Pandora Media’s second-quarter results and upbeat outlook hit all the right notes with investors

Pandora Media Inc (NYSE:P) beat top- and bottom-line estimates in its second-quarter results, issuing a cheery outlook for the following quarter.

The music-streaming company reported a net loss of US$0.15 per share on revenue of US$385mln compared with a loss of US$0.21 per share on revenue of US$377mln in the previous year’s second quarter.

The California-based company beat Wall Street estimates of a loss of US$0.16 EPS on revenue of $373mln.

There were fewer active listeners this quarter, 71.4 million compared with 76 million this time last year.

Listening hours also declined to 5.09 billion compared with 5.22 in the previous second quarter. However, the hours did beat analyst expectations of 4.9 billion hours.

READ: Pandora to buy AdsWizz for US$145mln as Spotify IPO looms

The company’s guidance on the earnings was music to investors’ ears.

For the following quarter, Pandora expects revenue of US$390mln to US$405mln compared with analyst estimates of US$395mln.

The company also recently completed its US$146.6mln cash-stock acquisition of ad-tech platform AdsWizz in an effort to increase the efficiency of its advertising operations.

The streaming giant introduced Premium Access, a feature that allows listeners to play songs on demand in exchange for watching a video ad. Playing songs on demand is a feature usually reserved for paying subscribers.

A total of 22 million users took advantage of that option compared with 13 million in the first quarter.

Shares of Pandora were up nearly 22% to US$8.24 in Wednesday morning trading.

Soundcheck from an analyst

Pandora’s improved results and focus on profitability have Wedbush analysts thinking that break-even adjusted EBITDA may be on the way.

“We remain optimistic on Pandora’s transition and progress towards sustainable profit expansion, although visibility to 2020 is limited,” wrote analyst Michael Pachter in a post-earnings note.

The road to significant profit growth remains unclear and the analyst is unsure if Pandora can support its current enterprise value until at least 2020.

With tough competition from the likes of Apple Music and Spotify, the analyst expects the shares to be range-bound.

Story by ProactiveInvestors