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Pandora Plummets After Disappointing Q2 Results, Weak Guidance (P)

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Shares of Pandora (NYSE: P) are down more than four percent in after hours trading after the company announced weaker-than-expected earnings results and guidance.

Based on the press release ("Pandora Reports Record 2Q14 Financial Results"), investors might not have immediately realized that anything was wrong.

Non-GAAP mobile revenue grew to $116 million, representing a year-over-year increase of 92 percent.

Meanwhile, the company's overall revenue of $157.4 million was slightly above the Street estimate of $156.24 million, representing a 55 percent increase year-over-year.

The online radio service also reported an EPS of $(0.04) versus the Street's estimate of $0.02. Pandora's non-GAAP EPS came to $0.04 versus $0.02.

"Our second fiscal quarter was an important inflection point in Pandora's history," Joe Kennedy, Chairman and CEO of Pandora, said in a company release.

"Strong momentum in our mobile business, with non-GAAP total mobile revenue growing 92% year-over-year to $116 million, clearly demonstrates the leverage in Pandora's business model. To drive future growth, we are accelerating investment in new technologies, channels and capabilities that maximize the value Pandora delivers."

Pandora expects to report a third quarter EPS of $0.03 - $0.06 versus an estimate of $0.08. Sales are expected to fall within the $174 million to $179 million range versus $170.5 million.

Pandora's full-year EPS is guided at $0.00 - $0.05 versus $0.08. Full-year sales are expected to be between $640 million and $655 million versus $633.85 million.

Related: Qello's Revenue Share Could Pay Artists More Than Pandora

Analysts had high hopes for the company. Many have raised their Price Targets over the last 60 days.

Shares of Pandora rose five percent on Monday after Needham's Laura Martin raised her Price Target from $20 to $25. She believes the company has a potential upside of 16 percent.

Despite the threat of new competition from Apple's (NASDAQ: AAPL) radio service (officially known as iTunes Radio), investors have stood by Pandora. Year-to-date, the stock is up more than 120 percent.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: Apple iTunes Radio Laura Martin Needham PandoraEarnings News Tech


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