Internet music service
) posted earnings results after the closing bell on Thursday,
with mixed results overall. Earnings per share (before
non-recurring items) came in at $0.00, whereas analysts had
expected a 1-cent gain. Revenues, however, reached $182 million
in the October-ended Q3, above the expected $177 million.
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Because smallish companies like Pandora are still looking for big
growth, revenue numbers are a bit more important than earnings
per share at this stage. And Pandora has indeed demonstrated
strong growth with revenues up 50% year-over-year and mobile
advertising going up 58% compared to the October quarter a year
ago. These types of gaudy figures help explain Pandora shares
having gained 223% year-to-date.
That said, the company's Q3 performance was not as outstanding as
its Q2 was, when it posted revenues +58% and mobile revenues
+92%. In fact, total mobile revenues have actually come down a
bit sequentially, from $116 million last quarter to $105 million
this quarter. Yet because Pandora competes against actual radio
stations, another positive is its share of overall radio
listening in the U.S. is now up to 8.1%, an increase from 6.6% a
Can Pandora keep taking big hunks of market share for the
forseeable future? If so, will it be able to successfully
monetize its new and more regular users? In this way, Pandora
seems to share a similar balancing act as
) does, increasing the profits from its service without
decreasing the quality of the user's experience with too many
ads. Pandora has a subscription service, too (as does
])... but then again, regular radio does not.
Analysts have had a mixed impression regarding earnings
expectations for this quarter and next, as well as both fiscal
2014 and 2015. This has earned the company a Zacks Rank #3 (Hold)
and a longer-term Neutral stance. Guidance from the company for
its Q4 revenues is in line with consensus expectations.
Pandora stock was modestly up in day trading before the earnings
report, and it's basically given back those gains thus far in the
after-market. It must be tough to keep climbing when you're
already up 200+% on the year, especially when there's no
price-to-earnings multiple to calculate.