Friday, March 08, 2013

Pandora: all that's left is hope, but a lot of it

Pandora have just released their financial perfomance figures for 2013. Here's what they choose as the headlines:

- Fiscal 2013 revenue of $427.1 million grew 56% year-over-year; 4Q13 total revenue of $125.1 million grew 54% year-over-year
- 4Q13 total mobile revenue of $80.3 million grew 111% year-over-year, outpacing mobile listener hour growth, which grew 70% year-over year
- Fiscal 2013 total mobile revenue of $255.9 million more than doubled and grew 105%, outpacing mobile listener hour growth, which grew 89% year-over year
All that shouting about revenue can only mean one thing: they're not making profits.

Indeed, the losses are so grim, Pandora can only bring themselves to express them as losses-per-share:
For the fiscal year 2013, GAAP basic and diluted net loss per share were ($0.23). Non-GAAP basic and diluted net loss per share were ($0.08), excluding approximately $25.5 million in stock-based compensation. Basic and diluted earnings per share were based on 168.3 million weighted average shares outstanding.
You have to spend a couple of minutes carrying figures before you realise they're talking a great big hole. Even if you do exclude "stock based compensation".

For the next year, though, they're predicting a profit per share of something between 5cents and minus five cents, which is either going to be good news or terribly miserable.

The company is upbeat about things, though, pointing to buoyant listener hours and rising advertising take:
"For the past two quarters, growth in mobile advertising revenue exceeded growth in mobile listening hours,” as CFO Michael Herring put it.
That's one of those impressive sounding claims that suddenly falls apart when you think about it - there's no promise that the advertising revenue is growing at a rate large enough to cover the costs of delivering the growth in mobile listening hours; just that one percentage number is bigger than the other.

At the same time, Pandora's CEO Joeseph Kennedy is getting the hell out of Dodge.

The end result of all this was the share price of Pandora rose. How much that is down the general giddiness of the markets off the back of a Dow Jones record this week isn't clear.


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