CEO Brian McAndrews says Pandora will achieve that goal within five years. In 2015, Pandora took in $1.164 billion in revenue. Here’s the plan McAndrews laid out which gives him the confidence his company can hit that $4 billion number by 2021.
First, McAndrews says Pandora will continue to grow its core Internet radio business. “We see that business expanding to over $2.4 billion in revenues in the next five years. Our cost structure today for this business is fixed and known, and thus we will operate at greater than 40% gross margin in 2016. Improvements in monetization will largely accrue to gross profit, and non-GAAP gross margins on the core business will approach 60% within five years.”
Second, McAndrews says Pandora will continue to optimize data to accelerate ticketing growth. “Combining that with our opportunity in live events sponsorship and our powerful existing sales resources, we see a $300 million-plus revenue opportunity in the next five years.”
And lastly, in 2016, Pandora will integrate Rdio in preparation to launch an expanded listening experience. “As we roll out new services, we expect subscription-based revenue growth to accelerate as our new product tiers are launched and adopted. We believe we can build a $1.3 billion subscription business over five years, conservatively based on 10% conversion of our current U.S. audience.”
