Competition in the digital music world may be ramping up, but in its first earnings report as a public company, Pandora Media said it’s not feeling any heat.
On a call with analysts Thursday, Pandora president and CEO Joe Kennedy said the company, which posted triple-digit revenue growth for the sixth consecutive quarter, was “off to a strong start.”
When asked about effects from the launch of the latest digital music darling, streaming service Spotify, Kennedy said, “We haven’t been able to discern any impacts from the new digital music initiatives that have launched over the past three to six months.
“Fundamentally, Spotify operated in a different segment—owned music, subscription music, leased music, whatever you want to call it. We really operate in radio, where there’s such a strong tradition of ad-supported, free-to-the-consumer music,” he said, adding that radio has historically represented 80 percent of consumer time with audio entertainment.
In the last quarter, Kennedy said, revenue grew 117 percent year over year to $67 million, and total listener hours grew 125 percent year over year to 1.8 billion.
He also said that mobile advertising revenue—a key area for the company, as nondesktop usage accounts for about 70 percent of total usage for Pandora—increased to about half of the total ad revenue for the company.
But despite the company’s significant gains, it also posted some losses—$1.8 million net, or 4 cents a share.
The biggest cost to Pandora is content acquisition, or the royalties it must pay to music companies. In the last quarter, it paid $33.7 million in these costs, or about half of its revenue. But Kennedy said there’s a “natural lag” between listener hour growth and the monetization of that growth.
“From an overall perspective, our business continues to gain momentum,” he said. “Pandora has a highly differentiated value proposition and a clear market share leadership in Internet radio. We feel very good about our future.”
Wall Street seemed to respond well to Pandora’s news, boosting the stock about 3.5 percent in after-hours trading to $12.90.