Pandora Says Things Are Awesome, and iTunes Radio Is No Big Deal. Wall Street Is Confused.
But that was a few minutes ago! Now the situation appears less dire, and shares are only down a few percentage points.
For what it’s worth: Pandora beat Wall Street’s earnings and revenue estimates, and provided revenue guidance that beat the consensus, as well. The main issue investors had with its numbers, presumably, was earnings guidance — the company said it would make between three cents and six cents a share next quarter, instead of the eight cents analysts had predicted.
Meanwhile, outgoing CEO Joe Kennedy had an upbeat story to tell about the company’s finances: “Everything’s going the way we want it to go,” he told me in an interview this afternoon.
Most important is that Pandora is now making some real money from mobile ads. That’s crucial, because that’s where all of Pandora’s growth is coming from, and turning that growth into dollars has been a big problem for most of the Web, and the streaming radio service in particular.
Pandora generated $116 million from mobile ads last quarter, up 92 percent from the previous year. Another way of looking at it: Every time Pandora served up 1,000 “listener hours” over phones and tablets last quarter, it made $33.90 from ads. A year ago, that that number was $22.17. But there’s still a big gap between desktop and mobile: For every 1,000 listener hours Pandora serves to PC listeners, it makes $59.31. (Update: An earlier version of this story misidentified Pandora’s ad metric as revenue per thousand impressions.)
Kennedy also dismissed concerns about Apple’s impending iTunes Radio launch, which will directly compete with his service. This one would be easier to take at face value if Pandora’s PR machinery wasn’t working so hard to downplay Apple’s entry.
But, for the record, Kennedy repeated the lines he has always used to describe competition in the past. “We’ve now been around for eight years. We’ve seen competitors large and small enter the market and, in some cases, exit the market,” he said. “I’ve never seen an analysis that identifies an effect from any competitor … we don’t see the picture changing.”
I can think of one real downside to Pandora’s upbeat report, though: It will make it harder for the company to generate sympathy in its ongoing campaign to lower its music-licensing rates.