Onlineradio service Pandora said it crossed the 1 billion mark in total listening hours in March — up from 975 million in February, and nearly twice the 567 million it reached in the year-earlier period. The company reported that it hit the milestone as part of a new push to share key audience metrics on a monthly basis in lieu of accurate third-party data-tracking usage across platforms.
Pandora also said it reached 51 million active users by the end of March — up 2 million from February, and a 59% gain from 32 million a year ago. Its share of total U.S. radio listening was 5.79%, an increase from 3.04% a year earlier.
In a research note, JP Morgan analyst Doug Anmuth said the latest figures are ahead of its estimates for Pandora’s first quarter ending in April. Still, he noted that the increase in users and listening hours do not necessarily translate into near-term gains in revenue and profitability.
The company missed revenue and earnings forecasts in its fiscal fourth quarter, despite boasting double-digit usage gains from a year ago. The downside of that growth is that it drives up Pandora’s costs in music licensing fees to record labels, while pushing down ad rates because of increased inventory.
“A reminder that incremental listener hours are currently a double-edged sword for Pandora — great for building market share and long-term revenue capability, but expensive in the near-term as it relates to variable content costs,” stated Anmuth in a research note issued Thursday.
During its first quarter ending in January, the company’s premium inventory sell-through rate hit a seasonal low point, as ad spending softened while usage grew steeply. The sent ad rates were lower than anticipated, and contributed to weaker-than-expected revenue. Pandora also lowered its first-quarter and full-year revenue outlook.
During the fourth-quarter conference call, Pandora CEO Joseph Kennedy stressed the company’s efforts to improve monetization by expanding its regional sales force and increasing ad revenue from its growing mobile audience, which now accounts for the majority of usage.
In that regard, the company also said 400 local advertising campaigns have been confirmed this year, which it said demonstrates “increased sales momentum in the top local radio markets. In particular, it pointed to a recent campaign for the Planet Honda dealership in New Jersey and an ongoing effort for Wayne State University in Detroit. Both targeted young-skewing audiences.
Separately, Pandora announced that Nissan and Suzuki will be integrated its music service into vehicles, bringing its total of auto partnerships to 18. In his note, Anmuth suggested the auto market represents fertile ground for the company, since half of terrestrial radio listening happens in the car.
But he also pointed to a cloud on the horizon in the form of a report that Procter & Gamble is limiting employees’ use of certain bandwidth-gobbling sites, including Pandora and Netflix. With about 18% of listening taking place in the workplace, “we would not w