Pandora (P) Tops Q3 EPS by 5c, Revenues Beat

Pandora (NYSE: P) reported Q3 EPS of ($0.06), $0.05 better than the analyst estimate of ($0.11). Revenue for the quarter came in at $417.6 million versus the consensus estimate of $401.29 million.

• Q3 Revenue was $417.6 million, growing 16% year-over-year, excluding Australia and New Zealand & Ticketfly
• Q3 Subscription revenue was $125.8 million, growing 49% year-over-year
• Q3 Advertising revenue of $291.9 million, improved year-over-year growth
• Ad RPM hit an all-time high of $77.83, growing 11% year-over-year
• Added 784,000 subscribers, reaching approximately 6.8 million total subscribers
• Non-GAAP gross margins increased 500 basis points sequentially
• Partnership with SoundCloud will increase Pandora’s U.S. ad audience reach to over 100 million users
• Announced acquisition by SiriusXM, creating the world’s largest audio entertainment company

“I’m proud of the progress we’ve made over the past year to reinvigorate Pandora,” said Roger Lynch, CEO. “A year ago, we committed to drive listener engagement through product innovation, expand our content, and increase distribution partnerships. We also prioritized making our ad tech capabilities a strategic advantage. And we executed. We launched new products like Premium Access, delivering on-demand functionality and improved listener engagement in our ad-supported tier; forged partnerships with leading brands such as T-Mobile, AT&T, Comcast, and Snap; and solidified our global leadership in digital audio advertising with the acquisition of AdsWizz and the launch of our programmatic audio marketplace.”

Continued Lynch, “Looking ahead, I couldn’t be more excited about Pandora joining forces with SiriusXM. A combined Pandora-SiriusXM will create the world’s largest audio entertainment company, bringing Pandora additional resources to accelerate growth and building on SiriusXM’s leadership in the car, subscription expertise, and unique content.”

Added CFO Naveen Chopra, “Our Q3 financial results, which exceeded both revenue and adjusted EBITDA guidance, showed meaningful improvement. Revenue growth accelerated, thanks to better monetization and a fast-growing subscription business; gross margins are expanding as evidenced by a 500 basis point sequential improvement in Q3; and we’re operating more efficiently: we recorded a 300 basis point reduction in operating expenses (excluding marketing and subscription commissions) as a percentage of revenue. All of this puts us on track to significantly improve cash flow and adjusted EBITDA next year and beyond.”

For earnings history and earnings-related data on Pandora (P) click here.

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