Pandora prices shares at $9 for $1B valuation

Faith Merino · June 3, 2011 · Short URL:

Business is booming and Pandora's financials are looking good

Three months after Pandora filed for an IPO, the company has put a price tag on its shares: $9. With 5,000,682 shares of common stock up for grabs, the pricing gives Pandora a valuation of more than $1 billion. While Pandora Media, Inc. is selling over five million shares of its common stock, other stockholders are selling 8.6 million shares.

Pandora’s financials are looking pretty snug. Pandora raked in $137.8 million in revenue in FY 2011, which was an explosive leap from FY 2009, when the company made only $19.3 million in revenue. But while revenues were up, so were losses. In fiscal year 2011, the company suffered a net loss of $1.8 million, which isn’t too bad, considering the fact that the company lost $22 million in 2009.

But the company has warned investors that it will be losing money throughout 2012 as well, so no one should be surprised. While Pandora is losing money, business is booming. Registered users are up to 94 million, compared to 53 million the previous year. Additionally, the amount of time users spend on the site has risen to 1.6 billion hours from 0.7 billion hours the year before.

So what accounts for the Pandora boom? Mobile devices. Pandora released the first mobile version of its service for cell phones in May 2007, and by the end of the year, its registered user base shot up from 6.9 million to 10 million.  In 2008, Pandora launched an iPhone app and subscribers skyrocketed.  The company’s users doubled as 35,000 new listeners were subscribing to Pandora each day to stream their personalized radio from their phones. By 2009, the company had 22 million registered users, and the number has doubled every year since.

The company says that it is adding three million new users each month, and that half of all subscribers are new users subscribing on a mobile device. More than half of all the music streamed from Pandora is streamed via a non-PC device, and the Pandora App has seen 50 million downloads to date.

The company will be hitting the stock market under the ticker symbol "P". 

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Pandora, the leading internet radio service, gives people music they love
anytime, anywhere, through a wide variety of connected devices: laptop and
desktop computers, smartphones, connected BluRay players, connected TVs,
etc. Personalized stations launch instantly with the input of a single “seed” –
a favorite artist, song or genre. The Music Genome Project®, a deeply
detailed, hand-built musical taxonomy, powers the personalization or
Pandora. Using this musicological “DNA” and constant listener feedback
Pandora crafts personalized stations from the more than 800,000 songs that
have been analyzed since the project began in January 2000.
More than 75 million people throughout the United States listen to
personalized radio stations for free on Pandora through their PCs, mobile
phones and devices such as the iPad, and connected in-house devices
ranging from TVs to set-top boxes to Blu-Ray players. Mobile technology has
been a significant factor in the growth and popularity of Pandora, starting
with the introduction of the Apple app store for the iPhone in the summer of
2008. Pandora instantly became one of the most top downloaded apps and
today, according to Nielsen, is one of the top five most popular apps across
all smartphone platforms.

Pandora is free, simple and, thanks to connectivity, available everywhere
consumers are – at the office, at home, in the car and all points in between.
In 2009 the Company announced that Pandora would be incorporated into
the dashboard in Ford cars via SYNC technology; GM has already followed in
announcing plans to integrate Pandora into its vehicles and Mercedes-Benz
introduced their Media Interface Plus device that works with the
free Pandora iPhone app to provide direct control of Pandora from in-dash
stereo controls. This was all great news for the millions of Pandora listeners
who had been plugging their smartphones into car dashboards to listen to
personalized stations while driving. More than 50 percent of radio listening
happens in the car, making it a crucial arena for Pandora.

Today tens of millions of people have a deeply personal connection with
Pandora based on the delight of personalized radio listening and discovery.
These highly engaged listeners reinforce the value Pandora provides to: 1)
musicians, who have found in Pandora a level playing field on which their
music has a greater chance of being played than ever before; 2) advertisers,
who benefit from the multi-platform reach of Pandora, as well as its best
practices in targeting consumers for specific campaigns; 3) the music
industry, which has found in Pandora a highly effective distribution channel;
and 4) automobile and consumer electronics device manufacturers, who have
noted that incorporating Pandora into their product makes it more valuable
to consumers.

Pandora continues to focus on its business in the United States. The radio
arena has never been hotter, thanks to technology that enables radio to be
personalized to the individual and more accessible than ever before. Right
now millions of people listen to Pandora in the United States and we hope
someday to bring Pandora to billions of people around the world.

• 2000 – Tim Westergren’s Music Genome Project begins.
• 2005 – Pandora launches on the web.
• 2008 – Pandora app becomes one of the most consistently downloaded
apps in the Apple store.
• 2009 – Ford announces Pandora will be incorporated into car
dashboard. Alpine and Pioneer begin selling aftermarket radios that
connect to consumers’ iPhones and puts the control and command of
Pandora into the car dashboard.
• 2010 – Pandora is present on more than 200 connected consumer
electronics devices ranging from smartphones to TVs to set-top boxes
to Blu-ray players and is able to stream visual, audio, and interactive
advertising to computers, smartphones, iPads, and in-home connected


Tim Westergren

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