Pandora Company Earnings Push Stock Toward All-Time High

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Pandora Media Inc. (NYSE: P) reported first-quarter 2014 results after markets closed today. For the quarter, the Internet radio company posted an adjusted diluted earnings per share (EPS) loss of $0.10 on revenues of $125.5 million. In the same period a year ago, the company reported an adjusted EPS loss of $0.09 on revenues of $80.8 million.First-quarter results also compare to the Thomson Reuters consensus estimate for an EPS loss of $0.10 on $123.83 million in revenues.

On a GAAP basis, the company reported a quarterly diluted EPS loss of $0.16. Adjusted earnings excluded $7.4 million in stock-based compensation expense.

For the second quarter, Pandora is guiding revenue non-GAAP revenue at $155 to $160 million and adjusted EPS in a range from a loss of $0.02 and a profit of $0.01. For the full 2014 fiscal year, Pandora expects revenues of $615 to $635 million and adjusted EPS in a range from a loss of $0.02 to a profit of $0.08.

The company’s CEO said:

Pandora continues to expand its mobile leadership. Mobile listening hours and mobile ad revenue reached record highs, with growth in mobile ad revenue exceeding growth in mobile listening hours.

Listener hours totaled 4.18 billion in the quarter up from 3.09 billion in the same period a year ago.

Sequentially, quarterly ad revenues fell, from $109 million in the fourth quarter to $105 million. Subscription revenue rose, from$16.1 million to $20.36 million sequentially as well. Listener hours were only up modestly quarter-over-quarter, from 4.05 billion in the fourth quarter to 4.18 billion.

When viewed sequentially, Pandora’s revenue per thousand hours has fallen from $31.25 to $30.74. Mobile revenue has, indeed, grown, but by less than $1 per thousand hours. Traditional computer revenue fell by nearly $5 per thousand hours.

Pandora managed to clear a pretty low bar. At the end of last quarter the company guided first quarter revenue and earnings well below the existing consensus estimate. Analysts lowered their estimates and, bingo, inline earnings and a beat on revenues. Pandora managed expectations very well going into the fourth quarter as well, and shares jumped more than 20%. Let’s see if it works again.

Shares are trading up more than 8% in the after-hours market at $18.56, which would set a new 52-week high. The current range is $7.08 to $17.65. The consensus target price for the shares was around $15.40 before today’s report. Since coming public nearly 2 years ago, Pandora’s all-time high share price is just over $20.

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