Pandora’s subscription products, including Pandora Premium, and other changes, such as 250+ new featured playlists, are helping the company grow its subscriber base and revenue. In fact, in its third quarter financial report, Pandora (MYSE: P) reported that its new Pandora Premium product had crossed the 1 million subscriber milestone, and its total subscribers have grown to 5.19 million, a 29 percent increase year-over-year. In addition, ad RPMs hit an all-time high of $70.27, a 21 percent increase, and daily active users on consumer electronics and automotive platforms are up 36 percent year-over-year.

Other highlights for the third quarter of 2017 include:

• Total revenue was $378.6 million, an 8 percent increase year-over-year.
• Subscription revenue was $84.4 million, a 50 percent increase year-over-year.
• Subscription revenue represents 22.3 percent of total revenue.
• Advertising revenue was $275.7 million, a 1 percent increase year-over-year. The average price per ad increased, but the number of ads sold decreased.
• Advertising revenue represents 72.8 percent of total revenue.
• Ticketing service revenue was $18.5 million in Q3, a 16 percent decline year-over-year. However, Ticketfly, who generated the revenue, was sold in Q3 so the revenue only represents two months.
• Total paid subscribers grew from 4.01 million in Q3 2016 to 5.19 million in Q3 2017, a 29 percent increase.
• Total listeners dropped to 5.15 billion for Q3, compared to 5.4 billion for the same period last year.
• Active listeners were 73.7 million, not including 1.1 million active listeners from Australia and New Zealand who were not included because Pandora is no longer providing service to those countries.
• GAAP net loss was $66.2 million, or ($0.34) per share, compared to $61.5 million, or $(0.27) per share, for the same period last year.

‘After just a short time here at Pandora, it’s clear to me we have a tremendous opportunity to meet the full spectrum of our listeners’ and advertisers’ needs,’ said Pandora president and CEO Robert Lynch in a press release. ‘We have significant scale, distribution and products that deliver a superior listening experience. We will leverage these strengths to become a more integral part of our listeners’ lives and reinforce our position as the definitive source for audio advertising.’

The company offered a bit more detail in the earnings call. Lynch, who has only been the CEO since September 18, commented on his early weeks at the company.

‘First and foremost, I believe everything we do needs to start with the customers we serve. At Pandora, these customers include both our listeners and our advertisers. We strive to be an irreplaceable and integral part of our listeners’ everyday lives and our advertisers’ evolving marketing needs,’ Lynch said on the earnings call. ‘For listeners, that means being able to find the content they want, and also discovering new content – on any connected device and in any setting they desire. And for advertisers, it means being able to transact with us in the way they desire…with the ability to target, verify and measure the success of their campaigns, and to reach their audiences in new and innovative ways.’

Lynch listed the company’s assets as unparalleled scale, massive distribution, data and advanced data science, which includes data and feedback from listeners spanning 17 years, and a tiered service model that includes the new Pandora Premium, an on-demand tier, and an improved Pandora Plus.

‘There is no longer a reason to leave Pandora for a different listening experience,’ Lynch said.

Lynch also explained the company’s challenges that included a declining user base, slower ad revenue growth than desired, and poor shareholder returns. He explained how he plans to address those issues, including stabilizing the company’s listener base and to maintain and build the company’s ‘best-in-class publisher of targeted digital advertising.’

If Pandora’s stock value is an indicator, investors were disappointed in Pandora’s results. On November 2, when quarterly financials were released, Pandora stock was valued at $7.41 per share. At 7:50 PM Eastern yesterday, Pandora stock was only worth $4.49 per share, a significant drop in just a week’s time.

Insider Take:

Pandora has had a tumultuous few years since we’ve been following them. They have changed CEOs several times in the last few years, bringing back – and then letting go – co-founder Tim Westergren. He was replaced by an interim CEO, who was then replaced by Lynch. The company is evolving their products and growing subscription revenue, but subscriptions represent less than one-fourth of their total revenue. At the same time, total listener hours are actually decreasing, and the company continues to post huge losses.

Though it has tried, Pandora has not been able to turn things around. Its efforts to find the right product and service mix and the perfect CEO have failed, and the company’s stock price is at an all-time low. It has bought and sold assets at a loss, and things are not shifting fast enough. With strong competitors like Apple Music and Spotify boasting tens of millions of subscribers, we don’t see how Pandora can sustain itself much longer. It is ripe for acquisition. The company’s only saving grace seems to be the $480 million cash infusion by Sirius XM, but that has not put a dent in what Pandora needs to save itself. Perhaps Q4 will tell a different story.