Pandora shares rose as much as 7 percent in after-hours trading on Thursday after the company said it would cut jobs and beat its earnings forecast.
The online radio company said it would slash 7 percent of its U.S. employee base by the first fiscal quarter of this year, as a cost-cutting measure.
"While making workforce reductions is always a difficult decision, the commitment to cost discipline will allow us to invest more heavily in product development and monetization and build on the foundations of our strategic investments," Pandora CEO Tim Westergren said in a statement.
But, the company's strong advertising performance has pushed Pandora past its previously announced fourth fiscal quarter sales guidance, the statement said. In October, it predicted revenue in the range of $362 million to $374 million.
Pandora has been floated as a takeover target for SiriusXM, amid increasing competition from Amazon, Apple and Spotify. The company has faced pressure to sell itself from activist investor Corvex Management, a hedge fund run by Keith Meister.
Still, Westergren released a Thursday letter to stockholders with ambitious plans for 2017, including in-app promotion, more aggressive ad placement, and targeted concert recommendations.
On Thursday, Pandora said it has surpassed 4.3 million in paid subscription customers, thanks in part to a new product, Pandora Plus, which added 375,000 net new subscribers by the end of December.