Pandora’s Q4 earnings a mixed bag, company quashes acquisition rumours

Pandora’s Q4 earnings a mixed bag, company quashes acquisition rumours

The start of 2015 has been tough for Pandora, as the company’s stock has been sinking not far from 2012’s all-time lows, and down 60% since October 2015. 

Just before the company unveiled its Q4 earnings, a New York Times report that Morgan Stanley was shopping the company to potential buyers sent the shares spiking, but Pandora quashed those rumours during the earnings call stating there is a 5-year plan in place for its future. CEO Brian McAndrews said: “We are focused on working as an independent company.” 

The Q4 earnings that were just released are a mixed bag: the company beat revenue expectations by £2 million, bringing home $336m in revenue, however, the company continues to lose money - $19 million in Q4 alone.

The 25% increase in revenues year-over-year was taken well by the market, as the stock - in free-fall in after-hour trading after the company denied the buyout rumours - recovered and is currently losing just 5%. 

The company aims to quadruple its revenues by 2020. This is a bold claim, considering that in spite of the fact that the company is getting better at monetizing its existing user base, that base is barely growing at all: 81.1 million listeners tuned in Q4, which represented an improvement over Q3 but a slight decline in the base recorded in Q4 2014. 

Pandora is creating a number of interesting synergies, acquiring the music streaming service Rdio post-bankruptcy and also the ticketing company Ticketfly. Reaching licensing deals with labels that could enable the company to launch an on-demand service and/or expand its offering internationally and figuring out a way to sell tickets directly to fans could play a big part in reaching its revenue growth targets. 


(Andrea Leonelli)