UPDATED: Pandora reported a 12% year over year revenue increase in Q2 2018, after the markets closed on Tuesday. But both monthly listener hours and active users continued a slow but significant downward spiral. Details & Analysis:
“We made continued progress against our strategy with total revenue growing 12%, subscription revenue up 67% and ad hour trends improving for the third straight quarter,” said Pandora CEO Roger Lynch. “New partnerships with top brands like Snap and AT&T, as well as enhancements to our ad tech and programmatic offerings, position us to further accelerate growth and ownership of the expanding digital audio marketplace.”
- Total Q2 Revenue was $384.8 million, growing 12% year-over-year excluding Australia, New Zealand & Ticketfly, exceeding top-end of guidance
- Q2 Subscription revenue was $113.7 million, growing 67% year-over-year excluding Australia, New Zealand & Ticketfly
- Ad hour trends improved for the third straight quarter
- Ad RPM hit an all-time Q2 high of $68.75, growing 4% year-over-year
- Added 351 thousand to approximately 6 million subscribers; which grew 23% year-over-year
- Announced partnerships with AT&T, Snap and Cheddar
- Completed the acquisition of AdsWizz and launched Audio Programmatic
Non-GAAP net loss was $38.9 million, or $0.15 per share. This compared to $50.1 million net loss or $0.21 in the year ago quarter. Adjusted EBITDA was a loss of $34.6 million, compared to a loss of $54.3 million in the same quarter last year.
Increased revenue from both advertising and subscriptions is always good news. But in an industry where 50% -70% of costs come from content licensing, if that growth is driven by increased use, more revenue does not equal profits. Spotify is living proof of the more users = bigger losses phenomenon.
But in recent quarters, Pandora has increased revenue while both listener hours and active users have slowly fallen. If both those trends continue, Pandora could eventually end up with a loyal core user base that's actually profitable.
It's a contrarian path to profitability that has kept Napster and other smaller streamers that don't offer a free tier afloat. Plus Pandora's free users cost the company a lower digital radio/ SoundExchange rate compared to the negotiated interactive rates that Spotify pays for its free users.