Pandora's stock is probably plunging as you read this; Wall Street is freaking out over disappointing earnings projections. But underneath all that noise is something interesting: for the quarter that just happened, Pandora actually made some money. In fact, Pandora just reported a solidly profitable fiscal quarter, thanks to strong increases across revenues, subscribers, active users and mobile usage.
During the three-month fiscal period ending Halloween, the publicly-traded Pandora posted revenues of roughly $120 million, a 60 percent gain over the same period last year. And, earnings gained 221 percent - ie, more than triple - to $2.1 million. Other areas were also booming: mobile revenue gained 112 percent to $73.9 million, total listener hours gained 67 percent to 3.56 billion, and active users gained 47 percent to 59.2 million.
(investor note: technically, this is Pandora's fiscal 2013)
It gets even better for Pandora execs. Because after one-time, non-recurring charges are removed from the picture, Pandora's profits are five times higher. Those costs, incidentally, were largely related to stock-based compensation of more than $7.1 million to top executives like cofounder Tim Westergren and CTO Tom Conrad, all of which ultimately cramped the profitability total.
All of which also seems to further erode the 'we're struggling' narrative being spun by these same guys. Because if Pandora can achieve profitability once, why can't it do it again, and again, and again? Especially given double-digit gains across revenues, listeners, and other critical metrics?
Indeed, this isn't the first profitable performance for Pandora, though Wall Street clearly thinks this is a dog. During the call, Pandora warned investors that the next quarterly report (for the three months ending in January) would feature pronounced losses, a prediction that sent shares plunging more than 20 percent in aftermarket trading. Part of the sag, according to Pandora CEO Joe Kennedy, would come from oncoming 'fiscal cliff' skittishness among advertisers.
Which raises a serious problem: advertising forms a disproportionate share of revenues, a situation Pandora claims is exacerbated by menacing royalties. "These rates are extraordinarily, unfairly high by any measure," Kennedy said. It's all alarmist and scary, except for the part that just happened. Because latest financial data suggests they can afford it.
Paul Tuesday, December 04, 2012
You missed the bigger story here. Pandora's stock dropped nearly 20% in after hours trading because they projected a huge loss for Q4 and even bigger losses for next year.
Now they are resorting to politics to salvage a clearly bad business model.
Joe Wednesday, December 05, 2012
I can see that you and a lot of other people are confused. You wrote that they are projecting "even bigger losses for next year." Fiscal 2013 (believe it or not) ends at the end of this current quarter for Pandora. They have not given guidance past January.
Charles Tuesday, December 04, 2012
That's what pandora wants you to think.
Look over there! We're bleeding we need help! Iceberg ahead!
[while collecting profits, cashing multi-million dollar checks]
John Welch Wednesday, December 05, 2012
Be great if someone at Digital Music News knew ANYTHING about business because this article is misinformed.
To examine the prospects of a business you don't look at a single quarter - duh. Depending on a when a lease payment is due or other larger payments there will often be small swings in quarterly numbers.
Note how the reporter at Digital Music News didn't actually provide a total for the YEAR? I guess it's too hard to add 4 numbers. Let me help. One quarter ago Pandora's results were -$5MM and the one before that was -$20MM. The econ flunking reporter is now claiming that because this quarter they were +2MM that suddenly Pandora's business is profitable. That's just retarded. The total for 2013 is -$23 MILLION and there's one quarter remaining in their fiscal year which they project will be a loss as well.
Looking forward Pandora's royalty rate will go UP 9% next year. And it will go up 9% for the each of the 2 years after that as well. Then their 50% discount from the FULL royalty rates expires and their rates will DOUBLE.
Digital music news should stick to reviewing albums or something which doesn't require any math.
Sorry, but... Wednesday, December 05, 2012
I'm not going to sit here and defend every Digital Music New article but he does have a point here. Investors don't like narrow profits only because they like big, wild profits (a small boat floats, a big yacht is why you invest)... but this proves this company can figure out how to keep the lights on and pay the bills to composers, songwriters, artists, labels, et al. So maybe you're asking law makers to then subsidize some investor desire for yachts essentially?
Hoboken Wednesday, December 05, 2012
The more this company claims poormouth poverty the greater the chances of getting a break from Washington. Let's stop painting such a dour "big Picture" and focus on the real story. The "big picture" is that everything is growing at meteoric rates:
2) listener hours
3) mobile hours
and let's not forget
4) exec compensation
Pandora has been profitable twice now.
Visitor Wednesday, December 05, 2012
This site would make Fox News proud.
Mr. Braithewaite Wednesday, December 05, 2012
Except FOX doesn't have Pandora trolls.
noxSOX Wednesday, December 05, 2012
Please fire Pandora's P.R. team already!
ogrover Thursday, December 06, 2012
Hmmm is right
Disillusioned Thursday, December 06, 2012
Honestly I'm starting to really look differently at Tim Westergren.
R.P. Thursday, December 06, 2012
Groupon posted profits once....
Don't believe the bullshit.
Noah Peterson Thursday, December 06, 2012
$7.1 million to Tim and his evil counterpart and they say they aren't profitable. Maybe if you didn't give out $7.1 million in you wouldn't be in the red. Makes you wonder what they're expense accounts are. I'm guessing private lear jets, prime penthouse suites in downtown S.F., generous pension contributions. What a bunch of thieveing tools. That $.001 they pay me sure goes a long way. Oh wait... it's too much, they can't afford that. This makes me think of the Rage Against the Machine song, how's it go? ...a bullet in your head...
joe livoti Friday, December 07, 2012
i guess what i've never gotten, is that why are royalty payouts tied to profitability?
if i start a business, do i pay a sliding scale for my inventory, depending on my profitability?
to me, it sounds like an internet version of "musicians needed for gig. no pay involved, but you get to promote your band, hand out business cards, and get exposure".
my best source of online revenue for my music has been itunes, followed by emusic. i can do without pandora.