Things have been a bit rocky for Pandora lately, with the loss of its CEO, a quarterly report that saw its losses increase year to year and the introduction of yet another competitor in the market with the launch of Apple's iRadio. So the company is looking for a quick cash infusion.
Pandora is offering of 10 million shares of its common stock, it was announced Tuesday. Shares of Pandora rose 5%, or $1.20, to $25.19 a share on the news.
The stock will be sold at $23.99 a share, its closing price on September 13th, it was revealed in a filing with the Securities and Exchange Commission. In addition, Pandora also says that it intends to grant its underwriters, which include JPMorgan Chase, Morgan Stanley and Wells Fargo, a 30-day option to purchase up to another 2,100,000 shares, if they choose to.
All in all, this transaction could net Pandora roughly $280 million.
The new money will be used for “general corporate purposes, including working capital and capital expenditures," as well as some potential acquistions.
In addtion, it was also announced that Crosslink Capital, is looking to sell four million of its own shares of the company, reducing its stake from 16.45% to 13.42%, but still retaining its position as Pandora's largest shareholder.
Pandora needs to raise this money to keep ahead of a space that becoming more and more crowded. Every big name company out there seems to want to be in the music streaming business.
That includes Microsoft, Nokia, Google and even Twitter trying to carve out their own piece of the pie. Its most notable new competitor will likely be Apple's iRadio, a Pandora-like service that will be launched on iOS 7 on Wednesday.
While Pandora remains the second most downloaded free app of all time (after Facebook) in Apple’s App Store, iTunes dominates the digital music market, accounting for 63% of all paid music downloads. Apple recently sold its 25 billionth song, with 15 billion of those songs being purchased in the last three years.
Despite Pandora recently hitting 200 million users, doubling its userbase in two years, and beating expectations n the second quarter of 2013, there have been some signs of trouble on the horizon.
While the company generated $157.4 million in revenue, beating out Wall Street’s estimates of $156 million, and saw its revenue go up 55% year to year, it also saw its loss grow in that time. The company’s second quarter EPS came in at a loss of $0.04, while analysts were expecting a profit of $0.02 per share.
Pandora also recently underwent a change in leadership. Pandora CEO Joe Kennedy announced his intention to step down in March. Kennedy, who led the company through its highly successful IPO, said he wanted to move on to other opportunities.
He was finally replaced by Brian McAndrews, a managing partner at Madrona Venture Group, last week.
Pandora is not the only music streaming company that looking to raise funds. Earlier this month it was reported that Spotify is looking to raise an unspecified amount of new funding, at valuation of 35 billion kronor, or $5.27 billion.
Pandora could not be reached for further comment.
(Image source: https://www.pandora.com)
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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.
Timeline:
• 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
devices.