Pandora Listener Hours Fall, Subscriptions Up Just 290K

PANDORA REPORTS Q4 2017 FINANCIAL RESULTS

Ad RPM Reaches an All-Time High; Subscription Revenue Grows 63%

• Q4 Revenue excluding Australia, New Zealand and Ticketfly was $395.3 million, growing 7% year-over-year
• Ad RPM hits an all-time high of $75.65 in Q4 2017, growing 12% year-over-year
• Q4 Subscription revenue was $97.7 million, growing 63% year-over-year
• Total subscribers were 5.48 million, growing 25% year-over-year
• Q4 Revenue and Adjusted EBITDA significantly exceeded our forecast
• Launched Premium Access, enabling greater interactivity in ad-supported tier
• Announced plans to reinvest $45 million of expected annualized cost-savings toward key growth initiatives

 

OAKLAND, Calif. – Feb. 21, 2018 – Pandora (NYSE: P) today announced financial results for the fourth quarter and full year ended December 31, 2017.

 

“Digital audio is on the verge of massive growth – music consumption is increasing, podcasts are gaining popularity and voice-activated devices are quickly becoming mainstream. Just like video, audio is transitioning from a one-to-many broadcast experience to a one-to-one model with personalization at the core. Pandora’s scale, listener engagement and data position us well to capitalize on these trends,” said Roger Lynch, CEO of Pandora. “From launching on-demand for our ad-supported listeners to expanding multiple device partnerships in the last quarter alone, we’re building a strong foundation for audience growth and improved monetization. These efforts will enable us to strengthen business fundamentals and reinvigorate Pandora in 2018.”

 

Fourth Quarter 2017 Financial Results & Highlights

 

Premium Access: Pandora successfully launched Premium Access, which allows ad-supported listeners access to on-demand experiences including, for the first time, the ability to search, play and share songs, albums, and playlists by viewing a short video ad. Premium Access also unlocks new rewards-based video inventory for advertisers.

 

Revenue: For the fourth quarter of 2017, total consolidated revenue was $395.3 million, an approximate 7% year-over-year increase compared to the year-ago quarter, excluding Australia, New Zealand and Ticketfly. This included $297.7 million in advertising revenue and $97.7 million in subscription revenue. Revenue in the year-ago quarter, excluding Australia, New Zealand and Ticketfly was $370.5 million. We discontinued our service in Australia and New Zealand on July 31, 2017 and Ticketfly was sold to Eventbrite on September 1, 2017. Including Australia, New Zealand and Ticketfly, total consolidated revenue for the fourth quarter of 2016 was $392.6 million.  

 

GAAP Net Loss and Adjusted EBITDA: For the fourth quarter of 2017, GAAP net loss was $44.7 million compared to a net loss of $90.0 million in the same quarter last year. Adjusted EBITDA was $5.8 million, compared to a loss of $30.4 million in the same quarter last year.

 

Cash and Investments: For the fourth quarter of 2017, the Company ended with $500.8 million in cash and investments, compared to $499.4 million at the end of the prior quarter. 

 

Partnerships: Expanded partnerships across Sonos, Comcast’s Xfinity X1, Android TV and Amazon Fire TV in the fourth quarter.

 

Listener Hours: Total listener hours were 5.03 billion for the fourth quarter of 2017, compared to 5.38 billion for the same period of the prior year.

 

Active Listeners: Active listeners were 74.7 million at the end of the fourth quarter of 2017.

 

Subscribers: Pandora Plus and Pandora Premium subscribers were 5.48 million at the end of the fourth quarter. 

 

Full Year 2017 Financial Results

 

Revenue: For the full year 2017, consolidated total revenue was $1.467 billion, a 6% year-over-year increase. This included ticketing revenue of $76.0 million from the period. Our ticketing service was sold to Eventbrite on September 1, 2017.  Excluding revenue from Australia, New Zealand and Ticketfly, full year 2017 revenue was $1.385 billion, an 8% year-over-year increase. This included advertising revenue of $1.071 billion and subscription and other revenue of $314.3 million.

 

GAAP Net Loss and Adjusted EBITDA: For the full year of  2017, GAAP net loss was $518.4 million compared to a net loss of $343.0 million in the year ago period. Adjusted EBITDA was a loss of $125.0 million compared to a loss of  $119.5 million last year. 

 

Recent Events & Other Information

 

Strategic Realignment: Pandora recently announced an organizational restructuring designed to prioritize its strategic growth initiatives and optimize overall business performance. A combination of eliminated roles and other  measures are expected to result in combined annualized savings of approximately $45 million to adjusted EBITDA. The savings will be reinvested into growth initiatives including ad-tech, non-music content, device integration and marketing technology, toward which the company will redeploy existing employees and hire for new positions.

 

Guidance: Guidance will be discussed during the fourth quarter and full year 2017 conference call.

 

Fourth Quarter and Full Year 2017 Financial Results Conference Call: Pandora will host a conference call today at 2 p.m. PT/5 p.m. ET to discuss fourth quarter and full year 2017 financial results with the investment community. A live webcast of the event will be available on the Pandora Investor Relations website at http://investor.pandora.com. A live domestic dial-in is available at (877) 355-0067 or (443) 853-1239 internationally. A domestic replay will be available at (855) 859-2056 or (404) 537-3406 internationally, using passcode 3687488, and available via webcast replay until March 14, 2018.