Pandora Revenue Disappoints

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Whatever the reason or reasons, Pandora’s revenue did not meet expectations and the stock price was reflecting that late Tuesday. Revenue was approximately $352 million, $8 million below the low end of Pandora’s own guidance range. CFO Mike Herring blamed the miss on a soft advertising market, especially in national business, and overall softness in digital advertising.

Subscription revenue was $56.1 million, a 1% decrease form the same quarter a year ago. Active listeners were also down, 77.9 million at the end of the third quarter of 2016, compared to 78.1 million for the same quarter in 2015. Listening hours dropped from 5.66 billion in Q2 to 5.4 billion in Q3 but were slightly up from 5.14 billion a year ago.

Herring also placed part of the blame for the quarterly miss on the shift in the Pandora business model, launching its new subscription services, which really started in the month of September. Part of that shift included about $120 million paid in advance to the record labels for the new deal the company worked out for those subscription services. Pandora  also cut its full-year revenue forecast range to $1.35 billion to $1.37 billion, from $1.39 billion to $1.41 billion.

The company also announced it now has 2,421 employees, up from 1,879 a year ago. Five hundred of those employees are salespeople, including 154 local sellers.

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