Pandora Media, Inc. Sings After a Great Quarter

By Steve SymingtonFool.com

Pandora Media just reported another better-than-expected quarter. And with shares down more than 20% so far this year headed into today's close, the stock's subsequent 11% pop in after-hours trading is music to investors' ears.

Revenue in Pandora's second quarter increased 30% year over year, to $285.6 million, including 37% growth in mobile revenue, to $229.7 million. For reference, that's just above the high-end of Pandora's guidance for total revenue in the range of $280 million to $285 million.

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Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization rose 29%, to $16.3 million, again significantly above Pandora's guidance for $8 million to $13 million. On the bottom line, adjusted net income came in at $11.6 million, or $0.05 per diluted share.

Analysts, on average, were anticipating adjusted earnings of just $0.02 per share, and lower revenue of $283.1 million.

On active listeners, loyaltyPandora also ended the quarter with 79.4 million active listeners, up slightly from 79.2 million last quarter, and a 3.9% increase from 76.4 million in the same year-ago period. During the subsequent conference call, management once again reiterated its long-term goal of reaching at least 100 million listeners.

But more importantly, those listeners are increasingly loyal to Pandora, as total listener hours rose an even faster 5% year over year, to 5.30 billion. What's more, this growth in active listeners and their respective loyalty was achieved despite the fact thatApplenotably offered consumers a three-month trial of Apple Music during the quarter. Some industry watchers had expressed concerns that Apple's widely publicized promotion could crimp Pandora's efforts to attract and retain listeners.

On investments in local advertisingNext, in my earnings preview, I also wondered whether Pandora's efforts to invest in local advertising -- specifically through its new programmatic buying solution and expanded sales force -- were bearing fruit.

As it turns out, Pandora CEO Brian McAndrews directly addressed that topic in today's press release, stating,

Advertising revenue still represents the bulk of Pandora's total, rising 30% year over year, to $230.9 million during the quarter. Within that, local advertising revenue led the way, growing 67% year over year, to $58.9 million, and increasing its share of overall ad revenue to 25.5%.

On guidancePandora also offered revised guidance for both the third quarter and full year. For the third quarter, Pandora expects revenue of $310 million to $315 million, and adjusted EBITDA of $25 million to $30 million. Both ranges compare well to consensus estimates, which called for lower revenue of $309.2 million, and earnings of $0.10 per share.

Finally for the full year 2015, Pandora raised its revenue guidance to a range of $1.175 billion to $1.185 billion compared to its previous range of $1.16 billion to $1.18 billion. In addition, Pandora reiterated its previous expected range for adjusted EBITDA of $75 million to $85 million.

In the end, you'll be hard pressed to find an investor who doesn't like the sound of Pandora's latest quarter. From its growing listener base, improving monetization, and technology trends favoring its ad-supported, streaming music model, Pandora is wonderfully positioned to continue creating value for shareholders going forward.

The article Pandora Media, Inc. Sings After a Great Quarter originally appeared on Fool.com.

Steve Symington owns shares of Apple. The Motley Fool recommends Apple and Pandora Media. The Motley Fool owns shares of Apple and Pandora Media. 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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