Internet Media

Victor Anthony
646-502-2452
VAnthony@aegiscap.com

Initiating Coverage
December 6, 2016
Key Metrics Pandora Media Inc.
Rating: Buy
P - NASDAQ $13.37
Pricing Date Dec 5 2016
$16.00
A Play On The On-Demand Launch & Potential
Price Target
52-Week Range $16.23 - $7.10
Shares Outstanding (mm) 255.2 Acquisition; Initiating With Buy and $16 PT
Market Capitalization (mm) $3,412.0
3-Mo Average Daily Volume 6,969 Investment Highlights:
Book Value/Share $3.56
Price/Book 3.8x We are initiating coverage of Pandora with a Buy rating and a $16 price target. While
our recent bullish stance on Pandora was somewhat tempered by the 3Q report that
EPS FY: December missed expectations and saw 2016 guidance reduced, we still see upside to owning
Prior Curr. Prior Curr. the shares at these levels due to our expectations for a successful on-demand service
2015A 2016E 2016E 2017E 2017E and the potential for an acquisition.
1Q-Mar (0.23) -- (0.51)A -- (0.55)E ■ On-Demand Launch Coming 2017 (Previewed Today). A beta product of the
2Q-Jun (0.08) -- (0.33)A -- (0.35)E on-demand service should be launched this month and is being previewed at an
3Q-Sep (0.40) -- (0.27)A -- (0.29)E event this evening in New York City. A full launch is expected in January 2017.
4Q-Dec (0.09) -- (0.44)E -- (0.19)E We believe that the market for paid online streaming will grow fast and Pandora
FY (0.79) -- (1.55)E -- (1.35)E will be one of the primary beneficiaries when they launch the on-demand service.
P/E NM NM NM We see an increasing willingness for users to pay $120 per-year to stream music
even amongst millennials. Competition is intense with Spotify, Apple Music,
REVENUE YouTube, and Amazon entering the space to grab share. However, we continue to
Prior Curr. Prior Curr. believe that the presence of these competitors is expanding the online streaming
2015A 2016E 2016E 2017E 2017E marketing, particularly, on-demand, and there are millions more potential users
1Q-Mar 230.8 -- 297.3A -- 341.0E who have yet to sign on to pay for music. In that vein, we believe Pandora’s on-
2Q-Jun 285.6 -- 343.0A -- 413.6E
demand service, as we stated previously, could expand quickly and gain share.
3Q-Sep 311.6 -- 351.9A -- 434.2E ■ Buy For The Eventual Acquisition. Earlier this year the New York Times
4Q-Dec 336.2 -- 364.9E -- 483.7E reported that Pandora had engaged investment bankers to pursue a sale. Activist
FY 1,164.0 -- 1,357.1E -- 1,672.5E investor Keith Meister of Corvex, suggested in a May 16, 2016 letter to the Board
of Directors that Pandora hire new investment bankers with a “fresh perspective”
Company Description: to consider “value maximization” including a sale of the company. Liberty Media
Pandora is an Internet radio service primarily in the U.S. with an has made public its interest in acquiring Pandora although it has also publicly
evolving service offering in New Zealand, and Australia and their voiced disagreement with Pandora’s decision to pursue the on-demand service.
associated territories. The service has over 78 million monthly active We understand that the offer put forth Liberty earlier this year was for $15 per
users, 100 million users every three months that listen for an average
Pandora share. This past Friday, it was widely reported that Liberty has again
of 23 hours a month, and close to 4 million paying subscribers to its
subscription ad-free service. Pandora also owns Ticketfly, a live events approached the board regarding and acquisition. We continue to give credence to
ticketing company, which it purchased on October 31, 2015 and is in the acquisition story, given the rich technology, the UI, and the large user base. In
the process of launching an on-demand music streaming subscription addition to Liberty, we believe Live Nation could be interested and while Google
service. Pandora was founded in 1999 by Timothy Westergren (recently has built out YouTube Red, we think the addition of Pandora would accelerate
returned to Pandora as CEO), along with two co-founders: Will Glaser
their online streaming efforts. At the current peer group 2016 EV/Sales, Pandora
and Jon Kraft. It was incorporated in 2000 and is headquartered in
Oakland, California. The company commenced its non-subscription, would fetch at least $17 per-share in an acquisition.
ad-supported radio service in 2005 and since then listeners have created
over 9 billion stations. The Company went public on the New York Stock ■ If Management Executes Against Plan – Shares Worth ~$29. Management has
Exchange on June 15th, 2011 at $16 per share. Pandora was originally
named Savage Beast Technologies. outlined what we think are ambitious goals across all four business lines for 2020
– we say ambitious because we are not modeling towards those numbers (high
execution risks). However, to illustrate the upside if they were in fact to pull it
off, we valued each business individually using a sum-of-the parts valuation. The
exercise highlights value near $29 per share based on what we think are reasonable
EBITDA margins and target multiples.

■ Valuation: Our $16 price target is based on a DCF analysis using a WACC of
9.4% and an 10x implied terminal year EBITDA multiple. Pandora trades at 2.1x
2017 EV/Sales on our estimates. These multiples are at a discount to the group of
Internet media stocks which trade at 3.0x 2017 EV/Sales.

The Disclosure section may be found on pages 14 - 15 of this report.

Pandora Media Inc. December 6, 2016

Company Description
Pandora is an Internet radio service primarily in the U.S. with an evolving service offering in New Zealand, and Australia and
their associated territories. The service has over 78 million monthly active users, 100 million users every three months that
listen for an average of 23 hours a month, and close to 4 million paying subscribers to its subscription ad-free service.
Pandora also owns Ticketfly, a live events ticketing company, which it purchased on October 31, 2015 and is in the process
of launching an on-demand music streaming subscription service. Pandora was founded in 1999 by Timothy Westergren
(recently returned to Pandora as CEO), along with two co-founders: Will Glaser and Jon Kraft. It was incorporated in 2000
and is headquartered in Oakland, California. The company commenced its non-subscription, ad-supported radio service in
2005 and since then listeners have created over 9 billion stations. The Company went public on the New York Stock
Exchange on June 15th, 2011 at $16 per share. Pandora was originally named Savage Beast Technologies.

Investment Thesis
We are initiating coverage of Pandora with a Buy rating and a $16 price target, for upside of ~23%. While our recent bullish
stance on Pandora was somewhat tempered by the 3Q report that missed expectations and saw 2016 guidance reduced, we
see upside to owning the shares at these levels due to our expectations for a successful on-demand service and the potential
for an acquisition.

Reasons To Buy
On-Demand Launch Coming 2017 (Previewed Today). A beta product of the on-demand service should be launched this
month and is being previewed at an event this evening in New York City. A full launch is expected in January 2017. Pandora
was driven to create an on-demand service to recapture the 35% of churned users who moved on to existing on-demand
services in the market. We understand that the product is differentiated from the incumbent on-demand services with
Pandora leveraging years of data science on users’ listener patterns to create a superior listener experience, including off-
line listening. Further, management should be able to launch the service without spending significant incremental marketing
dollars. We believe that the market for paid online streaming will grow fast and Pandora will be one of the primary
beneficiaries when they launch the on-demand service. We see an increasing willingness for users to pay $120 per-year to
stream music, even amongst millennials. Competition is intense with Spotify, Apple Music, YouTube, and Amazon entering
the space to grab share. However, we continue to believe that the presence of these competitors is expanding the online
streaming marketing, particularly, on-demand, and there are millions more potential users who have yet to sign on to pay
for music. In that vein, we believe Pandora’s on-demand service, could expand quickly and gain share.

Buy For The Eventual Acquisition. Earlier this year the New York Times reported that Pandora had engaged investment bankers to
pursue a sale. Activist investor Keith Meister of Corvex, suggested in a May 16, 2016 letter to the Board of Directors that
Pandora hire new investment bankers with a “fresh perspective” to consider “value maximization,” including a sale of the
company. Liberty Media has made public its interest in acquiring Pandora although it has also publicly voiced disagreement
with Pandora’s decision to pursue the on-demand service. We understand that the offer put forth by Liberty earlier this year
was for $15 per Pandora share. This past Friday, it was widely reported that Liberty has again approached the board
regarding a potential acquisition. We continue to give credence to the acquisition story, given the rich technology, the UI,
and the large user base. In addition to Liberty, we believe Live Nation could be interested, and while Google has built out
YouTube Red, we think the addition of Pandora would accelerate their online streaming efforts. At the current peer group
2017 EV/Sales, Pandora would fetch at least $17 per-share in an acquisition. While it is well known that Pandora’s CEO is
remains reticent to a sale, we think all the signs point to an eventual sale.

2 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Exhibit 1. M&A Valuation

Current 2017 EV/Sales Multiples 2.1x

Peer Group 2017 EV/Sales, Median 2.4x

Pandora's Value @ Peer Group Valuation $17.00

Premium % 27%
Source: Aegis Capital

If Management Executes Against Plan – Shares Worth ~$29. Pandora’s new model which now includes the core ad-
supported radio service, the coming Pandora Premium on-demand service, Pandora Plus, and Ticketing reduces the risk of
dependency on the core business to drive shareholder value. Moreover, there are natural synergies across the three major
business models that should help increase the value of the whole. Management has outlined what we think are ambitious
goals across all four business lines for 2020 – we say ambitious because we are not modeling towards those numbers.
However, to illustrate the upside if they were in fact to pull it off, we valued each business individually using a sum-of-the
parts valuation. The exercise highlights value near $29 per share based on what we think are reasonable EBITDA margins and
target multiples.

Exhibit 2. Valuation On Pandora’s 2020 Forecasts

Core Ad-Supported Radio Pandora Premium (On-Demand)
2020 Revenues $1,858 2020 Revenues $1,300
x Margins 25% x Margins 13%
= Adj. EBITDA $465 = Adj. EBITDA $169
x Target Multiple 10.0x x Target Multiple 20.0x
= Value $4,645 = Value $3,380
/ Shares 255 / Shares 255
= per Share Value $18.20 = per Share Value $13.24
Co. Assumptions: 89.5M active users Co. Assumptions: 11.3M subs,
22.2 hrs per-Active User, 23,370 hours 10.2% penetration, $9.99 ARPU
LPM of $36, RPM of $80, Ann. ARPU of $21 10% operating margin
55% Contribution Margins 35% contribution magrin
20% ooperating margin Revenues: $1.3B
Revenues: $1.858B

Pandora Plus Ticketing

2020 Revenues $541 2020 Revenues $300
x Margins 15% x Margins 13%
= Adj. EBITDA $81 = Adj. EBITDA $39
x Target Multiple 20.0x x Target Multiple 15.0x
= Value $1,623 = Value $585
/ Shares 255 / Shares 255
= per Share Value $6.36 = per Share Value $2.29
Co. Assumptions: 9.5M subs Co. Assumptions:
8.6% penetration, $4.90 APRU 10.2% penetration, $9.99 ARPU
60% content costs 10% operating margin
40% contribution margin Revenues: $300M
5,934 hours, 54 hours per-Active user
Ann. ARPU of $59
12% operating margin
Revenues: $541M

Total per-Share Value, End of 2019 $40.10

Cost of Equity 12%
Value at End of 2016 $28.85
Source: Aegis Capital; Company Reports

3 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Estimates
Our 4Q16 revenue and Adj. EBITDA estimates are at the mid-point of company guidance and approximate consensus.

For 2017, our revenue estimate is above consensus but Adj. EBITDA is below as we factor in additional content costs for the on-demand
service. Our estimates assume: 1) advertising revenue growth of 10% YoY, 2) Pandora Plus subscription revenue growth of 2%; 3)
Ticketing revenue of $105M; 4) on-demand revenues of $200M; 5) Ad RPM growth of 10%; 6) flat listener hour growth for ad-supported,
and 7) additional content costs equal to 70% of on-demand revenue.

Exhibit 3. Aegis Estimates vs. Consensus

Item Aegis Estimate Consensus Variance Variance % Guidance
4Q16E
Revenues ($m) $364.9 $368.9 ($4.0) -1.1% $362 to $374 million
Adj. EBITDA, ($m) ($46.4) ($42.0) ($4.4) 10.5% $-51 to -39 million
GAAP EPS ($0.45)
Non-GAAP EPS ($0.17) ($0.23) $0.1

1Q17E
Revenues ($m) $341.0 $342.8 ($1.7) -0.5%
Adj. EBITDA, ($m) ($59.1) ($59.7) $0.6 -1.0%
GAAP EPS ($0.54)
Non-GAAP EPS ($0.17)

2017E
Revenues ($m) $1,672.5 $1,667.0 $5.5 0.3%
Adj. EBITDA, ($m) ($65.3) ($56.0) ($9.3) 16.6%
GAAP EPS ($1.31)
Non-GAAP EPS ($0.21)
Source: Aegis Capital Estimates; FactSet; Company Reports

4 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Valuation
Our $16 price target is based on a DCF analysis using a WACC of 9.6% and a 9x implied terminal year EBITDA multiple.

Exhibit 4. Discounted Cashflow Valuation

DCF Valuation ('000s, Except Per Share Data) 2017 2018 2019 2020 2021 2022 2023 2024 2025 Terminal Year
Operating Income (EBIT) $(295.6) $(275.7) $(206.9) $(148.2) $(72.7) $8.1 $108.0 $170.0 $250.5 $251
Less: Cash Taxes on Operating Income $118.2 $110.3 $82.8 $59.3 $29.1 ($3.2) ($43.2) ($68.0) ($100.2) ($100.2)
Net Operating Profit Less Adjusted Taxes $(177) $(165) $(124) $(89) $(44) $5 $65 $102 $150 $150
Depreciation & Amortization $77.6 $81.4 $85.5 $89.8 $94.3 $99.0 $103.9 $109.1 $114.6 115
Change in Working Capital $4.0 ($10.8) ($60.3) ($68.1) ($78.3) ($89.3) ($102.1) ($115.1) ($131.7) ($132)
Capital Expenditures ($50.2) ($66.9) ($75.3) ($84.2) ($93.8) ($104.4) ($115.9) ($128.4) ($142.2) (115)
Other $152.7 $203.4 $228.8 $255.9 $285.3 $317.4 $352.3 $390.5 $432.5 432
Unlevered Free Cash Flow $7 $42 $55 $104 $164 $228 $303 $358 $423 $451

2017E PV of Unlevered FCF $7 $38 $46 $79 $114 $144 $175 $189 $204
PV of Terminal Value $3,416 $3,743 $4,100 $4,492 $4,921 $5,391 $5,906 $6,471 $7,089

Sum of the PV of Interim Unlevered FCF $989

PV of Terminal Value $3,416 DCF Assumptions
Gross Asset Value $4,406 Risk Free Rate (R f) 2.2%
Add: Cash & Equivalents 115 Estimated Equity Risk Premium (R m-Rf) 9.4%
Less: Debt (337) Beta (β) 1.00
Net Asset Value (NAV) $4,183 Cost of Equity (Ke) 11.6%
Diluted Shares 255 Cost of Debt (Kd), LT Avg. 9.0%
Fair Value per Share $16 Target Debt/Capital Ratio 33.0%
Current Price $13.37 Tax Rate 40.0%
Upside (Downside) 22.6% Weighted Average Cost of Capital (WACC) 9.6%
G (Perpetual Growth Rate) 3.0%
Terminal Multiple =(1+G)/(WACC-G) 16x
Implied Terminal Year Multiple on EBITDA 9x

Source: Aegis Capital Estimates

5 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Pandora trades at 2.1x 2017 EV/Sales on our estimates. These multiples are at a discount to the group of Internet media stocks which
trades at an average of 3.1x 2017 EV/Sales.

Exhibit 5. Online Media Comps

Price 52-Week 52-Week EV/Sales 2-Year EV/EBITDA
Company Ticker 12/05/2016 High Low Mkt Cap($mil)EV ($mils) 2016E 2017E 2018E CAGR 2016E 2017E 2018E

Online Media
Alphabet GOOGL $777.84 $839.00 $672.66 $531,854 $452,736 6.2x 5.3x 4.6x 11% 12.5x 10.7x 9.2x
Facebook FB $117.39 $133.50 $89.37 $339,906 $313,766 11.5x 8.6x 6.7x 20% 17.8x 13.6x 10.8x
Twitter TWTR $18.23 $26.25 $13.73 $13,033 $11,023 4.3x 3.9x 3.6x 6% 15.4x 13.1x 11.3x
IAC IACI $66.42 $68.75 $38.82 $5,420 $5,567 1.8x 1.7x 1.6x 5% 11.1x 9.1x 7.8x
Match Group MTCH $17.55 $19.74 $8.41 $4,803 $5,788 4.7x 4.1x 3.7x 8% 14.4x 12.2x 10.7x
Bankrate RATE $10.60 $14.47 $6.59 $955 $1,115 2.5x 2.2x 2.0x 8% 9.7x 9.0x 8.3x
Zillow ZG $34.29 $39.99 $16.46 $1,854 $1,639 1.9x 1.6x 1.3x 14% 11.7x 6.9x 4.9x
Yahoo! YHOO $40.17 $44.92 $26.15 $38,327 $8,484 2.4x 2.4x 2.4x 0% 10.3x 9.9x 10.0x
XO Group XOXO $18.44 $19.92 $13.64 $488 $385 2.5x 2.3x 2.1x 6% 12.2x 10.9x 9.1x
Groupon GRPN $3.79 $5.94 $2.15 $2,165 $1,705 0.5x 0.5x 0.5x 3% 10.8x 7.7x 6.1x
Zynga ZNGA $2.96 $3.04 $1.78 $2,295 $1,422 1.9x 1.7x 1.5x 1% 23.7x 12.5x 9.1x
Pandora P $13.40 $16.23 $7.10 $3,420 $3,507 2.6x 2.1x 1.6x 18% NM NM NM
Netflix NFLX $119.16 $133.27 $79.95 $51,137 $52,168 5.9x 4.7x 4.0x 14% 88.8x 51.3x 32.1x
Yelp YELP $36.49 $43.36 $14.53 $2,985 $2,552 3.6x 2.8x 2.3x 15% 21.7x 14.5x 11.1x
WebMD WBMD $53.31 $67.55 $45.46 $2,089 $2,094 3.0x 2.8x 2.7x 4% 9.1x 8.5x 8.0x
Average 3.7x 3.1x 9% 19.2x 13.6x
Median 2.6x 2.4x 8% 12.4x 10.8x

S&P 500

Source: Aegis Capital Estimates; FactSet Consensus

Risks
Competition. Competition in online streaming, and on-demand streaming in particular, continues to grow. Spotify recently announced
surpassing 40M subscribers, Apple Music in its short existence has 17M subscribers, Tidal is getting aggressive in the space with exclusive
content, YouTube/Google Play is becoming increasingly relevant in addition to launching the YouTube Red service, and SoundCloud has
175M users globally. Pandora may be forced to increase marketing to offset those competitive challenges, which may put pressure on its
goal of achieving 15% operating margins in 2020.

Relationships With Labels. Pandora’s relationships with the top music labels could sour in the future or could become less economical
when contracts are up for renegotiation. That could put pressure on long-term gross margins and operating margin targets.

Execution Risks. High execution risks from juggling multiple investments: the core advertising-supported service, the Pandora Plus ad-
free subscription service, the forthcoming on-demand service, international expansion, and expanding the ticketing service.

6 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Management & Board of Directors

Management
Name Title Background
Tim Westergren CEO Tim Westergren is the Pandora Founder. He serrved as Chief Creative Officer and Treasurer from February 2000 to May 2002, as our
Chief Executive Officer and President from May 2002 to July 2004, as our Chief Strategy Officer from July 2004 to February 2014, and
was appointed as Chief Executive Officer in March 2016Tim started the personalized radio service in 2000. He is an award-winning
composer and accomplished musician with 20 years of experience in the music industry. He also works extensively with technology
partners, distribution partners, advertisers and investors to help shape Pandora Radio's future.
Mike Herring CFO Currently President and CFO. He has been CFO since 2013, however, Pandora is actively looking for his replacement. Prior to
Pandora, Mike served as VP of Operations at Adobe Systems Incorporated for over three years. Prior to Adobe, he served as an EVP
of Omniture Inc. from 2004 and served as its CFO until 2009. Previous to Omniture, Mike served as the CFO of MyFamily.com (now
Ancestry.com), VP of Finance At Third Age Media and Controller of Anergen Inc.
Sara Clemens Chief Strategy Officer Sara Clemens Serves as Chief Strategy Officer in 2014. Prior to Pandora, Sara was an executive in residence of Greylock Partners.
She was previously VP, Corporate Development at LinkedIn. Prior to LinkedIn, Sara served at Microsoft for 5 years in a range of
leadship positions.
Chris Phillips Chief Product Officer Responsible for Pandora's product strategy and roadmap. Prior to Pandora, Chirs was Director of Product Management and User
Experience for Amazon Digital Music.
Nick Bartle Chief Marketing Officer Nick was previously at LinkedIn, where he served as VP of Member Marketing and Communications. Prior to joining LinkedIn, Bartle
was Senior Director of Marketing Communications for Apple for more than four years. Earlier in his career, Bartle held senior roles at
BBDO, Goodby, and Silverstein & Partners developing digital, print and television campaigns for Starbucks, New Balance, E*TRADE
and HP.
Chris Martin Chief Technology Officer Chris Martin joined Pandora in 2004. Since joining the company, he has managed the engineering at Pandora. Prior to joining Pandora,
Chris worked in various engineering capacities at multiple enterprise software companies, including Quintus, Kenamea and QRS/Inovis.

Kristen Robinson Chief Human Resources Officer Kristen Robinson joined Pandora in 2014. Prior to Pandora, she served as SVP of Global Human Resources. Previously, Kristen
served in high level positions at global teams for technology companies includes HP, Agilent Technologies, and Verigy.
John Trimble Chief Revenue Officer John Trimble serves as the Chief Revenue Officer of Pandora. Previous to Pandora, John was the EVP of sales at Glam Media. Before
that, John served as EVP of sales at Fox Interactive Media. In addition, he has served as Director of Sales for Sports Illustrated.com and
VP of Sales with Phase2 Media.
Source: Company Filings; Aegis Capital

7 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Board of Directors
Name Title Background
James M. P. Feuille Director, Chairman James M. P. Feuille has served on the board of directors since October 2005. James currently serves as a general partner with
Crosslink Capital. Prior to Crosslink Capital, he served as global head of technology at UBS, COO at Volpe Brown Whelan & Company,
and head of technology at Robertson Stephens & Company. James currently serves on the boards of directors of a number of privately-
held companies.
Timothy Leiweke Chairman Timothy Leiweke has served on the board of directors since April 2015. Mr. Leiweke currently serves as President and CEO of Maple
Leaf Sports & Entertainment, a professional sports and commercial real estate company, which is the parent company of the Toronto
Maple Leafs, Toronto Raptors, Toronto FC and the Toronto Marlies. He also currently serves on the board of directors of the 2015
Special Olympics World Summer Games and Visit California. From 1996 to 2013, he was the President and Chief Executive Officer of
Anschutz Entertainment Group (AEG), a sporting and music entertainment presenter. From 1995 to 1996, he served as President and
CEO for U.S. Skiing, the nation governing body for Olympic skiing. Prior to that, he served as President of the Denver Nuggets, a
professional basketball team, from 1991 to 1995.
Peter Gotcher Director Peter Gotcher has served on the board of directors since September 2005. Mr. Gotcher is an independent private investor focusing on
investments in digital media technology companies. Peter was a venture partner with Redpoint Ventures (1999-2002), and with
Institutional Venture Partners (1997-1999). He founded Digidesign, and served as its president, CEO and chairman of the board of
directors (1984-1995). He served as the general manager of Digidesign and EVP of Avid Technology (1995-1996). Peter currently
serves as executive chairman of the board of directors of Dolby Laboratories and a number of privately-held companies.
Robert Faxon Director Roger Faxon has served on the board of directors since June 2015. Since 2012, Mr. Faxon has been owner and Chief Executive of
A&R Investments, an investment and consulting firm focused on the media and communications industries. Previously, from 1994 to 2012,
Mr. Faxon held various positions at the EMI Group, a music recording and publishing company, including CEO of the Music Publishing
division and most recently as CEO. From 1991 to 1994 he served as the Managing Director of Sotheby’s Europe, the art auction house.
Mr. Faxon holds a Bachelor of Arts degree from The Johns Hopkins University, where he currently serves on its board of directors.

Elizabeth A. Nelson Director Elizabeth A. Nelson has served on the board of directors since 2013. She currently serves on the boards of Nokia, and Brightcove, Inc..
Ms. Nelson currently chairs the audit committee at Brightcover and serves on the audit committee at Nokia. She served as the EVP and
CFO at Macromedia, Inc. (1996-2005), and also served as a director in 2005. Before joining Macromedia, she held various positions in
finance and corporate development at HP. She also served on the board of directors of Ancestry.com (2009-2012), of SuccessFactors
Inc. (2007-2012), of Autodesk Inc.(2007-2010), and of CNET Networks, Inc.(2003-2008).
Mickie Rosen Director Mickie Rosen has served on the board of directors since September 2015. Since October 2013, Ms. Rosen has been advising Fortune
100 companies and growth and early stage startups regarding strategy and operations. From 2011 to 2013, Ms. Rosen held various
positions at Yahoo, most recently as SVP of Global Media & Commerce, where she led the media division globally, overseeing product,
design, engineering, editorial, business development, partnerships, and marketing solutions. From 2008 to 2011, Ms. Rosen was a
partner with digital media venture capital firm, Fuse Capital, where she also co-founded and incubated Tecca, a service helping
consumers navigate personal technologies. From 2006 to 2008, she was the SVP and GM of Entertainment for Fox Interactive Media
and from 2002 to 2006, Ms. Rosen was the head of product development, marketing, and PR for Fandango. Ms. Rosen has also held
executive roles with Quisic, an e-learning start-up, and The Walt Disney Company’s Corporate Alliances group and prior to that, was a
consultant for McKinsey & Company.
Anthony J. Vinciquerra Director Anthony J. “Tony” Vinciquerra, has served on our board of directors since March 2016. Mr. Vinciguerra is Senior Advisor to Texas
Pacific Group (TPG) in the Technology, Media and Telecom sectors, where he advises TPG on acquisitions and operations. He has
been Senior Advisor of TPG since September 2011. From September 2008 to February 2011, he was Chairman of Fox Networks
Group and from June 2002 to February 2011, President and Chief Executive Officer. Earlier in his career, he held various management
positions in the broadcasting and media industry. Mr. Vinciquerra was a director of DirecTV from September 2013 to July 2015. He
previously served as a director of Motorola Mobility Holdings, Inc. from January 2011 to May 2012, and Motorola, Inc. from July 2007 to
January 2011.
Tim Westergren Director Tim Westergren is the Pandora Founder. Tim started the personalized radio service in 2000. He is an award-winning composer and
accomplished musician with 20 years of experience in the music industry. He also works extensively with technology partners, distribution
partners, advertisers and investors to help shape Pandora Radio's future.
Source: Company Filings; Aegis Capital

8 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016
Pandora Media Income Statement ($ in mlns, except per share)
Period 2007 2008 2009 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Total Revenue $4.175 $14.299 $19.333 $266.767 $410.009 $637.893 $920.802 $230.764 $285.560 $311.562 $336.157 $1,164.043 $297.305 $343.022 $351.901 $364.879 $1,357.107 $341.035 $413.605 $434.249 $483.661 $1,672.549 $2,230.047
q/q % 0.0% 0.0% -13.9% 23.7% 9.1% 7.9% 0.0% -11.6% 15.4% 2.6% 3.7% 0.0% -6.5% 21.3% 5.0% 11.4% 0.0% 0.0%
y/y % 242.5% 35.2% 0.0% 53.7% 55.6% 44.4% 18.8% 30.5% 30.0% 25.4% 26.4% 28.8% 20.1% 12.9% 8.5% 16.6% 14.7% 20.6% 23.4% 32.6% 23.2% 33.3%

Total Cost of revenue ($6.382) ($12.252) ($23.169) ($162.019) ($279.425) ($388.391) ($508.004) ($142.256) ($150.177) ($232.686) ($172.222) ($697.341) ($206.909) ($216.725) ($215.208) ($244.857) ($883.699) ($250.100) ($279.884) ($281.859) ($318.988) ($1,130.832) ($1,496.750)
q/q % 0.0% 0.0% 0.0% 7.3% 5.6% 54.9% -26.0% 0.0% 20.1% 4.7% -0.7% 13.8% 0.0% 2.1% 11.9% 0.7% 13.2% 0.0% 0.0%
y/y % 0.0% 0.0% 89.1% 0.0% 72.5% 39.0% 30.8% 15.4% 19.7% 83.6% 29.9% 37.3% 45.4% 44.3% -7.5% 42.2% 26.7% 20.9% 29.1% 31.0% 30.3% 28.0% 32.4%
% of revenues -152.9% -85.7% -119.8% -60.7% -68.2% -60.9% -55.2% -61.6% -52.6% -74.7% -51.2% -59.9% -69.6% -63.2% -61.2% -67.1% -65.1% -73.3% -67.7% -64.9% -66.0% -67.6% -67.1%

Cost of Revenue - Content acquisition ($3.240) ($6.402) ($15.771) ($139.703) ($248.313) ($342.884) ($446.377) ($126.02) ($130.13) ($211.27) ($142.93) ($610.362) ($171.26) ($176.63) ($174.33) ($200.49) ($722.722) ($207.07) ($232.75) ($233.77) ($264.21) ($937.795) ($1,256.929)
q/q % 0.0% 0.0% 0.0% 9.3% 3.3% 62.3% -32.3% 0.0% 19.8% 3.1% -1.3% 15.0% 0.0% 3.3% 12.4% 0.4% 13.0% 0.0% 0.0%
y/y % 0.0% 0.0% 146.3% 0.0% 77.7% 38.1% 30.2% 16.4% 16.8% 89.8% 23.9% 36.7% 35.9% 35.7% -17.5% 40.3% 18.4% 20.9% 31.8% 34.1% 31.8% 29.8% 34.0%
% of revenues -77.6% -44.8% -81.6% -52.4% -60.6% -53.8% -48.5% -54.6% -45.6% -67.8% -42.5% -52.4% -57.6% -51.5% -49.5% -54.9% -53.3% -60.7% -56.3% -53.8% -54.6% -56.1% -56.4%

Cost of Revenue - Other ($3.142) ($5.850) ($7.398) ($22.316) ($31.112) ($45.507) ($61.627) ($16.23) ($20.04) ($21.41) ($22.17) ($79.858) ($21.00) ($24.83) ($25.56) ($29.01) ($100.397) ($23.61) ($28.85) ($30.38) ($37.03) ($119.867) ($157.591)
q/q % 0.0% 0.0% 0.0% -5.7% 23.5% 6.8% 3.5% 0.0% -5.3% 18.3% 2.9% 13.5% 0.0% -18.6% 22.2% 5.3% 21.9% 0.0% 0.0%
y/y % 0.0% 0.0% 26.5% 0.0% 39.4% 46.3% 35.4% 8.4% 43.3% 38.6% 28.8% 29.6% 29.4% 23.9% 19.3% 30.9% 25.7% 12.4% 16.2% 18.9% 27.6% 19.4% 31.5%
% of revenues -75.3% -40.9% -38.3% -8.4% -7.6% -7.1% -6.7% -7.0% -7.0% -6.9% -6.6% -6.9% -7.1% -7.2% -7.3% -8.0% -7.4% -6.9% -7.0% -7.0% -7.7% -7.2% -7.1%

Gross profit ($2.207) $2.047 ($3.836) $104.748 $130.584 $249.502 $412.798 $88.508 $135.383 $78.876 $163.935 $466.702 $90.396 $126.297 $136.693 $120.022 $473.408 $90.935 $133.720 $152.390 $164.673 $541.717 $733.297
q/q % 0.0% -78.6% 53.0% -41.7% 107.8% 0.0% -44.9% 39.7% 8.2% -12.2% 0.0% -24.2% 47.1% 14.0% 8.1% 0.0% 0.0%
y/y % -287.4% 0.0% 24.7% 91.1% 65.4% 24.6% 44.9% -30.1% 21.0% 13.1% 2.1% -6.7% 73.3% -26.8% 1.4% 0.6% 5.9% 11.5% 37.2% 14.4% 35.4%
gross margin % -52.9% 14.3% -19.8% 39.3% 31.8% 39.1% 44.8% 38.4% 47.4% 25.3% 48.8% 40.1% 30.4% 36.8% 38.8% 32.9% 34.9% 26.7% 32.3% 35.1% 34.0% 32.4% 32.9%

Product Development ($0.382) ($5.932) ($6.116) ($13.038) ($18.255) ($33.293) ($53.153) ($15.875) ($18.742) ($21.849) ($28.115) ($84.581) ($35.846) ($33.808) ($33.657) ($40.690) ($144.001) ($33.350) ($32.768) ($34.086) ($27.928) ($128.133) ($159.693)
q/q % 0.0% 6.8% 18.1% 16.6% 28.7% 0.0% 27.5% -5.7% -0.4% 20.9% 0.0% -18.0% -1.7% 4.0% -18.1% 0.0% 0.0%
y/y % 3.1% 0.0% 40.0% 82.4% 59.7% 34.2% 43.3% 63.3% 89.1% 59.1% 125.8% 80.4% 54.0% 44.7% 70.3% -7.0% -3.1% 1.3% -31.4% -11.0% 24.6%
% of revenues -9.1% -41.5% -31.6% -4.9% -4.5% -5.2% -5.8% -6.9% -6.6% -7.0% -8.4% -7.3% -12.1% -9.9% -9.6% -11.2% -10.6% -9.8% -7.9% -7.8% -5.8% -7.7% -7.2%

Marketing and sales ($0.562) ($8.214) ($13.265) ($61.680) ($101.181) ($182.166) ($277.330) ($84.274) ($94.035) ($107.286) ($112.574) ($398.169) ($117.622) ($123.812) ($116.475) ($136.366) ($494.275) ($134.217) ($135.270) ($137.067) ($132.617) ($539.171) ($633.835)
q/q % 0.0% 9.6% 11.6% 14.1% 4.9% 0.0% 4.5% 5.3% -5.9% 17.1% 0.0% -1.6% 0.8% 1.3% -3.2% 0.0% 0.0%
y/y % 61.5% 0.0% 64.0% 80.0% 52.2% 36.2% 42.0% 48.3% 46.4% 43.6% 39.6% 31.7% 8.6% 21.1% 24.1% 14.1% 9.3% 17.7% -2.7% 9.1% 17.6%
% of revenues -13.5% -57.4% -68.6% -23.1% -24.7% -28.6% -30.1% -36.5% -32.9% -34.4% -33.5% -34.2% -39.6% -36.1% -33.1% -37.4% -36.4% -39.4% -32.7% -31.6% -27.4% -32.2% -28.4%

General and administrative ($9.574) ($2.577) ($4.190) ($33.703) ($46.356) ($74.131) ($112.443) ($36.754) ($38.812) ($35.603) ($42.774) ($153.943) ($46.296) ($40.562) ($41.768) ($42.360) ($170.986) ($43.523) ($39.717) ($41.269) ($45.473) ($169.982) ($215.491)
q/q % 0.0% 18.3% 5.6% -8.3% 20.1% 0.0% 8.2% -12.4% 3.0% 1.4% 0.0% 2.7% -8.7% 3.9% 10.2% 0.0% 0.0%
y/y % 62.6% 0.0% 37.5% 59.9% 51.7% 39.4% 50.1% 22.2% 37.7% 36.9% 26.0% 4.5% 17.3% -1.0% 11.1% -6.0% -2.1% -1.2% 7.3% -0.6% 26.8%
% of revenues -229.3% -18.0% -21.7% -12.6% -11.3% -11.6% -12.2% -15.9% -13.6% -11.4% -12.7% -13.2% -15.6% -11.8% -11.9% -11.6% -12.6% -12.8% -9.6% -9.5% -9.4% -10.2% -9.7%
Total Operating Expenses ($10.518) ($16.723) ($23.571) ($108.421) ($165.792) ($289.590) ($442.926) ($136.903) ($151.589) ($164.738) ($183.463) ($636.693) ($199.764) ($198.182) ($191.900) ($219.416) ($809.262) ($211.091) ($207.755) ($212.422) ($206.018) ($837.286) ($1,009.018)
q/q % 0.0% -69.1% 10.7% 8.7% 11.4% 0.0% 8.9% -0.8% -3.2% 14.3% 0.0% -3.8% -1.6% 2.2% -3.0% 0.0% 0.0%
y/y % 40.9% 0.0% 52.9% 74.7% 52.9% 36.8% 44.1% 43.4% 49.3% 43.7% 45.9% 30.7% 16.5% 19.6% 27.1% 5.7% 4.8% 10.7% -6.1% 3.5% 20.5%
% of revenues -251.9% -117.0% -121.9% -40.6% -40.4% -45.4% -48.1% -59.3% -53.1% -52.9% -54.6% -54.7% -67.2% -57.8% -54.5% -60.1% -59.6% -61.9% -50.2% -48.9% -42.6% -50.1% -45.2%

Income (loss) from operations ($12.725) ($14.676) ($27.407) ($3.673) ($35.208) ($40.088) ($30.128) ($48.395) ($16.206) ($85.862) ($19.528) ($169.991) ($109.368) ($71.885) ($55.207) ($99.394) ($335.854) ($120.156) ($74.035) ($60.032) ($41.346) ($295.569) ($275.721)
q/q % 0.0% -483.6% -66.5% 429.8% -77.3% 0.0% 460.1% -34.3% -23.2% 80.0% 0.0% 20.9% -38.4% -18.9% -31.1% 0.0% 0.0%
y/y % 86.7% -76.2% 858.6% 13.9% -24.8% 66.9% 38.2% 4152.7% -254.8% 464.2% 126.0% 343.6% -35.7% 409.0% 97.6% 9.9% 3.0% 8.7% -58.4% -12.0% -6.7%
% of total revs -304.8% -102.6% -141.8% -1.4% -8.6% -6.3% -3.3% -21.0% -5.7% -27.6% -5.8% -14.6% -36.8% -21.0% -15.7% -27.2% -24.7% -35.2% -17.9% -13.8% -8.5% -17.7% -12.4%

Interest income $0.000 $0.053 $0.098 $0.102 $0.361 $0.328 $0.000 $0.000 $0.000 $0.328 $0.862 $0.255 $0.579 $0.535 $2.231 $0.409 $0.393 $0.285 $0.145 $1.232 $1.232
Interest expense $0.000 ($0.784) ($0.526) ($0.602) ($0.516) ($0.131) ($0.124) $0.000 $0.000 ($0.255) ($6.175) ($6.247) ($6.494) ($6.494) ($25.410) ($6.494) ($6.494) ($6.494) ($6.494) ($25.976) ($25.976)
Other income (expense), net $0.902 $0.688 ($0.821) ($4.482) ($0.003) ($0.015) $0.217 $0.197 $0.256 ($0.036) ($1.637) ($1.220) ($5.313) ($5.992) ($5.915) ($5.959) ($23.179) ($6.085) ($6.101) ($6.209) ($6.349) ($24.744) ($24.744)
Income (loss) before provision for income taxes ($11.823) ($13.988) ($28.228) ($8.886) ($35.639) ($40.603) ($29.822) ($48.001) ($15.950) ($85.898) ($21.165) ($171.211) ($114.681) ($77.877) ($61.122) ($105.353) ($359.033) ($126.241) ($80.136) ($66.241) ($47.695) ($320.313) ($300.465)
q/q % 0.0% 61.0% -66.8% 438.5% -75.4% 0.0% 441.8% -32.1% -21.5% 72.4% 0.0% 19.8% -36.5% -17.3% -28.0% 0.0% 0.0%
y/y % 101.8% 0.0% 301.1% 13.9% -26.6% 66.1% 37.2% 4249.3% -266.9% 474.1% 138.9% 388.3% -28.8% 397.8% 109.7% 10.1% 2.9% 8.4% -54.7% -10.8% -6.2%
% of revenues -283.2% -97.8% -146.0% -3.3% -8.7% -6.4% -3.2% -20.8% -5.6% -27.6% -6.3% -14.7% -38.6% -22.7% -17.4% -28.9% -26.5% -37.0% -19.4% -15.3% -9.9% -19.2% -13.5%

Income tax benefit (tax) $0.000 ($0.145) $0.019 ($0.100) ($0.584) ($0.059) ($0.115) ($0.032) $1.756 $1.550 ($0.421) $1.544 ($0.412) $0.500 $1.211 $0.426 $0.270 $0.223 $0.161 $1.080 $0.000
q/q % 0.0% -85.5% 94.9% -72.2% -5587.5% 0.0% -124.0% -466.7% -126.7% -221.4% 0.0% -14.8% -36.5% -17.3% -28.0% 0.0% 0.0%
y/y % 0.0% 0.0% -113.1% -626.3% 484.0% 110.7% 16.2% -36.0% -531.4% -365.4% 613.6% -1442.6% 1187.5% -71.5% -21.9% -201.1% -82.5% -154.2% -67.8% -10.8% -100.0%
Net Income ($11.823) ($13.988) ($28.228) ($9.031) ($35.620) ($40.703) ($30.406) ($48.060) ($16.065) ($85.930) ($19.409) ($169.661) ($115.102) ($76.333) ($61.534) ($104.853) ($357.822) ($125.815) ($79.866) ($66.017) ($47.534) ($319.232) ($300.465)
q/q % 0.0% -491.4% -66.6% 434.9% -77.4% 0.0% 493.0% -33.7% -19.4% 70.4% 0.0% 20.0% -36.5% -17.3% -28.0% 0.0% 0.0%
y/y % 0.0% 0.0% 294.4% 14.3% -25.3% 66.1% 37.0% 4143.5% -258.1% 458.0% 139.5% 375.2% -28.4% 440.2% 110.9% 9.3% 4.6% 7.3% -54.7% -10.8% -5.9%
% of revenues -283.2% -97.8% -146.0% -3.4% -8.7% -6.4% -3.3% -20.8% -5.6% -27.6% -5.8% -14.6% -38.7% -22.3% -17.5% -28.7% -26.4% -36.9% -19.3% -15.2% -9.8% -19.1% -13.5%

Basic Share Count 4.097 4.671 5.881 157.341 167.568 180.201 205.273 209.928 211.742 212.760 220.625 213.790 226.659 229.745 232.139 234.139 230.671 235.139 238.139 241.139 244.139 244.971 259.271
Fully diluted Share count 4.097 4.671 5.881 157.341 167.568 180.201 205.273 209.928 211.742 212.760 220.625 213.790 226.659 229.745 232.139 234.139 232.954 235.139 238.139 241.139 244.139 247.254 259.271

EPS, basic, total ($3.62) ($3.80) ($5.45) ($0.06) ($0.21) ($0.23) ($0.15) ($0.23) ($0.08) ($0.40) ($0.09) ($0.79) ($0.51) ($0.33) ($0.27) ($0.45) ($1.55) ($0.54) ($0.34) ($0.27) ($0.19) ($1.30) ($1.16)

GAAP EPS, fdil, total ($3.62) ($3.80) ($5.45) ($0.06) ($0.21) ($0.23) ($0.15) ($0.23) ($0.08) ($0.40) ($0.09) ($0.79) ($0.51) ($0.33) ($0.27) ($0.45) ($1.55) ($0.54) ($0.34) ($0.27) ($0.19) ($1.30) ($1.16)

Non GAAP Net Income #REF! #REF! #REF! ($1.101) ($6.542) $11.546 $43.190 ($24.682) $11.602 $22.851 $10.208 $19.979 ($45.216) ($26.783) ($16.057) ($40.963) ($129.019) ($39.684) ($14.266) ($5.034) $8.586 ($50.398) ($9.666)
q/q % 0.0% 0.0% 0.0% -157.1% -147.0% 97.0% -55.3% 0.0% -542.9% -40.8% -40.0% 155.1% 0.0% -3.1% -64.1% -64.7% -270.6% 0.0% 0.0%
y/y % 0.0% 0.0% #REF! 0.0% 494.2% -276.5% 274.1% -3.4% 28.0% 12.7% -74.1% -53.7% 83.2% -330.8% -170.3% -501.3% -745.8% -12.2% -46.7% -68.6% -121.0% -60.9% -80.8%

Non-GAAP Fully diluted Share count 186.825 167.568 202.001 218.939 209.928 221.260 222.899 229.408 222.743 226.659 229.745 232.139 234.139 230.671 235.139 238.139 241.139 253.272 244.971 259.271

Non-GAAP Fully Diluted EPS #REF! #REF! #REF! ($0.01) ($0.04) $0.06 $0.20 ($0.12) $0.05 $0.10 $0.04 $0.09 ($0.20) ($0.12) ($0.07) ($0.17) ($0.56) ($0.17) ($0.06) ($0.02) $0.03 ($0.21) ($0.04)
Source: Company Reports; Aegis Capital

9 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016
Pandora, Cash Flow, mn
Period 0 0 0 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Adjusted EBITDA
Operating Income ($12.725) ($14.676) ($27.407) ($3.673) ($35.208) ($40.088) ($30.128) ($48.395) ($16.206) ($85.862) ($19.409) ($169.872) ($109.368) ($71.885) ($55.207) ($99.394) ($335.854) ($120.156) ($74.035) ($60.032) ($41.346) ($295.569) ($275.721)
+ Depreciation & Amortization $0.000 #REF! #REF! $4.221 $6.917 $10.781 $15.431 $4.340 $5.025 $5.829 $9.264 $24.458 $13.277 $14.360 $15.843 $18.000 $61.480 $18.540 $19.096 $19.669 $20.259 $77.564 $81.443
+ Stock based compensation $0.000 #REF! #REF! $7.930 $24.720 $42.260 $87.055 $23.195 $27.484 $28.794 $32.172 $111.645 $38.655 $32.432 $32.754 $35.000 $138.841 $42.521 $35.675 $36.029 $38.500 $152.725 $203.406
= Adjusted EBITDA ($12.725) #REF! #REF! $8.478 ($3.571) $12.953 $72.358 ($20.860) $16.303 $30.642 $24.761 $50.846 ($57.436) ($25.093) ($6.610) ($46.394) ($135.533) ($59.096) ($19.264) ($4.333) $17.413 ($65.279) $9.128
q/q % 0.0% 0.0% 0.0% -147.7% -178.2% 88.0% -19.2% 0.0% -332.0% -56.3% -73.7% 601.9% 0.0% 27.4% -67.4% -77.5% -501.8% 0.0% 0.0%
y/y % 0.0% 0.0% #REF! 0.0% -142.1% -462.7% 458.6% 152.6% 28.9% 26.6% -43.4% -29.7% 175.3% -253.9% -121.6% -287.4% -366.6% 2.9% -23.2% -34.4% -137.5% -51.8% -114.0%
margin -304.8% #REF! #REF! 3.2% -0.9% 2.0% 7.9% -9.0% 5.7% 9.8% 7.4% 4.4% -19.3% -7.3% -1.9% -12.7% -10.0% -17.3% -4.7% -1.0% 3.6% -3.9% 0.4%

Free Cash Flow

Cash from operations ($0.916) ($2.513) $0.615 $20.744 $26.982 ($9.923) $11.878 ($71.019) ($42.082) ($13.104) ($45.474) ($120.495) ($40.152) ($219.225) ($2.029) ($38.653) ($51.013) $6.779 ($84.916) ($26.401)
Less CapEx ($13.156) ($8.124) ($22.873) ($29.754) ($5.931) ($12.016) ($9.386) ($4.741) ($32.074) ($14.371) ($20.193) ($11.836) ($14.595) ($60.995) ($10.231) ($12.408) ($13.027) ($14.510) ($50.176) ($66.901)
=FCF ($14.072) ($10.637) ($22.258) ($9.010) $21.051 ($21.939) $2.492 ($75.760) ($74.156) ($27.475) ($65.667) ($132.331) ($54.747) ($280.220) ($12.260) ($51.061) ($64.041) ($7.731) ($135.092) ($93.302)
q/q % -333.6% -204.2% -111.4% -3140.1% 0.0% -63.7% 139.0% 101.5% -58.6% 0.0% -77.6% 316.5% 25.4% -87.9% 0.0% 0.0%
y/y % 0.0% -24.4% 109.3% -59.5% -250.3% 88.0% -236.0% -509.5% 723.0% -230.5% 199.3% -5410.2% -27.7% 277.9% -55.4% -22.2% -51.6% -85.9% -51.8% -30.9%
fcf margin -5.3% -2.6% -3.5% -1.0% 9.1% -7.7% 0.8% -22.5% -6.4% -9.2% -19.1% -37.6% -15.0% -20.6% -3.6% -12.3% -14.7% -1.6% -8.1% -4.2%
EBITDA-to_FCF Conversion -166.0% 297.9% -171.8% -12.5% -100.9% -134.6% 8.1% -306.0% -145.8% 47.8% 261.7% 2002.0% 118.0% 206.8% 20.7% 265.1% 1477.8% -44.4% 206.9% -1022.2%

LFCF per share ($0.089) ($0.063) ($0.124) ($0.044) $0.100 ($0.104) $0.012 ($0.343) ($0.347) ($0.121) ($0.286) ($0.570) ($0.234) ($1.203) ($0.052) ($0.214) ($0.266) ($0.032) ($0.546) ($0.360)
q/q % 0.0% -328.5% -203.3% -111.3% -3031.8% 0.0% -64.7% 135.8% 99.4% -59.0% 0.0% -77.7% 311.2% 23.9% -88.1% 0.0% 0.0%
y/y % 0.0% -29.0% 94.6% -64.5% -243.1% 82.7% -232.3% -503.9% 690.3% -220.9% 175.9% -4966.9% -31.9% 246.8% -57.0% -25.0% -53.4% -86.5% -54.6% -34.1%
% of eps 155.8% 29.9% 54.7% 29.6% -43.8% 136.6% -2.9% 390.3% 43.7% 23.9% 86.0% 215.1% 52.2% 77.5% 9.7% 63.9% 97.0% 16.3% 41.9% 31.1%
Source: Company Reports; Aegis Capital

10 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016
Pandora Media Drivers, in mn
Period 0 0 0 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Active Users (mn) 3.0 7.0 46.6 67.1 76.2 81.5 79.2 79.4 78.1 81.1 81.1 79.4 78.1 77.9 77.9 77.9 79.4 78.1 77.9 77.9 77.9 78.7
q/q growth % 0.0% -2.8% 0.3% -1.6% 3.8% 0.0% -2.1% -1.6% -0.3% 0.0% 0.0% 1.9% -1.6% -0.3% 0.0% 0.0% 0.0%
y/y growth % 0.0% 0.0% 44.0% 13.6% 7.0% 5.2% 3.9% 2.1% -0.5% -0.5% 0.3% -1.6% -0.3% -3.9% -3.9% 0.0% 0.0% 0.0% 0.0% 0.0% 1.0%
% of register users 31.8% 37.3% 33.6% 38.1% 32.6% 31.7% 31.4% 30.6% 31.5% 31.5% 30.5% 29.7% 29.4% 29.1% 29.1% 29.5% 28.8% 28.6% 28.5% 28.5% 28.5%

Revenue per Active User, annualized $8.52 $7.21 $8.90 $11.68 $11.49 $14.40 $15.83 $16.89 $14.32 $14.82 $17.42 $18.05 $18.74 $17.07 $17.34 $21.01 $22.27 $24.83 $21.47 $28.48
q/q growth % -15.3% 25.4% 9.9% 6.7% 0.0% -12.3% 17.6% 3.6% 3.8% 0.0% -7.4% 21.1% 6.0% 11.5% 0.0% 0.0%
y/y growth % 0.0% -15.4% 23.4% 31.2% 12.0% 24.8% 26.2% 24.5% 22.6% 29.0% 21.0% 14.0% 10.9% 19.2% 17.0% 20.6% 23.4% 32.6% 25.8% 32.7%

Ad revenue per Active User, annualized $3.65 $7.45 $6.35 $7.27 $9.29 $8.90 $11.65 $12.93 $13.52 $11.48 $10.98 $13.47 $14.04 $14.81 $13.18 $12.06 $14.82 $15.58 $16.44 $14.80 $16.53
q/q growth % -20.2% 30.9% 11.0% 4.5% 0.0% -18.8% 22.6% 4.2% 5.5% 0.0% -8.5% 22.9% 5.2% 5.5% 0.0% 0.0%
y/y growth % 0.0% -14.8% 14.7% 27.7% 19.8% 24.6% 27.2% 21.3% 23.6% 23.4% 15.6% 8.5% 9.5% 14.8% 9.8% 10.0% 11.0% 11.0% 12.3% 11.7%

Registered Users (mn) 22 125 200 200 250 250 253 255 258 258 260 263 265 268 268 269 271 272 273 273 276
q/q growth % 0.0% 0.0% 1.0% 1.0% 1.0% 0.0% 1.0% 1.0% 1.0% 1.0% 0.0% 0.5% 0.5% 0.5% 0.5% 0.0% 0.0%
y/y growth % 0.0% 0.0% 60.0% 0.0% 25.0% 0.0% 1.0% 2.0% 3.0% 3.0% 4.1% 4.1% 4.1% 4.1% 4.1% 3.5% 3.0% 2.5% 2.0% 2.0% 1.0%

Total Listener Hours (B) 7.75 13.51 16.70 20.03 5.30 5.30 5.14 5.37 21.11 5.52 5.66 5.40 5.60 22.18 5.41 5.66 5.40 5.60 22.07 22.40
q/q growth % 1.9% 0.0% -3.0% 4.5% 0.0% 2.8% 2.5% -4.6% 3.6% 0.0% -3.3% 4.6% -4.6% 3.6% 0.0% 0.0%
y/y growth % 0.0% 74.3% 23.6% 19.9% 10.4% 5.2% 3.0% 3.3% 5.4% 4.2% 6.8% 5.1% 4.2% 5.1% -2.0% 0.0% 0.0% 0.0% -0.5% 1.5%

Listener Hours per Active listener per month 20.6 19.8 19.4 21.2 22.0 22.3 21.8 22.5 21.6 22.9 24.0 23.1 23.9 23.2 22.9 24.0 23.1 23.9 23.6 23.8
q/q growth % 0.2% 1.3% -2.3% 3.4% 0.0% 2.0% 4.5% -3.7% 3.8% 0.0% -4.3% 4.5% -3.7% 3.8% 0.0% 0.0%
y/y growth % 0.0% -4.0% -1.9% 9.0% 4.1% 0.6% 0.0% 2.5% 2.2% 4.3% 7.5% 6.1% 6.5% 7.4% 0.0% 0.0% 0.0% 0.0% 1.5% 1.0%

Advertising Listener Hours ( Mobile + Desktop) 7.00 12.47 14.62 17.58 4.67 4.69 4.58 4.81 18.75 4.85 4.97 4.71 4.89 19.42 4.74 4.97 4.75 4.94 19.41 19.81
q/q growth % 2.2% 0.6% -2.5% 5.1% 0.0% 0.8% 2.6% -5.2% 3.9% 0.0% -3.1% 4.9% -4.4% 3.9% 0.0% 0.0%
y/y growth % 0.0% 78.2% 17.2% 20.3% 10.8% 6.2% 4.5% 5.3% 6.6% 3.8% 5.9% 2.9% 1.8% 3.6% -2.1% 0.0% 0.9% 0.9% -0.1% 2.1%
% of total listener Hours 90.3% 92.3% 87.5% 87.8% 88.1% 88.6% 89.1% 89.6% 88.8% 87.8% 87.8% 87.2% 87.4% 87.6% 87.6% 87.8% 88.0% 88.2% 87.9% 88.4%
% Mobile 0.0% 78.4% 81.0% 84.2% 84.0% 85.0% 85.0% 85.0% 89.9% 85.0% 85.1% 85.1% 85.3% 85.1% 85.4% 85.5% 85.6% 85.7% 85.7% 86.2%

Mobile Ad Listener Hours 9.77 11.84 14.81 5.19 3.99 3.89 4.09 16.86 4.12 4.23 4.01 4.17 16.52 4.05 4.25 4.07 4.23 16.62 17.07
q/q growth % 36.8% -23.1% -2.5% 5.1% 0.0% 0.8% 2.7% -5.2% 4.1% 0.0% -3.0% 5.0% -4.3% 4.0% 0.0% 0.0%
y/y growth % 0.0% 21.2% 25.0% 48.2% 6.6% 4.8% 7.8% 13.9% -20.6% 6.0% 3.0% 2.1% -2.0% -1.7% 0.5% 1.5% 1.4% 0.6% 2.7%
% of total Ad Listener Hours 78.4% 81.0% 84.2% 111.1% 85.0% 85.0% 85.0% 89.9% 85.0% 85.1% 85.1% 85.3% 85.1% 85.4% 85.5% 85.6% 85.7% 85.7% 86.2%

Desktop Ad Listener Hours 2.70 2.77 2.84 (0.04) 0.70 0.69 0.72 2.19 0.73 0.74 0.70 0.72 2.89 0.69 0.72 0.68 0.71 2.81 2.74
q/q growth % -105.2% -1830.6% -2.5% 5.1% 0.0% 0.8% 1.9% -5.2% 2.5% 0.0% -3.8% 4.1% -5.0% 3.2% 0.0% 0.0%
y/y growth % 0.0% 2.9% 2.4% -105.7% 3.3% 3.0% -7.1% -23.0% -1886.6% 5.2% 2.2% -0.3% 32.1% -4.7% -2.7% -2.5% -1.8% -2.9% -2.3%
% of total Ad Listener Hours 21.6% 19.0% 16.2% -0.9% 15.0% 15.0% 15.0% 11.7% 15.0% 14.9% 14.9% 14.7% 14.9% 14.6% 14.5% 14.4% 14.3% 14.5% 13.8%

Subscription Listener Hours (B) 0.75 1.04 2.08 2.45 0.63 0.61 0.56 0.56 2.36 0.67 0.69 0.69 0.70 2.76 0.67 0.69 0.65 0.66 2.66 2.59
q/q growth % 0.0% -4.2% -7.3% -0.3% 0.0% 20.3% 2.2% -0.1% 2.0% 0.0% -4.9% 2.9% -6.2% 1.9% 0.0% 0.0%
y/y growth % 0.0% 38.5% 100.8% 17.6% 7.4% -2.0% -7.6% -11.4% -3.5% 6.6% 13.7% 22.4% 25.3% 16.6% -0.9% -0.2% -6.3% -6.4% -3.5% -2.7%
% of total listener Hours 9.7% 7.7% 12.5% 12.2% 11.9% 11.4% 10.9% 10.4% 11.2% 12.2% 12.2% 12.8% 12.6% 12.4% 12.4% 12.2% 12.0% 11.8% 12.1% 11.6%

RPMs
Total RPM $34.40 $30.23 $38.19 $45.97 $43.53 $53.91 $60.52 $60.75 $54.65 $49.84 $56.56 $61.09 $65.19 $61.19 $63.04 $73.08 $80.42 $86.42 $75.79 $99.56
q/q growth % -15.5% 23.8% 12.3% 0.4% 0.0% -18.0% 13.5% 8.0% 6.7% 0.0% -3.3% 15.9% 10.0% 7.5% 0.0% 0.0%
y/y growth % -12.1% 26.3% 20.4% 7.5% 24.2% 26.1% 17.9% 18.9% 14.5% 4.9% 0.9% 7.3% 12.0% 26.5% 29.2% 31.6% 32.6% 23.9% 31.4%

Total Advertising RPMs $33.31 $28.92 $35.66 $41.659 $38.30 $49.94 $56.84 $57.20 $50.520 $45.47 $53.34 $58.10 $58.92 $53.936 $50.02 $58.67 $63.91 $64.81 $59.403 $65.343
q/q growth % -20.5% 30.4% 13.8% 0.6% 0.0% -20.5% 17.3% 8.9% 1.4% 0.0% -15.1% 17.3% 8.9% 1.4% 0.0% 0.0%
y/y growth % -13.2% 23.3% 16.8% 14.7% 24.5% 28.2% 18.7% 21.3% 18.7% 6.8% 2.2% 3.0% 6.8% 10.0% 10.0% 10.0% 10.0% 10.1% 10.0%

Source: Company Reports; Aegis Capital

11 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016
Pandora Media Balance Sheet ($ in mlns)
Period 2007 2008 2009 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Cash and cash equivalents $25.646 $11.810 $9.608 $46.103 $59.939 $245.755 $175.957 $221.014 $204.103 $242.981 $334.667 $334.667 $303.454 $238.367 $207.695 $158.783 $158.783 $152.533 $110.758 $56.281 $58.401 $58.401 $9.360
Short-term investments $0.000 $0.000 $0.000 $44.893 $26.006 $98.662 $178.631 $160.566 $168.339 $120.614 $35.844 $35.844 $45.805 $54.800 $50.052 $50.052 $50.052 $50.052 $50.052 $50.052 $50.052 $50.052 $50.052
Accounts receivable $0.000 $0.000 $0.000 $73.626 $110.225 $164.023 $218.437 $188.470 $233.715 $262.910 $277.075 $277.075 $237.760 $263.654 $282.802 $280.478 $280.478 $215.893 $225.993 $276.605 $291.174 $291.174 $326.283
Prepaid expenses and other $0.000 $0.000 $0.000 $2.156 $4.614 $10.343 $15.389 $19.441 $16.664 $17.163 $35.920 $35.920 $48.182 $43.286 $34.166 $34.166 $34.166 $34.166 $34.166 $34.166 $34.166 $34.166 $34.166
Total current assets $0.000 $0.000 $0.000 $166.778 $200.784 $518.783 $588.414 $589.491 $622.821 $643.668 $683.506 $683.506 $635.201 $600.107 $677.338 $626.102 $626.102 $555.266 $523.592 $519.727 $536.416 $536.416 $522.484

Longer-term Investments $0.000 $0.000 $0.000 $0.000 $0.000 $105.686 $104.243 $99.704 $89.013 $78.982 $46.369 $46.369 $33.238 $18.153 $6.273 $6.273 $6.273 $6.273 $6.273 $6.273 $6.273 $6.273 $6.273
Property and equipment, net $0.000 $0.000 $0.000 $15.102 $16.606 $35.151 $42.921 $46.718 $54.741 $56.424 $66.370 $66.370 $81.412 $102.016 $118.453 $115.048 $115.048 $106.739 $100.051 $93.410 $87.660 $87.660 $73.119
Other assets $0.000 $0.000 $0.000 $2.362 $2.531 $13.715 $13.712 $13.957 $13.857 $9.479 $29.792 $29.792 $31.860 $31.478 $32.528 $32.528 $32.528 $32.528 $32.528 $32.528 $32.528 $32.528 $32.528
Total Assets $29.706 $18.629 $16.685 $184.242 $219.921 $673.335 $749.290 $749.870 $780.432 $820.743 $1,240.657 $1,240.657 $1,192.341 $1,159.174 $1,236.863 $1,182.222 $1,182.222 $1,103.078 $1,064.715 $1,054.209 $1,065.148 $1,065.148 $1,036.675

Accounts payable $0.000 $0.000 $0.000 $1.517 $3.974 $14.413 $10.825 $14.879 $16.386 $20.131 $17.897 $17.897 $9.922 $6.132 $13.983 $23.361 $23.361 $21.501 $18.043 $27.961 $38.084 $38.084 $62.408
Accrued liabilities $0.000 $0.000 $0.000 $3.702 $7.425 $14.885 $15.754 $21.789 $25.006 $37.099 $37.185 $37.185 $35.375 $29.723 $33.968 $33.968 $33.968 $33.968 $33.968 $33.968 $33.968 $33.968 $33.968
Accrued royalties $0.000 $0.000 $0.000 $32.663 $51.347 $66.110 $73.693 $80.574 $81.351 $163.047 $97.390 $97.390 $111.554 $123.583 $106.275 $106.275 $106.275 $106.275 $106.275 $106.275 $106.275 $106.275 $106.275
Deferred revenue $0.000 $0.000 $0.000 $19.420 $29.517 $42.650 $14.412 $26.740 $27.097 $22.682 $19.939 $19.939 $27.579 $28.751 $31.971 $31.971 $31.971 $31.971 $31.971 $31.971 $31.971 $31.971 $31.971
Accrued compensation $0.000 $0.000 $0.000 $10.851 $14.047 $17.948 $34.476 $27.968 $39.905 $36.856 $43.788 $43.788 $43.938 $48.971 $52.089 $52.089 $52.089 $52.089 $52.089 $52.089 $52.089 $52.089 $52.089
Dividends payable $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Current portion of long-term debt $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Total current liabilities $0.000 $0.000 $0.000 $68.153 $106.310 $156.006 $149.160 $171.950 $189.745 $279.815 $231.831 $231.831 $251.412 $254.592 $259.025 $268.403 $268.403 $266.543 $263.085 $273.003 $283.126 $283.126 $307.450

Long-term debt $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $234.577 $234.577 $239.011 $243.483 $337.429 $337.429 $337.429 $337.429 $337.429 $337.429 $337.429 $337.429 $337.429
Preferred stock warrant liability $0.083 $0.099 $0.049 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Other long-term liabilities $0.000 $0.000 $0.000 $2.220 $3.979 $9.098 $16.773 $15.246 $15.177 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Redeemable convertible preferred stock $49.438 $52.638 $62.560 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Common stock $0.000 $0.000 $0.000 $0.016 $0.017 $0.020 $0.021 $0.021 $0.021 $0.021 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023 $0.023
Additional paid-in-capital $0.000 $0.000 $0.000 $204.139 $235.506 $675.103 $781.009 $808.124 $837.356 $870.511 $1,110.539 $1,110.539 $1,152.577 $1,186.777 $1,227.197 $1,268.032 $1,268.032 $1,316.562 $1,361.523 $1,407.117 $1,455.467 $1,455.467 $1,703.134
Accumulated deficit $0.000 $0.000 $0.000 ($90.268) ($125.888) ($166.591) ($196.997) ($245.254) ($261.319) ($347.249) ($366.658) ($366.658) ($481.760) ($558.093) ($619.627) ($724.480) ($724.480) ($850.296) ($930.162) ($996.179) ($1,043.713) ($1,043.713) ($1,344.177)
Accumulated other comprehensive loss $0.000 $0.000 $0.000 ($0.018) ($0.003) ($0.301) ($0.676) ($0.217) ($0.548) ($0.625) ($0.517) ($0.517) ($0.443) ($0.412) ($0.586) ($0.586) ($0.586) ($0.586) ($0.586) ($0.586) ($0.586) ($0.586) ($0.586)
Total stockholders’ equity (deficit) ($23.431) ($40.247) ($63.510) $116.089 $109.632 $508.231 $600.130 $577.920 $590.687 $540.928 $743.387 $743.387 $670.397 $628.295 $607.007 $542.989 $542.989 $465.704 $430.798 $410.375 $411.192 $411.192 $358.394
Total Liabilities & Shareholder's Equity $0.000 $0.000 $0.000 $184.242 $219.921 $673.335 $749.290 $749.870 $780.432 $820.743 $1,240.657 $1,240.657 $1,192.341 $1,159.174 $1,236.863 $1,182.222 $1,182.222 $1,103.078 $1,064.715 $1,054.209 $1,065.148 $1,065.148 $1,036.675
Source: Company Reports; Aegis Capital

12 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016
Statement of Cash Flow ($ in mlns)
Period 2007 2008 2009 2011 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E
Net income (loss) 0 0 ($28.228) ($9.031) ($35.620) ($40.703) ($30.406) ($48.257) ($16.065) ($85.930) ($19.409) ($169.661) ($115.102) ($76.333) ($61.534) ($104.853) ($357.822) ($125.815) ($79.866) ($66.017) ($47.534) ($319.232) ($300.465)

Depreciation and amortization 0 0 $1.151 $4.221 $6.917 $10.781 $15.431 $4.340 $5.025 $5.829 $9.264 $24.458 $13.277 $14.360 $15.843 $18.000 $61.480 $18.540 $19.096 $19.669 $20.259 $77.564 $81.443
Loss on disposition of fixed assets 0 0 ($0.007) $0.282 $0.083 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Stock-based compensation $0.236 $0.283 $0.333 $7.930 $24.720 $42.260 $87.055 $23.195 $27.484 $28.794 $32.172 $111.645 $38.655 $32.432 $32.754 $35.000 $138.841 $42.521 $35.675 $36.029 $38.500 $152.725 $203.406
Issuance of common stock in exchange for non-employee
0 services 0 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Remeasurement of preferred stock warrants 0 0 ($0.050) $4.499 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Amortization of debt issuance cost and debt discount0 0 $0.019 $0.471 $0.264 $0.241 $0.197 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Amortization of premium on investments 0 0 $0.000 $0.199 $0.383 $0.266 $2.833 $0.619 $0.610 $0.483 $0.199 $1.911 $0.140 $0.107 $0.092 $0.000 $0.339 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000

Changes in assets and liabilities: 0 0 $0.000

Accounts receivable 0 0 ($0.566) ($31.294) ($36.599) ($53.797) ($54.414) $29.182 ($45.305) ($29.673) ($10.108) ($55.904) $38.514 ($26.375) ($20.477) $2.324 ($6.014) $64.586 ($10.101) ($50.612) ($14.568) ($10.696) ($35.109)
Prepaid expenses and other assets 0 0 $0.420 ($1.368) ($2.732) ($9.796) ($9.504) ($5.076) $2.972 ($4.460) ($12.354) ($18.918) ($19.742) $3.602 ($3.786) $0.000 ($19.926) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Accounts payable and accrued liabilities 0 0 $0.792 $0.561 $6.511 $17.803 $12.520 $6.562 $3.801 $20.738 ($11.521) $19.580 ($3.467) ($13.942) $12.419 $9.378 $4.388 ($1.860) ($3.457) $9.918 $10.122 $14.723 $24.325
Accrued royalties 0 0 $10.950 $16.657 $18.684 $14.763 $7.608 $6.896 $0.801 $81.726 ($65.687) $23.736 $14.152 $12.025 ($17.302) $0.000 $8.875 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Accrued compensation 0 0 $0.273 $0.800 $3.294 $4.108 $13.736 ($4.390) $10.287 ($1.564) $3.045 $7.378 $2.597 $2.900 $4.873 $0.000 $10.370 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Deferred revenue 0 0 $0.210 $4.782 $10.098 $13.134 ($28.238) $12.328 $0.357 ($4.996) ($2.743) $4.946 $7.640 $1.172 $3.220 $0.000 $12.032 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Reimbursement of cost of leasehold improvements 0 0 $0.000 $0.375 $1.484 $1.555 $4.169 $0.749 $0.000 $0.265 $0.010 $1.024 $4.244 $0.153 $0.000 $0.000 $4.397 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Net Cash Provided by (Used in) Operating Expenses
0 0 ($14.703) ($0.916) ($2.513) $0.615 $20.744 $26.982 ($9.923) $11.878 ($71.019) ($42.082) ($13.104) ($45.474) ($120.495) ($40.152) ($219.225) ($2.029) ($38.653) ($51.013) $6.779 ($84.916) ($26.401)

Purchases of property and equipment 0 0 ($0.615) ($13.156) ($8.124) ($22.873) ($29.754) ($5.931) ($12.016) ($9.386) ($4.741) ($32.074) ($14.371) ($20.193) ($11.836) ($14.595) ($60.995) ($10.231) ($12.408) ($13.027) ($14.510) ($50.176) ($66.901)
Proceeds from sale of property and equipment 0 0 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Prurchases of patents 0 0 $0.000 $0.000 $0.000 ($8.000) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Changes in restricted cash 0 0 ($0.641) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 ($0.250) $0.000 $0.000 ($0.250) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Sales of short-term investments 0 0 $6.250 ($59.634) ($66.830) ($230.156) ($273.427) ($56.790) $0.000 $0.000 $0.000 ($56.790) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Maturities of short-term investments 0 0 $1.973 $14.403 $85.184 $50.540 $258.518 $79.129 $53.630 $47.680 $49.199 $229.638 $8.332 $11.675 $14.809 $0.000 $34.816 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Payments related to acquisition 0 0 $0.000 $0.000 $0.000 ($0.400) $0.000 $0.000 ($0.200) ($22.828) ($246.538) ($269.566) ($0.676) $0.000 $0.000 $0.000 ($0.676) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Net Cash Provided by (Used in) investing activities
0 0 $6.967 ($58.387) $10.230 ($210.889) ($111.915) $16.408 ($10.315) $25.941 ($134.300) ($102.266) ($18.885) ($21.499) ($3.371) ($14.595) ($58.350) ($10.231) ($12.408) ($13.027) ($14.510) ($50.176) ($66.901)

Borrowings under debt arrangements 0 0 $6.998 $2.490 $0.000 $10.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $90.000 $0.000 $90.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Repayments of debt 0 0 ($7.779) ($10.140) $0.000 ($10.000) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Payment of debt issuance costs in connection with the0 debt refinancing 0 $0.000 $0.000 $0.000 ($0.450) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 ($0.032) $0.000 $0.000 ($0.032) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from employee stock purchase plan 0 0 $0.000 $0.000 $0.000 $0.000 $4.388 $1.619 $1.656 $1.814 $0.000 $5.089 $1.687 $2.150 $2.558 $0.000 $6.395 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from early exercise of stock options 0 0 $0.000 $0.000 $0.000 $0.000 $2.606 $0.000 $1.768 $0.856 $0.000 $2.624 $0.520 $1.353 $1.138 $0.000 $3.011 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from issuance of redeemable convertible preferred
0 stock,0net of issuance$0.000
costs $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from follow-on offering net of offering
costs 0 0 $0.000 $0.000 $0.000 $378.656 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from initial public offering net of offering costs
0 0 $0.000 $89.395 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from issuance of common stock, preferred $0.000stock, warrants$0.000 $0.042 $3.645 $6.123 $17.924 $14.288 $1.094 $0.000 $0.000 $1.474 $2.568 $0.000 $0.000 $0.000 $5.835 $5.835 $6.010 $9.285 $9.564 $9.851 $34.710 $44.261
Taxwithholdings related to the per share settlements$0.000
of restricted stock
$0.000
units $0.000 $0.000 $0.000 $0.000 ($2.019) $0.000 $0.000 ($1.388) ($0.245) ($1.633) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from issuance of common stock to
directors for cash 0 0 $0.000 $3.800 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from issuance of convertible promissory notes 0 0 $14.501 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Payment of dividends to preferred stockholders at initial
0 public offering
0 $0.000 ($29.779) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Proceeds from buyers in investor offer 0 0 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Payments to sellers in investor offer 0 0 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Excess tax benefit from stock-based compensation plans 0 0 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Net Cash Provided by (Used in) Financing Activities 0 0 $13.762 $59.411 $6.123 $396.130 $21.661 $1.825 $3.405 $1.282 $296.623 $303.135 $0.913 $2.004 $93.331 $5.835 $102.083 $6.010 $9.285 $9.564 $9.851 $34.710 $44.261
Effects of foreign currency translation on cash and cash0 equivalents0 $0.000 $0.000 ($0.004) ($0.040) ($0.288) ($0.158) ($0.078) ($0.223) $0.382 ($0.077) ($0.137) ($0.118) ($0.137) $0.000 ($0.392) $0.000 $0.000 $0.000 $0.000 $0.000 $0.000
Change in Cash 0 0 $6.026 $0.108 $13.836 $185.816 ($69.798) $45.057 ($16.911) $38.878 $91.686 $158.710 ($31.213) ($65.087) ($30.672) ($48.912) ($175.884) ($6.250) ($41.775) ($54.477) $2.120 ($100.382) ($49.041)
Cash-Beginning of period 0 0 $3.582 $45.995 $46.103 $59.939 $245.755 $175.957 $221.014 $204.103 $242.981 $175.957 $334.667 $303.454 $238.367 $207.695 $334.667 $158.783 $152.533 $110.758 $56.281 $158.783 $58.401
Cash-End of period 0 0 $9.608 $46.103 $59.939 $245.755 $175.957 $221.014 $204.103 $242.981 $334.667 $334.667 $303.454 $238.367 $207.695 $158.783 $158.783 $152.533 $110.758 $56.281 $58.401 $58.401 $9.360
Source: Company Reports; Aegis Capital

13 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Required Disclosures
Price Target
Our price target on Pandora is $16

Valuation Methodology
Our price target is based on a DCF valuation analysis.

Risk Factors
Competition. Competition in online streaming, and on-demand streaming in particular, continues to grow. Spotify recently announced
surpassing 40M subscribers, Apple Music in its short existence has 17M subscribers, Tidal is getting aggressive in the space with exclusive
content, YouTube/Google Play is becoming increasingly relevant in addition to launching the YouTube Red service, and SoundCloud
has 175M users globally.
Relationships With Labels. Pandora’s relationships with the top music labels could sour in the future or could become less economical
when contracts are up for renegotiation.
Execution Risks. High execution risks from juggling multiple investments : the existing lean-back service, the forthcoming on-demand
service, international expansion, and expanding the ticketing service.

For important disclosures go to www.aegiscap.com.

I, Victor Anthony, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject
companies and their securities. I also certify that I have not been, do not, and will not be receiving direct or indirect compensation in
exchange for expressing the specific recommendations in this report.

Research analyst compensation is not dependent upon investment banking revenues received by Aegis Capital Corp.

Aegis Capital Corp. intends to seek or expects to receive compensation for investment banking services from the subject company within
the next three months.

The firm nor the Research Analyst have any material conflict of interest in which the Research Analyst has a reason to know or knows
at the time of publication of this research report.

As of the report date neither Aegis Capital Corp. or its affiliates beneficially own 1% or more of any class of common equity securities
of the subject company of this report.

Neither the research analyst who prepared this report or a member of the research analyst’s household has a financial position in the debt
or equity securities of the subject company.

14 AEGIS CAPITAL CORP.

Pandora Media Inc. December 6, 2016

Investment Banking
Services/Past 12 Mos.
Rating Percent Percent
BUY [BUY] 85.85 37.36
HOLD [HOLD] 14.15 20.00
SELL [SELL] 0.00 0.00

Meaning of Ratings
A) A Buy rating is assigned when we do not believe the stock price adequately reflects a company's prospects over 12-18 months.
B) A Hold rating is assigned when we believe the stock price adequately reflects a company's prospects over 12-18 months.
C) A Sell rating is assigned when we believe the stock price more than adequately reflects a company's prospects over 12-18 months.

Other Disclosures
Other Disclosures The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not
considered to be all inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the securities mentioned herein.
Aegis Capital Corp., its affiliates, shareholders, officers, staff, and/or members of their families, may have a position in the securities
mentioned herein, and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts
or for the accounts of other customers of the Firm from time to time in the open market or otherwise. Opinions expressed are our present
opinions only and are subject to change without notice. Aegis Capital Corp. is under no obligation to provide updates to the opinions or
information provided herein. Additional information is available upon request.
The common stock of the subject company in this report may not be suitable for certain investors based on their investment objectives,
degree of risk, as well as their financial status.

© Copyright 2016 by Aegis Capital

Aegis Capital Corp.

(212) 813-1010
810 Seventh Avenue, 18th Floor
New York, New York 10019

15 AEGIS CAPITAL CORP.