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Summary:

Internet radio company Pandora reported the financial results of its first three months as a public company Thursday. The company confirmed that while it still has a long way to go before it reaches the listener levels of traditional radio, its ads are now just as valuable.

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Internet radio company Pandora reported the financial results for its first three months as a public company on Thursday. The Oakland, Calif.–based company confirmed that while it still has a long way to go before it reaches the listener levels of terrestrial radio, its ads are now just as valuable as traditional stations’.

Pandora posted total revenue of $67 million during the second fiscal quarter of the year, more than doubling its revenue from the same period one year ago. Revenue from ads accounted for the lion’s share of Pandora’s Q2 sales, totaling $58.3 million.

And while Pandora did not turn a bottom-line profit for the quarter — the company’s net loss was $1.8 million — it seems to be impressing Wall Street with the traction it has gotten thus far. On a phone call with investors and analysts after the stock market closed on Thursday afternoon, Pandora confirmed that pound for pound its ads are just as valuable as those broadcast on traditional radio.

One analyst said that in reading the company’s quarterly report, he calculated that Pandora is now “generating more ad revenue per 1000 hours than traditional radio is, with a tenth of the user base.” Pandora CEO Joseph Kennedy confirmed that the analyst’s calculations were “broadly correct” but added that it only pertained to the company’s web application, not its mobile apps. “It’s our belief that over the long term we can reach similar levels in mobile,” he said. Pandora saw 1.8 billion total listener hours in the second quarter, across approximately 100 million registered users. For the full year, Pandora expects to make between $270 million and $275 million in total revenue.

During the call, Kennedy also stressed that Pandora is still very small compared to traditional radio broadcasting — and that for investors, that should be a good thing. “We’ve penetrated less than four percent of the U.S. radio market. We simply have tremendous room to grow.”

  1. Pandora’s ads are currently virtually valueless. Just because they are fooling advertisers or advertisers are experimenting doesn’t mean that trend is going to continue. And what is this “pound for pound” drivel? Traditional radio doesn’t mix display in with voice advertising. Pandora’s client spams display advertising, which advertisers will correct discern is utterly valueless on mobile.

    Display ads on mobile phones for people listening to music? Uh no engagement of any kind. On desktops for people listening to music? Again, no. And the in-stream ads? Annoying, like terrestrial radio. And not local, so much less engagement and a much more limited base of advertisers. I can’t imagine how they maintain this growth once the scores on these ads come back.

    Pandora: Great, great service. Bad, bad business.

  2. Mark, you’re clueless. In general, I ignore online ads but on a few occasions I have clicked on audio/display ads at Pandora and transacted. If Google can monetize ads then why can’t Pandora do the same on the desktop? I do however agree with your comment about mobile.

  3. As long as Pandora does not emphasize it’s “limited commercial interruptions” as so many of the morons in terrestrial radio do (attacking their own life’s blood) it will continue to grow. It is my opinion that listeners respond to and accept “engaging commercials”. Pandora is an ear medium. I doubt that much of it’s success for Advertisers will come from the eye.

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