Today Pandora reported third quarter revenue of $120 million, which fell short of analyst and investor expectations. The revenue figure is a 60% rise of the same quarter last year.
The company reported GAAP earnings per share of $0.01. On a non-GAAP basis, Pandora reported earnings per share of $0.05. The company expects a loss of $0.06 to $0.09 per share on a non-GAAP basis for the coming quarter. Also for the coming quarter, Pandora expects revenue to be all but flat at between $120 million and $123 million.
Pandora has but $80 million in cash on hand. It ended the day with a valuation of $1.6 billion. It will be far below that come the morning.
The companyâ€™s stock has fallen more than 20% in after hours trading. Pandora has recently been involved in a contentious fight on Capitol Hill concerning radio royalty fees. On a happier note, Pandoraâ€™s active users nearly hit the 60 million mark, up 47% year over year. Also, â€ś[t]otal listener hours grew 67% to 3.56 billion for the third quarter of fiscal 2013, compared to 2.12 billion for the third quarter of fiscal 2012.â€ť The service apparently is not having a hard time getting its users to hit the play button, as its total hours listened grew faster on a percentage basis than its user base did.
Quite obviously, the companyâ€™s expected Q4 losses have spooked the street, overshadowing its minor profitability and almost in-line revenue for the third quarter.
The company has come under increasing fire from Spotify, and more recently Microsoftâ€™s new Xbox Music product that offer streaming on demand, and radio functionality, which could encroach on its ability to acquire new users on a profitable basis.
For the coming fiscal 2013 year for the firm, Pandora expects revenues of betweenÂ $422 million and $425 million.
If Pandora manages to secure a better royalty rate through legislation, the company could experience higher levels of marginal profitability. If, however, it is forced to continue at its current fee rates, it may struggle.