- Q4 2015 total RPMs reached a record
$60.75, growing 18% year-over-year; Ad RPMs were up 19%
year-over-year to a record $57.20
- Full year 2015 total RPMs were $54.65,
growing 19% year-over-year on a GAAP basis and 21% year-over-year
on a non-GAAP basis; Ad RPMs were up 21% year-over-year to
$50.52
- Q4 2015 total revenue was $336.2
million, growing 25% year-over-year
- Full year 2015 total revenue was $1.164
billion, growing 26% year-over-year on a GAAP basis and 28%
year-over-year on a non-GAAP basis
- Q4 2015 advertising revenue was $269.0
million, growing 22% year-over-year
- Full year 2015 advertising revenue was
$933.3 million, growing 27% year-over-year
- Q4 2015 total listener hours were 5.37
billion, growing 3% year-over-year
- Full year 2015 total listener hours
were 21.11 billion, growing 5% year-over-year
Pandora (NYSE: P), the world’s most powerful music discovery
platform, today announced financial results for the fourth quarter
and full year ended December 31, 2015.
“In 2015 we demonstrated the power of our core industry-leading
internet radio business and made substantial investments and
progress toward building the world’s go-to music destination for
listeners and artists alike – uniquely unifying the full music
experience under one roof, spanning radio, on-demand, and live
music,” said Brian McAndrews, CEO of Pandora. “We enter 2016 with
an enhanced portfolio of assets, cost certainty and substantial
competitive advantages. We’re invested in the long-term and I could
not have more conviction about the ability of Pandora to lead the
future of music. Given our confidence in our core advertising
model, the massive long-term opportunity and the competitive
advantages we have built, we believe 2016 is the time to build on
this foundation and invest in our many opportunities to fuel
revenue acceleration in 2017 and bolster long-term growth
prospects.”
Fourth Quarter 2015 Financial Results
Revenue: For the fourth quarter of 2015, consolidated
total revenue was $336.2 million, a 25% year-over-year increase.
Excluding revenue from ticketing services, total revenue was $326.0
million, an increase of 22% year-over-year. Advertising revenue was
$269.0 million, a 22% year-over-year increase. Subscription and
other revenue was $57.0 million, a 19% year-over-year increase.
Ticketing service revenue for the two month period ending December
31, 2015 was $10.2 million, as a result of our acquisition of
Ticketfly, which closed on October 31, 2015.
Adjusted EBITDA: For the fourth quarter of 2015,
consolidated adjusted EBITDA was $24.8 million, compared to $43.8
million in the same quarter last year. Excluding the impact of
Ticketfly, adjusted EBITDA for the fourth quarter of 2015 was $27.3
million, in line with guidance. Consolidated adjusted EBITDA
excludes $32.2 million in expense from stock-based compensation,
$9.3 million of depreciation and amortization expense, $2.9 million
of Ticketfly and Rdio transaction costs, approximately $1.6 million
of other expense and approximately $1.8 million of benefit from
income taxes.
Cash and Investments: For the fourth quarter of 2015, the
Company ended with $416.9 million in cash and investments, compared
to $442.6 million at the end of the prior quarter. Cash used
in operating activities was $71.0 million for the fourth quarter of
2015, compared to $25.1 million of cash generated by operating
activities in the same period of the prior year. The year-over-year
decrease in cash generated by operating activities is primarily due
to fourth quarter of 2015 payments for royalty settlements entered
into in the third quarter of 2015. The Company also paid $246.5
million for the Ticketfly and Rdio acquisitions, offset by proceeds
from our convertible debt and capped call transactions which
generated net proceeds of $293.3 million.
Full Year 2015 Financial Results
Revenue: For the full year 2015, consolidated total
revenue was $1.164 billion, a 26% year-over-year increase on a GAAP
basis and a 28% year-over-year increase on a non-GAAP basis1.
Excluding revenue from ticketing services, full year 2015 revenue
was $1.154 billion or growth of 25% on a GAAP basis and 27% on a
non-GAAP basis. Advertising revenue was $933.3 million, a 27%
year-over-year increase. Subscription and other revenue was $220.6
million, a 17% year-over-year increase on a GAAP basis and a 27%
year-over-year increase on a non-GAAP basis. Ticketing service
revenue for the two month period ending December 31, 2015 was $10.2
million as a result of our acquisition of Ticketfly.
Adjusted EBITDA: For the full year 2015, consolidated
adjusted EBITDA was $51.7 million, compared to $58.2 million last
year. Excluding the impact of Ticketfly, adjusted EBITDA for the
full year was $54.2 million, in line with guidance. Consolidated
adjusted EBITDA excludes expense from cost of revenue – content
acquisition costs due to one-time cumulative charges of $57.9
million for the pre-1972 sound recordings settlement and $23.9
million as a result of management’s decision to forgo the
application of the Radio Music Licensing Committee (“RMLC”)
publisher royalty rate from June 2013 to September 2015. Adjusted
EBITDA also excludes $111.6 million in expense from stock-based
compensation, $24.5 million of depreciation and amortization
expense, $3.7 million of Ticketfly and Rdio transaction costs,
approximately $1.2 million of other expense and approximately $1.6
million of benefit from income taxes.
Other Business Metrics
Listener Hours: Total listener hours grew 3% to 5.37
billion for the fourth quarter of 2015, compared to 5.20 billion
for the same period of the prior year.
Total listener hours grew 5% to 21.11 billion for the full year
2015, compared to 20.03 billion for the same period of the prior
year.
Active Listeners: Active listeners were 81.1 million at
the end of the fourth quarter of 2015, compared to 81.5 million for
the same period of the prior year.
Guidance
Based on information available as of February 11, 2016, the
Company is providing the following financial guidance:
First Quarter 2016 Guidance: Revenue is expected to be in
the range of $280 million to $290 million. Adjusted EBITDA loss is
expected to be in the range of $75 million to $65 million. Adjusted
EBITDA excludes forecasted stock-based compensation expense of
approximately $38 million and forecasted depreciation and
amortization expense of approximately $14 million and a provision
for income taxes of approximately $0.5 million and assumes minimal
cash taxes given our net loss position. Basic shares outstanding
for the first quarter 2016 are expected to be approximately 227
million. We anticipate a non-GAAP effective tax rate between 30-35%
for the first quarter 2016.
Full Year 2016 Guidance: Revenue is expected to be in the
range of $1.40 billion to $1.42 billion. Adjusted EBITDA loss is
expected to be in the range of $80 million to $60 million. Adjusted
EBITDA excludes forecasted stock-based compensation expense of
approximately $164 million and forecasted depreciation and
amortization expense of approximately $62 million and a provision
for income taxes of approximately $2.0 million and assumes minimal
cash taxes given our net loss position. Basic shares outstanding
for the full year 2016 are expected to be approximately 231
million. We anticipate a non-GAAP effective tax rate between 30-35%
for full year 2016.
Fourth Quarter and Full Year 2015 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 2015
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 internationally at (443) 853‐1239. A
domestic replay will be available at (855) 859‐2056 or
internationally at (404) 537‐3406, using passcode 24859903, and
available via webcast until March 3, 2016.
ABOUT PANDORA
Pandora (NYSE: P) is the world’s most powerful music discovery
platform – a place where artists find their fans and listeners find
music they love. We are driven by a single purpose: unleashing the
infinite power of music by connecting artists and
fans, whether through earbuds, car speakers, live on stage or
anywhere fans want to experience it. Our team of highly trained
musicologists analyze hundreds of attributes for each recording
which powers our proprietary Music Genome Project®,
delivering billions of hours of personalized music
tailored to the tastes of each music listener, full of
discovery, making artist/fan connections at unprecedented scale.
Founded by musicians, Pandora empowers artists with valuable data
and tools to help grow their careers and connect with their
fans.
www.pandora.com | Pandora Blog | Pandora
LinkedIn | @PandoraPulse
"Safe harbor" Statement:
This press release contains forward-looking statements within
the meaning established by the Private Securities Litigation Reform
Act of 1995, including, but not limited to, statements regarding
expected revenue and adjusted EBITDA. These forward-looking
statements are based on Pandora's current assumptions, expectations
and beliefs and involve substantial risks and uncertainties that
may cause results, performance or achievement to materially differ
from those expressed or implied by these forward-looking
statements. Factors that could cause or contribute to such
differences include, but are not limited to: our operation in an
emerging market and our relatively new and evolving business model;
our ability to estimate revenue reserves; our ability to increase
our listener base and listener hours; our ability to attract and
retain advertisers; our ability to generate additional revenue on a
cost-effective basis; competitive factors; our ability to continue
operating under existing laws and licensing regimes; our ability to
enter into licensing agreements directly with music publishers and
record labels on commercially-reasonable terms; our ability to
establish and maintain relationships with makers of mobile devices,
consumer electronic products and automobiles; our ability to manage
our growth and geographic expansion; our ability to continue to
innovate and keep pace with changes in technology and our
competitors; our ability to expand our operations to delivery of
non-music content; our ability to protect our intellectual
property; risks related to service interruptions or security
breaches; and general economic conditions worldwide. Further
information on these factors and other risks that may affect the
business are included in filings with the Securities and Exchange
Commission (SEC) from time to time, including under the heading
“Risk Factors” in our Annual Report on Form 10-K for the
current period and Current Report on Form 8-K filed on
December 2, 2015. The financial information contained in this
press release should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
most recent reports on Form 10-K and Form 10-Q, each as they may be
amended from time to time. The Company's results of operations for
the current period are not necessarily indicative of the Company's
operating results for any future periods.
These documents are available online from the SEC or on the SEC
Filings section of the Investor Relations section of our website at
investor.pandora.com. Information on our website is not part of
this release. All forward-looking statements in this press release
are based on information currently available to the Company, which
assumes no obligation to update these forward-looking statements in
light of new information or future events.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with accounting
principles generally accepted in the United States ("GAAP"), the
Company uses the following non-GAAP measures of financial
performance: non-GAAP total revenue, non-GAAP subscription revenue,
non-GAAP gross profit, non-GAAP net income (loss), non-GAAP basic
EPS, non-GAAP diluted EPS and adjusted EBITDA. The presentation of
this additional financial information is not intended to be
considered in isolation from, as a substitute for, or superior to,
the financial information prepared and presented in accordance with
GAAP. These non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP. In addition,
these non-GAAP financial measures may be different from the
non-GAAP financial measures used by other companies. These non-GAAP
measures should only be used to evaluate our results of operations
in conjunction with the corresponding GAAP measures. Management
compensates for these limitations by reconciling these non-GAAP
financial measures to the most comparable GAAP financial measures
within our earnings releases.
Non-GAAP total revenue, non-GAAP subscription revenue, non-GAAP
gross profit, non-GAAP net income (loss), non-GAAP basic EPS and
non-GAAP diluted EPS differ from GAAP in that they exclude revenue
effects from the subscription return reserve, stock-based
compensation expense, intangible amortization expense, amortization
of non-recoupable ticketing contract advances, transaction costs
from acquisitions and one-time cumulative charges to cost of
revenue – content acquisition costs that are not directly
reflective of our core business or operating results for the
present period. Starting in the first quarter 2015, the income tax
effects of these non-GAAP adjustments have been reflected in
non-GAAP net income (loss), non-GAAP basic EPS and non-GAAP diluted
EPS.
Cost of Revenue – Content Acquisition Costs Charges: Cost
of revenue – content acquisition costs included two one-time
cumulative charges in the full year 2015. The first charge related
to the settlement of an outstanding lawsuit related to sound
recordings recorded prior to February 15, 1972. On April 17, 2014,
UMG Recordings, Inc., Sony Music Entertainment, Capitol Records,
LLC, Warner Music Group Corp. and ABKCO Music and Records, Inc.
filed suit against Pandora Media Inc. in the Supreme Court of the
State of New York. The complaint claimed common law copyright
infringement and unfair competition arising from allegations that
Pandora owed royalties for the public performance of sound
recordings recorded prior to February 15, 1972. In October 2015, as
part of our strategy to strengthen our partnership with the music
industry, the parties reached an agreement whereby we agreed to pay
the plaintiffs a total of $90 million in exchange for the dismissal
of the lawsuit, a release of all claims and a covenant not to sue
for our use of pre-1972 sound recordings extending to December 31,
2016. The first and second installments of $60 million and $7.5
million were paid in October and December 2015, and the remaining
amount will be paid in three equal installments of $7.5 million
from April 1, 2016 through October 1, 2016. Pursuant to this
settlement, which covers approximately 90% of total pre-1972 spins
on our service, we recorded a one-time adjustment of $57.9 million
to cost of revenue - content acquisition costs in the third quarter
of 2015 related to pre-1972 spins played through September 30,
2015.
The second charge related to management’s decision to forgo the
application of the RMLC publisher royalty rate from June 2013 to
September 2015. In June 2013, we entered into an agreement to
purchase the assets of KXMZ-FM and in June 2015 the Federal
Communications Commission ("FCC") approved the transfer of the FCC
licenses and the acquisition was completed. The agreement to
purchase the assets of KXMZ allowed us to qualify for the RMLC
royalty rate of 1.7% of revenue for a license to the ASCAP and BMI
repertoires, before certain deductions. As a result, we recorded
cost of revenue - content acquisition costs at the RMLC royalty
rate starting in June 2013, rather than the rates that were set in
district court proceedings in March 2014 for ASCAP and in May 2015
for BMI. In the third quarter of 2015, despite confidence in our
legal position that we were entitled to the RMLC royalty rate
starting in June 2013, and as part of our strategy to strengthen
our partnership with the music industry, management decided to
forgo the application of the RMLC royalty rate from June 2013
through September 2015. As a result, we recorded a one-time
cumulative charge to increase cost of revenue - content acquisition
costs of $23.9 million in the third quarter of 2015 related to
spins played from June 2013 through September 30, 2015. Starting in
the third quarter of 2015, we are recording cost of revenue -
content acquisition costs for the performing rights organizations
at the rates established by the rate courts.
For the full year 2015, management considered its operating
results without these two one-time cumulative charges to cost of
revenue – content acquisition costs when evaluating its ongoing
non-GAAP and adjusted EBITDA performance because these charges
reflect aggregate charges to royalty rates across several prior
years of activity, and are not directly reflective of our business
or operating results for the present period. Expenses related to
these two items will not be excluded from adjusted EBITDA in future
periods as these relate to the ongoing performance of our
business.
Ticketfly and Rdio Transaction Costs: consists of
transaction costs paid in connection with the acquisitions of
Ticketfly and certain assets of Rdio, which were completed in the
fourth quarter of 2015. Ticketfly and Rdio transaction costs are
included in the general and administrative line item of our GAAP
presentation. For the full year 2015, management considered its
operating results without these charges when evaluating its ongoing
non-GAAP and adjusted EBITDA performance because these charges are
not believed by management to be reflective of our core business,
ongoing operating results or future outlook.
Subscription Return Reserve: consists of revenue that was
deferred on a GAAP basis because the Company had limited operating
history with certain mobile subscription refund rights prior to the
first quarter of 2014. The Company was required to defer all
revenue until the refund rights lapsed or until it developed
sufficient operating history to estimate a reserve. In periods
prior to the first quarter of 2014, the subscription return reserve
was excluded from the subscription and other revenue line of our
GAAP presentation and included in this line of our non-GAAP
presentation. In the first quarter of 2014, the Company established
sufficient operating history to estimate a reserve for these mobile
subscription refund rights. As such, the GAAP revenue results for
the first quarter of 2014 included a one-time reversal of
substantially all of the deferred revenue related to the
subscription return reserve in the amount of $14.2 million. This
reversal was excluded from our non-GAAP revenue in the first
quarter of 2014.
Stock-based Compensation Expense: consists of expenses
for stock options and other awards under our equity incentive
plans. Stock-based compensation is included in the following cost
and expense line items of our GAAP presentation: cost of revenue –
other, cost of revenue – ticketing, product development, sales and
marketing and general and administrative.
Although stock-based compensation is an expense for the Company
and is viewed as a form of compensation, management excludes
stock-based compensation from our non-GAAP measures for purposes of
evaluating our continuing operating performance primarily because
it is a non-cash expense not believed by management to be
reflective of our core business, ongoing operating results or
future outlook. In addition, the value of stock-based instruments
is determined using formulas that incorporate variables, such as
market volatility, that are beyond our control.
Income Tax Effects of Non-GAAP Adjustments: Starting in
2015, the Company is adjusting non-GAAP net income by considering
the income tax effects of its non-GAAP adjustments. Prior to 2015,
the Company’s non-GAAP effective tax rate was minimal. The Company
is currently forecasting a non-GAAP effective tax rate of
approximately 30% to 35% cumulatively for each quarter and the full
year 2016. The Company does not expect to pay significant cash
income taxes for the foreseeable future due to its net operating
loss position.
Adjusted EBITDA
Adjusted EBITDA excludes revenue effects from the subscription
return reserve, stock-based compensation expense, benefit from
(provision for) income taxes, depreciation and intangible
amortization expense, amortization of non-recoupable ticketing
contract advances, other income (expense), transaction costs from
acquisitions and one-time cumulative charges to cost of revenue –
content acquisition costs that are not directly reflective of our
core business or operating results for the present period.
Benefit from (Provision for) Income Taxes: consists of
expense recognized related to U.S. and foreign income taxes. The
Company considers its adjusted EBITDA results without these charges
when evaluating its ongoing performance because it is not believed
by management to be reflective of our core business, ongoing
operating results or future outlook.
Depreciation and Intangible Amortization Expense:
consists of non-cash charges that can be affected by the timing and
magnitude of business combinations and asset purchases.
Depreciation is included in the following cost and expense line
items of our GAAP presentation: cost of revenue – other, product
development, sales and marketing and general and administrative.
Amortization for currently owned intangible assets is included in
the general and administrative expense line of our GAAP
presentation. Depreciation and intangible amortization expense also
consists of non-cash amortization of non-recoupable amounts paid in
advance to the Company’s clients pursuant to ticketing agreements.
Amortization of non-recoupable ticketing contract advances is
included in the sales and marketing line of our GAAP presentation.
Management considers its operating results without intangible
amortization expense when evaluating its ongoing non-GAAP
performance and without depreciation and intangible amortization
expense when evaluating its ongoing adjusted EBITDA performance
because these charges are non-cash expenses that can be affected by
the timing and magnitude of business combinations, asset purchases
and new client agreements and may not be reflective of our core
business, ongoing operating results or future outlook.
Management believes these non-GAAP financial measures serve as
useful metrics for our management and investors because they enable
a better understanding of the long-term performance of our core
business and facilitate comparisons of our operating results over
multiple periods and to those of peer companies, and, when taken
together with the corresponding GAAP financial measures and our
reconciliations, enhance investors' overall understanding of our
current financial performance.
In the financial tables below, the Company provides a
reconciliation of the most comparable GAAP financial measure to the
historical non-GAAP financial measures used in this earnings
release.
The Company also provides estimates of disaggregated ad RPMs,
subscription RPMs, total RPMs and related LPMs for our computer
platform as well as our mobile and other connected devices
platforms, which are calculated by dividing the estimated revenue
and costs generated through the respective platforms by the number
of thousands of listener hours of our services delivered through
such platforms. While the Company believes that such disaggregated
data provides directional insight for evaluating our efforts
to monetize our service, such disaggregated data is not
validated to the level of financial statement reporting. Such data
should be seen as indicative only and as management's best
estimate.
1 Prior to the first quarter of 2014, the Company recognized
revenue on a non-GAAP basis from a subscription return reserve,
which consisted of revenue that was deferred on a GAAP basis
because the Company had limited operating history with certain
mobile subscription refund rights. The Company was required to
defer all revenue until the refund rights lapsed or until it
developed sufficient operating history to estimate a reserve. In
periods prior to the first quarter of 2014, the subscription return
reserve was excluded from the subscription and other revenue line
of our GAAP presentation and included in this line of our non-GAAP
presentation. In the first quarter of 2014, the Company established
sufficient operating history to estimate a reserve for these mobile
subscription refund rights. As such, the GAAP revenue results for
the first quarter of 2014 included a one-time reversal of
substantially all of the deferred revenue related to the
subscription return reserve in the amount of $14.2 million. This
reversal was excluded from our non-GAAP revenue in the first
quarter of 2014.
Pandora Media, Inc. Condensed
Consolidated Statements of Operations (in thousands, except
per share amounts) (unaudited) Three months
ended Twelve months ended December 31,
December 31, 2014 2015 2014 2015
Revenue Advertising $ 220,087 $ 268,989 $ 732,338 $ 933,305
Subscription and other 47,913 57,001 188,464 220,571 Ticketing
service (1) - 10,167 -
10,167 Total revenue 268,000
336,157 920,802 1,164,043
Cost of revenue Cost of revenue - Content acquisition costs 115,326
142,933 446,377 610,362 Cost of revenue - Other (2) 17,206 22,168
61,627 79,858 Cost of revenue - Ticketing service (1), (2) -
7,121 - 7,121
Total cost of revenue 132,532 172,222
508,004 697,341 Gross profit 135,468
163,935 412,798 466,702 Operating expenses Product
development (2) 14,865 28,115 53,153 84,581 Sales and marketing (2)
76,914 112,574 277,330 398,169 General and administrative (2)
31,074 42,774 112,443
153,943 Total operating expenses 122,853
183,463 442,926 636,693
Income (loss) from operations 12,615 (19,528 ) (30,128 )
(169,991 ) Other income (expense), net 70
(1,637 ) 306 (1,220 ) Income (loss)
before benefit from (provision for) income taxes 12,685 (21,165 )
(29,822 ) (171,211 ) Benefit from (provision for) income
taxes (407 ) 1,756 (584 ) 1,550
Net income (loss) $ 12,278 $ (19,409 ) $ (30,406 ) $
(169,661 ) Basic net income (loss) per share 0.06
(0.09 ) (0.15 ) (0.79 )
Weighted-average basic shares 208,434 220,625
205,273 213,790 Diluted
net income (loss) per share $ 0.06 $ (0.09 ) $ (0.15 ) $
(0.79 ) Weighted-average diluted shares 217,567
220,625 205,273 213,790
(1)Consists of two months of Ticketfly activity from the
acquisition date of October 31, 2015 to December 31, 2015.
(2) Includes stock-based compensation expense as follows:
Three
months ended Twelve months ended December 31,
December 31, 2014 2015 2014 2015
Cost of revenue - Other $ 1,438 $ 1,491 $ 4,414 $ 5,531 Cost of
revenue - Ticketing service - 40 - 40 Product development 5,257
7,523 17,546 23,671 Sales and marketing 13,490 14,344 42,165 52,747
General and administrative 6,754 8,774
22,930 29,656 Total stock-based
compensation expense $ 26,939 $ 32,172 $ 87,055
$ 111,645
Pandora Media, Inc.
Condensed Consolidated Balance Sheets (in thousands)
As of December 31, 2014
2015 (audited) (unaudited) Assets Current
assets Cash and cash equivalents $ 175,957 $ 334,667 Short-term
investments 178,631 35,844 Accounts receivable, net 218,437 277,075
Prepaid expenses and other current assets 15,389
35,920 Total current assets 588,414 683,506
Long-term investments 104,243 46,369 Property and equipment, net
42,921 66,370 Goodwill - 303,875 Intangible assets, net 6,939
110,745 Other long-term assets 6,773 29,792
Total assets $ 749,290 $ 1,240,657
Liabilities and stockholders' equity Current liabilities Accounts
payable $ 10,825 $ 17,897 Accrued liabilities 15,754 37,185 Accrued
royalties 73,693 97,390 Deferred revenue 14,412 19,939 Accrued
compensation 34,476 43,788 Other current liabilities -
15,632 Total current liabilities 149,160
231,831 Long-term debt - 234,577 Other long-term liabilities
16,773 30,862 Total liabilities
165,933 497,270 Stockholders' equity
Common stock 21 23 Additional paid-in capital 781,009 1,110,539
Accumulated deficit (196,997 ) (366,658 ) Accumulated other
comprehensive loss (676 ) (517 ) Total stockholders'
equity 583,357 743,387 Total
liabilities and stockholders' equity $ 749,290 $ 1,240,657
Pandora Media, Inc. Condensed
Consolidated Statements of Cash Flows (in thousands)
(unaudited) Three months
ended Twelve months ended December 31,
December 31, 2014 2015 2014 2015
Operating Activities Net income (loss) $ 12,278 $ (19,409 )
$ (30,406 ) $ (169,661 ) Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities Depreciation
and amortization 4,207 9,264 15,431 24,458 Stock-based compensation
26,939 32,172 87,055 111,645 Amortization of premium on
investments, net 727 199 2,833 1,911 Other operating activities 569
524 1,366 2,134 Amortization of debt discount - 1,084 - 1,084
Excess tax benefit from stock-based awards (348 ) - (348 ) -
Changes in operating assets and liabilities Accounts receivable
(21,336 ) (10,108 ) (55,478 ) (55,904 ) Prepaid expenses and other
assets (5,216 ) (12,354 ) (9,219 ) (18,918 ) Accounts payable,
accrued and other current liabilities 757 (11,521 ) 4,830 18,080
Accrued royalties 2,192 (65,687 ) 7,608 23,736 Accrued compensation
1,157 3,045 13,736 7,378 Other long-term liabilities 5,956 4,505
7,690 6,005 Deferred revenue (3,831 ) (2,743 ) (28,238 ) 4,946
Reimbursement of cost of leasehold improvements 1,008
10 4,169 1,024 Net cash
provided by (used in) operating activities 25,059 (71,019 ) 21,029
(42,082 ) Investing Activities Purchases of property and
equipment (6,560 ) (4,741 ) (30,039 ) (32,074 ) Purchases of
investments (67,252 ) (2,259 ) (340,679 ) (140,980 ) Proceeds from
maturities of investments 71,851 49,199 258,518 228,998 Proceeds
from sales of investments - 70,039 - 111,356 Payments related to
acquisitions, net of cash acquired - (246,538
) - (269,566 ) Net cash used in investing
activities (1,961 ) (134,300 ) (112,200 ) (102,266 )
Financing activities Proceeds from issuance of convertible notes -
345,000 - 345,000 Payments for purchase of capped call - (43,160 )
- (43,160 ) Payment of debt issuance costs - (8,909 ) - (8,909 )
Proceeds from employee stock purchase plan 2,050 2,463 6,438 7,552
Proceeds from exercise of stock options 1,726 1,474 16,894 5,192
Tax payments from net share settlements of restricted stock units
(33 ) (245 ) (2,019 ) (2,540 ) Excess tax benefit from stock-based
awards 348 - 348 -
Net cash provided by financing activities 4,091 296,623
21,661 303,135 Effects of exchange rate changes on cash and
cash equivalents (116 ) 382 (288 ) (77 ) Net increase
(decrease) in cash and cash equivalents 27,073 91,686 (69,798 )
158,710 Cash and cash equivalents at beginning of period
148,884 242,981 245,755
175,957 Cash and cash equivalents at end of period $ 175,957
$ 334,667 $ 175,957 $ 334,667
Pandora Media, Inc. Reconciliation of GAAP to Non-GAAP
Measures (in thousands, except per share amounts)
(unaudited) Three months
ended Twelve months ended December 31,
December 31, 2014 2015 2014 2015
Revenue GAAP total revenue $ 268,000 $ 336,157 $ 920,802 $
1,164,043 Subscription return reserve - -
(14,186 ) - Non-GAAP total revenue $
268,000 $ 336,157 $ 906,616 $ 1,164,043
Gross profit GAAP gross profit $ 135,468 $ 163,935 $ 412,798
$ 466,702 Subscription return reserve - - (14,186 ) - Stock-based
compensation: Cost of revenue - Other 1,438 1,491 4,414 5,531
Stock-based compensation: Cost of revenue - Ticketing service - 40
- 40 Amortization of intangibles - Cost of revenue - Ticketing
service - 937 - 937 Pre-1972 sound recordings settlement - - -
57,947 RMLC publisher royalty charge - -
- 23,934 Non-GAAP gross profit $
136,906 $ 166,403 $ 403,026 $ 555,091
Net income (loss) GAAP net income (loss) $ 12,278 $ (19,409
) $ (30,406 ) $ (169,661 ) Subscription return reserve - - (14,186
) - Amortization of intangibles 181 2,593 727 3,397 Amortization of
non-recoupable ticketing contract advances - 696 - 696 Stock-based
compensation 26,939 32,172 87,055 111,645 Pre-1972 sound recordings
settlement - - - 57,947 RMLC publisher royalty charge - - - 23,934
Ticketfly and Rdio transaction costs - 2,853 - 3,662 Income tax
effects of non-GAAP adjustments - (8,697 )
- (11,029 ) Non-GAAP net income $ 39,398
$ 10,208 $ 43,190 $ 20,591
Non-GAAP EPS - basic $ 0.19 $ 0.05 $ 0.21 $ 0.10 Non-GAAP EPS -
diluted $ 0.18 $ 0.04 $ 0.20 $ 0.09 Weighted average basic
shares 208,434 220,625 205,273 213,790 Weighted average diluted
shares 217,567 229,408 218,939 222,743 Adjusted EBITDA GAAP
net income (loss) $ 12,278 $ (19,409 ) $ (30,406 ) $ (169,661 )
Subscription return reserve - - (14,186 ) - Depreciation and
amortization 4,207 9,264 15,431 24,458 Stock-based compensation
26,939 32,172 87,055 111,645 Pre-1972 sound recordings settlement -
- - 57,947 RMLC publisher royalty charge - - - 23,934 Ticketfly and
Rdio transaction costs - 2,853 - 3,662 Other expense (income), net
(70 ) 1,637 (306 ) 1,220 Provision for (benefit from) income taxes
407 (1,756 ) 584 (1,550 )
Adjusted EBITDA - Consolidated $ 43,761 $ 24,761 $
58,172 $ 51,655 Less: Adjusted EBITDA - Ticketfly
- (2,570 ) - (2,570 )
Adjusted EBITDA - Pandora only $ 43,761 $ 27,331 $
58,172 $ 54,225 Cost of revenue - content
acquisition costs GAAP cost of revenue - content acquisition costs
$ 115,326 $ 142,933 $ 446,377 $ 610,362 Pre-1972 sound recordings
settlement - - - (57,947 ) RMLC publisher royalty charge -
- - (23,934 ) Non-GAAP
cost of revenue - content acquisition costs $ 115,326 $
142,933 $ 446,377 $ 528,481
Pandora Media, Inc. Monetization:
RPM History (unaudited) Three months
ended Twelve months ended December 31,
December 31, 2014 2015 2014 2015
Advertising RPMs Computer $ 68.83 $ 68.42 $ 62.00 $ 67.99
Mobile and other connected devices 44.37 55.14
37.84 47.56 Total $ 48.19 $ 57.20 $ 41.66 $ 50.52
Total RPMs Computer $ 68.06 $ 69.31 $ 61.74 $ 68.63 Mobile and
other connected devices 48.27 59.11 42.77
52.13 Total $ 51.54 $ 60.75 $ 45.97 $ 54.65 Total
RPMs based on non-GAAP revenue Computer $ 68.06 $ 69.31 $ 61.36 $
68.63 Mobile and other connected devices 48.27 59.11
41.99 52.13 Total $ 51.54 $ 60.75 $ 45.26 $ 54.65
Pandora Media, Inc. LPM History
(unaudited) Three
months ended Twelve months ended December 31,
December 31, 2014 2015 2014 2015
Advertising LPMs Computer $ 20.69 $ 25.00 $ 20.76 $ 28.79
Mobile and other connected devices 20.37 24.06
20.23 25.68 Total $ 20.42 $ 24.21 $ 20.31 $ 26.13
Subscription LPMs Computer $ 32.96 $ 42.31 $ 33.37 $ 45.70 Mobile
and other connected devices 35.43 44.53 37.41
49.18 Total $ 34.86 $ 44.08 $ 36.41 $ 48.45 Total
LPMs Computer $ 22.78 $ 27.69 $ 23.02 $ 31.68 Mobile and other
connected devices 22.06 26.45 22.14
28.42 Total $ 22.18 $ 26.65 $ 22.28 $ 28.92 Total LPMs based
on non-GAAP cost of revenue - content acquisition costs Computer $
22.78 $ 27.69 $ 23.02 $ 25.92 Mobile and other connected devices
22.06 26.45 22.14 24.88 Total $ 22.18 $
26.65 $ 22.28 $ 25.04
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160211006432/en/
PandoraDominic Paschel, 510-842-6960Corporate Finance &
Investor Relationsinvestor@pandora.comWill Valentine,
510-842-6996Pandora Corporate Communicationspress@pandora.com
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