Pandora's (P) mobile ad sales may be growing quickly, but they come with some tradeoffs. The Internet radio leader disclosed in its 10-Q today that its average price/ad fell 27% Y/Y in FQ4 due to a mix shift towards mobile ads. At the same time, Pandora's sales force grew by 80%, as the company both ramps its mobile business and increasingly targets local advertisers.
Pandora (P +18.8%) is breaking out of that trading range it has been stuck in, as shorts cover following a solid earnings report fueled by soaring mobile ad sales. SunTrust and Canaccord are upgrading Pandora to Buy - the latter cites improving visibility, moderating content costs, and stronger mobile monetization. Canaccord now sees Pandora generating $40 in 2015 revenue per thousand mobile ads, up from a prior $25. Mobile display ad firm Millennial Media (MM +3.1%) is also higher. (transcript)
Pandora (P) CFO Steve Cakebread announces during his company's FQ2 call that he'll be leaving at the end of the year to "consider other industry-changing opportunities." Pandora remains up 8.6% AH, as investors give a thumbs-up to its EPS beat, strong guidance, and growing mobile ad sales.
More on Pandora's FQ2: FQ3 guidance is for revenue of $115M-$118M and EPS of $0.00-$0.01, largely above a consensus of $114.4M and $0.00. FY13 guidance is for revenue of $425M-$432M and EPS of -$0.04 to -$0.08, above a consensus of $424.2M and -$0.12. Mobile revenue was $59.2M, +86% Y/Y and now 58% of total, evidence monetization is improving. Royalty costs +80% Y/Y, above revenue growth and 60% of sales. P +10.9% AH. 48.9% of the float was shorted on Aug. 15, expect some covering. (PR) (July listener data)
Pandora (P +2.2%) trades higher ahead of this afternoon's FQ2 report. Shares have been range-bound this summer after soaring due to to the guidance accompany Pandora's FQ1 report. The monetization of Pandora's mobile radio listening will be in focus today. The company received semi-favorable news yesterday when growing rival Spotify reported an FY12 loss of $56.9M to go with revenue of $235.5M. Soaring content costs, something Pandora is no stranger to, played a big role.
A bill floating around Congress could raise the music royalties that terrestrial radio stations pay and level the playing field with cable, satellite and Internet radio. Wanting the bill to pass: P, SIRI. In line for higher fees: CBS, Clear Channel, EMMMS, CMLS.
The reign of CDs in the U.S. is set to end this year: revenue from digital music will increase to $3.4B and top the $3.38B generated by CDs and vinyl, research firm Strategy Analytics forecasts. It will take until 2015 for the trend to occur worldwide. U.S. streaming revenues are expected to grow 28% in 2012 and downloads 6.7%, which should benefit the likes of Spotify and Pandora (P).
The most popular way for 13-17 year-olds to listen to music is via YouTube (GOOG), a Nielson survey shows, with 64% of respondents doing so. Next comes radio, iTunes (AAPL), CDs and Pandora (P). Among adults, radio wins out with 67%, followed by CDs, YouTube, Pandora and iTunes. The survey highlights the major problems music labels continue to face.
Pandora (P) exec John Trimble says his company is thinking of creating an ad exchange platform that would serve third-party content providers, particularly in the mobile realm (an area where Pandora has had monetization issues). He also claims Pandora is aggressively ramping its local ad sales efforts, with the goal of taking ad dollars from traditional radio. Facebook has ad exchange ambitions as well.
Pandora (P +2.5%) closed higher after posting its July audience metrics. Listener hours +4% M/M and +76% Y/Y to 1.12B. Active listeners +1% M/M (seasonality, or slowing growth?) and +48% Y/Y to 54.9M. U.S. radio listening share came in at 6.13%. up from 5.98% in June and 3.51% in the year-ago period. The data was published as startup TuneIn announced its now has 40M active users for its Internet radio apps. (June metrics)