Pandora 2012 Annual Report Download - page 65

Table of Contents
Cash provided by financing activities in fiscal 2010 was $35.6 million consisting primarily of net proceeds of $34.1 million from the issuance of
45.8 million shares of Series F redeemable convertible preferred stock and net borrowings of $1.4 million.
Contractual Obligations and Commitments
The following summarizes our contractual obligations as of January 31, 2012:
Payments Due by Period
Total
Less Than
1 Year 1-3 Years 4-5 Years
More Than
5 Year
(in thousands)
Operating lease obligations $ 16,521 $ 2,777 $ 5,659 $ 5,794 $ 2,291
Total $ 16,521 $ 2,777 $ 5,659 $ 5,794 $ 2,291
Off-Balance Sheet Arrangements
As of January 31, 2010, 2011 and 2012, we did not have any off-balance sheet arrangements.
Quarterly Trends
Our operating results fluctuate from quarter to quarter as a result of a variety of factors. We expect our operating results to continue to fluctuate in
future quarters.
Our results may reflect the effects of some seasonal trends in listener behavior due to increased internet usage and sales of media-streaming devices
during certain vacation and holiday periods. For example, we expect to experience increased usage during the fourth quarter of each calendar year due to the
holiday season, and in the first quarter of each calendar year due to increased use of media-streaming devices received as gifts during the holiday season. We
may also experience higher advertising sales during the fourth quarter of each calendar year due to greater advertiser demand during the holiday season and
lower advertising sales during the first quarter of each calendar year due to seasonally adjusted advertising demand. While we believe these seasonal trends
have affected and will continue to affect our operating results, our trajectory of rapid growth may have overshadowed these effects to date. We believe that
our business may become more seasonal in the future and that such seasonal variations in listener behavior may result in fluctuations in our financial results.
In addition, expenditures by advertisers tend to be cyclical and discretionary in nature, reflecting overall economic conditions, the economic prospects
of specific advertisers or industries, budgeting constraints and buying patterns and a variety of other factors, many of which are outside our control. For
example, an advertiser which accounted for more than 10% of our advertising revenue for the first two quarters of fiscal 2012 did not meet this threshold for
the third and fourth quarters of fiscal 2012. As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon
as indications of our future operating performance.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation
of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and
related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other
assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
We believe that the assumptions and estimates associated with our revenue recognition, allowance for doubtful accounts, stock based compensation,
stock option grants and common stock valuations, and accounting for income taxes have the greatest potential impact on our financial statements. Therefore,
we consider these to be our critical accounting policies and estimates.
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