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Pandora Focused on Mobile Ad Revenue

Internet music and audio service reports net revenue of $125.5 million in Q1

Pandora reported net revenue of $125.5 million in the first quarter.

That compares to $80.7 million for the quarter a year ago.

Its ad revenue in particular was $105 million, compared to $70.5 million for the same period a year ago. Total mobile ad revenue was nearly $84 million.

Pandora CFO Joe Kennedy told analysts in an earnings call the company implemented a limit on mobile listening, to help manage content acquisition costs. That 40-hour-a-month limit on mobile listening did result in fewer hours streamed for the quarter, with minimal impact on listenership or revenue growth, according to Kennedy.

Still, the company’s content acquisition costs increased, to $82.5 million in the quarter, compared to nearly $56 million a year ago.

Pandora claims total active listeners hit 70.1 million in Q1, up 35% from last year.

Overall, the company continues to grow. It has 883 employees as of Q1, compared to 560 a year ago. Out of those, 248 employees are sales reps. Seventy-two of those sales reps are focused on local ad sales, said CFO Mike Herring.

Asked how the company determines the national versus local mix, Herring said most of its revenue is still derived from national sales. Pandora looks at where the biggest demand is and where it gets the highest return, both in markets where it has and where it does not have people, he said.

Pandora has made a big push to drive mobile revenue and that’s paying off, according to Kennedy, with total mobile ad revenue of nearly $84 million in the quarter. Pandora has a mix of display, audio and video ads, and is seeing the greatest growth in audio in terms of local ad sales. The company plans to gradually increase the number of sold ads per hour on the audio service.