
Investors took the results as a sign that comparable-sales declines are reversing, despite the traffic metric, and that was enough to give the stock a big bump today.