Annual report pursuant to Section 13 and 15(d)

Segment Data and Revenue by Geographic Area

v3.6.0.2
Segment Data and Revenue by Geographic Area
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Segment Data and Revenue by Geographic Area Segment Data and Revenue by Geographic Area

Segment Data

We report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable operating segments.

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 revenue and gross profit on a disaggregated basis for our internet radio and ticketing services, while all other financial information is reviewed on a consolidated basis. Such evaluation excludes operating expenses and general corporate-level costs that are not specific to either of the reportable segments and are managed separately at the corporate level. The general corporate-level expenses relate to executive management, finance and accounting, human resources, legal, training and development, various nonrecurring charges and other separately managed general and administrative costs.

Our two operating segments, which are the same as our two reportable segments, are as follows:

Pandora—Internet Radio Service

Pandora is the world’s most powerful music discovery platform, offering a personalized experience for each of our listeners wherever and whenever they want to listen to music—whether through earbuds, car speakers or live on stage. Pandora is available as an ad-supported service or as a subscription service, which we call Pandora Plus. The majority of our listener hours occur on mobile devices, with the majority of our revenue generated from advertising on our ad-supported service on these devices. We offer both local and national advertisers the opportunity to deliver targeted messages to our listeners using a combination of audio, display and video advertisements. We also generate revenue from subscriptions to Pandora Plus.

Ticketing Service

We operate our ticketing service through our subsidiary Ticketfly, a leading live events technology company that provides ticketing and marketing software and services for clients, which are venues and event promoters, across North America. Ticketfly's ticketing, digital marketing and analytics software helps promoters book talent, sell tickets and drive in-venue revenue, while Ticketfly's consumer tools help fans find and purchase tickets to events. Tickets are primarily sold through the Ticketfly platform but are also sold through other channels such as box offices.

The measurement basis of segment profit or loss is gross profit, as operating expenses and working capital are all managed on an aggregate basis. Total segment assets have not been presented as segment assets are not reported to, or used by management to allocate resources to or assess performance of the segments.

The following table provides the financial performance of our reportable segments, including a reconciliation of gross profit from segment operations to gross profit from total operations:

 
Year ended December 31,
 
2015
 
2016
 
Pandora
 
Ticketfly (1)
 
Total
 
Pandora
 
Ticketfly
 
Total
 
(in thousands)
 
(in thousands)
Revenues
$
1,153,876

 
$
10,167

 
$
1,164,043

 
$
1,298,276

 
$
86,550

 
$
1,384,826

Cost of revenues
690,220

 
7,121

 
697,341

 
835,642

 
59,280

 
894,922

Gross profit
$
463,656

 
$
3,046

 
$
466,702

 
$
462,634

 
$
27,270

 
$
489,904

Operating and other expenses
 
 
 
 
(636,363
)
 
 
 
 
 
(832,882
)
Net loss
 
 
 
 
$
(169,661
)
 
 
 
 
 
$
(342,978
)
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes two months of revenue and expense for Ticketfly from the acquisition date of October 31, 2015 to December 31, 2015.

The following table provides depreciation and amortization costs included in costs of revenues by segment included in the consolidated statements of operations:

 
Year ended December 31,
 
2015
 
2016
 
Pandora
 
Ticketfly (1)
 
Total
 
Pandora
 
Ticketfly
 
Total
 
(in thousands)
 
(in thousands)
Depreciation and amortization
$
7,231

 
$
949

 
$
8,180

 
$
8,667

 
$
5,729

 
$
14,396

 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes two months of depreciation and amortization expense for Ticketfly from the acquisition date of October 31, 2015 to December 31, 2015.

Revenue by Geographic Area

The following table sets forth revenue by geographic area:

 
 
Year ended December 31,
 
 
2014
 
2015
 
2016
 
 
(in thousands)
Revenue by geographic area
 
 
 
 
 
 
United States
 
$
917,008

 
$
1,155,210

 
$
1,366,330

International
 
3,794

 
8,833

 
18,496

Total revenue
 
$
920,802

 
$
1,164,043

 
$
1,384,826



No individual foreign country represented a material portion of our consolidated revenue during the years ended December 31, 2014, 2015 and 2016.