Image source: Pandora
Pandora Media released its first-quarter earnings on April 23, reporting increasing revenue helped by user engagement reaching an all-time high of 22.3 hours per active user per month. The company reported a 5.2% year-over-year jump in the number of active listeners (to 79.2 million) and roughly 11% jump in total listener hours (to 5.3 billion) in the quarter. .
Yet even with these positives, Pandora still posted a net loss, even more so than a year ago. Because of this growing revenue to income gap, Pandora investors doubtless have some questions. Here are five things Pandora management wants investors to know.
1. Pandora is making big upgradesThe biggest reason for the recent losses seems to be the investments the company was making in new technology and partnerships. In the earnings report transcript, CEO Brian McAndrews said Pandora has been investing in every part of the business "from the music we play, to the ad technology and music maker products we offer."
Much of that investment is in the actual listener experience on the service, as well as content with new artist programs, including artists directly messaging Pandora followers about new music, tours, etc. McAndrews said:
2. More employees It's not just an increase in tech and services that is eating away at the bottom line. Pandora has been growing its employee base aggressively, planning for more overall growth in the future.Mike Herring, Pandora CFO, said:
When will investors see the payoff of this employee investment? Management stressed that this is a long-term plan. Herring finished the above quote saying that "product and development is an investment to drive revenue 13 to 36 months out, and thus, we plan to increase our spending in this critical area."
3. Focus on growing engagement is paying offMcAndrews said user engagement is growing, reaching a record high of 5.3 billion listener hours total, or 22.3 hours per active user per month. McAndrews said:
He also said that Pandora's share of the radio listening market was 10% as of the end of March. So, the investment is paying off in terms of getting attention, but are those increases going to pay off at the bottom line soon?
4. 2015 looks positiveRegardless of big advances in revenue and overall engagement, Pandora still reported a net loss of $48.3 million in the quarter, more than the $29 million in net losses the company reported during the same quarter last year. But 2015 could look pretty good following recent investments. McAndrews said:
For the year, Pandora management expects $1.17 billion in revenue and increasing EBITDA. While the company will likely continue to spend heavily on more upgrades that affect how the bottom line looks, investors can expect growing revenue and customer engagement, meaning the chance for future earnings continues to look good.
The article 4 Things Pandora Management Wants You to Know originally appeared on Fool.com.
Bradley Seth McNew owns shares of Apple. The Motley Fool recommends Apple, Facebook, Google (A shares), Google (C shares), Pandora Media, and Twitter. The Motley Fool owns shares of Apple, Facebook, Google (A shares), Google (C shares), Pandora Media, and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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