Pandora Media Inc Earnings Preview

Pandora Media, Inc. (P) Information Technology – Internet, Software & Services | Reports April 28, After Market Closes

Pandora Media Inc (P) Q1 Earnings – Key Takeaway

The Estimize consensus is calling for a 29 cent loss, down 68% in the past 3 months, on $285.57 million in revenue, right in line with Wall Street on both the top and bottom
Pandora is attempting to launch and on demand service which would require them to sign direct deals with labels
Stiff competition has taken it’s toll as Pandora continues to lose market share to Spotify and Apple Music
What are you expecting for P? Get your estimate in here!

Pandora is scheduled to report first quarter earnings tomorrow, after the market closes. Pandora has fallen by the wayside as Spotify and Apple Music take the streaming industry by storm. This year has been highlighted by weak fourth quarter earnings and a change at the helm. So far the new CEO has tied himself to the same strategy that has failed Pandora the last several quarters. The stock is down nearly 50% from a year earlier and almost 30% since the start of the year.

Given Pandora’s track record, expectations this quarter are understandably low. The Estimize consensus is calling for a 29 cent loss on EPS, down 68% in the past 3 months, on $285.57 million in revenue, right in line with Wall Street on both the top and bottom line. This reflects a 139% decline in earnings compared to a year earlier, with revenue expected to increase as much as 23%. The modest gains the stock has historically made ahead of earnings typically offsets the losses in the days following earnings.

Despite its waning presence in the music streaming space, Pandora’s fourth quarter featured a number of improvements in key metrics. Total revenue, revenue per minute, and advertising revenue all made double digit gains from a year earlier. Total listen hours also grew 3% to 5.37 billion hours. That said, full year guidance came in low with Pandora expecting to lose between $60 and $80 million on the year. Much of the loss comes from the company’s heavy investments into marketing, product development and launching new services.

Currently, Pandora has around 80 million active users just behind Spotify who just this year surpassed the 100 million user mark. This position has slowly eroding at the hands of the rapidly growing Spotify, Apple Music and even Jay-Z’s Tidal. Pandora’s plans to regain its industry lead with the launch of its own on demand service. This requires Pandora to sign direct deals with labels which will not only be difficult but extremely expensive.