Pandora's Q1 2013 results: Ad revenue up 62% year-over-year, listener hours up 92%, royalty costs up 91%

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Issue Date: 
May 24 2012 - 11:10am

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Pandora revenuesPandora yesterday released its fiscal results for the first quarter of fiscal year 2013 (ending April 30, 2012), which show that overall revenue reached $80.8 million -- up 58% year-over-year. Of that, 87.4% (or $70.6 million) came from advertising, up 62% year-over-year. Another $10.2 million came from subscriptions (up 38% year-over-year).

But costs grew as well, nearly 80% year-over-year, in fact. Content acquisition costs, which include royalty payments, grew 91% to $55.8 million -- nearly 70% of total revenue. Marketing costs also grew 81% to reach $23.5 million. All told, Pandora reported a loss of $20.2 million for the quarter, up from a loss of $6.8 million last year.

However, the company improved its guidance for the year from an adjusted loss of 11-16 cents on revenue of $410-420 million to a loss of 7-11 cents on revenue of $420-427 million. Additionally, as of publication Pandora's stock is up $1.77 for the day ($12.10 per share).

As for audience growth, Pandora says it now has 51.9 million active users (up 53% over last year) and 150 million total registered users. Total listener hours during the quarter reached 3.09 billion, up 92% year-over-year.

Pandora says it now has a 71.7% share of the top 20 web radio services' listening during Q1 2013 and 5.95% of total U.S. radio listening (up from 3.11% last year).

Joe Kennedy, Pandora CEOPandora CEO Joe Kennedy (pictured left) says the company "has the audience to massively disrupt" the radio market. It's "already larger than the largest AM or FM station" in many markets, he said (RAIN coverage on Pandora's latest local ratings via Triton Digital here).

Additionally, "[advertisers] are moving quickly to speak with their target customers across the Pandora platform, with the majority of the top 50 digital advertisers in the U.S. already having bought multiplatform advertising on Pandora. Pandora is the future of radio," he said.

Kennedy also spoke about how Pandora is seeking "integration into the systems radio buyers use every day," and increased hiring of local sellers. More on Pandora's local sales effort in the next story (here).

Radio Ink editor-in-chief Ed Ryan comments (here), "While some may dispute whether Pandora's 6% share of total audio listening is real or relevant, and whether a few hundred million dollars makes much of a difference to a multi-billion industry, the fact is Pandora is growing and radio is not."

To read more about Pandora's fiscal Q1 2013 results, find the company's press release here and coverage in the Wall Street Journal here.

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The future of radio

"Long live radio." A verbatim comment from a participant in a soon-to-be-released study by USC Annenberg's School of Communicatiions and Journalism regarding the relationship between radio personalities and their listeners.
If Pandora is the future of radio, then all the survey participants and the people from Jacobs' Tech 8 survey who lauded the emotional connections to radio are in for a dismal future. There are reasons that 2/3 or 100 million of the people who are registered on Pandora don't use it even once in the course of a month. All those are the very reasons that 241 million people use radio every week.
The listeners will determine the future of radio. The 95% of all the people who listen to radio that keep showing up every week.

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