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Pandora Media Inc (NYSE:P) Recoups Apple Inc. (NASDAQ:AAPL) Induced Losses

Pandora Media Inc market capitalization fell by more than 10 percent since Apple Inc. launched its “Music” service on June 30. However, the stock recouped all of those losses in Thursday’s post market session after recording better than expected quarterly numbers.

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Pandora Media Inc posted a quarterly loss of 8 cents per share, on revenue of $285.6 million. Excluding one-time items, the company’s profit stood at 5 cents per share. Analysts were expecting an adjusted profit of 2 cents per share on revenue of $282.8 million.

For the full-year, the company forecast revenue of between $1.175 billion and $1.185 billion, versus its prior forecast of between $1.16 billion and $1.18 billion. Third-quarter revenue is projected to come in at $310 million-$315 million, above the consensus estimate of $309.1 million.

Pandora is Managing to Hold its Ground

Investor sentiment was further boosted after Chief Executive Brian McAndrews said that the new Apple Music competition showed no early ill effects.

“There could be listeners who experiment with the (Apple Music) service and some short-term impact, but we’re not seeing any listener impact at this time and don’t expect long-term impact,” McAndrews said.

Key listener metrics were largely unchanged from the last reported quarter. Pandora Media Inc  drew 79.4 million active listeners who enjoyed 50.3 billion hours collectively in the three-month reporting period. Listening hours have been steadily improving since Pandora introduced its smartphone and tablet app.

Advertising Revenue Continues to Remain Strong

While growth in the number of listeners was minimal and a large new rival entered the scene, Pandora Media instead improved on revenue from advertising. The online radio station’s free, ad-supported model witnessed a 24 percent year-over-year gain in revenue per 1,000 listener hours to $53.91.

Local advertising revenue, on a y-o-y basis, soared 67 percent to $58.9 million, with trailing-four-quarters revenue surpassing the $1 billion-mark for the first time during this quarter.

While Apple Music’s $9.99-a-month subscription fee could force listeners to stick to Pandora’s free service, some analysts argue that the Oakland, Calif. company’s current quarter might prove to be challenging when Apple Inc. is offering a free three-month trial period.

The top management at Pandora Media Inc realize that the company’s strengths lie in its ability to monetize the free audience. As McAndrews said in yesterday’s conference call, “Monetizing free audio listening is a fantastically tough problem to solve, and we are alone in solving it.”

 

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