Pandora Cranks Up the Growth Machine, But Is It Sustainable?

The updated numbers Pandora provided this week in its latest SEC filing should impress even the Internet radio leader's most ardent naysayers. While Pandora's financial position will likely trigger even greater interest in its upcoming IPO, I wonder how sustainable this growth is, particularly in the face of formidable competition from satellite radio provider Sirius/XM (SIRI), emerging streaming threat Clear Channel (CCMO.PK), the force of Apple (AAPL), and other players.

Before getting into how I expect Pandora's main competitors to position themselves, I review key data from the latest S-1:

• Revenue skyrocketed from $55,189,000 in FY2010 to $137,764,000 in FY2011.
• Advertising revenue rose from $50,147,000 in FY2010 to $119,333,000 in FY2011.
• Subscription and "other" revenue increased from $5,042,000 in FY2010 to $18,431,000 in FY2011.
• Despite rising content acquisition costs (up from $32,946,000 to $69,357,000 between FY2010 and 2011), Pandora's loss narrowed from $15,549,000 in FY2010 to $321,000 in FY2011.

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