Last Thursday Pandora (NYSE: P) reported its fourth quarter and full year 2016 financials. While there were many positives including $392.6 million of total revenue in the fourth quarter, a 17 percent increase year-over-year, and 4.39 million subscribers in Q4, a 12 percent increase year-over-year, the company still reported a staggering loss of $90 million for the quarter and $343 million for the full year.

Other quarterly highlights include:

• Ad RPMs (revenue per thousand impressions) of $67.43, an 18 percent increase year-over-year
• Total revenue of $392.6 million, a 17 percent increase year-over-year
• Advertising revenue of $313.3 million, a 16 percent increase year-over-year
• Ticketing service revenue of $19.4 million, a 20 percent increase year-over-year
• Subscription and other revenue of $59.8 million, compared to $57.0 million year-over-year
• Net loss of $90.0 million, compared to a $19.4 million loss for the same period last year
• Average revenue per paid subscription (ARPU) of $4.73
• Licensing costs per paid subscriber (LPU) of $3.12
• Total listener hours of 5.38 billion, a 0.4 percent increase year-over-year
• Active listeners of 81.0 million, compared to 81.1 million year-over-year
• Subscribers grew to 4.39 million, a 12 percent increase year-over-year

Other full-year highlights include:

• Ad RPMs of $55.94, an 11 percent increase year-over-year
• Total revenue of $1.385 billion, a 19 percent increase year-over-year
• Advertising revenue of $1.072 billion, a 15 percent increase year-over-year
• Ticketing service revenue of $86.6 million, a 25 percent increase year-over-year
• Subscription and other revenue of $225.8 million, compared to $220.6 million year-over-year
• Net loss of $343.0 million, compared to $169.7 million for the same period last year
• Total listener hours of 21.96 billion, a 4 percent increase year-over-year

“We made significant progress in 2016 by driving leverage in our core business while accelerating subscriptions to our paid product,” said Tim Westergren, founder and CEO of Pandora. “We enter 2017 laser-focused on the growth of our ad-supported business, the launch and growth of our subscription products, and an artist-to-fan platform to drive listener engagement and ticket sales. These three strategic pillars operate in harmony to create mutually reinforcing revenue streams across a large and growing addressable market.”

Based on the company’s strategic plans and 2016 results, Pandora is providing the following financial guidance for the first quarter of 2017:

• Revenue will range between $310 million and $320 million.
• Adjusted EBITDA loss will range between $70 million and $80 million, not including one-time severance costs of approximately $6 million.

Pandora offers little guidance for the full year, except to say that revenue will range between $1.55 billion to $1.70 billion and that the company is working toward adjusted EBITDA profitability in 2017, but is not providing additional guidance at this time.

Investors did not react significantly to the news. On February 8, 2017 at 4 PM EST, Pandora stock was valued at $12.94 per share. The following day, when financials were reported, stock closed at $12.61 per share, and at the end of the week, February 10 at 4 PM, the stock closed at $12.85. While there is little fluctuation here, the current stock price of $12.85 per share is significantly higher than Pandora’s stock price this time last year. On February 16, 2016, Pandora stock was valued at just $7.91 per share.

In January, we reported on Pandora’s adjusted financial guidance for its fourth quarter, in advance of the earnings report. We also reported that Pandora was planning to reduce its workforce by 7 percent during the first quarter of 2017. This would mean a loss of 100 to 150 jobs, costing the company between $5 million and $7 million in severance costs. Ticketfly, acquired by Pandora in November 2015, will not be affected by the job losses.

Insider Take:

Since Tim Westergren returned to the company in early 2016, Pandora has done a pretty quick turnaround, moving in a positive direction, and the fourth quarter and full year results reflect that. However, Pandora is still hurting financially, sustaining triple-digit million dollar losses for the year. $21.5 million of this can be attributed to the final payments in a copyright settlement, but the other costs – particularly licensing – are huge. Cutting staff will help the bottom line after the severance payments are made, but until then Pandora needs to continue growing revenue.

One way they are planning to do that is with the launch of their new streaming music packages and the artist-fan platform they are planning to connect fans directly with musical artists. This could give Pandora a competitive edge, but we are somewhat skeptical because, while subscriptions are growing, their total listener hours actually dipped and there are so many competitors in the marketplace now. To win listeners from other services, Pandora has to offer something truly unique with an exceptional user experience.