Pandora Spins More Than LP’s: Says Cost Saving Measures Will Offset Reinvestment in Growth Initiatives

Pandora’s restructuring plans include a reduced workforce and an expansion in Atlanta with lower “location costs.” Here’s the full official release. Are you buying what they’re selling?

Company Release – 1/31/2018 4:45 PM ET

OAKLAND, Calif.–(BUSINESS WIRE)– Pandora (NYSE:P), the largest music streaming service in the U.S., today announced an organizational restructuring designed to prioritize its strategic growth initiatives and optimize overall business performance. The redesign shifts resources to focus on ad-tech and audience development efforts while positioning the company for improved operating leverage over time. It also simplifies the organization into a flatter structure for smarter, faster execution.

Effective immediately, a combination of eliminated roles and other cost-saving measures are expected to result in combined annualized savings of approximately $45 million to adjusted EBITDA. The savings will be reinvested into growth initiatives including ad-tech, non-music content, device integration and marketing technology, toward which the company will redeploy existing employees and hire for new positions.

Even with significant reinvestment in these growth initiatives, the cost reduction efforts mean that Pandora expects operating expenses, excluding subscription commissions, to represent a lower percentage of revenue in full-year 2018 than in 2017. In addition to creating operating leverage with these organizational changes, Pandora is focused on capturing additional cost efficiencies with tighter business processes, automation, expansion in lower-cost locations and management of content costs – all of which will be incremental to the savings above.

“Pandora is the largest music streaming service in the U.S. People spend more time on Pandora than any other digital platform in the country, and as our dynamic industry evolves, we must also evolve,” said Roger Lynch, CEO of Pandora. “As I shared last quarter, we know where and how to invest in order to grow. We have an aggressive plan in place that includes strategic investments in our priorities: ad-tech, product, content, partnerships and marketing. I am confident these changes will enable us to drive revenue and listener growth.”

Pandora also announced plans to expand its presence and workforce in Atlanta, providing a significant opportunity to add instrumental talent in a region with lower costs than the company’s headquarters in Oakland, CA.

“Atlanta is a city with a rich history in music and a large pool of diverse tech talent that we can tap into as we scale,” added Lynch. “While we are committed to having Oakland remain our headquarters, we’re excited to build on the great foundation of our awesome team there and expand our presence in Atlanta over time.”

“These changes allow us to act faster, invest for growth and extend our leadership as the audio market hits what we believe will soon be a major inflection point,” said Lynch.

Funny. There’s no mention of SiriusXM’s recorded decrease of approximately $72 million, or approximately $0.02 per diluted share, in the fair value of its investment in Pandora.

Share This

About the author

Mike Dias is a Sales Director for Logitech. He specializes in consumer electronics & pro audio with an expertise in headphones & portable audio. He has over 15 years of experience selling custom handcrafted in-ear monitors.

View all articles by Mike Dias