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Pandora Reports Record 3QFY14 Financial Results

Pandora (NYSE:P), the leading Internet radio service, today announced financial results for the third quarter of fiscal year 2014 ended on October 31, 2013.

“Pandora continues to monetize effectively across the board,” stated Brian McAndrews, CEO, President & Chairman of Pandora. “Mobile advertising revenue surpassed the $100 million milestone during the quarter, which drove increased operating leverage. At the same time, Pandora continues to lead the market in mobile innovations, with a complete redesign for the iPad and the debut of the Android tablet app. We plan to continue to aggressively invest in the business as we seek to deliver the best personalized radio service for users.”

Fiscal Third Quarter Ended October 31, 2013 Financial Results

Total Revenue: For the third quarter of fiscal 2014, GAAP total revenue was $180.4 million, a 50% year‐over‐year increase. Non‐GAAP total revenue 1 was $181.6 million, a 50% year‐ over‐year increase, including $1.2 million in revenue relating to our subscription return reserve. Advertising revenue was $144.3 million, a 36% year‐over‐year increase. Non‐GAAP subscription and other revenue was $37.2 million, a 156% year‐over‐year increase, including $1.2 million in revenue relating to our subscription return reserve.



The subscription return reserve consists of revenue that we defer on a GAAP basis because we have limited operating history with certain mobile subscription refund rights. The Company is required to defer revenue until the refund rights lapse or until it has developed sufficient transaction history to estimate a reserve. The subscription return reserve is excluded from the subscription services and other revenue line of our GAAP presentation. Management includes revenue relating to the subscription return reserve because they believe that this non‐GAAP measure will provide greater comparability with future GAAP revenue once sufficient transaction history is developed and a return reserve can be estimated. The Company expects to have sufficient transaction history to estimate a subscription return reserve in January 2014. As such, the Company expects that GAAP revenue results will include a one‐time reversal of substantially all of the deferred revenue related to the subscription return reserve in that period.

EPS: For the third quarter of fiscal 2014, GAAP basic and diluted EPS were ($0.01). Non‐GAAP diluted EPS was $0.06, including $1.2 million in revenue relating to our subscription return reserve and excluding $12.6 million in expense from stock‐based compensation and $0.2 million in amortization of intangible assets. GAAP basic and diluted EPS were based on 184.7 million weighted average shares outstanding. Non‐GAAP diluted EPS was based on 208.1 million weighted average shares outstanding.

Cash: For the third quarter of fiscal 2014, the Company ended with $447.8 million in cash, cash equivalents and short‐term investments, compared with $68.9 million at the end of the prior quarter. For the third quarter of fiscal 2014, Pandora’s cash provided by operating activities was $4.1 million compared to $0.9 million used in the year‐ago quarter. In addition, Pandora raised $379.1 million in a follow‐on equity offering in September 2013.

Other Business Metrics

Total listener hours: Total listener hours grew 17% to 4.18 billion for the third quarter of fiscal 2014, compared to 3.56 billion for the third quarter of fiscal 2013.


Pandora’s conversion to a calendar‐based fiscal year will be complete on December 31, 2013. The next report on financial results will cover the two‐month transition period ending December 31, 2013. Although the Company does not plan to report financial results for the three and twelve months ending January 31, 2014, it is providing guidance for those periods to enable investors to understand its results in a manner consistent with its prior reporting and currently published estimates.

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