The third quarter of 2018 delivered good news and bad news for the streaming music service Pandora.
For the first time since Q3 of 2017, its advertising revenue rose year-over-year. For Q3 2018, it was $291.9 million, up 6% from the same period last year.
In addition, the company’s efforts to supercharge its premium subscription service appear to be working. Paid subscriptions are up 49% year-over-year to $125.8 million.
Overall, revenues were up 16% year over year; the company beat market expectations.
However, the earnings were not all bullish.
While ad revenue rose, the number of monthly active listeners declined by more than 5 million year-over-year to 68.8 million. That means millions of Pandora users appear to be switching to rivals like Spotify or Apple Music.
The growth in advertising was due to the launch of its audio programmatic business, stemming from its acquisition of AdsWizz earlier this year.
What Pandora will look like a year from now is also in question.
The company agreed in September to be acquired by SiriusXM, in a deal valued at $3.5 billion. The satellite radio giant said that it planned to continue operating Pandora as a subsidiary once the deal closes, most likely in Q1 of 2019.
Will Pandora still seek to bolster its own subscription business? Or, will it be integrated into SiriusXM’s offerings? Another concern: will SiriusXM look to
Pandora’s programmatic audio ad tech to bolster its own ad revenue?