Tomahawk, WI 11/25/2013 (BasicsMedia) – Pandora Media Inc (NYSE:P) is revealing interesting momentum and it is safe to day that the radio services company is well ahead of its targets as regards growth and stability. The ticker’s Q3 was up more than 50% from the year before and also topped analysts’ estimates by crossing the $180 million mark. However, profits are still hard to come by but this is understandable as the company is investing a lot in sales and marketing. Also, the costs doubled in the quarter due to increased growth orientated activities which simply mean that the future will see much reduced cost going forward.

The company however has some work to do in its administrative and general expenses and this cost doubled in the most recent quarter.

The particular area that is costing P in terms of operation cost is content acquisition which remains high at time when the company is winning the cost reduction war in other aspects of the business. Cost in the just reported quarter came in at about 48.2% of the revenue generated. This is substantial reduction which means that while content acquisition may remain the real headache, expenses are generally climbing down to levels they are required to be. Pandora Media Inc (NYSE:P)’s long-term target is to bring cost to 40% of the revenue. At this level], the company will easily climb to the profitable zone where it has been lacking for a long time in regards the GAAP standards. As costs come down, I also expect the profit margin to increase going forward.

Revenue growing nicely

Pandora Media Inc (NYSE:P) taps the most of its revenue from ads and subscription services. Revenue in all these segments have been growing nicely and just recently, the company noted more than 162% increase in subscription services revenue which brought the actual dollar to $36 million. As for the ads, revenue climbed more than 35% in the most recent quarter to hit the highs of $144 million.

Looking at the revenue percentile increase, they all but point to a company that is putting up a good fight against internet competitors and the conventional radio stations.

It is even important mentioning that Pandora Media Inc (NYSE:P) has been able to increase its listener base and now stands at more than 8% of the U.S. listener base. This simply means that P is giving radio stations a run for their money.

The future is bright

Pandora Media Inc (NYSE:P) is winning its market wars nicely and there is reason to believe that the company will continue posting revenue growth going forward. The company is promising revenue between $185 and $190 million in the current quarter. Looking at how the company has been able to lay its ground, I see the company surpassing the upper limit in its revenue estimates. And going into the future, I expect revenues to come in the region of $2 billion in the next two to three years.  Coupled with declining expenses, the company’s profits are also going to take the same curve.

If Pandora Media Inc (NYSE:P) maintains the pace, it could start paying divided in the next quarter; something that will also bolster its stock performance on the browser.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.