Pandora released its 2017 fourth quarter earnings on Wednesday (Feb. 21) reporting $395.3 million in revenue -- marking 7 percent growth year-over-year for the streaming service, excluding Australia, New Zealand and Ticketfly.
The quarterly revenue and adjusted EBITDA exceeded Pandora's previous forecast, driven by $97.7 million in subscription revenue that offset a 5 percent year-over-year decline in advertising revenue. Pandora reported a 25 percent increase in subscribers year-over-year, counting 5.48 million total -- up 290,000 from the previous quarter and amounting to a 63 percent increase in subscription revenue year-over-year.
And while advertising revenue was $297.7 million in the fourth quarter of 2017, down from $313.3 million in the same quarter the year before, a notable bright spot was an all-time high in the company's ad RPM -- which measures revenue per 1,000 impressions. That reached $75.65 in Q4 2017, growing 12 percent year-over-year.
Driving the decline in ad revenue was a 6 percent drop in active users year-over-year, totaling 74.7 million in Q4 2017.
The year-over-year earnings comparison did not include Australia and New Zealand, where the service was discontinued on July 31, 2017, and Ticketfly was sold to Eventbrite on Sept. 1, 2017. With those included, total consolidated revenue for the fourth quarter of 2016 was $392.6 million.
CEO and president Roger Lynch -- the former chief of video streaming service Sling TV -- highlighted user engagement, noting Pandora's status as the world's largest ad-supported music service and that its users spend more time with the service than any other digital publisher, according to Comscore. He also emphasized how the dominant ad-supported service can form a cohesive strategy working in tandem with the paid subscription base, building the two parts up together.
"As much as people want to paint us as either an ad-supported business or a subscription service, I am a firm believer that we need to meet consumers where they are," he said. "While we're the largest ad-supported music service and we intend to press this advantage, I see significant opportunity to grow our subscription business and utilize the tactics I've learned from running three other subscription businesses prior to this."
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