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For Pandora, getting more listeners costs more money

Pandora Media reported higher revenue and profit for the quarter ending in December but said that costs to grow its audience is rising.

For the quarter ending December, Pandora reported that revenue grew 52 percent to $200.4 million on a GAAP basis. Net income rose to $8.9 million, or 4 cents per share, from $1.6 million, or 1 cent per share, in the year-ago period.

The online streaming music company said that earnings per share for the full year is expected to be between 13 cents and 17 cents, below analysts expectations of 19 cents per share, according to Thomson Reuters I/B/E/S.

Shares of Pandora fell almost 6 percent in after- market trade on Wednesday after closing at $35.83.

(Watch: Pandora rebounded nicely amid the competition)

"It's clearly that they are spending more to acquire customers and sell ads,'' said Michael Pachter, an analyst with Wedbush Securities. "I think they are intent on growing."

Indeed, Pandora Chief Executive Brian McAndrews said in a statement that the company will continue to "aggressively invest" this year to sustain audience growth. "Our bias will continue to be toward revenue growth and capturing additional market share,'' he said.


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