Pandora announced that it's laying off 7% of its workforce while also releasing a promising Q4 2016 guidance which saw its shares rise by 7.6% on Thursday. In October, the company said it's expecting to generate between $362 million and $374 million in revenue during the last quarter of 2016 but is now certain it will surpass that estimate after it exceeded 4.3 million in paid subscribers. This boost in paying customers is largely attributed to the company's new service Pandora Plus which attracted approximately 375,000 new subscribers by the end of the year. The company will post its fourth quarter financial on February 9th.
The online radio service also said it will cut more than 150 jobs by the end of March. The Oakland, California-based firm currently employs over 2,200 people, some of whom will lose their job due to the company's new financial strategy designed to reduce costs. Pandora is planning to invest future savings into new monetization methods and product development, the company's CEO Tim Westergren said in a statement, adding that layoffs are always a difficult decision to make. Westergren is now looking towards the future, as he told shareholders the firm is planning to implement in-app promotions, targeted concert recommendations, and more aggressive advertising over the course of this year. Pandora is currently in the process of improving its ad insertion algorithms which should drive the company's profits and allow it to invest into its upcoming endeavors without raising more external capital.
Westergren also said the Pandora Premium service will launch by the end of Q1 2016 by reiterating the company's December announcement. The online radio provider is hoping its premium service will be a hit among consumers despite costing $10 per month, twice as much as Pandora Plus. In the meantime, the Oakland-based firm continues to face pressure from its investor Corvex Management that's currently lobbying against its rumored acquisition by Sirius XM, a broadcasting company from New York City. Sirius XM allegedly approached Pandora about a potential acquisition in December but no real terms have yet been agreed upon and it remains to be seen whether this transaction will ever materialize. A Sirius XM CFO David Frear recently said the deal isn't likely to happen.