Pandora Reports Record 4Q13 & Fiscal Year 2013 Financial Results

       Pandora Reports Record 4Q13 & Fiscal Year 2013 Financial Results

- Fiscal 2013 revenue of $427.1 million grew 56% year-over-year; 4Q13 total
revenue of $125.1 million grew 54% year-over-year

- 4Q13 total mobile revenue of $80.3 million grew 111% year-over-year,
outpacing mobile listener hour growth, which grew 70% year-over year

- Fiscal 2013 total mobile revenue of $255.9 million more than doubled and
grew 105%, outpacing mobile listener hour growth, which grew 89% year-over
year

PR Newswire

OAKLAND, Calif., March 7, 2013

OAKLAND, Calif., March 7, 2013 /PRNewswire/ --Pandora (NYSE: P), the leading
Internet radio service, today announced financial results for the fourth
quarter and fiscal year 2013 ended on January 31, 2013.

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

"We continue to monetize mobile at record levels and exceeded our expectations
for the quarter," stated Joe Kennedy, Chairman & CEO of Pandora. "We closed
the year with a record 8% share of total U.S. radio listening and record
mobile monetization that cemented our leadership in mobile advertising. We
have completed our technology integration with radio ad buying platforms and
are rolling it out to the market. Pandora has been hiring top talent in local
radio markets to further increase our share of the $15 billion radio ad
market. We are now effectively the largest radio station in almost every
major market and begin fiscal year 2014 with extraordinary momentum."

Fiscal 4Q13 and Fiscal Year 2013 Financial Results

Total Revenue: For the fourth quarter of fiscal 2013, total revenue was $125.1
million, a 54% year-over-year increase. Advertising revenue was $109.0
million, a 51% year-over-year increase. Subscription and other revenue was
$16.1 million, a 74% year-over-year increase.

For the fiscal year 2013, total revenue was $427.1 million, a 56%
year-over-year increase. Advertising revenue was $375.2 million, a 56%
year-over-year increase. Subscription and other revenue was $51.9 million, a
51% year-over-year increase.

Net Loss per Share: For the fourth quarter of fiscal 2013, GAAP basic and
diluted net loss per share were ($0.09). Non-GAAP basic and diluted net loss
per share were ($0.04), excluding approximately $6.9 million in stock-based
compensation. Basic and diluted earnings per share were based on 170.9 million
weighted average shares outstanding.

For the fiscal year 2013, GAAP basic and diluted net loss per share were
($0.23). Non-GAAP basic and diluted net loss per share were ($0.08),
excluding approximately $25.5 million in stock-based compensation. Basic and
diluted earnings per share were based on 168.3 million weighted average shares
outstanding.

Cash: For the fourth quarter of fiscal 2013, the company ended with $89.0
million in cash, cash equivalents and short-term investments, compared with
$80.5 million at the end of the prior quarter.For the fourth quarter of
fiscal 2013, Pandora's cash generated in operating activities was
approximately $8.4 million compared to $1.9 million in the year-ago quarter.

Other Business Metrics

Total listener hours: Total listener hours grew 53% to 4.05 billion for the
fourth quarter of fiscal 2013, compared to 2.66 billion for the fourth quarter
of fiscal 2012.

For the fiscal year 2013, total listener hours grew 70% to 14.01 billion,
compared to 8.23 billion for the fiscal year 2012.

Guidance

Based on information available as of March 7, 2013, the company is providing
financial guidance for the first quarter and fiscal year 2014 as follows:

1Q14 Guidance: Revenue is expected to be in the range of $120 million to $125
million. Non-GAAP loss per share is expected to be between ($0.13) and
($0.10). Non-GAAP loss per share excludes stock-based compensation expense,
assumes minimal tax expense given our net operating loss position, and 174
million weighted average basic shares outstanding for the first quarter of
fiscal 2014.

Fiscal 2014 Guidance: Revenue is expected to be in the range of $600 million
to $620 million. Non-GAAP net loss or earnings per share is expected to be
between ($0.05) and $0.05. Non-GAAP loss per share excludes stock-based
compensation expense, assumes minimal tax expense given our net operating loss
position, and 176 million weighted average basic shares and 199 million
diluted shares outstanding for fiscal 2014.

4Q13 Financial Results Conference Call: Pandora will host a conference call
today at 2 p.m. PT/ 5 p.m. ET to discuss the fourth quarter and fiscal year
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 92620516, and available via webcast until March 21, 2013.

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 more than
one million tracks. 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; our
ability to integrate with radio advertising buying platforms; 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, 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)
                            Fiscal Quarter Ended        Fiscal Year Ended
                            January 31,                January 31,
                            2012          2013          2012         2013
Revenue:
 Advertising            $  72,053   $  108,979  $           $ 
                                                        239,957     375,218
 Subscription services  9,273         16,110        34,383       51,927
and other
Total revenue               81,326        125,089       274,340      427,145
Costs and expenses:
 Cost of revenue -      48,169        76,695        148,708      258,748
Content acquisition costs
 Cost of revenue -      6,679         9,250         22,759       32,019
Other (1)
 Product development    3,583         5,153         13,425       18,118
(1)
 Marketing and sales   20,916        34,084        65,010       107,715
(1)
 General and            10,054        14,333        35,428       48,247
administrative (1)
Total costs and expenses    89,401        139,515       285,330      464,847
Loss from operations        (8,075)       (14,426)      (10,990)     (37,702)
Other income (expense):
 Interest income       28            19            59           95
 Interest expense       (123)         (138)         (616)        (535)
 Other expense, net     -             (2)           (4,485)      (1)
Loss before provision for   (8,170)       (14,547)      (16,032)     (38,143)
income taxes
Income tax expense          (9)           (10)          (75)         (5)
Net loss                    $  (8,179)  $           $          $  
                                          (14,557)      (16,107)     (38,148)
Accretion of redeemable     -             -             (110)        -
convertible preferred stock
Increase in cumulative
dividends payable upon
conversion or liquidation   -             -             (3,648)      -
of redeemable convertible
preferred stock
Net loss attributable to    $  (8,179)  $           $          $  
common stockholders                       (14,557)      (19,865)     (38,148)
Basic and diluted net loss  $           $         $        $    
per share attributable to   (0.05)       (0.09)        (0.19)       (0.23)
common stockholders
Weighted-average shares
used in computing basic and 162,275       170,887       105,955      168,294
diluted per share amounts
(1) Amounts include stock-based compensation expenses
as follows:
                            2012          2013          2012         2013
Cost of revenue - Other     $         $        $       $   
                            186           314           582          1,214
Product development         557           1,179         1,638        4,530
Marketing and sales         1,901         3,440         4,866        12,294
General and administrative  804           1,957         2,101        7,462
                            $   3,448  $          $         $  
                                          6,890        9,187       25,500



Pandora Media, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
                                          As of January 31,  As of January 31,
                                          2012               2013
Assets
Current assets:
Cash and cash equivalents                 $  44,126         $  65,725
Short-term investments                    46,455             23,247
Accounts receivable, net                  66,738             103,410
Prepaid expenses and other current assets 2,806              6,232
Total current assets                      160,125            198,614
Property and equipment, net               15,576             17,758
Other assets                              2,314              2,460
Total assets                              $ 178,015         $ 218,832
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                          $   2,053       $   4,471
Accrued liabilities                       3,838              7,590
Accrued royalties                         33,822             53,083
Deferred revenue                          19,232             29,266
Accrued compensation                      11,962             21,560
Total current liabilities                 70,907             115,970
Other long-term liabilities               2,568              3,873
Total liabilities                         73,475             119,843
Stockholders' equity:
 Common stock                         16                 17
Additional paid-in capital                205,955            238,552
Accumulated deficit                       (101,426)          (139,574)
Accumulated other comprehensive loss      (5)                (6)
Total stockholders' equity                104,540            98,989
Total liabilities and stockholders'       $  178,015        $  218,832
equity



Pandora Media, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
                                    (Unaudited)
                                    Fiscal Quarter Ended    Fiscal Year Ended
                                    January 31,            January 31,
                                    2012          2013      2012      2013
Operating Activities
Net loss                            $           $       $       $  
                                    (8,179)      (14,557)  (16,107)  (38,148)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization       1,468         1,929     4,455     7,076
Loss on disposition of assets       13            -         296       23
Stock-based compensation            3,448         6,890     9,187     25,500
Remeasurement of preferred stock    -             -         4,499     -
warrants
Amortization of premium on          246           81        246       360
investments
Amortization of debt issuance costs 66            66        190       264
and debt discount
Changes in assets and liabilities:
Accounts receivable                 (6,491)       (5,546)   (24,526)  (36,672)
Prepaid expenses and other assets   (555)         (1,716)   156       (3,752)
Accounts payable and accrued        (1,124)       431       (865)     4,963
liabilities
Accrued royalties                   8,200         8,653     15,742    19,261
Accrued compensation               3,743         9,841     8,147     9,598
Deferred revenue                    800           2,290     3,322     10,034
 Reimbursement of cost of         241           -         616       1,243
leasehold improvements
Net cash provided by operating      1,876         8,362     5,358     (250)
activities
Investing Activities
Purchases of property and equipment (2,620)       (1,599)   (11,644)  (7,580)
Purchases of short-term investments (29,956)      (15,044)  (66,890)  (65,168)
Maturities of short-term            19,984        14,473    19,984    87,933
investments
Net cash provided by (used in)      (12,592)      (2,170)   (58,550)  15,185
investing activities
Financing activities
Repayments of debt                  -             -         (7,596)   -
Proceeds from issuance of common    1,246         1,812     2,074     6,877
stock
Tax withholdings related to net
share settlements of restricted     -             -         -         (208)
stock units
Proceeds from exercise of preferred -             -         165       -
stock warrants
Proceeds from initial public        (280)         -         90,632    -
offering, net of offering costs
Payment of dividends to preferred
stockholders at initial public      -             -         (31,005)  -
offering
Net cash provided by financing      966           1,812     54,270    6,669
activities
Effects of foreign currency
translation on cash and cash        -             (4)       -         (5)
equivalents
Net increase (decrease) in cash and (9,750)       8,000     1,078     21,599
cash equivalents
Cash and cash equivalents at        53,876        57,725    43,048    44,126
beginning of period
Cash and cash equivalents at end of $   44,126  $      $      $   
period                                            65,725    44,126    65,725



Pandora Media, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands, except per share data)
(Unaudited)
                            Fiscal Quarter Ended        Fiscal Year Ended
                            January 31,                January 31,
                            2012          2013          2012        2013
Net loss and net loss per
share reconciliations
GAAP net loss               $  (8,179)  $           $         $  
                                          (14,557)      (16,107)    (38,148)
Stock-based compensation    3,448         6,890         9,187       25,500
Change in the fair value of -             -             4,499       -
the warrant
Non-GAAP net loss           $  (4,731)   $           $         $ 
                                          (7,667)       (2,421)     (12,648)
Non-GAAP net loss per       $           $         $       $    
common share - basic       (0.03)       (0.04)        (0.02)      (0.08)
Weighted-average common     162,275       170,887       158,335     168,294
shares outstanding - basic*
Non-GAAP net loss per       $           $         $       $    
common share - diluted      (0.03)       (0.04)        (0.02)      (0.08)
Weighted-average common
shares outstanding -        N/A         N/A         N/A       N/A
diluted*
Costs and expenses
reconciliation:
GAAP costs and expenses     $  89,401   $  139,515  $          $ 
                                                        285,330    464,847
Stock-based compensation   (3,448)       (6,890)       (9,187)     (25,500)
Non-GAAP costs and          $ 85,953     $ 132,625    $ 276,143  $ 439,347
expenses
Loss from operations
reconciliation:
GAAP loss from operations   $  (8,075)  $           $         $  
                                          (14,426)      (10,990)    (37,702)
Stock-based compensation in 186           314           582         1,214
cost of revenue
Stock-based compensation in 557           1,179         1,638       4,530
product development
Stock-based compensation in 1,901         3,440         4,866       12,294
marketing and sales
Stock-based compensation in 804           1,957         2,101       7,462
general and administrative
Non-GAAP loss from          $  (4,627)   $           $         $ 
operations                               (7,536)       (1,803)     (12,202)



*Weighted-average common shares for the twelve months ended January 31, 2012
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.



Pandora Media, Inc.
Monetization: RPM History
(Unaudited)
              Fiscal Year Ended January 31,      Fiscal Year Ended January 31,
              2012                               2013
              Q1     Q2     Q3     Q4     FY     Q1     Q2     Q3     Q4     FY
Advertising
RPM
 Traditional  $    $    $    $    $     $    $    $    $    $ 
 Computer     55.33  69.86  67.26  59.62  62.68  46.52  57.14  58.03  53.53  53.73
 Mobile and
 other        $    $    $    $    $     $    $    $    $    $ 
 connected    18.42  23.74  22.74  19.34  21.05  17.88  22.17  25.59  23.51  22.53
 devices
 Total        $     $     $     $     $     $    $    $    $    $ 
 advertising  30.02  35.30  34.42  29.71  32.22  24.82  29.48  32.40  29.26  29.13
Total RPM
 Traditional  $    $    $    $    $     $    $    $    $    $ 
 Computer     53.39  64.52  62.06  56.22  58.84  45.54  55.02  56.40  52.82  52.36
 Mobile and
 other        $    $    $    $    $     $    $    $    $    $ 
 connected    19.36  24.67  23.60  20.15  21.93  18.86  23.32  26.96  25.05  23.83
 devices
 Total       $    $    $    $    $     $    $    $    $    $ 
              31.57  36.48  35.30  30.62  33.32  26.09  30.68  33.73  30.86  30.49



SOURCE Pandora

Website: http://www.pandora.com
Contact: Dominic Paschel, Corporate Finance & Investor Relations,
+1-510-842-6960, investor@pandora.com, or Mollie Starr, Pandora Corporate
Communications, +1-510-842-6996, press@pandora.com