Pandora 2015 Annual Report Download

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Table of contents

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  • Page 5
    ... to expand our share of the $15 billion plus US radio business . In terms of digital revenue opportunities, we are positioning Pandora to lead the transition in what we see as an inevitable shift to mobile programmatic buying. People will increasingly use their mobile devices for e-commerce...

  • Page 6
    ... we pay to license music in the United States are based on rates set by the Copyright Royalty Board, or the CRB, and their ruling determining the rates for the next five years - 2016 through 2020 - will come near the end of 2015. While there may be some inherent investor uncertainty about Pandora...

  • Page 7
    ... EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35198 Pandora Media, Inc. (Exact name of registrant as specified in its...

  • Page 8
    ..., 2014 (the last business day of the registrant's most recently completed second quarter), based on the closing price of such stock on The New York Stock Exchange on such date was approximately $4,656 million. This calculation excludes the shares of common stock held by executive officers, directors...

  • Page 9
    ... Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on...

  • Page 10
    ... industry and market data contained in this Annual Report on Form 10-K are based on independent industry publications, including those generated by Triton Digital Media or "Triton" and International Data Corporation or "IDC" or other publicly available information. This information involves a number...

  • Page 11
    ...11-month) Calendar 2013 (11-month) February 2013 - December 2013 Calendar 2014 (12-month) January 2014 - December 2014 Calendar 2013 (11-month) Results Compared With Calendar 2012 (11-month recast, unaudited) Calendar 2012 (11-month recast, unaudited) February 2012 - December 2012 Calendar 2013 (11...

  • Page 12
    ...as the total number of accounts that have been created for our service at period end. As of December 31, 2014, more than 225 million registered users had accessed Pandora through smartphones and tablets. For the twelve months ended December 31, 2014, we streamed 20.03 billion hours of internet radio...

  • Page 13
    ... to connected devices throughout the home. Tv.pandora.com. We have developed a standards-based HTML5 website called tv.pandora.com that allows users to stream music content on next generation TV, game consoles and set top box architectures that support open web standards. Tv.pandora.com features...

  • Page 14
    ... solutions, offering advertisers the opportunity to reach in-car audiences through audio ads running on vehicle models and aftermarket automotive devices with native Pandora automotive integrations. In addition, we have invested in building a local advertising sales force in major radio markets...

  • Page 15
    ...a premium version of the Pandora service, which currently includes advertisement-free access and higher audio quality on the devices that support it. Pandora One is primarily available for purchase through major app stores and through the Pandora website. For the twelve months ended January 31, 2013...

  • Page 16
    ...SESAC rate is subject to small annual increases. In some cases, we pay royalties directly to music publishers. Music publishers own or administer copyrights in musical works and license those copyrights to third parties that use music, such as record labels, filmmakers, television and radio stations...

  • Page 17
    ...than 125,000 artists played on our service. Derived from tens of billions of hours of personalized listening, Pandora AMP is designed to help artists with many critical decisions such as tour routing, single selection, set lists, audience targeting and more. Music Industry Group. In October 2014, to...

  • Page 18
    ...demand services or play interactive video games on their home-entertainment system, computer or mobile phone rather than listen to the Pandora service, these content services pose a competitive threat. Competition for Advertisers We compete with other content providers for a share of our advertising...

  • Page 19
    ... lower advertising sales in the first three months of each calendar year due to reduced advertiser demand and increased usage due to increased use of media-streaming devices received as gifts during the holiday season. See the section entitled "Business Trends" in Item 7 of this Annual Report on...

  • Page 20
    ...and our telephone number is (510) 451-4100. Our website is located at www.pandora.com and our Investor Relations website is located at investor.pandora.com. We changed our fiscal year to the calendar twelve months ending December 31, effective beginning with the period ended on December 31, 2013. As...

  • Page 21
    ...allow the streaming in the U.S. of any sound recording lawfully released to the public. Pandora offers a small number of ancillary services (e.g., "Pandora Premieres") that allows users to more directly engage with a limited amount of content for which we secure rights directly from copyright owners...

  • Page 22
    ... both listeners and advertisers, will be adversely impacted. For the twelve months ended December 31, 2014, we incurred content acquisition costs for the public performance of musical works representing approximately 4% of our total revenue for that period. We currently operate under a license with...

  • Page 23
    ... a license, which could also lead to a reduction of musical works performed on our service, adversely impacting our ability to retain and expand our listener base. Internet radio is an evolving industry, which makes it difficult to evaluate our current business and future prospects. Internet radio...

  • Page 24
    ... other connected devices constituted approximately 77%, 76%, 80% and 83% of our total listener hours for the twelve months ended January 31, 2013, the eleven months ended December 31, 2012 and 2013 and the twelve months ended December 31, 2014, respectively. Digital advertising on mobile devices is...

  • Page 25
    ... advertising message delivered. These advertising products and programmatic channels are currently more developed in terms of ad technology and industry adoption on the web than they are on mobile. However, the majority of our listeners currently access our service through mobile devices. Therefore...

  • Page 26
    ... revenue depends on retaining and expanding our listener base and increasing listener hours. We must convince prospective listeners of the benefits of our service and existing listeners of the continuing value of our service. The more listener hours we stream, the more ad inventory we have to sell...

  • Page 27
    ... the total number of accounts that have been created for our service at period end and we define active users as the number of distinct registered users that have requested audio from our servers within the trailing 30 days from the end of each calendar month. To establish an account, a person does...

  • Page 28
    ... or play interactive video games on their home-entertainment system, computer or mobile phone rather than listen to the Pandora service, these content services pose a competitive threat. We believe that companies with a combination of financial resources, technical expertise and digital media...

  • Page 29
    ... of our web tuner and app as compared with other businesses and software that deliver audio and other content through the internet, mobile devices and consumer products. We face significant competition for listeners from companies promoting their own digital music and content online or through...

  • Page 30
    ... expands and as new internet-connected products are introduced, we must constantly adapt our technology. It is difficult to keep pace with the continual release of new devices and technological advances in digital media delivery and predict the problems we may encounter in developing versions...

  • Page 31
    ... metrics in the media buying systems that media buyers use to purchase advertising. Media buying agencies receive measurement metrics from third parties, such as Triton for internet radio and Nielsen for more traditional media like terrestrial radio and television. Media buying agencies may choose...

  • Page 32
    ... will be able to generate sufficient revenue from advertising sales associated with comedy content to offset the costs of maintaining comedy stations or the royalties paid for such comedy stations. Further, we have established a reputation as a music format internet radio provider and our ability to...

  • Page 33
    ... and automobile, mobile device and other consumer electronic product manufacturers to work with us, which we may not do successfully. Our brand may be impaired by a number of other factors, including service outages, data privacy and security issues, listener perception of ad load and exploitation...

  • Page 34
    ... of our service and harm our business. We rely on systems housed in our own facilities and upon third-party vendors, including bandwidth providers and data center facilities located in the United States and New Zealand, to enable listeners to receive our content in a dependable, timely and efficient...

  • Page 35
    ...and collect royalties or other payments. We have registered "Pandora," "Music Genome Project" and other marks as trademarks in the United States. Nevertheless, competitors may adopt service names similar to ours, or purchase our trademarks and confusingly similar terms as keywords in internet search...

  • Page 36
    ..., we may not be able to service our existing listeners, acquire new listeners or attract or retain advertising customers, each of which could inhibit the implementation of our business plan and materially harm our operating results. We may acquire other companies or technologies, which could divert...

  • Page 37
    ... terms. Expanding our operations into international markets is an element of our long-term strategy. For example, in June 2012 we began providing our service in New Zealand, Australia and their associated territories. However, offering our service outside of the United States involves numerous risks...

  • Page 38
    ..., in jurisdictions where copyright protection has been insufficient to protect against widespread music piracy, achieving market acceptance of our service may prove difficult as we would need to convince listeners to stream our service when they could otherwise download the same music for free. As...

  • Page 39
    ... relating to listeners. Restrictions on our ability to collect, access and harness listener data, or to use or disclose listener data or any profiles that we develop using such data, could in turn limit our ability to stream personalized music content to our listeners and offer targeted advertising...

  • Page 40
    ...to address related matters. Unauthorized access to music or playlists would potentially create additional royalty obligations with no corresponding revenue. We cannot control the actions of third parties who may have access to the listener data we collect. The integration of the Pandora service with...

  • Page 41
    ...adversely affect the popularity or growth in use of the internet, including laws limiting internet neutrality, could decrease listener demand for our service offerings and increase our cost of doing business. Future regulations, or changes in laws and regulations or their existing interpretations or...

  • Page 42
    ...similar companies in the internet, radio or digital media spaces; • our actual or anticipated achievement of non-financial key operating metrics; • general economic conditions and their impact on advertising spending; • the overall performance of the equity markets; • the number of shares of...

  • Page 43
    ...major change in our board of directors or management; • publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts; and • sales or expected sales of shares of our common stock by us, and our officers, directors...

  • Page 44
    ... candidates to our board of directors or to propose ...terms of our music licensing arrangements, including favorable royalty rates that currently apply to us, may not be available to an acquiror. These terms may discourage a potential acquiror from making an offer to buy us or may reduce the price...

  • Page 45
    ... tolerance and will also support our continued growth. The data centers host the Pandora.com website and intranet applications that are used to manage the website content. The websites are designed to be fault-tolerant, with a collection of identical web servers connecting to an enterprise database...

  • Page 46
    ...'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The New York Stock Exchange ("NYSE") under the symbol "P." The following table sets forth the range of high and low intra-day sales prices per share of our...

  • Page 47
    ... from June 15, 2011, the date our common stock commenced trading on the NYSE, through December 31, 2014 of the total cumulative return of our common stock with the total cumulative return of the New York Stock Exchange Composite Index (the "NYA Composite"), the Global X Social Media Index (the "SOCL...

  • Page 48
    ... months ended December 31, 2014 920,802 (30,406) (0.15) (in thousands, except per share data) 10,761 105,955 168,294 167,956 180,968 205,273 Key Metrics (unaudited):(1) Twelve months ended January 31, 2011 Listener hours 3.83 2012 8.23 2013 14.01 As of January 31, 2011 Active users 29.3 2012...

  • Page 49
    Table of Contents As of January 31, 2011 Balance Sheet Data: Cash and cash equivalents Working capital Total assets Long-term liabilities Preferred stock warrant liability Convertible preferred stock Common stock and additional paid-in capital Total stockholders' equity (deficit) $ 43,048 36,715 99...

  • Page 50
    ...as the total number of accounts that have been created for our service at period end. As of December 31, 2014, more than 225 million registered users had accessed Pandora through smartphones and tablets. For the twelve months ended December 31, 2014, we streamed 20.03 billion hours of internet radio...

  • Page 51
    ... One. Pandora One is a paid subscription service without any advertising. Pandora One also enables listeners to have more daily skips, enjoy higher quality audio on supported devices and enjoy longer timeout-free listening. • A key element of our strategy is to make the Pandora service available...

  • Page 52
    ...of streaming through increased advertising revenue across all of our delivery platforms. In March 2013, we instituted a 40 hour per month listening limit for our advertising supported service on certain mobile and other connected devices. Listeners who reached this limit could continue to use our ad...

  • Page 53
    ... in our listener hours. However, we expect to incur annual net losses on a U.S. GAAP basis in the near term because our current strategy is to leverage improvements in gross profit by investing in broadening distribution channels, developing innovative and scalable advertising products, increasing...

  • Page 54
    ... months ended December 31, 2012 11.55 1.01 12.56 2013 13.34 1.97 15.31 Listener hours (in billions) 17.58 2.45 20.03 Twelve months ended December 31, 2014 Advertising Revenue per Thousand Listener Hours ("ad RPMs") We track ad RPMs for our free, advertising-supported service because it is a key...

  • Page 55
    ... sound recordings for our Pandora One subscription service that are higher than the per-performance rates for our free, advertising-supported service. Total ad RPMs For the twelve months ended December 31, 2014 compared to the eleven months ended December 31, 2013, total ad RPMs increased primarily...

  • Page 56
    ... the eleven months ended December 31, 2013 compared to 2012, total subscription RPMs increased as the growth in subscription and other revenue outpaced the growth in subscription listener hours on both the computer and the mobile and other connected devices platforms. Total ad LPMs Total ad LPMs in...

  • Page 57
    ... periods. Twelve months ended January 31, 2013 Revenue Advertising Subscription and other Total revenue Cost of revenue Cost of revenue-Content acquisition costs Cost of revenue-Other(1) Total cost of revenue Gross profit Operating expenses Product development(1) Sales and marketing(1) General and...

  • Page 58
    ...a premium version of the Pandora service, which currently includes advertisement-free access and higher audio quality on the devices that support it. Subscription revenue is recognized on a straight-line basis over the duration of the subscription period. For the twelve months ended January 31, 2013...

  • Page 59
    ...31, 2013 Computer Mobile and other connected devices 35% 76% Eleven months ended December 31, 2012 2013 34% 75% 34% 58% Twelve months ended December 31, 2014 34% 53% Cost of revenue-Content acquisition costs principally consist of royalties paid for streaming music or other content to our listeners...

  • Page 60
    ... stop playing after a certain length of user inactivity with the service, partially offset by scheduled rate increases. For the eleven months ended December 31, 2013 compared to 2012, content acquisition costs increased by $84.1 million or 36%, due to increased listener hours, higher royalty rates...

  • Page 61
    ... and hosting costs driven by an increase in listener hours and a $2.3 million increase in other costs of ad sales related to events sold as part of advertising arrangements. In addition, the remaining increase in cost of revenue-other was due to the twelve months ended December 31, 2014 having one...

  • Page 62
    ... commissions on subscription purchases through mobile app stores, external sales and marketing expenses such as brand marketing and customer acquisition costs, public relations expenses, costs related to music events, agency platform and media measurement expenses, facilities-related expenses and...

  • Page 63
    ... adding personnel and systems to our administrative functions. For the twelve months ended December 31, 2014 compared to the eleven months ended December 31, 2013, general and administrative expenses increased $43.1 million or 62%, primarily due to a $23.1 million increase in employee-related costs...

  • Page 64
    ... of the mobile listening limit and an increase in accrued royalties of $13.0 million due to schedule rate increases, offset by a $60.6 million increase in accounts receivable driven by an increase in revenue. In the eleven months ended December 31, 2012, net cash provided by operating activities was...

  • Page 65
    ... rate increases and an increase in deferred revenue of $10.0 million primarily due to an increase in customers purchasing subscriptions for Pandora One, offset by an increase in accounts receivable of $36.7 million driven by an increase in revenue. Investing activities In the twelve months ended...

  • Page 66
    ... of these advertising sales-related trends on our fiscal results was not as pronounced due to the inclusion of January instead of October in our fourth fiscal quarter. The growth in listener hours on mobile and other connected devices was tempered in the eleven months ended December 31, 2013 by the...

  • Page 67
    ... and other revenue Subscription and other revenue is generated primarily through the sale of a premium version of the Pandora service which currently includes advertisement-free access and higher audio quality on supported devices. Subscription revenue derived from direct sales to listeners is...

  • Page 68
    ...transactional information which enabled us to estimate future returns. Accordingly, in January 2014, we began recording revenue related to these mobile subscriptions net of estimated returns. This change resulted in a one-time increase in subscription revenue in the three months ended March 31, 2014...

  • Page 69
    ... significantly increasing risk. Approximately 27% of our portfolio consists of cash and cash equivalents that have a relatively short maturity, and a fair value relatively insensitive to interest rate changes. Our available-for-sale investments consist of corporate debt securities, commercial paper...

  • Page 70
    ...8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PANDORA MEDIA, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Reports of Independent Registered Public Accounting Firm Consolidated Financial Statements: Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements...

  • Page 71
    ...of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders Pandora Media, Inc. We have audited the accompanying consolidated balance sheets of Pandora Media, Inc. as of December 31, 2013 and 2014, and the related consolidated statements of operations...

  • Page 72
    ... Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders Pandora Media, Inc. We have audited Pandora Media, Inc.'s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued...

  • Page 73
    ... Pandora Media, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) As of December 31, 2013 Assets Current assets Cash and cash equivalents Short-term investments Accounts receivable, net of allowance of $1,272 at December 31, 2013 and $1,218 at December 31, 2014...

  • Page 74
    ... Pandora Media, Inc. Consolidated Statements of Operations (in thousands, except per share amounts) Twelve months ended January 31, 2013 Revenue Advertising Subscription and other Total revenue Cost of revenue Cost of revenue-Content acquisition costs Cost of revenue-Other Total cost of revenue...

  • Page 75
    ... of Contents Pandora Media, Inc. Consolidated Statements of Comprehensive Loss (in thousands) Twelve months ended January 31, 2013 Net loss Change in foreign currency translation adjustment Change in net unrealized losses on marketable securities Other comprehensive loss Total comprehensive loss...

  • Page 76
    ...December 31, 2013 Issuance of common stock upon exercise of stock options Stock-based compensation Vesting of restricted stock units Share cancellations to satisfy tax withholding on vesting of restricted stock units Stock issued under employee stock purchase plan Excess tax benefit from stock-based...

  • Page 77
    Table of Contents Pandora Media, Inc. Consolidated Statements of Cash Flows (in thousands) Twelve months ended January 31, 2013 Operating activities Net loss Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization Loss on retirement of ...

  • Page 78
    ...computers and car audio systems, as well as a range of other internet-connected devices. We have pioneered a new form of radio-one that uses intrinsic qualities of music to initially create stations and then adapts playlists in real-time based on the individual feedback of each listener. We generate...

  • Page 79
    ... through the sale of a premium version of the Pandora service which currently includes advertisement-free access and higher audio quality on supported devices. We offer both an annual and a monthly subscription option. Subscription revenue derived from direct sales to listeners is recognized...

  • Page 80
    ... customers to sell advertising packages that include different media placements or ad services that are delivered at the same time, or within close proximity of one another. We recognize the relative fair value of the media placements or ad services as they are delivered assuming all other revenue...

  • Page 81
    ...the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts. We also consider any changes to the financial condition of our customers and any other external market factors that could impact the collectability of our receivables in...

  • Page 82
    ..., we record this as a cost of revenue in the related period. Employee-related costs include salaries and benefits associated with supporting hosting and ad serving functions. Other costs of ad sales include costs related to music events that are sold as part of advertising arrangements. Product...

  • Page 83
    ...-40) ("ASU 2014-15"). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when...

  • Page 84
    ...of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued As of December 31, 2013 (in thousands) Cash and cash equivalents Cash Money market funds Commercial paper Corporate debt securities Total cash and cash equivalents Short-term investments Commercial paper Corporate...

  • Page 85
    ... of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued The following tables present available-for-sale investments by contractual maturity date as of December 31, 2013 and 2014. As of December 31, 2013 Adjusted Fair Value Cost (in thousands) Due in one year or less...

  • Page 86
    Table of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued As of December 31, 2014 Twelve Months or Less Fair Value Money market funds Commercial paper Corporate debt securities U.S. government and government agency debt securities Total $ $ - - 192,699 Gross ...

  • Page 87
    ... of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued Balance at Beginning of Period Allowance for Doubtful Accounts For the twelve months ended January 31, 2013 For the eleven months ended December 31, 2013 For the twelve months ended December 31, 2014 Additions...

  • Page 88
    ... December 31, 2013 and 2014: As of December 31, 2013 Fair Value Measurement Using Quoted Prices in Significant Other Active Markets Observable for Identical Inputs Instruments (Level 1) (Level 2) (in thousands) Assets Money market funds Commercial paper Corporate debt securities U.S. government and...

  • Page 89
    ... Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued As of December 31, 2014 Fair Value Measurement Using Quoted Prices in Significant Other Active Markets Observable for Identical Inputs Instruments (Level 1) (Level 2) (in thousands) Assets Money market funds Commercial...

  • Page 90
    ... of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued As of December 31, 2014 (in thousands) 2015 2016 2017 2018 $ 733 733 733 733 733 3,275 $ 6,940 2019 Thereafter Total future amortization expense Restricted Cash As part of our original May 2011 credit facility...

  • Page 91
    ... Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued We conduct our operations using leased office facilities in various locations. We lease office space under arrangements expiring through 2024. Rent expenses for twelve months ended January 31, 2013, the eleven months ended...

  • Page 92
    Table of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued York. The complaint claims common law copyright infringement and unfair competition arising from allegations that Pandora owes royalties for the public performance of sound recordings recorded prior to ...

  • Page 93
    Table of Contents Pandora Media, Inc. Twelve months ended January 31, 2013 Current Federal State and local International Total current income tax expense Deferred Federal State and local Valuation allowance Total deferred income tax expense Total provision for income taxes $ $ (10,098) (1,573) 11,...

  • Page 94
    ... due to ownership changes. Such annual limitations could result in the expiration of our net operating loss and tax credit carryforwards before they are utilized. During the twelve months ended December 31, 2014, our valuation allowance increased by $16.2 million. At December 31, 2013 and 2014, we...

  • Page 95
    ... year Increases related to tax positions taken during the current year Ending balance $ $ 2,633 108 - 2,479 5,220 $ $ 5,220 1,161 (1,924) 1,336 5,793 Twelve months ended December 31, 2014 The total unrecognized tax benefits, if recognized, would not affect our effective tax rate as the tax benefit...

  • Page 96
    ... terms. For stock option grants the exercise price is determined by the Plan Administrator, but generally may not be less than the fair market value of the common stock on the date of grant. Shares available for grant as of December 31, 2014 and the activity during the twelve months ended December...

  • Page 97
    ... per-share fair value of shares to be granted under the ESPP is determined on the first day of the offering period using the Black-Scholes option pricing model using the following assumptions: Twelve months ended December 31, 2014 Expected life (in years) Risk-free interest rate Expected volatility...

  • Page 98
    ..., 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was determined on the grant date using the BlackScholes option pricing model with the following assumptions: Twelve months ended January 31, 2013 Expected life (in years) Risk-free interest rate Expected...

  • Page 99
    Table of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued The aggregate intrinsic value of stock options exercised during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $84.9 ...

  • Page 100
    Table of Contents Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued Twelve months ended January 31, 2013 Stock-based compensation expense Cost of revenue-Other Product development Sales and marketing General and administrative Total stock-based compensation expense $ $ 1,214...

  • Page 101
    ... Pandora Media, Inc. Notes to Consolidated Financial Statements - Continued The following potential common shares outstanding were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive: As of January 31, 2013 Options to purchase common...

  • Page 102
    ... Pandora Media, Inc. 11. Selected Quarterly Financial Data (unaudited) Three months ended April 30, 2013 Total revenue Cost of revenue Cost of Revenue- Content acquisition costs Cost of revenue- Other Total cost of revenue Gross profit Operating expenses Product development Sales and marketing...

  • Page 103
    Table of Contents 12. Subsequent Event Pandora Media, Inc. Subsequent to December 31, 2014, we entered into a sublease agreement to increase our leased space at our corporate headquarters in Oakland, California. This agreement is expected to result in an additional operating lease obligation of ...

  • Page 104
    ...2014 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting...

  • Page 105
    ... Related Party Transactions" and "Corporate Governance-Director Independence." ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by this Item is incorporated by reference to the section of the Proxy Statement entitled "Ratification of Appointment of Independent Registered Public...

  • Page 106
    ...PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are included as part of this Annual Report on Form 10-K. 1. Index to Financial Statements Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations...

  • Page 107
    ... this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act in person...

  • Page 108
    ...11, 2015 Chief Financial Officer (Principal Financial and Accounting Officer) February 11, 2015 Director February 11, 2015 Director February 11, 2015 Director February 11, 2015 Director February 11, 2015 Director February 11, 2015 Director February 11, 2015 Director February 11, 2015...

  • Page 109
    ... Rights Agreement, by and among Pandora Media, Inc. and the investors listed on Exhibit A thereto, dated May 20, 2010, as amended 2011 Long Term Incentive Plan and Form of Stock Option Agreement under 2011 Long Term Incentive Plan 2011 Corporate Incentive Plan 2004 Stock Plan, as amended, and Forms...

  • Page 110
    ... Unit Agreement under the 2011 Equity Incentive Plan Offer Letter with Brian McAndrews, dated September 11, 2013 2014 Employee Stock Purchase Plan Consent of Independent Registered Public Accounting Firm Power of Attorney (included on signature page of this Annual Report on Form 10-K) Certification...

  • Page 111
    ... Data Files Pursuant to Rule 405 of Regulation S-T: (i) Balance Sheets as of December 31, 2014 and December 31, 2013, (ii) Statements of Operations for the Twelve months ended December 31, 2014, the Eleven months ended December 31, 2013 and 2012 and the Twelve months ended January 31, 2013...

  • Page 112