Blog Post

New Numbers From Pandora Show Big Growth But No Profits

Pandora, which is seeking to raise $100 million from an IPO, has filed another three months’ worth of financial results. The filing shows Pandora’s remarkable growth in the last year. Still, the company posted a net loss of $6.8 million, and expects to continue to lose money through at least 2012.

Key stats:

»  Revenue for the quarter was just over $51 million; more than double the $21.6 million Pandora earned in the same quarter last year.

»  But that big increase didn’t make Pandora profitable. In fact, it posted a net loss of $6.8 million, compared to a net loss of $3 million the previous year. Its biggest expense by far is “content acquisition,” that is, copyright fees paid to rights-holders. Pandora paid $29 million in copyright fees. $13 million were spent on marketing and sales, also a big jump from 2010-all those new users aren’t coming on board for free.

»  Pandora today has 94 million registered users, of whom 34 million are considered “active” users. That’s up from 53 million users registered and 18 million “active” in the same quarter last year. And the user base is listening more, as well-Pandora played 1.6 billion hours of music in the quarter ending April 30, compared with 700 million hours last year.

»  The new SEC filing doesn’t specify the number of Pandora users who pay $36 per year to subscribe to Pandora One, the internet radio company’s premium service, but it does say that the number of Pandora One subscribers jumped 139% year-over-year. The mix of paid vs. ad-supported revenue has stayed roughly the same over the last year period, with about 86% of the company’s revenue coming from the non-paying, ad-supported users.

»  The company is still operating without an agreement with ASCAP, a copyright collection agency representing songwriters. The falling-out happened late last year because Pandora “believe[s] that the royalty rates currently sought by ASCAP are excessive.” ASCAP is one of the three main performing rights organizations, with the other two being BMI and SESAC. Royalty payments to the three combined amounts to 4 percent of Pandora’s revenue but the amount of that going to ASCAP specifically isn’t broken out. This dispute hasn’t moved into court yet but it could if ASCAP chooses to do so. In the meantime, Pandora still has access to ASCAP-licensed works under a consent decree.

Unrelated to these numbers, Pandora recently had some interesting content news-it’s added comedy to its wide array of musical offerings. Pandora is trying to create a “genome” that will predict what kind of comedy its users like, just like it does for music. The alt-weekly East Bay Express reported that Pandora used a “list of joke traits, identified and vetted by more than one hundred comedians who had worked with Pandora’s team” to complete the job.