Pandora Media beats by $0.13, reports revs in-line; guides Q2 revs below consensus; lowers FY17 rev guidance; KKR (KKR) invests $150 mln in convertible preferred stock, get Board seat; Board also forming independent committee to look for new Directors (10.40)
- Reports Q1 (Mar) loss of $0.20 per share, $0.13 better than the Capital IQ Consensus of ($0.33); revenues rose 6.3% year/year to $316 mln vs the $318.15 mln Capital IQ Consensus. Advertising revenue was $223.3 million, a 1% year-over-year increase, during our seasonally weakest advertising quarter. Total subscribers increased from 3.93 million in Q1 2016 to 4.71 million in Q1 2017, growing ~20% year-over-year. Subscription and other revenue was $64.9 million, a 19% year-over-year increase. Adj. EBITDA ($71.3) mln vs. ($70-80) mnln guidance
- Co issues downside guidance for Q2, sees Q2 revs of $360-375 mln vs. $390.79 mln Capital IQ Consensus Estimate; EBITDA loss $50-65 mln.
- Co issues in-line guidance for FY17, sees FY17 revs of $1.50-1.65 bln from $ vs. $1.62 bln Capital IQ Consensus Estimate.
- Pandora successfully launched its on-demand subscription product, Pandora Premium, during the quarter. ~1.3 million trials were started in the last seven weeks, including more than 500 thousand Premium trial starts. Total subscribers increased approximately 20% year-over-year. To date, more than 80% of new trial subscribers were acquired on-platform—virtually free of acquisition costs—again demonstrating our marketplace strategy in action. Nearly half of Premium trial listeners used Pandora daily during their first week, significantly higher than non-Premium listeners. Research tells us that more than 30% of our ad-supported and paid radio listeners are strong candidates for an on-demand tier.
- entered into an agreement for a $150 million strategic investment from KKR. In connection with the investment, Richard Sarnoff, KKR's Head of Media & Communications Private Equity investing in the Americas, will join Pandora's Board of Directors. KKR will purchase an aggregate of $150 million in a new designated Series A convertible preferred stock of Pandora. Pandora will pay dividends to the holders of the preferred stock quarterly at an annualized rate of 7.5% if paid in cash or 8% if paid in kind, at its option. The Series A preferred stock is convertible into common stock, cash or a combination thereof at a conversion price of $13.50 per share. The offering may be upsized to a total of $250 million should the Company determine to issue additional shares.
- Company is implementing certain governance changes. James M. P. Feuille and Peter Gotcher will resign from the Board of Directors, and the Board is forming an independent committee, to be chaired by Timothy Leiweke, an independent director, to identify and appoint new directors who will provide additional expertise and leadership as the Company moves forward. In addition, at the upcoming 2017 annual meeting of stockholders, the Board will recommend that its stockholders approve a resolution to declassify the Board and provide for the annual election of directors in the future