Pandora reports net loss in fourth quarter

Despite Pandora’s impressive revenue total of US$392.6 million in the fourth quarter of 2016, once again the world’s largest internet streaming service failed to break a profit.

The company’s net loss increased from US$19.4 million to US$90 million over the same period, according to Q4 results. While total listening hours grew by 0.4% to 5.38 billion, active listeners fell slightly from 81.1 million to 81 million, highlighting Pandora’s struggle to increase the size of its active user base.

Wall Street was expecting Pandora to reach US$374 million in fourth quarter revenue, with the service beating the projected amount by US$19 million. Revenue is also up 17% from the same period the year before.

It was a big quarter in advertising for the company, bringing in US$313.3 million and recording a total of over US$1 billion in ad revenue for the entire year. Subscription income and other revenue for the fourth quarter reached US$59.8 million, an increase of 5%.

However, Pandora shares fell 4% in the initial after-hours after Pandora in light of the fourth quarter financial results, according to TechCrunch.

The main costs in the last quarter were sunk into content acquisition costs, which totalled US$212.1 million, followed by sales and marketing expenditure which reached US$133.5 million. Other costs included US$46.9 million on general costs and administration, and US$38.3 million on product development.

For the current quarter, the streaming giant is projecting revenue to be between US$310 million and US$320 million, yielding a loss of US$70 million to US$80 million.

The introduction of Pandora’s Plus and Premium Services tiers has helped achieve further monetisation of its streaming service business. This has proved to be a significant boost for Pandora as it continues to challenge Spotify, Apple Music and Amazon in the highly contested streaming market.