Pandora Media (P 9.86, -0.54) has given up 5.2% after reporting better than expected first quarter results. The company guided second quarter earnings below consensus estimates and lowered its revenue guidance for the fiscal year.
In addition to reporting its quarterly results, Pandora announced that KKR has made a $150 million strategic investment in the company's new designated Series A convertible preferred stock. The stock will yield 7.5% if paid in cash or 8.0% if paid in kind. The stock can be converted into common stock at $13.50 per share and the offering can be upsized to $250 million. KKR will receive a seat on Pandora's Board of Directors.
For the first quarter, Pandora reported an above-consensus loss of $0.20 per share on a 6.3% year-over-year increase in revenue to $316 million, which was just shy of expectations.
Advertising revenue increased 1.0% year-over-year to $223.30 million despite this being the company's weakest advertising quarter. Total subscriber count increased 19.9% year-over-year to 4.71 million.
Subscription and other revenue grew 19.0% year-over-year to $64.90 million while ticketing and service revenue jumped 25.0% to $27.80 million.
The company launched its on-demand Pandora Premium service with 80% of trial subscribers coming from the company's platform, meaning acquisition costs were almost non-existent. The company reported positive user engagement as nearly half of Premium trial listeners used the service every day during the first week after launch.
Looking ahead, the company expects that second quarter revenue will be between $360 million and $375 million, which is shy of current market expectations. For the full year, the company expects revenue between $1.50 billion and $1.65 billion, down from previous guidance for sales between $1.55 billion and $1.70 billion.