Pandora Stock Plunges On Revenue Miss

Pandora Thursday announced its fourth-quarter earnings, and the stock is down more than 23% after hours on revenues that missed Wall Street estimates.

The company reported Q4 revenue of $268 million, lower than the company's expectations of $273 to $278 million. Analysts were expecting about $276 million.

Pandora's Q1 2015 revenue guidance also disappointed analysts and investors. Pegged at $244 million, it came in at between $220 million and $225 million.

People listened to 20.03 billion hours of music on Pandora in 2014, which is up 20% from the year before. There were 81.5 million total active listeners, which is up 7% year over year (for reference, Spotify reports over 60 million active listeners).

Brian McAndrews

Generally, the number of hours of music listened to is more imporant than the number of active users, because it is the time that dictates how much advertising Pandora can sell, according to Business Insider.

Advertising revenue was $220.1 million, a 36% year-over-year increase. Subscription and other revenue was $47.9 million, a 24% year-over-year increase.

Brian McAndrews Chairman, President and CEO of Pandora, said:

"We end 2014 in a very good position, with stronger relationships across the music community, record monetization metrics and highly engaged users. We’re looking forward to an exciting and productive 2015. We have spent the past two years building our monetization capabilities and infrastructure to a point where we are driving healthy gross margins and are cash flow positive. 2015 will be a year in which we optimize Pandora’s potential for long-term growth. We enter the year with energy and focus on what comes next –further migrating radio budgets from terrestrial to digital, defining the future of mobile marketing and advancing Pandora’s leading role in the future of the music industry."