It’s a good day for Pandora Media, as long as you aren’t an employee.
The music streaming power’s shares are up more than 8% in post-market trading after it said that it beat the targets it set for revenues and cash flow in Q4 — and still plans to slash its U.S. employee base by about 7% before the end of March.
In the last three months of 2016 “we accelerated our core advertising business, increased advertising [revenue per 1,000 impressions] and saw strong improvements in adjusted EBITDA,” CEO Tim Westergren says. “Now, with all of the elements of our strategy in place, we are in the best position possible to expand our listener base, drive engagement and deliver significant value to all of our stakeholders.”
Well, not exactly all.
Pandora says it’s cutting 7% of the U.S. jobs, not including Ticketfly, and “undertaking operational efficiency measures to reduce overall operating costs in 2017.”
Westergren says this was “a difficult decision” for him. But the “commitment to cost discipline will allow us to invest more heavily in product development and monetization and build on the foundations of our strategic investments.”
There’s no word yet on what, specifically, is in store for Pandora’s employees.
The company signed up more than 375,000 net new subscribers in the quarter, which Westergren says “bodes well for the introduction of Pandora Premium later this quarter.”
Pandora formally releases its Q4 earnings, and will answer analysts’ questions, on February 9.
Pandora shares have taken a roller coaster ride over the last year or so. Investors tired of its recurring losses as it struggled to compete with powerful rivals including Apple, Google, and Spotify. They also are thrilled at the possibility of a sale — possibly to Liberty Media’s Sirius XM.
In February, the New York Times reported that Pandora had hired Morgan Stanley to help find a buyer. In July, the satellite radio company informally offered to pay about $3.4 billion, or $15 a share, for Pandora — which the board rejected.
Last month Pandora shares spiked when CNBC disclosed that directors had changed course and were now open to a sale.
SunTrust Robinson Humphrey’s Matthew Thorton urged investors last week to watch out for the time line — especially with activist investors putting management “under pressure to rein in costs” and after it reported disappointing results for Q3.
Anyone who wants to nominate a rival slate of directors could do so in February. As a result, “the stock could be driven by headlines until we get back to fundamentals, where sentiment is tepid,” he says.
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