February 6, 2015 / 12:42 AM / 3 years ago

Pandora revenue misses on slower-than-expected ad sales

(Reuters) - Online music streaming service Pandora Media Inc’s (P.N) sales fell short of market estimates in the holiday quarter, hurt by weaker-than-expected advertising revenue, sending its shares plunging 19 percent in extended trading.

A screen displays the name of music streaming company Pandora on the floor of the New York Stock Exchange shortly after the start of trading in New York July 1, 2013. REUTERS/Lucas Jackson

The company, which recommends music by predicting listener’s preferences, also forecast lower-than-expected revenue for the current quarter, after its advertising revenue growth slowed in the fourth quarter ended Dec. 31.

Chief Executive Brian McAndrews said weakness in holiday sales, following relatively soft Black Friday and Cyber Monday sales in retail, telecoms and consumer electronics, hurt the fourth quarter.

Advertising revenue growth rate slowed to 35.9 percent in the fourth-quarter ended Dec. 31 from 39.5 percent a year earlier.

Pandora Media said active users by the end of 2014 were 81.5 million, while listener hours for the fourth quarter were 5.20 billion. Analysts had expected 79 million active users and 5.38 billion listener hours, according to market research firm StreetAccount.

Pandora is facing stiff competition from Spotify, Apple Inc’s (AAPL.O) Beats online streaming service, Google Inc (GOOG.O) and Amazon.com Inc (AMZN.O) in the fast-growing music streaming business.

Spotify, which is fast catching up, said last month it had 15 million subscribers and 60 million active users at the end of 2014.

Pandora forecast current-quarter revenue of $220 million-$225 million, below an expected $243.6 million.

Net income rose to $12.3 million, or 6 cents per share, in the fourth quarter ended Dec. 31, from $8.9 million, or 4 cents per share, a year earlier.

Revenue rose to $268 million from $200.4 million. Mobile revenue rose 43 percent to $209.5 million.

Reporting by Kshitiz Goliya and Anya Tharakan in Bengaluru; Editing by Joyjeet Das and Sayantani Ghosh

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