Pandora mobile revenues jump 111% in Q4, CEO Kennedy steps down

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Pandora Media reported fiscal fourth-quarter revenues of $125.1 million, a 54 percent year-over-year increase fueled by mobile growth. The streaming radio company also announced the resignation of longtime Chairman and CEO Joe Kennedy.

pandora Chairman and CEO Joe Kennedy

Kennedy

Pandora posted fourth-quarter mobile revenues of $80.3 million, growing 111 percent year-over-year; advertising revenues increased to $109 million, up 51 percent year-over-year, and subscription and other revenue reached $16.1 million, a 74 percent jump. Pandora posted quarterly losses of $14.6 million, compared with a loss of $8.2 million in the year-ago period.

For its fiscal year 2013, Pandora raked in total revenues of $427.1 million, a 56 percent year-over-year increase. Total mobile revenue grew 105 percent to $255.9 million, ad revenue climbed 56 percent to $375.2 million, and subscription and other revenue surged 51 percent to $51.9 million.

Total Pandora listener hours surged 53 percent to 4.05 billion for the fourth quarter of fiscal 2013, compared to 2.66 billion for the fourth quarter of fiscal 2012. Mobile listening increased 70 percent. For Pandora's fiscal year 2013, total listener hours leaped 70 percent to 14.01 billion, compared to 8.23 billion for the fiscal year 2012, with mobile increasing 89 percent compared to the previous year.

Listener growth does pose challenges for Pandora, however. Web-based streaming music services like Pandora are subject to a different music licensing rate than traditional radio companies: Each time a user listens to a track via mobile device or the desktop, Pandora must pay a royalty fee. Content acquisition costs rose 59 percent to $76.7 million in the most recent quarter, and The Wall Street Journal reports Pandora's per-track royalties are set to increase to 0.14 cent in 2015 from 0.12 cent this year; the company is currently lobbying Congress to pass the Internet Radio Fairness Act, which would overhaul how royalties are paid to recording artists.

Pandora recently announced it will impose new monthly listening limits on its free mobile streaming music service, a measure to help address mounting royalty fees.

Moving forward, Pandora--which offers music apps for platforms including Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android--will cap mobile users at 40 listening hours per month. In a blog post announcing the change, Pandora founder Tim Westergren said the new limit will impact less than 4 percent of the company's 65.6 million total monthly active users, noting the average listener spends approximately 20 hours accessing Pandora in a given month.

Pandora also faces a future without Kennedy, who was installed as chairman and CEO in 2004. He will remain at the helm until a successor is found. While "my heart is still 100 percent in Pandora… my head is telling me it's time to get to a recharging station sooner rather than later," Kennedy said Thursday during a conference call with analysts.

For more:
- read this release
- read this Wall Street Journal article (sub. req.)

Related articles:
Pandora caps free mobile listening as royalty costs surge
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Pandora mobile ad revenues leap to $59.2 million, CFO plans exit
Pandora: 70% of listening hours on mobile devices
Pandora: Mobile ads now half of total advertising revenue

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