This Pandora's box is filled with music. The internet radio station generates playlists based on a user's favorite artist or song. As part of the company's Music Genome Project, songs are analyzed according to musical features -- including details of instrumentation, harmony, lyrics, melody, rhythm, and vocals. Users enter the name of a song, and Pandora creates a playlist of songs with similar characteristics. Pandora's service, free to its more than 80 million registered users and available only in the US, is supported by local and national advertising. It also offers a subscription services Pandora Plus and Pandora Premium. In 2018, Pandora agreed to be acquired by SiriusXM for $3.5 billion.
Change in Company Type
Pandora agreed to a $3.5 billion acquisition by
Pandora generates about 75% of its revenue through advertising that supports its free streaming service for listeners. Its advertising products include audio, display, and video ads, as well as order management, advertising serving and timing, native advertising formats, targeting, and reporting.
The company’s subscription services, Pandora Plus and Pandora Premium, supply more than 20% of revenue. Pandora Plus offers ad-free listening with other features that include replays, additional skipping of songs, offline listening, and longer timeout-free listening. Pandora Premium includes features from Plus, as well as the capability to search, compile playlists, listen to curated playlists, and share playlists on social media.
Pandora sold its Ticketfly subsidiary to Eventbrite in 2017. The unit provided about 5% of Pandora’s revenue in 2017 before the sale.
The company rents data center services from Equinix, Digital Realty Trust, and InfoMart.
Users in the US generate virtually all of Pandora’s revenue. The company is based in Oakland, California, and also has offices in New York, Atlanta, Chicago, Dallas, Detroit, and Santa Monica, California.
Sales and Marketing
Pandora’s sales force sells advertising across its computer, mobile, and other device platforms, while its marketing teams provide campaign planning and analytics, consumer marketing, and communications. The company has local advertising sales units working in major radio markets in the US.
The company sets rates according to how many people use its service. Its advertising customers prefer using data from third-party vendors, but that doesn’t always match Pandora’s data. If the company is unable to better able to reconcile its data and that of third parties, it could hurt the company’s advertising revenue.
Although Pandora's revenue grew at nearly 30% a year between 2013-2017, the pace slowed in the last two years. In 2017, the company’s sales rose about 6% to $1.46 billion from $1.38 billion in 2016. The slowdown has been in advertising revenue, which increased less than 1% in 2017. On the other hand, subscription sales jumped 35% year-to-year, increasing its contribution to total revenue to 22% in 2017 from 16% in 2016.
Pandora’s net loss grew to $518.4 million in 2017 from $343 million in 2016. The company had higher acquisition costs for content in 2017 and it took a goodwill impairment charge in 2017 that was absent the year before.
The company’s cash on hand rose to $499.9 million in 2017 from $199.9 in 2017 from 2016. Pandora raised $480 million in 2017 by selling 19% of the company to Sirius XM Radio.
Pandora pursues users on two tracks: an ad-supported service and subscription services. In 2018, it introduced a blended service called Premium Access. In exchange for listening to or watching an ad, Access listeners can request specific music on demand and share playlists. For advertisers, the service offers a new rewards-based video inventory.
Pandora has moved aggressively to offer its services on voice-activated devices such as Amazon Echo and Google Home. The company continues to invest in audio experiences, voice, and personalization to maintain its momentum in that market.
The company culled some of its non-core operations in 2017, including the sale of the TicketFly ticket-broker subsidiary to Eventbrite. In early 2018, Pandora reorganized to focus on its strategic growth programs and improve its overall business performance. The company shifted resources to focus on ad-tech and audience development efforts, as well as position itself to reduce debt over time. It also flattened the organizational structure to increase nimbleness. The changes were expected to save the company about $45 million.
Pandora received a $480 million cash infusion in 2017 as it sold a 19% stake to Sirius XM Radio. That deal was followed by a shakeup in Pandora’s executive suite that brought in a CEO who had previous experience in running subscription focused companies.
Mergers and Acquisitions
Pandora agreed to be bought by SiriusXM for about $3.5 billion in 2018. The deal would create the company with the largest digitla audioIn 2017 Pandora acquired AdsWizz, digital audio ad technology firm, for $145 million. AdsWizz offers an advertising platform that’s used by other audio providers such as iHeartRadio, Spotify, and PodcastOne. Adswizz operates as a standalone subsidiary of Pandora.
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Employer Type: Publicly Owned
CFO: Naveen Chopra
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