For Pandora (P), turning around the company is a marathon — not a sprint.
The Oakland, California-based streaming music business on Tuesday afternoon reported second-quarter earnings with an adjusted loss of $.15 per share on revenues of $384.8 million, driven by better-than-expected advertising and subscriber revenues. Analysts were generally expecting an adjusted loss of $.16 per-share on revenues of $372.78 million, compared with a $.24 loss per-share on revenues of $368.1 million the same period a year ago.
Although the number of the paid subscribers climbed 23% year-over-year to 6 million, the number of total active Pandora listeners dipped slightly 71.4 million from 72 million during the same time last year.
“We’re in the early innings of turning things around, with more to come,” Pandora CEO Roger Lynch acknowledged to Yahoo Finance, pointing to solid advertising and subscriber revenues as a positive indicator that Pandora’s slump is likely a thing of the past.
Investors may agree: Pandora’s stock was up 11% in after-hours trading.
2017 was a rocky year for Pandora
Last year was rocky for the streaming giant, to say the least, with several top-level executives, including former CEO Tim Westergren departing, subscribers spending less time on the company’s app and ad revenues falling. But since Lynch took the reins last September, the stock has slowly started to recover, with shares up 37% so far this year, driven in part by progress the company is making towards doubling down on monetization efforts such as advertising.
During the second quarter, Pandora also closed its $145 million acquisition of AdsWizz, a digital audio ads company Lynch says will be key to driving revenues growth in the months to come. Earlier on Tuesday, the company also announced the integration of AdsWizz into the Pandora platform, giving all advertisers the ability to purchase audio and video ad inventory with computers using data to decide which ads to buy and how much to pay for them. AdsWizz is one of the few ad platforms to offer “programmatic advertising” for audio, although the competition is growing.
“When I joined at the end of last year, large advertisers and holding companies had started moving large portions of their budgets into programmatic,” Lynch explained. “Back then, we didn’t have programmatic display: we didn’t have programmatic video or audio. We were facing headwinds in our ads business because we didn’t have those capabilities. It [AdsWizz] enables us to tap into portions of advertising budgets we weren’t able to before and also really to transact with our advertising customers in the way they want to transact.”
And for Pandora, at least in the short-term, ads are the majority of where its revenues are.
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