|
Description of Business and Basis of Presentation
|
12 Months Ended |
|---|---|
|
Dec. 31, 2014
|
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Description of Business and Basis of Presentation |
Description of Business and Basis of Presentation
Pandora Media, Inc. provides an internet radio service offering a personalized experience for each listener wherever and whenever they want to listen to radio on a wide range of smartphones, tablets, computers and car audio systems, as well as a range of other internet-connected devices. We have pioneered a new form of radio—one that uses intrinsic qualities of music to initially create stations and then adapts playlists in real-time based on the individual feedback of each listener. We generate a majority of our revenue by offering local and national advertisers an opportunity to deliver targeted messages to our listeners using a combination of audio, display and video advertisements. We also generate revenue by offering a paid subscription service which we call Pandora One. We were incorporated as a California corporation in January 2000 and reincorporated as a Delaware corporation in December 2010. Our principal operations are located in the United States; we also operate in Australia and New Zealand.
As used herein, “Pandora,” “we,” “our,” the “Company” and similar terms include Pandora Media, Inc. and its subsidiaries, unless the context indicates otherwise.
Basis of Presentation
The consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the accounts of Pandora and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Certain changes in presentation have been made to conform the prior period presentation to current period reporting. Our statements of operations now include the presentation of gross profit, which is calculated as total revenue less cost of revenue. In addition, we have reclassified certain software license fees, facilities-related expenses and depreciation expenses among the general and administrative, cost of revenue—other, sales and marketing and product development lines in our consolidated statements of operations. Furthermore, we have reclassified certain compensation-related amounts from the accrued liabilities line item to the accrued compensation line item of our consolidated balance sheets and our consolidated statements of cash flows.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used in several areas including, but not limited to determining accrued royalties, selling prices for elements sold in multiple-element arrangements, the allowance for doubtful accounts, the fair market value of stock options and the impact of forfeitures on stock-based compensation, the provision for (benefit from) income taxes and the subscription return reserve. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements could be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.
Segments
Pandora operates in one segment. Our chief operating decision maker (the "CODM"), our Chief Executive Officer, manages our operations on a consolidated basis for purposes of allocating resources. When evaluating our financial performance, the CODM reviews separate revenue information for our advertising, subscription and other offerings, while all other financial information is reviewed on a consolidated basis.
Fiscal year
We changed our fiscal year from the twelve months ending January 31 to the calendar twelve months ending December 31, effective beginning with the year ended December 31, 2013. As a result of this change, our prior fiscal year was an eleven-month transition period ended on December 31, 2013. In these consolidated statements, including the notes thereto, the current year financial results ended December 31, 2014 are for a twelve-month period. Audited results for the periods ended December 31, 2013 and January 31, 2013 are for an eleven-month period and a twelve-month period. In addition, the accompanying consolidated statements of operations and consolidated statements of cash flows include unaudited comparative amounts for the eleven-month period ended December 31, 2012. These unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. In our opinion, the unaudited consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our results of operations and our cash flows for the eleven months ended December 31, 2012.
All references herein to a fiscal year prior to December 31, 2013 refer to the twelve months ended January 31 of such year, and references to the first, second, third and fourth fiscal quarters ended prior to November 1, 2013 refer to the three months ended April 30, July 31, October 31 and January 31, respectively.
All references herein to a fiscal year subsequent to December 31, 2013 refer to the twelve months ended December 31 of such year, and references to the first, second, third and fourth fiscal quarters ended subsequent to November 1, 2013 refer to the three months ended March 31, June 30, September 30 and December 31, respectively.
|