Pandora plans an IPO for mid-2011

Wed, Feb 16, 2011


A few years ago, on the invitation from a friend, I attended a Pandora launch party at some swanky Chicago club/bar. At the time, I had never heard of Pandora and was more interested in trying the finger foods and guzzling down some free alcohol. After a little bit of mingling, Pandora CTO Tom Conrad got up and delivered a few words explaining what Pandora was and why he thought it would revolutionize the way we listened to and discovered music.

Now, many years later, there’s no denying that Conrad was 100% right. Pandora lets users create their own music stations that dynamically “learn” a users musical tastes by constantly updating what songs are streamed based on songs that a user has previously indicated he likes or doesn’t like. I myself owe Pandora a debt of gratitude for introducing me to countless numbers of musical artists that I’d, most likely, would have never otherwise found on my own. In a relatively short period of time, Pandora has morphed into a mainstream service, bolstered in a tangible way by the introduction of the iPhone and the iTunes App Store.

Pandora founder Tim Westergren has said that the iPhone helped the music recommendation service increase its daily number of new subscribers from 20,000 a day to 40,000 a day. Moreover, less than a year since hitting the iTunes App Store, Pandora mobile had already hit over 2 million registered iPhone users. Pandora has also had a seemingly close relationship with Apple, and have taken the stage a few times at various Apple media events to showcase new iOS features such as multitasking.

And with Pandora continuing to grow, the company has tapped Morgan Stanley and J.P. Morgan to help them file an IPO, most likely sometime in mid-2011. As such, the company this past Friday filed an SEC S-1 form chock full of interesting information about the company.

During the first 9 months of 2010, Pandora had revenues of $90 million but still reported a loss of $328,000. In the previous year, Pandora lost $16.7 million on revenue of $55 million. So in one year’s time, Pandora was able to add $35 million+ to their bottom line while also running their business more efficiently.

So where is Pandora’s revenue coming from? Advertising mostly – 86% to be exact. The rest of Pandora’s revenue is derived from subscriptions.

Pandora also notes that it houses 800,000 songs from 80,000 artists while currently boasting over 80 million registered users, up from 46 million during the same period a year-ago and 22 million in 2009. That’s over 209% subscriber growth in two years, not too shabby. But if you’re looking to get in on this IPO action, just remember that the company has yet to turn a profit just yet and has an accumulated debt of $83.9 million.

via TechCrunch



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