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.
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