(Reuters) – Pandora Media Inc (P.N) reported fourth-quarter revenue on Wednesday that topped Wall Street estimates as the internet radio company added more subscribers to its platform.
Shares of the company, which have fallen 61 percent in the past 12 months, rose nearly 5.3 percent to $5.13 after the bell.
Pandora said total subscription revenue jumped 63.2 percent to $97.7 million, beating the average analyst estimate of $94.1 million.
Total number of subscribers grew 25 percent to 5.48 million in the quarter from 4.39 million subscribers a year earlier.
A late entrant to the on-demand music service business, Pandora’s strong subscriber growth comes after Chief Executive Officer Roger Lynch, who replaced co-founder Tim Westergren last year, launched such a service, Pandora Premium, to lure more users.
“Some of the subscription revenue came from strong performance of our Pandora Premium and Plus, and we see this trend to continue,” Lynch told Reuters in an interview. “We also see substantial growth in operating cash flow in 2018.”
Online music streaming industry has become a battleground for market share with Pandora competing with bigger rivals such as Sweden’s Spotify, Apple Inc’s (AAPL.O) Apple Music, Google’s (GOOGL.O) Play Music that have been bolstering their services to attract new subscribers.
“Challenges remain, but the high user base that Pandora has created provide potential for monetization with right combination of services,” James Goss, analyst at Barrington Research Associates said.
The streaming music pioneer said it sold fewer advertisements in the quarter. Revenue from advertising, which accounts for 75.3 percent of its total revenue, fell 5 percent to $297.7 million.
However, that number beat the average analyst estimate of $280.7 million, according to Thomson Reuters I/B/E/S.
Pandora has been cutting jobs and investing more to make the platform advertiser friendly. Last month, the company said it would save $45 million by cutting 5 percent of its workforce.
Chief Executive Lynch said the money would be used to deploy a more efficient ad technology that would allow advertisers to place ads without paying an intermediary.
Pandora’s net loss narrowed to $52.1 million, or 21 cents per share, benefiting from $483 million in one-time tax gains.
Excluding items, it posted a loss of 21 cents per share. Total revenue rose nearly 1 percent to $395.3 million.
Analysts on average had expected a loss of 7 cents per share and revenue of $376.4 million.
Reporting by Laharee Chatterjee and Arjun Panchadar in Bengaluru; Editing by Arun Koyyur
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