Pandora 1Q Preview: Investors Looking for Traction in Pandora Premium

Pandora will report its 1Q earnings next Monday, May 8. As with previous quarters, investors will be watching Advertising revenue for the quarter, which makes up the majority of the revenue for Pandora. Visible Alpha’s consensus estimates have Advertising growth of just 1.5% as management noted that they would be resetting their advertising strategy in 1Q.

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Additionally, 1Q will mark the first quarter of the company’s new three-tiered business model. Pandora previously offered a free option with advertisements and an ad-free option (Pandora Plus) for listeners. In March, the company launched an on-demand option (Pandora Premium) to select users, and this option was made more broadly available in April. Investors will be focused on how much traction this new option has gained (in the albeit limited amount of time since launch) and how it has affected the other tiers. Visible Alpha’s consensus estimates suggest small Premium traction in 1Q but growing to more significant figures by year end. Consensus estimates also have Pandora Plus growth accelerating in 1Q and for 2017 as the company attempts to move Advertising users up to Plus.