Pandora Media Inc. P is set to report second-quarter 2018 results on Jul 31.
In the last reported quarter, Pandora incurred adjusted loss per share of 27 cents, narrower than the Zacks Consensus Estimate of a loss of 37 cents. However, the figure was wider than the year-ago quarter’s loss of 24 cents.
Revenues increased 1% year over year to $319.2 million, which beat the Zacks Consensus Estimate of $304 million.
For second-quarter 2018, revenues are expected in the range of $360–$375 million, reflecting 7% year-over-year growth rate at the midpoint.
Let’s see how things are shaping up for this announcement.
Key Growth Drivers
Subscription revenues are a major positive for the company. In the last reported quarter, Subscription and other revenues increased 61.3% year over year to $104.7 million on the back of Premium subscribers’ growth.
The company expects Premium Access to aid subscription of Pandora Premium. The company’s expanded partnerships with Sonos, Comcast’s Xfinity X1, Android TV and Amazon Fire TV are also anticipated to drive results.
Notably, during the quarter, the company completed the acquisition of AdsWizz, a provider of digital audio advertising technology. Management expects the acquisition to be accretive as it will aid them to serve worldwide publishers and brands with audio turning out to be a fast growing format in the digital advertising zone.
During the quarter, the company also announced that it will collaborate with Snap SNAP “as the music streaming launch partner for Snap Kit.” The association with Snap is expected to be beneficial for the expansion of Pandora’s user base.
Pandora Media, Inc. Price and EPS Surprise
Pandora Media, Inc. Price and EPS Surprise | Pandora Media, Inc. Quote
Key Concerns
Pandora operates in a highly competitive market with players like Spotify SPOT, Tidal and Amazon. Moreover, the company is a late entrant in the on-demand music services arena, which boasts big names like Spotify and Apple AAPL. Notably, Apple Music has been recording phenomenal growth.
We note that Pandora has been facing a decline in active users and total listener hours over the last few quarters due to closure of operations in Australia and New Zealand, its only two international markets. These remain major negatives for the company.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Pandora has a Zacks Rank #3 and an Earnings ESP of -7.96%.
For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $373.61 million, indicating a decline of 0.85% from the year-ago quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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