Pandora 3Q15 Earnings Call Notes

Pandora Media’s (P) CEO Brian McAndrews on Q3 2015 Results

The impact of Apple music on our listening hours was muted

“I am pleased to say that, given the scale of press and consumer attention on this launch, the impact on our active users and listening hours was muted and was, in fact, consistent with what we experienced during the launch of Apple’s radio service in 2013.”

Bought Ticketfly

“Founded in 2008 by Ticketfly CEO Andrew Dreskin, a pioneer in online ticketing, Ticketfly has become a major force in the live events industry. This year, Ticketfly was named one of Fast Company’s “Most Innovative Companies in Music” with an average of 14 million people visiting Ticketfly.com and its network of client sites each month.

In 2014, Ticketfly sold 16 million tickets to more than 90,000 live events, generating more than $500 million in gross transaction value and crossing the $1 billion mark in cumulative gross transaction value. Ticketfly provides ticketing and marketing software for approximately 1,200 leading venues and event promoters across North America and powers more than 600 websites on behalf of its clients, making it the leading provider of website technology to the live events industry.”

Consumers try new technologies in an evolving marketplace

“In an evolving marketplace, consumers try new technologies and experiment with other services, and we would naturally expect ebbs and flows in active users and hours as we grow our category leadership.”

Launched brand campaign including on TV

“we also launched our new brand campaign with the theme “the next song matters” across multiple media channels, including, for the first time, television. We view our direct marketing as an investment to engage current and lapsed listeners, as well as attract new listeners in the short-term.”

The competitive landscape has changed a lot in two years

“the landscape is very different this year than it was two years ago when iTunes Radio launched. There are more players in the market and more people offering free music and free trials and discounted trials and all kinds of stuff”

Pandora at Morgan Stanley Conference Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Brian McAndrews – Chairman, President and CEO

Starting to see growth slowing

“our listener hours were about 1.5 billion, up 9%, our unique listeners was 75.3 million, up 11%. And so we’ve said, obviously, with the lot large numbers we are starting to see some growth slowing.”

Big market opportunity

“looking at the opportunity, we think it’s a very huge opportunity, $15 billion radio in the U.S. alone growing to $17 billion 2017, $22 billion-ish in video and display, digital advertising and then another $12 billion in mobile and when you kind of put all those together. It’s a really, really big opportunity for us because we play in all three of those market opportunity.”

Number one in 12 of 15 largest markets

“Media Audit also says that we’re number one in 12 to 15 markets, top 15 markets. So we stand by those numbers.”

On the impact of iTunes radio

“e’re still growing, the pace has slowed some, is any of that competitive? It’s really hard to know.

The reason we specifically could address iTunes radio, it was the first time that our active listeners actually went down, went down 2.6% the month that iTunes radio launched. So that was seen pretty clear to be a cause and effect there. And then our research indicated as you said there were people who were less committed listeners which make sense checking out iTunes.”

Spotify says it doesn’t compete with Pandora

“I mean Daniel Ek has publicly said we don’t compete with Pandora. We don’t think we compete with Pandora. So their goal is really to get subscribers. So they’re finding different ways to bring you into a free environment to be the funnel to get you to subscribe it. As I said we don’t have that kind of funnel, if you want to subscribe, we’re happy to have you subscribed. But if you want free, we’re equally happy because that’s really where we see the bigger opportunity.”

Pandora Presentation at Telsey Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$P Notes From Presentation Telsey Advisory Group Conference

“The average Pandora listener listens around 21 hours per month”

“The other 20% is what is oftentimes confused with as competition for Pandora, which is the on-demand space…that amounts to around 20% of the consumption of audio that takes place in that lean forward environment”

“When you look at how radio consumption takes place, nearly half of it takes place in the automobile, in the car side of things. The other — the rest of it, 35% in the home, 18% in the office is generally how radio has been consumed, again to the amount of roughly 56 hours per month. When you look at what Pandora is bringing to the table in terms of combining the best of what has historically made radio successful, which is ubiquity, which is discoverability, zero work, and ad supported and free to the consumer, that is why roughly 93% of the U.S. population listen to radio still on a weekly basis.”

“We’re now over 8% of the U.S. radio market. That essentially makes Pandora the number one station in every major DMA throughout the country.”

“200 million registered users”

“That traditional terrestrial radio market makes up around $15 billion in total available market.”

“revenue per thousand hours…Desktop…$52 per thousand hours…mobile…$25 per thousand hours”

“when you do direct deals, the challenge with that is every two years– it’s up in the air again. And with due respect to our on-demand vendors, that’s a challenge that in Apple or Spotify, Rhapsody, a MOG, an RDIOall of those companies have to engage in that constant behavior of negotiations with the labels…we are very happy in terms of operating under our compulsory license, the way radio has historically done.”

“what makes Pandora special isn’t creating static playlist, it’s about creating real live dynamic algorithms.”

“Pandora’s algorithms…have to…evolve with both cultural and personal tastes, and that’s really what the power of the algorithms are.”