Pandora Media Inc (P) Q1 Earnings Preview

Pandora Media Inc (P) Q1 Earnings Preview
By w:Pandora [Public domain], via Wikimedia Commons

Pandora Media Inc (NYSE:P) will post first quarter earnings on April 24th, and is expected to post a loss of 14 cents a share, excluding one-time items. Considering the recently revealed operating metrics, the company is expected to witness strong revenue growth and improved margins. Ad monetization is also expected to improve owing to the popularity of its mobile ad business.

Impressive return for shareholders

The internet radio leader gave a guidance of a loss of between 14 cents and 16 cents per share for the quarter ended in March. Analysts expect that the company would record sales of $178.2 million, whereas Pandora Media Inc (NYSE:P) guided revenue in the range of $170 million to $176 million. Previous quarter earnings cannot be used to compare as Pandora has recently shifted its earnings reports to match with the calendar.

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Shareholder’s returns were impressive over the last year as the share price doubled to $28.41 compared to previous year’s stock price. However, Pandora Media Inc (NYSE:P) was a part of tech stock sell-off during March, when shares dropped 30% after hitting a 52 week high of $40.44 on March 5th.

During the earnings call, Pandora Media Inc (NYSE:P) will also update its quarterly listener metrics, but it was already mentioned in its monthly reports that total listener hours came in at 4.8 billion during the quarter.

Brighter outlook for Pandora

Analysts would be interested in knowing Pandora Media Inc (NYSE:P)’s earnings and revenue outlooks with the company penetrating deeper in the local advertising market. Michael Pachter, an analyst with Wedbush Equity Research mentioned “Our bias is that the company will grow revenues at a faster rate than guidance implies, as we expect the mix of local ads to accelerate in 2014.” Pachter said that the company is positioned to gain more on revenue in 2015.

Pandora Media Inc (NYSE:P) has increased the monthly fee of its Pandora One service by $1 to $4.99, the first price rise since its launch in 2009. Though first quarter 2014 earnings will not bear the impact of this price revision, full year performance will surely do. Average revenue per user would rise next year as most subscribers will adopt the new pricing structure. The effect of the price rise will trickle down to Pandora’s bottom line. At present, Pandora Media Inc (NYSE:P) has a paid subscriber base of 3.3 million, which is a small part of its overall user base.

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