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Pandora Media (P) Q2 Earnings: What to Expect this Time?
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Pandora Media, Inc. is set to report second quarter 2016 results on Jul 21. It delivered a positive earnings surprise of 13.95% in the last quarter. Also, it has a positive four-quarter average earnings surprise of 18.64%. Let’s see how things are shaping up for this announcement.
Factors to Consider
With strong first quarter numbers, Pandora has proved that its strategic initiatives are heading in the right direction.
It has been overhauling its operations to provide all of “radio, on-demand and live music” on its own platform. It recently announced that it will launch a new on-demand platform that is reportedly expected to add over 9 million subscribers, $750 million in revenues $120 million in EBITDA over the next three years.
Also, as part of the strategy, Pandora acquired companies like Next Big Sound, Rdio and Ticketfly. In addition, it is cutting label deals to reduce dependence on CRB rates and better manage its content costs. Further, Pandora is strategically making advances in the automotive market by integrating its services with the Uber app for drivers in the U.S., Australia and New Zealand markets. This will boost the demand for the company’s core radio service as Uber has over 450K active drivers in the U.S. itself.
Simultaneously, its affiliation with Jam Productions, a prominent concert promoter in the U.S., will add to the company’s evolving Ticketfly Platform. Per the deal, Ticketfly will become the exclusive ticketing provider for select Jam events in addition to providing tickets for three Chicago venues (Riviera Theatre, Vic Theatre and Park West).
There is no denying that Pandora holds a prime position in the online radio market. But even then the company has been struggling to make profits. In the last reported quarter, operating loss was around $109 million. Rising costs related to licensing and higher operating expenses will continue to be a drag on profitability.
Also, competition is intense. The digital music streaming industry is expected to grow rapidly over the next few years, and hence all the players including Pandora, Apple, Spotify, and Amazon are striving to fortify their presence in the industry. As per a Statistica report, revenues from digital music streaming is projected to grow approximately 9.47% between 2016-2020, leading to a market volume of $2,773.2 million by 2020.
Notably, Spotify crossed 100 million monthly active users, of which more than 30 million are paid subscribers. Apple’s talks to Buy Tidal Music Company should further escalate competition in this arena.
For the second quarter of 2016, revenues are expected in a range of $345 million to $355 million. The company expects adjusted EBITDA loss to be in a band of $30 million to $20 million. Stock-based compensation expense is expected to be $37 million. Depreciation and amortization expense of $15 million and provision for income taxes of $0.5 million are not included in the adjusted EBITDA forecast.
Our proven model does not conclusively show that Pandora Media is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Pandora has an ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 30 cents.
Zacks Rank: Pandora’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:
QUALCOMM Incorporated (QCOM - Free Report) with Earnings ESP of +3.61% and a Zacks Rank #2.
Intel Corporation (INTC - Free Report) with Earnings ESP of +3.77% and a Zacks Rank #2
Amazon.com, Inc. (AMZN - Free Report) with Earnings ESP of +37.72% and a Zacks Rank #3
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Pandora Media (P) Q2 Earnings: What to Expect this Time?
Pandora Media, Inc. is set to report second quarter 2016 results on Jul 21. It delivered a positive earnings surprise of 13.95% in the last quarter. Also, it has a positive four-quarter average earnings surprise of 18.64%. Let’s see how things are shaping up for this announcement.
Factors to Consider
With strong first quarter numbers, Pandora has proved that its strategic initiatives are heading in the right direction.
It has been overhauling its operations to provide all of “radio, on-demand and live music” on its own platform. It recently announced that it will launch a new on-demand platform that is reportedly expected to add over 9 million subscribers, $750 million in revenues $120 million in EBITDA over the next three years.
Also, as part of the strategy, Pandora acquired companies like Next Big Sound, Rdio and Ticketfly. In addition, it is cutting label deals to reduce dependence on CRB rates and better manage its content costs. Further, Pandora is strategically making advances in the automotive market by integrating its services with the Uber app for drivers in the U.S., Australia and New Zealand markets. This will boost the demand for the company’s core radio service as Uber has over 450K active drivers in the U.S. itself.
Simultaneously, its affiliation with Jam Productions, a prominent concert promoter in the U.S., will add to the company’s evolving Ticketfly Platform. Per the deal, Ticketfly will become the exclusive ticketing provider for select Jam events in addition to providing tickets for three Chicago venues (Riviera Theatre, Vic Theatre and Park West).
There is no denying that Pandora holds a prime position in the online radio market. But even then the company has been struggling to make profits. In the last reported quarter, operating loss was around $109 million. Rising costs related to licensing and higher operating expenses will continue to be a drag on profitability.
Also, competition is intense. The digital music streaming industry is expected to grow rapidly over the next few years, and hence all the players including Pandora, Apple, Spotify, and Amazon are striving to fortify their presence in the industry. As per a Statistica report, revenues from digital music streaming is projected to grow approximately 9.47% between 2016-2020, leading to a market volume of $2,773.2 million by 2020.
Notably, Spotify crossed 100 million monthly active users, of which more than 30 million are paid subscribers. Apple’s talks to Buy Tidal Music Company should further escalate competition in this arena.
For the second quarter of 2016, revenues are expected in a range of $345 million to $355 million. The company expects adjusted EBITDA loss to be in a band of $30 million to $20 million. Stock-based compensation expense is expected to be $37 million. Depreciation and amortization expense of $15 million and provision for income taxes of $0.5 million are not included in the adjusted EBITDA forecast.
PANDORA MEDIA Price and EPS Surprise
PANDORA MEDIA Price and EPS Surprise | PANDORA MEDIA Quote
Earnings Whispers
Our proven model does not conclusively show that Pandora Media is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Pandora has an ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 30 cents.
Zacks Rank: Pandora’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:
QUALCOMM Incorporated (QCOM - Free Report) with Earnings ESP of +3.61% and a Zacks Rank #2.
Intel Corporation (INTC - Free Report) with Earnings ESP of +3.77% and a Zacks Rank #2
Amazon.com, Inc. (AMZN - Free Report) with Earnings ESP of +37.72% and a Zacks Rank #3
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>