Pandora Media (P) will report its results for the months of November and December on Wednesday as it makes the switch to calendar-quarter reporting. The leader in Internet radio faced increasing competition in 2013 as tech giants Google (GOOGL -1.05%) and Apple (AAPL 0.86%) each released their own streaming music services. Meanwhile, private companies such as Beats entered the market, and Spotify and Rdio continue to forge ahead.

With the increased competition and large user base, growth in listener hours slowed in the second half of 2013. In November, the company improved the metric by 18%. In December, it slowed to just 13% growth, but still beat analysts' expectations. The company will only need moderately improved monetization to beat its revenue estimates.

Street music
During Pandora's fiscal third quarter, the company reported revenue of $181.6 million, topping analyst expectations, and its non-GAAP earnings met expectations at $0.06 per share. The highlight was the rapid growth in mobile ad revenue to more than $100 million, climbing 58% year over year. Its revenue per thousand listener hours, or RPM, climbed 28%, reaching $43.48.

For the two-month stub period, Pandora forecast revenue between $132 million and $136 million and non-GAAP earnings per share of $0.05-$0.07. For the full calendar quarter, analysts expect $0.07 per share on revenue of $196 million, a 49% increase from the same period in 2012.

Based on the company's reported listener hours from November and December, Pandora should handily beat its revenue guidance based on the third quarter RPM. Considering the holiday season is typically strong for ad rates, Pandora should have no problem exceeding its guidance.

Strong competition
This stub period will be Pandora's first full quarter facing competition from Apple, which released its iTunes Radio service in September. The copycat service has the advantage of being built into every iPhone and iPad Apple sells. Last quarter, Apple sold 51 million iPhones and 26 million iPads.

Pandora is also facing competition from Google and its Play Music All Access service, which rolled out its long-delayed iOS app last quarter. All Access is a hybrid between Internet radio and an on-demand streaming service, much like Spotify. So, while it's not a direct competitor with Pandora or iTunes Radio, it's unlikely a subscriber would use both services.

Google also has plans to roll out another music-streaming service based on its YouTube brand. YouTube is currently the most popular music streaming service, despite its original intent as a video-sharing platform.

Still, dozens of new streaming sites have not stopped Pandora from growing its listener hours. However, the competition may result in an increase in licensing costs as demand goes up. Pandora has locked in rates through 2015, but may see a dramatic increase in price thereafter. As it is, the company will see rates climb to $0.14 per hundred streams next year.

Pandora is a leader in one of the few bright areas for the music industry. Streaming revenue grew significantly in 2013 as CD sales and digital downloads fell. Pandora's service is relatively sticky, since users spend hours fine-tuning radio stations to their tastes, so it's likely to remain a staple in the music-streaming scene for the long term.

What to watch for
When Pandora reports, watch to see further increases in its mobile monetization. Acceleration would indicate that the company has turned a corner from earlier this year, when it resorted to imposing a limit on the number of hours mobile listeners could use the service.

With even a slight sequential growth in RPM, the company will beat its revenue guidance. But watch to see if that also translates into an earnings beat. Although earnings are not the current focus of the company, it would be nice to see if Pandora is capable of turning a better-than-expected profit in an increasingly competitive market.