Pandora Media Inc (P) Targets RPM Expansion

Pandora Media Inc (NYSE:P) management gave an update on the company’s progress at Canaccord Genuity’s growth conference this week. They say the radio streaming company is still evolving and that they are in the process of building up a solid team for the long term. In addition, they provided an update on international expansion and opportunities in the U.S. market.

Pandora Media prepares for expansion

In a report dated Aug. 13, 2014, Canaccord Genuity analysts Michael Graham, Maria Ripps and Austin Moldow said Pandora’s management team is still evolving “favorably.” They note that the company has recently added a number of roles, including a Revenue Operations head and Chief Strategy Officer. The analysts say the additions of these positions mean that company management is “building a team for the long term.”

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They see a big opportunity for Pandora Media in international expansion. Management said that they will have to sign direct deals with record labels in order to expand internationally. They believe that these deals could be more likely after 2015, as currently the company is in the CRB (copyright royalty board) rate-setting process.

Pandora updates business opportunities

Management also said that certain listeners in certain areas and demographics are generating significant opportunities. In peak geographies, they said some listeners are generating more than $100 in revenue per thousand listener hours. Their plan is now to spread this high monetization rate to the rest of the company’s listener base.

Pandora Media management also said that the company is nearing the point where its service “is no longer in a state of over-supply.” The Canaccord Genuity team said when advertiser demand, which is driven by growth in the company’s sales force, catches up with supply, which is driven by the numbers of listeners and hours, the monetization rate should grow.

Pandora Media gets comfy

Executives also said that they will probably advertise more to pull in even more listeners in the second half of this year. The analysts see this as a “positive sign that Pandora is feeling increasingly comfortable with its monetization abilities.”

Pandora management also said that it’s unlikely that upside or downside in revenue is going to be very dramatic in each quarter because about two-thirds of its quarterly ad revenue is booked at the beginning of the quarter.

The Canaccord Genuity team maintained their Buy rating and $43 per share price target on Pandora Media.