The basic Pandora service is free, with most of its revenue coming from advertising, just like traditional radio stations. Users can pay more to get rid of the ads, enable unlimited listening time and more "skips" and receive higher-quality songs. Most people apparently are willing tolerate the ads. The IPO documents said 86 percent of Pandora's revenue came from advertising in its fiscal year just completed Jan. 31.
The company has lost $83.9 million since its inception and remains unprofitable, according to Friday's filing. In the first nine months of its last fiscal year, Pandora suffered a $328,000 loss on revenue of $90.1 million.
The filing said its independent auditor determined there was "material weakness" in Pandora's financial reporting
practices. The company said it's trying to fix the problems.