Pandora Media said CEO Joe Kennedy is stepping down. He will stay on in the role until they find a successor. The news came after the online-radio service posted a smaller-than-expected loss for the fourth quarter and its revenue outlook topped forecasts.
Pandora shares shot up 20 percent right after the results were released.What's Pandora stock doing now? (Click here for the latest after-hours quote.)
Kennedy departs as Pandora is gaining market share and growing revenue, but still struggling to expand its profit. The company also has to grapple with intensifying competition from current rivals and Spotify, as well as potential future entrants such as Apple.
"As I approach the start of my tenth year, my head is telling me to get to a recharging station sooner rather than later," Kennedy, who has a background in the automobile industry, told analysts on a conference call.
Kennedy, a former auto industry executive who confesses on his Pandora profile to being a pop music junkie, has led the company since July 2004. He will remain in his current role until the board names his successor, Pandora said.
The Oakland, California-based company said that mobile revenue, an important metric, more than doubled to $80.3 million for the fourth quarter.
The company's net loss widened to $14.5 million, or 9 cents a share, from $8.2 million, 5 cents a share, in the year-earlier period.
Excluding items, the company's loss was 4 cents a share, compared with 3 cents a share a year ago.
Revenue increased 54 percent to $125 million from $81 million.
Analysts had expected a loss ex-items of 5 cents a share on revenue of $123 million, according to a consensus estimate from Thomson Reuters.
The online-radio service also said it expects a loss of 10 to 13 cents a share for the first quarter and for revenue to come in between$120 million and $125 million. Analysts currently expect a loss of 10 cents a share on revenue of $120 million.
Pandora said the number of active listeners rose 37 percent to 67.7 million at the end of February from February 2012 and listening hours jumped 42 percent to 1.38 billion.
Last week, Pandora said it would cap free mobile listening at 40 hours per month as it tries to overcome rising royalty costs.
Analysts believe the company capped mobile streaming because while its mobile advertising sales continue to rise, it is behind rising royalty payment costs.
For the past decade, Pandora has been gaining market share as it becomes more popular. But as it attracts more listeners, Pandora has to pay more to license music.
Pandora's per-track royalty rates have increased more than 25 percent over the last 3 years, including 9 percent in 2013 alone and are set to increase an additional 16 percent over the next two years, co-founder Tim Westergren wrote in a blog posted last week on the company's website.