Pandora Media (P +0.00%) announced strong second-quarter 2018 results on Tuesday after the market closed, detailing accelerated revenue growth, improved ad-hour trends, and new partnerships that could further spur its momentum.
With shares up nearly 15% today, let's take a closer look at what Pandora had to say, and what investors should be watching in the quarters ahead:
Image source: Getty Images.
Pandora Media results: The raw numbers
| Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$384.8 million |
$376.8 million |
2.1% |
|
GAAP net income (loss) available to common stockholders |
($99.5 million) |
($289.7 million) |
N/A |
|
GAAP net income (loss) per share available to common stockholders |
($0.38) |
($1.20) |
N/A |
Data source: Pandora Media Inc.
What happened with Pandora Media this quarter?
- Excluding last year's wind-down of Pandora's Australia/New Zealand (ANZ) operations and the sale of Ticketfly, revenue grew 12% year over year.
- The top line was also far above Pandora's guidance provided in May, which called for a range of $360 million to $375 million.
- On an adjusted (non-GAAP) basis -- which excludes items like stock-based compensation and divestment expenses -- Pandora's net loss was $38.9 million, or $0.15 per share, beating consensus estimates by a penny per share and narrowed from a loss of $0.21 in the same year-ago period.
- Adjusted EBITDA was a loss of $34.6 million, narrowed from a $54.3 million loss in last year's Q1 and near the better end of guidance for a loss ranging from $45 million to $30 million.
- Pandora Plus and Pandora Premium subscribers grew 23% year over year to roughly 6 million, up from 5.63 million last quarter.
- Subscription revenue grew 67% year over year to $113.7 million (excluding Ticketfly, Australia, and New Zealand), to $113.7 million. Average revenue per paid user increased 35.3% to $6.52.
- Advertising revenue declined 2.6% to $278.2 million, above expectations driven by the third straight quarter of improved ad-hour trends. Advertising RPM (or revenue per thousand listener-hours) grew 4% year over year to an all-time quarterly high of $68.75.
- Active users were 71.4 million at the quarter's end, down sequentially from 72.3 million last quarter.
- Listener hours declined 2.5% year over year to 5.09 billion.
- It completed the previously announced acquisition of audio ad-tech company AdsWizz for a total consideration of $146.6 million, including $73.7 million in cash and 9.6 million shares.
- In its first product integration with AdsWizz technology, Pandora announced the general availability of Audio Programmatic, which enables advertisers to more precisely target audiences, while allowing Pandora to capitalize on additional demand and increase the efficiency of its ad business.
- It launched a new Pandora Premium Family Plan that allows ad-free, on-demand music for up to six people under one account for $14.99 per month.
What management had to say
CEO Roger Lynch cited "continued progress against our strategy" during the quarter, stating: "New partnerships with top brands like Snap and AT&T, as well as enhancements to our ad tech and programmatic offerings, position us to further accelerate growth and ownership of the expanding digital audio marketplace."
Looking forward
During the subsequent conference call, Pandora management reiterated that its various growth initiatives "will build over the course of 2018 and beyond."
"Although we've continued to make notable progress, we are still in the early stages of what we view as a long game," CFO Naveen Chopra said.
In the meantime, Pandora provided third-quarter revenue guidance of $390 million to $405 million, or 10% year-over-year growth at the midpoint -- and above most analysts' models for more-modest growth of 4.2%. Pandora also projects third-quarter adjusted EBITDA ranging from a loss of $25 million to a loss of $10 million.
All things considered, this was another stellar quarter from Pandora as it effectively exceeded expectations on all relevant business metrics. And it should come as no surprise to see the stock rallying in response.
