Net earnings more than triple
For those that trade Pandora Media Incorporated shares (ticker symbol: P) it’s been a quarterly cash cow. The latest quarterly numbers that came from camp P were frickin awesome and once again, savvy traders of the shares were blessed with returns in excess of 30% during a two week trading window. Take a look at these numbers:
- Net earnings of $2.1 million (1 cent per share), compared to $661,000 or break-even a year earlier.
- Adjusted earnings, which exclude stock-based compensation, more than doubled to 5 cents a share, easily beating estimates for just 1 cent per share.
- Revenue surged 60 percent to $120 million, compared to $75 million in last year’s third quarter. Wall Street had expected revenue of about $117 million.
- Pandora says mobile users now represent 77 percent of listener hours.
“This quarter exceeded our expectations as we monetized mobile at record levels and grew total mobile revenue 112 percent,” stated Joe Kennedy, chairman and chief executive officer of Pandora. “During the quarter we launched Pandora 4.0, the biggest redesign on the iOS (NASDAQ:AAPL) and Android (NASDAQ:GOOG) platforms ever, bringing new, innovative and enhanced functionality to mobile devices for the first time for both users and advertisers.”
Shares plunge 20% – what?
Shareholders, investors and traders know that the current numbers of a quarterly report are only part of the equation. The forward looking outlook as projected by management is equally if not more important than the current numbers. Pandora’s predicted fourth quarter numbers is the catalyst for the decimation in share price. Here is what the company is looking for:
- An adjusted loss between 6 cents and 9 cents per share for the fourth quarter.
- Quarterly revenue between $120 million to $123 million – Wall Street was anticipating a fourth quarter profit of 1 cent per share, on revenue of $130 million, according to analysts polled by Thomson Reuters.
- For the full-year, Pandora expects an adjusted loss of 9 cents to 12 cents a share.
- Revenue of $422 million to $425 million. Earlier this year, it forecast an adjusted loss between 4 cents and 8 cents per share, on revenue of $425 million to $432 million.
Don’t look at us – it’s fiscal cliff’s fault
Pandora appears to be pointing the finger (which one is your choice) towards the pending fiscal cliff. According to the Bloomberg press release, Mr. Kennedy explains; “Over the last couple months there has been increasing caution from advertisers. We’re having conversations with advertisers that go beyond end of the calendar year. There are concerns about the effect the fiscal cliff will have on growth, and it’s reduced our visibility. When our clients are cautious, we have to be cautious.” He believes most of the slowdown will occur in January.
In my opinion, if this is any indication of the real caution from advertisers, then fiscal cliff finger pointing could become a short term epidemic.