Pandora Reports 3Q13 Financial Results

                    Pandora Reports 3Q13 Financial Results

- 3Q13 total revenue of $120.0 million grew 60% year-over-year

- 3Q13 total mobile revenue of $73.9 million grew 112% year-over-year

- 3Q13 total listener hours of 3.56 billion grew 67% year-over-year

- Active users reach 59.2 million growing 47% year-over-year

PR Newswire

OAKLAND, Calif., Dec. 4, 2012

OAKLAND, Calif., Dec. 4, 2012 /PRNewswire/ --Pandora (NYSE: P), the leading
Internet radio service, today announced financial results for the third
quarter of fiscal 2013.

(Logo: http://photos.prnewswire.com/prnh/20110615/SF20192LOGO)

"This quarter exceeded our expectations as we monetized mobile at record
levels and grew total mobile revenue 112%," stated Joe Kennedy, Chairman & CEO
of Pandora. "During the quarter we launched Pandora 4.0, the biggest redesign
on the iOS and Android platforms ever, bringing new, innovative and enhanced
functionality to mobile devices for the first time for both users and
advertisers."

Fiscal 3Q13 Financial Results

Total Revenue: For the third quarter of fiscal 2013, total revenue was $120.0
million, a 60% year-over-year increase. Advertising revenue was $106.3
million, a 61% year-over-year increase. Subscription and other revenue was
$13.7 million, a 52% year-over-year increase.

Earnings per Share: For the third quarter of fiscal 2013, GAAP basic and
diluted earnings per share were $0.01. Non-GAAP basic and diluted earnings per
share were $0.05, excluding approximately $7.1 million in stock-based
compensation. Basic earnings per share was based on 169.4 million weighted
average shares outstanding and diluted earnings per share was based on 190.3
million weighted average shares outstanding.

Cash: For the third quarter of fiscal 2013, the company ended with $80.5
million in cash, cash equivalents and short-term investments, compared with
$82.3 million at the end of the prior quarter. For the third quarter of
fiscal 2013, Pandora's cash used in operating activities was approximately
$878 thousand compared to cash provided by operating activities of $111
thousand in the year-ago quarter.

Other Business Metrics

Total listener hours: Total listener hours grew 67% to 3.56 billion for the
third quarter of fiscal 2013, compared to 2.12 billion for the third quarter
of fiscal 2012.

Guidance

Based on information available as of December 4, 2012, the company is
providing financial guidance for the fourth quarter and fiscal year 2013 as
follows:

4Q13 Guidance: Revenue is expected to be in the range of $120 million to $123
million. Non-GAAP loss per share is expected to be between ($0.06) and
($0.09). Non-GAAP loss per share excludes stock-based compensation expense,
assumes minimal tax expense given our net operating loss position, and 171
million weighted average basic shares outstanding for the fourth quarter
fiscal 2013.

Fiscal 2013 Guidance: Revenue is expected to be in the range of $422 million
to $425 million. Non-GAAP loss per share is expected to be between ($0.09)
and ($0.12). Non-GAAP loss per share excludes stock-based compensation
expense, assumes minimal tax expense given our net operating loss position,
and 168 million weighted average basic shares outstanding for fiscal 2013.

3Q13 Financial Results Conference Call: Pandora will host a conference call
today at 2 p.m. PT/ 5 p.m. ET to discuss the third quarter of fiscal 2013
financial results with the investment community. A live webcast of the event
will be available on the Pandora Investor Relations website at
http://investor.pandora.com. A live domestic dial-in is available at (877)
355-0067 or internationally at (443) 853-1239. A domestic replay will be
available at (855) 859-2056 or internationally at (404) 537-3406, using
passcode 35603295, and available via webcast until December 18, 2012.

About Pandora

Pandora gives people music they love anytime, anywhere, through connected
devices. (OK, we've added comedy as well so we're also up for playing some
jokes you'll love.) 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 of
Pandora® internet radio by using musicological "DNA" and constant listener
feedback to craft personalized stations from a growing collection of hundreds
of thousands of recordings. Tens of millions of people in the U.S. turn on
Pandora to hear music they love.
www.pandora.com

"Safe harbor" Statement:

This press release contains forward-looking statements within the Private
Securities Litigation Reform Act of 1995, including, but not limited to,
statements regarding expected revenue and non-GAAP EPS. These forward-looking
statements are based on Pandora's current assumptions, expectations and
beliefs and involve substantial risks and uncertainties that may cause
results, performance or achievement to materially differ from those expressed
or implied by these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to: our operation
in an emerging market and our relatively new and evolving business model; our
ability to increase our listener base and listener hours; our ability to
attract and retain advertisers; our ability to generate additional revenue on
a cost-effective basis; competitive factors; our ability to continue operating
under existing laws and licensing regimes; our ability to establish and
maintain relationships with makers of mobile devices, consumer electronic
products and automobiles; our ability to manage our growth; our ability to
continue to innovate and keep pace with changes in technology and our
competitors; risks related to service interruptions or security breaches; and
general economic conditions worldwide. Further information on these factors
and other risks that may affect our business is included in filings we make
with the Securities and Exchange Commission (SEC) from time to time, including
our Annual Report on Form 10-K and our Form 10-Q for the current quarter,
particularly under the heading "Risk Factors."

The financial information contained in this press release should be read in
conjunction with the consolidated financial statements and notes thereto
included in the company's most recent reports on Form 10-K and Form 10-Q, each
as they may be amended from time to time. The company's results of operations
for the current quarter are not necessarily indicative of the company's
operating results for any future periods.

These documents are available online from the SEC or on the SEC Filings
section of the Investor Relations section of our website at
investor.pandora.com. Information on our website is not part of this release.
All forward-looking statements in this press release are based on information
currently available to us, and we assume no obligation to update these
forward-looking statements in light of new information or future events.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are
prepared and presented in accordance with accounting principles generally
accepted in the United States ("GAAP"), we use the following non-GAAP measures
of financial performance: non-GAAP net income (loss) and non-GAAP diluted
earnings (loss) per share. The presentation of this additional financial
information is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP. These non-GAAP measures have limitations in
that they do not reflect all of the amounts associated with our results of
operations as determined in accordance with GAAP. In addition, these non-GAAP
financial measures may be different from the non-GAAP financial measures used
by other companies. These non-GAAP measures should only be used to evaluate
our results of operations in conjunction with the corresponding GAAP measures.
Management compensates for these limitations by reconciling these non-GAAP
financial measures to the most comparable GAAP financial measures within our
earnings press releases.

These non-GAAP financial measures differ from GAAP in that they exclude
stock-based compensation, which consists of expenses for stock options and
other awards under our equity incentive plans. The non-GAAP net income (loss)
and non-GAAP historical diluted earnings (loss) per share measures also
exclude the applicable change in fair value of certain warrants issued by us.
The change in fair value of certain warrants issued by us is included within
other expense, and stock-based compensation is included in the following cost
and expense line items of our GAAP presentation:

  oCost of revenue - other
  oProduct development
  oMarketing and sales
  oGeneral and administrative

Although stock-based compensation is an expense for us and is viewed as a form
of compensation, management excludes stock-based compensation from our
non-GAAP measures for purposes of evaluating our continuing operating
performance primarily because it is a non-cash expense not believed by
management to be reflective of our core business, ongoing operating results or
future outlook. Furthermore, determining the fair value of both stock-based
compensation and stock-derived warrants involves a high degree of estimation
and judgment such that the expense recorded may bear little resemblance to the
actual value realized upon the future exercise or termination of the related
stock-based instruments. In addition, the value of stock-based instruments is
determined using formulas that incorporate variables, such as market
volatility, that are beyond our control. We believe these non-GAAP financial
measures serve as useful metrics for our management and investors because they
enable a better understanding of the long-term performance of our core
business and facilitate comparisons of our operating results over multiple
periods and to those of peer companies, and, when taken together with the
corresponding GAAP financial measures and our reconciliations, enhance
investors' overall understanding of our current financial performance.

In the financial tables below, we provide a reconciliation of the most
comparable GAAP financial measure to the historical non-GAAP financial
measures used in this earnings release.

We estimate revenue generated through both our mobile and other connected
devices platform as well as our traditional computer platform. While we
believe that such disaggregated revenue estimates provide directional insight
for evaluating our efforts to monetize our service through these platforms, we
do not validate such disaggregated revenue to the level of financial statement
reporting. Such metrics should be seen as indicative only and as management's
best estimate.

Pandora Media, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                              Three months ended      Nine months ended
                              October 31,             October 31,
                              2011       2012         2011         2012
Revenue:
 Advertising              $        $          $          $  
                              65,985     106,258      167,904      266,239
 Subscription services    9,023      13,747       25,110       35,817
and other
Total revenue                 75,008     120,005      193,014      302,056
Costs and expenses:
 Cost of revenue -        37,658     65,713       100,539      182,053
Content acquisition costs
 Cost of revenue - Other  6,260      8,338        16,080       22,769
(1)
 Product development (1)  3,685      4,371        9,842        12,965
 Marketing and sales (1) 16,628     26,714       44,094       73,631
 General and              10,021     12,700       25,374       33,914
administrative (1)
Total costs and expenses      74,252     117,836      195,929      325,332
Income (loss) from operations 756        2,169        (2,915)      (23,276)
Other income (expense):
 Interest income         28         19           31           76
 Interest expense         (123)      (137)        (493)        (397)
 Other income (expense),  -          1            (4,485)      1
net
Income (loss) before          661        2,052        (7,862)      (23,596)
provision for income taxes
Income tax benefit (expense)  (23)       -            (66)         5
Net income (loss)             $      $        $         $  
                              638       2,052        (7,928)      (23,591)
Accretion of redeemable       -          -            (110)        -
convertible preferred stock
Increase in cumulative
dividends payable upon
conversion or liquidation of  -          -            (3,648)      -
redeemable convertible
preferred stock
Net income (loss)             $      $        $          $  
attributable to common        638       2,052        (11,686)     (23,591)
stockholders
Basic net income (loss) per   $      $       $        $    
share attributable to common  0.00       0.01         (0.13)       (0.14)
stockholders
Weighted-average shares used
in computing basic per share  161,288    169,391      86,976       167,423
amounts
Diluted net income (loss) per $      $       $        $    
share attributable to common  0.00       0.01         (0.13)       (0.14)
stockholders
Weighted-average number of
shares used in computing      191,014    190,278      86,976       167,423
diluted per share amounts
(1) Amounts include
stock-based compensation
expenses as follows:
                              2011       2012         2011         2012
Cost of revenue - Other       $      $       $       $     
                              184       333         396          900
Product development           491        1,180        1,081        3,351
Marketing and sales           1,463      3,186        2,965        8,854
General and administrative    537        2,374        1,297        5,505
                              $       $        $        $   
                              2,675      7,073        5,739        18,610

Pandora Media, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)
                                  As of January 31,      As of October 31,
                                  2012                   2012
Assets
Current assets:
Cash and cash equivalents         $            $          
                                  44,126                 57,725
Short-term investments            46,455                 22,778
Accounts receivable, net          66,738                 97,864
Prepaid expenses and other        2,806                  4,409
current assets
Total current assets              160,125                182,776
Property and equipment, net       15,576                 16,387
Other assets                      2,314                  2,612
Total assets                      $             $          
                                  178,015               201,775
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable                  $            $          
                                   2,053                 3,615
Accrued liabilities               3,838                  6,234
Accrued royalties                 33,822                 44,430
Deferred revenue                  19,232                 26,976
Accrued compensation              11,962                 11,719
Total current liabilities         70,907                 92,974
Other long-term liabilities       2,568                  4,064
Total liabilities                 73,475                 97,038
Stockholders' equity:
 Common stock                 16                     17
Additional paid-in capital        205,955                229,742
Accumulated deficit               (101,426)              (125,017)
Accumulated other comprehensive   (5)                    (5)
loss
Total stockholders' equity        104,540                104,737
Total liabilities and             $             $          
stockholders' equity             178,015               201,775

Pandora Media, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
 (Unaudited)
                        Three months ended          Nine months ended
                        October 31,                 October 31,
                        2011          2012          2011          2012
Operating Activities
Net income (loss)       $         $          $           $ 
                        638          2,052         (7,928)       (23,591)
Adjustments to
reconcile net loss to
net cash provided by
(used in) operating
activities:
Depreciation and        1,272         1,811         2,987         5,147
amortization
Loss on disposition of  283           -             283           23
assets
Stock-based             2,675         7,073         5,739         18,610
compensation
Remeasurement of
preferred stock         -             -             4,499         -
warrants
Amortization of premium -             87            -             279
on investments
Amortization of debt
issuance costs and debt 66            66            124           198
discount
Changes in assets and
liabilities:
Accounts receivable     (8,812)       (17,477)      (18,035)      (31,126)
Prepaid expenses and    1,671         (1,360)       711           (2,036)
other assets
Accounts payable and    1,397         2,815         259           4,532
accrued liabilities
Accrued royalties       1,108         4,077         7,542         10,608
Accrued compensation   584           (2,853)       4,404         (243)
Deferred revenue        (771)         2,831         2,522         7,744
 Reimbursement of
cost of leasehold       -             -             375           1,243
improvements
Net cash provided by
(used in) operating     111           (878)         3,482         (8,612)
activities
Investing Activities
Purchases of property   (3,653)       (2,094)       (9,024)       (5,981)
and equipment
Purchases of short-term (36,934)      (15,031)      (36,934)      (50,124)
investments
Maturities of           -             24,900        -             73,460
short-term investments
Net cash provided by
(used in) investing     (40,587)      7,775         (45,958)      17,355
activities
Financing activities
Repayments of debt      -             -             (7,596)       -
Proceeds from exercise
of preferred stock      -             -             165           -
warrants
Proceeds from initial
public offering, net of (754)         -             90,912        -
offering costs
Proceeds from issuance  174           1,498         828           5,065
of common stock
Tax withholdings
related to net share    -             (208)         -             (208)
settlements of
restricted stock units
Payment of dividends to
preferred stockholders  (375)         -             (31,005)      -
at initial public
offering
Net cash provided by
(used in) financing     (955)         1,290         53,304        4,857
activities
Effects of foreign
currency translation on -             (1)           -             (1)
cash and cash
equivalents
Net increase (decrease)
in cash and cash        (41,431)      8,186         10,828        13,599
equivalents
Cash and cash
equivalents at          95,307        49,539        43,048        44,126
beginning of period
Cash and cash
equivalents at end of   $   53,876  $   57,725  $   53,876  $   57,725
period

Pandora Media, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands, except per share data)
(Unaudited)
                           Three months ended          Nine months ended
                           October 31,                 October 31,
                           2011          2012          2011         2012
Net loss and net loss per
share reconciliations
GAAP net income (loss)     $         $          $         $  
                           638           2,052        (7,928)      (23,591)
Stock-based compensation   2,675         7,073         5,739        18,610
Change in the fair value   -             -             4,499        -
of the warrant
Non-GAAP net income (loss) $  3,313    $          $         $  
                                         9,125         2,310        (4,981)
Non-GAAP net income        $          $         $        $    
(loss) per common share - 0.02         0.05         0.01        (0.03)
basic
Weighted-average common
shares outstanding -       161,288       169,391       157,007      167,423
basic*
Non-GAAP net income (loss) $          $         $        $    
per common share - diluted 0.02         0.05         0.01        (0.03)
Weighted-average common
shares outstanding -       191,014       190,278       186,508      167,423
diluted*
Costs and expenses
reconciliation:
GAAP costs and expenses    $  74,252   $            $           $ 
                                         117,836      195,929     325,332
Stock-based compensation  (2,675)       (7,073)       (5,739)      (18,610)
Non-GAAP costs and         $ 71,577     $ 110,763    $ 190,190   $ 306,722
expenses
Loss from operations
reconciliation:
GAAP income (loss) from    $         $          $         $  
operations                 756           2,169        (2,915)      (23,276)
Stock-based compensation   184           333           396          900
in cost of revenue
Stock-based compensation   491           1,180         1,081        3,351
in product development
Stock-based compensation   1,463         3,186         2,965        8,854
in marketing and sales
Stock-based compensation
in general and             537           2,374         1,297        5,505
administrative
Non-GAAP income (loss)    $  3,431    $          $         $  
from operations                         9,242         2,824        (4,666)
*Weighted-average common shares for the nine months ended October 31, 2011
have been computed to give effect to the conversion of the convertible
preferred stock and warrants into common stock as though the conversion had
occurred at the beginning of the period.

SOURCE Pandora

Website: http://www.pandora.com
Contact: Dominic Paschel, Corporate Finance & Investor Relations, (510)
842-6960, investor@pandora.com, or Eric Brown, Pandora Communications and
Public Relations, (510) 842-6960, press@pandora.com