Music streaming service Pandora (P) announced Monday that founder Tim Westergren will return as Chief Executive Officer of the company. Pandora also introduced a new management structure, giving Chief Financial Officer Mike Herring the additional title of president and appointing strategy chief Sara Clemens as Chief Operating Officer to focus on scaling the business and developing new ventures. Brian McAndrews, previously CEO, chairman and president, will be departing, with board member Jim Feuille now taking on the chairmanship role.
MANAGEMENT COMMENTARY: Remarking on the news, Pandora called Westergren a “visionary” entrepreneur and musician who “plays an essential role in engaging employees, listeners, music makers, advertisers and partners.” Chairman Feuille commented that Westergren is “the ideal CEO” who “carries the vision for how Pandora can transform the music industry and is uniquely able to connect with listeners, music makers and employees.”
FINANCIAL FORECAST: Pandora also took the opportunity to reaffirm its previously announced revenue and EBITDA guidance. Note that on February 11, the company forecast first quarter revenue of $280M-$290M and adjusted EBITDA of negative $75M-$65M, along with 2016 revenue of $1.4B-$1.42B and adjusted EBITDA of negative $80M-$60M. Today, the company said it expects to come in at the high end of those Q1 targets, and backed its full year range.
ANALYST TAKE: Weighing in on the announcement, Bank of America analyst Nat Schindler highlighted that no details were given as to why McAndrews is departing after just two and a half years. The analyst argued that the move “likely originated” out of disagreements between McAndrews and Pandora’s board regarding its long term strategic direction. Given his background in private equity, the sale of his previous company to Microsoft (MSFT), and a New York Times report in February that Pandora was exploring a sale, Schindler said McAndrews may indeed have been advocating a sale of the streaming service, though that outcome is “incrementally less likely,” at least in the near term, with Westergren’s return.
