Pandora lost $8.18 million, or five cents a share, due to higher costs for advertising, marketing and content acquisition. Fourth-quarter revenue rose to $81.3 million from $47.6 million, a 71% year-over-year increase. Advertising revenue was $72.1 million, up 74% from the year before, and subscription and other revenue was up 51% to $9.2 million.
Analysts polled by Thomson Reuters expected a quarterly loss of two cents a share on revenue of $83 million. Pandora for the past two quarters has beat market expectations, until this earnings report.
Pandora's share price has surged 42% this year, but is still below the $16 IPO price.
Investors are cautious of Pandora's user growth, afraid it'll slow and halt the soaring stock. But active users last quarter reached a record 47 million, growing 62% year-over-year, and total listener hours increased 99%.
JPMorgan analyst Doug Anmuth, who has a $22 price target on Pandora, told The Street any user growth constraints will be short-term.
"We recognize that very strong growth in usage hours driven by mobile will continue to weigh on profitability in the near term, but in the meantime, we believe that Pandora will build significant market share and that the ability to monetize mobile hours will improve over the next few years and drop down to the bottom line," Anmuth wrote in a research note earlier this month.
Pandora got a 5.5% boost Monday after Stifel Nicolaus analyst Jordan Rohan raised his rating to "Buy" from "Hold" and gave the stock an $18 price target. Rohan said Pandora has become a "must have" application for mobile devices and is gearing up to make more money from mobile advertising.
Pandora has invested more in its ad sales force. It reported it has 5.5% of U.S. radio listener hours - up from 2.71% at the end of the previous year - which Rohan said will eventually fuel earnings growth with mobile advertising.
"While monetization lags audience in media, we believe Pandora will show vastly improved monetization this year," said Rohan.
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