(Adds closing date to buy AdsWizz)
May 3 (Reuters) - Despite intensifying competition from larger rivals, Pandora Media Inc reported a smaller-than-expected quarterly loss on Thursday as the music streaming service provider benefited from higher subscription revenue and smaller declines in its advertising business than feared.
Shares of the Oakland, California-based company rose 7.8 percent to $6.21 after the bell.
The company said total subscription and other revenue surged 61.3 percent to $104.7 million, slightly above analysts' estimate of $104.6 million, according to Thomson Reuters I/B/E/S.
Pandora's advertising revenue fell 3.9 percent to $214.6 million, but topped analysts' estimate of $198.7 million.
The company faces stiff competition from deep-pocketed music streaming rivals such as Apple Inc's Apple Music and Sweden's Spotify Technology SA, whose results on Wednesday failed to enthuse investors.
Those newer services have plucked away many former Pandora listeners, but the Oakland company has started courting them to come back with new offerings such as its "Premium Access" feature, which lets users try out its ad-free, on-demand service after watching a video ad.
"The recapture of our prior listeners is a very, very important factor for us," Chief Executive Roger Lynch told Reuters in an interview. "March was the first time in 18 months where we increased the recapture of lapsed listeners."
For paid users, Pandora's revenue per user jumped to $6.30, up nearly a third from $4.76 a year ago. Pandora Chief Financial Officer Naveen Chopra said that was primarily a result of users opting for Pandora's $9.99 month "Premium" plan, which competes against Apple Music and Spotify to let users select what songs to listen to, rather than its older "Plus" plan for ad-free radio stations where users cannot select the songs.
"We expect we'll continue to see that (increase in revenue per user) as Premium grows. Plus is actually declining a bit, so Premium has an outsized impact," Chopra said.
On a conference call with investors, Pandora executives also said they expect its $145 million deal to buy AdsWizz, an audio advertising technology firm, to close in mid-May. That technology will make it easier for advertisers to place ads on Pandora's service, as well as the services of other online streaming music services.
"It's very similar to what Google did when they bought DoubleClick," Lynch told Reuters, "and that's worked out well for them."
Excluding items, Pandora posted a loss of 27 cents per share. Total revenue increased to $319.2 million from $316.0 million.
Analysts on average had expected a loss of 38 cents per share and revenue of $304.3 million. (Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; editing by Sriraj Kalluvila and Lisa Shumaker)