Following news that CEO Joe Kennedy will be stepping down after nearly 10 years at the helm, shares of online music streaming company Pandora Media Inc (NYSE:P) jumped 21%.
The 53-year-old will remain at Pandora until a replacement is found. In a statement Kennedy said,”I reached the conclusion and advised the board that the time is right to begin a process to identify my successor.”
Kennedy’s announcement of his exit came on the heels of better than expected fourth quarter sales and improving finances.
Ad revenue for the quarter jumped 51% to $109 million. Growth year-over-year was robust and the company provided upbeat guidance. Subscription and other revenue rose 74% to $16.1 million. The company also expanded its sales force 40%.
Pandora currently commands 8% of all radio listening, and it’s the largest radio station in almost every major U.S. market. Total active listeners is some 67 million.
The company revolutionized the radio industry. Pandora Media Inc (NYSE:P) lets users create customized “radio stations” based on their listening tastes. Pandora will assemble a radio station based on songs or artists a user likes by carefully curating a select song list based on a user’s preference.
Users can tune in to listen on desktops or mobile devices. Auto makers have just started putting Pandora’s service in cars. Users are allowed 40 free hours a month. Once that threshold has been reached users receive a warning and can pay a nominal 99 cents for the rest of the month.
But that’s not how the company makes money. It’s ads the company relies on for revenue.
Apart from Apple Inc. (NASDAQ:AAPL)’s iTunes, Pandora remains the biggest name in digital music. Rivals include lesser known private names such as Songza and Spotify.
Founder Time Westergren has said in the past that on-demand music sites like Songza and Spotify are “not fundamentally competitive with radio listening” emphasizing Pandora’s algorithms and discovery elements that make for a unique listening experience.