Pandora's All Ears

Pandora Media (NYS: P) certainly isn't suffering from a lack of popularity.

The personalized radio service operator posted strong growth in its latest quarter.

Revenue soared 99% to $75 million in its fiscal third quarter, fueled by a 102% spike in ad revenue of $66 million and a more modest 80% surge in subscription revenue of $9 million. The performance ends Pandora's streak of six consecutive quarters of triple-digit top-line growth, but you won't see too many people complaining about a 99% leap in revenue.

Adjusted earnings checked in with a profit of $0.02 a share. This is the second quarter in a row where Pandora has surprised deficit-seeking analysts with a tweaked profit of $0.02 a share. Wall Street was settling for a small deficit on just $71.4 million in revenue.

There are now 40 million active Pandora users, 65% ahead of where Pandora was a year ago. It's a lot of people, and they're listening more per person. Pandora served up a whopping 2.1 billion hours of content during the period, more than double last year's listening time.

Analysts weren't necessarily impressed with its guidance for the current quarter. Pandora's eyeing a deficit of $0.02 a share to $0.04 a share on $80 million to $84 million in revenue. Then again, Pandora has already proved to be adept at underestimating its performance in its brief life as a public company. Three months ago it was telling Wall Street to expect a small loss in its fiscal third quarter.

Pandora's a hit as an ad service. The mere $9 million it scored in subscription revenue should be a warning to Spotify, CBS' (NYS: CBS) last.fm, and Sirius XM Radio (NAS: SIRI) that have erected tollbooths on their mobile streaming apps.

Pandora realizes that freeloaders can be monetized through ad revenue, and it's making sure that it has a meaty presence in next-generation dashboards. Toyota (NYS: TM) commercials these days are showing off the Entune platform, where Pandora is one of six default touchscreen icons. Ford (NYS: F) has offered voice-activated access to Pandora through its SYNC AppLink platform for some time.

Don't let the small earnings number or the uninspiring guidance trick you. Pandora's growth party is just getting started.

If you want to see how the premium and streaming radio wars play out, consider trackingSIRIUS XM RadioandPandora Mediathrough My Watchlist.

At the time thisarticle was published The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Ford. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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