Pandora beats Q3 expectations after paid subscriptions rise to 6.8m

Online radio and music streaming service Pandora generated revenue of US$417.6 million in the third quarter, with non-adjusted net losses at $15.5 million, or $0.06 per share.

This exceeded market expectations, which forecast revenue of $401.29 million, and losses of $0.11 per share. Pandora shares rose 2.3% after the financials were posted.

In the Q3 2017, Pandora’s revenues were $378.64 million, with losses of $0.06.

The main feature of Q3 2018 financials was how paid subscription revenue climbed to be 30% of the revenue slice, with the latest subscribers figures at 6.8 million paying for Pandora Plus and Pandora Premium.

In the quarter, Pandora added 784,000 more subscribers. Certainly not in the league of Spotify and Apple figures, of course, but Pandora’s subscription revenue grew 49% year-over-year to $125.77 million for the quarter.

In comparison, its ad revenue only grew 6% in the quarter year-on-year to $291.9 million.

Pandora now has 68.8 million monthly active listeners, about 5 million fewer than a year ago, and with total listener hours of 4.81 billion.

The company also confirmed the success of its Premium Access – which allows customers to unlock on-demand music for a session by watching video ads – to be used by 32 million listeners so far.

It’s also touting the huge benefits to come its way after its deal with SiriusXM closes in the first quarter of 2019.

This includes $7 billion in expected revenues through co-marketing opportunities, and the addition of SiriusXM’s exclusive content to boost Pandora’s non-music content business.

A recent ad partnership deal with SoundCloud will increase Pandora’s US ad audience reach to over 100 million.

“I’m proud of the progress we’ve made over the past year to reinvigorate Pandora,” said Roger Lynch, Pandora CEO.

“A year ago, we committed to drive listener engagement through product innovation, expand our content, and increase distribution partnerships.

“We also prioritized making our ad tech capabilities a strategic advantage.

“And we executed. We launched new products like Premium Access, delivering on-demand functionality and improved listener engagement in our ad-supported tier; forged partnerships with leading brands such as T-Mobile, AT&T, Comcast, and Snap; and solidified our global leadership in digital audio advertising with the acquisition of AdsWizz and the launch of our programmatic audio marketplace.”

“Looking ahead, I couldn’t be more excited about Pandora joining forces with SiriusXM.

“A combined Pandora-SiriusXM will create the world’s largest audio entertainment company, bringing Pandora additional resources to accelerate growth and building on SiriusXM’s leadership in the car, subscription expertise, and unique content.”