Pandora said it would lay off around 7 percent of its U.S. workforce, excluding Ticketfly, by the end of the first quarter this year in an announcement that it would beat the guidance it set for the fourth quarter in 2016.
Pandora now has more than 4.3 million paid subscribers, which at the end of the year is a flash of good news for a company desperately in need of some. Pandora has had to contend with an increasingly commoditized music streaming business and had to find ways to differentiate itself from Apple Music and Spotify. The net result has been a rocky year for the company, which saw one of its biggest jumps happening as a result of potential acquisition talks.
By the end of December last year, Pandora Plus added more than 375,000 new subscribers, the company said. Pandora also said that it showed “strong advertising performance,” though didn’t clarify exactly what that meant.
After the announcement — which typically would show that a company was and is trying to get its act together — shares of Pandora were up around 9 percent. On the year, Pandora’s shares were up around 20 percent, jumping from major dives from its earning reports to spikes as a result of acquisition reports.
Pandora has increasingly tried to experiment with new lines of business, ranging from acquiring Ticketfly for $450 million to launching a $5 per month streaming service with replays and offline access. 2016 was essentially a transition year for Pandora as it looked to discover new ways to show Wall Street it could be an independent publicly traded company. Spotify and Apple Music have been consistently bulldozing parts of its business, and it’s had to get creative. So far, it looks like there are some positive signs, but a lot of work is still ahead for the company.
One of Pandora’s strongest selling points was that it could intelligently recommend music to users based on radio stations. And, for a while, those algorithms were quite good, and the idea of an online radio powered by ads and subscriptions looked like it would be a massive company. But the difficult environment of online music streaming, coupled with other companies also breaking into Pandora’s turf, showed that it was a much more complicated environment than expected.
Pandora will report its fourth-quarter earnings in February, which we’ll naturally be watching closely.