Exhibit 99.1

 

GRAPHIC

 

PANDORA REPORTS CALENDAR Q4 AND CALENDAR YEAR
2013 FINANCIAL RESULTS

 

·                  Calendar year 2013 GAAP total revenue of $637.9 million and non-GAAP total revenue of $647.5 million, both growing 56% year-over-year

·                  Eleven months ended December 2013 GAAP total revenue of $600.2 million and non-GAAP total revenue of $609.4 million, growing 54% and 55% year-over-year

·                  Calendar year 2013 non-GAAP diluted EPS of $0.06; calendar year 2013 GAAP EPS was ($0.23)

·                  Eleven months ended December 2013 non-GAAP diluted EPS of $0.11; Eleven months ended December 2013 GAAP EPS was ($0.15)

·                  Calendar Q4 GAAP revenue of $200.4 million, growing 52% year-over-year; and non-GAAP Q4 revenue of $200.8 million, growing 51% year-over-year

·                  Two months ended December 2013 GAAP revenue of $137.0 million, growing 57% year-over-year; and non-GAAP revenue of $137.2 million, growing 55% year-over-year

·                  Monetization reaches record highs across all dimensions of Pandora’s business

·                  Calendar 2013 total listener hours of 16.70 billion, growing 23% year-over-year

 

OAKLAND, Calif. — February 5, 2014 — Pandora (NYSE: P), the leading Internet radio service, today announced year-end financial results for the transition two and eleven month periods ended December 31, 2013 as well as calendar(1) fourth quarter and year ended December 31, 2013, recast from prior year reporting.

 

“Pandora continued growing revenue over 50% year-over-year,” stated Brian McAndrews CEO, President  & Chairman of Pandora. “We continued to improve monetization, which was reflected in record RPMs on all dimensions of our business, and drove our first non-GAAP profitable year as a public company.  Throughout the year, we were able to invest back into the business with notable achievements, improving our product, innovating across multiple technologies, devices and automotive platforms in our continuing efforts to reinvent radio and make Pandora available anytime, anywhere for millions of listeners.”

 

“2013 marked notable growth from user metrics to financial achievements. These have largely been driven by our position as a leader in mobile media, both in user engagement and monetization.  We remain intensely focused on advancing Pandora’s mission to reinvent radio. To fully capture the substantial market opportunity ahead of us, we will continue to aggressively invest in 2014 in sustained audience and engagement growth as well as activities that further accelerate monetization. As such, our bias will continue to be toward revenue growth and capturing additional market share.”

 


(1) Calendar results are included for ease of reference and comparability to published estimates.  These results will not be audited or included in the Company’s Annual Report on Form 10-K for the transitional eleven month period ended December 31, 2013.

 



 

Calendar Quarter Ended December 31, 2013 Financial Results

 

Total Revenue: For the calendar fourth quarter of 2013, GAAP total revenue was $200.4 million, a 52% year-over-year increase. Non-GAAP total revenue(2) was $200.8 million, a 51% year-over-year increase, including $0.4 million in revenue relating to our subscription return reserve. Advertising revenue was $162.0 million, a 39% year-over-year increase. Non-GAAP subscription and other revenue was $38.8 million, a 132% year-over-year increase, including $0.4 million in revenue relating to our subscription return reserve.

 

EPS: For the calendar fourth quarter of 2013, GAAP basic EPS was $0.05. GAAP diluted EPS was $0.04. Non-GAAP basic EPS was $0.12 and non-GAAP diluted EPS was $0.11, both including $0.4 million in revenue relating to our subscription return reserve, and excluding $13.4 million in expense from stock-based compensation and $0.2 million in amortization of intangible assets. GAAP and non-GAAP basic EPS were based on 194.4 million weighted average shares outstanding. GAAP and non-GAAP diluted EPS were based on 218.5 million weighted average shares outstanding.

 

Cash and Investments: For the calendar fourth quarter of 2013, the Company ended with $450.1 million in cash and investments, compared with $443.3 million at the end of the prior calendar quarter. For the calendar fourth quarter of 2013, Pandora’s cash provided by operating activities was $12.3 million compared to $9.6 million generated in the year-ago calendar quarter.

 

Calendar Year Ended December 31, 2013 Financial Results

 

Total Revenue: For the calendar year 2013, GAAP total revenue was $637.9 million, a 56% year-over-year increase. Non-GAAP total revenue was $647.5 million, a 56% year-over-year increase, including $9.6 million in revenue relating to our subscription return reserve. Advertising revenue was $521.2 million, a 45% year-over-year increase. Non-GAAP subscription and other revenue was $126.3 million, a 135% year-over-year increase, including $9.6 million in revenue relating to our subscription return reserve.

 


(2) The subscription return reserve consists of revenue that we defer on a GAAP basis because we have limited operating history with certain mobile subscription refund rights. The Company is required to defer revenue until the refund rights lapse or until it has developed sufficient transaction history to estimate a reserve. The subscription return reserve is excluded from the subscription and other revenue line of our GAAP presentation. Management includes revenue relating to the subscription return reserve because they believe that this non-GAAP measure will provide greater comparability with future GAAP revenue once sufficient transaction history is developed and a return reserve can be estimated. The Company expects to have sufficient transaction history to estimate a subscription return reserve in the first calendar quarter of 2014. As such, the Company expects that GAAP revenue results will include a one-time reversal of substantially all of the deferred revenue related to the subscription return reserve in that period.

 



 

EPS: For the calendar year 2013, GAAP basic and diluted EPS were ($0.23). Non-GAAP basic and diluted EPS were $0.06, including $9.6 million in revenue relating to our subscription return reserve, and excluding $42.3 million in expense from stock-based compensation and $0.4 million in amortization of intangible assets. GAAP basic and diluted and non-GAAP basic EPS were based on 180.2 million weighted average shares outstanding. Non-GAAP diluted EPS was based on 202.0 million weighted average shares outstanding.

 

Transitional 2- and 11-month periods ended December 31, 2013

 

Total Revenue: For the two month November-December 2013 stub period, GAAP total revenue was $137.0 million, a 57% year-over-year increase. Non-GAAP revenue was $137.2 million for the same period, a 55% year-over-year increase, including $0.2 million in revenue relating to our subscription return reserve. Advertising revenue was $111.3 million, a 44% year-over-year increase. Non-GAAP subscription and other revenue was $25.9 million, a 126% year-over-year increase, including $0.2 million in revenue relating to our subscription return reserve.

 

For the 11 months ended December 31, 2013, GAAP total revenue was $600.2 million, a 54% year-over-year increase.  Non-GAAP revenue was $609.4 million, a 55% year-over-year increase.  Advertising revenue was $489.3 million, a 43% year-over-year increase. Non-GAAP subscription and other revenue was $120.0 million, a 139% year-over-year increase, including $9.1 million in revenue relating to our subscription return reserve.

 

EPS: For the two month November-December 2013 stub period, GAAP basic EPS was $0.06 and GAAP diluted EPS was $0.05. Non-GAAP basic EPS was $0.11 and non-GAAP diluted EPS was $0.10, including $0.2 million in revenue relating to our subscription return reserve, and excluding $9.5 million in expense from stock-based compensation and $0.1 million in amortization of intangible assets.  GAAP and non-GAAP basic EPS were based on 194.6 million weighted average shares outstanding. GAAP and non-GAAP diluted EPS were based on 218.8 million weighted average shares outstanding.

 

For the 11 months ended December 31, 2013, GAAP basic and diluted EPS were ($0.15). Non-GAAP basic EPS was $0.12 and non-GAAP diluted EPS was $0.11, including $9.1 million in revenue relating to our subscription return reserve, and excluding $40.0 million in expense from stock-based compensation and $0.4 million in amortization of intangible assets. GAAP basic and diluted and non-GAAP basic EPS were based on 181.0 million weighted average shares outstanding. Non-GAAP diluted EPS was based on 203.0 million weighted average shares outstanding.

 

Other Business Metrics

 

Total Calendar Fourth Quarter Ended December 31, 2013 Listener Hours: Total listener hours grew 16% to 4.54 billion for the calendar fourth quarter of 2013, compared to 3.91 billion for the calendar fourth quarter of 2012.

 

Total Calendar Year Ended December 31, 2013 Listener Hours: Total listener hours grew 23% to 16.70 billion for the calendar year of 2013, compared to 13.51 billion for the calendar year of 2012.

 



 

Guidance

 

Based on information available as of February 5, 2014, the Company is providing the following financial guidance:

 

Calendar First Quarter 2014 Guidance: Non-GAAP revenue is expected to be in the range of $170 million to $176 million. Non-GAAP basic and diluted EPS is expected to be between a loss of $(0.16) and a loss of $(0.14). Non-GAAP EPS excludes revenue relating to our subscription return reserve, stock-based compensation expense and amortization of intangible assets, assumes minimal tax expense given our net operating loss position, and is based on 200 million basic weighted average shares outstanding for the three months ending March 31, 2014.

 

Calendar Year 2014 Guidance: Non-GAAP revenue is expected to be in the range of $870 million to $890 million. Non-GAAP diluted EPS is expected to be between $0.13 and $0.17. Non-GAAP EPS excludes revenue relating to our subscription return reserve, stock-based compensation expense and amortization of intangible assets, assumes minimal tax expense given our net operating loss position, and is based on 225 million diluted weighted average shares outstanding for the twelve months ending December 31, 2014.

 

Financial Results Conference Call: Pandora will host a conference call today at 3 p.m. PT/ 6 p.m. ET to discuss the financial results with the investment community. A live webcast of the event will be available on the Pandora Investor Relations website at http://investor.pandora.com. A live domestic dialin is available at (877) 3550067 or internationally at (443) 8531239. A domestic replay will be available at (855) 8592056 or internationally at (404) 5373406, using passcode 31451335, and available via webcast until February 19, 2014.

 

ABOUT PANDORA 

 

Pandora (NYSE: P) gives people music and comedy they love anytime, anywhere, through connected devices. Personalized stations launch instantly with the input of a single “seed” — a favorite artist, song or genre. The Music Genome Project®, a deeply detailed hand-built musical taxonomy, powers the personalization of Pandora® internet radio by using musicological “DNA” and constant listener feedback to craft personalized stations from a growing collection of more than one million tracks. Tens of millions of people turn on Pandora every month to hear music they love. www.pandora.com

 

“Safe harbor” Statement:

 

This press release contains forward-looking statements within the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding expected revenue and non-GAAP EPS. These forward-looking statements are based on Pandora’s current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our operation in an emerging market and our relatively new and evolving business model; our ability to estimate revenue reserves; our ability to increase our listener base and listener hours; our ability to attract and retain advertisers; our ability to generate additional revenue on a cost-effective basis; competitive factors; our ability to continue operating under existing laws and licensing regimes; our ability to establish and maintain relationships with makers of mobile devices, consumer electronic products and automobiles; our ability to manage our growth; our ability to continue to innovate and keep pace with changes in technology and our competitors; risks related to service interruptions or security breaches; and general economic conditions worldwide. Further information on these factors and other risks that may affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our Annual Report on Form 10-K and our Form 10-Q for the current period, particularly under the heading “Risk Factors.”

 



 

The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent reports on Form 10-K and Form 10-Q, each as they may be amended from time to time. The Company’s results of operations for the current period are not necessarily indicative of the Company’s operating results for any future periods.

 

These documents are available online from the SEC or on the SEC Filings section of the Investor Relations section of our website at investor.pandora.com. Information on our website is not part of this release. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

 

Non-GAAP Financial Measures

 

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), we use the following non-GAAP measures of financial performance: non-GAAP total revenue, non-GAAP subscription revenue, non-GAAP gross profit, non-GAAP net income (loss), non-GAAP basic EPS and non-GAAP diluted EPS. The presentation of this additional financial information is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In addition, these non-GAAP financial measures may be different from the non-GAAP financial measures used by other companies. These non-GAAP measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. Management compensates for these limitations by reconciling these non-GAAP financial measures to the most comparable GAAP financial measures within our earnings releases.

 

These non-GAAP financial measures differ from GAAP in that they include an effect on revenue from our subscription return reserve, which consists of deferred revenue related to subscriptions that are sold with return rights, and exclude expense from stock-based compensation and amortization of intangible assets.

 

The subscription return reserve consists of revenue that we defer on a GAAP basis because we have limited operating history with certain mobile subscription refund rights. We are required to defer revenue until the refund rights lapse or until we have developed sufficient transaction history to estimate a reserve. The subscription return reserve is excluded from the subscription and other revenue line of our GAAP presentation. The subscription return reserve is expected to be released in the first quarter of calendar 2014 when sufficient transaction history is developed and a return reserve can be estimated. For periods ending as of and prior to the first quarter of calendar 2014, management includes an effect on revenue relating to our subscription return reserve because we believe that this non-GAAP measure will provide greater comparability with future GAAP revenue.

 



 

Stock-based compensation consists of expenses for stock options and other awards under our equity incentive plans. Stock-based compensation is included in the following cost and expense line items of our GAAP presentation:

 

· Cost of revenue - other

· Product development

· Sales and marketing

· General and administrative

 

Although stock-based compensation is an expense for us and is viewed as a form of compensation, management excludes stock-based compensation from our non-GAAP measures for purposes of evaluating our continuing operating performance primarily because it is a non-cash expense not believed by management to be reflective of our core business, ongoing operating results or future outlook. In addition, the value of stock-based instruments is determined using formulas that incorporate variables, such as market volatility, that are beyond our control.

 

Intangible amortization consists of non-cash charges that can be affected by the timing and magnitude of business combinations and asset purchases. Amortization for currently owned intangible assets is included in the general and administrative expense line of our GAAP presentation. Management considers its operating results without these charges when evaluating its ongoing performance because it is a non-cash expense not believed by management to be reflective of our core business, ongoing operating results or future outlook.

 

We believe these non-GAAP financial measures serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods and to those of peer companies, and, when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors’ overall understanding of our current financial performance.

 

In the financial tables below, we provide a reconciliation of the most comparable GAAP financial measure to the historical non-GAAP financial measures used in this earnings release.

 

We estimate revenue generated through both our mobile and other connected devices platform as well as our traditional computer platform. While we believe that such disaggregated revenue estimates provide directional insight for evaluating our efforts to monetize our service through these platforms, we do not validate such disaggregated revenue to the level of financial statement reporting. Such metrics should be seen as indicative only and as management’s best estimate.

 

###

 



 

Contacts:

 

Dominic Paschel

 

Corporate Finance & Investor Relations

investor@pandora.com

(510) 842-6960

 

Will Valentine

Pandora Corporate Communications

press@pandora.com

(510) 842-6996

 



 

Pandora Media, Inc.

Consolidated  Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Two months ended
December 31,

 

Eleven months ended
December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

Revenue

 

 

 

 

 

 

 

 

 

Advertising

 

$

77,079

 

$

111,328

 

$

343,318

 

$

489,340

 

Subscription and other

 

10,349

 

25,664

 

46,166

 

110,893

 

Total revenue

 

87,428

 

136,992

 

389,484

 

600,233

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

 

 

 

 

 

 

 

Cost of revenue - Content acquisition costs

 

48,678

 

63,144

 

230,731

 

314,866

 

Cost of revenue - Other (1)

 

5,971

 

8,605

 

28,740

 

41,844

 

Total cost of revenue

 

54,649

 

71,749

 

259,471

 

356,710

 

Gross profit

 

32,779

 

65,243

 

130,013

 

243,523

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Product development (1)

 

3,226

 

6,179

 

16,191

 

29,986

 

Sales and marketing (1)

 

20,935

 

33,322

 

94,566

 

169,774

 

General and administrative (1)

 

9,406

 

14,613

 

43,320

 

70,212

 

Total operating expenses

 

33,567

 

54,114

 

154,077

 

269,972

 

Income (loss) from operations

 

(788

)

11,129

 

(24,064

)

(26,449

)

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest income

 

12

 

66

 

88

 

96

 

Interest expense

 

(89

)

(94

)

(486

)

(554

)

Other expense, net

 

(4

)

 

(3

)

(16

)

Income (loss) before provision for income taxes

 

(869

)

11,101

 

(24,465

)

(26,923

)

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

(2

)

(44

)

3

 

(94

)

Net income (loss)

 

$

(871

)

$

11,057

 

$

(24,462

)

$

(27,017

)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

(0.01

)

$

0.06

 

$

(0.15

)

$

(0.15

)

Weighted-average basic shares

 

170,350

 

194,641

 

167,956

 

180,968

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

 

$

(0.01

)

$

0.05

 

$

(0.15

)

$

(0.15

)

Weighted-average diluted shares

 

170,350

 

218,755

 

167,956

 

180,968

 

 


(1) Includes stock-based compensation expense as follows:

 

 

 

Two months ended
December 31,

 

Eleven months ended
December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

Cost of revenue - Other

 

$

209

 

$

433

 

$

1,109

 

$

1,946

 

Product development

 

788

 

1,961

 

4,138

 

8,802

 

Sales and marketing

 

2,273

 

4,405

 

11,128

 

20,222

 

General and administrative

 

1,403

 

2,672

 

6,908

 

9,071

 

Total stock-based compensation expense

 

$

4,673

 

$

9,471

 

$

23,283

 

$

40,041

 

 



 

Pandora Media, Inc.

Consolidated  Statements of Operations

(In thousands, except per share amounts)

(Unaudited Recast)

 

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

Revenue

 

 

 

 

 

 

 

 

 

Advertising

 

$

116,144

 

$

162,007

 

$

360,715

 

$

521,239

 

Subscription and other

 

15,355

 

38,355

 

49,294

 

116,654

 

Total revenue

 

131,499

 

200,362

 

410,009

 

637,893

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

 

 

 

 

 

 

 

Cost of revenue - Content acquisition costs

 

71,758

 

93,698

 

248,313

 

342,884

 

Cost of revenue - Other (1)

 

8,798

 

12,617

 

30,845

 

45,121

 

Total cost of revenue

 

80,556

 

106,315

 

279,158

 

388,005

 

Gross profit

 

50,943

 

94,047

 

130,851

 

249,888

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Product development (1)

 

4,684

 

9,239

 

17,494

 

31,911

 

Sales and marketing (1)

 

30,889

 

53,116

 

101,537

 

182,923

 

General and administrative (1)

 

13,617

 

22,567

 

47,028

 

75,142

 

Total operating expenses

 

49,190

 

84,922

 

166,059

 

289,976

 

Income (loss) from operations

 

1,753

 

9,125

 

(35,208

)

(40,088

)

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest income

 

19

 

68

 

98

 

102

 

Interest expense

 

(137

)

(144

)

(526

)

(602

)

Other expense, net

 

(7

)

(17

)

(3

)

(15

)

Income (loss) before provision for income taxes

 

1,628

 

9,032

 

(35,639

)

(40,603

)

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

 

(55

)

19

 

(100

)

Net income (loss)

 

$

1,628

 

$

8,977

 

$

(35,620

)

$

(40,703

)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

0.01

 

$

0.05

 

$

(0.21

)

$

(0.23

)

Weighted-average basic shares

 

170,196

 

194,429

 

167,568

 

180,201

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

 

$

0.01

 

$

0.04

 

$

(0.21

)

$

(0.23

)

Weighted-average diluted shares

 

189,937

 

218,468

 

167,568

 

180,201

 

 


(1) Includes stock-based compensation expense as follows:

 

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

Cost of revenue - Other

 

$

308

 

$

618

 

$

1,174

 

$

2,053

 

Product development

 

1,152

 

2,743

 

4,375

 

9,192

 

Sales and marketing

 

3,230

 

6,187

 

11,821

 

21,389

 

General and administrative

 

2,021

 

3,886

 

7,350

 

9,626

 

Total stock-based compensation expense

 

$

6,711

 

$

13,434

 

$

24,720

 

$

42,260

 

 



 

Pandora Media, Inc.

Consolidated Balance Sheets

(In thousands)

 

 

 

As of January 31,

 

As of December 31,

 

 

 

2013

 

2013

 

 

 

 

 

(Unaudited)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

65,725

 

$

245,755

 

Short-term investments

 

23,247

 

98,662

 

Accounts receivable, net

 

103,410

 

164,023

 

Prepaid expenses and other current assets

 

6,232

 

10,343

 

Total current assets

 

198,614

 

518,783

 

 

 

 

 

 

 

Long-term investments

 

 

105,686

 

Property and equipment, net

 

17,758

 

35,151

 

Other long-term assets

 

2,460

 

13,715

 

Total assets

 

$

218,832

 

$

673,335

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

4,471

 

$

14,413

 

Accrued liabilities

 

7,590

 

14,885

 

Accrued royalties

 

53,083

 

66,110

 

Deferred revenue

 

29,266

 

42,650

 

Accrued compensation

 

21,560

 

17,948

 

Total current liabilities

 

115,970

 

156,006

 

 

 

 

 

 

 

Other long-term liabilities

 

3,873

 

9,098

 

Total liabilities

 

119,843

 

165,104

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common stock

 

17

 

20

 

Additional paid-in capital

 

238,552

 

675,103

 

Accumulated deficit

 

(139,574

)

(166,591

)

Accumulated other comprehensive loss

 

(6

)

(301

)

Total stockholders’ equity

 

98,989

 

508,231

 

Total liabilities and stockholders’ equity

 

$

218,832

 

$

673,335

 

 



 

Pandora Media, Inc.

Consolidated Statements of Cash Flows 

(In thousands)

(Unaudited)

 

 

 

Two months ended

 

Eleven months ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

 

 

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(871

)

$

11,057

 

$

(24,462

)

$

(27,017

)

Adjustments to reconcile to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

1,259

 

1,941

 

6,406

 

10,112

 

Loss on disposition of assets

 

 

 

23

 

 

Stock-based compensation

 

4,673

 

9,471

 

23,283

 

40,041

 

Amortization of premium on investments

 

50

 

180

 

329

 

237

 

Amortization of debt issuance costs

 

44

 

33

 

242

 

220

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(12,361

)

(22,227

)

(43,487

)

(60,613

)

Prepaid expenses and other assets

 

(153

)

(3,176

)

(2,189

)

(7,891

)

Accounts payable and accrued liabilities

 

5,887

 

2,799

 

10,419

 

16,708

 

Accrued royalties

 

6,917

 

7,611

 

17,525

 

13,027

 

Accrued compensation

 

2,328

 

(74

)

2,085

 

(3,393

)

Deferred revenue

 

2,541

 

(438

)

10,285

 

13,384

 

Reimbursement of cost of leasehold improvements

 

 

 

1,243

 

1,555

 

Net cash provided by (used in) operating activities

 

10,314

 

7,177

 

1,702

 

(3,630

)

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(5,828

)

(5,645

)

(11,809

)

(20,536

)

Purchases of patents

 

 

 

 

(8,000

)

Purchases of investments

 

(9,435

)

(204,123

)

(59,559

)

(224,549

)

Proceeds from maturities of short-term investments

 

6,143

 

4,050

 

79,603

 

42,210

 

Payments related to acquisition

 

 

 

 

(400

)

Net cash provided by (used in) investing activities

 

(9,120

)

(205,718

)

8,235

 

(211,275

)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Borrowings under debt arrangements

 

 

 

 

10,000

 

Repayments of debt

 

 

 

 

(10,000

)

Proceeds from follow-on offering, net of issuance costs

 

 

(434

)

 

378,654

 

Proceeds from issuance of common stock

 

1,020

 

2,389

 

5,877

 

16,793

 

Payment of debt issuance costs in connection with the debt refinancing

 

 

 

 

(450

)

Net cash provided by financing activities

 

1,020

 

1,955

 

5,877

 

394,997

 

 

 

 

 

 

 

 

 

 

 

Effects of foreign currency translation on cash and cash equivalents

 

 

(39

)

(1

)

(62

)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

2,214

 

(196,625

)

15,813

 

180,030

 

Cash and cash equivalents at beginning of period

 

57,725

 

442,380

 

44,126

 

65,725

 

Cash and cash equivalents at end of period

 

$

59,939

 

$

245,755

 

$

59,939

 

$

245,755

 

 



 

Pandora Media, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited Recast)

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

Operating Activities

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,628

 

$

8,977

 

$

(35,620

)

$

(40,703

)

Adjustments to reconcile to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

1,886

 

3,063

 

6,917

 

10,781

 

Loss on disposition of assets

 

 

 

83

 

 

Stock-based compensation

 

6,711

 

13,434

 

24,720

 

42,260

 

Amortization of premium on investments

 

79

 

179

 

383

 

266

 

Amortization of debt issuance costs

 

66

 

49

 

264

 

241

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(18,264

)

(26,739

)

(36,599

)

(53,797

)

Prepaid expenses and other assets

 

(936

)

(2,850

)

(2,732

)

(9,796

)

Accounts payable and accrued liabilities

 

3,949

 

3,535

 

6,511

 

17,803

 

Accrued royalties

 

6,333

 

6,860

 

18,684

 

14,763

 

Accrued compensation

 

5,080

 

6,393

 

3,294

 

4,108

 

Deferred revenue

 

3,112

 

(573

)

10,098

 

13,134

 

Reimbursement of cost of leasehold improvements

 

 

 

1,484

 

1,555

 

Net cash provided by (used in) operating activities

 

9,644

 

12,328

 

(2,513

)

615

 

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

(1,704

)

(7,482

)

(8,124

)

(22,873

)

Purchases of patents

 

 

 

 

(8,000

)

Purchases of investments

 

(15,741

)

(205,522

)

(66,830

)

(230,156

)

Proceeds from maturities of short-term investments

 

10,893

 

6,250

 

85,184

 

50,540

 

Payments related to acquisition

 

 

 

 

(400

)

Net cash provided by (used in) investing activities

 

(6,552

)

(206,754

)

10,230

 

(210,889

)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Borrowings under debt arrangements

 

 

 

 

10,000

 

Repayments of debt

 

 

 

 

(10,000

)

Proceeds from follow-on offering, net of issuance costs

 

 

(653

)

 

378,656

 

Proceeds from issuance of common stock

 

1,120

 

3,764

 

6,123

 

17,924

 

Payment of debt issuance costs in connection with the debt refinancing

 

 

 

 

(450

)

Net cash provided by financing activities

 

1,120

 

3,111

 

6,123

 

396,130

 

 

 

 

 

 

 

 

 

 

 

Effects of foreign currency translation on cash and cash equivalents

 

 

(12

)

(4

)

(40

)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

4,212

 

(191,327

)

13,836

 

185,816

 

Cash and cash equivalents at beginning of period

 

55,727

 

437,082

 

46,103

 

59,939

 

Cash and cash equivalents at end of period

 

$

59,939

 

$

245,755

 

$

59,939

 

$

245,755

 

 



 

Pandora Media, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Two months ended

 

Eleven months ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

GAAP total revenue

 

$

87,428

 

$

136,992

 

$

389,484

 

$

600,233

 

Subscription return reserve

 

1,101

 

210

 

4,045

 

9,122

 

Non-GAAP total revenue

 

$

88,529

 

$

137,202

 

$

393,529

 

$

609,355

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

32,779

 

$

65,243

 

$

130,013

 

$

243,523

 

Subscription return reserve

 

1,101

 

210

 

4,045

 

9,122

 

Stock-based compensation: Cost of revenue - Other

 

209

 

433

 

1,109

 

1,946

 

Non-GAAP gross profit

 

$

34,089

 

$

65,886

 

$

135,167

 

$

254,591

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(871

)

$

11,057

 

$

(24,462

)

$

(27,017

)

Subscription return reserve

 

1,101

 

210

 

4,045

 

9,122

 

Amortization of intangibles

 

 

121

 

 

364

 

Stock-based compensation

 

4,673

 

9,471

 

23,283

 

40,041

 

Non-GAAP net income

 

$

4,903

 

$

20,859

 

$

2,866

 

$

22,510

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

 

 

 

 

 

 

 

 

GAAP basic EPS

 

$

(0.01

)

$

0.06

 

$

(0.15

)

$

(0.15

)

Subscription return reserve (1)

 

0.01

 

 

0.02

 

0.05

 

Amortization of intangibles (1)

 

 

 

 

 

Stock-based compensation (1)

 

0.03

 

0.05

 

0.15

 

0.22

 

Non-GAAP basic EPS

 

$

0.03

 

$

0.11

 

$

0.02

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing basic EPS

 

170,350

 

194,641

 

167,956

 

180,968

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

(0.01

)

$

0.05

 

$

(0.15

)

$

(0.15

)

Subscription return reserve (1)

 

0.01

 

 

0.02

 

0.05

 

Amortization of intangibles (1)

 

 

 

 

 

Stock-based compensation (1)

 

0.03

 

0.05

 

0.15

 

0.21

 

Non-GAAP diluted EPS

 

$

0.03

 

$

0.10

 

$

0.02

 

$

0.11

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing diluted EPS

 

192,577

 

218,755

 

190,657

 

203,033

 

 


(1) EPS may not recalculate due to rounding

 



 

Pandora Media, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands, except per share amounts)

(Unaudited Recast)

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2013

 

2012

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

GAAP total revenue

 

$

131,499

 

$

200,362

 

$

410,009

 

$

637,893

 

Subscription return reserve

 

1,378

 

427

 

4,358

 

9,625

 

Non-GAAP total revenue

 

$

132,877

 

$

200,789

 

$

414,367

 

$

647,518

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

50,943

 

$

94,047

 

$

130,851

 

$

249,888

 

Subscription return reserve

 

1,378

 

427

 

4,358

 

9,625

 

Stock-based compensation: Cost of revenue - Other

 

308

 

618

 

1,174

 

2,053

 

Non-GAAP gross profit

 

$

52,629

 

$

95,092

 

$

136,383

 

$

261,566

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

1,628

 

$

8,977

 

$

(35,620

)

$

(40,703

)

Subscription return reserve

 

1,378

 

427

 

4,358

 

9,625

 

Amortization of intangibles

 

 

182

 

 

364

 

Stock-based compensation

 

6,711

 

13,434

 

24,720

 

42,260

 

Non-GAAP net income (loss)

 

$

9,717

 

$

23,020

 

$

(6,542

)

$

11,546

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

 

 

 

 

 

 

 

 

GAAP basic EPS

 

$

0.01

 

$

0.05

 

$

(0.21

)

$

(0.23

)

Subscription return reserve (1)

 

0.01

 

 

0.02

 

0.05

 

Amortization of intangibles (1)

 

 

 

 

 

Stock-based compensation (1)

 

0.04

 

0.07

 

0.15

 

0.24

 

Non-GAAP basic EPS

 

$

0.06

 

$

0.12

 

$

(0.04

)

$

0.06

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing basic EPS

 

170,196

 

194,429

 

167,568

 

180,201

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

0.01

 

$

0.04

 

$

(0.21

)

$

(0.23

)

Subscription return reserve (1)

 

0.01

 

 

0.03

 

0.05

 

Amortization of intangibles (1)

 

 

 

 

 

Stock-based compensation (1)

 

0.03

 

0.07

 

0.14

 

0.24

 

Non-GAAP diluted EPS

 

$

0.05

 

$

0.11

 

$

(0.04

)

$

0.06

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing diluted EPS

 

189,937

 

218,468

 

167,568

 

202,001

 

 


(1) EPS may not recalculate due to rounding

 



 

Pandora Media, Inc.

Monetization: RPM History

(Unaudited)

 

 

 

Year Ended

 

Three months ended

 

Two months
ended

 

Eleven months
ended

 

Three months ended

 

Two months
ended

 

Eleven months
ended

 

 

 

1/31/2012

 

4/30/2012

 

7/31/2012

 

10/31/2012

 

12/31/2012

 

12/31/2012

 

4/30/2013

 

7/31/2013

 

10/31/2013

 

12/31/2013

 

12/31/2013

 

Advertising RPMs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional computer

 

$

62.68

 

$

46.52

 

$

57.14

 

$

58.03

 

$

57.46

 

$

54.51

 

$

48.16

 

$

59.31

 

$

57.54

 

$

65.22

 

$

56.79

 

Mobile and other connected devices

 

$

21.05

 

$

17.88

 

$

22.17

 

$

25.59

 

$

25.29

 

$

22.80

 

$

23.23

 

$

33.90

 

$

36.00

 

$

36.38

 

$

31.97

 

Total

 

$

32.22

 

$

24.82

 

$

29.48

 

$

32.40

 

$

31.56

 

$

29.60

 

$

28.02

 

$

38.87

 

$

40.11

 

$

41.61

 

$

36.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total RPMs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional computer

 

$

58.84

 

$

45.54

 

$

55.02

 

$

56.40

 

$

56.17

 

$

52.98

 

$

48.04

 

$

57.37

 

$

57.33

 

$

64.04

 

$

56.01

 

Mobile and other connected devices

 

$

21.93

 

$

18.86

 

$

23.32

 

$

26.96

 

$

26.66

 

$

24.03

 

$

25.31

 

$

36.17

 

$

39.64

 

$

40.14

 

$

34.98

 

Total

 

$

33.32

 

$

26.09

 

$

30.68

 

$

33.73

 

$

32.92

 

$

30.88

 

$

30.01

 

$

40.52

 

$

43.19

 

$

44.71

 

$

39.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total RPMs based on non-GAAP revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional computer

 

$

58.86

 

$

45.64

 

$

55.19

 

$

56.50

 

$

56.36

 

$

53.12

 

$

48.33

 

$

57.75

 

$

57.44

 

$

64.07

 

$

56.22

 

Mobile and other connected devices

 

$

22.01

 

$

19.16

 

$

23.81

 

$

27.23

 

$

27.14

 

$

24.41

 

$

26.15

 

$

37.59

 

$

39.97

 

$

40.22

 

$

35.67

 

Total

 

$

33.38

 

$

26.33

 

$

31.09

 

$

33.96

 

$

33.33

 

$

31.20

 

$

30.74

 

$

41.73

 

$

43.48

 

$

44.78

 

$

39.81

 

 

Pandora Media, Inc.

Monetization: RPM History

(Unaudited Recast)

 

 

 

Year Ended

 

Three months ended

 

Year Ended

 

Three months ended

 

Year Ended

 

 

 

12/31/2011

 

3/31/2012

 

6/30/2012

 

9/30/2012

 

12/31/2012

 

12/31/2012

 

3/31/2013

 

6/30/2013

 

9/30/2013

 

12/31/2013

 

12/31/2013

 

Advertising RPMs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional computer

 

$

64.11

 

$

43.23

 

$

53.99

 

$

57.06

 

$

59.31

 

$

53.47

 

$

44.63

 

$

58.53

 

$

58.44

 

$

61.92

 

$

55.84

 

Mobile and other connected devices

 

$

21.61

 

$

15.73

 

$

22.25

 

$

23.51

 

$

25.52

 

$

22.15

 

$

20.43

 

$

32.56

 

$

35.31

 

$

36.20

 

$

30.93

 

Total

 

$

33.31

 

$

22.45

 

$

29.33

 

$

30.30

 

$

32.33

 

$

28.92

 

$

24.85

 

$

37.89

 

$

39.68

 

$

40.95

 

$

35.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total RPMs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional computer

 

$

60.06

 

$

42.80

 

$

52.07

 

$

55.51

 

$

57.67

 

$

52.01

 

$

45.17

 

$

56.73

 

$

57.50

 

$

61.28

 

$

55.18

 

Mobile and other connected devices

 

$

22.49

 

$

16.68

 

$

23.25

 

$

24.87

 

$

26.93

 

$

23.38

 

$

22.41

 

$

34.37

 

$

38.75

 

$

39.99

 

$

33.89

 

Total

 

$

34.40

 

$

23.86

 

$

30.40

 

$

31.70

 

$

33.68

 

$

30.23

 

$

26.96

 

$

39.17

 

$

42.49

 

$

44.14

 

$

38.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total RPMs based on non-GAAP revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional computer

 

$

60.07

 

$

42.92

 

$

52.20

 

$

55.64

 

$

57.83

 

$

52.15

 

$

45.36

 

$

57.09

 

$

57.68

 

$

61.32

 

$

55.37

 

Mobile and other connected devices

 

$

22.52

 

$

17.06

 

$

23.65

 

$

25.20

 

$

27.34

 

$

23.76

 

$

22.92

 

$

36.01

 

$

39.32

 

$

40.10

 

$

34.57

 

Total

 

$

34.42

 

$

24.16

 

$

30.74

 

$

31.98

 

$

34.03

 

$

30.55

 

$

27.41

 

$

40.53

 

$

42.98

 

$

44.23

 

$

 

38.77