Pandora profit forecast largely below Street, shares fall

Reuters News
Posted: Jul 24, 2014 4:49 PM

(Reuters) - Pandora Media Inc <P.N> forecast current quarter adjusted profit largely below analysts' estimates, hurt by slowing subscription revenue growth.

The company's shares fell 12 percent in extended trading.

Pandora forecast adjusted profit of 5-8 cents per share on revenue of $235-$240 million for the third quarter ending September. [ID:nBw7FJpLJa]

Analysts on average were expecting an 8 cents per share in profit on revenue of $234.6 million, according to Thomson Reuters I/B/E/S.

Pandora faces stiff competition from Spotify, Apple Inc's <AAPL.O> Beats online streaming service, Google Inc <GOOG.O> and Inc <AMZN.O> in the fast-growing music streaming business as downloads decline.

The company said it expects adjusted profit of 16-19 cents per share on revenue $895-$915 million for the full year. Analysts were expecting profit of 17 cents per share on revenue of $901.2 million.

Pandora spent 40 percent more to acquire content in the second quarter ended June 30. The company is investing more to buy music licensing rights.

Growth in subscription revenue slowed down to 35 percent from 94 percent in the first quarter.

Net loss widened to $11.7 million, or 6 cents per share, in the quarter ended June 30 from $6.9 million, or 4 cents per share, a year earlier.

Excluding items, the company earned 4 cents per share.

Revenue increased to $218.9 million from $153.1 million.

Pandora had hiked subscription fees by $1 to $4.99 per month in March as royalty rates go up.

Advertising revenue, where Pandora makes the bulk of its money, jumped 39 percent to $177.3 million in the second quarter helped by strong mobile advertising revenue growth.

Analysts expected an adjusted profit of 3 cents per share on revenue of $218.8 million.

Pandora shares closed up 4 percent at $28.72 on the New York Stock Exchange.

(Reporting by Soham Chatterjee in Bangalore; Editing by Joyjeet Das)