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Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 347.95 Td (26) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I2 Do Q endstream endobj 7 0 obj <> endobj 8 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (3 of 13) Tj ET Q BT /F2 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 0 RG /GS0 gs 1.14 w 0 i [] 0 d 1 J 1 j 3 M 49.5 701.0220703125 m 132.4921875 701.0220703125 l s q 0 0 0 rg BT 49.50 702.90 Td (T) Tj ET Q q 0 0 0 rg BT 57.29 702.90 Td (im ) Tj ET Q q 0 0 0 rg BT 73.40 702.90 Td (W) Tj ET Q q 0 0 0 rg BT 84.74 702.90 Td (estergr) Tj ET Q q 0 0 0 rg BT 120.49 702.90 Td (en) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 702.90 Td (27) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 682.00 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 682.00 Td (28) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 661.15 Td (KKR and Board ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 661.15 Td (29) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.25 Td (Thanks, Dom, and thank you to everyone for joining the call today) Tj ET Q q 0 0 0 rg BT 368.98 640.25 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 640.25 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 619.40 Td (31) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.50 Td (The next chapter of Pandora has begun with the launch of Premium, an injection of strategic capital, and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 598.50 Td (32) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.60 Td (the evolution of our board of directors. ) Tj ET Q q 0 0 0 rg BT 238.56 577.60 Td (T) Tj ET Q q 0 0 0 rg BT 245.06 577.60 Td (oday we announced a $150 million investment from KKR, a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 577.60 Td (33) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.75 Td (leading global investment firm. 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Richard brings a deep passion ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 515.00 Td (36) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 494.10 Td (for music and wealth of experience to the company) Tj ET Q q 0 0 0 rg BT 294.63 494.10 Td (, including a 15-year leadership role of Bertelsmann ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 494.10 Td (37) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.20 Td (where he served as Chairman and President of Bertelsmann Digital Media Investments.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 473.20 Td (38) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 452.35 Td (39) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.45 Td (Additionally) Tj ET Q q 0 0 0 rg BT 109.38 431.45 Td (, two of our long serving board members, Jim Feuille and Peter Gotcher) Tj ET Q q 0 0 0 rg BT 454.16 431.45 Td (, will be stepping ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 431.45 Td (40) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.60 Td (down.. I want to personally thank both Jim and Peter for their dedicated board service over many years. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 410.60 Td (41) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.70 Td (Jim and Peter were early investors in Pandora and have been instrumental in building Pandora into a truly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 389.70 Td (42) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.80 Td (iconic company) Tj ET Q q 0 0 0 rg BT 125.03 368.80 Td (. Much like Pandora has evolved over time to address consumer) Tj ET Q q 0 0 0 rg BT 432.39 368.80 Td () Tj ET Q q 0 0 0 rg BT 435.73 368.80 Td (s needs, so too must our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 368.80 Td (43) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.95 Td (board bring new expertise to advise Pandora on its next chapter and a continued focus on maximizing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 347.95 Td (44) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 327.05 Td (shareholder value. ) Tj ET Q q 0 0 0 rg BT 139.80 327.05 Td (A) Tj ET Q q 0 0 0 rg BT 147.80 327.05 Td ( search committee lead by current independent board member ) Tj ET Q q 0 0 0 rg BT 447.13 327.05 Td (T) Tj ET Q q 0 0 0 rg BT 454.04 327.05 Td (im Leiweke will lead ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 327.05 Td (45) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.20 Td (the search to identify additional new board members for our next chapter) Tj ET Q q 0 0 0 rg BT 399.05 306.20 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 306.20 Td (46) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 285.30 Td (47) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.40 Td (My warm welcome to Richard, and my sincere and deep thanks to Jim and Peter) Tj ET Q q 0 0 0 rg BT 435.06 264.40 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 264.40 Td (48) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 243.55 Td (49) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 222.65 Td (First Quarter) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 222.65 Td (50) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.80 Td (Moving on to our financial performance, Im excited to share we had a solid first quarter) Tj ET Q q 0 0 0 rg BT 474.87 201.80 Td (, reflecting re-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 201.80 Td (51) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 180.90 Td (accelerating growth in number of subscribers, subscriptions revenue and continuing to increase leverage in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 180.90 Td (52) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 160.00 Td (advertising revenue. Most notably) Tj ET Q q 0 0 0 rg BT 215.68 160.00 Td (, we successfully launched Pandora Premium, which is of) Tj ET Q q 0 0 0 rg BT 492.07 160.00 Td (f to a terrific ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 160.00 Td (53) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 139.15 Td (start. Ill share more details around the launch in the majority of my prepared remarks. Im also excited to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 139.15 Td (54) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.25 Td (welcome Naveen Chopra to our management team as CFO. Hell share further details regarding our first ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 118.25 Td (55) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.40 Td (quarter and our expectations for Q2 and the rest of the year) Tj ET Q q 0 0 0 rg BT 332.39 97.40 Td (. Mike Herring, Pandora) Tj ET Q q 0 0 0 rg BT 452.70 97.40 Td (s President, is also on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 97.40 Td (56) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 76.50 Td (the call and will join in the Q&A) Tj ET Q q 0 0 0 rg BT 207.14 76.50 Td ( discussion.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 76.50 Td (57) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I3 Do Q endstream endobj 9 0 obj <> endobj 10 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (4 of 13) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 24.00 702.70 Td (58) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (T) Tj ET Q q 0 0 0 rg BT 55.99 681.80 Td (o start of) Tj ET Q q 0 0 0 rg BT 98.43 681.80 Td (f, since we launched the limited release of Premium in mid-March, we have seen strong interest ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 681.80 Td (59) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (and uptake in our suite of subscription of) Tj ET Q q 0 0 0 rg BT 246.25 660.95 Td (ferings. Since that time, we have started approximately 1.3 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 660.95 Td (60) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (million trials for our Premium and Plus subscription tiers combined, including more than 500,000 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 640.05 Td (61) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (Premium trials. Since Premium only became fully available in mid-April, the ratio of Premium to Plus ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 619.20 Td (62) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.30 Td (trial starts is about 50:50. ) Tj ET Q q 0 0 0 rg BT 173.94 598.30 Td (W) Tj ET Q q 0 0 0 rg BT 184.30 598.30 Td (e are also pleased with our unique ability to leverage our massive existing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 598.30 Td (63) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (audience to attract subscribers, including those who have lapsed. ) Tj ET Q q 0 0 0 rg BT 362.85 577.40 Td (T) Tj ET Q q 0 0 0 rg BT 369.35 577.40 Td (o date, more than 82% of new trial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 577.40 Td (64) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (starts were acquired on-platform-virtually free of acquisition cost-again demonstrating the significant ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 556.55 Td (65) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (opportunity ahead of us and our marketplace strategy in action. ) Tj ET Q q 0 0 0 rg BT 355.52 535.65 Td (T) Tj ET Q q 0 0 0 rg BT 362.01 535.65 Td (otal subscribers increased approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 535.65 Td (66) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (20% since last year) Tj ET Q q 0 0 0 rg BT 141.80 514.80 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 514.80 Td (67) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 493.90 Td (68) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 473.00 Td (e had a solid first quarter) Tj ET Q q 0 0 0 rg BT 179.01 473.00 Td (, with ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 209.34 473.00 Td ($316.0 million) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 280.01 473.00 Td ( in total revenueslightly above the midpoint of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 473.00 Td (69) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (guidance range. Our adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 239.44 452.15 Td ( was at the high-end of our guidance range, at a loss of ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 504.69 452.15 Td ($71.3 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 452.15 Td (70) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (million) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 84.17 431.25 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 431.25 Td (71) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 410.40 Td (72) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.50 Td (During the quarter) Tj ET Q q 0 0 0 rg BT 137.65 389.50 Td (, we had an increased focus on monetizing and optimizing conversion, revenue and cost ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 389.50 Td (73) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (containment related to our various tiers of servicesPandora, Pandora Plus and now Pandora Premium. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 368.60 Td (74) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 347.75 Td (75) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (As a result, our Q1 monthly active users were down ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 301.78 326.85 Td (3%) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 317.77 326.85 Td ( year) Tj ET Q q 0 0 0 rg BT 341.18 326.85 Td (-over) Tj ET Q q 0 0 0 rg BT 366.26 326.85 Td (-year to ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 406.24 326.85 Td (76.7 million) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 464.91 326.85 Td (. ) Tj ET Q q 0 0 0 rg BT 473.69 326.85 Td (The actives ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 326.85 Td (76) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (decline in Q1 was primarily driven by our need to address the evolving listening habits of consumers, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 306.00 Td (77) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (which we did with the launch of Premium. In addition, during Q1 we placed greater emphasis on up-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 285.10 Td (78) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (selling listeners to our subscription tiers vs. acquiring new listeners in our marketing activities. Naveen ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 264.20 Td (79) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (will address some of the exact details, but the bottom line is going forward we expect to stabilize and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 243.35 Td (80) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 222.45 Td (resume growth of monthly active users, while continuing to find the right tier of service for our existing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 222.45 Td (81) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (active and lapsed listeners. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 201.60 Td (82) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 180.70 Td (83) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (Also, as we indicated on the last conference call, we would be managing our least profitable ad hours ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 159.80 Td (84) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 138.95 Td (down 5 to 10% for 2017. ) Tj ET Q q 0 0 0 rg BT 174.83 138.95 Td (As part of our ef) Tj ET Q q 0 0 0 rg BT 253.92 138.95 Td (forts to decrease our least profitable ad hours during the first ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 138.95 Td (85) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.05 Td (quarter) Tj ET Q q 0 0 0 rg BT 83.00 118.05 Td (, total listener hours declined ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 224.96 118.05 Td (6%) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 240.96 118.05 Td ( year) Tj ET Q q 0 0 0 rg BT 264.36 118.05 Td (-over) Tj ET Q q 0 0 0 rg BT 289.44 118.05 Td (-year to ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 329.42 118.05 Td (5.21 billion) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 384.76 118.05 Td (. Overall, we still expect total ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 118.05 Td (86) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.20 Td (listener hours to be flat for the year while subscription usage deepens and ramps. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 97.20 Td (87) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 76.30 Td (88) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I4 Do Q endstream endobj 11 0 obj <> endobj 12 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (5 of 13) Tj ET Q BT /F1 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.70 Td (Y) Tj ET Q q 0 0 0 rg BT 56.96 702.70 Td (et usage trends among our most engaged listeners are consistently at high levels. Hours per active user ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 702.70 Td (89) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (were approximately 22, while average daily active users remained at peak levels. ) Tj ET Q q 0 0 0 rg BT 444.12 681.80 Td (W) Tj ET Q q 0 0 0 rg BT 454.48 681.80 Td (e continue to explore ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 681.80 Td (90) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (additional strategies for driving core active listener growth, including the launch last month of our artist-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 660.95 Td (91) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (driven marketing campaign called "Sounds Like ) Tj ET Q q 0 0 0 rg BT 283.89 640.05 Td (Y) Tj ET Q q 0 0 0 rg BT 291.35 640.05 Td (ou." ) Tj ET Q q 0 0 0 rg BT 314.03 640.05 Td (The campaign is still ramping up, with the bulk of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 640.05 Td (92) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (it expected to reach consumers this quarter) Tj ET Q q 0 0 0 rg BT 254.09 619.20 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 619.20 Td (93) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.30 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 598.30 Td (94) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (Earlier this year) Tj ET Q q 0 0 0 rg BT 125.65 577.40 Td (, we laid out our 2017 strategic prioritiessubscription growth; growth in our advertising ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 577.40 Td (95) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (business; and increased opportunities to connect artists and fans. Before I give updates on our execution ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 556.55 Td (96) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (against those priorities, I'd like to give some context on the music industry and consumer experience and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 535.65 Td (97) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (why we think our symbiotic ecosystem approachwith of) Tj ET Q q 0 0 0 rg BT 330.23 514.80 Td (ferings for every type of listeningis the right ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 514.80 Td (98) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 493.90 Td (one to capture the long term opportunity) Tj ET Q q 0 0 0 rg BT 242.67 493.90 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 24.00 493.90 Td (99) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (100) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 452.15 Td (e believe that we are standing on the cusp of the next Golden ) Tj ET Q q 0 0 0 rg BT 354.77 452.15 Td (Age for music. ) Tj ET Q q 0 0 0 rg BT 428.76 452.15 Td (After a generation-long ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (101) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (period of uncertainty in the music industry) Tj ET Q q 0 0 0 rg BT 253.34 431.25 Td (, revenues are now growing at their fastest rate in nearly 20 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (102) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.40 Td (years. ) Tj ET Q q 0 0 0 rg BT 80.16 410.40 Td (And for the first time, streaming represents the majority of those revenues. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (103) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (104) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (However) Tj ET Q q 0 0 0 rg BT 93.00 368.60 Td (, music consumers are still faced with a sub-par listening experience. Frankly) Tj ET Q q 0 0 0 rg BT 463.11 368.60 Td (, the delivery of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (105) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (streaming music has historically been approached the wrong way) Tj ET Q q 0 0 0 rg BT 361.96 347.75 Td (. ) Tj ET Q q 0 0 0 rg BT 367.51 347.75 Td (Y) Tj ET Q q 0 0 0 rg BT 374.98 347.75 Td (es, the transition from physical to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (106) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (digital media was a game-changing phenomenon. But listeners are still subject to a fundamentally retail ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (107) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (experience. Instead of an 80,000 square foot warehouse, consumers are now taken to a 40 million song ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (108) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (digital storefront and told to find what they want. It should be the other way around. ) Tj ET Q q 0 0 0 rg BT 455.86 285.10 Td (The solution isn) Tj ET Q q 0 0 0 rg BT 536.97 285.10 Td (t just ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (109) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (to help listeners find music, it) Tj ET Q q 0 0 0 rg BT 195.48 264.20 Td (s to help bring music to listeners. Simplicity is the next frontier in music ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 264.20 Td (110) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (consumption.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.70 243.35 Td (111) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 222.45 Td (112) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (Bringing people the music they love is at the heart of what we do. ) Tj ET Q q 0 0 0 rg BT 368.20 201.60 Td (W) Tj ET Q q 0 0 0 rg BT 378.57 201.60 Td (eve spent 17 years building our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 201.60 Td (113) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 180.70 Td (Music Genome Project. ) Tj ET Q q 0 0 0 rg BT 165.48 180.70 Td (As Pandora has become the lar) Tj ET Q q 0 0 0 rg BT 313.55 180.70 Td (gest online music platform in the U.S., we've ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 180.70 Td (114) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (amassed a massive amount of very precise preference data from a highly engaged audience, and we are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 159.80 Td (115) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 138.95 Td (leveraging our unique assets to create the next generation of what streaming music should bea simple, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 138.95 Td (116) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.05 Td (elegant, and a completely personalized experience that works for all types of listeners, in all formats of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 118.05 Td (117) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.20 Td (listening. ) Tj ET Q q 0 0 0 rg BT 99.62 97.20 Td (W) Tj ET Q q 0 0 0 rg BT 109.98 97.20 Td (e know ) Tj ET Q q 0 0 0 rg BT 147.76 97.20 Td (WHA) Tj ET Q q 0 0 0 rg BT 175.08 97.20 Td (T) Tj ET Q q 0 0 0 rg BT 182.20 97.20 Td ( people like to listen to, and we also know HOW) Tj ET Q q 0 0 0 rg BT 415.60 97.20 Td ( they like to listen to it. ) Tj ET Q q 0 0 0 rg BT 532.37 97.20 Td (W) Tj ET Q q 0 0 0 rg BT 542.74 97.20 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 97.20 Td (118) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 76.30 Td (know the right, unique playlist construction for every one of our listeners. ) Tj ET Q q 0 0 0 rg BT 406.54 76.30 Td (W) Tj ET Q q 0 0 0 rg BT 416.90 76.30 Td (e are able to make it easy to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 76.30 Td (119) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I5 Do Q endstream endobj 13 0 obj <> endobj 14 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (6 of 13) Tj ET Q BT /F1 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.70 Td (listen to and discover music they love. ) Tj ET Q q 0 0 0 rg BT 236.13 702.70 Td (And in today's environment, that ef) Tj ET Q q 0 0 0 rg BT 405.38 702.70 Td (fortlessness is the holy grail for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 702.70 Td (120) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (a successful consumer music service. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (121) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (122) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (Now) Tj ET Q q 0 0 0 rg BT 72.05 640.05 Td (, I'll provide some highlights regarding how we executed against our strategic priorities during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (123) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (quarter: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (124) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.30 Td (125) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (Subscription Gr) Tj ET Q q 0 0 0 rg BT 132.30 577.40 Td (owth and Pandora Pr) Tj ET Q q 0 0 0 rg BT 242.43 577.40 Td (emium Update) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (126) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (W) Tj ET Q q 0 0 0 rg BT 60.35 556.55 Td (ith the introduction of Pandora Premium last month, our most important new product since our birth, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.55 Td (127) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (aim to do the same thing for on-demand that we did for digital radioreinventing the experience through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (128) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (simplicity and personalization. On-demand becomes but one feature in an intuitive interactive experience ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (129) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 493.90 Td (where the music you love finds you. Currently) Tj ET Q q 0 0 0 rg BT 272.01 493.90 Td (, fewer than 100 million people worldwide pay for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (130) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (streaming music. ) Tj ET Q q 0 0 0 rg BT 134.27 473.00 Td (The vast majority of prospective subscribers have yet to find a service worth paying for) Tj ET Q q 0 0 0 rg BT 553.48 473.00 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (131) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 452.15 Td (e believe there is significant opportunity ahead of us, and it starts with our own ad-supported and paid ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (132) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (radio listenerswhere research tells us that approximately 30% are strong candidates for an on-demand ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (133) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.40 Td (tier) Tj ET Q q 0 0 0 rg BT 64.83 410.40 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (134) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (135) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (W) Tj ET Q q 0 0 0 rg BT 60.35 368.60 Td (ith regard to Premium, the early engagement metrics from our beta period are very encouraging. Nearly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (136) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (HALF of Premium trial listeners used Pandora daily during their first week, significantly higher than non-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (137) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (Premium listeners. Most importantly) Tj ET Q q 0 0 0 rg BT 225.38 326.85 Td (, approximately half of all early Premium users are taking advantage ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (138) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (of features on the tier that are unique to Pandora, including the My ) Tj ET Q q 0 0 0 rg BT 372.52 306.00 Td (Thumbs Up playlist, Linked Playlists, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (139) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (and the "magic wand" that is ) Tj ET Q q 0 0 0 rg BT 189.93 285.10 Td (Add Similar Songs. It is clear that there is significant pent-up demand among ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (140) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (Pandora users for features beyond what they have been historically been able to get from our radio tiers) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.20 Td (141) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (and this provides further confidence in our research that approximately 30% are strong candidates for an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.35 Td (142) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 222.45 Td (on-demand tier) Tj ET Q q 0 0 0 rg BT 121.81 222.45 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.45 Td (143) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 208.05 Td (144) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 187.20 Td (Advertising ) Tj ET Q q 0 0 0 rg BT 111.84 187.20 Td (Acceleration and Momentum) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 187.20 Td (145) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 166.30 Td (In our advertising business, we continue to see growth despite a bumpy ad environment. Our careful ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 166.30 Td (146) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 145.40 Td (management of listener hours drove year) Tj ET Q q 0 0 0 rg BT 245.52 145.40 Td (-over) Tj ET Q q 0 0 0 rg BT 270.60 145.40 Td (-year growth in ad RPM of ) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 403.24 145.40 Td (12%) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 425.24 145.40 Td ( in Q1. ) Tj ET Q q 0 0 0 rg BT 460.58 145.40 Td (And we anticipate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 145.40 Td (147) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 124.55 Td (strong tailwinds as the ad technology investments we are making in the first half of 2017 come online in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 124.55 Td (148) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 103.65 Td (the seasonally strong second half of the year) Tj ET Q q 0 0 0 rg BT 261.77 103.65 Td (. Programmatic has led to significantly higher ef) Tj ET Q q 0 0 0 rg BT 493.49 103.65 Td (fective CPMs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 103.65 Td (149) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 82.80 Td (in display) Tj ET Q q 0 0 0 rg BT 95.72 82.80 Td (. ) Tj ET Q q 0 0 0 rg BT 101.50 82.80 Td (W) Tj ET Q q 0 0 0 rg BT 111.87 82.80 Td (e are excited that the same opportunity will exist for programmatic audio and video. Pandora ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 82.80 Td (150) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I6 Do Q endstream endobj 15 0 obj <> endobj 16 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (7 of 13) Tj ET Q BT /F1 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.70 Td (is laser focused on delivering a solution that is superior and we are bringing these to market later this year) Tj ET Q q 0 0 0 rg BT 557.02 702.70 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 702.70 Td (151) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (Auto and Consumer Electronics remain our fastest-growing listening and monetization segments, with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (152) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (26% growth in listening hours and 37% growth in ad RPM. Despite that growth, we believe that these ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (153) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (segments are still under) Tj ET Q q 0 0 0 rg BT 162.90 640.05 Td (-monetized, and our native audio ads are perfectly suited to those formats. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (154) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (155) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.30 Td (While our recent initiatives have been focused on bringing Pandora Premium to market, building the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.30 Td (156) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (lar) Tj ET Q q 0 0 0 rg BT 61.94 577.40 Td (gest audio advertising platform on the ) Tj ET Q q 0 0 0 rg BT 247.01 577.40 Td (W) Tj ET Q q 0 0 0 rg BT 257.38 577.40 Td (eb remains a priority) Tj ET Q q 0 0 0 rg BT 356.23 577.40 Td (. Our direct interactive deals now allow ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (157) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (for skips and replays on our ad-supported tier) Tj ET Q q 0 0 0 rg BT 267.30 556.55 Td (, which has produced incremental opportunities for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.55 Td (158) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (advertisers to engage with listeners and provides further opportunity to increase advertising monetization. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (159) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (Our ad-supported listeners are engaging at a remarkable level with these features. One of every five ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (160) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 493.90 Td (listeners given the opportunity for more skips and replays take advantage of it by watching a 30 second ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (161) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (video ad. ) Tj ET Q q 0 0 0 rg BT 96.27 473.00 Td (V) Tj ET Q q 0 0 0 rg BT 104.21 473.00 Td (ideo inventory per hour increased 27% year) Tj ET Q q 0 0 0 rg BT 313.89 473.00 Td (-over) Tj ET Q q 0 0 0 rg BT 338.97 473.00 Td (-year in Q1 as well as increased pricing. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (162) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (163) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (Connecting ) Tj ET Q q 0 0 0 rg BT 110.51 431.25 Td (Artists and Fans) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (164) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.40 Td (T) Tj ET Q q 0 0 0 rg BT 56.41 410.40 Td (icketing continues to exceed our expectations, with revenue growth accelerating 25% year) Tj ET Q q 0 0 0 rg BT 489.33 410.40 Td (-over) Tj ET Q q 0 0 0 rg BT 514.41 410.40 Td (-year) Tj ET Q q 0 0 0 rg BT 538.39 410.40 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (165) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.50 Td (And the ) Tj ET Q q 0 0 0 rg BT 90.16 389.50 Td (Artist Marketing Platform, or ) Tj ET Q q 0 0 0 rg BT 233.81 389.50 Td (AMP) Tj ET Q q 0 0 0 rg BT 258.49 389.50 Td (, was used by more than 2,300 artists to deliver tar) Tj ET Q q 0 0 0 rg BT 500.22 389.50 Td (geted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (166) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (messages and we are quickly approaching 1 billion impressions to their fans. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (167) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (168) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 326.85 Td (e believe more strongly than ever that the best way to bring about the next Golden ) Tj ET Q q 0 0 0 rg BT 456.42 326.85 Td (Age of Music is to be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (169) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (able to ef) Tj ET Q q 0 0 0 rg BT 93.93 306.00 Td (fectively monetize the entire spectrum of listening, from ad-supported and subscription radio to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (170) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (full on-demand, and to empower artists to harvest the audience scale and engagement on the platform) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (171) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (essentially allowing them to setup storefronts in a massive new marketplace. Pandora is the only music ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.20 Td (172) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (company that is successfully achieving this vision. Our expanded listening tiers will drive greater ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.35 Td (173) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 222.45 Td (engagement, which attracts advertisers and sponsors, and the data from all of these of) Tj ET Q q 0 0 0 rg BT 459.48 222.45 Td (ferings is used to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.45 Td (174) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (fine tune and grow the ecosystem. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 201.60 Td (175) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 180.70 Td (176) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (Now over to Naveen who joined us in late February as our new CFO. He will walk through the quarterly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 159.80 Td (177) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 138.95 Td (results and share more detail regarding the balance sheet update. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 138.95 Td (178) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 124.55 Td (179) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I7 Do Q BT /F2 12.00 Tf ET 0 0 0 RG /GS0 gs 1.14 w 0 i [] 0 d 1 J 1 j 3 M 49.5 101.77207031249998 m 129.83203125 101.77207031249998 l s q 0 0 0 rg BT 49.50 103.65 Td (Naveen Chopra) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 103.65 Td (180) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 82.80 Td (181) Tj ET Q endstream endobj 17 0 obj <> endobj 18 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (8 of 13) Tj ET Q BT /F2 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.90 Td (Intr) Tj ET Q q 0 0 0 rg BT 69.95 702.90 Td (oduction and r) Tj ET Q q 0 0 0 rg BT 145.08 702.90 Td (eview of upside opportunity) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 702.90 Td (182) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 682.00 Td (Thank you, ) Tj ET Q q 0 0 0 rg BT 106.94 682.00 Td (T) Tj ET Q q 0 0 0 rg BT 113.85 682.00 Td (im. Im very excited to be here and look forward to working with you and the team to help ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 682.00 Td (183) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 661.15 Td (craft the next chapter of Pandora. My goals in that regard are simple: make sure we are positioned to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 661.15 Td (184) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.25 Td (deliver the world's best music listening experience and create value for our shareholders. I joined Pandora ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.25 Td (185) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.40 Td (because I believe there are tangible value creation opportunities that flow from the company) Tj ET Q q 0 0 0 rg BT 495.66 619.40 Td (s unique and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.40 Td (186) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.50 Td (powerful assets. ) Tj ET Q q 0 0 0 rg BT 132.60 598.50 Td (Those assets start with the product, which, as you know) Tj ET Q q 0 0 0 rg BT 399.44 598.50 Td (, sets the benchmark for a truly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.50 Td (187) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.60 Td (personalized music experiencethe "holy grail" of music so to speak powered by the foundation of data ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.60 Td (188) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.75 Td (and the Music Genome Project. ) Tj ET Q q 0 0 0 rg BT 206.91 556.75 Td (This core ability to seamlessly find and play music that each individual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.75 Td (189) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.85 Td (listener truly enjoys has yet to be replicated. Pandora's ability to delight users with personalized music ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.85 Td (190) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 515.00 Td (curation is laid clear by our incredible mobile user engagement metrics which, at approximately 22 hours ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 515.00 Td (191) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 494.10 Td (per month, exceed those of well-respected services like Facebook, Spotify) Tj ET Q q 0 0 0 rg BT 404.94 494.10 Td (, and Netflix. ) Tj ET Q q 0 0 0 rg BT 470.59 494.10 Td (Another key asset ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 494.10 Td (192) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.20 Td (is the incredible scale we bring to the digital audio advertising market. Pandora is one of the only ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.20 Td (193) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.35 Td (platforms that can deliver audio, digital, and video ads, at scale, across multiple platformsmobile, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.35 Td (194) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.45 Td (desktop, connected devices and live events. ) Tj ET Q q 0 0 0 rg BT 264.21 431.45 Td (W) Tj ET Q q 0 0 0 rg BT 274.58 431.45 Td (e are the lar) Tj ET Q q 0 0 0 rg BT 330.65 431.45 Td (gest radio station in virtually every major ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.45 Td (195) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.60 Td (market. ) Tj ET Q q 0 0 0 rg BT 91.60 410.60 Td (This is perhaps not a surprise when you take into consideration that nearly 100 million US adults ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.60 Td (196) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.70 Td (used Pandora in the past quarter) Tj ET Q q 0 0 0 rg BT 202.46 389.70 Td (. ) Tj ET Q q 0 0 0 rg BT 211.24 389.70 Td (That is almost 1 Pandora listener for every ) Tj ET Q q 0 0 0 rg BT 417.86 389.70 Td (American household. No ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.70 Td (197) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.80 Td (wonder Pandora is considered an iconic brand. Simply stated, the combination of these assets means ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.80 Td (198) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.95 Td (Pandora is heavily used, by a lot of people. ) Tj ET Q q 0 0 0 rg BT 261.46 347.95 Td (And with the launch of Pandora Premium we combine a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.95 Td (199) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 327.05 Td (powerful, profitable advertising business with the growth opportunity of a spectacular on-demand audio ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 327.05 Td (200) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.20 Td (product being launched into a subscription streaming market that is expected to grow by approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.20 Td (201) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.30 Td (70% in the next four years. ) Tj ET Q q 0 0 0 rg BT 185.24 285.30 Td (T) Tj ET Q q 0 0 0 rg BT 191.74 285.30 Td (ogether these pieces yield a compelling portfolio of great product, scaled ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.30 Td (202) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.40 Td (advertising business, and fertile growth opportunity) Tj ET Q q 0 0 0 rg BT 296.68 264.40 Td (, and they position Pandora to compete with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.40 Td (203) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.55 Td (advantages that others don't have.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.55 Td (204) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.65 Td (205) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 201.80 Td (Strategic Financing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 201.80 Td (206) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 180.90 Td (Before addressing Q1 results, I wanted to provide some additional color around the strategic financing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 180.90 Td (207) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 160.00 Td (agreement we announced in conjunction with today's earnings release. ) Tj ET Q q 0 0 0 rg BT 392.99 160.00 Td (W) Tj ET Q q 0 0 0 rg BT 403.36 160.00 Td (e have negotiated with KKR and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 160.00 Td (208) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 139.15 Td (their af) Tj ET Q q 0 0 0 rg BT 83.60 139.15 Td (filiated investment funds on a purchase of $150 million in aggregate principal, 8% convertible ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 139.15 Td (209) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.25 Td (preferred stock maturing in 2022 with a conversion price of $13.50 per share. Closing of the transaction is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 118.25 Td (210) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.40 Td (subject to customary closing conditions including regulatory approvals and will close no earlier than June ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 97.40 Td (211) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 76.50 Td (8, 2017. ) Tj ET Q q 0 0 0 rg BT 94.28 76.50 Td (The transaction also includes a customary fiduciary out in favor of Pandora. Under our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 76.50 Td (212) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I8 Do Q endstream endobj 19 0 obj <> endobj 20 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 294.65 27.80 Td (9 of 13) Tj ET Q BT /F1 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.70 Td (agreement with KKR, Pandora also has the right to issue an additional $100 million of such security ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 702.70 Td (213) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (subject to participation of additional strategic investors. I have prioritized the establishment of a strong ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (214) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (balance sheet for the company since arriving on the job two months ago. ) Tj ET Q q 0 0 0 rg BT 403.07 660.95 Td (A) Tj ET Q q 0 0 0 rg BT 411.08 660.95 Td ( strong balance sheet gives us ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (215) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (the ability to accelerate growth investments when appropriate, to negotiate the best possible music ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (216) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (licensing deals, and to compete aggressively in a rapidly changing, complex market. ) Tj ET Q q 0 0 0 rg BT 459.83 619.20 Td (The proceeds will be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (217) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.30 Td (used for general corporate purposes including potential investments in areas like such as advertising and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.30 Td (218) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (marketing technologies, international expansion, and new types of content, if and when such opportunities ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (219) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (are both available and yield compelling returns. ) Tj ET Q q 0 0 0 rg BT 284.20 556.55 Td (W) Tj ET Q q 0 0 0 rg BT 294.57 556.55 Td (e intend to be responsible stewards of capital and there ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.55 Td (220) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (should be no confusion about the fact that, even with a completed KKR investment, we will continue to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (221) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (strive for improved operating ef) Tj ET Q q 0 0 0 rg BT 202.56 514.80 Td (ficiency as we evolve past the pure investment stage of Pandora Premium.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (222) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (223) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (In addition to strengthening our balance sheet with this transaction, we are very excited to be partnering ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (224) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (with KKR as the lead investor in this financing and I look forward to working closely with Richard ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (225) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (Sarnof) Tj ET Q q 0 0 0 rg BT 81.28 431.25 Td (f when he joins the board. His broad base of experience at KKR and in the music industry will be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (226) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.40 Td (welcome along with his support for the long-term vision at Pandora.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (227) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (228) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (First Quarter) Tj ET Q q 0 0 0 rg BT 118.92 368.60 Td ( Performance) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (229) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (W) Tj ET Q q 0 0 0 rg BT 60.35 347.75 Td (ith that background, let me quickly review our Q1 results. Generally) Tj ET Q q 0 0 0 rg BT 387.47 347.75 Td (, Q1 was a solid quarter and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (230) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (performed as anticipated, reflecting the significant seasonality of past years.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (231) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (232) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (T) Tj ET Q q 0 0 0 rg BT 55.99 285.10 Td (otal revenue was $316.0 million, roughly at the mid-point of our guidance range. ) Tj ET Q q 0 0 0 rg BT 446.57 285.10 Td (Advertising revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (233) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (was $223.3 million, compared to $220.3 million in the year) Tj ET Q q 0 0 0 rg BT 334.55 264.20 Td (-ago quarter) Tj ET Q q 0 0 0 rg BT 392.19 264.20 Td (. ) Tj ET Q q 0 0 0 rg BT 400.97 264.20 Td (While ad revenue experienced ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.20 Td (234) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (only modest year) Tj ET Q q 0 0 0 rg BT 131.91 243.35 Td (-over) Tj ET Q q 0 0 0 rg BT 156.98 243.35 Td (-year growth this was accomplished on a base of 10% fewer ad hours by increasing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.35 Td (235) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 222.45 Td (ad loads and successfully maintaining pricing. Growth in advertising revenue would have been higher) Tj ET Q q 0 0 0 rg BT 541.22 222.45 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.45 Td (236) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (however) Tj ET Q q 0 0 0 rg BT 90.33 201.60 Td (, there were a few factors at play:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 201.60 Td (237) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 180.70 Td (238) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (First, we had some sizeable network radio upfronts from repeat clients that were signed later in the quarter ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 159.80 Td (239) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 138.95 Td (than expected. ) Tj ET Q q 0 0 0 rg BT 124.58 138.95 Td (W) Tj ET Q q 0 0 0 rg BT 134.95 138.95 Td (e also incurred headwinds from January's workforce reduction which involved quota ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 138.95 Td (240) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.05 Td (reassignments for a meaningful number of our salespeople. ) Tj ET Q q 0 0 0 rg BT 338.75 118.05 Td (And lastly) Tj ET Q q 0 0 0 rg BT 387.64 118.05 Td (, we proactively controlled Q1 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 118.05 Td (241) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.20 Td (listening hours by adjusting timeouts for our least-profitable cohorts, which has the ef) Tj ET Q q 0 0 0 rg BT 460.86 97.20 Td (fect of improving ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 97.20 Td (242) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 76.30 Td (adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 135.82 76.30 Td ( but reduces remnant inventory and its related ad revenue.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 76.30 Td (243) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I9 Do Q endstream endobj 21 0 obj <> endobj 22 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 292.65 27.80 Td (10 of 13) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 19.00 702.70 Td (244) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (Ad RPM grew 12% year) Tj ET Q q 0 0 0 rg BT 167.91 681.80 Td (-over) Tj ET Q q 0 0 0 rg BT 192.98 681.80 Td (-year to $50.87, an all-time high for the first quarter) Tj ET Q q 0 0 0 rg BT 441.24 681.80 Td (. Growth was driven by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (245) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (an increase in our average ad-load relative to the year) Tj ET Q q 0 0 0 rg BT 306.12 660.95 Td (-ago period and generally consistent premium direct ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (246) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (pricing. ) Tj ET Q q 0 0 0 rg BT 89.27 640.05 Td (W) Tj ET Q q 0 0 0 rg BT 99.64 640.05 Td (e also continued to have strong performance on video and local, two of our fastest growing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (247) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (segments, for example, local ad sales represent 30% of ad revenue.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (248) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.30 Td (249) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (Subscription and ) Tj ET Q q 0 0 0 rg BT 133.28 577.40 Td (T) Tj ET Q q 0 0 0 rg BT 140.19 577.40 Td (icketing were both positive highlights in the first quarter) Tj ET Q q 0 0 0 rg BT 410.13 577.40 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (250) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.55 Td (251) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 535.65 Td (e added 320,000 Pandora Plus subscriptions to end the quarter with 4.71 million total subscriptions. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (252) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (This was the second lar) Tj ET Q q 0 0 0 rg BT 161.92 514.80 Td (gest number of net additions we have seen in any quarter since we instituted 40-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (253) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 493.90 Td (hour mobile caps in 2013. First quarter subscription and other revenue was $64.9 million, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (254) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (19% over the same period in 2016. ) Tj ET Q q 0 0 0 rg BT 222.46 473.00 Td (As a reminder) Tj ET Q q 0 0 0 rg BT 289.96 473.00 Td (, the subscriber growth was achieved while Pandora ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (255) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (Premium was only rolled out to a very limited number of users during the last couple of weeks in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (256) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (quarter) Tj ET Q q 0 0 0 rg BT 82.82 431.25 Td (. ) Tj ET Q q 0 0 0 rg BT 91.60 431.25 Td (W) Tj ET Q q 0 0 0 rg BT 101.96 431.25 Td (e are excited about what the success of Pandora Plus suggests about the potential for Premium. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (257) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (258) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.50 Td (T) Tj ET Q q 0 0 0 rg BT 56.41 389.50 Td (icketing revenue in the first quarter was $27.8 million, up 25% year) Tj ET Q q 0 0 0 rg BT 381.08 389.50 Td (-over year) Tj ET Q q 0 0 0 rg BT 429.38 389.50 Td (. Bookings saw another ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (259) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (record quarter) Tj ET Q q 0 0 0 rg BT 116.64 368.60 Td (, with first quarter Gross ) Tj ET Q q 0 0 0 rg BT 237.07 368.60 Td (T) Tj ET Q q 0 0 0 rg BT 243.98 368.60 Td (ransaction ) Tj ET Q q 0 0 0 rg BT 296.07 368.60 Td (V) Tj ET Q q 0 0 0 rg BT 303.41 368.60 Td (alue excluding box of) Tj ET Q q 0 0 0 rg BT 407.50 368.60 Td (fice sales of $215.0 million, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (260) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (growing approximately 25% year) Tj ET Q q 0 0 0 rg BT 210.21 347.75 Td (-over) Tj ET Q q 0 0 0 rg BT 235.29 347.75 Td (-year) Tj ET Q q 0 0 0 rg BT 259.27 347.75 Td (. ) Tj ET Q q 0 0 0 rg BT 265.05 347.75 Td (W) Tj ET Q q 0 0 0 rg BT 275.42 347.75 Td (e transacted approximately 4.8 million tickets excluding ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (261) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (box of) Tj ET Q q 0 0 0 rg BT 80.28 326.85 Td (fice sales in the quarter which were purchased by approximately 2 million unique ticket buyers for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (262) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (approximately 44 thousand live events. ) Tj ET Q q 0 0 0 rg BT 240.57 306.00 Td (W) Tj ET Q q 0 0 0 rg BT 250.94 306.00 Td (e also launched fan-to-fan ticket exchanges, with nearly 50 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (263) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (partners signed up to-date, allowing fans to transact.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (264) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.20 Td (265) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (Active Users) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.35 Td (266) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 222.45 Td (As ) Tj ET Q q 0 0 0 rg BT 65.62 222.45 Td (T) Tj ET Q q 0 0 0 rg BT 72.53 222.45 Td (im called out, our Q1 monthly active users were down 3% year) Tj ET Q q 0 0 0 rg BT 375.53 222.45 Td (-over) Tj ET Q q 0 0 0 rg BT 400.61 222.45 Td (-year to 76.7 million. ) Tj ET Q q 0 0 0 rg BT 508.04 222.45 Td (W) Tj ET Q q 0 0 0 rg BT 518.41 222.45 Td (e believe ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.45 Td (267) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (the decline in actives during Q1 was primarily caused by marketing activities around on-platform ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 201.60 Td (268) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 180.70 Td (promotion and up-sell communications in preparation for the Premium launch. ) Tj ET Q q 0 0 0 rg BT 433.20 180.70 Td (W) Tj ET Q q 0 0 0 rg BT 443.56 180.70 Td (e have since placed new ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 180.70 Td (269) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (frequency caps on these promotional tools to avoid the negative ef) Tj ET Q q 0 0 0 rg BT 367.85 159.80 Td (fects on monthly active users. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 159.80 Td (270) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 138.95 Td (271) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 118.05 Td (Content Costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 118.05 Td (272) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.20 Td (Content costs represented 59% of total revenue in Q1. Our ability to drive leverage on these costs is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 97.20 Td (273) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 76.30 Td (dependent on our ability to increase ad RPMs in excess of our ad LPMs. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 76.30 Td (274) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I10 Do Q endstream endobj 23 0 obj <> endobj 24 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 292.80 27.80 Td (1) Tj ET Q q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 296.50 27.80 Td (1 of 13) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 19.00 702.70 Td (275) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (For the quarter) Tj ET Q q 0 0 0 rg BT 120.33 681.80 Td (, total ad LPMs were $33.44 an increased of $2.96 or 10% compared to the same quarter ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (276) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (last year due to the higher cost structure from direct deals signed late 2016. ) Tj ET Q q 0 0 0 rg BT 415.39 660.95 Td (Ad LPMs decreased from Q4. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (277) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (As a reminder Q4 had certain overlapping content costs from prior royalty settlements that temporarily ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (278) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (inflated LPMs. Going forward we expect LPMs to maintain Q1 levels. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (279) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.30 Td (280) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (Gr) Tj ET Q q 0 0 0 rg BT 63.94 577.40 Td (oss Margin) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (281) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (The impact of direct deals is also reflected in first quarter) Tj ET Q q 0 0 0 rg BT 324.24 556.55 Td (, non-GAAP) Tj ET Q q 0 0 0 rg BT 384.46 556.55 Td ( gross mar) Tj ET Q q 0 0 0 rg BT 434.24 556.55 Td (gin which was 28%,) Tj ET Q BT /F2 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0.2 0.6 rg BT 531.56 556.55 Td ( ) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 19.00 556.55 Td (282) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (compared to 31% in the year) Tj ET Q q 0 0 0 rg BT 187.54 535.65 Td (-ago quarter) Tj ET Q q 0 0 0 rg BT 245.18 535.65 Td (. ) Tj ET Q q 0 0 0 rg BT 253.52 535.65 Td (Again, the year) Tj ET Q q 0 0 0 rg BT 326.91 535.65 Td (-over) Tj ET Q q 0 0 0 rg BT 351.99 535.65 Td (-year decline was primarily the result of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (283) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (costs associated with content.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (284) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (285) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (Q1 Operating Expenses) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (286) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (T) Tj ET Q q 0 0 0 rg BT 56.41 452.15 Td (urning to operating expenses, for the first quarter of 2017, non-GAAP) Tj ET Q q 0 0 0 rg BT 391.89 452.15 Td ( sales and marketing expense was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (287) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td ($104.3 million, or 33% of revenue, an increase of 3% compared to the first quarter of 2016, as a result of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (288) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 410.40 Td (an increase in headcount year) Tj ET Q q 0 0 0 rg BT 191.19 410.40 Td (-over) Tj ET Q q 0 0 0 rg BT 216.26 410.40 Td (-year) Tj ET Q q 0 0 0 rg BT 240.25 410.40 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (289) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (290) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (Non-GAAP) Tj ET Q q 0 0 0 rg BT 106.39 368.60 Td ( product development expense was $29.1 million for the first quarter) Tj ET Q q 0 0 0 rg BT 435.49 368.60 Td (, or 9% of revenue, an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (291) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (increase of 15% compared to the first quarter of 2016. ) Tj ET Q q 0 0 0 rg BT 315.19 347.75 Td (W) Tj ET Q q 0 0 0 rg BT 325.55 347.75 Td (e continue to believe that product and service ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (292) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (innovation is at the core of our value proposition and we intend to continue to prioritize product ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (293) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (development investments going forward.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (294) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (295) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (Non-GAAP) Tj ET Q q 0 0 0 rg BT 106.39 264.20 Td ( G&A) Tj ET Q q 0 0 0 rg BT 135.39 264.20 Td ( expense was $35.5 million or 1) Tj ET Q q 0 0 0 rg BT 287.92 264.20 Td (1% of revenue, roughly flat as a percentage of revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.20 Td (296) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 243.35 Td (compared to the same quarter last year) Tj ET Q q 0 0 0 rg BT 234.09 243.35 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.35 Td (297) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.45 Td (298) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 201.60 Td (299) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 180.70 Td (Consolidated adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 202.15 180.70 Td ( for the first quarter was a loss of $71.3 million coming in near the high-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 180.70 Td (300) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (end of our guidance range. ) Tj ET Q q 0 0 0 rg BT 183.56 159.80 Td (The strong result on adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 369.20 159.80 Td ( was achieved by ongoing focus on cost ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 159.80 Td (301) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 138.95 Td (discipline across the or) Tj ET Q q 0 0 0 rg BT 159.59 138.95 Td (ganization. ) Tj ET Q q 0 0 0 rg BT 214.90 138.95 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 304.56 138.95 Td ( excludes stock-based compensation, depreciation ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 138.95 Td (302) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.05 Td (and amortization, and other item the details of which are contained within our press release. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 118.05 Td (303) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 97.20 Td (304) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 76.30 Td (EPS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 76.30 Td (305) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I11 Do Q endstream endobj 25 0 obj <> endobj 26 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 292.65 27.80 Td (12 of 13) Tj ET Q BT /F1 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.70 Td (First quarter 2017 GAAP) Tj ET Q q 0 0 0 rg BT 170.71 702.70 Td ( basic and diluted net loss per share was $0.56. Non-GAAP) Tj ET Q q 0 0 0 rg BT 455.55 702.70 Td ( basic and diluted net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 702.70 Td (306) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (loss per share was $0.24. GAAP) Tj ET Q q 0 0 0 rg BT 207.70 681.80 Td ( and non-GAAP) Tj ET Q q 0 0 0 rg BT 285.25 681.80 Td ( basic and diluted EPS were based on 238 million ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (307) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (weighted average shares outstanding. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (308) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (309) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (Cash) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (310) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.30 Td (Pandora ended the first quarter with $203.0 million in cash and investments compared to $243.3 million at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.35 598.30 Td (311) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (the end of the prior quarter) Tj ET Q q 0 0 0 rg BT 177.79 577.40 Td (. Cash used by operating activities was $36.0 million for the first quarter ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (312) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (compared to $13.1 million in the year) Tj ET Q q 0 0 0 rg BT 230.21 556.55 Td (-ago quarter) Tj ET Q q 0 0 0 rg BT 287.85 556.55 Td (. Capital expenditures were $2.0 million in the first ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.55 Td (313) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (quarter) Tj ET Q q 0 0 0 rg BT 82.82 535.65 Td (. Internal-use software costs were $7.8 million in the first quarter) Tj ET Q q 0 0 0 rg BT 394.24 535.65 Td (, driven by capitalization of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (314) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (engineering expense associated with the development of new subscription services.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (315) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (316) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (Guidance) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (317) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (Now) Tj ET Q q 0 0 0 rg BT 72.05 452.15 Td (, Ill wrap up with some thoughts regarding our full-year guidance, as well as our expectations for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (318) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (second quarter) Tj ET Q q 0 0 0 rg BT 119.14 431.25 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (319) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (320) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.50 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 389.50 Td (e are excited about the launch of Pandora Premium and its potential as it begins to ramp. ) Tj ET Q q 0 0 0 rg BT 490.53 389.50 Td (W) Tj ET Q q 0 0 0 rg BT 500.89 389.50 Td (e expect ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (321) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (revenue to build throughout the year and we are confident in our strategy based on leveraging a suite of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (322) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (products that works together to strengthen our value proposition. Our expectation is that topline growth in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (323) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (2017 will be heavily loaded towards the back half. Due to issues with third-party billing integrations, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (324) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 306.00 Td (ramp of Premium from mid-March to general availability took longer than expected. Since Premium only ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (325) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (fully launched in mid-April and the vast majority of Premium users will remain in trial mode during Q2, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (326) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 264.20 Td (and subscription revenue will not ramp significantly until the third and fourth quarter) Tj ET Q q 0 0 0 rg BT 457.41 264.20 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 264.20 Td (327) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 243.35 Td (328) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 222.45 Td (Additionally) Tj ET Q q 0 0 0 rg BT 109.38 222.45 Td (, the advertising business has historically demonstrated significant seasonality that further ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 222.45 Td (329) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 201.60 Td (weights revenue toward the back half. Pandora previously issued full-year revenue guidance with a wide ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 201.60 Td (330) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 180.70 Td (range in light the unknowns related to the timing and ramp of Premium revenue, which again, we expect ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 180.70 Td (331) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 159.80 Td (to occur primarily in Q3 and Q4. ) Tj ET Q q 0 0 0 rg BT 212.91 159.80 Td (While we are excited to have formally launched Premium, we now ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 159.80 Td (332) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 138.95 Td (expect full-year revenue in the range of $1.5B to $1.65B, taking into account the fact that Premium ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 138.95 Td (333) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 118.05 Td (launched later than expected and is only 20 days into the commercial launch of a transformative new ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 118.05 Td (334) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 97.20 Td (product. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 97.20 Td (335) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 76.30 Td (336) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I12 Do Q endstream endobj 27 0 obj <> endobj 28 0 obj <> stream BT /F1 10.00 Tf ET BT /F1 8.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 285.65 40.40 Td (May 8, 2017) Tj ET Q BT /F1 8.00 Tf ET q 0.25882352941176473 0.25882352941176473 0.25882352941176473 rg BT 292.65 27.80 Td (13 of 13) Tj ET Q BT /F1 12.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 49.50 702.70 Td (For Q2 we expect revenue in the range of $360 million to $375 million and adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 500.07 702.70 Td ( in the range ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 702.70 Td (337) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 681.80 Td (of a $65 million loss to a $50 million loss. Incorporated in this guidance are several important factors. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 681.80 Td (338) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 660.95 Td (Specifically) Tj ET Q q 0 0 0 rg BT 106.03 660.95 Td (, with respect to the advertising business, although we did have some revenue move from Q1 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 660.95 Td (339) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 640.05 Td (to Q2, our forecast reflects the fact that historical sequential growth rates between Q1 and Q2 have proven ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 640.05 Td (340) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 619.20 Td (to be a reliable way to project our ad sales opportunity in the first half of the year) Tj ET Q q 0 0 0 rg BT 438.38 619.20 Td (. For subscriptions, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 619.20 Td (341) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 598.30 Td (have built our forecasts expecting demand generation initiatives to build as the quarter progresses. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 598.30 Td (342) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 577.40 Td (Perhaps most important, our ) Tj ET Q q 0 0 0 rg BT 187.82 577.40 Td (AEBITDA) Tj ET Q q 0 0 0 rg BT 239.82 577.40 Td ( guidance illustrates that we expect sales and marketing expenses ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 577.40 Td (343) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 556.55 Td (to be significantly higher in Q2 than the year) Tj ET Q q 0 0 0 rg BT 264.53 556.55 Td (-ago period due to the launch marketing activities and is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 556.55 Td (344) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 535.65 Td (expected to decline in the remaining quarters as the launch campaign transitions to a sustained marketing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 535.65 Td (345) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 514.80 Td (mode. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 514.80 Td (346) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 493.90 Td (347) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 473.00 Td (Lastly) Tj ET Q q 0 0 0 rg BT 78.71 473.00 Td (, some housekeeping items in relation to our guidance. ) Tj ET Q q 0 0 0 rg BT 346.44 473.00 Td (The reconciliation of our adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 555.38 473.00 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 473.00 Td (348) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 452.15 Td (guidance to GAAP) Tj ET Q q 0 0 0 rg BT 140.37 452.15 Td ( is contained in our press release and we anticipate a year to date non-GAAP) Tj ET Q q 0 0 0 rg BT 507.80 452.15 Td ( ef) Tj ET Q q 0 0 0 rg BT 519.90 452.15 Td (fective ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 452.15 Td (349) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 431.25 Td (tax rate between 30% and 37%.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 431.25 Td (350) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 410.40 Td (351) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 389.50 Td (I want to finish by emphasizing my excitement about the potential that lies ahead to drive growth through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 389.50 Td (352) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 368.60 Td (Pandora) Tj ET Q q 0 0 0 rg BT 92.16 368.60 Td (s unique assets. ) Tj ET Q q 0 0 0 rg BT 171.82 368.60 Td (As I said earlier) Tj ET Q q 0 0 0 rg BT 247.64 368.60 Td (, the formula of great product, existing scale, and fertile growth ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 368.60 Td (353) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 347.75 Td (opportunity is one I find highly attractive and more importantly) Tj ET Q q 0 0 0 rg BT 353.65 347.75 Td (, it is a formula which can create real value ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 347.75 Td (354) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 326.85 Td (for shareholders, and indeed, all stakeholders -- users, artists, and the music industry) Tj ET Q q 0 0 0 rg BT 453.95 326.85 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 326.85 Td (355) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 306.00 Td (356) Tj ET Q BT /F1 12.00 Tf ET q 0 0 0 rg BT 49.50 285.10 Td (W) Tj ET Q q 0 0 0 rg BT 59.87 285.10 Td (e will now open to your questions, operator) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 19.00 285.10 Td (357) Tj ET Q /GS0 gs q 205.00 0 0 41.00 50.00 726.60 cm /I13 Do Q endstream endobj 29 0 obj <> /View <>>>>> endobj 30 0 obj <> /View <>>>>> endobj 31 0 obj <> endobj 32 0 obj <> stream xy\E7~n{{w'd'52 HaGPPA!"" b-&h,+TLy?:uk?uΩoH""?W~.Xv3&rm 2\jMgwm'CڴzlycǏ\ rBjx\DsV@{twocmC{Iwl11z:1m!t-\q3D.:yz'Wɨp[_F=>E"ǢӦ/|K&_~=!wn-az3¦h$7,ؑ2Oo_eSFLlk}Fg[F>|;