http://www.morningstar.com/earnings/42659782-pandora-media-inc-p-q2-2013.aspx

Pandora Media Inc P
Q2 2013 Earnings Call Transcript

Transcript Call Date 08/29/2012

Operator: Welcome to Pandora Media Second Quarter Fiscal 2013 Financial Results Conference Call. All lines have been placed on mute.

Opening today's call is Dominic Paschel, Vice President of Pandora Media Inc. Mr. Paschel, you have the line.

Dominic Paschel - VP, Corporate Finance and IR: Thank you, Sheila. Good afternoon, and welcome to Pandora's second quarter fiscal 2013 financial results call for the quarter ended July 31, 2012.

Some of our discussions will contain forward-looking statements, which may include projected financial results or operating metrics, business strategies, anticipated future products or services, anticipated market demand or opportunities, and other forward-looking topics. These statements are subject to risks and uncertainties and assumptions. Accordingly actual results could differ materially. For a discussion of the risk that could cause our results to differ from today's discussion, please refer to the documents we file with the Securities and Exchange Commission.

I would also like to remind you that during the course of this conference call, we may discuss non-GAAP measures of our performance. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables in the press release and Form 8-K filed this afternoon with the SEC.

Today's call is available via webcast replay will be available following the conclusion of the call for two weeks. To access the press release, supplemental financial information or the webcast replay, please consult our Investor Relations section of pandora.com.

With that let me turn the call over to Joe Kennedy Pandora's Chairman and CEO.

Joe Kennedy - President and CEO: Thanks Dom. This quarter exceeded our expectations. As our strong momentum continues with both listeners and advertisers. Consumer adoption of Pandora personalized radio continues at an extraordinary pace.

At the end of July, active users were just under 55 million, an increase of 48% from just over 37 million during the same time period last year. Listener hours for the quarter were 3.30 billion an increase of 18% year-over-year, more than 75% of total listening hours took place on mobile and other connected devices. To put our listener hours in a broader perspective, they exceeded the total number our hours U.S. consumer spend on YouTube in the same time. Pandora's market share of all U.S. radio listening as of the end of July exceeded 6%, up from 3.5% a year ago.

The second quarter financial results exceeded the high end of our revenue and earnings expectations. Pandora’s total revenue grew 51% to $101.3 million.

Total mobile revenue including subscription revenue on mobile was approximately $59.2 million. Mobile revenue was up 86% year-over-year quite close to our growth rate in mobile hours which was 96%. Meaning that we have narrowed the mobile monetization gap considerably.

In fact if one adjusts the mobile revenue from Q2 of last year to exclude the revenue associated with the single large advertiser we had at that time. Our growth in mobile revenue year-on-year actually outpaced the growth in mobile hours. We expect continued strong progress for the remainder of the year and as Steve will detail later in the call we are raising our guidance for fiscal 2013 based on our strong second quarter results and ongoing business momentum.

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