Pandora Earnings: Why Stock Rose Despite A Jump In Losses?

• Pandora’s stock increased 10% following its Q1 fiscal 2016 earnings release as revenue and non-GAAP diluted EPS beat estimates.
• With 29% growth in revenues, the company’s topline came in 4% ahead of analysts’ estimates.
• However, as expected [Read: Pandora Earnings Preview: Losses Expected To Soar], operating losses more than doubled due to a significant increase in content acquisition costs.
• Nevertheless, with a higher amount reported in tax benefits, Pandora’s loss per share increased at a slower rate of 67%.
• Interestingly, non-GAAP diluted EPS at -20 cents a share was 12 cents better than the expected figure.

• The biggest contributor to Pandora’s topline growth was advertising segment where revenues increased 23% driven by 41% growth in local advertising revenues.
• The company has been targeting the local ad market since it is relatively under-penetrated and offers huge opportunities.
• The main reason why Pandora’s expenses soared was the increase in its royalty rates, as directed by the Copyright Royalty Board, which pushed the Internet radio company’s content costs as percentage of revenues up by 3 percentage points.
• Looking ahead, Pandora will look to push its ticketing business, which generated $22 million in revenues in Q1.

Have more questions about Pandora? See the links below:

• By How Much Have Pandora’s Revenue & EBITDA Increased In The Last Five Years?
• How Has Pandora’s Revenue Composition Changed In The Last Five Years?
• What’s Pandora’s Fundamental Value Based On Expected 2016 Results?

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