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Pandora Surges After Unexpected Break-Even Second Quarter

Pandora Media Inc., the Internet radio service, surged the most in 14 months after reporting break-even second-quarter results, excluding some items, that beat analysts’ estimates.

The shares rose 20 percent to $12.07 at 2:38 p.m. in New York, after jumping as much as 23 percent for the biggest intraday gain since June 15, 2011. Analysts had expected a loss of 3 cents, the average of 19 estimates compiled by Bloomberg.

Mobile advertising grew 86 percent in the period ended July 31, the company said. Marketers have been persuaded that ads for devices such as Apple Inc.’s iPhone and Android-based smart phones are effective, said Joe Kennedy, Pandora’s chairman and chief executive officer.

“Our mobile monetization strategies are working,” Kennedy said in an interview. “That is the core of our performance.”

Sales climbed 51 percent to $101.3 million in the quarter, Oakland, California-based Pandora said in a statement. Analysts had projected $101.1 million.

Pandora also said third-quarter and full-year results will exceed analysts’ estimates. The company expects $115 million to $118 million in revenue this quarter, versus the $115.4 million projected by analysts. The company also forecasts break even to profit of 1 cent a share, excluding items, in line with analysts’ projections.

For the year, Pandora estimates sales of $425 million to $432 million, more than the $423.9 million analysts expected, and projects a loss of 4 cents to 8 cents a share, excluding items. Analysts estimated a loss of 11 cents on that basis.

“Subscriber revenue and mobile revenue per minute improvements were bright spots and a guidance raise drew optimism from investors,” Scott Devitt, an analyst with Morgan Stanley in New York, wrote today in a report.

Advertising sales climbed 53 percent in the second quarter to $89.4 million, while content costs from streaming music increased 79 percent to $60.5 million, the company said.

Chief Financial Officer Steve Cakebread will leave the company at the end of the year to pursue other opportunities, he said on a conference call after the results.

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