Pandora Media Inc (NYSE:P), the leading Internet radio service, today announced financial results for the second quarter ended June 30, 2015.
“Our advertising investments, particularly in local, are paying off. This quarter, local ad revenue reached an all-time high, driving record RPMs,” stated Brian McAndrews Chairman and CEO of Pandora. “Our monetization success allows us to be an even more effective platform for helping artists grow their careers. In addition to our ability to provide insights to the entire music industry, we fuel promotion that is extremely valuable to music makers.”
Second Quarter 2015 Financial Results
Revenue: For the second quarter of 2015, total revenue was $285.6 million, a 30% year-over-year increase. Advertising revenue was $230.9 million, a 30% year-over-year increase. Subscription and other revenue was $54.6 million, a 31% year-over-year increase.
Adjusted EBITDA: For the second quarter of 2015, adjusted EBITDA was $16.3 million, a 29% year-over-year improvement. Adjusted EBITDA excludes $27.5 million in expense from stock-based compensation, $5.0 million of depreciation and amortization expense,$0.3 million of other income and $0.1 million of provision for income taxes.
Cash and Investments: For the second quarter of 2015, the Company ended with $461.5 million in cash and investments, compared to $481.3 million at the end of the prior quarter. Cash used by operating activities was $9.9 million for the second quarter of 2015, compared to $7.1 million used in operating activities in the same period of the prior year.
Other Business Metrics
Listener Hours: Total listener hours grew 5% to 5.30 billion for the second quarter of 2015, compared to 5.04 billion for the same period last year.
Active Listeners: Active listeners were 79.4 million at the end of the second quarter of 2015, compared to 76.4 million from the same period last year.
Based on information available as of July 23, 2015, the Company is providing the following financial guidance:
Third Quarter 2015 Guidance: Revenue is expected to be in the range of $310 million to $315 million. Adjusted EBITDA is expected to be in the range of $25 million to $30 million. Adjusted EBITDA excludes forecasted stock-based compensation expense of approximately $30 million and forecasted depreciation and amortization expense of approximately $6 million and assumes minimal provision for income taxes given our net loss position. Diluted shares outstanding for the third quarter 2015 are expected to be approximately 222 million.
Full Year 2015 Guidance: Revenue is expected to be in the range of $1.175 billion to $1.185 billion. Adjusted EBITDA is expected to be in the range of $75 million to $85 million. Adjusted EBITDA excludes forecasted stock-based compensation expense of approximately $112 million and forecasted depreciation and amortization expense of approximately $22 million and assumes minimal provision for income taxes given our net loss position. Diluted shares outstanding for the full year 2015 are expected to be approximately 221 million.
Starting in 2015, the Company is adjusting non-GAAP net income by considering the income tax effects of its non-GAAP adjustments. Prior to 2015, the Company’s non-GAAP effective tax rate was minimal. The Company expects that its non-GAAP effective tax rate will be minimal in periods that result in a non-GAAP net loss. The Company is currently forecasting a non-GAAP effective tax rate of approximately 1% to 7% for the third quarter 2015 and approximately 30% to 35% for the full year 2015. The Company does not expect to pay significant cash income taxes for the foreseeable future due to its net operating loss position. (Original Source)
Shares of Pandora Media are up 7.57% to 14.92 following the earnings announcement. P has a 1-year high of $28.96 and a 1-year low of $13.30. The stock’s 50-day moving average is $15.95 and its 200-day moving average is $16.55.
On the ratings front, Pandora Media has been the subject of a number of recent research reports. In a report released today, Suntrust Robinson Humphrey analyst Robert Peck maintained a Buy rating on P, with a price target of $25, which implies an upside of 79.9% from current levels. Separately, yesterday, Oppenheimer’s Jason Helfstein maintained a Buy rating on the stock and has a price target of $25.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Robert Peck and Jason Helfstein have a total average return of 13.5% and 11.3% respectively. Peck has a success rate of 62.8% and is ranked #253 out of 3713 analysts, while Helfstein has a success rate of 52.3% and is ranked #299.
The street is mostly Bullish on P stock. Out of 16 analysts who cover the stock, 11 suggest a Buy rating , 4 suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $20.44, which represents a potential upside of 47.1% from where the stock is currently trading.
Pandora Media Inc provides internet radio services on smartphones, tablets, traditional computers and car audio systems, as well as other internet-connected devices.