Pandora files for $100 million IPO

tim_westergren_pandora.gi.top.jpgPandora founder Tim Westergren. By Stacy Cowley, tech editor


NEW YORK (CNNMoney) -- Internet radio site Pandora filed late Friday to raise up to $100 million in an initial public offering.

This offers the first public look at the company's finances -- and Pandora isn't yet profitable. The popular site posted a net loss of $328,000 on revenue of $90.1 million in the first nine months of its most recent fiscal year. In the fiscal year ended Jan. 31, 2010, it lost $16.8 million on sales of $55.2 million.

Its biggest expense is the royalties it pays for the music it streams. As Pandora's audience grows, so do those costs, which reached $45.4 million in the first nine months of 2010. That is twice what Pandora spent on them in the same period a year earlier.

And the Oakland, Calif.-based company's business is growing fast. As of last month, Pandora had 80 million registered members and was averaging a new one every second. Those members racked up 2.6 billion hours of listening to Pandora's song stream in nine-month stretch that ended Oct. 31.

Founded in 2000 as the Music Genome Project, Pandora uses algorithms and user feedback to generate music recommendations for its listeners.

The company claims a 50% share of all Internet radio listening time among the top 20 stations and networks in the United States, according to a November 2010 report by audience measurement firm Ando Media.

Pandora offers listeners two options: A free, advertising-supported stream or a "premium" plan priced at $36 per year, which offers higher audio quality and no ads.

The premium plan is a growing moneyspinner: It generated $12.3 million in the first nine months of 2010, up from just $2.6 million a year earlier. But advertising is by far Pandora's biggest revenue source. The site took in ad sales of $77.9 million in the first nine months of 2010, up from $28.7 million during the same timeframe a year earlier.

Pandora currently has 295 employees and a cash stash of $40.7 million. The site is backed by more than $55 million in venture capital from investors including Crosslink Capital, Greylock Partners, Hearst Interactive Media and Allen & Co.

Pandora founder Tim Westergren currently holds a 2.4% stake in the company he created nearly a decade ago. CEO Joseph Kennedy holds 2.7%. Both sold off some of their holdings to private investors last year in a tender offer priced at $3.138 per share of stock. Those sales netted $2.2 million for Westergren and $2.5 million for Kennedy.

Pandora is one of a growing number of tech companies looking to go public.

Online content creator Demand Media (DMD) raised $67 million last month in an IPO that valued the company at more than $1.5 billion. Business social network LinkedIn filed in late January for its IPO, revealing a profit of $10 million for the first nine months of 2010 on sales of $161 million.  To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.