What: Shares of Pandora (NYSE:P) rose nearly 12% in April, according to S&P Capital IQ data, as a successful funding round from competitor of investors ignored shrugged off an active listener decrease and reacted positively to better-than-expected revenue, engagement, and a narrower loss than expected during the company's first-quarter earnings report.
So what: Pandora performed better than expected in its first quarter on both a revenue and EPS standpoint. In revenue, the company reported $230.8 million, an increase of 19% on a year-over-year basis. The company also exceeded analyst's top-line estimates of $224.6 million. And although the company recorded an EPS loss of $0.12 per share (non-GAAP), this was better than expected as consensus was a loss of $0.16 per share.
Looking beyond the headline numbers, however, and the results look even better. First, user engagement reached an all-time high of 22.3 hours per active user as a testament to the popularity of the service among its heavy users, although that metric comes with a caveat -- the total number of active users dropped on a sequential basis, dropping from 81.5 million last quarter to 79.2 million this quarter. Perhaps the best metric for Pandora was its subscription-based revenue increase of $52 million, up 32% year over year.
Now what: Even including Pandora's strong April, the company is still down nearly 30% on a year-over-year basis. Overall, the streaming-music space continues to become more crowded, with streaming-only companies Spotify, iHeart Radio, and now Jay-Z's Tidal. In addition, you have major tech companies with offerings -- Apple with both iTunes Radio and Beats' streaming services, Google with its Google Play Music offering, and Amazon.com now with its Amazon Prime Music streaming offering.
So although it's been a tough year for Pandora investors, and competition is only going to get tougher, the company does have a dedicated user base of nearly 80 million active users. If the company continues to grow subscription-based revenue by continuing to turn active users into paying subscribers, the company could have the last laugh.
Jamal Carnette owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, Google (A shares), Google (C shares), and Pandora Media. The Motley Fool owns shares of Amazon.com, Apple, Google (A shares), Google (C shares), and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.