Pandora Expects to Exceed Q4 2016 Guidance, Citing Subscription Momentum and RPM Growth
January 12 2017 - 5:05PM
Business Wire
Undertakes operational efficiency measures to
reinforce commitment to focused execution and cost discipline
Pandora (NYSE: P) announced today it expects to exceed
previously announced Q4 2016 revenue and adjusted EBITDA guidance
ranges1 given strong advertising performance and has surpassed 4.3
million in paid subscription customers.
“During the fourth quarter, we accelerated our core advertising
business, increased advertising RPM and saw strong improvements in
adjusted EBITDA,” said Tim Westergren, CEO of Pandora. “Now, with
all of the elements of our strategy in place, we are in the best
position possible to expand our listener base, drive engagement and
deliver significant value to all of our stakeholders.”
As a result of its direct deals with music labels and
publishers, Pandora introduced Pandora Plus along with new features
and functionality on its ad-supported tier to listeners at the end
of the third quarter. By the end of December 2016, the product
generated more than 375,000 net new subscribers.
“The initial response from both new and existing listeners to
the enhancements on the service is extremely encouraging,”
Westergren continues. “This excitement and engagement bodes well
for the introduction of Pandora Premium later this quarter.”
Pandora is also undertaking operational efficiency measures to
reduce overall operating costs in 2017. It plans to reduce its U.S.
employee base (excluding Ticketfly) by approximately 7 percent by
the end of Q1 2017. Additionally, the company is leveraging its
analytics platform and ad insertion logic to drive additional
revenue and realize leverage in content costs. Taken together,
these measures are designed to ensure the company can execute on
its core strategic initiatives without additional capital and
enable further investments in product innovation to drive
advertising revenue and subscription growth.
“2016 was a year of significant investment for Pandora. In 2017,
we will manage the business toward full year adjusted EBITDA
profitability,” said Westergren. “While making workforce reductions
is always a difficult decision, the commitment to cost discipline
will allow us to invest more heavily in product development and
monetization and build on the foundations of our strategic
investments.”
Fourth quarter and full year 2016 financial results will be
shared and discussed on Thursday, February 9, 2017 via a conference
call at 2:00 PM (PT) / 5:00 PM (ET). A live audio webcast will be
available at http://investor.pandora.com. A live domestic dial‐in
will be available at (877) 355-0067 or internationally at (614)
999‐7532. A domestic replay will be available at (855) 859-2056 or
internationally at (614) 999‐7532, using passcode 51921242, and
available via webcast replay until March 2, 2017.
ABOUT PANDORA
Pandora 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.
"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 and maintain commercially viable direct licenses with
record labels for the right to reproduce and publicly perform sound
recordings on our service; 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 Quarterly Report
on Form 10-Q for the quarter ended September 30, 2016.
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 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 gross profit, non-GAAP net income (loss), non-GAAP
basic EPS and non-GAAP diluted EPS differ from GAAP in that they
exclude 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. The income tax effects of non-GAAP net income (loss)
before provision for income taxes and the related non-GAAP
adjustments have been reflected in non-GAAP net income (loss),
non-GAAP basic EPS and non-GAAP diluted EPS.
1. Pandora’s previously communicated Q4 guidance indicated it
expects revenue in the range of $362 million to $374 million and an
adjusted EBITDA loss in the range of $51 million to $39 million.
Adjusted EBITDA differs from GAAP net loss in that it excludes
forecasted stock-based compensation expense of approximately $35
million, depreciation and amortization expense of approximately $18
million, a provision for income taxes of approximately $0.4 million
and other expense, net, of $6 million and assumes minimal cash
taxes given Pandora’s net loss position.
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version on businesswire.com: http://www.businesswire.com/news/home/20170112006065/en/
For PandoraDominic Paschel, 510-842-6960Corporate Finance
& Investor Relationsinvestor@pandora.comorStephanie Barnes,
415-722-0883Corporate Communicationssbarnes@pandora.com
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