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Pandora Q2 earnings: The strongest report in a year, stock +10%

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“I’m looking forward to discussing our strong quarter, and the progress we’ve made across several business initiatives,” said Brian McAndrews, CEO of Pandora, to start the Q2 earnings call. By any reckoning the call was a success, and for the first time in several quarters, the stock price responded with an upward swing in after-hours trading.

A few headline points:

  • The company beat earnings expectations, delivering five cents per share against an expected two cents. Wall Street loves it some beaten expectations.
  • For the first time in a 12-month period, Pandora earned over a billion dollars.
  • Quarterly revenue was $286-million, up 30% from last year’s 2nd quarter.
  • Future guidance? Pandora told investors to expect 3rd-quarter revenue at $310-315-million.

In our view a key metric in Pandora’s quarterly drumbeat is RPM — revenue per thousand listening hours. In Q2, the company attained a record-high RPM of $53.91, a 24% year-over-year gain. The advertising portion of that was $49.94, a 25% rise over last year. the advertising portion of total quarterly revenue was $231-million, or 86% of total revenue.

Pandora continued the assertive build-out of its sales force, adding 100 sales people. That brought the total ad-sales force to 443. Local ad revenue was $60-million, growing 67% in a year.

Audience metrics are a much-awaited dimension of P’s quarterly reports. In the second quarter, monthly active users remained essentially flat at 79.4-million listeners. Those consumer soaked up 5.3-billion hours of music. Both metrics represent single-digit percentage gains year-over-year.

 

Brad Hill

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