Pandora Media Inc. (P) may not be adding many new subscribers to its platform, but at least it's finding them in new places.
One eye-popping number was buried in the online radio company's second-quarter earnings report: People using Pandora on a voice-activated device surged 282% year-over-year, as smart speakers such as Amazon.com Inc.'s (AMZN) Echo and Alphabet Inc.'s (GOOGL) Google Home become more and more popular platforms for streaming music. Users on voice-activated platforms represented 1.6 million out of Pandora's total 76 million users.
The results came as Pandora beat Wall Street's expectations for the fiscal second quarter, but issued third-quarter sales guidance that fell short of estimates. The company's active users also declined 2.7% year-over-year to 76 million. Pandora posted a loss of 21 cents per share on revenue of $376.8 million, which surpassed analysts' projected loss of 24 cents per share and $368 million in revenue. The company expects to post revenue in the range of $370 million and $385 million for the third quarter, which is lower than Wall Street's estimated $407 million.
Shares of Pandora were down about 2% to $8.78 in morning trading on Tuesday.
Although user growth remained sluggish in the second quarter, Pandora's interim CEO Naveen Chopra noted that the rate of decline in users is slower than the previous quarter. User engagement increased during the quarter, Chopra said, alongside growth in the company's advertising business.
"This quarter's results are a great example of our ability to generate more value from our ad-supported audience even while listenership levels may not be growing," Chopra explained on the company's earnings call with investors. "Going forward, we expect the trends in our advertising business to continually improve."
Chopra is in the process of carrying out a massive turnaround plan at Pandora, after co-founder Tim Westergren stepped down as CEO in June and the company accepted a $480 million investment from Sirius XM Holdings Inc. (SIRI) earlier that month. In taking on the role of CEO, Chopra has said that he sees major room for growth in Pandora's advertising business and that the company's on demand and premium subscription services aren't mutually exclusive businesses.
Chopra said Pandora plans to take full advantage of the added boost it's seeing from connected consumer devices like smart speakers.
"In the back half of the year, we will deepen our existing relationships with partners like Amazon, Google and Sonus, while also adding new partnerships to expand our suite of over 2,000 connected devices," Chopra added.
Amazon and Google are just a few of tech giants who are capitalizing on the rise in smart home speakers. Apple Inc. (AAPL) is expected to release its own device, the HomePod, by year's end.