RAIN Exclusive: Pandora AQH now over 1,000,000 according to Q3 financial report

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Issue Date: 
Nov 23 2011 - 11:30am

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Pandora's Q3 fiscals were released yesterdayDuring its most recent quarter, Pandora's listening hours increased 104% from last year as its revenues grew 99%, according to the company's newly-released report on its fiscal third quarter earnings. (RAIN's Kurt Hanson calculates that this growth has pushed Pandora's AQH above 1,000,000 -- find our analysis below).

The company's current monthly active user count, 40 million, is up over 11% from July -- when it had 36 million active users -- and up 65% from the same quarter last year. Moreover, Pandora says its quarterly total listener hours have increased 104% from last year to 2.1 billion hours.

Pandora says that its listening accounts for 66% of the top 20 webcasters participating in Triton Digital's Webcast Metrics (up from 53% last year). The company also says its share of the total U.S. radio listening is now 4.2% (up from 2.1%).

Additionally, CEO Joe Kennedy (he's the one in the black turtleneck and sportcoat in the photo; Pandora founder Tim Westergren is in the brown sportcoat) said Pandora has seen "no impact" on its listening as a result of competition from music services like Spotify. 

Pandora CEO Joe Kennedy (center) with founder Tim Westergren (left)Pandora's revenues during its fiscal third quarter reached $75 million -- up 99% from last year. That includes $66 million in ad revenue (up 102%) and $9 million in subscription revenue (up 80%). Kennedy stated that about half of the company's ad revenue came from mobile, "a 'triple-digit' increase from a year ago," writes Business Week. As far as local advertising goes, Kennedy told analysts, "the percent of sales force devoted to local is a 'single digit percent,'" but local sales are still in the "beginning stages," Billboard reports.

In terms of operational costs, Pandora in fact generated a profit of $638,000 this quarter. That's compared to a loss of $1.77 million last year. "Excluding some items, profit of 2 cents beat the average 1-cent loss projected by 13 analysts in a Bloomberg survey," writes Business Week. However, if dividends paid to investors during Q3 are factored in, Pandora was not profitable this quarter.

The company now projects full-year revenues will reach between $273 and $277 million.

You can find more coverage from Billboard here, Business Week here, Forbes here and Reuters here. You can also find RAIN's coverage of Pandora's Q2 report here.

RAIN AnalysisRAIN ANALYSIS: As pointed out by RAIN publisher Kurt Hanson at last September's RAIN Summit Chicago event (watch his keynote here), if Pandora's financial reports are accurate in terms of their number of listening hours per quarter, Pandora's audience is significantly understated in the Triton Digital's monthly Webcast Metrics reports.

According to Webcast Metrics, Pandora had an AQH of 750,000 listeners in September. However, as noted above, according to the financial report, Pandora had 2.1 billion hours of listening in its fiscal third quarter (Aug.-Oct. 2011).
 
Assuming that about 15% of those hours were in overnights, that works out to an actual Sept. 2011 AQH (Mon.-Sun. 6a-12m) of about 1,100,000. (Here's the math: 2.1 billion hours, divided by 3 months in the period, times .85 to subtract overnights, divided by 18 hours per day, and divided by 30 days in the month.)
 
Pandora's VP of Corporate Communications Deborah Roth tells RAIN that the reasons that Webcast Metrics may be understating the total size of Pandora's AQH audience is that (A) Webcast Metics does not measure the commercial-free "Pandora One" listening, and (B) listening on some consumer electronic devices is not currently measured by Webcast Metrics.

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That was one great success

That was one great success and achievement of Pandora. They have maintained their standing, to be on top of other competitors. - Marla Ahlgrimm

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